1 00:00:02,400 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,680 --> 00:00:15,480 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,440 Speaker 2: with Lisa Bromwitz and a Marie Hortenn. Join us each 4 00:00:18,520 --> 00:00:21,440 Speaker 2: day for insight from the best in markets, economics, and 5 00:00:21,440 --> 00:00:24,759 Speaker 2: geopolitics from our global headquarters in New York City. We 6 00:00:24,800 --> 00:00:27,479 Speaker 2: are live on Bloomberg Television weekday mornings from six to 7 00:00:27,560 --> 00:00:31,040 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify 8 00:00:31,240 --> 00:00:33,519 Speaker 2: or anywhere else you listen, and as always on the 9 00:00:33,520 --> 00:00:35,880 Speaker 2: Bloomberg Terminal and the Bloomberg Business App. 10 00:00:36,360 --> 00:00:38,680 Speaker 3: We have the wonderful lineup of guests today, starting with 11 00:00:39,040 --> 00:00:41,280 Speaker 3: the very own CEO of the Royal Bank of Canada, 12 00:00:41,560 --> 00:00:43,000 Speaker 3: Dave Mackay, who joins us here. 13 00:00:43,040 --> 00:00:44,800 Speaker 1: Dave, wonderful to see you. Thank you for being with us. 14 00:00:44,840 --> 00:00:45,720 Speaker 4: It's great to be back. 15 00:00:46,120 --> 00:00:48,239 Speaker 5: It's amazing at youears gone by already. 16 00:00:48,000 --> 00:00:50,160 Speaker 3: Right, I mean, what's your impression so far of this jobos? 17 00:00:50,159 --> 00:00:51,840 Speaker 3: It feels very different than previous ones. 18 00:00:52,040 --> 00:00:54,720 Speaker 5: It's more intense. There's more leaders here than I think 19 00:00:54,720 --> 00:00:57,240 Speaker 5: there's ever been. Over eight hundred and fifty CEOs, four 20 00:00:57,360 --> 00:01:01,800 Speaker 5: hundred ministers, sixty five heads of state, so there's been 21 00:01:01,880 --> 00:01:03,840 Speaker 5: a lot of dialogue already in the first kind of 22 00:01:03,840 --> 00:01:08,000 Speaker 5: forty eight hours, a lot of joint business government leader dialogue, 23 00:01:08,000 --> 00:01:10,640 Speaker 5: a run investment to your point, looking at making deals, 24 00:01:10,680 --> 00:01:14,560 Speaker 5: looking at co investment, every country, looking at diversifying trade, 25 00:01:15,040 --> 00:01:18,200 Speaker 5: bringing business leaders with them to talk about co investment 26 00:01:18,240 --> 00:01:21,840 Speaker 5: or whether it's manufacturing investment, defense spend in Europe and Canada's 27 00:01:21,880 --> 00:01:24,039 Speaker 5: going up, a lot of discussions about how do we 28 00:01:24,160 --> 00:01:27,560 Speaker 5: spend eighty billion dollars in Canada on defense? You know 29 00:01:27,720 --> 00:01:28,880 Speaker 5: what partners are we looking at? 30 00:01:28,959 --> 00:01:29,920 Speaker 4: How do we use that. 31 00:01:31,680 --> 00:01:37,080 Speaker 5: Defense spending lever to attract manufacturing investment, in automotive energy investment. 32 00:01:37,760 --> 00:01:40,600 Speaker 5: So there's a lot of grand bargain discussions going on 33 00:01:41,640 --> 00:01:45,160 Speaker 5: with business leaders with and haven't seen that before, and 34 00:01:45,200 --> 00:01:47,559 Speaker 5: so it's different. It feels different. It's transactional to you said, 35 00:01:47,600 --> 00:01:49,960 Speaker 5: but it's exciting. At the same time, there's opportunity here. 36 00:01:50,040 --> 00:01:52,320 Speaker 3: Well you're talking about the excitement, and yet you are 37 00:01:52,520 --> 00:01:56,040 Speaker 3: Royal Bank of Canada. You are expanding in the United States, 38 00:01:56,400 --> 00:01:59,120 Speaker 3: and right now there is a breakdown in the relationship 39 00:01:59,160 --> 00:02:00,440 Speaker 3: between these two trees. 40 00:02:00,880 --> 00:02:02,720 Speaker 1: How problematic is that for you at. 41 00:02:02,600 --> 00:02:04,280 Speaker 3: A time where you have been expanding in the United 42 00:02:04,280 --> 00:02:07,200 Speaker 3: States and you do see flows at least in travel 43 00:02:07,800 --> 00:02:09,160 Speaker 3: going me other direction a little bit. 44 00:02:10,080 --> 00:02:13,160 Speaker 5: No, I think we're in this temporary world where we're 45 00:02:13,160 --> 00:02:16,280 Speaker 5: trying to figure out how we're going to trade going forward. 46 00:02:16,280 --> 00:02:20,640 Speaker 5: But I come back to the core of USMCA. Canada 47 00:02:20,720 --> 00:02:24,440 Speaker 5: really helps America with affordability. We make things in Canadian dollars, 48 00:02:24,520 --> 00:02:26,480 Speaker 5: we sell it to the US. The US buy is 49 00:02:26,480 --> 00:02:28,800 Speaker 5: it that a thirty percent discount, but it's automotive parts, 50 00:02:28,840 --> 00:02:32,120 Speaker 5: whether it's steel, aluminum, food, and a lot of our 51 00:02:32,120 --> 00:02:34,680 Speaker 5: Canolagos the United States, and therefore we help keep prices 52 00:02:34,720 --> 00:02:36,080 Speaker 5: down in the US. And if the US were to 53 00:02:36,080 --> 00:02:39,760 Speaker 5: bring all of that back, it's inflationary, you shortage of 54 00:02:39,840 --> 00:02:41,480 Speaker 5: labor in the United States. So as you look at 55 00:02:41,480 --> 00:02:44,600 Speaker 5: the core of USMCA, it's good for America, and I 56 00:02:44,600 --> 00:02:47,000 Speaker 5: think that gives me comfort that we will come to 57 00:02:47,760 --> 00:02:50,600 Speaker 5: an arrangement going forward recognizing this is good for America. 58 00:02:50,720 --> 00:02:53,160 Speaker 5: It's good for Canada obviously, but it's good for America 59 00:02:53,200 --> 00:02:55,960 Speaker 5: and that's important to the President. There will be change, 60 00:02:56,000 --> 00:02:58,160 Speaker 5: I don't think it will be the same agreement going forward, 61 00:02:58,400 --> 00:03:00,760 Speaker 5: but the core of it, I think is so important 62 00:03:00,760 --> 00:03:03,639 Speaker 5: to both sides, and that gives me comfort that we 63 00:03:03,880 --> 00:03:06,359 Speaker 5: will continue to trade Canada, and you heard our Prime 64 00:03:06,360 --> 00:03:09,840 Speaker 5: minister's message. I'm sure we'll talk about that has to 65 00:03:09,960 --> 00:03:12,720 Speaker 5: diversified trade. I think we've relied on trade to the 66 00:03:12,800 --> 00:03:14,919 Speaker 5: US substantially a big part of our economy. And I 67 00:03:14,960 --> 00:03:19,560 Speaker 5: think that the conversations that are happening before Davos after Davos. 68 00:03:19,600 --> 00:03:22,560 Speaker 5: In Davos are very much about here's what we're good at. 69 00:03:22,800 --> 00:03:25,760 Speaker 5: Can we find a grand bargain deal. Can we expand 70 00:03:25,800 --> 00:03:29,200 Speaker 5: trade across multiple countries where that's Europe, A lot of 71 00:03:29,200 --> 00:03:31,320 Speaker 5: discussion with South Asia and Asia, and a lot of 72 00:03:31,360 --> 00:03:34,200 Speaker 5: discussion with the Middle East, and investing in Canada. And 73 00:03:34,240 --> 00:03:37,360 Speaker 5: what's different about Davos this year? Honestly, Lisa, it's risk 74 00:03:37,440 --> 00:03:37,960 Speaker 5: on Canada. 75 00:03:38,800 --> 00:03:40,400 Speaker 1: Let's talk about the Prime minister speech. 76 00:03:40,520 --> 00:03:42,720 Speaker 6: The sharpest tone I've ever heard from Mark Carney about 77 00:03:42,760 --> 00:03:46,120 Speaker 6: Donald Trump without mentioning Trump's name, He's talking about a 78 00:03:46,160 --> 00:03:48,600 Speaker 6: new world order, saying these middle countries, if you're at 79 00:03:48,640 --> 00:03:51,280 Speaker 6: the table prepared to get eaten. Does that make it 80 00:03:51,360 --> 00:03:54,920 Speaker 6: harder when you're talking about things like watching the USMCA 81 00:03:55,160 --> 00:03:58,360 Speaker 6: trade deal. Do you think that the relationship is going 82 00:03:58,400 --> 00:04:02,000 Speaker 6: to become more challenging in Canada and the United States. 