WEBVTT - BWPodcast013124 0:00:01.360 --> 0:00:05.680 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.440 gloom O Business Finance and tech news. The Bloomberg Business 0:00:13.440 --> 0:00:18.760 Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:20.040 --> 0:00:22.439 All right, everybody, it is a fed Wednesday. It's also 0:00:22.480 --> 0:00:25.200 still we're thick in the earning season. Qualcom out the 0:00:25.200 --> 0:00:28.600 stock is up about two point five percent here in 0:00:28.640 --> 0:00:33.840 the after market. So the Qualcom forecast meeting estimates, giving 0:00:33.840 --> 0:00:35.760 that revenue forecast for the current quarter that was in 0:00:35.840 --> 0:00:38.720 line with analyst estimates, help by a recovery market for 0:00:38.760 --> 0:00:42.239 smartphone ships. We know that they're moving into AI areas. 0:00:42.240 --> 0:00:44.839 They're also looking into the PC area. But when it 0:00:44.840 --> 0:00:46.839 comes down to it, it's their bread and butter and 0:00:46.880 --> 0:00:49.559 then some it's all about those smartphoneeships. 0:00:50.440 --> 0:00:53.240 Analyst wanted to see nine point three to six billion. 0:00:53.320 --> 0:00:56.440 When it came to a fiscal second quarter revenue sales 0:00:56.600 --> 0:00:58.720 of the company said will be eight point nine billion 0:00:58.760 --> 0:01:03.120 to nine point seven billion, excluding certain items, probably two 0:01:03.160 --> 0:01:05.320 twenty to forty a share in the current quarter, versus 0:01:05.360 --> 0:01:08.280 an average projection of two dollars and twenty six cents 0:01:08.280 --> 0:01:08.760 per quarter. 0:01:09.240 --> 0:01:10.320 We got a great voice. 0:01:10.080 --> 0:01:10.679 On this, we do. 0:01:10.760 --> 0:01:14.720 Lindwan in the studio making her way here, Managing editor 0:01:14.760 --> 0:01:17.560 of Technology Global Security a Bloomberg News. She's here in 0:01:17.560 --> 0:01:21.800 our interactive booker's studio. Okay, first gut reaction, how they 0:01:21.880 --> 0:01:22.839 do We were wrong? 0:01:23.040 --> 0:01:24.959 We were all wrong. I feel like it was just 0:01:25.000 --> 0:01:28.440 like a week ago. We were like AI winners, not 0:01:28.600 --> 0:01:32.760 AI losers. And then you have Qualcomm, and Qualcomm is 0:01:32.840 --> 0:01:36.120 like as bored as you can get. They're like in headphones. 0:01:36.160 --> 0:01:39.240 They're trying to make it into cars, right, They're like 0:01:39.319 --> 0:01:41.840 in the non sexy and they may be the only 0:01:41.880 --> 0:01:43.640 ones in the past twenty four hours. 0:01:43.640 --> 0:01:46.320 Actually they're trying to get into what matters is what 0:01:46.360 --> 0:01:46.720 they are in. 0:01:46.920 --> 0:01:49.560 Yeah, it's forming the narrative. Over the last twenty four hours. 0:01:49.560 --> 0:01:54.160 You saw Microsoft earnings disappointed on AI, Alphabet disappointed on AI. 0:01:54.480 --> 0:01:57.120 AMD has been trying to make itself like an AI 0:01:57.240 --> 0:02:00.840 chip maker like Nvidia. They disappointed on AI. And then 0:02:00.880 --> 0:02:05.840 here it comes Qualcomm smartphone recovery headsets. Like that's interesting. 0:02:05.960 --> 0:02:09.240 Okay, So I'm glad you saw said this because Christiano Aman, 0:02:09.320 --> 0:02:12.600 who is the president's CEO of Qualcomm said that they're 0:02:12.600 --> 0:02:15.679 not just of course interested in handsets and automotive that 0:02:15.760 --> 0:02:19.920 you mentioned, but he said, we're gonna build on the 0:02:19.919 --> 0:02:23.679 momentum with our leading snap Dragon platforms and tech differentiation 0:02:23.800 --> 0:02:29.120 and connectivity, computing on device generative aim. 0:02:30.600 --> 0:02:32.040 Do we care about that? 0:02:32.360 --> 0:02:35.519 Well, I mean, you see how diversified he's getting right there. 