Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Ley.
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Speaker 1: Vincent Reinhart Standish Melon economist and investment strategist. Good morning
Speaker 1: to you, Vince. Is that how you see this plank
Speaker 1: out a short term win? Good more and Jonathan uh So, Look,
Speaker 1: I think that we have to accept that the government's
Speaker 1: going to be shut down for a while, that it
Speaker 1: was pretty clearly a distinct standoff we saw yesterday, and
Speaker 1: that the Federal Reserve is on the sidelines for a bit.
Speaker 1: The minutes will be an interesting this afternoon, though. What
Speaker 1: are you looking for from the minutes? To South Benoon.
Speaker 1: One thing you gotta remember is that the minutes are
Speaker 1: supposed to be an accurate depiction of what was discussed
Speaker 1: at the f MC meeting, But a lot of stuff
Speaker 1: is discussed at the FMC meeting. The transcript runs something
Speaker 1: like a d and twenty pages, and they just still
Speaker 1: look down to eleven or twelve pages in those minutes. Um. Therefore,
Speaker 1: there's some selectivity in the week or two after the
Speaker 1: meeting to nudge the boat in a in a better direction.
Speaker 1: Chair Pal came off a little tone death in the
Speaker 1: in the press conference. They'll try to fix it in
Speaker 1: the minute. So you'll seem more responsive to financial conditions.
Speaker 1: You'll see him more worried about the world and emphasizing
Speaker 1: the range of views on appropriate monetary policy be a
Speaker 1: bigger tent. In an interview in The Wall Street Journal today,
Speaker 1: Jim Blad saying we're bordering on coming too far on
Speaker 1: rates and possibly tipping the economy into recession. If rights
Speaker 1: on left did vince, what do you think of that?
Speaker 1: The idea that we're one right hunk away from a
Speaker 1: policy mistake at a federal reserve. So the first thing
Speaker 1: I would say is I believe in market economies. I
Speaker 1: don't think they're so fragile that if you get a
Speaker 1: quarter point wrong one way or the other, you are
Speaker 1: headed to the abyss. Uh. And so I hope that
Speaker 1: you know the world works better than that. Second, remember
Speaker 1: that president Board has had of you consistently over the
Speaker 1: over the last five years or so. Uh that uh,
Speaker 1: it's not possible to predict where rates are going, and
Speaker 1: so your best estimate of where the neutral rate is
Speaker 1: is where it is right now. And so he could
Speaker 1: have repeated the concern uh he expressed in the in
Speaker 1: the journal, uh, this morning, just about any time over
Speaker 1: the last several years. So I'm not sure that's news,
Speaker 1: Vince Reynard. In the minutes, there's these key words some
Speaker 1: several several members several of this, John, it's like you
Speaker 1: and me, some several, Vince Reynard. How is several different
Speaker 1: with Chairman Powell versus several with yelling bernankey in back
Speaker 1: to your time with Chairman Greenspan. I mean, is there
Speaker 1: an active discussion that Chairman Powell listens to or is
Speaker 1: he alone as Greenspan was alone. So I would say
Speaker 1: the first thing the minutes drafters, and remember I signed
Speaker 1: the minutes for six or seven years. Uh tried he
Speaker 1: used to quill John. It was with a quill can,
Speaker 1: candle light and a quill um. Uh, try to be
Speaker 1: consistent across time. And so I probably everybody still has
Speaker 1: that dog eared cheat sheet on parchment paper. I would
Speaker 1: say that gives the translation of some and several and
Speaker 1: a couple and a few, So I don't think that
Speaker 1: that's not a part of the minute. Question is how
Speaker 1: consultative is chair Pal relative to other of his predecessors.
Speaker 1: My bed is is pretty consultative. He comes from a background, uh,
Speaker 1: you know, from a bush bush triggery from the private sector,
Speaker 1: some think tank um, in which you get along by
Speaker 1: by by getting along. And he uh often said hey,
Speaker 1: I'm not an economist. That means he listens to economists.
Speaker 1: So I would suspect that, um, he does talk a lot.
Speaker 1: I think the concern you should have is he talks
Speaker 1: a lot to people who are just like him. That
Speaker 1: he had a material influence admiring the last eight bank presidents.
