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Speaker 2: Hey, now to the ominous tone when it comes to
Speaker 2: the macro. As US consumer sentiment slides to one of
Speaker 2: the lowest readings on record, and his economists anticipate President
Speaker 2: Trump's trade war makes a US recession almost a coin flip.
Speaker 2: We had to Washington, DC into Bloomberg's Michael McKee. He's
Speaker 2: a Bloomberg TV and Radio international economics and policy correspondent.
Speaker 2: He's live in our DC bureau right now. Mike, you're
Speaker 2: wrapping up the meetings that I am at. The imath
Speaker 2: I want to get from you just the general consensus,
Speaker 2: the general tone, the vibes, for lack of a better term.
Speaker 3: But before that, I.
Speaker 2: Want to bring up the umish data that we got
Speaker 2: earlier today and really what it told us.
Speaker 3: What was the signal there?
Speaker 4: Well, the signal is the same as it was with
Speaker 4: the preliminary numbers. These were a little bit better, but
Speaker 4: they basically say Americans don't think the economy is in
Speaker 4: good shape and they're worried about where it's going from here.
Speaker 4: The question always is with these sentiment surveys is do
Speaker 4: they translate that into action?
Speaker 5: Do they start pulling back?
Speaker 4: The inflation expectations number is certainly not good, little bit
Speaker 4: better by a basis point than they were in the
Speaker 4: preliminary but they're still very high. And if Americans are
Speaker 4: worried about prices going up and they are worried about
Speaker 4: the economy, they might pull back on their spending. And
Speaker 4: then you've got a demand problem that slows the economy
Speaker 4: at a time when tariffs might be something of a
Speaker 4: shock on the supply side and push up inflation.
Speaker 5: And that's the nightmare scenario.
Speaker 6: So you.
Speaker 4: Can sort of game out bad news from this report
Speaker 4: if you want to go far enough.
Speaker 7: All right, So when do you just kind of speculate
Speaker 7: that it's going to turn into bad actions? I mean,
Speaker 7: is there a reading mic that you say, Okay, we're there.
Speaker 7: People are definitely holding back and it doesn't look good.
Speaker 4: Well, you'll have to look at the consumer spending numbers,
Speaker 4: both the retail sales numbers and of course the spending
Speaker 4: numbers that come at the end of the month. But
Speaker 4: there was a study downe a couple of years ago
Speaker 4: by Danny Blanchflower, you know, well, he's an economics professor
Speaker 4: up at Dartmouth College that shows there is a strong
Speaker 4: correlation between big drops in consumer confidence and recessions.
Speaker 5: And I have been at.
Speaker 4: The other end of his emails where he's been saying lately,
Speaker 4: I told you, and this is what's going to happen.
Speaker 5: So we shall see if that does indeed prove out.
Speaker 2: Okay, I promised we'd talk about the vibes don in Washington.
Speaker 2: You've been there the entire week. I'm sure the weather
Speaker 2: has been great, spring like nice in Washington right now.
Speaker 3: What about the vibes though?
Speaker 2: What's the takeaway from the Spring IMF meetings and really
Speaker 2: everyone that you've run into, everyone you've heard from.
Speaker 4: I think everybody just wants to get out of this town.
Speaker 4: As the talk, as you say, no matter what comes up,
Speaker 4: it all ends up back on tariffs and what the
Speaker 4: US role in the global economy is going to be
Speaker 4: going forward. And the problem for everybody besides just the
Speaker 4: basics of tariffs are bad for economics, is that the
Speaker 4: uncertainty caused by the presidents waffling around on tariffs and
Speaker 4: what they're going to be is really paralyzed everybody. Countries
Speaker 4: are trying to figure out how they can defend themselves
Speaker 4: and the protect their economies from tariffs, but they don't
Speaker 4: know what the tariffs are actually going to be, what
Speaker 4: they'll be applied upon, when they'll be applied. So it's
Speaker 4: very hard for anyone to get a clear idea of
Speaker 4: where we go from here. And of course we're all
Speaker 4: in this echo chamber where that's all what gets talked about.
Speaker 4: I think people may be glad when this event is over.
Speaker 7: Well that's interesting too, Like I do wonder when the
Speaker 7: echo chamber, like we just kind of are in this vacuum,
Speaker 7: we're like bad, bad, bad. Having said that, Bloomberg did
Speaker 7: their own survey of economists and they basically are saying
Speaker 7: a couple of things. They say, the US economy set
Speaker 7: to expand one point four percent this year, what and
Speaker 7: a half percent next year? Not great compared with two
Speaker 7: percent one point nine percent in the last month's poll,
Speaker 7: the median respondent now sees a forty five percent chance
Speaker 7: of a downturn in the next twelve months. That's up
Speaker 7: from thirty percent in March. You're the expert here. I
Speaker 7: know it's all just numbers. I know it's just a survey,
Speaker 7: but you go back a few months, we really weren't
Speaker 7: talking us recession, and now it's part of the narrative.
Speaker 4: Yeah, I feel like we're playing family feud here. The
Speaker 4: survey reflects basically the feeling on Wall Street and among
Speaker 4: almost all economists that a recession is not necessarily likely,
Speaker 4: but the odds of it have gone up significantly, and
Speaker 4: a lot of it is going to depend on what
Speaker 4: consumers do. We also see the beginnings of a real
Speaker 4: slowdown in business investment. We saw that in some of
Speaker 4: the categories of durable goods. We had a big durable
Speaker 4: goods number yesterday based on Boeing sales, but machinery sales,
Speaker 4: machinery orders, computer orders, things like that fell during the month.
Speaker 4: So if businesses are pulling back, and FED officials tell
Speaker 4: us that that's what they're hearing as well, then the
Speaker 4: odds go up significantly that recession could occur.
