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Joining us now with JP Morgan with his leadership and fixed income is Bob Michael. Why is the bond market so calm? I look at sofur swaps recovering. I look at the ten year real yield really coming in in a responsible way? Why is the world turned upside down? Accepted at Piers bonds?
Before I answer that, Tom, I have a bone to pick with you. As a New Englander, you should know that New Hampshire actually has the highest quality black flies. They do the more temperate climate the lakes. Vacationers and blackflies go there by choice and.
Now a surveillance audible as well. It is widely understood the blackflies of Boden are far more vicious than what you see in the burbs of Cold me. You know, there's just no question about it. I was once in a car. This is ancient history. I got out of the car the flies were so bad we just got back in the car and left. Thank you for that vision of knowing. Michael. Why is there a Colm in the market your world?
Because a couple of things have happened. The first thing that happened is the deleveraging pass through the system, the forcing of levered investors who had swap trades on who were short Europe along the US. All these other things got squeezed out of the system. It took yields very high, it's deep in the curve, and then it was done. All the false narratives out there were proven to be false. The thought that foreign official official institutions we're selling treasuries
was just nonsense. When you look at the Fed's custody data, they actually increase their position. And then you had some blinking. You've had a couple FED officials acknowledge that yes, they have a dual mandate and if something happens in the employment market, they'd be poised to step in. And you had the administration coming out saying, hey, you know what, we're open to talks and we're looking to negotiate. All those things created Colm and now have created a reversal in the bond market.
What's the bond market saying about this US economy, Bob Azer, I keep hearing strategies coming. Are economists raising their prospects and their odds for recession?
What's the bond market telling you?
The bond market's telling us watch out as things stand. If the tariffs go through as they're currently spec out, the ninety days passes and there's only some moderate compromise, the US is going into recession. I think our economist Mike Faroli has made that clear. He's got the back half of this year at minus half a percent real GDP. When you look at things like tips break evens, they're
down below or right around two percent. They're not at the four percent that everyone's talking about where inflation is going to be. The market realizes that a one time price reset and inflation will kill top line demand, aggregate final demand, and will go barreling into recession, and then all the pricing will fade.
So does that suggest in a fix and co market?
I really don't want to take much credit risk here today. I want to stick to you, stick to the treasury market and clip that coupon.
You can take good quality credit risk. It doesn't I've heard a lot of people come on and say, no, you've got to be high quality. We're at the top of the capital structure. If you own any equities, then you should be owning the debt of the companies that you own, and a lot of them are below investment grade. The key is to find companies that can actually make it through a period of taxation with higher prices on their input costs and then some loss and demand destruction
in their sales. There are a lot of companies in the investment grade space that will be fine. There's no aherea there, and the majority of the high yield market, you know, ninety seven plus percent of it will be fined.
Okay, I'm going to go here because I know you're a expert in it. Folks, they did mark to market because that's what you did in the nineteenth century. And they said FDR down in nineteen thirty eight and said this ain't working out, and we changed measuring everything every day, every Friday, every moment on Wall Street. It went away, and then we brought it back, and we had the
same challenges within the banking system. Should we be marketing to market private equity and private credit or did they get a pass in the Bob Michael world.
I think there's a shadow system there that does mark them to market. And I think this is going to be highlighted this year because, as you well know, they're an awful lot of plans who have expenses to pay. Maybe you're a pension fund, you have retirey benefits, maybe you're insurance company, you have claims to pay. Maybe your university endowment and you've got to run your school and your funding's been pulled. And now you're looking at your portfolio.
What was in alt and a liquid seems not to have moved in price, and everything in the public markets at one point was down five to fifteen twenty percent, but the only thing you could sell was what was down. I think you're going to see one some rebalancing and two some calls about greater liquidity space.
Well, this is really important. And radio you don't see this, but on YouTube cardinal rule of thumb, when a global Wall Street leader puts their hands up and starts measuring things, that's when you lean forward and really listen. How big is the haircut? Can you estimate for US blended private equity, given institution? How much? What's the hit going to be? I haven't number in my head.
Yeah, you know the numbers that have been thrown out there are around fifteen percent. Yes, but but there is an awful lot of capital that's forum that's gone into the secondary space. So I don't think there's going to be anything near that headcut, that haircut. I think a lot of capital is there dry powder, It will absorb it. I know in the private credit space, we look for opportunities in secondaries and it's very competitive.
