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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along

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Speaker 1: with my co host of Bonnie Quinn. Every business day

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Speaker 1: we bring you interviews from CEO, market pros and Bloomberg experts,

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Speaker 1: along with essential market moving news. Find the Bloomberg Markets

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Speaker 1: Podcast on Apple podcast or wherever you listen to podcasts,

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Speaker 1: and on Bloomberg dot com. Sean Donn, and senior trade

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Speaker 1: and globalization reporter for Bloomberg News, is out with a

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Speaker 1: story that's just fascinating here, and we want to drill

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Speaker 1: into that a little bit. It's entitled A two trillion

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Speaker 1: dollar rescue leaves America's black, black neighborhoods behind on Cleveland's

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Speaker 1: East Side. So interesting. Sean, thanks so much for joining

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Speaker 1: us here. Tell us kind of what you're reporting kind

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Speaker 1: of brought to you. Yeah, thanks for having me. I

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Speaker 1: set out, I guess a month or to to try

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Speaker 1: and figure out if this tears out, the fiscal rescue

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Speaker 1: would work. And one of the big questions we immediately

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Speaker 1: launched onto was getting left out and we're America then

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Speaker 1: hit hardest. And if you look at if you've gone

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Speaker 1: back a month or so ago and look at the

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Speaker 1: unemployment statistics you would have discovered that about the fifth

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Speaker 1: of workers in Cleveland had lost their jobs as a

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Speaker 1: result of the crisis. The unemployment rate literally went from

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Speaker 1: a little over uh three percent to twenty three percent

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Speaker 1: in a matter of weeks. Uh and uh that you know,

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Speaker 1: when we've seen some incredible spike around around the country,

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Speaker 1: but that was among the highest we've seen in any

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Speaker 1: cities in the in the in the United States. And

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Speaker 1: so I set out that the head to Cleveland and

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Speaker 1: started asking around, started sitting down carefully with a mask

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Speaker 1: ONCTA Park outside oftentimes uh, asking people whether they were

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Speaker 1: seeing this pot of money land anywhere near Cleveland. And

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Speaker 1: the answer you get from people on the east side

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Speaker 1: of Cleveland, which is predominantly black, is no, I'm not

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Speaker 1: seeing it and I need it. Well, there are some

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Speaker 1: amazing stories in here. You talk about the Bethany Baptist Church,

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Speaker 1: which was one of eight religious organizations that did get money,

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Speaker 1: but not enough. And also this wonderful character Tony Jones,

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Speaker 1: who owns TJ's Barbershop, who only saw that the the

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Speaker 1: program was opened three days before he was allowed to reopen.

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Speaker 1: Tell us his story a little bit. Yeah, So Tony

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Speaker 1: turnand is a Barberry's form of steel worker who left

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Speaker 1: that business uh twenty plus years ago and opened this

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Speaker 1: this barbershop that t J is Tony Jones uh and

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Speaker 1: he has was forced to shut down in the middle

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Speaker 1: of the March under order show estate uh, and quickly

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Speaker 1: applied for unemployment, was rejected a number of times. He

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Speaker 1: then was told to wait to apply for this new

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Speaker 1: thing and unemployment assistance, which was this new program for

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Speaker 1: self employed workers who traditionally haven't been able to get unemployment.

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Speaker 1: And he was knocked back from that as well. Uh.

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Speaker 1: You have to wait, literally, as you said, until May

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Speaker 1: twelve to even lodge his application. There. He was allowed

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Speaker 1: to reopen by the state. Masis themes uh and uh.

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Speaker 1: But you know, the reality is he's gotten nothing some

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Speaker 1: out of these two billion dollars that have that have

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Speaker 1: been appropriate, He's lost his livelihood. He now, if you

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Speaker 1: walk into his his barbershop, will tell you that he

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Speaker 1: might see one two clients in a day. He knows

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Speaker 1: he's got a lot of people at home he need haircuts.

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Speaker 1: They're still too afraid to come and get there their

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Speaker 1: hair cut. And he's stuck. And and he's that one

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Speaker 1: little corner of of the American economy that hasn't gotten

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Speaker 1: help us. So, Sean, is there a common theme why

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Speaker 1: some of these business owners have not received the help?

