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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Applecarplay and Android Auto with the Bloomberg Business App.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: M and A Trade Today, M and A Monday.

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Speaker 3: We haven't had too many deals this year, but we

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Speaker 3: had one in the finance business, Rocket Mortgage to buy

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Speaker 3: mortgage firm, mister Cooper, and a nine point four billion

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Speaker 3: dollar deal all stock deal again. The first thing, you

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Speaker 3: know me, what I do is I go to m A,

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Speaker 3: go and see who's getting paid here Jp Morgan advising

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Speaker 3: the acquirer. Here at Rocket and City advising the target

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Speaker 3: mister Cooper. So everybody's getting paid there. I worked at

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Speaker 3: both of those firms, so both of those folks getting paid.

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Speaker 3: All right, let's talk about what's going on here. Paige

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Speaker 3: Smith joins his consumer financial reporter for Bloomberg News. Paige,

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Speaker 3: talk to us about this deal. Mortgage, I've Rocket More,

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Speaker 3: I've heard of it, I've never heard of mister Cooper.

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Speaker 2: Who are they?

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Speaker 4: So, mister thanks for having me. Mister Cooper. Is more

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Speaker 4: is best known, I would say, in the mortgage servicing

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Speaker 4: side of things. So it's sort of after the fact,

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Speaker 4: you've got your mortgage, but who are you actually interacting with,

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Speaker 4: you know, gears down the line, it's actually going to

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Speaker 4: be mister Cooper. But this is a big deal for

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Speaker 4: Rocket because they've kind of they've been trying to position

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Speaker 4: themselves as sort of a one stop shop for consumers

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Speaker 4: finance offerings, So think credit cards in addition to your

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Speaker 4: mortgage and you know, now theoretically your mortgage servicing rights.

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Speaker 4: So it's a pretty big deal for this company based

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Speaker 4: in Detroit. Dan Gilbert a pretty prominent person in the

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Speaker 4: finance yep, pretty big in sports as well. But nine

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Speaker 4: point four billion dollars, it's a big deal for these folks.

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Speaker 5: And earlier this month we have Rocket also striking a

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Speaker 5: deal to acquire redfin, which is a real estate brokerage.

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Speaker 5: How will that build into this one or if they're

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Speaker 5: even connected.

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Speaker 4: At all, certainly it's it is basically sort of from

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Speaker 4: a sort of a nose to toe, if you will,

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Speaker 4: of the home buying experience, everything will sort of be

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Speaker 4: under this Rocket umbrella. It you know, Redfinn as you

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Speaker 4: as I think a lot of folks will know quite

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Speaker 4: well is this platform for buying and selling homes, and

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Speaker 4: it would be sort of a starting point for the

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Speaker 4: home buying journey. Rocket is well known for originating, getting

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Speaker 4: or creating mortgages, and now mister Cooper is well known

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Speaker 4: for sort of the servicing of mortgages. So it's it

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Speaker 4: is kind of from start to finish up the home

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Speaker 4: buying process. Theoretically, if they.

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Speaker 2: Got a lot of debt on their boundary.

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Speaker 3: Because I being a former banker, I don't look at

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Speaker 3: stock market values. I look at enterprise value to include

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Speaker 3: the debt. It's eighteen point five billion dollars because that's

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Speaker 3: what you get paid on. You get paid on enterprise A.

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Speaker 3: So that is a big, big number there. Talk to

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Speaker 3: us about the mortgage business. I mean, is it doesn't

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Speaker 3: seem like there's a lot of deals happening in the

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Speaker 3: in the business.

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Speaker 4: Well, I mean, I think we can look at interest rates.

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Speaker 4: It's certainly been a tough time for home buyers and sellers,

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Speaker 4: and that also weighs on these home on these home lenders.

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Speaker 4: It's a tough time for folks who kind of have

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Speaker 4: put their eggs all in one basket, which is the

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Speaker 4: home lending business. But that's kind of what Rocket has

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Speaker 4: been aiming to do, is to really branch out and

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Speaker 4: diversify their business so they're not so interest rate reliant

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Speaker 4: or exposed rather which they have been in the past,

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Speaker 4: and frankly that's showed up in their earnings over the

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Speaker 4: past couple of years. So I chatted with Ceover and

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Speaker 4: Krishna over the summer. Actually we did kind of a

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Speaker 4: deeper dive into Rocket and the company, and one thing

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Speaker 4: that he told me then was that artificial intelligence is

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Speaker 4: actually a big bet that they're making to really try

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Speaker 4: to boost the business and make that home buying process

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Speaker 4: truly as smooth as possible for the customers to kind

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Speaker 4: of amp up their offerings, and we'll see how it

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Speaker 4: works out with for them in the end. But so far,

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Speaker 4: numbers look pretty good.

