1 00:00:00,840 --> 00:00:02,560 Speaker 1: Welcome to the Bloomberg Markets Podcast. 2 00:00:02,720 --> 00:00:03,480 Speaker 2: I'm Paul Sweeney. 3 00:00:03,520 --> 00:00:05,280 Speaker 1: Alongside my co host Matt Miller. 4 00:00:05,640 --> 00:00:09,600 Speaker 3: Every business day, we bring you interviews from CEOs, market pros, 5 00:00:09,720 --> 00:00:13,640 Speaker 3: and Bloomberg experts, along with essential market moving news. 6 00:00:14,160 --> 00:00:17,279 Speaker 1: Find the Bloomberg Markets Podcast on Apple Podcasts or wherever 7 00:00:17,360 --> 00:00:20,520 Speaker 1: you listen to podcasts, and at Bloomberg dot com Slash podcast. 8 00:00:21,160 --> 00:00:23,520 Speaker 1: A lot of news out of Washington, DCT on the 9 00:00:23,640 --> 00:00:26,640 Speaker 1: legal front. I mean we started off the day looks 10 00:00:26,640 --> 00:00:30,440 Speaker 1: like President Trump faces an August twenty twenty three trial 11 00:00:30,440 --> 00:00:33,280 Speaker 1: in the classified documents case, so we've got some clarity there. 12 00:00:33,920 --> 00:00:36,239 Speaker 1: Then just breaking recently, Hunter Biden de plete guilty to 13 00:00:36,320 --> 00:00:38,680 Speaker 1: tax charges. So we want to get to the bottom 14 00:00:38,720 --> 00:00:41,080 Speaker 1: of this news coming out of Washington. Nick Ackerman, former 15 00:00:41,080 --> 00:00:43,599 Speaker 1: assistant special Watergate prosecutor, joins us. 16 00:00:43,800 --> 00:00:43,959 Speaker 4: Nick. 17 00:00:44,040 --> 00:00:47,480 Speaker 1: Let's start with the news first on President Trump. If 18 00:00:47,479 --> 00:00:51,520 Speaker 1: nothing else, it's he's going to receive a speedy trial, 19 00:00:51,520 --> 00:00:53,880 Speaker 1: if you will. I mean, this is happening very quickly. 20 00:00:54,640 --> 00:00:57,480 Speaker 5: Yeah, no, I mean Florida, the southern district of Florida 21 00:00:57,560 --> 00:01:00,760 Speaker 5: is known for its rocket dockets, and clearly he's on there, 22 00:01:01,640 --> 00:01:03,600 Speaker 5: and I think it answers a lot of questions that 23 00:01:03,640 --> 00:01:07,520 Speaker 5: people were concerned about with this particular Judge Cannon, who 24 00:01:07,600 --> 00:01:10,560 Speaker 5: wasn't a Trump appointee, that somehow she would drag this 25 00:01:10,720 --> 00:01:13,399 Speaker 5: out and delay it for Trump. That is not going 26 00:01:13,440 --> 00:01:17,160 Speaker 5: to happen. I think one of the overriding themes that 27 00:01:17,240 --> 00:01:20,080 Speaker 5: comes out of our news this morning is really the 28 00:01:20,160 --> 00:01:23,480 Speaker 5: rule of law and how it has been enforced with 29 00:01:23,600 --> 00:01:26,600 Speaker 5: both of these developments today. One you've got a Trump 30 00:01:26,680 --> 00:01:30,160 Speaker 5: appointee as a judge who is moving this case along 31 00:01:30,240 --> 00:01:33,480 Speaker 5: and bringing it to trial. And two you've got the 32 00:01:33,560 --> 00:01:37,720 Speaker 5: Hunter Biden a guilty plead that was done and overseen 33 00:01:37,959 --> 00:01:42,040 Speaker 5: by a former Trump appointee as US Attorney in Delaware 34 00:01:42,280 --> 00:01:45,640 Speaker 5: who was purposely kept on in order to deal with 35 00:01:45,680 --> 00:01:49,880 Speaker 5: this matter, and he had the final ultimate decision as 36 00:01:49,880 --> 00:01:53,160 Speaker 5: to how it would be taken care of. The Attorney 37 00:01:53,200 --> 00:01:56,160 Speaker 5: General kept himself out of it for fear of some 38 00:01:56,360 --> 00:01:58,720 Speaker 5: kind of a conflict between the fact that he was 39 00:01:58,760 --> 00:02:03,960 Speaker 5: appointed by President Biden and he would be making the decision. Instead, 40 00:02:04,280 --> 00:02:10,040 Speaker 5: he delegated it completely to this Trump appointed US attorney, 41 00:02:10,680 --> 00:02:14,480 Speaker 5: And in the same way, the decision to indict Donald 42 00:02:14,520 --> 00:02:19,040 Speaker 5: Trump on the classified document case was delegated to a 43 00:02:19,080 --> 00:02:23,720 Speaker 5: special prosecutor that was totally out of the politics and 44 00:02:24,520 --> 00:02:28,040 Speaker 5: was removed from the attorney general. So I think today 45 00:02:28,160 --> 00:02:29,720 Speaker 5: was a good day for the rule of law. 46 00:02:30,840 --> 00:02:34,839 Speaker 6: So, Nick, has the Biden administration responded to either case yet? 47 00:02:36,160 --> 00:02:38,600 Speaker 5: I know, and there's no reason for them to. I mean, 48 00:02:38,639 --> 00:02:43,160 Speaker 5: they have should have absolutely nothing to do with either case. 49 00:02:43,200 --> 00:02:46,960 Speaker 5: It's important that they keep their distance and that the 50 00:02:47,000 --> 00:02:51,000 Speaker 5: public understands that the decisions being made on this case 51 00:02:51,040 --> 00:02:56,080 Speaker 5: are being made by totally independent individuals, whether the prosecutors 52 00:02:56,240 --> 00:02:57,000 Speaker 5: or the judges. 53 00:02:58,080 --> 00:03:00,960 Speaker 1: So all right, Nick, let's I guess focus on, presumably 54 00:03:01,080 --> 00:03:02,799 Speaker 1: what is the more important case here. 55 00:03:03,320 --> 00:03:04,440 Speaker 2: What is your expectation. 56 00:03:04,560 --> 00:03:06,160 Speaker 1: I mean, this is going only going to be They 57 00:03:06,200 --> 00:03:10,720 Speaker 1: announced a two week trial, so that seems very expeditious 58 00:03:10,720 --> 00:03:13,800 Speaker 1: if nothing else, How do you expect this to play out? 59 00:03:14,760 --> 00:03:14,919 Speaker 4: Oh? 60 00:03:15,200 --> 00:03:17,040 Speaker 5: I think it's likely to play out just the way 61 00:03:17,080 --> 00:03:18,600 Speaker 5: she's got it set up. I mean, there may be 62 00:03:18,639 --> 00:03:21,840 Speaker 5: a little bit of a delay in here, but this 63 00:03:21,919 --> 00:03:25,760 Speaker 5: is not a difficult case. It's fairly straightforward. The number 64 00:03:25,760 --> 00:03:28,840 Speaker 5: of classified documents I think is somewhere around thirty that 65 00:03:28,919 --> 00:03:32,960 Speaker 5: are an issue here. There's testimony by witnesses, there's going 66 00:03:33,000 --> 00:03:36,400 Speaker 5: to be pre trial motions, all of which are, for 67 00:03:36,440 --> 00:03:38,000 Speaker 5: the most part, as far as I can tell, it 68 00:03:38,040 --> 00:03:40,760 Speaker 5: pretty frivolous and will take no time to dispose of. 69 00:03:41,320 --> 00:03:44,200 Speaker 5: So there's no reason why this case can't be put 70 00:03:44,280 --> 00:03:48,360 Speaker 5: on trial in August. I mean, this judge is spot on. 71 00:03:48,480 --> 00:03:50,320 Speaker 5: This is the way the case ought to be handled. 72 00:03:50,520 --> 00:03:55,280 Speaker 1: Nick, Should we expect a plea deal from president former 73 00:03:55,320 --> 00:03:57,960 Speaker 1: president Trump's campus that's something that we should expect, or 74 00:03:58,000 --> 00:04:00,800 Speaker 1: do you think he prefers or he should go to trial? 75 00:04:01,760 --> 00:04:03,800 Speaker 5: Well, I think he's a fool to go to trial 76 00:04:03,920 --> 00:04:06,960 Speaker 5: because the evidence, at least as it's set forth in 77 00:04:07,000 --> 00:04:13,160 Speaker 5: the indictment, is extraordinarily powerful, and his statements, even his 78 00:04:13,240 --> 00:04:16,360 Speaker 5: statement last night on Fox News, he keeps digging himself 79 00:04:16,440 --> 00:04:20,600 Speaker 5: in deeper to this and creating more fodder for the 80 00:04:20,760 --> 00:04:24,680 Speaker 5: prosecution in the case. The best thing that I would 81 00:04:24,720 --> 00:04:27,640 Speaker 5: advise any client to do under these circumstances is to 82 00:04:27,680 --> 00:04:31,480 Speaker 5: somehow get a plea deal. But knowing Donald Trump, I'd 83 00:04:31,480 --> 00:04:32,720 Speaker 5: say that's pretty unlikely. 84 00:04:33,200 --> 00:04:36,000 Speaker 6: How does this affect the election. 85 00:04:37,440 --> 00:04:39,799 Speaker 5: Well, that's the whole point. If this case is done 86 00:04:40,040 --> 00:04:43,960 Speaker 5: by early September, it's not going to affect the election 87 00:04:44,080 --> 00:04:47,520 Speaker 5: at all. I mean, if he's convicted. You know, good 88 00:04:47,600 --> 00:04:50,400 Speaker 5: luck to the Republican Party if they want to nominate 89 00:04:50,520 --> 00:04:58,880 Speaker 5: somebody for president who's convicted for mishandling and obstructing classified documents. 90 00:04:58,880 --> 00:05:02,080 Speaker 5: I mean, I just don't see that happening here, so 91 00:05:02,120 --> 00:05:06,080 Speaker 5: I think it by doing this on this schedule, this, 92 00:05:06,080 --> 00:05:08,880 Speaker 5: this is a good thing in terms of the election. 93 00:05:09,480 --> 00:05:10,599 Speaker 1: Nick, thanks so much for joining us. 94 00:05:10,640 --> 00:05:12,400 Speaker 2: Really appreciate it. Jumping on with us. 95 00:05:12,600 --> 00:05:16,600 Speaker 1: Nick Ackerman, former assistant special Watergate prosecutor, giving us his 96 00:05:16,720 --> 00:05:20,279 Speaker 1: thoughts and analysis on what's been some pretty busy news front. 97 00:05:20,279 --> 00:05:24,080 Speaker 7: This morning, you're listening to the Team Ken's are Live 98 00:05:24,160 --> 00:05:27,600 Speaker 7: program Bloomberg Markets weekdays at ten am Eastern. 99 00:05:27,360 --> 00:05:30,440 Speaker 8: On Bloomberg dot Com, the iHeartRadio. 100 00:05:29,720 --> 00:05:32,480 Speaker 7: App, and the Bloomberg Business App, or listen on demand 101 00:05:32,520 --> 00:05:34,080 Speaker 7: wherever you get your podcast. 102 00:05:36,080 --> 00:05:38,080 Speaker 1: Jess Met and Paul Sweene Here in the Bloomberg Interactive 103 00:05:38,080 --> 00:05:41,280 Speaker 1: Brokers Studio, we're streaming live on YouTube starting today. 104 00:05:41,279 --> 00:05:44,160 Speaker 2: You can go check that out. Jess. 105 00:05:44,240 --> 00:05:46,560 Speaker 1: You know I've said it before, I'll say it again. 106 00:05:46,600 --> 00:05:47,920 Speaker 1: You know, my next life, I want to come back 107 00:05:47,920 --> 00:05:50,359 Speaker 1: as a care m and a bank because this just 108 00:05:50,520 --> 00:05:54,640 Speaker 1: deals left and right. We've got another one today, Lily 109 00:05:55,000 --> 00:05:57,600 Speaker 1: to pay two point four Yeah, two point four billion 110 00:05:57,640 --> 00:06:01,000 Speaker 1: dollars for immune drug developer Dice. Breaking down force is 111 00:06:01,000 --> 00:06:03,480 Speaker 1: our good friend Sam Vizzelli. He's head of European Research. 112 00:06:03,839 --> 00:06:06,680 Speaker 1: He's also got a side hustle where he's presumably reportedly 113 00:06:06,720 --> 00:06:11,039 Speaker 1: a pharmaceuticals analyst for Bloomberg Intelligence. So we'll check in 114 00:06:11,040 --> 00:06:12,920 Speaker 1: with Sam. Sam, thanks so much for joining us here again, 115 00:06:12,960 --> 00:06:17,080 Speaker 1: another deal here for Lily. You know your big farmer companies. 116 00:06:17,800 --> 00:06:19,599 Speaker 1: I know they do a lot of R and D, Sam, 117 00:06:19,600 --> 00:06:22,279 Speaker 1: but boy, they're really active on the M and A front, 118 00:06:22,320 --> 00:06:25,560 Speaker 1: buying drugs and therap therapies. What are they getting here 119 00:06:25,560 --> 00:06:25,960 Speaker 1: with Dice? 120 00:06:27,080 --> 00:06:29,880 Speaker 4: Hey, Paul, just just one comment before we go to Dice. 121 00:06:30,279 --> 00:06:33,479 Speaker 9: I think your life as a media analyst back in 122 00:06:33,520 --> 00:06:35,080 Speaker 9: the days wasn't that bad, was it? 123 00:06:35,200 --> 00:06:35,640 Speaker 4: No? It was. 124 00:06:36,640 --> 00:06:38,479 Speaker 2: We had a good role there for a while. 125 00:06:39,320 --> 00:06:42,160 Speaker 4: Oh yes, No, so Dice. 126 00:06:43,680 --> 00:06:46,120 Speaker 9: Basically, what Lily is doing here is that it's acquiring 127 00:06:46,240 --> 00:06:53,359 Speaker 9: a novel therapeutic approach or novel drug development approach to 128 00:06:54,040 --> 00:06:58,120 Speaker 9: treating dermatological disease. In this particular case, I think the 129 00:06:58,120 --> 00:07:00,800 Speaker 9: target's going to be a psariasis, which I think a 130 00:07:00,839 --> 00:07:04,599 Speaker 9: lot of people are familiar with in which Lily's already active. 131 00:07:05,080 --> 00:07:06,920 Speaker 4: So they have a product called Tolts. 132 00:07:06,960 --> 00:07:10,480 Speaker 9: It's doing really well, but it's coming off patent in 133 00:07:10,520 --> 00:07:15,000 Speaker 9: twenty in the late twenties, let's say, and it does 134 00:07:15,080 --> 00:07:18,280 Speaker 9: make sense for them to be backing into it other products. 135 00:07:18,280 --> 00:07:22,200 Speaker 9: And let's not forget a lot of farmer company products 136 00:07:22,720 --> 00:07:26,560 Speaker 9: to fifty percent of them originate outside of the farmer company. 