Latest / Bloomberg Intelligence / Loomis Is Buying Junk Bonds Amid ETF Sales, Elaine Stokes Says

Transcript

Loomis Is Buying Junk Bonds Amid ETF Sales, Elaine Stokes Says · Bloomberg Intelligence

• 0:05
  Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa Abramowitz. Each day we
• 0:11
  Speaker 1: bring you the most important, noteworthy, and useful interviews for
• 0:15
  Speaker 1: you and your money, whether you're at the grocery store
• 0:17
  Speaker 1: or the trading floor. Find the Bloomberg P and L
• 0:20
  Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Well,
• 0:32
  Speaker 1: we've got an investment professional with us. Elaine Stokes is
• 0:34
  Speaker 1: the vice president co portfolio manager of the Loomis Sales
• 0:38
  Speaker 1: Bond Fund based in Boston, but Elaine joins us here
• 0:41
  Speaker 1: in our leven Thrio studio. Lane, thank you for coming in.
• 0:45
  Speaker 1: Can we just start off with more of a theoretical
• 0:47
  Speaker 1: question passive versus active investing, because that seems to be
• 0:52
  Speaker 1: a debate that continues specifically in the stock market, but
• 0:56
  Speaker 1: has now moved over into the bond market in a
• 0:58
  Speaker 1: in a really big way. Where where do you come
• 1:01
  Speaker 1: down on this and what are some of the advantages
• 1:03
  Speaker 1: and disadvantages of both of those strategies? Okay, um, Well,
• 1:08
  Speaker 1: you know I'm an active manager, so I have to start.
• 1:11
  Speaker 1: I know you you got that bios the bias. Okay, um,
• 1:15
  Speaker 1: let me start there, but uh, you know, this probably
• 1:19
  Speaker 1: room for both UM. But when all of a sudden
• 1:23
  Speaker 1: done UM. I think what we're finding and from our
• 1:26
  Speaker 1: perspective is the more money that's going into passive is
• 1:31
  Speaker 1: going to a lot of it is going into a
• 1:33
  Speaker 1: new kind of passive, right the e t f s,
• 1:35
  Speaker 1: which are which are real fast money territory, and it's
• 1:39
  Speaker 1: going to do things like it did to the high
• 1:41
  Speaker 1: yield market last week. It's going to create more volatility
• 1:45
  Speaker 1: on news and that volatility is going to allow the
• 1:50
  Speaker 1: active managers who are doing the research and doing the
• 1:53
  Speaker 1: deep dives to take advantage of it. So you think
• 1:56
  Speaker 1: that the high old bond ETFs have exacerbated the atility
• 2:00
  Speaker 1: or caused it in the past few days, Is that right?
• 2:03
  Speaker 1: I think yeah, I think they exacerbated it, Yes, because
• 2:06
  Speaker 1: it's so easy in and out when UM of an
• 2:10
  Speaker 1: e t F Where what had happened prior to this
• 2:14
  Speaker 1: is that UM mutual funds, we're making it harder for
• 2:19
  Speaker 1: for timers to get in and out quickly because hey,
• 2:22
  Speaker 1: mutual funds want to invest for the long term. So
• 2:27
  Speaker 1: were you and was Loomas Sales actively buying specific credits
• 2:32
  Speaker 1: last week? And even you know today as the E
• 2:35
  Speaker 1: T F Cell it absolutely when the market is trading off,
• 2:40
  Speaker 1: you can you can expect that Loomas Sales is going
• 2:43
  Speaker 1: to be a buyer. So that means that you think
• 2:47
  Speaker 1: that this is a blip and it's time to have
• 2:50
  Speaker 1: your list of names and which things you like and
• 2:53
  Speaker 1: to get them on the cheap. Yeah, and you know
• 2:56
  Speaker 1: you have to remember when you're a true bond picker,
• 2:59
  Speaker 1: which we are, and your your research driven that even
• 3:03
  Speaker 1: if the market is going down and you think, I
• 3:06
  Speaker 1: think this, well, we think this volatility is going to continue.
