1 00:00:02,640 --> 00:00:05,320 Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul swing you 2 00:00:05,360 --> 00:00:07,680 Speaker 1: along with my co host Lisa Brahma Waits. Each day 3 00:00:07,720 --> 00:00:10,240 Speaker 1: we bring you the most noteworthy and useful interviews for 4 00:00:10,280 --> 00:00:12,520 Speaker 1: you and your money, whether at the grocery store or 5 00:00:12,560 --> 00:00:15,480 Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple 6 00:00:15,520 --> 00:00:17,960 Speaker 1: podcast or wherever you listen to podcasts, as well as 7 00:00:17,960 --> 00:00:22,560 Speaker 1: at Bloomberg dot com. We got a better than expected 8 00:00:22,600 --> 00:00:25,920 Speaker 1: headline number out of today's jobs report, we got weaker 9 00:00:25,920 --> 00:00:30,320 Speaker 1: than expected growth in wages. The market initially took this 10 00:00:30,640 --> 00:00:35,000 Speaker 1: as a positive report, albeit pretty much in line with expectations, 11 00:00:35,440 --> 00:00:38,320 Speaker 1: but subsequently President Trump came out and said that the 12 00:00:38,320 --> 00:00:42,760 Speaker 1: Federal Reserve should drop rates and stop quantitative tightening, even 13 00:00:42,800 --> 00:00:46,600 Speaker 1: though the economic numbers were very very good. Joining us now, 14 00:00:46,920 --> 00:00:50,480 Speaker 1: Joseph Davis, chief economist at Vanguard, We are so glad 15 00:00:50,520 --> 00:00:52,560 Speaker 1: that you can join us. Before we get into the 16 00:00:52,640 --> 00:00:55,760 Speaker 1: jobs report itself, what do you think, Joe, of the 17 00:00:55,840 --> 00:00:59,880 Speaker 1: idea of the Federal Reserve cutting rates right now at 18 00:00:59,880 --> 00:01:03,120 Speaker 1: the point in the credit cycle. Well, it's it's not 19 00:01:03,280 --> 00:01:07,240 Speaker 1: of view that I would um entertain too strongly. I mean, 20 00:01:07,560 --> 00:01:09,199 Speaker 1: I think if you look at the where the Fed 21 00:01:09,240 --> 00:01:12,160 Speaker 1: funds rate should be. I think it's the Federal Reserve 22 00:01:12,280 --> 00:01:15,760 Speaker 1: is is really navigating a global slowdown and trying to 23 00:01:15,880 --> 00:01:18,920 Speaker 1: maintain the length of this expansion. And so our view 24 00:01:19,200 --> 00:01:21,920 Speaker 1: continues to be that the Fed funds rate is close 25 00:01:21,959 --> 00:01:24,240 Speaker 1: to where it should be. Um. And if there's if 26 00:01:24,720 --> 00:01:26,480 Speaker 1: you would push me to say where the next move 27 00:01:26,520 --> 00:01:30,960 Speaker 1: should be, I would say maybe one hike higher rather 28 00:01:31,040 --> 00:01:35,000 Speaker 1: than cutting rates, because the fundamentals of the economy we're 29 00:01:35,040 --> 00:01:39,679 Speaker 1: still accommodative. The long story short, I don't see urgent 30 00:01:39,800 --> 00:01:43,080 Speaker 1: need for the Center Reserve the cut rates. So UM, 31 00:01:43,440 --> 00:01:46,400 Speaker 1: was there anything in this job's report today that changes 32 00:01:46,560 --> 00:01:49,920 Speaker 1: your outlook fundamentally? Now? If anything that you probably a 33 00:01:49,920 --> 00:01:51,960 Speaker 1: little bit of side relief, to be honest, I mean, 34 00:01:52,320 --> 00:01:53,800 Speaker 1: you know, we went into the year saying we were 35 00:01:53,800 --> 00:01:56,000 Speaker 1: going to see gross scares in the market, slowdown in 36 00:01:56,040 --> 00:02:00,720 Speaker 1: the global economy, but we hoped that the expected that 37 00:02:00,760 --> 00:02:04,080 Speaker 1: the labor market would show signs a deceleration, but we 38 00:02:04,080 --> 00:02:07,760 Speaker 1: won't see material cracks. Now. The disappointed number we saw 39 00:02:07,920 --> 00:02:12,120 Speaker 1: last month gives one pause in that assessment. So to 40 00:02:12,200 --> 00:02:16,440 Speaker 1: see the rebound in somewhat volatile data today I think 41 00:02:16,600 --> 00:02:19,320 Speaker 1: was more of a sigh of relief. Uh, And I 42 00:02:19,360 --> 00:02:23,320 Speaker 1: think a medication that yes, we will have choppy waters here, 43 00:02:23,440 --> 00:02:25,640 Speaker 1: but we're not going into recession. I mean, some of 44 00:02:25,639 --> 00:02:28,800 Speaker 1: the mature early bed would have to happen in the 45 00:02:28,800 --> 00:02:31,440 Speaker 1: global economy, I think, to take down the U S 46 00:02:31,440 --> 00:02:34,240 Speaker 1: economy at this point. So here's what I'm struggling with. 47 00:02:34,320 --> 00:02:37,639 Speaker 1: A lot of people dismiss President Trump's call for the 48 00:02:37,639 --> 00:02:41,440 Speaker 1: Fed to drop rates and stop q QT as being 49 00:02:41,480 --> 00:02:44,280 Speaker 1: a little outrageous at this point in the cycle. People 50 00:02:44,320 --> 00:02:47,400 Speaker 1: saying that's not needed, that's right now, you're seeing solid 51 00:02:47,480 --> 00:02:51,800 Speaker 1: job growth, etcetera. Bond markets agree with him. Bond markets 52 00:02:51,840 --> 00:02:54,440 Speaker 1: right now are pricing in more than a fifty chance 53 00:02:54,639 --> 00:02:57,040 Speaker 1: that the Federal Reserve will cut rates before year end. 54 00:02:57,200 --> 00:02:59,880 Speaker 1: And it's it's rising after this job's report, even though 55 00:03:00,000 --> 00:03:03,040 Speaker 1: people say that it indicates ongoing strengthen the economy. How 56 00:03:03,040 --> 00:03:06,000 Speaker 1: do you square that well, I think you know the times, 57 00:03:06,000 --> 00:03:08,120 Speaker 1: there are differences of opinion. I mean, you know, it's 58 00:03:08,120 --> 00:03:10,000 Speaker 1: always uh, you always had to be a little bit 59 00:03:10,040 --> 00:03:13,080 Speaker 1: wary saying that the bond market is wrong. Uh. Uh, 60 00:03:13,200 --> 00:03:15,720 Speaker 1: it's a very efficient market. But that also doesn't mean 61 00:03:15,720 --> 00:03:18,600 Speaker 1: the treasury markets accurate. All the time, I think, you know, 62 00:03:18,720 --> 00:03:22,080 Speaker 1: the financial condition deterioration we saw at the end of 63 00:03:22,160 --> 00:03:26,240 Speaker 1: last year and in January a significant fall and risky 64 00:03:26,280 --> 00:03:29,800 Speaker 1: assets and the equity market. Um, you know that clearly 65 00:03:29,840 --> 00:03:34,080 Speaker 1: took UH some momentum out of the sales of of 66 00:03:34,080 --> 00:03:36,840 Speaker 1: of what the FED I think was was hoping to do. 67 00:03:37,000 --> 00:03:39,600 Speaker 1: And so I think we're closer. I you know, we're 68 00:03:39,640 --> 00:03:42,840 Speaker 1: closer to where the Fed's forecast is rather than the 69 00:03:42,880 --> 00:03:45,440 Speaker 1: bond market. And if we're right that we're not going 70 00:03:45,480 --> 00:03:47,960 Speaker 1: into recession and the numbers we see today, maybe we'll 71 00:03:48,000 --> 00:03:51,240 Speaker 1: see somewhat weaker job growth numbers, but nothing below on 72 00:03:51,280 --> 00:03:53,920 Speaker 1: a trend basis, say below a hundred thousand jobs per month. 