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Speaker 1: Have they been denied? Have they been unable to uh

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Speaker 1: fill out the paperwork properly? What's kind of a common

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Speaker 1: theme that you saw. So there's two common themes that

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Speaker 1: that you see. One is people like Tony Jones who

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Speaker 1: have been denied. And in Ohio, something like of people

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Speaker 1: who applied for unemployment traditional unemployment have had their applications denied.

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Speaker 1: State officials say some have been able to get the

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Speaker 1: pandemic unemployment assistance, but it's unclear how many um they've

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Speaker 1: been denied because Ohio, like a lot of states, actually

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Speaker 1: has strict standards for who they will give unemployment assistance too.

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Speaker 1: You have to hit some thresholds, like any's gonna take it.

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Speaker 1: Tony Jones, you know, works full time, He according to

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Speaker 1: the state, didn't work enough hours. It's to the eligible fund.

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Speaker 1: Employment isn't the other big things of you see when

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Speaker 1: you go onto the ground, people just don't have access

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Speaker 1: to information. She said to Washington. Or you have become

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Speaker 1: very familiar with all of these accredy the PPP, the

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Speaker 1: p u A, the kills off all of those things.

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Speaker 1: If you're sitting in the neighborhoods of on the east

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Speaker 1: side of Cleveland, UH, you don't have the same access

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Speaker 1: to that information and you're not quite sure where the

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Speaker 1: help is. In the case of one of the people

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Speaker 1: I talked to, Elwood Clark, who runs a property management

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Speaker 1: and maintenance business, UH, he went to his bank to

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Speaker 1: apply for a PPD lee because he'd heard about it.

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Speaker 1: But by the time he went to the bank and

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Speaker 1: bank told him that there was no more money available.

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Speaker 1: This was the first round of the PPP. Even has

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Speaker 1: tried to get his bank interested in helping him apply

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Speaker 1: for a PPP loan since then, and he's just not

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Speaker 1: getting the calls back that bigger businesses have. He's like,

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Speaker 1: you know, you employs a couple of people. He's a

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Speaker 1: small business in in in the neighborhood. UH, is that

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Speaker 1: you know, full of vulnerable people, and he just cannot

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Speaker 1: get that people to pick up the phone. Literally. At

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Speaker 1: the same time as he's struggling through all these different

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Speaker 1: actents to figure out if there's anything else and he

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Speaker 1: might be eligible for, he's just decided, you know what,

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Speaker 1: I'm just going to cobble together what I can to

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Speaker 1: city councilman who talked about that area being at the

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Speaker 1: literally get the intersection of a range of pandemics. So

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Speaker 1: obviously not just coronavirus, but a pandemic of crime, lead, poisoning,

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Speaker 1: chronic unemployment. In fact, you sited statistic which is terrifying.

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Speaker 1: A child born today near the corner of one tenth

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Speaker 1: in Woodland, in this ward of Cleveland has a life

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Speaker 1: inspectancy more than two decades shorter than one born in

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Speaker 1: an affluent neighborhood just two miles away. So there's really

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Speaker 1: just a lot of systemic problems to be overcome, and

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Speaker 1: you know, it's it's bit by bid, and these these

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Speaker 1: p p P loans and cares package and so on.

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Speaker 1: The they're they're designed to be put to effect immediately,

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Speaker 1: but when you're trying to battle you know, decades of

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Speaker 1: systemic difference, it's really difficult to put these into into

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Speaker 1: use where they're needed. Absolutely, I mean that's the import

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Speaker 1: point here is one of the things we've seen with

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Speaker 1: this pandemic, and we know this with the health results

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Speaker 1: that we've seen them and the effect on the black

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Speaker 1: community Hispanic community who have higher death rates, higher rates

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Speaker 1: of transmission than than than wide Americans. And that's largely

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Speaker 1: because they are in these kind of frontline jobs and

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Speaker 1: have to keep working those an equities as crisis and

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Speaker 1: the worry, see when you had to a place like

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Speaker 1: the efect of Cleveland, is that they are only going

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Speaker 1: to get worse. Well, Sean, everybody will read this story,

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Speaker 1: hopefully and get a little more educated on the problems

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Speaker 1: in places like these areas of Cleveland. Sean and Donnan

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Speaker 1: joining us there on Doomberg Radio, OPEC and its allies.

