Latest / Bloomberg Intelligence / China, Economy, Vivo Suspends Partnership with NBA

Transcript

China, Economy, Vivo Suspends Partnership with NBA · Bloomberg Intelligence

• 0:02
  Speaker 1: Welcome to the Bloomberg Penl podcast on Paul Swing You.
• 0:05
  Speaker 1: Along with my co host Lisa Brahma Waits, 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 trade tensions between the
• 0:23
  Speaker 1: U S and China just took another notch up again
• 0:26
  Speaker 1: today as the Trump administration is moving ahead with discussions
• 0:29
  Speaker 1: around possible restrictions on capital flows into China. To get
• 0:33
  Speaker 1: the latest, we welcome Brendan Murray. Brendan covers all things
• 0:36
  Speaker 1: trade for Bloomberg News. He joins us from our London bureau. Brendan,
• 0:40
  Speaker 1: thanks so much for joining us. It seems like again
• 0:42
  Speaker 1: this is a just another piece of news in the
• 0:45
  Speaker 1: back and forth between US and China on trade issues.
• 0:48
  Speaker 1: Talk to us about this capital inflow issue, right, So,
• 0:52
  Speaker 1: this is an issue that we reported on about ten
• 0:55
  Speaker 1: days ago that there were broad range of things that
• 0:58
  Speaker 1: the administration wanted to to to basically restrict US investments
• 1:03
  Speaker 1: in Chinese assets, whether those be stocks or real estate
• 1:06
  Speaker 1: or other kinds of holdings. What we're reporting today is
• 1:09
  Speaker 1: that that that search or that that that those plans
• 1:12
  Speaker 1: have narrowed to uh, the kinds of investments that US
• 1:15
  Speaker 1: government retirement funds would make in things like Chinese stocks.
• 1:19
  Speaker 1: If that, if those opportunities were made available available to them,
• 1:23
  Speaker 1: and they and they will be UH coming in. So
• 1:26
  Speaker 1: there is a time pressure that the administration is working
• 1:29
  Speaker 1: under there. I mean, basically, we're talk start Thursday, continue
• 1:33
  Speaker 1: on Friday, and it's this They're supposed to be uh,
• 1:36
  Speaker 1: these are supposed to be the days of happy talk,
• 1:38
  Speaker 1: saying you know, these are the olive branches I'm bringing
• 1:41
  Speaker 1: into UH into these negotiations. Instead, we're seeing escalation, escalation,
• 1:46
  Speaker 1: and more escalation. Days of happy talk. And meanwhile we
• 1:49
  Speaker 1: are getting a blacklist of Chinese tech companies, the biggest
• 1:54
  Speaker 1: hot button isssue you could imagine, and the US is
• 1:57
  Speaker 1: citing human rights violations. Do you have a sense, Brendan,
• 2:01
  Speaker 1: of why this is coming now as we are supposed
• 2:04
  Speaker 1: to be hearing happy talk. Well, it's it's really hard
• 2:08
  Speaker 1: to understand the coordination that's going on here. You're talking
• 2:12
  Speaker 1: about multiple agencies in the case of the of the
• 2:17
  Speaker 1: blacklisting the Commerce Department. Uh, you know, the talks are
• 2:20
  Speaker 1: actually led by the US Trade representative. You had the
• 2:23
  Speaker 1: President himself saying yesterday that he was hopeful that things
• 2:26
  Speaker 1: could you know, things would come together for a deal.
• 2:29
  Speaker 1: So are you saying that this could be actually just
• 2:31
  Speaker 1: an unhappy coincidence as far as timing goes that that
• 2:34
  Speaker 1: this is absolutely could be unrelated in the Commis Department's
• 2:37
  Speaker 1: been working on this for a long time. Well, I'm
• 2:39
  Speaker 1: not going to get into that. I'm not gonna you know,
• 2:41
  Speaker 1: pretend to know what's going on in the minds of
• 2:43
  Speaker 1: the people, uh in the administration, who are who are
• 2:46
  Speaker 1: rolling these things out, um, you know, and whether they
• 2:50
  Speaker 1: are uh you know, accidental or or on purpose. But
• 2:54
  Speaker 1: what we're seeing is a lot of puzzling uh moves
• 2:58
  Speaker 1: in terms of timing. If indeed you do want to
• 3:00
  Speaker 1: secure some sort of deal with China, so Brendan, the
• 3:05
  Speaker 1: Chinese has said, quote stay tuned for retaliation over the
• 3:09
  Speaker 1: U S tech blacklist. What is the expectation for what
• 3:12
  Speaker 1: China might do in response? Well, there's a number of
• 3:15
  Speaker 1: things that they could do, but basically they could start
• 3:17
  Speaker 1: to make uh you know, the lives of American exact
• 3:21
  Speaker 1: business executives who are operating in China more difficult. Um,
• 3:24
  Speaker 1: you know, unannounced visits from regulators, and you know, are
• 3:29
  Speaker 1: are the kinds of things that uh, you know that
• 3:32
  Speaker 1: that that people would worry about. Um. But there's a
• 3:34
  Speaker 1: whole range of things, uh that you know that in
• 3:38
  Speaker 1: terms of reciprotaliating against the U S blacklists that China
• 3:42
  Speaker 1: could do that they haven't announced yet that they they
• 3:45
  Speaker 1: pride themselves on not being you know, knee jerk reactionists.