83 00:04:03,480 --> 00:04:06,360 Speaker 5: I think relationships are about value exchange, and if there's 84 00:04:06,400 --> 00:04:08,960 Speaker 5: good value exchange and you both see a benefit to that, 85 00:04:09,080 --> 00:04:11,240 Speaker 5: then you're going to find the right place. So when 86 00:04:11,720 --> 00:04:14,160 Speaker 5: just as I said, there's great value exchange, four hundred 87 00:04:14,200 --> 00:04:17,080 Speaker 5: billion dollars go back and forth across the border every 88 00:04:17,160 --> 00:04:20,880 Speaker 5: year because there's value. We're the number one trade relationship 89 00:04:21,480 --> 00:04:24,800 Speaker 5: with thirty six states. Most of those are red states 90 00:04:24,839 --> 00:04:26,040 Speaker 5: at the end of the day, So when we think 91 00:04:26,080 --> 00:04:30,239 Speaker 5: about the importance of that relationship just beyond a federal 92 00:04:30,320 --> 00:04:33,599 Speaker 5: level into the state level, it's really important. So I 93 00:04:33,600 --> 00:04:36,760 Speaker 5: think you come back and you say it's good for America, 94 00:04:36,839 --> 00:04:39,680 Speaker 5: it's good for Canada. That's the basis for exchange of 95 00:04:39,760 --> 00:04:41,919 Speaker 5: value and going forward. Having said that, I think the 96 00:04:41,920 --> 00:04:45,760 Speaker 5: Prime Minister is very clear that we haven't done our 97 00:04:45,880 --> 00:04:48,520 Speaker 5: role in defending ourselves. We haven't invested enough of our 98 00:04:48,520 --> 00:04:51,320 Speaker 5: GDP in defense, and you've seen that commitment to spend 99 00:04:51,320 --> 00:04:52,200 Speaker 5: that money. 100 00:04:52,360 --> 00:04:53,080 Speaker 4: We have to do that. 101 00:04:53,120 --> 00:04:56,279 Speaker 5: We have to increasingly defend ourselves and are not just 102 00:04:56,320 --> 00:04:58,799 Speaker 5: our economic security, it's our physical security. 103 00:04:58,839 --> 00:04:59,840 Speaker 4: We have to play a bigger role. 104 00:05:00,080 --> 00:05:01,719 Speaker 5: We have to defend the Arctic and we have to 105 00:05:01,760 --> 00:05:03,320 Speaker 5: invest in the Arctic, and it's a big part of 106 00:05:03,360 --> 00:05:05,360 Speaker 5: the commitment we've made to NATO and we've made to 107 00:05:05,400 --> 00:05:08,400 Speaker 5: the United States that you'll see a greater investment from Canada. 108 00:05:08,400 --> 00:05:12,279 Speaker 5: And we have to have dual use investments, not just military, 109 00:05:12,320 --> 00:05:15,599 Speaker 5: but commercial and economic investments in the Arctic in Canada 110 00:05:15,640 --> 00:05:18,000 Speaker 5: should play a role in doing that. So you're seeing 111 00:05:18,040 --> 00:05:20,480 Speaker 5: that a big part of his speech yesterday. And we 112 00:05:21,080 --> 00:05:23,359 Speaker 5: have to create scale. We're in a world of scale. 113 00:05:23,560 --> 00:05:26,160 Speaker 5: Businesses needs scale, countries need scale, and I think the 114 00:05:26,200 --> 00:05:29,600 Speaker 5: Prime Minister's message was we have to continue to diversify, 115 00:05:30,000 --> 00:05:32,160 Speaker 5: but diversify in a way that you continue to build 116 00:05:32,200 --> 00:05:33,000 Speaker 5: scale and what you need. 117 00:05:33,080 --> 00:05:34,680 Speaker 4: So I think that's what I took away when he. 118 00:05:34,600 --> 00:05:37,920 Speaker 6: Says diversify, does it mean maybe a new strategic partnership 119 00:05:37,960 --> 00:05:38,520 Speaker 6: with China? 120 00:05:38,640 --> 00:05:40,040 Speaker 4: Is that what you take from the Prime minister? 121 00:05:40,960 --> 00:05:42,719 Speaker 5: You know, the Prime Mister was just in China a 122 00:05:42,720 --> 00:05:46,000 Speaker 5: week ago and it was a very important delegation that 123 00:05:46,200 --> 00:05:48,960 Speaker 5: he led to China to kind of reset the relationship 124 00:05:49,000 --> 00:05:51,720 Speaker 5: after a better part of a decade where the relationship 125 00:05:51,760 --> 00:05:55,000 Speaker 5: had separated, and part of it was to renew economic 126 00:05:55,080 --> 00:05:57,760 Speaker 5: ties and to agree on areas where we definitely agree 127 00:05:57,880 --> 00:05:59,920 Speaker 5: and to say these are areas where we might not agree, 128 00:06:00,000 --> 00:06:01,680 Speaker 5: but let's focus on where we agree and where we 129 00:06:01,720 --> 00:06:03,200 Speaker 5: can build a future together. 130 00:06:03,240 --> 00:06:04,719 Speaker 4: And I think that was a very positive step. 131 00:06:04,760 --> 00:06:09,200 Speaker 5: You saw China make a commitment to resume buying our 132 00:06:09,200 --> 00:06:11,960 Speaker 5: canola oil, and that's very important market for Canola. The 133 00:06:12,000 --> 00:06:15,880 Speaker 5: United States and China of big markets. We ceded a 134 00:06:15,920 --> 00:06:20,000 Speaker 5: small part of our automotive market three percent to Chinese imports. 135 00:06:20,040 --> 00:06:24,200 Speaker 5: That's an affordability issue. China will bring in affordable electric vehicles, 136 00:06:24,200 --> 00:06:25,960 Speaker 5: So I think that's good for Canadians at the end 137 00:06:25,960 --> 00:06:28,239 Speaker 5: of the day. So I think there's more to build 138 00:06:28,279 --> 00:06:31,480 Speaker 5: on and I think it's part of diversifying across multiple countries. 139 00:06:31,600 --> 00:06:34,080 Speaker 3: Okay, so we've gone all this time without talking about 140 00:06:34,080 --> 00:06:34,960 Speaker 3: what you actually have done. 141 00:06:35,000 --> 00:06:37,320 Speaker 1: You just had a year that's phenomenal. You had record. 142 00:06:37,080 --> 00:06:41,600 Speaker 3: Revenues for any Canadian bank ever and you have grown tremendously. 143 00:06:41,720 --> 00:06:42,920 Speaker 1: You beat all of your targets. 144 00:06:42,920 --> 00:06:45,960 Speaker 3: I'm just wondering, when you're talking about diversifying businesses, does 145 00:06:46,000 --> 00:06:47,240 Speaker 3: it go to your business as well? 146 00:06:47,279 --> 00:06:50,080 Speaker 1: Are you expanding in places like China? Are you still 147 00:06:50,120 --> 00:06:52,120 Speaker 1: planning to expand in the United States? 148 00:06:53,720 --> 00:06:57,279 Speaker 5: Our second home markets, the United States. We've grown wonderfully 149 00:06:57,279 --> 00:06:59,159 Speaker 5: in the United States. We just launched a whole new 150 00:06:59,279 --> 00:07:02,200 Speaker 5: treasury management platform, the United States RBC clear that's had 151 00:07:02,240 --> 00:07:05,479 Speaker 5: a great reception. Technology leaf we brought in twenty five 152 00:07:05,520 --> 00:07:09,280 Speaker 5: billion dollars of new money from US senior corporate's fortune 153 00:07:09,360 --> 00:07:11,520 Speaker 5: kind of five hundred. So the United States is our 154 00:07:11,560 --> 00:07:13,760 Speaker 5: second home market and we continue to invest there. We 155 00:07:13,880 --> 00:07:17,080 Speaker 5: lend significantly to US corporates, We lend in the mid 156 00:07:17,120 --> 00:07:19,680 Speaker 5: corporate space, in the commercial space, and we have the 157 00:07:19,680 --> 00:07:21,880 Speaker 5: fifth largest high net worth platform in the United States. 