1
00:00:00,040 --> 00:00:13,760
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

2
00:00:13,840 --> 00:00:17,920
Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern

3
00:00:18,200 --> 00:00:22,000
Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business app.

4
00:00:22,360 --> 00:00:25,680
Speaker 1: Listen on demand wherever you get your podcasts, or watch

5
00:00:25,760 --> 00:00:27,040
Speaker 1: us live on YouTube.

6
00:00:27,240 --> 00:00:29,560
Speaker 2: This is the most important interview of the day. What

7
00:00:29,680 --> 00:00:32,839
Speaker 2: you got to understand is most titles in the investment

8
00:00:32,880 --> 00:00:36,760
Speaker 2: business are not like some think tank thing from senior management.

9
00:00:36,920 --> 00:00:40,640
Speaker 2: They're mostly decided in a Starbucks, like a two forty

10
00:00:40,680 --> 00:00:45,400
Speaker 2: Greenwich downtown. She has the greatest title of anybody and

11
00:00:45,560 --> 00:00:52,080
Speaker 2: Surveillance Head of Investment Strategy in Equity Advisory Solutions. It

12
00:00:52,240 --> 00:00:55,840
Speaker 2: bny mel and that can only be Alicia Levine. I

13
00:00:55,880 --> 00:01:01,160
Speaker 2: have never seen the divergence of opinions like literally, I'm

14
00:01:01,160 --> 00:01:07,000
Speaker 2: not exaggerating, never What is your equity advisory solutions in

15
00:01:07,080 --> 00:01:07,920
Speaker 2: this chaos?

16
00:01:08,120 --> 00:01:09,480
Speaker 3: So long and strong?

17
00:01:09,840 --> 00:01:13,760
Speaker 4: But you're right, it has been a relentlessly frustrating year.

18
00:01:14,400 --> 00:01:18,240
Speaker 4: There's a lot of fear about tariffs and policy and

19
00:01:18,280 --> 00:01:22,120
Speaker 4: the speed with which unusual suggestions are coming out of

20
00:01:22,120 --> 00:01:24,960
Speaker 4: the White House. I'll just call it that. And yet,

21
00:01:25,480 --> 00:01:27,479
Speaker 4: and yet, we just had one of the greatest earning

22
00:01:27,520 --> 00:01:31,520
Speaker 4: seasons in a long time. Earnings up about sixteen percent

23
00:01:31,640 --> 00:01:35,320
Speaker 4: for the fourth quarter. Okay, and the market saying, what

24
00:01:35,959 --> 00:01:38,280
Speaker 4: are you all yapping about? Okay, what do you all

25
00:01:38,360 --> 00:01:39,160
Speaker 4: yapping about?

26
00:01:39,560 --> 00:01:42,080
Speaker 3: Don't forget, it's a lot of y happening.

27
00:01:42,120 --> 00:01:42,600
Speaker 5: We yep.

28
00:01:42,800 --> 00:01:48,240
Speaker 4: But what it's earnings, its growth and its margins. We

29
00:01:48,360 --> 00:01:51,400
Speaker 4: know this right, and it's interest rates. This is what

30
00:01:51,560 --> 00:01:54,400
Speaker 4: drives market. So I love the conversation. We live for

31
00:01:54,440 --> 00:01:58,400
Speaker 4: the conversation, that's what we do. But essentially we're looking

32
00:01:58,440 --> 00:02:00,920
Speaker 4: at the fundamentals and we say, it's good that there's

33
00:02:00,960 --> 00:02:03,120
Speaker 4: a two way market this year. I like the two

34
00:02:03,160 --> 00:02:05,840
Speaker 4: way market because last year when everyone was on the

35
00:02:05,840 --> 00:02:08,440
Speaker 4: same side of the boat. Oh there's no recession that

36
00:02:08,480 --> 00:02:11,040
Speaker 4: you know, no hard landing, it's great, it's great as great.

37
00:02:11,160 --> 00:02:14,200
Speaker 4: Fed's gonna cut seven times this year. Yeah, there's there's

38
00:02:14,240 --> 00:02:15,600
Speaker 4: there's there's room.

39
00:02:15,480 --> 00:02:17,040
Speaker 3: For error there.

40
00:02:17,080 --> 00:02:21,520
Speaker 4: And I prefer investing in an environment like this where

41
00:02:21,680 --> 00:02:22,600
Speaker 4: he's back and forth.

42
00:02:22,720 --> 00:02:25,200
Speaker 2: Can you see this, folks on YouTube? You can you

43
00:02:25,240 --> 00:02:28,440
Speaker 2: can address this. Alicia Levine, did you get the white

44
00:02:28,440 --> 00:02:31,200
Speaker 2: blazer from Taylor Swift? Is that is that? Are you

45
00:02:31,280 --> 00:02:33,400
Speaker 2: wearing the YSL white blazer today?

46
00:02:33,480 --> 00:02:37,440
Speaker 3: I got my own style, yes, Alicia.

47
00:02:37,480 --> 00:02:40,519
Speaker 6: So you talked about earnings coming in strong. It seems

48
00:02:40,560 --> 00:02:42,560
Speaker 6: like this is a market that has to have earning

49
00:02:42,600 --> 00:02:44,600
Speaker 6: because it doesn't seem like the Fed's going to do

50
00:02:44,600 --> 00:02:46,680
Speaker 6: a lot for us this year. How confident are you

51
00:02:46,720 --> 00:02:48,720
Speaker 6: that earnings can in fact come.

52
00:02:48,560 --> 00:02:49,119
Speaker 7: Through this year.

53
00:02:49,280 --> 00:02:52,920
Speaker 4: So I think earnings can come through this year. We've

54
00:02:52,960 --> 00:02:55,919
Speaker 4: seen some degradation in the last week or two. I

55
00:02:55,960 --> 00:02:59,160
Speaker 4: think this is management saying we're just not giving guidance

56
00:02:59,240 --> 00:03:01,640
Speaker 4: right here right. I think there's just a reluctance to

57
00:03:01,720 --> 00:03:04,920
Speaker 4: go all in because nobody knows what the policy is

58
00:03:04,960 --> 00:03:07,079
Speaker 4: going to be, and so just leaving a little bit

59
00:03:07,200 --> 00:03:12,000
Speaker 4: of wiggle room for an arbitrage on what sized tariff,

60
00:03:12,040 --> 00:03:14,920
Speaker 4: ten percent, twenty five percent, which country. What we'd like

61
00:03:15,000 --> 00:03:18,440
Speaker 4: to remind our clients and the market is the US

62
00:03:18,520 --> 00:03:23,760
Speaker 4: has a massive trade deficit with Europe. If there are tariffs,

63
00:03:24,440 --> 00:03:27,799
Speaker 4: our trade partners suffer more than we do. It's fascinating

64
00:03:27,840 --> 00:03:30,240
Speaker 4: to me that Europe's out performing the US by the

65
00:03:30,240 --> 00:03:32,359
Speaker 4: way on this. And the question you have to ask

66
00:03:32,400 --> 00:03:34,680
Speaker 4: yourself is how sustainable is this?

67
00:03:35,120 --> 00:03:38,520
Speaker 3: Because in the end, we slowly, slowly just.

68
00:03:38,880 --> 00:03:42,520
Speaker 4: Increase our imports from Europe and rather than having you know,

69
00:03:43,240 --> 00:03:46,000
Speaker 4: a trade surplus with them. That's what the market is

70
00:03:46,040 --> 00:03:50,240
Speaker 4: sussing out. And in the end, the hit to earnings

71
00:03:50,960 --> 00:03:53,560
Speaker 4: on one round is not going to be that high. Now,

72
00:03:53,880 --> 00:03:56,200
Speaker 4: if there's retaliation, that's a very different story. But the

73
00:03:56,240 --> 00:03:58,160
Speaker 4: market's telling you that it does not believe the White

74
00:03:58,200 --> 00:04:00,600
Speaker 4: House essentially on this technology.

75
00:04:01,120 --> 00:04:03,760
Speaker 6: Is technology going in the mag seven but just broader tech,

76
00:04:03,800 --> 00:04:04,760
Speaker 6: whether it's chips or whatever.

77
00:04:04,840 --> 00:04:06,360
Speaker 5: Is that going to continue to be the leader in

78
00:04:06,360 --> 00:04:08,960
Speaker 5: this market? Or is this market? Does is it broadening out?

79
00:04:08,960 --> 00:04:09,760
Speaker 5: Does it need to broaden?

80
00:04:09,840 --> 00:04:12,680
Speaker 4: Feels more cyclical to us. Okay, so I think that

81
00:04:13,320 --> 00:04:15,920
Speaker 4: I think that the mags. Look, the top ten stocks

82
00:04:15,920 --> 00:04:19,760
Speaker 4: are thirty seven percent of the index. Now everybody's losing

83
00:04:19,960 --> 00:04:22,799
Speaker 4: sleep over this. Oh, it's the most concentrated market ever.

84
00:04:22,880 --> 00:04:23,320
Speaker 3: You know what.

85
00:04:23,480 --> 00:04:27,560
Speaker 4: There's more concentration in Japan, there's more concentration in Germany.

86
00:04:27,880 --> 00:04:29,760
Speaker 3: Okay, So concentration of the.

87
00:04:29,680 --> 00:04:33,599
Speaker 4: Top ten is nothing unusual, nor is it fatal. I

88
00:04:33,640 --> 00:04:37,360
Speaker 4: do think that there's just a breather here and some

89
00:04:37,400 --> 00:04:39,840
Speaker 4: of the market, some of the multiple has to just

90
00:04:39,960 --> 00:04:40,680
Speaker 4: sit and have.

91
00:04:40,680 --> 00:04:42,560
Speaker 3: The earnings grow into it. Because the earnings are still

92
00:04:42,640 --> 00:04:44,279
Speaker 3: very good Alicia Levine.

93
00:04:44,000 --> 00:04:46,240
Speaker 2: With being y wealth with us. We welcome here in

94
00:04:46,279 --> 00:04:51,800
Speaker 2: your community. Crossination on YouTube, Subscribe to Bloomberg Podcast. Alicia

95
00:04:51,880 --> 00:04:55,760
Speaker 2: Levine has prodigious math skills, which she likes to hide,

96
00:04:55,760 --> 00:05:00,159
Speaker 2: but the fact is she's got massively outstanding chops. So

97
00:05:00,279 --> 00:05:03,599
Speaker 2: let's go there right now. When you look at the

98
00:05:03,640 --> 00:05:07,039
Speaker 2: four cross moments, forget about the fancy stuff like kurtosis

99
00:05:07,120 --> 00:05:10,600
Speaker 2: and arrests. Just look at the variance that creates an

100
00:05:10,600 --> 00:05:15,240
Speaker 2: intelligent sharp ratio where you're getting a risk reward payoff

101
00:05:15,720 --> 00:05:20,480
Speaker 2: twelve months out thirty six months out to diminish variants.

102
00:05:20,839 --> 00:05:25,000
Speaker 2: Do I want to be less diversified more diversified? Do

103
00:05:25,080 --> 00:05:28,320
Speaker 2: I want to do factor or sector analysis? Or is

104
00:05:28,360 --> 00:05:30,520
Speaker 2: it every individual stock for itself?

