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

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Speaker 1: my co host Matt Miller. Every business day, we bring

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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along

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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast

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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and

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Speaker 1: at Bloomberg dot com slash podcast. Now, I want to

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Speaker 1: get over to Massimo Poselli. He joins us right now.

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Speaker 1: He's a senior vice president of Global Enterprise for Verizon Business.

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Speaker 1: And I guess mass your focus here is on five G.

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Speaker 1: To me, it's so fascinating, not just because all the

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Speaker 1: protesters around here are concerned that, you know, Bill Gates

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Speaker 1: is using the vaccines to inject us with five G chips,

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Speaker 1: but because it's gonna make I think business a lot

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Speaker 1: more exciting and our personal lives also a little bit easier. Um,

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Speaker 1: how do you think the most important UH leaps ahead

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Speaker 1: will be will be met by the five G technology

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Speaker 1: that you're that you're spreading around. Good morning, Paul, and that,

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Speaker 1: first of all, thank you for having me today. UM.

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Speaker 1: Fight G UH will change the way we live as

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Speaker 1: as as normal people and as employees. UH. And it's

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Speaker 1: probably the first generation of wireless services that will be

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Speaker 1: more focused or well bring more value to the enterprise,

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Speaker 1: to the end consumers. UH. Fight G combined with edge

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Speaker 1: computing will allow to define the business processes and the

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Speaker 1: engagement model with the consumer. Just think of the smart store,

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Speaker 1: I think of a smart manufacturing, Think of telehealth, Think

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Speaker 1: of the education. How can use the RBR to be

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Speaker 1: more effective in the way you educate the people? UH.

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Speaker 1: But the the art of the possible with five G

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Speaker 1: is infinite. And actually what we're doing is to explore

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Speaker 1: use cases on five G with our partners and with

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Speaker 1: our customers in almost every industry. All right, mass, we'll

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Speaker 1: give us a sense of timing. Here I see ads

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Speaker 1: from UH. You guys may tinteen your other competitors saying

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Speaker 1: five gus here. I don't think it's here. Where are

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Speaker 1: we in the rollout? Give us a sense of the

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Speaker 1: timetable UH on the different flavors or five G five

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Speaker 1: G at the C band, f G at the ultra

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Speaker 1: white band. UH. Five G is here now in seventy

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Speaker 1: one cities for the horizon, and we have the six

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Speaker 1: while access in twenty three cities. Uh, what will we

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Speaker 1: say is by five GM is now because really finding

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Speaker 1: the business processes for enterprise will take time. You will

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Speaker 1: change the way they work. So that's why even if

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Speaker 1: some use cases will be something you guys will be

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Speaker 1: available in in in a few months, some will take

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Speaker 1: a few quarters. But the time is now to work

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Speaker 1: and define what technology could do and how technology could

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Speaker 1: change at the way corporate works. What about the safety

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Speaker 1: of this? I mean, you know, I was joking a

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Speaker 1: little bit at the top, but you've got um Robert Kennedy,

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Speaker 1: whom the Globe and Mail called a super spreader of

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Speaker 1: medical misinformation, who nonetheless is a big name and has

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Speaker 1: warned about safety concerns around five G. Is there any

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Speaker 1: that we should take seriously? Listen, we had a discussion

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Speaker 1: about the safety every time we launched a new generation

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Speaker 1: of wireless services. So we heard the same one TREG.

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Speaker 1: We heard the same offer G, and we heard we

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Speaker 1: were here in the same offer G, and we will

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Speaker 1: hear the same on six G. So listen, this the

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Speaker 1: security is part of mount for us, and and you

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Speaker 1: know wireless that will just bring the technology and value

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Speaker 1: to the um beings. So no concern about security past

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Speaker 1: when will I have to go out and buy a

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Speaker 1: five G phone? When should I do that? Well, you

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Speaker 1: should do that now has set on five phone or

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Speaker 1: five G are available today in the market and and

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Speaker 1: will bring value. Think of the health for example, the

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Speaker 1: ability to capture your your health data and your personal

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Speaker 1: data in the in the middlesecond and to share uh

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Speaker 1: this with with your position and with the expert. But

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Speaker 1: also think of the ability to consume media content. We

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Speaker 1: had a view for the last Super Bowl where you

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Speaker 1: could have a three D view, multiple view on the

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Speaker 1: same screen using five G. So if you want to

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Speaker 1: start having an experience in sports event but also have

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Speaker 1: the ability to uh you know, be in the forefront

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Speaker 1: on the use of technology for your personal house, than

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Speaker 1: it's right time now to buy f I G. Front.

