OPEC, Trump, UBS, and WWE

he's the senior an also Bloomberg Intelligence. He's been covering the oil industry for decades. He's our global view guy. Mike mcglowe's senior macro strategists with Bloomberg Intelligence. Our commodities guru joins us viafone. Fernando's here in our Bloomberg Interactive Brokers studio. So since he's here, he's getting the gold star. You get to go first, Fernando. Opec. They surprised me. I woke up this morning. I wasn't expecting a production cut.

What's what's going on with our friends at Opec? Plus same here? It moved up the timeline. We were expecting that they would do it around the June meeting, which is the presential meeting, the larger one, and they moved it up to Wednesday. The rumor mill says that muhammadan Salman, the Crown Princess of Saudi Arabia, was upset that the Biden administration did not do strategic petroleumers of purchases to help stabilize the prices, and so they decided to act quicker.

Why didn't and then that's a little outside here, why haven't we built back the spr when there are a couple of reasons. First, they had tried to time the market to perfection and they didn't. And then even when prices dropped below the oil price set, they did not make those acquisitions because it was a pre sale of the expected sales over the next ten years. They just moved it up so they don't technically have to refill.

But it does seem like they missed a golden chance to kind of time the market and create some support for the local industry as opposed to foreign industries. Get it, Yeah, No, it's it's pretty shocking that they weren't able to do that, especially since the price fell at one point below the

level that they had set right to buy barrels. And at the same time President Biden warned there would be consequences for a cut that the Kingdom put into place last October, right a two million barrel a day cut, and those consequences never, as far as we know, came about. Yeah, they haven't materialized to tishing. And I think one of the problem is if they did make those acquisitions, they would have moved the price up a little bit above it.

The WTI came to sixty six dollars versus a sixty eight price, so if they were to purchase that kind of level, you would have pushed it back up way above seventy dollars. So it was a limited window. But I think there was no real commitment, and apparently the Department of Energy doesn't have a strategy to make those purchases as are. This is what I'm gonna do. I'm gonna send Mike McLoone to the pits and just say start buying hand over fill. He's been right on his

his oil podcasts. How does this OPEC movement here change your call, which has been these prices going down. I

think what Fernando said really is scary. The fact that if they're going to try to raise prices as we tilt towards global recession, as you just saw the ism, manufacturing, employment, new orders all came out weaker than expected and below fifty as a federal reserves tighten, as o're entering a bankering crisis, just just adds to my fear that we're entering to the greatest global macroeconomic reset of our lifetime. So let's look at w TR right now. It's eighty

dollars a barrel. It's still down nineteen percent on a one year basis, goals up two percent. But the key thing is bouncing the upper end of the range. But before this happened today, net positions had all been stopped out because they're all bullish above a hundred. They got stopped on the sixty four. The low this year was sixty four. And I think the rational thing for people to do now is Okay, this is a bear market.

We're bouncing and to start selling again to questions how that high pick kicks in, because it's there's the macro's overwhelming and the key thing, remember Ellen, was this at opec. OPEC is always when you have surprise cuts. It's always almost always consistent with bear markets. I want to hear more about your big concern there because our lifetime where were you old? So you're saying this is going to be the greatest, the greatest when you say global macroeconomic

research resets of our lifetime. So I've been writing about it for about a year. I've been tightening and printing it more on headlines lately, but I had to get into a gradually. It's just the classic examples of biggest booms in history and the back of liquidity, and then the bus come as you take that liquidity away. Now you just look at money supply, you look at bank deposits.

Things are negative things never before just plunging in. The FED is still tightening based on backward looking measures of inflation that were spiked by them in the first place. Because they didn't they waited too long and they cut too much. And I'm not blaming them, but it's just a classic pendulum singing swing heading the other way. In crude olt natural gas was one of the best indicators. It's the number one measure of heat, electricity and fertilizing

this country. It's down eighty percent at two dollars, the equivalent price in WTI is closer to forty forty five the cost of production in the US. I think that's where it's going. And just in the numbers, we saw Printon just a few minutes ago. Manufacturing in this country and a global basis is negative and central banks are still tightening. That's a classic recessionary trajectory. And if you see what Anna wants is are chief economists. She said her calls for a recession in Q three and now

she's pushing it closer. Basis point One of the reasons that you would be bullish oils because a limited spare capacity at OPEC and when you cut what have you just made spare capacity, So you're really trying to put in a floor to the price as opposed to make

its spike. And so this is a tug of wars, Mike was saying, between interest rates and the FED trying to contain the overheating of the economy, and then other sides like OPEC trying to steer more inflation in higher prices, and so far demand seems to be winning, or like lower demand. I should say, yeah. But by the way, Mike, if you want to sell that book, I'm going to say change global macroeconomic reset. You got to say something that people understand, because I still don't know exactly what

that is. If you say, you know, the greatest financial crisis of our lifetime, that book I'm buying good well. I expect to be you know, I expect to be writing the history Sunday and leaving it right now. You never really realize when you're middle of it. When you point out these facts, and if you study the history of booms and busts and supplying and contraction and coming on with liquidity, it's we're in one of the most

