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Bank Stress, Student Loans, Markets, and Carnival (Podcast) · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
• 0:04
  Speaker 1: my co host Matt Miller.
• 0:05
  Speaker 2: Every business day, we bring you interviews from CEOs, market pros,
• 0:09
  Speaker 2: and Bloomberg experts, along with essential market moving news.
• 0:14
  Speaker 1: Find the Bloomberg Markets Podcast on Apple Podcasts or wherever
• 0:17
  Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.
• 0:21
  Speaker 1: Right now, let's go to the banks. Alison Williams joins us,
• 0:23
  Speaker 1: Hermit Chan joins us as well. Alison covers the big banks,
• 0:26
  Speaker 1: Herman Chan the regional banks. We had some stress tests
• 0:29
  Speaker 1: and they do that for bloom Bloomberg Intelligence. Allison, let's
• 0:31
  Speaker 1: let's start with you. What did we learn from the
• 0:33
  Speaker 1: stress test results yesterday and what does it mean for
• 0:35
  Speaker 1: some of the big banks?
• 0:37
  Speaker 3: I mean, really, what we learned from these tests are
• 0:41
  Speaker 3: what the firm's capital requirements and their flexibility are for
• 0:45
  Speaker 3: the coming year and so these it's sort of interesting
• 0:48
  Speaker 3: because last year, based on the result, capital requirements went
• 0:53
  Speaker 3: up eighty two one hundred basis points for Bank America
• 0:56
  Speaker 3: JP Morgan City. That was very unexpected. They had to
• 0:59
  Speaker 3: manage their round sheet to get to those levels. And
• 1:03
  Speaker 3: this year we still started the reverse for JP, Morgan,
• 1:05
  Speaker 3: Bank America and Goldman Sacks. So really those three banks
• 1:11
  Speaker 3: the big winners, if you will, in terms of capital flexibility.
• 1:14
  Speaker 3: Their capital requirements are likely coming down of the three
• 1:19
  Speaker 3: when we take into account what's happening in early twenty
• 1:22
  Speaker 3: twenty four. Goldman looks best, but I think the best
• 1:26
  Speaker 3: news that we got was for JP, Morgan, Wells, Fargo,
• 1:30
  Speaker 3: Morgan Stanley also a little bit more flexible on capital.
• 1:34
  Speaker 4: Whereas City looks worse.
• 1:36
  Speaker 3: And the reason why I'm using the term capital flexibility
• 1:39
  Speaker 3: and not buybacks is because we still have two a
• 1:42
  Speaker 3: couple of things coming. So Basil three endgame is certainly
• 1:46
  Speaker 3: one of those, and we think that that as well
• 1:49
  Speaker 3: as the uncertainty the economy, which is the other factor,
• 1:52
  Speaker 3: is going to keep the banks a little bit conservative
• 1:55
  Speaker 3: on buybacks.
• 1:55
  Speaker 4: So they have the flexibility.
• 1:57
  Speaker 3: We're probably going to see some good deviden increase is
• 2:01
  Speaker 3: you know, for everyone except for perhaps City on Friday.
• 2:06
  Speaker 3: But the good news is it gives them a little
• 2:07
  Speaker 3: bit more flexibility.
• 2:09
  Speaker 5: Herman, I want to bring you into this conversation because
• 2:11
  Speaker 5: you particularly focused on the regional banks. What did you
• 2:14
  Speaker 5: take away from this?
• 2:15
  Speaker 6: That's right, So it's pretty much of a different story
• 2:18
  Speaker 6: than what Alison just articulated. The regionals are already pausing
• 2:22
  Speaker 6: buybacks because of expected tougher regulations on the regionals after
• 2:27
  Speaker 6: the fallout from the failures of SVB and Signature and
• 2:30
  Speaker 6: First Republic. So the banks are already not buying back
• 2:34
  Speaker 6: any stocks on the regional bank side, so they're already pausing.
• 2:39
  Speaker 6: So it's a bit of a different story. I would
• 2:41
  Speaker 6: say that in terms of the winners and losers for
• 2:44
  Speaker 6: the regionals, citizens looks a bit weaker and surprised with
• 2:47
  Speaker 6: weaker performance with the higher capital requirements, and M and
• 2:52
  Speaker 6: C would be on the positive side with a bit
• 2:55
  Speaker 6: better result versus the last year.
• 2:57
  Speaker 5: So do we have potentially tougher ahead when it comes
• 3:01
  Speaker 5: to the regionals.
• 3:01
  Speaker 7: That's right.
• 3:02
  Speaker 6: So you would expect higher capital requirements, you would expect
• 3:05
  Speaker 6: higher liquidier requirements, and so this is the stressed US
• 3:10
  Speaker 6: was really just the first step in a series of
• 3:14
  Speaker 6: tougher capital rules that are coming down the pike for
• 3:16
  Speaker 6: the regional So it's the outcome of the stressed US.
• 3:21
  Speaker 6: This year for the regions was less of a news story,
• 3:26
  Speaker 6: but more of the regions are already pulling back, and
• 3:29
  Speaker 6: this will just sort of reinforce that fact.
• 3:33
  Speaker 1: Allison. What's next for these big banks is they think
• 3:36
  Speaker 1: about their capital return strategies going forward. What do they
• 3:39
  Speaker 1: need to do and what can they do?
• 3:43
  Speaker 3: So I guess, you know, sort of the next event
• 3:45
  Speaker 3: will be Friday when some of the banks do announced
• 3:48
  Speaker 3: dividend increases. As I said, probably will still conservative on
• 3:53
  Speaker 3: buybacks because the next thing, from a regulatory point of
• 3:55
  Speaker 3: view is Buzzle three endgame. This is something we've been
• 4:00
  Speaker 3: waiting for. We think it probably could come any time now.
• 4:05
  Speaker 3: There's been various reports and actually in some testimony of
• 4:10
  Speaker 3: how did confirm that the endgame could potentially raise capital
• 4:17
  Speaker 3: requirements by twenty percent for these banks. And so keep
• 4:21
  Speaker 3: in mind that this the changes will take place over
• 4:23
  Speaker 3: they'll be faced in over time. The banks have again
• 4:26
  Speaker 3: bigger capital cushions for everybody except for a city.
• 4:29
  Speaker 4: Based on the numbers today and.
• 4:34
  Speaker 3: With earnings, it's completely manageable.
• 4:39
  Speaker 1: Up in here. I mean it just haven't they Aren't
• 4:42
  Speaker 1: they over regulated? Aren't they over capitalized? If I'm Jamie Diamond,
• 4:46
  Speaker 1: don't just push back and say, all right, great financial
• 4:49
  Speaker 1: crisis was a long time ago. Guys, We're much better positioned.
• 4:52
  Speaker 3: Just stop, I think Jamie, I mean, he has definitely
• 4:56
  Speaker 3: been pushing back, and I think you know, one of
• 4:58
  Speaker 3: the things he brought up an Investor Day is something
• 5:01
  Speaker 3: I alluded to earlier. Capital requirement is something so critical
• 5:06
  Speaker 3: for the banks, and yet it's changing every year. So
• 5:08
  Speaker 3: imagine running your business with with sort of a key
• 5:12
  Speaker 3: metric of health changing every year. You know, one year
• 5:15
  Speaker 3: it's up one hundred basis points, it's down one hundred
• 5:17
  Speaker 3: basis points.
• 5:17
  Speaker 4: That shows that that the stress test is sort of flawed.
• 5:21
  Speaker 3: And then you know several other things that people are
• 5:23
  Speaker 3: pointing out in terms of you know, what the test
• 5:27
  Speaker 3: measures and what actually happened in March, what the real
• 5:30
  Speaker 3: results are. So really the test has only come to
• 5:34
  Speaker 3: mean you know, what's the requirement year to year for
• 5:36
  Speaker 3: the banks, and you know, maybe there is a better
• 5:39
  Speaker 3: way to have sort of a permanent hurdle. And to
• 5:42
  Speaker 3: your point, Jamie pushes pushes back on some of the regulation.
• 5:46
  Speaker 4: It's just can we have clarity and consistency?
• 5:49
  Speaker 7: All right?
• 5:49
  Speaker 1: Alison Herman chan Allison Williams, both from Bloomberg Intelligence, giving
• 5:53
  Speaker 1: us some a few minutes of their time on this
• 5:55
  Speaker 1: important time for the banks, whether the stress test. We
• 5:57
  Speaker 1: think forgetting a few minutes for you folks.
• 6:01
  Speaker 8: You're listening to the tape. Can's our live program, Bloomberg
• 6:04
  Speaker 8: Markets weekdays at ten am Eastern on Bloomberg dot Com,
• 6:08
  Speaker 8: the iHeartRadio app and the Bloomberg Business App, or listen
• 6:11
  Speaker 8: on demand wherever you get your podcasts.
• 6:15
  Speaker 5: Jess Mitten and Paul Sweeney Here in the Interactive Broker Studio,
• 6:18
  Speaker 5: I want to get straight to our next guest, Jackie Bow,
• 6:21
  Speaker 5: who's managing partner at Chatham Financial, joining us on Zoom. Jackie,
• 6:25
  Speaker 5: I want to pick your brain about We've obviously had
• 6:28
  Speaker 5: a ton of central bankers speaking this week, but we've
• 6:31
  Speaker 5: seen continued divergence when we're looking at the inflation numbers.
• 6:34
  Speaker 5: When we're looking at the US versus say, what's been
• 6:37
  Speaker 5: happening in the UK? Why is there such a stark
• 6:39
  Speaker 5: difference there?
• 6:42
  Speaker 9: Hi, very good morning. As I think in the UK
• 6:45
  Speaker 9: there certainly seems to be an issue with a bit
• 6:48
  Speaker 9: more persistent inflation than we've seen in the US, and
• 6:52
  Speaker 9: parts of the reason for that is we are nice
• 6:54
  Speaker 9: seeing here in the UK evidence of what we call
• 6:58
  Speaker 9: a price wage spiral, where those higher inflation numbers that
• 7:02
  Speaker 9: we've seen all year are becoming firmly embedded into wages.
• 7:07
  Speaker 9: And the data that we had last week in the
• 7:09
  Speaker 9: UK and confirmed that, you know, with the service sectored
• 7:12
  Speaker 9: inflation in particular, which is much more related to the
• 7:16
  Speaker 9: cost of labor, really pushing up the overall inflation numbers.
• 7:20
  Speaker 9: So the expectation that inflation would start to come down
• 7:23
  Speaker 9: this year that's where Central Bank was forecasting, now looks
• 7:26
  Speaker 9: to be overly optimistic.
• 7:29
  Speaker 1: All right, So we actually had I'm just looking at
• 7:31
  Speaker 1: some of the some of your notes here. The core
• 7:33
  Speaker 1: inflation rose from six point eight percent in April to
• 7:36
  Speaker 1: seven point one percent in May. That's the highest level
• 7:38
  Speaker 1: since nineteen ninety two. What's really driving it for our
• 7:41
  Speaker 1: good friends.
