1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:22,000 Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business app. 4 00:00:22,360 --> 00:00:25,680 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:25,760 --> 00:00:27,000 Speaker 1: us live on YouTube. 6 00:00:27,120 --> 00:00:30,720 Speaker 2: The honor of going to Robert Harmatt's Ambassador. Harmat's of 7 00:00:30,760 --> 00:00:33,199 Speaker 2: course a tour of duty at the State Department recently 8 00:00:33,680 --> 00:00:37,040 Speaker 2: with Secretary Clinton and with Kissinger associates, where thrilled to 9 00:00:37,080 --> 00:00:40,279 Speaker 2: could join us in the studios this morning. If we 10 00:00:40,440 --> 00:00:45,920 Speaker 2: quote unquote take out a theocracy back to nineteen seventy nine, 11 00:00:46,760 --> 00:00:52,600 Speaker 2: what's left of Persia after the Ayahtola. 12 00:00:53,720 --> 00:00:56,600 Speaker 3: Well, the answer to the question is we don't know, 13 00:00:56,880 --> 00:00:59,720 Speaker 3: and we don't have a very good record in the 14 00:00:59,760 --> 00:01:05,240 Speaker 3: mid least of regime replacement with better regimes. If you 15 00:01:05,280 --> 00:01:07,600 Speaker 3: look at all the regimes that have fallen in the 16 00:01:07,600 --> 00:01:11,800 Speaker 3: Middle East over the years where we have been explicitly 17 00:01:11,920 --> 00:01:15,520 Speaker 3: or implicitly involved, they have not necessarily been better, and 18 00:01:15,560 --> 00:01:18,800 Speaker 3: it's very hard to predict what would happen Okay Iran. 19 00:01:18,920 --> 00:01:23,160 Speaker 3: There's a strong nationalistic feeling, however in Iran, and there 20 00:01:23,200 --> 00:01:25,880 Speaker 3: are a lot of people who may not support the regime. 21 00:01:26,240 --> 00:01:31,200 Speaker 3: We believe Iran should have a nuclear power capability, and 22 00:01:31,360 --> 00:01:33,240 Speaker 3: those people are going to still be on the game. 23 00:01:33,319 --> 00:01:35,360 Speaker 2: We're gonna have Robert Hormank with us, and we're gonna 24 00:01:35,360 --> 00:01:37,680 Speaker 2: come back with Ambassador Hormance here with all the news 25 00:01:37,680 --> 00:01:40,399 Speaker 2: slow we've got again. We welcome you across the country. 26 00:01:41,040 --> 00:01:44,840 Speaker 2: You're at Fletcher at Toughs outside Boston. You're in the 27 00:01:44,880 --> 00:01:48,880 Speaker 2: classroom with Stravetas and you got admiralster vetas an ambassador 28 00:01:48,880 --> 00:01:51,200 Speaker 2: of Horrormancing. You've got a piece of chalk in your hand. 29 00:01:51,800 --> 00:01:55,600 Speaker 2: What are our aircraft carriers doing in the Middle East? 30 00:01:55,880 --> 00:01:59,240 Speaker 2: On a diplomatic basis, not a Stravitas basis, but on 31 00:01:59,320 --> 00:02:02,440 Speaker 2: a Horrmance basis, What does our show of force doing. 32 00:02:02,480 --> 00:02:05,720 Speaker 3: They're projecting power, They're projecting the fact that the United 33 00:02:05,720 --> 00:02:10,400 Speaker 3: States has not only the ships there, but the ability 34 00:02:10,440 --> 00:02:13,639 Speaker 3: to use them. The question is how will we use them. 35 00:02:13,680 --> 00:02:16,519 Speaker 3: We know that they have been used to a degree 36 00:02:16,880 --> 00:02:21,160 Speaker 3: to shoot down Iranian drones aimed at Israel. The bigger 37 00:02:21,240 --> 00:02:25,280 Speaker 3: question now going forward is a what is the United 38 00:02:25,320 --> 00:02:27,839 Speaker 3: States going to do with respect to involvement in the war, 39 00:02:28,400 --> 00:02:32,920 Speaker 3: And that would really depend less on those carriers and 40 00:02:33,000 --> 00:02:36,359 Speaker 3: more on B two bombers. If the US is going 41 00:02:36,360 --> 00:02:38,639 Speaker 3: to use bunker busters, those are the ones that would 42 00:02:38,680 --> 00:02:41,720 Speaker 3: deliver it. And that decision has not yet been made. 43 00:02:42,960 --> 00:02:47,120 Speaker 3: But I'm sure is what the Israelis are asking us 44 00:02:47,160 --> 00:02:50,040 Speaker 3: to do, since they don't have the power or the 45 00:02:50,080 --> 00:02:55,520 Speaker 3: ability to take out these underground enrichment facilities, and therefore 46 00:02:55,560 --> 00:02:59,200 Speaker 3: they want us involved, and Trump course seems to be 47 00:02:59,240 --> 00:03:02,960 Speaker 3: reluctant to do that, although of late seeming a little 48 00:03:03,040 --> 00:03:03,760 Speaker 3: less reluctant. 49 00:03:05,200 --> 00:03:07,760 Speaker 4: That's something that's even on the table. Do you think 50 00:03:08,000 --> 00:03:11,000 Speaker 4: is the Are the Iranian people in a position that 51 00:03:11,639 --> 00:03:12,680 Speaker 4: even consider. 52 00:03:12,320 --> 00:03:16,280 Speaker 3: That at the moment, the Iranian people are, but they 53 00:03:16,320 --> 00:03:19,480 Speaker 3: do not want foreigners to be the ones to do it. 54 00:03:19,760 --> 00:03:21,200 Speaker 2: There's a history. 55 00:03:21,120 --> 00:03:25,200 Speaker 3: In Iran of foreigners intervening with respect to say to 56 00:03:25,280 --> 00:03:28,120 Speaker 3: most of that, they still remember that the United States 57 00:03:28,200 --> 00:03:31,040 Speaker 3: was involved in the overthrow of mosedk and bringing back 58 00:03:32,000 --> 00:03:35,680 Speaker 3: the Shah, the New Shaw or the old Shaw now 59 00:03:36,880 --> 00:03:39,880 Speaker 3: and they do not like the idea of foreign intervention. 60 00:03:40,120 --> 00:03:42,520 Speaker 3: So they're very proud people. As you pointed out, there 61 00:03:42,560 --> 00:03:46,960 Speaker 3: an old three thousand plus year old empire and regime 62 00:03:47,080 --> 00:03:49,480 Speaker 3: change induced. 63 00:03:49,040 --> 00:03:51,240 Speaker 2: By we have no template here we do. 64 00:03:51,280 --> 00:03:53,000 Speaker 3: You have no temp We have no template, We have 65 00:03:53,040 --> 00:03:55,800 Speaker 3: no ability to change the regime. And the Resini and 66 00:03:55,800 --> 00:03:58,800 Speaker 3: the Uranians would resist that. If Israel did it or 67 00:03:58,840 --> 00:04:02,280 Speaker 3: the United States did it, they don't want foreigners to intervene. 68 00:04:02,640 --> 00:04:05,160 Speaker 3: If they do it ourselves, it's a very different matter. 69 00:04:05,360 --> 00:04:07,160 Speaker 3: If we do it, it's a very different matter. And 70 00:04:07,200 --> 00:04:07,880 Speaker 3: a negative boy. 71 00:04:07,880 --> 00:04:09,120 Speaker 2: I want to get this in now. We're going to 72 00:04:09,160 --> 00:04:11,600 Speaker 2: come back with Ambassador Arvans in the state of our 73 00:04:11,600 --> 00:04:15,200 Speaker 2: diplomacy in Washington. Maybe try to move a little bit 74 00:04:15,240 --> 00:04:19,159 Speaker 2: away from the conflict at hand. Futures negative thirty folks, 75 00:04:19,240 --> 00:04:22,200 Speaker 2: we have a seven thirty scheduled. The son of the 76 00:04:22,240 --> 00:04:25,839 Speaker 2: former shah named the crown prince in nineteen sixty seven. 77 00:04:26,160 --> 00:04:29,920 Speaker 2: I guess he's a crown prince in exile. But whatever, 78 00:04:30,839 --> 00:04:34,359 Speaker 2: the family is gone. But is the remains there of 79 00:04:34,400 --> 00:04:39,599 Speaker 2: a middle class, not a people that would seek out 80 00:04:39,640 --> 00:04:44,880 Speaker 2: some form of aristocracy, but would westernize their government. I 81 00:04:44,920 --> 00:04:47,080 Speaker 2: see no evidence of that. Well. 82 00:04:47,120 --> 00:04:49,280 Speaker 3: I think a lot of younger people would like to 83 00:04:49,320 --> 00:04:52,720 Speaker 3: see a more westernized government. I think a lot of 84 00:04:52,960 --> 00:04:57,120 Speaker 3: older people might think bringing back the Shaw's son was 85 00:04:57,200 --> 00:04:59,279 Speaker 3: a good thing. Don't forget They did the same thing 86 00:04:59,440 --> 00:05:02,240 Speaker 3: in Spain. They when Franco left, they brought back the king. 87 00:05:03,120 --> 00:05:05,120 Speaker 3: I don't think Iron's that way. There's a whole new 88 00:05:05,160 --> 00:05:09,240 Speaker 3: generation that's pretty well forgotten about the Shaw, and the 89 00:05:09,279 --> 00:05:14,480 Speaker 3: Shaw's son is actively urging that he be brought back 90 00:05:14,560 --> 00:05:18,600 Speaker 3: to preserve continuity and bring stability. But whether you can 91 00:05:18,640 --> 00:05:21,880 Speaker 3: get a large number of people to support that, predicting 92 00:05:22,000 --> 00:05:23,880 Speaker 3: younger people, that's a big question. 