1
00:00:00,840 --> 00:00:04,000
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside

2
00:00:04,040 --> 00:00:05,240
Speaker 1: my co host Matt Miller.

3
00:00:05,640 --> 00:00:09,720
Speaker 2: Every business day we bring you interviews from CEOs, market pros,

4
00:00:09,720 --> 00:00:14,400
Speaker 2: and Bloomberg experts, along with essential market moving news. Find

5
00:00:14,400 --> 00:00:17,439
Speaker 2: the Bloomberg Markets podcast called Apple Podcasts or wherever you

6
00:00:17,520 --> 00:00:20,520
Speaker 2: listen to podcasts, and at Bloomberg dot com slash podcast.

7
00:00:21,160 --> 00:00:26,200
Speaker 3: What's the cybersecurity outlook? Let's see. Wendy Whitmore is head

8
00:00:26,239 --> 00:00:30,319
Speaker 3: of Unit forty two at Palo Alto Networks. Our next

9
00:00:30,360 --> 00:00:33,320
Speaker 3: guest in studio with us. Thanks for starting. Why would

10
00:00:33,360 --> 00:00:35,760
Speaker 3: you leave Palo Alto to come to New York. It's

11
00:00:35,800 --> 00:00:36,880
Speaker 3: like twenty below here.

12
00:00:37,159 --> 00:00:39,159
Speaker 4: It is cold here, There's no doubt about that.

13
00:00:39,520 --> 00:00:42,760
Speaker 3: Annie, tell us what is what is the unit? Unit?

14
00:00:42,880 --> 00:00:44,279
Speaker 3: Do I have that right? Unit forty two.

15
00:00:44,560 --> 00:00:47,919
Speaker 4: Yeah, Unit forty two is really Paloouto Network special forces

16
00:00:47,960 --> 00:00:50,440
Speaker 4: on the ground if you will, so we consult. We

17
00:00:50,479 --> 00:00:54,240
Speaker 4: solve our clients crises, so incident response and breach investigations,

18
00:00:54,280 --> 00:00:56,760
Speaker 4: threat intelligence and threat hunting throughout the world.

19
00:00:57,000 --> 00:00:58,800
Speaker 5: And tell us a little bit about your clients. Who

20
00:00:58,800 --> 00:00:59,960
Speaker 5: are they, what kind of work do they do?

21
00:01:00,800 --> 00:01:03,120
Speaker 4: Our clients really do a bit of everything, right, they

22
00:01:03,200 --> 00:01:07,320
Speaker 4: are global two thousand companies or smaller organizations or governments

23
00:01:07,360 --> 00:01:09,920
Speaker 4: throughout the world. We partner with a tremendous amount of

24
00:01:09,920 --> 00:01:13,240
Speaker 4: intelligence organizations to share information throughout the world as well

25
00:01:13,440 --> 00:01:15,200
Speaker 4: related to cyber threats and attacks.

26
00:01:15,319 --> 00:01:18,840
Speaker 3: Okay, what's the landscape right now in terms of cyber security?

27
00:01:19,000 --> 00:01:22,600
Speaker 3: I mean it's just like I also get at least

28
00:01:22,640 --> 00:01:26,520
Speaker 3: once a month, it seems now, a letter from whatever organization.

29
00:01:26,920 --> 00:01:30,520
Speaker 3: Last month it was from Robert Wood Johnson University Hospital

30
00:01:30,520 --> 00:01:35,279
Speaker 3: system saying they had a breach of their security, their

31
00:01:35,319 --> 00:01:40,000
Speaker 3: their computer systems and some data patient data was leaked out.

32
00:01:40,280 --> 00:01:43,520
Speaker 3: And oh you know, here's a consolation prize. We're going

33
00:01:43,600 --> 00:01:48,200
Speaker 3: to give you a year free of cyber security threat

34
00:01:48,200 --> 00:01:53,000
Speaker 3: detection or credit monitoring, whatever it is, credit monitoring. What's

35
00:01:53,040 --> 00:01:55,760
Speaker 3: the landscape right now? Things seem to have gotten a

36
00:01:55,960 --> 00:01:56,680
Speaker 3: lot worse.

37
00:01:57,200 --> 00:02:00,720
Speaker 4: The landscape is a bit chaotic, especially going into twenty

38
00:02:00,760 --> 00:02:04,040
Speaker 4: twenty four. We're going to have over sixty major elections

39
00:02:04,080 --> 00:02:06,560
Speaker 4: throughout the world happening in this year alone. Right, this

40
00:02:06,600 --> 00:02:09,600
Speaker 4: will be the largest voting that's ever occurred. So I

41
00:02:09,639 --> 00:02:12,200
Speaker 4: think an easy way to remember it is the three

42
00:02:12,400 --> 00:02:16,880
Speaker 4: s's speed scale and sophistication. We're seeing attacks happen faster

43
00:02:17,040 --> 00:02:19,519
Speaker 4: than they have been before. So when an attacker gets

44
00:02:19,520 --> 00:02:22,280
Speaker 4: in an environment, they are stealing data within a matter

45
00:02:22,320 --> 00:02:26,200
Speaker 4: of hours in some cases. From a scale perspective, you mentioned,

46
00:02:26,240 --> 00:02:28,280
Speaker 4: you know, maybe on a weekly basis that you're getting

47
00:02:28,280 --> 00:02:31,519
Speaker 4: a letter write about another breach that's occurred. This scale

48
00:02:31,600 --> 00:02:34,359
Speaker 4: attackers for the first time in history, they're no longer

49
00:02:34,639 --> 00:02:37,320
Speaker 4: doing only spear phishing, which is sending an email to

50
00:02:37,360 --> 00:02:39,120
Speaker 4: an employee right and they click on a link and

51
00:02:39,120 --> 00:02:43,360
Speaker 4: they get infected that way. They're actually exploiting vulnerabilities at scale,

52
00:02:43,520 --> 00:02:47,240
Speaker 4: So within hours there could be hundreds of thousands of

53
00:02:47,280 --> 00:02:51,919
Speaker 4: systems affected by a three CX and Microsoft Exchange for example.

54
00:02:52,240 --> 00:02:56,080
Speaker 4: And then sophistication. It's long been certainly that nation state

55
00:02:56,120 --> 00:02:59,160
Speaker 4: actors are highly sophisticated, but now we're looking at cyber

56
00:02:59,200 --> 00:03:02,360
Speaker 4: criminals who have a deeper understanding of business to business

57
00:03:02,400 --> 00:03:06,000
Speaker 4: interactions and processes than we've ever seen before, and they're

58
00:03:06,080 --> 00:03:07,280
Speaker 4: using that to their advantage.

59
00:03:07,680 --> 00:03:11,840
Speaker 5: Wow, So a few things I'm scared. A few things

60
00:03:11,840 --> 00:03:14,359
Speaker 5: you just mentioned there that definitely made me scared. You're

61
00:03:14,400 --> 00:03:19,760
Speaker 5: mentioning cybersecurity elections and nation states of course makes me

62
00:03:19,800 --> 00:03:23,200
Speaker 5: think twenty sixteen, you know, we are heading toward another

63
00:03:23,240 --> 00:03:26,120
Speaker 5: election here in the US, very likely could have Trump

64
00:03:26,200 --> 00:03:29,000
Speaker 5: on the ballot again. I don't know, do we start

65
00:03:29,040 --> 00:03:32,200
Speaker 5: thinking again about potential Russian interference in the US election?

66
00:03:32,320 --> 00:03:34,360
Speaker 5: I mean, where is your mind at right now in

67
00:03:34,440 --> 00:03:37,000
Speaker 5: terms of threats with this election coming up?

68
00:03:37,680 --> 00:03:39,560
Speaker 4: I think that's a great question. But I think the

69
00:03:39,600 --> 00:03:41,839
Speaker 4: reality is we have to be thinking about nation state

70
00:03:41,880 --> 00:03:45,720
Speaker 4: interference from countries throughout the world. Right, we have now

71
00:03:45,760 --> 00:03:48,640
Speaker 4: with the onset and advent of generative AI, we have

72
00:03:48,720 --> 00:03:53,480
Speaker 4: the ability to speed up written and verbal communications and

73
00:03:53,520 --> 00:03:56,640
Speaker 4: make them sound more polished and genuine than we've ever

74
00:03:56,680 --> 00:03:59,960
Speaker 4: seen before. So I would imagine from a disinformation campaig,

75
00:04:00,480 --> 00:04:02,920
Speaker 4: we're going to see more of those emanating from throughout

76
00:04:02,920 --> 00:04:06,240
Speaker 4: the world, and we really need to be concerned about

77
00:04:06,280 --> 00:04:07,760
Speaker 4: where information is coming from.

78
00:04:08,240 --> 00:04:11,360
Speaker 3: From a business perspective, and particularly one of the areas

79
00:04:11,400 --> 00:04:14,760
Speaker 3: that uncovered with the small businesses, and they are especially

80
00:04:14,840 --> 00:04:17,479
Speaker 3: vulnerable because they just don't have the resources I would

81
00:04:17,520 --> 00:04:21,240
Speaker 3: imagine to combat this on a regular basis. They're liable

82
00:04:21,520 --> 00:04:25,440
Speaker 3: when that information when a client's information is stolen, right,

83
00:04:25,720 --> 00:04:28,040
Speaker 3: I mean from a legal perspective, they have to keep

84
00:04:28,080 --> 00:04:29,440
Speaker 3: that in mind certainly.

85
00:04:30,720 --> 00:04:33,359
Speaker 4: You know, cybersecurity is really a team sport at this point.

86
00:04:33,400 --> 00:04:35,400
Speaker 4: And you hit on a key factor of that, which

87
00:04:35,480 --> 00:04:38,560
Speaker 4: is small businesses are not only responsible for their own information,

88
00:04:38,960 --> 00:04:40,960
Speaker 4: but for those of their clients, and they may have

89
00:04:41,560 --> 00:04:43,800
Speaker 4: a chain where they're part of a big supply chain

90
00:04:44,080 --> 00:04:47,160
Speaker 4: for a large organization that does have more resources. So

91
00:04:47,240 --> 00:04:50,560
Speaker 4: that is a huge challenge for executives throughout the world

92
00:04:50,600 --> 00:04:52,839
Speaker 4: today is to make sure that not only they're securing

93
00:04:52,880 --> 00:04:56,400
Speaker 4: their own communications, but their clients are consumers and everyone

94
00:04:56,400 --> 00:04:57,320
Speaker 4: they're doing business with.

95
00:04:57,800 --> 00:04:59,560
Speaker 5: Yeah, you know, this was actually even like a really

96
00:04:59,560 --> 00:05:03,400
Speaker 5: big top heading into Davos this week that the survey

97
00:05:04,160 --> 00:05:08,320
Speaker 5: that some of these diplomats were conducted on were heading

98
00:05:08,320 --> 00:05:12,360
Speaker 5: into the World Economic Forum, that they ranked misinformation and

99
00:05:12,400 --> 00:05:15,720
Speaker 5: disinformation as the one as the top risk out of

100
00:05:15,720 --> 00:05:19,320
Speaker 5: ten for the short term and the long term. So

101
00:05:19,400 --> 00:05:21,840
Speaker 5: I thought that or sorry, the short term risk being

102
00:05:23,120 --> 00:05:26,320
Speaker 5: being this misinformation. So it is really interesting, I mean,

103
00:05:26,360 --> 00:05:29,039
Speaker 5: how does that then affect like the work that you do.

104
00:05:29,040 --> 00:05:30,880
Speaker 5: Do you feel like this is even more like under

105
00:05:30,920 --> 00:05:33,040
Speaker 5: a microscope and being scrutinized right now?

106
00:05:33,640 --> 00:05:36,800
Speaker 4: Well, I think the challenge with disinformation for example, is

107
00:05:36,880 --> 00:05:39,760
Speaker 4: it's not like a traditional cyber attack where you're necessarily

108
00:05:39,800 --> 00:05:42,279
Speaker 4: stealing data from an organization and there's some piece of

109
00:05:42,320 --> 00:05:45,880
Speaker 4: evidence to prove right. It really relies on the reader,

110
00:05:45,960 --> 00:05:49,040
Speaker 4: the viewer, the consumer of that information to be discerning

111
00:05:49,120 --> 00:05:52,159
Speaker 4: and to understand and do their fact checking to really,

112
00:05:52,400 --> 00:05:54,360
Speaker 4: you know, get to the degree of is this information

113
00:05:54,520 --> 00:05:57,120
Speaker 4: legitimate or not to the degree that it has impact

114
00:05:57,200 --> 00:05:59,599
Speaker 4: on a business and the economy. I think that's a

115
00:05:59,760 --> 00:06:02,760
Speaker 4: you know, true factor. So twenty twenty four we're likely

116
00:06:02,800 --> 00:06:04,480
Speaker 4: to see more of that than we've seen before.

117
00:06:05,320 --> 00:06:10,080
Speaker 3: So with computing capacity you know, growing exponentially, et cetera,

118
00:06:10,279 --> 00:06:13,919
Speaker 3: so forth, I would imagine it's not a question of when,

119
00:06:14,080 --> 00:06:18,479
Speaker 3: but if, not a question of if, but when you're

120
00:06:18,480 --> 00:06:21,480
Speaker 3: going to suffer a cyber attack, a devastating cyber attack,

121
00:06:22,040 --> 00:06:23,200
Speaker 3: how do you protect yourself?

