Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
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Speaker 1: pm Eastern Time on the Bloomberg Radio or watch us
Speaker 1: on YouTube search Bloomberg Global News. One of our favorite
Speaker 1: people all time is in studio with us um. She's
Speaker 1: going to tackle some of the most read stories on
Speaker 1: the Bloomberg. One includes about Wall Streets, Russia pull back
Speaker 1: on raveling decades of investment. This is really coming Tim
Speaker 1: on something we talked about yesterday, UH JPMorgan Chase joining
Speaker 1: Goldman Sachs Group and pulling back from Russia in response
Speaker 1: to the country's invasion of Ukraine and subsequent war UH
Speaker 1: in that country. We're joined now by Shinnali Basik, Wall
Speaker 1: Street reporter for Bloomberg News she's with us in the
Speaker 1: Bloomberg Interactive Broker studio. She's only care mentioned some of
Speaker 1: the names there, JP Morgan, Chase, Goldman Sacks, if we
Speaker 1: talked about yesterday. Of course, give us a lay of
Speaker 1: the land right now, an overview of who's doing business
Speaker 1: in Russia and to what extent they're actually pulling out
Speaker 1: now when it comes to the biggest banks. Yeah, it's
Speaker 1: very interesting. A little bit of history here is worth
Speaker 1: getting into a lot of these banks, Goldman Sachs, Morgan's only.
Speaker 1: JP Morgan really got into Russia in the wake of
Speaker 1: the fall of the Soviet Union, and so Goldman and
Speaker 1: JP Morgan they were huge in terms of not just
Speaker 1: helping the Russian government, you know, stave off their debt crisis,
Speaker 1: but also in terms of helping get a very liquid
Speaker 1: underwriting market for a lot of Russian companies. So fast
Speaker 1: forward a couple of decades later, they have built fairly
Speaker 1: robust presences there, but they are much smaller in um
Speaker 1: in terms of the whole scope of the operation. So
Speaker 1: for Goldman Sachs, for example, it's only about any employees.
Speaker 1: For Morgan Stanley it's you know, a couple dozen, And
Speaker 1: for JP Morgan, it's a couple of hundred and uh
Speaker 1: for City Group it's much bigger as about three thousand.
Speaker 1: But most of these banks, they started really the retreat
Speaker 1: back in the last time we were talking about sanctions,
Speaker 1: and now they've been back, they have been pulling back,
Speaker 1: and so the exposure is somewhat limited. But with that said,
Speaker 1: as you see by these big funds, there's still billions
Speaker 1: of dollars on the line for a lot of big
Speaker 1: asset managers, which are big clients of the banks. So
Speaker 1: even with these pull backs, you are seeing banks having
Speaker 1: to engage in the market making function of what they
Speaker 1: do and help their clients unwind a lot of these trades.
Speaker 1: Are these banks involved with the oligarchs? That is the
Speaker 1: million dollar questions, Yes, and and and not just you know,
Speaker 1: the people who are sanctioned themselves and the people who
Speaker 1: might potentially be sanctioned moving forward. I mean that is
Speaker 1: a very big question because it's not just you know,
Speaker 1: whether they're wealth clients, but you know, are they involved
Speaker 1: in any of the assets that they own, and you
Speaker 1: know to what extent or any of these people's buyers
Speaker 1: on the other side of things, right, So I mean
Speaker 1: I know, that's a very big issue when it comes
Speaker 1: to the banks unwinding their derivative trades. For example with VTB.
Speaker 1: On the other side, there are certain banks that have
Speaker 1: asked regulators for an extension so that they could figure
Speaker 1: out how to unwind those trades. It is very complicated,
Speaker 1: even the entities that are not sanctioned. Guys, if you
Speaker 1: look at the way the CDs is trading, there's a
Speaker 1: high risk of default. And so there's there's two kind
Speaker 1: of buckets of things here, things that have sanctions already
Speaker 1: imposed on them, things that might in the future, and
Speaker 1: things that just come with a lot of reputational risks.
Speaker 1: Sounds like an emerging market. No, I'm just thinking about
Speaker 1: the risk reward, which is why, right we see banks
Speaker 1: and others go into these areas. And we probably thought
Speaker 1: because of the walk coming down, you know how many
Speaker 1: decades ago, that it was more of a sure thing
Speaker 1: in a closer move towards a market economy, which we
Speaker 1: have seen. And yet here we are. It's very complicated.
Speaker 1: And even today as I sit here with you, you know,
Speaker 1: I've got to say I've been on the phone with
Speaker 1: a lot of people in the restructuring world and in
Speaker 1: the fund management world, saying that, you know, they're wondering
Speaker 1: who of their peers, they're wondering if they themselves want
Speaker 1: to buy anything on the cheap right now that's not sanctioned,
Speaker 1: and so it's a very complicated question. They're really worried
Speaker 1: about the reputational risk, which obviously there's a lot of.
