WEBVTT - Biden Finds Himself Boxed In on China 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.480 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanovk. We're here every day bringing 0:00:07.320 --> 0:00:09.840 you the latest news from the world to business and finance, 0:00:09.840 --> 0:00:13.640 plus technology, politics, economics, all partnising the power of Business 0:00:13.680 --> 0:00:17.160 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:20.000 analysts in more than one twenty countries. You can download 0:00:20.000 --> 0:00:23.239 Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.400 --> 0:00:25.200 You can also listen to our radio show at two 0:00:25.200 --> 0:00:28.400 pm Eastern Time on Bloomberg Radio or watch us on YouTube. 0:00:28.400 --> 0:00:32.680 Searched Bloomberg Global News lots of headlines when it comes 0:00:32.680 --> 0:00:36.519 to COVID and the pandemic. UK government Tim This is positive. 0:00:36.560 --> 0:00:39.199 They are lifting the restrictions that opposed. But in England 0:00:39.520 --> 0:00:42.000 back in December when the o maicron variant caused a 0:00:42.080 --> 0:00:44.640 record spike and infections that now show signs of easing. 0:00:44.760 --> 0:00:47.440 So a peak coming down, that's good. We're certainly seeing 0:00:47.440 --> 0:00:49.080 that here in New York City, but we should note 0:00:49.080 --> 0:00:51.640 that cases are still soaring elsewhere in Europe. France reporting 0:00:51.640 --> 0:00:53.840 a set a record of nearly four d and sixty 0:00:53.840 --> 0:00:56.760 five thousand new infections. Italy and Germany also registered all 0:00:56.800 --> 0:00:59.560 time highs. Switzerland decided to extend a work from home 0:00:59.680 --> 0:01:01.840 order to the end of February as cases search of 0:01:01.920 --> 0:01:04.120 different stories playing out. But we're learning more about how 0:01:04.200 --> 0:01:07.480 quickly hopefully on the cron can peak exactly. Fingers crossed. 0:01:07.520 --> 0:01:09.680 Dr David Kim is back with US, chief Executive of 0:01:10.280 --> 0:01:13.080 Physician Enterprise of at Providence Health. The first known US 0:01:13.160 --> 0:01:16.920 case of COVID nineteen was confirmed in Washington State at 0:01:16.920 --> 0:01:20.039 Providence Regional Medical Center and Everett that was pack in 0:01:20.120 --> 0:01:24.520 early January. There are massive hospital system and Dr Kim 0:01:24.600 --> 0:01:27.400 joins us on the phone in Irvine, California. Dr Kim 0:01:27.440 --> 0:01:29.840 so glad to have you back with Tim and myself 0:01:29.840 --> 0:01:33.120 here on Bloomberg. How are you and what are you seeing. 0:01:33.959 --> 0:01:36.480 I'm doing well and we are seeing a lot of 0:01:36.520 --> 0:01:39.960 what you are mentioning already that the COVID is uh 0:01:40.080 --> 0:01:42.679 the omicron is very infectious, and we're seeing it in 0:01:42.760 --> 0:01:46.560 fact people much more easily than the previous variants, and 0:01:46.560 --> 0:01:49.360 we're seeing our hospitalizations rise as a result of that. 0:01:50.280 --> 0:01:53.840 Um Although the rate of the percentage of people that 0:01:53.880 --> 0:01:55.800 are winding up in the I c U is much 0:01:55.920 --> 0:02:00.360 lower relative to the previous surges with omicron, and we 0:02:00.360 --> 0:02:03.040 were seeing milder disease. Okay, so that's a lot of 0:02:03.040 --> 0:02:04.800 good news. What what can you tell us? And and 0:02:04.840 --> 0:02:07.000 forgive me, but I like to ask this to everybody 0:02:07.000 --> 0:02:11.240 who has an idea of what's going on in in hospitals. Uh, 0:02:11.960 --> 0:02:16.080 who is that? Who is hospitalized right now? And are 0:02:16.120 --> 0:02:20.000 they vaccinated versus unvaccinated versus boosted? What can you tell 0:02:20.080 --> 0:02:22.480 us about who is actually getting very sick with covid 0:02:23.560 --> 0:02:27.120 um So there's there's different ways to answer that question. 0:02:27.120 --> 0:02:30.680 I would say who's getting hospitalized? We're seeing both vaccinated 0:02:30.720 --> 0:02:33.520 and unvaccinated people wind up in the hospital, and that 0:02:33.680 --> 0:02:38.880 is different with omicron because we saw the delta virus affected. 