1 00:00:09,880 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,480 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:26,960 Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg We 5 00:00:26,960 --> 00:00:30,440 Speaker 1: tend to politics. Now that debates in Nevada really was 6 00:00:30,760 --> 00:00:34,840 Speaker 1: fine night in Las Vegas. Mike Bloomberg owns more wealth 7 00:00:35,240 --> 00:00:39,280 Speaker 1: from the bottom a hundred and twenty five million Americans, 8 00:00:39,320 --> 00:00:44,640 Speaker 1: A billionaire who calls women fat broads and horse faced lesbians. 9 00:00:44,760 --> 00:00:47,559 Speaker 1: He has not managed his city very very well when 10 00:00:47,560 --> 00:00:50,120 Speaker 1: he was there one candidate who wants to burn this 11 00:00:50,200 --> 00:00:53,279 Speaker 1: party down and another candidate who wants to buy this 12 00:00:53,360 --> 00:00:56,880 Speaker 1: party out. The campaign memo from mayor. Bloomberg said this 13 00:00:56,960 --> 00:01:00,560 Speaker 1: morning that the only way that we get a nominee 14 00:01:00,800 --> 00:01:03,360 Speaker 1: is if we step aside for him. I'm a New Yorker. 15 00:01:03,680 --> 00:01:06,600 Speaker 1: I know how to take on an arrogant khan Man 16 00:01:06,640 --> 00:01:10,040 Speaker 1: like Donald Trump that comes from New York. Jointing US 17 00:01:10,080 --> 00:01:13,760 Speaker 1: now Terry Hynes Pangaea Policy Advisory found at Terry, we 18 00:01:13,840 --> 00:01:16,440 Speaker 1: got to talk about the founder majority Andre of Bloomberg AMPE, 19 00:01:16,800 --> 00:01:19,840 Speaker 1: the parent company of Bloomberg News. Mr Michael Bloomberg, how 20 00:01:19,920 --> 00:01:22,720 Speaker 1: tough was that night for him? Terry? I think it 21 00:01:22,800 --> 00:01:25,040 Speaker 1: was very tough for him, John, and I think the 22 00:01:25,640 --> 00:01:29,560 Speaker 1: bottom line effect is that the Democratic race is likely 23 00:01:29,560 --> 00:01:34,440 Speaker 1: more modeled and not clarified after Nevada South Carolina Super Tuesday. 24 00:01:34,640 --> 00:01:40,200 Speaker 1: Remember the Bloomberg case. According to a staff memo found 25 00:01:40,240 --> 00:01:42,440 Speaker 1: a couple of days ago, is that Sanders is the 26 00:01:42,520 --> 00:01:46,440 Speaker 1: likely nominee unless Biden, Clobachar, and Buddhajo would drop out 27 00:01:46,480 --> 00:01:50,600 Speaker 1: after Super Super Tuesday. Make it Sanders versus Bloomberg after 28 00:01:50,640 --> 00:01:55,040 Speaker 1: that performance, that's much less likely to happen. Uh. By anyway, 29 00:01:55,080 --> 00:01:58,080 Speaker 1: I'll stop there, no, Terry, I'm wondering whether Michael Bloomberg's 30 00:01:58,200 --> 00:02:01,680 Speaker 1: entrance actually ended up how bang Bernie Sanders by taking 31 00:02:01,720 --> 00:02:05,320 Speaker 1: some of the heat off him at Lisa. That's an 32 00:02:05,320 --> 00:02:08,079 Speaker 1: awfully good question, and I think the short answer is 33 00:02:08,120 --> 00:02:11,200 Speaker 1: I think it did. Uh combination of two things. One 34 00:02:11,320 --> 00:02:14,120 Speaker 1: is it does take heat off of him. And secondly, 35 00:02:14,280 --> 00:02:17,360 Speaker 1: you have people that I referred to and this morning 36 00:02:17,440 --> 00:02:22,000 Speaker 1: is second tier candidates. I mean no disrespect. Uh Warren, Clovachar, 37 00:02:22,120 --> 00:02:24,519 Speaker 1: budda Judge all tore each other up in order to 38 00:02:24,560 --> 00:02:27,000 Speaker 1: get a run up the ladder and stay alive. And 39 00:02:27,080 --> 00:02:30,440 Speaker 1: the combination of that with the deflation of Bloomberg, I 40 00:02:30,440 --> 00:02:33,160 Speaker 1: think really helped Sanders. Yes, Terry, good morning. This is 41 00:02:33,200 --> 00:02:37,200 Speaker 1: the third tier radio guy talking right now. Terry, and 42 00:02:37,280 --> 00:02:39,320 Speaker 1: you and I have been you know, seen this before, 43 00:02:39,400 --> 00:02:42,519 Speaker 1: the niceties of Kennedy nixt and you and I don't 44 00:02:42,560 --> 00:02:45,080 Speaker 1: go back to Lincoln Douglas. But I guess that was fiery. 45 00:02:45,600 --> 00:02:52,720 Speaker 1: Is well, something changed last night? What was it? I 46 00:02:52,800 --> 00:02:57,760 Speaker 1: think what changed is that you have candidates to that. 47 00:02:57,800 --> 00:02:59,960 Speaker 1: I mean, the market perception, I think in the general 48 00:03:00,040 --> 00:03:03,520 Speaker 1: perception and political perception was that this race was going 49 00:03:03,560 --> 00:03:06,079 Speaker 1: to get clarified and candidates were going to drop out. 50 00:03:06,120 --> 00:03:08,560 Speaker 1: And I think what changed last night is that that 51 00:03:08,680 --> 00:03:10,800 Speaker 1: is much less likely to happen. As I just mentioned. 52 00:03:11,000 --> 00:03:14,000 Speaker 1: The other thing that changed, I think is that, uh, 53 00:03:14,160 --> 00:03:17,920 Speaker 1: the other candidates were supposed to get the memo that 54 00:03:18,000 --> 00:03:19,840 Speaker 1: the race was supposed to come down to a two 55 00:03:19,840 --> 00:03:22,560 Speaker 1: person battle between Sanders and Bloomberg, and they didn't get 56 00:03:22,600 --> 00:03:25,880 Speaker 1: that memo. Instead, quite the opposite, Terry. Everything you've said 57 00:03:26,360 --> 00:03:29,000 Speaker 1: just opens the door to Senator Sanders running away with 58 00:03:29,040 --> 00:03:30,840 Speaker 1: this and a question I'm going to ask now is 59 00:03:30,880 --> 00:03:33,160 Speaker 1: what many people are thinking on Wall Street at the moment. 60 00:03:33,639 --> 00:03:36,800 Speaker 1: When does this start to bleed into financial markets, Terry, 61 00:03:36,960 --> 00:03:39,360 Speaker 1: When do we start to see that connection established with 62 00:03:39,600 --> 00:03:43,240 Speaker 1: Senator Sanders and perhaps being the risk off candidate for 63 00:03:43,440 --> 00:03:46,400 Speaker 1: off the people on the street. I think that takes 64 00:03:46,400 --> 00:03:49,160 Speaker 1: a while, actually, John, the you know for a couple 65 00:03:49,200 --> 00:03:53,120 Speaker 1: of reasons. One is that I think uh, markets and 66 00:03:53,160 --> 00:03:55,240 Speaker 1: the general public both are slow to catch up to 67 00:03:55,320 --> 00:03:59,240 Speaker 1: this um is that you know. Firstly, is that what 68 00:03:59,320 --> 00:04:03,680 Speaker 1: happens is Super Tuesday, UH doesn't clarify as much as 69 00:04:03,760 --> 00:04:08,040 Speaker 1: it's supposed to because the delegates are proportional. Uh, so 70 00:04:08,200 --> 00:04:10,760 Speaker 1: you know, it's not a winner take all situations. Secondly, 71 00:04:11,040 --> 00:04:14,280 Speaker 1: the Super Tuesday states generally split between Sandra states like 72 00:04:14,360 --> 00:04:18,160 Speaker 1: California and other ones, mostly in the South, where what 73 00:04:18,480 --> 00:04:20,960 Speaker 1: I would call non Bernies do a lot better, places 74 00:04:20,960 --> 00:04:24,320 Speaker 1: like Texas, Virginia, North Carolina. So it's gonna be quite 75 00:04:24,320 --> 00:04:27,800 