• 3:48
  Speaker 1: So it may take a couple of days before we
• 3:50
  Speaker 1: see that it maybe ours we we just don't know.
• 3:53
  Speaker 1: Is there a sense that there could be a Chinese
• 3:56
  Speaker 1: blacklist that you might find a company such as you know,
• 3:59
  Speaker 1: some of the big US companies on there. Uh, there's
• 4:01
  Speaker 1: there's uh, there's that potential for sure. You know, FedEx
• 4:05
  Speaker 1: has has a lot of operations in in China, and
• 4:08
  Speaker 1: you know there's some speculation and there has been in
• 4:10
  Speaker 1: the past that you know that they could become you know,
• 4:14
  Speaker 1: swept up in this. So who knows what how far
• 4:18
  Speaker 1: China is going to go in this retaliation and and
• 4:20
  Speaker 1: you know, you know, this could all be posturing ahead
• 4:23
  Speaker 1: of the ahead of these talks. So, uh, if there's
• 4:26
  Speaker 1: this way too many moving pieces right now, and and
• 4:28
  Speaker 1: and very difficult to predict how how things will turn
• 4:31
  Speaker 1: out the people you speak to, is there a sense
• 4:34
  Speaker 1: that there even could be some sort of narrow deal
• 4:38
  Speaker 1: that is reached that could actually have weight and carry
• 4:42
  Speaker 1: through based on the individuals coming and doing the negotiating here. Well,
• 4:46
  Speaker 1: that's what we reported a couple of days ago, that
• 4:48
  Speaker 1: that that the Chinese officials were coming to town, to
• 4:51
  Speaker 1: Washington for you know, what's what's been described as a
• 4:54
  Speaker 1: mini deal. Um, you know, a few uh you know,
• 4:58
  Speaker 1: pledges to buy us agriculture good in exchange for you know,
• 5:02
  Speaker 1: taking a couple of those companies off the blacklists and
• 5:04
  Speaker 1: things like that. So there are there is there is
• 5:07
  Speaker 1: some silver lining that you know, that that that the
• 5:10
  Speaker 1: two sides could could get together and salvage something. But
• 5:14
  Speaker 1: the but the atmosphere right now, the atmospherics around you know,
• 5:18
  Speaker 1: anything positive coming out of it are not great right now.
• 5:21
  Speaker 1: Brendon Murray, thank you so much for joining us, and
• 5:23
  Speaker 1: I'm sure we will be speaking with you again. Brendan
• 5:26
  Speaker 1: Murray covers all things trade for us here at Bloomberg News,
• 5:29
  Speaker 1: joining us from our London bureau. Well, it is clearly
• 5:47
  Speaker 1: a risk off day today for financial markets, driven in
• 5:50
  Speaker 1: large part by continued uncertainty about trade and what that
• 5:54
  Speaker 1: uncertainty may do to global economic growth and investors as
• 5:57
  Speaker 1: they look at the US figure out trying to figure
• 5:58
  Speaker 1: out what can the to reserve due to perhaps offset
• 6:02
  Speaker 1: some of the slowing growth brought about by trade tensions.
• 6:06
  Speaker 1: To get a sense of that, we welcome our good
• 6:08
  Speaker 1: friend Ira Jersey. He's a chief US interest rate strategist
• 6:11
  Speaker 1: for Bloomberg Intelligence. Join us on the phone from bi's
• 6:14
  Speaker 1: headquarters in Princeton, New Jersey. So again, you know, kind
• 6:17
  Speaker 1: of rearing its ugly head again as this whole economic
• 6:20
  Speaker 1: growth uncertainty and driven in large part by some trade concerns,
• 6:23
  Speaker 1: and obviously that is on the Fed's mind. How do
• 6:27
  Speaker 1: you think they are viewing kind of the slowing growth
• 6:29
  Speaker 1: they're seeing globally. Yeah, I think I think chere Powell
• 6:33
  Speaker 1: said it at the last press conference, um, and actually
• 6:35
  Speaker 1: the last several press conferences, is they look at the
• 6:38
  Speaker 1: whole economic situation, whether it's being driven by you know,
• 6:42
  Speaker 1: kind of artificial trade tensions that are driven by politics
• 6:45
  Speaker 1: more than actual you know, free markets and letting um
• 6:49
  Speaker 1: economic reality do its thing. So I think that that
• 6:52
  Speaker 1: the FED is going to have to be easy, and
• 6:54
  Speaker 1: they're going to continue to be easy. The markets basically
• 6:56
  Speaker 1: priced for two hikes over their next three FED meetings. Um,
• 7:01
  Speaker 1: you know, I think the markets already kind of set
• 7:02
  Speaker 1: up for that. I think the the issue that the
• 7:05
  Speaker 1: FED has at this point is they can only do
• 7:08
  Speaker 1: monetary policy. They can't do fiscal policy, they can't do
• 7:11
  Speaker 1: tax policy, they can't do any of the other, um,
• 7:14
  Speaker 1: other types of policies that might actually help the economic situation.