73 00:03:54,520 --> 00:03:56,800 Speaker 1: If we're right, then what what I think could happen 74 00:03:56,920 --> 00:03:59,720 Speaker 1: is that that anticipation of cuts and rates will slowly 75 00:03:59,800 --> 00:04:02,160 Speaker 1: be priced out of the of the bond market. I 76 00:04:02,160 --> 00:04:04,800 Speaker 1: think the key wild card is actually outside the United States. 77 00:04:04,800 --> 00:04:08,400 Speaker 1: And do we see UH stabilization in China's growth picture, 78 00:04:08,400 --> 00:04:11,480 Speaker 1: because right now we don't have strong evidence of that. So, Joe, 79 00:04:11,640 --> 00:04:14,280 Speaker 1: we are now in the tenth year of this economic cycle, 80 00:04:14,360 --> 00:04:17,440 Speaker 1: which I think is long by most standards. What do 81 00:04:17,480 --> 00:04:20,560 Speaker 1: you think is different this time? If anything. Structurally well, 82 00:04:20,600 --> 00:04:22,200 Speaker 1: I think the one thing that is different has just 83 00:04:22,279 --> 00:04:26,640 Speaker 1: been the fact that the recovery's pace has been fairly tepid. 84 00:04:26,839 --> 00:04:31,159 Speaker 1: So um, you know typical expansions, you know that haven't 85 00:04:31,200 --> 00:04:35,760 Speaker 1: involved significant consumer deleveraging. You've had rapid growth out of 86 00:04:35,760 --> 00:04:39,799 Speaker 1: the recession. Um, the set of reserve not the only factor, 87 00:04:39,920 --> 00:04:42,640 Speaker 1: but has clearly then been much more aggressive and tightening. 88 00:04:42,680 --> 00:04:46,520 Speaker 1: I think, um the low pace of inflation as well 89 00:04:46,560 --> 00:04:49,240 Speaker 1: as the low pace of economic growth can in large 90 00:04:49,279 --> 00:04:52,880 Speaker 1: part explain why we're into the tent Yer recession. Unless 91 00:04:52,920 --> 00:04:55,200 Speaker 1: things go fundamentally wrong, we could we could still be 92 00:04:55,240 --> 00:04:57,960 Speaker 1: talking about the fact that's the eleventh year of expansion 93 00:04:57,960 --> 00:05:01,000 Speaker 1: this time next year. Again, we're not Pollyanna um and 94 00:05:01,160 --> 00:05:03,520 Speaker 1: and the risks still remain on growth on the downside. 95 00:05:03,520 --> 00:05:05,599 Speaker 1: But I think it's the peppe paste of growth that 96 00:05:05,680 --> 00:05:09,360 Speaker 1: explains the duration and magnitude of it. Just to entertain 97 00:05:09,400 --> 00:05:13,120 Speaker 1: this idea of a really easy monetary policy or keeping 98 00:05:13,279 --> 00:05:17,040 Speaker 1: rates UH low or even going lower at this point, 99 00:05:17,160 --> 00:05:19,440 Speaker 1: I have to look at the lack of wage growth 100 00:05:19,480 --> 00:05:22,000 Speaker 1: that we've seen and that is ongoing, despite the fact 101 00:05:22,080 --> 00:05:26,599 Speaker 1: that headline numbers are beating expectations. Even amid and otherwise 102 00:05:26,720 --> 00:05:31,479 Speaker 1: decelerating US economy. Do you think that that changes the 103 00:05:31,560 --> 00:05:34,960 Speaker 1: scenario the backdrop for the Federal Reserve. It means that 104 00:05:35,040 --> 00:05:38,360 Speaker 1: perhaps past models don't hold true given the fact that 105 00:05:38,400 --> 00:05:41,240 Speaker 1: they were based on the Phillips curve. Yeah, well, you know, 106 00:05:41,279 --> 00:05:42,720 Speaker 1: we've done a lot of work on the selfs curve. 107 00:05:42,760 --> 00:05:45,440 Speaker 1: Is a great question. You know, it's it's still exists, 108 00:05:45,480 --> 00:05:47,120 Speaker 1: but you have to control for a lot of factors 109 00:05:47,160 --> 00:05:49,839 Speaker 1: to see that. Your relationship and you know, wage growth. 110 00:05:50,000 --> 00:05:52,280 Speaker 1: In our mind for the past year, we said that 111 00:05:52,360 --> 00:05:56,440 Speaker 1: wage growth should be around three percent because that's based 112 00:05:56,480 --> 00:05:59,360 Speaker 1: upon where productivity as we estimate it at best around 113 00:05:59,360 --> 00:06:02,240 Speaker 1: one in the US, and then you overlay an inflation 114 00:06:02,279 --> 00:06:05,240 Speaker 1: target around one and half to two percent, and so 115 00:06:05,360 --> 00:06:08,360 Speaker 1: you should be around three percent. Now you can you 116 00:06:08,440 --> 00:06:11,640 Speaker 1: can also like clearly above and below that. But um, 117 00:06:11,680 --> 00:06:16,320 Speaker 1: you know, we we expect wage growth to maybe modestly 118 00:06:16,320 --> 00:06:17,680 Speaker 1: inch up of the rest of the year, but we 119 00:06:17,720 --> 00:06:20,839 Speaker 1: would be hard pressed to see four percent wage growth. 120 00:06:20,880 --> 00:06:23,760 Speaker 1: And unless we see a material rise in productivity, I 121 00:06:23,760 --> 00:06:26,359 Speaker 1: think eventually we'll see a rebound there. And when I 122 00:06:26,360 --> 00:06:29,599 Speaker 1: say higher proactivity, it means workers are even more productive 123 00:06:29,600 --> 00:06:31,360 Speaker 1: than they currently are and hence they see, you know, 124 00:06:31,480 --> 00:06:35,920 Speaker 1: higher wage increases in firms reward that productivity. But we're 125 00:06:35,960 --> 00:06:38,280 Speaker 1: not there yet, and so I actually think wages are 126 00:06:38,320 --> 00:06:40,159 Speaker 1: where they should be. And a great example of that 127 00:06:40,320 --> 00:06:42,240 Speaker 1: is to look at places like Japan, where you have 128 00:06:42,320 --> 00:06:47,360 Speaker 1: record low unemployment rates, yet given their inflation expectations and productivity, 129 00:06:47,400 --> 00:06:49,599 Speaker 1: wage growth is even below where it is in the US. 130 00:06:50,440 --> 00:06:53,039 Speaker 1: Joe Davis, thank you very much. Joe Davis is chief 131 00:06:53,080 --> 00:06:55,960 Speaker 1: Global Econmerce for the Van Guard Vanguard Group, joining us 132 00:06:56,200 --> 00:06:59,240 Speaker 1: from Malvern, Pennsylvania. And I think it's interesting, Lisa that 133 00:06:59,279 --> 00:07:01,400 Speaker 