1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Bramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg p m L 6 00:00:20,840 --> 00:00:30,880 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. We're 7 00:00:30,880 --> 00:00:33,720 Speaker 1: focused on banks. We've got a slew of earnings out 8 00:00:33,760 --> 00:00:36,560 Speaker 1: from the likes of Balls, Fargo City Group and JP Morgan. 9 00:00:36,640 --> 00:00:39,920 Speaker 1: JP Morgan in particular started out with a bang, but 10 00:00:40,000 --> 00:00:42,760 Speaker 1: shares have since gone negative. Joining us now as somebody 11 00:00:42,800 --> 00:00:46,279 Speaker 1: who perhaps isn't entirely surprised by this, Charles Peabody as 12 00:00:46,280 --> 00:00:49,599 Speaker 1: president of Portala's Partners and Charles, I'm so glad you're 13 00:00:49,640 --> 00:00:53,559 Speaker 1: joining us today because just Wednesday you actually downgraded your 14 00:00:53,640 --> 00:00:56,040 Speaker 1: rating on JP Morgan too, a neutral from a bio 15 00:00:56,120 --> 00:01:00,760 Speaker 1: believed today's results edify your decision in your view or 16 00:01:01,320 --> 00:01:05,959 Speaker 1: did it make you rethink anything? Um, just a quick clarification, 17 00:01:06,120 --> 00:01:11,440 Speaker 1: I went from a neutral to a sell on Yeah. Um, Listen, 18 00:01:13,160 --> 00:01:15,800 Speaker 1: when you when you think of the themes that are 19 00:01:15,840 --> 00:01:19,520 Speaker 1: out there that that the analysts are espousing to try 20 00:01:19,560 --> 00:01:22,720 Speaker 1: and get people to buy these banks. There are three 21 00:01:22,720 --> 00:01:27,000 Speaker 1: major themes. One is um by those banks that have 22 00:01:27,080 --> 00:01:30,520 Speaker 1: big capital returns. The second is by those banks they're 23 00:01:30,520 --> 00:01:33,920 Speaker 1: showing positive operating leverage and and the third is by 24 00:01:33,959 --> 00:01:38,319 Speaker 1: those banks that have low loan to deposit ratios because 25 00:01:38,360 --> 00:01:40,680 Speaker 1: they're not going to be as effected by an increasing 26 00:01:40,720 --> 00:01:45,640 Speaker 1: deposit data. And if there's a uh theme that I 27 00:01:45,640 --> 00:01:48,720 Speaker 1: think is running through the weakness in the stocks today, 28 00:01:49,360 --> 00:01:54,320 Speaker 1: it has to do with the lack of positive operating leverage, 29 00:01:54,600 --> 00:01:56,960 Speaker 1: which you didn't see at JP Morgan, you didn't see 30 00:01:56,960 --> 00:02:00,240 Speaker 1: at p n C. And that gets back to the 31 00:02:00,280 --> 00:02:04,160 Speaker 1: fact that revenue growth is starting to slow um at 32 00:02:04,200 --> 00:02:08,400 Speaker 1: the margin and particularly in n I I it's it's 33 00:02:08,400 --> 00:02:11,080 Speaker 1: still positive, but if you go back to the first quarter, 34 00:02:11,160 --> 00:02:14,160 Speaker 1: revenue growth was high single digits. Now it's mid to 35 00:02:14,240 --> 00:02:19,120 Speaker 1: low single digits. Charles, maybe you could explain to people 36 00:02:19,840 --> 00:02:24,079 Speaker 1: your perspective when it comes to the cycle of bank 37 00:02:24,919 --> 00:02:29,160 Speaker 1: operating earnings and how they go through cycles at times 38 00:02:29,280 --> 00:02:34,799 Speaker 1: of rising interest rates. Absolutely, you know, the theme I've 39 00:02:34,840 --> 00:02:38,799 Speaker 1: had all year is that we are now investing for 40 00:02:39,240 --> 00:02:43,320 Speaker 1: end of cycle dynamics, and when you enter that end 41 00:02:43,360 --> 00:02:46,640 Speaker 1: of cycle period. What you want to look at is 42 00:02:46,680 --> 00:02:49,520 Speaker 1: what is happening to the change in the rate of 43 00:02:49,560 --> 00:02:52,720 Speaker 1: growth and and there are three key line items that 44 00:02:52,720 --> 00:02:56,120 Speaker 1: you're gonna want to pay attention to UM. One is revenues, 45 00:02:56,880 --> 00:02:59,919 Speaker 1: the other is credit costs, and the third is capital return. 46 00:03:00,760 --> 00:03:04,120 Speaker 1: And this year, what we're seeing is the revenue growth 47 00:03:04,320 --> 00:03:08,200 Speaker 1: is decelerating. So we started high mid single digits in 48 00:03:08,200 --> 00:03:11,240 Speaker 1: the first quarter, we're entering sort of mid single digits 49 00:03:11,360 --> 00:03:13,560 Speaker 1: this quarter. We'll probably down to low single digits by 50 00:03:13,560 --> 00:03:15,880 Speaker 1: the fourth quarter. And I think that's what we're going 51 00:03:15,919 --> 00:03:19,000 Speaker 1: to see in in nineteen is low single digit revenue growth. 52 00:03:19,880 --> 00:03:23,160 Speaker 1: On the other hand, you're seeing credit costs, which are 53 00:03:23,280 --> 00:03:27,400 Speaker 1: right now are very benign UM are likely to accelerate 54 00:03:27,480 --> 00:03:32,040 Speaker 1: higher in nineteen UM. And then I think beyond that 55 00:03:32,400 --> 00:03:36,920 Speaker 1: the capital return is going to slow dramatically. So the 56 00:03:36,960 --> 00:03:42,040 Speaker 1: three variables are working against improving profitability. So I think 57 00:03:42,040 --> 00:03:45,080 Speaker 1: we've seen peak profitability and that's what these stocks are 58 00:03:45,120 --> 00:03:48,000 Speaker 1: starting to reflect. So one thing that I'm struck by 59 00:03:48,320 --> 00:03:52,880 Speaker 1: is that JP Morgan posted its biggest loan growth in 60 00:03:52,920 --> 00:03:57,040 Speaker 1: a back to back period ever. Uh and this really 61 00:03:57,160 --> 00:04:00,640 Speaker 1: edified initially anyway, people's feeling of strength at basically, even 62 00:04:00,640 --> 00:04:03,880 Speaker 1: as interest rates rise, they're able to expand their