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

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Speaker 1: with my co host of Bonnie Quinn. Every business day

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Speaker 1: we bring you interviews from CEOs, A, market pros, and

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Speaker 1: Bloomberg experts, along with essential market moving news. Kind the

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Speaker 1: Bloomberg Markets Podcast on Apple Podcasts or wherever you listen

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Speaker 1: to podcasts, and on Bloomberg dot com. This morning, we

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Speaker 1: are fortunate to welcome shan Drawn Thomas. He is the

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Speaker 1: president of Northern Trust Asset Management. Typically we'd sit down

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Speaker 1: with shun Drawn and talk about markets where he thinks

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Speaker 1: our opportunities, but today we'll do something a little bit different. Recently,

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Speaker 1: shun Drawn UH composed a letter UH addressed to Corporate

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Speaker 1: American early September entitled I Can't Feel my Pain talking

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Speaker 1: about combating systemic racism, Sun Drown. Thank you so much

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Speaker 1: for joining us. We really appreciate your time. Give us

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Speaker 1: a sense of what you were trying to accomplish with

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Speaker 1: your letter entitled again, I Can't Feel my Pain. Well,

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Speaker 1: first of all, Paul, Bonnie, thank you so much for

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Speaker 1: having me on this morning. You know, I've been very

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Speaker 1: engaged in the dialogue that's been taking place both not

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Speaker 1: only within our company, but within the broader marketplace. And

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Speaker 1: you know, it was born out of both you know,

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Speaker 1: my own personal reflections and then the experiences of others

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Speaker 1: that that often don't uh well I would say, going stated,

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Speaker 1: because they don't have the same kind of platform that

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Speaker 1: I do. But as this had progressed, one of the

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Speaker 1: things that I reflected on was the challenge as a

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Speaker 1: black executive over the course of my career, because when

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Speaker 1: you're dealing with issues of race that proverbial is I

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Speaker 1: like to say third real topic. It's not one that

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Speaker 1: you can honestly comfortably engage in uh in in in

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Speaker 1: the in the workplace. And often it's just because of

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Speaker 1: the nature of the cultural dynamic in terms of dealing

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Speaker 1: with that kind of issue. And so one of the

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Speaker 1: challenges that you have, particularly as a black professional is

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Speaker 1: uh you have to in some ways sort of bottle

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Speaker 1: the natural emotions when you say, for instance, in your

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Speaker 1: community or external environment, see things like what happened with

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Speaker 1: George Floyd, or you see instances of what occurred more

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Speaker 1: recently uh in uh Wisconsin that's right next door to me,

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Speaker 1: and so um that was one of the things I

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Speaker 1: was really seeking to to to give a voice too,

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Speaker 1: and really to share some some honest and earnest perspective

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Speaker 1: on what's been the response so far Chandon, Well, you know,

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Speaker 1: it's it's been really incredible to me because for me,

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Speaker 1: you know, over the course of this year, I've actually

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Speaker 1: had a number of open letters that have offered on

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Speaker 1: key issues, whether it's my thought around compassionate leadership uh

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Speaker 1: in the pandemic. But the response to this, you know,

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Speaker 1: really has been overwhelming. I think for a couple of reasons. Uh.

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Speaker 1: Number one, UH is when when people can really identify

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Speaker 1: with someone in their business, UM that's actually experiencing these

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Speaker 1: kind of things. And I think the the the the

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Speaker 1: axiom that I used, pain hurts because it should um,

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Speaker 1: has really been a powerful metaphor because we realize in

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Speaker 1: the same way that our brains really tell us, you know,

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Speaker 1: when something in our environment is dangerous or provides a

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Speaker 1: threat to our physical and mental health. What I suggested

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Speaker 1: in the letter is, you know, our hearts in an

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Speaker 1: emotion and a spiritual sense, do the same thing, and

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Speaker 1: both for the individual, we need the capacity and ability

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Speaker 1: to be able to process and feel that pain, but

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Speaker 1: importantly in social relationships in an organization. We need to

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Speaker 1: be able to understand, empathize and feel one another's pain

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Speaker 1: if we're going to work effectively together and to have

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Speaker 1: a strong culture central on what role do you think

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Speaker 1: corporate America should play in dealing with this diversity issue

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Speaker 1: or race issue and all these things. What role do

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Speaker 1: you think corporate America should play? Well? First of all,

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Speaker 1: from a very practical standpoint, corporate America has a principal

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Speaker 1: role to play. So so think about many of our experiences.

