WEBVTT - Surveillance: Global Growth At Center Stage In Davos Day Two 0:00:09.880 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:33.360 Bloomberg dot Com, and of course, on the Bloomberg Now. 0:00:33.360 --> 0:00:36.600 The International Monetary Fund has caught its global growth forecast, 0:00:36.880 --> 0:00:40.640 warning that the expansion scene in recent years is losing momentum. 0:00:40.640 --> 0:00:43.440 That contributing to the slowdown, The organization site did increased 0:00:43.440 --> 0:00:47.279 trade tensions, political flashpoints, including a new deal breaks it well. 0:00:47.320 --> 0:00:50.680 The i m F Managing director Kissing joins us. Now, 0:00:50.960 --> 0:00:53.000 we've been talking about this interview all day. Tom and 0:00:53.040 --> 0:00:54.840 I have been like fighting over what we ask you, 0:00:54.960 --> 0:00:59.160 because you're really the high even maybe we push it 0:00:59.200 --> 0:01:00.560 to an hour and a half. But then, my guard 0:01:00.560 --> 0:01:03.400 when you look at the risks of a recession, if 0:01:03.400 --> 0:01:06.039 there are risks to a recession, where would they stand from? 0:01:06.200 --> 0:01:08.880 Is it China? Is it the US? Is it Brexit 0:01:08.920 --> 0:01:12.959 in Europe? Okay, today our forecast is three point five 0:01:13.360 --> 0:01:15.480 three point six next year. And if you ask me, 0:01:15.520 --> 0:01:18.600 do you see a recession? I said no? Okay, So 0:01:19.680 --> 0:01:22.880 if there was to be a materialization of the risks 0:01:22.920 --> 0:01:25.280 that we see on the horizon. And the point is 0:01:25.319 --> 0:01:27.399 that this horizon is getting a little bit closer to 0:01:27.440 --> 0:01:30.440 what we had back in October. That's the reason why 0:01:30.480 --> 0:01:34.880 we slightly revised our growth forecast. If those risks were 0:01:34.920 --> 0:01:38.920 to materialize, then it's a different story. And you asked 0:01:38.920 --> 0:01:43.399 me which one of the risks I rank higher, I 0:01:43.440 --> 0:01:47.080 would say that the trade tension, if unresolved and if 0:01:47.160 --> 0:01:50.279 associated with the big question mark, would be my number 0:01:50.320 --> 0:01:56.120 one risk. I think Brexit uncertainty and the big question 0:01:56.160 --> 0:01:58.880 mark yet again that we have on how it's going 0:01:58.920 --> 0:02:02.280 to be resolved is the time frame, what is the 0:02:02.360 --> 0:02:06.080 after divorce situation? I would put that as number two, 0:02:06.160 --> 0:02:11.639 but with probably um major impact on the UK, impact 0:02:11.680 --> 0:02:15.280 on the European Union, systemic risk risks if the financial 0:02:15.280 --> 0:02:18.600 sector is not addressed um and then I would have, 0:02:18.760 --> 0:02:21.520 as a sort of subset of that first risk, in 0:02:21.560 --> 0:02:25.960 other words, trade tensions continuing to increase, I would have 0:02:26.760 --> 0:02:30.640 an accelerated moderation of growth in China. If you clear 0:02:30.720 --> 0:02:33.040 those starts where that's French schooling for you, m my 0:02:33.080 --> 0:02:34.840 den la guard. When you look at China, how can 0:02:34.880 --> 0:02:37.000 we be so sure that it's not trade. I mean 0:02:37.520 --> 0:02:39.480 it's not you know that is its trade and not 0:02:39.880 --> 0:02:43.240 a more significant structural slowdown that would be much harder 0:02:43.240 --> 0:02:46.000 to deal with, you know, I would I would call 0:02:46.040 --> 0:02:50.000 your attention to one fact. Although we have downgraded our forecast, 0:02:50.400 --> 0:02:53.680 the two countries that we have not downgraded are the 0:02:53.800 --> 0:02:58.760 US and China. So that was partly anticipated number one, 0:02:59.080 --> 0:03:04.640 and it was part lee remedied number two remedied in 0:03:04.680 --> 0:03:08.480 the US because of the tax corporate the corporate tax, 0:03:08.639 --> 0:03:10.920 a major reform that has taken place and that has 0:03:11.000 --> 0:03:14.119 helped fuel additional growth, new jobs, and all the rest 0:03:14.120 --> 0:03:17.880 of it anticipated by China with similar s measures that 0:03:17.919 --> 0:03:21.440 were taken taken in the last few months to compensate 0:03:21.560 --> 0:03:26.280 both the trade threat impact as well as the credit shrinking, 0:03:26.320 --> 0:03:29.440 which was welcome, necessary and hopefully will continue a bit. 0:03:30.600 --> 0:03:32.280 I want to go back to your public service in 0:03:32.320 --> 0:03:35.920 France and to Steve Bannon on the early Trump years 0:03:36.400 --> 0:03:40.240 and his homage to French fascism of nineteen o five nineteen. 