Latest / Bloomberg Intelligence / Putin Is Doubling Down on Support of Assad, Ariel Cohen Says

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Putin Is Doubling Down on Support of Assad, Ariel Cohen Says · Bloomberg Intelligence

0:04
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
0:14
Speaker 1: you and your money, whether at the grocery store or
0:16
Speaker 1: the trading floor. Find the Bloomberg P L Podcast on iTunes,
0:20
Speaker 1: SoundCloud and at Bloomberg dot com. Secretary of State Rex
0:30
Speaker 1: Tillerson meeting with Sergei Lavrov, the Russian foreign minister, meeting
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Speaker 1: in the Kremlin today to talk about, among other things, Syria.
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Speaker 1: Here to tell us about Syria is Dr Ariel Cohen,
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Speaker 1: Senior Fellow of the Atlantic Council. He is also the
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Speaker 1: director of the Center for Energy and Natural Resources and
0:47
Speaker 1: Geopolitics at the Institute for Analysis of Global Security, and
0:52
Speaker 1: Dr Cohen joins us from Washington. Dr Cohen, in the
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Speaker 1: context of your sort of dual roles energy natural resources
1:01
Speaker 1: as well as politics, or if you could speak to
1:04
Speaker 1: the issue of natural resource as a strategic issue for
1:08
Speaker 1: the Russians, Is there anything that Rex Tillerson, he's formally
1:13
Speaker 1: of course chief executive X on mobile. Is there anything
1:15
Speaker 1: that he can say or do that would soften Vladimir
1:21
Speaker 1: Putin's position when it comes to Russia and Syria. I
1:26
Speaker 1: doubt it because putting his doubling down on his support
1:29
Speaker 1: of Bashar Assad, he probably did not expect Donald Trump
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Speaker 1: to turn against Russia and against Russian alliance with assad. Um.
1:41
Speaker 1: As you know, Trump called us At an animal. He
1:44
Speaker 1: has written him off just after the administration said maybe, uh,
1:49
Speaker 1: pushing as Adat was not a priority, and then of
1:52
Speaker 1: course assad went and did something so horrible as guessing children. Uh.
1:56
Speaker 1: Tillerson is in Moscow. He is um actually decorated Russian um,
2:03
Speaker 1: beneficiary of the Order of Friendship given to him by
2:07
Speaker 1: Putting himself several years ago for the X on Russia
2:11
Speaker 1: X and ross neft Um big oil deal. He understands
2:16
Speaker 1: Russian predicament um. Russia is pretty much a one uh
2:22
Speaker 1: one pony trick, one p show with oil and gas
2:26
Speaker 1: and some of other um raw materials. Russia exports lumbert timber,
2:33
Speaker 1: some metals, and of course weapons and nuclear reactors. Of course,
2:37
Speaker 1: as you saw with the bankruptcy of Westinghouse, Russian Rossatom
2:43
Speaker 1: is going to be in a better position to sell
2:45
Speaker 1: reactors around the world. But basically Russia is a bad
2:47
Speaker 1: economic situation and what it's doing in Syria is making
2:52
Speaker 1: that situation much much worse. Wait, well to that point,
2:55
Speaker 1: Dr Colm, what I don't fully understand is why Russia
2:58
Speaker 1: is so loyal to the shar Asad and why they
3:01
Speaker 1: are so committed to being involved in the Syria Civil war. Uh.
3:07
Speaker 1: They want to support uh their ally UH, not just Bashar,
3:13
Speaker 1: his father Hafez was Russian ally going all the way
3:16
Speaker 1: back to the nineties seventies. UH. They have a strategic
3:20
Speaker 1: relationship with the Allawi's, with a sect that Bashar and
3:25
Speaker 1: his father came from. It's essential in Alloite Ala White regime,
3:30
Speaker 1: and also Russia in Iran are in a strategic alliance
3:34
Speaker 1: as well as the terrorists Iranian offshoot called Kisbala in Lebanon.
3:39
Speaker 1: So this is the anti Western, anti Sunni Arab bloc
3:44
Speaker 1: in the Middle East. It is the Iranian Crescent going
3:47
Speaker 1: all the way from Tehran to the Mediterranean, and Russia
3:50
Speaker 1: is a very very important part of that. Is there
3:54
Speaker 1: any possibility that the Saudis will come in and maybe
3:58
Speaker 1: change the agreement to curtail the increase of oil because
4:03
Speaker 1: if Russia is dependent on revenue from oil production, why
4:07
Speaker 1: would the Saudis as Sunni state that is really in
4:11
Speaker 1: confrontation with Iran and with bush are Al Assad. Why
4:15
Speaker 1: would the Saudis continue behavior that in a sense offers
4:19
Speaker 1: the Russians a financial incentive to keep doing what they're doing. Well,
4:24
Speaker 1: Russians are not happy with the oil at fifty, They
4:26
Speaker 1: would much of it have an oil at seventy five
4:28
Speaker 1: or But for the Sauties it's also a challenge. They five.
