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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: All right, Good Wednesday morning from Bloomberg INTERACTI Broker Studio

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Speaker 2: in New York City to our worldwide audience. We've got

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Speaker 2: Bailly the Lipsholtz sitting in for Alex Steele. We're broadcasting

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Speaker 2: live from the Bloomberg Interactive Broker Studio. We're doing the

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Speaker 2: streaming thing on the intro web, so I think it's

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Speaker 2: YouTube dot com. You go over there and you search

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Speaker 2: Bloomberg Podcast and that's where you find. It's big news

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Speaker 2: today for a good head of friends of Robin Hood.

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Speaker 2: Markets stocks up three point six percent today. The company

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Speaker 2: unveiling a credit card. I need more credit cards.

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Speaker 3: Look at the stock here. Obviously I'm a Wall Street guy.

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Speaker 3: All I care about is the stock.

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Speaker 2: Stock's a fifty six percent year to date wow, trailing

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Speaker 2: twelve months up one hundred and thirty two since it's

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Speaker 2: got a seventeen and a half billion dollar market cap

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Speaker 2: so big news coming out of our friends of Robinhood.

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Speaker 2: Lat Ten of joins us. He's a chief executive officer.

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Speaker 2: He's a co founder Robinhood. He joined us here in

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Speaker 2: a Bloomberg interactive broker studio. I'm not on the robin

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Speaker 2: Hood platform because I'm a gentleman.

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Speaker 3: I need the.

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Speaker 2: Swiss bank secrecy laws protecting me. But my twenty eight

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Speaker 2: year old twins, who are the future of this thing,

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Speaker 2: they are on Robinhoo. They're very happy. They were psyched

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Speaker 2: that I was talking to Vlad. Talk to us about

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Speaker 2: your news today. You're not just a commission free platform,

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Speaker 2: which is in and of itself amazing, but you're now

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Speaker 2: getting to the credit card business.

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Speaker 4: Yeah.

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Speaker 5: We were really excited to announce this. We've been working

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Speaker 5: on it for quite a while and we didn't just

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Speaker 5: want to launch another me too credit card. We really

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Speaker 5: wanted to come in and do something special and really

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Speaker 5: lead the industry. So it's really the best cash back

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Speaker 5: rewards that we found in any credit card on the market,

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Speaker 5: the best digital experience, and really the best design. We

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Speaker 5: have a solid gold card that's basically a hunk of metal.

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Speaker 5: It's extremely iconic, very simple, like very well designed. We're

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Speaker 5: really proud of the product. Now the hard work comes

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Speaker 5: of rolling it out. But even since the announcement, in

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Speaker 5: the first few hours after the announcement, which was last night,

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Speaker 5: we had hundreds of thousands of people signing up for

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Speaker 5: the credit card, so it's it's looking very good so far.

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Speaker 6: How does the credit card fit into the business, because

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Speaker 6: I know early last year you guys announced a retirement products,

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Speaker 6: so it feels like you're trying to expand away from

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Speaker 6: the core trading platform.

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Speaker 4: Yeah.

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Speaker 5: So as a business, holistically, we're focused on three things.

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Speaker 5: The first is being the number one platform for active traders.

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Speaker 5: Right now, we're number two, but we have a path

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Speaker 5: to being number one in some number of years, and

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Speaker 5: that's really through user experience improvements, product innovations like twenty

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Speaker 5: four hour market, adding new asset classes like Futures, new

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Speaker 5: platform launches like our web Pro platform which we've announced.

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Speaker 5: But we don't want to just be an active trader platform.

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Speaker 5: We also want to grow wallet share with our customers

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Speaker 5: and help them build wealth. That's where Robinhood Gold comes in.

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Speaker 5: That's where our innovations and the retirement program with three

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Speaker 5: percent match come in. And of course, now the credit

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Speaker 5: card is sort of another pillar of us growing wallet

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Speaker 5: share with customers and helping them do all of their

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Speaker 5: financial activities in one place via Robinhood.

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Speaker 2: So are you competing with this card with the bank

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Speaker 2: issued visa master cards?

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Speaker 3: Is that the market you're now going into.

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Speaker 5: I think that we're trying to do something really interesting

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Speaker 5: with this card. So if you think about premium credit cards,

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Speaker 5: the best ones out there, accept less than half of

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Speaker 5: the people that apply.

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Speaker 3: Is that right? Half of that? Is that Chase Sephi

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Speaker 3: or is that an Platinum or whatever.

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Speaker 5: Those classes of credit card. It's really like the typical

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Speaker 5: sort of like super prime premium rewards cards, and they

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Speaker 5: have high annual fees. So what we want to to

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Speaker 5: do is, in the same way that Robinhood democratized stock

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Speaker 5: trading and made it accessible to a wider group of people,

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Speaker 5: we want to open up the private client experience. I

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Speaker 5: don't know if you've been to a Chase branch, but

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Speaker 5: you can see there's two doors, one for the private

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Speaker 5: clients and one for everyone else. And the whole idea

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Speaker 5: behind Robinhood Gold is giving that private client experience for

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Speaker 5: as little as five dollars a month, opening it to everyone,

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Speaker 5: and it starts with the premium credit card. Of course,

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Speaker 5: the retirement benefits where you get a three percent match,

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Speaker 5: the first and biggest in the industry the five percent

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Speaker 5: apy on our cash which is just an institutional grade,

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Speaker 5: high yield offering that you have to have, you know,

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Speaker 5: millions of dollars to match at other brokers. So yeah,

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Speaker 5: we're putting all this together and we're seeing Robinhood Gold

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Speaker 5: customers actually depositing the lion's share of their money into

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Speaker 5: Robinhood and really growing with us. And I think we

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Speaker 5: have an opportunity to offer them services for all their

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Speaker 5: financial needs in BIB the perks.

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Speaker 6: Are pretty sweet, as you mentioned, three percent cash back

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Speaker 6: on all purchases. Do you make money off of this?

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Speaker 5: Are?

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Speaker 6: How is this going to be kind of another peg

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Speaker 6: for the profitability and the growth of the company.

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Speaker 5: Yeah, two things there. One is we do obviously any

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Speaker 5: business line we enter, we intend to be profitable over

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Speaker 5: the long run on a standalone basis, so not just

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Speaker 5: a creative but we anticipate this being a profitable business

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Speaker 5: line just within the card portfolio. And that's through not

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Speaker 5: just the interchange transaction revenue, but also the lending business

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Speaker 5: through the card. We anticipate this would actually be a

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Speaker 5: very attractive card for people building credit over time, and

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Speaker 5: not just folks that pay off their balance in full.

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Speaker 5: And then the other side of it is we see

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Speaker 5: that when customers adopt Robinhood Gold, their rate of deposit

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Speaker 5: growth and account balance growth is much higher than non

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Speaker 5: Gold customers. They also adopt our products at a much

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Speaker 5: higher rate, and so even though they're getting so much

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Speaker 5: more value with all these industry leading rates and value props,

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Speaker 5: the revenue that accrues to the business from the gold

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Speaker 5: relationship is also multiples higher than non gold customers. And

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Speaker 5: we think the credit card, since it's so core to

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Speaker 5: people's financial needs. Typically all of their the line's share

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Speaker 5: of their spending goes through credit, and if you're using

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Speaker 5: a credit card, much easier to grab the paycheck deposit.

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Speaker 4: You need to carry his cash around.

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Speaker 6: Now, this is the guy who walks around with hundreds

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Speaker 6: of dollars in his pocket.

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Speaker 2: I don't know why I asked myself to say, when

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Speaker 2: you walk into a bar, the jersey short good cash

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Speaker 2: on the bar there.

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Speaker 5: Well, I mean, I'll show you what I've got in

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Speaker 5: my pocket.

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Speaker 2: Oh, he brought the card, very cool fourteen car So

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Speaker 2: this all right, folks, on we're shoving you this card.

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Speaker 2: It is it weighs something you got some hef to. Well,

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Speaker 2: this is the card here, folks, it is.

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Speaker 5: It's basically a gold bull. It's like it's not gold plated,

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Speaker 5: it's a this is solid.

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Speaker 6: Your numbers though I can't make it right now.

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Speaker 5: That's the great thing about it because this is a

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Speaker 5: digital first card, and we outlined all of the awesome

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Speaker 5: digital features like virtual cards, like family focused suite of features. Yeah,

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Speaker 5: you don't actually need the number on it. You can

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Speaker 5: open up the app, look at the number, the expiration

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Speaker 5: dates on there. The design of the card is minimal,

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Speaker 5: only the robin Hood brand, the chip and on the

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Speaker 5: back you have your name and that's pretty much interesting.

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Speaker 5: So if it gets stolen or lost, you don't really

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Speaker 5: have to worry about their actual number being used.

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Speaker 4: Yeah, yeah, all right.

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Speaker 2: So who is the typical robin Hood customer these days?

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Speaker 3: Client? These days?

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Speaker 5: A typical Robinhood customer, I would say, is someone in

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Speaker 5: their thirties. They tend to be an early adopter of technology.

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Speaker 5: They have you know, more half of our customers make

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Speaker 5: over one hundred thousand dollars in annual income, so it's

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Speaker 5: not sort of like the paycheck to paycheck customer as

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Speaker 5: maybe some people think, and we also have much larger

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Speaker 5: customers with big accounts. We recently have been introducing matches.

