WEBVTT - Banks Launch Return of Earnings Season 0:00:01.840 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.480 --> 0:00:06.840 Tim Stanevik. We're here every day bringing you the latest 0:00:06.840 --> 0:00:11.000 news from the world's of business and finance, clus technology, politics, economics, 0:00:11.039 --> 0:00:14.040 all harnessing the power of Business Week reporters and editors, 0:00:14.160 --> 0:00:17.040 not to mention our journalists and analyst in more than 0:00:17.040 --> 0:00:19.960 one and twenty countries. You can download Bloomberg Business Week 0:00:20.000 --> 0:00:22.880 on iTunes, SoundCloud, or Bloomberg dot com. You can also 0:00:22.880 --> 0:00:25.000 listen to our radio show at two pm Eastern Time 0:00:25.120 --> 0:00:28.200 on Bloomberg Radio or stream us live on YouTube and 0:00:28.240 --> 0:00:32.640 Bloomberg dot com. All right, let's talk more bank stocks. 0:00:32.680 --> 0:00:34.680 See that all right? Well as a whole, you know, 0:00:34.720 --> 0:00:37.120 they were lower, now they're higher. So this first hour 0:00:37.159 --> 0:00:39.000 we're looking at a group in a couple of different ways. 0:00:39.280 --> 0:00:41.280 First up, Carol, this morning's earnings and updates on the 0:00:41.320 --> 0:00:44.519 business from JPMorgan Bank of American City group that had 0:00:44.560 --> 0:00:47.920 stocks moving lower at least initially. Yeah, and after bank stocks, 0:00:47.960 --> 0:00:50.320 you know, keep in mind, underperforming the broader market last year, 0:00:50.360 --> 0:00:52.879 there were many who were saying that this group is 0:00:53.040 --> 0:00:56.280 potentially primed for a bounce higher, and we ultimately are 0:00:56.360 --> 0:00:58.959 seeing that in this latter half of the trading day. 0:00:58.960 --> 0:01:01.720 When it comes to bank stocks, KBW Bank Index was 0:01:01.760 --> 0:01:05.600 up more than nine from December twenty through yesterday, but 0:01:05.720 --> 0:01:07.880 it's even more now with a bump up today. So 0:01:07.959 --> 0:01:10.520 let's get to it. Uh. Anton Shoots is back with us. 0:01:10.520 --> 0:01:13.840 He's president chief investment officer at Mendon Capital Advisors, joining 0:01:13.880 --> 0:01:16.319 us via zoom from Florida. Anton, Good to see you, 0:01:16.360 --> 0:01:19.800 Happy new year, Happy new year. Always happy to be 0:01:19.840 --> 0:01:22.160 with you. Well, always great to have you here. So 0:01:22.400 --> 0:01:25.080 quite an interesting day. They came out. Initially those bank 0:01:25.160 --> 0:01:27.319 names as big bang names were under pressure in the 0:01:27.360 --> 0:01:30.560 equity trade. They've turned around. Um, as I always like 0:01:30.600 --> 0:01:32.880 to do and start with you broadly, what jumps out 0:01:32.880 --> 0:01:36.039 in terms of what we got from results today? Oh, 0:01:36.080 --> 0:01:38.280 I think we got kind of what was expected right, 0:01:38.360 --> 0:01:41.039 sort of maybe near the end of the net interest margin, 0:01:41.560 --> 0:01:44.640 you know, very weak investment banking, you know, thick. That 0:01:44.760 --> 0:01:48.000 was okay. Um, it was really the conference calls, I 0:01:48.040 --> 0:01:52.080 think to turn the stocks because I think that the stocks, 0:01:52.120 --> 0:01:55.080 you know, unperformed last year. People were really afraid of 0:01:55.400 --> 0:01:59.160 bad credit right two thousand seven all over again. And 0:01:59.280 --> 0:02:01.040 as I've said on your show many times, this is 0:02:01.080 --> 0:02:03.960 not two thousand seventies are not the dumb bank CEO 0:02:04.080 --> 0:02:07.560 is making really terrible mistakes of bad products, because they 0:02:07.560 --> 0:02:10.320 really did in two thousand seven, right, they negative amortization 0:02:10.400 --> 0:02:13.280 mortgages and they were letting a and it moved. I mean, 0:02:13.720 --> 0:02:16.120 these guys who run these banks today, they've learned a 0:02:16.160 --> 0:02:19.840 lot of lessons. They understand risk and risk management, credit underwriting, 0:02:20.440 --> 0:02:23.440 and they are not where the bad loans are. Um 0:02:23.480 --> 0:02:26.600 And what's interesting is obviously maybe the end of the 0:02:26.600 --> 0:02:29.919 interest rate margin expansion, but they've had that expansion right 0:02:29.960 --> 0:02:32.080 to go from zero rates to where they are today. 