WEBVTT - BI Weekend: US Election, Berkshire Earnings 0:00:02.920 --> 0:00:12.600 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Intelligence 0:00:12.640 --> 0:00:14.360 with Alex Steinhl and Paul Sweeney. 0:00:14.520 --> 0:00:17.720 The real app performance has been in US corporate high yield. 0:00:17.880 --> 0:00:19.040 Are the companies lean enough? 0:00:19.040 --> 0:00:20.279 Have they trimmed all the fats? 0:00:20.320 --> 0:00:24.119 The semiconductor business is a really cyclical business. 0:00:23.640 --> 0:00:27.160 Breaking market headlines and corporate news from across the globe. 0:00:27.240 --> 0:00:29.880 Do investors like the M and A that we've seen? 0:00:30.080 --> 0:00:33.159 These are two big time blue chip companies. 0:00:33.280 --> 0:00:36.920 The window between the peak and cut changing super fast. 0:00:37.080 --> 0:00:40.920 Bloomberg Intelligence with Alex Steinhl and Paul'sweeny. 0:00:40.479 --> 0:00:44.960 On Bloomberg Radio. I'm Paul sween and I'm John Tucker 0:00:45.000 --> 0:00:46.520 filling in for Alex Steele. 0:00:46.400 --> 0:00:49.200 On today's Bloomberg Intellivision show. We dig inside the big 0:00:49.200 --> 0:00:52.200 business stories impacting Wall Street and global markets. 0:00:51.960 --> 0:00:54.360 Each and head. Every week, we provide in depth research 0:00:54.400 --> 0:00:56.880 and data on some of the two thousand companies at 0:00:56.880 --> 0:00:59.960 one hundred and thirty industries our analysts cover worldwide. 0:01:00.520 --> 0:01:03.400 Today, we'll look at why Berkshire Hathaway's cash pile has 0:01:03.440 --> 0:01:04.880 reached a record plus. 0:01:04.880 --> 0:01:08.160 We'll discuss where wind and solar energy storage will be 0:01:08.360 --> 0:01:09.480 within the next decade. 0:01:09.600 --> 0:01:11.760 But first we begin with our top story, the twenty 0:01:11.800 --> 0:01:15.160 twenty four US election. This week, Donald Trump was elected 0:01:15.160 --> 0:01:17.760 the forty seventh President of the United States, reclaiming the 0:01:17.760 --> 0:01:20.959 White House and pulling off a stunning political comeback. 0:01:20.840 --> 0:01:23.800 If heated Vice President Kamala Harris after she replaced an 0:01:23.840 --> 0:01:27.040 unpopular President Joe Biden in the campaign's final months. 0:01:27.280 --> 0:01:30.360 For more on Donald Trump's election, guest host Damian Sasara 0:01:30.400 --> 0:01:33.319 and I were joined by Nathan Dean, Bloomberg Intelligence Senior 0:01:33.319 --> 0:01:36.520 policy analyst. We first asked Nathan how Trump's future presidency 0:01:36.560 --> 0:01:38.679 will impact different industries like banks. 0:01:39.120 --> 0:01:41.280 With the financial services industry, it all came down to 0:01:41.319 --> 0:01:43.760 this rule called the Basel three end game. You know, 0:01:43.800 --> 0:01:45.960 as outlined by the FED. You're talking about a nine 0:01:46.000 --> 0:01:49.000 percent increase for the GESIPS, the Bank America JP Morgan's 0:01:49.000 --> 0:01:51.240 of you will about three to four percent in terms 0:01:51.320 --> 0:01:54.440 of the regional banks. Now, with President Trump winning the 0:01:54.480 --> 0:01:56.480 office of the control of the currency is likely going 0:01:56.480 --> 0:01:59.000 to flip on day one of next year. So this 0:01:59.080 --> 0:02:02.320 rule is effective indefinitely delayed. You know this, you would 0:02:02.360 --> 0:02:05.279 need to FED, the OCC and the FDIC to move forward. 0:02:05.280 --> 0:02:07.520 Now we think at thirty percent chance of it being 0:02:07.520 --> 0:02:09.760 finalized by twenty twenty six. The reason why we're not 0:02:09.880 --> 0:02:12.560 down to zero is because there is potential out there 0:02:12.639 --> 0:02:15.840 that a Republican led regulator may try and move forth 0:02:15.880 --> 0:02:18.040 with it. But the idea is going to be completely different, 0:02:18.040 --> 0:02:20.160 and they're going to essentially start from scratch. So if 0:02:20.200 --> 0:02:23.040 you're talking about capital requirements on a global scale, remember 0:02:23.080 --> 0:02:25.440 the European banks have already implemented their version of this. 0:02:25.840 --> 0:02:28.160 There could be some questions here on if the Americans 0:02:28.160 --> 0:02:30.200 aren't going to do this, why should the Europeans on 0:02:30.200 --> 0:02:32.280 these same sides. So certainly a lot to play here 0:02:32.320 --> 0:02:35.320 in terms of the you know, deregulatory efforts amongst the 0:02:35.400 --> 0:02:36.160 investment banks. 