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Speaker 5: In fact, last night we rolled out another initiative, one

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Speaker 5: percent unlimited deposit match into Robinhood for all dollars deposited

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Speaker 5: for our Gold members. So basically, most financial firms charge

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Speaker 5: you a percentage to keep your money there as a

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Speaker 5: management fee. We're paying you a percentage to move your

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Speaker 5: money with us. And these types of offers have really

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Speaker 5: attracted people with much bigger accounts. We've had customers with

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Speaker 5: tens of millions of dollars moving those accounts to Robinhood

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Speaker 5: and they've been very happy with the experience. So we

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Speaker 5: have been adding capabilities to serve customers across the entire market,

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Speaker 5: not just sort of in that middle tier, but also

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Speaker 5: people with more money and people with less who are

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Speaker 5: just getting started. We also would like to serve them

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Speaker 5: and have been focusing on that demographic since day one.

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Speaker 6: And VLAT When I talk to skeptics, they point out

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Speaker 6: that you guys are heavily reliant on options trading, crypto volumes,

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Speaker 6: and that driving the business. Paul mentioned their huge run

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Speaker 6: up over the last twelve months, it's still down forty

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Speaker 6: eight percent from the IPO price. What is the kind

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Speaker 6: of mission in the next coming months and years for

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Speaker 6: the company to.

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Speaker 3: Get back to that IPO price and trade higher.

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Speaker 5: Well, I think we've been doing really well focusing on

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Speaker 5: the inputs of the business. I can't really control the

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Speaker 5: stock price directly, but if we're growing revenues, if we're

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Speaker 5: diversifying revenues, if we're launching innovative new products for our customers,

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Speaker 5: I think we can kind of grow through market headwinds

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Speaker 5: and high interest rate environment and be sort of like

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Speaker 5: a company that thrives in all conditions. And you mentioned

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Speaker 5: the revenues and you know, options trading and all these things.

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Speaker 5: But what's happened in the past couple of years is

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Speaker 5: the revenue profile of the business has diversified as we've

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Speaker 5: rolled out all these products. As of the last earnings

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Speaker 5: report several earnings calls, more than half of the revenue

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Speaker 5: is actually net interest margin, not even transaction base. So

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Speaker 5: as we add more of these products, like the five

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Speaker 5: percent yield on your cash, the profile of the business

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Speaker 5: has also changed.

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Speaker 3: All right, flat, thank you so much for joining us.

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Speaker 2: Really appreciate you coming into our Bloomberg and director broker

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Speaker 2: studio of lad Tenev. He's the chief executive officer, co

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Speaker 2: founder of Robin Hood. The news Today, Robinhood unveils a

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Speaker 2: credit card and folks, it hasn't hef This is a

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Speaker 2: unique credit card. It's been a further push beyond the

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Speaker 2: trading business there in the stock performing very well there.

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Speaker 3: We appreciate that.

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Speaker 2: One of the issues here is we think about the

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Speaker 2: ripple effects of what happened in Baltimore yesterday, is who's

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Speaker 2: going to pay for this stuff? And that kind of

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Speaker 2: goes to the insurance discussion, and so we have a

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Speaker 2: just insurance discussion. We turned to our expert, Matthew Palozola.

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Speaker 2: He's a senior analys insurance annalys for Bloomberg Intelligence he

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Speaker 2: joins his life in our Bloomberg Interactive Brooker Studio. So, Matthew,

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Speaker 2: it's not every day that we have an event like

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Speaker 2: we saw yesterday in Baltimore. From your perspective, from the

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Speaker 2: insurance perspective, how do you think it's going to play out?

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Speaker 7: So we know a couple of things. Is obviously still

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Speaker 7: very early, but we've seen some stuff in the trade press,

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Speaker 7: and there's a little more information than there actually normally

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Speaker 7: is on some of these disasters. The bridge itself, I've

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Speaker 7: seen reports that it's valued at about one point two

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Speaker 7: billion dollars. I have no idea how much it's going

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Speaker 7: to actually cost to rebuild it. The ship the Dolly

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Speaker 7: that crashed, actually is carrying, in my view, unusually large

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Speaker 7: amount of insurance and reinsurance, which is a good thing

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Speaker 7: in this case. There's about three point one billion dollars

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Speaker 7: worth of insurance and reinsurance tied to that vessel. Now

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Speaker 7: that's also separate from insurance that's on the bridge and

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Speaker 7: kind of other things. The problem is it's going to

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Speaker 7: take a long time to play out, so the reinsurance

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Speaker 7: that's on there will probably end up paying the bulk

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Speaker 7: of the.

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Speaker 6: Claims and how does this compare to say a hurricane

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Speaker 6: or another form of kind of natural disaster thing that

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Speaker 6: happens where you have insurance and reinsures kind of all.

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Speaker 7: Yeah, anything, it's it's a more complex event, right, So

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Speaker 7: on the back end, stuff we probably will never see.

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Speaker 7: They'll probably be a lot more back and forth. In

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Speaker 7: terms of the cost of the event, I'm assuming very

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Speaker 7: early back of the envelope, it's probably a mid single

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Speaker 7: digit billions, probably like a four billion or probably even less, honestly,

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Speaker 7: which is like a small hurricane, and we have hurricanes

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Speaker 7: that are twenty thirty fifty billion dollars. So in terms

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Speaker 7: of the impact of the entire industry is probably very manageable.

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Speaker 3: Who ensures this stuff? I mean, these ships go all

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Speaker 3: over the world. They're monsterships.

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Speaker 2: I have no idea how they get in and out

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Speaker 2: of ports now that you think about it, they're so

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Speaker 2: huge these days, and I got to traverse you know,

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Speaker 2: dangerous waters, congested waters. Who ensures this stuff?

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Speaker 4: So it's pretty interesting.

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Speaker 7: The way it works is it's it's kind of a

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Speaker 7: mutual claims paying group that specifically this ship, right, So

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Speaker 7: a bunch of this is kind of the way insurance started. Honestly,

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Speaker 7: is a bunch of people running the ships get together

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Speaker 7: and they pull their resources, and that's where they get

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Speaker 7: the insurance from. That's really only the very low layer

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Speaker 7: of the insurance. So that's one hundred million of the

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Speaker 7: three point one billion of insurance, right.

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Speaker 4: So then the rest of it goes to this.

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Speaker 7: Global reinsurance market. Above the one hundred there's kind of

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Speaker 7: another bit of ship reinsurance, and then above that it's

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Speaker 7: the global reinsurance market. So I think companies like Swiss

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Speaker 7: re Munich ree, some of the Bermuda reinsurance companies, I

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Speaker 7: don't know if they have specific exposure.

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Speaker 3: So do we know who's the name's backing this?

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Speaker 4: Who's we don't. We know that acce Xcel.

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Speaker 7: Was the lead on some of the reinsurance, we don't

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Speaker 7: know by how much, and that was just reported by

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Speaker 7: the group at the time when they renewed the policy.

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Speaker 6: If I'm a shipper and now my path is delayed

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Speaker 6: and I have to rethink how I'm operating, is there

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Speaker 6: anyone that I'm covered by insurance or reinsurance? Like, how

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Speaker 6: does insurance play into some of the delays that are

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Speaker 6: likely going to happen as they eventually clear, there'll.

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Speaker 7: Certainly be some knock on effects, right, so it would

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Speaker 7: be a business interruption claim. So it's kind of I think,

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Speaker 7: pretty classic, meaning there's something in your way, you can't

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Speaker 7: do your business, you'll have some sort of business insrupting

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Speaker 7: clim it's probably on the primary insurance market. If you

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Speaker 7: recall in twenty twenty one the Suez Canal got blocked

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Speaker 7: by that ship. There was talk about like ten billion

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Speaker 7: dollars worth of commerce a day going through there or

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Speaker 7: something like that, and that was that was six days.

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Speaker 7: Even when that happened, it wasn't a huge amount of

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Speaker 7: business eruption claims for the industry, but that that would

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Speaker 7: be where it falls.

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Speaker 2: All right, So are rates going to go up here

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Speaker 2: or is this just a one off black Swan kind

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Speaker 2: of event it which kind of seems like it.

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Speaker 7: So reinsurance press have been going up anyway, right, So,

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Speaker 7: and the reinsurance market doesn't exactly move in lockstep anymore.

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Speaker 7: It's kind of individual market. So I think you will

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Speaker 7: certainly see maritime reinsurance rates going up. So in case

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Speaker 7: you're shipping anything overseas, qual you might have to pay

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Speaker 7: a little more. But I think that's almost a given.

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Speaker 7: After an event like this that specifically to maritime reinsurance.

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Speaker 6: And looking at reinsurres, we've been sitting on the equities desk.

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Speaker 6: We're trying to game out which stocks are going to

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Speaker 6: move in which direction and who benefits and who loses?

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Speaker 4: How does that play out? Like?

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Speaker 6: Is this in real time we find out that X

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Speaker 6: firm has to disclose that they're the main reinsurer on

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Speaker 6: this or how how did those kind of dynamics?

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Speaker 4: Usually the way works.

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Speaker 7: So what will happen is and I don't expect we'll

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Speaker 7: see much of this for the names I cover.

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Speaker 4: But what will happen is as we go into earnings.

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Speaker 7: If you are one of the companies with a big

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Speaker 7: exposure to this and it's gonna be material on your results,

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Speaker 7: they will usually pre announce that ahead of earnings, just

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Speaker 7: so that they don't, you know, dramatically miss the number

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Speaker 7: on that day. So that will be the way it

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Speaker 7: would play out in the market. But I don't think

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Speaker 7: you're gonna hear a ton from at least in Bermuda

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Speaker 7: companies that I cover.

