1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day, we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,520 --> 00:00:15,600 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,439 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,200 Speaker 1: at Bloomberg dot com slash podcast. You know, this year, 7 00:00:23,000 --> 00:00:24,639 Speaker 1: it's been a tough year on Wall Street from a 8 00:00:24,640 --> 00:00:28,120 Speaker 1: profit perspective. But let's let's be honest. They had was awesome, 9 00:00:29,120 --> 00:00:32,960 Speaker 1: was even better. But then the traders at Goldman Sachs 10 00:00:33,000 --> 00:00:34,640 Speaker 1: are doing a lot better this year than they did, 11 00:00:34,720 --> 00:00:38,239 Speaker 1: like record, but the bankers not so much. Right, So, 12 00:00:38,280 --> 00:00:40,720 Speaker 1: if you're doing I P O s and stuff like that, 13 00:00:40,880 --> 00:00:43,280 Speaker 1: M and A trades, not so much. I'll tell you 14 00:00:43,280 --> 00:00:45,800 Speaker 1: what though, if I'm working in the business for you, Paul, 15 00:00:46,520 --> 00:00:48,880 Speaker 1: and I make you a lot more money this year 16 00:00:48,880 --> 00:00:50,800 Speaker 1: than I made you last year, you should pay me 17 00:00:50,840 --> 00:00:52,640 Speaker 1: more this year than you paid me last. So this 18 00:00:52,720 --> 00:00:55,480 Speaker 1: is how the conversation goes. And you're right the conversation. 19 00:00:55,560 --> 00:00:57,400 Speaker 1: I'm gonna your boss. I'll say, yes, you had a 20 00:00:57,400 --> 00:01:01,000 Speaker 1: great year, we appreciate it. But the bonus pool is 21 00:01:01,080 --> 00:01:04,080 Speaker 1: down because overall going across the street. Yeah, that's what happens. 22 00:01:04,120 --> 00:01:06,760 Speaker 1: So Shrie not AAJ and he's hopefully not going across 23 00:01:06,760 --> 00:01:09,560 Speaker 1: the street. Uh. He's here in a Bloomberg Interactive broker studio. 24 00:01:09,560 --> 00:01:12,000 Speaker 1: He's a Bloomberg News. He covers all things kind of 25 00:01:12,080 --> 00:01:14,760 Speaker 1: just Wall Street financial services, all the big you know, 26 00:01:15,040 --> 00:01:17,520 Speaker 1: mucky MUCKs on Wall Street. So shreet, how tough is 27 00:01:17,560 --> 00:01:20,240 Speaker 1: it gonna be on Wall Street here? Because we're it's December. 28 00:01:20,319 --> 00:01:24,320 Speaker 1: This is bonus discussion time, just front center for everybody. 29 00:01:24,600 --> 00:01:26,319 Speaker 1: So let me give you just a window into some 30 00:01:26,400 --> 00:01:29,759 Speaker 1: of the discussions happening. As heated as Matt sounded just 31 00:01:29,880 --> 00:01:31,959 Speaker 1: that horrified at the thought that he would not be 32 00:01:32,040 --> 00:01:34,679 Speaker 1: paid for good performance, I can guarantee you some of 33 00:01:34,680 --> 00:01:38,679 Speaker 1: the discussions happening inside Goldman Sachs have been much more heated. 34 00:01:39,080 --> 00:01:41,479 Speaker 1: The initial plans that they have discussed, especially for their 35 00:01:41,480 --> 00:01:44,520 Speaker 1: traders who have had a bumper or on their way 36 00:01:44,560 --> 00:01:46,760 Speaker 1: to pretty phenomenally are the best since two thousand nine. 37 00:01:46,800 --> 00:01:49,480 Speaker 1: Of course, two thousand nine has all other audities that 38 00:01:49,560 --> 00:01:52,000 Speaker 1: sort of led to that record. Here the best year 39 00:01:52,040 --> 00:01:54,640 Speaker 1: in thirteen, the best year in the best time in 40 00:01:54,720 --> 00:01:58,080 Speaker 1: thirteen years. Black kids weren't even there thirteen years ago, right, 41 00:01:58,880 --> 00:02:01,000 Speaker 1: and some of them were there now are in much 42 00:02:01,000 --> 00:02:04,200 Speaker 1: more senior position than expecting much bigger payouts. But the 43 00:02:04,280 --> 00:02:06,680 Speaker 1: initial round of discussions, as they typically tend to happen 44 00:02:06,680 --> 00:02:11,800 Speaker 1: across Wall Street post Thanksgiving. Around Thanksgiving, the conversations and 45 00:02:11,840 --> 00:02:15,239 Speaker 1: the numbers relate to deskheads have led to somewhat of 46 00:02:15,280 --> 00:02:17,720 Speaker 1: an allergic reaction, and you can see that, and that's 47 00:02:17,720 --> 00:02:20,399 Speaker 1: why it's a surprise across the street. There is no 48 00:02:20,440 --> 00:02:23,560 Speaker 1: doubt that do You Making has come off its highs 49 00:02:23,560 --> 00:02:26,560 Speaker 1: of last here if you've had a massive slowdown invest 50 00:02:26,560 --> 00:02:30,600 Speaker 1: banking across the board, revenues are down about and the 51 00:02:30,639 --> 00:02:33,480 Speaker 1: culture of Wall Street is today as it has been 52 00:02:33,560 --> 00:02:35,880 Speaker 1: yesterday and for decades in the past and will be 53 00:02:35,880 --> 00:02:39,000 Speaker 1: in the future, is pay for performance. So you expect 54 00:02:39,040 --> 00:02:43,000 Speaker 1: banker bonuses to be cut significantly. Not so much traders. 55 00:02:43,040 --> 00:02:44,200 Speaker 1: And that is why it was a bit of a 56 00:02:44,240 --> 00:02:46,320 Speaker 1: surprise for us that even though they've had a pretty 57 00:02:46,440 --> 00:02:49,919 Speaker 1: good year at Goldman, the traders, they are talking about 58 00:02:49,919 --> 00:02:52,880 Speaker 1: cutting their bonus pool. But in some ways the smoke 59 00:02:52,919 --> 00:02:56,200 Speaker 1: signals coming out of Goldman sacks will make a lot 60 00:02:56,280 --> 00:02:59,960 Speaker 1: of people across the street and c and twitchy because fine, 61 00:03:00,000 --> 00:03:03,519 Speaker 1: and they may not. The delta between the revenue performance 62 00:03:03,560 --> 00:03:06,519 Speaker 1: said Goldman and the bonus discussions might be pretty large, 63 00:03:07,160 --> 00:03:12,000 Speaker 1: But there will be a gap elsewhere in every other 64 00:03:12,200 --> 00:03:15,680 Speaker 1: major bank. This thread of austerity will carry over across 65 00:03:15,680 --> 00:03:18,000 Speaker 1: the street. So so what does what does that mean 66 00:03:18,040 --> 00:03:20,120 Speaker 1: for me? If I would say I'm going across the street, 67 00:03:21,040 --> 00:03:23,359 Speaker 1: I go across the street and they're facing the same problems. 68 00:03:23,800 --> 00:03:26,200 Speaker 1: Are we going to see a big This is exactly 69 00:03:26,280 --> 00:03:28,400 Speaker 1: what I was wondering when I was reading probably your 70 00:03:28,440 --> 00:03:31,120 Speaker 1: story this morning. I was I was thinking, does this 71 00:03:31,200 --> 00:03:34,520 Speaker 1: mean a bunch of traders are gonna leave Goldman Sachs 72 00:03:34,760 --> 00:03:36,800 Speaker 1: and they're gonna go over to Jeffreys? But Rich Handler 73 00:03:36,880 --> 00:03:38,640 Speaker 1: is saying it's gonna be a tough year here too. 74 00:03:38,680 --> 00:03:41,080 Speaker 1: But boys, you know, so are they going somewhere else? 75 00:03:41,880 --> 00:03:44,800 Speaker 1: And that's a good point because banks are not the 76 00:03:44,880 --> 00:03:48,360 Speaker 1: only game in town. There is still a really strong 77 00:03:48,560 --> 00:03:52,200 Speaker 1: bid from hedge funds and other by side firms. And 78 00:03:52,240 --> 00:03:56,120 Speaker 1: if you're in the top quartile, top decile of performance 79 00:03:56,160 --> 00:03:59,640 Speaker 1: at any institutions, you will still be bid up. Yes, 80 00:03:59,680 --> 00:04:02,480 Speaker 1: we're talking about an uncertain twenty three. Yes, there are 81 00:04:02,520 --> 00:04:05,120 Speaker 1: other challenges on the horizon. But if you're at a bank, 82 00:04:05,360 --> 00:04:09,000 Speaker 1: a trader, I cannot live in a vacuum. Right. You 83 00:04:09,080 --> 00:04:11,560 Speaker 1: are not on the only division at the film. It is, 84 00:04:11,600 --> 00:04:13,720 Speaker 1: after all the culture of one large bank. There are 85 00:04:13,760 --> 00:04:16,240 Speaker 1: other divisions. And as one of the executives that pointed 86 00:04:16,240 --> 00:04:19,120 Speaker 1: out to me, you can only be as happy as 87 00:04:19,160 --> 00:04:23,000 Speaker 1: your unhappiest child. So for safe, for instance, at Goldman, 88 00:04:23,080 --> 00:04:26,279 Speaker 1: you have a consumer business that's losing not of a 89 00:04:26,279 --> 00:04:29,400 Speaker 1: billion dollars in a year. Two bad traders. If you 90 00:04:29,440 --> 00:04:32,480 Speaker 1: did really well, we still can't pay you that. Hedge 91 00:04:32,480 --> 00:04:34,640 Speaker 1: funds don't have that same risk exactly right, And that's 92 00:04:34,680 --> 00:04:38,479 Speaker 1: the argument you cannot make to your top people. So um, 93 00:04:38,800 --> 00:04:41,400 Speaker 1: one of the story I want to read free So 94 00:04:41,960 --> 00:04:44,560 Speaker 1: if you know, if you know a reporter covers this sector, 95 00:04:44,640 --> 00:04:47,520 Speaker 1: let me know is the story that was a year ago, 96 00:04:47,880 --> 00:04:50,920 Speaker 1: and they were great stories. Every investment bank had to 97 00:04:51,000 --> 00:04:53,960 Speaker 1: raise the pay for their junior bankers and they were 98 00:04:54,000 --> 00:04:55,800 Speaker 1: doing it almost on a weekly basis to one up 99 00:04:55,839 --> 00:04:59,039 Speaker 1: each other. Does that ever reverse itself? I mean, because 100 00:04:59,240 --> 00:05:02,680 Speaker 1: you know we'll literally the assarch and and also come 101 00:05:02,680 --> 00:05:04,599 Speaker 1: into a investment banking at eighty five grand, and I 102 00:05:04,600 --> 00:05:06,640 Speaker 1: think where we ended after a six month period was 103 00:05:06,640 --> 00:05:08,640 Speaker 1: like a hundred fifty grand or something like that. Does 104 00:05:08,680 --> 00:05:10,880 Speaker 1: it ever go back? Do you think? I mean, you've 105 00:05:10,920 --> 00:05:13,640 Speaker 1: you've you've seen wal Street over the years, Paul, And 106 00:05:13,760 --> 00:05:16,640 Speaker 1: like you know, King today, Paper tomorrow, and King again. 