Well said, yeah, it's Friday, General counsel for JP. Morgan's not listening.
No, that's good chilling out on a Friday. Yeah, getting ready.
I want you to talk, Bob. And certainly every report we've had a surveillance is liquidity's in order, the plumbings in order within the American financial system. Where's the leverage? The shadow of leverage out there? It amends every ten every fifteen years we move to a new leverage. What's the new new leverage out there you worry about?
Well, I think where some of the marginal funding has aggregated is clearly in private credit. If you go back to two thousand and seven, I don't really recall much in the way of private credit except if there was some sort of debt exchange or something like that. And today estimates are about two trillion dollars, So it's come from nowhere to something big. When we look at the size of the entire US banking system, the commercial and industrial loan book, Paul, you will be able to us
on that, but that actually is it's three trillion. So that's two trillion in borrowing that might have historically gone to the public high yield market, the broadly syndicated loan market, or two banks. When we look at the public high yield market, it looks very clean, even in a fairly meaningful recession, thing greater than the Ferole minus half a percent for a couple quarters, something closer to one percent.
We can only get the fault rates up to about three percent in the public high yield market, and we know there will be more pain. We think that gets felt in private credit.
Now.
It remains to be seen whether that can all be dealt with behind the scenes, but it feels like we're about to approach the long way to shake out there.
Hey, Bob, we were, Tom and I were just talking to Megan Graper earlier this morning. She runs Deck Capital Markets at Barkley's. If she called you up today and she had a new issue in the investment grade market.
Would you buy that? Are you open to that? In all the craziness that's going out there in the world.
Absolutely, one hundred percent nice because because don't worry. I'm sure they have. Yes, Corporate America is going into this in really good shape. Profit margins are very compelling. Actually, consumer balance sheets are in pretty good shape too, So businesses and households can withstand some level of pain on taris and investment. Great companies were not all that that worried about, and generally they these new deals come with
a bit of a concession. We have to know what the company is, you know what what their industry looks like. Where are they issuing all the usual credit research things. But yeah, we're buying.
The president just making comments. These are tape comments, folks in Oregona's way to roam in the funeral of the Pope gave us presidential statements on negotiations. Everything's wonderful, full everything. I think he literally said, it's going to be a wealthier nation. The rest of them. America's turned upside down here worrying about shipping arrivals in Los Angeles, and that if we almost on a Hyagen basis, if we clear the market, Bob Michael, is it just like it used
to be? Do we go to something new here within American Wall Street? Or do we if we clear all these troubles, do we go back to what we knew? What would Paul deep into January?
Yes?
I mean do we just revert back to what we knew?
So we're in an interesting couple months here. As I was listening to Lisa talk about the bottom of the capital structure, I think they're called equities. I'm not entirely sure shape something. One of those markets was up a couple tents. I think the NASDAC, you know, the specious companies. We're in a period of a couple months where we should see good news. Where we're in that ninety day delay on tariffs, that pause, You've already had the administration
come out and tell us good things. Negotiations are underway, there are paths to compromise, we're working things out. You've got the Federal Reserve out there telling us, yeah, we're keeping an eye on the labor market, and you've got Secretary Besson out there saying we've got this. There are a lot of things we can do in the treasury market. So all of those things are calm, which didn't exist
a couple of weeks ago. The second thing is it's too early for the hard data to turn, and we fully expect unless there's a meaningful roll back on the TWERF policy as it sits now, then the hard data will turn. But for now the next couple months, everything looks to be smooth selling. I think you could retrace all of the selloff of thank you, of March April thank you.
I'm letting on a Friday, we got to I think I can get through the week.
One time I didn't expect to be positive myself.
One final question, I am so honored to ask you this. With Pennsylvania classics including COLSD one four Roman America, we will have a funeral this weekend in Rome. I have stood in Santa Pudenziana Church three point thirteen AD, built on Roman ruins, and it was literally where the Pope slept before they built two or three churches before Saint Peter's link in this thing that we have within the Catholic Church back to biblical times, back to Roman times.
How do you perceive the Catholic Church back to what you studied at Pennsylvania.