Speaker 1: a while before that clarifies. And uh, you know, once 76 00:04:27,920 --> 00:04:31,560 Speaker 1: if it clarifies in Sanders direction, I think I think frankly, 77 00:04:31,560 --> 00:04:34,200 Speaker 1: that goes market positive because then it looks like Trump's 78 00:04:34,320 --> 00:04:37,120 Speaker 1: likelier to win. But the longer this models, I think 79 00:04:37,120 --> 00:04:40,200 Speaker 1: the longer, it's a market negative on balanced Tera Haynes, 80 00:04:40,200 --> 00:04:46,880 Speaker 1: thank you so much. Appreciated this morning with pangea. Right now, 81 00:04:46,880 --> 00:04:49,040 Speaker 1: we are thrilled to bring you a gentleman that some 82 00:04:49,120 --> 00:04:54,479 Speaker 1: would say invented this ages ago, before Obama, before William 83 00:04:54,560 --> 00:04:58,080 Speaker 1: Jefferson Clinton. There was a doctor from New York who 84 00:04:58,120 --> 00:05:00,520 Speaker 1: was up in Vermont skiing and sugar bu and he said, 85 00:05:00,560 --> 00:05:04,240 Speaker 1: I think I had to reinvent presidential politics. Hard Dean 86 00:05:04,320 --> 00:05:07,159 Speaker 1: went on to reinvent the Iowa Caucus, and then he 87 00:05:07,160 --> 00:05:11,240 Speaker 1: went on for leadership within his Democratic Party. Howard, we 88 00:05:11,360 --> 00:05:16,520 Speaker 1: just got from Terry Haines sort of a grizzled, you know, strategy. 89 00:05:16,600 --> 00:05:20,279 Speaker 1: Look from Washington, what did last night mean for the 90 00:05:20,360 --> 00:05:23,840 Speaker 1: fabric of the Democratic Party, for the operatives, for the 91 00:05:23,880 --> 00:05:27,240 Speaker 1: people in the States. People that have been Democratic, the 92 00:05:27,360 --> 00:05:31,120 Speaker 1: thick and thin, they haven't changed parties, They've always been Democratic. 93 00:05:31,360 --> 00:05:34,680 Speaker 1: You mentioned the moderate Democrats. What did all this fireworks 94 00:05:34,960 --> 00:05:38,560 Speaker 1: mean for them last night? Well, first of all, thank 95 00:05:38,560 --> 00:05:43,920 Speaker 1: you for the overinflated resident a. Secondly, uh, in all 96 00:05:44,000 --> 00:05:47,000 Speaker 1: due respect to all the analysts, people from Washington usually 97 00:05:47,040 --> 00:05:49,520 Speaker 1: had the last out here. What's gonna happen? So let 98 00:05:49,560 --> 00:05:51,159 Speaker 1: me tell you what I think is gonna happen, which 99 00:05:51,200 --> 00:05:56,599 Speaker 1: is very different. Uh, It's quite possible, although maybe won't happen, 100 00:05:56,640 --> 00:05:59,040 Speaker 1: that all six of these candidates will go to Super Tuesday. 101 00:05:59,720 --> 00:06:02,880 Speaker 1: That depends mostly on the finishes of Elizabeth Lawrence and 102 00:06:02,960 --> 00:06:07,240 Speaker 1: Joe Bid if they finished decently in Nevada. Uh, in 103 00:06:07,360 --> 00:06:11,440 Speaker 1: South Carolina, they're all going to Super Tuesday. Now, when 104 00:06:11,480 --> 00:06:14,080 Speaker 1: you get to Super Tuesday, we have a rule that 105 00:06:14,120 --> 00:06:16,159 Speaker 1: says if you don't get fiftent of the vote, you 106 00:06:16,160 --> 00:06:21,680 Speaker 1: get zero delegate. That is gonna win out people out significantly. Uh. 107 00:06:22,520 --> 00:06:25,080 Speaker 1: People are saying that Bernie's the front runner. I think 108 00:06:25,080 --> 00:06:27,120 Speaker 1: that's the or buddhas Judge is the front runner. I 109 00:06:27,200 --> 00:06:30,479 Speaker 1: think that's the mistake. After two states, they are mostly white, 110 00:06:30,520 --> 00:06:35,200 Speaker 1: don't look anything like the Democratic Party. So, um, I'm 111 00:06:35,240 --> 00:06:38,200 Speaker 1: guessing we're gonna have a shake out. But I'm guessing 112 00:06:38,240 --> 00:06:41,000 Speaker 1: all six of these they're all six of these candidates 113 00:06:41,040 --> 00:06:43,560 Speaker 1: could go on and win the nominations. As we saw 114 00:06:43,680 --> 00:06:46,599 Speaker 1: last night. I thought it was a fantastic debate. What 115 00:06:46,720 --> 00:06:48,840 Speaker 1: makes you think from the debate last night that all 116 00:06:48,880 --> 00:06:51,880 Speaker 1: six could go on and win this Howard, because they're 117 00:06:51,880 --> 00:06:54,839 Speaker 1: all attractive, they all did well, they're all smart and 118 00:06:54,880 --> 00:06:58,920 Speaker 1: they all have their own different lanes. Okay, Well, let's 119 00:06:58,920 --> 00:07:01,679 Speaker 1: talk about Matt Bloomberg. Because most people said he didn't 120 00:07:01,720 --> 00:07:04,679 Speaker 1: have a good night. What did you say that suggests 121 00:07:04,680 --> 00:07:06,960 Speaker 1: that he could go on and tite the nomination because 122 00:07:07,000 --> 00:07:09,080 Speaker 1: he has so much money, he's all over the place, 123 00:07:09,120 --> 00:07:12,240 Speaker 1: he's on the air. Um. Yes, he didn't have as 124 00:07:12,280 --> 00:07:14,400 Speaker 1: good night as some of the others. This is the 125 00:07:14,440 --> 00:07:16,640 Speaker 1: first debate. Everybody else has already doing in five or 126 00:07:16,680 --> 00:07:20,040 Speaker 1: six of them. Um, So I don't think that's going 127 00:07:20,080 --> 00:07:22,840 Speaker 1: to harm him greatly. He had to up his game, 128 00:07:22,920 --> 00:07:25,480 Speaker 1: he knows that. But he's the one person up there 129 00:07:25,480 --> 00:07:28,160 Speaker 1: who could come on as a novice and continue to 130 00:07:28,200 --> 00:07:31,080 Speaker 1: do just fine. My guess is he may meet the 131 00:07:31,560 --> 00:07:34,239 Speaker 1: percent thresholds in a number of states on Super Tuesday, 132 00:07:34,280 --> 00:07:37,720 Speaker 1: and maybe even South Carolina. Howard, what do you think 133 00:07:37,720 --> 00:07:42,880 Speaker 1: of Pete his criticism of Bernie Sanders and his followers 134 00:07:43,000 --> 00:07:46,440 Speaker 1: and saying that he has to take responsibility for some 135 00:07:46,520 --> 00:07:50,600 Speaker 1: of the vitriol that is being thrown by the people 136 00:07:50,600 --> 00:07:53,920 Speaker 1: who are commonly known as Bernie prose I. Actually it 137 00:07:54,080 --> 00:07:56,200 Speaker 1: helped two people. One was Pete Buddhi and the other 138 00:07:56,320 --> 00:07:59,000 Speaker 1: was Bernie standards, that is an issue. There is a 139 00:07:59,080 --> 00:08:02,400 Speaker 1: lot of resentment about that. I don't think that's anything 140 00:08:02,480 --> 00:08:06,240 Speaker 1: close to the majority of Bernie Sanders, but that is 141 00:08:06,280 --> 00:08:08,120 Speaker 1: going to be an issue in the campaign. Bernie now 142 00:08:08,200 --> 00:08:10,280 Speaker 1: knows that, and he's gonna have to do something that 143 00:08:10,440 --> 00:08:13,120 Speaker 1: I think he will poward one more question and get 144 00:08:13,160 --> 00:08:15,920 Speaker 1: you off in your busy morning. I'm sure in democratic politics, 145 00:08:16,280 --> 00:08:20,040 Speaker 1: if you put Hubert Humphrey up there last night, Scoop Jackson, frankly, 146 00:08:20,080 --> 00:08:23,000 Speaker 1: if you put Hillary Clinton up there last night, where 147 00:08:23,000 --> 00:08:25,000 Speaker 1: do they fit in right to left? Would they be 148 00:08:25,040 --> 00:08:28,480 Speaker 1: the most right candidate up there? I mean that how 149 00:08:28,520 --> 00:08:32,160 Speaker 1: far your party shifted? I think our party shifting to 150 00:08:32,200 --> 00:08:34,800 Speaker 1: the center? I think, come on, I didn't hear that 151 00:08:34,920 --> 00:08:37,600 Speaker 1: last night. Dr Dean, Well, you may you may not have, 152 00:08:37,760 --> 00:08:41,560 Speaker 1: but I'll tell you what's on the ground. Five five 153 00:08:41,640 --> 00:08:47,440 Speaker 1: congress people that we elected are significantly to the leftist center. Agreed, 154 00:08:48,400 --> 00:08:51,760 Speaker 1: But Oklahoma, the voters are moving to the sound Howard. 