WEBVTT - Bloomberg Surveillance TV: April 15, 2024 0:00:00.120 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.720 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.240 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:37.720 Terminal and the Bloomberg Business App. John Kirby, Admiral Kirby, 0:00:37.760 --> 0:00:39.959 fantastic to catch up with you, sir. Busy weekend, I'm 0:00:40.000 --> 0:00:43.040 sure for you and the administration, let's get straight into it. 0:00:43.280 --> 0:00:45.960 We've heard from Iran at least they've indicated the matter 0:00:46.000 --> 0:00:48.559 can be deemed concluded. I think we all want to know, 0:00:48.840 --> 0:00:51.639 Admiral Kirby, whether Israel Is indicated the same thing. 0:00:52.960 --> 0:00:54.840 I won't speak for the Israelis, I think you can 0:00:54.920 --> 0:00:58.520 understand that. I believe the war cabinet is still deliberating 0:00:58.600 --> 0:01:02.640 and making their decisions. The President had a very good 0:01:02.640 --> 0:01:05.880 conversation with the Prime Minister right after or towards the 0:01:05.959 --> 0:01:09.040 end of the attacks on Saturday night, and the President 0:01:10.080 --> 0:01:13.479 was very direct that this was a. 0:01:13.440 --> 0:01:16.280 Huge success, that Israel can be. 0:01:16.200 --> 0:01:18.319 Proud that it doesn't stand alone, and that it has 0:01:18.360 --> 0:01:21.959 superior military capability. Iran utterly failed and what they were 0:01:21.959 --> 0:01:25.319 trying to achieve, and that that success alone sends a 0:01:25.319 --> 0:01:28.920 strong message to Iran and to the region about Israel's 0:01:28.920 --> 0:01:29.400 place there. 0:01:29.600 --> 0:01:32.720 So could we just define success? How can we define 0:01:32.720 --> 0:01:35.679 the weekend's events as a success. To see the first 0:01:35.840 --> 0:01:40.080 direct strikes coming from Iranian soil on Israel, how is 0:01:40.120 --> 0:01:42.080 that a success in any way shape or for. 0:01:42.920 --> 0:01:44.400 Let's talk about what didn't happen. 0:01:47.560 --> 0:01:52.160 Hardly any damage and the only impacts were to an 0:01:52.160 --> 0:01:57.040 air base in central Israel, no real casualties except sadly, 0:01:57.960 --> 0:02:03.800 a young civilian girl was critically injured. In the vast majority, 0:02:03.880 --> 0:02:07.080 as the IDF have said, ninety nine percent of what 0:02:07.880 --> 0:02:11.239 Aroon threw up in the air, drones and missiles never 0:02:11.360 --> 0:02:15.480 landed either it failed or actually got shot down. So 0:02:15.520 --> 0:02:18.919 that's what didn't happen. And what did happen was Israel 0:02:19.040 --> 0:02:22.880 proved it has superior military capability and just as critically, 0:02:23.000 --> 0:02:26.079 they don't stand alone. That the United the United States 0:02:26.120 --> 0:02:31.440 stands with them. I think people are maybe not cognizant 0:02:31.480 --> 0:02:35.080 of the fact that the President put US forces in 0:02:35.200 --> 0:02:37.720 harm's way to help defend Israel for the first time, 0:02:37.760 --> 0:02:40.680 American fighter pilots in the air shooting things down that 0:02:40.760 --> 0:02:45.400 we're heading towards Israel, and they were extraordinarily successful in 0:02:45.440 --> 0:02:45.720 doing so. 0:02:45.800 --> 0:02:46.720 I think that's significant. 0:02:46.800 --> 0:02:49.400 You're talking about a successful defense. I think a lot 0:02:49.400 --> 0:02:54.000 of people also focused on the unsuccessful deterrents. The President said, 0:02:54.040 --> 0:02:56.760 don't and they did, and we're trying to work out, 0:02:56.800 --> 0:02:59.000 Admiral Kirby, in what way the US is able to 0:02:59.080 --> 0:03:00.880 influence Iranian behavior. 