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Speaker 3: Gotcha, where are we? I don't know?

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Speaker 2: Trailing twelve months on your you're the disaster guy. So

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Speaker 2: there's a hurricane or some terrible fire with our friends

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Speaker 2: in California or something like that, we turned to you.

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Speaker 3: We haven't talked to you a lot recently.

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Speaker 4: Yeah, we've We've been alright.

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Speaker 7: So even last year, what happened was the Swiss regis

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Speaker 7: put out there annual catastrophe loss for the industry, right,

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Speaker 7: and it was one hundred billion dollars for the third

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Speaker 7: year in a row. And when I started in this

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Speaker 7: industry many years ago, if you told me it would

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Speaker 7: be one hundred billion dollars last year, we'd be shocked, right,

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Speaker 7: it would have blown off the off the chair. And

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Speaker 7: now it's been three years in a row that's happened.

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Speaker 7: The interesting thing about last year was a lot of

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Speaker 7: it was caused by severe convective storms, not huge catastrophes,

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Speaker 7: not huge hurricanes, So it was kind of these smaller

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Speaker 7: events that built up. So that's probably why you're not

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Speaker 7: hearing these kind of headline things. But the losses, you know,

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Speaker 7: are still there. That said, the market's still very well capitalized,

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Speaker 7: and it really wasn't. It was still a pretty good

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Speaker 7: year for the insurers. But that's kind of what's happening.

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Speaker 7: And now if you get a big event on top

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Speaker 7: of those accumulation of smaller events, than it could be

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Speaker 7: pretty all.

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Speaker 2: Right, Bailey's in the market for beachfront mansion done in

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Speaker 2: the palm beachery.

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Speaker 3: Can you get insurance on that stuff sitting on the water?

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Speaker 7: It depends on the state, but probably not. You might

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Speaker 7: have to move into yours. But yeah, no, I mean,

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Speaker 7: it's it's all the insurers are pulling back from all

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Speaker 7: of the coastal states.

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Speaker 4: It's partly climate change.

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Speaker 7: I know, we know, kind of like a point to

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Speaker 7: that immediately, but that's not it's not the biggest thing.

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Speaker 7: The other thing is that property valves have gone up,

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Speaker 7: inflation has pushed the repair costs up, and yes, the

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Speaker 7: frequency and severity of storms is worse. So it's kind

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Speaker 7: of all those things mixed together. It's just at a

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Speaker 7: conference where someone said a home insurance ceo who I

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Speaker 7: won't name, and said they just wouldn't even touch New

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Speaker 7: Jersey specifically.

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Speaker 2: Right, all right, Well, I'm five blocks for us, fine

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Speaker 2: blocks in from the ocean, so I feel and they're

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Speaker 2: long blocks of the big block, so I feel very

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Speaker 2: safe there. But again, you know, Superstorm Sandy came through

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Speaker 2: and still to this day you get onto men and

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Speaker 2: menal loaking in New Jersey. There are still lots like

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Speaker 2: a ten million dollar home got washed away. They haven't rebuilt.

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Speaker 2: It's still sitting there empty. So those folks got crushed.

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Speaker 3: So it's a thing.

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Speaker 2: Matthew Palozola, thanks so much for joining us senior analys

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Speaker 2: covering the insurance business for Bloomberg Intelligence. Joining us here

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Speaker 2: in our Bloomberg Interactive Brokers studio're trying to game out

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Speaker 2: kind of what some of the insurance implications will be

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Speaker 2: from this bridge collapse in Baltimore.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple Car, playing Android

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Speaker 1: Otto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 3: Cardinal Cruise Lines reported some numbers.

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Speaker 2: They raised their four year outlook amid record setting booking pace,

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Speaker 2: but they also said that the collaps Baltimore Bridge might

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Speaker 2: have a ten million dollars negative impact on their cash flow.

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Speaker 3: And earnings for the year.

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Speaker 2: Let's break it down with Jody Lourie. She covers all

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Speaker 2: the consumer stuff for Bloomberg Intelligence.

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Speaker 3: She's a credit analyst over there.

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Speaker 2: So, Jody, what'd you make of the Carnival numbers. It

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Speaker 2: seems like people are cruising like crazy here, So I.

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Speaker 8: Would say a few things about that, Paul.

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Speaker 9: First of all, I would say that when you look

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Speaker 9: at Carnival, it's really a cash flow story. It really

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Speaker 9: is a credit story more than anything else, and the

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Speaker 9: bookings are sort of confirming that.

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Speaker 8: Now.

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Speaker 9: The booking level, if you include short and long term,

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Speaker 9: it's actually not at the peak, which was second quarter

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Speaker 9: of last year, but it's right near the peak, and

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Speaker 9: based on what management is saying, it sounds like second

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Speaker 9: quarter of this year might top second quarter of last year.

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Speaker 8: That said, I.

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Speaker 9: Think more importantly, the company is starting to attack some

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Speaker 9: of its debt load, particularly in some of its secured areas,

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Speaker 9: which will help to sort of free up the balance

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Speaker 9: sheet a little bit, provide some flexibility, make it so

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Speaker 9: that the company has an ability to sort of make

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Speaker 9: its way back to high grade ratings as it's been

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Speaker 9: targeting for twenty twenty six.

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Speaker 6: H Jody, you call that out just using the FA

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Speaker 6: function on the terminal Carnival cruise almost thirty two billion

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Speaker 6: dollars in debt compared to a market cap of twenty

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Speaker 6: one billion dollars. How does that stack up to the

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Speaker 6: likes of Royal, Caribbean or Norwegian and some of those

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Speaker 6: other piers in the cruise liner space.

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Speaker 9: So yeah, Carnival was able to bring down their debt

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Speaker 9: load to about thirty billion over the past year, and

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Speaker 9: it's likely that'll probably end this year around that level

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Speaker 9: based on what they're taking in in terms of ships.

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Speaker 9: That said, it is significantly higher than Royal, it is

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Speaker 9: significantly higher than Norwegian, but on a leverage perspective, it's

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Speaker 9: sort of middle of the pack at the moment as

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Speaker 9: compared to Royal and Norwegian. Royal is a little bit

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Speaker 9: a few quarters ahead of Carnival in terms of its

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Speaker 9: deleveraging strategy. Management at Royal actually bumped up their narrative

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Speaker 9: around getting to investment grade level metrics to do it

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Speaker 9: earlier than twenty twenty five, and Carnival stuck to that

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Speaker 9: twenty twenty six number, which I think is descriptive of

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Speaker 9: being a little bit more conservative, particularly with the backdrop

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Speaker 9: of everything happening globally, not just the Baltimore Bridge situation,

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Speaker 9: but also at the Red Sea and everywhere else that's

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Speaker 9: affecting Carnival more broadly because of its more global nature.

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Speaker 2: I'm looking at again, the FA function is barely called out.

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Speaker 2: I still see you know, three four billion dollars in

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Speaker 2: in capex every year. Are they buying ships or what

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Speaker 2: are they spending that kind of money on?

438
00:22:05,400 --> 00:22:09,600
Speaker 9: Yeah, the three four billion dollars of capex is primarily ship.

439
00:22:10,080 --> 00:22:13,040
Speaker 9: There is a portion of it that is in terms

440
00:22:13,080 --> 00:22:15,639
Speaker 9: of maintenance capex. Right, your ships get old, you have

441
00:22:15,680 --> 00:22:18,359
Speaker 9: to update them every few years. You have all these

442
00:22:18,400 --> 00:22:21,160
Speaker 9: sort of different requirements related to it. They also have

443
00:22:21,240 --> 00:22:23,639
Speaker 9: that celebration key that they're rolling out on, which is

444
00:22:23,640 --> 00:22:26,840
Speaker 9: on the Grand Bahama, and that's to rival their peers,

445
00:22:26,880 --> 00:22:32,040
Speaker 9: which have been investing really heavily also into island presence. Right,

446
00:22:32,280 --> 00:22:35,000
Speaker 9: the Caribbean island presence is a money maker for all

447
00:22:35,040 --> 00:22:35,359
Speaker 9: of them.

448
00:22:35,560 --> 00:22:36,920
Speaker 8: It's this captive audience.

449
00:22:36,960 --> 00:22:39,280
Speaker 9: They bring the people who are on their ships to

450
00:22:39,359 --> 00:22:42,280
Speaker 9: these islands and to these sections of islands like you know,

451
00:22:42,359 --> 00:22:45,240
Speaker 9: not the whole Grand Bahama, but that carved out sections

452
00:22:45,320 --> 00:22:48,920
Speaker 9: specifically for Carnival and you know, wine and dying them

453
00:22:48,960 --> 00:22:51,639
Speaker 9: get them to spend extra money that onboard spend is

454
00:22:51,680 --> 00:22:52,640
Speaker 9: really where you see that.

455
00:22:52,560 --> 00:22:55,320
Speaker 6: Margin you mentioned wining and dining. I just want to

456
00:22:55,320 --> 00:22:57,639
Speaker 6: look at some of the other areas that you cover,

457
00:22:58,160 --> 00:23:01,040
Speaker 6: talking about wind resorts, MGM and HILT all the funds,

458
00:23:01,119 --> 00:23:02,600
Speaker 6: all the fund stuff. Yeah, you have the best job.