0:02:36.360 --> 0:02:38.720 Nathan Dean, you are the consummate Washington insider. When I 0:02:38.760 --> 0:02:41.240 need to get my what ifs answered about what's happening 0:02:41.320 --> 0:02:44.120 in Washington, I call you. So I have a question here, 0:02:44.240 --> 0:02:47.160 What name should I be looking at more closely than others? 0:02:47.440 --> 0:02:50.480 Bill Lackman, Elon Musk's got Bess and Howard Luckneck. I mean, 0:02:50.520 --> 0:02:52.440 talk to us about what the potential for a Trump 0:02:52.520 --> 0:02:54.040 cabinet may very well look like. 0:02:55.000 --> 0:02:58.200 Yeah, so you know, obviously the big question is you're 0:02:58.200 --> 0:03:01.800 going to get the Wall Street President Trump? Or are 0:03:01.840 --> 0:03:04.040 you going to get a populist President Trump? And that's 0:03:04.040 --> 0:03:06.080 the question that I don't think anybody really has an 0:03:06.080 --> 0:03:08.120 answer to, because you know, for example, at the SEC, 0:03:08.600 --> 0:03:10.560 you know you have Commissioner Hester Purse, who I think 0:03:10.600 --> 0:03:14.160 would be a very popular SEC chair coming from more 0:03:14.200 --> 0:03:16.680 of the conservative wing the populist side of the party. 0:03:16.880 --> 0:03:18.480 But then there's also going to be folks like former 0:03:18.560 --> 0:03:20.760 JA Clayton. You know, obviously his name's been in there 0:03:20.800 --> 0:03:24.440 for a Treasury but you know, somebody like a disciple, 0:03:24.480 --> 0:03:27.480 if you will, a commissioner or chairman Clayton could be 0:03:27.480 --> 0:03:29.600 also a named at the SEC. So the question that 0:03:29.639 --> 0:03:31.360 we have, and we should find out about this more 0:03:31.360 --> 0:03:32.760 over the next few weeks, is are you going to 0:03:32.800 --> 0:03:35.280 get the populist Trump? Are the Wall Street Trump? And 0:03:35.360 --> 0:03:37.480 I think you're probably going to get a combination of 0:03:37.520 --> 0:03:40.880 the both, where if President Trump cares about your issue 0:03:40.920 --> 0:03:44.000 in terms of he specifically wants to be involved, you'll 0:03:44.000 --> 0:03:46.720 get a populist Trump. If it's something where he's happy 0:03:46.720 --> 0:03:48.960 to delegate to other folks in Washington, then I think 0:03:49.160 --> 0:03:50.280 you may get a Wall Street Trump. 0:03:50.320 --> 0:03:52.120 Well ly than it took a long time for Trump 0:03:52.200 --> 0:03:54.320 to pick his cabinet and his players back the first 0:03:54.360 --> 0:03:56.600 time around. Apparently he's much more prepared this time. Talk 0:03:56.600 --> 0:03:58.600 to us about timing around some of those selections. When 0:03:58.600 --> 0:03:59.800 can we expect to hear something there? 0:04:00.400 --> 0:04:02.520 Yeah, so I think you're gonna hear it, probably before 0:04:02.680 --> 0:04:04.840 probably within the next few weeks. I mean to your point, 0:04:04.920 --> 0:04:07.240 you know, they've been talking about this for some time. 0:04:07.240 --> 0:04:09.320 But I would also note that the Republican Senate is 0:04:09.320 --> 0:04:11.880 gonna be able to confirm a lot of President Trump's 0:04:11.880 --> 0:04:14.520 appointees on a much quicker basis than if you were 0:04:14.560 --> 0:04:16.680 to have a Democrat controlled Senate or even a fifty 0:04:16.960 --> 0:04:19.440 or fifty one. Now why do we care about this, Well, 0:04:19.480 --> 0:04:22.240 because the faster that those regulatory leaders