Speaker 1: This is Bloomberg Business Wait inside from the reporters and
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Speaker 1: global business, finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Jinny's talking about Vava's Brian moynihan profit topping estimates on
Speaker 2: trading net interest income that he had Goldman Tim profit
Speaker 2: slumping thirty three percent, the company CEO David Salin pleading patients.
Speaker 3: We know, we talked.
Speaker 2: About it with Shri yesterday. Sweat Arajan just some of
Speaker 2: the changes that that company is undergoing.
Speaker 3: Well, let's get to our big bank round up with
Speaker 3: us on the highlights and low lights of today's reporting.
Speaker 3: We got Bloomberg News America's finance team leader in our
Speaker 3: Bloomberg Interactive Brokers studio, Sally Bakewell with us. Also with
Speaker 3: us as Cheryl Angelo, Capital senior portfolio manager involved in
Speaker 3: managing several financial strategies, joins us on zoom in Atlanta. Sally,
Speaker 3: give us your big takeaways. Where do you want to start?
Speaker 4: So?
Speaker 5: I think, yeah, the Bank of America had a pretty
Speaker 5: good quarter by many metrics. Overall profit and net interest
Speaker 5: income topped estimates. It did better than expected in investment banking,
Speaker 5: you know, despite the persistent deal slump, and it did
Speaker 5: way better by a long way in trading because the
Speaker 5: bank has actually, you know, spent a lot of time
Speaker 5: in investment, in expanding its balance sheet and taking on
Speaker 5: more clients in its trading business. But Goldman it was
Speaker 5: a bit of a different kettle of fish. Profit fell,
Speaker 5: it was hit by another quarter of real estate write offs,
Speaker 5: and of course it was impacted by sluggish investment banking,
Speaker 5: even though trading was better than expected. What was interesting
Speaker 5: is both banks sort of steered clear of you know,
Speaker 5: making very decisive comments about when investment banking might bounce back,
Speaker 5: which they have done in previous quarters, perhaps indicating that
Speaker 5: those green shoots in investment banking they had long talked
Speaker 5: about and might be pushed sort of further back on.
Speaker 3: The Hurican Stock's not going to come out and save
Speaker 3: investment banking, probably not.
Speaker 5: Even though they should do, given you know, the wonderful
Speaker 5: sandals that I own. But yeah, I think with the
Speaker 5: geopolitical concerns, and we know Jamie Diamond referenced those on Friday.
Speaker 5: He said it is. You know, this is one of
Speaker 5: the most dangerous times in history. So I think that's
Speaker 5: a big cloud over the investment banking.
Speaker 2: As we and we know Golvin Saxton about one point
Speaker 2: seven percent b of actually up about two and a
Speaker 2: quarter percent. I want to bring in Cheryl Page. She's
Speaker 2: angel O Capital senior portfolio manager involved in the managing
Speaker 2: of several financial strategies at the firm. She's on Zoom
Speaker 2: in Atlanta. So Cheryl, come on in. You know, it's
Speaker 2: interesting and I'm just curious. As Sally went through the
Speaker 2: two big banks that reported today, we've heard from a
Speaker 2: lot of the big banks, certainly last week as well.
Speaker 2: Is there anything that you've been hearing that's actionable for
Speaker 2: you in terms of investing.
Speaker 6: Yeah.
Speaker 7: I think what we've seen thus far this earning season
Speaker 7: has been outperformance relative to expectations, and I think across
Speaker 7: the board we're seeing beats on ANII and better than
Speaker 7: expected credit quality, which really have been the two points
Speaker 7: of concern as we look at bank fundamentals where to
Speaker 7: deposit betas go from here? They typically don't. They typically
Speaker 7: continue to rise until a couple quarters past the last
Speaker 7: rate hike, and credit quality has been something we've been
Speaker 7: expecting to normalize for quite some time, so we're encouraged
Speaker 7: with results. We're seeing less normalization less quickly than we
Speaker 7: would have anticipated, and a lot of levers that banks
Speaker 7: are able to pull in terms of continuing to drive
Speaker 7: higher ANII than expected. So what we really take away
Speaker 7: from this, I think is the business models that work
Speaker 7: probably best in this environment tend to skew towards the
Speaker 7: large cap banks where we have a bit of a
Speaker 7: balance between a really strong consumer still and then on
Speaker 7: the smaller side of the spectrum, where community banks may
Speaker 7: be the only bank in town and continue to benefit
Speaker 7: from deposit flow stabilization. So we sort of like a
Speaker 7: Barbelle approach here, and we would be most concerned at
Speaker 7: the margin at some of the regional banks that ski
Speaker 7: relatively higher on commercial real estate and office cre in particular.