107 00:05:16,760 --> 00:05:20,359 Speaker 1: Sometime in the future, these cycles will repeat themselves. It 108 00:05:20,560 --> 00:05:23,680 Speaker 1: was certainly top of the cycle last year. The war 109 00:05:23,800 --> 00:05:26,520 Speaker 1: for talent was was a phrase that made its way 110 00:05:26,520 --> 00:05:29,200 Speaker 1: into eight K filings across the street as they were 111 00:05:29,279 --> 00:05:32,839 Speaker 1: lavishing bonuses left right and center. Not so much right now. 112 00:05:33,800 --> 00:05:36,159 Speaker 1: Clearly you can't walk across the street to another bank 113 00:05:36,200 --> 00:05:38,440 Speaker 1: because they're dealing with the same challenges. Last year they 114 00:05:38,480 --> 00:05:40,960 Speaker 1: were talking about pay, the pay for performance culture that 115 00:05:41,040 --> 00:05:45,479 Speaker 1: embodies and exemplifies sort of the month ro on Wall Street. 116 00:05:45,880 --> 00:05:48,520 Speaker 1: Today it feels like pay for someone else's performance. And 117 00:05:48,720 --> 00:05:53,119 Speaker 1: unfortunately that's how twent and this is when it gets ugly, 118 00:05:53,560 --> 00:05:55,440 Speaker 1: is it's it's one thing to have a conversation we're 119 00:05:55,440 --> 00:05:58,479 Speaker 1: gonna cut your bonus, profits down when it's really ugly 120 00:05:58,560 --> 00:06:01,120 Speaker 1: because profits, we're gonna cut your bone us and profits 121 00:06:01,120 --> 00:06:04,200 Speaker 1: are up is apart for some people, but for something 122 00:06:04,200 --> 00:06:06,160 Speaker 1: when it gets really ugly is when they craft these 123 00:06:06,240 --> 00:06:11,040 Speaker 1: creative equity like instruments to give to you, um, you know, 124 00:06:11,200 --> 00:06:15,160 Speaker 1: restricted stock units. We had them at one point. Um. 125 00:06:15,200 --> 00:06:18,000 Speaker 1: That's when it gets funky. Now you know they try 126 00:06:18,080 --> 00:06:20,479 Speaker 1: to say, hey, you know they're trying to incentivize you, 127 00:06:20,560 --> 00:06:22,960 Speaker 1: but you already have way too much exposure to your 128 00:06:22,960 --> 00:06:25,039 Speaker 1: employer exactly, so they try to give you some deep 129 00:06:25,040 --> 00:06:27,360 Speaker 1: dis kind of things that we haven't seen those stories yet. 130 00:06:27,400 --> 00:06:29,520 Speaker 1: And when you start to see those stories, that's when 131 00:06:29,560 --> 00:06:31,599 Speaker 1: it gets bad, because that's when they say, we don't 132 00:06:31,600 --> 00:06:33,400 Speaker 1: even want to give you equity because we know you're 133 00:06:33,400 --> 00:06:35,520 Speaker 1: not gonna take our equity because our equity sticks. So 134 00:06:35,520 --> 00:06:37,919 Speaker 1: we're gonna give you these leverage restricted stock units that 135 00:06:37,920 --> 00:06:40,280 Speaker 1: will pay out two to one in five years if 136 00:06:40,360 --> 00:06:42,320 Speaker 1: we turn things around. Let's take a trip down the 137 00:06:42,360 --> 00:06:46,200 Speaker 1: rabbit hole. Two thousand eight. Goldman Sex terribly across the street. 138 00:06:46,240 --> 00:06:49,360 Speaker 1: Goldman actually made money. Goldman actually did well do your 139 00:06:49,400 --> 00:06:51,080 Speaker 1: of the financial crisis. What I love the scene if 140 00:06:51,120 --> 00:06:53,240 Speaker 1: people were told it's really gonna be hard to pay you, 141 00:06:53,279 --> 00:06:57,039 Speaker 1: our police accept some equity five six, ten years down 142 00:06:57,040 --> 00:07:00,599 Speaker 1: the line that paid off in speeds that was worth 143 00:07:00,640 --> 00:07:05,720 Speaker 1: a few billion dollars they made off like any credit suite. 144 00:07:05,760 --> 00:07:07,960 Speaker 1: We got that in either two thousand one or two 145 00:07:07,960 --> 00:07:10,280 Speaker 1: thousand two, you know, when the dot com thing had 146 00:07:10,360 --> 00:07:13,320 Speaker 1: at burst and that thing ripped. Man, that which the 147 00:07:13,360 --> 00:07:16,880 Speaker 1: one thing that in my years that really had like 148 00:07:16,920 --> 00:07:19,720 Speaker 1: a three four, five x twenty years later. Would you 149 00:07:19,720 --> 00:07:22,360 Speaker 1: take credits to ees Equity today? No? No? And you 150 00:07:22,480 --> 00:07:26,440 Speaker 1: also had a policy right of anything invested you sold 151 00:07:26,560 --> 00:07:30,520 Speaker 1: sell it right away. Yeah, so I sold Swiss francs 152 00:07:30,360 --> 00:07:32,840 Speaker 1: and it isn't that the normal you would want to 153 00:07:32,840 --> 00:07:36,360 Speaker 1: do that, right? And if a majority of your Stearns 154 00:07:36,400 --> 00:07:39,160 Speaker 1: and Lehman brothers they didn't sell because when you sell, 155 00:07:39,560 --> 00:07:42,000 Speaker 1: it's perceived as you're not supporting your firm and all 156 00:07:42,040 --> 00:07:44,720 Speaker 1: that kind of stuff. But let's talk about smart financial policy. Yes, 157 00:07:44,720 --> 00:07:47,440 Speaker 1: I can see top management. You know, the optics are 158 00:07:47,560 --> 00:07:48,880 Speaker 1: just as bad. You don't want to do this. You 159 00:07:48,960 --> 00:07:51,040 Speaker 1: want to be seen as having skin in the game. 160 00:07:51,360 --> 00:07:54,200 Speaker 1: But for almost everyone else, because the majority of it 161 00:07:54,600 --> 00:07:58,200 Speaker 1: is linked to stock and prudent financial advice says you 162 00:07:58,240 --> 00:08:00,800 Speaker 1: need to be diversified more off them. They're not as 163 00:08:00,800 --> 00:08:03,040 Speaker 1: soon as it best. You know, as it is, you're 164 00:08:03,360 --> 00:08:05,480 Speaker 1: pretty much attached to the firm you're working at. Your 165 00:08:05,520 --> 00:08:07,360 Speaker 1: fortune is tied to them, so as soon as you 166 00:08:07,400 --> 00:08:09,560 Speaker 1: stalk best, you might as well take it out and 167 00:08:10,160 --> 00:08:12,200 Speaker 1: put it in an index fund if you again that 168 00:08:12,880 --> 00:08:16,760 Speaker 1: we saw it the Great Financial Crisis. Unfortunately, too many 169 00:08:16,760 --> 00:08:19,240 Speaker 1: people at bear Stearns and Lehman Brothers did not do that, 170 00:08:19,480 --> 00:08:23,120 Speaker 1: and they just got wiped out, wiped out. Bummer. But 171 00:08:23,560 --> 00:08:26,280 Speaker 1: at least a lot of them could go become teachers. Yes, 172 00:08:26,400 --> 00:08:29,000 Speaker 1: they good, all right, So I guess we'll get some 173 00:08:29,040 --> 00:08:31,960 Speaker 1: more color on this over the next several months. And 174 00:08:32,120 --> 00:08:34,440 Speaker 1: the payofs are usually February right three, kind of February 175 00:08:34,480 --> 00:08:37,840 Speaker 1: March timeframe. So so don't be too happy to have 176 00:08:37,880 --> 00:08:39,959 Speaker 1: your initial discussion and decided to leave it. Leave it, 177 00:08:40,080 --> 00:08:42,720 Speaker 1: leave at your end, because then you will not get you. 178 00:08:42,720 --> 00:08:44,840 Speaker 1: You gotta stick around at least until don't read our 179 00:08:44,880 --> 00:08:47,000 Speaker 1: stories and leave. Yeah, exactly right. So that's when you 180 00:08:47,040 --> 00:08:48,640 Speaker 1: see the turnover on Wall Street is kind of in 181 00:08:48,640 --> 00:08:50,880 Speaker 1: that February March. When people get paid, then they can 182 00:08:50,880 --> 00:08:53,720 Speaker 1: start moving around street. Not Rodging does all that stuff 183 00:08:54,480 --> 00:09:00,679 Speaker 1: for Bloomberg News. We appreciate that. All. Let's talk a 184 00:09:00,679 --> 00:09:05,120 Speaker 1: little global investment banking, little European investment banking. Credit Suis 185 00:09:05,320 --> 00:09:08,040 Speaker 1: in particular, that is a story that just keeps on giving. 186 00:09:08,360 --> 00:09:12,280 Speaker 1: It was once a proud, proud uh you know, European 187 00:09:12,400 --> 00:09:15,120 Speaker 1: and global investment bank. Now it's having some hard times. 188 00:09:15,160 --> 00:09:20,800 Speaker 1: Marion Hoftemeyer, financial reporter with Bloomberg News. She's based in Switzerland. 189 00:09:21,200 --> 00:09:25,079 Speaker 1: She joins as does senior banks analysts at Bloomberg Intelligence. 190 00:09:25,120 --> 00:09:28,120 Speaker 1: Alison Williams. Uh, Mary, I want to start with you here, 191 00:09:28,240 --> 00:09:32,720 Speaker 1: give us the latest on what's going on with Credit Swiss. 192 00:09:33,080 --> 00:09:36,560 Speaker 1: What can you tell us? So? The latest that's going 193 00:09:36,640 --> 00:09:40,200 Speaker 1: on right now is we have this ongoing volatility in 194 00:09:40,200 --> 00:09:44,720 Speaker 1: the share price that's partially related to the capital race. 195 00:09:44,800 --> 00:09:48,240 Speaker 1: There's currently a rights issue happening um that will help 196 00:09:48,280 --> 00:09:50,760 Speaker 1: them shore up their balance sheet. But separately to that, 197 00:09:50,880 --> 00:09:54,559 Speaker 1: last week we had quite some concerning news around profitability 198 00:09:54,760 --> 00:09:58,160 Speaker 1: and asset outflows at their wealth division, which has caused 199 00:09:58,160 --> 00:10:01,920 Speaker 1: some concern because we've seen four billion francs leave the bank. 200 00:10:02,880 --> 00:10:05,960 Speaker 1: So and this is an important business to them, right Allison. 