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Speaker 1: They're going to restore some oil supplies next months, but

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Speaker 1: according to Saudia's energy minister, the impact will be barely felt.

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Speaker 1: That's one piece of oil market news today. The other

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Speaker 1: is that inventories here in the US were down seven

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Speaker 1: and a half million barrels. The market was looking for

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Speaker 1: them to be down way less than that, and as

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Speaker 1: a result, we are seeing a little bit of an

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Speaker 1: increase in oil prices today. Let's begin somebody who is

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Speaker 1: all across this. Dr ellen Wald is president of Transversal Consulting.

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Speaker 1: She also Bloomberg Opinion contributor and the author of Saudi,

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Speaker 1: which is a history of Saudi Arabia through Aramco. Ellen,

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Speaker 1: thank you so much for joining the idea that OPEC

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Speaker 1: is allowing oil supplies get restored just little by little,

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Speaker 1: and that it's basically holding fast to the agreement that

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Speaker 1: was made some time back. Is that a good thing

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Speaker 1: for the health of oil markets. I think it's a

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Speaker 1: good thing that OPEC is keeping to the plan that

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Speaker 1: it originally laid out, because one of the important things

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Speaker 1: that OPEC has always done is provide this kind of

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Speaker 1: long term guidance for where oil production is headed, and

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Speaker 1: in recent months they really abandoned that by basically saying, hey, well,

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Speaker 1: we're going to reevaluate everything on a month to month

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Speaker 1: basis about, you know, whether we want to keep production

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Speaker 1: lowl or increased or not. And so the fact that

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Speaker 1: they're giving this guidance, um, you know, in in a

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Speaker 1: slightly longer term situation, I think is a positive for

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Speaker 1: markets because it helps markets understand what OPEC is thinking

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Speaker 1: and where they're going in a slightly longer term situation.

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Speaker 1: On the other hand, is a market really ready for

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Speaker 1: more production. Russia and Saudi Arabia are really big on saying, look,

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Speaker 1: we're going to be consuming all of this oil domestically.

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Speaker 1: Russia has seen domestic demand up, Saudi Arabia wants to

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Speaker 1: put more into its domestic markets, but at the same time,

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Speaker 1: it's going to be another two million barrels a day,

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Speaker 1: and demand, at least in the US and in Europe

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Speaker 1: is not necessarily showing that it's ready for for more oil. Yes,

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Speaker 1: we did see a draw in crudual stocks today from

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Speaker 1: in the United States, but in general these stocks have

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Speaker 1: been hitting record highs and so there's still so much

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Speaker 1: oil in storage. So Ellen, give us as we talk

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Speaker 1: about the supply side of the equation. Where what are

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Speaker 1: the US shale producers doing today in terms of supply. Yeah,

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Speaker 1: we're seeing production at about eleven million barrels a day,

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Speaker 1: which is a pretty significant decline from where we were

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Speaker 1: back in February when we were up at thirteen million

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Speaker 1: barrels a day, But it's still not quite as much

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Speaker 1: as they predicted it would drop. Now, signs are the

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Speaker 1: indications are that we could see further drops in production,

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Speaker 1: particularly because one of the factors of shale oil production

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Speaker 1: is that you need to see more and more drilling

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Speaker 1: in order for production to stay at the same levels

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Speaker 1: and to increase, and we're not seeing applications for a

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Speaker 1: lot more permits for drilling. We're not seeing uh, you know,

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Speaker 1: more rigs opening up. So while some companies may be

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Speaker 1: increasing their production because they're in better situation, we are

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Speaker 1: seeing other companies that are going bankrupt, that are folding,

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Speaker 1: and so it's not out of the question to expect

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Speaker 1: that US oil production will drop further. That does, however,

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Speaker 1: depend on the price of oil, and if they stay

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Speaker 1: around forty barrel, that's enough for a good number of

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Speaker 1: shale oil companies to really continue and possibly even expand

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Speaker 1: their drilling. Well, let's just said Saudi Radia and Russia

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Speaker 1: right now, really depending on the Asian oil market, China

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Speaker 1: in particular, are they overestimating the capacity of that market

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Speaker 1: to absorb their oil and therefore this extra two million

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Speaker 1: barrels per day might sort of not find buyers. Yeah,

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Speaker 1: it's it's I think that's a really big important question.

