WEBVTT - ConnectOne's Sorrentino Says Fed Should Not Raise Rates (Audio)

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<v Speaker 1>Broadcasting live to New York, Bloomberg even to Washington, d C.

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<v Speaker 1>Bloomberg to Boston, Bloomberg twelve hundred, to San Francisco, Bloomberg

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<v Speaker 1>to the countries, US Exam General one nine and around

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<v Speaker 1>the globe the Bloomberg Radio plus ath and Bloomberg got gone.

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<v Speaker 1>This is taking Stock. I'm Kathleen Hayes along with Pam

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<v Speaker 1>Fox Wednesday afternoon. It is a feder Reserve in focus today,

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<v Speaker 1>a look at the Fed and the big banks. A

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<v Speaker 1>lot of regulatory questions hanging over them. Yes, and we'll

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<v Speaker 1>also be speaking with Frank Sarantino. He is the chief

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<v Speaker 1>executive of connect One Bank. They are the fourth largest

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<v Speaker 1>bank in New Jersey. We'll talk about such topics as

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<v Speaker 1>financial technology, interest rates, regulation, and yes, cybersecurity. But right

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<v Speaker 1>now let's go to Charlie Pellet in the Bloomberg news

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<v Speaker 1>room for Bloomberg Business Flat and I thank you him,

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<v Speaker 1>I thank you Kathleen. The DAL the SMP nez DAK

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<v Speaker 1>holding APT their best level of the day. This data

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<v Speaker 1>Stocks are higher, adding to an advance after their strongest

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<v Speaker 1>one day gain since Marches. Signs of a stronger economy

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<v Speaker 1>spur speculation it can withstand higher interest rates. People familiar

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<v Speaker 1>with the matter say Chinese officials plan to ask their

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<v Speaker 1>American counterparts in annual talks next month about the chance

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<v Speaker 1>of a Federal Reserve interest rate increase in June, and

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<v Speaker 1>people say that Chinese delegation will try to deduce whether

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<v Speaker 1>a June or July rate rises more likely as the

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<v Speaker 1>nations policy makers prepare for the potential impact on financial markets.

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<v Speaker 1>Dan Skelly, as head of the Equity Model port folio

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<v Speaker 1>team at Morgan Stanley Wealth Management, he told bloom Bird Television,

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<v Speaker 1>whenever the Fed does move, China will definitely be watching.

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<v Speaker 1>Our official view of Morgan Stanley is that we actually

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<v Speaker 1>don't get the first rate hike this year till December,

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<v Speaker 1>so really not till the end of the year, so

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<v Speaker 1>we'll see what happens. But obviously the Chinese are very

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<v Speaker 1>concerned about financial conditions. When we had the first rate

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<v Speaker 1>hike back in December with the FED, and then back

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<v Speaker 1>in August when the Chinese were fixing or appreciating their currency,

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<v Speaker 1>financial conditions tightened and markets sold off very, very dramatically.

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<v Speaker 1>So that's why the Chinese are concerned. But again our

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<v Speaker 1>view is that the Fed doesn't hike till later this year.

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<v Speaker 1>In December. Gold down five three a drop of point

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<v Speaker 1>four SMP up sixteen a gain of eight tenths of

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<v Speaker 1>one percent. And now let's take a look at other

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<v Speaker 1>news from around the world. Thank you, Charlie from the

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<v Speaker 1>Boomberg newsroom. I'm Bonny Quen. A State Department audit addresses

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<v Speaker 1>Hillary Clinton's use of a Pivot email accountant server, while

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<v Speaker 1>Secretary of State. Boomberg's Michael Bahr has more. The State

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<v Speaker 1>Department audit claims previous secretaries of State, including Hillary Clinton,

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<v Speaker 1>poorly managed emails and other computer information. The Associated Press

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<v Speaker 1>obtained a copy of the report by the agency's Inspector General.

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<v Speaker 1>According to the report, there were longstanding systemic weaknesses related

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<v Speaker 1>to communications. The report also says the Department and its

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<v Speaker 1>secretaries were slowly recognized and respond to new cyber security risks.

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<v Speaker 1>Michael Barr Bloomberg Radio, how Speaker Paul Ryan has told

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<v Speaker 1>reporters he has not come to a decision yet on

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<v Speaker 1>the endorsement of Donald Trump. Earlier, two people close to

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<v Speaker 1>the lawmaker told Bloomberg News speaker Ryan was ready to

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<v Speaker 1>end the standoff. Those people said Ryan may and doors

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<v Speaker 1>Trump for president this week. The speaker was said to

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<v Speaker 1>be concerned about the split that's developed in the Republican Party.

