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Markets, Commodities, And Twitter (Podcast) · 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. Every business day we bring
• 0:06
  Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
• 0:11
  Speaker 1: with essential market moving news. Find the Bloomberg Markets podcast
• 0:15
  Speaker 1: called Apple Podcasts or wherever you listen to podcasts, and
• 0:18
  Speaker 1: at Bloomberg dot com slash podcast. Since we have Lisa here,
• 0:23
  Speaker 1: we figured we'd booked a whole bunch of super smart
• 0:26
  Speaker 1: rates guests, So pream Isra is the first on our
• 0:28
  Speaker 1: docket to join us. Pre a great to have you
• 0:30
  Speaker 1: on the program. Um, I'm gonna kind of sit back
• 0:33
  Speaker 1: while you and Lisa explain to me what's going on.
• 0:37
  Speaker 1: I know that what the curve is inverted for like
• 0:40
  Speaker 1: the third time, maybe the fourth time, right, Um, and
• 0:44
  Speaker 1: Jay help me out. Lisa, Sorry, Lee, Lisa helped me out.
• 0:48
  Speaker 1: Jay Powell pays attention to the three month tenure, but
• 0:51
  Speaker 1: we're all fixated on the two year, ten year. Well, okay,
• 0:55
  Speaker 1: so there are yield curve in versions. People. If it's
• 0:57
  Speaker 1: waiting for this, you're seeing people really bid into the
• 1:00
  Speaker 1: long end. There is this expectation for some sort of recession.
• 1:05
  Speaker 1: But the thing that really has struck me in Matt.
• 1:08
  Speaker 1: You know, to me, the fascinating aspect is that people
• 1:10
  Speaker 1: are already pricing in rate cuts, and a lot of
• 1:13
  Speaker 1: people are pushing back and saying it is too soon
• 1:16
  Speaker 1: to predict the FED will curtail their rate hiking cycle.
• 1:21
  Speaker 1: Can you weigh in on that, this idea that there
• 1:23
  Speaker 1: is going to be some sort of retracement of a
• 1:27
  Speaker 1: federal reserve that is dead set uncurtailing inflation. Sure, thanks
• 1:32
  Speaker 1: for having me, and I love all the rich talc.
• 1:35
  Speaker 1: It's it's really the heart of the issue right now.
• 1:38
  Speaker 1: So you know, I think it's fair the market pricing
• 1:41
  Speaker 1: in these cuts. What I struggled with not so much
• 1:44
  Speaker 1: as the concern. I mean, the FED is likely to
• 1:46
  Speaker 1: hike at the fastest space into the highest level really
• 1:50
  Speaker 1: since the nineties, so it is a significant amount of frightening.
• 1:53
  Speaker 1: We also have balance sheet run off, so there is
• 1:55
  Speaker 1: a lot of tightening, and so I think the concern
• 1:57
  Speaker 1: about growth and the consumer six months out, one year out,
• 2:01
  Speaker 1: I think is legitimate, and which is why we're actually
• 2:04
  Speaker 1: long long and real rates. We went long last week.
• 2:07
  Speaker 1: What I struggled with is the pricing and of rate cuts.
• 2:10
  Speaker 1: I think the FED is telling us, and I'm taking
• 2:12
  Speaker 1: them at face value. They've changed their reaction function. They
• 2:15
  Speaker 1: care about inflation unconditionally, which means, even though they know
• 2:19
  Speaker 1: that they have a dual mandate, if growth slows down,
• 2:23
  Speaker 1: I think they'll view it as collateral damage. They really
• 2:26
  Speaker 1: have to get price stability and their inflation credibility back
• 2:29
  Speaker 1: on track. So if inflation stays higher, we're looking for
• 2:31
  Speaker 1: another actually above consensus headline inflation number this week. We're
• 2:37
  Speaker 1: concerned that that's going to make the FED continue to hike,
• 2:40
  Speaker 1: and I think the market pricing and cuts right after
• 2:43
  Speaker 1: the last hike that I struggled with, I think they're
• 2:45
  Speaker 1: going to stay on hold for a while, so that
• 2:48
  Speaker 1: inversion that Matt's talking about. I think that inversion stays
• 2:51
  Speaker 1: deepens further because we're all going to wait for the
• 2:53
  Speaker 1: FED to respond to slower growth, and they're going to
• 2:56
  Speaker 1: be their hands are a bit tied until inflation gets
• 2:59
  Speaker 1: closer to percent. I don't think they'll have that. It's
• 3:02
  Speaker 1: two percent the number that we're looking for pre I
• 3:04
  Speaker 1: was reading a note from Ben Emmons over at Medley
• 3:08
  Speaker 1: Advisors this weekend, and he says, um an unemployment rate
• 3:12
  Speaker 1: of sorry, uh uh, an inflation rate of three point
• 3:17
  Speaker 1: six percent would be three and a half percent would
• 3:20
  Speaker 1: be headed in the right direction. I think it's headed
• 3:24
  Speaker 1: in the right direction. It can help them slow down
• 3:26
  Speaker 1: the place of hikes like we're looking for after this
• 3:29
  Speaker 1: fifties twenty five. But I think to ease you have
• 3:33
  Speaker 1: to have two percent very clearly in front of you.