155 00:08:51,880 --> 00:08:55,079 Speaker 1: I totally take your point. I didn't see that in 156 00:08:55,200 --> 00:08:59,599 Speaker 1: John Farrell's Las Vegas last night. I thought Budd was 157 00:08:59,679 --> 00:09:04,000 Speaker 1: clearly centers. Uh, Colob Charwood centers Bloomberg wasn't able to 158 00:09:04,040 --> 00:09:06,400 Speaker 1: get his message out, but I would guess that he 159 00:09:06,520 --> 00:09:08,920 Speaker 1: was center to center right, probably the most conservative guy 160 00:09:08,920 --> 00:09:11,959 Speaker 1: on the stage, although Amy might have been conservative person 161 00:09:12,000 --> 00:09:14,720 Speaker 1: on the stage. Okay, Howard Dean, thank you. I think 162 00:09:14,880 --> 00:09:16,440 Speaker 1: we have to leave it there just because of the time, 163 00:09:16,480 --> 00:09:19,040 Speaker 1: but Dr Dean, thank you so much. Former how did 164 00:09:19,080 --> 00:09:24,800 Speaker 1: the Democratic National Committee? Right now, we're looking at the 165 00:09:24,920 --> 00:09:29,240 Speaker 1: Trade shares ahead of the market up twenty four percent, 166 00:09:29,400 --> 00:09:32,199 Speaker 1: Morgan Stanley shares somewhat lower. This comes after Morgan Stanley 167 00:09:32,440 --> 00:09:34,840 Speaker 1: so that it is buying e Trade in a thirteen 168 00:09:34,920 --> 00:09:38,720 Speaker 1: billion dollar deal more than premium over where the shares 169 00:09:38,800 --> 00:09:42,680 Speaker 1: price closed yesterday. Sationally Boss who covers all things financial 170 00:09:42,720 --> 00:09:45,640 Speaker 1: here for us in Bloomberg Television and Bloomberg News, joining 171 00:09:45,720 --> 00:09:47,880 Speaker 1: us in interactive broker studios. And there really is a 172 00:09:47,960 --> 00:09:51,880 Speaker 1: question what is Morgan Stanley getting with this deal given 173 00:09:52,120 --> 00:09:55,440 Speaker 1: where the valuation istionally Morgan Stanley for the masses. Lisa, 174 00:09:55,760 --> 00:09:58,280 Speaker 1: So you have a bank here that used to mostly 175 00:09:58,320 --> 00:10:03,120 Speaker 1: serve wealthy individual and they want to go way downstream. 176 00:10:03,160 --> 00:10:06,480 Speaker 1: They want to serve thirteen million customers and they want 177 00:10:06,520 --> 00:10:10,920 Speaker 1: to create a full scale bank, a full scale digital bank, 178 00:10:11,320 --> 00:10:13,880 Speaker 1: and which they have checking and savings accounts for millions 179 00:10:13,880 --> 00:10:16,240 Speaker 1: of people. All right, so back up. The idea here 180 00:10:16,280 --> 00:10:20,199 Speaker 1: being that e trade caters to retail clients, not necessarily 181 00:10:20,240 --> 00:10:24,200 Speaker 1: the millionaires and billionaires, and that bringing them in through 182 00:10:24,240 --> 00:10:28,400 Speaker 1: their brokerage accounts will also generate more deposits and more 183 00:10:28,480 --> 00:10:31,640 Speaker 1: wealth management and just that whole cross selling kind of 184 00:10:31,720 --> 00:10:34,920 Speaker 1: chain of revenues. Correct, Yes, yes, and yes. So something interesting. 185 00:10:34,920 --> 00:10:37,360 Speaker 1: Remember Morgan Stanley. If you googled it in the past, 186 00:10:37,440 --> 00:10:39,880 Speaker 1: people would ask is Morgan Stanley and JP more even 187 00:10:39,920 --> 00:10:43,040 Speaker 1: the same thing. Most people don't relate to Morgan Stanley 188 00:10:43,120 --> 00:10:45,400 Speaker 1: because it's an investment bank, it's a wealth manager for 189 00:10:45,440 --> 00:10:49,080 Speaker 1: wealthier people. But now they're saying they want everyone to 190 00:10:49,160 --> 00:10:53,280 Speaker 1: know what Morgan Stanley is. Will this do it? I mean? 191 00:10:53,360 --> 00:10:55,880 Speaker 1: Is it worth it? Analysts saying that this deal seems 192 00:10:55,880 --> 00:10:58,679 Speaker 1: like it could be really lucrative for Morgan Stanley. Listen, Initially, 193 00:10:58,760 --> 00:11:00,920 Speaker 1: the stock is not doing well. Investors on the front 194 00:11:01,000 --> 00:11:05,520 Speaker 1: end are have their concerns. Why did those concerns exist? 195 00:11:05,840 --> 00:11:08,679 Speaker 1: For more financial reasons? More likely, what does this mean 196 00:11:08,720 --> 00:11:13,200 Speaker 1: for buybacks and capital return to shareholders? Strategically, it makes 197 00:11:13,240 --> 00:11:17,080 Speaker 1: a lot of sense. Why is that James Gorman, former 198 00:11:17,160 --> 00:11:20,520 Speaker 1: mckensey consultant, took over Morgan Stanley, made them one of 199 00:11:20,559 --> 00:11:24,280 Speaker 1: the biggest managers in America, pushed up those margins and 200 00:11:24,400 --> 00:11:28,199 Speaker 1: now is making that even bigger. He's been successful the 201 00:11:28,240 --> 00:11:31,640 Speaker 1: first time around. We're getting to get in some of 202 00:11:31,640 --> 00:11:34,360 Speaker 1: the numbers here. And Allison Williams was really clear about 203 00:11:34,400 --> 00:11:37,040 Speaker 1: the overpaying here and what's fascinating here, and I like 204 00:11:37,120 --> 00:11:40,360 Speaker 1: the equivalent of JP Morgan in their charge card business. 205 00:11:41,000 --> 00:11:43,960 Speaker 1: Revenues are so dear and difficult in the business that 206 00:11:44,040 --> 00:11:47,920 Speaker 1: everybody's extending out the x X axis the timeline, and 207 00:11:47,960 --> 00:11:52,440 Speaker 1: they're making very clear the break even period on doing 208 00:11:52,480 --> 00:11:55,839 Speaker 1: the trade is much longer than expected. If you heard 209 00:11:55,880 --> 00:11:58,480 Speaker 1: from your sources, how long is long yet two to 210 00:11:58,520 --> 00:12:03,439 Speaker 1: three years? Well, I would say that short. Financially, it 211 00:12:03,559 --> 00:12:05,839 Speaker 1: makes sense for them to do this big strategic thing 212 00:12:05,840 --> 00:12:09,800 Speaker 1: about becoming America's bank. Right to build a full scale, 213 00:12:10,240 --> 00:12:14,559 Speaker 1: full service digital bank will take many years. So think 214 00:12:14,600 --> 00:12:17,839 Speaker 1: about how long it took Gorman for for his first 215 00:12:18,880 --> 00:12:22,080 Speaker 1: I want to go into your expertise then on Goldman 216 00:12:22,120 --> 00:12:25,120 Speaker 1: saction were just at the investor day as well. At 217 00:12:25,160 --> 00:12:27,920 