WEBVTT - US Weighs Response to Deadly Drone Attack as Iran Denies Role 0:00:01.360 --> 0:00:05.720 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:19.000 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:19.800 --> 0:00:22.200 So, with all that's going on, market watchers and many 0:00:22.200 --> 0:00:24.959 of them and business executives continue to remind us we 0:00:25.040 --> 0:00:27.840 cannot forget what is going on geopolitically and on that. 0:00:28.280 --> 0:00:31.120 The White House is certainly contemplating its next move, weighing 0:00:31.160 --> 0:00:34.000 potential responses to that deadly attack on a US base 0:00:34.040 --> 0:00:37.680 in Jordan Byron backed militants over the weekend that killed 0:00:37.720 --> 0:00:40.879 three US soldiers, said to be the first Americans to 0:00:40.920 --> 0:00:43.559 die from such an attack since regional tensions were inflamed 0:00:43.640 --> 0:00:46.400 him by the start of the Israel Hamas War in Gaza, 0:00:46.440 --> 0:00:47.839 which of course started back in October. 0:00:47.960 --> 0:00:51.159 Yeah, depending on press. Secretary Air Force Brigadier General pat 0:00:51.240 --> 0:00:54.320 Ryder was on Bloomberg Surveillance earlier this morning and addressed 0:00:54.320 --> 0:00:55.760 a possible US response. 0:00:56.160 --> 0:01:00.279 We will take deliberate, appropriate action. Our focus here is 0:01:00.320 --> 0:01:03.680 not to broaden a conflict. From the very beginning, we've 0:01:03.720 --> 0:01:07.600 been very focused on ensuring that the situation in Israel 0:01:07.720 --> 0:01:11.600 does not broaden into a wider regional conflict. Unfortunately, what 0:01:11.640 --> 0:01:15.240 you have here are Iranian proxy groups that are exploiting 0:01:15.240 --> 0:01:20.520 the situation and conducting these types of illegal attacks against 0:01:20.520 --> 0:01:23.479 forces that are in the region to actually preserve peace 0:01:23.520 --> 0:01:26.399 and stability. So again, we're going to do what we 0:01:26.440 --> 0:01:29.280 need to do to protect our forces, while also cognitive 0:01:29.400 --> 0:01:31.479 the fact that what we don't want is a wider 0:01:31.560 --> 0:01:32.680 regional conflict. 0:01:33.360 --> 0:01:35.520 That was of course pending on Press Secretary Air Force 0:01:35.560 --> 0:01:38.880 Brigadio General pat Ryder on Bloomberg surveillance earlier this morning 0:01:38.880 --> 0:01:42.759 addressing a possible response. We do also hear from John Kirby, 0:01:42.840 --> 0:01:46.199 National Security Council Coordinator for Strategic Communications, speaking right now, 0:01:46.520 --> 0:01:48.520 who did say that the US will respond on the 0:01:48.640 --> 0:01:50.920 US's schedule, not on anyone else's, all right, So. 0:01:50.880 --> 0:01:53.400 Let's get to the interview with US as retired Major 0:01:53.440 --> 0:01:57.160 General Maston Robinson. He served in combat zones in Liberia, 0:01:57.240 --> 0:02:01.040 Desert Storm, Somalia, Iraq, and in Afghanistan. He commanded at 0:02:01.040 --> 0:02:03.240 every operational level in the Marine Corps, so he has 0:02:03.280 --> 0:02:06.520 seen a lot and has some very deep insight. He 0:02:06.640 --> 0:02:10.840 is geopolitical Intelligence Advisor and board member at Academy Securities Advisory. 0:02:10.919 --> 0:02:14.919 He joins us on Zoom from Greenville, South Carolina. Major Robinson, 0:02:14.960 --> 0:02:18.000 it is great to have you back with us. Curious 0:02:18.360 --> 0:02:22.360 in terms of appropriate response, I think we all wonder 0:02:22.480 --> 0:02:24.840 what that means, what goes into First of all, you 0:02:24.919 --> 0:02:29.360 know firsthand what goes into determining what is an appropriate response. 0:02:30.160 --> 0:02:34.120 Thanks Carol. The first step is attribution. You know, can 0:02:34.160 --> 0:02:37.959 you validate who did it? We certainly can validate where 0:02:38.000 --> 0:02:41.280 the drone came from, but whose fingerprints on the drone 0:02:42.280 --> 0:02:45.760 can be challenging party going dealing with proxies, and you 0:02:45.800 --> 0:02:48.200 have to be careful when you're dealing with proxies. The 0:02:48.240 --> 0:02:52.799 tendency is to say, who historically funds or sports of proxies, 0:02:53.080 --> 0:02:56.480 gloves off, let's go after him. And although that's a 0:02:56.520 --> 0:03:01.040 popular response, I didn't always necessarily the most defendable response. 