Speaker 1: So a Wall Street pull back from Russia is, you know,
Speaker 1: not really the whole story. I want to hit on
Speaker 1: the reputational risk ELEMNTIONALI. You know, you've been on the
Speaker 1: phone with sources, You've been passing through the very carefully
Speaker 1: worded statements that could that come from these banks. Are
Speaker 1: you getting the impression that they're pulling out for good,
Speaker 1: that this is indefinite, or that there is an opportunity
Speaker 1: if tensions ease, to go back in, Because Caroline, I've
Speaker 1: been talking two weeks, for two weeks about the reputational
Speaker 1: risk of of of going back to a place where
Speaker 1: the person in power did something that was so atrocious.
Speaker 1: You know, this is this is on a scale. I
Speaker 1: asked a bank executive the other day. I was like,
Speaker 1: can you compare this to any time in your history?
Speaker 1: And there was just a lot of silence on the phone. Uh,
Speaker 1: you know this is yes because you know is are
Speaker 1: the nineties with the Russia any um comparison right these
Speaker 1: in South Africa divestment, which you know has come up
Speaker 1: a little bit. But this is this is different. I mean,
Speaker 1: this scale is just so large. And you know the
Speaker 1: other question, the ripple effect that comes of this is
Speaker 1: does this change global geopolitics? Are there other countries they
Speaker 1: need to read? They will with the sanctions day in place. Yeah,
Speaker 1: and and that's the thing at the end. On one hand,
Speaker 1: the very simple answer is if you're sanction nity, the
Speaker 1: government and multiple governments have said no dice so like
Speaker 1: it's as simple as that. But on top of that is,
Speaker 1: you don't if they haven't pulled back already from even
Speaker 1: on the unsanctional individuals. They don't want to find themselves
Speaker 1: on the other end of a fine a few years
Speaker 1: from now. And that is just the least of their problems, right,
Speaker 1: And there are costs of going back and forth. Black Rock,
Speaker 1: Just in context, what do we need to I mean,
Speaker 1: they have what tent or they did have tenrillly and
Speaker 1: I think as of the beginning of this year or right,
Speaker 1: from the beginning. It's funny. Leave it to you, Carrol,
Speaker 1: to make sure that we're marking the market. Um so
Speaker 1: get black Rock with more than ten twillion dollars under
Speaker 1: management at the beginning, they see her lost seventeen billion.
Speaker 1: That's only point two per cent of the firm's assets,
Speaker 1: but seventeen billion in the pure dollar terms is a
Speaker 1: lot of money. And if you look at the specific
Speaker 1: funds themselves, yes, the one specifically tied to Russia have
Speaker 1: stopped trading. The ones that are liquid, they've been halted.
Speaker 1: But there's also liquid funds that are still trading that
Speaker 1: still have exposure to Russia, like a m B there
Speaker 1: emerging market fund, which you know, it's exposed to tons
Speaker 1: of different funds around the world, tons of different sovereign debt,
Speaker 1: and is exposed to Russian sovereign bonds. You follow this
Speaker 1: sector just got fifteen seconds. I mean, if there's an
Speaker 1: opportunity of money to be made, would the financial community
Speaker 1: go back in? Do you think real quickly? It's too
Speaker 1: soon to tell. Okay, nicely said, and you've covered a lot.
Speaker 1: Thank you so much, Shinali Bostic, as I said, one
Speaker 1: of our faves Wall Street reporter up Bloomberg News here
Speaker 1: in our interactive broker studio. Check her out at shiny
Speaker 1: Bosk on Twitter. You're listening to Bloomberg Radio. You're listening
Speaker 1: to Bloomberg Business Way with Carol Messer and Bloomberg Quick
Speaker 1: Takes Tim Stinovic on Bloomberg Radio south By Southwest. It
Speaker 1: brings together tech, film, music industries gets underway today in Austin, Texas.
Speaker 1: The more than weeklong event is in person for the
Speaker 1: first time in three years. This was supposed to be
Speaker 1: also the first year Ukraine would send an official delegation
Speaker 1: of startups to the event. That plan no tim of course,
Speaker 1: disrupted by the war at home. Sarah McBride profiles some
Speaker 1: of those people who were supposed to be there and
Speaker 1: mostly now is still in Ukraine. She's venture capital reporter
Speaker 1: for Bloomberg News. She joins us on the phone from
Speaker 1: San Francisco. Sarah, there's no probably no better way to
Speaker 1: put this than the way that you wrote about it.
Speaker 1: Really at the beginning of your story. Somebody who was
Speaker 1: supposed to be in Austin, Texas this week, staying in
Speaker 1: an Airbnb now finds herself in the middle of the
Speaker 1: night hearing air raid sirens and waking her two year
Speaker 1: old up and hiding in a bathroom to try to
Speaker 1: stay safe. Yes, that was just the most heart wrenching story.