0:02:38.960 --> 0:02:41.600 Hospitalization is much less in people who are vaccinated. However, 0:02:42.480 --> 0:02:44.960 and what we're seeing is that people who are unvaccinated 0:02:45.000 --> 0:02:48.080 being hospitalized are getting much sicker. So the percentage of 0:02:48.080 --> 0:02:49.920 people that are going to the IIC you that do 0:02:50.040 --> 0:02:52.720 get very sick with omicron tend to be people who 0:02:52.720 --> 0:02:55.840 have not been vaccinated or boosted. Can you believe we're 0:02:55.840 --> 0:02:59.160 still talking about this and living this? Dr Kim, Yeah, 0:02:59.320 --> 0:03:01.640 day is like a year these days and you know, 0:03:02.040 --> 0:03:04.560 depending on how you look at it, this is the third, fourth, 0:03:04.639 --> 0:03:06.919 or fifth surge we've had over the past two years. 0:03:06.919 --> 0:03:09.800 It is it has been a remarkable time. And healthcare. 0:03:10.360 --> 0:03:14.040 How do you balance normal health care with pandemic healthcare. 0:03:15.200 --> 0:03:18.600 It's difficult, right. Not only are there constraints in the 0:03:18.639 --> 0:03:22.160 hospital because of the COVID patients, but there is a 0:03:22.200 --> 0:03:26.240 bit of a shift in the mindset of patients of 0:03:26.320 --> 0:03:29.560 when do they feel comfortable going to the hospital um. 0:03:29.600 --> 0:03:31.880 And some of that has been positive and thinking through 0:03:32.000 --> 0:03:35.000 telehealth and the evolution of being able to get health 0:03:35.080 --> 0:03:39.040 care in new and novel ways, but some of it 0:03:39.120 --> 0:03:41.560 is concerning that people who need care aren't getting it 0:03:41.600 --> 0:03:44.640 and where um, there is a concern that once COVID 0:03:44.680 --> 0:03:48.600 is over, we're going to start seeing people who delayed care, 0:03:48.600 --> 0:03:50.040 who are going to need care. We're going to see 0:03:50.080 --> 0:03:53.040 more significant consequences of that. It's so it's so interesting 0:03:53.040 --> 0:03:54.920 that you said that, I mean a year ago, Carol 0:03:54.960 --> 0:03:56.800 remembers this. I hadn't been to the dentist any year 0:03:56.840 --> 0:03:59.880 because of because of COVID, and finally I finally gotten 0:03:59.880 --> 0:04:02.640 appointment for with a with a physician today for a 0:04:02.720 --> 0:04:06.160 check out. But it was so difficult to get an 0:04:06.200 --> 0:04:10.240 appointment because all these healthcare workers, so many of them 0:04:10.280 --> 0:04:13.120 have gotten sick, so many of them are overworked. So 0:04:13.200 --> 0:04:14.760 it seems like the system is kind of being pulled 0:04:14.800 --> 0:04:18.640 from both ends here. Doctor. Oh yeah, the staffing issue, 0:04:18.680 --> 0:04:20.400 I would say is almost as much of a concern 0:04:20.480 --> 0:04:23.800 as the as the COVID itself. That so much of 0:04:23.800 --> 0:04:26.359 our constraints these days are because people are getting sick 0:04:26.880 --> 0:04:30.280 and they can't work or they're just tired, you know. 0:04:30.320 --> 0:04:33.760 And we see record numbers of people leaving healthcare as 0:04:33.800 --> 0:04:36.920 as an employment option because of the past two years 0:04:36.960 --> 0:04:40.440 and the and the strains that COVID has put on 0:04:40.440 --> 0:04:42.560 the system, and then the people who work in the system. 0:04:42.640 --> 0:04:44.320 So what are the changes that need to be made? 0:04:44.320 --> 0:04:47.640 I mean, your your your CEO of Physician Enterprise at 0:04:47.680 --> 0:04:50.160 Providence Health Systems. So so you're making these decisions, and 0:04:50.200 --> 0:04:52.000 you're looking closely at the data about people who are 0:04:52.000 --> 0:04:53.799 staying and people who are leaving. What needs to change 0:04:54.040 --> 0:04:57.000 in order to make sure that our health care workers 0:04:57.000 --> 0:05:00.400 in the US do not get burned out? I think 0:05:00.440 --> 0:05:02.840 that's the that's the million dollar or the billion dollar 0:05:02.920 --> 0:05:05.920 question we are really thinking through. How do we keep 0:05:05.960 --> 0:05:08.440 hearts in minds engage, and how do we keep people 0:05:08.480 --> 0:05:10.440 close to their initial calling of why they went into 0:05:10.440 --> 0:05:12.840 healthcare in the first place, and why, how we can 0:05:12.920 --> 0:05:16.599 keep healthcare from being a commoditized industry but really be 0:05:16.720 --> 0:05:18.840 a place where people can fulfill the mission of why 0:05:18.880 --> 0:05:21.560 they chose a career to help others in their communities. 