1 00:00:00,240 --> 00:00:02,440 Speaker 1: This is Bloomberg Wall Street Week. 2 00:00:02,480 --> 00:00:04,400 Speaker 2: And we may not have an overall recession, We're having 3 00:00:04,400 --> 00:00:06,720 Speaker 2: a rolling recession. Econy of roll looks pretty strongly. It 4 00:00:06,760 --> 00:00:07,680 Speaker 2: is when it comes to jobs. 5 00:00:07,720 --> 00:00:09,840 Speaker 1: The financial stories that shape our world. 6 00:00:09,960 --> 00:00:13,640 Speaker 2: Three major regional bank failures send shockwaves through the banking system. 7 00:00:13,680 --> 00:00:15,480 Speaker 2: We're all trying to figure out what to make of 8 00:00:15,600 --> 00:00:17,000 Speaker 2: generative AI. 9 00:00:16,920 --> 00:00:19,280 Speaker 3: Through the eyes of the most influential voices. 10 00:00:19,440 --> 00:00:22,400 Speaker 2: Welcome down, Doctor Paul Krugman, Ryan moynihan, a Bank of America, 11 00:00:22,560 --> 00:00:25,279 Speaker 2: deebro Lair of the Paulson Institute, well Then Hubbard of 12 00:00:25,280 --> 00:00:26,280 Speaker 2: the Columbia Business School. 13 00:00:26,280 --> 00:00:30,120 Speaker 3: Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 14 00:00:30,280 --> 00:00:34,040 Speaker 2: A war continues, a strike moves toward conclusion, and the 15 00:00:34,159 --> 00:00:37,680 Speaker 2: US economy just keeps on keeping on. This is Bloomberg 16 00:00:37,720 --> 00:00:41,360 Speaker 2: Wall Street Week. I'm David Weston this week. Roger Altman 17 00:00:41,440 --> 00:00:44,080 Speaker 2: of Evercore on the financial world coming to terms with 18 00:00:44,200 --> 00:00:46,240 Speaker 2: a world of higher bond yield. 19 00:00:46,200 --> 00:00:49,720 Speaker 4: With the very long, roughly fifteen year period of ultra 20 00:00:49,880 --> 00:00:51,400 Speaker 4: low interest rates is over. 21 00:00:51,680 --> 00:00:54,360 Speaker 2: And Tom Knight's former US investor in Israel, on what 22 00:00:54,440 --> 00:00:57,440 Speaker 2: the Israel war with Hamas means for the rest of us. 23 00:00:57,560 --> 00:00:59,720 Speaker 5: We're not at war with the policity people quite the 24 00:00:59,760 --> 00:01:07,520 Speaker 5: offer said, We're at war with Hamas. 25 00:01:14,680 --> 00:01:17,000 Speaker 2: Global Wall Street spent the week dealing with a new 26 00:01:17,120 --> 00:01:20,039 Speaker 2: version of the issues it faced last week, starting with 27 00:01:20,200 --> 00:01:24,080 Speaker 2: Israeli military action against Hamas in Gaza, as diplomatic efforts 28 00:01:24,160 --> 00:01:26,840 Speaker 2: continued to keep the war from spreading in the region. 29 00:01:27,520 --> 00:01:30,360 Speaker 1: Israel has it right, and I would add a responsibility 30 00:01:30,880 --> 00:01:33,319 Speaker 1: to respond to the slaughter of their people, and we 31 00:01:33,360 --> 00:01:36,200 Speaker 1: will ensure Israel has what a need to defend itself 32 00:01:36,200 --> 00:01:37,280 Speaker 1: against these terrorists. 33 00:01:37,319 --> 00:01:41,080 Speaker 2: And humanitarian groups struggled to get food, medicine, and fuel 34 00:01:41,160 --> 00:01:42,880 Speaker 2: to those in desperate need. 35 00:01:43,440 --> 00:01:46,880 Speaker 1: We've seen this picture before and it doesn't look very good, 36 00:01:47,000 --> 00:01:49,960 Speaker 1: particularly when you have so many civilians who are caught 37 00:01:50,000 --> 00:01:50,480 Speaker 1: in the middle. 38 00:01:50,640 --> 00:01:53,240 Speaker 2: Back in the United States, the UAW strike brought a 39 00:01:53,320 --> 00:01:54,960 Speaker 2: tentative agreement with four. 40 00:01:55,200 --> 00:01:56,920 Speaker 1: We reached a historic agreement. 41 00:01:57,280 --> 00:02:01,560 Speaker 6: As you know, in our union, the members are the 42 00:02:01,640 --> 00:02:02,520 Speaker 6: highest authority. 43 00:02:02,800 --> 00:02:05,040 Speaker 2: And big tech earnings came in mixed. 44 00:02:05,400 --> 00:02:07,840 Speaker 7: I think you know alls that and done Cloud is 45 00:02:07,880 --> 00:02:10,920 Speaker 7: the major story here, But at the end of the day, 46 00:02:10,960 --> 00:02:11,799 Speaker 7: it really is good. 47 00:02:11,720 --> 00:02:13,639 Speaker 8: Numbers a front all their businesses. 48 00:02:13,880 --> 00:02:17,400 Speaker 9: Alphabet, the parent company of Google, pretty much only missed 49 00:02:17,639 --> 00:02:19,920 Speaker 9: in its Cloud division, sales of eight point four to 50 00:02:19,919 --> 00:02:23,000 Speaker 9: one billion below street estimates of eight point six billion, 51 00:02:23,400 --> 00:02:26,600 Speaker 9: also missing on the bottom line in that unit as well. 52 00:02:26,840 --> 00:02:30,080 Speaker 2: Morgan Stanley named its new CEO, Ted Pick, taking over 53 00:02:30,160 --> 00:02:32,160 Speaker 2: from James Gorman the first of the year. 54 00:02:32,440 --> 00:02:34,720 Speaker 10: That next cycle is going to be investment banking led, 55 00:02:35,040 --> 00:02:36,280 Speaker 10: and it means that inequities. 56 00:02:36,280 --> 00:02:38,280 Speaker 1: You want to be one or two every quarter as 57 00:02:38,280 --> 00:02:40,840 Speaker 1: we have in the last decade. We have fixed income business, 58 00:02:40,919 --> 00:02:42,919 Speaker 1: we were structured. It's now a top. 59 00:02:42,720 --> 00:02:45,079 Speaker 5: Five business, and investment banking is going to lead the 60 00:02:45,120 --> 00:02:45,639 Speaker 5: next cycle. 61 00:02:45,919 --> 00:02:48,960 Speaker 2: The House of Representatives, after three long weeks, finally came 62 00:02:49,040 --> 00:02:49,919 Speaker 2: up with a speaker. 63 00:02:50,120 --> 00:02:52,600 Speaker 10: The challenge before us is great, but the time for 64 00:02:52,720 --> 00:02:53,680 Speaker 10: action is now. 65 00:02:53,919 --> 00:02:56,760 Speaker 2: But through it all, the US economy continued to surprise 66 00:02:56,880 --> 00:03:00,600 Speaker 2: in a good way, with GDP growth numbers way trend, 67 00:03:00,919 --> 00:03:04,240 Speaker 2: with the third quarter growing by four point nine percent. 68 00:03:04,680 --> 00:03:07,680 Speaker 6: It's a good strong number, and it chose an economy 69 00:03:07,800 --> 00:03:12,480 Speaker 6: sixteen very well. Let's remember it is just one quarter's number. 70 00:03:14,120 --> 00:03:16,520 Speaker 2: But as much as the economy soared this week, it 71 00:03:16,560 --> 00:03:18,600 Speaker 2: did not bring the markets along with it. The S 72 00:03:18,639 --> 00:03:20,320 Speaker 2: and P five hundred was down over two and a 73 00:03:20,360 --> 00:03:22,959 Speaker 2: half percent for the week, falling to forty one seventeen. 74 00:03:23,000 --> 00:03:25,640 Speaker 2: That is well below the median year end number projected 75 00:03:25,680 --> 00:03:27,840 Speaker 2: by our Bloomberg Elves, which is up at forty four 76 00:03:27,840 --> 00:03:30,760 Speaker 2: to thirty five. The NASAC was down just over two 77 00:03:30,840 --> 00:03:33,520 Speaker 2: point six percent, and this week we can't blame the 78 00:03:33,560 --> 00:03:36,000 Speaker 2: cell off in stocks on a similar move away from bonds, 79 00:03:36,200 --> 00:03:39,080 Speaker 2: as the yield actually gave up nearly fifteen basis points 80 00:03:39,120 --> 00:03:41,200 Speaker 2: on the week. Here to t help us sort it 81 00:03:41,240 --> 00:03:43,720 Speaker 2: all out are Chris Harvey, Wells Fargo head of Equity 82 00:03:43,760 --> 00:03:48,320 Speaker 2: Strategy and Kristin Bitterley City Global Wealth, head of Investment Solutions. 83 00:03:48,360 --> 00:03:51,920 Speaker 2: By the way, congratulates on your big promotion titled yeah 84 00:03:51,920 --> 00:03:53,760 Speaker 2: good for years, so much good for you. So Chris, 85 00:03:53,880 --> 00:03:55,200 Speaker 2: let me start with you, what did we see in 86 00:03:55,200 --> 00:03:56,480 Speaker 2: the markets this week? I mean, there were a lot 87 00:03:56,480 --> 00:03:58,840 Speaker 2: of factors of play. We had the war in Israel, 88 00:03:58,880 --> 00:04:01,280 Speaker 2: we had the GDP numbers. What do you think really 89 00:04:01,440 --> 00:04:02,560 Speaker 2: is driving the market right now? 90 00:04:02,600 --> 00:04:05,840 Speaker 7: So even though rates went down, it's still concern we 91 00:04:06,000 --> 00:04:08,640 Speaker 7: don't know where the ceiling is on interest rates and 92 00:04:08,680 --> 00:04:10,960 Speaker 7: so as a result, it's really hard to have an 93 00:04:11,000 --> 00:04:11,720 Speaker 7: equity floor. 