1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day, we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,520 --> 00:00:15,520 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,400 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,360 Speaker 1: at Bloomberg dot com slash podcast. Let's get to Ira Jersey. 7 00:00:22,360 --> 00:00:26,400 Speaker 1: He's the interest rate dude UM for Bloomberg Intelligence. Ira. 8 00:00:26,720 --> 00:00:28,520 Speaker 1: If I'm the Fed here, if I'm j Pale, I 9 00:00:28,640 --> 00:00:32,200 Speaker 1: gotta continue to fight inflation. But I got a market 10 00:00:32,200 --> 00:00:34,800 Speaker 1: that's spooked at there about the whole banking system. What 11 00:00:34,880 --> 00:00:37,560 Speaker 1: do I do next week? Yeah, it winds up becoming 12 00:00:37,560 --> 00:00:41,000 Speaker 1: a massive communication challenge. So I think that the feder 13 00:00:41,000 --> 00:00:44,239 Speaker 1: Reserve will hike twenty five basis points and then UM 14 00:00:44,360 --> 00:00:46,960 Speaker 1: say that, you know, we're ready to step in to 15 00:00:47,159 --> 00:00:49,839 Speaker 1: provide be the lender of last resort, as is our mandate, 16 00:00:49,880 --> 00:00:53,480 Speaker 1: and we do care about financial stability, so I think. 17 00:00:53,520 --> 00:00:56,320 Speaker 1: But but like you said, you know, with inflation still 18 00:00:56,400 --> 00:01:00,880 Speaker 1: running at you know, four tenths a month on headline inflation, 19 00:01:00,960 --> 00:01:03,840 Speaker 1: there's very little reason to think that the Fed's actually 20 00:01:03,880 --> 00:01:05,280 Speaker 1: going to cut. You know, I know that there's at 21 00:01:05,319 --> 00:01:08,320 Speaker 1: least one or two banks out there saying that maybe 22 00:01:08,319 --> 00:01:10,200 Speaker 1: the Fed's going to cut interest rates because of the 23 00:01:10,200 --> 00:01:13,399 Speaker 1: financial stability issues. That's not going to happen. They're not 24 00:01:13,400 --> 00:01:15,920 Speaker 1: going to cut much more likely to pause and then 25 00:01:15,959 --> 00:01:19,399 Speaker 1: say we might restart hiking later than they would be 26 00:01:19,440 --> 00:01:22,880 Speaker 1: to actually lower interest rates, because I think I've told 27 00:01:22,959 --> 00:01:24,640 Speaker 1: you before, Paul, you know, I think we saw have 28 00:01:24,640 --> 00:01:26,679 Speaker 1: a FED put, but that FED put is very far 29 00:01:26,680 --> 00:01:31,240 Speaker 1: out of the money because inflation still is their key mandate. Yeah, 30 00:01:31,360 --> 00:01:34,720 Speaker 1: we should remind our listeners that inflation did come in 31 00:01:34,800 --> 00:01:37,319 Speaker 1: hotter than expected. If you're looking at the core number 32 00:01:37,680 --> 00:01:40,520 Speaker 1: for CPI, so CPI X food and Energy month over 33 00:01:40,560 --> 00:01:43,280 Speaker 1: month was up zero point five percent. We were looking 34 00:01:43,280 --> 00:01:45,680 Speaker 1: for a gain of zero point four percent, and it's 35 00:01:45,680 --> 00:01:48,280 Speaker 1: also higher than the zero point four percent gain that 36 00:01:48,320 --> 00:01:50,720 Speaker 1: we saw in the previous month. So it's still a 37 00:01:51,000 --> 00:01:54,320 Speaker 1: problem by the time we get to the FED meeting. 38 00:01:54,360 --> 00:01:56,200 Speaker 1: So you think they're going to hike another twenty five 39 00:01:56,240 --> 00:02:00,440 Speaker 1: basis points, that puts some at the upper range five percent, 40 00:02:00,520 --> 00:02:04,639 Speaker 1: so four seventy five to five and markets still pricing 41 00:02:04,640 --> 00:02:07,160 Speaker 1: and just a smidge more than that or it was 42 00:02:07,200 --> 00:02:09,760 Speaker 1: a second ago in May. Do you think we're going 43 00:02:09,760 --> 00:02:11,760 Speaker 1: to get another hike after that? Do they need to 44 00:02:11,800 --> 00:02:16,200 Speaker 1: go to higher than five in terms of the target 45 00:02:16,320 --> 00:02:19,359 Speaker 1: rate or is that going to be the ceiling? Well, man, 46 00:02:19,480 --> 00:02:21,720 Speaker 1: I've been I've been talking to you about the fact 47 00:02:21,720 --> 00:02:23,840 Speaker 1: that I think that now they're in calibration mode. So 48 00:02:23,919 --> 00:02:28,200 Speaker 1: I think it really depends on the data and also 49 00:02:28,280 --> 00:02:31,080 Speaker 1: at now you have to think the financial stability situation 50 00:02:31,200 --> 00:02:33,960 Speaker 1: going forward. Right, So if if in the environment where 51 00:02:34,360 --> 00:02:36,919 Speaker 1: they hike to five percent and then they um, they 52 00:02:36,960 --> 00:02:39,200 Speaker 1: get a string of okay, maybe we get point threes 53 00:02:39,280 --> 00:02:43,160 Speaker 1: for example on CPI UM and then we get additional 54 00:02:43,240 --> 00:02:46,200 Speaker 1: volatility in the banking sector, then then that's the situation 55 00:02:46,240 --> 00:02:48,720 Speaker 1: where the Fed may actually pause. But but I think 56 00:02:48,720 --> 00:02:52,079 Speaker 1: that you know, cumulatively, they've obviously increased interest rates, you know, 57 00:02:52,200 --> 00:02:56,120 Speaker 1: nearly nearly five percent UM, and you know that's quite 58 00:02:56,120 --> 00:02:58,840 Speaker 1: a bit. And so I think at this point taking 59 00:02:58,840 --> 00:03:00,919 Speaker 1: a pause and then saying, look, we're not going to 60 00:03:00,960 --> 00:03:03,840 Speaker 1: be cutting anytime soon. And I think that's the important 61 00:03:03,880 --> 00:03:06,079 Speaker 1: point that that J. Powell has to make is look, 62 00:03:06,639 --> 00:03:11,120 Speaker 1: we're still fighting inflation even if we stop hiking interest rates. 63 00:03:11,160 --> 00:03:13,320 Speaker 1: That doesn't mean that we're immediately going to be cutting. 64 00:03:13,880 --> 00:03:16,600 Speaker 1: There was at one point yesterday we were pricing for 65 00:03:17,200 --> 00:03:19,640 Speaker 1: seventy five bases points of interest rate cuts this year, 66 00:03:19,919 --> 00:03:22,560 Speaker 1: and so so first get those out of the market, 67 00:03:22,600 --> 00:03:24,320 Speaker 1: and if you can get those out of the market, 68 00:03:24,360 --> 00:03:28,040 Speaker 1: then I think that that, you know, policy might be 69 00:03:28,120 --> 00:03:31,880 Speaker 1: calibrated appropriately. Right if we have to think about this, 70 00:03:31,919 --> 00:03:35,400 Speaker 1: Matt point four percent annualize that it's four point eight percent. 71 00:03:36,040 --> 00:03:38,440 Speaker 1: That's exactly where basically where the Fed funds rate is 72 00:03:38,480 --> 00:03:40,520 Speaker 1: going to be after they hike one more time, so 73 00:03:40,840 --> 00:03:44,720 Speaker 1: they can say, hey, we're at you know, we're basically 74 00:03:44,720 --> 00:03:47,440 Speaker 1: at a neutral Fed funds rate. Now we have to 75 00:03:47,480 --> 00:03:50,080 Speaker 1: convince everyone that hey, we're not going to be cutting 76 00:03:50,200 --> 00:03:53,680 Speaker 1: until that goes much lower. Is financial stability really still 77 00:03:53,720 --> 00:03:59,440 Speaker 1: a problem? I mean, you know, SVB had an unbelievable 78 00:04:00,120 --> 00:04:08,080 Speaker 1: rations mismatch, plus an incredibly uniform depositor base, and plus 79 00:04:08,120 --> 00:04:13,120 Speaker 1: now you know there's no limit to deposit insurance. It's 80 00:04:13,160 --> 00:04:16,760 Speaker 1: whatever you have in any financial institution that's regulated. So 81 00:04:17,720 --> 00:04:20,800 Speaker 1: is there any reason to think we have a financial 82 00:04:20,800 --> 00:04:25,680 Speaker 1: stability problem? M Well, you do in so far as 83 00:04:25,760 --> 00:04:30,719 Speaker 1: if people don't have um their own Uh, if they're 84 00:04:30,720 --> 00:04:33,400 Speaker 1: not confident in their financial institution, they might still pull 85 00:04:33,400 --> 00:04:36,200 Speaker 1: their deposits out right, and that's that's your typical bank 86 00:04:36,279 --> 00:04:38,920 Speaker 1: run and that's basically what happened to SVB. But now 87 00:04:38,920 --> 00:04:42,520 Speaker 1: they can right, Fed's got your back. Well yeah so, 88 00:04:42,960 --> 00:04:45,480 Speaker 1: but but keep in mind, like even during the financial crisis, 89 00:04:45,560 --> 00:04:49,080 Speaker 1: the depositors rarely lose money in bank workouts, and I 90 00:04:49,120 --> 00:04:51,720 Speaker 1: think that it's showing that the regulatory environment is working. 91 00:04:51,720 --> 00:04:54,040 Speaker 1: And the reason is is because now you have all 92 00:04:54,040 --> 00:04:58,120 Speaker 1: these other capital layers below depositors, where you know, equity 93 00:04:58,120 --> 00:05:02,640 Speaker 1: holders and bondholders and equity holders, all of those people 94 00:05:02,880 --> 00:05:05,560 Speaker 1: you know will potentially lose a lot of money, if 95 00:05:05,600 --> 00:05:09,640 Speaker 1: not all of their money in their investments in those institutions. 96 00:05:09,680 --> 00:05:12,640 Speaker 1: But but to make the depositors whole, um, So you know, 97 00:05:12,680 --> 00:05:15,400 Speaker 1: you go back and look at watching the mutual or INDIMAC. 98 00:05:15,440 --> 00:05:16,880 Speaker 1: You know, those are kind of some of the earlier 99 00:05:16,880 --> 00:05:22,040 Speaker 1: banks that failed during the financial crisis, and even their depositors, um, 100 00:05:22,440 --> 00:05:24,520 Speaker 1: even there's some of their large depositors, they were mostly 101 00:05:24,560 --> 00:05:27,240 Speaker 1: made whole. So so keep in mind that when we 102 00:05:27,240 --> 00:05:29,839 Speaker 1: talk about the deposit insurance being up there, it's not 103 00:05:29,839 --> 00:05:33,440 Speaker 1: so much deposit insurance. The regulators and bank workouts always 104 00:05:33,440 --> 00:05:36,080 Speaker 1: try to make the depositors whole as much as they can. Um. 105 00:05:36,120 --> 00:05:38,440 Speaker 1: It's that you're only guaranteed to do that up to 106 00:05:38,640 --> 00:05:41,480 Speaker 1: the FDIC limit, right, so, um so you have to 107 00:05:41,560 --> 00:05:43,360 Speaker 1: keep that in mind. But but I think that there 108 00:05:43,440 --> 00:05:46,799 Speaker 1: is still a risk that people are you know, get nervous, 109 00:05:46,800 --> 00:05:48,560 Speaker 1: and they want to pull their money out of some 110 00:05:48,920 --> 00:05:51,800 Speaker 1: certain banks that maybe they're not so sure about that 111 00:05:51,800 --> 00:05:53,839 Speaker 1: they'll be able to get their money in a timely fashion. 112 00:05:53,920 --> 00:05:56,480 Speaker 1: I think that that's that still remains at risk today. 113 00:05:56,520 --> 00:05:58,719 Speaker 1: All Right, it's March madness. So I don't know how 114 00:05:58,800 --> 00:06:00,160 Speaker 1: much free time I'm going to have here, But if 115 00:06:00,160 --> 00:06:02,400 Speaker 1: I catch one soccer match over the next several days, 116 00:06:02,800 --> 00:06:05,320 Speaker 1: which one is it? Uh? Yeah, you know, I hate 117 00:06:05,320 --> 00:06:07,640 Speaker 1: to say this. I have not looked at the fixture 118 00:06:07,680 --> 00:06:11,080 Speaker 1: list for this weekend. Um so that's resolutely horrible of me. Well, 119 00:06:11,240 --> 00:06:13,200 Speaker 1: all right, we'll give us the third, give us the tense. 