0:05:22.320 --> 0:05:24.640 And the more we can continue to bring that back 0:05:25.520 --> 0:05:28.560 into the why of why people came into healthcare and 0:05:28.600 --> 0:05:30.200 why they come to work every day, I think, the 0:05:30.240 --> 0:05:32.600 more we can think about how we can sustain them 0:05:32.600 --> 0:05:34.719 through what is a very very difficult time. How do 0:05:34.760 --> 0:05:37.280 we do that, though, like you said, you've got to 0:05:37.320 --> 0:05:39.279 figure it out. What are your thoughts on that? Is 0:05:39.320 --> 0:05:41.680 it a case of pay? Is it a case of respect? 0:05:41.800 --> 0:05:43.920 Is it I love? I don't love. But I think 0:05:43.960 --> 0:05:47.400 about how you said commoditized, you know, um in terms 0:05:47.400 --> 0:05:50.880 of health care workers. UM, I certainly don't think of that. 0:05:50.920 --> 0:05:53.200 When I go to see somebody as like a commodity. 0:05:53.240 --> 0:05:55.400 I think about, you're an expert, you went had a 0:05:55.440 --> 0:05:58.640 lot of education. You know you've got to you know, 0:05:58.680 --> 0:06:02.000 you're taking care of our health. Absolutely, we call those 0:06:02.000 --> 0:06:04.200 sacred encounters, and it is the reason why it's so 0:06:04.320 --> 0:06:07.080 fulfilling to be in healthcare to have those moments of 0:06:07.160 --> 0:06:12.479 connection and relationship and intimacy almost with with sharing your 0:06:12.560 --> 0:06:15.440 life and thinking about your health. How we do that, 0:06:15.480 --> 0:06:18.760 I think is this multiple fold. Some of it is 0:06:18.760 --> 0:06:22.279 through programmatic work around keeping people focused on the purpose 0:06:22.320 --> 0:06:24.520 and the mission of why. Some of it around creating 0:06:24.520 --> 0:06:30.080 a work environment, whether that's compensation or cultural work, or 0:06:31.000 --> 0:06:34.120 a sense of community that we can really get our 0:06:34.240 --> 0:06:36.920 arms around how to make people feel part of something 0:06:37.120 --> 0:06:40.360 and and connected to the purpose of what we're trying 0:06:40.360 --> 0:06:44.040 to accomplish together. And part of it is practical is 0:06:44.360 --> 0:06:46.880 sending people to workshifts that don't burn them out in 0:06:47.040 --> 0:06:49.240 so that they can find adequate time to rest, and 0:06:49.440 --> 0:06:53.000 equipping them with tools so that they can check out 0:06:53.000 --> 0:06:55.000 when their home and not be thinking about work all 0:06:55.000 --> 0:06:57.039 the time. All about wellness that has been a big 0:06:57.080 --> 0:07:00.760 theme of this pandemic. Dr Kim David Kim, Chief Executive 0:07:00.760 --> 0:07:04.279 Physician Enterprise at Providence Health, Thank you so much, Bloomberg. 0:07:06.279 --> 0:07:09.880 You're listening to Bloomberg Business Week with Carol Masser and 0:07:09.960 --> 0:07:15.120 Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. President Biden 0:07:15.280 --> 0:07:17.520 Marking one year in office, we're going to hear from 0:07:17.560 --> 0:07:19.680 the president, I guess in about an hour or so 0:07:19.800 --> 0:07:21.960 on that. In the meantime. In the upcoming issue of 0:07:21.960 --> 0:07:24.960 Bloomberg Business Week, Bloomberg News white house reporter Jenny Leonard 0:07:25.440 --> 0:07:28.120 writes about how one year in tim the president finds 0:07:28.200 --> 0:07:31.040 himself boxed in when it comes to China. Jenny Leonard 0:07:31.080 --> 0:07:33.200 is white house reporter for Bloomberg News. She joins us 0:07:33.200 --> 0:07:35.200 on the phone from Washington, d C. Also joining us 0:07:35.240 --> 0:07:37.440 is Joel Webber, editor at Bloomberg Business Week. He joins 0:07:37.480 --> 0:07:40.120 us on the