Speaker 1: The board appointments are relatively you know, uh similar to his,
Speaker 1: to his they're basically rebuilding the bush triggery um, and
Speaker 1: so there's a question how much diversity of opinion there
Speaker 1: is that the you know, in FMC discussions, that's always
Speaker 1: a risk. Well, then being able to listen to the
Speaker 1: committee is important. Being able to present all the committee
Speaker 1: things coherently and consistently is something altogether different, and I
Speaker 1: see a chairman that's really struggling to do that. We
Speaker 1: seem to have flip from one view to another in
Speaker 1: the emphasis every time he speaks seems to change. Do
Speaker 1: you think the chairman's struggling in the early part of
Speaker 1: his tenure events? So, I think the chairman's uh issue
Speaker 1: and he is that he has an ambition to explain
Speaker 1: monetary policy as as clearly as possible. His audience is
Speaker 1: not Bloomberg or the Wall Street Journal, It's the readership
Speaker 1: of USA today. And the problem is when you try
Speaker 1: to simplify the message to a few key points, you're
Speaker 1: going to leave some stuff out, and global financial markets
Speaker 1: will very quickly remind you what you left out. And
Speaker 1: so I don't uh. So, I think there is an
Speaker 1: issue of how much financial market experience there is at
Speaker 1: the top of the house across you know, when you
Speaker 1: think about the leadership of the said and I think
Speaker 1: there's also a sincere desire to keep it simple. But
Speaker 1: keeping it simple may mean you kept it too simple.
Speaker 1: How important is January thirty? I mean it's changed, I
Speaker 1: know in six, eight weeks, etcetera. But Vince, right now
Speaker 1: we're in ten twelve days away from January thirty. Whatever
Speaker 1: the math is, it's most more than that fifteen days
Speaker 1: or whatever. But but it's right now, how important is
Speaker 1: this January meeting become? So it's important in a couple
Speaker 1: of ways. One is it's how will we handle a
Speaker 1: press conference? Uh, the now that he's will be doing
Speaker 1: eight of them a year. But I think it's also
Speaker 1: important in that they have changed change their communications strategy.
Speaker 1: They don't want to be responsible for commun indicating the
Speaker 1: entire path of interest rates, because that then the headlines
Speaker 1: are the FED tightened and intense to tighten more. They
Speaker 1: want to be able to say the data drove them
Speaker 1: to raise rates this meeting. They don't want the responsibility
Speaker 1: of a long term commitment, but they also don't want
Speaker 1: to comprise markets. So the question is do they lean
Speaker 1: into tightening in March or do they signal that they
Speaker 1: are pausing. That's the big question for January. This has
Speaker 1: been a wonderful Vincent Reynard, thank you so much for
Speaker 1: the briefing with standard Melon of course for years even
Speaker 1: decades with a FED serving as head of research for
Speaker 1: Chairman Alan Greenspan as well. It was an original and
Speaker 1: historic moment for the nation. The President spoke last night,
Speaker 1: let's listen the border wall, when very quickly pay for itself.
Speaker 1: The cost of illegal drugs exceeds five billion dollars a year,
Speaker 1: vastly more than the five point seven billion dollars we
Speaker 1: have requested from Congress. The wall will also be paid
Speaker 1: for indirectly by the great new trade deal we have
Speaker 1: made with Mexico. The President the United States, and of
Speaker 1: course Speaker Pelosi and Senate Leader Schumer speaking after the
Speaker 1: President last night. He is a Democrat from Texas, but
Speaker 1: that barely describes his visceral understanding of the border. There
Speaker 1: is no one I know in America more linked to
Speaker 1: Laredo and the border east and west. And Henry Quire
Speaker 1: of the twenty district in UH, Texas, and of course
Speaker 1: the Democrat and conservative Democrat, I might point out from Texas.
Speaker 1: Mr Quaier, I am thrilled that you're with us today.
Speaker 1: What does President Trump get most wrong about what the
Speaker 1: people on the border want. Well, first of all, he
Speaker 1: makes it sound like it's a crisis and a very
Speaker 1: difficult place to live. If you look at the latest
Speaker 1: FBI stats, UH, and I've looked at him for years,
Speaker 1: that's the same thing. When you look at murder rates,
Speaker 1: crime rate, violent rape assaults and all that the border
Speaker 1: crime rate is lower than the national crime rate. In fact,
Speaker 1: if you look at Laredo, my hometown on the border,
Speaker 1: that murder rate UH is about two or three times
Speaker 1: lower than Washington, d C. So when the President leaves
Speaker 1: tomorrow to the border, the most dangerous thing he's gonna
Speaker 1: see is when he leaves Washington to go to the
Speaker 1: border again. You have a visceral understanding with this, with
Speaker 1: the history of your parents, with the history of a
Speaker 1: Laredo and folks, Laredo isn't Murdy Robin's song. Just for
Speaker 1: to get it straight, Laredo is a huge depot for
Speaker 1: trade in America. Now, it's completely different than the stereotype.
