WEBVTT - Banks, ChatGPT, Apple, Fox News, and Cybersecurity 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:05.240 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moving news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets Podcast on Apple Podcasts or wherever 0:00:17.400 --> 0:00:20.480 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:21.280 --> 0:00:23.360 Let's bringing Alison Williams. She's the pro on this. She's 0:00:23.400 --> 0:00:26.000 our senior analyst Bloomberg Intelligence covering the bank. She's also 0:00:26.079 --> 0:00:30.280 the co director of America's Research for Bloomberg Intelligence. So 0:00:30.320 --> 0:00:33.400 she's got a bunch of people that report to her 0:00:33.479 --> 0:00:35.960 rely on her for the management of that biz. 0:00:35.960 --> 0:00:36.800 So she's a busy person. 0:00:36.840 --> 0:00:38.560 We appreciate getting some time here in the Bloomberg in 0:00:38.560 --> 0:00:41.639 our active broker studio. Allison, let's start with Goldman Sachs here. 0:00:42.720 --> 0:00:45.120 You know, from my perspective, I haven't competing against these 0:00:45.120 --> 0:00:48.000 guys forever. Look at you know, really admiring the franchise. 0:00:48.000 --> 0:00:50.280 There a little bit of a miss here this quarter 0:00:50.400 --> 0:00:53.120 on the fix training, the fixed income, commodities and credit 0:00:53.159 --> 0:00:54.000 and all that kind of stuff. 0:00:54.320 --> 0:00:56.720 From your perspective, what happened so. 0:00:56.800 --> 0:01:01.440 I think, you know, obviously not benefiting from some of 0:01:01.440 --> 0:01:03.800 the areas of the other banks, And just to put 0:01:03.800 --> 0:01:06.560 that in context, so they missed on fixed they sort 0:01:06.600 --> 0:01:09.720 of made it up with equities and fees, but net 0:01:09.760 --> 0:01:13.319 the other banks posted big positive surprises. They have more 0:01:13.360 --> 0:01:18.760 momentum going on. Yes, Goldman probably benefited last year. Well, 0:01:18.800 --> 0:01:21.640 we're pretty sure they benefited last year from commodities, which 0:01:21.680 --> 0:01:24.040 is a business that they have a lot more relative 0:01:24.080 --> 0:01:26.920 strength than the other peers. But the bottom line is 0:01:26.959 --> 0:01:31.280 there's just less momentum in that business going forward. They 0:01:31.360 --> 0:01:33.560 earn more from the other banks reporting today from that 0:01:33.640 --> 0:01:36.840 business that's a negative. Bank of America is really the 0:01:36.920 --> 0:01:41.320 interesting one. They've been gaining share in equities and a 0:01:41.400 --> 0:01:44.120 fixed income and you know, part of that is some 0:01:44.200 --> 0:01:47.120 investments that they've made, but I think they're also benefiting 0:01:47.240 --> 0:01:50.360 from some of the troubles at Credit Sue. If you 0:01:50.400 --> 0:01:53.560 think about where Bank of America has some of their strengths, 0:01:54.240 --> 0:01:58.320 the securitization business, those spread type products, those were businesses 0:01:58.360 --> 0:02:02.120 that Credit Sweez is relative strong and and much of 0:02:02.120 --> 0:02:05.120 that business has sort of gone away from them, and 0:02:05.200 --> 0:02:07.040 perhaps going to Bank America. 0:02:06.840 --> 0:02:09.680 Is there a best fixed income trading business on the street. 0:02:09.720 --> 0:02:12.679 Is there a bank that's known for its fixed income trading? Like, 0:02:12.720 --> 0:02:14.520 if I have a multi billion dollar fund and I 0:02:14.520 --> 0:02:17.760 want to do work with one big firm, is there 0:02:17.760 --> 0:02:19.080 one I would obviously choose? 0:02:19.200 --> 0:02:19.920 JP Morgan. 0:02:20.200 --> 0:02:24.639 Yeah, okay, I was just oh, I would said Goldman opinion. 