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Speaker 1: And I think that both Saudi Arabia and Russia have

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Speaker 1: been very very focused recently in investing in Asian markets,

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Speaker 1: particularly in China, and they're very focused on demand, and

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Speaker 1: demand from China in June was very strong, but China

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Speaker 1: also puts a lot into storage, so they were definitely uh,

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Speaker 1: you know, producing more produ bucks, buying oil and producing

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Speaker 1: more products, but they were also putting oil into storage.

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Speaker 1: And there's always a chance that, uh, that strong demand

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Speaker 1: may not hold up, particularly when you look at how

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Speaker 1: the demand picture is shaping up in Europe and the

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Speaker 1: United States. And the fact is that it's possible that

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Speaker 1: side of you at Russia maybe too focused on their

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Speaker 1: Asian customers and on the Asian market and not paying

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Speaker 1: quite enough attention to some of the continued weaknesses that

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Speaker 1: we're seeing in the US and in Europe. Yeah, that's

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Speaker 1: kind of where I wanted to go Ellen. As I

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Speaker 1: think about, you know, some of these really big states California, Texas, Florida,

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Speaker 1: you know, kind of slowing the reopening, maybe even shutting

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Speaker 1: down certain parts of their economy. I can't imagine that

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Speaker 1: bodes well for diesel fuel. And we saw Delta reduced

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Speaker 1: the number of flights they're going to add next month,

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Speaker 1: so I think about jet fuel there. So I mean,

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Speaker 1: the demand side, it's got to be precarious at best.

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Speaker 1: I would think, yeah, it really is, And I think

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Speaker 1: that there's a risk in focusing too much on gasoline demand.

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Speaker 1: And we have seen increases in gasoline demand, but it's

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Speaker 1: not a straight lineup. We're looking at you know, we're

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Speaker 1: looking at the deliveries of gasoline to UH service stations,

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Speaker 1: and we're not necessarily seeing the kinds of major increases.

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Speaker 1: We'll see one week where it goes up and then

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Speaker 1: the next week where uh, you know, it's going down.

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Speaker 1: And I think that shows that there's it's really uneven

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Speaker 1: and that yes, people are going out and they're traveling

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Speaker 1: more than they were in April, but they're still traveling

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Speaker 1: so much less than they were compared to last year.

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Speaker 1: And then when you put jet fuel and you put

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Speaker 1: diesel on top of that, I mean, diesel has been

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Speaker 1: weak for two years now, really, and so uh, any

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Speaker 1: increase in diesel or jet field demand looks good, but

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Speaker 1: you have to take into account the fact that it's

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Speaker 1: so so weak that yes, there's an increase, but that

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Speaker 1: doesn't mean that we're seeing a big return or a

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Speaker 1: big resurgence. L I'm very curious about NBS these days.

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Speaker 1: You know, we heard a lot about him until the

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Speaker 1: killing of Demalg and suddenly you know, he's gone very quiet.

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Speaker 1: What's his position, like security wise, is he stable and

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Speaker 1: what's his current strategy. That's that's a huge, huge issue.

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Speaker 1: I'm glad you you brought that up, because one of

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Speaker 1: the interesting things that we're seeing in Saudi Arabia right

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Speaker 1: now is that they've decided to increase their vat um.

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Speaker 1: They recently instituted a vat uh to kind of put

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Speaker 1: them in line with the vat and other Gulf countries,

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Speaker 1: but now they've decided to increase it too, I think

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Speaker 1: about which is much higher than compared to other economies

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Speaker 1: in the Gulf, and that's really putting a strain on

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Speaker 1: the Saudi population. And then we just heard today that

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Speaker 1: they've also decided to basically cut like two million people

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Speaker 1: from their you know, basically their welfare roles, and that's

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Speaker 1: going to have a big impact. And so what we're

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Speaker 1: seeing in Saudi Arabia is that, um, we're actually seeing

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Speaker 1: people speak out against this and say, look, you know

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Speaker 1: where you're cutting our you know, our funds just at

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Speaker 1: this time when everything is more and more difficult, and

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Speaker 1: that could really start to pose some issues for NBS,

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Speaker 1: particularly as he looks like he's spending so much on