120 00:06:13,480 --> 00:06:17,479 Speaker 1: Was something else going on? Yes, exactly, Rayal Central, New Jersey. 121 00:06:17,480 --> 00:06:19,360 Speaker 1: Do I come down and catch a game? Yeah? Yeah, 122 00:06:19,400 --> 00:06:20,960 Speaker 1: we we have a we have a match. We're playing 123 00:06:21,000 --> 00:06:24,200 Speaker 1: Philadelphia Soccer Club this weekend, and if we win we'll 124 00:06:24,279 --> 00:06:27,120 Speaker 1: we'll move up the third place. We we had a 125 00:06:27,120 --> 00:06:29,560 Speaker 1: cup game this weekend the unfortunately we lost one nil 126 00:06:29,680 --> 00:06:32,640 Speaker 1: to a very good team from the Jersey Shore. But 127 00:06:32,680 --> 00:06:35,479 Speaker 1: if yeah, if we win this game, we'll jump up 128 00:06:35,520 --> 00:06:37,640 Speaker 1: into third place and have a shot at second. So 129 00:06:37,800 --> 00:06:39,880 Speaker 1: we're trying to move up the table here Rayal Central, 130 00:06:39,880 --> 00:06:41,919 Speaker 1: New Jersey. How about that? Kids, You can check that 131 00:06:41,960 --> 00:06:45,800 Speaker 1: out if you're in the area. IRA Jersey soccer club 132 00:06:46,360 --> 00:06:50,040 Speaker 1: magnet as well as a interest rate strategist for Bloomberg Intelligence. 133 00:06:50,080 --> 00:06:51,840 Speaker 1: He brings it all. We're gonna have more coming up. 134 00:06:52,120 --> 00:06:59,120 Speaker 1: This is Bloomberg. There's still a little tech round table here. 135 00:06:59,120 --> 00:07:02,080 Speaker 1: There's a lot of news there of course SVB. Then 136 00:07:02,080 --> 00:07:04,560 Speaker 1: this morning we had the layoffs coming out of Meta, 137 00:07:04,800 --> 00:07:06,719 Speaker 1: so lots to talk about. So we got a couple 138 00:07:06,720 --> 00:07:08,960 Speaker 1: of our smart tech geeks joining us here in the 139 00:07:08,960 --> 00:07:11,760 Speaker 1: Bloomberg Inactive broker studio. Dan, I've senior equity annals at 140 00:07:11,800 --> 00:07:16,760 Speaker 1: web Bush Securities, Mandeep saying, senior tech annals for Bloomberg Intelligence, 141 00:07:16,800 --> 00:07:19,320 Speaker 1: both here in our studio here. Hey, Dan, let's start 142 00:07:19,360 --> 00:07:24,000 Speaker 1: with just SVB, the fallout for the valley. Some of 143 00:07:24,040 --> 00:07:25,840 Speaker 1: the tech companies I know you cover I know you're 144 00:07:25,840 --> 00:07:27,920 Speaker 1: tight with all the folks in the valley and the 145 00:07:28,000 --> 00:07:31,160 Speaker 1: venture capital stuff. What's how are you getting business done 146 00:07:31,200 --> 00:07:36,120 Speaker 1: day today? Look, they were the godfather of Silicon Valley banking, 147 00:07:36,480 --> 00:07:38,720 Speaker 1: and I think that the impact here is going to 148 00:07:38,840 --> 00:07:41,360 Speaker 1: be for I think many years to come in terms 149 00:07:41,360 --> 00:07:44,400 Speaker 1: of the startups and for the tech world. So even 150 00:07:44,440 --> 00:07:46,560 Speaker 1: though this has been ring fence in terms of the 151 00:07:46,560 --> 00:07:49,880 Speaker 1: actual SVP the situation, I think it's really going to 152 00:07:50,000 --> 00:07:54,800 Speaker 1: be a big change from a financing perspective. What's happened 153 00:07:54,840 --> 00:07:58,720 Speaker 1: in the startup community. Well, do you think someone eventually 154 00:07:58,720 --> 00:08:01,679 Speaker 1: comes in and takes that role. I mean, one bank, 155 00:08:03,480 --> 00:08:07,240 Speaker 1: you know, reclaims the mantle of Silicon Valley godfather in 156 00:08:07,320 --> 00:08:11,120 Speaker 1: terms of you know, the Sandhill customers. I think in theory, 157 00:08:11,440 --> 00:08:13,239 Speaker 1: but I just don't see that it's going to happen 158 00:08:13,320 --> 00:08:15,880 Speaker 1: because right now, the risk, especially with so many of 159 00:08:15,880 --> 00:08:19,360 Speaker 1: these companies burning cash, spending money is like nineteen eighties 160 00:08:19,440 --> 00:08:22,320 Speaker 1: rock stars as VP has obviously been a sup a 161 00:08:22,400 --> 00:08:24,920 Speaker 1: black guy. And now what's going to happen is you're 162 00:08:24,960 --> 00:08:28,080 Speaker 1: gonna see vcs that are gonna, of course be much 163 00:08:28,120 --> 00:08:32,120 Speaker 1: more reliant in terms of from a funding perspective, and 164 00:08:32,160 --> 00:08:34,319 Speaker 1: then a lot of the venture funding that they did, 165 00:08:34,320 --> 00:08:37,080 Speaker 1: a lot of the venture financing that as Ab did. 166 00:08:37,480 --> 00:08:39,360 Speaker 1: No big center money bank is going to do that 167 00:08:39,440 --> 00:08:41,920 Speaker 1: a regional and that's going to be the issue now 168 00:08:41,960 --> 00:08:43,920 Speaker 1: going forward. I think it's going to catalyze m Anda. 169 00:08:44,040 --> 00:08:46,640 Speaker 1: I think Big Tax is going to accelerate that. And 170 00:08:46,679 --> 00:08:49,120 Speaker 1: clearly there's many on the outside looking in. I think 171 00:08:49,120 --> 00:08:51,839 Speaker 1: that Hubris is now going to start to be over 172 00:08:51,880 --> 00:08:55,360 Speaker 1: in terms of valuation haircuts. Talking about Hubris maybe coming 173 00:08:55,400 --> 00:08:58,439 Speaker 1: out of the Valley Meta laying off ten thousand employees, 174 00:08:58,760 --> 00:09:01,440 Speaker 1: Man Deep just will simply what does this mean for 175 00:09:01,640 --> 00:09:06,120 Speaker 1: the investment and the pivot towards the metaverse for our 176 00:09:06,200 --> 00:09:09,400 Speaker 1: good friends at Facebook. So so far, what they have 177 00:09:09,520 --> 00:09:13,280 Speaker 1: said is they're focused on efficiencies in the core business. 178 00:09:13,400 --> 00:09:16,920 Speaker 1: They're not curtailing their ambitions on the metaverse side, although 179 00:09:18,040 --> 00:09:20,559 Speaker 1: I think you can see how they are reducing their 180 00:09:20,640 --> 00:09:23,680 Speaker 1: hiring for this year and they talked about you know, 181 00:09:23,720 --> 00:09:27,280 Speaker 1: the open roles going away, So clearly there is focus 182 00:09:27,400 --> 00:09:30,600 Speaker 1: on efficiencies. But my point over there is more around 183 00:09:30,600 --> 00:09:33,280 Speaker 1: their R and D expense. They spend about thirty five 184 00:09:33,320 --> 00:09:36,960 Speaker 1: billion dollars a year. Compare that to Apple and Microsoft's 185 00:09:37,040 --> 00:09:39,640 Speaker 1: R and D expense it's around twenty five billion. So 186 00:09:39,720 --> 00:09:43,760 Speaker 1: why is Facebook or Meta spending more when their revenue 187 00:09:43,760 --> 00:09:46,640 Speaker 1: base is like half or even you know, one fourth 188 00:09:46,640 --> 00:09:49,760 Speaker 1: of Apple size. And I think that's where all the 189 00:09:49,800 --> 00:09:52,439 Speaker 1: tech companies are looking at their fixed costs and saying, 190 00:09:52,679 --> 00:09:54,600 Speaker 1: do we really need to spend that much? And I 191 00:09:54,600 --> 00:09:57,280 Speaker 1: think Meta is clearly leading that. So Dan, what do 192 00:09:57,280 --> 00:10:00,839 Speaker 1: you think about that move? And it seems to me 193 00:10:00,960 --> 00:10:05,520 Speaker 1: that Mark Zuckerberg at least is squaring himself up with 194 00:10:05,640 --> 00:10:08,120 Speaker 1: investors who are worried about an interest rate regime that 195 00:10:08,280 --> 00:10:11,240 Speaker 1: is here to stay, you know, higher rates for longer, 196 00:10:11,480 --> 00:10:14,439 Speaker 1: and that name change came too soon because they might 197 00:10:14,480 --> 00:10:17,720 Speaker 1: go back to Facebook because realistically, I think, you know, 198 00:10:17,720 --> 00:10:20,400 Speaker 1: as Mandeep talked about, I mean, this is just a 199 00:10:20,440 --> 00:10:22,959 Speaker 1: new world. And that's why Zuckerberg finally read the room. 200 00:10:23,000 --> 00:10:25,480 Speaker 1: That's why the stocks you know, more than doubled from 201 00:10:25,480 --> 00:10:28,480 Speaker 1: bomb because they need to cut significant cause double down 202 00:10:28,520 --> 00:10:31,199 Speaker 1: on social media. And you look at the metaverse strategy. 203 00:10:31,240 --> 00:10:33,720 Speaker 1: When you look what they're investing, it's good money after 204 00:10:33,800 --> 00:10:36,840 Speaker 1: bad and I think this is really it's a pivotable 205 00:10:36,960 --> 00:10:40,640 Speaker 1: time for Zuckerberg. But clearly you see a new Zuckerberg 206 00:10:40,760 --> 00:10:44,079 Speaker 1: in terms of how he's acting, especially on the cost side, 207 00:10:44,120 --> 00:10:47,720 Speaker 1: and that's why the stock wall streets rewarded. Yeah, and interesting, 208 00:10:47,880 --> 00:10:50,800 Speaker 1: all right, I want to pivot to Uber and Lyft 209 00:10:50,840 --> 00:10:54,040 Speaker 1: because there was an interesting story that I really found interesting. 210 00:10:55,760 --> 00:11:00,000 Speaker 1: California says that these drivers are in fact gig workers 211 00:11:00,080 --> 00:11:02,760 Speaker 1: an appeals court right back in Prop twenty two. Yeah, 212 00:11:02,800 --> 00:11:05,199 Speaker 1: and to me, that's kind of existential to the entire 213 00:11:05,280 --> 00:11:07,560 Speaker 1: business model. If you don't have that ruling, you don't 214 00:11:07,559 --> 00:11:10,160 Speaker 1: have a company. A business MENTEEP talkers about kind of 215 00:11:10,200 --> 00:11:12,640 Speaker 1: what you learn there and what it means for these companies. Yeah. 216 00:11:12,679 --> 00:11:15,200 Speaker 1: So look, if you are operating in the US as 217 00:11:15,240 --> 00:11:18,160 Speaker 1: a gig economy company, this is huge because it's setting 218 00:11:18,200 --> 00:11:21,040 Speaker 1: up a precedent where all these companies can operate with 219 00:11:21,080 --> 00:11:23,520 Speaker 1: the current business model. They don't have to do anything 220 00:11:23,559 --> 00:11:26,920 Speaker 1: in terms of changing their cost structure, and we've seen 221 00:11:27,000 --> 00:11:30,800 Speaker 1: with Uber they are clearly showing operating leverage. So to me, 222 00:11:30,960 --> 00:11:34,000 Speaker 1: this is a positive sign that the scale players in 223 00:11:34,000 --> 00:11:38,000 Speaker 1: this business, your Uber and door Dash will likely benefit 224 00:11:38,160 --> 00:11:41,880 Speaker 1: more simply because they have that organic driver supply growth, 225 00:11:41,920 --> 00:11:44,760 Speaker 1: which is what you need for driving top line. And 226 00:11:44,800 --> 00:11:47,880 Speaker 1: if the cost structure isn't changing. I think the incremental 227 00:11:47,920 --> 00:11:51,000 Speaker 1: margin will be much higher than it was before. What 228 00:11:51,040 --> 00:11:53,600 Speaker 1: do you think about those companies, Dan, Look, I think 229 00:11:53,720 --> 00:11:56,840 Speaker 1: Uber it's a winner. Take Off, I mean, right now, Lift, 230 00:11:57,800 --> 00:12:00,200 Speaker 1: I go back, that was probably the worst common it's 231 00:12:00,200 --> 00:12:02,920 Speaker 1: called top three that I've heard in twenty two years. 