WEBVTT - Surveillance: Trump Doesn't Impact Powell, Bremmer Says 0:00:02.600 --> 0:00:12.960 Yea. Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 0:00:13.480 --> 0:00:17.560 Jay Lee. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:31.120 Bloomberg dot Com, and of course, on the Bloomberg So 0:00:31.240 --> 0:00:34.400 another tweet, another takedown of the Federal Reserve, the President 0:00:34.520 --> 0:00:36.720 saying if the Fed had done its job properly, which 0:00:36.760 --> 0:00:38.599 it has not, the stock market would have been up 0:00:38.600 --> 0:00:43.320 five thousand to ten thousand. Additional points quanditative tightening was 0:00:43.360 --> 0:00:46.760 a killer. We should have done the exact opposite. To 0:00:46.760 --> 0:00:48.920 weigh in a man that doesn't need much of an introduction, 0:00:48.960 --> 0:00:53.080 it's Ian Brama, Eurasia Group President, and great to see you. 0:00:53.320 --> 0:00:56.000 Let's just talk about the independence of the Federal Reserve 0:00:56.400 --> 0:00:59.240 and to what extent that's being damaged at the moment um. 0:00:59.280 --> 0:01:03.640 There's no question that Trump's tweets are undermining the way 0:01:03.680 --> 0:01:09.280 we think about the FED. But J. Powell is very 0:01:09.360 --> 0:01:15.240 much a capable, qualified and independent chief and that that's 0:01:15.240 --> 0:01:19.160 certainly nobody is making the argument that his decisions have 0:01:19.240 --> 0:01:22.880 been undermined or politically skewed by Trump. I think the 0:01:22.920 --> 0:01:26.600 bigger question has been the recent move by Trump to 0:01:26.720 --> 0:01:30.520 push Steven Moore and Herman Kaine as FED board members. 0:01:30.680 --> 0:01:34.640 I mean, these are Stephen Moore's economic capabilities make AOC 0:01:34.880 --> 0:01:37.960 look like a strong economist, right, so you would this 0:01:37.959 --> 0:01:39.920 This isn't that. I mean, I'm a political scientist, and 0:01:40.040 --> 0:01:42.160 I it's pretty clear to me that these are not 0:01:42.240 --> 0:01:44.920 people you want on the board. But um, but I 0:01:44.959 --> 0:01:48.600 do think that if Trump were to win in UH 0:01:48.680 --> 0:01:50.960 and he decides to get rid of J. Powell at 0:01:51.000 --> 0:01:54.080 that point, which you know has not that that's not 0:01:54.160 --> 0:01:57.680 really been tested UM in UH as like so many 0:01:57.680 --> 0:01:59.760 things in the true administration, then I think we could 0:01:59.760 --> 0:02:01.560 be in a different conversation. Let's talk about how generable 0:02:01.600 --> 0:02:04.240 the institution is. Do you think it is likely even possible, 0:02:04.400 --> 0:02:06.240 for that matter, to the president can't get rid of 0:02:06.240 --> 0:02:09.600 the chaman of the Federal Reserve. I think it's possible 0:02:10.240 --> 0:02:13.880 at after four years, I do UH, And I think 0:02:13.880 --> 0:02:17.120 that there would be difficult to UH with republic if 0:02:17.120 --> 0:02:20.360 Republicans are also um, you know, sort of a majority 0:02:20.400 --> 0:02:22.919 at that point in Senate, and certainly Trump wins, you 0:02:23.000 --> 0:02:25.320 think that would be the case. It's hard to see 0:02:25.360 --> 0:02:29.480 a lot of yelling and screaming about it. I had 0:02:29.520 --> 0:02:31.600 to find a blue button. The blue button is for 0:02:31.680 --> 0:02:38.240 Chelsea Blue. It's good, it's um Ian, okay, fed independence 0:02:38.360 --> 0:02:43.000 and all that. But it's within an international architecture. Right now, 0:02:43.000 --> 0:02:46.240 what John and I here interview to interview is the 0:02:46.320 --> 0:02:51.480 separateness of domestic economies versus all the international back and forth. 0:02:51.880 --> 0:02:55.120 Do you buy that separateness or is that just a 0:02:55.200 --> 0:02:57.480 thing of the moment we should bundle it all together. 