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Speaker 1: I spend the majority of my waking hours engage in

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Speaker 1: my work and with the professionals that I deal with

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Speaker 1: in the workplace, and so anything that affects me right

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Speaker 1: in this case, you know, the construct of race, which

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Speaker 1: has been around for half a millennium, is one of

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Speaker 1: the most pervasive and impactful social constructs that we know,

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Speaker 1: particularly in the Western world, certainly here in the US,

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Speaker 1: and so affects every aspect of life. And so it's

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Speaker 1: not like we get to go to work and we have,

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Speaker 1: say a work life that is separate from our real life.

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Speaker 1: We bring all of those things with us into the workplace.

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Speaker 1: And so to the extent, working as part of a

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Speaker 1: cooperative means that we come together as individuals for a

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Speaker 1: common mission and a common purpose and a common vision,

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Speaker 1: which shared values. How can you not, in the context

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Speaker 1: of the workplace, then address something like systemic racism our

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Speaker 1: mandates the answer, I mean, it feels like there shouldn't

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Speaker 1: be a need for mandate, but it also feels like

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Speaker 1: it's not getting done without them. Chandon, Well, it's interesting because, um,

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Speaker 1: there's some in some corners a reflective, reflexive rejection to

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Speaker 1: quote unquote say mandates or targets. But I find that

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Speaker 1: ironic because if I think about my responsibilities, I have

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Speaker 1: the privilege of leading a global business, and so anything

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Speaker 1: of import that we are focused on. Not only do

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Speaker 1: we have priorities around, we have targets and we have

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Speaker 1: measurements against And although those are common in our business,

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Speaker 1: in fact, not only are the common, they're expected, and

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Speaker 1: to the extent in any of my areas of primary

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Speaker 1: responsibility I didn't have those, I would be viewed to

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Speaker 1: be profligated my responsibility. But when it comes to advancing

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Speaker 1: something that we in many aspects say is very important

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Speaker 1: to us, like diversity inclusion, Uh, then there is often

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Speaker 1: a pushback on saying we should have a target or

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Speaker 1: a specific expectation or clear and transparent measurements. But I

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Speaker 1: think it should be just the same as everything of

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Speaker 1: import we do in a business context. Chandra, is this

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Speaker 1: time different? It feels, at least to certain observers that

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Speaker 1: the what's happened in the country over the last six

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Speaker 1: months as it relates to police brutality against certain members

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Speaker 1: of UH minority communities, that it is different this time.

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Speaker 1: Do you think it might be different? UH, well, I'll

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Speaker 1: tell you, um So, I have a mixed perspective on that.

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Speaker 1: If you go over the last um call it six

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Speaker 1: seven decades, We've we've seen multiple periods in our history

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Speaker 1: where we've had um social unrest UH and it's usually

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Speaker 1: been led by young, courageous people of diverse groups and backgrounds,

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Speaker 1: and we're seeing that again today. So if you ask me,

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Speaker 1: when I look at history, that's something that that in

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Speaker 1: a sense rhymes what I feel like when people say

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Speaker 1: is different. And I would acknowledge this if I think about,

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Speaker 1: you know, my twenty six years working in financial services

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Speaker 1: in the business that i've a d and then doing

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Speaker 1: that in a corporate context. The nature of the dialogue

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Speaker 1: in recent decades has not been this transparent um and

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Speaker 1: has not been as engaging. So I think our challenge

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Speaker 1: at this point is to say, what I call this

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Speaker 1: moment that we have, how do we translate it into

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Speaker 1: a sustainable movement, because again, this is not the first

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Speaker 1: time in history that we've had meaningful um discourse and

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Speaker 1: even meaningful social movement on issues as it pertains to

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Speaker 1: race and racial quality. Schandron, thank you for bringing us

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Speaker 1: this letter. It is a September letter. I can't feel

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Speaker 1: my pain. But if you go to the Northern Trust

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Speaker 1: website you can see other writings from Schandron Thomas on

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Speaker 1: the subject, and we appreciate him. Today President at Northern Trust,

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Speaker 1: but it is time to check in on Homberg Opinion now.

