Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane
Speaker 1: Jay Lee. We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg I'm
Speaker 1: ready placed to say that Johnny, Tom and I here
Speaker 1: in New York City is Allison Williams, a CEDIA analyst
Speaker 1: here at Bloomberg Intelligence, to run us through some of
Speaker 1: the numbers from JP Morgan. Allison aggressively going through the
Speaker 1: press release. So let's talk about it. The top line
Speaker 1: for you, Allison this morning. So I think the top
Speaker 1: line is the bottom line, the return on tangible equity,
Speaker 1: which to us is extremely impressive. JP Morgan is already
Speaker 1: executing at the top end of piers and that shows
Speaker 1: that they continue to do so. Looking at the guidance,
Speaker 1: I would say what's most positive is the expense guide,
Speaker 1: which looks like it's coming in a little bit lower UM.
Speaker 1: So again, it's a lot of data out there that
Speaker 1: we need to sift through, but um on the surface
Speaker 1: that's positive. On the net interest margin or net interest
Speaker 1: income is similar to last quarter, um. However, recall that
Speaker 1: intra quarter they did sort of guide down UM. But
Speaker 1: again I think I wouldn't make too much of it,
Speaker 1: too much out of it one way or the other.
Speaker 1: They were saying fifty seven plus or minus. Then they said, oh,
Speaker 1: maybe maybe it might be UM, you know, closer to
Speaker 1: fifty seven. I think in general, uh, interest rates is
Speaker 1: sort of the one situation that matters most of banks,
Speaker 1: but where we'll probably get the least clarity this quarter,
Speaker 1: just because of the dynamics driving that are really things
Speaker 1: beyond the bank's control. Let's talk about an interest income
Speaker 1: just briefly. Then the stock is filmed in the pre market,
Speaker 1: but I run about two percentage points net interesting income
Speaker 1: less than fifty seven point five billion dollars is to
Speaker 1: a rate across for the other big banks on Wall Street.
Speaker 1: Was still too early to tell, Allison, I think it's
Speaker 1: a little too early to tell. We haven't sort of
Speaker 1: gone through to see, um, what's happening with mix, and
Speaker 1: I think that's could be the one area where we
Speaker 1: get positively surprised and we could see an offset to
Speaker 1: some of the margin pressures. So if we looked at
Speaker 1: some of the weekly data that comes out consumer loan
Speaker 1: growth UM has been doing better. That's higher margin and
Speaker 1: to the extent that you have that influencing your portfolio, UM,
Speaker 1: that's obviously helpful to net interest income. The other thing
Speaker 1: fixed income trading, which is actually more important for City
Speaker 1: and Goldman. It's a bigger share their earnings will hear
Speaker 1: from them shortly, but that coming in much better than estimates.
Speaker 1: We allcome, all of you worldwide and coast to coast.
Speaker 1: It's a too big to fail day for me and
Speaker 1: John Farrell, and you can do that with Fred Cannon
Speaker 1: of KBW of course part of Stiffle as well, with
Speaker 1: decades of experience, including being on the inside at Bank
Speaker 1: of America years ago. Fred Cannon, these banks can't acquire
Speaker 1: other banks, they got deposit issues and that they're just
Speaker 1: gonna organically grow. Do you see the too big to
Speaker 1: fails growing at nominal GDP less than nominal GDP or
Speaker 1: they all blended gonna get JP Morgan like seven eight
Speaker 1: nine pc per your growth? Well, I think in terms
Speaker 1: of top line growth slightly slower than nominal GDP, the
Speaker 1: small banks and FinTechs are going to pick up a
Speaker 1: bit of market share in terms of asset growth, so
Speaker 1: that keeps them down and you're seeing that in the
Speaker 1: numbers that said bottom line growth. How do you get there?
Speaker 1: Operating leverage, keep the expenses down, and buy backs, that's
Speaker 1: the key. I mean, I I thought Mr Diamond's comments
Speaker 1: and of course there'll be much more in this John
Speaker 1: as well, But Allison, I mean the comments were all upbeat, upbeat,
Speaker 1: up beat, you know, the usual boilerplate and investor relations
Speaker 1: guy would put together for Mr Diamond. Where's the gloomy here?