• 3:09
  Speaker 1: There's a lot. I mean, look at the number of
• 3:11
  Speaker 1: news stories there were last week that were negative or
• 3:14
  Speaker 1: or created uncertainty. We expect they'll be continued volatility. But
• 3:20
  Speaker 1: if you've done your deep dive research, you take advantage
• 3:24
  Speaker 1: of each of these bouts of volatility to add a
• 3:26
  Speaker 1: little hair, add a little there. You're not spending your
• 3:29
  Speaker 1: last time yet. The notion that as an investor, you
• 3:33
  Speaker 1: hold this inventory and you want to hold it to maturity,
• 3:38
  Speaker 1: I would imagine unless someone's coming along and offering you
• 3:41
  Speaker 1: a huge premium to what you paid, is that would
• 3:44
  Speaker 1: that be accurate? Or Yeah, you know, we are very
• 3:47
  Speaker 1: long term holders you know, um, you know easily hold
• 3:50
  Speaker 1: bonds three or four years. I have bonds that I
• 3:52
  Speaker 1: feel like I bought when they were issued and it's
• 3:54
  Speaker 1: twenty years later. Um. But it's a little bit more.
• 3:59
  Speaker 1: You have to act to the market. Not many stories
• 4:02
  Speaker 1: will last for the life of the bond exactly as
• 4:06
  Speaker 1: they were, you know, the short bonds, the three to
• 4:08
  Speaker 1: five years. Yes, but when you're you do what we do,
• 4:11
  Speaker 1: which is oftentimes we buy the long bond because that's
• 4:15
  Speaker 1: the lowest dollar price and that's where you have the
• 4:17
  Speaker 1: most upside. So we've noticed that the sectors that have
• 4:21
  Speaker 1: gotten uniquely punished over this sell off have been telecommunications
• 4:26
  Speaker 1: and healthcare. Are you buying in those sectors? Yes? Which
• 4:31
  Speaker 1: which do you think has been oversold most? Um, Well,
• 4:36
  Speaker 1: that's a good question. Uh, it's really been which name
• 4:40
  Speaker 1: and not not right now because we're still active in
• 4:46
  Speaker 1: the in the space. Um. But I think that you
• 4:49
  Speaker 1: can easily dig through, um, whether it's in healthcare, the
• 4:53
  Speaker 1: pharmaceutical names, or the health or the hospital companies, and
• 4:59
  Speaker 1: they're all being punished, and you can find the one
• 5:01
  Speaker 1: or two that are going to be long term okay
• 5:06
  Speaker 1: companies just because something gets downgraded. Just because a company
• 5:12
  Speaker 1: um is moving to a different phase doesn't mean as
• 5:15
  Speaker 1: a bond investor you're not still going to get paid.
• 5:18
  Speaker 1: You just might get more carry along the way. Can
• 5:22
  Speaker 1: you give any comment about this seemingly a trend where
• 5:26
  Speaker 1: governments and some corporates are issuing bonds fifty to a
• 5:31
  Speaker 1: hundred years into the future. Yeah. Um, we liked to
• 5:36
  Speaker 1: buy the long glow dollar price bond, but we also
• 5:40
  Speaker 1: also like to have some visibility into into the story,
• 5:44
  Speaker 1: you know, and a bond that is issued fifty hundred
• 5:49
  Speaker 1: years I guess only governments could do that, um, but hey,
• 5:52
  Speaker 1: we've even seen companies countries disappear right uh in in
• 5:58
  Speaker 1: this geopolitical environment would make me really, really nervous. It's
• 6:01
  Speaker 1: hard to envision the world in fifty years. And Elena,
• 6:06
  Speaker 1: thank you so much for joining us. We really appreciate
• 6:08
  Speaker 1: you coming in. Elaine Stokes, vice president and uh CO
• 6:11
  Speaker 1: portfolio manager of the Lomas Sales Bond Fund in Boston,
• 6:15
  Speaker 1: but she joins us here in our eleven three oh
• 6:18
  Speaker 1: studios lots of interesting things. Lomas is a buyer amid
• 6:22
  Speaker 1: the selling. As I mentioned earlier, we are awaiting testimony
• 6:38
  Speaker 1: from Attorney General Jeff Sessions in front of Congress, and
• 6:41
  Speaker 1: here to give us a preview of what to expect,
• 6:44
  Speaker 1: is Billy Billy House, Congressional reporter for Bloomberg. Billy, what
• 6:49
  Speaker 1: are we expecting to learn? Or is this simply going
• 6:51
  Speaker 1: to be an experience of uh sort of partisan bickering.