0:03:40.720 --> 0:03:42.640 Of course, all of that going over to Hitler and 0:03:42.680 --> 0:03:46.680 Mussolini and another far more troubled time in your blue book, 0:03:46.720 --> 0:03:49.960 your green book, your fistcal book as well there's no 0:03:50.040 --> 0:03:53.240 discussion of the new populism and his rise of the 0:03:53.320 --> 0:03:57.520 far right and elements or shades of fascism. What can 0:03:57.640 --> 0:04:01.840 your institution do to push again this new populism and 0:04:01.920 --> 0:04:05.880 someone is just a new ugly populism. I think what 0:04:06.000 --> 0:04:08.520 we have done and we need to continue to do 0:04:08.640 --> 0:04:12.320 and probably be more vocal about it, is the study 0:04:12.480 --> 0:04:20.200 of inequalities, excessive inequalities, impacts of inequalities on growth. And 0:04:20.240 --> 0:04:23.600 we started that, you know, I began talking about it 0:04:23.640 --> 0:04:27.279 four years ago. I said, watch out inequalities of doing 0:04:28.160 --> 0:04:31.000 claim speech in New York and you went right after Washington. 0:04:31.600 --> 0:04:34.719 And we need to, you know, be vocal about that, 0:04:34.760 --> 0:04:37.640 and we need, I think, to articulate the measures that 0:04:37.680 --> 0:04:43.320 can be taken in order to resist this acceleration of inequalities, 0:04:43.560 --> 0:04:45.880 both in terms of wealth and in terms of income. 0:04:45.920 --> 0:04:49.000 And they are good sound tags and fiscal measures that 0:04:49.040 --> 0:04:51.719 can be taken in order to address those issues. Added 0:04:51.760 --> 0:04:54.800 to that, Tom, I think it's not just a fiscal 0:04:55.160 --> 0:04:59.640 financial coming, and I think it has lots of other 0:05:00.440 --> 0:05:06.920 roots ramifications, amongst which I would put cultural disenfranchisement. I 0:05:06.960 --> 0:05:10.720 would put the threat of technologies and how it's going 0:05:10.760 --> 0:05:14.840 to take my job, displace me somewhere, and the malaise 0:05:15.160 --> 0:05:19.200 that people feel. As stated, so many people fear that 0:05:19.240 --> 0:05:21.880 we're in right now. Then the critical question, and a 0:05:21.960 --> 0:05:25.600 delicate question for you in your position, is the experience 0:05:25.640 --> 0:05:30.000 of America, the Trump experience and other populous movements. Can 0:05:30.080 --> 0:05:33.159 they be at one off where we go back easily 0:05:33.279 --> 0:05:36.440 to some kind of normalcy or do a leads to 0:05:36.560 --> 0:05:39.960 leaders have to do something immediate so we get back 0:05:40.040 --> 0:05:43.480 to normalcy? Is it a one off? We believe that 0:05:43.600 --> 0:05:47.640 policies have to be taken to address the root causes 0:05:48.400 --> 0:05:52.960 of what has precipitated those movements. What I mean by 0:05:53.000 --> 0:06:00.520 that is address excessive inequalities, address the issues of I 0:06:00.560 --> 0:06:03.400 feel out of my job. The machines are taking over. 0:06:03.760 --> 0:06:07.640 Artificial intelligence much talked about here in Douvles, is going 0:06:07.720 --> 0:06:12.320 to um emasculate my brain and my capacity to deal 0:06:12.360 --> 0:06:15.360 with my destiny. All these issues have to be addressed 0:06:15.360 --> 0:06:18.120 as well. They're not all of an economic nature, but 0:06:18.200 --> 0:06:21.280 they have to be addressed because otherwise it's very easy 0:06:21.400 --> 0:06:26.240 to instill fear, to raise ants, and then anything can go. 0:06:26.800 --> 0:06:28.520 And I'd like to ask you actually how you deal 0:06:28.520 --> 0:06:30.600 with that though? Is a