1 00:00:00,840 --> 00:00:04,000 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 2 00:00:04,040 --> 00:00:05,240 Speaker 1: my co host Matt Miller. 3 00:00:05,640 --> 00:00:09,600 Speaker 2: Every business day we bring you interviews from CEOs, market pros, 4 00:00:09,720 --> 00:00:13,600 Speaker 2: and Bloomberg experts, along with essential market moving news. 5 00:00:14,160 --> 00:00:17,279 Speaker 1: Find the Bloomberg Markets podcast called Apple Podcasts or wherever 6 00:00:17,400 --> 00:00:20,520 Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast. 7 00:00:21,079 --> 00:00:24,360 Speaker 1: All right, let's get to the political story that is 8 00:00:24,400 --> 00:00:27,440 Speaker 1: of the day. That would be the fourth criminal indictment 9 00:00:27,640 --> 00:00:30,440 Speaker 1: of former President Donald Trump. I want to bring in 10 00:00:31,240 --> 00:00:35,560 Speaker 1: Kayley Lines, Bloomberg Television, TV and radio host. She joins 11 00:00:35,600 --> 00:00:37,919 Speaker 1: us here, plus former federal prosecutor for the Department of 12 00:00:38,000 --> 00:00:42,159 Speaker 1: Justice Michael Zelden joins us as well. So we appreciate that. 13 00:00:42,800 --> 00:00:44,160 Speaker 3: Kaylie. Let's start with you here. 14 00:00:44,840 --> 00:00:50,199 Speaker 1: What's the feeling in DC about this fourth indictment and 15 00:00:50,360 --> 00:00:52,880 Speaker 1: likely presumably the last one we'll get here. 16 00:00:53,360 --> 00:00:55,880 Speaker 4: Well, we've all been waiting a really long time for this. 17 00:00:56,000 --> 00:00:58,160 Speaker 4: It had been some time that Fannie Willis, the district 18 00:00:58,200 --> 00:01:00,600 Speaker 4: attorney in Fulton County, had said that you would bring 19 00:01:01,000 --> 00:01:03,920 Speaker 4: these charges in August. So there is some relief I 20 00:01:03,960 --> 00:01:06,440 Speaker 4: guess that that has finally happened, and we all have 21 00:01:06,480 --> 00:01:08,160 Speaker 4: to stop the waiting game, and now it really is 22 00:01:08,160 --> 00:01:12,039 Speaker 4: more of the what happens next game. That said, this is, 23 00:01:12,120 --> 00:01:14,479 Speaker 4: as you say, the fourth indictment. We have already seen 24 00:01:14,480 --> 00:01:17,360 Speaker 4: this song and dance three times already, so I feel 25 00:01:17,360 --> 00:01:21,000 Speaker 4: like there is a bit more of a Okay, it's 26 00:01:21,040 --> 00:01:23,880 Speaker 4: another one since here relative to you know, the history 27 00:01:23,920 --> 00:01:26,399 Speaker 4: being made of that first state indictment in New York 28 00:01:26,440 --> 00:01:29,959 Speaker 4: and then the first federal indictment in the classified documents case, 29 00:01:30,520 --> 00:01:34,320 Speaker 4: and so the fourth one, while definitely significant, giving given 30 00:01:34,360 --> 00:01:37,640 Speaker 4: its wide range, how the violation of the Rico Act 31 00:01:37,680 --> 00:01:40,640 Speaker 4: he is accused of does carry a minimum sentence if 32 00:01:40,680 --> 00:01:45,200 Speaker 4: found guilty, of five years, it definitely is significant. But 33 00:01:45,240 --> 00:01:47,280 Speaker 4: it's a moment we have long been expecting. 34 00:01:48,000 --> 00:01:51,040 Speaker 2: Michael, first of all, thanks for joining us. I got 35 00:01:51,040 --> 00:01:56,160 Speaker 2: to ask you about the tactic tactical differences between the 36 00:01:56,400 --> 00:02:00,960 Speaker 2: Jack Smith prosecution of just Trump and and you know, 37 00:02:01,000 --> 00:02:03,200 Speaker 2: it seems like he's really honed in. He doesn't want 38 00:02:03,240 --> 00:02:08,160 Speaker 2: to be distracted by any other defendants. And Fannie Willis, 39 00:02:08,240 --> 00:02:14,680 Speaker 2: who has how many people has she indicted for? Eighteen people, 40 00:02:15,200 --> 00:02:19,200 Speaker 2: nineteen people, nineteen people. It seems like that would just take. 41 00:02:19,040 --> 00:02:19,639 Speaker 3: A long time. 42 00:02:19,680 --> 00:02:23,239 Speaker 2: Everybody's got a different scheduling problem. I mean, how is 43 00:02:23,280 --> 00:02:24,160 Speaker 2: this gonna work out? 44 00:02:25,360 --> 00:02:27,040 Speaker 5: Well, A whole lot of people are going to enter. 45 00:02:27,080 --> 00:02:29,880 Speaker 5: Please all of the people on sort of page two 46 00:02:29,919 --> 00:02:32,839 Speaker 5: of the indictment, they have to get out from under 47 00:02:32,880 --> 00:02:37,600 Speaker 5: the Rico charge. Rico charge carries the five year mandatory minimum, 48 00:02:38,000 --> 00:02:43,000 Speaker 5: and these lesser people are all gonna say to the prosecutor, 49 00:02:43,600 --> 00:02:47,280 Speaker 5: please let me plead guilty to something other than Rico. 50 00:02:47,639 --> 00:02:49,480 Speaker 5: If you need me to cooperate, let's see if I 51 00:02:49,520 --> 00:02:51,840 Speaker 5: have anything that's worthwhile to you. But this case, I 52 00:02:51,880 --> 00:02:55,640 Speaker 5: think is gonna get skinnied down pretty quickly because of 53 00:02:55,680 --> 00:02:58,680 Speaker 5: the Rico charge, and I think you'll have a multiple 54 00:02:58,680 --> 00:03:02,959 Speaker 5: defendent case. But Fanny Willis decided that that was what 55 00:03:03,040 --> 00:03:07,240 Speaker 5: she wanted to tell the jury, this multi part, multipurpose 56 00:03:07,919 --> 00:03:12,360 Speaker 5: indictment with a lot of people trying to undermine the 57 00:03:12,440 --> 00:03:15,919 Speaker 5: voter's rights in Georgia, and that's her prerogative. It's a 58 00:03:15,960 --> 00:03:19,520 Speaker 5: sovereign state, and that's what she chose to do. I 59 00:03:19,520 --> 00:03:21,919 Speaker 5: don't know what the timing will be in relationship to 60 00:03:22,000 --> 00:03:24,560 Speaker 5: Jack Smith case, and I don't know how it'll work 61 00:03:24,600 --> 00:03:27,680 Speaker 5: with some of the overlapping witnesses, but that's for them 62 00:03:27,720 --> 00:03:29,400 Speaker 5: to work out between them. 63 00:03:29,840 --> 00:03:34,600 Speaker 1: Hey, Kaylee, the Biden administration has been noticeably quiet during 64 00:03:34,639 --> 00:03:36,800 Speaker 1: the prior three indictments and just kind of during the 65 00:03:36,840 --> 00:03:38,720 Speaker 1: whole process here. Is there any reason to think that 66 00:03:39,160 --> 00:03:41,480 Speaker 1: will be different here or now that we've kind of 67 00:03:41,480 --> 00:03:44,400 Speaker 1: got the final one, maybe they'll have a holistic kind 68 00:03:44,440 --> 00:03:45,800 Speaker 1: of comment. 69 00:03:46,640 --> 00:03:49,040 Speaker 4: Well, certainly this isn't going to be an issue that 70 00:03:49,120 --> 00:03:53,200 Speaker 4: the administration, or more specifically, the Biden campaign, is going 71 00:03:53,240 --> 00:03:56,560 Speaker 4: to be able to avoid, especially in the general election, should, 72 00:03:56,680 --> 00:04:00,600 Speaker 4: as is presumed now, Donald Trump be the Republican they 73 00:04:00,600 --> 00:04:02,480 Speaker 4: are going to have to deal with this litany of 74 00:04:02,560 --> 00:04:05,200 Speaker 4: legal issues and address them and make the case why 75 00:04:05,520 --> 00:04:07,960 Speaker 4: Biden would be a better president than Trump, in part 76 00:04:07,960 --> 00:04:12,080 Speaker 4: for those reasons. That said, given a perception on the 77 00:04:12,120 --> 00:04:15,080 Speaker 4: side of many in the Republican Party that this Justice 78 00:04:15,120 --> 00:04:18,920 Speaker 4: Department under President Biden is being weaponized against the former president, 79 00:04:18,960 --> 00:04:22,200 Speaker 4: I think the administration is being very careful here to 80 00:04:22,400 --> 00:04:26,640 Speaker 4: not comment for concern about how that may be perceived 81 00:04:26,680 --> 00:04:29,479 Speaker 4: and feed into that notion that this is politically motivated. 82 00:04:29,520 --> 00:04:32,640 Speaker 4: As the former president himself and others close to him 83 00:04:32,680 --> 00:04:35,680 Speaker 4: have suggested that all of these indictments. 84 00:04:35,120 --> 00:04:38,760 Speaker 1: Are, and Michael, I just want to get your thoughts here. 85 00:04:38,880 --> 00:04:42,120 Speaker 1: Now that we have four of these indictments, could you 86 00:04:42,200 --> 00:04:44,520 Speaker 1: help us just put it all in context. Where is 87 00:04:44,560 --> 00:04:47,000 Speaker 1: the real risk here for former. 88 00:04:47,040 --> 00:04:49,239 Speaker 2: But by the way, I got to say, just quickly, Paul, 89 00:04:49,760 --> 00:04:52,120 Speaker 2: it's a strong presumption that this is the last indictment 90 00:04:52,160 --> 00:04:53,720 Speaker 2: Donald Trumpay is that's a fair statement. 91 00:04:53,760 --> 00:04:55,880 Speaker 3: That's a fair statement of we currently no. 92 00:04:56,040 --> 00:04:58,239 Speaker 1: I guess that's probably the way to phrase. So, Michael, 93 00:04:58,680 --> 00:05:00,279 Speaker 1: how do you put him in? Where's the real scared 94 00:05:00,320 --> 00:05:00,880 Speaker 1: for the president? 95 00:05:01,720 --> 00:05:04,640 Speaker 5: I think they all present different risks, you know, if 96 00:05:04,680 --> 00:05:06,600 Speaker 5: you were going to say which is the most serious, 97 00:05:06,640 --> 00:05:09,960 Speaker 5: which is the least serious, perhaps Georgia is the most 98 00:05:09,960 --> 00:05:13,240 Speaker 5: serious because of the mandatory minimum. But each of these 99 00:05:13,320 --> 00:05:18,800 Speaker 5: cases is an important case for the president former president. 100 00:05:19,320 --> 00:05:23,560 Speaker 5: Each has the opportunity for him to come forward and 101 00:05:23,640 --> 00:05:27,040 Speaker 5: testify and say why this isn't true. We'll see whether 102 00:05:27,480 --> 00:05:30,520 Speaker 5: he chooses to testify in any of these cases. So 103 00:05:30,640 --> 00:05:33,200 Speaker 5: I think, you know, it's hard to ball, you know, 104 00:05:33,320 --> 00:05:37,000 Speaker 5: sort of guess which one is the most significant, because 105 00:05:37,000 --> 00:05:40,280 Speaker 5: they're all significant. All of them are felony, you know, indictments, 106 00:05:40,279 --> 00:05:42,960 Speaker 5: and all of them carry jail time. This one just 107 00:05:42,960 --> 00:05:45,359 Speaker 5: carries mandatory jail time, which why is why I'm putting 108 00:05:45,360 --> 00:05:47,400 Speaker 5: it at the top of the list. But it's very 109 00:05:47,400 --> 00:05:51,240 Speaker 5: hard to handicap them in that way because they all 110 00:05:51,279 --> 00:05:55,200 Speaker 5: have different issues and present different opportunities for Trump and 111 00:05:55,279 --> 00:05:56,640 Speaker 5: opportunities for the prosecutors. 112 00:05:57,120 --> 00:06:01,480 Speaker 2: Michael, I want to ask about not the former president's 113 00:06:01,600 --> 00:06:05,800 Speaker 2: indictment issues, but the current president's son, Hunter Biden, was 114 00:06:05,839 --> 00:06:12,920 Speaker 2: assigned the probe of Hunter Biden a special special council 115 00:06:13,400 --> 00:06:17,320 Speaker 2: and what difference does it make. I mean, this investigation 116 00:06:17,360 --> 00:06:19,359 Speaker 2: has already been going on for five years by a 117 00:06:19,360 --> 00:06:25,120 Speaker 2: Trump appointee. How do you see the you know, the 118 00:06:25,120 --> 00:06:27,080 Speaker 2: the difference here as a special counsel. 119 00:06:27,960 --> 00:06:30,800 Speaker 5: I think it's really more form over substance. I think 120 00:06:30,839 --> 00:06:35,120 Speaker 5: that because the Plea deal broke down, and therefore because 121 00:06:35,160 --> 00:06:39,960 Speaker 5: the case is ongoing, and because there are possible Foreign 122 00:06:40,000 --> 00:06:45,159 Speaker 5: Agent Registration Act links, that the least the politicians have 123 00:06:45,200 --> 00:06:48,279 Speaker 5: been saying take us back to President Biden when he 124 00:06:48,320 --> 00:06:52,160 Speaker 5: was vice president, that Garland just made a safe decision 125 00:06:52,240 --> 00:06:55,279 Speaker 5: to say, let's just designate him as a special counsel 126 00:06:55,760 --> 00:06:59,240 Speaker 5: and strip the politics of this even further. But I 127 00:06:59,279 --> 00:07:01,400 Speaker 5: think it's really more form of substance. Wis is the 128 00:07:01,400 --> 00:07:03,960 Speaker 5: guy who's been investigating this for all these years. He's 129 00:07:04,000 --> 00:07:06,839 Speaker 5: the Special Counsel, and I think business will go on 130 00:07:07,000 --> 00:07:09,880 Speaker 5: as usual, except, of course, nothing is usual in this. 131 00:07:09,920 --> 00:07:11,280 Speaker 3: Case, Kaylee. 132 00:07:11,280 --> 00:07:14,160 Speaker 1: Just following off from the Washington perspective here as it 133 00:07:14,200 --> 00:07:15,560 Speaker 1: relates to Hunter Biden. 134 00:07:15,280 --> 00:07:17,600 Speaker 3: In his legal issues. 135 00:07:18,080 --> 00:07:20,560 Speaker 1: What are we hearing from the Biden administration, the Biden 136 00:07:20,680 --> 00:07:23,080 Speaker 1: campaign as to the risk. 137 00:07:23,000 --> 00:07:26,760 Speaker 4: Here, basically nothing at all. To be honest with you, Paul, 138 00:07:26,840 --> 00:07:30,720 Speaker 4: this is an issue that President Biden is very reluctant 139 00:07:30,800 --> 00:07:33,240 Speaker 4: to touch. He actually didn't even say anything about it 140 00:07:33,240 --> 00:07:37,320 Speaker 4: on the day on Friday when the Special Council was named. 