WEBVTT - BI Weekend: Tesla Deliveries, Luxury Sales 0:00:02.759 --> 0:00:07.240 Bloomberg Audio Studios, Podcasts, radio news. 0:00:09.360 --> 0:00:13.360 This is Bloomberg Intelligence with Alex Steele and Paul Sweeney. 0:00:13.400 --> 0:00:16.599 The real ap performance has been the US corporate high yield. 0:00:16.800 --> 0:00:19.160 Are the companies lean enough? Have they trimmed all the fats? 0:00:19.239 --> 0:00:22.439 The semiconductor business is a really cyclical. 0:00:22.000 --> 0:00:26.040 Business, breaking market headlines and corporate news from across the globe. 0:00:26.120 --> 0:00:28.640 Do investors like the M and A that we've seen? 0:00:28.920 --> 0:00:31.960 These are two big time blue chip companies. 0:00:32.120 --> 0:00:35.720 The window between the peak and cunt changing super fast. 0:00:35.840 --> 0:00:41.240 Bloomberg Intelligence with Alex Steele and Paul Sweeney on Bloomberg Radio. 0:00:42.479 --> 0:00:45.000 Today's Bloomberg Intelligence Show, we dig inside the big business 0:00:45.000 --> 0:00:47.040 stories impacting Wall Street and the global markets. 0:00:47.200 --> 0:00:49.000 Each and every week we provide in depth research and 0:00:49.080 --> 0:00:50.800 data on some of the two thousand companies and one 0:00:50.880 --> 0:00:53.440 hundred and thirty industries our analysts cover worldwide. 0:00:53.680 --> 0:00:55.880 Today, we'll look at what comes next for Wall Street 0:00:55.920 --> 0:00:57.000 Banks in twenty twenty. 0:00:56.760 --> 0:00:59.800 Five, plus we'll discuss the potential global impact of future 0:00:59.800 --> 0:01:00.760 you A tariffs. 0:01:00.840 --> 0:01:02.920 But first we begin in the automotive industry. 0:01:03.080 --> 0:01:05.800 This week we heard the Tesla's annual vehicle sales dropped 0:01:05.800 --> 0:01:08.160 for the first time in over a decade for more. 0:01:08.280 --> 0:01:10.680 Alex and I were joined by Steve Man Bloomberg Intelligence 0:01:10.720 --> 0:01:13.960 Global Autos and Industrials Research Channels. We first asked Steve 0:01:14.000 --> 0:01:16.240 about what testless numbers mean for the automaker. 0:01:16.360 --> 0:01:18.600 If you look at the fourth quarter, it's actually up 0:01:18.640 --> 0:01:21.800 slightly by two percent, but you know they've done a 0:01:21.840 --> 0:01:27.320 lot throughout the quarter to drive that number, mainly on incentives. 0:01:27.959 --> 0:01:31.680 So we're likely to see that to continue. But if 0:01:31.720 --> 0:01:33.920 you look out in twenty twenty five, we expect the 0:01:33.959 --> 0:01:39.640 company that actually give you rosier guidance. They do have 0:01:39.720 --> 0:01:42.560 new vehicles coming out, the refresh of the model Why, 0:01:42.640 --> 0:01:45.680 the popular model Why. And then there's a new affordable 0:01:45.760 --> 0:01:48.760 vehicle being launched in the first half that should drive 0:01:49.160 --> 0:01:50.760 sales in twenty twenty five. 0:01:51.480 --> 0:01:54.960 So how important are incentives these days, Steve? For the 0:01:55.000 --> 0:01:57.480 average EV buyer, it. 0:01:57.440 --> 0:02:01.120 Is very important. It's not just EV. We're seeing that 0:02:01.360 --> 0:02:06.760 throughout the auto industry, including gasoline cars. Affordability continue to 0:02:06.760 --> 0:02:09.880 be an issue. You know, if you look at delinquency 0:02:09.960 --> 0:02:14.120 rates on loans are there rising, So the the automakers 0:02:14.160 --> 0:02:19.600 have to come in and actually support demand. So we'll 0:02:19.600 --> 0:02:24.080 probably see that in twenty twenty five. But you know, 0:02:24.480 --> 0:02:27.680 there's there's reports out there that we, you know, including ourselves, 0:02:27.720 --> 0:02:31.200 we think that battery costs will continue to come down 0:02:32.080 --> 0:02:35.520 and then we'll see probably a better an upturn, likely 0:02:35.520 --> 0:02:38.799 in twenty twenty six, not so much in this year. 0:02:39.240 --> 0:02:41.800 When you mentioned that there'll be some product refreshes this 0:02:41.880 --> 0:02:44.760 year as well as an affordable Tesla, yeah, I've been 0:02:44.760 --> 0:02:46.360 hearing that for a while. What do we mean by 0:02:46.400 --> 0:02:49.919 affordable and do we trust this timeline? 