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What's Ahead For Mortgage Rates · Bloomberg Intelligence

0:00
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. Now. There's been a
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Speaker 1: lot of talk about housing lately, from the FED to
0:25
Speaker 1: David Rubinstein's interview with John Paulson. I want to bring
0:28
Speaker 1: in somebody who runs a closed and fund invest primarily
0:32
Speaker 1: and residential whole mortgages. Katherine Hawkins joins US portfolio manager
0:37
Speaker 1: and senior vice president Vertical Capital Income Fund. So, Catherine, UM,
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Speaker 1: what kind of my main question is what kind of
0:47
Speaker 1: risk are you seeing here for the return that you're
0:51
Speaker 1: getting or what kind of return are you saying for
0:53
Speaker 1: the risk that you're taking? Sure? I mean, I think
0:57
Speaker 1: it really depends, you know, on what us A classes
1:00
Speaker 1: in the mortgage industry or investing in UM. Single family
1:04
Speaker 1: rentals right now are pretty hot. UM. They're producing the
1:08
Speaker 1: highest returns really UM, and that's with investors chasing yield
1:13
Speaker 1: and kind of this low rate environment. UM, you're still
1:17
Speaker 1: looking at a first lean on a residential mortgage. UM,
1:20
Speaker 1: so as far as you know the risk profile, UM,
1:24
Speaker 1: your first in line. We're in the business of buying
1:26
Speaker 1: the whole loans, so we're not investing in any pools
1:29
Speaker 1: or tranches. UM. We own the servicing rights as well.
1:32
Speaker 1: So UM, that's where we are focusing on really right
1:36
Speaker 1: now as a single family that that makes a lot
1:38
Speaker 1: of sense. And I could see UM single family rentals
1:41
Speaker 1: being a great investment when you step back and look
1:44
Speaker 1: at the whole market right now, how does it strike you?
1:48
Speaker 1: Because it seems like everyone wants to buy a house,
1:52
Speaker 1: Prices are going as high as they can and people
1:55
Speaker 1: are just paying as much as they can borrow. UM. Well,
2:00
Speaker 1: I don't know that I necessarily agree with all of
2:02
Speaker 1: that we have UM. You know, home ownership is actually
2:06
Speaker 1: down since two thousand nine, UM, and we've got we're
2:09
Speaker 1: seeing a lot more renters, especially in the younger generations
2:12
Speaker 1: and millennial generation. UM. And you're seeing that too in
2:16
Speaker 1: a start with covid UM and a surge of people
2:19
Speaker 1: wanting more space, not wanting to be in the multifamily housing.
2:22
Speaker 1: So you're seeing kind of people moving out of that
2:24
Speaker 1: live work play area and looking for single family renter
2:29
Speaker 1: rental homes. Catherine talks to us about the credit quality
2:34
Speaker 1: of the market that that you play in. What are
2:37
Speaker 1: you seeing now in terms of credit quality? Yeah, I
2:40
Speaker 1: think that's the big difference between kind of a surge
2:42
Speaker 1: right now and and back you know, subprime eras is
2:46
Speaker 1: really you're seeing seven hundred and above ficos um. You know,
2:50
Speaker 1: the credits guidelines and lending practices are tighter than they
2:55
Speaker 1: have been in a while. UM, So we're really we're
2:58
Speaker 1: looking at seven D seven fifty ficos um and generally
3:01
Speaker 1: like a sixty percent LTV on the property. What about
3:05
Speaker 1: the feds involvement here, the asset purchases that they've been making,
3:09
Speaker 1: Is it hurting your ability to provide more returns? It's
3:14
Speaker 1: really not so. Again, we're buying a whole loan. Um,
3:17
Speaker 1: we have a whole loan portfolio. The tapering, you know that,
3:20
Speaker 1: I think we're not going to see any significant um
3:24
Speaker 1: change in rate due to tapering, um, you know anytime soon.