158 00:07:21,920 --> 00:07:24,360 Speaker 5: So the US is very important to US, serving Americans, 159 00:07:24,360 --> 00:07:28,680 Speaker 5: helping Americans grow. And I told the administration already yesterday 160 00:07:28,720 --> 00:07:31,680 Speaker 5: that we've invested significant in the US economy and we're 161 00:07:31,720 --> 00:07:33,200 Speaker 5: part of the solution, and we. 162 00:07:33,160 --> 00:07:36,000 Speaker 4: Feel very welcome in the United States. So it's a 163 00:07:36,040 --> 00:07:37,080 Speaker 4: big part of our strategy. 164 00:07:37,120 --> 00:07:40,160 Speaker 5: To your point, our strategy has not included China up 165 00:07:40,240 --> 00:07:42,800 Speaker 5: until now for all the reasons where we didn't have 166 00:07:42,840 --> 00:07:47,080 Speaker 5: significant diplomatic ties. We didn't see the basis for that investment, 167 00:07:47,120 --> 00:07:49,560 Speaker 5: and now we have to review that. I can't say 168 00:07:49,680 --> 00:07:52,920 Speaker 5: how we would go back in, but if the trade 169 00:07:52,960 --> 00:07:56,920 Speaker 5: continues to diversify and Canadian corporates invest in China, then 170 00:07:57,040 --> 00:07:58,840 Speaker 5: we will have to be part of that. What I'm 171 00:07:58,880 --> 00:08:02,920 Speaker 5: focused on now is the least significant investment commitments from 172 00:08:02,960 --> 00:08:05,000 Speaker 5: the Middle East of Canada. I think one of the 173 00:08:05,000 --> 00:08:07,960 Speaker 5: themes of Davos is Middle East is a great place 174 00:08:08,000 --> 00:08:11,320 Speaker 5: to invest. Abu Dhabi, Dubai u Ate on that side, 175 00:08:11,440 --> 00:08:16,000 Speaker 5: Riad and Saudi Arabia significant commitments on both sides, and 176 00:08:16,040 --> 00:08:18,720 Speaker 5: you'll see a greater presence from RBC in the Middle 177 00:08:18,760 --> 00:08:20,480 Speaker 5: East as well. So yes, to your point, it's a 178 00:08:20,520 --> 00:08:24,000 Speaker 5: great question. You're seeing RBC become a more globally connected 179 00:08:24,000 --> 00:08:26,280 Speaker 5: bank because Canada is going to become a more globally 180 00:08:26,280 --> 00:08:29,520 Speaker 5: connected country. In the US is already incredibly globally connected country. 181 00:08:30,080 --> 00:08:42,880 Speaker 2: Stay with us, Mulbloomberg. Savannah's coming up after this. We 182 00:08:42,960 --> 00:08:45,520 Speaker 2: begin this out with stocks slightly lower following the biggest 183 00:08:45,520 --> 00:08:47,880 Speaker 2: slide in three months of investors search for direction. The 184 00:08:47,880 --> 00:08:50,880 Speaker 2: Morgan Stanley chairman and see Ted pick has Sino and 185 00:08:50,960 --> 00:08:51,800 Speaker 2: he joined Usnaphomore. 186 00:08:51,880 --> 00:08:52,600 Speaker 7: Ted, good to see. 187 00:08:52,480 --> 00:08:55,520 Speaker 4: You guys, Thanks for having me. I'll like your mom 188 00:08:55,880 --> 00:08:57,600 Speaker 4: like fading good, feeling pretty good. 189 00:08:57,600 --> 00:08:58,760 Speaker 7: You're not going to be in the speech in about 190 00:08:58,800 --> 00:09:00,600 Speaker 7: twenty eight minutes time. Avoid that. 191 00:09:01,040 --> 00:09:02,880 Speaker 4: Yeah, I'll be with you, guys. 192 00:09:03,440 --> 00:09:05,559 Speaker 2: Let's talk about how things are set up for twenty six. 193 00:09:05,640 --> 00:09:08,880 Speaker 2: We've drawn a big distinction between the energy that's coming 194 00:09:08,880 --> 00:09:11,199 Speaker 2: from European officials and the emotion they have about a 195 00:09:11,240 --> 00:09:13,559 Speaker 2: place like Greenland, and the optimism that people have for 196 00:09:13,600 --> 00:09:17,400 Speaker 2: the broader US economy, particularly from bankers regarding the pipeline 197 00:09:17,520 --> 00:09:19,280 Speaker 2: and the amount of debt issuance we've seen over the 198 00:09:19,320 --> 00:09:21,280 Speaker 2: past few months. The debt end to writing that you've 199 00:09:21,440 --> 00:09:23,640 Speaker 2: really benefited from that's going to fund a lot of 200 00:09:23,640 --> 00:09:26,920 Speaker 2: the transition. How ammed up are you about the year ahead? 201 00:09:27,120 --> 00:09:29,040 Speaker 4: Well, thanks for having me, guys, great to see you. 202 00:09:29,679 --> 00:09:33,880 Speaker 8: I'm pretty amped up. You know, we had several years 203 00:09:33,960 --> 00:09:35,760 Speaker 8: where the emin ACTIVI who's going to get going? And 204 00:09:35,760 --> 00:09:38,720 Speaker 8: then COVID happen and then retrooved, and it's taken a 205 00:09:38,720 --> 00:09:41,400 Speaker 8: while for a tongue glue. But this kind of in 206 00:09:41,440 --> 00:09:45,800 Speaker 8: this case literal noise speaks to c suite need to act, 207 00:09:46,160 --> 00:09:49,880 Speaker 8: whether it's to reglobalize or reorient where your operations are, 208 00:09:50,040 --> 00:09:52,040 Speaker 8: who you want to do business with, and as long 209 00:09:52,080 --> 00:09:54,320 Speaker 8: as there's activity, we're busy. So cross border M and 210 00:09:54,320 --> 00:09:57,120 Speaker 8: a large cap M and a going to be important 211 00:09:57,679 --> 00:09:59,720 Speaker 8: AI access an accelerant to that too. If you want 212 00:09:59,720 --> 00:10:02,480 Speaker 8: to act, you get after their productivity gains and embedded 213 00:10:02,480 --> 00:10:04,400 Speaker 8: in AI. You have to have the wherewithal to do it. 214 00:10:04,600 --> 00:10:06,560 Speaker 8: And if your market cap is thirty or forty billion, 215 00:10:06,960 --> 00:10:08,560 Speaker 8: that's tough. You know, how do you take a couple 216 00:10:08,600 --> 00:10:10,920 Speaker 8: of points off your income statement to do that year 217 00:10:10,960 --> 00:10:13,319 Speaker 8: after year? But if you're two three hundred billion, maybe 218 00:10:13,360 --> 00:10:15,800 Speaker 8: you got a shot. So people are thinking bigger. And 219 00:10:15,840 --> 00:10:18,440 Speaker 8: then the sponsors, as you know, a couple thousand companies 220 00:10:18,480 --> 00:10:19,960 Speaker 8: that have been sitting there that have a billion dollar 221 00:10:20,000 --> 00:10:23,240 Speaker 8: market caps implied they need to come. And then very 222 00:10:23,240 --> 00:10:26,280 Speaker 8: importantly have these great companies that have been private. And 223 00:10:26,280 --> 00:10:28,600 Speaker 8: over the last fifteen years we've seen companies go public 224 00:10:28,840 --> 00:10:31,079 Speaker 8: to defase options or effectively be secondaries. 225 00:10:31,200 --> 00:10:32,600 Speaker 4: You may actually see great companies that. 226 00:10:32,559 --> 00:10:35,040 Speaker 8: Are growth companies, some of them in the AI ecosystem, 227 00:10:35,080 --> 00:10:38,040 Speaker 8: that want to go tap capital. So for the investment bank, 228 00:10:38,080 --> 00:10:40,640 Speaker 8: a great period and for a wealth manager, leading wealth 229 00:10:40,640 --> 00:10:42,719 Speaker 8: manager in the US and the world, you want to 230 00:10:42,720 --> 00:10:44,800 Speaker 8: allocate your capital efficiently, so very exciting. 231 00:10:45,160 --> 00:10:46,800 Speaker 2: Some pank some of those business lines. So let's just 232 00:10:46,800 --> 00:10:49,480 Speaker 2: pick up on the IPO pipeline. The activity we could 233 00:10:49,480 --> 00:10:53,079 Speaker 2: see later this year SpaceX open AI. We're talking about 234 00:10:53,080 --> 00:10:55,760 Speaker 2: some absolute monsters. Even the team have been historically quite 235 00:10:55,800 --> 00:10:58,320 Speaker 2: dominant in the tech sector. What are you doing right 236 00:10:58,360 --> 00:10:59,800 Speaker 2: now to prepare for that moment that might be an. 237 00:10:59,760 --> 00:11:04,080 Speaker 8: Office Well, these companies, you know, you bank them for 238 00:11:04,120 --> 00:11:06,720 Speaker 8: a whole bunch of years and you get to know them. 239 00:11:07,320 --> 00:11:10,800 Speaker 8: So there's a process, obviously the formal bakeoff process and 240 00:11:10,840 --> 00:11:12,320 Speaker 8: then the go or no go decision. 