• 7:42
  Speaker 9: In the UK, Well, I think what the headlines would
• 7:46
  Speaker 9: would direct he too, is actually what we're seeing in
• 7:48
  Speaker 9: terms of food price inflation. But I think that's a
• 7:51
  Speaker 9: bit of a diversion because in fact food, well it's
• 7:55
  Speaker 9: food and non alcoholic beverages is the category within the
• 7:58
  Speaker 9: index only really makes up about twelve percent of the basket.
• 8:02
  Speaker 9: So again that's where all the headline is coming from.
• 8:06
  Speaker 9: Food inflation in the UK is high. It's like eighteen percent,
• 8:09
  Speaker 9: but that isn't really what's driving it. As I say,
• 8:12
  Speaker 9: it's much more becoming embedded through the wages. And if
• 8:15
  Speaker 9: you look at where average earnings have been going on
• 8:19
  Speaker 9: the wages cycle, that's where we're seeing the more persistent
• 8:22
  Speaker 9: impact of inflation.
• 8:23
  Speaker 5: So Jackie, does this mean we could actually see even
• 8:25
  Speaker 5: higher rates when we're looking at the UK versus other
• 8:28
  Speaker 5: major central banks across the world.
• 8:32
  Speaker 9: Yeah, for sure. And I think you know the Bank
• 8:34
  Speaker 9: of England mood fifty basis points last week, and right
• 8:38
  Speaker 9: up until probably two days before the meeting, there was
• 8:41
  Speaker 9: an expectation they would raise twenty five and then we
• 8:44
  Speaker 9: head back to back that wage data and then ultimately
• 8:47
  Speaker 9: that CPI data that you referred to, and they decided
• 8:51
  Speaker 9: to move fifty and they certainly have got room to go.
• 8:54
  Speaker 9: The market is looking at rates in the UK, you know,
• 8:58
  Speaker 9: above six percent, maybe even up to six twenty five,
• 9:02
  Speaker 9: and as the Bank of England continue to change when
• 9:07
  Speaker 9: we are expecting to get inflation back to targets so
• 9:10
  Speaker 9: back to that two percent, the market is becoming less
• 9:13
  Speaker 9: convinced that the Bank of England's industry increases or having
• 9:17
  Speaker 9: the effect that they need to have on inflation.
• 9:20
  Speaker 1: So is there any evidence, Jackie, is there any talk
• 9:24
  Speaker 1: within the City of London that maybe Brexit is having
• 9:27
  Speaker 1: some impact here on the UK economy that may be
• 9:29
  Speaker 1: exacerbating some of the challenges.
• 9:33
  Speaker 9: Again, some of the headlines might direct you towards that
• 9:36
  Speaker 9: as a reason, but when you dig into the data
• 9:39
  Speaker 9: in a bit more detailed, there's really little evidence of that.
• 9:43
  Speaker 9: The increased costs at the border, shall we say, is
• 9:47
  Speaker 9: adding a small amount to UK goods, both intermedia and
• 9:51
  Speaker 9: final goods, but in the grand scheme of where those
• 9:54
  Speaker 9: inflation numbers are, it's actually quite minuscule.
• 9:57
  Speaker 5: One thing I've been curious about, whether we're talking about
• 10:00
  Speaker 5: the Bank of England or the Federal Reserve, is when
• 10:03
  Speaker 5: we're looking at these terminal rates, is there a particular
• 10:06
  Speaker 5: level where it would get to to where it could
• 10:09
  Speaker 5: potentially break the economy lead to a recession or is
• 10:12
  Speaker 5: it a particular threshold of leaving it at a particular
• 10:15
  Speaker 5: terminal rate for a significant amount of time. That could
• 10:17
  Speaker 5: then turn that issue to what could that mean for
• 10:20
  Speaker 5: global growth and that particular economy in that point.
• 10:25
  Speaker 9: Yeah, and that's an interesting question because I think the
• 10:29
  Speaker 9: impact of the higher interest rates across those different markets.
• 10:33
  Speaker 9: Is the mechanism by which they feed through to the
• 10:36
  Speaker 9: real economy is very different, and part of that is
• 10:40
  Speaker 9: the complete structured differences in our mortgage market. So here
• 10:44
  Speaker 9: in the UK we basically have what I call an
• 10:47
  Speaker 9: adjustable rate mortgage markets, in that people either choose variable
• 10:52
  Speaker 9: rates or they choose fixed strates, but for very short
• 10:55
  Speaker 9: periods of time, so maybe three, four or five years.
• 10:59
  Speaker 9: So as those in rates increase, you have this kind
• 11:02
  Speaker 9: of lag effect as households have to refinance their mortgages
• 11:06
  Speaker 9: at much higher rates. And that's when you start to
• 11:10
  Speaker 9: really get the tightening in terms of consumer budgets and
• 11:13
  Speaker 9: discretionary spend every month. And we haven't seen that yet,
• 11:17
  Speaker 9: so you know, there's still consumer confidence is still quite high,
• 11:22
  Speaker 9: and that's partly related to the strength of the labor market.
• 11:25
  Speaker 9: But as those interest rate increases start to really feed
• 11:28
  Speaker 9: through into the mortgage market and consumer spending through the
• 11:31
  Speaker 9: end of twenty twenty three, then I think the risk
• 11:35
  Speaker 9: of recession becomes very real for the UK.
• 11:37
  Speaker 1: All right, Jackie, let's jump across the English Channel get
• 11:42
  Speaker 1: onto the continent here. What did you hear from ECB
• 11:45
  Speaker 1: Central Banker Christine Legard from Portugal this week stand it
• 11:50
  Speaker 1: again pretty adamant that there's more work to do there.
• 11:54
  Speaker 9: Yeah, I mean, the ECB have absolutely left the door
• 11:56
  Speaker 9: wide open for further rate increases. In fact, their guidance,
• 12:02
  Speaker 9: I believe has been pretty clear, and part of the
• 12:06
  Speaker 9: question about the credibility of central banks and whether the
• 12:10
  Speaker 9: markets believe them is really around that guidance that they give.
• 12:15
  Speaker 9: So the ECB certainly have more room to go in
• 12:19
  Speaker 9: terms of rate increases. Back to your earlier points, where
• 12:23
  Speaker 9: that terminal rate peaks out currently looks to be quite
• 12:27
  Speaker 9: substantially below where the UK rates will be. You know,
• 12:30
  Speaker 9: if you think again, if you go back to that
• 12:32
  Speaker 9: six to six twenty five, for the UK euro rates
• 12:35
  Speaker 9: are not expected to really go above four percent.
• 12:38
  Speaker 5: So can the US economy remain more insulated from what
• 12:42
  Speaker 5: we're seeing with these other inflationary factors when we're looking
• 12:46
  Speaker 5: beyond the pond? Or is the global economy just so
• 12:49
  Speaker 5: interconnected that eventually that could also potentially hurt the US?
• 12:55
  Speaker 9: Yeah, I mean, the comments I was making about the
• 12:57
  Speaker 9: structure of the mortgage market is quite imported, and obviously
• 13:01
  Speaker 9: the US being you know that the agency has been
• 13:04
  Speaker 9: such a big part of the mortgage market with people
• 13:06
  Speaker 9: taking very long dated fixed strates, that doesn't impact consumer
• 13:11
  Speaker 9: spending quite so much. And you know, we've seen inflation
• 13:14
  Speaker 9: in the US literally ticked down every single month as
• 13:17
  Speaker 9: you you know, you start, it's been very stark that
• 13:20
  Speaker 9: the difference between the US and other markets.
• 13:23
  Speaker 4: I think for the.
• 13:24
  Speaker 9: US in terms of growth and potential risks to the
• 13:27
  Speaker 9: growth in the future maybe comes down to a bit
• 13:30
  Speaker 9: more about those sort of global relations with China. You know,
• 13:34
  Speaker 9: the supply chain that comes from China globally is still
• 13:38
  Speaker 9: huge in terms of intermedia and final goods, and if
• 13:42
  Speaker 9: those relationships continue to deteriorate and that those products that
• 13:48
  Speaker 9: come out into the global market are cut off for
• 13:51
  Speaker 9: whatever reason, then you will see issues across global growth
• 13:55
  Speaker 9: in the US will suffer from that too.
• 13:57
  Speaker 7: All right.
• 13:58
  Speaker 1: You put all that together, Jackie, and your responsibility is
• 14:02
  Speaker 1: you're Middle East in Africa. Where are you suggesting or
• 14:05
  Speaker 1: some of the more attractive opportunities here.
• 14:10
  Speaker 9: So I think there's still a price adjustment process happening
• 14:14
  Speaker 9: across both the public markets as well as the private
• 14:17
  Speaker 9: real asset markets, which is where I'm focused. So a
• 14:20
  Speaker 9: lot of the work we do is within commercial, real estate,
• 14:23
  Speaker 9: private equity, and it still feels that it we're in
• 14:27
  Speaker 9: a risk off situation that there's not a lot of
• 14:32
  Speaker 9: not a lot of excitement for new investments, and I
• 14:35
  Speaker 9: think that will continue through twenty twenty three. So in
• 14:38
  Speaker 9: a risk off situation, of course, that's more positive for
• 14:42
  Speaker 9: risk free assets and public bond markets. I do think
• 14:46
  Speaker 9: there are some glimmers within other markets where it looks
• 14:50
  Speaker 9: like assets are getting undervalued because there's this more sort
• 14:55
  Speaker 9: of gloomy outlook, and it might be a case of
• 14:57
  Speaker 9: just trying to pick through that debris to find the
• 15:00
  Speaker 9: ones that have been unfairly punished. But I think in
• 15:02
  Speaker 9: general it will continue to be a risk of few
• 15:05
  Speaker 9: for the rest of this year.
• 15:06
  Speaker 5: All Right, Jackie Bowie, thank you so much for joining
• 15:09
  Speaker 5: us managing partner at chatt and Financial. Bringing it down, Paul,
• 15:13
  Speaker 5: As you know, we've gotten so many updates this week
• 15:15
  Speaker 5: from these central bankers when we're talking about the Bank
• 15:17
  Speaker 5: of England to the Federal Reserve, obviously the Bank of
• 15:20
  Speaker 5: Japan as well, So it's going to be really interesting
• 15:22
  Speaker 5: because we were just talking about that update to the
• 15:24
  Speaker 5: first quarter GDP numbers.
• 15:26
  Speaker 8: You're listening to the tape. Can's our live program Bloomberg
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• 15:34
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• 15:36
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• 15:39
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• 15:45
  Speaker 1: All right, to our next guest, Chris Whalen. He's a
• 15:47
  Speaker 1: chairman of Whalen Global Advisors. Chris, You've had a lot
• 15:51
  Speaker 1: of experience on the street, worked all over the street.