3:27
Speaker 1: I think race will stay the same um, you know,
3:31
Speaker 1: And that's it's always going to drive you know, to
3:32
Speaker 1: kind of get creative on structure and leverage to find
3:36
Speaker 1: some yield and return. So I'm starting to hear I
3:41
Speaker 1: think maybe on the radio some of the return of
3:43
Speaker 1: zero down mortgages UM. That kind of gets my radar up.
3:48
Speaker 1: Having lived through the financial crisis, should we be concerned
3:53
Speaker 1: about for two and a half million, Yeah, yeah, UM,
3:57
Speaker 1: it concerns me to UM. Luckily, it's not a big
4:00
Speaker 1: program UM and very few groups are offering it. And
4:04
Speaker 1: then it is different than subprime, you know, than we
4:07
Speaker 1: saw kind of the nina UM you know, in subprime
4:10
Speaker 1: programs that were out there. The credit um is a
4:13
Speaker 1: lot higher. I think it's a seven sixty minimum credit
4:16
Speaker 1: limit to these, and it is basically an so you're
4:22
Speaker 1: really financing your down payment on those UM. One of
4:25
Speaker 1: the biggest differences that I take a little bit of
4:27
Speaker 1: comfort in is that these are fixed rate loans UM.
4:31
Speaker 1: They do not have a balloon payment uh and so
4:33
Speaker 1: there's not going to be any kind of or a
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Speaker 1: pre payment penalty for that matter, and so there's not
4:36
Speaker 1: going to be a really a big payment shocked to
4:40
Speaker 1: any of the borrowers. I think it really weeds out
4:42
Speaker 1: some of the borrowers that are trying to get in
4:45
Speaker 1: in the beginning. What do you think about the way
4:47
Speaker 1: the fund has traded on the n Y s C.
4:49
Speaker 1: I mean, UM, it's obviously you don't expect to see
4:55
Speaker 1: much volatility in this kind of fund, and yet even
4:58
Speaker 1: with the pandemic you saw big drop. People took advantage
5:01
Speaker 1: of it quickly and its snapped almost back, but it's
5:04
Speaker 1: still it's got yet to come back to the two levels.
5:09
Speaker 1: That's right. We did see a pretty big drop in
5:11
Speaker 1: the stock price with UM the onset of COVID, which
5:15
Speaker 1: I think was kind of in line with all markets
5:17
Speaker 1: really in general. UM. And you know, the the volatility
5:21
Speaker 1: in our fund is that we're just it's not a
5:23
Speaker 1: big market share, right, so we've got a few and
5:26
Speaker 1: but UM institutional investors that trade in and trade out.
5:29
Speaker 1: It's really more of a long term play. What's the
5:33
Speaker 1: concerning your market, Catherine? Thirty seconds left here? Uh, if
5:36
Speaker 1: rates will in fact start to rise here, you know,
5:41
Speaker 1: for us, we're buy and hold, so we'd redeploy any
5:44
Speaker 1: capital that you know, we get back and remit. UM.
5:47
Speaker 1: We're starting to see a slowdown and re fis, but
5:49
Speaker 1: it's too early related to tell if that was just
5:51
Speaker 1: kind of a come down as the summer season. Um,
5:54
Speaker 1: and if that will really continue. Um, but really for
5:57
Speaker 1: us slow down and refisum real red just redeployed capital,
6:02
Speaker 1: you know, in the current rate environment. All right, Catherine,
6:05
Speaker 1: thank you so much for joining us. Katherine Hawkins, portfolio
6:08
Speaker 1: manager and Signior vice president of Vertical Capital Income Fund
6:12
Speaker 1: UH close and fund that invests primarily in residential whole
6:17
Speaker 1: mortgage loans and whole loan secured by deeds of trust. UH.
6:21
Speaker 1: The investment objective there is to seek income and for
6:23
Speaker 1: a lot of investors looking at a you know, one
6:25
Speaker 1: point three percent ten year yield, there is a need
6:30
Speaker 1: for income. There is a need for yield in this market,
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Speaker 1: and clearly the mortage market is one place of interest.