• 3:36
  Speaker 1: I think three and a half is still too high.
• 3:38
  Speaker 1: I mean, if we're a two and a half, that's
• 3:40
  Speaker 1: a big decline and growth is slowing significantly. I think
• 3:43
  Speaker 1: that might be mode level where they can cut. But
• 3:45
  Speaker 1: absolutely I think getting to three three and a half,
• 3:48
  Speaker 1: they'll say, look, their success, our tightening is having an impact.
• 3:51
  Speaker 1: We can slow down, we can pause the hiking cycle.
• 3:55
  Speaker 1: I think cutting is just a higher hurdle. Right. We're
• 3:58
  Speaker 1: speaking with Permsra Ahead of Rates Strategy over at TV Securities.
• 4:01
  Speaker 1: Prior earlier this morning, we were speaking with Sonalza Sai,
• 4:05
  Speaker 1: a Franklin Templeton who said she expects inflation headline and
• 4:09
  Speaker 1: c p I to remain at about seven and a
• 4:12
  Speaker 1: half to eight percent at year end. What kind of
• 4:18
  Speaker 1: FED funds rate would that imply if the Fed really
• 4:21
  Speaker 1: saw that inflation, Yes, was trending down, but only by
• 4:25
  Speaker 1: about a percentage point. Oh that's not a good That's
• 4:30
  Speaker 1: much higher than our forecast. We've got FED funds closed
• 4:33
  Speaker 1: like three seventy five by your en four percent biole
• 4:36
  Speaker 1: next year with a five and a half percent cp I.
• 4:39
  Speaker 1: So if you're telling me it's seven percent, I mean
• 4:42
  Speaker 1: I don't think we go up necessarily a lot more
• 4:45
  Speaker 1: than four four and a quarter, but I think it's
• 4:47
  Speaker 1: going to make that it makes it very hard for
• 4:50
  Speaker 1: the Fed to sound responsive to growth. Let's say, let's
• 4:53
  Speaker 1: sort of reframe this in terms of the CPI print
• 4:56
  Speaker 1: that we get this week on Wednesday. Is the risk
• 5:00
  Speaker 1: of possible upside or a downside surprise? What's the bigger
• 5:03
  Speaker 1: risk based on market positioning for rates? I actually think,
• 5:09
  Speaker 1: I mean we're looking for upside surprise because I think
• 5:12
  Speaker 1: even though oil prices have fallen, they didn't really fall
• 5:14
  Speaker 1: in June. But I think the markets more vulnerable to
• 5:18
  Speaker 1: a weaker surprise, meaning you know, we were sort of
• 5:22
  Speaker 1: we've priced in high inflation, and so if you start
• 5:25
  Speaker 1: to see weaker inflation prints, I think these FED hikes
• 5:28
  Speaker 1: start to get taken out. The idea maybe the touts
• 5:30
  Speaker 1: pricing will go down, but I do think rates will fall.
• 5:33
  Speaker 1: I mean we've risen a lot, even in the front end,
• 5:36
  Speaker 1: so I think now with growth concerns sort of front
• 5:39
  Speaker 1: and center, a weaker inflation, and I should say it's
• 5:42
  Speaker 1: not just headline, it's core, and it's details of the core.
• 5:45
  Speaker 1: If all the decline is driven by airline fares, I
• 5:47
  Speaker 1: think the market should ignore it. If it's driven by
• 5:50
  Speaker 1: shelter service inflation, the consumer is pulling back and therefore
• 5:53
  Speaker 1: service inflation is slowing down. I think the market is
• 5:56
  Speaker 1: going to say, great, now the FED can slow down
• 5:58
  Speaker 1: hikes and that doesn't result in a recession. And so
• 6:01
  Speaker 1: I think some of the real move this, you know,
• 6:04
  Speaker 1: inversion of the curve or over the FED over doing
• 6:07
  Speaker 1: it risk. I think that starts to come off. I
• 6:10
  Speaker 1: think it's truly for it. I think we only see
• 6:12
  Speaker 1: that sign closer to your end, but but that's the risk.
