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Stephen Major joins us legendary at HSBC's Global Macro Advisor now at Tradition, and we're just thrilled he could come back on today. Stephen Major, congratulations on this effort. At Tradition. You are associated with the belief in price up, yield down. Do you maintain a structural dampening of yield into the coming years?
Shul Tom says yes. The elaboration on that, Tom is that the returns on off of from fixed income are really quite healthy. And if you think about the amount of cash that people are holding, so is it some seven trillion dollars in money markets now? I think before I started my garden leave six months ago, it might have been nearer six but seven trillion dollars in cash that's not going to be earning what it was at the start of this year. So there's plenty of cash
to go into fixed income here now. If you look at the returns of other asset classes, it gets quite interesting. You know, I get people asking me about gold, about bitcoin, What do I know about that? But people ask and you look at it, just about everything's given you a good return s and P five hundred. Obviously we know the numbers there. The bomb markets had a positive return, Gold is on a tear. Gold goes up every day. It seems bitcoin not. But then again, it's all about
the context of the last few years of performance. So it seems that most people are going to go into twenty twenty six with a healthy return based on whatever they've got. People have done all right. The question is how do you set your portfolio up for twenty twenty six. And I would say bonds have a central place. I mean, if you can get five six percent return in the next year, you should be happy. The trouble is people aren't happy with that.
They're greedy.
So that's a slightly longer answer, Steve.
We've seen since the beginning of twenty twenty five, and we had all that uncertainty about the tariffs and introduction of the tariffs and Liberation Day, a lot of risk at most risk assets have rebounded one that has not has been the US dollars still down about I don't know, eight nine, ten percent from the early year highs. What do you make of the US dollar here?
Yeah, Paul, Again it's context because we're down on the year, but on the last five years, we're up by a similar amount.
Yep.
So five years is an investment cycle, business cycle sort of time period. So, yeah, the dollar is down. It could be down a lot more if you told me some of the things that have been happening this year. I mean, you go back to the start of this year, if you had known some of the steps that have been taken. So you mentioned tariffs, but you could also talk about the FED chair for example. You could talk about the data releases, what happened at the Employment Bureau,
all these things. I mean, I've forgotten half of what happened this year already. But if you told me these events were going to happen at the start of this year, I'd say, yeah, the dollar will be down. So is the dollar down by more than we would reasonably expect? Well, it seems okay. And actually in the context of the last five years, it seems okay. And when people tell
me that there's a d dollarization going on. I don't see it in the data, and I always ask, well, what else are you going to hold?
Actually is?
And so it's an unsatisfactory answer because it's the same answer to the same question. But I'm afraid it's still the case that the dollar is something that you have to hold. It takes a big chunk of everyone's portfolio. I live in a region in the UAE, in the Middle East where many currencies are linked to the dollar exact. There's no evidence of that changing.
Stephen.
In the US treasury market, you know, we've got the two year at three point fifty, We've got the ten year at call it four fifteen, so sixty five basis points or so there of steepening.
What does that tell you.
Well, the steepening has come from the front, hasn't that. In fact, you pick your point on the curve, the middle point, let's say sevens to ten's has done very little, which means your positive total return this year of what best part of five percent is coming from the coupon. You just clip the coupon, that's fine. But if you go to the front of the curve, those yields have come down a lot, which means the FED has cut by more than most people expected at the start of
the year. By definition, for the year to fall, it had to beat the forwards for you to make money, and that's what's happened. The longer end has slipped a little bit. But there's a lot of focus on this steepening of the US curve. Well, actually it's a ball steepening, right, It's a bullish steepening. And many people who were calling steepening. I bet we're arguing that yields would have to go
up in the longer end, and that hasn't happened. That happened in Germany, it's happened in Japan, and the reasons are quite clear why it happened. It didn't happen in the US.