Speaker 1: We're gonna have funding and this is axios. Mike Allen
Speaker 1: just reporting moments ago oh MB is talking to Pentagon
Speaker 1: about a military refunding of this project. How would you
Speaker 1: respond to having the Pentagon come down and do this
Speaker 1: infrastructure project for your Laredo. You know it's wrong, And
Speaker 1: I said on both the subcommittees are appropriations for homeland
Speaker 1: and defense. There are two different things. We're talking about
Speaker 1: a law enforcement issue at the border, not a military issue.
Speaker 1: And the President needs to understand this. If you wanted
Speaker 1: to stop drugs, and the latest d A report will
Speaker 1: tell you that most drugs that come into the United
Speaker 1: States will come through ports of entry uh. Cars, drugs
Speaker 1: uh and And he just doesn't understand that a wall
Speaker 1: is not going to stop the drugs coming in the
Speaker 1: way he thinks it is. So he's got to have
Speaker 1: a better understanding the way the border works. And require
Speaker 1: you're you're on the edge of the Blue Dog coalition,
Speaker 1: you're a conservative Democrat. There's a lot of Republicans out there,
Speaker 1: we saw this at the election, who have moved away
Speaker 1: from the certitude of the president of belief in the president.
Speaker 1: How lonely is this president within his Republican party. How
Speaker 1: many Republicans are over with the Blue Dog coalition. You know,
Speaker 1: it's interesting. That's a very good point. When you talk
Speaker 1: to a lot of the Republicans on on a private matter,
Speaker 1: they'll tell you that they understand that the President is
Speaker 1: not correct on this issue, but many of the times
Speaker 1: they have to stick with them because the party. But
Speaker 1: a lot of them understand that the wall is a
Speaker 1: fourteenth century solution to a twenty one century problem. He
Speaker 1: thinks that the only way you're gonna secure the border
Speaker 1: is by having a wall, and that's wrong as China
Speaker 1: at you know, look at the Berlin Wall, look at
Speaker 1: the Germans and the French are in the World War One.
Speaker 1: You know, we just gotta look at technology and personnel
Speaker 1: and other ways of securing the border. Right, So so
Speaker 1: that Congressman, what you're calling for is more practical border security.
Speaker 1: Do we have any idea of how much that would cost?
Speaker 1: What kind of training are you talking about? Well, you know,
Speaker 1: first of all, let's look at border patrol. Uh where?
Speaker 1: Now two thousand border patrols short from the higher lights
Speaker 1: that we used to half two thousand border patrol. So
Speaker 1: what does the administration do? They put a two million
Speaker 1: dollar contract to hire border patrol to show them how
Speaker 1: to hire border patrol. In fact, they just hired with
Speaker 1: fourteen point eight million dollars. They hired two new border patrol.
Speaker 1: Now maybe one of them is Captain America. I don't know,
Speaker 1: but if you're gonna spend that much money, you better
Speaker 1: get something good for for that money. So we gotta
Speaker 1: hire border patrol. We gotta give them the equipment. The
Speaker 1: military has a lot of technology that works very well.
Speaker 1: A lot of the tech companies out there have the
Speaker 1: latest technology that works very well. But again, we can't
Speaker 1: play defense on the one yard line called the US
Speaker 1: Mexico border, where we spent over eighteen billion dollars. We
Speaker 1: got to expand that work with Mexico with Central America.
