Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg Surveillance Podcast. I'm Tom Keene along with Paul Sweeney. Join us each day for insight from the best in economics, finance, investment, and international relations. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube to see the show weekday mornings from seven to ten am Eastern from our global headquarters in New York City. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen and always I'm Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business App. I can do this with Wendy Show. She's at Brown University and she's been to every bar every place it sells near against at lager Beer in Rhode Island. And when I was thirty nine years old, I mean two or three nights a week, I was at Lupo's heart Break Hotel, really, and they served the Meragansett and plastic cups. Professor Schuller nows this is way back. I mean, you get it down on to the dark side in Newport. Listen, you know, listen to the Blues and RBQ and all that Wendy thirty nine years old. I'm a vice presidential nominee. Is that too young?

Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg Surveillance Podcast. I'm Tom Keene along with Paul Sweeney. Join us each day for insight from the best in economics, finance, investment, and international relations. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube to see the show weekday mornings from seven to ten am Eastern from our global headquarters in New York City. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen and always I'm Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business App. I can do this with Wendy Show. She's at Brown University and she's been to every bar every place it sells near against at lager Beer in Rhode Island. And when I was thirty nine years old, I mean two or three nights a week, I was at Lupo's heart Break Hotel, really, and they served the Meragansett and plastic cups. Professor Schuller nows this is way back. I mean, you get it down on to the dark side in Newport. Listen, you know, listen to the Blues and RBQ and all that Wendy thirty nine years old. I'm a vice presidential nominee. Is that too young?

No?

No?

I mean I don't think it's too young.

I mean I don't think it's too young.

I think he's navigated a political career after being a Yale law school and I'm writing a bestseller.

I think he's navigated a political career after being a Yale law school and I'm writing a bestseller.

I don't think it's too young.

I don't think it's too young.

I think that's one of the things that Americans are looking for right, this big contrast between our older main candidates and the vps being younger. I think William Jennings Bryant would have enjoyed JD. Vance's speech Tom last night. I mean it struck almost identical themes to eighteen ninety six. I don't know if that should reassure people or make them very frightened that we're going backwards.

I think that's one of the things that Americans are looking for right, this big contrast between our older main candidates and the vps being younger. I think William Jennings Bryant would have enjoyed JD. Vance's speech Tom last night. I mean it struck almost identical themes to eighteen ninety six. I don't know if that should reassure people or make them very frightened that we're going backwards.

But nonetheless, no, I don't think so at all.

But nonetheless, no, I don't think so at all.

I think that he's positioning self to be the heir apparent before.

I think that he's positioning self to be the heir apparent before.

Trump even wins this election. So that's an interesting political dynamic in the Republican Party.

Trump even wins this election. So that's an interesting political dynamic in the Republican Party.

Bill Clinton forty six and a half, George W. Bush Bush the younger, fifty four and a half, President Obama forty seven and a half. I guess the trends there. We've been talking this morning, Professor Schiller about isolationism. What's the character of the Trump vance isolationism.

Bill Clinton forty six and a half, George W. Bush Bush the younger, fifty four and a half, President Obama forty seven and a half. I guess the trends there. We've been talking this morning, Professor Schiller about isolationism. What's the character of the Trump vance isolationism.

Well, Trump has successfully pitched this in two ways. One is, we get bad deals when we go into multi multination agreements, particularly NAFTA, which he renegotiated, which by the way, was triumphed by new Gingridge and.

Well, Trump has successfully pitched this in two ways. One is, we get bad deals when we go into multi multination agreements, particularly NAFTA, which he renegotiated, which by the way, was triumphed by new Gingridge and.

The Republicans in the House in nineteen ninety three.

The Republicans in the House in nineteen ninety three.

So I thought it was amazing that they just pushed this all to the Democrats.

So I thought it was amazing that they just pushed this all to the Democrats.

It was pretty clever of them.

It was pretty clever of them.

So that's one way, right, we just don't get a good deal when we're part of these multinations in the courts, and economically we suffer.

So that's one way, right, we just don't get a good deal when we're part of these multinations in the courts, and economically we suffer.

The other is in military arrangements, we end up paying most of the bills.

The other is in military arrangements, we end up paying most of the bills.

And that's what Trump had said in twenty sixteen there was presidents, and he's saying again that resonates with a lot of Americans, particularly in a time where they see that they're struggling to pay their bills because of inflation. So it's clever to bring these two issues together, mostly under an economic tent.

And that's what Trump had said in twenty sixteen there was presidents, and he's saying again that resonates with a lot of Americans, particularly in a time where they see that they're struggling to pay their bills because of inflation. So it's clever to bring these two issues together, mostly under an economic tent.

Wendy, what do we expect to hear from the former president tonight at his speech, Well, Paul.

Wendy, what do we expect to hear from the former president tonight at his speech, Well, Paul.

Donald Trump has remained more disciplined in the last two months of his campaign than we've ever seen him either as candidate or president.

Donald Trump has remained more disciplined in the last two months of his campaign than we've ever seen him either as candidate or president.

In prior years. I mean, incredibly disciplined. So if this.

In prior years. I mean, incredibly disciplined. So if this.

Speech which he gave in twenty sixteen was, you know, I'm going to make sure we're safe from crime and I'm going to block immigrants, I think it's going to be very similar to twenty sixteen, but it might be just a little bit more moderated, just a little bit.

Speech which he gave in twenty sixteen was, you know, I'm going to make sure we're safe from crime and I'm going to block immigrants, I think it's going to be very similar to twenty sixteen, but it might be just a little bit more moderated, just a little bit.

He has squashed abortion at.

He has squashed abortion at.