severe cases of liquidity contraction ever. Now. The key point is we have a banking crisis, that's clear, and what cause that banking crisis is still Actually it's accelerating. The FED raised rates just what a week ago the ECB did the Bank of England. That's what's making it worse. And you know, the key thing that's the trigger is the stock market probably needs to go down. And good indications for that is what's happening with copper, and they trade tick for tick and if the stock market can

stay up, everything's fine. But I think the biggest risk because it's more like to do what take the hint of the what people say the smarter bond market, I mean the two year note yield that and Fed funds at five percent? Is not that that's a recession indication, Fernando. We don't have a huge risk to the upside, do we? Because what if Chinese people get in their cars in droves, in hundreds of millions and drive around. What if Europe doesn't have a recession and they continue to drive everywhere

and fill up their tanks. The OPAT plus companies are going to be able to come to market with, you know, cheat these production cuts as they have historically, right, they can to a certain extent if everyone goes through the door at the same time, and then we're probably short because we haven't invested in the industry. And that's the case we see in the long term why oil should

be higher. But we agree with Mike. In the short term, the pressures on themand are just too strong that especially with the Chinese consumer being over levered, the European consumer being way too exposed to high energy prices, the US consumer between high leverage and higher energy prices also struggling. We see those pressures being too much in the short term, and then eventually that leads even more underinvestment in oil and gas, and that's when we see a supercycle for

commodities really taking off. Wow, good stuff. We got these two guys on. Those are some superlidis. I know I'm going big time here. I told you. Fernando Valley, senior annalso Bloomberg Intelligence covering the energy space for Bloomberg Intelligence. And Mike mcloan is Scot's down in South Miami Beach, senior macro strategist for Bloomberg Intelligence. He's our commodities go to person. So we'll have to get those two folks

on together. We have big moves in oil like we do today given the OPEC plus did even talk about good going over twenty eight thousand? I know we don't even get to that, but interesting stuff waking up this morning in the global energy space. We'll have more coming up. This is Bloomberg. You're listening to the Team Cancer Live program, Bloomberg Markets weekdays at ten AMI staring on Bloomberg dot Com, the I Heard Radio app and the Bloomberg Business appe.

We're listening on demand wherever you get your podcast. Tomorrow we'll be a when history will be made, when former President Donald Trump will be indicted in Lower Manhattan. We want to get the latest on that. We go right to ground zero, if you will. Bloomberg's Curtty Gupta joins us from downtown Manhattan to discuss the latest on the ground there and also joined by Nick Ackerman. He is self employed the law office of Nick Ackerman. He was

former assistant Special Watergate prosecutor. He joins us on the phone, Cretty, let's start with you. You're down in Manhattan. Just tell us where you are and what you're observing down there as we wait President Trump's indictment schedule for tomorrow. Yeah, a lot of anticipation in the air. It's interesting. So we're standing rights here outside of the New York District

Attorney's office. So within the next forty eight hours, this is the spot where President Trump or former President Trump is expected to be arraigned at about two pm tomorrow afternoon. But look, it's going to be a really quick visit. He's gonna fly out from his Marlago esteate, or is

at least expected to today. I want to say, in a couple of hours stay at Trump's how we're a few blocks north from here, which I hear is packed right now, only to get arranged, like I said, right out here outside the District Attorney's office in downtown Manhattan at two pm tomorrow, only to return again to his moral lago state at eight fifteenth pm tomorrow. So right now you're really seeing a lot of media presents, a lot of police presidents, actually a couple of protesters as well.

You can really see the anticipation here isn't just for seeing President Trump go through this historic move, but also what the fallout might be, protests, rallies. The police are prepared for it. Allow, So he's going to go straight back. I guess he assumes he'll be released on his own recognizance, right, because usually if you're indicted, don't you don't they have to hold you? Or I don't know, Hey, Nick, let's let's bring you in Nick. How does this typically works?

What's the legal process tomorrow for former President Trump? Well, the process of the arrangement is he will go in before the judge. The judge will ask him if he wants to read the charges, and he can either wave the reading or not. And at that point, the judge will ask whether how he pleads guilty or not guilty. Most all defendants plead not guilty at an arraignment, and then the judge sets bail. In this case, it's it's almost a certainty that he's going to be released on

his own recognisance. Sometimes, if there's a situation that justifies bail because the person doesn't have roots to the community and as a flight risk, they would put up a certain amount for bail. But I don't think in this case. I think it's it's pretty much a dead certainty that

he's going to be released on his own recognissance. Nick, what do you think about based upon what we know, which which is limited at this point, but based upon your experience as an assistant US attorney for the Southern District of New York from nineteen seventy six to nineteen eighty three, as I mentioned, a former assistant special Watergate

prosecutor from seventy three to seventy five. Based upon your experience and based upon what we know, what do you think of this case here that the district attorneys of the screen, well, we don't know what the case is, we don't know what the charges are. The only thing we really know is that they have been looking, you know, publicly.