0:02:50.160 --> 0:02:50.480 Yeah? 0:02:50.520 --> 0:02:52.919 So, you know, I think there's been a lot of 0:02:53.000 --> 0:02:55.160 questions out there in terms of how, you know, if 0:02:55.160 --> 0:02:59.640 Elon must will actually meet his his own projection. I 0:02:59.639 --> 0:03:03.240 think that he will launch the affordable EV and that's 0:03:03.360 --> 0:03:07.840 likely to be under thirty thousand, including the that the 0:03:07.919 --> 0:03:13.400 includes the seventy five hundred credit incentive by the federal government. Oh, 0:03:13.440 --> 0:03:14.120 it includes it. 0:03:14.160 --> 0:03:16.640 So if that goes away, it no longer becomes affordable. 0:03:17.639 --> 0:03:19.960 It still is. It's still one of the cheapest EV's 0:03:20.040 --> 0:03:23.400 out there. I think the new EV's that they're launching 0:03:24.360 --> 0:03:28.840 coming going forward will actually be much lower costs than 0:03:28.880 --> 0:03:32.480 the current model three Model Y, So there's still some 0:03:32.680 --> 0:03:37.560 room for them to cut prices and also, you know, 0:03:37.840 --> 0:03:42.400 help maintain the automative gross margin around the you know, 0:03:42.440 --> 0:03:43.560 eighteen to twenty percent. 0:03:45.080 --> 0:03:49.280 Steve, twenty twenty four feels like a year where the 0:03:49.320 --> 0:03:52.800 evolution towards electric vehicleles hit kind of a speed bump 0:03:52.880 --> 0:03:55.560 out there. A, Is that in fact the case? And 0:03:55.680 --> 0:03:59.480 b how do you think about the industry's continued evolution 0:03:59.600 --> 0:04:02.040 to EV over the twenty twenty. 0:04:01.840 --> 0:04:05.600 Five Yeah, I think twenty twenty five EV sales will 0:04:05.640 --> 0:04:08.960 probably be grown at a single digit and you know, 0:04:09.080 --> 0:04:12.600 incentives still going to be a bigger part of the story. 0:04:13.120 --> 0:04:15.880 But I think long term, you know, beyond twenty twenty five, 0:04:16.080 --> 0:04:19.240 that means twenty twenty six and beyond, I think EV 0:04:19.400 --> 0:04:22.800 sales will recover, Battery costs will continue to come down. 0:04:23.560 --> 0:04:27.839 More automakers, not just Tesla, GM and Stillentis are launching 0:04:28.600 --> 0:04:32.080 newer and cheaper evs. That's going to be that's going 0:04:32.120 --> 0:04:34.599 to resonate with the with the mass market. You know, 0:04:34.600 --> 0:04:37.479 a lot of the early adopters have bought evs, and 0:04:37.480 --> 0:04:39.880 I think the next leg up is really to get 0:04:40.279 --> 0:04:44.080 the general population to buy evs and make it more 0:04:44.360 --> 0:04:45.320 affordable for them. 0:04:46.080 --> 0:04:48.320 I guess I just wonder, like without the tax credit, 0:04:48.839 --> 0:04:51.160 if that goes away. I appreciate that Tesla's still the 0:04:51.200 --> 0:04:53.120 cheapest one out there, but that's not going to be Like, 0:04:53.160 --> 0:04:56.080 there's no way Paul's buying a thirty eight thousand dollars Tesla, right, Like, 0:04:56.160 --> 0:04:59.159 that's not happening. So what has to happen for that 0:04:59.240 --> 0:05:01.240 price to get even lower? And I know that it's 0:05:01.240 --> 0:05:02.920 a chicken and an egg thing, right because you need 0:05:02.920 --> 0:05:06.400 the demand in order to trigger the production, which then 0:05:06.680 --> 0:05:10.480 releases lower prices. But that's just not materializing, particularly without 0:05:10.520 --> 0:05:11.320 that tax credit. 0:05:12.160 --> 0:05:12.360 Right. 