141 00:07:38,000 --> 00:07:41,320 Speaker 4: To this extent, when we heard the Plea deal first announced, 142 00:07:41,320 --> 00:07:44,360 Speaker 4: that of course, has subsequently fallen apart. Earlier this summer, 143 00:07:44,400 --> 00:07:46,120 Speaker 4: all the President and the First Lady said in a 144 00:07:46,160 --> 00:07:48,120 Speaker 4: statement was that they love her their son, and they 145 00:07:48,120 --> 00:07:50,840 Speaker 4: support him as he continues to rebuild his life. This 146 00:07:50,960 --> 00:07:54,560 Speaker 4: is a very touchy subject for the President in regard 147 00:07:54,880 --> 00:07:58,200 Speaker 4: to his son. Again, like Trump's legal issues, this isn't 148 00:07:58,200 --> 00:08:00,440 Speaker 4: going to be something as he campaigns for election in 149 00:08:00,480 --> 00:08:02,680 Speaker 4: twenty twenty four that he is going to be able 150 00:08:02,720 --> 00:08:05,400 Speaker 4: to avoid forever. This is something that is going to 151 00:08:05,480 --> 00:08:09,280 Speaker 4: continually be a focus on him and his family, especially 152 00:08:09,640 --> 00:08:12,720 Speaker 4: not just in terms of this probe that is happening 153 00:08:13,000 --> 00:08:15,960 Speaker 4: with the Special Counsel, but also in Congress where they're investigating, 154 00:08:17,080 --> 00:08:19,320 Speaker 4: to use the words of the chair of the Oversight Committee, 155 00:08:19,400 --> 00:08:22,960 Speaker 4: James Comer, the Biden crime family. It's something that's going 156 00:08:23,000 --> 00:08:24,920 Speaker 4: to continue to dog him. But it's something to this 157 00:08:24,960 --> 00:08:28,119 Speaker 4: point he's proven very reluctant to actually openly talk about. 158 00:08:28,240 --> 00:08:34,000 Speaker 1: Yeah, Michael, the former president Trump now faces four criminal indictments. 159 00:08:34,360 --> 00:08:39,840 Speaker 1: Who is representing him and is he getting quality representation? 160 00:08:41,440 --> 00:08:41,680 Speaker 6: Well? 161 00:08:41,760 --> 00:08:45,360 Speaker 5: This newest lawyer, Lauro, is reputed to be a very 162 00:08:45,360 --> 00:08:49,120 Speaker 5: good lawyer. I have friends who know him from Florida, 163 00:08:49,559 --> 00:08:51,800 Speaker 5: and I think he will do a good job for 164 00:08:52,400 --> 00:08:55,160 Speaker 5: the president if the President does a good job for 165 00:08:55,240 --> 00:08:59,000 Speaker 5: him as a client. Right now, the biggest problem with 166 00:08:59,360 --> 00:09:03,120 Speaker 5: Donald Trump, from a lawyer's perspective, is containing him. He 167 00:09:03,160 --> 00:09:06,160 Speaker 5: was just in court the other day and Judge Chutkin 168 00:09:06,360 --> 00:09:10,800 Speaker 5: in the DC District Court in the January sixth style 169 00:09:10,840 --> 00:09:14,520 Speaker 5: of case said to Trump, here are the parameters of 170 00:09:14,559 --> 00:09:16,480 Speaker 5: what you can and can't talk about. We're not going 171 00:09:16,559 --> 00:09:18,840 Speaker 5: to try this case in the public domain. Does everyone 172 00:09:18,920 --> 00:09:21,880 Speaker 5: understand what's going on here? Everyone yes, agrees, Laura says, yes, 173 00:09:21,920 --> 00:09:24,360 Speaker 5: I'm me have my client. He understands the protective order. 174 00:09:24,520 --> 00:09:27,040 Speaker 5: The next day he violates the protective order. So we're 175 00:09:27,040 --> 00:09:30,040 Speaker 5: gonna have to see how Laura can control his client. 176 00:09:30,360 --> 00:09:32,720 Speaker 5: We're gonna have to see how Judge Chutkin, if he 177 00:09:32,800 --> 00:09:37,199 Speaker 5: can't get under control sanctions the behavior of the president. 178 00:09:37,280 --> 00:09:40,360 Speaker 5: So he's got good lawyers, he's just not a good client. 179 00:09:40,520 --> 00:09:42,920 Speaker 5: And you know, good lawyers can only do so much 180 00:09:42,960 --> 00:09:43,880 Speaker 5: with a bad client. 181 00:09:44,240 --> 00:09:45,880 Speaker 3: All right, Michael, thank you so much for joining us. 182 00:09:45,960 --> 00:09:50,320 Speaker 1: Really appreciate getting your informed perspective. Michael Zelden, former federal 183 00:09:50,320 --> 00:09:53,520 Speaker 1: prosecutor for the US Department of Justice, and Kaylee Lynes 184 00:09:54,600 --> 00:09:57,599 Speaker 1: Bloomberg Radio and Television joining us from Washington, d C. 185 00:09:58,040 --> 00:10:00,120 Speaker 3: Giving us the perspective there as well. 186 00:10:00,120 --> 00:10:03,000 Speaker 1: So again, the fourth indictment of former President Donald Trump, 187 00:10:03,640 --> 00:10:07,640 Speaker 1: we now that's now been released, and now I guess 188 00:10:07,640 --> 00:10:10,120 Speaker 1: it's a political issue as well as. 189 00:10:10,160 --> 00:10:11,800 Speaker 3: A legal issue, so we'll stay on top of that. 190 00:10:11,840 --> 00:10:16,560 Speaker 7: Of course, you're listening to the Team Ken's Are Live 191 00:10:16,640 --> 00:10:20,559 Speaker 7: program Bloomberg Markets weekdays at ten am Eastern on Bloomberg 192 00:10:20,600 --> 00:10:23,880 Speaker 7: dot com, the iHeartRadio app and the Bloomberg Business app, 193 00:10:24,040 --> 00:10:26,599 Speaker 7: or listen on demand wherever you get your podcasts. 194 00:10:28,360 --> 00:10:31,280 Speaker 1: I'm looking at Home Depot. The stock is up at 195 00:10:31,280 --> 00:10:35,360 Speaker 1: one percent. They reported some results that beat estimates. Apparently 196 00:10:35,480 --> 00:10:39,480 Speaker 1: the door yourselfers out there are still spending. I don't 197 00:10:39,520 --> 00:10:42,720 Speaker 1: relate to that whatsoever. But I do have a toolbox 198 00:10:42,760 --> 00:10:44,400 Speaker 1: in my house, but that doesn't get a lot. 199 00:10:44,520 --> 00:10:48,160 Speaker 2: I have so many tools you do, but I don't 200 00:10:48,200 --> 00:10:49,240 Speaker 2: really do that much. 201 00:10:50,000 --> 00:10:52,400 Speaker 1: I'm not your guy for that. But Drew Redding is. 202 00:10:52,559 --> 00:10:54,920 Speaker 1: He's a research annelys. He covers all the home builders 203 00:10:55,480 --> 00:10:58,920 Speaker 1: for Bloomberg Intelligence here. So Drew, it looks like, I mean, 204 00:10:59,240 --> 00:11:02,120 Speaker 1: you know, people crazy during the pandemic, you know, buying 205 00:11:02,200 --> 00:11:04,960 Speaker 1: stuff and fixing up their houses, and I thought we'd 206 00:11:04,960 --> 00:11:07,080 Speaker 1: see a big, big drop off post pandemic. 207 00:11:07,960 --> 00:11:09,319 Speaker 3: Doesn't appear that that's happening. 208 00:11:11,320 --> 00:11:13,280 Speaker 8: Yeah, it's right. I mean, Home Depot is still going 209 00:11:13,360 --> 00:11:16,360 Speaker 8: to do somewhere around one hundred and fifty billion dollars 210 00:11:16,640 --> 00:11:18,720 Speaker 8: in sales for the year. That's up more than forty 211 00:11:18,720 --> 00:11:21,760 Speaker 8: percent since twenty nineteen. But we are seeing a slow 212 00:11:21,800 --> 00:11:26,080 Speaker 8: down this year. The company called out ongoing pressure in 213 00:11:26,320 --> 00:11:29,960 Speaker 8: bigger ticket discretionary items. Part of that has to do 214 00:11:30,040 --> 00:11:32,400 Speaker 8: with the inflation we've seen. Part of it has to 215 00:11:32,400 --> 00:11:34,560 Speaker 8: do with the pull forward of demand over the last 216 00:11:34,600 --> 00:11:36,760 Speaker 8: couple of years. So I think of certain categories like 217 00:11:37,840 --> 00:11:41,120 Speaker 8: patios or grills or appliances, where you make that purchase 218 00:11:41,160 --> 00:11:43,040 Speaker 8: one year, it's going to be a while before you 219 00:11:43,080 --> 00:11:47,160 Speaker 8: purchase it again. So that's part of the slowdown. They 220 00:11:47,160 --> 00:11:49,760 Speaker 8: have noted a little bit of strength in smaller tickets, 221 00:11:49,840 --> 00:11:52,679 Speaker 8: which was which has helped to offset some of that weakness, 222 00:11:53,120 --> 00:11:56,080 Speaker 8: But generally speaking, the company still expects sales to be 223 00:11:56,120 --> 00:11:57,760 Speaker 8: down two to five percent this year. 224 00:11:58,280 --> 00:12:02,400 Speaker 2: How are they doing in terms of competition, Drew, I mean, 225 00:12:03,800 --> 00:12:06,760 Speaker 2: do they do they Are they winning the fight with 226 00:12:06,840 --> 00:12:09,840 Speaker 2: lows or does it really just come down to whoever 227 00:12:09,880 --> 00:12:11,840 Speaker 2: has the store nearest you get your business. 228 00:12:13,040 --> 00:12:15,800 Speaker 8: I think that's part of it. And home depots massive 229 00:12:15,840 --> 00:12:20,840 Speaker 8: store store footprint has always been a competitive advantage for them. Well, 230 00:12:20,840 --> 00:12:22,680 Speaker 8: you know, one of the reasons why we like them 231 00:12:22,679 --> 00:12:24,760 Speaker 8: and why they've they've been winning over the last couple 232 00:12:24,760 --> 00:12:28,360 Speaker 8: of years is because they're exposure to professional customers. It's 233 00:12:28,360 --> 00:12:31,000 Speaker 8: about forty five percent of sales, it's about twenty five 234 00:12:31,040 --> 00:12:35,640 Speaker 8: percent for lows. So the pros, while their backlogs are 235 00:12:35,679 --> 00:12:38,360 Speaker 8: starting to slow a bit little bit, they're still very 236 00:12:38,400 --> 00:12:40,880 Speaker 8: elevated from where they were over the last couple of years. 237 00:12:41,559 --> 00:12:44,240 Speaker 8: And you know, as we look forward, they're starting to 238 00:12:44,320 --> 00:12:47,480 Speaker 8: dive deeper into the pro category through what they call 239 00:12:47,600 --> 00:12:51,400 Speaker 8: complex projects. So you think of a contractor who has 240 00:12:51,480 --> 00:12:55,720 Speaker 8: relationships with, you know, many suppliers, whether it's for paint, flooring, 241 00:12:56,480 --> 00:12:58,960 Speaker 8: you name it, and you know they have to go 242 00:12:59,000 --> 00:13:01,520 Speaker 8: to ten different suppliers. Home DEEPO wants to consolidate all 243 00:13:01,559 --> 00:13:04,720 Speaker 8: that and be the single supplier for larger contractors taken 244 00:13:04,760 --> 00:13:06,600 Speaker 8: on more complex jobs, and we think that's a big 245 00:13:06,600 --> 00:13:07,800 Speaker 8: growth opportunity for them. 246 00:13:08,200 --> 00:13:10,720 Speaker 1: So when I walk into a home depot, which granted 247 00:13:10,800 --> 00:13:12,600 Speaker 1: isn't very often, but when I do walk in there, 248 00:13:12,640 --> 00:13:16,560 Speaker 1: I'm just blown away by all of the inventory they have, 249 00:13:16,720 --> 00:13:20,800 Speaker 1: their the skews as you retailer call it. How how 250 00:13:20,800 --> 00:13:22,760 Speaker 1: are they managing inventory? I mean, are they like a 251 00:13:22,760 --> 00:13:25,679 Speaker 1: lot of other retailers where they had too much inventory 252 00:13:25,720 --> 00:13:26,960 Speaker 1: there coming out of the pandemic. 253 00:13:28,000 --> 00:13:31,640 Speaker 8: Yeah, they've really worked their inventory levels down very significantly. 254 00:13:32,040 --> 00:13:33,800 Speaker 8: You know, they've highlighted they still have a little bit 255 00:13:33,840 --> 00:13:36,240 Speaker 8: of more work to do. But at the same time, 256 00:13:36,679 --> 00:13:39,160 Speaker 8: what they've done is they've improved their in stock position, 257 00:13:39,200 --> 00:13:41,480 Speaker 8: which is has been a focal point for them. So 258 00:13:41,520 --> 00:13:44,120 Speaker 8: their in stocks are actually better than where they were 259 00:13:44,200 --> 00:13:47,440 Speaker 8: over the last couple of years. So that's really you know, 260 00:13:47,480 --> 00:13:49,760 Speaker 8: what they're focused on, and they've made good, good headway 261 00:13:49,800 --> 00:13:50,360 Speaker 8: in that regard. 262 00:13:50,800 --> 00:13:52,400 Speaker 2: I was in there on Sunday. 263 00:13:52,760 --> 00:13:52,920 Speaker 7: No. 264 00:13:53,280 --> 00:13:56,240 Speaker 2: I was, yeah, we have a big home depot out 265 00:13:56,280 --> 00:14:00,719 Speaker 2: in Yonkers. I was looking for one eighth inch BSP 266 00:14:01,559 --> 00:14:02,199 Speaker 2: pipe cap. 267 00:14:02,679 --> 00:14:03,320 Speaker 3: You were, yes. 268 00:14:03,360 --> 00:14:06,000 Speaker 2: I was wow because I uh, because I blew the 269 00:14:06,240 --> 00:14:09,280 Speaker 2: two censor bung off the exhaust pipe of my Ducati Monster. 270 00:14:09,400 --> 00:14:10,360 Speaker 3: Sure. I hate when it happened. 271 00:14:10,360 --> 00:14:12,640 Speaker 2: And I was looking for some high heat lock tap. 272 00:14:12,720 --> 00:14:15,079 Speaker 2: Now they lock tight. Now they had the pipe cap, 273 00:14:15,320 --> 00:14:17,520 Speaker 2: which I was impressed by. In fact, I looked first 274 00:14:17,600 --> 00:14:19,480 Speaker 2: online and saw they had ten in store, and I 275 00:14:19,520 --> 00:14:21,800 Speaker 2: was like, wow, they never have it in store, but 276 00:14:21,880 --> 00:14:23,080 Speaker 2: the lock tight they didn't have. 277 00:14:23,880 --> 00:14:24,560 Speaker 3: You know what you're gonna do? 278 00:14:25,440 --> 00:14:26,040 Speaker 7: Uh? 279 00:14:26,240 --> 00:14:30,960 Speaker 2: So Sunday dealership closed, Monday dealership closed. Motorcycle dealers always 280 00:14:30,960 --> 00:14:32,680 Speaker 2: closed Sunday and Monday. Today. 281 00:14:32,960 --> 00:14:34,440 Speaker 3: I'm gonna go get it fixed, that's right. 282 00:14:34,560 --> 00:14:36,680 Speaker 1: Yeah, Hey, Drew talk to us about the just the 283 00:14:36,720 --> 00:14:38,320 Speaker 1: housing market in general. 284 00:14:38,400 --> 00:14:38,640 Speaker 6: Here. 285 00:14:38,720 --> 00:14:41,720 Speaker 1: I mean, we've got interest rates, mortgage rates, you know, 286 00:14:41,800 --> 00:14:44,440 Speaker 1: north of seven percent. Nobody wants to get out of 287 00:14:44,440 --> 00:14:46,720 Speaker 1: our house with their three percent mortgage and try to 288 00:14:46,760 --> 00:14:49,280 Speaker 1: move to somewhere else with a higher mortgage. Is there 289 00:14:49,320 --> 00:14:51,360 Speaker 1: a level that you hear from maybe some of your 290 00:14:51,600 --> 00:14:55,680 Speaker 1: home builders where they think if mortgages get down to 291 00:14:55,720 --> 00:14:57,760 Speaker 1: some level, is it five percent, is a four point 292 00:14:57,760 --> 00:14:59,840 Speaker 1: five percent, then that'll free up the market. 