137 00:07:26,640 --> 00:07:31,520 Speaker 9: You can't own every science, every new methodology for developing drugs, 138 00:07:31,680 --> 00:07:33,960 Speaker 9: which is something that Dice has got a new approach 139 00:07:34,000 --> 00:07:38,120 Speaker 9: to doing small molecule pill type drugs. So that's what 140 00:07:38,240 --> 00:07:40,560 Speaker 9: I think we got. We're seeing and we continue to see. 141 00:07:41,200 --> 00:07:43,760 Speaker 6: Sam. How are investors reacting to this? Because if you 142 00:07:43,760 --> 00:07:47,480 Speaker 6: look at shares of Dice as tickersymbol DIICE up about 143 00:07:47,520 --> 00:07:51,120 Speaker 6: thirty eight percent on Peaceport's best days since October of 144 00:07:51,280 --> 00:07:54,000 Speaker 6: last year. Looking at Eli Lillly tickersymbol l l Y 145 00:07:54,160 --> 00:07:55,160 Speaker 6: up about one percent. 146 00:07:56,200 --> 00:07:59,080 Speaker 9: Yeah, well, so, I mean usually the acquired when they're 147 00:07:59,080 --> 00:08:01,760 Speaker 9: doing such a small de Let's not forget Eli Lee. Now, 148 00:08:01,800 --> 00:08:04,679 Speaker 9: at least last time I checked, was the largest farmer 149 00:08:04,720 --> 00:08:07,920 Speaker 9: company in the world. They overtook Johnson and Johnson. Although 150 00:08:07,920 --> 00:08:11,040 Speaker 9: I think they're vying for that position like who's the 151 00:08:11,040 --> 00:08:13,000 Speaker 9: wealthiest man in the world kind of situation. 152 00:08:14,480 --> 00:08:17,160 Speaker 4: But so, really, what difference does it make to them? 153 00:08:17,240 --> 00:08:19,280 Speaker 9: Yes, it changes a little bit of the dynamics of 154 00:08:19,640 --> 00:08:26,040 Speaker 9: potential downside in their immunology franchises and rices franchise seven 155 00:08:26,160 --> 00:08:26,640 Speaker 9: years at. 156 00:08:26,520 --> 00:08:28,000 Speaker 4: Down the road. Great planning. 157 00:08:28,320 --> 00:08:30,720 Speaker 9: But what really is driving in the stock today is 158 00:08:30,720 --> 00:08:33,640 Speaker 9: the excitement around as we all know, obesity, diabetes, and 159 00:08:33,679 --> 00:08:37,840 Speaker 9: Alzheimer's disease. So this is not surprising to me the 160 00:08:37,840 --> 00:08:40,680 Speaker 9: way the share prices that mod What is interesting is 161 00:08:40,679 --> 00:08:42,280 Speaker 9: that the share price I'm just watching it now on 162 00:08:42,320 --> 00:08:43,840 Speaker 9: my screen here for Dyce. 163 00:08:44,080 --> 00:08:45,720 Speaker 4: This company presented. 164 00:08:45,360 --> 00:08:49,120 Speaker 9: Data for this drug way back in nine months ago 165 00:08:49,160 --> 00:08:52,240 Speaker 9: October last year, and it's interesting that it's taken this 166 00:08:52,440 --> 00:08:54,480 Speaker 9: long for them to be taken out. And I have 167 00:08:54,520 --> 00:08:56,880 Speaker 9: to also say it's not the biggest premium I've seen 168 00:08:57,440 --> 00:08:58,400 Speaker 9: with recent deals. 169 00:08:58,400 --> 00:09:00,240 Speaker 4: So Mark bought Prometheus for. 170 00:09:00,240 --> 00:09:03,960 Speaker 9: Around a seventy seventy five percent premium, and the Chinook 171 00:09:04,400 --> 00:09:07,120 Speaker 9: was acquired or at least announced to be acquired by 172 00:09:07,160 --> 00:09:10,480 Speaker 9: Novartists just a few days ago last week for a 173 00:09:10,559 --> 00:09:14,040 Speaker 9: sixty six percent premium or sixty percent premium depending on 174 00:09:14,080 --> 00:09:16,720 Speaker 9: where you start so at this thirty eight percent premium 175 00:09:16,800 --> 00:09:19,839 Speaker 9: is not the biggest we've seen, and it does make 176 00:09:19,880 --> 00:09:22,800 Speaker 9: me wonder how why this it took so long for 177 00:09:22,840 --> 00:09:26,160 Speaker 9: somebody like Lily to actually close the deal, and perhaps 178 00:09:26,160 --> 00:09:27,240 Speaker 9: they could have paid less. 179 00:09:27,280 --> 00:09:28,000 Speaker 4: Who knows? 180 00:09:28,280 --> 00:09:30,720 Speaker 1: Hey, Sam, talk to us about kind of that risk 181 00:09:30,840 --> 00:09:34,320 Speaker 1: for patent expirations. I mean, I know you guys as 182 00:09:34,400 --> 00:09:37,280 Speaker 1: analysts and investors, you probably follow that closely, are there. 183 00:09:38,000 --> 00:09:39,599 Speaker 2: Do you have a pretty good certainty. 184 00:09:39,240 --> 00:09:42,200 Speaker 1: When drugs come off patent and then when that revenue 185 00:09:42,240 --> 00:09:45,280 Speaker 1: may be a risk, And are certain companies more vulnerable 186 00:09:45,320 --> 00:09:46,960 Speaker 1: to that risk than than others? 187 00:09:47,840 --> 00:09:50,880 Speaker 9: Yeah, I think, Paul, it happens that sometimes some companies 188 00:09:50,920 --> 00:09:53,760 Speaker 9: go through a wave of them and then others are 189 00:09:53,800 --> 00:09:55,920 Speaker 9: pretty immune for a while to go yet, and I 190 00:09:55,960 --> 00:09:59,600 Speaker 9: think Lily is one of those that's relatively immune. Pfizer, 191 00:09:59,640 --> 00:10:03,480 Speaker 9: I think, more exposure than others currently, But then of 192 00:10:03,520 --> 00:10:05,440 Speaker 9: course they come and go and then they move on 193 00:10:05,480 --> 00:10:10,040 Speaker 9: to a new base. And with patterns, yes, it's relatively 194 00:10:10,400 --> 00:10:14,360 Speaker 9: relatively easy because you can get fantastic pattern analysts like 195 00:10:14,440 --> 00:10:17,920 Speaker 9: our own old Girsbacker who digs deep on these things 196 00:10:17,960 --> 00:10:20,560 Speaker 9: to try and guestimate when the patent expirer would come. 197 00:10:20,840 --> 00:10:23,000 Speaker 4: What has muddied the water here. 198 00:10:22,840 --> 00:10:27,360 Speaker 9: Of course, is the Inflation Reduction Act, which is saying 199 00:10:27,800 --> 00:10:30,920 Speaker 9: that some of your drugs, especially these small molecules, these 200 00:10:30,920 --> 00:10:34,800 Speaker 9: pills that I've been talking about, will be negotiated in 201 00:10:34,880 --> 00:10:37,120 Speaker 9: terms of price to get them into a world that 202 00:10:37,200 --> 00:10:39,640 Speaker 9: looks like as if they're becoming generic in terms of 203 00:10:39,679 --> 00:10:43,600 Speaker 9: pricing way before the patent expires. And so that creates 204 00:10:43,720 --> 00:10:47,360 Speaker 9: an extra layer of uncertainty, which is why I'm actually 205 00:10:47,480 --> 00:10:50,000 Speaker 9: quite interested in this deal today because it is a 206 00:10:50,040 --> 00:10:52,600 Speaker 9: small molecule dealer, it is a pill, and it does 207 00:10:52,679 --> 00:10:53,839 Speaker 9: fall into the IRA. 208 00:10:53,760 --> 00:10:58,160 Speaker 6: Trap, same with healthcare. Deer deals on a tear this year. 209 00:10:58,679 --> 00:11:00,960 Speaker 6: Is this a sign of optimist in the M and 210 00:11:01,000 --> 00:11:01,480 Speaker 6: A market? 211 00:11:02,920 --> 00:11:04,280 Speaker 4: Yeah, it's interesting, isn't it? 212 00:11:05,080 --> 00:11:07,360 Speaker 9: If you think back to last year interest rates pretty 213 00:11:07,400 --> 00:11:10,000 Speaker 9: much close to zero here and there, it was a 214 00:11:10,040 --> 00:11:13,360 Speaker 9: deal that these are not big numbers. You know, three 215 00:11:13,400 --> 00:11:16,320 Speaker 9: billion dollars. What's that to a four hundred billion dollar company? 216 00:11:16,760 --> 00:11:19,880 Speaker 9: But it does it's make me kind of chuck a 217 00:11:19,920 --> 00:11:22,559 Speaker 9: little bit when interest rates are shooting up, But you 218 00:11:23,000 --> 00:11:26,200 Speaker 9: think that MNA would be less likely. These companies are 219 00:11:26,200 --> 00:11:28,559 Speaker 9: stepping in into introduers, which of course, it's telling you 220 00:11:28,840 --> 00:11:31,320 Speaker 9: that they don't need any debt to do this. I mean, 221 00:11:31,960 --> 00:11:33,440 Speaker 9: Lily is very clear. He said, we're just going to 222 00:11:33,440 --> 00:11:36,880 Speaker 9: finance this through our massive cash flow. So what is 223 00:11:36,960 --> 00:11:38,880 Speaker 9: happening though, is that I think they're coming to a 224 00:11:38,880 --> 00:11:41,000 Speaker 9: point of thinking more and more. 225 00:11:41,240 --> 00:11:44,000 Speaker 4: Valuations are where they are. They haven't moved very much. 226 00:11:44,080 --> 00:11:46,559 Speaker 9: They've taken their time, and they're finding the assets that 227 00:11:47,000 --> 00:11:49,840 Speaker 9: they feel are the right quality for their pipelines. 228 00:11:50,200 --> 00:11:53,840 Speaker 1: Hey, Sam, as analysts and investors in these pharma companies, 229 00:11:54,080 --> 00:11:58,360 Speaker 1: does a market care whether you know, the the Lilies 230 00:11:58,400 --> 00:11:59,800 Speaker 1: of the world, the marks of the world, whether they 231 00:11:59,840 --> 00:12:02,920 Speaker 1: do all of their therapeutics and drugs internally via R 232 00:12:02,960 --> 00:12:04,680 Speaker 1: and D or they go out and buy it, do 233 00:12:04,720 --> 00:12:05,440 Speaker 1: you guys even care? 234 00:12:06,240 --> 00:12:07,960 Speaker 4: No, not really at the end of the day. 235 00:12:08,120 --> 00:12:10,280 Speaker 9: I mean, obviously, if the R and D engine of 236 00:12:10,320 --> 00:12:12,120 Speaker 9: the company they were spending ten billion a year and 237 00:12:12,120 --> 00:12:14,440 Speaker 9: they were getting nothing out of it, that's not a 238 00:12:14,440 --> 00:12:17,320 Speaker 9: good thing. But let's not forget this product isn't done yet. 239 00:12:17,440 --> 00:12:19,600 Speaker 9: It still needs to go through. What a lot of 240 00:12:19,600 --> 00:12:23,760 Speaker 9: people don't think about or contemplate is that it's not 241 00:12:23,840 --> 00:12:27,040 Speaker 9: just about discovering a molecule. It's about then manufacturing it. 242 00:12:27,120 --> 00:12:29,440 Speaker 9: Make sure you've got the right manufacturing footprint, make sure 243 00:12:29,440 --> 00:12:31,640 Speaker 9: you've got the right package. 244 00:12:31,240 --> 00:12:33,160 Speaker 4: To go to the FDA, et cetera, et cetera. 245 00:12:33,520 --> 00:12:35,400 Speaker 9: So there's a lot of R and D that still 246 00:12:35,440 --> 00:12:37,840 Speaker 9: needs to go in here that Lily will be spending 247 00:12:38,240 --> 00:12:42,920 Speaker 9: on this product. So but nobody really cares as long 248 00:12:42,960 --> 00:12:46,199 Speaker 9: as internal R and D, which is where the Munjaro 249 00:12:46,320 --> 00:12:49,360 Speaker 9: drug there's appetite has come from, which is where there 250 00:12:49,360 --> 00:12:52,240 Speaker 9: alzhemazrugs have come from, are delivering something. 251 00:12:53,200 --> 00:12:56,680 Speaker 6: Any chatter of other companies that Eli Lilly might be 252 00:12:56,840 --> 00:13:00,720 Speaker 6: potentially in the sort of looking here to see potential 253 00:13:00,840 --> 00:13:04,840 Speaker 6: buying as far as wor could potentially obviously continue this 254 00:13:04,920 --> 00:13:06,960 Speaker 6: behemoth of a company that we've been seeing. 255 00:13:08,040 --> 00:13:09,800 Speaker 9: Yeah, so I think the best way to figure that 256 00:13:09,840 --> 00:13:13,160 Speaker 9: out is to look at the products that are facing 257 00:13:13,200 --> 00:13:17,320 Speaker 9: competition in the longer term and look at what else 258 00:13:17,360 --> 00:13:19,840 Speaker 9: is available in the biotech sector. So you know, a 259 00:13:19,840 --> 00:13:22,520 Speaker 9: lot of these deals are not coming into the mid 260 00:13:22,559 --> 00:13:26,800 Speaker 9: stage development companies. There was a time where everybody wanted big, 261 00:13:26,840 --> 00:13:29,480 Speaker 9: big revenue generators to basically do a little bit of 262 00:13:29,480 --> 00:13:32,400 Speaker 9: financial engineering on that. But what we're seeing more than 263 00:13:32,480 --> 00:13:36,600 Speaker 9: names I read off to Chinuk Prometheus, this company dies. 264 00:13:36,960 --> 00:13:41,560 Speaker 9: These are more midstage pipeline fillers, which are therefore going 265 00:13:41,640 --> 00:13:45,000 Speaker 9: to be tied to what the company is either developing 266 00:13:45,040 --> 00:13:48,400 Speaker 9: a new therapeutic franchise or it's got a drug like 267 00:13:48,480 --> 00:13:50,680 Speaker 9: Tolts in the case of Lily that's going off pattern. 268 00:13:51,000 --> 00:13:51,959 Speaker 4: What you should really. 269 00:13:51,800 --> 00:13:54,680 Speaker 9: Be looking for is to marry that with good data 270 00:13:54,720 --> 00:13:58,200 Speaker 9: that comes out of the companies as they report them. 271 00:13:58,400 --> 00:14:00,359 Speaker 1: Hey, Sam, thanks so much for joining us. Really preciated 272 00:14:00,480 --> 00:14:03,600 Speaker 1: as always, Sam Fazzelli. He's head of European Research. He's 273 00:14:03,640 --> 00:14:06,800 Speaker 1: also the senior pharmaceuticals analyst, one of the top analysts 274 00:14:06,800 --> 00:14:07,880 Speaker 1: in the city of London. 