201 00:10:06,400 --> 00:10:10,120 Speaker 1: I kind of romanticize the Swiss banks as these asset 202 00:10:10,200 --> 00:10:13,120 Speaker 1: managers that give you, um, you know, anonymous numbers. I 203 00:10:13,160 --> 00:10:15,880 Speaker 1: know they don't really work that way anymore. At least 204 00:10:16,000 --> 00:10:19,719 Speaker 1: they divulge everything when any country asks. But is it 205 00:10:19,960 --> 00:10:22,679 Speaker 1: the most important business? For credit sweets as well as 206 00:10:22,760 --> 00:10:26,400 Speaker 1: u B s it is the most important business. And 207 00:10:26,400 --> 00:10:29,040 Speaker 1: and keeping in mind that this is where they're pivoting 208 00:10:29,080 --> 00:10:32,920 Speaker 1: to focus more on, given some of the changes. But 209 00:10:33,040 --> 00:10:36,240 Speaker 1: I think you know, what was important that we heard 210 00:10:36,320 --> 00:10:40,760 Speaker 1: this morning, UM, actually from from a Bloomberg interview with 211 00:10:40,800 --> 00:10:45,959 Speaker 1: the chairman, was that, uh, the outflows have stemmed and 212 00:10:46,400 --> 00:10:49,800 Speaker 1: the hood is improving, so you know, signs that things 213 00:10:49,840 --> 00:10:53,000 Speaker 1: could be setting UM. To Marian's point, we think that 214 00:10:53,040 --> 00:10:56,920 Speaker 1: the shares will remain volatile until they're done with the 215 00:10:56,960 --> 00:10:59,920 Speaker 1: capital raise. I mean, it's it's difficult when we know, 216 00:11:00,720 --> 00:11:04,720 Speaker 1: or when investors know, um, you know, money is coming 217 00:11:05,120 --> 00:11:07,640 Speaker 1: at at a price that's below it's being traded in 218 00:11:07,679 --> 00:11:10,000 Speaker 1: the market. I think that inherently there is going to 219 00:11:10,040 --> 00:11:12,400 Speaker 1: be pressure. But I think that the key thing is 220 00:11:12,400 --> 00:11:15,960 Speaker 1: that the fundamentals for the banks steady, and and the 221 00:11:16,000 --> 00:11:20,520 Speaker 1: other insights were you know, it wasn't institutional people backing away. 222 00:11:20,559 --> 00:11:23,559 Speaker 1: It was retail so UM and and sort of the 223 00:11:23,640 --> 00:11:27,840 Speaker 1: significance there is that the retail investor UM was perhaps 224 00:11:27,880 --> 00:11:29,559 Speaker 1: more worried than a lot of the headlines that were 225 00:11:29,559 --> 00:11:33,520 Speaker 1: coming across in early October and the social media and um. 226 00:11:33,520 --> 00:11:39,040 Speaker 1: The second point that that the chairman made was that, um, 227 00:11:39,080 --> 00:11:42,240 Speaker 1: it's not clients leaving, it was clients pulling some funds 228 00:11:42,400 --> 00:11:45,040 Speaker 1: and so that the significance of that is that those 229 00:11:45,400 --> 00:11:47,760 Speaker 1: can come back. Well, you know, then the client is 230 00:11:47,800 --> 00:11:50,200 Speaker 1: gone that you know, then then they're really gone. But 231 00:11:50,200 --> 00:11:52,760 Speaker 1: if it's a matter of you know, moving funds around 232 00:11:52,760 --> 00:11:55,600 Speaker 1: because they're worried that that money can come back, I'll 233 00:11:55,600 --> 00:11:58,360 Speaker 1: go ahead and plug that interview. That was Francine Laquais 234 00:11:58,480 --> 00:12:03,480 Speaker 1: this morning interviewing so Leman and uh. I recommend people 235 00:12:03,480 --> 00:12:05,560 Speaker 1: go on Bloomberg dot com to watch that, especially if 236 00:12:05,559 --> 00:12:09,040 Speaker 1: you you know, work at Credit swee exactly, Mary, and 237 00:12:09,120 --> 00:12:12,200 Speaker 1: how much do we know how much they have in 238 00:12:12,200 --> 00:12:15,120 Speaker 1: total assets under management? Because it was like ninety billion 239 00:12:15,760 --> 00:12:20,080 Speaker 1: dollars that left, right, Yeah, so at the end of 240 00:12:20,120 --> 00:12:22,839 Speaker 1: three Q they were looking at around I think one 241 00:12:23,120 --> 00:12:29,079 Speaker 1: point four trillion across their wealth management businesses. UM, so 242 00:12:29,160 --> 00:12:31,959 Speaker 1: it's it's it's a it's a decent amount that's gone down, 243 00:12:32,000 --> 00:12:35,520 Speaker 1: but it's it's you know, as Alison was saying, you know, 244 00:12:35,640 --> 00:12:39,240 Speaker 1: it could come back, especially if the client hasn't totally 245 00:12:39,280 --> 00:12:42,200 Speaker 1: left the bank, Um, they'll they'll eventually come back when 246 00:12:42,200 --> 00:12:44,800 Speaker 1: they feel that the bank can offer them what they 247 00:12:44,880 --> 00:12:48,080 Speaker 1: need and offer them stability. Um. So it's definitely a 248 00:12:48,120 --> 00:12:50,440 Speaker 1: dip down, especially when you compare it to UPS, which 249 00:12:50,440 --> 00:12:52,880 Speaker 1: is looking at three trillion working Stanleys more in the 250 00:12:52,880 --> 00:12:56,719 Speaker 1: four to five trillion range in terms of wealth management assets. 251 00:12:57,200 --> 00:12:59,760 Speaker 1: So it's it's you know, they're starting to look a 252 00:12:59,800 --> 00:13:02,960 Speaker 1: lot smaller than they used to be. Marrying you're based 253 00:13:03,080 --> 00:13:06,800 Speaker 1: insert You've got to feel for, you know, kind of 254 00:13:06,840 --> 00:13:10,480 Speaker 1: what's going on within the country here. How much is 255 00:13:10,520 --> 00:13:13,240 Speaker 1: it I don't know, for the national government or just 256 00:13:13,320 --> 00:13:15,160 Speaker 1: the people or the country, is this is kind of 257 00:13:15,280 --> 00:13:19,400 Speaker 1: like a national embarrassment or how concerned are they about 258 00:13:19,440 --> 00:13:25,199 Speaker 1: what's happening to the once great credit Swiss name. Definitely 259 00:13:25,240 --> 00:13:27,679 Speaker 1: for you know, private banking. This is a private banking country, 260 00:13:27,800 --> 00:13:30,880 Speaker 1: So for private banks across the country and the people 261 00:13:30,920 --> 00:13:34,000 Speaker 1: in the industry, it's not a good look. Everybody feels 262 00:13:34,000 --> 00:13:36,480 Speaker 1: like they're suffering, you know. I've I've talked to private 263 00:13:36,520 --> 00:13:40,840 Speaker 1: bankers at competitors who are having to defend Swiss private 264 00:13:40,880 --> 00:13:44,000 Speaker 1: banking to their clients internationally, even though they don't even 265 00:13:44,000 --> 00:13:46,480 Speaker 1: work at Credit Suite, So there's a little bit of 266 00:13:46,520 --> 00:13:49,560 Speaker 1: you know, having to to grapple a bit with the 267 00:13:49,600 --> 00:13:52,480 Speaker 1: reputational hit that the bank has had and that has 268 00:13:52,520 --> 00:13:57,160 Speaker 1: had on the whole country in terms of you know, politicians, government, etcetera. 269 00:13:57,520 --> 00:14:00,000 Speaker 1: It is definitely something that's on top of mind because 270 00:14:00,080 --> 00:14:02,360 Speaker 1: you have one of your big champions and banking is 271 00:14:02,400 --> 00:14:05,400 Speaker 1: a huge part of GDP here in Switzerland. UM, that's 272 00:14:05,480 --> 00:14:10,040 Speaker 1: really undergoing kind of an embarrassing suffering that goes from 273 00:14:10,040 --> 00:14:14,200 Speaker 1: mismanagement to scandals despiring to just problems in business and 274 00:14:14,240 --> 00:14:19,840 Speaker 1: then risk implodion. So Allison, UM, somebody's going to take 275 00:14:19,840 --> 00:14:24,120 Speaker 1: advantage of the situation, right, another bank has to be 276 00:14:24,240 --> 00:14:28,640 Speaker 1: holding now those nine billion, and then some who's benefiting 277 00:14:28,760 --> 00:14:32,840 Speaker 1: from the problems that credit sweez so UBS is the 278 00:14:32,840 --> 00:14:38,680 Speaker 1: one UM that that has featured in some Bloomberg News reports. UM. 279 00:14:38,720 --> 00:14:43,320 Speaker 1: Their management actually has spoken as well and said, UM, 280 00:14:43,800 --> 00:14:46,080 Speaker 1: the comments are along the lines of, yes, some money 281 00:14:46,120 --> 00:14:47,960 Speaker 1: is coming to them, but they're not you know, it's 282 00:14:48,000 --> 00:14:52,280 Speaker 1: not something that they're proactively seeking and it's not UM 283 00:14:52,320 --> 00:14:56,320 Speaker 1: you know, they're not looking to benefit UM from their 284 00:14:56,320 --> 00:15:00,640 Speaker 1: peerist troubles. But there is some money flowing there. Uh, 285 00:15:00,640 --> 00:15:03,080 Speaker 1: And as I said, it's not the clients leaving, but 286 00:15:03,120 --> 00:15:07,000 Speaker 1: the clients are diversifying. So it would make sense UM 287 00:15:07,040 --> 00:15:12,560 Speaker 1: to be diversifying UM across the close competitor UM. But 288 00:15:12,680 --> 00:15:16,640 Speaker 1: I think that and you know when when we did 289 00:15:16,680 --> 00:15:20,120 Speaker 1: get that eight billion number, to put it in context, 290 00:15:20,640 --> 00:15:24,080 Speaker 1: that those outflows were basically more than the inflows of 291 00:15:24,120 --> 00:15:26,320 Speaker 1: the past two years combined from credit suites. And I 292 00:15:26,320 --> 00:15:30,680 Speaker 1: think that's what really took people, took people back, But 293 00:15:30,880 --> 00:15:34,240 Speaker 1: it is it is something of UM. You know, it 294 00:15:34,320 --> 00:15:37,960 Speaker 1: was news I guess too two investors when they announced 295 00:15:37,960 --> 00:15:41,560 Speaker 1: it last week, but it really related to early October. 