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Trump, Credit Crunch, Media · 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,
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Speaker 2: and Bloomberg experts, along with essential market moving news.
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Speaker 1: Find the Bloomberg Markets Podcast called Apple Podcasts or wherever
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Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.
0:20
Speaker 1: All right, let's get to the news of the day.
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Speaker 1: It comes out of Washington, d C. Of course, former
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Speaker 1: President Trump charged over secret documents, and which is a
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Speaker 1: first for an ex president. We want to round table
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Speaker 1: this thing. We're going to do that today with Bloomberg
0:34
Speaker 1: Law host June Garasso. She's going to join us here
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Speaker 1: in the studio, and Ann Mary Hordern Bloomberg Washington Carsponey
0:39
Speaker 1: usually in DC. Up here in New York at our
0:41
Speaker 1: Bloomberg Interactive Broker Studio. We appreciate getting both June and
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Speaker 1: Anne Marie here and let's start with you. This feels different.
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Speaker 1: I mean, it's federal. Can you put in context what's
0:53
Speaker 1: the feeling coming out of Washington, DC?
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Speaker 3: Well, this is definitely different. First former US president to
0:57
Speaker 3: be tried with committing federal crime. This is a case
1:01
Speaker 3: that even Trump's own Attorney General, Bill Barr, has talked
1:04
Speaker 3: about for months, really that this is going to be
1:06
Speaker 3: the more serious of the case. Also said it was
1:09
Speaker 3: almost one of Trump's own making. He said recently on
1:12
Speaker 3: CBS this morning. He was there two days ago. He
1:14
Speaker 3: said Trump was the one there, his words, jerking around
1:18
Speaker 3: the DOJ when he could have just given up these
1:21
Speaker 3: documents that the National Archives wanted. And then you look
1:24
Speaker 3: at and June definitely will be able to speak to
1:26
Speaker 3: this more. The indictment what we're seeing so far, Obviously
1:30
Speaker 3: it's under seal that could be made public today, though
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Speaker 3: it contains these seven charges, and some of them would
1:37
Speaker 3: normally carry I don't think anyone actually thinks that we're
1:40
Speaker 3: going to see the president behind bars for a decade,
1:43
Speaker 3: but some of them carry potential consequences of ten or
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Speaker 3: twenty years behind prison.
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Speaker 4: So June, I want to bring you into the conversation
1:51
Speaker 4: breakdown more specifically what these charges.
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Speaker 5: Are well, and just a reminder that we don't know
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Speaker 5: what the charges are specifically. This is all based on sourcing,
2:00
Speaker 5: has been under seal and it may not be opened
2:03
Speaker 5: until actually until Tuesday, when he reports to the court.
2:08
Speaker 5: But it may be open sooner. So there are several
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Speaker 5: seven charges. They include wilful retention of national defense information,
2:15
Speaker 5: corruptly concealing documents, conspiracy to obstruct justice, and making false statements.
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Speaker 5: The conspiracy charge is particularly interesting to me because it
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Speaker 5: means that there was someone else. There has to be
2:29
Speaker 5: two people involved in a conspiracy, so the prosecutors have
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Speaker 5: someone else who they're either going to charge or who
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Speaker 5: is going to testify against Trump and one of the
2:39
Speaker 5: possible people. When you think about the evidence that they have,
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Speaker 5: they don't only have people. They have video and audio evidence.
2:45
Speaker 5: And part of the video evidence is a man moving
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Speaker 5: boxes into a storage boxes of documents into the storage
2:53
Speaker 5: space at marra A Lago the day before the prosecutors
2:57
Speaker 5: were set to arrive there. So they have lots of evidence.
3:01
Speaker 5: They also have what's kind of incredible. They have an
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Speaker 5: audio tape of Trump at his Bedminster golf club waving
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Speaker 5: a document around and saying that it was a document
3:13
Speaker 5: with sensitive military information related to Iran in his possession,
3:17
Speaker 5: and he says that he knows, according to a transcript,
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Speaker 5: he knows that he doesn't have the authority to show this.
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Speaker 5: So they have lots and lots of evidence.
3:26
Speaker 1: Hey, June, I just want to we got one little
3:28
Speaker 1: piece of news that started and I guess it's just
3:30
Speaker 1: going to come out and drips and drabs. But US
3:32
Speaker 1: Judge Aileen Cannon has been assigned to the criminal case.
3:37
Speaker 1: And I believe she is a Trump appointee. What does
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Speaker 1: that mean to you?
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Speaker 5: When I was thinking of why they moved the case
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Speaker 5: and the pros and cons of moving the case to Florida,
3:47
Speaker 5: I thought, Wow, I hope they don't get Judge Eileen
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Speaker 5: Cannon because it's not just that she's a Trump appointee.
3:53
Speaker 5: It's that she was the one appointed to be a
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Speaker 5: special Master to review the material sees from mar A Lago,
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Speaker 5: and she gave some I don't know, head scratching decisions
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Speaker 5: that people were sort of shocked by, and one of
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Speaker 5: them which prevented the FBI from using the c's classified
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Speaker 5: documents as part of their investigation until she completed her review,
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Speaker 5: which could take months, and that was ultimately thrown out.
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Speaker 5: She was reversed by the Eleventh Circuit and there was
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Speaker 5: some sharp language in there about her. So she's in
4:24
Speaker 5: it for this initial part. If she stays on it,
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Speaker 5: I think the Justice Department will have some problems.
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Speaker 4: Annriy want to bring you back into this conversation. How
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Speaker 4: does all of this end up impacting his campaign? Is
4:36
Speaker 4: he's under indictment once again.
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Speaker 3: Yeah, it's going to be an even more wild ride,
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Speaker 3: it feels like for the twenty twenty four campaign. So
4:44
Speaker 3: initially with the former president, anytime he faces a struggle,
4:48
Speaker 3: illegal hurdle, his numbers go up in the polls, and
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Speaker 3: also his campaign dollars go up. There's a big question
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Speaker 3: about this specifically because of how serious these charges are.
5:00
Speaker 3: Potentially how the other candidates, now it's much wider field
5:03
Speaker 3: in terms of Republican nominations, how they react. What you
5:06
Speaker 3: already are seeing is I think one individual only came
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Speaker 3: out and said they would pardon the former president, Vivik Ramaswami.