• 7:18
  Speaker 1: So they're going to do what they can, but what
• 7:20
  Speaker 1: they can do is limited, and the market's already kind
• 7:23
  Speaker 1: of priced for for quite a lot of easy And
• 7:25
  Speaker 1: there are some FED members who are saying, you guys,
• 7:29
  Speaker 1: why are we cutting rates in response to geopolitical uncertainty?
• 7:33
  Speaker 1: Just because inflation isn't taking off to exact the degree
• 7:37
  Speaker 1: that we like doesn't necessarily mean that this is the
• 7:39
  Speaker 1: medicine that's required. How significant of a voice to those
• 7:43
  Speaker 1: people have? So I think that obviously they have a
• 7:46
  Speaker 1: voice because they sit around the table and you had
• 7:48
  Speaker 1: two dissenters who didn't want to cut rates at the
• 7:50
  Speaker 1: September meeting. I think that the I think that their
• 7:56
  Speaker 1: point that a lot of them are are are making
• 7:59
  Speaker 1: is that look, the economy, while while slow is not
• 8:03
  Speaker 1: a significant is not terrible yet. And we only have
• 8:06
  Speaker 1: so many uh, we only have so many arrows in
• 8:08
  Speaker 1: our quiver. So we don't want to use all of
• 8:10
  Speaker 1: our arrows now because we know that in the future,
• 8:13
  Speaker 1: if we do get a more sustained and larger slowdown,
• 8:15
  Speaker 1: we will have to use them. Um. Well, the other
• 8:18
  Speaker 1: part of the committee, the people who are the more
• 8:20
  Speaker 1: dovish right now and want to keep cutting, say, well,
• 8:22
  Speaker 1: we want to cut now because we don't want to
• 8:24
  Speaker 1: wait until the economy is already bad in order to
• 8:27
  Speaker 1: get in front of this. And and you know they'll
• 8:29
  Speaker 1: they'll point to the traditional long and variable legs of
• 8:32
  Speaker 1: that monetary policy works in as the evidence for them
• 8:35
  Speaker 1: needing to needing to cut now. Um But but either way,
• 8:39
  Speaker 1: I mean, even if the FED were to cut a
• 8:40
  Speaker 1: little bit more slowly, the market is still going to
• 8:43
  Speaker 1: think maybe the terminal rate will be lower than than
• 8:45
  Speaker 1: the market's thinking right now. So the market right now
• 8:47
  Speaker 1: is thinking the Fed's gonna cut two or three more times,
• 8:50
  Speaker 1: and then they're going to stop the I think if
• 8:53
  Speaker 1: they were to slow down their number of cuts, the
• 8:55
  Speaker 1: market would think, Okay, they're only going to cut every
• 8:57
  Speaker 1: other meeting or every third meeting, but they're gonna cut zero, right,
• 9:00
  Speaker 1: So that that ends up being a pretty interesting market
• 9:04
  Speaker 1: story if ultimately we start the price for that type
• 9:07
  Speaker 1: of a FED reaction. So I UM give us your
• 9:10
  Speaker 1: sense of how the FED might think about its balance sheet.
