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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

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Speaker 1: my co host Matt Miller. Every business day, we bring

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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along

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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast

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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and

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Speaker 1: at Bloomberg dot com slash podcast. All right, so we've

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Speaker 1: got some mid term elections tomorrow. A lot of key

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Speaker 1: states are having some some big races. Here Bloomberg, we'd

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Speaker 1: like to talk about the political side in the context

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Speaker 1: of the impacts on markets. So we bring in Cameron

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Speaker 1: christ He's a macro strategist for Bloomberg News. So Cameron,

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Speaker 1: you know you're looking across the markets here broadly defined.

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Speaker 1: How are you kind of handicapping this midterm election as

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Speaker 1: it relates to markets. Are you thinking traders are putting

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Speaker 1: on any bets? Is it a wait and see type

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Speaker 1: of thing? What are you hearing? Yeah? I think it's

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Speaker 1: I mean, it's tough because there's so much going on

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Speaker 1: outside of the of the US political sphere. Um as

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Speaker 1: you alluded to, We've got CPI later this week, and

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Speaker 1: there's also the China stuff. I mean, people seem to

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Speaker 1: be getting excited about the prospect of China reopening, even

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Speaker 1: though domestically, you know, there are still officially denying that

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Speaker 1: that's imminent, and COVID cases in China are are rising.

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Speaker 1: So it's it's kind of tough to sort of just

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Speaker 1: pick out the isolated impact of mid terms. Um, insofar

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Speaker 1: as you can. I guess there's this idea that, um,

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Speaker 1: that a switch in in the House would be kind

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Speaker 1: of positive for the stock market. UM. I'm not sure

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Speaker 1: how plausible that is. I think generally speaking, people tend

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Speaker 1: to overestimate the significance of individual political actors in driving

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Speaker 1: economic and certainly financial market returns. Now, obviously there are

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Speaker 1: exceptions to that we've seen in the UK this year. Uh,

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Speaker 1: But broadly speaking, UM, I mean, is the is the

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Speaker 1: US economy gonna look radically different depending on who wins

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Speaker 1: the House uh tomorrow? You know, is it gonna look

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Speaker 1: radically different over the next two years? Arguably not that

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Speaker 1: much different. Cam. So, I was just sitting on set

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Speaker 1: with John Farrow from nine to ten AM, and I

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Speaker 1: loved the question that he asked. Morgan Stanley's Mike Wilson

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Speaker 1: I want to ask you the same question. If you

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Speaker 1: could know the outcome of the midterm elections, or you

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Speaker 1: could know what this week's CPI reading would be, which

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Speaker 1: one would you pay without a doubt CPI without a doubt.

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Speaker 1: That's actually not what Mike Wilson said. Why would you

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Speaker 1: rather know cp I? Because you know, as I just said,

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Speaker 1: I I really don't think it matters UM who gets

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Speaker 1: in UH to to to Congress. I really don't. I mean,

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Speaker 1: the the pattern there is a quite a strong path

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Speaker 1: earned based on the calendar UH in in in terms

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Speaker 1: of UM, the third year of a presidential term is

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Speaker 1: typically very very strong UH for the stock market. UM.

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Speaker 1: And that is kind of irrespective of who of who

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Speaker 1: of who gets in UM. I know, I know Wilson

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Speaker 1: thinks that it's it's going to be it's pretty supportive

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Speaker 1: of the stop mark in the near term if the

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Speaker 1: Republicans get in, so obviously, if he has that view,

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Speaker 1: and then that's what he wants to know. UH. And

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Speaker 1: I guess in the micro term, if people want to

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Speaker 1: get excited about the outcome of the election, whatever it

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Speaker 1: might be, then yeah, maybe you want to know that.

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Speaker 1: But again, I'm pretty skeptical that it matters very much

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Speaker 1: at all in the in the medium term. Um, so

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Speaker 1: I would rather know the CPI. I would rather know

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Speaker 1: the CBI number, even though as we saw on Friday,

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Speaker 1: and maybe that doesn't matter either. So I guess I

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Speaker 1: really want to know is one's China going to reopen?

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Speaker 1: If I can I canswer the question? Yeah please? Yeah, yeah,

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Speaker 1: all right? So Cameron, Um, you know, the CPI data

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Speaker 1: is on the Thursday, and obviously that will be a

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Speaker 1: key driver for these markets and handicapping what the Feds

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Speaker 1: are gonna do. But a lot of folks are saying,

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Speaker 1: you know, that's a backward looking, uh kind of measurement here.

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Speaker 1: What's what's your inflation call? Do you feel like it's peaked?

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Speaker 1: You feel like it's coming down? I mean, we heard

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Speaker 1: from Rich Truman, who produces Bloomberg Surveillance this morning that

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Speaker 1: his favorite pasta dish at his favorite restaurant from eighteen

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Speaker 1: bucks pre pandemic to thirty two dollars today. That's inflation.

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Speaker 1: How are you viewing inflation? Yeah, I mean, I mean

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Speaker 1: I have to sort of define the rules of engagement here.

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Speaker 1: If you're talking about the year on your change in

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Speaker 1: the headline CPI index. Then yeah, it's it's it's very

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Speaker 1: likely peaked. UM. If you're saying that if inflation is peaked,

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Speaker 1: that means that the marginal price changes are going to

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Speaker 1: get with with some rapidity, go back to levels of

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Speaker 1: the FED is comfortable with. I think that's that's that's

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Speaker 1: less likely. UM. For one, the shelter component UH tends

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Speaker 1: to lag. It's a big portion of c b I

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Speaker 1: PC partically on a core basis, UH, and that's going

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Speaker 1: to continue to push up inflation for you know, the

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Speaker 1: next few quarters. UM. Kind of regardless of what what

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Speaker 1: the housing market does, not just the nature of of

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Speaker 1: the beast UM. More generally, as long as the labor

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Speaker 1: market reminds tight services beyond the housing market are are

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Speaker 1: going to continue generating inflation because it's still tough to

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Speaker 1: get you know, it's still tough to get labor. I mean,

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Speaker 1: part of that pasta dish cost is. Yeah, the price

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Speaker 1: of the price of rigatoni has gone up. Part of

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Speaker 1: it's the price of bolon at sauce have gone up.

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Speaker 1: But part of it is because it's difficult to hire

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Speaker 1: people to cook the food and serve the food and

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Speaker 1: then clean the food up. Yep, that's kind of what

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Speaker 1: he was lamenting. But I mean, you've gotta feel for

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Speaker 1: a guy whose favorite pasta dish so much, so much

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Speaker 1: over the past few years. That's when he brings it,

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Speaker 1: brings it home. There, Camera Christ good stuff. They're appreciated

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Speaker 1: as always. Cameras a macro strategists for Bloomberg News comfortably

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Speaker 1: working from home. We might add so a great time too, Yeah,

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Speaker 1: I mean exactly. So, you know, I'm just looking at

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Speaker 1: these markets. It's kind of an odd day. Obviously, the

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Speaker 1: dollop you know, two points, that's a half of one percent,

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Speaker 1: whereas NASDAC still feeling the hangover. I think of the

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Speaker 1: earnings we saw, you know, last week, and now some

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Speaker 1: of these layoff announcements today. Uh, you know, I think

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Speaker 1: it's really calling into question kind of the growth story

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Speaker 1: underpinning that tech sector, maybe getting a little bit of

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Speaker 1: a rerating their mid term elections tomorrow, CPI Data Thursday.

