WEBVTT - BONUS EPISODE: Jamie Dimon Speaks To Bloomberg 0:00:00.440 --> 0:00:03.360 It's going to get worse before it gets better. That's 0:00:03.400 --> 0:00:07.480 according to JP Morgan Chase CEO Jamie Diamond, but he's 0:00:07.480 --> 0:00:10.560 not talking about the economy. Instead, Diamond is warning of 0:00:10.760 --> 0:00:14.200 overregulation in the banking industry in the wake of several 0:00:14.240 --> 0:00:17.520 regional bank failures. It's one of the topics Diamond covered 0:00:17.520 --> 0:00:20.520 when he joined Bloomberg's Francine Laqua and Paris for a 0:00:20.560 --> 0:00:23.920 wide ranging discussion. They touched on everything from regional banks 0:00:23.920 --> 0:00:27.200 to China and the debt ceiling. Let's go to that 0:00:27.240 --> 0:00:28.760 conversation right now. 0:00:29.080 --> 0:00:32.200 Debt ceiling or banking turmoil? What are you most worried about? 0:00:32.200 --> 0:00:36.599 You'd be here. Well, I think the debt sh thing 0:00:36.640 --> 0:00:39.680 is potentially catastrophe. Yeah, so that's a whole different issue. 0:00:39.680 --> 0:00:42.440 Hopefully won't happen. You know, the banking crisis, I still 0:00:42.440 --> 0:00:45.080 believe will kind of sort its way through and it's 0:00:45.120 --> 0:00:48.519 not anything like eight or nine. Only a couple of 0:00:48.520 --> 0:00:50.600 people off size with all these various things which you 0:00:50.680 --> 0:00:53.360 knew about. So hopefully you know it's getting near the 0:00:53.400 --> 0:00:53.920 tail end of that. 0:00:54.240 --> 0:00:56.120 But if you're Janet Yellen right now, what would you 0:00:56.160 --> 0:00:56.720 do differently? 0:00:57.720 --> 0:00:59.840 I don't know. I think we need to finish the bank. 0:01:00.720 --> 0:01:03.320 I think we've been we've had uncertain policy on mergers. 0:01:03.320 --> 0:01:05.839 This first Arizon deal. I think we have to assume 0:01:05.840 --> 0:01:07.800 they'll be a little bit more so, you know, whatever 0:01:07.840 --> 0:01:10.720 the FD I see, the OCC the Federal Reserve, you know, 0:01:10.760 --> 0:01:14.319 whatever they need to do to uh make it better, 0:01:14.319 --> 0:01:17.360 they should do. Be thoughtful, be very forward looking. You 0:01:17.560 --> 0:01:20.040 not be surprised constantly because some of these things have 0:01:20.120 --> 0:01:22.440 been known about for quite a while. And so we've 0:01:22.480 --> 0:01:29.920 handled three SBB signature first Republic and so Yes, but 0:01:29.959 --> 0:01:32.080 I think it's very important. The regional banks who I've 0:01:32.120 --> 0:01:34.280 been speaking to like every day for the last week, 0:01:34.400 --> 0:01:37.040 they're quite strong. You know, they're quite worried because of 0:01:37.080 --> 0:01:39.959 the run and deposits all that, but the financial results 0:01:40.000 --> 0:01:42.839 are good. The financial results are gonna be good, Okay 0:01:42.880 --> 0:01:45.440 next quarter. You know, they're earning money. They've got a 0:01:45.520 --> 0:01:49.760 very good clientele, very diversified. Uh uh, and they're they're 0:01:49.840 --> 0:01:50.320 quite strong. 0:01:50.640 --> 0:01:52.880 Jemmy for like a comprehensive solution. So if you're asking 0:01:52.920 --> 0:01:54.880 Jennet Young to get the job done, what does that 0:01:54.920 --> 0:01:55.720 look like that solution? 0:01:55.960 --> 0:01:59.920 Asking for solution? Why not just be prepared for problem. 0:02:00.440 --> 0:02:02.120 There's no we don't need a copy of solution. 0:02:02.920 --> 0:02:06.120 What do we need right now? Do we regulators to 0:02:06.200 --> 0:02:07.920 look at short sellers of banks? 