WEBVTT - JPMorgan Earnings and Citi's Grand Plan 0:00:01.800 --> 0:00:04.400 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.440 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanabek. We're here every day bringing 0:00:07.280 --> 0:00:09.799 you the latest news from the world of business and finance, 0:00:09.840 --> 0:00:13.600 plus technology, politics, economics, all harnessing the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.120 --> 0:00:20.000 analyst in more than one twenty countries. You can download 0:00:20.000 --> 0:00:23.200 Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.400 --> 0:00:25.120 You can also listen to our radio show at two 0:00:25.160 --> 0:00:27.840 pm Eastern Time on Bloomberg Radio or watch us on 0:00:27.880 --> 0:00:32.199 YouTube search Bloomberg Global News. Just to rehash, JP Morgan 0:00:32.280 --> 0:00:34.879 really one of the ones we've obviously been in the 0:00:34.960 --> 0:00:37.360 front and center today down two point six percent, so 0:00:37.400 --> 0:00:40.720 it's hovering near it's loads of the session, and this 0:00:40.800 --> 0:00:45.319 is after the I think it's safe to say Tim 0:00:45.360 --> 0:00:47.960 the most closely watched bank and certainly the most closely 0:00:47.960 --> 0:00:51.520 watched CEO of a bank on Wall Street. They did 0:00:51.560 --> 0:00:54.360 come out and they said it was a record in 0:00:54.480 --> 0:00:56.840 terms of making deals, a record M and a quarter. 0:00:56.880 --> 0:00:59.200 And that's and that's happening in the industry more broadly, 0:00:59.680 --> 0:01:04.000 kind of record M and a activity but that's certainly 0:01:04.240 --> 0:01:06.680 offset some of maybe the downside of what we saw 0:01:06.720 --> 0:01:09.440 for jpmore, but not enough for investors today. Loan growth 0:01:09.520 --> 0:01:12.319 still lacking. The bank does see some green shoots. The 0:01:12.360 --> 0:01:16.880 company's CFO emphasized that excess deposits are stabling analysts, though 0:01:16.920 --> 0:01:18.440 on the call they were quite curious how the bank 0:01:18.440 --> 0:01:21.360 intends to deploy its capital. What's the acquisition strategy with 0:01:21.400 --> 0:01:23.360 all these fintech players that are out there right now? 0:01:23.480 --> 0:01:25.600 So she has been so busy, you said, just coming 0:01:25.640 --> 0:01:29.399 into the studio, because she has been nonstopping, probably up 0:01:29.400 --> 0:01:32.360 since the wee hours. Allison Williams, our senior Global Banks analyst, 0:01:32.400 --> 0:01:35.600 a Bloomberg Intelligence here in our interactive broker studio. Thanks 0:01:35.600 --> 0:01:37.240 because I know it is a crazy day for you 0:01:37.360 --> 0:01:41.000 and am yes, I did, but this is just the 0:01:41.040 --> 0:01:45.080 warm up tomorrow. We have four all right, so's today's 0:01:45.080 --> 0:01:48.080 sort of relaxed and we have had so we actually 0:01:48.120 --> 0:01:49.880 have had time to go through the numbers and such, 0:01:49.920 --> 0:01:52.640 and I think you touched on a couple of key points, 0:01:52.640 --> 0:01:55.279 and really our cheek away is, you know, green joots 0:01:55.280 --> 0:02:00.320 need to blossoms, right, will they blossom? They So there's 0:02:00.320 --> 0:02:03.240 a couple of positive signs. So the consumers are working 0:02:03.240 --> 0:02:05.360 down the access deposits. And one of the reasons why 0:02:05.800 --> 0:02:09.600 we don't have card loan growth is because people are 0:02:09.639 --> 0:02:12.960 paying off their cards with their savings so there, so 0:02:13.000 --> 0:02:16.119 they're spending, but they're not borrowing. So that's why those 0:02:16.160 --> 0:02:19.040 excess deposits coming down are sort of a sign of 0:02:19.160 --> 0:02:21.320 or a green shoot for the future. How important is 0:02:21.360 --> 0:02:23.800 that on the as a revenue line for these companies, 0:02:23.919 --> 0:02:27.800 So for JP Morgan and City, it's it's relatively important 0:02:27.840 --> 0:02:30.400 because they have more exposure to the card business. If 0:02:30.440 --> 0:02:33.960 you think about the yields on a card loan, the 0:02:34.000 --> 0:02:36.559 spreads are much better than some of the other businesses. 