WEBVTT - UMich Survey, Euro Falls 0:00:02.440 --> 0:00:09.119 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:09.160 --> 0:00:13.280 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:13.360 --> 0:00:17.040 Eastern on Effocarplay and Android Auto with the Bloomberg Business App. 0:00:17.079 --> 0:00:20.279 Listen on demand wherever you get your podcasts, or watch 0:00:20.360 --> 0:00:22.320 us live on YouTube. 0:00:23.440 --> 0:00:26.400 Malex Steel alongside Paul Sweeney. Happy Friday. Everyone made it 0:00:26.600 --> 0:00:29.240 the end of the week. Yes, we did that. Lots 0:00:29.280 --> 0:00:30.840 to go through over the next couple hours. We want 0:00:30.880 --> 0:00:32.680 to kick off with more on that you mished sentiment. 0:00:32.760 --> 0:00:34.880 It is the final read for November, but I'm interested 0:00:34.920 --> 0:00:36.400 to see sort of what that brings in when it 0:00:36.440 --> 0:00:39.479 comes to the election result. So Joe Anshu, University of 0:00:39.560 --> 0:00:42.880 Michigan Surveys of Consumer Director joins us sentiment coming in 0:00:42.960 --> 0:00:44.879 at about seventy three point nine, a little bit better 0:00:45.000 --> 0:00:48.800 current condition sixty four point four, also better expectations, also 0:00:48.920 --> 0:00:50.840 a touch better. Does this encapsulate the election? 0:00:51.760 --> 0:00:52.479 Yes it does so. 0:00:52.600 --> 0:00:56.040 Our preliminary read that we released two weeks ago did 0:00:56.120 --> 0:00:59.600 not encapsulate the election, but today's release includes two weeks, 0:01:00.080 --> 0:01:02.840 four and two weeks after the election. Essentially, what we 0:01:03.000 --> 0:01:06.640 saw was that after Trump was elected, sentiment lost about 0:01:06.680 --> 0:01:08.160 half of the gains that it had seen in the 0:01:08.200 --> 0:01:11.640 first two weeks of the month. But on net, we're 0:01:11.680 --> 0:01:13.840 still a little bit better than we were in October, 0:01:14.000 --> 0:01:17.120 and we are now at four straight months of incremental gains. 0:01:17.640 --> 0:01:20.040 Johan, talk to us about inflation out look. I know 0:01:20.280 --> 0:01:22.000 you guys at Michigan take a look at that in 0:01:22.080 --> 0:01:25.319 your survey. How are people thinking about the inflation netlook? 0:01:26.480 --> 0:01:30.800 In the short run, people are expecting inflation to continue stabilizing. 0:01:31.400 --> 0:01:34.759 We saw the year ahead inflation expectations edged down by 0:01:34.840 --> 0:01:39.200 one tenth of percent, likely supported by lower gas prices 0:01:39.240 --> 0:01:42.160 at this time of year. That being said, we actually 0:01:42.240 --> 0:01:46.160 saw long run inflation expectations go from three point zero 0:01:46.240 --> 0:01:48.200 to three point two. That's kind of on the high 0:01:48.320 --> 0:01:50.440 side of the range we've been seeing for the last 0:01:50.520 --> 0:01:53.680 couple of years. Consumers are perceiving quite a bit of 0:01:53.760 --> 0:01:57.200 uncertainty over long run inflation, which is consistent with the 0:01:57.280 --> 0:02:01.279 fact that we don't really know exactly Trump's economic agenda 0:02:01.360 --> 0:02:03.080 is going to look like over the next four years, 0:02:03.120 --> 0:02:05.160 So that uncertainty seems quite reasonable. 0:02:05.480 --> 0:02:07.400 All right, Joe, and thank you so much. We appreciate it. 0:02:07.720 --> 0:02:10.000 I appreciating a couple of minutes of your time joined shoe. 0:02:10.160 --> 0:02:13.160 She's at the University of Michigan Surveys of consumer She 0:02:13.280 --> 0:02:15.480 directs to that whole business here and again the you 0:02:15.600 --> 0:02:18.079 missurveyed numbers just a headline number. I'm gonna go with that. 0:02:18.200 --> 0:02:20.560 It came in at seventy one point eight contentius seventy 0:02:20.560 --> 0:02:22.880 three point nine and also is down a little bit 0:02:22.919 --> 0:02:24.120 from last period as well. 0:02:25.560 --> 0:02:29.400 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:02:29.520 --> 0:02:33.040 weekdays at ten am Eastern on applecar Play and Android 0:02:33.080 --> 0:02:35.800 Auto with the Bloomberg Business app. You can also listen 0:02:35.960 --> 0:02:39.040 live on Amazon Alexa from our flagship New York station. 