Speaker 1: I'm in a gloomy mood today. Is there any gloom
Speaker 1: in the JP Morgan story? I can't find it so
Speaker 1: not so far. But you see any gloom? I don't
Speaker 1: see a lot of gloom in this, but we wouldn't
Speaker 1: expect at this point in time, John, you see any
Speaker 1: stalks up nineteen percent through the way people talk about
Speaker 1: the banks freadits and if they've had a terrible year,
Speaker 1: what's going on? How do you reconcile the sentiment around
Speaker 1: some of these big names with the performance in the
Speaker 1: equity market? Well, I mean the year to date is
Speaker 1: a tough one because remember we had such a bad
Speaker 1: that applies to the whole index that applies to the
Speaker 1: whole index, That applies to the whole of the SMP
Speaker 1: five hundred. You look at it on the year, we've
Speaker 1: done nothing. But what a difference a month make, of course,
Speaker 1: but let's talk about this. If you ask people about
Speaker 1: how stocks have done this year, they feel like stocks
Speaker 1: have done well. You ask them how banks have done
Speaker 1: this year, they feel like banks haven't performed. So what's
Speaker 1: happening is that the banks have made progress, especially on
Speaker 1: the bottom line, and the multiples have held, and that's
Speaker 1: allowed for this growth. And we're still trading at fifteen
Speaker 1: year lows on on multiple on pe ratios for the banks,
Speaker 1: and so the fact is that they're bouncing along the
Speaker 1: bottom evaluation and continuing to make some progress in terms
Speaker 1: of the bottom line, and that that has allowed some
Speaker 1: reasonable UH money to be even the bank stoxes here.
Speaker 1: Just in terms of ivise effects, Allison looking back twelve
Speaker 1: months for this quarter, is that when we see somebody
Speaker 1: out performance and fick redative to equities, it's a big
Speaker 1: base effect to play here. So that'll be the story
Speaker 1: next quarter. I think the story of this quarter is though,
Speaker 1: that embody comparisons are easing, so we really strong half
Speaker 1: that sort of faded in three Q. But I think
Speaker 1: for FICK, and again we're gonna want to dig into
Speaker 1: the details, but September was a really strong month for
Speaker 1: credit issuance. It was a strong month for credit trading,
Speaker 1: especially in high yield. We know that's more profitable. UM.
Speaker 1: You know, we had good, good spreads, We had a good,
Speaker 1: good bond price movement. So I think that might be
Speaker 1: what you're seeing play into fictual quest. The question is
Speaker 1: with FICK, is going to be sustainable? Allison, I have
Speaker 1: a question and it is a light question, but it's
Speaker 1: also serious as well. I looked through quickly as sped
Speaker 1: read through all their stuff. I don't see we Work mentioned,
Speaker 1: and you know this is in the headlines, and I
Speaker 1: would give us the I know, I agree, but for
Speaker 1: our listening on its give us the amount of we
Speaker 1: were Is it like literally a drop in a lake?
Speaker 1: I think, you know, WE Work, I think is a
Speaker 1: broader you know, people might say perhaps a reputational issue.
Speaker 1: It's not something that you know, perhaps there might have
Speaker 1: been a mark in the portfolio. There's a big headline
Speaker 1: number about how much UM they're invested, but that's across
Speaker 1: their private equity funds, and they do have a very
Speaker 1: big portfolio. The question I think is more um, you know,
Speaker 1: I guess softer in terms of, you know, what are
Speaker 1: they doing from here? And so I'm not necessarily saying
Speaker 1: that there's a reputational hit. I'm saying that, you know,
Speaker 1: people are going to want to know, like, what is
Speaker 1: what's JP Morgan doing? Um from here? They're gonna just
Speaker 1: want to hear a little bit and a little bit
Speaker 1: more about that. And that was really something for for
Speaker 1: I think the call all along, it's not necessarily something
Speaker 1: you would see in the press release unless there was
Speaker 1: some outsized hit. We're looking ahead for it. I just wander,
Speaker 1: from your perspective, the hangover from the we work saga
Speaker 1: for I p o s for the back end of
Speaker 1: this year, for investment bank fees, how do you think
Speaker 1: we set up for the back half of this year
Speaker 1: at the back end of this year. I'm pretty cautious
Speaker 1: on that. I mean, what we're seeing is these unicorns
Speaker 1: in the just cannot get their private market valuations in
Speaker 1: the public market. I mean, we work you think is
Speaker 1: a one off, but it's continual. In other words, we've
Speaker 1: we've seen this story before of these unicorns having these
Speaker 1: huge private market valuations and they just don't come through.