tax redistribution. How do you 0:06:30.600 --> 0:06:33.599 make it more more equal? Is there one country that 0:06:33.640 --> 0:06:38.200 does it better than others that everyone else could learn from? Well, 0:06:38.600 --> 0:06:40.560 there are many countries, but each country is going to 0:06:40.600 --> 0:06:43.560 have to deal with it specifically because some countries are 0:06:43.680 --> 0:06:48.760 prone to um creating opportunities raising the level of education 0:06:48.920 --> 0:06:52.440 and health for people to actually aspire to a better future, 0:06:52.680 --> 0:06:56.200 better jobs, better training. Other countries deal with it with 0:06:56.880 --> 0:07:00.560 a different tax system. What we're seeing on you know 0:07:00.640 --> 0:07:04.840 more and more is actually you know, less income going 0:07:04.920 --> 0:07:08.520 to labor and more income going to capital. At the 0:07:08.560 --> 0:07:13.160 same time, we see less taxation of capital income than 0:07:13.280 --> 0:07:17.400 off labor income. So you have a confluence of those 0:07:17.440 --> 0:07:20.760 factors which need to be looked at because if we 0:07:20.800 --> 0:07:24.400 want to address some of them big frustrations around there 0:07:24.960 --> 0:07:28.160 that that is part of the of the remedies. Yes, again, 0:07:28.200 --> 0:07:30.000 they also want to ask you about Brexit. Do we 0:07:30.080 --> 0:07:34.000 understand the ramifications of a possible no deal Brexit? Is 0:07:34.000 --> 0:07:36.640 it a systemic issues it is? How concerning is it 0:07:36.720 --> 0:07:42.200 for for the UK but also the Europe. What we 0:07:42.280 --> 0:07:48.400 know is that whatever the outcome, whether it's a no deal, 0:07:48.840 --> 0:07:53.920 whether it's a Alan Norway, whether it's a custom unions 0:07:54.000 --> 0:08:00.600 with appropriate adjustment for the Irish border, whether it will 0:08:00.680 --> 0:08:04.720 not be as good as what it is now. In 0:08:04.720 --> 0:08:07.440 other words, there will be additional frictions, there will be 0:08:07.480 --> 0:08:12.160 additional bureaucracy. Is there will be more um slow lane 0:08:12.760 --> 0:08:16.240 for the traffic coming from Europe to the UK and 0:08:16.360 --> 0:08:19.760 vice versa. So none of it will be better, but 0:08:20.200 --> 0:08:22.480 some of the solutions will will be a lot worse. 0:08:22.760 --> 0:08:25.560 And I think the whole business community here if you 0:08:25.600 --> 0:08:28.560 talk to them and us from our analytical work, we 0:08:28.640 --> 0:08:34.800 all agree that a no deal is you know, having 0:08:35.480 --> 0:08:38.920 very negative effect. We are trying to model and for 0:08:39.000 --> 0:08:44.160 what it's worth, we're looking at, you know, eight less 0:08:44.280 --> 0:08:47.520 g d P. In the medium to long term for 0:08:47.600 --> 0:08:50.880 the UK economy, it will shrink. That's what we see. 0:08:52.200 --> 0:08:54.040 And that's only at the macro level. If you look 0:08:54.080 --> 0:08:58.040 at the micro level. You talk to the automobile manufacturers, 0:08:58.040 --> 0:09:01.760 you talk to the airline industry, you talk to the 0:09:01.760 --> 0:09:05.800 pharmaceutical industries, you talk to the food retailers of the UK. 0:09:05.920 --> 0:09:09.880 They will all tell you it's it's it's terrible. We 0:09:10.040 --> 0:09:13.560 do not know how to deal with it. So it's 0:09:13.640 --> 0:09:17.240 it's clearly of systemic importance for the UK and it's 0:09:17.360 --> 0:09:21.920 also having consequences for the EU systemic or not. That 0:09:21.960 --> 0:09:25.480 will depend on, you know, how in particular the financial 0:09:25.520 --> 0:09:30.280 sector and its activities are dealt with, how much you 0:09:30.360 --> 0:09:34.200 know reconciliation there will be between the two systems, who 0:09:34.200 --> 0:09:36.320 would be allowed to do what and what the licensing 0:09:36.320 --> 0:09:38.920 system will be. I want to bring it back to 0:09:38.960 --> 0:09:42.360 the idea of we've all got to get back together. 