0:02:39.440 --> 0:02:42.160 Just say Alexa Play Bloomberg eleven thirty. 0:02:43.360 --> 0:02:45.000 Let's get to the other big news of the day, 0:02:45.120 --> 0:02:48.359 and that was European PMIS. They were terrible and you 0:02:48.480 --> 0:02:51.200 definitely then saw rerating in terms of cuts, maybe a 0:02:51.240 --> 0:02:53.799 fifty basis point cut from the ECB. So we wanted 0:02:53.840 --> 0:02:55.160 to break it down a little bit more for you 0:02:55.200 --> 0:02:58.960 with David Powell Senior. You're area economist for Bloomberg Economics. 0:02:59.440 --> 0:03:02.359 David was so bad about these numbers. What stood out 0:03:02.400 --> 0:03:04.080 to you, Well. 0:03:04.040 --> 0:03:06.400 Actually they were bad all around, and that's really what 0:03:06.560 --> 0:03:09.840 stood out. There was no bright spots here, so the 0:03:10.160 --> 0:03:13.960 composite figure for the your area declined and the numbers 0:03:14.120 --> 0:03:17.400 for both the services and manufacturing sectors were weak. In 0:03:17.480 --> 0:03:19.959 addition to that, we get a national breakdown at the 0:03:20.000 --> 0:03:23.440 first release which shows the numbers for France and Germany, 0:03:23.680 --> 0:03:26.120 and it showed both of the your areas to largest 0:03:26.160 --> 0:03:30.040 economies experience weakness. So it's not something that's just isolated 0:03:30.080 --> 0:03:33.160 to one country or one sector. It's this broad based weakness. 0:03:34.160 --> 0:03:37.040 Again, it's interesting that we woke up to this data 0:03:37.080 --> 0:03:39.360 here in the States, David, and we kind of said 0:03:39.400 --> 0:03:41.720 we knew there was you know, it was softer in 0:03:42.160 --> 0:03:44.200 across Europe, but some of this data came in and 0:03:44.280 --> 0:03:47.880 just really, I think, surprise the markets here. What's the 0:03:48.000 --> 0:03:50.920 expectation for the next you know, six to twelve months 0:03:51.040 --> 0:03:53.320 as reached in European economic activity. 0:03:54.360 --> 0:03:58.160 Well, I think the market is bracing for deterioration in 0:03:58.280 --> 0:04:01.000 the economic numbers coming out out of coming out of 0:04:01.080 --> 0:04:04.640 the EUR area, and that's because of the electoral victory 0:04:04.680 --> 0:04:07.840 of Donald Trump. One of his campaign promises was to 0:04:08.920 --> 0:04:13.600 impose tariffs not only on China, but smaller tariffs on 0:04:13.720 --> 0:04:17.160 other trading partners and one country that really stands out 0:04:17.200 --> 0:04:20.640 in that list is Germany given its huge trade surplus 0:04:21.240 --> 0:04:24.320 with the United States, and it's a country that Donald 0:04:24.360 --> 0:04:28.760 Trump specifically referred to on many occasions during the campaign. 0:04:29.520 --> 0:04:33.360 And we have run the numbers and our estimate is 0:04:33.480 --> 0:04:35.800 if those tariffs turn out to be as high as 0:04:36.440 --> 0:04:39.120 Trump promised during the campaign, that could knock in the 0:04:39.200 --> 0:04:42.560 short term about one percent off of GDP in the 0:04:42.640 --> 0:04:46.760 EU area. And we've also had estimates come from the 0:04:47.240 --> 0:04:50.640 Bundesbank Germany Central Bank, and they have a similar estimate 0:04:50.680 --> 0:04:53.160 for the German economy. And that's going to be a 0:04:53.240 --> 0:04:56.960 big shock to demand in the your era, which will 0:04:57.040 --> 0:05:00.360 require the ECB in all likelihood to respond the form 0:05:00.400 --> 0:05:04.320 of lower interest rates. And that comes on top of 0:05:04.440 --> 0:05:07.240 what was already a weak economy before any of this happened. 0:05:07.400 --> 0:05:09.719 Okay, so do you think fifty basis points coming up? 0:05:12.440 --> 0:05:15.479 I don't think they'll cut by fifty basis points in December. 