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

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Speaker 1: my co host Matt Miller.

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Speaker 2: Every business day we bring you interviews from CEOs, market pros,

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Speaker 2: and Bloomberg experts, along with essential market moving news.

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Speaker 1: Find the Bloomberg Markets Podcast on Apple Podcasts or wherever

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Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.

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Speaker 1: I'm going to get to these markets here. The store's been.

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Speaker 1: It feels to this simple investor over here that the

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Speaker 1: interest rates out there in the marketplace have really been

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Speaker 1: impacting stocks. And that's my take. Vince Signorella, he joins us.

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Speaker 1: He's a pro global macro strategist for Bloomberg News. New

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Speaker 1: knee or just a repaired knee replacement replace harsh, replacing

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Speaker 1: the He's walking just fine. He found his way into

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Speaker 1: the Bloomberg and Director Broker studio. We left from crumbs

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Speaker 1: out for him. Vince, what do you make of these

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Speaker 1: markets here?

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Speaker 3: Uh?

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Speaker 4: You know, the equity market's looking really sick. I mean

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Speaker 4: if you look at longer term charts.

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Speaker 2: Sick as in bed like the kids say, look ill,

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Speaker 2: not like beastie boys ill, but like unwell unwell.

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Speaker 4: Yes, there's a level to watch it around forty one

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Speaker 4: to fifty. It's a TD sequential level. If that breaks,

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Speaker 4: it actually opens up a major move down of four thousand.

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Speaker 4: We're looking at a potential major move lower inequity markets

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Speaker 4: if these levels don't hold, and we're gonna need to

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Speaker 4: see some help from probably Amazon and the like going

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Speaker 4: forward to lift this higher, because it's not going to

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Speaker 4: come from interest rights.

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Speaker 2: I look, Abigail, do little yesterday it showed me. Oh

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Speaker 2: y no, no, not rs high.

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Speaker 1: That is back. That is awesome. Look at the rs

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Speaker 1: I for SPX. We are right there. You buy him

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Speaker 1: right here, unless, as you say, it breaks through that

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Speaker 1: little green lines colors and everything. Get me a break.

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Speaker 2: I'll tell you what, though it did. It did move

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Speaker 2: below the two hundred the SMP move below the two

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Speaker 2: hundred day moving average, and the last time we've seen

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Speaker 2: it that blow you know, in that in those terms,

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Speaker 2: was March, and.

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Speaker 4: It's well below the two hundred day, which is around

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Speaker 4: forty two to thirty five, so we're well below that.

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Speaker 4: So forty one seventy interestingly enough, is the average closing

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Speaker 4: price for the last year, So between this forty one

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Speaker 4: fifty forty one seventy level. I'd love to see it

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Speaker 4: hold and maybe catch a bid, but so far it's

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Speaker 4: looking a little bit of a dead cat bounce here.

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Speaker 2: If I see rates up, as Paul said, you know,

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Speaker 2: rates have been a huge driver. I feel like if

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Speaker 2: I see rates up, if I see dollar strength, if

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Speaker 2: I see oil up, that's all bad for equities, right yeah.

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Speaker 4: Yeah, And you know what rates aren't really there's not

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Speaker 4: much of an infinite impetus for rates to go substantially lower.

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Speaker 4: You know, we need to see really super low inflation

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Speaker 4: numbers to turn rates at the moment. You know, we're

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Speaker 4: saying a little bit of a reprieve in the treasury market.

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Speaker 4: You know, Acman's trade helped a little bit.

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Speaker 2: It got some Americans want to buy treasures, but who else?

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Speaker 4: Pretty much there.

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Speaker 2: Is Japanese foreign buyers. They don't want to hold this paper.

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Speaker 4: No, no, what else.

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Speaker 1: Are you gonna buy?

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Speaker 4: Well, yeah, that's actually a good point though, But the

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Speaker 4: upside for it, you know, you're just buying if you're yield,

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Speaker 4: you're not looking at for a capital.

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Speaker 1: Well, it's the first time in almost a generation you

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Speaker 1: could get yield.

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Speaker 4: Oh no, I mean a lot of people loving and

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Speaker 4: you're looking at see these at five and a half percent.

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Speaker 4: I mean, that's these are great rates, especially for fixed

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Speaker 4: income or or seniors on a on a fixed income.

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Speaker 4: A lot of folks out there doing that. I mean

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Speaker 4: I've done a little bit myself. I'm kind of a

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Speaker 4: senior actually these days. But you know, I mean I

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Speaker 4: could see rates staying here. You know, I'm not really

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Speaker 4: going down a lot, not really going up a lot.

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Speaker 4: But that's not going to help the equity market. It's

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Speaker 4: going to need it from somewhere else.

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Speaker 1: So when a guy like Bill Ackman says I closed

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Speaker 1: my short in the treasury markets, a does that mean

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Speaker 1: anything to pros out there?

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Speaker 4: Is not just a name, And if you think about it,

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Speaker 4: the size of his fund it was like a one

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Speaker 4: percent game.

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Speaker 2: So he was long too, right, wasn't he talking about.

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Speaker 4: A thirty year Yeah? Yeah, yeah, but he had a

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Speaker 4: one percent gain on the assets under management.

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Speaker 2: I mean he wasn't the only bill. You know Bill

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Speaker 2: Gross also what is he long or short? Going long treasuries?

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Speaker 1: Now?

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Speaker 2: Well, so's Warren Buffet closing short at least?

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Speaker 5: Yeah?

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Speaker 4: Okay, yeah, you know they put a position on a

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Speaker 4: Monday and tell you on Wednesday what they did. So

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Speaker 4: you'll goin in and money.

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Speaker 2: Do those names. The other day, our producer Eric Molo,

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Speaker 2: he had a mask on and I said, hey, dude,

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Speaker 2: where's Tonto. He had no idea what I was talking about,

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Speaker 2: and I was I said, you know what, like the

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Speaker 2: Lone Ranger? And he was like, no, sorry, don't get it.

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Speaker 2: He did not know who the Lone Ranger was. And

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Speaker 2: do these kids today do they know Bill Gross? Do

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Speaker 2: they know Warren Buffett? Like in a real way?

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Speaker 4: I mean, you know the program the the Algo programmers

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Speaker 4: do because they take those names and they program it

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Speaker 4: into their into their trading venues. But you know, actually,

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Speaker 4: the only iconic name from from that era that is

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Speaker 4: actually incredibly well known Lassie. Everyone knows who Lassie is.

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Speaker 4: This is not in the markets, yeah, well, in the

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Speaker 4: world in general, yeah, markets I mean, but yeah, I

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Speaker 4: mean in the all the years I trade.

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Speaker 2: Do you think Eric Molo knows who Lassie was?

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Speaker 4: I think so we'll have to test him on the

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Speaker 4: way out, check him out.

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Speaker 1: All right, what's the most interesting trade for you out there?

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Speaker 1: Just in the markets? I know, you look at currency, stocks, bonds,

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Speaker 1: all kinds of stuff out there. What are you looking

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Speaker 1: at it to me?

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Speaker 4: You know, going back to interest rates, I still like

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Speaker 4: the short term. I still like two year treasuries. I mean,

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Speaker 4: that's the one that's really going to catch a bid

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Speaker 4: when the FED decides to turn or the FED says

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Speaker 4: I stopped because you could, you would more likely than

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Speaker 4: not see the yield curve steepend if inflation expectations remain,

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Speaker 4: that's not going to affect the short end as much.

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Speaker 4: So if you see steepening, it's going to be a

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Speaker 4: sell off in the back end. I think the short

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Speaker 4: end is the place to be because inevitably that's got

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Speaker 4: to come your way the FED.

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Speaker 1: You know, Matt's been telling me not to crowd into

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Speaker 1: that two year because I gonna have an interest rate

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Speaker 1: risk reinvestment reinvestments. Now the thirty year five point zero seven,

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Speaker 1: you were right negative by.

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Speaker 2: I'm not saying, first of all, I don't give investment advice.

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Speaker 2: I loaded up on them, and if I do, you

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Speaker 2: should run the other direction. But no, I'm not saying

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Speaker 2: you want duration right now. I'm just I just look

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Speaker 2: at the interest as sorry, the reinvestment risk as something

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Speaker 2: that is better dealt with by you know, you have

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Speaker 2: like very sophisticated advisors. I just look at an ETF.

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Speaker 2: I would rather T bill and chill.

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Speaker 1: You know, T build chill. I get Yankee tickets, and

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Speaker 1: you do T bill and chill. All right, So what

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Speaker 1: are we doing here, Vince? I mean, is the next

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Speaker 1: move for this Federal Reserve to just stay or to

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Speaker 1: still talk tough? We hear Christine Lagard to ECB today,

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Speaker 1: still talking tough.

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Speaker 4: You know, I take that with a grain of salt.

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Speaker 4: They're saying what they have to say. I mean, the

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Speaker 4: guard's been You know, if you go back ten years

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Speaker 4: when inflation in the Eurozone was below one percent, well

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Speaker 4: you heard from the ECB central bankers was HRCP inflation

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Speaker 4: is moving towards target. It didn't move for five years,

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Speaker 4: but they said that at every meeting. So now at

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Speaker 4: every meeting they're going to say we can still raise,

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Speaker 4: but they have no real intention of raising. Neither does

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Speaker 4: the Fed. I think, I mean, the Federal talk a

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Speaker 4: tough book potentially raising one more. I have absolutely no

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Speaker 4: idea why there's really no reason to raise at this point.

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Speaker 2: Isn't moving down quickly enough? Well, what's counter fiscal spending?

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Speaker 2: I mean, it needs to be two like last week.

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Speaker 3: You know.

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Speaker 4: But I would argue this, the idea of getting inflation

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Speaker 4: to two percent goal is ridiculous. The two percent goal

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Speaker 4: was at a time when there was a balance sheet

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Speaker 4: of what a trillion now we have Now we have

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Speaker 4: a federal deficit of thirty three trillion. The balance sheet

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Speaker 4: at the Fed is off the charts. You're not going

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Speaker 4: to see two percent inflation. You're going to see two

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Speaker 4: percent inflation if you have a disaster.

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Speaker 2: You don't think they're going to get there.

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Speaker 4: No, I think that if they're lucky, they get to

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Speaker 4: three three and a half and they should be happy

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Speaker 4: if they do.

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Speaker 1: So I'm in that camp. I don't know what's so

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Speaker 1: special about two percent. They made it up?

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Speaker 2: Yeah, they would all be made up. But the point

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Speaker 2: is inflation is just thievery right. You're just robbing from savers.

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Speaker 2: So it's their duty to get it down to near

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Speaker 2: as damn it to zero.

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Speaker 1: I would say, well, I mean.

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Speaker 4: You're robbing savers if you don't have real interest rates higher.

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Speaker 4: But we now have real interest rates starting to come

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Speaker 4: to the positive. If you get inflation down to three

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Speaker 4: three and a half percent, you're not going to see

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Speaker 4: a ten ure yield of three percent, so you're still

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Speaker 4: going to have a positive, positive carry and people are

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Speaker 4: going to be earning. I mean the other side of

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Speaker 4: the corner is you get inflation into three three and

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Speaker 4: a half percent. Where does that put the SMP? Probably

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Speaker 4: around forty five forty eight hundred, So you're gonna have

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Speaker 4: a positive return somewhere. It's just a matter of where

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Speaker 4: you go.

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Speaker 1: All right, what do we do? I mean, all right,

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Speaker 1: I think my fed's gonna stay put next time.

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Speaker 4: I think so too. And I think I look at

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Speaker 4: tech and I'm always the one where I joke with people.

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Speaker 4: So you're not going to get your next iPhone from

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Speaker 4: Campbell's soup. So you know, whatever they're selling whenever they

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Speaker 4: sell tech disaggressively, to me, it looks like an opportunity.

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Speaker 1: To buy the big tech.

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Speaker 4: I would buy the big tag. But you know, just

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Speaker 4: get my feet wet here and there my toes.

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Speaker 1: Buying the iPhone fifteen my daughter. I just looked at

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Speaker 1: it yesterday. It's got a new plug. You got to

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Speaker 1: replace all your plugs. I thought, my plug is strategically

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Speaker 1: located everywhere. None is more than an arm length away. Dude,

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Speaker 1: I feel now I got to replace everything. I feel

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Speaker 1: you that you explain the European sect.

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Speaker 4: Because they made Apple bye by their.

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Speaker 2: Yeah, a regulation move, but I'm happy they finally got

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Speaker 2: to it.

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Speaker 1: But you're right, we have to.

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Speaker 2: Buy all new cables and it's all right.

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Speaker 1: Vincey Garell. Thank you so much. We appreciate it.

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Speaker 5: You're listening to the teenth Ken's Are Live program Bloomberg

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Speaker 5: on demand wherever you get your podcast.

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Speaker 2: I want to get to the end of the strike.

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Speaker 2: I mean I want to get to it. I'm sure

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Speaker 2: the union members want to get to it. I know

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Speaker 2: the car makers want to get to it. Let's talk

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Speaker 2: on the telephone on Zoom actually with Keith Noughton.

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Speaker 1: He covered on Zoom.

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Speaker 2: Look at him going on Ford in the Big three

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Speaker 2: for US at a motor city, and it looks like

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Speaker 2: at least Ford has got a tentative agreement with the UAW.

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Speaker 2: Keith walk us through it.

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Speaker 6: Yeah, so it's an agreement that includes a twenty five

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Speaker 6: percent raise and the restoration of cost of living allowances.