296 00:15:42,240 --> 00:15:45,880 Speaker 1: And I think that just the fact that things that 297 00:15:45,920 --> 00:15:50,200 Speaker 1: are studied and they're heading in the right direction. UM. 298 00:15:50,560 --> 00:15:55,760 Speaker 1: It will help UM eventually gives give some studiness to 299 00:15:55,760 --> 00:15:59,960 Speaker 1: to the shares. We are awaiting comments from President Biden 300 00:16:00,000 --> 00:16:03,800 Speaker 1: from Washington, d C. Commenting about the the averting the 301 00:16:03,920 --> 00:16:06,480 Speaker 1: rail strike, and we'll bring those two in just moments 302 00:16:06,520 --> 00:16:09,400 Speaker 1: when he appears. Als. I wanted to ask you just 303 00:16:09,480 --> 00:16:12,640 Speaker 1: about Credit sweet. I mean, you know, when I was 304 00:16:12,680 --> 00:16:15,560 Speaker 1: there back in the day, we consider ourselves a bulge 305 00:16:15,600 --> 00:16:18,560 Speaker 1: bracket firm. We could compete with anybody anywhere in the world. 306 00:16:18,800 --> 00:16:22,480 Speaker 1: Are those days gone for Credit Swiss. I think it's 307 00:16:22,520 --> 00:16:26,280 Speaker 1: it's a tough time for them. But I think that um, 308 00:16:26,320 --> 00:16:28,440 Speaker 1: you know, and you know, and you're the business you're 309 00:16:28,480 --> 00:16:31,960 Speaker 1: referring to is really the the investment banking part of it, 310 00:16:32,720 --> 00:16:36,160 Speaker 1: which for everyone has been a very difficult year. I mean, 311 00:16:36,200 --> 00:16:37,960 Speaker 1: if you look at the industry while it is down 312 00:16:38,880 --> 00:16:42,600 Speaker 1: or so, and especially on the equity side of things, uh, 313 00:16:42,760 --> 00:16:45,120 Speaker 1: you know, I P O s or something like of 314 00:16:45,120 --> 00:16:48,400 Speaker 1: what they were uh last year. So I think that's 315 00:16:48,440 --> 00:16:52,720 Speaker 1: been tough for everyone. And you know, Credit Sweets is 316 00:16:53,240 --> 00:16:57,400 Speaker 1: taking this approach. They're going to spin out their investment bank. 317 00:16:57,440 --> 00:17:00,640 Speaker 1: They're bringing back the name Credit Sweets First Boston. UM. 318 00:17:00,880 --> 00:17:03,040 Speaker 1: They also had some comments this morning that they are 319 00:17:03,080 --> 00:17:06,200 Speaker 1: getting interest in that unit. So so again that's a positive. 320 00:17:06,720 --> 00:17:09,680 Speaker 1: And I think by trying to spin out the bank 321 00:17:09,720 --> 00:17:12,840 Speaker 1: and separate the bank out um from some of the 322 00:17:12,840 --> 00:17:17,840 Speaker 1: businesses that have given them a little bit more UM pressure, UM, 323 00:17:17,840 --> 00:17:22,080 Speaker 1: they're hoping that they can isolate that. And so it's 324 00:17:22,320 --> 00:17:27,000 Speaker 1: it's gonna be tough to see when the environment is bad, um, 325 00:17:27,040 --> 00:17:30,280 Speaker 1: you know, it's tough to make a turnaround. It's tough 326 00:17:30,320 --> 00:17:35,040 Speaker 1: to make a turnaround when the market's going against you. Um, 327 00:17:35,119 --> 00:17:39,119 Speaker 1: but we'll see how that plays out. Marian, tell us 328 00:17:39,119 --> 00:17:42,800 Speaker 1: a little bit about Zurich. Right now we have you know, 329 00:17:42,840 --> 00:17:45,040 Speaker 1: at this time of day, probably most of our listeners 330 00:17:45,080 --> 00:17:47,640 Speaker 1: are are in the US. It's a little bit later obviously, 331 00:17:47,720 --> 00:17:51,040 Speaker 1: six hours later where you are five hours later in London. Um, 332 00:17:51,880 --> 00:17:55,800 Speaker 1: the main what square is it? Paradha plots? What do 333 00:17:55,800 --> 00:17:57,680 Speaker 1: you what do you call it? Is that where ubs 334 00:17:57,760 --> 00:18:00,720 Speaker 1: and credit? Is that where all the bank all the 335 00:18:00,840 --> 00:18:05,600 Speaker 1: private wealth managers are located, many of them? Yes, we 336 00:18:05,640 --> 00:18:09,240 Speaker 1: have we have pie not so far Julia Sparry if 337 00:18:09,280 --> 00:18:14,080 Speaker 1: g uh Saffra is also around the corner. And and 338 00:18:14,200 --> 00:18:17,800 Speaker 1: what's what's the environment like? I mean here in New 339 00:18:17,880 --> 00:18:21,120 Speaker 1: York on Wall Street, everybody's worried about bonuses. I guess 340 00:18:21,119 --> 00:18:23,520 Speaker 1: it's got to be much worse. They're considering the problems 341 00:18:23,520 --> 00:18:26,000 Speaker 1: that credit sweete. Although maybe ubs bankers are doing well. 342 00:18:28,200 --> 00:18:30,560 Speaker 1: I think the mode is definitely around, you know, trying 343 00:18:30,600 --> 00:18:32,480 Speaker 1: to get to the end of the year and hopefully 344 00:18:32,480 --> 00:18:35,280 Speaker 1: turn a page and move on to three and hopefully 345 00:18:35,320 --> 00:18:37,679 Speaker 1: things go up from there. Um. You know, it's been 346 00:18:37,760 --> 00:18:40,639 Speaker 1: it's been a hard year for everybody across the industry, 347 00:18:40,640 --> 00:18:43,520 Speaker 1: as Alison was saying, and that that includes wealth as well. 348 00:18:43,560 --> 00:18:46,120 Speaker 1: I mean, you know, with the stock markets not doing 349 00:18:46,160 --> 00:18:48,200 Speaker 1: as well as they have previously, that means a lot 350 00:18:48,200 --> 00:18:51,520 Speaker 1: of billionaires have lost some wealth. Um, and that definitely 351 00:18:51,560 --> 00:18:54,840 Speaker 1: is impacting both you know, ubs and credit sweetes among 352 00:18:54,880 --> 00:18:57,919 Speaker 1: other private banks in terms of asset outflows and and 353 00:18:58,000 --> 00:19:00,640 Speaker 1: just a little bit of nervousness around market. Right So 354 00:19:01,640 --> 00:19:04,840 Speaker 1: you know, just like bonuses on Wall Street in New 355 00:19:04,920 --> 00:19:07,720 Speaker 1: York might not be looking so great, I think, um, 356 00:19:07,880 --> 00:19:10,639 Speaker 1: a lot of bankers and private bankers in Switzerland product 357 00:19:10,720 --> 00:19:14,280 Speaker 1: lats will be anticipating, you know, looking at that and 358 00:19:14,280 --> 00:19:16,359 Speaker 1: maybe not being so pleased at what might be coming 359 00:19:16,400 --> 00:19:21,280 Speaker 1: for them as well. Is the Swiss finance industry, you know, 360 00:19:22,160 --> 00:19:25,119 Speaker 1: centered in Zurich or is a lot of it in Geneva? 361 00:19:25,240 --> 00:19:28,439 Speaker 1: I know I always hear about you know, hedge funds, funds, 362 00:19:29,400 --> 00:19:32,480 Speaker 1: guys and women working in SOUG. Is it spread out 363 00:19:32,560 --> 00:19:35,280 Speaker 1: or is it is it all there? It depends what 364 00:19:35,359 --> 00:19:37,520 Speaker 1: part of the fine industry you're looking at. When you're 365 00:19:37,560 --> 00:19:40,720 Speaker 1: looking at the global quote unquote investment banks which were 366 00:19:40,760 --> 00:19:43,680 Speaker 1: ubus and credit spees which are both now more wealth management. 367 00:19:43,760 --> 00:19:47,440 Speaker 1: They're they're very Zurich based UM, but private banking has 368 00:19:47,480 --> 00:19:50,439 Speaker 1: historically been very big in Geneva. Now it's become a 369 00:19:50,440 --> 00:19:53,159 Speaker 1: little bit more split between Geneva and Zurich. And then 370 00:19:53,200 --> 00:19:55,399 Speaker 1: if you look at hedge funds, yes, you're still looking 371 00:19:55,400 --> 00:19:58,280 Speaker 1: at some of the smaller towns just outside of Zurich, 372 00:19:58,400 --> 00:20:01,159 Speaker 1: like Zoom. You mentioned UM, and then a lot of 373 00:20:01,200 --> 00:20:05,120 Speaker 1: commodity trade finance is also in Zoogan and in around Geneva. 