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Speaker 5: What was this deal expected? Were you hearing chatter before?

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Speaker 5: Did its completely shock you?

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Speaker 4: I was not hearing chatter before, and it seems like

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Speaker 4: the market is responding in kind of an interesting way.

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Speaker 4: But we're going to continue to follow the story and

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Speaker 4: see how this kind of fits into the broader Rocket story.

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Speaker 2: Who do they compete against?

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Speaker 3: Do they compete against the banks that make the loans,

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Speaker 3: or the banks that make the loans usually just syndicate

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Speaker 3: them away. Right.

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Speaker 4: Well, I kind of take a different take on that

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Speaker 4: since I covered consumer and finance kind of broadly. I

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Speaker 4: think of folks who are kind of trying to be

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Speaker 4: that one one stop shop for consumer the consumer finance experience.

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Speaker 4: So for me, I think of you know, so FI

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Speaker 4: technologies for example. Yes, that is like a they have

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Speaker 4: a lot of lending opportunities for consumers, but they do

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Speaker 4: a heck of a lot of other business as well.

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Speaker 4: Robinhood even coming at it from the investing side of

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Speaker 4: things now offering banking products for folks. That's kind of

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Speaker 4: how I think about it in terms of competitors. But

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Speaker 4: that's just from a fintech consumer finance perspective. When it

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Speaker 4: comes to home lenders, you know, other big folks in

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Speaker 4: the space, the space. I was just looking at some

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Speaker 4: data by Inside Mortgage Finance that placed United Wholesale Mortgagees

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Speaker 4: number one, Pennymac is number two, and Rocket as number three.

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Speaker 3: Penny Mac is what I use any that rings a bell, Okay,

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Speaker 3: Dan Gilbert, Just for what it's worth, Kids on the

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Speaker 3: rich top list of Bloomberg all the wealthy people.

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Speaker 2: He comes in at number sixty two. That's not bad.

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Speaker 3: Net worth of twenty eight point seven billion dollars up

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Speaker 3: two point six billion year to date.

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Speaker 4: Yeah, he's a force in Detroit. I would say some

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Speaker 4: of our colleagues out of the Detroit Bureau did a

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Speaker 4: great story on him last year. If you're interested in

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Speaker 4: the terminal, David Welch shout out, all.

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Speaker 2: Right, Page, thank you so much, appreciate it.

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Speaker 3: Page Smith, consumer financi reporter of Bloomberg News, joining us

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Speaker 3: in our studio here talking about Rocket mortgage buying mortgage

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Speaker 3: firm mister Cooper nine point four billion dollar deal, so

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Speaker 3: make more consolidation in that processing business of the mortgage business.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Coarcklay and Android

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Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 3: As we're talking about all morning, Gold hitting another high today,

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Speaker 3: up another thirty six dollars. That's one point one percent,

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Speaker 3: three and twenty. I don't know, mbeed, Mike mcloone's got

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Speaker 3: some thoughts here. Mike McGlone's Bloomberg Intelligence senior commodity strategist.

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Speaker 3: He's down there in Miami Beach, of course he is, Mike. Now,

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Speaker 3: it just seems kind of silly here. I mean, just

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Speaker 3: every day we're up one percent. It can't just be

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Speaker 3: the Chinese banks and Chinese.

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Speaker 2: Consumers haul on, you know, hoarding all this stuff. What's

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Speaker 2: going on out there now?

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Speaker 6: I think we have gold trading basically as a put

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Speaker 6: with the S and B five hundred, but it's almost

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Speaker 6: one to one five hundreds, down about a percent today,

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Speaker 6: and gold's up about a one percent today. So the

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Speaker 6: bull is getting food, and the bull does need food.

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Speaker 6: Gold is stretched above three thousand dollars and ounce. I

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Speaker 6: think that's now a support level, but it's.

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Speaker 7: Doing what it should do in an environment.