293 00:15:00,240 --> 00:15:02,800 Speaker 2: This is Paul hoping that mortgage rates come down next 294 00:15:02,840 --> 00:15:05,560 Speaker 2: year because he has an adjustable rate mortgage that he 295 00:15:05,560 --> 00:15:06,560 Speaker 2: wants to refinance. 296 00:15:06,720 --> 00:15:10,400 Speaker 8: Yes, it's a great question. We've been describing the housing 297 00:15:10,400 --> 00:15:13,479 Speaker 8: market as a tale of two markets. You've got activity 298 00:15:13,520 --> 00:15:16,280 Speaker 8: in the existing home market pretty much frozen because, as 299 00:15:16,280 --> 00:15:18,720 Speaker 8: you mentioned, people don't want to trade in their sub 300 00:15:18,760 --> 00:15:20,880 Speaker 8: four sub three and a half percent rate for what's 301 00:15:20,920 --> 00:15:23,720 Speaker 8: now seven and a quarter. On the other side, you've 302 00:15:23,720 --> 00:15:26,040 Speaker 8: got the builders who have benefited because they've brought new 303 00:15:26,080 --> 00:15:27,920 Speaker 8: supply to the market. They've been able to work with 304 00:15:27,960 --> 00:15:32,160 Speaker 8: their buyers through offering lower mortgage rates. And to your question, 305 00:15:32,960 --> 00:15:35,920 Speaker 8: what we've heard from a majority of the builders is 306 00:15:35,960 --> 00:15:38,520 Speaker 8: that five five and a half percent mortgage rate is 307 00:15:38,600 --> 00:15:42,040 Speaker 8: kind of the sweet spot where they've seen much more 308 00:15:42,040 --> 00:15:45,240 Speaker 8: buyer activity. But you know, I will say that we've 309 00:15:45,280 --> 00:15:47,320 Speaker 8: also heard as rates have started to creep up, not 310 00:15:47,360 --> 00:15:50,840 Speaker 8: all of their buyers are using rate bydowns, even from 311 00:15:50,880 --> 00:15:52,640 Speaker 8: some of the larger builders, like at d R. Horten, 312 00:15:52,680 --> 00:15:56,600 Speaker 8: you're somewhere around sixty percent. So there is some aspect 313 00:15:56,760 --> 00:16:00,960 Speaker 8: that consumers have become more comfortable with higher rates. I mean, 314 00:16:00,960 --> 00:16:03,840 Speaker 8: we've been at these elevated levels for you know, call 315 00:16:03,880 --> 00:16:06,240 Speaker 8: it more than a year, so there has been kind 316 00:16:06,240 --> 00:16:09,920 Speaker 8: of some decree of acceptance here among consumers, and you know, 317 00:16:09,960 --> 00:16:11,720 Speaker 8: what they've had to do is kind of just adjust 318 00:16:11,720 --> 00:16:15,720 Speaker 8: their expectations. Builders are also adjusting the size of their houses. 319 00:16:15,720 --> 00:16:17,880 Speaker 8: That's another way that they could get to that monthly 320 00:16:17,920 --> 00:16:18,640 Speaker 8: mortgage payment. 321 00:16:19,400 --> 00:16:23,520 Speaker 2: I wonder about the labor situation right now. Did we 322 00:16:23,600 --> 00:16:26,560 Speaker 2: learn anything from home Depot about that? Because I noticed 323 00:16:26,600 --> 00:16:28,400 Speaker 2: on Sunday when I was in there, they had a 324 00:16:28,440 --> 00:16:32,680 Speaker 2: lot of employees Like I was always able to get 325 00:16:32,680 --> 00:16:35,520 Speaker 2: help in every aisle when I needed it, which is 326 00:16:35,560 --> 00:16:38,480 Speaker 2: not my typical retail experience over the past year. 327 00:16:40,840 --> 00:16:43,560 Speaker 8: So actually believed that home Depot has made this year, 328 00:16:43,600 --> 00:16:47,800 Speaker 8: a massive investment in its employees, for its hourly employees 329 00:16:47,840 --> 00:16:52,800 Speaker 8: in the stores. You know, their model tends to flex 330 00:16:52,880 --> 00:16:57,640 Speaker 8: with demand, so you'll see their staffing levels within their 331 00:16:57,680 --> 00:17:00,800 Speaker 8: store adjust as demands ebbs and flows. But they have 332 00:17:00,960 --> 00:17:05,640 Speaker 8: made that concert of effort and investing in their employees 333 00:17:05,680 --> 00:17:08,160 Speaker 8: because you know, the labor environment has been so tough 334 00:17:08,200 --> 00:17:09,879 Speaker 8: over the last couple of years. We think that this 335 00:17:10,000 --> 00:17:11,960 Speaker 8: is you know, it's the time to do it. While 336 00:17:12,000 --> 00:17:13,840 Speaker 8: the market might not be as strong as it's been, 337 00:17:14,320 --> 00:17:15,920 Speaker 8: now's a good time for them to get out ahead 338 00:17:15,960 --> 00:17:18,120 Speaker 8: of it so when things do rebound, they have the 339 00:17:18,119 --> 00:17:19,160 Speaker 8: the employees there. 340 00:17:19,960 --> 00:17:23,320 Speaker 1: So you know, when you think about building new homes, 341 00:17:23,560 --> 00:17:25,520 Speaker 1: it doesn't seem like the builders are building what the 342 00:17:25,560 --> 00:17:26,359 Speaker 1: market really needs. 343 00:17:26,359 --> 00:17:29,480 Speaker 3: The market needs starter homes for people. 344 00:17:30,720 --> 00:17:34,080 Speaker 1: They do we need another MC mansion or subdivision of 345 00:17:34,280 --> 00:17:36,240 Speaker 1: MC mansions with the five and six vedders. Now, I 346 00:17:36,320 --> 00:17:38,440 Speaker 1: understand that's where the profit margin is for the builders, 347 00:17:38,440 --> 00:17:42,159 Speaker 1: but I'm wondering is there any supply to meet that 348 00:17:42,240 --> 00:17:43,640 Speaker 1: demand on the lower end. 349 00:17:44,720 --> 00:17:46,600 Speaker 8: So that's actually been an area of focus for the 350 00:17:46,600 --> 00:17:51,000 Speaker 8: builders over the last couple of years. You know, you've 351 00:17:51,000 --> 00:17:53,879 Speaker 8: got names like Deer who are in Leonard, who are 352 00:17:53,880 --> 00:17:58,159 Speaker 8: pretty big in the entry level market. You know, we 353 00:17:58,200 --> 00:18:00,000 Speaker 8: think that's where most of the supply is going to come, 354 00:18:00,080 --> 00:18:02,239 Speaker 8: because that's really one of the only ways at this 355 00:18:02,280 --> 00:18:04,320 Speaker 8: point where you could kind of help the bridge that 356 00:18:04,359 --> 00:18:08,000 Speaker 8: affordability gap. You're seeing builders start to offer lower square 357 00:18:08,040 --> 00:18:11,480 Speaker 8: footage plans that are more preferred by buyers, just starting 358 00:18:11,520 --> 00:18:13,960 Speaker 8: to take out some of the bells and whistles in 359 00:18:14,000 --> 00:18:16,560 Speaker 8: the houses as well, which helps to lower that payment too. 360 00:18:18,320 --> 00:18:21,119 Speaker 2: What are the next data points, Drew that you're going 361 00:18:21,160 --> 00:18:24,800 Speaker 2: to be watching closely in terms of the housing market, 362 00:18:24,840 --> 00:18:29,400 Speaker 2: and you know, which which direction we're to decide which 363 00:18:29,400 --> 00:18:30,440 Speaker 2: direction we're moving here. 364 00:18:31,880 --> 00:18:33,680 Speaker 8: So it's going to be interesting to hear the next 365 00:18:33,800 --> 00:18:37,600 Speaker 8: round of home builder earnings calls to see how this 366 00:18:38,240 --> 00:18:40,400 Speaker 8: you know, resurgence and rates to seven and a quarter 367 00:18:40,440 --> 00:18:43,720 Speaker 8: percent is going to impact the business. We just got 368 00:18:44,040 --> 00:18:49,160 Speaker 8: data from the NHB today built sentiment and it's actually 369 00:18:49,240 --> 00:18:51,080 Speaker 8: the first decline in several months, and a lot of 370 00:18:51,080 --> 00:18:53,080 Speaker 8: that has to do with the fact that rates have 371 00:18:53,200 --> 00:18:55,800 Speaker 8: risen so much so buyer traffic is down, you know, 372 00:18:55,880 --> 00:18:59,080 Speaker 8: So if this situation persists, we would expect that builders 373 00:18:59,080 --> 00:19:01,760 Speaker 8: are going to return to a more elevated use of 374 00:19:01,800 --> 00:19:06,480 Speaker 8: sales incentives to drive traffic, which could impact profitability. So 375 00:19:06,480 --> 00:19:08,520 Speaker 8: that's really what we're gonna be listening to. How has 376 00:19:08,880 --> 00:19:11,399 Speaker 8: this most recent rise and rates impacted the business. 377 00:19:11,600 --> 00:19:14,080 Speaker 2: It's pretty amazing. I look at the bank rate thirty 378 00:19:14,160 --> 00:19:18,880 Speaker 2: year mortgage and right now seven spot five to one percent. 379 00:19:19,040 --> 00:19:20,560 Speaker 3: Yeah, brutal ouch. 380 00:19:20,640 --> 00:19:23,159 Speaker 1: Yes, so I thought I was getting rooked with my 381 00:19:23,359 --> 00:19:25,760 Speaker 1: six handle, But I look kind of smart these days. 382 00:19:25,960 --> 00:19:29,800 Speaker 1: Drew reading research channels covers all the homebuilders for Bloomberg Intelligence. 383 00:19:29,840 --> 00:19:33,439 Speaker 1: Appreciate that getting that update on home depot. 384 00:19:33,720 --> 00:19:36,800 Speaker 7: You're listening to the tape cans are live program Bloomberg 385 00:19:36,880 --> 00:19:40,480 Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the 386 00:19:40,520 --> 00:19:43,760 Speaker 7: tune in app, Bloomberg dot Com, and the Bloomberg Business App. 387 00:19:43,800 --> 00:19:46,600 Speaker 7: You can also listen live on Amazon Alexa from our 388 00:19:46,640 --> 00:19:51,720 Speaker 7: flagship New York station, Just say Alexa play Bloomberg eleven thirty. 389 00:19:53,000 --> 00:19:55,879 Speaker 1: I'm all a dark old car, joins us. He's global 390 00:19:55,920 --> 00:19:59,600 Speaker 1: head of Corporates for Chatham Financial. He's been doing this 391 00:19:59,600 --> 00:20:01,879 Speaker 1: stuff over twenty years. He's got his NBA from some 392 00:20:01,920 --> 00:20:04,920 Speaker 1: trade school down in Philadelphia. But certainly the key part 393 00:20:04,920 --> 00:20:07,720 Speaker 1: of his resume for me is he's a Penn State 394 00:20:07,840 --> 00:20:10,080 Speaker 1: graduate chemical engineering and economics. 395 00:20:10,280 --> 00:20:10,680 Speaker 3: Penn State. 396 00:20:10,680 --> 00:20:13,080 Speaker 1: By the way, the football team is preseason ranked number seven, 397 00:20:13,119 --> 00:20:14,240 Speaker 1: which is great to see. 398 00:20:14,560 --> 00:20:14,800 Speaker 3: Old. 399 00:20:14,960 --> 00:20:17,119 Speaker 1: I think it might be a little high. But anyway, Amal, 400 00:20:17,200 --> 00:20:18,960 Speaker 1: thanks so much for joining us here. 401 00:20:19,920 --> 00:20:21,080 Speaker 3: That is so uncool. 402 00:20:21,320 --> 00:20:23,320 Speaker 1: Well, I'm a huge Penn State fan, but I'm just 403 00:20:23,320 --> 00:20:26,240 Speaker 1: feeling like seven might be a little high too much. 404 00:20:26,280 --> 00:20:27,359 Speaker 3: They can earn their way into it. 405 00:20:27,400 --> 00:20:28,639 Speaker 2: But mall, what do you say? 406 00:20:28,800 --> 00:20:30,160 Speaker 3: Does seven sound good? 407 00:20:30,760 --> 00:20:32,960 Speaker 9: We don't have enough time to talk about Penn State football. 408 00:20:33,160 --> 00:20:34,920 Speaker 9: I think seven sounds pretty good to start. 409 00:20:34,960 --> 00:20:36,679 Speaker 1: That sounds pretty good to start, all right, Amal? What 410 00:20:36,720 --> 00:20:38,440 Speaker 1: are you looking at here again? I'm looking at the 411 00:20:38,960 --> 00:20:41,560 Speaker 1: real yield on the tenures. Some people like Lisa Brahmins 412 00:20:41,560 --> 00:20:43,920 Speaker 1: tell me that's important. We're here at one point eight three. 413 00:20:43,920 --> 00:20:45,800 Speaker 1: That's the highest it's been since I think like two 414 00:20:45,800 --> 00:20:47,880 Speaker 1: thousand and nine or something. So what do you make 415 00:20:47,920 --> 00:20:48,879 Speaker 1: out there in the marketplace? 416 00:20:49,960 --> 00:20:53,120 Speaker 9: Well, nominal yields are are pretty high too, And what 417 00:20:53,160 --> 00:20:55,720 Speaker 9: we have seen is there's just been this adjustment in 418 00:20:55,760 --> 00:20:58,760 Speaker 9: the market to coming around to the view that rates 419 00:20:58,840 --> 00:21:00,720 Speaker 9: might be higher for longer. I mean, we saw the 420 00:21:00,720 --> 00:21:04,760 Speaker 9: retail sales data out this morning that was quite strong. 421 00:21:04,920 --> 00:21:09,280 Speaker 9: And again the market is slowly adjusting and multinational corporate 422 00:21:09,400 --> 00:21:13,040 Speaker 9: CFOs treasures are starting to really try to understand what 423 00:21:13,080 --> 00:21:15,160 Speaker 9: that means for them as they look forward. 424 00:21:17,359 --> 00:21:19,800 Speaker 1: So is your sense that we are in fact in 425 00:21:19,920 --> 00:21:23,200 Speaker 1: for kind of a soft landing, that maybe the Federal 426 00:21:23,240 --> 00:21:25,640 Speaker 1: Reserve has kind of done a pretty decent job here. 427 00:21:26,840 --> 00:21:28,920 Speaker 9: Well, that's what the market seemed to be feeling right 428 00:21:28,960 --> 00:21:33,000 Speaker 9: now that I remember all that talk of the goldilocks 429 00:21:33,760 --> 00:21:36,960 Speaker 9: ending to this inflation story a year or so ago. 430 00:21:37,080 --> 00:21:39,400 Speaker 9: There was a lot of naysayers on that, and right 431 00:21:39,400 --> 00:21:42,880 Speaker 9: now the market seem to be adjusting to the possibility 432 00:21:42,920 --> 00:21:44,159 Speaker 9: that the Fed has. 433 00:21:44,040 --> 00:21:46,400 Speaker 2: In fact stuck the landing. There's a lot of room 434 00:21:46,440 --> 00:21:47,000 Speaker 2: to go here. 435 00:21:47,440 --> 00:21:50,159 Speaker 9: And again, I think one of the big challenges for 436 00:21:50,440 --> 00:21:51,720 Speaker 9: risk managers out. 437 00:21:51,520 --> 00:21:53,920 Speaker 3: There, for CFOs and treasures. 438 00:21:53,520 --> 00:21:55,920 Speaker 2: Is looking at that and saying, what does this mean? 439 00:21:55,960 --> 00:21:59,280 Speaker 9: I have certainly a significant amount of maturity coming up 440 00:21:59,720 --> 00:22:02,600 Speaker 9: when you look at both investment grade and high yield bonds. 