1 00:00:00,120 --> 00:00:02,920 Speaker 1: Brought you by Bank of America, Mary Lynch. Investing in 2 00:00:03,000 --> 00:00:07,840 Speaker 1: local communities, economies and a sustainable future. That's the power 3 00:00:08,080 --> 00:00:12,360 Speaker 1: of global connections, Mary Lynch, Pierce Fenner, and Smith Incorporated 4 00:00:12,760 --> 00:00:27,400 Speaker 1: Member s I p C. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:27,840 --> 00:00:31,520 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:31,560 --> 00:00:36,600 Speaker 1: insight from the best in economics, finance, investment, and international relations. 7 00:00:37,040 --> 00:00:41,600 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com, and 8 00:00:41,680 --> 00:00:48,879 Speaker 1: of course on the Bloomberg I'll leg it to my 9 00:00:48,920 --> 00:00:51,479 Speaker 1: Morning mus Street is an entree to Steve Case on 10 00:00:51,720 --> 00:00:55,280 Speaker 1: technology and the people we need to make America about it. 11 00:00:55,360 --> 00:00:57,880 Speaker 1: This is from the wonderful Noah Feldment of Harvard, one 12 00:00:57,920 --> 00:01:02,560 Speaker 1: of my favorite favorite people on law and constitution. As 13 00:01:02,560 --> 00:01:05,000 Speaker 1: they argued in a column I wrote at three am 14 00:01:05,040 --> 00:01:08,560 Speaker 1: after the election, it's all about the Constitution now, the 15 00:01:08,640 --> 00:01:12,480 Speaker 1: protection of sanctuary cities and these example of how the 16 00:01:12,560 --> 00:01:16,360 Speaker 1: Constitution protects minority rights, in this case, the rights of 17 00:01:16,440 --> 00:01:20,640 Speaker 1: cities that dissent on immigration policy with US. Is Steve Case, 18 00:01:20,680 --> 00:01:23,839 Speaker 1: a o L co founder and author of The Third Wave. 19 00:01:23,880 --> 00:01:26,400 Speaker 1: I can't say enough about the accessibility of his book, 20 00:01:26,680 --> 00:01:29,080 Speaker 1: and I would suggest out of Punaho that you grew 21 00:01:29,120 --> 00:01:33,080 Speaker 1: up in the sanctuary state. Hawaii is the absolutely crucible, 22 00:01:33,480 --> 00:01:36,559 Speaker 1: almost almost a test tube if you will, of these 23 00:01:36,600 --> 00:01:40,840 Speaker 1: these these emotions that are buffeting America right now. If 24 00:01:40,880 --> 00:01:44,880 Speaker 1: Hawaii was a sanctuary state for so many, particularly out 25 00:01:44,880 --> 00:01:49,160 Speaker 1: of Asia. Tell us about your thoughts on sanctuary cities 26 00:01:49,360 --> 00:01:52,320 Speaker 1: and what we do if we build walls around them. Well, 27 00:01:52,320 --> 00:01:54,080 Speaker 1: I did have the opportunity to grow up in Hawaii, 28 00:01:54,120 --> 00:01:55,480 Speaker 1: which is sort of a melting pot. There are a 29 00:01:55,480 --> 00:01:57,240 Speaker 1: lot of different people, a lot of different countries, and 30 00:01:57,360 --> 00:02:00,400 Speaker 1: even as a as a young Caucasian guy, was actually 31 00:02:00,400 --> 00:02:02,440 Speaker 1: in the minority. They're not the not the majority. So 32 00:02:02,560 --> 00:02:04,240 Speaker 1: I had a sense of what was possible when you 33 00:02:04,480 --> 00:02:08,520 Speaker 1: brought different people, had different perspectives, different backgrounds, different outlooks together. 34 00:02:08,560 --> 00:02:10,720 Speaker 1: I think that's with what's made not just Hawaii great, 35 00:02:10,720 --> 00:02:13,360 Speaker 1: but American great. We've always been a great immigrant nation. 36 00:02:13,360 --> 00:02:14,720 Speaker 1: Now we need to figure out how to strike the 37 00:02:14,800 --> 00:02:17,400 Speaker 1: right balance in terms of enforcing the rules of of 38 00:02:17,440 --> 00:02:20,120 Speaker 1: the road while also still being welcoming. Uh. I'm a 39 00:02:20,200 --> 00:02:23,680 Speaker 1: little concern that the applications to the schools are particularly 40 00:02:24,160 --> 00:02:26,560 Speaker 1: PhD s things like that from other countries are are down, 41 00:02:26,639 --> 00:02:29,120 Speaker 1: you know, requests for visas are down. We need to 42 00:02:29,120 --> 00:02:31,320 Speaker 1: make sure we are welcoming to people while still for 43 00:02:31,520 --> 00:02:34,560 Speaker 1: enforcing our laws. And that's particularly important in the technology 44 00:02:34,600 --> 00:02:36,560 Speaker 1: sect of the innovation sector. That's where a lot of 45 00:02:36,800 --> 00:02:39,880 Speaker 1: a lot of of the fortunate companies were started by immigrants. 46 00:02:40,560 --> 00:02:43,679 Speaker 1: Almost of Silicon Valley companies were started by immigrants. So 47 00:02:43,720 --> 00:02:45,600 Speaker 1: we need to figure out how to strike this this 48 00:02:45,600 --> 00:02:47,120 Speaker 1: this balance. I hope that will be more of a 49 00:02:47,160 --> 00:02:50,200 Speaker 1: focus going forward. Steve Case, of course, the co founder 50 00:02:50,240 --> 00:02:52,560 Speaker 1: of a Well Enough, chairman and CEO of Revolution, the 51 00:02:52,600 --> 00:02:55,799 Speaker 1: author of the Third Wave, an entrepreneur's vision of the future. 52 00:02:55,800 --> 00:02:58,280 Speaker 1: And I should also add someone who's advised Person Obama 53 00:02:58,320 --> 00:03:01,240 Speaker 1: on innovation and entrepreneurship, a member of the former President's 54 00:03:01,240 --> 00:03:03,840 Speaker 1: counsel on Jobs and Competitiveness. He joins us here in 55 00:03:03,840 --> 00:03:05,920 Speaker 1: our Bloomberg eleven three oh studio. Is great to see you, 56 00:03:06,000 --> 00:03:08,520 Speaker 1: Good morning, New York. Let me start with with the 57 00:03:08,520 --> 00:03:10,799 Speaker 1: government angle. Here. We talk a lot about how to 58 00:03:10,880 --> 00:03:15,000 Speaker 1: catalyze or encourage innovation entrepreneurship. As you've been thinking about this, 59 00:03:15,040 --> 00:03:17,359 Speaker 1: has been dealing with it. What role should the government play, 60 00:03:17,400 --> 00:03:20,480 Speaker 1: What can the government do well to to kick start innovation. Well, 61 00:03:20,520 --> 00:03:22,280 Speaker 1: one thing it could do and hopefully we'll do this 62 00:03:22,360 --> 00:03:24,359 Speaker 1: year is sort of level of playing field in terms 63 00:03:24,360 --> 00:03:26,440 Speaker 1: of access to capital. Right now, if you're in a 64 00:03:26,480 --> 00:03:28,799 Speaker 1: place like New York City or Boston or San Francisco 65 00:03:28,880 --> 00:03:31,359 Speaker 1: and the whole Silicon Valley area, you do pretty well 66 00:03:31,400 --> 00:03:33,280 Speaker 1: and the entrepreneurs there can raise the capital and need. 67 00:03:33,320 --> 00:03:35,640 Speaker 1: But most of the country, most entrepreneurs can't. Last year, 68 00:03:35,680 --> 00:03:38,720 Speaker 1: the data is pretty sobering that seventy eight percent of 69 00:03:38,760 --> 00:03:41,600 Speaker 1: venture capital went to just three states California, New York, 70 00:03:41,600 --> 00:03:45,160 Speaker 1: and Massachusetts. The other forty seven states got So we 71 00:03:45,160 --> 00:03:46,840 Speaker 1: need to what we we're focused on what we call 72 00:03:46,880 --> 00:03:48,880 Speaker 1: the Rise of the rest to help those entrepreneurs in 73 00:03:48,920 --> 00:03:51,080 Speaker 1: those places. The other is to in this third wave 74 00:03:51,120 --> 00:03:53,040 Speaker 1: it's just to be merging now, which will be the 75 00:03:53,080 --> 00:03:56,160 Speaker 1: next evolution of the Internet and really disrupt you know, 76 00:03:56,200 --> 00:04:00,920 Speaker 1: some sectors like education, healthcare, transportation, food, agg culture. Getting 77 00:04:00,920 --> 00:04:03,480 Speaker 1: the regulations right will be critical. How do you keep 78 00:04:03,480 --> 00:04:05,520 Speaker 1: bad things from happening and make sure that the food 79 00:04:05,520 --> 00:04:07,480 Speaker 1: your kids eat at school and make them sick or 80 00:04:07,680 --> 00:04:09,960 Speaker 1: you know, driver list cars don't create havoc, but have 81 00:04:10,080 --> 00:04:12,680 Speaker 1: a bias towards enabling good things to happen and and 82 00:04:12,960 --> 00:04:16,080 Speaker 1: unleashing that innovation. Actually, the government did that pretty well 83 00:04:16,080 --> 00:04:17,760 Speaker 1: with the Internet when they kind of, you know, put 84 00:04:17,800 --> 00:04:19,960 Speaker 1: the money in to build the basic research that made 85 00:04:19,960 --> 00:04:23,400 Speaker 1: the Internet possible and then commercialized the Internet and had 86 00:04:23,560 --> 00:04:25,920 Speaker 1: had a light touch approach to regulation in those early 87 00:04:26,000 --> 00:04:28,320 Speaker 1: days thirty plus years ago. Hopefully that will be the 88 00:04:28,320 --> 00:04:30,400 Speaker 1: case in some of these new emerging sectors as well, 89 00:04:30,400 --> 00:04:33,080 Speaker 1: because that will enable the United States to remain the 90 00:04:33,080 --> 00:04:36,160 Speaker 1: most entrepreneurnation. You've got a new partner revolution. That's J. D. 91 00:04:36,240 --> 00:04:37,760 Speaker 1: Vans author I Field Bill LG. I think a lot 92 00:04:37,800 --> 00:04:40,360 Speaker 1: of us have read the book and know of his 93 00:04:40,360 --> 00:04:43,040 Speaker 1: his work. He's setting out to look for innovation new 94 00:04:43,040 --> 00:04:47,840 Speaker 1: companies outside of California, New York, and Massachusetts. How's it 95 00:04:47,839 --> 00:04:49,120 Speaker 1: gonna go about doing that? How do you do that 96 00:04:49,160 --> 00:04:51,000 Speaker 1: at the firm? How do you look for for pockets 97 00:04:51,000 --> 00:04:53,919 Speaker 1: of innovation outside of those three states? Well, there's two parts. 