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Speaker 6: We have a very extended US stock market going back downward.

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Speaker 6: At the same time, it's taking the dollar with it,

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Speaker 6: which has been usually odd. We kind of risk off

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Speaker 6: the dollars going down. It's because the stock the dollar's

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Speaker 6: so expensive too. So still very bullish gold, but I

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Speaker 6: think you have to remember what it's doing now. It's

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Speaker 6: what's our key thing is we've had four years of

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Speaker 6: outflows and ETFs. Now they're starting to turn inflows. At

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Speaker 6: the same time we've seen bitcoin peaking, so it looks

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Speaker 6: like it's big pictures reversion just getting started. I'm still

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Speaker 6: bullish gold, but it's somewhat dependent on that stock market

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Speaker 6: going down.

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Speaker 5: At these levels, it is hard to ignore gold ETFs, Mike.

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Speaker 5: I mean, we've seen February in March, both months they

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Speaker 5: took in twelve billion. That's the most since at least

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Speaker 5: five years. So investors are really plowing into that. But

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Speaker 5: recent buyers are also buying bars, coins and ETF so

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Speaker 5: I think it's maybe the multiple avenues that they can

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Speaker 5: express their views on goal.

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Speaker 7: Yeah.

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Speaker 6: So I think what you're seeing is we see we

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Speaker 6: saw central banks are still buying, but they've been really

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Speaker 6: big buyers the last years. And at the same time,

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Speaker 6: with the stock market and a tear and high interest rates,

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Speaker 6: ETF investors, most notably in the US and Western country,

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Speaker 6: we're just selling say sorry, I don't need the rock.

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Speaker 6: But now they're starting to realize the rock is really outperforming.

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Speaker 6: It's almost four years now, one two, three, four years

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Speaker 6: now it's beating the stock market and performance is starting

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Speaker 6: to win.

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Speaker 7: It's also seeing that what they were told about digital gold.

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Speaker 6: Bitcoin it was better than gold, is finding out this

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Speaker 6: bitcoin's down about thirty percent with the S and B

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Speaker 6: five correcting about ten percent.

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Speaker 7: It's proving its leverage beta.

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Speaker 6: At the same time, gold's up while the stock market's

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Speaker 6: going down. So they're seeing that diversication and shift over.

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Speaker 7: The question is what stops it?

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Speaker 6: And if you look at people like Anna Wong and

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Speaker 6: Gena Martin Adams, I still think the US stock market

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Speaker 6: can go lower with US GDP and US economic growth,

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Speaker 6: and that's.

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Speaker 7: Very bullish for gold long bonds and bad for the

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Speaker 7: stock market.

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Speaker 3: So again, there's no pe ratio to look at here, Mike,

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Speaker 3: for an investor to say, oh boy, this is historically

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Speaker 3: expensive here. You know, we need to get get out

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Speaker 3: of a certain commodity. How do you kind of talk

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Speaker 3: to clients about I guess just relative value.

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Speaker 6: Well, one of my favorite ways look at gold palls

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Speaker 6: the away what I published this morning. You take the

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Speaker 6: price of gold announces divided by the S and P

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Speaker 6: five hundred and it's just bumping up.

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Speaker 7: Above zero point five, meaning you need.

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Speaker 6: Two S and B five rs for one gold, and

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Speaker 6: the last key times it did that was nineteen seventy

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Speaker 6: two on the way up big rally.

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Speaker 7: Remember that one. I was very young in.

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Speaker 6: Two thousand and seven on the way up, and it's

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Speaker 6: been now it's starting to break up higher. At the

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Speaker 6: same time, the stock market's dropping from two times market

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Speaker 6: caped to GDP. I mean that hasn't happened in US

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Speaker 6: since the nineteen thirties. It's happened in Japan and nineties.

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Speaker 6: It's happened in China in just.

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Speaker 7: Few years ago.

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Speaker 6: So that crocodile crocodile joe patterns just starting.

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Speaker 7: To narrow, and I'm worried this it's going to keep narrowing.

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Speaker 6: That means gold out performing most assets as a stock

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Speaker 6: market just reverts to more normal levels.

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Speaker 5: I'm going to resist bringing in bitcoin here since they're

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Speaker 5: also right bitcoin and I know you write bitcoin two.

