1 00:00:06,360 --> 00:00:13,040 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Jay Ley. We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:32,640 Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg We 5 00:00:32,720 --> 00:00:34,639 Speaker 1: need to get you up to date on the floods 6 00:00:35,120 --> 00:00:38,440 Speaker 1: forced by Hurricane Florence, and we crossed sub announcie Chris Flad, 7 00:00:38,600 --> 00:00:41,600 Speaker 1: who joins us from North Carolina. Bloomberg News is climate 8 00:00:41,880 --> 00:00:46,639 Speaker 1: and adaptation reporter. Chris, give us the latest place. Sure, well, 9 00:00:46,640 --> 00:00:50,040 Speaker 1: I can just get back from Charlotte's last night. I've 10 00:00:50,040 --> 00:00:52,960 Speaker 1: been there for a few days. The rain started in 11 00:00:53,120 --> 00:00:58,560 Speaker 1: Earnest really on Friday night, continuing heavily through yesterday. Amazing 12 00:00:58,680 --> 00:01:01,680 Speaker 1: how slowly it was, How long it took the effect 13 00:01:01,760 --> 00:01:04,920 Speaker 1: of that hurricane to reach inland to Charlotte, And it 14 00:01:05,000 --> 00:01:08,040 Speaker 1: looked like the floods were just getting worse. There were 15 00:01:08,160 --> 00:01:11,720 Speaker 1: rivers around Charlotte beginning to top their banks. It's hard 16 00:01:11,720 --> 00:01:14,400 Speaker 1: to know how long the effect might last because they're 17 00:01:14,400 --> 00:01:16,720 Speaker 1: still building. Chris, do we know when these flatts will 18 00:01:16,760 --> 00:01:21,000 Speaker 1: starts received? Yeah, it's hard to say. It's the question 19 00:01:21,040 --> 00:01:24,440 Speaker 1: of how how inundated the soil is, how much water 20 00:01:24,600 --> 00:01:28,039 Speaker 1: is where it goes. I got the stent from talking 21 00:01:28,040 --> 00:01:31,119 Speaker 1: to local officials they are braced for a multiday event 22 00:01:31,200 --> 00:01:34,280 Speaker 1: in Charlotte, and only then can they assess the impact 23 00:01:34,680 --> 00:01:36,480 Speaker 1: and figure out what it will take to clean up 24 00:01:36,520 --> 00:01:41,040 Speaker 1: after Chris away from the media and the you know, 25 00:01:41,319 --> 00:01:43,640 Speaker 1: people on the beach and blowing winds and all that. 26 00:01:43,800 --> 00:01:46,360 Speaker 1: What is the back store? Are you observed down there? 27 00:01:47,800 --> 00:01:50,320 Speaker 1: I got so a few things. A good question, because 28 00:01:50,360 --> 00:01:53,200 Speaker 1: you're right, the new Burn stuff gets the most attention. 29 00:01:53,480 --> 00:01:55,680 Speaker 1: I certainly got the impression the state that knows what 30 00:01:55,800 --> 00:01:58,640 Speaker 1: they're doing, they're used this stuff. You talk to residents 31 00:01:58,840 --> 00:02:01,440 Speaker 1: in small towns around the state, they all say, this 32 00:02:01,520 --> 00:02:05,080 Speaker 1: happens all the time. We're used to it by now, 33 00:02:05,160 --> 00:02:07,360 Speaker 1: we know how to handle it. But then again, we 34 00:02:07,480 --> 00:02:10,440 Speaker 1: climate change. The thing we've learned is just because you've 35 00:02:10,440 --> 00:02:12,919 Speaker 1: been through storms doesn't know you're doesn't mean you're quite 36 00:02:12,960 --> 00:02:16,120 Speaker 1: prepared for what comes next. Everyone said, these are historic 37 00:02:16,160 --> 00:02:19,000 Speaker 1: amounts of rain, at least in Charlotte's, so no one 38 00:02:19,080 --> 00:02:21,920 Speaker 1: really knows if something new will happen in terms of 39 00:02:21,960 --> 00:02:25,200 Speaker 1: the amount of flooding the sort of severity of flooding, 40 00:02:25,480 --> 00:02:27,960 Speaker 1: but people were ready. It's the state that that knows 41 00:02:28,000 --> 00:02:29,960 Speaker 1: how to handle this stuff, and they don't seem to 42 00:02:30,000 --> 00:02:33,040 Speaker 1: have any any blinders on. They seem to appreciate that 43 00:02:33,320 --> 00:02:35,320 Speaker 1: this could be really bad and they've got to do 44 00:02:35,360 --> 00:02:37,440 Speaker 1: whatever it takes to deal with it. Crystal, thank you 45 00:02:37,520 --> 00:02:40,560 Speaker 1: so much with an update on what we see in 46 00:02:40,639 --> 00:02:56,040 Speaker 1: the Carolinas job chilling news. You want to us now 47 00:02:56,040 --> 00:02:57,919 Speaker 1: here in New York City. Credit Sue is global head 48 00:02:57,960 --> 00:03:01,320 Speaker 1: of ex Treating Strategy Shop. Which side of the trade 49 00:03:01,320 --> 00:03:03,240 Speaker 1: store do you sit on this morning? Because it looks 50 00:03:03,280 --> 00:03:05,600 Speaker 1: like it could get better. Last week we were going 51 00:03:05,639 --> 00:03:07,600 Speaker 1: to get talks between the Chinese and the United States, 52 00:03:07,639 --> 00:03:09,480 Speaker 1: and then this morning it looks like it may well 53 00:03:09,560 --> 00:03:12,520 Speaker 1: get worse, with the Chinese reportedly set to walk away 54 00:03:12,520 --> 00:03:15,400 Speaker 1: from any potential talks. Yeah, we've we've been on the 55 00:03:15,400 --> 00:03:17,200 Speaker 1: more cynical side, to be honest with you, when it 56 00:03:17,200 --> 00:03:20,000 Speaker 1: comes to the story on the U s side, it 57 00:03:20,040 --> 00:03:23,360 Speaker 1: feels to us that the agenda for for the Trump 58 00:03:23,360 --> 00:03:26,200 Speaker 1: administration going into the midterms is going to be to 59 00:03:26,280 --> 00:03:28,280 Speaker 1: try to roll out the base. You know, that seems 60 00:03:28,320 --> 00:03:30,880 Speaker 1: to be the idea which requires more of this type 61 00:03:30,880 --> 00:03:34,440 Speaker 1: of talk from from our perspective, and on the Chinese side, 62 00:03:34,760 --> 00:03:39,000 Speaker 1: the odds of them backing down preemptively in the face 63 00:03:39,040 --> 00:03:43,480 Speaker 1: of pressure doesn't seem too high either. So it does 64 00:03:43,520 --> 00:03:45,360 Speaker 1: seem like we have more of the same ahead and 65 00:03:45,600 --> 00:03:48,520 Speaker 1: that's obviously an issue for the for the X market, 66 00:03:48,760 --> 00:03:50,840 Speaker 1: particularly the Chinese. Remember, well, let's talk about how the 67 00:03:50,840 --> 00:03:53,280 Speaker 1: FX markets capturing this story this morning. Was interesting to 68 00:03:53,320 --> 00:03:55,800 Speaker 1: wake up this morning. See the negative headlines around the 69 00:03:55,840 --> 00:03:59,120 Speaker 1: trade story see futures negative. But the dollar weaker against 70 00:03:59,160 --> 00:04:01,640 Speaker 1: the Bulka G ten. What explains that dollar weakness? I 71 00:04:01,680 --> 00:04:04,800 Speaker 1: think G ten and actually currencies in general, you've seen 72 00:04:04,800 --> 00:04:07,640 Speaker 1: a lot of dispersion now in performance um it's leaving 73 00:04:07,680 --> 00:04:10,360 Speaker 1: the overall dollar actually, funny enough, stuck in arrange, and 74 00:04:10,360 --> 