105
00:05:30,839 --> 00:05:34,440
Speaker 4: So I think this is a great year for individual stocks,

106
00:05:34,520 --> 00:05:39,000
Speaker 4: thank you, rather than the index. That is a healthy market, right,

107
00:05:39,200 --> 00:05:42,640
Speaker 4: so that makes for an interesting market. That's the two

108
00:05:42,640 --> 00:05:46,800
Speaker 4: way conversation. I think that's where you want to be here,

109
00:05:47,160 --> 00:05:48,200
Speaker 4: But that doesn't.

110
00:05:47,920 --> 00:05:51,040
Speaker 2: Mean you well look ahead, continue please, But.

111
00:05:50,960 --> 00:05:54,919
Speaker 4: That doesn't mean you just discard overall diversification.

112
00:05:55,040 --> 00:05:57,480
Speaker 3: Diversification is the.

113
00:05:57,400 --> 00:06:01,640
Speaker 4: Important of smoothing out of returns, and we've had clients

114
00:06:01,680 --> 00:06:03,279
Speaker 4: that said to us last year, why am I even

115
00:06:03,320 --> 00:06:07,719
Speaker 4: in overseas markets? Why should I bother with like you

116
00:06:07,760 --> 00:06:10,520
Speaker 4: know x US developed and said, well, you have to

117
00:06:11,040 --> 00:06:12,880
Speaker 4: because the valuation is so.

118
00:06:12,880 --> 00:06:15,560
Speaker 3: Extreme that there is going to be there will be a.

119
00:06:15,560 --> 00:06:18,760
Speaker 4: Day where there's some resolution of this, and you want

120
00:06:18,760 --> 00:06:20,160
Speaker 4: to be in the market, and let me do it

121
00:06:20,200 --> 00:06:22,280
Speaker 4: is to be in it, and Paul.

122
00:06:22,080 --> 00:06:25,599
Speaker 2: What's important here is Katie Greidfeld's wonderful story on Vanguard

123
00:06:25,760 --> 00:06:28,479
Speaker 2: and the index funds. Did you see those numbers? I

124
00:06:28,480 --> 00:06:31,760
Speaker 2: mean everybody's going away from Alicia Levine, so there is

125
00:06:31,800 --> 00:06:35,200
Speaker 2: two it. I mean they're all index index, index index, Alicia.

126
00:06:35,880 --> 00:06:37,560
Speaker 6: How about some sectors if I want to go find

127
00:06:37,560 --> 00:06:40,320
Speaker 6: some value in the US market outside of technology?

128
00:06:41,120 --> 00:06:42,680
Speaker 5: What screens wall for you guys these days?

129
00:06:42,720 --> 00:06:45,480
Speaker 4: So we love industrials, We love financials here. I mean

130
00:06:45,600 --> 00:06:47,560
Speaker 4: financials are a really interesting story.

131
00:06:47,960 --> 00:06:49,839
Speaker 5: Buying Jpmork and Goldman Sachs, that kind of thing.

132
00:06:49,839 --> 00:06:50,200
Speaker 6: Am right?

133
00:06:50,240 --> 00:06:53,040
Speaker 4: Well, I can't talk about specific names if we like overall,

134
00:06:53,200 --> 00:06:57,080
Speaker 4: I think that the capital providers, the alternative capital providers,

135
00:06:57,440 --> 00:07:00,520
Speaker 4: they're taking a pause here. There's a reason they after

136
00:07:00,560 --> 00:07:03,240
Speaker 4: the election, because you're going to see more activity, friendlier

137
00:07:03,279 --> 00:07:06,280
Speaker 4: face at the FTC. This is all good for financials. Listen,

138
00:07:06,400 --> 00:07:11,000
Speaker 4: if you lessen the regulatory burden, that sector becomes less

139
00:07:11,000 --> 00:07:13,040
Speaker 4: of a utility and more of a growth sector again,

140
00:07:13,080 --> 00:07:15,240
Speaker 4: and then the multiple changes and in the end it's

141
00:07:15,240 --> 00:07:17,720
Speaker 4: not just the earnings moving higher. Because of it, you

142
00:07:17,840 --> 00:07:20,680
Speaker 4: get a better multiple, and we think that's sustainable.

143
00:07:20,720 --> 00:07:22,200
Speaker 2: Here MAG seven.

144
00:07:22,520 --> 00:07:24,360
Speaker 3: MAG seven is going to be well, it's been the

145
00:07:24,440 --> 00:07:26,800
Speaker 3: LAG seven yea for.

146
00:07:26,760 --> 00:07:28,880
Speaker 2: A cup of coffee. It's been the lag seven.

147
00:07:28,680 --> 00:07:29,920
Speaker 3: For a cup of coffee.

148
00:07:29,960 --> 00:07:32,600
Speaker 5: You look for three years, so three years.

149
00:07:32,680 --> 00:07:36,280
Speaker 2: Yeah, I think Alicia doesn't drink senka. Let's be sure

150
00:07:36,480 --> 00:07:38,480
Speaker 2: that's Lily. It's like early or whatever.

151
00:07:38,560 --> 00:07:40,000
Speaker 3: Yeah, it's ULTI.

152
00:07:40,560 --> 00:07:44,880
Speaker 4: But look, the MAG seven needs to at least be

153
00:07:45,080 --> 00:07:48,880
Speaker 4: in line. In other words, it can't massively underperform the market.

154
00:07:49,320 --> 00:07:50,920
Speaker 4: In order to get to the place where we think

155
00:07:50,920 --> 00:07:51,320
Speaker 4: the market is.

156
00:07:51,480 --> 00:07:55,000
Speaker 2: Your securities research would be in Why Wealth suggesting they will.

157
00:07:54,920 --> 00:07:58,240
Speaker 4: Underperform, not that it'll underperform. We still think you have

158
00:07:58,360 --> 00:08:02,640
Speaker 4: massive earnings and massive marge. The cash flow and cash flow, wello,

159
00:08:02,760 --> 00:08:05,240
Speaker 4: I sat here many times talking about the cash flow margin.

160
00:08:05,520 --> 00:08:07,240
Speaker 3: So the question is, does all.

161
00:08:07,080 --> 00:08:11,040
Speaker 4: The spending on AI crush that cash flow margin?

162
00:08:11,320 --> 00:08:12,520
Speaker 3: It does on the margin.

163
00:08:12,760 --> 00:08:15,840
Speaker 4: The market lives in a second derivative, It lives on

164
00:08:15,880 --> 00:08:18,360
Speaker 4: the rate of change, so to that you could get

165
00:08:18,480 --> 00:08:20,880
Speaker 4: some just sort of flattening out of performance. But that

166
00:08:20,920 --> 00:08:23,760
Speaker 4: doesn't mean it's over, and it doesn't mean it's two thousand.

167
00:08:23,600 --> 00:08:26,480
Speaker 2: Thirty second audible. Alicia and I bust their chops about

168
00:08:26,600 --> 00:08:30,000
Speaker 2: education of offspring, and that what's the tip point of

169
00:08:30,040 --> 00:08:33,680
Speaker 2: one hundred thousand dollars a year tuition? When do people

170
00:08:33,800 --> 00:08:34,440
Speaker 2: just say no?

171
00:08:34,760 --> 00:08:37,280
Speaker 4: They're not saying no, They're not saying guys, the market's

172
00:08:37,320 --> 00:08:40,439
Speaker 4: up fifty eight percent over the last two years. Real

173
00:08:40,559 --> 00:08:43,319
Speaker 4: estate's up forty five percent in the last four years.

174
00:08:43,360 --> 00:08:44,000
Speaker 3: No one's saying no.

175
00:08:44,600 --> 00:08:53,880
Speaker 2: Alicia Levine, thank you so much, Absolutely brilliant. Thank you.

176
00:08:53,880 --> 00:08:57,480
Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us Live

177
00:08:57,559 --> 00:09:01,079
Speaker 1: weekday afternoons from seven to ten amis the Listen on Apple,

178
00:09:01,120 --> 00:09:04,480
Speaker 1: Karplay and Android Otto with the Bloomberg Business app, or

179
00:09:04,600 --> 00:09:06,120
Speaker 1: watch us Live on YouTube.

180
00:09:06,280 --> 00:09:08,000
Speaker 2: We've spent a couple of weeks trying to get him

181
00:09:08,040 --> 00:09:11,400
Speaker 2: in here. He's with Hart Tree Partners. Edward Morris's absolutely

182
00:09:11,400 --> 00:09:16,720
Speaker 2: definitive on hydrocarbon. Think of Daniel Jurgen's surprise. Ed Morris

183
00:09:16,720 --> 00:09:19,319
Speaker 2: shows up about page twenty three in the prize from

184
00:09:19,360 --> 00:09:22,360
Speaker 2: a few years ago definitive at City Group and of

185
00:09:22,360 --> 00:09:25,360
Speaker 2: course now with Hart Tree Partners. When was the first

186
00:09:25,400 --> 00:09:28,480
Speaker 2: time you were in riod.

187
00:09:28,600 --> 00:09:31,440
Speaker 8: It was in the late nineteen seventies.

188
00:09:32,440 --> 00:09:35,920
Speaker 2: With Faisal, with King Faisel.

189
00:09:36,240 --> 00:09:38,199
Speaker 8: Yes, but I didn't see him at that point in time.

190
00:09:38,320 --> 00:09:41,120
Speaker 2: What is the sharp okay, fine, but what is the

191
00:09:41,240 --> 00:09:46,120
Speaker 2: strongest difference now between the Royalty of Riod Is They

192
00:09:46,160 --> 00:09:51,240
Speaker 2: look out at this Maelstrom versus our stereotype of Saudi Arabia.

193
00:09:52,120 --> 00:09:55,320
Speaker 8: So the sadiast have come a long way. They're looking

194
00:09:55,400 --> 00:10:00,880
Speaker 8: at how to keep it public happy. They they are

195
00:10:01,200 --> 00:10:03,840
Speaker 8: trying to diversify their economy as quickly as they can,

196
00:10:05,000 --> 00:10:08,640
Speaker 8: and it's looking to the future rather than building on

197
00:10:08,679 --> 00:10:09,640
Speaker 8: the present for the past.

198
00:10:09,760 --> 00:10:13,000
Speaker 2: What is their relationship with Russia? This idea of Opec

199
00:10:13,160 --> 00:10:17,319
Speaker 2: plus is it a what's a distinction of that relationship?

200
00:10:17,360 --> 00:10:21,160
Speaker 8: The relationship is kind of critical. Think about where the

201
00:10:21,200 --> 00:10:24,640
Speaker 8: Saudis are, where Opek is. The Saudis have a production

202
00:10:24,760 --> 00:10:28,880
Speaker 8: capacity today between eleven and twelve million barrels a day.

203
00:10:29,280 --> 00:10:32,199
Speaker 8: That's what they had in nineteen eighty nineteen eighty was

204
00:10:32,240 --> 00:10:36,760
Speaker 8: a long time ago. OPEC's production capacity then was around

205
00:10:36,840 --> 00:10:39,520
Speaker 8: thirty two to thirty three million barrels a day. Today

206
00:10:39,559 --> 00:10:41,760
Speaker 8: it's thirty five thirty six million barrels a day. The

207
00:10:41,760 --> 00:10:45,200
Speaker 8: oil market was then sixty million barrels a day and

208
00:10:45,240 --> 00:10:48,360
Speaker 8: today it's one hundred million a day. So they discovered

209
00:10:48,440 --> 00:10:51,880
Speaker 8: that they could not on their own balance the market,

210
00:10:51,960 --> 00:10:54,800
Speaker 8: they could not put a floor under prices, and they

211
00:10:54,840 --> 00:10:58,480
Speaker 8: needed to expand, and they had the opportunity to do

212
00:10:58,559 --> 00:11:02,800
Speaker 8: so in the middle of the last decade when we

213
00:11:02,880 --> 00:11:06,280
Speaker 8: had volatility across the planet, and a lot of that

214
00:11:06,400 --> 00:11:12,360
Speaker 8: volatility was a result of the two fastest growing oil

215
00:11:12,400 --> 00:11:15,880
Speaker 8: producing countries in the world, Russia and the United States.