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Speaker 1: Ellen Wold is president of Transversial Consulting and an nonresident

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Speaker 1: Senior Fellow at the Atlantic Council's Global Energy Center. For

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Speaker 1: our Purposes today, She's also Bloomberg Opinion columnist and has

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Speaker 1: written a column on OPEC's power over the oil market.

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Speaker 1: As we celebrate, I suppose that's the right way to

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Speaker 1: put it, the sixtieth anniversary of OPEC this week, Ellen,

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Speaker 1: thanks for joining. Has OPEC been a force for good

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Speaker 1: in the world. Well, I think that OPEC has certainly

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Speaker 1: been a force in the world. Um Initially, really, when

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Speaker 1: OPEC was sounded in nineteen sixty, nobody really paid it

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Speaker 1: much notice at all, and it wasn't until nine seventy

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Speaker 1: three that it actually became a household name or political

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Speaker 1: talking point, because that was really the first time that

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Speaker 1: OPEC was able to have any real effects over the markets.

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Speaker 1: And for consuming nations, this was a very big shock

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Speaker 1: because suddenly their energy prices basically quadruples almost overnight, and

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Speaker 1: there were mass shortages. So OPEC was seen very negatively.

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Speaker 1: But for the producing countries, for Venezuela, for Saudi Arabia,

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Speaker 1: for a rock, for iron, these were countries that for

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Speaker 1: many years had really been producing oil at prices that

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Speaker 1: were probably below what they should have been. And so

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Speaker 1: for these countries, the rise in oil prices did provide

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Speaker 1: them with cash that they used for divine So so

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Speaker 1: in that sense, uh, the rise and prices did help,

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Speaker 1: you know, assist in the development and economic development of

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Speaker 1: some of these countries which traditionally had been somewhat poor. So, Ellen,

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Speaker 1: I'm old enough to remember seventy three and the looking

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Speaker 1: at your license plate and if you had an odd number,

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Speaker 1: you would go on certain days and get it even number,

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Speaker 1: you'd go on other days to the pumps OPEC. Since then,

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Speaker 1: how is it evolved? This is essentially Saudi Arabia and

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Speaker 1: Russia and maybe a couple other people that we have

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Speaker 1: to worry about. How was it really evolved as a

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Speaker 1: market setting mechanism. That's a really good question because initially

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Speaker 1: it seemed like OPAQUE was kind of this boogeyman at

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Speaker 1: this enemy that existed to basically, uh control consumers and

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Speaker 1: extract money out of them. And over the years it's

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Speaker 1: definitely changed. At first, there was this kind of heaty

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Speaker 1: enthusiasm for wow, we can basically charge whatever we want.

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Speaker 1: And since then OPEC has evolved to take a much

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Speaker 1: more balanced view of the market. And I think Saudi

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Speaker 1: Arabia really did lead the way in this, because Saudi

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Speaker 1: Arabia was always concerned at setting prices for oil too

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Speaker 1: high would lead to demand destruction, and so they were

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Speaker 1: always very sensitive about really managing the market, taking a

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Speaker 1: long term view, and I think over time OPEK evolved

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Speaker 1: into a much more technocratic and professional organization today. In fact,

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Speaker 1: they issue in the demand forecasts they do a lot

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Speaker 1: of really great data collection and analysis uh that analysts

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Speaker 1: find very very useful. Now that they've expanded this group

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Speaker 1: to include Russia, it really very much is a Saudi

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Speaker 1: Russian show because they're the biggest producers, they have the

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Speaker 1: most spare capacity to wield in this situation. And yet

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Speaker 1: at the same time, players like Iraq and Nigeria are

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Speaker 1: always a thorn in the side and they can have

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Speaker 1: an effect on the market simply by kind of defying uh,

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Speaker 1: the group. So it's not just a Saudi Russian show. Yeah,

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Speaker 1: it's really stunning. I was going to say a more

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Speaker 1: inclusive OPEC, but that was a little tongue in cheek.