Speaker 3: What about Sheryl investment banking? When do you see investment
Speaker 3: banking bouncing back?
Speaker 7: I think that is a difficult one. It clearly we
Speaker 7: have seen better results than anticipated, but still down pretty
Speaker 7: heavily year over year, and it's difficult to see when
Speaker 7: that turn may happen. But one of the things that
Speaker 7: we do expect will start to accelerate as we move
Speaker 7: into twenty twenty four. Is M and A and particularly
Speaker 7: in the banking sector. I think there's a lot of
Speaker 7: focus that will be put on expense reduction, and M
Speaker 7: and A is a way to achieve that, particularly in
Speaker 7: the banking sector, and that could drive some higher investment
Speaker 7: banking fees as we move into calendar twenty twenty four.
Speaker 2: Sal you want to come back into in terms of
Speaker 2: we got you know, obviously we heard from JP Moore
Speaker 2: again and City last week. We've really been kind of
Speaker 2: waiting to hear from these guys to see what they
Speaker 2: have to say and women about what they have to
Speaker 2: say about the health of the banking sector. Is there
Speaker 2: kind of a theme, a trend line. I know they're
Speaker 2: not all apples to apples.
Speaker 5: Yeah, I think the trend line the theme is that
Speaker 5: so JP Morgan and City they did see charge offs increase,
Speaker 5: but they are still low compared to historic levels. And
Speaker 5: as we heard from Bank of America, it was a
Speaker 5: similar thing today. Charge offs ticked up, but as we
Speaker 5: heard from Brian moynihan, the consumer remains healthy, although spending
Speaker 5: is starting to slow. So again it's a sort of
Speaker 5: ominous cloud that things are starting to deteriorate a little bit,
Speaker 5: but they're not quite reaching kind of pre pandemic levels yet.
Speaker 3: When you say not quite reaching pre pandemic levels, would
Speaker 3: that be a good thing because it's a normalization or
Speaker 3: would that be frowned upon?
Speaker 5: I think it would probably be. Well, then there probably
Speaker 5: be a good thing in the sense that they'd be
Speaker 5: coming back to sort of a no one wants sort
Speaker 5: of credit charge offs or right downs. But I think
Speaker 5: if they're you know, if they're bouncing off historic lows,
Speaker 5: it's less a thing to worry about.
Speaker 2: No, and yeah, that makes a lot of sense, right,
Speaker 2: but it is right we try to figure out kind
Speaker 2: of what's normal coming off the pandemic and then in
Speaker 2: comparison to where we were pre pandemic. Cheryl, I asked
Speaker 2: you about actionable Is there names and remind us of
Speaker 2: your strategy because if what I remember, it's a credit
Speaker 2: or debt play as well as an equity play. But
Speaker 2: is there is there anything actionable off of the round
Speaker 2: of earnings that we've heard from the financial space for
Speaker 2: you specifically, Yeah.
Speaker 7: And again it's still a little early in the earning season.
Speaker 7: We are encouraged by way what we've seen so far.
Speaker 7: Our strategies tend to be more credit focused and more
Speaker 7: focused on sort of that smaller end of the cohort
Speaker 7: fifty billion in below, where we do see actually quite
Speaker 7: a compelling risk reward opportunity. Given the dislocation in the
Speaker 7: banking sector that still hasn't fully recovered from the volatility
Speaker 7: back in March. We're able to source in the markets
Speaker 7: today equity like returns for fixed income investments, and so
Speaker 7: that's where we've been deploying the bulk of our dry powder, frankly,
Speaker 7: in this environment. On the bank, back of what we've
Speaker 7: seen thus far this earning season, most actionable for me,
Speaker 7: I think the ones that really are the standout banks
Speaker 7: thus far, I would I would highlight JP Morgan and
Speaker 7: Wells Fargo. JP Morgan continues to beat and raise the
Speaker 7: fourth increase this year on NII and a lot of
Speaker 7: benefit obviously from First Republic as well helping out in
Speaker 7: the results. And then on the Wells Fargo side, really
Speaker 7: a lot of excess capital and still some lovers to
Speaker 7: pull on the expense side. So I think that's where
Speaker 7: we would see the most upside thus far this recording season, surely.
Speaker 5: I think for Bank of America it's been a bit
Speaker 5: of an outlier, largely because of its unrealized bond losses,
Speaker 5: and the bank has been sort of a lot of
Speaker 5: pains to say that it will likely, it's very unlikely
Speaker 5: to need to sell sell these. They'll be held to maturity.
Speaker 5: They have plenty of liquidity. Anyway. I just wonder what's
Speaker 5: your perspective on the fact that those unrealized loss and
Speaker 5: losses did widen in the third culture and they absolutely
Speaker 5: dwarf those of you know, the biggest US bank, JP Morgan.