0:02:37.360 --> 0:02:41.720 And then the other area, um, the other area. Sorry, 0:02:41.760 --> 0:02:44.880 I'm just going to move my challenge. Just get headphones. 0:02:45.040 --> 0:02:50.600 It's not easy, so the following following the rules. So 0:02:51.000 --> 0:02:54.200 um So the other positive is that they're seeing an 0:02:54.280 --> 0:02:57.880 uptick in commercial line utilization. So that's an important reader 0:02:57.919 --> 0:03:00.320 cross for Wells Fargoing, Bank of the Artist r OW. 0:03:00.960 --> 0:03:04.799 So what that means is, you know, banks extend credit lines. 0:03:05.639 --> 0:03:08.960 During the crisis, we saw people borrowing on those lines, right, 0:03:09.000 --> 0:03:10.920 so think of it. People have like a whole equity 0:03:10.960 --> 0:03:13.680 line of credit or any kind of credit. This is 0:03:13.680 --> 0:03:19.240 available to you, and so banks or companies pulled down, 0:03:19.280 --> 0:03:21.919 they borrowed, then they paid it all back, and so 0:03:22.120 --> 0:03:24.440 you use of those lines is very low because again 0:03:24.480 --> 0:03:27.800 the companies, like consumers, have a lot of cash and 0:03:27.840 --> 0:03:30.760 so they're not borrowing. And so to the extent that 0:03:30.800 --> 0:03:34.000 you're starting to see companies use those lines, right, So 0:03:34.040 --> 0:03:38.080 they're starting to borrow against them, perhaps too finance inventory 0:03:38.160 --> 0:03:40.520 needs or or other. Wait a second, I thought the 0:03:40.560 --> 0:03:43.840 housing market was on fire, and everybody's getting new mortgages 0:03:43.880 --> 0:03:45.800 at low rates, and they're going out and buying really 0:03:45.840 --> 0:03:48.720 expensive homes because the monthly costs are low. That is, 0:03:48.800 --> 0:03:52.800 and that's all good for origination volumes, but it doesn't 0:03:52.800 --> 0:03:55.400 necessarily transfer to long growth because a lot of the 0:03:55.440 --> 0:03:58.160 banks are sell off those loans. So it's good for volumes, 0:03:58.200 --> 0:04:00.480 it's good for fees um but by the way, we're 0:04:00.480 --> 0:04:03.320 starting to get up some against some tough comparisons in 0:04:03.360 --> 0:04:06.240 those businesses. So it is interesting on the commercial side though, 0:04:06.240 --> 0:04:08.120 that if they are drawing on the lines finally, right, 0:04:08.160 --> 0:04:10.200 because we've seen such a such a huge cap raig 0:04:10.800 --> 0:04:12.840 certainly during the pandemic, right everybody was able to act 0:04:12.880 --> 0:04:15.800 because money was so cheap. Correct. So we've seen you know, 0:04:15.960 --> 0:04:20.120 massive raising of money by corporations. UM. And what's interesting 0:04:20.400 --> 0:04:22.040 that we saw on the quarter was actually still some 0:04:22.040 --> 0:04:24.120 good debt feed growth because now with all this M 0:04:24.160 --> 0:04:27.560 and A right going on, people are borrowing UM with 0:04:27.600 --> 0:04:30.400 those transactions, so there has there was actually some some 0:04:30.480 --> 0:04:33.720 debt feed growth advisory. UM. I think as you pointed 0:04:33.720 --> 0:04:37.480 out earlier, that's really the highlight record fees triple a 0:04:37.560 --> 0:04:41.720 year ago for JP Morgan, you know, up like uh 0:04:42.120 --> 0:04:45.280 a hot big percent. I think it's from the prior quarter. 0:04:45.360 --> 0:04:47.640 Hey listen. Also, what's always a highlight I feel like 0:04:47.839 --> 0:04:49.920 is yep, the results. And let's point out JP Morgan 0:04:49.960 --> 0:04:52.680 has been on a tear up about this year, so 0:04:52.800 --> 0:04:55.280 it's been a big bump to the upside. We've seen 0:04:55.320 --> 0:04:57.520 that with some of the big banks. UM. What Jamie 0:04:57.520 --> 0:04:59.680 Diamond has to say about the world at large. I 0:04:59.680 --> 0:05:01.120 have to say, we're getting ready to go to milk 0:05:01.160 --> 0:05:03.240 in and I was taking notes for some of the 0:05:03.279 --> 0:05:04.800 interviews and some of the panels we're going to be 0:05:04.880 --> 0:05:06.880 