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Speaker 1: I mean, the idea that Russia has huge sway now

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Speaker 1: in this OPEC plus group is pretty phenomenal. Is Russia

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Speaker 1: a good actor in terms of its oil dealings with

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Speaker 1: the world, because certainly some countries don't believe that Russia

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Speaker 1: is a good actor in other areas well. I think

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Speaker 1: that one of the things that that OPEC has to

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Speaker 1: realize that Russia is that Russia is always going to

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Speaker 1: put Russia first. They're never going to put the group first.

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Speaker 1: And that was actually one of the reasons why Ali

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Speaker 1: on that you meet. The former Saudi oil minister was

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Speaker 1: very wary of getting into some kind of larger deal

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Speaker 1: with Russia because he'd seen Russia basically make promises, make

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Speaker 1: agreements and then turn around and do exactly the opposite,

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Speaker 1: and so if he didn't trust them at all. I

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Speaker 1: think that Russia has definitely shifted in that respect somewhat,

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Speaker 1: but it's still a constant challenge to make sure that

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Speaker 1: there's enough incentive for Russia to stay as part of

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Speaker 1: the group and not you know, go off and do

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Speaker 1: its own thing. And still it's always been one of

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Speaker 1: the big laggards in terms of compliance with its promised quotas.

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Speaker 1: Right now it happens to be doing much better than

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Speaker 1: say Iraq, but it's always it's always a gamble as

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Speaker 1: to whether they can keep Russia in. In fact, the

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Speaker 1: whole thing practically fell apart in March, so it's very

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Speaker 1: much kind of a thin line here, alright. So Ellen,

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Speaker 1: that's this supply side of the equation. I'm looking at

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Speaker 1: w T I crude here just under thirty eight dollars

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Speaker 1: a barrel had been in that forty three dollar range

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Speaker 1: for most of August. Is this really being is this

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Speaker 1: really is that Take a look at the global UH

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Speaker 1: crude market, demand driven market, and markets telling us we

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Speaker 1: don't see much demand out there. Yeah, demand is the

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Speaker 1: big picture today and that's really I think what markets

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Speaker 1: are coming to terms with today. Over the summer, I

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Speaker 1: think there were absolutely a lot of signs that demand

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Speaker 1: wasn't as strong as people thought it was. There. We

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Speaker 1: were seeing good increases in demand all throughout the summer,

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Speaker 1: But really I think those are hiding some of the

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Speaker 1: or kind of covering over some of the larger weaknesses.

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Speaker 1: And now that the summer is basically over, people have

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Speaker 1: stopped trying to go on whatever vacations they could have.

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Speaker 1: We're now seeing these weaknesses come to light in a

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Speaker 1: much stronger way and realizing that, uh, there there's going

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Speaker 1: to be serious weaknesses and demand for the rest of

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Speaker 1: not into and the market is just going to have

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Speaker 1: to take that into account. And so I think we're

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Speaker 1: seeing a price correction with this realization in mind. Now,

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Speaker 1: is there a forecast for when the world is no

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Speaker 1: longer dependent on hydrocarbons? Well, if you ask yeska vp uh,

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Speaker 1: they forecast that data come much sooner than than other

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Speaker 1: people I think that there's definitely a hope that you know,

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Speaker 1: at some point between that that might that might be true.

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Speaker 1: But I think that that's very much dependent on technology

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Speaker 1: and the pace of technological development, and I don't think

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Speaker 1: that we have really seen the kind of innovation that

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Speaker 1: will lead to mass adoption of non hydrocarbon sources across

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Speaker 1: the globe, and so those forecasts are very much are

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Speaker 1: very much hope rather than a realistic prediction. Ellen Wall,

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Speaker 1: thank you so much for joining us. Dr ellen Wald.

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Speaker 1: She's president a Transversal Consulting. She has also a Bloomberg

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Speaker 1: Opinion contributor. You can read her work and all the

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Speaker 1: work for the good folks of Bloomberg Opinion at Bloomberg

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Speaker 1: dot com, slash Opinion or on the terminal by typing

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Speaker 1: an O, P, I, N GO and vannie. You know,

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Speaker 1: as Dr Wald was suggesting here, it seems to be

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Speaker 1: a demand driven market. In the market participants seem to

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Speaker 1: be saying, I just don't see a big pickup in demand. Well,

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Speaker 1: airlines certainly don't need any products and vehicles on the

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Speaker 1: road for sure, but probably not as much as before

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Speaker 1: with people not just doing their daily commute. But it's