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Speaker 1: these big projects and the population is suffering. Yeah, just

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Speaker 1: as extraordinary times they're in Saudi Arabia and across the

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Speaker 1: global oil patch. Dr Ellen Wall, President Transversal Consulting, also

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Speaker 1: Bloomberg Opinion contributor, joining us, giving us uh kind of

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Speaker 1: the latest on the global energy markets as production starts

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Speaker 1: to tick back up. We'll have more on that certainly

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Speaker 1: going forward. Now let's move to the media sphere and

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Speaker 1: geeze that rank and Nathan who is an analyst for

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Speaker 1: Bloomberg Intelligence. She covers all sorts of companies from Facebook

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Speaker 1: to Apples, TikTok. These days, why com CBS so much

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Speaker 1: happening in the field as the pandemic reshapes media. Gee,

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Speaker 1: thanks for joining. Talked to us first of all about

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Speaker 1: to you know, theme parks and how you know we're

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Speaker 1: seeing Disney bring people back but at a very small pace.

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Speaker 1: But yet it's theme parks that allow companies very often

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Speaker 1: have their media landscape sorted out for the year. Oh yeah, absolutely, Ronnie,

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Speaker 1: thank you. So, as you rightly pointed out, the media

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Speaker 1: sector has been completely pummeled by by COVID nineteen. Um,

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Speaker 1: you know, we have movie theaters that have been shut down,

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Speaker 1: Live sports is on hold, and as you mentioned theme

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Speaker 1: parks have been closed. Of course, we're seeing some green shoots.

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Speaker 1: So Disney of course opened it Florida Theme Park a

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Speaker 1: little bit earlier this this week. But what was really

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Speaker 1: tricky is as they were doing that, they were forced

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Speaker 1: to close down their Hong Kong uh property once again,

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Speaker 1: starting actually today. So it's it's it's really a tricky situation.

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Speaker 1: I mean, until a vaccine is widely available, I don't

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Speaker 1: think we're going to be able to see these uh

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Speaker 1: parks open to full capacity. So it's probably gonna take

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Speaker 1: another couple of years before we see, um, you know,

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Speaker 1: theme park attendants kind of go back to pre pandemic levels.

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Speaker 1: So Keith, I mean, that's that's amazing in and of itself.

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Speaker 1: A couple of years before we get back to the

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Speaker 1: theme park attendance levels. And that's been such a driver

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Speaker 1: for a lot of these big media companies, Disney, Comcast

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Speaker 1: and some others. How about you know, we take we

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Speaker 1: think about the film and TV production that's been effectively

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Speaker 1: shut down on a global basis, and while other manufacturing

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Speaker 1: has started to reopen. I think about you know, the

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Speaker 1: auto plants in Detroit and so on, they're starting to reopen.

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Speaker 1: But the the you know, the manufacturing of the media

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Speaker 1: industry that is making TV shows, making movies that is

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Speaker 1: still shut down. What's the ripple effect and the repercussions

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Speaker 1: for that across the media landscape. Yeah, that's that's a

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Speaker 1: great point that you bring up, Paul Um. It is

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Speaker 1: it is effectively being shut down, which means that the

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Speaker 1: whole fall TV season, the season that all advertisers are

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Speaker 1: kind of excited about typically every year, is kind of

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Speaker 1: completely gone away, which is why it's really important for um,

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Speaker 1: you know, TV networks that sports because if if you

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Speaker 1: really think about its sports and entertainment, those are the

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Speaker 1: two big components that bring in audiences. With you know,

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Speaker 1: production kind of shutdown, it's really important. You know, all

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Speaker 1: of these media companies are now banking heavily on the

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Speaker 1: return of life sports, which should then hopefully spark back

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Speaker 1: an advertising rebound as well. Keether, we're looking for Netflix

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Speaker 1: earning tomorrow. I mean, that's one company that should have

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Speaker 1: a very different story from the rest of the companies.