doing because he's like, I'm going to spend whatever I 0:05:06.920 --> 0:05:08.599 can have to on fintech, and I was thinking it 0:05:08.640 --> 0:05:11.239 was really the big I think that's a really big line. 0:05:11.320 --> 0:05:13.279 And I think that's the other thing that you've seen 0:05:13.279 --> 0:05:15.440 in JP Morgan's numbers. I mean, they raised their cost 0:05:15.520 --> 0:05:19.240 guidence something like five times five billion like over the 0:05:19.320 --> 0:05:22.560 past year. And we think that that spending is going 0:05:22.640 --> 0:05:24.880 to go up next year. But I think just him, 0:05:24.920 --> 0:05:26.680 you know, sort of making that statement, we have all 0:05:26.760 --> 0:05:29.680 kinds of competition, We're going to spend what it takes 0:05:30.480 --> 0:05:33.560 um so sort of a mic drop, as my peer 0:05:33.600 --> 0:05:36.400 put it, spend what it takes to compete, or spend 0:05:36.440 --> 0:05:40.360 what it takes to acquire. Well, you can buy acquiring, right. 0:05:40.440 --> 0:05:43.360 So one of the things that the banks have done, 0:05:43.440 --> 0:05:45.360 or I guess two of the things that that they've done, 0:05:45.440 --> 0:05:48.320 right is that they, um you know, they partners with 0:05:48.400 --> 0:05:50.719 fin techs, they buy the FinTechs, they have you know, 0:05:50.760 --> 0:05:54.360 these venture funds where they do different things. Um So 0:05:54.760 --> 0:05:56.760 I think they kind of look at it from all angles. 0:05:56.880 --> 0:05:59.640 And you know what we've talked about is this this 0:05:59.760 --> 0:06:01.960 go around, right, So in the nineties when there was 0:06:02.000 --> 0:06:04.280 the Internet and they all kind of dismissed it, you know, 0:06:04.360 --> 0:06:06.840 this time around the banks from the beginning even with 0:06:06.880 --> 0:06:10.160 technologies like blockchain or you know, we're gonna make sure 0:06:10.200 --> 0:06:13.159 that we're involved. We're except for bitcoin. We know how 0:06:13.160 --> 0:06:17.960 he feels about more controversial on bitcoin. Real quickly. I'm 0:06:17.960 --> 0:06:19.960 going to squeeze you twenty five seconds. What we've got 0:06:20.000 --> 0:06:22.760 city wells um Morgan Stanley tomorrow? What am I leaving out? 0:06:23.640 --> 0:06:26.520 Sacks tomorrow? Bank America. I think Morgan Stanley is on 0:06:26.560 --> 0:06:29.919 Friday by forgive me yeah, Strong Equities trading M and 0:06:29.960 --> 0:06:32.400 A fee strong still looking for some more signs of 0:06:32.440 --> 0:06:34.679 green shoots on the loan growth side. All right, sorry, 0:06:34.720 --> 0:06:38.480 you'll get sleep on the weekend or somewhere. Alison Williams, 0:06:38.480 --> 0:06:41.240 we love her, knows this industry like no other. She's 0:06:41.240 --> 0:06:43.839 senior global banks analyst here at Bloomberg Intelligence. We are 0:06:43.920 --> 0:06:46.000 lucky she's part of our team. You are listening to 0:06:46.040 --> 0:06:48.440 Bloomberg Business Week. So he writes today on the Bloomberg 0:06:48.440 --> 0:06:50.560 that quote, perhaps the most important outcome today is that 0:06:50.600 --> 0:06:54.160 there remains little sign that inflation is turning around. Let's 0:06:54.200 --> 0:06:57.279 get a market perspective on today's hotter than forecast CPI 0:06:57.400 --> 0:07:00.960 report with us Cameron Chries. Cameron's back Crow strategist and 0:07:01.000 --> 0:07:03.760 a contributor to the market's live blog at Bloomberg News. 0:07:03.760 --> 0:07:07.600 He joins us on the throne from Westford, Connecticut. Macroman 0:07:07.760 --> 0:07:12.640 literally Macroman Cameron take us into the reading of today's numbers. 0:07:12.640 --> 0:07:14.680 It came in a little hotter than expected, but but 0:07:14.760 --> 0:07:17.680 only a little hotter. Well, I guess it depends on 0:07:17.720 --> 0:07:19.560 how you wanted to find that. Yeah, I mean that 0:07:19.680 --> 0:07:23.840 the headline number was came in at zero point four 0:07:23.880 --> 0:07:27.880 percent on the month. Margaret had expected zero point three. 