459
00:23:02,640 --> 00:23:05,240
Speaker 6: I hope you take advantage of it. But like when

460
00:23:05,240 --> 00:23:08,320
Speaker 6: you look at the underlying business dynamics of some of

461
00:23:08,359 --> 00:23:10,479
Speaker 6: the other areas that you cover. What are we seeing

462
00:23:10,680 --> 00:23:13,760
Speaker 6: in terms of hotel demand and hotel sales and what

463
00:23:13,800 --> 00:23:15,640
Speaker 6: that means from a credit perspective.

464
00:23:16,280 --> 00:23:19,960
Speaker 9: So hotel demands, hotel sales, it's it is a bit

465
00:23:20,160 --> 00:23:23,600
Speaker 9: mixed regionally, but I think overall we're pretty optimistic about

466
00:23:23,640 --> 00:23:25,560
Speaker 9: this year, and that's a function of the fact that

467
00:23:25,640 --> 00:23:28,840
Speaker 9: business and conference is really picking up this year as

468
00:23:28,840 --> 00:23:31,160
Speaker 9: compared to the past few years. You know, we're at

469
00:23:31,160 --> 00:23:33,960
Speaker 9: that point where that post pandemic narrative has sort of

470
00:23:34,000 --> 00:23:36,520
Speaker 9: played out and we're getting to more normalized.

471
00:23:36,720 --> 00:23:38,480
Speaker 8: That said, there are areas.

472
00:23:38,119 --> 00:23:41,560
Speaker 9: Of expansion and growth. We're also seeing that all inclusive

473
00:23:41,640 --> 00:23:45,120
Speaker 9: area be a much more attractive area for a lot

474
00:23:45,160 --> 00:23:47,160
Speaker 9: of these companies, and I think we are seeing some

475
00:23:47,280 --> 00:23:51,080
Speaker 9: rivalry across the board when it comes to hotels casinos,

476
00:23:51,160 --> 00:23:55,639
Speaker 9: cruise lines as these destination opportunities. We're talking Las Vegas

477
00:23:55,680 --> 00:23:58,280
Speaker 9: obviously not the regional casinos that's a little bit different,

478
00:23:58,560 --> 00:24:02,159
Speaker 9: but Las Vegas, Macaw, you know, the cruise lines and

479
00:24:02,200 --> 00:24:04,520
Speaker 9: the hotels. There's a lot of sort of this destination

480
00:24:04,720 --> 00:24:07,000
Speaker 9: narrative that's going on to get people to spend that

481
00:24:07,040 --> 00:24:09,680
Speaker 9: extra money and to sort of go on vacation, live

482
00:24:09,720 --> 00:24:13,159
Speaker 9: life to the fullest. Now, we do have these partnerships

483
00:24:13,160 --> 00:24:18,360
Speaker 9: that are happening between Marriott and an MGM, but then

484
00:24:18,400 --> 00:24:21,440
Speaker 9: also we have an MGM and Carnival relationship. So there

485
00:24:21,480 --> 00:24:24,440
Speaker 9: is this fluidity that's happening within my industry that makes

486
00:24:24,520 --> 00:24:25,960
Speaker 9: it sort of interesting.

487
00:24:25,960 --> 00:24:29,040
Speaker 2: And you get a great view on the consumer Jody

488
00:24:29,119 --> 00:24:32,159
Speaker 2: with you know the coverage you have again hotels and

489
00:24:32,280 --> 00:24:35,320
Speaker 2: casinos and cruise lines. Where are people kind of spending

490
00:24:35,320 --> 00:24:38,119
Speaker 2: their dollar And it seems like they're still spending on

491
00:24:38,240 --> 00:24:42,080
Speaker 2: that whole experiential thing, the experiences. What are the companies

492
00:24:42,119 --> 00:24:44,320
Speaker 2: you cover, what are they saying is to the how

493
00:24:44,359 --> 00:24:45,520
Speaker 2: that's likely to play out?

494
00:24:47,800 --> 00:24:51,920
Speaker 9: Because so consumers are definitely spending still on experiences. We're

495
00:24:51,960 --> 00:24:54,760
Speaker 9: still very much seeing it now if you compare twenty

496
00:24:54,800 --> 00:24:57,760
Speaker 9: twenty three twenty twenty two. It's a different sort of

497
00:24:57,880 --> 00:25:00,399
Speaker 9: narrative than twenty twenty three to two thousand two before,

498
00:25:00,440 --> 00:25:04,359
Speaker 9: because the base is much greater. Right, if you looked

499
00:25:04,359 --> 00:25:07,000
Speaker 9: at the base going back to twenty twenty one, you're

500
00:25:07,040 --> 00:25:10,960
Speaker 9: dealing with nothing, building on nothing. It's very significant. That said,

501
00:25:11,000 --> 00:25:13,879
Speaker 9: there still is that narrative of growth and that consumer

502
00:25:14,000 --> 00:25:19,080
Speaker 9: spending on experiences where we sort of wonder is what's

503
00:25:19,160 --> 00:25:22,160
Speaker 9: going to happen heading into the second half. That's sort

504
00:25:22,160 --> 00:25:24,960
Speaker 9: of the puzzle piece that isn't quite filled.

505
00:25:24,600 --> 00:25:25,440
Speaker 8: Out for us yet.

506
00:25:25,840 --> 00:25:29,800
Speaker 9: Where first half into the summer season is very strong,

507
00:25:30,200 --> 00:25:32,359
Speaker 9: we're also seeing that for cruise lines, they're saying that

508
00:25:32,400 --> 00:25:35,439
Speaker 9: going into the twenty twenty five they're seeing strength, and

509
00:25:35,480 --> 00:25:37,399
Speaker 9: that's a function of the fact that people book their

510
00:25:37,440 --> 00:25:40,320
Speaker 9: cruises so far in advance. You don't get that benefit

511
00:25:40,359 --> 00:25:42,640
Speaker 9: in the hotel space, you don't get that benefit as

512
00:25:42,800 --> 00:25:48,640
Speaker 9: much in the vacation arena elsewhere. People don't book vacations

513
00:25:48,680 --> 00:25:52,000
Speaker 9: apart from cruises so far in advance. So I think

514
00:25:52,040 --> 00:25:53,960
Speaker 9: as we head into second half, we'll sort of get

515
00:25:54,040 --> 00:25:56,960
Speaker 9: a feel for how comfortable the consumer is in terms

516
00:25:56,960 --> 00:25:57,480
Speaker 9: of spending.

517
00:25:58,080 --> 00:26:01,120
Speaker 6: And Jody, I just want to ask about FED if

518
00:26:01,160 --> 00:26:04,000
Speaker 6: we do have higher for longer and if a rate

519
00:26:04,080 --> 00:26:07,320
Speaker 6: cut keeps dragging on, how does that impact the kind

520
00:26:07,320 --> 00:26:10,760
Speaker 6: of areas of your coverage differently, whether it's sector by

521
00:26:10,760 --> 00:26:14,600
Speaker 6: sector or a company by company, it's.

522
00:26:14,480 --> 00:26:16,960
Speaker 8: A combination of factors.

523
00:26:17,000 --> 00:26:18,960
Speaker 9: So when you're talking the cruise lines, a lot of

524
00:26:19,000 --> 00:26:23,320
Speaker 9: the narrative is around repaying and refinancing debt. That refinancing

525
00:26:23,359 --> 00:26:27,600
Speaker 9: portion won't be as attractive if we are higher for longer.

526
00:26:28,160 --> 00:26:30,800
Speaker 9: The other component, though, is on the consumer side. So

527
00:26:30,840 --> 00:26:33,840
Speaker 9: you have the high end consumers that might benefit or

528
00:26:33,880 --> 00:26:38,240
Speaker 9: not from high interest rates or a elevated stock market

529
00:26:38,240 --> 00:26:40,840
Speaker 9: price of sorts, But then you have the lower end

530
00:26:40,840 --> 00:26:43,160
Speaker 9: consumer that might feel a little bit more of the pressure.

531
00:26:43,480 --> 00:26:46,880
Speaker 9: I think the more important piece is that inflation factor,

532
00:26:47,400 --> 00:26:50,520
Speaker 9: where you say, okay, from the inflation standpoint, how much

533
00:26:50,600 --> 00:26:52,359
Speaker 9: is the consumer feeling it, how are they feeling it

534
00:26:52,400 --> 00:26:54,760
Speaker 9: directly in their wallet, and how much are they willing

535
00:26:54,840 --> 00:26:58,800
Speaker 9: to borrow in order to continue that's spending, and so

536
00:26:59,200 --> 00:27:01,240
Speaker 9: I don't really know how that's going to play out.

537
00:27:01,280 --> 00:27:03,640
Speaker 9: That's you know, there are other people within the firm

538
00:27:03,680 --> 00:27:06,760
Speaker 9: that are really very smart and can talk more to that.

539
00:27:06,760 --> 00:27:08,240
Speaker 8: That said that is something we.

540
00:27:08,160 --> 00:27:11,040
Speaker 9: Are monitoring from the standpoint of how much the consumer

541
00:27:11,080 --> 00:27:14,159
Speaker 9: is stretching, because that narrative around consumer is having extra

542
00:27:14,240 --> 00:27:17,760
Speaker 9: cash on the sidelines to pump into vacations isn't so

543
00:27:17,840 --> 00:27:21,760
Speaker 9: much there, but the thought process around spending on vacations

544
00:27:21,800 --> 00:27:24,680
Speaker 9: and that mentality around spending on vacations still exists.