4:33
Speaker 1: They try to cut a deal with Puchin, in with
4:36
Speaker 1: Iran and limit the production. But guess what, every time
4:40
Speaker 1: the production the price because of the production cut goes
4:45
Speaker 1: to sixty. Our shale producers in the United States, in
4:52
Speaker 1: the oil sands in Canada and other shale producers can
4:55
Speaker 1: pump more and the price almost automatically drives down back
5:00
Speaker 1: to fifty or even below fifty. The Salis have their
5:03
Speaker 1: own huge um economic problem with cheap oil. They are
5:08
Speaker 1: in deficit. Uh, they are preparing Saudi Aramco for an
5:13
Speaker 1: I p O that's always going to be the largest
5:16
Speaker 1: I p O in the world. So Satis don't have
5:19
Speaker 1: a lot of margin. But we'll see if the Russians
5:24
Speaker 1: are really are not playing ball. Is Iranians are still threatening. Yes,
5:28
Speaker 1: the versalities still have the spare capacity to flood the
5:32
Speaker 1: market and drive oil to Let's say, at which point
5:37
Speaker 1: it's not good news for our domestic shell producers. Real quick,
5:41
Speaker 1: At what point do you think that the economic issues
5:44
Speaker 1: that Russia is facing with lower oil prices and sanctions
5:47
Speaker 1: will feed into their willingness to compete continue supporting Syria. Well,
5:53
Speaker 1: there two or three challenges here. Number one, Uh, the
5:57
Speaker 1: Russians are very careful how they intervene in Syria. It's
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Speaker 1: a relatively small force. It's not alone a lot of
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Speaker 1: ground troops. It's more air force. But uh, the first
6:08
Speaker 1: sort of ringer for the Russians was at the G
6:11
Speaker 1: seven meeting where us uk um and maybe Germany. I know,
6:16
Speaker 1: actually Germany was against it. They tried uh to impose
6:20
Speaker 1: additional sanctions against Russia because of the Syrian chemical attack.
6:26
Speaker 1: Italy and Germany where against it. But the Russians continue,
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Speaker 1: then we might have to say, maybe they will do
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Speaker 1: more sanctions. I'm so sorry, We're gonna have to leave
6:35
Speaker 1: it there. We can talk all afternoon. Dr Ariel Cohen,
6:37
Speaker 1: Senior Fellow at the Atlantic Council, also director of the
6:40
Speaker 1: Center for Energy Natural Resources, and geopolitics at the Institute
6:44
Speaker 1: for Analysis of Global Security. We want to get the
6:58
Speaker 1: voice of an executive from the automobile industry joining us
7:01
Speaker 1: now as Ian Robertson. He is a member of the
7:03
Speaker 1: Board of Management and Global Sales and Marketing director for BMW.
7:08
Speaker 1: He joins us today from the New York International Auto Show,
7:11
Speaker 1: taking place at the Jacob Javits Center in New York.
7:15
Speaker 1: Ian Robertson, thank you very much for being with us.
7:19
Speaker 1: Good to be with you. All right. I want to
7:20
Speaker 1: give you the chance, first of all, just to give
7:21
Speaker 1: us an update on some sales reports that you've just released,
7:25
Speaker 1: and then we'll get into the details of what you're unveiling,
7:28
Speaker 1: what you're showing off at the New York International Auto Show.
7:33
Speaker 1: You know, we just announced quality results. They're up around
7:36
Speaker 1: five and a half percent. But I think a notable
7:39
Speaker 1: achievement was we did two fifty four thousand sales in
7:42
Speaker 1: March alone, and it wouldn't have been that long ago
7:45
Speaker 1: where that sort of number would have been almost an
7:47
Speaker 1: impossible dreams. So I'm delighted with the performance. Right around
7:50
Speaker 1: the world during Q one, we've heard a lot, particularly
7:53
Speaker 1: in the US, about lower resale values of cars and
7:58
Speaker 1: that you know, frankly, people have been saturated, They borrowed
8:01
Speaker 1: so much that they aren't going to buy that much
8:04
Speaker 1: more in the near future. How come BMW isn't reflecting
8:08
Speaker 1: that in their March sales. You know, I'm on the
8:13
Speaker 1: record of saying at the start of that I thought
8:16
Speaker 1: the US market had pete. I thought it was being
8:19
Speaker 1: over pushed. I thought there was a lot of inventory
8:21
Speaker 1: on the ground, and you know that proved to be
8:23
Speaker 1: the case. We we cut our inventory a lot last year.
8:26
Speaker 1: We didn't chase the last volume, which I think was
8:29
Speaker 1: an important step because at the end of the day,
8:32
Speaker 1: you know, we're driving for a profitability position as well.