The Republican Convention, which is really remarkable given that it's been the driving populist force in the Republican Party for so long. So if he stays disciplined and doesn't look literally too scary to independent voters, then I think they're going to walk away and think this convention was a big success.

The Republican Convention, which is really remarkable given that it's been the driving populist force in the Republican Party for so long. So if he stays disciplined and doesn't look literally too scary to independent voters, then I think they're going to walk away and think this convention was a big success.

Let me break into your poll with Professor Schiller of Brown. At the European Central Bank, as expected, they leave key rates unched, they wait for signs inflation is under control, and they say that Christine lan Guard will not swim in the rivers.

Let me break into your poll with Professor Schiller of Brown. At the European Central Bank, as expected, they leave key rates unched, they wait for signs inflation is under control, and they say that Christine lan Guard will not swim in the rivers.

Embarrassedlympics, Wendy.

Embarrassedlympics, Wendy.

It certainly appears to a lot of folks, including myself, that this has been a really solid convention for the Republican Party.

It certainly appears to a lot of folks, including myself, that this has been a really solid convention for the Republican Party.

How much how much momentum do they have coming out of this?

How much how much momentum do they have coming out of this?

Every party, if they can pull off a successful convention, has momentum coming out.

Every party, if they can pull off a successful convention, has momentum coming out.

Mitt Romney had a lot of momentum coming out in twenty twelve.

Mitt Romney had a lot of momentum coming out in twenty twelve.

You know, the government, I'm sorry, the public focuses on the party in that week, and if everybody looks good and sounds good, they think, hey, maybe this is the party we're going to go with. When we have incumbents, they're bringing their priors with, you know, anything that will push them away. That was the risk for the Republicans is that they've got this energized base, more unified now from lots of factors, including the tragic attempt on Trump's life. So now they got unity and energy, and you know, did they mess it up? And they did not mess it up, And that's why I think their momentum continues. The Democrats are the exact opposite. It's starting to feel a lot like nineteen eighty eight when there was a quote unquote winnable election for the Democrats and somehow they lost it. So I think the Democrats are under tremendous pressure to generate energy. And finally, I will say that that may require that Biden step aside very soon in order to give them the time to ramp up that energy for their own convention.

You know, the government, I'm sorry, the public focuses on the party in that week, and if everybody looks good and sounds good, they think, hey, maybe this is the party we're going to go with. When we have incumbents, they're bringing their priors with, you know, anything that will push them away. That was the risk for the Republicans is that they've got this energized base, more unified now from lots of factors, including the tragic attempt on Trump's life. So now they got unity and energy, and you know, did they mess it up? And they did not mess it up, And that's why I think their momentum continues. The Democrats are the exact opposite. It's starting to feel a lot like nineteen eighty eight when there was a quote unquote winnable election for the Democrats and somehow they lost it. So I think the Democrats are under tremendous pressure to generate energy. And finally, I will say that that may require that Biden step aside very soon in order to give them the time to ramp up that energy for their own convention.

So where are we with that?

So where are we with that?

I mean, it seems like from past discussions, Wendy, that this is the decision solely on President Biden. Can he be persuaded to perhaps step down or create a process for a new Kennedy?

I mean, it seems like from past discussions, Wendy, that this is the decision solely on President Biden. Can he be persuaded to perhaps step down or create a process for a new Kennedy?

Well, Paul, the biggest difference between two weeks ago and now is that, you know, chief donors, not just George Clooney in the New York Times, but you know, the people who are actually really writing a lot of checks have stopped basically freezing the money, not giving the money that's trickling down to send it house races as well, you know, and that means the party could completely collapse. So without any money, it just strikes me that Biden doesn't have a lot of choices here. And the question is really directly, you know, send his delegates to Kamala Harris or send it to an open convention, right, And I think he's still waiting to hear about that, tomm He's still waiting to hear do you have a choice is the party unified around Kamala.

Well, Paul, the biggest difference between two weeks ago and now is that, you know, chief donors, not just George Clooney in the New York Times, but you know, the people who are actually really writing a lot of checks have stopped basically freezing the money, not giving the money that's trickling down to send it house races as well, you know, and that means the party could completely collapse. So without any money, it just strikes me that Biden doesn't have a lot of choices here. And the question is really directly, you know, send his delegates to Kamala Harris or send it to an open convention, right, And I think he's still waiting to hear about that, tomm He's still waiting to hear do you have a choice is the party unified around Kamala.

If so, then I'll get out.

If so, then I'll get out.

Okay, well maybe that's pulling. How do you envision a quote unquote open convention like from this Sunday forward? What does that look like? Professor Schiller?

Okay, well maybe that's pulling. How do you envision a quote unquote open convention like from this Sunday forward? What does that look like? Professor Schiller?

You know, if you ever imagine a political nightmare, an open Democratic convention in twenty twenty four would be that, because it will be it will expose the fissures and fractures within the Democratic Party between the very progressive left, the progressive.

You know, if you ever imagine a political nightmare, an open Democratic convention in twenty twenty four would be that, because it will be it will expose the fissures and fractures within the Democratic Party between the very progressive left, the progressive.

The middle, and you know, they won't be able to agree.

The middle, and you know, they won't be able to agree.

They're going to want their person to challenge Trump and try and make arguments about that.

They're going to want their person to challenge Trump and try and make arguments about that.

All the way from Bernie Sanders Warren all the way down to you know.

All the way from Bernie Sanders Warren all the way down to you know.

Dark horses like Gina Romando, Secretary of Commerce, you know, and Gresha and whiber might be dragged back into it.

Dark horses like Gina Romando, Secretary of Commerce, you know, and Gresha and whiber might be dragged back into it.

Joshua Prero of Pennsylvania.

Joshua Prero of Pennsylvania.