00:04:13,120 Speaker 1: it has been for for two three months. But dispersion 75 00:04:13,200 --> 00:04:15,600 Speaker 1: is really the name of the game right now. In Europe, 76 00:04:15,720 --> 00:04:18,320 Speaker 1: you've got a situation with for example, of Nouise's banks 77 00:04:18,320 --> 00:04:21,839 Speaker 1: again to hike rates probably this week. European data have 78 00:04:21,839 --> 00:04:24,360 Speaker 1: have been quite solid as well, and to some extent 79 00:04:24,360 --> 00:04:26,200 Speaker 1: that the market has been able to ignore some of 80 00:04:26,240 --> 00:04:29,080 Speaker 1: the issues that have affected emerging markets, like for example, 81 00:04:29,160 --> 00:04:31,600 Speaker 1: this trade story. So I think when you look at 82 00:04:31,600 --> 00:04:35,240 Speaker 1: the dollar, you do have to differentiate between the various 83 00:04:35,279 --> 00:04:39,440 Speaker 1: currencies and uh, you know, look at each story in 84 00:04:39,520 --> 00:04:41,920 Speaker 1: its own lights. O give it a come on, eight 85 00:04:41,960 --> 00:04:44,760 Speaker 1: days ago we had a contagion, than God, give us 86 00:04:44,760 --> 00:04:47,320 Speaker 1: a contagion update. I mean, it's not there unless the 87 00:04:47,400 --> 00:04:51,599 Speaker 1: news makes it there. I think contagion is unlikely unless 88 00:04:51,640 --> 00:04:55,760 Speaker 1: there's you suggest there's some uh feed through from some 89 00:04:55,839 --> 00:04:58,719 Speaker 1: of the shocks that we're seeing into the banking system, 90 00:04:58,720 --> 00:05:03,320 Speaker 1: for example, some central source of of actual contagions, something 91 00:05:03,400 --> 00:05:06,560 Speaker 1: that distributes it into the system more widely. Now you 92 00:05:06,600 --> 00:05:08,960 Speaker 1: saw a few weeks ago with respected Turkey. There was 93 00:05:09,040 --> 00:05:11,839 Speaker 1: some unknowns around the extent to which that could create 94 00:05:11,880 --> 00:05:15,120 Speaker 1: that problem, but the market seems to have digested it 95 00:05:15,160 --> 00:05:17,440 Speaker 1: and decided that it isn't really a problem for the system. 96 00:05:17,520 --> 00:05:20,400 Speaker 1: So until we get a shock big enough to really 97 00:05:20,400 --> 00:05:23,799 Speaker 1: bring the overall system into question, I think this dispersion 98 00:05:23,800 --> 00:05:27,479 Speaker 1: is is this going through seven weakness? I mean, the 99 00:05:27,480 --> 00:05:30,840 Speaker 1: bottom line is Philippine peso crashes out, then it moves 100 00:05:30,880 --> 00:05:33,760 Speaker 1: weaker over three or four years, and we're almost back 101 00:05:33,800 --> 00:05:36,520 Speaker 1: to that two thousand three two THO for weakness. And 102 00:05:36,680 --> 00:05:40,560 Speaker 1: look at John, look at Argentinian peso. Yeah, I'm Friday. 103 00:05:40,600 --> 00:05:43,039 Speaker 1: I mean, you can rationally most for the years, but 104 00:05:43,320 --> 00:05:45,880 Speaker 1: I don't like the nine nineties comparison. I don't like 105 00:05:45,960 --> 00:05:50,880 Speaker 1: comparing fixed exchange rate regimes to flexible exchange rate regimes. Yes, 106 00:05:50,920 --> 00:05:54,520 Speaker 1: the levels might matter, but the moves haven't been as vicious. 107 00:05:54,560 --> 00:05:57,839 Speaker 1: They haven't been as devastating compared to the late nineties 108 00:05:57,880 --> 00:06:01,239 Speaker 1: across the m outside of places like argenty. Now that's right. Well, 109 00:06:01,839 --> 00:06:05,960 Speaker 1: the difference then was that obviously having these dollar pegs 110 00:06:06,160 --> 00:06:10,600 Speaker 1: allowed for huge inflation differentials to build up over time 111 00:06:10,680 --> 00:06:13,800 Speaker 1: and then had to be suddenly adjusted in one shock. 112 00:06:14,200 --> 00:06:16,800 Speaker 1: Right now, what you're seeing, especially in a currency like 113 00:06:16,880 --> 00:06:20,200 Speaker 1: the Philippine peso, which is free floating, you're seeing a 114 00:06:20,279 --> 00:06:23,520 Speaker 1: reaction that takes you know, many months to unfold, but 115 00:06:23,720 --> 00:06:25,960 Speaker 1: ultimately reflects the same factor, which is that you do 116 00:06:26,040 --> 00:06:29,839 Speaker 1: have high rate differentials in inflation differentials storry between a 117 00:06:29,880 --> 00:06:32,000 Speaker 1: country like the Philippines in the US, and you don't 118 00:06:32,000 --> 00:06:34,520 Speaker 1: really have high enough real rates to protect the currency 119 00:06:34,560 --> 00:06:35,960 Speaker 1: at this point. And so what's your base case for 120 00:06:36,000 --> 00:06:38,120 Speaker 1: the U s dollar right now? We think the US 121 00:06:38,160 --> 00:06:41,919 Speaker 1: dollar going into the mid terms probably continues to behave 122 00:06:41,960 --> 00:06:43,560 Speaker 1: as it is at this point in time, so it 123 00:06:43,640 --> 00:06:48,800 Speaker 1: stays relatively firm against the wider group of currencies. The 124 00:06:48,880 --> 00:06:51,760 Speaker 1: mid term elections do pose a potential pivot point from 125 00:06:51,760 --> 00:06:54,159 Speaker 1: our perspective, and as much as if you do actually 126 00:06:54,200 --> 00:06:58,120 Speaker 1: see a very strong democratic performance, it will be seen 127 00:06:58,160 --> 00:07:01,599 Speaker 1: by the market as maybe an indictment to some extent 128 00:07:01,720 --> 00:07:04,520 Speaker 1: of some of the policy mixes that we've had until 129 00:07:04,560 --> 00:07:06,560 Speaker 1: this at this point in time, even if they're have 130 00:07:06,600 --> 00:07:08,919 Speaker 1: been good for the equity market, for example, um and 131 00:07:09,000 --> 00:07:11,760 Speaker 1: that unknown, that new unknown as to what that will 132 00:07:11,800 --> 00:07:15,680 Speaker 1: do for animal spirits for example, could be await on 133 00:07:15,840 --> 00:07:18,880 Speaker 1: us rate expectations, but on the dollar by extension at 134 00:07:18,920 --> 00:07:22,520 Speaker 1: that points. Global head of Effect Training Strategy. Great to 135 00:07:22,520 --> 00:07:25,200 Speaker 1: have you with us this morning radio and on a 136 00:07:25,200 --> 00:07:42,840 Speaker 1: blunk black TV as well. John Ferrell found a PDF 137 00:07:43,120 --> 00:07:48,200 Speaker 1: from two thousand eight March Away, March Away Banks and Brokers, 138 00:07:48,360 --> 00:07:52,000 Speaker 1: More Charges Ahead, Mike Mayo, the author, a fantastic piece 139 00:07:52,080 --> 00:07:55,320 Speaker 1: and the absence of six employers. This is like the 140 00:07:55,360 --> 00:07:58,559 Speaker 1: absence of management realism and it's all here in the piece. 