275 00:14:08,200 --> 00:14:11,319 Speaker 7: You're listening to the tape Cats are live program Bloomberg 276 00:14:11,400 --> 00:14:14,960 Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the 277 00:14:15,040 --> 00:14:17,120 Speaker 7: tune in app, Bloomberg dot Com. 278 00:14:16,840 --> 00:14:18,280 Speaker 8: And the Bloomberg Business App. 279 00:14:18,280 --> 00:14:21,120 Speaker 7: You can also listen live on Amazon Alexa from our 280 00:14:21,120 --> 00:14:26,160 Speaker 7: flagship New York station, Just say Alexa play Bloomberg eleven thirty. 281 00:14:27,040 --> 00:14:30,160 Speaker 6: Jess Mitt and Paul Sweeney here in the Interactive Brokers studio, 282 00:14:30,240 --> 00:14:31,880 Speaker 6: and we're going to change things up with a C 283 00:14:32,120 --> 00:14:35,280 Speaker 6: suite conversation with someone who I here actually went to 284 00:14:35,320 --> 00:14:39,160 Speaker 6: a school in Texas. Yes, well, so I'm excited. Matt Road, 285 00:14:39,240 --> 00:14:42,240 Speaker 6: chief revenue officer at the auto lending enable to firm 286 00:14:42,360 --> 00:14:44,800 Speaker 6: Open Lending. He's going to chat with us about the 287 00:14:44,840 --> 00:14:48,320 Speaker 6: auto market, carloans, credit crunch, all things about that. Matt, 288 00:14:48,360 --> 00:14:49,800 Speaker 6: thanks so much for joining us. 289 00:14:50,600 --> 00:14:52,360 Speaker 2: Yeah, thank you, guys, Thanks palm Jess. 290 00:14:52,440 --> 00:14:54,320 Speaker 6: I have to get your thoughts when it comes to 291 00:14:54,440 --> 00:14:56,960 Speaker 6: the auto space and with the backdrop obviously with the 292 00:14:56,960 --> 00:14:59,640 Speaker 6: Federal reserve in the direction of the economy. Are you 293 00:14:59,720 --> 00:15:02,040 Speaker 6: noticed seeing any sort of red flags pop up so 294 00:15:02,160 --> 00:15:05,560 Speaker 6: far when it comes to auto lending, you. 295 00:15:05,520 --> 00:15:07,080 Speaker 2: Know, not at this time. 296 00:15:07,080 --> 00:15:09,920 Speaker 10: I mean, I think everybody is curious in watching. You know, 297 00:15:09,960 --> 00:15:13,080 Speaker 10: we've seen used car values over the last couple of years, 298 00:15:13,440 --> 00:15:15,880 Speaker 10: you know, induced by the pandemic and the shortage of 299 00:15:15,920 --> 00:15:18,920 Speaker 10: supply of vehicles, drive car values to the highest we've 300 00:15:18,920 --> 00:15:20,920 Speaker 10: ever seen. And we've seen the biggest drop last year 301 00:15:20,920 --> 00:15:23,920 Speaker 10: in the Mannheim index on records. I think, you know, 302 00:15:24,320 --> 00:15:27,160 Speaker 10: cautiously watching what you use car values are doing, and 303 00:15:27,200 --> 00:15:30,360 Speaker 10: then I'll be ever looming, you know, recession that we 304 00:15:30,520 --> 00:15:33,840 Speaker 10: may or may not be in has lenders thinking about 305 00:15:33,920 --> 00:15:36,920 Speaker 10: you know, from a strategy standpoint, you know, how can 306 00:15:36,960 --> 00:15:41,360 Speaker 10: they still drive some growth but not you know, avoid 307 00:15:41,400 --> 00:15:43,520 Speaker 10: some of the risk that may be out there today. 308 00:15:44,080 --> 00:15:47,640 Speaker 1: Hey, Matt, we may be in a recession or coming 309 00:15:47,680 --> 00:15:49,560 Speaker 1: into recession. People have been talking about it for more 310 00:15:49,600 --> 00:15:51,080 Speaker 1: than a year. What are you seeing in terms of 311 00:15:51,080 --> 00:15:54,560 Speaker 1: the credit quality of your portfolio? Are are your borrowers 312 00:15:54,560 --> 00:15:56,040 Speaker 1: are there? Are they struggling? 313 00:15:57,360 --> 00:16:00,360 Speaker 10: You know, so we tend to focus more on the 314 00:16:00,400 --> 00:16:04,280 Speaker 10: near prime consumer, and what we have typically seen even 315 00:16:04,320 --> 00:16:07,800 Speaker 10: through the Great Recession is that near prime consumers can 316 00:16:08,080 --> 00:16:11,880 Speaker 10: weather you know, economic storms better than than prime consumers. 317 00:16:11,920 --> 00:16:14,520 Speaker 10: And so, you know, from a from a risk standpoint, 318 00:16:14,560 --> 00:16:17,720 Speaker 10: we encourage you know, banks and in any auto lender 319 00:16:18,520 --> 00:16:22,720 Speaker 10: to diversify their portfolio because you know, again typically you know, 320 00:16:22,760 --> 00:16:25,400 Speaker 10: what we saw in the in the Great Recession was 321 00:16:25,400 --> 00:16:31,080 Speaker 10: that prime consumers defaulted at a much higher anticipated rate 322 00:16:31,720 --> 00:16:34,280 Speaker 10: than the near prime consumers. So, you know, we have 323 00:16:34,360 --> 00:16:37,800 Speaker 10: not seen anything out of the norm as of yet 324 00:16:37,840 --> 00:16:41,680 Speaker 10: as it relates to higher than expected delinquency at this 325 00:16:41,720 --> 00:16:44,760 Speaker 10: point in time, but it's something that we continue to monitor. 326 00:16:44,840 --> 00:16:45,040 Speaker 2: Matt. 327 00:16:45,080 --> 00:16:47,600 Speaker 1: Do you guys lend directly to borrowers or do you 328 00:16:47,720 --> 00:16:49,800 Speaker 1: provide financing for the dealerships? 329 00:16:50,040 --> 00:16:51,320 Speaker 2: How does your business model work. 330 00:16:52,160 --> 00:16:55,560 Speaker 10: Yeah, So so we actually are lending enablement platform solution 331 00:16:55,720 --> 00:17:01,560 Speaker 10: that allows auto lenders to better assess risk at origination. 332 00:17:01,680 --> 00:17:04,920 Speaker 10: So we work directly with the banks, credit unions, any 333 00:17:04,960 --> 00:17:09,199 Speaker 10: auto lender on their near prime auto lending strategy to 334 00:17:09,200 --> 00:17:11,840 Speaker 10: help them price and assess risk better at the time 335 00:17:11,880 --> 00:17:14,080 Speaker 10: of origination of that of that auto loan. 336 00:17:14,680 --> 00:17:18,440 Speaker 6: Something that struck me is the car shopping website Edmunds 337 00:17:18,520 --> 00:17:22,240 Speaker 6: was talking about how the thousand dollars auto loan payment 338 00:17:22,320 --> 00:17:25,560 Speaker 6: is actually becoming more common. In about seventeen percent of 339 00:17:25,560 --> 00:17:27,480 Speaker 6: people who bought new cars in the first three months 340 00:17:27,480 --> 00:17:29,480 Speaker 6: of the year have an auto loan payment of about 341 00:17:29,520 --> 00:17:35,600 Speaker 6: one thousand dollars or more. How is that possible? You know, 342 00:17:36,119 --> 00:17:37,200 Speaker 6: it's even sustainable. 343 00:17:38,080 --> 00:17:39,520 Speaker 8: Yeah, it's pretty wild. 344 00:17:39,560 --> 00:17:41,320 Speaker 10: I mean I think, you know, obviously a lot of 345 00:17:41,359 --> 00:17:45,240 Speaker 10: that was driven by the shortage of car car vehicles 346 00:17:45,240 --> 00:17:48,639 Speaker 10: out there, right, So, I mean, when the pandemic, you know, 347 00:17:48,720 --> 00:17:53,239 Speaker 10: caused the auto manufacturers to stop making new cars the 348 00:17:53,240 --> 00:17:55,840 Speaker 10: cars that were available, the price of those just obviously 349 00:17:55,880 --> 00:17:58,520 Speaker 10: went up. So you know, coupled that with you know, 350 00:17:58,880 --> 00:18:03,040 Speaker 10: rising indust rates over the last year, it's just exacerbated 351 00:18:03,119 --> 00:18:06,520 Speaker 10: some of the affordability issues that the consumers are having 352 00:18:06,520 --> 00:18:08,520 Speaker 10: out there today. So so from a from a bank 353 00:18:08,560 --> 00:18:11,320 Speaker 10: and a credit union standpoint, we advise them to take 354 00:18:11,359 --> 00:18:15,600 Speaker 10: ways to to although payments have gone up, you know, 355 00:18:15,680 --> 00:18:18,760 Speaker 10: how can they protect themselves from a risk standpoint of 356 00:18:18,800 --> 00:18:22,520 Speaker 10: that of that increased payment. But you know a lot 357 00:18:22,560 --> 00:18:25,280 Speaker 10: of times, you know, from a from a near prime consumer, 358 00:18:26,040 --> 00:18:28,280 Speaker 10: you know, payment is everything, and so as long as 359 00:18:28,280 --> 00:18:34,240 Speaker 10: they're assessing the collateral value and that residual value appropriately 360 00:18:34,359 --> 00:18:36,920 Speaker 10: on the front end, it puts the bank and the 361 00:18:37,240 --> 00:18:39,879 Speaker 10: credit union in a better position to withstand some of 362 00:18:39,880 --> 00:18:42,840 Speaker 10: this some of these things that we are seeing, you know, 363 00:18:42,840 --> 00:18:44,960 Speaker 10: as it relates to affordability in the economy. 364 00:18:45,480 --> 00:18:48,040 Speaker 1: Hey man, I seem to remember in the news in 365 00:18:48,040 --> 00:18:50,480 Speaker 1: the last several weeks a bank or multiple banks just 366 00:18:50,560 --> 00:18:54,200 Speaker 1: kind of pulling back from the auto lending business. What 367 00:18:54,240 --> 00:18:55,560 Speaker 1: do you what are you seeing in the marketplace in 368 00:18:55,600 --> 00:18:58,440 Speaker 1: terms of the number of lenders actually out there providing 369 00:18:58,440 --> 00:19:00,920 Speaker 1: credit to this segment of the economy. 370 00:19:00,960 --> 00:19:03,480 Speaker 10: You know, I think today, you know, I think what 371 00:19:03,600 --> 00:19:05,840 Speaker 10: most banks and credit unions are trying to do from 372 00:19:05,840 --> 00:19:10,479 Speaker 10: an asset liability management perspective is focus on shorter duration 373 00:19:10,680 --> 00:19:14,080 Speaker 10: loans obviously, given what's happened with you know, Silicon Valley 374 00:19:14,080 --> 00:19:18,440 Speaker 10: banks collapse, you know, they need to focus on lending 375 00:19:18,800 --> 00:19:22,280 Speaker 10: to those consumers that you know have a greater value. 376 00:19:22,280 --> 00:19:27,160 Speaker 10: So are they achieving a return that exceeds. 377 00:19:26,680 --> 00:19:27,600 Speaker 2: Their cost of capital? 378 00:19:27,640 --> 00:19:32,480 Speaker 10: Because of what's happened with interest rates, obviously, everybody's cost 379 00:19:32,520 --> 00:19:35,720 Speaker 10: of capital has gone up, and so you know, maintaining 380 00:19:35,760 --> 00:19:39,200 Speaker 10: balance sheets is what's the most important things and pricing 381 00:19:39,200 --> 00:19:43,120 Speaker 10: those loans correctly, you know, and that really ties back 382 00:19:43,160 --> 00:19:45,399 Speaker 10: to using correct data and to be able to predict 383 00:19:45,400 --> 00:19:50,440 Speaker 10: loan performance ahead of time and ensuring that they're again 384 00:19:50,680 --> 00:19:55,520 Speaker 10: hitting those yield targets that that that they need to 385 00:19:55,640 --> 00:19:56,320 Speaker 10: hit today. 386 00:19:56,560 --> 00:19:59,840 Speaker 6: Right, What indicator are you watching to see if more 387 00:20:00,000 --> 00:20:02,800 Speaker 6: Americans are falling behind on their car loans? 388 00:20:03,680 --> 00:20:09,160 Speaker 10: Yeah, so we we obviously monitor sixty day delinquencies very closely. 389 00:20:09,240 --> 00:20:11,200 Speaker 10: I mean, that is sort of the standard for any 390 00:20:11,200 --> 00:20:15,200 Speaker 10: auto lender out there today in terms of monitoring risk. 391 00:20:15,320 --> 00:20:17,639 Speaker 10: And you know, is that that that's kind of the 392 00:20:17,720 --> 00:20:21,600 Speaker 10: leading indicator for you know, what is my defaults or 393 00:20:21,800 --> 00:20:25,040 Speaker 10: is this barwer's ability actually going to make their next payment? 394 00:20:26,440 --> 00:20:28,679 Speaker 10: And so I think that's that's obviously one that that 395 00:20:28,840 --> 00:20:31,399 Speaker 10: most of the industry watches just as a sort of 396 00:20:31,440 --> 00:20:34,120 Speaker 10: the leading indicator for future losses. 397 00:20:34,800 --> 00:20:37,560 Speaker 1: And Matt just about thirty seconds here. Just overall, I mean, 398 00:20:37,920 --> 00:20:41,800 Speaker 1: it looks like Detroit settled on this annual manufacturing figure 399 00:20:41,800 --> 00:20:44,679 Speaker 1: of maybe fifteen million vehicles per year versus maybe the 400 00:20:44,720 --> 00:20:46,520 Speaker 1: seventeen or seventeen million plus before. 401 00:20:47,119 --> 00:20:48,240 Speaker 2: Do you think that's a new normal. 402 00:20:50,640 --> 00:20:53,640 Speaker 10: I think that it's it's it's getting back to where 403 00:20:53,640 --> 00:20:56,560 Speaker 10: we I do think the seventeen million years is where 404 00:20:56,600 --> 00:20:58,399 Speaker 10: we're going to get back to. I mean, you know, 405 00:20:58,720 --> 00:21:02,880 Speaker 10: the auto manufacturer, you know, need to make cars, and 406 00:21:03,640 --> 00:21:04,639 Speaker 10: so they're. 407 00:21:04,280 --> 00:21:04,800 Speaker 8: Going to do that. 408 00:21:04,920 --> 00:21:08,000 Speaker 10: And I think what we're seeing on the incentive side 409 00:21:08,480 --> 00:21:11,119 Speaker 10: is that those incentives are coming back, and so that 410 00:21:11,200 --> 00:21:14,760 Speaker 10: will drive new car prices down. As we've started to 411 00:21:14,800 --> 00:21:16,480 Speaker 10: see that. I think we just saw the first time 412 00:21:16,520 --> 00:21:19,320 Speaker 10: in a couple of years that the average car sale 413 00:21:19,480 --> 00:21:22,119 Speaker 10: for a new vehicle was below HIMSRP. So I do 414 00:21:22,160 --> 00:21:23,719 Speaker 10: think we're going to get back to normal levels, pre 415 00:21:23,760 --> 00:21:24,560 Speaker 10: pregnement levels. 