122
00:06:23,480 --> 00:06:26,400
Speaker 4: And no doubt organizations are aware this is happening at

123
00:06:26,440 --> 00:06:28,960
Speaker 4: a faster pace, right than we've ever seen before. So

124
00:06:29,000 --> 00:06:31,080
Speaker 4: I think the keys there are really being able to

125
00:06:31,200 --> 00:06:34,960
Speaker 4: understand what visibility into your environment, so understanding what are

126
00:06:35,040 --> 00:06:38,800
Speaker 4: legitimate communications and interactions what are not, And then what

127
00:06:38,960 --> 00:06:41,920
Speaker 4: something that everyone can do is practice in advance, right

128
00:06:42,000 --> 00:06:44,240
Speaker 4: practice these plans make sure you know how to get

129
00:06:44,240 --> 00:06:46,720
Speaker 4: a hold of your employees and your team members, and

130
00:06:47,680 --> 00:06:49,440
Speaker 4: in the event that you don't have access to your

131
00:06:49,480 --> 00:06:52,360
Speaker 4: primary email and other types of communications, that you can

132
00:06:52,400 --> 00:06:56,480
Speaker 4: really respond quickly. On a personal note, I cannot stress

133
00:06:56,600 --> 00:06:59,600
Speaker 4: enough do not reuse the same passwords for every single account,

134
00:06:59,680 --> 00:07:03,040
Speaker 4: for every application, and for every application you can make

135
00:07:03,040 --> 00:07:05,960
Speaker 4: sure you have multi factor authentication enabled so that you

136
00:07:06,040 --> 00:07:07,920
Speaker 4: make yourself less of a target.

137
00:07:07,640 --> 00:07:10,840
Speaker 5: And don't click those emails. John say alert, Oh.

138
00:07:10,720 --> 00:07:14,640
Speaker 3: Wendy, do you have like just anecdotally, like, what's give

139
00:07:14,760 --> 00:07:16,560
Speaker 3: us some horror stories that you've dealt with.

140
00:07:17,320 --> 00:07:20,040
Speaker 4: Well, So, for example, just last week, we're working for

141
00:07:20,120 --> 00:07:23,840
Speaker 4: an incident response, meaning a breach investigation for a healthcare organization,

142
00:07:24,280 --> 00:07:26,720
Speaker 4: and in this case it's a ransomware actor. Not only

143
00:07:26,760 --> 00:07:29,680
Speaker 4: do they reach out to try to extort the healthcare organization,

144
00:07:30,000 --> 00:07:32,800
Speaker 4: they're reaching out individually to patients and in this case

145
00:07:32,800 --> 00:07:35,800
Speaker 4: it's cancer patients, and they're saying, hey, for three dollars,

146
00:07:35,840 --> 00:07:38,840
Speaker 4: you can preview the information that we've stolen about you,

147
00:07:39,160 --> 00:07:41,400
Speaker 4: and for fifty dollars you can pay us to make

148
00:07:41,440 --> 00:07:43,680
Speaker 4: sure that we don't expose this further on the internet.

149
00:07:44,400 --> 00:07:47,240
Speaker 4: This is horrific behavior. We're likely to see more of

150
00:07:47,280 --> 00:07:50,760
Speaker 4: this as these ransomware actors continue to monetize their attacks.

151
00:07:51,080 --> 00:07:55,880
Speaker 3: They ever caught the ransomware actors or they rush or

152
00:07:55,920 --> 00:07:59,640
Speaker 3: some far off place where you're never going to you

153
00:07:59,760 --> 00:08:00,640
Speaker 3: just reach them.

154
00:08:00,920 --> 00:08:02,680
Speaker 4: Well, the great news I think is there's a lot

155
00:08:02,720 --> 00:08:05,440
Speaker 4: more information now, So multiple governments throughout the world are

156
00:08:05,440 --> 00:08:08,840
Speaker 4: collaborating on these attacks. We have law enforcement actually going

157
00:08:08,840 --> 00:08:13,400
Speaker 4: after disrupting these ransomware actors their infrastructure, so the tools

158
00:08:13,400 --> 00:08:16,000
Speaker 4: that they're using to host and wage these attacks. And

159
00:08:16,040 --> 00:08:18,160
Speaker 4: then certainly we're moving to the point where we're now

160
00:08:18,200 --> 00:08:22,679
Speaker 4: disrupting from an actual arrest standpoint too. So good news,

161
00:08:22,720 --> 00:08:24,480
Speaker 4: but still slow going in that aspect.

162
00:08:24,680 --> 00:08:26,440
Speaker 5: So one more here for you, Wendy. We had some

163
00:08:26,480 --> 00:08:28,880
Speaker 5: news out of JP Morgan this morning. They're saying that

164
00:08:28,880 --> 00:08:31,080
Speaker 5: they've seen an increase in hackers that are trying to

165
00:08:31,120 --> 00:08:35,480
Speaker 5: infiltrate their systems and JP Morgan spends about fifteen billion

166
00:08:35,520 --> 00:08:38,800
Speaker 5: dollars a year on technology as part of its attempts

167
00:08:38,800 --> 00:08:42,680
Speaker 5: to bolster its cyber defenses. Obviously we're not all JP Morgan,

168
00:08:42,720 --> 00:08:44,760
Speaker 5: but this could get very expensive.

169
00:08:45,080 --> 00:08:47,839
Speaker 4: Oh, no doubt. I mean, this has a true economic impact, right.

170
00:08:47,840 --> 00:08:49,760
Speaker 4: But I think the good news there and the silver

171
00:08:49,880 --> 00:08:53,319
Speaker 4: lining is we're seeing so many more organizations really effectively

172
00:08:53,400 --> 00:08:56,440
Speaker 4: prepare to detect these attacks. So in JP Morgan's case,

173
00:08:56,640 --> 00:08:59,560
Speaker 4: they're detecting them, they're preventing them, they're gathering data that

174
00:08:59,559 --> 00:09:02,240
Speaker 4: they're sharing with the community so that more and more

175
00:09:02,280 --> 00:09:05,280
Speaker 4: others can also protect and defend themselves as well. So

176
00:09:05,440 --> 00:09:07,040
Speaker 4: I think there's a good story there as well.

177
00:09:07,280 --> 00:09:11,240
Speaker 3: Okay, I'm changing my passer from JBT one two three four.

178
00:09:11,520 --> 00:09:15,440
Speaker 5: It's not password one two three Oh no, that was

179
00:09:15,480 --> 00:09:16,120
Speaker 5: my old one.

180
00:09:16,240 --> 00:09:19,640
Speaker 3: Okay, Wendy, thanks so much. Wendy Whitmore is senior vice president,

181
00:09:19,679 --> 00:09:24,120
Speaker 3: head of Unit forty two at Pallo Outdo Networks in

182
00:09:24,160 --> 00:09:26,680
Speaker 3: the studio, so she gets a goals start today.

183
00:09:27,640 --> 00:09:31,040
Speaker 6: You're listening to the team, can't her live program Bloomberg

184
00:09:31,080 --> 00:09:34,520
Speaker 6: Markets weekdays at ten am Eastern on Bloomberg dot Com,

185
00:09:34,559 --> 00:09:37,680
Speaker 6: the iHeartRadio app and the Bloomberg Business App, or listen

186
00:09:37,760 --> 00:09:39,880
Speaker 6: on demand wherever you get your podcasts.

187
00:09:41,760 --> 00:09:44,600
Speaker 3: Is twenty twenty four, the year for a rebound. Our

188
00:09:44,679 --> 00:09:47,680
Speaker 3: next guest has some thoughts on that. Thomas Smell is

189
00:09:47,760 --> 00:09:51,560
Speaker 3: CEO of f E International. Before we get to the deals.

190
00:09:51,600 --> 00:09:53,680
Speaker 3: What do you guys do? What is the company you

191
00:09:53,720 --> 00:09:54,280
Speaker 3: have all about?

192
00:09:54,400 --> 00:09:57,559
Speaker 1: So f International we focus on middle market tech, M

193
00:09:57,600 --> 00:10:00,760
Speaker 1: and A too, work with buys and sellers of companies

194
00:10:00,840 --> 00:10:04,600
Speaker 1: up to generally three hundred million in evaluation. In total,

195
00:10:04,640 --> 00:10:07,800
Speaker 1: we've closed over fifteen hundred transactions.

196
00:10:07,880 --> 00:10:12,080
Speaker 3: So you're in an advisory capacity exactly where an advisor. Yeah, okay,

197
00:10:12,880 --> 00:10:15,320
Speaker 3: twenty twenty three is a year year. I would imagine

198
00:10:15,360 --> 00:10:17,520
Speaker 3: you want to forget what's the outlook?

199
00:10:17,800 --> 00:10:19,960
Speaker 1: Yeah, So I mean twenty twenty three I think finished

200
00:10:19,960 --> 00:10:21,959
Speaker 1: on a reasonable high. So if we look at our

201
00:10:22,000 --> 00:10:25,120
Speaker 1: deal volume second half of twenty twenty three versus second

202
00:10:25,160 --> 00:10:27,800
Speaker 1: half of twenty twenty two, we're up fifty six percent.

203
00:10:27,880 --> 00:10:30,840
Speaker 1: So deals are still happening, particularly in the middle market.

204
00:10:30,880 --> 00:10:34,040
Speaker 1: Lower middle market, I think where a lot of people

205
00:10:34,080 --> 00:10:37,320
Speaker 1: see deal volumes slow down as really those much larger transactions,

206
00:10:37,400 --> 00:10:41,400
Speaker 1: So it's much less those billion dollar and above deal's happening,

207
00:10:41,440 --> 00:10:44,400
Speaker 1: but the still activity lower down.

208
00:10:44,679 --> 00:10:47,120
Speaker 5: Yeah, and it sounds like this year obviously, if interest

209
00:10:47,200 --> 00:10:49,120
Speaker 5: rates are going to come down, that should probably help

210
00:10:49,160 --> 00:10:50,800
Speaker 5: give a boost to the outlook.

211
00:10:50,440 --> 00:10:52,560
Speaker 1: This year, right, Yeah, for sure, I think last year

212
00:10:52,559 --> 00:10:54,320
Speaker 1: there was a lot of uncertainty about what's going to

213
00:10:54,320 --> 00:10:56,600
Speaker 1: happen to interest rates, and they kept getting pushed upwards,

214
00:10:56,679 --> 00:10:58,160
Speaker 1: so a lot of buyers were kind of sitting on

215
00:10:58,200 --> 00:11:00,800
Speaker 1: the sidelines waiting to see what would happen. Now, I

216
00:11:00,840 --> 00:11:04,400
Speaker 1: think most analysts are predicting maybe two or three interest

217
00:11:04,440 --> 00:11:08,080
Speaker 1: rate cuts this year, so buyers are definitely getting more active,

218
00:11:08,120 --> 00:11:11,600
Speaker 1: particularly those who are using debt. But on the flip side,

219
00:11:11,640 --> 00:11:15,360
Speaker 1: there's still four trillion dollars of dry powder with private

220
00:11:15,360 --> 00:11:18,000
Speaker 1: equity firms that they need to deploy, which is sitting

221
00:11:18,000 --> 00:11:20,680
Speaker 1: there in cash, so there's still the ability to do

222
00:11:20,720 --> 00:11:22,120
Speaker 1: deals even if they don't use debt.

223
00:11:22,640 --> 00:11:25,360
Speaker 3: How does it work. Do they come to you mostly

224
00:11:25,559 --> 00:11:28,600
Speaker 3: or you see the opportunity, are like, hey, this is

225
00:11:28,640 --> 00:11:32,240
Speaker 3: something that might make sense in terms of M and A,

226
00:11:32,440 --> 00:11:34,280
Speaker 3: and you approach those companies.

227
00:11:34,360 --> 00:11:36,200
Speaker 1: So generally they will come to us. We've been in

228
00:11:36,240 --> 00:11:38,080
Speaker 1: business like fourteen years now, so we get a lot

229
00:11:38,120 --> 00:11:40,360
Speaker 1: of word of mouth. Founders will come directly to us

230
00:11:40,400 --> 00:11:42,920
Speaker 1: wanting us to help sell their business. Maybe they're ready

231
00:11:43,000 --> 00:11:45,240
Speaker 1: to move on, maybe they've had an approach and they

232
00:11:45,240 --> 00:11:47,800
Speaker 1: want someone to help advise them. And then we'll work

233
00:11:47,840 --> 00:11:51,040
Speaker 1: through the process of reaching out to suitable buyers and

234
00:11:51,120 --> 00:11:52,080
Speaker 1: negotiating from that.

235
00:11:53,480 --> 00:11:56,600
Speaker 3: How do they reach that decision? Give me a specific

236
00:11:56,880 --> 00:11:59,280
Speaker 3: like when they know it's time to do something.