Speaker 1: She and her high men, who's also a co founder
Speaker 1: of the company, left Kia the day before the attack
Speaker 1: on Ukraine started. They got there two year old, they
Speaker 1: had to find an apartment. He's asking what's going on.
Speaker 1: They tell him it's hide and seek and they have
Speaker 1: to hide in the bathroom and look for dinosaurs there,
Speaker 1: and all the stories they tell him. It was just
Speaker 1: the most surreal feeling. Their whole life has been upended.
Speaker 1: And I was interviewing her over zoom and she could
Speaker 1: just see the news room in the background with everybody
Speaker 1: just going about their business and here she was in
Speaker 1: the middle of the war. Just was the most wrenching
Speaker 1: reporting experience. You know, Sarah's something that we grappled with, right,
Speaker 1: because what we do here at Bloomberg is we report
Speaker 1: on companies, what they do. We report on the financial
Speaker 1: markets and world's events how they impact the markets. And
Speaker 1: of course we've done that with the Russian invasion of
Speaker 1: Ukraine the subsequent war. So in reporting out your story, right,
Speaker 1: we cannot forget the humanitarian impact. But you also wanted
Speaker 1: to shed some light on what what these entrepreneurs who
Speaker 1: have created these companies, what they're doing right. And so,
Speaker 1: for example, that startup founder who rents a company called
Speaker 1: EFA makes disposable toothbrushes, and they were getting a lot
Speaker 1: of traction. They were getting into a bunch of hotels
Speaker 1: in the US. She told me they were talking to
Speaker 1: Netflix and she was hoping to use south By Southwest
Speaker 1: to really build on this momentum. Now, as well as
Speaker 1: worrying about her family, she and her employees all over Ukraine,
Speaker 1: it's also her business. She had a shipment of toothbrushes
Speaker 1: that are now stuck in Romania. A bunch of their
Speaker 1: disposable razors are in an office building and TV she
Speaker 1: has no idea if they're safe or not. And then
Speaker 1: the other people I spoke to who are trying to
Speaker 1: juggle dealing with a war and fleeing from their homes
Speaker 1: and trying to solvage what they can at our businesses
Speaker 1: and hoping their businesses make it to the other side
Speaker 1: of this. And uh, they're all at different stages um,
Speaker 1: all experiencing just crazy range of emotions, UM, and many
Speaker 1: of them are still in Ukraine. Many of them had
Speaker 1: to lead in nearby countries like Poland. So, Sarah, what
Speaker 1: what is going to be going on at south By
Speaker 1: Southwest in place of where these Ukrainian entrepreneurs were going
Speaker 1: to be? They were they were supposed to have a
Speaker 1: booth their sponsored by the Ukrainian government. How will they
Speaker 1: be represented? Well? Um? The first notion in the first
Speaker 1: word that many of them got from the ministry. They're
Speaker 1: all on a telegram group chat and they got the
Speaker 1: Ministry of Digital Transformation in Ukraine was supposed to be
Speaker 1: through various grants funding parts of their chips, and they
Speaker 1: got a message saying basically, sorry, we need that money
Speaker 1: for the war efforts. UM, please return it and glory
Speaker 1: to Ukraine. So invade uh. I think at that point, Uh,
Speaker 1: their priorities had already shifted from trying to get to
Speaker 1: south By Southwest. But there is one person from the
Speaker 1: ministry who's still going, and there is another representative of
Speaker 1: the startup community there. They were just kind of frantically
Speaker 1: figuring out what to do. They were debating whether to
Speaker 1: have the founders come in by a zoom link to
Speaker 1: pitch the latest I've heard if they're looking for volunteers
Speaker 1: who can pitch on behalf of these startups at south
Speaker 1: By Southwest. But the booth is still going to be there,
Speaker 1: which is impressive. It is incredibly impressive. And so glad
Speaker 1: you were able to bring this story up to us
Speaker 1: and remind us of the work that they're doing. And
Speaker 1: hopefully these individuals um get to put out their companies
Speaker 1: at a future of it and just hope that they
Speaker 1: say safe uh, and so do their families. All right, Sarah,
Speaker 1: thank you so much. Sarah McBride Cheese, VC reporter here
Speaker 1: at Bloomberg News. This is Bloomberg Business Week with Carol
Speaker 1: Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio.
Speaker 1: Well Today's Bloomberg Big Take. It's also among the most read.
Speaker 1: It's in the new issue also of Bloomberg Business Week magazine,
Speaker 1: which is now online at business Week, in Bloomberg dot com,
Speaker 1: also on the Bloomberg terminal and on news stands. It's
Speaker 1: a story about how Well's Fargo left black homeowners behind
Speaker 1: in a pandemic mortgage refinancing boom. Tim Sean Donn and
Speaker 1: his senior economics writer at Bloomberg News. He's one of
Speaker 1: the bylines on this exhaustively researched and written uh story
Speaker 1: in the current issue of Bloomberg Business Week. Sean joins
Speaker 1: us from our studio in Washington, d C. Sean, I
Speaker 1: was really shocked to see these numbers, especially, you know,
Speaker 1: given that this was over the last two years and
Speaker 1: not something that we think that's you know, more historical.