Stephen Major where this folks of tradition based out of Dubai in or London Studios at que Queen Victoria Street, and we welcome all of you across America around the world to the Pacific rim good evening and over to Indian and mister Major's Dubai is well. Steve Major, I look at the curves in the pros you Jim Carron coming up with Morgan Stanley, Which spread is the best spread for our audience to study if they know there's twenty eight flavors of spreads. The vanilla spread is twos
is compared to tenure. But which is the steve major spread that provides the most information and guidance.
Yeah, if you want number on the curve, it's probably five to thirty year. You can ask Jim next. Send in my regards, but Jim will have an idea as well. I think twos tens can be quite distorted because two's is about the FED. That that is as simple as that. Two's is not a credit risk story. It's not a sovereign risk story. It's not about auctions or anything. Really,
twos is safe, twos is about the FED. Tens starts to be a bit more cyclical, a bit more about the data and looking into longer term sort of trends. I think fives thirties is your best measure of the curve because you're capturing something that is close to where the FED is and sensitive to rates, but not quite as sensitive as twos, and I think I think it captures the whole story. Five thirties.
Let's stay on this steave major in honor of Jim Carren, physics major in Bowden. Let's just stay on the physics of the moment, and I want to look at this first and second derivatives of the way the curve is changing. Is there an accelerat of tendency or is there a quiet stability to yield dynamics right now?
Look, I think that the bomb market has performed very well. And one of the measures I would say on the health of this bomb market is the asset swap spread. So that's the difference between the treasuries and the swaps. When the treasury yield is going up at a faster rate than the swaps, that you might infer that there's something amiss. There's something wrong with the treasuries. People are worried about the term premium and other measures of risk.
They're worried about the longer, longer term credit quality even of the US government. But the fact is those treasures have been coming in, they've been doing better, the yields have been coming in versus the swaps, and it could be because they got over sold. It could be that the fiscal narrative has been overplayed. I mean, I look at the fiscal position of the US. I don't think it's that bad, but I sound like a heretic. I'm
just looking. I was looking at the data. It's actually come in better than people expected, and the US Treasury is finding you buyers of its bonds. You can think about what stable coin might do to the demand supply
dynamics longer term, for example. But I just think that there's a narrative out there that is just ready to go all the time, and it tends to be very negative on the US Treasury and on the US government, and it's willing this risk premium called it term premium if you want to be there, and it just isn't. It's nothing like what people that expected. The curve has steepened,
but that's because short dated yields went down. That's a very different explanation to the one that people were offering one year ago.
Stephen. If you look back on twenty twenty five, it's been a great year.
I'm looking at the world equity indices, the WI function, the Bloomberg terminal, double digit returns across the globe. You're on equities. We had US fix income high single digit total returns in twenty twenty five. What do we set up what's the setup for twenty twenty six?
Do you think, I mean, Paul yours, you're so right, you couldn't really go wrong. I'm sure they're going to meet people who did go wrong, but you just I think the biggest mistake anyone could make will be taking profits too early in this rally, and whether that's gold or S and P five hundred and there are better people than me that have given you explanations as to why this will continue in twenty twenty six. So it does seem that the economy is resilient, the growth numbers
are robust, the Fed's going to be dubbish. Whoever's going to be in charge will be cut in rates by more than the current chair for sure. So that's quite a nice setup going into twenty twenty six. It's very difficult to see how this could be derailed. But that's exactly when you should start to worry, because when it's so obvious and everyone's doing the same thing, then you need to be diversified. And I'm meeting people that are not touching the bomb market. They're coming up with all
reasons for not holding bonds. That says to me, there might even be a structural short out there. Interesting, people are holding less than they need to of global fixed income. Don't forget credit spreads are tight as well, again relative to history. So to me, the government markets, led by the Treasury, they look like reasonable value. You're going to get five to six percent total return, probably again in twenty twenty six. I think the biggest problem is greed.
That people expect that you should be able to make ten to fifteen percent because they've got used to it. But I think we all know that that expectation isn't realistic.
