Latest / Bloomberg Intelligence / Microsoft, Inflation, Banks, TMT, and Prime Day

Transcript

Microsoft, Inflation, Banks, TMT, and Prime Day · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
• 0:04
  Speaker 1: my co host Matt Miller.
• 0:05
  Speaker 2: Every business day we bring you interviews from CEOs, market pros,
• 0:09
  Speaker 2: and Bloomberg experts, along with essential market moven news.
• 0:14
  Speaker 1: Find the Bloomberg Markets Podcast on Apple Podcasts or wherever
• 0:17
  Speaker 1: you listen to podcasts, and at Bloomberg dot com Slash podcast.
• 0:20
  Speaker 1: Big Big News Nugget Today on the Big I mean
• 0:24
  Speaker 1: we have it's this NonStop. Microsoft wins a US court
• 0:29
  Speaker 1: nod to buy Activision that remember this is a sixty
• 0:31
  Speaker 1: nine billion dollar transaction to Federal Trade Commission was looking
• 0:35
  Speaker 1: to kind of block this deal. The court said no,
• 0:38
  Speaker 1: ruled in favor of Microsoft Activision stock Trading hire.
• 0:41
  Speaker 3: Here.
• 0:41
  Speaker 1: We want to get the details, and we're so fortunate
• 0:44
  Speaker 1: to have Jenre with us because Jenri from Bloomberg Intelligence.
• 0:47
  Speaker 1: She covers all the anti trust issues across a number
• 0:49
  Speaker 1: of industries. She's really an expert on anti trust and
• 0:52
  Speaker 1: we want to get her sense of what's happening here.
• 0:54
  Speaker 1: So Jen, a big win for Microsoft and Activision, not
• 0:58
  Speaker 1: a good day for the Federal Trade Commission. What do
• 1:00
  Speaker 1: you take away from this?
• 1:02
  Speaker 4: There really isn't and you know, the Federal Trade Commission
• 1:05
  Speaker 4: is going to have to rack up a win one
• 1:06
  Speaker 4: of these days because their track record is not so
• 1:09
  Speaker 4: great yet. But this was really a big deal for Microsoft.
• 1:12
  Speaker 4: This was make or break the deal. If they had
• 1:15
  Speaker 4: lost today, they probably would have had to abandon because
• 1:18
  Speaker 4: the process then would have extended for years. So they
• 1:21
  Speaker 4: needed this to move forward. And now it looks like,
• 1:24
  Speaker 4: really they just have the UK to tackle. And since
• 1:27
  Speaker 4: the last time I talked to you, Paul, it looks
• 1:29
  Speaker 4: like we have some developing news because they are talking
• 1:32
  Speaker 4: about suspending the litigation in the UK, which means to
• 1:35
  Speaker 4: me they're probably talking settlement at this point with the
• 1:38
  Speaker 4: Competition and Markets Authority there.
• 1:40
  Speaker 3: So then would that mean the big barriers that were
• 1:44
  Speaker 3: in front of it are potentially out of place at
• 1:46
  Speaker 3: this point and it could more easily go through.
• 1:49
  Speaker 4: It looks like we're getting there absolutely if they can.
• 1:52
  Speaker 4: If they can get to some sort of a settlement
• 1:54
  Speaker 4: with the CMA and the UK, they're good to go.
• 1:57
  Speaker 5: Now.
• 1:57
  Speaker 6: I want to be clear, all that's.
• 1:58
  Speaker 4: Happened here today is that the refused to temporarily block
• 2:01
  Speaker 4: the closing of this merger. The FTC still has an
• 2:04
  Speaker 4: ongoing matter. Internally, it's called a part three, which is
• 2:08
  Speaker 4: litigation to determine if the deal actually violates the antitrust laws.
• 2:12
  Speaker 6: There's nothing stopping.
• 2:13
  Speaker 4: The FTC from continuing to pursue that even if the
• 2:15
  Speaker 4: deal is closed. At that point, though, it really becomes
• 2:19
  Speaker 4: much harder for them because what they have to do
• 2:21
  Speaker 4: is seek in order to unwind, which is even harder
• 2:23
  Speaker 4: than in order to block a deal that's vertical in nature,
• 2:27
  Speaker 4: which is tough to block to begin with.
• 2:28
  Speaker 6: But it doesn't necessarily mean even.
• 2:31
  Speaker 4: If they settle in the UK, even if they close
• 2:33
  Speaker 4: the deal, doesn't necessarily mean that the legal challenge won't
• 2:36
  Speaker 4: continue by the FTC. I would say, though, if that happens,
• 2:40
  Speaker 4: I believe it's a losing battle on the FTC side.
• 2:43
  Speaker 1: All right, And Activision stock up eleven percent. It was
• 2:46
  Speaker 1: up about five percent on the Microsoft on the when
• 2:48
  Speaker 1: the court ruling came out, now up eleven percent. Maybe
• 2:50
  Speaker 1: getting a sense that the UK may there may be
• 2:53
  Speaker 1: a settlement there. So Jen, you're expert in kind of
• 2:57
  Speaker 1: working with a Department of Justice, the Federal Trade Commission,
• 3:00
  Speaker 1: all these regulatory bodies, and we know what the Biden
• 3:02
  Speaker 1: administration it has been taking a harder stance on deals
• 3:06
  Speaker 1: in general.
• 3:07
  Speaker 7: This looks like a bad day for the FTC. How
• 3:09
  Speaker 7: bad was it?
• 3:11
  Speaker 8: You know?
• 3:11
  Speaker 6: I think it's pretty bad now. This was going to
• 3:14
  Speaker 6: be a tough battle going in.
• 3:16
  Speaker 4: As I said, this is a vertical deal, and it's
• 3:18
  Speaker 4: very hard to challenge a vertical deal. The last time
• 3:22
  Speaker 4: an agency tried to do that, it was the Department
• 3:24
  Speaker 4: of Justice with AT and T and Time Warner, and
• 3:27
  Speaker 4: the DJ also lost that pretty resoundingly and also lost
• 3:30
  Speaker 4: on appeal. By the way, in that case, it is
• 3:34
  Speaker 4: very hard to prove harm when companies are vertically integrating.
• 3:37
  Speaker 4: It's very different than when two competitors come together. Because
• 3:40
  Speaker 4: that concentrates a market. It's much more obvious how that
• 3:43
  Speaker 4: might cause some consumer harm, and in a vertical situation
• 3:46
  Speaker 4: it's less obvious and harder to prove.
• 3:48
  Speaker 6: But I do think this was a big test.
• 3:50
  Speaker 4: I mean, the FTC is simply trying to stop many companies,
• 3:54
  Speaker 4: but in particular big tech platforms, from growing through acquisition.
• 3:58
  Speaker 4: They tried to stop Meta from buying Within. They've now
• 4:01
  Speaker 4: tried to stop Microsoft from buying Activision, and they haven't
• 4:03
  Speaker 4: had success. It doesn't bode well for any future challenges,
• 4:08
  Speaker 4: I think that may be coming up.
• 4:10
  Speaker 3: As far as when it comes to future challenges, what
• 4:13
  Speaker 3: potential other mergers are on your radar that you're keeping
• 4:16
  Speaker 3: a close eye on.
• 4:17
  Speaker 4: Well, I'm really watching Adobe Figma carefully because that's been
• 4:20
  Speaker 4: pending for a while and the company's finished up their
• 4:23
  Speaker 4: investigation in mid March, so I think something should happen
• 4:26
  Speaker 4: there at any time that's before the Department of Justice,
• 4:29
  Speaker 4: and I tend to think there will be a lawsuit
• 4:32
  Speaker 4: to try to block it, because it sort of hits
• 4:34
  Speaker 4: an area of heightened sensitivity right now, which it has
• 4:37
  Speaker 4: the appearance of an incumbent buying a sort of smaller, scrappier,
• 4:42
  Speaker 4: nascent competitor, a company that's posing some competition now but
• 4:45
  Speaker 4: might grow into a bigger competitive threat in the future
• 4:48
  Speaker 4: if it stays independent. So I think there could be
• 4:51
  Speaker 4: a lawsuit there. There's a little bit you know, broad
• 4:54
  Speaker 4: Common VMware is also pending. I just saw some breaking
• 4:58
  Speaker 4: news that that might get clearance in Europe. I think
• 5:00
  Speaker 4: that a deadline there is something like next week for
• 5:03
  Speaker 4: the European decision. If that happens, I think that votes
• 5:06
  Speaker 4: pretty well for getting clear And elsewhere we have Kroger
• 5:10
  Speaker 4: and Albertson's very big grocery deal that's pending before the
• 5:14
  Speaker 4: Federal Trade Commission, So we'll have to.
• 5:15
  Speaker 6: See in second half.
• 5:16
  Speaker 4: We could certainly see either a settlement there or a
• 5:20
  Speaker 4: lawsuit to block. I tend to lean more toward to
• 5:22
  Speaker 4: lawsuit to block because we just haven't seen a lot
• 5:25
  Speaker 4: of settlement activity by this FTC or DOJ yet.
• 5:29
  Speaker 6: In the last year.
• 5:31
  Speaker 4: And then we have the pending litigation Jeck Blue and Spirit.
• 5:34
  Speaker 4: The Department of Justice has already challenged that and that's
• 5:37
  Speaker 4: going to start trial in October.
• 5:39
  Speaker 6: So I'm watching that one as well.
• 5:40
  Speaker 7: Lots of follow Hey, Jen.
• 5:42
  Speaker 1: We also have the folks from the PGA Tour testifying
• 5:46
  Speaker 1: in front of Congress today pending merger between the PGA
• 5:51
  Speaker 1: Tour and the Live Tour, including a big investment from
• 5:55
  Speaker 1: a Saudi investment fund. I'm not sure if you're a
• 5:57
  Speaker 1: golf fan, but is there antitrust risk because that sounds
• 6:01
  Speaker 1: like a horizontal deal.
• 6:03
  Speaker 4: It is, And you know, Paul, I'll say, I'm kind
• 6:06
  Speaker 4: of adjacent golf fan.
• 6:07
  Speaker 6: That kind of means a huge golf fan, and that makes.
• 6:09
  Speaker 4: Me adjacent, right, So sometimes I'm in front of the
• 6:12
  Speaker 4: TV watching some of this stuff.
• 6:14
  Speaker 6: Yes, I agree with you.
• 6:16
  Speaker 4: That's a horizontal deal that superficially facially looks anti competitive,
• 6:21
  Speaker 4: like a merger to monopoly or near to it. And
• 6:24
  Speaker 4: so it's very surprising from an anti trust perspective that
• 6:27
  Speaker 4: they move forward with this.
• 6:28
  Speaker 6: Now.
