1 00:00:00,080 --> 00:00:02,840 Speaker 1: We bring you news and analysis every day on the 2 00:00:02,840 --> 00:00:06,840 Speaker 1: Bloomberg Surveillance Podcast, but now you can get the latest 3 00:00:06,880 --> 00:00:11,639 Speaker 1: news on demand whenever you want. Subscribe to Bloomberg News 4 00:00:11,640 --> 00:00:14,400 Speaker 1: Now to get the latest headlines at the click of 5 00:00:14,440 --> 00:00:18,880 Speaker 1: a button. Get informed on your schedule. You can listen 6 00:00:18,960 --> 00:00:22,720 Speaker 1: and subscribe to Bloomberg News Now on the Bloomberg Business App, 7 00:00:22,760 --> 00:00:27,720 Speaker 1: Bloomberg dot Com plus Apple, Spotify, and anywhere else you 8 00:00:27,800 --> 00:00:35,519 Speaker 1: get your podcasts. Search Bloomberg News Now and subscribe today. 9 00:00:37,720 --> 00:00:40,920 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Lisa A. 10 00:00:40,960 --> 00:00:44,279 Speaker 3: Bramwoids, along with Tom Keane and Jonathan Ferrow. Join us 11 00:00:44,320 --> 00:00:47,920 Speaker 3: each day for insight from the best in economics, geopolitics, 12 00:00:47,960 --> 00:00:49,080 Speaker 3: finance and investment. 13 00:00:49,400 --> 00:00:51,959 Speaker 2: Subscribe to Bloomberg Surveillance on demand. 14 00:00:51,640 --> 00:00:54,880 Speaker 3: On Apple, Spotify and anywhere you get your podcasts, and 15 00:00:54,960 --> 00:00:57,880 Speaker 3: always on Bloomberg dot Com, the Bloomberg Terminal, and the 16 00:00:57,920 --> 00:01:00,880 Speaker 3: Bloomberg Business appich Nolly Boss has been parsing through the 17 00:01:00,960 --> 00:01:03,880 Speaker 3: numbers listening to the call for JP Morgan because she 18 00:01:03,920 --> 00:01:05,720 Speaker 3: can do everything at the same time, and I'm wondering 19 00:01:05,760 --> 00:01:07,960 Speaker 3: if there are any larger takeaways before we dig into 20 00:01:07,959 --> 00:01:10,920 Speaker 3: some of the details from these earnings that we can 21 00:01:11,000 --> 00:01:13,560 Speaker 3: kind of draw a conclusion on with respect to the banks. 22 00:01:13,640 --> 00:01:15,480 Speaker 4: Yeah, there's one thing that JP Morgan says that I 23 00:01:15,480 --> 00:01:17,399 Speaker 4: think is very important in terms of caution for the 24 00:01:17,400 --> 00:01:20,040 Speaker 4: industry that is so excited that things aren't so bad today. 25 00:01:20,319 --> 00:01:23,320 Speaker 4: And he says, these results benefit from our over earning 26 00:01:23,400 --> 00:01:26,280 Speaker 4: on both net interest income and below normal credit costs. 27 00:01:26,480 --> 00:01:29,480 Speaker 5: What does that mean? Don't expect this to be normal? 28 00:01:29,560 --> 00:01:30,200 Speaker 5: Per se? 29 00:01:30,560 --> 00:01:34,959 Speaker 4: He raised his net interest income at least three times. 30 00:01:34,959 --> 00:01:36,800 Speaker 5: There's a debate if it was a fourth time. 31 00:01:36,600 --> 00:01:40,160 Speaker 4: This year, and can you imagine to that many times 32 00:01:40,200 --> 00:01:41,800 Speaker 4: say we're going to make more money, We're going to 33 00:01:41,840 --> 00:01:44,120 Speaker 4: make more money. We're going to make more money, and 34 00:01:44,160 --> 00:01:46,440 Speaker 4: we're going to make more money. 35 00:01:46,720 --> 00:01:48,840 Speaker 2: Here's the thing, there's a bigger takeaway here. 36 00:01:48,960 --> 00:01:51,760 Speaker 3: And John was asking this earlier, which is how much 37 00:01:51,840 --> 00:01:54,559 Speaker 3: is this pr and basically saying, don't look at us. 38 00:01:54,840 --> 00:01:56,720 Speaker 3: We're not expecting to make this money. It just keeps 39 00:01:56,760 --> 00:02:00,360 Speaker 3: coming through the door. Or is this something that is 40 00:02:00,680 --> 00:02:02,800 Speaker 3: some sort of tea leaf of what they expect to 41 00:02:02,840 --> 00:02:06,080 Speaker 3: come and saying to regulators and saying to others, hey, 42 00:02:06,440 --> 00:02:09,200 Speaker 3: it's not so great, we're not really making bank. 43 00:02:09,280 --> 00:02:11,080 Speaker 2: Is just sort of a quirk of the moment. 44 00:02:11,160 --> 00:02:12,600 Speaker 5: There is a little bit of balancing here. 45 00:02:12,600 --> 00:02:16,440 Speaker 4: Remember they are taking to Washington again soon in early December. 46 00:02:16,480 --> 00:02:20,320 Speaker 4: You have the big banks that will be facing lawmakers 47 00:02:20,320 --> 00:02:23,240 Speaker 4: at the beginning of their annual grilling. I love listening 48 00:02:23,320 --> 00:02:27,640 Speaker 4: to this one because they are making pretty stunning profits 49 00:02:27,639 --> 00:02:29,959 Speaker 4: in this environment. But you know, they can also say 50 00:02:30,200 --> 00:02:32,840 Speaker 4: this is a US consumer, This is a good thing. 51 00:02:33,200 --> 00:02:36,000 Speaker 4: Consumers want to borrow. They're still spending money. You are 52 00:02:36,040 --> 00:02:38,679 Speaker 4: seeing some normalization. You think, look at City Group, the 53 00:02:38,919 --> 00:02:42,520 Speaker 4: kind of the spend here starting to normalize. These are 54 00:02:42,680 --> 00:02:45,320 Speaker 4: things that show you things could start to turn a 55 00:02:45,320 --> 00:02:47,919 Speaker 4: little bit here. But the strength of the consumer is 56 00:02:48,040 --> 00:02:51,239 Speaker 4: keeping the banking industry strong, plus the comeback of these 57 00:02:51,240 --> 00:02:55,200 Speaker 4: institutional businesses that are aided by these very complicated dynamics 58 00:02:55,200 --> 00:02:55,560 Speaker 4: in the market. 59 00:02:55,720 --> 00:02:59,240 Speaker 6: They're going to really push back on potentially future bank 60 00:02:59,520 --> 00:03:02,160 Speaker 6: capital requirements, aren't they when they come to Washington. 61 00:03:02,480 --> 00:03:03,799 Speaker 5: There's going to be two objectives. 62 00:03:03,800 --> 00:03:06,240 Speaker 4: From the banking perspective, they're going to be pushing back 63 00:03:06,240 --> 00:03:09,639 Speaker 4: against those capital requirements. From the lawmaker's perspective, there's all 64 00:03:09,680 --> 00:03:13,360 Speaker 4: sorts of other issues. Why aren't you lending to my constituents? 65 00:03:13,360 --> 00:03:16,000 Speaker 4: Who want to buy a home. The housing market is 66 00:03:16,040 --> 00:03:19,160 Speaker 4: still in dire straits in many places in the country. 67 00:03:19,760 --> 00:03:22,040 Speaker 5: There's going to be the constant. 68 00:03:21,840 --> 00:03:26,200 Speaker 4: Constant push pull on ESG matters, especially with this concern 69 00:03:26,240 --> 00:03:29,120 Speaker 4: about energy security around the world. There's also going to 70 00:03:29,160 --> 00:03:31,880 Speaker 4: be a lot of questions about headcount because besides for 71 00:03:31,960 --> 00:03:34,399 Speaker 4: JP Morgan, most of these other banks are cutting jobs, 72 00:03:34,440 --> 00:03:35,200 Speaker 4: not adding them. 73 00:03:35,840 --> 00:03:37,440 Speaker 6: One thing that you really should need to know about 74 00:03:37,520 --> 00:03:41,119 Speaker 6: Washington when there's hearings like this is actually you think 75 00:03:41,200 --> 00:03:44,280 Speaker 6: lawmakers in the room listening to every question, listening to 76 00:03:44,320 --> 00:03:47,760 Speaker 6: every answer, they're actually not. They come in, it's very performative, 77 00:03:47,880 --> 00:03:50,720 Speaker 6: they decide the point they want to make, potentially try 78 00:03:50,760 --> 00:03:52,360 Speaker 6: to embarrass an executive, and then they leave. 