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Speaker 1: Lots for this market to digest. In addition to continued earnings,

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Speaker 1: got Mickey Mouse's uh Walt Disney Company reporting after the

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Speaker 1: close tomorrow. Lots of cross currents there. Let's check in

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Speaker 1: with the professional who does this stuff for living. Hugh

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Speaker 1: Robert's head of analytics at quant Insights. Before that, he

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Speaker 1: did stints at Merrill Lynch, my former firm, Credit Swiss,

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Speaker 1: my former firm. You get a sense of what's going

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Speaker 1: on here, Hugh, Thanks so much for joining us here again.

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Speaker 1: Lots across currents out there, tons of underperformance no matter

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Speaker 1: where you look as a classes so far in two.

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Speaker 1: What are you telling clients these days? Yeah? I agree

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Speaker 1: totally with the lots of cross currents, and I think

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Speaker 1: what's jumping out off our models at the moment is

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Speaker 1: that now we've been pretty bearish on equities for most

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Speaker 1: of two. You know, the message from the power FED

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Speaker 1: about tightening financial conditions to fight inflation has been very

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Speaker 1: evident on our models, and we've seen a substantial move

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Speaker 1: in that direction. But even though we kind of got

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Speaker 1: Jackson hole two or whatever you want to label the

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Speaker 1: tone to last week's FED meeting ads, we haven't seen

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Speaker 1: the same move in terms of tightening financial conditions. If

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Speaker 1: you look at credit spreads, tighter real yields of stop

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Speaker 1: legging higher, the dollars come back a bit. Now, there

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Speaker 1: are indio some trastic stories at play. Even there you

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Speaker 1: know that the dollar move might be as much about

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Speaker 1: China reopening as it is about anything the estic us driven.

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Speaker 1: But the bottom line on our modeling is that the

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Speaker 1: tightening the financial conditions there has been a huge headwind

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Speaker 1: and the major driver of the equity by bear market.

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Speaker 1: In the last few months, they've stopped tightening and that

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Speaker 1: opens up a little bit of evaluation gap on our

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Speaker 1: models where you're starting to see US equity indices spoons

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Speaker 1: now is that there they are all cheap to macro

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Speaker 1: on the modeling that we've done. So that's probably the

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Speaker 1: most interesting thing that we're watching at the moment. So

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Speaker 1: talk to me about what cheap to macro means. Is

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Speaker 1: that a bi signal in your models? It is, yes, Sorry,

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Speaker 1: So it to be clear what we do is we

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Speaker 1: take a huge number of macro factors, but they fall

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Speaker 1: into three broad buckets. So it's economic fundamentals, that's levels

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Speaker 1: of growth, tracking GDP numbers, expectations around inflation. They fall

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Speaker 1: into a bucket that is kind of overall financial conditions

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Speaker 1: at the level of real yields, the slope of the

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Speaker 1: yield curve, how strong the dollar is, um what the

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Speaker 1: Fed might be doing in terms of tightening or easing,

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Speaker 1: both in terms of rates and the balance sheet. And

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Speaker 1: then the last big bucket would be measures of risk

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Speaker 1: appetites and stuff like vix um and then more traditional

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Speaker 1: measures like cold silver. But it's all those economic fundamentals,

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Speaker 1: financial conditions, risk appetite all rolled up to say, right,

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Speaker 1: given where all these macro variables are right here, right now,

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Speaker 1: fair value on spoons is X, on the net back

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Speaker 1: is y, etcetera. And because mainly because of the financial

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Speaker 1: condition side of that three legged kind of input, because

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Speaker 1: they've not actually tightened and actually come back a bit,

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Speaker 1: our model values actually tipped a little bit higher for

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Speaker 1: your sequity and disease while you've had this sell off

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Speaker 1: of the last couple of weeks. So that's opened up

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Speaker 1: a cheap valuation in our language. So I guess what

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Speaker 1: is your recession call here? I mean, I guess you

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Speaker 1: know there's definitely and over in Europe, you guys have

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Speaker 1: some real real economic challenges. What's your recession car for

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Speaker 1: the US? So we're not actually a traditional kind of

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Speaker 1: a macro forecasting shop. We don't have a call to say,

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Speaker 1: you know, the Eurozone is going to contract by this

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Speaker 1: much whereas the US might just engineer a softer landing. Um,

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Speaker 1: there's plenty of very clever economists out there and talking

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Speaker 1: heads who do that. What q I S value added

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Speaker 1: is we can tell you the market's reaction function to

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Speaker 1: those economic fundamentals. So if you were, for example, a

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Speaker 1: massive growth bear and you said Eurozone is going to

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Speaker 1: bear the brunt of it because of geographical proximity to

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Speaker 1: Russia and the energy crisis and everything else, we can

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Speaker 1: tell you, right, but it's had a long duration trade.

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Speaker 1: Should I be long buns? Should I be short the EUROFX?

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Speaker 1: Is it a short eurostock fifty play? Or which sector

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Speaker 1: within euros is it? So that's really more Our value

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Speaker 1: added is measuring the relationship between any financial security, bond,

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Speaker 1: currency equity, whatever it may be, and the macro environment.

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Speaker 1: But we're not a shop that's going to turn around

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Speaker 1: and say three U s GDP is going to be

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Speaker 1: this euro presenting GDP is going to be that. All right,

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Speaker 1: Well you're based and looking at the Bloomber turnal fifty

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Speaker 1: Liverpool Street, is that right where we were? Yet we're

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Speaker 1: London based, Yeah, yeah, So what's it like in the

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Speaker 1: city of London these days? It's you know, three thirty

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Speaker 1: a p m. There you went out for lunch, presumably.

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Speaker 1: How are the streets of London the prett marmang airs

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Speaker 1: for example. Yeah, well there's a there's a very rude

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Speaker 1: acronym that I can't repeat live on air. But most

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Speaker 1: people have turned into Tuesday, Wednesday, Thursday working from the

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Speaker 1: office and Monday and Friday from home, So Monday is

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Speaker 1: probably not a fair representative I got you. Yeah, middle

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Speaker 1: of the week. I would say London is back to

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Speaker 1: kind of like volume and foot traffic or what you

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Speaker 1: used to see. I think in terms of the mood, um, yeah,

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Speaker 1: people are very aware, especially near the whole trosonomic saga. Um,

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Speaker 1: I think brought so much of what we do, which

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Speaker 1: is normally quite leash uh in the middle of the newspaper,

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Speaker 1: brought it very much onto the front pages. I think,

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Speaker 1: you know, mortgage rates is probably where what do meets

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Speaker 1: Main Street right first and foremost, and that story has

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Speaker 1: been splashed everywhere in the UK media. So the mood

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Speaker 1: is pre downbeat. I think people are expecting now the

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Speaker 1: housing market correction and tough times ahead. So it is

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Speaker 1: not greater the UK. All right, we'll hanging there, Hugh

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Speaker 1: Robert's head of analytics at quant Insights. Well, this Federal Reserve,

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Speaker 1: if nothing else, has been quite clear in its messaging

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Speaker 1: what it's what it's doing with rates. You had, obviously, uh,

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Speaker 1: a couple of big, big meetings recently, and they've been

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Speaker 1: quite clear that number one issue is to fight inflation.

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Speaker 1: How how did they go? When do they start? Pre

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Speaker 1: a Miserraam, Managing director and global head of rates Strategy

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Speaker 1: of TV Securities, joins us. So, what's your takeaway here,

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Speaker 1: um as as to where this Federal Reserve is going

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Speaker 1: after we think about the next three to six months

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Speaker 1: in terms of rates. Sure, thanks for having me. So.