• 6:28
  Speaker 4: Congress is also worried about national security issues, so I
• 6:32
  Speaker 4: think today's hearing may actually it covers both. I think
• 6:36
  Speaker 4: it may be more focused on national security, you know,
• 6:39
  Speaker 4: the idea perhaps that the saudiast could get in their
• 6:42
  Speaker 4: hands the data of US golf fans, golf golf consumers,
• 6:46
  Speaker 4: or even other issues. But from an anti trust perspective, Paul,
• 6:49
  Speaker 4: it looks like a very difficult deal to do to me.
• 6:54
  Speaker 4: And golf doesn't have an anti trust exemption like some
• 6:56
  Speaker 4: other sports leagues. For instance, baseball has some limited trust exemptions.
• 7:01
  Speaker 4: Golf does not have that. So we'll have to see
• 7:03
  Speaker 4: what happens here. We do know that DOJ has already
• 7:05
  Speaker 4: opened an investigation the Ant Trust Division, so they're looking
• 7:09
  Speaker 4: at it. They'll be investigating it, and if they filed
• 7:12
  Speaker 4: a lawsuit to challenge that merger wouldn't surprise me at all.
• 7:16
  Speaker 3: Any indication of how long it could be before we
• 7:18
  Speaker 3: get some more news about Microsoft and activision ah soon.
• 7:22
  Speaker 4: I think we're going to get news every day because
• 7:25
  Speaker 4: their end date is July eighteenth, right, that's next Tuesday,
• 7:28
  Speaker 4: So they really want to close before July eighteenth. So
• 7:32
  Speaker 4: I suspect they're talking right now very earnestly with the
• 7:35
  Speaker 4: UK CMA, trying to reach some sort of settlement, maybe
• 7:39
  Speaker 4: even with an agreement that let them close before their
• 7:42
  Speaker 4: July eighteenth date, so maybe Monday or even this Friday
• 7:46
  Speaker 4: and hold separate if they need to for continued discussions
• 7:49
  Speaker 4: with the UK, or if a settlement can't be reached,
• 7:52
  Speaker 4: to go through the appeal, because holding a company separate
• 7:55
  Speaker 4: obviously makes it much easier down the road to unwind
• 7:58
  Speaker 4: the deal if the UK were to veil. But I
• 8:00
  Speaker 4: suspect at this point, given overwhelmingly the global regulators who
• 8:05
  Speaker 4: cleared this deal, you know, Europe didn't only clear it
• 8:09
  Speaker 4: that Europe said the settlement was pro competitive, that it
• 8:12
  Speaker 4: wasn't just neutral, that it was pro competitive, and I
• 8:14
  Speaker 4: think there's a lot of pressure on the CMA to
• 8:16
  Speaker 4: let this go forward, also with some kind of a
• 8:19
  Speaker 4: behavioral settlement promises by Microsoft not to take these Games exclusive.
• 8:23
  Speaker 7: All right, Jen, thanks so much for joining us. Really
• 8:25
  Speaker 7: appreciate it.
• 8:25
  Speaker 1: Jenri antitrust litigation analysts for Bloomberg Intelligence, pining on a
• 8:31
  Speaker 1: number of deals. The big news today Microsoft getting a
• 8:35
  Speaker 1: court clearance to proceed next steps with its Penning acquisition activision.
• 8:40
  Speaker 1: I remember that's a gaming company and this transaction is fight.
• 8:43
  Speaker 1: It's sixty nine billion dollars, so even by Microsoft's standards,
• 8:48
  Speaker 1: pretty darn material.
• 8:49
  Speaker 7: We'll have more reporting on that going forward.
• 8:53
  Speaker 9: You're listening to the team Ken's are Line program Bloomberg
• 8:56
  Speaker 9: Markets weekdays at ten am Eastern on Bloomberg dot com,
• 9:00
  Speaker 9: the iHeartRadio app and the Bloomberg Business App, or listening
• 9:03
  Speaker 9: on demand wherever you get your podcasts.
• 9:07
  Speaker 1: I'm looking at the Bloomberg Commodity Index exactly, and you
• 9:11
  Speaker 1: know from its high recent high back in August September
• 9:14
  Speaker 1: of last year, it's then about almost twenty percent, so
• 9:16
  Speaker 1: that there's yeh, disinflation for you, I guess. But we
• 9:19
  Speaker 1: got some in our studio here who knows a lot
• 9:21
  Speaker 1: more than we did. David Schastler, portfolio manager and head
• 9:23
  Speaker 1: of quantitative investment Solutions at van Neck, joins us here
• 9:26
  Speaker 1: in our Bloomberg Interactive Brokers Studio David talk to us,
• 9:29
  Speaker 1: tell you guys at van Neck, how you guys trade
• 9:32
  Speaker 1: invest in commodities?
• 9:34
  Speaker 10: Sure, so we manage a commodity fund, the tickers pit pit.
• 9:38
  Speaker 10: It's throw back to the old commodity pits. Really what
• 9:42
  Speaker 10: we do. It's a quantitative approach. So we're looking at
• 9:44
  Speaker 10: a few different things. The first, we're looking at what
• 9:47
  Speaker 10: is the structure of the curve, so are we in
• 9:49
  Speaker 10: backwardation or canentangle? If we're in backwardation, it's an implication
• 9:53
  Speaker 10: that there's some likely supply issues bullshtign so that's something
• 9:58
  Speaker 10: that we watch closely. Second Ndarily, what we're doing is
• 10:01
  Speaker 10: we're looking at prices and seeing are these commodities well
• 10:04
  Speaker 10: behaved or not. Clearly, natural gas has not been We've
• 10:07
  Speaker 10: been significantly underweighted for a very long time now. And
• 10:11
  Speaker 10: then the third mean reversion commodities are super cool in
• 10:14
  Speaker 10: the sense of they may not have the most attractive
• 10:18
  Speaker 10: return stream, but they're always zigging and zag right and
• 10:20
  Speaker 10: if you watch those zig and zags relative to each other,
• 10:23
  Speaker 10: there's usually an opportunity. So we will look for mean
• 10:27
  Speaker 10: reversion opportunities within there. So it's a very active strategy
• 10:30
  Speaker 10: and that's.
• 10:30
  Speaker 3: What we do. So how are you advising clients to
• 10:32
  Speaker 3: position at this.
• 10:33
  Speaker 10: Point within commodities or from an overall acid allocation?
• 10:36
  Speaker 3: Start with commodities first.
• 10:38
  Speaker 10: Within commodities, right now, we are bullish on energy. We
• 10:42
  Speaker 10: have a round of fifty percent allocation five zero percent
• 10:45
  Speaker 10: allocation to commodities, significantly higher than what you reference before
• 10:48
  Speaker 10: with the Bloomberg Commodity Index. We're bullish on oil right
• 10:51
  Speaker 10: We've got a big CPI report coming out tomorrow. Don't
• 10:54
  Speaker 10: have a big view on that, but if you look
• 10:56
  Speaker 10: at the CPI trends, inflation's falling largely because energy prices
• 11:01
  Speaker 10: are falling. We don't think that that trend continues. In fact,
• 11:04
  Speaker 10: we're obviously betting in the opposite direction.
• 11:07
  Speaker 7: A lot of those issues.
• 11:08
  Speaker 10: We think are behind us. Lower prices, softer prices are
• 11:12
  Speaker 10: discouraging production, right Saudi Arabia reducing production, eating into supply.
• 11:19
  Speaker 10: Obviously the spr stuff largely behind us. We think loial
• 11:22
  Speaker 10: prices firm up here, go higher. Clearly we're betting on that.
• 11:26
  Speaker 3: So then the production issues would be the catalyst to
• 11:29
  Speaker 3: moving energy prices.
• 11:30
  Speaker 10: Yes, so hate to be bearish on the economy, but
• 11:33
  Speaker 10: we are okay, But there's a relatively inelasticity of demand
• 11:38
  Speaker 10: when it comes to energy prices, when it comes to oil.
• 11:41
  Speaker 10: So we think we can see a softening and demand modestly.
• 11:45
  Speaker 10: We think that the supply side is where the juice
• 11:48
  Speaker 10: is in the story, and we think that that's what
• 11:49
  Speaker 10: drives that's what firms up prices and eventually drives them
• 11:52
  Speaker 10: higher as we move later in the year.
• 11:53
  Speaker 1: And now that the contra cost to this is Bloomberg intelligence.
• 11:57
  Speaker 1: Mike mcgloan are commodity strategist. He says, if Miami Mikey
• 12:01
  Speaker 1: says it goes to fifty before it goes to one hundred,
• 12:04
  Speaker 1: it's just that's the and his thing is and I
• 12:07
  Speaker 1: actually I won't speak for it, but anyway, so and
• 12:09
  Speaker 1: I guess the bearish call is just demand that the
• 12:11
  Speaker 1: demand curve is outweighing the supply curve. Here is at
• 12:14
  Speaker 1: a concern of you that demand out there, whether it's
• 12:17
  Speaker 1: Russian up being as strong as we thought, whether it's
• 12:19
  Speaker 1: being the continued tensions in Ukraine or whatever, maybe a
• 12:22
  Speaker 1: recession in the US. How do you think about the
• 12:24
  Speaker 1: demand side of the of the energy space.
• 12:27
  Speaker 10: Demand softening continues to soften because we do have a
• 12:30
  Speaker 10: bearish view on the economy. That's what's likely going to
• 12:33
  Speaker 10: happen when the FED takes the juice bowl away. So
• 12:36
  Speaker 10: we think that that's going to continue. But it's a
• 12:38
  Speaker 10: supply side story, so we'll think that the supply side
• 12:41
  Speaker 10: is going to cause an imbalance sends oil prices higher. Now,
• 12:44
  Speaker 10: if we're talking two to three months out, he may
• 12:46
  Speaker 10: be right, we may be right. But if we're talking
• 12:48
  Speaker 10: six twelve months out, we think that we're right.
• 12:50
  Speaker 3: So we talked about positioning specifically in the commodity space,
• 12:54
  Speaker 3: what about more broadly.
• 12:56
  Speaker 10: Our view, broadly speaking, is that investors should have an
• 13:00
  Speaker 10: allocation of ten to fifteen percent to assets with scarcity.
• 13:05
  Speaker 10: We're talking about commodities, we're talking about natural resource equities,
• 13:09
  Speaker 10: we're talking about gold bullying gold equities. These are the
• 13:12
  Speaker 10: assets that have historically performed the best during periods of
• 13:16
  Speaker 10: high inflation. Now quick preview one r view on inflation
• 13:21
  Speaker 10: This time is not different, meaning inflation doesn't happen often,
• 13:24
  Speaker 10: but when it does happen, it sticks around for an
• 13:27
  Speaker 10: extended period of time. We think that that's what happens.