1: you bring up that day on the Bloomberg terminal about 134 00:07:01,440 --> 00:07:05,840 Speaker 1: the high percentage almost uh probability of a rate cut 135 00:07:05,880 --> 00:07:10,200 Speaker 1: in kind of consistent with what we just heard from 136 00:07:10,240 --> 00:07:13,080 Speaker 1: the President. Yet uh, there certainly are some economists out there, 137 00:07:13,120 --> 00:07:16,120 Speaker 1: most notably our Carl, Ricka Donna and others, that think that, 138 00:07:16,520 --> 00:07:19,480 Speaker 1: given the relative strength of the US economy, that a 139 00:07:19,600 --> 00:07:23,720 Speaker 1: rate hike UH is probably more likely. So we'll have 140 00:07:23,760 --> 00:07:25,760 Speaker 1: to see how that plays at And obviously the FED 141 00:07:25,920 --> 00:07:28,400 Speaker 1: is data dependent, as we heard from Carl, and they 142 00:07:28,440 --> 00:07:31,040 Speaker 1: will be looking at a future data points coming up 143 00:07:31,320 --> 00:07:44,440 Speaker 1: to push the agenda forward for the fed well. The 144 00:07:44,440 --> 00:07:48,880 Speaker 1: Eurozone continues to deal with slowing growth. The uncertainty surrounding 145 00:07:48,880 --> 00:07:52,320 Speaker 1: Brexit certainly is not helping, and there is ongoing concern 146 00:07:52,400 --> 00:07:55,080 Speaker 1: in the European banking sector that there may be too 147 00:07:55,160 --> 00:07:58,400 Speaker 1: much supply of banks in the banking sector in Europe. 148 00:07:58,520 --> 00:08:00,160 Speaker 1: To help us deal with some of these issues, we 149 00:08:00,160 --> 00:08:03,960 Speaker 1: welcome our guest. Geneve Fillon is the CEO of BNP 150 00:08:04,240 --> 00:08:06,400 Speaker 1: Parry by U s A. He joins us in our 151 00:08:06,440 --> 00:08:09,920 Speaker 1: Bloomberg Interactive Broker studio here in New York. Johnny, thank 152 00:08:09,920 --> 00:08:11,600 Speaker 1: you so much for joining us. I wonder if we 153 00:08:11,640 --> 00:08:15,040 Speaker 1: could just start off by getting your sense of how 154 00:08:15,080 --> 00:08:19,000 Speaker 1: the European economy is doing, and maybe specifically dive into 155 00:08:19,040 --> 00:08:22,640 Speaker 1: the European banking system under pressure. Certainly I would love 156 00:08:22,680 --> 00:08:24,600 Speaker 1: to get your thoughts. Well. Thank you for having me. 157 00:08:24,640 --> 00:08:27,960 Speaker 1: By the way, it's always a pleasure to be here. Um. Well, 158 00:08:28,000 --> 00:08:31,600 Speaker 1: you said it well. The European economy is uh showing 159 00:08:31,680 --> 00:08:36,719 Speaker 1: some slowdown. In the Eurozone is expected to grow g 160 00:08:36,880 --> 00:08:41,320 Speaker 1: d P groles at best one uh, it's only Europe, 161 00:08:41,360 --> 00:08:43,319 Speaker 1: by the way, there is a slut in Asia or 162 00:08:43,400 --> 00:08:46,800 Speaker 1: slut in in China. And even though the US economy 163 00:08:46,800 --> 00:08:49,560 Speaker 1: is doing really well. It's not you know, running in 164 00:08:49,559 --> 00:08:54,040 Speaker 1: a vacuum and it's being impacted by by what's happening there. Um, 165 00:08:54,360 --> 00:08:57,880 Speaker 1: then it's it's just a factor. Um. You mentioned European 166 00:08:57,920 --> 00:09:02,880 Speaker 1: banking industry. I think it's important to uh highlight the 167 00:09:02,920 --> 00:09:07,920 Speaker 1: fact that since the eleven crisis and under the leadership 168 00:09:07,960 --> 00:09:11,240 Speaker 1: of the Central Bank, the European banking industry has been better, 169 00:09:11,440 --> 00:09:15,760 Speaker 1: you know, uh capitalized, is probably more liquid and has 170 00:09:15,800 --> 00:09:19,520 Speaker 1: made progress. Having said that, UM, this is an environment 171 00:09:19,559 --> 00:09:24,240 Speaker 1: the industry has to deal with. So Johnny Feel, the 172 00:09:24,240 --> 00:09:28,520 Speaker 1: CEO of BNP Pariba in US, I would love your 173 00:09:28,559 --> 00:09:32,360 Speaker 1: perspective on negative rate policies and the low rate policies 174 00:09:32,360 --> 00:09:35,559 Speaker 1: that we have content on an ongoing basis in the US. 175 00:09:35,559 --> 00:09:39,160 Speaker 1: How much has that been the root cause of a 176 00:09:39,160 --> 00:09:43,280 Speaker 1: lot of the weakness we've seen in the European banking system. Um, 177 00:09:43,320 --> 00:09:45,720 Speaker 1: we should go back to the fundamentals here, because the 178 00:09:45,800 --> 00:09:48,760 Speaker 1: low rate environment we have today and maybe to an 179 00:09:48,760 --> 00:09:52,360 Speaker 1: extreme in Europe with negative rights, has been a major 180 00:09:52,480 --> 00:09:57,240 Speaker 1: contributor to creating stimulus. By the way, in the United 181 00:09:57,280 --> 00:09:59,720 Speaker 1: States and in Europe at a time it was really 182 00:09:59,760 --> 00:10:02,840 Speaker 1: need in this sense by the way, we've seen convergence 183 00:10:02,880 --> 00:10:05,760 Speaker 1: between what the FED has been doing here and what 184 00:10:05,880 --> 00:10:08,240 Speaker 1: the ECB is doing there with the lack of time, 185 00:10:08,320 --> 00:10:11,760 Speaker 1: because the status of these two economies, you know, have 186 00:10:11,960 --> 00:10:14,560 Speaker 1: not been exactly the same eighteen months. Europe is about 187 00:10:14,559 --> 00:10:17,040 Speaker 1: eighteen months behind the US and recovery very true, and 188 00:10:17,080 --> 00:10:19,160 Speaker 1: this is what we've seen, you know, the FED taking 189 00:10:19,200 --> 00:10:22,280 Speaker 1: measure on stopping QUI here and probably the e c 190 00:10:22,440 --> 00:10:25,480 Speaker 1: B being still in a you know, stimulus mode, not 191 00:10:25,559 --> 00:10:27,920 Speaker 1: through QUEI, but on winding the banalance field at a 192 00:10:28,120 --> 00:10:32,640 Speaker 1: probably you know, slower pace and really coming back with UM. 193 00:10:32,679 --> 00:10:35,079 Speaker 1: I would say tools like you know, the t l 194 00:10:35,280 --> 00:10:37,200 Speaker 1: L t R row which is a way to inject 195 00:10:37,400 --> 00:10:40,160 Speaker 1: liquid it directly in the banking system that you know 196 00:10:40,360 --> 00:10:44,040 Speaker 1: might still be required as we probably need to support 197 00:10:44,160 --> 00:10:48,800 Speaker 1: growth UM even further, maybe to the excellent point you 198 00:10:48,880 --> 00:10:53,839 Speaker 1: made UM. You know, monetary policy UM is initially made 199 00:10:54,320 --> 00:10:58,040 Speaker 1: to support economies, not so