1 00:00:02,720 --> 00:00:10,600 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. You're listening to the 2 00:00:10,600 --> 00:00:14,600 Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 3 00:00:14,640 --> 00:00:18,560 Speaker 1: Eastern on Applecarplay and Android Auto with the Bloomberg Business App. 4 00:00:18,640 --> 00:00:21,920 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:21,960 --> 00:00:23,120 Speaker 1: us live on YouTube. 6 00:00:23,680 --> 00:00:27,120 Speaker 2: Welcome about Bloomberg Intelligence. I'm Lise Matteo alongside Paul Sweeney. 7 00:00:27,560 --> 00:00:31,080 Speaker 2: Big day for bank earning some mixed reports though. Taking 8 00:00:31,120 --> 00:00:32,800 Speaker 2: a look at the stock, we have JP Morgan they're 9 00:00:32,840 --> 00:00:35,840 Speaker 2: down their shares down about half percent, Wells Fargo down 10 00:00:36,000 --> 00:00:38,159 Speaker 2: five percent, we have City up about one and a 11 00:00:38,159 --> 00:00:40,559 Speaker 2: half percent. So here to break it all down for 12 00:00:40,680 --> 00:00:43,440 Speaker 2: us and what happened with each bank is Alison Williams, 13 00:00:43,479 --> 00:00:47,839 Speaker 2: who else Bloomberg Intelligence, Senior analyst, Global Banks and Asset Managers. Alison, 14 00:00:47,840 --> 00:00:49,839 Speaker 2: Thanks for joining us here in the studio. Good to 15 00:00:49,840 --> 00:00:52,680 Speaker 2: see you. So let's start with JP Morgan, right, they 16 00:00:52,720 --> 00:00:55,680 Speaker 2: had some surprise deal making gains. I mean, is that 17 00:00:56,160 --> 00:00:58,480 Speaker 2: a sign that taraffears are easy or how do you 18 00:00:58,480 --> 00:00:58,760 Speaker 2: take it? 19 00:00:58,920 --> 00:01:01,040 Speaker 3: I mean they had a solid quarter. 20 00:01:01,080 --> 00:01:03,640 Speaker 4: There's always a high bar for JP Morgan, but I 21 00:01:03,680 --> 00:01:08,640 Speaker 4: think a really good quarter, strong returns, good organic growth, 22 00:01:08,760 --> 00:01:11,120 Speaker 4: and I think, you know, about a billion dollars of 23 00:01:11,160 --> 00:01:14,679 Speaker 4: upside with trading and fees, and so I think that 24 00:01:14,720 --> 00:01:17,160 Speaker 4: we you know, we did see that that fee pick 25 00:01:17,240 --> 00:01:19,920 Speaker 4: up we saw April stall, then we saw fees really 26 00:01:20,000 --> 00:01:23,160 Speaker 4: did pick up in May and June. As you said, 27 00:01:23,600 --> 00:01:27,720 Speaker 4: it really is. The advisory business was big upside, you know, 28 00:01:27,760 --> 00:01:33,080 Speaker 4: for both JP Morgan and City and we also saw 29 00:01:33,240 --> 00:01:36,959 Speaker 4: IPOs better and so we have seen that improving sentiment. 30 00:01:37,360 --> 00:01:39,520 Speaker 4: I think there is going to be a little bit 31 00:01:39,520 --> 00:01:42,000 Speaker 4: of a lift in terms of some of the expectations 32 00:01:42,000 --> 00:01:44,480 Speaker 4: for those banking fees going forward as well. 33 00:01:44,640 --> 00:01:48,080 Speaker 5: Red Headline crossing the Bloomberg terminal, Tesla's top North America 34 00:01:48,160 --> 00:01:50,600 Speaker 5: sales executive, Troy Jones exits. 35 00:01:50,720 --> 00:01:52,840 Speaker 6: That's according to the Wall Street Journal. So when it 36 00:01:52,920 --> 00:01:53,320 Speaker 6: rains at. 37 00:01:53,240 --> 00:01:55,040 Speaker 5: Pours there all right, here we go. So we had 38 00:01:55,480 --> 00:01:58,440 Speaker 5: JP Morgan, City Group in Wells report today. Guess what 39 00:01:58,800 --> 00:02:01,480 Speaker 5: I worked at all of the firms Chase and Hatton 40 00:02:01,520 --> 00:02:05,480 Speaker 5: Bank not part of JP Morgan, Salomon Brothers now part 41 00:02:05,480 --> 00:02:09,440 Speaker 5: of City Group, and Wheat First Securities, which is. 42 00:02:09,440 --> 00:02:10,400 Speaker 6: Now part of Wells Fargo. 43 00:02:10,400 --> 00:02:13,160 Speaker 5: That's what Wills Fargo got its original broker deal license 44 00:02:13,240 --> 00:02:16,000 Speaker 5: by acquiring my firm Wheak for Securities, Richard Virginia. 45 00:02:16,080 --> 00:02:17,720 Speaker 6: So I got I'm biased all over the place here. 46 00:02:17,800 --> 00:02:18,760 Speaker 6: Let's start with Citygroup. 47 00:02:18,800 --> 00:02:20,720 Speaker 5: I think that's got the most upside because I think 48 00:02:21,560 --> 00:02:24,240 Speaker 5: it's underperformed for such a long time. It was just 49 00:02:24,320 --> 00:02:29,200 Speaker 5: begging for really, really, really good management. Is this, I mean, 50 00:02:29,200 --> 00:02:31,200 Speaker 5: a stock's hitting fifty two weeks high today? Is this 51 00:02:31,440 --> 00:02:32,840 Speaker 5: the turnaround that everybody's been waiting for? 52 00:02:33,000 --> 00:02:35,359 Speaker 3: You think, think, yeah, Jane is getting it done right. 53 00:02:35,440 --> 00:02:40,000 Speaker 4: So and and to be fair, you know, her predecessor's 54 00:02:40,080 --> 00:02:42,280 Speaker 4: made some changes, but I think she's She's made some 55 00:02:42,320 --> 00:02:46,400 Speaker 4: tough decisions, you know, especially the sale of the you know, 56 00:02:46,440 --> 00:02:51,480 Speaker 4: the Mexico business, where she really cut her teeth. I 57 00:02:51,520 --> 00:02:55,240 Speaker 4: think that is a sign that she can be objective 58 00:02:55,360 --> 00:02:58,720 Speaker 4: in terms of deciding what's right for the business. And 59 00:02:58,919 --> 00:03:03,840 Speaker 4: they are working there way up to some better return. So, 60 00:03:04,480 --> 00:03:06,760 Speaker 4: you know, there's a lot of talk about the evaluation 61 00:03:06,840 --> 00:03:08,920 Speaker 4: for City Group. We know that they trade at a 62 00:03:09,000 --> 00:03:13,280 Speaker 4: discount to their book value. They traded assistant to their peers. Wow, 63 00:03:13,480 --> 00:03:16,800 Speaker 4: that's what happens when you don't earn your cost of 64 00:03:16,880 --> 00:03:21,120 Speaker 4: capital and your returns are below peers. But I think 65 00:03:21,160 --> 00:03:23,639 Speaker 4: the changes that they're making are moving them in the 66 00:03:23,680 --> 00:03:24,200 Speaker 4: right direction. 