Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along
Speaker 1: with my co host of Bonnie Quinn. Every business day
Speaker 1: we bring you interviews from CEOs, A, market pros, and
Speaker 1: Bloomberg experts, along with essential market moving news. Kind the
Speaker 1: Bloomberg Markets Podcast on Apple Podcasts or wherever you listen
Speaker 1: to podcasts, and on Bloomberg dot com. This morning, we
Speaker 1: are fortunate to welcome shan Drawn Thomas. He is the
Speaker 1: president of Northern Trust Asset Management. Typically we'd sit down
Speaker 1: with shun Drawn and talk about markets where he thinks
Speaker 1: our opportunities, but today we'll do something a little bit different. Recently,
Speaker 1: shun Drawn UH composed a letter UH addressed to Corporate
Speaker 1: American early September entitled I Can't Feel my Pain talking
Speaker 1: about combating systemic racism, Sun Drown. Thank you so much
Speaker 1: for joining us. We really appreciate your time. Give us
Speaker 1: a sense of what you were trying to accomplish with
Speaker 1: your letter entitled again, I Can't Feel my Pain. Well,
Speaker 1: first of all, Paul, Bonnie, thank you so much for
Speaker 1: having me on this morning. You know, I've been very
Speaker 1: engaged in the dialogue that's been taking place both not
Speaker 1: only within our company, but within the broader marketplace. And
Speaker 1: you know, it was born out of both you know,
Speaker 1: my own personal reflections and then the experiences of others
Speaker 1: that that often don't uh well I would say, going stated,
Speaker 1: because they don't have the same kind of platform that
Speaker 1: I do. But as this had progressed, one of the
Speaker 1: things that I reflected on was the challenge as a
Speaker 1: black executive over the course of my career, because when
Speaker 1: you're dealing with issues of race that proverbial is I
Speaker 1: like to say third real topic. It's not one that
Speaker 1: you can honestly comfortably engage in uh in in in
Speaker 1: the in the workplace. And often it's just because of
Speaker 1: the nature of the cultural dynamic in terms of dealing
Speaker 1: with that kind of issue. And so one of the
Speaker 1: challenges that you have, particularly as a black professional is
Speaker 1: uh you have to in some ways sort of bottle
Speaker 1: the natural emotions when you say, for instance, in your
Speaker 1: community or external environment, see things like what happened with
Speaker 1: George Floyd, or you see instances of what occurred more
Speaker 1: recently uh in uh Wisconsin that's right next door to me,
Speaker 1: and so um that was one of the things I
Speaker 1: was really seeking to to to give a voice too,
Speaker 1: and really to share some some honest and earnest perspective
Speaker 1: on what's been the response so far Chandon, Well, you know,
Speaker 1: it's it's been really incredible to me because for me,
Speaker 1: you know, over the course of this year, I've actually
Speaker 1: had a number of open letters that have offered on
Speaker 1: key issues, whether it's my thought around compassionate leadership uh
Speaker 1: in the pandemic. But the response to this, you know,
Speaker 1: really has been overwhelming. I think for a couple of reasons. Uh.
Speaker 1: Number one, UH is when when people can really identify
Speaker 1: with someone in their business, UM that's actually experiencing these
Speaker 1: kind of things. And I think the the the the
Speaker 1: axiom that I used, pain hurts because it should um,
Speaker 1: has really been a powerful metaphor because we realize in
Speaker 1: the same way that our brains really tell us, you know,
Speaker 1: when something in our environment is dangerous or provides a
Speaker 1: threat to our physical and mental health. What I suggested
Speaker 1: in the letter is, you know, our hearts in an
Speaker 1: emotion and a spiritual sense, do the same thing, and
Speaker 1: both for the individual, we need the capacity and ability
Speaker 1: to be able to process and feel that pain, but
Speaker 1: importantly in social relationships in an organization. We need to
Speaker 1: be able to understand, empathize and feel one another's pain
Speaker 1: if we're going to work effectively together and to have
Speaker 1: a strong culture central on what role do you think
Speaker 1: corporate America should play in dealing with this diversity issue
Speaker 1: or race issue and all these things. What role do
Speaker 1: you think corporate America should play? Well? First of all,
Speaker 1: from a very practical standpoint, corporate America has a principal
Speaker 1: role to play. So so think about many of our experiences.