Well, that's way outside of my level of ex perceise. I will tell you I've been to the Vatican a couple of times, and I'm always impressed. And I do see the classics everywhere. I see the Romans laboring away constructing a city. It's just spectacular.
Bob Michael, thank you so much. What he really is going to say is we're going to get a fifty eight page and a report letter from the new Pope, just like we get from mister Diamond. Mister Michael is a JP Morgan.
You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from seven to ten am Eastern. Listen on Applecarplay and Android Otto with the Bloomberg Business app, or watch us live on YouTube.
Without question, the most important conversation of the day for Global Wall Street. Let me describe mister Adams to you as we talk of this moment in American history. He is a student of American history out of the University of Kentucky. His public service to Bush Senior, his many public services to Bush Junior into a legitimate lobbying effort in Washington, and he is the banker's lobbyist in Washington, President the chief executive officer of what is called THEIF.
And the other day he had a modest conversation with the Secretary of Treasury Tim just as a general thrilled you with us today from the meetings in Washington is a general statement, how scared is Global Wall Street? How scared is Manhattan Wall Street of this moment in banking? Yeah?
Sure, Tom, thank you for the intro. It's the best intro I've had in a long time. It's such an honorary back on your show. I listened to you every day. Look, people are worried because of just the enormous uncertainty and the daily changes that are coming out of Washington. Although I will say this week was a breakout week for Secretary Best, and I think he really established himself as the anchor voice in this administration, a sober voice or reason.
And I think the time that the industry spent within this week was a calming experience. And I think if the administration in the White House will let Scott Secretary Best and get out on the front more often, I think that would help our industry, and I think it would help markets.
Okay, I'll go with you there. But basically what they did they put a cork in the mouth of selected other Trump bites. Let's say we continue with the cork in the mouth. That's great. Besson asks to talk to Trump about what this nation needs first, sing Paul Sweeney said this morning, mister Adams is shipping in Los Angeles is off a cliff. How far off a cliff do your bankers see the American economy?
Yeah, they're very worried. Obviously, the soft indicators of what we've seen initially. I think about Q three, Q four, you're going to see real indicators show that the real economy is beginning slow. The workers that this administrations say they want to help manufacturing factory workers are going to get hurt. It doesn't need to happen. I think Secretary
Bessence again, sober voice or reason. I think if the President would listen more to Scott and let him lead on these discussions and really put in place a thoughtful policy, I think we can avoid the worst. But right now it hangs in the balance.
Jimmy, you're down in our Washington, DC Bureau.
As we speak, you've been in meeting with some of the folks in the IMF, which has been in Washington this week.
What are our global trading partners what are they telling you these days?
Well, first, there was a sigh relief this week when the United States and articularly about Secretary Vestent, agreed to stay in a leadership role in the Brightwoods Institution, the IMF, the World Bank, and other iffies. I think there was some concern that the US was going to pull back or downsize or try to undermine these institutions. But what we heard from the Secretary was a reaffirmation of not only the US a belief in these institutions, but they
want to play a leadership role. They want to get back to factory settings. I get that. I actually agree with it, so I think a reaffirmation. The second is just the uncertainty over trade in tariffs, and that's really creating turmoil around the world and enormous uncertainty about the trajectory of growth.
Tim Again, when you talk to your counterparts in DC and then the IMF and all our global trading partners, is there since that globalization as kind of we've grown up with the last I don't know, thirty forty fifty sixty years.
Is that over Well, it certainly feels like we're moving into a new chapter. I actually think globalization of the last forty fifty years improved a lot of tens of millions, if not hundreds of millions of people globally, and actually think it was good for the US economy. But they had that discussion the last election. Let's move on to figure out what what does the next chapter look like? And I think we want an outcome that works for
the United States and works for others. Alliances and trades still mattered, David Ricardo Toad is that two hundred and fifty years ago. We just need to stay true to the lessons we've learned over time. But I understand that the US wants a better deal from some countries, including China. I get that. Let's move on to that, resolve that dispute and then get back to basics.
Tim, you mentioned China, and obviously that's a huge trading partner with the United States.
Any sense of.
Kind of what the administration's strategy is as it relates.
To China at this point.