79 00:03:52,480 --> 00:03:54,000 Speaker 4: Don't you just kind of want to go down there 80 00:03:54,040 --> 00:03:56,480 Speaker 4: and buy them all a drink after? Like it is 81 00:03:56,680 --> 00:03:59,280 Speaker 4: such a long day. But you know, speaking of long days, 82 00:03:59,640 --> 00:04:02,080 Speaker 4: this that's us up for next week two, doesn't it, 83 00:04:02,120 --> 00:04:04,320 Speaker 4: because we do have a Goldman, sax Bank of America, 84 00:04:04,360 --> 00:04:07,000 Speaker 4: and Morgan Stanley starting to come in. Remember what's interesting 85 00:04:07,440 --> 00:04:09,880 Speaker 4: a lot of money. Yes, the consumer's holding up the 86 00:04:10,000 --> 00:04:12,480 Speaker 4: economically sensitive parts of the economy as you see it, 87 00:04:12,600 --> 00:04:16,440 Speaker 4: Wells Fargo auto lending homes still under pressure. But when 88 00:04:16,480 --> 00:04:18,280 Speaker 4: you look at Bank of America Morgan stilling, these are 89 00:04:18,440 --> 00:04:22,360 Speaker 4: wealthier client bases that we're looking at here that are 90 00:04:22,560 --> 00:04:25,880 Speaker 4: borrowing for homes and still able to spend at maybe 91 00:04:25,920 --> 00:04:28,240 Speaker 4: a greater scale than you're seeing it the weaker parts 92 00:04:28,279 --> 00:04:28,960 Speaker 4: of the economy. 93 00:04:29,240 --> 00:04:31,680 Speaker 3: One thing that the JP Morgan CFO said on the 94 00:04:31,720 --> 00:04:34,000 Speaker 3: call was that, as you mentioned, the full year net 95 00:04:34,240 --> 00:04:38,600 Speaker 3: income guidance was up on as you mentioned Shnali slower reprice. 96 00:04:38,920 --> 00:04:42,000 Speaker 3: Does this basically just mean that they are not passing 97 00:04:42,040 --> 00:04:43,960 Speaker 3: it along as quickly as they thought they would be 98 00:04:44,040 --> 00:04:44,880 Speaker 3: to depositors. 99 00:04:44,960 --> 00:04:47,640 Speaker 4: And this is where that big versus small question comes 100 00:04:47,680 --> 00:04:50,200 Speaker 4: into play again. JP Morgan is not passing it on 101 00:04:50,320 --> 00:04:53,080 Speaker 4: as meaningfully as some of the smaller banks, where you know, 102 00:04:53,200 --> 00:04:57,400 Speaker 4: Jeffries in particular puts out this great chart about just 103 00:04:57,520 --> 00:05:00,840 Speaker 4: how much deposits have repriced, because across the industry they 104 00:05:00,960 --> 00:05:03,200 Speaker 4: certainly have, just not at the biggest of the big 105 00:05:03,240 --> 00:05:04,960 Speaker 4: banks that don't need your deposits. 106 00:05:05,000 --> 00:05:07,359 Speaker 3: So at what point does that become some sort of 107 00:05:07,440 --> 00:05:09,960 Speaker 3: rally and cry, If you're getting so much money, why 108 00:05:09,960 --> 00:05:11,680 Speaker 3: don't you pass it along with some of your clients 109 00:05:11,720 --> 00:05:12,120 Speaker 3: that you have. 110 00:05:12,440 --> 00:05:13,400 Speaker 2: At what point does. 111 00:05:13,240 --> 00:05:17,200 Speaker 3: That deposit beta play a role and really come under focus. 112 00:05:17,320 --> 00:05:20,400 Speaker 4: And it's also that question for consumers. Do you park 113 00:05:20,400 --> 00:05:22,120 Speaker 4: your money at a JP Morgan where you know your 114 00:05:22,120 --> 00:05:24,479 Speaker 4: money is safe, too big to fail, right, or do 115 00:05:24,520 --> 00:05:26,280 Speaker 4: you park it at a smaller bank where there could 116 00:05:26,279 --> 00:05:27,160 Speaker 4: be some more worries. 117 00:05:27,200 --> 00:05:28,560 Speaker 5: As we've seen earlier. 118 00:05:28,200 --> 00:05:30,520 Speaker 4: This year, the smaller banks are getting a bigger rate, 119 00:05:30,839 --> 00:05:33,240 Speaker 4: a better rate on your deposits. But to your point too, 120 00:05:33,560 --> 00:05:36,400 Speaker 4: this has been highly politicized. The bankers have been directly 121 00:05:36,440 --> 00:05:40,000 Speaker 4: asked where is this money going if we're raising interest 122 00:05:40,080 --> 00:05:42,040 Speaker 4: rates and you are not giving that money back. 123 00:05:41,880 --> 00:05:44,159 Speaker 3: To consumer, which raises a question of modest buybacks, and 124 00:05:44,160 --> 00:05:45,800 Speaker 3: modest has been the word of the day. It's sort of, 125 00:05:45,920 --> 00:05:48,320 Speaker 3: you know, something that we've seen as a theme and 126 00:05:48,360 --> 00:05:49,279 Speaker 3: a lot of the banks. 127 00:05:49,600 --> 00:05:52,120 Speaker 2: How much are we going to see in terms of buybacks? 128 00:05:52,160 --> 00:05:56,159 Speaker 3: What will count as modest enough to satisfy investors and 129 00:05:56,240 --> 00:05:57,800 Speaker 3: quell concerns by regulators. 130 00:05:58,040 --> 00:06:00,840 Speaker 4: It's a great question because the banking and investor story, 131 00:06:01,080 --> 00:06:03,560 Speaker 4: I don't know that it's hinging necessarily on those buybacks. 132 00:06:03,560 --> 00:06:06,560 Speaker 4: They just want the numbers themselves to get better. But 133 00:06:06,800 --> 00:06:09,040 Speaker 4: to that point, you're making. Also, you can't sit there 134 00:06:09,080 --> 00:06:11,320 Speaker 4: and return a ton of money to investors when you're 135 00:06:11,360 --> 00:06:13,719 Speaker 4: laying tens of thousands of people off at most of 136 00:06:13,720 --> 00:06:16,760 Speaker 4: these banks, right, the expense story and the use of 137 00:06:16,839 --> 00:06:20,680 Speaker 4: capital is a massive tension and only getting more so 138 00:06:20,760 --> 00:06:23,080 Speaker 4: by the day because wage pressure still exists at these 139 00:06:23,080 --> 00:06:23,520 Speaker 4: banks too. 140 00:06:23,839 --> 00:06:25,960 Speaker 3: There's also a big theme, especially as we head toward 141 00:06:26,000 --> 00:06:28,839 Speaker 3: Morgan Stanley Bank of America and Goldman Sachs next week, 142 00:06:28,960 --> 00:06:33,600 Speaker 3: about why equity revenues, equity trading revenues disappointed and fixed 143 00:06:33,680 --> 00:06:36,360 Speaker 3: income revenues beat. Do you have a sense of what 144 00:06:36,520 --> 00:06:38,360 Speaker 3: was behind it? Is this a theme for the industry 145 00:06:38,440 --> 00:06:41,359 Speaker 3: or is this an execution issue for both City Group 146 00:06:41,480 --> 00:06:42,800 Speaker 3: as well as JP Morgan. 147 00:06:42,880 --> 00:06:44,800 Speaker 4: There's one big tell that shows you that this is 148 00:06:44,839 --> 00:06:46,520 Speaker 4: a theme for the industry. You had three of the 149 00:06:46,520 --> 00:06:49,200 Speaker 4: biggest investment banks in the world, Goldman's at JP Morgan 150 00:06:49,240 --> 00:06:53,200 Speaker 4: and Morgan Stanley on the Birkenstock IPO and the IPO 151 00:06:53,480 --> 00:06:56,280 Speaker 4: whift and so that is a really big. 152 00:06:56,080 --> 00:06:57,400 Speaker 5: Problem for the IPO market. 153 00:06:57,440 --> 00:07:01,760 Speaker 4: This lack of equity issuance, this real scarcity here makes 154 00:07:01,800 --> 00:07:05,240 Speaker 4: it tough to keep equity trading live in terms of 155 00:07:05,240 --> 00:07:08,120 Speaker 4: fees for the banks. But you know, a little inside baseball, 156 00:07:08,240 --> 00:07:11,000 Speaker 4: that Goldman number versus Morgan Stanley. 157 00:07:10,600 --> 00:07:12,559 Speaker 5: Next week is the talk of the town. 158 00:07:13,040 --> 00:07:16,600 Speaker 4: Goldman has been leading on financing the big hedge funds 159 00:07:16,840 --> 00:07:20,760 Speaker 4: and trying to win that business leverage while constraint is 160 00:07:20,800 --> 00:07:22,720 Speaker 4: still alive and well, Chanelli. 161 00:07:22,440 --> 00:07:23,400 Speaker 2: Blasik, thank you so much. 162 00:07:23,440 --> 00:07:25,480 Speaker 3: We'll be catching up with you throughout next week and 163 00:07:25,520 --> 00:07:28,520 Speaker 3: throughout the day ahead, and of course we're going to 164 00:07:28,680 --> 00:07:31,080 Speaker 3: get those earnings from Bank of America as well as 165 00:07:31,080 --> 00:07:33,320 Speaker 3: Morgan Stanley and Goldman Sacks next week. 166 00:07:37,400 --> 00:07:40,400 Speaker 7: Ken Leon a c if all right, Ken, you've gone 167 00:07:40,400 --> 00:07:41,600 Speaker 7: through sacy what you might commit. 