Speaker 1: I spend the majority of my waking hours engage in
Speaker 1: my work and with the professionals that I deal with
Speaker 1: in the workplace, and so anything that affects me right
Speaker 1: in this case, you know, the construct of race, which
Speaker 1: has been around for half a millennium, is one of
Speaker 1: the most pervasive and impactful social constructs that we know,
Speaker 1: particularly in the Western world, certainly here in the US,
Speaker 1: and so affects every aspect of life. And so it's
Speaker 1: not like we get to go to work and we have,
Speaker 1: say a work life that is separate from our real life.
Speaker 1: We bring all of those things with us into the workplace.
Speaker 1: And so to the extent, working as part of a
Speaker 1: cooperative means that we come together as individuals for a
Speaker 1: common mission and a common purpose and a common vision,
Speaker 1: which shared values. How can you not, in the context
Speaker 1: of the workplace, then address something like systemic racism our
Speaker 1: mandates the answer, I mean, it feels like there shouldn't
Speaker 1: be a need for mandate, but it also feels like
Speaker 1: it's not getting done without them. Chandon, Well, it's interesting because, um,
Speaker 1: there's some in some corners a reflective, reflexive rejection to
Speaker 1: quote unquote say mandates or targets. But I find that
Speaker 1: ironic because if I think about my responsibilities, I have
Speaker 1: the privilege of leading a global business, and so anything
Speaker 1: of import that we are focused on. Not only do
Speaker 1: we have priorities around, we have targets and we have
Speaker 1: measurements against And although those are common in our business,
Speaker 1: in fact, not only are the common, they're expected, and
Speaker 1: to the extent in any of my areas of primary
Speaker 1: responsibility I didn't have those, I would be viewed to
Speaker 1: be profligated my responsibility. But when it comes to advancing
Speaker 1: something that we in many aspects say is very important
Speaker 1: to us, like diversity inclusion, Uh, then there is often
Speaker 1: a pushback on saying we should have a target or
Speaker 1: a specific expectation or clear and transparent measurements. But I
Speaker 1: think it should be just the same as everything of
Speaker 1: import we do in a business context. Chandra, is this
Speaker 1: time different? It feels, at least to certain observers that
Speaker 1: the what's happened in the country over the last six
Speaker 1: months as it relates to police brutality against certain members
Speaker 1: of UH minority communities, that it is different this time.
Speaker 1: Do you think it might be different? UH, well, I'll
Speaker 1: tell you, um So, I have a mixed perspective on that.
Speaker 1: If you go over the last um call it six
Speaker 1: seven decades, We've we've seen multiple periods in our history
Speaker 1: where we've had um social unrest UH and it's usually
Speaker 1: been led by young, courageous people of diverse groups and backgrounds,
Speaker 1: and we're seeing that again today. So if you ask me,
Speaker 1: when I look at history, that's something that that in
Speaker 1: a sense rhymes what I feel like when people say
Speaker 1: is different. And I would acknowledge this if I think about,
Speaker 1: you know, my twenty six years working in financial services
Speaker 1: in the business that i've a d and then doing
Speaker 1: that in a corporate context. The nature of the dialogue
Speaker 1: in recent decades has not been this transparent um and
Speaker 1: has not been as engaging. So I think our challenge
Speaker 1: at this point is to say, what I call this
Speaker 1: moment that we have, how do we translate it into
Speaker 1: a sustainable movement, because again, this is not the first
Speaker 1: time in history that we've had meaningful um discourse and
Speaker 1: even meaningful social movement on issues as it pertains to
Speaker 1: race and racial quality. Schandron, thank you for bringing us
Speaker 1: this letter. It is a September letter. I can't feel
Speaker 1: my pain. But if you go to the Northern Trust
Speaker 1: website you can see other writings from Schandron Thomas on
Speaker 1: the subject, and we appreciate him. Today President at Northern Trust,
Speaker 1: but it is time to check in on Homberg Opinion now.
Speaker 1: Ellen Wold is president of Transversial Consulting and an nonresident
Speaker 1: Senior Fellow at the Atlantic Council's Global Energy Center. For
Speaker 1: our Purposes today, She's also Bloomberg Opinion columnist and has
Speaker 1: written a column on OPEC's power over the oil market.