0:05:12.600 --> 0:05:15.120 You know, I think we talked about battery costs is 0:05:15.160 --> 0:05:17.080 being one of them. The other thing is really the 0:05:17.160 --> 0:05:21.640 charging infrastructure. You know, I don't think the charging infrastructures 0:05:21.880 --> 0:05:25.400 has been expanded to a point where it's convenient for 0:05:25.440 --> 0:05:28.880 a lot of the for owners or potential owners of evs, 0:05:29.360 --> 0:05:31.680 but there's a lot of money being poured into it. 0:05:31.720 --> 0:05:34.440 There's one company called EVgo. They just got a huge 0:05:34.440 --> 0:05:38.000 loan from the federal government to expand. We got a 0:05:38.000 --> 0:05:44.039 lot of automakers, major ones, GM, Ford and Hyundai and 0:05:44.120 --> 0:05:48.360 the likes are actually joining forces together, pulling capital together 0:05:48.720 --> 0:05:52.160 to expand the infrastructure. So that's why, you know, I 0:05:52.160 --> 0:05:57.040 think you know beyond twenty twenty six to beyond twenty 0:05:57.080 --> 0:06:00.880 twenty five, we're going to see improved uptick EV demand 0:06:01.240 --> 0:06:06.039 because of not only cheaper EV's, but an expanded charging infrastructure. 0:06:06.560 --> 0:06:09.320 Our Thanks to Steve Mann Bloomberg Intelligence Global Anos, an 0:06:09.320 --> 0:06:11.359 industrial research analyst, we. 0:06:11.440 --> 0:06:14.159 Moved next to luxury this week. Guest host Matt Miller, 0:06:14.200 --> 0:06:17.000 Shanala Basik and I were joined by Deborah aichin Bloomberg 0:06:17.040 --> 0:06:18.880 Intelligence Luxury Goods analysts. 0:06:19.080 --> 0:06:21.440 She discussed her outlook for luxury goods in twenty twenty 0:06:21.440 --> 0:06:23.880 five and my twenty twenty four was so disappointing for 0:06:23.920 --> 0:06:25.080 some luxury companies. 0:06:25.200 --> 0:06:27.640 I began by asking Deborah what happened to luxury in 0:06:27.680 --> 0:06:28.440 twenty twenty four. 0:06:28.760 --> 0:06:31.080 I think if we stepped back to the beginning of 0:06:31.080 --> 0:06:34.440 the year January February, we had some of those the 0:06:34.440 --> 0:06:38.800 biggest company CEOs focusing on a normalized year of growth. 0:06:39.640 --> 0:06:43.600 Now that followed three real years of recovery twenty one, 0:06:43.720 --> 0:06:47.120 twenty two and twenty three, so normalized growth was set 0:06:47.240 --> 0:06:50.440 we thought at around four to six percent. It started 0:06:50.480 --> 0:06:52.919 out okay in the first half, and we were looking 0:06:52.920 --> 0:06:56.240 for the second half to pick up somewhat. On the 0:06:56.279 --> 0:06:58.840 back of that, and that's where the disappointment has been 0:06:58.960 --> 0:07:02.760 so second of twenty twenty four, a real disappointment because 0:07:02.800 --> 0:07:06.919 of so much going on economically, politically, but with a 0:07:06.960 --> 0:07:10.720 big drag in China and travel retail not yet recovering, 0:07:10.840 --> 0:07:13.120 and also just the fact that we kind of got 0:07:13.120 --> 0:07:16.600 to peak price twenty five percent price increases over a 0:07:16.640 --> 0:07:19.880 three year period on average across the sector to pass 0:07:19.880 --> 0:07:23.160 on some of those inflationary costs. It all just became 0:07:23.200 --> 0:07:25.119 too much, especially at entry level. 0:07:25.520 --> 0:07:28.440 So what's been the problem Is it just the Chinese 0:07:28.520 --> 0:07:32.480 economy and the Chinese consumer is so important to this 0:07:32.560 --> 0:07:36.400 segment because as we look at you know, rich people 0:07:36.600 --> 0:07:38.760 to have at least the top five hundred in the world, 0:07:38.880 --> 0:07:42.480 continue to get richer and richer and richer. So I 0:07:42.520 --> 0:07:45.960 can't imagine there's any kind of upper limit on Burken bags. 0:07:47.000 --> 0:07:49.920 Yeah. You know, if we look at the companies that 0:07:49.960 --> 0:07:53.520 have outperformed MS and the types of product that they 0:07:53.600 --> 0:07:56.200 offer to the market, the waiting list there is still 0:07:56.240 --> 0:08:01.280 in place. Other high end names like and Elocutionelle. You know, 0:08:01.360 --> 0:08:04.800 these companies are focused eight to ten percent growth year 0:08:04.840 --> 0:08:08.560 in year out, and they're achieving that, but really it's 0:08:08.640 --> 0:08:12.000 been twofold. If we think about