0:03:01.880 --> 0:03:02.200 Well. 0:03:02.440 --> 0:03:05.960 The President prepositioned military forces in the region, which allowed 0:03:06.000 --> 0:03:10.400 for that unprecedented successful defense. The President met with the 0:03:10.440 --> 0:03:14.400 G seven leaders yesterday to talk about a unified diplomatic 0:03:14.440 --> 0:03:18.399 response and to consider other options and alternatives to try 0:03:18.400 --> 0:03:21.840 to hold Iran accountable for what it did on Saturday night. 0:03:22.480 --> 0:03:25.720 Iran is increasingly isolated in the world, certainly in the region, 0:03:26.200 --> 0:03:28.280 and Israel has proven that it has friends. 0:03:28.760 --> 0:03:31.760 If Israel does not respond, is the new status quo 0:03:32.000 --> 0:03:35.440 that Iran can strike Israel from its own soil and 0:03:35.960 --> 0:03:37.200 there won't be a retaliation. 0:03:38.400 --> 0:03:39.920 Again, I can't speak to that, Amory. 0:03:39.960 --> 0:03:41.640 That's going to be up to the Prime Minister in 0:03:41.680 --> 0:03:43.640 the War Cabinet to make those decisions. 0:03:43.680 --> 0:03:46.760 We respect that it's a sovereign nation. They have to 0:03:46.760 --> 0:03:47.680 make those decisions. 0:03:47.920 --> 0:03:50.240 There's lots of reporting that the Biden administration that was 0:03:50.320 --> 0:03:53.320 verbalizing to these really that they do not support a 0:03:53.400 --> 0:03:56.680 counter strike. Isn't that in the sense taking one of 0:03:56.720 --> 0:03:59.200 those tools out of the toolbox and brandishing it to 0:03:59.280 --> 0:03:59.960 the world. 0:04:00.960 --> 0:04:02.600 The tools that we took out of the toolbox were 0:04:02.600 --> 0:04:07.080 pretty significant on Saturday night, Amory, ballistic missile destroyers in 0:04:07.120 --> 0:04:10.800 the instrument helping shoot down ballistic missiles, fighter aircraft in 0:04:10.840 --> 0:04:13.560 the air, other partners participating. There was a lot of 0:04:13.640 --> 0:04:16.880 tools in the toolbox, and there's no question that Iran 0:04:17.279 --> 0:04:22.920 recognizes the coalition that was put together to help Israel 0:04:22.920 --> 0:04:26.240 defend itself. Again, I can't speak for what either side 0:04:26.279 --> 0:04:28.400 will do going forward. All I can do is speak 0:04:28.400 --> 0:04:31.520 for President Biden as commander in chief. He has since 0:04:31.560 --> 0:04:35.400 October seventh, and he will continue going forward making sure 0:04:35.600 --> 0:04:37.919 that we are meeting our commitments to Israel, but just 0:04:37.960 --> 0:04:40.560 as critically that we're meeting our commitments to our own 0:04:40.640 --> 0:04:43.400 national security interests in the region, making sure we have 0:04:43.440 --> 0:04:46.000 the resources in place to protect our troops, our facilities, 0:04:46.160 --> 0:04:48.360 and the missions that we're conducting there in the Middle East. 0:04:48.760 --> 0:04:52.520 We've had sixty tons of arsenal fired upon Israel directly 0:04:52.560 --> 0:04:55.920 from Iran. We've had six months of Iranian backed who 0:04:55.920 --> 0:04:59.160 Thi's hitting as well, trying to hit even US vessels 0:04:59.400 --> 0:05:02.279 in the Red Seat and disrupting global trade. We also 0:05:02.320 --> 0:05:06.120 had an uptick of uranium enrichment by Iran. So to 0:05:06.120 --> 0:05:08.839 get to this deterrence, what is the US willing to do? 0:05:09.360 --> 0:05:11.760 We have sanctions in place, is the United States willing 0:05:11.760 --> 0:05:13.160 to enforce them? 0:05:13.640 --> 0:05:15.800 We have been enforcing sanctions, I mean, my goodness. 0:05:15.800 --> 0:05:17.640 In the three and a half years of this administration, 0:05:18.279 --> 0:05:22.680 we have implemented more than fifty sanctioned regimes, targeting more 0:05:22.720 --> 0:05:27.440 than five hundred entities and individuals. And again I won't 0:05:27.640 --> 0:05:30.640 preview coming sanctions or anything like that, but I can 0:05:30.640 --> 0:05:33.440 tell you that additional sanctions are certainly not off the 0:05:33.480 --> 0:05:35.400 table in terms of holding Iran accountable. 