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M and A Trade Today, M and A Monday.
We haven't had too many deals this year, but we had one in the finance business, Rocket Mortgage to buy mortgage firm, mister Cooper, and a nine point four billion dollar deal all stock deal again. The first thing, you know me, what I do is I go to m A, go and see who's getting paid here Jp Morgan advising the acquirer. Here at Rocket and City advising the target mister Cooper. So everybody's getting paid there. I worked at both of those firms, so both of those folks getting paid.
All right, let's talk about what's going on here. Paige Smith joins his consumer financial reporter for Bloomberg News. Paige, talk to us about this deal. Mortgage, I've Rocket More, I've heard of it, I've never heard of mister Cooper.
Who are they?
So, mister thanks for having me. Mister Cooper. Is more is best known, I would say, in the mortgage servicing side of things. So it's sort of after the fact, you've got your mortgage, but who are you actually interacting with, you know, gears down the line, it's actually going to
be mister Cooper. But this is a big deal for Rocket because they've kind of they've been trying to position themselves as sort of a one stop shop for consumers finance offerings, So think credit cards in addition to your mortgage and you know, now theoretically your mortgage servicing rights. So it's a pretty big deal for this company based in Detroit. Dan Gilbert a pretty prominent person in the
finance yep, pretty big in sports as well. But nine point four billion dollars, it's a big deal for these folks.
And earlier this month we have Rocket also striking a deal to acquire redfin, which is a real estate brokerage. How will that build into this one or if they're even connected.
At all, certainly it's it is basically sort of from a sort of a nose to toe, if you will, of the home buying experience, everything will sort of be under this Rocket umbrella. It you know, Redfinn as you as I think a lot of folks will know quite well is this platform for buying and selling homes, and it would be sort of a starting point for the home buying journey. Rocket is well known for originating, getting or creating mortgages, and now mister Cooper is well known
for sort of the servicing of mortgages. So it's it is kind of from start to finish up the home buying process. Theoretically, if they.
Got a lot of debt on their boundary.
Because I being a former banker, I don't look at stock market values. I look at enterprise value to include the debt. It's eighteen point five billion dollars because that's what you get paid on. You get paid on enterprise A. So that is a big, big number there. Talk to us about the mortgage business. I mean, is it doesn't seem like there's a lot of deals happening in the in the business.
Well, I mean, I think we can look at interest rates. It's certainly been a tough time for home buyers and sellers, and that also weighs on these home on these home lenders. It's a tough time for folks who kind of have put their eggs all in one basket, which is the
home lending business. But that's kind of what Rocket has been aiming to do, is to really branch out and diversify their business so they're not so interest rate reliant or exposed rather which they have been in the past, and frankly that's showed up in their earnings over the past couple of years. So I chatted with Ceover and
Krishna over the summer. Actually we did kind of a deeper dive into Rocket and the company, and one thing that he told me then was that artificial intelligence is actually a big bet that they're making to really try to boost the business and make that home buying process truly as smooth as possible for the customers to kind of amp up their offerings, and we'll see how it works out with for them in the end. But so far, numbers look pretty good.
What was this deal expected? Were you hearing chatter before? Did its completely shock you?
I was not hearing chatter before, and it seems like the market is responding in kind of an interesting way. But we're going to continue to follow the story and see how this kind of fits into the broader Rocket story.
Who do they compete against?
Do they compete against the banks that make the loans, or the banks that make the loans usually just syndicate them away. Right.
Well, I kind of take a different take on that since I covered consumer and finance kind of broadly. I think of folks who are kind of trying to be that one one stop shop for consumer the consumer finance experience. So for me, I think of you know, so FI technologies for example. Yes, that is like a they have a lot of lending opportunities for consumers, but they do a heck of a lot of other business as well. Robinhood even coming at it from the investing side of
things now offering banking products for folks. That's kind of how I think about it in terms of competitors. But that's just from a fintech consumer finance perspective. When it comes to home lenders, you know, other big folks in the space, the space. I was just looking at some data by Inside Mortgage Finance that placed United Wholesale Mortgagees number one, Pennymac is number two, and Rocket as number three.
Penny Mac is what I use any that rings a bell, Okay, Dan Gilbert, Just for what it's worth, Kids on the rich top list of Bloomberg all the wealthy people.
He comes in at number sixty two. That's not bad.
Net worth of twenty eight point seven billion dollars up two point six billion year to date.
Yeah, he's a force in Detroit. I would say some of our colleagues out of the Detroit Bureau did a great story on him last year. If you're interested in the terminal, David Welch shout out, all.
Right, Page, thank you so much, appreciate it.