loan 63 00:04:03,920 --> 00:04:06,040 Speaker 1: book and they're able to capitalize the fact that interest 64 00:04:06,120 --> 00:04:08,640 Speaker 1: rates are raising fast, rising faster than how much they 65 00:04:08,640 --> 00:04:12,200 Speaker 1: have to pay depositors. Why does not not what does 66 00:04:12,240 --> 00:04:18,279 Speaker 1: that not give you confidence? Well, again, JP Morgan is 67 00:04:18,279 --> 00:04:20,960 Speaker 1: one of the better in terms of execution, and they've 68 00:04:20,960 --> 00:04:23,159 Speaker 1: been investing in their businesses and then showing some of 69 00:04:23,160 --> 00:04:26,880 Speaker 1: the better, um you know, revenue growth. This I mean 70 00:04:26,920 --> 00:04:29,640 Speaker 1: for this quarter, total revenues were up five percent year 71 00:04:29,680 --> 00:04:31,800 Speaker 1: over a year, which is one of the better quarters 72 00:04:31,839 --> 00:04:34,279 Speaker 1: that you're going to see. Um So, I have no 73 00:04:34,360 --> 00:04:37,880 Speaker 1: problem with what JP Morgan reported. What I'm what I'm 74 00:04:37,880 --> 00:04:40,960 Speaker 1: focused on is is that rate of change and growth. 75 00:04:41,440 --> 00:04:44,720 Speaker 1: And going back to your question about loans, they grew 76 00:04:44,839 --> 00:04:47,840 Speaker 1: core loans around six this quarter, but they have been 77 00:04:47,839 --> 00:04:50,920 Speaker 1: growing core loans at the upper single digit range earlier 78 00:04:50,920 --> 00:04:53,839 Speaker 1: in the year. So it's that rate of change that's 79 00:04:53,880 --> 00:04:58,480 Speaker 1: starting to show us flowing over what period of time, Charles, 80 00:04:58,520 --> 00:05:02,240 Speaker 1: do you believe that the banks can turn their operations 81 00:05:02,680 --> 00:05:05,680 Speaker 1: to be more nimble based on where they are in 82 00:05:05,680 --> 00:05:10,599 Speaker 1: the cycle right now, because that would reflect decisions that 83 00:05:10,640 --> 00:05:14,400 Speaker 1: are made now that only bear fruit six twelve months, 84 00:05:14,440 --> 00:05:18,240 Speaker 1: even twenty four months into the future, if not longer. Yeah, 85 00:05:18,680 --> 00:05:22,360 Speaker 1: that's an excellent question, tim because because for example, PNC 86 00:05:22,640 --> 00:05:26,120 Speaker 1: is getting punished today if the stock is down six dollars, 87 00:05:26,160 --> 00:05:29,119 Speaker 1: and the reason is because they had sluggish loan growth 88 00:05:29,160 --> 00:05:32,200 Speaker 1: in are only projecting low single digit revenue growth in 89 00:05:32,240 --> 00:05:36,640 Speaker 1: the fourth quarter, and and they're falling behind the competition 90 00:05:36,680 --> 00:05:40,840 Speaker 1: and some of their momentum indicators. And they're claiming it's 91 00:05:40,839 --> 00:05:43,360 Speaker 1: because they're trying to be prudent in this end of 92 00:05:43,440 --> 00:05:46,960 Speaker 1: cycle where a lot of mistakes are made, but they're 93 00:05:46,960 --> 00:05:49,760 Speaker 1: being punished for that because they're not showing the positive 94 00:05:49,800 --> 00:05:52,720 Speaker 1: operating leverage that somebody else is to maybe taking more risk. 95 00:05:52,839 --> 00:05:56,440 Speaker 1: Is I think at the end of the day, the 96 00:05:56,520 --> 00:06:00,640 Speaker 1: banks will come out of this next down cycle whenever 97 00:06:00,680 --> 00:06:02,600 Speaker 1: it happens. I think it's going to happen in nineteen 98 00:06:03,160 --> 00:06:07,040 Speaker 1: um the recession um with their balance sheets intact, with 99 00:06:07,160 --> 00:06:09,600 Speaker 1: their capital intact, and they're going to be able to 100 00:06:10,040 --> 00:06:12,520 Speaker 1: grow day one when we come out of that recession, 101 00:06:12,839 --> 00:06:15,840 Speaker 1: and there's going to be a much bigger positive revaluation 102 00:06:15,839 --> 00:06:18,760 Speaker 1: of these bank stalks out of that next cycle. But 103 00:06:18,880 --> 00:06:22,200 Speaker 1: going into it, there's going to be skepticism that they 104 00:06:22,279 --> 00:06:26,680 Speaker 1: haven't changed their historical practices, which is always to reach 105 00:06:26,760 --> 00:06:29,400 Speaker 1: for growth at the wrong time of the cycle. And 106 00:06:29,440 --> 00:06:31,320 Speaker 1: that's going on, but it's going on more in the 107 00:06:31,360 --> 00:06:34,120 Speaker 1: non bank system or the shadow market banking system than 108 00:06:34,160 --> 00:06:36,800 Speaker 1: it is the banking system. Charles, is there any bank 109 00:06:36,920 --> 00:06:38,160 Speaker 1: right now in the US that you think is a 110 00:06:38,240 --> 00:06:44,400 Speaker 1: buy well? You know, I think we started a bear 111 00:06:44,480 --> 00:06:47,160 Speaker 1: market and that the bank stocks will be down some 112 00:06:47,279 --> 00:06:51,400 Speaker 1: thirty from their September I mean from their first quarter 113 00:06:51,920 --> 00:06:54,360 Speaker 1: UM highs of eighteen, which I think is the peak. 114 00:06:54,760 --> 00:06:57,200 Speaker 1: Is the top is now in place, and they'll be 115 00:06:57,240 --> 00:07:02,119 Speaker 1: down thirty by the depth of the recession. So within 116 00:07:02,160 --> 00:07:05,840 Speaker 1: that cycle, call no, you don't want to buy banks. 