WEBVTT - Bloomberg Surveillance TV: July 16th, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.400 with Lisa Bromwitz and a Marie Hordern. Join us each 0:00:18.480 --> 0:00:21.360 day for insight from the best in markets, economics, and 0:00:21.400 --> 0:00:24.720 geopolitics from our global headquarters in New York City. We 0:00:24.760 --> 0:00:27.400 are live on Bloomberg Television weekday mornings from six to 0:00:27.480 --> 0:00:31.000 nine am Eastern. Subscribe to the podcast on Apple, Spotify 0:00:31.200 --> 0:00:33.479 or anywhere else you listen, and as always, on the 0:00:33.479 --> 0:00:37.000 Bloomberg Terminal and the Bloomberg Business app. Karen Murphy of 0:00:37.040 --> 0:00:40.320 Castra Investment Management, writing, we are modestly overweight equities, with 0:00:40.400 --> 0:00:42.800 lower exposure to mega camps in favor of mid cap, 0:00:43.080 --> 0:00:46.000 a tilt towards non us, and a focus on owning's growth. 0:00:46.159 --> 0:00:48.640 Kara joins us now for more. Kara, good morning, Good morning. 0:00:48.680 --> 0:00:50.520 Let's get to their last line earnings growth. 0:00:50.600 --> 0:00:52.160 Where are you seeing it? Where's it coming from? 0:00:52.479 --> 0:00:54.920 So I think we definitely had a pause heading into 0:00:54.960 --> 0:00:56.600 second quarter, and that's sort of what we're going to 0:00:56.640 --> 0:00:58.520 be chewing through over the next couple of weeks as 0:00:58.560 --> 0:01:02.040 we make our way through earnings season. But what is 0:01:02.080 --> 0:01:04.800 so important and what is usually important in earnings season 0:01:05.080 --> 0:01:07.000 is getting the view of the second half. And I 0:01:07.000 --> 0:01:09.679 think what we're finding is that CEOs are coming in 0:01:09.720 --> 0:01:12.320 a little bit bolder about what the second half looks like. 0:01:12.600 --> 0:01:13.759 They're able to sort of like. 0:01:15.200 --> 0:01:17.520 Take that slower growth in the second quarter, but then 0:01:17.560 --> 0:01:20.039 see a real reacceleration into the second half of. 0:01:20.040 --> 0:01:22.720 The year where they getting cloarnity on policy from. 0:01:22.680 --> 0:01:24.360 I don't think they are saying it. 0:01:24.480 --> 0:01:26.040 Lisa is not saying, you saying. 0:01:26.120 --> 0:01:27.880 I think what they're able to do. And this is 0:01:27.920 --> 0:01:31.040 where time is all of our friend. Right when tariffs 0:01:31.040 --> 0:01:33.720 are first introduced in early April, it was this huge 0:01:33.800 --> 0:01:36.880 change and people didn't really understand even what the implications 0:01:36.880 --> 0:01:39.800 were for their supply chains. Over the last couple of months, 0:01:40.000 --> 0:01:43.440 many CEOs have been able to sharpen their pencils, understand 0:01:43.440 --> 0:01:46.920 where those implications are, sometimes diversify their supply chain so 0:01:46.959 --> 0:01:49.080 that they're less sort of behold UNTI let's say China, 0:01:49.120 --> 0:01:52.200 where that's sort of been ground zero for tariffs, and 0:01:52.280 --> 0:01:54.840 also be able to forecast different scenarios. So again, this 0:01:54.880 --> 0:01:57.520 doesn't say that policy isn't an impact. I think policy 0:01:57.560 --> 0:02:01.040 uncertainty is still a really big challenge, but being able 0:02:01.080 --> 0:02:03.680 to have that time to work through it really makes 0:02:03.720 --> 0:02:05.400 it much easier, be able to manage through. 0:02:05.800 --> 0:02:08.680 Is the air getting very rare for some of these stocks, 0:02:08.760 --> 0:02:11.880 and John was asking for the whole the totality of 0:02:11.919 --> 0:02:15.240 the morning saying, you know, not good enough, not good enough, 0:02:15.320 --> 0:02:17.520 and that seems to be the read through from bank stocks. 0:02:17.560 --> 0:02:19.840 Is that a sort of wider spread phenomenon throughout the 0:02:19.880 --> 0:02:20.600 stock market. 0:02:20.800 --> 0:02:21.680 So when we. 0:02:21.600 --> 0:02:24.200 Came into earlier this year, one of the main risks 0:02:24.240 --> 0:02:27.760 that we saw were high valuations in a very concentrated market. 0:02:28.080 --> 0:02:30.440 With the rebound that we've had more recently, we still 0:02:30.480 --> 0:02:32.679 have those same exact risks and so that's really a 0:02:32.720 --> 0:02:35.040 big reason why we're leaning a little bit more into midcaps, 0:02:35.040 --> 0:02:37.280 a little bit more into non US. So, yes, I 0:02:37.280 --> 0:02:40.000 think that's a challenge, but it's a challenge for certain names. 0:02:40.440 --> 0:02:42.680 And then you mentioned financials. I think that's a really 0:02:42.680 --> 0:02:46.520 interesting area where these names got some really nice lift recently. 0:02:46.880 --> 0:02:50.400 So I think some of the maybe like lackluster reaction 0:02:50.560 --> 0:02:53.520 to the earnings is more a reflection of what the 0:02:53.560 --> 0:02:56.720 stocks have done recently. And I think importantly, as we 0:02:56.760 --> 0:02:59.640 look through those bank earnings, what we see is pretty 0:02:59.680 --> 0:03:03.519 decent and underlying economic growth, and I think again that 0:03:03.760 --> 0:03:05.720 augurs well for second half earnings growth. 0:03:05.760 --> 0:03:07.480 In general, it feels very volatile. 0:03:07.600 --> 0:03:09.400 There's been a lot of volatility at a headline level. 0:03:09.400 --> 0:03:11.280 When you actually look at the move index, which is 0:03:11.280 --> 0:03:14.480 implied volatility and treasure yields, it's pretty low. When you 0:03:14.520 --> 0:03:16.399 take a look at the average BIX, it's come down 0:03:16.440 --> 0:03:19.040 pretty significantly. Do you just sort of sit on your hands, 0:03:19.240 --> 0:03:21.880 decide what you like, buy it, go on vacation. 0:03:23.480 --> 0:03:25.320 I like to describe the first half of the year 0:03:25.320 --> 0:03:26.880 as the Van Winkle market. 0:03:26.960 --> 0:03:27.120 Right. 0:03:27.160 --> 0:03:29.600 If you had gone to bed on January first, woken 0:03:29.680 --> 0:03:31.080 up at the end of June, you'd be like, I 0:03:31.120 --> 0:03:32.280 did a great job, Like. 0:03:32.280 --> 0:03:33.240 I feel really good. 0:03:33.680 --> 0:03:37.560 I wish I had, right, don't We always? 0:03:36.480 --> 0:03:42.120 Many levels carry on, right, But the challenge is that 0:03:42.160 --> 0:03:43.440 we all lived through that. 0:03:43.760 --> 0:03:45.720 The jury is is that experience. 0:03:45.800 --> 0:03:48.360 That experience helped us sort of live through what we're 0:03:48.360 --> 0:03:50.600 going through now. And I think over the weekend, we 0:03:50.600 --> 0:03:53.080 saw this new introduction of tariffs and the market just 0:03:53.120 --> 0:03:56.120 didn't react, right. The market has reacted less and less 0:03:56.160 --> 0:03:59.520 with every new tariff announcement because and this is important, 0:03:59.560 --> 0:04:03.400 because the assumption is that the Trump administration is not 0:04:03.440 --> 0:04:06.520 going to accept a recession in exchange for its trade agenda. 0:04:07.000 --> 0:04:09.640 If that breaks, then I think we have a very 0:04:09.640 --> 0:04:12.360 different market. But as long as that holds, the market's 0:04:12.360 --> 0:04:14.120 going to be like, Okay, you can tinker at you 0:04:14.240 --> 0:04:16.280 as you will, but we're not going to face a recession. 0:04:16.360 --> 0:04:18.680 So all is good. How do you justify the tilt 0:04:18.760 --> 0:04:20.120 and non US at the moment? 0:04:20.440 --> 0:04:23.279 So this has been a challenge for US investors for 0:04:23.320 --> 0:04:25.040 a very long time, and we talk with a lot 0:04:25.080 --> 0:04:28.560 of investors who are frustrated with owning anything outside the 0:04:28.600 --> 0:04:31.480 S and P. Five hundred and Over the years, you've 0:04:31.520 --> 0:04:34.920 seen again higher and higher concentration US stocks around the world, 0:04:35.240 --> 0:04:38.680 higher and higher evaluation differentials between those. But it's been 0:04:38.760 --> 0:04:41.960 largely justified because of stronger growth in the US. I 0:04:41.960 --> 0:04:45.719 think as we're moving from a very unipolar free trade 0:04:45.760 --> 0:04:48.960 world to a multipolar world where maybe US is a 0:04:49.000 --> 0:04:51.400 little bit less dominant, I think we start to see 0:04:51.400 --> 0:04:54.040 capital flows outside of the US, and then on top 0:04:54.120 --> 0:04:56.080 of that you have maybe a little bit of a 0:04:56.240 --> 0:04:58.240 narrowing of the differential and growth rates, a little bit 0:04:58.279 --> 0:05:00.279 of a narrowing of that valuation different. 0:05:00.120 --> 0:05:02.920 What is the European growth story? I can get excited 0:05:02.920 --> 0:05:04.040 about what is it? 0:05:04.120 --> 0:05:06.520 So it's like it's a little bit better than what 0:05:06.600 --> 0:05:08.800 it was before, and that's what's important. So they do 0:05:08.920 --> 0:05:11.279 there is a lot of infrastructure spending that's happening, and 0:05:11.320 --> 0:05:14.279 so it's just that incremental growth. It's not necessarily that 0:05:14.320 --> 0:05:17.279 it's going to take off going forward, but it's priced 0:05:17.320 --> 0:05:19.599 for a slower growth environment than what I think we 0:05:19.640 --> 0:05:20.760 see in the next couple of years. 0:05:20.800 --> 0:05:22.960 The growth story is fewer holidays, that's what we're learning 0:05:23.120 --> 0:05:26.240 for us. For us, sure, yeah, but in France right 0:05:26.279 --> 0:05:28.039 the idea that you're going to take two holidays out. 0:05:28.200 --> 0:05:29.800 I just wonder, you know what this horde of. 0:05:29.800 --> 0:05:32.480 Debt management and sort of when debt is too much discussion, 0:05:32.520 --> 0:05:33.919 whether that's really going to come into. 0:05:33.720 --> 0:05:35.320 Play with bond vigilantes. 0:05:35.360 --> 0:05:38.040 It seemed to be picking on Germany, even though German's 0:05:38.080 --> 0:05:40.240 debt to GDP ratio is really good. It's not as 0:05:40.279 --> 0:05:43.400 though they're particularly overly indebted, and yet you've seen yields 0:05:43.400 --> 0:05:44.680 on the long end climb there too. 0:05:45.279 --> 0:05:47.920 I think if there's anybody who needs the finger pointed 0:05:47.960 --> 0:05:51.600 out that has a debt problem, it's the US, and 0:05:51.640 --> 0:05:55.360 as I think about, one of the largest challenges that 0:05:55.440 --> 0:05:58.040 the US faces, and a really intractable problem, is the 0:05:58.120 --> 0:06:00.760 amount of debt that we have. And clear it is 0:06:00.839 --> 0:06:03.440 Republicans and Democrats who have contributed to this. This is 0:06:03.480 --> 0:06:05.520 not a political issue. This is an American issue. We 0:06:05.600 --> 0:06:07.880 like to spend money, and so far the debt markets 0:06:07.880 --> 0:06:10.360 have given us a pass right. For many, many years, 0:06:10.440 --> 0:06:13.560 we have really really low interest rates. Now that's changed, 0:06:13.600 --> 0:06:16.400 and that's why the equation really has to change. But 0:06:17.000 --> 0:06:18.800 I don't think we're going to tackle it anytime soon. 0:06:18.960 --> 0:06:20.720 Kara, it's good to see you. Thanks for dropping by. 0:06:20.920 --> 0:06:33.640 Karen Murphy there of Chestra Investment Management, PARTO GOO of 0:06:33.680 --> 0:06:35.719 New Street Research joins us now with a by rating 0:06:35.760 --> 0:06:38.839 on Nvidia and a price target of two hundred per 0:06:38.960 --> 0:06:40.799 joins US now pre welcome to the program. 0:06:40.839 --> 0:06:41.839 It's a change of policy. 0:06:42.080 --> 0:06:43.919 What kind of change does it make, what kind of 0:06:43.920 --> 0:06:46.960 difference does it make for this company? 0:06:47.360 --> 0:06:50.360 Well, John, is literally a change of twenty See when 0:06:50.400 --> 0:06:52.760 you look at the last couple of years, Nvidia has 0:06:52.800 --> 0:06:56.360 been able to ship chips in China. 0:06:57.880 --> 0:06:58.720 On enough. 0:07:00.120 --> 0:07:04.880 As like the ex force rules varied over time. So 0:07:05.360 --> 0:07:07.640 like earlier this year, we had like a very strict 0:07:07.680 --> 0:07:11.160 like tightening of the rule that created a potential shortfall 0:07:11.240 --> 0:07:16.320 for Nvidia of like eight ten billion dollars, you know, 0:07:17.560 --> 0:07:20.800 over what was left of the year. And now there 0:07:20.840 --> 0:07:24.240 is an easy and again of these of these restrictions. 0:07:24.240 --> 0:07:26.320 We had a similar situation last year and the year 0:07:26.400 --> 0:07:29.520 before lust So I would say this is back and forth. 0:07:29.560 --> 0:07:32.000 You shouldn't read too much into it. I think the 0:07:32.040 --> 0:07:36.880 reality is that you have a situation with three major metrics. 0:07:37.000 --> 0:07:41.960 One is making sure we protect like the US leadership 0:07:42.120 --> 0:07:45.960 in AI. The second one is making sure we don't 0:07:45.960 --> 0:07:49.920 completely cut off the relationship with China, because as Brandon mentioned, 0:07:50.600 --> 0:07:53.760 China has very important elements into the AI race, like 0:07:54.720 --> 0:07:57.960 the are rare smart adioles. And the third one is 0:07:57.960 --> 0:08:00.640 that of course the US government, the US insestion is 0:08:00.720 --> 0:08:04.520 very careful to protect the interest of US companies, and 0:08:04.600 --> 0:08:08.240 so this situation always creates a back and forth. It's 0:08:08.240 --> 0:08:14.000 good sometimes to tighten the rules to slow down like 0:08:14.040 --> 0:08:16.720 the progress of China, but at the same time doing 0:08:16.760 --> 0:08:20.280 too much of that favors China is developing their own 0:08:20.320 --> 0:08:23.400 supply chain, and it's good to maintain the leadership of 0:08:23.560 --> 0:08:26.480 US companies globally. So it's good, as Jensen said that 0:08:26.560 --> 0:08:30.160 they keep selling in China and you have like the 0:08:30.280 --> 0:08:35.000 right balance to find over time, and that would be 0:08:35.040 --> 0:08:36.360 the way I look at it. 0:08:36.559 --> 0:08:40.240 Pierre, how much is in Video's fay really dependent on 0:08:40.280 --> 0:08:43.320 the close relationship that Johnson one has with President Trump 0:08:43.400 --> 0:08:45.800 and the fact that move over Tim Kirk, he's the 0:08:45.840 --> 0:08:48.160 new tech ambassador for the United States. 0:08:50.360 --> 0:08:52.600 Well, you could almost invert the question. You know, how 0:08:52.600 --> 0:08:54.800 important is it for President Trump to make sure that 0:08:54.840 --> 0:08:57.079 he has like a strong ally in Yensen, like the 0:08:57.200 --> 0:09:00.320 number one or let's say one of the number ones 0:09:00.360 --> 0:09:04.720 you know, tech uh, tech tech leaders and uh. And 0:09:04.760 --> 0:09:07.360 we know that the relationship with Ilan musk Is is 0:09:07.400 --> 0:09:09.720 a bit south these days, so I think it's very 0:09:09.760 --> 0:09:14.000 important to to maintain strong relationships and uh. And yes, 0:09:14.080 --> 0:09:19.120 I think there is no real situation where the US 0:09:19.160 --> 0:09:23.640 administration wouldn't have a careful here to the concerns of Jensen, 0:09:23.840 --> 0:09:27.560 because the success of Nvidia is what matters the most 0:09:27.679 --> 0:09:33.400 to the US maintaining their leadership in AI development. And 0:09:33.440 --> 0:09:35.720 I think that that's what we have read in the 0:09:35.840 --> 0:09:38.680 in the trip to China our Fiens and his comments 0:09:38.679 --> 0:09:41.120 and his ability you know to speak before the White 0:09:41.160 --> 0:09:43.560 House and commitments from the White House tells you a lot. 0:09:43.720 --> 0:09:47.400 But how much darkening power he has in the in 0:09:47.480 --> 0:09:49.080 the conversation, But. 0:09:49.240 --> 0:09:51.240 A lot, apparently, Pierre, quite a lot based on the 0:09:51.280 --> 0:09:54.040 experience of the last few days. Per favorite of New 0:09:54.120 --> 0:10:06.960 Street Research pre thank you, sir, Devon run As Citizens 0:10:07.000 --> 0:10:10.040 down grading goldment sanks to market perform ahead of the results, 0:10:10.040 --> 0:10:12.480 writes in quote, the bar is now much higher for 0:10:12.559 --> 0:10:15.600 another lego, Devin joins us. Now for more, Devin, We've 0:10:15.600 --> 0:10:17.320 come a long way. We've had a big rally for 0:10:17.440 --> 0:10:19.760 most of these banks coming into this earning season. 0:10:19.800 --> 0:10:21.160 What do you make of what you've heard so far? 0:10:22.679 --> 0:10:25.800 Yeah, hey, Jonathan, good quarter. We thought it would be 0:10:25.800 --> 0:10:27.560 a good quarter. We were quite a bit above the street, 0:10:27.679 --> 0:10:30.600 but they still beat our numbers. And so what we're 0:10:30.640 --> 0:10:33.880 seeing is terriffs were actually pretty good for trading, and 0:10:33.920 --> 0:10:36.160 so we'll have to see now that kind of the 0:10:36.240 --> 0:10:38.840 terriff volatility has died down a little bit, what the 0:10:38.880 --> 0:10:40.439 back half of the year looks like for trading. But 0:10:40.480 --> 0:10:43.320 then on the other side, investment banking activity is really 0:10:43.320 --> 0:10:46.400 re excelerating. Remember in April we were questioning whether this 0:10:46.520 --> 0:10:49.040 is a pause or a break for investment banking right now, 0:10:49.040 --> 0:10:50.959 it looked like it was clearly a pause. And now 0:10:51.040 --> 0:10:52.960 all that activity that was kind of put on the 0:10:53.000 --> 0:10:55.000 back burner is now moving to the front burner. So 0:10:55.040 --> 0:10:58.880 we're seeing a pretty substantial reacceleration. Announced MINA volumes are 0:10:58.880 --> 0:11:01.719 tracking up twenty percent every year, even with losing a 0:11:01.760 --> 0:11:04.800 couple of months. IPO number of IPOs in the US 0:11:04.800 --> 0:11:07.560 are up eighty percent, So we feel really good. You know, Goldman, 0:11:07.640 --> 0:11:09.480 we just we put a buy on it at two 0:11:09.520 --> 0:11:11.840 hundred dollars back in twenty twenty, so now it's seven 0:11:11.960 --> 0:11:14.200 hundred dollars. You know, the bar is higher. And that 0:11:14.280 --> 0:11:15.280 was really what the call was. 0:11:15.400 --> 0:11:17.440 Do you see enough in the numbers this morning? At last? 0:11:17.480 --> 0:11:19.400 The question the Dan right, Devin, or are you sticking 0:11:19.400 --> 0:11:20.120 with the thesis? 0:11:20.880 --> 0:11:24.760 Yeah, we're sticking with the thesis. Listen, it's a great company. 0:11:25.120 --> 0:11:27.320 And our thesis was, you know, they're taking market share 0:11:27.360 --> 0:11:29.560 and people don't really realize it. And then also they're 0:11:29.600 --> 0:11:32.840 growing their asset management business, particularly in alternatives, and people 0:11:32.880 --> 0:11:35.680 don't appreciate how much assets they're raising. And so I 0:11:35.679 --> 0:11:38.440 felt like we had a differentiated call. And now we've 0:11:38.440 --> 0:11:41.839 become more consensus. So we're just looking for opportunities where 0:11:41.880 --> 0:11:44.520 we still have differentiated calls. But listen, you had a 0:11:44.600 --> 0:11:47.760 great quarter and I actually think the outlook again trading 0:11:47.840 --> 0:11:48.880 is going to be a little bit of a question 0:11:48.920 --> 0:11:50.680 market in the back half of the year because the 0:11:50.760 --> 0:11:54.319 Terra volatility did help. But Goldman Sachs and Morgan Stanley too, 0:11:54.320 --> 0:11:57.079 they're gaining market share, so you have the market backdrop 0:11:57.120 --> 0:11:59.959 which your volatility helps. Then on top of that, both 0:12:00.160 --> 0:12:02.480 firms are actually taking market share and trading you Goldman's 0:12:02.520 --> 0:12:04.920 really leaning in on their prime brokerage business. So we 0:12:04.960 --> 0:12:07.680 feel really good about the tone of the business. We 0:12:07.720 --> 0:12:10.880 want to reevaluate on the stocks here and consolidate some 0:12:10.960 --> 0:12:11.840 of these games we've seen. 0:12:11.920 --> 0:12:14.000 We've heard a pretty study story across all the bank 0:12:14.000 --> 0:12:16.760 earnings about how study the consumer is, how businesses are 0:12:16.800 --> 0:12:20.320 gaining confidence, and there's a feeling that everything is chugging 0:12:20.400 --> 0:12:22.439 along with a greater degree of certainty. 0:12:22.040 --> 0:12:23.199 Than on April. 0:12:23.360 --> 0:12:26.679 Second, I'm just wondering if this is a broader economic 0:12:27.120 --> 0:12:29.560 kind of read through, as John's been asking all morning, 0:12:29.640 --> 0:12:31.800 or if this is something that really indicates the banks 0:12:31.800 --> 0:12:33.760 have been much more cautious with who they led to 0:12:34.080 --> 0:12:36.280 the credit worthiness of all of their clients. 0:12:37.840 --> 0:12:40.120 Yeah, I mean, I think what we're seeing and what 0:12:40.160 --> 0:12:43.960 we're hearing is that, you know, there's obviously always tail 0:12:44.000 --> 0:12:46.280 risks here, and I think people are cautious to make 0:12:46.280 --> 0:12:49.560 sure that there's a lot of macro events that are 0:12:49.559 --> 0:12:52.600 occurring at tariffs are still uncertainty there, there's geopolitical risks, 0:12:52.640 --> 0:12:55.520 and so I think there's obviously a sense of, you know, 0:12:55.640 --> 0:12:58.720 cautiousness just to be careful that you're not getting yourself 0:12:58.720 --> 0:13:01.280 in trouble. But overall, the trendsit I think banks are 0:13:01.280 --> 0:13:04.080 seeing right now and that we're talking to both investors 0:13:04.080 --> 0:13:07.559 and CEOs about, is that things are good out there. 0:13:07.600 --> 0:13:09.839 You know, the consumer is in still a very good spot. 0:13:10.160 --> 0:13:12.840 The low end of the consumer is being more affected 0:13:12.840 --> 0:13:16.120 by inflation, and there's maybe a little more challenges here, 0:13:16.120 --> 0:13:18.640 but more broadly, the consumer is in a great spot. 0:13:18.679 --> 0:13:21.400 And then companies, as you see an investment banking activity 0:13:21.440 --> 0:13:23.439 or leaning back in so they're going back on offense, 0:13:23.840 --> 0:13:26.040 m and A volumes are picking up. Companies are feeling 0:13:26.040 --> 0:13:28.240 good about raising capital, their stock prices that are at 0:13:28.240 --> 0:13:30.560 all time high. So I think there's a really good 0:13:30.600 --> 0:13:33.240 sense of kind of optimism in the market right now 0:13:33.280 --> 0:13:35.520 from both corporates and consumers, and that's what I think 0:13:35.520 --> 0:13:38.679 we're going to hear from virtually all banks through earning season. 0:13:38.720 --> 0:13:40.600 Here, there's really a question about whether this is a 0:13:40.600 --> 0:13:42.920 pivot point where some of these banks that have been 0:13:43.000 --> 0:13:45.560 treated as other utilities for the past ten years can 0:13:45.600 --> 0:13:49.840 become more growthy, especially if they start to get deregulated 0:13:49.880 --> 0:13:52.080 to the point where they can compete more aggressively with 0:13:52.200 --> 0:13:53.559 private asset managers. 0:13:54.080 --> 0:13:55.720 Do you see that as a likelihood this year? 0:13:56.800 --> 0:13:59.240 Well, I mean, if you listen to JP Morgan's call yesterday, 0:13:59.280 --> 0:14:01.439 a lot of questions on fintech, a lot of questions 0:14:01.520 --> 0:14:04.840 on stable coins and tokenization. So I think the conversation 0:14:05.040 --> 0:14:07.720 is evolving a little bit. You know, banks are still 0:14:08.720 --> 0:14:11.600 I think obviously, you know, steadier types of business models 0:14:11.640 --> 0:14:12.960 and they're not going to take a lot of risk. 0:14:13.040 --> 0:14:16.400 But this this world of kind of less regulation, I 0:14:16.400 --> 0:14:18.640 think is starting to creep in and I think it's 0:14:18.679 --> 0:14:20.400 going to be a tailwind for banks over the next 0:14:20.400 --> 0:14:22.520 couple of years. And then on top of that, I 0:14:22.560 --> 0:14:25.360 think another catalyst here is consolidation. You're starting to see 0:14:25.600 --> 0:14:27.240 a little bit of bank mergers. It's going to be 0:14:27.280 --> 0:14:29.240 in the kind of the small mid sized banks, but 0:14:29.520 --> 0:14:32.000 I think that's going to be very valuation enhancing and 0:14:32.040 --> 0:14:33.440 I'd look to the back half of this year to 0:14:33.480 --> 0:14:35.320 start to see some of that, and I think that 0:14:35.360 --> 0:14:37.720 will be a catalyst for the broader group, something that 0:14:37.760 --> 0:14:39.520 we really haven't seen over the past four years. 0:14:39.600 --> 0:14:41.560 So Devin just drove down on some of that. As 0:14:41.560 --> 0:14:44.400 you mentioned earlier, some of these ideas became very consensus, 0:14:44.400 --> 0:14:47.160 Goldman being one of them, and it's certainly performed. If 0:14:47.160 --> 0:14:49.400 you were looking for something non consensus, something a little 0:14:49.400 --> 0:14:52.480 bit different in this sector, maybe the broader industry group, 0:14:52.600 --> 0:14:53.360 what would you look for. 0:14:54.520 --> 0:14:56.680 Yeah, so we're kind of some of the large cap 0:14:56.800 --> 0:14:59.120 names I think are pretty well owned right now. You know, 0:14:59.160 --> 0:15:01.280 it's kind of the index plays. So we're looking at 0:15:01.280 --> 0:15:03.720 some of our mid cap coverage show company like Stiefel, 0:15:03.960 --> 0:15:05.920 which kind of looks like Morgan Stanley in terms of 0:15:05.960 --> 0:15:10.160 wealth management and institutional exposure, but you know, much more 0:15:10.240 --> 0:15:13.680 reasonable valuation at kind of eleven times our exit twenty 0:15:13.720 --> 0:15:16.320 twenty six earnings level, you know, but still get some 0:15:16.360 --> 0:15:19.040 of those really good exposures. Then they also have a 0:15:19.120 --> 0:15:21.600 pretty good leverage to Bank m and A with their 0:15:21.640 --> 0:15:24.280 KBW business, so kind of that theme that we just 0:15:24.320 --> 0:15:26.440 talked about. So that would be one. A small cap 0:15:26.720 --> 0:15:29.800 advisory boutique called Pirella. Weinberg is a name we really like, 0:15:29.840 --> 0:15:32.680 so we want to be selective here just after these 0:15:32.720 --> 0:15:34.880 really big runs. And then i'd also in regional banks, 0:15:34.920 --> 0:15:39.960 as I just mentioned, with bank consolidation and deregulation, I 0:15:39.960 --> 0:15:42.200 think that could have a bigger impact on their business 0:15:42.280 --> 0:15:44.760 models as well. So broadly that is a kind of 0:15:44.760 --> 0:15:45.720 an index play. 0:15:45.600 --> 0:15:47.600 I Devin, appreciate it. Thanks for giving us some time, 0:15:47.600 --> 0:15:49.440 busy money for you. I know they haven't run there 0:15:49.560 --> 0:16:02.280 as citizens joining us around the table a potential candidate. 0:16:02.280 --> 0:16:05.040 They form a wealth bank president David Maltcas David and morning, 0:16:05.240 --> 0:16:07.240 good Mornington. Would you like to be considered? 0:16:08.360 --> 0:16:08.920 Of course. 0:16:09.040 --> 0:16:11.960 So it's a huge job and really important, really important 0:16:12.000 --> 0:16:15.120 to the Trump changeover that's going on in the world, 0:16:15.200 --> 0:16:18.920 saving the country. So but it means a lot of 0:16:19.040 --> 0:16:21.880 change at the FED. I think they've been making many 0:16:21.960 --> 0:16:26.600 mistakes and we can enumerate them and correct them and 0:16:26.640 --> 0:16:29.960 that will mean more growth and especially more growth and 0:16:30.120 --> 0:16:34.280 median income. If the FED were allowing more small business growth, 0:16:34.320 --> 0:16:37.880 there'd be more jobs that are that are new jobs 0:16:37.880 --> 0:16:40.880 for people across the across the country, not just in 0:16:41.040 --> 0:16:41.600 urban areas. 0:16:41.640 --> 0:16:43.119 Let's get into some of the details. 0:16:43.360 --> 0:16:45.320 Walk us through a couple of the examples where you 0:16:45.320 --> 0:16:47.800 think they've made mistakes and the remedies for them. 0:16:47.840 --> 0:16:48.480 How it correct? 0:16:48.480 --> 0:16:52.640 Course, you know, I didn't like que think about QUI 0:16:52.800 --> 0:16:54.920 that the Fed and its wisdom is going to go 0:16:55.000 --> 0:16:57.840 buy bonds. So how did that work out? They've lost 0:16:57.880 --> 0:17:01.080 a trillion dollars. They'll lose much more than that before 0:17:01.120 --> 0:17:05.440 they're done with the losses on the bonds. In addition 0:17:05.520 --> 0:17:10.680 to that, remember they've paid out in interest constantly since 0:17:10.720 --> 0:17:14.600 two thousand and nine. They've paid one point three trillion 0:17:14.720 --> 0:17:19.440 dollars of tax payer money to banks and to money 0:17:19.480 --> 0:17:22.719 market funds. That's the source of funding that they have 0:17:22.880 --> 0:17:25.119 to buy the bonds. So this has been the worst 0:17:25.200 --> 0:17:29.920 hedge trade in history. So that's a big mistake. It's 0:17:29.920 --> 0:17:34.760 also led to inflation because the federally allowed a merger 0:17:34.800 --> 0:17:41.280 of fiscal policy and central banking or monetary policy by 0:17:41.320 --> 0:17:45.160 buying bonds, as the government was really jacking up the deficit. 0:17:45.240 --> 0:17:47.119 So you're rather running go ready because I have to 0:17:47.160 --> 0:17:50.159 say isn't that exactly what the president would like to see? 0:17:50.920 --> 0:17:51.480 What would he like? 0:17:51.560 --> 0:17:53.719 President Donald Trump would very much like to see minitary 0:17:53.720 --> 0:17:55.399 policy and fiscal policy very well allowed. 0:17:56.359 --> 0:17:59.119 No, I think he wants to see them both improved, 0:17:59.160 --> 0:18:03.040 and is already doing that. The reconciliation built improves fiscal 0:18:03.119 --> 0:18:08.760 policy and the separation. What we need is lower interest rates, 0:18:08.800 --> 0:18:10.879 and you can't do that if you've got the FED 0:18:11.000 --> 0:18:15.480 carrying the load of all this fiscal deficit that Congress 0:18:15.560 --> 0:18:16.200 is generated. 0:18:16.280 --> 0:18:20.040 So in the near term, as a candidate yourself, what 0:18:20.080 --> 0:18:22.480 do you do as a potential new FED shair to 0:18:22.520 --> 0:18:24.720 the composition of the Fed and the approach that you think. 0:18:24.640 --> 0:18:25.119 Right size is? 0:18:25.720 --> 0:18:28.240 I think really important is people to see the flaws 0:18:28.280 --> 0:18:32.120 of the inflation targeting model. I've been writing about this 0:18:32.240 --> 0:18:36.800 since then, literally since the eighties, that if you target 0:18:36.960 --> 0:18:40.920 inflation as your goal, it's backward looking and it doesn't 0:18:41.000 --> 0:18:44.399 comprehend all of the prices within the economy. It's just 0:18:44.440 --> 0:18:47.800 a flawed indicator. But that is the basis of how 0:18:47.840 --> 0:18:50.679 the FED sets interest rates. So one of the things 0:18:50.960 --> 0:18:53.639 is you switch and you say the dual mandate is 0:18:53.680 --> 0:18:57.760 to have price stability. That's very different from CPI inflation, 0:18:58.560 --> 0:19:02.400 which waivers around and gives you false signals. That's what's 0:19:02.400 --> 0:19:06.160 happening right now. So you need lower interest rates because 0:19:06.200 --> 0:19:10.159 of the strength of the US economy. I think that's 0:19:10.200 --> 0:19:12.720 something that I understand a lot from working all over 0:19:12.760 --> 0:19:16.480 the world and in Wall Street in financial markets, that 0:19:16.520 --> 0:19:19.399 the US is the giant power and people want to 0:19:19.480 --> 0:19:22.639