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Mueller Report Likely To Impugn The President: Waxman (Podcast) · Bloomberg Intelligence

• 0:02
  Speaker 1: Welcome to the Bloomberg Penel podcast. I'm Paul swing you,
• 0:05
  Speaker 1: along with my co host Lisa Brahma Ways, each day
• 0:07
  Speaker 1: we bring you the most noteworthy and useful interviews for
• 0:10
  Speaker 1: you and your money. Whether at the grocery store or
• 0:12
  Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple
• 0:15
  Speaker 1: podcast or wherever you listen to podcasts, as well as
• 0:17
  Speaker 1: at Bloomberg dot com. Well, the Mueller investigation is reportedly
• 0:24
  Speaker 1: nearing its end, with a report being delivered as soon
• 0:27
  Speaker 1: as next week. The big question is what are we
• 0:30
  Speaker 1: going to learn about it, if anything. Joining us now
• 0:33
  Speaker 1: is Seth Waxman, partner at Dickinson Right in Washington, d C.
• 0:36
  Speaker 1: He is also a former federal prosecutor in the District
• 0:40
  Speaker 1: of Columbia. Seth, thank you so much for being with us.
• 0:43
  Speaker 1: I want to start there. What do you expect to
• 0:45
  Speaker 1: learn when the Mueller report does come out? Well, good morning.
• 0:50
  Speaker 1: With regards to the Mueller report, I expect to see
• 0:53
  Speaker 1: a fulsome description of the Mueller investigation. I know there's
• 0:56
  Speaker 1: been some discussion of a summary report. I just don't
• 0:59
  Speaker 1: see that happy thing. I think that this is a
• 1:01
  Speaker 1: two year investigation. Mr Mueller and his team have dedicated
• 1:04
  Speaker 1: an incredible amount of time and effort to this, and
• 1:06
  Speaker 1: it's such in the American people's interest to see the
• 1:10
  Speaker 1: full scope of that investigation, obviously taking out any national
• 1:13
  Speaker 1: security type of confidential information or classified information. But I
• 1:18
  Speaker 1: just don't believe that we're going to see a truncated
• 1:20
  Speaker 1: report or something that really doesn't explain to the American
• 1:23
  Speaker 1: people exactly what happened and why. So that's just for
• 1:26
  Speaker 1: an audience who exactly decides what gets released. So the
• 1:31
  Speaker 1: report Mr Mueller generates will be given to the Attorney General,
• 1:35
  Speaker 1: and by the Special Council regulations, it is the Attorney
• 1:38
  Speaker 1: General that will decide, uh, you know what to release
• 1:41
  Speaker 1: the Congress and then of course to the American people.
• 1:45
  Speaker 1: And so in in theory, Mr Bahar could send across
• 1:48
  Speaker 1: a truncated report or or refused to send it in fact,
• 1:52
  Speaker 1: but he's on record by saying he wants to make
• 1:55
  Speaker 1: it available to the greatest extent possible. The only reservation
• 1:58
  Speaker 1: he gives is, you know, for national security reasons or
• 2:01
  Speaker 1: classified information. In my in my opinion, Mr Mueller knows
• 2:05
  Speaker 1: that and will write a report that's likely exercise those
• 2:09
  Speaker 1: portions out or put them into a separate addendum, so
• 2:12
  Speaker 1: the report he hands over will be either a sanitized
• 2:15
  Speaker 1: in such a way as that it could be released
• 2:17
  Speaker 1: to the public in full. Is that It's sort of
• 2:19
  Speaker 1: interesting because a lot of commentators are saying that probably
• 2:23
  Speaker 1: the Mueller investigation won't have a smoking gun, probably won't
• 2:27
  Speaker 1: result in further indictments. Do you think that there is
• 2:30
  Speaker 1: evidence to support that view? Well, it's all speculation. Um,
• 2:35
  Speaker 1: you know, in my opinion, I think that there are
• 2:37
  Speaker 1: allegations that that would support criminal charges and and a
• 2:41
  Speaker 1: referral to Congress. I don't think that Mr Mueller will
• 2:43
  Speaker 1: indict a sitting president. I'm on the side of the
• 2:45
  Speaker 1: fence that a sitting president cannot be indicted. That it's
• 2:49
  Speaker 1: an impeachment proceeding that I would have to take place,
• 2:51
  Speaker 1: and then if a criminal charge were to be filed,
• 2:54
  Speaker 1: it would take place after that. But um, you know,
• 2:57
  Speaker 1: I think there is from what we know publicly, we
• 2:59
  Speaker 1: have this Just to take one example, this very critical
• 3:02
  Speaker 1: June ninth Trump Tower meeting where the Russians were offering
• 3:06
  Speaker 1: dirt on Hillary Clinton and the people. The Russians that
• 3:08
  Speaker 1: were in that meeting worked for companies whose sole purpose
• 3:12
  Speaker 1: was to reduce or eliminate sanctions on Russians. I think
• 3:15
  Speaker 1: it'd be very naive to think that when the Russians
• 3:17
  Speaker 1: came in and offered that dirt on Hillary Clinton that
• 3:20
  Speaker 1: they weren't seeking something in return, especially given the company
• 3:23
  Speaker 1: they represented. So if that in fact took place a
• 3:26
  Speaker 1: quid pro quo in exchange for dirt on Hillary Clinton
• 3:29
  Speaker 1: for reduction or promise to reduce or eliminate sanctions, that
• 3:33
  Speaker 1: fits into several federal bribery staff or federal statutes, including bribery.