Speaker 1: A couple of years ago, if I can say this briefly,
Speaker 1: we added fourteen million dollars to help Mexico secure the
Speaker 1: border with Guatemala. Did you know with that amount of
Speaker 1: money they were able to stop over two d and
Speaker 1: twenty thousand people a year, people that would have come
Speaker 1: to our borders. We gotta be smart on how we
Speaker 1: secure the border. Congressman, how what kind of changes would
Speaker 1: you also make to the American detention system? Well, you know,
Speaker 1: again the detention. You know, one of the things I've
Speaker 1: done is I make sure that there's transparency, make sure
Speaker 1: that you know we if somebody ends up in the detention,
Speaker 1: that we treat them with dignity and respect. But again,
Speaker 1: you know, uh, it's important to know that detention is
Speaker 1: a deterrence. We can and not have catch and release.
Speaker 1: And I know that some of my Democrat party don't
Speaker 1: like detentions, but again, you gotta have some detention beds,
Speaker 1: because if somebody comes in, you gotta be able to
Speaker 1: hold them and then send them back. I want to
Speaker 1: stretch from Laredo up to the sixteenth District and help
Speaker 1: pass so and Congresswoman Escobar's district as well. That's the
Speaker 1: span in the reach. That's the emotion that the President
Speaker 1: talks about. Speak to liberal Democrats about their belief on
Speaker 1: the wall. What the liberal Democrats get wrong, the cushion
Speaker 1: Democrats of California, even the President up on Fifth Avenue
Speaker 1: in New York, what do they get wrong about a
Speaker 1: liberal approach to our immigration and border activity. Well, you know, again,
Speaker 1: so without due respect. I think the extreme right and
Speaker 1: the extreme left don't understand the way the border works
Speaker 1: without due respect. Some people want open borders. I don't
Speaker 1: believe in open borders. I want to have a law
Speaker 1: and order at the border. And we have that. Like
Speaker 1: I said, our our areas are very safe. That we
Speaker 1: have problems, of course we do, but it's safer than
Speaker 1: many other places. But the bottom line is, uh, you know,
Speaker 1: you've got to have some sort of deterrence. You cannot
Speaker 1: just open up the border to anybody coming in. And
Speaker 1: if you're gonna have a wall too, And I say
Speaker 1: that to to to certain people a wall if you
Speaker 1: I've asked this question to all the border patrol chiefs
Speaker 1: since Bush, Obama, and Trump, and I've asked them how
Speaker 1: much time there's a border wall by you quote this
Speaker 1: is from from all of them, a few minutes or
Speaker 1: a few seconds. So we're gonna spend billions of dollars
Speaker 1: to uh to spend on a wall? Or do I
Speaker 1: spend a hundred dollars and buy you a ladder that
Speaker 1: can jump people over that uh, that fence. One final question,
Speaker 1: I know Dr Quaire that the only reason you got
Speaker 1: elected is your affiliation with the University of Texas and
Speaker 1: what Texas A and m as well, folks, that is
Speaker 1: just in Texas. You don't do that, and Mr Quaire
Speaker 1: did as well. What is it signal to Texas that
Speaker 1: Apple computer is gonna drop another x thousands of bodies
Speaker 1: into austin Texas? What does that signal about Texas capitalism?
Speaker 1: You know, let me tell you Texas some years ago
Speaker 1: was was creating about one third of all the private
Speaker 1: jobs in the country. One third. We were just growing,
Speaker 1: so we got trade is important to our area. Uh,
Speaker 1: energy is very important to oiline gas is very important
Speaker 1: to our area. But now the tech. If you go
Speaker 1: to Austin and I used to work there at Secretary
Speaker 1: of State and as a State rep. I've seen Austin
Speaker 1: now become a hub for technology for new startups and
Speaker 1: so that that means a lot. They just got to
Speaker 1: work on the transportation because it's got a little congested
Speaker 1: in Austin. Congressman, thank you so much. Enquire the twenty
Speaker 1: eight district in Texas, thank you for joining us. Thanks
Speaker 1: so much. With us is the right person to speak
Speaker 1: to on the changes of Mr Trump's Republican Party, and
Speaker 1: he is John Braybender, working with Mr Santorum among others.
Speaker 1: Mr Brabender has been in recovery from the lousy Steelers
Speaker 1: season that we've just seen, and we're thrilled that he
Speaker 1: could join us today as well. John. When I look
Speaker 1: at the Republican Party, it has to be a party
Speaker 1: of change. There's a lot of talk about Democrats, the
Speaker 1: new liberalism of the Democratic Party. With this crisis right now,
Speaker 1: what do you perceive is the change in Republicans as
Speaker 1: they greet two thousand nineteen. Well, look, first of all,
Speaker 1: we're we're saying the President and the Republican Party are synonymous,
Speaker 1: and I'm not sure that on this particular shoe they are.