117 00:07:06,279 --> 00:07:12,080 Speaker 1: Can they outperform relatively? They could, but I'm not convinced 118 00:07:12,600 --> 00:07:15,360 Speaker 1: that you get that change of secular leadership until you 119 00:07:15,400 --> 00:07:20,640 Speaker 1: have that down in turn. On a trading basis, I've 120 00:07:20,680 --> 00:07:23,280 Speaker 1: been advising my clients it's probably not no more than 121 00:07:23,280 --> 00:07:27,040 Speaker 1: another five percent downside from where we are today, and 122 00:07:27,120 --> 00:07:29,640 Speaker 1: so on a trading basis, maybe you want to pick 123 00:07:29,720 --> 00:07:33,960 Speaker 1: up a Wells Fargo or a city group. But you know, 124 00:07:34,320 --> 00:07:37,200 Speaker 1: I'm talking about as a trader, because I still think 125 00:07:37,240 --> 00:07:41,120 Speaker 1: that the cycle is for much bigger losses. Thank you 126 00:07:41,240 --> 00:07:44,080 Speaker 1: very much for spending time with us as always interesting 127 00:07:44,240 --> 00:07:49,160 Speaker 1: and insightful. Charles Peabody is the president of Portalis Partners. 128 00:07:49,200 --> 00:08:03,880 Speaker 1: Speaking about bank earnings. We are broadcasting from the Bloomberg 129 00:08:04,000 --> 00:08:07,800 Speaker 1: Interactive Broker's studios. I'm pim Fox along with my co 130 00:08:07,920 --> 00:08:11,640 Speaker 1: host and colleague, A Lisa Abramwitz. Just for an moment, 131 00:08:11,760 --> 00:08:15,040 Speaker 1: imagine that you are in charge of a one hundred 132 00:08:15,040 --> 00:08:19,160 Speaker 1: and fifty three year old company that started life in 133 00:08:19,200 --> 00:08:24,080 Speaker 1: the pulp business, a paper mill in Finland, and after 134 00:08:24,160 --> 00:08:27,520 Speaker 1: a series of reorganizations, it turns out that you have 135 00:08:27,680 --> 00:08:32,680 Speaker 1: remade yourself in just twelve months. Here's what happened at Nokia. 136 00:08:33,040 --> 00:08:36,360 Speaker 1: In April of the company completed the sale of its 137 00:08:36,400 --> 00:08:40,439 Speaker 1: mobile phone handset business to Microsoft that accounted for more 138 00:08:40,480 --> 00:08:45,600 Speaker 1: than half of the company's sales. In April of Alcatel 139 00:08:45,679 --> 00:08:53,040 Speaker 1: Lucent agreed to Nokia's sixteen point six billion dollar buyout offer. 140 00:08:53,160 --> 00:08:57,120 Speaker 1: The deal closed in January. It has created the world's 141 00:08:57,120 --> 00:09:02,120 Speaker 1: second biggest telecom equipment company. Hind Ericsson here to tell 142 00:09:02,200 --> 00:09:07,120 Speaker 1: us about transformation is the chairman of Nokia. Resto Salisma 143 00:09:07,320 --> 00:09:11,480 Speaker 1: He is the author of a new book entitled Transforming 144 00:09:11,520 --> 00:09:17,600 Speaker 1: Nokia The Power of Paranoid Optimism to Lead through Colossal Change, 145 00:09:17,600 --> 00:09:19,439 Speaker 1: and he joints us here in our studios. Thank you 146 00:09:19,520 --> 00:09:21,760 Speaker 1: very much, sir for being here. It's great to be here. 147 00:09:22,080 --> 00:09:26,400 Speaker 1: Tell us why you decided to write this book. Well, 148 00:09:26,480 --> 00:09:29,880 Speaker 1: I believe in learning. I'm an entrepreneur by background, and 149 00:09:31,240 --> 00:09:34,720 Speaker 1: if you want to develop your company, every time you 150 00:09:34,800 --> 00:09:37,520 Speaker 1: do something, you need to look back what worked out, 151 00:09:37,600 --> 00:09:40,560 Speaker 1: what didn't work out, to create a culture of learning, 152 00:09:40,600 --> 00:09:43,000 Speaker 1: so that people always sort of do a post mortem 153 00:09:43,640 --> 00:09:47,680 Speaker 1: after they finished a project. And this is about learning. 154 00:09:47,800 --> 00:09:52,440 Speaker 1: It's about sharing the story of how to create a 155 00:09:52,559 --> 00:09:56,960 Speaker 1: trusting environment, how to promote teamwork, how to promote openness, 156 00:09:57,760 --> 00:10:00,959 Speaker 1: how to make bad news flow to the top quickly 157 00:10:01,400 --> 00:10:03,920 Speaker 1: so that people can react to what is actually happening. 158 00:10:04,880 --> 00:10:08,040 Speaker 1: We were sort of poisoned by the success of Nakia 159 00:10:08,040 --> 00:10:11,880 Speaker 1: as a handset vendor, and that toxic side effect of 160 00:10:11,960 --> 00:10:17,080 Speaker 1: success faces every single company that is hugely successful. And 161 00:10:17,120 --> 00:10:20,480 Speaker 1: I think our lessons are worth sharing with other companies. 162 00:10:21,120 --> 00:10:24,120 Speaker 1: So what's the toxic side effect? Because at its peak, 163 00:10:24,160 --> 00:10:27,360 Speaker 1: Nokia is the world's largest mobile handsup maker and cadet 164 00:10:27,440 --> 00:10:32,040 Speaker 1: for about four of Finland's entire economic output. How is 165 00:10:32,080 --> 00:10:35,960 Speaker 1: that a poisoning factor? Because when you're at the top 166 00:10:36,000 --> 00:10:38,120 Speaker 1: of the world and everybody is telling you that you 167 00:10:38,160 --> 00:10:41,560 Speaker 1: are the best thing ever, you start to believe that. 168 00:10:42,640 --> 00:10:46,679 Speaker 1: And when you start to believe that, you become complacent. 169 00:10:47,240 --> 00:10:50,959 Speaker 1: You start paying more attention to external factors such as 170 00:10:50,960 --> 00:10:53,720 Speaker 1: share price and what the analysts are writing, what the 171 00:10:53,800 --> 00:11:00,120 Speaker 1: media says, rather than customers, got technology, employees, competition, and 172 00:11:00,800 --> 00:11:07,480 Speaker 1: those small things accumulate and suddenly your competitiveness starts to disappear, 173 00:11:07,880 --> 00:11:10,160 Speaker 1: but you may not notice because you're not paying attention 174 00:11:10,200 --> 00:11:15,320 Speaker 1: to those crucial details anymore. You've been described as someone 175 00:11:15,520 --> 00:11:22,400 Speaker 1: who has been motivated as much by maximum returns as 176 00:11:22,480 --> 00:11:28,640 Speaker 1: by soft values. Can you explain that a little bit? Well, 177 00:11:28,679 --> 00:11:33,560 