67 00:03:24,520 --> 00:03:26,640 Speaker 2: So when I look at Wells Fargo, I'm trying to 68 00:03:26,680 --> 00:03:29,400 Speaker 2: go through the information. So the big thing that kind 69 00:03:29,400 --> 00:03:31,000 Speaker 2: of stands out to me is that across the one 70 00:03:31,000 --> 00:03:34,160 Speaker 2: point nine to five trillion asset mark, is that a 71 00:03:34,160 --> 00:03:35,080 Speaker 2: big milestone? 72 00:03:35,280 --> 00:03:37,960 Speaker 4: Well, the removal of the asset cap that is really 73 00:03:38,160 --> 00:03:40,880 Speaker 4: I think that the big structural benefit. And I think 74 00:03:40,880 --> 00:03:43,280 Speaker 4: that goes to the number that you're talking about, where 75 00:03:43,920 --> 00:03:45,280 Speaker 4: you know, for years they had to. 76 00:03:45,200 --> 00:03:46,520 Speaker 3: Limit their balance sheet growth. 77 00:03:46,560 --> 00:03:48,720 Speaker 4: They finally got the go ahead that you know, we 78 00:03:48,760 --> 00:03:51,000 Speaker 4: don't have to be so concerned about what that exact 79 00:03:51,120 --> 00:03:51,720 Speaker 4: number is. 80 00:03:52,320 --> 00:03:54,560 Speaker 3: I think the stock has really. 81 00:03:55,800 --> 00:03:59,600 Speaker 4: Priced in a lot of the optimism around getting that 82 00:03:59,720 --> 00:04:03,280 Speaker 4: ass cap remove. I mean basically has been you know, 83 00:04:03,440 --> 00:04:06,480 Speaker 4: a huge gainer since the US election. I think the 84 00:04:06,560 --> 00:04:12,240 Speaker 4: shares are responding today to the lower debt interest income outlook, 85 00:04:12,280 --> 00:04:13,760 Speaker 4: and I think there's a couple of things there. 86 00:04:13,800 --> 00:04:17,000 Speaker 3: The core net interest income, that's what people focus. 87 00:04:16,720 --> 00:04:20,680 Speaker 4: On, right because the income that you get from trading 88 00:04:21,080 --> 00:04:24,760 Speaker 4: generally has an offset to fees. But if you're just 89 00:04:24,800 --> 00:04:27,520 Speaker 4: focusing on top on, you're just focusing on that number. 90 00:04:27,640 --> 00:04:29,400 Speaker 4: People are disappointed in that outlook. 91 00:04:29,440 --> 00:04:30,080 Speaker 3: For Welsbargo. 92 00:04:31,160 --> 00:04:33,960 Speaker 5: What are you hearing from these banks today and over 93 00:04:33,960 --> 00:04:36,360 Speaker 5: the coming days about loan growth because it seems like 94 00:04:36,400 --> 00:04:40,560 Speaker 5: what the yield curve steepening, it's a good time to 95 00:04:40,600 --> 00:04:43,120 Speaker 5: be making loans. How's the demand out there? Because only 96 00:04:43,160 --> 00:04:44,440 Speaker 5: hear about is private credit here? 97 00:04:44,520 --> 00:04:46,280 Speaker 6: Private credit there? How about the banks? 98 00:04:46,520 --> 00:04:48,800 Speaker 4: I mean, we are we did see like things a 99 00:04:48,839 --> 00:04:51,040 Speaker 4: little bit better. I would say that, you know, the 100 00:04:51,600 --> 00:04:55,159 Speaker 4: grow loan growth is still a bit modest, but the 101 00:04:55,279 --> 00:04:59,159 Speaker 4: expectation in terms of reduced risk to the economy is 102 00:04:59,200 --> 00:05:02,679 Speaker 4: really a positive these banks going into the second half, 103 00:05:02,920 --> 00:05:06,839 Speaker 4: and so I think there's there's certainly room for improvement 104 00:05:06,960 --> 00:05:07,840 Speaker 4: in the loan growth. 105 00:05:08,240 --> 00:05:09,560 Speaker 3: But I think things were fine. 106 00:05:09,920 --> 00:05:13,080 Speaker 2: Well, there's been the loosening and regulations capital requirements for 107 00:05:13,120 --> 00:05:15,120 Speaker 2: the banks. I mean, did this show up in the 108 00:05:15,200 --> 00:05:17,000 Speaker 2: results or or when will it? 109 00:05:17,600 --> 00:05:20,200 Speaker 4: I think that's that is something that is going to 110 00:05:20,360 --> 00:05:22,880 Speaker 4: come over time. I mean, we did see some some 111 00:05:22,880 --> 00:05:27,000 Speaker 4: some good buybacks at Wells Fargo for example, But I 112 00:05:27,000 --> 00:05:30,880 Speaker 4: think the big news was the stress tests that we 113 00:05:30,920 --> 00:05:34,560 Speaker 4: saw in June basically are signaling that their capital hurts 114 00:05:34,600 --> 00:05:40,159 Speaker 4: are going lower. Further, a proposal out there that you 115 00:05:40,160 --> 00:05:42,880 Speaker 4: know there we're going to have sort of average results 116 00:05:42,880 --> 00:05:46,520 Speaker 4: over time, So that for this year means that the 117 00:05:46,520 --> 00:05:50,080 Speaker 4: the you know, the decreases might not be as much 118 00:05:50,200 --> 00:05:51,680 Speaker 4: and they might come a little bit later. But we 119 00:05:51,720 --> 00:05:54,240 Speaker 4: think that's positive over time because what that means is 120 00:05:54,279 --> 00:05:57,039 Speaker 4: that there'll be more stabilization and not sort of these 121 00:05:57,160 --> 00:06:00,640 Speaker 4: ratios moving around a lot, so lots of outside excess 122 00:06:00,680 --> 00:06:04,480 Speaker 4: capital at the banks. Even more as those ratios go lower, 123 00:06:04,640 --> 00:06:10,160 Speaker 4: that means more buybacks, especially since we expect that any 124 00:06:10,160 --> 00:06:12,479 Speaker 4: further regulations are not going to be as drastic. 125 00:06:13,160 --> 00:06:16,960 Speaker 5: Goldman Sachs, Morgan Stanley they report tomorrow. I always love 126 00:06:17,000 --> 00:06:19,000 Speaker 5: looking at, you know, the way you guys analyze kind 127 00:06:19,000 --> 00:06:21,279 Speaker 5: of league tables and how people are doing competitively. Would 128 00:06:21,279 --> 00:06:22,720 Speaker 5: expect to hear from those two investment banks. 