Speaker 1: As we celebrate, I suppose that's the right way to
Speaker 1: put it, the sixtieth anniversary of OPEC this week, Ellen,
Speaker 1: thanks for joining. Has OPEC been a force for good
Speaker 1: in the world. Well, I think that OPEC has certainly
Speaker 1: been a force in the world. Um Initially, really, when
Speaker 1: OPEC was sounded in nineteen sixty, nobody really paid it
Speaker 1: much notice at all, and it wasn't until nine seventy
Speaker 1: three that it actually became a household name or political
Speaker 1: talking point, because that was really the first time that
Speaker 1: OPEC was able to have any real effects over the markets.
Speaker 1: And for consuming nations, this was a very big shock
Speaker 1: because suddenly their energy prices basically quadruples almost overnight, and
Speaker 1: there were mass shortages. So OPEC was seen very negatively.
Speaker 1: But for the producing countries, for Venezuela, for Saudi Arabia,
Speaker 1: for a rock, for iron, these were countries that for
Speaker 1: many years had really been producing oil at prices that
Speaker 1: were probably below what they should have been. And so
Speaker 1: for these countries, the rise in oil prices did provide
Speaker 1: them with cash that they used for divine So so
Speaker 1: in that sense, uh, the rise and prices did help,
Speaker 1: you know, assist in the development and economic development of
Speaker 1: some of these countries which traditionally had been somewhat poor. So, Ellen,
Speaker 1: I'm old enough to remember seventy three and the looking
Speaker 1: at your license plate and if you had an odd number,
Speaker 1: you would go on certain days and get it even number,
Speaker 1: you'd go on other days to the pumps OPEC. Since then,
Speaker 1: how is it evolved? This is essentially Saudi Arabia and
Speaker 1: Russia and maybe a couple other people that we have
Speaker 1: to worry about. How was it really evolved as a
Speaker 1: market setting mechanism. That's a really good question because initially
Speaker 1: it seemed like OPAQUE was kind of this boogeyman at
Speaker 1: this enemy that existed to basically, uh control consumers and
Speaker 1: extract money out of them. And over the years it's
Speaker 1: definitely changed. At first, there was this kind of heaty
Speaker 1: enthusiasm for wow, we can basically charge whatever we want.
Speaker 1: And since then OPEC has evolved to take a much
Speaker 1: more balanced view of the market. And I think Saudi
Speaker 1: Arabia really did lead the way in this, because Saudi
Speaker 1: Arabia was always concerned at setting prices for oil too
Speaker 1: high would lead to demand destruction, and so they were
Speaker 1: always very sensitive about really managing the market, taking a
Speaker 1: long term view, and I think over time OPEK evolved
Speaker 1: into a much more technocratic and professional organization today. In fact,
Speaker 1: they issue in the demand forecasts they do a lot
Speaker 1: of really great data collection and analysis uh that analysts
Speaker 1: find very very useful. Now that they've expanded this group
Speaker 1: to include Russia, it really very much is a Saudi
Speaker 1: Russian show because they're the biggest producers, they have the
Speaker 1: most spare capacity to wield in this situation. And yet
Speaker 1: at the same time, players like Iraq and Nigeria are
Speaker 1: always a thorn in the side and they can have
Speaker 1: an effect on the market simply by kind of defying uh,
Speaker 1: the group. So it's not just a Saudi Russian show. Yeah,
Speaker 1: it's really stunning. I was going to say a more
Speaker 1: inclusive OPEC, but that was a little tongue in cheek.
Speaker 1: I mean, the idea that Russia has huge sway now
Speaker 1: in this OPEC plus group is pretty phenomenal. Is Russia
Speaker 1: a good actor in terms of its oil dealings with
Speaker 1: the world, because certainly some countries don't believe that Russia
Speaker 1: is a good actor in other areas well. I think
Speaker 1: that one of the things that that OPEC has to
Speaker 1: realize that Russia is that Russia is always going to
Speaker 1: put Russia first. They're never going to put the group first.
Speaker 1: And that was actually one of the reasons why Ali
Speaker 1: on that you meet. The former Saudi oil minister was
Speaker 1: very wary of getting into some kind of larger deal
Speaker 1: with Russia because he'd seen Russia basically make promises, make
Speaker 1: agreements and then turn around and do exactly the opposite,
Speaker 1: and so if he didn't trust them at all. I
Speaker 1: think that Russia has definitely shifted in that respect somewhat,
Speaker 1: but it's still a constant challenge to make sure that
Speaker 1: there's enough incentive for Russia to stay as part of
Speaker 1: the group and not you know, go off and do
Speaker 1: its own thing. And still it's always been one of
Speaker 1: the big laggards in terms of compliance with its promised quotas.