0:02:24.720 --> 0:02:27.240 Yeah, so you're thinking, so I guess that the reason 0:02:27.280 --> 0:02:30.880 why you're probably thinking more of Goldman. Goldman has you know, 0:02:31.000 --> 0:02:34.480 really strength with the hedge fund customers, the asset management customers, 0:02:35.720 --> 0:02:38.320 you know that that that research frequently deals with. I 0:02:38.320 --> 0:02:41.640 think JP Morgan has an additional leg up with the 0:02:41.680 --> 0:02:45.600 corporate UH type customers, and so I think, you know, 0:02:45.639 --> 0:02:49.959 they are the biggest in that business. Goldman has made, 0:02:50.520 --> 0:02:53.880 i mean some pretty remarkable market share gains in the years, 0:02:53.919 --> 0:02:55.960 which again might be why you're why are I just 0:02:56.000 --> 0:02:57.960 going to them? But JP Morgan is still the biggest 0:02:57.960 --> 0:02:58.640 of that business. 0:02:58.800 --> 0:03:01.880 So be ay, give me a sense of where they 0:03:02.400 --> 0:03:06.040 stack up against the JP Morgans. I guess, against the Goldmans, 0:03:06.040 --> 0:03:09.880 against the Morgan, Stanley's and some of those capital markets businesses, 0:03:09.880 --> 0:03:12.359 because again the guts of Bank of America on that 0:03:12.440 --> 0:03:16.280 side is Merrill Lynch. Where where are they now, you know, 0:03:16.680 --> 0:03:19.639 ten years on from this this merger, so. 0:03:19.639 --> 0:03:23.240 I think they've they've definitely had some fits and starts, 0:03:23.240 --> 0:03:26.400 and I think if you look at their business over 0:03:26.440 --> 0:03:30.240 the long term, it's it's not been it. You know, 0:03:30.280 --> 0:03:32.200 it doesn't have sort of the same volatility as some 0:03:32.240 --> 0:03:34.440 of the other bigger names that we're talking about, JP, 0:03:34.520 --> 0:03:37.040 Morgan and Goldman. You know, they've sort of kept that 0:03:37.080 --> 0:03:41.520 business relatively steady. You know, Bank of America and UBS 0:03:41.560 --> 0:03:43.640 as well, just you know, tend to be sort of 0:03:43.760 --> 0:03:46.840 quarter and quarter out generating sort of the same amounts 0:03:46.840 --> 0:03:51.840 of revenue. But in the you know, in the last 0:03:51.960 --> 0:03:54.640 couple of years, and I think you know, this has 0:03:54.720 --> 0:03:57.600 also been helped by some people exiting prime brokerage, right, 0:03:58.640 --> 0:04:02.080 they sort of stepped up one of their capital requirements 0:04:02.080 --> 0:04:04.120 and they figured, you know, we we're going to add 0:04:04.120 --> 0:04:06.400 some more balance sheet to this trading business. So they 0:04:06.840 --> 0:04:09.840 invested in prime brokerage. They invested in macro, which is 0:04:10.080 --> 0:04:12.920 rates and currencies. So, as I said, they're good at 0:04:12.960 --> 0:04:16.560 those credit spread securitization type businesses that Credit Sweep was 0:04:16.600 --> 0:04:20.200 good at, but they've made investments in the interest rate business, 0:04:20.240 --> 0:04:22.800 the currency's business, like that's sort of the business that 0:04:22.839 --> 0:04:26.280 we're relatively more bullish on, you know, this year and 0:04:26.320 --> 0:04:29.080 the years ahead, just because we think you have all 0:04:29.080 --> 0:04:32.120 these trillions of dollars still sitting on central bank balance sheets. 0:04:32.440 --> 0:04:35.080 There's going to be uncertainty. There's going to be you know, 0:04:35.120 --> 0:04:37.640 this is an unprecedented situation, and we think that the 0:04:37.720 --> 0:04:40.840 interest rate uncertainty extends. 0:04:40.640 --> 0:04:42.880 We're in for a world of volatility for well, we're 0:04:42.920 --> 0:04:46.600 in it already and it's got to continue with with 0:04:46.680 --> 0:04:51.279 all of those variables. In terms of the investment banking business, 0:04:51.520 --> 0:04:53.880 investment banking revenue, how do they do. 0:04:54.760 --> 0:04:57.400 So, you know, Goldman did a little bit better, All 0:04:57.400 --> 0:04:59.719 the banks did a little bit better. But you know, 0:04:59.760 --> 0:05:02.680 we're looking at twenty to twenty five percent declines and 0:05:02.880 --> 0:05:05.520 calling that a win because last year we're down fifty percent. 