• 15:54
  Speaker 1: You've been, you know, just kind of out there and
• 15:58
  Speaker 1: with some really strong opinions. I'd love to get your
• 16:01
  Speaker 1: thoughts just kind of what we heard from the central
• 16:04
  Speaker 1: bankers this week. It was a week of just central
• 16:07
  Speaker 1: bankers speak. We had a big conference over in Portugal
• 16:10
  Speaker 1: with the some of the big central bankers here. What's
• 16:12
  Speaker 1: your takeaway what we're hearing from again the central bankers
• 16:15
  Speaker 1: around the world.
• 16:17
  Speaker 10: Well, I think two things they're trying to get back
• 16:19
  Speaker 10: on message. The message was central bankers are managing the
• 16:23
  Speaker 10: process well and they are hoping and I mean hoping
• 16:28
  Speaker 10: that another event does not occur that shakes confidence, because
• 16:33
  Speaker 10: that's really what they're about, that's their stock in trade,
• 16:36
  Speaker 10: is keeping the public confident that there is a hand
• 16:40
  Speaker 10: on the tiller and that we are going in the
• 16:42
  Speaker 10: right direction. So I think, you know, for all of them,
• 16:46
  Speaker 10: the tough part is there's so much to your conversation
• 16:49
  Speaker 10: right liquidity in the system, that the economies aren't really
• 16:53
  Speaker 10: slowing down. I mean, look at housing. We're at seven
• 16:56
  Speaker 10: percent mortgages and we're still right mortgages mostly purchased. But
• 17:01
  Speaker 10: that's okay. You know the world has not ended.
• 17:06
  Speaker 5: So then how are you advising your clients to position?
• 17:12
  Speaker 10: Well, honestly, I think we are seeing the end of
• 17:15
  Speaker 10: the rate increased trade. It's very hard for the FED
• 17:19
  Speaker 10: to get rates to go much higher if they're not
• 17:22
  Speaker 10: going to sell bonds. It's just technically impossible. So I
• 17:26
  Speaker 10: think they are trying to convince everybody that they can
• 17:30
  Speaker 10: still raise rates further to address inflation. But I think
• 17:34
  Speaker 10: the inflation is largely from non monetary factors. I mean,
• 17:38
  Speaker 10: other than the metic cash they dumped into the system,
• 17:41
  Speaker 10: which is an issue. And you see the FED being
• 17:43
  Speaker 10: criticized by the BIS by a number of people in
• 17:47
  Speaker 10: Europe for going big because that's the issue. How do
• 17:51
  Speaker 10: you control inflation when you still have trillions of dollars
• 17:55
  Speaker 10: in pent up demand and also the cash to meet
• 17:58
  Speaker 10: that demand. That, to me is the issue. You don't
• 18:01
  Speaker 10: hear people talking about it. Also, a lot of the
• 18:04
  Speaker 10: cash slashing around the system is just refinancing of existing debt.
• 18:09
  Speaker 10: It does not necessarily drive growth and employment.
• 18:13
  Speaker 1: Hey, Chris, you know after the year we all had
• 18:15
  Speaker 1: in twenty twenty two where there was just no place
• 18:18
  Speaker 1: to hide equities fixed in time, you got crush kind
• 18:20
  Speaker 1: of no matter where you were. I can sit into
• 18:24
  Speaker 1: your treasury note here four point eighty five percent. Why
• 18:28
  Speaker 1: don't I just do that? There's no shame in doing that.
• 18:30
  Speaker 1: I can go to the beach play off. What's wrong
• 18:32
  Speaker 1: with that?
• 18:33
  Speaker 5: No?
• 18:33
  Speaker 10: And I did that myself. I took a huge gain
• 18:36
  Speaker 10: in video I had gotten in, you know, when it
• 18:40
  Speaker 10: was down hundreds of dollars, and I stepped out just
• 18:43
  Speaker 10: below four hundred. I had to. It was too big
• 18:47
  Speaker 10: in my portfolio. And I still have some exposure. But
• 18:50
  Speaker 10: it's a gift. The Fed has given people gifts through
• 18:54
  Speaker 10: monetary policy. And to me, you know, to your question
• 18:57
  Speaker 10: about what I tell my clients, I'm getting ready to
• 19:00
  Speaker 10: shift to the long duration trade last couple of years.
• 19:03
  Speaker 10: Who made the money people that were short duration, people
• 19:07
  Speaker 10: who bought mortgage servicing, for example. But I think it's
• 19:10
  Speaker 10: time to be selling those assets.
• 19:12
  Speaker 5: I really do longer duration. What about tech gross stocks, Well,
• 19:18
  Speaker 5: I don't know.
• 19:18
  Speaker 10: Should I step back into Nvidio for you?
• 19:23
  Speaker 7: You know?
• 19:24
  Speaker 10: And I love that stock, don't get me wrong, But
• 19:26
  Speaker 10: I think as a trader, and it's an investor when
• 19:28
  Speaker 10: you're staring at one hundred and sixty percent game to
• 19:32
  Speaker 10: your point, right, and I dumped it into T bills.
• 19:36
  Speaker 10: I own a lot of bank preferms. I am buying
• 19:39
  Speaker 10: at bs now because when rates fall, if you buy
• 19:43
  Speaker 10: a ginmy may at seventy five and you start getting
• 19:47
  Speaker 10: pre payments at par, that's a beautiful thing, you know.
• 19:51
  Speaker 10: So there are some trades out there that I think
• 19:53
  Speaker 10: are staring us in the face. But to your earlier
• 19:56
  Speaker 10: point about risk in twenty twenty two being a difficult year, yes,
• 20:01
  Speaker 10: it was a difficult year because people are so focused
• 20:03
  Speaker 10: on short term and they're not looking at the big picture.
• 20:07
  Speaker 10: They're not saying where should we be next? So let
• 20:10
  Speaker 10: me give you an example. People are getting ready for
• 20:12
  Speaker 10: the non performing loan trade again, both in commercial and residential.
• 20:18
  Speaker 10: But there's some other interesting things going on in the
• 20:20
  Speaker 10: background that I think are very interesting for investors. My
• 20:24
  Speaker 10: clients are institutional. I talked to banks, I talked to
• 20:27
  Speaker 10: mortgage issuers and reads. So that's my work, and what
• 20:32
  Speaker 10: I'm telling them is it's time to position for falling rates,
• 20:36
  Speaker 10: higher volumes, but also you know, to be careful of
• 20:40
  Speaker 10: things like mortgage servicing. It six times annual cash flow,
• 20:44
  Speaker 10: that's a little high. Those assets are more like four. Okay,
• 20:49
  Speaker 10: So the Fed has ejected a lot of fluff into
• 20:51
  Speaker 10: these markets. JP at one and a half times book,
• 20:54
  Speaker 10: is that at a distressed price? No, of course not.
• 20:57
  Speaker 10: We just did a piece on Comerica's nothing wrong with
• 21:00
  Speaker 10: this bank except for j. Powell. That's the only problem
• 21:04
  Speaker 10: with co America, you know, And you have this market
• 21:07
  Speaker 10: that's a washing debt. Janet Yellen, we really I think
• 21:13
  Speaker 10: in strange times, it's like we wound the clock back
• 21:16
  Speaker 10: one hundred years and it's nineteen twenty three and we're
• 21:21
  Speaker 10: going through the deflation of the Underworld War One and
• 21:25
  Speaker 10: all sorts of speculative craziness around the country.
• 21:29
  Speaker 5: As we just got off of the bank stress test results.
• 21:33
  Speaker 5: Back in March, we were talking about how New York
• 21:35
  Speaker 5: Community Bank was a great stock to own. Do you
• 21:38
  Speaker 5: still feel that way?
• 21:39
  Speaker 10: Oh yeah, I've been buying more.
• 21:42
  Speaker 7: Yeah.
• 21:42
  Speaker 10: Baby, it's a great story.
• 21:45
  Speaker 7: You know.
• 21:45
  Speaker 10: It was a sleepy New York bank that was mostly
• 21:48
  Speaker 10: focused on multi family, not particularly well managed in a
• 21:52
  Speaker 10: sense of taking advantage of those branches in the relationship
• 21:56
  Speaker 10: that they had with their customers. Then they buy flag Star,
• 22:00
  Speaker 10: so they get back in the mortgage in a big way,
• 22:02
  Speaker 10: and they're now a national service er with enormous liquidity.
• 22:07
  Speaker 10: And then they buy the deposits and a lot of
• 22:10
  Speaker 10: assets from Signature Bank. I think it's a great story.
• 22:14
  Speaker 10: I think it's one of the strongest regional banks in
• 22:16
  Speaker 10: the US today.
• 22:17
  Speaker 1: And what did you take away from the stress tests?
• 22:20
  Speaker 1: I mean, are these Are you depending that the banks
• 22:23
  Speaker 1: have enough regulation they don't need any more, or how
• 22:27
  Speaker 1: do you think about that?
• 22:28
  Speaker 10: We need people who think about market risk instead of
• 22:32
  Speaker 10: capital and credit risk. If you look at credit today,
• 22:37
  Speaker 10: US consumers are pristine. There's no problem in housing when
• 22:42
  Speaker 10: it comes to residential commercial. Yes, this is commercial's time.
• 22:46
  Speaker 10: Think of it that way. We're going to have lots
• 22:48
  Speaker 10: of fun with commercial. But overall, what do we have
• 22:52
  Speaker 10: to worry about. We have to worry about banks managing
• 22:55
  Speaker 10: market risk and liquidity risk. It's not about capital. While
• 22:59
  Speaker 10: i'm mister Bard, I think he does a great job,
• 23:02
  Speaker 10: he's still fighting the last one. We have to orient
• 23:06
  Speaker 10: regulators on managing risk that's largely caused by central banks.
• 23:11
  Speaker 10: And because they're dealing with very large numbers, banks get
• 23:15
  Speaker 10: swamped and you could see some reeds tip over too.
• 23:18
  Speaker 10: It's a tough time right now with leverage findings. All
• 23:22
  Speaker 10: of them are hurting because of spreads and wire spreads
• 23:25
  Speaker 10: so messed up because the FED bought nine trillion dollars
• 23:30
  Speaker 10: for those securities. Okay, just look at the old curve.
• 23:33
  Speaker 10: I drew a little picture with SOMA and I put
• 23:35
  Speaker 10: it on top of my Bloomberg chart, and that kind
• 23:38
  Speaker 10: of makes the point that, you know, maybe we'll use
• 23:40
  Speaker 10: visualizations to communicate with people in Washington. But I worry
• 23:45
  Speaker 10: about the Fed. We have all these brilliant people with
• 23:47
  Speaker 10: PhDs and economics and they don't understand bondmath. They think, oh,
• 23:52
  Speaker 10: we could raise you know, FED funds another hundred bases points. No, No,
• 23:58
  Speaker 10: we gotta have a new approach. I think and to me,
• 24:01
  Speaker 10: what do you do? You make people think about duration,
• 24:04
  Speaker 10: You make bank management think about duration and articulate what
• 24:09
  Speaker 10: their strategy is every month. Okay, and then you use
• 24:12
  Speaker 10: the public data. And when you see somebody with fifteen
• 24:15
  Speaker 10: percent of assets and mortgage packs right well, America, you
• 24:19
  Speaker 10: know you have a problem. We've got to look at
• 24:21
  Speaker 10: the data.