141 00:07:58,720 --> 00:08:00,640 Speaker 1: And of course in later seven and Mike was the 142 00:08:00,640 --> 00:08:03,280 Speaker 1: one that downgraded City and imagine got a terrific amount 143 00:08:03,320 --> 00:08:06,880 Speaker 1: of abuse for downgrading stock. Mike had joining it. But 144 00:08:06,920 --> 00:08:09,360 Speaker 1: now with what I was Fargo senior analyst, Mike, great 145 00:08:09,400 --> 00:08:11,160 Speaker 1: to have you with us, Thanks for having me. Let's 146 00:08:11,160 --> 00:08:12,720 Speaker 1: look back and I want to sort of look forward 147 00:08:12,720 --> 00:08:15,520 Speaker 1: on time, but take a seven and earlier way. You 148 00:08:15,680 --> 00:08:17,720 Speaker 1: downgrade to some of the management who just aren't being 149 00:08:17,760 --> 00:08:20,760 Speaker 1: realistic enough. What kind of reception did you get? Well, 150 00:08:20,800 --> 00:08:23,400 Speaker 1: this is the ten years since Lehman Brothers failed. This 151 00:08:23,400 --> 00:08:26,040 Speaker 1: would have been Lehman Brothers Monday when there's a lot 152 00:08:26,040 --> 00:08:28,320 Speaker 1: of havoc. But it did not start in two thousand 153 00:08:28,400 --> 00:08:31,840 Speaker 1: seven or two thousand eight. It started throughout last decade 154 00:08:31,880 --> 00:08:35,280 Speaker 1: when the banking industry had the weakest balance sheet and 155 00:08:35,320 --> 00:08:39,680 Speaker 1: a generation more leverage on the bank's balance sheet in 156 00:08:39,840 --> 00:08:43,439 Speaker 1: decades before the financial crisis. So by the time you 157 00:08:43,520 --> 00:08:47,720 Speaker 1: got to two thousand seven, two thousand eight and Cracks performing, 158 00:08:47,760 --> 00:08:50,440 Speaker 1: Once you have Cracks with that amount of leverage, it 159 00:08:50,520 --> 00:08:52,679 Speaker 1: does not have a pretty ending. And what's interesting is 160 00:08:52,720 --> 00:08:54,439 Speaker 1: you break down the banks. This is at the piece 161 00:08:54,840 --> 00:08:56,920 Speaker 1: from March our way. You break down the banks into 162 00:08:57,000 --> 00:08:59,680 Speaker 1: individual banks with the home equity loane exposure and just 163 00:08:59,679 --> 00:09:02,320 Speaker 1: look at the average length of values of like six 164 00:09:03,880 --> 00:09:06,839 Speaker 1: at fifth third, and I imagine as time went by 165 00:09:06,880 --> 00:09:10,160 Speaker 1: this just started looking a whole lot worse. Well, you 166 00:09:10,200 --> 00:09:13,480 Speaker 1: really do reach in the archives here at Bloomberg, we 167 00:09:13,600 --> 00:09:18,560 Speaker 1: updated the spreadsheet about exposures to real estate and likely 168 00:09:18,679 --> 00:09:21,280 Speaker 1: write downs and existing right down. We had to update 169 00:09:21,280 --> 00:09:24,720 Speaker 1: that spreadsheet every week, sometimes within a couple of days, 170 00:09:25,040 --> 00:09:28,320 Speaker 1: and there is new information. Did you get right? Coming 171 00:09:28,320 --> 00:09:32,560 Speaker 1: out of this great insight the rebuild and operating income 172 00:09:32,840 --> 00:09:34,520 Speaker 1: that we see. I think one of the great things 173 00:09:34,559 --> 00:09:38,080 Speaker 1: unspoken now is how they've just layered on some of 174 00:09:38,080 --> 00:09:42,000 Speaker 1: these two big failed banks huge gains and operating income. 175 00:09:42,240 --> 00:09:43,880 Speaker 1: Do you do you look back and say you got 176 00:09:43,880 --> 00:09:48,640 Speaker 1: that right? Well? I think what the industry failed at 177 00:09:48,800 --> 00:09:51,640 Speaker 1: banks failed at before the crisis was it was too 178 00:09:51,760 --> 00:09:55,800 Speaker 1: much about growth, growth, growth, and not profit. And since 179 00:09:55,840 --> 00:09:58,839 Speaker 1: the financial crisis, do you know that revenue growth in 180 00:09:58,880 --> 00:10:01,600 Speaker 1: the banking industry will be the lowest this decade in 181 00:10:01,720 --> 00:10:06,199 Speaker 1: eighty years, But that's okay because banks are controlling expenses 182 00:10:06,280 --> 00:10:08,680 Speaker 1: much better. In fact, we think the banking industry will 183 00:10:08,720 --> 00:10:12,560 Speaker 1: have the best deficiency in history in the next five years. 184 00:10:12,880 --> 00:10:16,720 Speaker 1: So if you get earnings growth without overly aggressive revenue growth, 185 00:10:17,080 --> 00:10:18,839 Speaker 1: that's a good formula. We got so many things to 186 00:10:18,880 --> 00:10:20,520 Speaker 1: talk about. I know John wants to dive in here 187 00:10:20,559 --> 00:10:23,000 Speaker 1: with something very quickly. Here City Group in the tumult 188 00:10:23,040 --> 00:10:26,160 Speaker 1: A City Group is Mr Corbett in charge of a 189 00:10:26,240 --> 00:10:32,000 Speaker 1: strategic plan there. Mike Corbett has done a fine job. Um, 190 00:10:32,200 --> 00:10:35,480 Speaker 1: we've taken City Group a long way, really reinforced the 191 00:10:35,480 --> 00:10:39,360 Speaker 1: balance sheet. The risk culture is a hundred eighty degrees 192 00:10:39,480 --> 00:10:43,000 Speaker 1: different than a decade ago. And that's positive, but it's 193 00:10:43,000 --> 00:10:46,120 Speaker 1: not optimal yet. And we think City Group has much 194 00:10:46,160 --> 00:10:49,600 Speaker 1: more further to go to optimize the firm effect. We 195 00:10:49,640 --> 00:10:52,640 Speaker 1: think of City Group had metrics similar to a pear, 196 00:10:52,840 --> 00:10:55,679 Speaker 1: their earnings would be twenty five percent higher today if 197 00:10:55,760 --> 00:10:58,439 Speaker 1: we seen Pete Manchon's paying that interest munchions of these 198 00:10:58,480 --> 00:11:01,760 Speaker 1: banks already. Oh, you're a little to my optically focused 199 00:11:01,760 --> 00:11:05,640 Speaker 1: on net entrance margins. I mean sure many investors, the 200 00:11:05,679 --> 00:11:08,640 Speaker 1: stock market as a whole has reacted unfavorably to banks. 201 00:11:08,679 --> 00:11:11,440 Speaker 1: This year's thing, will margins be up one basis points 202 00:11:11,520 --> 00:11:14,839 Speaker 1: or two basis points? The bigger pictures what's happening to 203 00:11:14,960 --> 00:11:18,120 Speaker 1: revenues relative to expense and margins might not need to 204 00:11:18,200 --> 00:11:20,600 Speaker 1: long volume them micro yeah. So look, if you have 205 00:11:20,840 --> 00:11:24,320 Speaker 1: five percent revenue growth and three percent expense growth, that 206 00:11:24,480 --> 00:11:28,319 Speaker 1: is a fantastic recipe for for good earnings growth. And 207 00:11:28,480 --> 00:11:31,640 Speaker 1: you know what's incredible. Last week there was a presentation 208 00:11:31,679 --> 00:11:35,200 Speaker 1: by City Group Management and the audience was surveyed saying 209 00:11:35,440 --> 00:11:37,920 Speaker 1: what would make you more excited about owning City Group stock? 