241 00:11:12,720 --> 00:11:14,760 Speaker 4: But typically the company has. 242 00:11:14,600 --> 00:11:16,000 Speaker 8: A pretty good idea of what it wants to do 243 00:11:16,120 --> 00:11:19,200 Speaker 8: ahead of time because it's selected its group. And the 244 00:11:19,240 --> 00:11:22,120 Speaker 8: stakes are really high this round because as you say, 245 00:11:22,160 --> 00:11:25,360 Speaker 8: these the implied market caps these companies are enormous, but 246 00:11:25,400 --> 00:11:28,880 Speaker 8: also they are paradoxically they are very large but also 247 00:11:28,960 --> 00:11:30,960 Speaker 8: mega growers. They have, you know, some of them have 248 00:11:31,280 --> 00:11:33,400 Speaker 8: a little bit of a change the world field to them, 249 00:11:33,640 --> 00:11:35,520 Speaker 8: so they could become must own. I mean, one of 250 00:11:35,600 --> 00:11:37,079 Speaker 8: the things that you guys have talked a lot about 251 00:11:37,160 --> 00:11:39,320 Speaker 8: is so much of the equity base has become either 252 00:11:39,400 --> 00:11:42,360 Speaker 8: beta or it's become kind of the seven or eight names. 253 00:11:42,679 --> 00:11:44,959 Speaker 8: What if there's some additional companies that three, four, or 254 00:11:45,000 --> 00:11:47,599 Speaker 8: five hundred billion dollar market caps and trillion and a 255 00:11:47,600 --> 00:11:50,360 Speaker 8: half dollars market cap. The active management community say is 256 00:11:50,360 --> 00:11:51,640 Speaker 8: I want to own that. I want to own that 257 00:11:51,679 --> 00:11:53,480 Speaker 8: from the time of the IPO. So I think it's 258 00:11:53,480 --> 00:11:55,720 Speaker 8: not just Wall Street getting to know these companies. It's 259 00:11:55,760 --> 00:11:57,680 Speaker 8: a whole bunch of investors who have either backed into 260 00:11:57,720 --> 00:11:59,880 Speaker 8: early rounds or want to be there when the IPO. 261 00:12:00,440 --> 00:12:02,480 Speaker 3: When we were speaking with you a year ago in 262 00:12:02,559 --> 00:12:05,160 Speaker 3: these seats, you were talking about how it is going 263 00:12:05,200 --> 00:12:07,120 Speaker 3: to be a great year for IPOs and M and A, 264 00:12:07,200 --> 00:12:08,880 Speaker 3: and it was for your bottom line. 265 00:12:08,880 --> 00:12:09,920 Speaker 1: You had an incredible year. 266 00:12:10,679 --> 00:12:12,679 Speaker 3: There was, though, a lot of IPOs and a lot 267 00:12:12,720 --> 00:12:16,720 Speaker 3: of deals that got stymied by Liberation Day and policy uncertainty. 268 00:12:17,200 --> 00:12:19,840 Speaker 3: What has to go right for some of these deals 269 00:12:19,880 --> 00:12:23,839 Speaker 3: to come to fruish and open ay anthropic SpaceX Well, I. 270 00:12:23,760 --> 00:12:25,440 Speaker 8: Think part of the reason that these companies are so 271 00:12:25,559 --> 00:12:31,440 Speaker 8: interesting to investors is they are not rushed to go public, 272 00:12:31,760 --> 00:12:33,600 Speaker 8: So there has to be an element of being patient. 273 00:12:34,400 --> 00:12:36,440 Speaker 8: If you're in and around the ecosystem. They don't have 274 00:12:36,520 --> 00:12:38,319 Speaker 8: to come in the first half of twenty six I 275 00:12:38,360 --> 00:12:39,760 Speaker 8: think come in the second half of twenty sixth. They 276 00:12:39,760 --> 00:12:42,240 Speaker 8: could even come in twenty seven, but they are drawing 277 00:12:42,320 --> 00:12:45,719 Speaker 8: a whole bunch of interest to names like them, derivative 278 00:12:45,760 --> 00:12:48,880 Speaker 8: plays and the ecosystem. As you sort of disaggregate the 279 00:12:49,040 --> 00:12:51,080 Speaker 8: entire AI daisy chain, where do you want to play? 280 00:12:51,280 --> 00:12:54,439 Speaker 8: So the anticipation of the company going public almost is 281 00:12:54,960 --> 00:12:58,040 Speaker 8: as important as the company itself coming. But whether they 282 00:12:58,040 --> 00:13:00,679 Speaker 8: come LEASA in twenty six or twenty seven, they're going 283 00:13:00,720 --> 00:13:01,040 Speaker 8: to come. 284 00:13:01,240 --> 00:13:01,920 Speaker 4: They're going to come. 285 00:13:02,679 --> 00:13:05,120 Speaker 3: It's sort of a dissonance right now when you talk 286 00:13:05,160 --> 00:13:07,400 Speaker 3: to business leaders about how much enthusiasm there is for 287 00:13:07,480 --> 00:13:10,240 Speaker 3: deals and for energy in the US economy, and then 288 00:13:10,240 --> 00:13:12,680 Speaker 3: when you hear the policymakers, you hear uncertainty and you 289 00:13:12,760 --> 00:13:16,079 Speaker 3: hear sell America. How do you square those two narratives 290 00:13:16,160 --> 00:13:17,920 Speaker 3: at a time where you do hear a growing number 291 00:13:17,920 --> 00:13:21,079 Speaker 3: of investors say they are diversifying away from US assets. 292 00:13:22,040 --> 00:13:25,000 Speaker 8: I hear you guys talking about this a lot. I 293 00:13:25,000 --> 00:13:27,680 Speaker 8: think there are two separate phenomena, but they're not exclusive. 294 00:13:28,200 --> 00:13:29,960 Speaker 4: One is we got the arca history. 295 00:13:30,520 --> 00:13:32,160 Speaker 8: You know, I've gone on about the end of the 296 00:13:32,200 --> 00:13:34,319 Speaker 8: end of history and that things would get going again 297 00:13:34,679 --> 00:13:37,160 Speaker 8: and the Nation States would be battling for a Gemini 298 00:13:37,320 --> 00:13:39,960 Speaker 8: and kind of trying to you know, win out on 299 00:13:40,000 --> 00:13:42,679 Speaker 8: the rise and fall nations. That's just a historical fact 300 00:13:42,679 --> 00:13:45,960 Speaker 8: that kind of got there was an interregnum between Berlin, 301 00:13:46,000 --> 00:13:48,520 Speaker 8: Wall and COVID. We're actually back to the balance of 302 00:13:48,640 --> 00:13:51,320 Speaker 8: human history as we've all studied, and that means there's 303 00:13:51,360 --> 00:13:53,920 Speaker 8: going to be the kind of stuff that we are 304 00:13:54,200 --> 00:13:56,319 Speaker 8: living through right now. It's just been a while and 305 00:13:56,880 --> 00:14:00,000 Speaker 8: I don't know necessarily that that is something we should 306 00:14:00,040 --> 00:14:04,760 Speaker 8: expect to go away anytime soon. There's going to be renationalizing, nationalizing, 307 00:14:04,960 --> 00:14:06,840 Speaker 8: and that means in some case they'll be higher country risk, 308 00:14:06,880 --> 00:14:10,679 Speaker 8: they'll be maybe pockets of liquidity. There may be opportunistic 309 00:14:11,040 --> 00:14:15,439 Speaker 8: transactions or allocations that happened. But after twenty years of 310 00:14:15,480 --> 00:14:18,199 Speaker 8: financial oppression, we're back to live markets and. 311 00:14:18,160 --> 00:14:19,640 Speaker 4: Live nation states. That's here. 312 00:14:19,840 --> 00:14:22,080 Speaker 8: But at the same time, you have US capital markets 313 00:14:22,120 --> 00:14:23,800 Speaker 8: which are more than half the capital stock. 