0:05:15.480 --> 0:05:19.200 It will certainly introduce that topic for discussion. I think 0:05:19.240 --> 0:05:22.280 the more likely outcome is you just see a longer 0:05:22.400 --> 0:05:25.400 period of twenty five basis point cuts. So we look 0:05:25.480 --> 0:05:29.000 for a cut of twenty five basis points in December, 0:05:29.320 --> 0:05:32.080 and we think the ECB will keep with these back 0:05:32.160 --> 0:05:36.080 to back cuts being cut at every meeting until until 0:05:36.120 --> 0:05:39.160 they reached neutral, which is about two percent. So we're 0:05:39.200 --> 0:05:43.680 going to have numerous cuts coming up throughout the start 0:05:43.720 --> 0:05:48.200 of twenty twenty five. And like I said, more frequent 0:05:48.279 --> 0:05:50.119 cuts is more likely than larger cuts. 0:05:50.920 --> 0:05:52.600 David, thank you so much for joining us. We appreciate 0:05:52.640 --> 0:05:54.400 getting a few minutes of your time. David Powell, he's 0:05:54.440 --> 0:05:58.800 a senior Euro Area economist for Bloomberg Economics. That joining 0:05:58.920 --> 0:06:01.560 us from via zoom thing. 0:06:03.000 --> 0:06:06.800 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:06:06.920 --> 0:06:09.080 weekdays at ten am Eastern on fo. 0:06:09.040 --> 0:06:11.719 Cardplay and Android auto with the Bloomberg Business app. 0:06:11.800 --> 0:06:15.000 Listen on demand wherever you get your podcasts, or watch 0:06:15.080 --> 0:06:16.320 us live on YouTube. 0:06:18.000 --> 0:06:20.680 So and video is built as like the biggest event 0:06:21.160 --> 0:06:22.680 for the end of the year. And so my question 0:06:22.720 --> 0:06:24.360 over the last twenty four hours has been, Okay, well 0:06:24.400 --> 0:06:26.320 we're done with that, so then then what? And I 0:06:26.400 --> 0:06:29.159 keep getting notes in my inbox about how the rally 0:06:29.240 --> 0:06:31.120 is broadening out and then I hear, ooh, we might 0:06:31.160 --> 0:06:33.840 be topping out in tech. Go diversify. So let's get 0:06:33.880 --> 0:06:36.280 someone whose job is to actually understand all this. Grace Lee, 0:06:36.360 --> 0:06:40.520 senior portfolio manager for Columbia thread Needle, joins us. Now, Grace, 0:06:40.600 --> 0:06:43.320 what is the right strategy now that we're done with Nvidia? 0:06:43.640 --> 0:06:43.880 Now? What? 0:06:45.560 --> 0:06:48.560 Well? I think we always have to pay attention to 0:06:48.640 --> 0:06:52.080 in video and I think what in videos earnings showed 0:06:52.120 --> 0:06:55.200 us this week is that the AI theme is still 0:06:55.279 --> 0:06:59.280 alive and well, and so I think we can't ignore that. 0:07:00.120 --> 0:07:03.080 That said, there are plenty of other sectors and I 0:07:03.160 --> 0:07:05.839 think we're starting to see DOT. You know, we've started 0:07:05.839 --> 0:07:08.440 to see it all year. You know, you've seen a 0:07:08.600 --> 0:07:14.800 stealth rally in utilities and banks, especially post elections. You know, 0:07:14.880 --> 0:07:18.560 there has been definitely a people taking a second look 0:07:18.600 --> 0:07:22.760 at financials and other sectors that might have been a 0:07:22.840 --> 0:07:26.840 little bit more ignored during the year because of maybe 0:07:26.920 --> 0:07:30.920 regulatory concerns and things which have certainly eased post elections. 0:07:32.600 --> 0:07:34.920 Grace, what did the election mean to you and your 0:07:34.960 --> 0:07:37.400 team when you woke up that Wednesday morning? Did it 0:07:38.120 --> 0:07:41.840 alter your outlook or how you're thinking about allocation or sectors? 0:07:41.960 --> 0:07:42.840 How did you think about that? 0:07:44.160 --> 0:07:46.960 No, I think mostly it was a huge clearing event 0:07:47.120 --> 0:07:51.760 that it was decisive. It didn't take days or weeks 0:07:51.840 --> 0:07:55.680 to count the votes or anything, and then I think 0:07:55.960 --> 0:08:00.120 that it really is probably more of a positive I 0:08:00.240 --> 0:08:04.000 think for the for the markets. The one takeaway I 0:08:04.040 --> 0:08:08.160 would say is that at this point I probably don't 0:08:08.200 --> 0:08:11.960 want to be more defensive. You know, I think I 0:08:12.040 --> 0:08:16.120 think business leaders, company managements that we've met with since 0:08:16.200 --> 0:08:20.400 the elections, they are more optimistic about what might happen 0:08:20.560 --> 0:08:24.520 under a Trump administration and with the Republican Congress. 