Speaker 7: Yeah, I think that has been the point of debate
Speaker 7: clearly on the stock and you know, given the yields
Speaker 7: and the bond portfolio has been an area of concern.
Speaker 7: I think when we look at sort of capital accretion
Speaker 7: that has taken place and the fact that the portfolio
Speaker 7: gets shorter and you see maturities coming through, there's a
Speaker 7: way to sort of earn through this. And I think
Speaker 7: that was the takeaway that I had from today, But
Speaker 7: it remains a little outsized relative to peer group.
Speaker 2: Well, a great roundup by both of you, so appreciated.
Speaker 2: Bloomberg News America's finance team leader who I guess is
Speaker 2: getting no sleep right now, Sally.
Speaker 3: Bank, Well, because.
Speaker 2: It's like not early I know, right, it's just like
Speaker 2: it's like a.
Speaker 5: Major it's quotly sleep deprivation.
Speaker 2: Here in our Bloomberg Interactive Broker Studio and our thanks
Speaker 2: again to Sheryl Pate out there on zoom in Atlanta.
Speaker 2: She's Angel Oak Capital, senior portfolio manager and as we mentioned,
Speaker 2: you know, managing several financial strategies, but she said, really
Speaker 2: involved in the credit side of things. You guys, thank
Speaker 2: you so much, really appreciate it.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 1: or watch us live on YouTube.
Speaker 8: We're about to go on a little adventure together, and
Speaker 8: that adventure.
Speaker 9: Is going to span seventeen years of music.
Speaker 7: How does that sound.
Speaker 3: All right? Everybody?
Speaker 2: Well, they Ventor is definitely underway the Errors tour, right.
Speaker 2: The concert film released just last week, breaking in more
Speaker 2: than one hundred million in advanced sales. That's expected to
Speaker 2: double within weeks. We just talked about that moments ago.
Speaker 2: We also have talked about just anything. It feels like
Speaker 2: Taylor touches Tim just turns to gold.
Speaker 3: It certainly includes the re recording of her albums, and
Speaker 3: that brings us to a story in the current screen
Speaker 3: time issue of Bloomberg Business Week. It's on newstands, it's
Speaker 3: online at Bloomberg dot com, Slash BusinessWeek, and of course
Speaker 3: always on the Bloomberg terminal. The story by Ashley Carmen.
Speaker 3: She covers podcasts the music industry creators at Bloomberg News.
Speaker 3: She's with us right now in our Bloomberg Interactive Brokers
Speaker 3: studio along with the editor of Bloomberg BusinessWeek, Joel Weber. Joel,
Speaker 3: can we talking about Taylor? Yeah? The answer to that
Speaker 3: question is always yes. I'm just waiting for the screen
Speaker 3: time Taylor's Taylor Edition?
Speaker 1: Is this right?
Speaker 4: You know?
Speaker 6: It might be a thing, you know, Look, she.
Speaker 3: Would be a great guest editor. Noel, you're a great
Speaker 3: editor of the magazine.
Speaker 6: You can get Taylor Swift to edit this magazine. I
Speaker 6: will take the week off maybe longer. What a force, right,
Speaker 6: and you know, just a little personal page out of
Speaker 6: my life. I'll be going to see this movie on Friday.
Speaker 1: Don't give away the ending.
Speaker 6: Ending she's probably a billionaire.
Speaker 3: But hold on, what's the occasion?
Speaker 6: This is great Friday night and I could get tickets
Speaker 6: like three weeks ago, and I was like, I'm better
Speaker 6: book this now. So yeah, I will do this hit
Speaker 6: there on Friday, and then I will take my son
Speaker 6: and my wife to a movie called The Aras to her. So, uh,
Speaker 6: what's incredible about this is that it just totally has
Speaker 6: taken I think pop culture and just like taking it
Speaker 6: to a whole other level. Obviously, what she's been able
Speaker 6: to do at live shows is one thing. Now she's
Speaker 6: able to do it in movie theaters. But the best part,
Speaker 6: and as Ashley wrote in our screen Time issue, is
Speaker 6: actually when you think about what she's done with albums,
Speaker 6: it actually sets up just how powerful of a force
Speaker 6: Taylor Swift actually is. So this is not a news story.
Speaker 6: But yet it's not nearly over.
Speaker 3: Yet, is it?
Speaker 8: Actually it is not over yet? Yeah, So should we
Speaker 8: maybe back up and talk a little bit about what.
Speaker 3: The situation is that, I mean, I need to start
Speaker 3: at the beginning. I actually don't know why she how
Speaker 3: Scooter Brown got hold of these these the rights to
Speaker 3: this right.