0:02:35.639 --> 0:02:37.079 Do you see that diversified now? 0:02:37.600 --> 0:02:40.400 Or that's where they're getting. I mean, like they are 0:02:40.520 --> 0:02:44.000 the company that is known for putting there, for putting 0:02:44.000 --> 0:02:46.960 there a lot of different baskets, and you know a 0:02:46.960 --> 0:02:49.680 lot of ones that are like rooted in emerging technologies 0:02:49.680 --> 0:02:52.359 that haven't yet proven themselves out. But in some ways 0:02:52.440 --> 0:02:55.200 this quarter has been good for that because you're not 0:02:55.720 --> 0:02:58.239 you don't have your eggs all in one basket like AI, 0:02:58.520 --> 0:03:02.160 and like the revenue outlook and the profit outlook are. 0:03:03.280 --> 0:03:05.680 You can't say they're great, but the fact that they're 0:03:05.800 --> 0:03:09.480 not bad compared to what was reported yesterday afternoon is 0:03:09.520 --> 0:03:11.000 what's bolstering their stock today. 0:03:11.080 --> 0:03:12.880 Well, to be fair of that range, I'm like doing 0:03:12.960 --> 0:03:15.639 quick math here about that two quarter revenue out look 0:03:15.639 --> 0:03:17.840 eight point nine billion to nine point seven the estimates 0:03:17.919 --> 0:03:20.280 nine point three six. I mean that's pretty much exactly. 0:03:20.639 --> 0:03:22.679 It's like they're not blowing anything out of the water, 0:03:22.800 --> 0:03:25.919 and so like exactly, that's something about where tech investors 0:03:25.960 --> 0:03:29.480 are right now, which is like they're okay with not bad, 0:03:29.800 --> 0:03:31.920 Like they're okay, like they don't have to be blown 0:03:32.000 --> 0:03:34.720 under the water. But it's in there, right, the estimates 0:03:34.720 --> 0:03:35.240 in line. 0:03:35.600 --> 0:03:38.720 Yeah, I think that's fair to a certain extent, given 0:03:38.760 --> 0:03:40.520 the run up in the Nasdaq one hundred and the 0:03:40.600 --> 0:03:42.400 run up in the S and P five hundred, and that. 0:03:42.680 --> 0:03:44.960 You know, it seems like Carol, almost every other day 0:03:44.960 --> 0:03:47.200 we're talking about new records, and some of these individual 0:03:47.200 --> 0:03:48.800 companies were talking new records. 0:03:49.000 --> 0:03:52.080 Yeah, that's so, well, so valuate are you talking valuation? 0:03:52.240 --> 0:03:53.160 Talking valuations? 0:03:53.240 --> 0:03:55.320 Yeah, so we're coming back to earth on some of you. 0:03:55.200 --> 0:03:55.520 You think. 0:03:55.560 --> 0:03:58.680 So, it's a lot of this stuff was priced in again, 0:03:58.920 --> 0:04:00.880 not asking you for I don't worry. 0:04:01.560 --> 0:04:03.760 Well, it's a twenty one pe if we're looking pe 0:04:03.800 --> 0:04:05.880 if not quite sixteen, that seems reasonable. 0:04:06.120 --> 0:04:08.800 It's it feels reasonable, And I feel like investors are 0:04:08.880 --> 0:04:11.640 kind of like coming around to the idea that they 0:04:11.760 --> 0:04:15.600 just need to be in the reasonable range now more realistic, 0:04:15.840 --> 0:04:18.920 like less you know, euphoria and hype. I mean, I 0:04:18.960 --> 0:04:21.960 think this is like the first real quarter honestly where 0:04:21.960 --> 0:04:24.480 investors are kind of like, all right, great, we're over 0:04:24.480 --> 0:04:26.840 the knee jerk reaction of AI. Now show us where 0:04:26.880 --> 0:04:30.760 it's actually contributing to your bottom line and being Qualcomm 0:04:30.920 --> 0:04:33.640 being like the diversified player that they are, They're like, look, 0:04:33.640 --> 0:04:36.239 we don't have just AI to offer, and we're often 0:04:36.360 --> 0:04:39.320 good bread and butter results that are in line, like 0:04:39.720 --> 0:04:42.599 we're a steady, reliable company. I mean, that's the message 0:04:42.640 --> 0:04:43.640 that they're sending. 0:04:43.360 --> 0:04:46.359 Because there was I think worries that you know, smartphone 0:04:46.360 --> 0:04:49.479 demand has been kind of sluggish. Yeah, so how do 0:04:49.520 --> 0:04:52.479 you cross that thinking with what we got from Qualcom? 