232 00:12:03,400 --> 00:12:06,079 Speaker 1: They're the little brother Uber and right now, I mean 233 00:12:06,120 --> 00:12:09,720 Speaker 1: they just have an ever psych uphill battle competing in 234 00:12:09,760 --> 00:12:12,319 Speaker 1: an environment where it's no more free money. So I'm 235 00:12:12,360 --> 00:12:15,160 Speaker 1: looking at just the A and R page Dan, under 236 00:12:15,200 --> 00:12:18,040 Speaker 1: your bio for your recommendations, you've got a neutral on 237 00:12:18,200 --> 00:12:21,480 Speaker 1: Lift and outperform on Uber. So you're not just saying 238 00:12:21,480 --> 00:12:24,960 Speaker 1: to buy this rat ride sharing thing. You're saying you 239 00:12:25,000 --> 00:12:27,520 Speaker 1: need to be selective. Oh yeah, I think Uber is 240 00:12:27,559 --> 00:12:29,680 Speaker 1: the way to play it. I mean Lift right now, 241 00:12:30,240 --> 00:12:32,320 Speaker 1: I mean that feels like sort of jump in front 242 00:12:32,320 --> 00:12:36,280 Speaker 1: of a train relative to what's happening in that business. 243 00:12:36,280 --> 00:12:39,680 Speaker 1: And it feels like the management team doggate the homework 244 00:12:39,760 --> 00:12:43,600 Speaker 1: next time as the weather, maybe they could blame you know, traffic, 245 00:12:43,640 --> 00:12:45,760 Speaker 1: and then that's been the problem in terms of just 246 00:12:46,240 --> 00:12:49,120 Speaker 1: no comfort in terms of this management team, the way 247 00:12:49,200 --> 00:12:53,400 Speaker 1: they navigate, and you mentioned the rates environment, right, man, Deep, 248 00:12:54,120 --> 00:12:57,679 Speaker 1: this rates environment seems to be something that texeos are 249 00:12:57,720 --> 00:13:01,640 Speaker 1: waking up to. Mark Zuckerberg says, I think we should 250 00:13:01,679 --> 00:13:03,320 Speaker 1: this is a direct quote. I think we should prepare 251 00:13:03,320 --> 00:13:06,400 Speaker 1: ourselves for the possibility that this new economic reality will 252 00:13:06,440 --> 00:13:11,760 Speaker 1: continue for many years. Hello. Yeah, Well look, I think 253 00:13:11,840 --> 00:13:14,840 Speaker 1: all these are long duration of stocks. So when you 254 00:13:14,880 --> 00:13:17,440 Speaker 1: think about, you know, the terminal value of these businesses, 255 00:13:17,480 --> 00:13:20,520 Speaker 1: you have to discount them at the rate where VR 256 00:13:20,679 --> 00:13:24,679 Speaker 1: right now. And that's where you will never see software 257 00:13:24,720 --> 00:13:27,840 Speaker 1: or an internet company trading at forty fifty times sales anymore. 258 00:13:28,120 --> 00:13:31,320 Speaker 1: And I think that's the realization everyone is having that 259 00:13:31,400 --> 00:13:33,719 Speaker 1: there is a cap in terms of the multiple these 260 00:13:33,760 --> 00:13:37,600 Speaker 1: companies can trade at all. Right, let's pivot to digital advertising. 261 00:13:38,480 --> 00:13:41,680 Speaker 1: I'm thinking meta, you know, all that kind of stuff Google, 262 00:13:42,720 --> 00:13:45,640 Speaker 1: Where are we in that trend? Man, Deep? Because I mean, 263 00:13:46,040 --> 00:13:48,120 Speaker 1: you know, when I was covering these stocks, they were 264 00:13:48,120 --> 00:13:50,200 Speaker 1: going nothing but up. So I don't know what you 265 00:13:50,200 --> 00:13:51,960 Speaker 1: guys are doing. And that's because I had this secular 266 00:13:52,000 --> 00:13:54,640 Speaker 1: twenty percent growth story in digital ad spending and I 267 00:13:54,640 --> 00:13:57,520 Speaker 1: don't know where it was coming from, radio, TV, wherever? 268 00:13:58,240 --> 00:14:01,559 Speaker 1: Where what's the story there? Now? Look, there will always 269 00:14:01,679 --> 00:14:05,120 Speaker 1: be a secular kind of transition from linear TV to 270 00:14:06,240 --> 00:14:09,600 Speaker 1: the digital app platforms, and that trend is intact. I 271 00:14:09,640 --> 00:14:12,719 Speaker 1: think with connected TV you're probably going to see some 272 00:14:12,760 --> 00:14:16,840 Speaker 1: more tailwinds. The problem with digital ad businesses it's discretion 273 00:14:16,920 --> 00:14:19,760 Speaker 1: or even you compare it to a software business where 274 00:14:19,800 --> 00:14:22,600 Speaker 1: you still have to, you know, keep your business running 275 00:14:22,600 --> 00:14:25,760 Speaker 1: and you require that software. On the other hand, ads 276 00:14:25,840 --> 00:14:27,880 Speaker 1: can be shut on and off. And right now we're 277 00:14:27,920 --> 00:14:31,640 Speaker 1: in an environment where businesses are focused on costs and 278 00:14:31,720 --> 00:14:34,360 Speaker 1: the easiest thing to cut is your ad spend. So 279 00:14:34,600 --> 00:14:36,480 Speaker 1: I do think this is going to last a while, 280 00:14:36,560 --> 00:14:39,680 Speaker 1: but we will rebound and the cyclical aspect will come 281 00:14:39,680 --> 00:14:41,600 Speaker 1: into play, you know, once we are in a lower 282 00:14:41,680 --> 00:14:45,040 Speaker 1: rate and a better economic growth environment. How concerned are 283 00:14:45,080 --> 00:14:48,000 Speaker 1: you Dan about that? I mean, look, I think you're 284 00:14:48,080 --> 00:14:52,600 Speaker 1: seeing just the digital advertising headwinds, the Appleios privacy issues. 285 00:14:52,640 --> 00:14:55,680 Speaker 1: If continue to sort of be there slow an economy, 286 00:14:55,760 --> 00:14:57,720 Speaker 1: I do think a lot of bad news been baked in. 287 00:14:57,760 --> 00:15:00,240 Speaker 1: That's where a lot of these stocks are bouncing, you know, 288 00:15:00,320 --> 00:15:02,560 Speaker 1: And I think now you're starting to see the cut, 289 00:15:02,640 --> 00:15:05,760 Speaker 1: so we's now you're preserved in the bottom line in 290 00:15:05,800 --> 00:15:09,240 Speaker 1: this environment. That's why tech stocks are rallying, and even 291 00:15:09,280 --> 00:15:12,920 Speaker 1: now the SVP, you know, Fed's basically handcuffed. That feels 292 00:15:12,960 --> 00:15:15,640 Speaker 1: like that's gonna be positive in terms of what we're 293 00:15:15,680 --> 00:15:18,400 Speaker 1: seeing on hikes four attack and that's sort of this 294 00:15:18,520 --> 00:15:20,720 Speaker 1: dynamic that's pointing out with this sort of tago war 295 00:15:21,480 --> 00:15:24,680 Speaker 1: Fed's handcuffed. Yeah, I mean, this is exactly what I 296 00:15:24,720 --> 00:15:29,720 Speaker 1: was thinking on Sunday after the bailout, really on Friday 297 00:15:29,760 --> 00:15:35,160 Speaker 1: after the bank was taken it seemed like this is 298 00:15:35,440 --> 00:15:37,640 Speaker 1: this is something that's something that broke that we were 299 00:15:37,680 --> 00:15:40,040 Speaker 1: waiting for, and now they're done. But the question is 300 00:15:40,080 --> 00:15:42,720 Speaker 1: does that continue, especially if we keep getting you know, 301 00:15:43,000 --> 00:15:47,480 Speaker 1: half percent month over month core inflation increases. Yeah, I 302 00:15:47,480 --> 00:15:49,920 Speaker 1: don't know, I'm i'm supplies. We haven't seen just smart 303 00:15:49,960 --> 00:15:52,800 Speaker 1: experience back in a great financial crisis that we didn't 304 00:15:53,080 --> 00:15:55,280 Speaker 1: go to bed Sunday night with announcement that x y 305 00:15:55,360 --> 00:15:58,200 Speaker 1: Z Bank had bought SVB, and we haven't seen a 306 00:15:58,320 --> 00:16:00,720 Speaker 1: huge surprise. And we heard a member of Congress tell 307 00:16:00,800 --> 00:16:03,920 Speaker 1: Joe Matthew on sound On that there was an offer, 308 00:16:04,960 --> 00:16:08,400 Speaker 1: but the regulators rejected it. Have you heard that too, Dan, 309 00:16:08,760 --> 00:16:11,000 Speaker 1: Yean look, And I think that was just something where 310 00:16:11,600 --> 00:16:13,680 Speaker 1: the last thing warned was the contague and they need 311 00:16:13,680 --> 00:16:15,960 Speaker 1: to ring fence. And yep, all right, guys, good stuff. 312 00:16:16,000 --> 00:16:18,520 Speaker 1: Thanks so much for coming in to the studio here 313 00:16:18,560 --> 00:16:21,320 Speaker 1: today talking all things tech. We love doing that. Dan, 314 00:16:21,440 --> 00:16:23,920 Speaker 1: I've senior equity annalys at web Bush Securities and Man 315 00:16:23,920 --> 00:16:28,359 Speaker 1: Deep Seeing he's a senior technology annals at Bloomberg in intelligence. 316 00:16:28,600 --> 00:16:31,000 Speaker 1: Both in our study here talking all things tech, SVB 317 00:16:31,640 --> 00:16:34,520 Speaker 1: seems to have been as Dan was just suggesting, perhaps 318 00:16:34,960 --> 00:16:36,640 Speaker 1: ring fence a little bit in terms of that risk. 319 00:16:37,000 --> 00:16:38,840 Speaker 1: That's what the market's kind of telling you here. The 320 00:16:38,920 --> 00:16:41,520 Speaker 1: SMP up one point eight percent, and I said yesterday, Matt, 321 00:16:41,800 --> 00:16:43,320 Speaker 1: I thought we'd have a two percent to move up 322 00:16:43,360 --> 00:16:45,520 Speaker 1: in the market yesterday. But I guess people didn't want 323 00:16:45,520 --> 00:16:47,640 Speaker 1: to get in front of that CPI print today. But 324 00:16:47,640 --> 00:16:53,160 Speaker 1: they're certainly coming in with both feet right now. You know, 325 00:16:53,280 --> 00:16:56,200 Speaker 1: you pick a look at today's CPI print and you 326 00:16:56,200 --> 00:16:57,880 Speaker 1: could say you can make the argument that Fen's got 327 00:16:57,920 --> 00:16:59,800 Speaker 1: some more work to do there. But if you're the 328 00:17:00,680 --> 00:17:03,720 Speaker 1: you gotta recognize we've got some bank instability in the 329 00:17:03,760 --> 00:17:05,560 Speaker 1: system here. What are you supposed to do? Let's check 330 00:17:05,600 --> 00:17:09,000 Speaker 1: in with a real expert on some of these issues 331 00:17:09,040 --> 00:17:13,280 Speaker 1: that can maybe give us some headway here. Chevine Yeltakindane 332 00:17:13,440 --> 00:17:18,200 Speaker 1: at the University of Rochester Business School joins us. Cheven, 333 00:17:18,359 --> 00:17:21,840 Speaker 1: thank you, Chevine, thank you so much for joining us here. Again, 334 00:17:21,880 --> 00:17:24,359 Speaker 1: what do you think our Federal Reserve does because they 335 00:17:24,400 --> 00:17:28,119 Speaker 1: have a balancing act visa v inflation and what's happening 336 00:17:28,160 --> 00:17:33,119 Speaker 1: in the banking system. Oh? Absolutely, Hi. Their job just 337 00:17:33,200 --> 00:17:36,040 Speaker 1: got a lot harder over the last week, for sure, 338 00:17:36,480 --> 00:17:38,080 Speaker 1: when we were just waiting for the kind of the 339 00:17:38,160 --> 00:17:42,680 Speaker 1: unemployment report and the inflation numbers this week and last week, 340 00:17:43,520 --> 00:17:47,720 Speaker 1: SVBS collapsed along with its signature bank. This has now 341 00:17:47,800 --> 00:17:51,600 Speaker 1: become a lot harder. And because we see some of 342 00:17:51,640 --> 00:17:56,119 Speaker 1: the repercussions of banks or certain types of institutions not 343 00:17:56,240 --> 00:17:59,879 Speaker 1: taking into account interest rate risk, they're gonna have to 344 00:18:00,000 --> 00:18:05,119 Speaker 1: ounce is very very tightly. It's a tight rope. So, 345 00:18:05,640 --> 00:18:09,359 Speaker 1: uh should mean Matt Miller here? Um, I wonder if 346 00:18:09,359 --> 00:18:11,399 Speaker 1: you think the Fed made the right move along with 347 00:18:11,440 --> 00:18:15,080 Speaker 1: the other regulators involved and the Treasury in terms of 348 00:18:15,119 --> 00:18:18,440 Speaker 1: bailing out the depositors of this bank. It wasn't like, 349 00:18:18,520 --> 00:18:21,720 Speaker 1: you know, uh, mom and pop. This wasn't Joe Plummer 350 00:18:21,720 --> 00:18:25,600 Speaker 1: in the Midwest. These were you know, the wealthiest people 351 00:18:26,280 --> 00:18:29,720 Speaker 1: from from Sandhill Road and tech startups. You know, kids 352 00:18:29,720 --> 00:18:32,360 Speaker 1: who are going to work at places with ping pong 353 00:18:32,440 --> 00:18:36,160 Speaker 1: tables in the cafeteria. So you know, was it necessary 354 00:18:36,200 --> 00:18:40,920 Speaker 1: and does it create moral hazard? Oh? It absolutely creates 355 00:18:40,960 --> 00:18:45,119 Speaker 1: moral hazard because you know, every time you come exposed 356 00:18:45,520 --> 00:18:49,959 Speaker 1: after the damage in Bindom to create more insurances than 357 00:18:50,800 --> 00:18:52,840 Speaker 1: you know, not bailing out the bank, but bailing out 358 00:18:52,840 --> 00:18:57,560 Speaker 1: the depositors, it certainly creates moral hazard. But what's interesting 359 00:18:57,560 --> 00:19:00,600 Speaker 1: about this are two things that one of which you've mentioned. 