• 3:38
  Speaker 1: So um, we know that from the public record as
• 3:41
  Speaker 1: to what we what we've learned from the Mller investigation,
• 3:43
  Speaker 1: I think that, along with several other areas, are are
• 3:47
  Speaker 1: very um rife with potential criminal conduct. And I just
• 3:50
  Speaker 1: don't see, you know, at this stage of the game,
• 3:52
  Speaker 1: Mr Mueller, you know, after two years walking away without
• 3:56
  Speaker 1: some um referral to Congress that impugnes the press and
• 4:00
  Speaker 1: into one degree or another. So seth, let's just say
• 4:03
  Speaker 1: that something less than the full report is released. What
• 4:07
  Speaker 1: are the options for Congress. Well, Congress can conduct its investigations,
• 4:12
  Speaker 1: can move forward using the report as a basis to
• 4:15
  Speaker 1: launch additional investigations, they could move forward and learn facts
• 4:20
  Speaker 1: that cause them uh, either things they know now or
• 4:23
  Speaker 1: that they learn to UM convene UH convene impeachment proceedings
• 4:28
  Speaker 1: or to make referrals to other U. S. Attorney's offices
• 4:30
  Speaker 1: for federal prosecution. So while you know, whatever the Mueller
• 4:34
  Speaker 1: report says, it does not necessarily end the matter. UM.
• 4:37
  Speaker 1: And of course there are other U. S. Attorney's offices
• 4:40
  Speaker 1: across the country, including s d N Y most importantly,
• 4:43
  Speaker 1: that are conducting UH investigations, also state investigators, especially in
• 4:47
  Speaker 1: New York, that have ongoing investigations. But you know, in
• 4:50
  Speaker 1: my opinion, what this comes down to is Mueller versus Trump,
• 4:53
  Speaker 1: and you know, it's that's the headline, that's the main
• 4:55
  Speaker 1: movie we've all come to want to see. And to
• 4:58
  Speaker 1: the extent Mr Mueller exonerates or walks Mr Trump, you know,
• 5:02
  Speaker 1: that is a obviously a huge victory for Mr Trump.
• 5:05
  Speaker 1: And while those other investigations may or will likely continue forward,
• 5:08
  Speaker 1: it's my opinion that if Mr Trump is exonerated by
• 5:12
  Speaker 1: Mr Muller, or at least you know not, you're not
• 5:15
  Speaker 1: referred for impeachment proceedings or criminal charges. UM. That that's
• 5:19
  Speaker 1: really the big, the big to do in this, and
• 5:22
  Speaker 1: so it'll be very interesting to see what happens. Yeah,
• 5:24
  Speaker 1: just piggybacking on that. We did get the headlines earlier
• 5:27
  Speaker 1: today saying that New York State prosecutors are preparing charges
• 5:32
  Speaker 1: for Paul Manaford if President Trump does decide to pardon him.
• 5:36
  Speaker 1: You mentioned sd I W sd N Y, the Southern
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  Speaker 1: District of New York, UH, the U. S. Attorney's Office
• 5:42
  Speaker 1: in Manhattan, And I'm wondering we've been hearing about the
• 5:45
  Speaker 1: investigation that's ongoing there into the Trump organization. Who do
• 5:48
  Speaker 1: you think that will involve him? And is it just
• 5:51
  Speaker 1: couldn't go up to President Trump himself or does this
• 5:54
  Speaker 1: involve some peripheral characters as well as relatives of his No,
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  Speaker 1: I think it could reach all the way up to
• 6:00
  Speaker 1: Mr Trump himself. I mean he was the CEO of
• 6:02
  Speaker 1: this five oh one C three A a charitable organization,
• 6:05
  Speaker 1: and so when in that area, when individuals make donations
• 6:09
  Speaker 1: to charitable organizations, UM, there's a mandate as to how
• 6:13
  Speaker 1: that money should be used and if that money is
• 6:15
  Speaker 1: diverted away from those purposes altruistic purposes, whether it's you know,
• 6:20
  Speaker 1: giving to the Boy Scouts or your local community organization
• 6:23
  Speaker 1: or whatever the purposes that this charitable foundation was constructed.
• 6:27
  Speaker 1: When money is diverted away from those two personal gains,
• 6:30
  Speaker 1: like a personal portrait put up in a golf one
• 6:33
  Speaker 1: of Trump golf courses, or the many other things that
• 6:35
  Speaker 1: we've heard about, that is deceptive, that is fraudulent, and
• 6:39
  Speaker 1: on the federal level, it could be charged as wire fraud.
• 6:42
  Speaker 1: On the state level, it could be brought allegations can
• 6:45
  Speaker 1: be brought as they are by the New York Attorney General.