0:04:52.680 --> 0:04:55.280 I think I think that'll be really interesting. Like the 0:04:55.320 --> 0:04:59.279 big telling moment is going to be tomorrow Apple, right, Apple? Yeah, 0:04:59.440 --> 0:05:02.159 Like that's it says something about Apple. And you know, 0:05:02.279 --> 0:05:05.919 also what says something about Apple is when Verizon and 0:05:06.000 --> 0:05:08.640 AT and T and T Mobile get report it, they're 0:05:08.680 --> 0:05:11.599 usually trying to steal each other's share. This time around, 0:05:11.640 --> 0:05:15.680 they all reported gains in new wireless customers. So like 0:05:15.800 --> 0:05:20.680 maybe Qualcom, with all the telecoms, we'll say something about 0:05:20.680 --> 0:05:23.760 tomorrow's Apple. I am not one to make forecasts. I 0:05:23.760 --> 0:05:25.360 don't make pario connection. 0:05:25.720 --> 0:05:27.480 There is a connection we should know. Shares Apple in 0:05:27.520 --> 0:05:30.120 the after hours are up about seven tenths of one percent. 0:05:30.480 --> 0:05:33.880 So then can we say anything about the health of 0:05:33.880 --> 0:05:36.640 the PC industry and the health of the smartphone market 0:05:36.640 --> 0:05:39.720 in general? Apple notwithstanding, I mean, Apple is certainly a 0:05:39.760 --> 0:05:40.800 big player in both of those. 0:05:40.880 --> 0:05:42.599 By reading into Qualcom's results, I. 0:05:42.640 --> 0:05:48.000 Mean, Qualcomm certainly did not signal a rebound. It just 0:05:48.080 --> 0:05:51.600 signaled health, right and stability. And if you look at 0:05:51.600 --> 0:05:56.279 the other chips earnings thus far, granted we haven't gotten 0:05:56.279 --> 0:05:58.560 in video back and some of the others, but if 0:05:58.560 --> 0:06:00.400 you look at them thus far, it pains a very 0:06:00.480 --> 0:06:04.400 nuanced picture. I'm not ready to declare that we are 0:06:04.520 --> 0:06:07.279 over the chip's glut. I'm not ready to say that. 0:06:07.360 --> 0:06:09.240 I don't think that's what the earnings have panned out 0:06:09.279 --> 0:06:09.560 to say. 0:06:09.560 --> 0:06:09.800 Either. 0:06:09.920 --> 0:06:12.560 It's cross corn So what was it ASML that was 0:06:12.680 --> 0:06:14.440 like off the charts, and then we. 0:06:14.400 --> 0:06:18.320 Had a md Texas Instruments was right, yeah, Blackluster. 0:06:18.440 --> 0:06:19.400 Yeah, you know. 0:06:19.360 --> 0:06:21.640 It's interesting too. I'm look at quam, Tim knows this 0:06:21.760 --> 0:06:23.480 like one of my favorite functions on the Bloomberg is 0:06:23.520 --> 0:06:25.880 the supply chain, and I'm just you mentioned Apple, Like 0:06:25.920 --> 0:06:29.640 twenty seven percent of Qualcom's revenue is coming from Apple, 0:06:29.839 --> 0:06:33.600 about twenty one percent from Samsung. I mean watching that right, 0:06:33.760 --> 0:06:34.760 like about six percent. 0:06:34.920 --> 0:06:37.599 But how consistent is the Apple revenue moving forward given 0:06:37.640 --> 0:06:39.919 that Apple wants to do more of this stuff in house, Like, 0:06:39.960 --> 0:06:42.560 can Qualcomm still rely on Apple moving forward? That's a 0:06:42.560 --> 0:06:44.719 good question and maybe maybe I got asked Mark German 0:06:44.920 --> 0:06:45.279 about that. 0:06:46.920 --> 0:06:49.320 You'll tell you that Apple is like very much in 0:06:49.360 --> 0:06:52.679 the business of diversifying flight chain and getting all and there's. 0:06:52.480 --> 0:06:55.200 Been there's been some fighting between Apple and and. 0:06:55.400 --> 0:06:58.400 You know, and there's been some fighting between Apple and 0:06:58.520 --> 0:07:02.120 some of its other sources, like broad So I can't 0:07:02.160 --> 0:07:04.800 say where that relationship is going. I mean, clearly all 0:07:04.880 --> 0:07:06.919 of these big tech companies are starting to do a 0:07:06.960 --> 0:07:09.359 lot in house, both by way of like trying to 0:07:09.400 --> 0:07:12.240 invest in manufacturing and chips design. So we'll see where 0:07:12.240 --> 0:07:14.920 that goes. I mean, maybe they'll offer up some commentary 0:07:14.960 --> 0:07:16.320 about it. And this earning is called today. 