Speaker 1: Lisa brilliantly brings up that this is the retailizing of 218 00:12:27,960 --> 00:12:31,320 Speaker 1: Morgan Stanley. Okay, great? Is this essentially they're trying to 219 00:12:31,320 --> 00:12:34,319 Speaker 1: get out front of Goldman Sack? Did they did they 220 00:12:34,400 --> 00:12:37,800 Speaker 1: acquire a trade so somebody else wouldn't be able to 221 00:12:37,840 --> 00:12:42,840 Speaker 1: buy it? This is a huge way to stay competitive, Tom, Yes, Right, 222 00:12:43,280 --> 00:12:45,440 Speaker 1: Goldman sacs for for Gorman this morning to say that 223 00:12:45,480 --> 00:12:47,840 Speaker 1: they are building a full scale digital bank. That is 224 00:12:47,880 --> 00:12:52,640 Speaker 1: something that Goldman had said before. So how do they 225 00:12:52,679 --> 00:12:55,760 Speaker 1: compete now in their own plan? Right? And we are 226 00:12:55,800 --> 00:12:59,240 Speaker 1: seeing the Goldman Goldman Sacks shares down half percent in 227 00:12:59,280 --> 00:13:02,680 Speaker 1: pre market trade. Waiting, but it's you're gonna be spoking 228 00:13:02,720 --> 00:13:06,200 Speaker 1: with James Gorman, correct, with James James Gorman and Morgan 229 00:13:06,280 --> 00:13:09,960 Speaker 1: Stanley later today. What is sort of the main question 230 00:13:10,360 --> 00:13:12,400 Speaker 1: that you're hoping to get from him? Well, one thing 231 00:13:12,400 --> 00:13:14,120 Speaker 1: I want to know about him is does this extent 232 00:13:14,240 --> 00:13:17,320 Speaker 1: his tenure as CEO of the company. So we've been 233 00:13:17,320 --> 00:13:21,280 Speaker 1: already looking at Morgan Stanley succession plan for some time. Also, 234 00:13:22,000 --> 00:13:25,240 Speaker 1: remember Morgan Stanley is still the number one, two, or 235 00:13:25,280 --> 00:13:27,320 Speaker 1: three investment bank every year depending on how you look 236 00:13:27,320 --> 00:13:31,200 Speaker 1: at it, huge equity underwriter. Are the wealth managers now 237 00:13:31,320 --> 00:13:33,320 Speaker 1: taking back the power of the bank. They are the 238 00:13:33,400 --> 00:13:36,760 Speaker 1: number one stock trading firm in America. What does this 239 00:13:36,880 --> 00:13:39,520 Speaker 1: acquisition mean for them? It's probably going to push them 240 00:13:39,600 --> 00:13:44,000 Speaker 1: much further ahead. One thing, and this will be fascinating. 241 00:13:44,040 --> 00:13:48,439 Speaker 1: Your conversation with Mr Gorman uh later today and this 242 00:13:48,480 --> 00:13:51,800 Speaker 1: goes to ubs where axel Vever was heated this morning 243 00:13:51,840 --> 00:13:56,640 Speaker 1: with me and Francine Management. But it's where it's where 244 00:13:56,640 --> 00:14:01,440 Speaker 1: wealth management is? Is e trade well management or I 245 00:14:01,480 --> 00:14:03,920 Speaker 1: love this idea that I can't remember where the Lisa 246 00:14:04,000 --> 00:14:07,800 Speaker 1: said it. Uh, it's just nothing more than a digital bank. 247 00:14:07,920 --> 00:14:10,400 Speaker 1: I mean, I want to be very very stray about that. 248 00:14:10,480 --> 00:14:12,480 Speaker 1: I want to be very clear that Morgan Stanley was 249 00:14:12,559 --> 00:14:15,360 Speaker 1: a wealth manager. What they want to become is a bank. 250 00:14:15,880 --> 00:14:18,600 Speaker 1: They want to become a bank. What's a digital bank? 251 00:14:18,679 --> 00:14:20,680 Speaker 1: What does that look like? I mean when you talk 252 00:14:20,720 --> 00:14:23,760 Speaker 1: to Mr Solomon, Okay, but this is important. You talked 253 00:14:23,800 --> 00:14:26,840 Speaker 1: to David Solomon, He's got a vision a digital bank. 254 00:14:27,040 --> 00:14:29,440 Speaker 1: When you talk to Gorman today, is his vision the same? 255 00:14:29,600 --> 00:14:31,000 Speaker 1: And how much is this just? You don't need the 256 00:14:31,000 --> 00:14:34,360 Speaker 1: brick and mortar physical space which are being shown. Jamie 257 00:14:34,400 --> 00:14:36,720 Speaker 1: is Jamie Diamond talking about a digital bank? He's just 258 00:14:36,800 --> 00:14:39,600 Speaker 1: doing it. Can I give you somebody else here that 259 00:14:39,640 --> 00:14:42,600 Speaker 1: should be a little concerned about this deal? Goldman had 260 00:14:42,600 --> 00:14:45,240 Speaker 1: to go to Apple right there, the Google's, the Amazons 261 00:14:45,240 --> 00:14:46,960 Speaker 1: and all of these tech companies in the world that 262 00:14:46,960 --> 00:14:49,440 Speaker 1: wanted to get into banking, and Morgan Stanley is saying 263 00:14:49,480 --> 00:14:52,520 Speaker 1: we don't need you. They're saying we can do this 264 00:14:52,800 --> 00:14:56,680 Speaker 1: right now without big tech. Exactly interesting, that's actually fascinating. 265 00:14:56,880 --> 00:14:59,960 Speaker 1: I mean, the idea being that big tech isn't necessary 266 00:15:00,000 --> 00:15:01,920 Speaker 1: really going to have the seat at the table that 267 00:15:01,960 --> 00:15:03,480 Speaker 1: a lot of people thought. Okay, so what are you 268 00:15:03,480 --> 00:15:05,800 Speaker 1: gonna ask? Mr? Gorman? They give us an outline here. 269 00:15:05,920 --> 00:15:08,720 Speaker 1: This is a really important interview. What the one one? Besides? 270 00:15:08,840 --> 00:15:10,640 Speaker 1: You know, how long is he going to stay around? Listen, 271 00:15:10,680 --> 00:15:13,640 Speaker 1: you're talking about Jamie Diamond. Jamie Diamond has been clipping 272 00:15:13,680 --> 00:15:17,880 Speaker 1: up the heels of Morgan Stanley's massive stock trading business. 273 00:15:18,240 --> 00:15:21,880 Speaker 1: So how does this deal fend off JP Morgan in 274 00:15:21,880 --> 00:15:25,000 Speaker 1: that business? That's something people have not asked about. The 275 00:15:25,120 --> 00:15:27,320 Speaker 1: question you asked me for how long will this take 276 00:15:27,360 --> 00:15:29,560 Speaker 1: for you to become that full scale, beautiful digit box? 277 00:15:29,560 --> 00:15:32,800 Speaker 1: And what is where is David Solomon? Yeah? Well that's 278 00:15:32,800 --> 00:15:39,080 Speaker 1: the point. John Our next guest is great for writing 279 00:15:39,280 --> 00:15:43,000 Speaker 1: half sentence headlines that get your B T I G. 280 00:15:44,840 --> 00:15:50,360 Speaker 1: Why here's the reason why Tesla one up? Are you ready? Why? 281 00:15:50,440 --> 00:15:54,280 Speaker 1: Because the public is buying. I mean, you don't need 282 00:15:54,320 --> 00:15:57,160 Speaker 1: any more than that. He's here to talk about his 283 00:15:57,240 --> 00:16:03,200 Speaker 1: former boss at U B. S jude In Emmanuel strategist 284 00:16:04,320 --> 00:16:07,560 Speaker 1: right now, disclaimers everywhere. So when you were, you were, 285 00:16:07,680 --> 00:16:09,800 Speaker 1: you were brass Rey Lip there, I've been there many 286 00:16:09,840 --> 00:16:12,360 Speaker 1: times in Zurich down the street you and Mr Mahdi 287 00:16:12,440 --> 00:16:14,840 Speaker 1: where there? You know, what's the what's the body language? 