98 00:04:53,960 --> 00:04:56,320 Speaker 1: We started an initiative about three years ago called Rise 99 00:04:56,400 --> 00:04:58,760 Speaker 1: of the Rest, and I've traveled by bus six thousand 100 00:04:58,760 --> 00:05:05,360 Speaker 1: miles visit at ease and plays like Detroit, Pittsburgh, Atlanta, Phoenix, Salbuquerque, Madison, Minneapolis, 101 00:05:05,400 --> 00:05:07,799 Speaker 1: you know, Des Moines, St. Louis, really all over the country, 102 00:05:07,920 --> 00:05:10,000 Speaker 1: trying to understand what's happening in each of the cities 103 00:05:10,000 --> 00:05:12,359 Speaker 1: and trying to champion the the entrepreneurs in each of 104 00:05:12,360 --> 00:05:15,040 Speaker 1: the cities, tell their stories, attract more capital to their 105 00:05:15,080 --> 00:05:17,039 Speaker 1: to their companies into their their cities. So that's what 106 00:05:17,080 --> 00:05:19,479 Speaker 1: we're doing at the Revolution. And jd. Vance just joined 107 00:05:19,520 --> 00:05:22,400 Speaker 1: just recently. We announced that last month. He of course, 108 00:05:22,440 --> 00:05:24,240 Speaker 1: when he wrote the book Killed Billy Elogy, it was 109 00:05:24,279 --> 00:05:26,480 Speaker 1: a huge bestseller. I think it's sold a million copies 110 00:05:26,520 --> 00:05:28,800 Speaker 1: already and really told the story of a lot of 111 00:05:28,800 --> 00:05:30,640 Speaker 1: people in this country that do feel kind of left 112 00:05:30,640 --> 00:05:35,279 Speaker 1: out and left behind by technology, by digitization, by by globalization. 113 00:05:35,360 --> 00:05:37,359 Speaker 1: And and he was at the only time there was 114 00:05:37,360 --> 00:05:39,640 Speaker 1: writing the book. He actually was in Silicon Valley working 115 00:05:39,720 --> 00:05:44,200 Speaker 1: for Peter til focused on UH and venture capital investments. 116 00:05:44,200 --> 00:05:45,760 Speaker 1: But when I met him last fall, he said he 117 00:05:45,760 --> 00:05:49,120 Speaker 1: was planning to leave Silicon Valley move home to Ohio, 118 00:05:49,200 --> 00:05:51,479 Speaker 1: which is where he was born and raised, because he 119 00:05:51,520 --> 00:05:53,719 Speaker 1: wanted to not just defind the problem as he did 120 00:05:53,760 --> 00:05:55,480 Speaker 1: in the book Hell Bill the Elergy, but be part 121 00:05:55,520 --> 00:05:57,840 Speaker 1: of the solution, and one part of that solution. The 122 00:05:57,960 --> 00:06:00,280 Speaker 1: others as well is trying to level the play feel, 123 00:06:00,320 --> 00:06:02,520 Speaker 1: get more capital, going to more entrepreneurs in Ohio and 124 00:06:02,560 --> 00:06:04,719 Speaker 1: other places. So he'll be moving back and forth between 125 00:06:04,760 --> 00:06:07,320 Speaker 1: Ohio where he'll be based, in Washington See where where 126 00:06:07,360 --> 00:06:08,919 Speaker 1: we'll be based, but spending a lot of time on 127 00:06:08,960 --> 00:06:10,600 Speaker 1: the road talking about his book and talking about the 128 00:06:10,680 --> 00:06:13,120 Speaker 1: rise of the rest and championing these entrepreneurs that really 129 00:06:13,120 --> 00:06:15,719 Speaker 1: have the opportunity to build the next great iconic companies 130 00:06:15,880 --> 00:06:18,000 Speaker 1: if we pay attention and if we fund them. Do 131 00:06:18,120 --> 00:06:24,520 Speaker 1: you associate uh in Ohio the same pixie dust that 132 00:06:24,640 --> 00:06:28,839 Speaker 1: I see in San Francisco, which is top flight academics. 133 00:06:28,880 --> 00:06:32,039 Speaker 1: Ohio happens to have that. Yeah, it's an advantage that 134 00:06:32,080 --> 00:06:34,479 Speaker 1: they've got a case Western Reserve and the and the 135 00:06:34,520 --> 00:06:36,600 Speaker 1: rest of the good people and the great expertise in 136 00:06:36,680 --> 00:06:39,480 Speaker 1: sectors where Cincinnati. My first job actually out of college 137 00:06:39,480 --> 00:06:42,200 Speaker 1: was Procter and Gamble in Cincinnati. A lot of consumer technic. 138 00:06:42,320 --> 00:06:46,640 Speaker 1: What do you do for proctoring? Game? Brand management? What 139 00:06:46,640 --> 00:06:49,080 Speaker 1: what the hell is brand man? It was basically when 140 00:06:49,120 --> 00:06:51,520 Speaker 1: I was twenty one years old that I was still 141 00:06:51,600 --> 00:06:54,640 Speaker 1: learning what was basically they assign you to work on 142 00:06:54,640 --> 00:06:56,360 Speaker 1: a particular product I was there at the same time 143 00:06:56,360 --> 00:07:00,640 Speaker 1: that you sold toothpaste. I worked with called it at 144 00:07:00,640 --> 00:07:03,120 Speaker 1: the time, the toilet goods division they had that they 145 00:07:03,160 --> 00:07:05,000 Speaker 1: they because they're a good market if they renamed it 146 00:07:05,080 --> 00:07:06,960 Speaker 1: beauty here after a while, but it was like, you're 147 00:07:07,000 --> 00:07:10,040 Speaker 1: too taste in shampoo. And I worked on a hair 148 00:07:10,120 --> 00:07:13,119 Speaker 1: permanent product that failed in test market, and I also 149 00:07:13,200 --> 00:07:17,040 Speaker 1: worked on a couple other other kind of hair care products. 150 00:07:17,080 --> 00:07:18,800 Speaker 1: But I learned a lot of particularly about market. Even 151 00:07:18,840 --> 00:07:21,320 Speaker 1: the people used to tease when all was kind of 152 00:07:21,520 --> 00:07:24,000 Speaker 1: in the nine ninies really rapidly expanding. We were giving 153 00:07:24,000 --> 00:07:26,440 Speaker 1: out free trial disc all the time, UH, and that 154 00:07:26,520 --> 00:07:28,880 Speaker 1: was sort of a lesson we learned from PG. They're 155 00:07:28,880 --> 00:07:31,320 Speaker 1: great at getting people to try their product for free sample. 156 00:07:31,400 --> 00:07:34,920 Speaker 1: So essentially Well got got big because of the pmber 157 00:07:37,080 --> 00:07:39,680 Speaker 1: My experience. But going back to your question, Ohio has 158 00:07:39,720 --> 00:07:43,040 Speaker 1: great uh talent there, but historically there's been a brain drain. 159 00:07:43,120 --> 00:07:45,080 Speaker 1: People grew up there, went to school there, but felt 160 00:07:45,080 --> 00:07:47,840 Speaker 1: like they had to move to California or New York 161 00:07:47,840 --> 00:07:49,800 Speaker 1: for some other place to to, you know, kind of 162 00:07:49,840 --> 00:07:52,240 Speaker 1: find their opportunity. Now they're realizing they don't have to 163 00:07:52,320 --> 00:07:55,480 Speaker 1: leave because of the innovation is really now happening everywhere. 164 00:07:55,640 --> 00:07:57,640 Speaker 1: Just so you understand, David, and you're way too young 165 00:07:57,680 --> 00:08:00,240 Speaker 1: to understand this. We used to use Steve's ale well 166 00:08:00,320 --> 00:08:02,400 Speaker 1: dis that you get in the mail. Those would be 167 00:08:02,400 --> 00:08:05,800 Speaker 1: beer coasters for Jenny Crema. You could you could just say, 168 00:08:05,840 --> 00:08:07,400 Speaker 1: look that we got. We got a whole brace of it. 169 00:08:07,480 --> 00:08:09,760 Speaker 1: We have like six or twelve of them for for 170 00:08:09,800 --> 00:08:13,480 Speaker 1: all Reduce for users. They're the great coaster FORTI case 171 00:08:13,480 --> 00:08:16,040 Speaker 1: with some Bloomrick surveillance. We talk about geography here. If 172 00:08:16,040 --> 00:08:20,400 Speaker 1: I'm starting a company, um am, I looking for a 173 00:08:20,400 --> 00:08:22,000 Speaker 1: place to put it, do I say, oh, look it's 174 00:08:22,000 --> 00:08:23,680 Speaker 1: it's less expensive to do it in Detroit. I'm being 175 00:08:23,720 --> 00:08:25,200 Speaker 1: encouraged to do it in Detroit. I'll go there, or 176 00:08:25,240 --> 00:08:27,080 Speaker 1: I might go to d C, or might go to 177 00:08:27,120 --> 00:08:29,559 Speaker 1: Silk How how does that calculus work? How does somebody 178 00:08:29,560 --> 00:08:31,160 Speaker 1: decide where to start a company in the r teth 179 00:08:31,360 --> 00:08:34,040 Speaker 1: I think the big the biggest driver in this next 180 00:08:34,080 --> 00:08:36,080 Speaker 1: ten fifteen, twenty years, what I've called in the book 181 00:08:36,080 --> 00:08:38,880 Speaker 1: the third wave, will be domain expertise. If you're really 182 00:08:38,880 --> 00:08:42,520 Speaker 1: trying to disrupt healthcare, for example, being in Cleveland near 183 00:08:42,559 --> 00:08:45,719 Speaker 1: the Cleveland Clinic or in Baltimore near Johns Hopkins, or 184 00:08:45,880 --> 00:08:49,439 Speaker 1: near United Health in Minneapolis. When partnership has become more important, 185 00:08:49,440 --> 00:08:52,600 Speaker 1: being closer to those partners will become important. We're seeing 186 00:08:52,600 --> 00:08:55,440 Speaker 1: this in cities now like Pittsburgh that is known as 187 00:08:55,480 --> 00:08:57,520 Speaker 1: the sort of the steel capital help power the whole 188 00:08:57,559 --> 00:09:00,960 Speaker 1: Industrial revolution because of Carnegie mal and their expertise and 189 00:09:01,080 --> 00:09:03,560 Speaker 1: robotics and their history of making things. There's a lot 190 00:09:03,600 --> 00:09:06,880 Speaker 1: innovation there. Even Uber, kind of a prototypical Silicon Valley 191 00:09:06,880 --> 00:09:10,280 Speaker 1: company is focusing its innovation around dry West Cars and 192 00:09:10,640 --> 00:09:13,280 Speaker 1: in Pittsburgh. So you're starting to see the agriculture what 193 00:09:13,440 --> 00:09:16,320 Speaker 1: some people call agg tech. Uh, there's innovation happening in 194 00:09:16,360 --> 00:09:18,959 Speaker 1: Silicon Valley, but there's also innovation in place like Louisville 195 00:09:18,960 --> 00:09:21,839 Speaker 1: and Lincoln, even St. Louis which ra Monsanto's based. There's 196 00:09:21,800 --> 00:09:23,880 Speaker 1: a lot of engineers and understand a lot about farming. 