0:05:35.960 --> 0:05:37.200 And take a look at. 0:05:37.040 --> 0:05:40.359 The additional military resources that President Biden has added to 0:05:40.400 --> 0:05:43.479 the region even before October seventh. This is something that 0:05:43.520 --> 0:05:47.000 he's been keenly focused on, and as we saw from 0:05:47.000 --> 0:05:51.280 Saturday night, Iran is increasingly isolated on the world stage. 0:05:51.480 --> 0:05:54.920 They are increasingly making it harder for anybody in the 0:05:54.920 --> 0:05:59.280 international community to be sympathetic to any of their inimical interests. 0:05:59.279 --> 0:06:01.200 There Again, I think we've done a lot. 0:06:01.279 --> 0:06:03.800 We'll continue to look at our options going forward, and 0:06:03.839 --> 0:06:07.159 I suspect that we'll continue to hold Iran properly accountable. 0:06:07.160 --> 0:06:10.080 Analcarry how are they isolated? They had a call with 0:06:10.240 --> 0:06:13.360 the Saudis. They're sending all their oil to China, They're 0:06:13.400 --> 0:06:17.279 sending Shaha drones to Russia. In March, Iranian oil output 0:06:17.360 --> 0:06:18.920 hit a five year high. 0:06:19.040 --> 0:06:20.280 Where is the enforcement. 0:06:21.240 --> 0:06:24.120 There is enforcement of the sanctions. Memory again, this is 0:06:24.160 --> 0:06:27.159 one of the most heavily sanctioned countries in the world, 0:06:27.800 --> 0:06:30.000 and we're going to continue to look at our options 0:06:30.160 --> 0:06:33.040 going forward to hold them properly accountable. As sanctions are 0:06:33.040 --> 0:06:36.279 certainly not off the table, neither is going to making 0:06:36.279 --> 0:06:39.160 sure that we've got the capabilities in the region and 0:06:39.240 --> 0:06:42.359 we do to toward some of their destabilizing activity. You 0:06:42.440 --> 0:06:46.320 talked about the uranium enrichment when the previous administration pulled 0:06:46.320 --> 0:06:49.279 out of the Iran deal. It vastly accelerated the degree 0:06:49.320 --> 0:06:52.520 to which Iran could start to spin up their centrifuges 0:06:52.560 --> 0:06:53.720 and get closer to some. 0:06:53.640 --> 0:06:54.960 Sort of breakout capability. 0:06:55.120 --> 0:06:58.440 The President obviously tried, We tried, but Iran was not 0:06:58.600 --> 0:07:01.480 negotiating any good faith to get back into that Iran deal. 0:07:01.680 --> 0:07:04.640 But he also made clear that we will not allow 0:07:04.640 --> 0:07:06.720 Iran to achieve a nuclear weapons capability. 0:07:06.760 --> 0:07:09.200 We prefer to do that through diplomacy, but if not, 0:07:09.240 --> 0:07:10.520 we've got other options available. 0:07:10.680 --> 0:07:14.960 What's diplomacy, Bob Malley, the Iranian envoy is still under investigation. 0:07:15.120 --> 0:07:17.200 Who is leading these diplomatic efforts. 0:07:17.560 --> 0:07:19.760 As I said, the diplomatic efforts to get them back 0:07:19.760 --> 0:07:22.320 into the Iran deal are no longer being pursued because 0:07:22.320 --> 0:07:25.880 Iran wasn't negotiating in good faith, which is why we're 0:07:25.920 --> 0:07:28.080 going to make sure we have other options available to 0:07:28.160 --> 0:07:30.800 us to prevent them from achieving a nuclear weapons capability. 0:07:30.920 --> 0:07:33.560 Admiral one question, and Amory did touch on this, this 0:07:33.680 --> 0:07:37.840 question around what the response could be to Iran seizing 0:07:37.840 --> 0:07:40.160 a vessel in the Straits of Hormu. Is the idea 0:07:40.360 --> 0:07:43.480 of freedom of the seas. What's the US's response to that, 0:07:43.600 --> 0:07:45.560 given the fact that a lot of companies have already 0:07:45.560 --> 0:07:48.280 started to rejigger some of their trade routes and bacon 0:07:48.480 --> 0:07:49.640 extra costs as a result. 