129 00:06:22,760 --> 00:06:24,040 Speaker 3: I mean, so we expect strength. 130 00:06:24,160 --> 00:06:27,000 Speaker 4: I mean the results that we saw today in terms 131 00:06:27,080 --> 00:06:30,960 Speaker 4: of fixed income trading better than expected, equities trading better 132 00:06:31,000 --> 00:06:34,440 Speaker 4: than expected, fees almost across the board better than expected. 133 00:06:34,480 --> 00:06:37,200 Speaker 4: We talked about the IPOs like that's a really good 134 00:06:37,279 --> 00:06:39,360 Speaker 4: sign for Morgan. 135 00:06:39,040 --> 00:06:41,479 Speaker 3: Stanley and Goldman, the M and A. 136 00:06:41,640 --> 00:06:44,400 Speaker 4: You know, Goldman is typically an M and A leader there, 137 00:06:44,440 --> 00:06:47,320 Speaker 4: although JP Morgan has really been catching up, So those 138 00:06:47,320 --> 00:06:51,440 Speaker 4: are all very positive signals. I mean, twenty seven percent 139 00:06:51,520 --> 00:06:55,760 Speaker 4: growth year every year in City Group's rates and currencies business. 140 00:06:55,960 --> 00:06:59,640 Speaker 4: That is a really strong result. And you know Goldman 141 00:06:59,680 --> 00:07:01,720 Speaker 4: and Morgan Stanley lead and the equities they earn the 142 00:07:01,760 --> 00:07:03,919 Speaker 4: most from these businesses, so I think that you. 143 00:07:03,960 --> 00:07:07,720 Speaker 3: Know, the bar is definitely hire for them tomorrow. All right, 144 00:07:07,800 --> 00:07:08,919 Speaker 3: good stuff, appreciate it. 145 00:07:08,960 --> 00:07:12,240 Speaker 5: Alison Williams, Senior anos Global Banks Asset Managers Bloomberg Intelligence. 146 00:07:12,240 --> 00:07:13,320 Speaker 6: She's been doing it for a long time. 147 00:07:13,440 --> 00:07:16,440 Speaker 5: She worked on the buyside at Morgan's Stanley Investment Management, 148 00:07:16,520 --> 00:07:20,320 Speaker 5: investing in these big banks, so she knows what she's doing. 149 00:07:20,360 --> 00:07:22,960 Speaker 5: She's got a great team there at Bloomberg Intelligence on 150 00:07:23,000 --> 00:07:26,160 Speaker 5: a global basis looking at some of the big global 151 00:07:26,520 --> 00:07:29,400 Speaker 5: banks around the world. So I appreciate getting a couple 152 00:07:29,440 --> 00:07:30,440 Speaker 5: of minutes of her time. 153 00:07:32,040 --> 00:07:35,760 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 154 00:07:35,840 --> 00:07:39,200 Speaker 1: weekdays at ten am Eastern on Applecarclay, and Android Auto 155 00:07:39,320 --> 00:07:42,400 Speaker 1: with the Bloomberg Business App. Listen on demand wherever you 156 00:07:42,440 --> 00:07:45,360 Speaker 1: get your podcasts, or watch us live on YouTube. 157 00:07:45,600 --> 00:07:49,120 Speaker 5: We want to turn our attention to healthcare company Managed 158 00:07:49,160 --> 00:07:52,400 Speaker 5: care Company, United Health Group It's a big company, two 159 00:07:52,440 --> 00:07:55,480 Speaker 5: hundred and sixty seven billion dollars in market cap. Its 160 00:07:55,520 --> 00:07:57,360 Speaker 5: sound forty percent year to date, but it's had a 161 00:07:57,440 --> 00:08:02,080 Speaker 5: distinction of having I think sixty consecutive quarters that kind 162 00:08:02,080 --> 00:08:04,840 Speaker 5: of beat earnings estimates out there. But I think the 163 00:08:04,840 --> 00:08:06,840 Speaker 5: analysts are starting to take another look at some of 164 00:08:06,840 --> 00:08:09,240 Speaker 5: those earnings numbers, and they're going to look at how 165 00:08:09,280 --> 00:08:11,400 Speaker 5: this company put those numbers up. And I remember this 166 00:08:11,480 --> 00:08:14,320 Speaker 5: kind of story back in the day from General Electric, 167 00:08:14,360 --> 00:08:16,520 Speaker 5: where they would just beat by a couple of pennies 168 00:08:16,680 --> 00:08:17,800 Speaker 5: every single quarter. 169 00:08:18,480 --> 00:08:19,480 Speaker 6: But that turned out. 170 00:08:19,280 --> 00:08:21,120 Speaker 5: To be a little bit of a mirage when you 171 00:08:21,160 --> 00:08:21,880 Speaker 5: go back and look at. 172 00:08:21,760 --> 00:08:23,120 Speaker 6: Some of the data there. 173 00:08:23,640 --> 00:08:28,000 Speaker 5: Michelle Davis Joints is here, Bloomberg Senior Deals reporter, Michelle. 174 00:08:28,000 --> 00:08:30,280 Speaker 5: What you find when you're looking at United Healthcare? How 175 00:08:30,280 --> 00:08:31,840 Speaker 5: are they making some of those numbers recently? 176 00:08:32,000 --> 00:08:34,000 Speaker 7: So, Yeah, as you mentioned, they had kind of a 177 00:08:34,040 --> 00:08:37,920 Speaker 7: pristine record for more than sixty quarters. They beat estimates. 178 00:08:38,240 --> 00:08:40,880 Speaker 7: Analysts love them, and at the end of last year 179 00:08:40,920 --> 00:08:43,280 Speaker 7: that got a bit harder for them to keep up. 180 00:08:43,559 --> 00:08:46,480 Speaker 7: You know, medical costs arising. The government's been cracking down 181 00:08:46,520 --> 00:08:49,439 Speaker 7: on reiinbursements and that was eating into profits. And so 182 00:08:49,920 --> 00:08:52,080 Speaker 7: what we reported is that at the end of last 183 00:08:52,160 --> 00:08:55,640 Speaker 7: year they approached several private equity firms and asked them 184 00:08:55,720 --> 00:08:58,520 Speaker 7: if they wanted to buy stakes off of them of 185 00:08:58,600 --> 00:09:02,400 Speaker 7: their businesses, and a couple interesting things happen here. Not 186 00:09:02,440 --> 00:09:05,920 Speaker 7: only did they quietly do this, but the deals were 187 00:09:05,960 --> 00:09:09,560 Speaker 7: structured such that United Health can be forced to buy 188 00:09:09,559 --> 00:09:12,840 Speaker 7: the businesses back down the road, so it's temporary in nature. 