much to support the banking system, 200 00:10:58,040 --> 00:11:00,200 Speaker 1: and the banking system I think has to a app 201 00:11:00,320 --> 00:11:03,600 Speaker 1: to make sure that you know, whichever the goal for 202 00:11:03,760 --> 00:11:06,560 Speaker 1: supporting the economy is, we we can be there to 203 00:11:06,760 --> 00:11:09,880 Speaker 1: help and support and help clients. Is a negative right 204 00:11:09,960 --> 00:11:13,600 Speaker 1: environment sustainable for the many many years. Probably not, but 205 00:11:13,640 --> 00:11:15,959 Speaker 1: I just wanted to highlight the fact that the lower 206 00:11:16,080 --> 00:11:18,880 Speaker 1: environment you have here as well as the FED is 207 00:11:18,920 --> 00:11:23,720 Speaker 1: now UH contemplating basically not hiking anymore and potentially cutting 208 00:11:24,320 --> 00:11:27,760 Speaker 1: is UH is something that has actually probably helped industries 209 00:11:28,280 --> 00:11:32,040 Speaker 1: because of supporting the growth. What a politically correct answer, Paul, 210 00:11:32,120 --> 00:11:34,120 Speaker 1: Because basically, at a time when a lot of people 211 00:11:34,160 --> 00:11:37,200 Speaker 1: say the negative rate environments killing banks, a nuance to 212 00:11:37,200 --> 00:11:40,640 Speaker 1: ANSWER's a corporate banker. He knows that this question. So, Johnny, 213 00:11:40,640 --> 00:11:42,480 Speaker 1: if you know, when we think of BNP Parry Bats 214 00:11:42,559 --> 00:11:46,600 Speaker 1: obviously one of the major French banks, a major European bank, 215 00:11:47,240 --> 00:11:49,760 Speaker 1: but maybe people in the US don't know it as well. 216 00:11:49,840 --> 00:11:52,320 Speaker 1: Tell us about your business here in the US. What 217 00:11:52,480 --> 00:11:54,760 Speaker 1: is your focus here in US for BNP Pariba. We 218 00:11:54,880 --> 00:11:57,960 Speaker 1: love the US. We've been here for quite a long time, 219 00:11:58,600 --> 00:12:01,480 Speaker 1: you know, destinies and the platform we have here. He 220 00:12:01,600 --> 00:12:05,440 Speaker 1: is actually well balanced between retail. We own a bank 221 00:12:05,480 --> 00:12:07,920 Speaker 1: in California, Bank of the West, which makes us part 222 00:12:07,960 --> 00:12:10,120 Speaker 1: of the fabric of this country in one of the 223 00:12:10,160 --> 00:12:13,920 Speaker 1: most vibrant states in the United States. California as big 224 00:12:13,960 --> 00:12:16,480 Speaker 1: as France, by the way, in terms of size and 225 00:12:16,559 --> 00:12:19,600 Speaker 1: the wholesale activity we have out of New York where 226 00:12:19,640 --> 00:12:25,360 Speaker 1: we serve large institutional clients, corporate clients domestically in the 227 00:12:25,400 --> 00:12:28,400 Speaker 1: products which we have here, which is fairly large, and 228 00:12:28,440 --> 00:12:31,840 Speaker 1: obviously our value proposition in cuizes when it's time to 229 00:12:31,880 --> 00:12:34,600 Speaker 1: serve these corporates. You know, outside of the US and 230 00:12:34,720 --> 00:12:37,840 Speaker 1: particularly in Europe where we lead in the yoga bound 231 00:12:38,120 --> 00:12:41,440 Speaker 1: uh market, we have fourteen thou people in the US 232 00:12:41,600 --> 00:12:45,199 Speaker 1: one four and this is the largest balance sheet allocation 233 00:12:45,320 --> 00:12:50,040 Speaker 1: of BNBPI by group after France. It's close to groups 234 00:12:50,040 --> 00:12:52,640 Speaker 1: P revenues and it is really strategic and probably more 235 00:12:52,679 --> 00:12:56,120 Speaker 1: strategic today as this economy is still benefit from a 236 00:12:56,200 --> 00:13:00,480 Speaker 1: strong momentum in terms of expansion. So I'm wondering going 237 00:13:00,760 --> 00:13:04,360 Speaker 1: forward where you see the best opportunity for profitability in 238 00:13:04,400 --> 00:13:07,880 Speaker 1: the US. Is it in the trading and sales area 239 00:13:08,040 --> 00:13:11,120 Speaker 1: particularly I know on the on the dead side, is 240 00:13:11,160 --> 00:13:15,079 Speaker 1: it on originally glans? Where are you seeing opportunities? Well, um, 241 00:13:15,120 --> 00:13:17,920 Speaker 1: I think that I've served the practice and the platform 242 00:13:17,920 --> 00:13:21,520 Speaker 1: in the US is to be very centraled around clients, 243 00:13:21,600 --> 00:13:26,480 Speaker 1: and my growth and expectations for expansions is around the 244 00:13:26,520 --> 00:13:31,160 Speaker 1: client base one well, and this is very good point, 245 00:13:31,280 --> 00:13:34,319 Speaker 1: because clients there is a nest, right, it's prural. Then 246 00:13:34,360 --> 00:13:35,800 Speaker 1: if you look at Bank of the Ways, they have 247 00:13:35,840 --> 00:13:40,280 Speaker 1: two point five million clients, c IB has d strategic clients, 248 00:13:40,320 --> 00:13:43,120 Speaker 1: and uh, the more we can continue to support this 249 00:13:43,320 --> 00:13:49,440 Speaker 1: broad base of client in a growing economy, serving individuals, entrepreneurs, 250 00:13:49,480 --> 00:13:52,720 Speaker 1: small cat meatcaps with mancos the west and serving large 251 00:13:52,720 --> 00:13:56,360 Speaker 1: caps with CIB there, with convergence here and somewhere somewhat 252 00:13:56,440 --> 00:13:59,440 Speaker 1: or white spaces inside. All right, So they basically it 253 00:13:59,480 --> 00:14:02,720 Speaker 1: sounds like, uh, there's going to be a pretty widespread 254 00:14:02,760 --> 00:14:08,079 Speaker 1: effort to just get clients in uh one one word answer. 