That we know is that one of the things they clearly have been looking at is this Pecker, David Pecker, who is the head of the National Inquirer, and Donald Trump agreed that the National Inquirer would keep their eyes out for any kind of stories that might hurt Trump's chances for election in twoy sixteen, and as a result, they wound up paying off Karen McDougall, who is a

former Playboy playmate, and they paid off Stormy Daniels. But part of what's going on here fits into the overall theme of falsification of records of the Trump organization, for which the Trump Organization has already been convicted of a criminal violation in Manhattan State Court. And so the real question is will there be other violations of falsification of records, of insurance fraud, bank fraud, falsification of annual statements for

the Trump organization. Will that play a role in this indictment. We just don't know at this point, and it's a pure guesswork as to what this indictment is going to look like. It could also involve actions that Donald Trump has taken in the last week by putting up that picture of him with a baseball bat and the district attorney that could wind up involving other charges. There could

also be witness tampering relating to Michael Cohen. All of this is speculation at this point, right, Well, we're going to find out tomorrow. It does remind me that Trump essentially threatened death and destruction if he were indicted. Cratty, You're standing there at the DA's office, and you mentioned that there are a lot of people around trump O. Are there security concerns? Are we worried that there will be you know, busloads of angry protesters coming in from

out of state. Well, it definitely is the worry, And I mean I can say that pretty confidently with the amount of police presidence here. It's not just about protection for President Trump as well. But you can see the barricade. You're even seeing media not necessarily about to be parked close side to where their cameras are parked, for example. So this is definitely the preparation for that worst ye scenario.

But I think we also have to keep in mind that even President Trump's defense team over the weekend had come out on another network and said, look, we are trying to avoid showmanship or trying to avoid the theater. And Nick can perhaps comment on this, but I thought it was really interesting the way that they're talking about

approaching this case. They're not looking to dismiss it. They're not looking to remove the presiding judge, who, by the way, has a history of presiding against the former president President Trump, even going as far to saying, one merchant, who of course is the judge presiding, he hates me. And those are some comments, a very wrong comments made on social media. Yet the defense team isn't actually looking to remove them

from the case. And that's all to show that this is being done cooperatively, collaboratively and through the due process of law. Hey, Nick, just want to get a sense from you given up, there's a lot we don't know. But and assuming the former president, you know, does not plead some point at this case, what's the timing of a case like this, how would it progress and when would we actually get to a trial if there was a trial, Well, I hate to say it, but after tomorrow,

it's probably going to be thoroughly boring. Um, what what's going to happen is just like at all other criminal cases. The defense is going to file motions. Um, they're probably the emotions are dismissed. It could be emotion for change of venue. There could be emotion for more details on the complaint in the indictment. But my senses, this is going to be a very detailed indictment, unlike most indictments. But there'll be the pre trial motion practice. The district

attorney will have the opportunity to respond. This doesn't take place in a matter of days. It's going to be a matter of months as this goes back and forth. The judge then has to decide the motions. They'll be discovery where the DA's office has to provide the defense with documents that are in its possession that relate to the case. So this is this could very well take up to a year before it finally gets to trial. This is not going to happen overnight, all right, Really

appreciate getting your insight there. Nick Ackerman, he's a former assistant special Watergate prosecutor and then he went on to be the Assistant US Attorney for the Southern District of New York from nineteen seventy six to eighty three. And he now has his own law office of Nick Ackerman, getting his thoughts there, and of course could Gupta on the ground downtown Manhattan for Bloomberg News on site at

the DA's office in Lower Manhattan. If you're listening to the tape, Kens are a line program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, the Tuna 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 play Bloomberg eleven thirty. I want to get to the banks here. It is grim news coming out of Switzerland. UBS buying credit Swiss. I guess that's the good news kind of. But there's a

lot of redundancies there. They're going to cut a lot of people, and that's why we go to Alison Williams, Senior Global Banks Analysts. So, Alison, you saw some of the numbers here, tens of thousands of people likely to be let go. Here is this kind of part and parcel when you put two investment banks together, well, it is.

It is generally with investment banks, especially areas where there might be direct overlaps such as such as research as you know, and it does seem like, you know, some of the reports I've seen that a lot of the cuts could be centered in Switzerland would also seem to make sense just because, um, there's probably a lot of

overlap in terms of systems and management administration. And again it's it's it's tough to tell, and we've said since the beginning of this deal, it's tough to tell sort of what the what the revenue attrition is going to be from. You know, people that use both banks right and that now um maybe move some of their exposure to someone else that also will reverberate with employees. So um, So there are a lot of synergies, so to speak, but I wonder if they're as bad as as we anticipate.

I mean, the market has been there for Credit Suite and ubs. There was enough share for both players before. And while I get that, you know in terms of back office or you know, wealthy clients that used both to hedge their bets in a sense, um, that's an overlap, But it seems like there still is enough room for this big business, isn't there? Yeah, I mean it does. I mean to me, it does seem a really big number.

Like I scratched my head a little bit about where some of those will come, right, because a lot of the like asset management UM, you know, there's very complimentary products. And as I said, so there's some overlap in the investment bank, but that investment bank has already been so dramatically downsized. I'm not sure you know what's left to cut except for a couple of small areas that I mentioned.