416 00:21:24,720 --> 00:21:26,479 Speaker 1: All right, Matt, thanks so much for joining us. I 417 00:21:26,480 --> 00:21:28,680 Speaker 1: really appreciate getting some of your thoughts there. Matt Rowe, 418 00:21:28,880 --> 00:21:32,520 Speaker 1: he's a chief revenue officer for open lending. Open lending provides, 419 00:21:33,640 --> 00:21:37,359 Speaker 1: you know, lending solutions for auto dealers, so really focusing 420 00:21:37,400 --> 00:21:38,840 Speaker 1: in on that auto business, and that's one of the 421 00:21:38,840 --> 00:21:41,320 Speaker 1: areas that economas said, they really focus on to see 422 00:21:41,320 --> 00:21:44,560 Speaker 1: some cracks in the consumers will continue to pay attention there. 423 00:21:45,720 --> 00:21:49,119 Speaker 7: You're listening to the teenth Ken's are Live program Bloomberg 424 00:21:49,160 --> 00:21:52,520 Speaker 7: Markets weekdays at ten am Eastern on Bloomberg dot Com, 425 00:21:52,640 --> 00:21:55,760 Speaker 7: the iHeartRadio app, and the Bloomberg Business app, or listen 426 00:21:55,840 --> 00:21:57,960 Speaker 7: on demand wherever you get your podcasts. 427 00:22:00,119 --> 00:22:02,480 Speaker 6: Of course, what else can we continue to talk about, Paul, 428 00:22:02,560 --> 00:22:05,159 Speaker 6: But obviously the Federal Reserve with Fed Shair Jerome Palll 429 00:22:05,200 --> 00:22:08,119 Speaker 6: going to Capitol Hill on Wednesday and Thursday. So I 430 00:22:08,160 --> 00:22:11,000 Speaker 6: want to bring in our next guest, Danielle di Martino Booth, 431 00:22:11,000 --> 00:22:15,440 Speaker 6: who's the CEO and chief strategist at QI Research, joining 432 00:22:15,520 --> 00:22:17,880 Speaker 6: us to of course talk about the FED. Danielle, how 433 00:22:17,920 --> 00:22:18,199 Speaker 6: are you? 434 00:22:19,200 --> 00:22:20,120 Speaker 11: I'm doing great today. 435 00:22:20,119 --> 00:22:22,800 Speaker 6: How are you doing well? So I want to get 436 00:22:22,800 --> 00:22:25,520 Speaker 6: your take now that we got off the FED decision 437 00:22:25,760 --> 00:22:27,880 Speaker 6: last week and obviously going to hear from the man 438 00:22:27,960 --> 00:22:32,040 Speaker 6: himself again this week, what were your expectations as far 439 00:22:32,040 --> 00:22:35,680 Speaker 6: as going into this and also what was your sort 440 00:22:35,720 --> 00:22:37,919 Speaker 6: of take now that we've gotten past the FED decision 441 00:22:37,960 --> 00:22:38,440 Speaker 6: last week. 442 00:22:39,880 --> 00:22:43,600 Speaker 11: Well, from the perspective of a former FED insider, to 443 00:22:43,640 --> 00:22:47,240 Speaker 11: say that it's exceedingly rare to see the FED truly 444 00:22:47,320 --> 00:22:49,800 Speaker 11: pause and then resume rate hikes. 445 00:22:50,040 --> 00:22:50,840 Speaker 5: I will believe it. 446 00:22:50,800 --> 00:22:52,840 Speaker 11: When I see it, and I'm happy to be corrected. 447 00:22:52,880 --> 00:22:54,800 Speaker 11: And that's where the market is pricing in right now. 448 00:22:55,040 --> 00:22:59,280 Speaker 11: But this is a highly unusual situation. But again, the 449 00:22:59,320 --> 00:23:01,720 Speaker 11: markets are sitting at about seventy four percent probability that 450 00:23:01,760 --> 00:23:03,800 Speaker 11: there's another go come July. But there's a heck of 451 00:23:03,840 --> 00:23:06,919 Speaker 11: a lot of data between now and then. You know, 452 00:23:06,960 --> 00:23:09,399 Speaker 11: starting off on the terminal this morning, you see that 453 00:23:09,440 --> 00:23:11,879 Speaker 11: private equity firms are having a very hard time hedging, 454 00:23:11,920 --> 00:23:14,520 Speaker 11: and at the same time, you know, used car loans 455 00:23:14,600 --> 00:23:17,600 Speaker 11: are upside down. This is a story that we would 456 00:23:17,640 --> 00:23:19,719 Speaker 11: have read about in two thousand and eight, but about homes. 457 00:23:20,000 --> 00:23:21,600 Speaker 11: For the average loan to value is one hundred and 458 00:23:21,680 --> 00:23:24,520 Speaker 11: twenty five percent on used cars in the first three 459 00:23:24,560 --> 00:23:28,000 Speaker 11: months of twenty twenty three, according to TransUnion. Clearly, the 460 00:23:28,080 --> 00:23:33,560 Speaker 11: fed's campaign has had an effect in many different places. 461 00:23:33,560 --> 00:23:35,480 Speaker 1: It seems to me, Danielle, I mean you're you're the 462 00:23:35,520 --> 00:23:38,080 Speaker 1: expert to hear, having been at the Dallas FED. But 463 00:23:38,119 --> 00:23:41,280 Speaker 1: it just feels like from a optics perspective, I wouldn't 464 00:23:41,320 --> 00:23:42,960 Speaker 1: want if I were on the FED, I would want 465 00:23:42,960 --> 00:23:45,960 Speaker 1: to pause and then just kind of restart next meeting. 466 00:23:45,960 --> 00:23:48,480 Speaker 1: It sounds like I don't have much conviction one way 467 00:23:48,560 --> 00:23:48,880 Speaker 1: or the other. 468 00:23:50,280 --> 00:23:53,720 Speaker 11: Well, you know, it was interesting because Powell definitely threaded 469 00:23:53,760 --> 00:23:56,760 Speaker 11: that needle in what he said at the podium. He said, 470 00:23:56,880 --> 00:23:59,119 Speaker 11: the data that we have over a six week period 471 00:23:59,160 --> 00:24:01,680 Speaker 11: that's much different the data we have over a three 472 00:24:01,800 --> 00:24:04,840 Speaker 11: month period, which is more trend like. So he was 473 00:24:04,880 --> 00:24:08,400 Speaker 11: actually answering your question in advance, saying that the time 474 00:24:08,440 --> 00:24:11,160 Speaker 11: we get to the July meeting, we will have enough 475 00:24:11,200 --> 00:24:13,840 Speaker 11: to establish whether or not the lag effect has created 476 00:24:13,880 --> 00:24:16,639 Speaker 11: a trend in the data or whether it's a blip, 477 00:24:16,640 --> 00:24:18,199 Speaker 11: and we still have a lot more work to do 478 00:24:18,280 --> 00:24:22,560 Speaker 11: on the inflation front. I was his answers were extremely 479 00:24:22,680 --> 00:24:27,040 Speaker 11: choreographed and extremely careful, but he did make that distinction. 480 00:24:28,040 --> 00:24:30,880 Speaker 6: Danielle, are you managing money? 481 00:24:31,359 --> 00:24:35,720 Speaker 11: We advise institutional investors, so we I think our most 482 00:24:36,000 --> 00:24:38,760 Speaker 11: are what they thought was our craziest call was in 483 00:24:38,880 --> 00:24:41,320 Speaker 11: June of twenty twenty one, we said that the yield 484 00:24:41,359 --> 00:24:46,080 Speaker 11: curve would invert to triple digit negative levels and stay there, 485 00:24:46,440 --> 00:24:48,919 Speaker 11: when the entire street was saying no, no, we're going steeper, 486 00:24:48,920 --> 00:24:51,600 Speaker 11: We're going steeper. We're of the mind right now that 487 00:24:52,119 --> 00:24:56,480 Speaker 11: higher for longer is being reflected in the persistence of 488 00:24:56,520 --> 00:25:00,400 Speaker 11: the negative inversion in the two year tenure, which pushing 489 00:25:00,400 --> 00:25:02,960 Speaker 11: one hundred basis points again today. 490 00:25:03,119 --> 00:25:06,479 Speaker 6: How are you advising clients to position whether or not 491 00:25:06,600 --> 00:25:09,080 Speaker 6: there's a couple more interest rate hikes or not. 492 00:25:10,520 --> 00:25:12,639 Speaker 11: Well, what we're telling telling clients right now is that 493 00:25:12,720 --> 00:25:15,520 Speaker 11: time is on their side. If you have the optionality 494 00:25:15,800 --> 00:25:19,440 Speaker 11: of actually making a return on your cash right now, 495 00:25:19,560 --> 00:25:22,880 Speaker 11: then there's absolutely nothing wrong with being having a little 496 00:25:22,880 --> 00:25:25,440 Speaker 11: bit of dry powder, having some cash on the sidelines. 497 00:25:25,640 --> 00:25:28,880 Speaker 11: By the same token, we think that given what we're 498 00:25:28,920 --> 00:25:33,760 Speaker 11: hearing about household finances and this aha moment in October 499 00:25:33,800 --> 00:25:37,640 Speaker 11: when student loan payments resume, we think that a lot 500 00:25:37,680 --> 00:25:42,159 Speaker 11: of the consumer discretionary doocs and names and sectors have 501 00:25:42,320 --> 00:25:45,040 Speaker 11: gone way way over their skis right now on the 502 00:25:45,040 --> 00:25:47,400 Speaker 11: assumption that everything's going to be fine and the FED 503 00:25:47,480 --> 00:25:51,160 Speaker 11: is going to rise right into the rescue with rate cuts. 504 00:25:51,320 --> 00:25:54,160 Speaker 11: We don't see that as happening. But yet we are 505 00:25:54,280 --> 00:25:59,240 Speaker 11: seeing some severe distress emanating from the US household sector. 506 00:26:00,119 --> 00:26:04,200 Speaker 1: So again, I love to get further thoughts there, I mean, Danielle, 507 00:26:04,200 --> 00:26:07,439 Speaker 1: because I'm not sure really how to handle or phrase 508 00:26:07,520 --> 00:26:09,120 Speaker 1: or characterize this economy. 509 00:26:09,400 --> 00:26:10,600 Speaker 2: How tough is it out there? 510 00:26:11,080 --> 00:26:13,199 Speaker 1: I find myself stuck here in New York and if 511 00:26:13,240 --> 00:26:15,119 Speaker 1: I go to work to San Francisco, But how is 512 00:26:15,119 --> 00:26:15,560 Speaker 1: it out there? 513 00:26:15,600 --> 00:26:16,679 Speaker 2: What's the data telling you? 514 00:26:18,240 --> 00:26:21,160 Speaker 11: Well, the data you know. Actually, this week's quill, I'm 515 00:26:21,200 --> 00:26:24,879 Speaker 11: writing on big ANNEC data because it's more of the 516 00:26:25,040 --> 00:26:27,879 Speaker 11: anecdotes that you're hearing that tell the bigger story. We 517 00:26:27,960 --> 00:26:32,639 Speaker 11: have to recall it's advertised on every medium known in 518 00:26:32,680 --> 00:26:36,280 Speaker 11: financial media. The employee retention credit is pumping about twenty 519 00:26:36,359 --> 00:26:39,640 Speaker 11: billion dollars a month into the US economy. That makes 520 00:26:39,640 --> 00:26:42,560 Speaker 11: it really hard to tease out spending trends when the 521 00:26:42,640 --> 00:26:45,480 Speaker 11: highest income earners are getting twenty billion dollars a month 522 00:26:45,480 --> 00:26:49,440 Speaker 11: from Uncle Sam in leftover Carezact spending through the IRS. 523 00:26:49,960 --> 00:26:53,840 Speaker 11: So that's a really big swing factor about two hundred 524 00:26:53,840 --> 00:26:57,480 Speaker 11: billion dollars in the last three years or so. Marginal 525 00:26:57,640 --> 00:27:01,679 Speaker 11: increase to high net worth individuals if you will you 526 00:27:01,800 --> 00:27:05,439 Speaker 11: parse that out. There was a documentary that aired a 527 00:27:05,440 --> 00:27:09,040 Speaker 11: few months ago about a Phoenix food bank, for example, 528 00:27:09,880 --> 00:27:13,200 Speaker 11: the local TV station just revisited that same food bank, 529 00:27:13,240 --> 00:27:16,080 Speaker 11: and prior volunteers at that food bank are now going 530 00:27:16,119 --> 00:27:19,920 Speaker 11: to the feed bank for food. So we're seeing a turn. 531 00:27:20,000 --> 00:27:24,040 Speaker 11: There's a huge bifurcation in the US economy right now 532 00:27:24,160 --> 00:27:27,520 Speaker 11: where the haves really have it and the haves not 533 00:27:27,800 --> 00:27:30,240 Speaker 11: are really struggling. But it's hard to pick up in 534 00:27:30,280 --> 00:27:31,639 Speaker 11: the data right. 