441 00:22:03,000 --> 00:22:06,720 Speaker 9: How should we finance ourselves in a very different market 442 00:22:06,800 --> 00:22:08,919 Speaker 9: environment than any of us have seen in over two. 443 00:22:08,800 --> 00:22:12,640 Speaker 2: Decades in a much more expensive way. I'm guessing, right. 444 00:22:12,680 --> 00:22:15,480 Speaker 2: I mean, if you're financing a deal now, or if 445 00:22:15,520 --> 00:22:18,919 Speaker 2: you're refinancing existing debt, you're going to just be prepared 446 00:22:18,920 --> 00:22:19,480 Speaker 2: to pay more. 447 00:22:20,520 --> 00:22:20,840 Speaker 3: That's right. 448 00:22:20,880 --> 00:22:24,400 Speaker 9: It's not just home mortgages that are north of seven anymore, 449 00:22:24,560 --> 00:22:28,000 Speaker 9: and everything has gotten a lot more expensive, and so 450 00:22:28,160 --> 00:22:30,679 Speaker 9: it's led to what we often see in financial markets 451 00:22:30,760 --> 00:22:34,000 Speaker 9: is lots of innovation. One of the biggest areas of 452 00:22:34,000 --> 00:22:36,879 Speaker 9: innovation we've seen is the growth of private capital. So 453 00:22:37,000 --> 00:22:40,040 Speaker 9: not necessarily bank lending, but now we have all these 454 00:22:40,080 --> 00:22:43,160 Speaker 9: funds out there, as you've probably reported on many times, 455 00:22:43,640 --> 00:22:46,919 Speaker 9: that's creating new sources of liquidity for a lot of 456 00:22:47,520 --> 00:22:51,000 Speaker 9: mid market and even large cap type of firms or 457 00:22:51,040 --> 00:22:56,560 Speaker 9: infrastructure projects. It's been a pretty dynamic change in the 458 00:22:56,640 --> 00:22:59,600 Speaker 9: lending environment that we've seen amongst our clients. 459 00:22:59,200 --> 00:23:01,560 Speaker 2: And I expecting that to continue to grow. 460 00:23:01,680 --> 00:23:01,840 Speaker 6: Right. 461 00:23:02,119 --> 00:23:05,399 Speaker 2: Private capital, I mean, private lending is a business that 462 00:23:05,520 --> 00:23:06,520 Speaker 2: just keeps getting bigger. 463 00:23:07,680 --> 00:23:10,400 Speaker 9: Absolutely, it keeps getting bigger, and it will be really 464 00:23:10,480 --> 00:23:14,400 Speaker 9: interesting to see what happens once banks resume, you know, 465 00:23:14,640 --> 00:23:18,720 Speaker 9: as firms start to really underwrite that. Yeah, there's a 466 00:23:18,720 --> 00:23:20,720 Speaker 9: bit of a recession that could come, but maybe it's 467 00:23:20,720 --> 00:23:23,280 Speaker 9: not going to be too strong of one banks come 468 00:23:23,320 --> 00:23:25,600 Speaker 9: back into the market. There's a lot of competition from 469 00:23:25,640 --> 00:23:29,480 Speaker 9: private capital. You wonder how quickly the credit cycle can turn, 470 00:23:29,840 --> 00:23:34,359 Speaker 9: and whether institutions are going to be able to refinance 471 00:23:34,400 --> 00:23:37,800 Speaker 9: into maybe not better rates, but possibly better terms than 472 00:23:37,800 --> 00:23:38,640 Speaker 9: they could otherwise. 473 00:23:38,680 --> 00:23:41,480 Speaker 1: Get Hey, Mall, I mean, you know, if I were 474 00:23:41,480 --> 00:23:43,080 Speaker 1: to come back and restart my career on Wall Street, 475 00:23:43,080 --> 00:23:45,040 Speaker 1: I would definitely look at the private credit business because 476 00:23:45,040 --> 00:23:47,359 Speaker 1: it just seems to be such a fast growing part 477 00:23:47,359 --> 00:23:50,760 Speaker 1: of the marketplace. But Jamie Diamond and others have called out, Hey, 478 00:23:50,800 --> 00:23:53,720 Speaker 1: but these guys are kind of like a shadow banking system. 479 00:23:53,720 --> 00:23:56,359 Speaker 1: They're not really regulated, and man, there could be some 480 00:23:56,400 --> 00:23:59,080 Speaker 1: real problems there. Are you concerned about that about kind 481 00:23:59,119 --> 00:24:02,679 Speaker 1: of how much capital is going to the private credit market. 482 00:24:03,960 --> 00:24:07,960 Speaker 9: I think the private credit itself is just a continuation 483 00:24:08,119 --> 00:24:10,680 Speaker 9: of a trend that we've seen in finance over many, 484 00:24:10,720 --> 00:24:15,479 Speaker 9: many decades. That is, there are places where there are 485 00:24:15,480 --> 00:24:19,119 Speaker 9: different institutions that are better poised to offer liquidity for 486 00:24:19,320 --> 00:24:22,520 Speaker 9: different firms. As we look forward, though, there are going 487 00:24:22,600 --> 00:24:25,840 Speaker 9: to be some challenges for private credits. They don't offer 488 00:24:25,920 --> 00:24:27,800 Speaker 9: the full services. 489 00:24:27,119 --> 00:24:28,439 Speaker 6: That banks do. 490 00:24:28,600 --> 00:24:31,200 Speaker 9: At Chatham we work in the debt and derivative space. 491 00:24:31,640 --> 00:24:34,040 Speaker 9: And one of the places that a lot of borrowers 492 00:24:34,080 --> 00:24:37,320 Speaker 9: get into some challenges with private credit is they might 493 00:24:37,320 --> 00:24:39,720 Speaker 9: be able to borrow on a floating rate basis from 494 00:24:39,840 --> 00:24:43,600 Speaker 9: private capital private debt funds, but they may not be 495 00:24:43,600 --> 00:24:46,080 Speaker 9: able to actually hedge their risk as effectively as they 496 00:24:46,119 --> 00:24:49,479 Speaker 9: could if they did borrow from from a bank or 497 00:24:49,520 --> 00:24:52,240 Speaker 9: syndicative banks. And so you know, especially in a rising 498 00:24:52,320 --> 00:24:57,000 Speaker 9: rate environment, that can create some incremental friction, some incremental costs, 499 00:24:57,119 --> 00:25:00,840 Speaker 9: or some incremental risk that firms don't really want. 500 00:25:00,680 --> 00:25:01,119 Speaker 3: To take on. 501 00:25:02,040 --> 00:25:04,760 Speaker 1: So well, will I know you guys at Chatham, you 502 00:25:04,920 --> 00:25:06,960 Speaker 1: talked to a lot of the largest corporations in the 503 00:25:07,000 --> 00:25:09,040 Speaker 1: world and about their hedging programs. 504 00:25:09,960 --> 00:25:11,440 Speaker 3: What do you What kind of. 505 00:25:11,359 --> 00:25:13,880 Speaker 1: Hedging programs are you focused on? Are you hearing from 506 00:25:13,880 --> 00:25:16,520 Speaker 1: your clients that they needed expertise on Is it interest 507 00:25:16,560 --> 00:25:19,280 Speaker 1: rates as a currencies, as the commodities or some combination. 508 00:25:20,640 --> 00:25:23,080 Speaker 9: You know, it's all three of those actually, And one 509 00:25:23,080 --> 00:25:25,200 Speaker 9: of the biggest areas, of course, for the last year 510 00:25:25,240 --> 00:25:29,200 Speaker 9: has been around interest rate risk management. Lots lots in 511 00:25:29,240 --> 00:25:32,520 Speaker 9: the news, but if we rewind to about a year ago, 512 00:25:33,040 --> 00:25:35,960 Speaker 9: you might recall that FX was pretty big in the news. 513 00:25:36,520 --> 00:25:41,000 Speaker 9: The euro was below parody around this time last year, 514 00:25:41,359 --> 00:25:44,840 Speaker 9: strolling that they were going through a run of prime 515 00:25:44,880 --> 00:25:49,320 Speaker 9: ministers very quickly that that was making its way towards parody. 516 00:25:49,560 --> 00:25:50,879 Speaker 2: Since then, the dollar has. 517 00:25:50,720 --> 00:25:53,120 Speaker 9: Weakened, which has led to a little bit of complacency 518 00:25:53,640 --> 00:25:57,840 Speaker 9: amongst very large cap and multinationals. But there are some 519 00:25:57,880 --> 00:26:02,400 Speaker 9: other interesting areas is to look at as well. Part 520 00:26:02,400 --> 00:26:04,879 Speaker 9: of the other big theme that we've seen from these 521 00:26:04,960 --> 00:26:09,600 Speaker 9: multinationals is looking for places where they can reduce their 522 00:26:09,600 --> 00:26:12,000 Speaker 9: cost of funds, so back to higher interest rates in 523 00:26:12,000 --> 00:26:14,879 Speaker 9: the US, there are other places around the globe that 524 00:26:14,920 --> 00:26:18,399 Speaker 9: are actually cutting interest rates. At China, as we all 525 00:26:18,440 --> 00:26:21,840 Speaker 9: saw this morning, is one of them, and that's leading 526 00:26:21,840 --> 00:26:25,800 Speaker 9: to some interesting opportunities for firms to do some arbitrage 527 00:26:25,800 --> 00:26:28,440 Speaker 9: for lack of a better term, between dollar funding and 528 00:26:28,680 --> 00:26:30,560 Speaker 9: could be funding in other currencies. 529 00:26:31,280 --> 00:26:33,480 Speaker 2: Em All, let me just finally ask you what you 530 00:26:33,640 --> 00:26:37,199 Speaker 2: like in corporate credit. Are there areas that you and 531 00:26:37,280 --> 00:26:38,880 Speaker 2: Chatham find attractive right now? 532 00:26:40,359 --> 00:26:43,199 Speaker 9: You know, we're not too focused on the credit cycle 533 00:26:43,680 --> 00:26:46,159 Speaker 9: at this time. I think one of the big questions 534 00:26:46,160 --> 00:26:49,040 Speaker 9: that investors are asking is how are these firms actually 535 00:26:49,080 --> 00:26:52,760 Speaker 9: managing their risks, especially as we go into the possibility 536 00:26:52,800 --> 00:26:56,080 Speaker 9: of some type of a downturn. We recently did a 537 00:26:56,119 --> 00:26:58,959 Speaker 9: study and we found that an interesting fact is that 538 00:26:59,240 --> 00:27:03,600 Speaker 9: newly public companies tend to manage their risk less proactively 539 00:27:03,640 --> 00:27:06,560 Speaker 9: than firms that have been public for a longer period 540 00:27:06,560 --> 00:27:08,840 Speaker 9: of time. And I think that's an interesting area that 541 00:27:08,880 --> 00:27:10,840 Speaker 9: investors are going to be paying more and more attention 542 00:27:10,960 --> 00:27:12,199 Speaker 9: to as we go forward. 543 00:27:12,600 --> 00:27:14,240 Speaker 3: All right, mo On, thanks so much for joining us. 544 00:27:14,359 --> 00:27:17,119 Speaker 1: I really appreciate getting some of your time among a 545 00:27:17,240 --> 00:27:20,520 Speaker 1: Darkall car Global head of Corporates for Chadam Financial. 546 00:27:22,119 --> 00:27:25,960 Speaker 7: You're listening to the team ken'shur Live program Bloomberg Markets 547 00:27:26,000 --> 00:27:29,080 Speaker 7: weekdays at ten am Eastern on Bloomberg dot Com, the 548 00:27:29,160 --> 00:27:32,320 Speaker 7: iHeartRadio app, and the Bloomberg Business App, or listen on 549 00:27:32,359 --> 00:27:34,360 Speaker 7: demand wherever you get your podcasts. 550 00:27:36,240 --> 00:27:37,879 Speaker 1: All right, let's talk rates here. What the Fed is 551 00:27:37,920 --> 00:27:40,080 Speaker 1: going to do? We hit its strong economic data this morning. 552 00:27:40,119 --> 00:27:41,679 Speaker 1: Retail sales came in gangbusters. 553 00:27:41,680 --> 00:27:42,159 Speaker 3: How about that. 554 00:27:42,400 --> 00:27:45,000 Speaker 1: Let's bring in a couple of smart people roundtable this 555 00:27:45,040 --> 00:27:48,080 Speaker 1: whole thing. Michael Schumacher, head of macro strategy and rates 556 00:27:48,119 --> 00:27:52,720 Speaker 1: at Wells Fargo, and Neil Grossman, co founder of TK 557 00:27:53,119 --> 00:27:53,560 Speaker 1: n G. 558 00:27:53,800 --> 00:27:54,159 Speaker 3: Kapitel. 559 00:27:54,200 --> 00:27:57,400 Speaker 1: He joins us in the studio Michael's via zoom. Michael, 560 00:27:57,480 --> 00:27:59,439 Speaker 1: let's start with you here. What are you telling the 561 00:27:59,480 --> 00:28:03,359 Speaker 1: good client of Wells Fargo about kind of where this 562 00:28:03,440 --> 00:28:05,320 Speaker 1: FED is going to go? Where rates are going to go? 563 00:28:05,400 --> 00:28:06,480 Speaker 1: How high are they going to stay? 564 00:28:06,520 --> 00:28:06,639 Speaker 3: Here? 565 00:28:06,680 --> 00:28:08,800 Speaker 1: What's your call out of Wells Fargo these days? 566 00:28:09,800 --> 00:28:11,600 Speaker 10: Yeah, as far as the FED goes, I think where 567 00:28:11,600 --> 00:28:14,159 Speaker 10: most people begins, Hey, is the Fed done or not? 568 00:28:14,400 --> 00:28:17,680 Speaker 10: And it's probably close maybe done. That's the call for 569 00:28:17,800 --> 00:28:21,160 Speaker 10: Maricon team possibly goes one more time. Either way, neither 570 00:28:21,200 --> 00:28:24,200 Speaker 10: one's a surprise. I think the bigger question is how 571 00:28:24,200 --> 00:28:27,240 Speaker 10: long does the FED keep policy quite tight? And that 572 00:28:27,280 --> 00:28:30,479 Speaker 10: could be in a pretty extended period here. Nonetheless, when 573 00:28:30,520 --> 00:28:32,920 Speaker 10: you put these things together, we do recommend the client 574 00:28:33,040 --> 00:28:34,200 Speaker 10: scale in and buy bonds. 575 00:28:34,280 --> 00:28:34,680 Speaker 5: Right now. 576 00:28:34,760 --> 00:28:37,200 Speaker 10: You might say, well, it sounds kind of odd given 577 00:28:37,240 --> 00:28:40,360 Speaker 10: the backdrop with FED policy rates staying hi. But the 578 00:28:40,400 --> 00:28:42,600 Speaker 10: reason is the reason we have this view is that 579 00:28:42,640 --> 00:28:45,240 Speaker 10: the markets typically don't believe what the FED is trying 580 00:28:45,240 --> 00:28:48,320 Speaker 10: to sell. So J. Powell almost certainly comes out of 581 00:28:48,400 --> 00:28:51,160 Speaker 10: Jackson hole, says we'll be on hole for a long time. 582 00:28:51,760 --> 00:28:54,000 Speaker 10: But if people get the sense the last hike is in, 583 00:28:54,480 --> 00:28:56,600 Speaker 10: they'll be raced into buy bonds. In our view, so 584 00:28:56,640 --> 00:28:58,600 Speaker 10: we do think the yields come down a fair bit 585 00:28:58,640 --> 00:29:00,520 Speaker 10: by the end of the year. I've got the ten 586 00:29:00,560 --> 00:29:04,480 Speaker 10: year treasury sub three fifty eight year end, so maybe 587 00:29:04,520 --> 00:29:06,400 Speaker 10: it's the peak. Maybe it's not in yields, but it's 588 00:29:06,400 --> 00:29:07,080 Speaker 10: time to scale in. 589 00:29:07,600 --> 00:29:10,560 Speaker 2: But in terms of Michael, the FED funds rate, you know, 590 00:29:10,640 --> 00:29:13,680 Speaker 2: Jerome Powell is saying it's going to be years at 591 00:29:13,720 --> 00:29:16,160 Speaker 2: these levels. At the same time, he gives us a 592 00:29:16,200 --> 00:29:21,040 Speaker 2: dot plot that shows cuts four of them next year 593 00:29:21,080 --> 00:29:23,440 Speaker 2: and then even more the following year. How do you 594 00:29:23,960 --> 00:29:24,840 Speaker 2: square that circle? 