197 00:09:24,040 --> 00:09:27,040 Speaker 1: In your book, the last and then you're you're brilliant 198 00:09:27,040 --> 00:09:29,360 Speaker 1: on this. You've got like ten pages of photographs and 199 00:09:29,400 --> 00:09:34,560 Speaker 1: the last three pages is kids in Pittsburgh, kids in Ohio, etcetera, etcetera. 200 00:09:34,679 --> 00:09:37,520 Speaker 1: Aren't they there because they can actually afford to get 201 00:09:37,559 --> 00:09:39,840 Speaker 1: to the end of the month paycheck that this is 202 00:09:39,880 --> 00:09:42,000 Speaker 1: like a huge deal. That's a big part. Now, some 203 00:09:42,040 --> 00:09:43,360 Speaker 1: of them are there just because they happen to be 204 00:09:43,400 --> 00:09:45,360 Speaker 1: there and they're starting companies, but some of them are 205 00:09:45,360 --> 00:09:47,760 Speaker 1: there because they believe they can build companies there and 206 00:09:47,760 --> 00:09:49,400 Speaker 1: at the cost of living is much lower. And I've 207 00:09:49,400 --> 00:09:51,680 Speaker 1: seen this also if we travel around. The winner of 208 00:09:51,679 --> 00:09:54,200 Speaker 1: our Rise of the Rest Pitch competition in Detroit actually 209 00:09:54,200 --> 00:09:57,680 Speaker 1: started company in San Francisco but moved to Detroit, partly 210 00:09:57,720 --> 00:09:59,240 Speaker 1: for cost of living it was going to be less 211 00:09:59,240 --> 00:10:01,840 Speaker 1: than half a aust for rent and salaries and and 212 00:10:01,960 --> 00:10:04,240 Speaker 1: so forth, partly because he was from there and wanted 213 00:10:04,280 --> 00:10:06,080 Speaker 1: to go back there and raise his family there, and 214 00:10:06,080 --> 00:10:08,240 Speaker 1: probably because he wanted to be part of the renaissance, 215 00:10:08,280 --> 00:10:12,040 Speaker 1: the rebuilding, the reimagining of of of Detroit. We're starting 216 00:10:12,040 --> 00:10:13,600 Speaker 1: to see that all over the country what had been 217 00:10:13,640 --> 00:10:16,240 Speaker 1: a brain drain at that brain drain now slowing, and 218 00:10:16,280 --> 00:10:18,360 Speaker 1: even we're beginning to see a very early signs of 219 00:10:18,360 --> 00:10:21,120 Speaker 1: a boomerang of talent where people who felt they had 220 00:10:21,160 --> 00:10:23,880 Speaker 1: to go to the coast now are beginning to realize that, 221 00:10:23,960 --> 00:10:27,520 Speaker 1: you know, this regional entrepreneurship is beginning to accelerate and 222 00:10:27,520 --> 00:10:29,760 Speaker 1: and they can really start a company anywhere. How is 223 00:10:29,800 --> 00:10:31,760 Speaker 1: the the environment for we're starting a company and growing 224 00:10:31,800 --> 00:10:35,440 Speaker 1: a company chain since you started all and when when 225 00:10:35,480 --> 00:10:38,680 Speaker 1: we got started, venture capital was was still uh, relatively 226 00:10:38,679 --> 00:10:41,240 Speaker 1: early days. It's a relatively recent phenomena. When we started 227 00:10:41,240 --> 00:10:43,280 Speaker 1: in the Washington, d C. Area, it was not very 228 00:10:43,360 --> 00:10:45,240 Speaker 1: start up friendly. It was, you know, kind of a 229 00:10:45,240 --> 00:10:47,760 Speaker 1: big company town, kind of a government town. So for 230 00:10:47,920 --> 00:10:50,640 Speaker 1: all our venture capital came from other places, Boston, Chicago, 231 00:10:50,679 --> 00:10:54,200 Speaker 1: San Francisco. None of it came from the the DC area. Uh. 232 00:10:54,240 --> 00:10:56,280 Speaker 1: And even when I graduate from college, I talked about 233 00:10:56,280 --> 00:10:57,680 Speaker 1: this in the in the book. I had read a 234 00:10:57,720 --> 00:10:59,880 Speaker 1: book called The Third Wave by Alvin Toffler when I 235 00:10:59,880 --> 00:11:03,040 Speaker 1: was in college, and it talked about essentially the Internet, uh, 236 00:11:03,080 --> 00:11:05,120 Speaker 1: And I was mesmerized by it. I wanted to do it. 237 00:11:05,160 --> 00:11:08,040 Speaker 1: But when I graduate night there was no Internet companies 238 00:11:08,080 --> 00:11:09,840 Speaker 1: to go do and there was no startup culture, so 239 00:11:09,880 --> 00:11:11,800 Speaker 1: I couldn't really do my own thing. So it's really 240 00:11:12,000 --> 00:11:14,760 Speaker 1: changed quite dramatically in the last few decades. What's amazing 241 00:11:14,800 --> 00:11:17,520 Speaker 1: about this, David, is you read Elvin Toffler, you read 242 00:11:17,559 --> 00:11:21,280 Speaker 1: The Third Wave, and you had your Karmen Gia. You 243 00:11:21,320 --> 00:11:22,760 Speaker 1: know you had a Karmen Gee. And if you're a 244 00:11:22,840 --> 00:11:26,280 Speaker 1: rich kid, you had a SOB and you put your talk. 245 00:11:26,360 --> 00:11:28,640 Speaker 1: You could pick up girls just by putting your third 246 00:11:28,640 --> 00:11:30,800 Speaker 1: wave on the back, you know, the back of the 247 00:11:30,840 --> 00:11:34,280 Speaker 1: four seat car. They think you were sensitive. Gearshifter was 248 00:11:34,320 --> 00:11:37,880 Speaker 1: on the dash right, Yeah, well, yeah, well that was 249 00:11:37,880 --> 00:11:42,120 Speaker 1: a SOB. My first car was the exploding Pinto I 250 00:11:42,120 --> 00:11:44,240 Speaker 1: got I got from four box. I didn't tell my 251 00:11:44,320 --> 00:11:46,480 Speaker 1: parents about it because they've probably have been scared. A 252 00:11:46,679 --> 00:11:51,640 Speaker 1: fine engineered vehicle that Pinto. Mike Michael Barr still drives one. 253 00:11:51,720 --> 00:11:53,440 Speaker 1: I think I had two of them. You had two 254 00:11:53,440 --> 00:11:57,840 Speaker 1: pints at one point. Uh, talk about energy. That was terrible. 255 00:11:57,960 --> 00:12:00,000 Speaker 1: David Garrett and Tom Keene in New York with us 256 00:12:00,000 --> 00:12:02,960 Speaker 1: THEEF Case of Revolution here in our Bloomberg eleven three 257 00:12:03,000 --> 00:12:04,760 Speaker 1: oh studios and Steve I wanted to ask you about 258 00:12:05,320 --> 00:12:08,319 Speaker 1: um sort of the conversation about manufacturing that we're having 259 00:12:08,400 --> 00:12:10,240 Speaker 1: right now. The present talks an awful lot about bringing 260 00:12:10,320 --> 00:12:12,680 Speaker 1: jobs back, and we don't hear a whole lot about 261 00:12:12,720 --> 00:12:18,120 Speaker 1: the future manufacturing. We're about technological advancement, tour automation. Are 262 00:12:18,160 --> 00:12:20,440 Speaker 1: we are we missing out? On some component of that 263 00:12:20,480 --> 00:12:23,640 Speaker 1: conversation by not talking about those issues. Yeah, I think so. 264 00:12:23,760 --> 00:12:26,080 Speaker 1: I think it's great for the president were trying to 265 00:12:26,160 --> 00:12:27,880 Speaker 1: keep as many jobs in the country or you know, 266 00:12:27,960 --> 00:12:30,320 Speaker 1: from moving off shore. But I think we have to 267 00:12:30,440 --> 00:12:33,280 Speaker 1: not just kind of think about what was there thirty 268 00:12:33,360 --> 00:12:35,040 Speaker 1: or forty years ago, but what's going to be there 269 00:12:35,080 --> 00:12:37,160 Speaker 1: thirty or fourty years from now, and make the investments 270 00:12:37,200 --> 00:12:40,120 Speaker 1: in the industries of the future. Now, advanced manufacturing is 271 00:12:40,160 --> 00:12:43,320 Speaker 1: starting to show some momentum, and they're actually because of robotics. 272 00:12:43,360 --> 00:12:45,600 Speaker 1: It's an odd dynamic, but because of some of the 273 00:12:45,640 --> 00:12:49,760 Speaker 1: automation technologies, manufacturing that was moved off shore twenty years 274 00:12:49,800 --> 00:12:51,800 Speaker 1: ago is now beginning to come back because there is 275 00:12:51,880 --> 00:12:53,559 Speaker 1: less of a labor costs. So the bad news is 276 00:12:53,600 --> 00:12:55,280 Speaker 1: there's fewer jobs. The good news is some of the 277 00:12:55,440 --> 00:12:57,880 Speaker 1: jobs that were going away are are are coming back. 278 00:12:57,920 --> 00:12:59,880 Speaker 1: So that's an example where there's sort of a kind 279 00:12:59,880 --> 00:13:03,320 Speaker 1: of surprises emerged. But I think the real opportunity is 280 00:13:03,559 --> 00:13:05,600 Speaker 1: in this third wave is to figure out where things 281 00:13:05,600 --> 00:13:08,520 Speaker 1: are going and figure out what partnerships are necessary to 282 00:13:09,000 --> 00:13:11,839 Speaker 1: lead the way. I think there's a broader social discussion 283 00:13:11,840 --> 00:13:15,320 Speaker 1: around artificial intelligence and robotics and driverless cars, and how 284 00:13:15,320 --> 00:13:17,040 Speaker 1: do you deal with the fact that a lot of 285 00:13:17,120 --> 00:13:18,960 Speaker 1: jobs will be displaced. A lot of jobs will be 286 00:13:19,000 --> 00:13:21,000 Speaker 1: lost because of those innovations. I think the only way 287 00:13:21,040 --> 00:13:22,800 Speaker 1: to deal with that is to try to make sure 288 00:13:22,840 --> 00:13:26,240 Speaker 1: you're offsetting that by backing entrepreneurs in these emerging Rise 289 00:13:26,280 --> 00:13:29,000 Speaker 1: of the rest cities. So it's not just about job destruction, 290 00:13:29,040 --> 00:13:31,480 Speaker 1: it's also about job creation. Startups are the big job creator. 