0:02:57.840 --> 0:03:00.480 I mean, look, you look at the ECB and you 0:03:00.560 --> 0:03:04.359 see a process that is actually not being politicized, even 0:03:04.400 --> 0:03:06.880 though many people said it would. It actually is, you know, 0:03:06.919 --> 0:03:12.680 being handled by bureaucratic UH coalition to put to ensure 0:03:12.760 --> 0:03:16.000 that you have a new technocratic head um. You know 0:03:16.000 --> 0:03:20.960 that this the Chinese are not moving towards um a 0:03:20.960 --> 0:03:24.160 a floatable currency, and so you don't think of the 0:03:24.160 --> 0:03:28.720 p boc UM as being one of the important central 0:03:28.760 --> 0:03:34.639 banks in how the world manages flows of currencies. I mean, 0:03:34.880 --> 0:03:37.320 if you look at all of the ways that the 0:03:37.440 --> 0:03:40.640 geo political order has been fragmenting in the last twenty 0:03:40.680 --> 0:03:44.560 five years, central banks have not been one of them. 0:03:44.600 --> 0:03:46.960 That's actually one of the places where you would say, 0:03:47.000 --> 0:03:51.000 the world looks more like the old American lead order 0:03:51.160 --> 0:03:55.520 than in any other area. I mean, the central banks 0:03:55.520 --> 0:03:58.600 are there, but the arch question for listeners is as 0:03:58.680 --> 0:04:01.320 Chairman Paul Central Bank or of the world. And you know, 0:04:01.360 --> 0:04:02.960 you look at the I m F meetings, which have 0:04:03.040 --> 0:04:06.600 devolved from multilateralism down to whatever Mr Trump would like 0:04:07.040 --> 0:04:10.400 his Mr Powell's act changed because of it? Is he 0:04:10.800 --> 0:04:14.360 is he less multilateral than he used to be? Um, yeah, 0:04:14.400 --> 0:04:16.960 I guess I would say no. I think that Trump 0:04:17.000 --> 0:04:21.000 doesn't impact Powell very much. What what is true is 0:04:21.040 --> 0:04:25.400 that the United States is more relevant economically compared to 0:04:25.440 --> 0:04:28.839 the Europeans, right, and the fact that the Europeans feel 0:04:28.880 --> 0:04:31.960 and disarray, the fact that the UK is neither in 0:04:32.080 --> 0:04:34.360 nor out, the fact that the Germans and French are 0:04:34.440 --> 0:04:37.960 weaker than they were in our part of the world. 0:04:38.240 --> 0:04:40.880 The United States is increasingly the quote unquote rules set. 0:04:41.040 --> 0:04:44.800 And what stunning John is the dollar range is now 0:04:44.960 --> 0:04:48.120 a four year range, which I didn't realize till this morning. 0:04:48.120 --> 0:04:50.720 I thought it was two three years b d d 0:04:51.040 --> 0:04:53.760 d x Y. The Bloomberg Dollar Index has been churning 0:04:54.320 --> 0:04:57.599 for four years after that big jump up. I mean, 0:04:57.720 --> 0:05:01.479 I mean to to Mr Trump tweet, I mean, we 0:05:01.520 --> 0:05:04.000 haven't seen dollars. Are you expecting the presidents go after 0:05:04.040 --> 0:05:06.240 the effects market again? Is that what you know? I'm 0:05:06.279 --> 0:05:09.240 just saying that that usually with the comments did you 0:05:09.279 --> 0:05:11.640 give from President Trump in the last forty eight hours, 0:05:11.960 --> 0:05:14.600 you'd want to see a substantial dollar strength there. And 0:05:14.800 --> 0:05:16.960 let's talk about what actually is happening. I mean, the 0:05:16.960 --> 0:05:19.719 perception of independence hasn't been damaged because the perception of 0:05:19.760 --> 0:05:22.240 independence will be defined by our guests, not by us 0:05:22.240 --> 0:05:24.719 sitting around this table. It's market participants. Do they think 0:05:24.800 --> 0:05:27.039 something has changed at the fat? I don't see that 0:05:27.080 --> 0:05:29.200 in the market that now that's not in the price. 0:05:29.400 --> 0:05:31.479 They don't, and they don't for a range of reasons. 