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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

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Speaker 1: my co host Matt Miller.

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Speaker 2: Every business day we bring you interviews from CEOs, market pros,

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Speaker 2: and Bloomberg experts, along with essential market moving news.

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Speaker 1: Find the Bloomberg Markets podcast called Apple Podcasts or wherever

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Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.

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Speaker 3: Let's check it with.

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Speaker 1: Alison Williams, Senior Global Banks and Asset Managers analysts for

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Speaker 1: Bloomberg Intelligence.

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Speaker 3: Allison, you'd been busy.

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Speaker 1: A lot of the big banks have been reporting, a

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Speaker 1: lot of the European banks starting to report.

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Speaker 3: What are some of the takeaways here? I mean they

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Speaker 3: were concern in the marketplace.

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Speaker 1: Just think, you know, a month ago, five weeks ago

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Speaker 1: about some of the regional banks and what does that

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Speaker 1: mean for the banking system. So when you listen to

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Speaker 1: the Brian moynihans of the world, the Jamie Diamonds of

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Speaker 1: the world, how are they characterizing this banking system?

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Speaker 4: I think in general the clear message is, you know,

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Speaker 4: we had some turmoil, but things have studied. We've heard

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Speaker 4: that across the banks. Of course, of course, you know

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Speaker 4: for a republic, is is the one out there that

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Speaker 4: people keep watching, a situation that has not really resolved itself.

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Speaker 4: But in general, we also have seen you know, sort

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Speaker 4: of you know, companies that gained deposits. We see the

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Speaker 4: companies that are the safe havens. So in the US

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Speaker 4: that was companies like JP Morgan at the stream, also

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Speaker 4: Bank America, you know, Wells and City to a lesser extent.

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Speaker 4: In Europe we saw ubs as the safe haven crowd.

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Speaker 4: Sweet was the big one that we got this week

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Speaker 4: where we saw i would say, not as bad as feared,

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Speaker 4: so significant outflows, but not as bad as the prior quarter.

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Speaker 5: Of course, we.

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Speaker 4: Don't know what the trend was, and the sense is

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Speaker 4: that the day, you know, the daily outflows were significant

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Speaker 4: and that's why regulators had to step in. Deutsche Bank

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Speaker 4: was one that lost deposits. Their stock as you call,

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Speaker 4: came under pressure sort of in the late March turmoil.

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Speaker 4: But they think said things have studied. So things have

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Speaker 4: generally studied. But as we're moving forward, the question is lending.

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Speaker 4: What kind of lending are we going to see? Pullback?

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Speaker 4: You brought up you know, Jamie Dimond and Brian moynihan

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Speaker 4: who both said, you know, this is not a credit crunch.

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Speaker 4: We are going to see pockets of a pullback, but

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Speaker 4: I think that's really to come in the weeks ahead,

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Speaker 4: and then you know, the cost of those deposits are

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Speaker 4: going to continue to rise. So we're not in a

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Speaker 4: deposit plight, We're not in an extreme environment. But deposits

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Speaker 4: are going to continue to go into higher yielding products

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Speaker 4: as they should. They're going to go into money market

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Speaker 4: funds as they should, and so it's going to cost.

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Speaker 4: It's going to eat into the bank's interest margins. So

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Speaker 4: still very strong revenue, but at the margin probably have

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Speaker 4: seen the peak.

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Speaker 2: Do you think that the turmoil we've seen around First

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Speaker 2: Republic and the you know, free fall in the share

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Speaker 2: price for a couple of days this week is going

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Speaker 2: to turn out having led to more deposit outflows? I mean,

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Speaker 2: do do depositors watch the markets as closely as we

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Speaker 2: do and and decide to run again?

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Speaker 4: I think that, you know, First Republic is something that

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Speaker 4: we're all closely watching, But it's not the days of

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Speaker 4: March where there was a lot of headlines. There were

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Speaker 4: a lot of social media headlines, et cetera, and it

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Speaker 4: was a sort of a broader problem. I think now

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Speaker 4: it's much more an isolated problem where first republic, you know,

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Speaker 4: it has to figure out a path forward. And now

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Speaker 4: there's a lot more interested parties because you had all

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Speaker 4: these banks that you put those deposits in to try to,

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Speaker 4: you know, send a signal of confidence to the system,

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Speaker 4: and now they're you know, they're sort of tied into

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Speaker 4: the situation a little bit.

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Speaker 3: So I think that's.

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Speaker 4: Something we're watching. But it has become a much more

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Speaker 4: bank specific situation. As we know, we had a few

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Speaker 4: banks that were outliers at the extreme. They still caused

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Speaker 4: broad worries, but those broad worries seem to have studied

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Speaker 4: up hears. But I think what it did happen, right

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Speaker 4: is I did think it woke up the conversation. You

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Speaker 4: know why, Oh, suddenly I can make money on my savings,

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Speaker 4: Like that hasn't happened in like, let's say, a decade exactly,

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Speaker 4: And so I think that people realize, suddenly, oh I

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Speaker 4: can get four or five percent. I might have to

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Speaker 4: pay some fees of money markets or you know, what

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Speaker 4: have you, or shop around a little bit, but there's

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Speaker 4: actually yield out there.

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Speaker 1: Hey, Alison, our good friends Alizard reported some results a

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Speaker 1: little bit weaker than expected this and they're announcing that

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Speaker 1: they're laying off ten percent of their workforce on weak

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Speaker 1: advisory outlook here, talk to us about that side of

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Speaker 1: the business. What do you what are you seeing when

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Speaker 1: you look across the banks that you cover in terms

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Speaker 1: of kind.

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Speaker 3: Of capital markets advisory, some.

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Speaker 1: Of that stuff that's a little bit more volatile, I guess.

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Speaker 4: So I think, unfortunately, Paul, we're that business remains weak.

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Speaker 4: We're back to actually levels that's sort of the onset

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Speaker 4: of the pandemic to put it into perspective to how

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Speaker 4: weak things are. And the disappointment really is despite this

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Speaker 4: you know, huge rally we've had since you know, granted

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Speaker 4: it's a rally from the bottom, but since the fall,

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Speaker 4: it hasn't translated into more deals. So that just tells

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Speaker 4: you that the expectations between that, you know, the potential

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Speaker 4: investors or buyers in the market and people that want

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Speaker 4: to come to market, there's still a gap. What we've

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Speaker 4: heard from most of the managements out there is that

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Speaker 4: they expect to pick up in the second half or

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Speaker 4: twenty twenty four. Thozart is a little bit more bearish.

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Speaker 4: I would point to the fact that their M and

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Speaker 4: A business tends to be stronger in Europe, so there

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Speaker 4: might be a little bit of a regional impact. But

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Speaker 4: we are seeing cuts across these banks. Deutsche Bank, for example,

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Speaker 4: talked about cutting some of their senior executives. Not forward facing,

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Speaker 4: but there will be some cuts there. And you know,

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Speaker 4: we've seen articles here and there about different cuts made.

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Speaker 5: And so.

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Speaker 4: To the extent that FED policy does not turn to cuts,

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Speaker 4: because I think that's the outlook that a lot of

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Speaker 4: these more bullish calls are predicated on. You know, we

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Speaker 4: could continue to see some more right sizing through the.

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Speaker 1: End of the year.

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Speaker 3: All Right, Alison, thank you very much for joining us.

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Speaker 3: Appreciate the recap there.

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Speaker 1: Allison Williams senior Global Banks and Asset Managers analysts for

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Speaker 1: Bloomberg Intelligence.

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Speaker 3: And as if that's not enough, she's also.

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Speaker 1: Co director of Research for the Americas for Bloomberg Intelligence,

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Speaker 1: so she's got like one hundred and fifty people reporting

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Speaker 1: to her.

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Speaker 3: I mean, it's crazy.

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Speaker 2: I'm curious, busy. I'm curious to know, because you had

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Speaker 2: such a long career on Wall Street, what do you

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Speaker 2: make of the term right sizing? How does that strike you?

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Speaker 3: No, it's just we know it the way we think

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Speaker 3: about it.

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Speaker 1: It is on Wall Street, we get overpaid, but we

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Speaker 1: have below market job security.

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Speaker 3: That's just that's the trade off.

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Speaker 1: They overpay us asymmetrically, but we know our jobs are

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Speaker 1: very tenuous at best.

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Speaker 5: You're listening to the team Ken's are Live program Bloomberg

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Speaker 5: Markets weekdays at ten am Eastern on Bloomberg dot Com,

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Speaker 5: the iHeartRadio app and the Bloomberg Business App, or listen

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Speaker 5: on demand wherever you get your podcasts.

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Speaker 3: We're still a little tech recap here. Why not?

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Speaker 1: There's always lots of talk about Dan Ives, senior equity

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Speaker 1: analyst at web Bush Securities, joins us live here in

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Speaker 1: our Bloomberg Interactive Broker studio with yet again a questionable

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Speaker 1: outfit on a rag ran a senior tech anaists and

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Speaker 1: Bloomberg Intelligence. We get him one week a month, so

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Speaker 1: we get him here as often as we can. Otherwise

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Speaker 1: he's in Chicago doing god knows what. All Right, Dan,

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Speaker 1: let's start with you here.

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Speaker 2: Well, I don't think you can call out anybody's outfit today.

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Speaker 3: You don't like the flannel?

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Speaker 2: I love it, but I'm not a great I mean,

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Speaker 2: Paul is wearing for our listeners a red and black

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Speaker 2: check lumberjack flannel. Yes, I've got a flannel on.

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Speaker 3: Character for me, so yes, I get.

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Speaker 2: But at least at least Dan is wearing a blazer, Yes,

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Speaker 2: albeit lilac checked blazer to go.

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Speaker 1: With the powder blue pants. Yes, so Dan, Amazon, what's

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Speaker 1: your take on kind of what we heard out of

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Speaker 1: those guys last night.

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Speaker 6: I think it's tailed two cities. I mean, on one hand,

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Speaker 6: better than feared in terms of what we saw in

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Speaker 6: cloud in the quarter and e commerce really starting to

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Speaker 6: now recover bit and the cost cuttings there, but with

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Speaker 6: the guidance for next quarter was soft, and I think

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Speaker 6: ultimately just speaks to that company Crosstown the two or

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Speaker 6: six area, coulde they're gaining share. Microsoft is gaining share

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Speaker 6: from Amazon in the AWS, and I think that's a

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Speaker 6: narrative that continues to play out. But overall, this is

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Speaker 6: better than feared tech earnings. I think investors came in

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Speaker 6: white knuckles into the week, they go in drinking cappuccino.

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Speaker 2: Yeah, I will point out, as I said earlier, Yes,

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Speaker 2: Amazon shares are down today, they're off two point eight percent,

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Speaker 2: but they were up four point six percent yesterday and

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Speaker 2: they're up twenty six percent year to date. I mean,

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Speaker 2: they're doing very well. In fact, they're supporting this market.

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Speaker 2: Right They're one of the companies on Ragrana that's really

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Speaker 2: boosted this market, one of a handful that's boosted this

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Speaker 2: market this year. So they're still doing pretty well, and

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Speaker 2: I feel like they might be underpromising so that they

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Speaker 2: can over deliver on the one hand. On the other hand,

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Speaker 2: they're gonna cut margins to fight Microsoft across town.

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Speaker 7: See from our side, the other thing you want to

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Speaker 7: think about today the growth rate is going down, then

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Speaker 7: margin expectations at least in the near term have to

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Speaker 7: go down as well, because AWS supports majority of the

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Speaker 7: margins of Amazon. But think about it this way, and again,

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Speaker 7: this is where I argue with you know, most of

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Speaker 7: the bears is I agree, the next six months are

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Speaker 7: going to be tough for everybody, But think about the

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Speaker 7: revival when it comes back. It comes back with the

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Speaker 7: margin structure that's far superior than when we entered the

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Speaker 7: you know, the boom. I would say, imagine what's going

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Speaker 7: to happen to the margins at that point, and the

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Speaker 7: margins of the overall company, which is Amazon is just

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Speaker 7: going to be phenomenal once we get the recovery.

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Speaker 1: So Dan, you know Andy Jase uh is the you

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Speaker 1: know now the new president and see it EO. Is

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Speaker 1: he as committed to Jeff Bezos's plan to like, I'll

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Speaker 1: spend whatever I need to spend to get market share

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Speaker 1: and grow a business that I think is in line.