237
00:11:59,320 --> 00:12:01,000
Speaker 1: Yeah, So for a lot of people, that's very much

238
00:12:01,000 --> 00:12:04,560
Speaker 1: the personal decision. So like everyone has, I think in

239
00:12:04,600 --> 00:12:07,040
Speaker 1: the entrepreneurial world has their number. The number might be

240
00:12:07,480 --> 00:12:10,480
Speaker 1: ten million, fifty million, one hundred million, two hundred million.

241
00:12:10,559 --> 00:12:13,000
Speaker 1: Personally they want to walk away with when they get

242
00:12:13,040 --> 00:12:14,600
Speaker 1: to that level in terms of where they can sell

243
00:12:14,640 --> 00:12:17,280
Speaker 1: their company, they might just decide to walk away. Then

244
00:12:17,640 --> 00:12:19,079
Speaker 1: some people walk away when they have a change of

245
00:12:19,280 --> 00:12:22,840
Speaker 1: personal circumstances. Maybe they've got kids going to college and

246
00:12:22,840 --> 00:12:24,480
Speaker 1: they want to kind of spend more time with them,

247
00:12:24,600 --> 00:12:26,440
Speaker 1: or maybe they want to spend less time with them

248
00:12:26,480 --> 00:12:29,319
Speaker 1: and where they want to take time away from from work.

249
00:12:29,400 --> 00:12:33,160
Speaker 1: It can work in even directions. A lot of the time,

250
00:12:33,160 --> 00:12:35,000
Speaker 1: founders just get an approach, So they get an approach

251
00:12:35,000 --> 00:12:37,720
Speaker 1: from a buyer that gets them excited about the idea

252
00:12:37,720 --> 00:12:39,600
Speaker 1: of selling and they just want someone to help kind

253
00:12:39,600 --> 00:12:42,160
Speaker 1: of work through the process with them. Other times, I think,

254
00:12:42,240 --> 00:12:44,640
Speaker 1: particularly in kind of the current world of tech, it

255
00:12:44,720 --> 00:12:48,000
Speaker 1: moves so quickly, founders will have new ideas that they're like, well,

256
00:12:48,040 --> 00:12:50,079
Speaker 1: I've got a new business idea. How about I sell

257
00:12:50,160 --> 00:12:52,480
Speaker 1: my current company. I'm going to go work on this instead,

258
00:12:52,600 --> 00:12:54,280
Speaker 1: and I'll get some liquidity in the meantime.

259
00:12:54,880 --> 00:12:58,319
Speaker 5: So you'd mentioned private equity. Are you working in transactions

260
00:12:58,320 --> 00:13:00,640
Speaker 5: a lot that in which case that is buyer or

261
00:13:00,679 --> 00:13:04,200
Speaker 5: is this mostly you know, one business acquiring another.

262
00:13:04,720 --> 00:13:07,280
Speaker 1: Yeah, so privacy probably makes up about fifty percent of

263
00:13:07,360 --> 00:13:09,880
Speaker 1: the deals we work on. We work with a lot

264
00:13:09,880 --> 00:13:12,040
Speaker 1: of public companies as well, who are trying to make

265
00:13:12,080 --> 00:13:15,480
Speaker 1: acquisitions at all levels. I think a lot of people

266
00:13:15,520 --> 00:13:19,280
Speaker 1: think public companies only buy billion dollar businesses, but the

267
00:13:19,360 --> 00:13:22,360
Speaker 1: reality is, if there's a strategic fit, they might look

268
00:13:22,360 --> 00:13:24,840
Speaker 1: at a five million dollar business, a ten million dollar business,

269
00:13:25,240 --> 00:13:28,720
Speaker 1: fifty million dollar market cap business. And then a lot

270
00:13:28,720 --> 00:13:31,360
Speaker 1: of individuals are like very small funds. You might not

271
00:13:31,360 --> 00:13:34,559
Speaker 1: necessarily call them private equity, but they're kind of successful

272
00:13:34,600 --> 00:13:37,880
Speaker 1: individuals or partnerships have raised a small amount of money

273
00:13:37,880 --> 00:13:40,400
Speaker 1: to buy a business as well. Particularly in the US,

274
00:13:40,400 --> 00:13:43,000
Speaker 1: that's a very active demographic of buyer.

275
00:13:43,559 --> 00:13:47,000
Speaker 3: Okay, So looking forward to twenty twenty four, are there

276
00:13:47,000 --> 00:13:50,760
Speaker 3: any particular sectors that you deal with that look better

277
00:13:50,920 --> 00:13:54,440
Speaker 3: than others? Where is the deal activity in terms of that.

278
00:13:55,000 --> 00:13:56,800
Speaker 1: So I think that the big trend at the moment

279
00:13:56,920 --> 00:13:59,800
Speaker 1: is anything related to AI. And I think the interesting

280
00:13:59,800 --> 00:14:04,040
Speaker 1: thing about AI is, even if you don't necessarily understand it,

281
00:14:04,120 --> 00:14:06,600
Speaker 1: every single business out there has a way they can

282
00:14:07,080 --> 00:14:10,920
Speaker 1: improve with the use of AI. Lots of other kind

283
00:14:10,920 --> 00:14:12,960
Speaker 1: of sub industries that have come up over the years

284
00:14:13,360 --> 00:14:17,160
Speaker 1: have not necessarily had that kind of ability to be

285
00:14:17,160 --> 00:14:21,120
Speaker 1: applied in literally every business. So lots of companies we're

286
00:14:21,160 --> 00:14:23,680
Speaker 1: working with or acquiers that come to us and say, hey,

287
00:14:23,680 --> 00:14:26,720
Speaker 1: we're looking to buy a business interest in AI, either

288
00:14:26,760 --> 00:14:29,120
Speaker 1: to augment what they already have, so maybe they can

289
00:14:29,120 --> 00:14:30,960
Speaker 1: add some tools or even like a team to their

290
00:14:30,960 --> 00:14:35,560
Speaker 1: existing kind of business or whatever they might have, so

291
00:14:35,600 --> 00:14:38,960
Speaker 1: you can augment that by adding AI, or maybe if

292
00:14:39,000 --> 00:14:42,680
Speaker 1: you're building a business in the AI space, it's a

293
00:14:42,720 --> 00:14:45,280
Speaker 1: great time to sell because it's such a hot market.

294
00:14:45,400 --> 00:14:48,360
Speaker 1: So at the moment, we have a nine figure transaction

295
00:14:48,440 --> 00:14:52,280
Speaker 1: we're representing. They've built the business in three years to

296
00:14:52,360 --> 00:14:57,160
Speaker 1: over twenty million in revenue, no outside funding, currently actively

297
00:14:57,200 --> 00:15:01,680
Speaker 1: looking for a buyer, and it's so far extremely interesting

298
00:15:01,720 --> 00:15:04,280
Speaker 1: with buyers just because of the amount of kind of

299
00:15:04,360 --> 00:15:05,440
Speaker 1: AI focus it has.

300
00:15:05,920 --> 00:15:07,960
Speaker 5: Last one here a few of Thomas, And we've been

301
00:15:08,000 --> 00:15:10,040
Speaker 5: talking a bit about earlier in the show about the

302
00:15:10,080 --> 00:15:13,360
Speaker 5: regulatory outlook for M and A, especially with the Jeb

303
00:15:13,360 --> 00:15:16,440
Speaker 5: Blue and Spirit deal that didn't come through. So tell

304
00:15:16,520 --> 00:15:19,040
Speaker 5: us a little bit about that from your perspective, and

305
00:15:19,480 --> 00:15:21,840
Speaker 5: especially if we're heading into an election year and maybe

306
00:15:21,840 --> 00:15:23,400
Speaker 5: that administration could change.

307
00:15:23,680 --> 00:15:27,440
Speaker 1: Yeah, So I think buyers are always aware of political changes,

308
00:15:27,480 --> 00:15:30,520
Speaker 1: and that's not just necessarily in the US. That's geopolitically.

309
00:15:30,520 --> 00:15:35,600
Speaker 1: There's things all over the world that could affect effect deals.

310
00:15:35,640 --> 00:15:38,800
Speaker 1: So from that perspective, buyers will always be thinking about it.

311
00:15:38,880 --> 00:15:41,560
Speaker 1: Regulatory risk is very much specific to the industry you

312
00:15:41,640 --> 00:15:44,640
Speaker 1: might be working within. So recently we worked on a

313
00:15:44,640 --> 00:15:48,720
Speaker 1: business in the CBD space, which we successfully sold, but

314
00:15:49,160 --> 00:15:53,080
Speaker 1: there's constant regulatory changes with CBD. So if you're an

315
00:15:53,120 --> 00:15:56,800
Speaker 1: acquirer looking to buy businesses in that space, either you're

316
00:15:56,800 --> 00:16:00,640
Speaker 1: going to be extremely confident and knowledgeable of that industry,

317
00:16:01,120 --> 00:16:02,680
Speaker 1: or you're going to do a lot of extra research

318
00:16:02,680 --> 00:16:06,680
Speaker 1: into what might necessarily change or what could potentially change

319
00:16:06,680 --> 00:16:09,280
Speaker 1: in future, or maybe you'll even risk adjust your offer

320
00:16:09,320 --> 00:16:12,080
Speaker 1: and say, well, there's regulatory risk in this market, we're

321
00:16:12,120 --> 00:16:13,720
Speaker 1: going to pay less for that business.

322
00:16:14,120 --> 00:16:16,800
Speaker 3: Thomas A pleasure and thanks for stopping by in the

323
00:16:16,920 --> 00:16:20,640
Speaker 3: in studio guest A gold star for Thomas Smoe, CEO

324
00:16:20,840 --> 00:16:23,560
Speaker 3: of FI International Advising on.

325
00:16:24,080 --> 00:16:24,440
Speaker 7: M and A.

326
00:16:25,400 --> 00:16:29,040
Speaker 6: You're listening to the tape Cansur live program Bloomberg Markets

327
00:16:29,080 --> 00:16:32,480
Speaker 6: weekdays at ten am Eastern on Bloomberg Radio, the tune

328
00:16:32,520 --> 00:16:34,280
Speaker 6: in app, Bloomberg dot Com.

329
00:16:34,040 --> 00:16:35,480
Speaker 7: And the Bloomberg Business App.

330
00:16:35,520 --> 00:16:38,320
Speaker 6: You can also listen live on Amazon Alexa from our

331
00:16:38,360 --> 00:16:42,720
Speaker 6: flagship New York station, Just Say Alexa play Bloomberg eleven.

332
00:16:42,440 --> 00:16:47,440
Speaker 3: Thirty Joining us now Robert Stein, Managing director partner at

333
00:16:47,600 --> 00:16:51,760
Speaker 3: Blankie Shine Wealth Management. How does an investor play this?

334
00:16:52,800 --> 00:16:57,280
Speaker 3: Back and forth? Fed going to cut March Now it's later,

335
00:16:57,880 --> 00:17:01,360
Speaker 3: fewer cuts maybe what how do you view all this?

336
00:17:02,800 --> 00:17:05,320
Speaker 8: Well, good morning, John and Molly, And I think if

337
00:17:05,359 --> 00:17:07,040
Speaker 8: we go back a month ago, when I was in

338
00:17:07,080 --> 00:17:11,080
Speaker 8: the Bloomberg Radio studios, I did say that, you know,

339
00:17:11,280 --> 00:17:15,760
Speaker 8: the markets were anticipating and asking for in twenty twenty

340
00:17:15,800 --> 00:17:19,480
Speaker 8: four a rate cut. In fact, obviously you saw equity markets,

341
00:17:19,520 --> 00:17:23,439
Speaker 8: risk assets price that in super aggressively. We were in

342
00:17:23,440 --> 00:17:25,720
Speaker 8: the camp of as I said then, and I still

343
00:17:25,720 --> 00:17:28,520
Speaker 8: believe that it's going to be higher for longer, and

344
00:17:28,560 --> 00:17:30,920
Speaker 8: the federers are going to have to walk that tightrope

345
00:17:30,960 --> 00:17:33,760
Speaker 8: simply because if you look at the sort of trajectory

346
00:17:33,760 --> 00:17:37,760
Speaker 8: of inflation through history, you get two humps of inflation,

347
00:17:37,880 --> 00:17:41,040
Speaker 8: and the FED can't pull down sort of the interest

348
00:17:41,119 --> 00:17:44,600
Speaker 8: rate to re ignite some of the inflationary pressures. They

349
00:17:44,600 --> 00:17:48,200
Speaker 8: have to ensure that inflation is anchored before they go ahead.

350
00:17:48,200 --> 00:17:50,760
Speaker 8: I mean about seventy eight percent of the time historically speaking,

351
00:17:50,920 --> 00:17:53,879
Speaker 8: inflation comes in two waves. So you know what the

352
00:17:53,920 --> 00:17:56,840
Speaker 8: FED basically is done now is that for twenty twenty four,

353
00:17:56,960 --> 00:17:59,280
Speaker 8: it's not a no on rate hikes. It's no for

354
00:17:59,359 --> 00:17:59,879
Speaker 8: right now.