255 00:14:08,520 --> 00:14:10,600 Speaker 1: Do you think the next move for the Federal Reserve 256 00:14:10,840 --> 00:14:13,520 Speaker 1: is a rate hike or a rate cut? That there 257 00:14:13,559 --> 00:14:18,760 Speaker 1: is no one world answer here. That's a good try. No, no, 258 00:14:18,800 --> 00:14:23,560 Speaker 1: But in fifteen seconds, you know, central bankers are evidence 259 00:14:23,600 --> 00:14:27,680 Speaker 1: based and react on data and quite independently and quite well. 260 00:14:27,720 --> 00:14:30,000 Speaker 1: And I think the FED and the CB are doing 261 00:14:30,120 --> 00:14:32,880 Speaker 1: going to go exactly the same thing onward, look look 262 00:14:32,880 --> 00:14:35,680 Speaker 1: at data and try to continue to support this economy 263 00:14:35,760 --> 00:14:38,320 Speaker 1: the best way they can to benefit all industries, including 264 00:14:38,320 --> 00:14:41,440 Speaker 1: the banking industry. John, you Pion, thank you so much 265 00:14:41,480 --> 00:14:44,840 Speaker 1: for being with US chief executive Officer of BNP powered 266 00:14:44,880 --> 00:14:48,600 Speaker 1: by USA and Chairman of the Central Aspect the c 267 00:14:48,760 --> 00:14:52,480 Speaker 1: i B America's for VNP Party by joining us in 268 00:14:52,520 --> 00:15:06,400 Speaker 1: our interactive broker's studios. Today is Jobs Day. It also 269 00:15:06,680 --> 00:15:09,920 Speaker 1: is a day in which President Trump is discussing FED 270 00:15:10,040 --> 00:15:15,200 Speaker 1: policy and ongoing talks with China. So very much UH 271 00:15:15,480 --> 00:15:19,760 Speaker 1: Washington d C Front in focus today Chris Lee joining us, 272 00:15:19,760 --> 00:15:22,200 Speaker 1: now senior fellow at the University of Virginia Miller Center, 273 00:15:22,280 --> 00:15:27,680 Speaker 1: also former Deputy Secretary of Labor under President Obama. Chris, 274 00:15:27,800 --> 00:15:29,960 Speaker 1: thank you so much for being with us. We want 275 00:15:30,000 --> 00:15:33,440 Speaker 1: to get to a piece that you wrote for Newsday 276 00:15:33,480 --> 00:15:36,120 Speaker 1: that is really interesting. Before we get there, do you 277 00:15:36,160 --> 00:15:39,280 Speaker 1: have an initial read on today's jobs report and the 278 00:15:39,320 --> 00:15:41,960 Speaker 1: idea that the Fed should cut rates as President Trump 279 00:15:41,960 --> 00:15:45,720 Speaker 1: said going forward? You know what a couple a couple 280 00:15:45,720 --> 00:15:47,960 Speaker 1: of months that we were talking about the said raising rates, 281 00:15:47,960 --> 00:15:50,440 Speaker 1: and now we're talking about said cutting rates. You know, Look, 282 00:15:50,480 --> 00:15:53,080 Speaker 1: I don't we always say don't read too much into 283 00:15:53,120 --> 00:15:55,680 Speaker 1: one month. I think last month, you know, was a 284 00:15:55,720 --> 00:15:58,560 Speaker 1: blipped down. Um, I want to see a couple more 285 00:15:58,600 --> 00:16:01,360 Speaker 1: months of job growth. We've seen over the first three 286 00:16:01,400 --> 00:16:03,840 Speaker 1: months of this year. Uh the economy is averaging about 287 00:16:03,880 --> 00:16:06,160 Speaker 1: a hundred and eighty thousand. That's pretty good. That's kind 288 00:16:06,160 --> 00:16:08,040 Speaker 1: of right where we ought to be. Uh. So I 289 00:16:08,040 --> 00:16:09,760 Speaker 1: would if I were advising the set, I would just 290 00:16:09,760 --> 00:16:11,560 Speaker 1: tell them to keep things where they are, see a 291 00:16:11,600 --> 00:16:15,760 Speaker 1: couple more months before we make decisions on interest rate 292 00:16:15,920 --> 00:16:18,920 Speaker 1: hikes or cuts. Chris, I know, a couple of days 293 00:16:18,920 --> 00:16:22,560 Speaker 1: ago you wrote an opinion piece in Newsday talking about 294 00:16:23,000 --> 00:16:27,560 Speaker 1: security clearances, why they matter, and just security protocols overall, 295 00:16:27,600 --> 00:16:30,200 Speaker 1: why they matter in the White House, any white House. 296 00:16:30,560 --> 00:16:33,000 Speaker 1: How is the Trump White House different in terms of 297 00:16:33,040 --> 00:16:37,160 Speaker 1: traditional security clearances and protocols. Yes, So let me give 298 00:16:37,160 --> 00:16:39,080 Speaker 1: you a little bit of context. Before I was the 299 00:16:39,160 --> 00:16:43,560 Speaker 1: Deputy Secretary of Labor, I managed President Obama's cabinet. Before that, 300 00:16:44,040 --> 00:16:47,120 Speaker 1: I managed his presidential transition. So I've seen the security 301 00:16:47,120 --> 00:16:51,080 Speaker 1: clearance um both coming into office in two thousand nine 302 00:16:51,080 --> 00:16:53,680 Speaker 1: and then processing all of the people who served in 303 00:16:53,720 --> 00:16:57,480 Speaker 1: the White House. This is a process that's handled by 304 00:16:57,560 --> 00:16:59,760 Speaker 1: career professionals who work in the White House and the 305 00:16:59,760 --> 00:17:04,439 Speaker 1: different UM intelligence agencies. It's exhaustive. UM. I was cleared 306 00:17:04,480 --> 00:17:08,400 Speaker 1: three different times when I worked for Barack Obama. UM 307 00:17:08,440 --> 00:17:12,119 Speaker 1: it's not only you know, exhaustive information about your job 308 00:17:12,200 --> 00:17:17,080 Speaker 1: history and financial information, foreign contexts, drug use, alcohol use, UM. 309 00:17:17,119 --> 00:17:21,200 Speaker 1: They go out and talk to your associates, friends, colleagues, neighbors, UM, 310 00:17:21,600 --> 00:17:24,280 Speaker 1: and they gather a lot of information. And career professionals 311 00:17:24,280 --> 00:17:27,080 Speaker 1: make these decisions. And the reason they spent so much 312 00:17:27,119 --> 00:17:29,320 Speaker 1: time on this is that when you're cleared for you know, 313 00:17:29,400 --> 00:17:33,280 Speaker 1: top secret access to information, you have access to some 314 00:17:33,320 --> 00:17:36,360 Speaker 1: of the most sensitive information in the US government. These 315 00:17:36,400 --> 00:17:39,720 Speaker 1: are this is information that's been gathered at great financial 316 00:17:39,760 --> 00:17:43,240 Speaker 1: costs and often at a cost to the people that collected. 317 00:17:43,320 --> 00:17:44,480 Speaker 1: So you want to make sure it gets in the 318 00:17:44,520 --> 00:17:48,040 Speaker 1: hands of people who deserve it. So earlier this week, UM, 319 00:17:48,280 --> 00:17:50,840 Speaker 1: there was a whistleblower who indicated at least twenty and 320 00:17:50,840 --> 00:17:53,800 Speaker 1: at least twenty five cases in the White House. UM 321 00:17:53,960 --> 00:17:57,320 Speaker 1: career officials denied the security clearances for White House officials, 322 00:17:57,359 --> 00:18:01,920 Speaker 1: and then those were overruled by political folks above them. 323 00:18:01,920 --> 00:18:04,480 Speaker 1: And so you know, look, this is it's sometimes hard 324 00:18:04,520 --> 00:18:07,159 Speaker 1: to keep track of what really matters in Washington. This 325 00:18:07,200 --> 00:18:09,600 Speaker 1: should really matter, and this should matter regardless of what 326 00:18:09,720 --> 00:18:14,800 Speaker 1: party you're a member of. Why what are the potential consequences. Well, look, 327 00:18:15,200 --> 00:18:19,080 Speaker 1: part of the reason why, UM, this process is so exhaustive. UM, 328 00:18:19,200 --> 00:18:21,760 Speaker 1: if you want to make sure people don't have vulnerabilities, 329 00:18:21,800 --> 00:18:25,920 Speaker 1: they don't have weaknesses, because foreign governments, foreign adversaries are 330 00:18:26,040 --> 00:18:29,560 Speaker 1: looking to exploit those weaknesses to get access to this information. 