168 00:07:43,160 --> 00:07:45,840 Speaker 8: This was a good quarter. It shows that there's a 169 00:07:45,920 --> 00:07:49,880 Speaker 8: progression of the restructuring, and yet some of their core 170 00:07:50,320 --> 00:07:55,200 Speaker 8: franchises such as consumer and Treasury services are doing quite well. 171 00:07:55,880 --> 00:07:59,720 Speaker 8: So I think on operational basis we would give them 172 00:07:59,720 --> 00:08:04,840 Speaker 8: an we also for being courageous. Jane Fraser is moving 173 00:08:04,880 --> 00:08:08,840 Speaker 8: ahead as discussed in terms of removing layers of management 174 00:08:08,880 --> 00:08:12,480 Speaker 8: to reduce expense, and this is critical to get efficiency 175 00:08:12,560 --> 00:08:16,960 Speaker 8: for this bank and to improve returns on capital. Lastly, 176 00:08:17,440 --> 00:08:20,679 Speaker 8: let's not forget there's nine thousand employees at City Group 177 00:08:20,960 --> 00:08:25,200 Speaker 8: that are working on a US consent decree to improve 178 00:08:25,240 --> 00:08:30,600 Speaker 8: their processing and regulatory regime for compliance. This is important. 179 00:08:30,880 --> 00:08:34,880 Speaker 8: It sometimes gets lost in the weeds, but for many 180 00:08:34,960 --> 00:08:39,800 Speaker 8: years City did not operationally have the best platform for surveillance, 181 00:08:39,840 --> 00:08:43,679 Speaker 8: and I think they're getting there. Looking ahead. For the investor, 182 00:08:44,040 --> 00:08:47,400 Speaker 8: it's always you're always tempted with any stock in the 183 00:08:47,480 --> 00:08:51,120 Speaker 8: large bank's trading at half its net tangible book value 184 00:08:51,320 --> 00:08:54,280 Speaker 8: when the others are well above par. And I think 185 00:08:54,280 --> 00:08:56,439 Speaker 8: we need to say just a little bit more attraction 186 00:08:56,920 --> 00:09:01,080 Speaker 8: with what Jane Fraser does. Not only costs, but you 187 00:09:01,160 --> 00:09:06,760 Speaker 8: need a successful IPO Banamex in Mexico. As you recall, 188 00:09:06,880 --> 00:09:09,600 Speaker 8: they couldn't sell it. So now they're going IPO in 189 00:09:09,679 --> 00:09:13,640 Speaker 8: twenty twenty five. So things like promising, but they're still not, 190 00:09:14,000 --> 00:09:15,520 Speaker 8: you know, hitting on all cylinders. 191 00:09:15,600 --> 00:09:17,480 Speaker 7: Well, Ken, that's the problem. That's the question. Do they 192 00:09:17,480 --> 00:09:19,760 Speaker 7: have a problem with expenses or with strategy. 193 00:09:20,920 --> 00:09:23,720 Speaker 8: I think the strategy is in place, and it does 194 00:09:23,800 --> 00:09:26,920 Speaker 8: take time now to get the right people in place. 195 00:09:27,320 --> 00:09:30,600 Speaker 8: That would be the management teams below the C suite 196 00:09:30,679 --> 00:09:33,800 Speaker 8: or the first layer, so that they can execute on 197 00:09:33,920 --> 00:09:38,200 Speaker 8: the strategy. We also are talking again, this could be 198 00:09:38,200 --> 00:09:41,800 Speaker 8: a conversation in two quarters of a very highly efficient 199 00:09:41,920 --> 00:09:46,080 Speaker 8: global bank as they paired off all of their non 200 00:09:46,280 --> 00:09:51,680 Speaker 8: US consumer banks except for a few areas. So I 201 00:09:51,720 --> 00:09:55,120 Speaker 8: think overall there's still a lot of more work to do, 202 00:09:56,040 --> 00:09:58,840 Speaker 8: and that means that what we've learned with the Wells 203 00:09:58,880 --> 00:10:02,560 Speaker 8: Fargo turnaround is that they don't happen over six months, 204 00:10:02,679 --> 00:10:04,240 Speaker 8: they take three to five years. 205 00:10:04,679 --> 00:10:08,120 Speaker 3: Ken we saw JP Morgan just notch a record quarter 206 00:10:08,200 --> 00:10:11,160 Speaker 3: of net interest income twenty two point nine billion dollars. 207 00:10:11,240 --> 00:10:14,200 Speaker 3: They now see total full year net interest income of 208 00:10:14,240 --> 00:10:14,960 Speaker 3: eighty eight and a. 209 00:10:14,960 --> 00:10:16,079 Speaker 2: Half billion dollars. 210 00:10:16,160 --> 00:10:19,120 Speaker 3: City Group also raise their expectation for their full year 211 00:10:19,160 --> 00:10:23,199 Speaker 3: net interest income to forty seven point five billion dollars 212 00:10:23,240 --> 00:10:24,600 Speaker 3: from forty six billion dollars. 213 00:10:24,720 --> 00:10:27,120 Speaker 2: Is the takeaway from some of these results. 214 00:10:26,800 --> 00:10:30,600 Speaker 3: That higher yields are now becoming a good thing for banks, 215 00:10:30,640 --> 00:10:32,440 Speaker 3: a tailwind rather than a headwind. 216 00:10:34,040 --> 00:10:36,960 Speaker 8: So one scenario that hasn't been talked about, you know, 217 00:10:37,000 --> 00:10:40,240 Speaker 8: with the Fed possibly what a rate pause, is that 218 00:10:40,640 --> 00:10:43,720 Speaker 8: with rates staying high and if the banks can hold 219 00:10:43,760 --> 00:10:46,960 Speaker 8: the line in terms of deposit costs, they can enjoy 220 00:10:47,080 --> 00:10:51,120 Speaker 8: net interest income growth, particularly if there's loan growth. But 221 00:10:51,240 --> 00:10:54,240 Speaker 8: one of the worries we have is that still twenty 222 00:10:54,280 --> 00:10:58,560 Speaker 8: five to thirty percent of total deposits are still non interest, 223 00:10:58,640 --> 00:11:04,120 Speaker 8: fearing that can certainly shift and go to higher deposit costs. 224 00:11:04,360 --> 00:11:08,040 Speaker 8: This is absolutely true, and asset and wealth management for 225 00:11:08,200 --> 00:11:11,160 Speaker 8: JP Morgan Chase not so much a problem in the 226 00:11:11,240 --> 00:11:14,640 Speaker 8: corporate areas where they have other reasons for keeping non 227 00:11:14,720 --> 00:11:16,640 Speaker 8: interest deposits in those areas. 228 00:11:16,760 --> 00:11:18,040 Speaker 2: But Ken, we're not seeing it yet. 229 00:11:18,240 --> 00:11:19,559 Speaker 3: And this is something that a lot of people have 230 00:11:19,679 --> 00:11:22,200 Speaker 3: pointed to that these deposits have been sticky, that it 231 00:11:22,240 --> 00:11:24,040 Speaker 3: is such a pain in the butt to actually move 232 00:11:24,120 --> 00:11:25,920 Speaker 3: all of your money from one place to another and 233 00:11:25,960 --> 00:11:28,679 Speaker 3: rebank with an entirely new institution, that people just are 234 00:11:28,720 --> 00:11:30,920 Speaker 3: not doing it. What makes you think that people are 235 00:11:30,960 --> 00:11:34,200 Speaker 3: going to start doing it, especially if they do start 236 00:11:34,240 --> 00:11:36,560 Speaker 3: investing in other assets and they haven't so far. 237 00:11:37,679 --> 00:11:40,520 Speaker 8: Well, we actually did see that again in Acid and 238 00:11:40,559 --> 00:11:43,880 Speaker 8: wealth management down eight percent on deposits. But in the 239 00:11:43,920 --> 00:11:46,720 Speaker 8: other areas, I think you're right, it's a little bit stickier. 240 00:11:46,880 --> 00:11:50,960 Speaker 8: There's lots of reasons for small business or sometimes for consumers, 241 00:11:51,160 --> 00:11:54,040 Speaker 8: you know, to keep those large balances and checking accounts. 242 00:11:54,440 --> 00:11:56,280 Speaker 7: Ken, I want to finish with a bondmark if we 243 00:11:56,320 --> 00:11:58,280 Speaker 7: can something at least or not I've been talking about 244 00:11:58,360 --> 00:12:00,199 Speaker 7: now for weeks. 245 00:12:00,240 --> 00:12:02,240 Speaker 9: Need lower yields or high yields. 246 00:12:02,400 --> 00:12:05,080 Speaker 7: A long long time ago, we'd catch up with people 247 00:12:05,200 --> 00:12:08,920 Speaker 7: who would tell us forever that what they needed was yields, 248 00:12:09,000 --> 00:12:11,679 Speaker 7: higher rates up because they can become more profitable off 249 00:12:11,679 --> 00:12:12,200 Speaker 7: the back of it. 250 00:12:12,440 --> 00:12:13,680 Speaker 9: Can has that changed this year? 251 00:12:15,160 --> 00:12:18,319 Speaker 8: It really hasn't changed. But it's you know, for nen 252 00:12:18,360 --> 00:12:21,199 Speaker 8: intra syncron, which is very different than the bond conversation, 253 00:12:21,480 --> 00:12:24,840 Speaker 8: it's loan volume growth. I think for the bond market, 254 00:12:25,000 --> 00:12:29,280 Speaker 8: it's really what happens in an investment grade that's so critical. Again, 255 00:12:29,320 --> 00:12:31,920 Speaker 8: I want to see how many of these banks talk 256 00:12:32,000 --> 00:12:35,640 Speaker 8: about getting to be balance sheet light, which means possibly 257 00:12:35,760 --> 00:12:40,200 Speaker 8: partnering with private credit partners, given that they may have 258 00:12:40,280 --> 00:12:43,520 Speaker 8: some portfolios that just don't make any more sense with 259 00:12:43,679 --> 00:12:44,360 Speaker 8: higher rates. 