• 13:30
  Speaker 10: CPI again being pulled back because of energy prices. We
• 13:33
  Speaker 10: think that reverses with periods of inflation, pockets of inflation,
• 13:38
  Speaker 10: disinflationary pockets, pockets of inflation. It comes in waves. We
• 13:42
  Speaker 10: are right now in a disinflationary wave. We've said it
• 13:45
  Speaker 10: for a long time. Once you get into one of
• 13:47
  Speaker 10: these disinflationary waves, everybody's going to come out of the
• 13:49
  Speaker 10: closet again and say, listen, we knew that inflation wasn't
• 13:52
  Speaker 10: gonna happen. It was only temporary. That crowd's gonna come
• 13:54
  Speaker 10: back out. They're going to be really, really loud. We
• 13:56
  Speaker 10: think that they get tricked again. Inflation continues, and we
• 14:00
  Speaker 10: end up with an average level of inflation significantly above
• 14:03
  Speaker 10: two percent. During these regimes, you want to own assets
• 14:06
  Speaker 10: with scarcity. I look at the S and P five
• 14:08
  Speaker 10: hundred right now, I get very nervous. I see a
• 14:12
  Speaker 10: rich index. I see an imbalance index. I see an
• 14:15
  Speaker 10: index that is dominated by the five biggest technology companies
• 14:19
  Speaker 10: that have negative earning yield relative to short term treasuries.
• 14:23
  Speaker 10: Then I look over at energy stocks. I see positive
• 14:26
  Speaker 10: earning yields. I look over at diversified minors. I see
• 14:31
  Speaker 10: positive earning yields. I sit there, I scratch my head
• 14:34
  Speaker 10: and say, how can you be comfortable with the s
• 14:36
  Speaker 10: and P five hundred when you see such attractive opportunities,
• 14:39
  Speaker 10: specifically with an energy. Most attractive segment of the market right.
• 14:42
  Speaker 5: Now in our opinion sugar.
• 14:44
  Speaker 7: I like sugar.
• 14:45
  Speaker 10: We've been bullish sugar for a long time.
• 14:48
  Speaker 7: Now, how do you what's what's the call on sugar?
• 14:50
  Speaker 10: So we've been bullish on it, We've taken profits on it,
• 14:54
  Speaker 10: We're likely going to continue to do so. That's a
• 14:56
  Speaker 10: supplied demand imbalanced story. We pick that up BA of
• 15:00
  Speaker 10: all of our technicals. We're still bullsh on it. We
• 15:03
  Speaker 10: maintain our Bush position on it. It's just a situation
• 15:07
  Speaker 10: when you look at the commodity complex and you look
• 15:10
  Speaker 10: at energy, and we see probably better opportunities there going
• 15:13
  Speaker 10: forward than with sugar. But we've done well with the.
• 15:16
  Speaker 7: Sugar of seventeen percent year to date? Is it?
• 15:20
  Speaker 1: So if you invest in sugar, you just think the
• 15:22
  Speaker 1: demands gonna higher than the supply, right? I mean it's
• 15:24
  Speaker 1: just a commodity or is that kind of how you
• 15:26
  Speaker 1: go back?
• 15:27
  Speaker 10: That's that's the case for all commodities.
• 15:28
  Speaker 7: Yeah, that's right.
• 15:29
  Speaker 1: So you just think that demand is higher than a supply.
• 15:31
  Speaker 1: So it has it been a supply issue that you
• 15:33
  Speaker 1: guys got right or was it the demand side?
• 15:36
  Speaker 10: It has been a supply issue that we got right.
• 15:38
  Speaker 10: Why do we get it right though? We got it
• 15:41
  Speaker 10: right because we read the tee lea's from the technicals
• 15:43
  Speaker 10: of the market. So again, what are our three pillars
• 15:47
  Speaker 10: of investing. We look at the structure of the future's curve,
• 15:51
  Speaker 10: We look at the price of it. It had an
• 15:53
  Speaker 10: attractive return profile and that's why we were biased towards it. Now,
• 15:58
  Speaker 10: why was all that happening because of the weather situations?
• 16:02
  Speaker 10: Because of what happened on the underlying supply side of sugar,
• 16:05
  Speaker 10: and that was the catalyst.
• 16:06
  Speaker 7: Where do you grow? Where's sugar grown? Where do we
• 16:08
  Speaker 7: get sugar sugars?
• 16:11
  Speaker 10: India's big produce explorer, sugars sugars across the board?
• 16:14
  Speaker 1: Yeah, okay, I don't know if it was like some
• 16:15
  Speaker 1: part of the world that was having a drought or
• 16:17
  Speaker 1: this or that.
• 16:18
  Speaker 10: Yeah, so we read that, We read the tea leaves
• 16:22
  Speaker 10: from the technicals. The technicals are driven from the supplied
• 16:25
  Speaker 10: demanded balances. But we are not fundamental analysts. What we're
• 16:29
  Speaker 10: doing is we're looking at the structure of the curve
• 16:32
  Speaker 10: supply demand in balance.
• 16:34
  Speaker 3: What about infrastructure, because I know that's another big part
• 16:37
  Speaker 3: when you're looking at the allocation within your ETF.
• 16:41
  Speaker 10: Infrastructure is really cool in the sense of if you
• 16:45
  Speaker 10: are a bearish on the economy and you want to
• 16:48
  Speaker 10: protect profit margins, think of companies that have effectively you
• 16:52
  Speaker 10: can almost think about it as contract pricing. Think of
• 16:55
  Speaker 10: toll ros, airports, helports. These are businesses that are really
• 17:00
  Speaker 10: insulated from inflation, so they can maintain profit margins and
• 17:04
  Speaker 10: they are very defensive if we roll into a recession,
• 17:07
  Speaker 10: which unfortunately is likely to happen given where we are
• 17:10
  Speaker 10: right So when we think about the portfolio right now,
• 17:14
  Speaker 10: we're invested in infrastructure through our inflation allocation. ETF ticker
• 17:17
  Speaker 10: racks are a AX, it's around a sixteen percent allocation.
• 17:22
  Speaker 10: If the economy has a crash landing, obviously commodities are
• 17:25
  Speaker 10: going to be vulnerable there, and we look at the
• 17:27
  Speaker 10: portfolio and say what should do well. Infrastructure should do
• 17:30
  Speaker 10: very well in that environment. That's why it's there. It's
• 17:32
  Speaker 10: there's diverse fire, it's there to maintain profit margins. If
• 17:36
  Speaker 10: inflation continues, which we expect.
• 17:38
  Speaker 7: Man, I learned a lot today, Sugar, Look, get this
• 17:42
  Speaker 7: guy back.
• 17:42
  Speaker 1: David Schessler, portfolio manager and head of Quantitative Investment Solutions
• 17:46
  Speaker 1: at van K doing commodities. Lots of symbols out there
• 17:49
  Speaker 1: to follow some of those now, are those, David, just
• 17:51
  Speaker 1: real quick? Are those funds or those ETFs? Etf ETFs? Okay,
• 17:54
  Speaker 1: god forbid. Anybody does is a nu mutri fed fun
• 17:57
  Speaker 1: business anymore.
• 17:57
  Speaker 7: It's all ETFs.
• 17:58
  Speaker 11: It definitely is.
• 17:59
  Speaker 7: That's what the kids auld. I get it. I get it.
• 18:01
  Speaker 1: The days of me going up to Boston seeing all
• 18:03
  Speaker 1: the big mutual funds. I think that's a thing in
• 18:05
  Speaker 1: the past. David Schasler, thanks so much for joining us.
• 18:08
  Speaker 9: You're listening to the tape Ken's Are Live program Bloomberg
• 18:11
  Speaker 9: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 18:15
  Speaker 9: tune in app, Bloomberg dot Com, and the Bloomberg Business App.
• 18:18
  Speaker 9: You can also listen live on Amazon Alexa from our
• 18:21
  Speaker 9: flagship New York station, Just say Alexa play Bloomberg eleven thirty.
• 18:27
  Speaker 3: Jess met Paul Sweety here in the Bloomberg Interactive Brokers
• 18:30
  Speaker 3: Studio and Paul as you know, we've been discussing so
• 18:32
  Speaker 3: much about those big banks coming up reporting earnings, but
• 18:35
  Speaker 3: also when it comes to the fed's Vice Chair for Supervision,
• 18:38
  Speaker 3: Michael Barr is proposing those big bank regulation changes. What
• 18:42
  Speaker 3: would happen with banks with at least one hundred billion
• 18:44
  Speaker 3: dollars in assets could face higher capital limits? So who
• 18:47
  Speaker 3: better to speak with us about both of those two topics?
• 18:50
  Speaker 3: And Alison Williams, senior Global Banks and Asset manager analysts
• 18:55
  Speaker 3: with Bloomberg Intelligence, who's here in studio with us? So
• 18:58
  Speaker 3: I'll start off Allison. When it comes to these changes
• 19:00
  Speaker 3: that Michael Barr is proposing, can you walk us through
• 19:03
  Speaker 3: what that really means in how the banking industry is
• 19:06
  Speaker 3: reacting to this.
• 19:08
  Speaker 12: So we're still waiting for the finalization, but I think
• 19:11
  Speaker 12: the surprising things were one that he went down to
• 19:14
  Speaker 12: the hundred billion market cap I'm sorry, not market cap
• 19:19
  Speaker 12: by asset size. And then also you know he was
• 19:23
  Speaker 12: saying basically adding, you know, it would add like two
• 19:26
  Speaker 12: percentage points two dollars for every one hundred billion in
• 19:30
  Speaker 12: risk weighted assets, So.
• 19:33
  Speaker 11: Two dollars for everye hundred dollars.
• 19:34
  Speaker 12: I can't get away from saying the wrong thing here.
• 19:36
  Speaker 12: But anyway, the bottom line is, can we just get
• 19:39
  Speaker 12: the final rules. The Bank's been waiting for these for
• 19:41
  Speaker 12: a long time, and so I think that's why maybe
• 19:45
  Speaker 12: you didn't see much movement in the stocks yesterday, because
• 19:48
  Speaker 12: you know, Powell had already hinted at sort of a
• 19:50
  Speaker 12: twenty percent increase in capital required. Now we have this
• 19:53
  Speaker 12: other hint, so we're still waiting to get the proposal.
• 19:57
  Speaker 12: The other thing that we got, which is sort of
• 19:58
  Speaker 12: old news now, but we did get the stress tests.
• 20:00
  Speaker 12: The banks all did well except for a city, and
• 20:04
  Speaker 12: so that signal their requirements are coming down. So that's
• 20:07
  Speaker 12: a key positive of banks are staying conservative, partly because
• 20:11
  Speaker 12: of the Basil three endgame, and then you know, partly
• 20:14
  Speaker 12: because of the economy.
• 20:15
  Speaker 1: So why are some of these new, I guess rules
• 20:19
  Speaker 1: for the banks is this response to the some of
• 20:22
  Speaker 1: those smaller banks stressed a few months ago.
• 20:25
  Speaker 11: So I think.