210 00:11:38,080 --> 00:11:41,800 Speaker 1: You know what the audience did, more loan growth? Are 211 00:11:41,840 --> 00:11:44,840 Speaker 1: you kidding me? Do not ask for City Group to 212 00:11:44,880 --> 00:11:47,599 Speaker 1: have overly aggressive loan growth their city groups getting the 213 00:11:47,679 --> 00:11:50,760 Speaker 1: risk management right. In fact, city groups revenue growth this 214 00:11:50,840 --> 00:11:54,160 Speaker 1: decade is likely to be the slowest since before the 215 00:11:54,200 --> 00:11:57,360 Speaker 1: American Civil War. And that's a good thing because then 216 00:11:57,360 --> 00:12:01,040 Speaker 1: you have more sustainable earnings growth. Let's talk about this 217 00:12:01,040 --> 00:12:02,600 Speaker 1: because I have a ton of analysts come on the 218 00:12:02,600 --> 00:12:04,720 Speaker 1: program with Tom and I and Bloomberg Radio, the same 219 00:12:04,720 --> 00:12:07,760 Speaker 1: thing on Bloomberg TV. And basically the bullish pitch they 220 00:12:07,760 --> 00:12:10,760 Speaker 1: try and paint for financials is that, yes, net interest 221 00:12:10,800 --> 00:12:13,160 Speaker 1: margins might face a little bit of pressure, but loan 222 00:12:13,280 --> 00:12:15,040 Speaker 1: volume is going to make up for it. That's almost 223 00:12:15,040 --> 00:12:17,640 Speaker 1: the bullish scenario for them. For the banks, you're saying 224 00:12:17,640 --> 00:12:21,320 Speaker 1: that's not it, Well, look, you have cyclical lenses and 225 00:12:21,360 --> 00:12:24,960 Speaker 1: you can have a structural lens and the cyclical predictions. 226 00:12:25,000 --> 00:12:27,079 Speaker 1: What's going to happen at interest rates, what's going to 227 00:12:27,120 --> 00:12:29,400 Speaker 1: happen to margins. We think margins go up a little bit, 228 00:12:29,400 --> 00:12:31,520 Speaker 1: we think long growth goes up a little bit. That's fine, 229 00:12:31,679 --> 00:12:34,920 Speaker 1: but it's the structural changes that are taking place. You 230 00:12:35,000 --> 00:12:38,280 Speaker 1: have the strongest balance sheets and a generation usually have 231 00:12:38,360 --> 00:12:41,760 Speaker 1: the best efficiency in history. In five years, you have 232 00:12:41,960 --> 00:12:45,840 Speaker 1: better oversight and risk management. These are structural changes and 233 00:12:45,880 --> 00:12:48,680 Speaker 1: that has more of an impact on valuation than whether 234 00:12:48,760 --> 00:12:51,320 Speaker 1: a net interest margins up one basis point or down 235 00:12:51,320 --> 00:12:53,880 Speaker 1: to base So it used to be the case that 236 00:12:53,960 --> 00:12:56,840 Speaker 1: banks were the best proxy to capture a cyclical upswing, 237 00:12:56,920 --> 00:13:00,520 Speaker 1: and we send banks are no longer that we're going 238 00:13:00,559 --> 00:13:04,000 Speaker 1: to have recessions. We're going to have cycles. Banks are 239 00:13:04,040 --> 00:13:06,160 Speaker 1: not immune to the cycle, but we what we are 240 00:13:06,200 --> 00:13:10,439 Speaker 1: saying is banks are less susceptible to cycles in the past. 241 00:13:10,480 --> 00:13:14,560 Speaker 1: Banks are relatively more resilient that a situation like a 242 00:13:14,559 --> 00:13:17,400 Speaker 1: decade ago in the financial crisis is not likely to 243 00:13:17,480 --> 00:13:20,640 Speaker 1: happen over the next decade. So banks can weather a 244 00:13:20,679 --> 00:13:24,400 Speaker 1: crisis better than any time the last generation. And in fact, 245 00:13:25,040 --> 00:13:27,640 Speaker 1: you'll see we think you'll see through the next recession. 246 00:13:28,080 --> 00:13:30,760 Speaker 1: Banks should be a source of strength. So for that, 247 00:13:30,840 --> 00:13:34,520 Speaker 1: we say thank you regulators. They've required banks to raise 248 00:13:34,640 --> 00:13:37,720 Speaker 1: capital and increase liquidity enough where banks can be a 249 00:13:37,720 --> 00:13:39,880 Speaker 1: source of strength. I'm not sitting here saying that's a 250 00:13:39,880 --> 00:13:41,520 Speaker 1: bad thing. I agree with you. I think that's a 251 00:13:41,559 --> 00:13:43,360 Speaker 1: good thing. But I think what you've just said kind 252 00:13:43,360 --> 00:13:45,920 Speaker 1: of explains what we've got this stock on the performance 253 00:13:46,360 --> 00:13:48,040 Speaker 1: even though we've had GDP of full percent in the 254 00:13:48,080 --> 00:13:51,520 Speaker 1: lost quota. Doesn't that explain everything you've just said. Well, 255 00:13:51,559 --> 00:13:54,880 Speaker 1: we think it's too much short term emphasis with the banks. 256 00:13:55,040 --> 00:13:59,920 Speaker 1: So since the tax cuts, investors are saying, where's my dessert? 257 00:14:00,280 --> 00:14:04,080 Speaker 1: I mean, the main course at banks is good. I mean, okay, 258 00:14:04,120 --> 00:14:10,240 Speaker 1: revenue growth, good expense control, good capital return, and investors saying, 259 00:14:10,240 --> 00:14:13,640 Speaker 1: where's my extra loan growth? Where is my extra capital markets? 260 00:14:13,760 --> 00:14:17,280 Speaker 1: Where are my mergers? Where there's extra animal spirits showing 261 00:14:17,320 --> 00:14:20,360 Speaker 1: through it the banks? And we're saying it sounds like 262 00:14:20,400 --> 00:14:23,240 Speaker 1: a bunch of whiny kids at a summer barbecue. Like 263 00:14:23,520 --> 00:14:26,480 Speaker 1: you had a good dinner, don't whine about your dessert, 264 00:14:26,560 --> 00:14:30,440 Speaker 1: because you're going to have a steady course of meals 265 00:14:30,480 --> 00:14:33,120 Speaker 1: and not blow up and for that, when you take 266 00:14:33,120 --> 00:14:35,680 Speaker 1: the present value of future earnings, it's Tom Keynones at 267 00:14:35,720 --> 00:14:38,240 Speaker 1: c f A that has more of an impact on 268 00:14:38,320 --> 00:14:40,640 Speaker 1: valuation over the long term. What's your single best player 269 00:14:40,680 --> 00:14:43,640 Speaker 1: right now? City Group is our number one idea. We 270 00:14:43,720 --> 00:14:46,680 Speaker 1: think they are under optimized. We think there's reasons they 271 00:14:46,680 --> 00:14:49,640 Speaker 1: can become more optimized over the next several months. You're 272 00:14:49,640 --> 00:14:53,040 Speaker 1: going to have a change in chairman, a change in CFO, 273 00:14:53,520 --> 00:14:56,800 Speaker 1: a change in consumer in the United States, So changes 274 00:14:56,880 --> 00:15:00,440 Speaker 1: at a firm that's under optimized creates changing to what 275 00:15:01,600 --> 00:15:04,160 Speaker 1: changing to a more optimized firm? Oh, by the way, there, 276 00:15:04,320 --> 00:15:06,160 Speaker 1: what does that mean? Come on? Optimized from the New 277 00:15:06,240 --> 00:15:09,840 Speaker 1: York giants are optimized right now? Optimized from are they 278 00:15:09,840 --> 00:15:13,920 Speaker 1: going to be able to compete at retail against Fortress Diamond. Well, 279 00:15:14,000 --> 00:15:17,080 Speaker 1: the consumer business at City Group is way under optimized. 