545
00:27:25,000 --> 00:27:26,680
Speaker 3: All right, Jodi, thanks so much for joining us. Really

546
00:27:26,680 --> 00:27:27,720
Speaker 3: appreciate it. Jody Lourie.

547
00:27:27,760 --> 00:27:30,720
Speaker 2: She covers all the consumer companies, all the fun companies.

548
00:27:30,720 --> 00:27:33,520
Speaker 2: She does it from the credit perspective. Talking about Carnival,

549
00:27:33,520 --> 00:27:35,520
Speaker 2: Cruz reported some numbers today took their guidance up a

550
00:27:35,560 --> 00:27:38,439
Speaker 2: little bit, citing even though some concerns a little bit

551
00:27:38,520 --> 00:27:41,520
Speaker 2: near term short term small hit from Baltimore.

552
00:27:41,840 --> 00:27:42,879
Speaker 3: Have you cruised before?

553
00:27:43,040 --> 00:27:46,359
Speaker 2: Not a cruise, So you're not cruising for the honeymoon honeymoon?

554
00:27:46,359 --> 00:27:49,400
Speaker 6: No, we are flying to Portugal and then flying and

555
00:27:49,480 --> 00:27:51,720
Speaker 6: driving running a car leash mateo cruiser.

556
00:27:52,280 --> 00:27:52,960
Speaker 3: No, I haven't.

557
00:27:52,960 --> 00:27:55,840
Speaker 8: I'm kind of scared. I don't know. Titanic like comes

558
00:27:55,840 --> 00:27:57,520
Speaker 8: in my head and I'm like, I can't do it.

559
00:27:58,040 --> 00:27:59,800
Speaker 3: My thing is I don't like people. So that's kind

560
00:27:59,840 --> 00:28:02,719
Speaker 3: of a that's kind of a it could be a problem.

561
00:28:02,760 --> 00:28:04,000
Speaker 3: That's a problem for me.

562
00:28:04,240 --> 00:28:06,240
Speaker 2: So I mean it'd be stuck on board with like

563
00:28:06,280 --> 00:28:08,600
Speaker 2: three thousand people onto this ship.

564
00:28:08,640 --> 00:28:09,840
Speaker 4: Liesa says Titanic.

565
00:28:10,040 --> 00:28:13,600
Speaker 6: I use the pandemic as like exhibit number six hundred

566
00:28:13,600 --> 00:28:14,760
Speaker 6: for me to not do it, And you're just like,

567
00:28:14,760 --> 00:28:16,040
Speaker 6: I don't really want to interact with it.

568
00:28:16,080 --> 00:28:17,639
Speaker 3: I just don't like people. Yes, I don't need to

569
00:28:17,680 --> 00:28:17,960
Speaker 3: see it.

570
00:28:19,440 --> 00:28:23,320
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

571
00:28:23,400 --> 00:28:26,920
Speaker 1: weekdays at ten am Eastern on applecar Play and Android

572
00:28:26,960 --> 00:28:30,119
Speaker 1: Auto with the Bloomberg Business. You can also listen live

573
00:28:30,200 --> 00:28:33,399
Speaker 1: on Amazon Alexa from our flagship New York station Just

574
00:28:33,440 --> 00:28:36,080
Speaker 1: Say Alexa, playing Bloomberg eleven thirty.

575
00:28:37,560 --> 00:28:40,160
Speaker 2: Speaking of a global investment bank, Let's get the Alison Williams,

576
00:28:40,160 --> 00:28:42,760
Speaker 2: she covers the global investment banks for Bloomberg Intelligence. She

577
00:28:42,880 --> 00:28:46,680
Speaker 2: joins us from Princet, New Jersey via zoom Allison, I

578
00:28:46,720 --> 00:28:49,560
Speaker 2: guess the most recent story out is UBS. They're selling

579
00:28:49,560 --> 00:28:52,400
Speaker 2: an eight billion dollars in loans to Apollo. I guess

580
00:28:52,440 --> 00:28:54,360
Speaker 2: these are some loans they picked up on the acquired

581
00:28:54,680 --> 00:28:57,040
Speaker 2: Swiss What's going on with her friends in Switzerland?

582
00:28:57,720 --> 00:29:00,400
Speaker 10: Yeah, so this is really just wrapping up feel that

583
00:29:01,080 --> 00:29:03,480
Speaker 10: Credit SUITEE had put in place some time ago.

584
00:29:03,760 --> 00:29:06,200
Speaker 8: So even before UBS.

585
00:29:05,760 --> 00:29:08,960
Speaker 10: Had had purchased Credit Suite, they were winding down the

586
00:29:09,000 --> 00:29:12,240
Speaker 10: investment banks. They had this business, the securitized products group

587
00:29:12,320 --> 00:29:16,360
Speaker 10: that they were you know, getting rid of, and so

588
00:29:17,240 --> 00:29:20,880
Speaker 10: they upon consummation of the deal, some of those assets

589
00:29:20,920 --> 00:29:22,760
Speaker 10: had been sold off, but the rest have been put

590
00:29:22,760 --> 00:29:24,320
Speaker 10: in sort of a non core unit. So I think

591
00:29:24,320 --> 00:29:26,200
Speaker 10: this is really just kind of closing the loop on

592
00:29:26,280 --> 00:29:29,280
Speaker 10: that and it just shows progress that they're continuing to

593
00:29:29,320 --> 00:29:33,480
Speaker 10: wind down the business some of the more I don't

594
00:29:33,520 --> 00:29:36,160
Speaker 10: want to say unprofitable, but sort of some of the

595
00:29:36,200 --> 00:29:40,840
Speaker 10: more voluable assets, balancing intensive, the types of things that

596
00:29:41,000 --> 00:29:43,160
Speaker 10: UBS really does not want to be involved with.

597
00:29:43,480 --> 00:29:45,720
Speaker 6: Now's in UBS booking and net gain of three hundred

598
00:29:45,760 --> 00:29:47,960
Speaker 6: million in the first quarter related to the deal or

599
00:29:48,000 --> 00:29:48,440
Speaker 6: the matter.

600
00:29:48,680 --> 00:29:49,680
Speaker 3: Is this just a big.

601
00:29:49,520 --> 00:29:52,960
Speaker 6: Win for them given kind of how they're shedding the assets.

602
00:29:53,600 --> 00:29:55,440
Speaker 10: Yeah, I mean, I think if you if you look

603
00:29:55,480 --> 00:29:57,920
Speaker 10: at some of the numbers that they gave, I mean,

604
00:29:57,960 --> 00:30:00,320
Speaker 10: and it's there's obviously sort of the way that they

605
00:30:00,360 --> 00:30:04,760
Speaker 10: accounted for the transactions when they did the deal. I think,

606
00:30:05,040 --> 00:30:08,080
Speaker 10: you know, the important thing is probably not the direct

607
00:30:08,200 --> 00:30:11,720
Speaker 10: impact but just shutting those assets so that they can

608
00:30:12,000 --> 00:30:14,120
Speaker 10: you know, kind of return to the core business.

609
00:30:14,720 --> 00:30:15,200
Speaker 3: They have a.

610
00:30:15,240 --> 00:30:17,480
Speaker 10: Huge road ahead. I mean, this is you know, eight

611
00:30:17,480 --> 00:30:20,840
Speaker 10: billion in assets. It's about ten percent of the non

612
00:30:20,840 --> 00:30:23,920
Speaker 10: core book that they want to get rid of, and

613
00:30:24,560 --> 00:30:27,520
Speaker 10: they're sort of on a long path of integrating the

614
00:30:27,560 --> 00:30:30,640
Speaker 10: two banks. They've got big restructuring chargers ahead. I think

615
00:30:30,680 --> 00:30:33,440
Speaker 10: what we're focusing on really in the first quarter is,

616
00:30:33,840 --> 00:30:35,960
Speaker 10: you know, can we start to see some results from

617
00:30:36,000 --> 00:30:38,520
Speaker 10: this investment bank you know that part of what they wanted.

618
00:30:39,440 --> 00:30:41,920
Speaker 10: You know, obviously the wealth assets are huge for them,

619
00:30:41,960 --> 00:30:44,959
Speaker 10: the Swiss assets are huge for them, but another thing

620
00:30:45,000 --> 00:30:48,200
Speaker 10: they wanted was the investment bankers and credit Suiteze really

621
00:30:48,200 --> 00:30:52,520
Speaker 10: did have expertise in the tech area, as you know, Paul.

622
00:30:53,400 --> 00:30:57,280
Speaker 10: They have you know, a great reputation and done really

623
00:30:57,320 --> 00:31:01,120
Speaker 10: well on tech IPOs. And what we've seen in the

624
00:31:01,160 --> 00:31:03,360
Speaker 10: first couple of months of the quarter is UBS really

625
00:31:03,400 --> 00:31:07,400
Speaker 10: moving up the league tables for tech IPOs, showing that

626
00:31:07,440 --> 00:31:09,080
Speaker 10: they might be getting some of that benefit.

627
00:31:09,680 --> 00:31:12,480
Speaker 2: I'm looking at the stock here of thank you. I'm

628
00:31:12,520 --> 00:31:14,840
Speaker 2: looking at stock here, Allison of UBS. It's not kind

629
00:31:14,880 --> 00:31:16,680
Speaker 2: of flat year to date, but it's up sixty five

630
00:31:16,680 --> 00:31:19,520
Speaker 2: percent on a trailing twelve month basis. So what's the

631
00:31:19,880 --> 00:31:22,720
Speaker 2: when you talk to introditional investors out there, what's the

632
00:31:22,760 --> 00:31:25,360
Speaker 2: call here on UBS?