216
00:11:16,679 --> 00:11:20,439
Speaker 8: They were looking in the middle of the last decade,

217
00:11:20,480 --> 00:11:26,280
Speaker 8: actually around twenty thirteen, just at the time before Russia

218
00:11:27,080 --> 00:11:32,040
Speaker 8: had his first invasion of Ukraine, and they saw that

219
00:11:32,440 --> 00:11:35,120
Speaker 8: the production growth was a million barrels a day in

220
00:11:35,120 --> 00:11:37,440
Speaker 8: both countries if you look back a couple of years,

221
00:11:38,200 --> 00:11:41,400
Speaker 8: and they decided to bring prices down. They thought if

222
00:11:41,400 --> 00:11:45,280
Speaker 8: they could bring prices down to around seventy dollars a barrel,

223
00:11:45,640 --> 00:11:48,120
Speaker 8: they would lose They would see the world lose two

224
00:11:48,120 --> 00:11:50,160
Speaker 8: million barrels a day of oil and it didn't happen.

225
00:11:50,360 --> 00:11:53,200
Speaker 2: Paul, I want to mention this. Everyone was looking for

226
00:11:53,320 --> 00:11:57,520
Speaker 2: one hundred and it was a lone voice at City Group,

227
00:11:58,760 --> 00:12:01,600
Speaker 2: a big grizzled Edward Morris, you know, a bit older,

228
00:12:01,679 --> 00:12:06,640
Speaker 2: saying well, maybe not he nailed the move to seventy.

229
00:12:07,000 --> 00:12:09,480
Speaker 6: So ed how do you think about Russia as a

230
00:12:09,520 --> 00:12:12,600
Speaker 6: global supplier these days, because it seems like just in

231
00:12:12,640 --> 00:12:15,280
Speaker 6: the last few days things are changing. When you think

232
00:12:15,280 --> 00:12:17,560
Speaker 6: about the Trump administration how they're viewing Russia.

233
00:12:17,640 --> 00:12:18,640
Speaker 5: Do you expect.

234
00:12:18,360 --> 00:12:21,360
Speaker 6: Russia to be a bigger global supplier. I'm not sure

235
00:12:21,360 --> 00:12:22,040
Speaker 6: where that oil went.

236
00:12:22,679 --> 00:12:24,760
Speaker 8: You know, it all depends on when you're talking about

237
00:12:24,840 --> 00:12:28,120
Speaker 8: what your horizon is and what could possibly happen. And

238
00:12:28,440 --> 00:12:30,720
Speaker 8: you have to remember that it wasn't that long ago.

239
00:12:30,840 --> 00:12:38,199
Speaker 8: It was twenty nineteen when Putin visited Russia, visited Saddi

240
00:12:38,320 --> 00:12:41,760
Speaker 8: Raby right after the attack on the app Cake facility

241
00:12:42,520 --> 00:12:44,960
Speaker 8: and said, listen, we're going to be cooperating with you

242
00:12:45,559 --> 00:12:48,840
Speaker 8: through your Ramco IPO, and then we're going to be

243
00:12:49,160 --> 00:12:52,840
Speaker 8: out on our own and section. The CEO of Roznev

244
00:12:52,920 --> 00:12:55,560
Speaker 8: said right after that IPO, we're out on our own

245
00:12:56,040 --> 00:12:58,959
Speaker 8: we are going to be growing oil production at home

246
00:12:59,320 --> 00:13:04,600
Speaker 8: and abroad. They have right now the Vastok field in

247
00:13:04,640 --> 00:13:08,520
Speaker 8: northern Siberia, and that field can produce its scheduled to

248
00:13:08,520 --> 00:13:12,120
Speaker 8: produce two million incremental barrels a day. They are wash

249
00:13:12,200 --> 00:13:15,439
Speaker 8: in oil and they need to do something about it.

250
00:13:15,520 --> 00:13:19,360
Speaker 2: So President Trump says, drill, baby, drill, and we don't

251
00:13:19,760 --> 00:13:22,840
Speaker 2: waste time on that. But what we can state with

252
00:13:23,120 --> 00:13:28,040
Speaker 2: Edward Morse is oil a weapon for the United States

253
00:13:28,080 --> 00:13:29,520
Speaker 2: in our geopolitics.

254
00:13:30,400 --> 00:13:33,840
Speaker 8: Oil is certainly an important part of the foreign policy

255
00:13:33,840 --> 00:13:36,840
Speaker 8: in the country. It cannot be weaponized other than the

256
00:13:36,880 --> 00:13:39,840
Speaker 8: degree to which you can put sanctions on a country.

257
00:13:40,080 --> 00:13:42,600
Speaker 8: I don't know what weaponizing it means. I don't know

258
00:13:42,880 --> 00:13:45,760
Speaker 8: what we're going to pursue. Energy dominance means. I know

259
00:13:45,760 --> 00:13:51,040
Speaker 8: what it means as a soft, powerful instrument of policy.

260
00:13:51,080 --> 00:13:53,600
Speaker 8: And let me give you an example. We have become

261
00:13:54,040 --> 00:13:57,600
Speaker 8: the largest exporter of energy in the world, the largest

262
00:13:57,600 --> 00:14:01,839
Speaker 8: exporter of LNG. That LNG export growth enabled the United

263
00:14:01,840 --> 00:14:06,960
Speaker 8: States to replace every drop of Russian energy, but particularly

264
00:14:07,080 --> 00:14:09,840
Speaker 8: natural gas, going into Europe, and it did so at

265
00:14:09,880 --> 00:14:13,199
Speaker 8: a time when it was able to globalize a gas

266
00:14:13,240 --> 00:14:17,040
Speaker 8: market that had not been globalized. We have made oil

267
00:14:17,080 --> 00:14:21,360
Speaker 8: because we don't allow destination restrictions. We've enabled natural gas

268
00:14:21,880 --> 00:14:24,240
Speaker 8: to be global and the price of it is based

269
00:14:24,360 --> 00:14:27,040
Speaker 8: at Henry Hubb in the United States. That's kind of

270
00:14:27,120 --> 00:14:32,520
Speaker 8: soft diplomacy. We have an ability to expand l G globally,

271
00:14:32,560 --> 00:14:34,920
Speaker 8: but it's a soft ability. We have an ability to

272
00:14:35,000 --> 00:14:40,160
Speaker 8: say multilateral lending institutions ought to be pushing natural gas.

273
00:14:40,240 --> 00:14:45,600
Speaker 8: They ought to be backstopping regasification. It's cleaner than coal,

274
00:14:45,960 --> 00:14:49,920
Speaker 8: it's helpful to the global economy. But that's soft diplomacy.

275
00:14:49,920 --> 00:14:52,160
Speaker 8: It's not using it as a weapon.

276
00:14:53,320 --> 00:14:55,840
Speaker 6: So talk to us about the demand side of the equation.

277
00:14:55,840 --> 00:14:57,480
Speaker 6: I know, when you think about some of these commodities,

278
00:14:57,480 --> 00:14:59,840
Speaker 6: like global oil, you really have to have a call

279
00:15:00,160 --> 00:15:00,880
Speaker 6: on demand.

280
00:15:01,520 --> 00:15:02,320
Speaker 5: What do you think demand?

281
00:15:02,440 --> 00:15:07,360
Speaker 2: Is brilliant question, But even more brilliant do you drive

282
00:15:07,400 --> 00:15:07,760
Speaker 2: an EV?

283
00:15:09,320 --> 00:15:11,160
Speaker 8: I got to tell you I did drive an EV

284
00:15:11,800 --> 00:15:14,360
Speaker 8: until we moved back to New York full time, and

285
00:15:14,400 --> 00:15:17,000
Speaker 8: then I discovered that it was too expensive to have

286
00:15:17,040 --> 00:15:20,680
Speaker 8: a car to deal with Actually, the rush on garages

287
00:15:20,960 --> 00:15:24,000
Speaker 8: right at the edge of the zone from where New

288
00:15:24,080 --> 00:15:25,440
Speaker 8: York one to go south there.

289
00:15:25,600 --> 00:15:29,880
Speaker 2: Coming up on the congestion text, Paul, continue with.

290
00:15:29,840 --> 00:15:33,360
Speaker 5: Your demand view here of the next year or two.

291
00:15:33,840 --> 00:15:35,920
Speaker 8: So as we know, there's been a difference of demand

292
00:15:36,000 --> 00:15:40,200
Speaker 8: views between people in this country, between OPEK and the

293
00:15:40,560 --> 00:15:44,320
Speaker 8: ia OPEK and the IAU. Demand is kind of very

294
00:15:44,360 --> 00:15:47,640
Speaker 8: simple if you look at it. Historically, we've had a

295
00:15:47,880 --> 00:15:51,720
Speaker 8: regular drop in the oil intensity of GDP around the world,

296
00:15:52,240 --> 00:15:55,640
Speaker 8: starting at the really end of the post World War

297
00:15:55,680 --> 00:16:02,600
Speaker 8: Two growth of road transport in reconstructed Europe, reconstructed Japan,

298
00:16:03,040 --> 00:16:05,360
Speaker 8: and in the unterstate highway system in the US, We've

299
00:16:05,400 --> 00:16:10,080
Speaker 8: had a year after year a drop in the percentage

300
00:16:10,640 --> 00:16:14,720
Speaker 8: of demand growth per unit of GDP growth. Now, that

301
00:16:14,720 --> 00:16:17,520
Speaker 8: doesn't mean that oil demand comes to an end. It

302
00:16:17,560 --> 00:16:21,280
Speaker 8: means it slows down, okay. And to give you an example,

303
00:16:22,160 --> 00:16:25,120
Speaker 8: if we go back to nineteen seventy seventy one, for

304
00:16:25,280 --> 00:16:28,720
Speaker 8: every one percent increase in the world in global oil

305
00:16:28,800 --> 00:16:32,080
Speaker 8: demand and GDP, there was a one point one point

306
00:16:32,080 --> 00:16:35,320
Speaker 8: two percent increase in oil demand. Today's about zero point

307
00:16:35,360 --> 00:16:39,520
Speaker 8: three to one. So if we have three percent global

308
00:16:39,560 --> 00:16:42,040
Speaker 8: GDP growth, we have a million barrels a day on

309
00:16:42,120 --> 00:16:44,160
Speaker 8: a one percent based on one hundred million barrel a

310
00:16:44,200 --> 00:16:48,880
Speaker 8: day market of oil demand. And that's continuing to slide.

311
00:16:49,000 --> 00:16:51,120
Speaker 8: So think of it as we're not going to have

312
00:16:51,200 --> 00:16:53,240
Speaker 8: much more than million barrels a day of demand growth.