You know, a lot of the uh, you know, one of the compelling things that UBS ces is the ability to add the US presence and the technology presence that it doesn't have a credit suitee UM, and same thing in asset management, there's some complimentary things. And then in terms of the wealth management business you know, both globally and the Swiss in particular to the extent that you

have a number of advisors with a number of client UM. Yes, as I said, there might be some overlap and some reduction of exposures, but the headline number is really significant. Little bit it is a little bit interesting to think, like where those cuts are going to write. I mean, this is this is this is all according to the Zontag Situngue, which is a Swiss newspaper citing an unidentified

senior manager at ubs. They're saying thirty six thousand jobs will roll, so eleven thousand inside Switzerland, twenty five thousand outside Switzerland. And this is not at all a beloved deal domestically, So you can imagine that a local newspaper. Um, you know, if it bleeds, it leads, they might want to play it up a little bit just for sales.

I don't know, yeah, and who knows how they're coming because the cuts, the cost cutting that they've talked about, um, you know, it's something like fifteen to twenty percent of the cost base. You know. Also could it be outsourcing again, like it's very hard to get to these really sizeable numbers. One one could imagine someone saying, oh, well, if it's this much percent of clasts, what does that mean for a headcount? But I think you know, again, it's it's

a very different um, you know, business and some others. Right, So it's not like a typical we're going to have we know, two branches now we're only going to have one. Um, you know, how many headcounts? How many heads you really cut? If those branches are focused on serving Mualti clients and you're bringing those people together. They're we've sort of identified for you where we see the areas we're cuts, but it's still hard to get to that. So Elson's big numbers.

I can't think of a reason. I mean, if I'm an UBS shareholder here, I have to be really patient, don't I'm because i don't know really what I've bought. I'm not really sure what I'm going to end up with. I mean, you really have to believe in UBS management to stick around for what it could be a multi year in integration, you do. And perhaps that's one of the reasons why they felt they needed to bring Ermadi back,

you know, some of the fits and starts, um. You know, obviously Hammers was not there for that long, but some of the things that he had done, you know, in terms of buying the Digital Wealth Manager in the US, a deal that was later canceled, um, like we did evaluation or other reasons. Archigos actually happened under Hammer's watch, although you could certainly connect the dots to say that

the risk culture was there before he got there. But URMANDI what he brings is, you know, he came in after if you can remember the rogue trader scandal or unauthorized incident as they like to call it, which we know means they lost money because generally a rogue trader make money. We don't hear about that. But you know he came in after that, he put in a plan.

His plan was successful. He said he was going to shrink the investment bank and he did, and he did it, by the way, at a time when it was not that popular, Like they were the first bank to say, you know what, we don't have to be this big fix income. We don't have to be everything to everybody. We're going to focus where we want. We're going to focus on profitability and then manage through like a ten

year period of like regulation, litigation, the things coming. So I think, yeah, to your point, it's a long period, but maybe that he gives some confidence. All right, Alison, thank you so much for joining us yet again. Alison Williams, Senior banks analyst for Bloomberg Intelligence, breaking down what is the beginnings of a long merger process ubs acquiring credit Swiss.

You're listening to the Take Kids Are a 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 play Bloomberg eleven thirty. Yeah, woke this warning to a big production cut command out. Plus looking at in the markets here, WTI crude oil up about five point eight percent, about

just about eighty dollars per bower. What does that mean for global investors? Will Robert Teeter joins us here in our Bloomberg Director Broker studio. He's head of investment policy and strategy for Silver Crests Asset Management. Robert, thanks for so much for coming to the studio here. Again, what do you make of this move from OPEC in the in the impact on global energy? Yeah, it's a really interesting development in terms of a couple of different impacts.

I think the first thing that I would say is that it does certainly send us a pretty important signal that perhaps demand in the global economy hasn't been quite as strong as we've all been expecting. I think that's one of the things that OPEC's been responding to here is trying to get prices up through restricting the supply side rather than relying on demand. And I think that's a pretty important signal in terms of demand outlook for

global economics. I mean, you have, i've key drivers that you think we should be watching, bank stress, inflation, the economy, earnings, and the fixed income market. This I think goes to inflation and to the economy in a sense. It seems like it could drive inflation higher and slow the economy down. Is that Am I reading it the right way? I'm reading it that way as well. Certainly, mechanically speaking, higher

oil prices will be inflationary. They will represent that classic tax on the consumer and take spending away from other other parts of the economy. I do think perhaps it plays into the rate hike cycle as well, though in terms of reading that signal that perhaps demand is a bit slower than we've been anticipating. So on the bank stress issue, is that something that's in our rearview mirror now. I mean, it was kind of acute there three or four weeks ago. Haven't heard too much since, but some

of the drivers probably are still there. I think they are. I think in terms of depositors, it's in the rearview mirror. Certainly, the comments from FED officials have been very focused on protecting deposits. I think they've been very er that that issue is over and done with. When you think about earnings in the economy, I think the earnings drag on banks might be real, and I think when you think about the drag on economic activity from a slowdown in lending,

that's going to be real as well. Although the fact that the crisis was sort of mostly over and done with relatively quickly bodes well for the outlook. But nonetheless, I think there will be follow through drag on the economy from a slowdown in lending, whether that's regulatory mandated or just more caution on balance sheets. So what does that mean? What are your expectations for earnings? Are we entering a recession and does that mean earnings come down? What?

In percentage terms? I don't see a recession yet, So my view has been that we're running around two percent on the economy right now. I'd expect somewhere like another one percent drag from some of these issues in banking.