0:02:08.320 --> 0:02:10.880 Yes, you know, like look, my folks would tell me 0:02:10.880 --> 0:02:13.440 that that's not the problem the short selling ban. If 0:02:13.480 --> 0:02:16.239 you actually analyze stocks and short sales, it doesn't seem 0:02:16.280 --> 0:02:18.400 to that big a deal. I think they may partially 0:02:18.440 --> 0:02:22.000 be wrong, because, as you know, some people are unscrupulous 0:02:22.000 --> 0:02:24.400 and they use other means to go short. I think 0:02:24.400 --> 0:02:27.400 that if you look at the detail, the SEC has 0:02:27.440 --> 0:02:31.000 the enforcement capability to look at what people are doing 0:02:31.040 --> 0:02:35.840 by name in options, derivatives, short sales, and they should 0:02:35.840 --> 0:02:38.160 go if someone's doing anything wrong, people are in collusion, 0:02:38.480 --> 0:02:41.160 or people going short and then making a tweet about 0:02:41.160 --> 0:02:43.880 a bank, they should go after them and vigorously, and 0:02:43.880 --> 0:02:46.000 they should be punished to the full extental law allows it. 0:02:46.080 --> 0:02:48.360 So I think it's possible is taking place. We have 0:02:48.400 --> 0:02:50.400 no evidence of it, but you know, my experience in 0:02:50.440 --> 0:02:52.680 life has been don't assume too much. 0:02:52.880 --> 0:02:54.399 Do you think that they're looking into it? 0:02:54.760 --> 0:02:56.280 I hope so. I don't know. 0:02:57.240 --> 0:02:59.280 When you look at some of the position of JP 0:02:59.360 --> 0:03:01.200 mor Agan, of course you didn't really buy any long 0:03:01.280 --> 0:03:03.960 dated bonds, and at the time, a lot of people said, look, 0:03:03.960 --> 0:03:07.600 stop boarding cash. Do you think regulators and investors had 0:03:07.680 --> 0:03:10.519 pushed some of these banks to take unwarranted risk? 0:03:11.320 --> 0:03:14.519 Yes, I do, but let's be clear the people to blame, 0:03:14.639 --> 0:03:17.120 or the bank CEOs and the bank boards and things 0:03:17.200 --> 0:03:19.799 like that. Having said that, I think there would be 0:03:19.880 --> 0:03:23.840 a humility on the part of regulators that the Federal 0:03:23.880 --> 0:03:27.720 Reserve itself never forecast insurratees going off. Not one Fed 0:03:27.760 --> 0:03:30.640 governor forecast it. And whether you forecast it or not, 0:03:30.720 --> 0:03:33.320 you should be stressed testing people for it. Their stress 0:03:33.360 --> 0:03:36.880 tests always had low rates. We always knew about uninsured deposits. 0:03:37.120 --> 0:03:40.280 And there were huge incentives that banks to put securities 0:03:40.320 --> 0:03:45.160 in health and maturity, lower capital requirements, huge incentives own treasuries, 0:03:45.320 --> 0:03:48.600 lower capital acquirements, and they counted for liquidity. And I'm 0:03:48.640 --> 0:03:50.840 hoping all that guests looked at and they should look 0:03:50.840 --> 0:03:52.320 at and say, oh, okay, we're a little bit part 0:03:52.360 --> 0:03:54.960 of the problem, as opposed to just pointing fingers. 0:03:55.160 --> 0:03:57.200 So this is what not a regulation problem, it's a 0:03:57.240 --> 0:03:58.400 supervision problem. 0:03:58.760 --> 0:04:02.240 Yeah, it's a little bit of both. They become very related. 0:04:02.440 --> 0:04:06.480 I mean, supervisors, look at are you doing the right 0:04:06.520 --> 0:04:09.200 thing by regulations? And so, and like even the stress tests. 0:04:09.280 --> 0:04:11.400 I've always thought that you know, when you have one 0:04:11.440 --> 0:04:14.800 stress test and you have a company completely focused on 0:04:14.800 --> 0:04:17.040 that for three months, you know, does it all people 0:04:17.080 --> 0:04:19.280 have a false sense of security that all these other 0:04:19.320 --> 0:04:21.640 things aren't going to happen. And all these other things 0:04:21.640 --> 0:04:23.800 in history always happen, and so, you know, I think 0:04:23.800 --> 0:04:25.280 it was a little bit of a mistake. Have one 0:04:25.279 --> 0:04:27.960 stress test. I'm not asking to do many at this 0:04:28.120 --> 0:04:30.360 level of detail, but you know, our stress test is 0:04:30.400 --> 0:04:32.800 two hundred thousand pages long. Do you think that last 0:04:32.839 --> 0:04:35.320 one hundred thousand pages added value? And my view is 0:04:35.320 --> 0:04:35.680 it did not. 0:04:36.640 --> 0:04:38.480 Do you think? But things will change because of this? 0:04:38.560 --> 0:04:39.400 Is this like a catalyst? 