0:05:31.520 --> 0:05:33.400 One of them is that they don't think. Some of 0:05:33.440 --> 0:05:37.200 them don't think that these individuals that have been nominated recently, 0:05:37.520 --> 0:05:40.320 A will officially be nominated in the first place, B 0:05:40.800 --> 0:05:43.640 will actually be confirmed, and see if they are confirmed, 0:05:43.680 --> 0:05:45.960 will have much influence on the f O m c 0:05:46.400 --> 0:05:48.760 in and all those three things play into this. One 0:05:48.800 --> 0:05:52.360 thing has changed? What changes that the American economy feels 0:05:52.360 --> 0:05:54.520 softer now than it did six months ago, and as 0:05:54.800 --> 0:05:57.600 even though the unemployment numbers are very low. Job creations good, 0:05:57.600 --> 0:06:00.080 but people are not as excited about the growth, and 0:06:00.279 --> 0:06:02.640 that means Trump needs to look for people to blame, 0:06:03.200 --> 0:06:06.920 and the FED is one of many, but one of 0:06:07.480 --> 0:06:10.560 one of his primary targets right now, and that's going 0:06:10.560 --> 0:06:12.280 to continue to be the case as long as the 0:06:12.360 --> 0:06:14.400 U s economy looks soft as we get into the 0:06:14.400 --> 0:06:18.359 election cycle, that's only going to become more urgent for Trump. 0:06:18.720 --> 0:06:21.080 I don't think that changes the way market participants think 0:06:21.080 --> 0:06:23.080 about the FED. And let's wrap up this conversation by 0:06:23.080 --> 0:06:25.560 talking about a concept you introduced a long time ago, 0:06:25.720 --> 0:06:29.960 the Jacob the robustness of institutions, the openness of developed markets, 0:06:30.320 --> 0:06:33.520 and the reason why we're successful relative to the complete opposite. 0:06:33.800 --> 0:06:37.320 Updateus on that thinking now so here it's a very 0:06:37.320 --> 0:06:39.560 different conversation the one we've just had on the FED, 0:06:39.880 --> 0:06:43.560 which is that most institutions in the West have gotten 0:06:43.640 --> 0:06:47.719 gradually weaker less stable over the course of the last 0:06:47.880 --> 0:06:50.840 couple of decades. That means that the United States, which 0:06:50.960 --> 0:06:54.200 used to be very stable because it's very open, is 0:06:54.240 --> 0:06:57.200 becoming a little bit more fragmented, a little bit more closed, 0:06:57.400 --> 0:07:00.520 and a little bit less stable. Other kind trees like 0:07:00.640 --> 0:07:04.440 France with their uh, you know, yellow vest movement um 0:07:04.480 --> 0:07:08.280 and Macron looking very weak. They've they've slipped even farther 0:07:08.560 --> 0:07:11.600 down the Jacob The countries that haven't slipped much at 0:07:11.640 --> 0:07:15.480 all would be Germany and perhaps the least would be Japan. 0:07:15.560 --> 0:07:19.520 But across all of the advanced industrial democracies, the trend 0:07:19.600 --> 0:07:22.720 has been these political institutions are becoming a little more 0:07:22.760 --> 0:07:25.120 closed and a little bit less stable. If you were 0:07:25.160 --> 0:07:27.960 to rewrite the book right now, what the first couple 0:07:28.000 --> 0:07:31.160 of pies read like. The first couple of pages would 0:07:31.560 --> 0:07:35.120 talk about a j that looks a little bit more 0:07:35.200 --> 0:07:38.160 like a you. In other words, there's a little bit 0:07:38.280 --> 0:07:43.320 less advantage to being an open advanced industrial democracy today 0:07:44.080 --> 0:07:46.520 then there was twenty years ago. And one of the 0:07:46.520 --> 0:07:49.840 big reasons for that is technology. When I wrote the book, 0:07:50.320 --> 0:07:54.920 technology was a trend that undermined authoritarian regimes. It led 0:07:54.960 --> 0:07:58.600 to colored revolutions in the Arab Spring, and its strengthened 0:07:58.680 --> 0:08:02.040 liberal democracies. Today, when we talk about the data revolution 0:08:02.040 --> 0:08:07.040 and surveillance, it pushes towards supporting those authoritarian regimes that 0:08:07.040 --> 0:08:09.520 have control of that data can do the surveillance, and 0:08:09.520 --> 0:08:13.720 that undermines and fragments some of the advanced industrial democracy. 0:08:13.920 --> 0:08:16.240 So what John suggested, here's your next book is an 0:08:16.320 --> 0:08:22.320 update on Jake Curf. Now he's not suggested dr require 0:08:22.440 --> 0:08:25.560 an update years out. There's no question and thank you 0:08:26.200 --> 0:08:28.760 with you guys, he writes a great present and that 0:08:43.040 --> 0:08:45.480 global Wall Street Chat of the day. We can do 0:08:45.520 --> 0:08:48.760 that with Fred Cannon of Keith Brietton Woods where he 0:08:48.840 --> 0:08:51.720 runs the research shop as well. John and I have 0:08:51.800 --> 0:08:54.440 like two hours of conversation where it's gonna squeeze into 0:08:54.480 --> 0:08:58.160 six minutes. Here Fred Cannon wins. The bank roll up happened. 