• 24:22
  Speaker 5: Right definitely is right there, right well. Chris Whalen, thank
• 24:26
  Speaker 5: you so much for joining us, Chairman of Whalen Global Advisors,
• 24:30
  Speaker 5: walking us through some of these bank calls. Paul, very
• 24:33
  Speaker 5: important and once again looking at the S and P
• 24:35
  Speaker 5: five hundred financials leading the way this morning up more
• 24:38
  Speaker 5: than one percent, so keeping a close eye on that
• 24:41
  Speaker 5: and obviously those stress tests for the banks coming in
• 24:44
  Speaker 5: better than expected.
• 24:47
  Speaker 8: You're listening to the Team Ken's our line program, Bloomberg
• 24:50
  Speaker 8: Markets weekdays at ten am Eastern on Bloomberg dot Com,
• 24:54
  Speaker 8: the iHeartRadio app and the Bloomberg Business app, or listen
• 24:57
  Speaker 8: on demand wherever you get your podcast.
• 25:01
  Speaker 5: Jessminton, Paul Sweene here in the Interactive Brokers studio, and
• 25:04
  Speaker 5: I'm excited because our next guest, Paul is in studio
• 25:07
  Speaker 5: with us, speaking with Robert Teeter, head of investment policy
• 25:11
  Speaker 5: and Strategy at Silvercrest's asset Management. And I know, Robert,
• 25:15
  Speaker 5: you've been focusing a lot, obviously on what's been happening
• 25:18
  Speaker 5: with the Central bank speak this week, but also the
• 25:21
  Speaker 5: headwinds that rates have been facing on some of this commentary.
• 25:24
  Speaker 5: What's your take from what we heard from these major
• 25:27
  Speaker 5: when you're thinking about Pale to Christine.
• 25:29
  Speaker 11: Legard, Yes, I think while we got the pause and
• 25:32
  Speaker 11: rates that folks were looking for, we've had a lot
• 25:34
  Speaker 11: of pushback from the Fed in terms of hawkish commentary,
• 25:36
  Speaker 11: and some of that came through in the past couple
• 25:38
  Speaker 11: of days, and for me, it raises the question again
• 25:40
  Speaker 11: of is the FED targeting inflation or are they targeting
• 25:43
  Speaker 11: the economy? And so I think they've moved back into
• 25:45
  Speaker 11: that mode of perhaps talking about targeting the economy a
• 25:48
  Speaker 11: little bit and wanting to see some slow down there
• 25:50
  Speaker 11: before they ease up.
• 25:52
  Speaker 1: We get some good economic data today, I mean, the
• 25:54
  Speaker 1: economy is in pretty good shape. If I'm the Federal Reserve,
• 25:57
  Speaker 1: I can talk tough here like I have been talking tough.
• 26:00
  Speaker 11: Yes, I think that's spot on, and that's the way
• 26:02
  Speaker 11: I've been interpreting it.
• 26:03
  Speaker 10: As well.
• 26:03
  Speaker 11: They've had a license to talk tough if you will.
• 26:05
  Speaker 11: They've been able to do that. They haven't caused a
• 26:07
  Speaker 11: problem in the economy, and the tug of war continues.
• 26:10
  Speaker 11: You know, inflation's been falling quite a bit, but the
• 26:12
  Speaker 11: Fed's been able to keep up these increases in hawkish
• 26:15
  Speaker 11: talk and put the pressure on killing inflation for the
• 26:17
  Speaker 11: long term.
• 26:18
  Speaker 5: As the Federal Reserve in Droom Pale not gotten enough
• 26:22
  Speaker 5: credit for what they've been able to engineer over the
• 26:24
  Speaker 5: past year, especially obviously CPI is the Fed's preferred gauge.
• 26:27
  Speaker 5: But when you think of June of last year, CPI
• 26:29
  Speaker 5: at nine point one percent, now you're looking at what
• 26:32
  Speaker 5: would be around four percent for that and obviously the
• 26:35
  Speaker 5: trajectory of the stock market since last October.
• 26:38
  Speaker 11: I think that's a very fair point. I think because
• 26:40
  Speaker 11: the Fed got off to a bit of a rocky
• 26:42
  Speaker 11: start with the Great Hike cycle, a lot of folks
• 26:45
  Speaker 11: not knock them down a bit in terms of credibility,
• 26:47
  Speaker 11: but they've built that up a lot, and in my opinion,
• 26:49
  Speaker 11: the Fed's earned a lot of credibility here with inflation
• 26:52
  Speaker 11: coming down a lot, for a lot of the reasons
• 26:54
  Speaker 11: that they've mentioned as well as remaining tough and resolute
• 26:57
  Speaker 11: in their fight on inflation, and so they've been able
• 26:59
  Speaker 11: to do that without killing the economy. I think they
• 27:01
  Speaker 11: deserve a lot of credit for that. I also think
• 27:04
  Speaker 11: it builds in a lot of flexibility for the FED
• 27:06
  Speaker 11: because the economy is okay, and because inflation has come
• 27:08
  Speaker 11: down pretty clearly. Should they need to, they do have
• 27:11
  Speaker 11: the flexibility to pause for an extended time or even
• 27:13
  Speaker 11: cut if that need emerges.
• 27:16
  Speaker 1: Earnings, I think earning still matter. I'm part of the
• 27:18
  Speaker 1: old school here. I know it's not just the FED here.
• 27:20
  Speaker 1: We're gonna have earning kicking off in a couple of weeks.
• 27:22
  Speaker 10: Here.
• 27:24
  Speaker 1: A couple questions here, One, what are you looking for?
• 27:26
  Speaker 1: And two how much earnings risk, if any, is there
• 27:29
  Speaker 1: still in this market? Do you think so?
• 27:31
  Speaker 11: I'm looking forward to earnings because I think it may
• 27:33
  Speaker 11: give us a little bit of a tailwind here. We've
• 27:35
  Speaker 11: seen earnings estimates stabilized, tick up even just a little bit,
• 27:39
  Speaker 11: because we've had the economy coming in stronger than expected.
• 27:42
  Speaker 11: The data today shows that as well. The revenue side
• 27:44
  Speaker 11: of the equation for companies is probably a bit better
• 27:47
  Speaker 11: than had been forecast in those expectations, and on the
• 27:49
  Speaker 11: same time, you have an environment where cost controls have
• 27:53
  Speaker 11: been implemented. So companies have been fearful of recession for
• 27:56
  Speaker 11: a while and have been very cautious on the cost side.
• 27:59
  Speaker 11: So I don't want to sam overly optimistic on earning season,
• 28:01
  Speaker 11: but I do think it could give us a bit
• 28:03
  Speaker 11: of a boost. I'm looking forward to it.
• 28:04
  Speaker 5: I was speaking with Marion Bartel's who's the chief investment
• 28:07
  Speaker 5: strategist over at Sanctuary Wealth, and she was talking about
• 28:09
  Speaker 5: how typically when CEOs start getting very loud about their concerns,
• 28:14
  Speaker 5: that's when it should raise some alarm bells. It seems
• 28:17
  Speaker 5: like so far, when you're thinking kind of on a
• 28:19
  Speaker 5: company by company basis on aggregate, it doesn't seem like
• 28:23
  Speaker 5: we're at that point yet. So would that be more
• 28:25
  Speaker 5: of an optimistic sign going into this earning season Obviously
• 28:28
  Speaker 5: how that ties into the trajectory of the economy.
• 28:30
  Speaker 1: Yeah, it's a good observation.
• 28:31
  Speaker 11: We've certainly had these rolling fears of recession for some time,
• 28:34
  Speaker 11: so dating back to the beginning of last year when
• 28:36
  Speaker 11: we had slightly negative economic growth for two quarters, so
• 28:39
  Speaker 11: people have been preparing for this recession for quite a while,
• 28:42
  Speaker 11: and it hasn't been there, and so I just keep
• 28:44
  Speaker 11: looking through the underlying data, both real time and estimates
• 28:47
  Speaker 11: on the economy, and it shows to me that we
• 28:49
  Speaker 11: still have slightly positive economic growth. So I think that
• 28:52
  Speaker 11: bodes well for the revenue side on earning and.
• 28:54
  Speaker 5: Also the consumer obviously being more than two thirds of GDP.
• 28:58
  Speaker 5: We saw those upward revisions being partly not just exports,
• 29:01
  Speaker 5: but also by the consumer. So when you're thinking about
• 29:04
  Speaker 5: different sectors when we're looking at an earnings perspective, especially
• 29:08
  Speaker 5: just Bloomberg Intelligence marking up those results, when we're looking
• 29:10
  Speaker 5: at discretionary which obviously a lot of pressure it was
• 29:13
  Speaker 5: under last year, as well as some aspects of staples
• 29:16
  Speaker 5: not necessarily packaged good companies. Obviously General Mills was warning
• 29:20
  Speaker 5: on this, But what's kind of your thought as far
• 29:22
  Speaker 5: as some of these more consumer oriented type companies when
• 29:26
  Speaker 5: you are having some of them like General Mills saying
• 29:28
  Speaker 5: we don't think we can continue to pass on these
• 29:31
  Speaker 5: costs to consumers right now.
• 29:33
  Speaker 11: Right It's a super interesting environment there. And one of
• 29:35
  Speaker 11: the things that I've been optimistic on has been on
• 29:37
  Speaker 11: the theme of following the consumer and following the revenue,
• 29:40
  Speaker 11: and so from a sector basis, I do think most
• 29:43
  Speaker 11: parts of consumer look pretty encouraging here. Similarly, in industrials,
• 29:46
  Speaker 11: I think you have some strength from reshoring and manufacturing
• 29:49
  Speaker 11: build that's been going on, and there's certainly a technology
• 29:51
  Speaker 11: upgrade cycle. So you put those three sectors together and
• 29:54
  Speaker 11: they all have some tailwinds in terms of revenue opportunity.
• 29:57
  Speaker 11: I do think the interesting dynamic with companies is been
• 30:00
  Speaker 11: at a company level, how they're managing through those situations.
• 30:03
  Speaker 11: So we had people fearful of inflation causing profit margin collapse.
• 30:07
  Speaker 11: We now have people fearful of inflation coming down causing
• 30:10
  Speaker 11: profit margin collapse. But companies buy and large have been
• 30:13
  Speaker 11: very dynamic in their responses and done a great job
• 30:15
  Speaker 11: in terms of managing through a really rapidly changing cycle
• 30:18
  Speaker 11: in terms of both prices and their inputs. So I
• 30:22
  Speaker 11: think I'm pretty optimistic in terms of how margins hold
• 30:25
  Speaker 11: together here. Companies have done a pretty good job.