0:04:39.440 --> 0:04:41.760 We always gonna get worse for banks? I think that 0:04:41.960 --> 0:04:45.760 people they're just more regulations and more rules and more requirements. 0:04:45.960 --> 0:04:48.960 I hope they do it very thoughtfully, because you know, 0:04:48.960 --> 0:04:51.400 if you really love the community banks, the regional banks, 0:04:51.440 --> 0:04:54.080 we're the biggest banks of those folks. But you know, 0:04:54.080 --> 0:04:57.520 if you overdo certain rules, requirements, regulations. You know, some 0:04:57.560 --> 0:04:59.880 of these community banks tell me to have more compl 0:05:00.000 --> 0:05:02.479 cions people, the loan officers, you know, and so at 0:05:02.520 --> 0:05:04.599 one point you make it harder for them to new business. 0:05:04.880 --> 0:05:07.320 There are already hundreds of rules in place, and in 0:05:07.320 --> 0:05:09.279 a lot of ways, it's to mix the rules. If 0:05:09.279 --> 0:05:11.200 you're gonna change the liquidity and maybe not capital. If 0:05:11.200 --> 0:05:13.280 you can change capital and maybe not liquidity. If you're 0:05:13.279 --> 0:05:15.200 gonna add t LAC, then maybe you should do something 0:05:15.240 --> 0:05:18.039 with deposit insurance. They should. They should sit down and 0:05:18.040 --> 0:05:21.280 have a very thoughtful conversation about what those things are 0:05:21.400 --> 0:05:23.320 and what we want the outcome to be. If you 0:05:23.320 --> 0:05:25.320 look at the present outcome, a lot of things are 0:05:25.400 --> 0:05:27.800 leaving banks and they should you know, I'm not and 0:05:28.160 --> 0:05:29.520 if that's what they want, so be it. But that 0:05:29.560 --> 0:05:31.800 should be done with the forethought. That should not be 0:05:31.880 --> 0:05:34.479 done because you just putting rules and regulations in place 0:05:34.600 --> 0:05:37.560 and you don't know the consequences. The mortgage business, for example, 0:05:37.600 --> 0:05:40.000 is you know, largely not largely eighty percent out of 0:05:40.000 --> 0:05:42.280 banks today, and just be careful about what you what 0:05:42.320 --> 0:05:42.800 you wish for. 0:05:43.279 --> 0:05:46.120 So you bought First Republic, you've had I imagine how 0:05:46.200 --> 0:05:47.960 a good look at what's inside it? What did you 0:05:47.960 --> 0:05:48.640 find out? 0:05:49.160 --> 0:05:50.840 Yeah, no, we had to go look before we bought it. 0:05:51.160 --> 0:05:52.359 Okay, that's reassuring. 0:05:52.400 --> 0:05:54.600 But anything that you sign up eight hundred people working 0:05:54.600 --> 0:05:57.080 around the clock for a long time to look at 0:05:57.120 --> 0:05:59.960 something like that, and in reality, look, they did something 0:06:00.200 --> 0:06:02.720 really well. Like if you touch their customers, I've getten 0:06:02.760 --> 0:06:06.640 calls and emails and great great culture, great customers and 0:06:06.680 --> 0:06:09.880 things like that. Their credit is kind of pristine. You know, 0:06:10.080 --> 0:06:12.040 that's good. So of course we marked all the market 0:06:12.080 --> 0:06:13.920 and roll in very good shape, and we've had all 0:06:13.920 --> 0:06:17.360 the trade exposure together. We've got thousands of people now 0:06:17.520 --> 0:06:20.000 going out learning about what their best is. We want 0:06:20.040 --> 0:06:21.560 the best of both, about the kind of coming that 0:06:21.600 --> 0:06:24.279 comes in our highway, our way or the highway, and 0:06:24.360 --> 0:06:27.440 so there's no surprise there. You know, it's it had 0:06:27.440 --> 0:06:30.000 to make sense for shareholders. But you know this notion, 0:06:30.600 --> 0:06:32.440 this notion that it was unbelievad in it was a 0:06:32.520 --> 0:06:34.839 nice thing for shows. That's my I have to do that. 0:06:35.320 --> 0:06:37.960 But we also really did it to assimilate the bank 0:06:38.000 --> 0:06:40.520 in a way that's very safe for the system and 0:06:40.800 --> 