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Speaker 3: He came out and said that's what he would do,
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Speaker 3: and then others are taking a more moderate tone. Chris Christie,
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Speaker 3: we know that he's almost running this race to just
5:23
Speaker 3: bash Trump, but he did say let's see the facts.
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Speaker 3: I think all candidates will come out and say they're
5:28
Speaker 3: presumed innocent like all defendants. But a big question and
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Speaker 3: a litmus test for every nominee. Now, every question they're
5:36
Speaker 3: going to get whether they show up in Iowa, New Hampshire,
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Speaker 3: South Carolina, is will you pardon the former president?
5:42
Speaker 6: Okay?
5:43
Speaker 3: And that's going to now shape I think a lot
5:46
Speaker 3: of the Republican field.
5:48
Speaker 1: June can you give us. I know we haven't even
5:50
Speaker 1: seen the indictment, but on these types of cases, a
5:52
Speaker 1: sense of timing, how does this play out? And just
5:54
Speaker 1: to follow on Ann Mary's comments about the election, is
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Speaker 1: this some thing a six month process, a twelve month process,
6:01
Speaker 1: a multi year process.
6:03
Speaker 5: It's not multi year, And I mean it depends on
6:07
Speaker 5: how many motions there are before how I assume the
6:11
Speaker 5: Trump team is going to try to slow the process
6:14
Speaker 5: down with motions. Now, what's interesting is what the prosecution
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Speaker 5: did here. In order to prevent some of the most
6:21
Speaker 5: weight emotions, which would be a motion to change venue,
6:24
Speaker 5: they decided to go from Washington, d c. Where the
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Speaker 5: grand jury was hearing evidence for months, to Florida so
6:31
Speaker 5: that the defense wouldn't be able to raise that as
6:36
Speaker 5: a reason to slow things down, throw the case out
6:39
Speaker 5: and move it somewhere else. But I mean it could
6:42
Speaker 5: come before the before the election. There's no doubt that
6:45
Speaker 5: it could. There's also the other case in New York,
6:49
Speaker 5: which has which is I think supposed to go March.
6:52
Speaker 5: But and then you have in July or August. Do
6:57
Speaker 5: you have the district attorney in Fulton County going to
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Speaker 5: announce possible charges against Trump. So you're going to have
7:03
Speaker 5: all these judges, you know, jockeying and trying to figure
7:06
Speaker 5: out when they could have a trial. So but it
7:09
Speaker 5: could happen before before the election for sure.
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Speaker 4: And Marie, any sort of indication from your sources about
7:15
Speaker 4: what the chances are for an actual conviction on this, No,
7:18
Speaker 4: I don't think we're even closer to that point.
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Speaker 3: There's one I think interesting wrinkle and June can definitely
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Speaker 3: speak to this is I think everyone going into this
7:28
Speaker 3: thought it was going to be in Washington, in Washington, DC,
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Speaker 3: And this is almost a coup for the former president
7:34
Speaker 3: that it's happening in Florida. This is his home turf.
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Speaker 3: He has tremendous amount of support in Florida. He won
7:42
Speaker 3: that state. And I think if it was going to
7:46
Speaker 3: the trial was going to be and the case was
7:48
Speaker 3: going to be conducted of Washington, his team had already
7:51
Speaker 3: said they would try to move it to Florida, and
7:54
Speaker 3: already they're already it's starting in Florida June. Actually, I
7:57
Speaker 3: wonder do you think that them coming out and moving
8:01
Speaker 3: it to Florida helps the former president or because they
8:05
Speaker 3: wanted to motion to move it, it actually takes one
8:08
Speaker 3: of their tools out of the toolbox.
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Speaker 5: Well it's sort of a double edged sword because it
8:13
Speaker 5: takes one of the tools out of their toolbox, which
8:15
Speaker 5: would slow things down, But at the same time, it
8:18
Speaker 5: puts him in a really favorable venue. You know, as
8:21
Speaker 5: you said, Floridians voted for voted for Trump, and you
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Speaker 5: know he but he will not be able to say
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Speaker 5: the things he said about the New York jury during
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Speaker 5: the Eugene Carroll trial, how they were all against him,
8:33
Speaker 5: and he'll take that, will take his that talking point away.
8:35
Speaker 5: But yeah, I think it's I think it was a
8:38
Speaker 5: calculated move by the prosecutors. They want to move the
8:41
Speaker 5: case along, so they want to avoid that venue challenge,
8:44
Speaker 5: but at the same time, the jury pool is not
8:46
Speaker 5: going to be as favorable to them, I think, although
8:49
Speaker 5: they are in Miami.
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Speaker 3: So but it could potentially move to West Pump.
8:52
Speaker 5: Each Yes, it could, it could. This is all up
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Speaker 5: in the air. Who decides that, Well, there might be
8:58
Speaker 5: motions by the defense to move it. And right now
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Speaker 5: I'm not too sure where the judge Cannon is.
9:07
Speaker 1: I'm not sure.
9:08
Speaker 5: I'm not sure because we just found out about her
9:10
Speaker 5: a few minutes ago. So this is moving so quickly.
9:14
Speaker 5: But you know, there could be a motion to move it,
9:16
Speaker 5: or they could just decide that that's the better venue
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Speaker 5: for it because that's where mar A Lago is.
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Speaker 1: So so, Henriy, what have we heard, if anything, from
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Speaker 1: the Biden administration. What do we expect to hear from
9:27
Speaker 1: the Biden administration? How do we think they're going to
9:30
Speaker 1: play this whole thing?
9:31
Speaker 3: So Biden was asked about this yesterday he was giving
9:33
Speaker 3: a press conference with Richie Suneck of the UK, and
9:35
Speaker 3: of course reporters always want to ask about the hot
9:38
Speaker 3: story of the day, and he dismissed any of these
9:41
Speaker 3: suggestions that a potential indictment of the former president would
9:46
Speaker 3: potentially be politically motivated, because that's what the Republicans are
9:49
Speaker 3: really going to want to coalesce around this message. And
9:52
Speaker 3: you already seen some conservative networks of news saying it's
9:57
Speaker 3: Biden's doj going after the former president. So Biden said,
10:02
Speaker 3: you'll notice I have never once, one single time, suggested
10:04
Speaker 3: the Justice Department what they should do or not do
10:07
Speaker 3: relative to bring in charge or not bring a charge.