94 00:04:12,240 --> 00:04:13,040 Speaker 11: You combine that. 95 00:04:13,080 --> 00:04:16,520 Speaker 7: With geopolitical, which is just a complete Nutter wild card. 96 00:04:17,000 --> 00:04:18,600 Speaker 11: And then the reaction to earnings. 97 00:04:18,839 --> 00:04:19,240 Speaker 8: We had. 98 00:04:19,240 --> 00:04:22,240 Speaker 7: The earnings overall were okay, you had some good, you 99 00:04:22,279 --> 00:04:25,360 Speaker 7: had some bad, but the overall guidance the market really 100 00:04:25,360 --> 00:04:25,719 Speaker 7: didn't like. 101 00:04:25,800 --> 00:04:27,599 Speaker 11: And you throw that all together and it was a 102 00:04:27,640 --> 00:04:28,240 Speaker 11: difficult week. 103 00:04:28,320 --> 00:04:30,120 Speaker 2: We've got the FOMC next week. Is that going to 104 00:04:30,160 --> 00:04:31,680 Speaker 2: help us? Because most people think we know what it's 105 00:04:31,680 --> 00:04:32,920 Speaker 2: going to do, which is nothing. 106 00:04:33,480 --> 00:04:36,120 Speaker 7: It may help us. I have my fingers crossed. I'm 107 00:04:36,160 --> 00:04:38,520 Speaker 7: hoping it will help us. There's really two things next week. 108 00:04:38,800 --> 00:04:42,360 Speaker 7: It's the Treasury refunding announcement and it's FOMC. 109 00:04:42,920 --> 00:04:43,920 Speaker 11: If the Treasury. 110 00:04:43,560 --> 00:04:47,960 Speaker 7: Announces and they don't need as much paper as people suspect, 111 00:04:48,080 --> 00:04:50,680 Speaker 7: or they come in line with expectations, that's a good thing. 112 00:04:51,120 --> 00:04:54,000 Speaker 7: If the FOMC plays ball and says, okay, we're done, 113 00:04:54,040 --> 00:04:57,760 Speaker 7: we're good here for now, that could stabilize the markets. 114 00:04:57,800 --> 00:04:59,719 Speaker 7: But it's going to take a lot to really stabilize 115 00:04:59,720 --> 00:05:02,240 Speaker 7: the market. It's they're very generate at this point in time. 116 00:05:02,279 --> 00:05:05,480 Speaker 7: And again I don't want to overemphasize geopolitical, but it 117 00:05:05,560 --> 00:05:08,120 Speaker 7: really adds a whole new dimension. 118 00:05:07,680 --> 00:05:09,719 Speaker 2: To things Christian where are you do we have a 119 00:05:09,720 --> 00:05:11,520 Speaker 2: sense of where the market is going, particularly when it 120 00:05:11,560 --> 00:05:12,839 Speaker 2: comes to rates and yields. 121 00:05:13,200 --> 00:05:13,440 Speaker 12: Yeah. 122 00:05:13,440 --> 00:05:17,040 Speaker 13: So I think everyone was hopeful that during this earning 123 00:05:17,040 --> 00:05:19,000 Speaker 13: season we would go back to fundamentals, it would be 124 00:05:19,000 --> 00:05:22,120 Speaker 13: stories about companies, and I think what happened over the 125 00:05:22,160 --> 00:05:26,200 Speaker 13: past couple of weeks, given geopolitics, given the rise in oil, 126 00:05:26,680 --> 00:05:28,640 Speaker 13: and just given the fact that the tenure crossed over 127 00:05:28,720 --> 00:05:32,160 Speaker 13: five percent, it became much more about these macro conditions. 128 00:05:32,200 --> 00:05:34,320 Speaker 13: And when we look at the price action, yes, it's 129 00:05:34,360 --> 00:05:37,480 Speaker 13: given back some of that increase, But when we look 130 00:05:37,480 --> 00:05:39,679 Speaker 13: at the price action on the tenure and the effect 131 00:05:39,680 --> 00:05:43,400 Speaker 13: of tightening that that implies. So we don't expect that 132 00:05:43,400 --> 00:05:46,359 Speaker 13: the Fed's going to raise rates or do anything next week. 133 00:05:46,560 --> 00:05:48,720 Speaker 13: But I think the big question here is, in this 134 00:05:48,880 --> 00:05:52,320 Speaker 13: environment of rates being higher for longer and the market 135 00:05:52,360 --> 00:05:54,840 Speaker 13: doing some of the financial tightening for the FED, what 136 00:05:55,000 --> 00:05:57,640 Speaker 13: is really then the backdrop for corporate profitability and how 137 00:05:57,720 --> 00:05:58,120 Speaker 13: much is it. 138 00:05:58,160 --> 00:05:59,359 Speaker 2: Up to the Fed at this point? I mean, the 139 00:05:59,360 --> 00:06:02,080 Speaker 2: Fed didn't rates that really drove those yields. The yields 140 00:06:02,120 --> 00:06:04,400 Speaker 2: went up on their own, and Chris, you mentioned the 141 00:06:04,440 --> 00:06:06,200 Speaker 2: auction coming up this week. Part of it is the 142 00:06:06,200 --> 00:06:07,080 Speaker 2: supply of treasuries. 143 00:06:07,120 --> 00:06:07,480 Speaker 8: Christmas. 144 00:06:07,520 --> 00:06:09,279 Speaker 13: Part of it is the supply, so you have to 145 00:06:09,279 --> 00:06:11,359 Speaker 13: look at supply, demand and balances when it comes to 146 00:06:11,400 --> 00:06:14,080 Speaker 13: the tenure. So you have the supply, you have the 147 00:06:14,120 --> 00:06:16,560 Speaker 13: increased issuance, and then you have the question around who 148 00:06:16,600 --> 00:06:18,880 Speaker 13: is buying. And I think one of the things that 149 00:06:18,920 --> 00:06:21,960 Speaker 13: we have seen from our investors is, yes, you have 150 00:06:22,000 --> 00:06:24,119 Speaker 13: the attractiveness of the front part of the yield curve, 151 00:06:24,320 --> 00:06:26,440 Speaker 13: but you also have even going out kind of two 152 00:06:26,520 --> 00:06:29,039 Speaker 13: to five years, you have really attractive yields. You have 153 00:06:29,440 --> 00:06:32,359 Speaker 13: corporate investment grade bonds that you know at five years 154 00:06:32,520 --> 00:06:34,480 Speaker 13: five years are yielding around six to six and a 155 00:06:34,520 --> 00:06:38,159 Speaker 13: half percent. So there are really really attractive parts within 156 00:06:38,200 --> 00:06:40,320 Speaker 13: the fixed income market where you don't have to go 157 00:06:40,400 --> 00:06:41,880 Speaker 13: out ten years. So we see a lot of the 158 00:06:41,920 --> 00:06:44,360 Speaker 13: activity still concentrated on that front end. 159 00:06:44,320 --> 00:06:44,760 Speaker 2: Of the curve. 160 00:06:45,240 --> 00:06:47,440 Speaker 7: So let me just play off that because I think 161 00:06:47,520 --> 00:06:48,680 Speaker 7: Kristen hit onto something. 162 00:06:49,000 --> 00:06:50,200 Speaker 11: It's really on a tenure. 163 00:06:50,480 --> 00:06:53,560 Speaker 7: It's not so much about fundamentals, it's about technicals and 164 00:06:53,600 --> 00:06:57,360 Speaker 7: it's about positioning. And the technicals aren't great, especially if 165 00:06:57,400 --> 00:07:01,279 Speaker 7: the Treasury comes out with they need more paper. 166 00:07:01,000 --> 00:07:03,240 Speaker 11: Than people expect. That's going to be a problem. 167 00:07:03,440 --> 00:07:06,520 Speaker 7: The other issue is if you're long further out on 168 00:07:06,560 --> 00:07:09,680 Speaker 7: the curve, right, if you're a long duration buyer, you're 169 00:07:09,720 --> 00:07:12,280 Speaker 7: probably underwater at this point in time. You're trying to 170 00:07:12,320 --> 00:07:15,080 Speaker 7: catch a falling knife. There's lots of disincentives at this 171 00:07:15,080 --> 00:07:17,760 Speaker 7: point in time. And Chris and I were talking earlier, 172 00:07:18,000 --> 00:07:20,520 Speaker 7: who's last who's that buyer of the treasury, who's that 173 00:07:20,600 --> 00:07:23,080 Speaker 7: buyer of long duration assets? And it's really hard to 174 00:07:23,120 --> 00:07:25,440 Speaker 7: find that person at this point in time, and everyone's 175 00:07:25,480 --> 00:07:28,320 Speaker 7: waiting for somebody else to step up, And that's a problem. 176 00:07:28,160 --> 00:07:30,720 Speaker 2: Maybe all long duration. But you can get real return 177 00:07:30,920 --> 00:07:33,040 Speaker 2: on cash or close to cash about to two years 178 00:07:33,120 --> 00:07:35,160 Speaker 2: or so. Like that Does that hurt equity sales because 179 00:07:35,240 --> 00:07:36,720 Speaker 2: by the way, I can get some return by just 180 00:07:36,800 --> 00:07:37,840 Speaker 2: keeping it in money markets. 181 00:07:38,000 --> 00:07:39,720 Speaker 11: I think it hurts all risk product. 182 00:07:39,880 --> 00:07:42,080 Speaker 7: So why go out on the curve when you can 183 00:07:42,160 --> 00:07:44,160 Speaker 7: get a higher yield at the front end of the curve. 