288 00:16:14,840 --> 00:16:18,800 Speaker 1: Are you seeing your former employer? Well, look, it has 289 00:16:18,880 --> 00:16:24,600 Speaker 1: been a difficult decade, let's say to be a European bank. Um. 290 00:16:24,840 --> 00:16:28,880 Speaker 1: You know the question is it's not just uh specific 291 00:16:29,200 --> 00:16:32,680 Speaker 1: to that company, it's are you going to get any 292 00:16:32,760 --> 00:16:37,000 Speaker 1: relief from these just unremitting headwinds with regard to the 293 00:16:37,080 --> 00:16:41,040 Speaker 1: zero interest rate environment? We would actually argue that there 294 00:16:41,160 --> 00:16:44,400 Speaker 1: is a possibility you're going to get leadership transition in Germany. 295 00:16:44,720 --> 00:16:47,440 Speaker 1: You right, if you looked at the debate stage last night, 296 00:16:47,680 --> 00:16:50,960 Speaker 1: we know one thing. We are our deficit. You know, 297 00:16:51,160 --> 00:16:55,840 Speaker 1: I'm a trillion bid. You know you know it's yesterday 298 00:16:55,920 --> 00:16:58,280 Speaker 1: was saying at Deutsche Bank with two days ago, with 299 00:16:58,320 --> 00:17:00,680 Speaker 1: a with a GDP slowdown, the deaths that I believe 300 00:17:00,760 --> 00:17:03,200 Speaker 1: was touristing could go out to two trillion dollars Jule, 301 00:17:03,240 --> 00:17:04,439 Speaker 1: and I don't want to get you in trouble with 302 00:17:04,480 --> 00:17:06,840 Speaker 1: your General Council of bt I G, but you brought 303 00:17:06,880 --> 00:17:09,560 Speaker 1: up a really important point, and this goes to the 304 00:17:09,560 --> 00:17:12,760 Speaker 1: heart of your matter and equity strategy. With the dampening 305 00:17:12,840 --> 00:17:17,960 Speaker 1: that's out there, the zero bound that's out there is scale. 306 00:17:18,119 --> 00:17:23,520 Speaker 1: The only solution for corporations worldwide M and A combinations 307 00:17:23,600 --> 00:17:27,240 Speaker 1: is that the only path forward on the revenue side. Well, 308 00:17:27,760 --> 00:17:31,359 Speaker 1: it's not just the revenue side, it's just you know, 309 00:17:31,440 --> 00:17:36,560 Speaker 1: the speed of innovation UM and the changing landscape along 310 00:17:36,600 --> 00:17:39,080 Speaker 1: with our view that when you specifically look at this 311 00:17:39,160 --> 00:17:43,359 Speaker 1: transaction in the financial industry, that the retail investor is 312 00:17:43,480 --> 00:17:47,400 Speaker 1: likely to become an ever more important factor UM as 313 00:17:47,560 --> 00:17:51,359 Speaker 1: millennials inherit the greatest wealth transfer of all time and 314 00:17:51,400 --> 00:17:55,040 Speaker 1: they're under invested chronically. So so the answer is, yes, 315 00:17:55,119 --> 00:17:57,439 Speaker 1: it is. It makes sense. It certainly makes sense in 316 00:17:57,440 --> 00:17:59,560 Speaker 1: the financial engage. Cannot just sort of take you a 317 00:17:59,600 --> 00:18:04,919 Speaker 1: little bit further into the round of getting into troubles, 318 00:18:04,960 --> 00:18:07,679 Speaker 1: just the culture difference of working at a Swiss bank 319 00:18:08,320 --> 00:18:12,320 Speaker 1: versus a U S firm. How stark is that still 320 00:18:12,680 --> 00:18:16,959 Speaker 1: in Junion. Well, again, a lot of this has to 321 00:18:17,040 --> 00:18:20,359 Speaker 1: do with if you think about the margin pressure of 322 00:18:20,440 --> 00:18:23,879 Speaker 1: a European bank and and the tension, the extra tension 323 00:18:24,160 --> 00:18:27,160 Speaker 1: that you're under in this zero interest rate environment, as 324 00:18:27,200 --> 00:18:30,560 Speaker 1: opposed to this notion that you know, the FED, the 325 00:18:30,680 --> 00:18:34,520 Speaker 1: US FED is the only central bank to successfully escape 326 00:18:34,600 --> 00:18:37,679 Speaker 1: zero interest rates and to give you know, a margin 327 00:18:37,760 --> 00:18:41,080 Speaker 1: of profitability back to US banks. You're answering these rude 328 00:18:41,160 --> 00:18:43,720 Speaker 1: questions so well, I think you could be a seventh 329 00:18:43,760 --> 00:18:47,240 Speaker 1: debater in charge, just waiting for him to tell me 330 00:18:47,280 --> 00:18:49,200 Speaker 1: that he signed an ND and he can't talk about 331 00:18:49,240 --> 00:18:52,240 Speaker 1: what happened. To watch yourself, then we'll have a real disclaimer. 332 00:18:52,240 --> 00:18:54,480 Speaker 1: Continued J and fantastic to have you with us. Let's 333 00:18:54,480 --> 00:18:57,240 Speaker 1: talk about this teflon SMP five hundred. Shall we What 334 00:18:57,359 --> 00:19:00,000 Speaker 1: breaks the mood? What breaks this ragime? I always think 335 00:19:00,000 --> 00:19:01,760 Speaker 1: it's important not to talk about where we think things 336 00:19:01,800 --> 00:19:04,760 Speaker 1: should or shouldn't be, but think about where we are, 337 00:19:04,840 --> 00:19:07,800 Speaker 1: what investors are responding to, and perhaps more importantly, what 338 00:19:07,840 --> 00:19:10,640 Speaker 1: they are not responding to. Right now. What's your take 339 00:19:10,640 --> 00:19:12,680 Speaker 1: on those kind of themes at the moment? Well, well, 340 00:19:12,720 --> 00:19:15,879 Speaker 1: Tom set set the table perfectly. You know. Our view 341 00:19:16,400 --> 00:19:19,119 Speaker 1: is that, particularly when you look at your today and 342 00:19:19,200 --> 00:19:22,439 Speaker 1: specifically the month of February, you are seeing something that 343 00:19:22,480 --> 00:19:25,080 Speaker 1: you haven't seen in several years, and that is the 344 00:19:25,119 --> 00:19:29,000 Speaker 1: public has become an engaged buyer of stocks, whether they're 345 00:19:29,000 --> 00:19:32,879 Speaker 1: electric vehicle makers or you know, technology or what have you. 346 00:19:33,119 --> 00:19:36,520 Speaker 1: The public is back in. So from for where we stand, 347 00:19:36,760 --> 00:19:38,920 Speaker 1: you know, you're at a very sort of unique juncture 348 00:19:38,960 --> 00:19:43,199 Speaker 1: where you've shaken off a lot of the coronavirus and 349 00:19:43,280 --> 00:19:48,240 Speaker 1: the political concerns because the public is a buyer. I 350 00:19:48,280 --> 00:19:50,919 Speaker 1: think a lot of at least the near term, is 351 00:19:51,000 --> 00:19:53,960 Speaker 1: how the flow of news goes and does that cause 352 00:19:54,040 --> 00:19:57,119 Speaker 1: the public to have less of an appetite over the 353 00:19:57,160 --> 00:20:00,399 Speaker 1: next four to six weeks uh in terms of buy stock, 354 00:20:00,520 --> 00:20:03,520 Speaker 1: we think long term, actually, the key to the public 355 00:20:03,520 --> 00:20:06,960 Speaker 1: buying stocks and the key to moving markets higher is 356 00:20:07,000 --> 00:20:09,320 Speaker 1: something you know, we've all talked about for a number 357 00:20:09,320 --> 00:20:13,520 Speaker 1: of months in that the psychology of higher yields starts 358 00:20:13,560 --> 00:20:16,080 Speaker 1: to coalesce. And to that end, when you look at 359 00:20:16,160 --> 00:20:19,240 Speaker 1: yesterday's numbers to c P p I come in very, 360 00:20:19,359 --> 00:20:22,399 Speaker 1: very hot, whether it's explained away or not, tells you 361 00:20:22,440 --> 00:20:24,560 Speaker 1: the