260 00:12:44,440 --> 00:12:48,080 Speaker 7: So that means sunning off loans can Yes, it does interesting, 261 00:12:48,240 --> 00:12:50,760 Speaker 7: Ken Leon Cfira, thank you sir for being with us 262 00:12:50,800 --> 00:13:03,480 Speaker 7: this morning to break down JP Morgan. It's the perfect 263 00:13:03,600 --> 00:13:06,320 Speaker 7: day to catch up with this man right here. Agia Denny, 264 00:13:06,600 --> 00:13:09,760 Speaker 7: president of the Denny Research and ed. As I often say, 265 00:13:09,800 --> 00:13:12,280 Speaker 7: but it's worth repeating the man who coined the phrase 266 00:13:12,559 --> 00:13:14,840 Speaker 7: bond vigilantes. As you know me too well, you know 267 00:13:14,880 --> 00:13:17,360 Speaker 7: the next question the bond vigilances backhead. 268 00:13:18,360 --> 00:13:20,559 Speaker 10: I think they are yes, because it's certainly one of 269 00:13:20,600 --> 00:13:25,280 Speaker 10: the reasons that the bond yield has soared from just 270 00:13:25,440 --> 00:13:29,800 Speaker 10: under four percent on July thirty first to over four 271 00:13:29,800 --> 00:13:32,400 Speaker 10: and a half percent and a range only four and 272 00:13:32,440 --> 00:13:34,240 Speaker 10: a half to five percent recently. If we look at 273 00:13:34,240 --> 00:13:38,199 Speaker 10: the tenure the thirty years been higher. But supply clearly matters, 274 00:13:38,280 --> 00:13:43,680 Speaker 10: and supply is a result of fiscal profligacy. It's you know, 275 00:13:44,040 --> 00:13:46,600 Speaker 10: fiscal policy is out of control. Monetary policy has actually 276 00:13:46,640 --> 00:13:49,640 Speaker 10: been doing its job. I don't think the bond market 277 00:13:49,760 --> 00:13:51,680 Speaker 10: or the bond vigilantes really have an issue with the 278 00:13:51,800 --> 00:13:56,160 Speaker 10: monetary policy authorities. It's really well you can see they 279 00:13:56,200 --> 00:13:58,000 Speaker 10: can't even get a speaker of the House. 280 00:13:58,559 --> 00:14:00,000 Speaker 9: And sometimes supply doesn't matter. 281 00:14:00,400 --> 00:14:03,360 Speaker 7: Typically an economic downturns, people will be willing to finance 282 00:14:03,400 --> 00:14:07,040 Speaker 7: the deficit by treas rebonds with exceptionally low yields. And 283 00:14:07,280 --> 00:14:09,319 Speaker 7: is this a situation that can be addressed with bad 284 00:14:09,360 --> 00:14:11,680 Speaker 7: economic data? And what I mean by that is, will 285 00:14:11,720 --> 00:14:14,079 Speaker 7: we buy this bond market where those auctions look better? 286 00:14:14,120 --> 00:14:15,360 Speaker 9: If this economy looks worse. 287 00:14:16,679 --> 00:14:20,760 Speaker 10: Well, for all the volatility we've had since the summer, 288 00:14:20,840 --> 00:14:24,640 Speaker 10: I think we're fairly looking for a yield level at 289 00:14:24,640 --> 00:14:26,960 Speaker 10: which the market will clear, and I think four and 290 00:14:27,000 --> 00:14:29,960 Speaker 10: a half to five percent should do it. So I 291 00:14:30,000 --> 00:14:32,920 Speaker 10: think some of this recent volatility, as long as it's 292 00:14:33,240 --> 00:14:37,720 Speaker 10: range bound, is actually a good sign that the bond 293 00:14:37,800 --> 00:14:40,400 Speaker 10: market figures this is a good yield relative to the 294 00:14:40,400 --> 00:14:42,960 Speaker 10: inflation outlook. I know there are a lot of people 295 00:14:42,960 --> 00:14:46,160 Speaker 10: that were concerned about the inflation numbers of CPI numbers 296 00:14:46,160 --> 00:14:49,200 Speaker 10: that came out yesterday, But if you take out shelter, 297 00:14:49,320 --> 00:14:51,160 Speaker 10: you know, I always take out things that don't support 298 00:14:51,240 --> 00:14:55,000 Speaker 10: my story. So if you take out shelter, the CPI 299 00:14:55,360 --> 00:14:59,240 Speaker 10: headline and core, we're both at two percent, exactly at 300 00:14:59,240 --> 00:15:03,120 Speaker 10: two percent. It's that, you know, it's that shelter that's 301 00:15:03,160 --> 00:15:07,720 Speaker 10: just way too blank blank blank too high. That's been 302 00:15:07,880 --> 00:15:10,600 Speaker 10: the problem, and even in the latest number it was 303 00:15:10,640 --> 00:15:13,800 Speaker 10: a problem. But we know that lease inflation and new 304 00:15:13,880 --> 00:15:15,960 Speaker 10: leases has actually come down substantially. 305 00:15:16,520 --> 00:15:18,240 Speaker 3: And I love that you said that you take out 306 00:15:18,240 --> 00:15:20,520 Speaker 3: things that don't support your story because it's what everybody 307 00:15:20,560 --> 00:15:22,280 Speaker 3: is doing. And you can take out whatever data that 308 00:15:22,320 --> 00:15:24,640 Speaker 3: you want and support whatever story you want to write. 309 00:15:24,920 --> 00:15:26,600 Speaker 3: A lot of people are looking at the volatility of 310 00:15:26,640 --> 00:15:29,320 Speaker 3: the bond market, and you heard Michael Stowell yesterday talking 311 00:15:29,320 --> 00:15:31,960 Speaker 3: about how something will break and that that will be 312 00:15:32,400 --> 00:15:34,880 Speaker 3: something problematic for the market that the FED is going 313 00:15:34,920 --> 00:15:37,360 Speaker 3: to have to respond to. Do you have the same 314 00:15:37,440 --> 00:15:41,040 Speaker 3: feeling or is your response the opposite That the resilience 315 00:15:41,040 --> 00:15:43,400 Speaker 3: that we have seen in risk aids to date in 316 00:15:43,480 --> 00:15:45,520 Speaker 3: the light of such volatility is a sign that it 317 00:15:45,560 --> 00:15:49,000 Speaker 3: can continue regardless of what the bond market does well. 318 00:15:49,040 --> 00:15:51,680 Speaker 10: I've been in the soft landing camp since early last year, 319 00:15:51,680 --> 00:15:54,280 Speaker 10: and I characterized it as a rolling recession that's sitting 320 00:15:54,280 --> 00:15:58,200 Speaker 10: in different sectors at different times, and something is breaking 321 00:15:58,560 --> 00:16:01,040 Speaker 10: right now, and that's in the commercial real estate market. 322 00:16:01,200 --> 00:16:02,760 Speaker 10: There's going to be a lot of things breaking in 323 00:16:02,760 --> 00:16:04,800 Speaker 10: the commercial real estate market, and I think it's one 324 00:16:04,800 --> 00:16:07,680 Speaker 10: of the reasons the FED is probably done raising interest 325 00:16:07,720 --> 00:16:10,360 Speaker 10: rates because they realized that the bond market has been 326 00:16:10,440 --> 00:16:13,800 Speaker 10: recently doing all the heavy lifting and monetary policy. With 327 00:16:13,880 --> 00:16:18,040 Speaker 10: a bond yield up close to five percent, that's a 328 00:16:18,120 --> 00:16:20,640 Speaker 10: disaster for a lot of commercial real estate deals that 329 00:16:20,720 --> 00:16:25,040 Speaker 10: have to be refinanced, or the value of commercial real 330 00:16:25,160 --> 00:16:27,720 Speaker 10: estate so those things are going to break. Very reminiscent 331 00:16:27,760 --> 00:16:30,040 Speaker 10: of what happened in the early nineteen nineties when we 332 00:16:30,080 --> 00:16:32,640 Speaker 10: had the SNL crisis. A lot of things broken the 333 00:16:32,640 --> 00:16:35,640 Speaker 10: commercial real estate market. We did have a recession back then, 334 00:16:35,960 --> 00:16:38,600 Speaker 10: but it was very mild. It was just the growth 335 00:16:38,640 --> 00:16:43,280 Speaker 10: rate that was really hampered by all those problems. 