Speaker 1: So I'm just gonna go right into it and share
Speaker 1: the data nationwide. Only for scent of black homeowners who
Speaker 1: completed a REFI application with Waltz Fargo were approved. That
Speaker 1: compares with seventy of white homeowners. This is according to
Speaker 1: a Bloomberg News analysis of federal mortgage data. Why and how, Yeah, Look,
Speaker 1: the question why is something we're still trying to get at.
Speaker 1: Wells Fargo says that it is simply stricter than other lenders,
Speaker 1: that it treats all lenders the same, but the data
Speaker 1: clearly shows a big disparity there. I think, you know,
Speaker 1: there's the Wells Fargo story. There's also a bigger story here,
Speaker 1: which is that we've coming to the end of of
Speaker 1: a huge wealth event really in America, something like five
Speaker 1: trillion dollars in mortgages have been refinanced in the last
Speaker 1: two years. When the Fed next week raises interest rates,
Speaker 1: it will be kind of calling time on that refinancing boom.
Speaker 1: And a lot of families around America have been able
Speaker 1: to take advantage of rising home prices, low interest rates,
Speaker 1: pull out some equity, maybe finance kids education, and so on.
Speaker 1: And the reality is black homeowners have had a much
Speaker 1: harder time, and they had a much harder time than
Speaker 1: in the rest to the industry when they tried to
Speaker 1: refinance with Wells Fargo. In want to bring in Bloomberg
Speaker 1: Business Week out of Jill Webber with us here in
Speaker 1: our interactive Broker studio, I feel like I see Wells
Speaker 1: Fargo Joel that all all of a sudden like jump back,
Speaker 1: because it does feel like it's been many years of
Speaker 1: things where whether it's the culture or something, the company
Speaker 1: is just not getting it right. Yeah, the banks had
Speaker 1: plenty of issues through the years. UM and you know
Speaker 1: the one that um that Sean writes about UM in
Speaker 1: this story. You know, the thing that really just struck
Speaker 1: me was was the data. Because when you when you
Speaker 1: see the data, it just becomes really Stark. Um and
Speaker 1: you know that the the part of it that I
Speaker 1: think is um what makes it an interesting Business Week
Speaker 1: story has been this on going coverage we have about
Speaker 1: how much wealth is locked up in real estate and
Speaker 1: when when you have access to that, you can really
Speaker 1: have intergenerational transfers of wealth and and and rise with that.
Speaker 1: And if you're locked out of it, you're just always
Speaker 1: in on the sidelines. Um and And Sean I was wondering, um,
Speaker 1: you know what, you know, being so intimate with his data,
Speaker 1: um and and sort of the the the element of
Speaker 1: of wealth that a company's home ownership and and what's
Speaker 1: the cost of of a fact of the reporting about
Speaker 1: Wills Pargo And yeah, and look, I mean yeah, I
Speaker 1: think a lot of time when we talk about wealth
Speaker 1: in America and the racial wealth gap, we talk about
Speaker 1: the gap in home ownership between white and black families.
Speaker 1: Black families have a much lower home ownership rate than
Speaker 1: white families. What was really striking to me here is
Speaker 1: that we are talking about black families that have overcome
Speaker 1: that gap. We're talking about black middle class homeowners in
Speaker 1: the suburbs. The characters we were talking to were in
Speaker 1: the suburbs of Atlanta. These are not UH, poor inner
Speaker 1: city black families. These are relatively affluent black middle class
Speaker 1: families who still have trouble literally leveraging the wealth that
Speaker 1: they have and taking advantage of this historic event UH
Speaker 1: in terms of the low interest rates we've seen in
Speaker 1: the in the last couple of years. What's also striking
Speaker 1: to me, and what I couldn't get out of my
Speaker 1: head when I was looking at this data, is that
Speaker 1: a lot of what we were looking at in terms
Speaker 1: of the practices by banks UH and Wells Fargo, took
Speaker 1: place in twenty and at a time when we were
Speaker 1: having the supposed racial reckoning over the gaps in the
Speaker 1: American economy. UH. And here it is. It's it's right there,
Speaker 1: it's stark, it's um. It's just hard to get your
Speaker 1: head past that. And you've you look at this and
Speaker 1: you think back over the last couple of years, and
Speaker 1: and it's hard to to come to any other conclusion
Speaker 1: other than you know, racial wealth and equality in America
Speaker 1: has widened in the last couple of years. And housing
Speaker 1: is a big part of that story. And refinancing is
Speaker 1: a big part of the housing story. Sean, Who's Who's
Speaker 1: Christie Furchio and what is she doing at Wells Fargo
Speaker 1: and why is why is she unique in her position? Yeah,
Speaker 1: so she's really interesting. She is brought in in the
Speaker 1: middle of u in the summer of as the head
Speaker 1: of the mortgage business there, and she's the first black woman,
Speaker 1: UH to head up that that that mortgage business. She's
Speaker 1: also the head of the Mortgage Bankers Association in America
Speaker 1: right now, UM, and she is sitting on some panels
Speaker 1: that are looking at at credit in America and how
Speaker 1: credit scores are are are divvied out. And she's interesting.