280 00:15:17,120 --> 00:15:19,120 Speaker 1: By the way, there's an activist in City groups shares 281 00:15:19,320 --> 00:15:22,640 Speaker 1: a billion dollar ownership stake by a value act. That's 282 00:15:22,640 --> 00:15:25,680 Speaker 1: the first time you've had a major activists in city Shares, 283 00:15:25,880 --> 00:15:27,960 Speaker 1: and it coincides with the time when you have a 284 00:15:28,040 --> 00:15:31,320 Speaker 1: change in chairman. So that puts extra pressure. We think 285 00:15:31,360 --> 00:15:34,920 Speaker 1: we think City Group needs extra intensity, extra focus at 286 00:15:34,920 --> 00:15:37,400 Speaker 1: the top to control expenses while they continue to go 287 00:15:37,440 --> 00:15:40,360 Speaker 1: over I'm all ratios. On Monday, what's the price to book? 288 00:15:40,360 --> 00:15:42,760 Speaker 1: Their price to tangibles at thirty cents on the dollar, 289 00:15:43,240 --> 00:15:46,200 Speaker 1: City trades just a little bit more than tangible book value. 290 00:15:46,440 --> 00:15:49,360 Speaker 1: That's a book price to tangible book. They trade at 291 00:15:49,400 --> 00:15:52,280 Speaker 1: one point, you know, one one point two times tangible 292 00:15:52,320 --> 00:15:55,760 Speaker 1: book in the old days. Those the valuation levels you'd 293 00:15:55,760 --> 00:15:58,520 Speaker 1: see during a crisis. So at City Group you almost 294 00:15:58,520 --> 00:16:01,480 Speaker 1: have you know, a value wait, you know, a crisis 295 00:16:01,560 --> 00:16:04,720 Speaker 1: price without a crisis, that creates an opportunity. We think 296 00:16:04,720 --> 00:16:07,480 Speaker 1: City Group stock doubles from here over the next four years. 297 00:16:07,520 --> 00:16:10,440 Speaker 1: I tell you what a European Linda with a price 298 00:16:10,520 --> 00:16:13,240 Speaker 1: the book with a one handle, they would love that. That 299 00:16:13,160 --> 00:16:16,680 Speaker 1: That would be like a run so many European banks 300 00:16:16,760 --> 00:16:18,760 Speaker 1: right now, Mike, and on the memory here of you 301 00:16:18,760 --> 00:16:21,880 Speaker 1: know Lehman Brothers Monday ten years ago. Um, you know, 302 00:16:21,920 --> 00:16:25,320 Speaker 1: we think there's too much recency bias. It's all you know, crisis, 303 00:16:25,400 --> 00:16:28,200 Speaker 1: this crisis that is almost as if the crisis occurred 304 00:16:28,240 --> 00:16:30,960 Speaker 1: just a few days ago. But that's what creates the opportunity. 305 00:16:31,040 --> 00:16:32,920 Speaker 1: John started with Deutsche Bank. Can you give us a 306 00:16:33,000 --> 00:16:34,880 Speaker 1: few words and if it means that, can you do 307 00:16:34,960 --> 00:16:37,440 Speaker 1: that from a compliance standboy talk about Deutsche Bank or not? 308 00:16:38,120 --> 00:16:41,480 Speaker 1: I can. I worked at Deutsche Bank a depetative. But 309 00:16:41,600 --> 00:16:44,480 Speaker 1: in terms of the global banks generally, and we've shown 310 00:16:44,560 --> 00:16:47,240 Speaker 1: data on this, the U S banks, the five large 311 00:16:47,320 --> 00:16:50,640 Speaker 1: US banks and that's City, JP, Morgan Bank America, Morgan Stanley, 312 00:16:50,640 --> 00:16:54,280 Speaker 1: and Goldman Sachs have gained significant market share against Norutscha 313 00:16:54,320 --> 00:16:57,200 Speaker 1: Bank and the other European banks, and they were likely 314 00:16:57,240 --> 00:16:59,920 Speaker 1: to continue to do so because the US bank balance 315 00:17:00,040 --> 00:17:03,240 Speaker 1: gets are stronger than the European bank bound um. Stand 316 00:17:03,280 --> 00:17:05,639 Speaker 1: out of trouble, as Tom Kane trots games coming on 317 00:17:05,640 --> 00:17:09,000 Speaker 1: a company at sound of his converage, Get bench out 318 00:17:09,040 --> 00:17:11,640 Speaker 1: with your market from Fargo with a trip down memory 319 00:17:11,720 --> 00:17:14,439 Speaker 1: line the legendary band Countless. That is Mike Mayo from 320 00:17:14,440 --> 00:17:17,320 Speaker 1: New York City for our audience worldwide, alongside Tom Kane, 321 00:17:17,720 --> 00:17:32,080 Speaker 1: Jonathan Farroll. This is one of the themes this weekend 322 00:17:32,080 --> 00:17:34,879 Speaker 1: that I really really wanted to talk about. It's a 323 00:17:34,960 --> 00:17:38,359 Speaker 1: basic idea of the gradient to a weaker economy and 324 00:17:38,400 --> 00:17:40,640 Speaker 1: it's a real mystery out there right now. Francis Donald 325 00:17:40,720 --> 00:17:43,359 Speaker 1: within us with Manual Life Francis, or is the great 326 00:17:43,440 --> 00:17:45,280 Speaker 1: fake out here that we're going to see a better 327 00:17:45,320 --> 00:17:49,800 Speaker 1: economy for longer than most people are looking for. Well, 328 00:17:49,840 --> 00:17:52,680 Speaker 1: this is certainly a fairly extended cycle, but I see 329 00:17:52,680 --> 00:17:55,720 Speaker 1: at least eighteen months of more strength here before we 330 00:17:55,800 --> 00:17:58,000 Speaker 1: hit a rough patch. Right now, I'm a little bit 331 00:17:58,080 --> 00:18:01,320 Speaker 1: more concerned about twenty and what that year starts to 332 00:18:01,320 --> 00:18:03,280 Speaker 1: look at, just based on what the data is showing 333 00:18:03,359 --> 00:18:05,560 Speaker 1: us right now. But until then it still looks like 334 00:18:05,600 --> 00:18:07,840 Speaker 1: the all clear. Did you mean the economy of the 335 00:18:07,880 --> 00:18:12,560 Speaker 1: Montreal Canadians? Uh, Tom, I gotta admit there's some seasonality 336 00:18:12,600 --> 00:18:14,680 Speaker 1: in my fandom for the Montreal Canadians and a little 337 00:18:14,720 --> 00:18:17,560 Speaker 1: more focused on right now, John and I are busting 338 00:18:17,640 --> 00:18:20,600 Speaker 1: everybody looking at the folks. For those that don't know, 339 00:18:20,680 --> 00:18:23,520 Speaker 1: in hockey, it is a disgrace how the Canadians are 340 00:18:23,520 --> 00:18:27,239 Speaker 1: playing and people are looking out John and they're rebuilding. Well, 341 00:18:27,280 --> 00:18:29,960 Speaker 1: let's get let's get to one, Francis. We hear the 342 00:18:30,040 --> 00:18:32,880 Speaker 1: year twenty twenty a lot from economists at the moment. 343 00:18:32,920 --> 00:18:37,639 Speaker 1: When come from why twenty? A large part it comes 344 00:18:37,680 --> 00:18:40,720 Speaker 1: from just the fiscal number. So we are experiencing this 345 00:18:40,960 --> 00:18:44,240 Speaker 1: very peculiar peculiar dynamic right now, which is that we 346 00:18:44,280 --> 00:18:48,280 Speaker 1: have expansionary fiscal policy against tighter monetary policy. We haven't 347 00:18:48,280 --> 00:18:51,960 Speaker 1: seen that historically. It makes comparisons to pass cycles very difficult. 