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Speaker 1: I think that the Fed is trying to give a

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Speaker 1: very nuanced message here that they could slow down the pace,

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Speaker 1: and that's what they suggested, could happen as early as

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Speaker 1: the December meeting, but they could keep going until they

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Speaker 1: see very clear and convincing signs. Those are the terms

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Speaker 1: that they've been using that inflation is decelerating. So our

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Speaker 1: view is a fifty basis point in December, another fifty

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Speaker 1: in March, and then a series of twenty to bring

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Speaker 1: the terminal rate to five and a half and that's

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Speaker 1: really because we see inflation declining and actually we have

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Speaker 1: a lower than consensus called CPI podcast for Thursday, But

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Speaker 1: it's it's so broad based that we think that decline

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Speaker 1: is going to be slow and inflation is sticky because

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Speaker 1: it's so broad based. So you know, if inflation doesn't

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Speaker 1: decelerate that fast, we think it's going to prevent the

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Speaker 1: FED from being able to stop soon. So they can

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Speaker 1: slow down the pace but keep going. We think until

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Speaker 1: really middle of next year in doing it five and

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Speaker 1: a half and then they're going to have to be

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Speaker 1: resolute and just keep it there because inflation is still

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Speaker 1: going to look high. We focus about four percent inflation

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Speaker 1: at what point they stop, and then we actually have

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Speaker 1: them easing by the end of next year or more

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Speaker 1: so really into twenty four because by then inflation becomes

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Speaker 1: less of an issue, but the growth side becomes problematic

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Speaker 1: for the FED because we see the unemployment rate rising.

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Speaker 1: So I think it's going to be a tricky one

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Speaker 1: for the FED next year. Preal Let's game plan what

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Speaker 1: a five and a half percent terminal rate would look

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Speaker 1: like in terms of the bond market, because I'm looking

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Speaker 1: at two year yields right now at four points seven

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Speaker 1: per cent, do they eclipse five? The terminal rate really

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Speaker 1: does go that far. You know, I think we could

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Speaker 1: just about touch five, but I don't think we get

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Speaker 1: as high as five and a half, or that we

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Speaker 1: can sustain five for the two years because the markets

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Speaker 1: forward looking and is going to price in rate cuts.

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Speaker 1: I mean, we think we're already seeing signs of some

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Speaker 1: slowing in the consumer. You look at the third quarter

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Speaker 1: GDP number, how sing of course it's clearly snow slowing.

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Speaker 1: So this is the first time the fat is going

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Speaker 1: to be hiking into a growth slowdown, and I think

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Speaker 1: that's going to keep these cuts. In twenty four I

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Speaker 1: think we'll actually see more of that cut pricing being

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Speaker 1: built in and that will prevent that front tent from rising.

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Speaker 1: But yeah, I would say risks are more asymmetric, meaning

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Speaker 1: those front ten rates can still keep rising because you know,

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Speaker 1: we're saying five and a half. Maybe it's higher than

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Speaker 1: five and a half if inflation really doesn't decelerate fast.

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Speaker 1: So I'm looking at the two year and a ten

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Speaker 1: year treasury still inverted, you know, fifty fifty one points here.

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Speaker 1: What does that tell you? What is what? What are

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Speaker 1: you hearing from clients about that? Is that's still an issue? Yeah,

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Speaker 1: I think the inversion has been something we've had to

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Speaker 1: get used to, and I think we'll have to live

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Speaker 1: with this inversion for quite some time. I think investors

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Speaker 1: are asking me, you know, when's the time to put

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Speaker 1: on a steep now? If we think the fat's going

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Speaker 1: to be cutting at the end of next year, is

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Speaker 1: now the time for the steep now? And you know

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Speaker 1: a term, Yes, if you get a weaker CPI, the

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Speaker 1: curve can steepen a little bit. I think it's still

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Speaker 1: too early for that steep now. We really the curve

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Speaker 1: tends to only steepen when cuts are about three months

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Speaker 1: UM priced out. And I don't think this FED can

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Speaker 1: even talk about cutting let alone. I mean they're not

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Speaker 1: even talking about pausing. So I think the curve stays inverted.

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Speaker 1: Any big steepening should be feeded. And you really have

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Speaker 1: to wait for that inflation fear from the FED from

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Speaker 1: the market to come down before we can start legging

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Speaker 1: into steepness, legging into steepness. So you said that you

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Speaker 1: know three months out from the cut is if I'm

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Speaker 1: understanding you correctly, that's when you would start going in

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Speaker 1: on the steepener or recommending it. If if the FED

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Speaker 1: is going to cut by the end of next year,

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Speaker 1: does that mean September next year is when you know,

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Speaker 1: maybe you do see that two year ye'ld start following

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Speaker 1: those steepeners make a little bit more sense. Sure, yes,

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Speaker 1: so we're thinking fourth quarters when you start thinking about steepness.

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Speaker 1: I mean, if inflation has ends up being high than

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Speaker 1: our forecast, which is possible, I would say that bias

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Speaker 1: is higher inflation just because wage inflation is high and

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Speaker 1: it's a broad based increase. Maybe it's even closer to

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Speaker 1: the end of next year. So the trade I think

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Speaker 1: between now and then is more a long duration stand

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Speaker 1: rather than a curve steepna because you know, at some

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Speaker 1: point investors are going to want to a recession risk hedge,

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Speaker 1: and I think that's just owning long end treasuries rather

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Speaker 1: than playing for that fadies because the Fed is going

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Speaker 1: to be very reluctantly easy when they do. So we

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Speaker 1: do have midterm elections tomorrow. I wonder how you think

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Speaker 1: about that. I don't know how much you've kind of

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Speaker 1: factor in politics geopolitics into your outlook. How do you

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Speaker 1: think about that sure, so not a whole lot um.

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Speaker 1: I mean, even with the Democrats controlling all three chambers

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Speaker 1: of government, we actually didn't see a whole lot of stimulus.

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Speaker 1: I think other than COVID stimulus, we haven't had much

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Speaker 1: physical stimulus. So if you get gridlock, normally conventional with

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Speaker 1: them would mean less policy. Good for risk assets, probably

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Speaker 1: good for bonds. I would say we've been in that

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Speaker 1: regime already because it was such a tight split. I

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Speaker 1: do worry about the dead ceiling. I hate talking about it,

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Speaker 1: but we're going to be dealing with dead ceiling early

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Speaker 1: next year. It's going to go down to the wire.

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Speaker 1: Markets never like that, so I think that's one source

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Speaker 1: of sort of wild card around the dead ceiling. I

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Speaker 1: think political pressure on the FED will be high as well,

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Speaker 1: But I think this FED has been clear that it's

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Speaker 1: about inflation um, and I think we don't get any

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Speaker 1: fiscal stimulas. So even in my view, where the economy

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Speaker 1: hits the recession by the third quarter of next year,

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Speaker 1: normally we'd look for fiscal easing and monitories ing. I

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Speaker 1: think this time, inflation doesn't allow monitories. In split government

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Speaker 1: doesn't allow fiscal easing, so that's why you know that

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Speaker 1: recession need not be very short lived because you just

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Speaker 1: don't have any policy support. Pretty I'm going to ask

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Speaker 1: you the question that John Pharaoh asked Michaelson from Morgan Stanley,

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Speaker 1: and then I asked him Christ about an hour ago,

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Speaker 1: I think, or a little lessn't that would you rather

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Speaker 1: know the outcome of the midterm elections or would you

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Speaker 1: rather know what the CPI print on Thursday is going

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Speaker 1: to be? Oh? C p I A need. I think

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Speaker 1: that's what's going to tell us a lot more about

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Speaker 1: FED policy, which is actually front and center in everyone's mind.