• 6:58
  Speaker 1: I love. We're gonna find out. And and actually the
• 7:00
  Speaker 1: chairman of the committee uh in this hearing is is
• 7:03
  Speaker 1: giving his open remarks right now the Attorney General Jeff
• 7:06
  Speaker 1: Sessions will speak momentarily. UH. What we're gonna find is
• 7:10
  Speaker 1: that Republicans are going to try to steer this conversation,
• 7:14
  Speaker 1: this hearing away from anything to do, if they could,
• 7:19
  Speaker 1: with the alleged Trump cooperation collusion with Russian meddling, uh
• 7:25
  Speaker 1: to to other areas, in fact, into investigations of Hillary
• 7:31
  Speaker 1: Clinton and her husband. Democrats meanwhile, we want to stick
• 7:34
  Speaker 1: to the topic and and go after Mr Sessions for
• 7:38
  Speaker 1: what they say are his inconsistent remarks about what he
• 7:41
  Speaker 1: knew about Russian context. Billy. There's also a report that
• 7:44
  Speaker 1: there are six Democratic senators that want an inspector general
• 7:48
  Speaker 1: investigation of Commerce Secretary Wilburg Ross. Why are they doing
• 7:52
  Speaker 1: all this. I mean, is this really substantive to the
• 7:54
  Speaker 1: operation of government or is this just inside the belt
• 7:57
  Speaker 1: Way UH politics? Well, UH ross thing. I think it's
• 8:03
  Speaker 1: quid pro quail. I mean, they've they've sat by as
• 8:05
  Speaker 1: Republicans in particularly in the House, for the last month,
• 8:09
  Speaker 1: have launched investigations into UH two thousand and ten uranium
• 8:14
  Speaker 1: deal involving UH members of the Obama administration, including Hillary Clinton.
• 8:20
  Speaker 1: They've launched new investigations into her email and UH scandal
• 8:25
  Speaker 1: and UH and into her dealings even with Benghazi still so,
• 8:31
  Speaker 1: I guess Democrats are scraping to find something to launch
• 8:35
  Speaker 1: of their own. UH six Democrats, though, won't get anything done.
• 8:38
  Speaker 1: They would need something from the majority. Does any of
• 8:41
  Speaker 1: this end up sticking? I mean, because if these people
• 8:43
  Speaker 1: stick around in Washington, they have to work with each other,
• 8:47
  Speaker 1: at least on the superficial level. Does any of this
• 8:50
  Speaker 1: create even more bad feelings and bad blood to the
• 8:54
  Speaker 1: point where no one's gonna work with anybody because they're
• 8:57
  Speaker 1: not gonna even talk to each other at us create
• 9:00
  Speaker 1: the bad letter does create at tensions that make even
• 9:04
  Speaker 1: the most basic bipartisanship difficult. However, the impact on the
• 9:09
  Speaker 1: American public is unclear. Polls are showing that, uh, the
• 9:14
  Speaker 1: Russia collusion investigation. Really at this point, even uh Special
• 9:17
  Speaker 1: Counsel Robert Mueller's probe hasn't registered much with them yet.
• 9:22
  Speaker 1: But we'll see what his findings are in the end.
• 9:25
  Speaker 1: I'm wondering what actually could come from these hearings, In
• 9:28
  Speaker 1: other words, is anything that will be said actionable? Well? Uh,
• 9:36
  Speaker 1: last night Justice Aspartment released a statement that it would
• 9:39
  Speaker 1: be looking into potentially uh some Clinton administration Hillary Clinton matters,
• 9:45
  Speaker 1: including this two thousand ten uranium deal. Uh. That opened
• 9:49
  Speaker 1: the door for the idea of a potential second special
• 9:53
  Speaker 1: prosecutors since Mr Sessions himself can't get involved. Uh, that
• 9:58
  Speaker 1: may possibly come out of and we'll see some discussion
• 10:01
  Speaker 1: of that this hearing. And just momentarily, Billy, you've looked
• 10:04
  Speaker 1: at the polls for the favorable or unfavorable rating from
• 10:08
  Speaker 1: members of Congress, and certainly they don't need any guidance
• 10:12
  Speaker 1: as to what the public thinks about them. Why do
• 10:15
  Speaker 1: they persist in the constant behavior that has given them
• 10:18
  Speaker 1: such low poll ratings. Uh. Well, Republicans, obviously heading into
• 10:24
  Speaker 1: a mid term election next year, want to hold onto
• 10:27
  Speaker 1: their majorities in both the House and Senate, and are
• 10:31
  Speaker 1: obviously worried about whatever is going to be found about
• 10:34
  Speaker 1: the Trump administration that could help drag them down. Democrats
• 10:39
  Speaker 1: are the reverse of that. They're seeing they're breathing heavy
• 10:42
  Speaker 1: a little bit about next year. Well, I'm just wondering,
• 10:45
  Speaker 1: Billy about the special prosecutor process. My impression was that
• 10:50
  Speaker 1: it was for standing politicians are big political figures. Can
• 10:54
  Speaker 1: you sort of correct me on that, because it seems
• 10:56
  Speaker 1: like if they could open some kind of uh investigation
• 11:00
  Speaker 1: into a former politician that no longer has political cloud
• 11:03
  Speaker 1: in any kind of concrete way, is that is that quit?