331 00:18:30,040 --> 00:18:33,040 Speaker 1: And if you've got something in your past personal issues, 332 00:18:33,119 --> 00:18:36,159 Speaker 1: financial issues, if you've got to set the foreign context, UM, 333 00:18:36,200 --> 00:18:40,280 Speaker 1: that makes it easier to manipulate you. UM. And so again, 334 00:18:40,320 --> 00:18:43,040 Speaker 1: as I said, this information comes at great cost to 335 00:18:43,080 --> 00:18:44,879 Speaker 1: the US government, and we want to make sure it 336 00:18:44,880 --> 00:18:47,320 Speaker 1: gets into the hands only of those people who can 337 00:18:47,359 --> 00:18:51,560 Speaker 1: be trusted. So, Chris, I know this, uh, this report 338 00:18:51,600 --> 00:18:55,160 Speaker 1: that came out and sited quote to senior White House officialist, 339 00:18:55,400 --> 00:18:58,879 Speaker 1: I guess they were presumed to be uh Trump's uh 340 00:18:59,119 --> 00:19:02,080 Speaker 1: daughter Ivancantre and son in law Jared Kushner got their 341 00:19:02,080 --> 00:19:06,080 Speaker 1: clearances only after the intervention of President Trump. How common 342 00:19:06,320 --> 00:19:10,640 Speaker 1: is that type of arrangement. Well, it's incredibly unusual. I mean, 343 00:19:10,680 --> 00:19:13,159 Speaker 1: I look, I'm not aware of a single instance where 344 00:19:13,840 --> 00:19:18,360 Speaker 1: UM a security clearance denial was overturned during the Obama administration. 345 00:19:18,400 --> 00:19:20,879 Speaker 1: I know that, UM, subsequent reporting is indicated there may 346 00:19:20,880 --> 00:19:23,439 Speaker 1: have been one or two, and it dealt with, you know, 347 00:19:23,520 --> 00:19:26,600 Speaker 1: an initial denial based on drug use that was then overturned. 348 00:19:26,760 --> 00:19:29,040 Speaker 1: But these are overturned like at a very low level, 349 00:19:29,240 --> 00:19:31,640 Speaker 1: you know, and you know, different administrations sort of look 350 00:19:31,640 --> 00:19:34,480 Speaker 1: at particularly drug use in sort of different ways. I 351 00:19:34,520 --> 00:19:36,800 Speaker 1: am not aware, and I don't think I've seen any 352 00:19:36,840 --> 00:19:41,280 Speaker 1: reporting indicating that a previous president has overturned one of 353 00:19:41,280 --> 00:19:44,159 Speaker 1: these rulings. Uh. And obviously doing it for your family 354 00:19:44,200 --> 00:19:47,560 Speaker 1: member raises a whole other set of issues, and so, um, yes, 355 00:19:47,640 --> 00:19:50,720 Speaker 1: it should be concerning. What's interesting though, with regard to 356 00:19:50,840 --> 00:19:54,640 Speaker 1: Jared Kushner is that while his top secret clearance denial 357 00:19:54,760 --> 00:19:57,879 Speaker 1: was overturned, now his top secret clearance UM. There's an 358 00:19:57,920 --> 00:20:01,680 Speaker 1: additional level of clearance the the CIA offers UM. It's 359 00:20:01,720 --> 00:20:05,000 Speaker 1: called s c I clearance. Apparently they have not given 360 00:20:05,080 --> 00:20:08,439 Speaker 1: him that clearance. So one of his parts, one of 361 00:20:08,560 --> 00:20:12,160 Speaker 1: the parts of his portfolios to negotiate Middle East peace, 362 00:20:12,200 --> 00:20:15,720 Speaker 1: and he's doing that without with access to some information 363 00:20:15,760 --> 00:20:17,920 Speaker 1: which is sensitive, but not to all of the information. 364 00:20:17,960 --> 00:20:20,080 Speaker 1: So that's a little odd. We're speaking with Chris Lew 365 00:20:20,119 --> 00:20:22,639 Speaker 1: Senior fellow at the University of Virginia Miller Center. He 366 00:20:22,720 --> 00:20:26,240 Speaker 1: also has a twenty year career in public service in 367 00:20:26,280 --> 00:20:29,600 Speaker 1: the highest echelons of the Obama administration and before that 368 00:20:30,320 --> 00:20:33,760 Speaker 1: eight years working for Representative Henry Waxman is Deputy Chief Council. 369 00:20:34,080 --> 00:20:37,200 Speaker 1: I'm just wondering, given your extensive experience and your extensive 370 00:20:37,440 --> 00:20:41,600 Speaker 1: roots in Washington, d C. How many old timers are 371 00:20:41,640 --> 00:20:45,119 Speaker 1: there left? In other words, given some of the institutional 372 00:20:45,160 --> 00:20:47,919 Speaker 1: knowledge that is built up over time, how much of 373 00:20:47,920 --> 00:20:51,560 Speaker 1: that remains in Washington today? Well, not much of it. 374 00:20:51,600 --> 00:20:54,399 Speaker 1: And I think it's the challenge in a social media 375 00:20:54,440 --> 00:20:57,639 Speaker 1: environment to sort of try to put the context what 376 00:20:57,880 --> 00:21:01,160 Speaker 1: is happening, and what matters and what doesn't matter, you know, Um, 377 00:21:01,200 --> 00:21:03,080 Speaker 1: I mean, if you think about sort of the news 378 00:21:03,080 --> 00:21:05,480 Speaker 1: of this past week. Um. The other one of the 379 00:21:05,480 --> 00:21:08,720 Speaker 1: other big news items is that House Democrats requested um, 380 00:21:09,240 --> 00:21:12,760 Speaker 1: President Trump's tacks returns. Well, it's worth noting for history 381 00:21:12,760 --> 00:21:17,000 Speaker 1: purposes that president's going back to Richard Nixon, have either 382 00:21:17,040 --> 00:21:20,000 Speaker 1: disclosed their tax returns when they are running for office 383 00:21:20,119 --> 00:21:23,439 Speaker 1: or shortly after becoming president. And so yes, I know, 384 00:21:23,600 --> 00:21:26,000 Speaker 1: in the kind of the swirl of social media, we 385 00:21:26,119 --> 00:21:29,479 Speaker 1: love to say everything is unprecedented, but sometimes you have 386 00:21:29,520 --> 00:21:31,280 Speaker 1: to look in the lens of history and say, Okay, 387 00:21:31,280 --> 00:21:34,560 Speaker 1: really what is where are the norms? And where is 388 00:21:34,640 --> 00:21:38,520 Speaker 1: this president's actions conduct words outside of that norms? And 389 00:21:38,520 --> 00:21:40,920 Speaker 1: and so it's sometimes hard because, as you say, there 390 00:21:40,960 --> 00:21:43,520 Speaker 1: aren't a lot of people now in Washington who have 391 00:21:43,640 --> 00:21:47,399 Speaker 1: that historical uh knowledge. Well, Chris, the you know, the 392 00:21:47,480 --> 00:21:51,000 Speaker 1: House Oversight Committee is looking at the security clearance issue. 