0:03:01.880 --> 0:03:04.079 The second is you have to look at what's our 0:03:04.120 --> 0:03:09.160 capability to UH to send a response, what's the message 0:03:09.200 --> 0:03:12.440 that it will send, what's our will to send a response? 0:03:13.480 --> 0:03:16.240 And then there's the dicey part of our credibility in 0:03:16.280 --> 0:03:20.000 the response. It's sort of like you know a parent, 0:03:20.160 --> 0:03:22.240 you know with the child, I mean, you need to 0:03:22.320 --> 0:03:24.760 when you say I'm gonna do something, I'm gonna I'm 0:03:24.800 --> 0:03:27.720 gonna do it. So I think the Biden administration is 0:03:27.760 --> 0:03:30.799 definitely trying to figure out how hard of a response 0:03:30.840 --> 0:03:31.840 can they address. 0:03:32.200 --> 0:03:33.320 Can they be. 0:03:33.720 --> 0:03:38.480 Specific at the funder or the supporter, or or is 0:03:38.520 --> 0:03:41.360 there a proxy they really can nail down to go after. 0:03:42.760 --> 0:03:46.360 They'll figure that out and they'll they'll do something. Whether 0:03:46.400 --> 0:03:48.920 that will have the desired effect or not is always, 0:03:49.400 --> 0:03:53.680 you know, the challenge, because these people don't think logically 0:03:53.760 --> 0:03:56.560 like we do, and they don't respond logically like we 0:03:56.680 --> 0:03:57.680 do for the most part. 0:03:58.200 --> 0:04:01.280 Major General Robinson, what did you make of Senator Lindsay 0:04:01.280 --> 0:04:04.480 Graham of South Carolina over the weekend tweeting hit Iran 0:04:04.640 --> 0:04:08.440 now hit them hard? First? What do you make of that? Second? 0:04:08.640 --> 0:04:11.440 Does that make the White House's job more difficult? 0:04:13.320 --> 0:04:15.280 I don't think it makes it more difficult. I mean, 0:04:15.320 --> 0:04:18.839 I think we live in a very political world and 0:04:18.960 --> 0:04:23.960 people make statements for effect. Historically speaking, there's certainly an 0:04:24.120 --> 0:04:29.920 argument made that there have been administrations in the past, 0:04:29.960 --> 0:04:32.240 and I don't mean, you know, going all the way 0:04:32.279 --> 0:04:36.320 back to the eighteen hundreds, but in the past two 0:04:36.520 --> 0:04:43.840 struck very specifically and very hard. And depending on what 0:04:43.960 --> 0:04:47.520 you're talking about, North Korea, Iran, you know, an African nation. 0:04:47.960 --> 0:04:50.360 I mean, each one is independent and how you need 0:04:50.760 --> 0:04:53.240 to measure the calculus of what you're going to do 0:04:53.839 --> 0:04:56.240 because they'll all respond differently. Some of them are very 0:04:56.320 --> 0:04:59.240 very thick skinned. Some of them it doesn't really matter 0:04:59.279 --> 0:05:00.960 what you do, and some you know, if you can 0:05:00.960 --> 0:05:05.920 find the sweet spot, you might do something. But attacking 0:05:05.920 --> 0:05:08.000 Iran right now, I'm not going to say it's a 0:05:08.040 --> 0:05:11.880 bad idea. I'm going to say it's a challenge is 0:05:12.000 --> 0:05:14.080 to what do you attack in Iran? If you're going 0:05:14.160 --> 0:05:18.760 to do it, that you can publicly not just argue, 0:05:18.920 --> 0:05:23.640 but validate that they had a direct fingerprint on what happened. Therefore, 0:05:23.880 --> 0:05:25.680 this was a justified response. 0:05:25.800 --> 0:05:29.240 So is it incorrect to believe that both Washington and 0:05:29.279 --> 0:05:32.880 Tehran are seeking to avoid a direct confrontation over the 0:05:32.880 --> 0:05:37.240 widening Middle East conflict? Is that incorrect for us to 0:05:37.360 --> 0:05:41.839 believe it that both Iran and the US do not 0:05:42.120 --> 0:05:46.200 want to see further escalation with those two specifically involved. 