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Speaker 1: This is Bloomberg Honors. Harrison joins us right now, chief
6:42
Speaker 1: investment Officer of Global Fixed Income at NOEU VENE. They
6:45
Speaker 1: have one point to trillion dollars of assets firm wide
6:50
Speaker 1: and are based out of gorgeous Charlotte, North Carolina. UM
6:55
Speaker 1: and anders this is you know, obviously it's a personal
6:57
Speaker 1: issue for me COVID and what's happening in terms of
7:00
Speaker 1: travel restrictions, but it's got to affect um, the companies
7:06
Speaker 1: that you cover, as well as uh, you know, the
7:11
Speaker 1: the entire global economy. When you don't allow Americans to
7:16
Speaker 1: fly into Europe, it becomes a problem on so many levels. Yeah,
7:22
Speaker 1: thanks for having me. Yeah, No, certainly, it's it's it's
7:25
Speaker 1: a key the area that we were paying attention to. UM. Certainly,
7:31
Speaker 1: the trends ofthing concerning and the reopening kind of type
7:36
Speaker 1: uh trend that we've been seeing not just here in
7:39
Speaker 1: the US but also globally is certainly could could become impacted.
7:44
Speaker 1: And as you said, if if Europe starts becoming more
7:47
Speaker 1: strict on you know, uh, you know, a scissors or
7:51
Speaker 1: visitors in general, that certainly can have you know, both
7:54
Speaker 1: an economic impact and behavioral impact as well. But I
7:59
Speaker 1: would say, and when we take a quick step back
8:02
Speaker 1: year of late the economic activity at least in the
8:05
Speaker 1: US has not been quite as much affected on this
8:09
Speaker 1: latest wave on the on the delta side as we've
8:12
Speaker 1: seen in the past, and the high frequency data has
8:15
Speaker 1: has sort of been showing quite minimal impact of consuming
8:20
Speaker 1: consuming behavior so far, that could certainly change. And certainly
8:24
Speaker 1: we're keeping an eye on return to school and how
8:27
Speaker 1: that's going and even if they were delays to returning
8:30
Speaker 1: to the office. But at this point, so far that again,
8:35
Speaker 1: the high frequency data seems to be holding up quite well.
8:39
Speaker 1: Certainly we're keeping an eye on on case counts and
8:42
Speaker 1: hospitalizations around on around the US and around the world,
8:46
Speaker 1: where at least now we're seeing some of these desolation
8:50
Speaker 1: in the latest numbers. Not to say that we're out
8:52
Speaker 1: of the woods, far from it, but um, we're certainly
8:56
Speaker 1: monitoring this risk. But at this point COVID has not
9:00
Speaker 1: had a whole lot of impact on the fixed income
9:03
Speaker 1: side of things at least, so worth monitoring obviously on
9:07
Speaker 1: the top of mind for everybody, so that the company's
9:10
Speaker 1: wearing less than um, but so far it's necessarily minimal impact.
9:15
Speaker 1: We would say, just what was your takeaway from Jackson
9:18
Speaker 1: Hole last week? It's that, you know, the the signaling
9:22
Speaker 1: factor seems to be pretty good from the FED. What
9:25
Speaker 1: was your takeaway? Sure, yeah, I would say we would
9:29
Speaker 1: we would probably call it a bit of a non event. Obviously,
9:32
Speaker 1: it's felt like there was in line with what the
9:34
Speaker 1: market was expecting and kind of hoping for, perhaps a
9:38
Speaker 1: little disappointment of not getting more clarity around the actual
9:42
Speaker 1: tapering timing. But we actually feel like General Powell handled
9:46
Speaker 1: events very well, gave a little more assurance that tapering
9:51
Speaker 1: is coming, and we sort of clarified and reinforced that
9:56
Speaker 1: that there is a thought process of that likely that
10:00
Speaker 1: could start before the end of the year. But at
10:03
Speaker 1: the same time, he left himself with a lot of optionality,
10:07
Speaker 1: be it looking at some of this additional economic data
10:10
Speaker 1: coming up. Obviously jobs numbers on Friday would be quite key,
10:14
Speaker 1: and even you know, a better read into what we
10:16
Speaker 1: just mentioned about COVID and the delta variant potentially impact.