• 20:25
  Speaker 12: Maybe the the you know, dipping down to the applying
• 20:29
  Speaker 12: the rules to a broader set of banks.
• 20:31
  Speaker 11: I think it definitely comes to.
• 20:33
  Speaker 1: That, Okay, but it seems to me there's already a
• 20:36
  Speaker 1: lot of rules for the banks. Maybe I'm just paraphrasing
• 20:38
  Speaker 1: Jamie Dimond here, but they just weren't enforced efficiently at
• 20:41
  Speaker 1: all for some of these banks. It wasn't like there's
• 20:44
  Speaker 1: not enough rules there, so that the existing rules were
• 20:46
  Speaker 1: not efficiently enforced probably well.
• 20:48
  Speaker 12: And and part of it is right that you know,
• 20:51
  Speaker 12: the rules are always you know, solving the last crisis.
• 20:55
  Speaker 12: So one thing that we we know that happened since
• 20:57
  Speaker 12: the global financial crisis is just the fact that, you know,
• 21:02
  Speaker 12: the mortgage market has been tight, and so like that's
• 21:04
  Speaker 12: the one area we don't even worry about this time
• 21:06
  Speaker 12: around the residential mortgage.
• 21:08
  Speaker 11: We excuse me, do you worry about commercial mortgage? But
• 21:10
  Speaker 11: it hasn't been a while since we've had to worry
• 21:13
  Speaker 11: about that.
• 21:14
  Speaker 3: So Michael Barr basically saying that America's biggest banks are
• 21:17
  Speaker 3: going to need more capital, But what about when it
• 21:19
  Speaker 3: comes to these regional banks. To Paul's point, that obviously
• 21:22
  Speaker 3: we're under those stresses during the spring, and what does
• 21:24
  Speaker 3: that mean moving forward for some of these mid size
• 21:26
  Speaker 3: or smaller banks.
• 21:27
  Speaker 12: And that's why to Paul's point, I think that's why
• 21:30
  Speaker 12: we did get some regulations reaching out to these you know,
• 21:34
  Speaker 12: super regional.
• 21:35
  Speaker 11: And big regional banks. Right, So it's not the smaller community.
• 21:38
  Speaker 12: Banks, but some of those regulations in recent years under
• 21:44
  Speaker 12: quarrels had actually been rolled back, and so I think
• 21:47
  Speaker 12: sort of bringing them back into the phrase is part
• 21:50
  Speaker 12: of the issue.
• 21:50
  Speaker 11: But I would.
• 21:51
  Speaker 12: Say, you know, the key issue that sort of brought
• 21:55
  Speaker 12: down those three banks, it was asset liability management. But
• 21:59
  Speaker 12: it was a odd issue that happened across the banking
• 22:01
  Speaker 12: sector where you had this huge inflow of deposits that
• 22:05
  Speaker 12: was invested in securities, then rates went the other way, right,
• 22:08
  Speaker 12: That's what caused it was the catalyst for these these
• 22:12
  Speaker 12: three banks that, as I said, the asset valuability management
• 22:17
  Speaker 12: was part of it, right, because what you saw for
• 22:20
  Speaker 12: banks that managed it well was to say, look, we
• 22:23
  Speaker 12: know these aren't these deposits on permanent We're not going
• 22:25
  Speaker 12: to tie them up in something that's going to potentially
• 22:28
  Speaker 12: make us a liquid all right.
• 22:29
  Speaker 1: So we're gonna have some big banks reporting on Friday,
• 22:33
  Speaker 1: which means we'll probably see you again, JP, Morgan, Wells,
• 22:37
  Speaker 1: Farga and City Group.
• 22:39
  Speaker 7: So three of the biggies. What are we looking for here?
• 22:43
  Speaker 1: I can't imagine the capital markets business has been anything
• 22:46
  Speaker 1: to write home about.
• 22:47
  Speaker 7: What are you really going to be looking at Uh.
• 22:50
  Speaker 12: It's not, and I think like there there's definitely a
• 22:52
  Speaker 12: dichotomy in terms of the trading and feasts.
• 22:55
  Speaker 11: So I guess, you.
• 22:56
  Speaker 12: Know, if you just look at it sort of a
• 22:57
  Speaker 12: one quarter of view, you'll see everything down. But trading
• 23:01
  Speaker 12: is really normalizing into a historically high level. So if
• 23:04
  Speaker 12: you look at a very long term chart, yes, trading
• 23:07
  Speaker 12: is coming down a bit, but we're normalizing in an
• 23:09
  Speaker 12: historically high level. Fees, on the other hand, are studying
• 23:13
  Speaker 12: in levels closer to pre pandemic, so very low levels.
• 23:17
  Speaker 12: So one of the big things we're going to see
• 23:19
  Speaker 12: this quarter, our higher expense is tied to severance and
• 23:22
  Speaker 12: we're going to see you know, banks finally, I think
• 23:26
  Speaker 12: coming to terms with the fact that, okay, this huge
• 23:29
  Speaker 12: boom that we saw in twenty twenty one is not
• 23:33
  Speaker 12: likely to repeat anytime soon, and we are hearing banks,
• 23:37
  Speaker 12: you know, talk about some signs of life at the
• 23:39
  Speaker 12: end of the second quarter, some pickup in activity, but
• 23:42
  Speaker 12: you know, if you follow the money, the headcount cuts
• 23:45
  Speaker 12: and as I said, a lot of the severance charges.
• 23:48
  Speaker 11: I think that you know, banks are.
• 23:49
  Speaker 12: Sort of recognizing that, you know, we are going to
• 23:52
  Speaker 12: be studying at these lower levels.
• 23:54
  Speaker 3: What do you think that interest margins will tell us?
• 23:56
  Speaker 3: Obviously that's a key gauge when you're thinking about the
• 23:58
  Speaker 3: profitability indicator when it comes to a lot of these
• 24:01
  Speaker 3: big banks.
• 24:02
  Speaker 12: So I think, you know, my views is perhaps different
• 24:06
  Speaker 12: than some of the some of the other analysts that
• 24:08
  Speaker 12: you've heard out there.
• 24:08
  Speaker 11: Maybe it's just because of the banks.
• 24:11
  Speaker 12: That I'm looking at, But for banks like JP Morgan
• 24:14
  Speaker 12: and City Group that have big credit card portfolios, we
• 24:17
  Speaker 12: think that their margin could and their net interested income
• 24:20
  Speaker 12: actually could be a little bit more resilient versus the
• 24:25
  Speaker 12: other banks where commercial and industrial loans, so that's sort
• 24:29
  Speaker 12: of the bread and butter of.
• 24:30
  Speaker 11: The commercial banks.
• 24:31
  Speaker 12: Bank America is also one a relatively bigger player in
• 24:34
  Speaker 12: that market. Those loans are actually shrinking, coming in a
• 24:39
  Speaker 12: little bit softer than expected. Bank America talked about some
• 24:42
  Speaker 12: of their utilization rates, you know, things stab stabilizing. They
• 24:45
  Speaker 12: thought things were going to get a little bit better there,
• 24:47
  Speaker 12: but they're not. And so I think for those banks
• 24:51
  Speaker 12: you could get net income a little bit softer than expected.
• 24:56
  Speaker 12: But I would keep in mind that the net interest
• 24:58
  Speaker 12: income numbers, I mean, we are at a hugely robust level.
• 25:01
  Speaker 12: It's just that investors are looking at you know, stocks
• 25:06
  Speaker 12: are discounting mechanisms.
• 25:07
  Speaker 11: We look forward and you know.
• 25:09
  Speaker 12: The question is, you know, how far do we start
• 25:13
  Speaker 12: going down from here?
• 25:14
  Speaker 7: All right, so thirty seconds here? What do you expect
• 25:18
  Speaker 7: Jamie Diamond to say? That's too hard to predict.
• 25:22
  Speaker 12: You know what, I if I'm gonna guess he's going
• 25:25
  Speaker 12: to talk about the regulations and really, like when you
• 25:27
  Speaker 12: look at what's happening with these capital requirements, it's a
• 25:30
  Speaker 12: it's a little bit crazy.
• 25:31
  Speaker 11: I mean, this is a key metric. It's something that
• 25:33
  Speaker 11: we all agree on is important for the banks.
• 25:35
  Speaker 9: Yep.
• 25:35
  Speaker 12: Last year huge increases, this year, huge decreases.
• 25:39
  Speaker 11: How do you manage your.
• 25:39
  Speaker 12: Business one year to year one of the most important
• 25:42
  Speaker 12: metrics continues to change and then, as you said, all
• 25:46
  Speaker 12: the regulations, all the different mix.
• 25:48
  Speaker 7: Yep, it's a lot, I know. I mean, Jamie Diamond's
• 25:51
  Speaker 7: called that.
• 25:52
  Speaker 1: JP Morgan calls a call I always listen into because
• 25:54
  Speaker 1: you just never know what he's going to say. He
• 25:56
  Speaker 1: feels free to say pretty much anything he does, and
• 25:58
  Speaker 1: his filter is very and it makes for good listening.
• 26:02
  Speaker 1: Allison Williams, Senior Global banks analyts for Bloomberg Intelligence. Joining
• 26:05
  Speaker 1: us here in our Bloomberg Interactive Broker Studio.
• 26:08
  Speaker 9: You're listening to the team Ken's are Live program Bloomberg
• 26:12
  Speaker 9: Markets weekdays at ten am Eastern on Bloomberg dot Com,
• 26:15
  Speaker 9: the iHeartRadio app and the Bloomberg Business App, or listen
• 26:18
  Speaker 9: on demand wherever you get your podcasts.
• 26:22
  Speaker 7: Let's shift gears here.
• 26:23
  Speaker 1: Let's talk a little bit telecom, TMT, tech media, Telecom.
• 26:27
  Speaker 1: We'll bring in John Butler. He's a senior analyst at
• 26:29
  Speaker 1: Bloomberg Intelligence. Joining us life here in our Bloomberg Interactive
• 26:32
  Speaker 1: Broker Studio. John, You've been covering telecom for a long time.
• 26:34
  Speaker 1: I'd like to start with the wireless business. Where are
• 26:38
  Speaker 1: we today in terms of the players.
• 26:40
  Speaker 7: The market share and is this market growing at all?
• 26:44
  Speaker 13: Boy, it's getting awfully crowded in the wireless market these days.
• 26:47
  Speaker 8: You know.
• 26:48
  Speaker 13: The latest rumor is that Amazon may enter the market
• 26:52
  Speaker 13: through a deal with Dish.
• 26:53
  Speaker 5: We'll see how that plays out. But it's a.
• 26:57
  Speaker 13: Slow growth year this year, and I think COVID disrupted
• 27:01
  Speaker 13: a lot of industries and wireless has been no exception.
• 27:04
  Speaker 5: You know, we saw.