• 9:13
  Speaker 1: Is there any scenario where you see it kind of
• 9:15
  Speaker 1: growing its balance sheet recognizing that perhaps, uh, the interest
• 9:18
  Speaker 1: rates arrows and its quivers are are are limited. Well,
• 9:22
  Speaker 1: I think that they're going to start increasing your balance
• 9:24
  Speaker 1: sheet actually in November, and they'll do that through what
• 9:27
  Speaker 1: they'll they'll phrase as organic balance sheet growth, and we
• 9:30
  Speaker 1: call it QUWI light. It's not outright quantitative easing, but
• 9:34
  Speaker 1: it's the it's their goal is to keep bank reserves
• 9:38
  Speaker 1: stable because right now, bank reserves continue to decline because
• 9:41
  Speaker 1: other liabilities on the Fed's balance sheet are going up,
• 9:44
  Speaker 1: and that and and reserves tends to be the equalizer there. So,
• 9:47
  Speaker 1: so we do think that they'll do that. Now, will
• 9:49
  Speaker 1: they do large galass it purchases A significant amount of
• 9:53
  Speaker 1: buying increased bank reserves. I think that they will do that,
• 9:57
  Speaker 1: but they'll wait until interest rates are near zero. We're
• 10:00
  Speaker 1: just about at zero, so you'd probably have to see uh,
• 10:03
  Speaker 1: the zero lower bound kind of insight again before before
• 10:06
  Speaker 1: the FED we do that. So I still think that
• 10:07
  Speaker 1: we're probably you know, at the earliest, probably the middle
• 10:10
  Speaker 1: of before they start large glass of purchases. But I
• 10:14
  Speaker 1: also think that you need to see a much much
• 10:16
  Speaker 1: lower economy than we're seeing right now, at least domestically
• 10:18
  Speaker 1: in the US. So please Ira look into your crystal ball,
• 10:23
  Speaker 1: and it often has information about interest rates in your
• 10:26
  Speaker 1: crystal ball because it's a very specific crystal ball, uh,
• 10:29
  Speaker 1: and tell us what is the next big move? Is
• 10:32
  Speaker 1: it going to be lower or is it going to
• 10:34
  Speaker 1: be higher? In benchmark US rates? I think I think
• 10:38
  Speaker 1: ten uere yields will probably will probably retest the the
• 10:42
  Speaker 1: the dis cycles low. So we're talking about about one
• 10:47
  Speaker 1: on on ten year treasuries before before we stabilize, because
• 10:51
  Speaker 1: I do think that there's a lot of risks out
• 10:52
  Speaker 1: there that the market is going to be um going
• 10:55
  Speaker 1: to be thinking about before we can get some stabilization
• 10:57
  Speaker 1: in the economy. So the next big move is going
• 11:00
  Speaker 1: to be lower one thirties. Right now we are seeing
• 11:04
  Speaker 1: ten year yields lower, but still far away from that
• 11:07
  Speaker 1: where not far basis points, it's twenty two basis points,
• 11:12
  Speaker 1: it felt like so far where at one point five
• 11:15
  Speaker 1: percent right now, and we are getting close to those
• 11:19
  Speaker 1: whole time lows that we saw back in two thousand. Jersey,
• 11:22
  Speaker 1: thank you so much for being with us. iRED Jersey
• 11:24
  Speaker 1: chief US interest rate strategist for Bloomberg Intelligence, Chief's chief
• 11:28
  Speaker 1: Bloomberg suspenderwear where actually no, he corrected me, he doesn't
• 11:33
  Speaker 1: call them suspenders braces. I can know who knows. There
• 11:54
  Speaker 1: is a question at a time of record low bond
• 11:57
  Speaker 1: yields around the world, do you continue to go with
• 12:00
  Speaker 1: the flow and expect yields to go lower on the
• 12:02
  Speaker 1: longer term securities? Or do you hide? Do you say
• 12:06
  Speaker 1: you know what? This cannot last? Joining us now, Eddie Vataro,
• 12:09
  Speaker 1: he is lead portfolio manager of the Ostrowise Total Turn Fund.
• 12:13
  Speaker 1: Joining us here in our Bloombergatterer Active Broker Studio. So, Eddie,
• 12:16
  Speaker 1: I guess that you know that's one big debate right now?
• 12:19
  Speaker 1: Is it time to sort of cash in on the
• 12:22
  Speaker 1: flight to longer term securities, sell them by short term notes,
• 12:27
  Speaker 1: and hold on. Yeah, absolutely, thanks for having me. Uh.
• 12:31
  Speaker 1: You know, when you look at yields and think about
• 12:33
  Speaker 1: what an investment in fixed income is, you don't have
• 12:36
  Speaker 1: the upside of equities or you have some kind of
• 12:38
  Speaker 1: asymmetric upside for for buying a cash flow that is
• 12:42
  Speaker 1: going to pay you part at the end. So frankly,
• 12:44
  Speaker 1: when you're buying a tenure treasury, now you're looking at
• 12:46
  Speaker 1: a one fifty yield that's from a long term perspective,
• 12:49
  Speaker 1: a pretty unattractive investment. If you think that yield can
• 12:52
  Speaker 1: go lower, sure you you follow along, but I think
• 12:55
  Speaker 1: you know, for folks that have more of a a
• 12:58
  Speaker 1: longer term view of the markets, you know, these rate
• 13:00
  Speaker 1: levels are not not compelling entry points for fixed income investment.
• 13:04
  Speaker 1: So what does what do you think the average fixed
• 13:06
  Speaker 1: income investor is doing or should be doing in this market? Here?