0:06:44.160 didn't cost unassured deposits, didn't cost the ft, it costs 0:06:44.160 --> 0:06:46.479 the FDA C as little as possible. But I also 0:06:46.520 --> 0:06:48.160 want to point out I'd be fine if they want 0:06:48.200 --> 0:06:49.360 to change the rules a little bit to make it 0:06:49.400 --> 0:06:52.080 easier for a regional bank to buy a big bank. 0:06:52.279 --> 0:06:54.200 And the other thing about big banks, which again is 0:06:54.839 --> 0:06:56.800 now I know, I know. But the thing about big banks, 0:06:56.920 --> 0:06:59.080 we need healthy big banks. We have the best banking 0:06:59.080 --> 0:07:01.400 system in the world, you know, and you want that 0:07:01.680 --> 0:07:04.919 very big. But but not banks are becoming smaller or 0:07:04.920 --> 0:07:07.320 smaller as a part of the global system. So when 0:07:07.320 --> 0:07:09.720 they look at banks, they say, oh, it's big. But when 0:07:09.720 --> 0:07:12.360 you look at the banking system, to the system mortgage 0:07:12.360 --> 0:07:14.880 of the left, a lot of private credits left, certain 0:07:14.880 --> 0:07:16.760 trading functions of the left, a lot of things are 0:07:16.760 --> 0:07:19.440 going to leave. You have Apple, you have the neo banks, 0:07:19.480 --> 0:07:21.720 you have you better be a little more thoughtful about 0:07:21.720 --> 0:07:24.440 when you say what you mean banking per se and so. 0:07:25.120 --> 0:07:28.400 But the US, the Americans, should not fear too much 0:07:28.520 --> 0:07:30.720 finance consolidation in your hands. 0:07:31.080 --> 0:07:33.600 No, because you know, most of our size accrues to 0:07:33.640 --> 0:07:36.160 our clients. So if you look at you know we 0:07:36.240 --> 0:07:39.120 do most large small banks can't do. We do like 0:07:39.400 --> 0:07:42.080 banking large corporations of fifty countries around the world to 0:07:42.120 --> 0:07:44.800 move ten trillion dollars a day. They you know, it's hard. 0:07:44.880 --> 0:07:47.040 So these are these are big, complex things. We're not 0:07:47.080 --> 0:07:49.280 big and complex. We want to be. We're big and 0:07:49.280 --> 0:07:51.880 complex because the pee we serve at bigger compon. We 0:07:52.000 --> 0:07:55.920 bank countries, the World Bank. You know, we do a 0:07:55.920 --> 0:07:58.240 lot of things, and yes we also bank consumers in the 0:07:58.280 --> 0:08:00.800 United States. So, but I want the banks to thrive. 0:08:01.040 --> 0:08:02.600 I mean, like I said, we want to do everything 0:08:02.720 --> 0:08:04.800 kind of help them. We didn't want this to happen. 0:08:05.000 --> 0:08:08.000 We didn't cause to happen. The second happened, we knew 0:08:08.000 --> 0:08:09.080 it was bad for old banks. 0:08:09.560 --> 0:08:10.560 Are you too big to fail? 0:08:12.520 --> 0:08:14.640 I don't know what that word means anymore. I mean, 0:08:14.680 --> 0:08:16.280 we're not going to fail, and I don't know what 0:08:16.360 --> 0:08:18.200 that means. But we certainly didn't mean it to be 0:08:18.200 --> 0:08:21.160 an advantage. Like so, you know, we've asked all our 0:08:21.160 --> 0:08:24.560 people when this crisis happened. I don't want anyone so 0:08:24.640 --> 0:08:27.480 listing any client or any bank or from any of 0:08:27.520 --> 0:08:30.680 the any bank's regional bank or community bank, et cetera. 0:08:30.800 --> 0:08:33.600 So is there anything else that you that you'd be buying. 0:08:33.600 --> 0:08:35.120 I mean some of the smaller banks fault, you know, 0:08:35.240 --> 0:08:36.040 fun that's it. 0:08:36.360 --> 0:08:38.320 No, I mean, we're gonna have a lot of blowback 0:08:38.360 --> 0:08:40.360 and having bought this one, but it was the right thing. 