0:07:16.520 --> 0:07:18.320 Well that's what I wanted to get too, So okay, 0:07:18.320 --> 0:07:22.000 we're gonna hear from them probably any moment. Now, what 0:07:22.160 --> 0:07:24.880 are top of mind questions for the Qualcom C suite. 0:07:25.120 --> 0:07:28.040 Rebound is going to be the big one for smartphones, Like, yeah, 0:07:28.080 --> 0:07:30.920 does that mean a rebound of smartphones? But remember that 0:07:30.960 --> 0:07:34.760 they also have a very big market in headsets, especially 0:07:34.800 --> 0:07:37.640 in Asia, Like Asia is a big market for them, 0:07:37.720 --> 0:07:39.720 So people are going to want to know whether there 0:07:39.760 --> 0:07:42.040 is strength there and whether there's going to be a 0:07:42.360 --> 0:07:45.640 recovery and demand there. I mean, clearly people are going 0:07:45.640 --> 0:07:48.840 to want to know, like how the telecom sales like 0:07:48.880 --> 0:07:52.000 correlate into demand for them. I think that's going to 0:07:52.040 --> 0:07:55.400 be the big question for qualk and AI AI AI 0:07:55.680 --> 0:07:56.160 all right. 0:07:56.040 --> 0:07:58.040 AI, see it's still important, It's still important. All right, 0:07:58.080 --> 0:07:59.560 Linda Wan, thank you so much. We know it's a 0:07:59.600 --> 0:08:02.800 busy day. Managing Editor of Technology and Global Cybersecurity. A 0:08:02.840 --> 0:08:04.960 really great voice for us to rely on as these 0:08:05.000 --> 0:08:07.880 earnings come down here at Bloomberg News. She joins us, 0:08:07.920 --> 0:08:09.600 of course, in studio. 0:08:10.120 --> 0:08:13.680 You're listening to the Bloomberg Business Week podcast. Catch us 0:08:13.720 --> 0:08:16.960 live weekday afternoons from two to five pm Eastern Listen 0:08:17.000 --> 0:08:19.160 on Apple car Play and then Brout Auto with a 0:08:19.160 --> 0:08:23.280 Bloomberg Business app, or want us Live on YouTube. 0:08:23.800 --> 0:08:27.160 Connect One Bank Corp. Reported earnings last week fourth quarter 0:08:27.360 --> 0:08:30.640 gap EPs one penny better than analyst consensus. Revenue a 0:08:30.680 --> 0:08:32.560 little bit of a miss, sales coming in at sixty 0:08:32.600 --> 0:08:35.079 one point eight two million versus an analyst estimate tim 0:08:35.240 --> 0:08:37.120 of sixty three point zero three million. 0:08:37.240 --> 0:08:37.480 Okay. 0:08:37.480 --> 0:08:40.360 Following earnings, three analysts raising their price targets. Shares of 0:08:40.360 --> 0:08:43.720 Connect One have rallied nearly fifty percent since October twenty seventh, 0:08:43.960 --> 0:08:45.880 the stock up two point four percent year to date 0:08:45.960 --> 0:08:47.840 versus a game of seven tens of one percent for 0:08:47.880 --> 0:08:51.120 the KIRE the SNP Regional bank ETF All. 0:08:51.040 --> 0:08:52.600 Right, so back with us on the business and what 0:08:52.679 --> 0:08:55.760 he describes as the new normal. Frank Sorentino, founder, chairman 0:08:55.800 --> 0:08:58.400 and CEO at the new Jersey base and publicly held 0:08:58.480 --> 0:09:02.800 Connect One Bank Corp. To joining us from West Palm Beach, Florida. Hey, 0:09:02.800 --> 0:09:05.400 Frank's so good to have you here with us. Welcome back, 0:09:05.440 --> 0:09:09.040 Happy New Year. Did the FED get it right today? 