Speaker 5: It wouldn't take much to tip us into what.
Speaker 2: How big of a grain of salt should we take
Speaker 2: surveys or not surveys such as this, but what economists
Speaker 2: think will happen. And I think back to what two
Speaker 2: three years ago at this point, Mike, when pretty much
Speaker 2: everyone was saying we'd be in recession and that didn't
Speaker 2: end up happening.
Speaker 4: Well, I think the difference this time is economists know
Speaker 4: that this is sort of an impossible situation to be in.
Speaker 4: And I've talked to a lot of them this week
Speaker 4: who all say that I'm lucky because I get to
Speaker 4: be an economist who doesn't have to make a forecast.
Speaker 4: They get paid, they get paid for making forecasts, and
Speaker 4: they don't have a whole lot of good data to
Speaker 4: make a forecast upon, so it's very difficult for them
Speaker 4: to know whether this forty five percent is a good
Speaker 4: strong number or not. I think as we go along
Speaker 4: and get more hard data, they'll refine their views. But
Speaker 4: for right now, I think they're being They're just being
Speaker 4: cautious because the odds are the story is lining up
Speaker 4: that we could go into recession, but it doesn't necessarily
Speaker 4: mean that's going to happen.
Speaker 7: Right, and at least putting out some numbers, right, They're
Speaker 7: not saying well, we could go this way or we
Speaker 7: go this way. I mean, it's like kind of an
Speaker 7: interesting environment, as you know with corporate earnings, where we're
Speaker 7: getting some CEOs or some c suite. We keep bringing
Speaker 7: up United Airlines, but I think there's a few others
Speaker 7: where are saying well, it could go this way, or
Speaker 7: it could go this way, depending on the tariffs and
Speaker 7: depending on the US economy. Mike the Fed speak, you
Speaker 7: caught up with Fed Governor Waller. I'm just curious how
Speaker 7: you were thinking about what we were hearing. We're getting
Speaker 7: ready to go right into a quiet period when it
Speaker 7: comes to the FED as well.
Speaker 4: Yeah, this is going to be an uneventful one and
Speaker 4: an uneventful FED meeting because they don't know they're not going.
Speaker 5: To make any change at the main meeting.
Speaker 4: The question then becomes how fast do we get enough
Speaker 4: data for them to make a decision. Waller said that
Speaker 4: he wouldn't expect anything until we get June data, which
Speaker 4: comes out in July.
Speaker 5: Which would put the next move.
Speaker 4: Perhaps it wouldn't be in June, it would be maybe
Speaker 4: the July thirtieth meeting, or even September seventeenth, and I
Speaker 4: think that Waller is leaning towards the fall before you
Speaker 4: have enough data to show what's going on, because companies
Speaker 4: are going to move slowly on all of this. If
Speaker 4: their input prices don't go shooting up, but just start
Speaker 4: to rise, maybe they'll eat a little bit of it to.
Speaker 5: Keep share of business.
Speaker 4: And if the economy slows, they may be a little
Speaker 4: more reluctant to let people go because it was so
Speaker 4: hard to find them before. So we'll have to see
Speaker 4: how the data play out. They know they'll be behind
Speaker 4: the curve, but there isn't much else they can do
Speaker 4: about it at this point.
Speaker 2: We got anecdotes from the Beige Book this week. We
Speaker 2: know the data that the Federal Reserve looks at as
Speaker 2: they go into their quiet period.
Speaker 3: How do they look though.
Speaker 2: At company earnings? Because we're going to hear from some
Speaker 2: big ones next week. Are they watching what companies like
Speaker 2: large megacap tech public companies are telling investors?
Speaker 4: Sure, And of course they're always talking to the CEOs
Speaker 4: of companies, especially the bank presidents in their districts. They
Speaker 4: don't particularly care I think about what the earnings per
Speaker 4: share is, but the guidance is what's giving the Fed
Speaker 4: some kind of clue as to what's going on. And
Speaker 4: when you have what Delta and American pulled their guidance,
Speaker 4: and you mentioned United setting up two scenario guidance that
Speaker 4: suggests that the businesses are.
Speaker 5: Going to sit on the sidelines for a while.
Speaker 4: And if that's the case, then the economy slows because
Speaker 4: it doesn't get the stimulus from investment.
Speaker 7: Are we seeing any shift? Next week is a big
Speaker 7: week when it comes to the job market, right, we
Speaker 7: get the monthly read from the government on Friday, That's
Speaker 7: what we'll be talking about one week from now, and
Speaker 7: then we get obviously some lead.
Speaker 3: Ups to jolts action coming earlier, a little.
Speaker 7: Bit of other stuff. So I am how important is
Speaker 7: it when I feel like it's almost getting to the point. Yes,
Speaker 7: we know the Fed obviously is on inflation watch, but
Speaker 7: people are kind of maybe debating are they gonna have
Speaker 7: to start watching the labor market more for signs of weakness,
Speaker 7: signs of growth slowing down? So I'm just curious how
Speaker 7: important the numbers are next week. I know they're always important,
Speaker 7: but are they a little bit more important.
Speaker 4: Next week, I think it'll be a little more interesting,
Speaker 4: but not necessarily more important. You know, Chris Waller said
Speaker 4: yesterday to me that he thinks that unemployment is going
Speaker 4: to be a more important indicator of where the economy
Speaker 4: is going than inflation, because his belief is inflation's a
Speaker 4: one time move, but if you start seeing people getting
Speaker 4: laid off, that tends to pick up speed. The thing
Speaker 4: about this week coming up the April numbers is we
Speaker 4: don't have a clear picture of how the job cuts
Speaker 4: the president has forced on the federal government are playing out.
Speaker 5: Yet.
Speaker 4: We don't really know how many people have been fired.
