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Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside my co host Matt Miller.

Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside my co host Matt Miller.

Every business day we bring you interviews from CEOs, market pros, and Bloomberg experts, along with essential market movin news.

Every business day we bring you interviews from CEOs, market pros, and Bloomberg experts, along with essential market movin news.

I'm the Bloomberg Markets Podcast called Apple Podcasts or wherever you listen to podcasts, and at Bloomberg dot com slash podcast. All right, private credit. You know, we love this topic. It's a big growing mark.

I'm the Bloomberg Markets Podcast called Apple Podcasts or wherever you listen to podcasts, and at Bloomberg dot com slash podcast. All right, private credit. You know, we love this topic. It's a big growing mark.

One and a half around one and a half trillion.

One and a half around one and a half trillion.

Oh my goodness, and you know it's just been growing. I've been calling out that having seen a bunch of credit blobs back in my day. There's going to be something. There's no regulation of this market. Something's going to go wrong. And I keep saying it, but it keeps growing. And I'll tell you what. Pretty much everything we know about the credit private credit business, we learned from Randy Schumer. He's a coet of Senior Lending, a Churchill Asset Management here in New York.

Oh my goodness, and you know it's just been growing. I've been calling out that having seen a bunch of credit blobs back in my day. There's going to be something. There's no regulation of this market. Something's going to go wrong. And I keep saying it, but it keeps growing. And I'll tell you what. Pretty much everything we know about the credit private credit business, we learned from Randy Schumer. He's a coet of Senior Lending, a Churchill Asset Management here in New York.

Randy, you said ninety yep, I have work to do, yes exactly.

Randy, you said ninety yep, I have work to do, yes exactly.

I'm just I don't want to put all the blame on you, but talk to us about the growth of this business. Is private credit business has been such a big growth story on Wall Street really since the end of the Great Financial Crisis? How concerned are you about the development of this market? Should investors and should regulators be concerned?

I'm just I don't want to put all the blame on you, but talk to us about the growth of this business. Is private credit business has been such a big growth story on Wall Street really since the end of the Great Financial Crisis? How concerned are you about the development of this market? Should investors and should regulators be concerned?

And Jess is now part of the private credit policse Yes, she is. Well, the timing of this is great. Thanks for having me on because what's happening is that And I talked to someone on a podcast that we're doing recently that's coming out I think this week about that exact question. Why are people so concerned and why is this viewed as a bubble as opposed to natural growth of moving loans from the public banking sector into the non regulated, which is what the regulators wanted. And he said, because it's new, it feels new. It's not public. These loans are not traded. These are middle market companies. And part of that is just getting educated in the asset claus. You guys have been doing a great job in doing that and helping me get the word out. I think Mark Rowan Apaula pointed out the fact that it's really investor education, and the more education there is, the better that we look. But the fact of the matter is that this is actually a natural evolution away from traded assets where the banks were considered to be not healthy holders of these loans, and so the private credit market has responded to the immense amount of appetite because of so much of market volatility, these loans are untraded and I liquid loans, as opposed to being a negative, are viewed as being positive to a lot of investors, institutional investors who are looking to allocate to non traded, non volatile, less correlated assets. So the reason that the asset class has grown so much is because the investors are looking for alternatives to the sixty forty correlation, you know, the allocation model.

And Jess is now part of the private credit policse Yes, she is. Well, the timing of this is great. Thanks for having me on because what's happening is that And I talked to someone on a podcast that we're doing recently that's coming out I think this week about that exact question. Why are people so concerned and why is this viewed as a bubble as opposed to natural growth of moving loans from the public banking sector into the non regulated, which is what the regulators wanted. And he said, because it's new, it feels new. It's not public. These loans are not traded. These are middle market companies. And part of that is just getting educated in the asset claus. You guys have been doing a great job in doing that and helping me get the word out. I think Mark Rowan Apaula pointed out the fact that it's really investor education, and the more education there is, the better that we look. But the fact of the matter is that this is actually a natural evolution away from traded assets where the banks were considered to be not healthy holders of these loans, and so the private credit market has responded to the immense amount of appetite because of so much of market volatility, these loans are untraded and I liquid loans, as opposed to being a negative, are viewed as being positive to a lot of investors, institutional investors who are looking to allocate to non traded, non volatile, less correlated assets. So the reason that the asset class has grown so much is because the investors are looking for alternatives to the sixty forty correlation, you know, the allocation model.

That we talked about.

That we talked about.

And at the end of the day, these are middle market loans. These are low risk, relatively low levered, fully secured with financial covenants, and so think of private credit as middle market lending for grownups. Okay, it's very stable lending that is being now packaged in multiple funds, very diverse investor base across many, many, now thousands of investors who are investing in this asset class, who have experience in other complicated asset classes such as real estate and private credit and public equities and fixed income, and so it's actually meeting a demand and the demand is growing as more investors realize what an opportunity and benefit it is.

And at the end of the day, these are middle market loans. These are low risk, relatively low levered, fully secured with financial covenants, and so think of private credit as middle market lending for grownups. Okay, it's very stable lending that is being now packaged in multiple funds, very diverse investor base across many, many, now thousands of investors who are investing in this asset class, who have experience in other complicated asset classes such as real estate and private credit and public equities and fixed income, and so it's actually meeting a demand and the demand is growing as more investors realize what an opportunity and benefit it is.

What is your investment approach for private credit, specifically for your clients, what do you advise them to do and how to have that exposure.

What is your investment approach for private credit, specifically for your clients, what do you advise them to do and how to have that exposure.

Yeah.

Yeah.

So we're also very fortunate to be owned by a very large entity called TIAA, which is their holding company, right or Neuvene, which is a trillion dollar asset manager, and they have hundreds of billions of dollars in fixed income and public equities and real estate and municipal bonds, and what their investors are looking at the same thing as our investors at Churchill looking for is the stability of returns. And so in a normal environment, a senior credit we've talked about this will will get you kind of a seven percent on leveraged yield in the current environment, which is why it's very attractive right now because rates are up, they're earning a twelve percent on levered yield, and so when they look at the returns of twelve percent versus what they're getting in other markets, we're representing a lower risk profile and so that's adding to the appetite that these investors are looking for now. In our case, we can offer them senior debt opportunities, we can offer them junior capital, we can offer them private equity. So we have a number of asset classes that we're also offering our private equity sponsors in terms of their financing options. So we're taking the same financing choices that we're giving our clients on the financing side to the investors on the investing side. And that's what makes the sort of nice balance which I think as it investors and frankly, the media and regulators get to understand the asset class. You know, this is not fast money. This is money that investors are focusing long term assets with us long term liabilities because these loans don't disappear tomorrow, they're not traded, and that kind of stability is really at a premium right now.