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<v Speaker 1>A Ukrainian pilot is thanking those who fought for her

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<v Speaker 1>release from Russian custody. Nadejda Savchenko was released today and

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<v Speaker 1>swapped for two Russian servicemen who were jailed in Ukraine.

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<v Speaker 1>The pilot had been convicted of involvement in the deaths

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<v Speaker 1>of two Russian journalists and was sentenced to twenty two

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<v Speaker 1>years in prison. She was released after two years. A

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<v Speaker 1>retrial for a New jerseyman accused of the nineteen seventy

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<v Speaker 1>nine murder of six year old Eton Pots will begin

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<v Speaker 1>after Labor Day. Pedro Hernandez Is May two thousand fifteen

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<v Speaker 1>trial ended in a hung jury. The child advantished on

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<v Speaker 1>his way to school and was carried dead. In two

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<v Speaker 1>thousand one, Global News twenty four hours a day, powered

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<v Speaker 1>by our twenty journalists and more than one fifteen news

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<v Speaker 1>bureaus around the world. From the Bloomberg Newsroom, I'm Bonnie Quinn, Charlie,

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<v Speaker 1>and we thank you and again recapping stocks are advancing

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<v Speaker 1>the now up one sixty seven, a gain of one percent,

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<v Speaker 1>Sump up sixteen, a gain of eight tenths of one percent.

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<v Speaker 1>I'm Charlie Palatin. That's a Bloomberg business flash. This is

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<v Speaker 1>taking stock the FED in focus on Bloomberg Radio feed

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<v Speaker 1>a reserve? Will it raise interest rates next month July?

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<v Speaker 1>And what does it mean for big banks? Big banks

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<v Speaker 1>to have a lot of challenges from increased regulation, shin

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<v Speaker 1>to increase, increased cyber security risk. Joining us now to

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<v Speaker 1>discuss all of this. And Morris Frank Sergantino. He is

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<v Speaker 1>chief executive officer at Connect One Bank. He is joining

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<v Speaker 1>us from our New York studio. So, Frank, a lot

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<v Speaker 1>of the markets actually moving a lot on FED rate hike,

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<v Speaker 1>UH expectations right. And one of the ways they're moving

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<v Speaker 1>is bank stocks start going higher when there's more signals

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<v Speaker 1>the Fed's actually going to move. Are you in the

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<v Speaker 1>camp that is hoping to Fed will will make the

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<v Speaker 1>move so you can increase your net interest margins. Hi, Kathleen,

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<v Speaker 1>always get to be with you. Um, you know it's interesting.

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<v Speaker 1>I guess it's from a from a selfish perspective. Sure,

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<v Speaker 1>higher rates will probably translate into higher profit margins, better

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<v Speaker 1>net interest income for most financial institutions. Um, but higher

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<v Speaker 1>interest rates will have, as we saw in December, also

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<v Speaker 1>have the capability of roiling the markets and really creating confusion. Uh.

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<v Speaker 1>It would be my own perspective that the Fed does

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<v Speaker 1>not raise rates in the June time frame. Uh, we

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<v Speaker 1>just don't see, you know, what what would be going

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<v Speaker 1>on in the economy that would that would dictate to

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<v Speaker 1>the Fed that they should raise rates. Frank and when

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<v Speaker 1>if you get off our a little bit of detail

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<v Speaker 1>about the business right now and tell us about things

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<v Speaker 1>such as the real estate the operation. But I also

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<v Speaker 1>know that that for example, you know, you know about

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<v Speaker 1>the rideshare in the in the taxi industry, you're you're

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<v Speaker 1>a lender to a variety of businesses we do. Um.

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<v Speaker 1>So there's lots going on in both the real estate marketplace,

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<v Speaker 1>and interest rates play a really big role in what's

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<v Speaker 1>happening relative to you know, the entire real estate industry.

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<v Speaker 1>Rising rates there is probably not a good thing, um

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<v Speaker 1>and is creating you know, sort of the wall of

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<v Speaker 1>worry for you know, a lot of people in that sector. Uh,

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<v Speaker 1>probably something that the FED appreciate that it's doing right.