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Speaker 6: Those two combined mean that the actual pay increase for

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Speaker 6: the top way journers is actually thirty three percent and

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Speaker 6: means they'll be making over forty dollars an hour. There's

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Speaker 6: improvements especially.

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Speaker 3: For new workers.

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Speaker 6: They're getting even larger raises. Temp workers are being converted

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Speaker 6: to full time, they're doing increasing the multiplier on pensions

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Speaker 6: and four one ks. So there's a whole bunch of

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Speaker 6: of good economic enhancements that are in the agreement.

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Speaker 3: Now you have you used the murder.

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Speaker 2: Pensions Keith, I imagine you're talking about people who already had pensions,

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Speaker 2: who what have been working there since pre two thousand

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Speaker 2: and seven. Because I know that Sean Fain, you know

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Speaker 2: he wanted a pay increase. He also wanted pensions for

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Speaker 2: all the union workers to find benefit pensions.

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Speaker 1: And he wanted.

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Speaker 2: A four day work week or a thirty two hour

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Speaker 2: work week.

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Speaker 1: So did he get two out of three?

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Speaker 6: Yeah, I just if you want to talk about this stuff,

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Speaker 6: he didn't. He didn't get Matt, He did not get

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Speaker 6: at the thirty two hour work week of the four

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Speaker 6: day work week. He did not get a return to

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Speaker 6: traditional pensions. What he got instead is a larger contribution

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Speaker 6: from the company to your four h one k or

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Speaker 6: to your pension. All those before, as you said two

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Speaker 6: thousand and seven, do have traditional pension, so it's the

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Speaker 6: it's the workers hired in the last fifteen years that don't.

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Speaker 6: So they instead are going to have a greater contribution,

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Speaker 6: greater multiplier.

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Speaker 1: All right, So I'm guessing this puts the pressure really

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Speaker 1: on GM and Stalantis. What's the how does this playoff

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Speaker 1: from here?

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Speaker 5: Yeah?

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Speaker 6: I mean, you know, so the analysts are already crunching

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Speaker 6: the numbers, and the Emmanuel Rosner over at Dolja Bank

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Speaker 6: is saying that this would cost Ford six point two

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Speaker 6: billion over the life of the contract, but it actually

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Speaker 6: would cost GM and Stillantis more GM and be over

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Speaker 6: seven billion, Stalantis higher in the six billions because they

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Speaker 6: have more temporary workers, so there's more temps to give

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Speaker 6: raises to, there's more tempts to convert to full time.

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Speaker 6: So you know, by going first, Ford was able to

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Speaker 6: tailor the agreement to their specific situation. They only have

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Speaker 6: two to three percent of the workforce that is temps,

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Speaker 6: whereas GM and Stlantis are gms close to closer to

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Speaker 6: ten and Stilantis's origin.

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Speaker 2: Interesting, so does this mean, I mean Ford workers are

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Speaker 2: going to go back to the Kentucky plant. They're going

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Speaker 2: to start building the bronco again. In Michion and Dearborn.

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Speaker 2: They're gonna, they're gonna, they're gonna put the pressure, in

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Speaker 2: that sense, further pressure on GM and Stilantis.

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Speaker 1: Do you expect agreements from the other two by the

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Speaker 1: end of the day.

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Speaker 6: I don't, actually, I think there's still work to be done.

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Speaker 6: And that's an important point that you just made. That

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Speaker 6: because back in twenty nineteen when the UAW struck GM,

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Speaker 6: when they reached a tentative agreement, the workers did not

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Speaker 6: go back to the plants. They didn't open the plants

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Speaker 6: again until after that agreement had been ratified by the

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Speaker 6: full membership, which took weeks. But in this case, the

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Speaker 6: OW is sending the workers forward back to the plants immediately.

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Speaker 6: The plants are cranking up today because they want to

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Speaker 6: do put pressure on GM and Stillantis. You know, the

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Speaker 6: losses for each of those companies just from this strike

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Speaker 6: are approaching a billion dollars. So and just this week

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Speaker 6: the two of them, GM and Stillants had their most

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Speaker 6: profitable plants go out on strike. So the costs are

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Speaker 6: going to escalate more rapidly.

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Speaker 2: Now, Oh, so catch us up, Keith, catch us up

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Speaker 2: on who's so the Bronco is made of the truck

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Speaker 2: assembly plant right in Wayne, Michigan.

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Speaker 6: Actually, yeah, so what's coming back online? Is that what

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Speaker 6: you're asking you at?

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Speaker 2: And what's still off? Because I know on Tuesday they

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Speaker 2: struck the GM plant that makes like the Escalade and

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Speaker 2: the Tahoe, right at least one of them, right.

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Speaker 6: Yep, yeah at GM. The big plant struck this week

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Speaker 6: as the Arlington, Texas plant that makes all the big SUVs,

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Speaker 6: Suburban Tahoe, Yukon and Escalade, and that at Stalantis. This

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Speaker 6: week it was the RAM pickup truck plant in Sterling Heights, Michigan,

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Speaker 6: and that is their most profitable plant for Ford. The

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Speaker 6: ones coming back are the Bronco and the Ranger plant.

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Speaker 6: That was the one that went down immediately. The one

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Speaker 6: that was more recently taken down on October eleventh is

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Speaker 6: Kentucky Truck that makes the biggest F series trucks and

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Speaker 6: the biggest SUVs, the Lincoln Navigator and the Ford Expedition

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Speaker 6: super Duties.

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Speaker 1: You know, twenty five percent seems like a lot to me,

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Speaker 1: even though it's over a number of years. What are

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Speaker 1: the auto companies getting here.

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Speaker 6: Well, they're getting labor peace, which you know costs something,

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Speaker 6: but they're getting richer contracts and they already had the

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Speaker 6: highest labor costs, you know, in the industry. So what

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Speaker 6: GM said, Mary Barrow, the CEO of GM said during

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Speaker 6: their earnings call this week, is they're going to try

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Speaker 6: and find offset. They're going to try and do cost

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Speaker 6: cuts to you know, make up for this. But you

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Speaker 6: know it's, uh, these are expensive deals and and you

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Speaker 6: know they're going to have to find a way. So

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Speaker 6: what's their costs competitive?

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Speaker 3: That makes me.

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Speaker 1: Worry about the vehicles?

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Speaker 2: Ouch, you're going to start So what putting in like

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Speaker 2: lower quality parts?

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Speaker 1: Is that? That's what I worry about.

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Speaker 2: That's what everyone who's buying these cars and trucks. Keith

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Speaker 2: I spend a lot of time on the forums right

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Speaker 2: of many different brands and they're all like, oh, stay

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Speaker 2: away from that.

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Speaker 1: Company because they're going to strike.

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Speaker 2: And even if they didn't strike, maybe they will and

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Speaker 2: workers are going to be unhappy and not do it

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Speaker 2: as screw it up. Yeah, but if they cut cost,

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Speaker 2: does that mean we're going to have lower quality components.

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Speaker 6: Uh, not necessarily. I mean in companies as large as these,

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Speaker 6: there's all kinds of waste and redundancy that you can

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Speaker 6: work on. I mean they cut by the billions when

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Speaker 6: they're cutting costs, and obviously people is one of the

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Speaker 6: ways they cut costs. Let's not forget Jim Farley said

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Speaker 6: just a year ago that Ford had twenty five percent

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Speaker 6: more engineers than its competitors. He's been cutting salaried staff

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Speaker 6: by the thousands, so you know there's still probably people

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Speaker 6: that he will cut as they continue to move into

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Speaker 6: their ev future from their internal combustion engine present.

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Speaker 1: So I know, Keith for the unions, you know, one

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Speaker 1: of the ass or demands was something nebulous to me

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Speaker 1: at least, which is, hey, can you guarantee you we're

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Speaker 1: going to still have the same number of positions in

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Speaker 1: an evy world that we have in an ice world.

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Speaker 1: Did they get any language to that effect?

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Speaker 6: There is some job security in this and Ford had

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Speaker 6: told them that they would not lay off anyone during

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Speaker 6: the term of this contract, which is four years and

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Speaker 6: eight months. In fact, would add to workers, but it's

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Speaker 6: not an idle concern by the union. It takes forty

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Speaker 6: percent less labor to assemble the power rain of an

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Speaker 6: electric vehicle. Then it does an internal combustion engine vehicle,

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Speaker 6: which has thousands of parts versus about twenty in an

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Speaker 6: electric vehicle. So you know that is coming and they

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Speaker 6: got to figure out how that's all going to work out.

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Speaker 2: What do you think this deal looks like to non

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Speaker 2: union shops, Keith? Yeah, I think of you know, the

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Speaker 2: the BMW plant in Spartanburg or the Tesla plants. My

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Speaker 2: X ray was made, your X three was made in

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Speaker 2: Spartan Work. Yes, okay, in fact it was very good,

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Speaker 2: very cool plant and cool truck.

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Speaker 1: I like it a lot.

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Speaker 2: But what do you think about those shops? Are they

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Speaker 2: going to look at this deal and say, you know,

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Speaker 2: we should have a union too, We should be in

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Speaker 2: the UAW.

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Speaker 6: That is what the UAW is counting on. So it

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Speaker 6: depends on when you say what does it mean for

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Speaker 6: those plants? It depends on who you're talking about. If

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Speaker 6: you're talking about the companies themselves, the CEOs, I think

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Speaker 6: what it means to them is the price of poker

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Speaker 6: just went up, and the way they've kept unions out

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Speaker 6: of their plants is they've offered you know, equivalent wages

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Speaker 6: and benefits. So if the CEOs want to keep the

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Speaker 6: unions out of their plans, they're going to have to

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Speaker 6: give everybody a raise of those non union plants. If

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Speaker 6: they don't, the UAW has a big opening to go

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Speaker 6: in and organize them.

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Speaker 1: All right, Very good, Keith Anton, thanks so much. We

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Speaker 1: appreciate that. Keithnton. He is a reporter for Bloomberg News

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Speaker 1: in Detroit. He is our go to voice there, and

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Speaker 1: again we get a deal from Ford and presumably Matt

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Speaker 1: That means Stalantis and GM a little pressure on them

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Speaker 1: to get something done because Ford is back out cranking

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Speaker 1: out the trucks.

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Speaker 5: Here, you're listening to the tape. Catch a our live program,

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Speaker 5: Bloomberg eleven thirty dans.

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Speaker 7: Welcome to our Bloomberg television and radio audiences. I'm standing

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Speaker 7: by now with Morgan Stanley, CEO and Chairman James Gorman

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Speaker 7: and incoming CEO Ted pick big moment for morgan Stown.

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Speaker 7: Only fourteen years at the home. How does it feel

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Speaker 7: to be passing.

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Speaker 3: On the baton? Feels great, you know, for several reasons. One,

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Speaker 3: it's time organizations grow because you have change. I mean,

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Speaker 3: you're not going to grow by doing the same thing

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Speaker 3: again and again. And I feel like we set this

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Speaker 3: up several years ago with the board. We've had a

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Speaker 3: very very intentional process and we ended up with a

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Speaker 3: phenomenal outcome, which is Ted. And we've got other unbelievably

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Speaker 3: good executives who are taking leadership roles as co presidents

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Speaker 3: Andy Sapsin and Dan Sancret. So it's sort of what

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Speaker 3: you hope for. I mean, you try and drive strategy,

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Speaker 3: you try and put together a team, You try and

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Speaker 3: deal with the inevitable knocks that you get from the

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Speaker 3: market and the disappointments that come in times in any

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Speaker 3: complex business. But at the end of the day, you're

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Speaker 3: also trying to hand it off for the next next generation.

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Speaker 3: So it feels great and it feels right.

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Speaker 7: You've been rumored to be a CEO contender for oh

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Speaker 7: so long, Ted, How does it finally feel to step

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Speaker 7: into the.

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Speaker 8: Next year Shinali. Morgan Stanley was the first place that

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Speaker 8: I worked out of college, and thirty three years later,

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Speaker 8: I'm sitting next to mister James Gorman.

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Speaker 3: It's the thrill of a lifetime. I'm so excited.

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Speaker 7: Now you've really inherited a gift here, a massive transformation

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Speaker 7: over fourteen years, one of the best valuations here in

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Speaker 7: global banking. But there are investors who are worried this

440
00:20:21,640 --> 00:20:22,600
Speaker 7: is as good as it gets.

441
00:20:22,600 --> 00:20:23,679
Speaker 1: What do you tell them?

442
00:20:24,119 --> 00:20:24,960
Speaker 3: There's more to come.

443
00:20:25,480 --> 00:20:28,000
Speaker 8: There's more to come. We look at the five year chart,

444
00:20:28,440 --> 00:20:32,240
Speaker 8: the ten year chart, the fifteen year chart. The wealth

445
00:20:32,280 --> 00:20:36,320
Speaker 8: and ASCID management businesses have these remarkable, durable earnings. The

446
00:20:36,359 --> 00:20:39,359
Speaker 8: Global Investment Bank has lots of miles to go. So

447
00:20:39,400 --> 00:20:42,119
Speaker 8: we're thrilled about the business strategy we have in place

448
00:20:42,600 --> 00:20:44,480
Speaker 8: and it's going to continue to deliver a long term

449
00:20:44,560 --> 00:20:45,240
Speaker 8: value for Sheerald.

450
00:20:45,520 --> 00:20:46,960
Speaker 7: Now for both of you, we've been in such a

451
00:20:46,960 --> 00:20:50,520
Speaker 7: prolongedble market that has hit such volatile times as of late.

