Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: By from Davos, Switzerland to the World Economic Forum, The
Speaker 2: Big Event, Ted Pick the Morgan Stanley Chairman.
Speaker 3: And fantastic good. One year in the.
Speaker 4: Seat, Yes, one year and three weeks. How does it
Speaker 4: feel amazing?
Speaker 3: Yeah?
Speaker 4: You know, you come into this job and you you
Speaker 4: want to do good. What you discover is the quality
Speaker 4: of underlying franchise and the people, and it's a wonderful franchise.
Speaker 3: I got the keys to.
Speaker 4: A great car and the partnership is alive and well.
Speaker 2: Now you've got to hit the ground running.
Speaker 3: Yeah.
Speaker 2: American bankers running around CEO very very very happy here
Speaker 2: in Davas, Switzerland, the CEOs and American bankers and you
Speaker 2: one of them. Are you optimistic about this year ahead?
Speaker 2: And what is it about the incoming administration that gives
Speaker 2: you that confidence?
Speaker 3: Jonathan?
Speaker 4: I am positive because it is definitely a change in tone.
Speaker 3: It just feels like the overall.
Speaker 4: Framework is one where's more interaction between the public and
Speaker 4: the private sectors.
Speaker 3: Where you guys are talking.
Speaker 4: About last couple of minutes, it can't be state actors
Speaker 4: alone and it can't be private companies alone.
Speaker 3: So the fact that.
Speaker 4: There's real dialogue building. I think that's a huge plus.
Speaker 4: And on the European question, sort of interesting comment too,
Speaker 4: because I think there may be some catalysts to some
Speaker 4: now reflection. You know, there were the droggy papers and
Speaker 4: people read it, they kind of read it, but there
Speaker 4: was nothing capital markets, union, banking union, kind of European
Speaker 4: sort of self strength. Maybe this is a catalyst some
Speaker 4: real conversations.
Speaker 3: So in that sense, I think it's positive too.
Speaker 1: Are you hearing about actual business activities stemming from that
Speaker 1: change in tone in Europe or is it just sort
Speaker 1: of a conversation at this point.
Speaker 4: Well, I mean we're like, what twenty five basis points
Speaker 4: into the new administration, right, We're just getting going. But yeah,
Speaker 4: hell of a lot more than you would expected two
Speaker 4: or three weeks ago.
Speaker 3: One thing, it's you know, it's constructive.
Speaker 1: One thing in your earnings that really stood out as
Speaker 1: a stock trading revenues that really boomed. And I'm wondering
Speaker 1: this has been a discussion about how risk on things
Speaker 1: have been feeling, certainly at Davos, But through the last
Speaker 1: couple of months, do you see that waning at all
Speaker 1: or is it just continuing to amp up? In terms
Speaker 1: of risk taking.
Speaker 4: Well, you know, when you become a CEO, one thing
Speaker 4: is for sure, all of your children are equally beautiful.
Speaker 3: But our equities business is.
Speaker 4: One of our more beautiful children that I adore. And yes,
Speaker 4: they put up some great numbers, and I think that
Speaker 4: is a reflection on just the quality the underlying franchise,
Speaker 4: but also a sense that people want to allocate to
Speaker 4: a little more risk, but importantly they kind of want to.
Speaker 3: Get beyond the index level.
Speaker 4: You guys talk about this a lot, right, sort of
Speaker 4: index level equity risk premium relative to sectors. And I
Speaker 4: think one of the positives here is we're talking about
Speaker 4: the regulation the energy space and energy transition. We're talking
Speaker 4: about the financial services space, and yes, you need to
Speaker 4: own the six because they are money machines and great companies,
Speaker 4: But how about the rest of the four hundred and
Speaker 4: ninety three four hundred ninety four. And I think some
Speaker 4: of that dispersion getting kind of allocated across teams and
Speaker 4: sectors and around the world. I think that's a multi
Speaker 4: year trend. I think we're early on.
Speaker 2: That concentration is certainly a risk factor that a lot
Speaker 2: of people are considering. Another one is the deficit and
Speaker 2: the cost of interest payments for the US government, for you,
Speaker 2: for the capital market business. Is that a risk more
Speaker 2: generally that you've take even the team of focused on.