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<v Speaker 1>It's forcing people to think through the risk of of

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<v Speaker 1>higher rates in the future. So you know, a lot

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<v Speaker 1>of disruption uh could potentially start to move into the

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<v Speaker 1>marketplace relative to the thought process behind the FED raising

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<v Speaker 1>rates on a consistent basis. So in terms of my

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<v Speaker 1>glad you raised that question, they'll him about business because

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<v Speaker 1>as a banker, particularly of a community banker, you see,

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<v Speaker 1>you get it. You have your finger on the pulse

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<v Speaker 1>in a way sometimes I think a lot of big

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<v Speaker 1>banks don't. What is your sense of the health of

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<v Speaker 1>this region and the economy more broadly right now from

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<v Speaker 1>a banking perspective, you know, I think the New York

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<v Speaker 1>metro region is probably, if not one of the strongest

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<v Speaker 1>thus strongest part of the economy here in the US.

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<v Speaker 1>Right it represents about ten percent of the U S economy,

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<v Speaker 1>about one point six trillion dollars of GDP, and it's

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<v Speaker 1>an incredibly diversified portfolio of businesses and you know, different

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<v Speaker 1>types of operations you know right here within let's say

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<v Speaker 1>a fifty mile radius of New York, say, uh, the

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<v Speaker 1>the average business owner that we deal with here, it

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<v Speaker 1>connect One bank certainly feels all the pressures, but at

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<v Speaker 1>the same time sees a pretty good economic environment in

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<v Speaker 1>front of them. Very low interest rates, pretty stable prices,

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<v Speaker 1>stable material prices, stable labor prices, all boats very very well.

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<v Speaker 1>Yet that's all painted on the backdrop of a very

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<v Speaker 1>tumultuous global economy. Right We're hearing things about negative interest

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<v Speaker 1>rates and problems around the globe, and and and I

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<v Speaker 1>think that's what's going to ultimately weigh on the FED, right,

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<v Speaker 1>the stronger dollar and and lots of other factors as

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<v Speaker 1>to whether or not they need to raise rates. But

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<v Speaker 1>at the same time, that jaw boning about rates, I

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<v Speaker 1>believe is keeping is keeping things sort of in check,

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<v Speaker 1>and we don't have runaway optimism in the marketplace, Frank,

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<v Speaker 1>I want to keep things local for just a moment,

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<v Speaker 1>if you can be sure, I think it has larger implications.

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<v Speaker 1>Tell me about the taxi medallion, the loans secured by

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<v Speaker 1>taxi medallions, and what you've seen there. Because we're living

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<v Speaker 1>in an uber well at least an uber economy. It's

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<v Speaker 1>a certain extent. So, you know, the taxi business specifically

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<v Speaker 1>in New York City. Um, while the headlines would have

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<v Speaker 1>you believe it's going out of business tomorrow, is actually

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<v Speaker 1>quite robust. The battle for the business there is really

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<v Speaker 1>more related to the drivers who drive for whether it's

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<v Speaker 1>yellow or uh, you know, any of the transportation network companies.

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<v Speaker 1>But but the business of taxi, they're still doing about

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<v Speaker 1>the same number of rides per day, and they're still

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<v Speaker 1>making about the same dollars per trip. Uh. And I

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<v Speaker 1>don't know, I know, I think you guys live in

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<v Speaker 1>the city as well as I do. It's uh, it's

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<v Speaker 1>difficult that most times of the day to get a taxicab.

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<v Speaker 1>And you've got more more more than a million, right,

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<v Speaker 1>you've got more allion, we have a we have about

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<v Speaker 1>that many. But like all other businesses, uh, there's a

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<v Speaker 1>lot of change, right. So there's disruption in the transportation space.

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<v Speaker 1>There's disruption in the hotel space. Uh and and in

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<v Speaker 1>some in some areas, there's even you know, disruption in

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<v Speaker 1>the multi family space right where buildings that were originally

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<v Speaker 1>designed to the apartments and homes are now being used

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<v Speaker 1>as CLOSEI hotels. There's tremendous disruption coming into financial space, right,

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<v Speaker 1>Look what's going on with fintech and and and all

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<v Speaker 1>the other types of businesses. So this is not something

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<v Speaker 1>that's just relegated to transportation. The entire economy is being

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<v Speaker 1>disrupted by technology plays and in some cases, you know,

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<v Speaker 1>similar to the financial industry. Some of this disruption is good, right,

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<v Speaker 1>it's forcing change, it's forcing forcing efficiencies within the system. Um,

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<v Speaker 1>it's forcing business owners to think differently about their business.

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<v Speaker 1>It doesn't necessarily mean those businesses are going to go away.

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<v Speaker 1>Frank Sorrentino, thank you for spending time with this, Chief

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<v Speaker 1>executive officer of Connect One Bank. They're based in Englewood Cliffs,

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<v Speaker 1>New Jersey. You're listening to taking Stock on Bloomberg Radio.

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