• 27:06
  Speaker 13: Very strong device growth during the outbreak. I think people
• 27:11
  Speaker 13: were buying a lot of phones for their kids that
• 27:13
  Speaker 13: they might otherwise not buy. They were connecting a lot
• 27:16
  Speaker 13: of devices, and so we're living through that hangover. You know,
• 27:21
  Speaker 13: the world's getting back to normal device growth and new
• 27:24
  Speaker 13: line growth is coming down. And now you've got the
• 27:27
  Speaker 13: added pressure on pricing coming from the cable operators like Dish,
• 27:32
  Speaker 13: like Comcast and Charter, and now the specter of Amazon
• 27:36
  Speaker 13: may be getting into the business.
• 27:38
  Speaker 3: I wanted to get your thoughts when it comes to
• 27:40
  Speaker 3: valuations in the TMT sectors. So I'm looking at some
• 27:42
  Speaker 3: Bloomberg Intelligence data when it comes to the forward earnings
• 27:46
  Speaker 3: for that and right now it's around twenty two times
• 27:49
  Speaker 3: forward earnings. But when you're excluding Microsoft, Apple, Google, Meta,
• 27:52
  Speaker 3: it's abound nineteen times. So what does that really tell us?
• 27:56
  Speaker 3: And are things still too pricey even if you're excluding
• 27:58
  Speaker 3: some of those big names.
• 28:00
  Speaker 13: So I need to tread carefully with some commentary on valuation.
• 28:05
  Speaker 13: But you know, it's no secret that the tech sector
• 28:08
  Speaker 13: in general has done very well in this environment. I
• 28:11
  Speaker 13: think people are responding to growth there. So you know
• 28:15
  Speaker 13: the tech names that I cover, Zoom is a good example,
• 28:18
  Speaker 13: ring Central Cloud, flare. A number of those names continue
• 28:22
  Speaker 13: to post double digit growth, even you know, during this
• 28:26
  Speaker 13: tough economic environment, and so I think that may account
• 28:31
  Speaker 13: for some of what you were referring to, the relatiatively
• 28:34
  Speaker 13: inflated multiple relative to the broader market.
• 28:39
  Speaker 1: So talk to us about the broadband business, John, because
• 28:41
  Speaker 1: that was such a growth business for the telecom companies,
• 28:45
  Speaker 1: the cable companies. Everybody needed more broadband, we doing downloading
• 28:50
  Speaker 1: video and all this kind of great stuff. Where are
• 28:52
  Speaker 1: we in terms of that market and how'shaking out competitively?
• 28:55
  Speaker 9: Well?
• 28:56
  Speaker 13: That I think, Paul is part of the double whammy
• 28:59
  Speaker 13: for the telcosen the cable operators in that that market
• 29:03
  Speaker 13: is maturing now and also becoming price competitive. I think
• 29:08
  Speaker 13: the good news there is that our appetite for content
• 29:13
  Speaker 13: and downloading more and more content, and as content gets
• 29:17
  Speaker 13: more bandwidth intensive, as we move up to HD streaming,
• 29:24
  Speaker 13: you know that people are trading up to higher priced plans.
• 29:28
  Speaker 13: But in terms of organic growth new line think of
• 29:32
  Speaker 13: it as new line growth that is really moderating here,
• 29:35
  Speaker 13: and so I would call that markets as mature as
• 29:39
  Speaker 13: wireless right now.
• 29:40
  Speaker 3: So if you take a look at what's happening with
• 29:43
  Speaker 3: American Tower. That's something that's interesting to me, and you
• 29:46
  Speaker 3: were talking about in a note recently about how overseas
• 29:49
  Speaker 3: expansion is offsetting the churn there. What do you see
• 29:52
  Speaker 3: when it comes to domestic growth picking up?
• 29:55
  Speaker 13: So, American Tower is one of big three, the big
• 29:59
  Speaker 13: three tower companies here in the US, American Tower in public.
• 30:04
  Speaker 11: I wonder who's I think.
• 30:09
  Speaker 7: A great business that it's.
• 30:11
  Speaker 5: A terrific business.
• 30:12
  Speaker 13: It's actually a real estate business, and they make their
• 30:15
  Speaker 13: money on leasing that vertical real estate on the towers
• 30:19
  Speaker 13: to telecom companies that need to set up antennas to
• 30:23
  Speaker 13: give US wireless service. American Tower and SBA, two of
• 30:29
  Speaker 13: the three big three, are seeking a lot of growth
• 30:32
  Speaker 13: overseas now that the US is largely a built out market.
• 30:37
  Speaker 1: So I mean, I guess American Tower and Crown Castle
• 30:39
  Speaker 1: they've always had some or not always, but I mean
• 30:42
  Speaker 1: certainly over the last ten or fifteen years, they've always
• 30:43
  Speaker 1: had international growth. Do they go to developing markets like
• 30:47
  Speaker 1: in India, for example, or do they stay in the
• 30:50
  Speaker 1: more mature markets?
• 30:52
  Speaker 5: So Crown Castle does not.
• 30:54
  Speaker 13: They have said they're really going to stick with the
• 30:56
  Speaker 13: US and they're rolling out of business.
• 30:58
  Speaker 5: Called small cells.
• 31:00
  Speaker 13: So these are think of many cell sites that you
• 31:03
  Speaker 13: can run through neighborhoods to provide fixed wireless broadband for example,
• 31:09
  Speaker 13: or higher bandwidth in transit hubs or stadiums. American Tower
• 31:13
  Speaker 13: is the one that has ventured overseas and their biggest
• 31:16
  Speaker 13: market is India, and they've lived some of the risks
• 31:20
  Speaker 13: that you get when you go into these emerging markets,
• 31:23
  Speaker 13: which is political risk. They have got hit with an owner,
• 31:28
  Speaker 13: the carriers got hit with an owner as spectrum tax,
• 31:31
  Speaker 13: and suddenly they can't pay their tower leasing costs.
• 31:34
  Speaker 5: So it's been very tough on them in a way.
• 31:37
  Speaker 1: All right, thirty seconds, what happens to our good friend
• 31:41
  Speaker 1: at Dish, Charlie Charlie Ergan.
• 31:43
  Speaker 13: Wow, this one could go either way. Honestly, Dish is
• 31:47
  Speaker 13: living through a really tough capital crunch right now. So
• 31:51
  Speaker 13: his immediate hurdle and his sole focus is on raising
• 31:55
  Speaker 13: more money. I think if he can get it, they
• 31:58
  Speaker 13: can go for a run in wireless. I think they
• 32:02
  Speaker 13: can carve out a niche there. By US definition, they
• 32:08
  Speaker 13: reach seventy percent of the US population with their own
• 32:11
  Speaker 13: five G network. Now they really got to fill that out,
• 32:15
  Speaker 13: though that number is very deceiving and that's where he
• 32:18
  Speaker 13: needs the money.
• 32:20
  Speaker 1: I never thought I'd see Charlie back into a corner
• 32:22
  Speaker 1: like this. He needs so successful for so long, he
• 32:25
  Speaker 1: misread this spectrum play John Butler, Senior equity anals covering
• 32:29
  Speaker 1: all the telecom stuff for Bloomberg Intelligence, talking about the wireless,
• 32:33
  Speaker 1: the wireline, the towers, which is just an awesome, awesome
• 32:37
  Speaker 1: business American Tower, Crown Castle, SBA.
• 32:39
  Speaker 9: You're listening to the tape. Catch are live program Bloomberg
• 32:42
  Speaker 9: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 32:46
  Speaker 9: tune in app, Bloomberg dot Com, and the Bloomberg Business App.
• 32:49
  Speaker 9: You can also listen live on Amazon Alexa from our
• 32:52
  Speaker 9: flagship New York station. Just say Alexa play Bloomberg eleven thirty.
• 32:59
  Speaker 3: What's happening with the dollars? So the Bloomberg Dollar Spot
• 33:02
  Speaker 3: Index that's ticker symbol bbd x Y that's actually down
• 33:07
  Speaker 3: almost ten percent from its peak at the end of
• 33:10
  Speaker 3: last September. So obviously the dollar was on a tear
• 33:13
  Speaker 3: last year because of that correlation with the Fed aggressively
• 33:16
  Speaker 3: hiking interest rates, but we've seen it paired back on
• 33:19
  Speaker 3: those indications that perhaps the Fed is close to being
• 33:22
  Speaker 3: done here, So I want to get straight to our
• 33:24
  Speaker 3: next guest, who's going to break down and discuss with
• 33:26
  Speaker 3: us what's happening when it comes to the four X
• 33:28
  Speaker 3: space and the dollar. Jane Foley, Managing director and head
• 33:32
  Speaker 3: of ex FX Strategy at Rabobank, joining us here on Zoom. So, Jane,
• 33:37
  Speaker 3: thank you so much for joining us, and please tell
• 33:39
  Speaker 3: us your thoughts here when it comes to the four
• 33:41
  Speaker 3: x market and what you're seeing when it comes to
• 33:43
  Speaker 3: the dollar trading right now.
• 33:46
  Speaker 8: Well, with respect to the dollar, there's one word I
• 33:48
  Speaker 8: think that's really entered into the framework here, and that
• 33:50
  Speaker 8: is disinflation, so that the market is beginning to think, well,
• 33:54
  Speaker 8: you know, look at look at the CPI forcast for tomorrow.
• 33:57
  Speaker 8: That's obviously the key event of the week, and the
• 33:58
  Speaker 8: market expectation here is for a headline number of three
• 34:02
  Speaker 8: point one percent year on year, and that will be
• 34:04
  Speaker 8: down from four percent in the last round and significantly
• 34:08
  Speaker 8: below where we've had that peak. And not only that,
• 34:10
  Speaker 8: but there's been a variety of economic data just in
• 34:13
  Speaker 8: the last few days, which again feeds this impression that,
• 34:16
  Speaker 8: you know, are we finally seeing disinflation in the US.
• 34:19
  Speaker 8: Of course, we've had the New York Fed Survey House
• 34:23
  Speaker 8: inflation forecasts down to three point eight last month and
• 34:26
  Speaker 8: lowest is more than two years. And we've had, of course,
• 34:28
  Speaker 8: within that NFIB data which improved, but we have the
• 34:33
  Speaker 8: share of business increasing prices. That share has declined. This
• 34:38
  Speaker 8: is now twenty nine percent of businesses from thirty two percent.
• 34:41
  Speaker 8: So there's various different indicators here which has got the
• 34:44
  Speaker 8: market excited. As you say that, yeah, you know what,
• 34:47
  Speaker 8: they're going to hike interest rates in July. The Fed is,
• 34:51
  Speaker 8: but perhaps that's then done. Whereas if you look at
• 34:54
  Speaker 8: some other central banks, many of those G ten central banks,
• 34:58
  Speaker 8: well they've got some more easing to come. The UCB,
• 35:01
  Speaker 8: for instance, that the market still thinks, I think might
• 35:03
  Speaker 8: go in September as well as July. Canada for instance,
• 35:07
  Speaker 8: expected to go again, RBA could go again, Norway, Sweden,
• 35:10
  Speaker 8: and of course the UK. Perhaps now the market's expecting
• 35:14
  Speaker 8: that one to have to go higher for even longer
• 35:16
  Speaker 8: than most of the most of its peers.