393 00:21:51,800 --> 00:21:55,280 Speaker 1: What's the endgame here for them? Can they affect any change? 394 00:21:55,920 --> 00:21:58,960 Speaker 1: We revoke anything? Do they have any power? Well, look, 395 00:21:59,000 --> 00:22:03,399 Speaker 1: they've issued subpoenas to the supervisor who was in charge 396 00:22:03,400 --> 00:22:06,520 Speaker 1: of overturning um a lot of these denials. Uh. They've 397 00:22:06,560 --> 00:22:10,120 Speaker 1: also asked for copies of memos on this subject. According 398 00:22:10,119 --> 00:22:13,680 Speaker 1: to news reporting, former Chief of Staff John Kelly um 399 00:22:13,680 --> 00:22:18,200 Speaker 1: put in writing his concerns about Jared Kushner getting a clearance. 400 00:22:18,240 --> 00:22:19,919 Speaker 1: So it'll be interesting to see where they get all that. 401 00:22:20,280 --> 00:22:22,080 Speaker 1: So there will be a fight back and forth about 402 00:22:22,080 --> 00:22:26,919 Speaker 1: whether these witnesses testify, about whether those documents are turned over. Ultimately, 403 00:22:27,000 --> 00:22:29,520 Speaker 1: Congress can legislate on this issue. I mean, it is 404 00:22:29,560 --> 00:22:32,399 Speaker 1: true that the president has the authority to grant a 405 00:22:32,520 --> 00:22:35,600 Speaker 1: clearance to whoever he wants, but I suspect Congress will 406 00:22:35,600 --> 00:22:37,800 Speaker 1: try to put greater checks into that and at the 407 00:22:37,920 --> 00:22:41,280 Speaker 1: very least require some kind of notification to Congress before 408 00:22:41,320 --> 00:22:44,480 Speaker 1: that happens. Chris Lew, thank you so much. Chris lewis 409 00:22:44,480 --> 00:22:47,480 Speaker 1: a senior fellow at the University of Virginia Miller Center, 410 00:22:47,520 --> 00:22:50,560 Speaker 1: and he's also a former Deputy Secretary of Labor under 411 00:22:50,720 --> 00:23:04,920 Speaker 1: President Obama. Well, there are a bunch of I p 412 00:23:04,960 --> 00:23:07,520 Speaker 1: o s lined up the initial public offerings that we've 413 00:23:07,520 --> 00:23:10,120 Speaker 1: seen so far. We've seen LIFT, we've seen trade Web. 414 00:23:10,119 --> 00:23:12,919 Speaker 1: They've generally been pretty well received, although LIFT has been 415 00:23:12,920 --> 00:23:16,600 Speaker 1: a little bit rockier. But Blue Apron might be sending 416 00:23:16,800 --> 00:23:21,639 Speaker 1: a very interesting and perhaps inauspicious message to the I 417 00:23:21,800 --> 00:23:23,760 Speaker 1: p o s that are lined up for later this year. 418 00:23:23,760 --> 00:23:26,840 Speaker 1: Sarah Ponzack, crocess, reporter for Bloomberg News, joins us now 419 00:23:27,200 --> 00:23:30,560 Speaker 1: uh to discuss why that may be. So discuss what 420 00:23:30,600 --> 00:23:33,159 Speaker 1: happened with Blue April. So Blue Apron can be a 421 00:23:33,200 --> 00:23:36,720 Speaker 1: cautionary tale. If you look at Blue Apron, since it's 422 00:23:36,760 --> 00:23:39,240 Speaker 1: I p O. I mean, this is a stock that 423 00:23:39,400 --> 00:23:43,080 Speaker 1: trades at a dollar, it's down, and when you consider 424 00:23:43,160 --> 00:23:46,360 Speaker 1: the fact that they originally we're talking about pricing at 425 00:23:46,359 --> 00:23:48,520 Speaker 1: a much higher level and the only reason they didn't 426 00:23:48,600 --> 00:23:51,080 Speaker 1: was because that was right around the time that Whole 427 00:23:51,119 --> 00:23:53,840 Speaker 1: Foods and Amazon we're talking about teaming up. Then it 428 00:23:53,880 --> 00:23:57,040 Speaker 1: would be about drop for Blue Apron, and it has 429 00:23:57,040 --> 00:24:00,760 Speaker 1: not been that long. It's only been since. So the 430 00:24:00,800 --> 00:24:03,040 Speaker 1: way you can look at this is that Blue Apron, 431 00:24:03,119 --> 00:24:06,200 Speaker 1: interestingly enough, yes it is a meal kit service, it's 432 00:24:06,200 --> 00:24:09,719 Speaker 1: a food delivery service, but it's also very much grouped 433 00:24:09,720 --> 00:24:13,640 Speaker 1: in with potential high growth companies, also with tech companies, 434 00:24:13,680 --> 00:24:15,800 Speaker 1: because it's supposed to be disruptive, it's supposed to be 435 00:24:15,800 --> 00:24:19,200 Speaker 1: a disruptor, and that's along the lines of a lot 436 00:24:19,240 --> 00:24:21,719 Speaker 1: of the companies that we are seeing come to market 437 00:24:22,160 --> 00:24:24,560 Speaker 1: this year potentially. I mean take Lift for example. No, 438 00:24:24,840 --> 00:24:28,640 Speaker 1: Lift has nothing to do with food, but they are 439 00:24:29,400 --> 00:24:31,720 Speaker 1: a bride sharing service and that's supposed to be disrupted 440 00:24:31,720 --> 00:24:34,600 Speaker 1: to the auto industry potentially. Um same thing with Uber, 441 00:24:34,720 --> 00:24:38,040 Speaker 1: and then you think of other UH companies like maybe Pinterest, 442 00:24:38,440 --> 00:24:41,160 Speaker 1: Slack coming out later this year. They all are very 443 00:24:41,480 --> 00:24:44,040 Speaker 1: niche in a way. So some are saying you can 444 00:24:44,119 --> 00:24:47,000 Speaker 1: look at Blue Apron, and yes, you have to say 445 00:24:47,040 --> 00:24:50,200 Speaker 1: it is clearly a very different type of company, But 446 00:24:50,480 --> 00:24:53,240 Speaker 1: look at the rough year and a half about that 447 00:24:53,280 --> 00:24:56,840 Speaker 1: it's had, and what does that mean for all of 448 00:24:56,880 --> 00:24:59,119 Speaker 1: the unicorns that we have heard are going to go 449 00:24:59,160 --> 00:25:01,320 Speaker 1: public this year. I think what it clearly says is 450 00:25:01,400 --> 00:25:03,159 Speaker 1: if you don't just in case of Blue Apron, if 451 00:25:03,200 --> 00:25:05,040 Speaker 1: if you don't deliver on what you say you're going 452 00:25:05,080 --> 00:25:06,399 Speaker 1: to do in your I p O road show, this 453 00:25:06,520 --> 00:25:10,639 Speaker 1: market will absolutely pound the stock. And I think for Lift, 454 00:25:10,840 --> 00:25:13,159 Speaker 1: just you know Lisa mentioned Lift in the intro, it 455 00:25:13,280 --> 00:25:15,080 Speaker 1: is we have to note it's back above the seventy 456 00:25:15,119 --> 00:25:17,720 Speaker 1: two I p O price at seventy five and change 457 00:25:17,760 --> 00:25:20,240 Speaker 1: here today, So maybe it's maybe this one's found a 458 00:25:20,280 --> 00:25:22,200 Speaker 1: little bit of a footing. But what I did here 459 00:25:22,200 --> 00:25:24,240 Speaker 1: in the aftermath of the Lift and be interesting get 460 00:25:24,240 --> 00:25:28,480 Speaker 1: your your sense, Sarah, is for Lift, for example, you know, 461 00:25:28,800 --> 00:25:31,280 Speaker 1: here's a company that lost a billion dollars last year. 462 00:25:31,400 --> 00:25:35,760 Speaker 1: It's really unclear about when they're going to actually achieve profitability. 