Speaker 1: I mean, she's someone who is quite frank about the
Speaker 1: problems that that Wells Fargo has had in the past
Speaker 1: and that the broader industry has in terms of servicing
Speaker 1: UM black homeowners. And she makes a point that part
Speaker 1: of this is cultural and part of this is a legacy.
Speaker 1: And she when we talked to her, sided her own
Speaker 1: mother who had a thirty year mortgage and never refinanced
Speaker 1: at once. And this makes Christie's own head spend because
Speaker 1: she's a banker and she's all about helping people refinance. Hey,
Speaker 1: UM sean to be fair Wells versus other big banks.
Speaker 1: What did we find out. Yeah, so Wells has by
Speaker 1: far the lowest approval rate or had by far the
Speaker 1: lowest approval rate in h among big banks. You look
Speaker 1: at banks like Bank of America. Uh, they were in
Speaker 1: the sixties in terms of an approval rate. JP Morgan
Speaker 1: had a higher approval rate than that, and Rocket Mortgage,
Speaker 1: which was the bigger refinance the biggest refinanced player in
Speaker 1: in in twenty twenty, had a rate up around eight plus. Uh.
Speaker 1: So I think you know the gap in terms of
Speaker 1: Wells Fargo uh is really it was the only major
Speaker 1: bank that approved less mortgages than it rejected, and that's
Speaker 1: for people who completed applications. All Right, there's a lot
Speaker 1: in this story and I highly recommend that folks check
Speaker 1: it out online on the Bloomberger. Also pick up the
Speaker 1: news stand because um again another revealing story about the
Speaker 1: inequities when it comes to home ownership, and as Joel mentioned,
Speaker 1: that has a lot to do with wealth creation when
Speaker 1: it comes to generational wealth. Our thanks to Sean Donna
Speaker 1: and senior economics writer at Bloomberg News and to Joel Webber,
Speaker 1: editor a Business Week. You're listening to Bloomberg Business Week
Speaker 1: with Carol Messer and Bloomberg Quick Takes. Tim Stenovic on
Speaker 1: Bloomberg Radio, we do want to get to our weekly
Speaker 1: crypto segment because this week present Biden signing an executive
Speaker 1: order directing government agencies to focus more on the fast
Speaker 1: growing crypto market, from researching a US digital dollar to
Speaker 1: combat and illicit finance, the White House saying on Wednesday
Speaker 1: calling on all agencies across the government to coordinates what's
Speaker 1: thus far been a kind of scattershot approach to the
Speaker 1: asset class. However, I gotta say, Tim, it falls short
Speaker 1: of providing clear direction when it comes to regulation. Kindness.
Speaker 1: Speaking of direction, we saw bitcoin surge on Wednesday after
Speaker 1: this news came out, which was actually before the executive
Speaker 1: order came out. That's an entirely different story, though, Carol. Thursday,
Speaker 1: it's selled off a little bit, and today we're actually
Speaker 1: seeing it lower by just a little bit. To Nel
Speaker 1: Dixon is CEO and executive director of Stellar Development Foundation.
Speaker 1: Uh Dnnell joins us once again from Oakland, California, to now,
Speaker 1: how are you? I'm wonderful, how are you both doing well?
Speaker 1: I should note that Stellar Development Foundation, it's a nonprofit,
Speaker 1: uses blockchain tech to help unlock the world's potential by
Speaker 1: making money more fluid and opening up markets, uh and more.
Speaker 1: Let's start with this executive order. What does the White
Speaker 1: House Executive Order mean for the crypto industry? You know,
Speaker 1: it's just such an opportunity for the crypto industry. I
Speaker 1: think that what it shows is that there's been so
Speaker 1: much progress that we've made domestically in the US with
Speaker 1: the administration as well as with policymakers and regulators to
Speaker 1: make them pay attention to this particular market, in this
Speaker 1: industry as a whole. And what I'm hopeful that we
Speaker 1: can get out of this because it would be amazing
Speaker 1: for us to have a lot more clarity around the
Speaker 1: roles of engagement for each of these agencies, so that
Speaker 1: there's a lot more specificity around what their lanes of
Speaker 1: operation are. And I think that that's going to just
Speaker 1: eliminate some of the concern that we see in the
Speaker 1: ecosystem broadly for blockchain and cryptocurrency about how to operate.
Speaker 1: You know, sometimes you have to do something to nudge
Speaker 1: and get things going. Because I'm wondering about exact get
Speaker 1: of order which can be overturned. Right, we know how
Speaker 1: this works versus some kind of congressional or regulatory action.