Speaker 4: I'm not sure all the people who've been fired know
Speaker 4: they've been fired. And we don't have a great idea
Speaker 4: yet of what the spillover into the contracting world is now.
Speaker 4: So there should be some impact, It should be noticeable,
Speaker 4: but is it going to be big enough to make
Speaker 4: a difference.
Speaker 5: Probably not.
Speaker 4: And the longer term, immigration has come to a stop,
Speaker 4: and so the labor market should start to fall, which
Speaker 4: changes the denominator on the unemployment rate and could keep
Speaker 4: the unemployment rate from moving up as quickly. So this
Speaker 4: week or this coming week, it'll be interesting to see
Speaker 4: what clues we get out of this, But it won't
Speaker 4: be determinative it anyway, because they're not going to move
Speaker 4: in May.
Speaker 2: Mike, just twenty seconds, Tourston slockout with the note today
Speaker 2: about US trade between China and China, trade between China
Speaker 2: and the US collapsing, could see empty shells COVID, Like,
Speaker 2: how big of a deal would that be if that happens?
Speaker 3: Just twenty seconds.
Speaker 4: Oh, if that happens, that'll be a big deal because
Speaker 4: that's the kind of thing that Americans notice right away,
Speaker 4: not only prices, but the availability of goods.
Speaker 5: So that's something to be concerned about.
Speaker 4: We'll see if the numbers continue on those container ships
Speaker 4: coming in.
Speaker 7: Yep, funny, not funny. The hunt for toilet paper and
Speaker 7: so much more. We all remember it all too, Michael mcgae.
Speaker 3: You Ward in the basement. I know that about you.
Speaker 3: So we're all going over to the masterhousehold if we
Speaker 3: run out of TP.
Speaker 7: Michael McKee he is, of course TV and radio international
Speaker 7: Economics and Policy correspondent, coming up, the CFO of Huntington
Speaker 7: Bank Shares.
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Speaker 7: Huntington Bank Shares reported earnings last week, some analyst noting
Speaker 7: how the regional bank based in Ohio seemed to be
Speaker 7: more optimistic about growth than its peers for the first quarter,
Speaker 7: the bank being on earnings and interest margin and more.
Speaker 7: It also approved a one billion dollar share buy back.
Speaker 7: The stock rally three percent on that release, but the
Speaker 7: stock overall year to date is down about eleven percent.
Speaker 7: In our weekly check in on cfo's chief financial officers
Speaker 7: back with us as Zach Wasserman. He's Senior executive VPCFO
Speaker 7: of Huntington Bank Shares. It is the holding company of
Speaker 7: the consumer and business regional bank, Huntington National Bank. It's
Speaker 7: got locations and a handful of states we'd like to
Speaker 7: remind you Ohio, Minnesota, North and South Carolina, and a
Speaker 7: few more. And Zach joining us from Columbus, Ohio. Also
Speaker 7: with us is Nita Trentman, senior editor at Bloomberg News,
Speaker 7: the author of the CFO Briefing Newsletter, which you can
Speaker 7: get at Bloomberg dot com. Slash CFO briefing. It comes
Speaker 7: out a new one every Sunday, and Zach is among
Speaker 7: those featured in the newsletter out on Sunday. Zach, you know, welcome.
Speaker 7: Good to have you both, Zach, We want to get
Speaker 7: right to it. Great to have you here. I think
Speaker 7: we talked with you in about mid March last go round,
Speaker 7: and that was before so called Liberation Day. What's changed
Speaker 7: as a result of what we've got from the White
Speaker 7: House and the volatility and uncertainty that has followed.
Speaker 8: Yeah, well, it's triving to be back with you, and
Speaker 8: certainly it's been an eventful first start of the start
Speaker 8: of the second quarter here, but for us, it's continued
Speaker 8: business as usual for the most part. We had, as
Speaker 8: you noted, a really strong first quarter. It was, frankly,
Speaker 8: in my finance career, within the top five of any
Speaker 8: quarter I've ever been a part of. You know, Revenues
Speaker 8: growing ten percent, earnings per share up twenty percent, with
Speaker 8: really strong customer acquisition trends, and great credit quality. So
Speaker 8: a lot of momentum actually carrying into the second quarter,
Speaker 8: you know, without being said. One of the ways we
Speaker 8: characterized the sentiment right now on our earnings call was
Speaker 8: cautious optimism. You know, certainly more uncertain the today than
Speaker 8: was the case earlier in the year. With that being said,
Speaker 8: we're still seeing growth, you know. Indication of that is
Speaker 8: loan pipelines. Our forward projection of likely loan closings actually
Speaker 8: higher in the first two weeks of the second quarter
Speaker 8: here from the from the end of the first quarter.
Speaker 8: So still seeing that come through, notwithstanding a bit more uncertainty,
Speaker 8: for sure.
Speaker 2: Given that you have a regional focus, what would you
Speaker 2: say is the biggest potential impact from tariff policy on
Speaker 2: your business? We talk about some of the bigger banks,
Speaker 2: and certainly you know that the issues around M and
Speaker 2: A and sort of a pause when it comes to
Speaker 2: IPOs that have been pulled that affects their capital markets business.
Speaker 2: But that's not necessarily where where you guys are playing.
Speaker 2: What are the biggest risks based on what's happening in
Speaker 2: Washington to your business.
Speaker 3: It's a great question.