355
00:18:00,440 --> 00:18:04,080
Speaker 5: How much do you think of the disinflation we've seen

356
00:18:04,119 --> 00:18:06,200
Speaker 5: that the FED can really take credit for. This is

357
00:18:06,240 --> 00:18:08,240
Speaker 5: something I've been wondering and I feel like so much

358
00:18:08,280 --> 00:18:11,320
Speaker 5: of it has just been like the supply side normalizing,

359
00:18:11,400 --> 00:18:14,600
Speaker 5: you know, since from those big COVID disruptions and a

360
00:18:14,600 --> 00:18:17,000
Speaker 5: lot of those supply chains getting back in order. Do

361
00:18:17,040 --> 00:18:19,480
Speaker 5: you really think, though, Rob, that these at the FED

362
00:18:19,520 --> 00:18:21,280
Speaker 5: can take credit for a lot of what we've seen.

363
00:18:22,560 --> 00:18:25,960
Speaker 8: Yeah, I think we've been We're in a territory including

364
00:18:25,960 --> 00:18:28,560
Speaker 8: the FED, that no one has ever seen before. So

365
00:18:29,040 --> 00:18:31,760
Speaker 8: you know, retail is working through that, services are working

366
00:18:31,800 --> 00:18:34,800
Speaker 8: through that, Federal reserve, businesses are working through that. You know,

367
00:18:34,880 --> 00:18:37,840
Speaker 8: one thing's good is this supply chain got tighter and

368
00:18:37,880 --> 00:18:40,480
Speaker 8: then I got sort of a lot more efficient, if

369
00:18:40,480 --> 00:18:42,879
Speaker 8: you will, And I think a lot of businesses became

370
00:18:42,920 --> 00:18:45,199
Speaker 8: a lot more efficient even moving forward. So that's going

371
00:18:45,280 --> 00:18:47,720
Speaker 8: to be leading to greater profitability for a lot of

372
00:18:47,760 --> 00:18:50,280
Speaker 8: businesses that learn through COVID. But if you look at

373
00:18:50,280 --> 00:18:52,840
Speaker 8: the shift in consumption, and two thirds of the economy

374
00:18:53,000 --> 00:18:57,600
Speaker 8: is consumption, it's basically the services sector that's still seeing

375
00:18:57,640 --> 00:19:00,280
Speaker 8: that spike up. Look at airline prices, look at all

376
00:19:00,280 --> 00:19:03,640
Speaker 8: the inflationary prices where people are like shifting their spending.

377
00:19:03,880 --> 00:19:07,040
Speaker 8: We just got retail sales goods. You know, American consumer

378
00:19:07,080 --> 00:19:09,160
Speaker 8: will always find a way, whether it's the credit card

379
00:19:09,240 --> 00:19:11,960
Speaker 8: or whether it's the savings that they had saved up to.

380
00:19:12,240 --> 00:19:15,080
Speaker 8: You know, make certain that Christmas is still Christmas at home.

381
00:19:15,480 --> 00:19:17,320
Speaker 8: But it's going to take some time to see we're

382
00:19:17,359 --> 00:19:19,679
Speaker 8: going to see a lot more pressure build on the consumer.

383
00:19:19,920 --> 00:19:22,359
Speaker 8: But the shift in spending is quite clear. It's still

384
00:19:22,400 --> 00:19:23,760
Speaker 8: services for this year.

385
00:19:24,359 --> 00:19:27,720
Speaker 3: Okay, we can definitely say there is something of a

386
00:19:27,800 --> 00:19:30,680
Speaker 3: pivot the degree to which you can argue about and

387
00:19:30,920 --> 00:19:35,560
Speaker 3: we're definitely headed towards that two percent, although with maybe

388
00:19:35,600 --> 00:19:40,280
Speaker 3: fits and starts, so a disinflationary environment or outright deflation

389
00:19:40,400 --> 00:19:43,560
Speaker 3: in some sectors. I asked this of all our equity guests,

390
00:19:43,800 --> 00:19:47,200
Speaker 3: what does that mean for earnings, especially the top line

391
00:19:47,280 --> 00:19:48,360
Speaker 3: sales growth.

392
00:19:49,840 --> 00:19:50,280
Speaker 7: Earnings?

393
00:19:50,280 --> 00:19:53,000
Speaker 8: If you look at you know again, that's going to

394
00:19:53,040 --> 00:19:55,080
Speaker 8: be at the forefront. We just had the two biggest

395
00:19:55,080 --> 00:19:58,240
Speaker 8: points you know, a year to date. As it relates

396
00:19:58,240 --> 00:20:01,920
Speaker 8: to CPI information as well as market it's not exactly

397
00:20:01,960 --> 00:20:03,880
Speaker 8: going in the right direction in terms of as much

398
00:20:04,000 --> 00:20:07,320
Speaker 8: movement as the FED needs to see, but the earnings

399
00:20:07,359 --> 00:20:10,080
Speaker 8: is on the forefront. And corporations. If you look at

400
00:20:10,119 --> 00:20:13,840
Speaker 8: tech two years ago, tech literally started laying off in

401
00:20:13,880 --> 00:20:17,160
Speaker 8: anticipation of a recession. We're looking at banks right now.

402
00:20:17,400 --> 00:20:19,480
Speaker 8: At the end of last year they started laying off.

403
00:20:19,880 --> 00:20:24,200
Speaker 8: So it's basically a rolling sector recession. You know, pick

404
00:20:24,240 --> 00:20:26,840
Speaker 8: your company, but a lot of companies are basically being

405
00:20:26,840 --> 00:20:31,200
Speaker 8: a lot more conservative now that job's number is basically

406
00:20:31,240 --> 00:20:33,040
Speaker 8: the you know, not going in the direction that the

407
00:20:33,080 --> 00:20:36,040
Speaker 8: FED needs it as quickly as as at least the

408
00:20:36,040 --> 00:20:36,840
Speaker 8: markets would like it.

409
00:20:37,000 --> 00:20:39,119
Speaker 7: So interest rates could come down quicker.

410
00:20:39,359 --> 00:20:43,240
Speaker 5: So a rolling sector recession, does that mean we're in

411
00:20:43,280 --> 00:20:47,560
Speaker 5: some an actual economic recession or heading toward one.

412
00:20:48,119 --> 00:20:51,320
Speaker 8: I don't know if that'll actually transpire. If you look

413
00:20:51,320 --> 00:20:55,280
Speaker 8: at the last two years, different sectors have had recessions

414
00:20:55,320 --> 00:20:57,760
Speaker 8: at different times. That's why I think this time is

415
00:20:57,800 --> 00:21:01,640
Speaker 8: different from a quote unquote recession standpoint. I know we've

416
00:21:01,640 --> 00:21:03,639
Speaker 8: been waiting for about a year and a half holding

417
00:21:03,640 --> 00:21:06,439
Speaker 8: our breath for the official data to come out. But

418
00:21:06,480 --> 00:21:09,280
Speaker 8: if you look at the different sectors and the performance

419
00:21:09,280 --> 00:21:13,280
Speaker 8: of the different sectors, outperformance in some and underperformance in others,

420
00:21:13,800 --> 00:21:16,040
Speaker 8: I think sectors, that's where you have to sort of

421
00:21:16,080 --> 00:21:20,080
Speaker 8: be tactical in your performance of your acid allocation. As

422
00:21:20,119 --> 00:21:22,800
Speaker 8: you look into the market for twenty twenty four, the

423
00:21:22,920 --> 00:21:25,360
Speaker 8: sectors that perform the best on a relative basis, let's

424
00:21:25,359 --> 00:21:27,800
Speaker 8: say technology are still going to perform well this year,

425
00:21:28,040 --> 00:21:31,480
Speaker 8: but relatively other sectors will sort of come back, let's

426
00:21:31,480 --> 00:21:35,119
Speaker 8: call it healthcare, energy. I think those are times to

427
00:21:35,160 --> 00:21:38,040
Speaker 8: start looking at overwaiting those sectors for twenty twenty four.

428
00:21:38,240 --> 00:21:41,000
Speaker 3: Okay, so I put all that into the blender, turn

429
00:21:41,080 --> 00:21:43,360
Speaker 3: it on high. What do I come up with? Where

430
00:21:43,400 --> 00:21:45,080
Speaker 3: do where am I going to put my money.

431
00:21:46,320 --> 00:21:49,120
Speaker 8: Again, the sixty forty sort of acid allocation is where

432
00:21:49,119 --> 00:21:52,560
Speaker 8: we're at. We like about a ten percent allocation within

433
00:21:52,680 --> 00:21:56,600
Speaker 8: that forty within alternative investments. But I really like energy

434
00:21:56,640 --> 00:21:59,600
Speaker 8: for the first six months. I think obviously the geopolitical

435
00:21:59,600 --> 00:22:03,399
Speaker 8: tensions that we're seeing earnings growth in that sector alone

436
00:22:03,440 --> 00:22:05,840
Speaker 8: as up forty percent in the last four years. And

437
00:22:05,880 --> 00:22:08,440
Speaker 8: then you also have buybacks. I mean, their dividend rich

438
00:22:08,560 --> 00:22:11,719
Speaker 8: right now, and so where they're gonna basically have that

439
00:22:11,760 --> 00:22:14,639
Speaker 8: free cash flow is how they're going to allocate that.

440
00:22:15,040 --> 00:22:17,000
Speaker 8: And we believe there's a lot of value there plus

441
00:22:17,040 --> 00:22:18,600
Speaker 8: a lot of m and a activity that we saw

442
00:22:18,840 --> 00:22:20,280
Speaker 8: is going to be a creative So we like the

443
00:22:20,400 --> 00:22:24,600
Speaker 8: energy sector moving forward. And then healthcare. Healthcare again just

444
00:22:24,800 --> 00:22:28,120
Speaker 8: like energy is going to prevent a present a lot

445
00:22:28,160 --> 00:22:30,919
Speaker 8: of value plus dividends you get paid while you eight.

446
00:22:31,560 --> 00:22:33,840
Speaker 5: So Robert, just on our last thirty seconds or so,

447
00:22:33,960 --> 00:22:36,439
Speaker 5: here just have to confirm you you're coming to us

448
00:22:36,480 --> 00:22:40,960
Speaker 5: from Palm Desert, California today? Is that right? Okay?

449
00:22:41,320 --> 00:22:43,520
Speaker 3: Tell me is that the t is that a TV

450
00:22:43,680 --> 00:22:47,439
Speaker 3: screen or your window in the background, to be honest,

451
00:22:48,320 --> 00:22:48,840
Speaker 3: but if you.

452
00:22:48,840 --> 00:22:51,560
Speaker 8: Look right through us We've got basically a Palm Desert

453
00:22:51,600 --> 00:22:54,600
Speaker 8: chamber of commerce. You know, snow cap mountains out here.

454
00:22:54,800 --> 00:22:56,400
Speaker 8: It's seventy degrees, so come on out.

455
00:22:56,680 --> 00:22:59,200
Speaker 5: And also nearby is a beautiful tennis center, which I

456
00:22:59,240 --> 00:23:01,080
Speaker 5: got to ask, are you going to be at Indian

457
00:23:01,160 --> 00:23:01,960
Speaker 5: Wells in March.

458
00:23:02,720 --> 00:23:07,720
Speaker 8: We love the Indian Wells tennis event. It's the first

459
00:23:07,720 --> 00:23:10,400
Speaker 8: class event, and it's international and it's growing every year,

460
00:23:10,480 --> 00:23:11,960
Speaker 8: so it's a perfect time to hear.

461
00:23:12,880 --> 00:23:14,639
Speaker 5: Yeah, that's big on my list for next year. This

462
00:23:14,760 --> 00:23:16,080
Speaker 5: year going to Miami Open.

463
00:23:16,160 --> 00:23:17,199
Speaker 3: Now back to tennis for you.

464
00:23:17,440 --> 00:23:19,639
Speaker 5: It has to We haven't even talked about the Australian

465
00:23:19,680 --> 00:23:22,600
Speaker 5: Open yet. It's really just a huge oversight on our part.

466
00:23:22,640 --> 00:23:24,920
Speaker 5: We will be getting that to you everyone. Don't worry, Bob.

467
00:23:24,960 --> 00:23:27,320
Speaker 3: Thanks a lot. I appreciate it. Robert Scheine, Managing director

468
00:23:27,320 --> 00:23:30,320
Speaker 3: and partner at Blankie Shine Wealth Management.

469
00:23:30,560 --> 00:23:33,680
Speaker 6: You're listening to the tape Cat's are live program Bloomberg

470
00:23:33,760 --> 00:23:37,359
Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the

471
00:23:37,400 --> 00:23:39,360
Speaker 6: tune in app, Bloomberg dot Com, and.

472
00:23:39,359 --> 00:23:40,640
Speaker 7: The Bloomberg Business App.

473
00:23:40,680 --> 00:23:43,520
Speaker 6: You can also listen live on Amazon Alexa from our

474
00:23:43,520 --> 00:23:48,520
Speaker 6: flagship New York station. Just say Alexa playing Bloomberg eleven thirty.