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Speaker 1: pretty amazing that it's the sixtieth anniversary of OPEC, which

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Speaker 1: is literally a global household name. I would I would

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Speaker 1: just imagine there isn't a single household that you could

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Speaker 1: go in to in the world and not know that

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Speaker 1: OPEC would be recognized there. Yeah, and I certainly remember

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Speaker 1: back to those early seventies waiting in line at the

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Speaker 1: gas station forecas before we have green on the screen

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Speaker 1: yet again, and yet again, Tex stocks are leading the

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Speaker 1: way tech investors, seemingly shrugging off that nearly ten percent

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Speaker 1: pullback we saw just last month to get a sense

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Speaker 1: of is there still room to move with these tech stocks?

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Speaker 1: That's welcome. David Coudla, founder, CEO and chief investment strategist

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Speaker 1: of Mainstake Capital Management. They've got three billion dollars under management. David,

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Speaker 1: thanks so much for joining us. Again, we always appreciate

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Speaker 1: your perspective here. So again, tech investors got a little

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Speaker 1: bit of a you know, a scared last month with

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Speaker 1: that pullback, uh and nearly a ten percent correction in

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Speaker 1: tech stocks, yet seems to not have scared many people away.

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Speaker 1: How are you viewing that sector of the market. It was,

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Speaker 1: it was a scary three days certainly, you know, uh,

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Speaker 1: a sharp correction over those three days, you know, and

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Speaker 1: then the days that ensued and from peak to trough

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Speaker 1: on the NASTAC one hundred INCHRA day. The low actually

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Speaker 1: came last Friday, so about a little over a week

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Speaker 1: that tech stocks were in trouble. But you know, uh,

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Speaker 1: if I said that evaluations had become frosty, that was

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Speaker 1: that's an understatement for sure. And they've been frosy for

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Speaker 1: for months, you know, even before we came into the

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Speaker 1: bear market. But so so certainly you know that the

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Speaker 1: that correction was needed. And I say that correction was

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Speaker 1: needed because I think it was a correction that we're

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Speaker 1: now already coming out of. We've got two strong days

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Speaker 1: for the nasdac A tech stocks yesterday and today. And

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Speaker 1: you know, it is our our favored sector in our portfolios.

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Speaker 1: We've talked about it on the show many times, not

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Speaker 1: only in the past few months, but the past few years,

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Speaker 1: and um, we we continue to like it in in uh,

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Speaker 1: continue to be overweight the sector even though you know,

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Speaker 1: I think it's it's prudent at these levels and coming

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Speaker 1: into the election that investors look hard at their portfolios

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Speaker 1: for how much risk they do have because we'll see

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Speaker 1: more volatility like that. I think between now in the election,

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Speaker 1: how much of the NALTAC would you advise people to own?

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Speaker 1: It sounds stave like you think this you know move

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Speaker 1: is not a pivot as such, it's just a little breather.

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Speaker 1: I think it is a breather. I think that, Uh,

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Speaker 1: the NASAC will continue to be strong. When we look

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Speaker 1: across all the industry sectors and we look good, you know,

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Speaker 1: where are the stocks that continue to do well where

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Speaker 1: the stocks did well during the lockdowns, either because you know,

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Speaker 1: technology had continue to do well with their second or

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Speaker 1: growth stories or technology that we're enablers for retailers or

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Speaker 1: e commerce I t UM those those are the companies

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Speaker 1: that have the best balance sheets, have the best free

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Speaker 1: cash flow, have tremendous growth rates. Uh. It just continues

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Speaker 1: to be such a strong sector. And when we say technology,

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Speaker 1: you know, that's very broad. Whether we're talking about hardware, uh,

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Speaker 1: I t e commerce, other Internet, it's it's a broad sector.

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Speaker 1: But uh, you know, technology is eating the world. And

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Speaker 1: we've heard that phrase many times, but it's true. And

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Speaker 1: when you know technology is disrupting when it comes into

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Speaker 1: an industry, when you know, the worst thing can happen

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Speaker 1: is to, you know, to find out in the morning that, uh,

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Speaker 1: you know, Jeff Bezos, who has leveraged technology to do

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Speaker 1: what he's done with Amazon, is coming into your industry. Uh,

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Speaker 1: like when he did that with UH and Kroger. The

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Speaker 1: CEO of Kroger woke up one morning to find out

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Speaker 1: he's coming into the grocery industry. But the point being

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Speaker 1: that that the technology is being leveraged in that way.