Speaker 8: It's a great question, Tim, and I think you know,
Speaker 8: for the most part, it is the uncertainty itself. You know,
Speaker 8: we're seeing somewhat delays in the decision making process that
Speaker 8: affects loan activity in our regional bank, for example. I
Speaker 8: was just talking with our key executive there mentioned that
Speaker 8: the loan closing process is taking about six days longer,
Speaker 8: about ten percent longer maybe than would historically have been
Speaker 8: the case. We're seeing some of our segments that are
Speaker 8: that really service companies who are keyed to durable goods,
Speaker 8: particularly those that you know where they have a foreign
Speaker 8: supply chain, that we're seeing some impacts in. We do
Speaker 8: have an m and a advisory business that supports middle market,
Speaker 8: largely private companies, and we're seeing somewhat slower deal closing
Speaker 8: process there. So you know, we're seeing to some to
Speaker 8: read those impacts and that if that uncertainty continues, we
Speaker 8: would expect to see that those impacts continue and probably magnify.
Speaker 8: So absolutely we'd like to see a resolution of some
Speaker 8: of these uncertainty. With that being said, as I know,
Speaker 8: even my first answer, we are seeing generally growth. You know,
Speaker 8: loans for us into the first quarter grew two percent
Speaker 8: from the end of last year, and our forecast for
Speaker 8: Q two the quarter in right now is we're one
Speaker 8: to two percent growth. So overall still seeing growth, but
Speaker 8: at the margin, you know, some of those impacts I'm Zach.
Speaker 9: To follow up on that. One of the themes in
Speaker 9: the upcoming edition of the briefing will be controlling the controllables,
Speaker 9: which is a theme that is coming up in many
Speaker 9: earning scolls that we're seeing these days, coming in wondering
Speaker 9: from your perspective, like, if you're looking at your business,
Speaker 9: what are the items that you can actually control?
Speaker 8: Yeah, it's a great question, Nina, and I think, you know,
Speaker 8: I think one of the things that's critical for us,
Speaker 8: and to some degree, situations like this really reveal which
Speaker 8: companies are managed the most rigorously. And we always think
Speaker 8: about multiple scenarios and scenario planning with contingent actions, and
Speaker 8: so to some degree, you know, this scenario that's playing
Speaker 8: out right now is part and partial to the way
Speaker 8: we manage the company all the time, always thinking about
Speaker 8: what could potentially come to pass and how we'll pull
Speaker 8: the levers of the business to maintain you know, strong
Speaker 8: relative performance in any of them. With that being said,
Speaker 8: you know, I always think about three things. Firstly, the
Speaker 8: key pillars of financial strength for the bank, capital, liquidity,
Speaker 8: and credit, and uh, you know, those are the things
Speaker 8: that under all circumstances we want to have strength in
Speaker 8: and you know, in an environment like this, we we
Speaker 8: know how we will operate to maintain those those areas
Speaker 8: of strength. Now, the second is the growth orientation of
Speaker 8: the firm. What are the goals that we're putting out
Speaker 8: to the organization. Where do we want folks focused, and
Speaker 8: what's the pace of our investments into key growth initiatives.
Speaker 8: And then the last thing is how can we be
Speaker 8: consistent with our customer base. You know, fundamentally one of
Speaker 8: the most important things for a bank is to be
Speaker 8: there for the for our customers through all cycles. And
Speaker 8: so for us that consistency of customer interaction, consistency of underwriting,
Speaker 8: and really making sure that for the customers we're always
Speaker 8: there to support them.
Speaker 9: Right, Just wondering, actually you pointed out the importance of
Speaker 9: credit and liquidity in the current situation. If we go
Speaker 9: back a few weeks time, basically, ever since the April
Speaker 9: two terrorifts were announced, we've seen a strong sell off
Speaker 9: in US assets. We've seen investors questioning sort of the
Speaker 9: stability of the US financial system, and we're also seeing
Speaker 9: corrects emerging around institutions here in the US with with
Speaker 9: questions around the rule of law. Do you process so
Speaker 9: I'm wondering from a from a CFO perspective, how do
Speaker 9: you think about those impacts to your business now and
Speaker 9: also for the longer term.
Speaker 8: Yeah, it's a it's a great question. Look, I think
Speaker 8: to some degree, we see ourselves as a as a
Speaker 8: bastion of strength at times when there is those kind
Speaker 8: of uncertainties, you can count on us. As I know
Speaker 8: it just just a minute ago. Our decision making criteria
Speaker 8: are going to be are we going to be consistent?
Speaker 8: We're there to provide advice and counsel to our to
Speaker 8: our customers. IM it's this time. I mean, to some degree,
Speaker 8: this actually is a time that that bankers relish. And
Speaker 8: don't get me wrong, no one wants uncertainty and potential
Speaker 8: challenges to the economic environment. But this is the time
Speaker 8: when we really prove our worth to our customers. We
Speaker 8: help them think through how are they going to address
Speaker 8: potential challenges to their supply chain, how are they going
Speaker 8: to continue to address the level of interest rates which
Speaker 8: have clearly risen it And if inflation does re emerge
Speaker 8: and begin to reaccelerate, how are they going to address that?
Speaker 8: So it really is a sort of go back to
Speaker 8: the core focus on customers, focus on their best interests,
Speaker 8: and really help them to be ready amongst this potential uncertainty.
Speaker 7: Hey, one thing I want to ask you, just to
Speaker 7: follow up Zach on Nina's question, and especially when it
Speaker 7: comes to the rule of law, we are living in
Speaker 7: an environment where it's being tested. We're seeing a consolidation
Speaker 7: of power by the president in the White House. We
Speaker 7: have a story this morning that is among our most
Speaker 7: read on the Bloomberg about a state judge in Wisconsin
Speaker 7: arrested by federal agents after an investigation into whether she
Speaker 7: obstructed officials trying to detain an undocumented in and I
Speaker 7: guess whether that was legal or illegal. The point is,
Speaker 7: we're living in a very different at this point, it
Speaker 7: feels like the United States of America. So how do
Speaker 7: you think about it As a CFO. We're looking to
Speaker 7: our leaders trying to understand the way forward, and how
Speaker 7: do you think about what could be a very different,
Speaker 7: potentially country going forward and operating within one.
