(Bloomberg) -- The Bloomberg Invest conference kicked off Wednesday, with some of the most influential leaders in finance gathering in New York for conversations on a wide range of topics, including artificial intelligence, cryptocurrencies and global trends in wealth management.
For the full agenda, click here.
M&A is About Overcoming Antitrust Risk, JPMorgan’s Aiyengar Says (4:20 p.m. ET)
Companies looking to do any kind of merger deal these days have to be prepared to fight pushback from antitrust regulators, according to JPMorgan Chase & Co.’s top M&A banker.
Litigation in takeover situations has increased by about “four times,” Anu Aiyengar, global head of M&A at JPMorgan, said at the conference.
“This is a new environment,” Aiyengar said. “How do we deal with the unknown? That’s a little bit of what the regulatory environment is — dealing with the unknown.”
Would-be buyers have realized that including so-called hell-or-high-water clauses and big break-up fees aren’t going to be enough to win over potential suitors, she added. They have to show that they’ve done the legwork to overcome potential antitrust pushback.
“Whatever is the path that you pursue will have regulatory hurdles,” she said. “What you need is real commitment from parties to say we are both going to fight it and we are both going to win.”
BofA CEO Says Higher Capital Requirements to Curtail Lending (3:25 p.m. ET)
Bank of America Corp. Chief Executive Officer Brian Moynihan said higher capital requirements will curb lending, following reports that large US banks may have to boost their buffers by an average of 20%.
“It’s fairly straightforward,” Moynihan said at the conference. “If our capital ratios go up by 100 basis points, simply put, you can’t make about $150 billion of loans.”
Bank of America and its rivals are expecting updated requirements amid an international overhaul of capital rules that started more than a decade ago in response to the 2008 financial crisis. While large banks may be required to increase their capital by 20% on average, the actual hike will vary based on the range of banks affected.
Every time that the requirements go up, there will be a “countervailing effect” where it impacts lending, Moynihan said.
Dalio Says US at Beginning of ‘Late, Big-Cycle Debt Crisis’ (2:30 p.m. ET)
Bridgewater Associates founder Ray Dalio said the US is seeing stubbornly high inflation along with elevated real interest rates.
“We are at the beginning of a late, big-cycle debt crisis when you are producing too much debt and have a shortage of buyers,” Dalio said at the conference.
While interest rates won’t go much higher, the economy will get worse, and that could cause more internal strife if the US continues to have political fragmentation, he said.
Dalio, 73, gave up control of Westport, Connecticut-based Bridgewater, which runs the world’s largest hedge fund, last year. He’s been focusing on building out his family office, and plans to set up a branch in Abu Dhabi.
Saba’s Boaz Weinstein Sees Value in Closed-End Fund Arbitrage (1:50 p.m. ET)
Saba Capital Management’s Boaz Weinstein is known for his credit derivatives bets, but his current focus is on unlocking value from closed-end mutual funds.
A quarter of funds in the $500 billion market are trading at “gaping discounts,” Weinstein said during the conference, adding that he views it as “buying dollars for 80 cents.”
The discount across funds is about $60 billion, he said. Weinstein’s strategy is to elect a board that can change the structure of the closed-end fund to an open-ended fund. Just under half of Saba’s flagship fund is invested in closed-end funds, he said.
“Closed-end fund arbitrage is the thing I’m most interested in today because it is tangible — it’s an arbitrage that you can collapse yourself. In closed-end fund arbitrage you can actually control your destiny,” he said.
Marc Lasry Looks to Buy Basketball Teams in Africa (1:30 p.m. ET)
Billionaire Marc Lasry, co-founder and chief executive officer of Avenue Capital Group, is looking to buy basketball teams in Africa and launch a fund to invest in women’s sports.
“I think in women’s sports, women’s soccer should go from $50 million to $500 in the next 10 years,” Lasry said at the conference.
He agreed to sell his 25% stake in the Milwaukee Bucks this year in a transaction that values the National Basketball Association team at about $3.5 billion. He previously said that while he thinks valuations in the league will continue to rise, it was the “right time to sell.”
Coinbase CEO Says SEC Started to Change ‘Tone’ Last Year (11:55 a.m. ET)
Coinbase Global Inc. Chief Executive Officer Brian Armstrong said the US Securities and Exchange Commission started to change its “tone” in its questioning of the company last year, before filing its lawsuit against the crypto exchange this week.
“They started to come to us with more questions about the business, so we were very forthcoming,” Armstrong said at the conference. “Unfortunately we were met with silence.”
Coinbase trades more than 200 assets on its platform, and the SEC complaint mentioned just 13 of them as securities, Armstrong said, “so a relatively small percentage of the assets we trade.”
The company is also facing scrutiny from state regulators who are demanding that Coinbase halt its staking service. “We are not going to wind down our staking services,” Armstrong said. “As these court cases play out, it’s really business as usual.”
Two Sigma Co-Founder Siegel Calls AI Hype ‘Remarkable’ (11:25 a.m. ET)
Two Sigma Investments co-founder David Siegel said the excitement surrounding artificial intelligence may be overblown.
“The hype is absolutely remarkable,” Siegel said at the conference. “I’ve never seen anything quite like it.”
When ChatGPT became broadly available late last year, it roused anxiety and spurred debate about how AI tools could upend industries including finance. Siegel — also co-chairman of Two Sigma, one of Wall Street’s most prominent quantitative hedge funds — said the main change that’s occurred recently with AI technology “is the awareness.”