291 00:13:31,520 --> 00:13:33,880 Speaker 1: We just can't just focus on backing the startups in 292 00:13:33,920 --> 00:13:36,600 Speaker 1: place like Silicon Valley and not in places like Detroit. 293 00:13:37,000 --> 00:13:38,880 Speaker 1: As it's like to be a founder of a big 294 00:13:38,920 --> 00:13:40,640 Speaker 1: We had Tim Armstrong here a couple of weeks back, 295 00:13:40,679 --> 00:13:42,959 Speaker 1: and there was a rebranding and talking about oath and 296 00:13:43,000 --> 00:13:44,760 Speaker 1: all of all of that stuff. But when when you 297 00:13:44,760 --> 00:13:47,280 Speaker 1: when you found a company, how far out are you looking? 298 00:13:47,640 --> 00:13:49,440 Speaker 1: Could you have envisioned what a o L is today? 299 00:13:49,480 --> 00:13:52,680 Speaker 1: How many iterations it's been through, where it's headed now? 300 00:13:52,679 --> 00:13:54,600 Speaker 1: How How forward looking are you when you're starting a 301 00:13:54,640 --> 00:13:57,079 Speaker 1: company like well, you have to be pretty forward looking. 302 00:13:57,120 --> 00:13:59,400 Speaker 1: And again, when we when we started at thirty two 303 00:13:59,520 --> 00:14:02,199 Speaker 1: years ago, it was early days. Only three percent of 304 00:14:02,240 --> 00:14:03,920 Speaker 1: people were online at all at the time, and they're 305 00:14:03,920 --> 00:14:06,079 Speaker 1: only online about an hour a week. And so when 306 00:14:06,080 --> 00:14:07,959 Speaker 1: we said we wanted to get America online, get the 307 00:14:08,000 --> 00:14:09,720 Speaker 1: world online, we knew it was gonna be a tough task. 308 00:14:09,720 --> 00:14:11,559 Speaker 1: But the surprise to me, frankly, it was it took 309 00:14:11,640 --> 00:14:13,280 Speaker 1: longer to get going than I thought. It was really 310 00:14:13,280 --> 00:14:16,679 Speaker 1: a decade before we finally It was just just it 311 00:14:16,720 --> 00:14:19,080 Speaker 1: struck me as an obvious idea, but the reality is 312 00:14:19,160 --> 00:14:21,520 Speaker 1: most people didn't think it was something most people wanted 313 00:14:21,560 --> 00:14:24,280 Speaker 1: to bother with, So I just took a long, long 314 00:14:24,400 --> 00:14:27,000 Speaker 1: term view. I think the challenge is to have that vision, 315 00:14:27,080 --> 00:14:29,520 Speaker 1: have that that focus on long term, but couple that 316 00:14:29,600 --> 00:14:32,360 Speaker 1: with with execution, and that Thomas Edison said, this is 317 00:14:32,400 --> 00:14:35,360 Speaker 1: inentrigo vision without execution as hallucinations. And how you strike 318 00:14:35,440 --> 00:14:38,160 Speaker 1: the balance between having the big idea, having a big vision, 319 00:14:38,640 --> 00:14:41,560 Speaker 1: but also executing and having the patience and perseverance I 320 00:14:41,600 --> 00:14:43,400 Speaker 1: think will become more important again in the third way. 321 00:14:43,440 --> 00:14:47,280 Speaker 1: The second way, there are a lot of overnight successive snapchat, facebooks, cetera. Uh, 322 00:14:47,280 --> 00:14:48,640 Speaker 1: and the third wave it's gonna be more like the 323 00:14:48,640 --> 00:14:50,680 Speaker 1: first wave. It's going to take more like ten years 324 00:14:50,680 --> 00:14:52,680 Speaker 1: in the making before you had that overnight six let 325 00:14:52,680 --> 00:14:54,680 Speaker 1: me ask the question. And I'm doing this folks. I 326 00:14:54,720 --> 00:14:57,600 Speaker 1: got my iPhone out of my fancy brown case. He's 327 00:14:57,640 --> 00:15:00,400 Speaker 1: got his iPhone out and his tasteful black case. You 328 00:15:00,480 --> 00:15:03,840 Speaker 1: got your iPad? On page two forty two of the 329 00:15:03,960 --> 00:15:07,760 Speaker 1: Third Wave? What's your advice? For the third wave of 330 00:15:07,800 --> 00:15:11,400 Speaker 1: the manufacturing shop known as Apple Computer? What do they 331 00:15:11,440 --> 00:15:13,080 Speaker 1: do well? I think they're doing a great job. Did 332 00:15:13,080 --> 00:15:16,040 Speaker 1: you have a Lisa? I did not own one. I 333 00:15:16,040 --> 00:15:18,040 Speaker 1: certainly saw it when it got launched and was and 334 00:15:18,120 --> 00:15:23,040 Speaker 1: then you saw that was the dog it was. It 335 00:15:23,080 --> 00:15:26,880 Speaker 1: was the sort of an enterprise office of computer based 336 00:15:26,880 --> 00:15:29,280 Speaker 1: on some of the Xerox parktect How do they avoid 337 00:15:29,360 --> 00:15:31,680 Speaker 1: a Lisa? What's your What's your advice? And they have 338 00:15:31,800 --> 00:15:33,720 Speaker 1: You have to keep pushing, you have to keep trying 339 00:15:33,720 --> 00:15:35,920 Speaker 1: you can, and they have to open up some new markets. 340 00:15:35,960 --> 00:15:39,040 Speaker 1: I've said for some time that Apple, even though their 341 00:15:39,040 --> 00:15:42,040 Speaker 1: focus has been on sort of horizontal markets, has to 342 00:15:42,080 --> 00:15:44,400 Speaker 1: start focusing on some vertical mark healthcare being one. I 343 00:15:44,440 --> 00:15:46,840 Speaker 1: saw just over the weekend that there's some rumors that 344 00:15:46,840 --> 00:15:49,960 Speaker 1: they're working on some technologies around diabetes, other kind of things. 345 00:15:49,960 --> 00:15:52,440 Speaker 1: I think figure out how they take the expertise they 346 00:15:52,480 --> 00:15:56,080 Speaker 1: have around interface and simplicity and and and accessibility and 347 00:15:56,120 --> 00:15:58,520 Speaker 1: apply that to other other sectors. So I think it's 348 00:15:58,560 --> 00:16:01,200 Speaker 1: not just about the horizontal heating platforms, whether it be 349 00:16:01,280 --> 00:16:05,200 Speaker 1: a phone or iPad or computers themselves, about how you 350 00:16:05,240 --> 00:16:08,520 Speaker 1: take that expertise into more vertical markets like like health care. 351 00:16:08,520 --> 00:16:10,840 Speaker 1: It's one sixth of our economy. Everybody agrees it's broken. 352 00:16:11,360 --> 00:16:14,240 Speaker 1: Innovation is necessary. Company like Apple could be a great innovator. 353 00:16:14,280 --> 00:16:15,800 Speaker 1: There is that the rich You've mentioned healthy here a 354 00:16:15,840 --> 00:16:17,520 Speaker 1: few times. That is that the richest vein now for 355 00:16:17,520 --> 00:16:19,400 Speaker 1: for innovation to use. I think so just because it 356 00:16:19,520 --> 00:16:21,240 Speaker 1: is such a big part of the economy and it's 357 00:16:21,280 --> 00:16:23,640 Speaker 1: so broken, and there are clearly a ways to use 358 00:16:23,680 --> 00:16:27,520 Speaker 1: technology to make you care more convenient uh and or accessible, 359 00:16:27,560 --> 00:16:31,080 Speaker 1: more more affordable, and more personalized. That this one scary 360 00:16:31,080 --> 00:16:33,280 Speaker 1: thing I talked about in the book is MD Anderson, 361 00:16:33,280 --> 00:16:35,720 Speaker 1: one of the great cancer hospitals. When people come there 362 00:16:35,760 --> 00:16:37,920 Speaker 1: for second opinions, twenty five percent of the time they 363 00:16:37,960 --> 00:16:42,600 Speaker 1: reverse the first opinion. That a lot of people go, yeah. 364 00:16:42,600 --> 00:16:45,040 Speaker 1: But now some of it's because there's some regional hospital 365 00:16:45,040 --> 00:16:47,280 Speaker 1: that doesn't have the expertise in that. But some of 366 00:16:47,280 --> 00:16:50,040 Speaker 1: it's because that the technology hasn't been embraced to really 367 00:16:50,280 --> 00:16:54,160 Speaker 1: be much more specific around pathways and identifying what the 368 00:16:54,200 --> 00:16:56,920 Speaker 1: problem is there for, what the diagnosis, what the what 369 00:16:57,040 --> 00:16:59,760 Speaker 1: the solution, the therapy should be. So clearly there's a 370 00:16:59,840 --> 00:17:01,720 Speaker 1: role for technology to play. The same time, one of 371 00:17:01,720 --> 00:17:04,359 Speaker 1: the key lessons I talk about is that it's not 372 00:17:04,440 --> 00:17:06,680 Speaker 1: just about the technology, is not just about the software. 373 00:17:06,680 --> 00:17:08,520 Speaker 1: It's got to be people. It's got to be culture, 374 00:17:08,520 --> 00:17:10,919 Speaker 1: and that, you know, the revolution healthcare will be getting 375 00:17:10,960 --> 00:17:14,080 Speaker 1: doctors and hospitals to think differently. The revolution education will 376 00:17:14,080 --> 00:17:16,399 Speaker 1: be getting you know, teachers and professors to think differently, 377 00:17:16,440 --> 00:17:18,320 Speaker 1: not just getting the engineers to write I got I 378 00:17:18,359 --> 00:17:21,240 Speaker 1: got forty seconds left? Is all on Steve Case in 379 00:17:21,359 --> 00:17:24,400 Speaker 1: third wave? How do you manage your email? It's your fault? 