• 6:14
  Speaker 1: Pria thanks so much for joining us. Pre A Miser
• 6:16
  Speaker 1: their managing director and global head of rate strategy at
• 6:19
  Speaker 1: t D Securities. So, Lisa, I saw that interview they
• 6:23
  Speaker 1: do with Nale Decide this morning. I thought it was
• 6:26
  Speaker 1: fantastic and both Priya and Sinale are have been going
• 6:30
  Speaker 1: long on the long end of the curve, right is
• 6:33
  Speaker 1: that is that consensus right now? Basically people see a
• 6:36
  Speaker 1: more consistent outlook over the next ten to thirty years
• 6:40
  Speaker 1: than they do over the next two months. That's my
• 6:43
  Speaker 1: takeaway as we look at a market that is highly
• 6:45
  Speaker 1: tollowed off, as we look at that market, and as
• 6:47
  Speaker 1: we focus on Way. Paul Sweeney is out this week
• 6:51
  Speaker 1: on the Big Island. Lisa just came back. Magnum p I.
• 6:55
  Speaker 1: The Robin's nest was demolished in two thousand eighteen. This
• 7:00
  Speaker 1: is Bloomberg. Let's go to Darway cong right now and
• 7:07
  Speaker 1: talk about the commodities portion of that equation. He's a
• 7:10
  Speaker 1: portfolio manager and head of Commodities over at d w
• 7:13
  Speaker 1: S Group. Darway. Thanks so much for joining us. Um
• 7:17
  Speaker 1: are we seeing commodities prices turned down? I've seen charts
• 7:20
  Speaker 1: recently the show. You know, not just the aggs, but
• 7:23
  Speaker 1: also the metals and the oils start to turn over,
• 7:26
  Speaker 1: even though we still have this natural gas story in Europe.
• 7:30
  Speaker 1: Uh Hi, Matt, thank you for inviting me today. Yes,
• 7:34
  Speaker 1: we do see quite a bit of a correction recently
• 7:37
  Speaker 1: across the board across all commodities and your rights across
• 7:42
  Speaker 1: energy complexes, cross based metal and certainly agriculture as well.
• 7:47
  Speaker 1: But we do think the drivers behind each part of
• 7:49
  Speaker 1: the sector is different, so plus energy. Clearly energy is
• 7:54
  Speaker 1: most directly related to people's concerns about the session and
• 7:58
  Speaker 1: the demand correct in there. It could be very severe
• 8:01
  Speaker 1: should we have a deep prolonged recession, but we do
• 8:06
  Speaker 1: think right now that's a little bit overdone from the
• 8:10
  Speaker 1: energy price correction perspective. On the natural gas side versus oil,
• 8:14
  Speaker 1: US natural gas price corrected much more than the global
• 8:18
  Speaker 1: natural gas price actually going opposite direction. Large part of
• 8:21
  Speaker 1: that is driven by the recent vire freeport that caused
• 8:26
  Speaker 1: the export to slow down, and we do think once
• 8:28
  Speaker 1: to export blockage, what to reverse welcome to see the
• 8:34
  Speaker 1: export pick up again, and then probably energy price, especially
• 8:37
  Speaker 1: metural gas price wor pick up again as well. Darway's
• 8:39
  Speaker 1: taking on the crude story on the oil, not the gas.
• 8:44
  Speaker 1: I'm wondering what the floor and what the ceiling is
• 8:46
  Speaker 1: for your expectations at this point, given that just a
• 8:50
  Speaker 1: few months ago you saw the potential for a hundred
• 8:53
  Speaker 1: and fifty five barrel and Brent and now we're seeing
• 8:58
  Speaker 1: recession concerns overwhelmed some of the demand issues and really
• 9:03
  Speaker 1: caused the clients. Um, that's a very good question of
• 9:08
  Speaker 1: our earlier assumption really comes from the unknown from how
• 9:13
  Speaker 1: much would the Russian oil be off market? I think
• 9:15
  Speaker 1: at the beginning of March there has really been very
• 9:20
  Speaker 1: little clarity about how deep the sension could go and
• 9:25
  Speaker 1: how much impact there are in terms of just ability
• 9:30
  Speaker 1: for for replacement for the oil. But we have found
• 9:34
  Speaker 1: since then, and I think the market recognized that is
• 9:36
  Speaker 1: the exports from Russia has been disrupted, but not to
• 9:41
  Speaker 1: the large degree that could have happened. And then even
• 9:44
  Speaker 1: though Europe is about to impose more ascension hasn't started yet,
• 9:47
  Speaker 1: so Europe is still buying oil from Russia. UM that
• 9:52
  Speaker 1: that replacement of demands from Asia has been very palpable
• 9:56
  Speaker 1: and was a increase buying from both India and China.