314 00:14:24,040 --> 00:14:25,320 Speaker 4: And the reality is very. 315 00:14:25,200 --> 00:14:30,440 Speaker 8: Basically as we know, corporate health is excellent, consumer health 316 00:14:30,440 --> 00:14:33,600 Speaker 8: at the top end is excellent, and obviously the administration 317 00:14:33,680 --> 00:14:36,520 Speaker 8: is getting after housing for the bottom half of the 318 00:14:36,600 --> 00:14:40,040 Speaker 8: k earnings as you know, grew eight percent this year, 319 00:14:40,040 --> 00:14:42,640 Speaker 8: that could grow in the mid teams next year, that's 320 00:14:42,760 --> 00:14:44,120 Speaker 8: double the long term average. 321 00:14:44,320 --> 00:14:47,600 Speaker 4: That's pretty good. So good corporate, good. 322 00:14:47,360 --> 00:14:51,240 Speaker 8: Consumer, excellent, capital markets, an easier FED the lowered by 323 00:14:51,240 --> 00:14:51,960 Speaker 8: seventy five. 324 00:14:52,320 --> 00:14:53,360 Speaker 4: Maybe there's more to go. 325 00:14:53,760 --> 00:14:56,680 Speaker 8: Maybe it's a demand driven twenty twenty six, in which 326 00:14:56,720 --> 00:14:57,960 Speaker 8: case the Fed doesn't have to move. 327 00:14:58,120 --> 00:14:58,680 Speaker 4: We have good. 328 00:14:58,560 --> 00:15:01,400 Speaker 8: Inflation, we keep on powering forwar growth. Or maybe it's 329 00:15:01,440 --> 00:15:05,120 Speaker 8: supply side where they're spending, but there isn't the same 330 00:15:05,200 --> 00:15:07,960 Speaker 8: kind of job creation and the federal help out, so 331 00:15:08,400 --> 00:15:11,640 Speaker 8: they're downside cases. But just in the main oh, and 332 00:15:11,720 --> 00:15:14,760 Speaker 8: the tailwinds of deregulation and the bill are kicking in. 333 00:15:15,080 --> 00:15:17,960 Speaker 8: It kind of is hard to argue against the twenty 334 00:15:18,080 --> 00:15:20,400 Speaker 8: six US led growth case. 335 00:15:20,600 --> 00:15:21,560 Speaker 4: Now we can get a. 336 00:15:21,480 --> 00:15:23,760 Speaker 8: Debate about where ASID prices should be, but in terms 337 00:15:23,800 --> 00:15:26,160 Speaker 8: of just two years ago were talking about recession. Last 338 00:15:26,240 --> 00:15:28,800 Speaker 8: year we weren't sure. Because the administrations come in, we're 339 00:15:28,800 --> 00:15:31,840 Speaker 8: not talking about that today. So for our business, very simply, 340 00:15:32,120 --> 00:15:34,760 Speaker 8: we write tickets to kind of two times GDP nominal, 341 00:15:35,040 --> 00:15:37,120 Speaker 8: and so if you think about our Wealth and Investment Bank, 342 00:15:37,120 --> 00:15:39,360 Speaker 8: if we're going to grow you know, five ten percent 343 00:15:39,440 --> 00:15:42,520 Speaker 8: on a two times basis nominally, that should be pretty 344 00:15:42,520 --> 00:15:43,800 Speaker 8: good for our business for doing our job. 345 00:15:43,920 --> 00:15:47,640 Speaker 2: Culporate health is very good, it's excellent. Software in health 346 00:15:47,800 --> 00:15:49,680 Speaker 2: is questionable. Right, can we talk about that. 347 00:15:49,800 --> 00:15:49,960 Speaker 4: Right? 348 00:15:49,960 --> 00:15:51,400 Speaker 2: The move in the last twenty four hours, the live 349 00:15:51,440 --> 00:15:54,120 Speaker 2: market stuff, let's get into that. The move in Japan 350 00:15:54,160 --> 00:15:56,120 Speaker 2: at the long end of the curve, is that a 351 00:15:56,160 --> 00:15:58,440 Speaker 2: warning shot, is that the start of something bigger? 352 00:15:59,360 --> 00:16:01,560 Speaker 8: Well, I mean this Japan trade has been talked about 353 00:16:01,600 --> 00:16:07,000 Speaker 8: forever and uh and I would expect then in a 354 00:16:07,040 --> 00:16:12,680 Speaker 8: lot of you know, highly indebted countries, you know off 355 00:16:12,680 --> 00:16:16,560 Speaker 8: the Liz Trust moment, where the demographics are poor and 356 00:16:16,600 --> 00:16:19,200 Speaker 8: you don't have the wherewithal our FIAT to kind of 357 00:16:19,200 --> 00:16:21,240 Speaker 8: work your way through that, there could. 358 00:16:21,120 --> 00:16:23,520 Speaker 4: Be some vulnerability. So what does that mean? 359 00:16:23,560 --> 00:16:26,160 Speaker 8: That means if we're sort of do our economics meets 360 00:16:26,720 --> 00:16:28,600 Speaker 8: you know, poly side thing. I think that means you 361 00:16:28,640 --> 00:16:31,680 Speaker 8: want to get closer to places where you can act 362 00:16:31,800 --> 00:16:35,640 Speaker 8: in your joint economic interest. And I think the Japanese 363 00:16:36,520 --> 00:16:39,520 Speaker 8: examples one that we should continue to pay attention to. 364 00:16:39,760 --> 00:16:41,840 Speaker 8: I wouldn't be surprised that we see pockets of that 365 00:16:42,240 --> 00:16:44,640 Speaker 8: now and then when you know, there's a little talk 366 00:16:44,720 --> 00:16:47,480 Speaker 8: of the bounty looks lousy, but we're going to inject 367 00:16:47,520 --> 00:16:50,120 Speaker 8: a little stimulus and let's see I anyone notices, Yeah, 368 00:16:50,240 --> 00:16:52,240 Speaker 8: they noticed, so you know you sort of have to 369 00:16:52,600 --> 00:16:54,760 Speaker 8: you know, then then you just it's you know, it's 370 00:16:54,760 --> 00:16:57,840 Speaker 8: a triballoon. It gets pulled back, and that's probably healthy 371 00:16:57,840 --> 00:16:59,280 Speaker 8: for markets. You know, you see a lot of that's 372 00:16:59,320 --> 00:17:01,880 Speaker 8: been bought act today. But that's different than the US 373 00:17:01,920 --> 00:17:06,000 Speaker 8: Treasury phenomenon. Yeah, that's that's been hugely overblown. The reality 374 00:17:06,080 --> 00:17:09,320 Speaker 8: is that when we did this a year ago, the 375 00:17:09,440 --> 00:17:11,840 Speaker 8: Treasury Secretary is you know of anyone was talking about 376 00:17:11,840 --> 00:17:13,800 Speaker 8: the ten year being so important to keep an eye on. 377 00:17:13,840 --> 00:17:16,160 Speaker 8: I think the ten years around four fifty seven, four 378 00:17:16,240 --> 00:17:18,600 Speaker 8: fifty five for sixty now it's a four twenty five 379 00:17:18,640 --> 00:17:20,720 Speaker 8: four to thirty, so the ten years doing his job, 380 00:17:20,720 --> 00:17:24,040 Speaker 8: there's some steepening. Yes, it's probably healthy. So I do 381 00:17:24,080 --> 00:17:27,320 Speaker 8: think there's a conflation between kind of US Treasury phenomenon 382 00:17:27,400 --> 00:17:30,280 Speaker 8: and the world, and I think there's a difference, and 383 00:17:30,440 --> 00:17:32,439 Speaker 8: you know, we just have to continue to highlight the. 384 00:17:32,440 --> 00:17:33,520 Speaker 1: Difference very quickly. 385 00:17:33,520 --> 00:17:37,080 Speaker 6: Ten you spend time you grew up in Venezuela, New world. 386 00:17:37,119 --> 00:17:39,639 Speaker 6: Now are you planning to maybe help facilitate companies go 387 00:17:39,720 --> 00:17:40,120 Speaker 6: back in. 388 00:17:42,000 --> 00:17:45,159 Speaker 4: Not prep for that question you lived in. Thank you 389 00:17:45,160 --> 00:17:45,560 Speaker 4: so much. 390 00:17:46,440 --> 00:17:48,720 Speaker 6: Interested because you have a different take, probably than every 391 00:17:48,720 --> 00:17:50,679 Speaker 6: other CEO walking around this forum. 