Speaker 8: Yeah, it's hard to speculate on how things will go
Speaker 8: and how the operating environment could potentially change. You know,
Speaker 8: we walked into this year with an expectation that the
Speaker 8: regulatory environment would continue to evolve and be very constructive
Speaker 8: to growth, and so we're certainly looking to see that.
Speaker 8: But you know, we try to get out of the
Speaker 8: game of speculation and really just continue to focus on
Speaker 8: the core of what a bank is, which.
Speaker 7: Is forgive me forgiving, customer, Zach, forgive me, not even speculation.
Speaker 7: I mean, we're seeing things happen that, you know, it's
Speaker 7: not business as usual in terms of how things are run.
Speaker 7: And I just I am curious and we're really on
Speaker 7: folks like you and all leaders that come on on
Speaker 7: Bloomberg just to try to understand. Is it upsetting and
Speaker 7: hard for leaders too to see things not kind of
Speaker 7: business as usual? Potentially you know, becoming the target of
Speaker 7: the White House.
Speaker 5: Yeah.
Speaker 8: Look, I mean I think we want to see certainty
Speaker 8: and clarity and and to have an operating environment which
Speaker 8: is clear, and so to the extent that it's not,
Speaker 8: that's not helpful for us. With that being said, and
Speaker 8: again I kind of come back to what's the role
Speaker 8: of our company. We're not a legislative body, we're not
Speaker 8: a political entity. We're there to help serve our customers.
Speaker 8: And this is the time when, to some degree, you know,
Speaker 8: the culture of hunting and certainly is all about service,
Speaker 8: and we just double down on that at times like
Speaker 8: this and just try to be that that bastion of strength,
Speaker 8: that pillar that people could always count on, and that's
Speaker 8: what we draw inspiration.
Speaker 2: Well, speaking of service, you mainly operate in the Midwest,
Speaker 2: and I'm wondering how you're servicing manufacturing and auto parts
Speaker 2: and auto related clients and how those are intending to
Speaker 2: manage supply chain challenges. What can you tell us about that?
Speaker 2: What color can you give us some what you've heard
Speaker 2: from them?
Speaker 8: Yeah, Look, I think certainly, sort of as I noted earlier,
Speaker 8: the folks that are really the most keyed toward foreign
Speaker 8: supply chains, you know, there is some concern and I
Speaker 8: think it's affecting decision making, it's affecting some of their
Speaker 8: investment plans. With that being said, I also generally speaking,
Speaker 8: I think we're seeing from our customer base that.
Speaker 5: They this is not totally unexpected.
Speaker 8: You know, we saw from the first Trump administration the
Speaker 8: tariffs were part of a major part of the agenda,
Speaker 8: and certainly during the election cycle that that came up
Speaker 8: as a major likely focused and so folks knew that
Speaker 8: something was coming and they were beginning to think through that.
Speaker 8: And so you know, for the most part, we're seeing
Speaker 8: us calm, more calm maybe than the headlines generally would indicate.
Speaker 8: And I think, you know, likewise, if you think of
Speaker 8: the commercial sector, you know, there's been a number of
Speaker 8: challenges over the last five years of COVID, rapid rise
Speaker 8: of interest rates, high levels of inflation, and so I
Speaker 8: think for the most part we're seeing resiliency, more resiliency
Speaker 8: perhaps than the headlines would would imply. I don't want
Speaker 8: to be Pollyanna here. If this uncertainty continued for a
Speaker 8: long period of time, you would see things more markedly deteriorate,
Speaker 8: but thus far we have not seen that.
Speaker 7: That's why we like to talk to folks like you, Zach,
Speaker 7: thank you so much. Really appreciate really weighing in on
Speaker 7: our world environment. And like we said, he's got a
Speaker 7: very optimistic view, and we saw that play out in
Speaker 7: their earnings and certainly investor reaction. Zach Wassterman, CFO of
Speaker 7: Huntington Bank Shares and our own inga trpment, senior editor
Speaker 7: at Bloomberg News. Check out the CFO Briefing newsletter, A
Speaker 7: new one out on Sunday.
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Speaker 7: We're going to talk about someone who has been a fixture,
Speaker 7: no doubt about it, of the global investment world. His
Speaker 7: financial moves watch closely. One of the very successful and
Speaker 7: uber rich members among Middle East royalty and yet, as
Speaker 7: Bloomberg's Devin Pendleton rights, Prince Awilid Bintellal is one of
Speaker 7: a kind figure among the rich and the powerful in
Speaker 7: the Middle East Skulf region. Devon has been at his
Speaker 7: top floor office in Kingdom's Center. It's a landmark of
Speaker 7: the rial skyline several times. She is Bloomberg Newswalth reporter.
Speaker 7: Her Bloomberg exclusive on Prince Abilid is Today's Bloomberg Big Take.
Speaker 7: It's also among the most read on the Bloomberg on
Speaker 7: this Friday. She joins us here in studio, really great
Speaker 7: story about someone that I feel like. At one point, Devin,
Speaker 7: we talked about him constantly over and over again in
Speaker 7: terms of his investments, and then you know, he kind
Speaker 7: of got quiet. And then there, of course was a
Speaker 7: big thing that happened over in Saudi Arabia. Take us
Speaker 7: back to kind of who he is and then kind
Speaker 7: of the moment, it feels like things changed.
Speaker 10: Sure well, thank you, thank you, Carol, thank you Tim.
Speaker 10: So Prince aghlid Is he's a Saudi billionaire and he's
Speaker 10: a member of the royal family. I mean, the royal
Speaker 10: family is huge, there's thousands of members. So he is
Speaker 10: related to the king, but not like in the kingly
Speaker 10: line of succession as we think of it, but a
Speaker 10: prominent member and very very entrepreneurial from a young age.