189 00:09:13,440 --> 00:09:17,440 Speaker 7: And United booked the gains in an interesting place. They 190 00:09:17,480 --> 00:09:19,719 Speaker 7: booked them as part of operating earnings, which is or 191 00:09:19,720 --> 00:09:22,920 Speaker 7: adjusted earnings, which is normally where you look to see 192 00:09:23,000 --> 00:09:25,560 Speaker 7: kind of how a business is doing, you know, excluding 193 00:09:25,559 --> 00:09:28,000 Speaker 7: one off gains or one off events like this. And 194 00:09:28,040 --> 00:09:30,280 Speaker 7: so it was just interesting to say, not only the 195 00:09:30,320 --> 00:09:33,080 Speaker 7: fact that they stealthily did this, but where they put them, 196 00:09:33,120 --> 00:09:36,000 Speaker 7: and without these gains they would have missed estimates and 197 00:09:36,160 --> 00:09:38,960 Speaker 7: profit would have dropped in the last quarter of last year. 198 00:09:39,160 --> 00:09:41,880 Speaker 2: So, as I'm going through this article, this certain quote 199 00:09:41,920 --> 00:09:43,720 Speaker 2: stands out for me from an analyst that you spoke to. 200 00:09:43,720 --> 00:09:46,160 Speaker 2: He said, if the company is manufacturing earnings by chopping 201 00:09:46,200 --> 00:09:49,280 Speaker 2: up their furniture or selling their assets, that's not exactly 202 00:09:49,280 --> 00:09:52,400 Speaker 2: a great business model. Okay, so is the risk that 203 00:09:52,440 --> 00:09:55,559 Speaker 2: it might be kind of masking this weakness in the operations. 204 00:09:56,000 --> 00:09:56,800 Speaker 3: That's the concern. 205 00:09:56,880 --> 00:09:59,520 Speaker 7: And just to be clear, you know, there's nothing illegal 206 00:09:59,559 --> 00:10:02,040 Speaker 7: about what they're doing, per se. You know, they disclosed 207 00:10:02,040 --> 00:10:04,400 Speaker 7: that they did this, most people didn't see it. It 208 00:10:04,440 --> 00:10:06,480 Speaker 7: was in a footnote in their ten K that kind 209 00:10:06,480 --> 00:10:08,640 Speaker 7: of went under the radar, and there are no details 210 00:10:08,640 --> 00:10:11,160 Speaker 7: about what exactly they sold. That's what we're trying to 211 00:10:11,280 --> 00:10:13,640 Speaker 7: you know, report on here. But yeah, the concern is 212 00:10:13,640 --> 00:10:16,440 Speaker 7: it clouds, you know, your ability to see how the 213 00:10:16,440 --> 00:10:19,760 Speaker 7: business is actually performing. And we heard from sources that 214 00:10:20,040 --> 00:10:23,400 Speaker 7: there's a culture inside United Health of you know, kind 215 00:10:23,400 --> 00:10:25,800 Speaker 7: of there being this pressure to do whatever you can 216 00:10:25,920 --> 00:10:28,480 Speaker 7: to meet targets every quarter. Yep. 217 00:10:29,040 --> 00:10:32,319 Speaker 5: So again the stock it's a huge company, huge player 218 00:10:32,360 --> 00:10:35,400 Speaker 5: in the managed care business. Stocks down forty percent. What's 219 00:10:35,440 --> 00:10:38,280 Speaker 5: the underlying concern for investors out there? Do you think 220 00:10:38,320 --> 00:10:39,079 Speaker 5: around this company? 221 00:10:39,920 --> 00:10:43,160 Speaker 7: United Health has been dealing with a lot of things. 222 00:10:43,240 --> 00:10:46,280 Speaker 7: I mean, even before we knew about this, there was 223 00:10:46,320 --> 00:10:49,040 Speaker 7: obviously the tragedy of you know, one of their executives 224 00:10:49,080 --> 00:10:52,760 Speaker 7: being murdered last year, and then you know, there was 225 00:10:52,800 --> 00:10:56,920 Speaker 7: a Wall Street Journal investigation this year about potential medicare fraud, 226 00:10:57,000 --> 00:11:00,920 Speaker 7: which they have denied. They also in the first quarter 227 00:11:01,000 --> 00:11:03,560 Speaker 7: reported their first earnings miss in you know, more than 228 00:11:03,559 --> 00:11:06,360 Speaker 7: sixty quarters, so that shoe finally dropped. They ousted their CEO. 229 00:11:06,440 --> 00:11:10,280 Speaker 7: So investors are just concerned about the story here. You know, what, 230 00:11:10,280 --> 00:11:12,240 Speaker 7: what is the United Health story? I think that's what 231 00:11:12,360 --> 00:11:13,240 Speaker 7: the big concern is. 232 00:11:13,520 --> 00:11:16,480 Speaker 2: So are there any other companies, like maybe other health 233 00:11:16,480 --> 00:11:19,480 Speaker 2: companies or something like that where this same story that 234 00:11:19,520 --> 00:11:22,240 Speaker 2: you've been talking about it kind of plays out? 235 00:11:23,040 --> 00:11:25,880 Speaker 7: Not that we could find. It seems like United Health 236 00:11:25,960 --> 00:11:30,959 Speaker 7: is really you know, unique in its ability and history 237 00:11:31,000 --> 00:11:35,800 Speaker 7: of you know, really carefully managing it's reporting every quarter. 238 00:11:36,080 --> 00:11:38,720 Speaker 5: So new management team here, what's kind of the focus 239 00:11:38,760 --> 00:11:40,560 Speaker 5: now at the company? What's kind of the message to 240 00:11:40,880 --> 00:11:42,719 Speaker 5: Wall Street about how they're I guess going to try 241 00:11:42,720 --> 00:11:43,560 Speaker 5: to turn this thing around. 