environment may be changing. I want to pick up 362 00:20:24,560 --> 00:20:27,360 Speaker 1: on that because today you're seeing a rally resoom in bonds, 363 00:20:27,359 --> 00:20:30,240 Speaker 1: and you have seen a rally pretty consistently with yesterday, 364 00:20:30,280 --> 00:20:32,840 Speaker 1: perhaps a slight pause in that. Do you think the 365 00:20:32,960 --> 00:20:37,480 Speaker 1: story being told in bond markets right now is incongruent 366 00:20:37,680 --> 00:20:41,119 Speaker 1: with the story being told in stocks. It's a massive disconnect, 367 00:20:41,160 --> 00:20:43,960 Speaker 1: there's no question about it. And when we look at it, 368 00:20:43,960 --> 00:20:46,639 Speaker 1: it was a disconnect last year, and it's certainly a 369 00:20:46,680 --> 00:20:49,719 Speaker 1: disconnect on the sector level and the equity markets, you know, 370 00:20:49,960 --> 00:20:54,240 Speaker 1: with this incredible out performance in utilities for one um, 371 00:20:54,680 --> 00:20:57,960 Speaker 1: and when you think about the evolution of last year, 372 00:20:58,160 --> 00:21:01,760 Speaker 1: there was a time in in September when we made 373 00:21:01,760 --> 00:21:04,360 Speaker 1: what we think is actually going to be a defensible 374 00:21:04,400 --> 00:21:08,520 Speaker 1: global yield low. Is that the story came together. But 375 00:21:08,640 --> 00:21:11,640 Speaker 1: the coronavirus has sort of put sand in the wheels. 376 00:21:11,680 --> 00:21:17,480 Speaker 1: How long can this divirgins happen exist? For I would 377 00:21:17,560 --> 00:21:22,760 Speaker 1: say that given the dynamics of we're gonna know over 378 00:21:22,800 --> 00:21:25,320 Speaker 1: the next month or two what the path of this 379 00:21:25,400 --> 00:21:29,159 Speaker 1: exogenous variable, being the coronavirus, is likely you know, in 380 00:21:29,240 --> 00:21:32,720 Speaker 1: the expectation is will clear up in April, but also 381 00:21:33,280 --> 00:21:36,639 Speaker 1: you know the uncertainty surrounding the election. It's going to 382 00:21:36,680 --> 00:21:41,119 Speaker 1: be resolved sometime between now and an election day. Julian 383 00:21:41,119 --> 00:21:44,680 Speaker 1: Emmanuel will this bt I G Chief Equity and derivtive strategies. Julian, 384 00:21:44,760 --> 00:21:46,200 Speaker 1: I want to go and I don't want to talk 385 00:21:46,240 --> 00:21:49,359 Speaker 1: about E trade Morgan Stanley, I understand it's inappropriate, but 386 00:21:49,440 --> 00:21:52,119 Speaker 1: I want to speak to you about the kind of 387 00:21:52,200 --> 00:21:56,280 Speaker 1: companies that are seeing low single digit flat revenue growth 388 00:21:56,440 --> 00:21:59,679 Speaker 1: right now? What bogey do they need to desire? Do 389 00:21:59,720 --> 00:22:03,200 Speaker 1: they just to get back to nominal GDP four percent 390 00:22:03,280 --> 00:22:05,600 Speaker 1: of those days done? Can you get valued in this 391 00:22:05,760 --> 00:22:10,639 Speaker 1: market with mid single digit revenue growth? Well, the issue 392 00:22:10,680 --> 00:22:14,240 Speaker 1: there is that kind of low and slow grower. Actually, 393 00:22:14,280 --> 00:22:18,040 Speaker 1: for the most part, their stock price has outperformed massively 394 00:22:18,440 --> 00:22:21,160 Speaker 1: over the last couple of years, explainers because they are 395 00:22:21,280 --> 00:22:24,679 Speaker 1: in sectors that are perceived as to be defensive and 396 00:22:24,840 --> 00:22:28,200 Speaker 1: bond proxies. For the most part, what we would say 397 00:22:28,400 --> 00:22:31,080 Speaker 1: is if we are about to go into an environment 398 00:22:31,280 --> 00:22:35,560 Speaker 1: where yields however gently because central banks are still behind uh, 399 00:22:35,560 --> 00:22:38,600 Speaker 1: you know, monetary accommodation, but yields on the long end, 400 00:22:38,680 --> 00:22:42,040 Speaker 1: if they do pick up, that will become a challenge 401 00:22:42,119 --> 00:22:46,480 Speaker 1: stock proprice performance metric. Well, what's your number on revenue growth? 402 00:22:46,480 --> 00:22:49,240 Speaker 1: Will you say? In any sector? Is it? Five percent? 403 00:22:49,359 --> 00:22:52,560 Speaker 1: Revenue growth? Is the appropriate numbers. That's what we're thinking 404 00:22:52,560 --> 00:22:57,600 Speaker 1: about this year. And that's reasonably consistent with earnings growth progressions. 405 00:22:58,080 --> 00:23:01,159 Speaker 1: Huge statement because I thought, you know, honeywell out with 406 00:23:01,200 --> 00:23:04,680 Speaker 1: eight percent organic sales like twelve eighteen months ago. All 407 00:23:04,680 --> 00:23:07,520 Speaker 1: these companies are doing two in three ish four percent? 408 00:23:07,680 --> 00:23:10,000 Speaker 1: Is that good enough? So, Judian, what supports an eighteen 409 00:23:10,200 --> 00:23:15,000 Speaker 1: nineteen times multiple? Exactly? Well, at this point it is 410 00:23:15,040 --> 00:23:18,080 Speaker 1: the yield for the most part, and the monetary accommodation. 411 00:23:18,400 --> 00:23:20,840 Speaker 1: But our view is what will continue to support it 412 00:23:21,480 --> 00:23:25,360 Speaker 1: after we look through some of the headwinds facing markets. 413 00:23:25,720 --> 00:23:30,400 Speaker 1: Is the rotation out of you know, trillions of dollars 414 00:23:30,520 --> 00:23:34,119 Speaker 1: of fixed income exposure and trillions of dollars of money 415 00:23:34,160 --> 00:23:38,000 Speaker 1: market exposure as high as the depth of the financial 416 00:23:38,000 --> 00:23:41,399 Speaker 1: crisis and intests having that conversation ten years ago, Julian, 417 00:23:41,960 --> 00:23:44,679 Speaker 1: ten years ago, I remember having those conversations in London, 418 00:23:44,720 --> 00:23:47,280 Speaker 1: people talking about the big moves coming out of fixed 419 00:23:47,280 --> 00:23:49,720 Speaker 1: income and into equities. You watch, it will be the 420 00:23:49,760 --> 00:23:53,840 Speaker 1: equity guys will fixed income world. It has been for 421 00:23:53,840 --> 00:23:56,280 Speaker 1: the last ten years. I know we've had a great bullmarket, 422 00:23:56,280 --> 00:23:58,760 Speaker 1: but just in terms of the flows, haven't really left 423 00:23:58,800 --> 00:24:01,600 Speaker 1: fixed income, have they? No, they haven't. And actually that's 424 00:24:01,640 --> 00:24:05,000 Speaker 1: part of the surprise of this year. Our thesis was 425 00:24:05,280 --> 00:24:07,840 Speaker 1: is that you'd start to see them move out and intaquities, 426 00:24:08,000 --> 00:24:10,560 Speaker 1: but you're seeing the wall of cash going into fix 427 00:24:10,640 --> 00:24:13,040 Speaker 1: coom and equities. Don't be a stranger. This has been 428 00:24:13,080 --> 00:24:15,480 Speaker 1: really good, Jillian Emmanuel, thank you so much. As BT 429 00:24:18,960 --> 00:24:20,760 Speaker 1: let us digress here. We got a lot going on 430 00:24:20,840 --> 00:24:22,840 Speaker 1: this morning, and we need to get back to econ 431 00:24:22,960 --> 00:24:26,800 Speaker 1: one on one. How about American economic growth? And of 432 00:24:26,800 --> 00:24:30,159 Speaker 1: course the backdrop here is the oddities of the labor market. 