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Speaker 1: Mike Wilson is the odd man out. He is. I

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Speaker 1: know he wants to know the mid term election chare,

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Speaker 1: but I kind of agree with Prea. Just feels like

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Speaker 1: what's driving this market is and earnings, it's it's it's

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Speaker 1: just kind of the Fed and what are they going

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Speaker 1: to do? So I agree with you, so Priam, thank

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Speaker 1: you so much for joining us. Managing Director and Global

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Speaker 1: head of Rate Strategy for t D Securities. United Nations

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Speaker 1: Climate Change Conference, more commonly known as COP twenty seven

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Speaker 1: is taking place as we speak in Egypt. Uh. The

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Speaker 1: question is what can they get done at this conference here,

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Speaker 1: and let's check in with Sadekwaba, member of the President's

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Speaker 1: National Infrastructure Advisory Council. Uh. He is also the founder,

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Speaker 1: chairman and managing partner of I Squared Capital. He's a

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Speaker 1: member of the Council of Foreign Relations since March. He's

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Speaker 1: also got a few advanced degrees. Uh. You know, kind

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Speaker 1: of just thrown in there for good measure. But Soedak,

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Speaker 1: thanks so much for joining us from Egypt. Given the

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Speaker 1: global geopolitical backdrop, Sedek, what is a reasonable expectations for

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Speaker 1: COP twenty seven in your mind? Thanks for having the

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Speaker 1: appointing to so. Look, the purpose of the COP twenties

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Speaker 1: seven is really to achieve five goals. One is an

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Speaker 1: obvious one, which is stronger commitments from countries in terms

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Speaker 1: of reducing carbon emission, which is what they've degreed in

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Speaker 1: the previous confidence. The second one, which is a little

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Speaker 1: bit more controversial, which is what they call loss of damage,

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Speaker 1: not of the emerging markets and emerging economies are basically

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Speaker 1: seeing we're going to bear the disproportionate share of climate change,

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Speaker 1: so you need to in one way or another compensate us,

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Speaker 1: and of course the world compensate is not something that

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Speaker 1: industrial economies like to hear. And also given the economic

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Speaker 1: crisis we're all feeling today, it's unclear where this money

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Speaker 1: is going to come from. Another goal is adaptation. We

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Speaker 1: need to find ways to reduce emission and these helped

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Speaker 1: African economies and other madrigal economies find those technological ways.

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Speaker 1: And then of course climate finance. How are you going

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Speaker 1: to pay for all this? So at the bottom line,

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Speaker 1: it's a question of where can we get the money,

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Speaker 1: who's going to pay for it, and who's going to

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Speaker 1: help pay for those increased expenses. Uh. And in the

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Speaker 1: current environment, I think it's cant be very difficult because

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Speaker 1: we have rising budget deficits uh GDP debt of soevern

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Speaker 1: economies is at an all time high, in fact higher

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Speaker 1: than World War two levels UH and we're all facing

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Speaker 1: inflation and potential recession of the coming theory. So the challenges.

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Speaker 1: You don't want any of the goals of the conference

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Speaker 1: to completely collapse, and I think you want to be

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Speaker 1: able to have everyone agree, maybe to disagree, and pundit

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Speaker 1: to the next conference and hopefully a good help, not great,

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Speaker 1: that's not that And so dak I mean, how optimistic

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Speaker 1: are you that those goals that you just lined out

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Speaker 1: will actually be met? Does that need to happen for

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Speaker 1: this conference to be considered a success. I think I

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Speaker 1: didn't think so. I think for this conference to be

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Speaker 1: a success is for the we didn't end up in

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Speaker 1: recrimination between various countries, the countries that have and the

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Speaker 1: countries that don't. I think if you achieve that goal

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Speaker 1: and everyone agrees that the current economic circumstances a tough

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Speaker 1: for everyone, and we all agree that we need to

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Speaker 1: need these goals, uh, then I think that even the

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Speaker 1: itself will be a great achievement and try to focus

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Speaker 1: on particular projects rather than macroeconomic goals, which becomes difficult

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Speaker 1: to monitor. So, so that you've written about the need

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Speaker 1: to greenify infrastructure, can you talk about that, what it means,

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Speaker 1: what it means for investors and markets. Yeah. Absolutely. Look,

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Speaker 1: when you think about the investment that is being made

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Speaker 1: for electric vehicles, Um, you know, it's nice. It's of

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Speaker 1: vehicles are moved from ice internal compass engine into electric vehicles.

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Speaker 1: But at the end of the day, those electric vehicles

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Speaker 1: will drive on roads which is native written in asphalt,

428
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Speaker 1: on bridges which is made of concrete, steel, and these

429
00:23:41,560 --> 00:23:48,760
Speaker 1: products are themselves high plaiting inputs. Right um, a percent

430
00:23:48,840 --> 00:23:54,719
Speaker 1: of steel production still uses coal UH. Asphalt and concrete

431
00:23:55,200 --> 00:23:59,159
Speaker 1: uses a huge amount of water and electricity, again a

432
00:23:59,160 --> 00:24:01,679
Speaker 1: lot of it coming from call. So how do you

433
00:24:01,760 --> 00:24:04,119
Speaker 1: deal with these issues is really going to be a problem.

434
00:24:04,160 --> 00:24:07,800
Speaker 1: So it's not enough to talk about the electric vehicles.

435
00:24:08,119 --> 00:24:10,320
Speaker 1: We think it's important to be able to talk about

436
00:24:10,359 --> 00:24:14,840
Speaker 1: the inputs themselves. Think about the following statistics. We will

437
00:24:14,880 --> 00:24:20,720
Speaker 1: need to build a New York City equivalent every month

438
00:24:21,440 --> 00:24:24,520
Speaker 1: for the coming forty years. To think of the amount

439
00:24:24,680 --> 00:24:28,720
Speaker 1: of inputs infrastructure that will need to be built globally,

440
00:24:29,240 --> 00:24:32,159
Speaker 1: the amount of energy that it will require. So the

441
00:24:32,280 --> 00:24:34,240
Speaker 1: way we need to do it is not just by

442
00:24:34,280 --> 00:24:37,399
Speaker 1: saying let's all have electric vehicles, among other things, is

443
00:24:37,440 --> 00:24:42,040
Speaker 1: to think creatively about the urban city. And to be fair,

444
00:24:42,880 --> 00:24:47,160
Speaker 1: Bloomberg and Bloomberg Philanthropies have been focusing precisely on that

445
00:24:47,560 --> 00:24:50,280
Speaker 1: because that, I think is where the future is, which

446
00:24:50,320 --> 00:24:52,600
Speaker 1: is the use of technology to be able to have

447
00:24:52,720 --> 00:24:58,520
Speaker 1: it smart cities that will reduce carbon footprint across the board.

448
00:24:58,840 --> 00:25:02,720
Speaker 1: And I think the future you've been finding technological solutions

449
00:25:03,440 --> 00:25:07,480
Speaker 1: like we did, for example, in UH controlling COVID. We

450
00:25:07,600 --> 00:25:10,520
Speaker 1: spent ten plus billion dollars in the span of nine

451
00:25:10,560 --> 00:25:12,720
Speaker 1: months to be able to find the right back seats.

452
00:25:13,160 --> 00:25:15,479
Speaker 1: So I think that needs to be that huge push

453
00:25:15,840 --> 00:25:22,280
Speaker 1: towards the adopting and adopting of technology to our daily life.