So we're also very fortunate to be owned by a very large entity called TIAA, which is their holding company, right or Neuvene, which is a trillion dollar asset manager, and they have hundreds of billions of dollars in fixed income and public equities and real estate and municipal bonds, and what their investors are looking at the same thing as our investors at Churchill looking for is the stability of returns. And so in a normal environment, a senior credit we've talked about this will will get you kind of a seven percent on leveraged yield in the current environment, which is why it's very attractive right now because rates are up, they're earning a twelve percent on levered yield, and so when they look at the returns of twelve percent versus what they're getting in other markets, we're representing a lower risk profile and so that's adding to the appetite that these investors are looking for now. In our case, we can offer them senior debt opportunities, we can offer them junior capital, we can offer them private equity. So we have a number of asset classes that we're also offering our private equity sponsors in terms of their financing options. So we're taking the same financing choices that we're giving our clients on the financing side to the investors on the investing side. And that's what makes the sort of nice balance which I think as it investors and frankly, the media and regulators get to understand the asset class. You know, this is not fast money. This is money that investors are focusing long term assets with us long term liabilities because these loans don't disappear tomorrow, they're not traded, and that kind of stability is really at a premium right now.

Who is a typical investor in one of your funds, So yeah, we.

Who is a typical investor in one of your funds, So yeah, we.

Don't really have typical investors. We have them from a broad array of types of investors. So we have pension plans, we have wealth wealth funds, we have sovereign wealth funds, we have insurance companies, and essentially, as more and more investors, particularly sophisticated investors, are looking at their options in this higher for longer world, they're thinking, you know, I need a premium yield because I can get five percent on treasuries right now, but I also want stability and those are the things that are attracting now even further down the food chain in terms of family offices and retail. And I think as the asset class grows, and we're calling it kind of the new paradigms, the as investors look at the benefits that private credit is offering and they're seeing some very sophisticated players in this market. They're they're saying, how can we party paid in this asset class.

Don't really have typical investors. We have them from a broad array of types of investors. So we have pension plans, we have wealth wealth funds, we have sovereign wealth funds, we have insurance companies, and essentially, as more and more investors, particularly sophisticated investors, are looking at their options in this higher for longer world, they're thinking, you know, I need a premium yield because I can get five percent on treasuries right now, but I also want stability and those are the things that are attracting now even further down the food chain in terms of family offices and retail. And I think as the asset class grows, and we're calling it kind of the new paradigms, the as investors look at the benefits that private credit is offering and they're seeing some very sophisticated players in this market. They're they're saying, how can we party paid in this asset class.

Do you see any red flags that are bubbling up in private credit any corners?

Do you see any red flags that are bubbling up in private credit any corners?

Yeah, Well, the thing that is most I think concerning to anybody who has experience in the asset class is high interest rates. Because the thing that when you look at your portfolio with rates now at five and a half percent from a benchmark perspective versus zero a year and a half ago, the interest coverage is shrinking across portfolios, and so everyone looks at that as a risk, and it's a real risk, and so you have to build a portfolio that is ready to accept those higher rates. And the way we do it is we look at very defensive sectors that have high free cash flows that are owned by private equity firms who can grow these businesses to keep pace not only with where GDP is, but also where some of the higher growth sectors in areas like healthcare and business services are going. So give an example, the average growth in both revenues and IBATA in our portfolio right now is about twelve and a half percent. So when you look at the GDP which is bouncing around two three four percent something like that. You're looking at businesses that we think will grow through whatever cycle is coming. It looks like probably a soft or no landing is going to be expected, but our businesses are really faster growing than that. But they also tend to be businesses that are market leaders that will be able to sustain any kind of downturn even if we do have it.

Yeah, Well, the thing that is most I think concerning to anybody who has experience in the asset class is high interest rates. Because the thing that when you look at your portfolio with rates now at five and a half percent from a benchmark perspective versus zero a year and a half ago, the interest coverage is shrinking across portfolios, and so everyone looks at that as a risk, and it's a real risk, and so you have to build a portfolio that is ready to accept those higher rates. And the way we do it is we look at very defensive sectors that have high free cash flows that are owned by private equity firms who can grow these businesses to keep pace not only with where GDP is, but also where some of the higher growth sectors in areas like healthcare and business services are going. So give an example, the average growth in both revenues and IBATA in our portfolio right now is about twelve and a half percent. So when you look at the GDP which is bouncing around two three four percent something like that. You're looking at businesses that we think will grow through whatever cycle is coming. It looks like probably a soft or no landing is going to be expected, but our businesses are really faster growing than that. But they also tend to be businesses that are market leaders that will be able to sustain any kind of downturn even if we do have it.

What's the deal flow you're seeing from your private equity sponsors. What's it been like today in this higher interest rate environment.

What's the deal flow you're seeing from your private equity sponsors. What's it been like today in this higher interest rate environment.

We just got the October numbers. We are the most as of the end of October, the most active direct lender in the market right now in the United States. The reason that that's happening is that our private equity sponsors continue to have dry powder that they are raising in their own funds. They wanted to put it to work. They've identified areas of interest, as I mentioned, in these defensive sectors that in this current economy are doing well, and they realize that next year is probably going to be a better year than people think, probably not going to have a recession, and so they're trying to vote with their feet and they're looking for scaled players like Churchill that can write large checks where we have relationships and I think I mentioned this last time. We're an investor in their funds and so we were sort of first in line to be asked to join these deals. We still tend to be pretty picky. We probably do about five percent of the deals that come in the door. So we're looking for it only the best of the best, knowing that we don't know what's coming next year. I mean, think about where we were two or three years ago with COVID and in traits and the good thing. And this goes back to this issue a bubble. These middle market companies have been tested. They've been tested through low rates, they've been tested through high rates, they've been tested through low inflation, they've been tested through high inflation. And so I think the benefit that needs to be explained more. And this is part of this education is why these companies actually do well, in some cases even better than some of the larger companies, because they tend to be in structures that are more conservative, and also with lending partners sisters ourselves that are basically built for the long run. We're going to work through whatever problem these companies have to get to a final resolution. That's a positive one.

We just got the October numbers. We are the most as of the end of October, the most active direct lender in the market right now in the United States. The reason that that's happening is that our private equity sponsors continue to have dry powder that they are raising in their own funds. They wanted to put it to work. They've identified areas of interest, as I mentioned, in these defensive sectors that in this current economy are doing well, and they realize that next year is probably going to be a better year than people think, probably not going to have a recession, and so they're trying to vote with their feet and they're looking for scaled players like Churchill that can write large checks where we have relationships and I think I mentioned this last time. We're an investor in their funds and so we were sort of first in line to be asked to join these deals. We still tend to be pretty picky. We probably do about five percent of the deals that come in the door. So we're looking for it only the best of the best, knowing that we don't know what's coming next year. I mean, think about where we were two or three years ago with COVID and in traits and the good thing. And this goes back to this issue a bubble. These middle market companies have been tested. They've been tested through low rates, they've been tested through high rates, they've been tested through low inflation, they've been tested through high inflation. And so I think the benefit that needs to be explained more. And this is part of this education is why these companies actually do well, in some cases even better than some of the larger companies, because they tend to be in structures that are more conservative, and also with lending partners sisters ourselves that are basically built for the long run. We're going to work through whatever problem these companies have to get to a final resolution. That's a positive one.