242 00:11:43,920 --> 00:11:47,600 Speaker 7: So they brought in their former CEO, who is a 243 00:11:47,600 --> 00:11:50,360 Speaker 7: accountant by by nature, and it seems like the market's 244 00:11:50,400 --> 00:11:53,720 Speaker 7: pretty uh, they've been put at ease by him. The 245 00:11:53,840 --> 00:11:56,160 Speaker 7: view or the hope from analysts is that the last 246 00:11:56,200 --> 00:11:57,920 Speaker 7: quarter was kind of an anomaly and they were just 247 00:11:57,960 --> 00:11:59,880 Speaker 7: bleeding out all the bad stuff and now they'll have 248 00:11:59,880 --> 00:12:02,520 Speaker 7: a lower base to kind of beat off of They 249 00:12:02,559 --> 00:12:05,360 Speaker 7: report earnings later this month, so we'll see, you know, 250 00:12:05,440 --> 00:12:07,920 Speaker 7: how the business is actually doing. But the big surprise 251 00:12:07,960 --> 00:12:10,280 Speaker 7: in the first quarter was that, you know, medical costs 252 00:12:10,280 --> 00:12:13,400 Speaker 7: were a lot higher than they say they anticipated. That 253 00:12:13,520 --> 00:12:15,880 Speaker 7: was confusing to people because their job is to anticipate that. 254 00:12:16,000 --> 00:12:18,760 Speaker 5: But that's what I've when we're reporting on that story 255 00:12:18,760 --> 00:12:20,280 Speaker 5: a couple of weeks ago, I said, Yeah, isn't that 256 00:12:20,320 --> 00:12:22,800 Speaker 5: the job of the company to know, Hell, that's going 257 00:12:22,840 --> 00:12:22,959 Speaker 5: to go? 258 00:12:22,960 --> 00:12:23,200 Speaker 2: All right? 259 00:12:23,200 --> 00:12:25,560 Speaker 5: I'm looking at the an R function on the Bloomberg 260 00:12:25,600 --> 00:12:28,360 Speaker 5: kermninal that tracks analysts recommendations, and if you're not at 261 00:12:28,440 --> 00:12:31,280 Speaker 5: health they're twenty one buys, six. 262 00:12:31,120 --> 00:12:32,920 Speaker 6: Holds and two cells. 263 00:12:33,480 --> 00:12:36,679 Speaker 5: So yeah, I think the streets still generally buying off 264 00:12:36,679 --> 00:12:39,199 Speaker 5: on this maybe this turnaround story. But maybe we'll take 265 00:12:39,200 --> 00:12:41,679 Speaker 5: a look at your story here today. Michelle Davis, thank 266 00:12:41,679 --> 00:12:43,960 Speaker 5: you so much for joining us. Michelle Davis is a 267 00:12:44,000 --> 00:12:46,800 Speaker 5: senior deals reporter for Bloomberg News. Joining us live here 268 00:12:46,800 --> 00:12:50,680 Speaker 5: in our Bloomberg Interactive Brokers studio. But it's interesting to 269 00:12:50,679 --> 00:12:53,720 Speaker 5: see on the healthcare space, and again I always come 270 00:12:53,760 --> 00:12:56,079 Speaker 5: in here every Mondayly said, it's like there's an M 271 00:12:56,160 --> 00:12:58,920 Speaker 5: and A deal coming out of the healthcare space, which 272 00:12:59,000 --> 00:13:02,440 Speaker 5: keeps the likes of Michelle Davis busy on the deal front. 273 00:13:02,480 --> 00:13:04,480 Speaker 5: But it's again, we see it time and time again 274 00:13:04,520 --> 00:13:06,240 Speaker 5: in a healthcare space. If you can't come up with 275 00:13:06,280 --> 00:13:10,199 Speaker 5: that next drug or that next you know, procedure. 276 00:13:09,760 --> 00:13:12,520 Speaker 6: Whatever in your R and D lab, you got to 277 00:13:12,600 --> 00:13:12,920 Speaker 6: join up. 278 00:13:12,960 --> 00:13:14,319 Speaker 5: You got to go buy somebody. You know, you go 279 00:13:14,480 --> 00:13:17,559 Speaker 5: go go buy somebody. And that's how that business has played. 280 00:13:19,480 --> 00:13:23,160 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 281 00:13:23,240 --> 00:13:26,640 Speaker 1: weekdays at ten am Eastern on Applecarclay and Android Auto 282 00:13:26,760 --> 00:13:29,800 Speaker 1: with the Bloomberg Business App. Listen on demand wherever you 283 00:13:29,840 --> 00:13:32,840 Speaker 1: get your podcasts, or watch us live on YouTube. 284 00:13:33,640 --> 00:13:35,640 Speaker 5: All right, Lisa Matteo, Paul Swhen you were live here 285 00:13:35,679 --> 00:13:38,360 Speaker 5: in our Bloomberg Interactive Brokeer Studio streaming live on YouTube. 286 00:13:38,400 --> 00:13:42,440 Speaker 5: So check us out there. You know, to an extent, 287 00:13:42,480 --> 00:13:45,360 Speaker 5: I at any luck in meeting other people. It's been 288 00:13:45,400 --> 00:13:47,400 Speaker 5: at a bar and no dating apps here. 289 00:13:47,559 --> 00:13:49,120 Speaker 2: I know, I know, I met my husband at the 290 00:13:49,120 --> 00:13:52,880 Speaker 2: grease trucks at Rutgers after who doesn't having burgers? 291 00:13:52,920 --> 00:13:53,439 Speaker 3: There you go. 292 00:13:53,880 --> 00:13:58,319 Speaker 5: Now, dating apps must evolve, as gen Z redefines romance. 293 00:13:58,360 --> 00:14:00,720 Speaker 5: That's according to it bloom We're going to tell survey 294 00:14:01,080 --> 00:14:03,080 Speaker 5: We're going there, folks, We're going down that rabbit hole. 295 00:14:03,200 --> 00:14:06,160 Speaker 5: Nicole Desuza joins its Internet and software equity analysts for 296 00:14:06,200 --> 00:14:10,360 Speaker 5: Bloomberg Intelligence. Nicole, what's your survey? What are the questions 297 00:14:10,360 --> 00:14:11,640 Speaker 5: that asked and what did you find? 298 00:14:12,280 --> 00:14:15,360 Speaker 8: Yeah, so we have Bloomberg Intelligence conducted the survey to 299 00:14:15,520 --> 00:14:19,440 Speaker 8: better understand how people are navigating dating, how they use 300 00:14:19,520 --> 00:14:21,800 Speaker 8: dating apps, and then also how they feel about AI 301 00:14:21,960 --> 00:14:25,960 Speaker 8: within dating apps. And so some really interesting findings. First 302 00:14:26,160 --> 00:14:29,680 Speaker 8: that you know, specifically, gen Z tends to be single 303 00:14:29,840 --> 00:14:30,640 Speaker 8: but not dating. 304 00:14:30,960 --> 00:14:33,280 Speaker 6: Gen zs what age again, sixteen to twenty eight? 305 00:14:33,440 --> 00:14:36,160 Speaker 5: Sixteen to twenty all right, so yay single, two of 306 00:14:36,200 --> 00:14:39,080 Speaker 5: my four into that one, Okay, And so they're not 307 00:14:39,160 --> 00:14:40,200 Speaker 5: using the apps. 308 00:14:39,960 --> 00:14:44,000 Speaker 8: They're not even dating, single and not dating. So this 309 00:14:44,200 --> 00:14:47,120 Speaker 8: is I mean, there's a few reasons. Studies have kind 310 00:14:47,120 --> 00:14:49,800 Speaker 8: of shown they do have higher rates of loneliness, but 311 00:14:49,920 --> 00:14:54,520 Speaker 8: they are also prioritizing independence. They are also you know, 312 00:14:54,520 --> 00:14:58,520 Speaker 8: feeling a reduced stigma around being single. So it could 313 00:14:58,560 --> 00:15:00,640 Speaker 8: really change dating patterns generationally. 