0:07:50.920 --> 0:07:52.920 Yeah, I had a little trouble hearing you over the 0:07:53.000 --> 0:07:54.600 lawnmower there, but I think I got the gist of 0:07:54.600 --> 0:07:57.840 the question. We certainly condemned this most recent maritime attack. 0:07:57.920 --> 0:08:01.360 This is a tack that the Iranians have used. 0:08:01.240 --> 0:08:01.840 In the past. 0:08:02.640 --> 0:08:06.840 We have, when able, been able to interdict, been able 0:08:06.920 --> 0:08:11.360 to try to afford other such maritime attacks, not all 0:08:11.400 --> 0:08:13.960 of them, of course, And we are also making a 0:08:14.000 --> 0:08:17.000 concerted effort over time, and we have been somewhat successful 0:08:17.560 --> 0:08:21.400 in intercepting goods that the Iranians have been trying to 0:08:21.400 --> 0:08:24.440 ship by sea to some of their proxies in Iraq 0:08:24.480 --> 0:08:26.480 and Syria and certainly the Huthis Iverner. 0:08:26.480 --> 0:08:28.000 One thing that a lot of companies are saying, a 0:08:28.040 --> 0:08:31.160 lot of executives is that they do have to make 0:08:31.240 --> 0:08:34.640 contingency plans because they aren't sure that there can be 0:08:34.720 --> 0:08:37.360 such safety and you've seen insurance costs go up. Is 0:08:37.360 --> 0:08:41.720 it appropriate for the US for Israel to more directly 0:08:41.760 --> 0:08:45.240 respond to Iran at some point, just not now. 0:08:46.240 --> 0:08:49.400 Again, I can't speculate about future operations one way or another, 0:08:49.520 --> 0:08:51.800 or future decisions that we might have to make. The 0:08:51.840 --> 0:08:54.960 President has been clear we're going to hold Iran accountable 0:08:54.960 --> 0:08:58.400 for their destabilizing activities. He's also been clear we don't 0:08:58.400 --> 0:09:00.880 want a war with Iran. We're not looking for another 0:09:01.080 --> 0:09:02.600 war in the Middle East or is to see the 0:09:02.640 --> 0:09:06.720 conflict that's currently underway in Gaza broadened or deepened across 0:09:06.800 --> 0:09:09.040 the region. Now we'll have to see how things unfold 0:09:09.120 --> 0:09:12.640 over the next coming days here, but we don't want 0:09:12.679 --> 0:09:15.040 to war with Iran, and everything the President has been 0:09:15.040 --> 0:09:17.480 doing since the seventh of October has been designed to 0:09:17.600 --> 0:09:19.640 try to bring the tensions down and to make sure 0:09:19.679 --> 0:09:22.280 that the United States is best posture to defend our 0:09:22.320 --> 0:09:23.280 interests there in the region. 0:09:23.679 --> 0:09:25.079 You and a fine now with a low mama, So 0:09:25.520 --> 0:09:28.360 we're gonna let you go. National Security accounts, SOL Communications 0:09:28.360 --> 0:09:31.040 advice that John Kirby, John, thank you, Sir Admiral Kirby. 0:09:31.160 --> 0:09:43.520 We appreciate your time with this amount of table together 0:09:43.520 --> 0:09:46.719 with Shanati KPWC. TELLMA show tell me you've had a 0:09:46.760 --> 0:09:48.360 few minutes to go over this one. What's your reaction 0:09:48.440 --> 0:09:48.640 to this? 0:09:49.160 --> 0:09:52.640 So Our feeling is it's two things. One is it's 0:09:52.640 --> 0:09:55.320 what's happening in the industry. So there is a rebound 0:09:55.360 --> 0:09:58.880 that's happening in investment banking. Investment banking was on a 0:09:58.920 --> 0:10:02.679 real downturn over the last prior twelve months, and what 0:10:03.679 --> 0:10:06.240 you see at Goldman is not even full power. I mean, 0:10:06.280 --> 0:10:09.920 we still think the industry, broadly speaking, is probably operating 0:10:09.960 --> 0:10:12.840 around seventy percent of what we would think is typical. 