0:05:47.279 --> 0:05:50.320 Yeah, I don't know that would be an accurate characterization. 0:05:50.400 --> 0:05:54.680 I think Iran doesn't necessarily want a widespread conflict, but 0:05:54.720 --> 0:05:58.719 what they definitely want is widespread disruption. They want to 0:05:58.800 --> 0:06:02.400 disrupt the you know what's happened over the last year 0:06:02.480 --> 0:06:05.200 plus of going all the way back to the Abraham 0:06:05.240 --> 0:06:09.800 McCords and the potential partnership between Saudi and Israel, and 0:06:10.640 --> 0:06:14.520 you know, the partnership within the Gulf that is not 0:06:14.960 --> 0:06:21.080 just oil based but has new economic opportunities. You've got 0:06:21.279 --> 0:06:26.560 you know, both Egypt and Jordan pretty much saying we're 0:06:26.880 --> 0:06:30.400 not going to take on the fanaticals in our country. 0:06:30.839 --> 0:06:33.280 So there's a lot of stake here that's going on. 0:06:33.480 --> 0:06:37.320 That's that's outside the parameters. I think Iran is very 0:06:37.360 --> 0:06:42.000 much trying to disrupt, but I wouldn't say they want 0:06:42.040 --> 0:06:43.440 a war with the US. 0:06:43.680 --> 0:06:45.800 We have a partial map of the region, but to 0:06:45.839 --> 0:06:49.760 show where the drone attack was over the weekend that 0:06:49.839 --> 0:06:53.320 led to US deaths. You know, every time general that 0:06:53.360 --> 0:06:55.280 we look at them out for the Middle East, including 0:06:55.400 --> 0:06:57.960 the attack over the weekend, we see how close everyone 0:06:58.040 --> 0:07:01.839 is geographically. We're reminded of how it wouldn't take much 0:07:01.880 --> 0:07:03.920 for it to snowball. At the same time, seeing how 0:07:03.960 --> 0:07:07.960 close everyone is, it's reminded us of what meaning the 0:07:08.000 --> 0:07:10.160 region must be thinking about how easily could get out 0:07:10.160 --> 0:07:13.360 of control and how much everyone in the region could 0:07:13.360 --> 0:07:16.360 stand to lose. And yet this is where we all 0:07:16.440 --> 0:07:18.480 lean on your experience in the region, and you've kind 0:07:18.480 --> 0:07:21.320 of hinted at some of it is how does the 0:07:21.360 --> 0:07:26.000 region see it. Do they view more attacks as an 0:07:26.080 --> 0:07:29.600 escalation and something to be worried about, or are they like, Okay, 0:07:29.880 --> 0:07:31.360 maybe we'll gain something out of this. 0:07:32.760 --> 0:07:37.200 Well with the US and maybe parts of Europe probably 0:07:37.200 --> 0:07:39.640 have a different calculus than some of the rest of 0:07:39.680 --> 0:07:42.760 the world in regard to human life. I mean, nobody 0:07:42.800 --> 0:07:47.120 wants to see some idea, but we probably put a 0:07:47.160 --> 0:07:53.680 bigger value on three soldiers, airmen, marines that were in 0:07:53.720 --> 0:07:58.600 a remote area in a small logistics base on the 0:07:58.640 --> 0:08:07.280 border of yours and and yeah, that they got hit 0:08:07.440 --> 0:08:12.280 by an indirect issue in their billeting space. The building 0:08:12.360 --> 0:08:15.840 space piece is probably what will be get the most attention. 0:08:16.440 --> 0:08:19.440 That you weren't addressing them while they were doing something 0:08:19.440 --> 0:08:22.560 that was antagonistic, but you're addressing them while they're sleeping. 0:08:24.400 --> 0:08:26.600 Part of that is how do we harden our facilities, 0:08:26.640 --> 0:08:30.160 How do we ensure that where they're sleeping is not 0:08:30.440 --> 0:08:34.040 as well known. Is more hardened is? I mean, in 0:08:34.040 --> 0:08:38.439 the fact it was thirty casualties. You probably can address 0:08:38.480 --> 0:08:41.480 some of that by, you know, a wider separation between 0:08:41.600 --> 0:08:45.880 who's sleeping where and how they're surrounding what they're sleeping in. 0:08:46.240 --> 0:08:48.120 You're not going to put top cover on top of it. 0:08:48.160 --> 0:08:51.160 It's going to be bulletproof. So it's always a threat 0:08:51.320 --> 0:08:56.480 anytime we deploy our forces overseas that they're going to 0:08:56.520 --> 0:08:59.520 be vulnerable because they're not going to be in hardened facilities. 