It will look like the Democrats can't decide and don't know what they're doing, and will only feed into whatever nostalgia Trump voters have for Trump, but also.

It will look like the Democrats can't decide and don't know what they're doing, and will only feed into whatever nostalgia Trump voters have for Trump, but also.

Independent voters who want a stable system. And this is the big irony of twenty twenty four.

Independent voters who want a stable system. And this is the big irony of twenty twenty four.

Now, the Trump and Republicans appear right now to be more stable, less chaotic than Biden and the Democrats.

Now, the Trump and Republicans appear right now to be more stable, less chaotic than Biden and the Democrats.

Professor Schuler, thank you really appreciate it. You know, folks, I'm not big on the parlor game. I really don't care about four rate cuts, eight rate cuts, bada b blah blah blah. But what I do know is it's a lonely crew saying the consensus is wrong. I'm gonna put Lindsay pigs. It's stephel That group and the leadership of Jim Bianco has been profounding. He absolutely nailed the challenge of the last mile of disinflation. He joins us now from his Chicago Did Jim your note is seeing soon discuss?

Professor Schuler, thank you really appreciate it. You know, folks, I'm not big on the parlor game. I really don't care about four rate cuts, eight rate cuts, bada b blah blah blah. But what I do know is it's a lonely crew saying the consensus is wrong. I'm gonna put Lindsay pigs. It's stephel That group and the leadership of Jim Bianco has been profounding. He absolutely nailed the challenge of the last mile of disinflation. He joins us now from his Chicago Did Jim your note is seeing soon discuss?

Yes, I don't think the FED should be cutting soon because I don't think that the economic data is supporting a FED rate cut. And that is is that the slowing that you've seen in the US economy might have already bottomed. It is growing yet somewhere at around two and a half percent for the second quarter.

Yes, I don't think the FED should be cutting soon because I don't think that the economic data is supporting a FED rate cut. And that is is that the slowing that you've seen in the US economy might have already bottomed. It is growing yet somewhere at around two and a half percent for the second quarter.

That's fine.

That's fine.

And I think that the inflation rate, while it's come down, has largely been in a three to four percent range for the last year and a half. It's back to three percent, the lower end of the range. And to use a fancy term, there's some residual seasonality in the data, meaning that you get all the weak inflation data in the summer and that's what got you down to three percent. And then as we move into the fall, I think it stiffens up a little bit. FED shouldn't cut, but it looks like their intent on cutting.

And I think that the inflation rate, while it's come down, has largely been in a three to four percent range for the last year and a half. It's back to three percent, the lower end of the range. And to use a fancy term, there's some residual seasonality in the data, meaning that you get all the weak inflation data in the summer and that's what got you down to three percent. And then as we move into the fall, I think it stiffens up a little bit. FED shouldn't cut, but it looks like their intent on cutting.

So okay, but chum is inflammatory. I mean, it's really something you've got as a for the sake of discussion and our start set. And we're not talking two point x percent. We're not talking Richard Clarita. We're talking to Jym bioncos three or four and you'll even print the number five. Is America ready for a three percent four percent our start?

So okay, but chum is inflammatory. I mean, it's really something you've got as a for the sake of discussion and our start set. And we're not talking two point x percent. We're not talking Richard Clarita. We're talking to Jym bioncos three or four and you'll even print the number five. Is America ready for a three percent four percent our start?

Uh? America is ready for it because the economy can handle it, the financial markets can handle it. It's the economic community that's not ready for it right now. If you look at the current level of interest rates and you listen to FED speak, they talk about it being highly restrictive. It might be retarding the economic growth. And again look at the stock market, Look at the rally in small cap stocks when we started pricing in September in the last week or so, and the data is just not there. But the economists still cling to this that the neutral funds rate, which is what our star is, is two and a half percent. And put this in terms, the Fed thinks they need to cut ten times to get to neutral. That's why they want to get started. They got a lot of work to do. The market is probably telling them, no, you probably need only about four or five cuts to get to neutral. There really isn't any hurry. But if you're gonna give me stimulatives interest rates by lowering them, then I'm going to pile into small cap stocks. And that's what we've seen in the last week.

Uh? America is ready for it because the economy can handle it, the financial markets can handle it. It's the economic community that's not ready for it right now. If you look at the current level of interest rates and you listen to FED speak, they talk about it being highly restrictive. It might be retarding the economic growth. And again look at the stock market, Look at the rally in small cap stocks when we started pricing in September in the last week or so, and the data is just not there. But the economists still cling to this that the neutral funds rate, which is what our star is, is two and a half percent. And put this in terms, the Fed thinks they need to cut ten times to get to neutral. That's why they want to get started. They got a lot of work to do. The market is probably telling them, no, you probably need only about four or five cuts to get to neutral. There really isn't any hurry. But if you're gonna give me stimulatives interest rates by lowering them, then I'm going to pile into small cap stocks. And that's what we've seen in the last week.

And pout on YouTube live chat. They nail it. It's a Sweeney It's a Sweeney live chat six percent cash. Yeah, I mean that's maybe what Jim's talking.

And pout on YouTube live chat. They nail it. It's a Sweeney It's a Sweeney live chat six percent cash. Yeah, I mean that's maybe what Jim's talking.

What's wrong with that?

What's wrong with that?

Hey, Jimm, we have seen that rotation into small caps. What do you make of that, because, I mean what I'm hearing from some of the strategists is that's a rotation like we've never seen before.

Hey, Jimm, we have seen that rotation into small caps. What do you make of that, because, I mean what I'm hearing from some of the strategists is that's a rotation like we've never seen before.

Oh yeah, I agree.

Oh yeah, I agree.