0:08:40.400 --> 0:08:43.000 To do, you know, but we'll get the blowback. But again, 0:08:43.040 --> 0:08:45.559 my job is this people at this thing. They always 0:08:45.559 --> 0:08:48.040 look at like the financial deal. Forget the financial deal. 0:08:49.160 --> 0:08:52.400 Eight hundred people working around the clock. Ten thousand people 0:08:52.440 --> 0:08:57.439 deployed now to consolidate systems, risk fraud, credit payments, branches, 0:08:57.520 --> 0:09:00.880 real estate vendors, technology. It's a lot of work, you know, 0:09:00.920 --> 0:09:02.920 and it just tracks us from those other things. And 0:09:03.000 --> 0:09:05.200 so you know, like I said, we did it. It 0:09:05.360 --> 0:09:08.559 was margely benefits for shareholders, it was good for the system. 0:09:08.640 --> 0:09:10.920 But and you know, we got to now we have 0:09:10.960 --> 0:09:12.480 to be prepared for the other side of that mountain. 0:09:12.600 --> 0:09:14.880 How worried are you about the dead ceiling? So Donald Trump, 0:09:14.960 --> 0:09:17.160 yesterre in a town halicy and na did not seem 0:09:17.200 --> 0:09:19.360 too worried and too actually told Republicans to stick to 0:09:19.360 --> 0:09:19.800 their guns. 0:09:19.920 --> 0:09:21.800 It's one more thing he does know very much about. 0:09:24.960 --> 0:09:28.240 It may be put in two categories. One is actual default. 0:09:28.960 --> 0:09:32.200 That is potentially catastrophic. And you can go through a 0:09:32.200 --> 0:09:36.880 million ways, but everyone, anyone's anyone knows that's potentially catastrophic. 0:09:37.080 --> 0:09:38.600 And I don't think it's going to happen because it 0:09:38.600 --> 0:09:40.800 gets catastrophic and the closer you get to it, you 0:09:40.840 --> 0:09:43.240 will have panic. And so the closer you get you 0:09:43.280 --> 0:09:45.840 have markets get volatile. Maybe there's Doc mar go down 0:09:46.160 --> 0:09:49.080 the treasury. Markets will have for their own problems. It's amazing. 0:09:49.160 --> 0:09:52.320 You already have certain T bills it's trading three percent 0:09:52.400 --> 0:09:55.040 and right next to them five percent. This is not good. 0:09:55.320 --> 0:09:58.280 And people just remember the American financial system is the 0:09:58.360 --> 0:10:01.760 foundation to the to the global economic system. And so 0:10:02.160 --> 0:10:04.800 and the closer we get more panic, we might get downgraded. 0:10:04.920 --> 0:10:07.040 The last time were downgrade, we had like sixty five 0:10:07.120 --> 0:10:10.120 or seventy percent debt to GDP. Now it's one hundred 0:10:10.120 --> 0:10:12.840 and five. Now our defenits are two or three times 0:10:12.880 --> 0:10:15.280 that that we had back then. So you know, we 0:10:15.400 --> 0:10:18.160 better be very careful. And I wish we didn't get 0:10:18.160 --> 0:10:21.120 there at all. I'm respectful of both sides who you know, 0:10:21.200 --> 0:10:23.040 one side wants to use it the makeup for we've 0:10:23.040 --> 0:10:25.480 got jammed down their throats, you know. And I would 0:10:25.480 --> 0:10:27.080 love to get rid of the debt ceiling thing, but 0:10:27.720 --> 0:10:28.920 please negotiate a deal. 0:10:29.240 --> 0:10:30.480 Do you think that it'll be at the end of 0:10:30.520 --> 0:10:32.560 the day of the markets that will spur a deal 0:10:33.160 --> 0:10:34.600 that we have to get to the point where there's 0:10:34.679 --> 0:10:35.520 where there's panic. 0:10:35.760 --> 0:10:39.120 It's a really bad idea because panic becomes something that 0:10:39.240 --> 0:10:42.520 is not good and it could affect other markets around 0:10:42.520 --> 0:10:44.520 the world. But yes, at the end of the day, 0:10:44.600 --> 0:10:46.840 if it gets to that panic point, people have to react, 0:10:47.480 --> 0:10:50.360 and we've seen that before. Another thing about markets is 0:10:50.400 --> 0:10:53.160 always remember panic is the one thing that scares people 0:10:53.880 --> 0:10:57.600 like they take irrational decisions. I remember even in eight 0:10:57.920 --> 0:11:01.480 people are selling certain securities at twenty percent of what 0:11:01.520 --> 0:11:04.240 they would be worth if we had a great depression. 