Just along that line there Stephen spots silver hits fresh record above seventy dollars an hour. So the commodity markets are just going nuts. What do you think of that? Gold and silver medium and all those pressures.
Well, we're quite big players in gold at tradition and the trend there is very clear. The people I speak to, the gold brokers, gold traders, all convinced it continues. Again. The problem with gold, I think for many people is they don't hold enough. So when something's going up, by definition,
you don't hold enough of it, do you. So look, I can imagine that a personal portfolio should have ten to fifteen percent in gold institutions could be moving in that direction as well, and that probably get enough gold in the world.
Stephen Major with us and of course based out of Dubai and all of us work in Hong Kong, particularly during COVID. But he's in London. Do you know why he's in London?
Why?
Okay u?
I mean, Steve, I don't care about the dan bond market. The idea that west Ham would be relegated and have to go down to the minor leagues is just anathema to me. I mean, Santo's trying to get it done. They got full of here, Okay, I get it. Come on, Stephen Major, what does west Ham do to not It's like if the Baltimore Orioles were sent down to Triple A. Steve Major, what does west Ham need to do? Yeah?
I guess for those that don't follow football. One of the things that we're talking about here is that there's a sixty thousand seater stadium, the old Olympic Stadium that could be in the lower leagues, which would would be a bit of an odd situation, right, but it's still We're only halfway on the season, and I think that Westam had been a bit unlucky, to tell you the truth, and they haven't really had the of the green, so
there's still time. I'm a patient man. I think let's talk again in a few months and hopefully we'll be out of trouble.
It is still early in this season. I love when they do this. They do this in YouTube when they show the highlights, they show the map of London with all the stadiums around. It's so cool. It's like if New York City had five Major League Baseball team rights, right, It's just fair, very cool. Tell us about Dubai, Steve Major. The time we've got left, we're going to go to an important inter year folks with Sir mic over at Novo Nordisk in a bit. But Stephen Major, tell us
about your in Dubai, the vibrancy of Dubai. You know what what the Emirates have done with that airport, with that airline. What is the new Dubai look like to a global traveler like Steve Major.
It's getting busy. I mean you can see the numbers. The population's north of ten million, and it's nearly ninety percent non Emiraties, so foreigners like me. But the place is booming, and it's not just Dubai's AVDB and the other emirates as well. And as you know, some of the big funds, some of the hedge funds have got as many people sitting in Dubai's they've got in London or New York. So you know, the numbers speak for themselves. And I think the geography, the location is very good, right,
the sort of time zone works well. And then and then it's very high tech and it's a can do kind of society. So I think there's many reasons why people are based there.
Mean Steven Major with Tradition as we celebrate his return to the street and look for his outlooks very prominent out on LinkedIn with Tradition. Stay with us. More from Bloomberg Surveillance coming up after this.
You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from seven to ten am Eastern Listen on Apple Karplay and Android Atto with the Bloomberg Business app, or watch us live on YouTube.
We continue looking at what we learn from yield. Jim Kieren is with Morgan Stanley. He's been definitive for decades on yield Jim. First of all, Stephen Major sends his kind greetings. He talked about Yeah, you know, you guys go way back here in the battle. He has a structural optimism about fixed income Grab the coupon, and he calls it a bullish steepener and that good things will turn out. Do you agree?
Well?
First of all, good morning and Merry Christmas to you both. And Steve Major is absolutely one of the best in the business. I call him the James Bond of interest rates strategy. I will say that, you know, grab the coupon is definitely the way I'm thinking about the fixed income markets in twenty twenty six. And the reason that I say that is that when I look across the Yeld curve, how much do I believe that yields will actually be moving lower in twenty twenty six. I don't
really think that they will. The front end, maybe because the Fed, the Fed's going to cut, the Yeld curve is going to steepen. But for the rest of the curve, I think it's more of a sideways range. It may drift a little bit higher. So I think the most we can expect out of twenty twenty six is the coupon and the yield and the bond, and that should be a good estimate for your expected return.
So how do you think about this Federal Reserve this year?