0:08:25.920 --> 0:08:27.920 What are your favorite top companies right now? Let's give 0:08:27.960 --> 0:08:29.800 me a couple that really float your boat. 0:08:31.040 --> 0:08:35.040 Well, I think in terms of I would broaden it 0:08:35.120 --> 0:08:38.240 out to maybe some sectors I think, you know, I 0:08:38.280 --> 0:08:41.160 would say utilities is actually an interesting one. As much 0:08:41.160 --> 0:08:43.920 as I say, don't get more defensive, there are some 0:08:44.320 --> 0:08:49.680 some actual secular themes going on in in the utility sector. 0:08:49.800 --> 0:08:53.600 And by by utilities, I'm not talking certainly the power 0:08:53.679 --> 0:08:56.319 producers have done very well this year. But you know, 0:08:56.400 --> 0:09:00.400 when when you think of Plaine Vanilla regulated utilities, I 0:09:00.440 --> 0:09:02.640 would say that if there's ever a time to get 0:09:02.720 --> 0:09:07.360 excited about about these companies, now is that time. And 0:09:07.640 --> 0:09:10.720 you know, these are companies like Excel Energy, Southern Company, 0:09:11.640 --> 0:09:14.079 the ones that maybe your you know, grandmother might have 0:09:14.160 --> 0:09:17.600 been clipping the dividends. But at this point, what we've 0:09:17.679 --> 0:09:21.400 seen is that we've had flat power demand for probably 0:09:21.520 --> 0:09:24.679 over twenty years, and that is now changing for the 0:09:24.840 --> 0:09:29.080 next several years where it's not just AI data centers, 0:09:29.120 --> 0:09:34.480 it's just broader electrification, these crypto mining and resuring. That's 0:09:34.520 --> 0:09:36.800 going to drive a lot more power demand, which means 0:09:36.880 --> 0:09:40.240 that the regulated utilities will have to invest, and that 0:09:40.400 --> 0:09:43.199 means that their earnings growth takes up higher. And we've 0:09:43.280 --> 0:09:48.680 started seeing that in reality this quarter, where you've seen 0:09:48.800 --> 0:09:53.360 some really interesting stock reactions, you know, maybe even double 0:09:53.440 --> 0:09:57.000 digit price gains in a day off of just slightly 0:09:57.120 --> 0:09:59.800 higher long term earnings outlooks. And I think that can 0:10:00.000 --> 0:10:03.240 continue within the c Hey grace. 0:10:03.559 --> 0:10:05.760 As a former banker, when I woke up that Wednesday morning, 0:10:05.800 --> 0:10:08.360 I said, uh, oh, M and A. I think that 0:10:08.440 --> 0:10:11.480 could be back on the front burner here. The regulators 0:10:11.520 --> 0:10:13.880 have been really really tough on M and A or 0:10:13.960 --> 0:10:16.960 list several years. That might change. Does that factor into 0:10:17.000 --> 0:10:19.439 how you think about what sectors to get exposure to. 0:10:21.480 --> 0:10:25.840 I think broadly M and A should pick up. People 0:10:25.920 --> 0:10:27.760 have been waiting for this for a long time. I 0:10:27.840 --> 0:10:31.480 think you know, financials are obviously front and center there. 0:10:32.720 --> 0:10:34.760 You know, we're we're certainly involved in some of the 0:10:34.800 --> 0:10:38.800 capital market stocks, some of the alternative investment managers which 0:10:38.840 --> 0:10:43.439 we think we will will certainly see benefits there. But 0:10:44.160 --> 0:10:47.319 you know, I think broadly and possibly you know, we 0:10:47.400 --> 0:10:50.200 don't traffic in small caps a ton, but I think 0:10:50.280 --> 0:10:53.480 some of the smaller mid cap companies might might also 0:10:53.600 --> 0:10:56.719 be a little bit more interesting in this environment as 0:10:56.800 --> 0:10:57.800 potential targets. 