336 00:16:43,800 --> 00:16:45,520 Speaker 3: Let's tie that together, because we heard from the Wells 337 00:16:45,520 --> 00:16:48,160 Speaker 3: Fargo CEO is saying that they do expect commercial real 338 00:16:48,240 --> 00:16:53,200 Speaker 3: estate losses to increase. They are expecting loan losses to increase, 339 00:16:53,320 --> 00:16:55,800 Speaker 3: even though provisions are not necessarily increasing as much as 340 00:16:55,800 --> 00:16:59,960 Speaker 3: people previously expected. Is your sense right now that we're 341 00:17:00,120 --> 00:17:02,960 Speaker 3: seeing things just soften and that we're not going to 342 00:17:02,960 --> 00:17:06,119 Speaker 3: actually see anything break in that basically it's all been 343 00:17:06,200 --> 00:17:09,040 Speaker 3: priced in based on where we are in this cycle. 344 00:17:09,920 --> 00:17:10,120 Speaker 11: Yeah. 345 00:17:10,119 --> 00:17:13,760 Speaker 10: Well, I'm still in that rolling recession camp, and indeed, 346 00:17:13,760 --> 00:17:17,399 Speaker 10: in some areas it's starting to look like a rolling recovery. 347 00:17:17,440 --> 00:17:21,640 Speaker 10: I think in the retailing sector, for example, consumers may 348 00:17:21,800 --> 00:17:24,399 Speaker 10: very well be coming back to buying some goods. The 349 00:17:24,480 --> 00:17:28,160 Speaker 10: single family housing market looks like it's bottoming. But yeah, 350 00:17:28,600 --> 00:17:30,680 Speaker 10: I still don't think we're going to have an economy 351 00:17:30,680 --> 00:17:35,399 Speaker 10: wide recession going into next year. I think it's the 352 00:17:35,400 --> 00:17:39,960 Speaker 10: economy's resilience is going to be proven to be with us, 353 00:17:40,320 --> 00:17:42,840 Speaker 10: and I think it's largely because of the consumer. And 354 00:17:42,840 --> 00:17:45,120 Speaker 10: there's a lot of moving parts in the consumer. One 355 00:17:45,119 --> 00:17:47,959 Speaker 10: of them has got seventy five million baby boomers that 356 00:17:48,080 --> 00:17:51,439 Speaker 10: increasingly are retiring and talk about excess savings. I know 357 00:17:51,560 --> 00:17:54,040 Speaker 10: Jamie Diamond said has been saying since May of last 358 00:17:54,080 --> 00:17:56,399 Speaker 10: year that consumers are going to be running out of 359 00:17:56,440 --> 00:17:59,199 Speaker 10: excess savings and that's when we have a recession. But 360 00:18:00,080 --> 00:18:02,760 Speaker 10: baby boomers have a lot of access savings in their 361 00:18:02,760 --> 00:18:07,280 Speaker 10: retirement assets, something like seventy five trillion dollars, and as 362 00:18:07,320 --> 00:18:09,880 Speaker 10: they retire, they're going to be spending those assets to. 363 00:18:09,880 --> 00:18:13,439 Speaker 7: Those boomers, not like Don Paranion out of the mh AS. Yeah, Danny, 364 00:18:13,600 --> 00:18:15,640 Speaker 7: was that not the canary in a coal mine? 365 00:18:17,720 --> 00:18:23,480 Speaker 10: Well, look, I think that the retiring consumers are going 366 00:18:23,480 --> 00:18:27,960 Speaker 10: out to restaurants, they're taking vacations more often, they're flying, 367 00:18:28,000 --> 00:18:31,000 Speaker 10: they're using hotels, motels, and these are all the areas 368 00:18:31,080 --> 00:18:34,920 Speaker 10: where where industries are very labor intensive, and I think 369 00:18:34,920 --> 00:18:38,840 Speaker 10: it explains why the labor market's been so tight. It's 370 00:18:38,920 --> 00:18:42,200 Speaker 10: very hard to have a recession with a record employment. 371 00:18:42,560 --> 00:18:45,520 Speaker 10: I know, employments always at a record right before recessions, 372 00:18:46,160 --> 00:18:48,600 Speaker 10: but it just keeps going going on. It just keeps 373 00:18:48,920 --> 00:18:52,120 Speaker 10: rising to new record highs. So as long as that's 374 00:18:52,160 --> 00:18:55,560 Speaker 10: the case, I think that the economy's resilience is going 375 00:18:55,600 --> 00:18:58,000 Speaker 10: to be attributable to the consumer. And by the way, 376 00:18:58,800 --> 00:19:01,399 Speaker 10: we know that the fiscal policy is out of control, 377 00:19:01,480 --> 00:19:03,560 Speaker 10: but part of that is because they're spending a lot. 378 00:19:03,560 --> 00:19:07,600 Speaker 10: We're just stimulative to the economy. Even those net interest 379 00:19:07,600 --> 00:19:09,720 Speaker 10: payments that they have to make, somebody is getting them. 380 00:19:09,960 --> 00:19:14,040 Speaker 10: Consumers are getting a windfall relative to what they had, 381 00:19:14,160 --> 00:19:17,520 Speaker 10: you know, past several years of much higher net interest income. 382 00:19:17,800 --> 00:19:19,720 Speaker 7: He's sound constructive at it's going to catch up, And 383 00:19:19,840 --> 00:19:26,280 Speaker 7: John Denny, if you have any research. Let's turns to 384 00:19:26,280 --> 00:19:29,480 Speaker 7: Greg Value, the chief US policy strategist at AGF Investments. 385 00:19:29,520 --> 00:19:31,880 Speaker 7: Greg joins us. Now, Greg, wonderful to catch up with you. 386 00:19:32,280 --> 00:19:34,040 Speaker 7: We have this phrase that we borrowed from a famous 387 00:19:34,040 --> 00:19:36,400 Speaker 7: comedian in the United States in the last hour, Aren't 388 00:19:36,400 --> 00:19:39,480 Speaker 7: you embarrassed? Is Washington embarrassed by the dysfunction this playing 389 00:19:39,480 --> 00:19:41,520 Speaker 7: gap currently? Given what's happening in the world. 390 00:19:42,200 --> 00:19:45,240 Speaker 12: Well, we should be this City should be embarrassed. It's 391 00:19:45,280 --> 00:19:50,160 Speaker 12: a clown show, it's a circus. And the serious part 392 00:19:50,160 --> 00:19:52,520 Speaker 12: of the story, John, is that there are three big 393 00:19:52,600 --> 00:19:55,359 Speaker 12: things that have to get done. One is, of course, 394 00:19:55,600 --> 00:19:58,879 Speaker 12: a budget, and I think that November seventeenth deadline will slip. 395 00:19:59,119 --> 00:20:02,800 Speaker 12: Maybe they'll do another extension, probably into next year. Number two, 396 00:20:03,160 --> 00:20:05,959 Speaker 12: we really need more aid for Ukraine, they're starting to 397 00:20:06,160 --> 00:20:09,760 Speaker 12: run low. And now a third story, of course, and 398 00:20:09,760 --> 00:20:13,440 Speaker 12: that's aid to Israel, which is mandatory. The irony here 399 00:20:13,520 --> 00:20:17,680 Speaker 12: is that a vast majority in both houses, in both parties, 400 00:20:18,080 --> 00:20:21,480 Speaker 12: want to do all three, but they can't get it done. 401 00:20:21,680 --> 00:20:24,440 Speaker 6: Greg, who can get to two seventeen within Republican caucus 402 00:20:24,480 --> 00:20:25,159 Speaker 6: at this point? 403 00:20:27,320 --> 00:20:30,000 Speaker 12: You got me? I mean I thought that Scales would 404 00:20:30,000 --> 00:20:34,879 Speaker 12: be likely. Jim Jordan isn't exactly mister personality. I'm not 405 00:20:34,920 --> 00:20:39,240 Speaker 12: sure he's going to get there. So I am beginning 406 00:20:39,280 --> 00:20:41,680 Speaker 12: to think they go for someone less well known. There's 407 00:20:41,720 --> 00:20:46,400 Speaker 12: a House member from Minnesota, someone from Oklahoma. They may 408 00:20:46,440 --> 00:20:49,440 Speaker 12: go for a fresh face who's not as badly damaged 409 00:20:49,680 --> 00:20:51,440 Speaker 12: as some of these others are. 410 00:20:51,520 --> 00:20:55,320 Speaker 6: Democrats just as much to blame for this paralysis we're 411 00:20:55,359 --> 00:20:57,480 Speaker 6: seeing in the House of Representatives. 412 00:20:58,280 --> 00:21:03,640 Speaker 12: A little. I mean, nobody's blamed a pox on both 413 00:21:03,640 --> 00:21:07,040 Speaker 12: of their houses. But I would say that Hakeem Jeffries 414 00:21:07,080 --> 00:21:10,520 Speaker 12: and others are valid in saying why should we bail 415 00:21:10,560 --> 00:21:13,720 Speaker 12: them out? They want to impeach the president, that they've 416 00:21:13,720 --> 00:21:15,480 Speaker 12: done a lot of things in the last year that 417 00:21:15,520 --> 00:21:19,320 Speaker 12: have been inexcusable according to the Democrats, So I think 418 00:21:19,320 --> 00:21:21,440 Speaker 12: they're not in any great rush to help them out. 419 00:21:22,200 --> 00:21:24,359 Speaker 7: For a long time, this stuff hasn't mattered. Does it 420 00:21:24,400 --> 00:21:26,760 Speaker 7: matter out it does? 421 00:21:26,840 --> 00:21:29,760 Speaker 12: I mean, we need these loan packages, we need to 422 00:21:29,760 --> 00:21:33,240 Speaker 12: get a budget. People worry about government benefits, their salaries, 423 00:21:33,280 --> 00:21:35,800 Speaker 12: things like that. And there's one other factor, John that 424 00:21:35,880 --> 00:21:39,000 Speaker 12: I think could come into the narrative once again, and 425 00:21:39,040 --> 00:21:42,480 Speaker 12: that's the credit rating agencies like Fitch and S and P. 426 00:21:42,920 --> 00:21:45,560 Speaker 12: I wouldn't be surprised if we see another credit rating 427 00:21:45,680 --> 00:21:48,679 Speaker 12: downgrade on the US. And that's not a good story. 428 00:21:48,840 --> 00:21:49,959 Speaker 2: Every investors come on. 429 00:21:50,000 --> 00:21:52,320 Speaker 3: Whos said that there is absolutely no incentive to grapple 430 00:21:52,359 --> 00:21:54,479 Speaker 3: with the real issues that are going to cause serious 431 00:21:54,520 --> 00:21:58,960 Speaker 3: problems for the US economy and for the US deficit Medicare, medicaid, 432 00:21:58,960 --> 00:22:02,640 Speaker 3: defense spending, and the other entitlement social security. How much 433 00:22:02,760 --> 00:22:04,919 Speaker 3: do you see a greater willingness later this year or 434 00:22:04,920 --> 00:22:08,359 Speaker 3: next year if interest payments start to significantly be the 435 00:22:08,560 --> 00:22:10,280 Speaker 3: main expense of this country. 436 00:22:11,280 --> 00:22:14,800 Speaker 12: Well, you're speaking logically, and logic doesn't always apply, Lisa, 437 00:22:15,600 --> 00:22:18,720 Speaker 12: I don't know that that will make a big difference. 438 00:22:18,840 --> 00:22:18,960 Speaker 11: You know. 439 00:22:19,119 --> 00:22:21,600 Speaker 12: The problem is that, you know, I go around the country, 440 00:22:21,600 --> 00:22:24,600 Speaker 12: I talk to investors and ordinary people and they all 441 00:22:24,640 --> 00:22:27,439 Speaker 12: say we have to reduce the deficit, and then I 442 00:22:27,640 --> 00:22:31,520 Speaker 12: give them a list of options, and to everyone they say, no, 443 00:22:31,920 --> 00:22:36,399 Speaker 12: these are not doable. These are not politically sellable to 444 00:22:36,760 --> 00:22:40,320 Speaker 12: the voters. So we could have a national consensus that 445 00:22:40,400 --> 00:22:43,480 Speaker 12: we need to do something on net borrowing costs, but 446 00:22:43,480 --> 00:22:47,480 Speaker 12: there will not be a consensus on these specific prescriptions. 447 00:22:47,720 --> 00:22:50,239 Speaker 3: Nobody wants to take the poison to come along with 448 00:22:50,280 --> 00:22:53,280 Speaker 3: the medicine. There's a question here, though, Greg, especially as 449 00:22:53,280 --> 00:22:56,159 Speaker 3: we face off with a number of conflicts around the 450 00:22:56,160 --> 00:22:58,679 Speaker 3: world where we have the US calling for more money 451 00:22:58,720 --> 00:23:02,000 Speaker 3: and more resources to be deployed, whether it's Israel, whether 452 00:23:02,040 --> 00:23:04,800 Speaker 3: it's Ukraine, whether that's going to mean more borrowing and 453 00:23:04,840 --> 00:23:07,439 Speaker 3: an even bigger deficit. Do you see that in the 454 00:23:07,480 --> 00:23:10,320 Speaker 3: pipeline that basically not only is there no incentive to cut, 455 00:23:10,480 --> 00:23:14,200 Speaker 3: but there is incentive to spend more and the result 456 00:23:14,240 --> 00:23:16,160 Speaker 3: will simply be felt. 457 00:23:15,840 --> 00:23:18,160 Speaker 2: Maybe at some of these bond auctions. We've been talking about. 458 00:23:18,840 --> 00:23:22,359 Speaker 12: Two enormous wildcards that I think will determine the answer 459 00:23:22,359 --> 00:23:25,159 Speaker 12: to your question. The first is could we see it 460 00:23:25,359 --> 00:23:28,600 Speaker 12: movement by Hesbalah in the north that would be horrible 461 00:23:28,960 --> 00:23:32,600 Speaker 12: to open up a second front. And secondly Iran, I 462 00:23:32,640 --> 00:23:35,280 Speaker 12: think what once Hamas has dealt with, then they will 463 00:23:35,320 --> 00:23:39,400 Speaker 12: be dealt with. I think the Iranians will be targeted 464 00:23:40,000 --> 00:23:43,439 Speaker 12: for at least some kind of increased sanctions because of 465 00:23:43,480 --> 00:23:47,680 Speaker 12: their support for both Hamas and Hezbollah. So those factors, 466 00:23:47,680 --> 00:23:51,240 Speaker 12: to me, would make me think that a lot more 467 00:23:51,240 --> 00:23:53,359 Speaker 12: spending on defense is going to have to recur. 468 00:23:53,960 --> 00:23:57,520 Speaker 6: We saw yesterday the administration come out along with Katari 469 00:23:57,560 --> 00:23:59,920 Speaker 6: officials and say that Iran at this moment cannot act 470 00:24:00,080 --> 00:24:02,760 Speaker 6: sass that six billion dollars that was unfrozen from the 471 00:24:02,880 --> 00:24:07,399 Speaker 6: South Korean banks for the prisoner swap. Is this administration 472 00:24:07,520 --> 00:24:12,000 Speaker 6: going to come under increased criticism for their strategy in 473 00:24:12,040 --> 00:24:13,840 Speaker 6: Iran specifically. 474 00:24:14,240 --> 00:24:17,080 Speaker 12: Well, the Iranians are furious. The New York Times broke 475 00:24:17,119 --> 00:24:20,520 Speaker 12: the story early early this morning, and I think This 476 00:24:20,600 --> 00:24:23,159 Speaker 12: is going to be a big controversy, but they're not 477 00:24:23,240 --> 00:24:25,920 Speaker 12: going to get that money. I think that is inconceivable. 478 00:24:26,280 --> 00:24:30,399 Speaker 12: Considering all the political problems Joe Biden has, the last 479 00:24:30,400 --> 00:24:33,800 Speaker 12: thing he needs is to give the Iranians six billion dollars. 480 00:24:34,200 --> 00:24:36,160 Speaker 6: Just a week and a half ago, Jake Sullivan greg 481 00:24:36,200 --> 00:24:38,440 Speaker 6: said the Middle East was the quietest it's been in decades. 482 00:24:38,480 --> 00:24:42,840 Speaker 6: Today we have Jamie Timon, a CEO of JP Morgan, 483 00:24:42,880 --> 00:24:45,520 Speaker 6: coming out and saying the world is the most dangerous 484 00:24:45,560 --> 00:24:49,679 Speaker 6: we've seen in decades. Is this administration going to face 485 00:24:49,760 --> 00:24:52,879 Speaker 6: the consequences of what is going on in the foreign 486 00:24:52,880 --> 00:24:56,800 Speaker 6: policy sphere come in November of next year, they may. 487 00:24:56,840 --> 00:24:59,080 Speaker 12: I mean, there are so many things, my lord, the 488 00:24:59,480 --> 00:25:03,359 Speaker 12: fact that we're averaging eight thousand illegal immigrants a day 489 00:25:03,720 --> 00:25:07,200 Speaker 12: coming into the US, we have big urban crime, average 490 00:25:07,240 --> 00:25:10,800 Speaker 12: voters don't think inflation has been subdued. So yeah, I mean, 491 00:25:11,160 --> 00:25:15,439 Speaker 12: this could be still another huge albatross for Joe Biden. 492 00:25:15,520 --> 00:25:19,520 Speaker 12: He's in a difficult spot. I think that Blincoln is good. 493 00:25:19,760 --> 00:25:22,840 Speaker 12: I think Sullivan's good. I think they may calm this 494 00:25:22,960 --> 00:25:25,560 Speaker 12: thing down by the end of the year. But I 495 00:25:25,600 --> 00:25:28,640 Speaker 12: think we got several really rocky weeks ahead. 496 00:25:28,600 --> 00:25:32,000 Speaker 9: Greg, doesn't look great. It really doesn't greg value of 497 00:25:32,200 --> 00:25:32,920 Speaker 9: jeff investments. 498 00:25:32,960 --> 00:25:45,560 Speaker 7: Greg, Thank you, sir, joining us now, I'm pleased to say, 499 00:25:45,640 --> 00:25:48,840 Speaker 7: is Congressman Mike laud a Republican from New York Congressman. 