348 00:18:51,960 --> 00:18:53,560 Speaker 1: But what we do know is based on the current 349 00:18:53,600 --> 00:18:55,919 Speaker 1: numbers that are laid out, and if nothing else changes, 350 00:18:56,200 --> 00:18:59,400 Speaker 1: by that fiscal stimulus that we see goes from fiscal 351 00:18:59,680 --> 00:19:02,639 Speaker 1: tail win too fiscal headwind, and then you end up 352 00:19:02,640 --> 00:19:05,399 Speaker 1: with a double whammy of tighter fiscal policy and tighter 353 00:19:05,440 --> 00:19:08,119 Speaker 1: monetary policy. Now things can change. We could get more 354 00:19:08,160 --> 00:19:10,600 Speaker 1: stimulus from the United States, we could see a sizeable 355 00:19:10,600 --> 00:19:12,520 Speaker 1: stimulus out of China, and that could move a dial. 356 00:19:12,560 --> 00:19:14,639 Speaker 1: But based on the numbers we see now, that's a 357 00:19:14,640 --> 00:19:16,960 Speaker 1: little bit problematic. So you don't think we've broken out 358 00:19:17,040 --> 00:19:21,080 Speaker 1: to sustainable high trend growth in Natus Nates Francis, Oh, 359 00:19:21,119 --> 00:19:24,480 Speaker 1: we may have improved our potential GDP rate and productivity 360 00:19:24,520 --> 00:19:27,480 Speaker 1: looks like it may improve. Wages moving higher is important. 361 00:19:27,920 --> 00:19:30,919 Speaker 1: Potential GDP might be up a few notches, but that 362 00:19:31,000 --> 00:19:33,639 Speaker 1: doesn't mean that we can't experience some cyclical softness in 363 00:19:35,160 --> 00:19:37,160 Speaker 1: one and and don't forget around that time. We should 364 00:19:37,160 --> 00:19:39,280 Speaker 1: begin to see some of the tightness coming from the 365 00:19:39,280 --> 00:19:41,199 Speaker 1: e c P in the Bank of Japan coming in 366 00:19:41,480 --> 00:19:43,240 Speaker 1: and you may begin to see some of the impacts 367 00:19:43,280 --> 00:19:46,960 Speaker 1: from a flatterer yield curve our wage gains in this 368 00:19:47,040 --> 00:19:52,760 Speaker 1: new better economy. Are the wage gains dispersed throughout the 369 00:19:52,840 --> 00:19:57,360 Speaker 1: economy or is it narrow and separate and selected industries. 370 00:19:58,880 --> 00:20:02,640 Speaker 1: It certainly isn't odd. We see our pockets of substantial 371 00:20:02,800 --> 00:20:06,840 Speaker 1: wage strength, we see weakness, We see continuous evidence of 372 00:20:06,920 --> 00:20:10,320 Speaker 1: skills mismatches. And this is really the difference between structural 373 00:20:10,680 --> 00:20:13,639 Speaker 1: issues in the economy and cyclical problems. And this is 374 00:20:13,680 --> 00:20:15,399 Speaker 1: going to be one of the big challenges for anybody 375 00:20:15,400 --> 00:20:18,320 Speaker 1: who looks at macro over the next one years is 376 00:20:18,480 --> 00:20:21,639 Speaker 1: how do we separate two quarters of negative growth versus 377 00:20:21,680 --> 00:20:24,240 Speaker 1: what are long potential GDP. But if the president or 378 00:20:24,240 --> 00:20:27,000 Speaker 1: anybody else's pop and you know we're doing four percent 379 00:20:27,040 --> 00:20:29,879 Speaker 1: wage growth, do you buy that? Or is that you know, 380 00:20:29,960 --> 00:20:32,399 Speaker 1: one part of the economy getting six seven eight percent 381 00:20:32,400 --> 00:20:34,880 Speaker 1: wage growth and other parts flat on their back? Which 382 00:20:34,960 --> 00:20:37,800 Speaker 1: is it? It's the latter, And that's what happens with 383 00:20:37,920 --> 00:20:40,640 Speaker 1: national averages across all of our economic data. We see 384 00:20:40,640 --> 00:20:43,119 Speaker 1: that in housing activity, we see that this morning very 385 00:20:43,160 --> 00:20:46,920 Speaker 1: evidence by regional manufacturing activity in some areas doing very well. 386 00:20:47,119 --> 00:20:50,000 Speaker 1: But unfortunately, most of our policy tools are not ones 387 00:20:50,080 --> 00:20:52,560 Speaker 1: that can be directed to regional issues. They have to 388 00:20:52,560 --> 00:20:54,760 Speaker 1: be applied naturally. That, of course, is the biggest problem 389 00:20:54,800 --> 00:20:57,880 Speaker 1: for most central banks, including the Subtle Reserve. Francis, thank 390 00:20:57,880 --> 00:21:14,520 Speaker 1: you so much. Francis Donald with Manute Life, Tom Keane. 391 00:21:14,640 --> 00:21:16,680 Speaker 1: Do you when you brush your teeth in the morning, 392 00:21:16,680 --> 00:21:18,119 Speaker 1: do you let the water run? No? I do not, 393 00:21:18,359 --> 00:21:20,440 Speaker 1: Just I don't know where that came from, your right, 394 00:21:20,760 --> 00:21:23,480 Speaker 1: Some people they do, some people they don't. I never 395 00:21:23,560 --> 00:21:26,960 Speaker 1: did that. A Google survey the teeth like once a month, 396 00:21:27,080 --> 00:21:30,520 Speaker 1: but you know that's a separate story, all right, right, Yeah, 397 00:21:30,600 --> 00:21:33,639 Speaker 1: all I was gonna say is that Google, can we 398 00:21:33,680 --> 00:21:37,400 Speaker 1: just do a survey report? Here? John just let met 399 00:21:38,240 --> 00:21:42,240 Speaker 1: of Americans, according to Google, let the water run when 400 00:21:42,280 --> 00:21:45,879 Speaker 1: they brush while they brush their teeth. And our next 401 00:21:45,920 --> 00:21:48,280 Speaker 1: guest is here to tell us how he's working to 402 00:21:48,920 --> 00:21:53,520 Speaker 1: stop that so the people stop wasting water. Michael Phelps 403 00:21:53,600 --> 00:21:56,440 Speaker 1: is the most decorated Olympian in history. He's got a 404 00:21:56,480 --> 00:21:59,800 Speaker 1: total of twenty eight medals. He's got twenty three gold 405 00:22:00,000 --> 00:22:03,600 Speaker 1: medals over the course of five Olympic Games and he 406 00:22:03,720 --> 00:22:09,000 Speaker 1: joins US now. Michael Felts, So what are you doing 407 00:22:09,240 --> 00:22:11,879 Speaker 1: to make sure that people turn the faucet off and 408 00:22:11,920 --> 00:22:16,679 Speaker 1: stop wasting water? Well, this is our second year with 409 00:22:16,800 --> 00:22:20,280 Speaker 1: the campaign, and really after going through our first year, 410 00:22:20,280 --> 00:22:24,760 Speaker 1: we're now able to see um, some feedback and and 411 00:22:25,160 --> 00:22:28,040 Speaker 1: UM for me, this is this is something that's very 412 00:22:28,040 --> 00:22:30,000 Speaker 1: near and dear to my heart. Water has always been 413 00:22:30,040 --> 00:22:32,000 Speaker 1: something that's a big part of my life and it 414 00:22:32,040 --> 00:22:33,960 Speaker 1: continues to play a big role in my life. So 415 00:22:34,520 --> 00:22:37,719 Speaker 1: UM for me to continue to to try to spread 416 00:22:37,720 --> 00:22:40,840 Speaker 1: the message and UM, you know, with the help from Colgate, 417 00:22:40,880 --> 00:22:42,760 Speaker 1: to be able to to try to get people to 418 00:22:42,800 --> 00:22:45,480 Speaker 1: turn the water off while they're while they're brushing, or 419 00:22:45,680 --> 00:22:48,119 Speaker 1: you know, not to take a thirty minute shower. You know, 420 00:22:48,160 --> 00:22:51,200 Speaker 1: there are some things that we can all do UM 421 00:22:51,240 --> 00:22:53,840 Speaker 1: together that I think will have such a big impact, 422 00:22:54,200 --> 00:22:56,280 Speaker 1: not only people in the US, but also all over 423 00:22:56,320 --> 00:23:00,119 Speaker 1: the world. A thirty minute shower. Who's who's the He 424 00:23:00,160 --> 00:23:03,199 Speaker 1: doesn't have daughters, he has two boys. That's the difference. 