93 00:05:24,000 --> 00:05:26,000 Speaker 2: Well can you stay for the next section here? Yes, 94 00:05:26,560 --> 00:05:30,920 Speaker 2: I gotta sell toothpaste. But please Bob Hormance with us today. 95 00:05:31,000 --> 00:05:33,800 Speaker 2: What a joy to have Ambassador Hormance with us with 96 00:05:33,960 --> 00:05:37,440 Speaker 2: just decades and decades of experience on this and speaking 97 00:05:37,480 --> 00:05:41,880 Speaker 2: with authority of the generations, the decades of Persia as well. 98 00:05:42,279 --> 00:05:45,800 Speaker 2: I have to go, Bob Horrmance with your not only 99 00:05:45,839 --> 00:05:49,320 Speaker 2: your service to Secretary Clinton, but to Republicans over the years. 100 00:05:49,360 --> 00:05:52,280 Speaker 2: You play both sides of the aisle within your diplomacy, 101 00:05:52,680 --> 00:05:58,000 Speaker 2: working forever with Secretary Kissinger, with doctor Kissinger. What do 102 00:05:58,120 --> 00:06:02,480 Speaker 2: you make of this State Department? Where are Alexander Hamilton? 103 00:06:03,040 --> 00:06:06,440 Speaker 2: I think he's got three jobs, if not four jobs. 104 00:06:06,680 --> 00:06:10,360 Speaker 2: How does the Secretary of State do that? Well? 105 00:06:10,440 --> 00:06:12,800 Speaker 3: It is very difficult to do, and we've tried this 106 00:06:12,920 --> 00:06:16,600 Speaker 3: experiment once and it did not work. With Kissinger, as 107 00:06:16,640 --> 00:06:19,600 Speaker 3: you pointed out, he was Secretary of State and National 108 00:06:19,640 --> 00:06:23,440 Speaker 3: Security Advisor at the same time. The roles are entirely different. 109 00:06:23,560 --> 00:06:27,120 Speaker 3: Secretary of State represents the State Department. The National Security 110 00:06:27,120 --> 00:06:30,479 Speaker 3: Advisor pulls all the agencies together and is supposed to 111 00:06:30,480 --> 00:06:34,080 Speaker 3: be the intermediary for the Defense Department of the State Department, 112 00:06:34,279 --> 00:06:38,080 Speaker 3: the CIA, and numerous others, and it is a very 113 00:06:38,120 --> 00:06:40,480 Speaker 3: time consuming job. One is to take a longer term 114 00:06:40,520 --> 00:06:45,600 Speaker 3: strategic view. The Secretary of State is more proactive and 115 00:06:45,680 --> 00:06:47,760 Speaker 3: more immediate in the kinds of things he does, and 116 00:06:47,800 --> 00:06:48,160 Speaker 3: he has. 117 00:06:48,080 --> 00:06:49,040 Speaker 2: To travel a lot. 118 00:06:49,320 --> 00:06:54,240 Speaker 3: So I think that Kissinger himself decided that it was 119 00:06:54,320 --> 00:06:58,440 Speaker 3: not a sustainable thing to do, and he encouraged Brent 120 00:06:58,480 --> 00:07:01,800 Speaker 3: Scocroft to take over the job of National Security Advisor 121 00:07:02,080 --> 00:07:04,480 Speaker 3: while he was Secretary of State, and it worked out 122 00:07:04,600 --> 00:07:07,360 Speaker 3: very well. So you need the two of them to collaborate, 123 00:07:07,760 --> 00:07:10,360 Speaker 3: but you don't want them to be the same whatever 124 00:07:10,400 --> 00:07:11,440 Speaker 3: you're too much. 125 00:07:11,360 --> 00:07:16,640 Speaker 2: Whatever your politics. Paul to mention the caliber of a Scowcraft, 126 00:07:17,840 --> 00:07:20,480 Speaker 2: of a Hormant's and the others compared to some of 127 00:07:20,520 --> 00:07:24,680 Speaker 2: the talent we're dealing with today is just shocking. Bob. 128 00:07:24,720 --> 00:07:27,920 Speaker 4: You represented the US as a President's advisor and summit 129 00:07:27,960 --> 00:07:31,200 Speaker 4: planner otherwise known as the SHERPA at six Group of 130 00:07:31,240 --> 00:07:34,560 Speaker 4: seven Economic summits. What's a G seven economic summit? What's 131 00:07:34,560 --> 00:07:37,080 Speaker 4: the goal of these G seven meetings? 132 00:07:37,080 --> 00:07:41,840 Speaker 3: Well, actually I started out as the first CHIRPA at 133 00:07:41,960 --> 00:07:44,320 Speaker 3: Rombolier in nineteen seventy five. 134 00:07:44,440 --> 00:07:46,600 Speaker 2: That's because he could pronounce it. It was the only 135 00:07:46,640 --> 00:07:47,520 Speaker 2: one in Americas, and I. 136 00:07:49,400 --> 00:07:51,880 Speaker 3: Spoke French and English, and their igguestion was in French 137 00:07:51,920 --> 00:07:57,480 Speaker 3: and English. So and the French originally didn't want note 138 00:07:57,480 --> 00:08:01,600 Speaker 3: takers or shurpas. Just when we want all these four 139 00:08:01,680 --> 00:08:04,240 Speaker 3: year old when one of those twenty year olds running around, 140 00:08:04,280 --> 00:08:06,600 Speaker 3: we want this to be a very high level thing 141 00:08:06,640 --> 00:08:09,280 Speaker 3: with they wanted only the heads of state, not even 142 00:08:09,320 --> 00:08:13,520 Speaker 3: the ministers. So the answer to your question is that 143 00:08:13,560 --> 00:08:18,760 Speaker 3: they can't remake the world themselves, but they can fortify 144 00:08:18,960 --> 00:08:25,160 Speaker 3: or refortify the level of common commitment to democracies, to freedom, 145 00:08:25,400 --> 00:08:29,040 Speaker 3: to free markets, to the kind of common values that 146 00:08:29,120 --> 00:08:35,319 Speaker 3: we share among the US, France, Britain, Germany, Japan, Canada 147 00:08:35,320 --> 00:08:39,640 Speaker 3: and Italy. And that is what they do for the 148 00:08:39,679 --> 00:08:43,640 Speaker 3: most part by having the meetings themselves. The second thing 149 00:08:43,679 --> 00:08:46,640 Speaker 3: they can do is they can be the nucleus of 150 00:08:46,840 --> 00:08:50,360 Speaker 3: new ideas. How do you improve the trading system? How 151 00:08:50,360 --> 00:08:52,520 Speaker 3: do you deal with all these trade issues that are 152 00:08:52,800 --> 00:08:55,640 Speaker 3: circulating around they were going to talk about and Mark Carney, 153 00:08:56,040 --> 00:08:59,520 Speaker 3: who would work with me at Goldman, is very interested 154 00:08:59,559 --> 00:09:02,920 Speaker 3: in AI, so he wanted to have conversations about how 155 00:09:02,920 --> 00:09:07,640 Speaker 3: they can work together to develop standards on AID. The third, 156 00:09:07,679 --> 00:09:10,400 Speaker 3: they wanted to strengthen, at least almost all of them 157 00:09:10,440 --> 00:09:16,840 Speaker 3: except one. US wanted to strengthen sanctions against Russia, and 158 00:09:17,040 --> 00:09:19,960 Speaker 3: Russia was actually a member for a period of time. 159 00:09:20,040 --> 00:09:24,480 Speaker 3: And Trump started out this meeting complaining that Russia was 160 00:09:24,559 --> 00:09:27,040 Speaker 3: kicked out and should be brought back. They were kicked 161 00:09:27,040 --> 00:09:32,480 Speaker 3: out because they annexed Crimea and the notion that if 162 00:09:32,520 --> 00:09:36,880 Speaker 3: they were in there now, they wouldn't have invaded Ukraine 163 00:09:37,320 --> 00:09:40,719 Speaker 3: while they were in it. They annexed Crimea. So this 164 00:09:41,920 --> 00:09:45,240 Speaker 3: and also how do you deal with a resurch in China? 165 00:09:45,559 --> 00:09:47,440 Speaker 3: How do you deal with all the trade issues and 166 00:09:47,480 --> 00:09:48,000 Speaker 3: other issues. 