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Speaker 1: Are you working on six G already? You mentioned it?

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Speaker 1: Is it already in the cards? Mainly so I think

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Speaker 1: the art of the possible four five G is infinite

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Speaker 1: that we think you will probably take several years so

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Speaker 1: before you full exploit of the value of I G

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Speaker 1: and what I G could bring to people and to enterprises. So, uh,

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Speaker 1: we had in the forefront thinking the next technology, but

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Speaker 1: we're not totally focused on the point i G and

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Speaker 1: then bringing the value of i G to everyone. Masimo

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Speaker 1: takes so much for joining us. We appreciate it getting

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Speaker 1: the update on all things on the telecom front with

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Speaker 1: five G in particular. Massimo Passelli, Senior vice president of

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Speaker 1: Global Enterprise for Verizon Business five G. The It's funny

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Speaker 1: the telecom companies, they've spent billions of dollars on the spectrum.

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Speaker 1: They will spend billions of dollars more on developing more

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Speaker 1: of the infrastructure and the technology to support that spectrum.

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Speaker 1: And then uh, presumably as they rollout services and so on,

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Speaker 1: we will be incentive to go out and buy new

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Speaker 1: five G phones in one not so we'll see how

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Speaker 1: that plays out over the next several months and years. Now,

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Speaker 1: I want to get into the impact of the pandemic

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Speaker 1: and while the reopening on travel and e commerce. Adobe

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Speaker 1: does that with its Adobe Adobe Digital Economy Index. And

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Speaker 1: here to talk about that is the director of Adobe

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Speaker 1: Digital Insides, Taylor Shriner Um. Taylor, what kind of action

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Speaker 1: are are you seeing right now? Are we looking at it? Uh?

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Speaker 1: A lift off so to speak in terms of the airlines. Well,

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Speaker 1: broadly speaking, Matt we're seeing a turnaround across the board,

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Speaker 1: but we're not out of the words yet. So, for instance,

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Speaker 1: we are seeing that bookings are really double what they

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Speaker 1: were before. People were starting to get back to needed

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Speaker 1: People are showing a strong interest in travel, but if

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Speaker 1: you compare today's bookings to what we were seeing in

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Speaker 1: March of twenty nineteen, we're still down. So while people

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Speaker 1: are eager to travel and they have increasing competence in travel,

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Speaker 1: we're not even back to twenty nineteen levels quite yet. Taylor,

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Speaker 1: talk to us about some of the regional UH differences

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Speaker 1: you may be seeing in your data. You know, Matt

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Speaker 1: and I earlier we're talking about how successful it seems that,

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Speaker 1: you know, big states like Texas and Florida have been

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Speaker 1: reopening ahead of other parts of the region. Are you

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Speaker 1: seeing regional differences in terms of travel. We've seen a

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Speaker 1: really strong UH bias for its southern and Midwestern states

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Speaker 1: being willing to travel today. But on the other hand,

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Speaker 1: if you look at the Northeast, where there's been a

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Speaker 1: lot of reluctance to travel and they have sort of

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Speaker 1: less travel than you would expect on average for the US,

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Speaker 1: they have a greater responsiveness to vaccines. So the more

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Speaker 1: vaccines are all out, the faster folks in the Northeast

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Speaker 1: are willing to travel, either because data themselves are vaccinated

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Speaker 1: or because they have greater faith in travel with more

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Speaker 1: people vaccinated. So if that's the case, UM, I would

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Speaker 1: expect when more people go out, when more people eat

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Speaker 1: at restaurants, from, more people take flights, from more people

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Speaker 1: hit the shops. Um, fewer people are sitting at home

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Speaker 1: still using Amazon and other e commerce sites to get

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Speaker 1: their goods. Am I mistaken. Uh, it's a fair assumption.

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Speaker 1: But actually we have seen fifty growth year over year

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Speaker 1: this last March, So people are really still used to

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Speaker 1: making their purchases online and they're not telling us that

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Speaker 1: they are showing any signs of going back to a

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Speaker 1: pure in person retail world. They're absolutely going to restaurants.