374 00:20:05,200 --> 00:20:07,800 Speaker 1: So we're a little bit split between the two sides. Yeah, 375 00:20:08,000 --> 00:20:10,920 Speaker 1: So Alison, you know, aside from Credit Swiss, the other 376 00:20:11,000 --> 00:20:13,439 Speaker 1: name out of Europe that is just as intriguing to 377 00:20:13,480 --> 00:20:15,719 Speaker 1: me is Deutsche Bank. I mean, at one time they 378 00:20:15,720 --> 00:20:20,320 Speaker 1: were absolutely you know, in the top five seven globally 379 00:20:21,080 --> 00:20:25,280 Speaker 1: in terms of global investment banks, commercial banks. Where are 380 00:20:25,320 --> 00:20:28,359 Speaker 1: they now? Give us the latest on Deutsche Bank? I think, 381 00:20:28,440 --> 00:20:31,399 Speaker 1: you know, Deutsche Bank is is uh is perhaps the 382 00:20:31,440 --> 00:20:33,800 Speaker 1: future that credit suites can look forward to in a 383 00:20:33,840 --> 00:20:37,640 Speaker 1: way they uh, you know, sort of left behind. We're 384 00:20:37,640 --> 00:20:39,520 Speaker 1: gonna try to be all things to all people and 385 00:20:39,520 --> 00:20:41,919 Speaker 1: said we're going to pick our shots and focus on 386 00:20:41,960 --> 00:20:46,040 Speaker 1: those businesses. And they really have focused in on fixed 387 00:20:46,080 --> 00:20:49,480 Speaker 1: income trading. They you know, largely get out of the 388 00:20:49,480 --> 00:20:52,080 Speaker 1: equities trading business. They do have sort of a small 389 00:20:52,080 --> 00:20:56,399 Speaker 1: effort that supports UM their capital markets franchise, but they 390 00:20:56,480 --> 00:20:59,760 Speaker 1: really said we're gonna focus on fixed income trading, and 391 00:21:00,560 --> 00:21:03,439 Speaker 1: you know they when they made that decision, it was 392 00:21:03,680 --> 00:21:06,640 Speaker 1: a tough market, a tough time for fick UM. But 393 00:21:06,720 --> 00:21:09,720 Speaker 1: as that's improved, they have really sort of ridden the 394 00:21:09,720 --> 00:21:12,240 Speaker 1: wave and if you look at their numbers, they are 395 00:21:12,240 --> 00:21:16,040 Speaker 1: showing that they are competing in that business. So not 396 00:21:16,160 --> 00:21:18,879 Speaker 1: everything to everyone, but but winning in the business that 397 00:21:18,920 --> 00:21:23,680 Speaker 1: they want to. All right, well, we'll continue to cover 398 00:21:23,720 --> 00:21:27,159 Speaker 1: obviously what's going on at credit Sweets and UH it 399 00:21:27,200 --> 00:21:29,880 Speaker 1: did seem for a while like it was in the spotlight, 400 00:21:30,280 --> 00:21:33,919 Speaker 1: UM in terms of problems. Now, UM, we're looking across 401 00:21:33,960 --> 00:21:37,520 Speaker 1: the industry and looking at uh issues as we get 402 00:21:37,560 --> 00:21:40,960 Speaker 1: closer to the bonus season, UM for bankers at an 403 00:21:41,040 --> 00:21:46,200 Speaker 1: array of different um. Yeah, so all right, Marion Hofftemeyer, 404 00:21:46,400 --> 00:21:49,000 Speaker 1: Financial reporter, Bloomer News in Zurich, which is very cool 405 00:21:49,040 --> 00:21:51,800 Speaker 1: to get somebody ready. I love Zerich so much. By 406 00:21:51,840 --> 00:21:54,480 Speaker 1: the way, you know, a lot of people think it's 407 00:21:54,600 --> 00:21:57,040 Speaker 1: a little bit provincial. It's a little bit small, but 408 00:21:57,080 --> 00:21:59,359 Speaker 1: I like that about it. That's the charm. And we 409 00:21:59,440 --> 00:22:02,160 Speaker 1: also had Alice and Williams, by the way, Bloomberg Intelligence 410 00:22:02,240 --> 00:22:08,159 Speaker 1: joining us there as well. This Sam bank Man freed 411 00:22:08,440 --> 00:22:11,800 Speaker 1: FTX story, it just is the gift that keeps on giving, 412 00:22:12,200 --> 00:22:14,760 Speaker 1: and it's journalists. It's not a gift for anybody who 413 00:22:14,840 --> 00:22:18,920 Speaker 1: was invested, obviously, you know exactly in in the exchange, 414 00:22:19,160 --> 00:22:20,960 Speaker 1: a lot of people lost a heck of a lot 415 00:22:20,960 --> 00:22:23,360 Speaker 1: of money. I think a lot of people lost life savings, 416 00:22:23,359 --> 00:22:26,680 Speaker 1: life savings. I mean billions of dollars of customer money 417 00:22:26,760 --> 00:22:29,679 Speaker 1: is missing. And you know, and he's talking to pretty 418 00:22:29,760 --> 00:22:33,720 Speaker 1: much the media at large here, which seems odd from 419 00:22:33,720 --> 00:22:37,080 Speaker 1: a you know, a legal perspective. But anyway, Zeke Fox 420 00:22:37,240 --> 00:22:41,240 Speaker 1: has got a great, great article on the Bloomberg terminal, 421 00:22:41,320 --> 00:22:44,280 Speaker 1: the big take story here today about some time with 422 00:22:44,359 --> 00:22:47,679 Speaker 1: Sam Bankman freed again, because Zeke already had spent a 423 00:22:47,680 --> 00:22:50,920 Speaker 1: lot of time with him in the Mamas after the collapse, 424 00:22:51,760 --> 00:22:54,480 Speaker 1: he went back, Zeke went back down there. Actually, correct 425 00:22:54,520 --> 00:22:56,320 Speaker 1: me if I'm wrong, Z. Did you not go back 426 00:22:56,400 --> 00:22:59,359 Speaker 1: after November eight to hang out with him in his 427 00:22:59,520 --> 00:23:05,360 Speaker 1: kind of abandoned penthouse. Yes, so I had profiled him 428 00:23:05,440 --> 00:23:08,680 Speaker 1: in the winter when things were like at their peak 429 00:23:08,680 --> 00:23:13,760 Speaker 1: and it was going great, and last winter, like in February, 430 00:23:13,840 --> 00:23:16,440 Speaker 1: I've been down there. I spent two days with him 431 00:23:16,480 --> 00:23:19,800 Speaker 1: at the at the office and seeing like what I 432 00:23:19,800 --> 00:23:22,400 Speaker 1: thought was a bunch of like you know, genius kids 433 00:23:22,440 --> 00:23:27,359 Speaker 1: making billions of dollars trading crypto um. Then the whole 434 00:23:27,359 --> 00:23:32,119 Speaker 1: exchange blew up. I was clearly my impression was dead wrong, 435 00:23:32,760 --> 00:23:35,760 Speaker 1: and I decided to come back to the Bahamas to 436 00:23:36,440 --> 00:23:38,960 Speaker 1: speak with him about what happened, to try and figure 437 00:23:38,960 --> 00:23:44,760 Speaker 1: out why what I had missed. I'm some people after 438 00:23:44,880 --> 00:23:48,480 Speaker 1: FTX collapsed, a lot of people are saying this was 439 00:23:48,520 --> 00:23:51,840 Speaker 1: all a total scam from the start, and I was 440 00:23:51,880 --> 00:23:54,520 Speaker 1: just wondering, like maybe the story is a bit more 441 00:23:54,560 --> 00:23:58,840 Speaker 1: complicated than that, like what really happened? And I decided, 442 00:23:59,760 --> 00:24:02,600 Speaker 1: even and if you I couldn't believe everything that this 443 00:24:02,640 --> 00:24:05,040 Speaker 1: guy was gonna tell me to be worth hearing him 444 00:24:05,080 --> 00:24:07,440 Speaker 1: out and trying to figure out his side of the 445 00:24:07,480 --> 00:24:09,440 Speaker 1: story and maybe there'll be something to learn from that. 446 00:24:10,359 --> 00:24:13,200 Speaker 1: So Zeke, I mean, you've had again, as you mentioned, 447 00:24:13,240 --> 00:24:16,159 Speaker 1: a lot of exposure to Sam Bank Ben Freed. I 448 00:24:16,280 --> 00:24:18,680 Speaker 1: watched his interview with the deal Book interview. That was 449 00:24:18,720 --> 00:24:22,320 Speaker 1: the first time I had seen him speak. Thank thanks 450 00:24:22,359 --> 00:24:24,600 Speaker 1: for never watching our interviews with him, Paul, I don't know. 451 00:24:24,680 --> 00:24:28,280 Speaker 1: I'm sorry, I've show like three times. I know I 452 00:24:28,320 --> 00:24:31,479 Speaker 1: was behind the curve, I admit, But what do you 453 00:24:31,560 --> 00:24:35,760 Speaker 1: think is going on? Zeke? Is he do you think, 454 00:24:35,800 --> 00:24:39,760 Speaker 1: like some suggest there's some fraud involved here? Was he lying? 455 00:24:39,880 --> 00:24:41,879 Speaker 1: Or is he an idiot? Which one is? There? You go? 456 00:24:42,000 --> 00:24:47,600 Speaker 1: Thank you? So I came. I went to go interview him, 457 00:24:47,600 --> 00:24:50,840 Speaker 1: open to both possibilities, and I think both things are 458 00:24:50,840 --> 00:24:56,359 Speaker 1: still possible. I came down on the fraud side. I 459 00:24:56,400 --> 00:25:02,760 Speaker 1: think it's quite likely that there was intentional misconduct here, 460 00:25:03,280 --> 00:25:08,560 Speaker 1: and that his argument is essentially like I don't pay 461 00:25:08,600 --> 00:25:11,919 Speaker 1: any attention whatsoever to like my billions of dollars and 462 00:25:12,000 --> 00:25:15,920 Speaker 1: what I'm doing with them. Meanwhile, he's like a genius soup, 463 00:25:15,960 --> 00:25:18,520 Speaker 1: studied physics and m I T and was trained as 464 00:25:18,520 --> 00:25:22,040 Speaker 1: a trader at Jane Street Capital, which is for like, uh, 465 00:25:22,440 --> 00:25:24,600 Speaker 1: you know, one of the most elite trading firms on 466 00:25:24,600 --> 00:25:28,959 Speaker 1: Wall Street. So well, it's certainly possible that he anything 467 00:25:29,040 --> 00:25:33,359 Speaker 1: is possible, like, but he's sitting on a pile of 468 00:25:33,400 --> 00:25:36,560 Speaker 1: like tens of billions of dollars. He's all about this, 469 00:25:36,800 --> 00:25:39,040 Speaker 1: and now he's trying to say I didn't pay any 470 00:25:39,080 --> 00:25:42,159 Speaker 1: attention to my money, Like, what was he doing? I mean, 471 00:25:42,200 --> 00:25:45,360 Speaker 1: I can think of some things, but it just seems unlikely. 472 00:25:45,600 --> 00:25:47,960 Speaker 1: His version of the story doesn't make sense to me. Well, 473 00:25:48,000 --> 00:25:51,160 Speaker 1: he was playing video games, right. He was big into 474 00:25:51,840 --> 00:25:58,400 Speaker 1: some kind of Dungeons and Dragons role playing game, wasn't it. Yeah, 475 00:25:58,520 --> 00:26:01,160 Speaker 1: I mean the first time that this it at him, Um, 476 00:26:01,200 --> 00:26:03,199 Speaker 1: I just pulled up a chair next to him. Like 477 00:26:03,320 --> 00:26:07,160 Speaker 1: most corporate executives would be like really nervous. It would 478 00:26:07,160 --> 00:26:10,000 Speaker 1: all be like stage managed. He really didn't seem to care. 479 00:26:10,520 --> 00:26:14,000 Speaker 1: And he was doing other interviews. He was doing taking 480 00:26:14,040 --> 00:26:17,560 Speaker 1: like important calls, emailing with other billionaires. And then on 481 00:26:17,560 --> 00:26:21,720 Speaker 1: one of his many screens, he was playing a kind 482 00:26:21,720 --> 00:26:23,760 Speaker 1: of it's kind of like a Magic the Gathering type 483 00:26:23,800 --> 00:26:27,160 Speaker 1: computer game where you have an army of fairies and nights, 484 00:26:27,320 --> 00:26:29,640 Speaker 1: which is, by the way, kind of ironic now, Zeke, 485 00:26:29,800 --> 00:26:34,879 Speaker 1: because you know Mount cox h is the first big 486 00:26:34,880 --> 00:26:40,200 Speaker 1: explosion and that stands for Magic the Gathering online exchange 487 00:26:40,280 --> 00:26:44,720 Speaker 1: Mount cox Um. True, I know I always got to 488 00:26:44,760 --> 00:26:47,880 Speaker 1: kick out of that one, Zeke. All Right, he's down 489 00:26:47,920 --> 00:26:52,280 Speaker 1: in the Bahamas. Still, what is he? Is he there 490 00:26:52,359 --> 00:26:56,719 Speaker 1: because there's no extradition? Is he there for legal protective reasons? 