0:11:05.120 --> 0:11:07.520 But they were like, I want out, I want cash. 0:11:07.640 --> 0:11:10.360 I'm not betting my my family's money on this and 0:11:10.440 --> 0:11:13.520 my company's money. People will panic, and again we got 0:11:13.520 --> 0:11:16.320 to be very careful about getting closer situation that causes that. 0:11:16.520 --> 0:11:18.400 Do you get a call from Jennet yelling about this. 0:11:18.360 --> 0:11:20.280 I'm not going to talk about personal calls I'm getting 0:11:20.679 --> 0:11:23.400 We've all spoken about that's young, I mean everyone, that's 0:11:23.600 --> 0:11:25.520 that's everyone's no for big banks. 0:11:25.559 --> 0:11:29.320 Are you ready? Actually, how do you prepare for possible? 0:11:29.320 --> 0:11:32.360 We have a group of people who are very smart. 0:11:32.440 --> 0:11:36.000 We're looking at again, it's very unfortunate, it's time consuming. 0:11:36.320 --> 0:11:40.280 Hopefully it won't happen, but it affects contracts, collateral, clearing 0:11:40.320 --> 0:11:44.200 houses clients and affects clients differently around the world. You 0:11:44.280 --> 0:11:46.280 have to then anticipate what people are going to do, 0:11:46.320 --> 0:11:49.120 which is very different than the legality of it. And 0:11:49.880 --> 0:11:51.680 you know, and the closer we get, the more those 0:11:52.040 --> 0:11:53.720 kind of that war room will start. Now it's taking 0:11:53.720 --> 0:11:57.560 place once a week, but my guess is sometimes called 0:11:57.600 --> 0:12:00.400 May twenty. First it'll be every day, then it'll be 0:12:00.440 --> 0:12:03.400 three times a day, and then there'll be much more 0:12:03.400 --> 0:12:05.720 conversations with clients. But what they need to do to 0:12:05.720 --> 0:12:08.560 help get them through it and things like that. It's 0:12:08.840 --> 0:12:11.400 very unfortunate. It should never happen this way. 0:12:11.760 --> 0:12:13.760 Fortress Diamond is always about the balance sheet. Should there 0:12:13.840 --> 0:12:17.439 be a special commission looking at debts in the US 0:12:17.679 --> 0:12:18.640 that you should run? 0:12:19.160 --> 0:12:21.560 Oh god no, why not? I don't want to. 0:12:23.280 --> 0:12:27.559 On China, they went after tech, they're looking now at finance. 0:12:27.800 --> 0:12:30.480 What kind of message does it tell companies that want 0:12:30.520 --> 0:12:31.480 to do business there? 0:12:32.000 --> 0:12:33.959 Well, I think we say they're looking at finance. It's 0:12:33.960 --> 0:12:37.079 been very limited. They've been very much more careful about 0:12:37.080 --> 0:12:42.240 touching the financial system. Who we're outsiders. But look, this 0:12:42.360 --> 0:12:45.760 is a serious subject and anything that relates to national security. 0:12:45.840 --> 0:12:47.960 I'm a patriot first, and I'm going to salute my government, 0:12:48.320 --> 0:12:51.280 So put that, but put that aside. What the government 0:12:51.480 --> 0:12:53.360 should do and it wants to do, and is now 0:12:53.400 --> 0:12:55.960 say they are going to do, is have conversations. They're 0:12:55.960 --> 0:12:58.560 gonna be tough, but they should be thoughtful. Certain things 0:12:58.600 --> 0:13:01.920 are really national security, certain things are not, you know, 0:13:02.040 --> 0:13:05.040 And we shouldn't confuse the two American shine of a 0:13:05.080 --> 0:13:09.679 lot of common interest climate, nuclear pliferation, anti terrorism, and 0:13:09.880 --> 0:13:12.960 global stability, you know, And we have differences. You know. 0:13:13.040 --> 0:13:16.720 We're capitalists, they're not, you know, And it's okay, we 0:13:16.720 --> 0:13:18.840 could sort that out. But we need to keep the 0:13:18.880 --> 0:13:22.680 Western alliances together, not just around war and Ukraine, but 0:13:22.800 --> 0:13:28.120 around strategic economic reladerships, including trade, including trade. We can't 0:13:28.160 --> 0:13:29.880 take trade of the table every time we talk to 0:13:30.280 --> 0:13:32.319 you know, Europe or Asian stuff like that. So I 0:13:32.320 --> 0:13:35.600 would go back into TPP. I would surround the world. 