So I'm in the camp of slightly positive economic growth and I'm in the camp that consensus earnings are about right for flat, although I do think there will be some reshuffling of the deck beneath that, and we'll get a lot more color on that as we get into earning season and see where some of those misses and beats are coming from. It all that backdrop, what do

you expect our federal Reserve to do? There's you know, a lot of folks out there to saying, hey, another twenty five bases point hike, maybe two, But there's also a reasonable crowd out there saying this economy is slowing down everywhere you look. We had the ism data again today, this should be it. Maybe you can cut. I mean, what camp do you fall into. I'm in the camp of it. They'll either be a pause or twenty five

and that will be the end of it. And I think if it is twenty five, it's unlikely to be more following. The one thing that I think will perhaps change over coming weeks will be that the rate cuts that have been priced in for later in the year, I think those will be going away. I read the signals from the FED as the bank crisis is not a major issue. They don't need to cut in response

to that. Economy is okay. They don't need to cut in response to that, and that they'll be resolute in keeping rates where they are our twenty five bases points higher until inflation gets down to target. So let me get to the fifth driver. Then we've covered the banking stresses. We've covered inflation in the economy as well as earnings.

The fixed income market has been aptly nut. So I mean I grafted the VIX, which is supposed to measure in some sense at least equity market volatility, against the move index, which measures bond market volatility, and the move index is just off the charts. I mean, looking at that, you would expect equities to be doing absolutely nothing, which is fair, a fair assessment, but the bond market just to be, I mean, going crazy. How does this affect

your investment strategies? Yeah, so it's interesting. I read the volatility in a similar way, and I think I take it as to an indication that we're right around this inflection point. So we're near the end of the FED rate hike cycle. We're sort of on the edge of a recession, but not quite there, and so each incremental data point is going to trigger a pretty massive response

in the fixed income markets. But I think if I zoom out from that a little bit and look away from day to day trading and think about this upcoming weeks and months, to me, we're likely to be range bound on treasuries. The range of you know, plus or minus thirty basis points are still from here, which is still some volatility. But I think dependent upon what signal as we get in terms of inflation, what signals we get on the FED. You see some of the data

today in ism pointing to a slightly weaker economy. So I think all of these things balance out and keep us range bounding treasuries, even though there's been a lot of volatility lately. Robert, when you talk to folks in the marketplace, do you get a sense a lot of people missed that first quarter move? I mean, we'd s and p up just about seven percent in the first quarter and coming off with just a brutal twenty twenty two when you lost money is inequities, you lost money

in bonds. Do you get a sense that people missed it. I think some people have missed it. I think it's been very easy to be barished at any point in time over the last couple of years, there's certainly lots of things going on that we can point to as negative.

But one of the things that I've been impressed by, and you see it when you listen to company earnings calls, is just the dynamic response of companies and ways to find to manage around whatever the problems of the day might be, whether that's a OPEC oil cut or surprise inflation or the issues we had with COVID, and so companies are finding ways to make money, and so I think it's important to sort of stick with that story through the long haul, even though there there are lots

of reasons to be barished today as there were a year ago. Where which companies? Where where are you looking to find those? Yeah? So I think we've seen some durability and earnings in the consumer discretionary space. I think we're still looking to see some positive earnings out of the industrial side, and we've and we've seen tech companies respond in a pretty interesting way to the situations that

they're involved in. So whether that means earnings, beats or missus, I think they're doing a lot of things to restructure their businesses and create earnings. So those three sectors are ones that I think have the potential for durable gains and earnings going forward. We had our commodities analyst on earlier and what was the term he used, Matt like, I mean, he's got like Mike McLoone said, this will

be the greatest global macroeconomic reset in history. Oh no, in our life, in our lifetime, but that's close enough to history because we're pretty old. Yeah, exactly so, I mean, I mean he was just kind of looking at it from interest rates and commodity prices and you know this and not and you know, weaning off of the stimulus from the pandemic. He thinks we're set up for how long the duration is, but certainly a violent move downward in this economy that's the hardest of hard landing. I

guess it was kind of a Thomas Wood statement. I think it was, you know, the kind of thing we were hearing a lot after the Great Financial Crisis but didn't really come to pass. At some point, though, the chickens have to come home to roost, right. I think that's right, And I actually think the financial crisis is

a good analogy in a way. We've had a massive cycle over the past few years related to the pandemic and we're sort of back to where we started, although I do think there will be some drags and some lags. And so if we look at, you know, long term numbers on economic growth coming into the pandemic era, we were around two percent. We're maybe there now, but a bit lower going forward because of all those drags. But I do think it's a reset. It's sort of a back to where we were before. Not a lot of

dynamic activity on the economy, just slow growth. That doesn't seem like a bad thing. I mean, it doesn't seem as bad as McLoone put it, right, But they're not going to sell any books Robert, Yeah, Boks, Mike needs to write a book, and Robert needs to just make money for his clients, right, exactly, Easy peasy, all right. So Robert Energy is having its day in the sun today.