463 00:25:35,840 --> 00:25:38,199 Speaker 1: So yes, I get the top lines growing, but I 464 00:25:38,240 --> 00:25:40,320 Speaker 1: don't have a real path or a real good sense 465 00:25:40,440 --> 00:25:43,280 Speaker 1: of a path to profitability. That could be a problem. 466 00:25:43,320 --> 00:25:45,280 Speaker 1: I think for not only Lift that we've seen, but 467 00:25:45,359 --> 00:25:47,160 Speaker 1: maybe some of these other companies. Well that's the common 468 00:25:47,160 --> 00:25:51,000 Speaker 1: denominator here. Blue Apron has never had a quarter of profits. 469 00:25:51,080 --> 00:25:55,280 Speaker 1: Lift has not either. Uber hasn't either. So these companies, 470 00:25:55,359 --> 00:25:58,520 Speaker 1: they have to believe that investors are going to take 471 00:25:58,520 --> 00:26:00,920 Speaker 1: a bet that, no, they're not turning profits right now, 472 00:26:00,960 --> 00:26:03,919 Speaker 1: but they will eventually be profitable and it's going to 473 00:26:04,000 --> 00:26:06,679 Speaker 1: be worth it. But a lot of investors are starting 474 00:26:06,680 --> 00:26:09,080 Speaker 1: to realize that maybe it's going to take a little 475 00:26:09,080 --> 00:26:12,720 Speaker 1: bit longer for these companies to actually grow into their profits, 476 00:26:12,760 --> 00:26:16,119 Speaker 1: actually turn profits then they believed at the start of it. 477 00:26:16,200 --> 00:26:18,800 Speaker 1: And that's why a lot wait, wait, wait, wait, wait, 478 00:26:18,880 --> 00:26:21,399 Speaker 1: I'm sorry to interrupt you. Is there any evidence of 479 00:26:21,440 --> 00:26:25,119 Speaker 1: that of investors actually showing skepticism here? So some that 480 00:26:25,160 --> 00:26:26,920 Speaker 1: I've spoken with, I mean, the issue is they're having 481 00:26:26,920 --> 00:26:29,639 Speaker 1: a hard time with valuations. I mean a lot of 482 00:26:29,640 --> 00:26:32,000 Speaker 1: people are looking at these companies and saying, I honestly 483 00:26:32,040 --> 00:26:34,520 Speaker 1: don't know what to value Lift at. Yes, we're trading 484 00:26:34,560 --> 00:26:36,560 Speaker 1: back aub of the I p O price, But it's 485 00:26:36,640 --> 00:26:39,800 Speaker 1: difficult because you can promise on your road show, you 486 00:26:39,800 --> 00:26:41,720 Speaker 1: can promise when you I p O that you're eventually 487 00:26:41,720 --> 00:26:44,520 Speaker 1: going to be profitable, but there's a little skepticism. So 488 00:26:44,560 --> 00:26:47,800 Speaker 1: there's skepticism, but they're still buying at the very high valuations, 489 00:26:47,840 --> 00:26:50,840 Speaker 1: and they're still sending stocks higher. So even with this 490 00:26:51,040 --> 00:26:56,160 Speaker 1: lack of conviction around the company's outlook, they're still actively 491 00:26:56,760 --> 00:26:59,439 Speaker 1: pushing up prices. They are, but we also have to 492 00:26:59,440 --> 00:27:03,000 Speaker 1: remember we're only a week into lift trading. UB essentially 493 00:27:03,240 --> 00:27:08,119 Speaker 1: lots of broad assumptions about the broad market about this. Yes, no, 494 00:27:08,280 --> 00:27:10,160 Speaker 1: it's only been a week, so it's hard to take 495 00:27:10,160 --> 00:27:13,560 Speaker 1: away exactly what's going to happen. But UBS, interestingly enough, 496 00:27:13,560 --> 00:27:15,159 Speaker 1: they put out our report this week that kind of 497 00:27:15,240 --> 00:27:18,760 Speaker 1: dived into the typical on average trading reactions of I 498 00:27:18,880 --> 00:27:20,440 Speaker 1: p o s and they found that the first day, 499 00:27:20,480 --> 00:27:23,320 Speaker 1: the first week, you typically have really good play because 500 00:27:23,320 --> 00:27:26,280 Speaker 1: people are excited. Still, people are still really pumped up 501 00:27:26,320 --> 00:27:28,840 Speaker 1: about this new company that has so much hype around 502 00:27:28,840 --> 00:27:31,800 Speaker 1: it coming to market. Where you start to see it 503 00:27:32,160 --> 00:27:35,880 Speaker 1: really start to potentially lose traction is in the six 504 00:27:35,920 --> 00:27:38,880 Speaker 1: month mark out to three years, because on average, typically 505 00:27:38,920 --> 00:27:42,240 Speaker 1: an I p O is actually lower the market return, 506 00:27:42,280 --> 00:27:44,639 Speaker 1: the risk adjusted return over that period is lower than 507 00:27:44,680 --> 00:27:47,320 Speaker 1: the market because people start to become a little bit 508 00:27:47,359 --> 00:27:51,520 Speaker 1: more skeptical, the excitement fades away. So it's hard to 509 00:27:51,600 --> 00:27:55,160 Speaker 1: really take this all away from Lift for example. Right now, 510 00:27:55,200 --> 00:27:57,359 Speaker 1: it's too soon to tell. We're going to have to 511 00:27:57,359 --> 00:28:00,399 Speaker 1: see what actually happens. And with the other Uni corns 512 00:28:00,560 --> 00:28:02,840 Speaker 1: that are supposed to come out this year too, because 513 00:28:03,200 --> 00:28:06,919 Speaker 1: they are names that have so much push and so 514 00:28:07,040 --> 00:28:10,880 Speaker 1: much support and hype surrounding them that it's also kind 515 00:28:10,880 --> 00:28:13,520 Speaker 1: of hard to live up to that, right, We'll have 516 00:28:13,560 --> 00:28:15,919 Speaker 1: to see. Sarah pon SEC. Thank you so much, Sarah's 517 00:28:15,920 --> 00:28:18,240 Speaker 1: across asset reporter for Bloomberg News, joining us live here 518 00:28:18,240 --> 00:28:21,720 Speaker 1: in the Bloomberg Interactive Broker Studio. Thanks for listening to 519 00:28:21,760 --> 00:28:24,159 Speaker 1: the Bloomberg P and L podcast. You can subscribe and 520 00:28:24,240 --> 00:28:27,360 Speaker 1: listen to interviews at Apple Podcasts or whatever podcast platform 521 00:28:27,400 --> 00:28:30,480 Speaker 1: you prefer. Paul Sweeney, I'm on Twitter at pt Sweeney. 522 00:28:30,560 --> 00:28:32,760 Speaker 1: I'm Lisa A. Bram Woids. I'm on Twitter at Lisa A. 523 00:28:32,840 --> 00:28:35,440 Speaker 1: Bram Woods One. Before the podcast, you can always catch 524 00:28:35,520 --> 00:28:37,320 Speaker 1: us worldwide on Bloomberg Radio