8:35
Speaker 1: Um So from that perspective, you know, our results actually
8:40
Speaker 1: underscore that. As we come into this year, GDP numbers
8:43
Speaker 1: are good, the unemployment figures are also good, and I think,
8:47
Speaker 1: you know, there are some encouraging signs on Wall Street.
8:50
Speaker 1: Having said all of that, I don't expect a lot
8:52
Speaker 1: of upside in the in the US market this year
8:55
Speaker 1: as well. So I'm very much in the position of
8:59
Speaker 1: we're going to a flat maybe single digit growth. We
9:03
Speaker 1: saw that in Q one. Let's see how it develops.
9:05
Speaker 1: During the rest of the year, But I don't think
9:07
Speaker 1: there's a big upside in the US market this year.
9:10
Speaker 1: Ian Robertson, you almost didn't make it into the automobile industry.
9:14
Speaker 1: You studied marine science at I guess the University of Whales, right,
9:19
Speaker 1: and you were not going to be in a desert
9:22
Speaker 1: or in the North Sea. You wanted to be in
9:24
Speaker 1: something that you were passionate about when you when you
9:26
Speaker 1: joined the Rover at the age of seventeen, did you
9:29
Speaker 1: ever think you'd be talking about electric and electric hybrid cars?
9:32
Speaker 1: I think what BMW sold twenty thousand of them, or
9:34
Speaker 1: at least delivered more than twenty thousand so far. That's true.
9:39
Speaker 1: I actually joined the car industry straight from university when
9:41
Speaker 1: I was twenty one, but that's a long time ago
9:43
Speaker 1: as well. Now it's thirty eight years uh this this year,
9:47
Speaker 1: so you know, from that perspective, the industry has changed
9:50
Speaker 1: a lot. But you know, I'm also of the opinion
9:53
Speaker 1: that what we're going to see in the next five
9:55
Speaker 1: or seven years will probably be more changed than we've
9:58
Speaker 1: seen in the past hundred and the car the street
10:00
Speaker 1: BMW included is just over a hundred years old and
10:04
Speaker 1: that's because we're seeing new path trains, we're seeing new materials,
10:07
Speaker 1: were saying new ways of designing cars. We're seeing the
10:11
Speaker 1: customer behaving in a way which they haven't done in
10:13
Speaker 1: the past. Because you know, we're at the moment, for example,
10:16
Speaker 1: renting cars by the minute in many, many cities around
10:19
Speaker 1: the world. So all of these changes brought about by digitalization,
10:23
Speaker 1: brought about by the new way of thinking with autonomous
10:27
Speaker 1: driving and electro mobility are actually changing the whole perspective
10:31
Speaker 1: of the industry. It's really really exciting times. Which market
10:35
Speaker 1: around the world is the one that has the greatest
10:38
Speaker 1: demand for electric cars right now? You know, it very
10:42
Speaker 1: much depends at this stage in the development what governments
10:45
Speaker 1: are doing. And you know the example I always use
10:47
Speaker 1: is Norway. You know, around about six seven years ago
10:51
Speaker 1: Northern Norwegian government, by the way, about the Norwegian economy
10:55
Speaker 1: is based on oil, they decided that they wanted to
10:58
Speaker 1: go for electromobility. As such, they put a big incentive
11:02
Speaker 1: in place, no v A T on the cars. They
11:04
Speaker 1: allowed people to drive in the bus lane. So if
11:06
Speaker 1: you work downtown in Oslo, you can say forty five
11:10
Speaker 1: minutes in the morning, forty five minutes in the afternoon,
11:12
Speaker 1: free charging, free infrastructure. Last year, over twenty of the
11:17
Speaker 1: total market was electric. If you look at other governments
11:20
Speaker 1: who've done similar things, that's where it really works well.