633
00:31:25,760 --> 00:31:28,600
Speaker 10: I think, you know, it depends probably a little bit

634
00:31:28,640 --> 00:31:30,440
Speaker 10: on your time frame. It's going to be a long

635
00:31:30,600 --> 00:31:33,880
Speaker 10: slog and so I think, you know, the broader look

636
00:31:33,960 --> 00:31:36,120
Speaker 10: at the company, and as you know, we don't we

637
00:31:36,160 --> 00:31:39,440
Speaker 10: don't make recommend recommendations on stocks. But I think you know,

638
00:31:39,440 --> 00:31:42,560
Speaker 10: when I talk about this company from a fundamental standpoint

639
00:31:42,560 --> 00:31:45,360
Speaker 10: and how investors might be looking at it, it's going

640
00:31:45,440 --> 00:31:48,640
Speaker 10: to be a very long time for them to you know,

641
00:31:48,840 --> 00:31:54,720
Speaker 10: sort of get this deal done the execution. As I said,

642
00:31:54,760 --> 00:31:57,520
Speaker 10: you know, we're looking at mid single digit returns in

643
00:31:57,600 --> 00:32:00,440
Speaker 10: the year ahead, so there's sort of a long path

644
00:32:00,520 --> 00:32:04,160
Speaker 10: to go to the fifteen percent return on common equity

645
00:32:04,200 --> 00:32:07,280
Speaker 10: that you know that they're kind of targeting in a

646
00:32:07,320 --> 00:32:09,600
Speaker 10: long run, and a lot of work to do. So

647
00:32:09,640 --> 00:32:14,440
Speaker 10: it depends on you know, sort of the investors' patients.

648
00:32:14,480 --> 00:32:17,680
Speaker 10: Also somewhat of a show me story. I think that

649
00:32:17,760 --> 00:32:23,200
Speaker 10: the big gains last year really reflect that they did

650
00:32:23,200 --> 00:32:28,400
Speaker 10: this deal. It was a very financially attractive just given

651
00:32:28,440 --> 00:32:32,240
Speaker 10: the structure of the deal, and especially what happened with

652
00:32:32,280 --> 00:32:36,800
Speaker 10: the at ones and you know the fact that they

653
00:32:36,800 --> 00:32:41,400
Speaker 10: were able to stabilize the wealth flows and stabilize that franchise.

654
00:32:41,480 --> 00:32:43,800
Speaker 10: So I think a lot of the initial concerns were

655
00:32:43,880 --> 00:32:45,840
Speaker 10: will they be able to you know, preserve some of

656
00:32:45,880 --> 00:32:48,760
Speaker 10: that value or will their competitors pick it off? And

657
00:32:48,800 --> 00:32:52,200
Speaker 10: I think they did show that they've stabilized it. So

658
00:32:52,240 --> 00:32:55,280
Speaker 10: we have the foundation and now just need to start

659
00:32:55,280 --> 00:32:56,360
Speaker 10: doing some of the heavy lifting.

660
00:32:56,840 --> 00:32:58,840
Speaker 6: And Allison Paul's looking to put some money to work.

661
00:32:58,920 --> 00:33:01,440
Speaker 6: He's got his eye on global banks and asset managers,

662
00:33:01,440 --> 00:33:05,080
Speaker 6: which is exactly what you cover. What stocks do you

663
00:33:05,240 --> 00:33:07,760
Speaker 6: like right now? And where does ubs fit into it?

664
00:33:08,760 --> 00:33:12,240
Speaker 10: Okay, Well, as I said, I can't, we don't recommend stocks,

665
00:33:12,600 --> 00:33:15,480
Speaker 10: so but I will talk about, you know, the fundamentals,

666
00:33:15,560 --> 00:33:19,360
Speaker 10: and I would say that, you know, one of the

667
00:33:19,360 --> 00:33:21,880
Speaker 10: big things that investors are looking for this year is

668
00:33:21,880 --> 00:33:24,400
Speaker 10: a pickup and fees. We think that we will get

669
00:33:24,440 --> 00:33:27,480
Speaker 10: good growth and fees, but you know, we're nowhere near

670
00:33:27,520 --> 00:33:31,000
Speaker 10: the twenty twin levels, so that story could end up

671
00:33:31,000 --> 00:33:34,480
Speaker 10: being a little bit disappointing. But trading, on the other

672
00:33:34,560 --> 00:33:39,160
Speaker 10: hand holding up really well. The asset values are great

673
00:33:39,200 --> 00:33:42,360
Speaker 10: for asset managers, right, especially from a mixed perspective. We

674
00:33:42,400 --> 00:33:46,080
Speaker 10: have equities at record highs. That definitely helps the few

675
00:33:46,560 --> 00:33:50,760
Speaker 10: prospects because more assets just mathematically turn into more fees

676
00:33:51,280 --> 00:33:55,840
Speaker 10: and the potential for more flows. The flows are always tricky.

677
00:33:56,360 --> 00:33:59,000
Speaker 10: They've also been good for the hedge funds. Hedge funds

678
00:33:59,000 --> 00:34:01,720
Speaker 10: and asset managers doing well. That means Goldman's doing well

679
00:34:01,720 --> 00:34:03,960
Speaker 10: in their prime brokerage business. They do have more of

680
00:34:03,960 --> 00:34:06,640
Speaker 10: a bent to those types of customers. But we think

681
00:34:06,960 --> 00:34:10,480
Speaker 10: trading looks good across the banks. Bank of America is

682
00:34:10,560 --> 00:34:14,120
Speaker 10: also someone that we're watching, Gating share Bank of America

683
00:34:14,160 --> 00:34:17,120
Speaker 10: and Wells Fargo, who's a smaller one, but you know,

684
00:34:17,160 --> 00:34:19,279
Speaker 10: the share games are really more meaningful about for them

685
00:34:19,320 --> 00:34:25,439
Speaker 10: because because they're smaller, So from a fundamental standpoint, those

686
00:34:25,480 --> 00:34:29,040
Speaker 10: skew to trading. Like Goldman, Sachs looking like a strong corner.

687
00:34:29,600 --> 00:34:31,200
Speaker 10: All right, Alison, thank you so much for joining us.

688
00:34:31,200 --> 00:34:34,400
Speaker 2: Als Williams senior analy She covers all the big banks

689
00:34:34,440 --> 00:34:37,920
Speaker 2: investment banks globally for Bloomberg Intelligence. She's based down in Princeton,

690
00:34:38,000 --> 00:34:40,560
Speaker 2: joining us via zoom. I guess my one of my

691
00:34:40,640 --> 00:34:45,319
Speaker 2: questions is again having worked for one of the firms

692
00:34:45,360 --> 00:34:48,440
Speaker 2: that now makes up UBS, that being Pain Weber, I

693
00:34:48,480 --> 00:34:51,240
Speaker 2: still don't know what UBS is kind of globally ambitions

694
00:34:51,239 --> 00:34:53,719
Speaker 2: are do they do they intend to compete against the

695
00:34:53,800 --> 00:34:56,120
Speaker 2: jpm Morgans and the Morgan Sailings of the world, or

696
00:34:56,719 --> 00:34:58,560
Speaker 2: are they, you know, they're a little bit more focused

697
00:34:58,560 --> 00:35:01,200
Speaker 2: maybe on just a handful of markets, a handful of

698
00:35:01,280 --> 00:35:03,440
Speaker 2: business lines and not going to kind of compete across

699
00:35:03,440 --> 00:35:05,840
Speaker 2: the board. I'm not really sure now that they've acquired

700
00:35:05,880 --> 00:35:08,360
Speaker 2: credits with you know, kind of what's happening there. But

701
00:35:08,400 --> 00:35:11,320
Speaker 2: I think typically the street rewards, at least for this

702
00:35:11,480 --> 00:35:13,840
Speaker 2: investment banks kind of just focus, yeah, you know, like

703
00:35:13,920 --> 00:35:17,520
Speaker 2: Morgan Stanley focusing on the wealth management business, which has been.

704
00:35:17,320 --> 00:35:19,640
Speaker 3: So good for them.

705
00:35:20,560 --> 00:35:24,480
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

706
00:35:24,560 --> 00:35:28,040
Speaker 1: weekdays at ten am Eastern on applecar Play and androyd

707
00:35:28,080 --> 00:35:31,239
Speaker 1: Otto with the Bloomberg Business. You can also listen live

708
00:35:31,360 --> 00:35:34,520
Speaker 1: on Amazon Alexa from our flagship New York station just

709
00:35:34,600 --> 00:35:37,200
Speaker 1: Say Alexa playing Bloomberg eleven thirty.