0:07:28.280 --> 0:07:31.280 The core reading, which is thought to get a better 0:07:31.920 --> 0:07:36.160 um sent some underlying inflation, was zero point two. And 0:07:36.240 --> 0:07:39.920 that seems very well behaved. But there are a number 0:07:39.920 --> 0:07:45.720 of things under the surface, uh that that van flow 0:07:45.880 --> 0:07:49.560 based on what's going on with the pandemic saying UM. 0:07:49.600 --> 0:07:52.880 But there are some alternative measures, such as those that 0:07:52.960 --> 0:07:55.320 sort of strip out the very lowest and the very 0:07:55.400 --> 0:08:00.280 highest readings, the so called shouldn't mean or median c 0:08:00.480 --> 0:08:04.960 p i UM. The Cleveland said has a series on that, 0:08:05.680 --> 0:08:08.560 and that actually rose by zero point four or five, 0:08:09.040 --> 0:08:12.720 which is the highest in more than thirty years, uh, 0:08:12.720 --> 0:08:15.560 and one of the highest readings in the last forty years. 0:08:16.120 --> 0:08:20.200 So from that perspective, what that implies is actually that 0:08:20.280 --> 0:08:24.080 the scope of price rises is broadening out, and it's 0:08:24.120 --> 0:08:28.920 not just a narrow set of of components that are 0:08:28.920 --> 0:08:31.880 impacted by the pandemic understate in price rise. This is 0:08:31.920 --> 0:08:35.839 exactly what you would expect if inflation is not, in 0:08:35.840 --> 0:08:39.440 the fact a transitory phenomenon. But it is starting to 0:08:39.520 --> 0:08:41.880 build on itself as the public gets used to this 0:08:41.960 --> 0:08:45.880 idea that the price of everything is going up. Well, 0:08:45.920 --> 0:08:48.320 and you know what's interesting, Cameron, and prepping for this segment, 0:08:48.360 --> 0:08:50.679 I wrote to myself a little note. Um, when I'm 0:08:50.679 --> 0:08:53.000 not speaking to myself, I write to myself. But um, 0:08:53.040 --> 0:08:56.960 what are we allowed to say that inflation isn't transitory anymore? Like? 0:08:57.040 --> 0:09:02.000 What is it technically that happens where say, um, no, folks, 0:09:02.240 --> 0:09:04.839 this is the environment and it's going to stay with us. 0:09:05.480 --> 0:09:08.360 Well between you and me. You can say it now. 0:09:08.880 --> 0:09:11.920 You go home, lock yourself in the bathroom, look yourself 0:09:11.960 --> 0:09:16.079 in the mirror, and say it loud, to say it proud, um. 0:09:16.559 --> 0:09:19.559 You know it's it's it's one of these things. You know. 0:09:19.760 --> 0:09:22.800 It seems like the only people that that that's not there. 0:09:22.880 --> 0:09:26.280 But among the the central bankers, the people in charge 0:09:26.280 --> 0:09:30.360 of policy for the most prominent advocates of this notion 0:09:31.200 --> 0:09:34.280 that that it's transitory because they kind of they kind 0:09:34.280 --> 0:09:37.000 of need an excuse to do nothing. Um. You could 0:09:37.080 --> 0:09:39.679 argue that given what the stock markets done, given what 0:09:39.800 --> 0:09:42.760 spending has done, that we haven't needed emergency settings for 0:09:42.840 --> 0:09:45.839 montary policy for quite some time. But yet we've been 0:09:45.920 --> 0:09:50.040 full bor QUEI. And one of the excuses is that, well, 0:09:51.000 --> 0:09:54.080 all this inflation stuff that everyone's worried about, it's just transitory. 0:09:54.080 --> 0:09:57.439 It'll it'll go away. And you know, in practice life 0:09:57.480 --> 0:09:59.679 is transitory. You know, in the long run, we're all that. 0:10:00.480 --> 0:10:05.480 Uh and in between now everybody, uh, we're this is 0:10:05.480 --> 0:10:11.440 the Sunshine report. Uh you know, uh so at some level, 0:10:11.600 --> 0:10:14.720 geolove and you know, geologic time, they're all human existence 0:10:14.760 --> 0:10:20.080 is so Um, it's an arbitrary construct. Um that that 0:10:20.240 --> 0:10:23.680 basically I think the central banks are using to mean, 0:10:23.920 --> 0:10:26.640 you know, until we're proven correct. But you are seeing 0:10:26.800 --> 0:10:31.760 some uh you know, some fractures in the committee. Uh. 0:10:31.880 --> 0:10:34.320 Some of the regional Fed presidents in particular has been 0:10:34.840 --> 0:10:37.160 pretty