10:20
Speaker 1: So all in all, we we we felt like he
10:23
Speaker 1: handled well. I didn't really scoop the markets one way
10:26
Speaker 1: or another. Um I think it was kind of interesting
10:30
Speaker 1: to see that you had a lot of key speakers
10:33
Speaker 1: from from the FED come out in the past week
10:35
Speaker 1: or so with sort of a mix of views and
10:38
Speaker 1: discussion points. But in the end, I think this reinforced
10:42
Speaker 1: our view that you really, really mostly almost exclusively need
10:46
Speaker 1: to listen to to Powell or with maybe Clarenda Williams
10:50
Speaker 1: and Brainard, and those are the key people that are
10:54
Speaker 1: really setting the tone here. So interesting to get to
10:57
Speaker 1: take aways from other FED speakers, But ultimately power in
11:00
Speaker 1: this core team is what truly matters. Here are they
11:03
Speaker 1: are all the Hawks non voters. It's a bit of
11:07
Speaker 1: a mix to be fair. And then as you guys
11:10
Speaker 1: know it, kind of it's a moving target as well
11:12
Speaker 1: as those are moving around. But but the key players
11:16
Speaker 1: in our mind is again those kind of four power Clarada,
11:20
Speaker 1: William some brain art um. And that's not to say
11:23
Speaker 1: that everybody obviously has some influence and have views that
11:27
Speaker 1: can can frame things up. But at this point um,
11:31
Speaker 1: we cannot view this weekend's message from Powell in particular,
11:36
Speaker 1: particularly that it was sort of adubblished tapering message, meaning
11:41
Speaker 1: reinforced here what I said that it's on top of
11:44
Speaker 1: mind they have kind of the four end of the
11:46
Speaker 1: year time frame, but at the same time also reinforced
11:50
Speaker 1: that the tapering timing and the interest rate hiking timing
11:54
Speaker 1: or in completely supper timetable. So that had been some
11:58
Speaker 1: market speculation again part be I think because some of
12:01
Speaker 1: the other FED speakers being fairly aggressive and some of
12:04
Speaker 1: their sound bites, so there has been some speculation and
12:08
Speaker 1: maybe we can start reading into timing of the first
12:11
Speaker 1: hike around when tapering would wrap up. But again I
12:15
Speaker 1: think Powell came out he said it pretty clearly on
12:19
Speaker 1: that that that shouldn't be the case, and he's separating
12:22
Speaker 1: those two timetables completely. So again we kind of do
12:25
Speaker 1: it as a dobish tapering that message at this point
12:29
Speaker 1: and again gives them a lot of flexibility here and
12:32
Speaker 1: could easily posse ab bit before rate hikes start. Uh,
12:37
Speaker 1: and kind of wrapping up the tabling. All right, Anders,
12:40
Speaker 1: thank you so much for joining us as always unders
12:43
Speaker 1: person Chief Investment Officer of Global Fix Income at now
12:47
Speaker 1: Vene based in Charlotte, North Carolina. As we watch markets
12:55
Speaker 1: hit a new time a new all time high at
12:57
Speaker 1: least the SMP five after what we saw in Jackson Hole. Um,
13:03
Speaker 1: we should talk about what exactly that was pre a
13:06
Speaker 1: misrab joins us Managing Director and Global head of Great
13:09
Speaker 1: Strategy at t D Securities. Great having you on, Great
13:13
Speaker 1: talking to you again. Um, what did you think that was?
13:17
Speaker 1: Was that a dovish taper as it was sort of
13:19
Speaker 1: referred to on the day. Hi Matt, thanks for having
13:23
Speaker 1: me on. Yes, I think we heard not a new
13:26
Speaker 1: message from chair Power, but certainly a message that they
13:30
Speaker 1: are inching that the fat is inching towards taper, but
13:33
Speaker 1: that they don't feel urgency either on the inflation front
13:36
Speaker 1: on the labor market front to have to accelerate the base.
13:39
Speaker 1: We're also seeing very clear signs from the feather they're
13:42
Speaker 1: trying to disentangle um tapering from hiking. I think they're
13:46
Speaker 1: trying to prevent a taper tantrum. They've done a fantastic
13:48
Speaker 1: job so far. We're three months away potentially from a taper,
13:51
Speaker 1: at least in our foecast tapering happens in December, and
13:55
Speaker 1: yet the bond market is table, equities continue to go up.