595 00:29:26,200 --> 00:29:29,240 Speaker 10: Basically you don't. So Jay Powell is going to say, hey, 596 00:29:29,320 --> 00:29:32,920 Speaker 10: the dots are not forecasts or individual members something or others. 597 00:29:32,960 --> 00:29:36,360 Speaker 10: But you can't really account for the difference between Powell's 598 00:29:36,440 --> 00:29:39,680 Speaker 10: view and the dots. So really, what the market folks 599 00:29:39,720 --> 00:29:43,240 Speaker 10: typically do is discount a lot of the dots and 600 00:29:43,280 --> 00:29:46,840 Speaker 10: try to latch onto commentary from Powell, from Williams, from 601 00:29:46,880 --> 00:29:49,640 Speaker 10: a couple other senior folks, and really let that be 602 00:29:49,720 --> 00:29:52,680 Speaker 10: the north star. But the dots themselves don't really jibe 603 00:29:52,680 --> 00:29:55,560 Speaker 10: with what the Fed's been saying at least a senior leadership. 604 00:29:55,560 --> 00:29:57,600 Speaker 3: Neil, what do you kind of make of what's happening 605 00:29:57,600 --> 00:29:57,960 Speaker 3: out there? 606 00:29:58,240 --> 00:29:59,840 Speaker 1: You look at the markets, you look at kind of 607 00:29:59,840 --> 00:30:01,240 Speaker 1: some the ego data we're seeing. 608 00:30:01,760 --> 00:30:03,640 Speaker 3: What's your story these days? 609 00:30:04,240 --> 00:30:07,120 Speaker 6: I think my story is consistent with what we've discussed. 610 00:30:07,200 --> 00:30:09,160 Speaker 6: Number one. I think for the moment, you've seen the 611 00:30:09,160 --> 00:30:13,120 Speaker 6: best of the inflation data, the rather sharp drop was 612 00:30:13,200 --> 00:30:17,640 Speaker 6: due primarily to year on year comparisons. But over the 613 00:30:17,640 --> 00:30:21,200 Speaker 6: next six months those comparisons turn around. I think the 614 00:30:21,280 --> 00:30:23,680 Speaker 6: last half of last year average like about zero at 615 00:30:23,680 --> 00:30:25,840 Speaker 6: two point one. So the odds are you're going to 616 00:30:25,840 --> 00:30:29,480 Speaker 6: start to see Number one, prices push higher, which should 617 00:30:29,520 --> 00:30:33,160 Speaker 6: work against the Feds or the markets perceived perspective of 618 00:30:33,200 --> 00:30:38,200 Speaker 6: the Fed cutting number one. Number two, these labor agreements 619 00:30:38,200 --> 00:30:40,920 Speaker 6: are telling you there's a lot of upward pressure on wages. 620 00:30:41,520 --> 00:30:45,000 Speaker 6: And yes, if productivity is sufficient, that's one thing, but 621 00:30:45,040 --> 00:30:49,160 Speaker 6: it's still embedding a lot of upward pressure on prices. 622 00:30:49,640 --> 00:30:53,640 Speaker 6: Number three. Again, I know the FED has a habit 623 00:30:53,680 --> 00:30:57,640 Speaker 6: of speaking one way when it means being accommodating and 624 00:30:57,880 --> 00:30:59,800 Speaker 6: going the other one. It's not, but they spent years 625 00:30:59,800 --> 00:31:02,240 Speaker 6: to time talking about averaging well by the end of 626 00:31:02,240 --> 00:31:04,480 Speaker 6: this year, you'll have had two years at seven plus 627 00:31:04,480 --> 00:31:07,640 Speaker 6: percent plus someplace between four and five on headline inflation. 628 00:31:08,200 --> 00:31:09,920 Speaker 6: I don't know how long it's going to take them, 629 00:31:10,240 --> 00:31:12,160 Speaker 6: but even if you get to two percent at the 630 00:31:12,240 --> 00:31:16,040 Speaker 6: end of the year after this, and that's an if, 631 00:31:16,480 --> 00:31:19,440 Speaker 6: you've allowed a lot of embedded price pressures to arise. 632 00:31:19,480 --> 00:31:21,040 Speaker 6: So my person, they're going to let that. 633 00:31:21,280 --> 00:31:24,479 Speaker 2: I mean, well, let's you don't need to hold them 634 00:31:24,480 --> 00:31:26,240 Speaker 2: to their word. They're going to let that roll off 635 00:31:26,640 --> 00:31:27,480 Speaker 2: their back like. 636 00:31:27,720 --> 00:31:30,560 Speaker 6: Well, but here's the problem, Matt. The thing that I 637 00:31:30,640 --> 00:31:34,560 Speaker 6: have is a couple of things. One, this economy is 638 00:31:34,600 --> 00:31:38,640 Speaker 6: actually doing reasonably well all things considered, with the Fed 639 00:31:38,720 --> 00:31:44,120 Speaker 6: having acted fairly aggressively. They're not aggressive from my perspective. 640 00:31:44,760 --> 00:31:48,240 Speaker 6: It took them a year to do one vulgar. The 641 00:31:48,680 --> 00:31:51,400 Speaker 6: simple fact of the matter is is where it's full employment, 642 00:31:51,720 --> 00:31:55,600 Speaker 6: you have upward pressure on wages, you have a reasonable economy. Again, 643 00:31:55,640 --> 00:31:58,840 Speaker 6: the data, although it has is mixed periodically, seems to 644 00:31:58,840 --> 00:32:02,200 Speaker 6: be showing the economies actually picking up speed. I want 645 00:32:02,200 --> 00:32:05,320 Speaker 6: to know why anybody outside of the equity market who 646 00:32:05,400 --> 00:32:10,600 Speaker 6: needs rate cuts to justify silly valuations should think that 647 00:32:10,680 --> 00:32:13,959 Speaker 6: an economy doing this well needs to have any rate adjustments, 648 00:32:14,080 --> 00:32:16,959 Speaker 6: We're going to need to have something, in my perspective 649 00:32:17,200 --> 00:32:21,080 Speaker 6: that is significant, either some sort of catastrophic equity event 650 00:32:21,200 --> 00:32:25,320 Speaker 6: or some really sharp deceleration in the economy and employment. 651 00:32:25,400 --> 00:32:26,360 Speaker 6: I justify this. 652 00:32:26,440 --> 00:32:27,240 Speaker 3: That's where I want to go. 653 00:32:27,680 --> 00:32:30,880 Speaker 1: Michael Schumacher, Our good friends of Goldman Sachs are looking 654 00:32:30,920 --> 00:32:34,000 Speaker 1: for a rate cut in the first one in the 655 00:32:34,000 --> 00:32:34,720 Speaker 1: second quarter of. 656 00:32:34,680 --> 00:32:36,360 Speaker 2: Next year, and then one a quarter. 657 00:32:36,480 --> 00:32:37,960 Speaker 3: Right, yeah, So what do you think about that? 658 00:32:39,800 --> 00:32:42,719 Speaker 10: It seems quick. I think Denil's point something would have 659 00:32:42,760 --> 00:32:46,840 Speaker 10: to break. Something in the neighborhood of one cut a 660 00:32:46,920 --> 00:32:50,400 Speaker 10: quarter is not consistent with a disastrous event in the markets. 661 00:32:50,440 --> 00:32:53,480 Speaker 10: But it's pretty clear to us the Fed really wants 662 00:32:53,520 --> 00:32:55,200 Speaker 10: to stay on hold for a long time, at least 663 00:32:55,280 --> 00:32:57,600 Speaker 10: Jay Powell goes, and whether he wins that debate or 664 00:32:57,680 --> 00:33:00,920 Speaker 10: not remains to be seen, but it does seem pretty 665 00:33:00,920 --> 00:33:03,520 Speaker 10: fast to us. If you think about the typical time lag, 666 00:33:03,560 --> 00:33:06,840 Speaker 10: for instance, I know the apparels and looking at historical cycles, 667 00:33:06,840 --> 00:33:09,400 Speaker 10: but still let's start there. Over the last four to 668 00:33:09,480 --> 00:33:12,280 Speaker 10: five cycles, the average lag between the last tike and 669 00:33:12,320 --> 00:33:15,320 Speaker 10: the first cut is something like ten months, and if 670 00:33:15,360 --> 00:33:18,160 Speaker 10: you consider the inflation scenario we've all experienced over the 671 00:33:18,240 --> 00:33:20,160 Speaker 10: last couple of years. It seems to me it argues 672 00:33:20,240 --> 00:33:24,320 Speaker 10: for a longer period, not shorter. So something would have 673 00:33:24,360 --> 00:33:28,560 Speaker 10: to give pretty sharply for let's say early Q two 674 00:33:28,640 --> 00:33:29,840 Speaker 10: to be in the picture next year. 675 00:33:29,880 --> 00:33:33,080 Speaker 2: What do you think about Neil's supposition that we've seen 676 00:33:33,120 --> 00:33:38,080 Speaker 2: the best of declining inflation and we could be in 677 00:33:38,160 --> 00:33:41,120 Speaker 2: for higher inflation from here on out. I mean, we've 678 00:33:41,120 --> 00:33:42,640 Speaker 2: heard a lot of other people say that as well. 679 00:33:42,640 --> 00:33:46,200 Speaker 2: When you look at oil prices, airline tickets, healthcare costs, 680 00:33:46,240 --> 00:33:48,720 Speaker 2: a lot of these things are only going up. 681 00:33:50,000 --> 00:33:52,440 Speaker 10: Yeah, whether it's higher or sticky, take your pick. I 682 00:33:52,480 --> 00:33:55,960 Speaker 10: agree with Neil that the basically the big winnings have 683 00:33:56,040 --> 00:33:59,400 Speaker 10: already been cashed in, if you will, and our recon team, 684 00:33:59,480 --> 00:34:01,680 Speaker 10: our economy Sarah House is a great term. She calls 685 00:34:01,680 --> 00:34:04,200 Speaker 10: it the last mile. That last mile is tough. So 686 00:34:05,280 --> 00:34:08,520 Speaker 10: you've got core CPI the run rate down to low 687 00:34:08,600 --> 00:34:11,280 Speaker 10: threes right now, begetting that to two and a half 688 00:34:11,400 --> 00:34:14,480 Speaker 10: or heaven forbid too, that will be a very tough slog. 689 00:34:14,719 --> 00:34:16,560 Speaker 10: So I'm on the same page as Neil. 690 00:34:16,400 --> 00:34:19,360 Speaker 6: Here, by the way, one point on that everybody's looking 691 00:34:19,400 --> 00:34:22,040 Speaker 6: at getting to two. The question is is that a 692 00:34:22,080 --> 00:34:26,240 Speaker 6: stable rate. It's quite possible that we get down to 693 00:34:26,239 --> 00:34:27,920 Speaker 6: two or near two, and then all of a sudden 694 00:34:27,920 --> 00:34:30,719 Speaker 6: it starts to rise. So just because the Fed manages 695 00:34:31,200 --> 00:34:35,560 Speaker 6: to get closer, you're going to want them to maintain 696 00:34:35,640 --> 00:34:38,239 Speaker 6: that whole show it that's actually a stable rate. 697 00:34:38,320 --> 00:34:40,280 Speaker 2: But so, Neil, do you think that the Fed could 698 00:34:40,360 --> 00:34:43,000 Speaker 2: actually raise rates even further? 699 00:34:43,800 --> 00:34:47,040 Speaker 6: Well, it depends on the price pressures and employment. My view, man, 700 00:34:47,160 --> 00:34:48,960 Speaker 6: and it's been this way for a while, is I'm 701 00:34:49,040 --> 00:34:52,880 Speaker 6: less concerned about rates five four and a half percent, 702 00:34:52,920 --> 00:34:56,160 Speaker 6: four to six. They need to sell assets from their 703 00:34:56,160 --> 00:34:58,160 Speaker 6: balance sheet. The balance sheet, i think is a big 704 00:34:58,200 --> 00:35:01,319 Speaker 6: piece of the problem. It's still providing even though there's 705 00:35:01,320 --> 00:35:04,640 Speaker 6: a you know, I call a quantitative dribble. It's slowly 706 00:35:05,880 --> 00:35:08,600 Speaker 6: falling in size. But there are a lot of factors. 707 00:35:08,600 --> 00:35:10,440 Speaker 6: By the way, one of the other things we haven't discussed, 708 00:35:10,480 --> 00:35:13,839 Speaker 6: I mean, there is still enormous amounts of pent up 709 00:35:13,880 --> 00:35:18,600 Speaker 6: fiscal stimulus tied to some of the last programs that 710 00:35:18,640 --> 00:35:21,120 Speaker 6: were passed by the Biden administration, which is also going 711 00:35:21,160 --> 00:35:24,640 Speaker 6: to work against the economy slowing down. So the answer 712 00:35:24,680 --> 00:35:27,440 Speaker 6: to me is they need to take some of the 713 00:35:27,480 --> 00:35:29,920 Speaker 6: liquidity out of the market, and that's more important than 714 00:35:29,960 --> 00:35:30,440 Speaker 6: the rates. 715 00:35:30,960 --> 00:35:34,839 Speaker 1: Hey, Michael Jackson Hole next week. By the way, I'm 716 00:35:34,880 --> 00:35:37,160 Speaker 1: still searching my inbox for my invite. I can't find 717 00:35:37,200 --> 00:35:40,280 Speaker 1: it anywhere. I must have just missed it. But Jackson Hole, 718 00:35:40,840 --> 00:35:43,320 Speaker 1: what do you expect to come out of there? If anything? 719 00:35:45,320 --> 00:35:46,320 Speaker 10: Usually it's a non event. 720 00:35:46,880 --> 00:35:47,080 Speaker 5: Now. 721 00:35:47,160 --> 00:35:49,680 Speaker 10: Last year was interesting, of course, with the famous eight 722 00:35:49,719 --> 00:35:52,520 Speaker 10: minute speech, and I'm going to head for the trails. 723 00:35:52,560 --> 00:35:55,239 Speaker 10: But this year, I suspect the message is, Hey, we've 724 00:35:55,239 --> 00:35:58,439 Speaker 10: done a lot of good work. Inflations down quite a bit. 725 00:35:59,360 --> 00:36:02,840 Speaker 10: There's still residual benefit lowering whatever you might want to 726 00:36:02,880 --> 00:36:06,439 Speaker 10: call it, from tightening the pipeline. We're going to stay 727 00:36:06,480 --> 00:36:08,480 Speaker 10: on Hole for a long time. We're not going to 728 00:36:08,480 --> 00:36:11,680 Speaker 10: cut anytime soon. And I think the market probably buys 729 00:36:11,760 --> 00:36:14,240 Speaker 10: the first part of that talk and not the second part. 730 00:36:14,840 --> 00:36:17,560 Speaker 10: So it's a really difficult sales job, if you will. 731 00:36:18,120 --> 00:36:21,160 Speaker 10: One interesting point about jackson Hole thoughs there's almost certainly 732 00:36:21,200 --> 00:36:24,320 Speaker 10: no Q and A, so it's a set piece. I'll 733 00:36:24,320 --> 00:36:27,680 Speaker 10: can stick to his message. Really, no chance of being 734 00:36:27,719 --> 00:36:30,719 Speaker 10: thrown off guard by a strange question. So in a 735 00:36:30,800 --> 00:36:33,440 Speaker 10: sense it's a fairly easy setup. But it's hard for 736 00:36:33,760 --> 00:36:36,680 Speaker 10: and consistently Jackson Hole hasn't mattered too much to the markets. 