Well, so far it's been to try to isolate and bludge in a bit. You know, I've been going to China for thirty years. I don't know that that's going to work. I understand that the President believes in his strategy. He's certainly a you know a history of negotiations. So we'll see if it works. I think you've got to find characteristics. I think that you've got to build an alliance, and I think you've got to treat China with respect. Trying to bludge in them to come to the table
hasn't worked in the past. I don't think it's going to work this time.
Tim Adams with us the IF after his conversation with the Secretary of Treasury, just a terrific perspective not only on our banking industry and the people he represents with the IIF, but also of course with his Kentucky and the Republican Party. Tim Adams, let me shift gears with you right now, and this is going to go out
of your sense of Kentucky. Kessius Marcellus Clay started a Republican Party a few years ago in Kentucky out of the Civil War, and you know, it was an old style Kentucky party, and then it goes on to what you lived with a Bush family. There was a certain character to a Republican Party at Walker's Point in Kennebunkport that's been blown up. Just look at the Oval office with the gold and then you know, I probably think got Tim adams portrait up there and all the rest
Tim Adams. What does the old Republican Party do? Do they vote Democrat? Is there a third party here? What does your Republican Party do in the next four years?
Well, if you remember Bush forty one, who I worked for as a young White House staffer, talked about a kinder, gentler country, and I think that's true. And I had the honor working for Bush forty three as well, and they believed in real decorum. Look, I think there are a lot of people across the country trying to figure out which of the two boxes they fit in. I just would like to find a party that wants to be pro growth, pro business, pro capital formation, pro risk taking,
that believes in trade. As I said about two hundred fifty years of experience, that trade actually makes us wealthier. Right, So that's what I'm looking for. And you know, there's no reason why the Republican Party can't offer that or the Democratic Party right now. I think the Democratic Party is a bit lost, but there's an opportunity to reinvent themselves.
Avestant of the Treasury worked for sous years ago. He seems to be able to work with everyone. Marco Rubio, I would suggest Tim Adams as someone iif and the bankers can deal with. These are more traditional Republican in this Donning Brook around. Look at the economists covered this week of the Bandaged Eagle. Tim Adams, are you looking to Secretary Rubio and bestent for leadership to help the president get back to where we were? Yes?
Absolutely, And look you've got great leadership on the Capitol Hill. Chairman of Finished Services Committee, French Hill I spoke with this week, known him for thirty years. Also that way, Bill Haggerty, Dave McCormick. There are people on Capitol Hill. They're Senators and House members that I think also believe in engagement, free trade and just cap aformation and growth. We need a pro growth strategy.
Yeah, I'm Paul, I got eight more quests jump exactly, Tim and I are going to start talking about Henry Clay in a moment.
All save this, Hey, Tim, talk to us about regulatory policy here. How do you think this administration is kind of just viewing how they want to regulate US commerce. I mean, there was a belief at the election that this is going to be a pro growth administration, maybe a little bit light handed as it relates to regulation.
How do you think that's developing here?
Yeah, I think they do. I think philosophically that's exactly where they want to go. Now you have to do on a sector best sector basis, and we're seeing in the energy sector a real push as he said, you know, drill, baby, drill, let's find ways to increase oil and gas production on top of the US being already the largest oil producer at thirteen point two million barrels a day. So I think that's true. On financial services, they're finding their way through.
I think we'll get to a good point. It really depends on the sector. I do think they do want to focus on the regulation.
Tim Adams is the new method of communication for bankers, not through Tim Adams if but they have to appear on Fox TV because that's what the president watches, is that what we've become.
Well, Jamie is a unique individual and he's a larger life figure, and I think he's a great voice and a great face for not only the financial service industry, but for industry generally. I think it was a brilliant move of him to go where he knew the president would be watching. And so I'm a big Jamie fan. I think we, all of us, all of our voices need to be heard in all variety of places. In Gleen Bloomberg. You are such an important medium. So we're all out there every day.
He's just looking for Red Sox tickets, Tim, Tim, I look at this and again there's the international component. Please tell me what the European bankers through the if what they observe in Washington.
Well, look, they want to know where financial regulation is going. The Basle process, the Bazle three we've been working on for fifteen years. Is there some resolution, is it coming? What does it mean? And what does that mean for Europe. But I'll tell you this Trump shock I think has been a wake up call for Europe. I actually think there's an opportunity for Europe to seize the moment and put in place policies they will create capital formation, job creation,
and they can grow. They certainly need a defense industrial base, a security industrial base. Europe's moment is here. Can they seize it? I don't know, but what I heard this week from European officials they know it and there are some here that want to move forward.