535 00:27:31,520 --> 00:27:33,600 Speaker 6: In the bifurcation. Just looking at some of the housing 536 00:27:33,680 --> 00:27:36,160 Speaker 6: data this morning, with housing starts surging the most since 537 00:27:36,280 --> 00:27:40,880 Speaker 6: twenty sixteen, and so that's suggesting that residential construction could 538 00:27:40,880 --> 00:27:43,639 Speaker 6: be on track to really help fuel economic growth. But 539 00:27:43,680 --> 00:27:45,760 Speaker 6: to your point, how do you square some of that 540 00:27:45,840 --> 00:27:48,119 Speaker 6: data away where you start to see some cracks with 541 00:27:48,200 --> 00:27:50,439 Speaker 6: the consumer even though we've seen other consumer data like 542 00:27:50,480 --> 00:27:52,040 Speaker 6: retail sales still keep up. 543 00:27:53,240 --> 00:27:55,280 Speaker 11: Well, we are seeing retail sales keep up, and we 544 00:27:55,359 --> 00:27:58,919 Speaker 11: should given we're seeing month after month of record uptake 545 00:27:58,960 --> 00:28:01,200 Speaker 11: on credit cards as well as the extra twenty billion 546 00:28:01,200 --> 00:28:03,080 Speaker 11: dollars that I just said is being pumped into the 547 00:28:03,119 --> 00:28:07,359 Speaker 11: economy via the ERC tax credit. So we should be 548 00:28:07,400 --> 00:28:10,720 Speaker 11: seeing these numbers given the amount of money that's being 549 00:28:10,760 --> 00:28:13,679 Speaker 11: taken out and or given away by Uncle Sam. But 550 00:28:13,800 --> 00:28:17,120 Speaker 11: when you see housing starts a hat tip to Randy 551 00:28:17,160 --> 00:28:19,400 Speaker 11: Woodword for pointing this out to me, when you see 552 00:28:19,520 --> 00:28:24,280 Speaker 11: starts at the highest level compared to permits since the 553 00:28:24,359 --> 00:28:28,320 Speaker 11: nineteen nineties, there's something funky in the data, especially when 554 00:28:28,359 --> 00:28:30,919 Speaker 11: we learned that thirty one point two billion dollars of 555 00:28:31,000 --> 00:28:35,400 Speaker 11: residential loans saw a negative in the Fed's H eight 556 00:28:35,480 --> 00:28:37,640 Speaker 11: on Friday after the clothes when everybody had long since 557 00:28:37,720 --> 00:28:41,640 Speaker 11: left for the long weekend. So, from what I'm hearing 558 00:28:41,680 --> 00:28:45,280 Speaker 11: from home builders and from people who study the industry, 559 00:28:45,800 --> 00:28:49,360 Speaker 11: right now, builders are buying down points, so you're still 560 00:28:49,360 --> 00:28:52,080 Speaker 11: borrowing in the four percent range if you're buying a 561 00:28:52,080 --> 00:28:54,760 Speaker 11: new home. The assumption is that the FED is going 562 00:28:54,800 --> 00:28:57,800 Speaker 11: to lower interest rates, making it that much easier to 563 00:28:57,960 --> 00:29:01,720 Speaker 11: push this spec supply out in into the housing market 564 00:29:01,760 --> 00:29:03,720 Speaker 11: and for there to be people who can actually afford it. 565 00:29:03,800 --> 00:29:06,640 Speaker 11: But again, a lot of people, whether you're talking about 566 00:29:07,040 --> 00:29:10,760 Speaker 11: home builders or you're talking about individuals making loans, loan 567 00:29:10,840 --> 00:29:13,680 Speaker 11: officers at banks, a lot of the decisions are being 568 00:29:13,680 --> 00:29:17,240 Speaker 11: predicated on the assumption of said rate cuts. Going forward. 569 00:29:17,560 --> 00:29:20,960 Speaker 1: So on that front, there rate cuts, I mean keeps 570 00:29:20,960 --> 00:29:23,840 Speaker 1: getting pushed out, pushed out. What is your call given 571 00:29:23,880 --> 00:29:24,640 Speaker 1: the data right now? 572 00:29:25,880 --> 00:29:29,680 Speaker 11: Well, I don't If any of you are Star Wars fans, 573 00:29:29,720 --> 00:29:32,840 Speaker 11: you know these aren't the droids you're looking for. When 574 00:29:33,120 --> 00:29:36,680 Speaker 11: Powell was asked by Politico dot com about quantitative tightening, 575 00:29:37,120 --> 00:29:39,880 Speaker 11: he basically gave her that answer, These are not the 576 00:29:39,920 --> 00:29:42,400 Speaker 11: droids you're looking for. We're not talking about the balance sheet. 577 00:29:42,640 --> 00:29:45,200 Speaker 11: It's going to continue to run off in the background. Now, 578 00:29:45,240 --> 00:29:48,440 Speaker 11: he can only do that if he maintains high interest rates. 579 00:29:48,480 --> 00:29:51,200 Speaker 11: You cannot cut interest rates and have quantitative tightening going 580 00:29:51,200 --> 00:29:54,640 Speaker 11: on at the same time. They're by definition contradictory policies. 581 00:29:55,000 --> 00:29:57,200 Speaker 11: So for him to keep shrinking that balance sheet, all 582 00:29:57,200 --> 00:29:59,600 Speaker 11: I ask to do is not hike anymore. Just keep 583 00:29:59,640 --> 00:30:00,600 Speaker 11: breaks where they are. 584 00:30:03,200 --> 00:30:07,280 Speaker 6: All right, Well, it was really great having you, Danielle, 585 00:30:07,320 --> 00:30:09,880 Speaker 6: as far as just breaking down the Federal Reserve, all 586 00:30:09,920 --> 00:30:14,000 Speaker 6: things FED ahead of Fedchair Jerome Pal's testimony on Capitol 587 00:30:14,040 --> 00:30:17,360 Speaker 6: Hill on Wednesday and Thursday. Thank you so much for joining. 588 00:30:17,160 --> 00:30:19,200 Speaker 11: Us, Thank you for having me today. 589 00:30:19,480 --> 00:30:22,600 Speaker 7: You're listening to the tape Cans Are Live program Bloomberg 590 00:30:22,680 --> 00:30:26,240 Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the 591 00:30:26,320 --> 00:30:28,400 Speaker 7: tune in app, Bloomberg dot Com. 592 00:30:28,120 --> 00:30:29,560 Speaker 8: And the Bloomberg Business App. 593 00:30:29,560 --> 00:30:32,400 Speaker 7: You can also listen live on Amazon Alexa from our 594 00:30:32,400 --> 00:30:37,440 Speaker 7: flagship New York station. Just say Alexa play Bloomberg eleven thirty. 595 00:30:38,440 --> 00:30:41,960 Speaker 1: All right, let's pivot over to lay great boondoggle over 596 00:30:42,040 --> 00:30:45,440 Speaker 1: in Paris. That would be the Paris Air Show. They 597 00:30:45,480 --> 00:30:48,320 Speaker 1: buy and sell airplanes there, like you know, we change socks. 598 00:30:48,320 --> 00:30:51,240 Speaker 1: George Ferguson's over there. He's a senior aerospace and defense analyst, 599 00:30:51,680 --> 00:30:53,840 Speaker 1: and it's so important that George is there, so we 600 00:30:53,880 --> 00:30:56,400 Speaker 1: send him there every other year there than the odd 601 00:30:56,440 --> 00:30:57,400 Speaker 1: year they go to London. 602 00:30:57,760 --> 00:31:01,840 Speaker 2: George, thanks much for joining us Boeing Airbus. 603 00:31:02,360 --> 00:31:05,840 Speaker 1: How's it playing out for those two big aerospace companies? 604 00:31:06,920 --> 00:31:10,160 Speaker 12: Thanks for having me? It's I'd say it's I'd say 605 00:31:10,160 --> 00:31:14,000 Speaker 12: it's playing out kind of weekly this year, weekly as 606 00:31:14,040 --> 00:31:17,320 Speaker 12: in W E A K L. I think there's no 607 00:31:17,400 --> 00:31:21,240 Speaker 12: E in there. Why, you know, we've seen a lot 608 00:31:21,280 --> 00:31:23,880 Speaker 12: of the orders we've seen are really wheels out of 609 00:31:23,960 --> 00:31:27,920 Speaker 12: previous orders that were undisclosed, and so they disclose them 610 00:31:27,960 --> 00:31:29,840 Speaker 12: at the air show, and you know, they try to 611 00:31:29,840 --> 00:31:33,520 Speaker 12: get someone to put them in the tally. Airbus started 612 00:31:33,560 --> 00:31:37,120 Speaker 12: the show out with a five hundred airplane order from Indigo, 613 00:31:37,520 --> 00:31:40,960 Speaker 12: the largest order ever, which was that was pretty exciting. 614 00:31:41,720 --> 00:31:43,440 Speaker 12: I mean when you when you look at the order 615 00:31:43,440 --> 00:31:47,760 Speaker 12: books right now, Indigo, you know, the largest air in India, 616 00:31:48,000 --> 00:31:51,840 Speaker 12: fast grower. Indigo has four hundred airplanes on order already, 617 00:31:51,840 --> 00:31:53,920 Speaker 12: so I guess they'll add the five hundred to four hundred. 618 00:31:54,400 --> 00:31:57,560 Speaker 12: Have about nine hundred airplanes on order. They said they're 619 00:31:57,600 --> 00:31:59,720 Speaker 12: taking care of in the order book well into the 620 00:31:59,720 --> 00:32:02,680 Speaker 12: next decade. It didn't surprise us. They took about fifty 621 00:32:02,720 --> 00:32:05,920 Speaker 12: airplanes last year, so I think they were looking to 622 00:32:05,920 --> 00:32:08,800 Speaker 12: make a big splash. But you know, if you knock 623 00:32:08,840 --> 00:32:10,800 Speaker 12: that order out, there's just not a lot going on 624 00:32:10,960 --> 00:32:13,160 Speaker 12: the show. But don't tell my bosses, because I want. 625 00:32:14,800 --> 00:32:17,720 Speaker 6: What are these orders tell us about the trajectory of 626 00:32:17,800 --> 00:32:20,440 Speaker 6: the global economy? 627 00:32:20,560 --> 00:32:23,960 Speaker 12: You know, I think what they tell us is, look, 628 00:32:24,000 --> 00:32:27,360 Speaker 12: aerospace is one of the last recovering areas of the 629 00:32:27,400 --> 00:32:30,240 Speaker 12: global economy. And everyone we talked to over here we 630 00:32:30,360 --> 00:32:33,239 Speaker 12: asked the same question, how's your supply chain, How's your 631 00:32:33,240 --> 00:32:36,760 Speaker 12: supply chain? How's your supply chain? And we're hearing stories 632 00:32:36,800 --> 00:32:41,120 Speaker 12: from it's not getting any worse, but it isn't. We 633 00:32:41,200 --> 00:32:43,640 Speaker 12: still have a lot of problems. So we're getting you know, 634 00:32:43,720 --> 00:32:47,800 Speaker 12: incremental improvement. This industry isn't performing at the level it 635 00:32:47,840 --> 00:32:51,240 Speaker 12: was performing before the pandemic. It's going to take them 636 00:32:51,320 --> 00:32:54,240 Speaker 12: a bunch more years to get there. And so what 637 00:32:54,240 --> 00:32:57,400 Speaker 12: that means is that backlogs are already large. They're already 638 00:32:57,760 --> 00:33:01,720 Speaker 12: stretching into the next decade actually for the Neo and 639 00:33:01,760 --> 00:33:05,560 Speaker 12: the Max, right, the two narrow body people movers, and 640 00:33:05,640 --> 00:33:07,640 Speaker 12: so I think you didn't wait for the show. If 641 00:33:07,680 --> 00:33:09,160 Speaker 12: you had in order to place, you got it placed 642 00:33:09,240 --> 00:33:11,200 Speaker 12: right away because you had to get in that backlog 643 00:33:11,560 --> 00:33:14,920 Speaker 12: and hope that these two manufacturers figure out how to 644 00:33:14,960 --> 00:33:18,040 Speaker 12: get more airplanes pumped through their factories. But they're still 645 00:33:18,320 --> 00:33:20,720 Speaker 12: so I haven't supply chain problems. Labor is the big issue. 646 00:33:20,840 --> 00:33:22,840 Speaker 2: So all right, I want to get to like, what 647 00:33:23,200 --> 00:33:23,680 Speaker 2: is the problem. 648 00:33:23,720 --> 00:33:28,000 Speaker 1: I'm not hearing about semiconductor problems anywhere these days. You know, 649 00:33:28,120 --> 00:33:29,840 Speaker 1: it feels I haven't heard from the auto guys in 650 00:33:30,040 --> 00:33:33,640 Speaker 1: a while, So what really for aerospace. I understand it's 651 00:33:33,680 --> 00:33:36,040 Speaker 1: long lead time and it's you know, building the planes 652 00:33:36,320 --> 00:33:39,080 Speaker 1: a pretty big deal, but what are the supply chains 653 00:33:39,080 --> 00:33:41,560 Speaker 1: and kind of is there any fix out there? 654 00:33:42,840 --> 00:33:45,760 Speaker 12: You know, it's really hard, I think for aerospace because, 655 00:33:46,080 --> 00:33:49,000 Speaker 12: like I said, the big problem is labor, labor, labor, 656 00:33:49,640 --> 00:33:53,760 Speaker 12: and it's not just hiring labor, right, this is sophisticated manufacturing. 657 00:33:53,760 --> 00:33:56,160 Speaker 12: You have to hire it, train it, and get it 658 00:33:56,240 --> 00:34:00,680 Speaker 12: to perform at the level of performed pre pandemic. All 659 00:34:00,720 --> 00:34:04,760 Speaker 12: of this in the backdrop of a global economy where 660 00:34:05,440 --> 00:34:08,759 Speaker 12: during the pandemic people learn to work from home, liked it, 661 00:34:09,080 --> 00:34:12,080 Speaker 12: want the quality of life. And so now you say 662 00:34:12,080 --> 00:34:13,400 Speaker 12: to yourself, do I want to go back to my 663 00:34:13,440 --> 00:34:16,280 Speaker 12: aerospace job. I got to go there five days a week. 664 00:34:16,680 --> 00:34:19,239 Speaker 12: My neighbor's going in three days a week, and you're 665 00:34:19,280 --> 00:34:21,400 Speaker 12: sleeping in at six o'clock in the morning. I'm not 666 00:34:21,480 --> 00:34:23,080 Speaker 12: taking that job. I'm going to go with attack or 667 00:34:23,120 --> 00:34:23,719 Speaker 12: something like that. 668 00:34:23,960 --> 00:34:24,280 Speaker 4: Wow. 669 00:34:24,680 --> 00:34:27,680 Speaker 6: So, especially when it comes to pilot pay, that has 670 00:34:27,719 --> 00:34:29,439 Speaker 6: been a particular issue. 671 00:34:29,160 --> 00:34:31,000 Speaker 8: Right, Yes. 672 00:34:31,360 --> 00:34:34,160 Speaker 12: Absolutely. The funny thing too is the pilots even in 673 00:34:34,200 --> 00:34:37,400 Speaker 12: their agreement, they wanted quality of life issues. And I 674 00:34:37,440 --> 00:34:40,680 Speaker 12: was like, wow, you got to get my cockpit five plane. 675 00:34:40,960 --> 00:34:45,200 Speaker 12: But us pilots especially, I think I have a really 676 00:34:45,200 --> 00:34:47,440 Speaker 12: good year, right, Delta has already signed an agreement with 677 00:34:47,480 --> 00:34:51,640 Speaker 12: their pilots eighteen percent immediately retroactive to the beginning of 678 00:34:51,640 --> 00:34:55,200 Speaker 12: the year, five more percent in pay at the end 679 00:34:55,239 --> 00:34:57,320 Speaker 12: of the year, and then I think it's another five, 680 00:34:57,560 --> 00:35:01,040 Speaker 12: four and four in the out years. So if you 681 00:35:01,080 --> 00:35:03,319 Speaker 12: want the school to be a pilot, you know, your 682 00:35:03,320 --> 00:35:04,040 Speaker 12: ship has come in. 683 00:35:04,280 --> 00:35:07,440 Speaker 1: Your ship has come in so Georgia over there in Paris. 