• 6:47
  Speaker 1: So to the extent Mr Trump, the President participated in
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  Speaker 1: that was the beneficiary of it, you know, knowingly and
• 6:54
  Speaker 1: intentionally um fostered that scheme, he could be implicated. So
• 6:59
  Speaker 1: that's just on the report. What is your sense of
• 7:01
  Speaker 1: timing here? We we kind of hear reports that it
• 7:03
  Speaker 1: could be really any day now. Is that in infect
• 7:05
  Speaker 1: your your sense as well? Yeah, Again, this is the
• 7:08
  Speaker 1: world of speculation that we're all in, where we're hearing
• 7:11
  Speaker 1: things that make us think that the report may be
• 7:13
  Speaker 1: in the offing. Of course, Mr Barr is on record
• 7:16
  Speaker 1: now saying it's coming. Mr Rosenstein, who months ago said
• 7:19
  Speaker 1: he wouldn't leave the Justice Department until the report was
• 7:23
  Speaker 1: going to be issued, and and now he's announced his departure.
• 7:26
  Speaker 1: We're hearing, I don't know, reports of prosecutors on the
• 7:29
  Speaker 1: Special Prosecutor Council's team boxing up boxes and reaching out
• 7:33
  Speaker 1: to former employees to see where their next job may lie.
• 7:37
  Speaker 1: You know, you take all that together, it seems like
• 7:39
  Speaker 1: we're heading towards a critical mass of this report being issued.
• 7:43
  Speaker 1: Whether that's next week or in the coming weeks, it's
• 7:46
  Speaker 1: it's difficult to say, but you know, we have you know,
• 7:48
  Speaker 1: by all accounts, we've reached the top of the ladder,
• 7:50
  Speaker 1: or Mr Mueller has, you know, he's gone after Mannerfurt Stone,
• 7:54
  Speaker 1: all the other prime targets, the two that stand out
• 7:57
  Speaker 1: that haven't been addressed, or of course Donald Trump Jr.
• 8:00
  Speaker 1: And Jared Kushner. But what we don't know is if
• 8:03
  Speaker 1: Mr especially with regards to an interview of those people,
• 8:06
  Speaker 1: but Mr Mueller may have requested that interview, and if
• 8:09
  Speaker 1: their lawyers had said they'll plead the fifth Um, then
• 8:12
  Speaker 1: there is nothing no interview to take place. And you know,
• 8:15
  Speaker 1: if if if those individual lawyers have kept their mouth shut,
• 8:19
  Speaker 1: we never know that Great Seth really appreciate it. Seth Waxman,
• 8:23
  Speaker 1: partner at Dickinson right in Washington, d C. On the
• 8:27
  Speaker 1: Mueller investigation, which should be announced soon. The way that
• 8:44
  Speaker 1: companies are community communicating I'm trying to communicate communicating with
• 8:49
  Speaker 1: their customers is changing dramatically in a time of artificial intelligence.
• 8:54
  Speaker 1: Our next guest is very familiar with that. Chris Grinarchy
• 8:57
  Speaker 1: is chief financial officer of Live Person, which reported earnings yesterday,
• 9:01
  Speaker 1: shares surging today in a response up seven and a
• 9:05
  Speaker 1: half percent. Chris joins us here in our Bloomberg Interactive
• 9:07
  Speaker 1: Brokers Studios. Chris, thank you so much for being here.
• 9:11
  Speaker 1: Let's start with what is Live Person? Yeah? First of all,
• 9:14
  Speaker 1: great to be with y'all. Uh. Live Person is a
• 9:16
  Speaker 1: leading provider to Fortune five companies conversational commerce solutions that
• 9:21
  Speaker 1: enables them to digitally transform how they engage with their consumers. Okay,
• 9:25
  Speaker 1: and then in English? Sure, Uh, when was the last
• 9:28
  Speaker 1: time he dialed at one hundred number? And how did
• 9:29
  Speaker 1: you feel afterwards? Uh? Did not, So you have to
• 9:36
  Speaker 1: force yourself to do it. Uh, and it's not a
• 9:38
  Speaker 1: pleasant experience afterwards. Brands are catching up with that. We
• 9:40
  Speaker 1: believe that we're past the point of inevitability where consumer
• 9:46
  Speaker 1: behavior of messaging over using voice UH is here and companies,
• 9:50
  Speaker 1: now brands are catching up with that, and we are
• 9:53
  Speaker 1: enabling them to be where their consumers are, whether that's
• 9:56
  Speaker 1: on Apple, business Chat, Google, Alexa, WhatsApp, are creating the
• 10:01
  Speaker 1: integrations that allow them to directly connect their consumers in
• 10:04
  Speaker 1: a way that's transforming. So what are some of the
• 10:06
  Speaker 1: examples of some of the companies that have used your
• 10:08
  Speaker 1: service successfully and you know kind of what's been their
• 10:11
  Speaker 1: success story. Sure, T Mobile is one of our clients.