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Speaker 3: Is that still the mantra for Amazon or no? No?

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Speaker 6: I mean, look, Bezos was basically spending money like in

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Speaker 6: nineteen eighty is rock star right? And Jase basically inherited

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Speaker 6: that has had a cut costs, ripped a band aid

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Speaker 6: off and that's why he inherited a lot of this.

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Speaker 6: But look, ultimately they need to aggressively spend AI need

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Speaker 6: to focus on next gen, especially in this arms where

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Speaker 6: it's going on in tech. But at the same time

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Speaker 6: cut costs you're starting to see it play out. But

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Speaker 6: overall in tech, I mean, I'll call it him as

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Speaker 6: a Goldilocks week when you combine Microsoft, Meta Alphabet and Amazon.

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Speaker 2: I actually heard a story about Plexico Burus buying a

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Speaker 2: Lamborghini today and without having ever test driven one, and

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Speaker 2: then realizing after he got into the four hundred thousand

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Speaker 2: dollars car that he doesn't really fit. And this came

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Speaker 2: from where I can't reveal my sources. Okay, friend of

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Speaker 2: Plexico's who now works for Bloomberg Radio.

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Speaker 1: I was wondering why we were talking to our tech

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Speaker 1: annals about Plexico errors.

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Speaker 2: No, because he said spending money like a nineteen eighty star.

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Speaker 3: I got ya, and with it reminded me and the

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Speaker 3: NFL draft and so it all. So AI is relatively

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Speaker 3: new term for me.

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Speaker 1: Tell me what it means for the tech industry, you know,

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Speaker 1: and who.

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Speaker 3: The players are? How do I think about it?

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Speaker 7: So, at least in my view right now, it's a

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Speaker 7: lot of software development or software that's there for people

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Speaker 7: to build applications on. To me, the two biggest things

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Speaker 7: and I'm not talking about hardware world because the video

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Speaker 7: is a huge you know, winner in that case, But

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Speaker 7: the two real big areas we're going to see a

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Speaker 7: lot more money go into is cloud services we're on

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Speaker 7: which you will develop these applications. And the second is

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Speaker 7: this army off software developers that are you know, part

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Speaker 7: of IBM Global Services or Accenture or Tata and all

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Speaker 7: those companies that are going to be deployed by companies

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Speaker 7: to create these enterprise applications.

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Speaker 1: All right, So maybe is it too late for me,

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Speaker 1: Matt to retrain as a software engineer if you think.

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Speaker 2: It is too late, because I've considered it myself a

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Speaker 2: number of different times. Have you seen the salaries that

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Speaker 2: we're paying programmers at this company?

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Speaker 3: And they don't even and they dress like they're you know,

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Speaker 3: paupers over there.

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Speaker 2: They don't have to, I don't. They don't please anybody.

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Speaker 3: No, theo those and make money. Yes, I know, and

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Speaker 3: they're the best in the business. Dan, what's some of

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Speaker 3: your top what's your top pick right here?

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Speaker 1: What are you talking to investors as we come out

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Speaker 1: of this little earnings period here?

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Speaker 6: Yeah, I look, Apple continues to be a top pic

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Speaker 6: and I think Thursday night that will be the drum

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Speaker 6: roll with Cooper Tino coming out with what I believe

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Speaker 6: strong iPhone numbers next week Thursday.

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Speaker 3: Next week we have Apple numbers.

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Speaker 6: Thursday, and that's the drummo because look is we saw

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Speaker 6: it from Microsoft and Alphabet that's one half in terms

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Speaker 6: of what we see on cloud, Microsoft best cloud Play.

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Speaker 6: Apple can just be overall our top pick. But then

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Speaker 6: I look like names like Power out doing cybersecurity that

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Speaker 6: can turn short of what I view is almost to try,

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Speaker 6: you know, triangulate way to play some of the key

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Speaker 6: tech trends right here. But it all starts in Cooper,

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Speaker 6: Tino and Redmond.

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Speaker 1: When you when you travel around talking to institution investors today,

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Speaker 1: I mean, you had it. I'm gonna call it easy job.

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Speaker 1: You an on an easy job. I could have done

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Speaker 1: your job over the last decade fifteen years. Now you've

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Speaker 1: got a little bit of headwind out there for the

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Speaker 1: tech story. What's the pushback you get from investors on

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Speaker 1: tech these days?

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Speaker 6: But it's almost more enjoyable because now the New York

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Speaker 6: City cab drivers still barish on tech. A lot of

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Speaker 6: institutional investors hate the rally, But ultimately it's a stock

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Speaker 6: pickers market. Is on our talking about it is identifying

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Speaker 6: the winners, doing the work and trying to figure out

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Speaker 6: the hype from the actual you know where the spending is.

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Speaker 6: And that's why I think that's been the best this

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Speaker 6: last three to four month. It's a stock pickers market,

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Speaker 6: and I think that's the key here. No longer fed

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Speaker 6: driven Ppi y Noko every Friday, that's the key.

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Speaker 3: Interesting.

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Speaker 2: I mean, Anaak how much further can these companies run?

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Speaker 2: I mean they're already they've done so well. When you

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Speaker 2: look at the gains we've seen year to date, they're

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Speaker 2: all basically Apple, Microsoft, and Video Meta and Amazon.

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Speaker 7: I thought they would all cut down massively last year.

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Speaker 2: Okay, I was. I was not. I was ignoring twenty

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Speaker 2: twenty two off the bottoms.

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Speaker 7: I would not ignore that, because you know what, come

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Speaker 7: next year, we're going to see a very different story.

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Speaker 2: Quarterly sales for web services. Amazon kicked off twenty twenty

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Speaker 2: two with a gain of forty percent year over year.

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Speaker 2: Now we're looking at sixteen percent and they're saying it's

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Speaker 2: going to fall the same.

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Speaker 7: I would say, go back and see what happened in

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Speaker 7: twenty twenty three. Quarters of four quarters in a row,

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Speaker 7: Amazon's growth trade declined massively awsh The year after that,

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Speaker 7: it improved by ten percentage points in some quarters more

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Speaker 7: than that. So it's it's a matter of usage. It's

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Speaker 7: not as if things cried up. It's a paper use model.

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Speaker 7: People using more, it's gonna go up. Economic activity goes up.

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Speaker 2: It goes up.

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Speaker 7: People want to save more money, then move more workloads.

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Speaker 3: It adds up.

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Speaker 7: It's a compounding business.

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Speaker 2: You know, it's also cool. Dan hon Rog was telling

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Speaker 2: us yesterday, but there's a green component to businesses switching

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Speaker 2: to the cloud, right, because if you have all your

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Speaker 2: servers on site wherever you are, energy could cost a

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Speaker 2: lot and it could be very pollutive. However, a lot

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Speaker 2: of these businesses, like on Rog was telling us, Amazon

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Speaker 2: or maybe Microsoft, have put their server farms in places

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Speaker 2: where energy is cleaner and cheaper, so it really makes

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Speaker 2: a difference to their big carbon footprint.

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Speaker 6: Well, it's a big part of what you see that

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Speaker 6: Microsoft's talked about where Apple talks about. And then at

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Speaker 6: the same time, like when you look at AI, what's

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Speaker 6: really happening now from processing power perspective, It's going to

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Speaker 6: be a golden age in terms of AI. This is

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Speaker 6: not a hype trend and I've viewed as the next

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Speaker 6: leg to what I've view is just going to be

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Speaker 6: probably one of the biggest trends between in the last

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Speaker 6: twenty five years.

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Speaker 1: Hey, Dan, can't let you leave here without and the

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Speaker 1: update of Tesla call what are you seeing out of

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Speaker 1: our good friends?

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Speaker 6: The cyber truck coming, Yeah, so cyber Truck's coming for you.

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Speaker 6: And around Halloween Look, I think the biggest thing is

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Speaker 6: just the price cuts continue sort of weigh on the

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Speaker 6: stock in terms of margins. You see now a lot

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Speaker 6: of you know, throwing in the towel. I view this

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Speaker 6: is sort of over sold in my opinion, because I

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Speaker 6: think the demand will start to tick up, specifically in China,

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Speaker 6: price cuts will start to stabilize. And then again going

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Speaker 6: the second half with cyber truck, I think that's where

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Speaker 6: I must puts the red cape back on and you

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Speaker 6: start to see sentiment improve.

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Speaker 3: The cyber truck.

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Speaker 2: I'm excited for the cyber truck. It looks terrible. It

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Speaker 2: looks awesome. Did you not like mad Max?

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Speaker 3: No, it looks like.

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Speaker 2: A giant DeLorean. I love it.

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Speaker 3: I like the Ford f one fifty.

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Speaker 1: Look all right, that's our tech roundtable for the day again.

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Speaker 1: I've seen your equity antis, what Bush Securities and on

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Speaker 1: Ourgrana he's a senior technists with Bloomberg Intelligence. Kind of

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Speaker 1: round table here, kind of get the latest on tech

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Speaker 1: space again. Amazon reporting numbers, keep it a little bit.

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Speaker 1: The numbers were good, big big operating profit.

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Speaker 2: But this market has been dominated by tech.

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Speaker 3: I know totally, yep, absolutely.

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Speaker 5: You're listening to the tape. Cat's are live program Bloomberg

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Speaker 5: Markets weekdays at ten am Eastern on Bloomberg Radio, the

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Speaker 5: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

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Speaker 5: You can also listen live on Amazon Alexa from our

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00:17:23,200 --> 00:17:27,600
Speaker 5: flagship New York station, Just say Alexa play Bloomberg eleven thirty.

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Speaker 3: Let's get a kind of a wider view of what's

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Speaker 3: going on here. We're going to bring in the.

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Speaker 1: Sylvia Drablonski, chief investment officer and co founder of Defiance

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Speaker 1: ATFS and Herman Chan. He is the regional bank analyst

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Speaker 1: for Bloomberg Intelligence, kind of put this a little bit

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Speaker 1: into context. So, Sylviet, it's not every day that we

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Speaker 1: see this type of struggle for a financial institution. Yes,

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Speaker 1: it's not a big money center bank like we saw

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Speaker 1: back in two thousand and eight, but still, what's your

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Speaker 1: view when you start seeing some of these regional banks

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Speaker 1: really face some stress here?

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Speaker 8: Yeah, iked morning. Well, interestingly enough, it actually feels like

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Speaker 8: it is a little more common. It's not every day,

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Speaker 8: but it's happened a couple of days this year. So

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Speaker 8: I think what it does is it puts some strain

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Speaker 8: on you know, the confidence of investors essentially about the

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Speaker 8: regional banking system. And you know, there's that becomes problematic,

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Speaker 8: right because if all of the funds are pulled from

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Speaker 8: regional banks, you know, we can assume that they go elsewhere,

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Speaker 8: so you know, find the money stays in the system.

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Speaker 8: But you do have this, you know, major part of

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Speaker 8: the financial sector on shaky ground, and I think if

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Speaker 8: that happens, you know, these are banks that classically lead

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Speaker 8: to to main street and that's the major part of

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Speaker 8: our RGVP and our economy. So there is some fear

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Speaker 8: that these things that they keep piling up, you know,

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Speaker 8: would be inherently pretty bad for the for the banking

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Speaker 8: banking system, and it would make investors worry about this

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Speaker 8: ability of larger banks eventually.

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Speaker 2: Uh yeah, all we see those fears spreading across the market,

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Speaker 2: until now it looks like it's only you know, it's

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Speaker 2: isolated to so far. SVB, Signature Bank and First Public

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Speaker 2: is still going concern But Herman chan, how much longer?

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Speaker 2: I mean, what do they have in terms of deposits

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Speaker 2: and what do they have in terms of assets? Can

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Speaker 2: customers get all their money out today?

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Speaker 9: The First Republic's to open for business right now today.

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Speaker 9: So if you're a depositor, you can easily just go

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Speaker 9: to the ATM or head up your business banker or

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Speaker 9: personal banker and exit the balance.

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Speaker 2: Che ATMs have limits. You can't pull out more than

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Speaker 2: like a thousand dollars. So if you have forty sending

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Speaker 2: at First Republic you're gonna need.