I mean I've looked at the statistics and it is unprecedented. Depending on how you look at it, and usually when you get a massive rotation in the small cap stocks in the past, it's because the market is literally collapsing and big cap stocks are going down faster than small cap stocks. This one is everything's going up except for yesterday, and small cap stocks are going up a lot more. But I really think what it is is that this is such a macro dependent market and that that negative point one on CPI, you know, the bell one off, that's it. The Fed's gonna give us cheaper money. Let's go to all of the let's go to all of the lagging companies, and let's go to all the companies that have borrowed more than that would be in the small cap space or have losses in the small cap space, and that that cheaper money will benefit them. So everybody started to exit large cap and rallied. It ran into small cap to a degree we've never seen before. So there is no historical precedent for what this means, like what what this is mean a month or two months later, because we've never seen it, especially in a rally.

I mean I've looked at the statistics and it is unprecedented. Depending on how you look at it, and usually when you get a massive rotation in the small cap stocks in the past, it's because the market is literally collapsing and big cap stocks are going down faster than small cap stocks. This one is everything's going up except for yesterday, and small cap stocks are going up a lot more. But I really think what it is is that this is such a macro dependent market and that that negative point one on CPI, you know, the bell one off, that's it. The Fed's gonna give us cheaper money. Let's go to all of the let's go to all of the lagging companies, and let's go to all the companies that have borrowed more than that would be in the small cap space or have losses in the small cap space, and that that cheaper money will benefit them. So everybody started to exit large cap and rallied. It ran into small cap to a degree we've never seen before. So there is no historical precedent for what this means, like what what this is mean a month or two months later, because we've never seen it, especially in a rally.

So this is an election year, Jim, how does that impact the FED really at the end of the day.

So this is an election year, Jim, how does that impact the FED really at the end of the day.

Well, it should and it has in the past, and you know, to be very nuanced about it, the FED has never changed direction between Memorial Day and Election Day changed direction.

Well, it should and it has in the past, and you know, to be very nuanced about it, the FED has never changed direction between Memorial Day and Election Day changed direction.

If they were.

If they were.

Hiking, they continue to hike, cutting, continue to cut, hold, they continue to hold. They're talking about changing directions in September by cutting rates. That is unusual. And the fear is that interjects themselves into the political debate because Donald Trump won't be happy. He'll say that Jay Paul's trying to rig the election against him, and then the FED would prefer that their name not get mentioned between now an election day, and so they shouldn't be part of it. Now, what does it mean for markets? At a macro level? Stock spawns the dollar. I don't think you can really see the machinations in the in the election there. But when you go further down the line, if you look at maybe the mean stock of Donald DJ you know, Trump Media, that one goes up and down. Tesla seems to be another stock because Elon Musk is so tied himself with Donald Trump. You know, if you look at maybe the prison stocks or the body armor stocks, because there's going to be more spending on police and protection, those kind of things are moving, but not at the higher levels. Are you really seeing this election impacting the market? Impacting the market?

Hiking, they continue to hike, cutting, continue to cut, hold, they continue to hold. They're talking about changing directions in September by cutting rates. That is unusual. And the fear is that interjects themselves into the political debate because Donald Trump won't be happy. He'll say that Jay Paul's trying to rig the election against him, and then the FED would prefer that their name not get mentioned between now an election day, and so they shouldn't be part of it. Now, what does it mean for markets? At a macro level? Stock spawns the dollar. I don't think you can really see the machinations in the in the election there. But when you go further down the line, if you look at maybe the mean stock of Donald DJ you know, Trump Media, that one goes up and down. Tesla seems to be another stock because Elon Musk is so tied himself with Donald Trump. You know, if you look at maybe the prison stocks or the body armor stocks, because there's going to be more spending on police and protection, those kind of things are moving, but not at the higher levels. Are you really seeing this election impacting the market? Impacting the market?

Jim? What's the stock market do here? I mean away from the economics. So now do you have an SPX or dowd Jones faith out twelve months?

Jim? What's the stock market do here? I mean away from the economics. So now do you have an SPX or dowd Jones faith out twelve months?

Well, you know that, you know the stock market I think is going to really take its cues from interest rates. It bottomed to September of twenty twenty two, and it's been rally and there's only been two times when it didn't rally, a ten percent correction between June and October of last year and March and April this year six percent correction. What was what was existed during both those corrections the tenure field above four and a half percent. When the ten year yield gets above four and a half percent, the stock market seems to struggle. We're at four eighteen right now, so we're not above four and a half percent. But if the market starts to feel like the Fed's going to ease, the economy's okay. This inflation problem is not solved. The rejection of that policy could be higher interest rates, and if it gets above four and a half percent, that could become a problem for the stock market. So right now, I think it's going to be okay. It's just going to go through this massive rotation that we haven't seen before, and it's going to be really dependent on whether or not interest rates start to head higher. And I'll conclude by saying, I ultimately think by the end of the year into the first quarter they will get well above four and a half percent again and it will be a problem. But they're not there right now.

Well, you know that, you know the stock market I think is going to really take its cues from interest rates. It bottomed to September of twenty twenty two, and it's been rally and there's only been two times when it didn't rally, a ten percent correction between June and October of last year and March and April this year six percent correction. What was what was existed during both those corrections the tenure field above four and a half percent. When the ten year yield gets above four and a half percent, the stock market seems to struggle. We're at four eighteen right now, so we're not above four and a half percent. But if the market starts to feel like the Fed's going to ease, the economy's okay. This inflation problem is not solved. The rejection of that policy could be higher interest rates, and if it gets above four and a half percent, that could become a problem for the stock market. So right now, I think it's going to be okay. It's just going to go through this massive rotation that we haven't seen before, and it's going to be really dependent on whether or not interest rates start to head higher. And I'll conclude by saying, I ultimately think by the end of the year into the first quarter they will get well above four and a half percent again and it will be a problem. But they're not there right now.