0:05:06.560 --> 0:05:08.720 But things are still weak there and you're starting to 0:05:08.720 --> 0:05:12.120 see these headlines about you know, cuts in the investment 0:05:12.160 --> 0:05:17.560 banking business. You know, the CEOs have the CEOs of 0:05:17.640 --> 0:05:21.200 the investment banks have talked about their clients, you know, 0:05:21.400 --> 0:05:27.000 still not really adjusting to the newer valuation. So you know, 0:05:27.040 --> 0:05:29.400 as we know, tech has had a few good months, 0:05:29.440 --> 0:05:32.240 but we're just not back to where we were, and 0:05:32.279 --> 0:05:34.839 some of those companies waiting to go public may not 0:05:35.040 --> 0:05:40.480 have adjusted their expectations. The other thing that the investment 0:05:40.520 --> 0:05:43.440 banks CEOs have said is, look, when the FED stops 0:05:43.520 --> 0:05:46.479 raising rates, we think that that could really put a 0:05:46.480 --> 0:05:49.360 flood of issuance. You know, that remains to be seen 0:05:49.440 --> 0:05:52.039 when that happens. Again, We're we're sort of in a 0:05:52.080 --> 0:05:57.240 pretty remarkable period where Jamie Diamond's interesting right, Like they 0:05:57.279 --> 0:06:00.920 talked about FED cuts are being baked into their interesting 0:06:00.920 --> 0:06:03.599 income guidance. But then he said everybody should prepare for 0:06:03.680 --> 0:06:07.120 higher rates for longer, and so you see that you're 0:06:07.120 --> 0:06:08.600 getting those contradicting messages. 0:06:08.720 --> 0:06:12.080 So, Allison, you've been following these companies for a long time. 0:06:12.120 --> 0:06:13.440 You've seen management teams come and go. 0:06:13.720 --> 0:06:14.719 How was the street? 0:06:15.160 --> 0:06:17.680 How were investors viewing David Solomon, the chairman and cy 0:06:17.720 --> 0:06:18.479 of Goldman Sex. 0:06:19.160 --> 0:06:22.719 I mean, I think for Solomon it's still a little 0:06:22.760 --> 0:06:25.640 bit weight. And see I know that there's you know 0:06:25.920 --> 0:06:29.680 a lot of the negative press and criticism have come 0:06:29.720 --> 0:06:32.040 around the consumer business. I would keep in mind that 0:06:32.640 --> 0:06:34.880 even though that's that's sort of being done away with 0:06:34.960 --> 0:06:38.039 under Solomon, it was really started underwind Fly. That was 0:06:38.080 --> 0:06:41.880 a huge deviation for Goldman. You know, parts of that 0:06:41.920 --> 0:06:44.600 business remain. You know, we're hearing a lot about this 0:06:44.839 --> 0:06:47.760 new Apple product on the deposit side of things, but 0:06:47.800 --> 0:06:51.799 the Marcus loans. You know, frankly, I don't think any 0:06:52.120 --> 0:06:55.440 investors really ever believed in that business. I always thought 0:06:55.440 --> 0:06:57.279 the strategy was sort of like a me too from 0:06:57.320 --> 0:06:58.080 like the nineties. 0:06:59.120 --> 0:07:01.760 I'm going to say I like that strategy. I know you, 0:07:01.920 --> 0:07:04.599 I know you have hated it forever, and Paul also 0:07:04.680 --> 0:07:09.400 has never understood the consumer. To me, it's just high 0:07:09.520 --> 0:07:12.400 end super luxury if you're doing your banking with Golden. 0:07:13.640 --> 0:07:16.560 But it's not going but it's it's the it's the 0:07:16.640 --> 0:07:19.320 strategy with which they went after these loans, which was 0:07:19.480 --> 0:07:22.880 competing on price. Well they failed, so I was the 0:07:23.000 --> 0:07:25.960 loan book, right, So they're still trying to go after 0:07:26.000 --> 0:07:28.720 those deposits. Yeah, they're trying to go after it with 0:07:28.920 --> 0:07:30.520 using the Apple premium brand. 0:07:31.000 --> 0:07:31.160 You know. 0:07:31.280 --> 0:07:34.240 They they're going after CDs with premium pricing in their market. 