380 00:17:25,160 --> 00:17:27,840 Speaker 1: How I must have met? There are mornings I wake 381 00:17:27,920 --> 00:17:30,840 Speaker 1: up and say, this is a stupid ideas. Who got 382 00:17:30,880 --> 00:17:34,240 Speaker 1: this thing started? Now? I I have multiple accounts for starters, 383 00:17:34,480 --> 00:17:37,760 Speaker 1: multiple accounts. I've been stealing newsletters things like that. I 384 00:17:38,080 --> 00:17:40,280 Speaker 1: have go to one I want to account. Uh, And 385 00:17:40,320 --> 00:17:42,600 Speaker 1: so it's one way to kind of, you know, when 386 00:17:42,600 --> 00:17:44,239 Speaker 1: I have time in today, I'll kind of look at 387 00:17:44,280 --> 00:17:46,720 Speaker 1: that and I also just try to afford to other 388 00:17:46,760 --> 00:17:49,280 Speaker 1: people that somebody else kind of deal with it with much. 389 00:17:50,440 --> 00:17:54,800 Speaker 1: But it's a great it's a great resource, but sometimes 390 00:17:54,800 --> 00:17:57,520 Speaker 1: it can be a source of frustration for all of us. 391 00:17:57,640 --> 00:18:02,919 Speaker 1: It's your fault, So hush. It is a fabulous book, folks, 392 00:18:02,920 --> 00:18:05,000 Speaker 1: with a new epilogue that really brings it up to 393 00:18:05,119 --> 00:18:07,800 Speaker 1: date with all that's going on in Washington. The Third 394 00:18:07,840 --> 00:18:12,119 Speaker 1: Wave Steve Case and Entrepreneur's Vision. I'll change the title 395 00:18:12,200 --> 00:18:14,359 Speaker 1: of what to Do with this Nation? Steve Case. The 396 00:18:14,440 --> 00:18:26,159 Speaker 1: Third Wave, very important effort brought you by Bank of 397 00:18:26,200 --> 00:18:30,240 Speaker 1: America Mary Lynch, dedicated to bringing our clients insights and 398 00:18:30,320 --> 00:18:34,480 Speaker 1: solutions to meet the challenges of a transforming world. That's 399 00:18:34,520 --> 00:18:39,760 Speaker 1: the power of global connections, Mary Lynch. Pierce Federan Smith Incorporated, 400 00:18:39,920 --> 00:18:47,520 Speaker 1: Member s i PC, joining us now from the Union 401 00:18:47,520 --> 00:18:52,480 Speaker 1: Bank of Switzerland. He's run six marathons, Julian Emmanuel, you've 402 00:18:52,560 --> 00:18:55,520 Speaker 1: run six marathons? Are you one of those slugs that 403 00:18:55,600 --> 00:18:58,800 Speaker 1: comes in at five pm staggering away? Tell me how 404 00:18:58,840 --> 00:19:02,160 Speaker 1: you do this? Back of the packers they get uh, 405 00:19:02,200 --> 00:19:06,679 Speaker 1: you know, basically it is all preparation and psychology. You 406 00:19:06,760 --> 00:19:08,840 Speaker 1: get in there, you decide you're gonna do it. You 407 00:19:08,880 --> 00:19:12,280 Speaker 1: put in your miles before the event, and you do it, 408 00:19:12,400 --> 00:19:14,600 Speaker 1: and then the pain comes and you keep going. How 409 00:19:14,640 --> 00:19:18,560 Speaker 1: do your ankles hold up? O wise one, These ankles 410 00:19:18,600 --> 00:19:22,960 Speaker 1: need plenty of support. It's it's a challenge. Uh, you know, 411 00:19:23,119 --> 00:19:25,320 Speaker 1: there's a lot of pain, but it's just it's a 412 00:19:25,359 --> 00:19:29,080 Speaker 1: great experience. Going across the Arizona Bridge must be just extraordinary. Well, 413 00:19:29,080 --> 00:19:31,159 Speaker 1: the first time I did it, and the field the 414 00:19:31,240 --> 00:19:34,879 Speaker 1: bridge actually sway. It was it was a little it 415 00:19:35,000 --> 00:19:37,320 Speaker 1: was a little bit unsettling, but you get you said, okay, 416 00:19:37,320 --> 00:19:42,200 Speaker 1: we're sixteen Washington Street, sways up in Boston as well, 417 00:19:42,480 --> 00:19:44,480 Speaker 1: Julian Emmanuel with us with U B. S as we 418 00:19:44,560 --> 00:19:47,520 Speaker 1: talked to Marathon and on this special Monday for New 419 00:19:47,520 --> 00:19:51,760 Speaker 1: England and really a special market as well. When you 420 00:19:51,840 --> 00:19:56,600 Speaker 1: construct your research notes, now, seriously, do you could you 421 00:19:56,640 --> 00:20:01,480 Speaker 1: construct them around a gauze of a rash exuberance or 422 00:20:01,560 --> 00:20:05,280 Speaker 1: is there a sanity to where these equity valuations are well, 423 00:20:05,480 --> 00:20:09,119 Speaker 1: so when you think about investing, you basically put forth 424 00:20:09,160 --> 00:20:12,480 Speaker 1: a thesis and then you wait for it to develop. Obviously, 425 00:20:12,520 --> 00:20:15,879 Speaker 1: if it develops, you perhaps increase your exposure to the 426 00:20:15,880 --> 00:20:18,080 Speaker 1: thesis and if it doesn't, you peel it back a 427 00:20:18,119 --> 00:20:22,639 Speaker 1: little bit. Investors after the election took on the thesis 428 00:20:22,680 --> 00:20:25,680 Speaker 1: that the economy was going to grow stronger than had 429 00:20:25,720 --> 00:20:28,120 Speaker 1: been the case for the last many years, and that's 430 00:20:28,160 --> 00:20:32,480 Speaker 1: what engendered the confidence. So the confidence readings seem very high. 431 00:20:32,640 --> 00:20:36,640 Speaker 1: You might use the irrational zuberance simply because we haven't 432 00:20:36,680 --> 00:20:41,760 Speaker 1: seen the confirmation either through the economy itself or through policy. However, 433 00:20:42,320 --> 00:20:47,480 Speaker 1: the pent up investment psychology of getting rid of zero 434 00:20:47,560 --> 00:20:50,800 Speaker 1: interest rates really has a long way to go, and 435 00:20:50,840 --> 00:20:53,359 Speaker 1: we think that this thesis is going to have to 436 00:20:53,400 --> 00:20:56,000 Speaker 1: play out over a number of quarters. It isn't just 437 00:20:56,119 --> 00:20:59,240 Speaker 1: the first hundred days. Um, So you know, it's it's 438 00:20:59,240 --> 00:21:01,680 Speaker 1: really a wait and see mode for markets right now. 439 00:21:01,920 --> 00:21:04,040 Speaker 1: So you give me a sense of your optimism for 440 00:21:04,200 --> 00:21:07,280 Speaker 1: something getting done in Washington. You're reevaluating the timetable here 441 00:21:07,400 --> 00:21:10,440 Speaker 1: or we have a pessimistic are you? I guess we've 442 00:21:10,440 --> 00:21:14,600 Speaker 1: been We've been realistic all along and and and basically, 443 00:21:15,200 --> 00:21:19,240 Speaker 1: you know, the world never repeats itself. But the simple 444 00:21:19,320 --> 00:21:21,960 Speaker 1: fact is is that Ronald Reagan came to office in 445 00:21:22,040 --> 00:21:27,080 Speaker 1: night doubtless intending to do tax reform straight away, and 446 00:21:27,160 --> 00:21:30,760 Speaker 1: he did it, but not until nine six. So you know, 447 00:21:30,920 --> 00:21:34,359 Speaker 1: given the fact that there are divisions within the Republican Party, 448 00:21:34,800 --> 00:21:37,200 Speaker 1: we need to be patient. We need to let things 449 00:21:37,240 --> 00:21:41,840 Speaker 1: play out. And obviously, well what do you do? I mean, okay, 450 00:21:41,880 --> 00:21:43,560 Speaker 1: that's great, and I get the idea I need to 451 00:21:43,600 --> 00:21:45,960 Speaker 1: be patient, But am I going to be patient and 452 00:21:46,080 --> 00:21:48,479 Speaker 1: enjoy a correction or a true bear market on the 453 00:21:48,520 --> 00:21:52,560 Speaker 1: way to being patient? I mean what I learned? And David, 454 00:21:52,560 --> 00:21:53,840 Speaker 1: I was away for a week. I don't know if 455 00:21:53,840 --> 00:21:58,840 Speaker 1: you noticed. People are baffled. People are baffled about like 456 00:21:59,000 --> 00:22:01,840 Speaker 1: what to do. They're not getting a lot of what 457 00:22:02,000 --> 00:22:05,880 Speaker 1: to do. What is your prescription? Now? Given where valuations 458 00:22:05,920 --> 00:22:08,719 Speaker 1: are so so very often, the best thing to do 459 00:22:08,800 --> 00:22:11,240 Speaker 1: in investing, and I think it's it's a lot more 460 00:22:11,280 --> 00:22:14,040 Speaker 1: of the time than people actually give it credit to 461 00:22:14,320 --> 00:22:17,680 Speaker 1: is to do nothing. Okay, So in our view, you're 462 00:22:17,800 --> 00:22:21,040 Speaker 1: likely started a correction in the beginning of March. The 463 00:22:21,119 --> 00:22:24,760 Speaker 1: market's gone sort of sideways as opposed to selling off 464 00:22:24,800 --> 00:22:28,320 Speaker 1: more vigorously. We think that if the macro breaks a 465 00:22:28,359 --> 00:22:30,359 Speaker 1: certain way over the next several weeks, and there are 466 00:22:30,400 --> 00:22:33,680 Speaker 1: a lot of events coming up, including the potential closure 467 00:22:33,680 --> 00:22:36,680 Speaker 1: of the government on April, the market pulls back more, 468 00:22:37,040 --> 00:22:39,760 Speaker 1: and that's the sort of situation where you need to 469 00:22:39,800 --> 00:22:42,520 Speaker 1: be prepared to buy very quickly. This happened to be 470 00:22:42,560 --> 00:22:44,880 Speaker 1: the you know, David, do you have women at your 471 00:22:44,880 --> 00:22:47,800 Speaker 1: house that they go to drug stores and just acquire stuff? 