• 10:16
  Speaker 1: T Mobiles really an early adopter in this phase. T
• 10:20
  Speaker 1: Mobile has gone to the lengths of actually turning off
• 10:22
  Speaker 1: their I vr U, creating a team of experts, their
• 10:27
  Speaker 1: interactive voice response kind of systems. So when you call it, yes,
• 10:31
  Speaker 1: I needed to definition, no problem, UH, which informed team
• 10:36
  Speaker 1: of experts. So you are now assigned a team of
• 10:39
  Speaker 1: experts to you. You can message the same way you
• 10:41
  Speaker 1: message friends and family. You reached them through the app,
• 10:44
  Speaker 1: through SMS, through Apple business Chat, UH, and it's been
• 10:48
  Speaker 1: transformative to their customer first focus. So you just reported
• 10:52
  Speaker 1: earnings yesterday, UH forecast nine adjusted a ten to fifteen
• 10:57
  Speaker 1: million dollars. You expect modest losses is in the first
• 11:00
  Speaker 1: half of this year due to hiring plans, but you
• 11:04
  Speaker 1: see renewed a profit in the second half hiring plans.
• 11:07
  Speaker 1: Who are you hiring? Is it just computers to program themselves? Uh,
• 11:12
  Speaker 1: we're hiring people. Uh. We we do. We do purchase
• 11:17
  Speaker 1: a lot of servers. Uh. But let me start first
• 11:19
  Speaker 1: actually with what's driving that. And if you look at
• 11:23
  Speaker 1: the company's growth performance, we had a sixteen points swing
• 11:25
  Speaker 1: and our revenue growth rates from two thousand seventeen two eighteen,
• 11:28
  Speaker 1: so we posted fourteen percent growth this year off of
• 11:31
  Speaker 1: a down two and seventeen uh. This year, we signaled
• 11:34
  Speaker 1: that by the fourth quarter will be at high teens
• 11:37
  Speaker 1: range accelerating to at least So what's driving that demand
• 11:42
  Speaker 1: environment for us? We have pipelines that are uh, so
• 11:45
  Speaker 1: we have that high quality opportunity of having our pipelines
• 11:49
  Speaker 1: outpace our sales capacity right now. And pipelines in this
• 11:52
  Speaker 1: industry means companies basically saying we are going to want
• 11:56
  Speaker 1: your services, We're going to contract with you, we'll start
• 11:59
  Speaker 1: paying it out over time. It's exactly right. So the
• 12:01
  Speaker 1: number of companies that are interested in conversational commerce. If
• 12:04
  Speaker 1: you look at the count of those opportunities is up
• 12:06
  Speaker 1: eight percent just over the last six months, So that
• 12:09
  Speaker 1: demand is surging to the point where we need to
• 12:11
  Speaker 1: now catch up with our sales capacity. So in order
• 12:14
  Speaker 1: to get as much in your yield as we can
• 12:16
  Speaker 1: to get them productive as quickly as we can, we're
• 12:18
  Speaker 1: interested in hiring them in the first and second quarters.
• 12:20
  Speaker 1: So what's what's your competition? What's the competitive marketplace for
• 12:24
  Speaker 1: your service? Your technology? We replace voice anywhere where there's
• 12:28
  Speaker 1: a voice call, we're replacing it with messaging, and increasingly
• 12:31
  Speaker 1: messaging that's fully automated through bots in AI. So think
• 12:35
  Speaker 1: of Nuance Genesis of Allah. Those are the folks that
• 12:38
  Speaker 1: were displacing in their call centers. What's the hardest thing
• 12:42
  Speaker 1: about a call to replicate using artificial intelligence? You best
• 12:50
  Speaker 1: practice is not to fully replicate it. Actually, the best
• 12:52
  Speaker 1: practice is to pair a bot with a human. You
• 12:56
  Speaker 1: all have probably as much as you've been frustrated with
• 12:58
  Speaker 1: a one hundred number before, you could be equal as
• 13:00
  Speaker 1: frustrated as a generic bot experience where you're you're either
• 13:03
  Speaker 1: on a web chat or on a message, you're trying
• 13:05
  Speaker 1: to get something back and it just default completely wrong answer.
• 13:08
  Speaker 1: So the best practice is actually to pair that human
• 13:11
  Speaker 1: with the body. We call it a tango situation, just
• 13:13
  Speaker 1: like the dance and UH. The difficult part, if you will,
• 13:17
  Speaker 1: is the routing and knowing what the intent of you
• 13:20
  Speaker 1: and I UH in our conversations is. We take in
• 13:23
  Speaker 1: tens of millions of conversations a month, so data is
• 13:26
  Speaker 1: one of the motes of the company. And when you
• 13:29
  Speaker 1: can take in that amount of data, you can then
• 13:31
  Speaker 1: predict intense and you can then pair those intents with responses,
• 13:35
  Speaker 1: so the agent consider their console and the bot can
• 13:38
  Speaker 1: be continuously making recommendations for how to response, so now
• 13:41
  Speaker 1: they can be much more productive. So a great example
• 13:44
  Speaker 1: of that is if I'm handling a call that can
• 13:46
  Speaker 1: handle one at a time, right unless I'm really skilled,
• 13:48
  Speaker 1: but most people can only handle one call at a time.
• 13:50
  Speaker 1: I know we try many times, we're not successful in
• 13:53
  Speaker 1: in a web chat scenario, maybe four to six. You
• 13:58
  Speaker 1: can scale to forty messages at a time when you're
• 14:01
  Speaker 1: in a messaging format, and then you can scale too
• 14:04
  Speaker 1: close to a hundred when automation is in bed. So
• 14:06
  Speaker 1: think about the productivity that now comes into play with
• 14:09
  Speaker 1: the consumers and the customers that we serve every day. Fascinating.