dismissive of this notion that you can just wave 0:10:37.160 --> 0:10:39.800 away price rises. And I would say that these are 0:10:39.800 --> 0:10:42.720 the people that are more in touch with sort of 0:10:43.120 --> 0:10:45.960 main street and in the real world because they have 0:10:46.080 --> 0:10:49.839 business contact they speak to on a regular basis. Well, 0:10:49.840 --> 0:10:52.520 does it seem like from a policy perspective, the FED 0:10:52.640 --> 0:10:57.080 is letting the foods footing stuff run too hot? I 0:10:57.160 --> 0:11:00.000 think so, um And I think one of the reasons 0:11:00.440 --> 0:11:04.160 is that over the last sort of thirty almost forty 0:11:04.280 --> 0:11:10.319 years inflation uh. And policy has been thought of from 0:11:10.320 --> 0:11:13.000 the demand side. Uh. You know, we need to manage 0:11:13.040 --> 0:11:16.960 demands to get the outcomes we want on inflation. The 0:11:16.960 --> 0:11:20.800 problem is is that this inflation shock, it is driven 0:11:20.840 --> 0:11:24.600 not just by demand but also prominently supply. The supply side, 0:11:24.640 --> 0:11:28.319 You've had these supply constraints because because of the pandemic 0:11:28.360 --> 0:11:31.400 that aren't going away. Um. And when you matched that 0:11:31.520 --> 0:11:39.679 sort of reduction in the supply with outsized demand last 0:11:39.720 --> 0:11:42.480 sort of eighteen months or so, that's where you get 0:11:42.480 --> 0:11:44.640 this sort of dynamic and that the problem with the 0:11:44.720 --> 0:11:50.880 risk is it becomes sufficiently entrenched, then that permanently changes 0:11:51.000 --> 0:11:56.480 or or maybe not permanently, but substantively changes expectations and behavior. 0:11:56.520 --> 0:11:58.079 And this is exactly the phenomena that we had in 0:11:58.120 --> 0:12:01.240 the nineteen seventies where there was an energy supply shock 0:12:01.960 --> 0:12:04.440 that was met with policy that said well, we're not 0:12:04.480 --> 0:12:06.880 going to we're not going to address to sort of 0:12:06.920 --> 0:12:10.439 head on because it's it's going to be ephemeral. But 0:12:10.559 --> 0:12:14.200 it influenced people's expectations the wage demands. And the next 0:12:14.240 --> 0:12:16.360 thing we know, you had this sort of wage price 0:12:16.480 --> 0:12:19.839 spiral where people got paid more and they were willing 0:12:19.840 --> 0:12:22.559 to pay more for good services. Price that those went up, 0:12:22.679 --> 0:12:25.280 the people demanded more wages, and that just kind of 0:12:25.280 --> 0:12:28.079 fed on itself. And there's there's a risk that we're 0:12:28.080 --> 0:12:29.599 going to see the same sort of thing that you 0:12:29.679 --> 0:12:32.280 realized this tumeral. Hey, when it comes to wages, and 0:12:32.320 --> 0:12:35.280 I was just looking at your work. I mean you 0:12:35.320 --> 0:12:37.959 point out real wage growth is negative using both hourly 0:12:38.000 --> 0:12:40.800 and weekly earning series, and funny enough, there's a prominent 0:12:40.840 --> 0:12:43.040 shortage of lab or perhaps the public is sharper than 0:12:43.080 --> 0:12:44.880 we've been led to believe because one of the things 0:12:44.960 --> 0:12:47.880 I thought about, I don't know if the feed is watching, 0:12:47.920 --> 0:12:51.319 because they talk about inequities and equalities. Certainly the lower 0:12:51.440 --> 0:12:53.840 end of the income strata, you know, has not seen 0:12:53.840 --> 0:12:57.280 the benefits at the higher end has seen, especially when 0:12:57.280 --> 0:13:00.200 it comes to wealth gains and wage gains. Um and 0:13:00.280 --> 0:13:04.240 so in a funny way, this shortage of labor has 0:13:04.480 --> 0:13:08.160 you know, drove companies to increase what they pay, certainly 0:13:08.200 --> 0:13:11.559 hourly workers. And in some way is that a benefit? 0:13:11.640 --> 0:13:14.559 But help me out here is the real wage inflation? 