come in place, 0:04:22.640 --> 0:04:25.479 the faster they can start these deregulatory efforts. You know, 0:04:25.640 --> 0:04:27.640 a regulatory leader, for the most part, can't just come 0:04:27.680 --> 0:04:30.200 in and say, right, this regulation, we're going to just 0:04:30.240 --> 0:04:31.640 completely roll it back on day one. 0:04:31.839 --> 0:04:32.599 It's gonna take. 0:04:32.520 --> 0:04:35.240 Nine months, twelve months, if not even two years to 0:04:35.320 --> 0:04:37.440 move forth on that effort. So the quicker those regulatory 0:04:37.520 --> 0:04:40.159 leaders come in place, the quicker the de regulatory effort 0:04:40.200 --> 0:04:40.760 can take place. 0:04:41.120 --> 0:04:43.919 Nathan, President elect Trump is se had lame duck president? 0:04:44.279 --> 0:04:45.440 Is that a fair way to look at it? 0:04:46.160 --> 0:04:46.400 Now? 0:04:46.480 --> 0:04:48.960 So generally, and I say this generally, in the second 0:04:49.040 --> 0:04:51.839 term of a presidential term, if you will, I think 0:04:51.880 --> 0:04:54.880 President Obama or President George W. Bush, you usually have 0:04:54.920 --> 0:04:58.240 about eighteen months to expend your political capital. First one 0:04:58.279 --> 0:05:00.480 hundred days of the presidency is critical. But as soon 0:05:00.520 --> 0:05:03.200 as Congress begins to think about their mid term elections 0:05:03.200 --> 0:05:05.640 and then as the result when they come back, you know, 0:05:05.680 --> 0:05:07.520 why should they stick their necks out for the president 0:05:07.560 --> 0:05:09.640 who's going to be gone? So what do presidents tend 0:05:09.680 --> 0:05:11.479 to do. They tend to go internationally, and they tend 0:05:11.480 --> 0:05:13.520 to travel because the power of the presidency is more 0:05:13.560 --> 0:05:15.920 powerful there. So, you know, we do think President Trump 0:05:16.000 --> 0:05:18.200 is going to be spending a lot of time abroad, Ukraine, 0:05:18.360 --> 0:05:21.000 Middle East, for example, China. There's a lot of stuff 0:05:21.040 --> 0:05:23.000 that he can do there. But I wouldn't call him 0:05:23.000 --> 0:05:25.080 a lame duck just yet, because again, the power of 0:05:25.120 --> 0:05:26.560 the presidency is more powerful there. 0:05:26.839 --> 0:05:30.119 You know that China tariffs are coming. You're betting, man, 0:05:30.320 --> 0:05:32.600 what kind of tariff regime do you think we're entering into? 0:05:32.680 --> 0:05:34.599 Is it going to be that ten percent broad is 0:05:34.600 --> 0:05:36.720 it going to be sixty percent on China? What are 0:05:36.720 --> 0:05:37.119 you hearing? 0:05:37.800 --> 0:05:40.000 So this is where I think the process of tariff 0:05:40.120 --> 0:05:43.240 is key. Now, remember, let's just say January twentieth, President 0:05:43.240 --> 0:05:45.320 comes in. You see a red line over the terminal. 0:05:45.400 --> 0:05:47.880 You say, President Trump signs an executive order saying tariffs 0:05:47.920 --> 0:05:50.680 are coming. In the language of that executive order, however, 0:05:50.760 --> 0:05:52.680 I think you'll see language that says the tariff is 0:05:52.720 --> 0:05:54.520 not coming for two hundred and seventy days or three 0:05:54.560 --> 0:05:57.920 hundred and sixty five days. Why, Because tariffs are negotiation tools. 0:05:58.000 --> 0:06:00.360 President Trump doesn't know what the reciprocal tariff on China 0:06:00.440 --> 0:06:03.000 from China would be, and President Trump wants to use 0:06:03.040 --> 0:06:05.480 this as a negotiation. So I think there's going to 0:06:05.520 --> 0:06:08.120 be language in there allowing flexibility. Allowed President Trump to 0:06:08.120 --> 0:06:10.720 come back and say, ah, maybe not sixty percent, maybe 0:06:10.720 --> 0:06:12.360 we'll go to ten percent because China gave us a 0:06:12.360 --> 0:06:14.599 win or something like that. So what we're saying is 0:06:14.880 --> 0:06:16.680 watch out for that headline risk in the first or 0:06:16.720 --> 0:06:19.120 second quarter of next year. But then you're gonna get 0:06:19.160 --> 0:06:22.119 probably six months to actually truly understand what that tariff 0:06:22.160 --> 0:06:23.960 will look like before it goes into fruition. 