Speaker 8: So, when Taylor was an up and coming, you know,
Speaker 8: a known name, she was on a label group called
Speaker 8: Big Machine label group that was never a thing.
Speaker 1: She was always known.
Speaker 8: From the day she was born, right, exactly exactly. Eventually
Speaker 8: Big Machine sold to Scooter Bron's management company, and so
Speaker 8: when they did that, Tailer's master recordings went with that deal.
Speaker 3: And is this typical, like artists don't have control over
Speaker 3: these two versions of rights.
Speaker 8: Yeah, so okay. So the master recordings, which is the
Speaker 8: literal like recording of a song, that specific song in
Speaker 8: this case and in many cases, is owned by her
Speaker 8: former record label. What they did not own, because she
Speaker 8: was a songwriter on all of her songs, is the composition,
Speaker 8: so that is, you know, the lyrics, the notes, the melody,
Speaker 8: all of that. So that set her up when when
Speaker 8: Scooter took over her records for the first he was
Speaker 8: doing the rights of the first six albums that she
Speaker 8: put out. They have a very long history of not
Speaker 8: liking each other. It's definitely not.
Speaker 3: Worth being She was vocal about it, very vocal.
Speaker 8: About it happen exactly. She didn't trust him with these recordings,
Speaker 8: and so when that happened, she decided to kind of
Speaker 8: go with the nuclear option, which is to re record
Speaker 8: all of these albums. And she can do that because
Speaker 8: she still has the rights to this composition. And so
Speaker 8: that's why you.
Speaker 6: Know who you don't want to see go nuclearlor.
Speaker 2: Swift, Yeah and shame they didn't do well, right.
Speaker 4: Yeah.
Speaker 8: So she has been on this mission to re record
Speaker 8: these albums. She's released a few already and she's going
Speaker 8: to be releasing nineteen eighty nine. And you can tell
Speaker 8: when these are the re recorded versions because in parentheses
Speaker 8: they'll say Taylor's version that is set to come out
Speaker 8: later this month.
Speaker 3: How different? Sorry, Joel, I keep cutting it. Go ahead, Sorry,
Speaker 3: when it's Taylor.
Speaker 6: You're in charge, You're in charge.
Speaker 3: How different?
Speaker 6: I'll go scorch or later.
Speaker 3: How different? This is my last question I've thronest. How
Speaker 3: different is the Taylor's version versus a I don't want
Speaker 3: to call it Scooter Brown versions with the Big Machine
Speaker 3: version compared.
Speaker 2: I haven't just a you know, twelve year old in
Speaker 2: your house.
Speaker 6: What you wouldn't want to do is listen to the
Speaker 6: non Taylor's version if you're a swiftye, because then you're
Speaker 6: only listening to the Taylor version.
Speaker 8: That gets into why she's been I think so successful.
Speaker 8: But as far as you know, did she stick to
Speaker 8: the original recording style? Yes, Like she has really tried
Speaker 8: to basically recreate those original albums. There's been a couple
Speaker 8: tweaks here and there, a couple of lyric changes. She's released,
Speaker 8: like new bonus tracks with different artists, so she's added
Speaker 8: on but no, broadly speaking, like these are meant to
Speaker 8: replace those original albums.
Speaker 2: And she's done really well with them.
Speaker 6: Okay, Tim's beak, but this is this is where well,
Speaker 6: that gets the heart of it, right, because if you're
Speaker 6: on say Spotify, and you're gonna listen to Taylor Swift,
Speaker 6: guess what album comes out first? It's the new ones, right,
Speaker 6: So every time she releases the Taylor's version, the old
Speaker 6: version goes lower and lower and lower. And you know,
Speaker 6: the guy that she didn't want to have control, any
Speaker 6: control of anything, makes less and less money on it.
Speaker 8: Well, so actually she so Scooter no longer owns these recordings.
Speaker 8: We should say Scooter sold them to Shamrock and now
Speaker 8: they hold onto these But regardless, I mean, she wants
Speaker 8: control of her own tracks, and she has been extremely successful.
Speaker 8: I can tell you guys, A little bit of a
Speaker 8: stat here. So, as of July one of her album's Fearless,
Speaker 8: Taylor's version had earned a one point four to seven
Speaker 8: billion on demand song streams since its release. Okay, in
Speaker 8: that same amount of time the original Yeah, in the
Speaker 8: same amount of time the original albums and the non
Speaker 8: Taylor's version received six hundred and eighty point four million,
Speaker 8: so obviously still substantial, but much much smaller than what
Speaker 8: she's receiving on that new album. And then since it's
Speaker 8: November twenty twenty one release, Red Taylor's version had reached
Speaker 8: two point eighty six billion on demand streams, while the
Speaker 8: non Taylor version earned four hundred and seventy six point
Speaker 8: five millions. So people are widely choosing to listen to
Speaker 8: Taylor's version, and kind of like what Joel was talking about,
Speaker 8: in some ways, this has become almost an ethical conversation,
Speaker 8: like who are you going to support this artist who
Speaker 8: has been very public about her disputes over her rights
Speaker 8: and her ownership. Are you going to support her? Are
Speaker 8: you going to support you know, the investors who have
Speaker 8: bought this in different ways.