• 13:10
  Speaker 1: Do you get go down in credit quality looking for
• 13:13
  Speaker 1: yield and hope the economy stays pretty firm? What do
• 13:15
  Speaker 1: you do? And I think I think the economy is
• 13:18
  Speaker 1: going to stay firm, but I think it's a little
• 13:19
  Speaker 1: bit risky to go down in credit quality uh, just
• 13:22
  Speaker 1: in a hunt for yield. There's certainly some names as
• 13:24
  Speaker 1: you go down in quality that have redeeming qualities as
• 13:28
  Speaker 1: investments that you want to be invested in. But when
• 13:30
  Speaker 1: you're looking at at the market as a whole, I
• 13:33
  Speaker 1: think you need to be very careful about what names
• 13:35
  Speaker 1: you pick. Uh. And I would recommend kind of shortening
• 13:38
  Speaker 1: and yield taking whatever positive return the market gives, you know,
• 13:41
  Speaker 1: waiting for rates to recast down the road to make
• 13:45
  Speaker 1: a longer term investment. What's the catalyst for higher rates? Well,
• 13:49
  Speaker 1: we had that catalyst a couple of years ago, but
• 13:51
  Speaker 1: obviously the tides have turned. H. We need some resolution
• 13:54
  Speaker 1: to what's going on in terms of all the unrest
• 13:56
  Speaker 1: that we have with our headlines, whether it's tweets, brexit,
• 14:00
  Speaker 1: it obviously the trade situation with China is has kind
• 14:03
  Speaker 1: of cast upaul across all fixed income markets. You need
• 14:07
  Speaker 1: some resolution or some hope of resolution, uh, to kind
• 14:10
  Speaker 1: of come back to the four. I would argue that
• 14:12
  Speaker 1: what we've seen in the US so far, as we've
• 14:14
  Speaker 1: seen rate cuts that have been more protective rather than
• 14:17
  Speaker 1: actually reflective of our economy. But if we if we
• 14:20
  Speaker 1: continue to see decreased sentiment. If we continue to see
• 14:25
  Speaker 1: markets that that are on edge, uh, you know, we're
• 14:28
  Speaker 1: gonna have lower rates for a while. We really need
• 14:30
  Speaker 1: to see some resolution to that. So again, getting some
• 14:33
  Speaker 1: resolution to some of the bigger macro issues in the interim.
• 14:36
  Speaker 1: I mean, how do you think about allocation between investment
• 14:39
  Speaker 1: grade and high yield and so on and so forth. Yeah,
• 14:43
  Speaker 1: I mean I think investment grade is a good place
• 14:45
  Speaker 1: to be. Within investment grade. I actually like mortgages here
• 14:47
  Speaker 1: against corporates and treasuries. I think that some of the
• 14:51
  Speaker 1: fears of refinance risk that that go into mortgage valuations
• 14:55
  Speaker 1: are I think a little bit overdone. But again, I
• 14:58
  Speaker 1: think it's important to pick your spots with mortgage is
• 15:00
  Speaker 1: you don't have the credit risk, you don't have to
• 15:01
  Speaker 1: worry if you're going to be made whole on your investment,
• 15:04
  Speaker 1: which is a nice quality about mbs, and you you
• 15:06
  Speaker 1: do get paid incremental yield there. But I think corporates
• 15:09
  Speaker 1: offer value too, as long as you focus on names
• 15:12
  Speaker 1: that make more sense, that are that are more stable.
• 15:14
  Speaker 1: So here's the conundrum. Right now, we have seen an
• 15:17
  Speaker 1: incredibly bifurcated credit market where you see the higher quality
• 15:20
  Speaker 1: names have done better, right, so you're getting even less yield.
• 15:26
  Speaker 1: So any rally that you get in those securities, where
• 15:30
  Speaker 1: does it come from. Well, at this point it comes
• 15:32
  Speaker 1: from treasury yields, which are already quite deflated as they are.
• 15:35
  Speaker 1: So when you go into these higher quality names, are
• 15:39
  Speaker 1: you looking for returns or are you looking for avoiding losses?
• 15:43
  Speaker 1: It's really you certainly are looking to avoid losses, and
• 15:46
  Speaker 1: you are getting some incremental return by owning a high
• 15:49
  Speaker 1: grade corporate instead of a treasury. So you might earn
• 15:52
  Speaker 1: you know, fifty basis points over a duration match treasury,
• 15:56
  Speaker 1: which with your levels where they are, that is a
• 15:58
  Speaker 1: compelling opportunity. So it doesn't really matter necessarily whether you
• 16:03
  Speaker 1: think that they are going to necessarily gain value on
• 16:06
  Speaker 1: a price level, meaning that they will continue to do better. Uh.
• 16:10
  Speaker 1: It more just matters that you get that extra incremental yield.
• 16:13
  Speaker 1: To my getting that correctly, Yeah, I think you can
• 16:15
  Speaker 1: look at it that way. I just think that the
• 16:17
  Speaker 1: you know, one of the things that's come up is
• 16:20
  Speaker 1: this notion of negative yields globally, and we've seen them
• 16:23
  Speaker 1: in Europe and we haven't seen them in the US.
• 16:25
  Speaker 1: And you know, the notion of of investing in longer
• 16:28
  Speaker 1: duration the US now requires you to think that that
• 16:31
  Speaker 1: is something that could be in our realm of possibility
• 16:33
  Speaker 1: down the road. I don't think it can happen in
• 16:35
  Speaker 1: the US for reasons that are related to the structural
• 16:38
  Speaker 1: composition of the US bond market, including the big component
• 16:41
  Speaker 1: that is mortgages, which adds a lot of supply to
• 16:44
  Speaker 1: the market when interest rates fall. We don't see that globally.