Speaker 1: And that's a tough story to to build up your
Speaker 1: I p O pipeline one. Just to fund a word
Speaker 1: on the Allison, how difficult Q four might be because
Speaker 1: of some of the big dramas, the big sagas that
Speaker 1: we've had with some of these prime profile I p
Speaker 1: O s. So, so I'll say two words and for
Speaker 1: earnings easy comps. So that's what we'll be talking about
Speaker 1: in January. But I think that you know, the I
Speaker 1: p O question, I think is a is a bigger
Speaker 1: question sort of I think going into and I think
Speaker 1: what's also interesting is that this while you have sort
Speaker 1: of we were canceling their deal, you have paloton um,
Speaker 1: you know, disappointing, you also have all these conferences going
Speaker 1: on in Morgan stan Ley Goldman getting into these conferences
Speaker 1: where the private investors are saying that they're not getting
Speaker 1: enough money. So I think it's sort of and perhaps
Speaker 1: talking about the circumventing the banks and is there a
Speaker 1: way for them to sort of get more of the economics,
Speaker 1: which in a way I think highlights sort of the
Speaker 1: role of the intermediary, right. Some people think that they're
Speaker 1: overpriced something they're overpriced underpriced. So that's that is something
Speaker 1: we're gonna look to hear more about in the call
Speaker 1: to two of you thank you so much else than
Speaker 1: you can thank you so much for being with KBW
Speaker 1: before they write up their banking combine and write up
Speaker 1: reports on four banks, so they somebody who's run out
Speaker 1: of ammunition? Is the week company we did? Did you
Speaker 1: read the whole prospectives? Right? John? I didn't, but nice
Speaker 1: when he did. We are down to Coupan with what's
Speaker 1: called an equity kicker in the trade to guarantee I say,
Speaker 1: a thirty percent return. This is like you know this
Speaker 1: this transaction they're trying to structure. So there's two options.
Speaker 1: Either the soft bank bailout all ultimately JP Morgan leading
Speaker 1: a group of bankers and securing some debt for them.
Speaker 1: JP Morgan's turnishing their reputation, including including a two billion
Speaker 1: dollar note payment and kind note coupon almost double Tom
Speaker 1: what they've paid last year. I'm real has never written
Speaker 1: that larger coupon or that large and equity kicker. You
Speaker 1: talked to adults, What do the adults of Wall Street
Speaker 1: say when they see fifteent coupon and equity kicker on
Speaker 1: warrants promising thirty percent return, it's a tough environment to
Speaker 1: get that done. Obviously, what ever, right ever, let alone
Speaker 1: in the market that we're in right now, they're talking
Speaker 1: to everybody and their mother to try to get this done.
Speaker 1: But whether they can or not, if they do, it's
Speaker 1: a real hail Mary. The myth maddox here is what's
Speaker 1: called a cramdown, which is if you do a coupon,
Speaker 1: and you do that, you cram down to value where
Speaker 1: it kicks right over to the new investors. How many
Speaker 1: billion is the is the diminishment here to get this
Speaker 1: thing done? I mean they're trying to get two billion
Speaker 1: of this done, right but I mean everybody that I
Speaker 1: talked to is saying, oh, it's it's it's a tough one.
Speaker 1: It's a stretch, and you know it's a lot of
Speaker 1: a lot of money. Billion. What's the thing worth right now?