Speaker 1: Like many entrepreneurs, I believe that the long term is 178 00:11:33,600 --> 00:11:38,480 Speaker 1: the the only real horizon. I don't follow daily share 179 00:11:38,520 --> 00:11:42,120 Speaker 1: price movements at all. It may be two weeks between 180 00:11:42,720 --> 00:11:45,960 Speaker 1: I pay attention to what the share price is. I 181 00:11:46,040 --> 00:11:50,360 Speaker 1: want to build companies where employees really want to be 182 00:11:50,400 --> 00:11:53,800 Speaker 1: proud of not only what the company achieves, but how 183 00:11:53,880 --> 00:11:58,040 Speaker 1: they achieve That that how thing is so important, and 184 00:11:58,120 --> 00:12:01,240 Speaker 1: that's all about the long term. So perhaps you don't 185 00:12:01,280 --> 00:12:03,520 Speaker 1: pay attention to the share price, but the shares have 186 00:12:03,640 --> 00:12:07,840 Speaker 1: risen more than since you took over in two thousand 187 00:12:07,920 --> 00:12:10,640 Speaker 1: and twelve the company, so I will say that it 188 00:12:10,679 --> 00:12:14,600 Speaker 1: has done well. How do you foster that feeling though, 189 00:12:14,960 --> 00:12:18,560 Speaker 1: of pride and belief in the company and its purpose, 190 00:12:18,679 --> 00:12:23,800 Speaker 1: especially as its purpose changes. And there are certain core 191 00:12:23,840 --> 00:12:29,480 Speaker 1: elements that that remain and survive all changes. And for example, 192 00:12:30,080 --> 00:12:33,360 Speaker 1: in Nokia, as we started rebuilding and transforming the company, 193 00:12:33,400 --> 00:12:37,360 Speaker 1: we went back to our values from the nineties, which 194 00:12:37,640 --> 00:12:40,760 Speaker 1: sort of resonated with people whose they they remember how 195 00:12:40,800 --> 00:12:44,840 Speaker 1: in the nineties Nokia grew from being completely unknown to 196 00:12:44,960 --> 00:12:49,520 Speaker 1: the top of the world. And it's it's that sentimental 197 00:12:49,640 --> 00:12:53,720 Speaker 1: feeling that we are all humans aren't driven by feelings 198 00:12:53,720 --> 00:12:57,480 Speaker 1: and emotions. It's not about fact only. Although I have 199 00:12:57,559 --> 00:13:00,199 Speaker 1: to wonder. I mean a big conglomerate, right, I mean 200 00:13:00,240 --> 00:13:02,360 Speaker 1: a lot of conglomerates are facing a lot of issues 201 00:13:02,400 --> 00:13:04,360 Speaker 1: because they have to kind of figure out what are 202 00:13:04,400 --> 00:13:06,319 Speaker 1: they right and when we're seeing this with General Electric 203 00:13:06,360 --> 00:13:09,319 Speaker 1: for example, So you know, belief and in faith, in 204 00:13:09,559 --> 00:13:11,840 Speaker 1: a sense of pride or go so far, But what 205 00:13:11,880 --> 00:13:14,439 Speaker 1: about the skills that you need to overhaul, etcetera. When 206 00:13:14,440 --> 00:13:16,959 Speaker 1: you when you make a big shift, that's a that's 207 00:13:16,960 --> 00:13:21,360 Speaker 1: a good point. If you have a strong foundation of trust, 208 00:13:22,720 --> 00:13:26,760 Speaker 1: which means openness, which needs means being ready for both 209 00:13:26,800 --> 00:13:30,640 Speaker 1: bad news and good news, then you can experiment. People 210 00:13:31,040 --> 00:13:33,400 Speaker 1: have the courage to try out new things even if 211 00:13:33,440 --> 00:13:35,280 Speaker 1: they know they might fail, because they know that if 212 00:13:35,320 --> 00:13:38,840 Speaker 1: I fail, nothing bad will happen. And when you experiment, 213 00:13:39,120 --> 00:13:41,880 Speaker 1: you'll learn, and if you can do that at a 214 00:13:42,000 --> 00:13:48,760 Speaker 1: rapid cycle, then you'll survive the unpredictable changes in the environment. Now, 215 00:13:48,800 --> 00:13:51,600 Speaker 1: you just went back to school in order to fulfill 216 00:13:51,679 --> 00:13:54,520 Speaker 1: exactly some of these things. Explain what you're learning at 217 00:13:54,559 --> 00:13:57,520 Speaker 1: school and why you decided to do this. Yeah, like 218 00:13:57,559 --> 00:14:01,280 Speaker 1: many other leaders, I was challenging ins by machine learning 219 00:14:01,679 --> 00:14:05,080 Speaker 1: and what it can do. And like many others, I 220 00:14:05,120 --> 00:14:08,560 Speaker 1: was told by my teams sort of what it means, 221 00:14:09,200 --> 00:14:13,280 Speaker 1: and I learned those bullet points by heart, and like 222 00:14:13,360 --> 00:14:16,760 Speaker 1: a paratte I went out and gave presentations on the 223 00:14:16,840 --> 00:14:20,840 Speaker 1: power of machine learning without understanding the whole thing at all. 224 00:14:21,560 --> 00:14:23,520 Speaker 1: And then I sort of woke up that this cannot be. 225 00:14:23,600 --> 00:14:26,640 Speaker 1: I can't tell the world that machine learning will be 226 00:14:26,680 --> 00:14:29,600 Speaker 1: the key component of our future competitiveness if I don't 227 00:14:29,720 --> 00:14:33,560 Speaker 1: understand how it works. And then I went back to 228 00:14:33,600 --> 00:14:36,440 Speaker 1: school and I have studied programming again. I have taken 229 00:14:36,840 --> 00:14:39,600 Speaker 1: six courses in machine learning programming and done so all 230 00:14:39,720 --> 00:14:43,200 Speaker 1: sorts of architectures. And then I created a training program 231 00:14:43,320 --> 00:14:46,960 Speaker 1: based on what I now understood and tried to create 232 00:14:47,040 --> 00:14:50,000 Speaker 1: content that I would have wanted somebody to tell me 233 00:14:50,880 --> 00:14:53,080 Speaker 1: when I was trying to figure out what does machine 234 00:14:53,160 --> 00:14:56,560 Speaker 1: learning mean for us? And this has been something of 235 00:14:56,600 --> 00:15:00,040 Speaker 