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Speaker 1: Are there other places we can go? We want to

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Speaker 1: hedge our portfolios with gold because gold is more attractive

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Speaker 1: to us now than bonds. With rates so low, we

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Speaker 1: think consumer discretionary looks attractive, you know, other sectors we

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Speaker 1: want to diverse by into. The technology is going to

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Speaker 1: be overweighting our portfolios for some time, David, you mentioned

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Speaker 1: the election, and some people started to raise some concerns

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Speaker 1: about the potential for a can tested election an uncertain outcome. Uh,

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Speaker 1: you know, maybe a legal process and the uncertainty that

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Speaker 1: may bring into the markets. How do you af factor

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Speaker 1: that into your thinking? Well, we think that this could

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Speaker 1: be it could be a real problem for the markets.

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Speaker 1: You know, we could have this scenario that's shaping up

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Speaker 1: where you know, we don't we we don't have election nights,

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Speaker 1: and we're not gonna have an election night any longer.

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Speaker 1: We're gonna have an election month where you know, we're

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Speaker 1: seeing this scenario come about where we could have on

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Speaker 1: election night potentially one candidate looks like the winner and

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Speaker 1: maybe a clear winner, and as all the absentee ballots

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Speaker 1: or the mail in ballots come in over the coming days,

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Speaker 1: that may look to change or potentially change. So that anxiety,

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Speaker 1: that uncertainty. The markets hate uncertainty. So that uncertainty we

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Speaker 1: have leading up the election. And again it's not as

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Speaker 1: much about uh, which party wins or who wins the

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Speaker 1: election as it is the uncertainty leading up to the election,

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Speaker 1: so the market can price it in price in the certainty. Um,

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Speaker 1: we've only had that uncertain leading up the election. It

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Speaker 1: may be very uncertain for days after, and it may

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Speaker 1: be very uncertain how it gets resolved, and that could

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Speaker 1: cause some incredible indigestion and volatility for the markets that

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Speaker 1: that could potentially go on for the only days but weeks.

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Speaker 1: So you know, we are concerned about that. David Coula

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Speaker 1: always gore to get your thoughts. Thank you for joining

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Speaker 1: us today. David Coula is CEO and chief investment strategist

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Speaker 1: of Mainstay Capital Management, about three billion dollars in assets

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Speaker 1: under management, coming to us all the way from Michigan today.

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Speaker 1: It's always interesting to speak to people around the country,

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Speaker 1: but what he says Paul about uncertainty is really interesting

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Speaker 1: and to some it's an obvious point, but it's going

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Speaker 1: to only get more vivid as we approach the election.

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Speaker 1: Marko Kolonovitch, for example, of JP Morgan, the famed quant,

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Speaker 1: talks about this a lot and how we're really only

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Speaker 1: part of the way there, even though the election as

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Speaker 1: well as on fifty days or fifty days or so

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Speaker 1: away at this point, we will talk about this throughout

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Speaker 1: the afternoon. Marco Colonovot John B TV at one pm

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Speaker 1: Eastern as well, may as well get that in there.

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Speaker 1: This is Bloomberg bubble, bubble toil in trouble at Credit Suits.

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Speaker 1: It seems in fact Credit Suite and UBS are even

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Speaker 1: potentially investigating whether to come together. Let's bring in somebody

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Speaker 1: who knows a lot more about this. Alison Williams, the

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Speaker 1: senior analyst for Global Investment Banks and asset management at

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Speaker 1: Bloomberg Intelligence. How realistic is it that credit suits and

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Speaker 1: UBS could merge, Allison? So I would call it unlikely

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Speaker 1: but not impossible. And uh, you know, normally this is

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Speaker 1: the type of story that I would read and think

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Speaker 1: it was rather silly. But I think the fact that

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Speaker 1: UM it does seem like the chairman has approach regulators

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Speaker 1: UM and is listening to do do this gives it

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Speaker 1: some haft UM. I think the key sticking point, you know,

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Speaker 1: even if the local regulators agree UM, could relate to

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Speaker 1: anti trust issues and their home markets. So these two

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Speaker 1: banks have huge global businesses. Investment banking and trading is

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Speaker 1: when we talk about where they compete with the US.