Speaker 1: I have no idea less than ten Probably it's a
Speaker 1: distress nesset now, that's what it is. Who's making the decision?
Speaker 1: We work? Well, they have two new CEOs now, right,
Speaker 1: and so Adam Newman is not the one here saying
Speaker 1: that we prefers off banker. We don't. It's the two
Speaker 1: new CEOs. I've got to say something. So they are
Speaker 1: supposed to run out of cash pretty soon, right next
Speaker 1: month exactly, and so um, remember their restructuring. Restructuring is expensive, right,
Speaker 1: They have to fire people, which is expensive. They have
Speaker 1: to get sell assets, which is expensive. They have to
Speaker 1: try to get out of some leases, which is expensive.
Speaker 1: So they have to take they have to spend money
Speaker 1: before they could even ever think about making money. And
Speaker 1: so if you're somebody who's betting on them now through,
Speaker 1: even with the coupon, at what point they actually turn
Speaker 1: around is a really tough question. Two options were on
Speaker 1: the table, and it looks like from our reporting this morning,
Speaker 1: they're exploding exploring the JP Morgan lifeline over the soft
Speaker 1: bank lifeline. Why do we have a hy at this point? So,
Speaker 1: if you think about it, if you take the debt right,
Speaker 1: you still have a more institutional base. If you get
Speaker 1: more equity from soft bank, soft bank owns you, right,
Speaker 1: and it's risky you're sharing all your income with soft
Speaker 1: bank rather than paying them down a coupon. Oh well,
Speaker 1: so that's the real problem with UM, you know, taking
Speaker 1: the soft Bank money. Remember soft Bank already owns almost
Speaker 1: fort of the company, so it's a real tough one
Speaker 1: when um, you know, they already practically own you, and
Speaker 1: they own more than Newman himself. But what about I
Speaker 1: don't mean to interrupt it, you just you just did.
Speaker 1: I was busy, you know, like the fan mail is
Speaker 1: coming in, and I just had to talk to Michael
Speaker 1: from from I don't know, up North, very very quickly.
Speaker 1: Here they need Kendall Roy. I mean, the answer is
Speaker 1: they need somebody like Kendall who was going to fly
Speaker 1: in and save this thing. All a succession, Oh, I
Speaker 1: wish Kendall Roy could be the person. Spoilers, No spoilers.
Speaker 1: I didn't watch Sunday Nights. We're in the new episode.
Speaker 1: Just no spoilers. You're like you did this week Game
Speaker 1: with Thrones. Don't ruin this for people. There's no different.
Speaker 1: Succession is the same as game and thrown. Seriously, who
Speaker 1: was the white Knight to come in? Buffet is not
Speaker 1: going to come in works on a seven or eight
Speaker 1: percent coupon? Here were percent coupon? Is this like Steven
Speaker 1: Schwartzman comes in and black Stone. No, well, yeah, even
Speaker 1: they might even be messy for Stephen Schwartzman. Right, you
Speaker 1: gotta think like somebody who likes to stress a little
Speaker 1: bit more than that, like an Apollo. But I doubt that. Okay,
Speaker 1: what what are the adults should Apollo do when they
Speaker 1: see what Jillian Tan and our team wrote about. Yeah,
Speaker 1: I mean, I don't you're talking about Steve Schwartzman, for example,
Speaker 1: very similar to Apollo. Steve has spoken about we work
Speaker 1: publicly before. He said that he doesn't understand where the
Speaker 1: economics came from in the first place. By the way,
Speaker 1: over the weekend, I had bankers involved in all of
Speaker 1: this deal, all of these deals saying oh, we probably
Speaker 1: should have seen the writing on the wall a while ago.
Speaker 1: It's a little far gone. That's the problem. Tom. We're working.