access line from Brooklyn. Joel, it's so 0:07:40.160 --> 0:07:42.360 interesting during at this point in the Trump administration, we'd 0:07:42.400 --> 0:07:44.640 probably be talking about a trade war perhaps it maybe 0:07:44.680 --> 0:07:47.440 perhaps in the second year of the Trump administration. Up 0:07:48.160 --> 0:07:51.040 What exactly, though, is the policy that the Biden administration 0:07:51.040 --> 0:07:54.920 has towards China right now? Well, that's the whole point 0:07:54.920 --> 0:07:58.360 of the story, my friend. So it's a really interesting 0:07:58.440 --> 0:08:01.640 moment because if I rewound the clock and we were 0:08:01.640 --> 0:08:03.800 at this moment, like you said, in the Trump administration, 0:08:04.400 --> 0:08:07.800 I think I had done multiple trade war uh covers already, 0:08:07.880 --> 0:08:12.000 and you know, here we are, um uh when almost 0:08:12.080 --> 0:08:14.960 one year in knocking on that door for the Biden administration, 0:08:15.080 --> 0:08:17.600 and I think, as Jenny is about to tell you, 0:08:17.720 --> 0:08:21.880 it looks pretty much like the same framework. That's exactly 0:08:21.960 --> 0:08:25.720 what I was. Yeah, we haven't really even talked about 0:08:25.800 --> 0:08:28.640 trade forever. Um, I just forgot all about it. So 0:08:29.280 --> 0:08:32.720 Jenny remind us where do things stand in and what 0:08:32.880 --> 0:08:37.960 is the Biden administration's uh policies on trade with China? Especially, 0:08:38.040 --> 0:08:41.280 looked like, yeah, you got it right, Joel. It does 0:08:41.360 --> 0:08:45.199 look a lot like you know, where Trump left office. 0:08:45.480 --> 0:08:48.600 And a lot of Democrats fear that that's sort of 0:08:48.640 --> 0:08:53.040 a weakness going into the mid term election because China, 0:08:53.200 --> 0:08:56.840 of course is something that energizes with voters. Of course 0:08:56.880 --> 0:09:01.600 it takes a backseat to COVID and the economy right now. Uh, 0:09:01.640 --> 0:09:04.560 but Biden hasn't really in the first year in office, 0:09:04.600 --> 0:09:07.160 put his own stamp on China policy. And even his 0:09:07.240 --> 0:09:10.800 allies say, hey, you know, I think you I think 0:09:10.800 --> 0:09:13.920 we're we know where you're hinting at wanting to do, 0:09:14.000 --> 0:09:16.280 but we don't really know for sure, So why don't 0:09:16.320 --> 0:09:20.400 you tell us? Um, the Biden administration has been meticulously 0:09:20.520 --> 0:09:23.600 reviewing sort of what they inherited. Right if you guys, 0:09:23.679 --> 0:09:26.559 remember the trade war sort of ended with the Phase 0:09:26.640 --> 0:09:32.800 one deal inherited that those negotiations are still ongoing. Uh, 0:09:32.920 --> 0:09:35.839 the Chinese have fallen short on their commitments, which we 0:09:36.080 --> 0:09:40.719 knew going into this administration. Um, and there's really no 0:09:40.960 --> 0:09:45.280 timeline for when those negotiations should result in any sort 0:09:45.280 --> 0:09:49.040 of outcome. So UM to sum it up, I would say, 0:09:49.280 --> 0:09:52.000 you know, they really need to hit the gas to 0:09:52.000 --> 0:09:55.720 to show something in the mid terms because Democrats are 0:09:55.720 --> 0:09:59.880 getting a little anti that Republicans sends a little weakness here, 0:10:00.280 --> 0:10:02.640 you know, Jenny, what's the right China policy? I mean 0:10:02.640 --> 0:10:05.319 I talked to the Cisco CEO Tech Robbins earlier. China 0:10:05.440 --> 0:10:08.440 we know so important to global company companies, But what's 0:10:08.440 --> 0:10:12.880 the right balance when it's safe to say world leaders, 0:10:13.080 --> 0:10:15.560 US leaders don't agree with Chinese social policies, but they 0:10:15.559 --> 0:10:18.160 also don't want to lose access to the China's you know, 0:10:18.520 --> 0:10:21.520 massive market potential that that continues to be out there. 0:10:21.559 --> 0:10:25.480 So what is the right policy with China? Yeah, I 0:10:25.520 --> 0:10:28.040 think you hit the nail on the head there on 0:10:28.120 --> 0:10:31.480 exactly what you know any government or any U S 0:10:31.559 --> 0:10:35.080 government is trying to balance and where the different sort 0:10:35.120 --> 0:10:39.599 of voices come in when the different principles from agencies 0:10:39.600 --> 0:10:42.760 are discussing it, right, So you you would have you know, 0:10:42.840 --> 0:10:45.679 in thinking back to the Trump administration, you would of 0:10:45.679 --> 0:10:51.120 course have you know the more HACKISHENDVERSH sides, you know, Treasury, U, SCR, Commerce, 0:10:51.160 --> 0:10:55.400 all these different entities that here from different stakeholders. And 0:10:55.440 --> 0:10:59.240 I think the Biden administration is hearing exactly the same things. 0:10:59.280 --> 0:11:02.120 Even if a has become more and more difficult to 0:11:02.160 --> 0:11:07.160 deal with, even as supposedly you know, there's less interest 0:11:07.280 --> 0:11:11.560 in investing in China, We're still seeing how intertwined the 0:11:11.559 --> 0:11:15.679 economies are. And I think you've seen at least the 0:11:15.720 --> 0:11:20.480 Commerce Secretary be very vocal, uh in this Biden administration 0:11:20.559 --> 0:11:23.800 saying decoupling is not an option, that is not something 0:11:23.840 --> 0:11:27.880 that is possible, that is not something that's desirable. If anything, 0:11:27.960 --> 0:11:30.960 we need to slow that down China as much as 0:11:31.000 --> 0:11:33.040 we can, but we need to run faster. And so 0:11:33.960 --> 0:11:37.120 that's been the Biden administration's focus, you know, getting the 0:11:37.960 --> 0:11:41.560 Rescue plan pass getting the infrastructure plan passed, and you know, 0:11:41.800 --> 0:11:44.720 of course now working on their third big plan, the 0:11:44.840 --> 0:11:48.120 Build Back Better Plan, which is stalled. Um, so there 0:11:48.200 --> 0:11:52.520 isn't really anything in the immediate term, and definitely nothing 0:11:52.600 --> 0:11:57.200 that they can show in the biladult sense where they say, hey, 0:11:57.240 --> 0:12:00.439 we're competing with China in a smarter way. Jenny, we 0:12:00.480 --> 0:12:02.240 got to talk about the politics of this, because here 0:12:02.240 --> 0:12:05.520 we are, it's midterm elections coming up in November. We 0:12:05.559 --> 0:12:09.199 are expecting to hear from the president to really give 0:12:09.200 --> 0:12:11.240 a speech about his first year in office at four 0:12:11.280 --> 0:12:15.839 o'clock today Wall Street Time. How are Republicans though, using 0:12:16.280 --> 0:12:19.600 the President's policy towards China, the administration's policy towards China, 0:12:19.800 --> 0:12:26.640 as a way to criticize him. So I think, um, 0:12:26.920 --> 0:12:30.920 Republicans are are definitely you know, seizing the moment that 0:12:31.000 --> 0:12:34.680 Biden for now, and they might prove us wrong, you know, 0:12:34.720 --> 0:12:38.920 in two months. But for now, Biden has adopted and 0:12:39.160 --> 0:12:43.360 kept in place Trump's policies, which, of course, uh you 0:12:43.440 --> 0:12:48.440 remember the Republican Congress has pushed him. There. There's a 0:12:48.480 --> 0:12:50.679 lot of you know, China Hawks in Congress that are 0:12:51.640 --> 0:12:55.360 maybe gearing up for presidential runs themselves in two that 0:12:55.400 --> 0:12:58.480 are running for re election to their Senate seats or 0:12:58.520 --> 0:13:03.000 House seats in two Uh. So they feel emboldened knowing 0:13:03.040 --> 0:13:07.000 that the Biden administration is sort of boxed in leaving 0:13:07.000 --> 0:13:10.440 in place the policies that you know, they sort of 0:13:10.480 --> 0:13:14.360 pushed the Trump administration to go for UH and and 0:13:14.480 --> 0:13:19.760 they are seeing you know, the this boxed in situation 0:13:19.840 --> 0:13:23.320 for Biden too that I think they're sort of relishing 0:13:23.320 --> 0:13:27.680 a little bit that Biden is, you know, maybe unable 0:13:27.720 --> 0:13:31.880 to do much on China that could hurt the U. 0:13:31.960 --> 0:13:35.719 S economy even more. Uh when you think about tariffs, right, 0:13:35.840 --> 0:13:41.000 so currently we have tariffs in place. Um, everyone knows that, 0:13:41.160 --> 0:13:45.200 you know, taking off Harris will probably leave Biden even 0:13:45.200 --> 