Speaker 1: Joining us now is Howard Lutnik, Chairman and CEO of BGC,
Speaker 1: also chairman of Cantor Fitzgerald. And let's talk about performance
Speaker 1: for a second here, BGC. You looked at equities, it
Speaker 1: was down, every other business really was on the rise.
Speaker 1: What was driving performance and where are you going to
Speaker 1: be making most of your money from this year?
Speaker 2: So BGC for years was in the market where there
Speaker 2: was zero interest rates, and so people sort of forgot
Speaker 2: about us. We're the world's most valuable wholesaler. So everything
Speaker 2: in the world that you guys talk about in trade,
Speaker 2: we're the wholesale market. Like who does Goldman Sachs trade?
Speaker 2: Who does JP Morgan call when they want to do
Speaker 2: their trades? They called BGC where the wholesaler. So with
Speaker 2: interest rates back, our stock was up ninety percent last year,
Speaker 2: up thirty percent this year so far, and our business
Speaker 2: is on fire. Revenues up eleven point seven profits up
Speaker 2: nineteen point two percent.
Speaker 3: And the most exciting.
Speaker 2: Thing we're launching in September pretty soon, a competitor to
Speaker 2: the awesome monopoly the Chicago Merchantolic Exchange. They do one
Speaker 2: hundred percent of futures in America and now FMX, which
Speaker 2: is run by the largest wholesale in the world. We
Speaker 2: brought in some partners, ten of ten of the largest
Speaker 2: banks and trading firms in the world, JP, Morgan, Goldman, Sachs, Citadel,
Speaker 2: you name the list, they're all on the list. In September,
Speaker 2: we bring competition. So I think our stock's going to
Speaker 2: be fire. Obviously, we're going to try to do a
Speaker 2: ninety percent again, right, we got some work to do
Speaker 2: in the last bunch of months.
Speaker 3: Let's talk about that competition.
Speaker 4: Because, of course, Terry Duffy of CMEA has had some
Speaker 4: words for you, both on his earnings call and in
Speaker 4: the media, and it was one of actually the first
Speaker 4: question on your earnings call basically Terry Duffy criticizing you
Speaker 4: clearing trades through LCH when it comes.
Speaker 3: Specifically to treasuries.
Speaker 4: We know that we've reported that you've struck a deal
Speaker 4: with LCH rather to basically cross margin with treasuries. Do
Speaker 4: you foresee any issues there?
Speaker 2: No, That's what I found so fascinating. You've got the
Speaker 2: CEO of the Chicago Market dog changehere. It's seventy billion
Speaker 2: dollars right with the monopoly on the only exchange doing futures.
Speaker 2: Now here we come with our competition and we are
Speaker 2: just in his head. Oh my gosh for him to talk.
Speaker 2: He said, he said nasty things about me. I mean,
Speaker 2: imagine saying nasty things about the guy who's going to
Speaker 2: compete with you.
Speaker 1: Well, he says, he's not going to sit by and
Speaker 1: watch who takes share. At the end of the day,
Speaker 1: I think Katie and I are both wondering, have you
Speaker 1: talked to him?
Speaker 2: Well, what's he gonna do? Do a dance while I
Speaker 2: take share? I mean, look, he's got one hundred percent
Speaker 2: market share. There's no chance we don't take share. And
Speaker 2: we're going to take serious share because we've got partners
Speaker 2: of all the big banks, all the big trading firms
Speaker 2: are our partner. So LCCH clears interest rate swaps, right,
Speaker 2: so dollar based interest rate swaps, so for futures are
Speaker 2: really a future for swaps. So if you can do
Speaker 2: both things together, it's really efficient, right because you're just
Speaker 2: basically it's like stock few which you.
Speaker 3: Talk about and stocks, right, they're good hits for each other.
Speaker 2: That's what interest rate swaps and swap futures or SOFA
Speaker 2: futures are. So we will have amazing cross margining opportunities,
Speaker 2: and therefore we're going to bring this competition and investors
Speaker 2: have not really understood how exciting that is within BGC's stock.