• 16:47
  Speaker 1: We only see it in the US, which is part
• 16:49
  Speaker 1: of the reason I think domestic rights are higher than
• 16:51
  Speaker 1: they are globally, part of the reason. But that being said,
• 16:55
  Speaker 1: you know, I I prefer to stay defensive, and I
• 16:57
  Speaker 1: do think that. Uh, if you buy a shorter maturity,
• 17:00
  Speaker 1: high quality names and you know, book a two two
• 17:03
  Speaker 1: and a half percent return in the short term, that's fine.
• 17:05
  Speaker 1: That's not fine for me at least knows I want.
• 17:08
  Speaker 1: I'm willing to take risk. So where should I go
• 17:11
  Speaker 1: for a little bit more return than to two? Does
• 17:14
  Speaker 1: it have to stay within fixed income? Yes, that could
• 17:18
  Speaker 1: be a little trickier. Um. You know, like I said,
• 17:21
  Speaker 1: if if if you have some acumen with picking uh
• 17:24
  Speaker 1: specific securities, UH, if you're looking at funds, I would
• 17:29
  Speaker 1: probably look at at at active funds that have demonstrated
• 17:32
  Speaker 1: and ability to pick securities that are down in credit
• 17:35
  Speaker 1: that that could be compelling, that give you more yield
• 17:38
  Speaker 1: than investment grade might give you. But again, it's really
• 17:41
  Speaker 1: gonna come down to UH, finding individual securities or names
• 17:45
  Speaker 1: that make the most sense in this market, because you
• 17:48
  Speaker 1: know you do not want to just category of the
• 17:50
  Speaker 1: ranch for yield. Eddie Vataro, thanks so much for joining us.
• 17:54
  Speaker 1: Eddie is the lead portfolio manager of Osterwise Total Return
• 17:57
  Speaker 1: Fund based in San Francisco, but joining us live here
• 17:59
  Speaker 1: in our Boberg Interactive Broker studio, giving us some thoughts
• 18:02
  Speaker 1: on the fixed income market. As we heard earlier with
• 18:04
  Speaker 1: John Michael Waite from Bloomberg talking to Many Roman from Pimco,
• 18:08
  Speaker 1: not an easy market to make that this is this
• 18:11
  Speaker 1: is a tough market and the question is you just
• 18:13
  Speaker 1: go for I guess cash preservation, yes, and take your
• 18:18
  Speaker 1: two percent yell and book it. The fallout just keeps
• 18:35
  Speaker 1: deepening when we look over to China, and when it
• 18:38
  Speaker 1: comes to the NBA, it was supposed to be the
• 18:41
  Speaker 1: first US league to host games in China, those may
• 18:45
  Speaker 1: now be torpedoed. Joining us now in our Bloomberg inta
• 18:48
  Speaker 1: active broker studios is Evan Novi Williams, a sports business
• 18:51
  Speaker 1: reporter and for us here at Bloomberg News. Evan, what's
• 18:55
  Speaker 1: the latest here on this sort of blowing up controversy
• 18:59
  Speaker 1: over the NBA in China. Yeah, so the NBA right
• 19:01
  Speaker 1: now is in Tokyo nearby. You know, they're playing games
• 19:05
  Speaker 1: right now in Japan. So Adam Silver has been talking
• 19:07
  Speaker 1: kind of in the night here in the US, trying
• 19:10
  Speaker 1: to clarify his position in the position to the league,
• 19:12
  Speaker 1: and overnight he made it clear that you know, he
• 19:15
  Speaker 1: was not he was not trying to criticize Darryl Moorey's
• 19:19
  Speaker 1: right to say whatever he wants to say about protests
• 19:21
  Speaker 1: in Hong Kong. And as a results, CCTV, which is
• 19:24
  Speaker 1: the state run TV network in China, the one that
• 19:27
  Speaker 1: was going to be broadcasting these two preseason games coming
• 19:29
  Speaker 1: up later this week in China, they announced that they
• 19:31
  Speaker 1: would not be broadcasting either of those games, which is
• 19:34
  Speaker 1: a pretty big deal. Right. So, so that's kind of
• 19:36
  Speaker 1: where we are right now. Adam Silver is kind of
• 19:39
  Speaker 1: in damage control, and as a result of what he
• 19:41
  Speaker 1: is saying, there's been more retribution coming from from from
• 19:44
  Speaker 1: Chinese businesses. I mean, he is Adam Silver is in it.