0:07:34.280 --> 0:07:37.040 And they always had this, not not the loans, and 0:07:37.080 --> 0:07:39.360 they always had and they still have. But one of 0:07:39.160 --> 0:07:42.480 their real selling points for decades has been you sell 0:07:42.520 --> 0:07:45.520 your company a will advise you take the fee there 0:07:45.720 --> 0:07:48.000 and then when you have that the proceeds in your pocket. Oh, 0:07:48.040 --> 0:07:51.200 let me introduce you to my private wealth manager in Dallas, 0:07:51.200 --> 0:07:54.320 Texas or in San Francisco, and he'll he or she 0:07:54.360 --> 0:07:55.920 will help you manage this money. 0:07:56.000 --> 0:07:57.840 We'll make fees there too. So they've always had that. 0:07:58.240 --> 0:07:59.400 But Marcus was more. 0:08:00.720 --> 0:08:04.280 Marcus was more, you know, let's broaden out. Let's broaden 0:08:04.320 --> 0:08:06.560 out the net, right, like, are we leaving all this 0:08:07.200 --> 0:08:09.800 white space behind? And you know, let's try to do 0:08:09.840 --> 0:08:14.480 a few different things there. You know, as we as 0:08:14.520 --> 0:08:17.360 we just discussed the deposits, I think is interesting and 0:08:17.440 --> 0:08:21.040 getting getting those customers in the door. But the credit 0:08:21.040 --> 0:08:24.560 card lending strategy was really like a price a pricing strategy, 0:08:24.600 --> 0:08:28.040 and that's you know, I don't know any bank where 0:08:28.040 --> 0:08:29.240 it's one over the long term. 0:08:29.280 --> 0:08:31.880 Eventually that all right, Morgan Stanley, before the open tomorrow 0:08:31.920 --> 0:08:32.880 is up what we have? 0:08:33.600 --> 0:08:37.040 So Morgan Stanley, Uh, people I think are going to 0:08:37.080 --> 0:08:39.480 be listening. I'm going to be listening to find out. 0:08:39.640 --> 0:08:42.680 You know, Andy c left Merrill. He's going over to 0:08:43.440 --> 0:08:45.959 City to be the head of their global wealth management. 0:08:46.040 --> 0:08:48.920 Is there going to be more competition in the us 0:08:49.000 --> 0:08:52.160 keeping mind, Morgan Stanley bought that's you know, Smith Barty business. 0:08:52.160 --> 0:08:55.480 They're a wealth powerhouse. Part of that came from city 0:08:55.520 --> 0:08:59.000 a long time ago. Equities trading, you know, has been 0:08:59.160 --> 0:09:01.960 generally been disappoint So that's not great for a city. 0:09:02.320 --> 0:09:04.560 I mean, that's not great for Morgan Stanley. Excuse me. 0:09:05.000 --> 0:09:07.920 We'll see how their fixed income holds up, all right, and. 0:09:07.880 --> 0:09:10.679 We'll see if anyone else says, you know, AI can 0:09:10.720 --> 0:09:11.560 reduce headcamps. 0:09:11.600 --> 0:09:14.040 Yes exactly. We like that because that was a good 0:09:14.080 --> 0:09:15.559 line from mois the morning Hand. 0:09:15.679 --> 0:09:17.959 Yeah, morning Hand on Top Live. So that was you know, 0:09:17.960 --> 0:09:20.040 if you're you know, working on wall streets, I think, 0:09:20.080 --> 0:09:21.720 oh great, now I got another. I gotta worry about 0:09:21.720 --> 0:09:24.600 these stupid machines taking over my job. All right, Allison Williams, 0:09:25.000 --> 0:09:27.000 as always, thank you so much for finding a few 0:09:27.000 --> 0:09:29.240 minutes in your busy scheduled to come in and get 0:09:29.320 --> 0:09:31.160 us up to date on some of these numbers coming 0:09:31.160 --> 0:09:33.040 out of Bank of America and Goldman Sachs. A little 0:09:33.040 --> 0:09:34.880 bit of a miss for Goldman Sacks. It doesn't happen 0:09:35.000 --> 0:09:36.920 very often, but so the stock's off just a little 0:09:36.920 --> 0:09:40.080 bit here. But we'll continue with these big banks, big 0:09:40.080 --> 0:09:42.599 investment banks reporting. We've got Morgan Stanley tomorrow before the 0:09:42.679 --> 0:09:47.560 open and Alison will be all over that and her team. 0:09:47.840 --> 0:09:49.040 You're listening to the team. 0:09:49.400 --> 0:09:52.760 Can's are live program Bloomberg Markets weekdays at ten am 0:09:52.800 --> 0:09:56.200 Eastern on Bloomberg dot Com, the iHeartRadio app and the 0:09:56.240 --> 0:09:59.240 Bloomberg Business App, or listen on demand wherever you get 0:09:59.280 --> 0:09:59.920 your podcast. 