Speaker 2: So I think what will happen is we're going to
Speaker 2: launch in September. We're going to come out strong. But
Speaker 2: it's a marathon. This is not sprint, and you know that.
Speaker 1: Assume how much volume could you do in year one?
Speaker 3: Well, I think year one we're going to do.
Speaker 2: Our goal is to have the world record open interest,
Speaker 2: meaning trades that are sort of parked at our exchange,
Speaker 2: where investors are sticking it out with us. They're not
Speaker 2: just coming and going, they're staying. We expect at the
Speaker 2: end of the first year we will have the record
Speaker 2: for the most open interest ever for a new exchange,
Speaker 2: and that will bode incredibly well. So that's what I'm
Speaker 2: looking forward to. That's the ribbon we're going to cut.
Speaker 2: The most open interest ever for an exchange.
Speaker 4: Well, we have that on record, so we'll have to
Speaker 4: check in with you on that. App good with that,
Speaker 4: But you mentioned the stock. I want to talk about
Speaker 4: the stock because I was checking it's up eighty nine
Speaker 4: percent over the past year. But you pointed out in
Speaker 4: the earnings call that you only traded ten times earnings,
Speaker 4: and you cited that as a reason why you're buying.
Speaker 3: Back the stock. What do you think is a more
Speaker 3: reasonable valuation. So we're a member of.
Speaker 2: The S and P six hundred, which is sort of
Speaker 2: like the mid cap stocks. We now, unfortunately, we've got
Speaker 2: a long way to go to catching Vidia, you know,
Speaker 2: instead of for three trillion sort of world. But so
Speaker 2: you know, our stock is eleven percent revenue growth, ten
Speaker 2: percent for the year, right, just had eleven this quarter
Speaker 2: and nineteen percent profit growth. If you compare that to
Speaker 2: other SMP six hundred stocks, they trade at twenty five
Speaker 2: to thirty times, and we're trading at ten times. And
Speaker 2: you say, okay, other stocks in the S and P
Speaker 2: six hundred, and I said, well, those that trade ten
Speaker 2: times earnings have zero revenue growth. So I'm trading like
Speaker 2: a zero revenue growth company when we're really eleven percent
Speaker 2: top line revenue. And the reason for that is because
Speaker 2: all those years of zero interest rates, people sort of
Speaker 2: forgot what a great company we are. You know, I
Speaker 2: used to describe us like Jillette, you know, every morning,
Speaker 2: all the men in the earth wake up with a
Speaker 2: beard and some of them need to shave, not meaning much,
Speaker 2: but some need to shave.
Speaker 3: Bonds always, there's just going to be more issued.
Speaker 2: If you're in the bond business, I promise you next
Speaker 2: year there'll just be more to trade.
Speaker 3: Good business for you as well.
Speaker 1: Speaking of trading, you were bang on when it came
Speaker 1: to kind of seeing the direction of interest rate cuts
Speaker 1: this year. You never really thought we were going to
Speaker 1: get five or six. You said September was when you
Speaker 1: would see one. Now the market is aligned with what
Speaker 1: you had said many months ago.
Speaker 3: How about that? Right? I said it in December.
Speaker 2: Now the whole world believes they're not going to cut today,
Speaker 2: and they're.
Speaker 3: Going to cut September. So they're basically we're saying, yeah,
Speaker 3: what about what about next year?
Speaker 1: You think about the pace of cuts moving past September?
Speaker 1: The election coming up, a lot of people are thinking
Speaker 1: about what it would mean for Trump versus Kamala Harris
Speaker 1: to take the office, whether those tariff policies will be
Speaker 1: inflationary going into next year. How much room will there
Speaker 1: really be to cut rates going into twenty twenty five.
Speaker 2: I think both candidates both would like to cut rates,
Speaker 2: so that's good for the bond business.
Speaker 3: Right, when you have everybody.