• 10:00
  Speaker 1: They can take up what the Europe doesn't buy. So
• 10:04
  Speaker 1: we're seeing less supply disruption than earlier expected. So that's
• 10:09
  Speaker 1: why the price has declined. What's your outlook for China
• 10:12
  Speaker 1: and how much does that play into the price because
• 10:14
  Speaker 1: they've been locked down and I know, Um, that's also
• 10:17
  Speaker 1: stopped a lot of driving demand. Uh trying. That's an
• 10:22
  Speaker 1: interesting story because in terms of the crew purchase, they
• 10:25
  Speaker 1: actually haven't declined very much, so the country is still
• 10:28
  Speaker 1: important crewe uh even though the demand part is impacted
• 10:32
  Speaker 1: directly because of the traffic constraint. Um we're seeing China
• 10:39
  Speaker 1: releasing some of the products of gasoline diesel, allowed that
• 10:44
  Speaker 1: to export out of China recently. Still very limited by
• 10:48
  Speaker 1: allowing that to occur, so we may see some more
• 10:52
  Speaker 1: inventory freeda from China. Chinese stories are very interesting because
• 10:56
  Speaker 1: it is a policy issue for China in terms of
• 10:59
  Speaker 1: the COVID constraints. So near term we see the same
• 11:04
  Speaker 1: concern on COVID, but once that would to to change
• 11:08
  Speaker 1: onnticipating very large spending package. We just saw one recently
• 11:12
  Speaker 1: with a recent a large MOM program that's worth about
• 11:16
  Speaker 1: billion US dollars that that if that would to kick in,
• 11:19
  Speaker 1: we'll want to see sharp reversal of demand from China. Darwai,
• 11:23
  Speaker 1: thanks so much for joining us. Darway Kung there portfolio
• 11:25
  Speaker 1: manager and head of Commodities over at d w S Group.
• 11:32
  Speaker 1: Let's get over right now to Alex Webb Rights for
• 11:35
  Speaker 1: Bloomberg Opinion and covers tech for us, and uh, he's
• 11:40
  Speaker 1: going to talk about Twitter and exactly what's going on
• 11:42
  Speaker 1: there with Elon Musk doing his you turn. I will
• 11:44
  Speaker 1: tell you also, the Bloomberg Markets is brought to you
• 11:46
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• 11:50
  Speaker 1: with the solution they need to grow a thriving business,
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  Speaker 1: Commonwealth go where you grow. Visit Commonwealth dot com to
• 11:58
  Speaker 1: learn more with that other way, Uh, let's get over
• 12:01
  Speaker 1: to alex web and and find out what happens next.
• 12:04
  Speaker 1: I think Alex to be fair, we none of us
• 12:07
  Speaker 1: were really expecting Elon Musk to buy Twitter. Is that
• 12:10
  Speaker 1: a fair statement. I mean, some people clearly were, because
• 12:14
  Speaker 1: the share price got one stage, got very close to
• 12:16
  Speaker 1: the offer price, but not for very long weeks and weeks,
• 12:20
  Speaker 1: you know, not for a little while. There's been certainly
• 12:23
  Speaker 1: a lot of very confusing messaging, and you know, Elon
• 12:26
  Speaker 1: Musk says that she wants to buy it and then
• 12:28
  Speaker 1: does something even before today, which seems to suggest very
• 12:32
  Speaker 1: much the opposite. It clearly was not looking good because
• 12:37
  Speaker 1: the the offer price was fifty four dollars twenty The
• 12:38
  Speaker 1: share price is now in the low thirties particularly given
• 12:42
  Speaker 1: the latest news, some analysts forecasting that it could fall
• 12:46
  Speaker 1: as low as the low twenties. So um, just even
• 12:50
  Speaker 1: cutting aside any Elon Must related whimsy, from pure financial perspective,
• 12:55
  Speaker 1: it was very hard to see why he would want
• 12:57
  Speaker 1: to do this deal. But he's already sealed it, so
• 12:59
  Speaker 1: there was an you know, he's tied to it in
• 13:00
  Speaker 1: a sense. Well that that's really where wanting to go,
• 13:03
  Speaker 1: this idea that he's trying to back out of the deal.
• 13:06
  Speaker 1: But the deal exists and is currently being debated in
• 13:09
  Speaker 1: a Delaware chord, and you have Twitter board members saying
• 13:13
  Speaker 1: you gotta buy this, and you've gotta buy it at
• 13:14
  Speaker 1: fifty four and twenty cents. Is this all just a
• 13:17
  Speaker 1: lot of drama around renegotiating price. That's hard to tell, Like,
• 13:23
  Speaker 1: you know, that's essentially I've said this is someone earlier today.