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Speaker 5: But let's talk about can copper beat gold in a

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Speaker 5: year of unprecedented austerity and tires in China increasingly relying

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Speaker 5: on stimulus.

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Speaker 6: Well, I love the question because you know my answer

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Speaker 6: is the questions leading as if I thought you're bringing

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Speaker 6: im Glad you brought that up to my outlook for

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Speaker 6: this month, I think copper's more likely to go to four,

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Speaker 6: partly because I'm an next trader.

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Speaker 7: I used to have have here. I know I probably

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Speaker 7: would have been stopped out trying to short it. But

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Speaker 7: now last week it made a new high.

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Speaker 6: US copper price peaked at five dollars and thirty seven,

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Speaker 6: down five dollars and thirty seven cents a pound. Last

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Speaker 6: year's high was five twenty and then it dropped the four.

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Speaker 6: But the reason it went up is for odd reasons. Okay,

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Speaker 6: it's expecting tariffs. We haven't had the tariffs and it's

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Speaker 6: fully priced them in. So what copper usually does, it

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Speaker 6: goes down because it goes up. And I think if

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Speaker 6: we see further weakness in the US stock mark, I

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Speaker 6: think copper's much more likely dropped towards four. It's very

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Speaker 6: unlikely to get to six, and that's what normally happens.

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Speaker 6: If it continues higher from here, it's very discombobulating and

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Speaker 6: it's really is counter to one of the major some

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Speaker 6: of the major goals of President Trump, that's on showing productivity,

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Speaker 6: on showing markets and production and lower inflation and lower yields.

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Speaker 3: Hey, Mike, you're from the farm belt. How's the US

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Speaker 3: farmer doing these days?

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Speaker 6: They're having a rough time, most notably because of lower prices.

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Speaker 6: The key thing I learned from farmers when I go

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Speaker 6: out there, they all dagg out look at it. I'll

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Speaker 6: be out there next month is the quote from Mark

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Speaker 6: Twain that they don't make land anymore.

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Speaker 7: I should buy some. And the quote is, well they

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Speaker 7: are in Brazil. Massive supply of soybeans out of Brazil.

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Speaker 7: That's the key thing.

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Speaker 6: It's a reaction to the big pumping prices, technology, bringing

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Speaker 6: them on better infrastructure. Brazil now exports double the soybeans

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Speaker 6: the US does. US has been about the same for

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Speaker 6: ten years. Ten years ago they exported a lot less.

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Speaker 6: So that supplies being met, prices are heading lower. You

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Speaker 6: basically need a US drought for US grain prices to

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Speaker 6: go up this year.

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Speaker 3: All right, tough one there. Mike mcloughan, thanks so much

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Speaker 3: for joining us. I always appreciate getting some time from you.

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Speaker 3: We can talk about anything, for metals, the precious to

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Speaker 3: the base metals, to the softs and oil and all

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Speaker 3: that kind of stuff.

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Speaker 2: So Mike covers it all.

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Speaker 3: Mike mcglon's and your commodity strategies for Bloomberg Intelligence.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us Live

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Speaker 1: weekdays at ten am Eastern on Applecarckley and Android Auto

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Speaker 3: All right, we got them, Sean Donn and he's down

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Speaker 3: in d C. He's joined us right now, senior economics writer. Sean,

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Speaker 3: you're in DC. You have to have some scoop for us, man.

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Speaker 3: What's going to happen? What's the President going to do

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Speaker 3: on Wednesday with these TERFs?

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Speaker 8: Well, look, the scoop this week is less about what

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Speaker 8: we're going to get on Wednesday, and I think really

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Speaker 8: thinking about the direction and I think that's what the

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Speaker 8: markets have been thinking about more and more in the

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Speaker 8: last couple of weeks. And the details of exactly what

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Speaker 8: we're going to get on Wednesday when the President steps

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Speaker 8: up to the microphone and announces these reciprocal tariffs and

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Speaker 8: proclaims liberation Day for the US economy are still being

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Speaker 8: worked out. And we heard that over the weekend. We

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Speaker 8: heard Kevin Hassett, the head of the National Economic Council,

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Speaker 8: saying he didn't know he didn't have any forward guidance

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Speaker 8: to offer as to what was coming. He just said

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Speaker 8: he trusts the president to decide to do the right thing.