472 00:22:48,760 --> 00:22:54,760 Speaker 1: You know, the occasion. So today, looking down, it's something 473 00:22:54,800 --> 00:22:57,439 Speaker 1: from a famous toothpaste company, Like, why the hell did 474 00:22:57,480 --> 00:23:00,679 Speaker 1: we buy this? That toothpaste company? Is trade to get 475 00:23:00,720 --> 00:23:05,040 Speaker 1: a blended twenty seven times earnings pe ratio. Which budget 476 00:23:05,080 --> 00:23:10,240 Speaker 1: is the price or the earnings? Uh, the price budget 477 00:23:10,280 --> 00:23:13,240 Speaker 1: is in the near ternament our view. And that's why 478 00:23:13,359 --> 00:23:15,560 Speaker 1: when we look at the consumer sector and when we 479 00:23:15,600 --> 00:23:18,040 Speaker 1: look at the market as a whole, you've got to 480 00:23:18,119 --> 00:23:21,960 Speaker 1: be selective at these valuations. And and where there is 481 00:23:22,080 --> 00:23:27,680 Speaker 1: value right now is technology, healthcare and financials. We still 482 00:23:27,720 --> 00:23:30,440 Speaker 1: like the financial story, despite the fact that the yield 483 00:23:30,440 --> 00:23:32,760 Speaker 1: curve flattening over the last Do you see share by 484 00:23:32,760 --> 00:23:36,200 Speaker 1: back and dividend growth just continuing as a blended concept. Well, 485 00:23:36,280 --> 00:23:39,120 Speaker 1: it's it's it's been a part of this entire bowl market. 486 00:23:39,119 --> 00:23:43,120 Speaker 1: We continue to see it. And and look, if there's repatriation, 487 00:23:43,240 --> 00:23:44,960 Speaker 1: you're certainly going to see a lot more of it. 488 00:23:45,000 --> 00:23:47,000 Speaker 1: I'm gonna give you the highest marks for staying in 489 00:23:47,000 --> 00:23:49,280 Speaker 1: this market. We've gotta go to cash. The world's going 490 00:23:49,359 --> 00:23:52,879 Speaker 1: to die as we know it. And UBS has had 491 00:23:52,880 --> 00:23:54,399 Speaker 1: the courage saying, no, you've got to be in this 492 00:23:54,480 --> 00:23:58,080 Speaker 1: market and uh and participate. We do that. At twenty 493 00:23:58,119 --> 00:24:01,119 Speaker 1: tho four fifty three, we're rocky in equities with Julian 494 00:24:01,119 --> 00:24:05,160 Speaker 1: Emmanuel of UBS, a serious discussion about valuations right now. 495 00:24:05,160 --> 00:24:07,679 Speaker 1: One of the themes through all the surveillance this morning, Julian, 496 00:24:08,119 --> 00:24:10,360 Speaker 1: has been the lack of volatility. The VIX has gone 497 00:24:10,359 --> 00:24:14,120 Speaker 1: from twelve to sixteen. Is that a normal vix right now? 498 00:24:14,160 --> 00:24:18,000 Speaker 1: To see it the historical normals twenty? Ugly'st forty. We're 499 00:24:18,000 --> 00:24:20,960 Speaker 1: not ugly. We're actually pretty complacent. But it's a sixteen 500 00:24:21,000 --> 00:24:24,320 Speaker 1: of sixteen on the vix. No, it's not at all. 501 00:24:24,520 --> 00:24:28,320 Speaker 1: Uh well because again going back to post election, people 502 00:24:28,800 --> 00:24:31,440 Speaker 1: played their thesis. They they got positioned the way they 503 00:24:31,440 --> 00:24:34,520 Speaker 1: wanted and now they're waiting um. And in fact, if 504 00:24:34,520 --> 00:24:37,679 Speaker 1: you look at the flows year to date, the public 505 00:24:37,800 --> 00:24:41,359 Speaker 1: really has been the incremental buyer. But another thing has happened. 506 00:24:41,520 --> 00:24:45,560 Speaker 1: Stocks don't move uh similarly to each other on a 507 00:24:45,640 --> 00:24:48,000 Speaker 1: day to day day basis the way they did, and 508 00:24:48,040 --> 00:24:51,720 Speaker 1: this lack of correlation is also driving volatility lower. But 509 00:24:51,880 --> 00:24:54,160 Speaker 1: net net, when you look at the risks, the VIX 510 00:24:54,280 --> 00:24:56,399 Speaker 1: should be higher, and we think it does go higher. 511 00:24:56,960 --> 00:24:59,960 Speaker 1: It's earning season. Now we had some financial supporting last 512 00:25:00,080 --> 00:25:03,479 Speaker 1: a couple more later this week is a theme shaping 513 00:25:03,560 --> 00:25:06,280 Speaker 1: up to the to the quarter earning season. Yeah, well, 514 00:25:06,320 --> 00:25:10,600 Speaker 1: we think that basically because you're at the valuation paradigms 515 00:25:10,640 --> 00:25:13,600 Speaker 1: that that you're at UM that not only are you 516 00:25:13,680 --> 00:25:15,800 Speaker 1: going to have to report good earnings, you're going to 517 00:25:15,880 --> 00:25:18,919 Speaker 1: have to beat the number UM, which most companies do 518 00:25:19,040 --> 00:25:21,320 Speaker 1: quarter in, quarter out, but that number is going to 519 00:25:21,440 --> 00:25:24,080 Speaker 1: have to be good to begin with, and you're going 520 00:25:24,119 --> 00:25:27,320 Speaker 1: to have to be a reasonably valued company because there's 521 00:25:27,359 --> 00:25:31,760 Speaker 1: just at almost twenty times trailer earnings across the broad market. 522 00:25:32,000 --> 00:25:36,520 Speaker 1: There's less room for error given this macro overhang. Let's 523 00:25:36,520 --> 00:25:39,080 Speaker 1: talk about that macro overhang. There there is so much happening. 524 00:25:39,119 --> 00:25:41,920 Speaker 1: How do you separate out the real risks from those 525 00:25:41,920 --> 00:25:47,240 Speaker 1: that are distractions? Uh, it's it's definitely challenged, there's no 526 00:25:47,480 --> 00:25:50,040 Speaker 1: question about it. And and we're seeing things that we 527 00:25:50,119 --> 00:25:55,640 Speaker 1: haven't seen before. UM, particularly you know, unfolding in geopolitical 528 00:25:55,680 --> 00:26:00,840 Speaker 1: theaters across the world, and frankly, you're in a situation 529 00:26:01,080 --> 00:26:04,840 Speaker 1: where events could go in any number of directions. And 530 00:26:04,880 --> 00:26:08,080 Speaker 1: so for us again, uh, you're seeing the vix actually 531 00:26:08,080 --> 00:26:10,399 Speaker 1: start to pick up the last week or two in 532 00:26:10,520 --> 00:26:14,159 Speaker 1: recognition of that fact, even as people don't make the 533 00:26:14,200 --> 00:26:17,840 Speaker 1: stock market itself more volatile. But there's definitely hedgen going on, 534 00:26:18,080 --> 00:26:19,680 Speaker 1: so you have to be mindful of that. Is there 535 00:26:19,720 --> 00:26:22,680 Speaker 1: the impulse to hunker down and look purely at fundamentals 536 00:26:22,760 --> 00:26:24,880 Speaker 1: or is that something you'd caution against it At this point, 537 00:26:26,240 --> 00:26:28,879 Speaker 1: I think this is a very rare time. We haven't 538 00:26:28,920 --> 00:26:31,400 Speaker 1: seen it that often over the course of the last 539 00:26:31,480 --> 00:26:36,040 Speaker 1: thirty or forty years. Politics really does move the fundamentals. 540 00:26:36,280 --> 00:26:39,040 Speaker 1: And if you you look it back at politics moving 541 00:26:39,040 --> 00:26:42,920 Speaker 1: the confidence numbers higher, We've seen times throughout history where 542 00:26:42,960 --> 00:26:47,080 Speaker 1: confidence actually causes the economy and a self fulfilling prophecy 543 00:26:47,160 --> 00:26:49,960 Speaker 1: to strengthen. We haven't seen that yet. We're not sure 544 00:26:49,960 --> 00:26:53,080 Speaker 1: it's going to happen, but we do expect incremental strength 545 00:26:53,200 --> 00:26:55,800 Speaker 1: to this debate on the soft data versus hard data, 546 00:26:55,800 --> 00:26:58,040 Speaker 1: and what the soft data you're saying you're not seeing it. 547 00:26:58,119 --> 00:27:00,040 Speaker 1: You're you're not seeing the leading value of the this 548 00:27:00,119 --> 00:27:02,760 Speaker 1: off date at this point, it's not there yet. You're 549 00:27:02,760 --> 00:27:05,840 Speaker 1: a hard day to gug. We we like to see 550 00:27:05,880 --> 00:27:08,240 Speaker 1: the facts and and the facts are that the first 551 00:27:08,280 --> 00:27:11,080 Speaker 1: quarter was was quite weak. But on the other hand, 552 00:27:11,240 --> 00:27:13,400 Speaker 1: when you look at the FED commentary over the last 553 00:27:13,400 --> 00:27:17,560 Speaker 1: several weeks, the FED doesn't seem to be terribly concerned. Well, 554 00:27:17,760 --> 00:27:19,879 Speaker 1: I mean, I got all sorts of opinions on this. 555 00:27:19,920 --> 00:27:23,600 Speaker 1: Macroeconomic advisors to St. Louis readjust second quarter call to 556 00:27:23,720 --> 00:27:27,879 Speaker 1: three point six percent? How do you gyrate from zero 557 00:27:28,000 --> 00:27:30,400 Speaker 1: point six or zero point eight whatever the number comes 558 00:27:30,400 --> 00:27:33,720 Speaker 1: in out to three point six percent? I mean, when 559 00:27:33,760 --> 00:27:36,359 Speaker 1: does the switch? Have you noticed, David, where the switch 560 00:27:36,400 --> 00:27:38,720 Speaker 1: got turned on? Or you know, it's like one of 561 00:27:38,720 --> 00:27:42,480 Speaker 1: those big theater toggle switches, the sparks go off when 562 00:27:42,480 --> 00:27:47,080 Speaker 1: you turn the lights. Part of the where's the toggle switch? 