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Speaker 1: Wealth management is an area where UM UBS is a

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Speaker 1: global leader. Crowds sweets is also strong. But I think

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Speaker 1: the sticking point could be their home market, at least

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Speaker 1: according to our anti trust analysts UM and simply just

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Speaker 1: looking at how big they are UM in the Swiss business. So, Alison,

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Speaker 1: even the fact that these two UH European giants are

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Speaker 1: even talking to each other about this, does that suggest

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Speaker 1: that the business European global banking, but particularly in Europe

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Speaker 1: where the rates are negative in many key markets and

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Speaker 1: are so low around the world. Old it's just so

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Speaker 1: so tough for these companies to make any money on

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Speaker 1: their own. So, Paul, I think that it really just

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Speaker 1: comes down to, you know, if if Europe, if the

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Speaker 1: europe competitors want to compete, I do think that, um,

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Speaker 1: there has to be something done to form a global competitor.

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Speaker 1: I think if we look at what's happened in the

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Speaker 1: landscape over the last um, you know, let's call a

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Speaker 1: decade or so, since the banks have emerged from the crisis,

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Speaker 1: you know, the US banks have benefited from this virtuous

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Speaker 1: cycle of you know, technology spending and scale. They got

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Speaker 1: profitable sooner they put their issues behind them, sooner they've

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Speaker 1: had they had a better economy to work with, um,

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Speaker 1: so they had more revenue to spend to invest to

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Speaker 1: build the technology, and which has resulted in revenue share

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Speaker 1: gains and thus the cycle where European competitors have been

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Speaker 1: sort of this serial restructuring at all of the largest

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Speaker 1: competitors or exiting businesses on by one because they just

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Speaker 1: can't be profitable and so UM. The reason why scale

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Speaker 1: really matters is, you know, it's not just this concept

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Speaker 1: of you know, offering all the products, which is sort

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Speaker 1: of a nice to have, but you know to the

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Speaker 1: extent that you have the money to make these investments,

431
00:25:16,800 --> 00:25:19,199
Speaker 1: and that's you know, sort of where the war is

432
00:25:19,280 --> 00:25:22,639
Speaker 1: really being waged. And so if you look at the

433
00:25:22,640 --> 00:25:25,480
Speaker 1: technology budgets and you look at credit suites and you

434
00:25:25,560 --> 00:25:28,159
Speaker 1: bs and you add those budgets together, you know, that

435
00:25:28,160 --> 00:25:30,640
Speaker 1: would put them in the realm of the US competitors.

436
00:25:30,640 --> 00:25:33,199
Speaker 1: The one you know caution we would say is you know,

437
00:25:33,280 --> 00:25:35,760
Speaker 1: it's necessary, but not sufficient, and it's not going to

438
00:25:35,840 --> 00:25:39,280
Speaker 1: be overnight. So you know, in terms of at least

439
00:25:39,320 --> 00:25:42,960
Speaker 1: the global investment banking business, you know, I can figure

440
00:25:43,000 --> 00:25:45,440
Speaker 1: out a way for some of these European banks to

441
00:25:45,560 --> 00:25:49,440
Speaker 1: merge to create uh, someone that has the technology um

442
00:25:49,440 --> 00:25:52,879
Speaker 1: to invest you know it. It gives them a chance,

443
00:25:52,960 --> 00:25:56,920
Speaker 1: but it doesn't it's not necessarily guarantee. Yeah, I want

444
00:25:56,960 --> 00:25:58,800
Speaker 1: to ask you what they all do differently, or at

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00:25:58,880 --> 00:26:01,159
Speaker 1: least what these two do different and the But I

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00:26:01,200 --> 00:26:02,680
Speaker 1: do want to point out first that we had the

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00:26:02,760 --> 00:26:07,960
Speaker 1: hilarious report from I p is That, which is a

448
00:26:08,040 --> 00:26:13,000
Speaker 1: German newspaper inside for atopods that UBS chairman Excel Labor

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00:26:13,000 --> 00:26:15,760
Speaker 1: had threatened to move the bank's headquarters to Frankfurt if

450
00:26:15,800 --> 00:26:18,560
Speaker 1: if officials were to forbid a merger with Credit Suite,

451
00:26:18,560 --> 00:26:20,840
Speaker 1: So he was deadly serious about it. It seems what

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00:26:21,080 --> 00:26:26,520
Speaker 1: do UBS and Credit Suite do that's different? So I

453
00:26:26,560 --> 00:26:30,600
Speaker 1: would I would say that their business mixes are very similar,

454
00:26:31,320 --> 00:26:35,040
Speaker 1: but I would say that UBS is a bigger competitor.