0:13:35.640 --> 0:13:38.840 I'd want to keep the world safe for democracy, and 0:13:39.000 --> 0:13:41.839 i'd want to have open markets, particularly Europe. And I 0:13:41.840 --> 0:13:44.040 mean I obvious here last time is when we passed Iraq. 0:13:44.360 --> 0:13:46.560 A lot of great things that act, but there are 0:13:46.559 --> 0:13:49.080 things I don't like, like too much social engineering inside 0:13:49.120 --> 0:13:50.959 of it, but also a pistol off all of our 0:13:51.000 --> 0:13:52.920 allies putting on the China side. 0:13:52.920 --> 0:13:55.320 So they if they start doing more noise on finance, 0:13:55.400 --> 0:13:56.760 does that hurt Chinese growth? 0:13:57.559 --> 0:14:02.800 Like probably, I think you've already seen it's not trade, 0:14:02.800 --> 0:14:05.880 but you've seen investment going both ways coming down, and 0:14:07.640 --> 0:14:09.439 that's okay. In the short run and the long run. 0:14:09.480 --> 0:14:12.240 We should say what And the government's got to decide. 0:14:12.400 --> 0:14:15.760 This is not gonna be business companies decide, nor should they. 0:14:15.840 --> 0:14:19.280 So when Congress criticizes business sometimes there may be truth 0:14:19.320 --> 0:14:22.320 to that. They have to decide what is okay, what's 0:14:22.360 --> 0:14:24.960 not okay? What do they want? What's security? And that's 0:14:25.000 --> 0:14:27.480 around trade, that's around investment, and that's around sharing. 0:14:27.560 --> 0:14:29.720 IP I give you a million pounds or maybe you 0:14:29.720 --> 0:14:31.480 take it, you know, your own million pounds. Where'd you 0:14:31.560 --> 0:14:32.320 invest in? 0:14:32.480 --> 0:14:36.920 Organ I wouldn't. I wouldn't buy sovereign dead anywhere. Why 0:14:38.120 --> 0:14:43.240 I think there's too much The amount of fiscal stimus 0:14:43.280 --> 0:14:45.880 took place and still surging through the system, the amount 0:14:45.920 --> 0:14:49.280 of qi these were extraordinary numbers, and not just in 0:14:49.320 --> 0:14:51.520 the US, but in Europe and in other parts of 0:14:51.520 --> 0:14:54.320 the world. When I say extraordinary, I mean extraordinary, and 0:14:54.480 --> 0:14:57.320 therefore I think there's a chance you have more inflation 0:14:57.360 --> 0:14:59.920 than people think. So while the Fed control short ray, 0:15:00.320 --> 0:15:03.320 they don't completely control longer rates, and then you could 0:15:03.360 --> 0:15:07.280 see longer rates ticking up because of higher inflation, and 0:15:07.360 --> 0:15:09.520 even if there's a mild recession, they continue to tick up. 0:15:09.600 --> 0:15:11.000 You know a lot of us experience that in the 0:15:11.000 --> 0:15:13.440 seventies and eighties, and I would be a little worried 0:15:13.480 --> 0:15:15.280 about that. So rates are kind of low, spreads are 0:15:15.280 --> 0:15:15.880 still kind of low. 0:15:15.920 --> 0:15:17.800 Okay, so you're not putting them in suffer, and where 0:15:17.800 --> 0:15:18.720 are you putting that million? 0:15:19.360 --> 0:15:21.160 I'm central banks. 0:15:22.680 --> 0:15:25.520 For stability. If you look at fragmentation, I mean, the 0:15:25.560 --> 0:15:27.680 world seems a little bit odd like equities are doing 0:15:27.680 --> 0:15:29.920 one thing, but we keep on being told there's a recession. 0:15:30.200 --> 0:15:32.760 Why is there this massive adusyncrasy. 0:15:33.280 --> 0:15:38.320 That's the contradiction. There's still consumers in America job unemployed 0:15:38.440 --> 0:15:41.000 three point five percent. Home prizes have gone up for 0:15:41.040 --> 0:15:44.240 ten to fifteen years. Stock prize has gone in for 0:15:44.240 --> 0:15:46.760 ten to fifteen years. They have a trillion dollars more 0:15:46.760 --> 0:15:49.880 in their checking accounts. They're spending that money. You see 0:15:49.920 --> 0:15:52.200 in travel, you see in restaurants, you see it, and 0:15:52.480 --> 0:15:54.120 you've been around here and you see in hotels, you 0:15:54.160 --> 0:15:56.640 see it. That's all good, But the excess money's being 