737 00:36:36,680 --> 00:36:39,279 Speaker 10: It's hard for that to be radically different this year. 738 00:36:39,920 --> 00:36:43,000 Speaker 6: I happy I would add one quick thing. Anything that 739 00:36:43,080 --> 00:36:47,360 Speaker 6: sends the stock market up, provides liquidity, works against the 740 00:36:47,400 --> 00:36:50,120 Speaker 6: Fed and in my perspective going forward. So you've got 741 00:36:50,120 --> 00:36:51,560 Speaker 6: that other character balance. 742 00:36:51,680 --> 00:36:53,759 Speaker 3: All right, Well, I'll keep looking for my invite to 743 00:36:53,840 --> 00:36:54,359 Speaker 3: Jackson Hole. 744 00:36:54,400 --> 00:36:57,160 Speaker 1: I got the surveillance Jed gassed up and ready to go, 745 00:36:57,200 --> 00:36:57,880 Speaker 1: so we'll see if I can. 746 00:36:58,000 --> 00:36:59,480 Speaker 2: I think they're going without you, buddy, I. 747 00:36:59,400 --> 00:37:01,560 Speaker 3: Think they are. I think they are. That's the cold truth. 748 00:37:01,680 --> 00:37:02,400 Speaker 3: Let's be honest. 749 00:37:02,480 --> 00:37:05,800 Speaker 1: I offered to Carrie Luggage nothing. Michael Schumacher had a 750 00:37:05,800 --> 00:37:09,040 Speaker 1: macro strategy and rates for Wells Fargo and joining us, 751 00:37:09,280 --> 00:37:12,600 Speaker 1: so we appreciate that as well as well as our 752 00:37:12,680 --> 00:37:16,640 Speaker 1: good friend Neil Grossman, former CIO at TKNG Capital. He 753 00:37:16,680 --> 00:37:19,799 Speaker 1: comes in the studio and he comes bearing gifts in. 754 00:37:19,719 --> 00:37:22,200 Speaker 3: The form of some lovely looking one. Oh, I'm sure 755 00:37:22,200 --> 00:37:23,680 Speaker 3: it's going to taste just great as well. 756 00:37:23,920 --> 00:37:27,040 Speaker 7: You're listening to the tape cans Are Live program Bloomberg 757 00:37:27,080 --> 00:37:30,680 Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the 758 00:37:30,760 --> 00:37:34,000 Speaker 7: tune in app, Bloomberg dot Com, and the Bloomberg Business App. 759 00:37:34,000 --> 00:37:36,839 Speaker 7: You can also listen live on Amazon Alexa from our 760 00:37:36,840 --> 00:37:42,960 Speaker 7: flagship New York station, Just Say Alexa play Bloomberg eleven thirty. 761 00:37:43,280 --> 00:37:44,120 Speaker 3: Issue of the Day. 762 00:37:44,160 --> 00:37:45,719 Speaker 1: The story that just kind of keeps on giving that 763 00:37:45,760 --> 00:37:49,640 Speaker 1: as former President Trump and his legal challenges, most recently 764 00:37:49,680 --> 00:37:51,600 Speaker 1: from the state of Georgia, we want to bring in 765 00:37:51,640 --> 00:37:53,640 Speaker 1: a couple of heavyweights. Mat I don't know who put 766 00:37:53,680 --> 00:37:57,640 Speaker 1: these two together. Tim O'Brien, Senior executive editor with Bloomberg Opinion, 767 00:37:57,640 --> 00:38:01,080 Speaker 1: and June Grasso, legal analyst with Bloomberg News. June, I'd 768 00:38:01,080 --> 00:38:03,120 Speaker 1: like to start with you just from the legal perspective, 769 00:38:04,200 --> 00:38:06,600 Speaker 1: what is unique or what's important for us to know 770 00:38:06,640 --> 00:38:08,880 Speaker 1: about what the indictment from Georgia yesterday. 771 00:38:09,120 --> 00:38:11,560 Speaker 11: Well, I think you know what's important is the scope 772 00:38:11,600 --> 00:38:14,840 Speaker 11: of this indictment and it goes, you know, it shows 773 00:38:15,160 --> 00:38:17,800 Speaker 11: the White House from the Oval Office to this rural 774 00:38:18,000 --> 00:38:21,359 Speaker 11: county in Georgia, and it's very detailed. 775 00:38:21,600 --> 00:38:22,560 Speaker 12: It, as you. 776 00:38:22,520 --> 00:38:26,800 Speaker 11: Say, it sets out one hundred and sixty one separate 777 00:38:26,840 --> 00:38:29,800 Speaker 11: acts that were done and as opposed to Jack Smith's 778 00:38:29,800 --> 00:38:32,719 Speaker 11: the special Council's January sixth, which was very narrow and 779 00:38:32,760 --> 00:38:35,800 Speaker 11: targeted toward Trump and getting it to trial early. 780 00:38:36,080 --> 00:38:37,640 Speaker 12: This one is really broad. 781 00:38:37,719 --> 00:38:41,359 Speaker 11: It even includes things that happened in other states where 782 00:38:41,360 --> 00:38:44,280 Speaker 11: there were fake elector plans. So you see this broad 783 00:38:44,400 --> 00:38:49,560 Speaker 11: conspiracy to try to change the election, even including stealing 784 00:38:49,760 --> 00:38:52,040 Speaker 11: election data. I mean, what you see in this is 785 00:38:52,120 --> 00:38:54,600 Speaker 11: almost some of it is just unbelievable. And then it 786 00:38:54,640 --> 00:38:58,239 Speaker 11: goes to the heart of what we saw during the 787 00:38:58,320 --> 00:39:02,640 Speaker 11: January sixth committee hearings, Ruby Freeman. Remember everyone remembers that 788 00:39:02,719 --> 00:39:06,280 Speaker 11: worker who was crying because she was harassed by people 789 00:39:06,360 --> 00:39:10,040 Speaker 11: associated with Trump to change to say that the election 790 00:39:10,200 --> 00:39:13,640 Speaker 11: was fraudulent, and she one of the counts concerns her, 791 00:39:13,640 --> 00:39:17,640 Speaker 11: and there are three people who allegedly harassed her who 792 00:39:17,680 --> 00:39:19,920 Speaker 11: are charged as part of the defendants. 793 00:39:20,680 --> 00:39:24,600 Speaker 2: Tim O'Brien, it's I mean, this is the first time 794 00:39:24,680 --> 00:39:30,359 Speaker 2: Donald Trump has ever been charged under RICO, Right. Isn't 795 00:39:30,360 --> 00:39:32,200 Speaker 2: that a little surprising when you say that out loud? 796 00:39:32,200 --> 00:39:36,520 Speaker 2: But it's true. What's your reaction to this prosecution, to 797 00:39:36,560 --> 00:39:41,360 Speaker 2: this indictment. We can't hear you. We can't hear Tim. Guys, 798 00:39:41,480 --> 00:39:43,200 Speaker 2: can we get to his audio or you muted. 799 00:39:46,239 --> 00:39:46,960 Speaker 13: Can you hear me now? 800 00:39:47,080 --> 00:39:50,279 Speaker 2: Yes, yes, you guys muted me. 801 00:39:50,560 --> 00:39:54,719 Speaker 13: I'm back, you know. I think on the rico thing, 802 00:39:54,760 --> 00:39:56,560 Speaker 13: one of the things that's just really interesting from sort 803 00:39:56,560 --> 00:39:59,680 Speaker 13: of the historical perspective is, let's not forget that Rudy 804 00:39:59,719 --> 00:40:02,839 Speaker 13: Jrul as a young prosecutor in the Southern District of 805 00:40:02,920 --> 00:40:06,840 Speaker 13: New York, made his bones by pursuing rico cases against 806 00:40:06,920 --> 00:40:11,000 Speaker 13: the mob and against insider traders on Wall Street. And 807 00:40:11,040 --> 00:40:16,040 Speaker 13: he essentially gave a lot of muscularity to federal rico prosecutions. 808 00:40:15,640 --> 00:40:19,719 Speaker 13: And now decades later, that's the long armor of the 809 00:40:19,760 --> 00:40:22,600 Speaker 13: law is revisiting itself on his doorstep in the same fashion. 810 00:40:23,400 --> 00:40:25,120 Speaker 13: I think, you know, this is I think, like the 811 00:40:25,239 --> 00:40:29,960 Speaker 13: two Special Council indictments, this is an evidence rich prosecution 812 00:40:30,200 --> 00:40:35,719 Speaker 13: or indictment. It is full of just raw evidence that 813 00:40:35,800 --> 00:40:38,840 Speaker 13: I think would be very hard to refute in a 814 00:40:38,880 --> 00:40:41,600 Speaker 13: courtroom in terms of how it's tied to the allegations 815 00:40:41,960 --> 00:40:43,480 Speaker 13: of trying to torpedo the election. 816 00:40:43,560 --> 00:40:44,120 Speaker 7: I mean, there's a. 817 00:40:44,120 --> 00:40:47,920 Speaker 13: Taped phone call. He is taped saying, go and find 818 00:40:47,960 --> 00:40:53,760 Speaker 13: me eleven thousand votes his minions, whether it's his lawyers 819 00:40:53,840 --> 00:40:57,720 Speaker 13: or a chief of staff, like Mark Meadows or people 820 00:40:57,719 --> 00:41:02,279 Speaker 13: in the Justice Department are all literally conspiring in an 821 00:41:02,360 --> 00:41:06,279 Speaker 13: organized fashion to try to overturn election results when they 822 00:41:06,360 --> 00:41:09,279 Speaker 13: knew that the results of the election and were repeatedly 823 00:41:09,360 --> 00:41:12,440 Speaker 13: told that the results of the election were sound. So 824 00:41:12,520 --> 00:41:14,279 Speaker 13: I think it's I think he's got a long hill 825 00:41:14,360 --> 00:41:18,160 Speaker 13: to climb here as a defendant, and and there is 826 00:41:18,200 --> 00:41:20,840 Speaker 13: the possibility he gets re elected that he can dismiss 827 00:41:21,200 --> 00:41:25,160 Speaker 13: the two federal indictments and investigations that are circling around 828 00:41:25,239 --> 00:41:27,400 Speaker 13: him now, but he won't be able to touch the 829 00:41:27,440 --> 00:41:30,799 Speaker 13: Georgia case. So they're they're looking at they're looking at 830 00:41:30,840 --> 00:41:31,920 Speaker 13: a real legal problem. 831 00:41:32,040 --> 00:41:36,440 Speaker 1: Hey, Tim, Tim, you've known Donald Trump as well or 832 00:41:36,440 --> 00:41:40,719 Speaker 1: better than anyone in media, given your longtime dealings with him. 833 00:41:40,920 --> 00:41:43,600 Speaker 1: How do you think he's going to react here? How 834 00:41:43,680 --> 00:41:46,080 Speaker 1: is he going to play this whole thing out? How 835 00:41:46,080 --> 00:41:47,800 Speaker 1: do you think he's going It'll be televised, It'll be 836 00:41:47,840 --> 00:41:48,720 Speaker 1: televised in Georgia. 837 00:41:48,719 --> 00:41:50,719 Speaker 3: But how do you think just all for these indictments, 838 00:41:50,800 --> 00:41:52,279 Speaker 3: what's his what do you think his strategies? 839 00:41:53,360 --> 00:41:55,520 Speaker 13: Well, his playbook has been to say it's a witch hunt, 840 00:41:55,560 --> 00:41:59,160 Speaker 13: that it's entirely partisan, that there is nothing behind this 841 00:41:59,400 --> 00:42:02,920 Speaker 13: other than an effort to knock out a robust competitor 842 00:42:02,920 --> 00:42:06,440 Speaker 13: in the Republican Party. And of course he's ignoring the 843 00:42:06,480 --> 00:42:08,560 Speaker 13: need for the rule of law. He's ignoring the fact 844 00:42:08,920 --> 00:42:13,359 Speaker 13: that the evidentiary trail is damning, he's overlooking the fact 845 00:42:13,400 --> 00:42:17,319 Speaker 13: that it's happening in multiple venues. But he certainly has 846 00:42:17,360 --> 00:42:20,080 Speaker 13: the ear of his core supporters, and he always will. 847 00:42:20,120 --> 00:42:22,440 Speaker 13: I don't think there's a single indictment that can be 848 00:42:23,000 --> 00:42:27,719 Speaker 13: brought against Donald Trump that will dislodge how warmly his 849 00:42:27,800 --> 00:42:32,640 Speaker 13: core supporters feel about him. What the real political element 850 00:42:32,680 --> 00:42:36,000 Speaker 13: of this is is what independent what moderate Republicans and 851 00:42:36,000 --> 00:42:39,040 Speaker 13: independent voters think about this. That's where this will swing. 852 00:42:40,000 --> 00:42:42,839 Speaker 13: But I think he's he's scared, you know. For all 853 00:42:42,840 --> 00:42:45,200 Speaker 13: of his bluster and this myth that he has nine 854 00:42:45,280 --> 00:42:49,080 Speaker 13: legal lives, he has never faced prosecutions that are this 855 00:42:49,239 --> 00:42:53,560 Speaker 13: detailed and with prosecutors who have really done their homework 856 00:42:53,680 --> 00:42:57,840 Speaker 13: and involve criminal charges, not civil shenanigans in a courtroom 857 00:42:57,840 --> 00:43:00,720 Speaker 13: where he's happy to wage the battle in the press 858 00:43:00,760 --> 00:43:02,960 Speaker 13: as much as in court. And he's sort of been 859 00:43:02,960 --> 00:43:06,360 Speaker 13: told by one judge in one of the federal cases 860 00:43:06,400 --> 00:43:11,000 Speaker 13: that he can't go lollygagging around in the media trying 861 00:43:11,040 --> 00:43:13,399 Speaker 13: to win the case there, or she's going to start 862 00:43:13,400 --> 00:43:14,120 Speaker 13: to sanction him. 863 00:43:14,200 --> 00:43:18,000 Speaker 2: So I think he's nervous to that point. Tim, I 864 00:43:18,200 --> 00:43:23,240 Speaker 2: have a quote from Lewis Kaplan in another case, unrelated entirely, 865 00:43:23,800 --> 00:43:27,400 Speaker 2: but I think it's interesting to read it out. So 866 00:43:27,560 --> 00:43:31,759 Speaker 2: Caplin says, in regards to Sam Bankman Freed, a defendant's 867 00:43:31,760 --> 00:43:34,080 Speaker 2: speech is not protected to the extent that it is 868 00:43:34,120 --> 00:43:36,759 Speaker 2: intended to bring about a crime. And June, I want 869 00:43:36,800 --> 00:43:40,640 Speaker 2: to ask you about this. What happens if Donald Trump 870 00:43:40,719 --> 00:43:43,200 Speaker 2: is found to be attempting to tamper with witnesses? What 871 00:43:43,200 --> 00:43:46,719 Speaker 2: happens if Donald Trump is trying to intimidate people with 872 00:43:46,840 --> 00:43:50,719 Speaker 2: his speech? Can he always say that's political speech, free 873 00:43:50,800 --> 00:43:54,200 Speaker 2: speech and claim First Amendment? Or will any judge you 874 00:43:54,400 --> 00:43:57,239 Speaker 2: have the power and the kahonas to say no, you 875 00:43:57,280 --> 00:43:57,759 Speaker 2: can't do that. 876 00:43:58,080 --> 00:44:00,600 Speaker 11: Yes, there will be judges who will have the power 877 00:44:00,800 --> 00:44:04,600 Speaker 11: to say no. And the judge in DC has already 878 00:44:04,680 --> 00:44:08,560 Speaker 11: said no to that. So they're raising First Amendment claims. 879 00:44:08,840 --> 00:44:11,359 Speaker 11: But First Amendment is about speech, and I think, as 880 00:44:11,360 --> 00:44:14,120 Speaker 11: Tim referred to, what he's charged with is not what 881 00:44:14,239 --> 00:44:18,800 Speaker 11: he said, it's what he did. And every conspiracy that's charged, 882 00:44:19,320 --> 00:44:20,440 Speaker 11: the people talk about it. 883 00:44:20,520 --> 00:44:20,719 Speaker 2: Right. 