0:09:09.200 --> 0:09:09.920 Why or why not? 0:09:11.120 --> 0:09:13.120 Happy new Year? And everybody great to be back. 0:09:13.200 --> 0:09:16.520 And I think the Fed did exactly what we all 0:09:16.640 --> 0:09:20.520 in the banking industry expected that they would do. You 0:09:20.760 --> 0:09:24.240 Inflation is still a concern of theirs. There's still some 0:09:24.280 --> 0:09:27.240 work to do on the balance sheet. They reiterated their 0:09:27.240 --> 0:09:31.360 stance that they aren't going to continue their QT program 0:09:31.440 --> 0:09:35.520 and continue to take dollars off their balance sheet, and 0:09:35.559 --> 0:09:38.000 they're going to sit pat with rates until they see 0:09:38.240 --> 0:09:42.560 data that confirms that inflation is absolutely under control. And 0:09:42.679 --> 0:09:46.320 with the strong employment numbers that we keep seeing month 0:09:46.320 --> 0:09:50.480 after month, they're not getting that data as quickly as 0:09:50.559 --> 0:09:52.920 everyone else would like to see it. Right, everyone wants 0:09:52.960 --> 0:09:55.040 to see interest rates come down. I think we're going 0:09:55.080 --> 0:10:00.520 to see them in this range of altitude for quite 0:10:00.520 --> 0:10:00.880 a while. 0:10:01.040 --> 0:10:03.240 Well, that's exactly where I want to go with this, 0:10:03.360 --> 0:10:05.440 because you guys do a ton with real estate and 0:10:05.480 --> 0:10:10.079 construction and small business, So remind everybody about your business mix, 0:10:10.160 --> 0:10:14.880 exposure to sectors, and more importantly, what you're seeing out 0:10:14.880 --> 0:10:16.520 there right now and what you project to see in 0:10:16.559 --> 0:10:17.600 the next few months. 0:10:18.360 --> 0:10:18.520 You know. 0:10:18.559 --> 0:10:20.040 I'm not sure if it was the last time I 0:10:20.160 --> 0:10:22.440 was on or a couple of times ago, but I 0:10:22.800 --> 0:10:25.080 someone asked me what I thought the economy was going 0:10:25.160 --> 0:10:26.640 to look like as we got into the end of 0:10:26.679 --> 0:10:29.240 the year and into twenty four and I said robust, 0:10:29.280 --> 0:10:33.000 and everybody so to lost it. I remember that, but 0:10:33.200 --> 0:10:37.040 that's but that is the sentiment when we here connect 0:10:37.080 --> 0:10:40.640 one speak to our clients and they talk about business 0:10:40.640 --> 0:10:44.679 opportunities in the environment in which we're in. Everyone, I 0:10:44.720 --> 0:10:47.520 don't want to say they're bullish, but they're optimistic about 0:10:47.600 --> 0:10:51.880 the future. And yes, interest rates are certainly higher than 0:10:51.960 --> 0:10:55.320 where they were two years ago, three years ago, five 0:10:55.400 --> 0:10:58.960 years ago, but let's let's not forget that was an 0:10:59.040 --> 0:11:03.360 abnormal place. Zero interest rates really don't exist for any 0:11:03.400 --> 0:11:06.520 period of time in any economy. And actually the interest 0:11:06.600 --> 0:11:09.679 rate environment we're in today, but for the inverted nature 0:11:09.720 --> 0:11:13.280 of the curve, is more normal than what we've seen 0:11:13.280 --> 0:11:16.920 in the last ten or fifteen years. So look, I believe, 0:11:16.960 --> 0:11:19.520 and you know, we have these conversations with our clients. 0:11:19.800 --> 0:11:22.440 If you can't make money in your business with a six, 0:11:22.600 --> 0:11:25.360 seven or eight percent interest rate a true cost of money, 0:11:25.600 --> 0:11:28.120 then something might be wrong other than the interest rates. 0:11:28.160 --> 0:11:28.800 That's interesting. 0:11:29.000 --> 0:11:32.120 Our homebuilders are seeing that, our manufacturers are seeing that, 0:11:32.880 --> 0:11:35.520 and other segments that we're involved in are seeing that 0:11:35.559 --> 0:11:38.200 they can actually make money, They can attract good talent, 0:11:38.280 --> 0:11:41.280 they can get capital at these interest rates and still 0:11:41.280 --> 0:11:41.800 make money. 