Since your clients have money to use that's sitting on the sidelines. What do you think this tells us about the direction of the economy. They're willing to take more risk.

Since your clients have money to use that's sitting on the sidelines. What do you think this tells us about the direction of the economy. They're willing to take more risk.

Yeah, well I think that amazingly. It looks like the FED is engineered some kind of soft lending. Will see what happens. It feels like their language continues to be hawkish. They want to keep people on their toes. But if that's the case, and I do believe that it is, that next year will be a solid, solid year, that could be a good thing. Now in general, I do believe that inflation will be higher and rates will still be higher. But this is kind of the normal that we forgot about that hasn't been with us for fifteen years, right, You've had zero interest rates for a large part of that time. This zero gravity environment we got used to all of a sudden. You know, we're like the Apollo astronauts that they get you back or anybody from in these long space missions, and they can't walk because they're not used to the way to gravity. That's kind of how we're feeling right now. I think the world is not used to having a five percent FED funds rate, but in fact that's the average over the last sixty years. So I think we're returning to that, which is good because when you have zero interest rates, it sort of inspires some problematic behavior. But I think this new normal is actually very positive for private credit and for investors in general.

Yeah, well I think that amazingly. It looks like the FED is engineered some kind of soft lending. Will see what happens. It feels like their language continues to be hawkish. They want to keep people on their toes. But if that's the case, and I do believe that it is, that next year will be a solid, solid year, that could be a good thing. Now in general, I do believe that inflation will be higher and rates will still be higher. But this is kind of the normal that we forgot about that hasn't been with us for fifteen years, right, You've had zero interest rates for a large part of that time. This zero gravity environment we got used to all of a sudden. You know, we're like the Apollo astronauts that they get you back or anybody from in these long space missions, and they can't walk because they're not used to the way to gravity. That's kind of how we're feeling right now. I think the world is not used to having a five percent FED funds rate, but in fact that's the average over the last sixty years. So I think we're returning to that, which is good because when you have zero interest rates, it sort of inspires some problematic behavior. But I think this new normal is actually very positive for private credit and for investors in general.

Randy, thanks so much for joining us. Really appreciate you coming in the studio again. Randy Schummer. He's co head of senior Lending and his senior managing director at Churchill Asset Management, one of the leading private credit providers in the marketplace. And again, it's a business. I'm just looking at the some Bloomberg reporting here private credit market has roughly tripled in size since two thousand and fifteen.

Randy, thanks so much for joining us. Really appreciate you coming in the studio again. Randy Schummer. He's co head of senior Lending and his senior managing director at Churchill Asset Management, one of the leading private credit providers in the marketplace. And again, it's a business. I'm just looking at the some Bloomberg reporting here private credit market has roughly tripled in size since two thousand and fifteen.

You're listening to the Team Ken's live program Bloomberg Markets weekdays at ten am eastering on Bloomberg dot com, the iHeartRadio app and the Bloomberg Business App, or listen on demand wherever you get your podcasts.

You're listening to the Team Ken's live program Bloomberg Markets weekdays at ten am eastering on Bloomberg dot com, the iHeartRadio app and the Bloomberg Business App, or listen on demand wherever you get your podcasts.

Twenty twenty three was not a great year, kids for the IPO market. It was just kind of muted at best.

Twenty twenty three was not a great year, kids for the IPO market. It was just kind of muted at best.

Here.

Here.

I guess there was a little bit more hope for twenty twenty four. We had some news today Shine the China found an online fashion company that won over one hundreds of millions of shoppers around the world. Has confidentially How confidentially can it be if it's followed to go product in the US and welcome be one of the biggest IPOs in years. Brian Lynch joins is she's head of market insight at Equities in So, Brian, just give us a little summation. How was twenty twenty three in terms of IPO activity?

I guess there was a little bit more hope for twenty twenty four. We had some news today Shine the China found an online fashion company that won over one hundreds of millions of shoppers around the world. Has confidentially How confidentially can it be if it's followed to go product in the US and welcome be one of the biggest IPOs in years. Brian Lynch joins is she's head of market insight at Equities in So, Brian, just give us a little summation. How was twenty twenty three in terms of IPO activity?

Thanks for having me. Twenty twenty three was certainly an extremely quiet year for IPOs. So far, we've seen about twenty three billion in IPO proceeds, higher than last year, but drastically and lower the the three hundred billion we had seen up to this point in twenty twenty one. So it's been a quiet year. And the fall cohort of IPOs that we did see so Clavio, Instacart, Arm Birkenstock, really did not pave the way for others to follow. It looks like Birkenstock as of today is the only one training above their open price. So it's been a tough year for IPOs. Yet there is a lot of demand f I pos and there are thousands of unicorn companies sitting on the sidelines, you know, figuring out their next move.

Thanks for having me. Twenty twenty three was certainly an extremely quiet year for IPOs. So far, we've seen about twenty three billion in IPO proceeds, higher than last year, but drastically and lower the the three hundred billion we had seen up to this point in twenty twenty one. So it's been a quiet year. And the fall cohort of IPOs that we did see so Clavio, Instacart, Arm Birkenstock, really did not pave the way for others to follow. It looks like Birkenstock as of today is the only one training above their open price. So it's been a tough year for IPOs. Yet there is a lot of demand f I pos and there are thousands of unicorn companies sitting on the sidelines, you know, figuring out their next move.

What does this mean for twenty twenty four.

What does this mean for twenty twenty four.

Then yeah, I do think we'll see the market pick up in twenty twenty four, you know, both from a macro perspective, as you know you talked about a bit earlier, we are seeing better macro indicators. We have job growth, we have strong GDP, Inflation is cooling. You know, there's an end in sight when it comes to rate hikes or you know, even rate cuts, So that puts us in a better position. And ultimately a lot of these companies are feeling a lot of pressure from both early investors and shareholders to achieve liquidity. You know, look at Read at a company that was rumored today to be considering an IPO in twenty twenty four. This is a company that was found in two thousand and five, so they've been private for eighteen years. There's a lot of pend up demand for liquidity, and wild platforms like equity Zen can enable some of that liquidity while they're private. It really takes a public market exit for vast number of investors to have access and you know that wide scal liquidity for early shareholders.

Then yeah, I do think we'll see the market pick up in twenty twenty four, you know, both from a macro perspective, as you know you talked about a bit earlier, we are seeing better macro indicators. We have job growth, we have strong GDP, Inflation is cooling. You know, there's an end in sight when it comes to rate hikes or you know, even rate cuts, So that puts us in a better position. And ultimately a lot of these companies are feeling a lot of pressure from both early investors and shareholders to achieve liquidity. You know, look at Read at a company that was rumored today to be considering an IPO in twenty twenty four. This is a company that was found in two thousand and five, so they've been private for eighteen years. There's a lot of pend up demand for liquidity, and wild platforms like equity Zen can enable some of that liquidity while they're private. It really takes a public market exit for vast number of investors to have access and you know that wide scal liquidity for early shareholders.