0:09:42.480 --> 0:09:44.319 It's a wonderful thing to talk about. It's a lot 0:09:44.360 --> 0:09:47.760 harder to do. You are the voice of a transatlantic 0:09:47.840 --> 0:09:49.960 world of follow on too, when that seemed to be 0:09:50.000 --> 0:09:53.560 an easier process. The President flew to Paris World War 0:09:53.600 --> 0:09:56.560 One remembrances and couldn't get in a car to go 0:09:56.600 --> 0:10:00.920 out and see where many many Marines died bravely in 0:10:00.960 --> 0:10:04.479 World War One. How do we get back the transatlantic 0:10:04.720 --> 0:10:10.280 conversation that is so shattered right now? I hope we 0:10:10.320 --> 0:10:15.080 can get back that transatlantic conversation and dialogue and joint 0:10:15.080 --> 0:10:18.320 approach to some of the critical to take a work. 0:10:18.400 --> 0:10:20.600 Can we do it in a peaceful manner? I very 0:10:20.640 --> 0:10:22.680 much hope that we learned from history and that what 0:10:22.760 --> 0:10:26.760 has happened in the past we'll actually teach us that 0:10:27.000 --> 0:10:31.560 together collectively, cooperatively, not all of us being exactly on 0:10:31.600 --> 0:10:34.640 the same page, can actually address those issues. It was 0:10:34.720 --> 0:10:37.640 Churchill who said, better chat chat than world war, and 0:10:37.679 --> 0:10:41.280 that's what needs to happen. We are even more so today. 0:10:41.440 --> 0:10:46.040 We are facing the same issues ranging from pandemics to terrorism, 0:10:46.040 --> 0:10:51.680 from cybersecurity to a financial market stability. We have to 0:10:51.720 --> 0:10:55.800 address that together. One final question others talk people, do 0:10:56.240 --> 0:10:59.160 you did you hired a wonderful new director of economic 0:10:59.240 --> 0:11:02.720 research to your team. What is going to be the 0:11:02.720 --> 0:11:05.640 new spirit of the I m of for going forward 0:11:05.960 --> 0:11:11.880 in your economic research with Geta UM. I think Geta 0:11:12.000 --> 0:11:16.800 will bring her her energy, her intellect, her youth, her 0:11:16.840 --> 0:11:20.839 determination to look at all issues, including the processes of 0:11:20.880 --> 0:11:25.640 putting things together, process putting things together, some of the 0:11:25.679 --> 0:11:29.760 traditional institutional views that we've had for a long time. 0:11:30.000 --> 0:11:31.520 And I don't think she's going to look at it 0:11:31.640 --> 0:11:35.600 with an ideological background at all. She is a researcher, 0:11:36.000 --> 0:11:41.479 She is a very honest person. She will look at data, impact, 0:11:42.280 --> 0:11:45.080 collateral damage and so on and so forth. And and 0:11:45.120 --> 0:11:47.520 I very much welcomed that, but I thanks so much 0:11:47.640 --> 0:11:50.600 for joining us. That was the IMF Managing Director, Christina 0:11:50.679 --> 0:12:07.800 gad Brian moynahan joining me the Bank of America. See 0:12:07.960 --> 0:12:09.480 when he joins me on Bloomberg TV. They I want 0:12:09.480 --> 0:12:11.720 to take the opportunity to welcome in our listeners on 0:12:11.760 --> 0:12:14.319 Bloomberg Radio as well data with the World Economic Forum 0:12:14.480 --> 0:12:16.720 in Davil, Switzerland. Very pleased to say the man at 0:12:16.720 --> 0:12:18.600 the top of Bank of America, It's gonna stick with 0:12:18.600 --> 0:12:19.920 me for a little while as well. I want to 0:12:19.960 --> 0:12:23.000 talk about your business and the way investors perceive your 0:12:23.000 --> 0:12:25.040 business to be working. Right now, a lot of people 0:12:25.080 --> 0:12:27.199 look at the yield curve and say that this is 0:12:27.240 --> 0:12:30.560 going to damage bank profitability. What's interesting for me is 0:12:30.600 --> 0:12:33.200 that then an interest mountain at Bank for America's continue 0:12:33.240 --> 0:12:35.400 to go up at a time when the yield curve 0:12:35.600 --> 0:12:40.040 has continued to narrow. Are we looking at the wrong thing? Brian? Well, 0:12:40.240 --> 0:12:43.560 people people look at banking and get all involved in 0:12:44.000 --> 0:12:45.840 rate movements at a time time you have to step 0:12:45.880 --> 0:12:47.600 back and think about what it is we we