• 13:26
  Speaker 1: Actually that so many questions when you're going broadcasts to
• 13:28
  Speaker 1: do with Elon Must, they ultimately come down to what
• 13:31
  Speaker 1: is Elon thinking? And no one knows what Ellen is thinking.
• 13:34
  Speaker 1: He may still wants to do the deal, just in
• 13:36
  Speaker 1: a reduced form. He may not want to do the
• 13:38
  Speaker 1: deal at all. Ultimately, I think that you know it
• 13:41
  Speaker 1: was looking over priced. Now, if he really wanted to,
• 13:44
  Speaker 1: could he raise that money? Yeah, of course he could.
• 13:46
  Speaker 1: He could just sell down his test or stake. Does
• 13:47
  Speaker 1: he want to sell down his test stake? Almost certainly
• 13:49
  Speaker 1: not so. Um, it leaves him in a pickle where
• 13:52
  Speaker 1: clearly the Dela where court is going to have to
• 13:54
  Speaker 1: make some sort of decision. I think this would be
• 13:55
  Speaker 1: one of the if not the biggest decision of this
• 13:58
  Speaker 1: nature ever carried up ever taken by the court. Previously,
• 14:02
  Speaker 1: there is evidence to suggests that they have forced these
• 14:04
  Speaker 1: deals through. The case law that most people tend to
• 14:07
  Speaker 1: site is in the meat industry twenty years ago, where
• 14:09
  Speaker 1: a company had agreed a deal, the market collapsed and
• 14:13
  Speaker 1: then they tried to say, oh, well you weren't didn't
• 14:15
  Speaker 1: provide us ironically with full data, which it sounds very
• 14:18
  Speaker 1: similar to what Ellen has been saying. And they were
• 14:20
  Speaker 1: forced to do the deal anyway. And so, but that
• 14:23
  Speaker 1: was a third three point two billion dollars deal. This
• 14:25
  Speaker 1: is a forty four billion dollar deal. So there's a huge,
• 14:27
  Speaker 1: huge difference there. Um, can he not simply pay the
• 14:31
  Speaker 1: billion dollar breakup fee and walk away? I mean, he's
• 14:34
  Speaker 1: super rich, right, It would be an expensive, um sort
• 14:38
  Speaker 1: of mistake. I guess we would see there's a mistake.
• 14:41
  Speaker 1: He probably wouldn't. But can he do that? Not if
• 14:45
  Speaker 1: Twitter doesn't agree to it? Right? If they they? If
• 14:48
  Speaker 1: Twitter saying look, you you've agreed to do this deal,
• 14:50
  Speaker 1: you have to do this deal now. If the thing
• 14:52
  Speaker 1: is with a breakup fee, is that is when both
• 14:54
  Speaker 1: sides of the of the agreements say, oh, for whatever reason,
• 14:58
  Speaker 1: we code determined that this is not going to work,
• 15:03
  Speaker 1: for whatever the reasons might be, but irrespect to that,
• 15:05
  Speaker 1: you've got to pay the breakup fee. For instance, that
• 15:07
  Speaker 1: would be if for antitrust reasons they weren't allowed to
• 15:11
  Speaker 1: do the deal. You'd still have to pay the breakup
• 15:12
  Speaker 1: fee because you know, you've endured some damage over course
• 15:15
  Speaker 1: that time. But just the buyer not one to do
• 15:18
  Speaker 1: the deal. That is not enough to go actually the
• 15:21
  Speaker 1: breakup fee and be done with it. Is there anyone
• 15:23
  Speaker 1: standing by waiting in the wings? Any white night here,
• 15:27
  Speaker 1: um even maybe a beige night. Well, we've not seen
• 15:32
  Speaker 1: any big names reported, but there is over the years,
• 15:35
  Speaker 1: there's been any any amount of speculation, you know, big
• 15:38
  Speaker 1: names like Google for instance. Hard to see how that
• 15:40
  Speaker 1: would be doable from an antitrust perspective, given that fundamentally
• 15:43
  Speaker 1: YouTube is a social media channel. Um, but there are
• 15:48
  Speaker 1: you hear some of these names like Oracle or sales Force,
• 15:50
  Speaker 1: some less sexy names who you know clearly have the capital,
• 15:54
  Speaker 1: and you know that far hose of data's valuable, particularly
• 15:57
  Speaker 1: for in the advertising business, Alex. It's a bigger question,
• 15:59
  Speaker 1: which is at what point does it become more damaging
• 16:02
  Speaker 1: for Twitter to pursue and try to hold elon musk
• 16:06
  Speaker 1: price tag versus cutting their losses, cutting a deal with him,
• 16:11
  Speaker 1: letting him out, and trying to move on. And you
• 16:14
  Speaker 1: could say that that pass that point has long since passed.