• 11:07
  Speaker 1: Is that normal? Well, this with regard to Hillary Clinton
• 11:11
  Speaker 1: and her husband, former President Bill Clinton. Any Uh, this
• 11:15
  Speaker 1: is something that that the the Attorney Journal himself may
• 11:19
  Speaker 1: have brought upon himself. He recused himself from all matters
• 11:23
  Speaker 1: related to the Clintons. Therefore, any investigation at all into
• 11:28
  Speaker 1: wrongdoing by them in the past, by nature will require
• 11:32
  Speaker 1: a special counsel or prosecutor. That hasn't we haven't reached
• 11:35
  Speaker 1: that point yet. But it's it's what Republicans are drumming
• 11:38
  Speaker 1: up to kind of counter the noise over the Russian
• 11:41
  Speaker 1: inclusion investigation into the Trump campaign. Billy, is there any
• 11:45
  Speaker 1: way that you can offer any anecdote or story about
• 11:47
  Speaker 1: the mood that exists in Washington, Because not only do
• 11:50
  Speaker 1: you have the Attorney General testifying before the House Judiciary Committee,
• 11:54
  Speaker 1: but also you have the revelations regarding uh roy More,
• 11:59
  Speaker 1: the Republican candidate to replace Jeff Sessions as a Senator
• 12:04
  Speaker 1: for Alabama, and then you have this constant sniping. What
• 12:10
  Speaker 1: is what is the mood of the people who actually
• 12:11
  Speaker 1: have to live this on a day to day basis
• 12:15
  Speaker 1: of very negative, very negative in the House for instance,
• 12:18
  Speaker 1: Uh Uh, there's even uh upset on the Democrats part
• 12:23
  Speaker 1: that Speaker Paul Ryant, who promised to have one of
• 12:25
  Speaker 1: the most open speakerships in legislative processes in history, has
• 12:31
  Speaker 1: basically closed down any amendment system on the floor. Uh.
• 12:36
  Speaker 1: And this has been countered by uh, you know, absolutely
• 12:42
  Speaker 1: no Democratic buying on on the Republican tax overhaul plan. So,
• 12:46
  Speaker 1: I mean this is having real impact on legislation that
• 12:49
  Speaker 1: needs to get done. And Republicans are still trying to
• 12:52
  Speaker 1: as they did with the healthcare bill, trying to get
• 12:55
  Speaker 1: it done, um, even among disagreements with themselves. And this
• 13:00
  Speaker 1: all playing out against all these other weird developments. The
• 13:04
  Speaker 1: Alabama sent a race Donald Jrs WEEKI leagues communications, and uh,
• 13:09
  Speaker 1: of course the collusion investigations, of which we have multiple
• 13:12
  Speaker 1: panels looking into. Well, Billy, That's what I was gonna
• 13:15
  Speaker 1: ask you about, was we are all waiting whether or
• 13:19
  Speaker 1: not the GOP can get through the tax bill. And
• 13:22
  Speaker 1: I wonder, does this hearing that we're listening in on
• 13:27
  Speaker 1: today does this matter it turns to that policy, you
• 13:31
  Speaker 1: know what I mean? Does this sort of lift up
• 13:33
  Speaker 1: a roadblock for some of these policies, the most important
• 13:36
  Speaker 1: of which is the tax policy right now getting through? Well,
• 13:41
  Speaker 1: in one regard, I think it actually may force Republicans
• 13:44
  Speaker 1: to put their foot on the pedal, I mean, to
• 13:47
  Speaker 1: press down to get this thing done before something they
• 13:50
  Speaker 1: fear might really bad come out about their parties uh
• 13:56
  Speaker 1: elected president and uh uh and the difficulty in getting
• 14:01
  Speaker 1: anything done if parts of his campaign or even his
• 14:05
  Speaker 1: administration come under indictment. So what I think is happening
• 14:08
  Speaker 1: is is this is speeding up the process for Republicans
• 14:11
  Speaker 1: now whether they can agree amongst themselves what exactly they
• 14:14
  Speaker 1: want an attax overhaul bill by Christmas is anybody's guest.