provide 0:12:47.640 --> 0:12:50.040 service to clients. They give us their cash for transactional 0:12:50.080 --> 0:12:53.959 whether companies, whether whether a wealthy individuals and general individuals, 0:12:54.320 --> 0:12:56.400 and we have a trillon for that. And so what 0:12:56.480 --> 0:12:59.360 the business model is that we give great services for 0:12:59.400 --> 0:13:02.400 that care, and therefore people give it to us in 0:13:02.400 --> 0:13:05.560 industry accounts and checking accounts and low interest accounts because 0:13:05.559 --> 0:13:09.120 they're getting six in ATMs, four thousand branches, call centers, 0:13:10.200 --> 0:13:13.719 million UH mobile users, certain five millions. So all those 0:13:13.760 --> 0:13:16.480 services come together. And so I think people the confusion 0:13:16.800 --> 0:13:19.440 about the rate cycles because it was so abnormal. We 0:13:19.480 --> 0:13:21.679 had to we had to recoup a bit of profitability 0:13:21.960 --> 0:13:24.280 because we are subsidizing, and now we're back in a 0:13:24.320 --> 0:13:28.040 more normal, closer normal staff status. So I think that 0:13:28.320 --> 0:13:30.040 you know, our job is to drive more loans, more 0:13:30.040 --> 0:13:32.120 deposits that will produce more net interest market is that 0:13:32.160 --> 0:13:34.480 another web saying that you can keep the deposit bits 0:13:34.480 --> 0:13:37.280 are really low because you offer so many services around 0:13:37.600 --> 0:13:40.400 the checking accounts. It's it is what the accounts are. 0:13:40.480 --> 0:13:43.000 They are zero just checking accounts. What beta can be 0:13:43.040 --> 0:13:46.240 on half Our consumer checking accounts are zero intertaking Beyond that, 0:13:46.320 --> 0:13:48.760 I'm looking across all the accounts of banks. But the 0:13:48.840 --> 0:13:51.640 dominant value banking has driven off the transaction accounts low 0:13:51.840 --> 0:13:53.559 and and so that's what we drive and that's what 0:13:53.600 --> 0:13:55.959 we grow. So are checking balances and consumer group temper 0:13:56.280 --> 0:13:59.120 ten percent excuse me twenty billion dollars year over year 0:13:59.280 --> 0:14:02.760 gross numbers. That's that's a strong growth phrase about in 0:14:02.760 --> 0:14:05.280 in seven cent or something like that. And so that 0:14:05.400 --> 0:14:07.760 drives a lot of value at a little cost, not 0:14:07.840 --> 0:14:11.079 because it's because of service sup providing, And that's that's 0:14:11.120 --> 0:14:12.880 the business one and the corporate size the same thing. 0:14:12.920 --> 0:14:16.080 And your cash management deposits. So we can keep driving 0:14:16.080 --> 0:14:19.360 a profitabilities company in a stable rate and environment. It 0:14:19.520 --> 0:14:21.960 just it will will be driven by volumes, more loans, 0:14:21.960 --> 0:14:24.440 more deposits. If the economy is moving along and going 0:14:24.480 --> 0:14:27.920 at two everything. I think it's look good for you 0:14:28.000 --> 0:14:29.600 guys right now. I was looking at the Bloomberg terminal 0:14:29.680 --> 0:14:31.720 before you and I came up here twenty two biased 0:14:31.760 --> 0:14:35.040 on a single cell on the stock. Overwhelmingly the enthusiasm 0:14:35.080 --> 0:14:37.960 investors have for the financial sector seems to be there 0:14:37.960 --> 0:14:41.240 on the surface. Then I can't reconcile record profitability with 0:14:41.360 --> 0:14:43.680 your stock performance over the last year. Why do you 0:14:43.720 --> 0:14:46.440 think some people are looking at your stock differently to 0:14:46.520 --> 0:14:48.880 the way the bottom line looks at Bank for America. 0:14:48.960 --> 0:14:51.560 The profits look good, the stock performance over the last 0:14:51.640 --> 0:14:54.800 year less. So why largely industry get caught up in 0:14:54.800 --> 0:14:57.280 the question? Can we grow runnings in the context of 0:14:57.320 --> 0:15:01.400 a type economy slowing out, and that that's debate. We 0:15:01.520 --> 0:15:04.360 can looking at fixed triding, thick trading has been tough. 