• 30:27
  Speaker 1: So with Silverquest asset management, I think you, guys, folks
• 30:30
  Speaker 1: in part on global manager sourcing, what do you look
• 30:33
  Speaker 1: for in managers these days?
• 30:36
  Speaker 11: Yes, So that's a fun question that I could ramble
• 30:39
  Speaker 11: on for a long time, but I'll give you the
• 30:41
  Speaker 11: concise answer. So thematically, we look for three things when
• 30:44
  Speaker 11: we're looking for an investment manager. One is more concentrated
• 30:47
  Speaker 11: positions than normal. One is a longer term holding period
• 30:50
  Speaker 11: than normal than one is avoiding going from worse to first.
• 30:52
  Speaker 11: And our research shows that those three attributes really lend
• 30:56
  Speaker 11: themselves well to quality stock selection with a bias towards
• 30:59
  Speaker 11: fundament that tends to work over time, we tend to
• 31:02
  Speaker 11: find managers outperform when they do those three things.
• 31:04
  Speaker 5: Are there any specific stocks you can talk about that
• 31:06
  Speaker 5: you're buying or selling or maybe on an interview level.
• 31:09
  Speaker 11: Yeah, So I don't comment on a stock level, but
• 31:11
  Speaker 11: from a sector basis, I am pretty intrigued and optimistic
• 31:14
  Speaker 11: from the earnings backdrop for consumer discretionary as you alluded to,
• 31:17
  Speaker 11: perhaps some parts of staples, as well as industrials and technology.
• 31:21
  Speaker 5: When it comes to discretionary, because there's so many different
• 31:25
  Speaker 5: sub industries. If you're thinking about home builders, automakers, evs,
• 31:29
  Speaker 5: obviously retailers. Is there a particular group with a discretionary
• 31:33
  Speaker 5: that stands out to you?
• 31:34
  Speaker 7: Yeah.
• 31:34
  Speaker 11: One of the things that I've found the most compelling
• 31:37
  Speaker 11: is the areas that have still been seeing pent up demands.
• 31:39
  Speaker 11: So when you look at some of those spots, like
• 31:41
  Speaker 11: in leisure and airlines and hotels and hospitality and things,
• 31:44
  Speaker 11: that still continues to be going strong, and you see
• 31:46
  Speaker 11: it in the data and you see it anecdotally. You know,
• 31:48
  Speaker 11: anytime anyone gets out and travels these days, things are
• 31:51
  Speaker 11: pretty crowded and pretty busy. But we also see that
• 31:53
  Speaker 11: in the data. So if you look at mobility data,
• 31:55
  Speaker 11: if you look at where people are spending money, more
• 31:57
  Speaker 11: people employed in the country than have ever been before,
• 32:00
  Speaker 11: and they're happy to be out and about doing things,
• 32:02
  Speaker 11: And to me, that leads to those segments within discussionary.
• 32:04
  Speaker 5: So do you think people have just been too gloom
• 32:07
  Speaker 5: and doom coming into this year? Obviously, but now six
• 32:10
  Speaker 5: months into this year, heading into the second half, do
• 32:13
  Speaker 5: we need to maybe rethink those sort of recessionary projections
• 32:17
  Speaker 5: that was almost seems very well telegraphed for so many people.
• 32:20
  Speaker 11: Yes, I do think that's a large part of it.
• 32:22
  Speaker 11: I think one of the dynamics that happened was we
• 32:24
  Speaker 11: had such a strong boom bus cycle that when the
• 32:27
  Speaker 11: momentum on the economy started slowing down, that instantly triggered
• 32:31
  Speaker 11: a lot of indicators for future upcoming recession. Well, at
• 32:34
  Speaker 11: the same time, if you looked at what was actually
• 32:36
  Speaker 11: going on in terms of data and employment, the stability
• 32:39
  Speaker 11: was there. So my take all along had been that
• 32:41
  Speaker 11: economic momentum has been and continues to slow, but slowing
• 32:45
  Speaker 11: back down to a low positive rate of growth, rather
• 32:47
  Speaker 11: than dropping at the pace that it had been coming
• 32:49
  Speaker 11: off of that really high momentum out of the boom
• 32:52
  Speaker 11: bus cycle.
• 32:53
  Speaker 1: You know, we've had this kind of magnificent seven, if
• 32:57
  Speaker 1: you will, stocks kind of leading the way. Is it
• 32:59
  Speaker 1: worth trying to go out there and look for value stocks?
• 33:02
  Speaker 1: God forbidden.
• 33:03
  Speaker 11: I do think that there's some value and value, although
• 33:06
  Speaker 11: in my opinion it's more of a sector exercise than
• 33:09
  Speaker 11: a value versus growth exercise, and part of that is
• 33:11
  Speaker 11: because of how companies are managing through different cycles. But
• 33:14
  Speaker 11: I do think there's some value in small cap here.
• 33:16
  Speaker 11: That's an area where there's a lot of underperformers, but
• 33:18
  Speaker 11: there are some great companies that have been underappreciated. We
• 33:22
  Speaker 11: saw Breadth improving a little bit after the debt ceiling.
• 33:24
  Speaker 11: That was one of the things that we looked to
• 33:26
  Speaker 11: was would breadth improve after that and it did, and
• 33:28
  Speaker 11: so that's a bit encouraging as well that you might
• 33:30
  Speaker 11: have some money flowing back into that.
• 33:31
  Speaker 5: Space in small caps obviously being the ones we're under pressure,
• 33:35
  Speaker 5: but they typically lead the way before large caps, so
• 33:38
  Speaker 5: I feel like that's obviously going to be a key
• 33:41
  Speaker 5: area of the market to keep an eye on. We
• 33:43
  Speaker 5: only have about twenty seconds to left. But what's the
• 33:46
  Speaker 5: top question you hear from your clients right now?
• 33:49
  Speaker 11: That is a great question. I think it still comes
• 33:51
  Speaker 11: back to the FED cycle and inflation. That is still
• 33:54
  Speaker 11: very much number one on top of people's minds.
• 33:56
  Speaker 5: That's good to know, I mean, not surprisingly, right, Paul,
• 33:58
  Speaker 5: when it comes to this, And then what we will
• 34:00
  Speaker 5: have that FED meeting coming up at the end of
• 34:03
  Speaker 5: July on the twenty fifth and twenty sixth, with that decision,
• 34:06
  Speaker 5: so all eyes will be focused on that jobs day
• 34:09
  Speaker 5: next Friday, average hourly earnings will be greatly in focus.
• 34:12
  Speaker 5: And then the week after that we'll get another update
• 34:14
  Speaker 5: on July twelfth when it comes to CPI. So Robert Teeter,
• 34:17
  Speaker 5: thank you so much for joining us head of Investment
• 34:19
  Speaker 5: Policy and Strategy Group at Silvercress Asset Management and taking
• 34:23
  Speaker 5: a look and a little check here on the market's
• 34:25
  Speaker 5: SMP five hundred up marginally, as well as the Nasdaq
• 34:29
  Speaker 5: one hundred.
• 34:30
  Speaker 8: You're listening to the tape Cat's are live program Bloomberg
• 34:33
  Speaker 8: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 34:36
  Speaker 8: tune in app, Bloomberg dot Com.
• 34:38
  Speaker 7: And the Bloomberg Business App.
• 34:40
  Speaker 8: You can also listen live on Amazon Alexa from our
• 34:43
  Speaker 8: flagship New York station, Just say Alexa play Bloomberg eleven thirty.
• 34:49
  Speaker 1: Let's move over to talking about some of these consumer names.
• 34:52
  Speaker 1: I'm thinking these are some of the industries that I love.
• 34:54
  Speaker 1: I'm thinking cruises, I'm thinking gaming, ie casinos and all
• 34:59
  Speaker 1: the yeah, fun stuff, hotels, motels. We got a nice
• 35:02
  Speaker 1: round table here. Jonathan Levin, he's an opinion columnist for
• 35:06
  Speaker 1: Bloomberg News and Brian Egger. He's a senior analyst. He
• 35:08
  Speaker 1: covers all the gaming, lodging, cruising, all the fun stuff.
• 35:11
  Speaker 1: Somehow he's built a career on this. John, Let's start
• 35:14
  Speaker 1: with you. You got you had a column out today kind
• 35:17
  Speaker 1: of looking at the Carnival results and how the stock traded,
• 35:20
  Speaker 1: but you kind of expanded that out to this may
• 35:24
  Speaker 1: be represented what we might see during this earning season,
• 35:27
  Speaker 1: How did you view the Carnival numbers and the markets response.
• 35:31
  Speaker 12: Yeah, I just thought the reaction was was really fascinating
• 35:34
  Speaker 12: because the numbers come out on Monday, you know, surface level,
• 35:39
  Speaker 12: I thought they were really good, very very encouraging. But
• 35:44
  Speaker 12: the stock sells off in a big way, and everybody
• 35:48
  Speaker 12: sort of assumes, well, it's you know, it must have
• 35:51
  Speaker 12: been by the rumor, sell the news. But the very
• 35:54
  Speaker 12: next day the stock bounces right back, recovers everything that
• 35:59
  Speaker 12: it lost, and then on Wednesday, uh has uh has
• 36:03
  Speaker 12: another huge day.
• 36:05
  Speaker 7: Uh.
• 36:05
  Speaker 12: And so it's now trading well above where it was
• 36:10
  Speaker 12: before the earnings, And I just feel like, uh, you know,
• 36:14
  Speaker 12: this quirky series of events is a little bit representative
• 36:18
  Speaker 12: of where we are in this in this funny market.
• 36:21
  Speaker 12: You know, there's been this big run up in stocks.
• 36:24
  Speaker 12: Not a lot of people tend to trust it a lot.
• 36:28
  Speaker 12: If anybody was sort of fortunate enough to profit from
• 36:32
  Speaker 12: this recent rally, they're kind of saying like, maybe I
• 36:36
  Speaker 12: just got lucky here, Maybe it's maybe it's time to
• 36:39
  Speaker 12: to take some profits. And so I think there's an
• 36:42
  Speaker 12: inclination to sell at the first sign of trouble or
• 36:47
  Speaker 12: you know, as as we say, uh, you know, by
• 36:50
  Speaker 12: the rumor, but then hurry, Harry, hurry to uh to
• 36:54
  Speaker 12: sell the news. And as Carnival shows, you know, there's
• 36:58
  Speaker 12: there's some risk in that knee jerk reaction.
• 37:00
  Speaker 5: Brian want to bring you into this conversation because whenever
• 37:03
  Speaker 5: we need to know anything about cruise liners, we're obviously
• 37:07
  Speaker 5: going to go to you, Paul and I. When it
• 37:10
  Speaker 5: comes to Carnival in particular, some profit challenges there, but
• 37:14
  Speaker 5: then they still saw a lot of optimism on the bookings.