0:08:58.200 --> 0:09:01.600 I mean, not that we're going to canadaize American banking. 0:09:01.640 --> 0:09:04.160 We saw the sun Trust merger. When's the roll up 0:09:04.280 --> 0:09:08.400 really begin with the vengeance that scale begins. It really 0:09:08.400 --> 0:09:09.920 it's already there, Tom, I mean, if you look at 0:09:10.000 --> 0:09:12.719 what happened during the financial crisis, that was the roll 0:09:12.800 --> 0:09:15.760 up the biggest four banks in the US control of 0:09:15.800 --> 0:09:19.000 the you know, the market. Today beyond that, we are 0:09:19.040 --> 0:09:20.840 seeing some roll up and we'll continue to see that. 0:09:20.880 --> 0:09:23.520 The bb and T sun Trust deal maybe the biggest 0:09:23.520 --> 0:09:26.360 deal we will have in this cycle, but there'll be 0:09:26.400 --> 0:09:28.839 a lot of deals underneath that size. We're starting to 0:09:28.880 --> 0:09:30.319 see m o E s. We're starting to see a 0:09:30.360 --> 0:09:37.720 lot of these. First of all, I haven't been this 0:09:37.760 --> 0:09:39.520 industry for a long time. We have to know there's 0:09:39.559 --> 0:09:42.200 no such thing as a merger of equals. But yet 0:09:42.240 --> 0:09:46.040 the structure of putting two banks of equal size together 0:09:46.559 --> 0:09:50.560 um is one that is increasingly folks are looking at 0:09:50.600 --> 0:09:52.679 it as a way to consolidate the industry. So when 0:09:52.840 --> 0:09:56.040 when When? When m o E was the discussed yesterday 0:09:56.080 --> 0:09:59.160 at home? That's what that meant. We've talked about your 0:09:59.200 --> 0:10:04.880 marriage merger equals? Was it a merger rarely found in 0:10:04.920 --> 0:10:08.720 the wild? Continue with Mr kim freend Earnings. Gorman sacks 0:10:08.720 --> 0:10:10.920 out in about ten minutes time. A little bit after that, 0:10:10.920 --> 0:10:12.959 we're gonna get City as well. We had JP Morgan 0:10:12.960 --> 0:10:16.599 on Friday, where you're laser focused. Uh, well, look, I 0:10:16.640 --> 0:10:18.839 think on the capital market side, I think we're just 0:10:18.840 --> 0:10:21.600 going to see beating low expectations coming into the quarter. 0:10:21.640 --> 0:10:25.080 Everybody cut their estimates. We saw out of JP Morgan 0:10:25.120 --> 0:10:28.720 on Friday beating those reduced expectations. Still not a great quarter. 0:10:28.880 --> 0:10:31.880 I think where we're really focused beyond that, especially on City, 0:10:31.960 --> 0:10:34.840 is net interest margins. What's really happening because of this 0:10:34.960 --> 0:10:38.880 yield curve. That's kind of the dynamics that everybody's fascinated on. 0:10:38.920 --> 0:10:42.080 And when will when will we see net interest margins 0:10:42.160 --> 0:10:44.000 roll over at the bank. There's been an obsession with 0:10:44.040 --> 0:10:46.400 the yield curve. But the yield curve has been narrowing 0:10:46.440 --> 0:10:48.520 flattening over the last couple of years, and net interest 0:10:48.520 --> 0:10:50.560 margins have been expanding. It's not actually been a good 0:10:50.600 --> 0:10:53.760 read on bank profitability. What has been is the trajectory 0:10:53.760 --> 0:10:57.120 of interest rates. Interest rates go higher, income has been 0:10:57.160 --> 0:10:59.720 going north. And now we have this situation with the 0:10:59.720 --> 0:11:03.360 Federal Reserve where interest rates aren't coming higher anymore, at 0:11:03.400 --> 0:11:04.959 least for the time being. So I'm wondering where the 0:11:04.960 --> 0:11:07.959 growth comes from. Where does it come from? Well, you're 0:11:07.960 --> 0:11:10.160 exactly right. The real growth is coming at the big 0:11:10.160 --> 0:11:14.560 banks from sherry purchase. We calculate sixty of the growth 0:11:14.640 --> 0:11:16.600 in earnings this year is going to come from sherry 0:11:16.600 --> 0:11:22.280 purchase at the banks. Well, well, an American, I don't, 0:11:22.360 --> 0:11:24.960 I mean? I remember Dick Kovasovitch at Wells Fargo called 0:11:25.000 --> 0:11:27.720 to sign a defeat to repurchase shares. In other words, 0:11:27.760 --> 0:11:30.240 you can't find something mentioned the break. It's more like 0:11:30.280 --> 0:11:32.719 a utility. We got cash, give it back when it 0:11:32.800 --> 0:11:35.640 raises an important question. The lot a lot of people 0:11:35.679 --> 0:11:37.800 who are bullish the banks aren't bullish on the earnings. 