• 35:18
  Speaker 1: So is it like, just take the UK for example, Jane,
• 35:23
  Speaker 1: is the expectation that inflation there is going to be
• 35:25
  Speaker 1: harder to fight than perhaps in the US.
• 35:28
  Speaker 8: Yes, absolutely. You know, for instance, we were talking about
• 35:31
  Speaker 8: that the market consensus for the CPI printing in the
• 35:34
  Speaker 8: US been three point one percent percent, but for the UK, disappointingly,
• 35:40
  Speaker 8: for the last couple of months, the UK CPI inflation
• 35:43
  Speaker 8: rates has been coming in higher than expected and it's
• 35:46
  Speaker 8: remained now eight point seven percent. So that's a lot
• 35:49
  Speaker 8: higher on almost any sort of metric than in the
• 35:52
  Speaker 8: US and also in the Eurozone. For instance, this morning
• 35:55
  Speaker 8: in the UK we had the release of the latest
• 35:57
  Speaker 8: labor Port report that the way component again not only
• 36:01
  Speaker 8: was it revised up last month, but it was stronger
• 36:03
  Speaker 8: than expected this month too. So these indications of second
• 36:07
  Speaker 8: order price effects still very much there, and a lot
• 36:11
  Speaker 8: of people in the fifties have left the labor market.
• 36:13
  Speaker 8: We've got Brexit, of course, that has a labor market effect.
• 36:15
  Speaker 8: And there's lots of interesting data with respect to housing.
• 36:19
  Speaker 8: So for instance, in the UK, unlike the US, people
• 36:24
  Speaker 8: tend to fix their mortgages for maybe two years or
• 36:27
  Speaker 8: five years. That's interesting because that means that you know,
• 36:31
  Speaker 8: people will be faced with higher interest rates if they're
• 36:36
  Speaker 8: package unwined sort of now. But perhaps even more interesting
• 36:40
  Speaker 8: than that is that because of the aging demographics because
• 36:43
  Speaker 8: of the baby boomers, so many more households own their
• 36:48
  Speaker 8: houses outright. These guys are probably net savers and they're
• 36:51
  Speaker 8: benefiting from the hiking interest rates, meaning that the impact
• 36:56
  Speaker 8: on those holding mortgages is less. So again the Bank
• 37:00
  Speaker 8: of England probably has to work harder to really cool demand.
• 37:04
  Speaker 3: So what's your call on how to trade the dollar
• 37:07
  Speaker 3: depending on how we see CPI shake out tomorrow.
• 37:11
  Speaker 8: Well, of course this is the short term trade. If
• 37:14
  Speaker 8: CPI really does feed this disinflation review, then the dollar
• 37:18
  Speaker 8: can go down and we've got your dollar, you know,
• 37:20
  Speaker 8: probably going high above one ten again and perhaps getting
• 37:23
  Speaker 8: a bit more comfortable at that level for now. But
• 37:26
  Speaker 8: of course there's also the longer term view, and that's
• 37:28
  Speaker 8: a lot more complicated because there is the risk that
• 37:31
  Speaker 8: the US economy will be slowing it could see procession.
• 37:35
  Speaker 8: Not only that, of course, but China is finding it's
• 37:39
  Speaker 8: recovery pretty difficult. So yes, we've had some better news
• 37:42
  Speaker 8: today with respect to potential stimulus, but it's still finding
• 37:45
  Speaker 8: it rough. In fact, most economies that are dominated and
• 37:47
  Speaker 8: manufacturing are finding the going pretty tough. So we've got
• 37:50
  Speaker 8: this situation where whereby we might have China slowing, the
• 37:54
  Speaker 8: U is slowing, We've got pretty you know much stagnatory
• 37:57
  Speaker 8: growth in the Eurozone. Now that sort of scenario isn't
• 38:02
  Speaker 8: great for moving into risky assets. That sort of environment
• 38:05
  Speaker 8: is probably one which could be dollars supportive. So whilst
• 38:09
  Speaker 8: we've got this short term dollar trade, maybe the dollar
• 38:11
  Speaker 8: weekening if that, if that CPI comes in softer, that
• 38:15
  Speaker 8: doesn't mean to say that the dollar is going to
• 38:17
  Speaker 8: be selling off in the three to six month horizon,
• 38:19
  Speaker 8: because a slower global economy will probably give the dollar
• 38:23
  Speaker 8: some support. Yeah, Jane.
• 38:24
  Speaker 1: One of the questions I always have when I get
• 38:26
  Speaker 1: smart currency people like you on is give me the
• 38:29
  Speaker 1: case for a bare case for the US dollar.
• 38:33
  Speaker 7: I can't come up with one.
• 38:34
  Speaker 1: Is there a bare case a long term bear case
• 38:37
  Speaker 1: for the US dollar going forward?
• 38:39
  Speaker 8: Well, you know, I think that's a very perceptive question
• 38:42
  Speaker 8: because generally speaking, if the dollar is going to really weaken,
• 38:46
  Speaker 8: you've got to have risk appetite, global risk appetite pretty strong.
• 38:49
  Speaker 8: So with a dollar to be really very much on
• 38:52
  Speaker 8: the back foot, it's because everybody and their dog is
• 38:54
  Speaker 8: piling into emerging markets and on high risk acids, and
• 38:57
  Speaker 8: you know that that will be away from the U S,
• 39:00
  Speaker 8: which is considered to be you know more more of
• 39:02
  Speaker 8: a safe haven. So that sort of scenario is not
• 39:05
  Speaker 8: on the cards. And that is why I say that
• 39:07
  Speaker 8: I don't think the dollar is going to be selling
• 39:09
  Speaker 8: off heavily over the three to six month horizon. If
• 39:12
  Speaker 8: we've got this risk of a softer global economy, you
• 39:16
  Speaker 8: really do need a really bullish case for global growth,
• 39:19
  Speaker 8: in a really bullish case for emerging markets for the
• 39:22
  Speaker 8: dollar to be really soft. And right now, you know,
• 39:25
  Speaker 8: many may emerging markets, you know, they're week because China's week.
• 39:29
  Speaker 8: You know a lot of them are selling materials, raw
• 39:32
  Speaker 8: materials into China. A lot of them, you know, finding
• 39:35
  Speaker 8: it tough because China isn't manufacturing, you know, processing those
• 39:39
  Speaker 8: raw materials. So right now, I don't think we do
• 39:42
  Speaker 8: have that really bullish appetite for risk appetite which means
• 39:46
  Speaker 8: that the dollar is going to find some support.
• 39:48
  Speaker 3: And Jane, to Paul's point, I was putting out a
• 39:51
  Speaker 3: story that crossed the terminal in recent days looking at
• 39:53
  Speaker 3: how hedgephones have actually swung to an overall beerish dollar
• 39:56
  Speaker 3: bed for the first time since March. And that's basically
• 39:59
  Speaker 3: tie to the wagers of the FED finally potentially approaching
• 40:03
  Speaker 3: the end of its rate hiking cycle. What do you
• 40:05
  Speaker 3: think that tells us when it comes to hedge fund positioning.
• 40:09
  Speaker 8: Well, you know that the hedge funds guys, you know,
• 40:11
  Speaker 8: they can be quick in and they can be quick out.
• 40:13
  Speaker 8: And I think certainly if we are going to see
• 40:15
  Speaker 8: this disinflationary view for the US, we could see you know,
• 40:19
  Speaker 8: the dollar weakening in the shorter term. Again, you know,
• 40:22
  Speaker 8: I think we would have ne're a dollar but getting
• 40:24
  Speaker 8: more comfortable, get in its feet under the table at
• 40:26
  Speaker 8: you know, one ten, and you're a dollar. If the
• 40:28
  Speaker 8: CPI number comes in at three point one where the
• 40:30
  Speaker 8: market consists, is it, or even if it comes in
• 40:32
  Speaker 8: you know, slightly lower, but that is you know, maybe
• 40:35
  Speaker 8: a one to three month few taking us up to September.
• 40:38
  Speaker 8: But once we get beyond September, assuming that's where we
• 40:42
  Speaker 8: definitely will have had its peak for not just the FED,
• 40:44
  Speaker 8: but also for the ECB, that's probably when we're going
• 40:47
  Speaker 8: to be feeling the cracks in global growth a lot more.
• 40:51
  Speaker 8: And that's I think when the dollar will begin to
• 40:53
  Speaker 8: find that support.
• 40:55
  Speaker 1: Uh Jane bout thirty seconds left what's the popular trade
• 40:58
  Speaker 1: with the kids these days in the currency market.
• 41:01
  Speaker 8: You know, I think right now it is probably euro dollar.
• 41:04
  Speaker 8: It is looking, it has been looking as if it
• 41:07
  Speaker 8: wanted to break higher. I think that USCPI data is
• 41:10
  Speaker 8: going to be the focus. A few people obviously get
• 41:12
  Speaker 8: in on the on the Norwegian code in the trade
• 41:14
  Speaker 8: today that they are going to be hiking more, Canada
• 41:16
  Speaker 8: is going to be hiking more, Sweden is going to
• 41:18
  Speaker 8: be high king more. But I think really it's it's
• 41:20
  Speaker 8: very much the focus is on euro dollar.
• 41:23
  Speaker 3: All right. Jane Foley, Managing director and head of ETHX
• 41:26
  Speaker 3: Strategy at Rabobank, who is talking to us all things
• 41:30
  Speaker 3: dollar four X, so great to get your insight on
• 41:33
  Speaker 3: all of this. Thank you so much for joining us.
• 41:34
  Speaker 3: But talking again, Paul, when we're looking at where the
• 41:37
  Speaker 3: Bloomberg Spot indexes for the dollar, I mean, down close
• 41:40
  Speaker 3: to about ten percent from that peak in September, so
• 41:42
  Speaker 3: obviously all eyes on what happens with not just CPI
• 41:46
  Speaker 3: but the Fed decision later this month.
• 41:47
  Speaker 7: As exactly, and that ten percent pullback again.
• 41:50
  Speaker 1: I still feel like I don't have a big long
• 41:53
  Speaker 1: term bear case for the dollar, right It kind of
• 41:55
  Speaker 1: feels like, oh, jeep dollars off me back running and
• 41:57
  Speaker 1: buy some dollars.
• 41:58
  Speaker 3: And seeing what happens with He cost me six or seven.
• 42:00
  Speaker 1: Pounds to get a pint in London these days, that's
• 42:02
  Speaker 1: a little high.