452
00:20:50,840 --> 00:20:53,119
Speaker 7: Do you expect the next couple of years from Morgan

453
00:20:53,160 --> 00:20:55,399
Speaker 7: Stanley to be a little more choppy?

454
00:20:55,440 --> 00:20:58,720
Speaker 3: You know, I don't know. It's I thought this year

455
00:20:58,720 --> 00:21:01,880
Speaker 3: would be tough than it was a lot of what's

456
00:21:01,920 --> 00:21:04,879
Speaker 3: going in the market conspires against our particular business mix.

457
00:21:05,000 --> 00:21:08,120
Speaker 3: Some of the more commercial retail banks mortgage banks very

458
00:21:08,119 --> 00:21:11,000
Speaker 3: different business model. But our term will come. I think,

459
00:21:11,160 --> 00:21:14,720
Speaker 3: you know, I personally think the US has dodged a recession.

460
00:21:15,960 --> 00:21:18,880
Speaker 3: I think the FED is very close to being final

461
00:21:19,040 --> 00:21:23,960
Speaker 3: within probably twenty five bases points. We're starting to see activity.

462
00:21:23,960 --> 00:21:25,960
Speaker 3: Look at the Chevron deal we just announced the other day.

463
00:21:25,960 --> 00:21:29,360
Speaker 3: I'm in phenomenal, so we're seeing activity in different sectors.

464
00:21:29,160 --> 00:21:32,360
Speaker 3: It's coming alive now. So no, I think the next

465
00:21:32,359 --> 00:21:34,200
Speaker 3: couple of years will be great. But what I care

466
00:21:34,240 --> 00:21:37,080
Speaker 3: about is over the really long run. When we set

467
00:21:37,119 --> 00:21:39,280
Speaker 3: about on this journey, we weren't focused on a quarter,

468
00:21:39,880 --> 00:21:41,560
Speaker 3: and if the stock takes a dip in a quarter,

469
00:21:41,680 --> 00:21:44,400
Speaker 3: I say, that's kind of good news because we're buying

470
00:21:44,440 --> 00:21:47,119
Speaker 3: back stock and every share you buy back, you're retiring

471
00:21:47,160 --> 00:21:49,800
Speaker 3: a dividend. So shareholders who hang tough at getting a

472
00:21:49,840 --> 00:21:53,160
Speaker 3: four and a half percent yield and we're buying back

473
00:21:53,200 --> 00:21:56,520
Speaker 3: stock and the stock's cheap, so it's it's kind of

474
00:21:56,520 --> 00:21:59,639
Speaker 3: a good situation being But medium term, no, I think

475
00:21:59,680 --> 00:22:01,240
Speaker 3: we're I think the film is going to do great.

476
00:22:01,520 --> 00:22:03,240
Speaker 7: Ted, what are the biggest challenges for you as you

477
00:22:03,320 --> 00:22:04,400
Speaker 7: navigate this environment.

478
00:22:04,880 --> 00:22:08,680
Speaker 8: There's just so much opportunity. We're definitely a new paradigm.

479
00:22:09,160 --> 00:22:11,080
Speaker 8: Interest rates are going to be higher for longer, and

480
00:22:11,119 --> 00:22:14,880
Speaker 8: the world's gotten smaller, which means the clients need advice.

481
00:22:15,320 --> 00:22:17,240
Speaker 8: They need in the wealth and ask and management space,

482
00:22:17,280 --> 00:22:20,560
Speaker 8: they need in the institutional space our corporate clients, and

483
00:22:20,600 --> 00:22:23,359
Speaker 8: we're going to have lots of activity around those clients.

484
00:22:23,400 --> 00:22:26,120
Speaker 8: So I just want to make sure that we are

485
00:22:26,320 --> 00:22:29,840
Speaker 8: completely aligned in the business s rategy we have in place.

486
00:22:29,920 --> 00:22:33,679
Speaker 8: It's something that James is painstakingly put together for fourteen years.

487
00:22:33,960 --> 00:22:36,840
Speaker 8: The market knows we want to do, so I'm incredibly

488
00:22:36,880 --> 00:22:38,440
Speaker 8: optimistic over the next couple of years.

489
00:22:38,480 --> 00:22:38,640
Speaker 3: Now.

490
00:22:38,640 --> 00:22:40,840
Speaker 7: A lot of lessons have been learned in this building

491
00:22:40,960 --> 00:22:44,679
Speaker 7: over the last several decades. Really what to do, what

492
00:22:44,760 --> 00:22:48,080
Speaker 7: not to do? What is the Morgan Stanley playbook of

493
00:22:48,119 --> 00:22:50,359
Speaker 7: what not to do in twenty twenty four as you

494
00:22:50,440 --> 00:22:52,879
Speaker 7: navigate this new environment, Well, I.

495
00:22:52,840 --> 00:22:54,679
Speaker 8: Think it's to continue to do what we've been doing,

496
00:22:54,800 --> 00:22:58,480
Speaker 8: which is to treat each other with respect. This process

497
00:22:58,520 --> 00:23:02,280
Speaker 8: that James and the board ran was intentional, it was respectful.

498
00:23:02,640 --> 00:23:04,560
Speaker 8: I couldn't be more thrilled to be working with Andy

499
00:23:04,640 --> 00:23:08,360
Speaker 8: Sappersin and Dan Simkowitz, two of my closest friends. They

500
00:23:08,400 --> 00:23:12,040
Speaker 8: are extraordinary leaders. They're going to drive these businesses. The

501
00:23:12,080 --> 00:23:14,760
Speaker 8: fact that we've worked so collegially, this is the kind

502
00:23:14,800 --> 00:23:17,560
Speaker 8: of Morgan Stanley that we've known and loved, the blue

503
00:23:17,640 --> 00:23:21,240
Speaker 8: Morgan Stanley of respect and focusing on clients. And during

504
00:23:21,280 --> 00:23:24,560
Speaker 8: this painstaking process, there's been no loss of focus when

505
00:23:24,600 --> 00:23:27,280
Speaker 8: focused on our shareholders, on our clients. And the fact

506
00:23:27,320 --> 00:23:29,680
Speaker 8: that today we had a celebration with our partners and

507
00:23:29,720 --> 00:23:32,320
Speaker 8: it was really quite a wonderful experience shows that we

508
00:23:32,359 --> 00:23:35,240
Speaker 8: are on the ball and sticking with the future.

509
00:23:35,320 --> 00:23:37,160
Speaker 7: I'm glad you mentioned Andy and Dan because a lot

510
00:23:37,200 --> 00:23:41,080
Speaker 7: of questions here around. You know, they were two CEO candidates.

511
00:23:41,200 --> 00:23:43,639
Speaker 7: Now they're going to be the co president's. How do

512
00:23:43,720 --> 00:23:46,240
Speaker 7: you keep them around? Are you holding them to any

513
00:23:46,240 --> 00:23:47,040
Speaker 7: lock up periods?

514
00:23:47,240 --> 00:23:50,200
Speaker 3: No, They've got phenomenal job opportunities. Andy's co president. He's

515
00:23:50,240 --> 00:23:53,200
Speaker 3: now running not just wealth management which included d Trade,

516
00:23:53,200 --> 00:23:56,840
Speaker 3: but asset management, which includes Seaton Vance. So he's overseen

517
00:23:56,880 --> 00:23:59,640
Speaker 3: the biggest wealth and asset manager in the world at

518
00:23:59,800 --> 00:24:02,400
Speaker 3: what I believe is the most prestigious and best investment

519
00:24:02,400 --> 00:24:05,280
Speaker 3: bank in the world. Dan came out of capital markets

520
00:24:05,320 --> 00:24:07,400
Speaker 3: and is now going back there after a great stint

521
00:24:07,440 --> 00:24:10,040
Speaker 3: running asset management, and he's going to be running all

522
00:24:10,040 --> 00:24:16,000
Speaker 3: of global trading banking, capital markets his old home turf research,

523
00:24:16,040 --> 00:24:17,760
Speaker 3: and most importantly, the two of them are going to

524
00:24:17,800 --> 00:24:20,480
Speaker 3: work with Ted and helping to manage a firm. So now,

525
00:24:20,600 --> 00:24:24,639
Speaker 3: these are phenomenal opportunities. They're high quality people. These are

526
00:24:24,680 --> 00:24:26,560
Speaker 3: some of the best jobs on the planet, and you know,

527
00:24:26,600 --> 00:24:27,919
Speaker 3: we delighted to have them.

528
00:24:28,040 --> 00:24:30,760
Speaker 7: Now, I'm glad you brought up the institutional securities business

529
00:24:30,760 --> 00:24:33,480
Speaker 7: that is your old home as you move to the

530
00:24:33,520 --> 00:24:36,000
Speaker 7: new spot. But you know what's interesting. You've long been

531
00:24:36,080 --> 00:24:39,879
Speaker 7: the number one in equities trading. Lately Goldman has to

532
00:24:39,960 --> 00:24:42,880
Speaker 7: pass Morgan Stanly in a couple of quarters, while JP

533
00:24:43,040 --> 00:24:45,960
Speaker 7: Morgan and Goldman have been fearing better in various forms

534
00:24:45,960 --> 00:24:47,639
Speaker 7: of M and A and underwriting. Do you have a

535
00:24:47,640 --> 00:24:48,879
Speaker 7: plan to be number one again?

536
00:24:49,160 --> 00:24:51,159
Speaker 8: Listen, we have some great competitors, as you know, in

537
00:24:51,160 --> 00:24:54,720
Speaker 8: the global investment bank in equities and fixed income and

538
00:24:54,760 --> 00:24:58,280
Speaker 8: then across investment banking. We're focused on being number one.

539
00:24:58,400 --> 00:25:00,240
Speaker 8: We want to have the right people in place We've

540
00:25:00,280 --> 00:25:03,119
Speaker 8: been investing for the next cycle. That next cycle is

541
00:25:03,160 --> 00:25:06,080
Speaker 8: going to be investment banking led, and it means that inequities.

542
00:25:06,080 --> 00:25:08,040
Speaker 8: You want to be one or two every quarter as

543
00:25:08,080 --> 00:25:10,080
Speaker 8: we have in for the last decade. We have fixed

544
00:25:10,080 --> 00:25:13,200
Speaker 8: income business, we were structured, it's now top five business

545
00:25:13,200 --> 00:25:15,479
Speaker 8: and investment banking is going to lead the next cycle.

546
00:25:15,720 --> 00:25:17,520
Speaker 8: There's going to be a lot of m and a consolidation.

547
00:25:17,880 --> 00:25:21,280
Speaker 8: It's going to be across industry groups. The world's gotten smaller,

548
00:25:21,520 --> 00:25:23,960
Speaker 8: there's a new cost of capital. We want to be

549
00:25:23,960 --> 00:25:26,320
Speaker 8: a leader, a global leader in all those spaces.

550
00:25:26,680 --> 00:25:29,600
Speaker 7: Now, James has hinted before to the possibility of more

551
00:25:29,680 --> 00:25:32,600
Speaker 7: murders and acquisitions for Morgan Stanley moving forward. You've already

552
00:25:32,600 --> 00:25:35,679
Speaker 7: done some very transformative ones. Do you feel said that

553
00:25:35,760 --> 00:25:38,200
Speaker 7: it's a matter of time in the CEO seat before

554
00:25:38,240 --> 00:25:41,280
Speaker 7: you can do a significant deal or do you feel

555
00:25:41,320 --> 00:25:42,320
Speaker 7: like you can jump right in.

556
00:25:43,080 --> 00:25:46,280
Speaker 8: Well, I think we now have done three major acquisitions

557
00:25:46,320 --> 00:25:48,919
Speaker 8: over the last fifteen years, all of which were in

558
00:25:49,040 --> 00:25:52,800
Speaker 8: James's vision. Smith Barney shortly after the financial crisis, e

559
00:25:53,000 --> 00:25:55,400
Speaker 8: Trade at the dawn of the pandemic, and they eat

560
00:25:55,400 --> 00:25:59,280
Speaker 8: in advance. Those are three major integrations we like what

561
00:25:59,359 --> 00:26:03,560
Speaker 8: we have, the business strategies in places. Let's execute on

562
00:26:03,600 --> 00:26:06,359
Speaker 8: what we have, keep the strategy in place. We always

563
00:26:06,359 --> 00:26:09,680
Speaker 8: talk about acquisition candidates, but that's that's often to the future.

564
00:26:10,000 --> 00:26:10,320
Speaker 3: Now.

565
00:26:10,560 --> 00:26:12,320
Speaker 7: The other thing, James has said that there are a

566
00:26:12,320 --> 00:26:14,320
Speaker 7: few things you'd rather get out of the way before

567
00:26:14,359 --> 00:26:18,760
Speaker 7: stepping down, including the US investigation into Morgan Stanley's role

568
00:26:18,840 --> 00:26:22,000
Speaker 7: into the block trading market. Is this something that can

569
00:26:22,040 --> 00:26:23,600
Speaker 7: be resolved before you step down.

570
00:26:23,840 --> 00:26:25,840
Speaker 3: Well, I'm going to stay, as you know, Shnali as

571
00:26:25,920 --> 00:26:29,000
Speaker 3: executive chairman for a period of time. We'll see how long.