13:58
Speaker 1: So I think what the FED is trying to say
13:59
Speaker 1: is the corner me strong. The FED is starting to
14:02
Speaker 1: take the punch pull away, but they're doing it in
14:04
Speaker 1: such a gradual pace that it doesn't threaten the recovery.
14:06
Speaker 1: I think that's the message we got on Friday, and
14:09
Speaker 1: now I would say it's much more important now what
14:11
Speaker 1: happens to the economy and the economic outlook rather than
14:14
Speaker 1: the FED reaction function. I think the FED is tried
14:17
Speaker 1: hard to clarify that back and holding through other FED messages.
14:21
Speaker 1: All right, for yourself, we are to look at the economy,
14:23
Speaker 1: presumably labor is a big, big part of that. So
14:27
Speaker 1: when we have obviously the jobs before coming up on Friday,
14:29
Speaker 1: how do you think the FED is looking at this
14:32
Speaker 1: labor market and what do you think they're kind of
14:34
Speaker 1: what clues do you think they're looking for? Ye, so
14:37
Speaker 1: I think they'd want to see the continued number of
14:40
Speaker 1: you know, non farm payroll numbers, so jobs created in
14:44
Speaker 1: the economy. I think they'd want to see that continuing
14:46
Speaker 1: to grow. We do expect to see that sign, but
14:48
Speaker 1: our economists do have a slowing in the pace, a
14:50
Speaker 1: pretty significant slowing. We've got four thousand pensylvan for Friday,
14:55
Speaker 1: so that is much weaker than close to a million
14:57
Speaker 1: that we saw last month. Some of it is a
14:59
Speaker 1: seasonal issue, some of it is high frequency data we're
15:02
Speaker 1: noticing is showing a deceleration in the job momentum. But
15:06
Speaker 1: I think the FED would want to see continued job
15:08
Speaker 1: growth plus people returning to the labor force. I think
15:11
Speaker 1: that's been a big open question. You know, is there
15:14
Speaker 1: a structure shift in the labor market or in our view,
15:17
Speaker 1: this is more a function of the fact that we
15:19
Speaker 1: have the extended unemployment benefits, or there's just lingering COVID
15:23
Speaker 1: fears or the fact that schools won't reopen. I don't
15:26
Speaker 1: think you get that sense from this report because this
15:28
Speaker 1: is still August report. Really, I would say September and
15:31
Speaker 1: October payroll report so released a month later, would be
15:35
Speaker 1: more important. On that, you know, structural component of the
15:38
Speaker 1: labor market. I think that will give the FED a
15:40
Speaker 1: sense of true labor market slack. As long as there
15:43
Speaker 1: a slack in the system, I think they want to
15:45
Speaker 1: be extremely accommodative. If there's science that people are not
15:48
Speaker 1: re entering the labor force, that they've left the labor
15:50
Speaker 1: force for good, you know, retirements or people just there's
15:54
Speaker 1: skills mismatch, I think then the FED may have to
15:56
Speaker 1: accelerate that piece of exit because I will mean beige
15:59
Speaker 1: in flame scan and sustainable price inflation will be on,
16:03
Speaker 1: you know, will be sooner than they expect. But our
16:06
Speaker 1: thought is that people do reent to the labor before.
16:08
Speaker 1: So we are looking for a weaker number this Friday,
16:10
Speaker 1: and I think that can make the market a little
16:13
Speaker 1: bit nervous here if the recovery is derailing a little bit.
16:16
Speaker 1: But we expect, you know, over the next couple of
16:19
Speaker 1: months numbers to remain strong and that will allow the
16:22
Speaker 1: fit to exit gradually. But I think that's really the
16:25
Speaker 1: critical one. Well, this is the end of summer. I
16:27
Speaker 1: mean you mentioned a high frequency data. We had a
16:31
Speaker 1: great story overnight by Steve Matthews and Jill Shaw just
16:34
Speaker 1: putting together a ton of charts from the data, and
16:37
Speaker 1: the one that caught my eye was um airline travel.