Speaker 1: We can. We thank you all for listening. On the
Speaker 1: week Company. There have been any number of stories over
Speaker 1: the last forty eight hours. Really, Turkey and Syria front
Speaker 1: and center, and of course all the bank earnings as
Speaker 1: well in the financial world, and Brexit has become a
Speaker 1: state of confusion. Theresa Raphael writes brilliantly on this, and
Speaker 1: particularly writes on a relative basis and has a wonderful
Speaker 1: essay on what the United Kingdom will look like after
Speaker 1: Brexit or non Brexit or no deal or deal Brexit,
Speaker 1: whatever the eight flavors are. And what fascinates me to
Speaker 1: reason your essay is the Europeans are sort of afraid
Speaker 1: of what a separate United Kingdom will be like. Why
Speaker 1: is Paris, Berlin and Brussels afraid of what this independent,
Speaker 1: newly independent United Kingdom will look like? Right, So this
Speaker 1: is one of the fears that you hear from Angela
Speaker 1: Merkel in Germany, also from Makron, that an independent UK
Speaker 1: will look a little bit like a Singapore on the
Speaker 1: Thames River. It will cut taxes, slash regulations, open, uh,
Speaker 1: you know, put itself to the world's banks and businesses,
Speaker 1: and you know, actually become, um, you know, such a
Speaker 1: formidable competitor to the EU that that Brexit, uh, you know,
Speaker 1: encourages other EU countries to maybe try to join Britain's orbit.
Speaker 1: And so, you know, one of the balances that has
Speaker 1: to be struck in Europe is they you know, now
Speaker 1: I think very much would like to be rid of
Speaker 1: the UK. Uh. It's the Brexit negotiations have dragged on
Speaker 1: and on, but they want to do it in a
Speaker 1: way that that uh it seemed to hurt and doesn't
Speaker 1: give the UK of some trade advantage that they will
Speaker 1: then come to regret. Okay, but the feasibility of this,
Speaker 1: I mean, there's been the Norway on the Thames, and
Speaker 1: Singapore and the Thames in Toronto on the Thames and
Speaker 1: the rest of it. I don't hear anybody except the
Speaker 1: wishful hopeful, actually linking the culture, the ethos, the geography
Speaker 1: of Singapore with what we see in a more northern latitude.
Speaker 1: Yeah lately, I mean, I think the people you know,
Speaker 1: worrying most about Singapore and the Thames really haven't spent
Speaker 1: a lot of time in the UK. You just can't
Speaker 1: compare a one party city state of six and a
Speaker 1: half million to a country as large and geographically diverse
Speaker 1: and politically pluralistic as the United Kingdom. And you know,
Speaker 1: the main um reality of British politics now is it's
Speaker 1: going in the other direction. Even the Conservatives, traditionally the
Speaker 1: party of you know, fiscal prudence and low spending and
Speaker 1: low taxation, are turning it on when it comes to
Speaker 1: offering voters much enhanced public services, more spending. They still
Speaker 1: want to keep tax rates low, but they don't have
Speaker 1: that much to cut really kind of realm of corporate taxes.
Speaker 1: You know, I looked at the photos of the Queen
Speaker 1: and Prince Charles and all that. I didn't see Boyd
Speaker 1: George there. But you know I I I looked for
Speaker 1: as at the speech and I you know, read through
Speaker 1: some of those stuff and I get that. But how
Speaker 1: much the Queen is supposed to voice what the Prime
Speaker 1: Minister wants, how much of it is like actual policy,
Speaker 1: and how much of it was if I'm elected free beer? Yeah,
Speaker 1: I mean it is obviously he the the government rights
Speaker 1: the Queen's speech. This one was you know, it was
Speaker 1: a bit of a joke because the government is meant
Speaker 1: to be setting out its agenda, but it doesn't have
Speaker 1: a majority. It has a majority of minus forty five,
Speaker 1: so it's not a legislative Agenda's effectively an election manifesto.
Speaker 1: Uh so it is a lot of you know, sort
Speaker 1: of free here. There was lots of talk about social
Speaker 1: care and other spending programs. It's basically telling voters, if
Speaker 1: you elect us, this is what will you know, this
Speaker 1: is what we'll do. Um, and so it was very
Speaker 1: controversial as well. Well you're you're a great student of
Speaker 1: the press. There was was a feeling that Queen was
Speaker 1: put in a compromising position. Yeah, there was a lot
Speaker 1: of scrutiny of the decision to prorogue or suspend parliament
Speaker 1: even for the short period and have a queen speech.