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Speaker 1: I mean it literally added millions of new subscribers thanks

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Speaker 1: to the pandemic. Oh absolutely, I mean we're seeing you know,

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Speaker 1: Covid nineteen is really accelerating the shift of you know,

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Speaker 1: viewers away from traditional TV to streaming. We saw that

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Speaker 1: in Netflix's numbers in one queue, I mean they guided

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Speaker 1: to about seven million, they came in at about so

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Speaker 1: of teen million are So again, we've seen the download

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Speaker 1: momentum across the app space very very strong for all

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Speaker 1: streaming apps in general, than especially for Netflix, both of

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Speaker 1: the domestic market as well as the international market, especially Asia,

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Speaker 1: where downloads were up almost hunt fift So with cancelations

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Speaker 1: at record lows UM, we actually think that those numbers

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Speaker 1: are going to come in really really strong. They have

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Speaker 1: again guided for about seven and a half million UM

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Speaker 1: global subscribers, but we think they'll be in at a

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Speaker 1: much much higher level. So is this is the court

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Speaker 1: cutting Keith in the next thirty seconds. Here is court

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Speaker 1: cutting just accelerating? Here? Oh absolutely, COVID nineteen Paul has

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Speaker 1: put court cutting on steroids. I mean, there's red use,

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Speaker 1: disposable income, no sports, the economic fallout, that's just a

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Speaker 1: perfect storm. And we're seeing that base of courd cutting

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Speaker 1: get really really higher and higher. Wow, it's just extraordinary,

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Speaker 1: Like those trends affecting the media industry just being accelerated here.

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Speaker 1: Keith Running Athen thanks so much for joining us. Githa

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Speaker 1: is one of the top media analysts on Wall Street,

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Speaker 1: and we're fortunate to have her Bloomberg Intelligence giving us

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Speaker 1: her thoughts here. We got Netflix tomorrow reporting that will

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Speaker 1: be interesting news that stocks had a great run, one

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Speaker 1: of those handful of names that's really benefited, uh from

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Speaker 1: the shutdown from the coronavirus and UH. But again, the

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Speaker 1: media sector overall really facing some just challenging, challenging headwinds

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Speaker 1: as people consume media in much different ways and in

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Speaker 1: much less profitable ways for the media companies. And so

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Speaker 1: what we're seeing is a lot of these big media companies,

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Speaker 1: led by the Walt Disney Company trying to catch up

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Speaker 1: and compete with Netflix, and they try to pivot towards

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Speaker 1: streaming and we'll see how they do here. But their

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Speaker 1: core businesses, that cable networks, the team parks all those things,

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Speaker 1: the movies really really challenged right here, so uh and

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Speaker 1: the stocks are reflecting it, and that is probably the

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Speaker 1: one that the market is most focused on, at least

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Speaker 1: in earlier hours of the session. And so let's bring

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Speaker 1: in somebody who knows a lot about banks and how

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Speaker 1: they work and whether they work. Chris Whalen of Chris

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Speaker 1: Whalen Advisors is great to have you back on the radio, Chris,

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Speaker 1: and to chat with you talk to us about Goldman Sachs.

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Speaker 1: You said you went into the Q two earning season

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Speaker 1: with a combination of expectation and dread. How do you

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Speaker 1: feel this morning, Well, I feel a little better. When

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Speaker 1: Goldman is making money. That tells you that the markets

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Speaker 1: are functioning UH, and we need to look to make

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Speaker 1: sure that all the different market sectors are functioning in

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Speaker 1: The good news is that they are um. But on

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Speaker 1: the other hand, the credit costs that we've seen from

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Speaker 1: JP Morgan and the rest of the banks are of

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Speaker 1: concern because we're looking at losses this yere Vanni that

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Speaker 1: could be twice two thousand nine in terms of credit.

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Speaker 1: And it's different from two thousand nine because it's not

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Speaker 1: about residential real estate and private mortgage securities this time.

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Speaker 1: It's about commercial real estate and commercial exposures of all kinds.

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Speaker 1: Any kind of small, mid size, even large business you

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Speaker 1: can think of that's affected by this terrible disease and

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Speaker 1: the reaction to COVID nineteen UH is affected the whole

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Speaker 1: services sector. You know New York Bunny, we both lived here.

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Speaker 1: Everything in the arts, everything in hospitality. UM, so you

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Speaker 1: know we're we're facing a tough couple of years. I think,

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Speaker 1: uh Dick Bove was out with a note this morning

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Speaker 1: saying that I totally agree with Dick. This is a

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Speaker 1: credit event and it's going to take time to work through.