Speaker 1: I think everybody agrees with border security, everybody agrees with
Speaker 1: the importance of getting something done. The real question comes,
Speaker 1: do you do it at the expense of closing down
Speaker 1: the government? And you know, one thing that I've learned
Speaker 1: over time is that generally the White House owns problems,
Speaker 1: whether they created them or not. And so what what
Speaker 1: I really believe is that last night turned out to
Speaker 1: be a non event because there was no major announcement. Uh.
Speaker 1: In fact, you know, the only thing I think we
Speaker 1: learned were two things. What is that President Trump is
Speaker 1: much more comfortable in front of twenty thousand people out
Speaker 1: an auditorium trying to free wheel it. And I think
Speaker 1: we also learned what Nancy Pelosi and Chuck Schumer will
Speaker 1: look if they were ever side by side at a
Speaker 1: wax museum. Beyond that, I don't think every you were
Speaker 1: left they're saying where where do we go? But it's
Speaker 1: an easier message for the Democrats. The presidents saying we
Speaker 1: need border security borders really means a wall, and I'm
Speaker 1: not opening until we did it. I mean, you know,
Speaker 1: but you've always had a more sophisticated message about GOP politics,
Speaker 1: and some people think it's a Whig Party forty going
Speaker 1: into oblivion. What is a gentleman from Kentucky need to
Speaker 1: do to regain a voice for non Trumpian Republicans. Well,
Speaker 1: and that's a that's a really good point, because what
Speaker 1: I believe this president was elected on was a lot
Speaker 1: of disenfranchised Americans who had very little loyalty the either
Speaker 1: party that felt both sides and let them left them
Speaker 1: alone on the economic battlefield, and that it chronically took
Speaker 1: a billionaire to give them a loud enough megaphone to
Speaker 1: say I'm gonna go there, fight for you, give you
Speaker 1: a voice and change things. In fact, I think you
Speaker 1: know more than you know. Everybody cheered the wall when
Speaker 1: Donald Trump keep these speeches. What I think was missed
Speaker 1: was what people were really cheering even louder for, was
Speaker 1: heven saying I was going to drain the swamp. And
Speaker 1: I think that where the party has gotten off here
Speaker 1: a little bit is uh number one, we're poor on messaging.
Speaker 1: Number two, it is more of this shake up Washington
Speaker 1: and make it for real people again. That is going
Speaker 1: to get the president reelected. And honestly, I'm not sure
Speaker 1: that they go to bed at night worrying as much
Speaker 1: about the wall as they do about their next next
Speaker 1: paycheck and fuming over the fact that Washington politicians, in
Speaker 1: Washington insiders seem to have a lot of benefits and
Speaker 1: privileges that they don't enjoy. So Joel Nice, talk about
Speaker 1: the classic grid luck we have right now. Typically it's
Speaker 1: tension elsewhere the breaks the grid luck. What it's the
Speaker 1: ten shouldn't come from? Is it the lines of the airport,
Speaker 1: Is it the employees that don't receive that paychecks? Where
Speaker 1: does it come from? But well, what it really comes
Speaker 1: from is who's gonna win in the poll data that's
Speaker 1: going to influence the next election. If one side or
Speaker 1: the other side feels that somebody else has all of
Speaker 1: a sudden gaining an advantage, they're gonna move on this.
Speaker 1: I mean, let's be honest. This is a public relations
Speaker 1: and pr problem. It is it is not a policy problem.
Speaker 1: And and so you know, you have two sides who
Speaker 1: are trying to figure out how they can make the
Speaker 1: other side own this, which appears to be losing. John,
Speaker 1: We're gonna run out of time, but we would love
Speaker 1: to get you back on again with us, and of
Speaker 1: course with Kevin so early down a FM in Washington,
Speaker 1: John Brave Under, thank you so much, just way way
Speaker 1: too short a time. Today we'll have Mr brave under
Speaker 1: on away uh on again of course with brave Undercott
Speaker 1: Cox in Washington. This is a joy. We'd like to
Speaker 1: see her every ninety days. We don't. Betsy is just happy.
Speaker 1: We have an adult in the room of Morgan Stanley
Speaker 1: and every everybody on the cell side is their own style.