Is Kim kardashing going to save the IPO market? I hear she's got a company called Skims, which I'm sure John Tucker.

Is Kim kardashing going to save the IPO market? I hear she's got a company called Skims, which I'm sure John Tucker.

Is aware of, but oh he do that's wearing at this skirf.

Is aware of, but oh he do that's wearing at this skirf.

Yeah, talk to us about like, I don't know, what do you know about Skims?

Yeah, talk to us about like, I don't know, what do you know about Skims?

Sure? So Skims kind of bucks the trend of some of these other companies. They were just founded in twenty nineteen, so a relatively young company valued out of four billion dollar valuation over the summer, but they're rapidly growing. They obviously have a strong brand name, you know, the connection with Kim Kardashian certainly helps. And you know, from what I've heard, they have a strong product as well. So if they did IPO next year, they would certainly be different than a lot of these ten fifteen, almost twenty year old companies that we expect to hit the markets.

Sure? So Skims kind of bucks the trend of some of these other companies. They were just founded in twenty nineteen, so a relatively young company valued out of four billion dollar valuation over the summer, but they're rapidly growing. They obviously have a strong brand name, you know, the connection with Kim Kardashian certainly helps. And you know, from what I've heard, they have a strong product as well. So if they did IPO next year, they would certainly be different than a lot of these ten fifteen, almost twenty year old companies that we expect to hit the markets.

What industry groups are doing better at going public at this point versus others that are struggling. Is it more company specific or is it more industry specific?

What industry groups are doing better at going public at this point versus others that are struggling. Is it more company specific or is it more industry specific?

I think it is company specific to some extent. You know, there are certain things that any company is going to need to exhibit to have a successful IPO. They need to be showing profitability, they need to be in growth, and they need to have a strong brand that investors know and recognize. That being said, a lot of these companies this fall showed some of those elements and still weren't successful. The industries that we're seeing the most investor interest in in the private markets are AI and machine learning, so not surprising, information technology so pure tech companies, and fintech. So those are the areas we're seeing interest in the private markets. When you look at AI and machine learning, a lot of these companies are younger companies who are less likely to be close to an IPO. So I think some of these pure tech companies that have really attractive multiples could be the ones, you know that have a more successful debut.

I think it is company specific to some extent. You know, there are certain things that any company is going to need to exhibit to have a successful IPO. They need to be showing profitability, they need to be in growth, and they need to have a strong brand that investors know and recognize. That being said, a lot of these companies this fall showed some of those elements and still weren't successful. The industries that we're seeing the most investor interest in in the private markets are AI and machine learning, so not surprising, information technology so pure tech companies, and fintech. So those are the areas we're seeing interest in the private markets. When you look at AI and machine learning, a lot of these companies are younger companies who are less likely to be close to an IPO. So I think some of these pure tech companies that have really attractive multiples could be the ones, you know that have a more successful debut.

You know, Brian, I wonder what the what are the bankers saying as to why they didn't get more done in twenty twenty three. Like back in my day, as long as this market wasn't crashing, I could push out a lot of stuff out the door, particularly from companies that are really looking for some liquidity. What are they saying here, what kind of market do they need? I mean, the S Andp's up sixteen seventeen eighteen percent, even equal weighted it's up four or five percent, So it's not like the market's down.

You know, Brian, I wonder what the what are the bankers saying as to why they didn't get more done in twenty twenty three. Like back in my day, as long as this market wasn't crashing, I could push out a lot of stuff out the door, particularly from companies that are really looking for some liquidity. What are they saying here, what kind of market do they need? I mean, the S Andp's up sixteen seventeen eighteen percent, even equal weighted it's up four or five percent, So it's not like the market's down.

I think you're right. The macro indicators show that we are in a pretty good place for companies to exit. I think that there's just a lot of trepidation in the market given that we haven't seen a blockbuster IPO be successful, you know, this year or last year really, so it's I think it's more of an investors are nervous. They're looking for someone to lead the packing kind of tell everyone, Okay, this is going to work out fine, and we've yet to really see that. I do think once we see one or two really successful IPOs, the doors will open more because you know, the macro factors are there and it should be a decent market to exit. That being said, I think another factor that impacts a lot of these companies is that if they raise capital in twenty twenty one, it's very unlikely that that valuation is still where the market is unless they into it. So they're just going to have to accept that the IPO at a lower evaluation, you know, if they're trying to.

I think you're right. The macro indicators show that we are in a pretty good place for companies to exit. I think that there's just a lot of trepidation in the market given that we haven't seen a blockbuster IPO be successful, you know, this year or last year really, so it's I think it's more of an investors are nervous. They're looking for someone to lead the packing kind of tell everyone, Okay, this is going to work out fine, and we've yet to really see that. I do think once we see one or two really successful IPOs, the doors will open more because you know, the macro factors are there and it should be a decent market to exit. That being said, I think another factor that impacts a lot of these companies is that if they raise capital in twenty twenty one, it's very unlikely that that valuation is still where the market is unless they into it. So they're just going to have to accept that the IPO at a lower evaluation, you know, if they're trying to.

Exit, well, Shine could be maybe one of these companies because it's I think according to the Wall Street Journal reporting Shine, which is it's a Chinese company, so that could be an issue for some people. But it's now based in Singapore, was valued around sixty six billion dollars in a fundraising round in May, and is likely to aim for an even higher valuation in an initial public offering, So I guess. And it's got Gold and Sachs and JP Morgan and Morgan Stanley. So I mean, it seems like all the elements are there for Shine. Do we have any sense of timing Shine would be early twenty four later twenty four.

Exit, well, Shine could be maybe one of these companies because it's I think according to the Wall Street Journal reporting Shine, which is it's a Chinese company, so that could be an issue for some people. But it's now based in Singapore, was valued around sixty six billion dollars in a fundraising round in May, and is likely to aim for an even higher valuation in an initial public offering, So I guess. And it's got Gold and Sachs and JP Morgan and Morgan Stanley. So I mean, it seems like all the elements are there for Shine. Do we have any sense of timing Shine would be early twenty four later twenty four.

Indications look like this would be an early twenty four IPO. But this is also a company that has had its valuation decrease. They raised capital in twenty twenty two at one hundred billion dollar valuation, earlier this year raised again at a sixty six billion dollar valuation, and as you said, looking at an eighty or ninety billion dollar valuation. So they haven't bucked that trend of companies that have had to, you know, accept that their twenty twenty one twenty twenty two valuation may not be where the market is anymore. But to your point, it's a company that has achieved twenty three billion dollars in revenue, had its most profitable half in the first half of this year. You know, it was growing rapidly with new distribution centers in the US, Canada, and Europe. They're opening new manufacturing centers in Brazil and India. So a lot of growth going on there, but also some concerns about their relationship with China, you know, IP infringement, labor practices and some other things. So certainly not a straight forward story on this one.