454
00:25:22,760 --> 00:25:25,960
Speaker 1: That's absolutely critical. You won't be able to do it

455
00:25:26,000 --> 00:25:32,080
Speaker 1: through conventional methods. All right, that's great stuff. Sekuaba, member

456
00:25:32,240 --> 00:25:36,679
Speaker 1: of the President's National Infrastructure Advisory Council, is also the founder,

457
00:25:36,720 --> 00:25:40,240
Speaker 1: chairman and managing partner of I Squared Capital. Reporting to

458
00:25:40,320 --> 00:25:45,280
Speaker 1: US live from Egypt. The Top twenty seven conference taking

459
00:25:45,280 --> 00:25:46,920
Speaker 1: place there. It's gonna be going on for a couple

460
00:25:46,920 --> 00:25:49,840
Speaker 1: of weeks there uh in Egypt. And again it's an

461
00:25:49,840 --> 00:25:53,199
Speaker 1: annual conference talking on climate change. Uh. It's kind of

462
00:25:53,240 --> 00:26:01,080
Speaker 1: public private solutions. Perhaps going forward, let's talk big tech

463
00:26:01,320 --> 00:26:03,800
Speaker 1: and you think back, since it's great financial crisis that's

464
00:26:03,840 --> 00:26:06,520
Speaker 1: been the leader for this stock market. But we had

465
00:26:06,600 --> 00:26:09,480
Speaker 1: some really rough earnings this past reporting period and some

466
00:26:09,480 --> 00:26:12,160
Speaker 1: people starting to question that a little bit. Let's bring

467
00:26:12,240 --> 00:26:15,359
Speaker 1: some experts on board and get their U ideas. Man

468
00:26:15,400 --> 00:26:18,880
Speaker 1: Deep singh Uh and A rag Rana there two technology

469
00:26:18,880 --> 00:26:22,280
Speaker 1: annels with Bloomberg Intelligence Man Deeps in our Bloomberg Interactive

470
00:26:22,280 --> 00:26:24,800
Speaker 1: broker studio, A Rock joins us on the phones. On Rock,

471
00:26:24,880 --> 00:26:27,120
Speaker 1: let's start with you, because I want to start with

472
00:26:27,320 --> 00:26:30,200
Speaker 1: We'll get the man Deeps crazy companies later, the ones

473
00:26:30,240 --> 00:26:33,480
Speaker 1: that don't ever even have profits. But you've got Microsoft,

474
00:26:33,920 --> 00:26:36,480
Speaker 1: I mean, that's the bluest of blue chips. Even they

475
00:26:37,000 --> 00:26:40,160
Speaker 1: we're seeing some challenges in their business model, whether it's earnings,

476
00:26:40,200 --> 00:26:43,560
Speaker 1: heads winds, or maybe concern from some of their corporate customers,

477
00:26:44,280 --> 00:26:48,520
Speaker 1: how's that big software space doing? When my Microsoft, my

478
00:26:48,680 --> 00:26:52,800
Speaker 1: leader is a little bit concerning. So when you think

479
00:26:52,800 --> 00:26:55,480
Speaker 1: about it, over the past five to six years, they

480
00:26:55,480 --> 00:26:58,520
Speaker 1: have had a great run in terms of top line growth,

481
00:26:58,840 --> 00:27:02,560
Speaker 1: you know, north of twelve in constant currency, so pretty

482
00:27:02,640 --> 00:27:04,760
Speaker 1: much their you know, revenue has doubled just in the

483
00:27:04,840 --> 00:27:07,879
Speaker 1: last five six years. Now, what's going to happen is

484
00:27:07,960 --> 00:27:10,359
Speaker 1: over the next year year and a half, when we

485
00:27:10,400 --> 00:27:13,560
Speaker 1: see the global economy slowing down a little bit. You know,

486
00:27:13,840 --> 00:27:16,680
Speaker 1: those companies or those clients for them for that matter,

487
00:27:16,760 --> 00:27:19,800
Speaker 1: that have been spending so robustly on software, they're gonna

488
00:27:19,800 --> 00:27:21,960
Speaker 1: pull back a little bit. And and this is more

489
00:27:22,080 --> 00:27:25,840
Speaker 1: so just a mere function of economic think rather than

490
00:27:25,880 --> 00:27:28,200
Speaker 1: anything to do with the digital or you know, all

491
00:27:28,240 --> 00:27:31,240
Speaker 1: the emerging technologies that we see now. Having said that,

492
00:27:31,280 --> 00:27:34,000
Speaker 1: we have confidence that the year after that we're going

493
00:27:34,040 --> 00:27:37,800
Speaker 1: to see a bounce back in that spending. Okay, I

494
00:27:37,840 --> 00:27:40,080
Speaker 1: want to talk about the crazy companies that Paul mentioned.

495
00:27:40,080 --> 00:27:41,480
Speaker 1: I want to do that with man Deep. I want

496
00:27:41,520 --> 00:27:44,320
Speaker 1: to talk about Twitter. I think I don't know, we

497
00:27:44,400 --> 00:27:46,679
Speaker 1: should check the the size and scope on this. How

498
00:27:46,760 --> 00:27:50,160
Speaker 1: much time we talk spending about private companies? Twitter has

499
00:27:50,200 --> 00:27:54,280
Speaker 1: to be number one, But obviously the news from last week,

500
00:27:54,280 --> 00:27:55,560
Speaker 1: there's been a lot of news. But one of the

501
00:27:55,560 --> 00:27:57,920
Speaker 1: big headlines from last week that you had the likes

502
00:27:57,960 --> 00:28:01,760
Speaker 1: of General Mills, You had Auti Fiser joining the list

503
00:28:01,840 --> 00:28:05,560
Speaker 1: of companies that aren't going to advertise on Twitter anymore.

504
00:28:05,560 --> 00:28:07,840
Speaker 1: And the state of ad spending is a little hairy

505
00:28:07,960 --> 00:28:11,080
Speaker 1: right now. But what could that mean for other social

506
00:28:11,080 --> 00:28:15,560
Speaker 1: media companies? Were those dollars going to go? Yes? I

507
00:28:15,640 --> 00:28:20,080
Speaker 1: actually think you know, other competitors like a Snapchat or

508
00:28:20,320 --> 00:28:23,680
Speaker 1: Meta for example, may benefit from some of that ad

509
00:28:23,680 --> 00:28:27,440
Speaker 1: dollars that could move from Twitter to you know, companies

510
00:28:27,480 --> 00:28:31,000
Speaker 1: with more of a direct response UH spend exposure. And

511
00:28:31,040 --> 00:28:33,880
Speaker 1: the reason I say that is because Twitter is eight

512
00:28:34,560 --> 00:28:38,520
Speaker 1: brand advertising, they don't use a lot of personalization when

513
00:28:38,560 --> 00:28:41,719
Speaker 1: it comes to ads, whereas companies with direct response ads

514
00:28:42,080 --> 00:28:46,280
Speaker 1: they personalized as Even though Apple's privacy changes were a headwind,

515
00:28:46,600 --> 00:28:48,880
Speaker 1: there's still better R o I in terms of the

516
00:28:48,920 --> 00:28:51,880
Speaker 1: ad spend. So clearly I think it could make a

517
00:28:51,920 --> 00:28:54,880
Speaker 1: difference for a company like Snapchat. For Meta, it's just

518
00:28:54,960 --> 00:28:59,320
Speaker 1: too large for you know, maybe you know, two hundred

519
00:28:59,360 --> 00:29:01,360
Speaker 1: million dollars moving to Metta. It's not going to make

520
00:29:01,360 --> 00:29:04,760
Speaker 1: a big difference in their fortunes. Hey, you know, let's

521
00:29:04,800 --> 00:29:07,680
Speaker 1: step back a little bit here. We are either you know,

522
00:29:07,720 --> 00:29:10,480
Speaker 1: if you listen to most economists either in or approaching

523
00:29:11,000 --> 00:29:15,240
Speaker 1: sometime in twe recession. Talk to us about kind of

524
00:29:15,280 --> 00:29:19,440
Speaker 1: how tech spending tends to kind of perform in a

525
00:29:19,520 --> 00:29:22,200
Speaker 1: recessionary environment. What are you hearing from the big companies

526
00:29:22,280 --> 00:29:25,280
Speaker 1: you talk to? Yeah, thanksful. So, So the way we

527
00:29:25,320 --> 00:29:27,320
Speaker 1: want to think about is the first thing that goes

528
00:29:27,600 --> 00:29:31,080
Speaker 1: is hardware spending. If you unless you have to upgrade

529
00:29:31,120 --> 00:29:33,120
Speaker 1: the big hardware equipment that you have, you're going to

530
00:29:33,200 --> 00:29:35,600
Speaker 1: push that out for a year. The second place you

531
00:29:35,640 --> 00:29:39,080
Speaker 1: also go is, you know, your legacy on premise software packages.