Jim Bianco from Chicago, thank you so much. Bianco there is it's really important comments there pushing against the Fedzeite geys to say the least quot he Van Steinas joins us right now, Hugh, I got to rip up the script here on ECB, we stagger from Deusenberg to Triche and a dragi in the modern day of leguard. How's that ECB experience experiment going, h von Steina's.

Jim Bianco from Chicago, thank you so much. Bianco there is it's really important comments there pushing against the Fedzeite geys to say the least quot he Van Steinas joins us right now, Hugh, I got to rip up the script here on ECB, we stagger from Deusenberg to Triche and a dragi in the modern day of leguard. How's that ECB experience experiment going, h von Steina's.

Well, great to be back with you, Tom, and glad I'm not swimming in the Sein at the moment, left alone in the Thames. Look, I think ECB experiment has been painful. You and I have chatted many times over the last you know, a dozen a dozen and a half years really since the Euro has been introduced. How we've had to have an awful lot of emergency measures, whether it's q E and tltrra's special bank lending schemes to fend off the Eurozone crisis. Then we had this dangerous experiment of negative interest rates. Finally we're getting back to a little bit of normality, even if maybe not so normal on the politics side. So I think it's been a very painful experience, and I think, well, you know, one of the things I'd put in my op ed of the ft last week is we still haven't finished the reforms. I went to that I was invited somehow. It's the ten year anniversary of Banking Union.

Well, great to be back with you, Tom, and glad I'm not swimming in the Sein at the moment, left alone in the Thames. Look, I think ECB experiment has been painful. You and I have chatted many times over the last you know, a dozen a dozen and a half years really since the Euro has been introduced. How we've had to have an awful lot of emergency measures, whether it's q E and tltrra's special bank lending schemes to fend off the Eurozone crisis. Then we had this dangerous experiment of negative interest rates. Finally we're getting back to a little bit of normality, even if maybe not so normal on the politics side. So I think it's been a very painful experience, and I think, well, you know, one of the things I'd put in my op ed of the ft last week is we still haven't finished the reforms. I went to that I was invited somehow. It's the ten year anniversary of Banking Union.

Tom.

Tom.

I didn't see you there. But the problem was it's only got one leg finished to two parts of the house are still unfinished, and securitization in Europe has been basically dead as a dodo for fifteen years, and so there's plenty of work still to be done.

I didn't see you there. But the problem was it's only got one leg finished to two parts of the house are still unfinished, and securitization in Europe has been basically dead as a dodo for fifteen years, and so there's plenty of work still to be done.

I should interview. I introduced him properly here. Vanstein is vice chair of Oliver Wyman's Service to the United Kingdom with Mark Kearney at the Bank of England and of course his endowment work with his Oxford University here Vansteina, she sent me a chat the other day, which is your wheelhouse, which is trying to keep track of the shadows to come in banking and this is always about highest quality tranches unloading the garbage of lower quality tranches to somebody else. Who's the somebody else this time around?

I should interview. I introduced him properly here. Vanstein is vice chair of Oliver Wyman's Service to the United Kingdom with Mark Kearney at the Bank of England and of course his endowment work with his Oxford University here Vansteina, she sent me a chat the other day, which is your wheelhouse, which is trying to keep track of the shadows to come in banking and this is always about highest quality tranches unloading the garbage of lower quality tranches to somebody else. Who's the somebody else this time around?

It's a great question, tom So. I think that the challenge here is it's there's no simple picture. So if you take let's say our friends at Apollo or Blackstone working with their insurance colleagues, well, insurance companies need investment grade. If they can just get even fifty basis points more than their competitors over a decade to twelve years, that's huge. So in their case, they're really wanting high quality, investment grade assets. Clearly, if you're going to get twelve to fifteen points of return, you're going to need to be taking a lot more risk. And so there's some endowments, pension funds and increasingly high network or maybe reaching down, but there is no The challenge here is there's not a great data set. And that's in way why black Rock Port. You know that big data company recently, but also it's more complex. I mean, I'm not Look, credit is credit, there is a site, there'll be a cycle. There's always stuff which goes wrong. So I'm not going to be panglossy on that there won't be problems. But on the other hand, I don't see that this is I don't think there's any reason to panic.

It's a great question, tom So. I think that the challenge here is it's there's no simple picture. So if you take let's say our friends at Apollo or Blackstone working with their insurance colleagues, well, insurance companies need investment grade. If they can just get even fifty basis points more than their competitors over a decade to twelve years, that's huge. So in their case, they're really wanting high quality, investment grade assets. Clearly, if you're going to get twelve to fifteen points of return, you're going to need to be taking a lot more risk. And so there's some endowments, pension funds and increasingly high network or maybe reaching down, but there is no The challenge here is there's not a great data set. And that's in way why black Rock Port. You know that big data company recently, but also it's more complex. I mean, I'm not Look, credit is credit, there is a site, there'll be a cycle. There's always stuff which goes wrong. So I'm not going to be panglossy on that there won't be problems. But on the other hand, I don't see that this is I don't think there's any reason to panic.

You just you referenced upbed in the Financial Times back about eleven days ago, in that you say Europe's capital markets are underdeveloped while its banking sector is insufficiently sized to handle the growing demands for capital expenditures tied the energy transition, digital infrastructure defense.

You just you referenced upbed in the Financial Times back about eleven days ago, in that you say Europe's capital markets are underdeveloped while its banking sector is insufficiently sized to handle the growing demands for capital expenditures tied the energy transition, digital infrastructure defense.