Speaker 2: Well, I will say my daughter, who's been a fan
Speaker 2: for a long time, but she took that evil Scooter
Speaker 2: Braun Like it's like, what, how do you even know
Speaker 2: who Scooter Braun is? And it's just interesting how she
Speaker 2: has realized, as you say, it's an ethical decision in
Speaker 2: terms of what music you choose to play.
Speaker 6: Has she written lyrics about Scooter Braun?
Speaker 8: There is speculation.
Speaker 6: History of Taylor going scorched earth on ex boyfriends, you know,
Speaker 6: like Jake Jillenhall once had a career and then became.
Speaker 3: A victor of great sound of some songs, right.
Speaker 6: Like, so so there is this history.
Speaker 1: Has she gone there?
Speaker 8: There is definitely speculation that some of the songs she
Speaker 8: has written are about Scooter. I don't know that she
Speaker 8: has ever confirmed or tonight.
Speaker 6: I don't know. I mean neither with Jake Jillenhall either.
Speaker 3: It's just it just Google that I didn't know they dated. Okay, yeah,
Speaker 3: it takes.
Speaker 8: Your role, not Scooters.
Speaker 3: I don't know.
Speaker 2: I'm no it is, but you know, we've been kind
Speaker 2: of laughing not laughing, but I feel like we talk
Speaker 2: about the financial markets and Taylor Swift comes up, like
Speaker 2: it's just whether the economic impact. You know, we were
Speaker 2: all out of screen time on the West Coast and
Speaker 2: how many conversations.
Speaker 9: People want to talk about with Taylor.
Speaker 2: Swift and Beyonce. To be fair, one thing though, that
Speaker 2: you know, in terms of what you did, like, she
Speaker 2: can do this? Can anybody else do this? And other
Speaker 2: artists have tried.
Speaker 8: Other artists have definitely tried. I'm sure we are all
Speaker 8: not familiar with Deaf Leopard's attempt to re record some
Speaker 8: of their songs over are you?
Speaker 1: I know?
Speaker 3: Check?
Speaker 8: Yeah, okay, Deaf Leopard had tried to do this. Prince
Speaker 8: has tried to do this. Other artists have tried to
Speaker 8: do this. But I would say it's interesting because Taylor's version, Yeah,
Speaker 8: they're not Taylor's version. And this is also uniquely a
Speaker 8: era of streaming. So in the past, you might have
Speaker 8: bought an album once you had it on vinyl or
Speaker 8: CD or tape, and that was your copy of the
Speaker 8: record and that's what you listen to. But now in streaming,
Speaker 8: you are constantly making a decision which one do I
Speaker 8: want to listen to? And that totally changes the economics.
Speaker 6: You know what else changes the economics Being able to
Speaker 6: sell out stadiums for one thousand dollars a ticket.
Speaker 3: You know, take your family to a tailors. Yeah, okay,
Speaker 3: well a movie.
Speaker 6: I was able to buy three tickets for like thirty
Speaker 6: less than thirty bucks each, twenty bucks.
Speaker 3: Each instead of three thousand dollars, So.
Speaker 6: Let me do that math for you. And I was like,
Speaker 6: that'll be Friday at a movie theater is good enough
Speaker 6: for the Weber household. But the other thing that that
Speaker 6: speaks to, though, is like, if you're an artist, now
Speaker 6: you do those live shows and that is where the
Speaker 6: money is, right, But for Taylor, it's like all of
Speaker 6: these other things are also money is because.
Speaker 3: She's such a horse, right right.
Speaker 6: She is the other thing I love about Taylor, which
Speaker 6: is my last tangent.
Speaker 2: My name is Joe Weather Weber, and I love Taylor sweaters.
Speaker 3: I'm forced to listen to a lot of But she
Speaker 3: turns her.
Speaker 6: Vulnerabilities into the magic that dreads your business that actually
Speaker 6: speaks to exactly what we're talking about with the Taylor's version.
Speaker 6: It's like somebody tried to pull a fast one on her.