• 14:18
  Speaker 1: Right now, the Senate and the House are far apart. Billy.
• 14:21
  Speaker 1: You've also had the joy of having to write stories
• 14:23
  Speaker 1: regarding Donald Trump Jr. And his relationship with Wiki Leaks
• 14:28
  Speaker 1: and also the Vice president. Could you just enlighten us
• 14:31
  Speaker 1: a little bit. Yeah, yesterday the Atlantic broke news about
• 14:37
  Speaker 1: congressional committees having copies of direct messages between week Leaks
• 14:42
  Speaker 1: and Donald Trump Jr. Both leading up to the election
• 14:47
  Speaker 1: last November and afterwards. This was kind of startling because
• 14:51
  Speaker 1: they've denied that, including Vice President Mike Pence, denied that
• 14:56
  Speaker 1: last year. Well, it turns out there were some communications,
• 14:59
  Speaker 1: not any A lot of it was polite responses from
• 15:03
  Speaker 1: messages from WEEKI Leaks by Donald Trump Jr. But some
• 15:08
  Speaker 1: some eyebrow raising communications that may suggest some coordination, if
• 15:15
  Speaker 1: not legal collusion. And the upshot was the Vice President
• 15:19
  Speaker 1: himself put out statement through a spokeswoman last night that
• 15:22
  Speaker 1: he was completely unaware of these contacts. All right, Well, Billy,
• 15:26
  Speaker 1: I want to thank you very much. Billy House is
• 15:28
  Speaker 1: our congressional reporter for Bloomberg. We're gonna let you get
• 15:31
  Speaker 1: back and organized for this hearing. Alright, for success in
• 15:48
  Speaker 1: retail we of course turned to BERTA. Flickinger. He joins
• 15:51
  Speaker 1: us as he was just speaking earlier during our program,
• 15:55
  Speaker 1: and of course we're monitoring what's going on in Washington
• 15:58
  Speaker 1: with the testimony of Attorney General Jeff Sessions. Bert Flickinger,
• 16:02
  Speaker 1: Managing director of Strategic Resource Group. The topic Walmart and
• 16:07
  Speaker 1: its plans versus. So let's say Target, Walmart will release
• 16:10
  Speaker 1: its results I believe on Thursday, right, and Target releases
• 16:14
  Speaker 1: results tomorrow. Is this really a tale of merchandizing that's
• 16:22
  Speaker 1: gone wrong? Or is there a vision, a strategic vision
• 16:25
  Speaker 1: that has just fallen off the sort of the radar
• 16:28
  Speaker 1: here with when it comes to Target, because they were
• 16:30
  Speaker 1: hot and Walmart was not him. It's the old Janis
• 16:34
  Speaker 1: Joplin a combination the two. Is you synthesize so well,
• 16:37
  Speaker 1: it's merchandizing, its vision and its leadership. Walmart has all
• 16:42
  Speaker 1: of the above, and targets really unbalanced in every area.
• 16:46
  Speaker 1: Why is that? Why? Why is Target not being able
• 16:48
  Speaker 1: to get its act together? I thought they were great
• 16:50
  Speaker 1: getting into the grocery business, and they were doing all
• 16:53
  Speaker 1: kinds of things with RF you know, radio frequency tags
• 16:56
  Speaker 1: and so on. They were, but it really coincides from Um,
• 17:00
  Speaker 1: the passing of Bruce Bliss Dayton, the last of the
• 17:04
  Speaker 1: Dayton brothers and the founding family and the last of
• 17:07
  Speaker 1: the Dayton CEO. She the best combination of family and
• 17:10
  Speaker 1: professional management. And then with Ulric and uh Steinhoffel and
• 17:16
  Speaker 1: now Cornell, you've got the Mackenzie what I call co
• 17:20
  Speaker 1: monarchy coming in. And one of the reasons, ironically best
• 17:24
  Speaker 1: Buy really picked up in the last few years is
• 17:27
  Speaker 1: Target left so many of its best and brightest go
• 17:30
  Speaker 1: they got picked up by best Buy. Walmart pushed out
• 17:34
  Speaker 1: all the politicians from poor executive search and now has
• 17:37
  Speaker 1: all the producers. And so it's like the days of
• 17:40
  Speaker 1: Mr Sam Walton, the founder from nineteen sixty two. Doug McMillan,
• 17:44
  Speaker 1: current Walmart CEO, was his last hand picked person. Doug
• 17:48
  Speaker 1: was banished to China by all all the politicians who
• 17:52
  Speaker 1: didn't want him there to be promoted. Since he came
• 17:55
  Speaker 1: back with Greg Varrant and many other talented people and
• 18:00
  Speaker 1: recruiting Dave Criscione from Amazon, it's they've turned the tables
• 18:05
  Speaker 1: and Target outsources everything, and hence his poor service there.