You know, had a after I had had two or three great years, and then Nis you're given it a back smarting because he thinks he missed I think I missed that trade a little bit. So, but what do we do with energy from here? I mean, I know today's having a good day, but it hasn't been having a good twenty twenty three. In my view, I would say the outlook is okay. And the reason I say okay is I think the backdrop on economic growth is

relatively slow. So that same signal that I think we got from OPEC today of not seeing a lot of demand side activity as far as energy, I think that backdrop is with us going forward. So while the price action might be favorable today and going forward, I think that's probably just an okay outlook rather than a great outlook for energy. So the the idea that OPEC is going to cut this surprise announcement that we got yesterday

didn't rock your boat too much. Not a lot. I mean, I think the follow through on pricing will again be inflationary and a drag on the consumer. But I think it's more important to look at the demand side signal that it seems to be sending. That's a poor demand side signal. I know. Just thirty seconds Robert Tech it's having a good year after big really really lagging last big, big profitable Tech has done well. Yeah, yeah it has.

And I think a lot of the rotation we've seen recently has been on the back of balance sheet strength. In my view, with inflation continuing to improve, you'll get rate stabilizing and some valuation boost on that front as well. So I think the outlook for technology is reasonably favorable here as long as they're cutting costs. That seems to be a theme for a lot of industries, a lot of companies. Robert Teeter, head of investment policy in a

strategy group for Silver Crest Asset Management. We appreciate getting his time. Appreciate him coming into the Bloomberg and Actor Broker studio. You're listening to the Team Cancer Line program Bloomberg Markets weekdays at ten am Eastern on Bloomberg dot Com, the Irhart Radio app, and the Bloomberg Business App. We're listening on demand wherever you get your podcast. I'm gonna guess, actually, I'll bet that our next guest is not the WWE fan. What do you think? I don't think he is either.

All right, let's him in here. Jerry Smith. He's a reporter Bloomberg News. I think he knows more about ww than both of us combined. Yes, particularly in the last twenty twenty four hours. Because he's a reporter. This is his beat, all that media entertainment stuff, and he joins us live in a Bloomberg Interactive Broker studio, which is a strong performance from somebody who's a Wake Forest Demon deacon. So we appreciate him coming into the studio. So, Jerry,

what's it he's ripping on you? Dude? What's a talent agency doing buying? You know, mister McMahon's WWE. So Endeavor is a lot more than a talent agency. They own UFC, so they are already into They're into with this okay, combat sports, and I think that's why a lot of people saw them as the front runner when WWE said that they were exploring a potential sale. As you can just see the obvious synergies, the crossover a fan bases between people who are fans of combat sports like UFC

and WWE. So, first off, just some semantics here. I see the red sticky headline that crossed the Bloomberg terminal says Endeavor and WWE to combine in a deal valued it more than twenty one billion dollars? Is endeavor? Has it been reduced to just UFC? Are they really combining as a merger of equals? Or is Endeavor buying WWE? So Endeavor is gonna have fifty one percent of the new company, and WWE is gonna have forty nine percent

of this new company. Um, and that it's going to trade under the stock ticker t KO, which is a fun a fun stock tick, technical knockout for those unfamiliar. Correct. So so it's a purchase essentially, it's not a combination. That's PR likes to spin it that way all the time. Um, I just need to sort it out because what do you call a flak? He hates that term, hate that,

but it's for a good reason. Um. I just when I saw the headline, I thought, oh, maybe Endeavor has just uh you know, focused most of its business on UFC, and I didn't know that it dwindled down to that. But Endeavor does a lot more than just bat sports. Right. This is William Morris Endeavor, right right, I mean this is a massive talent agency. A lot of the biggest

celebrities in Hollywood are represented by um talent agents. I mean obviously, um Ari Emmanuel runs Endeavor and kind of made famous by that show Gold was said to be based on on Ari Emmanuel. So they do that, you know, they broker major sports rights, A lot of sports leagues will UM, you know, higher endeavor to help them with their sports rights deals. So they do a lot more than just UFC. But as far as buying WWE, I think that's where a lot of people saw the synergies

in this. So Vince McMahon, who was the control shareholder of WWE via his control stock, had ten votes per share. Did he have to body slam his daughter out of there to get control? Right? I mean, this is a remarkable turn of events for Vince McMahon. I mean considering just months ago he um, you know, he's been under investigation for um, you know, hush um alleged high money payments with UM, you know, involving his leadership of the company.

And now he turns around and UM has this massive deal with Endeavor, so um, you know it's you never count out UM. Vince McMahon scorn stars though, right, But is he gonna so now his super voting stock is can be converted into just common stock, right, So he's not gonna have any outsized control here. He's in fact

just gonna be a minority shaholder. Right. Yeah, he is somebody who and if you can actually see this in WWE's sec filings where they see him so important to WWE that if he was out of the picture, Um, you know, the creativity of the company would suffer and that would be material impact the company because he is for years. I mean, he is the guy who has um really orchestrated, um all of this behind the scenes.