0:02:32.520 --> 0:02:35.320 Earnings estimates went up all year, yet the stocks went down. 0:02:35.960 --> 0:02:38.200 Now we may be in a scenario where earnings estimates 0:02:38.200 --> 0:02:40.840 may actually go down some but the stocks are so 0:02:40.960 --> 0:02:43.880 cheap relative to where the rest of the SMP is 0:02:43.919 --> 0:02:46.480 the stocks could actually outperform in value. Has certainly been 0:02:46.480 --> 0:02:52.120 showing them. Anton It's interesting because even if this year 0:02:52.200 --> 0:02:55.200 is looking good, we still saw all of the lenders 0:02:55.240 --> 0:02:57.640 put aside more money to cover loans that might go bad. 0:02:58.320 --> 0:03:00.959 How do you read into that? Well, first of all, 0:03:01.200 --> 0:03:04.760 you know it's this crazy accounting thing called CECIL, So 0:03:05.000 --> 0:03:06.720 you know the banks will have to buy a model 0:03:06.800 --> 0:03:09.280 for Moodies, and obviously they have their own models as well. 0:03:10.040 --> 0:03:12.560 But you know, you have to take in all these factors, 0:03:12.919 --> 0:03:15.840 and those model based factors tell you that credit is 0:03:15.840 --> 0:03:18.760 going to get worse. They're not seeing it, right, It 0:03:18.760 --> 0:03:21.520 really hasn't happened. I mean, on the margin, we've seen 0:03:21.520 --> 0:03:24.760 credit get worse than the subcrime consumer. The banks really 0:03:24.760 --> 0:03:27.800 aren't in that space. We're certainly seeing, you know, on 0:03:27.840 --> 0:03:29.760 the credit card side, people are spending more than not 0:03:29.840 --> 0:03:32.360 paying back as quickly, but they're not defaulting. They all 0:03:32.400 --> 0:03:35.320 have jobs. I mean, I think another big factor is 0:03:35.400 --> 0:03:38.240 everybody has a job. Everybody wants a job as a job, 0:03:38.760 --> 0:03:41.440 and you know, employers are still scrambling to hire people. 0:03:42.560 --> 0:03:44.040 So what do you make too of you know? One 0:03:44.040 --> 0:03:45.760 of the things, and no doubt about it that we 0:03:45.800 --> 0:03:48.240 wanted to see the results and what the you know, 0:03:48.280 --> 0:03:51.080 how the banks came in. We were really interested in 0:03:51.120 --> 0:03:54.240 outlooking what the CEO has had to say, Um, any 0:03:54.280 --> 0:03:56.880 consensus takeaway for you, you know Jamie Diamond. Of course 0:03:56.920 --> 0:03:59.520 we pass everywhere that he says. But was there any 0:03:59.600 --> 0:04:03.760 takeaway for you among the big banks CEOs today? Yeah? 0:04:03.840 --> 0:04:06.040 I mean he didn't use the word hurricane. You know, 0:04:06.120 --> 0:04:09.520 Thank goodness, I think he's regretted that word. We we 0:04:09.560 --> 0:04:13.400 all have, anybody who owns financials regretted that word. But 0:04:13.600 --> 0:04:16.200 the reality is is, you know, they're all, you know, 0:04:16.279 --> 0:04:19.440 sort of cautiously optimistic, right. Nobody is negative. No one's going, 0:04:19.520 --> 0:04:21.760 oh my goodness, you know things are going to be 0:04:21.839 --> 0:04:25.880 tough now. You know, nobody likes the pressure that's out there. 0:04:25.880 --> 0:04:27.800 Maybe the fat is done, right, your prior guests talked 0:04:27.800 --> 0:04:30.599 about maybe being done. Maybe they're close to done, and 0:04:30.600 --> 0:04:32.680 and maybe we can engine eer a soft landing. And 0:04:32.720 --> 0:04:35.960 even if there's a mild recession, banks have outperformed during 0:04:36.040 --> 0:04:38.480 milder sessions. If you look at that that period and 0:04:38.640 --> 0:04:40.680 you know, I guess I'm giving my age away, but 0:04:40.760 --> 0:04:43.560 I ran money in that two thousand period where the 0:04:43.640 --> 0:04:47.880 dot com bust happened and financials performed very, very well. 0:04:48.440 --> 0:04:51.640 And you may have that value, you know, out performance 0:04:51.720 --> 0:04:55.440 versus growth. You may have