0:15:04.800 --> 0:15:06.800 A lot of people will come on a program with 0:15:06.800 --> 0:15:08.920 me and say, what the bank's need is volatility. They 0:15:08.920 --> 0:15:10.240 did that for a number of years. Then we've got 0:15:10.240 --> 0:15:12.840 the volatility and the banks, many of them. And I'm 0:15:12.920 --> 0:15:14.400 not including you in this, but the word I would 0:15:14.400 --> 0:15:17.560 always hear is bad band folatility. What is band volatility? 0:15:18.800 --> 0:15:22.600 We run If you look at our capital markets business 0:15:22.600 --> 0:15:25.040 several last six seven years, you've had a range of 0:15:25.040 --> 0:15:27.400 revenue from twelve point nine billion to thirteen point six 0:15:27.400 --> 0:15:29.720 billion over like six or seven years. All the years, 0:15:29.760 --> 0:15:32.800 all different environments they called different quarters, come out different ways. 0:15:32.960 --> 0:15:34.880 We run that business in a way that Tom Montag 0:15:35.000 --> 0:15:37.000 and the team and do a great job of taking 0:15:37.000 --> 0:15:39.400 a right risk and just moving and we do in 0:15:39.480 --> 0:15:41.840 support of our customer base, our issuing customer based companies 0:15:41.840 --> 0:15:44.840 issue in debt and our investor customer based customer buying debt. 0:15:45.160 --> 0:15:47.520 And then the equity business fab Gallant team have done 0:15:47.520 --> 0:15:49.360 a good job and that's come up. So yeah, we 0:15:49.360 --> 0:15:52.600 we made five hundred million bucks in capital markets after 0:15:52.680 --> 0:15:55.840 tax in the fourth quarter nearly four billion dollars last year. 0:15:55.840 --> 0:15:58.360 It's a great business. And so yeah, one quarter, actually 0:15:58.360 --> 0:16:00.840 one months. It was a month in December wasn't too pretty, 0:16:01.080 --> 0:16:03.000 but you know, you get back to January, people get 0:16:03.040 --> 0:16:04.880 back to work and things start working through. I remember 0:16:04.880 --> 0:16:06.800 catching up with Andrew ra Chow. He was at UBS 0:16:06.840 --> 0:16:08.080 at the time, a couple of years ago, and it 0:16:08.120 --> 0:16:09.600 was right before we got the first rate hike of 0:16:09.640 --> 0:16:11.960 the Federal Reserve, and he was nervous that a lot 0:16:11.960 --> 0:16:14.160 of his trading floor had never seen a tightening cycle 0:16:14.560 --> 0:16:17.440 from the Fed. They've never experienced a big batter volatility, 0:16:17.480 --> 0:16:19.320 and how would they be able to operate and generate 0:16:19.360 --> 0:16:21.440 returns in that environment. Just that there's an argument to 0:16:21.480 --> 0:16:23.520 make there that maybe some people are struggling with something 0:16:23.560 --> 0:16:25.640 they've just never seen before because of the age, the 0:16:25.640 --> 0:16:29.040 average age on the trading floor and our average ages 0:16:29.040 --> 0:16:32.120 in the trading floor. You know, I don't know exactly 0:16:32.160 --> 0:16:34.440 what it is, but the people in that trading floor, 0:16:34.680 --> 0:16:36.440 the good news is a fair amount and went through 0:16:36.440 --> 0:16:38.400 the crisis. They understand what to do, not to do, 0:16:38.440 --> 0:16:40.080 and what risk to take and not to take. In 0:16:40.080 --> 0:16:43.680 our risk manager practices. That's more important then you and 0:16:43.800 --> 0:16:47.640 understand the rate cycle. So there is a nobody if 0:16:47.680 --> 0:16:50.960 you think of the rate environment changed. You know at 0:16:50.960 --> 0:16:54.280 the time of crisis, it's ten ten plus years. There's 0:16:54.280 --> 0:16:55.960 a lot of people who are any better. The thirty 0:16:55.960 --> 0:16:58.600 five has really probably never seen this kind of environment change. 0:16:58.800 --> 0:17:00.760 But the reality is don't learn it quickly. Well, let's 0:17:00.760 --> 0:17:03.440 talk about risk management. What's your approach the leverage lines 0:17:03.560 --> 0:17:06.040 at the moment, really competitive space, a lot of people 0:17:06.080 --> 0:17:09.600 aggressively chasing mandates. There was a signing Q three that 0:17:09.680 --> 0:17:12.840 you guys were maybe taking less risk, maybe being less aggressive. 