684 00:35:07,520 --> 00:35:09,360 Speaker 1: I know it's always a fight, and you know, between 685 00:35:09,400 --> 00:35:12,759 Speaker 1: Boeing and Airbus, but I want to talk about kind 686 00:35:12,800 --> 00:35:15,799 Speaker 1: of talk about the big jets that I like, the 687 00:35:15,800 --> 00:35:18,120 Speaker 1: big wide body jets, you know, the old seven four 688 00:35:18,200 --> 00:35:21,000 Speaker 1: sevens or even the you know, the triple sevens and 689 00:35:21,000 --> 00:35:21,800 Speaker 1: all that kind of stuff. 690 00:35:21,840 --> 00:35:24,839 Speaker 2: That the Airbus three, I don't know, was it three eighty? 691 00:35:24,880 --> 00:35:25,480 Speaker 2: This monsters. 692 00:35:25,840 --> 00:35:27,640 Speaker 1: Are they even gonna be making those things anymore? 693 00:35:27,680 --> 00:35:28,120 Speaker 2: Is at all? 694 00:35:28,200 --> 00:35:31,799 Speaker 1: Like you said, the people movers the smaller planes, you know. 695 00:35:32,000 --> 00:35:34,480 Speaker 12: So what we saw during the pandemic is that the 696 00:35:34,520 --> 00:35:37,560 Speaker 12: big four engine airplanes three eighty and the seven four 697 00:35:37,640 --> 00:35:42,120 Speaker 12: seven they were sunset. So they're done with the seven four. 698 00:35:42,719 --> 00:35:44,440 Speaker 12: I think we're fully done with the three eighty, though 699 00:35:44,440 --> 00:35:46,360 Speaker 12: there might be one or two coming off the line. Still, 700 00:35:46,360 --> 00:35:50,840 Speaker 12: but they're done. The two big the wide bodies that 701 00:35:50,880 --> 00:35:52,440 Speaker 12: are going to rule the day, I think, you know, 702 00:35:52,520 --> 00:35:55,120 Speaker 12: post pandemic, are going to be the seven eight seven 703 00:35:55,520 --> 00:35:57,640 Speaker 12: and the A three fifty, and we've seen orders for 704 00:35:57,680 --> 00:36:01,160 Speaker 12: those airplanes here at the show. Long haul travel has 705 00:36:01,200 --> 00:36:04,120 Speaker 12: taken a little bit longer to come back. China is 706 00:36:04,160 --> 00:36:07,280 Speaker 12: still not sort of wide open. There's not much capacity 707 00:36:07,320 --> 00:36:10,160 Speaker 12: going in and out of there from Europe in the US, 708 00:36:10,960 --> 00:36:13,880 Speaker 12: you know, long haul capacity, so that's kind of slowed 709 00:36:13,920 --> 00:36:17,400 Speaker 12: down that recovery. I still think there's some willing to 710 00:36:17,440 --> 00:36:19,920 Speaker 12: dealing dealing to do here at the show on wide bodies, 711 00:36:19,920 --> 00:36:22,759 Speaker 12: because that's one of the areas of the backlogs, the 712 00:36:23,160 --> 00:36:24,840 Speaker 12: you know, the three fifteen to seventy eighty seven that 713 00:36:24,920 --> 00:36:27,640 Speaker 12: Bolli and everybody would like to grow. They want to build. 714 00:36:28,120 --> 00:36:29,920 Speaker 12: They want to build more rate on that they could make. 715 00:36:30,000 --> 00:36:32,680 Speaker 12: They could be more profitable toy build more per month, 716 00:36:32,719 --> 00:36:34,319 Speaker 12: and so I think there's probably some wheeling and dealing 717 00:36:34,400 --> 00:36:37,279 Speaker 12: to be done, maybe last minute dinners tonight, you know, 718 00:36:37,360 --> 00:36:39,600 Speaker 12: to try to coerce people to buy one hundred and 719 00:36:39,640 --> 00:36:40,760 Speaker 12: thirty million dollar jets. 720 00:36:40,920 --> 00:36:41,920 Speaker 2: You know, all right, you. 721 00:36:41,880 --> 00:36:45,239 Speaker 1: Flew over to Paris, I'm guessing you went business. How 722 00:36:45,440 --> 00:36:48,440 Speaker 1: was it in terms of was this sold out? Tell 723 00:36:48,440 --> 00:36:49,759 Speaker 1: it to us about the flight and kind of what 724 00:36:49,800 --> 00:36:50,240 Speaker 1: you learned. 725 00:36:51,280 --> 00:36:55,719 Speaker 12: Yeah, I mean flight was pretty full. Is United flight 726 00:36:55,800 --> 00:36:58,839 Speaker 12: on a triple seven a big steal that you'd like? Yeah, 727 00:36:58,880 --> 00:37:03,160 Speaker 12: and those will continue to remain in you know, in production. 728 00:37:03,200 --> 00:37:05,200 Speaker 12: I think they're Heyday. That day we'll come back and 729 00:37:05,239 --> 00:37:07,280 Speaker 12: have a Hey Day again because that'll be the biggest 730 00:37:07,280 --> 00:37:11,080 Speaker 12: people movers. But the flight was full, you know, I 731 00:37:11,080 --> 00:37:14,960 Speaker 12: think this year is going to be pretty busy when 732 00:37:14,960 --> 00:37:18,280 Speaker 12: it comes to this summer. When it comes to European travel, 733 00:37:18,600 --> 00:37:20,440 Speaker 12: there's a lot of bounce back. You know, here in 734 00:37:20,480 --> 00:37:22,640 Speaker 12: Paris we have you can see a lot of Americans 735 00:37:22,640 --> 00:37:25,400 Speaker 12: on the streets, not a lot of Asians, you know, 736 00:37:25,440 --> 00:37:28,400 Speaker 12: not a lot of Chinese and Koreans and Japanese from 737 00:37:28,400 --> 00:37:30,640 Speaker 12: other times I've been here, a lot a lot more 738 00:37:30,640 --> 00:37:34,000 Speaker 12: Americans a dollars strong. So they're filling airplanes and they're all, 739 00:37:34,080 --> 00:37:35,880 Speaker 12: you know, they're trying to get that revenge travel. And 740 00:37:35,920 --> 00:37:38,239 Speaker 12: they got to go back to Paris two or three 741 00:37:38,320 --> 00:37:40,200 Speaker 12: more times since they had to go through a pandemic, 742 00:37:40,280 --> 00:37:43,000 Speaker 12: and so they're you know, they're full they're in the airplanes. 743 00:37:43,320 --> 00:37:45,480 Speaker 6: George, we only have thirty seconds left. When do you 744 00:37:45,600 --> 00:37:49,640 Speaker 6: think corporate travel will return to its pre pandemic levels. 745 00:37:50,440 --> 00:37:53,000 Speaker 12: Yeah, so our last look it was seventy percent back. 746 00:37:53,360 --> 00:37:55,319 Speaker 12: I think we got to get back to a world 747 00:37:55,360 --> 00:37:57,080 Speaker 12: where people are going to the office five days a 748 00:37:57,120 --> 00:38:01,560 Speaker 12: week and it's maybe not so much quality of life exactly. 749 00:38:01,880 --> 00:38:04,840 Speaker 1: That's coming from a former Army officer, you know, quabi 750 00:38:04,880 --> 00:38:07,600 Speaker 1: of life, Get back to work. George Ferguson, thank you 751 00:38:07,680 --> 00:38:10,200 Speaker 1: so much. We appreciate it as always. George Ferguson. He 752 00:38:10,239 --> 00:38:13,560 Speaker 1: covers the global airspace industry, the airline business, and as 753 00:38:13,600 --> 00:38:16,080 Speaker 1: I mentioned, he is a veteran of the US Army, 754 00:38:16,080 --> 00:38:18,720 Speaker 1: so we of course thank him for his service. But again, 755 00:38:19,000 --> 00:38:21,200 Speaker 1: you know, when I was working with George, I'd see 756 00:38:21,200 --> 00:38:22,840 Speaker 1: this request come in. Oh, I got to go to 757 00:38:22,880 --> 00:38:24,640 Speaker 1: Paris for the Paris Air Show next year. I need 758 00:38:24,680 --> 00:38:26,160 Speaker 1: to get in London for the farms where I'm like, 759 00:38:26,440 --> 00:38:28,240 Speaker 1: really you got to go, say yeah, this is where. 760 00:38:28,040 --> 00:38:29,920 Speaker 6: It all happens, you know, and then Hearriet. 761 00:38:29,680 --> 00:38:32,520 Speaker 1: There is yeah, I mean, and they just it's amazing 762 00:38:32,880 --> 00:38:35,240 Speaker 1: the you know the amount of money that gets committed. 763 00:38:35,239 --> 00:38:36,360 Speaker 2: At those air shows. 764 00:38:36,400 --> 00:38:39,560 Speaker 1: Just huge orders from airlines, and he was mentioning Indigo 765 00:38:40,160 --> 00:38:42,840 Speaker 1: talking about a fast growth market of India. 766 00:38:42,880 --> 00:38:44,120 Speaker 2: So that's interesting to learn. 767 00:38:44,400 --> 00:38:47,480 Speaker 7: You're listening to the tape cans are live program Bloomberg 768 00:38:47,600 --> 00:38:51,200 Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the 769 00:38:51,239 --> 00:38:53,200 Speaker 7: tune in app, Bloomberg dot Com, and. 770 00:38:53,160 --> 00:38:54,479 Speaker 8: The Bloomberg Business App. 771 00:38:54,520 --> 00:38:57,319 Speaker 7: You can also listen live on Amazon Alexa from our 772 00:38:57,360 --> 00:39:01,360 Speaker 7: flagship New York station, Just Say Alexa playing Bloomberg eleven. 773 00:39:04,120 --> 00:39:06,880 Speaker 6: Jess Mitten and Paul Sweeney here in the Interactive Broker 774 00:39:06,960 --> 00:39:09,040 Speaker 6: studio and Paul and I we were just talking about 775 00:39:09,040 --> 00:39:13,160 Speaker 6: that Kava ipo last week that debuted. It actually ended 776 00:39:13,239 --> 00:39:15,480 Speaker 6: up being the sixth largest IPO of the year after 777 00:39:15,520 --> 00:39:18,120 Speaker 6: it raised three hundred and seventeen million dollars at around 778 00:39:18,120 --> 00:39:21,160 Speaker 6: a two hundred actually a two point five billion dollar valuation. 779 00:39:21,239 --> 00:39:23,400 Speaker 6: But once you saw that open up, Paul obviously closer 780 00:39:23,400 --> 00:39:27,920 Speaker 6: to a five billion dollar valuation and being up to 781 00:39:28,000 --> 00:39:31,160 Speaker 6: about forty two dollars per share notes trading around thirty eight. 782 00:39:31,200 --> 00:39:34,440 Speaker 6: But who better to bring in to chat about this 783 00:39:34,520 --> 00:39:36,799 Speaker 6: ipo as well as what the outlook is when it 784 00:39:36,840 --> 00:39:40,200 Speaker 6: comes to the IPO market. Brian Lynch, who's the head 785 00:39:40,239 --> 00:39:43,400 Speaker 6: of market insight at Equiti z in Brian talk to 786 00:39:43,480 --> 00:39:46,600 Speaker 6: us about this IPO last week and what you think 787 00:39:46,600 --> 00:39:49,319 Speaker 6: this means as far as what the trajectory is for 788 00:39:49,360 --> 00:39:51,520 Speaker 6: the IPO market moving forward this year next year. 789 00:39:52,560 --> 00:39:56,000 Speaker 13: Thanks for having me. I think the IPO market was 790 00:39:56,080 --> 00:39:59,400 Speaker 13: really seeing the benefits of the Mediterranean diet. As you've 791 00:39:59,440 --> 00:40:02,480 Speaker 13: said that. Kava ipo traded up ninety two percent on 792 00:40:02,520 --> 00:40:05,400 Speaker 13: its first day and holding on to that IPO pop 793 00:40:05,520 --> 00:40:09,200 Speaker 13: and I think they've set a really strong example for 794 00:40:09,400 --> 00:40:13,280 Speaker 13: what a company needs to show to have a successful IPO. 795 00:40:13,440 --> 00:40:18,760 Speaker 13: So public market investors are looking for companies generating significant revenue, 796 00:40:18,800 --> 00:40:22,120 Speaker 13: so Kava generating over five hundred million, and then also 797 00:40:22,160 --> 00:40:26,160 Speaker 13: a mix of growth and profitability. So they stated how 798 00:40:26,320 --> 00:40:29,080 Speaker 13: the majority of their IPO proceeds would go to opening 799 00:40:29,200 --> 00:40:32,800 Speaker 13: more stores, and while they're not profitable, they have strong 800 00:40:32,920 --> 00:40:35,600 Speaker 13: unit economics and they're on a near term path to that. 801 00:40:35,760 --> 00:40:37,880 Speaker 13: So they've kind of laid out the path for the 802 00:40:37,880 --> 00:40:40,360 Speaker 13: boxes other companies will need to check as well. 803 00:40:41,040 --> 00:40:43,000 Speaker 1: So Brionn, I mean, you know, the S and P 804 00:40:43,120 --> 00:40:46,000 Speaker 1: five hundred is a you know, a good chunk this 805 00:40:46,080 --> 00:40:49,280 Speaker 1: year ten eleven twelve percent, why haven't we seen more deals? 806 00:40:49,719 --> 00:40:53,200 Speaker 1: Because the deals we've seen ken View, Kava have been 807 00:40:53,239 --> 00:40:56,319 Speaker 1: wildly successful, and there's got to be a a you know, 808 00:40:57,080 --> 00:41:01,000 Speaker 1: a backlog that you know is incredibly huge. Now for 809 00:41:01,080 --> 00:41:02,080 Speaker 1: most of these underwriters, I. 810 00:41:02,080 --> 00:41:07,760 Speaker 13: Would think absolutely, you have globally over twelve hundred unicorn companies. 811 00:41:07,840 --> 00:41:11,440 Speaker 13: So these are private companies valued at over a billion dollars, 812 00:41:11,840 --> 00:41:14,520 Speaker 13: many that are sitting on the sidelines and we're waiting 813 00:41:14,680 --> 00:41:17,520 Speaker 13: for the market to turn around. So while the market's 814 00:41:17,560 --> 00:41:20,520 Speaker 13: down a bit today, the SMPS at a fourteen month high, 815 00:41:20,600 --> 00:41:23,200 Speaker 13: the VIX is at its lowest level since February of 816 00:41:23,239 --> 00:41:25,799 Speaker 13: twenty twenty, and as you said, we've seen a few 817 00:41:25,800 --> 00:41:30,240 Speaker 13: successful IPOs, So I think companies who have strong business 818 00:41:30,239 --> 00:41:33,840 Speaker 13: fundamentals and have put the right hires in place really 819 00:41:33,880 --> 00:41:37,239 Speaker 13: should start to think about capitalizing on this market opportunity. 