Jim?
We've gotten some cuts here. I think we're going to get maybe some more in twenty twenty six, but it's not a lockdown at this point.
How are you thinking about that?
So?
Look, you know, I do think that the I do think that the Fed's going to cut possibly two more times. And I know there's a lot of concern about the next FED chair, whoever's coming in. I don't think it's about interest rate cuts. What I think it's really about is the overall regulatory aspect of the Fed. I think the next FED chair, and in President Trump's selection for the next FED chair, has a lot more to do about how the Fed will act as a regulator versus
how they're going to think about interest rates. Look, this is probably going to be two more cuts, is probably going to be under Powell. If another FED chair comes in, is there another rate cut? Possibly? But it's really going to depend on the inflation data that's out there, So I'm not overly excited about that. What I'm really excited about is effectively what the regulatory nature of the FED
will be. And it does seem like we're moving into a zone, or at least a time period where there's going to be a lot of deregulation.
What do you tell the equity beasts at Morgan Stantley, the fixed income people call the stock market people beast, I mean, you know they're out of control. What does the bond market, Jim Careen signal to people focused on the S and P five.
Hundred, It actually is a very positive signal for equities because look, I mean, credit spreads are typing, yes, but they're not widening.
Default risks are relatively low.
We're not really seeing a materially a material widening of default risks or increase in default risks. Interest rates, while they may drift a little bit higher in the back end, they don't seem like they're moving out of control. You know, they might go a little higher, but certainly not to
levels that I think will destroy the equity markets. So I think twenty twenty six, at least from the bond markets perspective, I don't think the bond market's going to get in the way of equities I don't think that we're in and unless we get a shock higher in inflation, which is the risk in my opinion for twenty twenty six, if that happens, then all bets are off. But if that doesn't materialize, and I don't think it will, then
I think it's really saying smooth sailing for equities. Equities have to make their own way, but bonds aren't going to be the hurdle that we have to jump over.
Historically, Jim, it's been us. Large cap has kind of been the way to go. Is it time to think about mid caps and maybe even smaller cap?
So you know, this is a really good question. So I still think large cap is going to do well in twenty twenty six. Certainly, a lot of the cap X spending is there, a lot of the benefits from taxes are there. But I do think that twenty twenty six, and this is the way that we're positioning our portfolios across fixed income and equities, is that we do think that the cyclical components of the markets are going to
see an upturn. So what we likely will see is the broader markets the four ninety three right outside of the mag seven, we'll actually start to perform better.
Now.
Why because what we're already seeing if you look at confidence, if you look at even just the decline and interest rates that we've had over the past year, all of that works with a lag, and the cyclical sectors are likely to be what benefits from that. But it's probably not going to be Paul until until the end of
the first quarter. I think the first quarter of twenty twenty six, we'll still see the soft patch bleed over from twenty twenty five, and it's not until then that I believe that the tax policies, the fiscal stimulus, the lower interest rates, which act with a lag, will actually start to take hold. And I would expect the labor markets to even get better starting around the second quarter. But I still think there's going to be weakness in front of us, at least until March thirty one.
I'm I'm just fascinated here by Jim Kieren Folks in the physics of a sixty forty portfolio. We got three groups of people, Jim Karen. We got people their standards the dock, and after three years of double digit equity performance, the boats really really left the dock. We got people that did the right thing sixty forty, and they're like, well, I underperformed. Should have just loaded the boat on Nvidia. And then we got people trying to find a new
sixty forty. What does Jim Caron's new sixty percent stocks forty percent bonds look like?
Yeah, it's you know, this is a question of our time, right. So I think that the interest rates cycle that we have from nineteen eighty one to twenty twenty one was pretty much just downward rates, which meant that bonds were stable. Sixty forty is a passive way to look at the markets, was a very very good allocation. But now that interest rates are likely to move sideways over time, that means
that sixty forty is no longer optimal. So what it means is that you probably need to have a bit more, a bit more equity, a bit less bonds, because bonds aren't going to be the stable returns. Plus bond return correlations are very high relative to equity return correlations, so therefore one is edged necessarily against the other. So this is another factor that you know that I look at. So I would say it's it's a little more our equities, a little less ball.