0:13:49.840 more vulnerable to criticism from Republicans. But adding more tariffs 0:13:49.880 --> 0:13:52.839 to it, if that is your enforcement tool, is maybe 0:13:52.840 --> 0:13:55.680 not something they want to go down. It's it's not 0:13:55.760 --> 0:13:57.600 really a pass they want to you know, go down. 0:13:57.640 --> 0:14:02.000 And so Republicans see the current reality for Biden and 0:14:02.200 --> 0:14:06.760 you know, probably enjoying watching him sort of figure out 0:14:06.800 --> 0:14:11.160 his way out of this box. Okay, we spent a 0:14:11.280 --> 0:14:14.240 lot of time learning uh cast of characters in the 0:14:14.240 --> 0:14:17.440 Trump administration who would love to tip their cards and 0:14:17.480 --> 0:14:21.320 talk about how negotiations were going. We've heard nothing about 0:14:21.400 --> 0:14:23.000 who's leading the charge of the American side, and the 0:14:23.000 --> 0:14:27.960 Biden administration. Who are the players real quick Jenny, Yeah, 0:14:28.080 --> 0:14:31.720 certainly a different casts of characters, and they're way less 0:14:31.760 --> 0:14:34.080 likely to tell us how it's going. Um it's the 0:14:34.480 --> 0:14:37.680 chief negotiator here is Katherine tie of the US Trade Representative. 0:14:38.440 --> 0:14:42.560 She's been in touch with the Chinese, uh, only twice 0:14:43.160 --> 0:14:46.520 in the first year in office. Her deputy, Sarah Bianchi, 0:14:46.800 --> 0:14:49.960 who handles China issues, has been in touch with the 0:14:50.080 --> 0:14:53.520 Chinese also a couple of times, although the agency decided 0:14:53.600 --> 0:14:57.960 not to disclose that. So um uh interesting there. And 0:14:58.000 --> 0:15:01.680 then you know, of course Tresure Secretary Yellen and Commerce 0:15:01.680 --> 0:15:05.280 Secretary are also key players here. Yeah. Aho, a lot 0:15:05.320 --> 0:15:07.640 of top names there in the administration, he thinks so much. 0:15:07.680 --> 0:15:10.680 Bloomberg News White House reporter Jenny Leonard from d C, 0:15:10.920 --> 0:15:12.720 of course, along with Bloomberg Business Week at or Jill 0:15:12.760 --> 0:15:14.760 Webber from Brooklyn. That story in the upcoming issue of 0:15:14.760 --> 0:15:17.680 Bloomberg Business Week magazine. It's online on the Bloomberg that 0:15:17.760 --> 0:15:23.120 magazine out lead this week. This is Bloomberg Business Week 0:15:23.280 --> 0:15:27.240 with Carol Masser and Bloomberg Quick Takes Tim Stinovic on 0:15:27.400 --> 0:15:30.360 Bloomberg Radio. So we had a bunch of big banks 0:15:30.640 --> 0:15:32.320 report over the last week, and Tim, we had what 0:15:32.440 --> 0:15:36.120 Morgan in b of a today coming out with numbers. Yeah, 0:15:36.200 --> 0:15:39.320 we've far already heard from Goldman Sachs, We've heard from 0:15:39.400 --> 0:15:42.080 JP Morgan Chase. Uh. We're also starting to hear from 0:15:42.080 --> 0:15:44.080 the regional banks as well, right, and I know that's 0:15:44.080 --> 0:15:46.360 something that's certainly always on the radar of our next guest, 0:15:46.600 --> 0:15:48.760 Anton Shuts is back with us. He's president and chief 0:15:48.760 --> 0:15:53.240 investment officer at Mendon Capital Advisors. On the phone in Florida. Anton, 0:15:53.400 --> 0:15:55.640 Good to have you here, Happy New Year. How are you. 0:15:56.640 --> 0:15:59.880 I'm doing well? Thanks about yourself doing okay? You know, 0:16:00.040 --> 0:16:03.240 taken one day at a time as as we do. Um. 0:16:03.280 --> 0:16:05.640 Good to hear though and kind of get into earnings 0:16:05.640 --> 0:16:07.360 because I really love when we start to hear, certainly 0:16:07.360 --> 0:16:10.600 from the financials and from leaders overall the big banks. 