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Speaker 1: You can see travel increasing, but we simultaneously see continued

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Speaker 1: growth and basic things like grocery shopping online. Uh and well,

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Speaker 1: uh we expect that to continue. Frankly, broadly speaking through

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Speaker 1: the year. About outside the US tailor, you know when

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Speaker 1: we go look at the UK or and mats based

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Speaker 1: in Germany, are we seeing similar trends as it relates

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Speaker 1: to e commerce. Well, this is the first year that

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Speaker 1: Adobe has released our insights on the whole global digital economy,

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Speaker 1: or this is the first report rather, and frankly, there's

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Speaker 1: some really big numbers out there. Last year, we saw

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Speaker 1: about three point five trillion dollars in online commerce, and

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Speaker 1: we're seeing that grow over the first quarter at thirty

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Speaker 1: eight percent. So we see incredibly strong global e commerce growth.

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Speaker 1: And fact, we're predicting four point two trillion dollars UH

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Speaker 1: in e commerce over the course of the year, which is,

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Speaker 1: you know, bigger than than some major economies you'll see

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Speaker 1: in in Europe. Yeah, way bigger, um. But I wonder

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Speaker 1: how they compare to the US, I mean e commerce

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Speaker 1: in the US versus a e commerce and the EU.

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Speaker 1: Are they similar sizes or is the US far ahead

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Speaker 1: of what we see here in old Europe? Well, you know,

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Speaker 1: e commerce global is really dominated by the United States

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Speaker 1: and China in terms of where the overall dollars are

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Speaker 1: getting expensed, where the overall money is getting expensed. But

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Speaker 1: to your point, we really see UH strong growth in Europe.

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Speaker 1: The UK, for instance, saw sixty growth in the first quarter,

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Speaker 1: so just stunning frankly, levels of e commerce growth that

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Speaker 1: are continuing in Europe, and it's going to be different

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Speaker 1: country by country with the varying payment systems and cultural differences.

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Speaker 1: But globally we see incredibly strong growth and the US

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Speaker 1: is at the moment on par with growth global growth,

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Speaker 1: but there are a lot of countries that are going

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Speaker 1: to get into this space and start to grow rapidly.

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Speaker 1: All right, So, teller, you're based in the Bay Area

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Speaker 1: of San Francisco, right, Lucky, that's correct. All right, give

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Speaker 1: us a sense of how how that area is kind

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Speaker 1: of reopening here. What's the feeling there Again, we think

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Speaker 1: about the northeast maybe being a little bit more conservative.

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Speaker 1: Texas and Florida very aggressive in the reopening. What's it

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Speaker 1: like where you are in California? Uh, well, I can

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Speaker 1: just speak for my area. You know, you still see

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Speaker 1: a lot of masks, You still see uh, you know,

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Speaker 1: a dearth of public transit, but people are out. I

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Speaker 1: went to my first museum, uh this last weekend and

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Speaker 1: you know, went over to see friends. So the the

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Speaker 1: street level commerce is definitely growing and people are think

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Speaker 1: you of traveling, looking to travel. Um, you know, one

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Speaker 1: of the things we saw in the travel stats is

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Speaker 1: that people are booking Thanksgiving and Christmas. Now, uh, that's

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Speaker 1: the one area where bookings are above twenty nineteen levels

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Speaker 1: and you know, grademic totally in my area. That's that's

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Speaker 1: what we see is that people are eager to travel

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Speaker 1: and see friends and they're they're confident that by the

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Speaker 1: fall that will be possible. Interesting, I'd like to get

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Speaker 1: out there. Yeah, it's beautiful out there. West Coast is

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Speaker 1: where it's at. Man's all right, Taylor, thanks so much

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Speaker 1: for joining us. Taylor Shriner, he's a director of Adobe

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Speaker 1: Digital Insights. Uh, there out there Digital Economy Index showing

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Speaker 1: some good growth Matt from you know, kind of the

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Speaker 1: pre vaccine time frame in this pandemic. But still you

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Speaker 1: know below you know, you're looking at airline flights and

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Speaker 1: hotels still below from levels. But but in e commerce, um,

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Speaker 1: they point out that the e commerce in March of

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Speaker 1: this year broke records, adding almost another Black Friday in

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Speaker 1: online spending. So it's been huge. Yeah, it's been huge,

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Speaker 1: and you know, you talk to the retail folks and

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Speaker 1: they don't see that going back the market share that

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Speaker 1: e commerce has, it's here to stay. Busy week this

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Speaker 1: week for earnings. Also a busy week for economic data.