Speaker 1: It was very performative. It doesn't serve any uh, you know,
Speaker 1: any practical function. But you know, we are now in
Speaker 1: the realm of you know, the ridiculous, I think, in
Speaker 1: the view of many people, and this was just par
Speaker 1: for this new course that you know that everyone is on. Well,
Speaker 1: thank you, truths revel with a really good essay folks,
Speaker 1: sing Singapore and Attams. For those of you in Newport,
Speaker 1: Rhode Island, it's Singapore and Thames. But I don't understand
Speaker 1: the Thames Thames, Singapore and Thames. I'll try to get
Speaker 1: that on Twitter. Bloomberg Opinion touris Raphael with us this morning.
Speaker 1: Let us pause and do this over the next good
Speaker 1: half hour with Gerard Cassidy of RBC Capital Markets, who
Speaker 1: said two years ago, I know they're going nowhere, but
Speaker 1: at some point they'll move. If patient investors the banks moved, Gerard,
Speaker 1: I looked at Golden Sacks today tenure track record three
Speaker 1: point six percent per year. I looked at JP Morgan
Speaker 1: ten point x percent per year. Does JP Morgan's succeed
Speaker 1: because of their best practices or because they avoid worst practices? Tom,
Speaker 1: That's a really good point, because you put your thumb
Speaker 1: on it. With JP Morgan, they know how to execute
Speaker 1: the investment banking commercial banking businesses are generally commodity businesses.
Speaker 1: There's no patents or proprietary you know, products that really
Speaker 1: can distinguish one bank from another bank. It's all about execution,
Speaker 1: and that's what JP Morgan did again this quarter, and
Speaker 1: they're demonstrating that they're really starting to lead the pack,
Speaker 1: that they're able to deliver better than expected results because
Speaker 1: they're executing, whereas the other bank things don't seem to
Speaker 1: be executing as well. In some cases, what is executing me?
Speaker 1: You've only been doing this for four hundred years, you
Speaker 1: were and Hamilton was arguing before Andrew Jackson about there
Speaker 1: being too many banks. What does executing actually mean? It
Speaker 1: really comes down to looking at the playbook and having
Speaker 1: a map to drive the revenues and control your expenses.
Speaker 1: So it means making sure people are following up on
Speaker 1: phone calls with clients after a client meeting. It means
Speaker 1: that you know, opening branches, you know, when you're building
Speaker 1: out new branches, as JP Morgan is doing in Boston
Speaker 1: and Washington, d C. For example, opening them on time,
Speaker 1: having the layouts the way they wanted to. It's all
Speaker 1: these little things that really add up. You see, always
Speaker 1: set up cassidy with that answer, because I knew where
Speaker 1: I was going next. Paul, this was Jamie Diamond's annual essay,
Speaker 1: and he just he put in trumpy and all caps
Speaker 1: hard work, hard work. It's just how work. It's just jarred.
Speaker 1: I mean, it's I can't remember a day when we
Speaker 1: had so many big banks reporting on one day. So
Speaker 1: what I think a lot of our listeners and investors
Speaker 1: are trying to do is try to take a step
Speaker 1: back and say what can we take away about the
Speaker 1: U S and global banking business from today's results. It's
Speaker 1: really interesting that you bring that up, because we are
Speaker 1: overwhelmed with bank results today and we will be tomorrow.
Speaker 1: And when you step back for a moment and look
Speaker 1: at the bigger picture, our banking system is very strong.
Speaker 1: Our biggest banks are very strong, and they're taking market
Speaker 1: share away from the European banks who continue to struggle
Speaker 1: in the capital markets businesses. But what's also clear from
Speaker 1: today's results is the consumer banking business in the United
Speaker 1: States is very strong, which is supported by their strong
Speaker 1: consumer numbers. We see whether it's employment wage gains, and
Speaker 1: that's now showing up in the banking results. So, Gerard,
Speaker 1: one of the narratives that I think we hear a
Speaker 1: lot as we think about global banking um is that
Speaker 1: the US banks did a pretty good job post crisis
Speaker 1: kind of right sizing themselves to the new world, the
Speaker 1: new regulatory world, the new return outlook, whereas perhaps the
Speaker 1: Europeans really haven't been as aggressive. Is that a fair assessment.