425 00:23:03,560 --> 00:23:07,280 Speaker 1: That's that's the difference. Yes, Michael, Michael, we would kill 426 00:23:07,480 --> 00:23:12,320 Speaker 1: for thirty three three minutes, for three minutes just to 427 00:23:12,359 --> 00:23:15,439 Speaker 1: get in there. So Michael, did did you go up 428 00:23:15,480 --> 00:23:18,800 Speaker 1: turning the fostered off when you brush your teeth. I've 429 00:23:18,840 --> 00:23:22,720 Speaker 1: always been very conscious of and conscious of exactly what 430 00:23:22,720 --> 00:23:24,720 Speaker 1: we're doing around the house, and especially when it comes 431 00:23:24,760 --> 00:23:27,280 Speaker 1: to water. Um. You know, like I said, I obviously 432 00:23:27,320 --> 00:23:30,720 Speaker 1: be been a swimmer for so long, um, but now 433 00:23:30,800 --> 00:23:33,960 Speaker 1: being a family of four and and seeing really just 434 00:23:34,040 --> 00:23:37,680 Speaker 1: how much more water we use as our family grows, um, 435 00:23:38,119 --> 00:23:41,160 Speaker 1: you know, it's it's something that we're very excited about 436 00:23:41,240 --> 00:23:43,800 Speaker 1: to teach, um, both of our kids at such a 437 00:23:43,840 --> 00:23:46,600 Speaker 1: young age, the importance of this precious resource. Give us 438 00:23:46,640 --> 00:23:49,280 Speaker 1: an example of what Colgate is actually doing. I mean 439 00:23:49,280 --> 00:23:51,720 Speaker 1: it's I mean, you know, people are sneaking in their 440 00:23:51,760 --> 00:23:54,800 Speaker 1: shower heads all the time and cheating here, cheating there. 441 00:23:54,840 --> 00:23:57,520 Speaker 1: But what's the actual to do list for Colgate to 442 00:23:57,640 --> 00:24:00,119 Speaker 1: get us to change behavior. That's a tough thing to do, 443 00:24:00,280 --> 00:24:02,520 Speaker 1: isn't it. I mean, some of those things you know, like, 444 00:24:02,920 --> 00:24:05,399 Speaker 1: but it's it's also like, you know, how many times 445 00:24:05,480 --> 00:24:06,919 Speaker 1: or how many people in the world are in the 446 00:24:06,920 --> 00:24:09,280 Speaker 1: country you're stand there brushing their teeth with the water running, 447 00:24:09,440 --> 00:24:13,440 Speaker 1: Like that's something that's so easy and so simple to do, 448 00:24:13,960 --> 00:24:16,200 Speaker 1: just to turn it off because you know, that simple 449 00:24:16,280 --> 00:24:18,600 Speaker 1: thing is wasting up to sixty four glass of water, 450 00:24:19,040 --> 00:24:21,399 Speaker 1: so you know, and that's just one brush and one person. 451 00:24:21,560 --> 00:24:25,040 Speaker 1: So if you multiply that by however many hundred million 452 00:24:25,080 --> 00:24:27,640 Speaker 1: people we have in this country, Um, that's a lot 453 00:24:27,680 --> 00:24:30,960 Speaker 1: of water. So you know, I think it's just simple, um, 454 00:24:31,000 --> 00:24:33,640 Speaker 1: everyday thing that we can do and and just be 455 00:24:33,880 --> 00:24:38,600 Speaker 1: you know, extremely cautious of how much water you're actually using. Um, 456 00:24:38,760 --> 00:24:40,439 Speaker 1: you know, I think it's just it's something we can 457 00:24:40,440 --> 00:24:42,320 Speaker 1: all just do common sense here. We can all use 458 00:24:42,320 --> 00:24:44,640 Speaker 1: common sense to do if you're just joining us worldwide 459 00:24:44,640 --> 00:24:47,160 Speaker 1: and coast to coast, joining us the Olympian Michael Phelps, 460 00:24:47,240 --> 00:24:50,119 Speaker 1: And I can only say, Pim that I remember the 461 00:24:50,200 --> 00:24:54,639 Speaker 1: absolute certitude that only Mark Spitz would reign supreme forever. 462 00:24:54,720 --> 00:24:57,480 Speaker 1: And it took a kid from Baltimore to just destroy 463 00:24:58,359 --> 00:25:00,720 Speaker 1: so many of those records that miss your spits held 464 00:25:00,720 --> 00:25:04,280 Speaker 1: from a few years back, twenty three gold medals, Michael Phelps. 465 00:25:04,280 --> 00:25:06,320 Speaker 1: What does it take to get Michael Phelps to come 466 00:25:06,359 --> 00:25:08,280 Speaker 1: over to your house and actually turn the water off 467 00:25:08,280 --> 00:25:11,639 Speaker 1: in the morning, admonished people? Is it? Is it some 468 00:25:11,720 --> 00:25:14,040 Speaker 1: kind of tracking device? I mean, how do you measure, 469 00:25:14,520 --> 00:25:18,240 Speaker 1: you know, whether you're actually complying. You know, people say, okay, okay, well, well, 470 00:25:19,200 --> 00:25:22,919 Speaker 1: three out of four people who understand and know what 471 00:25:22,960 --> 00:25:26,080 Speaker 1: we're doing, UM or what I'm doing and what Colgates 472 00:25:26,119 --> 00:25:28,000 Speaker 1: doing the message that we're trying to get out there, 473 00:25:28,359 --> 00:25:31,280 Speaker 1: three out of four of those people in the world 474 00:25:31,600 --> 00:25:34,200 Speaker 1: or excuse me, in the nation are making that change. 475 00:25:34,400 --> 00:25:36,440 Speaker 1: And just with those three out of four, we're saying 476 00:25:36,480 --> 00:25:39,840 Speaker 1: we save fifty billion gallons of water last year. So 477 00:25:39,920 --> 00:25:43,320 Speaker 1: I think that alone, that number alone should be something 478 00:25:43,359 --> 00:25:46,280 Speaker 1: that's significant enough to be able to grab the attention 479 00:25:46,320 --> 00:25:49,480 Speaker 1: of UM anybody in the world, and and and just 480 00:25:49,560 --> 00:25:52,120 Speaker 1: to be able to to chime in and help where 481 00:25:52,119 --> 00:25:54,600 Speaker 1: you can. And Michael, what's so important here is the 482 00:25:54,640 --> 00:25:57,480 Speaker 1: economics of water where for so many Americas it's basically 483 00:25:57,480 --> 00:25:59,760 Speaker 1: a free source. We don't even look at it, John Tucker, 484 00:25:59,800 --> 00:26:02,640 Speaker 1: do you look at your water bill? My water bill 485 00:26:02,800 --> 00:26:07,600 Speaker 1: is significant, and I've resorted to watering the lawn with grain. 