11:24
Speaker 1: And I think we are seeing now an acceleration of
11:27
Speaker 1: this right around the world. You know, I'm struck by
11:30
Speaker 1: the US and how different it is in the U
11:33
Speaker 1: s which is the biggest car market. Correct or is
11:36
Speaker 1: China Ano the biggest car up market or is it
11:38
Speaker 1: still the US? It's still the US right now. China
11:41
Speaker 1: is now the biggest car market in the world. China
11:43
Speaker 1: overtook the US three or four years ago. Wow, and
11:46
Speaker 1: way behind the times. Thank you for that clarification. So
11:48
Speaker 1: in the US, which is a massive car market, you
11:51
Speaker 1: have people going to trucks, uh, and you have you know,
11:55
Speaker 1: this sort of move back toward fossil fuel vehicles. Is
11:57
Speaker 1: there any concern or downside risk that this move to
12:00
Speaker 1: electric won't go quickly enough to justify the investments that
12:05
Speaker 1: BMW is making in the technology. You know, we we
12:10
Speaker 1: look at every market individually, and as I said, government
12:13
Speaker 1: policy plays a big part in the actual takeup of
12:16
Speaker 1: electronome ability. But over time, you know, we are always
12:20
Speaker 1: seeing the reduction in emission levels. It's a very very
12:24
Speaker 1: important topic for US and the industry in total. So
12:27
Speaker 1: overall this is a progressive position around the world. So, yes,
12:33
Speaker 1: trucks are important here. By the way, trucks are important
12:36
Speaker 1: or s A V s are important in many many
12:38
Speaker 1: markets around the world. In our Q one here in
12:40
Speaker 1: the US, we did around trucks, um. But at the
12:44
Speaker 1: same time that also tells you that the market is
12:47
Speaker 1: non trucks. So from that perspective, it's a good balance. Now,
12:51
Speaker 1: Ian Robertson, are you're going to be in Coachella this
12:53
Speaker 1: uh this weekend? I'm not. I'm I'm back in Europe
12:59
Speaker 1: and I'm under Shane High Alright. The reason I asked
13:01
Speaker 1: exactly twelve hours of time delay? Well, the reason I
13:04
Speaker 1: asked us because of course BMW is debuting a variety
13:08
Speaker 1: of models, the BMW I three Electric. It will be
13:10
Speaker 1: at the Music Festival, uh this coming weekend. Tell us
13:14
Speaker 1: about the I performance line. You know, I performance is
13:19
Speaker 1: in good shape. And this morning in the World Car Awards,
13:22
Speaker 1: the I three picked up the Urban Car of the Year,
13:24
Speaker 1: so another accolade. And you know last year we did
13:27
Speaker 1: sixty two thousand electric cars. We're aiming to do a
13:30
Speaker 1: hundred thousand this year. Q one would tell us where
13:33
Speaker 1: on target to achieve that, and that tells you this
13:36
Speaker 1: momentum is building. So you know, another addition to the
13:40
Speaker 1: range is the five thirty can be used in the
13:42
Speaker 1: multiple occupancy lanes in California. That's the first as well.
13:46
Speaker 1: There are more cars in the pipeline, so we have
13:49
Speaker 1: an I eight roadster that's coming, and of course we've
13:52
Speaker 1: announced an electric I three, an electric Mini, and what
13:55
Speaker 1: we're calling the I Next vehicles. So the trend is
13:59
Speaker 1: is very very clear all around the world. Thank you
14:02
Speaker 1: so much. Fascinating to hear the new developments. Ian Robertson,
14:06
Speaker 1: member of the board of Management and a global sales
14:09
Speaker 1: and marketing director for BMW. He was speaking from the
14:13
Speaker 1: Javit Center where the New York International Auto Show is.
14:16
Speaker 1: Right now and tomorrow we will be broadcasting live from
14:19
Speaker 1: the New York International Auto Show at the Javit Center
14:22
Speaker 1: to bring you the newest models, the latest automative trends
14:25
Speaker 1: and sales outlook. So I'm sure we'll be talking a
14:27
Speaker 1: lot more about electric and the push into more varieties
14:32
Speaker 1: of such vehicles. I'm Lisa Baram Away's here with pim Fox.
14:35
Speaker 1: This is Bloomberg. We are about to get earnings starting
14:50
Speaker 1: tomorrow from the biggest bank starting with JP Morgan City
14:53
Speaker 1: Group and Wells Fargo, and there are a lot of questions.
14:56
Speaker 1: I mean, we know that bond trading revenues are supposed
14:59
Speaker 1: to be us and if it, we also know that
15:01
Speaker 1: some of the loan loss provisions that they've been setting
15:03
Speaker 1: aside are expected to increase. To make sense of all
15:06
Speaker 1: of this and give a better vision into what we
15:09
Speaker 1: should look for, I want to bring in Michael Scanlon,
15:11
Speaker 1: who's a portfolio manager for Menu Life Asset Management. Michael,
15:15
Speaker 1: what are you looking for? What do you want to
15:17
Speaker 1: know from tomorrow's earnings results? Well, good morning and thanks
15:21
Speaker 1: for having me. So there'll be a number of key
15:24
Speaker 1: things that people will be focused on with this round
15:27
Speaker 1: of earnings. You know, it looks like the market related earnings.
15:30
Speaker 1: Market related revenues are going to be up year over year,
15:33
Speaker 1: largely largely driven by fixed trading, fixed income currencies and commodities.
15:39
Speaker 1: On the net interest margin side, you know, they'll be
15:43
Speaker 1: people will be more focused on what the commentary is
15:45
Speaker 1: in light of the fact that the yield on the
15:48
Speaker 1: tenure has gone down, uh thus far this quarter. And
15:51
Speaker 1: the other thing to really keep a focus on is credit.