1: an inspiration to our R and D people, who I 236 00:15:00,120 --> 00:15:02,320 Speaker 1: felt and come to me and said that I'm being 237 00:15:02,360 --> 00:15:04,360 Speaker 1: a bit of shame that our chairman knows more about 238 00:15:04,400 --> 00:15:07,440 Speaker 1: machine learning than I do. I'm not taking night courses 239 00:15:07,520 --> 00:15:10,000 Speaker 1: on machine learning, and that's of course music to my ears. 240 00:15:10,080 --> 00:15:12,480 Speaker 1: Let's let's sign up for this well, the power of shame, 241 00:15:12,600 --> 00:15:15,560 Speaker 1: right if if if your fosters more about your job 242 00:15:15,600 --> 00:15:17,520 Speaker 1: than you do, you start to feel like you gotta 243 00:15:17,560 --> 00:15:20,160 Speaker 1: catch up. Risto Celisma, thank you so much for being 244 00:15:20,160 --> 00:15:23,080 Speaker 1: with us, and thank you congratulations on your book, Transforming 245 00:15:23,080 --> 00:15:28,200 Speaker 1: Nokia The power of Paranoid Optimism to lead through colossal change. 246 00:15:28,200 --> 00:15:32,000 Speaker 1: Resto Celis's chairman of Nokia also chairman and founder and 247 00:15:32,080 --> 00:15:35,720 Speaker 1: former chief executive of f Secure Corporation. Here in our 248 00:15:35,720 --> 00:15:50,440 Speaker 1: eleven three oh studios. Washington Post columnist and known critic 249 00:15:50,560 --> 00:15:56,120 Speaker 1: of Saudi Arabia disappeared mysteriously. Turkey is accusing uh Saudi 250 00:15:56,160 --> 00:16:01,000 Speaker 1: Arabia of murdering the journalist in an alleged attack that 251 00:16:01,240 --> 00:16:04,440 Speaker 1: was planned. Joining us now as Bobby got Ghosh. Bobby 252 00:16:04,440 --> 00:16:07,280 Speaker 1: Ghosh is editor of Bloomberg Opinion based in London. Bobby, 253 00:16:07,320 --> 00:16:09,480 Speaker 1: thank you so much for being with us. First, can 254 00:16:09,520 --> 00:16:12,440 Speaker 1: you explain what we know at this point about this 255 00:16:12,560 --> 00:16:17,120 Speaker 1: situation and why it's so important. But we know that 256 00:16:17,200 --> 00:16:21,000 Speaker 1: Jamal Kashogi about a week ago went into the Saudia 257 00:16:21,120 --> 00:16:25,840 Speaker 1: consulate in Istanbul to collect some papers, um, and that 258 00:16:25,960 --> 00:16:29,360 Speaker 1: was the last anybody saw or heard from him. Um. 259 00:16:29,400 --> 00:16:32,640 Speaker 1: We know that the Turkish authorities have been leaking to 260 00:16:32,840 --> 00:16:36,560 Speaker 1: the media, both local as well as international media, that 261 00:16:36,680 --> 00:16:40,560 Speaker 1: they believed that they had evidence that Jamal Kashogi was 262 00:16:40,800 --> 00:16:43,720 Speaker 1: first tortured and then murdered and then that his body 263 00:16:43,800 --> 00:16:47,120 Speaker 1: was removed from the Saudi consul. That they also have 264 00:16:47,280 --> 00:16:52,440 Speaker 1: tracked the movements of a private aircraft with fifteen passengers 265 00:16:52,440 --> 00:16:55,320 Speaker 1: that arrived that very day. They believe that these passengers 266 00:16:55,680 --> 00:16:58,440 Speaker 1: included people who were responsible for the torture and murder. 267 00:16:59,080 --> 00:17:02,720 Speaker 1: This is the extent off These are the facts that 268 00:17:02,760 --> 00:17:07,720 Speaker 1: we know. UM. This is important because it is it 269 00:17:07,880 --> 00:17:12,359 Speaker 1: comes while Saudi Arabia is trying to change its image 270 00:17:12,400 --> 00:17:15,359 Speaker 1: in the world. The crown Prince, the relatively new Crown 271 00:17:15,400 --> 00:17:19,760 Speaker 1: Prince um moment Bin Salman, he's better known as MBS. 272 00:17:20,240 --> 00:17:25,000 Speaker 1: He has been trying to change the way the country behaves. 273 00:17:25,000 --> 00:17:27,520 Speaker 1: He has been trying to reform economy, trying to change 274 00:17:28,400 --> 00:17:31,840 Speaker 1: many of the social regulations in the country, and trying 275 00:17:31,840 --> 00:17:33,840 Speaker 1: to improve its image in the world. So this comes 276 00:17:33,840 --> 00:17:36,320 Speaker 1: at a time this is this couldn't have been worse 277 00:17:36,440 --> 00:17:40,639 Speaker 1: type UM. This incident. If it is true that Jamal 278 00:17:40,800 --> 00:17:43,960 Speaker 1: was killed in the Saudi consulate buy Saudi officials on 279 00:17:44,080 --> 00:17:48,480 Speaker 1: the orders of senior Saudi figures in government, then this 280 00:17:48,560 --> 00:17:50,520 Speaker 1: is not a new and improved Saudi Areia. This is 281 00:17:50,600 --> 00:17:52,720 Speaker 1: very much an old one. In fact, in some ways 282 00:17:52,760 --> 00:17:56,920 Speaker 1: it is worse than the old Saudi Arabia Bobby Ghost. 283 00:17:57,200 --> 00:18:00,639 Speaker 1: This also has implications for the relations and ship between 284 00:18:00,680 --> 00:18:04,840 Speaker 1: the United States and Saudi Arabia. Correct yes, name it 285 00:18:04,920 --> 00:18:09,160 Speaker 1: does because Jamal was a resident of the United States 286 00:18:09,160 --> 00:18:13,760 Speaker 1: of Washington. UM. He was a columnist of Washington Post, 287 00:18:14,119 --> 00:18:17,399 Speaker 1: well known in Washington political and diplomatic circles, were liked 288 00:18:17,760 --> 00:18:21,240 Speaker 1: in those circles. UM. This is important because Saudi Arabia 289 00:18:21,320 --> 00:18:25,119 Speaker 1: is very important to the Trump administration. Donald Trump's President Trump, 290 00:18:25,320 --> 00:18:29,080 Speaker 1: his first international trip was to Saudi Arabia. UM. His 291 00:18:29,520 --> 00:18:33,119 Speaker 1: son in law, Jared Kushner, has a close personal relationship 292 00:18:33,160 --> 00:18:36,480 