Speaker 4: Yeah, you've been talking about that a lot, and I'm
Speaker 4: certain and I think it's important because if you don't
Speaker 4: talk about it, it sort of says, you know, there's
Speaker 4: no canary in the coal mine, right. But I do
Speaker 4: think there is the fact that there has been so
Speaker 4: much attention given to this, and you have folks like
Speaker 4: fest and coming in who know the bond market, that
Speaker 4: it has a sort of reaffirmation that we got to
Speaker 4: look out on that Simpson bowls.
Speaker 3: You know, here we are these years later that.
Speaker 4: Hasn't even said, you know, term premium is still pretty narrow,
Speaker 4: so like we haven't seen the long bond really move.
Speaker 3: So there's an underlying confidence. I think the question is
Speaker 3: what kind of growth can we generate.
Speaker 4: I think so the conversation that one would have is
Speaker 4: which comes first, sort of the potential inflationary effect of
Speaker 4: tars or the positive deregulatory effect. And I think that's
Speaker 4: going to be one of the things we know is
Speaker 4: that there's going to be an ongoing dialectic you know
Speaker 4: which policy function can be transmitted more quickly than the other.
Speaker 4: And I think that pivoting and transitioning and important.
Speaker 2: Do you think it holds back activity that degree of
Speaker 2: uncertainty given how confident everyone is, and Lisa especially me too,
Speaker 2: we get nervous when everyone in Davos gets ready.
Speaker 3: Yes, contraindicator.
Speaker 2: Does it hold back activity without having the clarity on
Speaker 2: what these changes are going to look like?
Speaker 4: I think part of the dilemma is that the vernacular
Speaker 4: of whether we're really moving with animal spirits as whether
Speaker 4: we see a bunch of M and A prints like
Speaker 4: where are those M and announcements?
Speaker 3: And the reality is.
Speaker 4: Over the last number of years, we've had I think
Speaker 4: two major uncertainties, right the end of financial oppressions zero
Speaker 4: and zero.
Speaker 3: Is that finally passes?
Speaker 4: And do we kind of know where rates are going
Speaker 4: to be and we can focus on the detail of
Speaker 4: whether they'll be you know, one or two moves or
Speaker 4: none at all, But at least we generally know that
Speaker 4: for the next period of time, the US restory rate
Speaker 4: is somewhere in the mid forest, and then you can
Speaker 4: apply discount rates for risk and the company and the
Speaker 4: rest of it, so.
Speaker 3: That's kind of pass us. So that's an uncertainty that's.
Speaker 4: Taken off the table if you're a CFO and you're
Speaker 4: a board room. The second set of uncertainty has been
Speaker 4: around sort of the end of the end of history,
Speaker 4: which is the resumption of nation states and the like.
Speaker 4: And one could argue, well, there's a lot of uncertainty
Speaker 4: in the world. I would argue the combination of having
Speaker 4: some sense of a rate framework and having some sense
Speaker 4: that things are going to happen in the US, in Europe,
Speaker 4: around the world. I think it galvanizes the corporate community.
Speaker 4: And so the question is how much does the market
Speaker 4: discount of that? How fast will that be? And I
Speaker 4: do think important catalysts to this will be there are
Speaker 4: the better part of nineteen hundred companies in the private
Speaker 4: equity space that have a billion of aggregate value five
Speaker 4: years of life on average.
Speaker 3: Those companies need to move so at some.
Speaker 4: Level, I couldn't tell you exactly the pacing of that activity,
Speaker 4: but we've been below trend line in the M and
Speaker 4: A market. We talked a couple of years from now.
Speaker 4: I think we'll be a trend line or higher. I'm
Speaker 4: pretty confident.
Speaker 1: I think it's going to be M and A. I
Speaker 1: think it's going to be IPOs and everything.
Speaker 3: I think we've been talking about.
Speaker 4: You've talked about so much of the surf paucity of
Speaker 4: investable names, especially when you get past the Big seven
Speaker 4: companies and they're sort of small cap orphans without research.
Speaker 3: I think there's a Yes, it.