Is there a solution there? I mean, what is the solution?

Is there a solution there? I mean, what is the solution?

Look, I think it's a great point. And so Europe relies far far more on the banks. So point one, I would be in favor of trying to, you know, have interesting investment opportunities which fixed income investors around the world or equity ones would want to come and sees. So I think part one is making it easier to list having a small standardization in the bomb markets. And then the piece I was particularly saying securitizations have really not rebounded since the financial crisis the way the Europeans codified that closed the door after the financial crisis was incredible to be penal and therefore it's never really started. And I think that's that allowing banks to package loans and puncel them on to investors is actually a really smart way to help us through Europe's growth. So I think really scuritizations there. In the next two weeks we might see the Draggy report published, and certainly what my sense of that is that he's going to be also arguing to try and you know, dust off the plan to reopen securitizations. But it's more than just that. I mean, you know, whether it's you know how the US elections going, Europe will need to spend more on defense, It'll need to spend more on energy security, let alone transition and of course upgrading it's degenfrastructure. These are vast sums, and I don't think the banking system alone is big enough and strong enough. And Dragging himself in Portugal the other day said he didn't think Europe's banks had enough fast.

Look, I think it's a great point. And so Europe relies far far more on the banks. So point one, I would be in favor of trying to, you know, have interesting investment opportunities which fixed income investors around the world or equity ones would want to come and sees. So I think part one is making it easier to list having a small standardization in the bomb markets. And then the piece I was particularly saying securitizations have really not rebounded since the financial crisis the way the Europeans codified that closed the door after the financial crisis was incredible to be penal and therefore it's never really started. And I think that's that allowing banks to package loans and puncel them on to investors is actually a really smart way to help us through Europe's growth. So I think really scuritizations there. In the next two weeks we might see the Draggy report published, and certainly what my sense of that is that he's going to be also arguing to try and you know, dust off the plan to reopen securitizations. But it's more than just that. I mean, you know, whether it's you know how the US elections going, Europe will need to spend more on defense, It'll need to spend more on energy security, let alone transition and of course upgrading it's degenfrastructure. These are vast sums, and I don't think the banking system alone is big enough and strong enough. And Dragging himself in Portugal the other day said he didn't think Europe's banks had enough fast.

But you know this is important. Bruce chas been publishing moments ago folks at JP Morgan and he's just his global disinflation to continue in the second half of this year. What does disinflation mean? You've unsteen as to the financial system. It's constructed as a good. I don't buy it. There's an ambiguity.

But you know this is important. Bruce chas been publishing moments ago folks at JP Morgan and he's just his global disinflation to continue in the second half of this year. What does disinflation mean? You've unsteen as to the financial system. It's constructed as a good. I don't buy it. There's an ambiguity.

So it depends which which bit of disinflation we're talking about here, If it's sort of if it's Chinese exports impacting Europe, that's one thing. It depends where we're going. I mean, as we're seeing from THECB today, there's not massive disinflation. There's quite frankly still inflationary pressures in the system. But at the end of the day, banks are lever plays on growth and what we've seen is very Whilst loan growth in the last bank lending survey has picked up a little bit, it's still really low. I mean, in the last decade, bank loan growth in Europe has been half that in the States, and that's because Europe has not been growing as far. So I think that disinflation and the pressures on exports for Germany, the pressures on on growth in France, these are ones which will be challenging. But what what where, Let's be clear, for every problem is a solution. In my conversations with bank CEOs and CFOs. They are looking to optimize their balance sheets. The reason why they're they're partnering up with private credits. Only this morning we saw a Lloyd's, the number one bank in the UK, partnering up with oak Tree part of Brookfield is because they want to try and you know, free ups and capital to offer dividends and buybacks. So for every problem there's a solution, and I think that's why the private credit trade in Europe is actually still quite interesting.

So it depends which which bit of disinflation we're talking about here, If it's sort of if it's Chinese exports impacting Europe, that's one thing. It depends where we're going. I mean, as we're seeing from THECB today, there's not massive disinflation. There's quite frankly still inflationary pressures in the system. But at the end of the day, banks are lever plays on growth and what we've seen is very Whilst loan growth in the last bank lending survey has picked up a little bit, it's still really low. I mean, in the last decade, bank loan growth in Europe has been half that in the States, and that's because Europe has not been growing as far. So I think that disinflation and the pressures on exports for Germany, the pressures on on growth in France, these are ones which will be challenging. But what what where, Let's be clear, for every problem is a solution. In my conversations with bank CEOs and CFOs. They are looking to optimize their balance sheets. The reason why they're they're partnering up with private credits. Only this morning we saw a Lloyd's, the number one bank in the UK, partnering up with oak Tree part of Brookfield is because they want to try and you know, free ups and capital to offer dividends and buybacks. So for every problem there's a solution, and I think that's why the private credit trade in Europe is actually still quite interesting.

You haven't seen this, Thank you so much for Oliver. Whyman I can't say no? The front pages of Lisa Matteo, we start strugging with a pause and nugget I saw this party, I said, are you kidneming?

You haven't seen this, Thank you so much for Oliver. Whyman I can't say no? The front pages of Lisa Matteo, we start strugging with a pause and nugget I saw this party, I said, are you kidneming?

Lisa discussed are the Warner Brothers. Apparently they need to boost their share price right, so they may be looking at splits digital streaming and studio business from its TV networks. So this is from the Financial Times. They're saying CEO David's as I've looking into a few options from selling the assets to actually yes, splitting off its Warner Brothers movie studio and that Max streaming service into a new company. They haven't hired an investment banker and anything like that. But it's top manager reportedly talking to advisors. But I mean the whole thing is about it, I guess boosting the share price.