So he's very involved. So do we know what his role will be in his new couh he's still gonna be leading WWE. Um Nick con is gonna be uh technically leading WWE, but he's still there and it's um yeah, I mean it's going to be really interesting. He was on CNBC earlier. I thought it was a perfect fit. He said that, um, WW had many suitors for the company. Is that true? Where there are a lot of people

after WWE? That's what That's what he said. Um, you know it's I think one thing to think about is this is live sports is extremely valuable right now if you think about what's happening in the industry with cord cutting. Anybody who can draw even just a few million viewers because WrestleMania was this weekend, right yeah, WrestleMania. I mean the viewership for that is huge. They're very big on social media as well. They're very savvy about WWE's social

media presence. They've been trying to expand internationally. So yeah, I mean this is um, you know, whether they had multiple suitors or not, I'm is a good question, but it's certainly valuable. And I think they paired this where they were also renewing these deals with USA and Fox, which are they're two big broadcasters, so you know, we'll see what happens with those deals. So what do we what is Endeavor saying today about how they want to

create value here? We're you know, because they're paying a pretty big number here, and but the w w E stock is down, so maybe they're getting you know, a good deal a relative to expectations. But where do they see the upside here? Yeah? I mean Ari Manuel said, you know, they're looking at doing some sort of streaming product, um, but I think there's also just cough save means and synergies involved, So you know, I think it's going to

be um. You know, you're talking about two big properties in terms of live sports, combat sports, and I think they're not saying too much about the strategy just yet, but I think that that's you can see opportunities there of combining these companies and putting that together. One of the interesting things we've seen, besides Vince McMahon's mustache is the value for the curling up. I've got a little I've got a little thing going on here, only on radio, okay,

not on TV. UM is that the WWE thinks maybe betting would be a good idea. How can you organize betting on what's essentially a fixed match? I assume these things are all fixed, right, They're scripted? Is the term, right? Jerry? Well? I think they, um, you know, there's been reporting out there that they had explored potential betting on WWE UM and they could see the opportunity there. Um, you know, similar to you can bet on UM award shows and it's you know which the outcome of those are already

known to a small number of people. So I think, yeah, you can bet on the Oscars for example, Yeah, okay, or the Grammy's right fee. Only two award shows I can think of, but I'm sure there are others. Golden Globes. All you can bet on the Golden Globes. Okay, good to know. So, Jerry, is this is an all stock deal? Do we know or is they some cashion near Do we know? Um that I have the check on that. So I'm just wondering, like, who's going to really really

control this thing? But I'm guessing Ari and the Endeavor folks will be doing it, and so this is a big deal. Do we know when this closes? I think they've said, um, later this year. Okay, all right, good stuff. That was fun. All right, wrestling. I'm just I know it's huge and people are into it. So the third time we've talked about it in the last two hours, I know, so we I feel like we've talked more about the WWE today than we have about oil well

and the former president being indicted right now. Yeah, well that's tomorrow's news. So all right, Jerry Smith, thanks much for joining us. Jerry Smith is a media entertainment reporter for Bloomberg News and that includes wrestling and ultimate fighting stuff. And Jerry, are you a fan? I've dabbled, Yeah, you've dabbled. I would have lost that bet. All right, Jerry Smith breaking it down for us here, Endeavor buying WWE snapped into a slim gym. There you go, this is Bloomberg.

You're listening to the take to 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, jes Say Alexa play Bloomberg eleven thirty. The bank rate thirty year fixed mortgage six point eight one percent down from the peak, just a couple of USCO still sharply higher than what a lot of people got,

just as recently as a year ago. I count myself lucky. Yes, you know, sometimes I'm so angry about the high taxes I pay living up in Westchester. But then I think, at least I got three percent of the mortgage, because that kind of makes up for it. That does, That does. Let's talk to somebody who follows this real estate stuff on a daily basis. Jeff Langbaum. He is the senior reets analyst for Bloomberg Intelligence. Hey, Jeff, I mean, there's

a couple of ways we want to go here. People are concerned that the banks are going to run into some problems because interest rates are going up and a lot of these offices, these office complex out there, a lot of real estate owners. I got a refinance here and it's gonna be a lot more expensive. How do you look at that? How do you quantify that risk? Well? So, um, basically we're likely, like you mentioned, Paul Offices are in

a perfect storm here. The you know, it's it's been a story for a while that um that you know, cash flow into building level is falling as there's a risk of you know, tenants pulling back on space and higher rates mean lower asset values. And at the same time all that's going on now, all of a sudden you kind of wonder when who's going to be willing

to lend on these properties? When new death new when debt maturities come due over the next couple, next couple of years, um, and the landlords are you know, going to have to fight to find access to capital. So um, this is a real concern in the sector. And I noticed today we saw a story on the Bloomberg Terminal that Blackstones be Read, the famous Blackstone Read saw four and a half billion dollars of withdrawal requests in March.

This is a third month in a row that they've been in that you know, four to five billion dollar area. Of course, they have shut down the gates. There's a I think a limit to what investors can take out in any given quarter five percent, so they haven't been able to withdraw that. But what does this mean for

the industry. Well, I think what going on with the Blackstone Read is there's a disconnect right now between what public READ prices are showing to be the perceived value of commercial real estate versus where nonlisted shares like b READ and private real estate values are trading. And investors in b READ are looking at that and saying, well, if public reach shares are way down, this is going down too, let me try and get my money out.

And so there's there's just a disconnect there, and I think one of the things that it's going to have to happen is private real estate values are going to have to come down some and then we'll have to figure out whether public reap shares came down too much or whether private values are going to have to chase them lower. All right, So how bad is it out there, Jeff?