the China market, just 0:08:12.040 --> 0:08:16.240 to put it back into context, Chinese consumers when they 0:08:16.320 --> 0:08:19.840 traveled twenty nineteen as well as spent at home on 0:08:19.880 --> 0:08:23.920 the mainland, Macau, Hong Kong and others, were around a 0:08:23.960 --> 0:08:26.800 third of the luxury market, and we think they're nearer 0:08:27.280 --> 0:08:30.600 twenty three percent or so. We've basically lost ten percent 0:08:30.640 --> 0:08:33.560 in the market from there. What's happened, though, is that 0:08:33.640 --> 0:08:37.280 the US has been particularly robust and has picked up 0:08:37.320 --> 0:08:37.760 some of that. 0:08:38.080 --> 0:08:39.079 Europe has picked up. 0:08:39.000 --> 0:08:41.720 A little bit, and also rest of the world and 0:08:41.760 --> 0:08:44.200 other parts of Asia. So when we look, you know, 0:08:44.280 --> 0:08:49.200 look at an Alviumh's absolute revenue twenty nineteen versus twenty 0:08:49.240 --> 0:08:53.120 twenty four, even taking out the Tiffany acquisition in twenty one, 0:08:53.800 --> 0:08:56.920 its sales are still over fifty percent higher than they 0:08:56.960 --> 0:09:01.640 were twenty nineteen in absolute use road terms. But there's 0:09:01.640 --> 0:09:03.880 been a big shift and we think that will continue 0:09:04.000 --> 0:09:05.080 twenty twenty five. 0:09:05.760 --> 0:09:08.160 You know, another question I have is how much of 0:09:08.200 --> 0:09:11.960 this is the macro. Of course, China is a massive story. 0:09:12.280 --> 0:09:14.080 Perhaps we'll talk about a little more as well. But 0:09:14.120 --> 0:09:17.520 another thing I'm fascinated by is the rebranding of some 0:09:17.600 --> 0:09:23.120 of these large luxury items and brands Jaguars, when Matt 0:09:23.120 --> 0:09:26.320 and I had covered a little earlier this year. That's 0:09:26.360 --> 0:09:29.600 a pretty extreme example, but there are others as well. 0:09:29.880 --> 0:09:34.120 How much of this is just customer taste changing and 0:09:34.240 --> 0:09:39.000 the company is needing to react to those changing preferences. 0:09:39.600 --> 0:09:42.120 There are more and more reports coming out because we 0:09:42.160 --> 0:09:46.439 also need to think about the recycle industry too. If 0:09:46.480 --> 0:09:49.600 we step back into the China situation, one of the 0:09:49.600 --> 0:09:54.199 big categories would be watches, and watches are higher indexed 0:09:54.240 --> 0:09:57.439 in China, so that's been a drag for many companies 0:09:57.480 --> 0:10:00.800 because most of them will have watches. No jewelry has 0:10:00.880 --> 0:10:03.680 really stood up well, so that's one side of the equation. 0:10:04.800 --> 0:10:07.400 If we think about other sides, though, there have been 0:10:08.480 --> 0:10:12.599 particularly at the low end with the aspirational side failures 0:10:12.720 --> 0:10:17.000 and different creative directors moving around. So there's been some 0:10:17.200 --> 0:10:20.160 question on where the identity of some of these brands are. 0:10:20.600 --> 0:10:23.640 But it therefore tends to be the heritage brands, which 0:10:23.679 --> 0:10:27.880 don't necessarily depend on a single creative director and more 0:10:27.920 --> 0:10:30.559 really focus on a team and a real high level 0:10:30.600 --> 0:10:34.560 of workmanship that continue to do better, and I think 0:10:34.559 --> 0:10:36.920 we'll see more of that play out also in twenty 0:10:37.000 --> 0:10:40.600 twenty five. If that kind of answers your question. 0:10:40.400 --> 0:10:43.840 There, deb of all the luxury companies that you cover 0:10:43.920 --> 0:10:46.439 from a research perspective for Bloomberg Intelligence, what are the 0:10:46.480 --> 0:10:49.880 ones that are seem well positioned to you these days 0:10:49.920 --> 0:10:52.240 as we go into twenty five, And if we're. 0:10:52.160 --> 0:10:56.680 Looking across modl it's moved around a lot in the 0:10:56.760 --> 0:11:01.280 last eighteen months and generally a little bit of a delay, 0:11:02.480 --> 0:11:07.120 but companies are being really more forthright in explaining what 0:11:07.320 --> 0:11:11.040 is happening where their investment is to back that future growth. 