455
00:26:35,359 --> 00:26:38,600
Speaker 1: So from a global banking perspective, UBS is a bigger

456
00:26:38,600 --> 00:26:44,119
Speaker 1: competitor in the equities business globally, they're stronger UM in

457
00:26:44,520 --> 00:26:48,439
Speaker 1: Europe and Asia UM, but you know, Credit Swiss has

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00:26:48,480 --> 00:26:51,920
Speaker 1: some strength in those businesses. But then when you turn

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00:26:51,960 --> 00:26:54,240
Speaker 1: over to the sixth income side of things, you know,

460
00:26:54,400 --> 00:26:58,040
Speaker 1: UBS they're very different in terms of UBS making an

461
00:26:58,040 --> 00:27:01,080
Speaker 1: early move to shrink their business years a go, much

462
00:27:01,119 --> 00:27:06,240
Speaker 1: more slow trading UH currencies and raised those types of businesses.

463
00:27:06,640 --> 00:27:09,359
Speaker 1: Cred Space is actually unique across all the global peers

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00:27:09,400 --> 00:27:12,919
Speaker 1: and having more of a credit focused business. UH in

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00:27:12,920 --> 00:27:15,159
Speaker 1: Bank America also sort of sort of that way, but

466
00:27:15,240 --> 00:27:18,520
Speaker 1: more us UM and so they really have sort of

467
00:27:18,520 --> 00:27:22,840
Speaker 1: stuck to some leadership positions and curization trading and the like.

468
00:27:23,440 --> 00:27:27,720
Speaker 1: Both banks, you know, have a strategic focus on wealth.

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00:27:27,840 --> 00:27:30,840
Speaker 1: So that's a similarity that they that that they both

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00:27:30,880 --> 00:27:36,040
Speaker 1: have UM, although UPS has perhaps a longer standing and

471
00:27:36,240 --> 00:27:39,800
Speaker 1: stronger presence UM focusing on Asia, but that's something that

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Speaker 1: banks worldwide are doing. Alison, thank you so much for

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00:27:43,040 --> 00:27:46,560
Speaker 1: joining us. We always appreciate your perspective UH and global

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Speaker 1: view of the global banking business. Alison Williams Senior Analysts

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00:27:50,040 --> 00:27:54,040
Speaker 1: Global Investment Banks and Asset Management for Bloomberg Intelligence. Bloomberg

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00:27:54,040 --> 00:27:59,840
Speaker 1: Intelligence is Bloomberg's investment management research business investment research UH.

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00:28:00,080 --> 00:28:03,240
Speaker 1: Allison is one of the founding members of Bloomberg Intelligence

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00:28:03,320 --> 00:28:05,280
Speaker 1: on the global investment banks and boy, when you talk

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00:28:05,320 --> 00:28:09,440
Speaker 1: about UBS and Credit Swiss potentially getting together on paper,

480
00:28:10,000 --> 00:28:13,119
Speaker 1: that suggests a very strong global competitor and one that

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00:28:13,160 --> 00:28:16,359
Speaker 1: can stick with some of these big us A global banks.

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Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can

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00:28:20,600 --> 00:28:24,359
Speaker 1: subscribe and listen to interviews at Apple Podcasts or whatever

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00:28:24,480 --> 00:28:27,840
Speaker 1: podcast platform you prefer. I'm Bonnie Quinn. I'm on Twitter

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00:28:28,040 --> 00:28:30,399
Speaker 1: at Bonnie Quinn, and I'm Paul Sweeney. I'm on Twitter

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00:28:30,440 --> 00:28:33,320
Speaker 1: at pt Sweeney. Before the podcast, you can always catch

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00:28:33,359 --> 00:28:34,920
Speaker 1: us worldwide at Bloomberg Radio