• 42:03
  Speaker 9: You're listening to the tape Canser Live program Bloomberg Markets
• 42:07
  Speaker 9: weekdays at ten am Eastern on Bloomberg Radio, the tune
• 42:10
  Speaker 9: in app, Bloomberg dot Com, and the Bloomberg Business App.
• 42:13
  Speaker 9: You can also listen live on Amazon Alexa from our
• 42:16
  Speaker 9: flagship New York station. Just say Alexa play Bloomberg eleven thirty.
• 42:22
  Speaker 1: Right down to this next story, the PGA and live.
• 42:25
  Speaker 1: They are merging huge, huge news in the world of golf,
• 42:29
  Speaker 1: in the world of sport, quite frankly, and it really
• 42:32
  Speaker 1: was unexpected and really rocked the golf war, golf world,
• 42:36
  Speaker 1: and of course it got the a tension of some
• 42:40
  Speaker 1: members of Congress, and that's why they are down in
• 42:42
  Speaker 1: DC right now doing giving some testimony. Kaylee Liones, Bloomberg
• 42:45
  Speaker 1: Television host joints us here from Washington, DC. Katie, what
• 42:48
  Speaker 1: are we learning so far during this testimony by some
• 42:51
  Speaker 1: of these PGA officials in Washington.
• 42:54
  Speaker 14: Well, as you say, Paul they're PGA officials, yes, the
• 42:57
  Speaker 14: COO as well as a member of the board, mister Dunn.
• 43:01
  Speaker 14: We're testifying today, but they weren't originally who the chair
• 43:04
  Speaker 14: of this committee, subcommittee, Senator Blumenthal, the Democrat from Connecticut,
• 43:08
  Speaker 14: wanted to hear from. He wanted to hear from the
• 43:09
  Speaker 14: PGA Commissioner, Jay Monahan, who's currently out on medical leave,
• 43:12
  Speaker 14: and he wanted to hear from the chief of Live Golf,
• 43:15
  Speaker 14: as well as someone from the Saudi Investment Fund. None
• 43:18
  Speaker 14: of those people showed up. The other two said they
• 43:20
  Speaker 14: had scheduling conflicts, so that kind of limits the information
• 43:24
  Speaker 14: that the committee is able to talk about at the
• 43:26
  Speaker 14: hearing today or ask questions about. Though they did unveil
• 43:29
  Speaker 14: ahead as this hearing went underway, some of the facts
• 43:32
  Speaker 14: about how this detail this deal went together. Some of
• 43:35
  Speaker 14: those details WhatsApp messages for example, things we understand the
• 43:39
  Speaker 14: PGA and Live. We're talking about the idea that Live
• 43:41
  Speaker 14: would stop poaching players, Tiger Woods would maybe own a
• 43:44
  Speaker 14: Live team, people like Rory McIlroy would as well. There
• 43:47
  Speaker 14: would be media sharing rights. So starting to get to
• 43:49
  Speaker 14: some of the details on what this deal is. But
• 43:52
  Speaker 14: of course for the chair he is very concerned about
• 43:54
  Speaker 14: Sadi's involvement in this and the idea of sportswashing.
• 43:58
  Speaker 3: What are the main issues play that have raised red
• 44:01
  Speaker 3: flags about this deal going forward?
• 44:04
  Speaker 14: Well, sports watching is definitely a big one, being that
• 44:08
  Speaker 14: this is the Saudi investment fund we are talking about.
• 44:11
  Speaker 14: And the accusation on the part of Chair Blumenthal and
• 44:14
  Speaker 14: others has been that this is just another example of
• 44:17
  Speaker 14: Saudi Arabia trying to wipe its slate cleaner, improve its
• 44:19
  Speaker 14: image around the world, to kind of cast a side
• 44:23
  Speaker 14: concerns around human rights abuses. Jamal Kashogi of course one
• 44:27
  Speaker 14: example of that, And so that's the accusation that's sportswa
• 44:30
  Speaker 14: washing is at play here and that the Saudi government
• 44:32
  Speaker 14: shouldn't be playing such an integral have such an integral
• 44:35
  Speaker 14: influence on American culture and sports culture specifically. The others,
• 44:39
  Speaker 14: of course, are antitrust concerns. This subcommittee that was holding
• 44:43
  Speaker 14: this hearing today doesn't actually have the power to block
• 44:46
  Speaker 14: the deal, but I spoke with Senator Blumenthal on the
• 44:49
  Speaker 14: sidelines before he went in to the room, and he
• 44:51
  Speaker 14: said that what they can do is uncover facts, they
• 44:54
  Speaker 14: can make policy suggestions and whatever they are able to uncover,
• 44:59
  Speaker 14: they can give the depart of Justice, and the Department
• 45:01
  Speaker 14: of Justice can use in that antitrust inquiry, and of
• 45:03
  Speaker 14: course the DOJ on competition grounds could actually block the deal.
• 45:08
  Speaker 7: You know, Katie.
• 45:08
  Speaker 1: One of the things that I think frustrates a lot
• 45:10
  Speaker 1: of observers here of the game and of the business
• 45:13
  Speaker 1: of golf is we just don't know anything about this deal,
• 45:15
  Speaker 1: and nothing's really been released, and it's been you know,
• 45:18
  Speaker 1: a number of weeks.
• 45:19
  Speaker 7: That in and of itself is really a cause for concern.
• 45:22
  Speaker 1: But I guess one of the questions that I think
• 45:24
  Speaker 1: one of the messages that the PGA Tour is trying
• 45:26
  Speaker 1: to get across is, hey, even though we're going to
• 45:28
  Speaker 1: take billions of dollars from a solidy fund, we the
• 45:32
  Speaker 1: PGA Tour will be in charge.
• 45:35
  Speaker 11: Yeah.
• 45:36
  Speaker 7: I mean, are they sticking with that?
• 45:37
  Speaker 1: Because if I'm putting in a couple billion dollars, I
• 45:39
  Speaker 1: want some control here.
• 45:41
  Speaker 14: Yeah, they are sticking with that message. Also, the idea
• 45:44
  Speaker 14: that this is a matter of survival, that they needed
• 45:47
  Speaker 14: to do this in order for the tour to remain
• 45:50
  Speaker 14: what it is currently because they had so many ongoing
• 45:52
  Speaker 14: legal fights with Live and it had been so very contentious,
• 45:55
  Speaker 14: which yes, is why this deal took everyone by surprise,
• 45:58
  Speaker 14: but by its very nature would kind of ease that
• 46:00
  Speaker 14: on the part of the PGA tour. So that's the
• 46:02
  Speaker 14: message that they are sending. But as you allude to, Paul,
• 46:05
  Speaker 14: we really don't know so much of the details. That
• 46:07
  Speaker 14: is something that Senator Blumenthal was bemoaning today, how not
• 46:11
  Speaker 14: transparent it has been. We don't know all of the
• 46:14
  Speaker 14: numbers around this. But for the PGA, they really are
• 46:17
  Speaker 14: indicating that this was a matter of survival and preservation.
• 46:20
  Speaker 3: Kaylie, Do we have any sort of sense of a
• 46:22
  Speaker 3: timetable here when we think about this deal, But then
• 46:25
  Speaker 3: also when it comes to these hearings in how long
• 46:27
  Speaker 3: this could all take to play out.
• 46:30
  Speaker 14: It could be sometime longer. As I said, the representatives
• 46:33
  Speaker 14: from Live In the Saudi Investment Fund weren't at today's hearing,
• 46:35
  Speaker 14: and for that reason, the chair has said that he
• 46:38
  Speaker 14: plans to have more hearings in the future. He told
• 46:40
  Speaker 14: me he's in active talks with both of those parties
• 46:42
  Speaker 14: to try to get them before the subcommittee to testify.
• 46:46
  Speaker 14: So those hearings themselves could take a while, and of
• 46:48
  Speaker 14: course the Department of Justice inquiry could take some time
• 46:51
  Speaker 14: as well. It's very early stages here, and that is
• 46:54
  Speaker 14: actually why many Republican members of this subcommittee today were
• 46:57
  Speaker 14: pushing back on the idea that this hearing even should
• 46:59
  Speaker 14: have been elt at this point. The ranking member, Senator
• 47:02
  Speaker 14: Ron Johnson said he didn't think they should be having
• 47:04
  Speaker 14: this hearing. Others were pushing back during the hearing as
• 47:07
  Speaker 14: well on the idea that this is really not what
• 47:09
  Speaker 14: this subcommittee should be investigating at this point, raising issues
• 47:13
  Speaker 14: like China, for example, that should be they say, a
• 47:16
  Speaker 14: higher priority than this specifically.
• 47:18
  Speaker 1: All right, So, is there any kind of next steps
• 47:21
  Speaker 1: here for either regulatory scrutiny or even god forbid, getting
• 47:26
  Speaker 1: this deal done announced maybe with some details. Are are
• 47:29
  Speaker 1: we learning anything today about what could be next steps?
• 47:32
  Speaker 3: Well?
• 47:33
  Speaker 14: Bloomberg has reported that the Department of Justice is watching
• 47:35
  Speaker 14: this hearing very closely, and everything that the Senate Subcommittee
• 47:39
  Speaker 14: unveiled today, that information likely will feedback into that DOJ inquiry.
• 47:43
  Speaker 14: So we'll look for any next steps from the Justice
• 47:45
  Speaker 14: Department on the anti trust front, and then I'll just
• 47:48
  Speaker 14: be watching to see when Charman Bluementhal may announce the
• 47:51
  Speaker 14: next hearing, because again he said that this is really
• 47:53
  Speaker 14: just the first one. There could be many of these
• 47:56
  Speaker 14: to come in the future.
• 47:57
  Speaker 1: All Right, Kaylee, thank you so much for joining us.
• 47:58
  Speaker 1: Really appreciate getting your report from Washington, DC. Katie Lines
• 48:02
  Speaker 1: Bloomberg News talking about this LIVEPGA deal. We got some
• 48:05
  Speaker 1: folks in front of Congress trying to explain what's happening.
• 48:08
  Speaker 9: You're listening to the tape. Catch our live program Bloomberg
• 48:11
  Speaker 9: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 48:15
  Speaker 9: tune in app, Bloomberg dot Com, and the Bloomberg Business App.
• 48:18
  Speaker 9: You can also listen live on Amazon Alexa from our
• 48:21
  Speaker 9: flagship New York station, Just say Alexa play Bloomberg eleven thirty.