184 00:07:44,240 --> 00:07:46,720 Speaker 7: I don't need to take that duration risk. And then 185 00:07:46,760 --> 00:07:49,760 Speaker 7: for equities, hey, I have this stable earnings in a 186 00:07:49,800 --> 00:07:52,560 Speaker 7: period where there's a lot of instability, maybe I'll just 187 00:07:52,600 --> 00:07:54,840 Speaker 7: put a portion of it there. And so yes, to 188 00:07:54,880 --> 00:07:57,120 Speaker 7: a certain degree, it is hurting equities. 189 00:07:56,840 --> 00:07:59,400 Speaker 2: Kristin, what about that duration question, because do I want 190 00:07:59,440 --> 00:08:01,560 Speaker 2: to keep it in case or near cash or at 191 00:08:01,600 --> 00:08:03,280 Speaker 2: some point should I lock in some of those rates 192 00:08:03,320 --> 00:08:05,680 Speaker 2: even on the fixed income because it may shift the 193 00:08:05,720 --> 00:08:06,080 Speaker 2: other way. 194 00:08:06,280 --> 00:08:07,880 Speaker 13: I think it's a balance. So when you look at 195 00:08:07,880 --> 00:08:10,200 Speaker 13: it building an income portfolio, I think if there's one 196 00:08:10,240 --> 00:08:12,520 Speaker 13: bright spot, it is the fact that you can build 197 00:08:12,680 --> 00:08:15,880 Speaker 13: really attractive fixed income portfolios. A portion of that is 198 00:08:15,960 --> 00:08:18,160 Speaker 13: going to be TVL. So the fact that you can 199 00:08:18,160 --> 00:08:20,720 Speaker 13: get really high yields on the very very short end 200 00:08:20,720 --> 00:08:23,160 Speaker 13: of the curve. We are encouraging our investors to take 201 00:08:23,200 --> 00:08:26,240 Speaker 13: advantage of that. But remember you have real reinvestment risks, 202 00:08:26,280 --> 00:08:29,200 Speaker 13: So depending upon what happens from here on out, you 203 00:08:29,240 --> 00:08:30,760 Speaker 13: are going to have that moment in time where that 204 00:08:30,840 --> 00:08:33,200 Speaker 13: yield is not going to be there. So the idea 205 00:08:33,200 --> 00:08:36,440 Speaker 13: that you can get above five percent going out two 206 00:08:36,480 --> 00:08:38,599 Speaker 13: to five years, you don't even have to stretch in 207 00:08:38,679 --> 00:08:41,240 Speaker 13: terms of credit quality. You can get this within investment 208 00:08:41,240 --> 00:08:44,480 Speaker 13: grade corporates, you can stay within government bonds, and you 209 00:08:44,520 --> 00:08:48,560 Speaker 13: can actually have this very diversified portfolio that's providing income 210 00:08:48,640 --> 00:08:51,400 Speaker 13: within mid to high single digits. So your earlier question 211 00:08:51,880 --> 00:08:54,480 Speaker 13: if you're an investor getting mid to high single digits 212 00:08:54,520 --> 00:08:58,400 Speaker 13: without really stretching in credit quality. How attractive are equities 213 00:08:58,440 --> 00:08:59,840 Speaker 13: at these levels? 214 00:09:00,160 --> 00:09:00,760 Speaker 11: And that's the fight. 215 00:09:01,040 --> 00:09:03,720 Speaker 7: Now, there is one thing that's going on, and I'm 216 00:09:03,720 --> 00:09:06,559 Speaker 7: sure Christen has seen this and talked about it, is 217 00:09:06,880 --> 00:09:09,440 Speaker 7: the negative carry. In other words, the Yal curve has 218 00:09:09,480 --> 00:09:12,560 Speaker 7: been incredibly inverted for a long time. If we go 219 00:09:12,640 --> 00:09:14,800 Speaker 7: back to July, it was over one hundred bases points 220 00:09:14,800 --> 00:09:17,680 Speaker 7: of inversion. Now we're only looking at fifteen twenty. That 221 00:09:17,840 --> 00:09:19,960 Speaker 7: was one of the reasons why the duration players weren't 222 00:09:20,000 --> 00:09:22,280 Speaker 7: stepping up is because it didn't make any sense. 223 00:09:22,320 --> 00:09:23,880 Speaker 11: There was a real negative carry there. 224 00:09:24,000 --> 00:09:26,560 Speaker 7: But as that curve goes to zero, it looks like 225 00:09:26,600 --> 00:09:28,760 Speaker 7: it's going to go to zero. Now you can start 226 00:09:28,840 --> 00:09:31,520 Speaker 7: having people move out in the curve without being penalized. 227 00:09:31,800 --> 00:09:33,880 Speaker 7: But we haven't seen that yet, and that's what we're 228 00:09:33,920 --> 00:09:37,840 Speaker 7: looking for, and maybe that will also beside FOMC and 229 00:09:37,880 --> 00:09:39,440 Speaker 7: Treasury help stabilize the bond. 230 00:09:39,559 --> 00:09:41,200 Speaker 2: So help me on that. Understand it, because I've read 231 00:09:41,200 --> 00:09:43,920 Speaker 2: about so called pancake Right, we visually have a flat curve, 232 00:09:43,960 --> 00:09:46,280 Speaker 2: it's not tilted one way or the other. Let's assume 233 00:09:46,280 --> 00:09:48,679 Speaker 2: the moment it goes and stays around a flat curve 234 00:09:48,679 --> 00:09:51,240 Speaker 2: for a while, and how does that change my portfolio building? 235 00:09:51,400 --> 00:09:54,440 Speaker 7: So what it does, it's not. It doesn't penalize you 236 00:09:54,520 --> 00:09:57,000 Speaker 7: for going out on the curve. So when the curve 237 00:09:57,080 --> 00:10:00,280 Speaker 7: is negative, right when it's inverted, you're giving up a 238 00:10:00,280 --> 00:10:01,920 Speaker 7: lot of carrier, giving up a lot of yields. 239 00:10:01,960 --> 00:10:03,679 Speaker 11: So you have to get duration right. 240 00:10:03,720 --> 00:10:05,760 Speaker 7: In other words, you have to get it right when 241 00:10:05,880 --> 00:10:08,959 Speaker 7: interest rates start to fall, otherwise it's going to be 242 00:10:08,960 --> 00:10:12,120 Speaker 7: a very painful process. As the curve flattens out, we 243 00:10:12,200 --> 00:10:13,480 Speaker 7: don't have to play around with that. 244 00:10:13,480 --> 00:10:14,840 Speaker 11: That becomes less of an issue. 245 00:10:14,920 --> 00:10:17,360 Speaker 7: And if you look at the macro, yes, the macro 246 00:10:17,480 --> 00:10:19,679 Speaker 7: right here, right now is a little bit troubling. But 247 00:10:19,720 --> 00:10:22,480 Speaker 7: an inflation has come down. The Fed looks like it's 248 00:10:22,520 --> 00:10:25,840 Speaker 7: going to stop. And if you go back to six 249 00:10:25,920 --> 00:10:29,320 Speaker 7: when the Fed stopped there tightening that four to six 250 00:10:29,360 --> 00:10:33,319 Speaker 7: tightening cycle, real rates drop, nominal race drop once they stopped, 251 00:10:33,600 --> 00:10:38,120 Speaker 7: And so there could be a catalyst here, a small one, 252 00:10:38,200 --> 00:10:40,480 Speaker 7: albeit for duration buyers. 253 00:10:40,480 --> 00:10:41,320 Speaker 11: But we'll see. 254 00:10:41,360 --> 00:10:43,520 Speaker 2: Okay, Thank you so very much to Chris Harvey as 255 00:10:43,559 --> 00:10:49,959 Speaker 2: wells Rogo and Kristin Bitterly of City coming up. Sky 256 00:10:50,120 --> 00:10:53,520 Speaker 2: high federal deficits help drive borrowing costs up. We talk 257 00:10:53,559 --> 00:10:57,520 Speaker 2: with Evercred Roger Altman about how Washington fiscal actions affect 258 00:10:57,520 --> 00:11:00,600 Speaker 2: Wall Street. That's the next time Wall Street Week Bloomberg. 259 00:11:02,400 --> 00:11:06,640 Speaker 3: This is Bloomberg Wall Street Week with David Weston from 260 00:11:06,760 --> 00:11:10,199 Speaker 3: Bloomberg Radio. 261 00:11:13,760 --> 00:11:15,800 Speaker 2: This is Wall Street Week. I'm David Weston. This week 262 00:11:15,840 --> 00:11:18,480 Speaker 2: brought a tentative settlement between the UAW and Ford, with 263 00:11:18,679 --> 00:11:21,560 Speaker 2: reports that GM instillances may not be too far behind, 264 00:11:21,800 --> 00:11:24,760 Speaker 2: but it comes with a price of substantially higher wages. 