360 00:19:00,640 --> 00:19:03,320 Speaker 1: One of them is that this is not your regular 361 00:19:03,480 --> 00:19:07,960 Speaker 1: kind of retail deposit bank very much. So we have 362 00:19:08,080 --> 00:19:11,800 Speaker 1: these very very large deposits in this bank from a 363 00:19:11,920 --> 00:19:16,159 Speaker 1: very concentrated industry base, mostly the tech sectors, some of 364 00:19:16,200 --> 00:19:20,880 Speaker 1: which is encrypto as we so uc DC. And at 365 00:19:20,880 --> 00:19:24,280 Speaker 1: the same time, you know, this was whereas it was 366 00:19:24,320 --> 00:19:28,120 Speaker 1: the sixteenth largest bank in the United States, it certainly 367 00:19:28,240 --> 00:19:31,200 Speaker 1: wasn't large enough to also get the scrutiny it needs 368 00:19:31,240 --> 00:19:35,040 Speaker 1: in terms of naging its risk. So did they do 369 00:19:35,119 --> 00:19:37,800 Speaker 1: the right policy? I would have liked to have had 370 00:19:38,240 --> 00:19:40,800 Speaker 1: heard from the FED and FDIC that they will be 371 00:19:40,840 --> 00:19:44,919 Speaker 1: guaranteeing the deposits of not just these two banks, but 372 00:19:45,280 --> 00:19:49,960 Speaker 1: all banking, you know, throughout the banking sector, because what 373 00:19:50,760 --> 00:19:52,959 Speaker 1: is now going to still be on the minds of 374 00:19:53,000 --> 00:19:56,240 Speaker 1: any depositor within higher than two hundred and fifty k 375 00:19:56,400 --> 00:19:59,080 Speaker 1: deposit is well, is my bank safe? I mean I've 376 00:19:59,119 --> 00:20:02,479 Speaker 1: just received any emails from my own bank saying we're safe, 377 00:20:02,640 --> 00:20:04,720 Speaker 1: you know, don't take out your deposits. I mean, not 378 00:20:04,800 --> 00:20:08,439 Speaker 1: exactly those words, but but well, you don't have to 379 00:20:08,480 --> 00:20:11,359 Speaker 1: worry now, I mean, didn't the FED implicitly say we 380 00:20:11,480 --> 00:20:14,280 Speaker 1: got your back, don't worry about the insurance level. I mean, 381 00:20:14,280 --> 00:20:17,760 Speaker 1: that's a joke. Carson Block from Muddy Waters said, you know, 382 00:20:19,240 --> 00:20:23,080 Speaker 1: corporate depositors should be expected to manage their counterparty risk, 383 00:20:23,160 --> 00:20:27,240 Speaker 1: but bailing out uninsured depositors SVB, which are mostly corporates, 384 00:20:27,400 --> 00:20:32,280 Speaker 1: further infantilizes markets by sending the message that such risk 385 00:20:32,440 --> 00:20:37,600 Speaker 1: management is anachronistic. Wow. Yes, I don't disagree with you. 386 00:20:37,640 --> 00:20:40,920 Speaker 1: I mean I do think that you know, this wasn't 387 00:20:40,960 --> 00:20:45,119 Speaker 1: something completely unexpected. Yes, we've seen an increased, uh you know, 388 00:20:45,280 --> 00:20:49,080 Speaker 1: quick increase and interest rates over the last year. But 389 00:20:50,000 --> 00:20:53,359 Speaker 1: for anybody who's who who is in risk management in 390 00:20:53,440 --> 00:20:56,159 Speaker 1: terms of understanding the maturity structure. This is not a 391 00:20:56,240 --> 00:20:58,719 Speaker 1: liquidity issue. You can think about the FED coming in 392 00:20:58,760 --> 00:21:03,680 Speaker 1: and providing some liquid This is an insolvent bank. They 393 00:21:03,720 --> 00:21:07,560 Speaker 1: manage their assets very badly compared to especially the kind 394 00:21:07,560 --> 00:21:11,160 Speaker 1: of deposits that they were getting very short termed very 395 00:21:11,440 --> 00:21:14,560 Speaker 1: large deposit. And we still don't know what else is 396 00:21:14,600 --> 00:21:16,800 Speaker 1: on their books. You know, we know about the Treasury 397 00:21:16,840 --> 00:21:19,840 Speaker 1: bonds and we know that they sold those that are lost, 398 00:21:20,040 --> 00:21:22,760 Speaker 1: but we have no idea about the other loans and 399 00:21:22,840 --> 00:21:26,320 Speaker 1: investments that they have made. Huge, huge issue for the 400 00:21:26,400 --> 00:21:29,480 Speaker 1: FED going forward, and the amount of FED backup that's 401 00:21:29,520 --> 00:21:32,199 Speaker 1: being provided as well. I mean that's very small compared 402 00:21:32,240 --> 00:21:35,480 Speaker 1: to the amount of uninsured deposits in the economy. So 403 00:21:36,080 --> 00:21:39,240 Speaker 1: you know, whether it's a joke or not, it doesn't 404 00:21:39,359 --> 00:21:43,000 Speaker 1: feel a little bit like cheap talk. I agree. Hey, Chevin, 405 00:21:43,240 --> 00:21:45,200 Speaker 1: the last time we spoke to you, you it was 406 00:21:45,240 --> 00:21:47,239 Speaker 1: in our studios here in New York City and you were, 407 00:21:47,359 --> 00:21:49,679 Speaker 1: I believe, on your way to your native Turkey for 408 00:21:49,880 --> 00:21:52,440 Speaker 1: a visit. And there's a country and there's a people 409 00:21:52,480 --> 00:21:55,720 Speaker 1: that have had such incredible challenges thrown their way, most 410 00:21:55,760 --> 00:21:59,440 Speaker 1: recently in terms of the earthquakes. What did you find 411 00:21:59,440 --> 00:22:03,680 Speaker 1: what was your beings over there? Oh, it's it's even 412 00:22:03,760 --> 00:22:06,720 Speaker 1: more devastating on the ground. I didn't go exactly to 413 00:22:06,840 --> 00:22:10,000 Speaker 1: the area where where the earthquake happened, but I was 414 00:22:10,040 --> 00:22:13,959 Speaker 1: in Istanbul in the northwest part of the country. But um, 415 00:22:14,119 --> 00:22:15,919 Speaker 1: you know, it's in the news all day long, and 416 00:22:16,000 --> 00:22:19,080 Speaker 1: the devastation. We have an election coming up in May, 417 00:22:19,920 --> 00:22:23,040 Speaker 1: that's of course, you know, combined with the devastation, and 418 00:22:23,080 --> 00:22:25,800 Speaker 1: it's just completely rattled all the markets. I mean, the 419 00:22:26,119 --> 00:22:29,800 Speaker 1: Turkish vera continues to lose its um. You know, it's 420 00:22:29,800 --> 00:22:33,640 Speaker 1: a value there isn't you know. There's a scrambling of 421 00:22:33,800 --> 00:22:36,600 Speaker 1: kind of the government trying to provide some sort of 422 00:22:36,720 --> 00:22:40,480 Speaker 1: aid both in kind as well as in monetary aid 423 00:22:40,680 --> 00:22:44,640 Speaker 1: to those affected by the by the earthquake. But this 424 00:22:44,720 --> 00:22:48,480 Speaker 1: is going to also of course provide you know, give 425 00:22:48,560 --> 00:22:52,199 Speaker 1: up huge burden, just just deliver a huge burden on 426 00:22:52,240 --> 00:22:54,480 Speaker 1: the government and on the taxpayers. At the end of 427 00:22:54,520 --> 00:22:57,720 Speaker 1: the day, it's a very devastating situation. It's going to 428 00:22:57,760 --> 00:23:02,159 Speaker 1: take a very long time to get from underneath it. 429 00:23:02,600 --> 00:23:05,000 Speaker 1: To be honest, what is the expectation when this as 430 00:23:05,000 --> 00:23:08,080 Speaker 1: this election comes up, because again, as you mentioned, it'll 431 00:23:08,080 --> 00:23:10,400 Speaker 1: be a referendum on maybe how the government dealt with 432 00:23:10,440 --> 00:23:13,200 Speaker 1: all these challenges and maybe who's best prepared to deal 433 00:23:13,200 --> 00:23:16,280 Speaker 1: with them going forward. What's the expectations or what did 434 00:23:16,280 --> 00:23:18,919 Speaker 1: you experience when you were into in Turkey. Well, that 435 00:23:19,040 --> 00:23:21,840 Speaker 1: was the interesting thing when I was there. You know, 436 00:23:21,920 --> 00:23:26,000 Speaker 1: there's an there isn't really a single opposition party that's 437 00:23:26,000 --> 00:23:31,560 Speaker 1: strong enough to be able to provide an alternative single handedly, 438 00:23:31,680 --> 00:23:36,000 Speaker 1: individual alternative to the AKP, the reigning party, but there 439 00:23:36,040 --> 00:23:39,760 Speaker 1: had been a coalition of six parties coming together to 440 00:23:40,840 --> 00:23:44,639 Speaker 1: unite and to provide an alternative at the ballot box. 441 00:23:45,040 --> 00:23:48,080 Speaker 1: That coalition actually fell apart while I was there, so 442 00:23:48,160 --> 00:23:50,320 Speaker 1: I was staying up really late listening to all the 443 00:23:50,359 --> 00:23:53,760 Speaker 1: news and listening to all the political commentary that was happening. 444 00:23:54,040 --> 00:23:58,480 Speaker 1: They tried to sort of reinstitute it a little bit 445 00:23:58,880 --> 00:24:02,240 Speaker 1: as I was leaving the country, but it's very very fragile, 446 00:24:02,359 --> 00:24:07,199 Speaker 1: and unfortunately, I think that has strengthened the position of 447 00:24:07,240 --> 00:24:12,760 Speaker 1: AKAP despite their mishandling of the of the all right, vine, 448 00:24:13,080 --> 00:24:15,040 Speaker 1: thank you so much. I really appreciate getting your thoughts 449 00:24:15,080 --> 00:24:18,080 Speaker 1: on obviously the economic issues that we love discussing with you, 450 00:24:18,160 --> 00:24:19,959 Speaker 1: the business issues, but also just kind of getting your 451 00:24:19,960 --> 00:24:23,160 Speaker 1: experiences from your recent trip to your native Turkey. We've 452 00:24:23,160 --> 00:24:27,440 Speaker 1: all seen the devastated devastation there. Chevin Yeltikin. She is 453 00:24:27,480 --> 00:24:30,399 Speaker 1: the dean at the University of Rochester, a business school. 454 00:24:30,880 --> 00:24:34,919 Speaker 1: Just an extraordinary background, undergrad at Wellesley, PhD in economics 455 00:24:34,920 --> 00:24:37,679 Speaker 1: from Stanford. So she knows herself, and that's why we 456 00:24:37,760 --> 00:24:40,240 Speaker 1: like to talk to smart people like that. Yeah, absolutely, 457 00:24:40,280 --> 00:24:41,760 Speaker 1: I mean she, I'm sure knows a lot of the 458 00:24:41,760 --> 00:24:48,600 Speaker 1: people who were involved in SVB because that's where they banked. 