314 00:15:00,800 --> 00:15:02,080 Speaker 2: I can kind of say my son was on a 315 00:15:02,160 --> 00:15:04,080 Speaker 2: dating app and then he stopped because he got tired 316 00:15:04,120 --> 00:15:06,160 Speaker 2: of it and it just and he's in that gen 317 00:15:06,240 --> 00:15:09,800 Speaker 2: Z kind of group and they're not going to pay 318 00:15:09,800 --> 00:15:13,280 Speaker 2: for them too. So how does that change for these 319 00:15:13,480 --> 00:15:15,800 Speaker 2: different you know, dating apps out there? How do they 320 00:15:15,840 --> 00:15:16,800 Speaker 2: have to change their approach? 321 00:15:17,440 --> 00:15:21,720 Speaker 8: So right now a lot of what we're seeing from 322 00:15:21,760 --> 00:15:24,240 Speaker 8: gen Z is that even though they are dating less, 323 00:15:24,280 --> 00:15:27,040 Speaker 8: they are looking for long term relationships. Those that are dating, 324 00:15:27,240 --> 00:15:30,560 Speaker 8: they are looking to form meaningful connections. So, you know, 325 00:15:30,600 --> 00:15:33,040 Speaker 8: some of the products we've seen from these dating apps 326 00:15:33,040 --> 00:15:35,280 Speaker 8: that really introduce AI are more around how to create 327 00:15:35,320 --> 00:15:38,080 Speaker 8: a profile, how to make it easier to talk to people, 328 00:15:38,200 --> 00:15:40,680 Speaker 8: you know, using AI to generate prompts that might not 329 00:15:40,720 --> 00:15:43,440 Speaker 8: necessarily you know, correlate with what gen Z is looking 330 00:15:43,440 --> 00:15:45,200 Speaker 8: for in terms of forming a meaningful connection. 331 00:15:46,080 --> 00:15:48,640 Speaker 5: I'll tell you Lisa go to the Parker House and 332 00:15:48,680 --> 00:15:52,760 Speaker 5: seeing her in New Jersey on a summer Saturday, thousands 333 00:15:52,840 --> 00:15:57,360 Speaker 5: and thousands of kids of gen Z type are there 334 00:15:57,760 --> 00:16:00,359 Speaker 5: yet like four o'clock in afternoon, they're not on the 335 00:16:00,360 --> 00:16:03,440 Speaker 5: They're all made up, dressed to the nines. I think 336 00:16:03,480 --> 00:16:05,640 Speaker 5: they're looking too to meet somebody. 337 00:16:05,680 --> 00:16:08,240 Speaker 2: Right now, I've been here, I had to wait on dress. 338 00:16:08,560 --> 00:16:11,040 Speaker 6: I mean, I don't know what's going on. How about millennials? 339 00:16:11,080 --> 00:16:12,400 Speaker 6: How did they fare? 340 00:16:12,760 --> 00:16:15,640 Speaker 8: So millennials are they kind of came of age during 341 00:16:15,640 --> 00:16:17,520 Speaker 8: the time of dating apps, so a lot of dating 342 00:16:17,520 --> 00:16:21,800 Speaker 8: apps are really created to target dating patterns of millennials. 343 00:16:21,880 --> 00:16:24,960 Speaker 8: So millennials have a more favorable relationship with dating apps, 344 00:16:24,960 --> 00:16:28,480 Speaker 8: and they also are much more like comfortable with AI 345 00:16:28,680 --> 00:16:31,800 Speaker 8: in dating apps versus gen Z, which was surprising to us. 346 00:16:32,120 --> 00:16:35,800 Speaker 2: Now what about Okay, people always forget about gen X, the. 347 00:16:35,800 --> 00:16:36,840 Speaker 3: Gen X folks. 348 00:16:37,880 --> 00:16:40,400 Speaker 2: Yeah, so what about gen X? And then you know 349 00:16:40,600 --> 00:16:43,600 Speaker 2: my my mom, you know, single, like she wants to 350 00:16:43,600 --> 00:16:46,720 Speaker 2: find out about these apps. I'm telling you, what about 351 00:16:46,720 --> 00:16:50,040 Speaker 2: the older generation? They're on dating apps, so they're on it. 352 00:16:50,120 --> 00:16:52,520 Speaker 8: There are Yeah, there are a lot of gen X 353 00:16:52,560 --> 00:16:55,360 Speaker 8: and baby boomers on dating apps, and there are a 354 00:16:55,360 --> 00:16:57,560 Speaker 8: wide variety of dating apps to kind of address different 355 00:16:57,560 --> 00:16:59,920 Speaker 8: age groups, different you know, things that people are looking for. 356 00:17:00,160 --> 00:17:01,640 Speaker 8: So they're they're available. 357 00:17:02,000 --> 00:17:05,119 Speaker 6: How does AI have to ask the AI questions? 358 00:17:05,680 --> 00:17:07,679 Speaker 5: Because we had a guest on earlier about it. I 359 00:17:07,720 --> 00:17:09,760 Speaker 5: walked out of there thinking AI is going to take 360 00:17:09,760 --> 00:17:12,880 Speaker 5: over Wall Street? How about AI and dating apps? That 361 00:17:13,600 --> 00:17:16,880 Speaker 5: I would think could be helpful to better select somebody 362 00:17:16,880 --> 00:17:18,480 Speaker 5: who might be a good match or something. 363 00:17:18,800 --> 00:17:21,080 Speaker 8: So we've seen dating app companies roll out a lot 364 00:17:21,119 --> 00:17:25,120 Speaker 8: of AI products. I would say, right now, it seems 365 00:17:25,160 --> 00:17:27,360 Speaker 8: at least based on our survey, that they haven't been 366 00:17:27,480 --> 00:17:30,880 Speaker 8: that well received. It seems like people don't necessarily need 367 00:17:30,920 --> 00:17:33,640 Speaker 8: AI to build a better profile, they don't need AI 368 00:17:33,720 --> 00:17:36,399 Speaker 8: to help them engage in conversation. I think where it 369 00:17:36,440 --> 00:17:39,120 Speaker 8: has been helpful is user safety, so to weed out 370 00:17:39,160 --> 00:17:42,760 Speaker 8: profiles that are fake or you know, potentially send people 371 00:17:42,800 --> 00:17:46,160 Speaker 8: who are sending harmful messages, and that is a common complaint. 