Indications look like this would be an early twenty four IPO. But this is also a company that has had its valuation decrease. They raised capital in twenty twenty two at one hundred billion dollar valuation, earlier this year raised again at a sixty six billion dollar valuation, and as you said, looking at an eighty or ninety billion dollar valuation. So they haven't bucked that trend of companies that have had to, you know, accept that their twenty twenty one twenty twenty two valuation may not be where the market is anymore. But to your point, it's a company that has achieved twenty three billion dollars in revenue, had its most profitable half in the first half of this year. You know, it was growing rapidly with new distribution centers in the US, Canada, and Europe. They're opening new manufacturing centers in Brazil and India. So a lot of growth going on there, but also some concerns about their relationship with China, you know, IP infringement, labor practices and some other things. So certainly not a straight forward story on this one.

We only have about a minute left. But what other companies should we keep on our radar that could potentially go public next year?

We only have about a minute left. But what other companies should we keep on our radar that could potentially go public next year?

Yeah, Reddit's one that we mentioned. They are in comations to potentially file next year. They're private for a very long time, and really they have solidified themselves as one of the leading social media platforms in the US. They made you know, a lot of splashy news in the error of the meme stocks their subreddits. Wall Street Back was really you know, the catalyst for a lot of the retail momentum in the stock market. So I think they are an important one to watch and see. Geek is another one that has confidentially not sorry, not confidentially, had filed to go public, hasn't yet, but has grown significantly, and we know they're considering an IPO, so we have eyes on that one as well.

Yeah, Reddit's one that we mentioned. They are in comations to potentially file next year. They're private for a very long time, and really they have solidified themselves as one of the leading social media platforms in the US. They made you know, a lot of splashy news in the error of the meme stocks their subreddits. Wall Street Back was really you know, the catalyst for a lot of the retail momentum in the stock market. So I think they are an important one to watch and see. Geek is another one that has confidentially not sorry, not confidentially, had filed to go public, hasn't yet, but has grown significantly, and we know they're considering an IPO, so we have eyes on that one as well.

All right, well, hopefully twenty four will be be a better IPO market than we have more opportunities to talk to Brian. Brian Lynch is head of market insight at Equities.

All right, well, hopefully twenty four will be be a better IPO market than we have more opportunities to talk to Brian. Brian Lynch is head of market insight at Equities.

In you're listening to the tape cans are live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com, and the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station Just say hello, what's playing? Bloomberg eleven thirty.

In you're listening to the tape cans are live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com, and the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station Just say hello, what's playing? Bloomberg eleven thirty.

Just met Paul Sweeny live here on Bloomberg Interactive Broker. This is a treat, folks. Neil Hennessy joins us chief market strategist The Hennessy Advisors. He started this back in nineteen eighty nine. I'm not gonna call him old, I'm gonna say he's a seasoned investor. It but we share something. We share something. We both started our careers at Pain whatever, which is a great brokerage, firm, investment bank, great retail presence. Back in the day, it was acquired by I don't know where this now is, but now it's basically the guts of ubs here in the US, but the House of Pain Neil, thanks so much for joining us here. You see a market like this SPX up seventeen to eighteen percent, but it's you take out the Magnificent seven and what do we got here? So how do you look at markets like this that doesn't feel like a healthy market.

Just met Paul Sweeny live here on Bloomberg Interactive Broker. This is a treat, folks. Neil Hennessy joins us chief market strategist The Hennessy Advisors. He started this back in nineteen eighty nine. I'm not gonna call him old, I'm gonna say he's a seasoned investor. It but we share something. We share something. We both started our careers at Pain whatever, which is a great brokerage, firm, investment bank, great retail presence. Back in the day, it was acquired by I don't know where this now is, but now it's basically the guts of ubs here in the US, but the House of Pain Neil, thanks so much for joining us here. You see a market like this SPX up seventeen to eighteen percent, but it's you take out the Magnificent seven and what do we got here? So how do you look at markets like this that doesn't feel like a healthy market.

Well, the market really hasn't gone any place. I mean, as of yesterday, you look at the Nasdaq was up thirty seven percent, but you take out they always say eight stocks, we'll get to the magnificence seven here in second. But essentially you take those out, the market's up seven percent, so it's really gotten no place. That downs up to and a half or three percent.

Well, the market really hasn't gone any place. I mean, as of yesterday, you look at the Nasdaq was up thirty seven percent, but you take out they always say eight stocks, we'll get to the magnificence seven here in second. But essentially you take those out, the market's up seven percent, so it's really gotten no place. That downs up to and a half or three percent.

So those eight.

So those eight.

Companies have controlled the market. But interesting enough, then you get to three weeks ago, I guess we came up with the new slogan magnificent seven.

Companies have controlled the market. But interesting enough, then you get to three weeks ago, I guess we came up with the new slogan magnificent seven.

Then Netflix went.

Then Netflix went.

Out, but that made me think to go back to nineteen sixty when the movie was made, The Magnificence Short. So I'll give you something to think about here is in that movie, the ending, they hired seven gunslingers to help protect the town and there are only three left. So you tell me which three of the seven are going to be left?

Out, but that made me think to go back to nineteen sixty when the movie was made, The Magnificence Short. So I'll give you something to think about here is in that movie, the ending, they hired seven gunslingers to help protect the town and there are only three left. So you tell me which three of the seven are going to be left?

So what do you do with a market that has that lack of breath? I know you guys at Hennessey are value investors, So how do you approach this market? How has it changed maybe over the last several years?

So what do you do with a market that has that lack of breath? I know you guys at Hennessey are value investors, So how do you approach this market? How has it changed maybe over the last several years?

As you know, you know value, what is a place that you want to be if you want to play again? So look at the SMPT five hundred you're talking about. Apple is seven over seven percent of that thirteen percent of the Nasdaq. And if you think logically, would you put thirteen percent of your money in one stock?

As you know, you know value, what is a place that you want to be if you want to play again? So look at the SMPT five hundred you're talking about. Apple is seven over seven percent of that thirteen percent of the Nasdaq. And if you think logically, would you put thirteen percent of your money in one stock?

Probably not?

Probably not?

Okay, So but that's what people have been doing at some point in time, just like the late nineties when all the value managers were getting fired because if you weren't twenty three years old and you didn't have a dot com on your forehead, you were fired. But essentially, you know, I love the mid cap arena, like the Hennessy MidCap thirty. And the reason I like that is mid cap stocks have really outperformed everything over time, and they're large enough to withstand an economic tsunami. They're big enough to make an acquisition that would be a creative to them from a smaller company. But they're also big enough to be acquired by a larger company and be a creative.