167 00:09:48,080 --> 00:09:49,840 Speaker 2: That's a good point of that China is a whole 168 00:09:49,880 --> 00:09:50,800 Speaker 2: overlay here that. 169 00:09:51,960 --> 00:09:54,840 Speaker 3: The most of are European or Atlantic. But Japan's in 170 00:09:54,880 --> 00:09:58,000 Speaker 3: there and China's affecting everyone. So how do we deal 171 00:09:58,040 --> 00:09:58,319 Speaker 3: with them? 172 00:09:58,360 --> 00:10:01,160 Speaker 2: Professor Romance, I've got a call see in the hormants 173 00:10:01,160 --> 00:10:03,400 Speaker 2: one oh two. So Paul, we got to impress him 174 00:10:03,480 --> 00:10:06,720 Speaker 2: right now. If you look at the Imperial War Museum 175 00:10:06,760 --> 00:10:12,319 Speaker 2: in London, they've got that map of Lawrence of Arabia, Yes, 176 00:10:12,480 --> 00:10:15,400 Speaker 2: with Sykes Pecot exactly. And the answer is to French 177 00:10:16,080 --> 00:10:19,959 Speaker 2: go from Syria in some vicinity of Persia. The British 178 00:10:20,000 --> 00:10:23,120 Speaker 2: have the Persian Gulf Uae. There's all that tension down 179 00:10:23,200 --> 00:10:27,160 Speaker 2: there where in God's name of the French. In this debate, 180 00:10:27,600 --> 00:10:31,720 Speaker 2: compared to what my childhood of Charles de Gaul dominant, 181 00:10:32,120 --> 00:10:36,040 Speaker 2: I'm thunderstruck how tentative the French seemed to be. 182 00:10:36,280 --> 00:10:41,400 Speaker 3: Am I right, well, I would have a somewhat different 183 00:10:41,800 --> 00:10:45,440 Speaker 3: perspective on that. I actually totally agree with you. The 184 00:10:45,480 --> 00:10:47,920 Speaker 3: Gaul made himself a presence. He was the head of 185 00:10:47,960 --> 00:10:52,920 Speaker 3: the free French by force of will and his strong personality. 186 00:10:53,160 --> 00:10:56,240 Speaker 3: I just got back from Paris, where I had conversations, 187 00:10:56,320 --> 00:10:59,600 Speaker 3: from France, where I had conversations with the French and 188 00:10:59,640 --> 00:11:04,880 Speaker 3: actually with the German national security people and Macron, who 189 00:11:04,920 --> 00:11:07,240 Speaker 3: actually was a Sherpa when I was a sherpist, so 190 00:11:07,280 --> 00:11:11,679 Speaker 3: we worked together very closely. He does want to strengthen 191 00:11:11,679 --> 00:11:14,480 Speaker 3: the role of the G seven. After all, it was 192 00:11:14,480 --> 00:11:17,640 Speaker 3: a creation of the French just started to saying, So 193 00:11:17,720 --> 00:11:20,040 Speaker 3: he wants to strengthen and I think he will play 194 00:11:20,679 --> 00:11:24,079 Speaker 3: a very effective role, as certainly will Mark Carney and 195 00:11:24,480 --> 00:11:28,680 Speaker 3: Mertz the new German bundes Chancellor. So I think that 196 00:11:28,800 --> 00:11:32,840 Speaker 3: you will see him playing a very active role in this, 197 00:11:32,960 --> 00:11:36,559 Speaker 3: both because he believes in it, he is committed institutionally 198 00:11:36,600 --> 00:11:39,800 Speaker 3: to it, and I think he wants to strengthen first 199 00:11:39,800 --> 00:11:45,280 Speaker 3: of all Europe's unity amongst itselves and second to demonstrate 200 00:11:45,320 --> 00:11:49,160 Speaker 3: to the United States that Europe actually does have an 201 00:11:49,200 --> 00:11:51,839 Speaker 3: interest in and the capability of playing an active role 202 00:11:51,920 --> 00:11:54,720 Speaker 3: visa of the Russia and made all these other issues. 203 00:11:55,120 --> 00:11:57,199 Speaker 2: Thank you so much coming in. This is just really 204 00:11:57,200 --> 00:12:00,160 Speaker 2: well timed and we very fortunately have you Robert Man 205 00:12:00,200 --> 00:12:03,280 Speaker 2: as always the former ambassador. Of course, this wonderful book 206 00:12:03,280 --> 00:12:08,120 Speaker 2: on America's fiscal policy, which needs an update, Bob. We 207 00:12:08,200 --> 00:12:11,400 Speaker 2: need an update on your book on our debt our 208 00:12:11,480 --> 00:12:14,120 Speaker 2: deficit in our foreign policy. See to do that we'll 209 00:12:14,160 --> 00:12:16,680 Speaker 2: try to get there in two thousand and twenty six. 210 00:12:22,160 --> 00:12:25,720 Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch US Live 211 00:12:25,800 --> 00:12:28,960 Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on 212 00:12:29,040 --> 00:12:32,680 Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or 213 00:12:32,840 --> 00:12:34,360 Speaker 1: watch US live on YouTube. 214 00:12:34,480 --> 00:12:37,360 Speaker 2: The Sun Arises in New York with Stuart Kaiser. He's 215 00:12:37,360 --> 00:12:40,880 Speaker 2: out of US equity trading strategy. It's city. It is 216 00:12:40,920 --> 00:12:43,200 Speaker 2: so confusing right now. I'm just going to ask the 217 00:12:43,240 --> 00:12:48,360 Speaker 2: basic trading question, where's the bet? Where's the speculation? On 218 00:12:48,400 --> 00:12:52,040 Speaker 2: Wall Street? Is the street lawn? Is the street short? 219 00:12:52,480 --> 00:12:54,080 Speaker 2: Is the street missed this rally? 220 00:12:54,640 --> 00:12:56,840 Speaker 5: I would say positioning probably seven out of ten, so 221 00:12:56,880 --> 00:12:59,120 Speaker 5: that would put the street pretty long, Probably not quite 222 00:12:59,120 --> 00:13:01,559 Speaker 5: as long as we were late February. In terms of 223 00:13:01,600 --> 00:13:04,040 Speaker 5: missing the rally, you know, probably a little bit. You know, 224 00:13:04,120 --> 00:13:06,040 Speaker 5: the first seventeen percent of the rally. I think we 225 00:13:06,120 --> 00:13:08,160 Speaker 5: chatted you only needed to hold the market for sixty 226 00:13:08,200 --> 00:13:11,120 Speaker 5: total minutes to get the first seventeen percent, so you know, 227 00:13:11,160 --> 00:13:13,240 Speaker 5: you really needed to be invested at the right time. 228 00:13:13,280 --> 00:13:15,080 Speaker 5: So yeah, I think we probably missed a little bit 229 00:13:15,120 --> 00:13:17,600 Speaker 5: of the rally, But positioning is pretty full right now, 230 00:13:17,640 --> 00:13:18,600 Speaker 5: I'd say seven out of ten. 231 00:13:18,760 --> 00:13:22,120 Speaker 4: So what are people you know, the flow you see 232 00:13:22,120 --> 00:13:24,840 Speaker 4: on your desk Stewart from institutional investors. Are they what 233 00:13:24,880 --> 00:13:26,720 Speaker 4: are they buying these days? Are they buying the big 234 00:13:26,840 --> 00:13:29,440 Speaker 4: tech stocks that seems to be the easy trade. Are 235 00:13:29,440 --> 00:13:31,400 Speaker 4: they trying to be a little bit smarter, trying to 236 00:13:31,400 --> 00:13:33,320 Speaker 4: find some value out there? What are they doing here? 237 00:13:33,640 --> 00:13:35,480 Speaker 5: I'd say the core of the rally was definitely in 238 00:13:35,520 --> 00:13:38,520 Speaker 5: that large cap growth at tech stock, without a doubt, 239 00:13:39,280 --> 00:13:42,560 Speaker 5: a tremendous re engagement in the AI trade post earnings 240 00:13:42,559 --> 00:13:44,960 Speaker 5: when those hyper scalers really doubled down on cap X 241 00:13:45,200 --> 00:13:47,400 Speaker 5: and I think the theme that's really resonated recently is 242 00:13:47,440 --> 00:13:50,800 Speaker 5: power generation. So it's these utilities that are incredibly levered 243 00:13:50,840 --> 00:13:53,600 Speaker 5: to the AI trade. All of that said, the last 244 00:13:53,640 --> 00:13:56,040 Speaker 5: two weeks, that theme has changed a little bit. We 245 00:13:56,120 --> 00:13:58,680 Speaker 5: started to see kind of smaller cap stocks, some lower 246 00:13:58,800 --> 00:14:02,480 Speaker 5: quality stocks, the shore getting squeezed a little bit. The 247 00:14:02,520 --> 00:14:06,360 Speaker 5: Middle East tensions obviously stopped that kind of pro risk rotation, 248 00:14:06,480 --> 00:14:09,160 Speaker 5: and we're kind of back into where we started starting. 