Speaker 1: with the Cown Prince. UM. The Trump administration has made 293 00:18:36,480 --> 00:18:38,200 Speaker 1: a big deal of the fact that they're very close 294 00:18:38,240 --> 00:18:42,120 Speaker 1: to South Arabia. So anything that reflects poorly on South Arabia, 295 00:18:42,520 --> 00:18:46,800 Speaker 1: especially since it involves an American resident, UM, he is 296 00:18:46,800 --> 00:18:48,840 Speaker 1: going to there's going to be a splashback on the 297 00:18:48,840 --> 00:18:52,280 Speaker 1: Trump administration. Bobby, It's really interesting in light of the 298 00:18:52,320 --> 00:18:55,280 Speaker 1: news that we have this morning with Turkey freeing in 299 00:18:55,320 --> 00:18:58,480 Speaker 1: the detained pastor that President Trump and his administration have 300 00:18:59,400 --> 00:19:04,240 Speaker 1: argued war, and it's interesting district contrast the rhetoric out 301 00:19:04,240 --> 00:19:07,760 Speaker 1: of the Trump administration around that versus the rhetoric around 302 00:19:08,160 --> 00:19:12,119 Speaker 1: this particular incident, and that basically President Trump seems to 303 00:19:12,160 --> 00:19:15,560 Speaker 1: be taking a pretty hands off approach to this, saying yeah, 304 00:19:15,600 --> 00:19:20,320 Speaker 1: well you know who knows why. Argument This argument is 305 00:19:20,320 --> 00:19:23,240 Speaker 1: that jama Kahoki is not an American citizen, whereas the pastor, 306 00:19:23,320 --> 00:19:27,000 Speaker 1: of course he's an American citizen. Unfortunately, that argument won't 307 00:19:27,040 --> 00:19:31,560 Speaker 1: wash because you know, States does have a responsibility for 308 00:19:31,640 --> 00:19:34,840 Speaker 1: somebody who was legally resident in Washington. It has a 309 00:19:34,880 --> 00:19:38,199 Speaker 1: responsibility because Saudi Arabia is a major ally, and it 310 00:19:38,240 --> 00:19:40,360 Speaker 1: has a responsibility as the leader of the free world, 311 00:19:40,400 --> 00:19:44,400 Speaker 1: as a beacon for for free speech and a free expression. 312 00:19:44,520 --> 00:19:50,639 Speaker 1: And Jamaica Shokei was essentially exercising his free speech. He 313 00:19:50,800 --> 00:19:53,640 Speaker 1: was not I would I think we should point out 314 00:19:53,680 --> 00:19:57,119 Speaker 1: he was not a strident opponent of the Soudi regime. 315 00:19:57,160 --> 00:20:00,520 Speaker 1: He was very much a part of the South, the elite. 316 00:20:00,760 --> 00:20:05,360 Speaker 1: His criticism had been quite mild. He supported the conference 317 00:20:05,359 --> 00:20:08,639 Speaker 1: when the conference was appointed, he disagreed with some of 318 00:20:08,680 --> 00:20:12,159 Speaker 1: the policies at the conference, then implemented and wrote about it. 319 00:20:12,240 --> 00:20:16,440 Speaker 1: That's the extent. This is not some left wing radical 320 00:20:17,320 --> 00:20:20,160 Speaker 1: who's hiding out in the United States and taking pot 321 00:20:20,160 --> 00:20:24,480 Speaker 1: shots at a regime. Is it possible that the United 322 00:20:24,520 --> 00:20:28,200 Speaker 1: States will conduct an investigation and if it does and 323 00:20:28,400 --> 00:20:33,760 Speaker 1: find something untoward, that there will be sanctions. Well, a 324 00:20:33,840 --> 00:20:39,040 Speaker 1: number of senior senators in the US have pressed the 325 00:20:39,080 --> 00:20:44,199 Speaker 1: presidents to do exactly that. Um Ran Paul the the 326 00:20:44,359 --> 00:20:47,720 Speaker 1: Senator from Kentucky, is threatening to call a vote in 327 00:20:47,760 --> 00:20:52,480 Speaker 1: the Senates to block all American arms sales to sell 328 00:20:52,520 --> 00:20:55,720 Speaker 1: the Arabia. He's run into tens hundreds of billions of dollars. 329 00:20:56,480 --> 00:21:00,159 Speaker 1: Very senior American political figures are taking this seriously. Um 330 00:21:00,320 --> 00:21:03,199 Speaker 1: The Trump administration might try to wriggle out of it, 331 00:21:03,680 --> 00:21:07,720 Speaker 1: but if the if the Senators keep pressing and keep 332 00:21:07,760 --> 00:21:11,879 Speaker 1: demanding answers, uh, then I think it'd be hard for 333 00:21:12,200 --> 00:21:16,200 Speaker 1: the White House to keep avoiding it. Bobby, just real 334 00:21:16,280 --> 00:21:19,120 Speaker 1: quick here, there are a number of company leaders who 335 00:21:19,119 --> 00:21:20,919 Speaker 1: have already said that they're not going to attend the 336 00:21:21,000 --> 00:21:25,320 Speaker 1: so called Davos in the Desert event that is upcoming 337 00:21:25,640 --> 00:21:28,600 Speaker 1: because of this incident. How significantly will that gain the 338 00:21:28,600 --> 00:21:33,000 Speaker 1: attention of Saudi Arabian leadership. But this is a very 339 00:21:33,080 --> 00:21:37,760 Speaker 1: very important, in fact, arguably even more than than NGOs 340 00:21:37,840 --> 00:21:42,080 Speaker 1: or human rights organizations complaining about what happened to to Jamal. 341 00:21:42,520 --> 00:21:45,600 Speaker 1: This is going to make a much greater impact because 342 00:21:45,600 --> 00:21:49,560 Speaker 1: a big part of the Crown Prince's reform agenda is 343 00:21:49,600 --> 00:21:53,600 Speaker 1: to bring more foreign and private investment investment into the country. 344 00:21:54,000 --> 00:21:57,360 Speaker 1: If major business leaders are backing out and don't want 345 00:21:57,359 --> 00:22:00,360 Speaker 1: to be associated with this event, which is a sort 346 00:22:00,359 --> 00:22:04,520 Speaker 1: of crown jewel of the of the program, that's a 347 00:22:04,560 --> 00:22:07,159 Speaker 1: big deal. I want to thank you very much for 348 00:22:07,240 --> 00:22:10,760 Speaker 1: joining us. Bobby Ghosh is a Bloomberg opinion editor speaking 349 00:22:10,800 --> 00:22:15,120 Speaker 1: about a Saudi Arabia Turkey and the disappearance of the journalist. 