491 00:26:56,720 --> 00:26:59,159 Speaker 1: Why is he? Surely there is extradition. I think the 492 00:26:59,240 --> 00:27:02,960 Speaker 1: question Paul wants to know to have answered, is why 493 00:27:03,080 --> 00:27:06,840 Speaker 1: hasn't anybody grabbed him yet? Like, why haven't the cops 494 00:27:06,840 --> 00:27:09,320 Speaker 1: grabbed him? Why hasn't the Department of Justice gone down 495 00:27:09,320 --> 00:27:13,000 Speaker 1: there and gotten him? Or Russian mobsters that lost two 496 00:27:13,080 --> 00:27:16,280 Speaker 1: hundred million dollars on the exchange, Like, isn't somebody gonna 497 00:27:16,320 --> 00:27:19,280 Speaker 1: get him? His parents should bring him home, really, his 498 00:27:19,359 --> 00:27:23,760 Speaker 1: parents should get him. I certainly had that feeling when 499 00:27:23,800 --> 00:27:27,320 Speaker 1: I was in his penthouse, just like the curtains were 500 00:27:27,400 --> 00:27:30,520 Speaker 1: drawn and I just felt like, you know, I could 501 00:27:30,560 --> 00:27:34,800 Speaker 1: feel the presence of these invisible enemies drawing closer from outside. 502 00:27:35,040 --> 00:27:37,639 Speaker 1: And when it comes to the Department of Justice, I 503 00:27:37,640 --> 00:27:40,240 Speaker 1: mean there are certain you count point to examples where 504 00:27:40,240 --> 00:27:43,760 Speaker 1: people got arrested really quickly. Also you can, yes, but 505 00:27:43,840 --> 00:27:46,440 Speaker 1: like you could think of other cases where it took 506 00:27:46,480 --> 00:27:48,840 Speaker 1: them years to figure out whether to bring charges and 507 00:27:48,880 --> 00:27:53,359 Speaker 1: so like he's, uh, you know, as of now they 508 00:27:53,560 --> 00:27:58,719 Speaker 1: opened an investigation that's known, but um, it's possible they 509 00:27:58,720 --> 00:28:02,320 Speaker 1: could decide not to are Jim See just wrote real quickly, 510 00:28:02,359 --> 00:28:04,800 Speaker 1: based upon your most recent experience. Do you think he's 511 00:28:04,840 --> 00:28:10,000 Speaker 1: a sound mind. At this point when I was talking 512 00:28:10,000 --> 00:28:13,000 Speaker 1: to him, I felt like he was delusional. He was 513 00:28:13,000 --> 00:28:14,760 Speaker 1: trying to tell me that he was going to save 514 00:28:14,800 --> 00:28:20,840 Speaker 1: the company. It just seemed so improbable, and that he's 515 00:28:20,840 --> 00:28:23,119 Speaker 1: smart enough he should know better. As I thought about 516 00:28:23,119 --> 00:28:27,359 Speaker 1: it some more, I thought that, Um, this could be 517 00:28:27,440 --> 00:28:30,800 Speaker 1: sort of a self serving position to take like it's 518 00:28:30,840 --> 00:28:34,240 Speaker 1: It could be part of sort of his defense that 519 00:28:34,880 --> 00:28:36,840 Speaker 1: it was all just a mistake. I'm going to save 520 00:28:36,880 --> 00:28:40,480 Speaker 1: the company now I'm still trying for everybody. So, um, 521 00:28:40,520 --> 00:28:43,800 Speaker 1: all right, that's it's just fascinating stuff. Zeke Fox Bloomberg News. 522 00:28:43,800 --> 00:28:45,640 Speaker 1: He's got the big take story on that. Check it 523 00:28:45,640 --> 00:28:51,440 Speaker 1: out on Bloomberg dot com. Okay, let's talk it. You 524 00:28:51,480 --> 00:28:53,160 Speaker 1: know you got a job. Some of it comes in 525 00:28:53,280 --> 00:28:56,040 Speaker 1: strong again. I mean, if you're the Federal Reserve, how 526 00:28:56,080 --> 00:28:57,920 Speaker 1: do you put that into the blender of things you're 527 00:28:57,960 --> 00:29:00,600 Speaker 1: looking at. Let's check on Jeffrey Cleveland, Rector in chief 528 00:29:00,600 --> 00:29:04,040 Speaker 1: economists that paid in and regal. You know, I'm not 529 00:29:04,080 --> 00:29:07,120 Speaker 1: sure I'm buying this recession talk, Jeff, I mean, I 530 00:29:07,400 --> 00:29:09,920 Speaker 1: got a fully employed economy out there. How do you 531 00:29:10,680 --> 00:29:12,920 Speaker 1: really kind of take into context of what we saw 532 00:29:13,000 --> 00:29:16,080 Speaker 1: this morning with the jobs print. Well, I think we 533 00:29:16,160 --> 00:29:19,120 Speaker 1: have to go back to chair pal speech on Wednesday 534 00:29:19,120 --> 00:29:21,960 Speaker 1: at Brookings UM. You know, you know, kudos to chair 535 00:29:22,000 --> 00:29:25,000 Speaker 1: Pal or FED staff whoever put that together. But I mean, 536 00:29:25,040 --> 00:29:27,080 Speaker 1: I think he laid it out really nicely in terms 537 00:29:27,080 --> 00:29:30,040 Speaker 1: of the key drivers of inflation. You know, sure there's 538 00:29:30,080 --> 00:29:32,560 Speaker 1: goods prices, but you know that seems to be fading. 539 00:29:32,960 --> 00:29:36,080 Speaker 1: Everyone knows the rents, the housing story that that probably 540 00:29:36,080 --> 00:29:39,440 Speaker 1: fades next year. But it's that third category that he highlighted, 541 00:29:39,480 --> 00:29:43,760 Speaker 1: the non housing services that could be, in his words, 542 00:29:44,160 --> 00:29:47,760 Speaker 1: the most important category for understanding the future evolution of 543 00:29:47,800 --> 00:29:51,680 Speaker 1: core inflation. And then he ties that category two wages. 544 00:29:52,120 --> 00:29:54,240 Speaker 1: And then this morning low and behold, what do we see? 545 00:29:54,240 --> 00:29:57,360 Speaker 1: Wage growth accelerates? So he set that up nicely. I 546 00:29:57,400 --> 00:30:00,480 Speaker 1: think this is the situation we're in. The Labor market 547 00:30:00,520 --> 00:30:04,280 Speaker 1: is still pretty strong, UM tight labor markets, supply constraint 548 00:30:04,320 --> 00:30:07,240 Speaker 1: on the on the labor supply side, and wages are 549 00:30:07,320 --> 00:30:10,640 Speaker 1: arguably accelerating. Here in the latest set of data that 550 00:30:11,160 --> 00:30:14,520 Speaker 1: is going to keep the Fed on guard against inflation. 551 00:30:14,600 --> 00:30:18,160 Speaker 1: That's gonna keep them in tightening mode. So maybe there 552 00:30:18,160 --> 00:30:20,120 Speaker 1: were some hopes. I don't know, the hope springs eternal 553 00:30:20,160 --> 00:30:24,000 Speaker 1: for the FED to pivot. Yeah, talk to bond traders 554 00:30:24,000 --> 00:30:25,760 Speaker 1: all day, you'll you'll get a lot of that over 555 00:30:25,760 --> 00:30:28,040 Speaker 1: the last nine months. But it's been it's been wrong 556 00:30:28,120 --> 00:30:31,000 Speaker 1: every time. I think it was wrong against equity bowls 557 00:30:31,120 --> 00:30:35,680 Speaker 1: as well. I mean, they've been hoping since the summer that, um, 558 00:30:35,800 --> 00:30:38,200 Speaker 1: the FED was gonna pivot. They can't go on. I 559 00:30:38,240 --> 00:30:41,360 Speaker 1: would hear so many people say, wait till there's a recession, 560 00:30:41,480 --> 00:30:44,760 Speaker 1: and you know, millions of more more people are added 561 00:30:44,800 --> 00:30:47,959 Speaker 1: to the unemployment list, but it just isn't happening in 562 00:30:48,080 --> 00:30:52,520 Speaker 1: terms of in terms of inflation. Jeffrey, what, um, what's 563 00:30:52,560 --> 00:30:56,080 Speaker 1: the trajectory look like for non housing services? Because as 564 00:30:56,080 --> 00:30:59,760 Speaker 1: you mentioned, goods prices are coming down. We're already you know, 565 00:30:59,800 --> 00:31:04,440 Speaker 1: we're worried about inventory and that um in in those prices. 566 00:31:04,680 --> 00:31:08,040 Speaker 1: And then the rent story is one that people can 567 00:31:08,120 --> 00:31:12,320 Speaker 1: put aside because um, you know, it's it sticks around 568 00:31:12,400 --> 00:31:15,960 Speaker 1: for a year. But what about non housing services? Are 569 00:31:15,960 --> 00:31:17,640 Speaker 1: they are they as well going to come down in 570 00:31:18,360 --> 00:31:21,479 Speaker 1: three Are they still on an upper trajectory. Well, if 571 00:31:21,480 --> 00:31:25,000 Speaker 1: you believe the FED chair then they're highly correlated with 572 00:31:25,080 --> 00:31:28,680 Speaker 1: wage growth and rage growth. Running let's say five to 573 00:31:28,800 --> 00:31:31,880 Speaker 1: six percent year on year is telling you that the 574 00:31:31,920 --> 00:31:35,200 Speaker 1: non housing services prices could be could be pretty elevated. 