572
00:26:29,640 --> 00:26:34,440
Speaker 3: You know. Frankly, I shouldn't stay too long because it's

573
00:26:34,560 --> 00:26:37,159
Speaker 3: Ted's job to run the firm now, so I'm going

574
00:26:37,200 --> 00:26:39,440
Speaker 3: to be there just to help him in whatever way,

575
00:26:39,520 --> 00:26:42,880
Speaker 3: and obviously meet with regulators around the globe. I've got

576
00:26:42,920 --> 00:26:46,200
Speaker 3: to know over the last decade plus and key clients,

577
00:26:46,440 --> 00:26:49,000
Speaker 3: and also in that period there are a few things

578
00:26:49,080 --> 00:26:50,880
Speaker 3: I want to still clean up. I want to hand

579
00:26:50,920 --> 00:26:54,480
Speaker 3: I said, as clean a plate as possible. These are

580
00:26:54,560 --> 00:26:59,200
Speaker 3: monster jobs and enormously complex. You travel a lot, there's

581
00:26:59,200 --> 00:27:01,320
Speaker 3: a lot that comes out, so I think it's nice

582
00:27:01,320 --> 00:27:04,800
Speaker 3: to start with a clean plate. We wouldn't have announced

583
00:27:05,560 --> 00:27:07,919
Speaker 3: I was stepping down if we didn't think whatever we

584
00:27:07,960 --> 00:27:10,280
Speaker 3: still have left isn't manageable. I mean, I wanted to

585
00:27:10,280 --> 00:27:13,879
Speaker 3: see seeka through. We came out of that actually with

586
00:27:13,920 --> 00:27:16,560
Speaker 3: a better capital ration than we went into it. Twelve

587
00:27:16,560 --> 00:27:19,440
Speaker 3: point nine CT one requirement, we're at fifteen to five.

588
00:27:20,000 --> 00:27:22,639
Speaker 3: I want to see the initial BUZZLE proposal. We've seen that.

589
00:27:22,720 --> 00:27:24,399
Speaker 3: I don't think it will end up where it is,

590
00:27:24,440 --> 00:27:27,480
Speaker 3: and we're working very closely with regulators. I want to

591
00:27:27,480 --> 00:27:30,600
Speaker 3: see the sort of summer months, obviously difficult quarter. We

592
00:27:30,680 --> 00:27:32,720
Speaker 3: knew that was coming, so I wanted to just see

593
00:27:32,720 --> 00:27:35,480
Speaker 3: the firm through that and then through this transitional leadership.

594
00:27:35,520 --> 00:27:38,119
Speaker 3: So no, we're very comfortable with where we are in

595
00:27:38,160 --> 00:27:40,200
Speaker 3: the process, and I'll do everything I can to help

596
00:27:40,280 --> 00:27:42,240
Speaker 3: help Ted and help Dan and Andy.

597
00:27:42,600 --> 00:27:45,800
Speaker 7: Now, one large issue that has been plaguing Wall Street

598
00:27:46,000 --> 00:27:48,840
Speaker 7: is the lack of gender and ethnic diversity at the

599
00:27:48,840 --> 00:27:51,960
Speaker 7: top ranks, and when the CEO search had come to

600
00:27:52,040 --> 00:27:54,560
Speaker 7: its final steps, there were no women or people of

601
00:27:54,600 --> 00:27:58,080
Speaker 7: color that were considered for the CEO ranks. What is

602
00:27:58,119 --> 00:28:01,159
Speaker 7: your plan to increase representation in the top ranks of

603
00:28:01,200 --> 00:28:01,880
Speaker 7: Morgan Stanley?

604
00:28:02,040 --> 00:28:06,120
Speaker 8: The next generation has lots of representation of all types.

605
00:28:06,359 --> 00:28:08,720
Speaker 3: It's a priority. It'll continue to be a priority.

606
00:28:09,480 --> 00:28:11,880
Speaker 7: Do you have specific goals over the next few years

607
00:28:11,880 --> 00:28:12,879
Speaker 7: to make sure that's.

608
00:28:12,800 --> 00:28:15,639
Speaker 8: You know, Well, we in Oceanize it's a good question.

609
00:28:15,880 --> 00:28:19,760
Speaker 8: We run a meritocracy and diversity comes in all types,

610
00:28:20,040 --> 00:28:23,800
Speaker 8: and we have fantastic women and men from all backgrounds

611
00:28:24,080 --> 00:28:27,080
Speaker 8: in senior positions on operating committees throughout the firm. And

612
00:28:27,119 --> 00:28:29,719
Speaker 8: I couldn't be more excited about the look of the

613
00:28:29,760 --> 00:28:31,240
Speaker 8: firm in the next five ten years.

614
00:28:31,440 --> 00:28:31,600
Speaker 3: Now.

615
00:28:31,600 --> 00:28:33,760
Speaker 7: I know you've said also that you know largely the

616
00:28:33,800 --> 00:28:37,440
Speaker 7: strategies in place, and it will be continued on into

617
00:28:37,480 --> 00:28:40,000
Speaker 7: the new leadership. There is one thing that is very

618
00:28:40,080 --> 00:28:42,960
Speaker 7: much in the mind of CEOs lately, and that's technological

619
00:28:43,000 --> 00:28:45,959
Speaker 7: disruption happening at a rabid clip. How are you thinking

620
00:28:46,000 --> 00:28:48,640
Speaker 7: about how this could change Morgan Stanley and its positioning

621
00:28:48,680 --> 00:28:49,160
Speaker 7: in the future.

622
00:28:49,440 --> 00:28:51,640
Speaker 3: Well, so, you know, Walda Riston said it best the

623
00:28:52,840 --> 00:28:54,680
Speaker 3: he said the most. I don't think he's totally right

624
00:28:54,720 --> 00:28:58,200
Speaker 3: on this, but he observed the most important technological evolution

625
00:28:58,360 --> 00:29:02,520
Speaker 3: for the financial services industry the ATM machine, and each

626
00:29:02,600 --> 00:29:06,280
Speaker 3: generation if you look at it, has embraced technology into

627
00:29:06,320 --> 00:29:08,240
Speaker 3: the businesses to make them better. What Ted did with

628
00:29:08,280 --> 00:29:12,640
Speaker 3: the electronic Trading and Equities so called MSET phenomenal and

629
00:29:12,680 --> 00:29:16,680
Speaker 3: that basically fed all of our trading apparatus that have

630
00:29:16,760 --> 00:29:19,959
Speaker 3: supported that business being again number one or two depending

631
00:29:19,960 --> 00:29:22,880
Speaker 3: on the quarter. But right up there what we've done

632
00:29:22,920 --> 00:29:25,360
Speaker 3: with each trade. Each trade's a technology company with a brand.

633
00:29:25,680 --> 00:29:27,440
Speaker 3: What we did with share works and what is now

634
00:29:27,480 --> 00:29:32,080
Speaker 3: Morgan Santic work the electronic stock plan business and Soling

635
00:29:32,120 --> 00:29:35,240
Speaker 3: we bought Soluing is a company of programmers in Calgary, Canada,

636
00:29:35,280 --> 00:29:37,719
Speaker 3: and that became the birth of the stock plan business.

637
00:29:38,120 --> 00:29:41,920
Speaker 3: So there's always technological revolution. What any Sabastine is now

638
00:29:41,960 --> 00:29:44,760
Speaker 3: doing in the AA space sort of building off the

639
00:29:44,760 --> 00:29:48,920
Speaker 3: early machine learning we did to create virtual financial advisors.

640
00:29:48,960 --> 00:29:51,320
Speaker 3: It's endless. We just had a presentation the board on it.

641
00:29:51,400 --> 00:29:54,680
Speaker 3: So it's in everything we do. We have nearly twenty

642
00:29:54,840 --> 00:29:59,280
Speaker 3: thousand employees, direct or consultants working for us in technology.

643
00:29:59,320 --> 00:30:02,560
Speaker 7: Now, before I let you guys go, what is the

644
00:30:02,800 --> 00:30:05,640
Speaker 7: one biggest piece of advice that you have to Ted

645
00:30:05,760 --> 00:30:07,960
Speaker 7: as you pass over the rank.

646
00:30:08,720 --> 00:30:12,000
Speaker 3: Enjoy it. It's an incredible privilege to be able to

647
00:30:12,040 --> 00:30:15,800
Speaker 3: make the call, to make decisions. Sometimes you'll be wrong,

648
00:30:16,120 --> 00:30:17,760
Speaker 3: the only way to be right is not to make

649
00:30:17,800 --> 00:30:21,040
Speaker 3: any So I took the approach of I was looking

650
00:30:21,040 --> 00:30:23,360
Speaker 3: for I don't know what the analogy is something at

651
00:30:23,400 --> 00:30:26,280
Speaker 3: bad So I'm not really a baseball player, but I

652
00:30:26,360 --> 00:30:29,000
Speaker 3: wanted to make enough decisions where we got a lot

653
00:30:29,000 --> 00:30:31,200
Speaker 3: of things right and along the way a few things

654
00:30:31,280 --> 00:30:34,080
Speaker 3: mightn't go away, but that's okay. Just enjoy the journey,

655
00:30:34,080 --> 00:30:36,080
Speaker 3: embrace the good bits and the bad bits. As you know,

656
00:30:36,160 --> 00:30:40,240
Speaker 3: Kipling said, an if and those imposts of success and failure,

657
00:30:40,720 --> 00:30:43,479
Speaker 3: and you know, keep yourself focused on the long term.

658
00:30:44,160 --> 00:30:46,000
Speaker 3: You're going to have great quarters and you're gonna have

659
00:30:46,000 --> 00:30:48,080
Speaker 3: disappointing quarters. You're going to think the stock should be

660
00:30:48,120 --> 00:30:50,160
Speaker 3: up when it's down and down when it's up. None

661
00:30:50,200 --> 00:30:52,160
Speaker 3: of that matters. What matters is the long term health

662
00:30:52,160 --> 00:30:55,480
Speaker 3: of the franchise, the values, and your own stability in

663
00:30:55,520 --> 00:30:57,360
Speaker 3: that role. And part of that is building a team.

664
00:30:57,520 --> 00:30:59,840
Speaker 3: He's off to a phenomenal start in twenty four hours.

665
00:31:00,000 --> 00:31:02,160
Speaker 3: We got a standing ovation from the board. Last night,

666
00:31:02,760 --> 00:31:04,880
Speaker 3: we had a wonderful dinner with directors. We had all

667
00:31:04,920 --> 00:31:08,960
Speaker 3: partners live in this building today and broadcast around to

668
00:31:09,000 --> 00:31:12,560
Speaker 3: our eighty three thousand employees. So you know, enjoy the moment.

669
00:31:12,640 --> 00:31:14,600
Speaker 3: It's an incredible privilege.

670
00:31:14,240 --> 00:31:17,040
Speaker 7: Ted James, it was a pleasure to spend time with

671
00:31:17,080 --> 00:31:19,480
Speaker 7: you on such a landmark day. From Morgan Stanley and

672
00:31:19,520 --> 00:31:20,880
Speaker 7: hope to see you at the turn of the year

673
00:31:20,880 --> 00:31:21,760
Speaker 7: when you take your new job.

674
00:31:21,800 --> 00:31:23,400
Speaker 3: Thank you so much. Thanks to note.

675
00:31:24,920 --> 00:31:28,320
Speaker 5: You're listening to the team Ken's are Live program Bloomberg

676
00:31:28,360 --> 00:31:31,720
Speaker 5: Markets weekdays at ten am Eastern on Bloomberg dot Com,

677
00:31:31,840 --> 00:31:35,000
Speaker 5: the iHeartRadio app and the Bloomberg Business app, or listening

678
00:31:35,040 --> 00:31:37,160
Speaker 5: on demand wherever you get your podcasts.

679
00:31:39,080 --> 00:31:41,920
Speaker 1: Stuner heads to Washington, DC. Why because we kind of

680
00:31:41,960 --> 00:31:45,280
Speaker 1: have to Jen Flinton, she is head of US Government

681
00:31:45,280 --> 00:31:49,200
Speaker 1: Affairs at Invesco joins US. So Jess we I'm sorry, Jen,

682
00:31:49,200 --> 00:31:49,800
Speaker 1: I'm sorry, Jen.

683
00:31:50,000 --> 00:31:50,200
Speaker 2: Jen.

684
00:31:50,280 --> 00:31:52,160
Speaker 1: We actually have a Speaker of the House now. I

685
00:31:52,200 --> 00:31:55,200
Speaker 1: guess that's a good thing. What are you taking away

686
00:31:55,240 --> 00:31:57,280
Speaker 1: from I know you're based down in Washington. What are

687
00:31:57,320 --> 00:31:58,840
Speaker 1: you taking away from the last couple of days of

688
00:31:58,840 --> 00:31:59,720
Speaker 1: what we've seen in the House.

689
00:32:00,720 --> 00:32:05,040
Speaker 9: Yeah, well, it's been particularly difficult for House Republicans. It's

690
00:32:05,080 --> 00:32:09,040
Speaker 9: been a rather embarrassing twenty two days, and so I

691
00:32:09,080 --> 00:32:14,640
Speaker 9: think a series of frustrations and blood letting in the

692
00:32:15,040 --> 00:32:21,520
Speaker 9: family meetings finally resulted in complete exhaustion, and Mike Johnson,

693
00:32:21,760 --> 00:32:25,000
Speaker 9: who is a fairly well liked member of Congress, although

694
00:32:25,400 --> 00:32:32,280
Speaker 9: relatively unknown outside of Washington, there was unanimous, unanimous can support.