16:41
Speaker 1: It's just rolled over at the end of August. But
16:44
Speaker 1: you know, to be expected because you did hopefully some
16:47
Speaker 1: kind of vacation June July. Um. You know, unless you're
16:51
Speaker 1: Amy Morris who hasn't gone on vacations since May. Um.
16:54
Speaker 1: What about the beginning of school? Does that? Does back
16:58
Speaker 1: to school? You think push that day? The backup is
17:00
Speaker 1: back to school. Three more moms and dads to get
17:03
Speaker 1: out there and look for a job and obviously get
17:06
Speaker 1: one right away. It is back to school. Change the picture. Yeah.
17:09
Speaker 1: I think, particularly on the labor market front, in terms
17:13
Speaker 1: of labor force participation, we do think back to school
17:15
Speaker 1: will help because it will free up a lot of
17:18
Speaker 1: people to come back and look for jobs. The Jewels
17:21
Speaker 1: statu is suggesting the job openings are there, so you know,
17:24
Speaker 1: employers have the job requirements out there. The openings are there,
17:28
Speaker 1: we just haven't found the people willing to take it. Now,
17:31
Speaker 1: the big question is is there a skills mismatch the
17:34
Speaker 1: job openings out there versus the people that are re
17:37
Speaker 1: entering the labor force. Is there a skills mismatch, which
17:39
Speaker 1: is I think more concerning for the FED if that
17:41
Speaker 1: does emerge, But I think there's enough jobs looking at
17:44
Speaker 1: the Jewels Stata across the spectrum that if people re
17:47
Speaker 1: enter the labor force as schools reopen, and I think
17:50
Speaker 1: COVID does is a bit of a concern. If we
17:53
Speaker 1: continue to see COVID cases rising, that might delay some
17:56
Speaker 1: people re entering the labor force. But if we do it,
18:00
Speaker 1: spect over the next couple of months, people re entering
18:02
Speaker 1: these jobs getting filled, and that's a sign that there
18:05
Speaker 1: is underlying labor market slack beyond just what the unemployment
18:08
Speaker 1: rate shows. Thirty seconds, Um, I'm looking at the ten
18:13
Speaker 1: year here, you know, one point three. It just feels
18:16
Speaker 1: like we're range bound here. Is that kind of how
18:20
Speaker 1: we're gonna play out the rest of the year, do
18:21
Speaker 1: you think? I think in the near term, yes, I
18:24
Speaker 1: think we're in a one twenty five to fifty type range.
18:28
Speaker 1: We are looking for higher rates by your end because
18:30
Speaker 1: by then we think we'll have the evidence that people
18:33
Speaker 1: are returning to the to the labor market, that Delta
18:36
Speaker 1: maybe delayed the recovery but doesn't derail it, that the
18:39
Speaker 1: FED starts to exit, we get more fiscal So by
18:42
Speaker 1: year end we think we may be able to break
18:44
Speaker 1: out of this range. But in the next few months,
18:47
Speaker 1: while we still have questions about the economy and the
18:49
Speaker 1: impact of delta, and the FED is being patient, we
18:52
Speaker 1: think we stay fairly range bound on on the tenure.
18:55
Speaker 1: All right, pray, thank you so much. We appreciate that
18:58
Speaker 1: as always pre a Misraah, Manager, Director and Global head
19:01
Speaker 1: of rate Strategy at TV Securities. Again a ten year
19:04
Speaker 1: trading today about one point three zero percent. Well earlier
19:11
Speaker 1: we heard a discussion some tape between John Paulson and
19:15
Speaker 1: Mr Rubinstein uh in a discussion about Mr Paulson's view
19:20
Speaker 1: of the markets are including crypto, and I want to
19:22
Speaker 1: get Shannali Bastic's view on that. Chanale is the Wall
19:25
Speaker 1: Street border for Bloomberg News joinings here in our Bloomberg
19:28
Speaker 1: Interactive Broker Studios. So, Sally, I know you you saw
19:31
Speaker 1: the interview. You saw the comments from John Paulson. What's
19:34
Speaker 1: your takeaway there? Well, a few things. I covered Paulson
19:37
Speaker 1: very very closely when he was working with Carl Icon
19:41
Speaker 1: as an activist investor against a i G. It's like,
19:44
Speaker 1: since two thousand and eight, everybody was waiting for John
19:46
Speaker 1: Paulson's next big short, and we never really saw it.