• 37:17
  Speaker 5: How do you square it away with what they've seen
• 37:19
  Speaker 5: obviously the rebound that we've seen in some of these
• 37:22
  Speaker 5: stocks in that particular corner of the market.
• 37:24
  Speaker 13: So I've seen this as kind of like a three
• 37:26
  Speaker 13: phase recovery, if you will, in terms of what drive sentiment.
• 37:29
  Speaker 13: First you had recovering from that long suspension, that long
• 37:32
  Speaker 13: pause with now ebitdoc per capacity day yields back to
• 37:36
  Speaker 13: where it was before the pandemic. Next stage, right now
• 37:38
  Speaker 13: we've got bookings and pricing looking really strong, so the
• 37:42
  Speaker 13: consumer is holding up. I think that next test will be,
• 37:45
  Speaker 13: to Jonathan's point, is one that they can achieve their
• 37:48
  Speaker 13: long term goals, which is by twenty twenty six back
• 37:52
  Speaker 13: to double digit returns on invested capital, increasing their ebitor
• 37:56
  Speaker 13: capacity day by fifty percent. They've laid out some very
• 37:59
  Speaker 13: specific benchmarks by twenty twenty six, and I think that
• 38:02
  Speaker 13: will really frame sentiment going forward.
• 38:05
  Speaker 1: Jonathan, we got I gotta ask, are you a cruiser?
• 38:09
  Speaker 12: Well, so I'll tell you I went on my very
• 38:11
  Speaker 12: first cruise, at least as an adult, when it was
• 38:17
  Speaker 12: the first Royal Caribbean cruise back after the pandemic, and
• 38:21
  Speaker 12: I did it as a Bloomberg journalist.
• 38:23
  Speaker 1: Oh oh, I see, which is so okay? You kind
• 38:26
  Speaker 1: of all right? Sor right? So Jonathan, this you know,
• 38:28
  Speaker 1: when you think about kind of how these stocks are
• 38:30
  Speaker 1: trading because this is going to be an important earning season,
• 38:32
  Speaker 1: is what we're hearing from a lot of strategist here.
• 38:34
  Speaker 1: But well, he get to economic data today that says
• 38:37
  Speaker 1: economy is pretty strong. What do you think corporate America
• 38:41
  Speaker 1: needs to do during this earning season to kind of
• 38:43
  Speaker 1: just keep moving forward here? Because as you mentioned in
• 38:46
  Speaker 1: your column here with Carnival, it was all over the place.
• 38:50
  Speaker 12: Yeah, I mean so obviously, you know, the trouble here
• 38:53
  Speaker 12: is that the bar is very high so you know,
• 38:57
  Speaker 12: traders analysts are going to struggle to answer the question
• 39:00
  Speaker 12: like how good is good enough? With pricing being as
• 39:05
  Speaker 12: strong as it is today. So you just look at
• 39:07
  Speaker 12: like what the cell side strategists have been saying for
• 39:10
  Speaker 12: the market as a whole. Most of them had their
• 39:13
  Speaker 12: year end twenty twenty three targets around forty one hundred.
• 39:16
  Speaker 12: So as we're trading above forty three hundred here you
• 39:20
  Speaker 12: say to yourself, you're gonna have to do a little
• 39:23
  Speaker 12: bit better than good to keep up this momentum.
• 39:28
  Speaker 4: Is it possible?
• 39:31
  Speaker 7: I think maybe?
• 39:32
  Speaker 12: You know, I mean, the macro data has been really really,
• 39:36
  Speaker 12: you know, nothing short of phenomenal. You have to say,
• 39:38
  Speaker 12: if you look over at that Bloomberg Economics Surprise Index,
• 39:43
  Speaker 12: it's the highest it's been in quite some time. You know,
• 39:49
  Speaker 12: just you know, a lot of upside surprises on the
• 39:53
  Speaker 12: macro and we may just see that filter down to
• 39:56
  Speaker 12: companies bottom lines.
• 39:58
  Speaker 5: Brian, what about some of carnival rivals when you're thinking
• 40:01
  Speaker 5: about Norwegian World Caribbean, how do they fare right now?
• 40:06
  Speaker 13: I mean also quite strong. I think across the white
• 40:09
  Speaker 13: swath of consumer leisure casinos, hotels, and cruise lines, the
• 40:15
  Speaker 13: leisure consumer of entertainment has really been quite resilient and
• 40:20
  Speaker 13: that remains the case. Whether or not that will remain
• 40:22
  Speaker 13: the case if we have a more significant economic downturn,
• 40:25
  Speaker 13: that will be a test, but we really are doing so.
• 40:28
  Speaker 13: When the cruises, you do have the benefit of relatively
• 40:30
  Speaker 13: moderate supply growth, fuel efficients used to offset some of
• 40:34
  Speaker 13: the rise and fuel costs, and some real strategic redeployment,
• 40:39
  Speaker 13: and in the case of Carnival, just a big deleveraging program.
• 40:42
  Speaker 13: So that's really what helps them with wind in their sales.
• 40:45
  Speaker 1: All right, I can't let you go here with that.
• 40:47
  Speaker 1: Talking about the gaming business, how are things Number one
• 40:51
  Speaker 1: on the strip in Vegas and number two in Macau?
• 40:55
  Speaker 13: Yeah, it was a nice pivot to casinos. Overall quite strong.
• 40:59
  Speaker 13: I mean Macau has suffered because of the long standing
• 41:02
  Speaker 13: travel restrictions and the ban on VP junk at credit,
• 41:05
  Speaker 13: but the mass business is beginning to come back. Vegas
• 41:08
  Speaker 13: looks quite strong. I mean the good news there is
• 41:09
  Speaker 13: not only do you have the leisure element, but you
• 41:11
  Speaker 13: also have, unlike cruise lines, the business element and conventions
• 41:14
  Speaker 13: seem to be back at full force.
• 41:17
  Speaker 1: Blair, what do you think the risk is to this
• 41:18
  Speaker 1: market here. As we kind of come into earnings here,
• 41:21
  Speaker 1: I mean, you know, the S and P five hundreds
• 41:23
  Speaker 1: to two hundred and twenty eight dollars a share roughly
• 41:25
  Speaker 1: for twenty twenty three, some folks will come into this
• 41:28
  Speaker 1: studio and say, hey, two hundred dollars is not off
• 41:31
  Speaker 1: the table, maybe even sub two hundred dollars in earnings.
• 41:34
  Speaker 1: There's earnings risk here.
• 41:35
  Speaker 10: What do you hear?
• 41:40
  Speaker 12: Jonathan, Yeah, sorry, Jonathan, Yeah, what is the what is
• 41:45
  Speaker 12: the earnings risk? I mean, coming into twenty twenty three,
• 41:48
  Speaker 12: I got I gotta say. I was certainly in the
• 41:50
  Speaker 12: camp of, you know, if we think we're going into
• 41:55
  Speaker 12: a recession, you know, two hundred twenty dollars seems awfully rich.
• 42:00
  Speaker 12: But all of the economic data that we've get gotten
• 42:03
  Speaker 12: recently suggests to me that if we're going into a downturn,
• 42:07
  Speaker 12: it's just not happening next month. It's not happening probably
• 42:11
  Speaker 12: three months from now. We've seen the professional economists, the
• 42:15
  Speaker 12: professional forecasting community sort of steadily bumped back their recession calls.
• 42:22
  Speaker 12: You know, a lot of people thought it would start
• 42:24
  Speaker 12: in three Q. Now most people see sort of flat
• 42:28
  Speaker 12: growth in three Q. Bumping back any recession calls to
• 42:32
  Speaker 12: four Q So you know, all of that, I think,
• 42:36
  Speaker 12: you know trickles right down to companies bottom lines. If
• 42:39
  Speaker 12: the macro economy is holding up and we know people
• 42:44
  Speaker 12: are going on cruise ships, it's hard to believe that,
• 42:49
  Speaker 12: you know, we're in for some massive downside surprise this
• 42:54
  Speaker 12: quarter or even next quarter.
• 42:56
  Speaker 5: And Brian, obviously, what does that tell us about the
• 42:58
  Speaker 5: consumer if there's still to spend money at all of this?
• 43:01
  Speaker 13: Yeah, the consumers hanging in there. I mean, what we
• 43:03
  Speaker 13: see for Carnival at least now, are the bookings for
• 43:06
  Speaker 13: the second quarter or seventeen percent above where they were
• 43:08
  Speaker 13: in twenty nineteen.
• 43:09
  Speaker 7: Wow.
• 43:10
  Speaker 13: We see ticket price is really quite strong, and we
• 43:13
  Speaker 13: see a nice backlog of customer deposits, people paying for
• 43:16
  Speaker 13: cruises in advance. The key thing for them is can
• 43:19
  Speaker 13: they hold up? Can ticket price and yield growth continue
• 43:21
  Speaker 13: to outpace inflation and things like port charges, travel expenses,
• 43:27
  Speaker 13: advertising costs. As long as they can maintain that balance
• 43:30
  Speaker 13: and generate incremental cash flow per unit of capacity, this
• 43:34
  Speaker 13: can continue. But obviously we're going to keep a close
• 43:36
  Speaker 13: watch on.
• 43:37
  Speaker 5: The economy, right, so that's going to be really important
• 43:39
  Speaker 5: to keep our eyes on. So I'm really glad that
• 43:41
  Speaker 5: both of you were able to join us. Brianeger, senior
• 43:44
  Speaker 5: Gaming and logging in list at Bloomberg Intelligence, who was
• 43:49
  Speaker 5: just speaking with us as well, and so that's going
• 43:51
  Speaker 5: to be really important. Paul, and we're taking a look
• 43:53
  Speaker 5: at all of this. Also, we had Jonathan Levin, who's
• 43:55
  Speaker 5: an opinion columns with The Bloomberg News, discussing Carnival.
• 43:58
  Speaker 8: You're listening to the tape cans our live program, Bloomberg
• 44:02
  Speaker 8: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 44:05
  Speaker 8: tune in app, Bloomberg dot Com, and the Bloomberg Business App.
• 44:08
  Speaker 8: You can also listen live on Amazon Alexa from our
• 44:11
  Speaker 8: flagship New York station, Just say Alexa play Bloomberg eleven thirty, jess.
• 44:18
  Speaker 5: Man and Paul Sweeney here in the Bloomberg Interactive Brokers Studio.
• 44:21
  Speaker 5: Up next, we want to get straight to our next guest,
• 44:23
  Speaker 5: Nancy Curtain, Partner Global CIO and head of Investment Advisory
• 44:27
  Speaker 5: at Altman Titaman Global, And Nancy, thank you so much
• 44:31
  Speaker 5: for joining us. We did get an update on the
• 44:34
  Speaker 5: first quarter GDP numbers being uppardly revised, driven by strength
• 44:39
  Speaker 5: in consumer spending. What's your take when you're looking at
• 44:42
  Speaker 5: the trajectory of the US economy versus what we're seeing globally.