0:10:01.960 --> 0:10:06.040 If you're Fox, Fox Communications, Fox Corporation, Rupert Murdock all 0:10:06.040 --> 0:10:08.200 the Fox Network, You're in a little bit of a 0:10:08.280 --> 0:10:11.160 legal suit here with dominion voting systems and the potential 0:10:11.200 --> 0:10:13.959 risks there are pretty material, so believe it or not, 0:10:14.000 --> 0:10:17.320 Bloomberg Intelligence has a bunch of litigation analysts for just 0:10:17.480 --> 0:10:20.960 this type of analysis. Matt Sheltenham joins as Caesar, senior 0:10:21.000 --> 0:10:23.760 Litigation analyst at Bloomberg Intelligence, and I happen to know 0:10:23.800 --> 0:10:27.120 that he is in Vegas as we speak at the 0:10:27.200 --> 0:10:30.400 National Association of Broadcasters conference. It's my first question, Matt, 0:10:30.480 --> 0:10:33.280 most important, and this is important, so get it right. 0:10:33.360 --> 0:10:34.080 Where are you staying? 0:10:35.800 --> 0:10:38.400 I am at the Aria Hotel Nice. 0:10:38.640 --> 0:10:41.240 All right, that's new school, that's new school, very good. 0:10:41.240 --> 0:10:44.120 I'm a Bellagio guy, so you know, go to the 0:10:44.280 --> 0:10:45.440 high rollers crafts table. 0:10:45.679 --> 0:10:48.520 Where do they have the the fake Paris and the 0:10:48.600 --> 0:10:50.320 Venice Yeah, and all that stuff that's. 0:10:50.200 --> 0:10:51.920 Right there on the strip. Oh I thought it was 0:10:52.040 --> 0:10:55.520 Paris the hotel. No, Paris is the hotel? Oh I see? 0:10:55.640 --> 0:10:55.840 Yeah? 0:10:55.840 --> 0:10:58.520 And the Venetian is that and they are both awesome properties. 0:10:58.600 --> 0:11:01.640 All right, Matt, talk to us about Fox and Dominion 0:11:01.760 --> 0:11:05.160 voting Systems. What is the lawsuit and where are we now? 0:11:06.080 --> 0:11:09.400 Yeah, so we're at the very beginning of this, this 0:11:09.520 --> 0:11:14.280 lawsuit heading to trial. Now, this is a suit about 0:11:14.800 --> 0:11:20.120 Fox's election coverage over about a month from November into 0:11:20.200 --> 0:11:24.960 December after the election, when Dominion's name kept coming up 0:11:25.160 --> 0:11:30.240 in interviews that that Fox held and Dominions this voting 0:11:30.280 --> 0:11:34.520 software company. Its software was used in about thirty states 0:11:34.600 --> 0:11:37.920 during the election, and a number of allegations were made 0:11:38.120 --> 0:11:41.720 suggesting that Dominion had had kind of rigged the election. 0:11:42.360 --> 0:11:45.680 And so now this is a defamation claim brought against 0:11:45.760 --> 0:11:49.280 Fox News claiming that you basically have wiped out our 0:11:49.400 --> 0:11:52.960 business by these false statements that you made. And it 0:11:53.120 --> 0:11:56.200 seeks initially they saw one point six billion dollars in 0:11:56.240 --> 0:11:58.240 their complaint. I think that's come down a little bit 0:11:58.679 --> 0:12:02.960 but it's a big, big deal, a serious financial threat 0:12:03.040 --> 0:12:03.840 to the box. 0:12:04.520 --> 0:12:06.640 Why one point said, you know, when I sue somebody, 0:12:06.720 --> 0:12:09.280 typically it's for a million or so. Oh yeah, how 0:12:09.320 --> 0:12:12.000 do they get to one point six billion dollars? 