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Speaker 1: Just today we had really strong consumer sentiment numbers come out,

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Speaker 1: and that's good news. Tomorrow we have the Fed minutes

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Speaker 1: and the press conference. Thursday, we get a GDP report

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Speaker 1: for the first quarter. Lots to dig into. Uh, We're

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Speaker 1: fortunate to have Marcus Schomer, chief economists at pine Bridge

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Speaker 1: Investments joining us. Marcus, I love to start with that

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Speaker 1: GDP print that we're going to see. Third, stay, what

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Speaker 1: do you expect to see? It should be a phenomenal number.

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Speaker 1: And then also for the next quarter as well, how

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Speaker 1: are you thinking about that? Oh? Yeah, the numbers look

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Speaker 1: really good. For the for the entire summer, the GDP

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Speaker 1: number will be somewhere north of six percent probably. Um,

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Speaker 1: we still don't know some of the some of the

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Speaker 1: more variable parts like trade and inventories could be a

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Speaker 1: little bit more negative. But we know that consumer spending,

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Speaker 1: for example, is on track for a ninth percent quarter.

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Speaker 1: I mean, that's the phenomenal number, and it's likely with

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Speaker 1: the with the check stop fully distributed in the first quarter,

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Speaker 1: that some of that is spilling into Q two as well,

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Speaker 1: and the numbers are probably going to stay like that

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Speaker 1: through the summer, so we get consumer spending, well, get

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Speaker 1: personal spending in UH income on Friday as well. Right, Um,

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Speaker 1: and a lot of people have been talking about the

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Speaker 1: savings rate was so strong and there's been so much

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Speaker 1: extra at least at the top cash to throw out

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Speaker 1: into the system. Is that going to happen? Then? Do

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Speaker 1: you expect a you know, um, a damn break in

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Speaker 1: terms of spending. Um, well, we've we've seen it already. Right.

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Speaker 1: We had a super strong retail sales number in January,

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Speaker 1: and the only reason Q one is actually not better

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Speaker 1: is because we had this really miserably cold February which

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Speaker 1: depressed everything and people couldn't go out and spend it.

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Speaker 1: And in parts they came back and with another check

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Speaker 1: in that pocket went out on a spending spree again.

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Speaker 1: And I assume that, um, the April and May retail

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Speaker 1: sales numbers will look really good as well, because you're right,

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Speaker 1: it's not just the check itself, but it's also the

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Speaker 1: money that's been accumulating over the last literally the last

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Speaker 1: twelve months, as people couldn't go on vacation, couldn't couldn't

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Speaker 1: go into the stores, and that has built up the

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Speaker 1: savings rate. It's not really that people were saving, they

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Speaker 1: just couldn't spend. That's a slightly different different way of

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Speaker 1: thinking about it. But some of that money will seep

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Speaker 1: into the economy over the next couple of months, and

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Speaker 1: I think that's why GDP goes will remain strong in

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Speaker 1: Q two and probably spending it to you three as well.

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Speaker 1: Question is what happens after that? Yeah, that's kind of

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Speaker 1: where I wanted to go here. I mean, we're seeing

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Speaker 1: a kind of a wide range of GDP forecasts out

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Speaker 1: there on the street. For one, what's your call for

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Speaker 1: the year of one, and then maybe also for next

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Speaker 1: year as well. Um, for this year we're we're around

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Speaker 1: six percent, and next year we see a slowdown back

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Speaker 1: to something around three and a half percent, a little

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Speaker 1: bit of low consensus next year. I think the near

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Speaker 1: term story is fairly clear, and the stimulus push is

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Speaker 1: so strong that there's probably not a lot of disagreement

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Speaker 1: where we where we are right now. But the disagreements

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Speaker 1: the more interesting where we will be a year from now,

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Speaker 1: because we're seeing more risks arising sort of on the horizon.

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Speaker 1: The pandemic is not over yet in the world. We

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Speaker 1: won't see really a resumption of global growth for a while,

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Speaker 1: the FETE is given up on the bond market and

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Speaker 1: allowing bond to rise, and that takes away from the

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Speaker 1: stimulus phisical policy is not talking about top fights and

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Speaker 1: not just spending increases all the time. And then we

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Speaker 1: have some political risks coming with the midterms next year.