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Speaker 9: You can go visit one of their beautiful offices and

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Speaker 9: eat some of their chocolate chip cookies and talk to

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Speaker 9: a personal banker and exit your withdrawal funds as you see.

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Speaker 1: Please, Sylvia, you know, how concerned are you about in

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Speaker 1: the broader economy if there is some more stress to

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Speaker 1: this banking system that maybe not a credit crunch, but certainly,

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Speaker 1: you know, maybe tightening of credit out there such that

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Speaker 1: it might impact the economy.

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Speaker 3: Are you factoring that into your outlook?

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Speaker 8: You know, I think it sort of depends to tough

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Speaker 8: question to answer, because I think it depends a lot

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Speaker 8: on what the Fed plans to do. I think, so

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Speaker 8: if you know, we'll certainly have credit tightening, and we'll

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Speaker 8: certainly have less liquidity in the system, and then on

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Speaker 8: top of that, you'll have you know, sort of even

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Speaker 8: less liquidity in the system because investors will will kind

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Speaker 8: of pull out in the market, and you know, it

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Speaker 8: gets worse. Thinks that, okay, perhaps there's some systemic risk.

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Speaker 8: I don't think there is a you know, broad based

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Speaker 8: risk to the entire banking system. As you said, these

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Speaker 8: are a handful of players. But nevertheless, you know, these

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Speaker 8: things happen haven't happened in the US since two thousand

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Speaker 8: and eight, and you know, they do instill some fear.

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Speaker 8: So I think it's the FED. You know, maybe we

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Speaker 8: get maybe that's twenty five BIPs is just a given,

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Speaker 8: particularly with shase inflation data and whatnot. But I think,

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Speaker 8: you know, if the side kind of keeps going after that,

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Speaker 8: and you have this liquidity and this credit tightening the system,

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Speaker 8: then the market is directionally at risk for perhaps a

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Speaker 8: recession or a harder landing. I think if that doesn't

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00:20:56,240 --> 00:20:58,119
Speaker 8: happen in the sense sort of pauses after this and

439
00:20:58,280 --> 00:21:00,400
Speaker 8: lets all of this kind of feed in and and

440
00:21:00,440 --> 00:21:02,800
Speaker 8: you know, bring inflation down and and kind of let

441
00:21:02,840 --> 00:21:04,400
Speaker 8: the market reset a little bit for a few months.

442
00:21:04,440 --> 00:21:06,080
Speaker 8: But then I think, well, we'll kind of be okay.

443
00:21:06,160 --> 00:21:09,719
Speaker 8: And whether this you know, corporators are certainly holding up,

444
00:21:09,760 --> 00:21:12,119
Speaker 8: and if if things don't sort of get worse. I

445
00:21:12,119 --> 00:21:15,520
Speaker 8: think that can can change the other way. But again

446
00:21:15,560 --> 00:21:17,600
Speaker 8: a tin side could could pull back.

447
00:21:17,400 --> 00:21:18,240
Speaker 2: Any kind of right.

448
00:21:18,800 --> 00:21:22,520
Speaker 1: Hermann just explained to us how this mechanically might work

449
00:21:22,640 --> 00:21:25,480
Speaker 1: if the FDI is it the FDI see that comes

450
00:21:25,560 --> 00:21:27,880
Speaker 1: in and intervenes here, and how does that work?

451
00:21:28,000 --> 00:21:31,000
Speaker 9: So the f I see what would typically likes to

452
00:21:31,119 --> 00:21:36,480
Speaker 9: close any failed bank on a Friday after business hours

453
00:21:36,480 --> 00:21:41,479
Speaker 9: to come in too, and then hopefully line up a

454
00:21:41,760 --> 00:21:45,160
Speaker 9: buyer by the weekend, and so the buyer would would

455
00:21:45,160 --> 00:21:49,760
Speaker 9: then operate First Republic or any other failed bank uh

456
00:21:49,880 --> 00:21:54,000
Speaker 9: as as their own entities, so there's no disruption in service,

457
00:21:54,359 --> 00:21:58,119
Speaker 9: and then any any customers of that bank could just

458
00:21:59,000 --> 00:22:03,439
Speaker 9: transact as normal, so there's no disruption. So that's typically

459
00:22:03,480 --> 00:22:05,960
Speaker 9: how things work, and that's why the FDIC likes to

460
00:22:05,960 --> 00:22:07,639
Speaker 9: do things on a Friday afternoon.

461
00:22:07,840 --> 00:22:11,240
Speaker 2: Yeah, exactly, that's a good point. We get these announcements

462
00:22:11,240 --> 00:22:14,040
Speaker 2: often on the weekend or after the market closes on Friday.

463
00:22:14,800 --> 00:22:19,600
Speaker 2: In terms of deposits above and beyond the two hundred

464
00:22:19,600 --> 00:22:23,359
Speaker 2: and fifty thousand dollars that's insured, do they break that

465
00:22:23,480 --> 00:22:25,800
Speaker 2: out at First Republic? Have they said, okay, everybody who

466
00:22:25,840 --> 00:22:27,959
Speaker 2: had more than two hundred and fifty. They've reduced that

467
00:22:28,000 --> 00:22:29,240
Speaker 2: to two fifty.

468
00:22:29,080 --> 00:22:32,320
Speaker 9: Right, So they said that in the fourth quarter it

469
00:22:32,400 --> 00:22:34,800
Speaker 9: was like sixty seven percent, and a lot of that

470
00:22:34,840 --> 00:22:37,920
Speaker 9: has now gone. And really there's only a few billion

471
00:22:38,000 --> 00:22:41,920
Speaker 9: dollars outside of the thirty billion from the collectively from

472
00:22:41,960 --> 00:22:46,000
Speaker 9: the largest US banking institutions that tried to prop up

473
00:22:46,440 --> 00:22:50,960
Speaker 9: First Republic. So most of the uninsured deposits have already eccided,

474
00:22:51,200 --> 00:22:56,320
Speaker 9: and any left probably and after this turmoil over the

475
00:22:56,320 --> 00:23:00,199
Speaker 9: past week, probably have thought twice about keeping their their

476
00:23:00,240 --> 00:23:01,560
Speaker 9: money at First Republic as one.

477
00:23:01,680 --> 00:23:04,359
Speaker 2: All right, Herman Chan is our Bloomberg intelligence analyst for

478
00:23:04,400 --> 00:23:06,400
Speaker 2: regional banks. I'm sure you're one it on television right

479
00:23:06,400 --> 00:23:10,040
Speaker 2: now or some other meeting. You should wear a cape

480
00:23:10,760 --> 00:23:12,879
Speaker 2: when you walk around this building. Sylvia. I'm sorry that

481
00:23:12,920 --> 00:23:15,479
Speaker 2: we didn't get to talk about more about quantum because

482
00:23:16,600 --> 00:23:19,720
Speaker 2: this ETF that you run qt u M it's got

483
00:23:19,800 --> 00:23:21,679
Speaker 2: to be so hot right now with all the interests

484
00:23:21,680 --> 00:23:24,879
Speaker 2: in AI and tech and banking has distracted us. But

485
00:23:25,040 --> 00:23:28,159
Speaker 2: just tell us briefly about you know, the flows and

486
00:23:28,160 --> 00:23:31,400
Speaker 2: the interest in qt um.

487
00:23:31,680 --> 00:23:34,919
Speaker 8: Yeah, so quantum is just sort of taking off, as

488
00:23:34,920 --> 00:23:38,159
Speaker 8: you can imagine and the tech earnings have particularly propelled that.

489
00:23:38,240 --> 00:23:39,639
Speaker 8: You know, we hold all of these needs in our

490
00:23:39,680 --> 00:23:43,120
Speaker 8: baskets that are benefiting from you know, cut and cost,

491
00:23:43,200 --> 00:23:46,240
Speaker 8: but also their future investments in AI for the Microsoft, Googles,

492
00:23:47,000 --> 00:23:48,880
Speaker 8: Amazons and whatnot. But yeah, I mean AI is going

493
00:23:48,920 --> 00:23:50,399
Speaker 8: to change the way we live. We've talked about it

494
00:23:50,400 --> 00:23:53,520
Speaker 8: a lot. You have AI applications in healthcare, you know,

495
00:23:53,920 --> 00:23:56,080
Speaker 8: reta out thinking about Amazon, you know, if they lose

496
00:23:56,119 --> 00:23:58,399
Speaker 8: on cloud, well maybe that you may also like this

497
00:23:58,600 --> 00:24:02,120
Speaker 8: thing when you're shopping comes from AI in to blues

498
00:24:02,119 --> 00:24:06,639
Speaker 8: speature revenues, you know, manufacturing AI solutions, forecast demand and

499
00:24:06,680 --> 00:24:08,119
Speaker 8: things like that. So it's just going to change the

500
00:24:08,160 --> 00:24:10,080
Speaker 8: way we live and work. And I think that a

501
00:24:10,080 --> 00:24:12,280
Speaker 8: lot of the companies at the forefront of this are

502
00:24:12,359 --> 00:24:15,400
Speaker 8: really you know, performing this year and I was performing

503
00:24:15,400 --> 00:24:17,400
Speaker 8: both and howzat on smt Hie.

504
00:24:17,440 --> 00:24:19,040
Speaker 1: Soyllia, thank you so much for joining us, and thank

505
00:24:19,080 --> 00:24:21,480
Speaker 1: you for being flexible here as we talk about the

506
00:24:21,800 --> 00:24:25,080
Speaker 1: First Republic News as well as so Vijablonski, chief investment

507
00:24:25,200 --> 00:24:27,440
Speaker 1: officer with Defiance E TFS.

508
00:24:29,160 --> 00:24:32,560
Speaker 5: You're listening to the team Ken's are Live program Bloomberg

509
00:24:32,600 --> 00:24:35,960
Speaker 5: Markets weekdays at ten am Eastern on Bloomberg dot Com,

510
00:24:36,040 --> 00:24:39,200
Speaker 5: the iHeartRadio app, and the Bloomberg Business app, or listen

511
00:24:39,280 --> 00:24:42,000
Speaker 5: on demand wherever you get your podcast.

512
00:24:43,680 --> 00:24:44,960
Speaker 3: Lose it just across the tape here.

513
00:24:45,320 --> 00:24:47,640
Speaker 1: At the top of the hour, the Federal Reserve Bank

514
00:24:47,680 --> 00:24:51,360
Speaker 1: Supervision chief called for a sweeping re evaluation of how

515
00:24:51,359 --> 00:24:54,600
Speaker 1: the institution oversees US financial firms following the failure of

516
00:24:54,680 --> 00:24:57,560
Speaker 1: Silicon Value Bank Gas some detailed reporting on that. Steve Matthews,

517
00:24:57,680 --> 00:25:00,959
Speaker 1: us economy reporter with Bloomberg News, and Jenny Sirring, she's

518
00:25:01,000 --> 00:25:03,359
Speaker 1: a financi reporter with the Bloomberg News who joins us

519
00:25:03,400 --> 00:25:05,320
Speaker 1: here in our Bloomberg Interactive Broker studio.

520
00:25:06,000 --> 00:25:07,600
Speaker 3: Jenny, what did What's your takeaway here?

521
00:25:07,640 --> 00:25:09,920
Speaker 1: I mean, it looks like they're trying to spread the

522
00:25:10,440 --> 00:25:12,960
Speaker 1: blame around a little bit on the bank itself and that,

523
00:25:13,080 --> 00:25:16,119
Speaker 1: but also on regulatory officials themselves and maybe been I

524
00:25:16,119 --> 00:25:17,359
Speaker 1: think the term is foot dragging.

525
00:25:17,960 --> 00:25:20,040
Speaker 10: Yeah, No, I think this is a little bit more

526
00:25:20,040 --> 00:25:22,320
Speaker 10: of the finger pointing that we've been seeing for a

527
00:25:22,320 --> 00:25:25,240
Speaker 10: lot of the last few weeks. So this is I

528
00:25:25,320 --> 00:25:27,359
Speaker 10: think you're right, the Fed is kind of putting a

529
00:25:27,359 --> 00:25:30,159
Speaker 10: lot of the bit blame squarely on these managers. I

530
00:25:30,160 --> 00:25:33,760
Speaker 10: do think they've acknowledged a little bit of their their laxness.