15:53
Speaker 1: You know, there's been obviously a lot written, a lot
15:56
Speaker 1: in the press the last handful of weeks here on credit,
15:58
Speaker 1: whether it's subprime auto or the credit card companies. Uh So,
16:02
Speaker 1: just that there's any change there in terms of realized
16:04
Speaker 1: charge off rates are commentary around future expectations. Michael, is
16:08
Speaker 1: JP more get expensive if you believe that they're going
16:11
Speaker 1: to earn eight bucks a year? Uh So, the well,
16:15
Speaker 1: the eight dollar year number is even a little above
16:17
Speaker 1: where the street is for next year. But you know
16:19
Speaker 1: when you look at that company, um, you know, just
16:22
Speaker 1: looking at on a multiple basis, you know, near term, uh,
16:25
Speaker 1: it might be a little bit stretched, but obviously this
16:28
Speaker 1: is a franchise that has tremendous earnings power going forward.
16:31
Speaker 1: And when you think about the potential lightning for the
16:35
Speaker 1: regulatory environment or potentially a lighter ce car touch, uh,
16:39
Speaker 1: you know, your capital return story could really increase materially there,
16:43
Speaker 1: which obviously drives a much better total return for shareholders. Well, Michael,
16:47
Speaker 1: talking about the regulatory regime, do you expect that any
16:50
Speaker 1: of the banks will address some of the optimism that
16:53
Speaker 1: we've seen from investors that there will be sort of
16:56
Speaker 1: a pullback with respect particularly to capital requirements that that
17:00
Speaker 1: force these banks to hold chillions of dollars of h
17:02
Speaker 1: safe assets. Well, maybe you get some commentary around that
17:07
Speaker 1: and some optimistic views, but I mean, frankly, nobody has
17:10
Speaker 1: insight into exactly what's going to go on there in
17:13
Speaker 1: terms of lightning the touch. Uh So it would all
17:16
Speaker 1: be very subjective comments, uh, and nothing that you could
17:20
Speaker 1: objectively measure at this point. Although Michael, as a portfolio manager,
17:23
Speaker 1: when do you have to see something concrete in order
17:27
Speaker 1: to decide whether or not to buy into this idea
17:30
Speaker 1: of less regulation and perhaps lower capital buffers. Yeah, so
17:35
Speaker 1: right now, I think when you look at the stocks,
17:36
Speaker 1: that's still sort of uh, you know, not really priced
17:39
Speaker 1: into the stocks. It's still somewhat of a free call
17:41
Speaker 1: option on the future. I think when you look at
17:43
Speaker 1: a lot of these franchises, and you know, we've talked
17:45
Speaker 1: about GP Morgan specifically, I mean that's a company where, um,
17:49
Speaker 1: you know, they've still got a lot of earnings leverage
17:51
Speaker 1: going forward, and then if you're talking about taking their
17:53
Speaker 1: payout ratio between buy back and dividends, you know, somewhere
17:57
Speaker 1: closer to a full return of earn is on an
18:00
Speaker 1: annual basis. Um. You know, at this point, I don't
18:03
Speaker 1: think the market is pricing that in it all. So
18:05
Speaker 1: if we do get positive, um, you know, concrete details
18:08
Speaker 1: on exactly what's going on there, that could drive further upside. Michael,
18:11
Speaker 1: I want to get your thoughts on Wells Fargo and
18:15
Speaker 1: the performance that Tim Sloan is doing. Stock is down
18:17
Speaker 1: about two and three quarters of our percent so far
18:19
Speaker 1: this year, pays nearly a three percent dividend. How's Tim
18:22
Speaker 1: Sloan reviving Wells Fargo? Yeah, so obviously Wells fargoes and
18:29
Speaker 1: the crosshairs right now in terms of the fact that
18:32
Speaker 1: this this issue from late last year is still lingering. Uh,
18:35
Speaker 1: that's not a stock that we currently have in our portfolio.
18:38
Speaker 1: The issue, I'm sorry, Michael, the issue that you're referencing
18:41
Speaker 1: has to do with the opening of fraudulent accounts by
18:45
Speaker 1: members of the workforce at Wells Fargo in order to
18:48
Speaker 1: meet sales goals. At least that's the allegations, correct, correct, Yeah,
18:52
Speaker 1: just the aggressive sales tactics. And you know what ultimately
18:55
Speaker 1: looks like some fraud um and clawback executive pay clawbacks
19:00
Speaker 1: actly two and the cloud back executive compensation in light
19:02
Speaker 1: of the discoveries there. You know, I think when you
19:05
Speaker 1: look at Wells, obviously still a great franchise. Uh, you know,
19:08
Speaker 1: right now, we don't own the stock in the portfolio.