10:10
Speaker 3: He said, I'm honest. We also need to remember the
10:13
Speaker 3: current president is also facing a special counsel inquiry into
10:18
Speaker 3: his documents that's still pending. But Vice President Mike Penn's
10:23
Speaker 3: former vice president his was actually concluded, there's very different
10:27
Speaker 3: You could draw a lot of parallels because everyone has
10:29
Speaker 3: these documents at home, but there's very different cases. I
10:32
Speaker 3: think Biden and Pence really wanted to get rid of them,
10:34
Speaker 3: while many were saying Trump.
10:36
Speaker 5: Wanted to keep them. And as she said, what the
10:40
Speaker 5: Trump people have been saying, what Trump has been saying,
10:42
Speaker 5: this prosecution is by the Biden administration. All these different
10:46
Speaker 5: things about the witch hunt that's going to play. That's
10:50
Speaker 5: for the court of public opinion, that's for the jury
10:53
Speaker 5: pool that's out there, but that is not going to
10:55
Speaker 5: happen in court. As we've seen case after case, those
10:58
Speaker 5: kinds of discussions just don't take place and don't have
11:01
Speaker 5: an effect.
11:02
Speaker 1: We're going to be talking to you, Drewne. A lot
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Speaker 1: I think are the coming days, weeks, and months. All right,
11:06
Speaker 1: I want to thank Bloomberg Law host June Grasso and
11:09
Speaker 1: Bloomberg Watching correspondent Ann Marie Hordern, both here in our
11:12
Speaker 1: studios starting to get some initial analysis on what is
11:16
Speaker 1: going to be a very complex case.
11:18
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11:22
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11:26
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11:30
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11:34
Speaker 1: Let's just go right to the bond market. And why not,
11:35
Speaker 1: because again I've been saying you can after twenty twenty two,
11:38
Speaker 1: just when you got crushing equities, crush bonds. Four point
11:42
Speaker 1: six percent in a two year bond seems pretty good
11:45
Speaker 1: to me for the treasury market.
11:46
Speaker 4: It definitely is, especially after the pain last year and
11:48
Speaker 4: looking ahead to next week's FED meeting. Look at these
11:50
Speaker 4: swap traders pricing in a roughly one third chance that
11:53
Speaker 4: we're going to see a FED hike next Yeah.
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Speaker 1: Absolutely, so that'll be top of mine next week and
11:58
Speaker 1: we'll have full coverage of that. Let's check with Natalie Trevithik,
12:01
Speaker 1: She's head of investment grade credit strategy at paid and regal. So, Natalie,
12:05
Speaker 1: what do you think about my trade. I'm just going
12:06
Speaker 1: to go put some money in a two year Treasury note.
12:10
Speaker 7: I think that's a great trade, Paul, But I advise
12:13
Speaker 7: even going into corporate bond you get five and a
12:14
Speaker 7: half percent, so it's worth that minimal incremental risk to
12:18
Speaker 7: go into corporates.
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Speaker 4: So, Natalie, what is the bond market telling us about
12:22
Speaker 4: the direction of the economy at this point in what
12:24
Speaker 4: it can mean for the FED decision next week.
12:27
Speaker 7: I think it's telling us that we're in pretty good shape.
12:29
Speaker 7: We've seen a pretty big rally in corporate bonds or
12:31
Speaker 7: almost back to the levels they were at the beginning
12:34
Speaker 7: of the year pre the banking crisis, and we've seen
12:36
Speaker 7: a big recovery in both banking spreads and equities, particularly
12:40
Speaker 7: among the regionals. That gives us some confidence.
12:43
Speaker 4: So in the.
12:44
Speaker 1: Investment grade space, Natalie, kind of how are you thinking
12:47
Speaker 1: about things? Are you going sector bi sector? Are you
12:50
Speaker 1: focusing more on duration? How are you guys approaching the
12:54
Speaker 1: investment grade space these days?
12:57
Speaker 7: Yeah, it's a number of items. Definitely duration. We're seeing
13:00
Speaker 7: more demand for the long end of the curve. Even
13:02
Speaker 7: though those the front end, as you mentioned, is very attractive,
13:04
Speaker 7: we aren't sure how long it's going to last for
13:06
Speaker 7: so investors really want to lock in these ten and
13:09
Speaker 7: thirty year yields at these higher levels, and with corporate
13:11
Speaker 7: bond you're getting close to six percent there. Among the
13:15
Speaker 7: sectors we do like communications technology. We think banking has
13:19
Speaker 7: a little bit more to run, particularly in some of
13:21
Speaker 7: the regionals, and those are most attractive in the front
13:24
Speaker 7: end of the curve.
13:26
Speaker 4: What are you hearing from clients at this point as
13:28
Speaker 4: far as what their concerns are, and maybe concerns maybe
13:31
Speaker 4: they had at the beginning of the year, not so
13:33
Speaker 4: much at this point.
13:35
Speaker 7: Yeah, the concerns at the beginning of the year was
13:37
Speaker 7: the recession, and they were already pricing in FED cuts
13:40
Speaker 7: and that's not going to be the case. We don't
13:42
Speaker 7: think right now. They're concerned about all of this treasury supply.
13:46
Speaker 7: We're likely to get posts to debt sealing resolution. People
13:49
Speaker 7: are talking anywhere from five hundred billion to a trillion
13:52
Speaker 7: of T bill supply this summer, and they're worried that
13:54
Speaker 7: mini crowd out investments in other places, such as corporate bonds.
13:58
Speaker 1: So Natalie. One of the challenges for investors is trying
14:03
Speaker 1: to get a sense of where this economy really is going.
14:05
Speaker 1: So you know, when your analysts come to you or
14:08
Speaker 1: your pms come to you with an idea, do you
14:11
Speaker 1: ask them, Hey, have you run your recession model? And
14:14
Speaker 1: if so, how does this credit fair? Are Is that
14:18
Speaker 1: top of mind for you guys?
14:20
Speaker 7: Exactly? Even though recession may still be you know, six
14:23
Speaker 7: months to a year out, if it does come, we
14:26
Speaker 7: are definitely running our recession models. How are these companies
14:29
Speaker 7: going to do? Fortunately, most companies have been well prepared.
14:32
Speaker 7: This is the most well telegraphed recession potentially coming, so
14:36
Speaker 7: they have started already to cut their cappex or cut
14:39
Speaker 7: dividends or share buybacks where necessary. So many companies are
14:42
Speaker 7: defensively positioned. We've actually seen a number of upgrades back
14:46
Speaker 7: to investment grade from high yield this year, such as
14:48
Speaker 7: Occidental Petroleum recently.