0:09:00.200 --> 0:09:04.560 So part of this is a factor of if people 0:09:04.600 --> 0:09:09.120 strike us in a soft target like this, we will 0:09:09.120 --> 0:09:13.000 come after them and we'll make them pay. That's certainly 0:09:13.080 --> 0:09:15.480 something that I know the administration will be looking at 0:09:15.600 --> 0:09:19.040 is how do we hit back hard enough to where 0:09:19.120 --> 0:09:21.679 they go ouch. I don't want to do that yet, 0:09:22.200 --> 0:09:23.840 but how do we do it in such a way 0:09:23.920 --> 0:09:26.760 that it doesn't have a second and third order effect 0:09:27.080 --> 0:09:31.360 that we later regret. And I hate going down a 0:09:31.400 --> 0:09:35.719 political road and this isn't political, but but we can 0:09:35.880 --> 0:09:40.080 be victims. We can undermine our message by our previous messages. 0:09:40.920 --> 0:09:42.679 And so you know, the President's going to have hard 0:09:43.160 --> 0:09:45.839 He's got to be challenged to figure out. How do 0:09:45.920 --> 0:09:49.679 we really hold Iron accountable and make sure they know 0:09:50.000 --> 0:09:53.120 that we take this very seriously and that we're not 0:09:53.240 --> 0:09:58.240 going away, you know, because they will measure this, whether 0:09:58.280 --> 0:10:00.439 we want them to do or not. I'm not sure 0:10:00.559 --> 0:10:03.480 this is napples and apples, but they'll measure it against 0:10:03.880 --> 0:10:06.679 the pull out in Afghanistan and the you know, the 0:10:06.760 --> 0:10:10.880 public statement is time for soldiers, sailors, are marine us 0:10:11.320 --> 0:10:14.280 to stop dying and god forsaken places halfway around the 0:10:14.280 --> 0:10:17.199 world that we don't care about. That's not what the 0:10:17.280 --> 0:10:19.920 President intended. That's not what he would would do. A 0:10:20.000 --> 0:10:22.480 parallel to hear it's got nothing new with that has 0:10:22.480 --> 0:10:25.080 to do with what's Iran hearing and what are they 0:10:25.160 --> 0:10:27.880 stringing together and how do we send them a different 0:10:28.000 --> 0:10:31.920 message that makes them sit up and go, Okay, this 0:10:32.120 --> 0:10:32.640 is different. 0:10:33.000 --> 0:10:36.400 This is not the run the mill, Major General. You 0:10:37.160 --> 0:10:41.959 first and foremost, we're talking about a story that involves casualties, 0:10:42.440 --> 0:10:45.440 US deaths. It's a human story. It's a story about conflict, 0:10:45.840 --> 0:10:49.439 but it's also a story that could have widespread economic implications, 0:10:49.559 --> 0:10:51.679 as we've seen play out in the region over the 0:10:51.720 --> 0:10:54.400 past few months. After all, you are an advisor and 0:10:54.440 --> 0:10:57.600 board member at Academy Securities Advisory. What is the way 0:10:57.679 --> 0:11:00.520 that you are providing advice right now to your clients, 0:11:00.559 --> 0:11:02.720 to your company? What is the thing that you're telling 0:11:02.800 --> 0:11:04.000 them about this conflict. 0:11:05.920 --> 0:11:10.880 I think unfortunately we're probably faced with the Red Sea 0:11:11.640 --> 0:11:15.959 avenue of transportation, the Bible Ol Mandeb straight the Red 0:11:16.040 --> 0:11:21.760 Sea and the Seuss Canal being certainly problematic. So that's 0:11:21.840 --> 0:11:24.480 a probably somewhere around the me and not only increased 0:11:24.559 --> 0:11:28.200 cost of that ship going down the Cape of Good 0:11:28.240 --> 0:11:31.120 Hope instead of going through the more direct route. So 0:11:31.200 --> 0:11:33.559 it's going to be a finance piece that will certainly 0:11:33.800 --> 0:11:38.240 bleed into inflation and the cost of things. It'll be 0:11:38.240 --> 0:11:41.320 an insurance piece for shipping that are in key shipping, 0:11:41.320 --> 0:11:43.720 because nobody's going to ensure that ship going through an 0:11:43.760 --> 0:11:47.440 area that is problematic