• 14:12
  Speaker 1: Thank you so much for being here. Well, thank you
• 14:14
  Speaker 1: all appreciate. Chris Grinder is CFO, Chief Financial Officer of
• 14:18
  Speaker 1: Live Person, based in New York. Well, it looks like
• 14:37
  Speaker 1: Philadelphia has sued seven banks, including JP, Morgan Chase, and
• 14:41
  Speaker 1: Bank of America, accusing them of costing local governments billions
• 14:44
  Speaker 1: of dollars by colluding to fix prices on floating rate
• 14:47
  Speaker 1: bonds issued to public to finance public finance work. So
• 14:51
  Speaker 1: it helps dig down into this issue. Is Joe Mysak
• 14:54
  Speaker 1: Joe as editor of Bloomberg Brief, covering the municipal market
• 14:58
  Speaker 1: for Bloomberg News. He joins us in our boom Brick
• 15:00
  Speaker 1: Interactive Brooker Studio here in New York. So, Joe, is
• 15:03
  Speaker 1: this suit in Philadelphia similar to what we've seen in
• 15:06
  Speaker 1: California and in Illinois? And what's what's going on here?
• 15:10
  Speaker 1: Oh baby? This lawsuit sixty pages is the complaint and
• 15:15
  Speaker 1: it reads like how did Truman Capodi describe in Cold
• 15:20
  Speaker 1: Blood a nonfiction novel? The narrative flow is powerful in
• 15:25
  Speaker 1: this thing. Yes, it's very similar. It's it's similar to
• 15:30
  Speaker 1: the key Tam lawsuits that were filed in California, Illinois,
• 15:35
  Speaker 1: New York, and Massachusetts, in that it says, excuse me,
• 15:42
  Speaker 1: a group of remarketing agents of variable rate demand obligations conspired,
• 15:48
  Speaker 1: they colluded, There was collusion to inflate prices on these instruments.
• 15:55
  Speaker 1: And the difference between the key Tam lawsuit and this
• 15:59
  Speaker 1: this is an antitrust lawsuit where a municipal issue itself
• 16:04
  Speaker 1: says you ripped us off, meaning they're seeking class class
• 16:09
  Speaker 1: status for this lawsuit. The key Tam lawsuit is where
• 16:13
  Speaker 1: a whistle blower comes in and says, we are suing
• 16:17
  Speaker 1: on behalf of this state and its municipalities because they
• 16:22
  Speaker 1: have been ripped off. And this is just, uh, this
• 16:26
  Speaker 1: is the biggest thing to hit the municipal market in
• 16:29
  Speaker 1: probably a decade. Okay, let's get a sense of the
• 16:32
  Speaker 1: scope of the potential losses for municipalities selling bonds as
• 16:37
  Speaker 1: a result of this alleged collusion between banks. Billions billions
• 16:44
  Speaker 1: they cost municipality or the investor or both taxpayers. This
• 16:50
  Speaker 1: taxpayers might sure shore pays a higher rate to borrow
• 16:55
  Speaker 1: money than it might normally, and how much higher just
• 16:58
  Speaker 1: in rate terms? Well, they said, actually that vr d
• 17:02
  Speaker 1: O rates were about I think twenty seven basis points
• 17:05
  Speaker 1: higher than they should have been, VRDO being variable rate denominations. Okay, uh,
• 17:13
  Speaker 1: and uh, you know, little things mean a lot, so
• 17:15
  Speaker 1: a quarter basis point. Yeah, and you know rates were
• 17:19
  Speaker 1: very low at this period, we know, what about two
• 17:23
  Speaker 1: thousand and eight, two and and this is amazing, they say,
• 17:28
  Speaker 1: by a round members of the cartel, as the complaint puts, it,
• 17:36
  Speaker 1: caught onto the fact that they were being uh investigated
• 17:40
  Speaker 1: and surveilled, if you will. And after that then the
• 17:45
  Speaker 1: vr d O rates sort of normalized and it's just, uh,
• 17:50
  Speaker 1: it's very you know, these are all allegations. You know,
• 17:54
  Speaker 1: jury trial demanded. Still, as I say, it makes for
• 17:57
  Speaker 1: a compelling narrative. So, Joe, we've had these suits, are
• 18:02
  Speaker 1: similar types of suits all around the country. Have you
• 18:04
  Speaker 1: had any resolution or if we had any scenario where
• 18:07
  Speaker 1: we could see what the banks are saying and what
• 18:10
  Speaker 1: what's what's their argument banks are? Well, the banks have
• 18:12
  Speaker 1: been you know, they did respond in Illinois and asked
• 18:16
  Speaker 1: that the complaint be dismissed, and the judge in Illinois said, no,
• 18:22
  Speaker 1: you know, your motion to dismiss is denied. We're going
• 18:24
  Speaker 1: ahead with this trial. Everywhere else those are those three states.