265 00:11:24,880 --> 00:11:27,440 Speaker 2: So Christen, let me start with you. We do have 266 00:11:27,480 --> 00:11:30,000 Speaker 2: the settlement. We do see labor costs going up. Ups 267 00:11:30,000 --> 00:11:32,920 Speaker 2: reported it. You saw it affected their earnings. Are we 268 00:11:33,000 --> 00:11:35,560 Speaker 2: seeing much margin pressure such so far because of labor 269 00:11:35,559 --> 00:11:36,079 Speaker 2: as far as you can. 270 00:11:36,040 --> 00:11:37,240 Speaker 13: Tell from the earning seats, You know what I would 271 00:11:37,240 --> 00:11:39,199 Speaker 13: say this earning season, I actually think we continue to 272 00:11:39,240 --> 00:11:42,600 Speaker 13: see some resiliency within earnings and there's actually potentially a 273 00:11:42,679 --> 00:11:45,640 Speaker 13: path to seeing positive earnings growth, which has not been 274 00:11:45,640 --> 00:11:48,640 Speaker 13: the case for the past three quarters. I would say though, 275 00:11:48,640 --> 00:11:50,880 Speaker 13: in terms of the market reaction and what we're seeing 276 00:11:50,880 --> 00:11:54,200 Speaker 13: around earnings, it's much more of a macro picture rates 277 00:11:54,200 --> 00:11:56,400 Speaker 13: are still in the driver's seat, But the other part 278 00:11:56,440 --> 00:11:58,480 Speaker 13: that's in the driver's seat is tech. And so you've 279 00:11:58,480 --> 00:12:01,280 Speaker 13: seen some pretty binary react in terms of not only 280 00:12:01,360 --> 00:12:05,280 Speaker 13: the earnings but also forward guidance in terms of their expectations, 281 00:12:05,559 --> 00:12:07,720 Speaker 13: and the market is heavily reacting to that. And if 282 00:12:07,760 --> 00:12:10,440 Speaker 13: you look at volatility around earnings, we are seeing a 283 00:12:10,480 --> 00:12:13,040 Speaker 13: wider spread in terms of some of those movements than 284 00:12:13,080 --> 00:12:15,000 Speaker 13: we have seen in prior earning seasons. 285 00:12:15,040 --> 00:12:17,679 Speaker 2: So, Chris, when I hear tech, I think about magnificent seven, right, 286 00:12:17,720 --> 00:12:19,319 Speaker 2: isn't that we call it these days? That's what we 287 00:12:19,480 --> 00:12:21,400 Speaker 2: are they holding up? Because we saw a little bit 288 00:12:21,400 --> 00:12:24,040 Speaker 2: of shakiness in some of those magnificent seven this week. 289 00:12:24,200 --> 00:12:27,080 Speaker 7: So the answer to that is the stocks aren't holding 290 00:12:27,160 --> 00:12:27,880 Speaker 7: up that well. 291 00:12:28,520 --> 00:12:30,720 Speaker 11: What it is is some good, some bad. 292 00:12:31,000 --> 00:12:35,480 Speaker 7: The underlying fundamentals fine, right, the reaction function. 293 00:12:35,600 --> 00:12:36,280 Speaker 11: Not so fine. 294 00:12:36,280 --> 00:12:39,560 Speaker 7: In some cases that's part of guidance. But here's a 295 00:12:39,600 --> 00:12:43,000 Speaker 7: funny thing. If you're a company, your stock's up one 296 00:12:43,040 --> 00:12:46,600 Speaker 7: hundred percent, you're looking forward, you might want to manage 297 00:12:46,640 --> 00:12:49,760 Speaker 7: expectations bring things down, so your stock goes down five 298 00:12:50,280 --> 00:12:52,880 Speaker 7: ten percent. You're already up one hundred You want to 299 00:12:52,920 --> 00:12:55,720 Speaker 7: load those expectations for next year. You want to set 300 00:12:55,760 --> 00:12:58,360 Speaker 7: things up for next year. And so it's not quite 301 00:12:58,360 --> 00:13:01,719 Speaker 7: clear to me if it's a man of expectations or 302 00:13:01,800 --> 00:13:04,600 Speaker 7: they're really saying something that we're not seeing, because the 303 00:13:04,679 --> 00:13:07,080 Speaker 7: results for some of the companies are actually quite good. 304 00:13:07,200 --> 00:13:08,760 Speaker 2: Well, what are the patterns that you're seeing so far, 305 00:13:08,840 --> 00:13:10,040 Speaker 2: Chris in this earning season. 306 00:13:10,440 --> 00:13:14,080 Speaker 7: So surprisingly, what we're seeing is margins are holding up well, 307 00:13:14,800 --> 00:13:16,120 Speaker 7: we're seeing top line beats. 308 00:13:16,559 --> 00:13:18,320 Speaker 11: But the issue is, or the rub. 309 00:13:18,200 --> 00:13:20,680 Speaker 7: Is, guidance hasn't been as good as it has been 310 00:13:20,679 --> 00:13:23,800 Speaker 7: in the past, and companies are being taken down a 311 00:13:23,880 --> 00:13:24,800 Speaker 7: notch due to that. 312 00:13:25,120 --> 00:13:26,439 Speaker 11: Whether that's because they're. 313 00:13:26,280 --> 00:13:28,760 Speaker 7: Again they're seeing something that we're not seeing, they're being 314 00:13:28,760 --> 00:13:32,920 Speaker 7: more conservative, they're managing expectations unclear, But the underlying fundamentals 315 00:13:33,000 --> 00:13:35,200 Speaker 7: in the here and the now are fine. The last 316 00:13:35,240 --> 00:13:37,840 Speaker 7: thing I'd say is that when we look at earnings 317 00:13:37,840 --> 00:13:41,959 Speaker 7: and we go through transcripts, assuming we go through transcripts 318 00:13:41,960 --> 00:13:43,480 Speaker 7: and we look at what the c suite is saying, 319 00:13:43,800 --> 00:13:46,640 Speaker 7: we are seeing things that tone chains get a little 320 00:13:46,679 --> 00:13:49,600 Speaker 7: bit darker around the consumer, which isn't a surprise, but 321 00:13:49,640 --> 00:13:51,439 Speaker 7: it's something we're watching very closely. 322 00:13:51,120 --> 00:13:53,280 Speaker 2: Which is something you mentioned earlier, Kristen exactly. 323 00:13:53,320 --> 00:13:54,760 Speaker 13: I think the other thing, too is when you look 324 00:13:54,760 --> 00:13:56,760 Speaker 13: at going back to this conversation around Tech and the 325 00:13:56,760 --> 00:14:00,440 Speaker 13: Magnificent seven, those stocks are priced for perfection, right, So 326 00:14:00,520 --> 00:14:01,920 Speaker 13: of course there's going to be a little bit of 327 00:14:01,960 --> 00:14:05,640 Speaker 13: an overreaction to and giving back some of the gains 328 00:14:05,640 --> 00:14:08,040 Speaker 13: that we've experienced here to date because as we all know, 329 00:14:08,520 --> 00:14:11,640 Speaker 13: the market has been so concentrated in those seven stocks. 330 00:14:11,880 --> 00:14:14,320 Speaker 13: So I think what is interesting is as we're kind 331 00:14:14,320 --> 00:14:18,560 Speaker 13: of if we've seen the bottoming of corporate earnings and 332 00:14:18,600 --> 00:14:20,920 Speaker 13: now we're kind of pivoting into modest growth. I do 333 00:14:21,040 --> 00:14:23,480 Speaker 13: think twenty twenty four, Chris, I'm not sure about your 334 00:14:23,560 --> 00:14:25,400 Speaker 13: view on this, but I think twenty twenty four the 335 00:14:25,440 --> 00:14:27,400 Speaker 13: outlook is a little bit too rosy, especially if you're 336 00:14:27,600 --> 00:14:28,840 Speaker 13: higher for longer rates. 337 00:14:28,920 --> 00:14:29,600 Speaker 11: I think that's right. 338 00:14:29,640 --> 00:14:32,880 Speaker 13: But within that there are opportunities in some of these 339 00:14:32,880 --> 00:14:33,760 Speaker 13: sectors and some. 340 00:14:33,680 --> 00:14:37,200 Speaker 2: Of the price effect. Yeah, we'll talk about defensive stocks. 341 00:14:37,280 --> 00:14:39,680 Speaker 2: Let's talk about small and mid caps, because yeah, those 342 00:14:39,720 --> 00:14:40,880 Speaker 2: are not I don't think price. 343 00:14:40,760 --> 00:14:41,320 Speaker 8: Perfection, no. 344 00:14:41,360 --> 00:14:42,840 Speaker 13: If you look at small and mid caps, I think 345 00:14:42,880 --> 00:14:44,880 Speaker 13: the interesting thing is, of course, if you're in a 346 00:14:44,920 --> 00:14:47,840 Speaker 13: higher interest rate environment. This idea that are their balance 347 00:14:47,880 --> 00:14:50,840 Speaker 13: sheets clean? Are they exposed to floating rate debt? But 348 00:14:50,920 --> 00:14:53,880 Speaker 13: within let's take like midcaps. Within mid caps, you have 349 00:14:54,000 --> 00:14:56,760 Speaker 13: parts of that market that actually are profitable. Let's take 350 00:14:56,800 --> 00:14:59,640 Speaker 13: like industrials. Right, So if we're looking at industrials, you're 351 00:14:59,640 --> 00:15:03,440 Speaker 13: looking at infrastructure, defense. Industrials are only like ten percent 352 00:15:03,480 --> 00:15:05,800 Speaker 13: of large cap, but like twenty percent of mid cap. 353 00:15:06,080 --> 00:15:09,360 Speaker 13: Are there opportunities within there to have exposure that makes 354 00:15:09,360 --> 00:15:13,080 Speaker 13: sense from a valuation perspective as as well as a 355 00:15:13,160 --> 00:15:14,480 Speaker 13: go forward perspective? 356 00:15:14,480 --> 00:15:15,000 Speaker 11: Absolutely? 