532
00:29:39,200 --> 00:29:41,720
Speaker 1: You know, you're not going to upgrade your UM you know,

533
00:29:41,840 --> 00:29:46,239
Speaker 1: databases or other software packages. But what happens is there

534
00:29:46,280 --> 00:29:48,440
Speaker 1: are certain areas that you just cannot turn off, so

535
00:29:48,480 --> 00:29:51,800
Speaker 1: security spending being one of them. You have certain areas

536
00:29:51,800 --> 00:29:55,320
Speaker 1: within cloud that increases productivity that you're going to still

537
00:29:55,440 --> 00:29:57,800
Speaker 1: spend a little bit. And the third area that gets

538
00:29:57,840 --> 00:30:01,840
Speaker 1: spending which cuts in spending I D services, but it's

539
00:30:01,960 --> 00:30:03,760
Speaker 1: done with I would say a little bit of a

540
00:30:03,880 --> 00:30:06,920
Speaker 1: lag because the contract that you've signed up or are

541
00:30:07,000 --> 00:30:10,000
Speaker 1: still driving revenue and you know that's the new booking

542
00:30:10,040 --> 00:30:12,440
Speaker 1: start to slow down and that has usually a six

543
00:30:12,520 --> 00:30:15,200
Speaker 1: to nine month lag. Now, having said that, you know,

544
00:30:15,240 --> 00:30:18,560
Speaker 1: from our side, if we do see a reversal in

545
00:30:18,680 --> 00:30:23,000
Speaker 1: the interest rate cuts or slow down, I think the

546
00:30:23,120 --> 00:30:25,520
Speaker 1: fundaments may still be weak, but I think the bounce

547
00:30:25,560 --> 00:30:27,640
Speaker 1: back is going to come there on all the tech

548
00:30:27,720 --> 00:30:31,440
Speaker 1: valuations that have been beaten up so far. Alright, Mandy

549
00:30:31,560 --> 00:30:32,960
Speaker 1: talked to us about the other one of the big

550
00:30:32,960 --> 00:30:35,959
Speaker 1: growth drivers in the tech area has been this, you know,

551
00:30:36,000 --> 00:30:42,200
Speaker 1: the secular ship of advertising dollars onto these digital platforms, Google, YouTube, Meta,

552
00:30:42,320 --> 00:30:45,440
Speaker 1: all those types of things. UM, how are you thinking

553
00:30:45,480 --> 00:30:49,560
Speaker 1: about that app that revenue stream in a recession. Well,

554
00:30:49,680 --> 00:30:53,720
Speaker 1: so clearly you're going to see broad based slowdown and

555
00:30:53,760 --> 00:30:56,560
Speaker 1: adds spending, whether it's on the traditional channels or the

556
00:30:56,600 --> 00:30:59,960
Speaker 1: digital channels. It's not going to change the secular trend.

557
00:31:00,160 --> 00:31:03,680
Speaker 1: Although I would argue that connected TV is becoming a

558
00:31:03,760 --> 00:31:07,520
Speaker 1: much bigger deal than we thought, you know, it was before,

559
00:31:07,880 --> 00:31:10,720
Speaker 1: simply because a lot of the focus was on mobile.

560
00:31:10,960 --> 00:31:14,280
Speaker 1: Mobile ads was really the holy glare and the reason

561
00:31:14,320 --> 00:31:17,600
Speaker 1: why you know, Meta did so well. Connected TV to

562
00:31:17,720 --> 00:31:20,560
Speaker 1: me is just a different medium when it comes to

563
00:31:20,720 --> 00:31:25,120
Speaker 1: you know, how you move your traditional broadcast streaming to

564
00:31:25,720 --> 00:31:28,920
Speaker 1: digital channels and it can curate a lot of first

565
00:31:28,920 --> 00:31:31,920
Speaker 1: party data. So that's where I feel like there will

566
00:31:31,920 --> 00:31:35,160
Speaker 1: be a lot of investments. YouTube clearly is the category

567
00:31:35,240 --> 00:31:38,480
Speaker 1: leader with connected TV. We've seen Roku kind of go

568
00:31:38,600 --> 00:31:41,800
Speaker 1: through its struggles because they don't have a clear platform,

569
00:31:41,840 --> 00:31:44,640
Speaker 1: but you could see there's a lot of emphasis around

570
00:31:44,640 --> 00:31:47,680
Speaker 1: connected TV, you know, for the foreseeable future. All right,

571
00:31:47,720 --> 00:31:51,000
Speaker 1: good stuff. Guys always appreciate getting a quick round table

572
00:31:51,040 --> 00:31:53,000
Speaker 1: there on all things technology. We can do that with

573
00:31:53,320 --> 00:31:58,000
Speaker 1: Man Deep Seeing on a round Bloomberg Intelligence tech analysts.

574
00:31:58,000 --> 00:32:02,320
Speaker 1: This is the big take the Bloomberg's in depth, original

575
00:32:02,360 --> 00:32:04,920
Speaker 1: reporting from around the globe. This is a really fast

576
00:32:05,000 --> 00:32:08,880
Speaker 1: moving story that's caused a lot of outrage among investors.

577
00:32:08,960 --> 00:32:11,640
Speaker 1: This is so fascinating. The market shutdown in a way

578
00:32:11,680 --> 00:32:14,760
Speaker 1: it's never done before. That's gonna have consequences for years

579
00:32:14,800 --> 00:32:20,719
Speaker 1: to come. The Big Take on Bloomberg Radio. All right, well,

580
00:32:20,720 --> 00:32:23,400
Speaker 1: you know we are big, big fans of The Big Take.

581
00:32:23,480 --> 00:32:26,240
Speaker 1: These are stories, in depth reported stories on Bloomberg News.

582
00:32:26,280 --> 00:32:28,400
Speaker 1: And now they've got their own podcast and they've got

583
00:32:29,120 --> 00:32:30,960
Speaker 1: all kinds of radio shows. You can listen to The

584
00:32:31,000 --> 00:32:35,160
Speaker 1: Big Take podcasts on the I Heart Radio app, Apple

585
00:32:35,200 --> 00:32:37,240
Speaker 1: and anywhere else you get your podcast and listen to

586
00:32:37,320 --> 00:32:40,479
Speaker 1: The Big Take every night at eleven pm Eastern on

587
00:32:40,600 --> 00:32:42,720
Speaker 1: Bloomberg Radio. I want to bring in West Coast of

588
00:32:42,760 --> 00:32:45,840
Speaker 1: a host of Bloomberg Big Take. It's a great story.