And tim I mean along those lines, you know, I think a lot of folks feel like, Okay, Germany can certainly step up and make those types of investments.
Maybe even Poland, I've heard.
Because just given their geography relative visa the Russia.
But how about the rest of Europe.
I'm thinking, you know, Italy, Spain, Portugal, I mean, what can they realistically do in terms of, you know, investment in their infrastructure, in their defense.
Well, you're right, Germany, after decades of a dorm and see in terms of a new investment, is ready to spend. I think the Chancellor Mertz will take over May seventh. He's got a great, great vision. I was in Warsaw two weeks ago. As you said, Poland is really a great intellectual leader in terms of growth and capitalism, the Baltic States, the Nordics. I met with Spanish officials yesterday. I think Spain has an enormous story to tell. Rapid economic growth in Spain, and so there is some upside.
Many of them have physical challenges, they have large debt to GDP, they have large deficits, so they've got to work through fiscal But I think there's an option for a mindset that the private sector, not the public sector, the private sector can play a growth leading role.
Tim Adams Kentucky rebuild to beat Paul Sweeney's Duke. I mean, can Mark quote, can Mark Pope get it done at Kentucky's So they finally walloped Duke?
Well, you know, we beat Duke this year in the regular season. It was a big win for Mark Pope. I think he's got a great team he's gonna put on the floor next year. I like him. I think he's a real deal, and the players like him as well.
Tim Adams generous of to spend this time with us this morning with the IF, and of course that really important interview conversation with Secretary Bessett here a few days ago which truly moved the markets.
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.
Filmmakers in the Full Frame Documentary Film Festival. That's a course at.
Duke at Duke and parents paid good tition.
That pays you to study duration and convexity.
But somehow she's made a good career. I don't know how she did it.
Meghan Graper joins, she really appreciate you coming into our studio. Here's global head of Debt capital Markets at Barkley's.
Meghan, thank you so much for joining us here.
If I want to fund a leverage buyout in the debt capital markets, can you do that for me?
We can? We can.
In fact, I think there are signs of life in the investment grade world, in particular a market that seems reasonably unshaken relative to what we're seeing play out and other asset classes. And part of this is tied to I think, you know, a reopening of the market. You need to see supply to beget supply, and there is confidence in cash to be deployed, and so the you know, supply demand and balance. I think helping drive.
That let me get to the soap opera right now in Rubinstein You know, do I mean there's no selling in private equity private debt? I mean they can cool concollect it. Other institutions are selling private equity. Now discuss what's it mean from your desk?
It means a cash rotation and so there's ample liquidity. You can see it in the order books we had this week, So we've had a functional new issue market. You sawt you know Kender Morgan deal with seventeen billion of demand this week, Walmart topping twenty one billion. We did a deal for the Republic of Austria and Europe sixty three billion in demand for seven billion dollar trans So cash is gravitating to save havens.
I hate you. She doesn't know. I bought the Austria in one hundred year at the top of the market. It went down seventy four percent.
What are your clients telling you these days, Megan? When you talk to them, if you bring a new issue to the market, how do they feel about Are they asking for more return or are they asking for tougher covenants? Are they concerned about just the world in general, or is there so much money on the sidelines so they're just throwing it at your issuers.
You know, I've yet to see an investor that would say they're bullish here, So that is the challenge.
I think.
You know, ultimately there there is a amount of cash coming into investors' hands that needs to be redeployed, and they are looking for safe harbors. Investment grade is proving to be that. You've got four hundred billion in coupon income and the wall of COVID debt maturing. So even as we keep monitoring these lipper data outflows, which certainly need to be scrutinized, I think they're indicative of sort
of psychology of market and sentiment. There is a willing and there is opportunity that volatility is presenting in the long end of the curve. And with yields that are now you know, upwards of six percent without having to take a lot of credit.
Risk, I guess your world has kind of readjusted to you know, a ten year at four thirty that type of thing, as opposed to years for fifteen years we had no interest rates has had issuers and investors kind of said, Okay, this is the new normal. Now, this is actually what a normal capital markets and the debt side looks like, yeah, it's.