0:11:37.800 --> 0:11:40.080 They're bullish on the multiple. They think the multiple will 0:11:40.080 --> 0:11:42.439 re rate higher. But if the earnings are going to 0:11:42.480 --> 0:11:45.600 be juiced by what some people would call financial engineering, 0:11:45.679 --> 0:11:48.280 let's just call it capital returns, Fred, it's going to 0:11:48.360 --> 0:11:52.000 be juiced by that, is it deserving a higher multiple? Well, 0:11:52.160 --> 0:11:54.240 if you look at the multiples today, we're trading a 0:11:54.360 --> 0:11:57.120 late cycle bank earnings multiples. It's happened before, it happened 0:11:57.160 --> 0:11:59.800 in two thousand, happened in two thousand and eight, happened 0:11:59.800 --> 0:12:02.400 in a number of time periods. In other words, why 0:12:02.760 --> 0:12:05.520 our banks training these multiple stay Because expectations are the 0:12:05.600 --> 0:12:07.760 earnings have peaked and that we're going to see a 0:12:07.800 --> 0:12:10.760 downward pressure. That downward pressure is going to come from credit, 0:12:11.080 --> 0:12:14.000 not from interest rates. And that's the concern your bank guys. 0:12:14.000 --> 0:12:16.280 I know, Fred, you're above it all. It's sixty feet. 0:12:16.320 --> 0:12:18.840 But you're banking team at KBW, what do they like 0:12:19.000 --> 0:12:21.520 right now in terms of bi hold sell What quality 0:12:21.559 --> 0:12:24.120 of bank do they like right now? Well? We really 0:12:24.120 --> 0:12:26.440 because of those multiples. We like the high quality banks, 0:12:26.720 --> 0:12:28.440 like the big guys that are way behind. We like 0:12:28.480 --> 0:12:30.280 the big guys that are the quality. I mean, look, 0:12:30.320 --> 0:12:32.079 you have to kind of keep going with JP Morgan. 0:12:32.120 --> 0:12:34.240 At this point in time, BA has turned into a 0:12:34.320 --> 0:12:36.520 quality institution. We wouldn't have said that five or six 0:12:36.600 --> 0:12:38.560 years ago. UM. So you're looking at the at the 0:12:38.559 --> 0:12:40.640 big banks with quality, and then you're looking at this 0:12:40.920 --> 0:12:43.120 at the commercial banks you can continue to grow. Does 0:12:43.160 --> 0:12:45.880 Will's Fargo get their act together? You know, I was 0:12:45.920 --> 0:12:47.520 thinking the other day it was you know, I mean 0:12:48.240 --> 0:12:50.840 five years ago, Wells Fargo was the go to bank 0:12:50.880 --> 0:12:53.880 in the US. Um, it's not today. It took Tiger 0:12:53.880 --> 0:12:56.360 Wood's eleven years to come back. We'll see if it 0:12:56.400 --> 0:13:01.439 takes the Canada with Fred what's the name you're most 0:13:01.440 --> 0:13:05.640 worried about? Uh. In the US, we don't really worry. 0:13:05.880 --> 0:13:09.280 The banks. Balance sheets are strong, the capital strong. We 0:13:09.320 --> 0:13:11.880 don't see a big hiccups. I am worried a bit 0:13:11.920 --> 0:13:15.840 about the kind of expectations that some of these traditional 0:13:15.880 --> 0:13:18.800 savings alone like New York Community Bank are gonna you know, 0:13:18.800 --> 0:13:20.839 their stocks have done very well this year. I think 0:13:20.840 --> 0:13:23.079 that might be a mystery. Hey, Fred great to cant 0:13:23.080 --> 0:13:25.760 Show and wonderful Fred Can in their KBW Global director 0:13:26.080 --> 0:13:43.800 of Research the takeaway over the last hour, I'd say 0:13:43.840 --> 0:13:45.959 Thomas as follows, if you compare it to the estimates 0:13:45.960 --> 0:13:48.319 were okay, if you compare it year on year, it's 0:13:48.320 --> 0:13:50.520 as dreadful as everyone thought it would be. Let's bring 0:13:50.559 --> 0:13:53.640 in Snali Bassex, Showy Bloomberg Banking reporters. She joins us 0:13:53.640 --> 0:13:56.680 in the Interactive Broker studios here