0:11:41.840 --> 0:11:43.959 So that when you hear the news about New York 0:11:44.000 --> 0:11:48.440 Community Bank Corp, also another regional bank player of record 0:11:48.800 --> 0:11:52.880 forty six incher day loss or haircut it its share 0:11:52.960 --> 0:11:57.120 price after reporting a surprise lost time to deteriorating credit quality, 0:11:57.120 --> 0:11:59.840 and it cut to its dividend as it's getting ready 0:11:59.840 --> 0:12:03.680 to stricter capital requirement. Is that a one off? Is 0:12:03.679 --> 0:12:06.040 this one of those folks who are like, why can't 0:12:06.080 --> 0:12:09.000 you make money in this environment? What does that say? 0:12:09.040 --> 0:12:11.000 And are you seeing any signs of that? 0:12:12.080 --> 0:12:12.280 Look? 0:12:12.640 --> 0:12:14.480 I think there are a lot of things going on 0:12:14.559 --> 0:12:17.440 in that story that you would have to really parse 0:12:17.480 --> 0:12:20.800 and get under the cover of. They bought a large 0:12:21.200 --> 0:12:26.120 defaulted portfolio through the FDIC from Signature Bank. They are 0:12:26.800 --> 0:12:30.760 mostly a single family I'm sorry, a multi family lender 0:12:30.840 --> 0:12:33.360 in the New York City market. They had a fairly 0:12:33.400 --> 0:12:37.680 good sized office exposure. They are approaching or just over 0:12:37.720 --> 0:12:39.679 the one hundred billion dollar mark, which puts them in 0:12:39.720 --> 0:12:42.920 a different category from a regulatory exposure. So you add 0:12:42.960 --> 0:12:45.199 all of those things up, none of those things are 0:12:45.240 --> 0:12:47.840 actually a great place to be at the moment you 0:12:47.880 --> 0:12:50.600 put them all together. I'm just not sure. I don't 0:12:50.600 --> 0:12:54.040 know enough and really wouldn't want to comment without having 0:12:54.400 --> 0:12:56.480 more specifics around all. 0:12:56.400 --> 0:12:57.200 Of those facts. 0:12:57.200 --> 0:12:59.600 But when you add that string of things up, it's 0:12:59.640 --> 0:13:02.839 no one that they're having some challenges in the. 0:13:02.800 --> 0:13:05.920 Marketplace because you know the sector so well. Frank, I'm 0:13:05.960 --> 0:13:08.080 wondering if you see the problems of New York Community 0:13:08.120 --> 0:13:11.160 New York Community Bank Corp. Spreading potentially to other banks 0:13:11.160 --> 0:13:11.600 out there. 0:13:12.400 --> 0:13:15.559 Look, we've been talking for a long time about issues 0:13:15.640 --> 0:13:18.640 within the within the real estate space. And if you 0:13:18.720 --> 0:13:21.000 recall if we went back, you know, two or three 0:13:21.040 --> 0:13:24.440 years ago, even before COVID, you know, retail was a 0:13:24.720 --> 0:13:28.120 really bad four letter word, and nobody, anybody that had 0:13:28.160 --> 0:13:30.520 exposure in retail. We had to spend an inordinate amount 0:13:30.559 --> 0:13:33.199 of time and we spoke on this program about retail 0:13:33.240 --> 0:13:34.360 exposure in banks. 0:13:34.760 --> 0:13:35.800 Today, retail is. 0:13:35.720 --> 0:13:39.280 One of the strongest segments in commercial real estate. 0:13:39.679 --> 0:13:40.160 It's ready. 0:13:40.640 --> 0:13:42.720 Some of the vacancy rates there are at the lowest 0:13:42.720 --> 0:13:45.840 they've been in thirty years. So, you know, there's a 0:13:45.960 --> 0:13:48.920 constant refreshment when it comes to real estate and real 0:13:49.000 --> 0:13:52.160 estate uses. As we went through COVID and came out 0:13:52.160 --> 0:13:56.480 of COVID, office became a problem. All office no, not 0:13:56.600 --> 0:14:00.960 really individual office spaces, certain types of office B class, 0:14:01.000 --> 0:14:04.480 C class you know, maybe a central business district office 0:14:04.520 --> 0:14:07.560 where where vacancy rates are the lowest. So again you've 0:14:07.559 --> 0:14:10.200 got to really parse the numbers and dive into what's happening. 