• 18:30
  Speaker 1: The process is moving along, and man, that takes the
• 18:33
  Speaker 1: lawyer is a while to get things going. So here's
• 18:35
  Speaker 1: my question. So banks got together and they said, we're
• 18:39
  Speaker 1: going to set the rates here so that if the
• 18:41
  Speaker 1: municipality tries to go out and shop around for a
• 18:44
  Speaker 1: better rate, they can't get one. Right, is that the
• 18:47
  Speaker 1: idea here? Not exactly this is this reset But but no,
• 18:53
  Speaker 1: it's that, you know, is this new issue? This is
• 18:57
  Speaker 1: you know, bonds that are out there. Okay, so every
• 19:01
  Speaker 1: week they're reselling them, and the banks get together and
• 19:04
  Speaker 1: they say, this is the price that we are going
• 19:06
  Speaker 1: to sell them at. And then the implication is shouldn't
• 19:10
  Speaker 1: evenalities want to borrow? They have to borrow at the
• 19:14
  Speaker 1: higher rate, the cartel rates. But so here's my question.
• 19:19
  Speaker 1: Are the banks profiting from this or is it their customers? Oh? No,
• 19:23
  Speaker 1: the banks would profit from this because what they The
• 19:28
  Speaker 1: essential argument here is that the investor, which sometimes included
• 19:32
  Speaker 1: subsidiaries of the banks themselves, Um, the investor would be
• 19:37
  Speaker 1: so happy with the rates he has that he doesn't
• 19:40
  Speaker 1: put the bonds back, which is the normal process. So
• 19:44
  Speaker 1: if you put the bonds back, these banks would have
• 19:47
  Speaker 1: to remarket them. So by keeping the rates high enough,
• 19:50
  Speaker 1: they kept the investors happy out there getting that higher yield,
• 19:56
  Speaker 1: and you know, the issuers are paying up and there
• 20:00
  Speaker 1: you know, there's a lid on the market. They would
• 20:02
  Speaker 1: never have to sit there and say, okay, we have
• 20:04
  Speaker 1: to remark at the bonds now and look for a
• 20:06
  Speaker 1: whole new set of investors. So they were marking the
• 20:09
  Speaker 1: bonds at lower prices than where they should have otherwise
• 20:12
  Speaker 1: been implying higher rates, and that was the objective. Fascinating story.
• 20:18
  Speaker 1: Thank you so much for being with us. Joe Maisak,
• 20:20
  Speaker 1: editor of the Bloomberg Brief, focused on the miss bond
• 20:23
  Speaker 1: market here in our eleven three oh studios in New York.
• 20:26
  Speaker 1: Really interesting story, really interesting issue that is evolving. Frankly,
• 20:31
  Speaker 1: it's a question to me on one hand, yes it's
• 20:34
  Speaker 1: a civil lawsuit, but you have to wonder at what
• 20:36
  Speaker 1: point other agencies come in if there is actual price manipulation,
• 20:40
  Speaker 1: which is essentially what the allegation here is. There is
• 20:56
  Speaker 1: a big debate brewing in credit markets. Has the US
• 21:00
  Speaker 1: high old bond market gone too far too fast? And
• 21:03
  Speaker 1: joining us here in our Bloombergetder Active Broker Studios is
• 21:06
  Speaker 1: Rob Waldner to answer that question. Rob Waldner is chief
• 21:09
  Speaker 1: strategist and head of multi sector fixed Income at Invesco,
• 21:13
  Speaker 1: hoping to oversee more than two hundred billion dollars. Thank
• 21:16
  Speaker 1: you so much for being here, Rob, So where do
• 21:18
  Speaker 1: you weigh in on this. Is it's a time to
• 21:20
  Speaker 1: still be buying the US high old bond market or
• 21:23
  Speaker 1: is it a time to step back and reduce risk? Well,
• 21:26
  Speaker 1: thank you for having me, Lisa. I think that the
• 21:28
  Speaker 1: the short answer is you want to have credit exposure
• 21:31
  Speaker 1: in your portfolio to get your yield, and combine that
• 21:34
  Speaker 1: with a duration at this part of the cycle argues
• 21:37
  Speaker 1: for having highled exposure in your portfolio. When we you know,
• 21:41
  Speaker 1: we'd like to compare everything to the start of the
• 21:42
  Speaker 1: year or the end of the year, and it looks
• 21:44
  Speaker 1: like high yield has rallied an awful lot this year.
• 21:46
  Speaker 1: But you know, we would say that end of the
• 21:48
  Speaker 1: year was a was a sort of strike a price
• 21:51
  Speaker 1: that was set in the midst of a fed potentially
• 21:54
  Speaker 1: making a policy mistake. So to compare it to the
• 21:56
  Speaker 1: end of the year is probably not the right way
• 21:57
  Speaker 1: to think about HI yield. So rob, I mean, we
• 22:00
  Speaker 1: have the U S economy UH slowing UM from last year,
• 22:04
  Speaker 1: it's coming into here to. We have the uncertainty in
• 22:07
  Speaker 1: Europe and the growth rates there. You know, Brexit's not
• 22:10
  Speaker 1: helping at all. And then of course China is slowing.
• 22:12
  Speaker 1: Whether it's six or six and a percent, who knows.