0:13:14.640 --> 0:13:17.640 We keep hearing about it? How do you see it? Well, 0:13:18.120 --> 0:13:22.560 this is the issue, right. Uh. Yes, wage growth has 0:13:22.600 --> 0:13:26.160 been has been stronger than it has been historically. But 0:13:26.360 --> 0:13:29.280 if you get a four percent pay rise, but the 0:13:29.400 --> 0:13:32.400 call us the living goes up by five, are you 0:13:32.440 --> 0:13:37.600 better off? No? You can buy one percent less stuff. Um. 0:13:37.640 --> 0:13:40.720 There's a phenomena known as money illusion, which means that 0:13:40.760 --> 0:13:44.360 there is has historically been intensity tendency to say, well, 0:13:44.760 --> 0:13:47.960 I've bet a wage drives a four percent This is fantastic. Um. 0:13:48.160 --> 0:13:52.800 But if the public is now aware, because of this 0:13:52.920 --> 0:13:57.079 narrative of watch tran inflation, that that four percent wage 0:13:57.240 --> 0:14:00.280 growth isn't going to cover the cost of living, there 0:14:00.320 --> 0:14:03.240 there's a problem. And um, you know, there's an argument 0:14:03.320 --> 0:14:07.880 that if if people aren't compensated adequately, and you would 0:14:07.880 --> 0:14:11.040 say that negative real wages wage growth is not a 0:14:11.120 --> 0:14:19.640 particularly remunerative compensation, then the the largeal propensity to actually work. Uh, 0:14:19.680 --> 0:14:23.720 and say safe exposure to COVID or what have you 0:14:24.640 --> 0:14:27.600 is least and if you have positive wage so cavin 0:14:27.640 --> 0:14:30.280 here we are earning season has kicked off officially. We 0:14:30.320 --> 0:14:32.240 heard from Delta, We heard from Fast and Hour earlier 0:14:32.240 --> 0:14:33.880 this week, and we heard of course from jpmore in 0:14:33.960 --> 0:14:38.160 Chase earlier today. UH Delta saying that fuel prices have 0:14:38.280 --> 0:14:40.760 risen six this year. The company is saying that could 0:14:40.760 --> 0:14:42.840 really hurt. What happens this quarter. What should we be 0:14:42.880 --> 0:14:44.920 on the lookout for when it comes to other companies 0:14:44.960 --> 0:14:47.120 that are reporting over the next few weeks when thinking 0:14:47.120 --> 0:14:49.320 about these pressures on the supply side and on the 0:14:49.360 --> 0:14:55.320 demand side. Yeah, one word margins um uh if uh 0:14:55.360 --> 0:14:59.760 you know, the good question is uh, input costs are 0:14:59.760 --> 0:15:04.680 gone up in terms of raw materials, weren't terms of labor? Uh? 0:15:04.800 --> 0:15:08.040 You know, companies have two choices. They can either raise 0:15:08.200 --> 0:15:12.560 prices uh and passed pass those costs onto somebody else, 0:15:12.600 --> 0:15:17.560 whether it's their business customers or their their their their 0:15:17.720 --> 0:15:22.800 ouphold customers, or they can absorb hit too margins and 0:15:23.000 --> 0:15:27.320 essentially make less per dollar of good service as their assault. 0:15:27.680 --> 0:15:33.120 In probability some combination of the two. So I think 0:15:33.200 --> 0:15:37.200 the thing to focus on is to what degree or 0:15:37.200 --> 0:15:41.240 a company seeing a squeeze a squeeze on margins, because 0:15:41.320 --> 0:15:45.680 that is obviously not a positive or uh for the 0:15:45.680 --> 0:15:48.080 equity market. Right, and that's when you know, if certainly, 0:15:48.080 --> 0:15:50.320 if you're a publicly held market, you gotta care because 0:15:50.560 --> 0:15:55.440 you know, if those margins start to um, diminish, go down, decline, uh, 0:15:55.520 --> 0:15:58.480 you're gonna get punished probably when it comes to your 0:15:58.480 --> 0:16:01.400 reporting season, and certainly a to the stock price. Hey, Cameron, 0:16:01.520 --> 0:16:03.840 thank you so much. Really some great insight into terms 0:16:03.920 --> 0:16:06.960 of some of that inflation data that we got today. 0:16:07.000 --> 0:16:10.280 Cameron cries. He's macro strategist, He's the macroman here at Bloomberg. 