695
00:32:32,720 --> 00:32:35,480
Speaker 9: So I think he came in at the right time,

696
00:32:36,160 --> 00:32:38,680
Speaker 9: and I think a lot is going to be said

697
00:32:38,840 --> 00:32:42,480
Speaker 9: for his ability to move forward. Hopefully he'll be able

698
00:32:42,520 --> 00:32:45,960
Speaker 9: to take that unanimous support and move it into the legislature.

699
00:32:46,000 --> 00:32:50,240
Speaker 2: So does this mean that Donald Trump is now back

700
00:32:50,320 --> 00:32:53,600
Speaker 2: to holding the most sway of the Republican Party, Because

701
00:32:53,880 --> 00:32:58,479
Speaker 2: what we do know Mike Johnson for is leading the

702
00:32:58,520 --> 00:33:02,560
Speaker 2: way on that amicus brief to overturn the election results.

703
00:33:02,600 --> 00:33:05,560
Speaker 2: Mike Johnson is an election denier. He doesn't believe that

704
00:33:05,840 --> 00:33:08,280
Speaker 2: American democracy worked in twenty twenty.

705
00:33:08,840 --> 00:33:10,400
Speaker 1: He doesn't believe that President.

706
00:33:10,000 --> 00:33:13,280
Speaker 2: Biden fairly won the election, and all of the people

707
00:33:13,360 --> 00:33:17,160
Speaker 2: in his party supported a person like that for Speaker

708
00:33:17,200 --> 00:33:19,600
Speaker 2: of the House. Does that mean, well, either none of

709
00:33:19,600 --> 00:33:22,840
Speaker 2: them believe in the US democracy or they're all sort

710
00:33:22,880 --> 00:33:25,840
Speaker 2: of heeding the Trumpian call. Well, first, I'll.

711
00:33:25,720 --> 00:33:28,040
Speaker 9: Say Donald Trump is the de facto leader of the

712
00:33:28,040 --> 00:33:30,640
Speaker 9: Republican Party. There is no doubt about that. He is

713
00:33:30,720 --> 00:33:34,840
Speaker 9: the former president. He's running for re election, right, and

714
00:33:34,880 --> 00:33:39,000
Speaker 9: he is the leaning candidate in the primary. So you know,

715
00:33:39,040 --> 00:33:41,720
Speaker 9: there's little doubt that Donald Trump is the leader of

716
00:33:41,760 --> 00:33:46,800
Speaker 9: the Republican Party. That being said, he did have some

717
00:33:46,840 --> 00:33:51,120
Speaker 9: sort of force within the last twenty two days putting

718
00:33:51,120 --> 00:33:54,480
Speaker 9: in his support first for Jordan, who failed quite frankly,

719
00:33:55,280 --> 00:33:59,000
Speaker 9: then opposition to Tom Emmer, who had already had about

720
00:33:59,040 --> 00:34:02,560
Speaker 9: twenty six votes against him already. So whether that Sankum

721
00:34:02,640 --> 00:34:04,640
Speaker 9: or whether that sort of sealed the deal, I think

722
00:34:04,760 --> 00:34:08,759
Speaker 9: is sort of an open question. But moving forward, I

723
00:34:09,280 --> 00:34:13,000
Speaker 9: into twenty twenty four, into an election year, I have

724
00:34:13,120 --> 00:34:16,720
Speaker 9: no doubt that this Republican Conference will be united behind

725
00:34:16,880 --> 00:34:21,680
Speaker 9: whoever is the Republican primary candidate, and right now Donald

726
00:34:21,680 --> 00:34:24,160
Speaker 9: Trump is taking a heavy lead there.

727
00:34:24,760 --> 00:34:26,640
Speaker 1: All right, So where does the Republican Party go?

728
00:34:26,880 --> 00:34:27,040
Speaker 3: Now?

729
00:34:27,080 --> 00:34:32,200
Speaker 1: Where does the House go? Now? From a legislative perspective, Well, two.

730
00:34:32,000 --> 00:34:36,080
Speaker 9: Things, right, So first, they have to get appropriations bills

731
00:34:36,239 --> 00:34:41,360
Speaker 9: across the House floor, and they need their appropriations bills

732
00:34:41,400 --> 00:34:44,160
Speaker 9: because they are marking to f y twenty two levels.

733
00:34:44,360 --> 00:34:47,240
Speaker 9: The Senate is marking to f y twenty three levels.

734
00:34:47,480 --> 00:34:51,319
Speaker 9: That is a big disagreement, right, So over the next

735
00:34:51,360 --> 00:34:54,960
Speaker 9: several weeks, you're going to see the House Republicans moving

736
00:34:55,280 --> 00:35:01,200
Speaker 9: their House Appropriations bills across the table. That will be

737
00:35:01,400 --> 00:35:03,480
Speaker 9: quite a feat on some of these bills which are

738
00:35:03,560 --> 00:35:08,640
Speaker 9: rather controversial to keep that Republican majority united because they

739
00:35:08,640 --> 00:35:10,959
Speaker 9: only have a four vote margin, they can only lose

740
00:35:11,000 --> 00:35:13,640
Speaker 9: four or five votes depending on the day, depending on

741
00:35:13,680 --> 00:35:17,439
Speaker 9: how many members are in town, and so that will

742
00:35:17,440 --> 00:35:19,920
Speaker 9: put them in the negotiating position that they'll need to

743
00:35:19,960 --> 00:35:22,600
Speaker 9: have in order to negotiate with the Senate on government

744
00:35:22,640 --> 00:35:25,480
Speaker 9: funding going forward. And then of course there is the

745
00:35:25,520 --> 00:35:28,000
Speaker 9: Defense supplemental that the White House sent to the Senate

746
00:35:28,080 --> 00:35:31,839
Speaker 9: last week. It's currently being debated, discussed through hearings, through

747
00:35:31,880 --> 00:35:35,000
Speaker 9: regular process in the Senate. I expect the same to

748
00:35:35,080 --> 00:35:37,560
Speaker 9: happen in the House, but that's going to take a

749
00:35:37,560 --> 00:35:42,640
Speaker 9: little bit of time. And that's funding Israel, Ukraine, Indo Pacific,

750
00:35:42,880 --> 00:35:44,480
Speaker 9: the border, and there are going to be a lot

751
00:35:44,480 --> 00:35:47,960
Speaker 9: of disagreements, a lot of controversies around the policy that

752
00:35:48,040 --> 00:35:49,000
Speaker 9: surrounds that.

753
00:35:49,080 --> 00:35:55,960
Speaker 1: Money in terms of cutting spending. Is there any hope that.

754
00:35:56,800 --> 00:35:59,279
Speaker 2: These Republicans, Republicans are going to be able to rein

755
00:35:59,360 --> 00:36:02,760
Speaker 2: it in after we've seen you know, basically deficits. Since

756
00:36:02,800 --> 00:36:05,680
Speaker 2: Bill Clinton, say what you will about the flandering of

757
00:36:06,080 --> 00:36:09,600
Speaker 2: William Jefferson, Clinton, at least he balanced the budget, right,

758
00:36:10,760 --> 00:36:13,600
Speaker 2: Is there any hope that something like that happens ever

759
00:36:13,640 --> 00:36:16,080
Speaker 2: again in our lifetimes? Jen, that's right.

760
00:36:16,080 --> 00:36:20,200
Speaker 9: And Bill Clinton came together with House Republicans with Nuke

761
00:36:20,239 --> 00:36:24,720
Speaker 9: Gingrich and was able to do that really in a

762
00:36:24,760 --> 00:36:32,760
Speaker 9: bipartisan way. I don't necessarily see that sort of work

763
00:36:32,800 --> 00:36:37,840
Speaker 9: being done between the White House and this Republican conference

764
00:36:37,960 --> 00:36:42,280
Speaker 9: in the House. I do think, though, we will see

765
00:36:43,280 --> 00:36:46,839
Speaker 9: it's going to naturally happen because of the debt ceiling deal.

766
00:36:46,960 --> 00:36:49,680
Speaker 9: The parameter set forth. Either there was a one percent

767
00:36:50,280 --> 00:36:54,879
Speaker 9: cut across the board starting January first, or they are

768
00:36:54,920 --> 00:36:58,160
Speaker 9: able to come to some sort of agreement on appropriations

769
00:36:58,360 --> 00:37:00,960
Speaker 9: that is going to lower the life levels of spending.

770
00:37:01,000 --> 00:37:03,719
Speaker 9: Because you're right, we're facing a thirty three trillion dollar

771
00:37:04,200 --> 00:37:08,520
Speaker 9: national debt, over one billion dollars a day in interest payments.

772
00:37:09,160 --> 00:37:12,040
Speaker 9: The numbers came in on our deficit this year, it's

773
00:37:12,080 --> 00:37:16,239
Speaker 9: about two trillion dollars. That's more than we are two

774
00:37:16,280 --> 00:37:19,799
Speaker 9: trillion more than we're bringing in, right, We're spending that's

775
00:37:19,840 --> 00:37:20,640
Speaker 9: a real problem.

776
00:37:20,960 --> 00:37:26,400
Speaker 2: Much more than reticipated overs Yes, exactly, wow into a

777
00:37:26,680 --> 00:37:29,440
Speaker 2: five percent gdp Q three exactly. It's not like we're

778
00:37:29,440 --> 00:37:31,960
Speaker 2: trying to spend ourselves out of a recession here. I mean,

779
00:37:31,960 --> 00:37:33,719
Speaker 2: this economy is on Faija in.

780
00:37:33,719 --> 00:37:36,680
Speaker 1: Feego, so jen, is there any reason to believe that

781
00:37:36,960 --> 00:37:40,080
Speaker 1: this new speaker will have any more success than the

782
00:37:40,120 --> 00:37:43,439
Speaker 1: prior speaker in terms of dealing with the extreme right

783
00:37:43,480 --> 00:37:45,600
Speaker 1: in the party, whether it's those you know, six seven

784
00:37:45,640 --> 00:37:47,720
Speaker 1: people whoever there are. He's just dealing with himself.

785
00:37:48,239 --> 00:37:48,960
Speaker 2: Yeah, Yeah, that's a.

786
00:37:48,960 --> 00:37:52,560
Speaker 9: Sixty four thousand dollars question, right. I mean, this member

787
00:37:52,600 --> 00:37:54,799
Speaker 9: has only ever had to speak for himself and for

788
00:37:54,920 --> 00:38:00,000
Speaker 9: his constituencies in Louisiana. He has held a leadership position

789
00:38:00,160 --> 00:38:03,200
Speaker 9: in the sense he was vice chair prior to the speakership.

790
00:38:03,440 --> 00:38:06,960
Speaker 9: So he's been at the leadership table, He's heard the strategy,

791
00:38:07,120 --> 00:38:10,879
Speaker 9: he's been part of that discussion. So he's coming in

792
00:38:11,000 --> 00:38:15,319
Speaker 9: with some context, some awareness, and he certainly had to

793
00:38:15,440 --> 00:38:18,480
Speaker 9: understand the factions and what he needed to do in

794
00:38:18,560 --> 00:38:21,960
Speaker 9: order to bring together the members of this conference in

795
00:38:22,040 --> 00:38:25,040
Speaker 9: order to get to the speakership. I think going forward,

796
00:38:25,120 --> 00:38:29,279
Speaker 9: he has suggested in his run for speakership earlier this

797
00:38:30,000 --> 00:38:33,399
Speaker 9: week with the conference, he has suggested that he wants

798
00:38:33,440 --> 00:38:38,600
Speaker 9: to pass a CR into January or April April fifteenth,

799
00:38:38,600 --> 00:38:42,880
Speaker 9: which is another magic deadline as regards to budget, in

800
00:38:42,960 --> 00:38:46,120
Speaker 9: order to get that leverage for Republicans in the House

801
00:38:46,239 --> 00:38:49,319
Speaker 9: to really negotiate with the Senate. This is going to

802
00:38:49,400 --> 00:38:52,799
Speaker 9: be his first test. This will be key to show

803
00:38:52,840 --> 00:38:55,040
Speaker 9: whether or not he can bring this conference together.

804
00:38:55,880 --> 00:38:57,560
Speaker 1: All right, Jen, thank you so much for joining us.

805
00:38:57,600 --> 00:39:01,120
Speaker 1: Really appreciate getting your insight. Jenny for Flinton, head of

806
00:39:01,400 --> 00:39:05,200
Speaker 1: US Government Affairs for Invesco. Before joining Invesco, she spent

807
00:39:05,280 --> 00:39:08,640
Speaker 1: a lot of time in Congress as working for actually

808
00:39:09,120 --> 00:39:13,960
Speaker 1: a Congressman Patrick McHenry in his office, so lots of

809
00:39:14,000 --> 00:39:14,759
Speaker 1: experience there.

810
00:39:15,040 --> 00:39:18,160
Speaker 5: You're listening to the tape catch are live program Bloomberg

811
00:39:18,200 --> 00:39:21,799
Speaker 5: Markets weekdays at ten am Eastern on Bloomberg Radio, the

812
00:39:21,840 --> 00:39:25,080
Speaker 5: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

813
00:39:25,120 --> 00:39:27,920
Speaker 5: You can also listen live on Amazon Alexa from our

814
00:39:27,960 --> 00:39:32,360
Speaker 5: flagship New York station. Just say Alexa play Bloomberg eleven thirty.