• 19:47
  Speaker 1: To me, it seems like an incredibly difficult decision. Give
• 19:50
  Speaker 1: us a sense of kind of how important China is
• 19:54
  Speaker 1: to the NBA. Seems like they've got a much bigger
• 19:56
  Speaker 1: presence there than any of the other big US sports. Yeah,
• 19:58
  Speaker 1: I would call Adam's position and impossible right now, Yeah,
• 20:01
  Speaker 1: and beyond difficult. Yeah. So, just to give you some
• 20:04
  Speaker 1: numbers real quick, the the amount of people in China
• 20:07
  Speaker 1: that watched NBA content last year eight hundred million people, right,
• 20:10
  Speaker 1: So that's two and a half times the entire population
• 20:13
  Speaker 1: of the US. The addressable market in China is enormous,
• 20:17
  Speaker 1: and the NBA is the most popular league there. And
• 20:19
  Speaker 1: I ironically, Darryl Morey, who works for the Rockets, the
• 20:22
  Speaker 1: Rockets are the most popular team of the n B
• 20:25
  Speaker 1: a um in China. But yeah, so you know that
• 20:28
  Speaker 1: the NBA has billion dollar broadcast deals in China from
• 20:33
  Speaker 1: the digital and the TV side. There are a number
• 20:35
  Speaker 1: of sponsors companies that are based in China that that
• 20:38
  Speaker 1: partner with both the league as a whole and with
• 20:40
  Speaker 1: individual teams. I mean, it's it's not an exaggeration to
• 20:43
  Speaker 1: say that NBA China, which is kind of what they
• 20:45
  Speaker 1: incorporated in two thousand and eight, that that is a
• 20:47
  Speaker 1: billion dollar enterprise and moving forward ten or fifteen years
• 20:51
  Speaker 1: could be multiple, multiple billions. Is it surprising to people
• 20:54
  Speaker 1: within the industry that one tweet from one manager could
• 21:00
  Speaker 1: drive this degree of backlash from China? Yeah, I think
• 21:04
  Speaker 1: I think it is. And you know, the criticism of
• 21:07
  Speaker 1: a lot of the criticism that the NBA is getting
• 21:09
  Speaker 1: right now is that, you know, players and coaches and
• 21:11
  Speaker 1: even general managers are very outspoken often about political issues
• 21:16
  Speaker 1: in the US, and the n f NBA has been
• 21:18
  Speaker 1: encouraging of their you know, they're right to speak out
• 21:21
  Speaker 1: and the things that they're saying. Uh, And it does
• 21:23
  Speaker 1: seem I think for a lot of people that, you know,
• 21:25
  Speaker 1: the quick backlash that came after Daryl Mori's tweet, which
• 21:27
  Speaker 1: he deleted, I believe just a couple of minutes after
• 21:30
  Speaker 1: he sent it, um that they might not be giving
• 21:32
  Speaker 1: him the same kind of leeway that they often give
• 21:35
  Speaker 1: their players and coaches for for for political issues here
• 21:38
  Speaker 1: in the US. I think the one major difference is
• 21:40
  Speaker 1: that the backlash came so quickly from Chinese businesses that
• 21:46
  Speaker 1: unlike the backlash that I'm sure they've seen when the
• 21:49
  Speaker 1: Miami Heat take the floor with I Can't Breathe t shirts, etcetera.
• 21:52
  Speaker 1: The backlash came so quickly that everybody, all the stakeholders
• 21:55
  Speaker 1: in the NBA felt like they also had had to
• 21:57
  Speaker 1: react as quickly as as well. One group that I
• 21:59
  Speaker 1: haven't they heard that much from is owners in the
• 22:03
  Speaker 1: league other than Josie, the owner of the Brooklyn Nets
• 22:07
  Speaker 1: and is a Chinese American. In full disclosure, he's a
• 22:09
  Speaker 1: personal friend of mine. But he came out with a
• 22:11
  Speaker 1: statement trying to explain I think maybe the how the
• 22:15
  Speaker 1: view from the Chinese side, how the Chinese viewing this,
• 22:17
  Speaker 1: and trying to maybe build a little bit of a
• 22:19
  Speaker 1: bridge there. But other than that, hadn't really heard much
• 22:22
  Speaker 1: from the owners. Yeah, Joe has been as you said,
• 22:24
  Speaker 1: you know, he put out a seven fifty word letter
• 22:27
  Speaker 1: essentially detailing the kind of the historical grievances that a
• 22:30
  Speaker 1: lot of mainland Chinese people feel against, you know, imperialism
• 22:34
  Speaker 1: and also their own you know, right to to territorial sovereignty. Um.
• 22:37
  Speaker 1: My guess is that most NBA owners are thinking, I
• 22:41
  Speaker 1: don't want to get anywhere near this thing. I mean,
• 22:43
  Speaker 1: generally speaking, where the NBA wants to be on issues
• 22:46
  Speaker 1: like this is neutral. And the only way that you
• 22:48
  Speaker 1: can be neutral is if you don't say anything at all, Right,
• 22:51
  Speaker 1: And unfortunately Darryl tweeting meant that the league had to
• 22:54
  Speaker 1: say something and therefore had to take aside in some capacity.