531
00:25:33,800 --> 00:25:35,880
Speaker 10: But yeah, I mean, I think one of the more

532
00:25:35,880 --> 00:25:39,080
Speaker 10: interesting takeaways that I saw was that they were calling

533
00:25:39,160 --> 00:25:43,119
Speaker 10: their interest rate risk modeling, you know, deficient, and that

534
00:25:43,280 --> 00:25:45,399
Speaker 10: was as far back as November at least, and so

535
00:25:45,840 --> 00:25:48,240
Speaker 10: obviously this was something that was on the radar of regulators.

536
00:25:48,280 --> 00:25:51,760
Speaker 10: But did they move quickly enough and act you know, anticipation.

537
00:25:51,960 --> 00:25:55,280
Speaker 2: Yeah, I mean, Steve Matthews, isn't this a case of

538
00:25:55,560 --> 00:25:59,399
Speaker 2: toothlessness at the regulator? What became really clear to me

539
00:25:59,520 --> 00:26:02,199
Speaker 2: watching the congressional testimony over a couple of days was

540
00:26:02,240 --> 00:26:05,320
Speaker 2: that the FED knew this was coming. You know, the

541
00:26:05,480 --> 00:26:10,080
Speaker 2: regulators knew this was happening for a year and did

542
00:26:10,320 --> 00:26:14,359
Speaker 2: essentially nothing about it. As John Tester said, nobody dropped

543
00:26:14,400 --> 00:26:14,800
Speaker 2: the hammer.

544
00:26:15,600 --> 00:26:16,560
Speaker 11: That is correct.

545
00:26:16,600 --> 00:26:19,040
Speaker 12: And you know, if you read the details of the report,

546
00:26:19,359 --> 00:26:22,960
Speaker 12: and if you're interested in financial regulation, it's definitely worth reading.

547
00:26:22,960 --> 00:26:24,240
Speaker 12: It's one hundred page report.

548
00:26:25,200 --> 00:26:26,119
Speaker 5: But the.

549
00:26:27,720 --> 00:26:31,000
Speaker 12: When there's a problem with the bank, the regulators write

550
00:26:31,080 --> 00:26:35,640
Speaker 12: up what an MR or MR I a matter requiring

551
00:26:35,680 --> 00:26:39,960
Speaker 12: attention and matter requiring immediate attention and send it to

552
00:26:40,000 --> 00:26:44,600
Speaker 12: the bank, and there were thirty one areas thirty one

553
00:26:44,840 --> 00:26:50,439
Speaker 12: of these corrections where there were problems with the bank,

554
00:26:50,680 --> 00:26:54,600
Speaker 12: and they you know, obviously they left them open and

555
00:26:55,359 --> 00:27:00,600
Speaker 12: you know, as in their annual exam in and uh,

556
00:27:01,119 --> 00:27:04,600
Speaker 12: you know, in the middle of last year, they found

557
00:27:04,800 --> 00:27:09,159
Speaker 12: management and controls were deficient and they were considering, you know,

558
00:27:09,200 --> 00:27:13,080
Speaker 12: putting together an enforcement action that would require the bank

559
00:27:13,160 --> 00:27:16,439
Speaker 12: to do more, and they were the regulators were mulling it.

560
00:27:17,160 --> 00:27:19,679
Speaker 12: But you know, the bank failed in the in the

561
00:27:19,760 --> 00:27:22,080
Speaker 12: year in which they were considering it. So it's like

562
00:27:22,119 --> 00:27:26,160
Speaker 12: they clearly there was a whole problem with the culture

563
00:27:26,560 --> 00:27:30,080
Speaker 12: of supervision. And the report kind of lays that out

564
00:27:30,160 --> 00:27:34,720
Speaker 12: and says that under the former vice chairman, uh, you know,

565
00:27:34,840 --> 00:27:39,720
Speaker 12: they pushed efficiency, they pushed you know, a light regulatory

566
00:27:39,960 --> 00:27:44,000
Speaker 12: approach and and uh and that kind of you know,

567
00:27:44,119 --> 00:27:48,040
Speaker 12: created a culture of what of supervisors backing off.

568
00:27:48,400 --> 00:27:53,080
Speaker 2: You know, Jenny, What's interesting is that Dodd Frank had

569
00:27:53,600 --> 00:27:59,640
Speaker 2: created some really tough supervisory regulations that then later were

570
00:28:00,160 --> 00:28:03,360
Speaker 2: loosened a little bit by Congress I think twenty eighteen, right,

571
00:28:03,760 --> 00:28:07,439
Speaker 2: and a lot of people, Elizabeth Warren and others have

572
00:28:07,720 --> 00:28:10,760
Speaker 2: grafted onto this as maybe the big problem. Right, it

573
00:28:10,800 --> 00:28:14,080
Speaker 2: was during the Trump era, so certainly it must have

574
00:28:14,119 --> 00:28:17,160
Speaker 2: been problematic. We talked to Barney Frank on this show,

575
00:28:17,359 --> 00:28:19,639
Speaker 2: we did, and he said, that has nothing to do

576
00:28:19,720 --> 00:28:22,359
Speaker 2: with it, So what's the truth?

577
00:28:23,280 --> 00:28:25,560
Speaker 10: I mean, yeah, I think he wrote.

578
00:28:25,359 --> 00:28:27,760
Speaker 2: That regulation right, He wasn't worried about it, So why

579
00:28:27,800 --> 00:28:28,520
Speaker 2: is anyone else?

580
00:28:28,640 --> 00:28:31,000
Speaker 10: Yeah, I mean, I think we're always going to see that.

581
00:28:31,480 --> 00:28:33,800
Speaker 10: The same fingerpointing that we've seen between you know, the

582
00:28:33,840 --> 00:28:36,480
Speaker 10: banks and the regulators, we'll probably see that between Democrats

583
00:28:36,480 --> 00:28:39,440
Speaker 10: and Republicans. And I mean, certainly there was a lot

584
00:28:39,480 --> 00:28:41,720
Speaker 10: of rolling back of regulation under Trump. But then I

585
00:28:41,720 --> 00:28:45,080
Speaker 10: think even just days before this all happened, you had

586
00:28:45,120 --> 00:28:46,880
Speaker 10: Michael Barr out there saying that, you know, you could

587
00:28:46,880 --> 00:28:49,840
Speaker 10: take a light touch approach to regional banking regulation. So

588
00:28:50,480 --> 00:28:54,479
Speaker 10: I don't think either side is completely blameless. And you know,

589
00:28:54,520 --> 00:28:56,600
Speaker 10: probably we could point to a lot of different examples

590
00:28:56,600 --> 00:28:59,480
Speaker 10: that you know, ultimately led to what happened in that

591
00:28:59,520 --> 00:29:00,000
Speaker 10: faithful day.

592
00:29:00,040 --> 00:29:03,960
Speaker 1: In mind, Steve, this just feels like a process that's

593
00:29:04,040 --> 00:29:07,280
Speaker 1: just going to take a long time to implement. Meanwhile,

594
00:29:07,880 --> 00:29:10,040
Speaker 1: you know, we still it's become clear that some of

595
00:29:10,040 --> 00:29:12,640
Speaker 1: these small regional banks they can do a lot of

596
00:29:12,720 --> 00:29:16,320
Speaker 1: damage to just market confidence. Here, what's the sense of

597
00:29:17,040 --> 00:29:19,880
Speaker 1: how any increased regulation may play out in terms of timing,

598
00:29:20,840 --> 00:29:21,360
Speaker 1: It could.

599
00:29:21,240 --> 00:29:25,080
Speaker 12: Take several years, just because the regulatory process is really

600
00:29:25,200 --> 00:29:28,400
Speaker 12: slow in terms of like creating the rules and then

601
00:29:28,440 --> 00:29:31,360
Speaker 12: having you know, a comment period and then you know,

602
00:29:31,840 --> 00:29:35,600
Speaker 12: Congress can can weigh in, and it's going to take

603
00:29:35,840 --> 00:29:37,920
Speaker 12: you know, a couple of years before you get actually

604
00:29:38,400 --> 00:29:41,280
Speaker 12: new rules in place. I think I think the important

605
00:29:41,280 --> 00:29:46,520
Speaker 12: thing is that Michael Barr is recognizing that there's a

606
00:29:46,600 --> 00:29:50,880
Speaker 12: problem with the culture of supervisors that they are you know,

607
00:29:50,960 --> 00:29:54,800
Speaker 12: not empowered to take action, that they feel like they're constrained,

608
00:29:54,840 --> 00:29:57,360
Speaker 12: and the report kind of lays that out. Before they

609
00:29:57,400 --> 00:30:00,840
Speaker 12: could even like you know, issue any kind of order

610
00:30:00,880 --> 00:30:02,840
Speaker 12: at all or any kind of memo, they had to

611
00:30:02,960 --> 00:30:06,280
Speaker 12: like consult at the San Francisco Fed with with the

612
00:30:06,640 --> 00:30:09,720
Speaker 12: FED staff in Washington. It's just kind of a slow

613
00:30:09,800 --> 00:30:13,520
Speaker 12: bureaucratic process. And they can definitely do a better job

614
00:30:13,560 --> 00:30:18,960
Speaker 12: with supervision just by you know, changing the culture without

615
00:30:19,040 --> 00:30:21,720
Speaker 12: changing any laws or rules at all.

616
00:30:22,680 --> 00:30:25,400
Speaker 2: Was there any criticism of the San Francisco Fed of

617
00:30:25,880 --> 00:30:29,480
Speaker 2: Mary Daily. I mean, during the testimony, Republicans you know,

618
00:30:30,200 --> 00:30:33,680
Speaker 2: made comments about how she may have been too worried,

619
00:30:34,600 --> 00:30:39,440
Speaker 2: too concerned with, you know, the vibe in San Francisco,

620
00:30:39,520 --> 00:30:43,360
Speaker 2: the mood of employees, although that's part of her job

621
00:30:43,400 --> 00:30:45,400
Speaker 2: as well. But did she get a mention in the

622
00:30:45,400 --> 00:30:47,960
Speaker 2: one hundred and two pages here, Jenny.

623
00:30:48,760 --> 00:30:50,720
Speaker 10: Not that I've seen yet, although I am still making

624
00:30:50,720 --> 00:30:52,480
Speaker 10: my way through all one hundred and two pages.

625
00:30:52,560 --> 00:30:53,560
Speaker 3: That's fair, that's fair.

626
00:30:53,600 --> 00:30:56,880
Speaker 2: It's a long report, you know. I wonder if any

627
00:30:56,920 --> 00:31:00,200
Speaker 2: of this will have fallout on First Republic. You know,

628
00:31:00,240 --> 00:31:02,240
Speaker 2: even if it takes years Steve, as you said, to

629
00:31:02,640 --> 00:31:07,959
Speaker 2: work through regulatory changes in legislation, do they feel the

630
00:31:08,000 --> 00:31:11,800
Speaker 2: need to be more hands on, to be more proactive

631
00:31:12,720 --> 00:31:16,120
Speaker 2: in a bank that could also see some real deposit

632
00:31:16,240 --> 00:31:19,400
Speaker 2: flight and has also had some serious interest rate risk.

633
00:31:20,080 --> 00:31:22,880
Speaker 12: Well, they definitely feel the need to be more proactive.

634
00:31:22,920 --> 00:31:25,480
Speaker 12: I mean, exactly how it will play out with First

635
00:31:25,560 --> 00:31:28,880
Speaker 12: Republic is an interesting question because, on the one hand,

636
00:31:28,920 --> 00:31:32,520
Speaker 12: if you're going to have a get tough approach, then

637
00:31:32,760 --> 00:31:35,720
Speaker 12: you know that would not necessarily be good news for

638
00:31:35,800 --> 00:31:40,400
Speaker 12: First Republics shareholders or depositors. On the other hand, if

639
00:31:40,440 --> 00:31:45,200
Speaker 12: you're worried about it's you know, systemic importance, you would

640
00:31:45,200 --> 00:31:49,000
Speaker 12: want to make sure that it doesn't cause additional harm

641
00:31:49,080 --> 00:31:52,400
Speaker 12: to the entire banking system. So you know, they're there

642
00:31:52,840 --> 00:31:55,760
Speaker 12: are definitely kind of cross currents there.

643
00:31:56,000 --> 00:31:58,120
Speaker 1: Hey, Jenny, what what are we hearing from the regional

644
00:31:58,160 --> 00:32:02,440
Speaker 1: banks themselves? Are they are they prepared heard for increased regulation?