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Speaker 1: We have maybe another spending package coming soon from the

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Speaker 1: Biden administration. How important is it? Do we need it? No? No,

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Speaker 1: we didn't even need the last one. I mean, we're

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Speaker 1: way about what was necessarily close to the output gap

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Speaker 1: and were so we're so in in such undiscovered country

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Speaker 1: right now that we have we have no idea what

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Speaker 1: the side effects of all this will be. For example,

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Speaker 1: at some stage when there will be you know next year,

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Speaker 1: well there won't be those spending packages. There will be

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Speaker 1: a huge decline in the way fiscal policy is boosting

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Speaker 1: GDP growth, which could which could actually lead to much

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Speaker 1: much lower goals that everybody is expecting, not because the

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Speaker 1: economy is weak, but because the comparison from the stibulous

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Speaker 1: fuel to the maybe less stimulus fuel. Two And certainly,

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Speaker 1: if the Republicans win the mid terms, there will be

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Speaker 1: no stimus in twenty three, that that change from twenty

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Speaker 1: to twenty three could be rather abrupt and could cause

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Speaker 1: a lot of micro volatility and also some confusion. Some

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Speaker 1: people may fear the economy is already two week recession

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Speaker 1: talk may start again. All this, all this access that

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Speaker 1: we're seeing right now is creating a lot of volatility

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Speaker 1: in the micro numbers, but also people will create volatility

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Speaker 1: in the expectations for the future. Okay, Marcus, I'd love

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Speaker 1: to just switch gears a little bit and talk about Europe.

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Speaker 1: You know, where Matt is based in Germany, much tougher

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Speaker 1: vaccine metrics. They're much you know, perhaps not the um

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Speaker 1: the stimulus having the same impact as having here in

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Speaker 1: the US. What's your view of Europe and the economic

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Speaker 1: recovery there. Well, I mean, right, the current situation that

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Speaker 1: does not look good. And you know, if look at

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Speaker 1: the p M I in disease that the beautifully tracked

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Speaker 1: the difference in the US where services are surging now

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Speaker 1: in Europe where services are stalled. UK s in the middle.

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Speaker 1: You can see once you start vaccinating enough of your population,

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Speaker 1: you can start to reopen and services come back in

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Speaker 1: the same way as they're already back here in the US.

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Speaker 1: You know, the vaccinations are taking up in Europe as well.

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Speaker 1: They're exploding right now. The supply is exploding. So given

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Speaker 1: give them another months, given another six weeks, and they

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Speaker 1: will be on the same track that we are on.

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Speaker 1: So it's just a bit of a delay. The issue

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Speaker 1: in Europe, in my mind, is more um, there's a

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Speaker 1: there's a very different way of policy stimulus. They don't

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Speaker 1: have the checks, they don't have the big packages, and

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Speaker 1: they have a lot of political groups coming up. In

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Speaker 1: the next couple of months, we have elections in Germany

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Speaker 1: and September, and the outcome of that is very unclear.

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Speaker 1: And then something I've been worried about four years is

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Speaker 1: in April of next year, twelve months from now, we

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Speaker 1: have elections in France and that could be that could

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Speaker 1: be a real nail binder if if the right wing

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Speaker 1: candidate could give current president markrom you know, run for

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Speaker 1: his money. Marcus, where is oys Kirschen West? Casan is

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Speaker 1: very close to Cologne, so um, very much in the

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Speaker 1: western part of Germany. I'm just stalking Marcus here on

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Speaker 1: the Bloomberg he was born. I'm sitting in Berlin and

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Speaker 1: I'm a big germanophile. But I'd say that has hurt

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Speaker 1: that the lack of vaccines here has hurt me. And

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Speaker 1: I will be interested to see if there's any scarring

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Speaker 1: from that economically and also um to see what happens

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Speaker 1: if the Greens actually take the cake in September, because

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Speaker 1: they've really run up in the polls, even ahead of

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Speaker 1: the C d U, C s U and our latest

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Speaker 1: aggregate poll, which is totally shocking. We gotta get you

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Speaker 1: back on, Marcus. It was a pleasure talking to you.

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Speaker 1: Thanks for spending some time with us. Marcus show Er,

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Speaker 1: his chief economist at pine Bridge Investments. UM, and it

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Speaker 1: was great to hear from someone who isn't just you know,

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Speaker 1: your typical red blooded Americans, someone who has a little

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Speaker 1: bit more interest in what's going on here in Germany.