Speaker 1: So is it a good, good, kind of you know,
Speaker 1: administrative step, you know, coming from the U. S. Government
Speaker 1: to kind of get the ball rolling in a in
Speaker 1: a more serious way. Well, the things that I loved
Speaker 1: about the order, one of them was the fact that
Speaker 1: it demonstrated and it said very specifically that the United
Speaker 1: States wants to continue to have leadership on global financial
Speaker 1: services and specifically on digital assets. That's huge. That's a
Speaker 1: really important statement to make because that's one of the
Speaker 1: things that we've been asking over and over to maintain
Speaker 1: our leadership here. And so I think that that particular
Speaker 1: statement carries a lot of weight, and it's going to
Speaker 1: get these agencies to focus on making sure that they're
Speaker 1: looking at the activity and understanding what part of the
Speaker 1: activity they need to consider that they need to regulate around.
Speaker 1: So I do think it's a really nice first step.
Speaker 1: I think we're still going to see activity at the
Speaker 1: policymaker level with respect to particularly I think stable coins
Speaker 1: this year. I think that's the low hanging fruit and
Speaker 1: a really important part of this puzzle that we need
Speaker 1: to see sort of act all together. But I think
Speaker 1: that they having an executive order and telling these agencies, hey,
Speaker 1: this is an important space for us. We can't lose
Speaker 1: sight of it and we can't fall behind. Is really
Speaker 1: what I see is an important takeaway to Now, um,
Speaker 1: what about when it comes to if some of these
Speaker 1: companies should start to get concerned at all that the
Speaker 1: scrutiny is going to be on them. It's It's interesting
Speaker 1: because on one hand, I think a lot of them
Speaker 1: are are are going to welcome some sort of clear
Speaker 1: guidance at least from regulators. But at the same time,
Speaker 1: are any of the business models at risk? So I
Speaker 1: don't know whether to think about it from that standpoint.
Speaker 1: Here's what I'd like to think about it from and
Speaker 1: this is what I would tell any of these companies
Speaker 1: out there, and many of them we work with in
Speaker 1: the industry. Holistically, one of the things that we did
Speaker 1: wrong on the content side of the web years and
Speaker 1: years ago, and privacy sort of came out as being
Speaker 1: one of those things to think about, is we told
Speaker 1: regulators and policymakers, we don't need your attention, we don't
Speaker 1: need your help. We've got this. We know how to
Speaker 1: do this as an industry. And the truth is that
Speaker 1: you can see today. We didn't and we didn't know
Speaker 1: how to do that necessarily as well as maybe we
Speaker 1: could have, and so we've learned our lesson there, and
Speaker 1: so I think now is the opportunity for us to
Speaker 1: engage with these regulators and these policymakers and these administrative
Speaker 1: agencies to help them to understand the value and the
Speaker 1: benefit of what this this technology and all these tools
Speaker 1: that are being built are providing to the individual consumers
Speaker 1: into businesses alike, domestically and globally. So I see this
Speaker 1: as an opportunity for engagement. And sure there might be
Speaker 1: scrutiny on certain things, but it's our opportunity to explain
Speaker 1: what what the what the value is so that you
Speaker 1: can balance the value with the challenge of understanding these
Speaker 1: business models. So I ultimately see this as this is
Speaker 1: our time to sort of demonstrate what we can do
Speaker 1: for the global financial system, and I think that that's
Speaker 1: going to be a huge step in favor of blockchain
Speaker 1: and cryptocurrency generally. Do now, we you know, constantly talk
Speaker 1: about financial innovation and platforms that hopefully make things more
Speaker 1: equal in terms of access. We just did a store
Speaker 1: about Wells Fargo and mortgages for um, Black Americans and
Speaker 1: those that you know in terms of where they are
Speaker 1: in the economic strata, have you know, good incomes success
Speaker 1: some would say financially, and yet are being turned down
Speaker 1: when it comes to, you know, refinancing your mortgage. So
Speaker 1: I do wonder how realistically will something like crypto be
Speaker 1: something that moves us in a big way towards more
Speaker 1: equality financially and just kind about forty twos so left. Yeah,
Speaker 1: I really do think that this is the opportunity for
Speaker 1: crypto and blockchain to shine. I think we can shine
Speaker 1: domestically and internationally. The notion of not having to have
Speaker 1: those minimum balance requirements, the notion of not having to
Speaker 1: have some of the fees that are attached to it,
Speaker 1: and the requirement that there's just a competitive advantage for
Speaker 1: figuring out how to do this better, cheaper and faster
Speaker 1: for all consumers. I always say the financial sector is
Speaker 1: right now focused on the money, I mean on the few,
Speaker 1: and we need it to be focused on the money.
Speaker 1: And I think that's what blockchain and crypto can do.