0:06:24.279 --> 0:06:24.560 All right. 0:06:24.600 --> 0:06:28.200 Thanks to Nathan Dean, Bloomberg Intelligence Senior policy analyst. 0:06:28.440 --> 0:06:31.039 Staying on the US election guest host Damian Sasaur and 0:06:31.080 --> 0:06:34.080 I were joined by Wendy Schuller, professor at Brown University. 0:06:34.360 --> 0:06:36.200 She gave us her take on the twenty twenty four 0:06:36.320 --> 0:06:39.640 US election, along with some of its political ramifications. And 0:06:39.720 --> 0:06:42.479 we first asked Wendy, what happens next for the Democratic 0:06:42.480 --> 0:06:43.880 Party during a Trump presidency? 0:06:44.320 --> 0:06:45.880 Well, you have to ask yourself why. 0:06:46.000 --> 0:06:49.720 You know, popular incumbent senators have been reelected before could 0:06:49.760 --> 0:06:53.520 not withstand the red wave, and so you can attribute 0:06:53.520 --> 0:06:56.600 it to Trump charisma the Trump followers. We can do 0:06:56.680 --> 0:06:59.200 that if we want to as observers, but you know 0:06:59.240 --> 0:07:04.440 this and deep, This reaction across voters, across different kinds 0:07:04.440 --> 0:07:08.320 of voters, from different backgrounds, different ages. This ran deep, 0:07:08.520 --> 0:07:10.960 and it was a signal that said, we don't like 0:07:11.080 --> 0:07:13.800 the policies that you're enacting, So what can they do? 0:07:13.960 --> 0:07:16.800 I think it's informative to go back to Obama. Obama 0:07:17.040 --> 0:07:18.760 had a much stricter border. 0:07:18.480 --> 0:07:21.480 Policy than Joe Biden, and I think he did that 0:07:21.600 --> 0:07:24.120 because he sensed there wasn't enough support in America for 0:07:24.200 --> 0:07:27.160 something more liberal and more open, so you can say 0:07:27.160 --> 0:07:29.720 to yourselves, the Democrats closed the border for too late. 0:07:30.240 --> 0:07:32.600 The Democrats didn't push hard enough to get those interest 0:07:32.640 --> 0:07:35.720 rates down. The Democrats didn't pay attention to the price 0:07:35.760 --> 0:07:39.080 of eggs, and that's unusual for the Democrats, who usually 0:07:39.160 --> 0:07:41.320 care a lot about the price of eggs. So I 0:07:41.320 --> 0:07:45.000 think this is not necessarily a reboot completely, but they 0:07:45.000 --> 0:07:47.240 have got to meet the voter where the voter is. 0:07:47.560 --> 0:07:49.720 The voter was not with the Democratic Party. 0:07:49.960 --> 0:07:51.720 Wendy, you mention the border, and let's look ahead here. 0:07:51.720 --> 0:07:53.440 Trump is about to embark on what many believed to 0:07:53.440 --> 0:07:58.000 be the largest deportation program in US history. How does 0:07:58.000 --> 0:08:00.160 he expect to round them all up? And does he 0:08:00.200 --> 0:08:01.560 intend to send him. 0:08:02.160 --> 0:08:05.000 Well, you know Trump, Trump always surprises us in the 0:08:05.040 --> 0:08:06.120 sense that he'll sort of. 0:08:06.040 --> 0:08:08.120 Go off the ranch and then I'll kind of moderate. 0:08:08.520 --> 0:08:08.680 You know. 0:08:08.720 --> 0:08:11.320 The idea is how long does Trump want to be president? 0:08:11.400 --> 0:08:15.200 You know, he's constitutionally prohibited from electing, being elected, and serving, 0:08:15.480 --> 0:08:18.240 not from running, and so you know, does he want 0:08:18.280 --> 0:08:19.480 to last long time? 0:08:19.680 --> 0:08:21.920 Maybe get rid of the twenty second Amendment. I don't 0:08:21.960 --> 0:08:24.000 know what he plans, but I think he. 0:08:23.960 --> 0:08:27.520 Will scale this idea back especially since the border has 0:08:27.560 --> 0:08:31.480 been shut down and you know, undocumented migration has slowed 0:08:31.560 --> 0:08:32.120 so much. 0:08:32.440 --> 0:08:34.480 Does he really have to do this? Does he have 0:08:34.559 --> 0:08:37.240 to disrupt the country this way? You know, he could 0:08:37.280 --> 0:08:39.520 do some of it, but I don't think the pressure's on. 0:08:39.520 --> 0:08:41.800 Him to do all of it, because Biden has already 0:08:41.800 --> 0:08:44.040 taken this step and he'll keep that policy in place. 