392 00:17:51,160 --> 00:17:54,680 Speaker 8: Well that as well as an extraordinary place, has a 393 00:17:55,480 --> 00:17:59,639 Speaker 8: proud but now in recent decades, very troubled history. But 394 00:18:00,119 --> 00:18:04,120 Speaker 8: is you know, if you know your Monroe doctrine critical 395 00:18:04,480 --> 00:18:07,520 Speaker 8: and has albeit as you've talked about it at length, 396 00:18:08,200 --> 00:18:12,800 Speaker 8: it's it's it's more sulphuric, but very high, vast quantities 397 00:18:12,840 --> 00:18:16,200 Speaker 8: of oil beneath the ground. So do I think Venezuela 398 00:18:16,240 --> 00:18:18,040 Speaker 8: is going to be relevant? I think Latin America is 399 00:18:18,080 --> 00:18:20,800 Speaker 8: going to be relevant. I think the Hemisphere is going 400 00:18:20,840 --> 00:18:24,239 Speaker 8: to be relevant in its sort of thinking around how 401 00:18:24,359 --> 00:18:28,320 Speaker 8: wants to get closer while maintaining its own, you know, 402 00:18:28,560 --> 00:18:30,680 Speaker 8: political and social independence from the US. But I think 403 00:18:30,960 --> 00:18:34,159 Speaker 8: coming together of some places may make some sense and 404 00:18:34,240 --> 00:18:36,159 Speaker 8: maybe in the broader economic interest. 405 00:18:36,160 --> 00:18:37,720 Speaker 4: Back to the previous question, it. 406 00:18:37,760 --> 00:18:39,639 Speaker 2: Was a fantastic counts, thank you so much. I've got 407 00:18:39,640 --> 00:18:41,720 Speaker 2: one more. Yes, it's not a land of mind. There 408 00:18:41,760 --> 00:18:44,159 Speaker 2: was some news about Deutschebank, and I just want to 409 00:18:44,200 --> 00:18:46,919 Speaker 2: breathe some life into that story, and essentially the Treasury 410 00:18:46,960 --> 00:18:49,919 Speaker 2: Secretary came out there was some research that he didn't 411 00:18:49,960 --> 00:18:53,520 Speaker 2: like and according to him, the Deutsche Bank CEO has 412 00:18:53,560 --> 00:18:56,400 Speaker 2: turned around and said, I don't stand by that research. 413 00:18:56,440 --> 00:18:57,520 Speaker 7: That's basically the point. 414 00:18:58,160 --> 00:19:00,679 Speaker 2: Is it difficult for the research apartment of Milk and 415 00:19:00,680 --> 00:19:03,560 Speaker 2: Stanley to say what they think in an environment like 416 00:19:03,600 --> 00:19:05,720 Speaker 2: this one? And I asked this question because I know 417 00:19:05,800 --> 00:19:10,439 Speaker 2: some tremendous individuals at Molke and Stanley in research, and 418 00:19:10,480 --> 00:19:13,600 Speaker 2: they are all highly intelligent, capable and have their own 419 00:19:13,640 --> 00:19:15,399 Speaker 2: thoughts about where they think we are. 420 00:19:15,240 --> 00:19:16,320 Speaker 7: In this moment right now. 421 00:19:16,440 --> 00:19:18,480 Speaker 2: But is it difficult in the C suite to allow 422 00:19:18,520 --> 00:19:20,800 Speaker 2: them just to go out their full throat, full throttle, 423 00:19:20,800 --> 00:19:23,560 Speaker 2: full blooded and just say what they really think about 424 00:19:23,560 --> 00:19:24,040 Speaker 2: this moment. 425 00:19:24,240 --> 00:19:24,840 Speaker 4: Absolutely not. 426 00:19:25,880 --> 00:19:27,800 Speaker 8: I'm not at a piece of research at my desk 427 00:19:27,880 --> 00:19:30,960 Speaker 8: for a yellow light or a no go. I think 428 00:19:31,000 --> 00:19:33,760 Speaker 8: what gets a little tricky is these institutions. 429 00:19:33,240 --> 00:19:34,600 Speaker 4: Also are desk analysts. 430 00:19:34,920 --> 00:19:36,240 Speaker 8: So I don't know if this one came out of 431 00:19:36,240 --> 00:19:39,439 Speaker 8: the research department or maybe a desk analyst sitting in 432 00:19:39,440 --> 00:19:40,560 Speaker 8: one of the divisions. 433 00:19:40,800 --> 00:19:42,320 Speaker 4: But to answer your question. 434 00:19:42,080 --> 00:19:46,280 Speaker 8: Directly, we want we celebrate broad opinion, I do think, 435 00:19:46,880 --> 00:19:51,040 Speaker 8: but to give not kind of the standard answer. 436 00:19:51,480 --> 00:19:53,200 Speaker 4: Part of the reason you're like our research. 437 00:19:52,920 --> 00:19:56,720 Speaker 8: Is because it's not just regurgitation, because we all have 438 00:19:56,760 --> 00:20:00,119 Speaker 8: a lumber terminal, okay, So it has to have some 439 00:20:00,280 --> 00:20:02,760 Speaker 8: kind of value add but it doesn't have to just 440 00:20:02,800 --> 00:20:06,919 Speaker 8: be provocation for its own sake. So we have industry leaders, 441 00:20:06,960 --> 00:20:10,440 Speaker 8: we have sector leaders. We have Seth Carpenter, who you 442 00:20:10,480 --> 00:20:13,679 Speaker 8: pointed out. I was watching you talk to him, and 443 00:20:13,720 --> 00:20:16,080 Speaker 8: I was and that was quite a moment when I. 444 00:20:16,119 --> 00:20:20,920 Speaker 4: Looked Starbucks all over my sue. So thanks for that. 445 00:20:20,920 --> 00:20:21,440 Speaker 4: That was excellent. 446 00:20:22,040 --> 00:20:23,480 Speaker 8: You had at least one viewer that day, and that 447 00:20:23,520 --> 00:20:28,280 Speaker 8: was me, so and Seth. But the answer is the 448 00:20:28,680 --> 00:20:31,320 Speaker 8: independence of research is important. 449 00:20:31,320 --> 00:20:33,480 Speaker 4: We've invested in it for all these years. 450 00:20:34,040 --> 00:20:37,480 Speaker 8: That having been said, sort of writing research to just 451 00:20:37,520 --> 00:20:41,520 Speaker 8: sort of provoke and kind of get your Warhol moment, 452 00:20:41,880 --> 00:20:44,800 Speaker 8: I mean that is not really fair to the institution either, 453 00:20:45,119 --> 00:20:48,320 Speaker 8: and it puts it puts the particular government or whomever 454 00:20:48,400 --> 00:20:50,879 Speaker 8: in an awkward spot because they read the research. So 455 00:20:50,960 --> 00:20:53,680 Speaker 8: I think there's got to be a balance between independent 456 00:20:53,680 --> 00:20:56,160 Speaker 8: integrity and what you're writing and writing something that actually 457 00:20:56,200 --> 00:20:58,760 Speaker 8: is meant to add value and bring intellectual capital to 458 00:20:58,760 --> 00:20:59,280 Speaker 8: the fore. 459 00:20:59,240 --> 00:21:01,440 Speaker 7: Seven of the Drunk and Bill I saw that out 460 00:21:01,440 --> 00:21:01,679 Speaker 7: for you. 461 00:21:01,760 --> 00:21:03,960 Speaker 4: I didn't actually split it up. I just swallowed wild. 462 00:21:04,520 --> 00:21:05,840 Speaker 7: Thank you, sir, Thank you very much. 463 00:21:05,880 --> 00:21:06,919 Speaker 4: Thank you. 464 00:21:06,960 --> 00:21:07,560 Speaker 7: Stay with us. 465 00:21:07,880 --> 00:21:10,440 Speaker 2: More Bloomberg surveillance coming up after this. 466 00:21:19,800 --> 00:21:20,359 Speaker 7: Joining us now. 467 00:21:20,440 --> 00:21:23,000 Speaker 2: The Republican Senator Tom tillis at the epicent of some 468 00:21:23,040 --> 00:21:25,919 Speaker 2: of the conversations down in Washington, d C. Regarding the 469 00:21:25,920 --> 00:21:28,159 Speaker 2: Federal Reserve Sena, it's good to see you. Great to 470 00:21:28,160 --> 00:21:30,480 Speaker 2: see you. So you're like the human roadblock now to 471 00:21:30,600 --> 00:21:32,919 Speaker 2: getting anyone confirmed. So let's get into that. Is it 472 00:21:32,960 --> 00:21:34,920 Speaker 2: about the individual or the process? 473 00:21:35,040 --> 00:21:36,000 Speaker 4: It's about the process. 474 00:21:36,040 --> 00:21:38,200 Speaker 9: Look, I made the statement that I did when the 475 00:21:38,520 --> 00:21:41,840 Speaker 9: news broke about the investigation on Chair Powell because I 476 00:21:41,880 --> 00:21:44,040 Speaker 9: felt like, leading up to the markets, I was on 477 00:21:44,080 --> 00:21:47,080 Speaker 9: a Sunday night that I want to send a signal 478 00:21:47,119 --> 00:21:49,520 Speaker 9: to the market so the Fed is independent and will 479 00:21:49,560 --> 00:21:52,120 Speaker 9: be independent, and this legal process needs to play itself out. 480 00:21:52,440 --> 00:21:53,080 Speaker 1: Your signal to. 481 00:21:53,080 --> 00:21:55,399 Speaker 6: The market is actually potentially why we saw the market 482 00:21:55,520 --> 00:21:56,160 Speaker 6: shrug off. 483 00:21:56,280 --> 00:21:56,960 Speaker 1: That's a PENA. 484 00:21:56,960 --> 00:21:59,240 Speaker 9: Well, yeah, And I think also you have to look 485 00:21:59,240 --> 00:22:02,679 Speaker 9: at people light Chair french Hill and others who weigh in. 486 00:22:02,880 --> 00:22:07,560 Speaker 9: I think that it made a simple fact obvious. The 487 00:22:07,600 --> 00:22:09,560 Speaker 9: Senate does have control over who gets. 488 00:22:09,480 --> 00:22:09,920 Speaker 4: On the board. 