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Speaker 1: This is Bloomberg Time check in with Bloomberg Opinion were

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Speaker 1: joined by opinion columnist Mark Gilbert, who's talking about the

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Speaker 1: many reasons bankers love hedge funds, and Mark, I guess

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Speaker 1: the main reason is the main reasons are you know,

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Speaker 1: millions or billions of dollars and fees. Right, money, It's

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Speaker 1: all about money, It's all about the green backs, and

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Speaker 1: hedge funds need the services that the investment banks can provide.

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Speaker 1: They need them to lend the money into so they

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Speaker 1: can leverage their bets. They need to borrow stocks often

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Speaker 1: when they go short in the market. There's a lot

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Speaker 1: of specialist prime services that the investment banks provide to

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Speaker 1: the hedge punk community, and they had a lot of

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Speaker 1: money for it, all right, Mark, I u a full disclosure.

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Speaker 1: I used to work at Credit Swiss back on those

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Speaker 1: Credit Swiss First Boston, and I know what a huge

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Speaker 1: business their prime brokerage businesses for them, as it is

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Speaker 1: for other leading Wall Street firms. So I was interested

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Speaker 1: to see the Credit Swiss is trimming it's prime broker's

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Speaker 1: exposure here post Arcticos. To me, this just feels like

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Speaker 1: a knee jerk reaction and they're going to be back

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Speaker 1: at some point, not in that arcti distant future. What

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Speaker 1: do you what do you make of what's going on

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Speaker 1: in Credit Swiss. Well, they've said that they're going to

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Speaker 1: trim by thirty five billion dollars, which is about a third,

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Speaker 1: So that shows you they've got a hundred billion dollars

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Speaker 1: out there. To the hedge fund community. There are there

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Speaker 1: are top five prime brokerage firm um. But you're probably right.

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Speaker 1: You know, once once they get over the shock of

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Speaker 1: losing this SMAs money to Arcas, they'll probably be back

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Speaker 1: into that business because it's so lucrative. There's so much

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Speaker 1: money to be made in it. You know, last year

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Speaker 1: the revenue you could make from providing new services to

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Speaker 1: hedge funds and family officers was more than thirty billion dollars.

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Speaker 1: It's grown at an average rate about eight percent years.

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Speaker 1: And given how hard it is to generate out for

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Speaker 1: given how hard it is for headge funds to generate

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Speaker 1: the returns they promised to investors in the current environments,

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Speaker 1: their demand for leverage is only going to increase, and

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Speaker 1: so the money you can make from providing those services

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Speaker 1: as an investment bank is only going to head off. Yes,

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Speaker 1: so Arcades and Greensville, right, they had a double whammy.

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Speaker 1: And I'm wondering if hedge funds out there, you know,

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Speaker 1: if you're a woman or or a dude who has

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Speaker 1: a big, risky trade and you need a prime brokerage services,

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Speaker 1: you might not pick up the phone and call Credit Sweet, right,

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Speaker 1: they might find it difficult to get that business back well.

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Speaker 1: To be honest, half of the market is dominated by

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Speaker 1: three firms Golden Sacks, Morgan Stanley and JP Morgan Um.

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Speaker 1: And if you're a hedge fund, even especially if you're

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Speaker 1: a bigger hedge funds, you probably have between three and

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Speaker 1: five prime brokers who you use for your business. You

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Speaker 1: want to spread the risks around yourself as a hedge fund,

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Speaker 1: so risks are not just one way. Plus you need

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Speaker 1: them to be able to find the stocks to lend

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Speaker 1: to you when you want to go short on a position.

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Speaker 1: So the headsphons themselves probably use a roster of firms

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Speaker 1: to gain the advantage that they're seeking by doing these

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Speaker 1: kinds of trades, by doing these leverage trades in the market.

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Speaker 1: So it's interesting that that market share from three companies

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Speaker 1: is just extraordinary. So do even the midsize investment banks

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Speaker 1: did it? Did they even have prime brokerage businesses? When

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Speaker 1: I think about it, maybe an RBC for example, high

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Speaker 1: quality kind of mid tier investment bank. There's a lot

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Speaker 1: of banks involved in the prime broker's business. I mean,

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Speaker 1: Wells Fargo is in there in the in the top

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Speaker 1: twn city groups, in the top twn bank of America's

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Speaker 1: in the top ten. Um. There's there's a lot of

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Speaker 1: crumbs to be had from from from what is a

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Speaker 1: very large table um. And again, just to repeat trendy

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Speaker 1: sweet sis, a hundred billion dollars of exposure to to

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Speaker 1: this industry um, which is you know, that shows you

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Speaker 1: how important it is to the investment banks as a

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Speaker 1: whole um. And that eight percent growth in revenue per year.