815
00:39:33,719 --> 00:39:35,360
Speaker 1: All right, here's some economics for you. We had the

816
00:39:35,400 --> 00:39:38,560
Speaker 1: GDP print today. Matt Right, four point nine percent thinks great,

817
00:39:39,160 --> 00:39:41,560
Speaker 1: But then you go look ahead and you see a

818
00:39:41,560 --> 00:39:45,200
Speaker 1: company like United Parcel Service. These folks, they see the

819
00:39:45,239 --> 00:39:48,359
Speaker 1: economy every single day on the ground, they put up

820
00:39:48,680 --> 00:39:52,520
Speaker 1: disappointing numbers. Cut the forecast again. To me, that's the

821
00:39:52,600 --> 00:39:53,960
Speaker 1: number to before. I mean, you don't even have to

822
00:39:53,960 --> 00:39:54,440
Speaker 1: look ahead.

823
00:39:54,520 --> 00:39:54,680
Speaker 5: Right.

824
00:39:54,800 --> 00:39:58,120
Speaker 2: They did cut their outlook for the second time in

825
00:39:58,200 --> 00:40:01,600
Speaker 2: less than three months, but even backward looking, it was horrible.

826
00:40:01,760 --> 00:40:05,560
Speaker 2: Annual EPs came in at a dollar fifty seven, down

827
00:40:05,680 --> 00:40:07,920
Speaker 2: forty seven percent from a year ago.

828
00:40:07,960 --> 00:40:09,560
Speaker 1: Well, they got to pay their pilots more now, right,

829
00:40:09,560 --> 00:40:11,279
Speaker 1: didn't they have that new contract? I don't think let's

830
00:40:11,320 --> 00:40:12,880
Speaker 1: bring it. So many of those about this, like Lee Clasical,

831
00:40:13,000 --> 00:40:16,239
Speaker 1: he covers all the transportation stuff. We blamed him for

832
00:40:16,320 --> 00:40:18,960
Speaker 1: the supply chain thing back a couple of years ago.

833
00:40:18,960 --> 00:40:21,719
Speaker 1: Now he got to fix that. He's with Bloomberg Intelligence,

834
00:40:21,840 --> 00:40:24,960
Speaker 1: joining us live here in our Bloomberg Interactive Broker's studio

835
00:40:25,480 --> 00:40:28,480
Speaker 1: a lead. What did you really hear from UPS and

836
00:40:28,520 --> 00:40:29,840
Speaker 1: their earnings and kind of their outlook?

837
00:40:30,160 --> 00:40:31,719
Speaker 10: Well, I mean, at the end of the day, they

838
00:40:32,120 --> 00:40:35,160
Speaker 10: had a tough slog with their labor negotiation. They lost

839
00:40:35,200 --> 00:40:39,120
Speaker 10: a lot of business to FedEx and another carriers. They're

840
00:40:39,120 --> 00:40:42,319
Speaker 10: in the process of winning that business back. You know,

841
00:40:42,320 --> 00:40:46,839
Speaker 10: they've won probably around six hundred thousand packages per day

842
00:40:47,600 --> 00:40:50,279
Speaker 10: back of what they lost and it's going to take

843
00:40:50,320 --> 00:40:52,520
Speaker 10: some time for them to get it all back. The

844
00:40:52,560 --> 00:40:54,640
Speaker 10: good news is that some of the sequential changes that

845
00:40:54,680 --> 00:40:58,719
Speaker 10: they saw from August to October, which August was the

846
00:40:58,760 --> 00:41:01,080
Speaker 10: hardest hit from that labor even in terms of volumes

847
00:41:01,120 --> 00:41:05,240
Speaker 10: going away, you know, they're seeing seasonal trends well above

848
00:41:05,320 --> 00:41:09,000
Speaker 10: what they normal normally see. They said that that volume

849
00:41:09,080 --> 00:41:11,680
Speaker 10: during that time period sequentially was up round two point

850
00:41:11,680 --> 00:41:15,400
Speaker 10: seven million packages a day. In last year that was

851
00:41:15,440 --> 00:41:18,239
Speaker 10: around one point five million packages a day. So it's

852
00:41:18,239 --> 00:41:20,960
Speaker 10: definitely they're they're definitely turning in the right direction. But

853
00:41:21,080 --> 00:41:24,240
Speaker 10: you know, the streets got to readjust their models. Fourth

854
00:41:24,280 --> 00:41:27,560
Speaker 10: quarter expectations are definitely going to have to come in.

855
00:41:28,200 --> 00:41:32,479
Speaker 10: You know, they provide full year guidance, which, as you mentioned, they.

856
00:41:32,400 --> 00:41:33,279
Speaker 1: Had to lower it again.

857
00:41:34,360 --> 00:41:37,160
Speaker 10: But when you look at the imply what that means

858
00:41:37,160 --> 00:41:40,240
Speaker 10: for the fourth quarter earnings expectations and the EPs bases

859
00:41:40,280 --> 00:41:42,840
Speaker 10: are going to have to come down anywhere between twenty five.

860
00:41:42,640 --> 00:41:43,520
Speaker 1: And thirty cents.

861
00:41:43,760 --> 00:41:47,160
Speaker 2: Well we care about I mean you care about UPS

862
00:41:47,200 --> 00:41:50,520
Speaker 2: for the sake of UPS and their competition. We care

863
00:41:50,560 --> 00:41:52,560
Speaker 2: about it mostly, I would say, for their view on

864
00:41:52,600 --> 00:41:56,839
Speaker 2: the economy, right, because if things are going well, we're

865
00:41:56,840 --> 00:41:59,439
Speaker 2: going to be shipping packages back and forth. If they're

866
00:41:59,560 --> 00:42:02,759
Speaker 2: losing out to competitors, that's one thing. But if they

867
00:42:02,760 --> 00:42:06,160
Speaker 2: have a dour outlook because they expect the economy to slow,

868
00:42:06,480 --> 00:42:07,040
Speaker 2: that's another.

869
00:42:07,080 --> 00:42:08,400
Speaker 1: Which is it? Yeah?

870
00:42:08,480 --> 00:42:11,279
Speaker 10: I think you know, UPS is obviously about weather for

871
00:42:11,320 --> 00:42:15,120
Speaker 10: the global economy. They have businesses everywhere around the world.

872
00:42:15,160 --> 00:42:17,960
Speaker 10: They ship everything you can imagine, and probably things you

873
00:42:18,000 --> 00:42:18,879
Speaker 10: can imagine.

874
00:42:19,239 --> 00:42:20,719
Speaker 2: But I think I would love to hear the like

875
00:42:20,800 --> 00:42:22,960
Speaker 2: top ten craziest things UPS shipped?

876
00:42:23,280 --> 00:42:26,040
Speaker 1: Yeah, why don't we do a top ten list? Ever, Paul, Yeah,

877
00:42:27,000 --> 00:42:28,360
Speaker 1: hasn't been done before. Yeah.

878
00:42:28,400 --> 00:42:31,080
Speaker 2: Well, I mean, anyhow, I.

879
00:42:31,040 --> 00:42:33,000
Speaker 10: Think the weakness that you're seeing in the fourth quarter,

880
00:42:33,360 --> 00:42:36,160
Speaker 10: about a third of it is probably macro driven and

881
00:42:36,200 --> 00:42:38,120
Speaker 10: two thirds of it is UPS specific.

882
00:42:38,239 --> 00:42:41,400
Speaker 2: Excellent, That's exactly what I was wondering. So two thirds

883
00:42:41,400 --> 00:42:44,680
Speaker 2: of it is company specific or industry specific, and a

884
00:42:44,719 --> 00:42:46,320
Speaker 2: third of it is the economy.

885
00:42:46,520 --> 00:42:46,719
Speaker 8: Yeah.

886
00:42:46,800 --> 00:42:49,360
Speaker 10: Yeah, because I mean they're really dealing with the loss

887
00:42:49,360 --> 00:42:51,719
Speaker 10: share that they had. I mean, you have these huge networks.

888
00:42:51,760 --> 00:42:54,480
Speaker 10: There's a huge there's a dally averaging effect, right, So

889
00:42:54,560 --> 00:42:57,839
Speaker 10: the less density you have, the more expensive it is

890
00:42:57,880 --> 00:42:58,719
Speaker 10: per package.

891
00:42:59,360 --> 00:43:01,920
Speaker 1: So how do you win back business just on price

892
00:43:02,880 --> 00:43:04,080
Speaker 1: price service?

893
00:43:05,200 --> 00:43:07,800
Speaker 10: You know, the company during their call was very adamant

894
00:43:07,800 --> 00:43:10,440
Speaker 10: about the fact that they are not using price to

895
00:43:10,719 --> 00:43:14,360
Speaker 10: entice people back. Maybe they're giving a slight discount, but

896
00:43:14,400 --> 00:43:17,239
Speaker 10: they're not going into a deep discount because the end

897
00:43:17,280 --> 00:43:19,160
Speaker 10: of the day, they have to pay for that new

898
00:43:19,239 --> 00:43:22,799
Speaker 10: labor agreement. It's a five year deal. A lot of

899
00:43:22,840 --> 00:43:26,160
Speaker 10: it is it's front loaded, something like forty five forty

900
00:43:26,200 --> 00:43:29,600
Speaker 10: eight percent of it is in the first year, so

901
00:43:29,920 --> 00:43:33,120
Speaker 10: you know they need to really offset that cost and

902
00:43:33,160 --> 00:43:35,880
Speaker 10: that's going to be a headwind for them going through

903
00:43:35,960 --> 00:43:37,560
Speaker 10: the first half of next year.

904
00:43:38,040 --> 00:43:42,000
Speaker 2: How how does their labor costs look compared to others?

905
00:43:42,040 --> 00:43:45,200
Speaker 2: And the reason I'm asking is you mentioned service, right,

906
00:43:45,200 --> 00:43:47,960
Speaker 2: They're going to deliver better service if their employees are

907
00:43:47,960 --> 00:43:53,120
Speaker 2: better paid. And you know, in less stressful working conditions,

908
00:43:53,480 --> 00:43:56,000
Speaker 2: have air conditioning in their trucks or heating in the winter,

909
00:43:57,080 --> 00:43:59,560
Speaker 2: are they in a good setup in that way?

910
00:43:59,719 --> 00:44:02,040
Speaker 10: You know, when you look at ups and you look

911
00:44:02,040 --> 00:44:05,279
Speaker 10: at FedEx, there are two different models. FedEx as the

912
00:44:05,280 --> 00:44:07,920
Speaker 10: independent contractor model. Even if you look at Amazon, Amazon

913
00:44:07,920 --> 00:44:11,880
Speaker 10: has an independent contract model. You know what it benefits

914
00:44:11,960 --> 00:44:15,080
Speaker 10: UPS is they have stability in their workforce. They have

915
00:44:15,120 --> 00:44:17,719
Speaker 10: a place where people probably want to come because they're

916
00:44:18,040 --> 00:44:20,360
Speaker 10: making more and now and maybe they're not making so

917
00:44:20,440 --> 00:44:22,919
Speaker 10: much more from a dollar standpoint, but when it's all

918
00:44:23,239 --> 00:44:26,600
Speaker 10: said and done and benefits pension all that stuff, it's

919
00:44:26,640 --> 00:44:28,480
Speaker 10: a place where people not only want to work, but

920
00:44:28,520 --> 00:44:31,640
Speaker 10: they probably want to work their whole careers. Versus a

921
00:44:31,680 --> 00:44:36,000
Speaker 10: FedEx or an Amazon where the employees are really it's

922
00:44:36,040 --> 00:44:39,520
Speaker 10: really a track transaction, if you will. They're just there

923
00:44:39,560 --> 00:44:42,080
Speaker 10: for the paycheck and if they find something better, they're

924
00:44:42,120 --> 00:44:44,000
Speaker 10: off to the highest bidder.

925
00:44:44,000 --> 00:44:45,840
Speaker 2: To me, that would I mean as a customer, I

926
00:44:45,840 --> 00:44:48,040
Speaker 2: would rather than use UPS, you know.

927
00:44:48,160 --> 00:44:52,120
Speaker 1: Yeah, you get a relationship with your delivery guy exactly. Yeah.

928
00:44:52,400 --> 00:44:54,840
Speaker 1: And they have a cool uniform. Yeah, I like the

929
00:44:54,840 --> 00:44:57,680
Speaker 1: brown So are we going to put air conditioning in

930
00:44:57,719 --> 00:44:58,200
Speaker 1: the trucks now?

931
00:44:59,040 --> 00:45:02,760
Speaker 10: They're putting the fans air conditioning all that sort of stuff.

932
00:45:02,800 --> 00:45:04,040
Speaker 1: Why didn't they in the past.

933
00:45:04,560 --> 00:45:06,520
Speaker 10: They just you see them on the road. They just

934
00:45:06,560 --> 00:45:10,759
Speaker 10: to open the doors, you know, and and you know.

935
00:45:10,800 --> 00:45:12,480
Speaker 1: Listen, it's at the end of the discuys are down

936
00:45:12,480 --> 00:45:14,719
Speaker 1: in Texas where it's like three hundred degrees out. I mean,

937
00:45:14,800 --> 00:45:17,040
Speaker 1: I don't care changing it. They're changing.

938
00:45:17,120 --> 00:45:19,680
Speaker 2: I mean, they expect global warming to happen like this.

939
00:45:20,080 --> 00:45:21,880
Speaker 2: Nobody told them it was going to happen like that.

940
00:45:22,080 --> 00:45:23,280
Speaker 2: Who knew exactly?