475
00:23:49,520 --> 00:23:52,240
Speaker 3: Goldman Sachs recently raised six hundred and fifty million dollars

476
00:23:52,240 --> 00:23:55,919
Speaker 3: for investing in life sciences startups. Is this an area

477
00:23:56,000 --> 00:23:59,840
Speaker 3: for you? Let's say asker next Kuss Zoe penn in

478
00:23:59,840 --> 00:24:04,000
Speaker 3: the partner at Lenanda Impact Ventures. She's joining us from

479
00:24:04,359 --> 00:24:06,679
Speaker 3: all these guests in locations like I want to be

480
00:24:06,920 --> 00:24:10,080
Speaker 3: Harry True you go to Antarctica then? And where do

481
00:24:10,160 --> 00:24:11,160
Speaker 3: you then? Mexico.

482
00:24:11,440 --> 00:24:14,639
Speaker 5: I'm telling you the bachelorette parties are killer. But Zoe

483
00:24:14,680 --> 00:24:16,439
Speaker 5: Patten joined us from Spain today.

484
00:24:17,280 --> 00:24:18,120
Speaker 3: Nice when us.

485
00:24:18,040 --> 00:24:19,440
Speaker 5: Star day, Zoey, what's up?

486
00:24:20,680 --> 00:24:23,119
Speaker 9: I'm doing well here? Thank you very warm.

487
00:24:23,560 --> 00:24:27,240
Speaker 3: So let's ask you on the on the risk spectrum,

488
00:24:27,240 --> 00:24:31,399
Speaker 3: where do startups in health, nature and biotech? Where do

489
00:24:31,480 --> 00:24:32,320
Speaker 3: they lie.

490
00:24:34,359 --> 00:24:37,520
Speaker 9: Risk? So when a Hernanda we invest in very early

491
00:24:37,560 --> 00:24:43,160
Speaker 9: stage impact ventures across all those areas, and it is

492
00:24:43,280 --> 00:24:45,320
Speaker 9: it is we are very early stage. So it is

493
00:24:45,400 --> 00:24:47,399
Speaker 9: high risk. I mean that's bench capital for you.

494
00:24:48,640 --> 00:24:49,320
Speaker 5: How much is it?

495
00:24:50,440 --> 00:24:53,320
Speaker 3: But high reward If if you get a home run

496
00:24:53,440 --> 00:24:56,159
Speaker 3: up one of these, how many home runs do you get? Typically?

497
00:24:58,040 --> 00:25:01,840
Speaker 9: So in VC, you're looking in a portfolio of twenty

498
00:25:01,840 --> 00:25:06,720
Speaker 9: five to thirty maybe two max. But that's the name

499
00:25:06,760 --> 00:25:09,240
Speaker 9: of the game, and everybody who works in this industry

500
00:25:09,320 --> 00:25:10,080
Speaker 9: knows that the.

501
00:25:10,119 --> 00:25:13,959
Speaker 5: Past the numbers game. Yes, that's right. Well, I mean

502
00:25:14,040 --> 00:25:15,800
Speaker 5: tell us about some of the home runs you've had

503
00:25:15,840 --> 00:25:18,000
Speaker 5: and like to what extent you can tell us about them.

504
00:25:20,200 --> 00:25:23,000
Speaker 9: So some of the areas that we've investing in. In

505
00:25:23,080 --> 00:25:25,600
Speaker 9: terms of the life sciences that you were asking about,

506
00:25:25,680 --> 00:25:29,160
Speaker 9: We've got a company called Closed Loop Medicine, and this

507
00:25:29,200 --> 00:25:32,960
Speaker 9: one deals with dosage. So when you take a pill,

508
00:25:33,400 --> 00:25:36,960
Speaker 9: everybody's taking the same dosage, get an adult dosage and

509
00:25:37,000 --> 00:25:39,320
Speaker 9: a child dosage. But we're not all made of the

510
00:25:39,359 --> 00:25:42,800
Speaker 9: same things. Our biology is very unique to each of

511
00:25:42,840 --> 00:25:45,240
Speaker 9: us and as a result, many of us get side effects.

512
00:25:45,640 --> 00:25:48,359
Speaker 9: And you know, if you go back to how drugs

513
00:25:48,359 --> 00:25:50,960
Speaker 9: are designed back in the seventies and eighties, there were

514
00:25:50,960 --> 00:25:54,000
Speaker 9: not many women involved in those clinical trials, so many

515
00:25:54,040 --> 00:25:58,280
Speaker 9: of the drugs that we take have much more exaggerated

516
00:25:58,400 --> 00:26:02,080
Speaker 9: impact on female bodies too. So Closely Medicine works with

517
00:26:02,119 --> 00:26:07,359
Speaker 9: pharmaceutical companies to do personalized digital dosage, so that's using

518
00:26:07,520 --> 00:26:10,840
Speaker 9: artificial intelligence and tracking lots of data. So that's that's

519
00:26:10,880 --> 00:26:14,920
Speaker 9: one of the ones. And then another one called resistant Map.

520
00:26:15,080 --> 00:26:17,399
Speaker 9: It's a very recent investment that we've done so very

521
00:26:17,520 --> 00:26:21,240
Speaker 9: very early. But you know, with the recent pandemic, everybody's

522
00:26:21,280 --> 00:26:25,480
Speaker 9: become much more aware of beneath for biosecurity and how

523
00:26:25,640 --> 00:26:29,920
Speaker 9: pathogens can be used as a weapon. You know, quite

524
00:26:29,960 --> 00:26:33,720
Speaker 9: worrying really, And one of the next pandemic that nobody

525
00:26:33,800 --> 00:26:38,200
Speaker 9: really talks about is antibiotic resistance. So what resistant map

526
00:26:38,200 --> 00:26:40,960
Speaker 9: does is it's able to map all the different strains

527
00:26:41,080 --> 00:26:44,720
Speaker 9: and say where all over the world where you've got

528
00:26:45,000 --> 00:26:48,040
Speaker 9: the worst antibiotic resistance. To make people aware of this.

529
00:26:48,640 --> 00:26:51,639
Speaker 3: Yeah, we you know, especially with my kids, it's like

530
00:26:51,720 --> 00:26:54,119
Speaker 3: every time they went to the doctors, they get a

531
00:26:54,160 --> 00:26:57,240
Speaker 3: Marxist cylind or some antibiotic and you had to start

532
00:26:57,280 --> 00:27:01,960
Speaker 3: wondering about like the resistance levels and what the ultimate

533
00:27:02,080 --> 00:27:05,640
Speaker 3: result of that is. Hey, as an average joke, can

534
00:27:05,680 --> 00:27:06,960
Speaker 3: I get in on the ground floor?

535
00:27:08,760 --> 00:27:11,680
Speaker 9: Can you get in the ground floor in impact investing

536
00:27:11,800 --> 00:27:12,639
Speaker 9: or life science?

537
00:27:12,680 --> 00:27:14,840
Speaker 3: Well, any of the companies that you're talking about.

538
00:27:15,040 --> 00:27:15,640
Speaker 7: This is like.

539
00:27:17,440 --> 00:27:19,320
Speaker 3: I want to get rich too, incredible.

540
00:27:19,720 --> 00:27:22,480
Speaker 9: Yeah, I'm sure, I'm sure, I think we all but no,

541
00:27:22,560 --> 00:27:25,000
Speaker 9: it's important not just getting rich. It's about having impact

542
00:27:25,000 --> 00:27:28,119
Speaker 9: as well, and making things at a better place, better

543
00:27:28,160 --> 00:27:32,920
Speaker 9: healthcare for everybody, more accessible, and yeah, better lives for everyone.

544
00:27:33,400 --> 00:27:35,399
Speaker 9: That's what impact investing is all about.

545
00:27:35,720 --> 00:27:37,400
Speaker 5: I've got to think that there's got to be some

546
00:27:37,520 --> 00:27:40,240
Speaker 5: kind of AI application here, So tell us a little

547
00:27:40,240 --> 00:27:42,440
Speaker 5: bit how that's coming into your space, and if that's

548
00:27:42,480 --> 00:27:42,800
Speaker 5: all the.

549
00:27:43,280 --> 00:27:47,000
Speaker 3: Intersection of AI and life sciences, et cetera.

550
00:27:47,280 --> 00:27:50,240
Speaker 5: I don't know that SEMs right got my attention. All right, Well,

551
00:27:50,440 --> 00:27:52,199
Speaker 5: all right, well John wants to know about it, So

552
00:27:52,240 --> 00:27:53,800
Speaker 5: tell John what's going on there?

553
00:27:54,920 --> 00:27:57,800
Speaker 9: Okay? So, I mean, we've just seen this money all

554
00:27:57,840 --> 00:28:00,720
Speaker 9: going into from gold and Sacks, and I must say

555
00:28:00,720 --> 00:28:02,360
Speaker 9: it's not the only big fund that they've got. They've

556
00:28:02,359 --> 00:28:05,200
Speaker 9: also got a climate fund as well. So Goldman Sachs

557
00:28:05,200 --> 00:28:08,480
Speaker 9: are making some interesting moves just generally and not just

558
00:28:08,560 --> 00:28:12,080
Speaker 9: in the life sciences. But we've seen lots of people

559
00:28:12,080 --> 00:28:15,320
Speaker 9: go into the life sciences twenty years ago similarly as

560
00:28:15,320 --> 00:28:18,320
Speaker 9: they did with clean tech, and get quite bruised. So

561
00:28:18,640 --> 00:28:22,040
Speaker 9: the question is why are we seeing this again? So yeah,

562
00:28:22,080 --> 00:28:25,640
Speaker 9: that's where the AI comes in, making it cheaper quicker

563
00:28:25,760 --> 00:28:30,119
Speaker 9: to build models using existing data and synthetic data. And

564
00:28:30,160 --> 00:28:32,959
Speaker 9: then your previous person that you had in the studio

565
00:28:33,119 --> 00:28:37,640
Speaker 9: talking about compute power too, So in relevance to life sciences,

566
00:28:37,760 --> 00:28:40,520
Speaker 9: you've got the ability to build new biological and chemical

567
00:28:40,680 --> 00:28:44,480
Speaker 9: models as well having this extra compute power. But what's

568
00:28:44,520 --> 00:28:47,040
Speaker 9: also interesting, and I think this is where Goldman Sachs

569
00:28:47,360 --> 00:28:50,320
Speaker 9: are picking up, is as market forces as well. We're

570
00:28:50,320 --> 00:28:54,480
Speaker 9: seeing this trickle down effect and from the big tech players,

571
00:28:54,480 --> 00:28:58,240
Speaker 9: there's Magnificent seven that we're calling them now investing heavily

572
00:28:58,280 --> 00:29:01,480
Speaker 9: into this space. So you've got six out of those

573
00:29:01,560 --> 00:29:06,320
Speaker 9: seven from the Minnixent seven investing in healthcare and AI

574
00:29:06,440 --> 00:29:10,240
Speaker 9: and life sciences. Just to give you one example which

575
00:29:10,280 --> 00:29:13,320
Speaker 9: I'm sure people are hearing about on the news, so Google,

576
00:29:13,440 --> 00:29:17,800
Speaker 9: Google D nine spinout isomorphic Labs, so they're reducing the

577
00:29:17,880 --> 00:29:22,840
Speaker 9: time for drug discovery, fining two large deals worth nearly

578
00:29:22,960 --> 00:29:27,080
Speaker 9: three billion dollars with Eli Lilly and the artists. So

579
00:29:27,200 --> 00:29:31,640
Speaker 9: that's really interesting. Revenue apparently coming in quite early on,

580
00:29:31,640 --> 00:29:35,040
Speaker 9: which we didn't see with that first trend twenty years ago.

581
00:29:35,080 --> 00:29:38,680
Speaker 9: In the early two thousands, they were mostly developing single assets,

582
00:29:38,960 --> 00:29:42,680
Speaker 9: single drugs. So if it doesn't work out, you spend

583
00:29:42,680 --> 00:29:45,360
Speaker 9: an awful lot of money at the beginning stage to

584
00:29:45,440 --> 00:29:47,840
Speaker 9: then lose a lot, so extremely high risk. So what

585
00:29:47,880 --> 00:29:51,520
Speaker 9: we're seeing is we're reducing that risk by being able

586
00:29:51,040 --> 00:29:56,800
Speaker 9: to discover more potential drugs using artificial intelligence, increase data,

587
00:29:56,880 --> 00:29:59,760
Speaker 9: to reduce the risk at every single stage of a

588
00:29:59,760 --> 00:30:02,680
Speaker 9: life science business. And I think that's why you're seeing

589
00:30:02,720 --> 00:30:07,200
Speaker 9: now Goldman Sachs and many other people forging back into

590
00:30:07,480 --> 00:30:11,440
Speaker 9: life sciences, which is a very very impactful area. So

591
00:30:11,480 --> 00:30:13,160
Speaker 9: the more money that goes into this and the more

592
00:30:13,240 --> 00:30:16,160
Speaker 9: chances we have success, this is a very good thing

593
00:30:16,240 --> 00:30:16,920
Speaker 9: for everyone.

594
00:30:17,520 --> 00:30:20,640
Speaker 3: Zoe, Do these companies come to you or do you

595
00:30:21,080 --> 00:30:23,720
Speaker 3: go scout these companies out? How does that work?