• 16:18
  Speaker 1: They have clearly endured a lot of damage over the
• 16:19
  Speaker 1: past few months and have in a certain amount of stasis,
• 16:21
  Speaker 1: except I think clarity is something the shareholders almost certainly want.
• 16:25
  Speaker 1: But if there's no path to moving the share price
• 16:29
  Speaker 1: from the twenties and thirties to the fifties again, then
• 16:33
  Speaker 1: this is the best deal for shareholders, right, And so
• 16:35
  Speaker 1: that's why potentially that's why they're trying to fight for it.
• 16:38
  Speaker 1: From the Tesla side, how concerning is it and how
• 16:41
  Speaker 1: much do you start to hear some pushback about a
• 16:44
  Speaker 1: CEO who can joke about an acquisition, who can make
• 16:49
  Speaker 1: comments and make agreements without thinking them through, perhaps, or
• 16:53
  Speaker 1: you know, just on a whim and try to backpedal
• 16:56
  Speaker 1: just as quickly. I mean, has it had any material
• 16:59
  Speaker 1: effect on the nuts and bolts of his business? Tesla
• 17:03
  Speaker 1: shares are down. I think they're down something like, if
• 17:05
  Speaker 1: I recall correctly, something like twelve percent since this this
• 17:08
  Speaker 1: since the Twitter deal was announced. Now, whether there's a
• 17:11
  Speaker 1: correlation between the two or whether that's the cause entirely,
• 17:15
  Speaker 1: it is hard to say. It also suggests that all
• 17:17
  Speaker 1: investment in Tesla is rational, which you could say isn't
• 17:21
  Speaker 1: necessarily the case as well, when you look at some
• 17:22
  Speaker 1: of the earnings fundamentals, it is clearly or has clearly
• 17:27
  Speaker 1: been a distraction. But Elon runs a whole bunch of
• 17:29
  Speaker 1: companies and they seem to distract from each other, and
• 17:32
  Speaker 1: yet Tesla share prices where it is, so, you know,
• 17:36
  Speaker 1: I think that the bigger risk would have been perhaps
• 17:40
  Speaker 1: relationship with China, stuff like that. Is that, but that's
• 17:42
  Speaker 1: probably more of a relation of risk for Twitter. I mean,
• 17:44
  Speaker 1: there are so many different moving parts here that it's
• 17:46
  Speaker 1: hard to kind of pin anyone down and saying that's
• 17:49
  Speaker 1: been detrimental to this. Yes, there's so many moving parts
• 17:53
  Speaker 1: to everything I'm finding this morning. Um. In terms of
• 17:56
  Speaker 1: the deal, though, one thing I was thinking as I
• 17:58
  Speaker 1: read through this over the weekend and Alex is that
• 18:01
  Speaker 1: his friends he's got on board must be annoyed. His
• 18:05
  Speaker 1: bankers must think, God, this guy waste so much of
• 18:07
  Speaker 1: our time. His lawyers even must. I'm sure they're happy
• 18:11
  Speaker 1: about the billing, but just unbelievable how much business this
• 18:15
  Speaker 1: guy generates. Is it not hurtful to his relationships? I mean,
• 18:19
  Speaker 1: if you're a lawyer, you're probably pretty happy, as you say, yeah,
• 18:21
  Speaker 1: because your generates all billable hours. If your banker is
• 18:24
  Speaker 1: a bit more complicated. It also depends where you are
• 18:26
  Speaker 1: in the value chain. If you committed equity, then perhaps
• 18:28
  Speaker 1: you're a little bit perturbed, although equally, did you want
• 18:31
  Speaker 1: to be buying in at that price given the direction
• 18:34
  Speaker 1: of travel. If you can get out of that, you
• 18:35
  Speaker 1: might be quite happy. From the debt perspective, of course,
• 18:38
  Speaker 1: the debt situation now, if there was a bridge, if
• 18:40
  Speaker 1: there was bridging financing in there, and then all of
• 18:42
  Speaker 1: a sudden you've got to find new financing. In the
• 18:44
  Speaker 1: current climate, it would have been a significantly different ask
• 18:48
  Speaker 1: because interest rates are so much higher. So again I'm
• 18:50
  Speaker 1: sorry to be, you know, a little too equivocate a
• 18:52
  Speaker 1: little bit, but it isn't a clear picture that everybody
• 18:54
  Speaker 1: will be angry at him. I think clearly if you
• 18:57
  Speaker 1: are Twitter, back to Lisa's original question that you know
• 19:02
  Speaker 1: good Twitter wanted to get out of this. I'm sure
• 19:03
  Speaker 1: Twitter is annoyed because they he's kind of come in
• 19:06
  Speaker 1: throwing a metaphorical grenade into the business which has proven
• 19:08
  Speaker 1: a distraction for however many months in his life, to
• 19:10
  Speaker 1: prove a distraction for another few months. So those are
• 19:13
  Speaker 1: the people I think are most put out right. Although
• 19:15
  Speaker 1: you wonder how many employees really wanted to work for
• 19:17
  Speaker 1: Elon Musk and I'll leave that a question. Alex Web,
• 19:20
  Speaker 1: thanks so much for joining us. Alex Web their Bloomberg
• 19:23
  Speaker 1: opinion calumnists who covers tech for us. Talking to us
• 19:26
  Speaker 1: about the Elon Musk Twitter deal, I noticed everyone cares.