0:10:58.280 --> 0:11:02.120 Yeah, profitable small camp that's really been out performing. All right, 0:11:02.120 --> 0:11:04.160 thanks so much, Grace, really appreciate it. Grace Lee, Senior 0:11:04.200 --> 0:11:07.040 portfolio manager for Columbia Thread Needle. Joining us. 0:11:08.640 --> 0:11:12.480 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:11:12.600 --> 0:11:15.520 weekdays at ten am Eastern on applecar. 0:11:15.120 --> 0:11:17.880 Play and Android Auto with the Bloomberg Business app. 0:11:18.000 --> 0:11:20.840 You can also listen live on Amazon Alexa from our 0:11:20.880 --> 0:11:25.240 flagship New York station. Just say Alexa play Bloomberg eleven thirty. 0:11:26.280 --> 0:11:30.000 Another story that we're following today concerns oil and JP 0:11:30.200 --> 0:11:33.319 Morgan and Iran. So apparently the US Treasury Department is 0:11:33.360 --> 0:11:36.640 examining JP Morgan's relationship with a hedge fund that is 0:11:36.679 --> 0:11:39.480 said to be part of a network that's overseen by 0:11:39.520 --> 0:11:43.160 Iranian oil trader hosting Chamkani. We want to understand sort 0:11:43.200 --> 0:11:46.080 of more on this. What might this violate in terms 0:11:46.120 --> 0:11:47.960 of sanctions or not. So we're here to break us 0:11:47.960 --> 0:11:51.200 down for us as Elliott Stein Bloomberg intelligence litigation analyst. 0:11:51.400 --> 0:11:53.040 Can you just give us the facts first? 0:11:53.800 --> 0:11:54.000 Yeah? 0:11:54.160 --> 0:11:57.280 So, I mean the investigations early, the reporting is early. 0:11:57.600 --> 0:12:00.680 A lot of unknowns, both known and unknown at this point. 0:12:01.240 --> 0:12:05.400 But it sounds like the Treasury Department is investigating JP 0:12:05.559 --> 0:12:09.480 Morgan in relation to its connection to this hedge fund 0:12:09.520 --> 0:12:12.800 that's based in London and Dubai and the hedge funds 0:12:12.840 --> 0:12:16.000 connection to an oil trader, And it sounds like the 0:12:16.120 --> 0:12:20.079 overall investigation is focused on the oil trader, but the 0:12:20.160 --> 0:12:22.920 Treasury departments also looking at JP Morgan to make sure 0:12:23.000 --> 0:12:25.360 that it followed its you know, due diligence and did 0:12:25.400 --> 0:12:28.800 its KYC and know your customer and AML compliance processes. 0:12:29.440 --> 0:12:31.320 And I guess I'm just looking at the Bloomberg reporting. 0:12:33.120 --> 0:12:35.800 I guess folks there say JP Morgan feels like they 0:12:35.840 --> 0:12:39.040 don't need to do anything here because neither the Shimkhani 0:12:39.120 --> 0:12:41.960 guy nor the company appear in any sanctions list. 0:12:42.080 --> 0:12:44.679 I guess, right, yeah, and this may be you know, 0:12:44.800 --> 0:12:46.920 this may be a nothing burger. There may be nothing there. 0:12:47.800 --> 0:12:50.880 And you know, best case scenario, or one possible scenario 0:12:50.880 --> 0:12:54.360 where JP Morgan has no exposure, is that maybe it 0:12:54.480 --> 0:12:58.640 did all its due diligence and it was misled by 0:12:59.160 --> 0:13:01.240 you know, the the companies that was doing its due 0:13:01.240 --> 0:13:04.440 diligence on That's just one possibility. But worst case scenario, 0:13:05.000 --> 0:13:08.000 it didn't do it's due diligence or it ignored red 0:13:08.040 --> 0:13:11.080 flags and we've seen, you know, recently with TD Bank 0:13:11.440 --> 0:13:12.439 what that can amount to. 0:13:12.720 --> 0:13:15.880 So if this oil trader did have a relationship with 0:13:16.000 --> 0:13:19.920 this individual from Iran, what does that potentially violate? What 0:13:20.000 --> 0:13:22.160 are the sanctions and the rules currently that would make 0:13:22.200 --> 0:13:23.800 that a problem, right, So, you. 0:13:23.840 --> 0:13:28.439 Know, banks should not be doing business with companies that 0:13:28.679 --> 0:13:33.599 are under sanctions or on you know, special lists, you know, 0:13:33.800 --> 0:13:36.839 And so it's unclear what the connection is though to 0:13:37.200 --> 0:13:38.200 this oil trader. 