Page Smith, consumer financi reporter of Bloomberg News, joining us in our studio here talking about Rocket mortgage buying mortgage firm mister Cooper nine point four billion dollar deal, so make more consolidation in that processing business of the mortgage business.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple, Coarcklay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
As we're talking about all morning, Gold hitting another high today, up another thirty six dollars. That's one point one percent, three and twenty. I don't know, mbeed, Mike mcloone's got some thoughts here. Mike McGlone's Bloomberg Intelligence senior commodity strategist. He's down there in Miami Beach, of course he is, Mike. Now, it just seems kind of silly here. I mean, just every day we're up one percent. It can't just be the Chinese banks and Chinese.
Consumers haul on, you know, hoarding all this stuff. What's going on out there now?
I think we have gold trading basically as a put with the S and B five hundred, but it's almost one to one five hundreds, down about a percent today, and gold's up about a one percent today. So the bull is getting food, and the bull does need food. Gold is stretched above three thousand dollars and ounce. I think that's now a support level, but it's.
Doing what it should do in an environment.
We have a very extended US stock market going back downward. At the same time, it's taking the dollar with it, which has been usually odd. We kind of risk off the dollars going down. It's because the stock the dollar's so expensive too. So still very bullish gold, but I think you have to remember what it's doing now. It's what's our key thing is we've had four years of outflows and ETFs. Now they're starting to turn inflows. At the same time we've seen bitcoin peaking, so it looks
like it's big pictures reversion just getting started. I'm still bullish gold, but it's somewhat dependent on that stock market going down.
At these levels, it is hard to ignore gold ETFs, Mike. I mean, we've seen February in March, both months they took in twelve billion. That's the most since at least five years. So investors are really plowing into that. But recent buyers are also buying bars, coins and ETF so I think it's maybe the multiple avenues that they can express their views on goal.
Yeah.
So I think what you're seeing is we see we saw central banks are still buying, but they've been really big buyers the last years. And at the same time, with the stock market and a tear and high interest rates, ETF investors, most notably in the US and Western country, we're just selling say sorry, I don't need the rock. But now they're starting to realize the rock is really outperforming.
It's almost four years now, one two, three, four years now it's beating the stock market and performance is starting to win.
It's also seeing that what they were told about digital gold.
Bitcoin it was better than gold, is finding out this bitcoin's down about thirty percent with the S and B five correcting about ten percent.
It's proving its leverage beta.
At the same time, gold's up while the stock market's going down. So they're seeing that diversication and shift over.
The question is what stops it?
And if you look at people like Anna Wong and Gena Martin Adams, I still think the US stock market can go lower with US GDP and US economic growth, and that's.
Very bullish for gold long bonds and bad for the stock market.
So again, there's no pe ratio to look at here, Mike, for an investor to say, oh boy, this is historically expensive here. You know, we need to get get out of a certain commodity. How do you kind of talk to clients about I guess just relative value.
Well, one of my favorite ways look at gold palls the away what I published this morning. You take the price of gold announces divided by the S and P five hundred and it's just bumping up.
Above zero point five, meaning you need.
Two S and B five rs for one gold, and the last key times it did that was nineteen seventy two on the way up big rally.
Remember that one. I was very young in.
Two thousand and seven on the way up, and it's been now it's starting to break up higher. At the same time, the stock market's dropping from two times market caped to GDP. I mean that hasn't happened in US since the nineteen thirties. It's happened in Japan and nineties. It's happened in China in just.
Few years ago.
So that crocodile crocodile joe patterns just starting.
To narrow, and I'm worried this it's going to keep narrowing.
That means gold out performing most assets as a stock market just reverts to more normal levels.
I'm going to resist bringing in bitcoin here since they're also right bitcoin and I know you write bitcoin two. But let's talk about can copper beat gold in a year of unprecedented austerity and tires in China increasingly relying on stimulus.
Well, I love the question because you know my answer is the questions leading as if I thought you're bringing im Glad you brought that up to my outlook for this month, I think copper's more likely to go to four, partly because I'm an next trader.
I used to have have here. I know I probably would have been stopped out trying to short it. But now last week it made a new high.
US copper price peaked at five dollars and thirty seven, down five dollars and thirty seven cents a pound. Last year's high was five twenty and then it dropped the four. But the reason it went up is for odd reasons. Okay, it's expecting tariffs. We haven't had the tariffs and it's fully priced them in. So what copper usually does, it goes down because it goes up. And I think if we see further weakness in the US stock mark, I
think copper's much more likely dropped towards four. It's very unlikely to get to six, and that's what normally happens. If it continues higher from here, it's very discombobulating and it's really is counter to one of the major some of the major goals of President Trump, that's on showing productivity, on showing markets and production and lower inflation and lower yields.