14:51
Speaker 4: When it comes to this concern about how the US
14:54
Speaker 4: debt deal would potentially trigger this one trillion dollar liquidity crunch,
14:58
Speaker 4: especially when we're looking at what's happening in bond market,
15:00
Speaker 4: what's your take on that.
15:03
Speaker 7: I think it may be overblown because globally, investors are
15:06
Speaker 7: still flush with cash. We see that in the corporate market,
15:09
Speaker 7: where deals are like five times subscribed. Yesterday we had
15:12
Speaker 7: US Bank Corporate in the market with three and a
15:14
Speaker 7: half billion, and they actually had eighteen billion of demand
15:18
Speaker 7: for that deal. So it seems like the market will
15:20
Speaker 7: be able to absorb all of this T bill issuance.
15:23
Speaker 1: Yeah, that's kind of where I wanted to go. Natalie's
15:25
Speaker 1: kind of the new issue market. As a former banker myself,
15:27
Speaker 1: I always like to see deals, the deal flow and
15:30
Speaker 1: who's coming to market and what kind of pricing they're getting, So,
15:33
Speaker 1: you know, even the rates are higher, it seems like
15:36
Speaker 1: new issuance is still pretty active. Is your phone ringing
15:39
Speaker 1: off the hook from our friends on Wall Street?
15:41
Speaker 7: Yeah? Absolutely, The new issue market has been very active. First,
15:45
Speaker 7: there was a surge of issuance trying to get ahead
15:47
Speaker 7: of the debt ceiling, and the banks were kind of
15:49
Speaker 7: locked out of the market for a little while there
15:52
Speaker 7: in March and April. Now that the debt ceiling is over,
15:55
Speaker 7: we've seen banks come back with huge issuance twenty seven
15:58
Speaker 7: billion this week, though there's still about forty percent under
16:01
Speaker 7: the rate of issuance they had in twenty twenty two,
16:03
Speaker 7: so we still expect to see a lot more supply,
16:05
Speaker 7: But now that regionals have been able to access to
16:07
Speaker 7: the markets this week, we think smaller regionals will start
16:11
Speaker 7: to come.
16:12
Speaker 1: And how about that when you see some of these
16:13
Speaker 1: new deals, are they investor friendly in a sense that
16:17
Speaker 1: that some strong covenants in there or do you get
16:19
Speaker 1: a sense that it's more the leverage is on a
16:22
Speaker 1: part of the issue. Where are we in the market
16:24
Speaker 1: right now?
16:25
Speaker 7: Yeah, an investment grade, there's generally not that strong covenants,
16:28
Speaker 7: but we are seeing investors push back on the high
16:30
Speaker 7: yield market to make sure the covenants are a little
16:32
Speaker 7: bit stronger.
16:33
Speaker 8: Here.
16:34
Speaker 7: We are seeing better concessions though in terms of pricing,
16:37
Speaker 7: and they're leaving a little bit on the table so
16:39
Speaker 7: that these deals perform in the secondary market.
16:41
Speaker 4: I have to ask you about the yield curve. What
16:44
Speaker 4: do you think this is telling us about the economy.
16:47
Speaker 7: Yeah, it's not a good sign. It's definitely a recession indicator,
16:50
Speaker 7: even though we aren't as inverted as we were in
16:52
Speaker 7: two tens previously. But I also think you know that
16:58
Speaker 7: the Fed's going to leave rates higher for longer, probably
17:00
Speaker 7: until twenty twenty four, and there's always the risk that
17:04
Speaker 7: the FED may have broken something, and we really haven't
17:06
Speaker 7: had a long enough of a timeline to see all
17:09
Speaker 7: of these factions take place in the marketplace. The Silicon
17:13
Speaker 7: Valley Bank failure was definitely one indication that the FED
17:16
Speaker 7: may have gone too far.
17:18
Speaker 1: Now, do you guys invest solely in the US or
17:21
Speaker 1: do you go outside of the US as well?
17:23
Speaker 7: No, we invest globally, lots of emerging markets. We have
17:25
Speaker 7: a very dedicated team here on that.
17:28
Speaker 1: All right, so let's go there a little bit. When
17:31
Speaker 1: you think outside of the US borders, kind of how
17:33
Speaker 1: do you kind of prioritize where you guys are looking.
17:38
Speaker 7: We're looking at countries with stable governments. We're also looking
17:41
Speaker 7: at oil importers versus oil exporters. We're following the election
17:47
Speaker 7: cycle which is going on, so it's really bifurcated across
17:49
Speaker 7: from markets and.
17:50
Speaker 4: We're talking about exporters versus importers for crude and things
17:54
Speaker 4: like that. Is it obviously that correlation with what we've seen,
17:57
Speaker 4: especially with oil prices in the US around when you're
18:00
Speaker 4: thinking about that sort of seventy dollars threshold there and
18:04
Speaker 4: what that could mean for the opportunities in those particular
18:06
Speaker 4: emerging markets exactly.
18:09
Speaker 7: And we do think seventy dollars is close to a floor,
18:11
Speaker 7: so we aren't foreseeing a crash in oil, so we
18:14
Speaker 7: think the man is likely going to hold up fairly well.
18:18
Speaker 7: But it also depends on the depth of the recession
18:21
Speaker 7: if we get one.
18:22
Speaker 1: So when you think about emerging markets, I'm not sure.
18:26
Speaker 1: And this is equities, it's credit, it's you know, you
18:31
Speaker 1: think about China. It's such a big part of the MSCI,
18:33
Speaker 1: I mean, is there How do you think about emerging markets?
18:36
Speaker 1: Where where do you find opportunities? Do you even think
18:38
Speaker 1: about China or do you kind of stay a little
18:41
Speaker 1: bit more close to home.
18:43
Speaker 7: Yeah, China's a pretty bifurcated market because there's a very
18:46
Speaker 7: high quality end of the spectrum where you have such
18:49
Speaker 7: as the Ali Baba's and ten Cent good investment grade credits,
18:52
Speaker 7: and then you have the Chinese property market, which we're
18:55
Speaker 7: still a little bit cautious on. So it really starts
18:57
Speaker 7: to get down to a name by name basis even
18:59
Speaker 7: within these emerging markets.