575 00:31:35,240 --> 00:31:37,040 Speaker 1: We laid this out, you know, if you want a 576 00:31:37,040 --> 00:31:40,520 Speaker 1: pictorial be portrayed this as best we could in our 577 00:31:40,560 --> 00:31:43,400 Speaker 1: chart of the week this week, and um, you know, 578 00:31:43,440 --> 00:31:47,800 Speaker 1: it just tells you that maybe inflation won't subside as 579 00:31:47,880 --> 00:31:50,240 Speaker 1: quickly as people expect. At the very least. The way 580 00:31:50,240 --> 00:31:53,400 Speaker 1: I would phrase it is this hopes of getting back 581 00:31:53,560 --> 00:31:57,240 Speaker 1: let's say below three on core inflation like core PC 582 00:31:57,560 --> 00:32:01,760 Speaker 1: by this time next year, I think are really premature 583 00:32:01,880 --> 00:32:04,840 Speaker 1: or far fetched. It seems far more likely to us 584 00:32:04,880 --> 00:32:08,480 Speaker 1: that will be maybe four on core inflation. And the 585 00:32:08,560 --> 00:32:10,560 Speaker 1: risk is you're you're a bit higher than that based 586 00:32:10,600 --> 00:32:13,400 Speaker 1: on beast on that data. So that's the I think 587 00:32:13,480 --> 00:32:15,960 Speaker 1: that is the take home message here your chart of 588 00:32:16,000 --> 00:32:19,200 Speaker 1: the week you just mentioned, where do listeners who are 589 00:32:19,240 --> 00:32:21,720 Speaker 1: interested see that? Do you have a Twitter account? Do 590 00:32:21,720 --> 00:32:25,720 Speaker 1: you pologize? I apologize with a commercial? You can go 591 00:32:25,800 --> 00:32:27,840 Speaker 1: to paidon dot com p A Y D E N 592 00:32:27,920 --> 00:32:30,000 Speaker 1: dot com that's probably the best way to go. But yeah, 593 00:32:30,000 --> 00:32:31,920 Speaker 1: I think we do have the Twitter, and we do 594 00:32:32,000 --> 00:32:39,000 Speaker 1: have the LinkedIn so Twitter fall. Paul only has like 595 00:32:39,040 --> 00:32:44,000 Speaker 1: ten thou followers on Twitter. What's your what's your Twitter handle? 596 00:32:44,160 --> 00:32:49,000 Speaker 1: At pt sweeney at pt sweeney, So everyone listen up, 597 00:32:49,440 --> 00:32:52,160 Speaker 1: get on that thing alright. Follow Paul on Twitter at 598 00:32:52,240 --> 00:32:57,760 Speaker 1: pt sweeney. He actually tweets stuff, stuff important, complain about airlines, 599 00:32:57,920 --> 00:33:02,120 Speaker 1: Complain about airlines. So I mean, essentially, Jeff, the average 600 00:33:02,160 --> 00:33:04,120 Speaker 1: hourly earnings on a year of year basis came in 601 00:33:04,120 --> 00:33:07,000 Speaker 1: at five point one percent. That's well above that four 602 00:33:07,040 --> 00:33:09,440 Speaker 1: point six percent the street was looking for. It was 603 00:33:09,520 --> 00:33:12,800 Speaker 1: well above kind of what we saw last month. That 604 00:33:12,880 --> 00:33:15,760 Speaker 1: kind of gets your attention, doesn't Yeah, because you still 605 00:33:15,800 --> 00:33:18,720 Speaker 1: have labor force participation is constrained, whether it's by the 606 00:33:18,760 --> 00:33:23,120 Speaker 1: pandemic or lack of immigration, early retirements, all sorts of 607 00:33:23,160 --> 00:33:28,040 Speaker 1: factors are keeping labor supply constrained. Labor demand still is 608 00:33:28,200 --> 00:33:30,400 Speaker 1: very strong. We see that in terms of job growth. 609 00:33:30,400 --> 00:33:32,400 Speaker 1: We also see that earlier in the week in terms 610 00:33:32,440 --> 00:33:35,280 Speaker 1: of job openings. Job opening has been come down from 611 00:33:35,280 --> 00:33:40,040 Speaker 1: their pandemic high, but they're way way above anything in history, right, 612 00:33:40,120 --> 00:33:44,120 Speaker 1: So very strong labor demand, soft labor supply. There you 613 00:33:44,200 --> 00:33:46,440 Speaker 1: got wage growth. Um. I like to look at that 614 00:33:46,440 --> 00:33:49,320 Speaker 1: Atlanta Fed wage tracker. You know that's closer to six 615 00:33:49,360 --> 00:33:53,040 Speaker 1: percent year on year. So I think the question is 616 00:33:53,040 --> 00:33:56,480 Speaker 1: for for bond traders, bonding is five to six percent 617 00:33:56,520 --> 00:33:59,560 Speaker 1: nominal wage growth consistent with let's say two percent inflation. 618 00:34:00,520 --> 00:34:02,640 Speaker 1: The FETE chair says, no, that that was the message 619 00:34:02,680 --> 00:34:05,200 Speaker 1: on Wednesday in watching the d C in that speech, 620 00:34:05,280 --> 00:34:09,040 Speaker 1: because wage growth ties back to non housing services cost, 621 00:34:09,440 --> 00:34:14,400 Speaker 1: non housing services cost of core inflation. So that's the 622 00:34:14,520 --> 00:34:16,920 Speaker 1: that's the picture you're in, all right, Jeff, thanks so 623 00:34:17,000 --> 00:34:20,000 Speaker 1: much for joining us. Always great talking to Jeffrey Cleveland 624 00:34:20,040 --> 00:34:22,319 Speaker 1: there from Paydon and Regal, and you can check out 625 00:34:22,400 --> 00:34:24,959 Speaker 1: his chart of the week by going on paydon dot 626 00:34:25,000 --> 00:34:31,640 Speaker 1: com or following on Twitter. Is the Job's days Nathans 627 00:34:31,680 --> 00:34:34,080 Speaker 1: was mentioning, and again the actual print came out at 628 00:34:34,200 --> 00:34:37,680 Speaker 1: two hundred sixty three thousand jobs added. The consensus on 629 00:34:37,680 --> 00:34:40,279 Speaker 1: the street was two hundred thousand. And also note that 630 00:34:40,280 --> 00:34:44,439 Speaker 1: the prior month was revised higher pretty substantially. The prior 631 00:34:44,480 --> 00:34:46,960 Speaker 1: month was an ad of two hundred sixty one thousand 632 00:34:47,239 --> 00:34:50,359 Speaker 1: that got revised hired to two eight four thousands, so 633 00:34:50,600 --> 00:34:52,840 Speaker 1: pretty strong across the board, and that's kind of what 634 00:34:52,840 --> 00:34:55,080 Speaker 1: we've been talking about this morning. Certainly had an impact 635 00:34:55,120 --> 00:34:57,560 Speaker 1: on the markets. Tom Gibbel joins us. We like to 636 00:34:57,600 --> 00:34:59,439 Speaker 1: talk to Tom every time we get these jobs data 637 00:34:59,560 --> 00:35:01,480 Speaker 1: points to get his sense of what he's seeing on 638 00:35:01,520 --> 00:35:03,720 Speaker 1: the ground. And he's a founder and CEO of LaSalle Network, 639 00:35:04,360 --> 00:35:08,319 Speaker 1: one of the biggest staffing networks out there, and he's 640 00:35:08,600 --> 00:35:11,080 Speaker 1: a proud University of Colorado buffalo who was still in 641 00:35:11,120 --> 00:35:14,400 Speaker 1: search of a football coach. Uh, Tom, what do you 642 00:35:14,440 --> 00:35:17,799 Speaker 1: make of the data today? Well, well, yeah, the Dow 643 00:35:17,960 --> 00:35:20,319 Speaker 1: Jones is only down sixty where the futures were showing 644 00:35:20,360 --> 00:35:22,680 Speaker 1: it was going to be down four hundreds. So the 645 00:35:22,719 --> 00:35:26,200 Speaker 1: market settling in and realizing that a good labor market 646 00:35:26,280 --> 00:35:28,360 Speaker 1: is not a bad thing. And I think that's the 647 00:35:28,680 --> 00:35:32,920 Speaker 1: message that we're seeing, Uh excuse me, that economists are 648 00:35:32,960 --> 00:35:35,800 Speaker 1: talking about, and I'm not sure economists are right, Uh, 649 00:35:35,920 --> 00:35:38,799 Speaker 1: is that the Fed's gonna have to raise interest rate 650 00:35:38,800 --> 00:35:40,880 Speaker 1: if the market is strong. And what we're learning is 651 00:35:41,400 --> 00:35:44,480 Speaker 1: the market, the labor market is strong. So what's our 652 00:35:44,520 --> 00:35:46,759 Speaker 1: definition of a recession is what we've really got to 653 00:35:46,760 --> 00:35:52,160 Speaker 1: recalibrate here, What do you expect in terms of next 654 00:35:52,280 --> 00:35:55,799 Speaker 1: year um from from your advantage point? I mean, have 655 00:35:55,920 --> 00:36:00,200 Speaker 1: you started have you started seeing sectors cut job Do 656 00:36:00,280 --> 00:36:03,480 Speaker 1: you think we're gonna see uh more widespread job cuts 657 00:36:03,520 --> 00:36:06,520 Speaker 1: as rates continue to rise? No? I think were you 658 00:36:06,600 --> 00:36:08,360 Speaker 1: see it vertical by vertical? So what I think we 659 00:36:08,440 --> 00:36:12,439 Speaker 1: have here is big tech realizing that they weigh over 660 00:36:12,560 --> 00:36:16,160 Speaker 1: hired during the pandemic, thinking that was gonna last for forever, 661 00:36:16,280 --> 00:36:18,360 Speaker 1: which just proves that even the smartest people in the 662 00:36:18,440 --> 00:36:22,000 Speaker 1: room aren't always the smartest people in the room. And 663 00:36:22,000 --> 00:36:24,719 Speaker 1: and now all those people that they cut, that's the 664 00:36:24,760 --> 00:36:27,720 Speaker 1: talent that the small and medium sized businesses were losing 665 00:36:27,719 --> 00:36:30,239 Speaker 1: out for that they couldn't afford because big tech could 666 00:36:30,239 --> 00:36:32,440 Speaker 1: pay whatever they wanted. Well, now we've got a flood 667 00:36:32,440 --> 00:36:34,480 Speaker 1: of those types of people on the market, so the 668 00:36:34,520 --> 00:36:36,839 Speaker 1: small and medium sized businesses can make it. And then 669 00:36:36,880 --> 00:36:40,200 Speaker 1: we've had a run on saying with interest rates higher, 670 00:36:40,200 --> 00:36:44,239 Speaker 1: the VC firms are not investing as much in pre 671 00:36:44,960 --> 00:36:48,400 Speaker 1: uh profit and pre revenue companies. So where's the recession. 672 00:36:48,400 --> 00:36:51,799 Speaker 1: The recession is hitting big tech, which are still very profitable, 673 00:36:52,360 --> 00:36:55,600 Speaker 1: and it's hitting small companies that don't make money Okay, 674 00:36:55,960 --> 00:37:01,720 Speaker 1: So what's doing well? Healthcare? Uh, professional services, UH, manufacturing 675 00:37:01,719 --> 00:37:04,400 Speaker 1: in the United States. And now we've got the situation 676 00:37:04,440 --> 00:37:06,400 Speaker 1: that China is opening up from COVID, which is going 677 00:37:06,440 --> 00:37:09,040 Speaker 1: to open up a whole another revenue stream for everybody 678 00:37:09,040 --> 00:37:11,560 Speaker 1: in this country. I think things are gonna be much better. 