596
00:30:24,720 --> 00:30:29,080
Speaker 9: Oh, it's always a bit of both. Actually, what we

597
00:30:29,280 --> 00:30:32,640
Speaker 9: like to do with Hernandez we have certain megatrends that

598
00:30:32,680 --> 00:30:35,360
Speaker 9: we go for, So we've got certain fields and different

599
00:30:35,360 --> 00:30:38,240
Speaker 9: areas of impact that we feel are the hot areas

600
00:30:38,240 --> 00:30:40,680
Speaker 9: over the next five to ten years. And for instance,

601
00:30:40,720 --> 00:30:43,600
Speaker 9: we've started to focus a lot of time now into

602
00:30:43,640 --> 00:30:47,080
Speaker 9: tech bio companies. So this is does come under life

603
00:30:47,120 --> 00:30:50,200
Speaker 9: sciences in its one particular area, which is more about

604
00:30:50,320 --> 00:30:57,200
Speaker 9: computational biology, so using AI with biology so that it's

605
00:30:57,440 --> 00:31:01,280
Speaker 9: the less capital intensive end of the life science is

606
00:31:01,360 --> 00:31:04,600
Speaker 9: just let's say that, and that's where we're expanding our field,

607
00:31:04,640 --> 00:31:07,960
Speaker 9: and we will often go out and look to the universities,

608
00:31:08,320 --> 00:31:10,880
Speaker 9: work with the angel investors who have a background in

609
00:31:10,920 --> 00:31:14,440
Speaker 9: this area, and go out and find as much as

610
00:31:14,480 --> 00:31:16,480
Speaker 9: we do they come to us. So it's a pretty

611
00:31:16,520 --> 00:31:18,320
Speaker 9: much a half and half sourcing strategy.

612
00:31:18,680 --> 00:31:20,760
Speaker 5: So, Zoe, you started out by telling us that, you know,

613
00:31:20,840 --> 00:31:23,720
Speaker 5: for every twenty five or so strikes, maybe two or

614
00:31:23,720 --> 00:31:26,280
Speaker 5: three of them hit. So it's obviously a lot of

615
00:31:26,320 --> 00:31:27,760
Speaker 5: them that don't work out. I know, we don't like

616
00:31:27,800 --> 00:31:30,479
Speaker 5: to harp on our you know, misfortunes, but can you

617
00:31:30,520 --> 00:31:33,160
Speaker 5: tell us about maybe some of these that haven't worked

618
00:31:33,160 --> 00:31:37,200
Speaker 5: out for you guys?

619
00:31:37,240 --> 00:31:41,920
Speaker 9: Difficult to name names right now, but what will tend

620
00:31:41,960 --> 00:31:46,760
Speaker 9: to happen is just it's kind of they've gone for

621
00:31:46,800 --> 00:31:49,800
Speaker 9: a single asset strategy. If you're talking about life sciences,

622
00:31:49,880 --> 00:31:52,640
Speaker 9: you spend a lot of money up front, and if

623
00:31:52,640 --> 00:31:55,320
Speaker 9: that one doesn't turn out to have the product market fits,

624
00:31:55,400 --> 00:31:57,880
Speaker 9: so people are not willing to pay at that point.

625
00:31:57,880 --> 00:31:59,520
Speaker 9: But you've had to spend a lot of money and

626
00:31:59,640 --> 00:32:01,760
Speaker 9: you run out of money. But it's as simple as

627
00:32:01,800 --> 00:32:04,480
Speaker 9: that with the life sciences. So that's why many of

628
00:32:04,520 --> 00:32:07,760
Speaker 9: them haven't worked out in the past. But like I

629
00:32:07,760 --> 00:32:10,160
Speaker 9: was saying, with everything that's happening now, you get more

630
00:32:10,160 --> 00:32:13,720
Speaker 9: bites at the cherry with artificial intelligence in these companies.

631
00:32:13,760 --> 00:32:16,720
Speaker 9: So it's reducing that risk and being able to spot

632
00:32:16,800 --> 00:32:19,680
Speaker 9: what's not going to make it. Just saying, you know,

633
00:32:19,920 --> 00:32:22,920
Speaker 9: time is the most precious thing for these entrepreneurs as

634
00:32:22,920 --> 00:32:25,960
Speaker 9: well as investors. If you're not going to work out,

635
00:32:26,160 --> 00:32:28,920
Speaker 9: let them go again. Let them build on the failures

636
00:32:28,920 --> 00:32:31,160
Speaker 9: of that one, because you know, all science is built

637
00:32:31,160 --> 00:32:33,400
Speaker 9: on the the you know, on the shoulders of many

638
00:32:33,440 --> 00:32:35,880
Speaker 9: of those that have gone before. Let them roll again

639
00:32:36,040 --> 00:32:40,920
Speaker 9: into another one. So failure is not the disaster as

640
00:32:41,000 --> 00:32:44,080
Speaker 9: many see it would be painted. It's just the next stage.

641
00:32:44,320 --> 00:32:46,320
Speaker 3: So we have pleasure to talk to you, appreciate you

642
00:32:46,400 --> 00:32:50,320
Speaker 3: start in buying. So we our partner ed Ata Impact Ventures,

643
00:32:50,360 --> 00:32:52,240
Speaker 3: joining us from some jealous Spain.

644
00:32:53,840 --> 00:32:57,720
Speaker 6: You're listening to the Team Cancer Live program Bloomberg Markets

645
00:32:57,760 --> 00:33:01,960
Speaker 6: weekdays at ten am Eastern on Bloomberg, the iHeartRadio app

646
00:33:02,000 --> 00:33:04,920
Speaker 6: and the Bloomberg Business app, or listen on demand wherever

647
00:33:04,960 --> 00:33:06,080
Speaker 6: you get your podcast.

648
00:33:08,360 --> 00:33:12,080
Speaker 3: Can I say jaw dropping data this morning on retail sales?

649
00:33:12,320 --> 00:33:12,520
Speaker 9: Yeah?

650
00:33:12,600 --> 00:33:12,920
Speaker 5: Why not?

651
00:33:13,360 --> 00:33:16,760
Speaker 3: I mean it was just like, way off expectations.

652
00:33:16,920 --> 00:33:19,960
Speaker 5: We look, the consumer, you know, loves to surprise. Isn't

653
00:33:19,960 --> 00:33:22,480
Speaker 5: that no recession? That's been the story, John.

654
00:33:22,400 --> 00:33:24,239
Speaker 3: Or I think, as I put it, the consumers not

655
00:33:24,280 --> 00:33:25,160
Speaker 3: falling off a cliff.

656
00:33:25,280 --> 00:33:27,719
Speaker 5: Yeah, that was your crystal ball this morning. You nailed it,

657
00:33:28,320 --> 00:33:30,120
Speaker 5: and I said we had to hold tight just to

658
00:33:30,160 --> 00:33:30,840
Speaker 5: make sure.

659
00:33:31,080 --> 00:33:34,080
Speaker 3: A US retail sales. As Molly wrote in the Bloomberg

660
00:33:34,160 --> 00:33:37,480
Speaker 3: story that you can read on top Go rising at

661
00:33:37,480 --> 00:33:40,080
Speaker 3: the strongest place in three months. In December, treasury yields

662
00:33:40,120 --> 00:33:44,000
Speaker 3: popped on the news. So how does this all gel

663
00:33:44,200 --> 00:33:46,960
Speaker 3: with the current investment climate? Let's put that to our

664
00:33:47,000 --> 00:33:51,760
Speaker 3: next guest, Geetu Sharma, founder and investment manager at Alpha's Future,

665
00:33:51,880 --> 00:33:55,400
Speaker 3: joining us from I'm going to guess the coldest place

666
00:33:55,440 --> 00:33:59,520
Speaker 3: on a planet Earth right now? Minneapolis? How bad is it.

667
00:34:01,360 --> 00:34:01,719
Speaker 9: Hi there?

668
00:34:01,840 --> 00:34:04,520
Speaker 10: Yeah, it's pretty cold here. I think with the wind

669
00:34:04,560 --> 00:34:06,280
Speaker 10: chills it's about minus twenty.

670
00:34:07,560 --> 00:34:08,720
Speaker 5: We're in Antarctica.

671
00:34:08,880 --> 00:34:11,799
Speaker 3: Molly's just back from Antarctica. She says, it's colder here

672
00:34:11,800 --> 00:34:13,040
Speaker 3: in New York than it.

673
00:34:13,080 --> 00:34:16,640
Speaker 5: Wasn't a serious Antarctica. It's summer right now. It's beautiful

674
00:34:16,680 --> 00:34:17,320
Speaker 5: down there.

675
00:34:17,320 --> 00:34:20,920
Speaker 3: All right, well, anyway, you know, every time I count

676
00:34:20,960 --> 00:34:24,759
Speaker 3: out the American consumer, I'm dead wrong. What do you

677
00:34:24,800 --> 00:34:27,840
Speaker 3: make of the data that we got today, and more importantly,

678
00:34:28,600 --> 00:34:31,680
Speaker 3: what does it imply for FED policy and just markets overall?

679
00:34:33,360 --> 00:34:36,240
Speaker 10: Yeah, I think like you were talking earlier, the consumer

680
00:34:36,280 --> 00:34:41,520
Speaker 10: remains very strong and is consuming, is willing to spend,

681
00:34:41,840 --> 00:34:45,239
Speaker 10: and we're not seeing any kind of slow down in

682
00:34:45,360 --> 00:34:50,200
Speaker 10: demand right now. Besides the strong retail sales data, we

683
00:34:50,320 --> 00:34:56,360
Speaker 10: also read about positive humban the sentiment, the mortgage demand

684
00:34:56,400 --> 00:35:00,680
Speaker 10: going up as well. And last week we saw unemployment

685
00:35:00,760 --> 00:35:03,520
Speaker 10: rate at about three point seven percent, which is you know,

686
00:35:03,600 --> 00:35:07,719
Speaker 10: one of the lowest or fifty sixty years. So we're

687
00:35:07,760 --> 00:35:13,719
Speaker 10: really not seeing any kind of shop significant slowdown that

688
00:35:13,840 --> 00:35:16,719
Speaker 10: would imply that a recession is coming. In fact, we're

689
00:35:16,719 --> 00:35:19,840
Speaker 10: seeing a consumer and an economy that continues to be

690
00:35:19,920 --> 00:35:23,760
Speaker 10: very strong, very resilient in the pace of high interest rates,

691
00:35:24,920 --> 00:35:28,080
Speaker 10: and you know, and inflation has come down, so that

692
00:35:28,239 --> 00:35:31,320
Speaker 10: of course is giving a positive post to the consumer

693
00:35:31,400 --> 00:35:31,920
Speaker 10: as well.

694
00:35:32,360 --> 00:35:34,560
Speaker 5: Of course, and you know you had mentioned in your

695
00:35:35,080 --> 00:35:37,440
Speaker 5: notes just just before the show gets you that the

696
00:35:37,520 --> 00:35:41,680
Speaker 5: outlook for disinflation remains uncertain, and obviously we did see

697
00:35:41,719 --> 00:35:44,880
Speaker 5: that CPI report. I believe that was last week. The

698
00:35:44,920 --> 00:35:47,279
Speaker 5: time is fine, but it was, as you said, you know,

699
00:35:47,320 --> 00:35:50,359
Speaker 5: it's a bit bumpy. So how are you parsing through

700
00:35:50,400 --> 00:35:53,360
Speaker 5: these different reports? And I'm really, you know, sticking to

701
00:35:53,440 --> 00:35:57,279
Speaker 5: your guns that inflation is on a firm downward trajectory.

702
00:35:58,920 --> 00:36:00,839
Speaker 10: I think it's at this point point of time, it's

703
00:36:00,960 --> 00:36:06,040
Speaker 10: really hard to say how far inflation will go down further.

704
00:36:06,160 --> 00:36:10,000
Speaker 10: We've seen some really sharp declines in twenty twenty three

705
00:36:10,480 --> 00:36:14,000
Speaker 10: and that has brought inflation down from nine person from

706
00:36:14,040 --> 00:36:17,440
Speaker 10: a higher nine person in June twenty two to about

707
00:36:17,800 --> 00:36:22,000
Speaker 10: two to three person right now. But it's often said

708
00:36:22,040 --> 00:36:24,880
Speaker 10: that the last leg is the most difficult, and we

709
00:36:24,960 --> 00:36:29,439
Speaker 10: did see the recent CPI data slightly nudge up. And

710
00:36:29,920 --> 00:36:32,080
Speaker 10: one of the biggest challenges I think for the FED

711
00:36:32,200 --> 00:36:34,960
Speaker 10: is that we just continue to be very sticky and

712
00:36:35,280 --> 00:36:38,719
Speaker 10: that's trending around four person right now, and that can

713
00:36:38,800 --> 00:36:42,560
Speaker 10: keep inflation at the current levels of two to three person,

714
00:36:42,640 --> 00:36:45,839
Speaker 10: which is still about pet's target. And as long as

715
00:36:45,840 --> 00:36:49,000
Speaker 10: they're can be staying strong and the inflation is stable

716
00:36:49,120 --> 00:36:52,959
Speaker 10: at this higher number, I don't see how the FED

717
00:36:53,080 --> 00:36:56,120
Speaker 10: woul't want to cut so rapidly as the market is

718
00:36:56,160 --> 00:36:58,200
Speaker 10: expecting S and p FI.