0:10:13.160 --> 0:10:15.600 So as we put the COVID period behind us, get 0:10:15.640 --> 0:10:18.679 to a more traditional moment, as IPOs pick up, m 0:10:18.720 --> 0:10:22.320 and A comes back, and especially if we get lower rates, 0:10:23.120 --> 0:10:25.160 we think the business has even further to go. 0:10:25.320 --> 0:10:26.079 So that's number one. 0:10:26.160 --> 0:10:28.440 Number two is I think it's a big moment in 0:10:28.480 --> 0:10:32.720 the Goldman reboot. They also sold green Sky in the quarter, 0:10:33.280 --> 0:10:36.480 which is putting some of their consumer efforts behind them 0:10:36.679 --> 0:10:38.600 and they're going to focus really on what's been the 0:10:38.640 --> 0:10:41.559 core of the company over the long term. We've been 0:10:41.600 --> 0:10:44.400 really positive on the shares. My senses will continue to 0:10:44.440 --> 0:10:48.440 recommend it even after today's move, and as the company 0:10:48.480 --> 0:10:51.959 earns around sixteen on tangible common equity in this quarter, 0:10:52.160 --> 0:10:54.679 it's a signal that they're starting from a very healthy 0:10:54.840 --> 0:10:56.800 point even this reboot. 0:10:56.880 --> 0:10:59.160 Something that Sheanali said that really stands out because it 0:10:59.200 --> 0:11:02.080 seems like of banks are implying the same thing in 0:11:02.080 --> 0:11:04.680 their numbers, use a balance sheet. We're hearing that again 0:11:04.720 --> 0:11:07.920 and again, using their balance sheets more aggressively. Is this 0:11:07.920 --> 0:11:10.160 the new model kind of going back to the old 0:11:10.200 --> 0:11:12.240 one as they try to compete with private credit and 0:11:12.280 --> 0:11:15.200 private asset managers, they got to use their balance sheets 0:11:15.240 --> 0:11:17.120 and they find ways to do it even with all. 0:11:17.040 --> 0:11:19.640 The regulatory Well, I think that that's going to be 0:11:19.720 --> 0:11:21.600 key because we've just gone through a moment where the 0:11:21.600 --> 0:11:24.240 banks in general of lost market shared to non banks, 0:11:24.559 --> 0:11:27.840 and I personally believe in a five percent yield world 0:11:27.880 --> 0:11:30.400 with a flat or inverted yield curve, it's going to 0:11:30.400 --> 0:11:32.720 be harder to get financing than when money was free 0:11:32.800 --> 0:11:36.520 during COVID. Okay, So having access to a balance sheet 0:11:36.520 --> 0:11:40.640 that's reliable is going to become more important to banks clients, 0:11:40.880 --> 0:11:43.160 and over time it could be part of the moment 0:11:43.360 --> 0:11:46.920 that helps these banks regain some share from that moment 0:11:47.000 --> 0:11:47.400 in time. 0:11:47.640 --> 0:11:50.040 Forgive me, there were years when a lot of these 0:11:50.080 --> 0:11:52.280 bank executives were saying that they can't do this, that 0:11:52.280 --> 0:11:55.560 they are hamstrung, their hands are tied because of financial regulations. 0:11:55.920 --> 0:11:58.040 What changed, well, I believe me. 0:11:58.559 --> 0:12:00.640 I don't think any bank's going to stay outside of 0:12:00.640 --> 0:12:04.000 the financial regulations. I think it's just core blocking and tackling, 0:12:04.360 --> 0:12:07.760 which is having reliable acts. I think what's changed is 0:12:07.800 --> 0:12:11.720 the other markets aren't as easy. So zero interest rates 0:12:11.760 --> 0:12:14.200 meant that it was very easy for non banks to 0:12:14.200 --> 0:12:16.440 be able to raise financing to be able to enter 0:12:16.480 --> 0:12:18.960 the market. It's going to be harder for non banks 0:12:19.200 --> 0:12:22.280 to raise funding to serve bank customers. So I think 0:12:22.360 --> 0:12:24.680 that's what's changed, not the banks, but I think it's 0:12:24.679 --> 0:12:26.839 the other items and other conditions. 0:12:26.960 --> 0:12:28.200 You said you like Goldman's action. 0:12:28.240 --> 0:12:30.880 Olie was talking about how Ted Pick his whole business 0:12:30.960 --> 0:12:34.600 has been really the trading and potentially we'll read through 0:12:34.640 --> 0:12:35.480 Morgan Standing tomorrow. 0:12:35.480 --> 0:12:36.440 What other banks do you like? 0:12:36.920 --> 0:12:40.000 Well, we like Truest. It's one of our favorite ideas. 