19:01
Speaker 4: Something I wanted to get your take on because we're
19:03
Speaker 4: going to get another update on the CFTC data this
19:06
Speaker 4: afternoon around three point thirty, and I noticed, particularly in
19:09
Speaker 4: the bond market, when it comes to the shorting that's
19:11
Speaker 4: happening on the US ten year, it's at a very
19:14
Speaker 4: extreme positioning. Usually that happens when investors are thinking that
19:17
Speaker 4: yields potentially betting that they would go higher. But such
19:20
Speaker 4: extreme positioning, when I've talked to some sources, think that
19:23
Speaker 4: might have the opposite effect, ended up pushing yields lower
19:26
Speaker 4: and then maybe supporting more equity prices. Why do you
19:29
Speaker 4: think we're seeing such extreme shorting happening on the ten
19:31
Speaker 4: year right now?
19:33
Speaker 7: Yeah, it's a bit of a mystery. I think there's
19:35
Speaker 7: all this positioning and jockeying ahead of the FED meeting,
19:37
Speaker 7: But it does seem that, like post these sped decisions,
19:41
Speaker 7: sometimes the bond market moves in opposite directions than what
19:44
Speaker 7: you would expect by the statements, and some of that's
19:46
Speaker 7: driven by the short positioning being offset afterwards.
19:50
Speaker 1: All right, Natalie, for me, next Wednesday is Flag Day,
19:53
Speaker 1: but for others in the market, it's it's FED Day.
19:56
Speaker 1: What is your foot or reserve going to do?
19:58
Speaker 7: Do you think it's But we think there's a strong
20:01
Speaker 7: likelihood they make a one or two more times, so
20:03
Speaker 7: the July meeting is very active.
20:06
Speaker 1: All right, Natalie, thank you so much. We appreciate that.
20:08
Speaker 1: Natalie Trevithick, head of investment grade credit Strategy at Payden
20:13
Speaker 1: and Regal.
20:14
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20:18
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20:21
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20:24
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20:34
Speaker 1: Hey, you're darn right. Focus on munis is brought to
20:36
Speaker 1: you by the New Deal, which created American infrastructure that
20:40
Speaker 1: at leashed a new opportunity. Today we're doing it again
20:43
Speaker 1: with massive investment in modernizing our infrastructure and municipal bonds
20:47
Speaker 1: backed by Build America Mutual. They help make it happen.
20:50
Speaker 1: Invest in the future of America with BAM in short
20:53
Speaker 1: bonds that I did my best. It's not nearly as
20:56
Speaker 1: good as Matt Miller, but he was just walking by
20:58
Speaker 1: and he knows it's Thursday. He knows it's eleven nine Friday.
21:02
Speaker 1: He knows it's eleven oh nine, and he jumps right
21:05
Speaker 1: in because he knows that's time for muni's Joe Myisk
21:07
Speaker 1: joins us here in the Bloomberg Interactive Brokers to studio.
21:10
Speaker 1: He is the head of all our municipal research. Joe,
21:12
Speaker 1: what's happening at there? We've got rates moving higher. What's
21:15
Speaker 1: going on in the world of municipal bonds?
21:16
Speaker 8: You know, we have a lot of stuff, But the
21:18
Speaker 8: biggest news I think this week was we uh snapped
21:22
Speaker 8: the sixteen week streak of outflows, outflows into municipal outflows
21:28
Speaker 8: from municipal bond funds. We saw four and sixty million
21:31
Speaker 8: come in this week.
21:32
Speaker 4: It's the catalyst there.
21:34
Speaker 8: We're getting higher yields, We're getting this this higher coupons
21:39
Speaker 8: out there. There's also, let's face it, the relief from
21:43
Speaker 8: the you know, the debt limit you know being passed.
21:47
Speaker 8: So there there is that very much that you know,
21:51
Speaker 8: things are it looks like things are. There's more it's
21:56
Speaker 8: more constructive as the analysts.
21:58
Speaker 1: Why were there so many we of outflows?
22:01
Speaker 8: Oh, you know, there was everything to worry about. First
22:05
Speaker 8: of all, you have the FED and there still is
22:08
Speaker 8: uncertainty about the FED because you know, we're caring stories
22:11
Speaker 8: about you know, FED is probably gonna uh you know
22:15
Speaker 8: pause next week. Well perhaps not. So there's still a
22:20
Speaker 8: lot of uncertainty in that area. Uh, And that's that
22:24
Speaker 8: was the biggest reason for the outflows. There was also
22:28
Speaker 8: you know, the debt limit's been hanging over the market
22:32
Speaker 8: now for probably month and a half, two months, so
22:36
Speaker 8: you know, between those two things, that's why people were
22:39
Speaker 8: clearing out. And you know, two we had, you know,
22:44
Speaker 8: you were getting loads of deals priced with two three percent,
22:49
Speaker 8: four percent coupons, not exactly h enticing. But now fives
22:56
Speaker 8: five and a half's we're kind of back to really
22:59
Speaker 8: formula of and higher.
23:02
Speaker 1: I gotta call my guys.
23:03
Speaker 6: We're kind of back.
23:04
Speaker 1: Jersey's coming out with any stuff that kind of cooping.
23:06
Speaker 1: I'm jumping back in the market.
23:07
Speaker 8: Oh yeah, but but now you know, five percent coupons
23:10
Speaker 8: and you know we're in uh you know, I want
23:14
Speaker 8: to say it's a it's a better place. Plus, you know,
23:18
Speaker 8: right now, very little volume in our market. You know,
23:22
Speaker 8: I think we're down. We're about one hundred and fifty billion,
23:25
Speaker 8: which is off about twenty percent. And if you're talking
23:28
Speaker 8: about number of Issues are probably off thirty percent. So
23:32
Speaker 8: there's not exactly a lot of.
23:34
Speaker 1: Pressure, is that because rates have gone up and Issues
23:36
Speaker 1: don't want to sell those?
23:38
Speaker 6: Right?
23:38
Speaker 1: Yeah? But I thought, I thought the issues you've always
23:40
Speaker 1: told us they don't care what they got to pay.
23:41
Speaker 8: Well, they know if they have to come to market,
23:43
Speaker 8: they'll come to market. But so many of them don't
23:46
Speaker 8: have to come to market because they a lot of
23:49
Speaker 8: them still have the COVID relief money, or a portion
23:52
Speaker 8: of it. It still hasn't all been allocated.