941
00:45:23,440 --> 00:45:25,359
Speaker 1: All right, let's let's step back a little bit from

942
00:45:25,400 --> 00:45:27,640
Speaker 1: ups just kind of your space in general. You do

943
00:45:28,120 --> 00:45:32,160
Speaker 1: you know, the big ocean shipping container, the railroads, the trucks,

944
00:45:32,239 --> 00:45:35,120
Speaker 1: everything in between. Talk to us about just how is

945
00:45:35,120 --> 00:45:38,000
Speaker 1: it out there in the transportation space. Are you guys,

946
00:45:38,239 --> 00:45:40,600
Speaker 1: are your companies seeing a slow down? And if so,

947
00:45:41,160 --> 00:45:41,800
Speaker 1: how pronounced?

948
00:45:41,920 --> 00:45:44,480
Speaker 10: Well, we've been in a freight recession for for over

949
00:45:44,520 --> 00:45:45,120
Speaker 10: a year now.

950
00:45:45,320 --> 00:45:48,319
Speaker 1: Now, that was just tough comps. Tough comps.

951
00:45:49,360 --> 00:45:51,719
Speaker 10: You know, there were certain aspects of the market that

952
00:45:51,760 --> 00:45:54,560
Speaker 10: were down a lot more. You know, what we're seeing

953
00:45:54,560 --> 00:45:58,000
Speaker 10: now is that, you know, the freight recovery will probably

954
00:45:58,080 --> 00:46:01,960
Speaker 10: lead the economic recovery, and the freight recession should probably

955
00:46:02,080 --> 00:46:04,800
Speaker 10: come nearer to an end in the first quarter because

956
00:46:04,800 --> 00:46:07,880
Speaker 10: of easier comps, assuming we have some sort of GDP growth.

957
00:46:07,920 --> 00:46:09,759
Speaker 10: You know, it doesn't have to be stellar growth. It

958
00:46:09,800 --> 00:46:13,000
Speaker 10: could be low single digit growth. You know, assuming that's

959
00:46:13,040 --> 00:46:15,880
Speaker 10: the case, we should come out of this funk. And

960
00:46:15,920 --> 00:46:18,680
Speaker 10: what's this done. What this is done is really of

961
00:46:18,719 --> 00:46:22,080
Speaker 10: depressed rates across the board. So if you're looking at

962
00:46:22,120 --> 00:46:25,279
Speaker 10: trucking rates, liner rates there are, they are very very

963
00:46:25,360 --> 00:46:27,320
Speaker 10: very very low. And it's you know, for some of

964
00:46:27,360 --> 00:46:31,040
Speaker 10: these markets, especially trucking and the container liner market, it's

965
00:46:31,080 --> 00:46:33,200
Speaker 10: really hard to figure out what's going to bring rates

966
00:46:33,280 --> 00:46:36,399
Speaker 10: up because there's a lot of downward pressure because there's

967
00:46:36,400 --> 00:46:39,000
Speaker 10: just so much supply out there. Why is there supplying

968
00:46:39,120 --> 00:46:41,200
Speaker 10: I mean, well on the ocean liner.

969
00:46:41,600 --> 00:46:43,880
Speaker 1: On everybody wanted capacity, right everybody.

970
00:46:43,920 --> 00:46:48,840
Speaker 10: People are buying capacity. You know, capacity growth is expected

971
00:46:48,880 --> 00:46:52,080
Speaker 10: to outpace demand growth by something like five hundred to

972
00:46:52,080 --> 00:46:55,480
Speaker 10: six hundred basis points this year and next year. And

973
00:46:55,520 --> 00:46:58,400
Speaker 10: then you know you have rates that were you know,

974
00:46:58,400 --> 00:46:59,880
Speaker 10: they're down like seventy percent.

975
00:47:00,560 --> 00:47:01,600
Speaker 1: If you wanted to ship.

976
00:47:01,320 --> 00:47:04,040
Speaker 2: Your car now now is no problem now, Yeah, but

977
00:47:04,080 --> 00:47:07,600
Speaker 2: I had to sell it. Yes, it's a horrible it's

978
00:47:07,600 --> 00:47:08,480
Speaker 2: and if you wait.

979
00:47:08,280 --> 00:47:10,200
Speaker 10: You'll probably if you want to wait, you probably get

980
00:47:10,280 --> 00:47:12,720
Speaker 10: even a better rate because because liner rates, there's really

981
00:47:12,920 --> 00:47:15,319
Speaker 10: no net for liner rates right now, trucking is a

982
00:47:15,320 --> 00:47:18,080
Speaker 10: different story of supply is coming out of the market,

983
00:47:18,120 --> 00:47:19,640
Speaker 10: which should go well for truck rates.

984
00:47:19,640 --> 00:47:21,840
Speaker 1: All right, Lee, great stuff. As always Lee clasical. He

985
00:47:21,960 --> 00:47:25,040
Speaker 1: is a senior transportation analyst logistics all that could stuff

986
00:47:25,040 --> 00:47:28,239
Speaker 1: for Bloomberg Intelligence based on in Prince University, been making

987
00:47:28,239 --> 00:47:30,600
Speaker 1: his way here to New York. We appreciate that.

988
00:47:30,840 --> 00:47:33,960
Speaker 5: You're listening to the tape. Cans are live program Bloomberg

989
00:47:34,040 --> 00:47:37,640
Speaker 5: Markets weekdays at ten am Eastern on Bloomberg Radio, the

990
00:47:37,680 --> 00:47:40,879
Speaker 5: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

991
00:47:40,960 --> 00:47:43,759
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992
00:47:43,800 --> 00:47:48,800
Speaker 5: flagship New York station, Just say Alexa, play Bloomberg eleven thirty.

993
00:47:49,880 --> 00:47:51,640
Speaker 1: A lot of I'd say you, here's the story that's

994
00:47:51,640 --> 00:47:53,560
Speaker 1: got my attention of the past couple of days. This

995
00:47:53,600 --> 00:47:57,279
Speaker 1: is going to be fascinating. Sam bankmin Freed, He's going

996
00:47:57,360 --> 00:48:01,160
Speaker 1: to testify in his trial on on behalf to try to,

997
00:48:01,239 --> 00:48:04,279
Speaker 1: I guess, counteract some of the negative testimony from some

998
00:48:04,320 --> 00:48:06,920
Speaker 1: of his former colleagues and friends and girlfriends. I don't

999
00:48:06,960 --> 00:48:08,879
Speaker 1: know what's going on there, but Max Chaffckin he knows.

1000
00:48:09,040 --> 00:48:11,800
Speaker 1: He's a calmnist for Bloomberg Business Week, Max, this sounds

1001
00:48:12,040 --> 00:48:15,120
Speaker 1: really risky from my perspective. What do you make of it?

1002
00:48:15,239 --> 00:48:17,680
Speaker 11: Well, so, you know, as you say, and as you're

1003
00:48:17,719 --> 00:48:21,480
Speaker 11: hinting at, criminal defense attorneys generally do not advise their

1004
00:48:21,520 --> 00:48:24,120
Speaker 11: clients to testify in their own defense, especially in a

1005
00:48:24,120 --> 00:48:29,360
Speaker 11: case like this. Sam Bankminfried, though, is not a traditional client,

1006
00:48:29,480 --> 00:48:32,000
Speaker 11: and as we know, anyone who's followed this story knows

1007
00:48:32,280 --> 00:48:35,480
Speaker 11: that he spent a lot of the weeks after the

1008
00:48:35,480 --> 00:48:39,320
Speaker 11: fall of FTX and even after his own arrest, giving

1009
00:48:39,400 --> 00:48:42,520
Speaker 11: interviews talking to pretty much anyone under the sun, saying

1010
00:48:42,560 --> 00:48:47,279
Speaker 11: all kinds of sort of half cocked, probably legally ill

1011
00:48:47,320 --> 00:48:50,719
Speaker 11: advised things, including that he you know, fed up and

1012
00:48:51,520 --> 00:48:54,880
Speaker 11: I'm quoting there and so. So again, this is not

1013
00:48:54,960 --> 00:48:58,200
Speaker 11: a traditional client, and we're probably not going to see

1014
00:48:58,200 --> 00:49:00,919
Speaker 11: a traditional defense or traditional testimony from him.

1015
00:49:01,040 --> 00:49:03,520
Speaker 2: What have we seen so far? I mean, has the

1016
00:49:03,640 --> 00:49:07,360
Speaker 2: testimony been so damning that putting himself on the stand,

1017
00:49:07,480 --> 00:49:09,319
Speaker 2: or that a lawyer putting him on the stand is

1018
00:49:09,320 --> 00:49:10,600
Speaker 2: the best the defense team can do?

1019
00:49:10,840 --> 00:49:13,120
Speaker 11: I mean, I think again, I'm not on the jury,

1020
00:49:14,239 --> 00:49:16,960
Speaker 11: and so it's always hard to speculate, but it has

1021
00:49:16,960 --> 00:49:19,640
Speaker 11: seemed from the outside to be pretty damning. I mean,

1022
00:49:19,680 --> 00:49:24,879
Speaker 11: we've seen basically his closest friends and senior executive team

1023
00:49:25,320 --> 00:49:27,680
Speaker 11: all get up there on the stand and talk not

1024
00:49:27,880 --> 00:49:31,480
Speaker 11: just in detail, saying that yes, the crimes that the

1025
00:49:31,760 --> 00:49:34,200
Speaker 11: you know, that the state is charging did occur, Sam

1026
00:49:34,239 --> 00:49:37,960
Speaker 11: Banganfreed did them, but producing essentially mountains of evidence showing

1027
00:49:38,120 --> 00:49:41,839
Speaker 11: Bankman Fried's direct involvement. So we've seen messages, we've seen

1028
00:49:41,880 --> 00:49:46,239
Speaker 11: Google docs, we've seen these very specific accounts, particularly from

1029
00:49:46,320 --> 00:49:49,680
Speaker 11: Caroline Ellison, who was the CEO of Allimeter Research that

1030
00:49:49,719 --> 00:49:52,799
Speaker 11: was Bankman Freed's hedge fund and his ex girlfriend. You

1031
00:49:52,840 --> 00:49:55,400
Speaker 11: know that they produced this kind of chain of balance

1032
00:49:55,440 --> 00:50:00,279
Speaker 11: sheets that Sam Bankwetfried was was very active in. So yeah, yeah,

1033
00:50:00,440 --> 00:50:02,279
Speaker 11: it has not looked good for what.

1034
00:50:03,040 --> 00:50:07,000
Speaker 1: Has been his I guess defense in this what's he

1035
00:50:07,200 --> 00:50:08,520
Speaker 1: claiming or what's I don't know?

1036
00:50:08,600 --> 00:50:10,200
Speaker 2: Well already told us up there.

1037
00:50:10,920 --> 00:50:13,759
Speaker 11: There are aspects of the defense that look like a

1038
00:50:13,800 --> 00:50:15,600
Speaker 11: traditional white collar defense. You know a lot of times

1039
00:50:15,640 --> 00:50:18,280
Speaker 11: in white collar defense is what the person who's accused

1040
00:50:18,280 --> 00:50:20,560
Speaker 11: will try to do is present is very complicated. There's

1041
00:50:20,600 --> 00:50:22,239
Speaker 11: a lot of ins, a lot of outs. You know,

1042
00:50:22,600 --> 00:50:24,600
Speaker 11: this is you know, complicated stuff. And I was doing

1043
00:50:24,640 --> 00:50:28,399
Speaker 11: my best, didn't mean to commit fraud. There is some

1044
00:50:28,480 --> 00:50:31,000
Speaker 11: of that here, but there's also been an effort to

1045
00:50:31,080 --> 00:50:33,560
Speaker 11: essentially blame everybody other than him, And that's the part

1046
00:50:33,640 --> 00:50:35,600
Speaker 11: that I'd say is probably legally, you.

1047
00:50:35,520 --> 00:50:36,560
Speaker 1: Know, less well advised.

1048
00:50:36,640 --> 00:50:38,920
Speaker 11: He spent a lot of time in interviews ahead of this,

1049
00:50:39,000 --> 00:50:41,080
Speaker 11: and we've seen some of this come out during the trial,

1050
00:50:41,280 --> 00:50:43,520
Speaker 11: essentially blaming Carolyn Ellison.

1051
00:50:43,480 --> 00:50:44,880
Speaker 1: For for the for the fraud.

1052
00:50:44,760 --> 00:50:48,160
Speaker 11: Or blaming his lawyers, or blaming you know, outside counsel

1053
00:50:48,440 --> 00:50:51,640
Speaker 11: and so on, and again it hasn't seemed especially credible

1054
00:50:51,680 --> 00:50:54,719
Speaker 11: because the prosecutors have been able to produce you know,

1055
00:50:54,800 --> 00:50:57,200
Speaker 11: emails and so on showing that he was very involved.

1056
00:50:57,320 --> 00:50:59,160
Speaker 11: And also, you know, it's not exactly a good look

1057
00:50:59,160 --> 00:51:01,400
Speaker 11: when the CEO is saying, oh no, this is just

1058
00:51:01,400 --> 00:51:04,160
Speaker 11: my underling's fault, especially the CEO who at one time

1059
00:51:04,239 --> 00:51:06,759
Speaker 11: you know, had personally enriched himself to the extent that

1060
00:51:06,800 --> 00:51:08,920
Speaker 11: Sam bankman Fried had done. So he you know, we've

1061
00:51:09,000 --> 00:51:11,640
Speaker 11: learned of a billion dollars in personal loans, you know,

1062
00:51:11,640 --> 00:51:15,000
Speaker 11: three hundred million dollars in luxury real estate, and the

1063
00:51:15,040 --> 00:51:16,040
Speaker 11: list kind of goes on and on.