313
00:16:53,360 --> 00:16:55,640
Speaker 2: We're going to thrilled that with us today. Edward Morris,

314
00:16:55,720 --> 00:16:58,280
Speaker 2: of course you know I'm from City Group at harttreet Partners.

315
00:16:58,920 --> 00:17:02,880
Speaker 2: Now definitive and geopolitics of oil and also of course

316
00:17:03,280 --> 00:17:05,639
Speaker 2: pricing of will do you have at heart treat? Are

317
00:17:05,680 --> 00:17:08,639
Speaker 2: you allowed to have a Brent guess? Do you have

318
00:17:08,680 --> 00:17:11,439
Speaker 2: an oil barrel guess? Or is it a folk spot?

319
00:17:12,119 --> 00:17:15,159
Speaker 8: No, No, it's not a problem. We live in the

320
00:17:15,160 --> 00:17:18,880
Speaker 8: most volatile market the world has seen, based on things

321
00:17:18,920 --> 00:17:21,120
Speaker 8: that are out of our control. We don't know what's

322
00:17:21,160 --> 00:17:24,040
Speaker 8: going to happen here and there. It's a relatively evenly

323
00:17:24,080 --> 00:17:27,320
Speaker 8: balanced market. But for the fact that Opek, going back

324
00:17:27,320 --> 00:17:30,280
Speaker 8: to your first question, okay plus has taken so much

325
00:17:30,320 --> 00:17:32,560
Speaker 8: oil out of the market that it now amounts to

326
00:17:32,680 --> 00:17:36,119
Speaker 8: eight million barrels a day. That's a lot of shut

327
00:17:36,160 --> 00:17:39,199
Speaker 8: in production capacity that can come on. And if we

328
00:17:39,240 --> 00:17:42,360
Speaker 8: look at the volatility today, we have prices going up

329
00:17:42,760 --> 00:17:45,280
Speaker 8: in part because of the drone attacks on the CPC

330
00:17:45,400 --> 00:17:48,959
Speaker 8: pipeline coming out of the CASPI and bringing Russian and

331
00:17:49,119 --> 00:17:53,680
Speaker 8: Kazakh oil into the Mediterranean. We have an announcement from

332
00:17:54,160 --> 00:17:59,400
Speaker 8: Kurdistan from Baghdad that the pipeline from Kurdistan threw Turkey

333
00:17:59,400 --> 00:18:02,600
Speaker 8: into the medical training is going to be revived next week.

334
00:18:03,160 --> 00:18:07,000
Speaker 8: That's we've lost maybe three hundred thousand barrels a day

335
00:18:07,240 --> 00:18:10,560
Speaker 8: out of the CPC pipeline. We'll get perhaps three hundred

336
00:18:10,600 --> 00:18:15,320
Speaker 8: thousand barrels a day out of Iraq unexpected by next week.

337
00:18:15,359 --> 00:18:18,639
Speaker 8: So given that volatility, we think oil is in the range.

338
00:18:18,720 --> 00:18:20,840
Speaker 8: The range is sixty eight to seventy eight.

339
00:18:20,880 --> 00:18:24,159
Speaker 2: I assume it's ghosh, that's French ghoshe of you to

340
00:18:24,240 --> 00:18:26,840
Speaker 2: do by hold sell right now. I don't want to buyhold,

341
00:18:26,880 --> 00:18:29,720
Speaker 2: sell and big oil. But how do you position big

342
00:18:29,760 --> 00:18:34,560
Speaker 2: oil when I see Chevron announcing massive layoffs, massive restructure

343
00:18:35,160 --> 00:18:38,640
Speaker 2: and you know it's weak double digit return over thirty years.

344
00:18:39,280 --> 00:18:43,120
Speaker 2: Is big oil prosperous? Is it thriving? Is it the

345
00:18:43,160 --> 00:18:44,840
Speaker 2: stereotype of our ute?

346
00:18:44,960 --> 00:18:46,960
Speaker 8: Well, as we know, some big oil is prospering and

347
00:18:47,000 --> 00:18:50,560
Speaker 8: some big oil is not prospering. Maybe for some investments

348
00:18:50,560 --> 00:18:52,800
Speaker 8: that they were making in the past, in the recent past,

349
00:18:53,480 --> 00:18:58,240
Speaker 8: in the drive to go heavily into renewables and into

350
00:18:58,280 --> 00:19:01,240
Speaker 8: things that weren't providing the same level return. But look

351
00:19:01,280 --> 00:19:04,240
Speaker 8: at the production growth of Chevron, the production growth of

352
00:19:04,480 --> 00:19:08,000
Speaker 8: Exxon on a global platform based in part of the

353
00:19:08,080 --> 00:19:12,320
Speaker 8: United States. They're increasing their output. They're increasing their output

354
00:19:12,320 --> 00:19:15,040
Speaker 8: of oil and gas in a world in which they're

355
00:19:15,119 --> 00:19:15,800
Speaker 8: very competitive.

356
00:19:16,720 --> 00:19:17,200
Speaker 2: Talk to us.

357
00:19:17,320 --> 00:19:21,919
Speaker 6: I'm watching the television show Landman at the life in

358
00:19:21,920 --> 00:19:23,879
Speaker 6: the oil patch in West Texas. So I now consider

359
00:19:23,920 --> 00:19:27,200
Speaker 6: myself an expert on global oil and gas. Here talk

360
00:19:27,240 --> 00:19:30,240
Speaker 6: to us about the US. We're now a net exporter

361
00:19:30,520 --> 00:19:34,760
Speaker 6: of energy. What is our role in the global energy market? Visavsay,

362
00:19:34,800 --> 00:19:36,240
Speaker 6: maybe like an OPEC plus or something.

363
00:19:36,560 --> 00:19:39,800
Speaker 8: We have transformed the energy market to the world, including

364
00:19:39,840 --> 00:19:42,720
Speaker 8: the oil market. If you go back to twenty ten,

365
00:19:43,359 --> 00:19:46,960
Speaker 8: we were a gross importer and a net importer, and

366
00:19:47,040 --> 00:19:50,520
Speaker 8: our production base if you add NGLs and other liquids,

367
00:19:50,960 --> 00:19:54,080
Speaker 8: was around eight million barrels a day. The last month

368
00:19:54,080 --> 00:19:56,840
Speaker 8: for which we have data, our production of liquids was

369
00:19:56,880 --> 00:20:00,000
Speaker 8: twenty three million barrels a day. We have moved from

370
00:20:00,080 --> 00:20:04,680
Speaker 8: being the largest gross and net import of the world

371
00:20:04,680 --> 00:20:08,080
Speaker 8: to being the largest gross exporter. We export sixteen to

372
00:20:08,119 --> 00:20:11,920
Speaker 8: seventeen million barrels a day of liquids nobody. That's more

373
00:20:12,000 --> 00:20:15,840
Speaker 8: than the combined exports of Russia and Saudi Arabia. Our

374
00:20:15,880 --> 00:20:18,840
Speaker 8: production is more than the total production of Russia and

375
00:20:18,840 --> 00:20:22,199
Speaker 8: Saudi Arabia combined. And we've become a net exporter on

376
00:20:22,240 --> 00:20:24,480
Speaker 8: the order of magnitude of four million barrels a day.

377
00:20:24,800 --> 00:20:27,360
Speaker 8: So that has made the basic difference in the global

378
00:20:27,400 --> 00:20:31,480
Speaker 8: market is a wild difference. Is what gives the US leverage.

379
00:20:31,560 --> 00:20:33,159
Speaker 2: I'd love to get you back in here in a

380
00:20:33,240 --> 00:20:35,760
Speaker 2: six months three month basis, doctor Morris. Let me ask

381
00:20:35,760 --> 00:20:38,600
Speaker 2: you one final question, and it's sort of from sixty

382
00:20:38,640 --> 00:20:44,400
Speaker 2: thousand feet in philosophical how bad did Anglo miracle screw up?

383
00:20:44,720 --> 00:20:48,639
Speaker 2: I mean, within the arch of Edward Morris's tenure owning

384
00:20:48,680 --> 00:20:53,240
Speaker 2: the high ground on this how bad did German leadership

385
00:20:53,359 --> 00:20:58,199
Speaker 2: screw up? From abnaw or forward.

386
00:20:58,320 --> 00:21:04,240
Speaker 8: So my personal experience in it is dealing with the

387
00:21:05,640 --> 00:21:09,439
Speaker 8: effort by Germany to become dependent on Russian gas. So

388
00:21:09,480 --> 00:21:11,280
Speaker 8: I was in the State Department at the time.

389
00:21:11,160 --> 00:21:13,760
Speaker 2: That the serving both Carter and Reagion.

390
00:21:15,200 --> 00:21:19,480
Speaker 8: And the US and France were the only NATO countries

391
00:21:19,880 --> 00:21:22,680
Speaker 8: that said, hey, you've got to look at you Germany

392
00:21:23,080 --> 00:21:26,960
Speaker 8: have to look at dependence. Yes, you can import gas,

393
00:21:27,520 --> 00:21:30,520
Speaker 8: but think about what it will do to your foreign policy.

394
00:21:30,560 --> 00:21:34,719
Speaker 8: Think about what leverage you've lost in terms of that dependency,

395
00:21:34,960 --> 00:21:39,320
Speaker 8: your inability to say no. And we saw that over time,

396
00:21:39,359 --> 00:21:42,080
Speaker 8: and I think Germany has really learned that lesson in

397
00:21:42,200 --> 00:21:46,720
Speaker 8: terms of being very reluctant as they go through this

398
00:21:46,800 --> 00:21:51,159
Speaker 8: election process of this coming Sunday, almost all of the

399
00:21:51,200 --> 00:21:54,600
Speaker 8: parties are reluctant to do more than say, we might

400
00:21:54,880 --> 00:22:00,040
Speaker 8: consider importing oil on a spot basis, but not on

401
00:22:00,080 --> 00:22:02,160
Speaker 8: the full contract based thirty seconds.

402
00:22:02,240 --> 00:22:03,600
Speaker 2: Does Tesla have a future?

403
00:22:05,119 --> 00:22:06,960
Speaker 8: I think evs have a future. I'm not going to

404
00:22:07,000 --> 00:22:10,840
Speaker 8: pick one versus another. But they're fun cars to drive,

405
00:22:11,840 --> 00:22:16,440
Speaker 8: They're cleaner than other cars to drive, and they're getting

406
00:22:16,440 --> 00:22:18,880
Speaker 8: more and more mild. So if I were to buy

407
00:22:18,880 --> 00:22:21,240
Speaker 8: a car again, I would certainly not hesitate to buy it.

408
00:22:21,280 --> 00:22:23,640
Speaker 2: Now. There we are the purson we need. Edward Morris,

409
00:22:23,720 --> 00:22:25,840
Speaker 2: thank you so much. Thank you for joining Bloomberg and

410
00:22:25,840 --> 00:22:29,199
Speaker 2: Bloomberg Surveillance today, doctor Morris. Of course they are in

411
00:22:29,240 --> 00:22:32,360
Speaker 2: the tumult, the maelstrom that is oil today.

412
00:22:33,040 --> 00:22:36,919
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

413
00:22:36,960 --> 00:22:40,000
Speaker 1: starting at seven am Eastern on Apple Corplay and Android

414
00:22:40,000 --> 00:22:43,040
Speaker 1: Auto with the Bloomberg Business app. You can also listen

415
00:22:43,119 --> 00:22:46,399
Speaker 1: live on Amazon Alexa from our flagship New York station.