Speaker 2: Running, you have one hundred percent coverage, you have people
Speaker 2: in politics want to cut rates, right, So I think
Speaker 2: we get a September cut. I think that's in the
Speaker 2: cards for sure. And you start Germany had negative growth,
Speaker 2: I mean negative growth from such a big economy like
Speaker 2: that is going to drive all the central bankers are
Speaker 2: now looking to cut, all right, So it's really that's
Speaker 2: sort of the word out there now cut. So September.
Speaker 2: I think the market's building in a one hundred percent
Speaker 2: probability of a cut.
Speaker 3: Now, how about that. That's a good percentage itself, sort
Speaker 3: of it.
Speaker 2: I think there'll be some cuts next year. But you
Speaker 2: have to remember zero is just not a thing. Okay,
Speaker 2: it was a manufactured thing to get us out of
Speaker 2: the Great financial crisis, right, So it's just and the pandemic.
Speaker 3: It's just not a thing. So I think a couple
Speaker 3: of cuts.
Speaker 2: Maybe in the mid fours is a reasonable rate for
Speaker 2: us to live and breathe in. So I think two
Speaker 2: or three cuts next year. I'd say two cuts next year,
Speaker 2: one in September. And that's the whole thing. It's not
Speaker 2: unfortunately it's not that exciting. It's not seven cuts and
Speaker 2: then seven hikes and all.
Speaker 4: The way back to zero.
Speaker 3: It's just not no chance, zero chance. We have a
Speaker 3: good economy, we have good interest rates.
Speaker 2: For the Fed, it's their tool, right if they at zero,
Speaker 2: what tool do you have that you can't?
Speaker 3: What did they do? Quantitative easing? You're like, how is
Speaker 3: that even on the menu? What they buy all the
Speaker 3: bonds of America?
Speaker 2: But you have to remember, as the FED runs off
Speaker 2: its balance sheet, Okay, that means I'm not buying bonds
Speaker 2: you are.
Speaker 3: That's tightening tightening.
Speaker 2: It's like it's cutting you know, it's it's cutting off
Speaker 2: your credit card for the economy.
Speaker 1: So, you know, if you think about the path forward,
Speaker 1: a lot of people are waiting for stability in the
Speaker 1: markets to finally see more IPOs. Candor Fitzgerald, big underwriter
Speaker 1: in the IPO market, what's your expectation for the year
Speaker 1: ahead and do you see bigger or smaller companies really
Speaker 1: coming to fruition here? It's really a market that is
Speaker 1: hoping for that small cap rebound.
Speaker 3: So canter is in a really good place.
Speaker 2: I mean we're third so far this year, and it's
Speaker 2: you know, we're going on, you know, going into August,
Speaker 2: so we're doing it.
Speaker 3: We're in a really good spot.
Speaker 2: Caner's got a great healthcare franchise. Now we don't do
Speaker 2: the big giant companies. We do the small, smaller companies
Speaker 2: where we focus on raising them for phase two and
Speaker 2: phase three drugs sort of. The one of my favorite
Speaker 2: days of the year is our healthcare conference because we're
Speaker 2: not sort of pumping up big companies. This is where
Speaker 2: all of the new developments in biotech and biopharma present
Speaker 2: themselves and it's so fun to see the things that
Speaker 2: are happening and we're helping them raise money. So our
Speaker 2: IPO business is very successful.
Speaker 3: I think the.
Speaker 2: Market twenty twenty five, you're going to see the IPO
Speaker 2: market open, and you're going to be talking about companies
Speaker 2: and on this show all day, you're just gonna have
Speaker 2: fire talking about because there's so much pent up demand,
Speaker 2: so many companies want to go right, and as the
Speaker 2: market starts to crack, which we're feeling now right, they're
Speaker 2: gonna start coming.
Speaker 3: You're gonna start.
Speaker 2: Seeing three a week, and you're gonna start seeing four
Speaker 2: a week and next year.
Speaker 3: By the middle of the next year, five a week.
Speaker 2: They're gonna be coming hot and heavy, and you guys
Speaker 2: are gonna be awful busy on the show.
Speaker 3: Well, I know that.
Speaker 4: You're hosting a dinner on August second, basically asking attendees
Speaker 4: to pay twenty five thousand dollars to attend, and even
Speaker 4: more so if they want, of course a photo.