500 00:25:48,880 --> 00:25:50,560 Speaker 7: Great to have you with us on the program, Sir. 501 00:25:50,960 --> 00:25:53,880 Speaker 7: I'm sure this is immensely frustrating for you. A time 502 00:25:53,920 --> 00:25:56,320 Speaker 7: for America to project power and at the moment, Washington 503 00:25:56,400 --> 00:25:58,480 Speaker 7: d C seems to be projecting dysfunction. 504 00:25:58,920 --> 00:25:59,879 Speaker 9: How frustrated? Are you? 505 00:26:02,160 --> 00:26:03,200 Speaker 11: Pretty frustrated? 506 00:26:04,080 --> 00:26:07,439 Speaker 13: But you know, right behind the camera lens is the 507 00:26:07,520 --> 00:26:11,040 Speaker 13: capital and I was just looking at it before the 508 00:26:11,080 --> 00:26:14,400 Speaker 13: commercial break, and the sun is shining down on it. 509 00:26:14,640 --> 00:26:19,600 Speaker 13: And we've been through tough times in this country and we. 510 00:26:19,560 --> 00:26:20,399 Speaker 11: Will get through it. 511 00:26:21,760 --> 00:26:26,679 Speaker 13: We will be meeting this morning to reconvene and begin 512 00:26:26,760 --> 00:26:31,399 Speaker 13: the process anew to elect a speaker. We have to 513 00:26:31,440 --> 00:26:36,000 Speaker 13: come together as a conference two hundred and seventeen to 514 00:26:36,160 --> 00:26:40,639 Speaker 13: elect a Republican speaker in a Republican majority. The American 515 00:26:40,680 --> 00:26:43,680 Speaker 13: people elected us to serve as a check in balance 516 00:26:43,760 --> 00:26:48,000 Speaker 13: on the Biden administration, from spending to the border to 517 00:26:48,359 --> 00:26:52,359 Speaker 13: international policy. There's a lot of work to do, and 518 00:26:52,760 --> 00:26:56,040 Speaker 13: obviously one of the first orders of business is to 519 00:26:56,160 --> 00:27:00,280 Speaker 13: support our closest ally in the Middle East, the state 520 00:27:00,320 --> 00:27:04,959 Speaker 13: of Israel, to ensure that they have the resources financially 521 00:27:05,040 --> 00:27:10,920 Speaker 13: militarily to do what they need to do to defeat Hamas. 522 00:27:11,240 --> 00:27:13,880 Speaker 7: What can you do, Congressman, in the next twenty four 523 00:27:13,880 --> 00:27:17,040 Speaker 7: hours to make sure that happens. There's a big issue 524 00:27:17,119 --> 00:27:19,840 Speaker 7: right now for your party. Not only should this country 525 00:27:19,880 --> 00:27:24,439 Speaker 7: be projecting power and solid aritory with Israel, your party 526 00:27:24,480 --> 00:27:27,359 Speaker 7: also needs to demonstrate to this country that you can govern. 527 00:27:28,040 --> 00:27:29,600 Speaker 7: Why is your party failing to do that? 528 00:27:31,720 --> 00:27:35,159 Speaker 13: Well, look what happened last week with the removal of 529 00:27:35,200 --> 00:27:39,359 Speaker 13: Speaker Kevin McCarthy never should have happened. Eight Republicans teamed 530 00:27:39,440 --> 00:27:41,960 Speaker 13: up with two hundred and eight Democrats, and I think 531 00:27:42,000 --> 00:27:46,359 Speaker 13: people need to remember that both parties threw us into 532 00:27:46,440 --> 00:27:52,080 Speaker 13: chaos here for no reason and it was totally unnecessary, unwarranted, 533 00:27:52,119 --> 00:27:56,280 Speaker 13: and unjustified. And so now we're forced to pick a 534 00:27:56,320 --> 00:28:00,640 Speaker 13: new speaker. This is not like just electing a class president. 535 00:28:01,200 --> 00:28:04,080 Speaker 13: You actually need somebody who can do the job and 536 00:28:04,119 --> 00:28:07,600 Speaker 13: do it well. There's a lot, a lot that is 537 00:28:07,800 --> 00:28:10,879 Speaker 13: entailed in it. And you know, I think we're going 538 00:28:10,960 --> 00:28:13,200 Speaker 13: to get back in the room today, hash it out 539 00:28:13,600 --> 00:28:20,320 Speaker 13: even further, and hopefully elect a speaker ultimately again, when 540 00:28:20,359 --> 00:28:22,840 Speaker 13: we get back to the work of the American people, 541 00:28:23,640 --> 00:28:26,760 Speaker 13: there is a lot of critical work to be done, 542 00:28:26,800 --> 00:28:30,440 Speaker 13: from the appropriations process, to securing our border, to increasing 543 00:28:30,520 --> 00:28:33,240 Speaker 13: aid to Israel. We also have to deal with aid 544 00:28:33,280 --> 00:28:37,640 Speaker 13: to Ukraine. These are critical issues and I'm focused on 545 00:28:37,720 --> 00:28:40,600 Speaker 13: that work. Commers, especially as a member of the Foreign 546 00:28:40,600 --> 00:28:43,920 Speaker 13: Affairs Committee and the Financial Services Committee. 547 00:28:43,400 --> 00:28:45,800 Speaker 6: It's not just about who can do the job of speaker. 548 00:28:45,840 --> 00:28:49,080 Speaker 6: It's about who can get two hundred and seventeen votes. 549 00:28:49,600 --> 00:28:51,680 Speaker 6: A lot of your colleagues say they don't see anyone 550 00:28:51,720 --> 00:28:54,080 Speaker 6: that can actually get to two seventeen. Do you know 551 00:28:54,160 --> 00:28:56,400 Speaker 6: an individual that can get to that number. 552 00:28:58,200 --> 00:29:01,680 Speaker 13: Look, we're going to come back the room. We'll see 553 00:29:01,720 --> 00:29:06,360 Speaker 13: who puts their name forward. I believe our strongest speaker 554 00:29:07,200 --> 00:29:10,200 Speaker 13: is Kevin McCarthy. I said it this week, I said 555 00:29:10,200 --> 00:29:12,520 Speaker 13: it last week, I said it the week before, I 556 00:29:12,560 --> 00:29:16,160 Speaker 13: said it in January fifteen times. We're going to have 557 00:29:16,280 --> 00:29:21,840 Speaker 13: to hash it out, and obviously there's some anger, some frustration, 558 00:29:22,080 --> 00:29:27,120 Speaker 13: some hardened feelings in the room. But you know, if 559 00:29:27,120 --> 00:29:29,360 Speaker 13: we need to bring a Festivus poll in and let 560 00:29:29,360 --> 00:29:31,600 Speaker 13: everybody air their grievances. 561 00:29:31,640 --> 00:29:33,720 Speaker 11: So be it, but we have to get back to work. 562 00:29:34,280 --> 00:29:38,080 Speaker 6: Your district voted for President Joe Biden. Is it time 563 00:29:38,160 --> 00:29:40,920 Speaker 6: for members like you to reach across the aisle and 564 00:29:40,960 --> 00:29:43,400 Speaker 6: find a centrist speaker with the Democrats? 565 00:29:45,080 --> 00:29:49,800 Speaker 13: Well, respectfully, again, the Democrats helped create this mess. Everybody 566 00:29:49,800 --> 00:29:53,000 Speaker 13: should remember that two hundred and eight Democrats voted to 567 00:29:53,040 --> 00:29:58,960 Speaker 13: remove the speaker, and the American people elected a House 568 00:29:59,000 --> 00:30:04,560 Speaker 13: Republican majorit to govern. So any deal with the Democrats 569 00:30:04,840 --> 00:30:08,640 Speaker 13: would be to elect a Republican speaker. We need to 570 00:30:08,680 --> 00:30:14,560 Speaker 13: exhaust all options within the conference, but ultimately as a nation, 571 00:30:14,840 --> 00:30:17,040 Speaker 13: as a country, we need to get back to work. 572 00:30:17,760 --> 00:30:18,880 Speaker 11: And frankly, in. 573 00:30:18,760 --> 00:30:22,360 Speaker 13: My conversations with many of my Democratic colleagues, they regret 574 00:30:22,480 --> 00:30:26,560 Speaker 13: their vote to remove Kevin McCarthy because they see the 575 00:30:26,640 --> 00:30:28,160 Speaker 13: chaos that they've helped create. 576 00:30:28,320 --> 00:30:31,120 Speaker 3: But then the congressmen, to build on Emory's point, are 577 00:30:31,160 --> 00:30:34,760 Speaker 3: you getting close, especially with your Democratic colleagues, to move 578 00:30:34,800 --> 00:30:37,640 Speaker 3: towards some sort of centrist candidate to put up and 579 00:30:37,680 --> 00:30:40,240 Speaker 3: then to be able to elect any bipartisan measure. 580 00:30:42,240 --> 00:30:44,840 Speaker 11: Look, right now we are meeting again today. 