Okay, So but that's what people have been doing at some point in time, just like the late nineties when all the value managers were getting fired because if you weren't twenty three years old and you didn't have a dot com on your forehead, you were fired. But essentially, you know, I love the mid cap arena, like the Hennessy MidCap thirty. And the reason I like that is mid cap stocks have really outperformed everything over time, and they're large enough to withstand an economic tsunami. They're big enough to make an acquisition that would be a creative to them from a smaller company. But they're also big enough to be acquired by a larger company and be a creative.

There.

There.

You see a lot of value in that mid cap arena right now.

You see a lot of value in that mid cap arena right now.

What stocks or industries in midcaps do you like?

What stocks or industries in midcaps do you like?

Well, you know, you know energies energies there, But I mean if you look at names that people don't associate too much when you get the radio, TV or something like that, is Comfort Systems, big deal, but most likely they did part of this building because they're industrial and building and putting in the ventilation, hating air things of that sort.

Well, you know, you know energies energies there, But I mean if you look at names that people don't associate too much when you get the radio, TV or something like that, is Comfort Systems, big deal, but most likely they did part of this building because they're industrial and building and putting in the ventilation, hating air things of that sort.

You know.

You know.

They earn eight dollars a share and pay a dollar dividend, so logic would tell you there's plenty of room to raise the dividend.

They earn eight dollars a share and pay a dollar dividend, so logic would tell you there's plenty of room to raise the dividend.

You can set up seventy to date, so yeah, you call for seven billion dollar market cap company fix is a ticker, Yeah.

You can set up seventy to date, so yeah, you call for seven billion dollar market cap company fix is a ticker, Yeah.

And then you can look at Sprouts farmers market.

And then you can look at Sprouts farmers market.

Wait, wait, this is a public company.

Wait, wait, this is a public company.

Hold on, huh.

Hold on, huh.

I'm going to go ahead and.

I'm going to go ahead and.

I'm just going Sprouts up on the terminal. Okay.

I'm just going Sprouts up on the terminal. Okay.

You know it's farmers market, and truly when you walk into the store, you feel like you're in a farmer's market.

You know it's farmers market, and truly when you walk into the store, you feel like you're in a farmer's market.

There's produce all over.

There's produce all over.

And then if you think about inflation, food prices that have gone up, and you go, well, geez, do I really want to get into a specialty market like that or Whole Foods? Well, there's a big difference between Sprouts and say Whole Foods or and that's simple that you know, you look at the produce and you look at the vegetables and stuff, and you just add a little bit of positive and you can make a very cheap meal for a family. And that's that's their their niche. They have about three hundred stores, mainly on the West coast. But you know, here's this company that makes three dollars a share and doesn't pay a dividend. So you know, there's so much value out there you just keep keep looking for it and then buy and hold it.

And then if you think about inflation, food prices that have gone up, and you go, well, geez, do I really want to get into a specialty market like that or Whole Foods? Well, there's a big difference between Sprouts and say Whole Foods or and that's simple that you know, you look at the produce and you look at the vegetables and stuff, and you just add a little bit of positive and you can make a very cheap meal for a family. And that's that's their their niche. They have about three hundred stores, mainly on the West coast. But you know, here's this company that makes three dollars a share and doesn't pay a dividend. So you know, there's so much value out there you just keep keep looking for it and then buy and hold it.

S FM is the ticker there. It's got about a four point three billion market cap, up thirty percent year to dat. How do you guys at Hennessy define value? I mean, is there a pe threshold? How do you scream to find sprouts for farmer's market is I know analyst didn't come to you and say, hey, I just went into this great farmers market. I think we should buy it. So I'm guessing you guys screen here.

S FM is the ticker there. It's got about a four point three billion market cap, up thirty percent year to dat. How do you guys at Hennessy define value? I mean, is there a pe threshold? How do you scream to find sprouts for farmer's market is I know analyst didn't come to you and say, hey, I just went into this great farmers market. I think we should buy it. So I'm guessing you guys screen here.

Well, you're right.

Well, you're right.

Everybody has to a certain Every money manager has a formula. Yep, okay, And we have a formula and what we do is once a year we rework the formula. So essentially it's looking for companies between one and ten billion dollars in market cap. We're looking for increase in earnings. The main point being a price is sales ratio of one point five or less. So we're not going to pay more than a dollar fifty for a dollar in sales. And that's where the value is. Because earnings, just like anybody, you can manipulate earnings by taking a ride off or adding this, or taking a game, and earnings don't pay your bills. Cash flow pays your bills. And so when you start to look at a truer number, unless you're going to do an Enron, it's sales, right, and so we won't like I say, pay it more than a dollar fifty for dollar and sales. Now you take those magnificent magnificent easy for me to say, the seven or eight stocks, and you're looking at a price of sales of you know, somewhere in the nine ten. So you know we're they're buying. You know, there are eight times what our threshold.

Everybody has to a certain Every money manager has a formula. Yep, okay, And we have a formula and what we do is once a year we rework the formula. So essentially it's looking for companies between one and ten billion dollars in market cap. We're looking for increase in earnings. The main point being a price is sales ratio of one point five or less. So we're not going to pay more than a dollar fifty for a dollar in sales. And that's where the value is. Because earnings, just like anybody, you can manipulate earnings by taking a ride off or adding this, or taking a game, and earnings don't pay your bills. Cash flow pays your bills. And so when you start to look at a truer number, unless you're going to do an Enron, it's sales, right, and so we won't like I say, pay it more than a dollar fifty for dollar and sales. Now you take those magnificent magnificent easy for me to say, the seven or eight stocks, and you're looking at a price of sales of you know, somewhere in the nine ten. So you know we're they're buying. You know, there are eight times what our threshold.

Is at least, what are you selling?

Is at least, what are you selling?

Well, we're not selling anything because when we do this formula, at the end of the formula, we buy to thirty companies okay that hit the list and essentially buy them an equal dollar mounts, hold them for one year, and then readjust the portfolio to then the thirty stocks that hit our list and buy them an equal dollar mounts. But the last stage of that is we're looking for companies that have or stocks that have price appreciation over three or six month period, and then we buy the top thirty that have the best price appreciation after one year. And you sort of ask, why would you do price pre and aren't you just chasing the market.

Well, we're not selling anything because when we do this formula, at the end of the formula, we buy to thirty companies okay that hit the list and essentially buy them an equal dollar mounts, hold them for one year, and then readjust the portfolio to then the thirty stocks that hit our list and buy them an equal dollar mounts. But the last stage of that is we're looking for companies that have or stocks that have price appreciation over three or six month period, and then we buy the top thirty that have the best price appreciation after one year. And you sort of ask, why would you do price pre and aren't you just chasing the market.

The reality is really.

The reality is really.

Smart managers more than me, they've been buying these companies for a while. They've just been holding their hand little by little by little by little, so over a three six twelve month period it goes up. So we're not catching it in the first inning, right, We're catching the stocks in their third inning, fourth inning, which is where you want to be.

Smart managers more than me, they've been buying these companies for a while. They've just been holding their hand little by little by little by little, so over a three six twelve month period it goes up. So we're not catching it in the first inning, right, We're catching the stocks in their third inning, fourth inning, which is where you want to be.