433 00:24:30,200 --> 00:24:33,920 Speaker 1: Brett Ryan really slices and dices for Deutsche Bank. They've 434 00:24:33,920 --> 00:24:37,120 Speaker 1: got a wonderful team over there. And what's interesting isn't 435 00:24:37,160 --> 00:24:40,359 Speaker 1: what I would call as a general statement an optimistic house. 436 00:24:41,000 --> 00:24:43,520 Speaker 1: I've got more cautious Brett. Have you marked down your 437 00:24:43,560 --> 00:24:45,840 Speaker 1: g d P recently? Can you even tell me twelve 438 00:24:45,840 --> 00:24:48,840 Speaker 1: months run rate of GDP is two point zero or 439 00:24:48,920 --> 00:24:53,440 Speaker 1: dare I say below two? Hey? Tom good morning, and 440 00:24:53,560 --> 00:24:56,000 Speaker 1: uh yeah, I mean the data this morning. The silly 441 00:24:56,040 --> 00:24:58,400 Speaker 1: said seems to be speaking of fly Me to the Moon, 442 00:24:58,760 --> 00:25:02,000 Speaker 1: um in terms of of Frank Sinatra tunes. But that's 443 00:25:02,000 --> 00:25:05,560 Speaker 1: probably a weather impact there. But on our GDP call, 444 00:25:05,720 --> 00:25:08,440 Speaker 1: you know, we're still a two two on Q four 445 00:25:08,440 --> 00:25:11,320 Speaker 1: over Q four basis, but we are Q one number 446 00:25:11,359 --> 00:25:14,640 Speaker 1: is one four. And what we're trying to point out 447 00:25:14,680 --> 00:25:18,120 Speaker 1: here is that the Fed's narrative and the markets narrative 448 00:25:18,359 --> 00:25:21,800 Speaker 1: is that the strong labor market and consumer spending is 449 00:25:21,840 --> 00:25:24,560 Speaker 1: going to carry the day, you know, through this soft 450 00:25:24,640 --> 00:25:29,360 Speaker 1: patch and business investment in trade right. And what we're 451 00:25:29,359 --> 00:25:32,280 Speaker 1: doing is we're pointing out some where there could be 452 00:25:32,359 --> 00:25:35,880 Speaker 1: some cracks in that story. And we've been talking about 453 00:25:35,920 --> 00:25:39,480 Speaker 1: this for a few months now. The slowing in an 454 00:25:39,480 --> 00:25:43,879 Speaker 1: hour's worked, the slowing and wage growth, and more recently 455 00:25:44,280 --> 00:25:48,280 Speaker 1: the spiked down in job opening and job openings have 456 00:25:48,359 --> 00:25:50,840 Speaker 1: been um, you know, a bit of a leading indicator. 457 00:25:51,080 --> 00:25:52,960 Speaker 1: Passengers a payroll. I want to get out of front 458 00:25:52,960 --> 00:25:54,880 Speaker 1: of Richard Claren. He's on the desk start right now 459 00:25:54,920 --> 00:25:57,440 Speaker 1: speaking to Steve Lisa, and I'm sure that's a good conversation. 460 00:25:57,760 --> 00:26:00,080 Speaker 1: Clarid is of course out with the headline fundamental, the 461 00:26:00,160 --> 00:26:03,120 Speaker 1: US economy are strong. Give us an update on your 462 00:26:03,240 --> 00:26:06,200 Speaker 1: your FED rate cuts right now? One or two this year? 463 00:26:06,240 --> 00:26:09,280 Speaker 1: Where's Deutsche Bank? We actually, we don't think they cut 464 00:26:09,280 --> 00:26:11,840 Speaker 1: this year. We think they're able to hold off until 465 00:26:12,000 --> 00:26:16,159 Speaker 1: next year as they transition to a soft form of 466 00:26:16,200 --> 00:26:20,400 Speaker 1: average inflation targeting, and we think their initial move will 467 00:26:20,440 --> 00:26:24,200 Speaker 1: be to, you know, use forward guidance to try to 468 00:26:24,280 --> 00:26:27,800 Speaker 1: gin up inflation expectations and then when you know, our 469 00:26:27,840 --> 00:26:31,560 Speaker 1: inflation forecast, we don't see core core PC getting back 470 00:26:31,560 --> 00:26:35,400 Speaker 1: above two percent wow in the next year, and so 471 00:26:35,680 --> 00:26:37,680 Speaker 1: eventually they're going to have to be They're going to 472 00:26:37,760 --> 00:26:41,200 Speaker 1: be forced to, you know, sort of prove that they're 473 00:26:41,200 --> 00:26:43,400 Speaker 1: committed to the strategy. I just don't. I just want 474 00:26:43,400 --> 00:26:45,639 Speaker 1: to say we're killing it. Maria has Greenspan on it 475 00:26:45,720 --> 00:26:47,280 Speaker 1: right now. We talked him a couple of weeks ago. 476 00:26:47,320 --> 00:26:50,280 Speaker 1: Our good friend Richard Clarence on CNBC. We have Brett 477 00:26:50,359 --> 00:26:53,840 Speaker 1: Ryan of Deutsche Bank. We are winning. Brett's crushing it. 478 00:26:53,960 --> 00:26:56,280 Speaker 1: But Brett says something really important, So let's not bury 479 00:26:56,320 --> 00:26:59,919 Speaker 1: the lead. Ethan is crashing the labor market right now, Bret. 480 00:27:00,520 --> 00:27:03,800 Speaker 1: That's a nonconsensus cold isn't it. Yeah, I think I 481 00:27:03,840 --> 00:27:07,960 Speaker 1: think it's it's what the let's mean to be clear, 482 00:27:08,080 --> 00:27:12,080 Speaker 1: all of the you know, the um you know, unemployment 483 00:27:12,160 --> 00:27:16,320 Speaker 1: rate says, you know, job markets really healthy, right, And 484 00:27:16,960 --> 00:27:19,840 Speaker 1: what we're saying is that you're seeing some cracks in 485 00:27:20,000 --> 00:27:25,040 Speaker 1: labor demand, right. You know, first firms start to slow 486 00:27:25,080 --> 00:27:28,679 Speaker 1: hours worked, then they start to slow wages and wage 487 00:27:28,680 --> 00:27:31,160 Speaker 1: growth and push back on that. If margins are being 488 00:27:31,160 --> 00:27:34,440 Speaker 1: squeezed or demand seems to be falling off, the last 489 00:27:34,440 --> 00:27:38,320 Speaker 1: shoe to drop is blame workers off. And that's when 490 00:27:38,320 --> 00:27:41,800 Speaker 1: you get a recession, right, And so firms are reluctant 491 00:27:41,840 --> 00:27:44,600 Speaker 1: to lay workers off because it is still a tight 492 00:27:44,720 --> 00:27:48,520 Speaker 1: labor market, but the hiring trend has been falling. I mean, 493 00:27:48,880 --> 00:27:51,920 Speaker 1: you know, and that that's to be expected somewhat um. 494 00:27:52,080 --> 00:27:54,680 Speaker 1: But now we're just seeing a few more signs where 495 00:27:54,800 --> 00:27:58,680 Speaker 1: of of where demand may be slowing for labor. And 496 00:27:58,920 --> 00:28:01,280 Speaker 1: you know, if if it can, if it continues on 497 00:28:01,280 --> 00:28:04,080 Speaker 1: on a gradual trend, then that's okay. But you have 498 00:28:04,160 --> 00:28:06,720 Speaker 1: to be you just have to be worried a little 499 00:28:06,720 --> 00:28:10,320 Speaker 1: bit more concerns than it. Most people seem to be 500 00:28:10,640 --> 00:28:14,320 Speaker 1: appreciating of how strong the labor market will break. Give 501 00:28:14,320 --> 00:28:17,359 Speaker 1: me a sense of just your conversations with clients at 502 00:28:17,400 --> 00:28:20,240 Speaker 1: the moment, your market participants. How receptive are they to 503 00:28:20,280 --> 00:28:22,600 Speaker 1: this argument? Did they turn around to you and say, 504 00:28:22,880 --> 00:28:24,480 Speaker 1: but you might be right, but until I see it 505 00:28:24,560 --> 00:28:26,920 Speaker 1: in claims, I'm not going