0:17:13.119 --> 0:17:15.879 What's your view now? We we've always been consistent. We 0:17:15.920 --> 0:17:17.679 haven't changed our risk one way the other way. So 0:17:17.720 --> 0:17:19.760 we and we have a good, very good business that 0:17:19.880 --> 0:17:23.120 it's one of our bigger, better businesses on the relative scale. Now, 0:17:23.160 --> 0:17:25.679 a lot of that business went to other participants in 0:17:25.760 --> 0:17:29.119 terms of back in the guidance by the occ and stuff, 0:17:29.240 --> 0:17:31.000 but we really pretty much ducked her in any it's 0:17:31.000 --> 0:17:33.320 a moving business. We underwrite for those issuers and send 0:17:33.760 --> 0:17:37.440 healthy investors. That's our postures. So it locked up in 0:17:37.480 --> 0:17:39.880 the fourth in December and it's not even October. Really 0:17:39.920 --> 0:17:42.320 December and and so there's no deals done and we'll 0:17:42.320 --> 0:17:44.480 get them done. Are optimistic in that space specifically for 0:17:44.520 --> 0:17:47.400 the rest of the year because eighteen was huge going 0:17:47.480 --> 0:17:49.160 right up towards the end of the year for supplying 0:17:49.200 --> 0:17:50.960 for underwriting. It was a big boon for the banks 0:17:51.000 --> 0:17:54.399 as well. Can we have another through nineteen in that space? 0:17:55.040 --> 0:17:57.240 You know, we'll see it's going to be more high 0:17:57.240 --> 0:17:59.800 the equity, you know, the participants and the deals and 0:17:59.840 --> 0:18:02.480 things like that. But it's a it's a market we're in, 0:18:02.600 --> 0:18:04.760 but we're we're in high grade. The nice thing about 0:18:04.760 --> 0:18:08.600 our franchises with thirteen billion dollars of markets revenue attached 0:18:08.640 --> 0:18:11.520 to ninety plus billion dollars is of real revenue from 0:18:11.520 --> 0:18:14.879 all the other businesses is something someone will go right, 0:18:14.880 --> 0:18:16.280 something will go wrong, But the idea is just keep 0:18:16.280 --> 0:18:18.840 flowing through. So if leverage finance is not as strong 0:18:18.880 --> 0:18:22.000 this year, high grade maybe better, uh FX may be better, 0:18:22.320 --> 0:18:23.760 all those things playing it out, but the way you 0:18:23.840 --> 0:18:26.280 played is to just keep serving our clients and moving them. 0:18:26.440 --> 0:18:28.160 On the vice side, there's some nerves around the space 0:18:28.200 --> 0:18:30.560 that leverage loans. If you were to have a dashboard, 0:18:30.560 --> 0:18:32.359 what would you be looking for for certain risk of 0:18:32.400 --> 0:18:35.480 materialized to to pair back risk to tell some of 0:18:35.480 --> 0:18:37.359 it seems to be less aggressive on the mandates. My 0:18:37.440 --> 0:18:41.399 point we don't change our risk posture, though, the is 0:18:41.440 --> 0:18:43.440 we have risk parameters that we set from the board 0:18:43.480 --> 0:18:45.879 to UH to the management, all the way down, all 0:18:45.880 --> 0:18:47.239 the way down to the desk, all the way down 0:18:47.320 --> 0:18:49.360 to the underwriting, and so we don't we don't take 0:18:49.600 --> 0:18:51.560 We don't say, oh, let's decide to add more risk 0:18:51.600 --> 0:18:53.399 today here, some trap more risks. We do more by 0:18:53.480 --> 0:18:56.560 volume because there's just more activity. But the individual deals 0:18:56.560 --> 0:18:58.400 and the way we think about underwriting is fairly consistent 0:18:58.400 --> 0:19:02.200 because the end of the day, leave aside syndication market 0:19:02.200 --> 0:19:04.239 bigger back in commercial lending, you know those credits are 0:19:04.240 --> 0:19:05.960 going to live with you for multiple years, and so 0:19:06.040 --> 0:19:09.040 what you're gonna do in nineteen first quarter will make 0:19:09.080 --> 0:19:12.359 no difference in nineteen what you did in fifteen makes 0:19:12.359 --> 0:19:14.240 a difference. And that's why you have to have consistent risk. 0:19:14.359 --> 0:19:16.560 So final question for you, Brian, I think many of us, 