0:14:10.280 --> 0:14:13.640 Same thing now is going on with multifamily. Multifamily everyone 0:14:13.679 --> 0:14:16.360 thinks is a problem well by itself, but it really isn't. 0:14:16.400 --> 0:14:19.440 It's where that you have rent stabilized multifamily. So the 0:14:19.440 --> 0:14:22.840 banks that have larger portfolios of rent stabilized are going 0:14:22.920 --> 0:14:25.520 to have more issues and challenges, right and those that 0:14:25.640 --> 0:14:26.120 don't won't. 0:14:26.200 --> 0:14:28.080 We talked about the different tiers of real estate. It's 0:14:28.120 --> 0:14:31.880 really important. Having said that, you know, Frank your you 0:14:31.920 --> 0:14:36.000 know your company's shares also got caught in the New 0:14:36.040 --> 0:14:39.040 York Community Bankcorp downdraft down four and a half percent 0:14:39.120 --> 0:14:42.440 on that news as well. Here's a moment to say, 0:14:42.520 --> 0:14:45.880 are you seeing any deteriorating credit quality? Are you looking 0:14:45.920 --> 0:14:48.040 to cut your dividend? You raised it last year. 0:14:49.160 --> 0:14:52.800 We just had our earnings called last week and we 0:14:52.840 --> 0:14:56.360 announced that we were pretty optimistic about the year ahead, 0:14:56.400 --> 0:14:59.080 and we've had a track record of raising our dividend 0:14:59.120 --> 0:15:02.440 and that we would like we'd be raising our dividends 0:15:02.440 --> 0:15:07.600 in this next quarter. Our credit is near pristine, like 0:15:07.720 --> 0:15:10.200 every other bank in the industry. There are one offs 0:15:10.200 --> 0:15:12.760 and by the way, here's another you know metric that 0:15:12.840 --> 0:15:16.040 people are looking at. Charge offs for banks have been 0:15:16.200 --> 0:15:19.000 forget about historical lows. They've been at zero, which is 0:15:19.200 --> 0:15:23.520 just not just doesn't make any sense for the banking industry. 0:15:23.560 --> 0:15:26.600 We are in the risk business. There should be a 0:15:26.600 --> 0:15:29.440 certain amount of charge offs. We're still not back to 0:15:29.480 --> 0:15:33.160 what's normalized charge offs within the industry. Yet when some 0:15:33.280 --> 0:15:37.880 bank announces an extraordinary number, everybody suffers for a day 0:15:37.960 --> 0:15:39.920 or two. I don't think it's going to impact us 0:15:39.920 --> 0:15:43.520 going forward. We have a great optimistic business plan going forward. 0:15:43.600 --> 0:15:46.480 Our clients and our markets are doing well, and I 0:15:46.520 --> 0:15:48.720 feel pretty confident about what's happening in twenty four. 0:15:48.720 --> 0:15:51.480 One last question. We can feel your confidence forty seconds, 0:15:51.520 --> 0:15:54.800 So consumer business side of your business nothing. You're not 0:15:54.840 --> 0:15:57.120 seeing any kind of financial stress and just very quickly 0:15:57.120 --> 0:15:57.840 if you could. 0:15:58.560 --> 0:16:02.040 Well again, not seeing any stress is probably a little 0:16:02.040 --> 0:16:04.120 could take it a little too far. Of course, there's 0:16:04.280 --> 0:16:08.680 individual challenges in various places, and you know, look, banks 0:16:08.720 --> 0:16:10.680 need to work with their clients, and we're seeing that 0:16:10.720 --> 0:16:13.640 in a lot of places. But overall, when you look 0:16:13.640 --> 0:16:16.240 at the US economy. You look at the employment rate, 0:16:16.280 --> 0:16:18.760 the fact that people have jobs, the fact that we're 0:16:18.800 --> 0:16:21.720 manufacturing everything here in the United States, the fact that 0:16:22.040 --> 0:16:24.880 you know, we have so much going on to the positive, 0:16:25.600 --> 0:16:27.360 I see a pretty bright printing picture. 0:16:27.520 --> 0:16:30.080 D Well, listen. We always appreciate getting some time with you. 0:16:30.400 --> 0:16:30.760 Frank B. 0:16:30.880 --> 0:16:31.040 Well. 0:16:31.080 --> 0:16:34.920 Frank Sorrentino, Founder chairman CEO at connect One Bankcourt joining 0:16:34.960 --> 0:16:37.760 us on Zoom from Florida, Florida. 0:16:37.880 --> 0:16:39.000 Nice this time of here, Caryl. 0:16:39.360 --> 0:16:42.640 It's better than a grey January here in New York City, 0:16:42.640 --> 0:16:44.680 New York and New Jersey. 