Speaker 8: It's a story, and it's a story that all the
Speaker 8: fans can participate in, and that gets down to even
Speaker 8: the friendship bracelets that we've seen people wearing to her
Speaker 8: shows that came from a lyric that she wrote that
Speaker 8: fans read into and were like, oh, we should wear
Speaker 8: friendship bracelets, and these shows they just it is a
Speaker 8: participatory experience. It's not just one of fan and then
Speaker 8: artists and then a fan consumption. It's actively we're looking
Speaker 8: for clues from her.
Speaker 6: You know, it's like the Chiefs, Right, we.
Speaker 8: Didn't talk about that.
Speaker 2: I can't wait for the time a song, right, I'm sorry.
Speaker 3: Is there a chance the history Taylor Swift could buy
Speaker 3: back the catalog?
Speaker 8: I mean, at this point she's committed so much time
Speaker 8: to the re recordings, but I you know, I don't know.
Speaker 2: The early stuff, which if you listen to her, right,
Speaker 2: she's got a different tone certainly early on. So like
Speaker 2: you do wonder if at some point she wants to
Speaker 2: own that where her sound was a little different.
Speaker 8: I'm just gonna say, yeah, I mean she has, obviously,
Speaker 8: as we all have, aged and voice changes over that time.
Speaker 8: So as much as she is doing what she can
Speaker 8: to make them identical, of course, there's always going to
Speaker 8: be moments where you can tell.
Speaker 6: Is there any sense of like when the when the
Speaker 6: next releases will come out, or what the sequence is
Speaker 6: it alway? Is it always chronological or.
Speaker 8: It is not chronological? So nineteen eighty nine is next,
Speaker 8: and then I believe there are yeah two more after that,
Speaker 8: and I don't think she has shared what that order
Speaker 8: will be. I for this story did go deep on Reddit,
Speaker 8: and there are some fan theories out what the order
Speaker 8: is and why.
Speaker 2: But always theories though, right, yeah, thirteen or the like.
Speaker 2: There's always like all these things around everything she does
Speaker 2: in terms of her releases, right or when it comes
Speaker 2: out or the date and time, like it's crazy.
Speaker 6: Yeah, I'm just gonna say, so, when are you gonna
Speaker 6: get When are you gonna go to the theater?
Speaker 3: Carol, find me a babysitter. I'll go as not mine,
Speaker 3: But yeah, I was gonna say thanks for the invites
Speaker 3: of the FIDA. However, there were three seats not together.
Speaker 3: I was like, Okay, are they really you couldn't get
Speaker 3: seats together?
Speaker 6: Mine's off in the corner.
Speaker 4: Yeah, you know, we just talked about that.
Speaker 2: How she's on her way to becoming America's youngest self
Speaker 2: made female billionaire and one of the few I'm reading
Speaker 2: from the story Magnet Millennials who hasn't made her fortune
Speaker 2: from memestocks and cryptocurrency. But you do wonder, like what's
Speaker 2: her next step, like her power in terms of philanthropy,
Speaker 2: because she has such an incredible stage whatever she does.
Speaker 8: Yeah, I mean, it really does feel like anything she's
Speaker 8: going to put her weight behind.
Speaker 6: Not crypto was like hard.
Speaker 3: Yes, right, she looks pretty good in hindsight. You know
Speaker 3: what you know what is so amazing? She said, no, right,
Speaker 3: she produces so much music, She writes so much music.
Speaker 6: She hasn't heard.
Speaker 3: Yeah, but I mean, and she has so many collaborations
Speaker 3: with artists who I love too. I mean, she's prolific.
Speaker 3: It's pretty amazing. Like her output is remarkable.
Speaker 8: Yeah, no, one hundred percent. And she tends to just
Speaker 8: drop these albums when you're least expecting them, and I
Speaker 8: think that also keeps the fans engaged. And she does
Speaker 8: elevate other voices as well, and has kind of you know,
Speaker 8: we talked about Travis Kelcey a bit, her new her
Speaker 8: new man who also who is an NFL player.
Speaker 2: But she came along to help him, right.
Speaker 8: Yes, but you know you could just see the ripple
Speaker 8: effects from her presence on other people. She has been hanging,
Speaker 8: Like what the NFL got cool real quick, right, And
Speaker 8: she's been hanging out with Sophie Turner, who has her
Speaker 8: own meritable marital things happening. But it's like she has
Speaker 8: been able to assow see herself with the people she
Speaker 8: wants to and raise them up in a way that
Speaker 8: she wants.
Speaker 2: Do you feel like you know right? She kind of
Speaker 2: relates in this kind of crazy way.
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Speaker 2: All right, TikTok, everybody, just about eighteen minutes.
Speaker 3: I can't believe it's not sixty minutes. It's actually us
Speaker 3: and it's Tuesday. And yeah, we got less than eighteen
Speaker 3: minutes till the market's close today.