0:12:12.360 --> 0:12:14.880 Yeah? So I think that's that's one of the most 0:12:14.920 --> 0:12:18.760 important things to watch going forward, is how credible is 0:12:18.880 --> 0:12:22.480 that number? Is that damage's number? And so they put 0:12:22.520 --> 0:12:24.720 one point six billion in their complaint, and as I said, 0:12:24.720 --> 0:12:26.520 I think it's come down a little bit. What they're 0:12:26.520 --> 0:12:30.280 looking at is one, what is our lost profits because 0:12:30.280 --> 0:12:33.280 of this? And two what is our lost value as 0:12:33.320 --> 0:12:36.440 an enterprise? And I think it's that second category that's 0:12:36.440 --> 0:12:38.559 going to be the focus here. They have an expert 0:12:38.600 --> 0:12:41.120 who comes in that says, when we look at our 0:12:41.480 --> 0:12:44.520 value as an enterprise over the next ten years, and 0:12:44.880 --> 0:12:48.080 we're basically so damaged as a business that you've wiped 0:12:48.160 --> 0:12:50.679 us out, we value that is at about nine hundred 0:12:50.720 --> 0:12:54.200 and twenty million dollars. Now Fox comes back and says, 0:12:54.480 --> 0:12:59.120 that's crazy. You you independently were valued as a company 0:12:59.440 --> 0:13:02.720 in twenty two for about three hundred million dollars and 0:13:02.800 --> 0:13:06.280 your business is actually doing better after the election. So 0:13:06.360 --> 0:13:09.920 I think I think dominion has a strong case about defamation. 0:13:10.240 --> 0:13:12.600 I don't know that it has a real strong case 0:13:12.640 --> 0:13:16.120 to get to that billion dollar figure. But one other 0:13:16.200 --> 0:13:19.800 footnote on that, though punitive damages are also in play here, 0:13:19.840 --> 0:13:22.720 the judge refused to take them off the table, and 0:13:22.760 --> 0:13:26.359 so it's not just that direct harm to the business. 0:13:26.640 --> 0:13:30.080 The jury has the ability to come in and effectively 0:13:30.160 --> 0:13:34.360 punish Fox. And sometimes punitive damages can go as much 0:13:34.360 --> 0:13:38.440 as five times the economic damages. So that's where you 0:13:38.600 --> 0:13:41.000 really get to big deal numbers. 0:13:41.080 --> 0:13:41.679 It gets you there. 0:13:42.000 --> 0:13:44.600 Yes, hey, Matt, if I'm Fox, why can I just 0:13:44.600 --> 0:13:45.959 claim First Amendment protection? 0:13:46.880 --> 0:13:48.880 Yeah, So that's what they've been doing. And they brought 0:13:48.920 --> 0:13:52.640 in Paul Clement, you know, the noted First Amendment Supreme 0:13:52.679 --> 0:13:56.080 Court lawyer, to defend them here, and and they tried 0:13:56.120 --> 0:13:59.800 that defense, but the court has mostly shot it down. 0:14:00.040 --> 0:14:03.319 That Fox, you know, Fox makes the First Amendment argument. 0:14:03.400 --> 0:14:06.320 This was the most important story of the day. The 0:14:06.360 --> 0:14:09.040 President of the United States is saying that the election 0:14:09.320 --> 0:14:12.160 was rigged. How can we not report on that? And 0:14:12.160 --> 0:14:17.000 and and so. But but the problem is there is real, no, 0:14:17.280 --> 0:14:20.840 there really is no defense in in in in the 0:14:20.880 --> 0:14:25.240 First Amendment that lets you air allegations that you know 0:14:25.480 --> 0:14:28.560 to be false or that you strongly believe to be false, 0:14:29.160 --> 0:14:31.760 and and so the so that the judge so far 0:14:31.840 --> 0:14:33.600 is pretty much said, now, we're not going. 0:14:33.600 --> 0:14:34.200 To go there. 0:14:34.480 --> 0:14:37.560 I already have decided these are false statements that you made. 0:14:37.920 --> 0:14:40.720 And so the only question in this trial now isn't 0:14:40.720 --> 0:14:44.080 the First Amendment. It's it's it's whether you knew they 0:14:44.120 --> 0:14:47.040 were false or whether you had a high probability to 0:14:47.280 --> 0:14:48.360 believe they were false. 0:14:48.480 --> 0:14:51.360 If television news can't make stuff up anymore than where 0:14:51.400 --> 0:14:52.480 are we as a country? 0:14:53.360 --> 0:14:55.520 Well, the first Amendment was for like mistakes. 0:14:55.520 --> 0:14:55.880 You know that. 0:14:56.000 --> 0:14:57.880 The The issue for me is do we get to 0:14:57.880 --> 0:15:02.040 see Rupert Murdoch, Do we get to see Alan John Hannity, 0:15:02.040 --> 0:15:05.360 Do we get to see Sean Hannity and Tucker Carlson testify. 