0:08:44.320 --> 0:08:46.120 Wendy, you mention the twenty second Amendment. You're not the 0:08:46.120 --> 0:08:47.679 first one to talk about it, but you know what 0:08:47.800 --> 0:08:49.800 I'm most interested in, and it's the FED right. And 0:08:49.800 --> 0:08:52.320 Trump has made no secret about his intention to have 0:08:52.360 --> 0:08:54.960 a greater say and monetary policy here in the US. 0:08:55.080 --> 0:08:57.400 My question for you is what legal mechanisms can Trump 0:08:57.400 --> 0:08:59.599 take advantage of in order for the to give the 0:08:59.600 --> 0:09:02.680 over LA Office more control. More saying monetary policy, well, 0:09:02.720 --> 0:09:03.400 I mean the. 0:09:03.320 --> 0:09:04.280 Federal Reserve Act. 0:09:04.320 --> 0:09:06.400 I mean literally the Act creating Federal Reserve and all 0:09:06.440 --> 0:09:08.040 the bills that have come you know after that and 0:09:08.040 --> 0:09:11.000 reauthorizing it. You know, that's something that's been sort of 0:09:11.000 --> 0:09:16.959 a partnership with private monetary institutions, banks and the federal government. 0:09:17.080 --> 0:09:19.679 And the thing about Donald Trump is gonna need cash, right, 0:09:19.760 --> 0:09:22.600 you can't, you know, you can't crash the government and 0:09:22.640 --> 0:09:26.200 crash the economy by the federal government running out of cash. 0:09:26.360 --> 0:09:29.760 So there is a symbiotic relationship between really big banks 0:09:29.800 --> 0:09:32.720 and the Federal Reserve itself and the success of a president. 0:09:33.040 --> 0:09:35.920 So there's going to have to be negotiations there. But 0:09:36.040 --> 0:09:36.839 I don't think the. 0:09:36.800 --> 0:09:38.440 Heads of big banks you're just going to hand over 0:09:38.520 --> 0:09:40.240 the keys of the kingdom to the president of the 0:09:40.320 --> 0:09:42.240 United States and amount of who they are, and so 0:09:42.320 --> 0:09:44.840 that will be a negotiation, and Trump fancies himself as 0:09:44.840 --> 0:09:45.840 a very good negotiator. 0:09:46.480 --> 0:09:48.920 Wendy, does Kamala Harris have it future as a leader 0:09:48.920 --> 0:09:51.400 of the Democratic Party. I'm thinking maybe in four years time. 0:09:52.120 --> 0:09:52.400 I think. 0:09:52.559 --> 0:09:55.040 I think, all things considered, she ran a good campaign 0:09:55.160 --> 0:09:57.679 what she was given, the time frame that she had 0:09:57.720 --> 0:10:00.240 to work within, and her balancing act of trying to 0:10:00.280 --> 0:10:03.160 separate from the Biden record and also present some sort 0:10:03.160 --> 0:10:06.240 of plan for the future and bringing in and solidifying 0:10:06.360 --> 0:10:09.800 particularly younger women, even older women. I think there's still 0:10:09.800 --> 0:10:12.920 a block and a constituency that she can tap if 0:10:12.960 --> 0:10:15.480 she wanted to run again. I just don't see this 0:10:15.559 --> 0:10:18.199 as a Kamala Harris failed campaign. I see it as 0:10:18.360 --> 0:10:21.760 Trump being a former president and energizing their base and 0:10:21.800 --> 0:10:24.760 not making the same campaign mistakes they did in twenty twenty, 0:10:24.960 --> 0:10:27.840 and the Biden record. I don't know if anybody could 0:10:27.880 --> 0:10:29.520 have won in the face of those numbers. 0:10:29.720 --> 0:10:31.559 Wendy, I wonder if you could shift your attention here 0:10:31.600 --> 0:10:34.600 to what's going on in Ukraine. Obviously, Zelenski was the 0:10:34.600 --> 0:10:38.000 firebrand who rejected Trump's request for information on Hunter Biden's 0:10:38.040 --> 0:10:41.000 dealings back during his first tenure. And what comes next 0:10:41.440 --> 0:10:44.960 for the Ukraine, for Zelenski, for Central Europe, and for 0:10:45.040 --> 0:10:46.559 Russia under a Trump administration. 