Lisa discussed are the Warner Brothers. Apparently they need to boost their share price right, so they may be looking at splits digital streaming and studio business from its TV networks. So this is from the Financial Times. They're saying CEO David's as I've looking into a few options from selling the assets to actually yes, splitting off its Warner Brothers movie studio and that Max streaming service into a new company. They haven't hired an investment banker and anything like that. But it's top manager reportedly talking to advisors. But I mean the whole thing is about it, I guess boosting the share price.

Yeah, And I think about Warner Brothers Discovery. They have two very interesting big investors. One is capabillionaire John Malone and the other one is the new House family which controls Conde Nest.

Yeah, And I think about Warner Brothers Discovery. They have two very interesting big investors. One is capabillionaire John Malone and the other one is the new House family which controls Conde Nest.

Very very smart media folks there, yes, And they know where the value is.

Very very smart media folks there, yes, And they know where the value is.

And the value is probably in the streaming businesses, not necessarily in some of the legacy networks.

And the value is probably in the streaming businesses, not necessarily in some of the legacy networks.

It in vast offices here, the surveillance offices. I sat fifteen feet that way the day Chrysler ran over the bondholders and I'm sorry. The ft explains this beautifully, folks. What they're going to do is take the gazillions of debt and put it into the news division. Is they wander off with Sweeney's streaming company? Got to be kidn me and this day and age, they're gonna get away with that?

It in vast offices here, the surveillance offices. I sat fifteen feet that way the day Chrysler ran over the bondholders and I'm sorry. The ft explains this beautifully, folks. What they're going to do is take the gazillions of debt and put it into the news division. Is they wander off with Sweeney's streaming company? Got to be kidn me and this day and age, they're gonna get away with that?

With it?

With it?

I don't don't know. I don't know. I mean again, they it's interesting.

I don't don't know. I don't know. I mean again, they it's interesting.

They have so much debt on this company that they have to put the debt where the cash flow is to support the debt.

They have so much debt on this company that they have to put the debt where the cash flow is to support the debt.

So we'll see.

So we'll see.

But again, this is a typical it's such a typical deal. I'm already envisioning the pitch book because that I would have put together to go to the board and go to the management.

But again, this is a typical it's such a typical deal. I'm already envisioning the pitch book because that I would have put together to go to the board and go to the management.

Here it's just right out of the central casting of it is of M and A, you know, diabetes.

Here it's just right out of the central casting of it is of M and A, you know, diabetes.

But are those times still in play? That's well, I think, I wonder the rules of the road has changed.

But are those times still in play? That's well, I think, I wonder the rules of the road has changed.

They may have, but boy, look at the principles here again, John Malone, the Conde Nest, David Zaslov the CEO. This is in their wheelhouse. They think about these things. Where's the value and what can support the debt?

They may have, but boy, look at the principles here again, John Malone, the Conde Nest, David Zaslov the CEO. This is in their wheelhouse. They think about these things. Where's the value and what can support the debt?

So we'll see.

So we'll see.

Okay, so I got I can bring it up on the Bloomberg. I got forty two bills in debt, yep. And they're gonna they're gonna give that. They're gonna hand that to Wolf Blitzer.

Okay, so I got I can bring it up on the Bloomberg. I got forty two bills in debt, yep. And they're gonna they're gonna give that. They're gonna hand that to Wolf Blitzer.

Yes, exactly, we'll see.

Yes, exactly, we'll see.

That's exactly what we're talking about. Margaret running here, Margaret, you take ten billion of debt, and well if you take thirty two billion of debt, sure, and that's what we're talking about.

That's exactly what we're talking about. Margaret running here, Margaret, you take ten billion of debt, and well if you take thirty two billion of debt, sure, and that's what we're talking about.

And there's ten billion of EBITDAD to support that. So it's about four times net debt to EBITDA.

And there's ten billion of EBITDAD to support that. So it's about four times net debt to EBITDA.

That's okay, it's not crushing, but it's it's it's tough.

That's okay, it's not crushing, but it's it's it's tough.

They weren't fifty two billion in debt just a couple of years ago, so they are paying it down. They've got five billion dollars a year free cash flow. There is stuff there to build on, but I'll leave it to.

They weren't fifty two billion in debt just a couple of years ago, so they are paying it down. They've got five billion dollars a year free cash flow. There is stuff there to build on, but I'll leave it to.

Moffatt, Nathan Simon us. We'll get the adults in here to describe this. Maybe Mar Gabelli. Ok No, I'm sorry, Li, So we get carried away in it.

Moffatt, Nathan Simon us. We'll get the adults in here to describe this. Maybe Mar Gabelli. Ok No, I'm sorry, Li, So we get carried away in it.

No, it's good, it's good. Another deal, okay, this was for the WNBA. Apparently the framework is set the new media rights deal with Disney, NBC, Amazon. It was first reported by The Athletic. The Wall Street Journal confirmed the numbers. The league set to bring in approximately two point two billion over eleven years. Now, if you break down the numbers, so the WNBA's current media rights valued at about sixty million per year, this new structure would be in the annual range of two hundred million.

No, it's good, it's good. Another deal, okay, this was for the WNBA. Apparently the framework is set the new media rights deal with Disney, NBC, Amazon. It was first reported by The Athletic. The Wall Street Journal confirmed the numbers. The league set to bring in approximately two point two billion over eleven years. Now, if you break down the numbers, so the WNBA's current media rights valued at about sixty million per year, this new structure would be in the annual range of two hundred million.

So you see the different Still still right right in my opinion?

So you see the different Still still right right in my opinion?

Still well, I mean, we're talking about the age, I would not wake up that element behind the w.