416
00:22:46,920 --> 00:22:51,000
Speaker 1: Just say Alexa, play Bloomberg eleven thirty Postnion time Ken.

417
00:22:51,040 --> 00:22:52,520
Speaker 2: What we're going to do is talk to Mike Mayo

418
00:22:52,600 --> 00:22:56,879
Speaker 2: here with Willis Fargo. Mike Mayo is absolutely legendary in banking.

419
00:22:56,920 --> 00:22:59,040
Speaker 2: He's one of the few people that Congress called upon

420
00:22:59,440 --> 00:23:02,120
Speaker 2: in the Great Financial Crisis to say what in God's

421
00:23:02,200 --> 00:23:05,600
Speaker 2: name is going on? And it has finally paid off

422
00:23:05,640 --> 00:23:08,960
Speaker 2: his optimism on large cap banks in Europe and of

423
00:23:09,000 --> 00:23:11,840
Speaker 2: course here in America, I have a charted city group

424
00:23:11,880 --> 00:23:15,880
Speaker 2: with a ten for one reverse split cratering from you know,

425
00:23:16,000 --> 00:23:19,840
Speaker 2: down and when and then it just forever and finally

426
00:23:19,960 --> 00:23:22,480
Speaker 2: a legitimate leg up. Let's start with that, Mike Mayol.

427
00:23:22,720 --> 00:23:25,080
Speaker 2: Why is banking finally getting a leg up?

428
00:23:25,760 --> 00:23:30,200
Speaker 7: Well, the times they are a change in and you're

429
00:23:30,280 --> 00:23:36,800
Speaker 7: seeing historic inflection in terms of the revenues, the earnings,

430
00:23:36,840 --> 00:23:41,200
Speaker 7: and especially fifteen years of regulation going from a headwind

431
00:23:41,280 --> 00:23:43,880
Speaker 7: to a tailwind. Now I'm not talking about going back

432
00:23:43,920 --> 00:23:46,680
Speaker 7: to two thousand and six, two thousand and seven, before

433
00:23:46,720 --> 00:23:50,200
Speaker 7: the Global Financial crisis, I'm talking about preserving the safety

434
00:23:50,200 --> 00:23:52,800
Speaker 7: and soundness of the banks and eliminating a lot of

435
00:23:52,840 --> 00:23:55,800
Speaker 7: red tape, and that can help banks operate a lot

436
00:23:55,800 --> 00:23:57,800
Speaker 7: of higher profit margin to help their stock rate.

437
00:23:57,960 --> 00:24:00,920
Speaker 2: Is it operational excellence or is it the g the curve?

438
00:24:01,880 --> 00:24:07,800
Speaker 7: You know, it's really more just operational streamlining because regulation

439
00:24:07,920 --> 00:24:11,720
Speaker 7: has gotten so complex. Pull back that complexity and banks

440
00:24:11,760 --> 00:24:14,840
Speaker 7: can perform better. But yes, you've had fifteen years of

441
00:24:14,880 --> 00:24:20,520
Speaker 7: financial repression. Zero interest rates were disturbing to bank's profitability.

442
00:24:20,560 --> 00:24:23,400
Speaker 7: Now you're going back, just back to normal.

443
00:24:24,440 --> 00:24:26,800
Speaker 6: So talk to us about how you think the regulatory

444
00:24:26,800 --> 00:24:30,159
Speaker 6: framework may change and what it can do to returns

445
00:24:30,240 --> 00:24:33,399
Speaker 6: on equities for example, Well.

446
00:24:33,280 --> 00:24:39,000
Speaker 7: I think the regulatory framework was vastly improved after the

447
00:24:39,040 --> 00:24:43,280
Speaker 7: Global financial crisis. Banks doubled capital, they doubled their liquidity,

448
00:24:43,680 --> 00:24:46,440
Speaker 7: They de risked for their consumer customers. Remember all those

449
00:24:46,480 --> 00:24:50,160
Speaker 7: subprime loans. They de risk their commercial customers. If anything,

450
00:24:50,240 --> 00:24:53,920
Speaker 7: banks have been marginalized to the benefit of the non

451
00:24:53,960 --> 00:24:56,000
Speaker 7: bank So a lot of the more risky stuff has

452
00:24:56,000 --> 00:24:59,600
Speaker 7: gone outside the bank industry. So I would say, great job.

453
00:24:59,640 --> 00:25:03,240
Speaker 7: Regular from the year you know, twenty ten through it's

454
00:25:03,240 --> 00:25:07,320
Speaker 7: called twenty fifteen. But the last decade, you had complexity

455
00:25:07,440 --> 00:25:10,680
Speaker 7: pile on top of complexity, the living will the FED

456
00:25:10,720 --> 00:25:14,080
Speaker 7: stress test. JP Morgan submits eighty thousand pages for each

457
00:25:15,000 --> 00:25:17,480
Speaker 7: and you know, I talked to the ex vice chairman

458
00:25:17,480 --> 00:25:20,160
Speaker 7: of the FDIC has said he didn't understand it when

459
00:25:20,160 --> 00:25:22,399
Speaker 7: he reviewed it, and nor did a lot of the banks.

460
00:25:22,400 --> 00:25:24,400
Speaker 7: So it's a lot of wasted money. So I think

461
00:25:24,400 --> 00:25:27,280
Speaker 7: you can save a lot of money on expenses at

462
00:25:27,320 --> 00:25:30,159
Speaker 7: the banks, at the regulatory agencies, and I think some

463
00:25:30,200 --> 00:25:32,639
Speaker 7: of that gets passed on to the customers. And also

464
00:25:33,880 --> 00:25:36,040
Speaker 7: banks deserve to have a level playing field when it

465
00:25:36,080 --> 00:25:39,480
Speaker 7: comes to how much capital they have, so compute those

466
00:25:39,520 --> 00:25:42,240
Speaker 7: capital ratios the same way you do for everybody else,

467
00:25:42,640 --> 00:25:44,639
Speaker 7: and the numbers go up by quite a bit. So

468
00:25:44,760 --> 00:25:49,560
Speaker 7: this could improve banking returns by two hundred basis points

469
00:25:49,600 --> 00:25:52,720
Speaker 7: over a few years. That's significant, and that can propel

470
00:25:52,800 --> 00:25:55,199
Speaker 7: a bank stock rally over a few years.

471
00:25:56,200 --> 00:25:59,679
Speaker 6: So are there certain banks that are better positioned in

472
00:25:59,720 --> 00:26:02,680
Speaker 6: this type of environment or is this a blanket call

473
00:26:02,760 --> 00:26:04,680
Speaker 6: on us financials?

474
00:26:05,080 --> 00:26:09,199
Speaker 7: Well, a rising tide does lift all ships. JP Morgan

475
00:26:09,240 --> 00:26:14,320
Speaker 7: remains best in class globile bank. But my favorite, number one,

476
00:26:14,440 --> 00:26:17,040
Speaker 7: number two, and number three favorite is City Group. I

477
00:26:17,080 --> 00:26:19,720
Speaker 7: was on your show not to you know last year,

478
00:26:20,680 --> 00:26:23,480
Speaker 7: and it's moved, it's starting to move, but it's still

479
00:26:23,640 --> 00:26:25,960
Speaker 7: that my dominant number one pick. It's a new era

480
00:26:26,080 --> 00:26:28,760
Speaker 7: for banking, but it's also a new era for City Group.

481
00:26:29,200 --> 00:26:31,720
Speaker 2: I've got a chart normalize. We're going to talk about this,

482
00:26:31,800 --> 00:26:33,719
Speaker 2: folks with Mike Mayo, you or well as Fargo as

483
00:26:33,760 --> 00:26:36,080
Speaker 2: we go into the next half. For I got a

484
00:26:36,200 --> 00:26:39,560
Speaker 2: chart normalized. Back with the day Lehman collapse. I think

485
00:26:39,600 --> 00:26:42,240
Speaker 2: I maybe talked to you that day. I can't remember.

486
00:26:42,359 --> 00:26:45,600
Speaker 2: I got a JP Morgan moonshot. When you say banks

487
00:26:45,600 --> 00:26:48,359
Speaker 2: are going to do well, are they catching up with

488
00:26:48,560 --> 00:26:52,600
Speaker 2: JP Morgan or is it all boats rising even for JP.

489
00:26:52,359 --> 00:26:58,640
Speaker 7: Morgan, I'd say both. I think the lesser bank will

490
00:26:58,720 --> 00:27:01,880
Speaker 7: narrow the gap with JP Morgan for sure, But at

491
00:27:01,880 --> 00:27:05,399
Speaker 7: the same time, JP Morgan should continue to matter. What

492
00:27:05,520 --> 00:27:09,000
Speaker 7: a bank generating over twenty percent returns on fifteen percent

493
00:27:09,080 --> 00:27:11,560
Speaker 7: capital with some best in class efficiency.

494
00:27:11,840 --> 00:27:15,359
Speaker 2: Mike Mayo with this, So I got JP Morgan, you

495
00:27:15,400 --> 00:27:19,119
Speaker 2: know clearly way ahead. Three hundred and seventeen thousand employees

496
00:27:19,200 --> 00:27:22,280
Speaker 2: is the working number we've got in the DS screen.

497
00:27:22,840 --> 00:27:24,800
Speaker 2: You know, there's all this you know the stuff Shinelli

498
00:27:24,880 --> 00:27:27,320
Speaker 2: bask talks about all this OMG, who's going to take

499
00:27:27,359 --> 00:27:30,199
Speaker 2: over for Jamie? Does that germane to you is like,

500
00:27:30,440 --> 00:27:34,000
Speaker 2: is that part of your analysis of JP Morgan or

501
00:27:34,000 --> 00:27:36,800
Speaker 2: do you just ignore the people moving around and just

502
00:27:36,840 --> 00:27:38,560
Speaker 2: look at the financials and the execution?

503
00:27:39,200 --> 00:27:44,000
Speaker 7: Well, I think Jamie Diamond. I asked him this question

504
00:27:44,080 --> 00:27:47,000
Speaker 7: the last earnings cost, said Jamie, who's your successor? And

505
00:27:47,040 --> 00:27:48,920
Speaker 7: he didn't give much of an answer.

506
00:27:48,720 --> 00:27:50,240
Speaker 2: And he's still doing that for ten years.

507
00:27:50,320 --> 00:27:52,600
Speaker 7: Well, then I finally said, so are you going to

508
00:27:52,600 --> 00:27:54,399
Speaker 7: be around for a few more years? He said yes,

509
00:27:54,560 --> 00:27:56,480
Speaker 7: So I think when you have this many moving parts,

510
00:27:56,680 --> 00:27:59,919
Speaker 7: Jamie's not going anywhere in the immediate term. Having said that,

511
00:28:00,240 --> 00:28:03,000
Speaker 7: there's a deep bench at JP Morgan. It could be

512
00:28:03,640 --> 00:28:06,000
Speaker 7: a number of three or four different people. Marion Lake

513
00:28:06,080 --> 00:28:09,399
Speaker 7: certainly is the name that comes to the four investors knowers.

514
00:28:09,400 --> 00:28:12,680
Speaker 7: She telled a lot of positions. But if Jamie stays

515
00:28:12,720 --> 00:28:15,760
Speaker 7: on for several years, it's you know, we'll see what happens.