249 00:14:09,640 --> 00:14:12,640 Speaker 2: I just I've never seen I think I can say 250 00:14:12,640 --> 00:14:17,440 Speaker 2: this the retail all in bed and the confusion of 251 00:14:17,559 --> 00:14:22,600 Speaker 2: institutions sitting in the turret at City Group. What's the 252 00:14:22,760 --> 00:14:26,120 Speaker 2: tone that you see among I'm gonna use this word 253 00:14:26,160 --> 00:14:28,400 Speaker 2: with quotes pros. Yeah. 254 00:14:28,400 --> 00:14:30,920 Speaker 5: Look, I think Tommy, the difference there is just holding period, 255 00:14:31,000 --> 00:14:33,080 Speaker 5: you know, like the pod shops and a lot of 256 00:14:33,080 --> 00:14:36,440 Speaker 5: institutional investors are so sensitive to you know, weekly returns, 257 00:14:36,480 --> 00:14:39,360 Speaker 5: if not daily, that the volatility we saw kind of 258 00:14:39,360 --> 00:14:41,880 Speaker 5: pulled them out of the market. Retail doesn't really suffer 259 00:14:41,920 --> 00:14:43,600 Speaker 5: that that kind of marked to market risk, and they've 260 00:14:43,640 --> 00:14:45,640 Speaker 5: been willing to kind of stay engaged in the markets. 261 00:14:45,760 --> 00:14:48,920 Speaker 5: If you look at data, though, retail did reduce their 262 00:14:48,960 --> 00:14:51,400 Speaker 5: their margin loans in their in their personal trade accounts 263 00:14:51,400 --> 00:14:54,240 Speaker 5: by about ninety billion in April, So retail did pull 264 00:14:54,320 --> 00:14:56,360 Speaker 5: back a little bit, but to your point, for the 265 00:14:56,400 --> 00:14:59,400 Speaker 5: most part, they stayed invested, suffered the pain of the 266 00:14:59,440 --> 00:15:02,040 Speaker 5: way down also caught, you know, the entire rebound. 267 00:15:02,480 --> 00:15:04,560 Speaker 4: What are your hedge fund clients doing here are they 268 00:15:05,520 --> 00:15:08,520 Speaker 4: Are they trying to be smart money and finding value 269 00:15:08,560 --> 00:15:12,800 Speaker 4: outside of the just the market or they just playing SBX. 270 00:15:13,160 --> 00:15:15,280 Speaker 5: Yeah, I think they're trying to They're trying to be 271 00:15:15,280 --> 00:15:17,360 Speaker 5: smart about stock picking it. The hedge fund community, I 272 00:15:17,400 --> 00:15:20,000 Speaker 5: think got hurt during the initial ten percent draw down 273 00:15:20,040 --> 00:15:22,320 Speaker 5: February to mid March. They kind of got their risk 274 00:15:22,440 --> 00:15:24,800 Speaker 5: right after that, and for that reason, we're actually able 275 00:15:24,800 --> 00:15:27,320 Speaker 5: to play a little bit offense like in April going 276 00:15:27,360 --> 00:15:30,240 Speaker 5: into May. But yeah, I mean it's it's initially it's 277 00:15:30,480 --> 00:15:32,400 Speaker 5: just get my beta on, but but right now it. 278 00:15:32,520 --> 00:15:34,840 Speaker 2: Is picking the right stocks. And now for the question 279 00:15:34,960 --> 00:15:38,280 Speaker 2: of the day with Stuart Kaiser City Group, do hedge 280 00:15:38,280 --> 00:15:41,960 Speaker 2: funds hedge anymore? Are they just as simple? Do they 281 00:15:42,000 --> 00:15:45,920 Speaker 2: actually hedge or is it just basically guys running money 282 00:15:45,920 --> 00:15:47,920 Speaker 2: for two and twenty they used to do it for 283 00:15:47,960 --> 00:15:48,720 Speaker 2: eighty five. 284 00:15:48,520 --> 00:15:51,800 Speaker 5: Beeps, Well, they do hedge, and I think after February 285 00:15:51,840 --> 00:15:53,760 Speaker 5: the other they're gonna they're gonna be hedging a little bit, 286 00:15:54,320 --> 00:15:56,720 Speaker 5: a little bit more aggressively. Look, I think if you 287 00:15:56,720 --> 00:15:58,440 Speaker 5: look back at the beginning of the year, Deep Seek 288 00:15:58,520 --> 00:16:01,560 Speaker 5: actually in hindsight, when that news came out, people think, 289 00:16:01,560 --> 00:16:03,440 Speaker 5: oh my good this, this is horrible for a video, 290 00:16:03,680 --> 00:16:05,880 Speaker 5: and then three weeks later we'd a new all time high, 291 00:16:06,000 --> 00:16:07,880 Speaker 5: and I think it kind of gave people a false 292 00:16:07,920 --> 00:16:10,360 Speaker 5: sense of security and perhaps to your point, on the 293 00:16:10,360 --> 00:16:13,000 Speaker 5: hedges weren't on as as deeply as they needed to 294 00:16:13,000 --> 00:16:15,520 Speaker 5: be in late February, but today they are after that 295 00:16:15,600 --> 00:16:17,160 Speaker 5: drawnoun So we're gonna. 296 00:16:16,960 --> 00:16:20,240 Speaker 4: Hear from the Fed tomorrow at two pm press conference 297 00:16:20,240 --> 00:16:23,440 Speaker 4: two two thirty. Do your clients put trades on in 298 00:16:23,480 --> 00:16:25,640 Speaker 4: front of that or around that or they do not 299 00:16:25,720 --> 00:16:26,320 Speaker 4: do that anymore? 300 00:16:27,000 --> 00:16:28,680 Speaker 5: Definitely do definitely do if you have if you have 301 00:16:28,720 --> 00:16:31,280 Speaker 5: a view on you know, in this case, there's they're 302 00:16:31,280 --> 00:16:32,920 Speaker 5: not going to cut rates, so you know that's not 303 00:16:32,960 --> 00:16:35,560 Speaker 5: a trade. I think in this particular meeting two things 304 00:16:35,560 --> 00:16:38,080 Speaker 5: will matter. One will be the economic projections we have. 305 00:16:38,160 --> 00:16:41,520 Speaker 5: They haven't updated their economic projection since since the tariff news. 306 00:16:41,720 --> 00:16:44,320 Speaker 5: And secondly, a little more qualitative is going to be 307 00:16:44,320 --> 00:16:46,640 Speaker 5: what is the messaging from pal during the press conference? 308 00:16:46,680 --> 00:16:47,720 Speaker 2: How devilish does he sound? 309 00:16:47,800 --> 00:16:51,160 Speaker 5: So yeah, you'll you'll get directional views on equities, but 310 00:16:51,200 --> 00:16:53,480 Speaker 5: you also get people trading the rates outlook, which in 311 00:16:53,520 --> 00:16:54,760 Speaker 5: this case is not really relevant. 312 00:16:54,800 --> 00:16:57,200 Speaker 2: I have no clue on this. The answer to this question, 313 00:16:57,440 --> 00:17:00,120 Speaker 2: are there losses out there? Are we going to see 314 00:17:00,600 --> 00:17:03,160 Speaker 2: into the end of the quarter? Oops, we really had 315 00:17:03,160 --> 00:17:06,960 Speaker 2: a bad quarter in trading losses or our losses if 316 00:17:07,000 --> 00:17:07,600 Speaker 2: you will. 317 00:17:07,840 --> 00:17:10,760 Speaker 5: You know this quarter hopefully not just given the degree 318 00:17:10,760 --> 00:17:13,240 Speaker 5: of the rally we've seen and volatility coming down. But 319 00:17:13,320 --> 00:17:15,959 Speaker 5: you know, to your point, people make mistakes. It wouldn't 320 00:17:15,960 --> 00:17:17,760 Speaker 5: surprise me if you did see some losses. But by 321 00:17:17,800 --> 00:17:20,360 Speaker 5: and large, in the type of rally we've had, I think, 322 00:17:20,440 --> 00:17:23,080 Speaker 5: you know, most institutional investors are feeling good, and to 323 00:17:23,119 --> 00:17:26,160 Speaker 5: your point earlier, the regret is maybe not capturing enough 324 00:17:26,200 --> 00:17:28,399 Speaker 5: of the rally as opposed to having lost money. 325 00:17:28,520 --> 00:17:30,840 Speaker 2: Stuart Kaiser will be with us again soon ahead of 326 00:17:30,920 --> 00:17:34,920 Speaker 2: US Equity Trading Strategy at the City Group. 327 00:17:35,080 --> 00:17:38,960 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 328 00:17:39,000 --> 00:17:42,280 Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto 329 00:17:42,400 --> 00:17:45,400 Speaker 1: with the Bloomberg Business app. You can also listen live 330 00:17:45,440 --> 00:17:49,040 Speaker 1: on Amazon Alexa from our flagship New York station, Just 331 00:17:49,080 --> 00:17:51,520 Speaker 1: say Alexa Play Bloomberg eleven thirty. 332 00:17:51,720 --> 00:17:55,199 Speaker 2: Someone that talks in does in the short term paper 333 00:17:55,200 --> 00:17:59,040 Speaker 2: market is Jerome Schneider. The miracle of his performance at 334 00:17:59,080 --> 00:18:01,439 Speaker 2: pinmpcoint I looked at your on your track record a 335 00:18:01,480 --> 00:18:03,520 Speaker 2: while back, and you're just done a role. How are 336 00:18:03,520 --> 00:18:07,600 Speaker 2: you creating? I love this alpha in the short term space. 