357 00:15:15,120 --> 00:15:17,280 Speaker 2: Okay, thank you so very much to Chris Harvey as 358 00:15:17,280 --> 00:15:20,840 Speaker 2: well as Fargo and Kristen's Bitterly of a City. Israel's 359 00:15:20,840 --> 00:15:23,520 Speaker 2: war with Hamas is entering its fourth week now, with 360 00:15:23,640 --> 00:15:27,320 Speaker 2: continued strikes and counter strikes on Gaza and israel efforts 361 00:15:27,320 --> 00:15:31,040 Speaker 2: to get humanitarian aid into the territory and feverish diplomatic 362 00:15:31,040 --> 00:15:34,760 Speaker 2: efforts to contain the conflicts. Welcome now, Tom Nydes He's 363 00:15:34,760 --> 00:15:38,280 Speaker 2: a former Morgan Stanley COO, former Deputy Secretary of State, 364 00:15:38,520 --> 00:15:41,200 Speaker 2: and he also just stepped down as US ambassador Israel 365 00:15:41,440 --> 00:15:43,920 Speaker 2: last month. So Tom, thank you so much for joining us. 366 00:15:44,080 --> 00:15:46,400 Speaker 2: Good to have you here. We all see the consequences 367 00:15:46,400 --> 00:15:49,720 Speaker 2: for people living in Israel and in Gaza every day 368 00:15:50,040 --> 00:15:52,240 Speaker 2: in video, but for many of the rest of us, 369 00:15:52,280 --> 00:15:55,400 Speaker 2: particularly in the business world, the consequences made determined and 370 00:15:55,680 --> 00:15:59,480 Speaker 2: determined by whether or not this conflict spreads beyond Israel 371 00:15:59,520 --> 00:16:01,360 Speaker 2: and Amas. What are the factors from your point of 372 00:16:01,440 --> 00:16:03,480 Speaker 2: view that will determine whether it does spread? 373 00:16:03,800 --> 00:16:05,880 Speaker 1: Well? Listen, David, First, I appreciate you having me. 374 00:16:07,360 --> 00:16:10,120 Speaker 5: This is the question because ultimately one of the things 375 00:16:10,160 --> 00:16:13,760 Speaker 5: that the present has been very clear about, regardless of 376 00:16:13,840 --> 00:16:16,800 Speaker 5: you you love him or hate him, the reality has 377 00:16:16,840 --> 00:16:21,320 Speaker 5: been very clear to the Iranians because the Iranian proxies 378 00:16:21,320 --> 00:16:25,720 Speaker 5: we're really talking about hesbl in particular, as he likes 379 00:16:25,760 --> 00:16:28,880 Speaker 5: to say, superpowers don't bluff. And it's also helped that 380 00:16:28,920 --> 00:16:31,960 Speaker 5: they move to some very large ships into the Mediterranean 381 00:16:32,520 --> 00:16:36,760 Speaker 5: every day. This White House is working to put pressure 382 00:16:36,920 --> 00:16:41,480 Speaker 5: on those proxies, those in Lebanon and yes, in Syria, 383 00:16:41,520 --> 00:16:45,200 Speaker 5: but more really, the Iranians don't do it. Don't do 384 00:16:45,240 --> 00:16:48,240 Speaker 5: it because the Two Front war. Who's that question, will 385 00:16:48,240 --> 00:16:51,200 Speaker 5: have the enormous consequences in the state of Israel, and 386 00:16:51,280 --> 00:16:54,640 Speaker 5: to be clear, will have enormous consequences to Lebanon and Iran. 387 00:16:54,800 --> 00:16:57,080 Speaker 5: So I think when they're sitting around thinking about this 388 00:16:57,200 --> 00:17:01,160 Speaker 5: in Tehran, I think thinking long and hard about what 389 00:17:01,200 --> 00:17:02,720 Speaker 5: the consequences. 390 00:17:02,040 --> 00:17:04,000 Speaker 1: Could be of them getting involved. But it certainly is 391 00:17:04,040 --> 00:17:04,360 Speaker 1: a risk. 392 00:17:04,880 --> 00:17:07,520 Speaker 2: Sometime we see, for example, sexual a state blink and 393 00:17:07,600 --> 00:17:10,960 Speaker 2: going to the region, we see various activities. I'm sure 394 00:17:11,160 --> 00:17:13,480 Speaker 2: nine tenths of what's going on we never see and 395 00:17:13,520 --> 00:17:16,280 Speaker 2: we're not meant to see without revealing anything you shouldn't 396 00:17:16,280 --> 00:17:18,840 Speaker 2: reveal that's confidential. What sorts of things do you expect 397 00:17:19,040 --> 00:17:20,760 Speaker 2: is going on behind the scenes. 398 00:17:21,280 --> 00:17:26,440 Speaker 5: Well, first of all, they're pushing the Israelis very strongly 399 00:17:26,440 --> 00:17:30,800 Speaker 5: about getting humanitarian aid into Gaza. Listen, Hamas is doing 400 00:17:30,880 --> 00:17:32,879 Speaker 5: exactly what they want to do. They want to create 401 00:17:33,000 --> 00:17:36,960 Speaker 5: unbelievable carnage in Israel, which they certainly did. They then really, 402 00:17:37,000 --> 00:17:39,400 Speaker 5: as you know, don't really care about the Palacinian people. 403 00:17:39,440 --> 00:17:40,920 Speaker 1: They're using them as human shields. 404 00:17:41,160 --> 00:17:43,160 Speaker 5: You know, this is Hamas isn't seen around and says 405 00:17:43,320 --> 00:17:45,760 Speaker 5: let's come up with a two state solution. Now Hamas 406 00:17:45,880 --> 00:17:49,120 Speaker 5: is like Isis and their goal is destroy the state 407 00:17:49,119 --> 00:17:53,000 Speaker 5: of Israel. On the other hand, the vast vast majority 408 00:17:53,000 --> 00:17:56,200 Speaker 5: of Palaestinians just want to live in peace and prosperity 409 00:17:56,320 --> 00:17:56,960 Speaker 5: and freedom. 410 00:17:57,359 --> 00:17:57,520 Speaker 1: You know. 411 00:17:57,760 --> 00:18:00,640 Speaker 5: They We're not at war with the Palacinia people. Quite 412 00:18:00,640 --> 00:18:03,760 Speaker 5: the opposite, we're at war with Hamas. And so I 413 00:18:03,760 --> 00:18:07,119 Speaker 5: think what the President and Secretary Blincoln is trying to 414 00:18:07,119 --> 00:18:11,840 Speaker 5: do is relieve this humanitarian suffering that's going on in Gaz. 415 00:18:11,960 --> 00:18:13,200 Speaker 8: It's it's it's terrible. 416 00:18:13,240 --> 00:18:14,800 Speaker 5: It's on the phone with a very close friend of 417 00:18:14,840 --> 00:18:18,240 Speaker 5: mine just this morning who has a very large business 418 00:18:18,280 --> 00:18:19,240 Speaker 5: in the West Bank and. 419 00:18:19,200 --> 00:18:20,840 Speaker 1: Has many, many, many people. 420 00:18:20,680 --> 00:18:24,280 Speaker 5: In Gaza with his operations there. It's heartbreaking. So I 421 00:18:24,320 --> 00:18:26,720 Speaker 5: don't you know, I don't like any of this, to 422 00:18:26,760 --> 00:18:28,879 Speaker 5: say the least. We should keep focus on how we 423 00:18:28,920 --> 00:18:31,960 Speaker 5: got here. But at the end of the day, what 424 00:18:32,040 --> 00:18:36,840 Speaker 5: you're hearing, what you're not hearing is the pressure that 425 00:18:37,760 --> 00:18:40,640 Speaker 5: that Secretary of Blincoln and the President and the Vice 426 00:18:40,640 --> 00:18:43,639 Speaker 5: President is putting on not only the Egyptians and the 427 00:18:43,720 --> 00:18:47,520 Speaker 5: Qataris and all the people that begin this humanitarian aid, 428 00:18:47,960 --> 00:18:50,560 Speaker 5: and also to make sure the Israelis are making smart 429 00:18:51,119 --> 00:18:52,040 Speaker 5: military decisions. 430 00:18:52,080 --> 00:18:53,400 Speaker 1: And I think that's very important as well. 431 00:18:53,400 --> 00:18:57,240 Speaker 2: You mentioned Katar, you mentioned Egypt, one other Saudi Arabia. 432 00:18:57,440 --> 00:19:00,199 Speaker 2: It could play a very significant role here. What do 433 00:19:00,200 --> 00:19:01,600 Speaker 2: you expect to go on in Sali Arabia. We thought 434 00:19:01,640 --> 00:19:03,480 Speaker 2: we might have been on the brink actually of a 435 00:19:03,520 --> 00:19:06,679 Speaker 2: peace agreement between sell Out Arabia and Israel that certainly 436 00:19:07,160 --> 00:19:08,200 Speaker 2: been put off for the time being. 437 00:19:09,560 --> 00:19:11,120 Speaker 1: Well, you know, David, as you know you and I've 438 00:19:11,119 --> 00:19:11,680 Speaker 1: spoken about this. 439 00:19:11,800 --> 00:19:14,760 Speaker 5: I've been a very strong advocate of getting a deal 440 00:19:14,800 --> 00:19:18,480 Speaker 5: done with Saudi Arabia. A normalized deal with Saudi Arabia 441 00:19:18,520 --> 00:19:20,680 Speaker 5: and the State of Israel and with security agreements in 442 00:19:20,680 --> 00:19:23,920 Speaker 5: the United States would only be better for the region, 443 00:19:24,080 --> 00:19:26,000 Speaker 5: just like the Abraham Accords were. If you look at 444 00:19:26,080 --> 00:19:28,679 Speaker 5: the abram Cords that were obviously done on the Trump administration, 445 00:19:28,840 --> 00:19:31,040 Speaker 5: I praise up all the time when I was in 446 00:19:31,080 --> 00:19:33,600 Speaker 5: the region, the idea of Bahrain in Morocco and the 447 00:19:33,760 --> 00:19:36,399 Speaker 5: UAE was a game changer for the region. And this 448 00:19:36,520 --> 00:19:39,600 Speaker 5: situation would be even worse if it wasn't the case. Now, 449 00:19:39,760 --> 00:19:42,119 Speaker 5: How grand would it be today if we had a 450 00:19:42,200 --> 00:19:45,800 Speaker 5: normalization with Saudi Arabia and Israel. 