0:16:45.720 --> 0:16:49.560 You're listening to the Bloomberg Business Week podcast. Listen live 0:16:49.680 --> 0:16:52.880 each weekday starting at two pm Eastern on applecar Play 0:16:52.880 --> 0:16:55.760 and Android Auto with the Bloomberg Business App. You can 0:16:55.760 --> 0:16:59.040 also listen live on Amazon Alexa from our flagship New 0:16:59.080 --> 0:17:02.320 York station, Say Alexa playing Bloomberg eleven. 0:17:03.760 --> 0:17:04.480 Let's get to it. 0:17:04.400 --> 0:17:06.280 With our Drive to the Closed. Guests Back with us 0:17:06.680 --> 0:17:09.240 is Walter Todd, President and Chief Investment Officer of at 0:17:09.240 --> 0:17:13.200 Greenwood Capital Zosias. He is on Zoom from Greenwood, South Carolina. 0:17:13.240 --> 0:17:13.560 Or Walter. 0:17:13.720 --> 0:17:16.000 Great to have you here on this FED day. So 0:17:16.200 --> 0:17:17.640 did the Fed get it right? In your view. 0:17:20.320 --> 0:17:22.719 Yeah, I mean it's definitely a contrast to what we 0:17:22.760 --> 0:17:25.600 heard in December, honestly, So I'm a little bit confused. 0:17:25.640 --> 0:17:28.040 I'm I'm glad I wouldn't taking a drink every time 0:17:28.080 --> 0:17:30.800 the word confidence was used in the press conference. 0:17:30.880 --> 0:17:33.879 He did say good economy several times though. 0:17:34.440 --> 0:17:37.320 Yeah, yeah, no, absolutely, I think you know, obviously the 0:17:37.320 --> 0:17:40.080 Marcus a little bit disappointed. You saw the expectations for 0:17:40.160 --> 0:17:42.720 the March rate cut dropped from like sixty. 0:17:44.640 --> 0:17:47.679 Pointed about considering he did say over and over again, 0:17:47.760 --> 0:17:50.720 it's a good economy. People are working, we've got growth, 0:17:50.840 --> 0:17:53.720 inflation continues to come down. Like, what is it that 0:17:54.000 --> 0:17:56.399 you think equity investors might be getting wrong here? Or 0:17:56.400 --> 0:17:57.720 do you not think they're getting it wrong? 0:17:57.920 --> 0:18:00.560 Yeah, No, I don't think they're They're I think it wrong. 0:18:00.600 --> 0:18:02.720 I just think it's just, again, a near term reaction 0:18:02.880 --> 0:18:05.639 to an expectation, not unlike what we've seen in a 0:18:05.680 --> 0:18:08.000 lot of earnings reports this year in terms of what 0:18:08.040 --> 0:18:11.159 the expectation levels are. So we're still about five percent 0:18:11.160 --> 0:18:14.159 above that level that we were before the December meeting, 0:18:14.640 --> 0:18:16.520 so you know, we could continue to drift a little 0:18:16.560 --> 0:18:18.800 bit lower, But I mean there's forty days between the 0:18:18.800 --> 0:18:20.600 March meeting and the main meeting, So I don't think 0:18:20.600 --> 0:18:22.879 it's that big of a deal than pushing it out. 0:18:23.359 --> 0:18:24.720 Do you think it's the right move? I mean, is 0:18:25.119 --> 0:18:27.439 what you're hearing from Pedhair Powell, in your opinion, the 0:18:27.520 --> 0:18:29.520 right thing for him and the FED to be thinking 0:18:29.520 --> 0:18:31.760 about right now. Do you agree that the FED needs 0:18:31.800 --> 0:18:34.640 to see more data in order to declare victory on inflation? 0:18:37.760 --> 0:18:40.760 Personally, No, I don't think they do. And actually we 0:18:40.840 --> 0:18:43.360 heard from Powell in December saying they really didn't need 0:18:43.400 --> 0:18:45.960 more data, but yet now they do, so they need 0:18:46.200 --> 0:18:50.320 better or growing confidence or more confidence, whatever the phrase is. 0:18:50.359 --> 0:18:52.200 So you know, again, I think we're kind of splitting 0:18:52.200 --> 0:18:53.400 the hairs on the timing. 0:18:53.760 --> 0:18:53.919 You know. 0:18:53.920 --> 0:18:55.840 I think they could certainly go ahead in March given 0:18:56.040 --> 0:18:59.040 what we know today, but there's there's a big gap 0:18:59.040 --> 0:19:01.000 between today and the March meeting. So we'll get a 0:19:01.000 --> 0:19:03.000