489 00:22:10,080 --> 00:22:13,080 Speaker 6: The Jump administration definitely doesn't like slow processes. So how 490 00:22:13,080 --> 00:22:14,520 Speaker 6: long do you think this is actually going to take. 491 00:22:14,840 --> 00:22:17,119 Speaker 9: Well, it's up to the Department of Justice at this point. 492 00:22:17,400 --> 00:22:19,119 Speaker 9: I didn't get us here. They got us here, So 493 00:22:19,160 --> 00:22:21,159 Speaker 9: they need to go through this process either prevent the 494 00:22:21,200 --> 00:22:23,359 Speaker 9: facts fully adjudicated or determine. 495 00:22:23,000 --> 00:22:24,920 Speaker 4: What to do with the investigation. 496 00:22:25,280 --> 00:22:26,800 Speaker 1: So, in other words, and tell Us is dismissed. There 497 00:22:27,440 --> 00:22:28,480 Speaker 1: there's no new FED chair. 498 00:22:29,280 --> 00:22:32,080 Speaker 9: Well until it's the semester three hundred and forty seven days, 499 00:22:32,080 --> 00:22:33,560 Speaker 9: that's the expiration of my term. 500 00:22:33,960 --> 00:22:37,879 Speaker 3: Okay, right now, we're here where you are diverging quite 501 00:22:37,880 --> 00:22:40,119 Speaker 3: a bit from some of the members of your own party, 502 00:22:40,160 --> 00:22:41,280 Speaker 3: including President Trump. 503 00:22:41,480 --> 00:22:43,840 Speaker 1: You've gone back and forth. You're not running for reelection. 504 00:22:44,640 --> 00:22:46,760 Speaker 3: What do you tell people who try to get a 505 00:22:46,800 --> 00:22:49,359 Speaker 3: sense of what the American people are going to do 506 00:22:49,480 --> 00:22:51,159 Speaker 3: or what Congress is going to do. What do you 507 00:22:51,240 --> 00:22:53,400 Speaker 3: tell them when they approach you here at Davos looking 508 00:22:53,400 --> 00:22:53,840 Speaker 3: for direction. 509 00:22:54,119 --> 00:22:57,240 Speaker 9: Well, I remind them that the United States two hundred 510 00:22:57,240 --> 00:22:59,440 Speaker 9: and fifty years old now this year our happy birthday. 511 00:22:59,440 --> 00:23:03,920 Speaker 9: But where a very complex democracy. It's very difficult to understand. 512 00:23:03,920 --> 00:23:07,040 Speaker 9: It's difficult to understand the institution of the Senate and 513 00:23:07,080 --> 00:23:11,720 Speaker 9: why one Senate member in this particular Congress can control 514 00:23:11,920 --> 00:23:14,359 Speaker 9: processes on committees. You know, we're the deciding where the 515 00:23:14,400 --> 00:23:15,240 Speaker 9: cloture maker. 516 00:23:15,040 --> 00:23:16,840 Speaker 4: Where the deciding votes. 517 00:23:16,880 --> 00:23:19,320 Speaker 9: So I think it's an opportunity for us to demonstrate 518 00:23:19,320 --> 00:23:21,880 Speaker 9: democracy at its best in the United States. I support 519 00:23:21,960 --> 00:23:24,480 Speaker 9: the vast majority of the President's policies, a lot of 520 00:23:24,520 --> 00:23:26,360 Speaker 9: the Watts, but some of the House to me, make 521 00:23:26,440 --> 00:23:29,520 Speaker 9: no sense to me. Greenland the what makes a lot 522 00:23:29,520 --> 00:23:32,040 Speaker 9: of sense to me? Project power in Greenland? Why would 523 00:23:32,080 --> 00:23:36,320 Speaker 9: any fiscal conservative want to spend billions of dollars to 524 00:23:36,520 --> 00:23:39,960 Speaker 9: buy something that we already have access to. Greenland has 525 00:23:40,000 --> 00:23:42,680 Speaker 9: offered us a base for a dollar, folks, we could 526 00:23:42,680 --> 00:23:45,680 Speaker 9: get seventeen bases if you extend that for seventeen dollars 527 00:23:45,960 --> 00:23:48,840 Speaker 9: versus fifty seven billion dollars or whatever it would cost. 528 00:23:48,920 --> 00:23:51,720 Speaker 9: Not to mention the Danes pay about a half a 529 00:23:51,720 --> 00:23:54,399 Speaker 9: billion dollars a year to just keep the infrastructure running 530 00:23:54,400 --> 00:23:58,760 Speaker 9: for some fifty seven hundred and fifty seven thousand indigenous 531 00:23:58,760 --> 00:24:00,920 Speaker 9: people on the island. Why do we want to take 532 00:24:00,960 --> 00:24:03,720 Speaker 9: on that overhead? Is it really about projecting power in 533 00:24:03,720 --> 00:24:04,320 Speaker 9: the Arctic. 534 00:24:04,200 --> 00:24:04,760 Speaker 4: Or something else. 535 00:24:04,800 --> 00:24:07,160 Speaker 9: If it's something else, maybe I look at the business case, 536 00:24:07,200 --> 00:24:10,320 Speaker 9: but ostensibly it's about projecting power in the Artic and 537 00:24:10,359 --> 00:24:13,199 Speaker 9: the best way to project power in the Arctic is 538 00:24:13,200 --> 00:24:17,400 Speaker 9: through the NATO forces using their Arctic skills, their ice 539 00:24:17,440 --> 00:24:20,280 Speaker 9: breaking skills. The projection of power that we come together, 540 00:24:20,840 --> 00:24:23,359 Speaker 9: the synergy of the NATO alliance is far greater than 541 00:24:23,359 --> 00:24:25,080 Speaker 9: anything in the United States could do. 542 00:24:25,040 --> 00:24:25,560 Speaker 4: On its own. 543 00:24:25,720 --> 00:24:29,080 Speaker 2: Do you know any fiscal conservatives in Washington. 544 00:24:29,200 --> 00:24:33,080 Speaker 9: Well, starting with one, no, I think there are several looks, 545 00:24:33,880 --> 00:24:36,320 Speaker 9: and we've got to start thinking about these other structural 546 00:24:36,320 --> 00:24:38,560 Speaker 9: decisions that we make. The run up the debt already 547 00:24:38,560 --> 00:24:42,200 Speaker 9: to unacceptable highs, with the fraud that we're seeing here, 548 00:24:42,240 --> 00:24:45,879 Speaker 9: with the uncertainty, with the increasing debt, I worry about 549 00:24:46,400 --> 00:24:49,840 Speaker 9: almost a level of irrational exuberance. We've somehow been able 550 00:24:49,920 --> 00:24:54,440 Speaker 9: to withstand some of the uncertainty, but there's a proverbial 551 00:24:54,480 --> 00:24:57,439 Speaker 9: straw out there, and these sorts of decisions could get 552 00:24:57,480 --> 00:24:59,000 Speaker 9: us closer to breaking the camels better. 553 00:24:59,080 --> 00:25:00,720 Speaker 7: What does corrective action actually look like? 554 00:25:01,240 --> 00:25:02,000 Speaker 4: Corrective action? 555 00:25:02,200 --> 00:25:04,159 Speaker 7: What's doable in Washington at the moment. 556 00:25:04,200 --> 00:25:06,480 Speaker 9: Well, you know, presumably even if we were to move 557 00:25:06,520 --> 00:25:08,840 Speaker 9: forward and there was some deal offered to Greenland, and 558 00:25:09,080 --> 00:25:13,840 Speaker 9: and to Denmark that would require congressional approval. The president 559 00:25:13,880 --> 00:25:17,359 Speaker 9: doesn't have a blank check that he can continue to 560 00:25:17,400 --> 00:25:20,679 Speaker 9: run up debt. That would require a process and raizor 561 00:25:20,760 --> 00:25:21,480 Speaker 9: thin margins. 562 00:25:21,680 --> 00:25:23,080 Speaker 4: And if it's a process. 