0:15:05.520 --> 0:15:09.720 We've already seen some of their you know, SMS text 0:15:09.760 --> 0:15:12.640 messages and it didn't look good, right. 0:15:12.680 --> 0:15:16.160 Absolutely, And I think that right now, you know, I 0:15:16.200 --> 0:15:18.760 still think a settlement is a pretty good bet over 0:15:18.800 --> 0:15:21.680 the next couple of months before a jury actually announces 0:15:21.720 --> 0:15:24.480 its decision. But I wouldn't be at all surprised to 0:15:24.480 --> 0:15:28.000 see this trial advance pretty far. So I think it's 0:15:28.040 --> 0:15:30.680 more likely than not you are going to see those 0:15:30.720 --> 0:15:33.320 witnesses called to the stand. And I think Rupert Rupert 0:15:33.400 --> 0:15:36.600 Murdoch is pretty early on the list, potentially in the 0:15:36.600 --> 0:15:37.680 next couple of days. 0:15:37.920 --> 0:15:39.920 All Right, Matt, thank you so much for joining us. 0:15:40.240 --> 0:15:43.760 Matt Sheltenham, he's a senior litigation analysts Bloomberg Intelligence. 0:15:43.760 --> 0:15:44.440 He's in Vegas. 0:15:44.480 --> 0:15:46.560 Matt, make sure you go over to the high end 0:15:46.560 --> 0:15:48.160 crafts table Blajo use my name. 0:15:48.160 --> 0:15:49.280 They'll take care of you over there. 0:15:49.320 --> 0:15:51.840 So Matt Sheltenham, he covers all that in litigation stuff 0:15:51.880 --> 0:15:54.440 for Bloomberg Intelligence, so it's great to get his informed 0:15:54.520 --> 0:15:56.560 legal opinion when you get some of these big legal 0:15:56.640 --> 0:15:58.960 cases surrounding certain companies. 0:15:59.280 --> 0:16:02.359 You're listening to the tape Cat's are live program Bloomberg 0:16:02.440 --> 0:16:06.000 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:16:06.080 --> 0:16:08.040 tune it app, Bloomberg dot Com, and. 0:16:08.000 --> 0:16:09.320 The Bloomberg Business App. 0:16:09.360 --> 0:16:12.160 You can also listen live on Amazon Alexa from our 0:16:12.200 --> 0:16:17.160 flagship New York station. Just say Alexa play Bloomberg eleven thirty. 0:16:19.080 --> 0:16:21.480 Let's turn to real estate, commercial real estate, and when 0:16:21.480 --> 0:16:23.480 you want to do that, because you know people aren't 0:16:23.480 --> 0:16:25.480 coming back to the office. That's how it is, particularly 0:16:25.480 --> 0:16:27.720 here in Midtown Manhattan, but maybe it's different in other 0:16:27.760 --> 0:16:29.920 parts of the world. But Jeff Langbound joins us. He's 0:16:29.920 --> 0:16:32.800 a senior reat analyst with Bloomberg Intelligence. Jeff, talk to 0:16:32.880 --> 0:16:35.240 us about I'd love to get your view on commercial 0:16:35.280 --> 0:16:38.560 real estate, office real estate in particular, how do you 0:16:38.640 --> 0:16:42.040 think office real estate is going to evolve in this country, 0:16:42.160 --> 0:16:44.240 you know, over the next several years, because boy, it's 0:16:44.320 --> 0:16:45.840 changed since pre pandemic levels. 0:16:46.280 --> 0:16:46.480 Yeah. 0:16:46.600 --> 0:16:48.600 Right, Well, first I want to say that nobody may 0:16:48.600 --> 0:16:51.920 be buying equities broadly, but definitely nobody's buying reads right now. 0:16:52.080 --> 0:16:55.040 So that's that's something we're definitely keeping an eye on. 0:16:55.800 --> 0:16:59.520 So the office is definitely a very different environment than 0:16:59.560 --> 0:17:04.280 it was pre pandemic, and right now we are in 0:17:04.359 --> 0:17:07.080 a very long kind of figure it out period. I 0:17:07.080 --> 0:17:09.199 think where we're going to figure we're going to have 0:17:09.200 --> 0:17:14.120 to see how much how much space tenants need, if any, 0:17:14.560 --> 0:17:16.439 We're going to have to figure out what properties are 0:17:16.480 --> 0:17:18.600 actually worth, and then we're gonna have to figure out 0:17:18.840 --> 0:17:22.920 what can be refinanced once mortgages start coming due. So 0:17:22.960 --> 0:17:24.920 it's going to be a long period of time where 0:17:24.960 --> 0:17:26.680 we have to figure out what the office environment is 0:17:26.680 --> 0:17:27.239 going to look like. 0:17:27.680 --> 0:17:33.280 What does the I mean I'm assuming everybody refinanced at 0:17:33.680 --> 0:17:37.440 near zero when they could. So when does that wall 0:17:37.480 --> 0:17:41.600 of debt? When's the first wall come due for maturities? 