0:12:40.000 --> 0:12:42.240 It's one of the biggest banks in the nation. They 0:12:42.280 --> 0:12:46.160 sold their insurance broker for a whopping price recently they're 0:12:46.160 --> 0:12:47.920 going to trade in. What you don't see now is 0:12:47.960 --> 0:12:50.960 that they haven't put the gain into their financial statements yet, 0:12:51.080 --> 0:12:54.280 so the stock's really trading around one fifteen intangible book, 0:12:54.440 --> 0:12:56.920 which is a very low valuation for one of the 0:12:56.960 --> 0:12:59.319 best banks in the nation. It's got a five point 0:12:59.360 --> 0:13:02.360 seven percent yield. The next time that dividend changes, it's 0:13:02.400 --> 0:13:05.320 going up, not down. So our view is at a 0:13:05.320 --> 0:13:08.160 single digit pe ratio for a bank that's got one 0:13:08.200 --> 0:13:11.320 of the best franchises in the country. That is I 0:13:11.320 --> 0:13:14.720 would say our largest bank idea at the moment, and 0:13:14.760 --> 0:13:16.840 we're pretty bullish on that one. And then you know 0:13:16.840 --> 0:13:19.160 they're also doing a restructuring. They got a little bit 0:13:19.200 --> 0:13:21.760 off sides after their merger, and we think the new 0:13:21.760 --> 0:13:24.240 management team is very focused on fixing things. 0:13:24.400 --> 0:13:26.240 When you look at the loan market at the moment, 0:13:26.280 --> 0:13:27.839 what do you make from it? Because know your notes 0:13:27.880 --> 0:13:29.800 you talk about the seasonality is low. 0:13:30.160 --> 0:13:33.720 Slow, it's slow what we're seeing, and all the results 0:13:33.720 --> 0:13:35.720 that have come out loans have actually been a little 0:13:35.760 --> 0:13:39.000 bit lower than we expected. And when I watch, you know, look, 0:13:39.040 --> 0:13:41.880 we've had three now four banks report our firm files 0:13:41.880 --> 0:13:44.000 two hundred and twenty five. We got a long way 0:13:44.040 --> 0:13:46.840 to go. But what do I think. I think delay 0:13:47.280 --> 0:13:50.320 in the pivot. So our bull case on the stocks 0:13:50.520 --> 0:13:54.640 and we're market performed, So the bull case we're pretty balanced. 0:13:54.880 --> 0:13:56.480 But the bull case is that we're going to get 0:13:56.480 --> 0:14:00.360 a pivot and acceleration into earnings going into twenty twenty five. 0:14:00.600 --> 0:14:04.120 To the extent that we get less rate cuts, less growth, 0:14:04.440 --> 0:14:07.040 it probably pushes that back a little bit for when 0:14:07.040 --> 0:14:08.800 we see an acceleration in earnings. 0:14:09.240 --> 0:14:11.400 How aligned to you with the gloom of Jamie Diamond. 0:14:11.440 --> 0:14:13.160 I've a JP Milkan What did you make of the 0:14:13.160 --> 0:14:15.679 caution from him on Friday? Typically we're all used to 0:14:15.720 --> 0:14:17.920 sort of beating race, beating race from JP Milkan. Then 0:14:17.960 --> 0:14:19.880 on Friday things kind of changed. What do you make 0:14:19.880 --> 0:14:20.040 of that? 0:14:21.000 --> 0:14:25.080 There are still big macro risks in the marketplace. And 0:14:25.400 --> 0:14:27.960 I'll tell you when I talked to bank management teams, 0:14:28.280 --> 0:14:30.920 it's almost like I feel like I'm having a credit 0:14:30.960 --> 0:14:34.400 analyst discussion more than an in equity analysts discussion. They're 0:14:34.560 --> 0:14:38.000 very focused on their own balance sheet. I think strength 0:14:38.000 --> 0:14:41.480 and stability seems to be a bigger presence in the 0:14:41.520 --> 0:14:45.080 strategic boardroom of these banks. They are building these banks 0:14:45.080 --> 0:14:47.080 to make sure they can withstand any challenge. 0:14:47.080 --> 0:14:49.120 And Tom, if you look at the way Goldman and 0:14:49.160 --> 0:14:51.920 Morgan Stanley have been trading, they've been bears. Morgan Stanley's 0:14:51.960 --> 0:14:54.200 down more than seven point five percent over the last 0:14:54.240 --> 0:14:54.880 twelve months. 