• 44:46
  Speaker 14: Look, the US has been a lot stronger than expectations.
• 44:50
  Speaker 14: This is something that we expected as we entered the year.
• 44:53
  Speaker 14: But the recent number that came out this morning, which
• 44:56
  Speaker 14: is of course the third revision of the first quarter
• 44:59
  Speaker 14: GPP in the United States was super strong, right, came
• 45:03
  Speaker 14: in revised up two percent. But the real surprise there
• 45:07
  Speaker 14: was the consumer is alive and well, there's no recession
• 45:10
  Speaker 14: going on with the consumer. In the first quarter, consumption
• 45:13
  Speaker 14: was up four point two percent versus one percent in
• 45:17
  Speaker 14: the fourth quarter of last year, and we see signs
• 45:22
  Speaker 14: that this consumer resilience is continuing into the second quarter,
• 45:27
  Speaker 14: which we expect to be pretty decent here. And so
• 45:30
  Speaker 14: I think one of the surprises of this year, which
• 45:32
  Speaker 14: is always why markets climb that proverbial wall of worry,
• 45:36
  Speaker 14: is that GDP has been stronger than expected, not just
• 45:40
  Speaker 14: the United States, but actually globally, and in particular it's
• 45:44
  Speaker 14: been the consumer that is added to that strength.
• 45:47
  Speaker 1: So globally, Nancy, where are you guys finding I guess
• 45:51
  Speaker 1: the most opportunity these days? Maybe geographically by ass a class.
• 45:55
  Speaker 1: Where are you spending most of your time these days?
• 45:57
  Speaker 14: So you know, we used our exposure to the United
• 46:01
  Speaker 14: States last year, so we would have a globally diversified portfolio,
• 46:06
  Speaker 14: and I think that's proven to give us both diversification
• 46:09
  Speaker 14: benefits and also return as well. So we all know
• 46:12
  Speaker 14: that the US market is up fourteen percent now, Stix
• 46:15
  Speaker 14: up thirty percent. Okay, very strong, and we can come
• 46:18
  Speaker 14: back and talk about some of the reasons, but I
• 46:21
  Speaker 14: think less well known maybe or US investors not focusing
• 46:25
  Speaker 14: on it, as euro stocks is up close to seventeen percent,
• 46:29
  Speaker 14: Japan in local currencies up twenty seven percent, So leaning
• 46:34
  Speaker 14: into the rest of the world has actually been a
• 46:36
  Speaker 14: fruitful strategy. Then it's mean that we've diversified some of
• 46:39
  Speaker 14: the concentration risk in the United States. So we like
• 46:43
  Speaker 14: the rest of the world, we want to have a
• 46:45
  Speaker 14: globally diversified portfolio, and more recently, within the United States,
• 46:51
  Speaker 14: I would say more recently we've moved to a slight overweight,
• 46:54
  Speaker 14: which is going to sound a bit controversial, and given
• 46:57
  Speaker 14: some of the news of the FED and ongoing tight
• 47:00
  Speaker 14: i'd say we're constructively optimistic or cautiously optimistic, which is
• 47:05
  Speaker 14: to say, we're leading into those areas of underperformance MidCap
• 47:10
  Speaker 14: and value which are trading at multi decade lows versus
• 47:14
  Speaker 14: their traditional metrics, and multi decade lows versus large cap
• 47:19
  Speaker 14: as well. So we think the market breath will improve
• 47:22
  Speaker 14: in the United States. So we still like the US market,
• 47:26
  Speaker 14: but also we have exposure to rest of world, which
• 47:29
  Speaker 14: is done pretty nicely here as well.
• 47:31
  Speaker 5: So more optimistic nancy when it comes to this market
• 47:34
  Speaker 5: breadth debate that a lot of people have been having.
• 47:37
  Speaker 5: What about when it comes to small caps? You brought
• 47:39
  Speaker 5: up midcaps, what about small caps?
• 47:42
  Speaker 14: We just think the MidCap index has more quality companies
• 47:48
  Speaker 14: with lower levels of leverage than small cap. But I
• 47:51
  Speaker 14: would make the same argument small cap is pretty attractively valued,
• 47:55
  Speaker 14: small cap, MidCap value. These are all the sectors that
• 47:59
  Speaker 14: have been ignored by investors as they focus on generative
• 48:03
  Speaker 14: AI and of course the tech sector, which has driven
• 48:05
  Speaker 14: the rallies so far here today. But we just think
• 48:08
  Speaker 14: there's more of a quality bias to the MidCap. We
• 48:11
  Speaker 14: also see a long term secular theme in MidCap, which
• 48:15
  Speaker 14: is the onshoring of supply chains bringing manufacturing back home. Again,
• 48:20
  Speaker 14: and also companies focus on automation. Cap X was up
• 48:24
  Speaker 14: about four percent in the first half of this year.
• 48:27
  Speaker 14: And we think these are tailwinds for the MidCap sector,
• 48:31
  Speaker 14: which is I said, trades at very very attractive valuations
• 48:34
  Speaker 14: versus its own history, and versus large caps as well.
• 48:38
  Speaker 1: Nancy, I know during your career you've amassed a lot
• 48:41
  Speaker 1: of experience in alternative assets. How do alternatives fit into
• 48:45
  Speaker 1: your outlook these days?
• 48:48
  Speaker 14: So our client base is ultra high net worth and
• 48:51
  Speaker 14: therefore and foundations as well, and so they have a
• 48:55
  Speaker 14: longer term time horizon. So when I talk about alternatives,
• 48:59
  Speaker 14: I think it's really appropriate for our client base as
• 49:02
  Speaker 14: I said, that has a mass, perhaps more wealth than
• 49:05
  Speaker 14: a long term time horizon, etc. Because many of these
• 49:08
  Speaker 14: alternatives come, we think we've enhanced return and interesting return characteristics,
• 49:15
  Speaker 14: but also with a degree of illiquidity, so they need
• 49:17
  Speaker 14: to be appropriate obviously to client circumstance. Okay, so what
• 49:21
  Speaker 14: do we like in alternatives? We think it's very interesting
• 49:24
  Speaker 14: time for private credit. It's one of the things we'll
• 49:27
  Speaker 14: be initiating, reducing some of our exposure to the shorter
• 49:31
  Speaker 14: end where we've made very nice money. Thank you, very
• 49:33
  Speaker 14: much yields a prison, etc. But we think we can
• 49:36
  Speaker 14: get double that in private credit. We like real estate,
• 49:40
  Speaker 14: particularly what we're going to call long hold real estate,
• 49:43
  Speaker 14: which we think for US taxpayers can bring some very
• 49:46
  Speaker 14: interesting tax benefits but also benefits from the supply demand
• 49:50
  Speaker 14: in balance in airs like residential real estate with good
• 49:54
  Speaker 14: tax benefits, good inflation protection. And then we like private
• 49:58
  Speaker 14: equity as well, csure to buy out managers, growth and venture.
• 50:03
  Speaker 14: We think, by the way, the generative AI, many of
• 50:06
  Speaker 14: what i'll call the killer apps probably still to come
• 50:10
  Speaker 14: or either on the drawing board or in many of
• 50:12
  Speaker 14: the private sector today in growth and venture portfolios. And
• 50:16
  Speaker 14: so we like this compliment of being able to play
• 50:19
  Speaker 14: clearly technology and public markets, but also the digitalization climate,
• 50:25
  Speaker 14: imperative decarbonization technologies, lots of tailwinds we think also happening
• 50:30
  Speaker 14: in private markets as well.
• 50:31
  Speaker 5: He Nancy, What are some of the top questions you're
• 50:33
  Speaker 5: getting from clients at this point when you do have
• 50:36
  Speaker 5: this ongoing sort of divergence where people were trying to
• 50:40
  Speaker 5: telegraph recession coming, but then you have a lot of
• 50:43
  Speaker 5: this economic data, especially the GDP data this morning, seeing
• 50:46
  Speaker 5: the contrary to that.
• 50:49
  Speaker 14: So we have said from the very beginning of the
• 50:52
  Speaker 14: year that we want to remain invested. State invested is
• 50:55
  Speaker 14: hugely important. It means I think most people didn't see
• 50:59
  Speaker 14: this rally, at least to the extent of this rally,
• 51:01
  Speaker 14: and so we've remained invested. We haven't tried to time
• 51:04
  Speaker 14: market super important. But we've also said we thought that
• 51:08
  Speaker 14: twenty twenty three would be a better year for risk assets.
• 51:11
  Speaker 14: And we said that because look back to back declines
• 51:15
  Speaker 14: in both bonds and stock markets super unusual happens about
• 51:19
  Speaker 14: two percent of the time in over one hundred years.
• 51:21
  Speaker 14: We also said that the third slash going into fourth
• 51:25
  Speaker 14: year of a presidential cycle tends to be good, particularly
• 51:29
  Speaker 14: for US risk assets. But finally, we've begun the year
• 51:32
  Speaker 14: by saying investors are super cautious. Everyone was cautiously positioned
• 51:37
  Speaker 14: bearish got even more bearish obviously after the banking stresses
• 51:42
  Speaker 14: and what we said to clients, look on any good news,
• 51:45
  Speaker 14: we think these markets could rally here. And of course
• 51:47
  Speaker 14: we've had a lot of good news right. Growth has
• 51:49
  Speaker 14: been better than expected. Q one earnings better than expected. Obviously,
• 51:54
  Speaker 14: this transformational technology in the form of generative AI super interesting. Again,
• 51:59
  Speaker 14: maybe evaluations on certain stocks have risen too much again,
• 52:03
  Speaker 14: but we think it has very very significant long term implications.
• 52:06
  Speaker 14: And then we got through that crazy debt deal in
• 52:08
  Speaker 14: the States without too much fiscal drag and pushed up
• 52:11
  Speaker 14: the whole discussion to twenty twenty five to talk about again.
• 52:14
  Speaker 14: So there's been a lot of good news here. And
• 52:16
  Speaker 14: we said to investors' markets, climb a proverbial wall of worry.
• 52:21
  Speaker 14: And we've had a lot of good news and actually
• 52:23
  Speaker 14: we think we could have some good news looking forward ahead.
• 52:26
  Speaker 1: But I'll hang on to that one, all right, Nancy,
• 52:28
  Speaker 1: Just real quick, we heard from again more inflation concerns
• 52:32
  Speaker 1: in the UK. How does that you got about thirty seconds?
• 52:34
  Speaker 1: How does it impact kind of your view of the
• 52:36
  Speaker 1: UK here?
• 52:37
  Speaker 8: UK?
• 52:38
  Speaker 14: I'm going to put in the special child department. UK
• 52:42
  Speaker 14: has some issues with related to Brexit. The composition of
• 52:46
  Speaker 14: the stock market very very energy intensive, banking intensive, and
• 52:50
  Speaker 14: it's been had very very sticky inflation. We think that
• 52:54
  Speaker 14: the UK could continue to raise rates, probably likely to
• 52:57
  Speaker 14: go into a deeper recession. That is not our you
• 53:00
  Speaker 14: about Europe, United States and Japan, by the way, So
• 53:04
  Speaker 14: we have a more constructively optimistic view on those other
• 53:08
  Speaker 14: markets UK special child. Let me put it that way.