Speaker 2: Yeah, exactly an interesting day. We talked about the economic
Speaker 2: news and move up in yields. That's really substantial once again,
Speaker 2: so let's get to it.
Speaker 3: Yeah, honor oursob is Global cohead of Global Banking at
Speaker 3: Moody's joins us on Zoom in New York City. Good
Speaker 3: to have you with us, Anna, thanks so much for
Speaker 3: joining us. Let's talk a little bit about just how
Speaker 3: broadly the sector is doing. I mean, we heard from
Speaker 3: the big banks today. We're seeing Goldman down but Bank
Speaker 3: of America higher.
Speaker 1: What are you watching?
Speaker 9: No, it was interesting quarter. Look, the big banks are
Speaker 9: doing fine.
Speaker 4: Everybody has a lot of us or a capital tack
Speaker 4: a little bit about Goldman or city who has a
Speaker 4: little bit more story credits, But overall, the big banks
Speaker 4: are very well positioned to brace for, you know, even
Speaker 4: more increased regulation. They're building capital organically and they're really
Speaker 4: benefiting particularly universal banks, you know, looking from the results
Speaker 4: from JP Morgan and City in Wells Fargo last week
Speaker 4: and Bank of America to them and excellent results from
Speaker 4: Bank of America made interesting comes still up to posit stable,
Speaker 4: really gaining market share, particularly in the sales and trading
Speaker 4: business so far from what we've seen. Obviously Morgan Steiling
Speaker 4: hasn't reported yet, but really kind of winning in the
Speaker 4: capital market side, which is which is very good as well,
Speaker 4: without a single losing day. So so definitely, I would
Speaker 4: say JP, Morgan and b of A leading the pack.
Speaker 4: Wells is doing well, you know, good capital accretion you
Speaker 4: know this year, this this quarter, you know, Goldman it's
Speaker 4: you know, it's basically doing unwind of some of the
Speaker 4: decisions on the consumer side, and that's going to be
Speaker 4: that's going to continue. But what's more disappointing is that
Speaker 4: the continuing asset management uh kind of loss is related
Speaker 4: to commercial real estate. They're trying to restructure the asset
Speaker 4: management business to be more third part in the unbalance
Speaker 4: sheet and that's going well. On alternatives, they're really you know,
Speaker 4: on target to raise that to two billion, But there's
Speaker 4: still going to be some noise both from you know,
Speaker 4: the onwine of the consumer business and and certainly from
Speaker 4: the asset management business restructuring as well.
Speaker 2: So when you look, listen what you do. It's so
Speaker 2: great to have you on on a day like this
Speaker 2: when we're talking about the big banks. We get a
Speaker 2: bunch obviously last week, a bunch today, and there's a
Speaker 2: lot more to come, certainly when we start to get
Speaker 2: into the regionals. But Anna, you know, you also co
Speaker 2: ed global bank rating over at Moody's. So when you
Speaker 2: look at the sector broadly so far, let's let's talk.
Speaker 3: About the said they're doing fine. That's the official rating.
Speaker 3: Can you're doing fine?
Speaker 2: Can you just cross it off and just say, okay,
Speaker 2: we're good.
Speaker 4: The large banks, you know, for sure, I think that
Speaker 4: what the regulators did post the financial crisis, it was
Speaker 4: painful for the US Bank to get to this so
Speaker 4: called Jamie Diamond's favorite, the bold plating of regulation, but
Speaker 4: that really made them stronger and they're capitalizing now.
Speaker 9: I mean there are basically that we're wading against the
Speaker 9: Europeans for a decade and now with all this, you
Speaker 9: know a little more challenges that we're seeing on the regionals.
Speaker 4: The big banks are basically kind of the bright story
Speaker 4: and you know, very different. Our expectations with the regionals
Speaker 4: that are basically just start reporting is that there's going
Speaker 4: to be a different performance on any interest margin because
Speaker 4: the big banks simply have that very I mean, think
Speaker 4: about the premier deposited.
Speaker 9: Franchise at a Bank of America or Welsh Park.
Speaker 4: Or Japim Morgan, then they have to be maybe a
Speaker 4: little bit up more for the plougy, right, but compared
Speaker 4: to what the regionals have to do. So things are
Speaker 4: well when.
Speaker 2: You look at the regions, are there anybody in particular
Speaker 2: and I'm assuming you have to be a little bit careful,
Speaker 2: but is there anybody in particular that's kind of on
Speaker 2: your radar that you're keeping an eye out for that
Speaker 2: you think.