0:14:55.120 --> 0:14:56.120 Does it deserve that? 0:14:56.680 --> 0:15:00.240 Are these kinds of investment banking and trading businesses is 0:15:00.480 --> 0:15:02.560 just something people don't want to pick up on in 0:15:02.600 --> 0:15:03.280 this environment. 0:15:03.640 --> 0:15:06.320 I think for Morgan Stanley it's just a preference for 0:15:06.400 --> 0:15:08.680 Goldman Sachs. For us, we had been really bullish on 0:15:08.720 --> 0:15:09.440 Morgan Stanley. 0:15:09.480 --> 0:15:10.240 We pulled back. 0:15:10.480 --> 0:15:12.880 It's just the dynamics of what's happening in their own 0:15:12.920 --> 0:15:15.840 earnings at the moment. We just think there's more upside 0:15:15.840 --> 0:15:18.960 because there's more delta coming at Goldman. They can do 0:15:19.000 --> 0:15:21.520 a little bit more self improvement, and so we like 0:15:21.600 --> 0:15:25.000 it more. But so we're a market perform on Morgan Stanley, 0:15:25.000 --> 0:15:27.080 but think it's a fine company. We just think the 0:15:27.200 --> 0:15:30.080 dynamics don't have as much delta to them. 0:15:30.960 --> 0:15:33.600 Chanie pass like that alongside tell mi shall I kyped up? 0:15:33.640 --> 0:15:34.880 You just like to read the Number's just the ren 0:15:34.880 --> 0:15:38.080 things sumptionalty quickly, bait bait bait. How would you frame 0:15:38.080 --> 0:15:39.880 it any other way? The gold sacks this smalling. 0:15:39.920 --> 0:15:40.840 There's no other way to frame it. 0:15:40.880 --> 0:15:42.920 Remember they've only been training at one point two times 0:15:42.920 --> 0:15:46.000 book value. Heading in today Morgan Stanley's at one point five. 0:15:46.200 --> 0:15:49.400 It sets the bar super high for tomorrow. And remember 0:15:49.440 --> 0:15:51.760 there's a big cloud over Morgan Stanley with a lot 0:15:51.800 --> 0:15:54.120 of questions about the investigations that they're facing. They haven't 0:15:54.120 --> 0:15:56.720 said anything yet, and so the earnings are one thing, 0:15:56.800 --> 0:15:59.120 but then the story is also going to be equally 0:15:59.120 --> 0:16:00.040 important heading into our. 0:16:00.240 --> 0:16:01.560 Let's got to score U up on the board again 0:16:01.560 --> 0:16:03.560 and just look at MOK and Standley and gets winning Sat. 0:16:03.600 --> 0:16:05.760 Tomorrow morning in the pre market, it is positive off 0:16:05.800 --> 0:16:07.680 the back of what you're saying on Goldman sacks. Goldman 0:16:07.760 --> 0:16:10.280 up by three point four percent, just beats across the board, 0:16:10.280 --> 0:16:11.960 and we totally so briefly about the night, sure of 0:16:12.000 --> 0:16:14.360 the upside surprise, let's just sit on fixed sounds and 0:16:14.360 --> 0:16:16.960 trading revenue just for a bait longer. Full point three 0:16:17.000 --> 0:16:19.880 to two billion the estimate three point sixty four. That 0:16:20.000 --> 0:16:21.000 is a solid. 0:16:20.680 --> 0:16:23.000 Beat, and it really raises a question, Okay, they're using 0:16:23.040 --> 0:16:25.040 their balance sheet more so that means they're making directional 0:16:25.080 --> 0:16:28.200 bets or taking things down in a market that might 0:16:28.360 --> 0:16:31.000 look like it's liquid but may not be as liquid. 0:16:31.480 --> 0:16:34.560 And then it also raises this question about just how 0:16:34.600 --> 0:16:37.120 much they're taking share from some of these other companies 0:16:37.240 --> 0:16:39.840 just in terms of private asset managers, which is something 0:16:39.880 --> 0:16:40.920 a lot of people have talked about. 0:16:41.040 --> 0:16:43.720 But also to remember, we don't have Credit Sweee anymore. 