372 00:17:46,320 --> 00:17:50,320 Speaker 8: But as of right now, it doesn't seem that you know, 373 00:17:50,720 --> 00:17:53,520 Speaker 8: at least gen Z and even some millennials are really 374 00:17:54,480 --> 00:17:56,720 Speaker 8: really adopting these new AI products. 375 00:17:56,840 --> 00:17:59,440 Speaker 2: So and there are certain a dating apps that are 376 00:17:59,440 --> 00:18:01,320 Speaker 2: more po popular than others, I mean, which are the 377 00:18:01,359 --> 00:18:02,160 Speaker 2: hot ones right now? 378 00:18:02,560 --> 00:18:06,680 Speaker 8: So right now, at least by users, Tinder has by 379 00:18:06,680 --> 00:18:09,320 Speaker 8: far the most users that's owned by match Group. And 380 00:18:09,359 --> 00:18:11,879 Speaker 8: then Hinge is actually one of the few dating apps 381 00:18:11,880 --> 00:18:15,080 Speaker 8: that is continuing to grow users, and that's probably because 382 00:18:15,119 --> 00:18:17,160 Speaker 8: Hinge focuses a little bit more on kind of long 383 00:18:17,240 --> 00:18:21,000 Speaker 8: term relationships, building meaningful connections. Tinder still has a reputation 384 00:18:21,119 --> 00:18:22,280 Speaker 8: of kind of a hookup app. 385 00:18:22,400 --> 00:18:26,000 Speaker 2: Yes, which one is that? 386 00:18:25,480 --> 00:18:26,919 Speaker 3: Yeah, that's how my son was on. 387 00:18:31,040 --> 00:18:35,360 Speaker 5: And I mean I'm looking at Nicole's research report. 388 00:18:35,600 --> 00:18:37,360 Speaker 6: I mean she's got graphs here. 389 00:18:37,200 --> 00:18:39,639 Speaker 5: Of like I'm in a monogamous relation, I'm single and 390 00:18:39,720 --> 00:18:42,359 Speaker 5: currently dating. I'm in an open relationship, single but not dating, 391 00:18:42,520 --> 00:18:46,159 Speaker 5: in a casual relationship by demo, by baby boomers, gen 392 00:18:46,320 --> 00:18:49,800 Speaker 5: X millennials. I mean, this is a lot of research here, 393 00:18:49,880 --> 00:18:52,720 Speaker 5: dudes on dating. I mean, go to a bar, you know, 394 00:18:52,880 --> 00:18:55,480 Speaker 5: have a cocktail, relax. I don't know, I don't know. 395 00:18:55,520 --> 00:18:57,200 Speaker 6: It's good stuff here. But Nicole, thanks so much for 396 00:18:57,280 --> 00:18:57,840 Speaker 6: joining us. 397 00:18:57,840 --> 00:19:01,639 Speaker 5: Great research again at Bi's cut and research Bloomberg Intelligence 398 00:19:02,520 --> 00:19:05,320 Speaker 5: using some survey data here to go out and take 399 00:19:05,320 --> 00:19:08,280 Speaker 5: a look at how some of these apps are working 400 00:19:08,280 --> 00:19:08,520 Speaker 5: out there. 401 00:19:08,560 --> 00:19:09,280 Speaker 6: Nicole Desuza. 402 00:19:09,359 --> 00:19:12,320 Speaker 5: She covers all the internet stuff and all the software 403 00:19:12,320 --> 00:19:13,840 Speaker 5: stuff for Bloomberg Intelligence. 404 00:19:15,760 --> 00:19:19,480 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 405 00:19:19,560 --> 00:19:22,640 Speaker 1: weekdays at ten am Eastern on Apple Coarcklay and Android 406 00:19:22,680 --> 00:19:25,959 Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever 407 00:19:26,040 --> 00:19:29,120 Speaker 1: you get your podcasts, or watch us live on YouTube. 408 00:19:29,720 --> 00:19:33,520 Speaker 5: Black Rock. You know, the stock's down, but I mean 409 00:19:33,880 --> 00:19:37,600 Speaker 5: it's black Rock. I mean, twelve and a half trillion 410 00:19:38,040 --> 00:19:40,920 Speaker 5: and assets under management. I can't get my mind around that. 411 00:19:41,480 --> 00:19:45,399 Speaker 5: It's just an extraordinary story. And by the way, it's 412 00:19:45,520 --> 00:19:46,840 Speaker 5: separated from Blackstone. 413 00:19:47,320 --> 00:19:49,640 Speaker 6: I mean, imagine if those two were together. Holy yew. 414 00:19:49,880 --> 00:19:51,520 Speaker 5: Anyway, I mean, it's got a market cap up one 415 00:19:51,560 --> 00:19:54,119 Speaker 5: hundred and sixty billion. Black Rock is down six percent today, 416 00:19:55,080 --> 00:19:58,159 Speaker 5: up about one percent for the year. Neil Sips's in 417 00:19:58,240 --> 00:20:00,600 Speaker 5: stew He's got to explain to us what's going on here. 418 00:20:00,600 --> 00:20:03,399 Speaker 5: He covers all the asset managers for Bloomberg Intelligence, you know, 419 00:20:03,440 --> 00:20:05,480 Speaker 5: talk to us about Blackrock gear. 420 00:20:05,760 --> 00:20:08,160 Speaker 6: They never seem to have problems getting money in the past. 421 00:20:08,200 --> 00:20:08,719 Speaker 6: What's going on? 422 00:20:09,160 --> 00:20:11,480 Speaker 9: Yeah, And I think what you're seeing a little bit 423 00:20:11,520 --> 00:20:14,000 Speaker 9: in the second quarter is the net inflow figure was 424 00:20:14,040 --> 00:20:17,280 Speaker 9: about half the first quarter, so perhaps a little bit 425 00:20:17,320 --> 00:20:21,160 Speaker 9: slower than the analysts we're expecting. But what I think 426 00:20:21,240 --> 00:20:23,320 Speaker 9: is encouraging and sort of what we're seeing with the 427 00:20:23,359 --> 00:20:27,240 Speaker 9: transition you even mentioned Blackstone, Blackrock is trying to enter 428 00:20:27,320 --> 00:20:29,919 Speaker 9: some of those businesses in a more meaningful way that 429 00:20:29,960 --> 00:20:32,440 Speaker 9: Blackstone is involved in the private markets. We saw the 430 00:20:32,480 --> 00:20:38,159 Speaker 9: handful of transactions last year Global Infrastructure Partners HPS, and 431 00:20:38,200 --> 00:20:40,000 Speaker 9: what this is going to do is really sort of 432 00:20:40,200 --> 00:20:43,119 Speaker 9: improve the organic base feed growth. So while we're seeing 433 00:20:43,160 --> 00:20:46,159 Speaker 9: a little bit slower on the net inflow figure in 434 00:20:46,240 --> 00:20:50,280 Speaker 9: terms of broader asset growth, what it means is as 435 00:20:50,280 --> 00:20:54,320 Speaker 9: we