in New York City. 0:13:56.679 --> 0:13:59.720 Snale your take please. Sure it's pretty nassy quarter and 0:13:59.720 --> 0:14:01.880 we're gonna be waiting for is what things look like 0:14:01.920 --> 0:14:04.880 going forward for Goldman Sacks. In their presentation so far, 0:14:04.920 --> 0:14:07.440 they've highlighted all the changes they're making, right, So that 0:14:07.480 --> 0:14:09.840 doesn't mean, hey, you know, look at how great we 0:14:09.880 --> 0:14:12.199 did in mergers. For example, it's hey, look at our 0:14:12.280 --> 0:14:15.640 Apple partnership and let's see where that's going. And so 0:14:15.840 --> 0:14:18.319 you know, people are going to be wondering whether they 0:14:18.320 --> 0:14:20.080 were blaming the government shutdown for a lot of the 0:14:20.120 --> 0:14:22.920 week performance in the first quarter. But there's some places 0:14:22.920 --> 0:14:26.120 that there's some real questions. Yeah, John, you nailed it 0:14:26.280 --> 0:14:30.440 twenty minutes ago by saying revenues are constrained. What I 0:14:30.480 --> 0:14:33.200 see throughout the first six pages of their power point 0:14:33.720 --> 0:14:37.480 is low single digit revenue growth in different subsets. There 0:14:37.480 --> 0:14:40.360 are some video syncrening reasons why revenues were constrained in 0:14:40.440 --> 0:14:43.640 the first quarter, specifically the government shut down holding back 0:14:43.760 --> 0:14:46.320 I P oceanale. Let's talk about where we will be 0:14:46.400 --> 0:14:48.720 less constraint in the next few months. Is that a 0:14:48.760 --> 0:14:51.040 pocket an area where they will be I POS is 0:14:51.040 --> 0:14:53.360 a great thing to bring up because Goldman saxes on slack. 0:14:53.440 --> 0:14:55.920 JP Morgan was on lift. There's uber around the corners. 0:14:55.920 --> 0:14:58.280 So I P o f S should jump back quite today. 0:14:58.520 --> 0:15:00.920 What do they move the needle on banks? That big? 0:15:00.960 --> 0:15:04.880 Come on? You know that's the thing, no right to 0:15:04.880 --> 0:15:07.440 talk about. It's great, cut'll talk. But we're at a 0:15:07.440 --> 0:15:09.360 point in the banking cycle where we're looking at every 0:15:09.360 --> 0:15:14.600 business line very aggressively and seeing for any signs of strength. 0:15:14.640 --> 0:15:17.800 And you know that's exactly a place where buried at 0:15:17.800 --> 0:15:20.480 the last page conclusions, buried at the second of the 0:15:20.560 --> 0:15:24.680 last line, while maintaining expense discipline. Do you ever even 0:15:24.720 --> 0:15:27.360 come out It's April now we're in the summer ballet. 0:15:27.600 --> 0:15:29.360 How many bodies are going to walk out the door 0:15:29.600 --> 0:15:33.840 vary since Sundry hundreds everywhere in very many decisions, in 0:15:34.040 --> 0:15:37.000 very many divisions. Another place that nobody really talked about 0:15:37.000 --> 0:15:39.560 this morning is investment management. Goldman also has one of 0:15:39.600 --> 0:15:42.720 the biggest asset managers. About that, did you talk about it? 0:15:42.800 --> 0:15:48.360 We talked about seconds. Seconds. Well, it looked at it. It 0:15:48.280 --> 0:15:50.640 It was really interesting. They bought in more assets, but 0:15:50.680 --> 0:15:53.120 they took in lower fees, which shows you even for 0:15:53.200 --> 0:15:55.440 Goldman Sacks, it's a race to the bottom and asset 0:15:55.480 --> 0:15:58.240 management when you're just taking in lower fees. And JP 0:15:58.320 --> 0:16:01.680 Morgan already said they're cutting staff in that division as well, 0:16:01.720 --> 0:16:04.240 and both of those divisions are over a trillion dollars 0:16:04.440 --> 0:16:06.600 some of the biggest on all Street City unchanged in 0:16:06.640 --> 0:16:08.640 the pre market dead flat. We had a boost of 0:16:08.680 --> 0:16:11.720 bank stocks on Friday, they read across from from JP Morgan. 