0:16:43.960 --> 0:16:47.960 So a year ago, Credit Suite disappeared overnight in the ubs. 0:16:48.240 --> 0:16:51.600 So when you look at the statistics, I believe that 0:16:51.720 --> 0:16:54.920 market share was pretty much captured by many of the 0:16:54.960 --> 0:16:57.880 biggest other banks. So I think that's also on a 0:16:57.960 --> 0:17:00.000 year over year basis been somewhat of a. 0:17:00.160 --> 0:17:02.520 So when Aschinali, is the pinketting bigger or did they 0:17:02.600 --> 0:17:04.480 just take someone else's slice? So you said that slice 0:17:04.520 --> 0:17:05.840 belong to Credit Suite. 0:17:06.520 --> 0:17:09.200 I would say amongst probably others, I would say they're 0:17:09.200 --> 0:17:11.479 getting a bigger piece of the slice. Because while I 0:17:11.520 --> 0:17:13.879 do think and I think Morgan Stanley will benefit tomorrow 0:17:13.880 --> 0:17:17.560 from the market just being better. And believe me, is 0:17:17.560 --> 0:17:19.920 someone who operates an investment bank, I pay attention to 0:17:20.000 --> 0:17:22.960 league tables and market share, believe me. So the biggest 0:17:23.080 --> 0:17:26.720 firms have probably picked up the most share, and it's 0:17:26.760 --> 0:17:29.919 a few firms who have done that, and Morgan Stanley 0:17:29.960 --> 0:17:31.480 and Goldman would be in that bucket. 0:17:31.600 --> 0:17:34.760 What's good for Goldman Sachs isn't necessarily good for Science 0:17:34.800 --> 0:17:38.760 Bank for some of the others that are smaller regional banks. 0:17:39.040 --> 0:17:42.119 How much is the gain of big banks the loss 0:17:42.200 --> 0:17:42.919 of regionals. 0:17:43.440 --> 0:17:46.679 Well, well, they tend to do different things, so the 0:17:46.680 --> 0:17:49.520 net interesting income world that they all live in is 0:17:49.600 --> 0:17:53.159 somewhat similar. It's the investment banking piece that really is 0:17:53.200 --> 0:17:55.640 the big delta that we've been talking about. So as 0:17:55.640 --> 0:17:58.919 we get away from banks that report that don't have that, 0:17:59.240 --> 0:18:03.280 they're going to be war attuned to what's happening in 0:18:03.320 --> 0:18:06.359 the interest rate environment. The good news there though, Li 0:18:06.560 --> 0:18:09.480 says that six months ago we would have been talking 0:18:09.480 --> 0:18:12.639 about the quantity of deposits. It's all about deposits, the 0:18:12.720 --> 0:18:16.320 quantity of deposits. The nice thing is that pressure has eased, 0:18:16.560 --> 0:18:18.160 and you're already seeing it in the numbers. 0:18:18.320 --> 0:18:18.480 Now. 0:18:18.520 --> 0:18:21.479 It's the cost of those deposits. And we're waiting for 0:18:21.520 --> 0:18:23.680 the Fed to cut rates a little bit to take 0:18:23.760 --> 0:18:26.040 some of the heat off, because you know what, US 0:18:26.160 --> 0:18:30.159 treasuries are really competitive for bank deposits. We need the 0:18:30.240 --> 0:18:32.800 US treasury rate to back off a little bit for 0:18:32.880 --> 0:18:35.159 the banking industry to do a little better. And it 0:18:35.240 --> 0:18:37.960 is actually all about deposits more so than loans. 0:18:38.000 --> 0:18:39.720 When you say we're white saying you made the banks, 0:18:39.760 --> 0:18:41.520 because for the rest of us with money on deposit, 0:18:41.640 --> 0:18:41.920 we're not. 0:18:42.280 --> 0:18:45.640 We're to poss on hid by bills. Final time. 0:18:45.680 --> 0:18:46.320 You know, I make it. 0:18:46.280 --> 0:18:47.800 Happen on wine. It's easy to do. 0:18:49.200 --> 0:18:50.280 Tema shot, Thank you. 0:18:50.320 --> 0:19:02.760 So consumer spending has been strong. I think it is 0:19:02.840 --> 0:19:06.520 driven by strong fundamentals. Job growth has been solid, We've 0:19:06.560 --> 0:19:09.760 seen real wage gains. We're in a pretty strong economy 0:19:09.840 --> 0:19:11.720 with good growth, So yes. 0:19:11.880 --> 0:19:13.000 It's part of that story. 0:19:13.040 --> 0:19:17.120 But you know, I think what we're realizing is we're 0:19:17.160 --> 0:19:20.920