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Speaker 1: Not many businesses have had that sort of steady growth

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Speaker 1: aga as bad as secures. But also nobody wants to

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Speaker 1: get burned again like credit sweez did. And I'm guessing

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Speaker 1: they're turning out their kind of risk adversity across the board.

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Speaker 1: Is that naive of me mark or or are they

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Speaker 1: going to get more risk averse. You've got to take

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Speaker 1: on the risk to be able to do the business.

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Speaker 1: But the big bank should be in the business of

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Speaker 1: mentioning those risks adequately. Now there's been a winnowing over

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Speaker 1: the past few years anyway, more business is flowing to

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00:24:44,680 --> 00:24:46,640
Speaker 1: the big affirms because a lot of this is down

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00:24:46,680 --> 00:24:49,080
Speaker 1: to technology. A lot of it is down to the

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00:24:49,200 --> 00:24:51,400
Speaker 1: software that you have, a lot of it is down

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00:24:51,440 --> 00:24:54,760
Speaker 1: to your your ability to measure the risks across your

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00:24:54,760 --> 00:24:57,560
Speaker 1: own from the exposure that you have to the head

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00:24:57,600 --> 00:25:00,480
Speaker 1: front and the family office community. And that's why the

437
00:25:00,480 --> 00:25:03,479
Speaker 1: big banks have half of the market. They're just that

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00:25:03,560 --> 00:25:06,399
Speaker 1: much better at assessing these risks, They're that much better

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00:25:07,280 --> 00:25:10,960
Speaker 1: keeping track of what those exposures are like UM, and

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00:25:11,000 --> 00:25:14,080
Speaker 1: frankly that they're probably that much better at squeezing the

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00:25:14,119 --> 00:25:17,200
Speaker 1: extra revenue out of the business that can finance the

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00:25:17,280 --> 00:25:20,440
Speaker 1: kind of back office technology they need to be able

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00:25:20,440 --> 00:25:24,040
Speaker 1: to service these clients safely. I mean, let's not forget

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00:25:24,040 --> 00:25:27,560
Speaker 1: Gold and got out of this completely unscathed, completely unscathed.

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00:25:27,960 --> 00:25:30,120
Speaker 1: UM and the top of the three in the risk

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00:25:30,160 --> 00:25:34,359
Speaker 1: management business. So yes, there are going to be increased

447
00:25:34,440 --> 00:25:36,960
Speaker 1: risks in taken on these kinds of traits, but that

448
00:25:37,000 --> 00:25:39,399
Speaker 1: should be the job of an investment bank to manage

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00:25:39,440 --> 00:25:43,440
Speaker 1: those risks, to make sure it's being adequately compensated, because

450
00:25:43,440 --> 00:25:45,160
Speaker 1: there is no such things as a bad risk, there's

451
00:25:45,160 --> 00:25:48,840
Speaker 1: only bad compensation and bad measurements. Risk is part of

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00:25:48,840 --> 00:25:51,600
Speaker 1: the business of of being an investment bank. Risk is

453
00:25:51,640 --> 00:25:55,760
Speaker 1: partly what headgephuns have made their money from. Being able

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00:25:55,800 --> 00:25:58,840
Speaker 1: to assess those risks is the core of that business.

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00:25:58,960 --> 00:26:01,880
Speaker 1: And yes, there's as a wake up call, but it's

456
00:26:01,960 --> 00:26:07,160
Speaker 1: not gonna produce I don't think any pulling back from

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00:26:07,200 --> 00:26:10,640
Speaker 1: the most of the investment banking community. They will reassess

458
00:26:10,720 --> 00:26:13,760
Speaker 1: their risks, they will probably want to run the ruler

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00:26:14,080 --> 00:26:16,840
Speaker 1: more firmly over the heads from the community and the

460
00:26:16,880 --> 00:26:19,200
Speaker 1: trades that they're doing. But at the end of the day,