19:10
Speaker 1: We think there's still a bit of an overhang with
19:13
Speaker 1: this ongoing investigation. Maybe the news even gets a little
19:15
Speaker 1: bit worse from here. Um. But frankly, when we look
19:18
Speaker 1: at our portfolio, we like some of these names that
19:21
Speaker 1: have more capital markets exposure because we think there's more
19:24
Speaker 1: upside there. So some of our bigger holdings in the
19:26
Speaker 1: portfolio GP Oregon City Group, which is got to bias
19:29
Speaker 1: towards that side of the market. Michael, where do you
19:32
Speaker 1: think the positive momentum is coming from within the credit side?
19:37
Speaker 1: Is it coming from the incredible amount of investment rate
19:41
Speaker 1: bond issuance? Is it coming from uncertainty around the FED?
19:44
Speaker 1: What's your view on this? Yeah, I would say it's
19:46
Speaker 1: a combination of both those things. Actually. I mean, you
19:49
Speaker 1: think about what everything is going on around the world
19:51
Speaker 1: in terms of central bank activity right now. You know,
19:54
Speaker 1: the Fed's already increased rates, are going to continue increasing
19:57
Speaker 1: rates this year. Obviously, recently we've gotten some updates in
20:01
Speaker 1: terms of the expectation that the FED might be shrinking
20:03
Speaker 1: the balance sheet come the end of the year. The
20:05
Speaker 1: ECB is contemplating doing a rate hike and potentially lightening
20:09
Speaker 1: their balance sheet as well, So that should induce some
20:12
Speaker 1: more volatility into rates, which is ultimately good for these uh,
20:16
Speaker 1: these banks which are sensitive to that part of the
20:18
Speaker 1: market and their earnings. Uh. And then you know you
20:21
Speaker 1: also spoke about issuance, right, I mean, whether it's hie
20:24
Speaker 1: yield investment grade that the bond markets are definitely still
20:27
Speaker 1: open for business. All these deals are multiple times over subscribe,
20:31
Speaker 1: so um, you know that's that side of the business
20:33
Speaker 1: for these folks is very strong right now. So that
20:36
Speaker 1: means that you like JP Morgan and City Group to
20:38
Speaker 1: the top fixed income trading revenue shops by by revenue globally.
20:44
Speaker 1: I think that's a fair comment. Yeah, and then we
20:45
Speaker 1: also own uh Goldman Sacks as well, which would have
20:48
Speaker 1: exposed to that part of the market. Michael Scalon, we
20:51
Speaker 1: just quickly your thoughts on the re emergence of Glass
20:55
Speaker 1: Stiegel at least coming from Washington and several proposals that
20:58
Speaker 1: we expect from the Treasury secret To Stephen Manuchin. Yes,
21:02
Speaker 1: I can't say, um, I have any terribly unique ins
21:06
Speaker 1: into the expectations there. What I would say is, you know,
21:08
Speaker 1: we live in a very different world today from the
21:11
Speaker 1: structure of the capital markets perspective, UM, and it's going
21:14
Speaker 1: to take a pretty unique proposal. I'm not sure they
21:16
Speaker 1: could go back to what was in place in the
21:18
Speaker 1: late nineties. That probably have to do something which is
21:20
Speaker 1: pretty materially different. UM. So we'll have to wait and
21:23
Speaker 1: see what the structure of the proposals will look like.
21:25
Speaker 1: Al Right, I want to thank you very much for
21:27
Speaker 1: joining us. Michael Scanlon his portfolio manager from Manual Life
21:30
Speaker 1: Asset Management. He joins us from Boston, home to Bloomberg
21:34
Speaker 1: twelve hundred and of course, so we're talking about bank stocks,
21:37
Speaker 1: and banks will be releasing their earnings, beginning with JP Morgan.