Speaker 1: Ms Graci style is to do pristine work on the banks,
Speaker 1: involving a lot of analysis, math in numbers and the
Speaker 1: mathiness of Betsy Grazi or Morgan Stanley with your team.
Speaker 1: What's the Mathew number that sticks out right now for
Speaker 1: the banks loan loan or what's the math thing that
Speaker 1: matters right now? The math thing that matters for the
Speaker 1: stocks is that they are pricing in recession level valuations
Speaker 1: even though radio you have to keep talking, okay, so
Speaker 1: even okay, even though we've got fundamentals that are flashing positive.
Speaker 1: So that's that's so, what's your level is strong by
Speaker 1: what's your level of conviction right now in the major banks,
Speaker 1: we'll overweight the group, and our top picks are State Street,
Speaker 1: Bank of America and JP Morgan. So usually going into
Speaker 1: arning season, we've had some guidance on traving revenue from
Speaker 1: the big CEO, somebody's big banks. They got it this
Speaker 1: one way, then got us in another in the spice
Speaker 1: of a couple of weeks. So I have no idea
Speaker 1: what to expect this quota. What are we getting? That's
Speaker 1: why you read our stuff? So, um, why did that happen? Right?
Speaker 1: Because we had a conference it was second week in December.
Speaker 1: Message was somewhere you know, trading revenues are going to
Speaker 1: be flat to plus, you know, maybe mid single digits.
Speaker 1: And then towards the end of the month you heard
Speaker 1: from I think it was b of a right, Brian
Speaker 1: Wayne hen CEO coming out and saying, hey, you know
Speaker 1: it's gonna be a little bit lower, it's gonna be
Speaker 1: sub zero. You know it's going to be negative. And
Speaker 1: does that surprise any of us really? Because we had
Speaker 1: such a market pullback, especially with bonds breads widening a
Speaker 1: lot the last couple of weeks in December. You guys
Speaker 1: know that, right, I mean we would paying attention, Yeah, attention.
Speaker 1: So you've got if you've got exposure to high yield,
Speaker 1: if you've got exposure to leverage, finance revenues are probably
Speaker 1: coming in lower capital markets. Is going to be difficult.
Speaker 1: What are the positive signs, what are the green lights
Speaker 1: to say buy bank stocks that come from this? And Okay,
Speaker 1: so part of what you know we're doing here is
Speaker 1: we've got a four queue that's in the rear view
Speaker 1: mirror and it's stock analysts. We want to look forward.
Speaker 1: So the rear view mirror is showing that it was
Speaker 1: a tough quarter. Four Q is a tough quarter because
Speaker 1: you had so much market this location, I mean, was
Speaker 1: the last time we had a quarter with SMP down.
Speaker 1: It's been a while, right, So looking forward, we've got
Speaker 1: loan growth flashing positive, the hight fed data right comes
Speaker 1: out weekly see and I long growth five percent up
Speaker 1: here on your good morning everyone for Global Wall Street,
Speaker 1: Betsy Gray sick with us with Morgan Stanley, your colleague,
Speaker 1: and cry Magdalena Slosa does deuts your bad right correct?
Speaker 1: And they got a bonus issue And in all that,
Speaker 1: how are the bonuses going to be for American Global
Speaker 1: Wall Street? Are they gonna do a Deutsche Bank. Are
Speaker 1: they gonna be okay? Are they going to be light?
Speaker 1: Are they gonna be a lot of bodies moving around?
Speaker 1: You know, I'm not running comp at these companies, but
Speaker 1: what I can tell you is in our models, UM,
Speaker 1: we do have comp ratios coming down slightly, okay, year
Speaker 1: on here, but that's but that's been happening one to
Speaker 1: three q right, so you've had uh comp ratios coming down,
Speaker 1: But that's and it's it's really reflecting management discipline here
Speaker 1: to continue to drive towards target r o s. You know,
Speaker 1: in the US, the companies that I cover obviously, you know,
Speaker 1: be of JP City, we've got we've got three quarters
Speaker 1: of you know, one to three q U eighteen very strong,
Speaker 1: four q weaker. But you know, compools we're expecting UM
Speaker 1: are going to trending line with with with what we
Speaker 1: saw the first three quarters of the year. Do they
Speaker 1: within camp and discipline, do they take apart divisions or
Speaker 1: sell divisions off or stop doing things in divisions or
Speaker 1: is it going to be labor rationalizations twenty at a
Speaker 1: time here, ten at a time here, which which expense
Speaker 1: discipline model? Are they going to use? Okay, So can
Speaker 1: I like frame this a little bit You're what you're
Speaker 1: basically saying, frame means say it better than I just
Speaker 1: did basically what she's about today. Well, oh you agree, right,
Speaker 1: I'm going to use that line so many times over
Speaker 1: the next couple of weeks. Can I just frame this
Speaker 1: a little bit better? Can you frame it a little
Speaker 1: bit better? For us? Well? What you what you're really
Speaker 1: asking is was the market dislocation so tough in December
Speaker 1: that managements are going to have to do something different
Speaker 1: from having been expecting to run their business the first
Speaker 1: part of the year, and in in the US in
Speaker 1: my group, you know, I don't I believe the answer.