Speaker 1: Right now it happens to be doing much better than
Speaker 1: say Iraq, but it's always it's always a gamble as
Speaker 1: to whether they can keep Russia in. In fact, the
Speaker 1: whole thing practically fell apart in March, so it's very
Speaker 1: much kind of a thin line here, alright. So Ellen,
Speaker 1: that's this supply side of the equation. I'm looking at
Speaker 1: w T I crude here just under thirty eight dollars
Speaker 1: a barrel had been in that forty three dollar range
Speaker 1: for most of August. Is this really being is this
Speaker 1: really is that Take a look at the global UH
Speaker 1: crude market, demand driven market, and markets telling us we
Speaker 1: don't see much demand out there. Yeah, demand is the
Speaker 1: big picture today and that's really I think what markets
Speaker 1: are coming to terms with today. Over the summer, I
Speaker 1: think there were absolutely a lot of signs that demand
Speaker 1: wasn't as strong as people thought it was. There. We
Speaker 1: were seeing good increases in demand all throughout the summer,
Speaker 1: But really I think those are hiding some of the
Speaker 1: or kind of covering over some of the larger weaknesses.
Speaker 1: And now that the summer is basically over, people have
Speaker 1: stopped trying to go on whatever vacations they could have.
Speaker 1: We're now seeing these weaknesses come to light in a
Speaker 1: much stronger way and realizing that, uh, there there's going
Speaker 1: to be serious weaknesses and demand for the rest of
Speaker 1: not into and the market is just going to have
Speaker 1: to take that into account. And so I think we're
Speaker 1: seeing a price correction with this realization in mind. Now,
Speaker 1: is there a forecast for when the world is no
Speaker 1: longer dependent on hydrocarbons? Well, if you ask yeska vp uh,
Speaker 1: they forecast that data come much sooner than than other
Speaker 1: people I think that there's definitely a hope that you know,
Speaker 1: at some point between that that might that might be true.
Speaker 1: But I think that that's very much dependent on technology
Speaker 1: and the pace of technological development, and I don't think
Speaker 1: that we have really seen the kind of innovation that
Speaker 1: will lead to mass adoption of non hydrocarbon sources across
Speaker 1: the globe, and so those forecasts are very much are
Speaker 1: very much hope rather than a realistic prediction. Ellen Wall,
Speaker 1: thank you so much for joining us. Dr ellen Wald.
Speaker 1: She's president a Transversal Consulting. She has also a Bloomberg
Speaker 1: Opinion contributor. You can read her work and all the
Speaker 1: work for the good folks of Bloomberg Opinion at Bloomberg
Speaker 1: dot com, slash Opinion or on the terminal by typing
Speaker 1: an O, P, I, N GO and vannie. You know,
Speaker 1: as Dr Wald was suggesting here, it seems to be
Speaker 1: a demand driven market. In the market participants seem to
Speaker 1: be saying, I just don't see a big pickup in demand. Well,
Speaker 1: airlines certainly don't need any products and vehicles on the
Speaker 1: road for sure, but probably not as much as before
Speaker 1: with people not just doing their daily commute. But it's
Speaker 1: pretty amazing that it's the sixtieth anniversary of OPEC, which
Speaker 1: is literally a global household name. I would I would
Speaker 1: just imagine there isn't a single household that you could
Speaker 1: go in to in the world and not know that
Speaker 1: OPEC would be recognized there. Yeah, and I certainly remember
Speaker 1: back to those early seventies waiting in line at the
Speaker 1: gas station forecas before we have green on the screen
Speaker 1: yet again, and yet again, Tex stocks are leading the
Speaker 1: way tech investors, seemingly shrugging off that nearly ten percent
Speaker 1: pullback we saw just last month to get a sense
Speaker 1: of is there still room to move with these tech stocks?