0:13:39.160 --> 0:13:41.720 Apparently he is the son of someone who was. 0:13:41.760 --> 0:13:44.959 In the Ayatolla's like inner circle, so there may be 0:13:45.120 --> 0:13:47.880 some connections. But we've seen in the past that banks 0:13:47.920 --> 0:13:51.120 have paid billions of dollars for doing transactions with the 0:13:51.200 --> 0:13:55.320 Iranian government or other Iranian entities that are on sanctions lists. 0:13:55.640 --> 0:13:58.480 So it can be very costly. But it's not clear 0:13:58.559 --> 0:14:00.840 that the investigation is even focused on that, and may 0:14:00.920 --> 0:14:03.120 be sort of just to make sure that JP Morgan 0:14:03.320 --> 0:14:04.880 was doing its due diligence. 0:14:05.200 --> 0:14:08.079 And doing through that. The training here at Bloomberg about 0:14:08.120 --> 0:14:11.400 this type of issues, yeah, the type of training that 0:14:11.840 --> 0:14:14.319 the same thing we receive and I'm sure everybody across 0:14:14.400 --> 0:14:18.319 the industry, to various degrees receives about Hey, if you're 0:14:18.400 --> 0:14:20.880 doing business with somebody that may or may not be 0:14:20.960 --> 0:14:24.240 on a list, just stop, call your boss, call complaints, 0:14:24.480 --> 0:14:26.520 see what the gig is before you move forward. 0:14:26.520 --> 0:14:29.160 Well, it sounds like this could be like a third derivative. 0:14:29.560 --> 0:14:31.760 Exactly, And that's why there's a lot of unknowns here. 0:14:32.040 --> 0:14:36.120 The bank may have no exposure, but anytime you're talking 0:14:36.120 --> 0:14:40.080 about sanctions on Iran and you know banks doing transactions 0:14:40.680 --> 0:14:44.280 you know indirectly as well, you know, your eyebrows get 0:14:44.360 --> 0:14:46.520 raised and banks have paid. 0:14:46.360 --> 0:14:48.520 A lot of money in the past for failures related 0:14:48.560 --> 0:14:48.720 to this. 0:14:48.880 --> 0:14:51.520 Do we feel that sanctions could get more strenuous under 0:14:51.600 --> 0:14:53.360 President Trump? Like, what are you thinking about? 0:14:54.680 --> 0:14:57.560 Certainly possible, right I mean, yeah, I would expect that. 0:14:57.760 --> 0:14:59.520 I would expect it, all right, So I'm going to 0:14:59.520 --> 0:15:01.760 a JP Moore stocks up one percent today, up forty 0:15:01.760 --> 0:15:04.200 five percent year to date, so I'm assuming the market's 0:15:04.240 --> 0:15:06.680 discounting this is a non risk issue. How about other 0:15:06.760 --> 0:15:09.080 litigation that your work? What else are you working on? 0:15:09.120 --> 0:15:11.880 Because you do the litigation that companies have the deal 0:15:11.960 --> 0:15:13.680 with that can move stocks. 0:15:13.560 --> 0:15:17.560 Absolutely and actually in this arena, there are several other 0:15:17.640 --> 0:15:21.000 banks that are under investigation for either AML violations or 0:15:21.080 --> 0:15:26.800 potentially sanctions violations. UBS is being investigated with in connection 0:15:26.920 --> 0:15:29.440 with clients that have took over from Credit Sue who 0:15:29.680 --> 0:15:33.400 may be in violation of sanctions on Russia. There's a 0:15:33.440 --> 0:15:37.400 swedest Sweat Bank that has been under investigation for AML 0:15:37.920 --> 0:15:40.440 violations for years now, so I'm waiting for a penalty there. 0:15:40.520 --> 0:15:44.240 There's a Turkish bank, Hawkbank, that was indicted by the 0:15:44.320 --> 0:15:46.880 US government for violating sanctions on Irun. 0:15:46.960 --> 0:15:49.040 So that's one area I'm looking at. 0:15:49.440 --> 0:15:52.280 Another big area right now is all these rules and 0:15:52.360 --> 0:15:55.880 regulations that the SEC and other regulators have put into 0:15:55.920 --> 0:15:58.680 place under the Biden administration. There's a lot of lawsuits 0:15:58.720 --> 0:16:00.120 over them, and so we're waiting to see what is 0:16:00.120 --> 0:16:02.120 going to happen with the rules and with the lawsuits. 0:16:02.840 --> 0:16:05.320 What else would a Trump victory mean for your world? 