337 00:18:07,840 --> 00:18:10,720 Speaker 6: Yeah, alpha is one of those things that basically means 338 00:18:10,720 --> 00:18:14,960 Speaker 6: how do you obviously create outperformance. And here's the interesting thing, Tom. 339 00:18:15,119 --> 00:18:18,439 Speaker 6: You know, we're an environment right now, where as we 340 00:18:18,560 --> 00:18:21,560 Speaker 6: just heard fixed income is very poignant, it's very topical. 341 00:18:21,880 --> 00:18:24,600 Speaker 6: We're finding ourselves in a transition, perhaps of a market 342 00:18:24,600 --> 00:18:28,199 Speaker 6: orientation which has been dominated by equities for years, and 343 00:18:28,240 --> 00:18:32,280 Speaker 6: now the income generation that's been focused on more recently 344 00:18:32,560 --> 00:18:35,680 Speaker 6: is quite real. Literally real is in terms of inflation 345 00:18:35,720 --> 00:18:38,879 Speaker 6: adjuster returns. But more importantly, how people are thinking about, 346 00:18:39,040 --> 00:18:42,040 Speaker 6: you know, surviving the volatility the marketplace, it's income and 347 00:18:42,080 --> 00:18:45,359 Speaker 6: how they're doing that has been most importantly beginning to 348 00:18:45,359 --> 00:18:47,439 Speaker 6: consider fixed income. And the first place they do that 349 00:18:47,560 --> 00:18:50,280 Speaker 6: is cash. And so when you talk about return and 350 00:18:50,880 --> 00:18:54,840 Speaker 6: alpha and relative returns, Tom, you know, we're really thinking 351 00:18:54,880 --> 00:18:57,600 Speaker 6: about ways to actively manage your cash in this environment, 352 00:18:57,640 --> 00:19:01,359 Speaker 6: given the uncertainty of outlook, given the opportunities to earn 353 00:19:01,800 --> 00:19:05,800 Speaker 6: above market infleetion adjusted returns and doing so in a 354 00:19:05,840 --> 00:19:09,960 Speaker 6: lower volatility output that doesn't necessarily underwrite equity risk. And 355 00:19:10,160 --> 00:19:13,320 Speaker 6: that's really exciting right now for us in those cash markets. 356 00:19:13,359 --> 00:19:15,679 Speaker 6: And doing so requires a bit of skill, a bit 357 00:19:15,760 --> 00:19:19,439 Speaker 6: diversification obviously the backbone of PIMCO resources, but all that 358 00:19:19,480 --> 00:19:23,080 Speaker 6: put together doesn't necessarily mean that you're doing and actively 359 00:19:23,119 --> 00:19:25,240 Speaker 6: managing your cash if you're sitting simply in a money 360 00:19:25,240 --> 00:19:27,840 Speaker 6: market fund. So the era of being in T bills, 361 00:19:28,359 --> 00:19:30,960 Speaker 6: sweep accounts, you know, certificates, a deposit that we have 362 00:19:31,000 --> 00:19:33,280 Speaker 6: seen for the past few years as rates moved higher 363 00:19:33,760 --> 00:19:37,119 Speaker 6: is rapidly changing and where our job is really to 364 00:19:37,200 --> 00:19:39,719 Speaker 6: sort of alert clients that they need to be more 365 00:19:39,760 --> 00:19:42,720 Speaker 6: adaptive to the changes and subtleties in these markets. 366 00:19:43,280 --> 00:19:45,080 Speaker 2: How short is short term for you. 367 00:19:45,080 --> 00:19:47,560 Speaker 6: Guys, that's a great question, and you know we cater 368 00:19:47,640 --> 00:19:49,960 Speaker 6: to a wide variety of clients at this point in time. 369 00:19:50,280 --> 00:19:52,679 Speaker 6: Obviously retail investors are a good deal, but you know, 370 00:19:52,920 --> 00:19:56,520 Speaker 6: family offices, central banks, et cetera. These are all clients 371 00:19:56,560 --> 00:19:59,359 Speaker 6: who are focused on three things. One capital preservation. The 372 00:19:59,400 --> 00:20:02,760 Speaker 6: second is liquidity management. And in that regard, how they 373 00:20:02,760 --> 00:20:06,440 Speaker 6: think about it is they want relative returns based upon benchmarks, 374 00:20:06,440 --> 00:20:09,679 Speaker 6: and those benchmarks are relatively money market funds. We're finding 375 00:20:09,680 --> 00:20:12,440 Speaker 6: more and more clients are adapting and shifting their focus 376 00:20:12,720 --> 00:20:15,479 Speaker 6: on moving out that space, finding ways to be more adaptive, 377 00:20:15,520 --> 00:20:18,719 Speaker 6: and that requires flexibility, meaning not just buying teap and 378 00:20:18,720 --> 00:20:21,919 Speaker 6: buying corporate bonds, et cetera. And that flexibility adds to 379 00:20:22,080 --> 00:20:25,160 Speaker 6: adds to the potential for returns. And so that's really 380 00:20:25,200 --> 00:20:27,520 Speaker 6: where we're finding more engagement with clients. 381 00:20:27,520 --> 00:20:30,360 Speaker 2: So you didn't ask, you didn't answer the question. I mean, 382 00:20:30,480 --> 00:20:33,480 Speaker 2: are they I can't wait for the Giants to play 383 00:20:33,480 --> 00:20:37,520 Speaker 2: the Dodgers where Mookie Monsters going up against Devers with 384 00:20:37,640 --> 00:20:39,760 Speaker 2: the Giants. I mean it's going to be painful to 385 00:20:39,840 --> 00:20:42,720 Speaker 2: say the least. How far out is out? Is it out? 386 00:20:42,880 --> 00:20:46,240 Speaker 2: To Paul's question, Yeah, out two years, out, two weeks, 387 00:20:46,640 --> 00:20:47,120 Speaker 2: that's great. 388 00:20:47,160 --> 00:20:50,080 Speaker 6: So ultimately is it's more than overnight. And so what 389 00:20:50,119 --> 00:20:53,120 Speaker 6: we're saying is if you have a need for overnight liquidity, 390 00:20:53,160 --> 00:20:55,640 Speaker 6: stay in your traditional money market funds. If your liquidity 391 00:20:55,680 --> 00:20:58,440 Speaker 6: horizons a week, a month, a year, two years, think 392 00:20:58,480 --> 00:21:02,680 Speaker 6: about segmenting your liquidity into additional tiers of cash. And 393 00:21:02,720 --> 00:21:06,919 Speaker 6: that's the power that managing liquidity is incredibly powerful to 394 00:21:07,000 --> 00:21:09,280 Speaker 6: earning additional turns of one hundred to two hundred basis 395 00:21:09,280 --> 00:21:11,280 Speaker 6: points more than the cash benchmark rates. 396 00:21:11,359 --> 00:21:16,439 Speaker 2: Jerom Schneider with US economist Short Term Paper Guy, is, well, 397 00:21:16,560 --> 00:21:19,439 Speaker 2: is there a disinflationary vector? Like when you show up 398 00:21:19,440 --> 00:21:22,120 Speaker 2: and you look at your three Bloomberg terminals the two 399 00:21:22,240 --> 00:21:24,480 Speaker 2: Monroe traders you've got in front of you. Do you 400 00:21:24,520 --> 00:21:25,440 Speaker 2: see disinflation? 401 00:21:25,680 --> 00:21:27,560 Speaker 6: Yeah, you know on the short term and the short 402 00:21:28,560 --> 00:21:31,240 Speaker 6: visible horizon, the answer is yes. Is it going to 403 00:21:31,240 --> 00:21:32,480 Speaker 6: remain consistently lower? 