Speaker 1: Bloomberg Audio Studios, podcasts, radio news, and it's the right.
Speaker 2: Place, the right time to speak to Meredith Whitney, who's
Speaker 2: seen ups and downs, to say, Alice, how do you
Speaker 2: stay invested given the day to day madness of these
Speaker 2: war headlines?
Speaker 1: I think you do what most investors are doing, which
Speaker 1: is ignore it. I mean, there's not to be a
Speaker 1: Debbie downer, but it's it's it's unrealistic to think that
Speaker 1: this war gets sewn up in you know, in days
Speaker 1: or even months, and we and if even if it does,
Speaker 1: the terms don't even seem very agreeable. So we're gonna
Speaker 1: have elevated prices for a long time.
Speaker 2: You know.
Speaker 1: I think the financials have been horrible performers this year.
Speaker 1: The AA stocks, which are agnostic of of this, have
Speaker 1: have carried the market. So how do you stay invested?
Speaker 1: You know, you you take a big gulp on the
Speaker 1: stuff that's down and course and the stuff that's.
Speaker 2: A gulp of what isn't shaken her stir exactly.
Speaker 3: So, Meredith, what are the banks saying about the consumer,
Speaker 3: you know, in terms of credit cards and all. That's
Speaker 3: kind of the first place that we see stress in
Speaker 3: the marketplaces. If the consumer stressing on the credit front.
Speaker 3: What are the banks telling?
Speaker 1: That has historically always been the case. You saw delinquencies
Speaker 1: rise into every recession. It's not the case this time.
Speaker 1: And my contention is that even though there was an
Speaker 1: article in the Wall Street JOURNALI this week that said
Speaker 1: delinquency ninety day punks delinquencies was over ten percent, and
Speaker 1: some really smart people posting forward to the that's based
Speaker 1: not based in reality, and not based on that bank.
Speaker 2: Why is that article which I did not retweet because
Speaker 2: I agree with you, tell our audience why that article
Speaker 2: was off the market.
Speaker 1: Okay, so the New York Fed has the thirteen point
Speaker 1: one two delinquency ninety day delinquencies. It does not comport
Speaker 1: with any bank figures. So I'll give you an example.
Speaker 1: The largest credit card operator is now Capital One because
Speaker 1: if it's merger with Discover there.
Speaker 2: It's because of of what's his saying, the basket couple,
Speaker 2: Charles Barkley, that's why there's success the Capitol One guy.
Speaker 1: But their thirty days, so they just report thirty days
Speaker 1: are three point two seven percent. The second largest credit
Speaker 1: card company that does report ninety days is JP Morgan.
Speaker 1: Their ninety delinquencies are one point one percent, So you've
Speaker 1: got to forty percent of the market with those two companies.
Speaker 1: And so then I look at I'll look at a
Speaker 1: subprime masure, which is oh and by the way, Capital
Speaker 1: One has twenty seven percent subprime customers and it's three
Speaker 1: point twenty seven. So the thirty day bucket for your listeners,
Speaker 1: it encompasses thirty sixty ninety.
Speaker 2: Well, you just heard their bottle at Classic Meredith Whitney
Speaker 2: Paul and it rhymes with Michelle Meyer of MasterCard, who
Speaker 2: is adamant those numbers weren't what they're seeing at MasterCard.
Speaker 3: So how do you view the consumer these days?
Speaker 4: It's bifurcated. So if you look at so all.
Speaker 1: The major credit card companies, which are regulated entities have
Speaker 1: de risked, pulled back from the lower income lower five
Speaker 1: go score a consumer dramatically, and that's Cap One.
Speaker 4: They started doing it twenty twenty two, all of the issuers.
Speaker 1: So you've got forty five percent of households that are
Speaker 1: considered less than prime or subprime. They're going to things
Speaker 1: like payday lending, like payday lending or pay on demand,
Speaker 1: which has grown through the roof. They don't qualify for
Speaker 1: home equity loans, so they're selling a piece of their
Speaker 1: equity to a private company that the equity interest accrues
Speaker 1: over time. And so these are adverse situations for any consumer.