In the office world? I mean, you know, vacancies here in New York City still remain extraordinarily high, and no, I'm not gonna say vacancies, but people coming back to work. It just seems like this is a huge problem that I'm not sure when it gets people realizing Yeah, when when when will this be realized? When will the office owners really feel the pain when they come around they say their tenants don't want, don't need as much space.

They're feeling it now. I mean, vacancy is high, not just you know, the amount of people in the buildings, but the amount of UM least space in the buildings. It's it's high. It's above historical levels UM, and it's

going and it's probably going to get worse. But I think what's interesting and what needs to be UM thought about is that there really is going to have to be some sort of bifurcation between the better quality assets UM and the better and the better located assets and those that are you know, probably bound for obsolescence UM. And what you'll probably see is those better, better quality assets.

You know, even if the existing tenants move out or pair back of their space, they'll have an easier time filling that space because their own assets. Where tenants are going to want to be UM, the older, more commodity like stuff. You know, that's going to be a real tough slog and it's going to impact the overall supplied demand dynamics, no doubt. Um. But you know, the better

quality assets probably hold up better. It's a lot. It's a lot like what happened in the mall space over the last decade or so, where you know, the lower tier malls just kind of disappeared and the better, better quality malls. You know, did Okay? I love a good mall. Sure, I gotta Sammy, you're coming to New Jersey. I just was hanging out the Ridge Hill Mall in Yonkers. We do malls in Jersey. I want to check out the what is the American Dream Mall? Yeah? I know we

can get over there, uh, Jeff. In terms of the movements, the flow us that you've seen, um, was there a marked difference pre and post SVB because the collapse of Silicon Valley Bank obviously tied to holding they're holding a chut charity portfolio and the move in rates. But everybody then started saying commercial real estate was the next shoot to drop. Has that freaked out big institutional holders, It freaked out the anybody invested in office reachs that's for sure.

And you can look at the stock price performance on on you know, the Bloomberg Office Read index for example, and you know it was it was down. They underperformed last year just because of all the things that we've been talking about. But then all of a sudden in March when it became you know what, when refinancing became the new risk, the new headwind. Uh, they shot down um pretty rapidly, um completely disconnected from the rest of

the reach sectors. They found a little bounced lately. I think probably a little short squeeze, a little you know, risk on type type move. But you know, there's been a real move away from those names because of the concern that if you can't refinance, your mortgage is coming due. Um, you know, what's the equity worth. So I think about just the New York marketings. I think that's one of the harder hit markets in the country, along with maybe

San Francisco and New York. I'm looking at your research New York focused s L Green and Vornado. I mean, what do those reads do, what are they what are they telling me about the future of their business? I'm you know, you just look around in New York and it's it's tough to see a real rebound in office occupancies. Well, they do tend to own the better quality acids, like I was referring to before, So you know, they they probably m end up being okay, but not without pain

in the in the near term. What they need to do is actually show UM that they have the ability to raise capital, that they have the ability to refinance that's that is coming due UM and you know, UM one way that they can do that is if they can sell some assets or or partial ownership interest in assets and prove that there is still demand to own this space and demand to lend on this space. And you know, that's something that's really going to take a

little while to shake out. It's going to probably be the story of twenty twenty three, you know, proof that there is both debt and equity interest in office buildings. And it really remains to be seen. But you know, I do think that, you know, if if my argument about the bifurcation between quality holds true, that those guys

end up being okay. How about Hudson Yards. I mean, that is an amazing redevelopment of Midtown West just west of Penn station and amazing office buildings and space over there. But that seemed to open almost like just right before the pandemic. How is it doing it? It's actually doing okay. UM. And you know one of the reasons it's doing okay is because they got those leases signed and you know, you've got long term leases and so we haven't really

had as much opportunity for that to roll off yet. UM. And and you know, with the benefit of a long term lease is that even if people aren't coming back to work, the tenant is on the hook and so um. You know it will it will be an interesting shakeout over the next you know, couple of years to see what works and what doesn't. Um. But again, high quality new stuff really should be them, you know, the type of buildings that uh that that tend to um outperform

versus the overall average. They have cool stuff to do over there, studios there, They've got this little Spain area which is I saw that eat there. Do do office big successful office properties have to offer experiences or do they have to have a daycare on site? Does there need to be a gym? Do you see that, Jeff,

highly amenetized space will win out. I mean, you know, basically, what landlords are trying to do and what tenants are trying to do is figure out ways that they can make the office buildings somewhere where their tenants and their employees want to go. And you know, they're they're trying to figure out what works and it will evolve over time.

But yeah, I mean, you know that that goes that goes hand in hand with you know, highly amenitizes, you know, landlords that can put capital into their buildings to make them, you know, up to the most modern required standards. And that's what's going to win out. Why can't a boss just say come back to work. I don't know how that does work, all right, Jeff, thanks so much for

joining our Yeah, exactly waiting for your session. Jeff Langbaum, he's a senior read analyst for Bloomberg Intelligence breaking it down and lots of headwinds for the real real estate space, particularly on the commercial side. Do you think about the pandemic and people not coming into the office and now you've got you know, kind of refinancing risk here in a much higher interest rate environment, which is one thing

after another impacting these companies. So it's good to have somebody like Jeff Langbaumo covers all of the reats able to get us a little bit smarter here. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller nineteen seventy three. And I'm fall Sweeney. I'm on

Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio