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Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along

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Speaker 1: with Jonathan Farrow and Lisa Abramowitz. Join us each day

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Speaker 1: for insight from the best and economics, geopolitics, finance and investment.

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Speaker 1: Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and

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Speaker 1: anywhere you get your podcasts, and always on Bloomberg dot Com,

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Speaker 1: the Bloomberg Terminal, and the Bloomberg Business App. Jered Cassidy

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Speaker 1: joins us. He's a large cat bank analyst at RBC Capital.

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Speaker 1: Marcus the decades of experience. What will the cost reductions be, Gerard,

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Speaker 1: I mean, I get they're gonna come out and they're

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Speaker 1: going to manage that.

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Speaker 2: But it's twenty.

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Speaker 1: Twenty four beginnings with this earnings report, a year of

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Speaker 1: cost reductions for these major banks.

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Speaker 3: Tom, I think they will be an increased focus on

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Speaker 3: reducing costs, no doubt about it. The banks are striving

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Speaker 3: for positive operating leverage, and as you know, the net

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Speaker 3: interest revenue numbers will start the year of on the

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Speaker 3: weak side because of the margin pressure that the banks

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Speaker 3: are experiencing. We expect that to inflect though sometime in

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Speaker 3: the first or second quarter or twenty four. But to

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Speaker 3: your point, we do expect to see further announcements of

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Speaker 3: downsizing of personnel.

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Speaker 4: We've already had some announcements, as you know. P and

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Speaker 4: C is an example. Of course. City Group's got a

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Speaker 4: big restructuring going on.

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Speaker 3: So yes, Tom, we do expect to hear more about

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Speaker 3: reducing costs.

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Speaker 1: So good Friday, folks, I zeld In Offspring, Jared Cass

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Speaker 1: and you know Zell Works. How's a digital banking battle?

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Speaker 1: Who is winning the digital bank wars?

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Speaker 4: Tom?

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Speaker 3: All of the major banks have incredibly good digital products.

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Speaker 3: You know, when you think about the introduction of the

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Speaker 3: iPhone back and I think it was seven eight, it

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Speaker 3: really has transformed banking like so many other industries around

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Speaker 3: the world, especially on the consumer banking side. But as

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Speaker 3: we know, you can buy a very strong product off

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Speaker 3: the shelf, which allows the smaller community banks to compete

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Speaker 3: against the likes of Bank America and JP Morgan.

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Speaker 4: With the digital product, and probably as.

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Speaker 3: You know from your own personal experience, is only a

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Speaker 3: handful of app or transactions we do on the phone,

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Speaker 3: so you don't need all the bills and whistles. It's

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Speaker 3: like the old VHS machines, Tom, we only use them

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Speaker 3: to play tapes and maybe record, even though they had

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Speaker 3: all those other bells and whistles on it.

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Speaker 4: Changing the digital apps.

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Speaker 2: He's he busted my jobs just a little bit. He

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Speaker 2: knows you have no clue what we're talking about.

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Speaker 5: I remember VHS, Tom, I was around for VHS. Well,

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Speaker 5: that's good, Jp Morgan, you are a bank for America.

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Speaker 5: Just around the corner. Before we get there, Jared, let's

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Speaker 5: talk about how to navigate these numbers from BFA. The

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Speaker 5: one time items are anticipating how to really get a

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Speaker 5: sense of the underlying business, the strength of the underlying business,

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Speaker 5: what we look for.

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Speaker 3: That's true, John, We're going to obviously, you know, exclude

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Speaker 3: the one time items. Everybody's going to have the big

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Speaker 3: FDIC charge you might recall from what happened last spring

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Speaker 3: with the failures, So that's a one time item that

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Speaker 3: the banks will incur. But it's really going to come

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Speaker 3: down to the core numbers, and that's going to really

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Speaker 3: focus on two areas, the ninja's.

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Speaker 4: Revenue growth and fee revenue growth.

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Speaker 3: And within the fee revenue growth, of course, with the

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Speaker 3: big universal banks, we're going to be very focused on

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Speaker 3: the capital markets numbers, especially for read throughs for next

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Speaker 3: week when Goldman and Morgan Stanley report.

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Speaker 5: I've has been really soft. You know that, Jared. I'm

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Speaker 5: just wondering where the pie hasn't been getting bigger, which

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Speaker 5: bank has been getting a bigger slice of that pie?

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Speaker 5: How are they out performing relative to other banks? Who's winning?

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Speaker 3: Yeah, it appears that Bank America is showing the best

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Speaker 3: improvement of taking a bigger piece of the pie. It's

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Speaker 3: somewhat difficult on the trading side to really get a

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Speaker 3: good handle on who's got the better market shares. The

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Speaker 3: Geologic numbers help us on the investment banking side because

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Speaker 3: those are public, they reported numbers, and those are good

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Speaker 3: estimates that Theologic has. And in that area, the dominant players,

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Speaker 3: of course are Golmen, Sachs, JP, Morgan Chase, and so

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Speaker 3: we'll see if Bank America or City can creep up

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Speaker 3: in their market share in that area as well.

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Speaker 1: Jero, are you going to undersell their success here? I

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Speaker 1: always it's not a joke, folks. I'm serious about it

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Speaker 1: when I say they almost have to apologize for their

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Speaker 1: concentration and their success down the income statement. Is it

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Speaker 1: the same old, same old this time around with these

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Speaker 1: four reporting.

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Speaker 3: I would say that they are going to be very

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Speaker 3: straightforward about the efforts that they're doing, the success that

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Speaker 3: they're having, but also pointing out Tom that they're not

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Speaker 3: only making money for their shareholders, but they're really investing

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Speaker 3: in their communities. You know, the banking industry never really

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Speaker 3: receives any credit to the amount of volunteer hours and

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Speaker 3: money that's investing that they donate to communities around this country.

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Speaker 3: And so it's that win for everybody when these banks

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Speaker 3: produce strong numbers, and they have been producing strong numbers,

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Speaker 3: these big four banks, and I expect today we'll see

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Speaker 3: some really impressive numbers.

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Speaker 1: Jared, I believe this, and I've said this from the

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Speaker 1: day I walked to the Dorrit Bloomberg. We don't understand

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Speaker 1: how big these people are. I just added up an

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Speaker 1: approximation of how many people they have. Some together, these

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Speaker 1: four banks are nine hundred eighty nine thousand plus employees.

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Speaker 1: A lot of that's retail banking. Where's that statistic? In

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Speaker 1: five years, it's.

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Speaker 4: Going to be interesting.

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Speaker 3: I think that number, depending on how well they can grow,

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Speaker 3: will probably be flatted down because of the expectation over

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Speaker 3: the next five years of increased use of artificial intelligence

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Speaker 3: to really make the banks more efficient and more profitable.

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Speaker 4: But nobody should expect those.

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Speaker 3: Numbers to be down twenty to thirty percent because of

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Speaker 3: new technologies these companies.

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Speaker 4: It's a people business time.

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Speaker 3: As you well know, financial services is generally a high

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Speaker 3: touch business in many areas.

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Speaker 4: There is opportunities for digital.

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Speaker 3: Banking as we as we know, but it's not a

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Speaker 3: total elimination of the human touch, which is an important

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Speaker 3: part of banking.

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Speaker 5: Jared to stay close said type. We've got some numbers

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Speaker 5: in just a moment from Bank for America and JP

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Speaker 5: Morgan Wels, Fargo City, all coming up later this morning

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Speaker 5: going into it. If you are just joining us, welcome

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Speaker 5: to the program. It got to futures on the S

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Speaker 5: and P five hundred just slightly negative. We're down by

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Speaker 5: zero point two percent. The tension in the Middle East

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Speaker 5: continues to build. Crude is up by more than four percent,

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Speaker 5: seventy five dollars on WTI on brank crude we are

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Speaker 5: in the eighties eighty dollars and about seventy cents. With

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Speaker 5: us around the table to break down these numbers on

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Speaker 5: please to say it's Bloomberg stionnale bassectionalite, four big banks,

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Speaker 5: four different stories. What are you looking for?

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Speaker 6: What is going to turn around the story for Bank

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Speaker 6: of America? I think is an interesting question we started there.

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Speaker 6: Can you imagine, John, that capital won last year was

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Speaker 6: up forty two percent and Bank of America only up

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Speaker 6: two percent?

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Speaker 7: Right?

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Speaker 6: Because people are borrowing on their credit cards. If you

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Speaker 6: think about it, on one hand, it's that strict balance

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Speaker 6: between being able to borrow and being able to not

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Speaker 6: lose money on those loans.

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Speaker 1: Okay, But to be careful here, moynihan has to come

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Speaker 1: out today. Does he have to address not concerns or

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Speaker 1: fears that overdoes it, but just a study of Bank

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Speaker 1: of America's liquid in the insolvency position?

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Speaker 6: Well, he does not, because Bank of America has really

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Speaker 6: taken care of that problem over the last decade, haven't they.

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Speaker 6: And you know, you could make an argument that investors

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Speaker 6: maybe want Bank of America to take on more risk. Remember,

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Speaker 6: they have piled a lot of their balance sheet into

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Speaker 6: bonds when yields were next to nothing, and so they

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Speaker 6: have had that money tied up. That balance sheet is

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Speaker 6: starting to roll off quite a bit, and you're starting

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Speaker 6: to see their health maturity, losses starting to shrink as

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Speaker 6: well as rates rise, so the or rates come down

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Speaker 6: rather so they want them to put that money to work. Remember,

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Speaker 6: their average fight go score is higher than some of

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Speaker 6: these risky borrowers here, But does that mean they want

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Speaker 6: them to lend harder? I think this is the balance

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Speaker 6: question of the banks, especially as delinquencies start to rise

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Speaker 6: on credit cards. How much risk are you really willing

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Speaker 6: to take on as a bank?

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Speaker 1: Today will be all loving kisses. What happens in February.

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Speaker 1: Do we see a lot of right sizing and rationalizations.

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Speaker 1: Do we see announcements or is it dribs and drabs

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Speaker 1: through the late winner.

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Speaker 6: We've been talking about this, the calling. We have seen

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Speaker 6: stricter callings right at the end of last year.

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Speaker 5: The media too.

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Speaker 6: It is brutal. It's absolutely brutal. And remember we saw

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Speaker 6: so many job cuts last year. The hope this year

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Speaker 6: is that things start to turn around and they can

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Speaker 6: keep more people on staff. To Gerard Cassidy's point here,

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Speaker 6: you did see Bank of America gain little share in

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Speaker 6: investment banking, and they also bank in the middle market

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Speaker 6: where a lot of banks don't have that wide American

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Speaker 6: footprint and deals happen faster when they're less than ten

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Speaker 6: billion dollars.

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Speaker 5: We've been talking about banks for the last fifteen minutes.

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Speaker 5: Haven't mentioned last sprink? Have we left that all behind?

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Speaker 2: Now?

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Speaker 5: The bank facty is of nine months ago.

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Speaker 6: Yes, I mean in the sense that you are going

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Speaker 6: to see those FDIC charges. But the idea of the

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Speaker 6: severe crisis that the people felt back in March, they

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Speaker 6: don't feel that now. But we do see pain still

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Speaker 6: and you'll see that in places like commercial real estate.

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Speaker 6: By the way, you'll also see it in places like

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Speaker 6: auto and credit cards that could get messy in the

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Speaker 6: coming quarters, as we see from FED studies that delinquencies

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Speaker 6: are rising.

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Speaker 1: They all come out with their different power points. What's

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Speaker 1: the first thing you look for?

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Speaker 2: I mean, they're like forty two pages.

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Speaker 1: Let's say, what's the first thing Chanelli Bessett goes to.

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Speaker 6: I go to You and I both do this. We

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Speaker 6: go to the returns. At the end of the day,

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Speaker 6: it comes down to the returns on tangible common equity.

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Speaker 6: It comes down to the returns on equity. It's the

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Speaker 6: best clean way to gauge the banks.

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Speaker 1: But the profitability it's basically except for city group, big

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Speaker 1: double digit, right is that there.

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Speaker 6: Again everybody else is wavering against that double digit number.

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Speaker 6: And it comes down to the costs as well. Those

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Speaker 6: returns can't be gauged if you can't keep your costs

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Speaker 6: under control. Interestingly enough, Bank of America had made that

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Speaker 6: great move to increase their minimum wage to twenty five

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Speaker 6: dollars per person in the next year or so in

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Speaker 6: the next couple of years, so they do have a

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Speaker 6: cost base, a big employee base that they have to

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Speaker 6: contend to while also managing how to bring in more

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Speaker 6: net interest income at a time where people are over

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Speaker 6: extended on loads.

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Speaker 2: I don't think we've ever done this job.

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Speaker 1: It's six forty four Wall Street time, and we're waiting

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Speaker 1: for four separate button pushes.

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Speaker 2: It's six forty five.

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Speaker 5: This is his fault?

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Speaker 6: Whose fault is it? I remember that time Bank of

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Speaker 6: America came out at five forty five in the morning.

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Speaker 1: But Jared Cassey, he remembers when there's carrier pigeons, I mean,

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Speaker 1: you know the pigeon. That's how the bird would fly

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Speaker 1: up from New York to Boston and he'd be a

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Speaker 1: tucker Anthon can chest out with a big net out

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Speaker 1: the window to.

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Speaker 5: Capture the booby to run again these numbers in the

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Speaker 5: next five ten minutes. Shinale just quickly briefly what you

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Speaker 5: make of that black Rock tail this morning.

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Speaker 6: Blackrock has been struggling to grow its alternatives business, and

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Speaker 6: to do it in infrastructure is one place it makes

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Speaker 6: the most sense. If you think about their competition now

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Speaker 6: it's Brookfield, and you will wonder if they will dig

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Speaker 6: deeper into those other alternatives like private credit that you've

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Speaker 6: seen others really dive into.

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Speaker 1: Would you suggest that we're going to be very careful

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Speaker 1: here with the time folks will give you the banks

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Speaker 1: the moment that come.

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Speaker 2: Out, John'll do that.

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Speaker 1: I'm fascinated if this was a bidding war, I mean Gatwick,

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Speaker 1: who as Canal, whatever it is, there's different there. And

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Speaker 1: the basic idea to me is everybody else must have

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Speaker 1: been bidding as well, right.

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Speaker 6: These alternative asset managers. When I talk to folks in

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Speaker 6: the market, they're all up for sale.

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Speaker 2: Everybody is up.

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Speaker 7: Everyone is because now.

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Speaker 2: Money costs something and everybody's for song.

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Speaker 6: And scale matters. Unfortunately, scale matters, So if you're not

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Speaker 6: big enough, then you're not invited to the Party.

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Speaker 5: The push into private markets has been absolutely phenomenal. I

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Speaker 5: want to bring back into on cassidy if ABC as

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Speaker 5: we wait for these numbers from JP Morgan and Bank

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Speaker 5: for America to add the competition private markets deep Bankking,

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Speaker 5: these guys starting to eat the lunch of some of

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Speaker 5: these big banks on Wall Street.

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Speaker 3: I would say, John, they certainly have increased their competitive

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Speaker 3: positions because many of the big banks that are regulated

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Speaker 3: by the Federal Reserve, the controller of the currency, they've

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Speaker 3: been de risked following the financial crisis, as we all know,

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Speaker 3: the Fed made a push to de risk the large banks,

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Speaker 3: and that's what's happening. But all in all, the shadow

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Speaker 3: banking industry has been around, as we all know, for

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Speaker 3: forty years, and it has taken over a very large

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Speaker 3: position of providing financing for companies in this country. It

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Speaker 3: has intensified more recently as you pointed out, John, and

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Speaker 3: so the banks are competitive, but the private side has

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Speaker 3: certainly taken a leg up more recently.

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Speaker 5: Take turn out the numbers TWOP for BFA. Let's get

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Speaker 5: to those numbers. There's a couple of one time items

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Speaker 5: in here that you need to strip out to really

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Speaker 5: gage the underlying business. You're not getting a full of

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Speaker 5: picture of what's dropping the stockcase right now we down

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Speaker 5: five five percent.

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Speaker 6: They missed on a lot of critical figures here, going

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Speaker 6: down to the core item here, for example, in trading,

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Speaker 6: where you've seen them really punch above their weight, they

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Speaker 6: did come in below estimates on fixed income as well

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Speaker 6: as total sales and trading revenue. Importantly, also, they came

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Speaker 6: in below estimates on net interest income. This is what

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Speaker 6: we've been talking about their ability to bring in lending

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Speaker 6: money at the time when you do see consumers still borrowing.

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Speaker 6: Are people going to slow down their borrowing activity if

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Speaker 6: they feel overextended? The outlook for that is really important

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Speaker 6: here as we wait for further communication from executives. Here

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Speaker 6: provision for credit losses, while that came in below estimates, John,

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Speaker 6: you did see charge offs come in above estimates, which

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Speaker 6: means loans are starting tour just a little bit more

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Speaker 6: than Wall Street expense.

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Speaker 1: As the statement comes out, John, and is a generalization

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Speaker 1: here in Shanelle and Gerard of the pros on this

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Speaker 1: return on average tangible common equity goes from fifteen ish

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Speaker 1: to thirteen for.

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Speaker 2: Bank of America. So there's that key ratio ebbing away a.

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Speaker 5: Little bit Wellstanka coming out as well. But let's just

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Speaker 5: sit on the training numbers out of Bank of America,

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Speaker 5: just for Abate Shinali four Q trading revenue as you

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Speaker 5: point it out, three point seventy five billion, the estimate

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Speaker 5: three point eighty four FICK trading. Can break it down

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Speaker 5: from fick trading to equities trading, Fick trading coming in

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Speaker 5: at two point two one billion, the estimate two point four,

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Speaker 5: equities at one point five to five the estimate one

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Speaker 5: point full four. What would you read into that? Right now?

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Speaker 6: They had zero days of trading losses. On one hand,

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Speaker 6: that is great for a bank. On the other hand,

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Speaker 6: remember prime services, the ability to service asset managers and

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Speaker 6: hedge funds super competitive. Goldman has been trying to eat

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Speaker 6: away at everyone's share and so watching into next week

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Speaker 6: how trading falls across the pack will be important. How

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Speaker 6: much risk are you willing to take on in this

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Speaker 6: volatile market is a question for these question.

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Speaker 2: Surely global markets.

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Speaker 1: Bank of America is zero trading loss days in twenty

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Speaker 1: twenty three. Is that good or bad? I mean, I mean,

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Speaker 1: I guess they're bragging about that. What does that really

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Speaker 1: mean they took no risk on their desk.

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Speaker 5: It is a good thing.

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Speaker 6: You don't want to see these banks losing much money.

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Speaker 6: But to your point here, at this point in time,

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Speaker 6: can you afford to lose a little bit of money?

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Speaker 6: That is a big question here. It's a tough, tough balance.

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Speaker 6: You have to remember we're living in a time where

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Speaker 6: non bank market makers are gaining a lot of share.

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Speaker 6: Look at those Jane Street numbers, for example Citadel Securities.

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Speaker 6: We don't know what they look like for all year.

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Speaker 6: And remember, guys, trading activity bounce back at the end

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Speaker 6: of last year, and so Bank of America is competitive positioning.

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Speaker 6: We have to wait for everybody else's numbers, but you

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Speaker 6: want to see if they are kind of holding their

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Speaker 6: ground against the big guys.

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Speaker 5: More numbers, Wells Fargo, I promised you those just briefly.

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Speaker 5: Four quarter revenue twenty point four eight billion, the estimate

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Speaker 5: twenty point three five. The stock is down by two

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Speaker 5: point six percent. JP Morgan up next. We'll go through

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Speaker 5: this piece by piece. Four Q Investment Bank in revenue

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Speaker 5: one point five to eight billion, the estimate one point

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Speaker 5: seven two. We talked about trading revenue over at Bank

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Speaker 5: of America. Let's do that at JP Morgan as well.

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Speaker 5: E Grete salsand trading revenue one point seven eight billion,

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Speaker 5: the estimate one point nine to three. FIT comes in

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Speaker 5: at four point zero three bid in the estimate three

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Speaker 5: point eighty four. There's a ton to get through here

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Speaker 5: with JP Morgan. Just the early stock reaction down four percent. Nalie,

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Speaker 5: what do you see?

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Speaker 8: Yeah?

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Speaker 6: The interesting thing here is investment banking is not jumping

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Speaker 6: back as quickly as anybody expects. Remember, even if dealmaking

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Speaker 6: came back at the end of last year, you're not

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Speaker 6: seeing the banks clip those fees yet from this activity.

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Speaker 6: It takes a while for those fees to float in.

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Speaker 6: Remember equities also below estimates. This is another competitive place

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Speaker 6: on Wall Street today. Fees have been light the last

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Speaker 6: couple of years, but that's a place that investors are

356
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Speaker 6: expecting a bounce back as well. Fick came in above estimates,

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Speaker 6: whopping four billion dollars, but is it enough to offset

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Speaker 6: weakness elsewhere? We're keeping an eye on those provisions as well.

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Speaker 6: Remember a JP Morgan a first glance, they're coming in

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Speaker 6: above estimates for the provisions. Do they expect the environment

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Speaker 6: to be weakening a little faster than investors expect.

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Speaker 1: Burd at the bottom of the very clear JP Morgan report.

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Speaker 1: This is not c if the institute worked Fortress principles.

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Speaker 1: Book value up sixteen percent, tangible book value up eighteen percent.

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Speaker 5: Fortress Diamond a bit of commentary from Jamie Diamond himself.

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Speaker 5: The JP Morgan CEO race may be higher the markets expect.

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Speaker 5: Inflation maybe stick here the markets expect. We've had these

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Speaker 5: kind of warnings from Jamie Diamond over the last year

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Speaker 5: or so. John Cassidy has had a bit of time

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Speaker 5: to go through these numbers, tons of numbers here out

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Speaker 5: wows Bank for America. JP Morgan put it all together

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Speaker 5: for us. What's the story.

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Speaker 3: It's certainly complicated because of all the one time charges,

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Speaker 3: as we touched on a moment ago. But what caught

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Speaker 3: my attention already is that the credit quality picture for

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Speaker 3: the banks was strong in the quarter. For example, in

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Speaker 3: Bank America, the provision for loan losses was less than expected.

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Speaker 3: In the charge offs in our estimate were a little

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Speaker 3: better than what we were anticipating.

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Speaker 4: And so I think that's one of the messages for investors.

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Speaker 3: When you talk to investors everybody is very concerned about

382
00:18:02,359 --> 00:18:05,040
Speaker 3: the outlook for credit quality for the banks, and it

383
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Speaker 3: it looks.

384
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Speaker 4: Like it's shaping up toward the end of the year

385
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Speaker 4: to be pretty strong.

386
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Speaker 3: But the investment banking results, capital market results are coming

387
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Speaker 3: in lighted and expected.

388
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Speaker 4: As you guys have pointed it out.

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Speaker 1: Edgier artists not the fine print, but it's on the

390
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Speaker 1: edge of fine print.

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Speaker 2: This is JP Morgan.

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Speaker 1: Average deposits flat are down three percent excluding their first

393
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Speaker 1: republic soiree. How do these banks react if yields come

394
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Speaker 1: down and the money market fund wall migrates back to them.

395
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Speaker 4: Tom, That's an interesting observation.

396
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Speaker 3: The read intermediation back into the banks could certainly happen because,

397
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Speaker 3: as you pointed out, the money market mutual funds, they're

398
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Speaker 3: tied very tightly to the Fed funds rate. So if

399
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Speaker 3: the Fed was to cut Fed funds this year, the

400
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Speaker 3: money market mutual fund yields fall, the banks are a

401
00:18:52,400 --> 00:18:55,160
Speaker 3: little slower to bring their yield them, So you could

402
00:18:55,240 --> 00:18:58,040
Speaker 3: see that put JP Morgan and the other big banks,

403
00:18:58,200 --> 00:19:02,560
Speaker 3: as you know, are confronting quantitative titment. As we recall,

404
00:19:02,760 --> 00:19:06,320
Speaker 3: under quantitative viasing in the pandemic, we estimate that the

405
00:19:06,440 --> 00:19:10,399
Speaker 3: Federal Reserve pump four trillion dollars of deposits into the

406
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Speaker 3: banking system and now they're taking them out, and that's

407
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Speaker 3: why you see some of these deposit numbers down.

408
00:19:15,480 --> 00:19:18,760
Speaker 1: Let's bring James Gorman retired into this film, Morgan Stanley

409
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Speaker 1: Shaneli bask with that important conversation recently at JP Morgan

410
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Speaker 1: Wealth Management Roe of thirty one percent.

411
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Speaker 2: That's the jewel of each of these banks. I mean,

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Speaker 2: they all want to be James Gorman. Right.

413
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Speaker 6: It's incredible what they're bringing in in terms of margins

414
00:19:36,119 --> 00:19:38,920
Speaker 6: from these asset and wealth managers, and it is worth

415
00:19:38,960 --> 00:19:41,480
Speaker 6: keeping an eye on. But again, Tom, if they can't

416
00:19:41,480 --> 00:19:45,359
Speaker 6: make money at these other businesses, it does damp in

417
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Speaker 6: the story for even the profitable parts of the business.

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Speaker 6: We'll have a city group later in the hour. They're

419
00:19:50,000 --> 00:19:52,600
Speaker 6: making tons of money at their treasury and trade services business,

420
00:19:52,840 --> 00:19:56,920
Speaker 6: but markets, investment banking are lagging, and credit quality they're

421
00:19:57,480 --> 00:20:01,240
Speaker 6: below Gerard's estimates, but they're broadly over the estimates of

422
00:20:01,280 --> 00:20:05,280
Speaker 6: all Bloomberg estimates combined on average and on costs. Can

423
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Speaker 6: you imagine JP Morgan, which is among the best at

424
00:20:08,040 --> 00:20:11,040
Speaker 6: cost control here for such a large bank really able

425
00:20:11,040 --> 00:20:15,000
Speaker 6: to keep a handle on their numbers here on their returns.

426
00:20:15,640 --> 00:20:20,080
Speaker 6: They're even above estimates here on non interest expenses. So

427
00:20:20,240 --> 00:20:23,920
Speaker 6: keeping these costs under control for the top four consumer

428
00:20:24,000 --> 00:20:27,360
Speaker 6: banks is going to be a very interesting balance.

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Speaker 5: This year, we're down across the board on these full

430
00:20:29,160 --> 00:20:31,879
Speaker 5: banks by a little more than two percent. Jared's slightly

431
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Speaker 5: unfair of me to ask this question, given you've only

432
00:20:33,920 --> 00:20:35,320
Speaker 5: had about twenty four minutes to look at some of

433
00:20:35,359 --> 00:20:37,359
Speaker 5: the numbers. In fact less than that, I think you've

434
00:20:37,359 --> 00:20:40,280
Speaker 5: had about fifteen Based on what you have seen. Who

435
00:20:40,320 --> 00:20:40,919
Speaker 5: won the quarter?

436
00:20:42,400 --> 00:20:45,960
Speaker 3: I would say that it's hard to say, but JP

437
00:20:46,119 --> 00:20:50,640
Speaker 3: Morgan's numbers look pretty dune good. I'm interested to dive

438
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Speaker 3: into the Wells Fargo numbers because they have been making

439
00:20:53,960 --> 00:20:58,080
Speaker 3: real inroads into those trading and capital market areas that

440
00:20:58,160 --> 00:21:01,760
Speaker 3: has been very beneficial to the any area. But overall,

441
00:21:01,960 --> 00:21:04,480
Speaker 3: the important part John, as we go through these numbers

442
00:21:04,760 --> 00:21:06,600
Speaker 3: is going to be what the outlook is for twenty

443
00:21:06,680 --> 00:21:09,040
Speaker 3: twenty four. So I know we're going to focus on

444
00:21:09,080 --> 00:21:12,000
Speaker 3: the earnings calls to hear what the guidance is for

445
00:21:12,160 --> 00:21:14,280
Speaker 3: twenty twenty four and if we are in for a

446
00:21:14,400 --> 00:21:17,879
Speaker 3: soft landing, and the Federal Reserve is finished in raising

447
00:21:18,000 --> 00:21:19,159
Speaker 3: church and interest rates.

448
00:21:19,359 --> 00:21:20,760
Speaker 4: All four of these banks are going to.

449
00:21:20,680 --> 00:21:24,440
Speaker 3: Be winners in twenty twenty four as their business benefits

450
00:21:24,440 --> 00:21:25,840
Speaker 3: from those types of conditions.

451
00:21:25,960 --> 00:21:28,560
Speaker 5: Jared, thank you, sir for the anticipation of these numbers

452
00:21:28,560 --> 00:21:30,800
Speaker 5: and the reaction to them this morning. Jared Cassidy if

453
00:21:30,880 --> 00:21:45,160
Speaker 5: RBC Capital Markets, he's tant and rusted joined us right now,

454
00:21:45,200 --> 00:21:48,320
Speaker 5: director of Equity Research at CFRA. Can you've had some

455
00:21:48,400 --> 00:21:50,400
Speaker 5: time to pour over the numbers. Good morning to you, sir.

456
00:21:50,440 --> 00:21:51,400
Speaker 5: What stands out for you?

457
00:21:52,480 --> 00:21:57,200
Speaker 9: Well, I think first on bank stock prices, they're really consolidating.

458
00:21:57,200 --> 00:21:59,320
Speaker 9: If they're a big move in the fourth quarter, and

459
00:21:59,400 --> 00:22:02,879
Speaker 9: looking out to twenty twenty four, it's not going to

460
00:22:02,880 --> 00:22:07,800
Speaker 9: be a V shape, if you will, strong recovery in

461
00:22:07,840 --> 00:22:12,280
Speaker 9: any of the areas. But overall, what we're seeing is stability,

462
00:22:12,600 --> 00:22:16,200
Speaker 9: and stability is going to lead to growth, loan growth,

463
00:22:16,800 --> 00:22:19,280
Speaker 9: Net interest income just doesn't fall off the cliff when

464
00:22:19,359 --> 00:22:22,720
Speaker 9: rates are cut, mostly because it's the spreads as it

465
00:22:22,880 --> 00:22:25,679
Speaker 9: was talked about earlier, and I think overall it's the

466
00:22:25,720 --> 00:22:30,440
Speaker 9: inflection point in investment banking going into twenty twenty four,

467
00:22:30,880 --> 00:22:35,720
Speaker 9: there is significant backlog, particularly from the private equity firms,

468
00:22:35,920 --> 00:22:40,560
Speaker 9: to monetize those investments into the market, which would benefit

469
00:22:40,600 --> 00:22:43,760
Speaker 9: the banks for investment banking, for underwriting.

470
00:22:43,320 --> 00:22:43,800
Speaker 4: And m and A.

471
00:22:44,640 --> 00:22:48,360
Speaker 9: Additionally, banks are going to be conservative in their message

472
00:22:48,400 --> 00:22:53,120
Speaker 9: with analysts today, mostly because we expect to see.

473
00:22:52,920 --> 00:22:55,679
Speaker 4: Tighter regulation by the end of this year.

474
00:22:56,080 --> 00:22:59,200
Speaker 9: And you're going to hear the term both from banks

475
00:22:59,480 --> 00:23:01,760
Speaker 9: and from analysts about capital bill.

476
00:23:02,320 --> 00:23:03,920
Speaker 7: That's going to be the clear message.

477
00:23:04,080 --> 00:23:06,439
Speaker 1: Kley and Jane Frasier out later with two hundred and

478
00:23:06,440 --> 00:23:09,200
Speaker 1: forty thousand employees. I tried to add up the combined

479
00:23:09,240 --> 00:23:12,440
Speaker 1: four bank employees and came up with over nine hundred

480
00:23:12,520 --> 00:23:17,639
Speaker 1: thousand employees between the four. You've covered this for decades.

481
00:23:18,160 --> 00:23:22,520
Speaker 1: Where's their employee account in five years? I mean, is

482
00:23:22,560 --> 00:23:25,119
Speaker 1: this a shrinking business or do they just keep on

483
00:23:25,320 --> 00:23:26,000
Speaker 1: keep on going.

484
00:23:27,600 --> 00:23:30,639
Speaker 9: Dank Fraser is doing a great job on a transformation,

485
00:23:30,800 --> 00:23:34,920
Speaker 9: but for investors, transformation is a multi year story with bumps,

486
00:23:34,920 --> 00:23:38,000
Speaker 9: and I think for what will be the headcount for

487
00:23:38,440 --> 00:23:41,280
Speaker 9: a streamlined city group as we look at it two

488
00:23:41,280 --> 00:23:44,360
Speaker 9: to three years out is perhaps going to be ten

489
00:23:44,400 --> 00:23:49,280
Speaker 9: to fifteen percent lower. There's a whole list of businesses

490
00:23:49,320 --> 00:23:53,439
Speaker 9: that are already announced as sold and consumer outside the US.

491
00:23:54,119 --> 00:23:58,040
Speaker 9: So I think what Jane Fraser is looking for is execution.

492
00:23:58,720 --> 00:24:02,320
Speaker 9: And I think by pre announcing, if you will, those

493
00:24:02,359 --> 00:24:05,680
Speaker 9: one time chargers, they want to show what that runway

494
00:24:05,880 --> 00:24:07,600
Speaker 9: is of this transformation.

495
00:24:08,000 --> 00:24:10,199
Speaker 2: What is that runway? What will we learn in the

496
00:24:10,240 --> 00:24:11,600
Speaker 2: hour from Jane Fraser.

497
00:24:12,720 --> 00:24:16,760
Speaker 9: I think what Jane Fraser is going to articulate is

498
00:24:16,800 --> 00:24:21,560
Speaker 9: that city has some very durable businesses that have very

499
00:24:21,840 --> 00:24:25,960
Speaker 9: reliable recurring revenue, whether it's in corporate or treasury services

500
00:24:25,960 --> 00:24:28,400
Speaker 9: and payments. And then when they look at the other

501
00:24:28,480 --> 00:24:31,760
Speaker 9: businesses where maybe they had only one eye on the business,

502
00:24:32,080 --> 00:24:36,919
Speaker 9: They're going to reinvest in wealth management along with selective

503
00:24:36,960 --> 00:24:39,960
Speaker 9: areas of investment banking. But this is going to be

504
00:24:40,080 --> 00:24:43,639
Speaker 9: a streamline bank looking out two to three years. I

505
00:24:43,640 --> 00:24:47,160
Speaker 9: would say, though there will be bumps along the way.

506
00:24:47,359 --> 00:24:50,520
Speaker 9: We had that same narrative with Wells Fargo. They're in

507
00:24:50,560 --> 00:24:53,639
Speaker 9: a better position today than a few years ago. So

508
00:24:53,720 --> 00:24:57,120
Speaker 9: I think for Jane Fraser, it's just really showing that

509
00:24:57,160 --> 00:25:00,679
Speaker 9: the strategy is beginning to work. It's not going to

510
00:25:00,720 --> 00:25:04,320
Speaker 9: be a turnaround. Just in twenty twenty.

511
00:25:04,040 --> 00:25:11,000
Speaker 5: Four, Kenley on there of Cflight joining US now is

512
00:25:11,000 --> 00:25:15,119
Speaker 5: Norman Rols, senior advisor on the Transnational Threats Project as CSIS,

513
00:25:15,119 --> 00:25:19,040
Speaker 5: and former senior US intelligence official Norman Good morning to you, sir.

514
00:25:19,240 --> 00:25:22,280
Speaker 5: The first question from US this morning, overnight and through

515
00:25:22,280 --> 00:25:25,119
Speaker 5: this morning was that a strike on Houthy rebels or

516
00:25:25,119 --> 00:25:26,199
Speaker 5: a strike against Iran.

517
00:25:28,000 --> 00:25:31,480
Speaker 7: Good morning. The attack was a strike on Houthy rebels.

518
00:25:31,520 --> 00:25:35,520
Speaker 7: It is a attack consistent with the administration's plan to

519
00:25:35,680 --> 00:25:39,240
Speaker 7: have a gradual escalatory approach to the region. It certainly

520
00:25:39,280 --> 00:25:44,040
Speaker 7: will degrade Hoothy capabilities. It's unclear to the extent those

521
00:25:44,040 --> 00:25:46,960
Speaker 7: capabilities will be degraded. It is unlikely to deter the

522
00:25:47,000 --> 00:25:50,639
Speaker 7: HOUTHIS from future attacks, although the HOUTHIS will likely calibrate

523
00:25:50,680 --> 00:25:54,400
Speaker 7: those attacks in discussion with Iran to prevent a more

524
00:25:54,440 --> 00:25:56,879
Speaker 7: significant regime to stabilizing response.

525
00:25:57,560 --> 00:26:00,800
Speaker 1: Mister Rowland Nicolas Smith in the Telegraph as a really

526
00:26:01,080 --> 00:26:06,520
Speaker 1: terse essay on the actual missiles that the Huties have,

527
00:26:07,040 --> 00:26:09,000
Speaker 1: and what I read out of it is this is

528
00:26:09,560 --> 00:26:11,800
Speaker 1: I see the stereotype of the media that this is

529
00:26:11,800 --> 00:26:13,959
Speaker 1: a bunch of terraces off on a desert island.

530
00:26:14,320 --> 00:26:18,200
Speaker 2: That's not the case. They have very sophisticated missiles.

531
00:26:18,600 --> 00:26:22,720
Speaker 1: For example, the USS gravelyes there the aarli Berg destroyer,

532
00:26:23,080 --> 00:26:28,000
Speaker 1: and they've got some missiles here of real capability, including ASBMs.

533
00:26:28,000 --> 00:26:30,639
Speaker 1: Do we underestimate their sophistication.

534
00:26:32,119 --> 00:26:35,679
Speaker 7: No, And in fact it's a well known fact among

535
00:26:35,760 --> 00:26:38,359
Speaker 7: the governments of the region in Europe that Behuthies have

536
00:26:38,440 --> 00:26:44,280
Speaker 7: acquired powerful missiles and more importantly training from Iran and

537
00:26:44,520 --> 00:26:49,679
Speaker 7: in Iran on those missiles to make them lethal threat

538
00:26:49,720 --> 00:26:50,280
Speaker 7: to the region.

539
00:26:51,040 --> 00:26:54,479
Speaker 1: What is the difference for our ships at sea at

540
00:26:54,480 --> 00:26:57,240
Speaker 1: the Red Sea and frankly outside the Red Sea today,

541
00:26:57,480 --> 00:26:59,320
Speaker 1: now that this attack has occurred by.

542
00:26:59,160 --> 00:27:02,440
Speaker 2: The Allies, what's the new risk to our sailors.

543
00:27:03,720 --> 00:27:06,199
Speaker 7: Well, the Houthis are certainly going to sit back and

544
00:27:06,200 --> 00:27:08,640
Speaker 7: say what do they have left, what has been damaged?

545
00:27:08,640 --> 00:27:10,959
Speaker 4: How can they disperse and use other tools?

546
00:27:11,280 --> 00:27:13,359
Speaker 7: We have to remember the Houthies still have a vast

547
00:27:13,440 --> 00:27:18,440
Speaker 7: drone fleet, probably some missile capacity of drone boats and

548
00:27:18,920 --> 00:27:22,080
Speaker 7: also naval minds. Now, a naval facility was struck as

549
00:27:22,160 --> 00:27:25,480
Speaker 7: part of the attack profile, but that doesn't mean that

550
00:27:25,560 --> 00:27:27,760
Speaker 7: we have taken out all of those capabilities, and the

551
00:27:27,800 --> 00:27:30,280
Speaker 7: Houthis again can use those as long as they keep

552
00:27:30,359 --> 00:27:32,880
Speaker 7: the nature of the attacks below the level that would

553
00:27:32,960 --> 00:27:35,359
Speaker 7: cause a very significant counter strike.

554
00:27:35,240 --> 00:27:37,120
Speaker 5: The Norman This effort has been led by the United

555
00:27:37,160 --> 00:27:39,320
Speaker 5: States and the United Kingdom. What do you think we

556
00:27:39,400 --> 00:27:42,439
Speaker 5: can learn from the countries who were involved and the

557
00:27:42,480 --> 00:27:43,320
Speaker 5: countries who weren't.

558
00:27:45,200 --> 00:27:48,080
Speaker 7: Well, the United States and the United Kingdom as usual

559
00:27:48,160 --> 00:27:52,240
Speaker 7: or very close partners, and their intelligence and military authorities

560
00:27:52,280 --> 00:27:54,760
Speaker 7: would have coordinated very closely over the weeks prior to this.

561
00:27:55,160 --> 00:27:58,240
Speaker 7: Within the region, we had support from involvement by Bahrain

562
00:27:58,359 --> 00:28:01,239
Speaker 7: and the European Union from never That doesn't mean these

563
00:28:01,280 --> 00:28:04,720
Speaker 7: other countries weren't playing different roles for security in the region,

564
00:28:05,040 --> 00:28:08,480
Speaker 7: but for their own political and security reasons, they could

565
00:28:08,560 --> 00:28:11,480
Speaker 7: not involve themselves in the attack. And frankly, the United

566
00:28:11,520 --> 00:28:14,240
Speaker 7: States and the United Kingdom had more than enough ordinance

567
00:28:14,240 --> 00:28:17,800
Speaker 7: to undertake these activities. Between our missiles, the US submarine

568
00:28:17,920 --> 00:28:20,000
Speaker 7: and the four typhoons launched from Cyprus.

569
00:28:20,160 --> 00:28:21,919
Speaker 5: Can you take us into RIHANNT and give us a

570
00:28:21,920 --> 00:28:24,840
Speaker 5: deeper understanding of how Saudi Arabia will be thinking about

571
00:28:24,840 --> 00:28:25,320
Speaker 5: this moment.

572
00:28:26,720 --> 00:28:30,080
Speaker 7: Saudi Arabia has issued a muted response calling for restraint

573
00:28:30,160 --> 00:28:33,919
Speaker 7: from all parties. The Saudis will probably be pushing a

574
00:28:33,920 --> 00:28:37,080
Speaker 7: diplomatic initiative to send eturn messages to the who theis

575
00:28:37,160 --> 00:28:40,239
Speaker 7: and to the Iranians. I'm not sure the impact of that,

576
00:28:40,280 --> 00:28:42,920
Speaker 7: but the Saudis also have to recognize that if the

577
00:28:43,000 --> 00:28:47,000
Speaker 7: conflict were to escalate, it would impact their security issues.

578
00:28:47,040 --> 00:28:50,120
Speaker 7: And the international community has not shown much appetite for

579
00:28:50,840 --> 00:28:53,440
Speaker 7: working against Yemen in the long term, so they have

580
00:28:53,480 --> 00:28:55,760
Speaker 7: to be careful. If you're going to involve yourself in Yemen,

581
00:28:55,960 --> 00:28:58,520
Speaker 7: what's the plan, how does this end? And are you

582
00:28:58,560 --> 00:29:00,600
Speaker 7: going to be with us as long as takes and

583
00:29:01,160 --> 00:29:03,959
Speaker 7: the United States and Europe have not comonstrated that interest.

584
00:29:04,080 --> 00:29:08,400
Speaker 1: Norman Road Bahrain near Cutter Sandwich, between Kuwait to the

585
00:29:08,440 --> 00:29:11,480
Speaker 1: north and Uae Dubai and Abu Dhabi to the south,

586
00:29:11,520 --> 00:29:15,640
Speaker 1: that the Persian Gulf the Arabian Sea, I should say,

587
00:29:16,240 --> 00:29:18,760
Speaker 1: I'm looking at berin what is their relationship to the

588
00:29:18,840 --> 00:29:22,360
Speaker 1: other Arab states? Are they alone this morning or are

589
00:29:22,360 --> 00:29:26,280
Speaker 1: they acting in support with the support I should say

590
00:29:26,640 --> 00:29:28,000
Speaker 1: of the other Arab nations.

591
00:29:29,120 --> 00:29:32,160
Speaker 7: Well, there's no opposition to Bahrain's activities. Bahrain is not

592
00:29:32,280 --> 00:29:35,000
Speaker 7: the largest country in the region, but it consistently shows

593
00:29:35,040 --> 00:29:38,840
Speaker 7: significant leadership on issues ranging from the Abraham Accords on

594
00:29:39,160 --> 00:29:42,640
Speaker 7: opposing what hamas did on October seventh, and on its

595
00:29:42,640 --> 00:29:47,600
Speaker 7: support with allied and partner military activities. The Naval nav

596
00:29:47,720 --> 00:29:50,520
Speaker 7: sent Our Naval Command center in the region is located

597
00:29:50,560 --> 00:29:54,680
Speaker 7: in Minama, and the Bahraini leadership is a very supportive

598
00:29:54,760 --> 00:29:56,000
Speaker 7: and reliable partner.

599
00:29:56,320 --> 00:29:58,760
Speaker 1: What is the level of our intelligence this morning? You've

600
00:29:58,800 --> 00:30:02,000
Speaker 1: been so good at outline to us. How we know

601
00:30:02,160 --> 00:30:04,080
Speaker 1: what we know? That's always worry.

602
00:30:04,360 --> 00:30:06,880
Speaker 2: Do we have good intelligence after these attacks?

603
00:30:08,120 --> 00:30:12,600
Speaker 7: The nature of the attacks demonstrates a clear and good

604
00:30:12,680 --> 00:30:16,680
Speaker 7: understanding of the locations from which attacks have taken place.

605
00:30:17,280 --> 00:30:22,000
Speaker 7: We have infrared satellite capability that, according to press reports,

606
00:30:22,040 --> 00:30:27,160
Speaker 7: allows us to understand whence attacks originates. So I'm confident

607
00:30:27,200 --> 00:30:30,960
Speaker 7: that the intelligence behind these attacks and subsequent Hoothy operations

608
00:30:31,000 --> 00:30:33,280
Speaker 7: will be good and consistent with the past.

609
00:30:33,400 --> 00:30:35,360
Speaker 5: I'd love your interpretation of a headline we got in

610
00:30:35,440 --> 00:30:37,120
Speaker 5: the last hour or so, Norman. I wonder what you

611
00:30:37,160 --> 00:30:39,240
Speaker 5: think about this when you hear the Hoothy say that

612
00:30:39,440 --> 00:30:43,800
Speaker 5: all us UK interests are now legitimate targets. Norman, what

613
00:30:43,800 --> 00:30:44,400
Speaker 5: does that mean?

614
00:30:46,040 --> 00:30:49,600
Speaker 7: Huthi rhetorica and Iranian rhetoric will remain defiant and strong,

615
00:30:49,720 --> 00:30:53,040
Speaker 7: But again we're likely to see Hoo they attacks against

616
00:30:53,080 --> 00:30:57,400
Speaker 7: shipping in the in their neighborhood. There reach is really

617
00:30:57,440 --> 00:31:00,520
Speaker 7: not far beyond that. But again they are going to

618
00:31:00,560 --> 00:31:04,200
Speaker 7: want to calibrate this for their own domestic audience and

619
00:31:04,240 --> 00:31:07,720
Speaker 7: for the region as they move forward without again and

620
00:31:07,920 --> 00:31:11,200
Speaker 7: we're getting another major missile response, particularly one aim at

621
00:31:11,200 --> 00:31:16,040
Speaker 7: their leadership. This response was tactical in deterring and degrading activity.

622
00:31:16,040 --> 00:31:18,880
Speaker 7: It was not strategic. It was not aimed at leadership

623
00:31:18,960 --> 00:31:22,880
Speaker 7: or destroying all Hohothy military assets. And again we're managing

624
00:31:22,880 --> 00:31:25,680
Speaker 7: that escalatory ladder and the administration of London or doing

625
00:31:25,720 --> 00:31:26,240
Speaker 7: this carefully.

626
00:31:26,320 --> 00:31:28,920
Speaker 5: The administration and Westminster will have to manage the domestic

627
00:31:29,000 --> 00:31:30,120
Speaker 5: reaction as well.

628
00:31:30,320 --> 00:31:30,640
Speaker 4: Norman.

629
00:31:30,640 --> 00:31:33,400
Speaker 5: This came from Richard Sunak, the British Prime Minister, describe

630
00:31:33,400 --> 00:31:36,400
Speaker 5: the hits on Yemen as limited, necessary and proportionate after

631
00:31:36,480 --> 00:31:40,480
Speaker 5: weeks of dangerous and destabilizing attacks the elector, and I

632
00:31:40,480 --> 00:31:43,360
Speaker 5: think domestically within the United States, within the UK, they're

633
00:31:43,400 --> 00:31:46,240
Speaker 5: going to be increasingly worried about their countries, their nations

634
00:31:46,280 --> 00:31:48,880
Speaker 5: being drawn into this tension in the Middle East. Norman,

635
00:31:48,880 --> 00:31:51,840
Speaker 5: would you describe what we saw overnight through this morning

636
00:31:52,200 --> 00:31:54,400
Speaker 5: as a one off where we set in the stage

637
00:31:54,640 --> 00:31:56,959
Speaker 5: for a repeat of this through the next few weeks.

638
00:31:58,200 --> 00:32:02,760
Speaker 7: The British Prime Minister's statement is accurate and crisply said.

639
00:32:03,680 --> 00:32:04,800
Speaker 4: We hope it's.

640
00:32:04,680 --> 00:32:07,200
Speaker 7: A one off, but that's really up to the Hoothy's

641
00:32:07,560 --> 00:32:09,280
Speaker 7: I think what we have to look at is whether

642
00:32:09,320 --> 00:32:13,560
Speaker 7: a Hoothi counter strike will be a symbolic meant to

643
00:32:13,560 --> 00:32:16,680
Speaker 7: show defiance or really something that indicates that they haven't

644
00:32:16,680 --> 00:32:19,160
Speaker 7: got the message. If the latter is the case, there

645
00:32:19,200 --> 00:32:22,720
Speaker 7: will certainly be a broader strike by the United States,

646
00:32:22,720 --> 00:32:26,200
Speaker 7: probably the United Kingdom, but again it'll be carefully calibrated

647
00:32:26,200 --> 00:32:29,320
Speaker 7: to move up the escalatory ladder. Neither Washington or London.

648
00:32:29,120 --> 00:32:31,320
Speaker 4: Or industry in an all out conflict in the region.

649
00:32:31,360 --> 00:32:33,600
Speaker 5: And Norman I Ran and who is at the moment,

650
00:32:33,600 --> 00:32:36,719
Speaker 5: You're comfortable that there is some kind of distinction between

651
00:32:36,840 --> 00:32:39,840
Speaker 5: Iran and Hoothy rebels, because a lot of people struggle

652
00:32:39,880 --> 00:32:41,960
Speaker 5: with that idea.

653
00:32:42,080 --> 00:32:44,360
Speaker 7: You will note that in the US statement on the attack,

654
00:32:44,440 --> 00:32:47,880
Speaker 7: Iran is not mentioned, although in any explanation of the

655
00:32:48,560 --> 00:32:51,920
Speaker 7: attack and the problem said, Iran is always described as

656
00:32:51,960 --> 00:32:55,600
Speaker 7: being behind this activity. Iran will attempt with difficulty to

657
00:32:55,600 --> 00:32:58,320
Speaker 7: deliver new weapons and provide support to the Houthis, but

658
00:32:58,360 --> 00:33:01,080
Speaker 7: the naval capacity in the region will likely disrupt that.

659
00:33:01,360 --> 00:33:03,240
Speaker 7: I think the broader problem is going to be the

660
00:33:03,280 --> 00:33:07,040
Speaker 7: capacity of Iran's embassy and the people involved provide intelligence

661
00:33:07,120 --> 00:33:10,240
Speaker 7: and counsel to the Huthis as they deliberate their way forward.

662
00:33:10,640 --> 00:33:12,960
Speaker 7: But that's the nature of the relationship between Iran and

663
00:33:12,960 --> 00:33:13,720
Speaker 7: the Huthis.

664
00:33:13,760 --> 00:33:15,880
Speaker 5: Norman, We're very lucky to catch up with you, sir.

665
00:33:15,880 --> 00:33:18,640
Speaker 5: Thanks for your time. Norman rule there a CSIS.

666
00:33:28,920 --> 00:33:32,240
Speaker 1: We are going to turn now to Mohammed El Area

667
00:33:32,280 --> 00:33:35,560
Speaker 1: and at Queen's College, Cambridge, and it is on economics,

668
00:33:35,560 --> 00:33:38,960
Speaker 1: finance and investment, but today it's on something different after

669
00:33:39,000 --> 00:33:44,320
Speaker 1: the attacks we saw overnight against Huti revels and terrorists

670
00:33:44,360 --> 00:33:47,560
Speaker 1: and of course their relationship to Iran. Muhammad, this goes

671
00:33:47,600 --> 00:33:50,200
Speaker 1: back to Albert Harani and what we all learned about

672
00:33:50,240 --> 00:33:53,960
Speaker 1: the history of the Arab people Byreen is one of

673
00:33:54,000 --> 00:33:54,720
Speaker 1: our allies.

674
00:33:54,840 --> 00:33:55,160
Speaker 2: Here.

675
00:33:55,680 --> 00:33:59,160
Speaker 1: Would you suggest that the Arab nations are in support

676
00:33:59,480 --> 00:34:01,960
Speaker 1: of this, how I'd attack on these rebels?

677
00:34:03,640 --> 00:34:06,840
Speaker 8: I would suggest then nervous. You saw a statement by

678
00:34:06,840 --> 00:34:13,359
Speaker 8: Saudi Arabia that is warning against escalation, and the concern here,

679
00:34:13,480 --> 00:34:18,560
Speaker 8: Tom is that other proxies. Other Iranian proxies in the

680
00:34:18,600 --> 00:34:25,320
Speaker 8: Middle East will see this as a reason to escalate

681
00:34:25,960 --> 00:34:29,200
Speaker 8: what's going on in that region. So that's why you

682
00:34:29,320 --> 00:34:33,920
Speaker 8: hear concern from the air countries. The last thing anybody

683
00:34:33,960 --> 00:34:37,360
Speaker 8: wants is an escalation that becomes region wide.

684
00:34:37,600 --> 00:34:43,319
Speaker 1: Which institution can create a dialogue between Tehran and a

685
00:34:43,360 --> 00:34:45,400
Speaker 1: Western world word.

686
00:34:47,760 --> 00:34:53,239
Speaker 8: I think first you need to see a cessation of

687
00:34:53,400 --> 00:34:57,960
Speaker 8: hostilities in Gaza. That is a Greek condition. There won't

688
00:34:57,960 --> 00:35:02,120
Speaker 8: be the ability to get people talking in a broader

689
00:35:02,160 --> 00:35:04,440
Speaker 8: sense in the region until you get a cessation of

690
00:35:04,840 --> 00:35:09,200
Speaker 8: hostilities in Gather. Once you get that, then you know

691
00:35:09,360 --> 00:35:12,480
Speaker 8: that the relationship between Saudi Arabia and Iran has improved.

692
00:35:13,000 --> 00:35:17,239
Speaker 8: You know that the UEE plays a critical role in

693
00:35:17,800 --> 00:35:21,160
Speaker 8: conversations among countries in the region. So there are parties

694
00:35:21,160 --> 00:35:24,000
Speaker 8: that can help, but you need to precondition first.

695
00:35:24,239 --> 00:35:28,160
Speaker 5: Mohammad, you warned in Projects Syndicate recently not to extrapolate

696
00:35:28,239 --> 00:35:31,359
Speaker 5: out the favorable trends that we finished last year with.

697
00:35:31,800 --> 00:35:33,719
Speaker 5: Is there something that's developing in the Middle East right

698
00:35:33,719 --> 00:35:35,560
Speaker 5: now that you think is a direct threat to that.

699
00:35:37,480 --> 00:35:39,280
Speaker 8: It's one of the things John, I mean, my major

700
00:35:39,320 --> 00:35:42,520
Speaker 8: concern is that if you look at the three systemically

701
00:35:42,560 --> 00:35:48,120
Speaker 8: important regions in the world economically, the euro Zone, the US,

702
00:35:48,160 --> 00:35:52,880
Speaker 8: and China, all three are having issues growing in a

703
00:35:53,000 --> 00:35:56,120
Speaker 8: robust manner. The US is the exceptional there, but even

704
00:35:56,160 --> 00:36:00,279
Speaker 8: the US now is facing lower household savings, higher debt.

705
00:36:00,880 --> 00:36:05,480
Speaker 8: China needs to fundamentally change its economic models, and we

706
00:36:05,600 --> 00:36:09,320
Speaker 8: know that without a healthy Germany, Europe is going to struggle.

707
00:36:09,640 --> 00:36:12,359
Speaker 8: So if you actually look at who is the locomotive

708
00:36:12,400 --> 00:36:16,319
Speaker 8: of growth, it's very hard to point to one locomotive.

709
00:36:17,040 --> 00:36:19,160
Speaker 8: It's hard to believe that the US will be able

710
00:36:19,200 --> 00:36:22,719
Speaker 8: to maintain what it was very impressive growth ways now.

711
00:36:22,760 --> 00:36:27,279
Speaker 8: Put on top of that the geopolitical concerns, and that's

712
00:36:27,360 --> 00:36:32,080
Speaker 8: why this recency bias, where people simply extrapolate what was

713
00:36:32,120 --> 00:36:35,920
Speaker 8: a surprisingly good year from last year, is something that

714
00:36:35,960 --> 00:36:36,920
Speaker 8: we have to guard against.

715
00:36:37,239 --> 00:36:40,120
Speaker 5: So you're questioning the resilient growth story, are you also

716
00:36:40,200 --> 00:36:43,680
Speaker 5: questioning the disinflationary trans muhammad that has started to develop

717
00:36:43,920 --> 00:36:45,040
Speaker 5: over the last twelve months.

718
00:36:46,239 --> 00:36:48,520
Speaker 8: Yeah, I smiled when I heard the conversation before I

719
00:36:48,560 --> 00:36:52,759
Speaker 8: came on that you know it's disinflation ahead, It's not

720
00:36:53,480 --> 00:36:57,040
Speaker 8: We're going to see and we already are seeing cost

721
00:36:57,080 --> 00:37:01,480
Speaker 8: push pressures in the pipeline. That's two. In particular, what's

722
00:37:01,880 --> 00:37:05,360
Speaker 8: happened to navigation in the Red Sea is directly and

723
00:37:05,480 --> 00:37:12,280
Speaker 8: indirectly increasing inflation pressures, directly by hiking input prices, indirectly

724
00:37:12,320 --> 00:37:17,399
Speaker 8: by causing shortages that then influence other prices. And then

725
00:37:17,480 --> 00:37:20,760
Speaker 8: we have the labor market issue. We have high labor

726
00:37:20,800 --> 00:37:24,439
Speaker 8: costs coming through the pipeline, so you've got cost push

727
00:37:24,520 --> 00:37:28,920
Speaker 8: pressures coming in. I suspect we will see inflation at

728
00:37:28,960 --> 00:37:32,080
Speaker 8: the CPI level get stuck at three percent, and then

729
00:37:32,719 --> 00:37:35,160
Speaker 8: the Fed is going to have to make a difficult decision.

730
00:37:35,719 --> 00:37:40,520
Speaker 8: I either tolerated for longer and I was encouraged by

731
00:37:40,760 --> 00:37:44,440
Speaker 8: John William's use of the word a longer term inflation

732
00:37:44,560 --> 00:37:48,680
Speaker 8: target is two percent, or try to reduce it to

733
00:37:48,719 --> 00:37:52,160
Speaker 8: two percent too quickly and risk the wheel economy. But

734
00:37:52,400 --> 00:37:56,040
Speaker 8: this notion that immaculate this inflation is going to continue

735
00:37:56,719 --> 00:37:59,480
Speaker 8: is something that I find very hard to reconcile with

736
00:37:59,600 --> 00:38:00,600
Speaker 8: actual data.

737
00:38:00,680 --> 00:38:02,960
Speaker 5: Muhammad, you really challenge that theory. I think that we

738
00:38:03,000 --> 00:38:04,480
Speaker 5: get a lot of people on this program, and I

739
00:38:04,520 --> 00:38:06,080
Speaker 5: know you tuned in and you've heard them say it

740
00:38:06,080 --> 00:38:08,320
Speaker 5: that the economy is rebalancaying. This will continue. You just

741
00:38:08,360 --> 00:38:11,600
Speaker 5: give it time, we'll get there. You push back against that.

742
00:38:12,040 --> 00:38:14,799
Speaker 5: I hear other people say things haven't changed, we will

743
00:38:14,840 --> 00:38:19,000
Speaker 5: go back to the pre twenty twenty economic regime, low

744
00:38:19,040 --> 00:38:23,200
Speaker 5: and stable inflation, growth in and around two percent. You

745
00:38:23,280 --> 00:38:25,880
Speaker 5: really believe something has changed. What are the issues that

746
00:38:25,920 --> 00:38:28,760
Speaker 5: you can point to, Muhammad, that you think have fundamentally

747
00:38:28,840 --> 00:38:30,440
Speaker 5: changed since the pandemic.

748
00:38:32,760 --> 00:38:36,919
Speaker 8: So I think it has fundamentally changed since what work

749
00:38:37,000 --> 00:38:40,080
Speaker 8: was before the pandemic. Coming out of the global financial crisis,

750
00:38:40,360 --> 00:38:44,239
Speaker 8: we had major balance sheet damage and that resulted in

751
00:38:44,280 --> 00:38:49,560
Speaker 8: a decade of insufficient argugod demand. There simply wasn't enough demand.

752
00:38:49,239 --> 00:38:49,800
Speaker 7: In the system.

753
00:38:50,160 --> 00:38:52,239
Speaker 8: And when there isn't enough demand in the system, you

754
00:38:52,400 --> 00:38:56,880
Speaker 8: pump in liquidity from the monetary side, from the fiscal side,

755
00:38:56,920 --> 00:39:01,360
Speaker 8: and you don't have to worry about inflation. You boost

756
00:39:01,400 --> 00:39:05,080
Speaker 8: up asset prices and you get some growth response, but

757
00:39:05,200 --> 00:39:09,880
Speaker 8: nothing really exciting. That was the story before the pandemic.

758
00:39:10,560 --> 00:39:13,960
Speaker 8: Coming out of the pandemic, in addition, well, in addition

759
00:39:14,000 --> 00:39:17,759
Speaker 8: to the pandemic disruptions, we have four factors that are

760
00:39:17,840 --> 00:39:22,320
Speaker 8: leading to insufficient aggregate supply. So it's a fundamental change

761
00:39:22,320 --> 00:39:25,279
Speaker 8: in the macro environment. So what are those factors. We

762
00:39:25,360 --> 00:39:30,320
Speaker 8: have fragmenting globalization, which means that supply chains are starting

763
00:39:30,360 --> 00:39:36,840
Speaker 8: to be determined by geopolitical and not just commercial reason.

764
00:39:38,160 --> 00:39:41,920
Speaker 8: We have companies themselves looking for more resilience balance sheets,

765
00:39:42,320 --> 00:39:45,680
Speaker 8: more resilient supply chains after what happened during the pandemic.

766
00:39:46,840 --> 00:39:51,000
Speaker 8: We have a significant transition on climate, and we have

767
00:39:51,080 --> 00:39:55,200
Speaker 8: the labor market also where labor force participation has not

768
00:39:55,280 --> 00:39:57,680
Speaker 8: gone up as much as all of us wish. This

769
00:39:57,840 --> 00:40:00,840
Speaker 8: is a world in which we are frat trial to

770
00:40:00,880 --> 00:40:03,439
Speaker 8: begin with on the supply side, and then you get

771
00:40:03,560 --> 00:40:06,560
Speaker 8: the original shock. So that is a fundamental.

772
00:40:06,080 --> 00:40:08,720
Speaker 2: Change, Muhammad. I'm not going to be at Davos.

773
00:40:08,800 --> 00:40:11,160
Speaker 1: I'm going to be watching QPR at Watchford this week

774
00:40:11,200 --> 00:40:13,200
Speaker 1: and we're looking forward to.

775
00:40:13,400 --> 00:40:14,239
Speaker 5: That, Mohammedan.

776
00:40:15,800 --> 00:40:17,440
Speaker 2: But I'll be there, Mohammad.

777
00:40:17,560 --> 00:40:20,319
Speaker 1: If I was in Davos, my banner for the year

778
00:40:20,400 --> 00:40:24,760
Speaker 1: would be its cost of carry Davos. What's fundamentally changed

779
00:40:24,760 --> 00:40:28,200
Speaker 1: off of you're good analysis there moments ago, is all

780
00:40:28,239 --> 00:40:33,040
Speaker 1: of a sudden money costs something. Every single business and

781
00:40:33,280 --> 00:40:38,360
Speaker 1: family out there has a new cost of money. How's

782
00:40:38,400 --> 00:40:40,759
Speaker 1: the world going to change a year out with this

783
00:40:40,960 --> 00:40:44,000
Speaker 1: new new After the free lunch of the last decade.

784
00:40:45,719 --> 00:40:48,760
Speaker 8: Yeah, and the issue is the legacy of the free lunch.

785
00:40:48,840 --> 00:40:51,959
Speaker 8: I think on a flow basis, we can deal with

786
00:40:52,120 --> 00:40:54,760
Speaker 8: the higher cost of money. The problem is the stock.

787
00:40:55,360 --> 00:40:59,440
Speaker 8: And we know there are three major areas that somehow

788
00:40:59,640 --> 00:41:03,520
Speaker 8: have to refinanced and you've got to get volume back.

789
00:41:04,400 --> 00:41:08,240
Speaker 8: One is the US housing market, where the higher mortgage

790
00:41:08,280 --> 00:41:12,520
Speaker 8: rate is just stopping people from moving and it's very

791
00:41:12,560 --> 00:41:15,600
Speaker 8: hard to get onto the housing ladder right now because

792
00:41:15,640 --> 00:41:18,560
Speaker 8: you're not getting the flow you need. Second is commercial

793
00:41:18,560 --> 00:41:22,040
Speaker 8: real estate. There's a trillion plus that has to be refinanced,

794
00:41:22,440 --> 00:41:25,120
Speaker 8: and some of it cannot be refinanced at what is

795
00:41:25,160 --> 00:41:28,480
Speaker 8: assumed in terms of value. And then the third area

796
00:41:29,040 --> 00:41:31,759
Speaker 8: that needs to do is we have a wall of

797
00:41:31,800 --> 00:41:34,920
Speaker 8: corporate maturities coming up in twenty twenty five and companies

798
00:41:35,320 --> 00:41:37,360
Speaker 8: normally try to get ahead of it. So if we

799
00:41:37,400 --> 00:41:40,160
Speaker 8: can deal with the stock issue, with the legacy of

800
00:41:40,200 --> 00:41:44,440
Speaker 8: this borrowing that occurred when rates were artificially low, we

801
00:41:44,520 --> 00:41:48,200
Speaker 8: can deal with the flow aspect. The flow aspects, Tom,

802
00:41:48,239 --> 00:41:50,360
Speaker 8: don't worry me. We just have to deal with the stock.

803
00:41:50,719 --> 00:41:52,879
Speaker 5: Mahammed, We'll continue this conversation. Do you want to tell

804
00:41:52,920 --> 00:41:54,920
Speaker 5: Tom about QPR or should I.

805
00:41:56,640 --> 00:41:59,000
Speaker 8: No, I really don't want to get depressed and start

806
00:41:59,000 --> 00:41:59,440
Speaker 8: crying on it.

807
00:42:00,200 --> 00:42:02,040
Speaker 5: Zone TK relegation zone.

808
00:42:02,160 --> 00:42:03,759
Speaker 2: Couldn't the Jets be relegated?

809
00:42:05,080 --> 00:42:08,719
Speaker 5: They are like the Jets of English football in the championship.

810
00:42:08,200 --> 00:42:10,600
Speaker 2: Real now, and there's a level below them.

811
00:42:10,719 --> 00:42:13,080
Speaker 5: They can go down a league. Yet this is not

812
00:42:13,120 --> 00:42:14,200
Speaker 5: looking good for QPR.

813
00:42:14,480 --> 00:42:16,719
Speaker 1: Well, you know, mister Ruberstone's room to be looking at

814
00:42:16,719 --> 00:42:17,800
Speaker 1: the Baltimore.

815
00:42:17,320 --> 00:42:23,200
Speaker 5: Else if they get relegated. Can we get some kind

816
00:42:23,200 --> 00:42:25,560
Speaker 5: of consortium together and take out QPR.

817
00:42:25,719 --> 00:42:29,880
Speaker 2: Yeah, that's what you know. Get some movie in the

818
00:42:29,960 --> 00:42:32,680
Speaker 2: unio thing you could go over and I could.

819
00:42:32,600 --> 00:42:35,560
Speaker 5: Go and coach the team or something. Anyone at QPR

820
00:42:35,640 --> 00:42:36,880
Speaker 5: wants that? I'm not sure.

821
00:42:38,800 --> 00:42:39,040
Speaker 7: Either.

822
00:42:39,280 --> 00:42:47,200
Speaker 5: The brilliant Mhammadalarian of Queen's College, Cambridge. The NFL reporting

823
00:42:47,239 --> 00:42:50,839
Speaker 5: it's best rating since twenty ten. Ninety three of the

824
00:42:50,880 --> 00:42:55,160
Speaker 5: top one hundred TV broadcast last year NFL games and

825
00:42:55,200 --> 00:42:58,319
Speaker 5: it's not just YouTube. Pecre't getting involved this weekend said

826
00:42:58,360 --> 00:43:01,719
Speaker 5: to broadcast their first playoff game the NFL, signaling a

827
00:43:01,840 --> 00:43:05,560
Speaker 5: shift away from linear TV. Michael Nathanson and Muffett Nathanson

828
00:43:05,640 --> 00:43:08,560
Speaker 5: wank in writing quote where the history of linear TV

829
00:43:08,640 --> 00:43:10,920
Speaker 5: has been written. A sad and sorry chapter will be

830
00:43:11,000 --> 00:43:14,400
Speaker 5: dedicated to how such a once great business was supplanted

831
00:43:14,880 --> 00:43:17,800
Speaker 5: by a model that wasn't nearly as good for anyone.

832
00:43:18,000 --> 00:43:20,840
Speaker 5: Michael and Police to say, join us right now, Michael,

833
00:43:20,880 --> 00:43:22,799
Speaker 5: great to catch up with you. Say let's discuss it.

834
00:43:22,880 --> 00:43:25,800
Speaker 5: Let's talk about the sport itself, the dominance of football

835
00:43:25,840 --> 00:43:28,200
Speaker 5: in this country. What's everyone else getting wrong?

836
00:43:30,239 --> 00:43:33,719
Speaker 4: Yeah, American football? What else is getting wrong? It's a

837
00:43:33,760 --> 00:43:36,440
Speaker 4: perfect sport for a TV right.

838
00:43:36,520 --> 00:43:36,879
Speaker 3: You have.

839
00:43:38,440 --> 00:43:41,560
Speaker 10: You a set of games, very predictable every week. It's

840
00:43:41,600 --> 00:43:47,000
Speaker 10: a short season, every game matters, and sports gambling is

841
00:43:48,520 --> 00:43:51,440
Speaker 10: growing very quickly, so it's a combination of it. It's

842
00:43:51,480 --> 00:43:54,200
Speaker 10: easy to watch, you can bet on it, and we

843
00:43:54,280 --> 00:43:55,600
Speaker 10: have national storylines.

844
00:43:55,680 --> 00:43:55,759
Speaker 7: Right.

845
00:43:55,920 --> 00:43:58,360
Speaker 10: The teams are now nationally followed in a way that

846
00:43:58,440 --> 00:44:00,799
Speaker 10: when Tom and I we are wasn't the case. It

847
00:44:00,840 --> 00:44:03,239
Speaker 10: was a regional sport and now it's national in terms

848
00:44:03,280 --> 00:44:03,960
Speaker 10: of fandom.

849
00:44:04,160 --> 00:44:07,640
Speaker 1: Michael's watching Digita, reading Digita, I should say about the

850
00:44:07,680 --> 00:44:11,880
Speaker 1: complete total dominance of mister Moran's YouTube. And I'm absolutely

851
00:44:11,880 --> 00:44:14,000
Speaker 1: fat You've been so far out front on this with

852
00:44:14,080 --> 00:44:17,480
Speaker 1: Craig Moffatt. Is anybody down the road, you going to

853
00:44:17,560 --> 00:44:22,520
Speaker 1: compete with the two consolidated giants YouTube and Netflix.

854
00:44:24,200 --> 00:44:29,319
Speaker 10: Amazon. So it's interesting people have always said content is king.

855
00:44:30,000 --> 00:44:32,560
Speaker 10: I think the past decade, what's what we've seen now

856
00:44:32,600 --> 00:44:37,200
Speaker 10: as the platform is king, and I pulled Amazon, Netflix

857
00:44:37,440 --> 00:44:41,799
Speaker 10: and YouTube as the future leaders in this industry right,

858
00:44:41,880 --> 00:44:44,359
Speaker 10: current leaders in the future. And the challenge for media

859
00:44:44,360 --> 00:44:46,120
Speaker 10: companies is how do you play in that world?

860
00:44:46,320 --> 00:44:46,480
Speaker 4: Right?

861
00:44:46,680 --> 00:44:49,960
Speaker 10: How does your content resonate in a world where you

862
00:44:50,040 --> 00:44:52,560
Speaker 10: have these massive platforms with so much choice?

863
00:44:53,040 --> 00:44:55,520
Speaker 4: And this is this is the challenge the next next decade.

864
00:44:55,640 --> 00:44:57,359
Speaker 1: Michael, we got to make some news here, so let's

865
00:44:57,360 --> 00:44:59,680
Speaker 1: get to it. It's a Friday. You need Nathanson news

866
00:44:59,760 --> 00:45:03,680
Speaker 1: right now. Paul Sweeney modeled out yesterday the idea of

867
00:45:04,000 --> 00:45:07,360
Speaker 1: ESPN with a forty percent lift. I believe an expense

868
00:45:07,480 --> 00:45:11,480
Speaker 1: they have to pay for all this sporting activity. Is

869
00:45:11,480 --> 00:45:15,400
Speaker 1: mister Eigers setting up ESPN for an immediate sale to Amazon.

870
00:45:17,040 --> 00:45:20,920
Speaker 10: You know, he has flowed the idea of finding minority partners.

871
00:45:20,960 --> 00:45:22,319
Speaker 10: I don't think he wants to give it up at

872
00:45:22,320 --> 00:45:23,200
Speaker 10: this point in time.

873
00:45:24,360 --> 00:45:24,960
Speaker 4: He's flowed to.

874
00:45:24,960 --> 00:45:29,160
Speaker 10: Partners from the platforms, from the leagues, maybe some of

875
00:45:29,200 --> 00:45:33,000
Speaker 10: the third parties. I think Disneyland wants in the sports

876
00:45:33,000 --> 00:45:35,239
Speaker 10: business and they just want to find some funding to

877
00:45:35,239 --> 00:45:39,080
Speaker 10: help them get through. We have wondered for a while

878
00:45:39,120 --> 00:45:42,600
Speaker 10: now how ESPN is a better business going forward than

879
00:45:42,640 --> 00:45:48,080
Speaker 10: it's been. Costizing work cutting continues to slide. So we've

880
00:45:48,120 --> 00:45:50,200
Speaker 10: been writing lately. We'll started this a couple of weeks

881
00:45:50,200 --> 00:45:52,360
Speaker 10: ago time with you, is that we think streaming and

882
00:45:52,400 --> 00:45:54,759
Speaker 10: they've not had a good streaming run here. They need

883
00:45:54,760 --> 00:45:57,600
Speaker 10: to focus more energy on streaming and less on ESPN,

884
00:45:57,760 --> 00:46:00,560
Speaker 10: and we'll see if they listen to us.

885
00:46:00,640 --> 00:46:02,600
Speaker 1: Just to me is like the interview of the Year John,

886
00:46:02,600 --> 00:46:04,560
Speaker 1: and it was Daniell leave you and you in London,

887
00:46:04,960 --> 00:46:06,840
Speaker 1: And at the end of that interview I was standing

888
00:46:06,840 --> 00:46:09,680
Speaker 1: there folks off the side having a pre cocky eil

889
00:46:09,760 --> 00:46:12,439
Speaker 1: tang And the answer is John is he said, well,

890
00:46:12,480 --> 00:46:14,640
Speaker 1: we just we don't really want to win. We just

891
00:46:14,719 --> 00:46:17,680
Speaker 1: sort of want to compete and have again entertainment. I'm

892
00:46:17,719 --> 00:46:20,920
Speaker 1: not hearing that from Nathan center Iger. It's totally different

893
00:46:21,200 --> 00:46:22,200
Speaker 1: over here about winning.

894
00:46:22,320 --> 00:46:25,359
Speaker 5: Let's talk about the sport, Michael, how do you break it?

895
00:46:25,880 --> 00:46:28,319
Speaker 5: I think you break it by airing playoff games on

896
00:46:28,360 --> 00:46:31,480
Speaker 5: streaming platforms that people don't have. I asked my producer

897
00:46:31,560 --> 00:46:35,800
Speaker 5: Jamie this morning, simple question. You have a producer, Jamie James, fantastic,

898
00:46:35,880 --> 00:46:37,960
Speaker 5: you don't get to share it. One atturn to Jamie

899
00:46:38,000 --> 00:46:40,080
Speaker 5: Michael and I said, how do you watch the football?

900
00:46:40,080 --> 00:46:42,160
Speaker 5: Win's it on? And he gave me an answer immediately.

901
00:46:42,520 --> 00:46:44,440
Speaker 5: I said, how do you watch the baseball? Win's it on?

902
00:46:44,719 --> 00:46:47,239
Speaker 5: Couldn't answer the question. He's a basketball fanasaid, when's the

903
00:46:47,239 --> 00:46:49,320
Speaker 5: basketball on? How do you watch it? Couldn't answer the

904
00:46:49,400 --> 00:46:52,480
Speaker 5: question with a direct answer. That's the problem for all

905
00:46:52,480 --> 00:46:55,640
Speaker 5: these other sports. And a great example of that is Boxinc.

906
00:46:55,960 --> 00:46:59,520
Speaker 5: They have killed Boxinc. This used to be something everyone

907
00:46:59,600 --> 00:47:02,040
Speaker 5: used to watch together. It's not anymore. It's buried on

908
00:47:02,080 --> 00:47:04,880
Speaker 5: a streaming platform, whatever it's called. I don't know. I

909
00:47:04,960 --> 00:47:07,640
Speaker 5: like boxing and I don't pay to watch it. Michael,

910
00:47:07,840 --> 00:47:10,319
Speaker 5: are they about to break it? You talked about the

911
00:47:10,360 --> 00:47:13,640
Speaker 5: loss of the experience, and I'm with you. They're killing git.

912
00:47:14,000 --> 00:47:16,200
Speaker 5: They've got success. Are they about to break it?

913
00:47:17,080 --> 00:47:17,279
Speaker 4: Yeah?

914
00:47:17,360 --> 00:47:19,799
Speaker 10: John, I'll break news on the air with you. I

915
00:47:19,880 --> 00:47:22,440
Speaker 10: totally agree with you. It makes me so angry as

916
00:47:22,480 --> 00:47:25,640
Speaker 10: a consumer and an analyst that this is one of

917
00:47:25,840 --> 00:47:28,799
Speaker 10: This playoff game is probably the top game of the weekend. Right,

918
00:47:29,200 --> 00:47:31,000
Speaker 10: And when I got my show the schedule when it

919
00:47:31,000 --> 00:47:33,840
Speaker 10: came out, I'm like, wait, they're they're putting the Dolphins

920
00:47:33,920 --> 00:47:36,959
Speaker 10: Chiefs on Peacock. So we have to pay six bucks

921
00:47:37,040 --> 00:47:41,239
Speaker 10: more a month together for one night. That's just outrageous

922
00:47:41,239 --> 00:47:44,800
Speaker 10: to me, right, it just is. And I think it's greedy,

923
00:47:45,200 --> 00:47:49,160
Speaker 10: and I know why comcasts are doing it in Peacock.

924
00:47:49,560 --> 00:47:49,920
Speaker 7: I think the.

925
00:47:50,000 --> 00:47:53,040
Speaker 10: League is overreaching here and they've done an amazing job

926
00:47:53,600 --> 00:47:56,080
Speaker 10: navigating the entire pragmentation media.

927
00:47:56,560 --> 00:47:57,560
Speaker 4: But I think you're right, John.

928
00:47:57,560 --> 00:48:00,640
Speaker 10: I think there's a feedback group which says these guys

929
00:48:00,719 --> 00:48:03,240
Speaker 10: don't care about the fans. They're in it for the money.

930
00:48:03,600 --> 00:48:05,919
Speaker 10: And it's just loud and clear by having the best

931
00:48:05,920 --> 00:48:08,799
Speaker 10: game of the weekend on Peacock. And I totally agree with.

932
00:48:08,760 --> 00:48:11,759
Speaker 5: You, Michael, because the numbers simply don't work. I've heard

933
00:48:11,760 --> 00:48:14,880
Speaker 5: TV executives talk about this. The problem with sport is

934
00:48:14,920 --> 00:48:17,480
Speaker 5: that you build out the asset, but you never own it.

935
00:48:17,719 --> 00:48:19,600
Speaker 5: You have to lease it. You get a four or

936
00:48:19,600 --> 00:48:22,480
Speaker 5: five year deal. I just wonder whether the numbers really

937
00:48:22,520 --> 00:48:25,080
Speaker 5: work anymore. It was always about grabbing that appointment of view.

938
00:48:25,080 --> 00:48:27,520
Speaker 5: There were very few left, Let's go to Sports Live TV.

939
00:48:27,640 --> 00:48:31,640
Speaker 5: All that's left is sports and this right here broadcast news. Michael,

940
00:48:31,680 --> 00:48:33,480
Speaker 5: I just wonder the future of that given how much

941
00:48:33,520 --> 00:48:34,600
Speaker 5: the asset now costs.

942
00:48:35,920 --> 00:48:39,080
Speaker 10: That was interesting, John, when you're nighted one hundred million

943
00:48:39,120 --> 00:48:39,920
Speaker 10: homes in America.

944
00:48:40,360 --> 00:48:41,320
Speaker 4: It was a great model.

945
00:48:41,560 --> 00:48:44,640
Speaker 10: But as holmes start to slide, the cost of sport

946
00:48:44,760 --> 00:48:48,120
Speaker 10: keeps going up, the cost of and the revenues keep

947
00:48:48,120 --> 00:48:51,400
Speaker 10: coming down or flattening, so it doesn't work for every sport.

948
00:48:51,480 --> 00:48:54,600
Speaker 10: The NFL is key because for five months out of

949
00:48:54,640 --> 00:49:01,200
Speaker 10: a year it maintained the PTV bundle. That is the difference, right, Hockey,

950
00:49:01,200 --> 00:49:05,000
Speaker 10: as much as I know, hockey is small. Baseball's become,

951
00:49:05,480 --> 00:49:06,440
Speaker 10: you know, a small.

952
00:49:06,120 --> 00:49:06,880
Speaker 4: Sport in America.

953
00:49:06,960 --> 00:49:08,840
Speaker 10: But the NFL and Collegetable are different.

954
00:49:09,280 --> 00:49:11,840
Speaker 4: I think those two models great for the time being.

955
00:49:12,200 --> 00:49:13,680
Speaker 4: For the time being, right, they.

956
00:49:13,520 --> 00:49:16,840
Speaker 1: Hold Michael, you and Craig Moffett on the high ground.

957
00:49:17,000 --> 00:49:19,480
Speaker 1: I'm predicting that we would cut the cord. I'm going

958
00:49:19,520 --> 00:49:22,040
Speaker 1: to give credit also to your good competitor, Rich Greenfield

959
00:49:22,360 --> 00:49:24,759
Speaker 1: for being out front in this as well. I want

960
00:49:24,800 --> 00:49:26,920
Speaker 1: to talk about the new cord cutting, which is the

961
00:49:27,040 --> 00:49:32,200
Speaker 1: churn model, A six percent churn and what that means

962
00:49:32,239 --> 00:49:35,880
Speaker 1: for finance of our entertainment. To me, that's a ginormous

963
00:49:36,000 --> 00:49:38,800
Speaker 1: number because I think over thirty six months a business

964
00:49:38,800 --> 00:49:41,799
Speaker 1: plan that you lose eighteen percent of your people, am

965
00:49:41,880 --> 00:49:42,239
Speaker 1: I right?

966
00:49:43,120 --> 00:49:45,799
Speaker 10: Well yeah, you know, Tom, the chart is actually six

967
00:49:45,800 --> 00:49:47,520
Speaker 10: percent a month percent of these services.

968
00:49:47,560 --> 00:49:49,359
Speaker 4: So think about that, right though.

969
00:49:49,680 --> 00:49:53,160
Speaker 10: In you know, over a couple of years, let's say

970
00:49:53,160 --> 00:49:55,200
Speaker 10: a year and a calf, you can turn your entire

971
00:49:55,239 --> 00:49:59,800
Speaker 10: base out. The streaming model does not work as built today.

972
00:50:00,160 --> 00:50:02,560
Speaker 10: That's where you're seeing all these bundles come together because

973
00:50:03,160 --> 00:50:06,000
Speaker 10: as Craig Craig's been on this from day one, there

974
00:50:06,080 --> 00:50:08,360
Speaker 10: was nothing better. I mean twenty years ago, there was

975
00:50:08,400 --> 00:50:11,239
Speaker 10: nothing better than the PTV bundle because you don't have

976
00:50:11,320 --> 00:50:14,440
Speaker 10: to compete for customers. The customer is given to you

977
00:50:14,480 --> 00:50:16,560
Speaker 10: by the cable operator. You just had to make one

978
00:50:16,560 --> 00:50:19,600
Speaker 10: good show or quarter to get paid by the cable operator.

979
00:50:19,920 --> 00:50:23,200
Speaker 10: In this world, you need to constant, constant hit cycle.

980
00:50:23,520 --> 00:50:26,040
Speaker 10: It's impossible to do so it churns off the charts.

981
00:50:26,560 --> 00:50:29,520
Speaker 10: The model, you know, Netflix has surprised me. We've been

982
00:50:30,239 --> 00:50:32,160
Speaker 10: a bit of a doubt or on Netflix's model, but

983
00:50:32,480 --> 00:50:35,439
Speaker 10: it's just worked their way so well, the number two

984
00:50:35,480 --> 00:50:37,760
Speaker 10: position is not very pretty if you look at Disney

985
00:50:37,800 --> 00:50:39,800
Speaker 10: in terms of the economics for those two and a

986
00:50:39,800 --> 00:50:42,879
Speaker 10: half dollion dollars last year. You need to cut churn.

987
00:50:43,040 --> 00:50:44,760
Speaker 10: And the only way you could schurn is by bundling

988
00:50:44,800 --> 00:50:47,160
Speaker 10: with other people or seeing competitors die.

989
00:50:47,560 --> 00:50:48,399
Speaker 4: That's where you are.

990
00:50:48,480 --> 00:50:50,480
Speaker 1: I know, your single best buy is the New York

991
00:50:50,600 --> 00:50:51,840
Speaker 1: Yankees with one soda.

992
00:50:51,920 --> 00:50:53,000
Speaker 2: What a gift that is.

993
00:50:53,320 --> 00:50:56,280
Speaker 1: But in the finance, in the stock market, Michael Nathanson,

994
00:50:56,360 --> 00:50:57,919
Speaker 1: what's your single best buy right now?

995
00:50:58,440 --> 00:51:00,640
Speaker 10: Well, it's funny. Our Centle best buy was actually a

996
00:51:00,640 --> 00:51:03,800
Speaker 10: short call on Roku. So, like you know, we've been pushed.

997
00:51:03,840 --> 00:51:05,400
Speaker 10: We've been very, very aggressive.

998
00:51:05,000 --> 00:51:08,080
Speaker 4: On Meta and Alphabet in the past fifteen months.

999
00:51:08,360 --> 00:51:10,359
Speaker 10: So we still like them, but it's getting harder and

1000
00:51:10,400 --> 00:51:12,239
Speaker 10: harder to see the you know, it was a home

1001
00:51:12,320 --> 00:51:14,640
Speaker 10: run a year ago. We were saying that immediately we've

1002
00:51:14,640 --> 00:51:16,840
Speaker 10: been buying Disney. But for Disney, I feel like the

1003
00:51:16,880 --> 00:51:21,399
Speaker 10: pressures on them to now prove the case for streaming right.

1004
00:51:21,480 --> 00:51:25,799
Speaker 10: So so our best call is shorting Roku here, which is,

1005
00:51:26,000 --> 00:51:28,799
Speaker 10: you know, a call on the state of streaming, right

1006
00:51:28,840 --> 00:51:31,160
Speaker 10: That's that's our the call of the year. We do

1007
00:51:31,239 --> 00:51:33,960
Speaker 10: this every six months. We update our call. Today for me,

1008
00:51:34,040 --> 00:51:36,080
Speaker 10: it's Roku on the cell side.

1009
00:51:36,400 --> 00:51:39,160
Speaker 5: Love this, Michael Estae again soon Michael Nathan's and the

1010
00:51:39,520 --> 00:51:41,120
Speaker 5: have Muffet NICSNS and thank you, Buddy.

1011
00:51:41,600 --> 00:51:45,440
Speaker 1: Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify, and

1012
00:51:45,600 --> 00:51:49,760
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1013
00:51:50,040 --> 00:51:54,640
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1014
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Speaker 1: app tune In.

1015
00:51:56,200 --> 00:51:57,640
Speaker 2: And the Bloomberg Business app.

1016
00:51:58,080 --> 00:52:02,279
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1017
00:52:02,320 --> 00:52:03,360
Speaker 1: the Bloomberg Terminal.

1018
00:52:03,760 --> 00:52:07,920
Speaker 2: Thanks for listening. I'm Tom Keen, and this is Bloomberg