563 00:27:47,400 --> 00:27:50,360 Speaker 1: Part of it is is is the difficulty in measuring 564 00:27:50,480 --> 00:27:54,119 Speaker 1: g d P um And a former colleague of ours 565 00:27:54,280 --> 00:27:57,600 Speaker 1: really made the point that GDP is a very noisy 566 00:27:57,640 --> 00:28:00,200 Speaker 1: indicator and that if you want to get a good 567 00:28:00,200 --> 00:28:03,560 Speaker 1: look at how the economy is moving in a more 568 00:28:03,640 --> 00:28:06,800 Speaker 1: clean basis, there are three things to look at. Bank lending, 569 00:28:06,880 --> 00:28:10,399 Speaker 1: which has been weak as of late, uh I, s 570 00:28:10,600 --> 00:28:13,320 Speaker 1: M S, which really is you know, is something that's 571 00:28:13,320 --> 00:28:16,240 Speaker 1: been quite strong, Yes or no? Our conditions going to 572 00:28:16,240 --> 00:28:21,080 Speaker 1: get that hard data that that's that's hard data HARDA. Yes, 573 00:28:21,160 --> 00:28:23,280 Speaker 1: we we consider that to be hard day, even though 574 00:28:23,320 --> 00:28:26,040 Speaker 1: there's an opinion aspect, but it tells you what the 575 00:28:26,160 --> 00:28:28,680 Speaker 1: people on the ground are seeing. And the last piece 576 00:28:28,680 --> 00:28:31,520 Speaker 1: of hard data that's very important is the weekly job 577 00:28:33,080 --> 00:28:35,440 Speaker 1: hard The hard data right now is the Yankees are 578 00:28:35,520 --> 00:28:38,920 Speaker 1: killing it, killing it in April. That's the hard data. 579 00:28:39,000 --> 00:28:41,720 Speaker 1: I'm a Mets fan, Tom, The Yankees are killing it. 580 00:28:41,840 --> 00:28:44,120 Speaker 1: They no one expected. Come on, no one expected the 581 00:28:44,200 --> 00:28:46,520 Speaker 1: Yankees are killed. I mean Michael Barr helped me here. 582 00:28:46,560 --> 00:28:49,320 Speaker 1: The Yankees are you kidding me? They want seven in 583 00:28:49,360 --> 00:28:53,000 Speaker 1: a row in April. That's hard data. Meanwhile, Tiger fans 584 00:28:53,040 --> 00:28:57,360 Speaker 1: over here, Miggy's hurt. It's a mess. No one cares 585 00:28:57,360 --> 00:28:59,960 Speaker 1: about the Tigers. Someone get a memo to Michael Barton. 586 00:29:00,000 --> 00:29:02,920 Speaker 1: No one cares at all about the Detroit Good morning, Detroit. 587 00:29:03,000 --> 00:29:05,920 Speaker 1: Glad you're listening on Serious Sex Empt Channel one night. 588 00:29:06,120 --> 00:29:09,080 Speaker 1: Julian Emmanuel, thank you so much. You know full. You know, 589 00:29:09,120 --> 00:29:11,240 Speaker 1: not that I would editorialize, but I'm in the Julian 590 00:29:11,240 --> 00:29:14,440 Speaker 1: Emmanuel camp on hard I'm like, when did the Vogue? 591 00:29:15,160 --> 00:29:18,840 Speaker 1: Where did I ever read about soft data? Hard data? No? 592 00:29:19,120 --> 00:29:23,040 Speaker 1: Let mean, come on, it's it's the function of the times. 593 00:29:23,200 --> 00:29:27,720 Speaker 1: Things are more difficult to measure the Internet. Julian Emmanuel 594 00:29:27,720 --> 00:29:42,280 Speaker 1: with Hubius, thank you so much. They're now joining us 595 00:29:42,720 --> 00:29:45,400 Speaker 1: at studying at the University of Maine. He went to 596 00:29:45,840 --> 00:29:48,520 Speaker 1: Delaware and then to San Francisco to lose his main accent. 597 00:29:48,600 --> 00:29:52,280 Speaker 1: Michael Mayo independent bank Analysts, one of the few that 598 00:29:52,400 --> 00:29:55,680 Speaker 1: we have on I want to go back to governor incident. 599 00:29:55,680 --> 00:29:57,800 Speaker 1: Of course, you made a real splash the Bank of America. 600 00:29:57,880 --> 00:30:01,040 Speaker 1: While back thinking about the Minutia, you have a jaw 601 00:30:01,160 --> 00:30:04,960 Speaker 1: dropping fact Toyd in the Michael Mayo research, and that 602 00:30:05,160 --> 00:30:09,520 Speaker 1: is City Group has a peer group different than the 603 00:30:09,600 --> 00:30:14,040 Speaker 1: other major banks. A guy like me was thunderstruck by that. 604 00:30:14,160 --> 00:30:17,320 Speaker 1: I mean, we compare them, and they compare them to 605 00:30:17,360 --> 00:30:21,320 Speaker 1: the same banks, and yet City Group, is this true, 606 00:30:21,880 --> 00:30:26,360 Speaker 1: compares itself to the European banks. Am I right? Let 607 00:30:26,400 --> 00:30:29,360 Speaker 1: let's take a step back here, so um, you know, 608 00:30:29,440 --> 00:30:32,080 Speaker 1: I focus a lot on governance as you mentioned, and 609 00:30:32,080 --> 00:30:34,760 Speaker 1: when you look at the large US banks, banks have 610 00:30:34,840 --> 00:30:38,200 Speaker 1: been hardwired for safety, they have not been hardwired for 611 00:30:38,240 --> 00:30:41,160 Speaker 1: better governance. To Regulators did their job, they did it 612 00:30:41,200 --> 00:30:44,840 Speaker 1: well to make sure banks are safe, but investors need 613 00:30:44,920 --> 00:30:47,600 Speaker 1: to make sure that banks have proper governance. So that 614 00:30:47,640 --> 00:30:50,800 Speaker 1: brings up City Group and City Groups annual meeting is 615 00:30:50,840 --> 00:30:53,640 Speaker 1: a week from tomorrow. I'm going to the meeting. It's 616 00:30:53,680 --> 00:30:56,320 Speaker 1: that in the East Village of New York City at 617 00:30:56,320 --> 00:30:59,440 Speaker 1: the Cooper Union, and I have ten questions that I 618 00:30:59,480 --> 00:31:01,600 Speaker 1: intend to but you're up in the cheap seats under 619 00:31:01,600 --> 00:31:04,320 Speaker 1: the dunkin donut sign right. Well, I'll line up early 620 00:31:04,360 --> 00:31:08,760 Speaker 1: to ask my questions that you will. And certainly one 621 00:31:08,880 --> 00:31:11,960 Speaker 1: one question relates to compensation. And the peer group that 622 00:31:12,000 --> 00:31:15,200 Speaker 1: City Group uses for compensation is different than the peer 623 00:31:15,240 --> 00:31:18,760 Speaker 1: group they use for their financial comparisons, and less than 624 00:31:18,800 --> 00:31:21,840 Speaker 1: one and ten companies the United States, you know, uses 625 00:31:21,840 --> 00:31:23,960 Speaker 1: that sort of technique, and City Group is the only 626 00:31:24,040 --> 00:31:27,160 Speaker 1: large bank to do so. So certainly one question is 627 00:31:27,240 --> 00:31:31,480 Speaker 1: on compensation and peer groups. But the more Germaine question 628 00:31:31,760 --> 00:31:34,920 Speaker 1: is why does the CEO letter of City Groups say 629 00:31:34,960 --> 00:31:37,560 Speaker 1: that you know they have so much right? They say 630 00:31:37,600 --> 00:31:40,640 Speaker 1: they're the right model, the right strategy, the right customers, 631 00:31:40,640 --> 00:31:42,720 Speaker 1: the right clients, the right people in the right places. 632 00:31:43,080 --> 00:31:45,560 Speaker 1: But then they still have worsting class returns, worst in 633 00:31:45,640 --> 00:31:49,000 Speaker 1: class stock valuation. They missed their prior targets. They push 634 00:31:49,080 --> 00:31:51,200 Speaker 1: their new targets four years out. So that that's my 635 00:31:51,520 --> 00:31:54,480 Speaker 1: most important Mr Corbett attending one of the Trump the 636 00:31:54,520 --> 00:31:59,560 Speaker 1: President Trump festivities in Washington. Their chairman is someone everybody 637 00:31:59,600 --> 00:32:04,200 Speaker 1: young Blue Bolas respects Mr Michael O'Neill's legendary within the business. 638 00:32:04,520 --> 00:32:08,160 Speaker 1: If any chairman can write a ship I would respectfully 639 00:32:08,200 --> 00:32:11,360 Speaker 1: suggest it's Mr O'Neill. Explain to us what a chairman 640 00:32:11,400 --> 00:32:15,680 Speaker 1: does at a big bank. Well, not every bank has 641 00:32:15,920 --> 00:32:18,920 Speaker 1: the chairman roles separated from the CEO. In the case 642 00:32:19,000 --> 00:32:22,040 Speaker 1: the City Group, though, chairman Mike O'Neill he's you know, 643 00:32:22,040 --> 00:32:24,640 Speaker 1: he's been a rockstar and banking for decades, so he's 644 00:32:24,720 --> 00:32:27,040 Speaker 1: the right guy at the top of the company. You know. 645 00:32:27,120 --> 00:32:31,080 Speaker 1: One question not explicitly asked, though, is is he being 646 00:32:31,080 --> 00:32:33,440 Speaker 1: too soft on management? So the job of a chairman 647 00:32:33,800 --> 00:32:38,280 Speaker 1: is to make sure that um, the board is overseeing 648 00:32:38,280 --> 00:32:41,240 Speaker 1: management properly, to ensure that they have the right strategy 649 00:32:41,520 --> 00:32:45,080 Speaker 1: and ensure that they're being held accountable to executing on 650 00:32:45,160 --> 00:32:49,160 Speaker 1: that strategy. Also, risk control banks is always huge. I 651 00:32:49,200 --> 00:32:51,840 Speaker 1: remember you agitating for more separation of those roles within 652 00:32:51,960 --> 00:32:54,880 Speaker 1: within banks. Is that does that continue to continue to 653 00:32:54,920 --> 00:32:56,600 Speaker 1: push for that? Is? Is it likely to happen at 654 00:32:56,600 --> 00:32:59,160 Speaker 1: other at other banks? Well, one size doesn't fit all. 655 00:32:59,200 --> 00:33:01,840 Speaker 1: Going back to SIT group, I was on your show 656 00:33:01,920 --> 00:33:05,440 Speaker 1: when they had um you know, Dick Parsons of Vicram, 657 00:33:05,480 --> 00:33:07,600 Speaker 1: pad It FOT, I said their names. I didn't like 658 00:33:07,680 --> 00:33:10,480 Speaker 1: that combination. It was separated. On the other hand, you know, 659 00:33:10,560 --> 00:33:14,080 Speaker 1: Jamie Diamond has gotten the job done at JP Morrigan, 660 00:33:14,240 --> 00:33:16,960 Speaker 1: you know, for over a decade now. So I think 661 00:33:17,000 --> 00:33:20,240 Speaker 1: if you execute well, you have double digit returns of 662 00:33:20,480 --> 00:33:24,000 Speaker 1: return on equity, and you're controlling your risk properly, then 663 00:33:24,200 --> 00:33:27,960 Speaker 1: maybe it's okay. But I think it's situational. You mentioned James. 