0:10:47.840 --> 0:10:50.160 Well, I think Trump is a fan of Putin, and 0:10:50.200 --> 0:10:52.559 I think Trump has said before that he thinks there's 0:10:52.600 --> 0:10:55.599 a deal that can be reached. So my guess is 0:10:55.640 --> 0:10:57.480 Trump says, listen, we're not going to send you the 0:10:57.480 --> 0:11:00.199 same kind of weaponry, We're not going to support the 0:11:00.240 --> 0:11:03.240 same way. Go to the table, cut a deal, give 0:11:03.320 --> 0:11:05.640 up crimea I mean literally, these are the things that 0:11:05.679 --> 0:11:08.000 he'll say. And maybe we'll make sure that more of 0:11:08.040 --> 0:11:09.880 your people don't get killed. I mean, I think that's 0:11:09.920 --> 0:11:11.880 what we'll do. And in the Middle East, you know, 0:11:11.960 --> 0:11:13.760 I think people who think that he'll be a diehard 0:11:13.760 --> 0:11:16.480 suborn of Israel maybe, but he may go to the 0:11:16.480 --> 0:11:18.120 Saudia's and say, what kind of deal you want to 0:11:18.160 --> 0:11:20.559 cut to get this thing over with against Iran. I mean, 0:11:20.760 --> 0:11:23.400 he wants to make deals and be the hero. And 0:11:23.400 --> 0:11:25.840 that's something we've seen before and we'll see again. So 0:11:25.960 --> 0:11:28.719 whatever whoever's dealing with him has to be able to 0:11:28.760 --> 0:11:30.720 give him some sort of victory he can walk away with. 0:11:30.960 --> 0:11:33.719 All right, thanks to Wendy Schilder, professor at Brown University. 0:11:34.000 --> 0:11:35.760 Coming up, we're going to talk more on why Donald 0:11:35.800 --> 0:11:39.200 Trump winning the US presidency is leaving banks hopeful. 0:11:39.480 --> 0:11:42.360 You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 0:11:42.400 --> 0:11:44.760 depth research and data on two thousand companies in one 0:11:44.840 --> 0:11:47.920 hundred and thirty industries. You can access Bloomberg Intelligence via 0:11:47.960 --> 0:11:49.040 b I go on the terminal. 0:11:49.080 --> 0:11:52.479 I'm Paul Sweeney and I'm John Tucker. This is Bloomberg. 0:12:01.640 --> 0:12:05.520 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:12:05.600 --> 0:12:08.280 weekdays at ten am Eastern on Apple car Play and 0:12:08.280 --> 0:12:11.360 Android Auto with the Bloomberg Business App. Listen on demand 0:12:11.360 --> 0:12:15.679 wherever you get your podcasts, or watch us live on YouTube. 0:12:16.520 --> 0:12:17.559 I'm Paul Sween. 0:12:17.400 --> 0:12:19.640 And I'm John Tucker. Filling in for Alex Steele. 0:12:19.800 --> 0:12:22.360 We continue with another conversation related to the twenty twenty 0:12:22.360 --> 0:12:23.320 four US election. 0:12:23.520 --> 0:12:26.600 This week, Donald Trump was elected forty seventh president of 0:12:26.600 --> 0:12:30.160 the United States, and according to Bloomberg Intelligence Research, Trump's 0:12:30.240 --> 0:12:33.439 victory is giving banks optimism for less regulation. 0:12:33.960 --> 0:12:35.400 For more on this, John and I were joined by 0:12:35.440 --> 0:12:38.760 Alison Williams, Bloomberg Intelligence senior analysts covering the global banks. 0:12:38.960 --> 0:12:42.319 We first asked Allison why bank shares rallied afternoons of 0:12:42.400 --> 0:12:44.200 Donald Trump becoming president elect. 0:12:44.720 --> 0:12:47.880 So we see three things. So the big one is 0:12:48.360 --> 0:12:54.040 less regulation. Secondly higher industrates, and then third we really 0:12:54.080 --> 0:12:56.880 see some momentum for fee revenue, which has really been 0:12:56.960 --> 0:13:00.959 powering the big banks that I cover. So the regulation 0:13:01.640 --> 0:13:04.680 is the big one, and it's not just some of 0:13:04.720 --> 0:13:07.800 the specific issues for the banks as a whole in 0:13:07.800 --> 0:13:10.200 one or two banks, but it is just, you know, 0:13:10.240 --> 0:13:12.400 the feeling that the pendulum can swing the other way 0:13:12.480 --> 0:13:15.760 right so that there won't be new regulations and that 0:13:15.840 --> 0:13:17.960 some of the things that are sort of in the 0:13:18.000 --> 0:13:21.920 pipeline could be watered down or pushed out. That baso 0:13:21.920 --> 0:13:25.240 three endgame has been the big one for the largest banks. 