21:40
Speaker 1: They will release their earnings tomorrow. We will cover them
21:42
Speaker 1: right here on Bloomberg Live. And also city groups they'll
21:46
Speaker 1: be coming out with their earnings as well. We also
21:47
Speaker 1: look forward to Wells Fargo and then I guess the
21:49
Speaker 1: next week put it on your calendar. We've got black
21:52
Speaker 1: Rock Reports, right, biggest ETF house. There you go while
22:08
Speaker 1: coming up, you know, Lisa brahma Witz, I think of
22:10
Speaker 1: May and I think of Memorial Day. You know what
22:12
Speaker 1: I think of the Indianapolis five race. Yes, you don't
22:19
Speaker 1: think about that? No? Al right, well you are going
22:21
Speaker 1: to think about it, because not only is the Indianapolis
22:24
Speaker 1: five taking place, but the weekend, I believe the weekend
22:27
Speaker 1: before that, two weekends before that, there's gonna be a
22:29
Speaker 1: major auction of classic automobiles in Indianapolis. And we're lucky
22:34
Speaker 1: to have Dave Majors. He's the chief executive officer of
22:37
Speaker 1: Meekam Auctions, joining us along with Frank Meekam. He's the
22:40
Speaker 1: director of Consignment also obviously of Mekam Auctions. Gentlemen, thank
22:45
Speaker 1: you very much for being here in the studio. Um,
22:47
Speaker 1: you know, I want to start off with you, Dave,
22:49
Speaker 1: maybe just give us an overview of the market, because boy,
22:53
Speaker 1: you know, if you look at the prices of muscle
22:56
Speaker 1: cars and we'll define that or you'll help us define
23:00
Speaker 1: uh uh, they are just skyrocketed. What is the reason
23:05
Speaker 1: behind this and is it sustainable? Well that the entire
23:08
Speaker 1: collector car market has been a great market for the
23:11
Speaker 1: last ten fifteen years, and I think the numbers if
23:14
Speaker 1: you look at various research collector car markets returned over
23:18
Speaker 1: fo over the last ten years. As a as an
23:20
Speaker 1: alternative asset class, our bread and butter is the American
23:24
Speaker 1: muscle car. Of course, we we sell pre war, we
23:27
Speaker 1: have exotics, and we do a lot of sixties and
23:30
Speaker 1: seventies American muscle cars. And I think right now nothing
23:34
Speaker 1: is hotter than that market. And it's the as as
23:37
Speaker 1: Frank Meekham has described it. It's the blue collar collector market,
23:42
Speaker 1: the high end market, the high end Ferrari European market
23:45
Speaker 1: is cooled off just a little bit, but as it does,
23:48
Speaker 1: we're seeing our market really start to pick up in
23:50
Speaker 1: a lot of activity, particularly uh a latter part of
23:53
Speaker 1: two thousand sixteen and so far in seventeen. Uh. Frank,
23:56
Speaker 1: to that point, what is the price the average price
24:01
Speaker 1: some of your muscle cars that they've been retailing for
24:03
Speaker 1: in the past year, and who are the biggest buyers. Well,
24:07
Speaker 1: you take a look at the price of the American
24:10
Speaker 1: muscle cars. You're seeing cars that uh eighteen months ago
24:16
Speaker 1: that we're fifty sixty thousand trading close to over a
24:20
Speaker 1: hundred thousand. I think your average price is going to
24:23
Speaker 1: be in that fifty to seventy range on American muscle cars.
24:28
Speaker 1: But you have cars that you get up on the
24:30
Speaker 1: high end, uh of the elite cars, the heavy COODA convertibles,
24:36
Speaker 1: the uh ZL ones, the the top collector talking to corvettes,
24:43
Speaker 1: and a variety of of makes right, because it's all
24:46
Speaker 1: over the map. Yeah yeah, So okay, so let's let's
24:48
Speaker 1: let's do this. And I want to start off by
24:50
Speaker 1: just you know, favoring Greg Jared in our newsroom because
24:53
Speaker 1: I understand that you've got a n Pontiac GTO convertible
24:57
Speaker 1: that is coming on the auction block. What what what
25:01
Speaker 1: kind of price range are you talking about there? Well,
25:03
Speaker 1: when you the g t O convertible that we have
25:07
Speaker 1: is a great car to talk about because when you
25:09
Speaker 1: talk about the muscle car era, that is truly the
25:13
Speaker 1: first car of the era and what what is known
25:15
Speaker 1: as the car that started the era. So you're talking
25:19
Speaker 1: about a car that is going to be in the
25:22
Speaker 1: seventy thousand dollar range. And Dave, you know, as we
25:26
Speaker 1: talk about seventy two hundred thousand dollars blue collar car.
25:29
Speaker 1: I mean it's not quite blue collar anymore. Who are
25:31
Speaker 1: the buyers of this? Well, buyers tend to be um
25:36
Speaker 1: entrepreneurs who have been very successful in their businesses. Some
25:40
Speaker 1: of them looked to collector cars as an investment, but
25:46
Speaker 1: a great many of them are looking to collect your
25:47
Speaker 1: cars as as just a passion that happens to have
25:51
Speaker 1: a good investment returns as well. It's the stock portfolio
25:54
Speaker 1: you can take to the park and show your friends
25:56
Speaker 1: on Sunday afternoon. How many cars do you have? Again,
25:59
Speaker 1: I have more than my share. It somewhere around twelve.
26:02
Speaker 1: Somewhere around twelve. I like that. It's always good to
26:05
Speaker 1: be vague when you go past a dozen. Uh. You know.