without really jacking the insurance up 0:11:47.800 --> 0:11:50.720 to insuring this is being paid for. So it will 0:11:50.800 --> 0:11:56.079 impact the economy. Probably what's happening they're in Syria will 0:11:56.120 --> 0:11:59.360 an pack the economy less than what's happening by the 0:11:59.440 --> 0:12:01.000 Huthis and in the Red Cita. 0:12:01.240 --> 0:12:02.839 But is that because you believe what's going on on 0:12:02.880 --> 0:12:05.240 the Red Sea, it's not going to wrap up anytime soon. 0:12:05.360 --> 0:12:07.679 It's going to be something that lingers if you will 0:12:07.760 --> 0:12:08.120 this year. 0:12:11.240 --> 0:12:16.640 So again the challenge is who's the audience. And if Iran, 0:12:17.280 --> 0:12:20.439 I think is probably more rational than the Houthis. The 0:12:20.520 --> 0:12:25.920 Houthis don't really have an organizational structure, a national instinct 0:12:26.520 --> 0:12:31.600 that has them thinking through these calculuses like Iran will 0:12:31.679 --> 0:12:34.719 have to do as a nation that wants to be 0:12:34.840 --> 0:12:39.559 influential as a nation. And that's the challenge with with 0:12:39.720 --> 0:12:46.000 irregulars you know that are around the world. Honestly, in Yemen, 0:12:46.160 --> 0:12:51.920 the the president Salom was probably the most effective. Yeah. Uh, 0:12:52.280 --> 0:12:55.319 we never controlled the tribes. What he did was he 0:12:55.720 --> 0:12:59.880 in essence, brought the tribes into Snah, bought their tribal 0:13:00.480 --> 0:13:04.440 villas and kind of the premise, keep you your friends close, 0:13:04.520 --> 0:13:05.320 the enemies closer. 0:13:05.600 --> 0:13:05.720 Right. 0:13:06.000 --> 0:13:09.560 He couldn't control them, but he tried to influence them 0:13:10.200 --> 0:13:14.160 in ways that were unconventional. And that's sort of still 0:13:14.240 --> 0:13:16.280 what you've got there with the hoho Thies and with 0:13:17.240 --> 0:13:22.160 Yemen as a nation that's more unstructured than Iran is 0:13:22.440 --> 0:13:23.000 as a nation. 0:13:23.400 --> 0:13:27.319 All right, Well, so much appreciated, Insight general, So thank 0:13:27.360 --> 0:13:29.640 you so much for joining us. Again, that's major General 0:13:29.960 --> 0:13:35.480 Maston Robinson, Geopolitical Intelligence Advisor to Academy Securities Advisor. He's 0:13:35.480 --> 0:13:37.360 also a member of their board. Joining us on Zoom 0:13:37.360 --> 0:13:40.520 from Greenville, South Carolina. I feel like we started the 0:13:40.559 --> 0:13:43.839 new year talking about concerns about geopolitics. We continue to 0:13:43.960 --> 0:13:47.599 kind of cautiously use the word escalation, but nonetheless, I 0:13:47.600 --> 0:13:49.079 guess now we're just kind of waiting to see what 0:13:49.160 --> 0:13:51.120 the US responds to see. 0:13:51.160 --> 0:13:52.920 Not a big response from oil on this. 0:13:53.280 --> 0:13:56.439 Not yet, Yeah, yeah, exactly. All right, folks, just getting 0:13:56.480 --> 0:13:57.360 started on this Monday. 0:13:57.440 --> 0:13:58.120 This is Bloomberg. 0:14:00.040 --> 0:14:03.440 You're listening to the Bloomberg Business Week podcast. Catch us 0:14:03.559 --> 0:14:06.760 Live weekday afternoons from two to five pm. Easter Listen 0:14:06.840 --> 0:14:08.959 on Apple car Play and Ed brought Auto with a 0:14:09.000 --> 0:14:12.000 Bloomberg Business app or wants us Live on YouTube. 0:14:15.520 --> 0:14:17.360 So one of the things that we love talking about 0:14:17.559 --> 0:14:19.640 is what's going on with the consumer, the health of 0:14:19.680 --> 0:14:22.120 the consumer. We do it because it's so important in 0:14:22.240 --> 0:14:24.960 terms of US economic momentum. And on that tim we've 0:14:25.000 --> 0:14:28.240 had some recent economic reports showing robust gains in both 0:14:28.280 --> 0:14:31.320 personal income and spending in December. We also had consumer 0:14:31.440 --> 0:14:34.680 sentiment soaring in early January to its highest in about 0:14:34.680 --> 0:14:35.160 three years. 