Picking and choosing your spots on the curve, so that is certainly a choice. I think for investors, the underlying yield is what's fueling the bid. So you're talking about, you know, some of the highest all in yields that you could achieve in the long end of the curve, upwards of six percent for a single a long piece data debt, and in triple bs is closer to six point three. So but on the issuer side, they're looking
at spreads, they're still at all time tights. So we've seen a ten basis point retlacement and credit spreads this week, which just tells you that you know, there is money pulling in at a time where yes, credit spreads are twenty five wider on the year, but underlying rates in the front end of the curve are forty to fifty lower, So you're all in cost of funding Actually isn't materially worse than you were at the start.
You're too young. But did your dad or grandpa did they show you the SMP blue Book.
We were a medical family. I was standing over my dad in an o R doing cardiac surgery procedures so finance was another world from that medical Listen.
Ten, you're attained, Mimosa. Maybe get Megan Raper through this. Megan Draper with us here in your community, rascin nation. Good morning worldwide and particularly to the continent of Europe. In your afternoon on YouTube, subscribe to Bloomberg Podcasts. Okay, any equity zeitgeist right now. Institutions not Barclay's total panic. Everybody's doing this, doing that in retails by the dip, keep it going. Is it the same retail institution dichotomy in fixed income?
Well, the one thing we've been monitoring is that twenty two percent of investment grade credit is owned by non US investors. And so the fear factor, particularly as we looked at some of the moves in the bond market, and you know, the the you know, suggestion was that maybe we were seeing investors hair back. That's in fact not the case.
We look, it's not happening.
It's not happening. You can see it in the raid auctions. We just got the allotment data for the April auctions, So tens and thirties actually saw a month of a month increase in terms of foreign participation. That's true in these new issue order books as well. So we are bringing deals to market that twenty two percent holding is still you know, there's no shortage of demand from Asia, from the Middle East and from Europe helping to underpin some of these functional markets.
How do you compete against private credit or how has the private credit market impacted your business?
I mean private credit is a bit more opaque and it does feel like more of a bespoke market. And so if you're an investor in this day and age, what's what's differ in the secondary market. Why everyone takes their lead from the primary is you're in good company. If you're in the new issue market, you're not a singular investor making a singular decision. A lot of private credit is actually more finite number of players helping to drive activity.
If you're alongside one.
Hundred and fifty other accounts in a twenty billion dollar order book, you're feeling more confident that at a market that's difficult to think about where is fair value, If you're alongside of a multitude of other savvy investors, you're feeling greater conviction about fair value.
David from Camden Yard's emails and I'm kidding folks, But if you were to talk to mister Rubinstein right now, are the endowments to locked up an alternative investments? Esoteric alternatives? Should they be looking at the joyous liquidity of Meghan Draper at Arclay's.
I think we're seeing that rotation happen. So if you're looking for safe have in trades, particularly in the front end of the curve, it's an easy place to find a cash surrogate and wait for more sustained stability because you know, even if there's a criminal dealmaking out there, the risk is that this growth landscape is going to contract,
particularly as you move into the second half. So it's a good place to sort of part cash and wait things out and still without taking much credit risk pick up in criminal yield.
The movie of my childhood was David Lean Lawrence of Arabia. I mean it was just it was jaw dropping as a kid. What was the movie of your childhood that made you do film it?
Do well?
I started out as a documentary filmmaker, and so it was really more evaluating and critiquing different personality types, which is actually somewhat apropos as you think about trying to evaluate different investors and issuers and how they're approaching markets.
C Z.
The Greek movie.
You got to see that? What is that?
The one every Academy award, like nineteen seventy seventy one. It was this incredibly it was before documentary. It's this incredibly violent movie about one of the Greek revolutions.
All Right, I'm on it.
Yeah, very cool Z.
Just a that's like a John Tucker reference. Lisa comes out of nowhere.
Something to watch on an international sign.
Are you based in New York or does Barkleys have you with a British accent in London?
No, I'm based in New York, but I'm all over the globe. I was in Texas yesterday. I'm flying to Switzer on Sunday.
You talked to Michael They're going to move to New York Stock Exchange to Texas.