• 18:09
  Speaker 1: They've been out of stock on cough cold and Walmart
• 18:12
  Speaker 1: like Kroger has its own meteorologists, so they not only
• 18:15
  Speaker 1: have cough cold in stock, but they have it on order.
• 18:17
  Speaker 1: When I asked Target why they don't have it, they said, well,
• 18:20
  Speaker 1: we'll email Robbie the e t M. I said, what's that,
• 18:23
  Speaker 1: they said, the Electronic Transportation Manager. He'll see if it's in,
• 18:27
  Speaker 1: so a lot of people be sick and we'll have
• 18:30
  Speaker 1: to have to go to Walmart and CVS and Walgreen's. Well,
• 18:34
  Speaker 1: you know, the the idea that Walmart has its own
• 18:37
  Speaker 1: meteorologist is amazing. Uh. It also has been incredibly forward
• 18:43
  Speaker 1: thinking when it comes to becoming sort of a lender
• 18:47
  Speaker 1: in many ways or acting in a financial services capacity.
• 18:50
  Speaker 1: It's walpay is set to take over Venmo and uh
• 18:55
  Speaker 1: and even Apple pay uh in the near future just
• 18:58
  Speaker 1: because it has developed such a following with its clients.
• 19:02
  Speaker 1: I'm just wondering, from that perspective, how much do you
• 19:05
  Speaker 1: think Walmart's going to earn from its financial services arm
• 19:08
  Speaker 1: And can you give us a sense of how long
• 19:10
  Speaker 1: this has been in the works. I mean, how quickly
• 19:11
  Speaker 1: has this popped up as a sort of dominant player. Uh, Lisa,
• 19:15
  Speaker 1: all great insights is always in for Walmart. It's something
• 19:19
  Speaker 1: I've been looking at for twenty five years. And as
• 19:23
  Speaker 1: you and PIM have reported well, with Walmart's lawsuits versus
• 19:27
  Speaker 1: the banks, GPC, general purpose credit card companies, Visa Master
• 19:32
  Speaker 1: discover uh AMAX for cheating up the interchange rates on
• 19:36
  Speaker 1: the on the debit cards uh and the and the
• 19:39
  Speaker 1: credit cards. Walmart has been looking at getting into financial
• 19:42
  Speaker 1: services for a long time. Under this administration, it's more accommodative,
• 19:46
  Speaker 1: but at the same time, it's Walmart doing good to
• 19:48
  Speaker 1: raise the standards of livings for society. Because when I
• 19:51
  Speaker 1: go Route eleven, Route fifteen in the rural areas of Mississippi, Louisiana, Boaz, Alabama,
• 19:58
  Speaker 1: et cetera, you see pay day loans, title loans for cars,
• 20:02
  Speaker 1: trailer homes everybody else. People are down and out financially.
• 20:06
  Speaker 1: So Walmart's going with the cheapest loan systems to make
• 20:11
  Speaker 1: their financial circumstances better for their consumers. Lower interchange rate
• 20:16
  Speaker 1: so they can in turn lower prices and lesa to
• 20:20
  Speaker 1: your great power rally of strength on high yield bonds.
• 20:24
  Speaker 1: Walmart's realizing that the vendors are really turning their backs
• 20:28
  Speaker 1: on the reverse category killers and the category dominant retailer.
• 20:32
  Speaker 1: So is the bonds trade down bankruptcy toys r US
• 20:37
  Speaker 1: trade down on pet smart bontan Stein Mart right aid.
• 20:41
  Speaker 1: Walmart's becoming a shopping center unto itself and trying to
• 20:45
  Speaker 1: capture the card data with the financial services. You're referencing
• 20:48
  Speaker 1: with the data and becoming the destination placed financially operationally,
• 20:54
  Speaker 1: UH and click and collectus as well as base basic
• 20:57
  Speaker 1: rhythm of retail and targets out of rhythm at this point.