0:19:16.600 --> 0:19:18.000 and I don't know about yourself when I speak for 0:19:18.080 --> 0:19:20.359 may have spent much of the last few months talking 0:19:20.359 --> 0:19:22.480 about downside risk, and we just finished by talking about 0:19:22.560 --> 0:19:25.600 upside risk, what's the big opportunity for you guys, for 0:19:25.880 --> 0:19:29.240 our company just continued to drive responsible growth and and 0:19:29.240 --> 0:19:32.120 and use these capabilities of three billion invest in technology 0:19:32.400 --> 0:19:34.800 every year, the capabilities that come on, whether it's on 0:19:34.840 --> 0:19:37.440 the consumer side WIS and wealth management, new digital capabilities 0:19:37.440 --> 0:19:41.439 and wealth management UH or in a commercial space and 0:19:41.480 --> 0:19:43.920 cash pro or cash manager price. It's just to drive 0:19:43.960 --> 0:19:46.960 those products out there. And there's just set and we 0:19:47.040 --> 0:19:49.160 have We are a big company, but we have small 0:19:49.200 --> 0:19:50.960 market share, I mean in the relative sense, so we 0:19:51.240 --> 0:19:53.840 in terms of absolute sense against against the markets, and 0:19:53.880 --> 0:19:55.639 we have lots of market share to gain. And the 0:19:55.720 --> 0:19:58.119 upside is just that our success might be better than 0:19:58.160 --> 0:20:00.840 we project because the competency in ca abilities a team 0:20:00.840 --> 0:20:03.600 and the and the tools are better for clients. Brunt 0:20:03.640 --> 0:20:05.480 always great to get your inside the globe of economy 0:20:05.480 --> 0:20:08.440 and of course on banking in America, bron Monhattan, Big 0:20:08.480 --> 0:20:11.920 Bank America Chairman and see I thank you very much, Sack. 0:20:24.680 --> 0:20:26.600 This is always a joy in any number of ways 0:20:26.640 --> 0:20:30.720 to speak with Steve with Bank Capital, associated with a 0:20:30.760 --> 0:20:33.760 small basketball team up in Boston as well, and truly 0:20:33.760 --> 0:20:37.399 one of the most interesting guys in investment in America. 0:20:37.520 --> 0:20:40.360 Wonderful to have you here today. And you know, like 0:20:41.600 --> 0:20:45.840 Mrs Tom Brady or Mr Jasobncher whatever, he is a 0:20:45.920 --> 0:20:50.240 slave for fashion here in Davos Valley Steve Canada Goose 0:20:50.680 --> 0:20:53.480 and it's a newer coat and you're you're the brand 0:20:53.480 --> 0:20:57.000 ambassador this year. That that'd be aderation. But I love 0:20:57.040 --> 0:20:59.080 the company in the CEO, Danny Reece has done a 0:20:59.119 --> 0:21:00.920 great job in our team him and it's now a 0:21:00.920 --> 0:21:03.480 worldwide global company and it's fitting to wear this in Davos. 0:21:03.480 --> 0:21:05.240 It's actually the first time I was ever warm a 0:21:05.320 --> 0:21:08.120 Davos was when our wars cos. Very nice endorsement theory 0:21:08.119 --> 0:21:10.680 as well. But I want you to explain your Pixie 0:21:10.720 --> 0:21:13.400 does when you go into a company and you don't 0:21:13.440 --> 0:21:16.720 tear management apart, you don't blow it up, You assist 0:21:16.760 --> 0:21:20.640 them to a branding or revenue in an operating income success. 0:21:20.760 --> 0:21:22.720 Give us an example with Canada Goose. Well, that's a 0:21:22.720 --> 0:21:24.560 great question. Time I go all the way back to 0:21:24.600 --> 0:21:27.639 the founding of Baining Capital. We were very unique at 0:21:27.760 --> 0:21:30.399 it was still unique were unique at the time because 0:21:30.800 --> 0:21:33.560 no other private equity venture capital shop spawned out of 0:21:33.560 --> 0:21:36.280 a consulting firm. So the theory Bill Bain had was 0:21:36.680 --> 0:21:38.919 you could take the consulting skills that were building companies 0:21:38.960 --> 0:21:41.840 long term, buy them directly and work with managements as 0:21:41.960 --> 0:21:44.280 a kind of a tool for management to help build 0:21:44.320 --> 0:21:47.520 those companies. So that was thirty five years ago and 0:21:47.840 --> 0:21:49.359 at the time no one thought that would work. It 0:21:49.800 --> 0:21:51.840