• 22:59
  Speaker 1: You know, so in Adam Silver's ideal world, like Darryl
• 23:02
  Speaker 1: never says anything, he never said, nobody ever says anything
• 23:04
  Speaker 1: about it, and it continues on in its unifying kind
• 23:07
  Speaker 1: of neutral way. Um, And yeah, I think that's kind
• 23:10
  Speaker 1: of part of the problem. So I don't think I
• 23:11
  Speaker 1: don't think you're gonna hear many NBA owners waited on
• 23:14
  Speaker 1: this because it's kind of impossible to do it in
• 23:16
  Speaker 1: a way that doesn't lean one way or the other.
• 23:19
  Speaker 1: And as we've seen in the past couple of days,
• 23:21
  Speaker 1: leaning one way or the other is bound to anger
• 23:24
  Speaker 1: a lot of people either way. What's the sort of
• 23:27
  Speaker 1: pushback going to be within China if these games are canceled. Yeah,
• 23:32
  Speaker 1: so that's a great question. And right now, the NBA
• 23:34
  Speaker 1: as we speak, is still planning to play these two
• 23:36
  Speaker 1: preseason games on Thursday, and Saturday in China. Uh, my guests,
• 23:42
  Speaker 1: if I had to kind of read through what I
• 23:44
  Speaker 1: think is in the Crystal Ball, I think the NBA
• 23:46
  Speaker 1: ends up being okay long term in China. I mean,
• 23:49
  Speaker 1: basketball is tremendously popular. I don't think the sport is
• 23:52
  Speaker 1: gonna lose popularity. Where I would be concerned is that
• 23:54
  Speaker 1: there's a good chance that the Rockets, who enjoyed, you know,
• 23:57
  Speaker 1: dating back to Yeoming's time, through Racy McGrady and now
• 24:00
  Speaker 1: James Harden, they have been one of, if not the
• 24:02
  Speaker 1: most popular teams in China. I do wonder if if
• 24:05
  Speaker 1: they may lose that mantle, and that if we were
• 24:07
  Speaker 1: to look back on this incident three or four years
• 24:10
  Speaker 1: from now, the truth may be that the NBA is
• 24:12
  Speaker 1: just as popular and their business is just as vibrant
• 24:14
  Speaker 1: in China. However, a lot of the people who were
• 24:16
  Speaker 1: die hard Rockets fans are now rooting for maybe Joe's
• 24:19
  Speaker 1: Ties team, the Brooklyn Nets, maybe are rooting for the
• 24:22
  Speaker 1: Lakers because they like Lebron. That they may lose some
• 24:25
  Speaker 1: fans and also lose sponsors and partners in China, but
• 24:29
  Speaker 1: but that the end result for the league as a
• 24:30
  Speaker 1: whole maybe not as bad as it looks right now.
• 24:33
  Speaker 1: What we've got, it's interesting, got the Nets and the
• 24:35
  Speaker 1: Lakers over there now and and do you expect it
• 24:38
  Speaker 1: seems like there might be some news over the next
• 24:40
  Speaker 1: few days, So stay tuned, right because absolutely, yeah. I mean,
• 24:43
  Speaker 1: I think there is a decent chance that these games
• 24:45
  Speaker 1: end up not happening. Um. I think everybody in in
• 24:49
  Speaker 1: my world, and I think a lot of fans out
• 24:51
  Speaker 1: there are waiting for it to sear what Lebron has
• 24:53
  Speaker 1: to say. And you can promise you that that if
• 24:55
  Speaker 1: these games do happen, he will be addressing the media
• 24:57
  Speaker 1: in some capacity when he when he's over there. Adam Silver,
• 25:01
  Speaker 1: you know, as of right now, is planning to fly
• 25:03
  Speaker 1: to Shanghai. I believe later today or maybe even tomorrow,
• 25:07
  Speaker 1: he will have to talk even more. We'll hear more
• 25:09
  Speaker 1: about this, as you know. The NBA's executives and its
• 25:12
  Speaker 1: biggest stars land in China in the next couple of
• 25:14
  Speaker 1: couple of hours. Evan Novide Williams, sports business reporter for
• 25:18
  Speaker 1: Bloomberg News, Thank you so much. Evan joins us here
• 25:20
  Speaker 1: in our Bloomberg Interactive Broker Studios. Note that you can
• 25:23
  Speaker 1: tune into the Business of Sports with Evan, Scott Sashnik
• 25:26
  Speaker 1: and Michael Barr throughout the weekend on Bloomberg Radio. Check
• 25:29
  Speaker 1: out the podcast anytime at Bloomberg dot com and at iTunes.
• 25:34
  Speaker 1: Thanks for listening to the Bloomberg P and L podcast.
• 25:36
  Speaker 1: You can subscribe and listen to interviews at Apple Podcasts
• 25:39
  Speaker 1: or whatever podcast platform you prefer. Paul Sweeney, I'm on
• 25:42
  Speaker 1: Twitter at pt Sweeney. I'm Lisa abram Boy. It's I'm
• 25:44
  Speaker 1: on Twitter at Lisa A. Bram Woyit's one before the podcast.
• 25:47
  Speaker 1: You can always catch us worldwide. I'm Bloomberg Radio.