563 00:25:22,720 --> 00:25:24,919 Speaker 9: That doesn't play out until next year, it's post election. 564 00:25:25,040 --> 00:25:27,200 Speaker 9: We've got to know what Congress looks like next year, 565 00:25:27,359 --> 00:25:29,320 Speaker 9: or they've got to know what Congress looks like next year. 566 00:25:29,400 --> 00:25:32,440 Speaker 6: The President's fairly focused on November third and this affordability push. 567 00:25:32,480 --> 00:25:34,080 Speaker 6: Do you expect him to make more phone calls to 568 00:25:34,200 --> 00:25:37,800 Speaker 6: Senator Elizabeth Warren, another senior member on the Banking Committee, 569 00:25:37,800 --> 00:25:38,240 Speaker 6: than to you. 570 00:25:38,440 --> 00:25:42,800 Speaker 9: I actually, Elizabeth Warre and our friends, we're not political friends, 571 00:25:43,040 --> 00:25:43,879 Speaker 9: personal friends. 572 00:25:44,240 --> 00:25:46,399 Speaker 4: I got on the floor, no the well at the house. 573 00:25:46,480 --> 00:25:51,880 Speaker 9: I said, Elizabeth, remarkable, you've sold the president on your 574 00:25:52,200 --> 00:25:55,800 Speaker 9: arbitrary caps on credit. We're no longer going to rate 575 00:25:55,880 --> 00:25:58,760 Speaker 9: for risk. We're just going to be rating basically what's 576 00:25:58,760 --> 00:26:00,879 Speaker 9: going to happen. We're going to under or unbank a 577 00:26:00,880 --> 00:26:03,760 Speaker 9: lot of people, and we're going to stabilize the asset 578 00:26:03,800 --> 00:26:07,440 Speaker 9: backed secure asset backed securities market along the way. I said, 579 00:26:07,440 --> 00:26:10,280 Speaker 9: Don't get me wrong, it's extraordinary that you've solved the 580 00:26:10,320 --> 00:26:12,679 Speaker 9: President on this idea, but you know, I'm going to 581 00:26:12,720 --> 00:26:14,000 Speaker 9: do everything I can to kill it. 582 00:26:14,560 --> 00:26:16,439 Speaker 6: But do you think something will be done when it 583 00:26:16,440 --> 00:26:17,439 Speaker 6: comes to credit cards? 584 00:26:17,440 --> 00:26:19,600 Speaker 1: Maybe it's the other bill. 585 00:26:19,640 --> 00:26:24,119 Speaker 9: That's why would we want to repeat a bad idea. 586 00:26:24,200 --> 00:26:26,400 Speaker 9: If you're taking a look at MasterCard and BS, they're 587 00:26:26,440 --> 00:26:26,960 Speaker 9: working with. 588 00:26:27,000 --> 00:26:27,840 Speaker 4: The small retailer. 589 00:26:27,960 --> 00:26:32,440 Speaker 9: The retailers have a legitimate concern and the credit card 590 00:26:32,480 --> 00:26:34,800 Speaker 9: companies are working that out. We don't need a big 591 00:26:34,840 --> 00:26:38,480 Speaker 9: government arbitrary solution. We've seen credit card competition acts in 592 00:26:38,520 --> 00:26:42,720 Speaker 9: Europe and they've been abject failures. Seventy percent of all 593 00:26:42,800 --> 00:26:45,920 Speaker 9: of the travel to Alaska, for example, are through rewards. 594 00:26:46,400 --> 00:26:48,399 Speaker 9: Do you the money's got to come from somewhere? Do 595 00:26:48,440 --> 00:26:49,879 Speaker 9: you think that that travel is going to be funded 596 00:26:49,880 --> 00:26:52,800 Speaker 9: in the future. Are those sorts of rewards and programs 597 00:26:52,840 --> 00:26:55,360 Speaker 9: going to be cut? It makes no sense. It's not sustainable, 598 00:26:55,400 --> 00:26:57,600 Speaker 9: and I think that we have the votes and the 599 00:26:57,640 --> 00:26:58,880 Speaker 9: Congress to hold it off. 600 00:26:58,880 --> 00:27:01,960 Speaker 3: This Congress States has been known for process. That's one 601 00:27:01,960 --> 00:27:04,159 Speaker 3: reason why a lot of businesses have invested in the 602 00:27:04,240 --> 00:27:06,639 Speaker 3: United States and the capital markets that we've created. And 603 00:27:06,680 --> 00:27:10,520 Speaker 3: I just wonder, as you are here with global business leaders. 604 00:27:10,840 --> 00:27:13,840 Speaker 3: Does it worry you that you hear more investors, more 605 00:27:13,880 --> 00:27:17,439 Speaker 3: businesses looking to diversify away from the United States because 606 00:27:17,480 --> 00:27:19,879 Speaker 3: of a lack of predictability of process of policy. 607 00:27:19,960 --> 00:27:20,480 Speaker 4: We have to do that. 608 00:27:20,840 --> 00:27:23,760 Speaker 9: I spent nearly twenty years at Price Waterhouse Coopers and 609 00:27:23,760 --> 00:27:26,400 Speaker 9: how Bey on global business services. I would I would 610 00:27:26,400 --> 00:27:28,400 Speaker 9: have to tell every client I advised at that time, 611 00:27:28,840 --> 00:27:31,160 Speaker 9: this is a risk. You've got to reduce your bybox 612 00:27:31,200 --> 00:27:35,240 Speaker 9: for any sorts of high risk ventures. And that freezes capital, 613 00:27:35,320 --> 00:27:38,280 Speaker 9: that that tamper's growth. That's the last thing we need 614 00:27:38,359 --> 00:27:38,680 Speaker 9: right now. 615 00:27:38,680 --> 00:27:39,920 Speaker 7: Are you going to be in the room in thirty 616 00:27:39,960 --> 00:27:40,680 Speaker 7: six minutes time? 617 00:27:40,760 --> 00:27:41,600 Speaker 4: One hundred percent? 618 00:27:41,880 --> 00:27:42,920 Speaker 7: What are you expecting to hear? 619 00:27:43,400 --> 00:27:46,719 Speaker 9: I'm expecting to here President Trump, you give a speech? 620 00:27:47,880 --> 00:27:50,359 Speaker 4: What content? So one thing I'm certain of. 621 00:27:50,480 --> 00:27:53,359 Speaker 7: Have you got to read on the content of seid speech? 622 00:27:54,160 --> 00:27:56,440 Speaker 9: No, No, I'll hear it when everybody else here is it. 623 00:27:57,600 --> 00:27:59,440 Speaker 9: But you know, I will tell you the raison. Everybody's 624 00:27:59,440 --> 00:28:02,520 Speaker 9: probably what still has got the bling on for this 625 00:28:02,640 --> 00:28:05,320 Speaker 9: says from we had a new tribe. The largest tribe 626 00:28:05,320 --> 00:28:07,800 Speaker 9: east of the Mississippi is Columbia Indians. They got recognized 627 00:28:07,840 --> 00:28:10,440 Speaker 9: after one hundred and thirty seven years of abuse and neglect. 628 00:28:10,960 --> 00:28:14,440 Speaker 9: Interestingly enough, they're about the same sized tribe, fifty five 629 00:28:14,520 --> 00:28:18,040 Speaker 9: thousand of the indigenous people in Greenland. I heard a 630 00:28:18,160 --> 00:28:20,640 Speaker 9: very important comment when I was in Denmark. They say 631 00:28:20,640 --> 00:28:23,600 Speaker 9: people can trade, but you can't trade people. We need 632 00:28:23,640 --> 00:28:26,040 Speaker 9: to make everyone understand that those people on the ground 633 00:28:26,040 --> 00:28:28,400 Speaker 9: have been there for forty five hundred years. They want 634 00:28:28,480 --> 00:28:30,920 Speaker 9: us there, but they want us there in their territory, 635 00:28:30,960 --> 00:28:34,800 Speaker 9: non American territory, and it can be accomplished much more conservatively, 636 00:28:35,040 --> 00:28:37,400 Speaker 9: much more sustainably, by cooperation. 637 00:28:38,640 --> 00:28:42,200 Speaker 2: This is the Bloomberg Survnmonts podcast, bringing you the best 638 00:28:42,200 --> 00:28:45,280 Speaker 2: in markets, economics, an gio politics. You can watch the 639 00:28:45,320 --> 00:28:48,400 Speaker 2: show life on Bloomberg TV weekday mornings from six am 640 00:28:48,440 --> 00:28:51,640 Speaker 2: to nine am Eastern. Subscribe to the podcast on Apple, 641 00:28:51,880 --> 00:28:54,760 Speaker 2: Spotify or anywhere else you listen, and as always on 642 00:28:54,760 --> 00:28:57,240 Speaker 2: the Bloomberg Terminal and the Bloomberg Business Amp.