0:11:11.440 --> 0:11:13.560 So you have the likes of at the top end, 0:11:13.600 --> 0:11:17.719 which we've mentioned Mares, Brune, Brunellocutionelli. If you look the 0:11:17.840 --> 0:11:21.880 numbers out there for top line growth and earning's growth, 0:11:21.920 --> 0:11:25.080 earning growth twenty twenty five must fully repair and come 0:11:25.160 --> 0:11:27.680 in ahead of sales, so you're looking at double digit 0:11:27.840 --> 0:11:31.479 sales there. We have arranged nine to twelve percent across 0:11:31.760 --> 0:11:35.880 Air Mayre's leading Brunellocutionelli in the lead proader. 0:11:35.960 --> 0:11:37.880 They're doing very very well, but a lot on the 0:11:37.960 --> 0:11:42.040 me and your brand Richmond doing very well on Cartier 0:11:42.160 --> 0:11:45.560 van Cleef and our pacids that high find jewelry and 0:11:45.600 --> 0:11:49.480 that high note worth individual continuing to buy. 0:11:49.600 --> 0:11:52.000 And there are some of the names out there as 0:11:52.000 --> 0:11:55.360 well as ELV made should further repair because we think 0:11:55.400 --> 0:11:57.480 that they will do better in the second half the year. 0:11:57.559 --> 0:12:01.320 They do have big exposure with DF into travel retail 0:12:02.000 --> 0:12:04.400 and also a lot of these companies. So mid single 0:12:04.440 --> 0:12:08.360 digit growth for LVMH for eachmon high single to double 0:12:08.400 --> 0:12:12.240 digit growth for some of those more niche individual brands 0:12:12.280 --> 0:12:16.120 with waiting with big lists waiting lists out there still 0:12:16.200 --> 0:12:18.480 for some of the very much high your end product. 0:12:19.000 --> 0:12:21.520 All right, thanks to Debic and a Bloomberg Intelligence luxury 0:12:21.520 --> 0:12:23.800 goods analyst, and coming up, we're going to break down 0:12:23.840 --> 0:12:26.400 why the number of primary dealers in the US treasury 0:12:26.440 --> 0:12:27.679 market has decreased. 0:12:27.960 --> 0:12:31.200 Listening to Bloomberg Intelligence on Bloomberg Radio, providing in research 0:12:31.240 --> 0:12:33.439 and data on two thousand companies and one hundred and 0:12:33.480 --> 0:12:36.360 thirty injusries. You can access Bloomberg Intelligence via b I 0:12:36.400 --> 0:12:38.160 go on the terminal, Paul Sweet. 0:12:38.000 --> 0:12:40.000 And am Alex Steel and this is Bloomberg. 0:12:44.160 --> 0:12:47.920 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:12:48.000 --> 0:12:50.800 weekdays at ten am Easter on Apple car Play and 0:12:50.920 --> 0:12:53.640 the Android Auto with the Bloomberg Business App. Listen on 0:12:53.720 --> 0:12:56.920 demand wherever you get your podcasts, or watch us live 0:12:57.000 --> 0:12:57.680 on YouTube. 0:12:58.960 --> 0:12:59.760 We move next to You. 0:13:00.640 --> 0:13:02.599 This week O host Matt Millo, Shanali Bassega, and I 0:13:02.720 --> 0:13:05.600 rejoined by Shrinanna rodgen Uberg, senior finance reporter. 0:13:05.840 --> 0:13:08.840 He discussed his outlook for Wall Street regulation bonuses and 0:13:08.880 --> 0:13:11.240 how banks are preparing for Donald Trump presidency. 0:13:11.440 --> 0:13:13.640 I began by actually shre what he thinks about the 0:13:13.640 --> 0:13:15.720 prospects for next year on Wall Street. 0:13:15.840 --> 0:13:17.920 If you had to see the best indicator for what 0:13:18.000 --> 0:13:20.080 people are expecting next year for the banks, just look 0:13:20.120 --> 0:13:22.079 at what the stocks have done this year, and I 0:13:22.120 --> 0:13:24.560 will tell you all you need to know about expectations 0:13:24.559 --> 0:13:27.720 and the outlook going into next year. Coleman, Sacks, JP, Morgan, 0:13:27.760 --> 0:13:30.520 Morgan Stanley. They're all up forty forty five to fifty percent. 0:13:30.800 --> 0:13:34.160 Jeffries pure play investment bank up something like ninety five percent. 