0:16:11.720 --> 0:16:13.520 It gave the whole sector a little bit of a 0:16:13.560 --> 0:16:16.600 lift off the back of these earning city doing absolutely nothing. Shinali, 0:16:16.640 --> 0:16:19.720 thank you and happy birthday, Thank you, Thank you very much. 0:16:19.720 --> 0:16:33.840 Snati Bassik there up Bloomberg Banking reporter. It's a good 0:16:33.840 --> 0:16:36.280 time to speak to Diane Swunk. She's with Grant Thornton 0:16:36.720 --> 0:16:39.440 it's just just does your woman's duty for us and 0:16:39.680 --> 0:16:43.200 fed day where she she gives this wonderful perspective on 0:16:43.200 --> 0:16:45.160 the central bank, Dan, I want to go into the 0:16:45.240 --> 0:16:50.440 nitte gritte around the National Association of Business Economists, which 0:16:50.480 --> 0:16:53.480 is all this data we're getting, and then we've got 0:16:53.520 --> 0:16:57.360 this massive divide and what we see from guests. Have 0:16:57.440 --> 0:16:59.920 you ever seen this before? Is this normal that we're 0:17:00.040 --> 0:17:03.880 seeing a mystery on the data and then two disparate 0:17:04.000 --> 0:17:07.000 views on what the central bank will do? You know, 0:17:07.119 --> 0:17:09.440 I think what's going on is one we have seen 0:17:09.440 --> 0:17:11.800 it before. You see it at tipping points in the economy, 0:17:11.840 --> 0:17:14.000 we start to get cross currents. The question is are 0:17:14.040 --> 0:17:16.880 we added tipping point or not. Also, I think it's 0:17:16.880 --> 0:17:20.119 really important to keep perspective out there that you know, 0:17:20.280 --> 0:17:23.600 when you're in a position where the underlying economy is 0:17:23.640 --> 0:17:26.560 doing well but slowing, you always worry about how close 0:17:26.560 --> 0:17:29.520 you're coming to send ice. And so even though it 0:17:29.600 --> 0:17:32.840 looks like the underlying economy is still solid, we worry 0:17:32.880 --> 0:17:35.880 about those soft patches out there, and the subtle reserve 0:17:36.359 --> 0:17:39.320 is hedging the downside risks of going through the ice 0:17:39.560 --> 0:17:42.520 and stepping back to the sidelines, which in and of itself, 0:17:42.560 --> 0:17:45.560 that moved to the sidelines signals that the said may 0:17:45.560 --> 0:17:49.439 be more worried. Well, this is critical. If there's one said, 0:17:49.720 --> 0:17:53.400 if there's one rate cut to come, or let's say 0:17:53.400 --> 0:17:57.520 it's asymmetric to rate cuts rate rises to come, what 0:17:57.720 --> 0:18:01.160 is the distinctive data factor that gets someone to two 0:18:01.280 --> 0:18:04.840 rate rises versus someone looking for one rate cut. You know, 0:18:04.880 --> 0:18:07.240 that's really interesting, I think at this stage of the game, 0:18:07.280 --> 0:18:11.240 because the Fed has so been wrong on inflation. It 0:18:11.359 --> 0:18:14.880 thought we'd get to three wage growth and sustained three 0:18:14.880 --> 0:18:17.399 percent wage growth would give us sustained two percent on 0:18:17.440 --> 0:18:21.000 their target inflation. That has failed. We've fallen short on that. 0:18:21.080 --> 0:18:25.600 After accelerating core inflation has actually decelerated. And so I 0:18:25.640 --> 0:18:28.320 think we need to see not only a sustained two 0:18:28.320 --> 0:18:31.080 percent reach on the target of inflation to get those 0:18:31.200 --> 0:18:34.000 rate hikes out there, but we need to see an 0:18:34.040 --> 0:18:36.960 overshoot on inflation for the FED to feel comfortable that 0:18:37.080 --> 0:18:40.200 they've really achieved their mandate. And their mandate is getting 0:18:40.280 --> 0:18:43.600 much more nuanced as well. Full employment doesn't just mean 0:18:43.600 --> 0:18:48.119 an unemployment rate anymore, as it's been evolving over several years, 0:18:48.240 --> 0:18:51.840 it's all now also now the employment to population share, 0:18:51.920 --> 0:18:54.919 the share of labor income that we're seeing in the economy, 0:18:55.119 --> 0:18:57.800 which is not moved up enough for the FED to 0:18:57.840 --> 0:19:01.080 feel comfortable at this stage. League Matt Bowsley here at 0:19:01.080 --> 0:19:03.399 Bloomberg doing a nice little rite up on that today. 