There's a there's a you know, decent amount of conviction that there's sort of ample, ample opportunities for you know, high quality names where our fundamentals are in good shape and where they have access to markets. So it's a tale of two cities. There's definitely you know, issuers that are cash rich and happy to sit this out for a period of times. With some of our pipeline has moved to late q Q two Q three, there are others though there's a thirty five billion dollars backlog slated
for next week. So we're going to build on the momentum we saw this week with twenty five billion getting done, twenty five billion getting done at new issue concessions that are three bases points, with over subscriptions that are upwards of five times.
Megan, Thank you, Megan Graper with Barkley's driving all their at market work.
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 watch us live every weekday on YouTube and always on the Bloomberg terminal.
This is like, you know, Leslie's in and we're going to talk about liquefied natural gas, and all of a sudden, you know, it's like, okay, we'll do it, and it's interesting and all that. She's with Energy Vista and we're gonna look at liquefied natural gas and it liquefies. It negative two hundred and thirty degrees Fahrenheite, and the the equation is C two h six or something. I flunked it in chemistry. I'm sorry, except you're the most important interview of the day.
Good time.
All of a sudden, your world is front and center with US, China, US Europe. So the boats go to China, but your boats with LNG may turn around and go to Europe. Do I have that right?
So they already stopped flowing to China since February, actually, both for economic reasons and the fifteen tariffs that happened at that time. But we've seen that China has used its retaliation from the beginning. It's geopolitical lever that it has on US energy from the beginning, same as last time, like the first trade war, China has stopped importing US lergy for a couple of months until the trade deal happened,
and then despite their imports of US elergy. So I think that China is using its coercive diplomacy retaliation right now. But the deal is still on the.
Table, I should say, Leslie Poultic, Goesman, I didn't energy so correctly, Paul put me in the timeout chair. Leslie Poultic Gosman with US from energy. Big deal. So it is.
And how do you think when you think about the global.
Trade here we're talking about tariffs with so many different countries and so many different products and services. How do you see energy industry think about a world where free trade maybe on the decline.
So, Paul, let me ask you a question. What's in common between Alaska and shipping? So they were both mentioned in the Speech of the State of the Union earlier this year. And this is the card that South Korea can play. So all the countries right now they are looking at all cross agencies, cross sectors, what they can
come to the table with the US and infrastructure. Shipping is going to be big on the table in South Korea has a competitive advantage here and they can bring they can buy also more US energy imports and potentially from the Alaska project that everybody is talking about.
Basic one, an allergy ship that's not going to China. Can it go through the Paramat Canal? They fit through the Panama Canal.
Yes they can. But all twenty twenty four, most of the LNG tankers from the US have avoided the Panama Canal because of the bottleneck re rooted around the Cape of Good Hope, but it made more sense anyway economically to send it to Europe, and Europe was the largest market for US O engerins.
Where does it come out of the East Coast is a golf American excuse Gulf of America. Sorry, where's the major LNG depot in Texas, Louisiana?
All around the US golf.
Coast Rotterdam or do they go to France?
From they go to France, Belgium, the UK, Turkeys like the all along the Mediterranean, the Netherlands, Germany.
What Secretary was going to do with this?
With your world of lerg So I think that it's a logical avenue to play this card because the US wants to sell more of it, unleash the American gold, and Europe needs it right now to keep Russia and gas and energy at bay. And so there is a
common ground of understanding here and US Energy. Yes, the permitting barrier has been removed, but US energy still needs to be built if new projects come along, and the financing is really challenging for this new project, and the US needs to sell if there is no market, you know, there is no exports, but.
Don't we I think that liquified natural gas. I came to understand the importance of it during when Russia invaded Ukraine and that shut off a source of energy for Europe and so our the US. Liquified natural gas became so much more valuable and so much more important. But isn't the problem in the US is we don't have necessarily the pipelines to get it to the ports in Galveston or wherever we.
Need to get it to.
Yeah, so you're you're you know, you're raising an important part of the equation that infrastructure in the US. More infrastructure needs to be built on the pipeline side. So it all depends what is the source of the gas for this energy? Is it associated gas from you know, oil production, or it's dry gas? So that will be important in the future.
Well, I had twenty seconds Michael Barr's trumpet at the BIT as clearly as I can. An energy tanker is two football fields and there's only twenty five people on board.
No, I don't even know exactly what's the crew. But I can give you another data points. Please, how many US flagships do we have?