0:14:35.480 --> 0:14:37.800 Don't forget about the FED page book and found resilient 0:14:37.840 --> 0:14:41.080 consumer spending that helps propel the US economy in recent weeks, 0:14:41.440 --> 0:14:44.239 offsetting weakness and other sectors like manufacturing. 0:14:44.760 --> 0:14:46.240 All sounds good, Yeah, it does sound good. 0:14:46.400 --> 0:14:46.840 That's great. 0:14:47.160 --> 0:14:47.880 Everything is awesome. 0:14:48.040 --> 0:14:50.800 Not so fast because credit card delinquency rates. Sorry to 0:14:50.840 --> 0:14:53.880 be the bummer here. Credit card delinquency rates have exceeded 0:14:54.000 --> 0:14:58.040 pre pandemic levels, while the share of borrowers making only 0:14:58.240 --> 0:15:00.960 the minimum payment climbed above ten percent for the first 0:15:01.000 --> 0:15:03.600 time since twenty nineteen. This is according to a Federal 0:15:03.640 --> 0:15:06.240 Reserve Bank of Philadelphia report TIM that was out earlier 0:15:06.360 --> 0:15:06.760 this month. 0:15:06.920 --> 0:15:07.960 Well that's the bummer, popt. 0:15:08.000 --> 0:15:09.400 Okay, we let's get into it with our next guest, 0:15:09.440 --> 0:15:12.160 who's also tracking the credit health of the US consumer 0:15:12.280 --> 0:15:15.600 with us is the CEO of vantage Score, Silvio Tavares. Silvio, 0:15:15.840 --> 0:15:18.880 good to have you with us this afternoon here from 0:15:18.920 --> 0:15:21.000 San Francisco. We should note that vantage Score is a 0:15:21.040 --> 0:15:24.560 joint venture of Experience, Equifax, and TransUnion. It provides credit data, 0:15:24.640 --> 0:15:28.080 credit risk modeling, and analytics based out in the West Coast. 0:15:28.600 --> 0:15:31.880 So you got a recent report out December report talk 0:15:31.880 --> 0:15:34.520 to us about specific data points in the report that 0:15:34.640 --> 0:15:35.520 has you concerned. 0:15:36.120 --> 0:15:38.680 Well, yeah, I think the main key point to start 0:15:38.720 --> 0:15:41.960 off with is that actually the overall consumer is healthy. 0:15:42.120 --> 0:15:44.600 You know, we measure the consumer credit health by the 0:15:44.800 --> 0:15:48.400 average vantage score. A low vantage score is three hundred, 0:15:48.760 --> 0:15:52.080 a perfect vantage scores eight point fifty, and prime, which 0:15:52.200 --> 0:15:54.560 is the level where consumers usually get the best rate, 0:15:54.640 --> 0:15:57.240 is vantage score six sixty. As you look through the 0:15:57.440 --> 0:16:00.560 end of December we publish this data today or monthly 0:16:00.720 --> 0:16:04.440 credit gauge, the average consumer credit score was seven oh one. 0:16:04.600 --> 0:16:07.480 So that's actually a pretty healthy score. But what that 0:16:07.920 --> 0:16:11.400 masks is an area of concern because basically the consumer 0:16:11.640 --> 0:16:16.280 is experiencing a bit of a credit hangover. So averages mean, yes, 0:16:16.600 --> 0:16:19.920 and the average and the mean are the same for 0:16:20.480 --> 0:16:27.080 credit scores typically because you see that nice normal distribution, Yes, yes, yes, correct, 0:16:27.480 --> 0:16:28.560 So go ahead. 0:16:28.560 --> 0:16:30.760 You were saying that it masks some of the underlying 0:16:30.840 --> 0:16:32.160 maybe concerns. 0:16:31.760 --> 0:16:34.880 There, exactly right, because what we saw in December, which 0:16:34.960 --> 0:16:37.480 is the data that we published today, was that all 0:16:37.520 --> 0:16:40.000 of a sudden, you're starting to see some signs for 0:16:40.200 --> 0:16:44.400 concern in terms of the increase in credit card credit 0:16:44.480 --> 0:16:47.760 card balances in December, we're up over eight point two 0:16:47.840 --> 0:16:50.400 percent on a year over year base basis. That's a 0:16:50.600 --> 0:16:53.880 big jump. And as we look also at delinquencies, the 0:16:54.000 --> 0:16:57.000 rate at which people are paying their loans late, we're 0:16:57.040 --> 0:16:59.880 actually seeing that increase on a year over year base. 0:17:00.480 --> 0:17:03.160 It's a little bit of an increase, but when you 0:17:03.240 --> 0:17:06.040 see that trend, that's always cause for concern. And so 0:17:06.280 --> 0:17:09.200 the consumer is experiencing a little bit of a credit hangover. 