Jim, I got the first look at GDP here and I know you haven't seen this. Excuse me the second look. I know you haven't seen this, but these are jaw dropping ellen Zendner's statistics. I mean, this is unbelievable. I got a GDP annualized not three point three, but a stick up four point three. I got personal consumption, thank you, Paul Sweeney two point seven up to three point five. I'm iballing seven percent nominal Jim, Karen, what do bonds do in a Trump boom economy?
Well, see that's the thing, right, you know, we're getting much stronger than expected data. I think we're starting to leave this soft patch. And if we get this capex spending which has been you know, going on in twenty twenty five, if that continues into twenty twenty six, and we get a furthering of the higher levels of productivity, than what that means is that you're going to get higher growth and lower inflation. So it doesn't mean that inflation.
So right now we're talking about GDP growth being good, but inflation data has been relatively stable. Well, the next inflation data is going to be the point. So if we have really high inflation for the next print. That's a problem. If we have stable inflation and we're printing these types of GDP numbers, that's really good, especially for equities.
Just extraordinary.
Again on that economic data at the top is just referring to mortgage backed securities. They've had a great year in twenty twenty five. On the agency side, here is that still a call for twenty twenty six.
It's our highest overweight in our portfolio, especially non agency mortgage backed securities. The housing market. Whether we look at the technicals, you look at the credit fundamentals.
A lot of the regulation that.
Came in since the financial crisis Dot Frank has meant that the credit quality of these assets is a lot stronger. The yield and the spread that you get out of mortgage is relative to their equivalent investment grade or even some investment grade bonds is better. So you're getting higher quality bonds with a higher yield in the mortgage space. So it is it is an overweight for us. We're not worried about the housing market in this in this particular cycle, so we really like that.
So yes, for twenty twenty six, we have thirty seconds. Just give me the Jim Karen nutshell of seven percent nominal GDP. It's like China. We have China GDP.
Well, well, at least for a little while. But yeah, So what it means is that bond yields are likely to.
Drift a bit higher.
I think that's natural, but it's not going to get in the way. And I think that's the key. So just because we see the ten year yield, you know, going up, doesn't mean it gets in the way of growth in the economy. Because if you're supporting a seven percent nominal GDP, you would expect bond yields to be a little bit higher, but it's not going to be restrictive. So I'd say that the economy seems like it's running
a bit hot and inflation is not. So in economy hot inflation y that is a high productivity environment.
When we invented this, folks, This is what's about Jim Karen setting you up for twenty twenty six. Stay with us. More from Bloomberg Surveillance coming up after this.
This is the Bloomberg Surveillance podcast. Listen live each weekday starting at seven am Eastern on Applecarplay and Android Auto with 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.
We migrate to private credit. Pau's been anticipating this all day with Churchill Asset Management giving us huge, huge perspective in twenty twenty five. What does private credit in that wall of money do within eight point two percent nominal GDP, you and I have never seen.
That's a big number.
I'll bet you a lot of those are middle market companies, by the way, in the service sectors, because we're seeing a lot of growth. So yeah, I always coming with a fun fact. The first of all, Happy holidays. Great to be in the studio. We usually either have a strong fourth quarter and then build up the pipeline in the first quarter or for whatever reason, not great fourth quarter, but the first quarter is building.
We've had both.
We had a I think a record fourth quarter and we've got a record pipeline for the first quarter. So I think this this GDP report mirrors the confidence that our private equity investors have, and we've had a few of them on our podcast just talking about the opportunities with these smaller companies and the growth, particularly in the service sectors, guys, I mean this is where a lot
of them. I'll bet you you dissect that four point three and the eight percent you know that you're looking at, I'll bet you a lot of that's in the service sectors right now.