Okay, sounds reasonable to me. It's a plan. You've been doing it a long time and must be working. Neil Hennessy, chief market strategist, Hennessy Advisors based out there.

Okay, sounds reasonable to me. It's a plan. You've been doing it a long time and must be working. Neil Hennessy, chief market strategist, Hennessy Advisors based out there.

What's the name of the town again, the Vado Marine County, Nevado, Marin County, which is really a beautiful place to be and I don't know why, you know, everybody doesn't set up shop in Marin County.

What's the name of the town again, the Vado Marine County, Nevado, Marin County, which is really a beautiful place to be and I don't know why, you know, everybody doesn't set up shop in Marin County.

You're listening to the tape. Can's our live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com, and the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa playing Bloomberg eleven thirty.

You're listening to the tape. Can's our live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com, and the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa playing Bloomberg eleven thirty.

Let's get to Washington, DC because there is a lot going on in Washington DC that will impact markets, impact individual companies. So we like to get a sense of kind of what are the investors, the professional investors, how are they kind of discounting what's happening in Washington, DC and some of the policy and regulatory risks. So we always appreciate checking with Jen Flinton. She is head of US Government Affairs at Investo, a huge money management firm. Jen, I'm sure there's a whole bunch of issues that you guys are following down there in DC. I'd like to start with my government is it going to shut down anytime soon? I need to be worried about that.

Let's get to Washington, DC because there is a lot going on in Washington DC that will impact markets, impact individual companies. So we like to get a sense of kind of what are the investors, the professional investors, how are they kind of discounting what's happening in Washington, DC and some of the policy and regulatory risks. So we always appreciate checking with Jen Flinton. She is head of US Government Affairs at Investo, a huge money management firm. Jen, I'm sure there's a whole bunch of issues that you guys are following down there in DC. I'd like to start with my government is it going to shut down anytime soon? I need to be worried about that.

Well, not until January for certain appropriations bill. So a couple of weeks ago they were able to pass a continuing resolution that's that stop gap funding for the government into January, so we're not going to have a holiday shutdown threat. We'll have two basic tiers. It'll be January nineteen, which you'll have have the Agriculture bill, the Energy bill, the milk con and VA bill. Those will be dealt with by January nineteenth theoretically, and then you'll have a February second where you get the really hard appropriations bills done right. So that's Defense, Labor, HHS, Homeland, think, Immigration, Interior think, environment, and so they'll have to come together over the holidays and then going into next year on these bills, the House and Senate.

Well, not until January for certain appropriations bill. So a couple of weeks ago they were able to pass a continuing resolution that's that stop gap funding for the government into January, so we're not going to have a holiday shutdown threat. We'll have two basic tiers. It'll be January nineteen, which you'll have have the Agriculture bill, the Energy bill, the milk con and VA bill. Those will be dealt with by January nineteenth theoretically, and then you'll have a February second where you get the really hard appropriations bills done right. So that's Defense, Labor, HHS, Homeland, think, Immigration, Interior think, environment, and so they'll have to come together over the holidays and then going into next year on these bills, the House and Senate.

So how likely are we going to see another eleven hour type of situation leading up to these deadlines?

So how likely are we going to see another eleven hour type of situation leading up to these deadlines?

It's pretty likely, I'm afraid. I mean, look, you have the Senate that is marking to f y twenty three numbers and you have the House that's marking.

It's pretty likely, I'm afraid. I mean, look, you have the Senate that is marking to f y twenty three numbers and you have the House that's marking.

To f y twenty two numbers.

To f y twenty two numbers.

That's a big difference in money, right, So they're going to have to.

That's a big difference in money, right, So they're going to have to.

Find why are they doing it differently?

Find why are they doing it differently?

Yeah, So the agreement on the debt ceiling negotiations over June was to mark to f y twenty three, which is what the Senate's doing. But conservatives in the House were very unhappy with that budget ceialing negotiation, so they got appropriations to agree to mark to f y twenty two.

Yeah, So the agreement on the debt ceiling negotiations over June was to mark to f y twenty three, which is what the Senate's doing. But conservatives in the House were very unhappy with that budget ceialing negotiation, so they got appropriations to agree to mark to f y twenty two.

Interesting, all right, So they can't even agree on that, all right. So a lot is going to fall to this new House Speaker, Mike Johnson, Republican from Louisiana. Is there any reason to believe that he's going to be more successful integrating his far right part of his party so they can actually get something done in the House.

Interesting, all right, So they can't even agree on that, all right. So a lot is going to fall to this new House Speaker, Mike Johnson, Republican from Louisiana. Is there any reason to believe that he's going to be more successful integrating his far right part of his party so they can actually get something done in the House.

That's an excellent question, and we're going to know a little bit about that over the next thirty six forty eight hours as he meets with the conference and tries to get an agreement to move the NDAA, which is the National Defense Authorization Act, which must be done by the end of the year. They never let that lapse. It's been like sixty years since that slap. So that House to get done before they break for the holidays. And then there's got to be some agreement around the supplemental bill, the one hundred and six billion dollars supplemental bill for Ukraine, in Israel and no Pacific the border. And he is sort of juxt opposing the negotiations in the Senate and has to figure out what his own conference can swallow.

That's an excellent question, and we're going to know a little bit about that over the next thirty six forty eight hours as he meets with the conference and tries to get an agreement to move the NDAA, which is the National Defense Authorization Act, which must be done by the end of the year. They never let that lapse. It's been like sixty years since that slap. So that House to get done before they break for the holidays. And then there's got to be some agreement around the supplemental bill, the one hundred and six billion dollars supplemental bill for Ukraine, in Israel and no Pacific the border. And he is sort of juxt opposing the negotiations in the Senate and has to figure out what his own conference can swallow.

And those meetings are happening this week.

And those meetings are happening this week.

So what's the I mean, do we are we? If I'm an investor and I thinking about Washington, DC and think about policy, am I beholding to literally a handful of representatives for just movement of my government?

So what's the I mean, do we are we? If I'm an investor and I thinking about Washington, DC and think about policy, am I beholding to literally a handful of representatives for just movement of my government?

Well?

Well?

Quite, frankly, it is a very tight margin. Not just in the House you have about a four vote margin and in the Senate one vote margin. So yes, there has to be compromised, there has to be negotiated agreement, and that means making a lot of people unhappy in order to move these bills, these must pass bills, and that, quite frankly, is the same situation that McCarthy was in that now Speaker Johnson is in. But the same is true for Majority Leader Schumer the Democrat, and McConnell who are trying to walk this tightline on INDAA and on the supplemental funding and on appropriations. So they're all still in the same seats. It's just you know, one different player here.