23:55
Speaker 4: So what about when we were talking about SVB and
23:58
Speaker 4: when it came to that seven billion dollar Beauni portfolio
24:01
Speaker 4: seen as basically requiring this sort of deep concession. What's
24:05
Speaker 4: happening with that?
24:06
Speaker 8: Well, I think it was black Rock is running the
24:10
Speaker 8: UH is running the municipal bond auctions, and I know
24:15
Speaker 8: they've sold off a good portion of that already. But
24:18
Speaker 8: they're not gonna you know, they're gonna dole it out
24:21
Speaker 8: a little at a time. You don't, uh, you know,
24:24
Speaker 8: just say all I wants, Oh, here you go, mini market,
24:26
Speaker 8: here's you know these billions for you. No, it's a
24:29
Speaker 8: little bit. We'll dole it out that way. But you know,
24:33
Speaker 8: as we quoted an analyst this week saying, uh, you know,
24:37
Speaker 8: the banks were really caught holding a lot of low
24:41
Speaker 8: coupon stuff, you know, two percent, three percent, and all
24:45
Speaker 8: I took a big hit with the Fed, you know,
24:48
Speaker 8: making its move the last couple of years.
24:51
Speaker 1: All right, let's talk one of my favorite topics, which
24:53
Speaker 1: is Las Vegas. Professional sports teams have been flocking there
24:57
Speaker 1: over the last several years. First we had the hockey team.
25:00
Speaker 1: I can't even think that at the end the finals,
25:01
Speaker 1: I think, I don't know. And then I watched and
25:05
Speaker 1: then football there the Raiders, and now the Oakland A's
25:10
Speaker 1: are coming down. They need a stadium, Joe, and I'm
25:14
Speaker 1: just guessing that this is going to require a little
25:17
Speaker 1: bit of public financing.
25:18
Speaker 8: Oh yeah, we have at least three hundred and eighty
25:21
Speaker 8: million dollars in various subsidies and tax breaks and infrastructure
25:30
Speaker 8: construction that are rolled in there. It's the total. I
25:34
Speaker 8: think it's a one point five billion stadium. We've been
25:37
Speaker 8: calling it.
25:38
Speaker 6: And uh, this week.
25:41
Speaker 8: We had Max Adler right about the Nevada lawmakers have
25:45
Speaker 8: been called back into session second special session to discuss
25:50
Speaker 8: the financing package for the as I I am in
25:54
Speaker 8: no talent that this is going to pass. Yeah, because
25:57
Speaker 8: Las Vegas is just such a.
26:01
Speaker 1: They're printing money out there. I can't imagine this won't
26:05
Speaker 1: get approved.
26:06
Speaker 8: No, I I yeah, this is this is, This has gone.
26:09
Speaker 4: Through any sort of timetable as far as when we
26:11
Speaker 4: could find out when that may happen.
26:12
Speaker 8: Oh, this is going to be uh you know, certainly
26:15
Speaker 8: within the next couple of weeks. And then they you know,
26:19
Speaker 8: set up the various parts of it, including the actual
26:22
Speaker 8: bond issue, which I know that mister Sweeney.
26:24
Speaker 1: Wants to got a part of totally. I mean, I'm
26:26
Speaker 1: just looking. I've been to a couple of Yankee games
26:28
Speaker 1: out in the Oakland Stadium. Man, that thing is ancient.
26:33
Speaker 1: I mean it is rough, and nobody goes to those games.
26:36
Speaker 1: It's not as bad as Tampa Bay maybe, but boy,
26:39
Speaker 1: it is rough out there. But and it's for such
26:41
Speaker 1: a great city. It's just brutal. But I think we're
26:44
Speaker 1: finding out in that Bay Area market can't really support
26:47
Speaker 1: two franchises, whether it's football, whether it's baseball.
26:51
Speaker 4: That's what it looks like.
26:52
Speaker 1: Yeah, but you know the Warriors, you know, they moved
26:54
Speaker 1: to a great new arena, in downtown San Francisco, right
26:57
Speaker 1: by the water, right by the pack Bell Park, which
26:59
Speaker 1: is I'm not sure what it's called anymore, but so
27:01
Speaker 1: that's a great area downtown San Francisco. But it looks like,
27:04
Speaker 1: you know, the age, you're going to Vegas and the
27:06
Speaker 1: public's gonna pay.
27:06
Speaker 9: Up little bit here.
27:07
Speaker 1: Oh yeah, and I think that I bet you those
27:09
Speaker 1: bonds will be snapped up.
27:10
Speaker 8: Oh easily. You know. In fact, I wrote about a
27:15
Speaker 8: bond issue out today, call them out today for the
27:21
Speaker 8: El Paso Chihuahuas. Whoa triple a El Pasoxes.
27:27
Speaker 4: Yes they were.
27:29
Speaker 8: They were going into the action today fifteen games back
27:32
Speaker 8: in third place behind the Oklahoma City Dodgers.
27:37
Speaker 1: So they're coming up with the bond deficiently.
27:39
Speaker 8: Yeah, they sold bonds earlier on for dis service savings.
27:43
Speaker 8: But could you imagine, you know, you get your you know,
27:46
Speaker 8: you're making your way up in the minors, and and
27:49
Speaker 8: you get to say, I'm a chiuaa cha.
27:52
Speaker 1: All right, So how are the fund flows into muni's.
27:53
Speaker 1: Are you talked to that that we have some funds
27:55
Speaker 1: for the first time coming back in Do you expect
27:57
Speaker 1: that to continue or one of the folks in the
28:01
Speaker 1: market talking ylloid, I.
28:02
Speaker 8: Would expect it to be coming back in now. And
28:07
Speaker 8: you know, as I say, you have higher yields, there's
28:10
Speaker 8: relief over the DEAT limit being passed, and you know
28:14
Speaker 8: you do have year to date. I know you're always
28:17
Speaker 8: as this performance over two percent.
28:20
Speaker 1: Over two percent, and that's you know, and then you
28:23
Speaker 1: get the tax adjustment there it's even better, say stuff.
28:26
Speaker 8: So yeah, so I would expect that we're going to
28:29
Speaker 8: see more inflows. And there's nothing on the horizon. I mean,
28:32
Speaker 8: there's no big muni disaster on the horizon, you know
28:36
Speaker 8: that throw people off the game.