Still well, I mean, we're talking about the age, I would not wake up that element behind the w.

If I were the WNBA, I would not lock up for this long. I think, I think, I think there are really at the cusp was Caitlin Clark and all the other great young players into the league.

If I were the WNBA, I would not lock up for this long. I think, I think, I think there are really at the cusp was Caitlin Clark and all the other great young players into the league.

This it's everywhere you.

This it's everywhere you.

Go to ESPN dot com, you pull up the app, you get the n w NBA stuff before you get like Major League Baseball, and that's how they rank it.

Go to ESPN dot com, you pull up the app, you get the n w NBA stuff before you get like Major League Baseball, and that's how they rank it.

It's unbelievable. So if I were the w NBA, I'd go short here on my deal.

It's unbelievable. So if I were the w NBA, I'd go short here on my deal.

But that's just what do you got next.

But that's just what do you got next.

Cidel founder Kenneth Griffines. He apparently has a thing for collectibles, so he set a record for a fossil sold at auction.

Cidel founder Kenneth Griffines. He apparently has a thing for collectibles, so he set a record for a fossil sold at auction.

He paid forty four point six.

He paid forty four point six.

Million dollars at souther B's for a one hundred and fifty million year old stegosaurus. Its name is Apex. It's about eleven feet tall. It was found in Colorado. It was actually expected to get six million, and he paid forty five million for it. Some people say he wants to lend it to a US museum, but I mean, he's done these trophy pieces before, but this is just just go buy.

Million dollars at souther B's for a one hundred and fifty million year old stegosaurus. Its name is Apex. It's about eleven feet tall. It was found in Colorado. It was actually expected to get six million, and he paid forty five million for it. Some people say he wants to lend it to a US museum, but I mean, he's done these trophy pieces before, but this is just just go buy.

A sports team.

A sports team.

I guess he likes buying.

I guess he likes buying.

All right, he donates to it.

All right, he donates to it.

ABC has a Tyrannosaurus wrecks. That's the that's the mean one in the movies, the meat Eater. Its nickname was Stan and it's sold for thirty one million four years ago. Thank you ABC for that. I made a joke about legos. I mean the kids. The kids are all into it and then it's over right. You know it's a Stegosaurus. There's one, and I think it's in England. I can't remember. There's one that's very cool in a museum.

ABC has a Tyrannosaurus wrecks. That's the that's the mean one in the movies, the meat Eater. Its nickname was Stan and it's sold for thirty one million four years ago. Thank you ABC for that. I made a joke about legos. I mean the kids. The kids are all into it and then it's over right. You know it's a Stegosaurus. There's one, and I think it's in England. I can't remember. There's one that's very cool in a museum.

And it's got the bumps on the back or something like that.

And it's got the bumps on the back or something like that.

It just kills. Take it back to my geology university, Lisa, save us.

It just kills. Take it back to my geology university, Lisa, save us.

Okay, the last one. This one's for the you talked about legos and stuff. Okay, this is a new Beanie baby.

Okay, the last one. This one's for the you talked about legos and stuff. Okay, this is a new Beanie baby.

If you've heard about it.

If you've heard about it.

You know, beanie babies kind of faded after a while, but it is a big deal. So now they have something called a Beanie Bouncer. It's this little four inch toy and you can bounce it. It has a ball inside and it goes about fifty feet high.

You know, beanie babies kind of faded after a while, but it is a big deal. So now they have something called a Beanie Bouncer. It's this little four inch toy and you can bounce it. It has a ball inside and it goes about fifty feet high.

So the kids are going.

So the kids are going.

To wreck haf it inside your house with this exactly? You take it outside, take it outside. Okay, but they're saying that it's got the patents for it. It's going to go along with the patents. It comes in like twelve animal characters. But this could be the hot new thing at Christmas.

To wreck haf it inside your house with this exactly? You take it outside, take it outside. Okay, but they're saying that it's got the patents for it. It's going to go along with the patents. It comes in like twelve animal characters. But this could be the hot new thing at Christmas.

Remember the rubber ball that you slammed on the driveway and you tried to get it to go over the house, which you did four or five times until a second floor window went out.

Remember the rubber ball that you slammed on the driveway and you tried to get it to go over the house, which you did four or five times until a second floor window went out.

I got stuck in a gutt hard. But it's good.

I got stuck in a gutt hard. But it's good.

You get the kids outside, so you get them off the technology out outside.

You get the kids outside, so you get them off the technology out outside.

I'm off for that.

I'm off for that.

Do your kids go outside?

Do your kids go outside?

They do because they're forced. They have sports, ever their forwards out of time. It's a huge dude, but it's you do. You have to get them off of remember when they were little, like getting them off the devices and getting them outside.

They do because they're forced. They have sports, ever their forwards out of time. It's a huge dude, but it's you do. You have to get them off of remember when they were little, like getting them off the devices and getting them outside.

Got to do it.

Got to do it.

It's okay, Well, thank you, Lisa. Is that it one?

It's okay, Well, thank you, Lisa. Is that it one?

That's it?

That's it?

You know there was one about alcohol being bad for your health, but that was in the journal. But I think that wouldn't go that would go over very well here.

You know there was one about alcohol being bad for your health, but that was in the journal. But I think that wouldn't go that would go over very well here.

Yeah, I said, nah. Next this is the Bloomberg surveillance podcast, bringing you the best in economics, finance, investment, and international relations. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube to see the show weekday mornings from seven to ten am Eastern from our global headquarters in New York City. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app.

Yeah, I said, nah. Next this is the Bloomberg surveillance podcast, bringing you the best in economics, finance, investment, and international relations. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube to see the show weekday mornings from seven to ten am Eastern from our global headquarters in New York City. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app.