516
00:28:16,280 --> 00:28:19,520
Speaker 7: I'll say this, Yeah, I'm not a couple of years

517
00:28:19,520 --> 00:28:22,040
Speaker 7: ago I downgraded JP Morgan when they were spending all

518
00:28:22,119 --> 00:28:24,240
Speaker 7: kinds of money without telling us why they were spending

519
00:28:24,280 --> 00:28:26,680
Speaker 7: and everything else. Then I upgraded it made it my

520
00:28:26,760 --> 00:28:29,080
Speaker 7: number one pick after the failures from a couple of

521
00:28:29,160 --> 00:28:32,040
Speaker 7: years ago. But not one investor that I've spoken with,

522
00:28:32,080 --> 00:28:35,080
Speaker 7: and I've traveled a lot the last month, last two months,

523
00:28:35,119 --> 00:28:38,320
Speaker 7: not one investor that I've spoken with wants Jamie Diamond

524
00:28:38,320 --> 00:28:41,640
Speaker 7: to leave. So people want Jamie Diamond to stay right now,

525
00:28:41,720 --> 00:28:44,680
Speaker 7: and so I think he should get that message and stay.

526
00:28:44,720 --> 00:28:47,960
Speaker 7: And he'd been Look, he'd been playing for this moment.

527
00:28:49,200 --> 00:28:53,840
Speaker 7: I caught reregulation, not deregulation, reregulation making, you know, more

528
00:28:53,960 --> 00:28:58,560
Speaker 7: common sense regulation. And he's gonna benefit. JP Morgan's gonna benefit.

529
00:28:58,680 --> 00:29:01,000
Speaker 7: Why leave now? He's been waiting to go to the

530
00:29:01,040 --> 00:29:04,600
Speaker 7: ballgame your whole professional career. You're finally getting there. You're

531
00:29:04,640 --> 00:29:05,800
Speaker 7: not going to leave before the first time.

532
00:29:06,960 --> 00:29:07,280
Speaker 5: City.

533
00:29:07,320 --> 00:29:09,200
Speaker 6: I'm a former employee there at City, and when I

534
00:29:09,200 --> 00:29:11,080
Speaker 6: worked there, I felt like there's not a piece of

535
00:29:11,080 --> 00:29:12,080
Speaker 6: business we couldn't win.

536
00:29:12,600 --> 00:29:14,320
Speaker 5: What happened to City and why is it now your

537
00:29:14,400 --> 00:29:15,040
Speaker 5: number one pick?

538
00:29:15,400 --> 00:29:18,280
Speaker 7: Well, look what's compared to the time you work there.

539
00:29:18,320 --> 00:29:21,400
Speaker 7: There was a dramatic shift last year that's underappreciated by

540
00:29:21,440 --> 00:29:25,240
Speaker 7: almost everybody. They went from five decades of this global

541
00:29:25,720 --> 00:29:29,840
Speaker 7: matrix management structure that nobody understood. And now they have

542
00:29:30,040 --> 00:29:35,160
Speaker 7: five lines of business. They have payments, banking, markets, wealth,

543
00:29:35,200 --> 00:29:38,040
Speaker 7: and consumer. When they have a CEO in charge of each,

544
00:29:38,120 --> 00:29:40,880
Speaker 7: they have return targets for each, they have accountability for

545
00:29:40,920 --> 00:29:43,080
Speaker 7: each one of those five lines of business. That's what

546
00:29:43,120 --> 00:29:45,200
Speaker 7: you're playing for for the next five to ten years.

547
00:29:45,360 --> 00:29:48,360
Speaker 7: But at the same time they're at that flection point

548
00:29:48,400 --> 00:29:51,520
Speaker 7: of the J curb. Invest money, your profits go down.

549
00:29:51,760 --> 00:29:53,360
Speaker 7: They're turning up on the other side of that J

550
00:29:53,560 --> 00:29:55,880
Speaker 7: curb where those investments start to pay off and they

551
00:29:55,920 --> 00:29:58,560
Speaker 7: start spending less. So you're going to see twice or

552
00:29:58,600 --> 00:30:02,520
Speaker 7: maybe three times better efficiency improvement at City Group and

553
00:30:02,640 --> 00:30:05,120
Speaker 7: return improvement at City Group than the other banks. And

554
00:30:05,160 --> 00:30:07,920
Speaker 7: by the way, they're passing this magical line where they

555
00:30:07,960 --> 00:30:10,880
Speaker 7: have single digit returns to double digit returns. When you

556
00:30:10,920 --> 00:30:13,360
Speaker 7: do that, you go from value destruction to value creation.

557
00:30:13,760 --> 00:30:17,040
Speaker 7: That is the number one biggest driver of bank stock performance.

558
00:30:17,200 --> 00:30:20,320
Speaker 7: It's the number one big bank stock performer so far

559
00:30:20,400 --> 00:30:22,640
Speaker 7: this year. I think it'll be the top performer by

560
00:30:22,640 --> 00:30:23,320
Speaker 7: the end of the year.

561
00:30:23,560 --> 00:30:27,040
Speaker 2: Michael Mayo was there in City Group and we'll continue.

562
00:30:27,080 --> 00:30:30,400
Speaker 2: He is, of course large cap Bank research at Wells Fargo.

563
00:30:31,080 --> 00:30:35,600
Speaker 2: Fairly to say, legendary and also very cut and chiseled. Yep,

564
00:30:35,680 --> 00:30:37,560
Speaker 2: you know he's like you know, he said to me, Tom,

565
00:30:38,120 --> 00:30:39,920
Speaker 2: you got to hit the weights again. Hit the gym. Time,

566
00:30:39,960 --> 00:30:42,200
Speaker 2: come on, you know he's like time getting the gym.

567
00:30:42,920 --> 00:30:44,000
Speaker 2: Thank you, Mike Maya.

568
00:30:44,280 --> 00:30:46,520
Speaker 6: On your City group pick. I'm fascinating by this now

569
00:30:46,600 --> 00:30:48,320
Speaker 6: it's all coming back to me. I walked out the

570
00:30:48,400 --> 00:30:50,520
Speaker 6: out of the door of City after a few years,

571
00:30:50,760 --> 00:30:51,960
Speaker 6: sold all my stock.

572
00:30:51,800 --> 00:30:53,719
Speaker 5: Literally on the day I walked out the door. Very

573
00:30:53,840 --> 00:30:55,480
Speaker 5: cool in January of two two thousand.

574
00:30:55,880 --> 00:30:59,480
Speaker 6: Jane Fraser, she's I think she's got a pretty good

575
00:30:59,480 --> 00:31:02,800
Speaker 6: message for the street. How is she different from other

576
00:31:02,840 --> 00:31:05,360
Speaker 6: CEOs at City who have also promised change and to

577
00:31:05,440 --> 00:31:07,080
Speaker 6: clean things up in the streamline things.

578
00:31:07,320 --> 00:31:10,720
Speaker 7: Oh boy, you're you're triggering me right now, I think

579
00:31:10,720 --> 00:31:13,760
Speaker 7: of the other CEOs. If he goes back, Tom Kane

580
00:31:13,760 --> 00:31:17,360
Speaker 7: probably remembers Walter Wriston, right, countries don't go pro Father.

581
00:31:17,240 --> 00:31:20,880
Speaker 2: Knew him personally. They used to talk farms in all

582
00:31:21,040 --> 00:31:25,680
Speaker 2: he worshiped Walter Riston and then it ended.

583
00:31:26,240 --> 00:31:29,440
Speaker 7: Yeah lending, let's lend. You know, Latin American countries will

584
00:31:29,440 --> 00:31:31,840
Speaker 7: pay us back they did in nineteen eighty seven. You

585
00:31:31,840 --> 00:31:35,040
Speaker 7: had big charges, and then you had John Reid back

586
00:31:35,120 --> 00:31:38,080
Speaker 7: in the early nineties. He had the Saudi Prince had

587
00:31:38,120 --> 00:31:40,960
Speaker 7: to pump it up with capital, and then you had

588
00:31:41,000 --> 00:31:44,920
Speaker 7: the whole Sandy Wow era A one later. And then

589
00:31:44,920 --> 00:31:47,400
Speaker 7: you had long term capital with the problems, and I

590
00:31:47,480 --> 00:31:49,920
Speaker 7: called that Noah's Ark because they brought two of everybody

591
00:31:49,960 --> 00:31:53,720
Speaker 7: along with the mergers with Travelers. And then you had

592
00:31:53,800 --> 00:31:57,720
Speaker 7: Vicram Pandit, which first you had Chuck Prince, the lawyer,

593
00:31:58,240 --> 00:32:01,600
Speaker 7: and that remember He's gonna keep dancing till the music stops,

594
00:32:01,640 --> 00:32:04,600
Speaker 7: and that that ended very music stop, and then the

595
00:32:04,680 --> 00:32:07,719
Speaker 7: music stopped, and basically they effectively failed and the government

596
00:32:07,720 --> 00:32:09,920
Speaker 7: bailed them out. And then you have Victim Pandit, which

597
00:32:10,440 --> 00:32:11,720
Speaker 7: was kind of there. And then you had this guy

598
00:32:11,760 --> 00:32:14,640
Speaker 7: Mike Corbett, who didn't change the strategy at all, and

599
00:32:15,080 --> 00:32:20,120
Speaker 7: through it all, I'd say city was very arrogant, very arrogant.

600
00:32:20,360 --> 00:32:23,040
Speaker 7: Jane Fraser gets there and says, you know what, we

601
00:32:23,160 --> 00:32:25,280
Speaker 7: have a lot of problems. We have a lot of

602
00:32:25,320 --> 00:32:28,200
Speaker 7: things to fix. The first step is to recognize that

603
00:32:28,280 --> 00:32:30,760
Speaker 7: you have a problem. And it's taken a little bit

604
00:32:30,800 --> 00:32:33,480
Speaker 7: longer than some people would have liked. I understand that,

605
00:32:33,560 --> 00:32:35,760
Speaker 7: and the expenses are a lot higher than they should

606
00:32:35,760 --> 00:32:39,440
Speaker 7: have been. But recognizing a problem. Then last year everyone

607
00:32:39,480 --> 00:32:43,960
Speaker 7: said City's going to mess up. Three concurrent initiatives. One

608
00:32:44,080 --> 00:32:49,240
Speaker 7: is this org simplification. They went from the five decades

609
00:32:49,280 --> 00:32:52,160
Speaker 7: of matrix structure, five lines of business. They eliminated five

610
00:32:52,240 --> 00:32:54,720
Speaker 7: management layers. They told all the employees you're gonna have

611
00:32:54,760 --> 00:32:57,160
Speaker 7: to manage more people's It was gut wrenching, and they

612
00:32:57,240 --> 00:32:59,760
Speaker 7: fired some people and that's always tough. And then you

613
00:32:59,800 --> 00:33:04,480
Speaker 7: have they're divesting, you know, over a dozen consumer operations

614
00:33:04,480 --> 00:33:07,120
Speaker 7: and a dozen countries outside the US, and then they

615
00:33:07,160 --> 00:33:10,080
Speaker 7: have this transformation in the back office. They're doing this

616
00:33:10,200 --> 00:33:13,239
Speaker 7: all at once, and everybody says city is going to implode. Well,

617
00:33:13,280 --> 00:33:16,640
Speaker 7: guess what last year City medics efficiency targets. They beat,

618
00:33:16,640 --> 00:33:19,720
Speaker 7: their revenue targets they met. And so going through those

619
00:33:19,760 --> 00:33:22,720
Speaker 7: major changes, so people say, what's the proof, what's the evidence?