1064
00:51:16,680 --> 00:51:18,920
Speaker 2: Is there any chance and I don't know that this

1065
00:51:19,040 --> 00:51:22,040
Speaker 2: matters in terms of this current court decision, But is

1066
00:51:22,120 --> 00:51:25,840
Speaker 2: there is there a chance that people who lost money

1067
00:51:25,880 --> 00:51:29,680
Speaker 2: in FTX or made whole because of you know, moonshot

1068
00:51:29,920 --> 00:51:32,719
Speaker 2: investments that they made that now look like they may

1069
00:51:32,760 --> 00:51:33,239
Speaker 2: pay off.

1070
00:51:33,480 --> 00:51:36,359
Speaker 11: Yeah, I mean, I think it's it's definitely too soon

1071
00:51:36,440 --> 00:51:39,440
Speaker 11: to say made whole. I think it's looking increasingly likely

1072
00:51:39,960 --> 00:51:42,799
Speaker 11: that some money at least will be recovered. You're I

1073
00:51:42,840 --> 00:51:45,160
Speaker 11: think you're alluding to Anthropic, which was this kind of

1074
00:51:45,520 --> 00:51:48,560
Speaker 11: moonshot AI investment is now you know, there are rumors

1075
00:51:49,080 --> 00:51:51,239
Speaker 11: valuations being tossed around in the in the tens of

1076
00:51:51,239 --> 00:51:55,279
Speaker 11: billions of dollars. The issue is that there's a lot

1077
00:51:55,320 --> 00:51:59,160
Speaker 11: of these assets are not highly traded, so it's it's

1078
00:51:59,160 --> 00:52:01,480
Speaker 11: sort of hard to know, like if they started selling them,

1079
00:52:01,800 --> 00:52:02,759
Speaker 11: what would happen to the price?

1080
00:52:02,840 --> 00:52:03,320
Speaker 1: Where were they go?

1081
00:52:03,440 --> 00:52:06,360
Speaker 11: And even even with a case of anthropic, right, you

1082
00:52:06,400 --> 00:52:08,840
Speaker 11: can't just go and sell that stake on the open market.

1083
00:52:09,000 --> 00:52:10,680
Speaker 11: A lot of this stuff will take a long time

1084
00:52:10,719 --> 00:52:13,520
Speaker 11: to unwind, the economy can change and so on.

1085
00:52:13,680 --> 00:52:15,360
Speaker 1: The other thing is the question.

1086
00:52:15,160 --> 00:52:17,520
Speaker 11: Of whether or not investors can be made whole isn't

1087
00:52:17,560 --> 00:52:19,120
Speaker 11: really relevant to Sam bankman.

1088
00:52:18,880 --> 00:52:21,440
Speaker 2: Free, it's not relevant. But yeah, I mean Matt Levine

1089
00:52:21,480 --> 00:52:25,200
Speaker 2: has written about if you defraud somebody and that person

1090
00:52:25,760 --> 00:52:29,120
Speaker 2: never gets her money back, you know you're gonna be

1091
00:52:29,160 --> 00:52:31,719
Speaker 2: in trouble. But if you defraud someone and she does

1092
00:52:31,760 --> 00:52:35,120
Speaker 2: get her money back, it's gonna be less bad. Yeah.

1093
00:52:35,200 --> 00:52:38,319
Speaker 11: Yeah, And and perhaps you know that will impact how

1094
00:52:38,360 --> 00:52:41,480
Speaker 11: Sam bankman Free's legacy, you know, is perceived and so on.

1095
00:52:41,840 --> 00:52:43,799
Speaker 11: I don't think it's gonna have an impact on this

1096
00:52:43,880 --> 00:52:48,319
Speaker 11: case because again, the jury isn't hearing this stuff. And

1097
00:52:48,600 --> 00:52:51,800
Speaker 11: again the charges are did Sam bankman Free take customer

1098
00:52:51,840 --> 00:52:52,640
Speaker 11: money and gamble it?

1099
00:52:52,680 --> 00:52:54,799
Speaker 1: The fact that you gambled it, and maybe.

1100
00:52:54,480 --> 00:52:59,279
Speaker 11: One doesn't necessarily you know, address the central allegation. And

1101
00:52:59,320 --> 00:53:01,680
Speaker 11: again there are allegations here. You know, we're going to

1102
00:53:01,760 --> 00:53:05,600
Speaker 11: have a second trial around campaign finance violations that stuff.

1103
00:53:05,719 --> 00:53:07,160
Speaker 1: Can you know, he could go to jail for a

1104
00:53:07,200 --> 00:53:07,520
Speaker 1: long time.

1105
00:53:07,560 --> 00:53:09,600
Speaker 11: There's the Chinese bribery allegation.

1106
00:53:09,760 --> 00:53:12,120
Speaker 2: So there's a bunch of these are separate trials.

1107
00:53:12,239 --> 00:53:13,400
Speaker 1: There are two separate trials.

1108
00:53:13,480 --> 00:53:17,040
Speaker 2: Yes, so what's the timeline look like for this one?

1109
00:53:17,200 --> 00:53:20,520
Speaker 11: Yeah, So we're gonna see Bank and Freed likely start

1110
00:53:20,560 --> 00:53:25,560
Speaker 11: testifying today, that'll go into tomorrow, probably early next week.

1111
00:53:25,719 --> 00:53:29,160
Speaker 11: I mean, we the jury could begin deliberating next week.

1112
00:53:29,200 --> 00:53:31,719
Speaker 11: We could have a verdict as as early as next week,

1113
00:53:31,719 --> 00:53:34,880
Speaker 11: although it seems possible it could go onto our reporters

1114
00:53:34,920 --> 00:53:37,680
Speaker 11: allowed in the courtroom, Yes, okay, public is allowed in

1115
00:53:37,680 --> 00:53:39,640
Speaker 11: the courtroom. We have we have a team of people

1116
00:53:40,280 --> 00:53:43,480
Speaker 11: down there there. They've been reporting on this, you know, relentlessly.

1117
00:53:44,360 --> 00:53:46,880
Speaker 11: You can read it on on Bloomergeck Tom at the terminal.

1118
00:53:47,640 --> 00:53:49,680
Speaker 11: General Public's also in there. So we've seen kind of

1119
00:53:49,680 --> 00:53:54,799
Speaker 11: a weird rotating list of kind of crypto figures and influencers.

1120
00:53:54,880 --> 00:53:57,520
Speaker 1: I think Martin Screlly was was there early on.

1121
00:53:57,560 --> 00:53:59,680
Speaker 11: You know, it's it's it's sort of been a you know,

1122
00:53:59,760 --> 00:54:01,040
Speaker 11: a of weird reality.

1123
00:54:01,440 --> 00:54:03,680
Speaker 1: I mean, this is really to a certain then I wonder,

1124
00:54:04,520 --> 00:54:07,800
Speaker 1: you know, crypto is this in a to what extent?

1125
00:54:07,840 --> 00:54:11,200
Speaker 1: Is this an indictment or of the crypto space? I mean,

1126
00:54:11,320 --> 00:54:12,720
Speaker 1: is it seen that way by people?

1127
00:54:13,080 --> 00:54:13,239
Speaker 3: Well?

1128
00:54:13,280 --> 00:54:15,000
Speaker 1: I think it's you know, it depends what you talk to.

1129
00:54:15,000 --> 00:54:16,640
Speaker 11: You So you talk to people in the industry, right,

1130
00:54:16,680 --> 00:54:18,800
Speaker 11: they have been very keen and you've seen the industry

1131
00:54:19,000 --> 00:54:21,319
Speaker 11: really like they have been some of the most aggressive

1132
00:54:21,320 --> 00:54:23,600
Speaker 11: people in calling out Sam Bankman free because because they

1133
00:54:23,600 --> 00:54:25,120
Speaker 11: want to make an effort to say, hey, look, this

1134
00:54:25,239 --> 00:54:28,479
Speaker 11: was a bad actor, you know, bad apple, He's making

1135
00:54:28,560 --> 00:54:29,200
Speaker 11: us look bad.

1136
00:54:29,920 --> 00:54:30,920
Speaker 2: I think in the minds.

1137
00:54:30,719 --> 00:54:33,279
Speaker 11: Of normal investors, in the minds of the public, right

1138
00:54:33,360 --> 00:54:35,040
Speaker 11: that arguments a little harder because.

1139
00:54:34,760 --> 00:54:35,640
Speaker 1: Sam Bankman freed.

1140
00:54:35,960 --> 00:54:39,120
Speaker 11: His whole thing was that he was the most law abiding,

1141
00:54:39,680 --> 00:54:41,879
Speaker 11: least sketchy. I mean, this is a world that has

1142
00:54:42,000 --> 00:54:44,600
Speaker 11: operated kind of on the edges of various laws in

1143
00:54:45,040 --> 00:54:47,040
Speaker 11: all over the world. So so again it's I think

1144
00:54:47,080 --> 00:54:50,000
Speaker 11: it's really too early to know how the what the

1145
00:54:50,040 --> 00:54:52,000
Speaker 11: impact is going to be on crypto broadly, and I

1146
00:54:52,000 --> 00:54:53,640
Speaker 11: think some of that has to do with, frankly, the

1147
00:54:53,760 --> 00:54:56,640
Speaker 11: verdict and and and depending on what the jury says,

1148
00:54:56,680 --> 00:54:58,919
Speaker 11: I think will will affect how people probably, I mean, can.

1149
00:54:58,840 --> 00:55:01,440
Speaker 2: He dude, you got to think that, you know, just

1150
00:55:01,440 --> 00:55:04,600
Speaker 2: because Bernie Madoff committed a big sixty five billion dollar

1151
00:55:05,000 --> 00:55:08,720
Speaker 2: fraud with an investment Ponzi scheme, that's not an indictment

1152
00:55:08,800 --> 00:55:11,000
Speaker 2: of the US stock market and certainly not of the

1153
00:55:11,080 --> 00:55:14,800
Speaker 2: US dollar, right right, right exactly, although I could see

1154
00:55:15,040 --> 00:55:18,839
Speaker 2: that because crypto is so difficult to understand, because it's

1155
00:55:18,880 --> 00:55:23,239
Speaker 2: not clear yet whether much or even any of these

1156
00:55:23,280 --> 00:55:25,520
Speaker 2: coins are gonna be worth something in five or ten years.

1157
00:55:25,640 --> 00:55:29,359
Speaker 2: People might very easily conflate the two.

1158
00:55:29,719 --> 00:55:32,439
Speaker 11: Yeah, absolutely, I mean it was an indictment of Ponzi schemes, right,

1159
00:55:32,520 --> 00:55:35,000
Speaker 11: And and the UH and the crypto critics are gonna

1160
00:55:35,080 --> 00:55:37,960
Speaker 11: are gonna essentially say that there there are businesses out

1161
00:55:37,960 --> 00:55:40,640
Speaker 11: there that are operating in ways that aren't necessarily that

1162
00:55:40,840 --> 00:55:43,960
Speaker 11: different from UH from the way ftx's offer.

1163
00:55:44,040 --> 00:55:46,480
Speaker 1: And this guy's facing real jail time, right, what it's.

1164
00:55:46,600 --> 00:55:49,359
Speaker 11: I mean, it's he faces a potential life sentence. Wow,

1165
00:55:49,800 --> 00:55:52,239
Speaker 11: the I mean effective life sentence. It's gonna be so

1166
00:55:52,320 --> 00:55:54,080
Speaker 11: many years that it would be, you know, he'd be

1167
00:55:54,239 --> 00:55:56,319
Speaker 11: old or deceased by the time he got out.

1168
00:55:56,880 --> 00:55:58,080
Speaker 1: We don't really know, you know.

1169
00:55:58,120 --> 00:56:01,680
Speaker 11: Of course, there's there's a wide potential range of potential sentences.

1170
00:56:02,640 --> 00:56:04,759
Speaker 11: You're talking about anywhere from years to decades. And of

1171
00:56:04,800 --> 00:56:08,000
Speaker 11: course he could be acquitted. Whatever happens with this case,

1172
00:56:08,040 --> 00:56:10,719
Speaker 11: I think they're definitely gonna be appeals. And there is

1173
00:56:10,840 --> 00:56:14,040
Speaker 11: this second trial, the second criminal trial, which also carries

1174
00:56:14,040 --> 00:56:15,480
Speaker 11: significant jail.

1175
00:56:15,280 --> 00:56:17,520
Speaker 1: Tourn all right, man, great stuff, Max, Thanks for joining

1176
00:56:17,560 --> 00:56:20,000
Speaker 1: us here. Max Chaffick he's a columnist for Bloomberg BusinessWeek.

1177
00:56:21,440 --> 00:56:24,560
Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can

1178
00:56:24,600 --> 00:56:28,360
Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever

1179
00:56:28,440 --> 00:56:32,160
Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter

1180
00:56:32,360 --> 00:56:35,480
Speaker 2: at Matt Miller nineteen seventy three and on ball.

1181
00:56:35,280 --> 00:56:38,160
Speaker 1: Sweeney, I'm on Twitter at pt Sweeney. Before the podcast,

1182
00:56:38,200 --> 00:56:41,640
Speaker 1: you can always catch us worldwide at Bloomberg Radio.