28:38
Speaker 1: All Right, I'm gonna call my guy to make sure
28:39
Speaker 1: he's on the lookout for some new Jersey muni's I
28:42
Speaker 1: like to say, coupons. I'm hearing about it exactly, Joe.
28:45
Speaker 1: I guess what, No, that's it. That's it. The end
28:48
Speaker 1: of our time together for this week. Joe Misich he
28:51
Speaker 1: covers all things municipal bonds for Bloomberg Briefs for our
28:55
Speaker 1: weekly update, which we always save for Friday. On the
28:58
Speaker 1: municipal bond market against the host of return this year
29:01
Speaker 1: after twenty twenty two, or the whole fixed income space
29:03
Speaker 1: was just ravaged in terms of negative performance. We're going
29:06
Speaker 1: more coming up. This is Bloomberg.
29:09
Speaker 6: You're listening to the team Ken's our live program Bloomberg
29:13
Speaker 6: Markets weekdays at ten am Eastern on Bloomberg dot Com,
29:16
Speaker 6: the iHeartRadio app, and the Bloomberg Business App, or listen
29:19
Speaker 6: on demand wherever you get your podcasts.
29:23
Speaker 1: You know, just when we want to talk about the
29:26
Speaker 1: worlds of technology and media coming together, we've got some
29:29
Speaker 1: good people to talk to.
29:31
Speaker 4: Want to see our next guest exactly.
29:33
Speaker 1: Mark Dougas president's CEO of Mountain Joints, is here.
29:36
Speaker 4: Hey.
29:37
Speaker 1: Mark, I want to ask you about what, to me
29:39
Speaker 1: has been one of the bigger news stories of this week,
29:42
Speaker 1: which is the merger of the PGA Tour and Live Golf.
29:46
Speaker 1: I mean, it just shocked the world of golf. It
29:49
Speaker 1: shocked the people who follow the business of golf, and
29:52
Speaker 1: I bet it was kind of a shock to some
29:53
Speaker 1: of their media partners as well. What's your take from
29:57
Speaker 1: your perspective and kind of the media slash tech zeitgeist.
30:02
Speaker 9: Yeah, so, first thing, I think if you spend time
30:06
Speaker 9: in the Middle East, I coincidentally have been in Dubai
30:10
Speaker 9: for ten the last ten days and this part of
30:14
Speaker 9: the world is just absolutely booming. It started with Dubai.
30:19
Speaker 9: I actually went to Dohag Guitar this week, which is
30:24
Speaker 9: also a much more traditional city than Guitar, but also booming.
30:29
Speaker 9: The people there are very happy, at least everyone I
30:32
Speaker 9: talked to was laughing and just really happy. And so
30:36
Speaker 9: it's very different on the ground than the image I
30:40
Speaker 9: think that folks have of the Middle East. And there's
30:43
Speaker 9: been a lot of evolution over the last two decades,
30:46
Speaker 9: and so Saudi Arabia is following that lead. All of
30:49
Speaker 9: a sudden, it's becoming kind of trying to become a
30:53
Speaker 9: tourism location. Obviously, I think for a lot of people
30:57
Speaker 9: in America that's kind of like not the first place
30:59
Speaker 9: that come the mind for where to go to a vacation,
31:02
Speaker 9: but they, I think, are determined to spend literally hundreds
31:06
Speaker 9: of billions of dollars to you know, kind of adjust
31:10
Speaker 9: their cultures, their their image, and to make Saudi Arabia,
31:15
Speaker 9: long with Dubai cant Are another city, is kind of
31:17
Speaker 9: an attractive place to go. And I think this deal
31:20
Speaker 9: the reason I said all that, I think this deal
31:22
Speaker 9: is essentially a part of that, and in fact, the
31:25
Speaker 9: amount of money involved in a deal is almost like
31:27
Speaker 9: a rounding era in terms of the entire investment that
31:31
Speaker 9: they're determined, Like there are single buildings in Dubai that
31:35
Speaker 9: costs the value of this deal. So so, I mean,
31:39
Speaker 9: I think it's great for the game of golf, Turning
31:41
Speaker 9: golf into a you know, kind of more of a
31:44
Speaker 9: team sport, making the players be a little less prize
31:48
Speaker 9: oriented in terms of how they make money and more
31:51
Speaker 9: kind of salary plus bonus oriented. I think it's great
31:54
Speaker 9: for the players, and I think it's going to expand
31:57
Speaker 9: the game. It's going to take some time, but I
31:58
Speaker 9: think it's going to we turn this game into something
32:01
Speaker 9: that a lot of people see as a more serious
32:05
Speaker 9: sport for the people who are not currently followers of God.
32:08
Speaker 1: What's the feeling, Yeah, well, what's the what's the feeling
32:11
Speaker 1: over there? Mark from some of the negative response that
32:16
Speaker 1: we've seen about just live golf in general, the role
32:19
Speaker 1: of the Saudis and live Golf, and and some of
32:22
Speaker 1: the feedback from even some big players like Roy McElroy
32:25
Speaker 1: and and those that didn't have not to date supported
32:28
Speaker 1: live what's the feeling over there in the Middle East
32:30
Speaker 1: about that?
32:31
Speaker 2: Yeah?
32:31
Speaker 9: I think they, I think they understand it, but they
32:34
Speaker 9: think that Americans are kind of looking in the past.
32:40
Speaker 9: You know, most of like I said, the tourism here
32:42
Speaker 9: and the people you see are more from Europe. You
32:46
Speaker 9: don't really see a lot of American as many Americans
32:49
Speaker 9: walking around. So I think they their perspective is, look,
32:54
Speaker 9: we you know, we we we've blended our culture with
32:57
Speaker 9: Western culture and and do so We've made ourselves way
33:01
Speaker 9: more attractive to Europe and that will eventually happen to
33:06
Speaker 9: America as they as they you know, like meet us
33:09
Speaker 9: as individuals and realize that we are very friendly to
33:13
Speaker 9: the to the rest of the world and not this
33:16
Speaker 9: kind of extremist.
33:19
Speaker 1: Image and actions.
33:21
Speaker 9: You know, you can that that happened in the past.
33:24
Speaker 9: So so I think they think time will will make
33:28
Speaker 9: this work, and and they're patient, they're they're ready to
33:32
Speaker 9: invest the time and the money to make it happen.