• 22:14
  Speaker 1: But given the slowing global macro economy, how are you
• 22:17
  Speaker 1: positioning your portfolio? So it is absolutely true the global
• 22:22
  Speaker 1: economy is slowing. The US is were packed pet past
• 22:24
  Speaker 1: peak growth, were relatively late cycle in the growth cycle,
• 22:28
  Speaker 1: and investors are caught between that and the policymakers. And
• 22:32
  Speaker 1: what we see is when you have slowing growth and
• 22:33
  Speaker 1: tighter policy like we did the end of last year,
• 22:36
  Speaker 1: it's a mess for the markets. But the Fed has relented,
• 22:39
  Speaker 1: we think may reset essentially going forward UM to be
• 22:43
  Speaker 1: much more accommodative. We know that the Chinese have become
• 22:45
  Speaker 1: much more accommodative. UH. They've introduced a number of different
• 22:48
  Speaker 1: stimulus measures, so that the policy making has been much
• 22:52
  Speaker 1: more accommodative in the last several months, offsetting that that
• 22:55
  Speaker 1: lower growth. So we're struck between slowing growth and accommodative policy,
• 22:59
  Speaker 1: which means it's not a massive bowl market, but you
• 23:02
  Speaker 1: want to own your credit and you want to own
• 23:04
  Speaker 1: your duration. So if there is a mistake and the
• 23:07
  Speaker 1: slowing growth overwhelms, you will get some protection from that duration.
• 23:10
  Speaker 1: I hear a little voice screaming behind him. Goldilocks, Goldilocks, goldilocks.
• 23:14
  Speaker 1: I mean, it seems like is a sort of the
• 23:15
  Speaker 1: perfect scenario for credit, and that's why you've got JP Morgan,
• 23:18
  Speaker 1: for example, raising it's US high O bond market forecast
• 23:21
  Speaker 1: for ten and a half percent from its prior a
• 23:24
  Speaker 1: percent prediction today. Yeah, well, it's not goldilocks, because goldilocks
• 23:28
  Speaker 1: you'd have to have. I think the growth picture be
• 23:30
  Speaker 1: a little bit better. We will get some volatility, but
• 23:33
  Speaker 1: what you do have is a grind. So it's not
• 23:36
  Speaker 1: the perfect environment, but it is definitely a grind going forward.
• 23:40
  Speaker 1: So do you do you recommend I mean, given of
• 23:42
  Speaker 1: alatility we've seen in the market over the lasting of
• 23:44
  Speaker 1: four or five months, the slowing growth, are you reckoning
• 23:46
  Speaker 1: Are you feeling comfortable going out duration a little bit
• 23:49
  Speaker 1: farther on the curve or do you prefer to stay
• 23:51
  Speaker 1: in a little bit tighter. Uh. For the last several
• 23:55
  Speaker 1: years we've been a rising rate environment and investors have
• 23:58
  Speaker 1: wanted to stay short messages weren't a risen rate environment,
• 24:03
  Speaker 1: and in that environment you want to get some duration
• 24:06
  Speaker 1: back into your portfolio because as bond investors, we know
• 24:10
  Speaker 1: the best offset to credit exposure if credit exposure going
• 24:13
  Speaker 1: to go poorly is a bit of duration. So if
• 24:16
  Speaker 1: you can offset your credit exposure to get it gets
• 24:18
  Speaker 1: you yield with some duration for protection you have, you
• 24:21
  Speaker 1: have the best set up. Is there going to be
• 24:23
  Speaker 1: another credit crisis ever? Again? Well not for not during
• 24:27
  Speaker 1: my career, I don't think, because we've had How long
• 24:30
  Speaker 1: do you plan to stay in the in the business?
• 24:32
  Speaker 1: I mean, really I'm wondering because it seems like everybody
• 24:34
  Speaker 1: has been, you know, screaming at the sky is falling
• 24:36
  Speaker 1: at every downturn ever since two thousand and eight because
• 24:40
  Speaker 1: it was so scarring. But is it going to be
• 24:43
  Speaker 1: a repeat or now? So look at the FED put
• 24:45
  Speaker 1: out their Financial Stability Report, you know, last year at
• 24:48
  Speaker 1: the end of last year, and they highlighted I mean
• 24:50
  Speaker 1: it's very clear if you go through the details of that,
• 24:52
  Speaker 1: there really isn't the tinder for a liquidity crisis if
• 24:56
  Speaker 1: you like, right there is even in China, even in India. Well,
• 25:00
  Speaker 1: so China that the benefit of China has is a
• 25:03
  Speaker 1: very large closed system and they can control the leverage
• 25:06
  Speaker 1: within their within their system and control their own policymaking.
• 25:08
  Speaker 1: So um, you know there could be some individual Uh,
• 25:12
  Speaker 1: there's there's gonna be credit events, certainly, especially with a
• 25:16
  Speaker 1: slowing economy as we go. As economy continues to slow,
• 25:18
  Speaker 1: you will get credit events. You'll get idiosyncratic events. But
• 25:21
  Speaker 1: a liquidity crisis would say that the entire system kind
• 25:25
  Speaker 1: of contracts together, and I don't expect to see that.
• 25:28
  Speaker 1: So Rob, how about the UK? Is that does brexit
• 25:30
  Speaker 1: make that market almost untouchable until you get some clarification
• 25:35
  Speaker 1: or there's some values there? Well, there's values there. Uh.