710
00:35:38,440 --> 00:35:41,160
Speaker 2: One of the most read stories on the Bloomberg Terminal

711
00:35:41,360 --> 00:35:44,880
Speaker 2: is regarding former President Donald Trump. He is richer than ever,

712
00:35:45,480 --> 00:35:48,600
Speaker 2: yet still strapped for cash. To former President's fortune on

713
00:35:48,640 --> 00:35:51,480
Speaker 2: paper has vaulted to seven point two billion dollars thanks

714
00:35:51,520 --> 00:35:54,640
Speaker 2: to his newly public media company. In the ticker there's

715
00:35:54,800 --> 00:35:59,040
Speaker 2: d j T for his initials, but legal strains threatened

716
00:35:59,080 --> 00:36:02,120
Speaker 2: his finances to more than we welcome. Eric Larson, he

717
00:36:02,160 --> 00:36:04,239
Speaker 2: covers all of this stuff for Bloomberg News. He joins

718
00:36:04,280 --> 00:36:07,120
Speaker 2: us here in our Bloomberg Interactive Brokers studio. So, Eric,

719
00:36:07,440 --> 00:36:10,879
Speaker 2: I'm looking at DJT stocks up another eleven percent. It's

720
00:36:10,920 --> 00:36:13,880
Speaker 2: had a heck of a run year up to two

721
00:36:13,920 --> 00:36:15,759
Speaker 2: hundred and seventy percent year to date, three hundred and

722
00:36:15,760 --> 00:36:17,600
Speaker 2: seventy percent over the past year. A heck of a

723
00:36:17,640 --> 00:36:21,279
Speaker 2: good run for the former president. So there's net worth,

724
00:36:21,320 --> 00:36:24,320
Speaker 2: how about cash? Talk to us about those two dynamics.

725
00:36:24,080 --> 00:36:26,560
Speaker 11: Right, So it was actually Bailey's story I was reading

726
00:36:26,560 --> 00:36:29,319
Speaker 11: earlier about DJT is very fascinating.

727
00:36:29,360 --> 00:36:31,480
Speaker 4: He's obviously more than you know, doubled his wealth.

728
00:36:31,520 --> 00:36:34,960
Speaker 11: But Trump testified in a deposition last year in one

729
00:36:34,960 --> 00:36:36,879
Speaker 11: of his civil lawsuits that he had more than four

730
00:36:36,960 --> 00:36:40,879
Speaker 11: hundred million dollars in cash. Just last week he said

731
00:36:40,920 --> 00:36:43,839
Speaker 11: on truth Social that he had almost five hundred million

732
00:36:43,880 --> 00:36:48,200
Speaker 11: dollars in cash. We're not exactly sure. We can't really

733
00:36:48,239 --> 00:36:51,640
Speaker 11: exactly verify that, but he had been saying in that

734
00:36:51,719 --> 00:36:53,799
Speaker 11: court case that he was low on cash, he didn't

735
00:36:53,800 --> 00:36:56,399
Speaker 11: have enough to post this big bond. So that's kind

736
00:36:56,400 --> 00:36:58,799
Speaker 11: of our relationship with Trump's cash right now, is his

737
00:36:58,880 --> 00:37:02,279
Speaker 11: comments in regards to that huge bonds that he that

738
00:37:02,320 --> 00:37:04,600
Speaker 11: he has to pay for his appeal in that case.

739
00:37:04,800 --> 00:37:06,839
Speaker 6: And so your story calls out seven point two billion

740
00:37:06,880 --> 00:37:09,680
Speaker 6: dollars in wealth on paper? How much is that is

741
00:37:09,800 --> 00:37:12,200
Speaker 6: in Trump media? How much of that is real estate

742
00:37:12,239 --> 00:37:13,280
Speaker 6: and other ventures?

743
00:37:13,719 --> 00:37:15,920
Speaker 11: Right, so it seems like the bulk of it is

744
00:37:15,920 --> 00:37:18,480
Speaker 11: actually on paper. As you mentioned from the from the

745
00:37:18,520 --> 00:37:23,719
Speaker 11: Trump media, his real estate has always usually been the

746
00:37:23,719 --> 00:37:26,360
Speaker 11: bulk of his wealth, about like two point seven billion

747
00:37:26,480 --> 00:37:27,960
Speaker 11: or so. I don't have the story right in front

748
00:37:28,000 --> 00:37:32,520
Speaker 11: of me, but clearly that's what Bloomberg Billionaire's Index put

749
00:37:32,520 --> 00:37:35,720
Speaker 11: his wealth at three point one billion before these these verdicts.

750
00:37:35,719 --> 00:37:38,960
Speaker 11: So the vast majority of that was real estate, and

751
00:37:39,080 --> 00:37:42,480
Speaker 11: of course there's licensing deals around the world and things

752
00:37:42,560 --> 00:37:45,640
Speaker 11: like that. So now that with Trump media, you know

753
00:37:45,680 --> 00:37:48,960
Speaker 11: his wealth is largely from this from the shares, which

754
00:37:49,040 --> 00:37:52,000
Speaker 11: is fascinating to me, but of course his real estate

755
00:37:52,000 --> 00:37:55,560
Speaker 11: continues to be you know, his crown jewels of his portfolio.

756
00:37:55,840 --> 00:37:56,040
Speaker 4: Yeah.

757
00:37:56,040 --> 00:37:58,480
Speaker 3: So I'm looking at dj T Trump Media.

758
00:37:59,239 --> 00:38:01,359
Speaker 2: It's got a you know, eight billion dollars eight point

759
00:38:01,400 --> 00:38:03,960
Speaker 2: seven billion dollar market cap, and I pull up FA

760
00:38:04,040 --> 00:38:07,800
Speaker 2: the financial analysis section to see the financials for this company,

761
00:38:08,600 --> 00:38:09,840
Speaker 2: and I don't really have any.

762
00:38:10,680 --> 00:38:14,120
Speaker 6: H What's part of that is because it's a SPAC deal,

763
00:38:14,320 --> 00:38:17,080
Speaker 6: so our our filings kind of are backloaded. That's why

764
00:38:17,160 --> 00:38:18,920
Speaker 6: I will like caution with SPACs.

765
00:38:18,920 --> 00:38:20,760
Speaker 3: So what do we know about the financials of this company?

766
00:38:21,040 --> 00:38:24,120
Speaker 6: They revenue three point four million in the first nine

767
00:38:24,120 --> 00:38:25,839
Speaker 6: months of last year and they lost I think air

768
00:38:25,880 --> 00:38:28,759
Speaker 6: correct me if I'm wrong about thirty million dollars, right, right, right,

769
00:38:29,280 --> 00:38:30,319
Speaker 6: So we're valuing.

770
00:38:29,960 --> 00:38:33,279
Speaker 2: That company at eight point eight billion dollars, correct, right,

771
00:38:33,280 --> 00:38:35,080
Speaker 2: and get my equity animals.

772
00:38:35,080 --> 00:38:37,080
Speaker 6: I'm trying to do my evaluation here, Paul. It's a

773
00:38:37,200 --> 00:38:40,520
Speaker 6: two thousand. Last night, it was a twenty two hundred

774
00:38:41,120 --> 00:38:44,400
Speaker 6: price to sales multia to sales reference in videos.

775
00:38:44,080 --> 00:38:46,280
Speaker 3: About thirty eight so understood.

776
00:38:46,400 --> 00:38:47,360
Speaker 4: And what was Facebook?

777
00:38:47,400 --> 00:38:49,600
Speaker 11: I believe I saw when it went public was something

778
00:38:49,640 --> 00:38:52,160
Speaker 11: maybe like twelve times minutes revenue.

779
00:38:51,760 --> 00:38:54,560
Speaker 2: So this is so are we characterizing in this company

780
00:38:54,640 --> 00:38:56,960
Speaker 2: at this stage as a kind of a mean stock.

781
00:38:58,040 --> 00:39:02,560
Speaker 11: I mean, we could call it a startup, but it

782
00:39:02,680 --> 00:39:05,319
Speaker 11: certainly has been put in that category. I think when

783
00:39:05,719 --> 00:39:08,719
Speaker 11: when one meme stock moves one way and a lot

784
00:39:08,760 --> 00:39:10,719
Speaker 11: of them tend to I think that's sort of been

785
00:39:10,760 --> 00:39:11,200
Speaker 11: true with this.

786
00:39:11,840 --> 00:39:15,520
Speaker 2: Okay, So what do we know about the liquidity of

787
00:39:15,760 --> 00:39:17,839
Speaker 2: the former president Trump? Again, he's been given a little

788
00:39:17,840 --> 00:39:19,239
Speaker 2: bit of a reprieve here to come up with this

789
00:39:19,640 --> 00:39:22,680
Speaker 2: one hundred and seventy five million dollar bond. But again

790
00:39:22,719 --> 00:39:25,880
Speaker 2: there still is that judgment out there for the larger amount.

791
00:39:26,320 --> 00:39:29,319
Speaker 2: But the I guess the expectation is he'll satisfy that

792
00:39:29,360 --> 00:39:31,479
Speaker 2: bond either with cash or.

793
00:39:31,960 --> 00:39:34,560
Speaker 11: He has said that he will satisfy that with cash.