Just a Bloomberg had headline kept coming across the tape here in the M and A Space service now to buy armis for about seven point seven five billion dollars in cash. The deals are coming, yeah, fast and furious. Talk to us about your pipeline for twenty Yeah.
So what's interesting about the pipeline now is with interest rates coming down and inflation kind of quiescent relative to the growth, and that's to be the case. I mean, we're seeing a really balanced to macro. I was listening to Jim Caron before I came on with you, and I agree with one hundred percent with what he's saying. It's very constructive for credit. I think that the deal flow that we are seeing now is mirroring the kind of deal flow we saw in twenty nineteen.
It's pretty strong.
I think interest rates being where they are as a big driver.
I like that, and you know, we all have our COVID stories. But I remember sitting in a chair on an island looking at a plane going over and saying, am I going to be on the last plane? And I was? And the answer is that was a medical crisis that was not a financial crisis. How does this end? If you have six seven percent phenomenal, if you have this shape has boom, private equity, private credit? Do you have a theory on how this ends?
So Tom tell me you.
I can give you the theory if you tell me what cycle we are in right now? Are we in the twenty ten to twenty twenty five satalogue?
Okay, what that well said? Right?
So?
Or are we in a mini cycle that just picked up after Liberation.
Day or coming out of the eighteen nineties? World War One got in the way, Thank you, folks. There was just a concerted technology lift.
Correct and now AI with AI being I'll bet you behind a lot of that, you're going to see a lift that's going to continue for a while.
I've never said the stuff for saying today, yep, eight point two, this is.
This is a good Christmas presents.
President.
Do you need someone to empty ash trees at Churchill? Yeah? We get back in the business.
No, you're doing the heavy lifting right now. This is great thought leadership.
We love it.
Randy.
What are your investors telling you these days? I mean, do they want you to, hey, put more money to work or monetize more?
What they want it?
They want it put to work quickly but safely, so they want you know. They're worried about default risk, right, Okay, they're also worried about growth. Are we in a bubble?
Right?
We talked about that a lot.
So KBRI came out with a really interesting stat So they looked at the last decade. They looked at leverage loan growth versus corporate lending growth. So leverage loans including bonds, syndicated loans, private credit six percent over the last ten years. If you look corporate lending, which includes C and I loans, so bank loans and investment grade bonds five percent. Not much of a bubble there, six versus five.
You know, in the much bigger market, Captain, where you guys typically play. In this Warner Brothers Discovery situation, there are debt deals flying all over the place. Bridges are being refinanced here and there, and the banks are coming in and guarantees.
The credit in that part.
Of the market is everywhere. So what's it like in your market?
Yeah?
So when I got out of the Uner versus Chicago and I was interviewing my mentors said, talk about capital formation.
This is in nineteen seventy nine.
This is what we are looking at right now with private markets because they are looking and taking away the opportunity for financing these deals that the banks had but they've given up. There was you saw the announcement that leverage loan guidance was being removed. Everybody was like, oh
my god, the banks are getting back into it. I'm sorry, but they're cultures that the armies of risk and compliance people that have been built up in the banks over the last four decades, those aren't going anywhere.
How do you edge folks? I should say, excuse me. Randy Schimmer with his vice chair chief investment Strategists at Churchill Asset Manager and a massive thanks to Stuart Paul. He's in the car already, is.
Yes, No, he's ski and ski out. Yeah really yeah, that's how.
He didn't tell us that. Yeah, that's Wong and the team rock. You know. They it's like Lee Cooperman had got the backdrop behind it. They're in somebody this summer, Randy Schimmer with us year. How do you pass off your risk? How do you hedge in the new world of private Yeah.
Well, we're actually not passing off of the risk. That's the beautiful part about our model. We hold the risk along with everybody else. We're investing alongside everyone. The Lasa Matteo for one K. We talked about that last time. TIAA, which is our parent company, Triple A Company, holds the same risk that Lisa one K.