26:07
Speaker 1: I want to ask you though about the issue of providence,
26:11
Speaker 1: because a lot of people who collect automobiles, just like
26:14
Speaker 1: anything else, they want to know who owned it. They
26:17
Speaker 1: want to know whether the engine is the original engine,
26:20
Speaker 1: whether it's been restored. Maybe you could just define fink
26:23
Speaker 1: some of these details, because you know, you talk about
26:26
Speaker 1: is it a driver, is it a show car? Is
26:28
Speaker 1: it a barn find? Well, it's like any other collectible. Uh,
26:33
Speaker 1: there's different grades of collectibility. Uh. You start at your
26:37
Speaker 1: entry level uh driver and collector cars UM that are
26:41
Speaker 1: anywhere from ten to thirty thousand dollars and start working
26:44
Speaker 1: your way up. But when you start talking about providence, UH,
26:47
Speaker 1: you're talking about things. Does it has uh factory paperwork
26:51
Speaker 1: for when the car was sold new? Do you have
26:53
Speaker 1: the original invoice or a build sheet? I'm thinking of
26:57
Speaker 1: this nine Ford Mustang at is coming up for auction, right.
27:01
Speaker 1: I think it's got number it's number two, serial number
27:04
Speaker 1: two that rolled off the the production line and the
27:09
Speaker 1: only other car H serial number one is that of
27:12
Speaker 1: course at the museum. When you talk about such huge
27:18
Speaker 1: returns and from the from an investment standpoint, Dave, have
27:21
Speaker 1: you ever in your history working with muscle cars or
27:27
Speaker 1: uh collectors cars, ever seen such quick appreciation? Well, I think,
27:32
Speaker 1: particularly for some cars, UM, you know, the appreciation was
27:35
Speaker 1: might have been on that level of unsustainable. But the
27:39
Speaker 1: American muscle cars really are just starting to take off.
27:41
Speaker 1: And I think one of the things that we're most
27:43
Speaker 1: proud of is we're starting to see American cars sixties
27:47
Speaker 1: and seventies American muscle cars bring two and three million
27:50
Speaker 1: dollars at auction, which puts them in the same class
27:53
Speaker 1: as the traditional high value European cars, and so we're
27:57
Speaker 1: generating respect. But but is this sort of gay mean
28:00
Speaker 1: the rapid game is this unprecedented for American moss of cars? Well,
28:05
Speaker 1: oftentimes the question is is the is the rapid gain
28:09
Speaker 1: of bubble? But bubbles typically are driven by by speculation,
28:14
Speaker 1: and this is a market that's not driven by speculation.
28:17
Speaker 1: This is driven by patient So um, it's this is
28:21
Speaker 1: unlike other financial markets where you see the the ups
28:25
Speaker 1: and downs that are driven by supply and demand. This
28:28
Speaker 1: is this is driven by people that truly love the
28:31
Speaker 1: cars that they're buying that happened to be good investments
28:33
Speaker 1: and good investment returns as well. So you know, I
28:36
Speaker 1: don't see this market, you know, functioning like other markets
28:39
Speaker 1: and having corrections. Well, Greg Jared in our newsroom has
28:43
Speaker 1: just to signal me that he'd like me to purchase
28:45
Speaker 1: the g t O. The GTO He says he deserves it.
28:50
Speaker 1: I don't know, maybe he deserves the sixty nine Chevrolet
28:52
Speaker 1: Camaro SS that's also coming on the auction block. What
28:56
Speaker 1: he estimate that to go for? Well, Camaros have always
28:59
Speaker 1: been our bread and butter. It's a car that the
29:03
Speaker 1: American public has always recognized, uh, you know, probably one
29:07
Speaker 1: of the behind only Mustang and Corvette is the number
29:11
Speaker 1: one brand in the American car world. Um, it's a
29:16
Speaker 1: car that it can be very reasonable and you can
29:19
Speaker 1: get in the twenty thirty thou range where you can
29:21
Speaker 1: have a Camaro that'll bring six seved So Greg Jarrett
29:27
Speaker 1: now has his face pressed against the glass and I'm saying, please, please,
29:31
Speaker 1: We'll save him. Maybe you could chill out that three
29:33
Speaker 1: million dollars. He's even allowed to touch it if it's well.
29:38
Speaker 1: We appreciate, we appreciate you guys coming in here. Dave
29:41
Speaker 1: Major's chief executive officer of Makom Auctions, as well as
29:45
Speaker 1: Frank Meecom, director of consignment at the firm, which is
29:49
Speaker 1: based in Walworth, Wisconsin, which is where my mother is from.
29:52
Speaker 1: So nice to see you guys. Thanks for listening to
30:01
Speaker 1: the Bloomberg pien L podcast. You can subscribe and listen
30:04
Speaker 1: to interviews at iTunes, SoundCloud, or whatever podcast platform you prefer.
30:10
Speaker 1: I'm Pim Fox. I'm out there on Twitter at pim Fox.
30:14
Speaker 1: I'm out there on Twitter at Lisa Abramo it's one
30:17
Speaker 1: before the podcast. You can always catch us worldwide on
30:19
Speaker 1: Bloomberg Radio