581 00:30:45,800 --> 00:30:49,760 Speaker 13: I think we owe it to the conference to continue 582 00:30:49,760 --> 00:30:55,000 Speaker 13: the discussion, to see any other candidates that put their 583 00:30:55,080 --> 00:30:59,400 Speaker 13: name forward, take a vote, see where it lands, and 584 00:30:59,440 --> 00:31:00,520 Speaker 13: then take it from there. 585 00:31:00,600 --> 00:31:01,600 Speaker 11: Obviously, we want to. 586 00:31:01,600 --> 00:31:06,240 Speaker 13: Get back to work as expeditiously as possible and get 587 00:31:06,280 --> 00:31:07,200 Speaker 13: back to governing. 588 00:31:07,800 --> 00:31:10,520 Speaker 11: That is why we're here. That is the focus. 589 00:31:10,760 --> 00:31:14,080 Speaker 13: The American people are not interested in inner party squabbles. 590 00:31:15,000 --> 00:31:18,800 Speaker 13: They're not interested in the parlor game that often. 591 00:31:18,560 --> 00:31:19,600 Speaker 11: Goes on in this place. 592 00:31:20,480 --> 00:31:22,480 Speaker 13: There's real work that needs to get done and that 593 00:31:22,920 --> 00:31:25,560 Speaker 13: has been and will continue to be my focus. 594 00:31:26,120 --> 00:31:28,400 Speaker 3: A lot of people talk about the former President Trump 595 00:31:28,520 --> 00:31:31,240 Speaker 3: as being the front runner, and frankly the leader of 596 00:31:31,240 --> 00:31:34,719 Speaker 3: the Republican Party. Who do you think is the leader 597 00:31:34,760 --> 00:31:37,320 Speaker 3: of the Republican Party at a time when it desperately 598 00:31:37,320 --> 00:31:38,920 Speaker 3: seems to need a leader. 599 00:31:40,960 --> 00:31:44,360 Speaker 13: Look, Kevin McCarthy was doing a phenomenal job as the 600 00:31:44,480 --> 00:31:50,840 Speaker 13: highest ranking Republican official in Washington, and I think it 601 00:31:50,920 --> 00:31:54,720 Speaker 13: was the single stupidest political act that I've ever seen 602 00:31:55,440 --> 00:31:59,920 Speaker 13: to remove Kevin McCarthy as speaker. It undermined the majority, 603 00:32:00,080 --> 00:32:03,480 Speaker 13: a torpedoed the work that we were doing. Uh And 604 00:32:03,880 --> 00:32:07,280 Speaker 13: you know, I said earlier this week that he is 605 00:32:07,840 --> 00:32:10,080 Speaker 13: our best player on the field and should have been 606 00:32:11,440 --> 00:32:15,400 Speaker 13: should have remained a speaker, and you know, ideally would 607 00:32:15,400 --> 00:32:20,360 Speaker 13: come back. But you know, obviously right now we need 608 00:32:20,360 --> 00:32:23,360 Speaker 13: to elect a speaker. That's the focus, uh for me 609 00:32:23,640 --> 00:32:25,680 Speaker 13: in in Washington, Congressman. 610 00:32:25,720 --> 00:32:27,960 Speaker 6: This week you called in the Biden administration to start 611 00:32:28,080 --> 00:32:30,920 Speaker 6: charter flights out of Israel. The State Department announced those 612 00:32:30,920 --> 00:32:34,959 Speaker 6: flights yesterday. You have hundreds of constituents stuck in Israel. 613 00:32:35,240 --> 00:32:36,800 Speaker 6: What are you hearing from them on the ground. 614 00:32:38,400 --> 00:32:40,720 Speaker 13: Well, there's a lot of frustration, a lot of angst, 615 00:32:41,520 --> 00:32:42,360 Speaker 13: a lot of concern. 616 00:32:42,960 --> 00:32:44,880 Speaker 11: Uh. You know, people want to come home. 617 00:32:46,000 --> 00:32:50,080 Speaker 13: Many of my constituents were in Israel for the holidays, 618 00:32:50,360 --> 00:32:53,960 Speaker 13: and you know, when the war broke out, and so 619 00:32:54,080 --> 00:32:56,960 Speaker 13: obviously they want to get back to the United States. 620 00:32:57,280 --> 00:32:58,040 Speaker 11: I've been in. 621 00:32:57,960 --> 00:33:02,000 Speaker 13: Touch with the White House multiple times, State Department multiple 622 00:33:02,000 --> 00:33:07,320 Speaker 13: times to try and expedite this process to get these 623 00:33:07,360 --> 00:33:11,920 Speaker 13: folks home. I had called for chartered aircraft as well 624 00:33:11,960 --> 00:33:16,520 Speaker 13: as military aircraft to try and expedite this process. We 625 00:33:16,560 --> 00:33:22,280 Speaker 13: have nearly six hundred thousand American citizens in Israel, many 626 00:33:22,280 --> 00:33:26,080 Speaker 13: of them dual citizens, but it's six hundred thousand Americans, 627 00:33:26,440 --> 00:33:29,400 Speaker 13: and so you know, obviously anytime you're in a war zone, 628 00:33:30,920 --> 00:33:36,000 Speaker 13: you want to protect the American people that are there. Obviously, 629 00:33:36,040 --> 00:33:39,240 Speaker 13: over twenty American lives lost, we still have people missing, 630 00:33:39,720 --> 00:33:43,640 Speaker 13: potentially hostages. We need to do everything we can to 631 00:33:43,640 --> 00:33:45,160 Speaker 13: bring our Americans home. 632 00:33:45,440 --> 00:33:48,360 Speaker 7: A congressman, A lot of your constituents in the Jewish community, 633 00:33:48,400 --> 00:33:51,760 Speaker 7: I'm sure here at home are on edge Hamas, which 634 00:33:51,840 --> 00:33:54,760 Speaker 7: as you know, designated a terrorist group by the United States, 635 00:33:54,840 --> 00:33:57,080 Speaker 7: also by the EU and the UK, calling for a 636 00:33:57,160 --> 00:34:00,440 Speaker 7: day of rage today across the Muslim world, the mass 637 00:34:00,440 --> 00:34:04,000 Speaker 7: protests against Israel. Congressmen, A, you're worried about the safety 638 00:34:04,000 --> 00:34:05,800 Speaker 7: of your constituents and what are you doing to make 639 00:34:05,840 --> 00:34:08,000 Speaker 7: sure they have the security they need. 640 00:34:09,640 --> 00:34:11,960 Speaker 13: I'm always concerned. You know, I have one of the 641 00:34:12,040 --> 00:34:16,279 Speaker 13: largest Jewish communities in the country in the seventeenth Congressional 642 00:34:16,280 --> 00:34:21,360 Speaker 13: District of New York. Unfortunately, you know, threats of violence 643 00:34:22,000 --> 00:34:27,120 Speaker 13: against the Jewish people are not new, and so law 644 00:34:27,200 --> 00:34:31,080 Speaker 13: enforcement in my communities across my district have always done 645 00:34:31,120 --> 00:34:36,160 Speaker 13: a phenomenal job working with leaders in the Jewish community, 646 00:34:36,239 --> 00:34:41,560 Speaker 13: working with municipal officials to really ramp up police presence 647 00:34:41,640 --> 00:34:47,399 Speaker 13: at synagogues or you know, Jewish institutions to ensure that 648 00:34:47,920 --> 00:34:51,440 Speaker 13: we don't have acts of violence. Just a few years ago, 649 00:34:52,360 --> 00:34:55,480 Speaker 13: we had an attack in my district in Munsey during Hanukkah, 650 00:34:56,400 --> 00:35:02,160 Speaker 13: killing an individual. And you know, we want to avoid 651 00:35:02,560 --> 00:35:07,480 Speaker 13: any such incidents across this country. But you know, certainly 652 00:35:07,560 --> 00:35:11,760 Speaker 13: in areas where like mine, where you have large Jewish populations, 653 00:35:11,800 --> 00:35:14,640 Speaker 13: so law enforcement always does a great job. I know 654 00:35:14,719 --> 00:35:16,200 Speaker 13: they will step up. 655 00:35:16,560 --> 00:35:18,160 Speaker 9: A Congressman, thanks for being with us today. 656 00:35:18,440 --> 00:35:20,719 Speaker 7: Hopefully we can catch up again soon, Sir, Congressman Mike 657 00:35:20,800 --> 00:35:24,640 Speaker 7: Laud of the Republican on the latest dysfunction in Washington. 658 00:35:24,840 --> 00:35:28,239 Speaker 3: Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify, and 659 00:35:28,320 --> 00:35:31,760 Speaker 3: anywhere else you get your podcasts. Listen live every weekday 660 00:35:31,760 --> 00:35:34,360 Speaker 3: starting at seven am Eastern on Bloomberg dot com, the 661 00:35:34,400 --> 00:35:36,560 Speaker 3: iHeartRadio app, tune In, and. 662 00:35:36,560 --> 00:35:37,800 Speaker 2: The Bloomberg Business app. 663 00:35:38,080 --> 00:35:41,360 Speaker 3: You can watch us live on Bloomberg Television and always 664 00:35:41,480 --> 00:35:44,879 Speaker 3: on the Bloomberg Terminal. Thanks for listening. I'm Lisa Abramowitz, 665 00:35:44,920 --> 00:35:45,960 Speaker 3: and this is Bloomberg