404 00:21:32,600 --> 00:21:32,719 Speaker 2: No? 405 00:21:33,040 --> 00:21:34,720 Speaker 6: And I think that's really what we're saying is we're 406 00:21:34,800 --> 00:21:36,639 Speaker 6: dealing with a FED and hey, you know, we're going 407 00:21:36,720 --> 00:21:38,800 Speaker 6: to use the word transitory once again, but they're dealing 408 00:21:38,800 --> 00:21:42,040 Speaker 6: with the transitory era of inflation moving perhaps a little 409 00:21:42,080 --> 00:21:44,760 Speaker 6: bit stickier and growth becoming a little bit more subdued, 410 00:21:44,800 --> 00:21:47,280 Speaker 6: and that basically lends itself to be a little bit 411 00:21:47,280 --> 00:21:49,479 Speaker 6: more thoughtful about how they're going to sequence out these 412 00:21:49,520 --> 00:21:51,320 Speaker 6: rate cuts for the remainder of the year and push 413 00:21:51,359 --> 00:21:54,320 Speaker 6: some of these into twenty twenty six. So I hate 414 00:21:54,320 --> 00:21:56,240 Speaker 6: to be myopic and sort of betting on the FED, 415 00:21:56,280 --> 00:21:58,879 Speaker 6: because that's not necessarily how you make money in our 416 00:21:58,880 --> 00:22:01,879 Speaker 6: short term markets, oddly speaking. But I would focus on 417 00:22:01,960 --> 00:22:05,640 Speaker 6: the fact that in this environment, yes, these are comforting 418 00:22:05,760 --> 00:22:09,400 Speaker 6: trends for the inflationary discussion, but there's reasons to think 419 00:22:09,440 --> 00:22:11,879 Speaker 6: that perhaps some of these prices aren't being passed on 420 00:22:11,920 --> 00:22:14,000 Speaker 6: to the consumer. In the near term, we might see 421 00:22:14,000 --> 00:22:16,160 Speaker 6: some that stickiness evolve later on this year and into 422 00:22:16,160 --> 00:22:18,680 Speaker 6: twenty twenty six. That just simply means that we're not 423 00:22:18,720 --> 00:22:21,880 Speaker 6: really close to that two percent FED target for inflation 424 00:22:21,960 --> 00:22:24,439 Speaker 6: policy that they want to embrace. And so you're going 425 00:22:24,520 --> 00:22:27,399 Speaker 6: to hear perhaps a little bit more, a little bit 426 00:22:27,440 --> 00:22:31,719 Speaker 6: more compassionate plea from the FED chair, but not necessarily 427 00:22:31,760 --> 00:22:33,679 Speaker 6: one that is going to give in entirely. 428 00:22:33,880 --> 00:22:36,159 Speaker 2: Jerrem Schneider, thank you so much. He's had a short 429 00:22:36,280 --> 00:22:37,880 Speaker 2: term portfolio management. 430 00:22:44,560 --> 00:22:48,480 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 431 00:22:48,520 --> 00:22:51,919 Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto 432 00:22:51,960 --> 00:22:54,760 Speaker 1: with the Bloomberg Business app. You can also watch us 433 00:22:54,800 --> 00:22:58,560 Speaker 1: live every weekday on YouTube and always on the Bloomberg terminal. 434 00:22:58,640 --> 00:23:01,280 Speaker 2: Joining us down in studio today for a really important 435 00:23:01,320 --> 00:23:05,080 Speaker 2: conversation in the state the finance in America. Meredith Whitney 436 00:23:05,119 --> 00:23:09,000 Speaker 2: is with a CEO at Meredith Whitney Advisory Group, but 437 00:23:09,080 --> 00:23:13,480 Speaker 2: far more than a student on the banking American banking system. 438 00:23:14,119 --> 00:23:17,800 Speaker 2: I'm dying to ask to get this private equity private credit. 439 00:23:18,200 --> 00:23:20,880 Speaker 2: I don't think it was around twenty years ago. Did 440 00:23:20,880 --> 00:23:23,359 Speaker 2: it come out of two thousand and seven? In two 441 00:23:23,400 --> 00:23:25,199 Speaker 2: thousand and eight and what do you think of this 442 00:23:25,280 --> 00:23:26,200 Speaker 2: beast right now? 443 00:23:26,720 --> 00:23:28,840 Speaker 7: I think you know, as you know in the economy, 444 00:23:28,880 --> 00:23:31,840 Speaker 7: there's there's a void, it gets filled. And there was 445 00:23:31,880 --> 00:23:35,000 Speaker 7: an amazing void created for private credit and private equity, 446 00:23:35,040 --> 00:23:37,960 Speaker 7: but particularly private credit because the banks were charged so 447 00:23:38,080 --> 00:23:43,400 Speaker 7: much for loans and they derisk they had PTSD and 448 00:23:43,520 --> 00:23:48,240 Speaker 7: it's been a bonanza. I mean, how I focus on it. 449 00:23:47,000 --> 00:23:52,920 Speaker 7: I've watched firms like KKR and Apollo of course, right, 450 00:23:52,920 --> 00:23:56,000 Speaker 7: but the private credit side, which has now come into 451 00:23:56,040 --> 00:23:58,919 Speaker 7: the consumer market, which is where it really impacts me, 452 00:23:59,320 --> 00:24:03,000 Speaker 7: I think is fascinating. And so you see consumer loan 453 00:24:03,080 --> 00:24:05,600 Speaker 7: market being basically taken over by private creditor. 454 00:24:05,800 --> 00:24:07,960 Speaker 2: Let me cut to the chase. Is the Whitney radar 455 00:24:08,119 --> 00:24:08,639 Speaker 2: up on this? 456 00:24:09,560 --> 00:24:14,560 Speaker 7: Wildly up? I mean, my MoMA, what's going on now? 457 00:24:14,560 --> 00:24:19,600 Speaker 7: I think is so wildly exciting in terms of remember 458 00:24:19,640 --> 00:24:23,320 Speaker 7: our product that called home equity. It's back with a vengeance, 459 00:24:23,680 --> 00:24:27,840 Speaker 7: and private credit is basically taking off bank balance. So 460 00:24:27,880 --> 00:24:30,560 Speaker 7: banks are still the eight hundred pound gorilla, but the 461 00:24:30,680 --> 00:24:34,680 Speaker 7: new entrance there's an entrance figure technology that's already number 462 00:24:34,720 --> 00:24:37,159 Speaker 7: eight in terms of home equity originations. And just to 463 00:24:37,160 --> 00:24:41,080 Speaker 7: put into context, home equity home equity loans, home equity 464 00:24:41,160 --> 00:24:44,480 Speaker 7: lines of credit declined for seventeen years in a row, 465 00:24:44,520 --> 00:24:47,159 Speaker 7: and just this past summer they started to pick up. 466 00:24:47,200 --> 00:24:49,720 Speaker 7: And this is fed data. And at the same time 467 00:24:50,080 --> 00:24:53,159 Speaker 7: you started to see forward purchase agreements going out to 468 00:24:53,359 --> 00:24:57,600 Speaker 7: consumer lene anyone who could could originate loans private credit 469 00:24:57,640 --> 00:25:00,680 Speaker 7: wanted to do a forward purchase commitment. So over forty 470 00:25:00,760 --> 00:25:06,240 Speaker 7: billion dollars for purchase commitments have been made since September. Wow, 471 00:25:06,440 --> 00:25:09,200 Speaker 7: that's a staggering amount for an industry that's coming into 472 00:25:09,920 --> 00:25:13,119 Speaker 7: And also the securitization market is going going bonker. So 473 00:25:13,560 --> 00:25:16,240 Speaker 7: you know, my source on all of this is Bloomberg and. 474 00:25:16,280 --> 00:25:18,440 Speaker 2: You know the god for that and God. 475 00:25:18,560 --> 00:25:21,320 Speaker 7: You look at a company like Rocket, their home equity 476 00:25:21,359 --> 00:25:24,880 Speaker 7: closed down. Mortgages are up forty seven percent last year. 477 00:25:25,000 --> 00:25:26,920 Speaker 2: You know, let's go back to nineteen You're too young 478 00:25:27,000 --> 00:25:29,640 Speaker 2: for this. There's nineteen eighty seven. You're too young for this. 479 00:25:29,840 --> 00:25:33,399 Speaker 2: There was nineteen ninety eight. My radar is up because 480 00:25:33,440 --> 00:25:36,440 Speaker 2: I didn't see those things coming. Is that how Meredith 481 00:25:36,440 --> 00:25:39,160 Speaker 2: Whitney feels now, Well, I. 482 00:25:39,119 --> 00:25:41,840 Speaker 7: Don't know that I saw the you know, Asian debt crisis, 483 00:25:41,880 --> 00:25:44,760 Speaker 7: in Russian default in ninety seven, and I was in 484 00:25:44,840 --> 00:25:50,679 Speaker 7: high school in eighty seven, so I it wasn't my 485 00:25:50,760 --> 00:25:53,840 Speaker 7: radar screen. What what was very much on my radar 486 00:25:53,880 --> 00:25:57,320 Speaker 7: screen was that the bond market was really impacted in 487 00:25:57,400 --> 00:25:59,960 Speaker 7: ninety seven and the securitization market came to a grind 488 00:26:00,080 --> 00:26:05,240 Speaker 7: ending halt. So today the capital at private credit is 489 00:26:05,640 --> 00:26:09,080 Speaker 7: you know, quasi permanent capital. So if the securitization market closes, 490 00:26:09,720 --> 00:26:11,080 Speaker 7: there's still going to be liquidity. 491 00:26:11,920 --> 00:26:14,359 Speaker 4: What is your view of the US banking system today? 