that mild recession where banks 0:04:55.440 --> 0:04:57.200 do not lose a lot of money, they don't lose 0:04:57.240 --> 0:05:00.200 money at all because their underwriting has been so good. 0:05:00.320 --> 0:05:02.159 And by the way, the other thing is is, you 0:05:02.160 --> 0:05:05.599 know we've talked fin techs on your show fin techs 0:05:05.880 --> 0:05:09.039 don't have deposits, right, the neo banks, they really don't 0:05:09.040 --> 0:05:12.080 have good deposit, good cost structure. Look at Golden Specs, right, 0:05:12.080 --> 0:05:13.600 it's is it a bank, Well, you know it's an 0:05:13.600 --> 0:05:16.640 investment bank and their cost of funds is very expensive. 0:05:16.680 --> 0:05:19.320 They've lost a lot of money, you know, for going 0:05:19.320 --> 0:05:23.680 into this consumer segment. Banks that have true core deposits, 0:05:23.760 --> 0:05:27.719 checking and savings accounts actually benefit from setting stable funding, 0:05:27.800 --> 0:05:31.719 from being regulated, and they actually can go back and 0:05:31.760 --> 0:05:34.320 take market share now because the people who don't have 0:05:34.360 --> 0:05:38.440 that funding cannot compete. So go ahead. I was just 0:05:38.440 --> 0:05:41.520 gonna ask about the American consumer because that's one area 0:05:41.560 --> 0:05:43.760 that we really like to hear from big banks eos 0:05:43.800 --> 0:05:46.320 on and oftentimes there's a lot of commentary about it. 0:05:46.360 --> 0:05:48.799 How would you characterize what we heard from banks CEO 0:05:48.880 --> 0:05:51.680 is regarding the American consumer their cash position and you know, 0:05:51.680 --> 0:05:53.839 how much money they have to be able to to 0:05:53.880 --> 0:05:56.880 pay for stuff that is more expensive. Yeah, I mean, 0:05:57.520 --> 0:06:01.600 you know, the cash position is still better than pre um. 0:06:01.640 --> 0:06:03.880 You know, they're they're they're they're certainly spending, they're not 0:06:03.920 --> 0:06:06.960 saving a lot. I think that's you know, the savings 0:06:07.080 --> 0:06:09.440 rate is where we're starting to see some stress, but 0:06:09.520 --> 0:06:12.880 the cash levels that consumers are still in pretty good shape. 0:06:13.320 --> 0:06:14.839 You can see it in the credit cards. Like I 0:06:14.839 --> 0:06:17.320 said earlier, that that they're not paying them off as 0:06:17.360 --> 0:06:20.040 quickly right there. They're using their cards and they're borrowing 0:06:20.480 --> 0:06:22.880 and they're not paying them off as rapidly. That's very 0:06:22.880 --> 0:06:25.960 different than defaulting. But you know, there's no doubt that 0:06:26.240 --> 0:06:28.840 at least the consumer has a job, and you know, 0:06:29.839 --> 0:06:32.880 lack of jobs is what really causes trouble and consumer lending. 0:06:33.040 --> 0:06:34.880 All right, So we know when we you know, check 0:06:34.920 --> 0:06:37.080 in with you, you always like the regional bank space. 0:06:37.360 --> 0:06:39.400 I'm assuming you still do. That's where you know your 0:06:39.440 --> 0:06:43.520 fund and investments go. Um. What in particular, what's the 0:06:43.520 --> 0:06:46.600 outlook for regional bankers at this point? Is it tough 0:06:47.240 --> 0:06:51.360 tough for them in a mild recession? No? No, no, 0:06:51.560 --> 0:06:53.560 I mean it isn't. And I think I've talked before 0:06:53.600 --> 0:06:56.200 about you know, markets that are favorable, right You've seen 0:06:56.240 --> 0:06:58.800 a lot of people and businesses moved to places like 0:06:58.839 --> 0:07:02.840 Texas and Florida, uh in Tennessee. So you know those 0:07:02.880 --> 0:07:07.479 markets can maintain above national growth metrics first of all, 0:07:07.880 --> 0:07:11.400 you know, second of all, a regional bank, you know, 0:07:11.440 --> 0:07:14.400 particularly a smaller bank can really know its customers. Right, 0:07:14.400 --> 0:07:17.040 the underwriting becomes a lot easier than going out and 0:07:17.520 --> 0:07:21.960 underwriting very large multinational companies. So you know, you actually 0:07:21.960 --> 0:07:25.240 can can understand that customers do a better job of underwriting. 