884 00:44:20,840 --> 00:44:22,920 Speaker 12: Speech is always part of a conspiracy. 885 00:44:23,280 --> 00:44:25,719 Speaker 11: So that's a way for them to attack this, but 886 00:44:25,800 --> 00:44:29,400 Speaker 11: I think it's almost the weakest way, and it's also 887 00:44:29,560 --> 00:44:32,279 Speaker 11: something that plays in the public. So his supporters are 888 00:44:32,280 --> 00:44:35,640 Speaker 11: saying he's a political candidate, he has the right to speak. Well, 889 00:44:35,680 --> 00:44:38,400 Speaker 11: the judge in DC said, you know, that's your day job, 890 00:44:39,080 --> 00:44:41,560 Speaker 11: what you do in this courtroom. You're a defendant here 891 00:44:41,600 --> 00:44:44,040 Speaker 11: and your speech here is different and you can't do 892 00:44:44,320 --> 00:44:47,960 Speaker 11: you can't say anything you want. Now she's testing him. 893 00:44:48,239 --> 00:44:50,960 Speaker 11: He already since that, she said, I'm gonna be watching 894 00:44:51,000 --> 00:44:53,440 Speaker 11: what you do, what you post on social media. He 895 00:44:53,520 --> 00:44:57,560 Speaker 11: already yesterday or the day before said to the Lieutenant 896 00:44:57,640 --> 00:45:00,680 Speaker 11: governor that he shouldn't go Who the Lieutenant governor, Jeff Duncan, 897 00:45:00,719 --> 00:45:04,040 Speaker 11: who testified at the grand jury and had testified at 898 00:45:04,080 --> 00:45:05,560 Speaker 11: the investigative. 899 00:45:04,920 --> 00:45:05,920 Speaker 12: Grand jury in Georgia. 900 00:45:06,080 --> 00:45:09,200 Speaker 11: He said he shouldn't go to testify. So I'm wondering 901 00:45:09,239 --> 00:45:11,120 Speaker 11: if the judge in DC is going to be looking 902 00:45:11,160 --> 00:45:14,680 Speaker 11: at that and saying intimidation of witness. Obviously she's trying 903 00:45:14,719 --> 00:45:18,040 Speaker 11: to intimidate a witness. Intimidation of witnesses, and will she 904 00:45:18,320 --> 00:45:22,160 Speaker 11: try in as Sam In Sam Bankminfried's case, Lewis, Judge 905 00:45:22,200 --> 00:45:26,480 Speaker 11: Kaplan tried in different ways to curtail what he was doing, 906 00:45:26,520 --> 00:45:30,520 Speaker 11: to curtail his outreach to to different people there, so 907 00:45:30,600 --> 00:45:32,360 Speaker 11: will she try in different ways? 908 00:45:32,400 --> 00:45:33,920 Speaker 12: And another thing she said is. 909 00:45:34,360 --> 00:45:36,200 Speaker 11: If this keeps up, I'm going to have to have 910 00:45:36,239 --> 00:45:38,799 Speaker 11: the trial sooner than we thought because you're trying to 911 00:45:38,840 --> 00:45:39,840 Speaker 11: taint the jury pool. 912 00:45:40,120 --> 00:45:41,919 Speaker 12: So she has a lot of things that she could 913 00:45:42,040 --> 00:45:43,080 Speaker 12: use against him. 914 00:45:43,280 --> 00:45:46,040 Speaker 11: However, it is Donald Trump, and I don't think he's 915 00:45:46,080 --> 00:45:48,520 Speaker 11: ever kept quiet about anything. 916 00:45:48,800 --> 00:45:52,120 Speaker 2: We have a listener writing in with a question June, 917 00:45:52,719 --> 00:45:56,080 Speaker 2: what if Trump's team moves to have this shifted to federal. 918 00:45:55,760 --> 00:45:58,600 Speaker 11: Court, don't let will work. I don't think that will work. 919 00:45:58,800 --> 00:46:00,600 Speaker 11: I mean he could, he will try that. He also 920 00:46:00,680 --> 00:46:04,480 Speaker 11: tried to get the judge changed in the case of Manhattan. 921 00:46:04,719 --> 00:46:06,799 Speaker 11: But there is no real reason for him to be 922 00:46:06,960 --> 00:46:10,240 Speaker 11: in federal court. And here you have a case that's 923 00:46:10,280 --> 00:46:13,399 Speaker 11: all about Georgia law, which could be tried in federal court. 924 00:46:13,600 --> 00:46:15,239 Speaker 12: But I don't see what the reason for him. 925 00:46:15,880 --> 00:46:18,240 Speaker 2: Still, he might be able to pardon himself if he doesn't. 926 00:46:18,360 --> 00:46:20,759 Speaker 11: Right, Well, that's the reason why he wants to would 927 00:46:20,880 --> 00:46:21,880 Speaker 11: still be state charges. 928 00:46:21,960 --> 00:46:24,040 Speaker 12: That's interesting. Whether he still could pardon it's still a 929 00:46:24,080 --> 00:46:24,680 Speaker 12: state case. 930 00:46:25,440 --> 00:46:27,680 Speaker 11: I think that it would be rejected, and I think 931 00:46:27,719 --> 00:46:29,920 Speaker 11: he'll probably try to appeal that. But what are his 932 00:46:30,040 --> 00:46:32,600 Speaker 11: reasons for moving it to federal court? That he can't 933 00:46:32,600 --> 00:46:34,880 Speaker 11: get a fair jury, which he's been trying to say 934 00:46:35,040 --> 00:46:38,200 Speaker 11: all along. So Florida is fine for him of the jury, 935 00:46:38,239 --> 00:46:39,160 Speaker 11: but DC's not. 936 00:46:39,440 --> 00:46:41,400 Speaker 1: Hey, Tim, you know what I've kind of noticed here 937 00:46:41,440 --> 00:46:44,640 Speaker 1: during this whole process on the four indictments, I've not 938 00:46:44,760 --> 00:46:47,920 Speaker 1: heard much from his family in terms of defending. What 939 00:46:47,960 --> 00:46:50,200 Speaker 1: do you think the family dynamics are in the dynamics 940 00:46:50,200 --> 00:46:53,960 Speaker 1: of some of his core core supporters outside of some 941 00:46:54,000 --> 00:46:56,480 Speaker 1: of the members of Congress, I guess well. 942 00:46:57,440 --> 00:46:59,640 Speaker 13: Eric Trump and Don Trump Junior have been very vocal, 943 00:46:59,680 --> 00:47:02,280 Speaker 13: I think on their social media feeds and on used programs. 944 00:47:02,640 --> 00:47:05,120 Speaker 13: I think Ivanka and Jared have headed for the hills. 945 00:47:06,239 --> 00:47:10,600 Speaker 13: You know they are. They are extremely conscious of how 946 00:47:10,640 --> 00:47:15,280 Speaker 13: they're perceived socially, including in Manhattan, even though they've fled 947 00:47:15,280 --> 00:47:19,160 Speaker 13: to Florida. So I think we're not hearing for them 948 00:47:19,280 --> 00:47:22,000 Speaker 13: from them because they have their own self interest in mind. 949 00:47:22,200 --> 00:47:25,040 Speaker 13: But Eric and Don Junior are still true believers and 950 00:47:25,080 --> 00:47:27,800 Speaker 13: are saying the same things that their father is saying, 951 00:47:27,800 --> 00:47:30,000 Speaker 13: that that his free speech rights are being violated and 952 00:47:30,080 --> 00:47:34,319 Speaker 13: that this is a witch hunt. I think, you know, 953 00:47:34,719 --> 00:47:37,880 Speaker 13: what's more interesting is the great silence from members of 954 00:47:37,880 --> 00:47:38,560 Speaker 13: the Party. 955 00:47:38,280 --> 00:47:42,280 Speaker 2: Of Law and Order agreed, you know, or support even Tim. 956 00:47:42,440 --> 00:47:44,880 Speaker 2: It's it's amazing how much support he gets from Congress, 957 00:47:45,280 --> 00:47:47,360 Speaker 2: and I guess silence from the Senators. 958 00:47:48,239 --> 00:47:51,759 Speaker 13: Because because he has enormous traction with about thirty to 959 00:47:51,760 --> 00:47:54,480 Speaker 13: thirty five percent of the party, and he has the 960 00:47:54,520 --> 00:47:58,319 Speaker 13: ability to destroy GOP candidates who he has a distaste for. 961 00:47:58,920 --> 00:48:01,600 Speaker 13: And I think this is essentially a moment. It's a 962 00:48:01,680 --> 00:48:05,839 Speaker 13: profile profiles encouraged moment. These are people who are more 963 00:48:05,880 --> 00:48:08,920 Speaker 13: worried about getting elected again than they are about doing 964 00:48:09,000 --> 00:48:12,719 Speaker 13: the right thing, even in the face of robust and 965 00:48:12,800 --> 00:48:13,640 Speaker 13: danding evidence. 966 00:48:14,040 --> 00:48:16,360 Speaker 1: So Tim, just real quick, third, thirty seconds left. I mean, 967 00:48:16,480 --> 00:48:18,439 Speaker 1: house is going to play out over the next months 968 00:48:18,520 --> 00:48:21,759 Speaker 1: until we get till November of twenty four. I know 969 00:48:21,800 --> 00:48:24,320 Speaker 1: it's probably an open ending question, but boy, it seems 970 00:48:24,360 --> 00:48:25,720 Speaker 1: to be one of the defining ones. 971 00:48:26,560 --> 00:48:28,520 Speaker 13: Well, I think it depends on how quickly these things 972 00:48:28,560 --> 00:48:30,960 Speaker 13: go to trial. You know, I think one of the 973 00:48:31,000 --> 00:48:33,480 Speaker 13: reasons he's seeking to move the Georgia case to federal 974 00:48:33,520 --> 00:48:35,759 Speaker 13: court is just for the delay. I don't think I 975 00:48:35,800 --> 00:48:37,400 Speaker 13: agree with you, and then I don't think it'll happen. 976 00:48:37,800 --> 00:48:42,040 Speaker 13: But if he can slow down the gears sufficiently till 977 00:48:42,160 --> 00:48:45,319 Speaker 13: he potentially gets into the White House, he then would 978 00:48:45,320 --> 00:48:47,120 Speaker 13: be in the Enva little position of being able to 979 00:48:47,120 --> 00:48:50,480 Speaker 13: dismiss both of the federal cases against him, telling the 980 00:48:50,600 --> 00:48:53,440 Speaker 13: Justice Department to just drop it. He would still have 981 00:48:53,480 --> 00:48:55,839 Speaker 13: to contend with the Georgia case. But I think what's 982 00:48:55,880 --> 00:48:58,239 Speaker 13: really important about these things going to court is that 983 00:48:58,280 --> 00:49:01,560 Speaker 13: it will then there'll be a nave presented to the 984 00:49:01,600 --> 00:49:04,200 Speaker 13: public that the public can decide upon. And I think 985 00:49:04,239 --> 00:49:08,240 Speaker 13: a lot of the poles and analysis of TV ratings 986 00:49:08,280 --> 00:49:11,640 Speaker 13: around these indictments that have showed waning interest. The same 987 00:49:11,760 --> 00:49:14,640 Speaker 13: was true of the January sixth investigations, and once those 988 00:49:14,640 --> 00:49:17,680 Speaker 13: were televised and a public narrative was laid out, it 989 00:49:17,719 --> 00:49:19,040 Speaker 13: really affected people's opinion. 990 00:49:19,280 --> 00:49:20,920 Speaker 3: All right, Tim, thanks so much for joining us. 991 00:49:20,920 --> 00:49:24,000 Speaker 1: Tim O'Brian, Senior executive editor with Bloomberg Opinion. In June, 992 00:49:24,040 --> 00:49:27,840 Speaker 1: Grosso legal analysts with Bloomberg News and the host of 993 00:49:27,960 --> 00:49:31,000 Speaker 1: Bloomberg Law, appreciate getting a couple of very smart voices 994 00:49:31,040 --> 00:49:32,960 Speaker 1: there to help us kind of put some context around 995 00:49:33,480 --> 00:49:37,160 Speaker 1: and evolving issue that will be with us, presumably right 996 00:49:37,280 --> 00:49:39,040 Speaker 1: up until the election and maybe past that. 997 00:49:39,400 --> 00:49:42,480 Speaker 7: You're listening to the tape cans our live program, Bloomberg 998 00:49:42,600 --> 00:49:46,200 Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the 999 00:49:46,239 --> 00:49:49,479 Speaker 7: tune in app, Bloomberg dot Com, and the Bloomberg Business App. 1000 00:49:49,520 --> 00:49:52,319 Speaker 7: You can also listen live on Amazon Alexa from our 1001 00:49:52,360 --> 00:49:58,360 Speaker 7: flagship New York station, Just say Alexa, play Bloomberg eleven thirty. 1002 00:49:58,680 --> 00:50:02,040 Speaker 1: Whyan elector In industries, under pressure of the stock there 1003 00:50:02,840 --> 00:50:05,720 Speaker 1: under concerns that perhaps there might be some connection between 1004 00:50:05,719 --> 00:50:08,680 Speaker 1: some of the utilities and that terrible fire in Hawaii. 1005 00:50:09,200 --> 00:50:11,799 Speaker 1: The stock is down eleven percent today, down fifty four 1006 00:50:11,840 --> 00:50:15,160 Speaker 1: percent a year to date. Let's get some more color 1007 00:50:15,160 --> 00:50:17,320 Speaker 1: and analysis on that. We do that with Andy Bischoff, 1008 00:50:17,840 --> 00:50:21,120 Speaker 1: utility strategists at Morning Star. Andy, as you take a 1009 00:50:21,160 --> 00:50:25,240 Speaker 1: look at the situation in Hawaii, this terrible situation, what's 1010 00:50:25,280 --> 00:50:28,840 Speaker 1: your view of kind of Hawaiian electric industries? Because we 1011 00:50:28,880 --> 00:50:33,719 Speaker 1: don't know if the utility was the cause at all, 1012 00:50:33,840 --> 00:50:41,320 Speaker 1: it has nothing's been proven, But what's your take Hereay. 1013 00:50:39,120 --> 00:50:42,279 Speaker 14: Good afternoon, thanks for having me. You know, as you mentioned, 1014 00:50:42,360 --> 00:50:47,439 Speaker 14: the very terrible situation and very unfortunate. You know, as 1015 00:50:47,480 --> 00:50:50,840 Speaker 14: for Hawaiian Electric, you know, there has been numerous reports 1016 00:50:50,840 --> 00:50:53,719 Speaker 14: of they may or may not have been responsible. O 1017 00:50:53,760 --> 00:50:56,560 Speaker 14: the lines have been tied to the fire. And so 1018 00:50:56,680 --> 00:51:00,160 Speaker 14: what you're I think seeing as investors selling first than 1019 00:51:00,239 --> 00:51:04,359 Speaker 14: asking questions later, because if you had noted that there 1020 00:51:04,360 --> 00:51:09,560 Speaker 14: has been no cause identified yet to date. But you know, 1021 00:51:09,760 --> 00:51:14,200 Speaker 14: if if Hawaiian is found to be negligent or has 1022 00:51:14,640 --> 00:51:18,359 Speaker 14: would have provided a reasonable law, then they could have 1023 00:51:18,600 --> 00:51:22,280 Speaker 14: a liability related to the fires at Awi. 1024 00:51:22,960 --> 00:51:26,759 Speaker 2: So I mean, even if they were found some way 1025 00:51:28,480 --> 00:51:31,799 Speaker 2: even partially responsible for setting the fire off, it's not 1026 00:51:31,840 --> 00:51:34,279 Speaker 2: their fault that we're in an al nino, right, It's 1027 00:51:34,320 --> 00:51:37,560 Speaker 2: not their fault that we've had the hottest months on 1028 00:51:38,400 --> 00:51:41,680 Speaker 2: plus the hurt on the record, and the wind. I mean, 1029 00:51:41,719 --> 00:51:47,680 Speaker 2: there's so many natural effects that certainly helped to boost 1030 00:51:48,320 --> 00:51:53,879 Speaker 2: the destructive potential of this fire. I can't imagine they 1031 00:51:53,880 --> 00:51:56,680 Speaker 2: could be held liable to such an extent. What are 1032 00:51:56,719 --> 00:51:57,680 Speaker 2: your estimates? 