451 00:19:45,800 --> 00:19:48,640 Speaker 1: Because ultimately that makes the region more secure. 452 00:19:48,800 --> 00:19:53,640 Speaker 5: So I am I'm actually quite confident after this is over, 453 00:19:53,760 --> 00:19:55,960 Speaker 5: and god knows how long it will be that the 454 00:19:56,080 --> 00:19:59,480 Speaker 5: size will in fact want to re engage because quite frankly, 455 00:19:59,560 --> 00:20:02,560 Speaker 5: they see the same threat that we see in Israel sees, 456 00:20:02,600 --> 00:20:04,040 Speaker 5: which is the Iranian threat. 457 00:20:04,320 --> 00:20:06,040 Speaker 2: Tom, thank you so very much for being on Wall Street. 458 00:20:06,040 --> 00:20:10,120 Speaker 2: We really appreciate that's Tom Knydes, former US Ambassador to Israel, 459 00:20:12,119 --> 00:20:15,800 Speaker 2: coming up. Sky high federal deficits help drive borrowing costs up. 460 00:20:16,160 --> 00:20:19,320 Speaker 2: We talk with Evercred Roger Altman about how Washington fiscal 461 00:20:19,359 --> 00:20:22,600 Speaker 2: actions affect Wall Street. That's next on Wall Street Week 462 00:20:22,800 --> 00:20:23,520 Speaker 2: on Bloomberg. 463 00:20:24,960 --> 00:20:29,160 Speaker 3: This is Bloomberg Wall Street Week with David Weston from 464 00:20:29,280 --> 00:20:30,200 Speaker 3: Bloomberg Radio. 465 00:20:36,760 --> 00:20:38,520 Speaker 2: This is Wall Street Week. I'm David Weston. 466 00:20:38,560 --> 00:20:38,919 Speaker 8: Global. 467 00:20:38,960 --> 00:20:41,840 Speaker 2: Wall Street is trying to come to terms with higher yields, 468 00:20:42,080 --> 00:20:44,760 Speaker 2: driven in no small part by the federal deficit and 469 00:20:44,800 --> 00:20:47,480 Speaker 2: the need for more borrowing, something that FED Chair J 470 00:20:47,720 --> 00:20:50,359 Speaker 2: Powell say they pay attention to it the FED, but 471 00:20:50,440 --> 00:20:53,119 Speaker 2: that former Treasury Secretary Larry Summer says is a bigger 472 00:20:53,240 --> 00:20:55,640 Speaker 2: problem perhaps than the FED may understand. 473 00:20:56,720 --> 00:20:59,359 Speaker 10: The Actually the fiscal authorities have oversight over us and 474 00:20:59,720 --> 00:21:01,800 Speaker 10: not the other way around, So we stay away from that. 475 00:21:03,240 --> 00:21:07,280 Speaker 10: So I would just say everyone knows that it's not 476 00:21:07,359 --> 00:21:09,960 Speaker 10: a secret, and about all I can say is we 477 00:21:10,119 --> 00:21:12,520 Speaker 10: know that we're on an unsustainable path fiscally. 478 00:21:12,880 --> 00:21:15,800 Speaker 3: There was a big Newfoundland of a dog that wasn't 479 00:21:15,880 --> 00:21:19,840 Speaker 3: barking as he was speaking, and that's everything about the 480 00:21:19,960 --> 00:21:22,200 Speaker 3: federal fiscal situation. 481 00:21:23,440 --> 00:21:26,200 Speaker 2: For a better sense of what these deficits in Congress, 482 00:21:26,240 --> 00:21:29,119 Speaker 2: this difficulty in dealing with them may mean for the 483 00:21:29,200 --> 00:21:32,240 Speaker 2: world of Wall Street. Welcome now back Roger Oltman. He's 484 00:21:32,280 --> 00:21:35,000 Speaker 2: founder and senior chairman of Evercore. Roger, thank you so 485 00:21:35,119 --> 00:21:35,720 Speaker 2: much for being. 486 00:21:35,600 --> 00:21:37,119 Speaker 8: Back with I could be here with you, David, So 487 00:21:37,160 --> 00:21:37,720 Speaker 8: you've had a lot of. 488 00:21:37,720 --> 00:21:40,239 Speaker 2: Experience in Washington, the Treasury Department, as well as here 489 00:21:40,359 --> 00:21:42,960 Speaker 2: on Wall Street. First of all, explain what you think j. 490 00:21:43,119 --> 00:21:45,560 Speaker 2: Powell means when he says it's unsustainable. 491 00:21:48,280 --> 00:21:52,000 Speaker 4: Well, as Herbside once said, when something's unsustainable, it actually stops. 492 00:21:53,440 --> 00:21:57,200 Speaker 4: But I know what I think when I hear that term. 493 00:21:57,240 --> 00:22:00,639 Speaker 4: I'm not sure exactly what he means, but as a 494 00:22:00,760 --> 00:22:03,520 Speaker 4: person who's spent so much time in and around markets, 495 00:22:04,080 --> 00:22:07,119 Speaker 4: I think that it's just a matter of time before 496 00:22:07,200 --> 00:22:11,760 Speaker 4: global financial markets turn their attention to this very poor 497 00:22:12,080 --> 00:22:15,879 Speaker 4: fiscal trajectory in the United States and reject it and 498 00:22:16,520 --> 00:22:22,359 Speaker 4: absent unless we change course fiscally on our own voluntarily 499 00:22:22,840 --> 00:22:27,040 Speaker 4: before that moment, there'll be a crisis, and it will 500 00:22:27,119 --> 00:22:29,440 Speaker 4: only be Many would argue it will only be a 501 00:22:29,520 --> 00:22:33,800 Speaker 4: crisis that will cause the authorities to adjust fiscal policy, 502 00:22:33,880 --> 00:22:38,000 Speaker 4: for example, additional revenue. So that's what I think of 503 00:22:38,119 --> 00:22:40,159 Speaker 4: when I hear the term unsustainable as a relation to 504 00:22:40,200 --> 00:22:42,840 Speaker 4: the deficit. They will come a moment of reckoning when 505 00:22:42,920 --> 00:22:48,119 Speaker 4: financial markets reject this course, will have a crisis, and 506 00:22:48,240 --> 00:22:52,359 Speaker 4: that will force the hands of the Congress and the 507 00:22:52,440 --> 00:22:54,479 Speaker 4: executive branch in terms of changing policy. 508 00:22:54,680 --> 00:22:56,600 Speaker 8: That's not a good way to do it. I hope 509 00:22:56,640 --> 00:22:58,760 Speaker 8: we don't do it that way. Be much better to. 510 00:23:00,240 --> 00:23:03,960 Speaker 4: In effect agree that we need a different path and 511 00:23:04,359 --> 00:23:08,159 Speaker 4: proactively choose one. But at the moment you have to 512 00:23:08,200 --> 00:23:10,359 Speaker 4: be a real optimist to think that's going to be 513 00:23:10,400 --> 00:23:11,040 Speaker 4: the way it happens. 514 00:23:11,280 --> 00:23:13,399 Speaker 2: We like to think of markets as anticipating the future 515 00:23:13,440 --> 00:23:15,800 Speaker 2: to some extent and discounting it and really taking into account. 516 00:23:16,520 --> 00:23:18,600 Speaker 2: Are the markets not discounting at all right now? Or 517 00:23:18,720 --> 00:23:20,639 Speaker 2: is that perhaps part of the reason we're seeing, for example, 518 00:23:20,680 --> 00:23:23,399 Speaker 2: the yield on the thirty year for example, go up. 519 00:23:23,520 --> 00:23:26,760 Speaker 2: Is it because of some beginning of concern about repaying 520 00:23:26,800 --> 00:23:27,360 Speaker 2: role at debt. 521 00:23:28,240 --> 00:23:30,719 Speaker 4: It's hard to say. I would not say that right 522 00:23:30,800 --> 00:23:35,080 Speaker 4: this moment. Fiscal concerns are one of the top two 523 00:23:35,160 --> 00:23:36,720 Speaker 4: or three factors driving markets. 524 00:23:37,800 --> 00:23:40,200 Speaker 8: Whether they're affecting the thirty year debatable. 525 00:23:41,680 --> 00:23:44,560 Speaker 4: There recently been a couple of very sloppy treasury auctions, 526 00:23:44,760 --> 00:23:48,560 Speaker 4: although they were shorter maturity auctions than that, and that's 527 00:23:48,600 --> 00:23:52,720 Speaker 4: always a sign of concern. And keep in mind we're 528 00:23:52,720 --> 00:23:55,840 Speaker 4: at a moment we have this very poor fiscal trajectory, 529 00:23:55,920 --> 00:23:57,959 Speaker 4: at a moment of quantitative tightening. 530 00:23:58,720 --> 00:24:01,080 Speaker 8: So has gone from. 531 00:24:01,240 --> 00:24:05,960 Speaker 4: Buying billions of dollars of treasury and government backed securities 532 00:24:06,080 --> 00:24:08,800 Speaker 4: during the quantitative easing period, which lasted a very long time, 533 00:24:09,520 --> 00:24:16,440 Speaker 4: to now selling down aggressively its bond portfolio. And what 534 00:24:16,560 --> 00:24:21,359 Speaker 4: that means is it's adding to the supply in effect 535 00:24:21,720 --> 00:24:25,560 Speaker 4: of treasuries that the market has to absorb because the 536 00:24:25,640 --> 00:24:27,639 Speaker 4: FED is a seller, and then you have the Treasury 537 00:24:27,680 --> 00:24:30,280 Speaker 4: itself issuing giant amounts of new securities. 538 00:24:30,560 --> 00:24:31,919 Speaker 8: That's adding to the complexity. 