0:16:10.400 --> 0:16:13.240 He is a contribute to Markets Live blog at Bloomberg 0:16:13.280 --> 0:16:15.720 News on the phone from Westport, Connecticut. Well here in 0:16:15.760 --> 0:16:18.000 our interactive broker studio two days in a row. I'm 0:16:18.040 --> 0:16:20.120 gonna just say that Tim and I are super, super 0:16:20.200 --> 0:16:23.040 lucky because Jenny Seraine, she's our finance reporter here at 0:16:23.080 --> 0:16:26.480 Bloomberg News. She's got the cover story of Bloomberg Business 0:16:26.600 --> 0:16:30.360 Week this week. It's all about the relatively new CEO 0:16:30.440 --> 0:16:32.760 on Wall Street, not new to the company she now runs, 0:16:33.320 --> 0:16:36.520 but she certainly is making some changes. When it comes 0:16:36.520 --> 0:16:39.160 to City Group, we're talking about CEO Jane Fraser, Jenny 0:16:39.200 --> 0:16:42.600 here in our studio. Congratulations, thank you great cover story. 0:16:42.640 --> 0:16:45.200 First of all, Um, tell us about writing this and 0:16:45.320 --> 0:16:47.680 kind of what you set out to do. Yes, well, 0:16:47.680 --> 0:16:49.560 we set out to really tell the story of City 0:16:49.680 --> 0:16:52.480 right now, Um, and we were fortunate enough to get 0:16:52.520 --> 0:16:54.360 an interview with Jane and have her kind of walk 0:16:54.480 --> 0:16:57.760 us through some of the big changes that she's got planned. Um. 0:16:57.800 --> 0:16:59.600 They're just an interesting company, you know, They've had a 0:16:59.640 --> 0:17:01.840 really off go of it recently, and I think they 0:17:01.880 --> 0:17:04.800 needed this fresh air and fresh blood and they've got that, 0:17:04.840 --> 0:17:06.240 and so it will be interesting to kind of see 0:17:06.280 --> 0:17:08.400 where she takes it from here. Well, speaking of fresh air, 0:17:08.400 --> 0:17:12.040 I mean, the piece literally opens with fresh air talking 0:17:12.080 --> 0:17:15.480 about an outdoor space that that city has for employees 0:17:15.520 --> 0:17:17.760 and also the way that that city is different than 0:17:18.119 --> 0:17:21.040 the other majors in thinking about a return to work. 0:17:21.240 --> 0:17:23.240 Take us through what Jane Fraser was doing and why 0:17:23.240 --> 0:17:25.240 this is this is kind of crazy for for what's 0:17:25.240 --> 0:17:27.840 happening in Wall Street. Yeah, I think that's exactly right. 0:17:27.920 --> 0:17:30.359 So a lot of where this started was just we 0:17:30.359 --> 0:17:32.920 were hearing grumblings over and over again, that people were 0:17:33.000 --> 0:17:35.840 leaving other banks and joining cities simply because they really 0:17:35.840 --> 0:17:37.960 liked the way she talked about the future of work 0:17:38.000 --> 0:17:40.359 and and what that looks like. And so you know, 0:17:40.440 --> 0:17:42.760 she's doing the thing where they are allowed to work 0:17:42.800 --> 0:17:44.520 from home at least two days a week on a 0:17:44.520 --> 0:17:46.800 permanent basis. That's one thing. But I think the more 0:17:46.880 --> 0:17:49.600 interesting thing that she said is, um, it's not just 0:17:49.640 --> 0:17:52.600 about this hybrid half in, half out situation. They're also 0:17:52.600 --> 0:17:54.880 being really flexible. So you know, if it's three o'clock 0:17:54.920 --> 0:17:56.600 and you want to knock off and go pick up 0:17:56.600 --> 0:17:58.359 your kids from school or or take them to a 0:17:58.400 --> 0:18:00.639 soccer game, that's fine. You know, log on later and 0:18:00.840 --> 0:18:03.439 finish your work up whenever you can. Um, it's this 0:18:03.480 --> 0:18:06.000 whole idea of flexibility that people seem to really appreciate. 0:18:06.080 --> 0:18:09.360 You know, she's acknowledging that people are not just robots 0:18:09.359 --> 0:18:11.639 at a desk, that they're real people with real lives 0:18:11.680 --> 0:18:14.359 and really embracing that. All right, So don't penalize me 0:18:14.359 --> 0:18:16.160 because I really hate this. Is like it's because she's 0:18:16.160 --> 0:18:17.720 a woman that she looks at it differently, because that 0:18:17.760 --> 0:18:19.639 kind of makes me crazy. But there is that, But 0:18:19.880 --> 0:18:22.880 is it also a leader who's understanding that the world 0:18:22.880 --> 0:18:25.000 has changed because of the pandemic and we have shown, 0:18:25.080 --> 0:18:27.640 certainly the big banks how much they could get downe home. 0:18:27.800 --> 0:18:31.399 Is it also third um kind of her sticky to 0:18:31.440 --> 0:18:33.120 the