Speaker 1: That's welcome. David Coudla, founder, CEO and chief investment strategist
Speaker 1: of Mainstake Capital Management. They've got three billion dollars under management. David,
Speaker 1: thanks so much for joining us. Again, we always appreciate
Speaker 1: your perspective here. So again, tech investors got a little
Speaker 1: bit of a you know, a scared last month with
Speaker 1: that pullback, uh and nearly a ten percent correction in
Speaker 1: tech stocks, yet seems to not have scared many people away.
Speaker 1: How are you viewing that sector of the market. It was,
Speaker 1: it was a scary three days certainly, you know, uh,
Speaker 1: a sharp correction over those three days, you know, and
Speaker 1: then the days that ensued and from peak to trough
Speaker 1: on the NASTAC one hundred INCHRA day. The low actually
Speaker 1: came last Friday, so about a little over a week
Speaker 1: that tech stocks were in trouble. But you know, uh,
Speaker 1: if I said that evaluations had become frosty, that was
Speaker 1: that's an understatement for sure. And they've been frosy for
Speaker 1: for months, you know, even before we came into the
Speaker 1: bear market. But so so certainly you know that the
Speaker 1: that correction was needed. And I say that correction was
Speaker 1: needed because I think it was a correction that we're
Speaker 1: now already coming out of. We've got two strong days
Speaker 1: for the nasdac A tech stocks yesterday and today. And
Speaker 1: you know, it is our our favored sector in our portfolios.
Speaker 1: We've talked about it on the show many times, not
Speaker 1: only in the past few months, but the past few years,
Speaker 1: and um, we we continue to like it in in uh,
Speaker 1: continue to be overweight the sector even though you know,
Speaker 1: I think it's it's prudent at these levels and coming
Speaker 1: into the election that investors look hard at their portfolios
Speaker 1: for how much risk they do have because we'll see
Speaker 1: more volatility like that. I think between now in the election,
Speaker 1: how much of the NALTAC would you advise people to own?
Speaker 1: It sounds stave like you think this you know move
Speaker 1: is not a pivot as such, it's just a little breather.
Speaker 1: I think it is a breather. I think that, Uh,
Speaker 1: the NASAC will continue to be strong. When we look
Speaker 1: across all the industry sectors and we look good, you know,
Speaker 1: where are the stocks that continue to do well where
Speaker 1: the stocks did well during the lockdowns, either because you know,
Speaker 1: technology had continue to do well with their second or
Speaker 1: growth stories or technology that we're enablers for retailers or
Speaker 1: e commerce I t UM those those are the companies
Speaker 1: that have the best balance sheets, have the best free
Speaker 1: cash flow, have tremendous growth rates. Uh. It just continues
Speaker 1: to be such a strong sector. And when we say technology,
Speaker 1: you know, that's very broad. Whether we're talking about hardware, uh,
Speaker 1: I t e commerce, other Internet, it's it's a broad sector.
Speaker 1: But uh, you know, technology is eating the world. And
Speaker 1: we've heard that phrase many times, but it's true. And
Speaker 1: when you know technology is disrupting when it comes into
Speaker 1: an industry, when you know, the worst thing can happen
Speaker 1: is to, you know, to find out in the morning that, uh,
Speaker 1: you know, Jeff Bezos, who has leveraged technology to do
Speaker 1: what he's done with Amazon, is coming into your industry. Uh,
Speaker 1: like when he did that with UH and Kroger. The
Speaker 1: CEO of Kroger woke up one morning to find out
Speaker 1: he's coming into the grocery industry. But the point being
Speaker 1: that that the technology is being leveraged in that way.
Speaker 1: Are there other places we can go? We want to
Speaker 1: hedge our portfolios with gold because gold is more attractive
Speaker 1: to us now than bonds. With rates so low, we
Speaker 1: think consumer discretionary looks attractive, you know, other sectors we
Speaker 1: want to diverse by into. The technology is going to
Speaker 1: be overweighting our portfolios for some time, David, you mentioned
Speaker 1: the election, and some people started to raise some concerns
Speaker 1: about the potential for a can tested election an uncertain outcome. Uh,
Speaker 1: you know, maybe a legal process and the uncertainty that
Speaker 1: may bring into the markets. How do you af factor
Speaker 1: that into your thinking? Well, we think that this could
Speaker 1: be it could be a real problem for the markets.
Speaker 1: You know, we could have this scenario that's shaping up
Speaker 1: where you know, we don't we we don't have election nights,
Speaker 1: and we're not gonna have an election night any longer.