0:13:34.200 --> 0:13:35.280 That stock is almost double. 0:13:35.320 --> 0:13:38.840 You're going to say, none better than Goldman, but Jeffries, yeah. 0:13:38.720 --> 0:13:41.080 Sure, not in the same league perhaps, but as a 0:13:41.120 --> 0:13:42.360 pure play investment bank. 0:13:42.440 --> 0:13:44.160 And the percentage rise in their stack. 0:13:44.000 --> 0:13:45.800 The percentage rise in their stuff, the fact that the 0:13:45.840 --> 0:13:48.960 stocks nearly double this year on the back of expectation 0:13:49.120 --> 0:13:52.040 that there will be a gusher of activity opened up 0:13:52.120 --> 0:13:55.680 next year. That is where banking expectations are right now. 0:13:55.800 --> 0:13:58.640 But there are crosswinds and you know, you're never certain 0:13:58.720 --> 0:14:01.640 how it will pan out. In fact, if you were 0:14:01.679 --> 0:14:04.360 to look what happened the day after the November election, 0:14:04.840 --> 0:14:07.400 all the bank stocks rallied up and in the days 0:14:07.440 --> 0:14:10.400 after that went up even higher. But since then they 0:14:10.440 --> 0:14:15.000 have given up half their gains. So what the concern 0:14:15.080 --> 0:14:18.880 there is isn't entirely clear. Are they're not as certain 0:14:18.960 --> 0:14:22.240 of that outlook as they were on say November fifth 0:14:22.280 --> 0:14:25.560 or sixth. We're not sure about that. But net I 0:14:25.560 --> 0:14:27.400 think if you talk to the c suite at all 0:14:27.440 --> 0:14:32.240 of these banks, the hope and optimism that they exude 0:14:32.520 --> 0:14:33.840 is very clear and visible. 0:14:35.160 --> 0:14:39.120 So what kind of deregulation do investors want to see? 0:14:39.120 --> 0:14:40.200 Specifically, because we. 0:14:40.280 --> 0:14:43.040 Throw this term around a lot, and for example, we 0:14:43.040 --> 0:14:46.120 were talking about deregulation. As I think about it, you know, 0:14:46.160 --> 0:14:49.600 we did see deregulation, but we also have seen for example, 0:14:49.720 --> 0:14:52.000 Jet Blue was not allowed to buy Spirit right, so 0:14:52.080 --> 0:14:57.800 you still have intervention from the government that changes the 0:14:57.840 --> 0:15:02.320 way these businesses work in bank What do investors? What 0:15:02.400 --> 0:15:05.520 does Jamie Diamond want to see in terms of deregulation. 0:15:05.760 --> 0:15:07.800 I guess deregulation is the word we'd use if you 0:15:07.840 --> 0:15:10.440 hare to sort of align where the Overton window is 0:15:10.560 --> 0:15:13.720 right now. But realistically, what the banks really want is 0:15:13.760 --> 0:15:17.040 not more regulation, and that is what they were looking 0:15:17.120 --> 0:15:20.280 at had it been a democratic administration. If you look 0:15:20.280 --> 0:15:22.600 at the action of the Fed, especially the capital rules, 0:15:22.920 --> 0:15:26.160 the fact that they were facing big increases on their 0:15:26.160 --> 0:15:28.800 capital requirements was a big headache for banks for much 0:15:28.800 --> 0:15:31.800 of this year. Even before the election, the Fed did yield. 0:15:32.120 --> 0:15:34.960 The banks made an aggressive push. They rolled back some 0:15:35.000 --> 0:15:38.240 of the proposals. They've not taken effect yet. But with 0:15:38.360 --> 0:15:41.320 the change in administration and the change in tune banks 0:15:41.360 --> 0:15:44.000 sends an opportunity to go for the kill and make 0:15:44.040 --> 0:15:47.120 a bigger ask to make sure that there isn't any 0:15:47.200 --> 0:15:50.160 increase in capital or wherever they land up is much 0:15:50.240 --> 0:15:52.400 much better than what it looked like at the start 0:15:52.440 --> 0:15:52.920 of twenty two. 0:15:53.080 --> 0:15:56.040 Guys, it's not even just the capital rules, it's the 0:15:56.080 --> 0:15:58.560 areas that were being cracked down on that might not 0:15:58.640 --> 0:16:01.600 be in the future. For example, vak Ramaswami who is 0:16:01.720 --> 0:16:05.240 co leading that DOGE effort, is looking at the CFPB. 0:16:05.400 --> 0:16:09.320 The CFPB was