459 00:24:48,680 --> 00:24:51,480 Speaker 1: You know, Stanford grads get out of school if they're 460 00:24:52,200 --> 00:24:54,480 Speaker 1: fortunate enough, if that, the US lets them stay and 461 00:24:54,520 --> 00:24:57,920 Speaker 1: work here. They start businesses that hire people, but they 462 00:24:57,960 --> 00:25:00,439 Speaker 1: get their banking or they got it at SVB. All right, 463 00:25:00,440 --> 00:25:06,879 Speaker 1: we're gonna have more coming up. This is Bloomberg, Chris Whaling. 464 00:25:06,920 --> 00:25:09,680 Speaker 1: He's a chairman of the Whaling Global Advisors. He joins 465 00:25:09,720 --> 00:25:12,000 Speaker 1: us here. Hey, Chris, we don't see a bank run 466 00:25:12,400 --> 00:25:15,560 Speaker 1: very often. What did she take from the news on 467 00:25:15,600 --> 00:25:22,160 Speaker 1: Friday with SBB. It was a disaster of bad risk 468 00:25:22,280 --> 00:25:25,600 Speaker 1: management by the bank. They were loading up on mortgage 469 00:25:25,600 --> 00:25:29,680 Speaker 1: backed securities in anticipation of a FED pivot that they 470 00:25:29,680 --> 00:25:33,120 Speaker 1: were early and they had been doing this three years. 471 00:25:33,160 --> 00:25:36,480 Speaker 1: They had an outsized position and needs securities, and then 472 00:25:36,520 --> 00:25:39,040 Speaker 1: they fed, you know, added to the problem. The real 473 00:25:39,119 --> 00:25:41,439 Speaker 1: issue I think we have to deal with. And you know, 474 00:25:41,480 --> 00:25:44,359 Speaker 1: the crisis is not over, guys. There's stuff going on 475 00:25:44,400 --> 00:25:46,719 Speaker 1: in the background. I can't even talk about that is 476 00:25:46,960 --> 00:25:52,080 Speaker 1: really mind numbing. But you know, the FED created securities 477 00:25:52,080 --> 00:25:55,000 Speaker 1: in twenty twenty and twenty one that you cannot hedge. 478 00:25:56,119 --> 00:25:59,520 Speaker 1: The hedge is twice the coupon or more. So tell 479 00:25:59,600 --> 00:26:01,800 Speaker 1: me again, and why do we want to own these securities? 480 00:26:02,160 --> 00:26:04,919 Speaker 1: The FED should have bought them all. I swear the 481 00:26:04,960 --> 00:26:08,000 Speaker 1: FED should have bought every single security from that period 482 00:26:08,040 --> 00:26:11,120 Speaker 1: and just hold on to it because it is unfair. Well, 483 00:26:11,160 --> 00:26:14,720 Speaker 1: they will lend you know against them now you can 484 00:26:14,720 --> 00:26:19,359 Speaker 1: get for collateral. Does that make any sense to you, Chris, 485 00:26:19,400 --> 00:26:22,720 Speaker 1: because I kind of want to buy SVP and then 486 00:26:23,080 --> 00:26:25,920 Speaker 1: load up on a whole bunch of crappy bonds that 487 00:26:26,040 --> 00:26:28,359 Speaker 1: are only training at seventy five cents on the dollar 488 00:26:28,400 --> 00:26:32,639 Speaker 1: and then use them as collateral for sweet loans. No, 489 00:26:32,720 --> 00:26:35,720 Speaker 1: but remember these aren't crappy bonds. These are triple A 490 00:26:35,880 --> 00:26:40,240 Speaker 1: rated securities with a zero risk way under Bonsle. But 491 00:26:40,359 --> 00:26:45,480 Speaker 1: the market risk because the coupons are so low is astronomical. 492 00:26:45,760 --> 00:26:48,840 Speaker 1: You can't even measure it. So if I finance collateral 493 00:26:48,920 --> 00:26:51,119 Speaker 1: like this today, I'm going to hair cut it the 494 00:26:51,280 --> 00:26:53,760 Speaker 1: market value I have to. So, Chris, do you feel 495 00:26:53,800 --> 00:26:57,760 Speaker 1: like this SVB issue, I'll even go out The signature 496 00:26:57,760 --> 00:27:01,920 Speaker 1: bank as well, is kind of ring fenced, if you will. 497 00:27:02,400 --> 00:27:04,240 Speaker 1: Or do you think there's no more risk out there 498 00:27:04,280 --> 00:27:07,040 Speaker 1: in the banking system. Well, it was nice to see 499 00:27:07,080 --> 00:27:10,520 Speaker 1: First Republic rally. I think all their clients and advisers 500 00:27:10,600 --> 00:27:13,120 Speaker 1: came in about the stock this morning. I'm not really 501 00:27:13,119 --> 00:27:15,760 Speaker 1: worried about the bank. You notice Jamie came in and 502 00:27:15,800 --> 00:27:19,920 Speaker 1: supported them too, Dat Morgan. Yeah, because First Republic is 503 00:27:19,960 --> 00:27:23,280 Speaker 1: a big issuer of non QM mortgages. Guess who's the 504 00:27:23,400 --> 00:27:26,640 Speaker 1: leader in that space, Chase. Guess who's the biggest work 505 00:27:26,720 --> 00:27:31,640 Speaker 1: warehouse lender in that space, Chase. So you know, everything 506 00:27:31,680 --> 00:27:34,359 Speaker 1: has a reason. But I'm very worried about smaller banks, 507 00:27:34,359 --> 00:27:37,120 Speaker 1: and by small I mean triple digits, okay, I mean 508 00:27:37,240 --> 00:27:41,040 Speaker 1: large regionals, because they are being forced to do things 509 00:27:41,119 --> 00:27:45,919 Speaker 1: to hold on to uninsured deposits that I think are untenable. 510 00:27:46,240 --> 00:27:48,439 Speaker 1: I think within a matter of days, if not a 511 00:27:48,480 --> 00:27:51,159 Speaker 1: week or so, we're gonna have another bank in big troubles. 512 00:27:51,320 --> 00:27:54,920 Speaker 1: Are there still uninsured deposits? I thought the implicit message 513 00:27:55,119 --> 00:27:58,879 Speaker 1: from the regulators was so there, you are covered, and 514 00:28:00,440 --> 00:28:03,719 Speaker 1: they had to make a systemic risk exception when they 515 00:28:03,800 --> 00:28:09,560 Speaker 1: passed Odd Frank the tactic did Sheila Bear use. Remember 516 00:28:09,640 --> 00:28:13,919 Speaker 1: she extended coverage to all of the transaction accounts. Because 517 00:28:14,000 --> 00:28:17,359 Speaker 1: when Treasury guaranteed the money market funds, the banks are 518 00:28:17,400 --> 00:28:20,360 Speaker 1: losing their money. They're all going into the guaranteed assets. 519 00:28:20,800 --> 00:28:23,280 Speaker 1: So we have the same problem today. I think it's 520 00:28:23,280 --> 00:28:26,479 Speaker 1: a matter of prudence. We should extend the blanket. They 521 00:28:26,480 --> 00:28:30,560 Speaker 1: should go to Congress ask them to act now, or 522 00:28:30,600 --> 00:28:34,720 Speaker 1: maybe we'll have a systemic risk exception for everybody. But 523 00:28:35,119 --> 00:28:37,000 Speaker 1: you know, we still have a problem. I think the 524 00:28:37,080 --> 00:28:40,000 Speaker 1: Fed should drop rates fifty bits, and I think they 525 00:28:40,000 --> 00:28:42,719 Speaker 1: should open the discount window, very similar to what they 526 00:28:42,760 --> 00:28:45,000 Speaker 1: did with the collateral, and say, if you want to 527 00:28:45,000 --> 00:28:47,440 Speaker 1: sell us that bond back, we'll take it at car 528 00:28:47,960 --> 00:28:50,680 Speaker 1: and we'll hold it until you want it back. But okay, 529 00:28:50,720 --> 00:28:53,960 Speaker 1: but they're they're unlikely to do that right now. Chris, 530 00:28:54,440 --> 00:28:59,000 Speaker 1: what does that mean in terms of those other regional 531 00:28:59,040 --> 00:29:03,320 Speaker 1: banks with triple digit deposit bases, triple digit billions and 532 00:29:03,360 --> 00:29:06,320 Speaker 1: deposits are they Are we going to see more bank 533 00:29:06,400 --> 00:29:09,720 Speaker 1: runs you think in the next couple weeks. Yes, because 534 00:29:10,080 --> 00:29:12,880 Speaker 1: look at what happened with Signature. Signature is different than 535 00:29:12,920 --> 00:29:16,960 Speaker 1: Silicon Valley. Silicon Valley was just a management mistake, Frankly, 536 00:29:17,200 --> 00:29:19,840 Speaker 1: and the regulators took their eye off the ball. Why 537 00:29:19,840 --> 00:29:22,320 Speaker 1: do you think Janet Yellen was on TV Sunday. She 538 00:29:22,360 --> 00:29:24,880 Speaker 1: didn't have a plan, but she was worried about the 539 00:29:24,920 --> 00:29:28,360 Speaker 1: blowback on the FED and her former colleagues at San Francisco, 540 00:29:28,440 --> 00:29:30,800 Speaker 1: and they dropped the ball. They didn't even look at 541 00:29:30,800 --> 00:29:34,040 Speaker 1: the data. It was right there. So what's going to 542 00:29:34,160 --> 00:29:36,800 Speaker 1: happen is that small, mid sized banks are going to 543 00:29:36,840 --> 00:29:40,120 Speaker 1: be under attack, especially if they're public. The shorts are 544 00:29:40,120 --> 00:29:42,280 Speaker 1: going to come after them. They have the list, right, 545 00:29:42,880 --> 00:29:44,960 Speaker 1: and I think that the bankers are going to try 546 00:29:45,000 --> 00:29:47,200 Speaker 1: and hold on to their deposits. But if they start 547 00:29:47,240 --> 00:29:50,200 Speaker 1: going down as we saw the Signature right, they lost 548 00:29:50,240 --> 00:29:53,840 Speaker 1: twenty percent of deposits in three quarters. A bank can't 549 00:29:53,880 --> 00:29:57,960 Speaker 1: do that, you know. We spoke Christie, We spoke at 550 00:29:58,000 --> 00:30:00,480 Speaker 1: Barney Frank yesterday which I thought it was a very 551 00:30:00,520 --> 00:30:03,640 Speaker 1: interesting conversation. He said a number of things that I 552 00:30:03,680 --> 00:30:07,760 Speaker 1: found fascinating. Number One, he said Dignature was not insolvent, 553 00:30:07,800 --> 00:30:10,200 Speaker 1: they were singled out because of their work with crypto. 554 00:30:10,760 --> 00:30:13,880 Speaker 1: Number two, he said he didn't have any problem with 555 00:30:13,920 --> 00:30:16,880 Speaker 1: the twenty eighteen amendments that died Frank, there's no reason 556 00:30:17,160 --> 00:30:21,520 Speaker 1: that they need extra scrutiny. And number three, he didn't 557 00:30:21,520 --> 00:30:27,080 Speaker 1: think that we needed really any more bank regulation. I know, well, 558 00:30:27,080 --> 00:30:29,600 Speaker 1: he's right about regulation. If we're not going to enforce 559 00:30:29,680 --> 00:30:32,880 Speaker 1: the rules and review the numbers that thanks provide us, 560 00:30:33,040 --> 00:30:36,920 Speaker 1: then why do we need more regulation? Right? I mean, seriously, guys, 561 00:30:36,960 --> 00:30:39,880 Speaker 1: it's right in the data. You can see forty percent 562 00:30:39,920 --> 00:30:43,760 Speaker 1: of total assets mortgage backed securities, and you know that 563 00:30:43,840 --> 00:30:46,760 Speaker 1: they can't hedge those securities. But the problem is the 564 00:30:46,760 --> 00:30:49,560 Speaker 1: folks at the Board of Governors who took over bank 565 00:30:49,640 --> 00:30:52,880 Speaker 1: supervision after two thousand and eight, they basically took it 566 00:30:52,920 --> 00:30:55,800 Speaker 1: away from the reserve banks, so they have no connection 567 00:30:55,840 --> 00:30:58,200 Speaker 1: with the markets, and they're sitting there looking at their 568 00:30:58,280 --> 00:31:01,200 Speaker 1: data and they don't realize that this whole class of 569 00:31:01,280 --> 00:31:06,440 Speaker 1: securities for really two years during COVID are toxic waste. 