Speaker 1: There's know, I think you're gonna have tweaking. You're not
Speaker 1: going to have you know, wholesale change. So let's talk
Speaker 1: about the capital return programs. I'm going to catch up
Speaker 1: with an analyst from Oppenheimer who says the following, we
Speaker 1: haven't changed our dollar buy back assumptions, but with the
Speaker 1: recent price declines, we expect banks to be able to
Speaker 1: retire around six percent of their shares in How significant
Speaker 1: of these capital return programs going to be? The buyback programs?
Speaker 1: So from a stock perspective. You want to think about
Speaker 1: where they're going to be increasing versus stabilizing. Right, and uh,
Speaker 1: there's many banks that have been doing four or five
Speaker 1: percent you know, buy backs for a couple of years now.
Speaker 1: We do have a couple of companies where we're expecting
Speaker 1: buybacks to increase, and that's you know, um Wells Fargo
Speaker 1: for example, State Street right. State Street had to had
Speaker 1: to stop their buy back program for the last two
Speaker 1: quarters of the year due to the c r D acquisition.
Speaker 1: So there's a couple of places where we think they're
Speaker 1: going to see acceleration. But that's that doesn't surprise me.
Speaker 1: And and and Betsy Jargon. What does tech spend mean?
Speaker 1: You're hugely optimistic view on JP Morgan. They're gonna open
Speaker 1: forned branches, fifty new markets. I just want an a
Speaker 1: t M up where I live. I mean, you know,
Speaker 1: from from name the bank. I don't care. But but
Speaker 1: what does the phrase text spend mean? Okay, um, text bend.
Speaker 1: It basically means okay, Well, here's what I want to say.
Speaker 1: You've got spending on tech plant, equipment, computers and software.
Speaker 1: You've got tex spend on people who are actually writing
Speaker 1: the code. You've got tex spend on, um, folks that
Speaker 1: are designing what your next ten years is going to
Speaker 1: look like. Right, so you asked the question away, Um,
Speaker 1: that's a really good way because there's plenty of people
Speaker 1: who say, look, my tex spend is different from yours
Speaker 1: because I'm only taking hardware and software and you're taking
Speaker 1: in all the strategy folks too. The important message about
Speaker 1: out text Spend, in my opinion, is that this is
Speaker 1: a business that will continue to migrate towards UH speed.
Speaker 1: Right now. We've seen this in plenty of markets already
Speaker 1: that the banks are involved in equity trading, for example,
Speaker 1: but the need to have a super efficient plant took
Speaker 1: communicate with your conce How did the little guys compete
Speaker 1: with this? How do the shared platform? Shared platform? I
Speaker 1: mean this is you know there are third parties that
Speaker 1: you can amortize your costs over by sharing the platform
Speaker 1: with others. Did I frame that? Okay? John did a
Speaker 1: decent chop. I think it's got to decide whether I
Speaker 1: honestly do and if we haven't want a third anchor,
Speaker 1: I would push Betsy. Could that person? I think? I think,
Speaker 1: I think, I think I could have a lot of
Speaker 1: fun with you every morning you think so, Betsy, Thank you,
Speaker 1: m Thanks for listening to the Bloomberg Surveillance podcast. Subscribe
Speaker 1: and listen to interviews on Apple Podcasts, SoundCloud, or whichever
Speaker 1: podcast platform you prefer. I'm on Twitter at Tom Keene
Speaker 1: before the podcast. You can always catch us worldwide. I'm
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