0:16:06.200 --> 0:16:09.400 Right, So, in connection with these rules and regulations that 0:16:09.760 --> 0:16:14.200 the SEC has promulgated during the Biden administration and the 0:16:14.280 --> 0:16:17.120 CFPB as well, we're expecting a lot of the rules 0:16:17.160 --> 0:16:20.680 and regulations to maybe be paused in terms of enforcing them, 0:16:21.000 --> 0:16:23.760 and then the regulators will probably go back and revisit 0:16:23.840 --> 0:16:27.440 the rules, but that takes a while. I'm also you know, 0:16:27.720 --> 0:16:31.920 I'm attuned to the courts as well, and I'm particularly 0:16:33.240 --> 0:16:34.640 interested in seeing whether. 0:16:34.800 --> 0:16:36.920 The two oldest justices on the Supreme Court. 0:16:36.760 --> 0:16:40.160 Clarence Thomas and Sam Alito, retire, probably at some point 0:16:40.440 --> 0:16:43.200 during this next Trump administrator life, in which case he 0:16:43.240 --> 0:16:47.000 would name the replacements and you'll have a conservative majority 0:16:47.120 --> 0:16:49.240 for at least another generation on the Supreme Court. 0:16:49.360 --> 0:16:49.760 Interesting. 0:16:49.800 --> 0:16:53.240 Wow, because you started off fine going to Stanford, then 0:16:53.280 --> 0:16:56.920 you went to get a law degree. It all turns 0:16:56.960 --> 0:16:58.280 south Man. What were you thinking? 0:17:00.080 --> 0:17:03.200 Have you marked your calendar for the Stanford Duke basketball game? 0:17:03.280 --> 0:17:05.400 No, because we're now in the same conference, right, Yeah, 0:17:05.520 --> 0:17:05.920 when is that? 0:17:06.560 --> 0:17:08.280 I don't have a car, but I think I think 0:17:08.280 --> 0:17:09.520 it's in January, maybe February. 0:17:09.560 --> 0:17:11.240 I want to check it outre Stanford is in the 0:17:11.280 --> 0:17:12.680 Atlantic Coast Conference. That makes sense. 0:17:12.800 --> 0:17:13.879 Yeah, big game this weekend. 0:17:13.960 --> 0:17:15.760 My Duke Field hockey team had a little problem getting 0:17:15.760 --> 0:17:17.159 out to the Bay Area for their games against it 0:17:17.280 --> 0:17:20.520 because you have to Drham, you have to transfer and connect, 0:17:20.720 --> 0:17:23.480 and I'm like, why are my kids going out to 0:17:23.600 --> 0:17:26.440 San Francisco for It's just the whole thing's a mess. 0:17:26.520 --> 0:17:29.879 Elliot Stein Bloomberg Intelligence litigation analysts joining us here in 0:17:29.920 --> 0:17:31.879 our Bloomberg Interactive Brokers Studio. 0:17:33.640 --> 0:17:37.480 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:17:37.600 --> 0:17:40.520 weekdays at ten am Eastern on applecar. 0:17:40.160 --> 0:17:42.880 Play and Android Auto with the Bloomberg Business app. 0:17:43.040 --> 0:17:45.840 You can also listen live on Amazon Alexa from our 0:17:45.880 --> 0:17:50.240 flagship New York station Just say Alexa playing Bloomberg eleven thirty. 0:17:51.480 --> 0:17:53.200 Happy for Friday. We made it to the end of 0:17:53.240 --> 0:17:55.119 the week. I'm Alex d alongside Paul swe Need. This 0:17:55.160 --> 0:17:57.320 is Bloomberg Intelligence Radio. We bring you all the top 0:17:57.400 --> 0:17:59.840 news and business, economics and finance through our lens of 0:17:59.840 --> 0:18:03.159 our Bloomberg Intelligence folks. We also tap an amazing network 0:18:03.200 --> 0:18:06.119 of resources outside of Bloomberg Intelligence, and we're going to 0:18:06.160 --> 0:18:09.080 tap one right now. Jessica Kriegel is chief strategy Officer 0:18:09.200 --> 0:18:12.960 of Workforce and Labor at Culture Partner. She joins US 0:18:12.960 --> 0:18:16.680 now from Sacramento, California. So the headline from this week 0:18:16.760 --> 0:18:19.040 that we didn't really get to digest as much was 0:18:19.280 --> 0:18:23.119 Elon Musk and Vivek Ramaswami outlining a plan for large 0:18:23.240 --> 0:18:26.480 scale firings of the federal workforce, in part, guys, get 0:18:26.520 --> 0:18:28.400 your butt backs in the office five days a week. 0:18:28.480 --> 0:18:29.719 You don't want to do it, and then you're going 0:18:29.760 --> 