570 00:31:06,720 --> 00:31:09,760 Speaker 1: It might as well be subprime mortgages. You know what 571 00:31:09,800 --> 00:31:11,800 Speaker 1: I'm saying. Even though it has a triple A rating 572 00:31:11,800 --> 00:31:14,040 Speaker 1: and the people have a hard time with it. They say, Chris, 573 00:31:14,080 --> 00:31:16,479 Speaker 1: this is a treasury bond, but why shouldn't I buy it? 574 00:31:16,600 --> 00:31:19,440 Speaker 1: So Chris is the next bank to go. You know, 575 00:31:19,480 --> 00:31:22,040 Speaker 1: if I screen on the Bloomberg and look for other 576 00:31:22,080 --> 00:31:25,120 Speaker 1: banks that have such a huge hold to maturity portfolio, 577 00:31:25,160 --> 00:31:28,480 Speaker 1: I don't see anything that looks like as bad a mismatches. 578 00:31:29,640 --> 00:31:32,120 Speaker 1: Look at the funding match, look for banks that have 579 00:31:32,400 --> 00:31:38,080 Speaker 1: large blocks of uninsured deposits tied to commercial customers. You see, 580 00:31:38,360 --> 00:31:40,600 Speaker 1: let me give you some context here. You guys always 581 00:31:40,600 --> 00:31:43,680 Speaker 1: helved this sim bloom book less ten years of FED 582 00:31:43,920 --> 00:31:46,800 Speaker 1: benevolence at low interest rates allow of a lot of 583 00:31:46,840 --> 00:31:50,600 Speaker 1: business models to flourish. Business models that might not have 584 00:31:50,720 --> 00:31:54,800 Speaker 1: done well in a less hospitable environment. Sill a convalidate signature, 585 00:31:55,040 --> 00:31:58,080 Speaker 1: because remember, these guys compete with big banks. The big 586 00:31:58,080 --> 00:32:00,880 Speaker 1: banks are right there, and so they were able to 587 00:32:00,920 --> 00:32:03,240 Speaker 1: carve out niches for themselves. But I think we're going 588 00:32:03,280 --> 00:32:06,040 Speaker 1: into a much less friendly environment now, and I think 589 00:32:06,080 --> 00:32:09,360 Speaker 1: you're going to see big time consolidation. I expect to 590 00:32:09,400 --> 00:32:12,960 Speaker 1: see a number of banks get bought to avoid being 591 00:32:13,000 --> 00:32:17,760 Speaker 1: taken down by the fdi C. So I'm still unclear 592 00:32:17,960 --> 00:32:21,320 Speaker 1: why the regulators or how the regulators missed this. That 593 00:32:21,320 --> 00:32:23,600 Speaker 1: seems to be the most immediate issue. You know, we're 594 00:32:23,640 --> 00:32:27,160 Speaker 1: all human, we're all conflicted agents. It's like my friends 595 00:32:27,160 --> 00:32:30,200 Speaker 1: in the ratings world, you know, S ANDP acted today 596 00:32:30,240 --> 00:32:33,560 Speaker 1: they downgraded the banks across the board and said, hey, 597 00:32:33,720 --> 00:32:37,280 Speaker 1: we have a problem. But the whole industry should have 598 00:32:37,520 --> 00:32:41,960 Speaker 1: downgraded every rating they had after quantitative easing was over. 599 00:32:42,800 --> 00:32:45,440 Speaker 1: You know, when you move five hundred basis points, think 600 00:32:45,480 --> 00:32:48,520 Speaker 1: about what that means in terms of ratings. Okay, five 601 00:32:48,560 --> 00:32:51,440 Speaker 1: hundred basis points is barely investment grade. So if you 602 00:32:51,560 --> 00:32:54,280 Speaker 1: subject that you know stress tests. Remember the FED does 603 00:32:54,400 --> 00:32:58,240 Speaker 1: dress tests, but they don't understand bonds. And you said, 604 00:32:58,240 --> 00:33:02,520 Speaker 1: Bloomberg do You're the best shop in the world of media, 605 00:33:02,600 --> 00:33:05,880 Speaker 1: So think about stressing a portfolio of Jinny May security 606 00:33:06,000 --> 00:33:09,760 Speaker 1: six hundred basis points. Guys, let's see answer. The answer 607 00:33:09,840 --> 00:33:14,680 Speaker 1: is you're insolvent. Okay, right, yeah, any first year bank 608 00:33:14,720 --> 00:33:17,280 Speaker 1: you associate notices Barney Frank would know that he's a 609 00:33:17,320 --> 00:33:19,960 Speaker 1: smart guy. All right, safe, but you know we have 610 00:33:20,040 --> 00:33:22,360 Speaker 1: to do the work. Yep, I got it. Hey, Chris, 611 00:33:22,720 --> 00:33:24,320 Speaker 1: we gotta go for time. But thanks so much for 612 00:33:24,400 --> 00:33:26,840 Speaker 1: joining us. We really appreciate getting your thoughts clearly non 613 00:33:26,840 --> 00:33:28,600 Speaker 1: consensus from my I hope we can get you back 614 00:33:28,600 --> 00:33:31,000 Speaker 1: on again soon as well. Absolutely, Chris Whalend, chairman of 615 00:33:31,000 --> 00:33:35,000 Speaker 1: the Whale and Global Advices, let's dive in here because 616 00:33:35,000 --> 00:33:38,200 Speaker 1: we got a better reserve meeting February twenty second. That 617 00:33:38,320 --> 00:33:41,000 Speaker 1: he's gonna be very interesting. And I'm glad I'm not 618 00:33:41,120 --> 00:33:44,480 Speaker 1: fed Chairman j Pal because he's kind of got, you know, 619 00:33:44,520 --> 00:33:47,480 Speaker 1: a balancing act here. So let's check you with Jeff 620 00:33:47,480 --> 00:33:50,200 Speaker 1: Cleveland Jeffrey Cleveland as a director in chief econdoms of 621 00:33:50,240 --> 00:33:52,480 Speaker 1: paid in Regal. So, Jeff, Jeffrey, I'm gonna put you 622 00:33:52,480 --> 00:33:55,240 Speaker 1: in the hot seat. You're fed Chairman j Pal next 623 00:33:56,200 --> 00:33:59,080 Speaker 1: week on the twenty second. What do you do and 624 00:33:59,120 --> 00:34:02,560 Speaker 1: why I don't want the job? You can keep the 625 00:34:02,640 --> 00:34:06,480 Speaker 1: job where I am. That's a tough that's a tough call. 626 00:34:06,560 --> 00:34:10,040 Speaker 1: I guess I think given the current situation, it'd be 627 00:34:10,040 --> 00:34:13,359 Speaker 1: prudent to pause here, just let the dust settle. I mean, 628 00:34:13,560 --> 00:34:16,759 Speaker 1: I think you could. One of the reasons we have. 629 00:34:17,200 --> 00:34:21,880 Speaker 1: The financial instability is due to the last twelve months 630 00:34:21,880 --> 00:34:24,320 Speaker 1: and the rate hikes that have been put into the system, 631 00:34:24,440 --> 00:34:26,680 Speaker 1: so maybe it would be prudent just to take a 632 00:34:26,680 --> 00:34:30,719 Speaker 1: step back. The problem with that is inflation. So when 633 00:34:30,719 --> 00:34:32,520 Speaker 1: I you know, I looked at that report this morning, 634 00:34:32,920 --> 00:34:37,040 Speaker 1: point five percent month to month for the core CPI, 635 00:34:37,080 --> 00:34:39,240 Speaker 1: and you know, I'd love to look at this median 636 00:34:39,360 --> 00:34:42,840 Speaker 1: CPI that the Cleveland Fed tabulates later in the morning, 637 00:34:42,920 --> 00:34:46,640 Speaker 1: and that thing for the month of February came in 638 00:34:47,480 --> 00:34:50,719 Speaker 1: even hotter. Right, That thing is point six percent month 639 00:34:50,800 --> 00:34:53,439 Speaker 1: to month after a point seven percent month a month 640 00:34:53,520 --> 00:34:56,360 Speaker 1: rating the prior month on a year on year basis. 641 00:34:56,760 --> 00:34:59,080 Speaker 1: I think that's a record high for the series seven 642 00:34:59,120 --> 00:35:02,000 Speaker 1: point two percent year on year for the median price change. 643 00:35:02,200 --> 00:35:06,239 Speaker 1: So that tells me there is a lot of underlying inflation. 644 00:35:07,680 --> 00:35:09,600 Speaker 1: It's just way too hot, So I think the Fed 645 00:35:09,880 --> 00:35:13,920 Speaker 1: has to address that as well. So maybe he's doing 646 00:35:13,960 --> 00:35:15,480 Speaker 1: the best he can here. He's going to use the 647 00:35:15,520 --> 00:35:20,000 Speaker 1: battle sheet to address the financial stability, and he's going 648 00:35:20,080 --> 00:35:23,520 Speaker 1: to use the policy rate to keep badding away at 649 00:35:23,520 --> 00:35:26,279 Speaker 1: inflation and try to get inflation back under control. But 650 00:35:26,360 --> 00:35:29,359 Speaker 1: it's a tricky situation. Well, when we're talking about bringing 651 00:35:29,400 --> 00:35:31,640 Speaker 1: inflation back to control. I feels like one of the 652 00:35:31,760 --> 00:35:35,040 Speaker 1: arguments here is that in the here and now, financial 653 00:35:35,080 --> 00:35:39,759 Speaker 1: stability matters more than price stability for kind of the 654 00:35:39,760 --> 00:35:43,359 Speaker 1: average consumer. And I wonder that for those folks who 655 00:35:43,400 --> 00:35:45,400 Speaker 1: are saying that's the trade off you kind of have 656 00:35:45,400 --> 00:35:47,680 Speaker 1: to make for this FED decision, to what extent does 657 00:35:47,719 --> 00:35:50,200 Speaker 1: that imply that at the next meeting they have to 658 00:35:50,200 --> 00:35:55,440 Speaker 1: be even more hawkish? I think that's it's tricky. I mean, 659 00:35:55,480 --> 00:35:59,080 Speaker 1: I still get friends and family and colleagues and clients 660 00:35:59,120 --> 00:36:02,239 Speaker 1: even that say to me, you know, um, that the 661 00:36:02,280 --> 00:36:04,680 Speaker 1: bigger problem is inflation. You know that that's what they're 662 00:36:04,680 --> 00:36:07,319 Speaker 1: really feeling in terms of what's eating into their their 663 00:36:07,360 --> 00:36:11,200 Speaker 1: income with they're facing you know, in terms of energy 664 00:36:11,239 --> 00:36:13,719 Speaker 1: costs or at the at the gas pumps. So I 665 00:36:13,760 --> 00:36:16,680 Speaker 1: don't know, I think there could be a healthy debate over, um, 666 00:36:17,000 --> 00:36:20,600 Speaker 1: what's the what is the primary concern? I do think though, 667 00:36:20,600 --> 00:36:22,000 Speaker 1: at the end of the day, a central bank. What 668 00:36:22,120 --> 00:36:23,759 Speaker 1: is the job of a central bank? I mean, first 669 00:36:23,800 --> 00:36:26,120 Speaker 1: and foremost, it's it's the banker's bank, right, It's to 670 00:36:26,200 --> 00:36:29,600 Speaker 1: keep the financial system healthy. So they do have to 671 00:36:29,600 --> 00:36:32,520 Speaker 1: take to take that into account. But these I think 672 00:36:32,560 --> 00:36:34,160 Speaker 1: these two are at odds is I guess what I'm 673 00:36:34,200 --> 00:36:38,600 Speaker 1: trying to express, Um, if you want to rein in inflation, 674 00:36:39,200 --> 00:36:41,879 Speaker 1: then you need to continue to bike and that will 675 00:36:41,880 --> 00:36:44,160 Speaker 1: continue to send us down this road work. There will 676 00:36:44,200 --> 00:36:47,560 Speaker 1: probably be other institutions that get into trouble. Maybe this 677 00:36:47,680 --> 00:36:50,160 Speaker 1: is just the beginning of that phase here. This is 678 00:36:50,239 --> 00:36:53,160 Speaker 1: a sort of August of two thousand and seven m 679 00:36:53,600 --> 00:36:55,680 Speaker 1: type period, and then there will be more, There'll be 680 00:36:55,719 --> 00:36:59,640 Speaker 1: more volatility. Ed Jeff, Well, we don't hear much about, 681 00:37:00,120 --> 00:37:02,000 Speaker 1: I guess recently. Maybe it's just because we're dealing with 682 00:37:02,320 --> 00:37:05,080 Speaker 1: a good old fashioned bank run. Is the economy in 683 00:37:05,160 --> 00:37:07,960 Speaker 1: just terms of recession, where are you right now? And 684 00:37:08,080 --> 00:37:13,439 Speaker 1: kind of your recession call for the US economy? Well, 685 00:37:13,760 --> 00:37:15,920 Speaker 1: all the day that we saw, you know, up until 686 00:37:16,200 --> 00:37:19,640 Speaker 1: the middle of last week, was pointing towards the no 687 00:37:19,920 --> 00:37:25,640 Speaker 1: landing scenario. So you know, you had very pretty strong 688 00:37:25,719 --> 00:37:29,040 Speaker 1: GDP tracking for the first quarter. It's drawn consumer spending 689 00:37:29,040 --> 00:37:32,040 Speaker 1: the last couple of months. You have inflation that's still elevated. 