Compare it in the old days to the scam of a general partner with many limited partners that you know, I'm not going to go to the history, folks, but it ended ugly. It's a partnership from casually talking, But what kind of flavor of partnership is it.
It's a sharing of risk partnership, but a sharing of reward partnership. So all of the income stream that these loans are producing, which right now is close to double digits still because interest rates are high.
What triple leverage all cash and.
This is with no leverage, Okay, so the risk will is very balanced. And we looking into twenty twenty six we talked about this. I actually think that with tariff inflation under control, that the macro risk and this is Jim Karn's point, the macro risk is looking pretty strong. So now it's portfolio selection, Fellas. This is what is like, how does a bad loan get into your portfolio? The only way it gets in your portfolio if you put
it there. So the whole thing is about assets selection and having twenty years of experience and not doing bad.
I mean, ask one more question, because Paul's got fourteen okay, but then how do you get rid of a bad loan?
Well, you work it out, and that's what we do. And by the way, some people don't like being landlords. They don't like fixing the sink or the plumbing or whatever's going wrong. We are landlords. We take care of the properties. We own it, We fix it, we get it back in shape and allow the private equity sponsor to sell the business. We're not in business of taking risk on the credit side because we're not getting outsize us. We're just getting our principal and interest back.
So we're conservatives.
So do you hold your loans to maturity or until.
Or until they pay off it's very unusual for the loans to actually go to maturity. Something usually happens the private acuity firm will will refinance, they'll sell you guys. Came out with a great data piece for the lead Left this week.
On the leverage loan.
Number of dividend recaps being done in this market in the leverage lone space at record highs for the for the recent quarter. So you know, people are taking money out of these deals. They're giving those. Now do you finance that? Do you mind the private guys, We don't mind taking some of the money, but we don't like them taking all the money out because we like them to have some skin in the game. You know, if you keep fifty percent of your money in, we'll do that deal, okay.
Because is it still a tough market to monetize the investments for these private equity guys.
It's getting better.
So you've got this trillion plus you know iceberg that is slowly melting. The reason to smelting is because interest rates are coming down and so financing costs, which is driving M and A. And you've seen now record M and A coming out of the choot, which is driving our deal flow.
Interest rates make that possible.
I'm looking at this Jimmy O'Connors and Window Mountain. I'm fascinated by it. Road trip we're going there. What's the sector you like in twenty twenty? Does it have to be an AI deal?
Get they give you a good deal that we just approved in the linen management area and health care healthcare companies.
Right, you go to the hospital.
You know, some of this disposable, but you've got the you know, the bed clothes and stuff like that. You know, there's a lot of this this under the radar stuff that's very cool and low risk. You're Chicago, Chicago, the academic pile.
Yes, what was your salary hope when you interviewed out of booth?
Well, I think my first job, I was getting twenty five.
Twenty five K. The fancy people were getting forty and you'd never get there right exactly, Okay, Lisa, we're doing the newspapers right now because I'm not here tomorrow to the end of the year. Michael Arrowit, thank you so much for doing this. This is some empower the four one kay people salaries. Americans say they consider the minimum to be financially successful. Randy Schimmer twenty five thousand, boomers
ninety nine thousand, rounded up one hundred thousand fossils. Gen X born after sixty.
Five, two hundred twelve thousand, millennials one hundred and eighty thousand. The average is two hundred seventy thousand dollars a year. Gen Z's clocking in at five hundred and eighty seven thousand.
That's a wealth investor right there. And we look at for that.
I mean, Lisa, what happened?
I don't the kids come out?
It's too expensive for everything nowaday for the kid.
Somebody at a beautiful vignette here of the starter homes we all lived in or rented. I mean, you know, I lived above a pizza parlor, you know, right down from Gitsie's White Hots in Rochester. The cockroaches would come up at night after the pizza parlor closed. We all lived at these dumps. I mean except for Swimmer. He was rocking right from day one. And now these kids.
Want to grant it, you know, they want the makers.
Are you doing that tomorrow?