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Speaker 8: Now what that right thing is, we don't know. But look,

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Speaker 8: the reality is the direction is a kind of known

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Speaker 8: here despite all this uncertainty, and that is that Donald

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Speaker 8: Trump is going to impose more tariffs, and then after

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Speaker 8: that there's going to come some more tariffs. And really

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Speaker 8: we are seeing the erection of a tariff wall around

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Speaker 8: the US economy, and we just don't know yet exactly

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Speaker 8: how high that wall is, but we are seeing a

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Speaker 8: real structural change in economic policy. And that is what

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Speaker 8: Donald Trump has been promising, not just during the last

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Speaker 8: year's campaign, but going back to twenty fifteen. And here

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Speaker 8: we are this week, we're going to see his biggest

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Speaker 8: attempt at that so far.

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Speaker 5: I was reading about this over the weekend, and we

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Speaker 5: have some reporting that Trump prefers a quote big and

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Speaker 5: simple tariff plan, suggesting no expectations or expectations could be

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Speaker 5: hard to come by. What does that mean for everyone.

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Speaker 8: Well, it means that Donald Trump likes big, round numbers.

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Speaker 8: And we've seen that going back to his first term

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Speaker 8: when he was urging his aids to scale up tariffs

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Speaker 8: rather than tone down tariffs when he was applying him

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Speaker 8: on Chinese goods. And I think we can expect the

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Speaker 8: same thing to happen this time around. Just over the

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Speaker 8: weekend we saw this again. When you know, previously Scott Essen,

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Speaker 8: the treasur the Treasury Secretary, had talked about a dirty fifteen,

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Speaker 8: signating that perhaps they were going to limit the tariffs

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Speaker 8: to the fifteen worst offenders when it came to the

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Speaker 8: US trade deficit and Donald Trump last night a board

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Speaker 8: Air Force one came back and said, no, it's going

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Speaker 8: to apply to all countries. So he wants something simple,

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Speaker 8: He wants something that he can sell to his but

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Speaker 8: he also wants something that can be transformational in his

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Speaker 8: mind for the US economy. He sees this as a

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Speaker 8: chance to put his stamp on US economic history and

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Speaker 8: in some ways repair the bad name that tariffs have

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Speaker 8: had for decades and decades.

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Speaker 3: Sean, what do we do about retaliation from some of

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Speaker 3: our big, biggest trading partners these days, Well.

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Speaker 8: We know it's going to come. That's what happens. Where

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Speaker 8: the Canadians have talked about it, the European Union have

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Speaker 8: talked about it. We've already seen retaliation from China, you know,

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Speaker 8: and that's where a lot of the economic damage will

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Speaker 8: come as well. Of course, you can model the direct

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Speaker 8: impact of reciprocal tariffs, and our folks at Bloomberg Economics

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Speaker 8: have modeled what they call a maximalist scenario, which would

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Speaker 8: take four percent off US GDP over the next two

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Speaker 8: to three years. But that doesn't account for retaliation. It

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Speaker 8: doesn't account for what happens to business investment when you

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Speaker 8: have global trade wars that kind of batter everyone and

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Speaker 8: throw a huge amount of uncertainty into the mix.

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Speaker 5: Come Wednesday, what is the one thing or two things

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Speaker 5: that you're going to rush to look at, or the

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Speaker 5: thing that has been the most ambiguous, and now you're

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Speaker 5: looking for certainty if we get certainty on Wednesday, So.

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Speaker 8: The thing I'm really looking for is what comes next. Right,

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Speaker 8: we're expecting tariffs to be announced that will take effect

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Speaker 8: April third. The President has already said that auto tariffs

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Speaker 8: will go into effect April third. So I'll look at

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Speaker 8: what other tariffs will go into immedia effect, but also

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Speaker 8: the sorts of investigations that he is going to launch.

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Speaker 8: He has talked about other sectoral tariffs on everything from

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Speaker 8: semiconductors to copper. All of those are probably going to

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Speaker 8: involve investigations that are going to be launched under certain

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Speaker 8: trade authorities. And you know that's the tariffs that will

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Speaker 8: come after what we get on Wednesday.

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Speaker 3: All right, Sean, thank you so much, really appreciate. I'm

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Speaker 3: sure we're going to be talking to you quite often

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Speaker 3: in the coming day. Seawan Donnam. He's the senior economics

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Speaker 3: writer for Bloomberg News. He's based down there in Washington, DC.

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