• 19:29
  Speaker 1: Even people who are normally covering rates have commented on
• 19:33
  Speaker 1: Twitter today shade this is Bloomberg. Let's bring in Burt
• 19:44
  Speaker 1: White to talk about this and how it affects his
• 19:47
  Speaker 1: market outlook, his chief strategy officer at the Carson Group
• 19:50
  Speaker 1: and bert Um, you know, these prices are real. Um.
• 19:55
  Speaker 1: The Fed seems pretty determined to break the back of inflation.
• 20:00
  Speaker 1: And can we take them at their word that they're
• 20:02
  Speaker 1: gonna do whatever it takes and offer clear and effective
• 20:05
  Speaker 1: communication along the way. Yeah, I think you can. And
• 20:09
  Speaker 1: I think I think what you're beginning to get a
• 20:11
  Speaker 1: sense of is that, Um, you know what, what's causing
• 20:15
  Speaker 1: this inflation is a bit demand, but it's released the
• 20:19
  Speaker 1: supply side. And so I think what the Feds beginning
• 20:22
  Speaker 1: to realize is what's just as important as their rate
• 20:25
  Speaker 1: rising is their narrative. Right. They've got to talk pretty tough.
• 20:29
  Speaker 1: They've got to redefine what hawk is is. I think
• 20:32
  Speaker 1: they are doing that as best they can, and that
• 20:34
  Speaker 1: certainly was in the minutes, and I think they're going
• 20:36
  Speaker 1: to continue to do that because at the end of
• 20:38
  Speaker 1: the day, Um, you can raise rates all you want, um,
• 20:42
  Speaker 1: but the demand side is not as big an issue.
• 20:45
  Speaker 1: It's a supply side. So the Feds just buying time
• 20:48
  Speaker 1: here with this tough talk until the supply chains begin
• 20:51
  Speaker 1: to loosen up a bit, which we're starting to see happen.
• 20:53
  Speaker 1: It sounds like you doubt the commitment to raising rates
• 20:57
  Speaker 1: to the degree that a lot of people in the
• 20:59
  Speaker 1: market currently are pricing in. Is that right? Yeah? I
• 21:03
  Speaker 1: think I think a lot of this is talk. You know.
• 21:05
  Speaker 1: The good news is that that the markets come down
• 21:08
  Speaker 1: a little bit, a feed has come up a little bit,
• 21:11
  Speaker 1: which is really what has got the market a little
• 21:13
  Speaker 1: bit more comfortable. They were in completely different camps set
• 21:17
  Speaker 1: in left field in La La Land, the market much
• 21:20
  Speaker 1: more on Hawkish Land, and those two things have come
• 21:22
  Speaker 1: together a bit um. But I do believe that the
• 21:25
  Speaker 1: Fed wants to take a couple of really big swings
• 21:29
  Speaker 1: at the ball um and and raise seventy five. They
• 21:32
  Speaker 1: did that. They'll raise seventy five again. But then I
• 21:35
  Speaker 1: think that they're gonna be a lot more moderate than
• 21:38
  Speaker 1: what I think that people think they will be. Um,
• 21:41
  Speaker 1: at least the market is thinking they will be, because
• 21:44
  Speaker 1: I think they recognize that all they can really do
• 21:47
  Speaker 1: is reduced demand, which sends us to a recession. That's
• 21:49
  Speaker 1: all they can do, and so they're willing to do
• 21:52
  Speaker 1: that a bit, but they don't want to take that
• 21:54
  Speaker 1: too far. They recognize what really is going to get
• 21:57
  Speaker 1: us on the other end of this is the supply
• 22:00
  Speaker 1: side beginning to open up. So how much pain do
• 22:03
  Speaker 1: you think they're willing to let us take? I mean,
• 22:05
  Speaker 1: so far, we really haven't seen much in terms of,
• 22:09
  Speaker 1: you know, equity indexes, we still haven't come down to
• 22:12
  Speaker 1: pre COVID levels, and um in terms of unemployment, we're
• 22:16
  Speaker 1: still an incredibly low number. Right, What do you think
• 22:21
  Speaker 1: is gonna set them off to go together direction? Yeah, well,
• 22:26
  Speaker 1: you know, you're exactly right. They have a lot of
• 22:28
  Speaker 1: room to operate. And and remember the FED doesn't have
• 22:31
  Speaker 1: a scalpel. The set has baseball bats, and so they
• 22:34
  Speaker 1: recognize that. So they have a blunt instrument. And so
• 22:38
  Speaker 1: if they were trying to lower inflation from let's just
• 22:41
  Speaker 1: pretend five to two, that'd be pretty tough because you
• 22:46
  Speaker 1: need a scalpel to do that. But but moving from
• 22:48
  Speaker 1: eight percent to two percent, have a lot of room.