Speaker 10: He attended college in the US and started investing here
Speaker 10: and there in Saudi Arabia. But he really the reason
Speaker 10: we all talk about him and know him is that
Speaker 10: he made a bet on Citibank back in the eighties
Speaker 10: when it was really struggling. That bet did tremendously well.
Speaker 10: For a long time, he was city's biggest shareholder. He
Speaker 10: went on to form relationships with Rupert Murdoch, with Bill Gates,
Speaker 10: he bought a steak in the four seasons. He bought
Speaker 10: a steak in news Corps, he had a steak in Disney,
Speaker 10: he funded euro Disney, I mean all over, and also
Speaker 10: very prominent hotel investors and amazing properties and just like
Speaker 10: a larger than life character. He was with a fixture,
Speaker 10: like you said, always showing up on financial television, loved
Speaker 10: to be quoted. He always traveled with a motorcade, like
Speaker 10: he had an entourage with him. Incredibly lavish lifestyle.
Speaker 2: And then pretty much overnight November twenty seventeen, everything changed.
Speaker 10: Everything changed. So in November twenty seventeen, this was about
Speaker 10: a year and a half after King Salman became King
Speaker 10: of Saudi Arabia and his son, Crown Prince Muhammad bin
Speaker 10: Salman was really just basically running the show in Saudi Arabia.
Speaker 10: Incredibly young and ambitious guy, and he locked up hundreds
Speaker 10: of the elite of Saudi Arabia, not just businessmen, but
Speaker 10: also governors, government ministers, prominent people, philanthropists, business people, detained
Speaker 10: them at the RITZ, and that included Prince Albhalid, which
Speaker 10: was a big deal because Prince A will lead at
Speaker 10: that point, like kind of prior to this moment was
Speaker 10: really like for the US. I mean, maybe the most
Speaker 10: famous Saudi, Like this was what a lot of investors
Speaker 10: thought of, or Wall Street thought of if you mentioned
Speaker 10: Saudi Arabia, because Saudi too was so private and closed
Speaker 10: off for so long, like it was difficult to crack.
Speaker 10: They weren't investing like it is, nothing like it is today.
Speaker 10: Albaalid was detained there for eighty three days. Nobody really
Speaker 10: heard from him, that they took everybody's phones. After eighty
Speaker 10: three days, he was released, and Bloomberg actually had the
Speaker 10: first interview with him. When he came out, he said,
Speaker 10: everything's good. He didn't look so great, he was quite thin,
Speaker 10: but he assured us everything's good. He said he'd struck
Speaker 10: an agreement with the government. He couldn't say anything about it,
Speaker 10: but just said, you know, business is normal, and it
Speaker 10: was like, okay, all right, business as usual. But he
Speaker 10: has a very very big, prominent investment company called Kingdom Holding,
Speaker 10: which has stakes all over the world. And he pretty
Speaker 10: much went quiet, like after he got out of the ritz.
Speaker 10: He gave that one interview and then didn't nearly have
Speaker 10: the same public profile that he had before.
Speaker 7: What I love is you say the terms of the
Speaker 7: agreement were secret, but it was clear the government, the
Speaker 7: Saudi government had a close interest in his portfolios portfolio
Speaker 7: with his stakes in hotels, aviation, and entertainment, all sectors
Speaker 7: overlapping with Vision twenty thirty. So is there any what
Speaker 7: do folks say that they wanted to exactly know what
Speaker 7: he was invested in? So what do we know?
Speaker 10: So we know? I mean he owned ninety five percent
Speaker 10: of Kingdom Holding this big publicly traded conglomerate before and
Speaker 10: in twenty twenty two the Public Investment Fund or PIFF
Speaker 10: bought roughly eighteen percent of it, so they actively had
Speaker 10: a stake at this point. I mean, they definitely had
Speaker 10: an interest before. And I think a big reason that
Speaker 10: this his investment empire was interesting to them is he
Speaker 10: for long time is invested in hotels and airlines and
Speaker 10: entertainment and these are all core sectors that are very
Speaker 10: important for Vision twenty thirty as they try to diverse
Speaker 10: Fy away from oil and you know, become a tourist destination,
Speaker 10: and he's very useful for that. Like he's been a
Speaker 10: hotel investor for a really long time. He has relationships
Speaker 10: with Bill Gates in the four seasons of Management and
Speaker 10: so You've seen a lot more domestic investment by all
Speaker 10: the lead in very specific projects.
Speaker 2: Some of those projects include projects by none other than
Speaker 2: Elon Musk. And I was pretty taken by one of
Speaker 2: the one of the things that he told you. He
Speaker 2: said to you in February when you were having one
Speaker 2: of your Zoom calls. Musk is de facto vice president
Speaker 2: and running the show.
Speaker 10: In Washington, Yes, and he was saying that in the
Speaker 10: context of talking about the value of X at that point,
Speaker 10: because you know, from we're all looking at X and thinking, gosh,
Speaker 10: its value has kind of really fallen, like since Elon
Speaker 10: took it private and he saw so many advertisers flee
Speaker 10: that had a big impact. He was roughly forty four
Speaker 10: billion dollar gross valuation when he bought it. Abili's had
Speaker 10: tremendous conviction that it was worth more than that. So,
Speaker 10: you know, one of the first things he said to
Speaker 10: me was like, hey, you know this is this is
Speaker 10: a valuable entity and you can't say that it's not.
Speaker 10: Look at where Elon Musk is now, Okay, it you know,
Speaker 10: speaks for itself.
Speaker 7: I mean, how close are they do we know? Like
Speaker 7: are It's obviously there's investment connections and a relationship. But
Speaker 7: I mean, how close are they I mean he.