Speaker 4: I'll try not to mentioned specific names, but I think
Speaker 4: broadly you can like, yeah, P and C obviously reported
Speaker 4: was good results. We're looking at super regionals, you know,
Speaker 4: the it's really interesting how you know, USB, you know,
Speaker 4: performs and US you know, trying to see relative to
Speaker 4: PNC because P and C had very you know, very
Speaker 4: decent results for for for original peer group, and then
Speaker 4: it's going to be very important. A couple of things
Speaker 4: that we're going to be watching is what is how
Speaker 4: much the posit stability is there. We look at the
Speaker 4: macro from a macro perspective, there is the posit stability
Speaker 4: this quarter. So we're not seeing some big you know,
Speaker 4: deposit outflows or anything like that, but they're paying more
Speaker 4: for deposits and there is this shift to CDs, and
Speaker 4: we want to see how much that is affecting in
Speaker 4: the net interest margin. We're expecting two to three percent
Speaker 4: lower net interest income, which is very different, is you know,
Speaker 4: relative to the large banks, which are actually even JP
Speaker 4: Morgan Jamie Diamond said, you know, look we're still expecting
Speaker 4: you know, Christian and are your interest income. So there's
Speaker 4: going to be the divergence. We want to see commercial
Speaker 4: reals state they're much more exposed. Typical regional bank has
Speaker 4: one hundred and eighty percent of their tangible common equity
Speaker 4: in commercial real estate. Community banks are close to three
Speaker 4: times the tangible common equity, and we want to see
Speaker 4: if there is a divergence related to what the big
Speaker 4: banks reported. SIRIA is going to be definitely an asset
Speaker 4: class to watch the big banks increased provisions prudently, but
Speaker 4: there's not really a lot of credit costs related to
Speaker 4: ciare yet, So we want to see if there is
Speaker 4: a different story in the regionals. That's probably one of
Speaker 4: the most important things. And thirdly is a creation of
Speaker 4: capital based on these new regulations they are coming. How
Speaker 4: they're going to do that in a more challenging opening environment.
Speaker 3: How concerned are you about assets leaving regional banks kind
Speaker 3: of what we saw earlier this year as results of
Speaker 3: higher rates elsewhere.
Speaker 4: You know what, it's probably not as much d year.
Speaker 4: It's going to be interesting what happens.
Speaker 3: You know, with the make it's appened, you're saying it's
Speaker 3: already happened.
Speaker 9: Look, there is there was a you know, threeans.
Speaker 4: Of BIXS deposits that were created as part of the
Speaker 4: quantity using around eight hundred billion have left, and you
Speaker 4: know they have let both from the big banks and
Speaker 4: from the small banks. Our data shows that the smaller
Speaker 4: banks departure of the posit really accelerated more after SVB,
Speaker 4: but doesn't mean that the big banks are not losing
Speaker 4: the posits either. It's just part of the quantitative of
Speaker 4: tightening rather than confidence issue. But you know, big people
Speaker 4: and commercial entities particularly will look to diversify there their
Speaker 4: opposit franchises, and the big banks.
Speaker 2: Have been beneficiars right and we're starting, you know, as
Speaker 2: we often see, you know, we're seeing a bunch of
Speaker 2: debt issue ince P and c IS among them. We
Speaker 2: saw that today, we've seen the big banks also doing it.
Speaker 2: We've seen a lot of debt coming to market. You know,
Speaker 2: it's a good market for these banks to be doing it,
Speaker 2: and it makes sense at this point, are again, you know,
Speaker 2: looking at the debt side of it, anything in particular
Speaker 2: that you're watching. In terms of the reception in the
Speaker 2: marketplace among investors.
Speaker 9: I think the investors a little bit. It's calm, you know,
Speaker 9: has calmed down from those very turbulent days of the spring.
Speaker 9: You know, there were obviously some outliers out there with.
Speaker 4: Significant industry at risk that put a bad picture on
Speaker 4: the whole industry. But there is still six hundred and
Speaker 4: fifty billion or so losses on banks balance sheet. The
Speaker 4: good thing is that you know, we have the lending facilities.
Speaker 4: There's not this imminent issue for banks to liquidate any
Speaker 4: of these assets. But it's going to be a drag
Speaker 4: on bank's earnings, and I think that the investors are
Speaker 4: understanding which metrics they need to look at for one bank,
Speaker 4: you know, looking at the posite quality, looking at the names,
Speaker 4: looking at exposure to commercial reals. That probably is more
Speaker 4: important today than thinking about like rund banks.
Speaker 2: All right, we're gonna leave it on that now, Anna,
Speaker 2: thank you so much. I really appreciate it. Anna Oursev.
Speaker 2: She's Global co head of Global Banking of Moody's joining
Speaker 2: us ound Zoom in New York City. But really an
Speaker 2: appropriate guest to have considering all of the banking earnings
Speaker 2: that we got today and really over the last week
Speaker 2: or so.
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