Speaker 3: It's gonna be a great chick out. It'll be really
Speaker 3: great chicken h.
Speaker 4: But how much are you looking to raise here? Are
Speaker 4: you trying to set any sort of record here when
Speaker 4: it comes to fundraising.
Speaker 2: I think we'll raise over ten million dollars for the evening,
Speaker 2: and I mean, what an honor to have President Trump
Speaker 2: come over the house. We've got really a great, great
Speaker 2: crowd will come. I'll probably keep it to one hundred
Speaker 2: people so because I don't want it to be too big,
Speaker 2: and it's really gets to talk. He gets a meet
Speaker 2: and he hosts a roundtable. So the biggest donors who
Speaker 2: pay two hundred and fifty thousand sit at a dining
Speaker 2: room table and spend a half hour just asking him
Speaker 2: questions and talking. And you know he needs money, right.
Speaker 2: It's a race now. It's a hot race now. And
Speaker 2: you know Donald Trump needs the fundraising, and I'm trying
Speaker 2: to help everywhere.
Speaker 3: I can to that end.
Speaker 1: You actually donated to the twenty sixteen Senate campaign for
Speaker 1: Kamala Harris. How do you think her entrance into this
Speaker 1: race changes the game?
Speaker 2: Well, putting on me what my wife does is not
Speaker 2: really fair.
Speaker 3: So interesting.
Speaker 2: No, there's a good balance in every marriage. There's a
Speaker 2: good balance. But my wife actually has moved over to
Speaker 2: Donald Trump, which is unusual for her because she says
Speaker 2: Israel is her number one you know, her number one policy,
Speaker 2: her number.
Speaker 3: One issue, and she knows that.
Speaker 2: Donald Trump literally sat down with my wife and told her,
Speaker 2: I will be the best president for Israel. I will
Speaker 2: protect Israel and take care of them. So you know,
Speaker 2: in my house we have unit inmity around Donald Trump.
Speaker 4: And of course you have big plans at Canter Fitzgerald
Speaker 4: with FMX as well. But if Donald Trump were to win,
Speaker 4: are you angling for a spot in the administration?
Speaker 3: Would you serve?
Speaker 2: You know, the rules are if the president asks you
Speaker 2: to serve, you kind of have to say yes. I'd
Speaker 2: rather help him with transition, you know, I'd rather help
Speaker 2: make sure they put great people in the administration. I
Speaker 2: mean That's the most important thing is you have the
Speaker 2: people around you are smart and capable.
Speaker 3: So I'm going to offer to help him there.
Speaker 2: But if he asks, you got to do what the
Speaker 2: president asks you to do. I'm in love with Running
Speaker 2: Canter Fitzgerald and BGC though, I just want to be
Speaker 2: crystal clear.
Speaker 3: I love I want a little story time.
Speaker 1: How did your relationship with Donald Trump develop and how
Speaker 1: did you become such kind of a critical part of
Speaker 1: this fundraising effort.
Speaker 2: Well, I've known him for thirty years. I mean, when
Speaker 2: you're in New York, I've known him for thirty years.
Speaker 2: If you go back and look at the first season
Speaker 2: of Celebrity Apprentice, I was a guest appearance, right, So,
Speaker 2: I mean I've felt him a long time. This isn't
Speaker 2: like politics, right, this is I've known him a long time.
Speaker 3: He's extraordinary.
Speaker 2: I went with him to a Minnesota rally, okay, and
Speaker 2: you know, I didn't know what to expect. I've never
Speaker 2: been to a rally with him. It's like going to
Speaker 2: Mick Jagger without Mick Jagger to a rock concert. They're lining,
Speaker 2: lining the streets, thousands of people lining the streets, fifteen
Speaker 2: thousand people in the arena and twenty five thousand outside
Speaker 2: watching on a jumbo Trump and you just can't You
Speaker 2: just can't understand what that feels like. And then when
Speaker 2: you see it, you're like, holy moly. So they let
Speaker 2: me introduce jd Vance. So I walked out in this rally,
Speaker 2: right and there's I mean, they're cheering.