Speaker 10: Told me they speak every week. They didn't know each
Speaker 10: other until twenty twenty two. Abili was a longtime investor
Speaker 10: in Twitter before it was even a public company, and
Speaker 10: he didn't really know Musk until Musk stepped in to
Speaker 10: buy it. But Abili totally immediately threw his hat in
Speaker 10: the ring, said I'm in. You know, I'm going to
Speaker 10: roll my stake over.
Speaker 9: Let's do this.
Speaker 10: So that meant a lot to Musk, and he said
Speaker 10: they speak regularly.
Speaker 7: Why do this story now?
Speaker 10: Because it was so marked, like after so many years
Speaker 10: of him being quiet, all of a sudden, he is
Speaker 10: taking to the airwaves in a way that we haven't
Speaker 10: seen in so long. And it really was reminiscent of
Speaker 10: the Abilid we used to know. You know, just this big,
Speaker 10: colorful guy with some very important differences.
Speaker 3: What's his relationship with the president?
Speaker 10: So he is a supporter, He has a long history
Speaker 10: with him. Actually in this time in the eighties and nineties,
Speaker 10: you know, go Go Wall Street. When Trump was mired
Speaker 10: in debt in the early nineties, Abilid kind of bailed
Speaker 10: him out. He bought his yacht, which he still owns.
Speaker 10: A few years later, Trump's still in debt and Abilid
Speaker 10: and another Singaporean billionaire bought his stake in the plaza.
Speaker 10: So he says, Oh, he loves to say that I
Speaker 10: know how to negotiate with Trump. I know what he's doing.
Speaker 10: You know, I've dealt with him before with the tariffs
Speaker 10: for example. You know when Trump was running for president
Speaker 10: of twenty sixteen, the run up to that, he had
Speaker 10: his muvelim Van. Prince Avolide is not a fan of that.
Speaker 10: They actually sparred on tw it, but very quick they
Speaker 10: papered things over. You know, he's very happy with his
Speaker 10: treatment of the Arab world.
Speaker 7: Fascinating read. Highly recommend everybody to check it out on
Speaker 7: the Bloomberg. Devin, thank you, I really appreciate it, Devin Pendleton.
Speaker 7: She's Bloomberg News Wealth reporter. This story is among the
Speaker 7: most read. It is the Bloomberg Big Take. Find it
Speaker 7: at Bloomberg dot com or on the Bloomberg.
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Speaker 7: Broomcle how about you let me drive?
Speaker 6: Oh no, no, no no, this is not a toy.
Speaker 7: Honey, please, I'll do the gravels. Listen, I want to drive.
Speaker 7: It's a good question.
Speaker 5: Good.
Speaker 7: This is the drive to the clothes punks.
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Speaker 7: All right, everybody, just got about any eineteen and a
Speaker 7: half minutes to go until we wrap up the trade
Speaker 7: on this Friday. Also for the week overall, we've got
Speaker 7: kind of a mixed market, but up on the S
Speaker 7: and P just slightly. You here, Charlie and Bill Maloney
Speaker 7: breaking down the numbers, just up about twenty two on
Speaker 7: the S and P five hundred nowstek one hundred again
Speaker 7: of about seven tons of a percent, up one hundred
Speaker 7: and thirty four points back to the S and P
Speaker 7: up about four tenths of a percent, and you've got
Speaker 7: the dowg just down about one tenth of one percent here.
Speaker 7: But we have seen, as Tim mentioned earlier, most names
Speaker 7: a majority of the names in the S and P
Speaker 7: five hundred or lower, so more of a risk off
Speaker 7: trade on this Friday. But we are up pretty significantly
Speaker 7: for the week overall.
Speaker 3: Thank you megacap Tech.
Speaker 2: Yeah, yeah, we'll see what happens next week.
Speaker 3: We got Apple reporting, yes we will, paforms, We got Amazon.
Speaker 7: Yes we will.
Speaker 3: Hey, let's speak to Adriana Machi. Bring her in.
Speaker 2: She's founder of managing partner of Strategic Wealth Capital. They've
Speaker 2: got about two hundred and thirty million dollars in assets
Speaker 2: under management. She joins us from San Francisco. Adrian, good
Speaker 2: to have you back with us. It's been kind of
Speaker 2: a wild ride this week. As Carol manche in the
Speaker 2: S and P five hundred, what it's on its best
Speaker 2: four day street.
Speaker 3: Carol's going back to January.
Speaker 7: Something like that, something like that significantly.
Speaker 2: So don't quote me on it, something like that. That's okay,
Speaker 2: But as Carol reminds us all the time, what fundamentally
Speaker 2: has changed when it comes to the trade ward, not necessarily.
Speaker 7: For it's longest advance is January. There we go, Well,
Speaker 7: mister Stennaman, Okay, we got that one right right, Adrian.
Speaker 3: What are you hearing right now from clients?
Speaker 6: The trickiest thing right now, of course, as everyone knows,
Speaker 6: is not just the uncertainty of what's going to stick
Speaker 6: so with tariffs, with interest rates, since there's been a
Speaker 6: lot of reversals, but it's what I have found. A
Speaker 6: lot of my clients are New York, DC, California, and
Speaker 6: the values of and the policies of the administration have
Speaker 6: been a bit hard. So I one thing I am
Speaker 6: telling clients to do. I have had more than one
Speaker 6: family ask if they should move abroad or move their
Speaker 6: assets abroad, which I have not helped. I know, and
Speaker 6: I do have a client who is also going to
Speaker 6: be moving to Europe and getting a passport. I can
Speaker 6: say I've never had that before, but I talk it
Speaker 6: through them. One thing that I do cancel everyone, regardless
Speaker 6: of political persuasion, is to just try to separate the business,
Speaker 6: the stock market, their earnings, and companies from the government piece.