645
00:32:02,680 --> 00:32:05,440
Speaker 1: Are they fighting back? What are we hearing from them?

646
00:32:05,960 --> 00:32:08,800
Speaker 10: I think we've honestly probably heard more from the biggest

647
00:32:08,800 --> 00:32:11,680
Speaker 10: banks wanting to draw that distinction that you know, we

648
00:32:11,680 --> 00:32:13,640
Speaker 10: were fine, we were able to step in and help

649
00:32:13,640 --> 00:32:17,200
Speaker 10: First Republic, for example. We haven't heard as much of

650
00:32:17,240 --> 00:32:19,400
Speaker 10: the regional banks saying like, no, no, you know, still

651
00:32:19,480 --> 00:32:22,479
Speaker 10: leave us alone. I think, you know, I think everybody

652
00:32:22,560 --> 00:32:24,400
Speaker 10: kind of realizes the state that things are in and

653
00:32:24,680 --> 00:32:26,840
Speaker 10: how fragile things are still, even though you know, we

654
00:32:26,960 --> 00:32:29,480
Speaker 10: just got through earning season and things felt a little

655
00:32:29,520 --> 00:32:32,280
Speaker 10: bit better. But I think mostly we've just heard from

656
00:32:32,280 --> 00:32:34,720
Speaker 10: the biggest US banks saying we've already been subject to

657
00:32:35,000 --> 00:32:37,320
Speaker 10: all number of things that prevented us from being in

658
00:32:37,360 --> 00:32:40,000
Speaker 10: this situation and allowed us actually to you know, step

659
00:32:40,000 --> 00:32:43,040
Speaker 10: in and save the day in some cases. So I

660
00:32:43,040 --> 00:32:45,280
Speaker 10: think that's that's mostly what we've been hearing so far.

661
00:32:45,280 --> 00:32:48,800
Speaker 2: Was there any mention of the you know, rapid rise

662
00:32:49,000 --> 00:32:53,720
Speaker 2: in rates by Jerome Powell and co. I mean, I

663
00:32:53,720 --> 00:32:58,000
Speaker 2: I guess we know that there are reasons for that, right,

664
00:32:58,040 --> 00:32:59,840
Speaker 2: they had to slow inflation, and a lot of people

665
00:32:59,840 --> 00:33:02,239
Speaker 2: think they were late to the party even there. But

666
00:33:02,640 --> 00:33:05,000
Speaker 2: you know, still five hundred basis points in a year,

667
00:33:06,520 --> 00:33:10,680
Speaker 2: Steve Matthews, is a lot for the economy to handle.

668
00:33:10,920 --> 00:33:13,200
Speaker 2: You know, you can see why it would have put

669
00:33:13,240 --> 00:33:15,560
Speaker 2: people in a difficult position. Do they talk about it,

670
00:33:15,560 --> 00:33:16,280
Speaker 2: do they touch on it?

671
00:33:16,600 --> 00:33:19,880
Speaker 12: That is not really touched on in that context. I

672
00:33:19,880 --> 00:33:23,240
Speaker 12: mean a lot of people outside the Fed say, well,

673
00:33:23,240 --> 00:33:26,160
Speaker 12: if you raise rates, you know, the most aggressively you

674
00:33:26,280 --> 00:33:28,600
Speaker 12: have in forty years, there's a good chance you're going

675
00:33:28,600 --> 00:33:29,920
Speaker 12: to end up with some accidents.

676
00:33:30,440 --> 00:33:31,800
Speaker 11: But you know, what the.

677
00:33:31,760 --> 00:33:36,960
Speaker 12: Report says is basically that these banks were not really

678
00:33:37,040 --> 00:33:41,080
Speaker 12: prepared for This bank in particular is not prepared for

679
00:33:41,680 --> 00:33:45,280
Speaker 12: the interest rate rises, and that the supervisors were not

680
00:33:45,520 --> 00:33:51,160
Speaker 12: really forcing this bank or banks more generally, to model

681
00:33:51,320 --> 00:33:54,680
Speaker 12: for this kind of thing. So you know, there was

682
00:33:54,840 --> 00:33:58,719
Speaker 12: there was, you know, an absence of risk management, and

683
00:33:58,920 --> 00:34:02,560
Speaker 12: you know that this wasn't the base case, this was

684
00:34:02,920 --> 00:34:06,120
Speaker 12: what people were expecting, but they should have been prepared for,

685
00:34:06,560 --> 00:34:09,399
Speaker 12: you know, a worst case scenario without you know, going

686
00:34:09,400 --> 00:34:10,359
Speaker 12: out of business.

687
00:34:10,760 --> 00:34:11,240
Speaker 3: Ay, Jenny.

688
00:34:11,239 --> 00:34:14,680
Speaker 1: Another troubled regional bank, New York Community Bank CRUP, bought

689
00:34:14,760 --> 00:34:17,880
Speaker 1: Signature Bank, So I should rephrase that New York Community

690
00:34:17,880 --> 00:34:21,680
Speaker 1: Bank bought a challenge Signature Bank. How's that working out?

691
00:34:22,440 --> 00:34:24,439
Speaker 10: You know, it's actually working out pretty well for them today.

692
00:34:24,480 --> 00:34:27,360
Speaker 10: I think they're up quite a bit. They reported earnings

693
00:34:27,400 --> 00:34:29,920
Speaker 10: this morning. It was sort of interesting because, you know,

694
00:34:29,960 --> 00:34:32,600
Speaker 10: when they bought this bank and combined to the two companies,

695
00:34:32,680 --> 00:34:35,480
Speaker 10: they had about ninety three billion in deposits, and they've

696
00:34:35,520 --> 00:34:38,000
Speaker 10: seen that slip down to about eighty two billion or

697
00:34:38,040 --> 00:34:41,200
Speaker 10: so as of last week, and they actually said a

698
00:34:41,239 --> 00:34:43,640
Speaker 10: lot of that was expected and that going forward it

699
00:34:43,719 --> 00:34:46,840
Speaker 10: should stabilize pretty nicely. And so, you know, it seems

700
00:34:46,960 --> 00:34:48,840
Speaker 10: like even the ones that were hit the hardest, and

701
00:34:48,880 --> 00:34:50,960
Speaker 10: even the ones that had the worst headlines where customers

702
00:34:51,000 --> 00:34:53,479
Speaker 10: would be the most booked, things are sort of getting

703
00:34:53,560 --> 00:34:56,080
Speaker 10: okay and things are sort of stabilizing. So you know,

704
00:34:56,080 --> 00:34:58,680
Speaker 10: they forecasted that their profits will go up and that

705
00:34:58,719 --> 00:35:01,440
Speaker 10: things look really nice. So I think that was definitely

706
00:35:01,440 --> 00:35:02,719
Speaker 10: a little bit of a sigh of relief. For a

707
00:35:02,719 --> 00:35:04,239
Speaker 10: lot of regional bank investors out there.

708
00:35:04,680 --> 00:35:07,640
Speaker 2: How are the other regional banks doing? Pac West was

709
00:35:07,680 --> 00:35:12,759
Speaker 2: one that we were all following very closely, even a

710
00:35:12,840 --> 00:35:16,799
Speaker 2: giant like Schwab was a company whose shares had been

711
00:35:16,960 --> 00:35:21,719
Speaker 2: hit pretty hard. Are are those others that had kind

712
00:35:21,760 --> 00:35:26,120
Speaker 2: of indirect contact with SVB and First Republic? Have they

713
00:35:26,160 --> 00:35:26,799
Speaker 2: bounced back?

714
00:35:27,719 --> 00:35:30,520
Speaker 10: Yeah? So I think, you know, if bounce back is

715
00:35:30,680 --> 00:35:32,960
Speaker 10: probably a little bit too strong. Stabilized, I think is

716
00:35:32,960 --> 00:35:34,200
Speaker 10: the word that a lot of them like to use.

717
00:35:34,280 --> 00:35:37,000
Speaker 10: So they're, you know, they've they admit that they saw

718
00:35:37,040 --> 00:35:39,560
Speaker 10: heavy outflows. Maybe it hasn't completely stopped, but it's a

719
00:35:39,640 --> 00:35:40,640
Speaker 10: leaf's gone down quite a bit.

720
00:35:40,719 --> 00:35:42,920
Speaker 3: Hiight, Jennie, thanks so much. We appreciate that. Jenny Starraine.

721
00:35:42,960 --> 00:35:45,920
Speaker 1: She's a financial reporter Steve Matthews covering the economy, weighing

722
00:35:45,920 --> 00:35:47,040
Speaker 1: in on this bank.

723
00:35:47,560 --> 00:35:50,640
Speaker 5: You're listening to the tape catch are live program Bloomberg

724
00:35:50,719 --> 00:35:54,319
Speaker 5: Markets weekdays at ten am Eastern on Bloomberg Radio, the

725
00:35:54,360 --> 00:35:57,600
Speaker 5: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

726
00:35:57,640 --> 00:36:00,480
Speaker 5: You can also listen live on Amazon Alexi from our

727
00:36:00,480 --> 00:36:04,840
Speaker 5: flagship New York station, Just Say Alexa playing Bloomberg eleven thirty.

728
00:36:06,960 --> 00:36:11,200
Speaker 1: Big Oil reporting big numbers today. Chevron and Exxon Mobile.

729
00:36:11,280 --> 00:36:13,600
Speaker 1: You put it together, they have like eighteen billion dollars

730
00:36:13,600 --> 00:36:16,280
Speaker 1: in net profit just in the quarter. Both Stoctor trading

731
00:36:16,360 --> 00:36:19,680
Speaker 1: higher today. My question to Fernando Valley, who covers all

732
00:36:19,680 --> 00:36:22,640
Speaker 1: this stuff for Bloomberg Intelligence, is is this as good

733
00:36:22,680 --> 00:36:25,320
Speaker 1: as it gets for Big Oil? Are we peak oil

734
00:36:25,360 --> 00:36:27,280
Speaker 1: here in terms of profitability and stuff?

735
00:36:27,840 --> 00:36:29,959
Speaker 11: I don't think we're quite as good as it gets.

736
00:36:29,960 --> 00:36:33,520
Speaker 11: But it's pretty darn good, okay, And it could be better,

737
00:36:34,480 --> 00:36:37,240
Speaker 11: and I think it may be in the next within

738
00:36:37,280 --> 00:36:40,640
Speaker 11: the next decade, but it's pretty close to that.

739
00:36:41,880 --> 00:36:47,120
Speaker 2: So how does the market look in terms of supply?

740
00:36:47,560 --> 00:36:51,759
Speaker 2: I keep seeing, you know, draw downs in stocks, and

741
00:36:52,520 --> 00:36:55,720
Speaker 2: I don't know about the demand side, but it seems

742
00:36:55,760 --> 00:36:57,719
Speaker 2: to me from the draw downs, I see that the

743
00:36:57,760 --> 00:37:02,160
Speaker 2: market's very tight, and I keep expecting to see the

744
00:37:02,200 --> 00:37:04,680
Speaker 2: price rise more than it has. Right where seventy five

745
00:37:04,719 --> 00:37:07,839
Speaker 2: dollars for right now, we're at about seventy five dollars

746
00:37:07,840 --> 00:37:12,239
Speaker 2: only pull up GLCO go seventy six, forty four for

747
00:37:12,400 --> 00:37:15,200
Speaker 2: WTI seventy nine to fifty one, so basically eighty bucks

748
00:37:15,200 --> 00:37:15,560
Speaker 2: for Brent.

749
00:37:15,960 --> 00:37:18,440
Speaker 11: Yeah, I think That's why it could get better, right

750
00:37:18,480 --> 00:37:21,960
Speaker 11: because the supply side, we see the underinvestment that's happened

751
00:37:22,000 --> 00:37:26,000
Speaker 11: over the past five to six, maybe even eight years globally,

752
00:37:26,040 --> 00:37:27,719
Speaker 11: not just in the US. And then we see the

753
00:37:27,760 --> 00:37:30,719
Speaker 11: limitations in US shale that we've talked about before, how

754
00:37:30,719 --> 00:37:34,160
Speaker 11: they're running out of the good quality inventory to get

755
00:37:34,200 --> 00:37:37,080
Speaker 11: to that supply. The issue, as you mentioned, is demand.