They don't know.
Or Fels said, go two thousand dollars, sneakers. They just went for a bigger value. Did you do the transaction on Golden Goose sneakers. It went for a bigger, bigger value than Versace Golden. I went by the store and I just you know, I try to distract the women when we go buy the store, you know, fancy sneakers. Randy Shimmer, thank you so much for being Let's really appreciate you coming in. Stay with us. More from Bloomberg Surveillance coming up after this.
This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on Apple Corplay and Android Auto with 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.
Let's get right too at the newspapers with Lisa Mateo.
All right, I want to start with this big affordability issue. The price of new cars and trucks in the US increase thirty three percent since twenty twenty. The average price of new carbrook the fifty thousand dollars barrier.
This fall.
JD Power the average monthly payment for a new car. It says it's estimated at seven hundred and sixty dollars a month, which means a lot of families can't afford that.
So what happens.
Experts are saying the typical forty eight to sixty month car Loan term will it how has given way to seventy two month learn terms, and even even longer. They're saying they're reaching one hundred months or more than eight years, especially when you get those larger use card.
Does the article say what it's done to use car prices?
It hasn't said that, but it said because people have been holding onto their used cars for so long, holding out that now they need the new car and they have no choice but to kind.
Of And to me, it's the auto insurance. I mean, you know, use hundred bucks a month and those days are.
Over yep, yep. It is crazy expensive. And then if you want to go like ev, you got to pay a premium.
On topic last night, the entire discussion at dinner last night was electric utility bills. I mean people are talking Red Sox baseball. You know what the Bears did to the Packers. No, we're talking the governor bills. The governor elected New Jersey. She got hired pretty much on that topic alone. She's going to bring down utility bills.
I want is there an age cutoff for when you kick the youth off the auto insurance from exactly the family plan.
Or keep it on the cell phone bill? Just asking because they're for Social Security and I'm still paying for their cell phone bill. Next.
Okay, restaurants, they found a new way to fatten up your check. Okay, if you've noticed, have you gotten the dessert menu lately?
If you notice our dessert.
Wines listed on there? Yes, shortly, Okay, they've been doing it more and more a long time. They're like thought of unsophisticated, too sweet like people, eh, but now they're on the menu because they cost a fraction of what reds would cost from a similar year. So, for example, if you get a glass of old wine from nineteen eighty nine, the sweet ones, it'll be fifty dollars, where as a bottle from that same nineteen eighties zyear will cost several thousand dollars. So people are more willing to
get the sweet wine at the end. And then because they have higher sugar content, the bottles can be left open longer, and so they can.
Extend the life of us. Bot what you're doing that see and then it.
Takes less, you know, manpower to just offer a dessert wine than a fancy dessert where you need a special chef and you need you know, additional manpower.
To get jamison neat. We're fine.
So what did you do when Bailey's was introduced?
It was like just ignored christ ignore that, ignore that.
Yeah.
Yeah, so norther in Northern Ireland, I have a problem.
Because they don't have Jamison's in Northern Ireland.
Really they don't.
We have to get I think she is old bush Mill.
It's a whole Northern Ireland, Republic of Ireland thing.
I was going to be quite okay, this is the last one. Okay. We took you from sweet wine to beer. Okay in the Wall Street Journal saying this is not just any beer. It is a new version of Boston Beer's, highly boozy Utopia's brand. It is the strongest yet thirty percent alcohol by volume.
Through illegal in fifteen states.
Just to give you idea, traditional Sam Adams is like five to six percent, okay, but thirty percent puts it right up there with Kognak, like the same the level.
You're really on a trend here today before the holidays don't open up.
But they're saying, don't try and make this at home because the beer is so strong it ate through the side of an insulated paper cup, so it.
Could be dangerous your inside.
Thank you, But apparently it's a it's a small portion, like a little you know, niche aspect. But but some people like it. It's all about for them the innovation.
Okay, well, thank you so much, Lisa, say the newspapers.
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