19:50
Speaker 1: But this is a very rare interview. He doesn't do
19:53
Speaker 1: much public speaking at all. I've tried to doorstop him
19:57
Speaker 1: personally at E C n Y conferences, and so it
20:01
Speaker 1: is a rare kind of view into his world. One
20:03
Speaker 1: of my favorite things he told David Rubinstein, though, is
20:05
Speaker 1: that he didn't really love managing money for other people.
20:08
Speaker 1: Remember now he runs his own money. It's billions of dollars.
20:13
Speaker 1: But I thought I totally agree. I thought, um, it
20:15
Speaker 1: was super fascinating, especially for those of us who you know,
20:19
Speaker 1: lived through and covered the financial crisis or invested through
20:23
Speaker 1: it for our listeners. Um, so fascinating to hear from
20:27
Speaker 1: John Paulson. I did think that if you're a crypto investor,
20:30
Speaker 1: you probably you couldn't you couldn't care any less what
20:36
Speaker 1: he thinks about bitcoin, right, And he also hasn't made
20:41
Speaker 1: any big bets um other than gold and steinway that
20:46
Speaker 1: I know of. Is that wrong, Nale? Since since the
20:49
Speaker 1: Big Short? Well, remember I had said I covered the
20:52
Speaker 1: A G investment and so that was certainly a big
20:54
Speaker 1: deal when that was happening. But to your point, no,
20:57
Speaker 1: not like not like what he had done during two
20:59
Speaker 1: thousand and eight. Nothing, nothing like that. And so you know,
21:02
Speaker 1: John Paulson, who is he to a new generation? That's
21:05
Speaker 1: a great question to me because and what can you
21:07
Speaker 1: learn from what he's done? I think the reason I'm
21:10
Speaker 1: so interested in what he said about investing is that
21:13
Speaker 1: he said he didn't really like the business of business.
21:16
Speaker 1: And so can you make more money just by yourself
21:19
Speaker 1: day trading crypto and not working at a big investment
21:23
Speaker 1: fund or is investing the business of it still a
21:27
Speaker 1: good business? Well, I think that's a great takeaway, because,
21:30
Speaker 1: first of all, no one can ever reduce the enormity
21:35
Speaker 1: of what Paulson did. I mean, I remember when the
21:38
Speaker 1: Big Short came out, I expected it to be about Paulson, um,
21:42
Speaker 1: you know, and it turned out to be about some
21:44
Speaker 1: other players making similar bets. But I think even more
21:47
Speaker 1: fascinating was the way John Paulson went about making his bet.
21:51
Speaker 1: The people that he enlisted, they were kind of uh
21:57
Speaker 1: lone wolves or people who were, you know, maybe very
22:01
Speaker 1: smart and wouldn't necessarily need to be courting clients or
22:07
Speaker 1: going on UM conference calls or helping other people deal
22:12
Speaker 1: tax issues. I mean, this was this is about making
22:15
Speaker 1: a big bet yourself and for your group, right, and
22:19
Speaker 1: not really about Remember when he was starting out in
22:23
Speaker 1: the hedge fund world, hedge funds were not what they
22:25
Speaker 1: were today, right, It was a nascent industry, which is
22:28
Speaker 1: why what he said reminds me so much of crypto guys.