really a relic of the two thousand 0:16:09.360 --> 0:16:12.080 and eight reforms. What does it mean for some of 0:16:12.120 --> 0:16:13.600 that to be rolled back on? 0:16:14.200 --> 0:16:15.840 And that actually is some of one of the most 0:16:15.880 --> 0:16:19.280 fascinating aspects right now. If you've been addicted to twitter 0:16:19.640 --> 0:16:22.320 x through the holiday season, shame on you. But if 0:16:22.360 --> 0:16:24.200 you have been, you would have noticed a lot of 0:16:24.280 --> 0:16:28.280 discussion on CFPB. Yes, the chief DOJE officers there, vive Ramaswami, 0:16:28.560 --> 0:16:31.600 Elon Musk, even Project twenty twenty five, these are names 0:16:31.640 --> 0:16:33.360 that have come out and said the CFPB needs to 0:16:33.400 --> 0:16:36.680 be eliminated altogether. Elon Musk and Project twenty twenty five 0:16:36.760 --> 0:16:40.400 recommendations were very clear. Vivex tweets over the last week 0:16:40.480 --> 0:16:42.560 or so make it clear that he's not happy with 0:16:42.600 --> 0:16:45.840 what's happening. And the incoming chair of the Senate Banking Committee, 0:16:45.840 --> 0:16:49.160 Tim'scott of South Carolina, has also been quite frustrated with 0:16:49.200 --> 0:16:52.280 what the CFPB has been doing in terms of their rulemaking. 0:16:52.560 --> 0:16:55.680 Where his point is, it's you're in a lame duck period. 0:16:55.720 --> 0:16:59.280 The FED, the OCC, the FDIC are not doing anything 0:16:59.440 --> 0:17:02.360 yet with this CFPP. We've seen the action on overdraft fees, 0:17:02.600 --> 0:17:06.240 We've seen the lawsuit against Walmart and one of their FinTechs, 0:17:06.480 --> 0:17:09.280 and some of the other motions that they're foot in place, 0:17:09.280 --> 0:17:11.560 including the crackdown going after the banks because of the 0:17:11.680 --> 0:17:15.840 zel fraud. Clearly they've been very active. The banking industry 0:17:15.880 --> 0:17:18.119 is not very happy about it. Some old school GOP 0:17:18.240 --> 0:17:20.600 members are not very happy about it. But I also 0:17:20.680 --> 0:17:24.520 find a very interesting strand here is there really are 0:17:24.720 --> 0:17:27.800 two different kinds of GOP right now. There is one 0:17:27.840 --> 0:17:32.600 where the faction of populism has been gaining ground and hole, 0:17:32.640 --> 0:17:34.479 and you can argue that it's coming straight down from 0:17:34.520 --> 0:17:38.480 the president. For that group, an agency like the CFPP 0:17:38.640 --> 0:17:42.639 going after overdraft fees, going after things like zelfraud that 0:17:43.040 --> 0:17:46.040 you would think would normally be encouraged. But your typical 0:17:46.440 --> 0:17:51.720 pro banking, anti regulation GOP faction would obviously see something 0:17:51.760 --> 0:17:54.600 like the CFPB as anathema. So it'll be interesting to 0:17:54.640 --> 0:17:56.879 see as we get into twenty twenty five and beyond 0:17:57.119 --> 0:17:59.600 which faction in that administration wins. 0:18:00.200 --> 0:18:02.439 I had dinner with the high school buddy mine, who 0:18:02.520 --> 0:18:05.320 is one of the top lawyers in the city, gets 0:18:05.320 --> 0:18:08.960 paid a King Ransom every year hates his job. He 0:18:09.040 --> 0:18:11.600 all did was complain about his job. I'm like, then leave, dude. 0:18:11.680 --> 0:18:14.439 I mean, he said, the biggest change is going to 0:18:14.440 --> 0:18:19.159 be Lena Khan at the Federal Trade Commission. Getting anybody 0:18:19.240 --> 0:18:22.240 in there in the FDC other than Lena Khan is 0:18:22.240 --> 0:18:23.879 going to be a boom to MNA bankers and m 0:18:23.880 --> 0:18:24.560 and A lawyers. 