Speaker 6: It's not easy, but when you're making the financial decisions,
Speaker 6: you have to try to be able to separate emotionally
Speaker 6: from the two.
Speaker 7: Wait, so why are they doing it? What did they
Speaker 7: tell you why they were doing it?
Speaker 6: That's such a good question. It was really interesting. So
Speaker 6: one client said, I'm worried that the current administration will
Speaker 6: dissolve a lot of protectionist measures we have, like insurance
Speaker 6: for savings accounts, and she was concerned that because if
Speaker 6: we're no longer, for example, of a reserve currency, and
Speaker 6: if our currency goes through severe devaluation, she wanted to
Speaker 6: be sure that she would have enough funds. She has
Speaker 6: quite a lot of savings and was wondering should she
Speaker 6: hedge against currency. And my answer in her case because
Speaker 6: she if she if someone is planning to move abroad
Speaker 6: and clients who own properties in multiple countries, that might
Speaker 6: make sense, but the risk of moving it abroad two
Speaker 6: euros for example, and back when it's going to be
Speaker 6: ultimately spent in dollars didn't make sense. For most people.
Speaker 6: It doesn't.
Speaker 3: So what did you advise her? Just do nothing?
Speaker 2: Because she's obviously anxious about what's going on here. And look,
Speaker 2: we've I anecdotally, I've spoken to people who are very
Speaker 2: anxious too, not necessarily taking steps as drastic as that,
Speaker 2: but definitely selling US assets and buying assets outside.
Speaker 3: Of the US.
Speaker 6: Yeah, so it's I think the last time I was
Speaker 6: on the show was I think the first or second
Speaker 6: business day of this year. I was just looking through
Speaker 6: that when I was reviewing my notes.
Speaker 7: Different different tone, different sentiment, different narrative, a little.
Speaker 6: Bit different sentiment, but my advice. So the consistency of
Speaker 6: asset allocation and diversification, that's always that's always going to
Speaker 6: be important. And so I had talked about international assets
Speaker 6: and last year I talked to a number of clients
Speaker 6: who said, well, I don't like Europe. They have high taxes,
Speaker 6: slow growths, so population growth. But what I what we
Speaker 6: had talked about in January was yes, but you're investing
Speaker 6: in multinational blue chip companies that happened to be based abroad.
Speaker 6: And I know we had talked about like Toyota and Honda,
Speaker 6: companies that build abroad, and we talked about European consumer
Speaker 6: product companies even with the tariffs. If you look at
Speaker 6: the makeup, a lot of these companies have sales outside
Speaker 6: of the US. And it's funny because only what three months,
Speaker 6: four months, I mean we've seen I mean, the EPHAH
Speaker 6: is up about almost nine percent I saw today and
Speaker 6: SMP is down about six So if you look at
Speaker 6: the difference, that's fifteen percent in what four months. Yeah,
Speaker 6: the timing, nobody knows the timing, But if the fundamentals
Speaker 6: are there and international was trading at discounts, it's going
Speaker 6: to be the case. That's that everything will revert to
Speaker 6: the fundamentals.
Speaker 1: And it did.
Speaker 3: But what are the fundamentals? Because we expected what are
Speaker 3: the fundamentals?
Speaker 2: Though, because the US has outperformed over the past decade
Speaker 2: or so, and you know, those people with global equity
Speaker 2: portfolios have said, Okay, this is the year. This is
Speaker 2: the year you know when things kind of revert to
Speaker 2: the means. Is the era of US exceptionalism and US
Speaker 2: out performance over.
Speaker 6: So, there are two things worth think that we're talking about.
Speaker 6: One is a stock market and the other is the
Speaker 6: US as a country, which produces, which has top institutions,
Speaker 6: and quite a large presence in the world stage. I mean,
Speaker 6: from education to research and technological advances. The short answer
Speaker 6: is on the business side, in the market side, companies
Speaker 6: are much more nimble than governments. And when some of
Speaker 6: this uncertainty clears up, and it's always going to exist
Speaker 6: in some form, I'm not concerned about the companies. The
Speaker 6: US companies will find ways to do to remain profitable.
Speaker 6: I am more concerned, however, about the US as an institution.
Speaker 6: It's not a fear so much as I think the
Speaker 6: cornerstones that the administration is trying to change. I think
Speaker 6: that will be detrimental. Even if we just look at universities,
Speaker 6: If students are afraid of coming here and researching and
Speaker 6: staying and starting businesses, they're going to be tough to
Speaker 6: remain exceptional.
Speaker 7: Okay, because agent it sounds like it's really going to
Speaker 7: be too also hard to separate, because I feel like
Speaker 7: the markets and the government will separate, you know, are connected,
Speaker 7: you know what I mean? So I do wonder how
Speaker 7: you know there's no faith in the US government, what
Speaker 7: that does to kind of the whole US marketplace? Like
Speaker 7: it's just there, isn't there twenty seconds or so, yeah,
Speaker 7: go ahead.
Speaker 6: Oh, it's not a We don't invest in governments. There's
Speaker 6: a lot of interplay, but the most important thing is
Speaker 6: to look at the earnings of the companies. So just
Speaker 6: like when we invest in Europe, we're not investing in
Speaker 6: a specific country's government, We're investing in the companies that
Speaker 6: are domiciled there. Interesting, absolutely the same thing for US
Speaker 6: as well.
Speaker 7: All Right, that's an interesting perspective. Good perspective to hear.
Speaker 7: Great to talk with you, have a great weekend. Adrianamachi,
Speaker 7: founder of managing partner Strategic Wealth Capital, ABOT two hundred
Speaker 7: and thirty million in assets under management, joining us from
Speaker 7: San Francisco.
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