0:17:09.359 --> 0:17:12.000 They spent a lot in December and we're going to 0:17:12.040 --> 0:17:13.600 watch that going through the bounce of the year. 0:17:13.680 --> 0:17:16.720 Is the credit hangover portend anything more concerning for you 0:17:16.960 --> 0:17:19.879 than people just owing more on their credit cards? I mean, 0:17:19.920 --> 0:17:22.399 what are the knock on effects of this? What has 0:17:22.480 --> 0:17:23.040 you concerned? 0:17:23.480 --> 0:17:27.159 Well, the key concern is if this continues, you're going 0:17:27.200 --> 0:17:30.480 to see a rising level of defaults and delinquencies. And 0:17:31.280 --> 0:17:34.040 it's not all consumers are experiencing the same thing. So 0:17:34.160 --> 0:17:38.720 for example, for the higher end, higher average age consumer, 0:17:38.840 --> 0:17:41.320 you're not seeing those delinquencies. But as you look to 0:17:41.440 --> 0:17:45.359 the lower credit tiers vantage score, subprime, and near prime, 0:17:45.680 --> 0:17:49.000 there's where you're seeing a higher rate of concern. Now 0:17:49.200 --> 0:17:52.080 as you look at banks, you know, using the analogy 0:17:52.160 --> 0:17:54.920 credit hangover, Well, the banks are still serving drinks. We 0:17:55.040 --> 0:17:59.360 actually saw credit origination's increase in the month of December 0:17:59.480 --> 0:18:02.840 compared to November, and also increase on a year over 0:18:02.960 --> 0:18:06.280 year basis. So banks we expected we're going to tighten, 0:18:06.560 --> 0:18:09.800 that didn't happen in December. We're actually seeing banks continue 0:18:09.880 --> 0:18:13.239 to lend really across most categories, and so we're going 0:18:13.280 --> 0:18:15.440 to watch that trend because obviously if you have higher 0:18:15.520 --> 0:18:19.119 delinquencies coupled with increased lending, that's not a good picture 0:18:19.200 --> 0:18:19.600 for banks. 0:18:19.680 --> 0:18:21.159 We have a chart to share with everybody, and it 0:18:21.240 --> 0:18:23.040 does show what you guys have seen in terms of 0:18:23.080 --> 0:18:25.920 credit card balances over the last four years. So you 0:18:26.000 --> 0:18:30.000 can just see from November twenty two, from December twenty 0:18:30.400 --> 0:18:33.720 twenty two to November twenty twenty three, December twenty twenty three, 0:18:33.920 --> 0:18:37.040 you can see the uptick and the build right, that 0:18:37.160 --> 0:18:40.359 gradual build in terms of credit card balances. Having said that, 0:18:40.440 --> 0:18:42.840 Sylvia give us an idea of you guys are getting 0:18:42.880 --> 0:18:45.679 data right from all the credit reporting agencies. I mean, 0:18:45.800 --> 0:18:48.720 so is it a nice cross section if you will, 0:18:49.240 --> 0:18:51.680 in terms of the US population. 0:18:51.680 --> 0:18:54.200 Yes, very much. So we have the most authoritative source 0:18:54.240 --> 0:18:58.639 on that data because vantage score actually scores approximately thirty 0:18:58.680 --> 0:19:02.400 million more consumers than conventional credit scores. We're used by 0:19:02.520 --> 0:19:05.920 eight of the top ten banks and over three thousand banks. 0:19:05.960 --> 0:19:09.520 In FinTechs we grew at thirty percent last year and 0:19:10.160 --> 0:19:13.080 approximately nineteen billion Vantage scores were used. So it's the 0:19:13.160 --> 0:19:15.960 most authoritative source, and that's to challenge with a lot 0:19:16.000 --> 0:19:18.240 of the economic data that you're seeing from other sources. 0:19:18.359 --> 0:19:20.760 Right now, it's backward looking. It's like driving in the 0:19:20.800 --> 0:19:23.639 rear view mar We have the most recent data and 0:19:23.760 --> 0:19:26.720 what it shows is overall, the consumers healthy, but we're 0:19:26.800 --> 0:19:30.200 starting to see some signs for concern. That delinquency rate 0:19:30.400 --> 0:19:33.160 increasing is one of them. The spike in credit card 0:19:33.240 --> 0:19:34.159 balances is another. 