461
00:26:19,280 --> 00:26:22,399
Speaker 1: that's how you make money in this business. Mark, is

462
00:26:22,400 --> 00:26:25,879
Speaker 1: there something just inherent in the structure of Credit Swiss

463
00:26:25,920 --> 00:26:29,280
Speaker 1: that they just are not good risk managers because it

464
00:26:29,320 --> 00:26:31,280
Speaker 1: seems like they are much more in the news than

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00:26:31,400 --> 00:26:34,280
Speaker 1: their peers. And I'm talking over a ten or twenty

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00:26:34,359 --> 00:26:39,520
Speaker 1: year period. I think every bank has got skeletons in

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00:26:39,560 --> 00:26:42,520
Speaker 1: its cupboard. You know, Deutsche Bank has had several of

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00:26:42,560 --> 00:26:45,280
Speaker 1: these blow ups. Ubs revealed today it lost almost the

469
00:26:45,320 --> 00:26:48,280
Speaker 1: building dollars on the on the on the Arcadist blow up.

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00:26:48,359 --> 00:26:51,440
Speaker 1: So there are always going to be a postiles that

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00:26:51,520 --> 00:26:54,480
Speaker 1: are always going to be sort of known and loans

472
00:26:54,560 --> 00:26:57,840
Speaker 1: and unknown and nots. The trick is how you react

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00:26:57,880 --> 00:27:01,879
Speaker 1: to them, and the business is how you response to

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00:27:02,000 --> 00:27:05,440
Speaker 1: your own risk bofile going forward, and how you assess

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00:27:05,520 --> 00:27:09,200
Speaker 1: the risk to make sure you're adequately compensated the trades

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00:27:09,320 --> 00:27:14,160
Speaker 1: that you've got on your book mark. Yeah, that's relating.

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00:27:14,200 --> 00:27:16,240
Speaker 1: That kind of goes to that risk adjusted return. Matt,

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00:27:16,280 --> 00:27:19,639
Speaker 1: you know you gotta, as Mark was suggesting. Yeah, I

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00:27:20,000 --> 00:27:22,520
Speaker 1: just wanted to say thanks as well to Mark Gilbert.

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00:27:22,560 --> 00:27:24,480
Speaker 1: There By the way, you can check out his piece

481
00:27:24,520 --> 00:27:26,800
Speaker 1: and the work of his colleagues as well. If you

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00:27:26,800 --> 00:27:28,200
Speaker 1: have a Bloomberg in front of you, just type O,

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00:27:28,320 --> 00:27:30,680
Speaker 1: P I N GO. On the web, you can type

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00:27:30,720 --> 00:27:33,679
Speaker 1: Bloomberg dot com slash opinion. Um. And he also has

485
00:27:33,720 --> 00:27:36,520
Speaker 1: his own ticker as we as we have mentioned, and

486
00:27:36,520 --> 00:27:38,880
Speaker 1: and I Gilbert, and I Getbert for all. I don't

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00:27:38,880 --> 00:27:40,359
Speaker 1: think I have my own ticker? Do you have? Do

488
00:27:40,359 --> 00:27:43,840
Speaker 1: you have your own Tickerment For a brief moment, if

489
00:27:43,840 --> 00:27:47,480
Speaker 1: you typed in my number, my name, sorry, um, you

490
00:27:47,520 --> 00:27:49,720
Speaker 1: would get all the charts, so you would get t

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00:27:49,920 --> 00:27:55,360
Speaker 1: hashtag b TV go. Um. But someone intelligently removed that

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00:27:55,400 --> 00:27:59,160
Speaker 1: feature from the terminal. Thanks for listening to the Bloomberg

493
00:27:59,240 --> 00:28:02,600
Speaker 1: Markets pod cast. You can subscribe and listen to interviews

494
00:28:02,600 --> 00:28:06,880
Speaker 1: with Apple Podcasts or whatever podcast platform you prefer. I'm

495
00:28:06,920 --> 00:28:11,280
Speaker 1: Matt Miller. I'm on Twitter at Matt Miller three. Put

496
00:28:11,320 --> 00:28:13,920
Speaker 1: on fall Sweeney. I'm on Twitter at pt sweeney Before

497
00:28:13,920 --> 00:28:16,800
Speaker 1: the podcast. You can always catch us worldwide at Bloomberg

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00:28:16,840 --> 00:28:17,080
Speaker 1: Radio