690 00:37:32,200 --> 00:37:35,600 Speaker 1: You have the unemployment rate that's you know, flirting with 691 00:37:35,640 --> 00:37:38,040 Speaker 1: a fifty year low. And we saw that jobs report 692 00:37:38,080 --> 00:37:41,000 Speaker 1: on Friday more than three hundred thousand jobs. So as 693 00:37:41,040 --> 00:37:43,239 Speaker 1: far as the data that we have to date, it's 694 00:37:43,520 --> 00:37:46,319 Speaker 1: it's holding up really well. And for us, the probability 695 00:37:46,360 --> 00:37:51,560 Speaker 1: of a recession in twenty twenty three was had fallen. 696 00:37:52,480 --> 00:37:54,239 Speaker 1: We thought we would get through the year without one. 697 00:37:54,800 --> 00:37:59,160 Speaker 1: Once you start to see financial concerns, when financial conditions 698 00:37:59,200 --> 00:38:02,440 Speaker 1: start to tighten, um, then we get a bit more concerned. 699 00:38:02,520 --> 00:38:05,440 Speaker 1: But as you've seen, you know this Morchine, this can 700 00:38:05,560 --> 00:38:08,880 Speaker 1: change day by day. So actually financial conditions have eased 701 00:38:09,080 --> 00:38:12,560 Speaker 1: to today, so well, I think we're just we're just 702 00:38:12,760 --> 00:38:14,520 Speaker 1: have to sit back and wait here. There's you know, 703 00:38:14,840 --> 00:38:17,160 Speaker 1: seven more days and eight more days until the FED 704 00:38:17,200 --> 00:38:22,320 Speaker 1: meetings build black and transpire. Yeah, five training sessions exactly. 705 00:38:22,360 --> 00:38:25,200 Speaker 1: And I have to ask in the next five training sessions, 706 00:38:25,600 --> 00:38:28,040 Speaker 1: what could be the game changer for the FED? Or 707 00:38:28,120 --> 00:38:31,080 Speaker 1: is everything in the bare view mirror here? I think 708 00:38:31,080 --> 00:38:35,160 Speaker 1: the key thing is that it is the containing contained um. 709 00:38:35,200 --> 00:38:38,520 Speaker 1: Do we get do we get improvement? Um? On that front? 710 00:38:38,520 --> 00:38:40,480 Speaker 1: So you've seen that. I think with bank stocks that 711 00:38:40,520 --> 00:38:42,120 Speaker 1: gives you a little sign of where the market is 712 00:38:42,120 --> 00:38:46,399 Speaker 1: thinking about the risks around financial stability. So you need 713 00:38:46,400 --> 00:38:48,479 Speaker 1: to we need to see some more signs that maybe 714 00:38:48,480 --> 00:38:50,560 Speaker 1: this is contained. It's a it's a one off, it's 715 00:38:50,560 --> 00:38:53,000 Speaker 1: an isolated type event. It's not going to be as 716 00:38:53,719 --> 00:38:56,799 Speaker 1: a systemic issue. We'll see. I got to push back 717 00:38:56,840 --> 00:38:59,520 Speaker 1: on that. Are they contained though? Are they stable? Given 718 00:38:59,560 --> 00:39:01,800 Speaker 1: that around all, we're looking at rallies of say forty 719 00:39:01,840 --> 00:39:04,360 Speaker 1: fifty percent in one stock. That's not normal even for 720 00:39:04,400 --> 00:39:08,080 Speaker 1: a regional bank. Yeah. You made a great point earlier 721 00:39:08,080 --> 00:39:12,040 Speaker 1: though about and we highlighted this in our quarterly for 722 00:39:12,120 --> 00:39:14,960 Speaker 1: the fourth quarter that came out, just the liquidity issues 723 00:39:15,000 --> 00:39:18,960 Speaker 1: in the financial system, at least with regard to treasuries 724 00:39:19,320 --> 00:39:22,080 Speaker 1: liquidity and the bond market in general. I do think 725 00:39:22,120 --> 00:39:27,000 Speaker 1: you're libel or you're vulnerable to some pretty sharp air pockets, 726 00:39:27,000 --> 00:39:29,000 Speaker 1: if you will. There a sharp movements and security prices 727 00:39:29,080 --> 00:39:32,839 Speaker 1: just given the structure of the marketplace. I think you're 728 00:39:32,960 --> 00:39:35,560 Speaker 1: quoting Ira Jersey, just looking at the size of the 729 00:39:36,040 --> 00:39:38,360 Speaker 1: bond market relative to the dealer system that has to 730 00:39:38,400 --> 00:39:41,400 Speaker 1: intermediate all those transactions, you get big movements and prices. 731 00:39:42,239 --> 00:39:45,400 Speaker 1: I think you know that could that could continue? Jeff, 732 00:39:46,120 --> 00:39:48,400 Speaker 1: what's your GDPU call going out like this year and 733 00:39:48,640 --> 00:39:51,640 Speaker 1: next year? You know, maybe there is a little recession 734 00:39:51,640 --> 00:39:55,719 Speaker 1: in there. But what's the call for you guys? Right 735 00:39:55,760 --> 00:39:59,120 Speaker 1: now we have point six percent real GDP Q four 736 00:39:59,160 --> 00:40:03,840 Speaker 1: to Q four for twenty twenty three, and we do 737 00:40:03,960 --> 00:40:06,800 Speaker 1: think it's prudent to think about a recession. So a 738 00:40:06,880 --> 00:40:10,680 Speaker 1: contraction in GDP in twenty twenty four, what does that 739 00:40:10,760 --> 00:40:13,680 Speaker 1: look like right now? Somewhere around half percent maybe to 740 00:40:13,760 --> 00:40:16,680 Speaker 1: a percentage point. So uh, that's more of a garden 741 00:40:16,800 --> 00:40:18,960 Speaker 1: variety downturn that you might have seen in the post 742 00:40:19,000 --> 00:40:22,200 Speaker 1: war era. But that's our that's our current thinking. Like 743 00:40:22,239 --> 00:40:24,560 Speaker 1: I said, though, the first the data out to start 744 00:40:24,600 --> 00:40:28,520 Speaker 1: the first order, it was tracking much better than that. So, um, 745 00:40:28,960 --> 00:40:30,440 Speaker 1: you know, we were we were off to a good 746 00:40:30,480 --> 00:40:33,839 Speaker 1: start and we hit we stumbled here and we'll have 747 00:40:33,880 --> 00:40:37,160 Speaker 1: to see how, you know, the next few weeks transpire. Jeff, 748 00:40:37,160 --> 00:40:39,360 Speaker 1: and I know you're you're based in the LA area. 749 00:40:39,560 --> 00:40:41,719 Speaker 1: Have you heard from any of the regional banks in 750 00:40:41,800 --> 00:40:46,680 Speaker 1: the southern California area about their position, their condition, their 751 00:40:46,719 --> 00:40:49,120 Speaker 1: concern because it seems like, you know, some of the 752 00:40:49,160 --> 00:40:51,839 Speaker 1: West Coast banks with some exposure obviously the Silicon Valley 753 00:40:51,840 --> 00:40:54,080 Speaker 1: in the VC community were the ones that were both 754 00:40:54,200 --> 00:40:57,600 Speaker 1: at risk. You know, I was in La over the 755 00:40:57,640 --> 00:41:01,680 Speaker 1: weekend and then I flew to DC on Sunday, and 756 00:41:01,680 --> 00:41:04,279 Speaker 1: it was interesting the contrast between the two coasts. So, 757 00:41:05,320 --> 00:41:08,719 Speaker 1: you know, contacts on the West Coast were very concerned 758 00:41:08,840 --> 00:41:11,959 Speaker 1: about the banking system, but also about the prospects for 759 00:41:12,200 --> 00:41:15,880 Speaker 1: a pretty severe downturn. As you know, many startups fail 760 00:41:16,000 --> 00:41:18,719 Speaker 1: and layoffs pick up on the West Coast and then 761 00:41:18,760 --> 00:41:22,640 Speaker 1: the unemployment rate rises, so much more concern about the 762 00:41:22,640 --> 00:41:24,080 Speaker 1: you know, the health of the economy and the banking 763 00:41:24,080 --> 00:41:26,000 Speaker 1: system on the West Coast. Then when I got to 764 00:41:26,360 --> 00:41:30,440 Speaker 1: to DC on Sunday and now I'm in London, so 765 00:41:30,880 --> 00:41:32,480 Speaker 1: I don't know. I guess I'll find out tomorrow what 766 00:41:32,920 --> 00:41:36,440 Speaker 1: the view is here. Actually there's an interesting comparison here. 767 00:41:36,440 --> 00:41:38,520 Speaker 1: I think that's worth thinking about. The Bank of England 768 00:41:38,600 --> 00:41:42,759 Speaker 1: face some financial stability issues in the guilt market last fall, 769 00:41:42,800 --> 00:41:44,920 Speaker 1: as you well know, and they dealt they chose a 770 00:41:44,960 --> 00:41:48,600 Speaker 1: delt deal with that with a temporary program and they 771 00:41:48,680 --> 00:41:51,160 Speaker 1: kept they maintain the pressure on the overnight rate to 772 00:41:51,200 --> 00:41:54,160 Speaker 1: deal with the inflation problem here. So similar path maybe 773 00:41:54,640 --> 00:41:57,840 Speaker 1: will be pursued by the Fed where they will you know, 774 00:41:57,880 --> 00:42:00,799 Speaker 1: they're very attentive. They don't want to financial crisis They 775 00:42:00,800 --> 00:42:02,839 Speaker 1: don't mind if the unemployment rate rises because I think 776 00:42:02,840 --> 00:42:04,200 Speaker 1: the inflation will come down, but they don't want to 777 00:42:04,200 --> 00:42:06,319 Speaker 1: financial crisis, so they can deal with that with the 778 00:42:06,360 --> 00:42:11,320 Speaker 1: balance sheet and then try to conduct their inflation control 779 00:42:11,560 --> 00:42:15,760 Speaker 1: campaign with the overnight rate. So all right, Well, enjoy London, 780 00:42:16,000 --> 00:42:18,040 Speaker 1: have a good time there. Jeffrey Cleveland, director and chief 781 00:42:18,080 --> 00:42:25,080 Speaker 1: Economists Payton, and Regaled Elam, President and CEO of the 782 00:42:25,200 --> 00:42:29,319 Speaker 1: National Bankers Association, joins us. Nicole. Thanks so much for 783 00:42:29,360 --> 00:42:32,239 Speaker 1: taking the time here help us put into perspective what 784 00:42:32,280 --> 00:42:34,799 Speaker 1: we've seen with some of these regional banks over the 785 00:42:34,840 --> 00:42:38,640 Speaker 1: last several days. How concerned are you that this is 786 00:42:39,120 --> 00:42:43,880 Speaker 1: systemic for some regional banks or it's really kind of 787 00:42:43,960 --> 00:42:47,359 Speaker 1: ring fenced to a handful of names. Yeah, so, so 788 00:42:47,520 --> 00:42:50,400 Speaker 1: thank you for having me today. We are seeing three 789 00:42:50,440 --> 00:42:53,280 Speaker 1: big ways that it's impacting us and that I imagine 790 00:42:53,280 --> 00:42:57,160 Speaker 1: will continue. The first is impacting customers. There is certainly 791 00:42:57,239 --> 00:43:00,640 Speaker 1: a deposit flight as customers are moving their deposits and 792 00:43:00,680 --> 00:43:03,719 Speaker 1: really their banking relationships to big Wall Street banks that 793 00:43:04,040 --> 00:43:06,600 Speaker 1: are now being perceived as too big to fail post 794 00:43:06,640 --> 00:43:09,319 Speaker 1: two thousand and eight. We're also paying attention to its 795 00:43:09,360 --> 00:43:14,360 Speaker 1: impact on regulators We certainly applaud this administration and regulators 796 00:43:14,400 --> 00:43:17,120 Speaker 1: for being swift in their response. But one thing that 797 00:43:17,160 --> 00:43:19,799 Speaker 1: we know is that this facility is going to need 798 00:43:19,840 --> 00:43:22,239 Speaker 1: to be paid for, and is it going to be 799 00:43:22,320 --> 00:43:25,480 Speaker 1: paid off of the back of small community banks, particularly 800 00:43:25,480 --> 00:43:29,239 Speaker 1: those banks who have asset sizes under three billion dollars? 