Speaker 1: We're gonna have an election month where you know, we're
Speaker 1: seeing this scenario come about where we could have on
Speaker 1: election night potentially one candidate looks like the winner and
Speaker 1: maybe a clear winner, and as all the absentee ballots
Speaker 1: or the mail in ballots come in over the coming days,
Speaker 1: that may look to change or potentially change. So that anxiety,
Speaker 1: that uncertainty. The markets hate uncertainty. So that uncertainty we
Speaker 1: have leading up the election. And again it's not as
Speaker 1: much about uh, which party wins or who wins the
Speaker 1: election as it is the uncertainty leading up to the election,
Speaker 1: so the market can price it in price in the certainty. Um,
Speaker 1: we've only had that uncertain leading up the election. It
Speaker 1: may be very uncertain for days after, and it may
Speaker 1: be very uncertain how it gets resolved, and that could
Speaker 1: cause some incredible indigestion and volatility for the markets that
Speaker 1: that could potentially go on for the only days but weeks.
Speaker 1: So you know, we are concerned about that. David Coula
Speaker 1: always gore to get your thoughts. Thank you for joining
Speaker 1: us today. David Coula is CEO and chief investment strategist
Speaker 1: of Mainstay Capital Management, about three billion dollars in assets
Speaker 1: under management, coming to us all the way from Michigan today.
Speaker 1: It's always interesting to speak to people around the country,
Speaker 1: but what he says Paul about uncertainty is really interesting
Speaker 1: and to some it's an obvious point, but it's going
Speaker 1: to only get more vivid as we approach the election.
Speaker 1: Marko Kolonovitch, for example, of JP Morgan, the famed quant,
Speaker 1: talks about this a lot and how we're really only
Speaker 1: part of the way there, even though the election as
Speaker 1: well as on fifty days or fifty days or so
Speaker 1: away at this point, we will talk about this throughout
Speaker 1: the afternoon. Marco Colonovot John B TV at one pm
Speaker 1: Eastern as well, may as well get that in there.
Speaker 1: This is Bloomberg bubble, bubble toil in trouble at Credit Suits.
Speaker 1: It seems in fact Credit Suite and UBS are even
Speaker 1: potentially investigating whether to come together. Let's bring in somebody
Speaker 1: who knows a lot more about this. Alison Williams, the
Speaker 1: senior analyst for Global Investment Banks and asset management at
Speaker 1: Bloomberg Intelligence. How realistic is it that credit suits and
Speaker 1: UBS could merge, Allison? So I would call it unlikely
Speaker 1: but not impossible. And uh, you know, normally this is
Speaker 1: the type of story that I would read and think
Speaker 1: it was rather silly. But I think the fact that
Speaker 1: UM it does seem like the chairman has approach regulators
Speaker 1: UM and is listening to do do this gives it
Speaker 1: some haft UM. I think the key sticking point, you know,
Speaker 1: even if the local regulators agree UM, could relate to
Speaker 1: anti trust issues and their home markets. So these two
Speaker 1: banks have huge global businesses. Investment banking and trading is
Speaker 1: when we talk about where they compete with the US.
Speaker 1: Wealth management is an area where UM UBS is a
Speaker 1: global leader. Crowds sweets is also strong. But I think
Speaker 1: the sticking point could be their home market, at least
Speaker 1: according to our anti trust analysts UM and simply just
Speaker 1: looking at how big they are UM in the Swiss business. So, Alison,
Speaker 1: even the fact that these two UH European giants are
Speaker 1: even talking to each other about this, does that suggest
Speaker 1: that the business European global banking, but particularly in Europe
Speaker 1: where the rates are negative in many key markets and
Speaker 1: are so low around the world. Old it's just so
Speaker 1: so tough for these companies to make any money on
Speaker 1: their own. So, Paul, I think that it really just
Speaker 1: comes down to, you know, if if Europe, if the
Speaker 1: europe competitors want to compete, I do think that, um,
Speaker 1: there has to be something done to form a global competitor.