589
00:32:45,960 --> 00:32:49,560
Speaker 1: We've all read about how these Russian billionaire oligarchs their

590
00:32:49,640 --> 00:32:53,200
Speaker 1: yachts are being seized, and there's some amazing yachts and

591
00:32:53,240 --> 00:32:55,640
Speaker 1: they're being seized due to the kind of response to

592
00:32:55,680 --> 00:32:57,480
Speaker 1: the war in Ukraine. Now the question is what do

593
00:32:57,520 --> 00:33:00,480
Speaker 1: you do with them once you got them? Um Wes,

594
00:33:00,520 --> 00:33:03,400
Speaker 1: you've got a fascinating story here. So it turns out

595
00:33:03,600 --> 00:33:07,560
Speaker 1: it costs money to own a yacht, doesn't it. Oh yeah,

596
00:33:07,600 --> 00:33:10,760
Speaker 1: these yachts are very expensive, not just to buy, but

597
00:33:10,880 --> 00:33:13,120
Speaker 1: to maintain. And as you said at the top there,

598
00:33:13,520 --> 00:33:16,360
Speaker 1: if you seize one of these yachts, as the US

599
00:33:16,440 --> 00:33:20,080
Speaker 1: government does and other European governments have done, as their

600
00:33:20,200 --> 00:33:24,400
Speaker 1: pursuing sanctioned Russian billionaires and trying to get what they

601
00:33:24,440 --> 00:33:27,880
Speaker 1: call the spoils of war, they take these things. Uh,

602
00:33:27,920 --> 00:33:31,240
Speaker 1: they haullow into port and then they sit there and

603
00:33:31,560 --> 00:33:33,640
Speaker 1: it is not cheap to maintain them. As one person

604
00:33:33,720 --> 00:33:36,640
Speaker 1: told Stephanie Baker, who is the guest on the show

605
00:33:36,680 --> 00:33:39,560
Speaker 1: today on the Big Take podcast, she says, these things

606
00:33:39,600 --> 00:33:42,400
Speaker 1: are trying to sink every day if you do not

607
00:33:42,680 --> 00:33:46,040
Speaker 1: maintain them. Well, I don't actually own a yacht at

608
00:33:46,120 --> 00:33:49,000
Speaker 1: least not yet. Walk me through some of the costs here.

609
00:33:49,000 --> 00:33:51,760
Speaker 1: If these yachts are just sitting there, what kind of

610
00:33:51,800 --> 00:33:55,120
Speaker 1: where and tear are they get in? Um? Yeah, Katie,

611
00:33:55,640 --> 00:33:58,880
Speaker 1: Unfortunately I'm also in the don't own a super yacht

612
00:33:58,880 --> 00:34:02,840
Speaker 1: club on now. Yeah, I can always save my pennies.

613
00:34:03,120 --> 00:34:07,000
Speaker 1: Um so. Uh. Anyone who's ever owned any boat, whether

614
00:34:07,000 --> 00:34:09,520
Speaker 1: it's a little dingy or it's a giant yacht. Knows that,

615
00:34:09,800 --> 00:34:12,600
Speaker 1: especially if they're in salt water, they are constantly being

616
00:34:12,640 --> 00:34:17,719
Speaker 1: attacked by a hostile environment. And these these enormous yachts

617
00:34:17,760 --> 00:34:22,040
Speaker 1: are more like floating hotels than they are just your

618
00:34:22,239 --> 00:34:28,560
Speaker 1: ordinary boat. They have um, really uh sophisticated like desalinization

619
00:34:28,640 --> 00:34:34,080
Speaker 1: systems so they can make their own water on transoceanic voyages. Um.

620
00:34:34,160 --> 00:34:37,080
Speaker 1: They have all kinds of systems. They don't have an engine,

621
00:34:37,120 --> 00:34:40,440
Speaker 1: they have engine rooms that you walk into, they have

622
00:34:40,520 --> 00:34:44,640
Speaker 1: control rooms, they have huge staffs, they have state rooms,

623
00:34:44,719 --> 00:34:48,040
Speaker 1: and you know, with all all the amenities in them. Uh,

624
00:34:48,080 --> 00:34:51,680
Speaker 1: and just trying to keep them afloat and in good

625
00:34:51,719 --> 00:34:56,880
Speaker 1: repair takes daily care. And so say the US seizes

626
00:34:56,960 --> 00:35:00,239
Speaker 1: one of these boats, and then they have to have

627
00:35:00,680 --> 00:35:05,359
Speaker 1: an entire crew of people maintaining it every day, as

628
00:35:05,400 --> 00:35:08,359
Speaker 1: though the billionaire still owned it, because of course those

629
00:35:08,360 --> 00:35:10,680
Speaker 1: people would also have a crew taking care of it.

630
00:35:11,520 --> 00:35:13,960
Speaker 1: Why don't why doesn't the US just turn around and

631
00:35:14,000 --> 00:35:15,960
Speaker 1: sell these things? Why why are they in the business

632
00:35:16,040 --> 00:35:18,800
Speaker 1: of owning and maintaining boats. So this is a really

633
00:35:18,800 --> 00:35:22,440
Speaker 1: good question. This is something that Stephanie Baker, who reported

634
00:35:22,440 --> 00:35:26,480
Speaker 1: and wrote this brilliant story got into and the problem

635
00:35:26,719 --> 00:35:31,000
Speaker 1: is what is the market for a seized Russian super yacht?

636
00:35:31,080 --> 00:35:33,560
Speaker 1: So let me just back up. The first thing is

637
00:35:33,600 --> 00:35:37,040
Speaker 1: they actually have to prove who owns it, because it's

638
00:35:37,080 --> 00:35:38,560
Speaker 1: not like you just kind of walk into the super

639
00:35:38,640 --> 00:35:40,279
Speaker 1: yacht show room and say I'll take that one and

640
00:35:40,320 --> 00:35:42,000
Speaker 1: the guy says, you know, what does it take for

641
00:35:42,040 --> 00:35:44,040
Speaker 1: me to put you in a super yott today? Um,

642
00:35:44,320 --> 00:35:46,160
Speaker 1: you have to order it. Of course, it's built to

643
00:35:46,239 --> 00:35:49,680
Speaker 1: your specifications. These things cost hundreds of millions of dollars

644
00:35:50,280 --> 00:35:54,600
Speaker 1: um and then they're they're built for you. And most

645
00:35:54,640 --> 00:35:57,960
Speaker 1: of them are not owned outright by the person who

646
00:35:58,000 --> 00:36:00,719
Speaker 1: buys them. They're bought through shell companies, and sometimes it's

647
00:36:01,400 --> 00:36:05,200
Speaker 1: a shell company inside a shell company that owns these vessels.

648
00:36:05,400 --> 00:36:07,600
Speaker 1: And so when the U S comes along and says, well,

649
00:36:07,600 --> 00:36:09,880
Speaker 1: we're gonna see this because it's owned by a sanctioned

650
00:36:09,960 --> 00:36:12,600
Speaker 1: Russian billionaire, they have to actually prove it, and that

651
00:36:12,640 --> 00:36:15,120
Speaker 1: can take a long time. So let's say they actually

652
00:36:15,120 --> 00:36:18,040
Speaker 1: do prove it or to the satisfaction of a court,

653
00:36:18,120 --> 00:36:21,600
Speaker 1: and they bring it into port and they are legally

654
00:36:21,600 --> 00:36:24,320
Speaker 1: allowed to say we have sees this as quote unquote

655
00:36:24,360 --> 00:36:27,160
Speaker 1: ill gotten gains, and they could sell it. Who's going

656
00:36:27,239 --> 00:36:31,160
Speaker 1: to buy that thing? As one person told Stephanie, Uh,

657
00:36:31,239 --> 00:36:33,239
Speaker 1: let's say you buy one of these yachts and you

658
00:36:33,400 --> 00:36:36,600
Speaker 1: sail it out into Asian waters, you know, outside the

659
00:36:36,600 --> 00:36:38,879
Speaker 1: reach of the US, and the billionaire comes back and says,

660
00:36:38,920 --> 00:36:42,080
Speaker 1: I want my boat. Uh. It's it's a risky sort

661
00:36:42,120 --> 00:36:44,600
Speaker 1: of thing to do. And so it's not that easy

662
00:36:44,840 --> 00:36:48,439
Speaker 1: to unload them. So it's not that easy to sell

663
00:36:48,480 --> 00:36:51,080
Speaker 1: them off, I guess unless you are selling them to