492 00:26:14,400 --> 00:26:17,400 Speaker 4: It feels like, since you know, the Great Financial Crisis, 493 00:26:17,720 --> 00:26:20,360 Speaker 4: maybe the best shape it's ever been in. Is that fair? 494 00:26:20,520 --> 00:26:22,919 Speaker 7: Yeah, there's no doubt. I mean so the European banks 495 00:26:22,960 --> 00:26:26,520 Speaker 7: are incredibly well capitalized. The ny've outperformed the US banks 496 00:26:27,000 --> 00:26:30,159 Speaker 7: so far this year. It's a question of how the 497 00:26:30,280 --> 00:26:32,359 Speaker 7: US banks grow. And I think the bet on the 498 00:26:32,480 --> 00:26:36,040 Speaker 7: US banks will be if they get capital relief from 499 00:26:36,119 --> 00:26:40,160 Speaker 7: regulatory reform. I think one of the things that you. 500 00:26:40,119 --> 00:26:42,760 Speaker 4: Do, you think that will happen, because President Trouble is 501 00:26:42,960 --> 00:26:44,280 Speaker 4: talking about that during a campaign. 502 00:26:44,320 --> 00:26:45,719 Speaker 7: Yeah, I think it'll happen. So if you look at 503 00:26:45,800 --> 00:26:48,440 Speaker 7: Michelle Bowman's recent comments and even her comments on the Hill, 504 00:26:49,080 --> 00:26:55,240 Speaker 7: she wants to streamline regulation. Two thirds of banks of 505 00:26:55,320 --> 00:26:57,960 Speaker 7: the of the twenty six banks, so let's take Bank 506 00:26:57,960 --> 00:27:00,400 Speaker 7: of America and JP Morgan out of the equation. Two 507 00:27:00,480 --> 00:27:06,920 Speaker 7: thirds of the twenty six banks over to hundred billion 508 00:27:07,040 --> 00:27:15,080 Speaker 7: are considered unsatisfactory in terms of regulatory so they're in 509 00:27:15,080 --> 00:27:17,119 Speaker 7: a penalty box. They can't do anything. She wants to 510 00:27:17,200 --> 00:27:17,760 Speaker 7: change all of that. 511 00:27:17,880 --> 00:27:20,440 Speaker 2: Meredith Whitney with us this morning in studio. David Gerr 512 00:27:20,440 --> 00:27:22,480 Speaker 2: waiting by in BAMF. We'll get to mister Gerry here 513 00:27:22,960 --> 00:27:26,240 Speaker 2: in a moment. Thrilled to have Meredith Whitney with us 514 00:27:26,320 --> 00:27:30,040 Speaker 2: on our Commute Your commute across the country on YouTube. 515 00:27:30,080 --> 00:27:33,479 Speaker 2: It's our new digital distribution. Just humbled by that. At 516 00:27:33,520 --> 00:27:36,320 Speaker 2: Lisa's been doing some nice YouTube stories about the reach 517 00:27:36,920 --> 00:27:41,359 Speaker 2: where on Bloomberg Podcasts. Subscribe to Bloomberg Podcasts at YouTube. 518 00:27:41,520 --> 00:27:44,960 Speaker 2: The joy of Meredith Whitney research, folks, is there's the 519 00:27:45,000 --> 00:27:49,960 Speaker 2: whole image thing in the decades of Meredith, the controversy, 520 00:27:50,000 --> 00:27:53,920 Speaker 2: if you will, But the research is bulletproof. The written 521 00:27:54,480 --> 00:27:58,080 Speaker 2: research is why Global Wall Street, whether they like it 522 00:27:58,160 --> 00:28:01,639 Speaker 2: or not, agree with her or not, pay attention. You 523 00:28:01,880 --> 00:28:07,840 Speaker 2: have a spectacular chart back to nineteen eighty of total 524 00:28:08,240 --> 00:28:13,320 Speaker 2: mortgage debt, and it's all wrapped around seniors and how 525 00:28:13,400 --> 00:28:17,600 Speaker 2: everybody in the financial business wants to get seniors' money. 526 00:28:17,640 --> 00:28:20,600 Speaker 2: What's the state of seniors in America? Well? 527 00:28:20,640 --> 00:28:24,399 Speaker 7: As You and many other shows and written talk about, 528 00:28:24,480 --> 00:28:27,320 Speaker 7: they talk about the boomers being so wealthy, and that's 529 00:28:27,359 --> 00:28:29,600 Speaker 7: just not true in terms of there's a segment of 530 00:28:29,600 --> 00:28:32,560 Speaker 7: the boomers that's incredibly wealthy, but only one in ten 531 00:28:33,040 --> 00:28:37,639 Speaker 7: boomers seniors can afford assisted living, and they're taking on 532 00:28:37,880 --> 00:28:40,960 Speaker 7: debt at a more rapid rate than any other age cohort. 533 00:28:41,280 --> 00:28:46,320 Speaker 7: So seniors own twenty five percent of total consumer debt outstanding. 534 00:28:46,520 --> 00:28:49,200 Speaker 7: That's that's counterintuitive because you think as you get older, 535 00:28:49,240 --> 00:28:52,600 Speaker 7: you get more conservative, you have less debt, So twenty 536 00:28:52,640 --> 00:28:55,000 Speaker 7: five percent compares to twelve percent. 537 00:28:56,400 --> 00:28:57,320 Speaker 2: In two thousand. 538 00:28:57,680 --> 00:29:01,320 Speaker 7: So it's if the economy was great, why would why 539 00:29:01,360 --> 00:29:04,000 Speaker 7: would seniors be taking on debt. One thing that seniors 540 00:29:04,040 --> 00:29:07,520 Speaker 7: have is they're sitting on a tremendous amount of equity 541 00:29:07,720 --> 00:29:10,600 Speaker 7: and they're starting to tap into that. So seniors have 542 00:29:11,400 --> 00:29:14,760 Speaker 7: at least fourteen trillion of tappable equity that they can 543 00:29:14,920 --> 00:29:17,400 Speaker 7: access that could make them be able to stay in 544 00:29:17,400 --> 00:29:21,080 Speaker 7: their homes longer agent place, maybe get maybe get private 545 00:29:21,120 --> 00:29:25,040 Speaker 7: home care, home health care. And they're doing it. So 546 00:29:25,160 --> 00:29:29,320 Speaker 7: forty four percent of home equity outstanding is held by seniors. 547 00:29:29,600 --> 00:29:32,360 Speaker 2: I mean, if you let mom and dad buy private 548 00:29:32,440 --> 00:29:36,280 Speaker 2: credit or private Paul helped me, or your better private 549 00:29:36,320 --> 00:29:39,000 Speaker 2: credit wants to go to retail? Right? 550 00:29:39,080 --> 00:29:39,360 Speaker 4: Sure? 551 00:29:39,440 --> 00:29:41,400 Speaker 2: Am I right on that you have a longer term horizon? 552 00:29:41,440 --> 00:29:43,280 Speaker 4: I think so, because if I've got. 553 00:29:43,160 --> 00:29:45,240 Speaker 7: Five years left in my life, I mean depending upon 554 00:29:45,360 --> 00:29:49,240 Speaker 7: like you just I don't think I don't you want liquidity? 555 00:29:49,360 --> 00:29:49,440 Speaker 2: Right? 556 00:29:49,560 --> 00:29:51,680 Speaker 7: So look at the universities that are selling their their 557 00:29:51,720 --> 00:29:54,120 Speaker 7: private credit and private equity at a discount, like they 558 00:29:54,120 --> 00:29:57,680 Speaker 7: need liquidity, like if you you know, I think it's 559 00:29:57,760 --> 00:30:01,520 Speaker 7: for for an older audience. It's a tough for Seal Meredith. 560 00:30:01,560 --> 00:30:03,640 Speaker 4: Talk about the regional banks just for a moment, because 561 00:30:03,640 --> 00:30:05,880 Speaker 4: when we had the Silicon Valley Bank, I think we 562 00:30:05,960 --> 00:30:08,960 Speaker 4: all got smarter about the regional banking business and maybe 563 00:30:09,000 --> 00:30:11,400 Speaker 4: the risk associated. Do we need four or five thousand 564 00:30:11,440 --> 00:30:12,680 Speaker 4: regional banks in this country? 565 00:30:13,480 --> 00:30:15,480 Speaker 7: I don't think so. But you need community banks, so 566 00:30:15,520 --> 00:30:19,240 Speaker 7: you need a presence, but you need you know, four thousand. 567 00:30:19,400 --> 00:30:23,320 Speaker 7: You're the Silicon Valley situation. Was hiding in plain site. 568 00:30:23,520 --> 00:30:27,360 Speaker 7: So that's on the regulators right for not addressing it. 569 00:30:27,480 --> 00:30:28,800 Speaker 2: I strongly agree with that. 570 00:30:28,880 --> 00:30:32,680 Speaker 7: It's a g capital now hiding in plain site. 571 00:30:32,760 --> 00:30:35,160 Speaker 2: Yeah, what's your single best buy right now? We got 572 00:30:35,160 --> 00:30:35,320 Speaker 2: to go. 573 00:30:36,240 --> 00:30:37,479 Speaker 7: I like rocket and so far. 574 00:30:38,040 --> 00:30:40,640 Speaker 2: Okay, Meredith Whitney, thank you, thank you so much, greatly 575 00:30:40,720 --> 00:30:42,560 Speaker 2: appreciate it. Don't be a stranger. 