22:30
Speaker 1: There's no day that went back through the last two years,
22:34
Speaker 1: almost now, the last eighteen months where I wasn't looking
22:36
Speaker 1: for the new John Paulson, where I wasn't saying who
22:39
Speaker 1: was making money off of this crisis that we've been
22:41
Speaker 1: living through. Now, many different players, some of the same, right,
22:45
Speaker 1: There are a lot of distress names, Apollo, oak Tree,
22:48
Speaker 1: even Scott Minored at Guggenheim that made big money last
22:51
Speaker 1: year just by betting on bonds at their lowest right
22:54
Speaker 1: by the point hundreds of millions. But but there has
22:56
Speaker 1: not been what John Paulson tells David Rubinstein an ace
23:00
Speaker 1: metrical trade. Where can you be Yeah, you know, and
23:04
Speaker 1: it was really what he's saying, really, what can you
23:06
Speaker 1: take that is long lasting investing advice? He said something
23:10
Speaker 1: that people have told David now a few times. Don't
23:13
Speaker 1: invest in things you don't know about, right, no about
23:15
Speaker 1: what you're investing. And people say that about crypto too.
23:17
Speaker 1: If you're going to dive into salan, don't know what
23:19
Speaker 1: it is. But also looking for asymmetrical trades, how how
23:23
Speaker 1: rare that is to find something where you wouldn't lose
23:26
Speaker 1: as much money on the downside. Yeah, it's interesting when
23:28
Speaker 1: you hear people of the generation John Paulson talk about
23:32
Speaker 1: crypto the way they do it and old guys. I
23:35
Speaker 1: want to remind you he's not really very he's only
23:37
Speaker 1: sixty five. I think in the context of crypto, that
23:40
Speaker 1: feels to me. It feels to me a lot of
23:44
Speaker 1: those investors may not necessarily get it if you will,
23:47
Speaker 1: and maybe not necessarily want to put in the time
23:49
Speaker 1: to develop a call on it. Um. That's kind of
23:53
Speaker 1: a theme I think I hear from some of these folks.
23:55
Speaker 1: As you know, I was driving the Pacific Coast Highway
23:58
Speaker 1: all of last week listening to five podcast. Yeah, I'm
24:02
Speaker 1: a total nerd listening to the parlance of the new
24:05
Speaker 1: generation of finance. I just want to know about the
24:07
Speaker 1: pc H. How was that. That's like a lifelong dream
24:10
Speaker 1: of mine that I've never accomplished. I highly best. I
24:14
Speaker 1: traveled once a month that I'm telling you, that was
24:15
Speaker 1: the best that I had. Wow, and she got spent
24:19
Speaker 1: some time in lovely Carmel, California. I did. I did.
24:22
Speaker 1: Listening to d FI podcast, Well, I know what I mean.
24:25
Speaker 1: I imagine doing in that trip in like um convertible Mustang.
24:30
Speaker 1: What were you driving? A Ford Fusion rented so you're
24:35
Speaker 1: able to get him in a car? Yes, we were able.
24:37
Speaker 1: It was hard. I would recommend doing it way in advance.
24:39
Speaker 1: And honestly, it was very empty. San Francisco was pretty empty.
24:43
Speaker 1: That's what I hear. Yeah, by the end of it.
24:45
Speaker 1: But we're not here to talk about San Francisco fell
24:49
Speaker 1: sometimes we sometimes we diverge a little bit, and uh,
24:53
Speaker 1: you know, it's very cool that. I mean, I agree
24:56
Speaker 1: that the Paul's interview is fascinating. I was psyched to
24:58
Speaker 1: watch it, and there were a couple of really interesting
25:01
Speaker 1: threads to pull from it, and it's great to hear
25:03
Speaker 1: our Wall Street reporters take. But I also want to
25:05
Speaker 1: hear her take on the Pacific Coast Highway because that's
25:08
Speaker 1: just awesome. Greg Jarrett apparently did it an mg A
25:11
Speaker 1: coup of seven n G A coup, which is an
25:14
Speaker 1: awesome car to do that trip. I'll do it better
25:17
Speaker 1: next time for you. Let's what you can do with Greg.
25:19
Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can
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Speaker 1: subscribe and listen to interviews with Apple Podcasts or whatever
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Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
25:30
Speaker 1: at Matt Miller three. Put on fall Sweeney. I'm on
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Speaker 1: Twitter at pt Sweeney Before the podcast. You can always
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Speaker 1: catch us worldwide at Bloomberg Radio