1033 00:51:59,440 --> 00:52:02,040 Speaker 14: Yeah, we don't put an asset on it at this point, 1034 00:52:02,440 --> 00:52:06,960 Speaker 14: just given the kind of wide variation of potential damages 1035 00:52:07,000 --> 00:52:10,200 Speaker 14: and liability there. You know, people like to point to 1036 00:52:10,239 --> 00:52:13,800 Speaker 14: the other bankruptcy PG and E that had wildfire, but 1037 00:52:13,800 --> 00:52:16,680 Speaker 14: it's a different situation. They're held to a higher legal 1038 00:52:16,719 --> 00:52:20,719 Speaker 14: standard in Hawaii than they were in California. So I 1039 00:52:20,800 --> 00:52:25,120 Speaker 14: under the kind of a legal aspects in Hawaii they 1040 00:52:25,120 --> 00:52:27,960 Speaker 14: would have to have could they have reasonably prevented a loss? 1041 00:52:28,080 --> 00:52:30,560 Speaker 14: And I think that's where the question UH is going 1042 00:52:30,640 --> 00:52:34,120 Speaker 14: to come up. There's been discussions of should they have 1043 00:52:34,840 --> 00:52:38,600 Speaker 14: pre emptively shut the power off if they do that 1044 00:52:38,719 --> 00:52:42,480 Speaker 14: in some states, whether that's reasonable or not in this situation, 1045 00:52:43,360 --> 00:52:45,560 Speaker 14: I think will definitely be up for debate in the 1046 00:52:45,600 --> 00:52:49,640 Speaker 14: court system. But it's not as clear cut of liability 1047 00:52:49,640 --> 00:52:53,040 Speaker 14: as you live in California when you have in Hawaii. 1048 00:52:53,760 --> 00:52:56,440 Speaker 1: And you give us a sense of kind of the 1049 00:52:56,440 --> 00:53:00,640 Speaker 1: the financial health of this company, Hawaiian Electric Industries, in 1050 00:53:00,719 --> 00:53:03,480 Speaker 1: terms of balance sheet liquidity, that kind of thing. 1051 00:53:04,719 --> 00:53:07,279 Speaker 14: Yeah, I mean, up until you know, last week, there 1052 00:53:07,360 --> 00:53:12,040 Speaker 14: was zero concerns of the financial health of both the 1053 00:53:12,120 --> 00:53:15,640 Speaker 14: utility and they also have a bank subsidiary, you know, 1054 00:53:16,040 --> 00:53:18,400 Speaker 14: absent what happened the last week. They were looking at 1055 00:53:18,440 --> 00:53:20,839 Speaker 14: a few headwindes from the bank, so they were going 1056 00:53:20,880 --> 00:53:23,319 Speaker 14: to look in at roughly two hours per share good 1057 00:53:23,360 --> 00:53:27,359 Speaker 14: cash flow to support their dividends. But now as we 1058 00:53:27,480 --> 00:53:30,319 Speaker 14: kind of head into this new era, it's really going 1059 00:53:30,400 --> 00:53:32,920 Speaker 14: to be a question of their capacity to access the 1060 00:53:32,920 --> 00:53:37,680 Speaker 14: markets to fund these capital requirements going into both to 1061 00:53:37,760 --> 00:53:41,400 Speaker 14: repair the that's their infrastructure in Mali and kind of 1062 00:53:41,400 --> 00:53:42,520 Speaker 14: their capital going forward. 1063 00:53:43,560 --> 00:53:47,239 Speaker 2: We did see that the rating credit rating was cut 1064 00:53:47,280 --> 00:53:50,120 Speaker 2: to junk by S and P. How much of a 1065 00:53:50,160 --> 00:53:53,759 Speaker 2: problem is that ratings cut for the company, regardless of 1066 00:53:54,880 --> 00:53:58,120 Speaker 2: you know, the outcome of the investigation into the fire. 1067 00:54:00,160 --> 00:54:04,880 Speaker 14: Every healthy utility needs access to the credit markets, and 1068 00:54:04,960 --> 00:54:09,160 Speaker 14: all utilities like to have that investment grade credit rating. 1069 00:54:09,560 --> 00:54:12,040 Speaker 14: Uh and that's going to be very important, not just 1070 00:54:12,080 --> 00:54:17,360 Speaker 14: for Hawaiian but for all utilities. Utility have significant capital 1071 00:54:17,400 --> 00:54:21,600 Speaker 14: programs in place. For example, Hawaiian Electric is looking at 1072 00:54:21,600 --> 00:54:25,080 Speaker 14: transitioning to renewable energy, so that's going to take a 1073 00:54:25,120 --> 00:54:28,400 Speaker 14: lot of capital, and that also funds not just your 1074 00:54:28,400 --> 00:54:32,000 Speaker 14: maintenance expenditures, but your growth capital expenditures. And so this 1075 00:54:32,200 --> 00:54:34,440 Speaker 14: could be very vital for a line to have access 1076 00:54:34,440 --> 00:54:35,800 Speaker 14: to the capital markets going forward. 1077 00:54:36,920 --> 00:54:40,600 Speaker 1: So and have we heard anything from the company, or 1078 00:54:40,640 --> 00:54:42,360 Speaker 1: do we expect to hear or when do we expect 1079 00:54:42,320 --> 00:54:43,440 Speaker 1: to hear anything from the company. 1080 00:54:45,239 --> 00:54:48,239 Speaker 14: We haven't heard anything you know, official there that that 1081 00:54:48,440 --> 00:54:51,719 Speaker 14: you know basically that the cause is under investigation, that 1082 00:54:51,800 --> 00:54:55,800 Speaker 14: investigation could take weeks or months, so that that creates 1083 00:54:55,800 --> 00:54:59,560 Speaker 14: a lot of uncertainty for investors, and that's uncertainty is 1084 00:54:59,560 --> 00:55:03,680 Speaker 14: not something that you're typical utility investor likes to have. 1085 00:55:04,719 --> 00:55:08,200 Speaker 14: But I would expect that this is going to take months, 1086 00:55:08,239 --> 00:55:11,360 Speaker 14: if not years, for to work through to provide clarity 1087 00:55:11,400 --> 00:55:14,960 Speaker 14: for the underlying investors in Hawaiian Electrics. 1088 00:55:15,600 --> 00:55:19,200 Speaker 1: So we'll just talk to us about this management team 1089 00:55:19,200 --> 00:55:21,720 Speaker 1: here in this company. Is this a company and management 1090 00:55:21,760 --> 00:55:25,680 Speaker 1: team that's considered or well regarded by investors. Is this 1091 00:55:26,040 --> 00:55:28,840 Speaker 1: a utility that's considered to be a quality utility or 1092 00:55:28,840 --> 00:55:32,280 Speaker 1: maybe it's one that maybe cuts cost cuts corners. 1093 00:55:33,840 --> 00:55:35,879 Speaker 14: Yeah, I don't think that's fair. I mean, I think 1094 00:55:35,880 --> 00:55:40,239 Speaker 14: it's a solid management team. They've promoted within. They have 1095 00:55:40,280 --> 00:55:44,200 Speaker 14: a new CEO that just came in recently from the 1096 00:55:44,400 --> 00:55:48,160 Speaker 14: long ten yured CEO previously. You know, I think they 1097 00:55:48,280 --> 00:55:53,840 Speaker 14: run the company with providing reliable electricity to the citizens 1098 00:55:53,880 --> 00:55:57,680 Speaker 14: of Hawaii, you know, and there's zero indications from me 1099 00:55:57,840 --> 00:56:00,080 Speaker 14: to see that they were cutting any costs and in 1100 00:56:00,120 --> 00:56:03,600 Speaker 14: any respect. You know, the utilities number one job with 1101 00:56:03,680 --> 00:56:07,920 Speaker 14: regulators to provide power, reliable power to its systems, and 1102 00:56:08,239 --> 00:56:10,359 Speaker 14: regulators oversee that, so. 1103 00:56:10,320 --> 00:56:15,040 Speaker 1: Any not maybe just aside from UH Hawaiian electrics. More 1104 00:56:15,040 --> 00:56:18,480 Speaker 1: generally speaking about utilities, how do utilities I mean, with 1105 00:56:18,560 --> 00:56:21,280 Speaker 1: all the climate change issues and all the extreme weather 1106 00:56:21,320 --> 00:56:23,760 Speaker 1: that we seem to be experiencing over the last couple 1107 00:56:23,760 --> 00:56:27,600 Speaker 1: of decades, whether it's fires in California or hurricanes, how 1108 00:56:27,640 --> 00:56:31,400 Speaker 1: do utilities typically I don't know, do they ensure against that? 1109 00:56:32,440 --> 00:56:34,400 Speaker 1: What is the reliability there? 1110 00:56:36,080 --> 00:56:39,440 Speaker 14: You know, there's there's definitely some insurance, but you know, 1111 00:56:39,480 --> 00:56:42,759 Speaker 14: take a take a hurricane, for example in Florida. If 1112 00:56:42,800 --> 00:56:47,640 Speaker 14: there's damage to the infrastructure, a utility should recover all 1113 00:56:47,840 --> 00:56:52,239 Speaker 14: reasonable costs to get the grid back up and performing 1114 00:56:52,280 --> 00:56:56,759 Speaker 14: and providing electricity to its customers. You bring up the 1115 00:56:56,840 --> 00:57:00,000 Speaker 14: clean energy you know that's going to be a significant 1116 00:57:00,400 --> 00:57:05,640 Speaker 14: expense for utilities going forward, capital investment opportunity. But you know, 1117 00:57:05,640 --> 00:57:09,080 Speaker 14: as we look forward and you know, incorporate some of 1118 00:57:09,120 --> 00:57:13,399 Speaker 14: these significant weather events that you mentioned, utilities are gonna 1119 00:57:13,400 --> 00:57:16,880 Speaker 14: have to continue to plan and hider their infrastructure to 1120 00:57:16,920 --> 00:57:21,040 Speaker 14: be able to adapt to the significant weather events and 1121 00:57:21,280 --> 00:57:23,720 Speaker 14: get up in a reasonable time to provide electricity. 1122 00:57:24,200 --> 00:57:27,920 Speaker 1: So and I'm just looking at the SMP Utilities index 1123 00:57:28,000 --> 00:57:30,160 Speaker 1: off about ten and a half percent this year to 1124 00:57:30,280 --> 00:57:32,840 Speaker 1: date and over the prior fifty two weeks off about 1125 00:57:33,000 --> 00:57:35,600 Speaker 1: seventeen and a half percent. What's been the kind of 1126 00:57:35,640 --> 00:57:38,560 Speaker 1: the narrative around utilities these days? 1127 00:57:39,640 --> 00:57:42,200 Speaker 14: Yeah, last year it was a great year for utilities. 1128 00:57:42,200 --> 00:57:45,520 Speaker 14: They have performed at the SMB and that switched this year. 1129 00:57:45,600 --> 00:57:45,760 Speaker 6: Yep. 1130 00:57:46,280 --> 00:57:48,919 Speaker 14: You know, two significant risks for utility or higher indust 1131 00:57:48,960 --> 00:57:52,240 Speaker 14: rates and higher inflation, and you have both of those 1132 00:57:53,120 --> 00:57:56,480 Speaker 14: right now for utilities to where we actually think utilies 1133 00:57:56,520 --> 00:58:00,520 Speaker 14: are a bit undervalued. But you know, going forward, you 1134 00:58:00,520 --> 00:58:02,800 Speaker 14: really have to have strong conveinence in a underlying growth 1135 00:58:03,240 --> 00:58:06,560 Speaker 14: and that that management team can really contain costs so 1136 00:58:06,600 --> 00:58:09,440 Speaker 14: they could be able to support that growth without having 1137 00:58:10,440 --> 00:58:14,200 Speaker 14: significant cost increases to it and customers creating making sure 1138 00:58:14,560 --> 00:58:16,200 Speaker 14: portability for customers. 1139 00:58:16,400 --> 00:58:19,880 Speaker 2: I wonder if the distance from the capital markets demands 1140 00:58:19,920 --> 00:58:22,520 Speaker 2: any kind of risk premium. What do you think about that? 1141 00:58:22,640 --> 00:58:25,960 Speaker 2: I just was reading that the company Hawaiian Electric Industries 1142 00:58:26,040 --> 00:58:29,760 Speaker 2: was started in eighteen ninety one, a decade after King 1143 00:58:29,840 --> 00:58:34,200 Speaker 2: Kullakawa met Thomas Edison to see the incandescent light bulb, 1144 00:58:34,240 --> 00:58:36,720 Speaker 2: which is fascinating. But if you read history of these 1145 00:58:36,720 --> 00:58:40,360 Speaker 2: Hawaiian kings, they traveled so far and it took them 1146 00:58:40,400 --> 00:58:44,840 Speaker 2: so long, obviously because of their remoteness. Does the distance 1147 00:58:44,880 --> 00:58:48,360 Speaker 2: of Hawaiian Electric or any of these companies from the 1148 00:58:48,400 --> 00:58:51,000 Speaker 2: capital markets demand a risk premium? 1149 00:58:52,640 --> 00:58:55,920 Speaker 14: You know, I don't think though, you know, Hawaii leafters. 1150 00:58:55,920 --> 00:58:59,360 Speaker 14: Obviously it's probably the firsest way you can get for 1151 00:58:59,440 --> 00:59:03,040 Speaker 14: a US utility from the capital markets. But there's a 1152 00:59:03,080 --> 00:59:07,240 Speaker 14: no indication for me that distance as a relative risk 1153 00:59:07,280 --> 00:59:08,840 Speaker 14: factor for utilities. 1154 00:59:09,400 --> 00:59:10,760 Speaker 3: Hey, Andy, thanks so much for joining us. 1155 00:59:10,760 --> 00:59:13,760 Speaker 1: Appreciate getting your thoughts there, Andy Bischoff, he's a utility 1156 00:59:13,840 --> 00:59:18,760 Speaker 1: strategist at morning Star. Again, Hawaiian Electric stock under pressure. 1157 00:59:19,080 --> 00:59:24,040 Speaker 1: Investors obviously concerned about potential liability there, although no cause 1158 00:59:24,080 --> 00:59:27,400 Speaker 1: of this fire has been determined at all as. 1159 00:59:27,240 --> 00:59:29,680 Speaker 2: Well, so he cuts them to junk. 1160 00:59:29,720 --> 00:59:30,400 Speaker 3: Saw that yep. 1161 00:59:30,480 --> 00:59:32,800 Speaker 1: So I'm kind of getting out before so I have 1162 00:59:32,840 --> 00:59:34,120 Speaker 1: to see how that plays out. 1163 00:59:37,440 --> 00:59:40,560 Speaker 2: Thanks for listening to the Bloomberg Markets podcasts. You can 1164 00:59:40,560 --> 00:59:44,360 Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever 1165 00:59:44,440 --> 00:59:48,160 Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter 1166 00:59:48,360 --> 00:59:51,400 Speaker 2: at Matt Miller nineteen seventy three and on Fall. 1167 00:59:51,280 --> 00:59:54,160 Speaker 1: Sweeney I'm on Twitter at pt Sweeney. Before the podcast, 1168 00:59:54,200 --> 00:59:57,680 Speaker 1: you can always catch us worldwide at Bloomberg Radio