664 00:33:28,160 --> 00:33:30,360 Speaker 1: Let's talk about JP Morgan. They reported last week. Get 665 00:33:30,400 --> 00:33:33,000 Speaker 1: your reaction to to the earnings that we saw from them. 666 00:33:33,040 --> 00:33:35,240 Speaker 1: The respeculation ahead of time here that we wouldn't see 667 00:33:35,720 --> 00:33:38,800 Speaker 1: great growth in in uh the equities trading side of things. 668 00:33:38,840 --> 00:33:42,560 Speaker 1: It seemed like they performed better than expected. Well. JP Morrigan. 669 00:33:42,720 --> 00:33:45,760 Speaker 1: I still consider them the Lebron James of banking. And 670 00:33:45,800 --> 00:33:49,360 Speaker 1: that's because like Lebron James, they have both offense and defense. 671 00:33:49,680 --> 00:33:51,920 Speaker 1: And when it comes to JP Morgan, in the first quarter, 672 00:33:51,960 --> 00:33:56,480 Speaker 1: they certainly had the offense. They had strong capital markets growth, 673 00:33:56,720 --> 00:34:00,960 Speaker 1: that's underwriting and trading and that did really well, and 674 00:34:00,960 --> 00:34:03,800 Speaker 1: they also had some of the best net interest margin improvement. 675 00:34:03,880 --> 00:34:06,200 Speaker 1: Yet on the other hand, the defense side, you know, 676 00:34:06,320 --> 00:34:09,319 Speaker 1: credit costs are still good, but they went up, and 677 00:34:09,360 --> 00:34:11,839 Speaker 1: also their expense control wasn't quite as good. A better 678 00:34:11,880 --> 00:34:14,400 Speaker 1: offense this quarter from Jake Morgan the defense. What size 679 00:34:14,440 --> 00:34:17,000 Speaker 1: of a moon shot was co America for? You don't 680 00:34:17,000 --> 00:34:20,560 Speaker 1: tell me, you said, load the boat a share? Where 681 00:34:20,600 --> 00:34:23,000 Speaker 1: did you get into America and say this is going 682 00:34:23,040 --> 00:34:26,960 Speaker 1: to be a turnaround of turnarounds? Um? Well, you know 683 00:34:27,320 --> 00:34:29,560 Speaker 1: I upgraded America for the first time in over two 684 00:34:29,600 --> 00:34:33,640 Speaker 1: decades the stock almost that was early last year. Um 685 00:34:33,840 --> 00:34:37,680 Speaker 1: and and so that. But the reason Camerica is so 686 00:34:37,760 --> 00:34:41,080 Speaker 1: important to me because it shows when you, you know, 687 00:34:41,120 --> 00:34:44,360 Speaker 1: spend energy on this governance and these oversight issues. You know, 688 00:34:44,400 --> 00:34:47,239 Speaker 1: I went to the America annual meeting, so did ten 689 00:34:47,360 --> 00:34:50,920 Speaker 1: other investors, most of whom stood up and said you 690 00:34:50,960 --> 00:34:53,960 Speaker 1: need to do a better job. One month later, America 691 00:34:54,000 --> 00:34:57,160 Speaker 1: announced restructuring. America was the best performing of the thirty 692 00:34:57,239 --> 00:34:59,960 Speaker 1: largest banks last year. So when someone says you're checking 693 00:35:00,000 --> 00:35:02,319 Speaker 1: a box, you're doing these annual media things for no 694 00:35:02,440 --> 00:35:05,440 Speaker 1: reason wrong, it helps investors. Everybody's we have spent too 695 00:35:05,520 --> 00:35:07,960 Speaker 1: much money in chocolate this weekend. Help me here with 696 00:35:08,120 --> 00:35:11,480 Speaker 1: how where's the next America? We spend all our time, 697 00:35:11,600 --> 00:35:13,520 Speaker 1: David and I are is guilty of this as anybody 698 00:35:13,800 --> 00:35:17,200 Speaker 1: talking about four or five big banks. The Comerica is 699 00:35:17,280 --> 00:35:20,799 Speaker 1: under their those twenty five or thirty regional kind of 700 00:35:20,800 --> 00:35:24,200 Speaker 1: big banks. Where's the next America? Well, my thought is 701 00:35:24,239 --> 00:35:27,440 Speaker 1: there's always under performers. There's always banks in the bottom 702 00:35:27,520 --> 00:35:31,640 Speaker 1: half of the bottom quartile. Those are potentially the next America. 703 00:35:31,800 --> 00:35:34,000 Speaker 1: So you know, as stocks trade from day to day 704 00:35:34,000 --> 00:35:36,200 Speaker 1: and we get the more earnings reports from big banks, 705 00:35:36,200 --> 00:35:38,480 Speaker 1: so you don't have an identified stock you can share 706 00:35:38,480 --> 00:35:41,239 Speaker 1: with us this morning, it's going to be the next America. 707 00:35:41,680 --> 00:35:44,400 Speaker 1: I you know, I can't tell you first, Tom, but 708 00:35:44,440 --> 00:35:46,000 Speaker 1: I can maybe me tell you after I tell a 709 00:35:46,000 --> 00:35:50,960 Speaker 1: few others. You see how we got around there. But 710 00:35:51,120 --> 00:35:52,960 Speaker 1: having said that, let me and you want to stock 711 00:35:53,040 --> 00:35:54,600 Speaker 1: here at least I figured I have to come on 712 00:35:54,640 --> 00:35:57,400 Speaker 1: the show and give you a stock and so you 713 00:35:57,400 --> 00:35:59,279 Speaker 1: know what I do over the weekend. You know, if 714 00:35:59,320 --> 00:36:01,279 Speaker 1: you do this job long enough is you know I 715 00:36:01,320 --> 00:36:07,400 Speaker 1: read annual reports. The marriage is great, folks. You know 716 00:36:08,000 --> 00:36:10,480 Speaker 1: the bar is high for a bank. Yellow staff fun um. 717 00:36:10,880 --> 00:36:14,400 Speaker 1: But I reread Goldman Sacks and report last night, and 718 00:36:14,440 --> 00:36:17,440 Speaker 1: to say one time to pound your chest. Hey, you 719 00:36:17,560 --> 00:36:20,440 Speaker 1: told us to downsize, but we didn't. At least three 720 00:36:20,440 --> 00:36:24,719 Speaker 1: times in the CEO letter of Goldman Sacks they advertised 721 00:36:24,719 --> 00:36:27,480 Speaker 1: the fact that, you know, we're one of the few 722 00:36:27,520 --> 00:36:30,400 Speaker 1: firms that have remained committed to serving clients a lot 723 00:36:30,440 --> 00:36:32,640 Speaker 1: of areas. Then they go, we did not extrapolate the 724 00:36:32,640 --> 00:36:35,680 Speaker 1: bad conditions. And then they in the last section the 725 00:36:35,719 --> 00:36:38,600 Speaker 1: follow up by Lloyd Blank found and the CEO LETTERY goes, 726 00:36:38,760 --> 00:36:41,080 Speaker 1: in the past decade or so, some of our industry 727 00:36:41,120 --> 00:36:44,160 Speaker 1: pulled back from sales and trading businesses, as to say, 728 00:36:44,200 --> 00:36:47,320 Speaker 1: but we didn't. And then they repeat, and then they 729 00:36:47,400 --> 00:36:50,640 Speaker 1: repeat in the report that like the fourth quarterbacklog was 730 00:36:50,680 --> 00:36:52,480 Speaker 1: good to the story of bank earnings. So far as 731 00:36:52,640 --> 00:36:55,319 Speaker 1: Wall Streets doing well, Main Street is not doing well. 732 00:36:55,360 --> 00:36:56,880 Speaker 1: So I want to own a Wall Street bank like 733 00:36:56,920 --> 00:36:59,960 Speaker 1: Goldman Sack before the report earnings tomorrow. Okay, very good. 734 00:37:00,160 --> 00:37:03,440 Speaker 1: I got twenty seconds left. That's all. Does Gary Cone 735 00:37:03,520 --> 00:37:06,120 Speaker 1: working for the Trump Bank down in Washington want to 736 00:37:06,120 --> 00:37:08,800 Speaker 1: get rid of Glass? Uh? We bring back glass Eagle? 737 00:37:09,120 --> 00:37:12,480 Speaker 1: Will that help Mr blankfind? You know what? Look at 738 00:37:12,520 --> 00:37:17,680 Speaker 1: first quarter results? Okay, lending, traditional corporate lending and overall 739 00:37:17,760 --> 00:37:20,160 Speaker 1: learning is the worst in six years. On the other hand, 740 00:37:20,520 --> 00:37:23,279 Speaker 1: debt underwriting, raising, debt and capital markets good. From the 741 00:37:23,320 --> 00:37:27,000 Speaker 1: customer standpoint, Glass de Eagle has been good, evidenced by 742 00:37:27,040 --> 00:37:29,439 Speaker 1: this quarter. Okay, We've run out of time. Never enough 743 00:37:29,480 --> 00:37:32,279 Speaker 1: time with Michael Mayo on the banks as well. He'll 744 00:37:32,320 --> 00:37:34,279 Speaker 1: be at the City. Maybe we'll get him on after 745 00:37:34,360 --> 00:37:44,640 Speaker 1: City banks. See how that goes. Thanks for listening to 746 00:37:44,680 --> 00:37:50,759 Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on iTunes, SoundCloud, 747 00:37:51,160 --> 00:37:55,440 Speaker 1: or whichever podcast platform you prefer. I'm out on Twitter 748 00:37:55,520 --> 00:37:59,320 Speaker 1: at Tom Keene. David Gura is at David Gura. Before 749 00:37:59,320 --> 00:38:03,680 Speaker 1: the podcast, you can always catch us worldwide. I'm Bloomberg Radio, 750 00:38:16,160 --> 00:38:19,680 Speaker 1: brought you by Bank of America Mary Lynch, dedicated to 751 00:38:19,800 --> 00:38:23,680 Speaker 1: bringing our clients insights and solutions to meet the challenges 752 00:38:23,800 --> 00:38:27,520 Speaker 1: of a transforming world. That's the power of global connections. 753 00:38:27,920 --> 00:38:32,440 Speaker 1: Mary Lynch, Pierce, Feeder and Smith Incorporated Member s I 754 00:38:32,600 --> 00:38:32,880 Speaker 1: p C,