to do anything. What kind 506 00:28:26,920 --> 00:28:29,800 Speaker 1: of responses do you hear? Yeah? It definitely claims is 507 00:28:29,840 --> 00:28:34,120 Speaker 1: a common argument. Um, And and that's that's for sure. 508 00:28:34,359 --> 00:28:38,560 Speaker 1: Claims are the best labor market indicator out there, and 509 00:28:38,680 --> 00:28:42,800 Speaker 1: we've written about that, especially continuing claims until you see 510 00:28:42,840 --> 00:28:46,440 Speaker 1: can continuing claims in an eighteen fifty type range or 511 00:28:46,480 --> 00:28:50,120 Speaker 1: at seventeen twenty six today. Um, you really don't have 512 00:28:50,200 --> 00:28:54,320 Speaker 1: to be that concerned. Uh, but you know, for sure, 513 00:28:54,320 --> 00:28:57,120 Speaker 1: I think people are recognizing that, you know, as we 514 00:28:57,160 --> 00:28:58,960 Speaker 1: get into the back half of the year in political 515 00:28:59,000 --> 00:29:02,520 Speaker 1: uncertainty sets, and maybe you want to end given the 516 00:29:02,640 --> 00:29:06,000 Speaker 1: credit spreads are at tights, maybe you want to take 517 00:29:06,000 --> 00:29:09,160 Speaker 1: a little bit of risk off here and start to question, 518 00:29:09,360 --> 00:29:12,400 Speaker 1: you know, where could everybody be wrong? My head is 519 00:29:12,440 --> 00:29:14,880 Speaker 1: spinning here. I've got Brett Bryan on, folks, and he's 520 00:29:14,920 --> 00:29:18,480 Speaker 1: giving me this caution on labor John, as you brilliantly 521 00:29:18,520 --> 00:29:21,200 Speaker 1: caught and I got Richard Claire to given me headlines 522 00:29:21,240 --> 00:29:25,400 Speaker 1: saying it's a good picture in monetary policy's accommodative. Brett, 523 00:29:25,520 --> 00:29:29,120 Speaker 1: why are we talking about a rate cut? Well, I 524 00:29:29,120 --> 00:29:32,080 Speaker 1: think the market certainly like praising a rate cut by 525 00:29:32,080 --> 00:29:35,000 Speaker 1: the middle of the year. Um, you know, some on 526 00:29:35,040 --> 00:29:38,000 Speaker 1: the back of the coronavirus. I think that's that's feeling 527 00:29:38,080 --> 00:29:40,560 Speaker 1: some of it. But you know, maybe you know the 528 00:29:40,560 --> 00:29:43,160 Speaker 1: bond markets seeing sort of similar things that we are. 529 00:29:43,360 --> 00:29:45,880 Speaker 1: But what does Deorger Banks say, what are you telling 530 00:29:45,920 --> 00:29:48,320 Speaker 1: me we're going to justify a rate cut with a 531 00:29:48,480 --> 00:29:53,000 Speaker 1: two point two percent GDP growth? Yeah, it's hard, it's 532 00:29:53,000 --> 00:29:56,680 Speaker 1: hard to envision that, right, But you know, the Fed 533 00:29:56,760 --> 00:30:01,720 Speaker 1: cut seventy five basis points last year and the economy 534 00:30:01,720 --> 00:30:04,600 Speaker 1: is still managed to eke out close to two percent growth, 535 00:30:05,200 --> 00:30:07,720 Speaker 1: And so you know, it's it's I think it's it's 536 00:30:08,080 --> 00:30:12,280 Speaker 1: finding a calibration of we're in a permanently low rate environment, 537 00:30:12,400 --> 00:30:14,520 Speaker 1: or not permanently, but at least for a long period 538 00:30:14,520 --> 00:30:17,600 Speaker 1: of time a low rate environment. Just how low that 539 00:30:17,840 --> 00:30:20,680 Speaker 1: is in order to be accommodative. The Feds still sort 540 00:30:20,680 --> 00:30:23,880 Speaker 1: of you know, feeling around in the dark around about that. 541 00:30:24,120 --> 00:30:26,560 Speaker 1: When you talk about the cracks in the labor market. 542 00:30:26,600 --> 00:30:29,800 Speaker 1: There's a question of how long it is before people 543 00:30:29,840 --> 00:30:32,480 Speaker 1: start using the R word again, the recession, because that's 544 00:30:32,480 --> 00:30:35,480 Speaker 1: pretty much off the table at this point. What where 545 00:30:35,480 --> 00:30:38,800 Speaker 1: did we push that back to. Well, I think, you know, 546 00:30:39,200 --> 00:30:41,920 Speaker 1: we we haven't been calling for recession yet. UM. I 547 00:30:41,920 --> 00:30:44,760 Speaker 1: think it's notable that the Fed's preferred measure of the 548 00:30:44,880 --> 00:30:47,800 Speaker 1: of the yield curve these three months and then the 549 00:30:48,120 --> 00:30:52,320 Speaker 1: eighteen months forward is inverted again. And that's been what 550 00:30:52,360 --> 00:30:55,480 Speaker 1: the their research has shown has been one of the 551 00:30:55,640 --> 00:31:01,200 Speaker 1: best indicators in terms of recession from a curve perspective. Um. 552 00:31:01,240 --> 00:31:04,040 Speaker 1: You know, it's it's hard, it's it's it's hard to 553 00:31:04,040 --> 00:31:06,480 Speaker 1: call these things, very difficult to call these what's going 554 00:31:06,520 --> 00:31:09,800 Speaker 1: to be the straw that breaks the camel's back? You know, 555 00:31:10,000 --> 00:31:12,600 Speaker 1: is it going to be? Um? You know, a financial 556 00:31:12,640 --> 00:31:16,320 Speaker 1: story of financial conditions story. UM. But I think one 557 00:31:16,360 --> 00:31:19,440 Speaker 1: of the things that we're focused on, you know, financial 558 00:31:19,480 --> 00:31:23,040 Speaker 1: conditions look really good, but that's in contrast to what 559 00:31:24,000 --> 00:31:27,320 Speaker 1: some of the fundamentals the I s M and the 560 00:31:27,480 --> 00:31:30,960 Speaker 1: non manufacturing is M, which have they've stabilized, but they're 561 00:31:31,000 --> 00:31:34,800 Speaker 1: not strongly rebounding. Um. You know, Today's Philly Fed. The 562 00:31:34,840 --> 00:31:37,160 Speaker 1: headline looks really good, but that's there's gonna be that's 563 00:31:37,200 --> 00:31:40,400 Speaker 1: definitely a weather boost there. The details are more mixed, 564 00:31:40,880 --> 00:31:43,560 Speaker 1: and so you know, I think. And it's also what 565 00:31:43,640 --> 00:31:46,440 Speaker 1: does the recession look like? Right? It's you're gonna you know, 566 00:31:46,440 --> 00:31:49,080 Speaker 1: you're gonna get a recessions sometimes in the next few years. 567 00:31:49,600 --> 00:31:52,400 Speaker 1: The question is how deep is it? What does it 568 00:31:52,440 --> 00:31:55,400 Speaker 1: look like? It's two thousand type scenario where you have 569 00:31:55,480 --> 00:31:59,400 Speaker 1: two quarters of cap acts down and two quarters of 570 00:31:59,480 --> 00:32:05,240 Speaker 1: rising and the poignant or is it, you know, eight disasters. 571 00:32:05,720 --> 00:32:08,720 Speaker 1: It's probably not going to be two nine, right, Bratt, 572 00:32:08,760 --> 00:32:11,000 Speaker 1: We're gonna leave Brett Ryan, we gotta leave it. I'm sorry, 573 00:32:11,040 --> 00:32:13,760 Speaker 1: Brett Ryan with Deutsche Bank at this point. Thanks for 574 00:32:13,880 --> 00:32:18,280 Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to 575 00:32:18,400 --> 00:32:24,160 Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. 576 00:32:24,720 --> 00:32:28,040 Speaker 1: I'm on Twitter at Tom Keane before the podcast. You 577 00:32:28,080 --> 00:32:31,480 Speaker 1: can always catch us worldwide. I'm Bloomberg Radio