Speaker 1: That's a very fair assessment. But I wouldn't put it
Speaker 1: all on the shoulders at the banks did it themselves.
Speaker 1: They were forced to do it by the Federal Reserve.
Speaker 1: So the Federal Reserve put a gun to these banks
Speaker 1: heads back in No. Nine intent and forced them to
Speaker 1: raise capital at distress prices. But by doing that, it
Speaker 1: enabled them to write off the problems that they were
Speaker 1: in into and they turned around much quicker that did
Speaker 1: not happen over in Europe, and that is the huge
Speaker 1: difference between the two banking systems. Did you read in
Speaker 1: the you know, I mean everybody's mantage of the message, folks,
Speaker 1: and you know we make jokes about it, but Paul
Speaker 1: and I don't. Gerard Cassidy can read one of these
Speaker 1: press releases in about six seconds. Is there any talking
Speaker 1: there about right sizing, layoffs, all the other happy jargon
Speaker 1: that's about firing people, Tom, I haven't seen any of that.
Speaker 1: In fact, we've brought up on the call with JP Morgan.
Speaker 1: I asked Jamie Diamond about the technology investing, how important
Speaker 1: it is for the capital markets, business and markets, and
Speaker 1: they are investing very heavily. So the one area that
Speaker 1: you could see head count reduction, you know, the trading desks.
Speaker 1: You and I both know you go to the New
Speaker 1: York Stock Exchange today and it's a museum. Basically, there
Speaker 1: aren't any many people there because technology is taken over.
Speaker 1: So we've seen it in terms across the board head
Speaker 1: count reductions. We haven't heard that at all, the second
Speaker 1: time I've heard that this week. Somebody said earlier this
Speaker 1: week Bloomberg surveillance was like a museum. No New York
Speaker 1: Stock Exchange not not not your so so, Gerward, I mean,
Speaker 1: is it simply what are the banks kind of telling
Speaker 1: investors now about you know, the next two to three years.
Speaker 1: We hear a lot of talking just about it is
Speaker 1: just slower growth. We've got the I m F taking
Speaker 1: down g d P numbers today. Um are they kind
Speaker 1: of telling the investors top mind, growth going forward is
Speaker 1: going to be less than maybe what it's been over
Speaker 1: the last several years. They really haven't said that that specifically.
Speaker 1: You know there there are somewhat reluctant to give out
Speaker 1: that type of guidance over a long period of time.
Speaker 1: But clearly what we're seeing is that as the economy slows,
Speaker 1: banks are intertwined. I often say banks are products of
Speaker 1: the economy, and so if the economy is going to
Speaker 1: slowing growth in invariably that will lead to slower revenue
Speaker 1: growth for the banks. Now, we did see this quarter
Speaker 1: that net interest margin impression that we've talked about in
Speaker 1: the past. Some banks were able to offset that would
Speaker 1: better growth in the capital markets businesses and also origination volumes,
Speaker 1: particularly in residential, mortgage and auto for some of the
Speaker 1: banks were strong. Zara, give me one small small bank
Speaker 1: we can talk about. Um. We continue to come back.
Speaker 1: I think the last time we said a time about
Speaker 1: the S one Bank Orp, s b B ACT Sam Bill, Bill, Xavier, Okay.
Speaker 1: They you continue to do a very good job. And
Speaker 1: it's interesting you bring that up because this country, we
Speaker 1: have more banks than any of the world, any other
Speaker 1: country in the world, and the small banks have a role.
Speaker 1: They're not going to get in our view. We don't
Speaker 1: think they go out of business. They need to have
Speaker 1: a niche. If you have a nie, you can survive.
Speaker 1: I gotta leave it there. Thank you so much, greatly appreciated.
Speaker 1: Always end Broadcastidy RBC Capital Markets. Thanks for listening to
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