719
00:36:58,239 --> 00:37:01,040
Speaker 3: I've found it, as you mentioned, it ain't cheap at

720
00:37:01,040 --> 00:37:05,640
Speaker 3: this point, but I look a little broader small mid caps.

721
00:37:06,239 --> 00:37:09,800
Speaker 3: Not only do they seem to be massively under owned

722
00:37:09,920 --> 00:37:13,720
Speaker 3: my investors at this point and by institutions, they're about

723
00:37:13,719 --> 00:37:19,359
Speaker 3: thirteen to fourteen times earnings. You can own these? Is

724
00:37:19,400 --> 00:37:20,480
Speaker 3: that an alternative?

725
00:37:22,320 --> 00:37:26,120
Speaker 10: I think it's a very difficult situation in terms up

726
00:37:26,640 --> 00:37:30,160
Speaker 10: investing right now, because what we've seen is a large

727
00:37:30,160 --> 00:37:33,520
Speaker 10: part of last year's value was driven by tech and

728
00:37:33,760 --> 00:37:38,600
Speaker 10: AI and secular trends around AI, and the rally was

729
00:37:38,640 --> 00:37:40,600
Speaker 10: not only in the large cap tech but also in

730
00:37:40,640 --> 00:37:44,600
Speaker 10: the small and MidCap tech. So there is this segment

731
00:37:44,640 --> 00:37:49,160
Speaker 10: of the market which has high growth, strong cash flows,

732
00:37:49,640 --> 00:37:54,879
Speaker 10: profitable and continues to do well and has expensive valuations.

733
00:37:55,360 --> 00:37:58,200
Speaker 10: On the other hand, you have everything else in the economy,

734
00:37:58,239 --> 00:38:02,719
Speaker 10: whether it's industrials or describtionary or even the defensive sectors

735
00:38:02,760 --> 00:38:06,879
Speaker 10: that have not participated in the rally, have underperformed last

736
00:38:06,960 --> 00:38:12,600
Speaker 10: year and are at especially the industrials and the financial

737
00:38:12,760 --> 00:38:16,359
Speaker 10: energy sectors. They remain exposed to recession risks, so they're

738
00:38:16,400 --> 00:38:19,879
Speaker 10: most cyclical and have downside risks. If we do head

739
00:38:19,880 --> 00:38:24,120
Speaker 10: into a recession. So the question is do you, uh,

740
00:38:24,360 --> 00:38:27,080
Speaker 10: do you continue to invest in tech which has this

741
00:38:27,480 --> 00:38:33,799
Speaker 10: positive profitability, demand growth trends but is expensive, or do

742
00:38:33,880 --> 00:38:36,799
Speaker 10: you how much of your portfolio do you weigh in

743
00:38:36,800 --> 00:38:40,520
Speaker 10: towards some of these value sectors which have not performed

744
00:38:40,560 --> 00:38:41,040
Speaker 10: so far?

745
00:38:41,440 --> 00:38:44,360
Speaker 3: Is there like, is there like a magnificent magnificent seven

746
00:38:44,520 --> 00:38:47,200
Speaker 3: in like small and mid caps?

747
00:38:48,480 --> 00:38:50,480
Speaker 10: I don't think so.

748
00:38:50,520 --> 00:38:55,640
Speaker 5: They're all magnificent across the board there, you two. So

749
00:38:55,800 --> 00:38:58,200
Speaker 5: if we're talking about the possibility of recession, I feel

750
00:38:58,200 --> 00:39:01,160
Speaker 5: like we've got to talk about these FED wagers here

751
00:39:01,200 --> 00:39:03,680
Speaker 5: and looking at investors that are pricing in as many

752
00:39:03,719 --> 00:39:07,799
Speaker 5: as six rate cuts next year. Obviously the FEDS dot

753
00:39:07,880 --> 00:39:11,720
Speaker 5: plot indicating just three. Where do you stand in that debate?

754
00:39:11,760 --> 00:39:14,640
Speaker 5: Because that's a that's a pretty big discrepancy between three

755
00:39:14,640 --> 00:39:17,440
Speaker 5: and six. And also why do you investors just not

756
00:39:17,560 --> 00:39:19,120
Speaker 5: believe the Fed time and time again?

757
00:39:20,960 --> 00:39:25,200
Speaker 10: So I think the market tends to swing from one

758
00:39:25,320 --> 00:39:28,120
Speaker 10: end to the other. We you know, and and a

759
00:39:28,120 --> 00:39:30,600
Speaker 10: lot of the market projections as well as the FED

760
00:39:30,719 --> 00:39:35,160
Speaker 10: projections have not come through for a while. We you know,

761
00:39:35,200 --> 00:39:39,439
Speaker 10: the market expected with session in twenty three that didn't

762
00:39:39,480 --> 00:39:42,760
Speaker 10: come through. We were expecting one more rate high towards

763
00:39:42,760 --> 00:39:44,799
Speaker 10: the end of the year that didn't come through. So

764
00:39:44,840 --> 00:39:49,680
Speaker 10: there's been you know, data has been shifting, and it's

765
00:39:49,800 --> 00:39:53,760
Speaker 10: really you know, hard to predict what's going to happen.

766
00:39:54,440 --> 00:39:58,040
Speaker 10: But clearly the difference between what the Fed is stop

767
00:39:58,280 --> 00:40:02,360
Speaker 10: is anticipating, which is a soft planning scenario stable growth

768
00:40:02,560 --> 00:40:07,040
Speaker 10: INFISH going to two by twenty twenty five. The Fed

769
00:40:07,200 --> 00:40:11,560
Speaker 10: is looking at normalizing interest rates to about four four

770
00:40:11,600 --> 00:40:14,520
Speaker 10: and a half person this year, whereas the market is

771
00:40:14,600 --> 00:40:18,680
Speaker 10: forecasting a more dire situation that ultimately leads to a

772
00:40:18,680 --> 00:40:21,640
Speaker 10: recession and the BED has to cut a lot more.

773
00:40:22,320 --> 00:40:25,960
Speaker 10: I think it remains this remains a big debate in

774
00:40:26,000 --> 00:40:28,360
Speaker 10: the market right now, and every day we are seeing

775
00:40:28,440 --> 00:40:33,000
Speaker 10: moves that are reflecting, you know, a ship from one

776
00:40:33,040 --> 00:40:36,560
Speaker 10: side of this debate to the other. Not really direction.

777
00:40:36,960 --> 00:40:39,040
Speaker 3: We're going to have to leave it there at Gitu Sharma,

778
00:40:39,080 --> 00:40:43,000
Speaker 3: the founder investment manager at Alpha's Future, thanks for being

779
00:40:43,000 --> 00:40:45,960
Speaker 3: with us date, I really appreciate it. From what'd you

780
00:40:46,000 --> 00:40:50,640
Speaker 3: say twenty below Windshield Minneapolis will not be signing me

781
00:40:50,719 --> 00:40:51,160
Speaker 3: up for that.

782
00:40:51,840 --> 00:40:54,960
Speaker 6: You're listening to the tape. Cat's are live program Bloomberg

783
00:40:55,040 --> 00:40:58,919
Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, tune

784
00:40:58,960 --> 00:41:00,440
Speaker 6: in app, Bloomberg Dot.

785
00:41:00,480 --> 00:41:01,919
Speaker 7: And the Bloomberg Business App.

786
00:41:01,960 --> 00:41:04,759
Speaker 6: You can also listen live on Amazon Alexa from our

787
00:41:04,760 --> 00:41:09,200
Speaker 6: flagship New York station, Just say Alexa play Bloomberg eleven thirty.

788
00:41:11,040 --> 00:41:15,120
Speaker 3: Investor's question the timing of FED rate cuts, among other things.

789
00:41:15,200 --> 00:41:17,600
Speaker 3: And with that context, let's bring in our next guest,

790
00:41:17,640 --> 00:41:23,960
Speaker 3: Molly Ron Sanchez, the chief investment officer at Fiduciary Trust International. Hi,

791
00:41:24,080 --> 00:41:25,040
Speaker 3: thanks for stupping.

792
00:41:24,719 --> 00:41:26,680
Speaker 11: By, great, Thank you, thanks for having me.

793
00:41:26,760 --> 00:41:28,000
Speaker 3: So what's in the driver's seat?

794
00:41:29,400 --> 00:41:32,279
Speaker 11: Well, from a market standpoint, I think markets are sort

795
00:41:32,320 --> 00:41:34,160
Speaker 11: of languishing a little bit here because there isn't a

796
00:41:34,200 --> 00:41:37,960
Speaker 11: catalyst we had. As you well know, markets ended the

797
00:41:38,040 --> 00:41:40,920
Speaker 11: year on a strong note. We already have seen the

798
00:41:40,960 --> 00:41:44,640
Speaker 11: most too important economic data for January that was the

799
00:41:44,719 --> 00:41:46,560
Speaker 11: labor report and CPI.

800
00:41:47,080 --> 00:41:48,160
Speaker 7: So at this.

801
00:41:48,239 --> 00:41:51,640
Speaker 11: Point I think the focus turns to earnings. We've seen

802
00:41:51,640 --> 00:41:54,480
Speaker 11: a couple of bank earnings, but we will see earnings

803
00:41:54,560 --> 00:41:57,520
Speaker 11: over the next two to three weeks. That'll give us

804
00:41:57,520 --> 00:42:00,319
Speaker 11: an idea about how the macro is filtering into the

805
00:42:00,360 --> 00:42:04,959
Speaker 11: micro and perhaps more importantly, CEO's expectations for twenty four.

806
00:42:05,080 --> 00:42:06,879
Speaker 5: Give us a little some of what we saw from

807
00:42:06,920 --> 00:42:09,759
Speaker 5: the bank earnings and what your biggest takeaway was from that.

808
00:42:10,600 --> 00:42:16,000
Speaker 11: Yeah, so almost that is quote as we expected, nothing alarming,

809
00:42:16,840 --> 00:42:21,680
Speaker 11: and economic activity and the banking system remain in good shape.

810
00:42:22,200 --> 00:42:25,400
Speaker 11: And I'm not sure that sort of bank earnings signal

811
00:42:25,840 --> 00:42:28,040
Speaker 11: much on the on the macro, we have to wait

812
00:42:28,080 --> 00:42:29,120
Speaker 11: for other companies.

813
00:42:29,440 --> 00:42:31,840
Speaker 3: For sure. We're maybe the last mile is going to

814
00:42:31,840 --> 00:42:34,120
Speaker 3: be real difficult to get to the Fed's target of

815
00:42:34,160 --> 00:42:37,719
Speaker 3: two percent. But we are in a disinflationary or in

816
00:42:37,760 --> 00:42:44,520
Speaker 3: some sectors outright deflationary environment. What does that do to earnings.

817
00:42:44,880 --> 00:42:47,480
Speaker 11: Well, it creates two things. I think it's going to

818
00:42:47,480 --> 00:42:52,760
Speaker 11: be much more challenging to pass on, and so revenue

819
00:42:52,760 --> 00:42:56,960
Speaker 11: and profit margins are going to be needed.

820
00:42:56,719 --> 00:42:59,560
Speaker 3: To sort of oporates for it.

821
00:42:59,560 --> 00:43:03,600
Speaker 11: Doesn't it does. Indeed, I think there's after two years

822
00:43:03,680 --> 00:43:07,080
Speaker 11: of where not only did you pass on rising input cost,

823
00:43:07,600 --> 00:43:10,640
Speaker 11: but a little more, and I think that environment is

824
00:43:10,719 --> 00:43:14,360
Speaker 11: clearly behind us. I think it's much more challenging and

825
00:43:14,400 --> 00:43:18,160
Speaker 11: if you do raise prices, you could see it manifest

826
00:43:18,239 --> 00:43:21,280
Speaker 11: itself in lower volume. So there's that trade off between

827
00:43:21,320 --> 00:43:23,000
Speaker 11: sales volume and sales revenue.

828
00:43:23,080 --> 00:43:25,439
Speaker 5: But prices are still going up. No, I mean, yes,

829
00:43:25,640 --> 00:43:28,160
Speaker 5: at a slower rate, but I mean there still is

830
00:43:28,200 --> 00:43:29,880
Speaker 5: some pricing power there, maybe.

831
00:43:29,640 --> 00:43:32,839
Speaker 11: Just not as much there is, And I think as

832
00:43:32,880 --> 00:43:34,919
Speaker 11: we move on it'll be it'll be less and less

833
00:43:34,960 --> 00:43:37,239
Speaker 11: and so at least as we sit here today, the

834
00:43:37,239 --> 00:43:41,359
Speaker 11: moderation I think is evident and well, especially sort of

835
00:43:41,600 --> 00:43:43,640
Speaker 11: in the goods market, it definitely.

836
00:43:43,280 --> 00:43:45,240
Speaker 3: Is Okay, So what do you like at this point?