0:19:03.680 --> 0:19:05.440 I suggest a lot of people reach out to Matt, 0:19:05.480 --> 0:19:07.160 if not, just take a read of it. It's really 0:19:07.200 --> 0:19:09.760 interesting in the push I read it to push Dan 0:19:09.840 --> 0:19:11.719 seems to become the push seems to be coming from 0:19:11.800 --> 0:19:15.119 vice share Rich Clarida. So how important is this push 0:19:15.160 --> 0:19:17.640 and how will it shape the federal reserve reaction function 0:19:17.760 --> 0:19:19.920 in the coming way? I think it's it's really important, John, 0:19:19.960 --> 0:19:21.639 And you know the issue is I was you know, 0:19:21.800 --> 0:19:24.280 I have to say that it's evolutionary, that revolutionary, and 0:19:24.320 --> 0:19:27.200 it's not as unique as you know it was pointed 0:19:27.240 --> 0:19:28.959 out in the article, because I know the FED has 0:19:28.960 --> 0:19:30.800 been looking at this issue for a long time as 0:19:30.840 --> 0:19:33.640 of economist for decades, looking at the issue of how 0:19:33.800 --> 0:19:36.960 labor has lost its bargaining power and that's hurting the 0:19:37.040 --> 0:19:40.400 labor share of income. We saw it in Janet Yellen's dashboard. 0:19:40.640 --> 0:19:42.560 So this has been something that FED has been trying 0:19:42.560 --> 0:19:44.480 to incorporate. I think Rich has taken it to a 0:19:44.520 --> 0:19:47.440 new level as Vice Chair of the FED, and really 0:19:47.480 --> 0:19:50.440 we're coming together and we're looking at it quite carefully, 0:19:50.440 --> 0:19:53.240 and how do we incorporate it more into the decision 0:19:53.320 --> 0:19:56.440 rule in understanding where the FED has been wrong on inflation. 0:19:56.480 --> 0:19:59.800 And I think that's a very important move going forward, 0:20:00.080 --> 0:20:04.040 is understanding not just employment, not just these aggregate very 0:20:04.040 --> 0:20:07.240 you know, basic tools of the economy, but getting the 0:20:07.280 --> 0:20:09.840 dirties in the details and Clarita and doing this is 0:20:09.880 --> 0:20:13.720 trying to make the decision much more of a process. 0:20:13.760 --> 0:20:16.720 It's more inclusive, and I think that's very important. Dian, 0:20:16.800 --> 0:20:18.040 just to put you on the spot a little bit, 0:20:18.480 --> 0:20:22.400 is Vice Chair Rich Clarada running the FED right now? 0:20:22.400 --> 0:20:24.600 But we don't want to put you on the spot now. 0:20:24.640 --> 0:20:26.000 You can put me on the spot all you want. No, 0:20:26.200 --> 0:20:28.360 Rich Clarida is not running the FED right now. Jay 0:20:28.400 --> 0:20:30.879 Paulo is running the FED right now, and nor is 0:20:30.920 --> 0:20:33.040 the president running the FED. Jay Paulo is running the 0:20:33.040 --> 0:20:35.560 FED right now. I have no qualms about that whatsoever. 0:20:35.840 --> 0:20:38.359 But this is a really strong Fedal Reserve Board at 0:20:38.400 --> 0:20:40.920 the moment, and I think that really deserves a lot 0:20:40.960 --> 0:20:42.920 of credit. It's not always been as strong of a 0:20:43.000 --> 0:20:47.200 board with his um broad base of opinions in different specialties. 0:20:47.440 --> 0:20:50.000 I think, you know, sort of, this pushback on nominees 0:20:50.040 --> 0:20:52.440 to the FED board is not about elitism. It's about 0:20:52.600 --> 0:20:55.600 having diversity of thought that's informed for the skills of 0:20:55.640 --> 0:20:59.080 the job, knowing regulation. What does that mean for the economy? 0:20:59.119 --> 0:21:02.280 Having experienced in that um knowing, it's you know, when 0:21:02.320 --> 0:21:04.600 I look at the FED boarding day, I really look 0:21:04.640 --> 0:21:08.080 at a board that is well qualified and rich karitas. 0:21:08.160 --> 0:21:11.800 You know, stepping out is really um evidence of that. 0:21:11.840 --> 0:21:14.480 But we've had many strong vice chairman. Janet Ellen was 0:21:14.520 --> 0:21:17.359 a vice chairman, Alice Ryland was a vice chairman, Allen Blinder, 0:21:17.720 --> 0:21:21.080 you know, Roger Ferguson, non economist vice chairman. So the 0:21:21.240 --> 0:21:25.119 strength in the FED board is really critical. Thank you, 0:21:25.560 --> 0:21:44.600 Thank you filts in the chief economists. Over that, let 0:21:44.680 --> 0:21:48.720 us listen to some golf history. Back behind the ball Woods, 0:21:50.440 --> 0:21:55.879