539 00:24:32,240 --> 00:24:35,240 Speaker 2: So Roger, let's go beyond the deficit and talk about 540 00:24:35,320 --> 00:24:38,639 Speaker 2: other things that are affecting business today, and specifically what 541 00:24:38,680 --> 00:24:40,359 Speaker 2: we've seen in the yields, because goodness knows, they've come 542 00:24:40,440 --> 00:24:42,159 Speaker 2: up a long way, really fast. 543 00:24:43,520 --> 00:24:46,280 Speaker 4: Well, we've seen, to quote my friend Howard Mark, say, 544 00:24:46,320 --> 00:24:52,520 Speaker 4: see change in the financial market environment in the sense 545 00:24:52,600 --> 00:24:56,120 Speaker 4: that the very long, roughly fifteen year period of ultra 546 00:24:56,280 --> 00:24:59,120 Speaker 4: low interest rates, at least, I would argue, is over. 547 00:25:00,480 --> 00:25:05,840 Speaker 4: It's not temporarily interrupted, it's over. And now today, in 548 00:25:05,920 --> 00:25:08,720 Speaker 4: round numbers, we have a five percent ten year yield 549 00:25:09,359 --> 00:25:12,239 Speaker 4: and we haven't seen that for I think since two 550 00:25:12,280 --> 00:25:17,280 Speaker 4: thousand and seven, and I think a lot of market participants, 551 00:25:17,359 --> 00:25:21,880 Speaker 4: in particular to your question, business leaders are just beginning 552 00:25:21,920 --> 00:25:25,840 Speaker 4: to grasp that we are in a new era in 553 00:25:26,040 --> 00:25:29,320 Speaker 4: terms of the structure of interest rates. It's a profound 554 00:25:29,440 --> 00:25:32,880 Speaker 4: change because it affects not just obviously cost of capital, 555 00:25:33,160 --> 00:25:39,399 Speaker 4: but it affects asset allocation. It affects returns. I mean, 556 00:25:39,400 --> 00:25:42,320 Speaker 4: if you're a financial imagine you're a private equity firm 557 00:25:42,400 --> 00:25:47,359 Speaker 4: and they are so ubiquitous, this fundamentally changes the return 558 00:25:47,480 --> 00:25:51,600 Speaker 4: prospects for them because the cost of that leverage is 559 00:25:51,680 --> 00:25:55,520 Speaker 4: such that they can't leverage XYZ investment to the same 560 00:25:55,560 --> 00:25:57,680 Speaker 4: degree today that they could have a year or two ago. 561 00:25:59,280 --> 00:26:01,160 Speaker 8: But I think a lot of people are just waking 562 00:26:01,280 --> 00:26:01,560 Speaker 8: up to this. 563 00:26:01,680 --> 00:26:04,280 Speaker 4: And I'm sure some people listening to this would disagree 564 00:26:04,359 --> 00:26:07,280 Speaker 4: that we've seen the end of ultra low interest rates, 565 00:26:07,320 --> 00:26:09,359 Speaker 4: but I'm convinced we have and. 566 00:26:11,720 --> 00:26:13,000 Speaker 8: It's really a profound change. 567 00:26:13,119 --> 00:26:16,560 Speaker 4: Now, how much it affects you as a CEO depends 568 00:26:16,600 --> 00:26:18,960 Speaker 4: on the nature of your business, how capital intensive it is. 569 00:26:19,400 --> 00:26:22,680 Speaker 4: Are you, by the nature of your business, a you 570 00:26:22,800 --> 00:26:27,720 Speaker 4: generate consistent free cash flow or are you generating deficits 571 00:26:27,760 --> 00:26:32,120 Speaker 4: instead and doing a lot of financing. So, if you're Apple, 572 00:26:33,400 --> 00:26:36,640 Speaker 4: you actually do borrow because of your international business versus 573 00:26:36,760 --> 00:26:39,080 Speaker 4: domestic and the role of share buybacks, but you're not 574 00:26:39,200 --> 00:26:44,240 Speaker 4: a net borrower in terms of net debt, and it 575 00:26:44,320 --> 00:26:46,159 Speaker 4: affects you, but it doesn't affect you very dramatically. But 576 00:26:46,240 --> 00:26:50,879 Speaker 4: if you're Blackstone or your Kkar or your Apollo and 577 00:26:50,960 --> 00:26:53,200 Speaker 4: so forth, very dramatic effect. 578 00:26:54,280 --> 00:26:56,720 Speaker 2: So you say some corporate leaders are just waking up 579 00:26:56,800 --> 00:26:59,600 Speaker 2: to this process, is that at least impart the answer 580 00:27:00,080 --> 00:27:02,720 Speaker 2: fundamental question, at least I have The economy seems to 581 00:27:02,760 --> 00:27:05,240 Speaker 2: be charging along. When you look at GDP numbers, you 582 00:27:05,240 --> 00:27:07,760 Speaker 2: look at retail sales, you look at so many indicators, 583 00:27:08,119 --> 00:27:10,000 Speaker 2: even the labor market. Maybe loosening a bit, but it's 584 00:27:10,040 --> 00:27:14,240 Speaker 2: still pretty strong labor market. How can the economy doing 585 00:27:14,359 --> 00:27:16,680 Speaker 2: this well, We've had this many rate hikes out of 586 00:27:16,680 --> 00:27:19,280 Speaker 2: the FED and this increase in the yields on the bonds. 587 00:27:19,320 --> 00:27:20,679 Speaker 8: I think the economy is slowing. 588 00:27:20,760 --> 00:27:20,879 Speaker 2: Now. 589 00:27:21,840 --> 00:27:23,560 Speaker 8: You're right that it's still resilient. 590 00:27:24,160 --> 00:27:27,479 Speaker 4: It's not falling off a cliff where there's no evidence 591 00:27:27,520 --> 00:27:30,080 Speaker 4: at the moment of an incipient recession, I mean like 592 00:27:30,720 --> 00:27:31,880 Speaker 4: next week or next month. 593 00:27:32,480 --> 00:27:33,440 Speaker 8: But I think it is slowing. 594 00:27:33,560 --> 00:27:36,920 Speaker 4: You look at the housing sector, and of course the 595 00:27:37,800 --> 00:27:41,159 Speaker 4: sharp rise and mortgage rates always would have the effect 596 00:27:41,160 --> 00:27:44,800 Speaker 4: that's having here, but new home sales, mortgage applications all 597 00:27:44,880 --> 00:27:46,480 Speaker 4: sharply down, as you would imagine. 598 00:27:47,640 --> 00:27:50,879 Speaker 8: And you look at a whole series of other surveys. 599 00:27:50,920 --> 00:27:51,720 Speaker 8: At evercorep we do. 600 00:27:53,240 --> 00:28:00,679 Speaker 4: A series of proprietary surveys trucking, temporary employment agencies, airlines, restaurants, 601 00:28:01,080 --> 00:28:03,040 Speaker 4: a whole series of them, and we do them regularly, 602 00:28:03,080 --> 00:28:05,679 Speaker 4: and I think it's quite a good set of data, and. 603 00:28:05,720 --> 00:28:08,280 Speaker 8: They're pointing to a serious slowdown. 604 00:28:08,400 --> 00:28:15,119 Speaker 4: So the composite reading of our surveys is above recession levels. 605 00:28:14,880 --> 00:28:15,719 Speaker 8: But it's come down a lot. 606 00:28:16,359 --> 00:28:19,600 Speaker 4: So I think the economy, despite the backward looking strong 607 00:28:19,720 --> 00:28:21,080 Speaker 4: data is slowing down? 608 00:28:21,160 --> 00:28:23,280 Speaker 8: Are we about to have a recession? I don't think so. 609 00:28:23,760 --> 00:28:25,880 Speaker 4: I don't know about next year, but I don't think 610 00:28:25,920 --> 00:28:27,480 Speaker 4: in the rest of this year twenty twenty three. 611 00:28:27,760 --> 00:28:29,199 Speaker 8: But this definitely slow down occurring. 612 00:28:29,359 --> 00:28:31,760 Speaker 2: By the way, for your data, I get Adheimens slides 613 00:28:31,800 --> 00:28:33,879 Speaker 2: every day and I read them every day. Well, you 614 00:28:33,920 --> 00:28:35,520 Speaker 2: know what I mean, I do know executly what maan. 615 00:28:35,560 --> 00:28:38,640 Speaker 2: I read those surveys every single day in some slide form. 616 00:28:39,080 --> 00:28:42,040 Speaker 2: So how does a corporate CEO respond? I mean, obviously 617 00:28:42,080 --> 00:28:43,840 Speaker 2: there's a lot of different corporate CEOs, a lot of 618 00:28:43,840 --> 00:28:45,880 Speaker 2: different reactions. But do they just pull on their horns 619 00:28:45,920 --> 00:28:47,600 Speaker 2: at this point? In partly because it's more expensive, but 620 00:28:47,600 --> 00:28:50,800 Speaker 2: also important because I CEO don't know exactly where it's. 621 00:28:50,640 --> 00:28:53,440 Speaker 8: Going well, and of course it depends on what your 622 00:28:53,520 --> 00:28:54,000 Speaker 8: business is. 623 00:28:54,160 --> 00:28:58,720 Speaker 4: So you're seeing some surprising strength given the level of 624 00:28:58,800 --> 00:29:01,840 Speaker 4: interest rates giving and how old this recovery simply is 625 00:29:01,920 --> 00:29:04,360 Speaker 4: this recovery is more than three years old. It began 626 00:29:04,480 --> 00:29:08,400 Speaker 4: in the early second half of twenty twenty. You know, 627 00:29:08,520 --> 00:29:11,320 Speaker 4: you see Walmart doing very well, you see Procter and 628 00:29:11,400 --> 00:29:15,280 Speaker 4: Gamble doing very well, and those are really broad based companies, 629 00:29:15,720 --> 00:29:17,960 Speaker 4: and they're a sign of the resilience of this economy. 