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Speaker 1: But the good news is all of the assets I

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Speaker 1: just mentioned, aircraft, hotels, whatever, are managed by professionals, and

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Speaker 1: so unlike resolving consumer issues as we had ten years ago,

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Speaker 1: and you remember that it was brutal. It went on

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Speaker 1: for years and years and years. My sense is this

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Speaker 1: time people are going to cut to the chase. You

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Speaker 1: saw the way the markets reacted. We had two weeks

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Speaker 1: of death and destruction at the end of March, and

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Speaker 1: then we had one of those great opportunities in April.

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Speaker 1: I sold most of my common chairs and banks, all

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Speaker 1: of them. In fact, US Bank was my last position,

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Speaker 1: and I loaded up on prefers because they were trading

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Speaker 1: close to the par Again, they have been very expensive

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Speaker 1: because of the income. So I think, you know, there's

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Speaker 1: still an enormous hunger in the street behind a trick duration,

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Speaker 1: and it's good to see City and Goldman coming in

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Speaker 1: with some some good numbers because I think we need

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Speaker 1: to make sure that the markets are functioning. The Fed's

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Speaker 1: done the right thing, and the big good news for

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Speaker 1: me is that the residential mortgage sector this year is

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Speaker 1: gonna have a record production. We're gonna be up on

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Speaker 1: volume year over year, and very good profitability too. Yeah. So, Chris,

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Speaker 1: as we look across these earnings over the last couple

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Speaker 1: of days, and we've got still got Morgan Stanley and

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Speaker 1: some others coming up. Obviously, the theme is the you know,

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Speaker 1: the capital markets business have been, you know, kind of

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Speaker 1: coming to the rescue here with a tremendous volatility and

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Speaker 1: trading levels. And that's been great for the folks that

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Speaker 1: have big trading desks. But as you point out, Christo's

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Speaker 1: those lone lost provisions and even the commentary I took

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Speaker 1: from Jamie Diamond yesterday really suggested that it's gonna be

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Speaker 1: tough for a perhaps a longer period than maybe the

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Speaker 1: market initially anticipated. Well, that's right. The metaphors about VS

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Speaker 1: and new shape, recoveries and all that, I think reflect

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Speaker 1: the past. They reflect our view that most of the

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Speaker 1: issues we've had in recent years have been liquidity driven,

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Speaker 1: and the market snapped back. You saw how fast people

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Speaker 1: came back this time. It was remarkable. So the thing

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Speaker 1: is so credit is different. In credit, we have to

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Speaker 1: reduce the value of assets. We have to apply losses

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00:24:40,880 --> 00:24:43,360
Speaker 1: to equity and in some cases debt, and then we're

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Speaker 1: going to turn the deadholders that remain into the owners

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Speaker 1: and start again. So that's the difference. And I think

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Speaker 1: for banks, you know, we've already got over a hundred

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Speaker 1: on the on the fire in terms of lost provisions,

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00:24:55,880 --> 00:24:59,000
Speaker 1: a hundred billion dollars in provisions, and I think we

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Speaker 1: could see twice that. Will they end up losing all

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Speaker 1: of that? No, a lot of that number may get

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00:25:04,320 --> 00:25:07,199
Speaker 1: recovered later on, But the industry is for us, for

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00:25:07,200 --> 00:25:09,320
Speaker 1: a lot of reasons, to kind of take a worst

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00:25:09,320 --> 00:25:13,040
Speaker 1: case scenario, mark things down. I think this quarter, next

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00:25:13,119 --> 00:25:15,359
Speaker 1: quarter won't be so bad, but by the time we

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Speaker 1: get to the fourth quarter for the banks, there's gonna

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00:25:17,880 --> 00:25:19,960
Speaker 1: be a lot of stuff taken into the curb. They'll

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Speaker 1: just have to clean house, and then we've got to

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Speaker 1: get ready for the next cycle the next year. Chris,

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00:25:25,880 --> 00:25:28,439
Speaker 1: it's fascinating. I was hoping they'd come in lower JP,

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00:25:28,480 --> 00:25:31,359
Speaker 1: but they came in higher this time. So there is

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Speaker 1: so much that I would like to ask you about.

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Speaker 1: We won't have time today, but maybe you can give

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Speaker 1: me some quick thoughts on a mortgage finance the future.