820 00:41:37,880 --> 00:41:40,040 Speaker 6: And Paul and I were actually just talking about a 821 00:41:40,040 --> 00:41:42,520 Speaker 6: story Lena Popoina Dita on our US Equities team about 822 00:41:42,560 --> 00:41:45,080 Speaker 6: how Goldman Sachs was saying, the IPO bus looks like 823 00:41:45,120 --> 00:41:48,480 Speaker 6: it's ready to boom once again looking at that data, 824 00:41:48,880 --> 00:41:51,520 Speaker 6: do you think that is when you're seeing a call 825 00:41:51,600 --> 00:41:54,640 Speaker 6: like that from Goldman Sex that you'll see more firms 826 00:41:54,719 --> 00:41:58,600 Speaker 6: kind of jump in and join that kind of call. 827 00:41:58,760 --> 00:42:01,520 Speaker 13: I think it's certainly in encouraging, and there is a 828 00:42:01,520 --> 00:42:05,200 Speaker 13: lot of pent up demand both for liquidity from early 829 00:42:05,239 --> 00:42:07,960 Speaker 13: employees and shareholders of these companies who have been waiting 830 00:42:08,280 --> 00:42:11,400 Speaker 13: ten fifteen years for an IPO, but then also for 831 00:42:11,520 --> 00:42:16,040 Speaker 13: investor access. I think there is this desire to participate 832 00:42:16,520 --> 00:42:20,480 Speaker 13: in innovation and growth, and with companies staying private longer, 833 00:42:20,520 --> 00:42:24,640 Speaker 13: that's happening in the private market. So once these growing 834 00:42:24,680 --> 00:42:27,279 Speaker 13: companies do make their public market debut, I think they 835 00:42:27,320 --> 00:42:31,600 Speaker 13: will be warm received, will be received warmly, So I 836 00:42:31,640 --> 00:42:34,680 Speaker 13: would say that, like the Goldman Report is painting the 837 00:42:34,760 --> 00:42:35,240 Speaker 13: right picture. 838 00:42:36,080 --> 00:42:38,480 Speaker 1: So the last eighteen months have been the slowest initial 839 00:42:38,480 --> 00:42:43,920 Speaker 1: public offering market really since a great financial crisis. I 840 00:42:43,960 --> 00:42:46,360 Speaker 1: guess I'm just wondering what the catalyst is going to 841 00:42:46,400 --> 00:42:50,640 Speaker 1: be here brand because it feels like, you know, just 842 00:42:50,680 --> 00:42:53,759 Speaker 1: by judging by recent deals, i'd be hitting a market 843 00:42:53,840 --> 00:42:54,160 Speaker 1: right here. 844 00:42:54,200 --> 00:42:55,880 Speaker 2: I'm not sure why people are waiting. 845 00:42:56,920 --> 00:43:02,279 Speaker 13: We're starting to see more companies confidentially file or you know, 846 00:43:02,360 --> 00:43:05,160 Speaker 13: make the indications that they're preparing for an IPO, so 847 00:43:05,600 --> 00:43:09,080 Speaker 13: maybe hiring a new head of investor relations, hiring a 848 00:43:09,120 --> 00:43:13,040 Speaker 13: new CFO. But there are companies you know who are 849 00:43:13,120 --> 00:43:16,040 Speaker 13: in the process that I think public market investors will 850 00:43:16,080 --> 00:43:19,520 Speaker 13: be excited about. Arm Is one. This is the British 851 00:43:19,600 --> 00:43:24,600 Speaker 13: SoftBank backed microchip company that tried to merge with Navidio 852 00:43:24,719 --> 00:43:28,840 Speaker 13: last year. That didn't work out for regulatory reasons, but 853 00:43:28,880 --> 00:43:31,440 Speaker 13: they were looking at a forty billion dollar valuation at 854 00:43:31,440 --> 00:43:34,839 Speaker 13: that time and they've confidentially filed for a USIPO. They're 855 00:43:34,920 --> 00:43:37,040 Speaker 13: looking to raise eight to ten billions. So I think 856 00:43:37,080 --> 00:43:39,319 Speaker 13: that's an exciting one that we'll see coming down the 857 00:43:39,320 --> 00:43:42,360 Speaker 13: pipe at some point this year, and more of these 858 00:43:42,600 --> 00:43:45,960 Speaker 13: examples will kind of, you know, give that nudge to 859 00:43:46,120 --> 00:43:48,200 Speaker 13: additional companies to test the markets. 860 00:43:48,760 --> 00:43:52,239 Speaker 6: To Paul's point talking about the IPO market, especially last year, 861 00:43:52,280 --> 00:43:55,120 Speaker 6: it was facing its worst year in about two decades. 862 00:43:55,200 --> 00:43:58,640 Speaker 6: Is given the backdrop of inflation and then higher interest rates, 863 00:43:58,640 --> 00:44:01,439 Speaker 6: how does the Federal Reserve in their interest rate path 864 00:44:01,560 --> 00:44:03,760 Speaker 6: play into this as far as if they're getting close 865 00:44:03,800 --> 00:44:06,480 Speaker 6: to this peak point here, what that means for the 866 00:44:06,520 --> 00:44:08,240 Speaker 6: trajectory of the IPO market. 867 00:44:09,320 --> 00:44:14,000 Speaker 13: Yeah, we saw that rate increases have slowed down, so 868 00:44:14,400 --> 00:44:18,200 Speaker 13: I think that's a positive. It's showing that inflation is 869 00:44:18,239 --> 00:44:21,799 Speaker 13: getting a bit more under control and there will be 870 00:44:22,239 --> 00:44:25,839 Speaker 13: likely future rate hikes, but there's a little less uncertainty 871 00:44:26,360 --> 00:44:30,040 Speaker 13: around that. But I think it really backonds to the 872 00:44:30,080 --> 00:44:34,400 Speaker 13: point of investor interest in growth. So they want, you know, 873 00:44:34,719 --> 00:44:39,880 Speaker 13: large growth opportunities and the ability to really capitalize on 874 00:44:39,960 --> 00:44:43,280 Speaker 13: greater returns, you know, in a higher interest rate environment 875 00:44:43,320 --> 00:44:44,759 Speaker 13: where your cash could be making more. 876 00:44:45,640 --> 00:44:49,080 Speaker 1: So brandis are there any industries that the market might 877 00:44:49,120 --> 00:44:51,200 Speaker 1: be more receptive to right now? Because I'm just saying 878 00:44:51,239 --> 00:44:55,200 Speaker 1: that Cava was a restaurant business, ken View was healthcare. 879 00:44:55,920 --> 00:44:58,360 Speaker 1: I mean, these aren't like the super sexiest things like 880 00:44:58,480 --> 00:45:01,520 Speaker 1: technology or something. So what are you hearing from the 881 00:45:01,560 --> 00:45:03,840 Speaker 1: bankers in terms of what industries might be, you know, 882 00:45:03,960 --> 00:45:06,320 Speaker 1: most receptive of by the public. 883 00:45:07,200 --> 00:45:10,719 Speaker 13: Yeah, So in the private markets, we're seeing a few 884 00:45:10,840 --> 00:45:16,000 Speaker 13: sectors with the greatest investor interest. Those are AI and 885 00:45:16,080 --> 00:45:21,279 Speaker 13: machine learning companies. Not surprisingly, fintech is generating a lot 886 00:45:21,320 --> 00:45:24,920 Speaker 13: of interest, and then software as a service businesses as well. 887 00:45:24,960 --> 00:45:29,200 Speaker 13: So those are some categories to think about where there 888 00:45:29,200 --> 00:45:32,640 Speaker 13: may be public market interest as well for the right 889 00:45:32,680 --> 00:45:34,840 Speaker 13: candidates to go public. But that's what we're seeing in 890 00:45:34,880 --> 00:45:37,319 Speaker 13: the private markets at equity zen, What. 891 00:45:37,239 --> 00:45:39,400 Speaker 6: Are the next IPOs that are on your radar? 892 00:45:41,000 --> 00:45:43,680 Speaker 13: Yeah, arm is one I'd mentioned that I think could 893 00:45:43,680 --> 00:45:49,319 Speaker 13: be interesting. Sheen is another one, the Chinese fast fashion retailer. 894 00:45:50,040 --> 00:45:53,880 Speaker 13: They just raised more capital at a down round just 895 00:45:54,000 --> 00:45:58,359 Speaker 13: earlier this year after raising at you know, a very 896 00:45:58,360 --> 00:46:01,400 Speaker 13: aggressive hundred billion dollar value back in April of twenty 897 00:46:01,440 --> 00:46:05,120 Speaker 13: twenty one. But this is the profitable, fast growing company 898 00:46:06,000 --> 00:46:08,479 Speaker 13: with a global market that is said that they're looking 899 00:46:08,560 --> 00:46:11,200 Speaker 13: to IPO later this year, So I think that's another 900 00:46:11,239 --> 00:46:12,600 Speaker 13: one people will have their eye on. 901 00:46:13,160 --> 00:46:15,879 Speaker 1: You bring up a good point here, just wondering about 902 00:46:15,880 --> 00:46:18,680 Speaker 1: the types of names that could come public here. And 903 00:46:19,120 --> 00:46:22,600 Speaker 1: valuation is a big issue here because I could I 904 00:46:22,640 --> 00:46:25,120 Speaker 1: can imagine me being an IPO banker going into with 905 00:46:25,160 --> 00:46:27,719 Speaker 1: evaluation that would represent a down round for a lot 906 00:46:27,760 --> 00:46:29,720 Speaker 1: of these companies and that's a problem. 907 00:46:29,760 --> 00:46:32,040 Speaker 2: So are we seeing that in the market. 908 00:46:33,440 --> 00:46:36,680 Speaker 13: I think it's just a reality of where we are, 909 00:46:36,800 --> 00:46:40,960 Speaker 13: where companies raised capital at these aggressive valuations in twenty 910 00:46:41,000 --> 00:46:43,960 Speaker 13: twenty and twenty twenty one, and on equity Zience platform, 911 00:46:44,000 --> 00:46:46,480 Speaker 13: we're seeing the average company trading at a forty to 912 00:46:46,520 --> 00:46:51,120 Speaker 13: fifty percent discount to that last primary round reflection or 913 00:46:51,160 --> 00:46:54,960 Speaker 13: reflecting that correction in the market. So I think some 914 00:46:55,040 --> 00:46:58,840 Speaker 13: companies may choose to raise additional primary capital as a 915 00:46:58,880 --> 00:47:02,160 Speaker 13: means of also reset adding their valuation before they go 916 00:47:02,239 --> 00:47:05,319 Speaker 13: to IPO. Others may rip off the band aid and 917 00:47:05,560 --> 00:47:08,799 Speaker 13: understand that they may be you know, raising out a 918 00:47:08,840 --> 00:47:13,200 Speaker 13: lower valuation in an IPO. So it's different paths that 919 00:47:13,280 --> 00:47:16,759 Speaker 13: different companies will take. But I think ultimately they need 920 00:47:16,800 --> 00:47:19,200 Speaker 13: to come up with the solution, you know, both for 921 00:47:19,400 --> 00:47:21,360 Speaker 13: liquidity and broader access. 922 00:47:22,280 --> 00:47:24,560 Speaker 1: Hey, Brian, thanks so much for joining us. Really appreciate 923 00:47:24,600 --> 00:47:27,200 Speaker 1: getting a few minutes of your time. Brian Lynch, head 924 00:47:27,239 --> 00:47:29,000 Speaker 1: of Market Insight at Equity Zen. 925 00:47:29,320 --> 00:47:32,920 Speaker 7: You're listening to the tape cancer live program Bloomberg Markets 926 00:47:33,000 --> 00:47:36,399 Speaker 7: weekdays at ten am Eastern on Bloomberg Radio, the tune 927 00:47:36,440 --> 00:47:38,120 Speaker 7: in app, Bloomberg dot Com, and. 928 00:47:38,080 --> 00:47:39,399 Speaker 8: The Bloomberg Business App. 929 00:47:39,440 --> 00:47:42,239 Speaker 7: You can also listen live on Amazon Alexa from our 930 00:47:42,280 --> 00:47:48,200 Speaker 7: flagship New York station. Just say Alexa play Bloomberg eleven thirty. 931 00:47:48,080 --> 00:47:52,080 Speaker 1: Lots going on in terms of global geopolitics, if you will. 932 00:47:52,280 --> 00:47:55,080 Speaker 1: Mc muloy joins us. He's co founder of the Lobo Institute, 933 00:47:55,520 --> 00:47:59,520 Speaker 1: former senior fellow at Middle East Initiative Formula Deputy Assistant 934 00:47:59,560 --> 00:48:02,040 Speaker 1: Second Defense for the Middle East at the US Department 935 00:48:02,040 --> 00:48:05,720 Speaker 1: of Defense. And also he is a former US Marine 936 00:48:05,719 --> 00:48:09,200 Speaker 1: Infantry officer, so we thank him for his service. Hey, Mick, 937 00:48:09,280 --> 00:48:11,440 Speaker 1: there's a lot to talk about here. We appreciate getting 938 00:48:11,440 --> 00:48:13,480 Speaker 1: some more of your time. Let's start with China and 939 00:48:13,600 --> 00:48:16,840 Speaker 1: Secretary of State Blincoln, how would you kind of characterize 940 00:48:17,239 --> 00:48:20,640 Speaker 1: that visit the success or lack thereof. 