0:16:11.480 --> 0:16:13.840 How do you see it, not only the numbers today, 0:16:13.880 --> 0:16:15.800 but the numbers we got last week. How are the 0:16:15.800 --> 0:16:18.040 banks doing? I mean, compensation is one of those things 0:16:18.120 --> 0:16:24.800 increased costs showing up big time. Well, it's compensation, it's technology, 0:16:25.040 --> 0:16:27.920 and you know it's a it's a real difference in 0:16:28.000 --> 0:16:31.040 strategy between a number of these companies. You know, if 0:16:31.040 --> 0:16:34.800 you think about um, you know, JP Morgan investing twelve 0:16:34.880 --> 0:16:39.120 billion dolls in financial technology, right, I mean that's more 0:16:39.200 --> 0:16:43.200 than all the disruptors combined, probably right, investing in new 0:16:43.240 --> 0:16:45.760 new innovation and research. I mean, they certainly can win 0:16:45.800 --> 0:16:47.960 the game, but you know it comes at a cost. 0:16:48.080 --> 0:16:50.000 It's amazing they can earn the amount of money they 0:16:50.040 --> 0:16:53.160 earned while spending twelve billion dollars. Yeah, Anton, what does 0:16:53.200 --> 0:16:55.320 that look like? Because when we talked to fintech companies 0:16:55.320 --> 0:16:57.240 for example, you know I talked to Chris Britt, the 0:16:57.320 --> 0:16:59.640 CEO of Chime yesterday. It's a twenty five billion dollar 0:16:59.720 --> 0:17:01.880 fint it doesn't call itself a bank, though it offers 0:17:02.240 --> 0:17:06.359 banking services. It's it's just got a massive, massive private 0:17:06.400 --> 0:17:10.879 market valuation. Is the idea for for JP Morgan to 0:17:10.920 --> 0:17:14.760 invest in products like like that? Because help me understand 0:17:14.800 --> 0:17:18.080 what what these fintech investments are. Well, I mean they're 0:17:18.119 --> 0:17:21.399 they're obviously trying to make themselves more efficient. They're trying 0:17:21.400 --> 0:17:25.520 to improve their delivery process. They're trying to improve their 0:17:25.560 --> 0:17:28.720 ability to provide compliance, which is you know, it's very 0:17:28.720 --> 0:17:31.200 expensive and if you look at the core processors the 0:17:31.320 --> 0:17:34.040 five serves. Jack Henry's the f I s is those 0:17:34.040 --> 0:17:36.960 are very expensive cores and you know all the banks 0:17:37.080 --> 0:17:38.960 using them. At the end of the day, if you 0:17:39.000 --> 0:17:41.520 can find a way to deliver all of your products 0:17:41.520 --> 0:17:45.520 that even exists your customers right cheaper, then you get 0:17:45.560 --> 0:17:48.480 to eliminate some of those very expensive U and capital 0:17:48.520 --> 0:17:50.439 costs that are very bay. You can't get people to 0:17:50.480 --> 0:17:52.840 come to work anyway. And obviously if you if you 0:17:52.840 --> 0:17:54.119 can get people to come to work, you've got to 0:17:54.160 --> 0:17:56.600 pay them more. So part of part of the money 0:17:56.600 --> 0:17:59.280 spent on the innovation is not just a new products, right, 0:17:59.359 --> 0:18:01.720 It's it's and how do you deliver those products. That's 0:18:01.760 --> 0:18:04.880 how you provide compliance for that deliberate and I think 0:18:04.920 --> 0:18:06.760 that you know, we'll learn a lot more about that 0:18:06.840 --> 0:18:11.199 compliance as the regulators get more involved in unregulated you know, 0:18:11.440 --> 0:18:14.560 uh sin tex right, the banks are very regulated. We 0:18:14.680 --> 0:18:18.320 just saw so far this morning. It's gonna become a 0:18:18.359 --> 0:18:21.120 lot more regulated as now you know, it's got approval 0:18:21.160 --> 0:18:22.720 to become a bank. And when one of the first 0:18:22.760 --> 0:18:24.560 things right and said, well wait a second, you know, 0:18:24.840 --> 0:18:26.640 on the crypto side, you guys got to back off 0:18:26.680 --> 0:18:28.240 a bit. You know, we've got to get to understand 0:18:28.320 --> 0:18:31.879 you better. As a thank Anton in terms of the 0:18:31.880 --> 0:18:34.760 financial space, and you've been investing in in these types 0:18:34.800 --> 0:18:38.160 of names for a long time. Um, you liked off 0:18:38.200 --> 0:18:41.960 in the regional space. But is fintech and the newer 0:18:42.040 --> 0:18:44.040 upstarts starting to get you know, garner any more of 0:18:44.040 --> 0:18:46.600 your attention or potentially some of your thoughts about well, 0:18:46.640 --> 0:18:50.000 you know what we should be putting and committing money there. Well, 0:18:50.040 --> 0:18:53.119 I really like banks that have fintech embedded in him. 0:18:53.200 --> 0:18:56.680 So you talked about these private market valuations, but obviously 0:18:56.720 --> 0:18:58.960 some of the public evaluations and a lot of those 0:18:58.960 --> 0:19:02.280 comanies don't earn money. And and I'm a traditional value investor, 0:19:02.320 --> 0:19:05.320 of course, I'm always looking for, you know, what creates value. 