0:13:25.960 --> 0:13:31.160 And you know, basil dictates that all jurisdictions around the 0:13:31.200 --> 0:13:34.440 world have to do some form of implementation. But the 0:13:34.559 --> 0:13:37.000 US proposal that came out in twenty twenty three was 0:13:37.800 --> 0:13:40.840 really much stricter than we saw in other regions. We 0:13:40.960 --> 0:13:43.800 had already had some expectations that that would be watered 0:13:43.840 --> 0:13:47.320 down from you know, comments that Powell had made and 0:13:47.400 --> 0:13:50.800 also comments from bar in September, so some of that 0:13:50.880 --> 0:13:52.680 was sort of in the stocks, but I think the 0:13:52.720 --> 0:13:58.400 feeling is, you know, from our regulatory group that the 0:13:58.440 --> 0:14:01.680 things could either get pushed further out or they could 0:14:01.720 --> 0:14:04.320 be water down even further. And so that's good for 0:14:04.360 --> 0:14:07.440 the banks because their excess capital is something like five 0:14:07.480 --> 0:14:11.440 to fifteen percent of their market caps. So definitely that 0:14:11.640 --> 0:14:14.800 was something aiding City Group in Wells Fargo as well 0:14:14.840 --> 0:14:18.680 as someone like Morgan, Stanley and Goldman, where even with 0:14:18.760 --> 0:14:21.960 the water even with the sort of lighter touch in September, 0:14:22.680 --> 0:14:24.880 they were still going to have a deficit in their capital. 0:14:25.000 --> 0:14:26.680 So some positive news. 0:14:26.440 --> 0:14:27.120 On that front. 0:14:27.440 --> 0:14:30.600 Also, as you know, you know, Wells Fargo has had 0:14:30.640 --> 0:14:33.080 this asset cap for a long time. City Group there's 0:14:33.120 --> 0:14:37.200 been some concerns, especially around when they reported their results, 0:14:37.200 --> 0:14:40.840 that they could face more scrutiny, So just a particular 0:14:40.920 --> 0:14:45.120 easing I think also benefited those couple of banks. And 0:14:45.160 --> 0:14:48.120 then there are some other things related to card and 0:14:48.160 --> 0:14:51.680 consumer and finance as well. On the interest rate funds, 0:14:51.880 --> 0:14:55.360 all these banks are positioned for higher rates, so we 0:14:55.480 --> 0:14:57.800 know that, you know, we'll be watching the FED in 0:14:57.880 --> 0:15:01.600 terms of short term rates. I think in general that 0:15:02.280 --> 0:15:04.920 also got a lift. And then finally from our viewpoint, 0:15:05.560 --> 0:15:07.880 the big thing is that we see momentum and fees 0:15:07.880 --> 0:15:10.120 and that's been a huge boost to the earnings for 0:15:10.200 --> 0:15:10.760 these banks. 0:15:10.840 --> 0:15:15.040 Just back to the Buzzo three endgame rules, the idea 0:15:15.200 --> 0:15:17.920 is give me the dummies version. You had to set 0:15:17.960 --> 0:15:22.200 aside more capital basically in case things went south, so 0:15:22.280 --> 0:15:27.920 the financial institutions wouldn't ruin the economy, right, So that's 0:15:27.960 --> 0:15:31.720 freed up. Does that now go back to shareholders? Is 0:15:31.720 --> 0:15:32.400 that the idea? 0:15:33.480 --> 0:15:37.560 That is the idea, and so Boso three endgame rules. So, 0:15:38.000 --> 0:15:40.400 as you know, Baso three is something that sort of 0:15:40.800 --> 0:15:44.400 came after the financial crisis, and there's been many iterations. 