756
00:37:37,840 --> 00:37:41,560
Speaker 11: We were talking about earlier ups saying volumes are down.

757
00:37:41,680 --> 00:37:45,680
Speaker 11: You see FED hiking rates, all the tech layoffs, bank implosions,

758
00:37:46,200 --> 00:37:48,960
Speaker 11: all of that will have a repercussion in oil demand. Ultimately,

759
00:37:49,239 --> 00:37:51,759
Speaker 11: so far it hasn't really happened. We just saw the

760
00:37:51,840 --> 00:37:54,880
Speaker 11: EIA send revised numbers for diesel around four million barrels

761
00:37:54,920 --> 00:37:57,919
Speaker 11: a day. That's good. It's not great, but it's good,

762
00:37:58,239 --> 00:38:01,160
Speaker 11: and so we're not seeing the cracks yet. As we

763
00:38:01,239 --> 00:38:05,360
Speaker 11: see further pressure on consumer demand, be the Disney's, the

764
00:38:05,400 --> 00:38:10,040
Speaker 11: Amazon layoffs, that could lead to lower oil demand itself.

765
00:38:10,480 --> 00:38:14,680
Speaker 2: I see your AEI and raise you one i EA.

766
00:38:14,960 --> 00:38:17,879
Speaker 2: I spoke with fatib Roll a couple of days ago,

767
00:38:18,480 --> 00:38:22,080
Speaker 2: who runs the International Energy Agency, and he came out

768
00:38:22,120 --> 00:38:25,399
Speaker 2: with a report that EV sales are going to make

769
00:38:25,520 --> 00:38:29,000
Speaker 2: up almost a fifth of total car sales this year.

770
00:38:29,120 --> 00:38:32,759
Speaker 2: That's huge, right, I mean that's up from what four

771
00:38:32,840 --> 00:38:36,120
Speaker 2: percent a couple of years ago. I think eighteen percent

772
00:38:36,160 --> 00:38:39,200
Speaker 2: was the exact number. Okay, it's still a tiny part

773
00:38:39,360 --> 00:38:44,040
Speaker 2: of the global automotive fleet. But is that having any

774
00:38:44,120 --> 00:38:45,200
Speaker 2: impact on demand?

775
00:38:46,200 --> 00:38:50,880
Speaker 11: Very limited because two main things. First is, how do

776
00:38:50,920 --> 00:38:53,680
Speaker 11: you mind for all those minerals that are going to

777
00:38:53,719 --> 00:38:56,560
Speaker 11: an EV battery and go into producing an EV. You

778
00:38:56,600 --> 00:38:59,279
Speaker 11: actually mind ten times as many minerals to produce an

779
00:38:59,280 --> 00:39:01,640
Speaker 11: EV as you do an internal combustion engine.

780
00:39:01,400 --> 00:39:03,840
Speaker 2: Vehicle with diesel powered machines exactly.

781
00:39:04,840 --> 00:39:07,560
Speaker 11: And then the second part is I come from Brazil

782
00:39:08,520 --> 00:39:14,240
Speaker 11: and the biggest growth engine of oil is developing markets.

783
00:39:14,360 --> 00:39:17,359
Speaker 11: Five billion people over fifty percent of demand. We can't

784
00:39:17,400 --> 00:39:20,400
Speaker 11: afford a forty thousand dollars Model three. We barely have

785
00:39:20,480 --> 00:39:23,279
Speaker 11: the power to feed them as it is. And when

786
00:39:23,320 --> 00:39:25,520
Speaker 11: you look at Europe, you look at California, they're struggling

787
00:39:25,560 --> 00:39:27,960
Speaker 11: with the power to feed their current EV fleet, let

788
00:39:28,080 --> 00:39:30,200
Speaker 11: alone if all of us were driving on evs.

789
00:39:30,960 --> 00:39:32,960
Speaker 3: All right, so what is your demand model?

790
00:39:33,440 --> 00:39:35,799
Speaker 1: I manage these guys for years, and they are a

791
00:39:36,400 --> 00:39:38,879
Speaker 1: These energy guys are a ruly bunch to manage. I mean,

792
00:39:40,160 --> 00:39:42,440
Speaker 1: I'm unbelievable. But one thing I did learn is you

793
00:39:42,440 --> 00:39:45,879
Speaker 1: guys have demand models. You've got supply models. What what's

794
00:39:45,920 --> 00:39:47,680
Speaker 1: your demand model kind of telling you over the next

795
00:39:47,840 --> 00:39:48,480
Speaker 1: couple of years.

796
00:39:48,960 --> 00:39:52,359
Speaker 11: Well, the biggest variable there is exactly what we get

797
00:39:52,400 --> 00:39:56,480
Speaker 11: on fuel efficiency and electric vehicles. Our view is that

798
00:39:56,520 --> 00:39:58,359
Speaker 11: we're going to continue to be at the one point

799
00:39:58,360 --> 00:40:01,600
Speaker 11: three to one point four per sent long term average

800
00:40:01,640 --> 00:40:05,120
Speaker 11: growth for oil demand, and the biggest change there is

801
00:40:05,160 --> 00:40:08,719
Speaker 11: just yes, you're going to get some ev penetration, but

802
00:40:09,200 --> 00:40:12,880
Speaker 11: more abundant energy actually leads to higher consumption as opposed

803
00:40:12,920 --> 00:40:16,520
Speaker 11: to fewer consumption. If you have more of it and

804
00:40:16,640 --> 00:40:20,200
Speaker 11: a cheaper price, you typically consume higher volumes and again

805
00:40:20,280 --> 00:40:24,080
Speaker 11: develop markets. We consume thirty seven times more than the

806
00:40:24,160 --> 00:40:28,680
Speaker 11: average African today, we owed American thirty seven times.

807
00:40:28,760 --> 00:40:32,640
Speaker 1: Is match driving around this Chevy Silverado thing, I mean,

808
00:40:32,760 --> 00:40:33,799
Speaker 1: like you need in west Chester.

809
00:40:33,920 --> 00:40:38,040
Speaker 2: I occasionally drive also electric vehicles, and I enjoy never

810
00:40:38,080 --> 00:40:41,000
Speaker 2: having to go to the pump. That reminds me to

811
00:40:41,040 --> 00:40:44,719
Speaker 2: bring John Tucker into this discussion, because JT I think

812
00:40:44,760 --> 00:40:47,439
Speaker 2: you have a question. Every day I come in here

813
00:40:47,480 --> 00:40:50,160
Speaker 2: and you're complaining to Paul about what you pay. I

814
00:40:50,200 --> 00:40:51,680
Speaker 2: whant to ask Fernando, what's up with that?

815
00:40:52,360 --> 00:40:56,240
Speaker 13: Yeah? Well, also it's first off, what are the best margins?

816
00:40:56,400 --> 00:40:58,800
Speaker 13: Is a diesel gasoline? What do you make the most

817
00:40:58,880 --> 00:40:59,719
Speaker 13: as a refinery?

818
00:41:00,080 --> 00:41:03,399
Speaker 11: Today it's gasoline, but refiners really benefit the most. Woe

819
00:41:03,520 --> 00:41:06,800
Speaker 11: diesel is that its highest because a barrel of oil

820
00:41:06,840 --> 00:41:09,919
Speaker 11: produces around fifty to fifty five percent gasoline and only

821
00:41:09,960 --> 00:41:12,680
Speaker 11: thirty percent diesel, so it's harder to make diesel. So

822
00:41:12,719 --> 00:41:15,719
Speaker 11: when those margins are high, you're really benefiting. And that's

823
00:41:15,760 --> 00:41:19,600
Speaker 11: what happened last year. Today gasoline is almost twice as

824
00:41:19,680 --> 00:41:21,000
Speaker 11: high on a margin as diesel.

825
00:41:21,080 --> 00:41:23,040
Speaker 13: What we were paying this morning three point fifty at

826
00:41:23,080 --> 00:41:24,759
Speaker 13: the wah wah, I think it was. Is it a

827
00:41:24,920 --> 00:41:29,279
Speaker 13: seasonal thing also where we're seeing a change in refinery

828
00:41:29,320 --> 00:41:32,399
Speaker 13: maintenance and some are blends starting to come in at

829
00:41:32,400 --> 00:41:32,840
Speaker 13: some point.

830
00:41:33,080 --> 00:41:36,000
Speaker 11: Yeah, the summer blend is just the switch off is

831
00:41:36,120 --> 00:41:38,480
Speaker 11: just getting into high gear and we're going to go

832
00:41:38,520 --> 00:41:41,440
Speaker 11: into high seasonal demand in the summer. The other issue

833
00:41:41,480 --> 00:41:46,120
Speaker 11: is Europe struggling to replace Russian crude and also high

834
00:41:46,239 --> 00:41:48,440
Speaker 11: energy costs in the East Coast. We import a lot

835
00:41:48,520 --> 00:41:52,600
Speaker 11: of gasoline from Europe Now some of it from India,

836
00:41:52,640 --> 00:41:56,239
Speaker 11: which is Russian crude. Don't tell them.

837
00:41:56,520 --> 00:41:58,920
Speaker 13: I mean, there's a chance that I'm filling up my

838
00:41:59,160 --> 00:42:02,719
Speaker 13: crush with gasoline that was a crude oil that was

839
00:42:02,719 --> 00:42:04,800
Speaker 13: refined in the gasoline in Europe.

840
00:42:04,880 --> 00:42:08,160
Speaker 2: There's a chance that you were funding Vladimir Putin's for Ukraine.

841
00:42:08,320 --> 00:42:11,200
Speaker 11: Yeah, it might be a Russian crew that was refined

842
00:42:11,239 --> 00:42:13,000
Speaker 11: in India and then came all the way here.

843
00:42:13,480 --> 00:42:16,479
Speaker 13: Okay, as I passed the bay Way refinery or what's

844
00:42:16,520 --> 00:42:19,160
Speaker 13: the one on the turnpike this Phillip sixty six.

845
00:42:19,040 --> 00:42:20,560
Speaker 3: Yeah, exactly, we're doing it right there.

846
00:42:20,640 --> 00:42:22,520
Speaker 1: So let's say I want to go down to Corpus Christi,

847
00:42:22,640 --> 00:42:24,600
Speaker 1: Texas and build a refinery.

848
00:42:24,840 --> 00:42:25,400
Speaker 3: Can I do that?

849
00:42:26,040 --> 00:42:27,920
Speaker 11: Well, you'd be better off just taking one of the

850
00:42:27,960 --> 00:42:29,440
Speaker 11: idle ones and restarting it.

851
00:42:29,480 --> 00:42:31,040
Speaker 3: Oh so, where are some idled ones?

852
00:42:31,480 --> 00:42:32,840
Speaker 11: You have some in Louisiana? You have?

853
00:42:32,880 --> 00:42:35,319
Speaker 3: Why do we have idle refineries? Don't we need not to.

854
00:42:35,200 --> 00:42:39,000
Speaker 11: Close some more? And one most refining it is that.

855
00:42:39,160 --> 00:42:42,600
Speaker 11: But it's also just it's very expensive to make all

856
00:42:42,600 --> 00:42:46,640
Speaker 11: the investments to bring them up to spec, not just

857
00:42:46,719 --> 00:42:50,080
Speaker 11: on green but also the emissions regulations and all the

858
00:42:50,160 --> 00:42:53,760
Speaker 11: other limitations that have been put on refiners and crewde

859
00:42:54,200 --> 00:42:57,919
Speaker 11: processing itself. And then the bigger challenge is we've talked

860
00:42:57,920 --> 00:42:59,920
Speaker 11: about it. You love it. The Jones Act. You can

861
00:43:00,080 --> 00:43:01,279
Speaker 11: up that's transported.

862
00:43:01,400 --> 00:43:04,200
Speaker 1: When I'm president, the first thing I'm doing is get ready,

863
00:43:04,239 --> 00:43:04,560
Speaker 1: what's that?

864
00:43:05,480 --> 00:43:09,520
Speaker 11: The Jones Act. You can't transport anything in the US

865
00:43:09,640 --> 00:43:12,799
Speaker 11: unless it's in a vessel that was built, crewed, and

866
00:43:13,200 --> 00:43:17,200
Speaker 11: registered in the US. And we only build naval ships,

867
00:43:17,680 --> 00:43:20,680
Speaker 11: uh for for defense reasons, so there are none of those.