679 00:37:11,640 --> 00:37:14,920 Speaker 1: We just did a survey. It showed that of companies 680 00:37:14,960 --> 00:37:17,640 Speaker 1: surveyed plan on hiring next year. Now they don't plan 681 00:37:17,640 --> 00:37:20,040 Speaker 1: on hiring as many as they did last year, but 682 00:37:20,120 --> 00:37:22,800 Speaker 1: it's the highest number of companies we've ever had reported 683 00:37:22,840 --> 00:37:25,560 Speaker 1: a plan on hiring in the next year. And Tom, 684 00:37:25,600 --> 00:37:27,560 Speaker 1: you know, another data point that people focus on on 685 00:37:27,600 --> 00:37:30,680 Speaker 1: these jobs days is the average hourly earnings on a 686 00:37:30,719 --> 00:37:33,080 Speaker 1: year of year basis came in at five point one percent. 687 00:37:33,400 --> 00:37:37,439 Speaker 1: The consensus was four point six percent. So wages are 688 00:37:37,440 --> 00:37:40,239 Speaker 1: still very strong at there. How do you think about that? 689 00:37:41,280 --> 00:37:44,080 Speaker 1: So wages are growing and and and that's because companies 690 00:37:44,120 --> 00:37:47,440 Speaker 1: are making money. And you also have this this pressure 691 00:37:47,840 --> 00:37:50,960 Speaker 1: that exists that says, if inflation is so high, we've 692 00:37:50,960 --> 00:37:54,200 Speaker 1: got to pay people more money. Um, which is which 693 00:37:54,239 --> 00:37:56,640 Speaker 1: is fine. But the real problem I see, if there's 694 00:37:56,719 --> 00:38:00,080 Speaker 1: one dark cloud hanging over things, is the increase you 695 00:38:00,160 --> 00:38:03,560 Speaker 1: seeing of consumer debt and people buying things on credit 696 00:38:03,600 --> 00:38:05,560 Speaker 1: and not being able to pay for it. That that's 697 00:38:05,560 --> 00:38:08,759 Speaker 1: what scares me is we have people that think that 698 00:38:08,840 --> 00:38:13,960 Speaker 1: over the past ten years, with the bailout stirring um, 699 00:38:14,160 --> 00:38:16,839 Speaker 1: COVID and and all the checks that the government was writing, 700 00:38:16,880 --> 00:38:18,680 Speaker 1: that that's just gonna be okay. You're always gonna be 701 00:38:18,680 --> 00:38:20,920 Speaker 1: taken care of. And I feel that that's a little 702 00:38:20,960 --> 00:38:23,479 Speaker 1: bit of a cloud hanging over us. But I think 703 00:38:23,520 --> 00:38:27,160 Speaker 1: that with wages increasing, they'll settle down. Is unemployment ticks up, 704 00:38:27,480 --> 00:38:31,080 Speaker 1: which it will, uh just naturally over the next few months. 705 00:38:31,360 --> 00:38:33,719 Speaker 1: There's still an out number. The biggest thing we don't 706 00:38:33,719 --> 00:38:37,040 Speaker 1: talk about skills gap. Yeah, and the problem why there's 707 00:38:37,080 --> 00:38:39,839 Speaker 1: so many jobs out there is because of of our 708 00:38:39,920 --> 00:38:42,960 Speaker 1: tight immigration laws. Right now we're educating foreign students in 709 00:38:43,000 --> 00:38:45,600 Speaker 1: our best colleges and then we're not letting him stay here. 710 00:38:45,840 --> 00:38:48,279 Speaker 1: And the technology and the other areas is there's a 711 00:38:48,320 --> 00:38:50,800 Speaker 1: skills gap. And then on the low level, the people 712 00:38:50,840 --> 00:38:53,000 Speaker 1: for the who's gonna do the infrastructure package? When we 713 00:38:53,000 --> 00:38:55,680 Speaker 1: start doing that from one point five trillion dollars, when 714 00:38:55,680 --> 00:38:57,480 Speaker 1: Americans have an entitlement that they don't want to do 715 00:38:57,520 --> 00:39:00,239 Speaker 1: the blue collar work. So Tom, what is going on here? 716 00:39:00,280 --> 00:39:04,399 Speaker 1: I have heard reports that UM, the US Citizen Chip 717 00:39:04,440 --> 00:39:08,440 Speaker 1: and Immigration Services U S c i S, has a 718 00:39:08,560 --> 00:39:13,560 Speaker 1: huge backlog of work permits to hand out. And you know, 719 00:39:13,600 --> 00:39:16,600 Speaker 1: we kind of expected this machinery to start turning once 720 00:39:16,640 --> 00:39:19,480 Speaker 1: Biden UM came into office after Trump, but it just 721 00:39:19,560 --> 00:39:22,920 Speaker 1: really hasn't worked out that way. Yeah, I think what 722 00:39:23,040 --> 00:39:25,680 Speaker 1: you have is there's so much pressure to fight on 723 00:39:25,800 --> 00:39:29,719 Speaker 1: the on the things that get UM people really excited 724 00:39:29,760 --> 00:39:32,000 Speaker 1: and heated, whether it was and I'm not saying it's 725 00:39:32,040 --> 00:39:33,920 Speaker 1: good or bad, I'm just saying, you know, Roe v. 726 00:39:34,040 --> 00:39:37,040 Speaker 1: Wade and getting a justice nominated, and then you had 727 00:39:37,080 --> 00:39:41,080 Speaker 1: mid terms and immigration wasn't a sexy talk because you 728 00:39:41,160 --> 00:39:43,880 Speaker 1: had the the economy that was still doing well and 729 00:39:43,880 --> 00:39:46,120 Speaker 1: and the jobs number. So we had a two D 730 00:39:46,239 --> 00:39:49,080 Speaker 1: and fifty thousand jobs. What's the problem with immigration? The 731 00:39:49,160 --> 00:39:51,759 Speaker 1: problem is we still have way more job openings than 732 00:39:51,800 --> 00:39:54,319 Speaker 1: we have people that are looking, and we have a 733 00:39:54,360 --> 00:39:56,520 Speaker 1: skills gap, but no one wants to talk about that 734 00:39:56,800 --> 00:39:59,320 Speaker 1: because it's America first, and they think that if we 735 00:39:59,400 --> 00:40:01,919 Speaker 1: let people in the country after we educate them, we're 736 00:40:01,960 --> 00:40:04,440 Speaker 1: not giving Americans the best job. The fact of the 737 00:40:04,520 --> 00:40:06,279 Speaker 1: fact of the matter is the Americans one of the 738 00:40:06,280 --> 00:40:08,879 Speaker 1: skill set to do the jobs that are needed. So 739 00:40:09,200 --> 00:40:11,600 Speaker 1: Tom on the other end of that job spectrum is 740 00:40:11,960 --> 00:40:15,400 Speaker 1: you know, you think about immigration, whether it's legal or illegal, 741 00:40:16,040 --> 00:40:17,640 Speaker 1: and you know, it just seems that you look at 742 00:40:17,640 --> 00:40:20,040 Speaker 1: the Jolts number, it's still north a ten million, you know, 743 00:40:20,120 --> 00:40:22,680 Speaker 1: job openings out there, and it just feels like a 744 00:40:22,719 --> 00:40:28,960 Speaker 1: lot of those jobs would ordinarily be filled by you know, immigration, 745 00:40:29,080 --> 00:40:31,799 Speaker 1: legal and illegal, and that doesn't seem to be the 746 00:40:31,800 --> 00:40:34,160 Speaker 1: case right now. I'm not sure how that changes. Well, 747 00:40:34,160 --> 00:40:35,960 Speaker 1: I think what ends up happening is be careful what 748 00:40:36,000 --> 00:40:38,880 Speaker 1: you wish for. Is everybody wanted tighter borders, and we 749 00:40:39,000 --> 00:40:42,720 Speaker 1: got into this this battle, this cultural battle, this social 750 00:40:42,760 --> 00:40:45,520 Speaker 1: battle over over what we want and in a lot 751 00:40:45,560 --> 00:40:48,560 Speaker 1: of ways it was necessary to tighten things up. But 752 00:40:48,600 --> 00:40:51,440 Speaker 1: if we don't have immigration coming from south of the 753 00:40:51,480 --> 00:40:54,960 Speaker 1: border and Americans don't want to do lower wage jobs, 754 00:40:55,320 --> 00:40:57,160 Speaker 1: we've got a real problem in our hands. And now 755 00:40:57,200 --> 00:41:00,680 Speaker 1: we've got a situation where you have municipalities, certain people 756 00:41:00,680 --> 00:41:03,200 Speaker 1: talking about raising the minimum wage even again, you know, 757 00:41:03,239 --> 00:41:06,160 Speaker 1: getting it from fifteen to twenty or even five. I mean, 758 00:41:06,560 --> 00:41:08,200 Speaker 1: you just get to a point where you can't pay 759 00:41:08,239 --> 00:41:10,680 Speaker 1: people more just because you want to. If the market 760 00:41:10,680 --> 00:41:12,399 Speaker 1: doesn't allow, what your milk is going to be seven 761 00:41:12,400 --> 00:41:15,879 Speaker 1: dollars a gallon. And that's what we're staring in the face, alright, Tom, 762 00:41:15,880 --> 00:41:19,279 Speaker 1: good Stuff. Always appreciate checking in with you on Jobs Day, 763 00:41:19,280 --> 00:41:22,480 Speaker 1: Tom Gimble. He's a founder and CEO of LaSalle Network 764 00:41:22,920 --> 00:41:26,879 Speaker 1: sALS and National Staffing Recruiting UH firm, and they fill 765 00:41:26,960 --> 00:41:29,240 Speaker 1: lots of jobs on a permanent basis, on a temporary basis, 766 00:41:29,239 --> 00:41:31,440 Speaker 1: and we'll love checking out with Tom getting his perspective. 767 00:41:31,480 --> 00:41:37,840 Speaker 1: Here's thanks for listening to the Bloomberg Markets podcast. You 768 00:41:37,880 --> 00:41:41,279 Speaker 1: can subscribe and listen to interviews at Apple Podcasts or 769 00:41:41,440 --> 00:41:45,160 Speaker 1: whatever podcast platform you prefer. I'm Matt Miller. I'm on 770 00:41:45,200 --> 00:41:49,080 Speaker 1: Twitter at Matt Miller V three. Pet On Ball Sweeney 771 00:41:49,120 --> 00:41:51,759 Speaker 1: I'm on Twitter at pt Sweeney. Before the podcast, you 772 00:41:51,760 --> 00:41:54,160 Speaker 1: can always catch us worldwide at Bloomberg Radio.