• 21:02
  Speaker 1: Bert Flickincher always in rhythm, Thank you very much, Managing Director,
• 21:05
  Speaker 1: Strategic Resource Group, giving us some insight into the world
• 21:08
  Speaker 1: of Walmart and Target. Once again. Target will release its
• 21:11
  Speaker 1: results tomorrow. Walmart is scheduled to release its results on Thursday.
• 21:28
  Speaker 1: We have been talking about Venezuela, about the fact that
• 21:32
  Speaker 1: Venezuela put a X drug kingpin in charge of debt negotiations,
• 21:37
  Speaker 1: asked US investors to come down to Venezuela to discuss
• 21:41
  Speaker 1: these negotiations, and then very few of them, if any
• 21:44
  Speaker 1: actually want here to talk about this meeting, which lasted
• 21:47
  Speaker 1: all of thirty minutes. Is Ben Bartonstein. He's Emerging Markets
• 21:50
  Speaker 1: reporter for the America's for Bloomberg News coming to us
• 21:54
  Speaker 1: from Lima, Peru. Ben, thank you so much for joining us.
• 21:58
  Speaker 1: Can you just give us some color from this eating certainly, Lisa, Yeah,
• 22:02
  Speaker 1: there was lots of but very little substance from the
• 22:05
  Speaker 1: meeting in Caracas yesterday. Uh, these debt negotiations, which were
• 22:10
  Speaker 1: greeted with much fanfare, President Maduro saying more than four
• 22:14
  Speaker 1: investors planning to attend, and the government literally rolling out
• 22:18
  Speaker 1: a red carpet for investors who arrived to the White
• 22:22
  Speaker 1: Palace um and we're greeted with goodie bags filled the
• 22:25
  Speaker 1: chocolates and coffee, serve a juice, rapaz and cochapas, which
• 22:30
  Speaker 1: are these venezuela and corn pancakes. But inside the White
• 22:33
  Speaker 1: Palace there was very little substance to the meeting itself.
• 22:37
  Speaker 1: The only Venezuelan official to speak was Vice President tark
• 22:41
  Speaker 1: Eli Sami, who, as you mentioned, was designated designated as
• 22:45
  Speaker 1: a drug kingpin by the U. S. Treasury in February.
• 22:49
  Speaker 1: He's been tasked to lead this debt renegotiation committee, and
• 22:53
  Speaker 1: he spent the majority of his talk railing against the
• 22:57
  Speaker 1: Trump administration, which has imposed tighter sank on the Venezuelan
• 23:01
  Speaker 1: government and discussing an international conspiracy that he feels is
• 23:07
  Speaker 1: meant to bring down the Maduro government. He did pledge
• 23:11
  Speaker 1: to continue paying debt both by petias of the state
• 23:16
  Speaker 1: oil company and the sovereign. That's been something that the
• 23:19
  Speaker 1: Madureau administration has taken much pride in doing. But in
• 23:23
  Speaker 1: terms of any significant proposals for how to restructure the debt,
• 23:27
  Speaker 1: there was none of that. Hey Ben, When when does
• 23:30
  Speaker 1: the government run out of money? That's a great question.
• 23:34
  Speaker 1: That is something that traders have been asking themselves for
• 23:38
  Speaker 1: quite a while. PIM and really they have money as
• 23:44
  Speaker 1: long as it partially it comes down to when lender's
• 23:47
  Speaker 1: the last resort China and Russia decide that they no
• 23:50
  Speaker 1: longer will fill those roles. So that's something the market
• 23:54
  Speaker 1: has been looking at, trying to decipher when when they
• 23:59
  Speaker 1: will know long to have an alternative option to bail
• 24:02
  Speaker 1: them out. It's interesting Peta Vesa recently started tweeting, potentially
• 24:06
  Speaker 1: as a sign of them looking further to Asia. They
• 24:10
  Speaker 1: recently started tweeting in Mandarin um eventually a way of
• 24:15
  Speaker 1: reaching out. Oh my gosh, I mean when we start
• 24:17
  Speaker 1: passing through Twitter posts and the bag of chocolates to
• 24:20
  Speaker 1: get clues on Venezuela death situation. It's really quite a time.
• 24:24
  Speaker 1: Of course, last night SMP Global Ratings weighed in and said,
• 24:28
  Speaker 1: you know what, Venezuela, you guys really have defaulted. I
• 24:31
  Speaker 1: know that is DA, which is the Credit Committee of
• 24:35
  Speaker 1: IZDA is deciding whether or not Venezuela has breached credit
• 24:39
  Speaker 1: default swap contract that still is out there. But as
• 24:43
  Speaker 1: far as SMP is concerned, Venezuela is in default already.