868
00:43:20,719 --> 00:43:23,120
Speaker 11: And you can't really bring a lot of products from

869
00:43:23,120 --> 00:43:25,080
Speaker 11: the Gulf Coast to East coast, which is why we're

870
00:43:25,120 --> 00:43:26,320
Speaker 11: importing it from India.

871
00:43:26,440 --> 00:43:28,920
Speaker 2: So they can't. They can't put them a bunch of

872
00:43:29,800 --> 00:43:35,880
Speaker 2: petroleum products into a ship in Louisiana and bring it

873
00:43:36,080 --> 00:43:37,760
Speaker 2: back around here to New Jersey.

874
00:43:37,840 --> 00:43:38,520
Speaker 3: You can't do it.

875
00:43:38,560 --> 00:43:39,040
Speaker 11: We send them.

876
00:43:39,239 --> 00:43:41,279
Speaker 1: Let's so let's put a pipeline in and pipe it

877
00:43:41,320 --> 00:43:43,360
Speaker 1: in from the Pennsylvania shale area.

878
00:43:43,520 --> 00:43:45,759
Speaker 11: Well, yeah, if you can't do them, if you can

879
00:43:45,800 --> 00:43:48,759
Speaker 11: convince New York State to build a pipeline, I'll give

880
00:43:48,800 --> 00:43:52,799
Speaker 11: you all of my uh all my all of my

881
00:43:52,800 --> 00:43:54,160
Speaker 11: free snacks from upstairs.

882
00:43:54,840 --> 00:43:56,400
Speaker 3: I mean that. That's the frustrating thing.

883
00:43:56,400 --> 00:43:59,200
Speaker 1: When you see you know, you can't get fuel to

884
00:43:59,280 --> 00:44:02,680
Speaker 1: the northeast it states, so we have to import it

885
00:44:02,719 --> 00:44:03,839
Speaker 1: from other parts of the world.

886
00:44:04,000 --> 00:44:07,560
Speaker 3: Absolutely nuts. You got to fix that. Go down to DC.

887
00:44:08,160 --> 00:44:10,520
Speaker 11: I can't run for president. I wasn't born in the US.

888
00:44:10,680 --> 00:44:17,120
Speaker 2: Yeah, Fernando Valley Brazilian. You speak obviously English and Portuguese,

889
00:44:17,200 --> 00:44:19,799
Speaker 2: but also German and Spanish. And I hear that you

890
00:44:20,040 --> 00:44:22,480
Speaker 2: ran a restaurant. What's the story with that.

891
00:44:22,920 --> 00:44:24,480
Speaker 11: It was a long time ago in Brazili.

892
00:44:25,120 --> 00:44:25,719
Speaker 2: It's not US.

893
00:44:25,920 --> 00:44:28,960
Speaker 11: No, it was bar food. It didn't go out, didn't

894
00:44:29,080 --> 00:44:31,239
Speaker 11: It didn't go so well. But you know, you live

895
00:44:31,280 --> 00:44:33,120
Speaker 11: and you learn, and so.

896
00:44:33,040 --> 00:44:35,800
Speaker 1: It fell back on being a global oil analyst.

897
00:44:35,920 --> 00:44:38,160
Speaker 2: Yeah, that's a pretty good fallback. I think you know,

898
00:44:38,239 --> 00:44:40,600
Speaker 2: yours is Walmart Greeter. I'm gonna be a truck driver,

899
00:44:40,680 --> 00:44:42,520
Speaker 2: and Fernando is like, I think I'll be a global

900
00:44:42,520 --> 00:44:43,480
Speaker 2: oil analystic.

901
00:44:44,120 --> 00:44:46,520
Speaker 13: One more thing before you go, and this is cool.

902
00:44:46,680 --> 00:44:50,400
Speaker 13: You go to boil, go on the terminal. How many

903
00:44:50,440 --> 00:44:54,760
Speaker 13: different types of crude oil are they? And real quick,

904
00:44:54,880 --> 00:44:58,360
Speaker 13: just what's the defining difference between them? The sulfur content

905
00:44:58,480 --> 00:44:59,120
Speaker 13: or something like that.

906
00:44:59,400 --> 00:45:03,760
Speaker 11: Yeah, So, I mean there are hundreds of crude grades globally.

907
00:45:03,800 --> 00:45:06,799
Speaker 11: I mean even in the US, there are two things.

908
00:45:06,840 --> 00:45:09,200
Speaker 11: You can be sour sweet, which is the sulfur content,

909
00:45:09,520 --> 00:45:13,160
Speaker 11: but then the gravity, so it's gravity relative to water.

910
00:45:13,840 --> 00:45:16,920
Speaker 11: You can go from the heavy bitumen in Canada which

911
00:45:16,960 --> 00:45:21,520
Speaker 11: is eight API gravity measure to a very light EGO

912
00:45:21,600 --> 00:45:24,640
Speaker 11: forward condensate which is sixty five, which.

913
00:45:24,480 --> 00:45:28,440
Speaker 13: Is the defining differences. Some are easier to refine than others.

914
00:45:28,600 --> 00:45:30,000
Speaker 13: That's the difference in price.

915
00:45:30,320 --> 00:45:33,520
Speaker 11: I think currently the defining difference is the higher it is,

916
00:45:33,560 --> 00:45:36,960
Speaker 11: the more gasoline it produces, it has fewer carbon atoms

917
00:45:37,360 --> 00:45:40,160
Speaker 11: and so it makes more gasoline less diesel. We actually

918
00:45:40,200 --> 00:45:42,080
Speaker 11: want the heavy stuff now we do.

919
00:45:42,160 --> 00:45:43,360
Speaker 3: That's that's science.

920
00:45:43,640 --> 00:45:47,040
Speaker 2: That's cool. Boil go on the Bloomberg terminal.

921
00:45:47,040 --> 00:45:50,919
Speaker 1: Fernanda Valley, senior analyst, former restauranteur at Bloomberg Intelligence.

922
00:45:51,000 --> 00:45:54,600
Speaker 5: You're listening to the tape Catcher live program Bloomberg Markets

923
00:45:54,640 --> 00:45:58,399
Speaker 5: weekdays at ten am Eastern on Bloomberg Radio, tune in app,

924
00:45:58,440 --> 00:46:01,600
Speaker 5: Bloomberg dot Com, and the Business app. You can also

925
00:46:01,640 --> 00:46:05,160
Speaker 5: listen live on Amazon Alexa from our flagship New York station,

926
00:46:05,520 --> 00:46:09,840
Speaker 5: Just say Alexa play Bloomberg eleven thirty.

927
00:46:10,840 --> 00:46:12,000
Speaker 3: Here on Bloomberg Markets.

928
00:46:12,120 --> 00:46:15,880
Speaker 1: We'd like to talk to C suite folks at interesting companies.

929
00:46:15,960 --> 00:46:17,960
Speaker 3: We think we've got one for you today, Kevin Sayer.

930
00:46:18,480 --> 00:46:21,080
Speaker 1: He's the CEO of dex coom Now, Dexcom, I wasn't

931
00:46:21,080 --> 00:46:22,680
Speaker 1: I'm not that familiar with it. But it's a medical

932
00:46:22,719 --> 00:46:26,520
Speaker 1: device company focused on the design and development of continuous

933
00:46:26,560 --> 00:46:29,400
Speaker 1: glucose monitoring systems for people with diabetes.

934
00:46:29,400 --> 00:46:31,200
Speaker 3: So certainly something.

935
00:46:30,880 --> 00:46:33,000
Speaker 2: That is needed out guessing I'm guessing it's even a

936
00:46:33,040 --> 00:46:35,799
Speaker 2: broader market. I mean, let's bring him in right now.

937
00:46:35,800 --> 00:46:43,000
Speaker 2: The ticker is d x CM NASDAK listed Dexcom. Kevin Sayer, CEO, Kevin,

938
00:46:43,080 --> 00:46:46,279
Speaker 2: is this really just for people with diabetes? Because I

939
00:46:46,520 --> 00:46:48,600
Speaker 2: feel like this market is really broadening out.

940
00:46:50,120 --> 00:46:52,080
Speaker 14: You know, that is a great question, and thanks for

941
00:46:52,120 --> 00:46:55,520
Speaker 14: having me on the show today. Right now, this technology

942
00:46:55,560 --> 00:46:58,640
Speaker 14: is used primary for people with diabetes and primarily for

943
00:46:58,719 --> 00:47:02,279
Speaker 14: people using insulin, but all time as a health indicator,

944
00:47:02,800 --> 00:47:05,560
Speaker 14: as a biosensor. I believe glucose can become a very

945
00:47:05,600 --> 00:47:10,160
Speaker 14: vital marker in healthcare for people, for example, weight loss, wellness.

946
00:47:10,360 --> 00:47:13,680
Speaker 14: Glucose is a sign of many things. Our primary indication

947
00:47:13,800 --> 00:47:16,759
Speaker 14: today is for diabetes, and our primary use case has

948
00:47:16,760 --> 00:47:18,319
Speaker 14: been for people on insulince so far.

949
00:47:18,560 --> 00:47:20,839
Speaker 2: I mean the reason I ask, and as my wife

950
00:47:20,880 --> 00:47:23,920
Speaker 2: will tell you, I'm a sucker for good marketing. I

951
00:47:24,000 --> 00:47:28,000
Speaker 2: see all over Okay, I see all over Instagram these

952
00:47:28,040 --> 00:47:32,800
Speaker 2: glucose monitors, and the idea is it can tell you, you

953
00:47:32,440 --> 00:47:36,000
Speaker 2: know what kind of sugar spike you get for eating

954
00:47:36,080 --> 00:47:40,880
Speaker 2: different kinds of food, and different people react in different ways.

955
00:47:41,120 --> 00:47:44,239
Speaker 2: So example is if I eat a bagel, I might

956
00:47:44,320 --> 00:47:47,640
Speaker 2: have a big sugar spike and maybe Paul doesn't. The

957
00:47:47,719 --> 00:47:49,600
Speaker 2: other thing is on the weight loss side. You know

958
00:47:49,600 --> 00:47:54,080
Speaker 2: I'm consistently ten to twenty pounds overweight. I love cake

959
00:47:54,560 --> 00:47:57,120
Speaker 2: and cookies, and that's a real problem for me. I

960
00:47:57,120 --> 00:47:59,640
Speaker 2: feel like if I had a glucose monitor, it would

961
00:47:59,640 --> 00:48:01,719
Speaker 2: be an easy your way for me to watch what

962
00:48:01,760 --> 00:48:04,440
Speaker 2: I eat, monitor what I eat, and maybe help control

963
00:48:04,440 --> 00:48:05,239
Speaker 2: myself a little bit.

964
00:48:06,719 --> 00:48:10,000
Speaker 14: There are numerous things you learned from wearing, one being

965
00:48:10,000 --> 00:48:12,600
Speaker 14: the COO at X common. Having been here quite a while,

966
00:48:12,680 --> 00:48:15,200
Speaker 14: I wear these things all the time. I don't have diabetes,

967
00:48:15,600 --> 00:48:18,600
Speaker 14: So a couple of personal insights. For example, I was

968
00:48:18,640 --> 00:48:20,960
Speaker 14: an investor conference one time and wanted to see how

969
00:48:21,040 --> 00:48:23,880
Speaker 14: high I could spike my glucose. So I ate a

970
00:48:23,880 --> 00:48:27,400
Speaker 14: great big cup of chocolate covered raisins and drank a

971
00:48:27,400 --> 00:48:30,360
Speaker 14: glass of orange juice, and I got my glucose so

972
00:48:30,520 --> 00:48:32,320
Speaker 14: high it almost looked like I had diabetes. And it

973
00:48:32,400 --> 00:48:34,840
Speaker 14: went very quickly. But I've learned what foods, for example,

974
00:48:34,920 --> 00:48:38,200
Speaker 14: I eat because my glucose to go up rapidly. Ice

975
00:48:38,200 --> 00:48:40,280
Speaker 14: cream does not cause you to go up as rapidly

976
00:48:40,320 --> 00:48:43,160
Speaker 14: as cake. You still go up, but not as not

977
00:48:43,200 --> 00:48:46,680
Speaker 14: as rapidly as weres cake as straight sugar, candies, jelly

978
00:48:46,680 --> 00:48:51,160
Speaker 14: beans and licorice guys super high spike very quickly. Chocolate

979
00:48:51,200 --> 00:48:54,080
Speaker 14: takes more time. At the end of the day, you

980
00:48:54,200 --> 00:48:56,880
Speaker 14: learn what those things do and how your body reacts

981
00:48:56,920 --> 00:48:58,920
Speaker 14: over the course of the day. But you also learn

982
00:48:58,960 --> 00:49:02,320
Speaker 14: about things like extra So if I have a workout

983
00:49:02,360 --> 00:49:05,560
Speaker 14: in the morning, what does mike glucos do during the

984
00:49:05,600 --> 00:49:09,560
Speaker 14: course of the day. And again my physiology personally, if

985
00:49:09,600 --> 00:49:11,560
Speaker 14: I have a nice workout on the morning, mike glucose

986
00:49:11,600 --> 00:49:15,720
Speaker 14: is ten percent lower all day long. And those things

987
00:49:15,840 --> 00:49:18,399
Speaker 14: are really good learnings as far as your overall health

988
00:49:18,440 --> 00:49:21,520
Speaker 14: over time. We look forward to being that market over time.