0:19:05.359 --> 0:19:07.800 And if I can find banks that are fintech embedded 0:19:07.840 --> 0:19:10.479 in the more managements that are leaning forward, that are 0:19:10.480 --> 0:19:13.200 going to create a better mouse trap. You know, for instance, 0:19:13.200 --> 0:19:15.480 in New York and New York community that's really embraced 0:19:15.520 --> 0:19:19.400 you know, fintech and blotching technology, or a signature bank 0:19:19.480 --> 0:19:21.639 also headquartered in New York has done a lot of it, 0:19:21.760 --> 0:19:25.360 or or a silver Gate or a Triumph or we've 0:19:25.359 --> 0:19:28.639 talked about Live Oak Bank before. You know, these banks 0:19:28.680 --> 0:19:31.080 all have fintech embedded in them. They're all using it 0:19:31.160 --> 0:19:34.080 to liver they're investing in it, and they're part of 0:19:34.119 --> 0:19:35.800 the future. And I think that as we start looking 0:19:35.840 --> 0:19:38.719 at that stable coins and and who's going to have 0:19:38.840 --> 0:19:42.640 that ability to really get approval from the regulators, it's 0:19:42.680 --> 0:19:44.920 going to be the banking system. Is it going to 0:19:44.960 --> 0:19:48.480 be more regional bankers banks or the big banks? I 0:19:48.520 --> 0:19:50.879 think the big banks will eventually get because it does 0:19:50.920 --> 0:19:52.880 seem like the regional banks are leading in that right now. 0:19:53.880 --> 0:19:56.280 They are. It's it's you know, part of that's the 0:19:56.359 --> 0:19:58.960 decision trade, right I mean. J K. Morten's a really 0:19:59.040 --> 0:20:02.439 large organization and they literally think said they invested a 0:20:02.560 --> 0:20:06.399 hundred fin tax last year parsing them, getting them, you know, 0:20:06.960 --> 0:20:09.480 to the to the market, getting them distributed through that 0:20:09.680 --> 0:20:12.480 very large organization. It's harder to do that if you're 0:20:12.560 --> 0:20:15.760 smaller entergy. It's a lot faster to bring something to 0:20:15.880 --> 0:20:19.240 market and you can test things out with some customers 0:20:19.320 --> 0:20:22.639 and get it going without a very large, um, you know, 0:20:23.080 --> 0:20:25.760 bureaucracy to say the least. And obviously some of those 0:20:25.800 --> 0:20:27.879 banks are better getting things to market, but it's a 0:20:27.920 --> 0:20:30.800 lot easier if you're a multibillion dollar bank rather than 0:20:30.800 --> 0:20:34.240 a multi trillion dollar bank. And what do you think 0:20:34.240 --> 0:20:35.840 the banking environment is going to be like for some 0:20:35.880 --> 0:20:39.040 of the names that that you hold onto, whether it's 0:20:39.040 --> 0:20:41.679 a live oak, whether there it's an equity bank shares, 0:20:42.080 --> 0:20:45.000 first bank shares. I mean, it's going to be a 0:20:45.040 --> 0:20:48.240 better environment because of a higher rates that we're starting 0:20:48.240 --> 0:20:50.879 to see certainly come through the system. Um, how do 0:20:50.920 --> 0:20:54.320 you see it? Well, all, you know, higher rates, everybody 0:20:54.359 --> 0:20:57.560 always talks about how great those are. Yes, absolutely a 0:20:57.640 --> 0:21:01.280 good you occur higher Um, you know, short term interest 0:21:01.400 --> 0:21:04.520 rates are good for almost all banks, and you've got 0:21:04.560 --> 0:21:06.520 the raise rates quite a bit before you start creating 0:21:06.520 --> 0:21:08.600 credit issues out there will just obviously the other side 0:21:08.600 --> 0:21:10.800 of that. But I think the thing that's that's really 0:21:10.840 --> 0:21:14.560 important here is there was so much stimulus put into 0:21:14.800 --> 0:21:18.120 their customers hands that loan growth really didn't exist a 0:21:18.119 --> 0:21:20.919 ton other than some of those faster growing markets like 0:21:21.000 --> 0:21:24.840 Tennessee or Texas or Florida, um, nationally, So now you've 0:21:24.880 --> 0:21:27.200