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Speaker 1: Friddie and Freddy you just talked about how you know

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Speaker 1: mortgage underwriting and so on will be up this year.

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Speaker 1: But also this new SEC proposal to have a three

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00:25:48,000 --> 00:25:50,639
Speaker 1: and a half billion dollar threshold for public disclosure of

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00:25:50,720 --> 00:25:54,480
Speaker 1: equities holdings. That's all the way up from just one million.

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00:25:55,440 --> 00:25:58,960
Speaker 1: What does that mean? But in terms of having the

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Speaker 1: disclosed benefit asial ownership, well, now, in terms of you know,

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00:26:03,160 --> 00:26:06,920
Speaker 1: the public knowing who owns was you know who I'm

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00:26:06,920 --> 00:26:09,960
Speaker 1: talking about the likes of Stan rock and Miller, George Sorols, Bridgewater,

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00:26:10,119 --> 00:26:12,479
Speaker 1: John Paulson. Is it important for the public to know

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00:26:12,560 --> 00:26:16,240
Speaker 1: what they own in terms of stocks? Short of course,

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00:26:17,040 --> 00:26:19,560
Speaker 1: especially if it's a control position. If the new cash

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00:26:19,640 --> 00:26:24,960
Speaker 1: coming in has influenced on management, then of course it's material. Um.

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Speaker 1: But you know, to your other question, I think, Resie,

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Speaker 1: make pull us out of this mess. I mean, we're

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Speaker 1: going to print money. We're gonna do probably three point

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00:26:33,840 --> 00:26:38,480
Speaker 1: two trillion dollars in residential mortgages this year, mostly rate reefies.

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00:26:38,760 --> 00:26:41,680
Speaker 1: That puts cash back in the households. That's a beautiful thing.

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Speaker 1: And then we're still doing purchase mortgages. Bonny, people are

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Speaker 1: migrating out to the suburbs to get Who would have thought, right,

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00:26:48,359 --> 00:26:50,480
Speaker 1: we would have been sitting here talking about walkability of

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Speaker 1: cities last year, right, So the whole narrative is flipped over,

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Speaker 1: and I think, you know, for a while, Uh, it's

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Speaker 1: gonna be very helpful multi family too. So those assets

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00:27:00,800 --> 00:27:02,840
Speaker 1: are fine, and I think they'll continue to be very

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00:27:02,880 --> 00:27:07,040
Speaker 1: attractive for investors. The big question is commercial um and

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00:27:07,080 --> 00:27:09,040
Speaker 1: that you see that in the reads. If you look

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00:27:09,080 --> 00:27:11,359
Speaker 1: at any of the valuations for the big equity reads,

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00:27:11,400 --> 00:27:15,840
Speaker 1: the ones with office and retail exposure are shown it. Uh,

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00:27:15,880 --> 00:27:20,080
Speaker 1: you know, it's it's stark, frankly, the difference between different sectors.

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Speaker 1: John Warehouses, You're a genius. Thank Chris, thanks so much

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Speaker 1: for joining us. We appreciate it. As always, Chris whal And,

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Speaker 1: chairman of the Weiler Whalen Global Advisers based in New

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Speaker 1: York City, giving us his thoughts on the market. Here

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00:27:34,680 --> 00:27:37,240
Speaker 1: we have again a lift to the market. Here some

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00:27:37,359 --> 00:27:40,679
Speaker 1: good Goldman Sachs numbers and some good vaccine data. This

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00:27:40,800 --> 00:27:45,439
Speaker 1: is Bloomberg. Thanks for listening to Bloomberg Markets podcast. You

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00:27:45,480 --> 00:27:49,000
Speaker 1: can subscribe and listen to interviews at Apple Podcasts or

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00:27:49,040 --> 00:27:52,560
Speaker 1: whatever podcast platform you prefer. I'm Bonnie Quinn. I'm on

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00:27:52,560 --> 00:27:55,119
Speaker 1: Twitter at Bonnie Quinn, and I'm Paul Sweeney. I'm on

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00:27:55,160 --> 00:27:58,040
Speaker 1: Twitter at pt Sweeney. Before the podcast, you can always

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Speaker 1: catch us worldwide at Bloomberg Radio. No Oh