Although large-language models such as ChatGPT have practical uses, their vast power in the public imagination doesn’t yet match the reality of their usefulness, he said.
Soros CIO Fitzpatrick Says Agency Mortgage Bonds Are Cheap (11 a.m. ET)
Dawn Fitzpatrick, chief investment officer of Soros Fund Management, called agency mortgage-backed securities a uniquely interesting investing opportunity.
“Two-thirds of your current holders — it’s central banks and banks — have turned into sellers,” said Fitzpatrick, who’s also chief executive officer of George Soros’s family office, said at the conference. “The valuations in that space have gotten disproportionately cheap relative to other asset classes.”
On Tuesday, Pacific Investment Management Co. CIO Dan Ivascyn said agency mortgage-backed securities are the “most attractive asset.”
The recent failures of several US regional banks resulted in regulators auctioning off sizable portfolios, which is “adding to the technical backdrop,” Fitzpatrick said. She added that she expects more banks to implode and that smaller lenders are particularly vulnerable.
TIAA Chief Duckett Predicts ‘Mild Recession’ by Year-End (10:40 a.m. ET)
Thasunda Brown Duckett, the chief executive officer of asset manager TIAA, said she expects an economic slowdown in the US by the end of the year.
“We do anticipate a mild recession in the latter part of the year going into the first quarter,” Duckett said at the conference, citing accelerating inflation and rising interest rates.
The economic climate has led more Americans to reduce contributions to their retirement funds or dip into those savings — decisions that will have severe long-term consequences, she said.
Duckett joined the retirement provider and investment firm in 2021 after a 17-year career at JPMorgan Chase & Co., where she ran the company’s consumer-banking division. Closely held TIAA, founded more than a century ago by Andrew Carnegie, had $1.2 trillion of assets under management as of March 31.
KKR Co-Founder Kravis Praises PGA Tour-LIV Golf Deal (9:55 a.m. ET)
KKR & Co.’s Henry Kravis said the proposed partnership between the PGA Tour and LIV Golf is the best thing for the sport, bringing an end to the acrimony between the traditional tour and the Saudi Arabia-backed upstart tournament.
“Getting together is the best thing for golf,” the private equity firm’s co-founder and co-executive chairman said in an interview. The legal battle between both sides was “not constructive for the game,” Kravis said.
PGA Tour board members, including co-chairman Ed Herlihy and vice chair Jimmy Dunne, are dealmakers who “know how to get things done,” Kravis said.
Nasdaq’s Friedman Says SEC in Spotlight Over Crypto (9:35 a.m. ET)
Regulators are the first line of defense to ensure companies such as Coinbase Global Inc. abide by securities-trading rules, Nasdaq Inc. Chief Executive Officer Adena Friedman said at the conference.
Nasdaq works with the US Securities and Exchange Commission and the Financial Industry Regulatory Authority to aid their enforcement efforts, she said.
On Tuesday, the SEC sued Coinbase, a Nasdaq-listed company, alleging the firm runs an illegal exchange. A lawyer for the firm has said Coinbase has a “demonstrated commitment to compliance.”
Friedman said that before a company goes public on the New York-based exchange, the SEC and Nasdaq evaluate it, and take a keen look at its risk factors among other items. In this “particular case,” Friedman said, there may have been some changes in the company’s risk factors.
Druckenmiller Expects to Own AI Giant Nvidia for Years (9 a.m. ET)
Billionaire Stan Druckenmiller said he expects that artificial intelligence is here to stay and that he anticipates owning Nvidia Corp. for several more years.
“AI could be as innovative as the internet,” Druckenmiller, the founder of Duquesne Family Office, said in an interview. “If I’m right on AI, I could own Nvidia for two or three more years.”
Druckenmiller, who managed money for George Soros for more than a decade, called the current investing landscape challenging.
“I don’t see any fat pitches,” said Druckenmiller, who’s never had a losing year managing money.
JPMorgan’s Kelly Sees US Inflation at 2% Next Year (8:35 a.m. ET)
JPMorgan Asset Management chief global strategist David Kelly is betting that inflation will ease back toward the Federal Reserve’s 2% target by the end of next year.
“The Fed is trying to fight a battle it’s already won,” Kelly said during a panel discussion.
Although his biggest worry is pressure brewing in the commercial real estate market, he noted that concerns about a severe downdraft in the US economy may be overblown.
“There’s still a risk of a recession,” he said. “But we’re just not there yet.”
CreditSights’ Cisar Touts High-Yield Bonds (8 a.m. ET)
Winnie Cisar, global head of strategy at CreditSights, said she sees opportunities in the US high-yield bond market.
In particular, Cisar likes single-B rated credits trading in the range of 8% to 9%, which “feels like a really great opportunity,” she said during a panel discussion, in which she was joined by Art Hogan, chief market strategist at B. Riley Wealth Management.
As Wall Street nervously weighs the Federal Reserve’s aggressive anti-inflation campaign against the threat of an economic downturn, questions are swirling about the best ways to position. To Hogan, one thing is clear: The “biggest mistake” investors can make is preparing too much for the short term while failing to focus on the long term, he said.
--With assistance from Michael Tobin, Annie Massa, Randall Williams, Yueqi Yang, Allison Nicole Smith, Jessica Menton, Katherine Burton, Paige Smith, Allison McNeely, Tanaz Meghjani and Hema Parmar.
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