• 48:26
  Speaker 3: Jess Naton and Paul Suing here in the Bloomberg Interactive
• 48:29
  Speaker 3: Brokers Studio and Paul up next. I wanted to talk
• 48:32
  Speaker 3: what's happening with technology and especially when it comes to
• 48:35
  Speaker 3: tech hiring for some of these top recruiting firms. When
• 48:39
  Speaker 3: you think about big tech, and it obviously undergoing a
• 48:42
  Speaker 3: lot of cost cutting efforts over the past year, but
• 48:44
  Speaker 3: some of that has supported some of the stock prices
• 48:46
  Speaker 3: for some of these big companies. So I want to
• 48:48
  Speaker 3: get straight to our next guest, Martha Heller, CEO and
• 48:51
  Speaker 3: founder of Heller Search Associates, who's going to discuss with
• 48:55
  Speaker 3: us some of the open tech roles and the outlook
• 48:57
  Speaker 3: for tech hiring, obviously on the heels of when we
• 49:00
  Speaker 3: got that softer than expected jobs report last week. Paul. So, Martha,
• 49:04
  Speaker 3: thank you so much for joining us. Tell us about
• 49:07
  Speaker 3: Heller Search Associates, what you do and obviously how what
• 49:12
  Speaker 3: you are exactly doing when it comes to helping recruit
• 49:14
  Speaker 3: for these top level IT executive positions.
• 49:18
  Speaker 6: Sure, thanks so much for having me so.
• 49:20
  Speaker 15: At Heller Search, we recruit CTOs CIOs, chief security officer roles,
• 49:25
  Speaker 15: head of software engineering, so technical roles. But not only
• 49:29
  Speaker 15: in the tech sector. We were across every sector, healthcare, retail, industrial, manufacturing.
• 49:35
  Speaker 15: So we pretty we have a very wide panoramic view
• 49:38
  Speaker 15: of what's going on with tech hiring and what I
• 49:41
  Speaker 15: see happening here. Yes, there was a bit of a
• 49:43
  Speaker 15: lackbuster jobs report, but I think there is a bigger
• 49:46
  Speaker 15: story here than uh, you know, supply chain and other
• 49:50
  Speaker 15: economic headwinds. What's happening now with most companies in the
• 49:54
  Speaker 15: world is that they were born in an industrial economy
• 49:59
  Speaker 15: where they had legacy products and services, and now everything
• 50:03
  Speaker 15: is moving into a software economy or a data economy.
• 50:07
  Speaker 15: So you're finding, you know, food processing businesses suddenly needing
• 50:11
  Speaker 15: data scientists.
• 50:13
  Speaker 6: You're having retail.
• 50:14
  Speaker 15: Businesses needing more digital software engineers. So we are very
• 50:18
  Speaker 15: busy here at Heller Search, and I predict that over
• 50:21
  Speaker 15: the next few months we're going to see an uptick
• 50:24
  Speaker 15: in the jobs report, but not with traditional roles, with
• 50:28
  Speaker 15: software roles, security roles, data engineering roles that are new
• 50:32
  Speaker 15: to these companies, So they don't yet know what is
• 50:36
  Speaker 15: the compensation model, where do they fit in the org,
• 50:39
  Speaker 15: what is our recruiting strategy. So a lot of companies,
• 50:42
  Speaker 15: as they're shifting to really becoming tech companies, whether they're healthcare, retail, automotive,
• 50:47
  Speaker 15: you name it, they're shifting their workforce to being technologists.
• 50:51
  Speaker 15: We think of technologists at Facebook, at Meta, at Twitter. Well,
• 50:56
  Speaker 15: Walgreens is hiring technologists, Macy's is hiring technologists, but it's
• 51:01
  Speaker 15: harder for them to get moving on that technology hiring
• 51:05
  Speaker 15: bandwidth because these roles are new to them.
• 51:07
  Speaker 1: Martha, I have a lot of technologists working for me
• 51:10
  Speaker 1: for the last decade I've had they've had the upper
• 51:13
  Speaker 1: hand on me. Now the most recent is working from
• 51:15
  Speaker 1: home versus coming to the office.
• 51:17
  Speaker 7: But now I see Google.
• 51:19
  Speaker 1: Facebook, all these companies out in the valley laying people off.
• 51:22
  Speaker 1: Do I now have the leverage over my tech workers
• 51:26
  Speaker 1: or do they.
• 51:27
  Speaker 7: Still have it?
• 51:29
  Speaker 15: I hate to say it, but they still have it back,
• 51:33
  Speaker 15: So you need them. That being said, their leverage is
• 51:36
  Speaker 15: waning a bit. Those technologists being laid off from the
• 51:40
  Speaker 15: Silicon Valley companies will be good technologists for you, right
• 51:45
  Speaker 15: what they've learned there they can transfer transfer to you.
• 51:50
  Speaker 15: But it's still a tight market. It's still a heady
• 51:52
  Speaker 15: skill set. Finding somebody to do cloud computing, for example,
• 51:56
  Speaker 15: it's a new skill set. So yes, those layoffs do
• 52:00
  Speaker 15: salt in the market for you, but not so much
• 52:02
  Speaker 15: that it becomes your market.
• 52:03
  Speaker 3: Martha, Whenever you're speaking with employers, what are they telling
• 52:07
  Speaker 3: you about their view on the economy in the labor
• 52:09
  Speaker 3: market when they're trying to hire.
• 52:11
  Speaker 15: Right now, you know a lot of my clients, and
• 52:15
  Speaker 15: remember our clients are cross industry, are taking a wait
• 52:18
  Speaker 15: and see approach. A lot of them have enough concerns
• 52:21
  Speaker 15: about the economic headwinds that they are doing hiring freezes,
• 52:25
  Speaker 15: not all of them, as I said, we're very busy,
• 52:27
  Speaker 15: but the one area where they're taking an exception is
• 52:30
  Speaker 15: hiring in data, digital and technology. But yes, we are
• 52:34
  Speaker 15: seeing with many of our clients, particularly in the industrial
• 52:37
  Speaker 15: era that have been hit hard by supply chain issues,
• 52:40
  Speaker 15: we're seeing some slow down on hiring there.
• 52:43
  Speaker 1: Martha, is our US educational system cranking out enough people
• 52:48
  Speaker 1: with technology skills or do we need to recruit from
• 52:53
  Speaker 1: outside the US? Where are we there in terms of
• 52:55
  Speaker 1: the supply of these folks.
• 52:57
  Speaker 15: Well, I mean, I think what I would say is no,
• 53:00
  Speaker 15: our educational system is not building enough of these technologists
• 53:04
  Speaker 15: for sure.
• 53:05
  Speaker 6: But I also.
• 53:06
  Speaker 15: Feel that just going and getting them, you know, out
• 53:09
  Speaker 15: of the country is not necessarily the way it's reaching
• 53:12
  Speaker 15: out to underrepresented markets in.
• 53:16
  Speaker 6: The United States.
• 53:17
  Speaker 15: You know, everybody, you know, most companies say we absolutely
• 53:19
  Speaker 15: have to have somebody who has a degree in computer science. Well,
• 53:22
  Speaker 15: there are a lot of ways to learn computer science
• 53:25
  Speaker 15: without going necessarily and getting a degree in it. So
• 53:28
  Speaker 15: starting to look at underrepresented groups, people who may not
• 53:32
  Speaker 15: have exactly the education that we want. But taking the
• 53:35
  Speaker 15: onus on us in our companies to create that education.
• 53:39
  Speaker 15: That could be a very vital strategy for today's companies
• 53:42
  Speaker 15: because there is a supply and demand problem.
• 53:45
  Speaker 3: How easy for how hard does it define talent? Right now?
• 53:50
  Speaker 15: If you have the right compensation, the role is exciting
• 53:55
  Speaker 15: to a technologist. Technologists don't want to work on old technology.
• 53:58
  Speaker 15: They want the new cool stuff. They want AI, they
• 54:01
  Speaker 15: want cloud engineering. If you've got that opportunity, your compensation
• 54:05
  Speaker 15: is lying and you will allow them to work remotely.
• 54:09
  Speaker 15: You can hire anybody you want. If you insist on
• 54:12
  Speaker 15: everybody coming into the office, you're trying to get a
• 54:15
  Speaker 15: cheap date by not paying at market, and you want
• 54:18
  Speaker 15: people to work on very legacy technologies, which is, you know,
• 54:21
  Speaker 15: asking somebody to sort of come and work at your
• 54:24
  Speaker 15: you know, videotape store.
• 54:25
  Speaker 6: If you will, ye, then it's going to be hard.
• 54:28
  Speaker 1: Can I say I'm a Silicon Valley company and oh,
• 54:32
  Speaker 1: you want to work in Boise idol?
• 54:34
  Speaker 7: Okay, Well that's salaries.
• 54:36
  Speaker 1: Cost of living Boise, Idaho is twenty percent less than
• 54:38
  Speaker 1: the Bay area, So I'm going to pay you twenty
• 54:40
  Speaker 1: percent less than you would into Bay.
• 54:42
  Speaker 7: Can I can I do that?
• 54:43
  Speaker 8: Yes?
• 54:43
  Speaker 6: Yes, you can do that?
• 54:46
  Speaker 7: And is that happening in the industry.
• 54:49
  Speaker 6: In some places it is.
• 54:50
  Speaker 15: I mean, what companies are trying to figure out now
• 54:53
  Speaker 15: is do we make people come back.
• 54:55
  Speaker 6: We have decided we're going to bring everybody back. Oops.
• 54:58
  Speaker 15: Half our workforce move to boise I from Silicon Valley
• 55:02
  Speaker 15: during the last three years.
• 55:04
  Speaker 6: So you know, if we are.
• 55:06
  Speaker 15: Going to leave them where they are paying them a
• 55:08
  Speaker 15: compensation that allows them to live a certain lifestyle which
• 55:11
  Speaker 15: is different from Silicon Valley. A lot of companies are
• 55:14
  Speaker 15: experimenting with that. Where it all shakes out in a
• 55:16
  Speaker 15: couple of years, we'll find.
• 55:17
  Speaker 7: Out, all right.
• 55:18
  Speaker 1: Martha, thank you so much for joining us. Really appreciate
• 55:19
  Speaker 1: getting your thoughts there. Really interesting discussion there about the
• 55:23
  Speaker 1: labor market, particularly in the technology space. Martha Heller, CEO
• 55:28
  Speaker 1: of Heller Search Associates. So it's tough still there. I
• 55:32
  Speaker 1: think that's still it just feels, you know, we have
• 55:34
  Speaker 1: so many.
• 55:34
  Speaker 7: Technologies engineers here at Bloomberg.
• 55:36
  Speaker 3: Still having the upper hand there. That was a good question.
• 55:38
  Speaker 7: Yeah, I don't know. I think I think the technologists
• 55:41
  Speaker 7: still have the upper hand.
• 55:42
  Speaker 3: Yeah.
• 55:44
  Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can
• 55:48
  Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever
• 55:51
  Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
• 55:55
  Speaker 2: at Matt Miller nineteen seventy three.
• 55:58
  Speaker 7: And I'm Fal Sweeney. I'm on Twitter at peace T Sweeney.
• 56:00
  Speaker 1: Before the podcast, you can always catch us worldwide at
• 56:03
  Speaker 1: Bloomberg Radio