Speaker 3: It was a rock count. I thought, you know, a
Speaker 3: guy like me.
Speaker 2: Doesn't usually feel like a rock concert sort of guy.
Speaker 1: Now, where do you worry about some of the comments
Speaker 1: that Jade Vance has been making lately about childless women
Speaker 1: and what it could mean for Trump's campaign?
Speaker 2: I think the vice president quickly moves to behind the president.
Speaker 2: You know, lots of things people talk about they try
Speaker 2: to make the vice president something. But the vice president's
Speaker 2: job is to strongly support the president of the United States.
Speaker 3: That's their job.
Speaker 4: So are you not then concerned about the speech he
Speaker 4: gave it the R and C for example, which was
Speaker 4: very anti Wall Street.
Speaker 2: Well, I think he wants to bring He wants the
Speaker 2: common people, right, the people on his neighborhood where he
Speaker 2: grew up to feel that they've got a voice in
Speaker 2: the White House, which I think is really important. Right,
Speaker 2: And I think it will resonate with the people on
Speaker 2: main Street.
Speaker 3: But the fact is the only.
Speaker 2: Policy that's going to matter is by the President of
Speaker 2: the United States. For both parties, Whoever they pick is
Speaker 2: a good running mate, is a smart person. There a
Speaker 2: heartbeat away from the Oval Office, as we know. But
Speaker 2: I mean, and Kamala was closer than most people.
Speaker 1: The Trump trade in your view as somebody who knows him.
Speaker 2: I think the Trump trade is a broadening of the base, right.
Speaker 3: So what we've seen is this rally. He's been the
Speaker 3: Magnificent seven right.
Speaker 2: He's going to cut corporate taxes, which is a broad
Speaker 2: base move. He's going to cut regulation, which is a
Speaker 2: broad based move, and he's probably going to put on
Speaker 2: tariffs on China, which isn't good for the Magnificent seven.
Speaker 2: So I think what you've got is a constraining of
Speaker 2: the Magnificent seven and a pounding up of the rest
Speaker 2: of the market. So I think if you were going
Speaker 2: to do a trade, it.
Speaker 3: Would be long the broad base right.
Speaker 2: Right against the Magnificent seven, which is sort of the
Speaker 2: opposite of what we felt for the past year.
Speaker 4: So Howard, somehow we only have a minute left with you.
Speaker 4: You were with Donald Trump in Minnesota. You were also
Speaker 4: with him in Nashville at that bitcoin conference announced that
Speaker 4: Canter Fitzgerald announced a new multi billion dollar effort in
Speaker 4: bitcoin financing. Can you give us any details on what
Speaker 4: the potential timeline for that is?
Speaker 3: Sure?
Speaker 2: So you know securities markets, everybody finances securities and nobody
Speaker 2: finances bitcoin. Bitcoin is market cap is over a trillion,
Speaker 2: three hundred billion. So we've figured out how to do it,
Speaker 2: how to custodian it will work with other custodians, but
Speaker 2: they're going to have to work with us because we
Speaker 2: have to control the bitcoin, can't let it get hacked.
Speaker 2: And we're going to start lending on bitcoin. We're going
Speaker 2: to start with two billion dollars of loans and then
Speaker 2: we're going to go up in increments of two billion dollars.
Speaker 2: So it'll be a huge business because it's a huge
Speaker 2: asset and it's only bitcoin. We're only focused on bitcoin.
Speaker 2: But with Canter Fitzgerald will be financing bitcoin. And I
Speaker 2: think it's a fun business and it's a big asset class,
Speaker 2: but it's more.
Speaker 3: Like a commodity. People talk about it like it's a currency.
Speaker 2: Get by bread with something that goes up and down,
Speaker 2: so I think of it as a commodity.
Speaker 3: Howard, I got a producer in my ear. We have
Speaker 3: to have you.
Speaker 4: Back very soon, maybe in September. Our thanks, of course
Speaker 4: to Howard Lutnik. He is Chairman of Canter Fitzgerald