350 00:22:15,160 --> 00:22:19,240 Speaker 1: Jamal also just mentioned that Bloomberg is a sponsor of 351 00:22:19,280 --> 00:22:22,879 Speaker 1: the devas and we are monitoring this situation. This is 352 00:22:22,880 --> 00:22:36,280 Speaker 1: Bloomberg here to tell us more about municipal markets as 353 00:22:36,320 --> 00:22:40,760 Speaker 1: Amanda Alright, municipal bond reporter for Bloomberg. She joins us 354 00:22:40,760 --> 00:22:45,119 Speaker 1: here in our Bloomberg Interactive Broker's studios. Amanda, thank you 355 00:22:45,240 --> 00:22:48,359 Speaker 1: very much for being with us. Before we get into 356 00:22:48,359 --> 00:22:50,359 Speaker 1: sort a big picture, you know, trends and so on, 357 00:22:50,800 --> 00:22:52,880 Speaker 1: I want to ask you about this really. I thought 358 00:22:52,920 --> 00:22:54,760 Speaker 1: it was a very interesting story having to do with 359 00:22:54,840 --> 00:22:58,480 Speaker 1: Los Angeles and what the city, what Los Angeles does 360 00:22:59,080 --> 00:23:02,840 Speaker 1: with the revenue that it receives from parking finds from 361 00:23:02,960 --> 00:23:07,160 Speaker 1: sales taxes. Explain what they do now and what might 362 00:23:07,280 --> 00:23:09,720 Speaker 1: happen in the future. Sure. So. We had a really 363 00:23:09,720 --> 00:23:12,280 Speaker 1: good story this week by reporter rom e Var Gazy 364 00:23:12,480 --> 00:23:15,919 Speaker 1: um So. She wrote about Los Angeles considering UM creating 365 00:23:15,920 --> 00:23:17,959 Speaker 1: a public bank. UM. It would be the first U. 366 00:23:18,000 --> 00:23:20,200 Speaker 1: S city to do so. Um So what that means 367 00:23:20,240 --> 00:23:23,760 Speaker 1: is that it would move it's eleven billion portfolio UM 368 00:23:23,800 --> 00:23:25,800 Speaker 1: from some of the biggest banks in the country to 369 00:23:26,119 --> 00:23:29,040 Speaker 1: you know, self managed UM. It would invest in you know, 370 00:23:29,119 --> 00:23:31,479 Speaker 1: local projects and kind of you know, seek to have 371 00:23:31,560 --> 00:23:34,200 Speaker 1: more of like an E. S. G UM mindset rather 372 00:23:34,240 --> 00:23:38,000 Speaker 1: than working with UM. Some banks that can come under controversy. 373 00:23:38,200 --> 00:23:40,840 Speaker 1: That's interesting. Why would they be doing this? Is it 374 00:23:41,080 --> 00:23:45,720 Speaker 1: because of that environmental, social and governance issue or would 375 00:23:45,720 --> 00:23:49,000 Speaker 1: there also be in a financial incentive. So the story 376 00:23:49,040 --> 00:23:50,920 Speaker 1: talks a little bit about kind of how this effort 377 00:23:51,119 --> 00:23:53,480 Speaker 1: UM you know, first started and so a lot of 378 00:23:53,520 --> 00:23:56,640 Speaker 1: it was prompted by UM concerns about the Dakota Access 379 00:23:56,680 --> 00:24:00,359 Speaker 1: pipeline UM and work with Wells Fargo a few years ago. 380 00:24:00,560 --> 00:24:04,119 Speaker 1: Um So. Actually there was a big movement around public 381 00:24:04,160 --> 00:24:07,480 Speaker 1: banks UM during the Occupy Wall Street time. Um So 382 00:24:07,560 --> 00:24:09,359 Speaker 1: it does sort of come from this E. S. G 383 00:24:09,520 --> 00:24:11,879 Speaker 1: mind frame, and we do see Los Angeles being one 384 00:24:11,920 --> 00:24:14,080 Speaker 1: of those cities that's you know, very much a leader 385 00:24:14,080 --> 00:24:17,080 Speaker 1: when it comes to e s g UM issues, Amanda, 386 00:24:17,119 --> 00:24:18,600 Speaker 1: I want to shift gears a little bit to what 387 00:24:18,680 --> 00:24:20,760 Speaker 1: happened in the past week. There were some pretty big 388 00:24:20,880 --> 00:24:23,520 Speaker 1: outflows I believe the biggest and more than a year 389 00:24:23,560 --> 00:24:27,080 Speaker 1: from municipal bond funds in the United States. Why is 390 00:24:27,119 --> 00:24:30,080 Speaker 1: this just a rising rates kind of story. Yes, So 391 00:24:30,280 --> 00:24:32,480 Speaker 1: the investors that I've spoken with, um, you know, one 392 00:24:32,480 --> 00:24:35,600 Speaker 1: of them described it as simple bond math um. Basically, 393 00:24:35,680 --> 00:24:39,640 Speaker 1: retail investors they start seeing the losses that munis have posted. UM, 394 00:24:39,680 --> 00:24:42,320 Speaker 1: they see you know, the FED telegraphing more rates, and 395 00:24:42,359 --> 00:24:44,840 Speaker 1: they get a little bit nervous about their holdings, and 396 00:24:44,880 --> 00:24:47,320 Speaker 1: so they start pulling out of these funds. UM. It 397 00:24:47,440 --> 00:24:50,080 Speaker 1: is something that investors keep a close eye on because 398 00:24:50,080 --> 00:24:53,080 Speaker 1: retail is so important to this market. UM. And you know, 399 00:24:53,119 --> 00:24:55,240 Speaker 1: banks and insurance companies have kind of been on the 400 00:24:55,280 --> 00:24:58,360 Speaker 1: sidelines after their taxes were cut earlier this year. UM. 401 00:24:58,400 --> 00:25:00,560 Speaker 1: So these outflows are really really importan and we've seen 402 00:25:00,600 --> 00:25:02,520 Speaker 1: them with mutual funds and we've also seen them with 403 00:25:02,560 --> 00:25:06,280 Speaker 1: community ETFs. So what is going to be the likely consequence? 