Speaker 1: So I see not just promise but real active use
Speaker 1: cases that are doing that today. All right, well, cool,
Speaker 1: So we will obviously reach out to you as things
Speaker 1: progress and and uh fingers crossed that this uh does
Speaker 1: play out the way that you just said. Danille Dixon,
Speaker 1: she is CEO and executive director of Stellar Development Foundation,
Speaker 1: interesting organization and nonprofit. They use blockchain to unlock economic
Speaker 1: potential by making money more fluid, markets more open, and
Speaker 1: people more empowered. That's their website. I'm reading from it,
Speaker 1: but that's their mission as well too. Yeah, big coin
Speaker 1: by the way down one today. Who's around right? Or
Speaker 1: so I hear? It's certainly does all right, you're listening
Speaker 1: to Bloomberg Business Week. It's Friday, and Mrs Bloomberg, I'm
Speaker 1: road Yeah, but you let me drive? No, no, no,
Speaker 1: who's going home leaves? I want to drive. It's a
Speaker 1: good question. Drive. This is good ride to the closed
Speaker 1: on Bloomberg at Alright, TikTok, everybody, Just about ten minutes
Speaker 1: left in today's trading session. We are getting ready to
Speaker 1: wrap up the trading day and the trading week. And
Speaker 1: we talked about some selling into the closes, Charlie breaking
Speaker 1: down those numbers, and we are at our loads of
Speaker 1: the session. Let's talk about the markets. We've got the
Speaker 1: drive to the class. Yeah. John Trainer is executive vice
Speaker 1: president and chief investment officer at People's United Advisors ten
Speaker 1: billion dollars in assets under management. John, how are you.
Speaker 1: It's good to have you with us this afternoon. Yeah,
Speaker 1: thanks for having me back. Yeah, it's good. It's good
Speaker 1: to have you back with us. UM. Just going through
Speaker 1: some numbers here on the Bloomberg terminal. The Dow right
Speaker 1: now headed for its fifth weekly decline in a row,
Speaker 1: SP five hundred, down for four of the last five weeks. Uh.
Speaker 1: What are you hearing from customers right now? Are they
Speaker 1: concerned or um? Are they kind of just sitting tight?
Speaker 1: You know, it's interesting. For the longest time, we were
Speaker 1: surprised that people were not more concerned about what was
Speaker 1: going on over in Ukraine. It's you know, it's filtering, true,
Speaker 1: it's it's the beginning and the end of every client
Speaker 1: conversation we have. But you know, one of the things
Speaker 1: that we highlight to them. We were on our investment
Speaker 1: call this morning. If you look at your Bloomberg and
Speaker 1: take a look at performance from the twenty three to
Speaker 1: last night, the SMP is up. The data was up
Speaker 1: that most of the damage done to the market was
Speaker 1: because of you know, the FED and inflation and changing
Speaker 1: introtrate policies that while volatilities picked up, the market has
Speaker 1: actually handled this pretty well. So we're reinforcing that with clients.
Speaker 1: The longer it goes on, though, how does that start
Speaker 1: to come on done? I mean, John, one of the
Speaker 1: conversations we've certainly had with individuals. You heard it from
Speaker 1: the g E CEO who talked with our David Weston
Speaker 1: this week. You heard it from Christine Leguard of the
Speaker 1: European Central Bank. UM. You know what's interesting is that
Speaker 1: the longer this goes on, do we need to start
Speaker 1: then having a rethink when it comes to the second
Speaker 1: half of this year, Well, we absolutely do. I mean,
Speaker 1: you know, it's a probably a foregone conclusion that Europe
Speaker 1: is going to roll right over into another recession. UM.
Speaker 1: We were trying to figure out how much we haircut
Speaker 1: our GDP forecast for the US, and that's going to
Speaker 1: roll right into earnings. So you know, we were looking
Speaker 1: for high single digit earnings at the beginning of the year.
Speaker 1: You know we're lower than that now. So absolutely it's
Speaker 1: it's gonna ripple through the US. UM and and primarily
Speaker 1: hate earnings absolutely, How does it ripple through the US
Speaker 1: What does that look like? Is it because of energy costs? Well,
Speaker 1: you know, again think about the consumer. Um you know,
Speaker 1: I've taken a look at some numbers, and you know,
Speaker 1: for every pay that the gas price increases, you know,
Speaker 1: economists will tell you that that increases like a tax
Speaker 1: increase of a billion dollars. So you know, years, over
Speaker 1: and over the course of the year. So we've had
Speaker 1: we've already had, you know, well over a one billion
Speaker 1: dollar tax incre that's going to slow the economy. And
Speaker 1: then when you take a look at the consumer. You know,
Speaker 1: we've been breathing about how the consumer balance sheets are
Speaker 1: in great shape. But boy, when you see oil prices
Speaker 1: move up, gasoline prices move up, that's going to have
Speaker 1: an increase of It's going to increase pain and the
Speaker 1: consumer balance sheet is going to impact psychology. So you know,
Speaker 1: the consumer has been driving this recovery through goods purchases,
Speaker 1: and we were hoping for increased services expenditures. We think
Speaker 1: it will be the consumer that is going to slow
Speaker 1: things down. So we we haven't figured out how much
Speaker 1: we haircut US GDP, but you know, we we we're
Speaker 1: gonna be hopefully we'll we'll still be about three percent
Speaker 1: of this year um recession. You know, it's one thing,
Speaker 1: even if it's a mild one, if it's touch and go.