Hey, Mike, you're from the farm belt. How's the US farmer doing these days?
They're having a rough time, most notably because of lower prices. The key thing I learned from farmers when I go out there, they all dagg out look at it. I'll be out there next month is the quote from Mark Twain that they don't make land anymore.
I should buy some. And the quote is, well they are in Brazil. Massive supply of soybeans out of Brazil. That's the key thing.
It's a reaction to the big pumping prices, technology, bringing them on better infrastructure. Brazil now exports double the soybeans the US does. US has been about the same for ten years. Ten years ago they exported a lot less. So that supplies being met, prices are heading lower. You basically need a US drought for US grain prices to go up this year.
All right, tough one there. Mike mcloughan, thanks so much for joining us. I always appreciate getting some time from you. We can talk about anything, for metals, the precious to the base metals, to the softs and oil and all that kind of stuff.
So Mike covers it all.
Mike mcglon's and your commodity strategies for Bloomberg Intelligence.
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All right, we got them, Sean Donn and he's down in d C. He's joined us right now, senior economics writer. Sean, you're in DC. You have to have some scoop for us, man. What's going to happen? What's the President going to do on Wednesday with these TERFs?
Well, look, the scoop this week is less about what we're going to get on Wednesday, and I think really thinking about the direction and I think that's what the markets have been thinking about more and more in the last couple of weeks. And the details of exactly what we're going to get on Wednesday when the President steps up to the microphone and announces these reciprocal tariffs and proclaims liberation Day for the US economy are still being
worked out. And we heard that over the weekend. We heard Kevin Hassett, the head of the National Economic Council, saying he didn't know he didn't have any forward guidance to offer as to what was coming. He just said he trusts the president to decide to do the right thing. Now what that right thing is, we don't know. But look, the reality is the direction is a kind of known here despite all this uncertainty, and that is that Donald Trump is going to impose more tariffs, and then after
that there's going to come some more tariffs. And really we are seeing the erection of a tariff wall around the US economy, and we just don't know yet exactly how high that wall is, but we are seeing a real structural change in economic policy. And that is what Donald Trump has been promising, not just during the last year's campaign, but going back to twenty fifteen. And here we are this week, we're going to see his biggest attempt at that so far.
I was reading about this over the weekend, and we have some reporting that Trump prefers a quote big and simple tariff plan, suggesting no expectations or expectations could be hard to come by. What does that mean for everyone.
Well, it means that Donald Trump likes big, round numbers. And we've seen that going back to his first term when he was urging his aids to scale up tariffs rather than tone down tariffs when he was applying him on Chinese goods. And I think we can expect the same thing to happen this time around. Just over the
weekend we saw this again. When you know, previously Scott Essen, the treasur the Treasury Secretary, had talked about a dirty fifteen, signating that perhaps they were going to limit the tariffs to the fifteen worst offenders when it came to the US trade deficit and Donald Trump last night a board Air Force one came back and said, no, it's going
to apply to all countries. So he wants something simple, He wants something that he can sell to his but he also wants something that can be transformational in his mind for the US economy. He sees this as a chance to put his stamp on US economic history and in some ways repair the bad name that tariffs have had for decades and decades.
Sean, what do we do about retaliation from some of our big, biggest trading partners these days, Well.
We know it's going to come. That's what happens. Where the Canadians have talked about it, the European Union have talked about it. We've already seen retaliation from China, you know, and that's where a lot of the economic damage will come as well. Of course, you can model the direct impact of reciprocal tariffs, and our folks at Bloomberg Economics have modeled what they call a maximalist scenario, which would take four percent off US GDP over the next two
to three years. But that doesn't account for retaliation. It doesn't account for what happens to business investment when you have global trade wars that kind of batter everyone and throw a huge amount of uncertainty into the mix.
Come Wednesday, what is the one thing or two things that you're going to rush to look at, or the thing that has been the most ambiguous, and now you're looking for certainty if we get certainty on Wednesday, So.
The thing I'm really looking for is what comes next. Right, we're expecting tariffs to be announced that will take effect April third. The President has already said that auto tariffs will go into effect April third. So I'll look at what other tariffs will go into immedia effect, but also the sorts of investigations that he is going to launch. He has talked about other sectoral tariffs on everything from
semiconductors to copper. All of those are probably going to involve investigations that are going to be launched under certain trade authorities. And you know that's the tariffs that will come after what we get on Wednesday.
All right, Sean, thank you so much, really appreciate. I'm sure we're going to be talking to you quite often in the coming day. Seawan Donnam. He's the senior economics writer for Bloomberg News. He's based down there in Washington, DC.
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