664
00:36:51,120 --> 00:36:54,279
Speaker 1: Russian billionaires, which can't do right now. But who is

665
00:36:54,320 --> 00:36:56,359
Speaker 1: paying for the upkeep at the end of the day,

666
00:36:56,360 --> 00:37:00,680
Speaker 1: who is paying for the cruise that maintain these huge,

667
00:37:00,719 --> 00:37:05,440
Speaker 1: beautiful boats. Well, I'm gonna give everybody listening, yes it's uh,

668
00:37:05,560 --> 00:37:09,160
Speaker 1: the taxpayers are and um. Stephanie tells the story of

669
00:37:09,200 --> 00:37:13,960
Speaker 1: this one enormous boat called Amadeia, which the US claims

670
00:37:14,040 --> 00:37:17,600
Speaker 1: is owned by this Russian gold tycoon named Suleiman Karama

671
00:37:17,680 --> 00:37:21,080
Speaker 1: who was sanctioned by the US and eighteen and they

672
00:37:21,120 --> 00:37:25,919
Speaker 1: tracked down this enormous three hundred twenty five million dollar Yeah,

673
00:37:25,960 --> 00:37:29,279
Speaker 1: it's three hundred and forty ft long. In fact, it's

674
00:37:29,360 --> 00:37:33,279
Speaker 1: so big that um. In boat parlance, it's not even

675
00:37:33,280 --> 00:37:37,040
Speaker 1: a super yacht. It's called mega yacht or a giga

676
00:37:37,120 --> 00:37:40,200
Speaker 1: yacht because it's so big. And they tracked this thing

677
00:37:40,280 --> 00:37:45,200
Speaker 1: down uh To to Fiji where it was located, and eventually,

678
00:37:45,200 --> 00:37:47,920
Speaker 1: after this very long you know, back and forth and

679
00:37:48,000 --> 00:37:52,120
Speaker 1: wrangling and questioning the crew, they hauled this thing back

680
00:37:52,120 --> 00:37:55,400
Speaker 1: to San Diego and that's where it's sitting in port.

681
00:37:56,280 --> 00:38:00,160
Speaker 1: The annual cost of keeping the Amadia in port, well

682
00:38:00,200 --> 00:38:01,640
Speaker 1: they're trying to figure out what to do with this

683
00:38:01,719 --> 00:38:04,080
Speaker 1: thing is about ten million dollars and that's paid for

684
00:38:04,200 --> 00:38:08,520
Speaker 1: by the taxpayers. So do the Russian oligarchs to purported

685
00:38:08,600 --> 00:38:11,879
Speaker 1: owners of these shots, did they have any recourse here?

686
00:38:11,920 --> 00:38:15,440
Speaker 1: What are they doing? Um? So this is also a

687
00:38:15,480 --> 00:38:20,560
Speaker 1: really interesting question. A lot of them either don't respond to,

688
00:38:21,120 --> 00:38:23,399
Speaker 1: you know, request for comment. Of course, I'm I'm really

689
00:38:23,440 --> 00:38:26,120
Speaker 1: repeating here because this is Stephanie's story. She came on

690
00:38:26,200 --> 00:38:28,640
Speaker 1: the Big Take podcast today and so I interviewed her

691
00:38:29,040 --> 00:38:33,319
Speaker 1: UM and she has said, um, that she reached out

692
00:38:33,360 --> 00:38:35,080
Speaker 1: to some of them that they didn't even answer. Others

693
00:38:35,120 --> 00:38:37,440
Speaker 1: of them say no, I'm not the owner, and the

694
00:38:37,480 --> 00:38:40,680
Speaker 1: owner can be a notional other person or it can

695
00:38:40,719 --> 00:38:42,600
Speaker 1: be a person who's the head of a shell company

696
00:38:42,600 --> 00:38:44,920
Speaker 1: and say no, no, there's the owner. They just use

697
00:38:45,080 --> 00:38:49,919
Speaker 1: the boat and so um, it's very complicated about trying

698
00:38:49,960 --> 00:38:52,239
Speaker 1: to identify that identity, and in part because they don't

699
00:38:52,239 --> 00:38:54,680
Speaker 1: just come out and say, hey, you took my boat. Yeah,

700
00:38:54,760 --> 00:38:57,200
Speaker 1: it's a it's interesting story. I didn't even think about it,

701
00:38:57,320 --> 00:38:59,160
Speaker 1: you know, I just until I read the story. It's like,

702
00:38:59,440 --> 00:39:01,799
Speaker 1: it's one thing to seize a yacht. It's another thing too,

703
00:39:02,200 --> 00:39:04,560
Speaker 1: I guess kind of do something with it, you know,

704
00:39:04,600 --> 00:39:07,439
Speaker 1: either monetize it or I don't know what West Coast about.

705
00:39:07,440 --> 00:39:09,480
Speaker 1: Thanks so much for joining us. West is the host

706
00:39:09,520 --> 00:39:12,480
Speaker 1: of Bloomberg's Big Take and again the Big Take story

707
00:39:12,760 --> 00:39:17,000
Speaker 1: is entitled and Pounded. Russian super yachts are costing millions

708
00:39:17,160 --> 00:39:20,960
Speaker 1: to maintain. So again and in this story, I saw

709
00:39:21,440 --> 00:39:23,759
Speaker 1: great photographs of these mega yachts in there, you know,

710
00:39:23,760 --> 00:39:25,440
Speaker 1: all over the world. One that one is in Spain,

711
00:39:25,560 --> 00:39:28,640
Speaker 1: one's in the UK, as West was saying, ones docked

712
00:39:28,680 --> 00:39:31,880
Speaker 1: in in San Diego. Um. And you know, these oligarchs

713
00:39:31,880 --> 00:39:33,879
Speaker 1: states tried to race out of Russian waters and get

714
00:39:33,920 --> 00:39:36,960
Speaker 1: the safe waters. Some made it, some did not. Uh,

715
00:39:37,000 --> 00:39:40,600
Speaker 1: And some had their boats seized here. Uh it's I

716
00:39:40,640 --> 00:39:42,560
Speaker 1: just thought you could just turn around and just sell it,

717
00:39:42,640 --> 00:39:44,759
Speaker 1: but apparently that's not the case. There might be some

718
00:39:44,880 --> 00:39:47,080
Speaker 1: legal issues there that they have to work out, but

719
00:39:47,120 --> 00:39:49,880
Speaker 1: a fascinating story. Uh. And you can listen to The

720
00:39:49,920 --> 00:39:53,200
Speaker 1: Big Take podcast on my Heart radio, app, Apple and

721
00:39:53,239 --> 00:39:55,480
Speaker 1: anywhere else you get your podcast. And you can listen

722
00:39:55,520 --> 00:39:57,320
Speaker 1: to The Big Take every night at love in pm

723
00:39:57,360 --> 00:40:02,040
Speaker 1: Eastern on Bloomberg Radio. Thanks for listening to the Bloomberg

724
00:40:02,080 --> 00:40:05,480
Speaker 1: Markets podcast. You can subscribe and listen to interviews of

725
00:40:05,520 --> 00:40:10,320
Speaker 1: Apple podcasts or whatever podcast platform you prefer. I'm Matt Miller.

726
00:40:10,600 --> 00:40:14,000
Speaker 1: I'm on Twitter at Matt Miller nineteen seventy three and

727
00:40:14,160 --> 00:40:16,760
Speaker 1: on Fall Sweeney I'm on Twitter at pt Sweeney. Before

728
00:40:16,800 --> 00:40:19,600
Speaker 1: the podcast. You can always catch us worldwide at Bloomberg

729
00:40:19,680 --> 00:40:19,919
Speaker 1: Radio