other banks and saying, you know, it's a fight 0:18:33.160 --> 0:18:35.919 for competition, uh, and so if this is what we 0:18:35.920 --> 0:18:37.639 have to do to kind of draw on talent, this 0:18:37.760 --> 0:18:40.520 makes sense. Yeah. I think she's she's definitely unique, and 0:18:40.560 --> 0:18:43.560 that she seems more willing to listen to her employees 0:18:43.600 --> 0:18:46.320 and has kind of let that guide a lot of 0:18:46.320 --> 0:18:49.159 her decisions, you know, since becoming CEO, And also she 0:18:49.240 --> 0:18:52.280 was president before that, So I think she's very unique. Um. 0:18:52.320 --> 0:18:53.719 A lot of the other CEO is kind of get 0:18:53.760 --> 0:18:55.600 an idea in their head and and stick to it 0:18:55.640 --> 0:18:59.200 and and don't really let a lot of um advice 0:18:59.480 --> 0:19:01.760 um come their way. But I think she's she's very 0:19:01.800 --> 0:19:04.359 unique in that sense. UM. And I do think, you know, 0:19:04.400 --> 0:19:06.239 it's a war for talent right now. These banks are 0:19:06.600 --> 0:19:10.160 it's a very cutthroat environment for for bankers, for traders, 0:19:10.160 --> 0:19:13.000 for engineers, for all sorts of different folks, and she's 0:19:13.000 --> 0:19:15.000 acknowledging that and I think really kind of setting them 0:19:15.040 --> 0:19:16.879 apart I thought of the other cover story that was 0:19:16.920 --> 0:19:18.720 on Business Week. I don't know, is it over the 0:19:18.720 --> 0:19:20.399 summer where it's like, basically, I don't get out of 0:19:20.400 --> 0:19:22.879 bed for thousand dollars just to steal you know, the 0:19:22.880 --> 0:19:26.200 supermodel line. But it was basically because we just continue 0:19:26.240 --> 0:19:29.040 to see, right tim that Wall Street, the big banks, 0:19:29.080 --> 0:19:32.080 the big firms are upping kind of salaries for some 0:19:32.119 --> 0:19:35.359 of their you know, starting junior bankers whatever, you know, 0:19:35.440 --> 0:19:37.600 we just see that happening. Well, well, when Jenny, will 0:19:37.600 --> 0:19:40.199 we start to see this payoff? If there is this 0:19:40.240 --> 0:19:42.320 talent war, and we know this talent war is happening, 0:19:42.520 --> 0:19:44.160 when will we start to see the moves that Jane 0:19:44.160 --> 0:19:48.040 Fraser's making, uh, in terms of poaching talent and perhaps 0:19:48.080 --> 0:19:51.520 just as important retaining talent. Yeah, so that's the big, 0:19:51.960 --> 0:19:54.760 big question, I think facing all of the efforts that 0:19:54.800 --> 0:19:57.920 they're making. They've already started to have some successes. There's 0:19:57.960 --> 0:20:00.960 been some big names that have left Goldman, Sachs, JP, Morgan, 0:20:01.359 --> 0:20:05.439 Google and joined Jane Um and her big journey UM. 0:20:05.480 --> 0:20:07.040 And I think it's not just talent, you know, it's 0:20:07.040 --> 0:20:09.119 also this whole energy that she's trying to bring to 0:20:09.160 --> 0:20:11.840 the turnaround. There um and really just trying to set 0:20:11.840 --> 0:20:14.280 them apart and set them on this path towards um. 0:20:14.280 --> 0:20:16.320 Excellence is the word that they like to use, um, 0:20:16.320 --> 0:20:19.000 which is all, you know, to be fair there, she 0:20:19.000 --> 0:20:21.800 did work for Mackenzie. She did work for Mackenzie. She's sorry, 0:20:21.760 --> 0:20:25.320 I love you Mackenzie. But you know, she's definitely I mean, 0:20:25.359 --> 0:20:27.760 she has that consultant brain and and the kind of 0:20:27.800 --> 0:20:30.840 see a lot of that Mackenzie touch um and the 0:20:30.840 --> 0:20:33.800 strategy rematch that she's partake or that she's kind of 0:20:33.880 --> 0:20:36.440 venturing out on. So she's you know, focused on wealth. 0:20:36.520 --> 0:20:39.920 She talks a lot about prioritizing high return businesses de 0:20:40.040 --> 0:20:43.440 prioritizing the low return businesses. That's McKenzie. Well, let's talk 0:20:43.440 --> 0:20:46.000 about it. I remember very early on my career when 0:20:46.440 --> 0:20:50.320 uh Sandy Wild was at City right and he bought 0:20:50.359 --> 0:20:53.840