Speaker 1: Uh when we when people see that, it makes everybody
Speaker 1: a little bit nervous. Yep, yep. And And you know,
Speaker 1: I've been doing this now for a little over forty years,
Speaker 1: and my best indicator for a recession has been the
Speaker 1: yield curve. That tend to yield curve. And we're in
Speaker 1: we're in red territory right now. Absolutely, you know, it's
Speaker 1: you know, that's been my best indicator. Twelve to eight
Speaker 1: months later, you've got a recession. So as the Fed
Speaker 1: starts raising rates, you know they'll raise them on the
Speaker 1: short end. I can't imagine that the tenure is going
Speaker 1: to be moving up that dramatically. So I can tell
Speaker 1: you the headlines, uh, you know, fairly soon late spring
Speaker 1: are probably going to be see what happens if the
Speaker 1: yield curve and verts here. I know Chairman Powell has
Speaker 1: talked about it, and he you know, he's not putting
Speaker 1: a lot of faith in it. But I think market
Speaker 1: participants will put a lot of faith in that as
Speaker 1: a pretty good indicator, so you know, the fear of
Speaker 1: a recession will be growing as we moved through the year. Absolutely. Yeah,
Speaker 1: it's interesting since you kicked off the conversation and talked
Speaker 1: about what the markets have done since um Russia launched
Speaker 1: that uh invasion of Ukraine. That was on February. So
Speaker 1: I looked at the markets as of the two clothes,
Speaker 1: and the Dado was just off about half a percent,
Speaker 1: The S and P is off about point four NASDAC
Speaker 1: is down about one point four percent, and the Russell
Speaker 1: is actually up on this one point percent. The Russell
Speaker 1: has been pretty beaten up. But your point is, and
Speaker 1: we talked about this, we could get to the end
Speaker 1: of the year and the markets might be little changed,
Speaker 1: but man, the trip to get there is a rough one,
Speaker 1: right because of the volatility and the huge wings. Absolutely,
Speaker 1: and look at what's happened to the European markets. He
Speaker 1: has gotten crushed, the EFA, the emerging markets, and I
Speaker 1: don't care whether you're in growth or value in Europe,
Speaker 1: the European markets are really sold off. You know, one
Speaker 1: of the things we want to look at as it
Speaker 1: as an investor is you know, when you go through
Speaker 1: something like this, what goes down the least because that
Speaker 1: tends to lead when you come out of this. So
Speaker 1: we are, you know, slightly overweight the US. We were
Speaker 1: debating do we go to Neutroller? Do we overweight Europe?
Speaker 1: Just a few months ago. We're sticking with the U.
Speaker 1: S overweight. We think the US is the place to
Speaker 1: be just based upon what's happened since the invasion. Yeah,
Speaker 1: msci Emorgin Markets index is downe about ten percent since
Speaker 1: the war started. So if you do the comparison, and
Speaker 1: this is right right, you know, John, when we talk
Speaker 1: about things, it's got to be everything relative to one another,
Speaker 1: um and investors will be looking at where where do
Speaker 1: I feel the most confident about placing and making those
Speaker 1: bets to him? John? How long do you John? How
Speaker 1: long do you see this this playing out here? I mean,
Speaker 1: and you know, just in the last thirty seconds we
Speaker 1: have with you. Uh, is there any chance of recession
Speaker 1: in the US is on the horizon if we don't
Speaker 1: see oil prices come down? Well, there are two things
Speaker 1: you need to look at. Number One, let's pray that
Speaker 1: the hostilities end fairly soon. I mean, I'm you know,
Speaker 1: I'm no foreign policy expert. But I think that will
Speaker 1: that will hopefully take place. But the resilience of the
Speaker 1: Ukrainian people certainly look like they're not going to roll
Speaker 1: over that, you know. I don't know. I love to
Speaker 1: read the foreign policy experts, and they're talking about this
Speaker 1: becoming Vladimir Putin's Afghanistan. So there'll be two stages. Hopefully
Speaker 1: we'll we'll see an end of the hostilities, right, but
Speaker 1: this will be a headline for quite a while to come,
Speaker 1: quite a while. All Right, We've got to run here, John,
Speaker 1: have a good and safe weekend. We appreciate it. John Trainor,
Speaker 1: his executive vice president and chief investment officer at People's
Speaker 1: United Advisors, but ten billion in assets under management on
Speaker 1: the phone from Connecticut. Thanks for listening to Bloomberg Business Week.
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