837
00:43:45,719 --> 00:43:49,279
Speaker 11: So I think the market looks, broadly speaking, looks you know,

838
00:43:49,800 --> 00:43:52,600
Speaker 11: compelling to us. I do think the first half of

839
00:43:52,600 --> 00:43:54,520
Speaker 11: the year is going to be choppy for risk assets

840
00:43:54,560 --> 00:43:54,799
Speaker 11: i e.

841
00:43:55,239 --> 00:43:55,839
Speaker 6: Equities.

842
00:43:56,239 --> 00:43:59,400
Speaker 11: I think we pulled forward a fair amount of return

843
00:44:00,040 --> 00:44:04,200
Speaker 11: to the fourth quarter, the soft landing that became evident

844
00:44:04,239 --> 00:44:07,120
Speaker 11: by year end. Again, twenty three was about the hard landing,

845
00:44:07,480 --> 00:44:10,879
Speaker 11: the no landing, but ultimately we've landed on the soft

846
00:44:10,960 --> 00:44:15,440
Speaker 11: landing and I think that's the high consensus or conviction trade.

847
00:44:15,760 --> 00:44:17,480
Speaker 11: And so the first half of the year I think

848
00:44:17,480 --> 00:44:21,160
Speaker 11: for risk assets is about a choppy market as you

849
00:44:21,200 --> 00:44:24,720
Speaker 11: look to validate that meaning, I need to see economic

850
00:44:24,840 --> 00:44:28,319
Speaker 11: data decelerate, not too much come in to around a

851
00:44:28,360 --> 00:44:31,239
Speaker 11: trend or slightly inside of two percent, and I need

852
00:44:31,280 --> 00:44:34,680
Speaker 11: to continue to see labor markets soften and the same

853
00:44:34,680 --> 00:44:37,839
Speaker 11: for inflation. In that environment, I think it sets up

854
00:44:37,840 --> 00:44:40,000
Speaker 11: better for the second half. And that's one of the

855
00:44:40,000 --> 00:44:42,520
Speaker 11: reasons why fixed incomes attractive for us, because I get

856
00:44:42,520 --> 00:44:43,120
Speaker 11: paid to eight.

857
00:44:43,920 --> 00:44:46,120
Speaker 5: Probably more attractive on a day like today as well.

858
00:44:46,200 --> 00:44:49,080
Speaker 5: When you see what was the two years up to say,

859
00:44:49,120 --> 00:44:51,960
Speaker 5: thirteen BIPs before John, you have four.

860
00:44:51,800 --> 00:44:54,200
Speaker 3: To thirty five of the yield right now thirteen basis

861
00:44:54,200 --> 00:44:57,759
Speaker 3: points enter the ten op six four to twelve. We

862
00:44:57,880 --> 00:45:03,920
Speaker 3: both Mully and I both missed five percent. Speak oh okay, sorry,

863
00:45:04,760 --> 00:45:08,399
Speaker 3: that's why she's going to Antarctica in Mexico. But we

864
00:45:08,440 --> 00:45:12,160
Speaker 3: missed the boat. I missed the boat on five four twelve.

865
00:45:12,280 --> 00:45:13,359
Speaker 3: Still a screaming buy.

866
00:45:14,040 --> 00:45:16,360
Speaker 11: I don't know about a screaming by, but it's it's attractive.

867
00:45:16,719 --> 00:45:20,880
Speaker 11: Two fronts want to carry trade and so looking at

868
00:45:20,920 --> 00:45:23,279
Speaker 11: sort of risk free return four to four and a

869
00:45:23,360 --> 00:45:26,799
Speaker 11: quarter is appealing, and it gives you a hedge in

870
00:45:26,880 --> 00:45:32,160
Speaker 11: case the economy does decelerate faster than we think. It'll

871
00:45:32,160 --> 00:45:35,040
Speaker 11: be a hedge against risk assets that'll that'll come under

872
00:45:35,040 --> 00:45:37,680
Speaker 11: some pressure. And I think you could see if we

873
00:45:37,719 --> 00:45:40,600
Speaker 11: do have an economic recession. Again, that's not our view.

874
00:45:41,280 --> 00:45:44,000
Speaker 11: Interstrates will will come down inside of four and you'll

875
00:45:44,000 --> 00:45:45,000
Speaker 11: have a total raid return.

876
00:45:45,080 --> 00:45:48,879
Speaker 3: That again is reasonable application. You're sixty forty.

877
00:45:49,080 --> 00:45:53,480
Speaker 11: That's right, and so we are neutral on US equity,

878
00:45:53,640 --> 00:45:57,600
Speaker 11: slight underweight in Europe and a slide overweight and fixed income.

879
00:45:57,840 --> 00:46:00,520
Speaker 5: So you're saying we're looking for a catalyst right now,

880
00:46:01,040 --> 00:46:03,520
Speaker 5: earnings being one of them. But I guess on the

881
00:46:03,640 --> 00:46:05,520
Speaker 5: ECO calendar, you know, we do have a FED meeting

882
00:46:05,840 --> 00:46:08,560
Speaker 5: in two weeks. I guess maybe not expecting to be

883
00:46:08,600 --> 00:46:12,319
Speaker 5: particularly exciting from a policy standpoint, but any early thoughts

884
00:46:12,360 --> 00:46:15,160
Speaker 5: ahead of that, and what new clues we might be

885
00:46:15,239 --> 00:46:18,759
Speaker 5: hearing from the FED, and just maybe the timing of

886
00:46:18,840 --> 00:46:19,560
Speaker 5: cuts this year.

887
00:46:19,920 --> 00:46:23,000
Speaker 11: Sure, I don't think we're going to sort of hear much.

888
00:46:24,360 --> 00:46:27,520
Speaker 11: They are coalescing around the hold. I don't think they

889
00:46:27,600 --> 00:46:31,359
Speaker 11: want to pre sell a cut, and I think they

890
00:46:31,400 --> 00:46:33,840
Speaker 11: want to have some patients here. I know the market

891
00:46:33,840 --> 00:46:37,080
Speaker 11: things differently. It's building in a first cut in March,

892
00:46:38,000 --> 00:46:41,440
Speaker 11: and for us it's just too premature. March is not

893
00:46:41,480 --> 00:46:44,000
Speaker 11: a line in the sand. I think the way investors

894
00:46:44,000 --> 00:46:46,839
Speaker 11: need to be looking at this is that I am

895
00:46:46,920 --> 00:46:49,640
Speaker 11: going to see the Federal Reserve move from a fighting

896
00:46:49,920 --> 00:46:54,920
Speaker 11: inflation campaign in twenty three to managing the economic cycle

897
00:46:55,040 --> 00:46:59,120
Speaker 11: in twenty four. And if the economy moderates as we expect,

898
00:46:59,480 --> 00:47:04,279
Speaker 11: they'll be latitude and scope to lower rates. Five and

899
00:47:04,320 --> 00:47:06,600
Speaker 11: a half's not the right number, so I think it's

900
00:47:06,640 --> 00:47:09,680
Speaker 11: more of a second half development. And again under the

901
00:47:09,760 --> 00:47:11,399
Speaker 11: heading of watch what you wish for? If they were

902
00:47:11,400 --> 00:47:14,319
Speaker 11: to move in March, given the fact there's only two

903
00:47:14,360 --> 00:47:17,200
Speaker 11: more labor reports, you would need to see more of

904
00:47:17,239 --> 00:47:21,000
Speaker 11: a rollover of economic data for them to move, and

905
00:47:21,560 --> 00:47:25,000
Speaker 11: I prefer to see the economy moderate than rollover.

906
00:47:25,200 --> 00:47:26,440
Speaker 5: I think we all would prefer that.

907
00:47:26,640 --> 00:47:30,520
Speaker 3: Yes, let's throw politics into the mix. I'm hearing the

908
00:47:30,560 --> 00:47:34,000
Speaker 3: word tariff pop up again again by a certain candidate.

909
00:47:34,080 --> 00:47:37,520
Speaker 3: What sort of risk does that bring it into the

910
00:47:38,239 --> 00:47:39,040
Speaker 3: equity space?

911
00:47:39,160 --> 00:47:41,600
Speaker 11: Well, it just adds to a fair amount of uncertainty

912
00:47:41,600 --> 00:47:45,440
Speaker 11: from a geopolitical and here in the US as well.

913
00:47:45,560 --> 00:47:49,200
Speaker 11: Obviously we're early, it's an election year. I think in

914
00:47:49,280 --> 00:47:51,879
Speaker 11: the first half of the year though, it will be

915
00:47:51,920 --> 00:47:55,160
Speaker 11: more about the economy and about the FED and inflation.

916
00:47:55,840 --> 00:47:57,560
Speaker 11: In the second half a year, I think you could

917
00:47:57,560 --> 00:48:00,200
Speaker 11: see market volatility attributed to political develop.

918
00:48:00,400 --> 00:48:04,160
Speaker 3: And the conventional wisdom is that FED policy makers aren't

919
00:48:04,200 --> 00:48:08,720
Speaker 3: going to act close to an election. Do you believe

920
00:48:08,719 --> 00:48:11,280
Speaker 3: that and how does that sort of change the timing

921
00:48:11,520 --> 00:48:14,360
Speaker 3: of the expectation of rate cuts.

922
00:48:14,560 --> 00:48:17,319
Speaker 11: Yeah, I do not believe that. I think they're in

923
00:48:17,360 --> 00:48:20,799
Speaker 11: an environment where they have been very aggressive needed to

924
00:48:20,840 --> 00:48:23,880
Speaker 11: be to fight inflation. I think their job is complete

925
00:48:24,280 --> 00:48:27,840
Speaker 11: on that front, and they are in a restrictive posture,

926
00:48:28,239 --> 00:48:30,919
Speaker 11: and as we move closer to election, there's a lot

927
00:48:30,920 --> 00:48:33,600
Speaker 11: of economic data to see where we end up and

928
00:48:33,640 --> 00:48:36,360
Speaker 11: whether it truly is a soft landing and where inflation

929
00:48:36,640 --> 00:48:38,839
Speaker 11: ends up, and I think in that regard, the FED

930
00:48:38,840 --> 00:48:43,000
Speaker 11: would like to moderate its stance and move from restrictive

931
00:48:43,040 --> 00:48:43,560
Speaker 11: to neutral.

932
00:48:43,920 --> 00:48:47,080
Speaker 5: I think they're also, you know, pretty decisively and you know,

933
00:48:47,600 --> 00:48:50,239
Speaker 5: a pivot right now toward lower interest rates. So I

934
00:48:50,239 --> 00:48:53,560
Speaker 5: don't think that it would really be as controversial if

935
00:48:53,560 --> 00:48:56,560
Speaker 5: they were to, you know, cut interest rates sometime around

936
00:48:56,560 --> 00:48:59,719
Speaker 5: the election. If that's obviously so pre calibrated at this.

937
00:48:59,680 --> 00:49:02,280
Speaker 11: Point, I'd agree with that, all right, they can't afford

938
00:49:02,280 --> 00:49:03,520
Speaker 11: to pass They kind of put.

939
00:49:03,440 --> 00:49:07,120
Speaker 3: You on the spot with my unfair questions, But how

940
00:49:07,120 --> 00:49:09,160
Speaker 3: many cuts this year from the Fed.

941
00:49:09,200 --> 00:49:13,640
Speaker 11: Did you say the Fed thinks three, the market thinks six,

942
00:49:13,960 --> 00:49:16,560
Speaker 11: and I think it's between three and six. It's at

943
00:49:16,640 --> 00:49:18,320
Speaker 11: least three, all right, And I'd say.

944
00:49:18,120 --> 00:49:24,799
Speaker 3: Four S and P five year in target.

945
00:49:24,160 --> 00:49:26,360
Speaker 11: So a modest return of five to seven percent for

946
00:49:26,400 --> 00:49:27,200
Speaker 11: the S and P five.

947
00:49:27,080 --> 00:49:30,719
Speaker 3: Hundred, all right, So five, that's okay, all right.

948
00:49:31,200 --> 00:49:33,600
Speaker 5: That sounds like a good number also for that round.

949
00:49:33,680 --> 00:49:38,400
Speaker 3: Yeah, okay, thanks, good to see it. Ron Bron Sanchez,

950
00:49:38,400 --> 00:49:43,040
Speaker 3: the chief investment Officer at Fiduciary Trust International, coming in

951
00:49:43,080 --> 00:49:45,600
Speaker 3: from the Islands, Long Island.

952
00:49:45,320 --> 00:49:47,239
Speaker 5: Best to the Island of Manhattan.

953
00:49:47,640 --> 00:49:50,719
Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can

954
00:49:50,760 --> 00:49:54,560
Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever

955
00:49:54,640 --> 00:49:58,360
Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter

956
00:49:58,560 --> 00:50:00,640
Speaker 2: at Matt Miller nineteen seven twenty three.

957
00:50:00,920 --> 00:50:03,320
Speaker 11: And I'm Paul Sweeney. I'm on Twitter at pt Sweeney.

958
00:50:03,440 --> 00:50:06,080
Speaker 11: Before the podcast, you can always catch us worldwide at

959
00:50:06,120 --> 00:50:06,839
Speaker 11: Bloomberg Radio.