33:34
Speaker 4: Since you work in the advertising software type space, what
33:37
Speaker 4: do you think a deal like this could mean, particularly
33:39
Speaker 4: for advertisers moving forward.
33:42
Speaker 9: Yes, Well, all the big money in sports actually comes
33:46
Speaker 9: from things like TV rights and when you talk to
33:49
Speaker 9: like some of the biggest agencies, the biggest issue they
33:52
Speaker 9: always have is getting more sports content. They want their
33:56
Speaker 9: advertisers want to advertise against more sports. So I'm talking
34:00
Speaker 9: like the WPPS and Group and and agent the big
34:05
Speaker 9: agency holding companies. So you know, the sport needs to
34:10
Speaker 9: kind of live up to the vision in the steel.
34:13
Speaker 9: But I think people are very encouraged by one interesting thing.
34:18
Speaker 9: We've been playing with a mound and this is almost
34:21
Speaker 9: like just an internal project. We look at a golf
34:23
Speaker 9: game and we look at and we go look at
34:25
Speaker 9: all that advertising space, like it's just all that green
34:29
Speaker 9: on the screen. And we've been we've been playing with
34:33
Speaker 9: ads that just like like show up on the on
34:36
Speaker 9: the lawn like just I think, so there's a lot
34:41
Speaker 9: of fun you can have with the technology, like by
34:43
Speaker 9: creating a space. But I think people anywhere you can
34:46
Speaker 9: get more sports content to advertise against, you're gonna get
34:50
Speaker 9: enthusiasm from advertisers. And that is you know where the big,
34:55
Speaker 9: big money comes in sports. It's like the huge sports deals,
34:58
Speaker 9: especially if golf starts to become more of a team
35:01
Speaker 9: sport than less of a little less of an individual sport.
35:04
Speaker 1: So to that end, I mean you're tight with the
35:08
Speaker 1: advertising community, the tech community, the intersection of that type
35:11
Speaker 1: of thing we had. Are you surprised we haven't seen
35:15
Speaker 1: you know more, you know, a tech company of size
35:19
Speaker 1: jump into the deep end of the pool and really
35:21
Speaker 1: get into content. So for example, you know, try to
35:25
Speaker 1: really bid for a major NFL package or Sunday package
35:28
Speaker 1: or something like that. I think about like Amazon Prime
35:30
Speaker 1: for example. You know, they've got a huge block of subscribers,
35:33
Speaker 1: They've they've got you know, bottomless pit of of of money.
35:38
Speaker 1: They're they're into the you know that the content business.
35:41
Speaker 1: But what one could argue they're not in commensuratey size.
35:44
Speaker 1: How do you think about that?
35:47
Speaker 9: Yeah, I think the the economics on that are just
35:53
Speaker 9: not very attractive. I mean, it makes sense for the
35:56
Speaker 9: big content networks like an NBC and others to bid
35:59
Speaker 9: on things like the Olympics and the bid on you
36:02
Speaker 9: know kind of NFL and so forth. But I think
36:05
Speaker 9: it's much harder to get Netflix. I think Netflix is
36:10
Speaker 9: kind of one of the prime examples. They've never had
36:13
Speaker 9: sports to my knowledge any right, well, what they've done
36:16
Speaker 9: an end a round on sports. I just was on
36:18
Speaker 9: I just literally locked into my Netflix account and they
36:21
Speaker 9: have like they have Formula one. They you know, an
36:23
Speaker 9: annual series. They now have one on bike racing, the
36:28
Speaker 9: Tourder France, and so they've come into it at much
36:30
Speaker 9: lower costs and ironically have helped expand those sports without
36:36
Speaker 9: having to commit literally billions of dollars to do it.
36:38
Speaker 9: I just don't think the economics fit. The economics at
36:42
Speaker 9: tech companies typically love which is very high margin with
36:45
Speaker 9: relatively low investment. So it's going to take some time
36:49
Speaker 9: before they jumped into the content game, where it's very
36:52
Speaker 9: high investment and arguably much much lower margin to you know,
36:57
Speaker 9: high much higher risk to get there.
36:59
Speaker 4: So the ad tier for Prime Video streaming service at Amazon,
37:02
Speaker 4: that's going to be tough.
37:05
Speaker 9: Yeah, I think Prime that I don't think that's much
37:08
Speaker 9: of a news story. I mean the one of the last.
37:11
Speaker 9: The thing about Prime the single biggest issue and that
37:13
Speaker 9: this is coming directly from executives at Amazon, you know,
37:17
Speaker 9: and conversations on that. The single biggest issue is most
37:19
Speaker 9: prom subscribers don't know they have Prime Video. They just
37:23
Speaker 9: literally don't know they got they got Prime because they
37:26
Speaker 9: want fastest shipping and free shipping on every order they did,
37:31
Speaker 9: and then it's and so they their single biggest issue
37:34
Speaker 9: like the Prime does advertise the advertisement or the remind
37:39
Speaker 9: you that you have access to Prime Video. So I
37:41
Speaker 9: think so it's kind of a very unique situation. And
37:46
Speaker 9: to a certain extent, I think that them having an
37:50
Speaker 9: ad supported tier maybe as much as like you need
37:53
Speaker 9: your subscribers to put some skin in the game for
37:56
Speaker 9: the actual video, Like if you want them to know
37:59
Speaker 9: they have it, they have to maybe pay for it,
38:02
Speaker 9: you know. I think that's what they're paying for. So
38:06
Speaker 9: I think Prime is just a very unusual content source,
38:12
Speaker 9: and Amazon clearly watched offset some of the costs and
38:17
Speaker 9: get more like knowledgeable adoption of Prime Video as opposed
38:22
Speaker 9: to like this time is currently mostly passive adoption of it.
38:26
Speaker 1: All right, Mark, always good to check in with you.
38:29
Speaker 1: We appreciate you making a time all the way from
38:31
Speaker 1: the Middle East. Mark Douglas, President and CEO of Mountain,
38:35
Speaker 1: just talking about the confluence continued confluence of technology and media.
38:40
Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can
38:43
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38:47
Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
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Speaker 2: at Matt Miller nineteen seventy three and on fall Sweeney.
38:54
Speaker 1: I'm on Twitter at pt sweeney Before the podcast. You
38:57
Speaker 1: can always catch us worldwide at Bloomberg Radio