404 00:25:06,280 --> 00:25:09,080 Speaker 1: I mean, at what point will this actually hamper or 405 00:25:09,359 --> 00:25:13,480 Speaker 1: make it prohibitively expensive for municipalities to borrow money to 406 00:25:13,560 --> 00:25:16,040 Speaker 1: continue with projects they have planned. Or we're not anywhere 407 00:25:16,080 --> 00:25:18,399 Speaker 1: close to that. I mean we're already seeing sort of 408 00:25:18,440 --> 00:25:21,240 Speaker 1: the beginning stages of that. UM. The tenure benchmark from 409 00:25:21,280 --> 00:25:24,440 Speaker 1: munis is at the highest since early UM. So that's 410 00:25:24,480 --> 00:25:27,359 Speaker 1: pretty significant UM. And that obviously we're seeing, you know, 411 00:25:27,440 --> 00:25:29,560 Speaker 1: deals that are coming in higher this year than they 412 00:25:29,600 --> 00:25:31,879 Speaker 1: were last year. UM. You know, issuers have kind of 413 00:25:31,880 --> 00:25:35,399 Speaker 1: had these really low UM borrowing costs UM, and you know, 414 00:25:35,920 --> 00:25:38,520 Speaker 1: we always wrote stories about how they didn't necessarily take 415 00:25:38,520 --> 00:25:40,960 Speaker 1: advantage of those costs as much as they could UM. 416 00:25:41,000 --> 00:25:43,239 Speaker 1: And so now they're kind of facing this prospect of 417 00:25:43,560 --> 00:25:47,479 Speaker 1: rising interest rates for the foreseeable future. Does any of 418 00:25:47,520 --> 00:25:51,480 Speaker 1: this have to do with the banks that no longer 419 00:25:51,720 --> 00:25:57,719 Speaker 1: see municipal bonds as an attractive investment previous to the 420 00:25:57,840 --> 00:26:02,520 Speaker 1: tax reform? Absolutely so. UM. One really interesting dynamic is UM, 421 00:26:02,560 --> 00:26:05,359 Speaker 1: the longer out you go on muni bond deals, the 422 00:26:05,640 --> 00:26:07,720 Speaker 1: higher the yields are. And so if you look at 423 00:26:07,760 --> 00:26:11,359 Speaker 1: where muni stand compared to treasuries, they're very cheap on 424 00:26:11,400 --> 00:26:13,520 Speaker 1: the long end, but they're more expensive on the short end, 425 00:26:13,560 --> 00:26:16,320 Speaker 1: which is where you know, retail kind of hangs out. UM. 426 00:26:16,359 --> 00:26:18,840 Speaker 1: But because banks and insurance companies, you know, face this 427 00:26:18,960 --> 00:26:22,320 Speaker 1: lower tax rate, they haven't been buying munis as much. UM, 428 00:26:22,600 --> 00:26:24,920 Speaker 1: So yields on the long end have already kind of 429 00:26:25,080 --> 00:26:27,800 Speaker 1: risen up this year, whereas now we're seeing the short 430 00:26:27,880 --> 00:26:30,679 Speaker 1: end kind of join in on on yield rising. I 431 00:26:30,680 --> 00:26:32,600 Speaker 1: have to wonder, just going back to what him was 432 00:26:32,600 --> 00:26:35,719 Speaker 1: talking about with this Los Angeles Public Bank, would that 433 00:26:35,840 --> 00:26:40,080 Speaker 1: replace municipal debt as a form of financing. Would they 434 00:26:40,080 --> 00:26:42,320 Speaker 1: have to borrow in the muni market? I ask this 435 00:26:42,520 --> 00:26:46,320 Speaker 1: because as rates rise, I have to wonder what alternative 436 00:26:46,400 --> 00:26:49,720 Speaker 1: methods municipalities are going to look to possibly finance themselves. 437 00:26:49,760 --> 00:26:52,040 Speaker 1: I think that's a great point, um. And also the 438 00:26:52,040 --> 00:26:54,480 Speaker 1: opportunity zones that we saw come out of the tax 439 00:26:54,480 --> 00:26:57,240 Speaker 1: reform Act, Um, municipalities are going to have to get 440 00:26:57,280 --> 00:27:01,040 Speaker 1: creative with how they finance projects within their own orders. UM. 441 00:27:01,080 --> 00:27:03,879 Speaker 1: You know, the Los Angeles Bank, you know, there's a 442 00:27:03,880 --> 00:27:05,840 Speaker 1: lot to be determined their you know, voters have to 443 00:27:05,840 --> 00:27:07,880 Speaker 1: approve it first of all. UM, And there are still 444 00:27:07,920 --> 00:27:10,440 Speaker 1: some questions about the costs of creating such a bank. 445 00:27:10,680 --> 00:27:13,320 Speaker 1: So Muni's might still end up being the more cost 446 00:27:13,359 --> 00:27:19,280 Speaker 1: effective option. As far as this creates this potential bank, 447 00:27:19,480 --> 00:27:21,520 Speaker 1: would that be something that would have to have like 448 00:27:21,600 --> 00:27:24,800 Speaker 1: a federal charter a state charter? Is there any precedent 449 00:27:24,840 --> 00:27:26,960 Speaker 1: for this? Do we know there is a state bank 450 00:27:26,960 --> 00:27:30,360 Speaker 1: out of North Dakota. UM, so it's not federally regulated, 451 00:27:30,400 --> 00:27:33,639 Speaker 1: which is interesting. UM. But obviously Los Angeles is very 452 00:27:33,720 --> 00:27:35,960 Speaker 1: very big, UM. You know, being the first to get 453 00:27:36,000 --> 00:27:39,280 Speaker 1: involved with something like this, UM, you're gonna invite a 454 00:27:39,280 --> 00:27:42,080 Speaker 1: lot of scrutiny not only from maybe regulators, but also 455 00:27:42,520 --> 00:27:44,679 Speaker 1: um from residents living in that city and wanting to 456 00:27:44,720 --> 00:27:49,800 Speaker 1: make sure funds are used appropriately and and matters like that. Amanda, alright, 457 00:27:49,880 --> 00:27:51,919 Speaker 1: really really great stuff. Thank you so much for joining us. 458 00:27:51,960 --> 00:27:57,200 Speaker 1: We really appreciate it. Thanks for listening to the Bloomberg 459 00:27:57,280 --> 00:27:59,919 Speaker 1: P and L podcast. You can subscribe and listen to 460 00:28:00,000 --> 00:28:04,520 Speaker 1: interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. 461 00:28:04,920 --> 00:28:08,480 Speaker 1: I'm pim Fox. I'm on Twitter at pim Fox. I'm 462 00:28:08,520 --> 00:28:11,919 Speaker 1: on Twitter at Lisa abramowits one before the podcast. You 463 00:28:11,920 --> 00:28:14,440 Speaker 1: can always catch us worldwide on Bluebirg Radio.