Speaker 4: Can be painful starbox for a young company to be public,
Speaker 4: but you get enduring long term value from shareholders that
Speaker 4: actually can also add some value, and you can use
Speaker 4: that currency to make other acquisitions. I think the IPO
Speaker 4: product is alive well. And I think importantly what's happened
Speaker 4: is a sort of financialization of the markets. Is the
Speaker 4: intersection of private and public that's come of age. So
Speaker 4: maybe you don't go public in the classic Nasdaq and
Speaker 4: New York IPO at the first. Maybe you do some
Speaker 4: hybrid capital for a while, and then you go public
Speaker 4: alla over with a full capital structure.
Speaker 1: One area that you've brought in one of your babies
Speaker 1: that's very beautiful that I'm sure you talk about is
Speaker 1: your wealth management unit and SIS a big baby.
Speaker 3: It's a big baby, big beautiful baby.
Speaker 1: One of the drivers of revenues for a very long time.
Speaker 1: What's been the challenge in accumulating assets and the wealth
Speaker 1: management growing assets to degree that you really have wanted to?
Speaker 4: Well, you have a massive denominator, right, and I think
Speaker 4: what's happened is we're now the better part of a
Speaker 4: trillion of aum between wealth and investment manager. And if
Speaker 4: you look at sort of point to point, what if
Speaker 4: assets done and obviously markets higher markets health, the assets.
Speaker 3: In one year went up by a trillion three.
Speaker 4: So people say, okay, you raise two fifty, Well that's
Speaker 4: a huge number. And for me at LEASTA, what's really
Speaker 4: important is how is our funnel working? Like think about
Speaker 4: our wealth business is sort of having three parts self
Speaker 4: directed E.
Speaker 3: Trade.
Speaker 4: We're seeing transaction activity really kicking up. That's clearly a
Speaker 4: positive signal part of what you're asking about. In the
Speaker 4: sort of pure equity space, we have this workplace business.
Speaker 4: I want your stock plan business because then I can
Speaker 4: do factory floor to CEO and then the fee based
Speaker 4: advisor fifty based points per annum, and the fee based
Speaker 4: advisory growth is quite impressive, quite impressive, and it's going
Speaker 4: to continue for years to come, especially if clients need
Speaker 4: to allocate across sectors.
Speaker 1: You've made a lot of acquisitions in the past, any
Speaker 1: in the pipeline planning any further types of tie ups yourself.
Speaker 4: You know, it's interesting we see stuff, but I really
Speaker 4: love the durable growth organically that we have the two
Speaker 4: majors major business in the investment bank and the wealth
Speaker 4: and investment manager. But over time we'll continue to look
Speaker 4: at stuff as we a Cree Capital.
Speaker 2: You've got one minute left on this place this in
Speaker 2: Have you spoke into the president? I have not, not recently, right,
Speaker 2: if you have the opportunity too, and Dabas will today
Speaker 2: to throw a question at the incoming president, the current president,
Speaker 2: Donald Trump? What would you ask him?
Speaker 4: I like the I like the quality of the questioners
Speaker 4: you have I do.
Speaker 3: I like the quality of the question was.
Speaker 2: In the mix and you had one, what would that
Speaker 2: question think?
Speaker 4: I think the question I would ask is one where
Speaker 4: it would give him the opportunity to sort of speak
Speaker 4: to the possibility that he's thinking about a lot of
Speaker 4: different possibilities on a lot of different issues, something along
Speaker 4: the lines of are you open to taking idea flow
Speaker 4: around a whole.
Speaker 3: Bunch of different spaces and give examples?
Speaker 4: And I think my guess is the answer that he
Speaker 4: would give is yes, and I'll give you examples of that.
Speaker 4: And the reason that's important is because I think we're
Speaker 4: so early in this administration, people are trying to sort
Speaker 4: of weigh how much is tactical versus how much is baked.
Speaker 4: I think there's a lot of discussion and people it
Speaker 4: wouldn't be so much for him, but people understanding this
Speaker 4: is a real conversation taking place on a whole bunch
Speaker 4: of important issues and we're only five days in.
Speaker 3: I think people hearing that will give confidence.
Speaker 4: That we are in the early stages of the dialectic and.
Speaker 3: There's more to come.
Speaker 2: I appreciate your time. Thank you so much for having me. Guys,
Speaker 2: thank you sir. Safe travels back to.
Speaker 3: Neo an avid listener and watcher, and.
Speaker 1: We appreciate that you got to come on again soon.
Speaker 2: NICs, I'd pick the channel to see of Mop and
Speaker 2: Standing