0:18:24.760 --> 0:18:27.520 Yeah, but this goes back to my previous point again. Yes, 0:18:27.640 --> 0:18:30.040 Lina Khan has been a bane for the banking industry, 0:18:30.080 --> 0:18:32.680 and you would think with the Democrats voted outline, that 0:18:32.800 --> 0:18:36.080 was even the conversation that even if Kamala Harris, who 0:18:36.080 --> 0:18:38.159 were to win, Lina Khan might not stay in that 0:18:38.240 --> 0:18:41.440 position because the pressure being put on that seat and 0:18:41.480 --> 0:18:44.480 the fear in the tech industry and beyond how much 0:18:45.080 --> 0:18:48.000 it was crimping deal making. But at the same time, 0:18:48.200 --> 0:18:51.080 listen to some of the comments made by Vice President 0:18:51.200 --> 0:18:54.600 leg JD. Vans during the campaigning cycle. He didn't not 0:18:54.880 --> 0:18:58.639 sound like someone who is the absolute anti Lina Khan type. 0:18:58.760 --> 0:19:02.520 So again, it remains to be seen which faction of 0:19:02.560 --> 0:19:05.919 the GOP has the louder voice. But if you didn't 0:19:05.920 --> 0:19:07.480 have a Lena Khan like figures. 0:19:10.040 --> 0:19:13.960 Having been guys, having been, you know, voting for Reagan 0:19:13.960 --> 0:19:16.000 in nineteen eighty, I can tell you there's only one voice. 0:19:16.040 --> 0:19:18.480 But even that one voice has not been the most 0:19:18.480 --> 0:19:19.400 predictable voice. 0:19:19.400 --> 0:19:22.639 So let's admit that I'm never bored of regulation, but 0:19:22.720 --> 0:19:24.920 I'm bored relative to the other topic that i want 0:19:24.960 --> 0:19:28.719 to talk about. Money, Right, Yeah, bonus season listen deals 0:19:28.720 --> 0:19:31.359 did not yet come back, so is there an expectation 0:19:31.440 --> 0:19:33.560 that bankers are going to get paid? Anyways? 0:19:34.600 --> 0:19:36.560 Deals did not come back to the extent you would 0:19:36.600 --> 0:19:38.680 have wanted to see, but they have been up relative 0:19:38.680 --> 0:19:41.560 to last year. They're still well below their long term averages, 0:19:41.600 --> 0:19:44.160 and the expectation is that you will get there. So 0:19:44.800 --> 0:19:47.160 some of the bonus payouts this year will not only 0:19:47.200 --> 0:19:50.720 be a recognition for the work done this year, but 0:19:50.880 --> 0:19:53.639 what you need to pay to keep top talent in 0:19:53.720 --> 0:19:56.560 their seat. And this is visible not just in bonus payouts. 0:19:56.600 --> 0:19:59.280 Look at the managing director promotion, Look at the Goldman 0:19:59.359 --> 0:20:02.040 Partner class. Some of these top promotions. 0:20:02.320 --> 0:20:03.000 They have been. 0:20:02.880 --> 0:20:06.120 Bigger sizes than in the past. They are battlefield promotions, 0:20:06.160 --> 0:20:09.240 recognizing the work that's already been done, but also telling 0:20:09.240 --> 0:20:11.960 them that there's a lot more opportunity to make a 0:20:12.040 --> 0:20:13.080 killing in the year ahead. 0:20:13.200 --> 0:20:16.520 Our thanks to Shrina Rajan Bloomberg Senior Finance reporter, we. 0:20:16.600 --> 0:20:19.240 Moved next to it Bloomberg Big Takes story we focused 0:20:19.280 --> 0:20:22.640 on this week, entitled Treasury's fifty trillion dollars day loads 0:20:22.680 --> 0:20:24.719 will test strained dealer pipes. 0:20:24.920 --> 0:20:27.680 The story looks at how the number of primary dealers 0:20:27.720 --> 0:20:30.159 in the US treasury market has now decreased, and it 0:20:30.200 --> 0:20:33.080 discusses how those remaining are facing mounting pressure is due 0:20:33.080 --> 0:20:36.360 to post financial crisis regulations and a growing US debtload. 0:20:36.480 --> 0:20:38.879 For more, guest host Matt Miller, Shanani Basseg and I 0:20:38.880 --> 0:20:41.639 were joined by Alex Harris, Bloomberg bond reporter. We first 0:20:41.680 --> 0:20:45.600 asked Alex why being a primary dealer isn't easy these days. 0:20:45.880 --> 0:20:48.480 You look at Citadel in this case, and they have 0:20:48.600 --> 0:20:51.479 been vuying to become a primary dealer for years, and 0:20:51.520 --> 0:20:54.359 finally in September said, you know what, thanks, but no thanks. 0:20:54.400 --> 0:20:57.280 This is just a losing proposition. And I think that's 0:20:57.280 --> 0:20:59.840 how people are feeling about it now and why you're 0:20:59.880 --> 0:21:03.960 not seeing the primary dealer community even growth to keep 0:21:04.040 --> 0:21:06.199