0:15:56.640 --> 0:15:59.640 spent down. So the bite of that is going to 0:15:59.640 --> 0:16:02.000 happen this year early next year. And the bite of 0:16:02.080 --> 0:16:05.160 QT hasn't happened yet. So if you have higher inflation, 0:16:05.240 --> 0:16:07.400 so I think it's a reasonable thing to say those 0:16:07.440 --> 0:16:10.920 things are coming to fruition. Maybe sometime in the end 0:16:10.920 --> 0:16:12.800 of the year. We don't know the effect of that, 0:16:13.320 --> 0:16:14.640 you know, if there's I mean I would take a 0:16:14.640 --> 0:16:17.920 mild recession happily. Right now. I am far more concerned 0:16:17.960 --> 0:16:25.120 about geopolitics Ukraine, trade, you know, Russia, our relations with China, etc. 0:16:25.720 --> 0:16:27.800 And I always have to mind all of our public 0:16:28.040 --> 0:16:31.560 America has a seventy five thousand per person GDP, China's 0:16:31.640 --> 0:16:34.080 is fifteen. We have all the food warn and energy 0:16:34.080 --> 0:16:36.800 we want. They import ten million bounds of oil a day. 0:16:37.320 --> 0:16:39.480 I mean it's not They're not a ten foot giant, 0:16:39.480 --> 0:16:41.960 and that's a four foot pigmy. We have to manage ourselves. 0:16:42.000 --> 0:16:44.480 Bat I think we can grow more and more thought forward. 0:16:44.800 --> 0:16:46.440 So you know, a lot of people say it's commercial 0:16:46.480 --> 0:16:48.800 real estate. I mean, we talk about nothing else. Everybody 0:16:48.840 --> 0:16:51.240 knows that that could break. Is there something that we're 0:16:51.240 --> 0:16:52.120 not seeing that could break? 0:16:52.200 --> 0:16:54.120 I think it's amazing when you talk about Marcus that 0:16:54.560 --> 0:16:57.440 sometimes it's and the press sometimes like a bunch of 0:16:57.480 --> 0:17:01.200 birds flocking to one thing with endless common about it. Yes, 0:17:01.280 --> 0:17:03.200 that's an issue. So you know, if you look at 0:17:03.200 --> 0:17:06.719 office real estate in B and C real estate will 0:17:06.800 --> 0:17:15.440 private problem Chicago, New York, Partland, Seattle, but probably not Nashville, Tampa, Orlando, Miami, etc. 0:17:15.640 --> 0:17:16.840 So you got to you gotta be a little more 0:17:16.840 --> 0:17:18.800 thoughtful about it. And I think if I'm the number 0:17:18.880 --> 0:17:22.000 banks have six hundred billion of office commercial real estate, 0:17:22.560 --> 0:17:24.320 you know they had a cushion or you even dropped 0:17:24.320 --> 0:17:26.639 and die. They self equity in it. Maybe something that 0:17:26.720 --> 0:17:30.720 will go bad, particularly the recession, they're gonna be Okay. 0:17:31.680 --> 0:17:34.560 It may take a few banks down. That's normal. Stuff 0:17:34.920 --> 0:17:39.400 that isn't abnormal. What is abnormal is the war trade 0:17:39.920 --> 0:17:43.800 the future of democracy. That is abnormal. I'm much more 0:17:43.800 --> 0:17:44.840 concerned about that than. 0:17:44.840 --> 0:17:48.080 The markets trade that. Right, if there's a big geopolitics, 0:17:48.119 --> 0:17:50.639 there's there's how do the markets talk them do that? 0:17:51.080 --> 0:17:55.480 Okay, Look, if I was a we're cautious I remind people, 0:17:55.560 --> 0:17:59.040 I'm not businesses aren't there to trade its. Sometimes they 0:17:59.000 --> 0:18:01.520 don't serve our clients, okay, and so we're gonna serve 0:18:01.520 --> 0:18:02.639 our clients no matter what happened. 0:18:02.960 --> 0:18:05.240 James, very quickly, final question, how are you feeling about 0:18:05.280 --> 0:18:06.720 the Epstein deposition this month? 0:18:07.800 --> 0:18:11.359 I am so sad that we had any relays with 0:18:11.400 --> 0:18:14.280 that man whatsoever. You know, we had top lawyers of 0:18:14.359 --> 0:18:17.960 value in this, from the SEC, Enforcement, the DOJ, you know, 0:18:18.000 --> 0:18:20.439 and obviously have we known them. We know today we 0:18:20.480 --> 0:18:22.960 would have done things differently. But it's very unfortunate, and 0:18:23.040 --> 0:18:26.359