0:18:33.840 to quit. Is this realistic? What's your take on something 0:18:33.960 --> 0:18:34.119 like this? 0:18:35.840 --> 0:18:39.160 Well, they argue that it is absolutely realistic, and you've 0:18:39.200 --> 0:18:43.720 already seen a precedent set in the corporate world where 0:18:43.840 --> 0:18:47.000 people are forcing employees back into the office five days 0:18:47.000 --> 0:18:49.640 a week. What is a little bit different or maybe 0:18:49.760 --> 0:18:52.400 even refreshing, you could argue, is that they are being 0:18:52.760 --> 0:18:56.480 straightforward about the fact that they anticipate by forcing people 0:18:56.560 --> 0:18:59.040 back into the office five days a week, that people 0:18:59.080 --> 0:19:02.000 will quit, and they welcome that. I think that's probably 0:19:02.119 --> 0:19:04.520 true for a lot of CEOs who make that decision 0:19:04.680 --> 0:19:09.080 because they know their workforce values flexibility, and yet they're 0:19:09.160 --> 0:19:12.119 forcing them to go back into the office. So they 0:19:12.160 --> 0:19:15.400 are being in some ways at least transparent that there 0:19:15.560 --> 0:19:19.840 is an alternative motivation for forcing people back into the office. 0:19:19.960 --> 0:19:22.920 It's not about quote unquote culture, it's not about quote 0:19:22.960 --> 0:19:26.280 unquote collaboration. It's really about we want to reduce the workforce, 0:19:26.320 --> 0:19:27.840 and this is one of the many tools that we 0:19:27.880 --> 0:19:28.320 will use. 0:19:29.359 --> 0:19:32.400 So I guess in the federal government again, Elon musk 0:19:32.480 --> 0:19:35.840 vivek Ramaswani, what do you think they could do? 0:19:36.200 --> 0:19:36.720 Should do? 0:19:36.960 --> 0:19:41.560 When you think about I don't know, waste inefficiency bureaucracy. 0:19:42.320 --> 0:19:44.560 Is there a preferred way to kind of go about 0:19:44.600 --> 0:19:47.320 this or you just take a you know, a clever 0:19:47.480 --> 0:19:48.760 and lop off ten percent? 0:19:50.760 --> 0:19:51.320 Well, should do? 0:19:51.520 --> 0:19:53.760 Can? I'll leave that up to the political analysts. But 0:19:53.840 --> 0:19:57.920 what I will say is they're arguing that the bureaucracy 0:19:58.160 --> 0:20:00.840 is wildly inefficient, and they're not wrong because if you 0:20:00.960 --> 0:20:05.040 look at accountability in bureaucracies as compared to the free markets, 0:20:05.119 --> 0:20:09.280 there is less accountability, right, There's less consequences for failure 0:20:09.400 --> 0:20:14.040 in a bureaucracy. There's less competition, and so accountability necessarily 0:20:14.160 --> 0:20:16.320 goes down. And they're saying we need to address that. 0:20:16.920 --> 0:20:20.359 It's not necessarily a problem the size of the federal government. 0:20:20.440 --> 0:20:23.520 The federal government is the largest employer in America with 0:20:23.640 --> 0:20:26.919 three million employees. But size isn't in and of itself 0:20:27.000 --> 0:20:29.760 the problem, right Look at Amazon. Amazon has one point 0:20:29.840 --> 0:20:32.720 five million employees, and they could deliver a band book 0:20:32.760 --> 0:20:35.280 to your doorstep in the next eight hours. Right. The 0:20:35.400 --> 0:20:37.879 problem is the lack of accountability, and that is in 0:20:38.000 --> 0:20:41.159 particular what they are wanting to address with. Yes, it 0:20:41.240 --> 0:20:44.399 sounds like a cleaver, Uh, how do they do that if? 0:20:44.440 --> 0:20:46.760 Okay, so let's say that they didn't just do the clever. 0:20:47.480 --> 0:20:51.240 How do you transform culture and help productivity in a 0:20:51.280 --> 0:20:52.080 government agency. 0:20:54.480 --> 0:20:57.720 Well, what we know from helping companies transform culture is 0:20:57.760 --> 0:21:00.119 that culture does not go down without a fight. So 0:21:00.240 --> 0:21:04.879 this is going to be incredibly disruptive. And here's the 0:21:04.920 --> 0:21:08.600 pros and cons of disruption. Innovation comes from disruption. You 0:21:08.720 --> 0:21:12.720