794
00:39:34,960 --> 00:39:37,880
Speaker 11: Keep in mind that earlier or just in January, he

795
00:39:38,000 --> 00:39:41,560
Speaker 11: lost a big defamation trial with the writer Egene Carroll,

796
00:39:41,600 --> 00:39:44,440
Speaker 11: who had accused him of sexually assaulting her in the

797
00:39:44,520 --> 00:39:48,520
Speaker 11: nineties and then defaming her by denying it. And that

798
00:39:48,600 --> 00:39:50,640
Speaker 11: was an eighty three point three million dollar verdict. He

799
00:39:50,719 --> 00:39:53,000
Speaker 11: did post a bond in that case of over ninety

800
00:39:53,040 --> 00:39:55,160
Speaker 11: one million dollars in order to put it on hold

801
00:39:55,200 --> 00:39:57,120
Speaker 11: while he appealed, so that took up almost one hundred

802
00:39:57,120 --> 00:40:00,359
Speaker 11: million right there. Then we're running one seventy five from

803
00:40:00,360 --> 00:40:03,600
Speaker 11: this next upcoming bond. And he has said he still

804
00:40:03,600 --> 00:40:05,160
Speaker 11: also wants to be able to spend some of his

805
00:40:05,239 --> 00:40:08,640
Speaker 11: money on his campaign, so that I mean, even based

806
00:40:08,640 --> 00:40:11,040
Speaker 11: on what he's saying he has, that's using up a

807
00:40:11,040 --> 00:40:11,440
Speaker 11: lot of it.

808
00:40:12,239 --> 00:40:15,760
Speaker 6: And Eric, when we look at the inability, from my understanding,

809
00:40:15,760 --> 00:40:18,560
Speaker 6: to borrow against his Trump media stake, can he take

810
00:40:18,600 --> 00:40:21,200
Speaker 6: out loans against some of his other real estate, Like

811
00:40:21,239 --> 00:40:23,520
Speaker 6: how if he doesn't want to use the cash on hand,

812
00:40:23,719 --> 00:40:25,800
Speaker 6: how can he kind of churn up some money.

813
00:40:26,400 --> 00:40:28,600
Speaker 4: I mean, that certainly is an option.

814
00:40:28,640 --> 00:40:30,799
Speaker 11: I think some wonder if he hasn't already done that

815
00:40:30,840 --> 00:40:34,160
Speaker 11: though with some of his properties, we know that he's

816
00:40:34,800 --> 00:40:37,360
Speaker 11: refinanced some of them, but he has claimed that he

817
00:40:37,400 --> 00:40:40,200
Speaker 11: has very low debt on his properties, so it certainly

818
00:40:40,520 --> 00:40:42,160
Speaker 11: one of them he should be able to borrow against

819
00:40:42,200 --> 00:40:45,920
Speaker 11: if he really had to. But it's also possible that

820
00:40:45,960 --> 00:40:49,799
Speaker 11: he could get the board of TMGT to change the

821
00:40:49,880 --> 00:40:52,640
Speaker 11: rules on that lock up period potentially and which would

822
00:40:52,680 --> 00:40:56,640
Speaker 11: allow him to sell some shares theoretically before that six

823
00:40:56,719 --> 00:40:57,320
Speaker 11: month period.

824
00:40:58,280 --> 00:41:00,080
Speaker 4: Although that might be a bad look with some of

825
00:41:00,120 --> 00:41:01,280
Speaker 4: the other buyers.

826
00:41:01,280 --> 00:41:05,480
Speaker 3: And interesting, i'man looking at the mg MT function, the management.

827
00:41:05,040 --> 00:41:10,320
Speaker 2: Function for the Trump Media and Technology Group again the tickers.

828
00:41:10,000 --> 00:41:10,880
Speaker 6: D j T.

829
00:41:11,600 --> 00:41:14,120
Speaker 2: I don't see former President Trump on the board or

830
00:41:14,120 --> 00:41:17,040
Speaker 2: listed as an executive, but I do see his son

831
00:41:17,120 --> 00:41:18,960
Speaker 2: is on the board, Donald Trump Junior.

832
00:41:20,120 --> 00:41:22,279
Speaker 3: So but do we know of anything of his.

833
00:41:23,960 --> 00:41:26,880
Speaker 2: Interaction or interaction with this company or is he simply

834
00:41:27,600 --> 00:41:28,279
Speaker 2: the shareholder.

835
00:41:28,920 --> 00:41:30,319
Speaker 4: Well, he's certainly the face of it.

836
00:41:30,440 --> 00:41:32,160
Speaker 11: I don't know exactly how much in the day to

837
00:41:32,239 --> 00:41:35,359
Speaker 11: day he's involved in it, other than of course being

838
00:41:35,440 --> 00:41:39,760
Speaker 11: the star user of its main or only products, truth Social.

839
00:41:40,920 --> 00:41:43,359
Speaker 11: So you know, as you point out it pointed out

840
00:41:43,360 --> 00:41:45,640
Speaker 11: in your story, Bailey, at a lot of these purchases,

841
00:41:46,160 --> 00:41:48,520
Speaker 11: you know, this stock is largely seen as a bet

842
00:41:48,560 --> 00:41:53,279
Speaker 11: on his political futures as well. So in a way,

843
00:41:53,600 --> 00:41:56,960
Speaker 11: these meme stocks are betting against you know, they're betting

844
00:41:57,000 --> 00:41:59,560
Speaker 11: against Wall Street, or in this case, betting against people

845
00:41:59,600 --> 00:42:02,279
Speaker 11: who are Trump detractors who don't think he can win.

846
00:42:02,440 --> 00:42:05,160
Speaker 2: Okay, Well, certainly having a good run here, that's that's

847
00:42:05,160 --> 00:42:05,600
Speaker 2: for sure.

848
00:42:06,360 --> 00:42:07,719
Speaker 3: There's certainly some buyers out there.

849
00:42:07,719 --> 00:42:09,680
Speaker 2: We're seeing good volume again, to stock up over double

850
00:42:09,680 --> 00:42:13,200
Speaker 2: digits here about twelve percent on some pretty decent volume.

851
00:42:13,400 --> 00:42:15,600
Speaker 2: Eric Larsan, thanks so much for joining us. Eric is

852
00:42:15,640 --> 00:42:19,560
Speaker 2: a Bloomberg legal reporter. On this story that it's a

853
00:42:19,560 --> 00:42:23,080
Speaker 2: great headline. Trump is richer than ever yet still strapped

854
00:42:23,080 --> 00:42:25,399
Speaker 2: for cash. We'll see how that plays out going forward.

855
00:42:25,760 --> 00:42:28,120
Speaker 2: And the question I have alias just as a you know,

856
00:42:28,360 --> 00:42:31,760
Speaker 2: someone who used to follow the social media companies like Facebook,

857
00:42:31,800 --> 00:42:34,279
Speaker 2: like Snapchat, want, you know, I have to take a

858
00:42:34,280 --> 00:42:35,879
Speaker 2: look and see kind of where the users are, where

859
00:42:35,880 --> 00:42:37,880
Speaker 2: the revenue is, and see, you know, kind of what

860
00:42:37,960 --> 00:42:40,280
Speaker 2: the opportunities are for this company.

861
00:42:40,320 --> 00:42:41,799
Speaker 6: And that's been the big thing when I talk to

862
00:42:41,880 --> 00:42:45,279
Speaker 6: investors who are not in the stock but are you know,

863
00:42:45,800 --> 00:42:48,319
Speaker 6: on the street, and their big question is how can

864
00:42:48,360 --> 00:42:51,680
Speaker 6: you actually monetize the business? If he wins the presidency,

865
00:42:51,920 --> 00:42:55,400
Speaker 6: does that then draw people to true social and advertisers.

866
00:42:54,800 --> 00:42:57,080
Speaker 3: In turn, or do they go out and acquire companies.

867
00:42:57,080 --> 00:42:59,239
Speaker 6: That's the big kind of question is how do you

868
00:42:59,239 --> 00:43:04,040
Speaker 6: fundamentally value what really is an app that has been

869
00:43:04,080 --> 00:43:06,480
Speaker 6: around for a little over a year at this point.

870
00:43:06,360 --> 00:43:08,600
Speaker 2: Right and you know, just seeing the business model for

871
00:43:08,640 --> 00:43:10,840
Speaker 2: these social media companies, it's very simple It's no different

872
00:43:10,880 --> 00:43:13,560
Speaker 2: than the magazine business back in the day. The newspaper

873
00:43:13,560 --> 00:43:15,800
Speaker 2: business back in the day is you have mass an audience.

874
00:43:16,360 --> 00:43:18,520
Speaker 2: The bigger the audience and the more engage the audience,

875
00:43:18,560 --> 00:43:18,960
Speaker 2: the more.

876
00:43:18,840 --> 00:43:20,440
Speaker 3: Valuable that is to advertisers.

877
00:43:20,520 --> 00:43:23,400
Speaker 2: You mess on audience and you sell advertising against that audience,

878
00:43:23,400 --> 00:43:25,239
Speaker 2: as simple as that. Maybe a little bit of an

879
00:43:25,280 --> 00:43:27,480
Speaker 2: e commerce in there if you're fortunate, but really it's

880
00:43:27,480 --> 00:43:29,160
Speaker 2: an advertising game.

881
00:43:29,200 --> 00:43:31,000
Speaker 3: So the question for the folks.

882
00:43:30,719 --> 00:43:33,359
Speaker 2: At Trump Media Technology goog will be whether they can

883
00:43:33,600 --> 00:43:35,480
Speaker 2: what kind of audience they can amss over timing.

884
00:43:36,000 --> 00:43:40,520
Speaker 1: This is the Bloomberg Intelligence podcast, available on apples, Spotify,

885
00:43:40,719 --> 00:43:43,640
Speaker 1: and anywhere else you will get your podcasts. Listen live

886
00:43:43,719 --> 00:43:47,320
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887
00:43:47,440 --> 00:43:50,840
Speaker 1: the iHeartRadio app tune In, and the Bloomberg Business app.

888
00:43:50,960 --> 00:43:54,080
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889
00:43:54,160 --> 00:43:56,040
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