486 00:26:07,720 --> 00:26:09,520 Speaker 1: I mean, I don't look at my water bill. I mean, 487 00:26:09,720 --> 00:26:12,280 Speaker 1: I'll be honest, Mike, what are we gonna do to 488 00:26:12,359 --> 00:26:16,960 Speaker 1: make water a price commodity where we actually care what 489 00:26:17,000 --> 00:26:20,959 Speaker 1: the bill says? I mean, I think I think people, 490 00:26:21,880 --> 00:26:26,399 Speaker 1: or I would guess that people probably just assume that 491 00:26:26,440 --> 00:26:28,320 Speaker 1: we're not going to run out of water, assume that 492 00:26:28,359 --> 00:26:30,399 Speaker 1: we're going to have clean water forever. So you know, 493 00:26:30,480 --> 00:26:34,160 Speaker 1: it's I think it's it's it's just something that uh, 494 00:26:34,320 --> 00:26:37,480 Speaker 1: we all have to be so so cautious of and 495 00:26:37,600 --> 00:26:39,560 Speaker 1: and water is not the only thing that that could 496 00:26:39,640 --> 00:26:41,399 Speaker 1: run out. You know, all of these resources are going 497 00:26:41,480 --> 00:26:43,160 Speaker 1: to run out at some point in the world at 498 00:26:43,200 --> 00:26:45,800 Speaker 1: some point in time, right, So it's like, I just 499 00:26:45,920 --> 00:26:50,199 Speaker 1: feel like it's just so easy to logically be like, Okay, 500 00:26:50,240 --> 00:26:52,480 Speaker 1: what can I do to change my everyday life to 501 00:26:52,520 --> 00:26:55,160 Speaker 1: be able to make an impact for the future and 502 00:26:55,160 --> 00:26:58,080 Speaker 1: and for me now being a father of two, I 503 00:26:58,160 --> 00:27:00,919 Speaker 1: want to make all the changes that I can do 504 00:27:01,119 --> 00:27:03,360 Speaker 1: for myself and try to help other people make those 505 00:27:03,440 --> 00:27:06,399 Speaker 1: changes so the young kids get to experience exactly what 506 00:27:06,520 --> 00:27:09,160 Speaker 1: we had and and and everything that we had as 507 00:27:09,280 --> 00:27:11,040 Speaker 1: as children and now in this day and age and 508 00:27:11,080 --> 00:27:15,880 Speaker 1: growing up. Michael Phelps, is there any chance that you're 509 00:27:15,880 --> 00:27:20,480 Speaker 1: gonna come out of retirement yet again? No, Okay, you're done. 510 00:27:20,840 --> 00:27:23,200 Speaker 1: Uh yeah, I mean I think I think I could, 511 00:27:23,240 --> 00:27:26,440 Speaker 1: but I just have no desire to. Um, I think 512 00:27:26,440 --> 00:27:28,399 Speaker 1: it would be a lot easier this time around, just 513 00:27:28,480 --> 00:27:30,760 Speaker 1: because I'm in better shape than I was last time 514 00:27:30,760 --> 00:27:33,320 Speaker 1: when I came out of retirement. But um, I just 515 00:27:33,359 --> 00:27:37,240 Speaker 1: have no goals to really um get me motivated to 516 00:27:37,240 --> 00:27:40,440 Speaker 1: to go back to going through that grind. And and 517 00:27:40,560 --> 00:27:43,919 Speaker 1: you know, for for what we're doing now, UM, you know, 518 00:27:43,960 --> 00:27:47,600 Speaker 1: I have the opportunity to to potentially save a life. 519 00:27:47,640 --> 00:27:51,040 Speaker 1: And and for me, that experience and that opportunity is 520 00:27:51,160 --> 00:27:54,520 Speaker 1: way way more valuable than ever winning an Olympical medal. Michael, 521 00:27:54,560 --> 00:27:57,800 Speaker 1: what is your number one advice to parents dealing with 522 00:27:57,840 --> 00:28:01,240 Speaker 1: the American jockocracy? You all seemed to finance your way 523 00:28:01,280 --> 00:28:04,120 Speaker 1: through what you mentioned earlier today, the importance of your 524 00:28:04,160 --> 00:28:08,480 Speaker 1: mother in your trading. What to the to the thousands 525 00:28:08,480 --> 00:28:11,080 Speaker 1: and thousands of people listening to us coast to coast 526 00:28:11,400 --> 00:28:15,560 Speaker 1: who are part of the American jackocracy, what's your best 527 00:28:15,600 --> 00:28:19,240 Speaker 1: practice or the thing to avoid with kids? I mean, 528 00:28:19,800 --> 00:28:21,960 Speaker 1: like I was saying earlier, my mom, the biggest thing 529 00:28:21,960 --> 00:28:24,320 Speaker 1: that she did was just so supportive, you know. She 530 00:28:24,320 --> 00:28:28,399 Speaker 1: she wasn't like kind of overbearing, really like forcing me 531 00:28:28,440 --> 00:28:31,760 Speaker 1: to do X, Y and Z. It was really just, um, 532 00:28:31,880 --> 00:28:34,040 Speaker 1: the goals and the dreams that I had. She kind 533 00:28:34,040 --> 00:28:36,000 Speaker 1: of helped me pay the way to be able to 534 00:28:36,040 --> 00:28:38,360 Speaker 1: give me the opportunity that I needed to have that 535 00:28:38,520 --> 00:28:41,959 Speaker 1: chance to do something that no one else has ever done. So, um, 536 00:28:42,000 --> 00:28:44,320 Speaker 1: you know, I think just the support and obviously she 537 00:28:44,440 --> 00:28:47,239 Speaker 1: was there when I ever needed help. Um, And I 538 00:28:47,280 --> 00:28:51,080 Speaker 1: think that was something that was just so beneficial and um, 539 00:28:51,120 --> 00:28:53,959 Speaker 1: you know, hopefully I can be um you know a 540 00:28:54,000 --> 00:28:55,960 Speaker 1: little bit of a of a parent that my mom 541 00:28:56,040 --> 00:28:59,719 Speaker 1: was to me, and hopefully everything that I I learned 542 00:28:59,760 --> 00:29:01,840 Speaker 1: from her, I'll be able to now pass along to 543 00:29:01,920 --> 00:29:04,440 Speaker 1: my two child my two children. And we didn't have 544 00:29:04,480 --> 00:29:06,560 Speaker 1: time in the radio interviews him to talk about he's 545 00:29:06,600 --> 00:29:09,320 Speaker 1: got a lap counter going in the bathtub for his kids. 546 00:29:10,000 --> 00:29:12,080 Speaker 1: They got down under the faucet and touched the end. 547 00:29:12,720 --> 00:29:18,800 Speaker 1: You know, they actually just started taking bath together and 548 00:29:18,960 --> 00:29:22,720 Speaker 1: they are wild men in there. So where we we 549 00:29:22,840 --> 00:29:25,960 Speaker 1: have the bathtub filled and but wait, wait, wait, wait, 550 00:29:26,000 --> 00:29:28,400 Speaker 1: you don't know you don't have him in an atmosphere 551 00:29:28,520 --> 00:29:32,480 Speaker 1: or speedo swimsuit, do you. Uh? They're in their board 552 00:29:32,520 --> 00:29:36,600 Speaker 1: shorts outside, but they're in their huggies little swimmers every 553 00:29:36,600 --> 00:29:38,520 Speaker 1: time they get in the pool. That's see how he 554 00:29:38,560 --> 00:29:44,480 Speaker 1: got that endorsement, and he's an endorsement. Michael Fels, thank 555 00:29:44,520 --> 00:29:47,400 Speaker 1: you so much, greatly appreciated and supported Colgate and serious 556 00:29:47,400 --> 00:29:49,920 Speaker 1: issue on water and this really hearkens back to what 557 00:29:49,960 --> 00:29:52,760 Speaker 1: we've done on surveillance and bloom We're gonna economy on 558 00:29:52,800 --> 00:29:55,720 Speaker 1: whether it's salt water or it's fresh water in Africa, 559 00:29:56,240 --> 00:29:58,240 Speaker 1: and just in this case with col Gate, just simple 560 00:29:58,320 --> 00:30:01,000 Speaker 1: stupid stuff. To me, it's not a big deal because 561 00:30:01,000 --> 00:30:03,000 Speaker 1: I turn off the water while I brush my teeth. 562 00:30:03,120 --> 00:30:04,600 Speaker 1: But a lot of people they just let it run 563 00:30:04,680 --> 00:30:13,600 Speaker 1: forever when you brush your teeth. Thanks for listening to 564 00:30:13,680 --> 00:30:18,200 Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on 565 00:30:18,240 --> 00:30:24,080 Speaker 1: Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm 566 00:30:24,120 --> 00:30:27,440 Speaker 1: on Twitter at Tom Keane before the podcast. You can 567 00:30:27,480 --> 00:30:30,680 Speaker 1: always catch us worldwide. I'm Bloomberg Radio.