0:17:42.080 --> 0:17:46.480 It's starting, it's it's this year. You know, there's there's 0:17:46.760 --> 0:17:50.280 a big chunk, big chunk coming of debt that was 0:17:50.920 --> 0:17:55.440 issued in the twenty eighteen timeframe. And like you said, 0:17:55.440 --> 0:17:58.760 not only are interest rates at lows, but asset values 0:17:58.760 --> 0:18:00.960 were at highs and cash flow. You know, everyone was 0:18:01.000 --> 0:18:05.440 projecting continuous rise and cash flows. So you have loan 0:18:05.520 --> 0:18:07.680 to values that you know are going to be elevated 0:18:08.080 --> 0:18:10.840 if you start marking values down. You have interest rates 0:18:10.840 --> 0:18:12.679 that you know, if it was floating debt has already 0:18:12.760 --> 0:18:15.280 risen and it's starting to present a problem. If it's 0:18:15.280 --> 0:18:17.200 not floating debt, then the refi is going to present 0:18:17.240 --> 0:18:20.440 a problem. So you know, but like I said, it's 0:18:20.480 --> 0:18:23.040 going to be a long term process to figure out 0:18:23.040 --> 0:18:26.520 how this is going to work because lenders don't want 0:18:26.560 --> 0:18:31.200 to take over office buildings that are you know, difficult 0:18:31.200 --> 0:18:36.280 to operate in this environment, and so landlords or borrowers 0:18:36.280 --> 0:18:38.480 are you know, kind of trying to figure out what 0:18:38.520 --> 0:18:41.959 they can can negotiate in order to get properties refinanced. 0:18:42.400 --> 0:18:46.760 So I'm just looking at the Bloomberg Property Reate Office 0:18:46.760 --> 0:18:50.280 Property Index. It peaked in October of twenty twenty, and 0:18:50.320 --> 0:18:53.000 it's now down sixty percent sixty zero percent from that 0:18:53.040 --> 0:18:57.760 peak in February of twenty twenty. And Jeff, I don't 0:18:57.760 --> 0:18:59.439 even feel like I can go in and buy the 0:18:59.480 --> 0:19:02.280 bottom here because, like you mentioned, A, I don't know 0:19:02.480 --> 0:19:04.080 don't know what my cash flows are going to because 0:19:04.080 --> 0:19:07.880 I don't know how much space my tenants are really 0:19:07.880 --> 0:19:09.840 going to need longer term, and too, I don't think 0:19:09.840 --> 0:19:10.520 I can finance it. 0:19:10.520 --> 0:19:11.080 At these rates. 0:19:11.080 --> 0:19:14.679 So, I mean, I don't see is this is this 0:19:14.840 --> 0:19:16.560 just the new normal and everybody's got to adjust. 0:19:17.680 --> 0:19:20.280 No, I don't think so. I think it's a little 0:19:20.280 --> 0:19:21.320 bit more nuanced than that. 0:19:21.840 --> 0:19:22.040 You know. 0:19:22.240 --> 0:19:26.159 So, the first wave of declining prices was you know, speculation, 0:19:26.920 --> 0:19:29.359 declining prices in the office rate Index and in the 0:19:29.400 --> 0:19:33.160 shares themselves was you know, speculation over how much property 0:19:33.240 --> 0:19:37.200 values were actually falling. You've gotten some pressure recently as 0:19:37.240 --> 0:19:40.040 the banks have started to struggle, where you know, there's 0:19:40.119 --> 0:19:42.800 real concern over the over the financing, But I don't 0:19:42.840 --> 0:19:46.520 think that it's a catch all for every property and 0:19:46.640 --> 0:19:50.320 every owner of properties. There's going to be a differentiation 0:19:50.440 --> 0:19:54.240 between quality. The owners of better quality assets are going 0:19:54.280 --> 0:19:57.359 to be able to attract tenants, uh, and the lower 0:19:57.400 --> 0:19:59.880 quality assets are going to need to find some alter 0:20:00.440 --> 0:20:03.200