• 22:52
  Speaker 1: And so that's why I think that this soft landing
• 22:55
  Speaker 1: is possible. So I think they're willing, just like they
• 22:57
  Speaker 1: showed in some of the dot plots, They're willing to
• 23:00
  Speaker 1: see employment begin to slow down and moderate. They're willing
• 23:03
  Speaker 1: to see the unemployment rate take back up a bit UM,
• 23:07
  Speaker 1: call that a few a few, you know, maybe a
• 23:10
  Speaker 1: half a percentage point or so. I think they're willing
• 23:12
  Speaker 1: to see demand come down just a little bit because
• 23:16
  Speaker 1: that's going to take some of the pressure off of
• 23:18
  Speaker 1: what really is going to impact this, and that is
• 23:20
  Speaker 1: a supply chain and so UM. I do think they're
• 23:24
  Speaker 1: they're mindful of that, but their narrative has to be tough.
• 23:27
  Speaker 1: And that's really what's really cut out of this is. UH,
• 23:30
  Speaker 1: they've come out with a really tough sort of stance,
• 23:33
  Speaker 1: and I think that they're trying to just buy time
• 23:36
  Speaker 1: that they'll do whatever it takes, UM, but they don't
• 23:39
  Speaker 1: have the tools to fix it. They're just buying time
• 23:43
  Speaker 1: until those uh, those real fixes on the supply side
• 23:47
  Speaker 1: come through. Bert, my spidy sense gets the feeling that
• 23:50
  Speaker 1: maybe your long stocks is that right? You know, UM,
• 23:55
  Speaker 1: we're neutral rate right now, UM, but we want to
• 23:58
  Speaker 1: start buying UM and and and listen, midterm election years
• 24:03
  Speaker 1: are always tough. You know, this is historically go back
• 24:06
  Speaker 1: the nineteen fifty mid term election years have been the
• 24:09
  Speaker 1: hardest of the three year presidential cycle, and the quarters
• 24:13
  Speaker 1: win right now are almost always tough. UM. What we
• 24:16
  Speaker 1: usually see historically is around right before the midterm elections.
• 24:22
  Speaker 1: That is typically the time UM to begin to see
• 24:25
  Speaker 1: the market rally. We think that's going to happen again
• 24:28
  Speaker 1: this time. So I think we're in for some you know,
• 24:31
  Speaker 1: foltle up and down. Think about a decision box that
• 24:34
  Speaker 1: this plus or minus you know, five or six percent.
• 24:37
  Speaker 1: But at the end of the day, we think that
• 24:39
  Speaker 1: that stocks move higher before the you know, by the
• 24:41
  Speaker 1: end of the year, substantially higher by the end of
• 24:44
  Speaker 1: the year, and a lot of that's going to happen
• 24:46
  Speaker 1: in the latter parts of this year. Bert, thanks so
• 24:49
  Speaker 1: much for joining us. Burt White, they're um talking to
• 24:51
  Speaker 1: us from the Carson Group, where he is chief strategy Officer.
• 24:58
  Speaker 1: Thanks for listening to the Bloomberg Mark Kids podcasts. You
• 25:01
  Speaker 1: can subscribe and listen to interviews of Apple Podcasts or
• 25:04
  Speaker 1: whatever podcast platform you prefer. I'm Matt Miller. I'm on
• 25:08
  Speaker 1: Twitter at Matt Miller three. On Fall Sweeney, I'm on
• 25:12
  Speaker 1: Twitter at pt Sweeney. Before the podcast. You can always
• 25:15
  Speaker 1: catch us worldwide at Bloomberg Radio.