941 00:48:22,680 --> 00:48:24,640 Speaker 14: So great to be with you, I think right now 942 00:48:24,640 --> 00:48:27,520 Speaker 14: we can say it's somewhere in between. It's good that 943 00:48:27,600 --> 00:48:31,200 Speaker 14: it happened. It's important that the superpowers of the world, 944 00:48:31,239 --> 00:48:36,560 Speaker 14: particularly those with nuclear weapons, are talking and not going 945 00:48:36,600 --> 00:48:40,600 Speaker 14: more towards the potential for our conflict. But one of 946 00:48:40,640 --> 00:48:42,960 Speaker 14: the main things that we wanted to do here was 947 00:48:43,000 --> 00:48:47,240 Speaker 14: to get military to military communications back started. That's something 948 00:48:47,280 --> 00:48:49,879 Speaker 14: that during the entirety of the Cold War, the United 949 00:48:49,880 --> 00:48:54,000 Speaker 14: States and sovi Union did mostly because we wanted to 950 00:48:54,200 --> 00:48:59,160 Speaker 14: avoid a misinterpretation that led to an engagement that could 951 00:48:59,239 --> 00:49:01,759 Speaker 14: lead to a conflict. So that's why I think Secretary 952 00:49:01,800 --> 00:49:04,040 Speaker 14: blink And has been so emphatic about that. And it 953 00:49:04,080 --> 00:49:07,640 Speaker 14: looks like that did not happen, but they did have 954 00:49:07,719 --> 00:49:12,200 Speaker 14: agreement to carry on and have another engagement between the 955 00:49:12,280 --> 00:49:15,880 Speaker 14: Foreign Minister and our Secretary of State and potentially have 956 00:49:16,040 --> 00:49:19,400 Speaker 14: our presidents meet at st the G twenty. So it 957 00:49:19,920 --> 00:49:22,520 Speaker 14: wasn't a failure, but it wasn't what we needed, which 958 00:49:22,600 --> 00:49:26,320 Speaker 14: was to make sure that our militaries have the ability 959 00:49:26,360 --> 00:49:28,840 Speaker 14: to talk to one another to avoid an escalation that 960 00:49:28,920 --> 00:49:30,160 Speaker 14: need Cutter would want. 961 00:49:30,640 --> 00:49:30,799 Speaker 4: Nick. 962 00:49:30,880 --> 00:49:33,360 Speaker 6: There were reports earlier this year that the US was 963 00:49:33,400 --> 00:49:38,120 Speaker 6: planning to increase the number of US troops training Taiwanese forces, 964 00:49:38,680 --> 00:49:41,640 Speaker 6: not confirmed though obviously by the government. Have we gotten 965 00:49:42,480 --> 00:49:45,280 Speaker 6: new indication on that front from his visit this week. 966 00:49:47,640 --> 00:49:50,400 Speaker 14: So one of the things that I think has irritated 967 00:49:50,560 --> 00:49:54,400 Speaker 14: China so much is that we have new agreements with 968 00:49:54,480 --> 00:49:58,279 Speaker 14: the Philippines, for example, to put four new or four 969 00:49:58,400 --> 00:50:02,120 Speaker 14: bases where less military will be, what the Marine Corps 970 00:50:02,120 --> 00:50:04,840 Speaker 14: doing with the lictoral Regiment. And now to your point 971 00:50:05,200 --> 00:50:10,240 Speaker 14: that we are actively increasing the number of trainers in Taiwan, 972 00:50:11,160 --> 00:50:13,319 Speaker 14: that is in our interest, it's in the interest of 973 00:50:13,320 --> 00:50:16,920 Speaker 14: our allies in the region. But it's obviously something that 974 00:50:17,040 --> 00:50:19,880 Speaker 14: China doesn't want to see if they still have a 975 00:50:19,960 --> 00:50:24,960 Speaker 14: design on taking Taiwan. So that's going to be attention. 976 00:50:25,120 --> 00:50:28,759 Speaker 14: I don't think we could have one hundred diplomatic engagements 977 00:50:29,080 --> 00:50:30,719 Speaker 14: and we're never going to see the eye to eye 978 00:50:30,840 --> 00:50:34,040 Speaker 14: on the issue of Taiwan, but it is something that 979 00:50:34,080 --> 00:50:37,840 Speaker 14: we need to address and then focus on the areas 980 00:50:37,840 --> 00:50:40,000 Speaker 14: where the United States and China do have an interest, 981 00:50:40,200 --> 00:50:44,799 Speaker 14: which is largely economics. Our economies are tied, not economists. 982 00:50:44,840 --> 00:50:46,840 Speaker 14: But I think I know I can say that, and 983 00:50:46,880 --> 00:50:50,440 Speaker 14: it's important that we focus on those areas, understanding that 984 00:50:50,480 --> 00:50:52,279 Speaker 14: there's certain areas that will never agree on. 985 00:50:52,920 --> 00:50:54,840 Speaker 1: All Right, Mick, let's switch gears because I know we 986 00:50:54,880 --> 00:50:59,440 Speaker 1: can do that with you. Ukraine, I guess the counter 987 00:51:00,120 --> 00:51:02,399 Speaker 1: offensive is underway. If it is kind of how would 988 00:51:02,440 --> 00:51:05,160 Speaker 1: you characterize it and what are your thoughts given that 989 00:51:05,239 --> 00:51:06,160 Speaker 1: situation over there? 990 00:51:08,200 --> 00:51:11,960 Speaker 14: So I would characterize it as smart. From the Ukrainian perspective, 991 00:51:12,719 --> 00:51:16,759 Speaker 14: they could they could have gone all in, and they 992 00:51:16,800 --> 00:51:19,640 Speaker 14: could have had a catastrophic failure. What I think they've 993 00:51:19,640 --> 00:51:24,040 Speaker 14: done is they've probed the Russian lines. They've retaken some 994 00:51:24,280 --> 00:51:27,440 Speaker 14: territory I think around one hundred and fourteen square kilometers 995 00:51:27,520 --> 00:51:31,280 Speaker 14: right now, about eight pounds, But they haven't committed the bulk, 996 00:51:31,400 --> 00:51:33,960 Speaker 14: the mass of their force because They're really trying to 997 00:51:34,000 --> 00:51:36,799 Speaker 14: find out where the Russians are most runnable and then 998 00:51:36,920 --> 00:51:39,880 Speaker 14: exploit it to a point where it puts them so 999 00:51:40,080 --> 00:51:42,759 Speaker 14: much on their back, but that they can start regaining 1000 00:51:43,239 --> 00:51:45,680 Speaker 14: a lot of territory. So I think it is going 1001 00:51:45,760 --> 00:51:48,880 Speaker 14: where the Ukrainians expected it to, maybe not what everybody 1002 00:51:48,960 --> 00:51:52,680 Speaker 14: expected it, where it would be a more massive attack 1003 00:51:53,560 --> 00:51:55,920 Speaker 14: acts of attacks. But I think they're doing it the 1004 00:51:56,000 --> 00:52:00,000 Speaker 14: right way because they have skill, they have the better equipment, 1005 00:52:00,120 --> 00:52:02,080 Speaker 14: but they also have a problem and they don't have 1006 00:52:02,280 --> 00:52:06,600 Speaker 14: as many soldiers, so they have to be very cautious 1007 00:52:06,719 --> 00:52:11,040 Speaker 14: one where they bend those soldiers and try to find 1008 00:52:11,080 --> 00:52:13,840 Speaker 14: the vulnerabilities, the gaps and teams, if you will, in 1009 00:52:13,880 --> 00:52:15,840 Speaker 14: the Russian defenses. So I think this is going to 1010 00:52:15,840 --> 00:52:19,240 Speaker 14: be something that builds rather than a big big bang 1011 00:52:19,239 --> 00:52:19,840 Speaker 14: at the beginning. 1012 00:52:20,080 --> 00:52:21,920 Speaker 6: What is it going to take to get Russia out 1013 00:52:21,920 --> 00:52:24,880 Speaker 6: of Ukraine? 1014 00:52:26,080 --> 00:52:29,680 Speaker 14: It's going to be tough. I think what the Ukrainians 1015 00:52:29,680 --> 00:52:31,879 Speaker 14: are trying to do is get to a point where 1016 00:52:31,880 --> 00:52:35,400 Speaker 14: they challenge their ability to maintain their presence in Crimea 1017 00:52:35,920 --> 00:52:39,440 Speaker 14: something they had thought they had harready gotten. They've done 1018 00:52:39,440 --> 00:52:42,800 Speaker 14: it in twenty fourteen and never thought that that would 1019 00:52:42,800 --> 00:52:47,560 Speaker 14: be challenged, and it is very strategically important to them 1020 00:52:48,040 --> 00:52:51,000 Speaker 14: if the Ukrainians can get to a point where they 1021 00:52:51,080 --> 00:52:54,479 Speaker 14: challenge their ability to stay there. That's why they're trying 1022 00:52:54,520 --> 00:52:57,200 Speaker 14: to cut off the land bridge by pushing all the 1023 00:52:57,200 --> 00:53:00,600 Speaker 14: way through Zaparicha to be able to cut them off. 1024 00:53:00,640 --> 00:53:02,560 Speaker 14: The only way they can get to Crimea after that 1025 00:53:02,680 --> 00:53:04,920 Speaker 14: is that bridge, which is vulnable. But if they get 1026 00:53:04,960 --> 00:53:08,480 Speaker 14: to that point, perhaps they'll be at times they can negotiate. 1027 00:53:08,920 --> 00:53:10,680 Speaker 14: I don't know if the Ukrainians will be willing to 1028 00:53:10,680 --> 00:53:14,520 Speaker 14: give any territory, including Crimea, but Russia might get to 1029 00:53:14,600 --> 00:53:17,840 Speaker 14: a point where they realized that they might lose Crimea, 1030 00:53:18,000 --> 00:53:20,920 Speaker 14: something they never thought would happen when they launched this invasion. 1031 00:53:21,719 --> 00:53:27,200 Speaker 1: Mike Holt important are critical? Are fighter jets for Ukraine? 1032 00:53:27,239 --> 00:53:28,640 Speaker 1: Are they a game changer or not. 1033 00:53:28,640 --> 00:53:31,520 Speaker 4: So much so. 1034 00:53:31,640 --> 00:53:35,880 Speaker 14: I think that with all the other items that they've gotten, 1035 00:53:35,920 --> 00:53:38,080 Speaker 14: you know, from the M one tanks, the other main 1036 00:53:38,120 --> 00:53:42,439 Speaker 14: battle tanks, the infantry fighting vehicles, this is just one 1037 00:53:42,480 --> 00:53:44,680 Speaker 14: more piece of the puzzle that's going to give them 1038 00:53:44,680 --> 00:53:46,880 Speaker 14: the ability to go on the offensive and to the 1039 00:53:46,920 --> 00:53:50,960 Speaker 14: point where they can take back key terrains. F sixteams. 1040 00:53:51,120 --> 00:53:54,560 Speaker 14: They're good in the air. They can knock incoming missiles, 1041 00:53:54,560 --> 00:53:56,960 Speaker 14: they can knock enemy fighters, but they can also do 1042 00:53:57,040 --> 00:54:00,319 Speaker 14: qulose air support, and that's something desperately needed when you're 1043 00:54:00,320 --> 00:54:03,800 Speaker 14: trying to attack fortified positions in which the Russians have 1044 00:54:03,960 --> 00:54:08,720 Speaker 14: been in for so long. Developing so game changer close 1045 00:54:08,760 --> 00:54:11,480 Speaker 14: to it, But I think the game changers of all 1046 00:54:11,480 --> 00:54:15,000 Speaker 14: the things that you've given recently that have really given 1047 00:54:15,040 --> 00:54:17,040 Speaker 14: them the ability to do this counter offensive in a 1048 00:54:17,080 --> 00:54:20,200 Speaker 14: way that could be really meaningful, that really put Russia 1049 00:54:20,280 --> 00:54:22,160 Speaker 14: in a position where they might not be able to 1050 00:54:22,160 --> 00:54:26,360 Speaker 14: stay stay in the positions that they had occupied for 1051 00:54:26,400 --> 00:54:26,839 Speaker 14: so long. 1052 00:54:27,160 --> 00:54:29,319 Speaker 6: Nick Willy have about thirty seconds left, but have to 1053 00:54:29,320 --> 00:54:32,520 Speaker 6: get your take about this Titanic vessel. What do you 1054 00:54:32,560 --> 00:54:33,759 Speaker 6: think is going to happen there? 1055 00:54:35,960 --> 00:54:38,799 Speaker 14: Well, I certainly hope that we can get out and 1056 00:54:38,880 --> 00:54:42,360 Speaker 14: find these individuals and rescue them. It's obviously you know, 1057 00:54:42,520 --> 00:54:47,040 Speaker 14: thoughts to them and their families, but it's going to 1058 00:54:47,080 --> 00:54:50,000 Speaker 14: be difficult. I mean, they're going to have to find 1059 00:54:50,880 --> 00:54:52,600 Speaker 14: If you think about it, look how long it took 1060 00:54:52,680 --> 00:54:55,200 Speaker 14: to find the Titanic itself. Well, the Titanic is nine 1061 00:54:55,280 --> 00:54:57,960 Speaker 14: hundred feet fall. How long is the Titan. That's the 1062 00:54:58,040 --> 00:55:01,080 Speaker 14: name of the submersible lends is twenty feed long. So 1063 00:55:01,120 --> 00:55:02,960 Speaker 14: they're going to have to figure out where it was, 1064 00:55:03,480 --> 00:55:07,200 Speaker 14: which is difficult because it doesn't have any communications. And 1065 00:55:07,200 --> 00:55:08,520 Speaker 14: then they're going to have to get all the way 1066 00:55:08,560 --> 00:55:11,000 Speaker 14: down there and figure out how to tether it to 1067 00:55:11,040 --> 00:55:14,040 Speaker 14: another subversible and bring it to the surface. Let's hope 1068 00:55:14,080 --> 00:55:16,480 Speaker 14: they can do it, but it is not going to 1069 00:55:16,520 --> 00:55:17,000 Speaker 14: be easy. 1070 00:55:17,040 --> 00:55:18,799 Speaker 5: It's going to be a challenge, all right, Nick, thank 1071 00:55:18,840 --> 00:55:19,200 Speaker 5: you so much. 1072 00:55:19,239 --> 00:55:19,759 Speaker 2: We appreciate it. 1073 00:55:19,840 --> 00:55:23,319 Speaker 1: McK mouloy, co founder of the Lobo Institute, getting his 1074 00:55:23,400 --> 00:55:25,240 Speaker 1: thoughts on some geopolitical issues. 1075 00:55:26,640 --> 00:55:29,759 Speaker 3: Thanks for listening to the Bloomberg Markets podcasts. You can 1076 00:55:29,800 --> 00:55:33,560 Speaker 3: subscribe and listen to interviews at Apple Podcasts or whatever 1077 00:55:33,640 --> 00:55:37,360 Speaker 3: podcast platform you prefer. I'm Matt Miller. I'm on Twitter 1078 00:55:37,560 --> 00:55:39,480 Speaker 3: at Matt Miller nineteen seventy three. 1079 00:55:39,920 --> 00:55:42,400 Speaker 2: And I'm Paul Sweeney. I'm on Twitter at pt Sweeney. 1080 00:55:42,440 --> 00:55:45,120 Speaker 1: Before the podcast, you can always catch us worldwide at 1081 00:55:45,120 --> 00:55:46,879 Speaker 1: Bloomberg Radio.