0:19:35.040 --> 0:19:37.359 I mean, all this has me thinking about the power 0:19:37.400 --> 0:19:39.440 that the US consumer has when it comes to the economy. 0:19:39.480 --> 0:19:42.560 I mean, this is an economy that the consumer certainly powers. 0:19:43.119 --> 0:19:45.600 Are there any macroeconomic takeaways that you can give us 0:19:45.760 --> 0:19:48.840 about credit score and what it means for consumer spending? 0:19:49.160 --> 0:19:51.399 Yeah, Well, the credit score, the vantage score is the 0:19:51.560 --> 0:19:55.560 real authoritative source of credit health. And what we're seeing 0:19:55.800 --> 0:19:58.800 is it's becoming very much of a tail of two cities. 0:19:58.880 --> 0:20:03.800 Those older, more affluent consumers, Generation xers, they're actually doing 0:20:03.880 --> 0:20:06.680 pretty well. So for example, in December, we saw Generation 0:20:06.840 --> 0:20:10.680 exers increasing their credit card balances. But those folks, you 0:20:10.720 --> 0:20:12.960 don't have to worry about them. They typically have higher 0:20:13.000 --> 0:20:16.520 average credit scores and higher wealth. What's more concerning is 0:20:16.640 --> 0:20:21.280 that younger and mid tier consumer, and when you look forward, 0:20:21.440 --> 0:20:23.920 they're going to be facing some economic headwinds. The most 0:20:23.960 --> 0:20:27.560 significant one is student loans. We're seeing those student loans 0:20:27.600 --> 0:20:28.560 pay and kick in. 0:20:28.920 --> 0:20:30.880 Is one reason that their credit score isn't as high, 0:20:30.960 --> 0:20:33.800 or their vantage score isn't as high, is because potentially 0:20:33.840 --> 0:20:35.760 they don't own a house, they don't own an apartment, 0:20:35.840 --> 0:20:39.920 they don't have that credit history that younger generations or 0:20:39.920 --> 0:20:42.560 older generations had when they were their age. 0:20:42.720 --> 0:20:45.240 One hundred percent. And what we see is that home 0:20:45.280 --> 0:20:48.800 ownership is a huge driver of wealth. The average home 0:20:48.840 --> 0:20:51.560 equity in a home today is two hundred and forty 0:20:51.600 --> 0:20:53.760 eight thousand dollars. So if you have a home, you're 0:20:53.800 --> 0:20:56.959 doing pretty good. If you don't, you have more challenge. 0:20:57.000 --> 0:20:59.439 And that younger consumer doesn't have as much as an 0:20:59.480 --> 0:21:03.080 economic cushion to weather the storm against rising inflation, and 0:21:03.200 --> 0:21:06.199 that higher average credit card statement that they have, they 0:21:06.240 --> 0:21:08.320 also don't have much of a cushion to pay for 0:21:08.440 --> 0:21:12.240 that unexpected loan repayment, and that's why it's so important. 0:21:12.320 --> 0:21:14.959 Recently we saw some of the regulators actually mandate they 0:21:15.040 --> 0:21:17.440 use advantage core for mortgage and so we're going to 0:21:17.520 --> 0:21:20.680 be seeing a lot more of those younger consumers, those 0:21:20.760 --> 0:21:24.520 underserved consumers, getting a chance at their first home, and 0:21:24.680 --> 0:21:27.280 we expect that to really help with credit health. 0:21:27.320 --> 0:21:28.840 I feel like these are a lot of the topics 0:21:28.880 --> 0:21:30.720 we've talked about in the last year or so. Is 0:21:30.760 --> 0:21:34.040 there anything just thirty seconds left here, Sylvia that was 0:21:34.119 --> 0:21:37.440 surprising to you that you think our investing audience should 0:21:37.480 --> 0:21:39.760 know about. It might be whether it's cause of concern 0:21:39.880 --> 0:21:41.120 or cause of come if. 0:21:41.000 --> 0:21:43.439 You will just quickly, well, I think the most surprising thing, 0:21:43.520 --> 0:21:46.520 the most newsworthy thing, is the reality that banks aren't 0:21:46.600 --> 0:21:49.240 tightening the way that we expected. We expected to see 0:21:49.320 --> 0:21:53.400 into December a cooling economy and banks really pulling back 0:21:53.440 --> 0:21:55.359 on their loans. We didn't see that. In fact, we 0:21:55.480 --> 0:21:58.280