push further into those private markets, those higher fee products, 436 00:20:54,880 --> 00:20:57,359 Speaker 9: that organic growth is actually more meaningful to the fundamentals 437 00:20:57,400 --> 00:20:59,359 Speaker 9: of the business. So we're going to see a little 438 00:20:59,359 --> 00:21:01,359 Speaker 9: bit of a transit here. I think perhaps that's what 439 00:21:01,359 --> 00:21:05,159 Speaker 9: you're seeing in the second quarter results today, is that 440 00:21:05,359 --> 00:21:10,080 Speaker 9: sort of slower inflow growth, but perhaps still pretty robust 441 00:21:10,119 --> 00:21:12,800 Speaker 9: based feed growth. And let's not forget the second quarter 442 00:21:12,960 --> 00:21:15,720 Speaker 9: was really a tale of two stories, a rather unique 443 00:21:15,760 --> 00:21:18,960 Speaker 9: quarter with a very challenging April and an incredible May 444 00:21:18,960 --> 00:21:21,480 Speaker 9: in June, so that is also sort of balanced in 445 00:21:21,480 --> 00:21:22,000 Speaker 9: the results. 446 00:21:22,359 --> 00:21:24,440 Speaker 2: Now, a lot of messers look to what the executives 447 00:21:24,440 --> 00:21:26,800 Speaker 2: are saying. So what kind of tone did did CEO 448 00:21:26,920 --> 00:21:27,800 Speaker 2: Larry think take? 449 00:21:28,240 --> 00:21:31,560 Speaker 9: Yeah, I think he struck a generally positive tone, especially 450 00:21:31,600 --> 00:21:35,040 Speaker 9: considering the sort of broader macro uncertainties that are still 451 00:21:35,080 --> 00:21:37,840 Speaker 9: out there. It feels like we've certainly moved back from 452 00:21:37,880 --> 00:21:40,600 Speaker 9: some of the more worst case scenarios we'll call them. 453 00:21:41,040 --> 00:21:43,280 Speaker 9: But there's still certainly quite a bit of uncertainty. But 454 00:21:43,320 --> 00:21:46,879 Speaker 9: when you look at equity markets, you don't necessarily see it, 455 00:21:46,960 --> 00:21:51,119 Speaker 9: right all time highs pretty much in the global equities landscape, 456 00:21:51,119 --> 00:21:54,199 Speaker 9: and so that's generally a positive for asset managers, particularly 457 00:21:54,240 --> 00:21:57,080 Speaker 9: someone like Blackrock. And what they've talked about is they 458 00:21:57,119 --> 00:22:00,919 Speaker 9: experienced momentum exiting the second quarter to the third quarter. 459 00:22:01,600 --> 00:22:05,320 Speaker 9: Clients continue to remain engaged. They haven't necessarily pulled away 460 00:22:05,480 --> 00:22:07,760 Speaker 9: in sort of the volatility that we saw in some 461 00:22:07,800 --> 00:22:10,840 Speaker 9: of the uncertainty that we talk about. So that sort 462 00:22:10,840 --> 00:22:13,439 Speaker 9: of creates a solid setup for black Rock moving forward. 463 00:22:13,560 --> 00:22:15,400 Speaker 5: All right, So for the asset managers that you find, 464 00:22:15,440 --> 00:22:17,959 Speaker 5: like when I grew up in the business, the biggest 465 00:22:17,960 --> 00:22:20,840 Speaker 5: customers on Wall Street were the mutual funds, and then 466 00:22:20,880 --> 00:22:22,040 Speaker 5: hedge funds became big. 467 00:22:23,440 --> 00:22:26,520 Speaker 6: Now it's ETFs. How do the asset. 468 00:22:26,240 --> 00:22:29,520 Speaker 5: Managers that you deal with, you know, think about it? It 469 00:22:29,560 --> 00:22:31,760 Speaker 5: just seems like all the money is going to ETFs. 470 00:22:32,760 --> 00:22:34,600 Speaker 5: How do your asset managers deal with that? 471 00:22:34,920 --> 00:22:38,000 Speaker 9: Yeah, Well, there's the way you deal with it is 472 00:22:38,200 --> 00:22:40,639 Speaker 9: enter the ETF space to sort of capture that flow. 473 00:22:41,119 --> 00:22:43,480 Speaker 9: But that is a business where scale is paramount. Because 474 00:22:43,480 --> 00:22:46,720 Speaker 9: you talk about ETFs, you're thinking about average ten basis 475 00:22:46,720 --> 00:22:48,720 Speaker 9: point fee rate. Right, You're not going to earn quite 476 00:22:48,720 --> 00:22:50,400 Speaker 9: a bit. The margins are going to be razor thin. 477 00:22:51,040 --> 00:22:53,440 Speaker 9: Unless you're the size of black Rock, who garners thirty 478 00:22:53,480 --> 00:22:56,280 Speaker 9: percent of the market in US ETFs. That can be 479 00:22:56,320 --> 00:23:00,680 Speaker 9: a profitable business, yep, and that's actually been from over 480 00:23:00,760 --> 00:23:03,480 Speaker 9: forty percent. Vanguard's the one that's sort of nipping at 481 00:23:03,480 --> 00:23:07,200 Speaker 9: the heels. But again it's sort of an oligopoly with Vanguard, Blackrock, 482 00:23:07,280 --> 00:23:09,800 Speaker 9: and Fidelity in the ETF space. But how do you 483 00:23:09,880 --> 00:23:12,720 Speaker 9: compliment that in a business where the flows are increasingly 484 00:23:12,760 --> 00:23:15,439 Speaker 9: going to ETFs. Well, they're also going to private markets 485 00:23:15,440 --> 00:23:17,800 Speaker 9: and that's why you saw again Blackrock push into that 486 00:23:17,880 --> 00:23:18,720 Speaker 9: space last year. 487 00:23:18,800 --> 00:23:20,520 Speaker 6: All right, Neil, thanks so much. We appreciate it. 488 00:23:20,800 --> 00:23:23,159 Speaker 5: Neil Sipes covers all the banks and asset managers for 489 00:23:23,160 --> 00:23:23,920 Speaker 5: Bloomberg A Tonza. 490 00:23:24,520 --> 00:23:29,200 Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify 491 00:23:29,400 --> 00:23:32,880 Speaker 1: and anywhere else you get your podcasts. Listen live each 492 00:23:32,920 --> 00:23:36,640 Speaker 1: weekday ten am to noon Eastern on Bloomberg dot com, 493 00:23:36,760 --> 00:23:40,320 Speaker 1: the iHeartRadio app, Tune in and the Bloomberg Business App. 494 00:23:40,760 --> 00:23:43,680 Speaker 1: You can also watch us live every weekday on YouTube 495 00:23:44,080 --> 00:23:46,280 Speaker 1: and always on the Bloomberg terminal