• 24:46
  Speaker 1: Can you explain a little bit about what death this
• 24:48
  Speaker 1: applies to and why this matters? Right? So, Fitch had
• 24:53
  Speaker 1: declared Petavesa in default yesterday evening, and SMP, of course
• 24:57
  Speaker 1: declaring the sovereign in default. Fitch his decision came down
• 25:01
  Speaker 1: to delays on principal payments for the Petta Basis seventeen bonds,
• 25:07
  Speaker 1: whereas S and p s decision moving Venezuela sovereign into
• 25:11
  Speaker 1: selective default was due to delayed interest payments which were
• 25:15
  Speaker 1: actually do last month, but their grace periods expired over
• 25:19
  Speaker 1: this weekend. But potentially, based on the circumstances legally speaking,
• 25:26
  Speaker 1: that this could be less of a headline risk than
• 25:29
  Speaker 1: some might expect. There could actually be a lesson taken
• 25:33
  Speaker 1: from the state utility company Electricita de Caracas, which was
• 25:38
  Speaker 1: declared in default by its trustee guests on Friday, actually
• 25:43
  Speaker 1: but actually is rallying significantly today, the most in eight years.
• 25:47
  Speaker 1: Uh and that being the case mostly due to comments
• 25:51
  Speaker 1: made by Finance Minister Simnzerpa over the weekend to Bloomberg
• 25:55
  Speaker 1: telling us that although there were some financial blockages in
• 26:01
  Speaker 1: terms of intermediary banks, they have since been resolved and
• 26:04
  Speaker 1: the company intends to to get that money to bond
• 26:07
  Speaker 1: holders this week. Ben. What you're you're joining us from
• 26:11
  Speaker 1: from Lima? What has been the reaction from other Latin
• 26:14
  Speaker 1: American governments and business leaders about doing business either with
• 26:19
  Speaker 1: Venezuela or in Venezuela Another great question, PIM. Perhaps the
• 26:26
  Speaker 1: most recent reaction that we've had is when Mauricio Mockri,
• 26:30
  Speaker 1: the Argentine President, traveled to New York and made his
• 26:35
  Speaker 1: voice clear that he and a number of Latin American
• 26:38
  Speaker 1: leaders were supportive of the US ratcheting up sanctions, including
• 26:43
  Speaker 1: on Venezuela's oil. Ah. So that that's been something that's
• 26:48
  Speaker 1: been obviously debated within the Trump administration. It would have
• 26:51
  Speaker 1: significant impact not only on Venezuela but on the U
• 26:54
  Speaker 1: S consumer and that's why perhaps the Trump and administration
• 26:58
  Speaker 1: has been reluctant to go that far. But Mackrie's comments there, uh,
• 27:04
  Speaker 1: we're definitely but seen by some in the market as
• 27:07
  Speaker 1: as a bit of a radical statement to make. It's
• 27:10
  Speaker 1: really a radical statement, even after the giving out chocolate
• 27:12
  Speaker 1: and tweeting in Mandarin. I guess it's a trifecta for
• 27:15
  Speaker 1: strange things that happened in the Venezuelan bond market. Alright,
• 27:19
  Speaker 1: we're gonna keep watching, You're gonna keep reporting. Much appreciated.
• 27:22
  Speaker 1: Ben barton Stein is the Emerging Markets America's reporter for
• 27:26
  Speaker 1: Bloomberg News, joining us from Lima, Peru. You know, I
• 27:30
  Speaker 1: just want to point out that Petavasa bonds that mature
• 27:34
  Speaker 1: have plunged today really dramatically, at three billion dollars of
• 27:38
  Speaker 1: debt now trading twenty six cents on the dollar. So
• 27:41
  Speaker 1: it's been a really big market reaction. Thanks for listening
• 27:46
  Speaker 1: to the Bloomberg P and L podcast. You can subscribe
• 27:49
  Speaker 1: and listen to interviews at Apple Podcasts, SoundCloud, or whatever
• 27:53
  Speaker 1: podcast platform you prefer. I'm pim Fox. I'm on Twitter,
• 27:57
  Speaker 1: at pim Fox. I'm on Twitter at Lisa A. Ramo.
• 28:00
  Speaker 1: It's one before the podcast. You can always catch us
• 28:03
  Speaker 1: worldwide on Bloomberg Radio