989
00:49:21,520 --> 00:49:23,919
Speaker 14: We're not labeled for that now, but you're right. People

990
00:49:23,960 --> 00:49:27,239
Speaker 14: are using them on a regular basis off label because

991
00:49:27,239 --> 00:49:29,239
Speaker 14: they can learn so much. And these devices go to

992
00:49:29,320 --> 00:49:32,160
Speaker 14: your phone, so you've got it right on your phone.

993
00:49:32,200 --> 00:49:34,240
Speaker 14: You can look at the data at the same time

994
00:49:34,640 --> 00:49:37,279
Speaker 14: you're looking at your text messages and your emails. And

995
00:49:37,320 --> 00:49:41,080
Speaker 14: for our diabetes users, particularly those on insulin, that phone

996
00:49:41,080 --> 00:49:44,600
Speaker 14: connection was one of the key advances we led, so

997
00:49:44,680 --> 00:49:47,640
Speaker 14: rather than look at a medical device or something else,

998
00:49:48,160 --> 00:49:50,200
Speaker 14: you can look at your phone. And if you're a

999
00:49:50,239 --> 00:49:53,360
Speaker 14: young person, particularly if you're a kid in school, we

1000
00:49:53,480 --> 00:49:56,279
Speaker 14: have the opportunity for your parents to see that data too,

1001
00:49:56,400 --> 00:49:59,760
Speaker 14: so caregivers can know that those in their family are safe.

1002
00:50:00,160 --> 00:50:03,080
Speaker 14: It's just been an amazing journey. Well here at the company,

1003
00:50:03,160 --> 00:50:04,680
Speaker 14: this technology is game changing.

1004
00:50:04,800 --> 00:50:07,880
Speaker 2: Well and what kind of discomfort are we talking about?

1005
00:50:07,920 --> 00:50:11,920
Speaker 2: This isn't like installing a pacemaker. No, no, no, I'm assuming

1006
00:50:12,520 --> 00:50:15,880
Speaker 2: at least equal to or better than a fingerprick on

1007
00:50:15,920 --> 00:50:16,840
Speaker 2: a regular basis.

1008
00:50:17,000 --> 00:50:18,399
Speaker 11: It's it's much less.

1009
00:50:18,400 --> 00:50:21,600
Speaker 2: Describe describe Kevin the device for us and how it

1010
00:50:22,080 --> 00:50:23,400
Speaker 2: has somebody.

1011
00:50:24,560 --> 00:50:26,880
Speaker 14: There is a small sensor that's about the width of

1012
00:50:26,880 --> 00:50:29,759
Speaker 14: a human hair in less than a less than a

1013
00:50:29,840 --> 00:50:31,839
Speaker 14: half inch of length, about three eights of an inch

1014
00:50:31,880 --> 00:50:35,320
Speaker 14: and length. It is inserted very rapidly with a needle.

1015
00:50:35,440 --> 00:50:39,000
Speaker 14: The needle is inside your body for that milliseconds, not

1016
00:50:39,200 --> 00:50:42,560
Speaker 14: even seconds. You don't feel it when you put it

1017
00:50:42,600 --> 00:50:45,480
Speaker 14: in our new product, The G seven's inserted on somebody's arm,

1018
00:50:46,080 --> 00:50:48,319
Speaker 14: attached to that small sensor in your arm as an

1019
00:50:48,320 --> 00:50:52,480
Speaker 14: electronic transmitter, and that sits outside your arm, uh and

1020
00:50:52,600 --> 00:50:56,040
Speaker 14: is attached with tape. You really don't feel that it's there.

1021
00:50:56,280 --> 00:50:59,400
Speaker 14: The G seven is a little bit bigger than a nickel.

1022
00:51:00,040 --> 00:51:02,600
Speaker 14: That's also you really don't feel it. You don't know

1023
00:51:02,640 --> 00:51:05,160
Speaker 14: that it's there. You wear it for ten days. People

1024
00:51:05,160 --> 00:51:08,239
Speaker 14: put them on themselves. There's no doctor or physician or

1025
00:51:08,280 --> 00:51:11,719
Speaker 14: anybody involved, and pair it with your phone and within

1026
00:51:11,760 --> 00:51:13,680
Speaker 14: a half hour you have glucose readings.

1027
00:51:14,000 --> 00:51:16,200
Speaker 11: Hey, Kevin Linten, that's yeah.

1028
00:51:16,080 --> 00:51:16,960
Speaker 14: That looks simple.

1029
00:51:17,120 --> 00:51:20,000
Speaker 1: Let's pivoty to your company and your stock. I mean,

1030
00:51:20,320 --> 00:51:22,480
Speaker 1: I need to pay more attention. This is a big company,

1031
00:51:22,520 --> 00:51:26,000
Speaker 1: forty six billion market cap. The stock you guys reported

1032
00:51:26,480 --> 00:51:29,120
Speaker 1: numbers after the close last night came in a little

1033
00:51:29,120 --> 00:51:31,560
Speaker 1: bit better and expected stocks trading off about three percent

1034
00:51:31,560 --> 00:51:34,160
Speaker 1: today but up about six percent year to date, up

1035
00:51:34,160 --> 00:51:37,200
Speaker 1: seventeen percent on trailing twelve year basis. Talk to us

1036
00:51:37,200 --> 00:51:39,319
Speaker 1: about the earnings last night reported what was a key

1037
00:51:39,400 --> 00:51:42,120
Speaker 1: message you wanted to get across to your investors in

1038
00:51:42,120 --> 00:51:43,920
Speaker 1: the anals, you know.

1039
00:51:44,040 --> 00:51:47,600
Speaker 14: Key message was continued growth. Nineteen percent organic revenue growth

1040
00:51:47,960 --> 00:51:51,040
Speaker 14: over last year. We launched our new product platform, mar

1041
00:51:51,160 --> 00:51:53,239
Speaker 14: G seven in this quarter and we just barely got

1042
00:51:53,239 --> 00:51:56,239
Speaker 14: started with that, and we believe that product's going to

1043
00:51:56,239 --> 00:51:58,280
Speaker 14: be an important growth driver for us in the future.

1044
00:51:58,880 --> 00:52:02,480
Speaker 14: We raise our guidance for the year. You talk about

1045
00:52:02,480 --> 00:52:05,520
Speaker 14: our stock story, and I listened to those revenue numbers.

1046
00:52:05,560 --> 00:52:08,719
Speaker 14: I've been with the company for twelve years. We were

1047
00:52:09,000 --> 00:52:12,000
Speaker 14: forty million dollars in revenue the year before I got here.

1048
00:52:12,040 --> 00:52:14,719
Speaker 14: In our guidance this year is in the three and

1049
00:52:14,760 --> 00:52:18,000
Speaker 14: a half billion dollar range. So this company is a

1050
00:52:18,000 --> 00:52:20,200
Speaker 14: big story. It's come a very, very long ways. We're

1051
00:52:20,239 --> 00:52:22,040
Speaker 14: in the s and P five hundred now as well,

1052
00:52:22,400 --> 00:52:23,880
Speaker 14: and our message rewarded you.

1053
00:52:24,040 --> 00:52:26,440
Speaker 2: I always look at comp charts right to compare a

1054
00:52:26,440 --> 00:52:31,040
Speaker 2: company stock over just a five year period, and your

1055
00:52:31,080 --> 00:52:34,120
Speaker 2: total return is five hundred and forty six percent. The

1056
00:52:34,160 --> 00:52:38,600
Speaker 2: stock has a sex tuppled in five years? Is that

1057
00:52:38,680 --> 00:52:43,560
Speaker 2: because you know this this market is growing Is it

1058
00:52:43,600 --> 00:52:46,439
Speaker 2: because there are more diabetics or is it because you've

1059
00:52:46,440 --> 00:52:49,239
Speaker 2: made innovations. You know it's much easier for them to

1060
00:52:49,320 --> 00:52:51,680
Speaker 2: use the product. What's the what's the main driver?

1061
00:52:52,960 --> 00:52:55,359
Speaker 14: I think the main driver has become awareness of how

1062
00:52:55,400 --> 00:52:59,560
Speaker 14: important a technology like this is in managing diabetes in general.

1063
00:53:00,360 --> 00:53:04,600
Speaker 14: We have expanded dramatically access to this product on the

1064
00:53:04,640 --> 00:53:07,560
Speaker 14: reimbursement front. One of our other key messages was expanded

1065
00:53:07,600 --> 00:53:11,960
Speaker 14: Medicare coverage. That's going to give us another three possibly

1066
00:53:12,000 --> 00:53:14,960
Speaker 14: three million people to access here in the US. So

1067
00:53:15,239 --> 00:53:17,680
Speaker 14: as people look at this technology and guys compare it.

1068
00:53:18,040 --> 00:53:20,080
Speaker 14: If you stick your finger, you have one number and

1069
00:53:20,120 --> 00:53:23,400
Speaker 14: that's all you have. We give people a new glucose

1070
00:53:23,440 --> 00:53:27,560
Speaker 14: reading every five minutes and with that, diabuts management is

1071
00:53:27,600 --> 00:53:30,879
Speaker 14: so much better. Every time somebody wears this or there's

1072
00:53:30,880 --> 00:53:36,080
Speaker 14: a study, we see people get healthier. Their average glucos

1073
00:53:36,120 --> 00:53:39,239
Speaker 14: comes down there when SE's come down, and it even

1074
00:53:39,280 --> 00:53:42,760
Speaker 14: goes beyond that into other health factors like cardiovascular conditions

1075
00:53:42,800 --> 00:53:46,520
Speaker 14: get better. People have realized how important this is. So

1076
00:53:46,680 --> 00:53:49,800
Speaker 14: the technology in our innovations, going to the phone, connecting

1077
00:53:49,800 --> 00:53:53,040
Speaker 14: with things, that has driven it. But because of those innovations,

1078
00:53:53,800 --> 00:53:56,920
Speaker 14: access is driven. It's just one after another after another,

1079
00:53:56,960 --> 00:53:59,080
Speaker 14: and we've been at the forefront of everything.

1080
00:53:58,719 --> 00:54:01,040
Speaker 1: All right, Kevin, thank you so much for joining Uskevin Sayer,

1081
00:54:01,160 --> 00:54:03,680
Speaker 1: CEO of dex Com, been a real success story for

1082
00:54:03,719 --> 00:54:04,040
Speaker 1: this dot.

1083
00:54:05,960 --> 00:54:09,040
Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can

1084
00:54:09,080 --> 00:54:12,840
Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever

1085
00:54:12,960 --> 00:54:16,680
Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter

1086
00:54:16,880 --> 00:54:18,920
Speaker 2: at Matt Miller nineteen seventy three.

1087
00:54:19,239 --> 00:54:21,640
Speaker 3: And I'm Faul Sweeney. I'm on Twitter at pt Sweeney.

1088
00:54:21,760 --> 00:54:24,440
Speaker 1: Before the podcast, you can always catch us worldwide at

1089
00:54:24,440 --> 00:54:26,160
Speaker 1: Bloomberg Radio.