0:15:44.440 --> 0:15:47.680 Thus the reference to this last set of rules as 0:15:47.880 --> 0:15:51.760 endgame and basically what that dictated was that as they 0:15:51.800 --> 0:15:55.800 measure their risk weighted assets, there would be big increases 0:15:55.840 --> 0:15:58.800 in that, and thus they'd be having to hire a 0:15:58.840 --> 0:16:03.720 hole more capital against that. And so based on third 0:16:03.800 --> 0:16:08.960 quarter earnings and fourth quarter requirements, their excess capital was 0:16:08.960 --> 0:16:12.480 five to fifteen percent of their market cap. Under the 0:16:12.520 --> 0:16:16.840 Basil three rules, that would turn to deficits across the bank, 0:16:16.920 --> 0:16:19.920 so they would have to find a way to increase 0:16:19.960 --> 0:16:23.000 their capital. There is a timeline, so they probably would 0:16:23.000 --> 0:16:26.400 have done that through internal capital generation. But to your point, 0:16:26.480 --> 0:16:28.480 they that would have been capital that they could not 0:16:28.520 --> 0:16:29.520 return to shareholders. 0:16:29.640 --> 0:16:33.120 Can I just who has the most capital to be 0:16:33.200 --> 0:16:34.880 returned to shareholders? 0:16:35.680 --> 0:16:40.680 Well, based on the requirements today, City Group, their excess 0:16:40.720 --> 0:16:43.440 capital is something like fifteen percent of. 0:16:43.360 --> 0:16:44.440 Their market cap. 0:16:45.120 --> 0:16:48.240 Okay, all right, And I would and I would point 0:16:48.240 --> 0:16:52.440 out also that you know these banks have and so 0:16:52.520 --> 0:16:55.080 by the way, like the banks do sort of target 0:16:55.400 --> 0:16:58.320 holding a buffer to the requirements. So there's a little 0:16:58.360 --> 0:17:00.720 bit of that, but I think you know, in general, 0:17:01.520 --> 0:17:05.080 it is the fact that buybacks will likely go up. 0:17:05.160 --> 0:17:07.959 These banks already have buyback programs in place so they 0:17:08.000 --> 0:17:11.240 can execute on them. But it's also the math. If 0:17:11.240 --> 0:17:14.320 you have higher equity, your return on equity is going 0:17:14.400 --> 0:17:17.639 to be lower, and that's how investors value stock. So 0:17:18.320 --> 0:17:22.880 there is definitely the higher buybacks, but also I think 0:17:22.960 --> 0:17:27.040 it is the sentiment that is helping bank multiples. This 0:17:27.119 --> 0:17:31.480 specific regulation, but also less regulation in general. One other 0:17:31.520 --> 0:17:34.320 area I didn't talk about with regard to regulation is 0:17:34.400 --> 0:17:37.080 less antitrust. So that's good for M and A and 0:17:37.119 --> 0:17:40.320 that's really why you saw Goldman and Morgan Stanley very 0:17:40.600 --> 0:17:42.000 the stocks reacting to that. 0:17:42.600 --> 0:17:42.840 All right. 0:17:42.840 --> 0:17:46.560 Thanks to Alison Williams, Bloomberg Intelligence Senior analysts Global banks 0:17:46.600 --> 0:17:47.720 and asset Managers. 0:17:48.119 --> 0:17:50.879 Each week we look at research from Bloomberg n EF 0:17:51.000 --> 0:17:53.520 previously known as New Energy Finance. They're the team at 0:17:53.520 --> 0:17:57.240 Bloomberg that tracks and analyzes the energy transition from commodities 0:17:57.280 --> 0:18:01.119 to power, transport, industries, buildings, and agri cultural sectors. This 0:18:01.200 --> 0:18:03.560 week we took a look at Bloomberg neef's outlook for 0:18:03.640 --> 0:18:06.600 wind and solar energy storage over the next ten years. 0:18:06.720 --> 0:18:09.760 Guest host Jess Mett and I were joined by Yao Sachini, 0:18:09.920 --> 0:18:13.080 Bloomberg NEF head of Energy Storage. We first asked her 0:18:13.359 --> 0:18:16.160 where we are in terms of energy storage just. 0:18:16.119 --> 0:18:18.159 For some context, and we're going to talk about some 0:18:18.200 --> 0:18:20.720 of the analysis that we actually published around the clean 0:18:20.840 --> 0:18:25.200 energy market outlook specifically look at the US for some contexts. 0:18:25.240 --> 0:18:27.800 There's just been a lot of investment that's been pouring 0:18:27.800 --> 0:18:30.879 into clean power segments. We've seen a lot of that 0:18:30.920 --> 0:18:34.240 accelerated over the last I guess two years, and since 0:18:34.280 --> 0:18:37.520