Speaker 1: I think if we look at what's happened in the
Speaker 1: landscape over the last um, you know, let's call a
Speaker 1: decade or so, since the banks have emerged from the crisis,
Speaker 1: you know, the US banks have benefited from this virtuous
Speaker 1: cycle of you know, technology spending and scale. They got
Speaker 1: profitable sooner they put their issues behind them, sooner they've
Speaker 1: had they had a better economy to work with, um,
Speaker 1: so they had more revenue to spend to invest to
Speaker 1: build the technology, and which has resulted in revenue share
Speaker 1: gains and thus the cycle where European competitors have been
Speaker 1: sort of this serial restructuring at all of the largest
Speaker 1: competitors or exiting businesses on by one because they just
Speaker 1: can't be profitable and so UM. The reason why scale
Speaker 1: really matters is, you know, it's not just this concept
Speaker 1: of you know, offering all the products, which is sort
Speaker 1: of a nice to have, but you know to the
Speaker 1: extent that you have the money to make these investments,
Speaker 1: and that's you know, sort of where the war is
Speaker 1: really being waged. And so if you look at the
Speaker 1: technology budgets and you look at credit suites and you
Speaker 1: bs and you add those budgets together, you know, that
Speaker 1: would put them in the realm of the US competitors.
Speaker 1: The one you know caution we would say is you know,
Speaker 1: it's necessary, but not sufficient, and it's not going to
Speaker 1: be overnight. So you know, in terms of at least
Speaker 1: the global investment banking business, you know, I can figure
Speaker 1: out a way for some of these European banks to
Speaker 1: merge to create uh, someone that has the technology um
Speaker 1: to invest you know it. It gives them a chance,
Speaker 1: but it doesn't it's not necessarily guarantee. Yeah, I want
Speaker 1: to ask you what they all do differently, or at
Speaker 1: least what these two do different and the But I
Speaker 1: do want to point out first that we had the
Speaker 1: hilarious report from I p is That, which is a
Speaker 1: German newspaper inside for atopods that UBS chairman Excel Labor
Speaker 1: had threatened to move the bank's headquarters to Frankfurt if
Speaker 1: if officials were to forbid a merger with Credit Suite,
Speaker 1: So he was deadly serious about it. It seems what
Speaker 1: do UBS and Credit Suite do that's different? So I
Speaker 1: would I would say that their business mixes are very similar,
Speaker 1: but I would say that UBS is a bigger competitor.
Speaker 1: So from a global banking perspective, UBS is a bigger
Speaker 1: competitor in the equities business globally, they're stronger UM in
Speaker 1: Europe and Asia UM, but you know, Credit Swiss has
Speaker 1: some strength in those businesses. But then when you turn
Speaker 1: over to the sixth income side of things, you know,
Speaker 1: UBS they're very different in terms of UBS making an
Speaker 1: early move to shrink their business years a go, much
Speaker 1: more slow trading UH currencies and raised those types of businesses.
Speaker 1: Cred Space is actually unique across all the global peers
Speaker 1: and having more of a credit focused business. UH in
Speaker 1: Bank America also sort of sort of that way, but
Speaker 1: more us UM and so they really have sort of
Speaker 1: stuck to some leadership positions and curization trading and the like.
Speaker 1: Both banks, you know, have a strategic focus on wealth.
Speaker 1: So that's a similarity that they that that they both
Speaker 1: have UM, although UPS has perhaps a longer standing and
Speaker 1: stronger presence UM focusing on Asia, but that's something that
Speaker 1: banks worldwide are doing. Alison, thank you so much for
Speaker 1: joining us. We always appreciate your perspective UH and global
Speaker 1: view of the global banking business. Alison Williams Senior Analysts
Speaker 1: Global Investment Banks and Asset Management for Bloomberg Intelligence. Bloomberg
Speaker 1: Intelligence is Bloomberg's investment management research business investment research UH.
Speaker 1: Allison is one of the founding members of Bloomberg Intelligence
Speaker 1: on the global investment banks and boy, when you talk
Speaker 1: about UBS and Credit Swiss potentially getting together on paper,
Speaker 1: that suggests a very strong global competitor and one that
Speaker 1: can stick with some of these big us A global banks.
Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can
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Speaker 1: podcast platform you prefer. I'm Bonnie Quinn. I'm on Twitter
Speaker 1: at Bonnie Quinn, and I'm Paul Sweeney. I'm on Twitter
Speaker 1: at pt Sweeney. Before the podcast, you can always catch
Speaker 1: us worldwide at Bloomberg Radio