630 00:29:18,320 --> 00:29:20,920 Speaker 4: On the other hand, you know, you see some companies 631 00:29:21,320 --> 00:29:24,840 Speaker 4: there been some bigger earnings reports the last day or 632 00:29:24,840 --> 00:29:27,720 Speaker 4: two which have been somewhat disappointing alphabet and so forth. 633 00:29:28,000 --> 00:29:32,520 Speaker 8: Really depends on the business you're in. But if you 634 00:29:32,920 --> 00:29:33,520 Speaker 8: take all these. 635 00:29:33,400 --> 00:29:37,920 Speaker 4: Earnings reports together, they do show resilience. I say, it's slowing, 636 00:29:38,000 --> 00:29:42,000 Speaker 4: but there's still considerable resilience, especially businesses that depend on 637 00:29:42,520 --> 00:29:45,760 Speaker 4: the day and day out consumer, because the consumer still has, 638 00:29:45,840 --> 00:29:51,200 Speaker 4: for example, considerable excess pandemic related excess savings, and as 639 00:29:51,240 --> 00:29:53,680 Speaker 4: you say, labor markets remain pretty tight, and so consumers 640 00:29:53,720 --> 00:29:56,560 Speaker 4: are doing well from an employment point of view, and 641 00:29:56,880 --> 00:29:59,160 Speaker 4: a lot of consumers are right about even in terms 642 00:29:59,200 --> 00:30:03,000 Speaker 4: of real after income, but still they are resilient. 643 00:30:04,120 --> 00:30:05,640 Speaker 2: Roger, it's oh, such a pleasure I have you with 644 00:30:05,680 --> 00:30:07,040 Speaker 2: this here on Wall Street. Thank you so much. Such 645 00:30:07,120 --> 00:30:12,960 Speaker 2: Roger Altman of Evercore coming up when okay, Boomer is 646 00:30:13,040 --> 00:30:15,800 Speaker 2: a not so subtle hint that we should be getting 647 00:30:15,880 --> 00:30:19,240 Speaker 2: off the stage. That's next time, Wall Street Week on Bloomberg. 648 00:30:21,680 --> 00:30:25,840 Speaker 3: This is Bloomberg Wall Street Week with David Weston from 649 00:30:26,000 --> 00:30:26,920 Speaker 3: Bloomberg Radio. 650 00:30:33,800 --> 00:30:37,360 Speaker 2: Finally, one more thought. The big elephant in the whole 651 00:30:37,440 --> 00:30:41,080 Speaker 2: system is the baby boomer generation that marches through like 652 00:30:41,160 --> 00:30:44,680 Speaker 2: a herd of elephants. That's how Senator Lindsay Graham described 653 00:30:44,720 --> 00:30:47,480 Speaker 2: one of the biggest fiscal challenges we face. But the 654 00:30:47,560 --> 00:30:51,000 Speaker 2: problem goes way past just bankrupting Social Security and medicare. 655 00:30:51,520 --> 00:30:54,520 Speaker 2: Everywhere we look these days, we find baby boomers and yes, 656 00:30:54,640 --> 00:30:57,480 Speaker 2: that is my generation, and we remain on the stage 657 00:30:57,600 --> 00:31:00,440 Speaker 2: without making room for the generations coming up behind us. 658 00:31:00,920 --> 00:31:03,880 Speaker 2: There are a few exceptions, to be sure, like Ray Daalio, 659 00:31:04,160 --> 00:31:06,320 Speaker 2: who has decided to step down from Bridgewater. 660 00:31:06,640 --> 00:31:10,320 Speaker 6: I'm at a phase in my life where it's very natural, 661 00:31:10,520 --> 00:31:14,440 Speaker 6: seventy four years old and the most important thing for 662 00:31:14,640 --> 00:31:17,200 Speaker 6: me is to pass along everything. 663 00:31:17,600 --> 00:31:20,080 Speaker 2: But for every Ray Dalio, it seems there's a host 664 00:31:20,120 --> 00:31:23,240 Speaker 2: of US boomers who are just fine staying in the limelight. 665 00:31:23,800 --> 00:31:26,160 Speaker 2: We see it in network television, where the long running 666 00:31:26,240 --> 00:31:29,760 Speaker 2: Bachelor series on ABC has added a Golden Bachelor version, 667 00:31:30,040 --> 00:31:33,040 Speaker 2: complete with an eligible widower looking for love at that 668 00:31:33,200 --> 00:31:36,800 Speaker 2: Golden get It Golden Age of set two. We see 669 00:31:36,800 --> 00:31:40,040 Speaker 2: it in sports, as Phil Nicholson won the PGA Championship 670 00:31:40,200 --> 00:31:42,360 Speaker 2: just two years ago at the age of fifty and 671 00:31:42,560 --> 00:31:45,440 Speaker 2: is still competing on the tour. We even see it 672 00:31:45,560 --> 00:31:48,880 Speaker 2: in real estate, as the elderly hold onto their homes longer, 673 00:31:49,000 --> 00:31:52,560 Speaker 2: putting even more stress on an already troubled housing market. 674 00:31:52,880 --> 00:31:55,880 Speaker 12: We call that phenomenon aging in place. And what used 675 00:31:55,880 --> 00:31:58,520 Speaker 12: to be is that the home ownership rate when you 676 00:31:58,600 --> 00:32:02,760 Speaker 12: hit about sixty five would drop precipitously. But like in 677 00:32:02,800 --> 00:32:05,520 Speaker 12: everything else, with the Baby Boomer generation, they're behaving differently, 678 00:32:05,640 --> 00:32:08,880 Speaker 12: and so they are something like ten percentage points more 679 00:32:09,160 --> 00:32:10,200 Speaker 12: likely to be homeowners. 680 00:32:10,440 --> 00:32:12,640 Speaker 2: And when it comes to the economy overall, once again, 681 00:32:12,800 --> 00:32:15,800 Speaker 2: it's the boomers, as Bank of America analysis this week 682 00:32:16,120 --> 00:32:19,400 Speaker 2: found that boomers and traditionalists are the only groups to 683 00:32:19,520 --> 00:32:23,160 Speaker 2: increase consumption. But maybe the biggest example of US boomers 684 00:32:23,200 --> 00:32:26,320 Speaker 2: holding on is on the concert stage, with the Rolling 685 00:32:26,320 --> 00:32:30,000 Speaker 2: Stones still touring led by lead singer Mick Jagger at 686 00:32:30,040 --> 00:32:33,960 Speaker 2: age eighty, Neil Diamond going strong at eighty two, and 687 00:32:34,080 --> 00:32:37,080 Speaker 2: the much younger Bonnie Rait on stage at seventy three. 688 00:32:37,960 --> 00:32:39,160 Speaker 2: And then there's the Boss. 689 00:32:40,040 --> 00:32:42,720 Speaker 8: This is what I've presented to you all these years, 690 00:32:42,760 --> 00:32:45,640 Speaker 8: as my long and noisy prayer, as my. 691 00:32:48,280 --> 00:32:52,000 Speaker 2: Magic trick, Bruce Springsteen, at seventy four, started his latest 692 00:32:52,040 --> 00:32:54,280 Speaker 2: tour this year, so he'll be going at least well 693 00:32:54,320 --> 00:32:57,920 Speaker 2: into twenty twenty four. But Bruce Springsteen is once again 694 00:32:58,240 --> 00:33:01,320 Speaker 2: leading the way for boomers, not quite by getting off 695 00:33:01,400 --> 00:33:03,960 Speaker 2: the stage, than by taking a big step toward that, 696 00:33:04,560 --> 00:33:07,680 Speaker 2: selling off his music catalog and getting a cool five 697 00:33:07,880 --> 00:33:10,440 Speaker 2: hundred million dollars for it. That is a record amount, 698 00:33:10,800 --> 00:33:14,280 Speaker 2: with the buyers backed in part by Blackstone, KKR and Blackrock. 699 00:33:14,720 --> 00:33:17,800 Speaker 2: And right now it looks like Springsteen's timing was once 700 00:33:17,840 --> 00:33:22,160 Speaker 2: again impeccable. As Bloomberg opinion commist Leonel Laurent lays out 701 00:33:22,240 --> 00:33:25,120 Speaker 2: this week, licensing music isn't as easy as it may 702 00:33:25,120 --> 00:33:28,200 Speaker 2: have appeared, and the funds that bought those boomer catalogs 703 00:33:28,240 --> 00:33:31,920 Speaker 2: are getting hit with lower valuations. Mister Springsteen may have 704 00:33:32,000 --> 00:33:34,680 Speaker 2: sold at the top of the market, But you know 705 00:33:34,880 --> 00:33:37,520 Speaker 2: one performer who isn't worried about any of this the 706 00:33:37,680 --> 00:33:40,760 Speaker 2: very much not boomer Taylor Swift. As we learned this 707 00:33:40,880 --> 00:33:43,840 Speaker 2: week that Miss Swift is now a billionaire in her 708 00:33:43,920 --> 00:33:47,120 Speaker 2: own right, and boy has she taken over the stage 709 00:33:47,200 --> 00:33:50,920 Speaker 2: from older artists. So maybe the younger generation will push 710 00:33:51,040 --> 00:33:54,960 Speaker 2: us all off the stage after all. Eventually, this has 711 00:33:55,000 --> 00:33:58,880 Speaker 2: been the most extraordinary experience of my entire life. That 712 00:33:59,000 --> 00:34:00,600 Speaker 2: does it For this episode of One All Street Week, 713 00:34:00,680 --> 00:34:03,160 Speaker 2: I'm David Weston. This is Bloomberg. See you next week.