576 00:30:43,120 --> 00:30:47,000 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 577 00:30:47,040 --> 00:30:50,360 Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto 578 00:30:50,480 --> 00:30:53,440 Speaker 1: with the Bloomberg Business app. You can also listen live 579 00:30:53,520 --> 00:30:57,080 Speaker 1: on Amazon Alexa from our flagship New York station, Just 580 00:30:57,160 --> 00:31:00,120 Speaker 1: say Alexa, play Bloomberg eleven thirty in. 581 00:31:00,080 --> 00:31:03,800 Speaker 2: The newspapers here with Lisa Matteo. Always important, Just just 582 00:31:03,960 --> 00:31:07,840 Speaker 2: an incredible set of stories to embarrass us by Lisa. 583 00:31:07,920 --> 00:31:08,320 Speaker 2: What do you have? 584 00:31:08,840 --> 00:31:09,080 Speaker 4: Okay? 585 00:31:09,160 --> 00:31:12,760 Speaker 8: So this Friday, it marks a special movie anniversary. It's 586 00:31:12,760 --> 00:31:16,320 Speaker 8: the fiftieth anniversary of a movie that made people afraid 587 00:31:16,440 --> 00:31:21,640 Speaker 8: to go in the water. Oh you know the theme 588 00:31:21,840 --> 00:31:26,120 Speaker 8: song June twentieth, nineteen seventy five, That was the day 589 00:31:26,240 --> 00:31:30,080 Speaker 8: Jaws was released. It basically invented the summer blockbuster. That's 590 00:31:30,160 --> 00:31:32,840 Speaker 8: exactly what it was okay. So the Wall Street Journal 591 00:31:32,840 --> 00:31:34,760 Speaker 8: has this inside look into the movie kind of some 592 00:31:34,800 --> 00:31:38,040 Speaker 8: fun facts that you might not have known. For example, 593 00:31:38,080 --> 00:31:40,680 Speaker 8: that theme song. Steven Spielberg actually didn't like it. He 594 00:31:40,960 --> 00:31:42,640 Speaker 8: really what two keys? 595 00:31:42,720 --> 00:31:43,120 Speaker 1: That's it? 596 00:31:43,520 --> 00:31:44,440 Speaker 8: That's all you got for me? 597 00:31:45,360 --> 00:31:45,880 Speaker 4: And he was. 598 00:31:45,880 --> 00:31:48,640 Speaker 8: Twenty Spielerg was twenty six when he started working on 599 00:31:48,680 --> 00:31:54,320 Speaker 8: the movie. It was a disaster production. There were equipment malfunctions. 600 00:31:54,360 --> 00:31:57,360 Speaker 8: They thought the audience would laugh at these mechanical sharks. 601 00:31:58,280 --> 00:32:01,360 Speaker 8: They had a tight three and a half million dollar budget, 602 00:32:01,760 --> 00:32:04,959 Speaker 8: no star salaries. They were using people on you know, 603 00:32:05,120 --> 00:32:06,720 Speaker 8: Martha's Vineyards for extras. 604 00:32:07,160 --> 00:32:07,400 Speaker 2: Yeah. 605 00:32:07,600 --> 00:32:10,480 Speaker 8: No, And remember, of course, what's the most famous line 606 00:32:10,520 --> 00:32:15,040 Speaker 8: from that movie, right we're going to Yes, that was improvised. 607 00:32:14,680 --> 00:32:18,160 Speaker 2: It was in scripted. So all these little tidbits. 608 00:32:18,880 --> 00:32:21,040 Speaker 8: Now Martha's Vineyard, it's going to be packed. They have 609 00:32:21,040 --> 00:32:22,880 Speaker 8: a lot of tourists going out there, you know, for 610 00:32:22,960 --> 00:32:26,640 Speaker 8: the fiftieth anniversary, and they have NBC is showing it Friday. 611 00:32:26,680 --> 00:32:31,640 Speaker 2: That's scared that people will know better than me and Paul. 612 00:32:31,680 --> 00:32:35,560 Speaker 2: You lived the Southern Jersey shore, the southeast of Martha's Vineyard. 613 00:32:35,600 --> 00:32:39,640 Speaker 2: When your kids are in the water, you're just always 614 00:32:40,120 --> 00:32:44,200 Speaker 2: watching clothes, always watching about it. 615 00:32:44,560 --> 00:32:44,760 Speaker 4: Next. 616 00:32:45,080 --> 00:32:46,920 Speaker 2: Thank you so much for doing that. It did scare. 617 00:32:47,600 --> 00:32:50,360 Speaker 8: Okay, So did you ever say, I know you haven't, 618 00:32:50,360 --> 00:32:52,920 Speaker 8: but people listening, have you ever sat in the line 619 00:32:52,920 --> 00:32:57,040 Speaker 8: at the Costco gas station? It's very yes, because they 620 00:32:57,040 --> 00:33:01,400 Speaker 8: have the best prices, it's cheaper gases, but the lines 621 00:33:01,400 --> 00:33:04,400 Speaker 8: are really long. So Business Insider has this look that 622 00:33:04,400 --> 00:33:08,520 Speaker 8: says they're planning to build a standalone forty Bay gas 623 00:33:08,600 --> 00:33:12,360 Speaker 8: station in the supperb of Los Angeles, about two miles 624 00:33:12,400 --> 00:33:14,440 Speaker 8: from where it is. But the problem is because it's 625 00:33:14,520 --> 00:33:17,120 Speaker 8: backing up into the parking lots and people are upset. 626 00:33:17,160 --> 00:33:18,680 Speaker 8: They're like, we just want to get the food, we 627 00:33:18,720 --> 00:33:20,560 Speaker 8: don't want the gas, and now you know, there's this 628 00:33:20,640 --> 00:33:22,880 Speaker 8: big line and I can't get to the store. So 629 00:33:23,120 --> 00:33:26,440 Speaker 8: they're saying gas is really a big business. It draws memberships, 630 00:33:26,480 --> 00:33:28,160 Speaker 8: you know, it's part of the reason why I get 631 00:33:28,160 --> 00:33:30,280 Speaker 8: the membership too, so you can get the cheaper gas. 632 00:33:30,320 --> 00:33:31,320 Speaker 4: Do you get your gas set? 633 00:33:31,360 --> 00:33:33,320 Speaker 8: I do every time I go, I wait in the 634 00:33:33,400 --> 00:33:34,160 Speaker 8: long line. 635 00:33:34,200 --> 00:33:35,480 Speaker 2: And how much cheap there? 636 00:33:36,200 --> 00:33:40,160 Speaker 8: It could be probably about ten cents or so. Yeah, yeah, yeah, 637 00:33:40,560 --> 00:33:41,800 Speaker 8: it's a big it's a big difference. 638 00:33:41,800 --> 00:33:48,320 Speaker 2: And a good savings doing personal I get in the 639 00:33:48,440 --> 00:33:51,280 Speaker 2: voice exactly. Can you charm us with one more? Lie? 640 00:33:51,520 --> 00:33:51,720 Speaker 5: Yeah? 641 00:33:51,840 --> 00:33:52,160 Speaker 2: Okay. 642 00:33:52,760 --> 00:33:55,400 Speaker 8: The latest Nielsen data it shows a shift in how 643 00:33:55,440 --> 00:33:58,200 Speaker 8: people watch TV. This is really interesting. So in May 644 00:33:58,280 --> 00:34:02,080 Speaker 8: more Americans watch TV on st than on cable and 645 00:34:02,320 --> 00:34:06,240 Speaker 8: network television combined, the first time it's happened for a 646 00:34:06,280 --> 00:34:09,600 Speaker 8: full month in a row. So Nielsen began comparing these 647 00:34:09,600 --> 00:34:12,080 Speaker 8: two right since twenty twenty one. Younger viewers always the 648 00:34:12,160 --> 00:34:15,440 Speaker 8: firus to jump in. But here's the interesting point. Boomers 649 00:34:15,840 --> 00:34:18,799 Speaker 8: are the big part of it. They're streaming more those 650 00:34:18,840 --> 00:34:24,160 Speaker 8: over sixty five, particularly platforms that are free, for example YouTube. 651 00:34:24,200 --> 00:34:27,600 Speaker 8: They are the fastest growing age group watching YouTube off 652 00:34:27,640 --> 00:34:30,040 Speaker 8: of a TV set. Those are the boomers. They like 653 00:34:30,160 --> 00:34:33,680 Speaker 8: other free streaming services like two b Roku, Pluto like. 654 00:34:33,680 --> 00:34:36,080 Speaker 8: Those are some other ones, but the boomers. Big thank 655 00:34:36,160 --> 00:34:38,840 Speaker 8: you to them for kind of helping boosting the streaming numbers. 656 00:34:38,920 --> 00:34:41,080 Speaker 2: Lisa too, Thank you so much for the newspaper. It's 657 00:34:41,160 --> 00:34:43,040 Speaker 2: very informative. There's aday we should do it twice to 658 00:34:43,040 --> 00:34:43,600 Speaker 2: show you think. 659 00:34:43,800 --> 00:34:51,000 Speaker 1: Yes, Lisa, No, this is the Bloomberg Surveillance podcast, available 660 00:34:51,040 --> 00:34:54,719 Speaker 1: on Apple, Spotify and anywhere else you get your podcasts. 661 00:34:55,239 --> 00:34:58,279 Speaker 1: Listen live each weekday, seven to ten am Easter and 662 00:34:58,600 --> 00:35:02,560 Speaker 1: on Bloomberg dot Com, the iHeartRadio app, tune In, and 663 00:35:02,640 --> 00:35:05,959 Speaker 1: the Bloomberg Business app. You can also watch us live 664 00:35:06,080 --> 00:35:09,800 Speaker 1: every weekday on YouTube and always on the Bloomberg Terminal