620
00:33:22,960 --> 00:33:25,800
Speaker 7: Look at the results of last year, and they're guidance

621
00:33:26,160 --> 00:33:28,200
Speaker 7: three years in a row. They're now guiding if you

622
00:33:28,200 --> 00:33:31,240
Speaker 7: believe them, revenue is going higher and expenses going lower.

623
00:33:31,280 --> 00:33:34,240
Speaker 7: So you're at that huge inflection point now. So they're

624
00:33:34,280 --> 00:33:35,920
Speaker 7: recognizing and they have a problem. They don't have that

625
00:33:35,960 --> 00:33:38,320
Speaker 7: same degree of arrogance. They have the ability, they have

626
00:33:38,360 --> 00:33:40,960
Speaker 7: the capability. They're in one hundred countries. So if you're

627
00:33:40,960 --> 00:33:44,640
Speaker 7: a global, multi national corporation you want to do payments

628
00:33:44,720 --> 00:33:47,240
Speaker 7: or global investment banking, you got it. They're top three

629
00:33:47,280 --> 00:33:50,200
Speaker 7: in credit cards, they have their franchise, a new strategy,

630
00:33:50,280 --> 00:33:53,960
Speaker 7: and Jane Frasier as the ultimate architect of where city

631
00:33:54,000 --> 00:33:55,800
Speaker 7: groups should be in the next decade.

632
00:33:55,800 --> 00:33:58,640
Speaker 2: You are more qualified on this than anybody I know

633
00:33:58,760 --> 00:34:01,400
Speaker 2: on the sales side. The great group of sales side

634
00:34:01,440 --> 00:34:05,840
Speaker 2: analysts that are out there. Jamie Diamond this weekend was

635
00:34:05,840 --> 00:34:07,960
Speaker 2: a Talk of the weekend with some tape that was,

636
00:34:08,120 --> 00:34:12,280
Speaker 2: you know, out of JP Morgan and that Mike Mayo

637
00:34:13,320 --> 00:34:14,880
Speaker 2: on Work from Home.

638
00:34:17,360 --> 00:34:22,160
Speaker 7: I loved the Jamie Diamond video and the audio that

639
00:34:22,280 --> 00:34:25,600
Speaker 7: got leaped out to the press, and that's vintage Jamie Diamond.

640
00:34:25,640 --> 00:34:25,960
Speaker 8: It is.

641
00:34:26,200 --> 00:34:26,920
Speaker 2: I agree with that.

642
00:34:27,120 --> 00:34:29,000
Speaker 7: He just said he's going to say what he thinks,

643
00:34:29,000 --> 00:34:31,279
Speaker 7: and he says, if you don't like it, don't work

644
00:34:31,320 --> 00:34:33,560
Speaker 7: at JP Morgan. We want you to work at JP Morgan,

645
00:34:33,600 --> 00:34:35,720
Speaker 7: but if you you need to work in the office

646
00:34:35,719 --> 00:34:38,279
Speaker 7: so you can mentor people and everything else. And for

647
00:34:38,400 --> 00:34:41,759
Speaker 7: JP Morgan and Jamie Diamond that works and that's their strategy.

648
00:34:41,800 --> 00:34:44,040
Speaker 2: Correct when you stop. When you were at Credit Sweee,

649
00:34:44,560 --> 00:34:47,919
Speaker 2: you had mentors as you built your career. You went

650
00:34:47,960 --> 00:34:52,080
Speaker 2: from you know, the day you got candidate Credit Sweez.

651
00:34:52,080 --> 00:34:53,440
Speaker 2: I think I spoke to you that day or the

652
00:34:53,520 --> 00:34:58,160
Speaker 2: day after whatever. The answer is, you need mentors. Mike

653
00:34:58,280 --> 00:35:01,160
Speaker 2: Mayo on Work from Home, talk to the kids right now.

654
00:35:01,520 --> 00:35:04,479
Speaker 7: But I'd also say it's not one size fits all either. Okay.

655
00:35:04,600 --> 00:35:07,120
Speaker 7: So there's different departments a different banks.

656
00:35:06,920 --> 00:35:08,439
Speaker 2: Different departments, but come on.

657
00:35:08,400 --> 00:35:12,280
Speaker 7: Different departments, different banks. I will say though Jamie Diamond

658
00:35:12,320 --> 00:35:15,480
Speaker 7: and JP Morgan, it's worked for them. They came back

659
00:35:15,520 --> 00:35:18,880
Speaker 7: early during the pandemic Goldman Sachs. That was actually my

660
00:35:18,880 --> 00:35:21,120
Speaker 7: first meeting at Goldman Sachs. I wasn't going to go

661
00:35:21,160 --> 00:35:23,040
Speaker 7: in and my wife's a doctor, as you know, and

662
00:35:23,160 --> 00:35:25,279
Speaker 7: she says, no, you're going in to meet with them

663
00:35:25,400 --> 00:35:29,440
Speaker 7: in person, okay. And and I went to Goldman Sachs

664
00:35:29,440 --> 00:35:31,919
Speaker 7: and I'm telling you, they have this middle area where

665
00:35:31,960 --> 00:35:34,600
Speaker 7: you have to transfer to the upper floors, and it

666
00:35:34,680 --> 00:35:36,640
Speaker 7: was almost packed. And this was at a time no

667
00:35:36,680 --> 00:35:38,640
Speaker 7: one was going back to work. So the J P.

668
00:35:38,800 --> 00:35:41,920
Speaker 7: Morgan and Goldman Sachs, they had all their all, they

669
00:35:41,960 --> 00:35:44,600
Speaker 7: had so many employees back early and look at the

670
00:35:44,600 --> 00:35:50,520
Speaker 7: most successful. But it's not one size fits all. So

671
00:35:50,600 --> 00:35:53,080
Speaker 7: if if City Group decides they're going to allow some

672
00:35:53,120 --> 00:35:56,280
Speaker 7: people to work remotely, that might be a competitive advantage

673
00:35:56,280 --> 00:35:59,920
Speaker 7: in hiring certain people. Some saying get it. Well, just

674
00:36:00,360 --> 00:36:03,480
Speaker 7: sometimes you can get great people if you make some accommodation.

675
00:36:03,680 --> 00:36:05,399
Speaker 7: So Jamie Diamond is not of that.

676
00:36:05,680 --> 00:36:07,719
Speaker 2: You know, we got Lisa Mateo. I mean that's the

677
00:36:07,760 --> 00:36:08,160
Speaker 2: way it was.

678
00:36:08,200 --> 00:36:11,680
Speaker 6: Actually, Okay, might talk to us about Bank of America again,

679
00:36:11,880 --> 00:36:14,800
Speaker 6: former employees, thank you through Merrill Lynch, I've worked.

680
00:36:14,680 --> 00:36:16,400
Speaker 5: Pretty much every work talked to us. Are the Bank

681
00:36:16,440 --> 00:36:18,360
Speaker 5: of America story? Sometimes I g's lost.

682
00:36:18,120 --> 00:36:20,680
Speaker 6: A little bit between the Jamie Diamond talk and maybe

683
00:36:20,680 --> 00:36:21,720
Speaker 6: the turnaround at City.

684
00:36:22,120 --> 00:36:23,840
Speaker 5: What's what's the story at Bank of America.

685
00:36:23,960 --> 00:36:27,600
Speaker 7: Look, we have three words that sum up the largest banks.

686
00:36:27,680 --> 00:36:31,120
Speaker 7: That is Goliath is winning. Okay, okay, scale is making

687
00:36:31,160 --> 00:36:34,480
Speaker 7: more difference in banking than ever before in the history.

688
00:36:34,520 --> 00:36:36,719
Speaker 5: Why don't you tell the European regulators that, I mean,

689
00:36:36,719 --> 00:36:37,640
Speaker 5: because we've they've.

690
00:36:37,480 --> 00:36:41,760
Speaker 7: Lost, they've lost, absolutely lost. The five biggest US capitol

691
00:36:41,800 --> 00:36:48,320
Speaker 7: market players Bank America, JP Morgan, Golden Morgan, stan Goldman,

692
00:36:48,440 --> 00:36:53,760
Speaker 7: Morgan Stanley, UH and uh and uh babaye. They've gained

693
00:36:53,800 --> 00:36:57,840
Speaker 7: market sharing capital markets since the global financial crisis, you know,

694
00:36:58,160 --> 00:37:01,040
Speaker 7: in spades, and I think they can continue to do so.

695
00:37:01,520 --> 00:37:03,799
Speaker 7: And you were like talk about twice or three or

696
00:37:04,440 --> 00:37:07,520
Speaker 7: JP Morgan four times larger than the European bank peers.

697
00:37:07,680 --> 00:37:09,799
Speaker 7: And by the way, this whole idea that US banks

698
00:37:09,800 --> 00:37:14,320
Speaker 7: should not merge, that's like the Brian moynihan or Jamie

699
00:37:14,320 --> 00:37:17,319
Speaker 7: Diamond Protection Act. Why do you want to protect them?

700
00:37:17,400 --> 00:37:21,040
Speaker 7: You should have more large banks pn C. Bill Demchek

701
00:37:21,120 --> 00:37:24,279
Speaker 7: talks about wanting to have another trillion dollar bank. He'd

702
00:37:24,360 --> 00:37:27,960
Speaker 7: like to be that, but the unintended consequence of regulations.

703
00:37:28,000 --> 00:37:29,719
Speaker 2: For the last time thirty seconds. Do you have a

704
00:37:29,760 --> 00:37:32,880
Speaker 2: regional right now you would own around that Mike Mayo theory?

705
00:37:32,880 --> 00:37:35,440
Speaker 2: Do you have a regional that could be mergeable with

706
00:37:35,520 --> 00:37:38,560
Speaker 2: the people from Pittsburgh with their beautiful baseball park.

707
00:37:39,200 --> 00:37:41,719
Speaker 7: Look, if you want to name it own, it's city group.

708
00:37:41,760 --> 00:37:43,440
Speaker 7: It's city group. It's city group. I don't want to

709
00:37:43,480 --> 00:37:48,560
Speaker 7: dilute that call. Let's be a group we're waving all

710
00:37:48,600 --> 00:37:53,680
Speaker 7: portfolio limits. Okay, but it's it's really City Group. And

711
00:37:53,719 --> 00:37:56,440
Speaker 7: then look and JP Morgan and Bank America. Those are

712
00:37:56,480 --> 00:37:57,920
Speaker 7: the three goliath they benefit.

713
00:37:57,960 --> 00:37:59,000
Speaker 2: You're not even going to look down.

714
00:37:59,080 --> 00:38:04,640
Speaker 7: And you know, look, PNC is a quality bank for

715
00:38:04,760 --> 00:38:08,400
Speaker 7: the National main Street Bank. Then the thirty largest cities,

716
00:38:08,680 --> 00:38:11,400
Speaker 7: they have a ten year runway bill. Dempcheck is an

717
00:38:11,440 --> 00:38:15,760
Speaker 7: exceptional CEO, and they should have revenues growing far past

718
00:38:15,920 --> 00:38:18,800
Speaker 7: the expenses, and they'll benefit from the rising tie of

719
00:38:18,880 --> 00:38:21,520
Speaker 7: lists all ships. But again for me, it's City Group,

720
00:38:21,560 --> 00:38:24,719
Speaker 7: City Group, City Group as my primary recommendation.