801 00:43:29,320 --> 00:43:31,160 Speaker 1: Are they going to be the ones that are now 802 00:43:31,200 --> 00:43:33,880 Speaker 1: having to bail it out. We also know that the 803 00:43:34,000 --> 00:43:38,279 Speaker 1: Hill and regulators are responding with new regulations and new 804 00:43:38,640 --> 00:43:41,719 Speaker 1: and new legislation. And typically when you have something like 805 00:43:41,800 --> 00:43:45,280 Speaker 1: this that happens, there's this one size fits all approach 806 00:43:45,320 --> 00:43:48,680 Speaker 1: that can be really burdensome on minority and community banks. 807 00:43:48,680 --> 00:43:50,759 Speaker 1: And so I think you're going to continue to see 808 00:43:50,800 --> 00:43:53,680 Speaker 1: deposit flight to Wall Street banks that are too big 809 00:43:53,680 --> 00:43:56,640 Speaker 1: to fail. You're going to continue to see regulators maybe 810 00:43:56,680 --> 00:44:00,120 Speaker 1: take as well as policymakers on the Hill continue you 811 00:44:00,160 --> 00:44:03,000 Speaker 1: to maybe think about a one size fits all approach 812 00:44:03,239 --> 00:44:06,640 Speaker 1: and how they address this. Well put this into some 813 00:44:06,680 --> 00:44:09,319 Speaker 1: perspective for us, because my understanding was to your point 814 00:44:09,320 --> 00:44:11,080 Speaker 1: of who's going to pay for this, is that the 815 00:44:11,120 --> 00:44:15,160 Speaker 1: fund already exists with the FED slash the FDIC, a 816 00:44:15,239 --> 00:44:19,560 Speaker 1: fund that banks large and small contribute to based upon 817 00:44:19,680 --> 00:44:21,680 Speaker 1: the amount of risk taking they do. So aren't the 818 00:44:21,719 --> 00:44:25,279 Speaker 1: funds already allocated for that? The funds are there, but 819 00:44:25,360 --> 00:44:28,839 Speaker 1: when something like this happens, there is you do have 820 00:44:28,880 --> 00:44:31,279 Speaker 1: the right to have what's called a special assessment. And 821 00:44:31,320 --> 00:44:35,160 Speaker 1: I think how exactly that special assessments is going to 822 00:44:35,200 --> 00:44:37,040 Speaker 1: be done is going to be is going to be 823 00:44:37,080 --> 00:44:40,640 Speaker 1: a challenge. That's something that is still being talked about 824 00:44:40,640 --> 00:44:45,560 Speaker 1: and discussed. So, Nicole, do you believe or in the 825 00:44:45,680 --> 00:44:50,239 Speaker 1: National Bankers Association believe that Dodd Franks should be kind 826 00:44:50,239 --> 00:44:53,839 Speaker 1: of applied to not just the large banks, the too 827 00:44:53,840 --> 00:44:58,080 Speaker 1: big to fail, but to regional banks as well. You 828 00:44:58,120 --> 00:45:01,200 Speaker 1: know that this idea of keeping the a banking system 829 00:45:01,320 --> 00:45:04,960 Speaker 1: safe is something that is important regardless of your asset size, 830 00:45:05,000 --> 00:45:07,439 Speaker 1: whether you're a small bank or a Wall Street bank, 831 00:45:07,800 --> 00:45:11,720 Speaker 1: that sentiment of keeping the financial system safe is something 832 00:45:11,719 --> 00:45:15,120 Speaker 1: that is important. I think, whether it's Dot Frank or 833 00:45:15,239 --> 00:45:18,560 Speaker 1: just in general, regulations that tend to be responsive to 834 00:45:18,680 --> 00:45:22,000 Speaker 1: something like as cosmic as this. What tends to happen 835 00:45:22,120 --> 00:45:25,800 Speaker 1: is that you don't have regulations that take into considerations 836 00:45:25,840 --> 00:45:28,759 Speaker 1: the uniqueness of these small banks, right, so you have 837 00:45:28,840 --> 00:45:32,719 Speaker 1: regulations that may have capital requirements that don't fit the 838 00:45:32,760 --> 00:45:35,360 Speaker 1: capital requirement needs of a small bank. And so what 839 00:45:35,480 --> 00:45:39,400 Speaker 1: tends to happen is that while increased regulations may be 840 00:45:39,520 --> 00:45:43,200 Speaker 1: needed for all, you cannot have a one size fits 841 00:45:43,239 --> 00:45:45,600 Speaker 1: all approach. And I think oftentimes that's what you tend 842 00:45:45,600 --> 00:45:47,799 Speaker 1: to see as a one size fits all approach that 843 00:45:47,880 --> 00:45:52,120 Speaker 1: can be unfairly burdensome on small banks and Nichole some 844 00:45:53,920 --> 00:45:57,080 Speaker 1: critics are some observers of the banking industry say, hey, 845 00:45:57,080 --> 00:46:00,000 Speaker 1: it just needs to have better enforcement of what's already there. 846 00:46:00,360 --> 00:46:03,479 Speaker 1: I mean, I could have looked at svb's balance sheet 847 00:46:03,520 --> 00:46:06,520 Speaker 1: and noted the mismatch between their deposits and the duration 848 00:46:06,680 --> 00:46:13,600 Speaker 1: of their investments. What happened? Do you think it's very 849 00:46:13,719 --> 00:46:17,040 Speaker 1: interesting because it is, Uh, they did have a rapid 850 00:46:17,080 --> 00:46:21,239 Speaker 1: growth non traditional model that you know, you would not 851 00:46:21,360 --> 00:46:26,719 Speaker 1: have thought that that would have it would have it 852 00:46:26,760 --> 00:46:29,200 Speaker 1: would have passed the stress tests. And so I do 853 00:46:29,320 --> 00:46:32,799 Speaker 1: think it causes you to wonder, Um, were they not 854 00:46:32,840 --> 00:46:35,719 Speaker 1: paying attention? Was this for the sake of we want 855 00:46:35,760 --> 00:46:38,839 Speaker 1: to be innovative? Um? What was going on here? But 856 00:46:39,040 --> 00:46:41,000 Speaker 1: one would one would have seen if you're growing three 857 00:46:41,440 --> 00:46:43,400 Speaker 1: fifteen percent in the last two years how are you 858 00:46:43,440 --> 00:46:46,719 Speaker 1: passing these stress tests? Um, and that's a that's a 859 00:46:46,760 --> 00:46:49,920 Speaker 1: problem because it's not the creation of something new, it's, 860 00:46:49,960 --> 00:46:53,160 Speaker 1: as you noted, there was already something there. Well in 861 00:46:53,239 --> 00:46:55,239 Speaker 1: terms of those stress tests, I have to ask a 862 00:46:55,239 --> 00:46:57,480 Speaker 1: lot of people are saying, look, a lot of these 863 00:46:57,560 --> 00:47:02,319 Speaker 1: kind of investment Uh see, sweet folks had said, had 864 00:47:02,400 --> 00:47:05,960 Speaker 1: not properly hedged the duration risks that they were taking on. 865 00:47:06,480 --> 00:47:09,920 Speaker 1: Is there a market angle to this were these Was 866 00:47:09,960 --> 00:47:11,960 Speaker 1: there a way that this could have been prevented from 867 00:47:12,000 --> 00:47:16,120 Speaker 1: the folks who are making these investment decisions. Yeah. So 868 00:47:16,160 --> 00:47:17,759 Speaker 1: I think what it really goes to show is that 869 00:47:17,840 --> 00:47:21,360 Speaker 1: Silicon Valley and Signature Bank have a model that is 870 00:47:21,360 --> 00:47:24,160 Speaker 1: not reflective of most banks in the country. It is 871 00:47:24,280 --> 00:47:27,480 Speaker 1: very much a rapid growth, non traditional model that has 872 00:47:27,680 --> 00:47:32,000 Speaker 1: unstable deposit basis and so the challenges they had high 873 00:47:32,080 --> 00:47:36,080 Speaker 1: concentrations of VC tech startups and crypto and when you 874 00:47:36,120 --> 00:47:38,560 Speaker 1: have all of those things happening at the same time, 875 00:47:39,360 --> 00:47:42,880 Speaker 1: and including uninsured deposits, which ninety eight percent of my 876 00:47:43,000 --> 00:47:46,920 Speaker 1: banks have MBI deposit accounts that are that are ensured. 877 00:47:47,239 --> 00:47:49,200 Speaker 1: So when you have all of those things happening at 878 00:47:49,200 --> 00:47:51,799 Speaker 1: the same time, it's a challenge. I think part of 879 00:47:51,800 --> 00:47:53,600 Speaker 1: the issue is is that there are only but a 880 00:47:53,640 --> 00:47:57,359 Speaker 1: handful of crypto banks, right. Crypto is something that there's 881 00:47:57,400 --> 00:47:59,880 Speaker 1: lots of debate about, but most could say that it 882 00:48:00,160 --> 00:48:02,960 Speaker 1: not regulated. And so when you have something like crypto, 883 00:48:03,040 --> 00:48:05,920 Speaker 1: it's also reminiscent to me of marijuana banking. Right. When 884 00:48:05,920 --> 00:48:08,520 Speaker 1: you have these types of industries where they're not as 885 00:48:08,520 --> 00:48:11,799 Speaker 1: regulated and so it ends up being consolidated into a 886 00:48:11,840 --> 00:48:16,719 Speaker 1: couple of banks, it becomes very, very risky. Nicole. Do 887 00:48:16,760 --> 00:48:21,000 Speaker 1: you expect, or a National Bankers Association expect more failures 888 00:48:21,000 --> 00:48:25,120 Speaker 1: from regional banks in the coming weeks and months. I 889 00:48:25,160 --> 00:48:27,160 Speaker 1: don't know that I would expect more failures. I think 890 00:48:27,400 --> 00:48:29,800 Speaker 1: we made it through the pandemic where you didn't see 891 00:48:29,840 --> 00:48:32,680 Speaker 1: a decline that you saw post two thousand and eight crisis, 892 00:48:32,880 --> 00:48:36,200 Speaker 1: where you saw a decline in regional banks and particularly 893 00:48:36,200 --> 00:48:38,520 Speaker 1: community banks. Not so much regional banks, but you saw 894 00:48:38,520 --> 00:48:41,080 Speaker 1: a decline in these community banks. You did not see 895 00:48:41,120 --> 00:48:44,280 Speaker 1: this post the pandemic. I think this was the exception 896 00:48:44,600 --> 00:48:47,719 Speaker 1: and not the rule. Again, given the fact that these 897 00:48:47,760 --> 00:48:50,120 Speaker 1: were banks that are not reflective of most banks in 898 00:48:50,120 --> 00:48:52,919 Speaker 1: the country, that's what led to their failure and so 899 00:48:53,200 --> 00:48:56,720 Speaker 1: I don't think that you'll continue to see that, all right, Nicole, 900 00:48:56,719 --> 00:48:58,640 Speaker 1: thank you so much for joining us. Really appreciate getting 901 00:48:58,719 --> 00:49:03,040 Speaker 1: your perspective here during this time of uncertainty around the 902 00:49:03,080 --> 00:49:06,680 Speaker 1: regional bank business. Nicole Elam, President and CEO of the 903 00:49:06,760 --> 00:49:11,239 Speaker 1: National Bankers Association, joining the SERACS based down in Washington, 904 00:49:11,320 --> 00:49:14,680 Speaker 1: d C. Thanks for listening to the Bloomberg Markets podcast. 905 00:49:15,080 --> 00:49:18,280 Speaker 1: You can subscribe and listen to interviews with Apple Podcasts 906 00:49:18,400 --> 00:49:22,359 Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm 907 00:49:22,360 --> 00:49:25,839 Speaker 1: on Twitter at Matt Miller nineteen seventy three. And I'm 908 00:49:25,840 --> 00:49:28,920 Speaker 1: Faull Sweeney. I'm on Twitter at pt Sweeney. Before the podcast, 909 00:49:28,960 --> 00:49:31,479 Speaker 1: you can always catch us worldwide at Bloomberg Radio