Quite, frankly, it is a very tight margin. Not just in the House you have about a four vote margin and in the Senate one vote margin. So yes, there has to be compromised, there has to be negotiated agreement, and that means making a lot of people unhappy in order to move these bills, these must pass bills, and that, quite frankly, is the same situation that McCarthy was in that now Speaker Johnson is in. But the same is true for Majority Leader Schumer the Democrat, and McConnell who are trying to walk this tightline on INDAA and on the supplemental funding and on appropriations. So they're all still in the same seats. It's just you know, one different player here.

So as far as looking at how some of these deadlines kind of overlap with the next Federal Reserve well not the next Phedoserve meeting, that decision's on December thirteenth, but the meeting the first meeting at the beginning of next year. It's actually January thirtieth and thirty first, So you have some of these shutdown deadlines coming up close to that. How do you think this could potentially impact anything coming up when it comes to some of that policy decision when you have issues going on the other side with the government.

So as far as looking at how some of these deadlines kind of overlap with the next Federal Reserve well not the next Phedoserve meeting, that decision's on December thirteenth, but the meeting the first meeting at the beginning of next year. It's actually January thirtieth and thirty first, So you have some of these shutdown deadlines coming up close to that. How do you think this could potentially impact anything coming up when it comes to some of that policy decision when you have issues going on the other side with the government.

Yeah, I mean, quite frankly, Congress doesn't look much to the monetary policy issues of the and it's questionable, I think how much the FED considers the you know, annual budget appropriation process the fiscal issues as it makes its monetary decisions. And so while it is a congruence of issues that are all going to arise at the same time, and I expect that will make the markets a little you know, you know, volatile around around these important deadlines. I do think that as we enter into twenty twenty four with this election year, you're going to see after these appropriations bills are settled, the shift is going to be a hard shift into election year politics and that really is going to be the driver going into twenty twenty four.

Yeah, I mean, quite frankly, Congress doesn't look much to the monetary policy issues of the and it's questionable, I think how much the FED considers the you know, annual budget appropriation process the fiscal issues as it makes its monetary decisions. And so while it is a congruence of issues that are all going to arise at the same time, and I expect that will make the markets a little you know, you know, volatile around around these important deadlines. I do think that as we enter into twenty twenty four with this election year, you're going to see after these appropriations bills are settled, the shift is going to be a hard shift into election year politics and that really is going to be the driver going into twenty twenty four.

So is that kind of the message Like if I'm a you know, Invesco port portfolio manager, equity portfolio manager or fixed income and I called you up and I say, Hey, what's the biggest I don't know risk for me and my portfolio coming out of Washington, DC?

So is that kind of the message Like if I'm a you know, Invesco port portfolio manager, equity portfolio manager or fixed income and I called you up and I say, Hey, what's the biggest I don't know risk for me and my portfolio coming out of Washington, DC?

What is it?

What is it?

Do you say? It's just I guess the upcoming election. What are some of the big what's the big issue for you?

Do you say? It's just I guess the upcoming election. What are some of the big what's the big issue for you?

Yeah?

Yeah?

So the next what six eight, nine weeks are really going to be the vast majority of legislation that's going to get done. That's going to be, as I said, the NDAA, the approbes, but also some tax extenders which are possible by the end of the year. And then it's going to be a lot of messaging bills you're going to see in the House. They're going to try to do a lot of messaging. If they can't get something done on immigration within the context of this supplemental bill, they're going to push. They're going to continue to push on that border issue. It's going to be a major message for House Republicans. And then you're going to see a lot of executive action. You're going to see the agencies taking it upon themselves, within their own discretion or discretion as they define it, uh to move the agenda of the administration things that they weren't able to get done over the next last three years, or that they've been working to resolve and finalize over the past three years. And so that's really what I'm telling folks to look at right now is watch those executive actions.

So the next what six eight, nine weeks are really going to be the vast majority of legislation that's going to get done. That's going to be, as I said, the NDAA, the approbes, but also some tax extenders which are possible by the end of the year. And then it's going to be a lot of messaging bills you're going to see in the House. They're going to try to do a lot of messaging. If they can't get something done on immigration within the context of this supplemental bill, they're going to push. They're going to continue to push on that border issue. It's going to be a major message for House Republicans. And then you're going to see a lot of executive action. You're going to see the agencies taking it upon themselves, within their own discretion or discretion as they define it, uh to move the agenda of the administration things that they weren't able to get done over the next last three years, or that they've been working to resolve and finalize over the past three years. And so that's really what I'm telling folks to look at right now is watch those executive actions.

So what are the most immediate things that you're watching in the next few weeks as far as what people need to be focused on in Washington.

So what are the most immediate things that you're watching in the next few weeks as far as what people need to be focused on in Washington.

Well, first we've got to watch these negotiations on appropriations, and we will be behind the scenes watching that very closely. But over the next thirty six forty eight hours, it'll be really interesting to see how these members sort of resolve on the NDAA, that Defense Authorization Act, which is very important. Conference technically meets on Thursday, but they could have a decision by Friday because they've been negotiating this behind the scenes, and there's some amendments that could be added to that that we'll be looking for, some related to AI, some related to crypto money laundering issues, some relating to outbound investment in China. So we're looking for whether those will be included in the final NDAA. But then it will be a race to the appropriation's deadlines and making sure that they fund the government that is important to the rating of the US but also sort of the faith in this Congress's ability to get things done.

Well, first we've got to watch these negotiations on appropriations, and we will be behind the scenes watching that very closely. But over the next thirty six forty eight hours, it'll be really interesting to see how these members sort of resolve on the NDAA, that Defense Authorization Act, which is very important. Conference technically meets on Thursday, but they could have a decision by Friday because they've been negotiating this behind the scenes, and there's some amendments that could be added to that that we'll be looking for, some related to AI, some related to crypto money laundering issues, some relating to outbound investment in China. So we're looking for whether those will be included in the final NDAA. But then it will be a race to the appropriation's deadlines and making sure that they fund the government that is important to the rating of the US but also sort of the faith in this Congress's ability to get things done.

Well, a lot of work to do. We'll certainly follow up with you Jen on that. Jen Flinton, she's the head of US Government affairs for Invesco. Trying to keep track of all the legislation, all the policy work that's being done in Washington, DC and how it impacts investco porfolio managers and their investment holdings. You know the analogous person for Bloomberg Intelligence that does that work as Nathan Dean for Bloomberg Intelligence. It's so important for investors that have a good feel for what's going on down in Washington, d C.

Well, a lot of work to do. We'll certainly follow up with you Jen on that. Jen Flinton, she's the head of US Government affairs for Invesco. Trying to keep track of all the legislation, all the policy work that's being done in Washington, DC and how it impacts investco porfolio managers and their investment holdings. You know the analogous person for Bloomberg Intelligence that does that work as Nathan Dean for Bloomberg Intelligence. It's so important for investors that have a good feel for what's going on down in Washington, d C.

Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews at Apple Podcasts or what whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller nineteen seventy three.

Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews at Apple Podcasts or what whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller nineteen seventy three.

And I'm Paul Sweeney. I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio

And I'm Paul Sweeney. I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio