1 00:00:00,320 --> 00:00:04,160 Speaker 1: Who you put your trust in matters. Investors have put 2 00:00:04,200 --> 00:00:07,640 Speaker 1: their trust in independent registered investment advisors to the tune 3 00:00:07,640 --> 00:00:12,240 Speaker 1: of four trillion dollars. Why learn more and find your 4 00:00:12,240 --> 00:00:29,040 Speaker 1: independent advisor dot com. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:29,440 --> 00:00:33,120 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:33,200 --> 00:00:38,200 Speaker 1: insight from the best in economics, finance, investment, and international relations. 7 00:00:38,640 --> 00:00:43,199 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and 8 00:00:43,280 --> 00:00:50,920 Speaker 1: of course, on the Bloomberg. A beautiful weekend at Tom Keene, 9 00:00:50,920 --> 00:00:53,080 Speaker 1: as you forecast, I spent much of it walking around 10 00:00:53,880 --> 00:01:00,120 Speaker 1: my beloved burrow. How about you. It's gorgeous, spectacular world. 11 00:01:00,240 --> 00:01:03,600 Speaker 1: It's like eighty degrees here today, Hi of eighty two 12 00:01:04,560 --> 00:01:10,200 Speaker 1: midweek I did that in centigrade for franc seven degree 13 00:01:10,360 --> 00:01:13,120 Speaker 1: celsius and I was lectured it's not centigrade as celsius. 14 00:01:13,880 --> 00:01:17,240 Speaker 1: My coffee today was two hundred and seventy three degrees 15 00:01:17,319 --> 00:01:22,040 Speaker 1: minus zero kelvin is where my coffee was, and then 16 00:01:22,800 --> 00:01:28,039 Speaker 1: machine this morning. So anyways, here we are in a Monday, 17 00:01:28,160 --> 00:01:30,840 Speaker 1: thrilled to have all of you with us on economics, 18 00:01:30,880 --> 00:01:34,679 Speaker 1: finance an investment. Bratt hints with us. We've been talking 19 00:01:34,720 --> 00:01:38,280 Speaker 1: for years with Sanfred Bernstein and now at New York University. 20 00:01:38,480 --> 00:01:41,200 Speaker 1: I want to primer right now on return on equity. 21 00:01:41,240 --> 00:01:47,240 Speaker 1: There two measurements within banking. Bank of America just came 22 00:01:47,280 --> 00:01:50,640 Speaker 1: out with single digit one measure double digit barely ten 23 00:01:50,720 --> 00:01:54,320 Speaker 1: percent another. But but basically there's two groups of American banks. 24 00:01:54,360 --> 00:01:57,800 Speaker 1: Those were the double digit return on equity and those 25 00:01:57,800 --> 00:02:01,520 Speaker 1: with single digit What is return on equity? Professor? Return 26 00:02:01,560 --> 00:02:04,000 Speaker 1: on equity is what the shareholders are going to get 27 00:02:04,040 --> 00:02:06,919 Speaker 1: after you've paid all your expenses, right, And that's really 28 00:02:07,040 --> 00:02:09,840 Speaker 1: the driver of the valuation. So if you look at 29 00:02:09,840 --> 00:02:13,000 Speaker 1: the price book right, the premium over the book value, 30 00:02:13,280 --> 00:02:15,760 Speaker 1: it tends to be very correl very closely correlated with 31 00:02:15,919 --> 00:02:17,560 Speaker 1: r o E. Get your r o E above your 32 00:02:17,600 --> 00:02:23,560 Speaker 1: cost of and the share price goes up against it 33 00:02:23,600 --> 00:02:28,600 Speaker 1: takes out debt expense. Right. Return on equity is after everything, 34 00:02:28,800 --> 00:02:31,040 Speaker 1: after everything, and that's a big deal. Do you know 35 00:02:31,120 --> 00:02:34,560 Speaker 1: what that everything is on a given banks balance sheet? 36 00:02:34,800 --> 00:02:36,760 Speaker 1: Or do you have the same mystery of two thousand 37 00:02:36,800 --> 00:02:41,160 Speaker 1: six You don't know what what everything is on a 38 00:02:41,160 --> 00:02:43,880 Speaker 1: bank balance sheet? You've got good disclosure, banks a better 39 00:02:43,880 --> 00:02:47,240 Speaker 1: disclosure than they've had for years. But nonetheless, you know 40 00:02:47,320 --> 00:02:51,000 Speaker 1: they when when they give you a line corporate bonds, 41 00:02:51,080 --> 00:02:54,040 Speaker 1: you're not exactly certain what's in there. You're not when 42 00:02:54,160 --> 00:02:56,560 Speaker 1: when they have a different a certain type of loan. 43 00:02:57,000 --> 00:03:00,639 Speaker 1: Yes you can get data from the from their call reports, 44 00:03:00,880 --> 00:03:04,000 Speaker 1: but it's not perfect. And that's one of the uncertainties 45 00:03:04,000 --> 00:03:06,720 Speaker 1: with that. That that goes on with banks always been 46 00:03:06,720 --> 00:03:08,680 Speaker 1: one of the reasons why the banks traded at a 47 00:03:08,760 --> 00:03:12,000 Speaker 1: somewhat discount to the rest of the of the market. 48 00:03:12,200 --> 00:03:16,000 Speaker 1: David to put to put opaqueness, to put this in opaque, 49 00:03:16,560 --> 00:03:20,000 Speaker 1: hundred million dollar credit card loans on the balance sheet. 50 00:03:20,480 --> 00:03:25,600 Speaker 1: A Bank of America commercial real estate loans ares paltry billion. 51 00:03:26,240 --> 00:03:31,120 Speaker 1: To give you the size of these things are, they're huge, Professor. 52 00:03:31,160 --> 00:03:33,000 Speaker 1: We spoke on Friday, we were talking about Wells and 53 00:03:33,080 --> 00:03:36,200 Speaker 1: JP Morgan and City. Now we get these results today. 54 00:03:36,920 --> 00:03:39,240 Speaker 1: On the last quarterly called, Brian moynahan said we were 55 00:03:39,240 --> 00:03:41,560 Speaker 1: gonna see five billion dollars in savings. We see the 56 00:03:41,560 --> 00:03:45,400 Speaker 1: head count dip T two nine thousand in this latest report. 57 00:03:45,880 --> 00:03:47,920 Speaker 1: Compare the way this bank is being run to the 58 00:03:47,920 --> 00:03:50,000 Speaker 1: other ones we were talking about last week. What does 59 00:03:50,000 --> 00:03:52,920 Speaker 1: Brian Moynahan's Bank of American look like in comparison, Well, 60 00:03:52,960 --> 00:03:56,040 Speaker 1: the mixes are are different, right. I mean, if if 61 00:03:56,080 --> 00:03:58,560 Speaker 1: you were to think of of Bank of America, you know, 62 00:03:58,800 --> 00:04:01,440 Speaker 1: we think you of Maryland. Right, So you know, here 63 00:04:01,480 --> 00:04:04,640 Speaker 1: you have this massive wealth management business that's there. Do 64 00:04:04,720 --> 00:04:06,480 Speaker 1: you have You've got a you've got a credit card 65 00:04:06,480 --> 00:04:09,840 Speaker 1: business that competes with all the other players, and the 66 00:04:09,880 --> 00:04:13,200 Speaker 1: bank the branches on every corner, which you know is 67 00:04:13,200 --> 00:04:15,360 Speaker 1: probably one of the areas that you're going to see 68 00:04:15,360 --> 00:04:18,359 Speaker 1: some some cutback. So they're competing with the with the 69 00:04:18,400 --> 00:04:21,760 Speaker 1: well sort of the retail business, they're competing with Wells 70 00:04:21,800 --> 00:04:24,600 Speaker 1: in terms of the of the wealth management business. They 71 00:04:24,600 --> 00:04:27,880 Speaker 1: also have the institutional businesses which they're competing with with 72 00:04:27,880 --> 00:04:32,039 Speaker 1: with JPM. JPM probably better than than Meryll Lynch on 73 00:04:32,040 --> 00:04:36,920 Speaker 1: the institutional businesses, right, Merrill Lynch the model in the 74 00:04:36,760 --> 00:04:40,080 Speaker 1: of the wealth management business. Right, I'm I'm sure Morgan 75 00:04:40,160 --> 00:04:42,840 Speaker 1: Stanley doesn't say that, but I mean I would say 76 00:04:42,880 --> 00:04:46,719 Speaker 1: Meryl is probably the model that everybody's going for. And 77 00:04:47,040 --> 00:04:49,880 Speaker 1: the problem with all of these banks is, you know 78 00:04:49,920 --> 00:04:52,919 Speaker 1: the idea of too big to fail, Well, it's you know, 79 00:04:53,000 --> 00:04:56,760 Speaker 1: too complex to manage. Correctly right. Too many linkage is 80 00:04:56,800 --> 00:04:58,640 Speaker 1: going back and forth, and every time you have one 81 00:04:58,680 --> 00:05:01,920 Speaker 1: of those linkages, you have the inefficiencies that exist in them. 82 00:05:02,040 --> 00:05:04,520 Speaker 1: You know, you want to believe that scale works perfectly 83 00:05:04,560 --> 00:05:07,839 Speaker 1: well above a certain level, scale doesn't work perfectly right, 84 00:05:07,920 --> 00:05:10,400 Speaker 1: there's there's there, there's sort of the reverse side of 85 00:05:10,400 --> 00:05:12,200 Speaker 1: the curve, you know, I like to think of it 86 00:05:12,279 --> 00:05:16,400 Speaker 1: from there's a the navy pilots come sometimes use the 87 00:05:16,560 --> 00:05:19,640 Speaker 1: term beyond the power curve, which is, you know, the 88 00:05:19,680 --> 00:05:22,440 Speaker 1: engine is operating at such a level that you're actually 89 00:05:22,560 --> 00:05:25,400 Speaker 1: beginning to see power drop off the more you push on, right, 90 00:05:25,760 --> 00:05:29,760 Speaker 1: they the right size of David, let me translate that 91 00:05:29,920 --> 00:05:32,760 Speaker 1: the power curve is where you want to watch cub 92 00:05:32,800 --> 00:05:37,120 Speaker 1: Dodgers and you're outvoted, and there's a girl movie that's 93 00:05:38,360 --> 00:05:40,040 Speaker 1: you're not going to reveal the movie, right, No, we're 94 00:05:40,080 --> 00:05:44,839 Speaker 1: not going to be embarrassed. The story of bankruinging season 95 00:05:44,880 --> 00:05:47,840 Speaker 1: thus far seems to be about fixed income. The difference 96 00:05:47,880 --> 00:05:50,080 Speaker 1: between what was estimating what we got. The gap is 97 00:05:50,160 --> 00:05:52,280 Speaker 1: rather largely with each of these banks. Why was that? 98 00:05:52,320 --> 00:05:55,160 Speaker 1: Why Why did folks not predict well? Why was the 99 00:05:55,160 --> 00:05:58,200 Speaker 1: prediction so low with fixed incoming? This is good. I 100 00:05:58,279 --> 00:06:00,440 Speaker 1: used to be an equity analysty, so now like now 101 00:06:00,440 --> 00:06:02,600 Speaker 1: I can do a true confession. You know, the ability 102 00:06:02,640 --> 00:06:06,640 Speaker 1: to to to forecast the forecast the trading sides very 103 00:06:06,720 --> 00:06:09,640 Speaker 1: very difficult. You look at volumes, right, but you really 104 00:06:09,680 --> 00:06:12,640 Speaker 1: don't know the amount of risk that they're taking. And 105 00:06:12,640 --> 00:06:15,520 Speaker 1: and remember in the case of of of what we 106 00:06:15,560 --> 00:06:18,520 Speaker 1: saw this summer, you could take risk in government's right, 107 00:06:18,560 --> 00:06:22,200 Speaker 1: that's not that that's that's that's not prohibited by vulcer. 108 00:06:22,320 --> 00:06:26,880 Speaker 1: So you know, you had monetary uncertainty, right, and that 109 00:06:26,920 --> 00:06:29,600 Speaker 1: was sort of the Brexit issue, right, and so therefore 110 00:06:29,680 --> 00:06:32,960 Speaker 1: you had a lot of of movements and currency foreign 111 00:06:32,960 --> 00:06:35,839 Speaker 1: exchange would have done very well, rates would have done 112 00:06:36,279 --> 00:06:41,320 Speaker 1: very well. You had uncertainty regarding FED, the FED tightenings, right, 113 00:06:41,560 --> 00:06:43,320 Speaker 1: and so what are the clients going to do? The 114 00:06:43,360 --> 00:06:45,760 Speaker 1: clients are all going to be reducing their duration for 115 00:06:45,800 --> 00:06:48,360 Speaker 1: a rising right environment, volumes are going to pick up 116 00:06:48,360 --> 00:06:51,240 Speaker 1: for the clients. So the the the issue here is 117 00:06:51,400 --> 00:06:53,880 Speaker 1: with all this movement going on, if I'm putting risk 118 00:06:53,920 --> 00:06:56,080 Speaker 1: at work and the and the regulators are allowing me, 119 00:06:56,160 --> 00:06:59,800 Speaker 1: I'm having money Brett Let's switch gears to deposit growth 120 00:07:00,000 --> 00:07:02,200 Speaker 1: mean they understand they can't merge because they're too big. 121 00:07:02,240 --> 00:07:06,560 Speaker 1: To begin with, Deposits were eight billion roughly during the 122 00:07:06,600 --> 00:07:09,720 Speaker 1: christ the beginning of the crisis. They're now way out, 123 00:07:10,200 --> 00:07:13,240 Speaker 1: way out over that to something on the order of 124 00:07:13,440 --> 00:07:19,080 Speaker 1: one point two trillion demand deposits intersparing deposits, and I 125 00:07:19,120 --> 00:07:22,520 Speaker 1: get there's inflation in that, but there's huge deposit growth. 126 00:07:22,880 --> 00:07:26,280 Speaker 1: Is that good or bad for Mr moynihan, Well, it 127 00:07:26,280 --> 00:07:31,239 Speaker 1: it is potentially very good right now when rates rise, 128 00:07:31,560 --> 00:07:36,280 Speaker 1: you know, touch Wood, when rates rise, you you know, 129 00:07:36,320 --> 00:07:40,520 Speaker 1: those deposits have have great value at at zero, those 130 00:07:40,560 --> 00:07:43,480 Speaker 1: deposits don't have a lot of value to him, you know, 131 00:07:43,520 --> 00:07:47,240 Speaker 1: they're you're you're, you're you're not able to to to 132 00:07:47,280 --> 00:07:50,800 Speaker 1: take advantage of that. But in a more normal environment, 133 00:07:50,840 --> 00:07:53,360 Speaker 1: deposits are our money in the bag. He you know. 134 00:07:53,400 --> 00:07:55,520 Speaker 1: The other the other issue is the ability to lend it. 135 00:07:55,600 --> 00:07:57,720 Speaker 1: If you get an economy coming back, you'll have a 136 00:07:57,720 --> 00:08:00,400 Speaker 1: lot of capacity, a lot of the earnings of a bank. 137 00:08:00,480 --> 00:08:01,840 Speaker 1: And you know, this is one of the things that 138 00:08:01,880 --> 00:08:04,320 Speaker 1: bank analysts are very well aware of. A lot of 139 00:08:04,320 --> 00:08:06,800 Speaker 1: the profitability of the bank comes out of the deposit base, 140 00:08:07,160 --> 00:08:09,000 Speaker 1: not the other stuff. The other stuff is at market, 141 00:08:09,320 --> 00:08:11,720 Speaker 1: but I mean I knew you were going there, but 142 00:08:11,760 --> 00:08:14,080 Speaker 1: didn't we see with JP Morgan and actually the Bank 143 00:08:14,080 --> 00:08:17,080 Speaker 1: of America today pretty good long growth, I mean long 144 00:08:17,160 --> 00:08:21,600 Speaker 1: growth way above nominal GDP. Right that that's true. We 145 00:08:21,640 --> 00:08:25,800 Speaker 1: saw mortgages right that mortgages did well. Why people were 146 00:08:25,800 --> 00:08:27,520 Speaker 1: worried that rates were going to rise. I want to 147 00:08:27,520 --> 00:08:30,200 Speaker 1: get that financing in and the long growth picked up, 148 00:08:30,240 --> 00:08:34,040 Speaker 1: and corporate corporations right mean, I want to make clear, David, 149 00:08:34,040 --> 00:08:36,160 Speaker 1: and we were you know, not that we were taking 150 00:08:36,200 --> 00:08:39,400 Speaker 1: shots at Mr Mornihan, but we were pointing out that 151 00:08:39,800 --> 00:08:42,679 Speaker 1: in oh seven oh eight, with all the CEO turnover, 152 00:08:43,200 --> 00:08:47,280 Speaker 1: people inherited a certain selective set of skeletons. In the 153 00:08:47,360 --> 00:08:52,480 Speaker 1: clure Happy Halloween, Mr was, I would suggest, respectfully, was 154 00:08:52,840 --> 00:08:57,520 Speaker 1: one of the more Yeah cool, I gotta live in Brooklyn. Gooulish. 155 00:08:58,559 --> 00:09:02,120 Speaker 1: What a great weekend of total the listeners we have, David, 156 00:09:02,559 --> 00:09:08,960 Speaker 1: We're up to over forty two listeners. It's absolutely extraordinary. Yes, 157 00:09:09,360 --> 00:09:13,200 Speaker 1: the good morning mrs girls, have you with us with David, 158 00:09:14,120 --> 00:09:19,360 Speaker 1: Mrs McKee, Mike McKee's mother's giving us up. She abandoned ship. 159 00:09:19,880 --> 00:09:21,880 Speaker 1: Look your bread hands with us as we look at 160 00:09:22,200 --> 00:09:25,280 Speaker 1: Global Banking Bread. We haven't talked about retail and the 161 00:09:25,320 --> 00:09:28,800 Speaker 1: employee kund of retail and given a hundred thousand of 162 00:09:28,840 --> 00:09:33,199 Speaker 1: a big bank, how many people are in demand deposits 163 00:09:33,360 --> 00:09:36,520 Speaker 1: retail loans and how many people are and all the 164 00:09:36,559 --> 00:09:40,560 Speaker 1: other stuff we mumbo jumbo about every day. Um, well, 165 00:09:41,080 --> 00:09:44,200 Speaker 1: the that's one of the core the retail business and 166 00:09:44,240 --> 00:09:47,600 Speaker 1: its support functions are are one of the bigger head counts. 167 00:09:47,600 --> 00:09:54,760 Speaker 1: Like but the the issue that the the issue that 168 00:09:54,760 --> 00:09:59,080 Speaker 1: that you've got on this is is there isn't a 169 00:09:59,120 --> 00:10:01,760 Speaker 1: sweet in the man. The banks don't know what is 170 00:10:01,760 --> 00:10:04,760 Speaker 1: the right size right there. We remember we went through 171 00:10:04,760 --> 00:10:07,760 Speaker 1: this period where they said twenty four branches right and 172 00:10:07,800 --> 00:10:10,640 Speaker 1: the work and then then you had the idea of 173 00:10:10,679 --> 00:10:12,840 Speaker 1: you're gonna have concierge is saying hello to you in 174 00:10:12,880 --> 00:10:17,839 Speaker 1: the minute you want, we have that and then that 175 00:10:18,160 --> 00:10:21,160 Speaker 1: you know, now if if you see the millennials, the 176 00:10:21,200 --> 00:10:24,600 Speaker 1: millennials never visit their banks, you know they do their David. 177 00:10:24,640 --> 00:10:27,320 Speaker 1: When the last time you're in a bank a couple 178 00:10:27,320 --> 00:10:28,920 Speaker 1: of months ago, I mean it is it's all on 179 00:10:28,960 --> 00:10:32,760 Speaker 1: the phone, and uh I I had to pay my accountant, 180 00:10:32,760 --> 00:10:34,840 Speaker 1: did my taxes? I did that through bill pay online 181 00:10:34,840 --> 00:10:37,959 Speaker 1: as well. So yeah, it's rare. And you're even depositing checks, yes, 182 00:10:38,120 --> 00:10:40,680 Speaker 1: taking photos with the phone and that's right, and so 183 00:10:40,840 --> 00:10:43,600 Speaker 1: you know, the you've got a generational issue. And you know, 184 00:10:43,760 --> 00:10:46,120 Speaker 1: so if if if you're Brian Mohnt my hand, one 185 00:10:46,120 --> 00:10:48,400 Speaker 1: of the questions that that you have to ask is 186 00:10:48,640 --> 00:10:51,600 Speaker 1: you know, how many branches do I need? But then 187 00:10:51,640 --> 00:10:53,760 Speaker 1: on the other hand, you have where wealth is not 188 00:10:54,040 --> 00:10:58,600 Speaker 1: related to population either, right, so we know that a 189 00:10:58,600 --> 00:11:00,160 Speaker 1: lot of the wealth is in the older group when 190 00:11:00,160 --> 00:11:02,360 Speaker 1: the older group uses the branches. So you know, this 191 00:11:02,440 --> 00:11:05,120 Speaker 1: is this is an interesting question. I mean, do you 192 00:11:05,160 --> 00:11:08,720 Speaker 1: want your do you want branches in you know, Lahoya 193 00:11:09,000 --> 00:11:14,720 Speaker 1: and Burling Game, right and Scarsdale and right, and and 194 00:11:14,760 --> 00:11:17,640 Speaker 1: then you don't have branches where young people live. I mean, 195 00:11:17,920 --> 00:11:19,840 Speaker 1: this is this is the kind of question they're dealing with. 196 00:11:20,360 --> 00:11:22,720 Speaker 1: What if we learned from from bank earnings thus far 197 00:11:22,800 --> 00:11:26,559 Speaker 1: about the health of the economy at large. We always 198 00:11:26,559 --> 00:11:27,959 Speaker 1: hear that going to earning season, this is going to 199 00:11:28,040 --> 00:11:30,120 Speaker 1: take the temperature of of of how the economy is doing. 200 00:11:30,120 --> 00:11:32,360 Speaker 1: From what we've heard from Wells and City and Bank 201 00:11:32,360 --> 00:11:35,719 Speaker 1: of America, Um, what have we learned about how the 202 00:11:35,720 --> 00:11:39,160 Speaker 1: economy is doing you know that because of rates. Rates 203 00:11:39,160 --> 00:11:42,280 Speaker 1: don't rise in lesson economies doing right. So, where we've 204 00:11:42,320 --> 00:11:44,400 Speaker 1: got an economy that's moving, it may not be moving 205 00:11:44,400 --> 00:11:47,480 Speaker 1: as fast as people wanted to write. And so we're 206 00:11:47,520 --> 00:11:51,720 Speaker 1: seeing bank loans grow, I mean, credit cards are doing 207 00:11:51,760 --> 00:11:54,839 Speaker 1: reasonably well and so that's you know, that's that's another 208 00:11:54,880 --> 00:11:58,080 Speaker 1: sign that you have an economy that's that's that's doing well. 209 00:11:58,520 --> 00:12:01,920 Speaker 1: So you know, the the banks, the banks on the 210 00:12:01,920 --> 00:12:05,120 Speaker 1: retail side are profiting from that. To bring it back 211 00:12:05,160 --> 00:12:08,640 Speaker 1: to investment banking and a huge part of our audience, 212 00:12:09,320 --> 00:12:12,080 Speaker 1: will the boutique banks just take more and more people? 213 00:12:12,679 --> 00:12:17,040 Speaker 1: And critically, will they take more and more key people? Um? Answer, yes, 214 00:12:17,080 --> 00:12:20,880 Speaker 1: they got yes. I mean if you were a world 215 00:12:20,880 --> 00:12:26,400 Speaker 1: famous m and a banker, wouldn't you think that I'm 216 00:12:26,440 --> 00:12:30,160 Speaker 1: better off? And particularly if you're at a place where 217 00:12:30,200 --> 00:12:32,600 Speaker 1: the stock has not performed well. Remember you're being paid 218 00:12:32,600 --> 00:12:36,840 Speaker 1: and deferred compence and deferred stock which is stock. Yes, exactly, 219 00:12:37,160 --> 00:12:39,000 Speaker 1: and this is one where you're saying, I'm bringing in 220 00:12:39,040 --> 00:12:43,480 Speaker 1: a lot of profitability, right, So so yes, the boutiques 221 00:12:43,679 --> 00:12:46,000 Speaker 1: they continue to take. Sure. The problem with the boutiques 222 00:12:46,040 --> 00:12:49,439 Speaker 1: is very simple, you know, the boutiques are not capital intensive, 223 00:12:49,520 --> 00:12:53,800 Speaker 1: right there an advisory business. And so if if if 224 00:12:53,800 --> 00:12:57,120 Speaker 1: a boutique walks in and to a to a technology 225 00:12:57,160 --> 00:12:58,680 Speaker 1: company and says, you know, we you know, we're going 226 00:12:58,720 --> 00:13:01,440 Speaker 1: to do an M and a deal for the company, 227 00:13:01,480 --> 00:13:05,360 Speaker 1: then decides that there that they'd rather go public, it's 228 00:13:05,480 --> 00:13:08,160 Speaker 1: very easy for Goldman sax or Morgan Stanley to push 229 00:13:08,200 --> 00:13:11,040 Speaker 1: the boutique out. So, you know, so the boutique model 230 00:13:11,120 --> 00:13:13,880 Speaker 1: has has great value. But it did, but it's not 231 00:13:14,040 --> 00:13:17,560 Speaker 1: it you know, it is not invulnerable. And so what 232 00:13:17,640 --> 00:13:20,120 Speaker 1: we haven't seen is we haven't seen these boutiques, you know, 233 00:13:20,160 --> 00:13:23,760 Speaker 1: going into the underright side because that uses capital. This 234 00:13:23,840 --> 00:13:25,760 Speaker 1: has been great, Brad Hands, thank you, thank you, thank 235 00:13:25,760 --> 00:13:28,400 Speaker 1: you so much for coming in a few times this week. 236 00:13:28,440 --> 00:13:30,719 Speaker 1: As we see Banker and he's maybe next time you 237 00:13:30,760 --> 00:13:36,000 Speaker 1: can discuss how Purdue football needs to win. That's that's 238 00:13:36,080 --> 00:13:39,280 Speaker 1: very est. That was very uncoinab. I did it only 239 00:13:39,320 --> 00:13:43,600 Speaker 1: because it's like Indian summer eighty degrees to say our 240 00:13:43,600 --> 00:13:47,320 Speaker 1: exact full the full disclosure, folks, our executive producer and 241 00:13:48,000 --> 00:13:50,840 Speaker 1: a certain number of our staff were infected with perdue. 242 00:13:51,040 --> 00:13:53,400 Speaker 1: Is that right? We boiler up every morning. Yes, we 243 00:13:53,440 --> 00:14:00,680 Speaker 1: do Bloomberg surveillance and it's it's challenging, is it. Yes, Yes, 244 00:14:01,559 --> 00:14:03,959 Speaker 1: when you go back to West Lafayette, it's a sad, 245 00:14:04,520 --> 00:14:08,320 Speaker 1: sad place. Very good, good morning, appreciate a bread hands. 246 00:14:17,679 --> 00:14:21,840 Speaker 1: I'm going to suggest umpire manufacturing is sort of a 247 00:14:21,920 --> 00:14:27,640 Speaker 1: secondary tertiary number this morning. A tenure yield in two 248 00:14:27,640 --> 00:14:30,440 Speaker 1: basis points one point seven eight to year yield comes 249 00:14:30,440 --> 00:14:33,800 Speaker 1: into basis points. Futures are flat. They got a little 250 00:14:33,840 --> 00:14:37,080 Speaker 1: negative weight to them. Dollar weakness here. Uh, you're one 251 00:14:37,160 --> 00:14:40,920 Speaker 1: ten as as well, so you know that that creates 252 00:14:40,920 --> 00:14:45,960 Speaker 1: some more interest as you get the nine um this morning, 253 00:14:46,200 --> 00:14:51,200 Speaker 1: Lindsey pigs up. Uh is just stiffle Lindsey, good morning. 254 00:14:51,600 --> 00:14:54,720 Speaker 1: Tell me about industrial production. Let me go to the 255 00:14:54,720 --> 00:15:00,280 Speaker 1: basic question. If we're service sector economy, why do I care? Oh? Remember, 256 00:15:00,280 --> 00:15:04,240 Speaker 1: manufacturing still is a very important component of the U. 257 00:15:04,360 --> 00:15:07,320 Speaker 1: S economy, And like you said, this morning's Empire Manufacturing 258 00:15:07,360 --> 00:15:10,320 Speaker 1: index was a market mover as it gives us an 259 00:15:10,320 --> 00:15:13,200 Speaker 1: invitation of what to expect from the broader I s 260 00:15:13,400 --> 00:15:16,120 Speaker 1: M reported later in the month, Lindsay, I don't know 261 00:15:17,200 --> 00:15:19,840 Speaker 1: help your calling of the twins. Lindsey, where are you 262 00:15:19,880 --> 00:15:23,040 Speaker 1: calling from right now. I'm calling from New York City, 263 00:15:23,160 --> 00:15:27,200 Speaker 1: your New York So you know it's eighty degrees here. 264 00:15:28,760 --> 00:15:31,920 Speaker 1: You know, we're getting up the Halloween stuff and David 265 00:15:32,000 --> 00:15:34,720 Speaker 1: had to buy four pumpkins this weekend. Lindsey, how do 266 00:15:34,840 --> 00:15:38,960 Speaker 1: utilities figure into industrial production? Whether it's hot or cold? 267 00:15:39,280 --> 00:15:42,080 Speaker 1: Does that move the needle? Well, it does because remember, 268 00:15:42,120 --> 00:15:45,440 Speaker 1: consumers are going to be spending more on utilities consumption. 269 00:15:45,680 --> 00:15:49,120 Speaker 1: Uh if we do see whether on favorably cold during 270 00:15:49,160 --> 00:15:51,560 Speaker 1: the winter season and vice versa, if we do have 271 00:15:51,600 --> 00:15:54,680 Speaker 1: a very mild winter, consumers will have more wealth in 272 00:15:54,680 --> 00:15:58,040 Speaker 1: their pocket because they're not expending that wealth on keeping 273 00:15:58,080 --> 00:16:01,440 Speaker 1: their home warm or pay more for for fuel and 274 00:16:01,520 --> 00:16:04,080 Speaker 1: natural gas. And so it certainly will play into the 275 00:16:04,680 --> 00:16:08,240 Speaker 1: portion of what consumers are doing in the final quarter 276 00:16:08,400 --> 00:16:11,040 Speaker 1: of the year. Now, as we know, prices right now 277 00:16:11,080 --> 00:16:12,960 Speaker 1: for energy are much lower, and if we can keep 278 00:16:12,960 --> 00:16:15,840 Speaker 1: the expenditures lower as well through the fourth quarter, that 279 00:16:15,920 --> 00:16:18,160 Speaker 1: will be a nice boost to the top line. GDP, 280 00:16:19,640 --> 00:16:21,240 Speaker 1: you've got a call on rates. I want I want 281 00:16:21,240 --> 00:16:24,600 Speaker 1: to talk a bit about the FED here. Uh standfish 282 00:16:24,640 --> 00:16:26,800 Speaker 1: are speaking today at the Economic Club of New York 283 00:16:27,000 --> 00:16:29,320 Speaker 1: have on Bloomberg Television at twelve fifteen on Bloombergradio the 284 00:16:29,360 --> 00:16:33,720 Speaker 1: headlines as well. Uh, just read I'll read the salient 285 00:16:33,800 --> 00:16:35,920 Speaker 1: line for your most recent note here. While some argue 286 00:16:35,920 --> 00:16:38,200 Speaker 1: the case for a rate increase is strengthening, at this point, 287 00:16:38,200 --> 00:16:41,600 Speaker 1: the FED still can't make the case for a rate increase. 288 00:16:41,640 --> 00:16:45,760 Speaker 1: You say, not in November, not in December. Why? Well, 289 00:16:45,880 --> 00:16:47,480 Speaker 1: I think that the biggest thing that we heard in 290 00:16:47,480 --> 00:16:50,520 Speaker 1: the September FOMC meeting minutes is there there is a 291 00:16:50,560 --> 00:16:53,240 Speaker 1: certain component of the Committee that is very anxious to 292 00:16:53,320 --> 00:16:55,560 Speaker 1: raise rates, but they're not making the case to do 293 00:16:55,680 --> 00:16:58,760 Speaker 1: so based on the data. They're making the case because 294 00:16:58,760 --> 00:17:01,800 Speaker 1: of the Fed's reputation, because of these concerns about the 295 00:17:01,920 --> 00:17:04,600 Speaker 1: calendar keeping the interest rates at this low level for 296 00:17:04,680 --> 00:17:08,080 Speaker 1: the this extended period of time, or perhaps the idea 297 00:17:08,160 --> 00:17:10,840 Speaker 1: that FED policy comes with an extreme lag so the 298 00:17:10,880 --> 00:17:13,960 Speaker 1: economy may heat up in the coming years and we 299 00:17:14,000 --> 00:17:16,840 Speaker 1: need to act now. But still, the vast majority of 300 00:17:16,880 --> 00:17:19,480 Speaker 1: the Committee is very much focused on the fact that 301 00:17:19,480 --> 00:17:24,040 Speaker 1: the U S economy is not recovering as expected. Growth Remember, 302 00:17:24,119 --> 00:17:27,720 Speaker 1: is still just averaging one across the first six months 303 00:17:27,720 --> 00:17:31,320 Speaker 1: of the year, inflation well below the committee's longer term target, 304 00:17:31,359 --> 00:17:34,399 Speaker 1: and by their own forecast, they do not expect that 305 00:17:34,480 --> 00:17:38,119 Speaker 1: longer term objective of two percent to be met for 306 00:17:38,160 --> 00:17:41,199 Speaker 1: the next several years. So if you're just focused on 307 00:17:41,200 --> 00:17:43,160 Speaker 1: the data, if you're just looking at the feds dual 308 00:17:43,200 --> 00:17:46,400 Speaker 1: mandate of stable prices and full employment, there is no 309 00:17:46,480 --> 00:17:49,439 Speaker 1: sense of immediacy to raise rates at this point. So 310 00:17:49,520 --> 00:17:51,440 Speaker 1: square that for me, because we hear time and time 311 00:17:51,440 --> 00:17:54,320 Speaker 1: again the mantra that they are data dependent, they are 312 00:17:54,359 --> 00:17:57,680 Speaker 1: solely focused on the data. Well, remember if we read 313 00:17:57,720 --> 00:18:00,720 Speaker 1: the full statement that the FED set they're willing to 314 00:18:00,800 --> 00:18:03,920 Speaker 1: raise rates, and some of them said potentially relatively soon. 315 00:18:04,040 --> 00:18:07,520 Speaker 1: That's a quote, but that depends. There's a second part 316 00:18:07,520 --> 00:18:11,040 Speaker 1: of the statement, if labor market data continues to improve, 317 00:18:11,520 --> 00:18:14,960 Speaker 1: if inflation continues to show further evidence that it's moving 318 00:18:15,320 --> 00:18:18,840 Speaker 1: towards that longer term two percent objectives. So I think 319 00:18:18,840 --> 00:18:22,360 Speaker 1: the FED has been pretty clear that they are data dependent, 320 00:18:22,720 --> 00:18:25,520 Speaker 1: but the market seems to not necessarily have the focus 321 00:18:25,600 --> 00:18:28,240 Speaker 1: to read the entire statement. They're just looking at that 322 00:18:28,280 --> 00:18:31,160 Speaker 1: word relatively soon or strengthening the case for a near 323 00:18:31,280 --> 00:18:33,480 Speaker 1: term rate increase, lendsy quickly, or will come back on 324 00:18:33,600 --> 00:18:37,440 Speaker 1: industrial production. How is the consumer right now the consumers 325 00:18:37,520 --> 00:18:40,200 Speaker 1: under pressure. It's very clear that the consumer was doing 326 00:18:40,240 --> 00:18:43,040 Speaker 1: the heavy lifting in the second quarter, but going forward 327 00:18:43,440 --> 00:18:46,920 Speaker 1: against the backdrop of still negative business investment in declining 328 00:18:46,920 --> 00:18:49,480 Speaker 1: income growth, it's very likely that they're going to face 329 00:18:49,560 --> 00:18:51,800 Speaker 1: increased hardship in the second half of the year. I 330 00:18:51,840 --> 00:18:54,600 Speaker 1: saw chart over the weekend Lindsay, which was number of 331 00:18:54,640 --> 00:18:57,560 Speaker 1: Americans going to restaurants, and I don't remember the month 332 00:18:57,600 --> 00:19:00,680 Speaker 1: August September. It was like off a cliff. I mean, 333 00:19:00,720 --> 00:19:03,040 Speaker 1: does that surprise you that that people are going out 334 00:19:03,080 --> 00:19:09,520 Speaker 1: the restaurants less. It's a big concern when consumers begin 335 00:19:09,560 --> 00:19:12,280 Speaker 1: to tighten their purse strings on any type of category, 336 00:19:12,320 --> 00:19:15,400 Speaker 1: whether that's going out to eat or whether that's buying electronics, 337 00:19:15,440 --> 00:19:19,119 Speaker 1: buying new apparel for the changing the season, it's always 338 00:19:19,119 --> 00:19:21,440 Speaker 1: a signal that the consumer is less common in their 339 00:19:21,440 --> 00:19:25,000 Speaker 1: financial situation. David, I went out this week and had 340 00:19:25,040 --> 00:19:28,440 Speaker 1: a six pack from you of the Culture yogurt. Culture 341 00:19:28,560 --> 00:19:32,200 Speaker 1: Yogurt from Brooklyn. It was so good. Yeah, right across 342 00:19:32,200 --> 00:19:35,200 Speaker 1: from J. J. Burn Park. Yeah, how do you sell 343 00:19:35,240 --> 00:19:37,719 Speaker 1: culture yogurt? Here's what you do, folks. You put a 344 00:19:37,720 --> 00:19:44,119 Speaker 1: bottle of maple syrup in the equal parts call it healthy, Like, 345 00:19:44,160 --> 00:19:46,439 Speaker 1: are you kidding me? I mean, Michael Bard, there was 346 00:19:46,520 --> 00:19:50,439 Speaker 1: like a bottle of maple syrup in this yogurt. They 347 00:19:50,440 --> 00:19:55,679 Speaker 1: were calling it healthy. But we thank David Gurrow for 348 00:19:55,760 --> 00:20:00,639 Speaker 1: letting us try Culture Yogurt of Brooklyn. You put your 349 00:20:00,640 --> 00:20:04,960 Speaker 1: trust in matters. Investors have put their trust in independent 350 00:20:05,040 --> 00:20:08,680 Speaker 1: registered investment advisors to the tune of four trillion dollars. 351 00:20:09,359 --> 00:20:13,200 Speaker 1: Why they see their role is to serve, not sell. 352 00:20:14,040 --> 00:20:16,399 Speaker 1: That's why Charles Schwab is committed to the success of 353 00:20:16,440 --> 00:20:21,600 Speaker 1: over seven thousand independent financial advisors who passionately dedicate themselves 354 00:20:21,920 --> 00:20:25,800 Speaker 1: to helping people achieve their financial goals. Learn more and 355 00:20:25,960 --> 00:20:30,800 Speaker 1: find your independent advisor dot com. I would let's do 356 00:20:30,840 --> 00:20:33,199 Speaker 1: one more question here about Empire manufacturing. Here we have 357 00:20:33,240 --> 00:20:36,800 Speaker 1: the New York Fed Study of Manufacturing in New York State. 358 00:20:36,800 --> 00:20:40,440 Speaker 1: Lindsay explained to to us why outside of New York 359 00:20:40,440 --> 00:20:42,600 Speaker 1: this metric is important, What does it tell us about 360 00:20:42,640 --> 00:20:45,520 Speaker 1: the economy as a whole. Well, what we do is 361 00:20:45,560 --> 00:20:48,919 Speaker 1: we look at the regional reports for manufacturing ahead of 362 00:20:48,960 --> 00:20:51,080 Speaker 1: that national I s M release, and as we get 363 00:20:51,080 --> 00:20:53,280 Speaker 1: more and more information on a regional basis, it really 364 00:20:53,320 --> 00:20:56,879 Speaker 1: sets the tone for what the overall country was experiencing 365 00:20:57,280 --> 00:20:59,960 Speaker 1: that month in terms of manufacturing output. And of course, 366 00:21:00,440 --> 00:21:04,920 Speaker 1: this morning's very disappointing Empire number coming in well below consensus, 367 00:21:04,960 --> 00:21:08,280 Speaker 1: deep into negative territory, really not setting a positive tone 368 00:21:08,720 --> 00:21:12,040 Speaker 1: for that that upcoming October I s M number. And remember, 369 00:21:12,320 --> 00:21:14,720 Speaker 1: most recently the I s M did move back into 370 00:21:14,720 --> 00:21:17,720 Speaker 1: positive territory. This was seen as a as a nice 371 00:21:17,920 --> 00:21:20,440 Speaker 1: green shoot possibly the second half of the year picking 372 00:21:20,480 --> 00:21:23,880 Speaker 1: up momentum. The Empire number this morning really throw some 373 00:21:23,880 --> 00:21:26,480 Speaker 1: some cold water on the David jump in here. I'm 374 00:21:26,480 --> 00:21:28,840 Speaker 1: gonna copy that. I'm going to send it out on Twitter, 375 00:21:29,080 --> 00:21:34,119 Speaker 1: the Empires. It's it's five pages, David. There, it is 376 00:21:34,240 --> 00:21:38,200 Speaker 1: pdf right there, Lizzie, Are there any bright spots for 377 00:21:38,320 --> 00:21:40,520 Speaker 1: manufacturing right now when you look at all of the data, 378 00:21:40,840 --> 00:21:45,280 Speaker 1: anything to indicate that there is some health to the sector? Well, 379 00:21:45,400 --> 00:21:47,000 Speaker 1: I think right now we can look out to the 380 00:21:47,000 --> 00:21:49,840 Speaker 1: global economy and say there are some variables that may 381 00:21:49,880 --> 00:21:53,919 Speaker 1: become silver linings going forward. If we see further easing 382 00:21:53,960 --> 00:21:56,560 Speaker 1: pressure on the dollar, of course, that makes us made 383 00:21:56,560 --> 00:22:00,520 Speaker 1: goods less expensive more attractive on the global market. If 384 00:22:00,560 --> 00:22:03,760 Speaker 1: we see global demand pick up, global markets firming, that 385 00:22:03,800 --> 00:22:07,199 Speaker 1: may trickle down into again higher demand for US made goods. 386 00:22:07,600 --> 00:22:11,360 Speaker 1: If we do see consumers begin to experience more robust 387 00:22:11,400 --> 00:22:14,520 Speaker 1: income growth, that would help demand here at home. But 388 00:22:14,560 --> 00:22:17,400 Speaker 1: remember these are possibilities. We haven't yet seen these come 389 00:22:17,440 --> 00:22:20,560 Speaker 1: to fruition, and more likely we will continue to see 390 00:22:20,680 --> 00:22:24,440 Speaker 1: near term pressure on manufacturers. So we've got business activity 391 00:22:24,480 --> 00:22:27,680 Speaker 1: declining in New York State, the labor market remaining week 392 00:22:27,720 --> 00:22:30,879 Speaker 1: according to this survey. Yet the outlook indexes for the 393 00:22:30,880 --> 00:22:33,800 Speaker 1: six month outlook suggested that respondents were more optimistic about 394 00:22:33,840 --> 00:22:38,000 Speaker 1: future conditions than in September. Why is that the case, Well, 395 00:22:38,240 --> 00:22:41,399 Speaker 1: if you look back historically, uh, that number does not 396 00:22:41,560 --> 00:22:45,639 Speaker 1: necessarily reflect a longer term trend in the reality of activity. 397 00:22:45,920 --> 00:22:47,879 Speaker 1: It's the same way when we ask consumers how do 398 00:22:47,920 --> 00:22:51,240 Speaker 1: you feel about the expectations of growth over the next 399 00:22:51,280 --> 00:22:54,280 Speaker 1: six to twelve months? Generally they're they're optimistic, but what 400 00:22:54,320 --> 00:22:56,639 Speaker 1: we see is that their current behavior doesn't reflect that. 401 00:22:57,080 --> 00:22:59,560 Speaker 1: And so remember this is a survey, This is just 402 00:22:59,600 --> 00:23:02,400 Speaker 1: saying how do you feel about conditions over the next 403 00:23:02,520 --> 00:23:06,600 Speaker 1: year to two and genuinely, genuinely, uh, generally we we 404 00:23:06,680 --> 00:23:09,840 Speaker 1: hear that manufacturers are more optimistic than what the actual 405 00:23:09,920 --> 00:23:12,879 Speaker 1: data is representing how much credence do you, Lindsay p 406 00:23:13,200 --> 00:23:16,359 Speaker 1: a give sentiment. It sounds like you're not You're not 407 00:23:16,400 --> 00:23:18,880 Speaker 1: that sudden when you're looking at the FED Uh, you 408 00:23:19,040 --> 00:23:21,640 Speaker 1: want them to be holy dated dependent. Here we're looking 409 00:23:21,680 --> 00:23:24,440 Speaker 1: at the survey. Here, you're saying that, you know, sentiment 410 00:23:24,480 --> 00:23:27,320 Speaker 1: can be kind of misleading. Here, how important is sentiment 411 00:23:27,400 --> 00:23:30,000 Speaker 1: right now when you assess the state of the economy. Well, 412 00:23:30,000 --> 00:23:32,520 Speaker 1: a sentiment can be very important because it becomes a 413 00:23:32,560 --> 00:23:36,280 Speaker 1: self fulfilling prophecy if consumers do begin to get very 414 00:23:36,320 --> 00:23:39,840 Speaker 1: concerned about the outlook, whether that's from a monetary policy 415 00:23:39,880 --> 00:23:42,320 Speaker 1: standpoint of fiscal policy standpoint. Of course, we have the 416 00:23:42,320 --> 00:23:46,080 Speaker 1: presidential election coming up playing into volatility at this point, 417 00:23:46,320 --> 00:23:49,920 Speaker 1: and if consumers are concerned, that can trickle into behavior. 418 00:23:50,000 --> 00:23:52,760 Speaker 1: Now they can begin to tighten their purse durings, pull back, 419 00:23:52,960 --> 00:23:55,720 Speaker 1: not invest, not on, not take on new amounts of debt, 420 00:23:56,240 --> 00:23:58,440 Speaker 1: not by that new home or that new car purchase. 421 00:23:58,760 --> 00:24:01,840 Speaker 1: So it can have an immediate impact. But this is important. 422 00:24:01,960 --> 00:24:05,720 Speaker 1: Do you see any indications that beginning to occur? I mean, 423 00:24:06,320 --> 00:24:08,520 Speaker 1: Vice Chairman Fisher today is going to take a bigger 424 00:24:08,560 --> 00:24:12,800 Speaker 1: academic view. Lindsey helped me here with the market dynamics 425 00:24:12,840 --> 00:24:16,240 Speaker 1: of some of these more tepid indicators, do they indicate 426 00:24:17,000 --> 00:24:20,880 Speaker 1: any chance towards zero percent g d P Absolutely. Look 427 00:24:20,880 --> 00:24:24,119 Speaker 1: at retail sales, in fact, look at core retail sales 428 00:24:24,280 --> 00:24:27,000 Speaker 1: negative for two consecutive months, followed by the most recent 429 00:24:27,040 --> 00:24:30,720 Speaker 1: report of just a minimal, minimal one tenth increase. We 430 00:24:30,800 --> 00:24:34,280 Speaker 1: see consumer's propensity to buy vehicles on a steep decline, 431 00:24:34,320 --> 00:24:37,640 Speaker 1: now down two year over year, and in fact, looking 432 00:24:37,680 --> 00:24:40,639 Speaker 1: at the consumers savings rate now taking up back towards 433 00:24:40,720 --> 00:24:44,240 Speaker 1: six percent the third consecutive month of increase. When do 434 00:24:44,359 --> 00:24:48,640 Speaker 1: consumers begin to save when they're concerned about their financial future? 435 00:24:48,920 --> 00:24:51,119 Speaker 1: So we are already seeing a translate into the data. 436 00:24:52,680 --> 00:24:55,240 Speaker 1: I'm you know, I'm looking at your your note here 437 00:24:55,240 --> 00:24:58,080 Speaker 1: about the fed UH and a lot of it has 438 00:24:58,119 --> 00:25:01,520 Speaker 1: to do with the increasing lack of unanimity among the 439 00:25:01,600 --> 00:25:04,280 Speaker 1: f O m C. How hard is it going to 440 00:25:04,400 --> 00:25:07,359 Speaker 1: be for this f O m C to raise rates 441 00:25:07,480 --> 00:25:10,920 Speaker 1: if there isn't maybe, if not total unanimity, more unanimity 442 00:25:10,920 --> 00:25:13,679 Speaker 1: than we're seeing now. Well, I think there needs to 443 00:25:13,720 --> 00:25:17,760 Speaker 1: be a more broad based consensus among committee members, certainly 444 00:25:17,800 --> 00:25:20,680 Speaker 1: before they pull the trigger if it's a split vote 445 00:25:20,720 --> 00:25:24,120 Speaker 1: five to five, it's going to be pretty difficult to say, yes, 446 00:25:24,160 --> 00:25:27,119 Speaker 1: we're we're confident in our decision. So you really need 447 00:25:27,160 --> 00:25:29,920 Speaker 1: to see the pendulum swing very far to the other 448 00:25:30,000 --> 00:25:33,879 Speaker 1: side saying nine to one or ten unanimous vote to 449 00:25:33,960 --> 00:25:36,720 Speaker 1: really give the market confidence that the Fed does in 450 00:25:36,800 --> 00:25:39,919 Speaker 1: fact know what they're doing and they're taking the appropriate 451 00:25:39,960 --> 00:25:43,880 Speaker 1: policy steps. That's best to maintain what little strength we're 452 00:25:43,880 --> 00:25:46,240 Speaker 1: seeing in the U S economy at this point. Lindsay, 453 00:25:46,320 --> 00:25:50,480 Speaker 1: thank you so much. Lindsay pigs with steph Uh this morning. 454 00:25:59,160 --> 00:26:04,040 Speaker 1: Matthew mish Is with ubs EN wrote in with a 455 00:26:04,119 --> 00:26:08,000 Speaker 1: team a brilliant report last week for u BS. They 456 00:26:08,080 --> 00:26:12,960 Speaker 1: really caught my attention. Matthew, wonderful to have you on 457 00:26:12,960 --> 00:26:18,560 Speaker 1: on bonds? What is wrong with the consensus view? Tom? 458 00:26:18,640 --> 00:26:21,199 Speaker 1: Thanks for having us on UM. I wouldn't say so 459 00:26:21,320 --> 00:26:23,919 Speaker 1: much as what's wrong, but I think what UM is 460 00:26:23,920 --> 00:26:27,560 Speaker 1: critical to understand is most clients UM on the corporate 461 00:26:27,600 --> 00:26:31,800 Speaker 1: bond market are basically focused on technicals UM fundamentals in 462 00:26:31,920 --> 00:26:35,199 Speaker 1: all UH, with all due respect, I think really doesn't 463 00:26:35,240 --> 00:26:37,679 Speaker 1: matter anymore UM, and a lot of that is driven 464 00:26:37,680 --> 00:26:40,880 Speaker 1: by the global central bank policy that you've seen which 465 00:26:40,880 --> 00:26:46,000 Speaker 1: really has come to very unprecedented proportions. So the central bank, 466 00:26:46,040 --> 00:26:49,400 Speaker 1: for example of the European Central Bank is now buying 467 00:26:49,440 --> 00:26:53,600 Speaker 1: almost of the net supply of high grade corporate issues 468 00:26:53,600 --> 00:26:57,679 Speaker 1: in the market UM. In places like Asia. You have 469 00:26:57,920 --> 00:27:02,360 Speaker 1: substantial demand coming UM from places like Japan because of 470 00:27:02,400 --> 00:27:07,920 Speaker 1: what is being dictated as new policy. Obviously in terms 471 00:27:07,960 --> 00:27:11,320 Speaker 1: of the fixed InCom allocation across pensions or insurance companies, 472 00:27:11,840 --> 00:27:16,080 Speaker 1: you have significant interest in US credit overseas UM. And 473 00:27:16,119 --> 00:27:18,800 Speaker 1: what you're seeing is obviously that UH in the fx 474 00:27:18,960 --> 00:27:21,040 Speaker 1: UH and the swap markets, the basis or the cross 475 00:27:21,040 --> 00:27:24,639 Speaker 1: currency swap markets, that it's getting increasingly expensive UM for 476 00:27:24,760 --> 00:27:27,440 Speaker 1: clients to look at and basically invest in the US. 477 00:27:27,520 --> 00:27:31,119 Speaker 1: But nonetheless, that demand keeps coming. It is more than 478 00:27:31,160 --> 00:27:34,280 Speaker 1: absorbing the supply in the US market UM. And as 479 00:27:34,359 --> 00:27:36,720 Speaker 1: a result, you are you know you are. You are 480 00:27:36,760 --> 00:27:39,360 Speaker 1: in a state where clients I would say are are 481 00:27:39,400 --> 00:27:42,560 Speaker 1: somewhat part they have fundamental concerns because technicals are just 482 00:27:42,600 --> 00:27:45,439 Speaker 1: the overriding fact just just just brilliant and the idea 483 00:27:45,480 --> 00:27:48,600 Speaker 1: here are paralyzed is what gets my attention. And within 484 00:27:48,640 --> 00:27:54,040 Speaker 1: the UBS report, if they are paralyzed, are we accentuating 485 00:27:54,080 --> 00:27:58,560 Speaker 1: the distortion now versus one or two or three years ago, 486 00:27:59,080 --> 00:28:04,560 Speaker 1: which gets you to financial instability. Well, I think look 487 00:28:04,600 --> 00:28:07,919 Speaker 1: anytime UM, you know, for fixed income, I think as 488 00:28:07,960 --> 00:28:11,000 Speaker 1: we all can appreciate the the future return is based 489 00:28:11,000 --> 00:28:12,920 Speaker 1: on the yield, so to the extent to which we've 490 00:28:12,920 --> 00:28:17,680 Speaker 1: seen the substantial rallying global rates. Structurally, not obviously keeping 491 00:28:17,680 --> 00:28:19,280 Speaker 1: in mind the weakness that we've seen over the last 492 00:28:19,320 --> 00:28:22,280 Speaker 1: couple of months, but structurally you're at very low government 493 00:28:22,280 --> 00:28:25,280 Speaker 1: bond yield levels globally. Now, what you've done is taken 494 00:28:25,440 --> 00:28:29,480 Speaker 1: credit spreads back to UM near the tightest levels. I 495 00:28:29,480 --> 00:28:31,520 Speaker 1: mean high grade credit spreads in the US around a 496 00:28:31,600 --> 00:28:34,560 Speaker 1: hundred thirty basis points high yield now inside a five 497 00:28:34,920 --> 00:28:38,080 Speaker 1: basis points at about five UM. Those are not the 498 00:28:38,080 --> 00:28:40,240 Speaker 1: all time tights that we saw in two thousand fourteen, 499 00:28:40,640 --> 00:28:43,600 Speaker 1: but there's certainly much tighter UM. And so at this point, 500 00:28:44,160 --> 00:28:48,040 Speaker 1: I think it's also important again the incremental demand UM. Perversely, 501 00:28:48,040 --> 00:28:50,400 Speaker 1: when we talk with clients is not coming from the 502 00:28:50,480 --> 00:28:53,720 Speaker 1: domestic investor, who I would say is increasingly focused on 503 00:28:54,120 --> 00:28:58,000 Speaker 1: the US fundamental so US the US economy, US corporate earnings, 504 00:28:58,320 --> 00:29:00,800 Speaker 1: UH in monetary policy, in the US. The real marginal 505 00:29:00,880 --> 00:29:04,240 Speaker 1: driver of demand at this point is coming from overseas. 506 00:29:04,280 --> 00:29:06,800 Speaker 1: And again, when you think about the cost or the 507 00:29:06,880 --> 00:29:10,560 Speaker 1: you know, the yield, particularly adjusted for the cross currency 508 00:29:11,000 --> 00:29:13,960 Speaker 1: UH and other and other hedging costs, it really makes 509 00:29:14,000 --> 00:29:16,600 Speaker 1: the asset class look less attractive, or it should make 510 00:29:16,600 --> 00:29:20,400 Speaker 1: it look look less attractive from a foreign investor's perspective 511 00:29:20,880 --> 00:29:23,440 Speaker 1: UH than it would for a domestic investor. But yet 512 00:29:23,840 --> 00:29:28,240 Speaker 1: they're they're alternative in many cases is zero you I 513 00:29:28,240 --> 00:29:30,680 Speaker 1: try and earn something? Or do I earn zero? We're 514 00:29:30,680 --> 00:29:34,800 Speaker 1: talking with go ahead? Sorry, go ahead? No, I was 515 00:29:34,840 --> 00:29:37,160 Speaker 1: gonna say I the report that Tom mentioned was was 516 00:29:37,200 --> 00:29:38,880 Speaker 1: drawn from a trip that you took, in the reaction 517 00:29:38,920 --> 00:29:40,880 Speaker 1: that you got from clients when you asked them what 518 00:29:40,920 --> 00:29:42,960 Speaker 1: they were following and most interested in. I wanted to 519 00:29:43,000 --> 00:29:44,959 Speaker 1: ask you about what what those clients had to say 520 00:29:45,040 --> 00:29:47,680 Speaker 1: about duration? Again looking here for the non consensus views, 521 00:29:47,720 --> 00:29:51,840 Speaker 1: what were they saying about duration in particular? I mean, 522 00:29:51,880 --> 00:29:54,120 Speaker 1: I think it again, it depends whether you're talking about 523 00:29:54,400 --> 00:29:56,520 Speaker 1: foreign investors. For example, in U care Europe, are you 524 00:29:56,560 --> 00:29:59,680 Speaker 1: talking about US clients foreign clients? Um? I think in 525 00:29:59,800 --> 00:30:03,640 Speaker 1: G general again, are directly looking at the US high 526 00:30:03,640 --> 00:30:07,600 Speaker 1: grade credit market. They're looking increasingly at longer duration or 527 00:30:07,680 --> 00:30:09,920 Speaker 1: longer tenors. So we've seen much more interest in the 528 00:30:10,000 --> 00:30:12,960 Speaker 1: twenty year and thirty years part of the bond market. 529 00:30:13,280 --> 00:30:15,480 Speaker 1: And so the bottom line is the answer based on 530 00:30:16,200 --> 00:30:20,000 Speaker 1: the investment interest is that they're not overly concerned about 531 00:30:20,000 --> 00:30:22,600 Speaker 1: travation or they're willing to take that risk relative to 532 00:30:22,680 --> 00:30:25,200 Speaker 1: investing in their home market, where in many cases the 533 00:30:25,240 --> 00:30:27,960 Speaker 1: yields are basically somewhere And I want to get this 534 00:30:28,080 --> 00:30:31,680 Speaker 1: in quickly manswer mission and come back with you is well, 535 00:30:31,800 --> 00:30:35,400 Speaker 1: if that's the case, are you beginning to see not 536 00:30:35,520 --> 00:30:40,800 Speaker 1: a panic, but just grave concern within institutional retirement money 537 00:30:41,040 --> 00:30:43,360 Speaker 1: that they're not going to make their actual real assumption. 538 00:30:45,720 --> 00:30:48,080 Speaker 1: I mean, I think that that's a that's a continued 539 00:30:48,160 --> 00:30:52,640 Speaker 1: concern very clearly. I think you're starting to see evidence 540 00:30:52,680 --> 00:30:55,800 Speaker 1: that in many cases there's a significant cost focus that 541 00:30:55,920 --> 00:30:57,960 Speaker 1: that seems to have accelerated, at least from what we 542 00:30:58,000 --> 00:31:01,400 Speaker 1: can tell um from those institutions to try and basically 543 00:31:01,480 --> 00:31:04,400 Speaker 1: raining costs, which obviously speaks to the fact that the 544 00:31:04,440 --> 00:31:06,800 Speaker 1: concerns over the you know, over the future for lower 545 00:31:06,840 --> 00:31:09,960 Speaker 1: returns um you know are are are are certainly below 546 00:31:10,000 --> 00:31:12,920 Speaker 1: and in some cases well below what was expected. So 547 00:31:13,240 --> 00:31:15,480 Speaker 1: you know we I would say, don't talk to those 548 00:31:15,520 --> 00:31:19,280 Speaker 1: clients as a as a sole focus, but that anxiety 549 00:31:19,360 --> 00:31:21,920 Speaker 1: certainly is growing. I wouldn't say that it's uh, you 550 00:31:21,960 --> 00:31:25,360 Speaker 1: know that it's that it's reached. Epic proportions is well. 551 00:31:25,640 --> 00:31:28,320 Speaker 1: We like EPIC on on Monday, particularly Matthew miss day 552 00:31:28,320 --> 00:31:38,440 Speaker 1: with us with you BS, David Gurrol, why don't you 553 00:31:39,080 --> 00:31:43,680 Speaker 1: continue with Matthew mish Ubs credit. Yes, work undeveloped credit 554 00:31:43,720 --> 00:31:46,520 Speaker 1: strategy at UBS, but I wanted to ask you about 555 00:31:46,640 --> 00:31:49,040 Speaker 1: some of the larger and more underpriced risk scenarios for 556 00:31:49,080 --> 00:31:51,640 Speaker 1: European credit investors, as you put it in your report, 557 00:31:52,440 --> 00:31:55,080 Speaker 1: one of those having to do with the idiosyncratic stress 558 00:31:55,080 --> 00:31:59,480 Speaker 1: among European banks. How much is the situation involving German 559 00:31:59,480 --> 00:32:03,960 Speaker 1: banks in banks weighing on credit right now? You know, 560 00:32:04,080 --> 00:32:08,200 Speaker 1: it's certainly weighing on specific institutions such as UM again 561 00:32:08,240 --> 00:32:11,960 Speaker 1: the Italian banks, as you mentioned, UM certainly select German banks, 562 00:32:12,040 --> 00:32:14,960 Speaker 1: but it broad based it's not really having a significant impact. 563 00:32:15,000 --> 00:32:17,160 Speaker 1: And again part of that is because you know, the 564 00:32:17,200 --> 00:32:20,440 Speaker 1: nets supply UM for European high grade credit is largely 565 00:32:20,480 --> 00:32:24,120 Speaker 1: being bought or absorbed by the ECB through the CSPP program. 566 00:32:24,360 --> 00:32:26,720 Speaker 1: And there's also expectations that if things do get worse, 567 00:32:27,040 --> 00:32:28,920 Speaker 1: some clients and again this is not a majority, but 568 00:32:28,960 --> 00:32:31,200 Speaker 1: some believe it's possible that the c B may actually 569 00:32:31,200 --> 00:32:34,360 Speaker 1: go back what it originally intended I think, and basically 570 00:32:34,360 --> 00:32:37,560 Speaker 1: by bank or financial bonds. So we haven't seen a 571 00:32:37,560 --> 00:32:39,080 Speaker 1: lot of stress, and I would say that's one of 572 00:32:39,120 --> 00:32:41,720 Speaker 1: the things that emerged from the meetings UM is that 573 00:32:41,800 --> 00:32:45,479 Speaker 1: clients certainly are positioned more constructively on European banks in 574 00:32:45,520 --> 00:32:48,880 Speaker 1: general and more broadly. And I would say what's interesting 575 00:32:48,960 --> 00:32:51,120 Speaker 1: is that does stand in contrast to I would say 576 00:32:51,320 --> 00:32:54,040 Speaker 1: the general based in the US, which is more skeptical 577 00:32:54,440 --> 00:32:56,600 Speaker 1: UH and more concerned around the European banks. And the 578 00:32:56,600 --> 00:32:59,640 Speaker 1: big issue, to be clear, is that central bank policy 579 00:32:59,640 --> 00:33:01,800 Speaker 1: and mono terry policy has put a lot of pressure 580 00:33:02,320 --> 00:33:05,600 Speaker 1: on business models, particularly European bank business models, and you 581 00:33:05,600 --> 00:33:07,680 Speaker 1: can see that in the equity prices, but we haven't 582 00:33:07,720 --> 00:33:10,560 Speaker 1: seen that flow through really to the debt prices I 583 00:33:10,600 --> 00:33:14,440 Speaker 1: alluded to at the top, other than specific UH select institutions. 584 00:33:14,440 --> 00:33:16,680 Speaker 1: So one of the key risks, we believe is to 585 00:33:16,760 --> 00:33:20,240 Speaker 1: the extent to which UH you know, monetary policy continues 586 00:33:20,280 --> 00:33:23,640 Speaker 1: to exert and the broader growth picture continues to exert 587 00:33:23,680 --> 00:33:26,160 Speaker 1: a lot of pressure on the European banks UM. To 588 00:33:26,240 --> 00:33:29,560 Speaker 1: be clear, on the credit side, clients are long European financials. 589 00:33:29,600 --> 00:33:33,160 Speaker 1: They are generally long the broader banking sector UM. And 590 00:33:33,200 --> 00:33:35,240 Speaker 1: despite the wobbles and the weakness that you've seen in 591 00:33:35,240 --> 00:33:37,760 Speaker 1: the European equity market, uh, there is a view from 592 00:33:37,760 --> 00:33:41,040 Speaker 1: credit investors that this is at this point and going forward, 593 00:33:41,040 --> 00:33:43,520 Speaker 1: an income statement problem, not a balance she probably seeing 594 00:33:43,600 --> 00:33:47,440 Speaker 1: right now. With regard to energy and high yield, we 595 00:33:47,480 --> 00:33:49,840 Speaker 1: see oil here around bucks and barrel what what what 596 00:33:49,840 --> 00:33:53,760 Speaker 1: are you seeing there? You know, we've seen a tremendous 597 00:33:53,840 --> 00:33:57,280 Speaker 1: rally in low quality or triple C credit within US 598 00:33:57,320 --> 00:34:00,200 Speaker 1: high yield and the oil sector. To put into con text, 599 00:34:00,240 --> 00:34:03,440 Speaker 1: you have triple C debt that's up almost thirty year 600 00:34:03,480 --> 00:34:05,560 Speaker 1: to date. So you know, I think at the start 601 00:34:05,560 --> 00:34:07,200 Speaker 1: of the year, at one point in Cute in the 602 00:34:07,320 --> 00:34:10,959 Speaker 1: in the first quarter, you had yields on energy debt 603 00:34:11,040 --> 00:34:13,640 Speaker 1: that were more than twice what you had at the 604 00:34:13,680 --> 00:34:16,839 Speaker 1: overall high yield index level. Now that spread has really 605 00:34:16,880 --> 00:34:20,439 Speaker 1: compressed down and for the sector in general, you're only 606 00:34:20,480 --> 00:34:23,920 Speaker 1: trading with a modest a modest discount to the broader market. 607 00:34:23,960 --> 00:34:26,600 Speaker 1: So call it one too, depending on the index that 608 00:34:26,640 --> 00:34:29,040 Speaker 1: you use. So the market from our side has very 609 00:34:29,080 --> 00:34:32,880 Speaker 1: much priced in to use UM UH, to use an analogy, UH, 610 00:34:33,000 --> 00:34:37,640 Speaker 1: the sustainability of most energy companies UM and the survivability 611 00:34:37,680 --> 00:34:40,919 Speaker 1: basically at oil prices that are here or higher with 612 00:34:41,160 --> 00:34:45,640 Speaker 1: a significant decline going forward in expected default. Right, Okay, okay, 613 00:34:45,680 --> 00:34:48,000 Speaker 1: this is great and I love all the talk and 614 00:34:48,040 --> 00:34:50,560 Speaker 1: I get it. What it means is this price to perfection. 615 00:34:51,120 --> 00:34:53,120 Speaker 1: If that's the case of manthy measure, what do you 616 00:34:53,160 --> 00:34:59,160 Speaker 1: tell retail or institutional money that needs yield? Are you 617 00:34:59,320 --> 00:35:03,239 Speaker 1: becoming a new advocate for divden growth? You know? What 618 00:35:03,360 --> 00:35:05,640 Speaker 1: we're saying very clearly is if you look at dispersion 619 00:35:05,640 --> 00:35:08,040 Speaker 1: in the market, a lot of things look priced to perfection. 620 00:35:08,080 --> 00:35:12,040 Speaker 1: There's a difficulty in finding attractive value. That's what we 621 00:35:12,080 --> 00:35:14,480 Speaker 1: hear from clients. Everything is picked over. There's not a 622 00:35:14,520 --> 00:35:17,360 Speaker 1: lot of opportunity, you know. Unfortunately, I think what that means, 623 00:35:17,480 --> 00:35:20,320 Speaker 1: at least traditionally, is you're supposed to go back to 624 00:35:20,480 --> 00:35:23,600 Speaker 1: blocking and tackling to basic credit fundamentals and you should 625 00:35:23,600 --> 00:35:26,280 Speaker 1: try and pick things that are again because the fact 626 00:35:26,320 --> 00:35:29,920 Speaker 1: of incremental that incremental yield pickup is not significant. You 627 00:35:29,920 --> 00:35:32,560 Speaker 1: should try and buy things that are more defensive, that 628 00:35:32,600 --> 00:35:35,680 Speaker 1: are higher in quality. UH and basically just sitting hold 629 00:35:35,719 --> 00:35:39,319 Speaker 1: type you know you can earn reasonable income still UH. 630 00:35:39,360 --> 00:35:41,560 Speaker 1: In the in the in the triple B or the 631 00:35:41,560 --> 00:35:44,600 Speaker 1: crossover segment of the US credit market. UH, there are 632 00:35:44,680 --> 00:35:48,680 Speaker 1: sectors like utilities and telecoms which are fairly defensive. UM. 633 00:35:48,719 --> 00:35:51,360 Speaker 1: And the bottom line is perhaps the strongest endorsement for 634 00:35:51,400 --> 00:35:55,000 Speaker 1: owning those above the risk here or the higher yielding sectors, 635 00:35:55,320 --> 00:35:57,080 Speaker 1: is you're really just not getting paid a lot to 636 00:35:57,080 --> 00:36:00,840 Speaker 1: be in the ladder. Help us then, with what full 637 00:36:00,920 --> 00:36:03,759 Speaker 1: faith and credit US does if there's a bid on 638 00:36:03,880 --> 00:36:07,000 Speaker 1: everything in sight? I mean, are you lower for longer? 639 00:36:07,160 --> 00:36:10,279 Speaker 1: One of your colleagues in crime HSBC takes it out 640 00:36:10,640 --> 00:36:14,760 Speaker 1: to two thousand twenty one. I would suggest UBS Economics 641 00:36:15,200 --> 00:36:19,160 Speaker 1: has a more optimistic tone than many other banks. Is 642 00:36:19,200 --> 00:36:24,520 Speaker 1: lower for longer out years? I mean structurally we think, 643 00:36:24,640 --> 00:36:29,320 Speaker 1: certainly lower for longer. UM is still the regime or 644 00:36:29,400 --> 00:36:33,239 Speaker 1: is still the right characterization we generally, I think, as 645 00:36:33,280 --> 00:36:35,319 Speaker 1: you say, are a little bit more optimistic on the 646 00:36:35,719 --> 00:36:39,040 Speaker 1: on the certainly on the US economy than perhaps appears 647 00:36:39,080 --> 00:36:41,920 Speaker 1: as you cited, um, but but not substantially so. And 648 00:36:42,000 --> 00:36:44,360 Speaker 1: I think the broader view is that, again from the 649 00:36:44,400 --> 00:36:47,399 Speaker 1: client trips, for example, in recent weeks, most clients think 650 00:36:47,440 --> 00:36:50,040 Speaker 1: the federal hike once in December and is not really 651 00:36:50,040 --> 00:36:52,200 Speaker 1: going to do much of anything next year. UM. So 652 00:36:52,239 --> 00:36:54,520 Speaker 1: in that environment, I think, as you alluded to at 653 00:36:54,520 --> 00:36:57,120 Speaker 1: the top, what people are concerned with is not just 654 00:36:57,200 --> 00:37:00,920 Speaker 1: the demand side and the significant influence of foreign demand, 655 00:37:00,920 --> 00:37:03,640 Speaker 1: which again is really driven by the relative value proposition 656 00:37:03,680 --> 00:37:07,480 Speaker 1: between choosing US credit or something with yield and zero, 657 00:37:08,200 --> 00:37:11,239 Speaker 1: but also the supply side, UM. And that's point that 658 00:37:11,280 --> 00:37:13,440 Speaker 1: we made in the piece, which is there are concerns 659 00:37:14,200 --> 00:37:16,520 Speaker 1: that the supply side is not going to be as robust, 660 00:37:16,560 --> 00:37:20,040 Speaker 1: partly due to some of the regulation intervention you've had 661 00:37:20,040 --> 00:37:21,920 Speaker 1: with some of the large M and A deals. Uh. 662 00:37:21,960 --> 00:37:26,320 Speaker 1: There are concerns about repatriation potentially next year. If that happens, 663 00:37:26,320 --> 00:37:29,279 Speaker 1: when you start to see less debt issuance um. And 664 00:37:29,320 --> 00:37:31,560 Speaker 1: there's a variety of other kind of uncertainties that may 665 00:37:31,600 --> 00:37:35,080 Speaker 1: actually make the corporate debt pie smaller next year. So 666 00:37:35,080 --> 00:37:37,719 Speaker 1: if you have more demand less supply, you know there 667 00:37:37,800 --> 00:37:39,880 Speaker 1: is a concern in a lower for longer environment that 668 00:37:39,920 --> 00:37:44,200 Speaker 1: you extend further um and uh, you know again obviously 669 00:37:44,280 --> 00:37:47,440 Speaker 1: that it's certainly possible. UM. But I would say, you 670 00:37:47,480 --> 00:37:50,239 Speaker 1: know it's certainly for me echoes back to the you 671 00:37:50,239 --> 00:37:52,200 Speaker 1: know the type of environment we saw No. Five or 672 00:37:52,560 --> 00:37:55,040 Speaker 1: oh five or six. I go back to price, price 673 00:37:55,120 --> 00:38:04,520 Speaker 1: to perfection. Matthew Mish, thank you so much. Thanks for 674 00:38:04,600 --> 00:38:09,040 Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to 675 00:38:09,200 --> 00:38:14,320 Speaker 1: interviews on iTunes, SoundCloud, or whichever podcast platform you prefer. 676 00:38:15,040 --> 00:38:17,920 Speaker 1: I'm out on Twitter at Tom Keene. David Gura is 677 00:38:18,040 --> 00:38:21,840 Speaker 1: at David Gura. Before the podcast, you can always catch 678 00:38:21,920 --> 00:38:35,120 Speaker 1: us worldwide. I'm Bloomberg Radio. Who you put your trust 679 00:38:35,160 --> 00:38:39,640 Speaker 1: in matters. Investors have put their trust in independent registered 680 00:38:39,640 --> 00:38:43,480 Speaker 1: investment advisors to the tune of four trillion dollars. Why 681 00:38:44,320 --> 00:38:49,879 Speaker 1: Learn more and find your independent advisor dot com.