0:07:25.720 --> 0:07:27.800 But I think what's really important is again going back 0:07:27.800 --> 0:07:31.680 to deposits, and regional banks that are very well funded 0:07:32.440 --> 0:07:34.880 really can outperform because they can take advantage of these 0:07:34.960 --> 0:07:38.200 higher rates, right, margins can still rise. You know, I've 0:07:38.240 --> 0:07:40.440 got companies in the portfolio the trade it. You know, 0:07:40.480 --> 0:07:44.440 I have sixt loaned deposit ratios loaner deposit ratios means 0:07:44.640 --> 0:07:47.280 if they can lend out that other difference to a 0:07:47.280 --> 0:07:49.440 loan or even buying a security at a higher yield, 0:07:49.600 --> 0:07:52.720 their margins continue to improve. So you know, those are 0:07:52.720 --> 0:07:55.080 the types of companies that have become much more valuable 0:07:55.240 --> 0:07:59.920 to those that don't have deposits. What's interesting, go ahead, Well, 0:08:00.120 --> 0:08:02.760 so if you look you look at the northeast, the Northeast, 0:08:02.800 --> 0:08:05.240 generally a lot of the banks in the Northeast um 0:08:05.440 --> 0:08:09.720 have loaned deposit ratios that are closer to so they 0:08:09.760 --> 0:08:12.720 don't they don't have that room. Hey, Anton just got 0:08:12.720 --> 0:08:14.840 about forty seconds left here. So if you had one 0:08:14.960 --> 0:08:19.080 name that you know you feel pretty confident about three, 0:08:19.160 --> 0:08:23.320 what might it be? Um, Well, I'm gonna first bank. 0:08:23.440 --> 0:08:25.960 FBMS is the symbol. It's one of the largest positions 0:08:25.960 --> 0:08:28.320 of my fund. And you know, I think they have 0:08:28.400 --> 0:08:30.720 that optionality that I really like. I think they're very 0:08:30.720 --> 0:08:34.680 attractive franchise. I think they do have sixty plus percent 0:08:34.840 --> 0:08:38.400 loan deposit ratio, so in good shape there. Of the 0:08:38.440 --> 0:08:41.520 bank is in Florida, in Georgia, so good, good growth, 0:08:41.520 --> 0:08:44.320 even though their headquarters in Mississippi. And at the end 0:08:44.400 --> 0:08:46.400 of the day, there's a lot of bigger banks that 0:08:46.440 --> 0:08:49.720 would love those deposits. Um. But also they've been a 0:08:49.800 --> 0:08:51.719 very smart buyer. They've added a lot of value to 0:08:51.760 --> 0:08:54.079 that company over the years. All Right, We're gonna leave 0:08:54.080 --> 0:08:55.440 it on that note. He's so great to check in 0:08:55.480 --> 0:08:58.080 with you and really appreciate on what is obviously a 0:08:58.080 --> 0:08:59.960 really big day when it comes to big banks. We 0:09:00.040 --> 0:09:03.800 know it continues into next week. Anton just shoots, excuse me, 0:09:04.040 --> 0:09:06.240 thank you so much, President and chief investment officer at 0:09:06.240 --> 0:09:10.319 Mendon Capital Advisers, joining us via zoom from Florida, and 0:09:10.720 --> 0:09:12.000 you know, once again if I look at some of 0:09:12.000 --> 0:09:14.280 those names, even something like a Morgan Stanley that reports 0:09:14.360 --> 0:09:16.360 next week, it's up one and a quarter percent. And 0:09:16.400 --> 0:09:18.160 then we have gold Man. Let's see what it's doing 0:09:18.600 --> 0:09:20.960 as we speak. It's up about eight tenths of a percent. 0:09:21.040 --> 0:09:24.400 But really those that reported today quite a rally. We're 0:09:24.400 --> 0:09:28.679 starting to see. This is Bloomberg. These sees Bloomberg Business 0:09:28.679 --> 0:09:33.240 Week with Carol Messer and Tim Stenebeck on Bloomberg Radio. 0:09:33.600 --> 0:09:35.599 The new issue of Bloomberg Business Week, great way to 0:09:35.640 --> 0:09:38.400 spend the Friday the thirteenth. It's out funded at newsstands, 0:09:38.440 --> 0:09:40.760 online at Bloomberg dot com, slash business Week and always 0:09:40.760 --> 0:09:43.400 on the Bloomberg terminal. And Tim, let's remind everybody it's 0:09:43.400 --> 0:09:45.559 the year ahead issue. Yeah, and in the finance section 0:09:45.600 --> 0:09:48.000 you find this a great story by Max Abel Sandys, 0:09:48.000 --> 0:09:50.800 Bloomberg News Finance reporter. It's all about the young bankers 0:09:51.240 --> 0:09:53.800 who got used to smooth sailing and how they now 0:09:53.840 --> 0:09:56.480 are preparing for a storm. Talk about a sea change. 0:09:56.800 --> 0:09:59.640 Max joins us right now in our Bloomberg Interactive Brokers 0:09:59.679 --> 0:10:02.440 stud to you. You You say young, but it's kind of 0:10:02.480 --> 0:10:06.319 like anyone under forty. Max Well, I resent the implication 0:10:06.520 --> 0:10:10.120 because that's because I myself turned thirty eight recently, So 0:10:10.200 --> 0:10:12.080 I'm you know, my idea of what young is kind 0:10:12.080 --> 0:10:15.360 of changes. You know, I did not know that, but 0:10:15.440 --> 0:10:18.000 you look like thank you. But but it's true though. 0:10:18.040 --> 0:10:20.680 I mean, what we're really saying young is essentially ethan 0:10:20.720 --> 0:10:22.880 is some frustrates. What we're really saying is that if 0:10:22.920 --> 0:10:26.079 you started in this industry, I mean any time after 0:10:26.160 --> 0:10:29.240 two or let's call it after two thousand nine, you 0:10:29.280 --> 0:10:32.920 know you have lived through this era where, you know, 0:10:33.440 --> 0:10:36.319 free money is essentially a fair phrase. Interest rates have 0:10:36.400 --> 0:10:38.760 been so low by and large since then, and the 0:10:38.840 --> 0:10:42.480 sailing has been so smooth, although obviously horrible things have 0:10:42.520 --> 0:10:47.280 happened like but by and large people have lived through 0:10:47.280 --> 0:10:50.520 an era that is sort of being replaced by something new, 0:10:50.559 --> 0:10:52.360 and that's what the story is about. I do feel 0:10:52.360 --> 0:10:53.800 like it's been an error, right. You could kind of 0:10:53.800 --> 0:10:56.000 throw money to almost anything it felt like, and things 0:10:56.000 --> 0:10:58.080 went up, and I feel like now the learning begins 0:10:58.480 --> 0:11:01.199 for a whole generation on straight ye. So I want 0:11:01.200 --> 0:11:03.280 to give a shout out to my co reporter Nick Carrela, 0:11:03.320 --> 0:11:06.359 who was a great, great reporter. He found this guy, 0:11:06.600 --> 0:11:09.199 Drew Pettitt, who is an analyst at City Group. I 0:11:09.240 --> 0:11:11.240 want to say he's in Buffalo, New York. Shout out 0:11:11.240 --> 0:11:15.280 to Buffalo, New York. And Drew basically realized that his 0:11:15.440 --> 0:11:18.680 life on Wall Street was so you know, essentially so 0:11:18.800 --> 0:11:22.320 even keeled that he decided to give himself homework. I 0:11:22.360 --> 0:11:23.880 think that was the word he used. He decided to 0:11:23.920 --> 0:11:26.760 give himself homework and read like basically the bleakest books 0:11:26.800 --> 0:11:29.960 he could find. We we actually didn't print this, but um, 0:11:30.120 --> 0:11:34.079 I think he I think one of them was black Swan. Um, 0:11:34.120 --> 0:11:36.840 I think one of them. I have a list, I'll 0:11:37.040 --> 0:11:39.800 I'll send it to you, the bleak books, books about 0:11:39.840 --> 0:11:44.079 bleakness and financial bleakness. And he really wanted to understand, 0:11:44.440 --> 0:11:45.800 you know, I think at the end of the day, 0:11:45.840 --> 0:11:48.240 probably this this these are my words and not his, 0:11:48.559 --> 0:11:50.880 you know, but how to make money, you know, when 0:11:50.960 --> 0:11:53.400 the times aren't aren't good and money isn't growing on trees, 0:11:53.480 --> 0:11:56.600 and you know it's I run it. Because the story 0:11:56.679 --> 0:12:00.240 was inspired Paula Dwyer, and editor who edited a piece 0:12:00.240 --> 0:12:03.240 for Business Week. Paul Paula Dwyer noticed this. A City 0:12:03.240 --> 0:12:07.040 Group executive, um not not one of Drew's bosses. But 0:12:07.120 --> 0:12:08.800 this is like I think one of the top bankers 0:12:08.840 --> 0:12:11.760 in London, she gave the speech at a conference late 0:12:11.840 --> 0:12:14.120 last year where she said, you know, I laugh to 0:12:14.200 --> 0:12:16.640 myself when I see these young people who are now 0:12:16.720 --> 0:12:19.760 making managing director. So I think that called out like 0:12:19.800 --> 0:12:23.400 your thirty two, your thirty three. These people are becoming 0:12:23.400 --> 0:12:25.920 managing directors at my bank and they've never lived through 0:12:26.440 --> 0:12:30.040 you know, any anything, but you know, the an era 0:12:30.080 --> 0:12:32.400 of easy money. And she I think she really implied 0:12:32.480 --> 0:12:34.320 that they're going to be in for a rude awakening 0:12:34.360 --> 0:12:36.440 here in here in we also, do you think that 0:12:36.520 --> 0:12:39.240 those banks are firms to also want to make sure 0:12:39.280 --> 0:12:42.160 that these guys have an understanding of like what happens 0:12:42.200 --> 0:12:45.600 to assets in a very different environment. Yep, it's so true. 0:12:45.640 --> 0:12:48.760 You know, sometimes reporting is it's not that it's a hassle, 0:12:48.800 --> 0:12:51.640 but sometimes reporting stories is so hard you bang your 0:12:51.679 --> 0:12:54.239 head against the wall. And then sometimes, like to the contrary, 0:12:54.480 --> 0:12:56.840 things fall into places like so nicely. I was in 0:12:56.960 --> 0:12:58.719 what we call in the industry, or at least what 0:12:58.800 --> 0:13:00.920 we're gonna do as an ed board, an editorial board, 0:13:01.280 --> 0:13:03.600 and I was sitting and listening to um, you know, 0:13:03.640 --> 0:13:06.840 it sounds boring because he's a regulator. Michael suit so interesting, 0:13:07.080 --> 0:13:10.160 so much fun hearing him talking is the I think 0:13:10.160 --> 0:13:14.040 he is the acting controller of the currency, acting controller currency. 0:13:14.080 --> 0:13:16.640 But the guy was fascinating. And I mean I did 0:13:16.640 --> 0:13:18.800 not I did not ask this, but I knew, I 0:13:18.880 --> 0:13:21.000 knew we were working on the story. And without me 0:13:21.080 --> 0:13:24.200 saying anything, he said, you know, it's funny because bankers 0:13:24.200 --> 0:13:27.440 are saying to me. Bankers are saying to me. Michael said, 0:13:27.800 --> 0:13:30.280 you know, there are all these young kids, all these 0:13:30.280 --> 0:13:32.000 young kids working for me, and they don't they don't 0:13:32.200 --> 0:13:34.440 they don't have to deal with all all these crazy things. 0:13:34.720 --> 0:13:38.240 Is there this layer of anxiety permeating right now among 0:13:38.280 --> 0:13:40.560 the bankers that you and your colleagues spoke to, not 0:13:40.640 --> 0:13:42.680 just because of you know, it's not just burnout that 0:13:42.760 --> 0:13:44.439 you guys reported on over the last couple of years 0:13:44.520 --> 0:13:46.400 during the pandemic, but but also look at the news 0:13:46.440 --> 0:13:49.840 we got earlier this week about Goldman sex upople being 0:13:49.920 --> 0:13:52.520 laid off. And that's a lot, a lot of peoples, 0:13:52.520 --> 0:13:54.680 with thousands of people. And it's not just a Goldman 0:13:54.720 --> 0:13:57.240 either too across the industry. I think anxiety is the 0:13:57.320 --> 0:13:59.480 right word. I think anxiety is the right word because 0:13:59.800 --> 0:14:02.680 for one thing, we're hearing bankers talk about that, But 0:14:02.840 --> 0:14:05.960 for another, it's the right word because you know, we 0:14:06.040 --> 0:14:11.280 are not going through um an awful era on Wall Street. 0:14:11.360 --> 0:14:13.319 After all, remember my story with Hannah that came out 0:14:13.400 --> 0:14:15.640 not too long ago. These big banks just made a 0:14:15.760 --> 0:14:19.600 trillion dollars in ten years, a trillion dollars. So these 0:14:19.600 --> 0:14:22.520 are by and large wealthy world. That's a lot of 0:14:22.520 --> 0:14:26.200 money and profit and profit. So you know, I'm not 0:14:26.560 --> 0:14:29.480 taking out my time of violand um or my violent 0:14:29.520 --> 0:14:32.280 shape pool to refer to a very old story of mine. 0:14:33.600 --> 0:14:36.160 But but we are talking about an entuurgy though. That's 0:14:36.240 --> 0:14:40.040 where people are beginning to worry about just how drastically 0:14:40.080 --> 0:14:42.280 things are going to change and just how many jobs 0:14:42.320 --> 0:14:45.200 are going to be lost if this country and the 0:14:45.200 --> 0:14:48.520 global economy gets into as much trouble as as a 0:14:48.560 --> 0:14:50.480 lot of people think of mine, No, I think it's 0:14:50.520 --> 0:14:54.200 so interesting. It's just like having a generation who's lived 0:14:54.240 --> 0:14:57.280 in a certain environment and and we're maybe going into 0:14:57.320 --> 0:15:00.720 a very very different one, and like how do they adapt? 0:15:00.760 --> 0:15:04.160 How do they function? Um? But I also do wonder, 0:15:04.480 --> 0:15:07.960 you know, volatility and bad markets are also an opportunity 0:15:08.320 --> 0:15:10.720 where you can make still money, right, So it's like 0:15:11.360 --> 0:15:13.640 they've just got to figure all of this stuff out. 0:15:13.840 --> 0:15:16.960 It's it's really interesting what surprised you most, and you 0:15:17.360 --> 0:15:22.560 and Nick doing this story. Well, without kissing up to you, 0:15:22.640 --> 0:15:23.920 let me just say that what you just said a 0:15:23.920 --> 0:15:26.280 second ago is so spot on the idea of that. 0:15:26.440 --> 0:15:28.480 And this was something that I think I had a 0:15:28.560 --> 0:15:30.880 kind of in co eight sense that this was true, 0:15:31.440 --> 0:15:35.560 the idea that when times are bad in the global 0:15:35.600 --> 0:15:38.600 economy or the U s economy, it is bad news 0:15:38.680 --> 0:15:41.040 for parts of Wall Street, it is good news for 0:15:41.080 --> 0:15:43.160 other parts of All Street. And Sally big Well, our 0:15:43.280 --> 0:15:46.040 our teams just in with us. Yeah, you know, Sally, 0:15:46.440 --> 0:15:50.359 she helped us sort through the thinking. So it's like, okay, mortgages, 0:15:50.960 --> 0:15:52.800 you don't want to be in the mortgage business. If 0:15:52.840 --> 0:15:55.760 interest rates are going up because people are not you 0:15:55.800 --> 0:15:57.560 know that the business is gonna is gonna dry up 0:15:57.560 --> 0:16:00.360 and that will have knock on effects. But then on 0:16:00.400 --> 0:16:03.840 the flip side, it's like net interest margin, you know, 0:16:04.440 --> 0:16:06.560 which is a fancy way of the you know, the 0:16:06.840 --> 0:16:09.120 difference between what you are and on loans over here 0:16:09.280 --> 0:16:11.680 and what you pay the positors over here. You know, 0:16:11.920 --> 0:16:16.120 that is good news. If if if rates are going up, 0:16:16.600 --> 0:16:18.560 that's good news. You don't want what rates to be zero, 0:16:19.120 --> 0:16:21.160 you know, if you if you're a trader, I bet 0:16:21.200 --> 0:16:23.160 either a couple of traders listening to this right now 0:16:23.160 --> 0:16:26.640 and chuckling to themselves because volatility is lucrative. You make 0:16:26.680 --> 0:16:29.640 money from bolatile markets. It's not bad to be a bank. 0:16:30.800 --> 0:16:32.240 Well you can, I can make it a lot of 0:16:32.240 --> 0:16:36.240 different ways, like absolutely, um, yeah, I am curious to 0:16:36.240 --> 0:16:37.960 see how it all plays out. And I think it's 0:16:38.000 --> 0:16:40.800 interesting too, you know, Max that the banks still feel 0:16:40.800 --> 0:16:43.560 confident to make these people put them in leadership positions 0:16:44.360 --> 0:16:48.320 knowing that they're going to be maybe going into environment 0:16:48.440 --> 0:16:49.960 I think about that, right, these guys are gonna be 0:16:50.000 --> 0:16:52.760 making investment decisions, trying to make deal. I don't know, Like, 0:16:52.840 --> 0:16:54.600 I'm curious to see how it plays well. If there 0:16:54.640 --> 0:16:57.120 are any listeners here who are working for a bank 0:16:57.280 --> 0:16:59.720 and their bank is like taking them to this new 0:17:00.120 --> 0:17:03.160 giving them classes on how to deal with calamity, you know, 0:17:03.240 --> 0:17:04.560 you know who you have to call, you gotta you 0:17:04.600 --> 0:17:06.879 gotta Levy know about that. Did anybody say that, like 0:17:07.000 --> 0:17:09.960 off the record, we're in calamity classes. Were on the record, 0:17:10.040 --> 0:17:12.320 right now. Well, I couldn't tell you if I heard it, 0:17:12.400 --> 0:17:15.120 but no, I I did not hear about any calamity classes. 