721
00:38:25,400 --> 00:38:28,680
Speaker 2: Thrill Devian today, thank you so much. He's with Wells Fargo. Folks.

722
00:38:35,360 --> 00:38:39,240
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

723
00:38:39,280 --> 00:38:42,280
Speaker 1: starting at seven am Eastern on applecar Play and Android

724
00:38:42,320 --> 00:38:45,360
Speaker 1: Auto with the Bloomberg Business app. You can also watch

725
00:38:45,400 --> 00:38:48,360
Speaker 1: us live every weekday on YouTube and always on the

726
00:38:48,360 --> 00:38:49,440
Speaker 1: Bloomberg Terminal.

727
00:38:49,520 --> 00:38:54,040
Speaker 2: The daily look at the front pages, the Lisa Mateo moment, Lisa,

728
00:38:54,080 --> 00:38:55,120
Speaker 2: what do you have to all?

729
00:38:55,200 --> 00:38:56,880
Speaker 9: Right, Well, we know prisident Trump has been warning of

730
00:38:56,920 --> 00:39:00,600
Speaker 9: steep tarrifs on European goods. So the water journalize this

731
00:39:00,640 --> 00:39:02,360
Speaker 9: interesting article because they're saying it's going to be a

732
00:39:02,360 --> 00:39:06,799
Speaker 9: blow to Bernard our Nose LVMH Empire. So they go

733
00:39:06,920 --> 00:39:09,799
Speaker 9: into the connection between the two because they say he's

734
00:39:09,800 --> 00:39:13,280
Speaker 9: trying to kind of work those ties avoid the tyrists

735
00:39:13,280 --> 00:39:15,600
Speaker 9: they do back when they were up and coming property

736
00:39:15,640 --> 00:39:16,680
Speaker 9: developers in Manhattan.

737
00:39:17,000 --> 00:39:18,200
Speaker 7: The families know each other.

738
00:39:18,239 --> 00:39:20,359
Speaker 9: You have his second oldest, our No's second oldest son

739
00:39:20,480 --> 00:39:23,440
Speaker 9: is friends with Jared Kushner. You have Ivanka friends with

740
00:39:23,480 --> 00:39:27,040
Speaker 9: our No's daughter. Ourn is at the friends because they.

741
00:39:26,920 --> 00:39:30,120
Speaker 2: Want a bag goes. I'll take that one.

742
00:39:30,480 --> 00:39:31,160
Speaker 7: Not too bad.

743
00:39:31,400 --> 00:39:35,560
Speaker 6: Rich Gal has Bernard Arnold number five ninety six billion.

744
00:39:36,400 --> 00:39:39,319
Speaker 2: That's good for him. They got some real challenges right now, though,

745
00:39:39,320 --> 00:39:40,480
Speaker 2: I mean I believe.

746
00:39:40,160 --> 00:39:43,360
Speaker 9: They do because China sales fell, Yeah.

747
00:39:42,920 --> 00:39:46,120
Speaker 2: China, and there's some other issues as well. And the

748
00:39:46,200 --> 00:39:48,840
Speaker 2: real anx here, which I read in Lemonde in France,

749
00:39:49,760 --> 00:39:54,400
Speaker 2: is they've basically businesses had it in France with the

750
00:39:54,480 --> 00:39:58,280
Speaker 2: taxes and the real relationship here is our Nose bait

751
00:39:59,000 --> 00:40:03,560
Speaker 2: to put manufact in Texas. No, and you know, I

752
00:40:03,560 --> 00:40:07,040
Speaker 2: don't know what products, you know, not Tiffany jewelry, but something.

753
00:40:07,920 --> 00:40:10,360
Speaker 2: It's the manufacturing. And I mean I mean, do you

754
00:40:10,360 --> 00:40:12,600
Speaker 2: want to buy a Lewis Futon bag. This is made

755
00:40:12,640 --> 00:40:15,399
Speaker 2: in Texas. On it does that? Take the charm away?

756
00:40:15,800 --> 00:40:16,480
Speaker 3: Take it away?

757
00:40:16,520 --> 00:40:17,399
Speaker 2: It does? It does.

758
00:40:18,400 --> 00:40:21,760
Speaker 9: Okay, we'll sit with kind of luxury. The Neiman Marcus

759
00:40:21,880 --> 00:40:25,120
Speaker 9: century old flagship store in Dallas. You mentioned Texas, it's

760
00:40:25,120 --> 00:40:28,400
Speaker 9: going to shut down. The owner of SAX Fifth Avenue

761
00:40:28,400 --> 00:40:29,160
Speaker 9: made the announcement.

762
00:40:29,280 --> 00:40:29,480
Speaker 7: Okay.

763
00:40:29,560 --> 00:40:31,879
Speaker 9: So what stands out is because it comes after they

764
00:40:31,960 --> 00:40:34,680
Speaker 9: just announced that they were acquiring Nemen. This big merger

765
00:40:34,680 --> 00:40:38,720
Speaker 9: happened December. The store apparently going to close March thirty. First,

766
00:40:38,840 --> 00:40:41,239
Speaker 9: it was in this memo from SAX Global. It was

767
00:40:41,280 --> 00:40:44,239
Speaker 9: seen by the Post. So they received the notice in

768
00:40:44,280 --> 00:40:46,480
Speaker 9: the landlord to terminate their occumency. It doesn't have to

769
00:40:46,480 --> 00:40:49,480
Speaker 9: do with acquisition, the source is saying. It's saying it

770
00:40:49,520 --> 00:40:52,239
Speaker 9: has to do with kind of a tiff with one

771
00:40:52,239 --> 00:40:56,000
Speaker 9: of the buildings, multiple landlords over a certain piece of property.

772
00:40:56,640 --> 00:40:58,880
Speaker 9: The corporate you know, offices above will stay there, but

773
00:40:58,960 --> 00:40:59,839
Speaker 9: the store will close.

774
00:41:01,080 --> 00:41:03,640
Speaker 5: Booming, booming, Mark Well, Texas is booming overall.

775
00:41:04,680 --> 00:41:07,440
Speaker 2: There's good morning to all of Chestnut Hill in Boston

776
00:41:07,480 --> 00:41:10,440
Speaker 2: and the Smith family at General Cinema. And that was

777
00:41:10,440 --> 00:41:14,360
Speaker 2: the Glory years, needless markup and what you know Richard

778
00:41:14,400 --> 00:41:18,560
Speaker 2: Smith Rather and his kids did there. They really husband

779
00:41:18,840 --> 00:41:22,480
Speaker 2: the image forward. And I don't know how many owners

780
00:41:22,520 --> 00:41:24,680
Speaker 2: it's been through since General Cinema had them. But the

781
00:41:24,760 --> 00:41:28,160
Speaker 2: answer is it's a whole world. I don't get department stores,

782
00:41:28,239 --> 00:41:29,680
Speaker 2: ju Lisa, do you spend a lot of time?

783
00:41:29,840 --> 00:41:30,480
Speaker 5: I don't know.

784
00:41:30,719 --> 00:41:33,600
Speaker 2: Costco is not a department store, right.

785
00:41:33,640 --> 00:41:34,239
Speaker 5: No, definitely not.

786
00:41:34,400 --> 00:41:39,400
Speaker 9: Okay, they've limited selections, which I like. Okay, So not

787
00:41:39,480 --> 00:41:42,359
Speaker 9: sure if any of you have either had overhead been

788
00:41:43,040 --> 00:41:46,719
Speaker 9: experiences that are just gone wrong on an airplane before.

789
00:41:47,680 --> 00:41:50,600
Speaker 9: So apparently there's this battle for the carry on space.

790
00:41:50,680 --> 00:41:51,239
Speaker 3: I've seen it.

791
00:41:51,280 --> 00:41:53,239
Speaker 9: You know, people shove their bags and they're trying to

792
00:41:53,280 --> 00:41:55,799
Speaker 9: fit it. You have the other people who kind of

793
00:41:56,000 --> 00:41:59,240
Speaker 9: toss it in, you know, first class or Economy plus

794
00:41:59,280 --> 00:42:00,239
Speaker 9: before they hit the back.

795
00:42:00,719 --> 00:42:01,839
Speaker 3: They kind of do that too.

796
00:42:02,960 --> 00:42:05,239
Speaker 9: It's delaying the process. So people complaining. So the Wall

797
00:42:05,280 --> 00:42:07,560
Speaker 9: Street Journal came out with the proper etiquette and what

798
00:42:07,600 --> 00:42:10,279
Speaker 9: the rules are and what you're supposed to do. So

799
00:42:10,320 --> 00:42:12,160
Speaker 9: you're supposed to put the larger carry on in the

800
00:42:12,200 --> 00:42:14,840
Speaker 9: overhead been the smaller item under your seat. Because a

801
00:42:14,880 --> 00:42:16,400
Speaker 9: lot of people take the smaller items.

802
00:42:17,520 --> 00:42:18,160
Speaker 5: You're one of them.

803
00:42:18,400 --> 00:42:20,400
Speaker 3: Yep, you put the smaller rag in the overhead bin.

804
00:42:20,840 --> 00:42:21,400
Speaker 3: That's what you do.

805
00:42:21,560 --> 00:42:23,600
Speaker 6: Yeah, well I've got now what I've noticed, Even on

806
00:42:23,640 --> 00:42:26,200
Speaker 6: a seven thirty seven, all the overhead bins have been

807
00:42:26,600 --> 00:42:30,040
Speaker 6: refurbished so that they're much bigger, so your big roll

808
00:42:30,120 --> 00:42:33,000
Speaker 6: on thing doesn't lie flat, it lies on its side,

809
00:42:33,000 --> 00:42:34,319
Speaker 6: and you can get more of them in there.

810
00:42:34,360 --> 00:42:36,160
Speaker 7: So they've actually, i think.

811
00:42:36,040 --> 00:42:39,040
Speaker 6: Improved the whole overhead thing because they know how it's

812
00:42:39,080 --> 00:42:40,400
Speaker 6: checking bags, because that's a disase.

813
00:42:40,440 --> 00:42:42,239
Speaker 2: I don't know where the airlines are and the whole

814
00:42:42,280 --> 00:42:44,799
Speaker 2: thing solvable in one day. That's the thing I don't get.

815
00:42:45,200 --> 00:42:47,680
Speaker 2: It's like we all have problems, like the red Sox

816
00:42:47,960 --> 00:42:51,080
Speaker 2: Middle relief is a problem. Baggage on airplanes is not

817
00:42:51,200 --> 00:42:55,240
Speaker 2: a problem. Lisa Mattel with the newspapers, Thank you so much.

818
00:42:55,680 --> 00:43:00,520
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apples, Spotify,

819
00:43:00,640 --> 00:43:04,399
Speaker 1: and anywhere else you get your podcasts. Listen live each

820
00:43:04,440 --> 00:43:08,240
Speaker 1: weekday seven to ten am Eastern on Bloomberg dot Com,

821
00:43:08,400 --> 00:43:12,240
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app.

822
00:43:12,520 --> 00:43:15,640
Speaker 1: You can also watch us live every weekday on YouTube

823
00:43:15,920 --> 00:43:17,960
Speaker 1: and always on the Bloomberg terminal