• 53:11
  Speaker 1: That's right, Okay, That's what we heard from some others
• 53:13
  Speaker 1: as well. Nancy Curtain, thank you so much for joining us.
• 53:16
  Speaker 1: Nancy Curtain, she's a partner Global CIO and head of
• 53:20
  Speaker 1: Investment Advisory at ALTI Titaman Global. Interesting take there on
• 53:25
  Speaker 1: a Global View.
• 53:26
  Speaker 8: You're listening to the tape cats our live program Bloomberg
• 53:30
  Speaker 8: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 53:33
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• 53:35
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• 53:36
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• 53:46
  Speaker 5: Mitt and Paul Sweeney here in the Bloomberg Interactive Brokers Studio.
• 53:50
  Speaker 5: And up next we have Stacy Stephenson, the CEO of
• 53:52
  Speaker 5: Family Equality, joining us to talk about the latest here
• 53:56
  Speaker 5: when it comes to as far as what this could
• 54:00
  Speaker 5: mean when we're looking at companies, especially being less vocal
• 54:03
  Speaker 5: when it comes to pride munch during this anti LGBTQ
• 54:07
  Speaker 5: outcry right now. But Stacey, I wanted to start off
• 54:09
  Speaker 5: first with you as far as your take here when
• 54:12
  Speaker 5: we're looking at some of these Supreme Court rulings that
• 54:14
  Speaker 5: are coming out.
• 54:17
  Speaker 15: Yeah, first, thanks for having me.
• 54:19
  Speaker 16: You know, when I think about the affirmative affirmative action
• 54:24
  Speaker 16: case that just came down, the first thing that came
• 54:27
  Speaker 16: to mind for me is that this is hate wrapped
• 54:29
  Speaker 16: in legallees.
• 54:31
  Speaker 15: And so this Supreme Court.
• 54:32
  Speaker 16: Overturning yet another long standing precedent is devastating and it's worrisome.
• 54:38
  Speaker 16: And you know, this is just yet another concerning court
• 54:41
  Speaker 16: Supreme Court decision at a time when LGBTQ plus folks
• 54:44
  Speaker 16: and marginalized folks are.
• 54:45
  Speaker 15: Under attack in this country. It's very worrisome.
• 54:49
  Speaker 1: How concerned are you, Stacy, that you know this ruling
• 54:52
  Speaker 1: will not just be in effect academia, but will go
• 54:55
  Speaker 1: permeate through other parts of society, whether it's the workplace
• 55:00
  Speaker 1: or other areas as well.
• 55:03
  Speaker 15: I'm extremely concerned about that.
• 55:05
  Speaker 16: Right, this is set a precedent, and you know, much
• 55:08
  Speaker 16: like when Roe was overturned, we saw that too. So
• 55:11
  Speaker 16: this could certainly start permeating and expanding not in just academia,
• 55:15
  Speaker 16: but start to seep into corporate America, started to seep
• 55:18
  Speaker 16: in other sectors.
• 55:19
  Speaker 15: And that's very concerning.
• 55:21
  Speaker 16: One thing I will say is that we are not
• 55:23
  Speaker 16: going to retreat, and our partners who are working in
• 55:25
  Speaker 16: academia will continue to fight. And on the LGBTQ plus side,
• 55:29
  Speaker 16: obviously we're watching this very closely. But one thing that
• 55:31
  Speaker 16: I think is very important is that we will not retreat.
• 55:34
  Speaker 16: We have to continue to fight. And at the same time,
• 55:36
  Speaker 16: you're really realistic about this could start to seep into
• 55:40
  Speaker 16: other sector's decisions like this.
• 55:42
  Speaker 5: Stacey, talk to us more about family equality and what
• 55:45
  Speaker 5: you do there.
• 55:47
  Speaker 16: Sure you know, family is foundational to America, to American values,
• 55:53
  Speaker 16: and every person in this country deserves the right to family. However,
• 55:59
  Speaker 16: that is not the experiences so many LGBTQ plus people
• 56:02
  Speaker 16: who want to create a family, who want to sustain
• 56:04
  Speaker 16: a family, who want to have children. That is the
• 56:07
  Speaker 16: work of family equality. For forty four years, we have
• 56:10
  Speaker 16: been fighting for LGBTQ plus people to find to form.
• 56:14
  Speaker 15: And sustain our families.
• 56:16
  Speaker 16: And what we do is essentially ensure that we can
• 56:18
  Speaker 16: create our families without social, without legal, and without economic barriers.
• 56:23
  Speaker 15: And we've been doing that work since nineteen seventy nine.
• 56:26
  Speaker 1: How do you do that, because it seems like today
• 56:30
  Speaker 1: maybe tougher than it's ever been, particularly in certain parts
• 56:33
  Speaker 1: of the country, certain states. Give us a practical case
• 56:37
  Speaker 1: of how you actually try to do that.
• 56:40
  Speaker 16: Sure a practical case would be, for example, we know
• 56:43
  Speaker 16: that we are seeing just a plethora of LGBTQ plus
• 56:49
  Speaker 16: rhetoric and laws being introduced or passed in the state
• 56:52
  Speaker 16: of Florida. For example, one of the strategies that we
• 56:55
  Speaker 16: employed is that we, along with some other plaintiffs, are
• 56:59
  Speaker 16: now taking the State of Florida or the Department of
• 57:02
  Speaker 16: Florida Education to court over there. Don't say gay bill there,
• 57:06
  Speaker 16: don't say gay law it because it's frankly unconstitutional. And
• 57:11
  Speaker 16: so when we can actually enter into lawsuits and to
• 57:15
  Speaker 16: conversations like that, that not only signals to families in
• 57:19
  Speaker 16: Florida that we are there for them, but it also
• 57:22
  Speaker 16: helps to move the needle. We're gonna have to get
• 57:24
  Speaker 16: really aggressive now, and we have over five hundred anti
• 57:27
  Speaker 16: LGBTQ plus bills that have been introduced across the country.
• 57:30
  Speaker 16: Those strategies have changed. I mean, I think twenty eighteen
• 57:33
  Speaker 16: we only saw forty one bills. Now we're up to
• 57:35
  Speaker 16: five hundred. They've changed their strategy, So now we have
• 57:38
  Speaker 16: to change our strategy, but a practical example would be
• 57:40
  Speaker 16: our lawsuit in Florida.
• 57:42
  Speaker 5: And talk to us more about these inclusive hiring efforts
• 57:46
  Speaker 5: that are really helped to be geared directed toward families.
• 57:50
  Speaker 5: And obviously when we've seen larger corporations, we've heard about
• 57:53
  Speaker 5: Target obviously having those particular backlash recently, and basically just
• 57:59
  Speaker 5: looking at as far as what this means for hiring, recruiting,
• 58:02
  Speaker 5: and some of the repercussions this could have there.
• 58:05
  Speaker 17: I mean, you know, you want inclusive policies, you want
• 58:08
  Speaker 17: to hire people who are from marginalized communities. Yet we
• 58:12
  Speaker 17: see organizations who are retreating, if you will, or understanding
• 58:17
  Speaker 17: that there's.
• 58:17
  Speaker 16: No more what I call a middle ground. I feel
• 58:19
  Speaker 16: like there used to be a middle ground where corporate
• 58:21
  Speaker 16: Muerica could sort of satisfy both sides. That middle ground
• 58:24
  Speaker 16: does not exist anymore, and what I see is going
• 58:27
  Speaker 16: to be a shrinking pipeline, a shrinking pipeline of individuals
• 58:31
  Speaker 16: who would you know, I've built be comfortable with applying
• 58:35
  Speaker 16: for places like Target and others. I think those folks
• 58:37
  Speaker 16: are going to think twice before working at organizations like this.
• 58:41
  Speaker 16: So now we've caused another issue, right, by retreating, now
• 58:44
  Speaker 16: we effectively as shrunk the pipeline in terms of those
• 58:47
  Speaker 16: organizations or those people rather who would otherwise be hired
• 58:51
  Speaker 16: or even see these organizations as a viable place to work.
• 58:54
  Speaker 1: So, Stacey, what's your take on what we saw or
• 58:57
  Speaker 1: what we are seeing with between Disney and the state
• 58:59
  Speaker 1: of FAFE.
• 59:03
  Speaker 16: I can't necessarily speak to that, but what I will
• 59:07
  Speaker 16: say is that.
• 59:08
  Speaker 1: Disney just just representative of corporate America. There's a company
• 59:11
  Speaker 1: who tried to step up and you know, obviously felt
• 59:14
  Speaker 1: some backlash, and that's Almighty Disney, That's Mickey Mouse.
• 59:17
  Speaker 15: Yeah, this is Mickey Mouse.
• 59:18
  Speaker 16: But you know what I will say is about Disney
• 59:20
  Speaker 16: and others, is that I feel like there isn't there's
• 59:23
  Speaker 16: an evolution that is happening with corporations. And so we
• 59:25
  Speaker 16: know that Disney had some backlash, they retreated, There was
• 59:30
  Speaker 16: a whole plethora of negatives that came out of that, and.
• 59:33
  Speaker 15: Then we saw Disney take a shift.
• 59:36
  Speaker 16: And I think that's exactly what's going to happen, is
• 59:38
  Speaker 16: that these organizations, oftentimes thinking about revenue, thinking about I
• 59:42
  Speaker 16: think trying to please everybody, will oftentimes retreat.
• 59:46
  Speaker 15: But if they are really connected to their values.
• 59:48
  Speaker 16: If they really are walking the walk and talking the talk,
• 59:52
  Speaker 16: then we will.
• 59:52
  Speaker 15: See that shift.
• 59:53
  Speaker 16: And I'm hoping that we will see that with other organizations,
• 59:56
  Speaker 16: because you're going to have to make a decision, and
• 59:59
  Speaker 16: I often say that either you are foreign quality or
• 1:00:01
  Speaker 16: you're not, and you can't take a middle.
• 1:00:04
  Speaker 1: Groil Stacy, thanks so much for joining us. Really appreciate
• 1:00:07
  Speaker 1: getting a few minutes of your time. Stacy Stevenson, CEO
• 1:00:10
  Speaker 1: of Family Equality.
• 1:00:15
  Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can
• 1:00:18
  Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever
• 1:00:22
  Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
• 1:00:26
  Speaker 2: at Matt Miller nineteen seventy three.
• 1:00:28
  Speaker 1: And I'm Fall Sweeney. I'm on Twitter at pt Sweeney.
• 1:00:31
  Speaker 1: Before the podcast, you can always catch us worldwide at
• 1:00:34
  Speaker 1: Bloomberg Radio.