• 25:38
  Speaker 1: The we believe that we believe the chance of a
• 25:42
  Speaker 1: heart brexit is very low. But that being said, uh,
• 25:45
  Speaker 1: if in order to realize the value that you see,
• 25:49
  Speaker 1: you've got to get some sort of something other than
• 25:51
  Speaker 1: a heart break that you either have to have a
• 25:53
  Speaker 1: you know, punt punt that decision or a sort of
• 25:56
  Speaker 1: soft brexit. So we need some activity to realize the value.
• 26:00
  Speaker 1: But it's undoubted that sterling is trading too cheap, and
• 26:02
  Speaker 1: we would look a lot of the assets sterling assets
• 26:05
  Speaker 1: and say, hey, they're trading trading too cheap. What was
• 26:07
  Speaker 1: the biggest move that you've made recently to your thesis
• 26:10
  Speaker 1: and those recommendations with respect to sector allocations. So the
• 26:15
  Speaker 1: biggest move that we've made in the last couple of
• 26:17
  Speaker 1: months is to add essentially move from a short duration
• 26:21
  Speaker 1: excuse me, from a short credit long dration view to
• 26:26
  Speaker 1: a long credit long draation for you to add that
• 26:28
  Speaker 1: credit back into portfolios and keep that duration. So we
• 26:33
  Speaker 1: would be overweight duration portfolios and a slightly overweight credit
• 26:36
  Speaker 1: because this environment where you created value in the credit markets,
• 26:41
  Speaker 1: but you still have the risk of slowing. Those two
• 26:43
  Speaker 1: come together quite well. Well, you don't know it, but
• 26:45
  Speaker 1: Friday's is Muni days here on Bluemorg markets. So where
• 26:48
  Speaker 1: do Muni's may know it? Maybe he does, Maybe it's
• 26:51
  Speaker 1: an avid listener um. Where do Munis fit into your
• 26:55
  Speaker 1: view of kind of the fixing come portfolio? So you know,
• 27:00
  Speaker 1: we have a so our view of Munis. Obviously they
• 27:03
  Speaker 1: you know, they have there sort of distinct from a
• 27:07
  Speaker 1: lot of the tax bill markets because of course they
• 27:09
  Speaker 1: have the special tax resumption, right but so we we
• 27:11
  Speaker 1: think about metis right here is offering opportunities. You know,
• 27:14
  Speaker 1: we think that uh, there's a lot of people who
• 27:17
  Speaker 1: will be surprised that they didn't get much of a
• 27:19
  Speaker 1: tax cut when they're doing the taxes in the next
• 27:21
  Speaker 1: month or so. Uh, they didn't get the tax cut
• 27:24
  Speaker 1: that they thought they were going to get. Uh. And
• 27:26
  Speaker 1: we'll renew interested metis and so we think that that
• 27:29
  Speaker 1: that's will be relatively good technical demand for meetings. And
• 27:32
  Speaker 1: at the same time, you know, the the decent growth
• 27:35
  Speaker 1: continuous to support the fundamentals in the meti market. Is
• 27:38
  Speaker 1: there any asset that you won't touch right now? Um,
• 27:45
  Speaker 1: good question? Uh wheels, Yeah, you know, the German boons,
• 27:52
  Speaker 1: Italian band, we'd be very we would be a bit
• 27:55
  Speaker 1: nervous about itly, I think that yeah, Um, you know,
• 27:58
  Speaker 1: ultimately the medium picture in Italy, it's hard to see
• 28:01
  Speaker 1: how we make it through. Um, in the medium tournament
• 28:04
  Speaker 1: our view, there's you know, with the amount of debt
• 28:06
  Speaker 1: that's there, and if if we don't get growth up, uh,
• 28:09
  Speaker 1: there could be potential for some some issue in Italy.
• 28:11
  Speaker 1: But back in the US, high old markets are there,
• 28:13
  Speaker 1: what's the best value you see in the US high
• 28:15
  Speaker 1: yield market sector was Uh, well, you know, we we
• 28:20
  Speaker 1: believe that at this point in the cycle right where
• 28:22
  Speaker 1: you have potential for a lot of idiosyncratic stuff. You
• 28:24
  Speaker 1: saw Kraft Hines right now, right, you have this slowing growth,
• 28:27
  Speaker 1: you really want to diversify credit bucket, So we would
• 28:31
  Speaker 1: actually recommend a bit of invest and created a bit
• 28:33
  Speaker 1: of high yield. Uh, maybe some bank loans across the board. Good, excellent, Rob,
• 28:38
  Speaker 1: Thank you very much for your insight on all things
• 28:41
  Speaker 1: fixed income. That's Rob Waldner, chief strategist and head of
• 28:44
  Speaker 1: multi sector for Investco Fixed Income a little over two
• 28:47
  Speaker 1: billion dollars in assets under management. Thanks for listening to
• 28:52
  Speaker 1: the Bloomberg P and L podcast. You can subscribe and
• 28:54
  Speaker 1: listen to interviews at Apple Podcasts or whatever podcast platform
• 28:57
  Speaker 1: you prefer. Paul Sweeney, I'm on Twitter at pt Sweeney.
• 29:00
  Speaker 1: I'm Lisa abram Woods. I'm on Twitter at Lisa abramo Woods.
• 29:03
  Speaker 1: One Before the podcast, you can always catch us worldwide
• 29:06
  Speaker 1: on Bloomberg Radio.