Like almost none? Right, exactly exactly.
I think we have only one new one that recently dropped a cargo in Puerto Rico that was like the only recent ones that we had. And globally speaking, eighty percent of the trade is on the ocean. How many US ships all together that we have only eighty yep that can do global trade.
This is great. Yeah, so I've more seven minutes with Leslie, Paul and the whole thing. Can you come back?
I can come back.
Thank you, Thank you for having me. Less Paul goes with Ergie Vista.
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 perfect for my.
Beverage of choice. Lisa was out on YouTube on the live chat. She want selling the newspapers. Oh something that we're going to get to it, not now, but something about ice cubes.
And I love that.
Okay, First, I want to start with We've been talking about so many companies, right industries being affected by China tariffs. The Wall Street Journal is pointing to another one. Baby strollers and baby products.
Not on the market.
Sorry, producer Eric, I know he's definitely in the market. The problem is that there are strict product safety standards with US that the US government requires, So products like shoes and clothing they're not regulated as closely as the baby products. So you have companies that are looking for places where they can get one the products, but to also meet those regulations. So that's why a lot of
them returned to China. So to give you an idea of the impact today, ninety five percent of imported strollers come from China. I did not realize that three quarters of toys and infant furniture like cribs come from China.
Why is this a surprise?
We know this.
I did not realize it was ninety five percent. So the question is, right, how much more is it going to cost me? So you have these strollers that are like nine hundred dollars so you could tackle stop stop.
Giuseppe has the fancy one. Giuseppe has a door best in it and stroller combo which is seven thousand dollars.
All we'll suspension.
That's all. One of the in laws bought it. I think it was her in law. You know her parents bought it. What a racket they.
Could close four hundred dollars more.
Can you imagine back in the old strollers you picked them up at Walmart for forty nine bucks.
Act, we have the twin strollers for their twins.
Okay, we had the side by side and the front and back depending that's a big investment.
Yes.
Next, please.
Have either of you is used chat jept?
Have you used it?
Engaged with it at all?
Seen?
Okay? Well, if you do.
The question is do you put prompts in there like please and thank you to chat chept? So if you do, it's like an etiquette question, but it's also a money question because apparently it costs money just for that little extra prompt. Sam Haltman, he's the CEO of open AI. He talked about it because someone asked him on X you know how much money is open ai losing an electricity costs from people adding just an extra pleaser thank you, and he responded, tens of millions of dollars well spent,
though he said, you never know. So the reason and this is really what because New York Time they spoke to experts. They say every additional word and ask increases the cost.
For a server.
So it involves like electrons moving through transitions very you know deep, and that needs energy. So that's the whole thing. So if you add an extra thank you, it tacks on extra money, but you're also being kind at the same time.
So I think when I was in college is closer to Benjamin Franklin, yes, than it is now. I remember the stacks and you couldn't stand You talked about Boulder earlier in the in the Colorado Stacks. I think it was Baker. I can't remember. You couldn't stand up, you know, the floors, and it was musty and shaper and incense and other things besides in.
Google, can I stop there, I'll give you you can mast up there.
Okay.
So, if you're enjoying a fancy cocktail somewhere, maybe on the Jersey Shore, maybe in Rome, maybe you're.
Enjoining the squad taverns, would.
You here's the question, though, would you pay an extra seventeen dollars for an ice cube from Greenland? Because a lot of people are doing it, Okay, entrepreneurs, they're heading to Greenland, they're harvesting all the ice.
Is because the Trump he sees.
It.
There you go, right, Okay, I get it now.
It's they're marketing and they're saying it's cleaner, it's denser because it's been compressing the glacier for like one hundred thousand years.
Weather science back set up. It's up for debate.
But people are paying one hundred dollars for six ice cubes.
It's crazy.
There's also vodka being made with glacial melt water on top of it, so it's growing. You have the government kind of approving about thirteen licenses to certain companies to do this, to harvest it.
Let's cut to the chase. Yes, we go to surveillance. Tito's expert Paul Sweeney and those sugar in Tito's right, I don't know.
It's Austin, Texas.
Yeah, how kind do you want to kid? Come up with a tequila like George?
Yeah, exacting that I'm not saying a hundred bucks for an ice crea.
Lisa Materio, thank you so much. Just find yourself. I don't know today.
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