Speaker 1: So the consumer on the lower end, forty five percent
Speaker 1: of households are not living paycheck to paycheck. They're living
Speaker 1: payday to pay day. And you don't see how bad
Speaker 1: it is because these companies in the shadow banking market
Speaker 1: are all private.
Speaker 2: Meredith Whitney with us here on banking, here on finance
Speaker 2: as well, you're so good and we're not going to
Speaker 2: have the subprime reducts of collective memory of seven. Oh
Speaker 2: wait when you see the securitization out there, now bring
Speaker 2: it over to his Pall's done better than mean. Private credit.
Speaker 2: Are there shadows out there you're worried about?
Speaker 1: Well, today would erase those shadows because software is doing
Speaker 1: well and private credit worries were over loans to software.
Speaker 1: But I think in large part there'll be some there'll
Speaker 1: be some, you know, isolated incidents, but it's certainly the
Speaker 1: market's not big enough to have any type of stomach risk.
Speaker 1: And these this is what these guys do, So they're
Speaker 1: good lenders. So I think that the market looks pretty
Speaker 1: clean from a credit quality standpoint. I mean, in the
Speaker 1: consumer sector it's pristine.
Speaker 3: I bet before the war, I mean one of the
Speaker 3: key topics for this marketplace was the private credit market
Speaker 3: and was some of the credit issues there was that
Speaker 3: systemic or not? What's your call today?
Speaker 1: It's such a small I mean, it's a trillion dollar
Speaker 1: market maybe, like if you want to get really aggressive,
Speaker 1: it's a trillion and a half dollar market.
Speaker 4: But it's just not big enough to make a difference.
Speaker 3: So what are we thinking here? If if you're JP
Speaker 3: Morgan here, you're some of these big banks here, is
Speaker 3: it loan growth? Is that the story to grow your
Speaker 3: business these days? Or do you just is it all
Speaker 3: capital markets? These days?
Speaker 1: It's for the banks, it's been mostly capital markets, and
Speaker 1: but for JP Morgan, which is spending a lot, it's
Speaker 1: been cost cutting and just general efficiency. But the banks
Speaker 1: really aren't growing that much. I mean, if they have
Speaker 1: big quarters, they haven't only grown for ten years in
Speaker 1: terms of a loan. From a loan perspective, Let's leave
Speaker 1: JP Morgan out of the equation. Because they pull off
Speaker 1: I don't know how they do it. But everybody else
Speaker 1: has been either flat or.
Speaker 4: Declining. And Bank of America's trunk. It's consumer effort.
Speaker 2: I've got with Scarlett food, Bloomberg money. Look for that, folks.
Speaker 2: It's Friday twelve noon, you know, Meredith, I'm getting inundated
Speaker 2: everybody that has a family office. Meredith Whitney on family offices.
Speaker 2: They weren't like a big deal fifteen years ago.
Speaker 4: Were There's just so much more money out there. So people,
Speaker 4: do you have a family office?
Speaker 2: Are you?
Speaker 1: I am the family office and walking exactly. But these
Speaker 1: family offices are huge now. And I have a lot
Speaker 1: of friends who run family offices.
Speaker 2: And are they regulated? Is there a form adv like
Speaker 2: an investment advisor?
Speaker 1: I don't think so, but they get they get shown notes.
Speaker 1: The family offices now are the for all the wealth
Speaker 1: management businesses. I mean JP Morgan courts these family offices
Speaker 1: all day long, and they're they're like.
Speaker 2: A prime broker. JP Morgan is like a prime broker
Speaker 2: with them.
Speaker 1: Yes, and you know, with loans with everything. And so
Speaker 1: if you're Tom, I'm sure you have a family office.
Speaker 1: So all of your properties have to be managed, your
Speaker 1: all your various accounts, Swiss accounts, all in cash, have
Speaker 1: to be managed, and you don't have time, especially with
Speaker 1: your new TV show, so you're going to hire her family.
Speaker 4: Office are on the side.
Speaker 2: Actually, folks, in my family office is called Tuition Inc.
Speaker 4: Believe it.
Speaker 2: Meredith, thank you, thank you, thank you so much. Meredith,
Speaker 2: be there.