0:17:15.160 --> 0:17:18.720 But let me you did mention a violent shaped pool 0:17:19.080 --> 0:17:22.159 an old article that you wrote it from. We'll tweet 0:17:22.160 --> 0:17:24.679 it out. Ex Bankers upgrade the good Life as violin 0:17:24.880 --> 0:17:28.520 pools back in. So if you you know, had that 0:17:28.560 --> 0:17:30.720 deep tease, go check out that story because it's another 0:17:30.760 --> 0:17:33.399 good one from the team, including Max. But it's some 0:17:33.560 --> 0:17:35.560 great it's great insight in terms of the Wall Street culture, 0:17:35.560 --> 0:17:37.600 of the financial culture, in terms of what's to come 0:17:37.640 --> 0:17:40.520 potentially um and what they're facing. Thank you so much. 0:17:41.080 --> 0:17:42.960 All right, have a great weekend. Max tables In he's 0:17:42.960 --> 0:17:45.440 financial reporter at Bloomberg News, joining us in our interactive 0:17:45.480 --> 0:17:48.640 broker studio. You are listening and watching Bloomberg Business Week 0:17:48.680 --> 0:17:51.960 on this Friday, Carol Master Tim Stanovic. We are Bloemberg Radio. 0:17:55.880 --> 0:17:59.199 You're listening to Bloomberg Business Week with Carol Messer and 0:17:59.280 --> 0:18:03.320 Tim Stanev on Bloomberg Radio. Well, the largest digital currency 0:18:03.359 --> 0:18:07.960 by market value, we're talking about bitcoin. Did you see 0:18:07.960 --> 0:18:11.080 what's been going on? Yeah, it's higher, it's true. Is 0:18:11.480 --> 0:18:13.959 it's also on track to have its best week since one. 0:18:14.040 --> 0:18:16.520 It's up roughly twelve percent or so from the last 0:18:16.520 --> 0:18:19.399 time I checked. Other tokens have also gained, with an 0:18:19.400 --> 0:18:21.840 index of the hundred biggest coins adding more than ten 0:18:22.480 --> 0:18:24.920 and then shares with some crypto related companies up even more, 0:18:24.920 --> 0:18:28.560 with Bitcoin minor Marathon Digital adding more than sixty percent 0:18:28.720 --> 0:18:30.560 this week alone. All right, well, it's time for our 0:18:30.560 --> 0:18:33.280 weekly crypto segment. Very pleased to have with us Ja Jog, 0:18:33.359 --> 0:18:36.280 the co founder of say Network, joining us via Zoom 0:18:36.320 --> 0:18:39.000 from San Francisco. J By the way, former lead developer 0:18:39.160 --> 0:18:42.320 Robin Hood during the game Stop crisis. I've got about 0:18:42.320 --> 0:18:45.119 five million dollars in funding that got that over the summer. 0:18:45.160 --> 0:18:48.200 It was led by multi Coin Capital, with participation from 0:18:48.200 --> 0:18:51.280 Coin based Ventures, Delphi Digital, and a few others. Jay, 0:18:51.280 --> 0:18:54.720 how are you think fantastic? Are you doing today? We're 0:18:54.720 --> 0:18:56.520 doing well. Thanks, It's good to have you with us. Okay, 0:18:56.560 --> 0:18:59.399 So for the enough uninitiated, which I will include myself 0:18:59.440 --> 0:19:03.239 and explain what you do at say Network. Yeah, So 0:19:03.359 --> 0:19:06.199 my background, as you mentioned, I worked at Robin before this, 0:19:06.560 --> 0:19:08.639 and I was there when the game Soft crisis happened 0:19:08.640 --> 0:19:10.960 two years ago. And I'm sure you were falling along 0:19:10.960 --> 0:19:13.920 with it. It was not handled very well, largely because 0:19:13.960 --> 0:19:16.679 there was internally a complete lack of transparency around what 0:19:16.760 --> 0:19:18.639 is happening, right, so that made me much more of 0:19:18.640 --> 0:19:22.639 a decentralization. Actually, anything that happens on chain is inherently trustless, 0:19:22.640 --> 0:19:26.000 inherently transparent, which is why we started building say um. 0:19:26.320 --> 0:19:29.040 Say is a new leyerl one blockchain, and you can 0:19:29.040 --> 0:19:32.360 think of it as the plumbing for decentrized exchanges. So 0:19:32.560 --> 0:19:35.120 basically what we're doing is we're making it as easy 0:19:35.119 --> 0:19:37.680 as possible for exchanges to deploy and scale by building 0:19:37.720 --> 0:19:40.160 on say so. Our mission is to build the best 0:19:40.320 --> 0:19:43.840