1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,640 --> 00:00:15,480 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,520 --> 00:00:18,720 Speaker 2: with Lisa Bromwitz and Amrie Hordernt. Join us each day 4 00:00:18,760 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,440 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,960 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,319 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,960 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:37,760 Speaker 2: Terminal and the Bloomberg Business App. Investors bracing for a 10 00:00:37,800 --> 00:00:41,160 Speaker 2: potential government shutdown to begin at midnight, Mark hay Fley, 11 00:00:41,159 --> 00:00:43,960 Speaker 2: the chief investment officer in UBS Global Wealth Management, right 12 00:00:44,040 --> 00:00:46,600 Speaker 2: in the following. With the direct impact of a government 13 00:00:46,640 --> 00:00:50,280 Speaker 2: shutdown on financial markets likely to be muted, we maintain 14 00:00:50,320 --> 00:00:53,959 Speaker 2: a positive outlook for US secrates. Mark joins us now 15 00:00:53,960 --> 00:00:55,840 Speaker 2: for more make welcome back is Vincin long, my friend, 16 00:00:55,920 --> 00:00:58,160 Speaker 2: Let's talk about what's anchoring that view. What's making you 17 00:00:58,200 --> 00:00:59,000 Speaker 2: bullish right now? 18 00:01:00,320 --> 00:01:04,240 Speaker 3: Well, I think we've had continued strong earnings. We've seen 19 00:01:04,319 --> 00:01:10,760 Speaker 3: this continued investment on the AI side, and then we 20 00:01:10,880 --> 00:01:14,840 Speaker 3: have the FED cutting rates, so those are positive backdrops 21 00:01:15,200 --> 00:01:20,319 Speaker 3: would also add in there, you know, the strong fiscal 22 00:01:20,360 --> 00:01:24,679 Speaker 3: spend that continues, and that's been supporting the economic picture 23 00:01:24,760 --> 00:01:25,200 Speaker 3: as well. 24 00:01:25,480 --> 00:01:28,520 Speaker 2: Mark, I know that these are real numbers, real revenue, 25 00:01:28,720 --> 00:01:32,760 Speaker 2: real profits. There's been some concerns recently about circle of finance, 26 00:01:33,160 --> 00:01:37,280 Speaker 2: financial engineering. Do you see any pockets of speculative behavior 27 00:01:37,319 --> 00:01:40,720 Speaker 2: that concern you and the team? 28 00:01:41,040 --> 00:01:44,360 Speaker 3: Absolutely that there is, you know, and there has been 29 00:01:44,480 --> 00:01:50,240 Speaker 3: for several years, speculation in various parts of the market. 30 00:01:50,320 --> 00:01:54,240 Speaker 3: I think focus on quality is something that we have 31 00:01:54,440 --> 00:01:58,640 Speaker 3: maintained and will continue to maintain a focus on cash flows. 32 00:01:59,680 --> 00:02:02,360 Speaker 3: There are plenty of stocks. It does seem like, you know, 33 00:02:02,760 --> 00:02:04,600 Speaker 3: you could put dot Com in your name and your 34 00:02:04,640 --> 00:02:06,960 Speaker 3: stock would go up. Now you put AI in your 35 00:02:07,040 --> 00:02:09,160 Speaker 3: name and your stock would go up. That kind of 36 00:02:09,200 --> 00:02:13,360 Speaker 3: thing is a worrisome sign to a degree, and that's 37 00:02:13,360 --> 00:02:15,680 Speaker 3: why you really do have to start digging in on 38 00:02:16,080 --> 00:02:19,440 Speaker 3: particularly I think on the cash flow side, Mark. 39 00:02:19,280 --> 00:02:21,880 Speaker 4: Until now, a lot of the money that's gone into 40 00:02:21,919 --> 00:02:25,280 Speaker 4: tech investment has been cash flow free cash flow. Now 41 00:02:25,320 --> 00:02:27,840 Speaker 4: we're starting to see more leverage get introduced to more 42 00:02:27,880 --> 00:02:30,359 Speaker 4: of these deals. I'm thinking of the core Weave Core 43 00:02:30,400 --> 00:02:32,960 Speaker 4: Weave deal right now, that we announced this morning. 44 00:02:33,160 --> 00:02:34,520 Speaker 5: With Meta Core. 45 00:02:34,600 --> 00:02:38,120 Speaker 4: Weave is a below investment grade rated company that relies 46 00:02:38,160 --> 00:02:40,640 Speaker 4: heavily on the debt market, and this comes along with 47 00:02:40,720 --> 00:02:44,240 Speaker 4: a slew of LBOs and other deal activity. Does that 48 00:02:44,360 --> 00:02:48,240 Speaker 4: raise concerns about the debt side of the financing structure 49 00:02:48,440 --> 00:02:51,160 Speaker 4: heading into a really uncertain economic time. 50 00:02:52,320 --> 00:02:54,480 Speaker 3: Well, I think it's a I think it's a good point, 51 00:02:55,000 --> 00:02:59,400 Speaker 3: as you've noted. I think rightly we're starting to see 52 00:03:00,440 --> 00:03:03,520 Speaker 3: really just kind of the beginnings maybe of some of 53 00:03:03,520 --> 00:03:08,680 Speaker 3: the more excitement on the institutional side about IPOs and 54 00:03:08,800 --> 00:03:11,320 Speaker 3: other things. So, you know, I think some of this 55 00:03:11,560 --> 00:03:16,440 Speaker 3: financing is absolutely something to watch, but we still believe, 56 00:03:17,200 --> 00:03:19,679 Speaker 3: you know, some of it in the around the core, 57 00:03:19,760 --> 00:03:22,800 Speaker 3: around some of the core of the hyperscalers. That's still 58 00:03:22,919 --> 00:03:25,880 Speaker 3: very early, but there's no question that there are pockets 59 00:03:25,880 --> 00:03:28,720 Speaker 3: of leverage as well building up in the system. I think, 60 00:03:29,120 --> 00:03:30,880 Speaker 3: you know, the way the way we look at it 61 00:03:30,919 --> 00:03:37,560 Speaker 3: overall with the AI project, it's something that we think 62 00:03:37,680 --> 00:03:40,520 Speaker 3: is one of the longer term themes that we want 63 00:03:40,560 --> 00:03:44,600 Speaker 3: to stay invested in because we do see the productivity growth, 64 00:03:44,640 --> 00:03:47,040 Speaker 3: we hear it from our clients who are our customers. 65 00:03:47,080 --> 00:03:50,080 Speaker 3: That's something they're investing in. We still like the power 66 00:03:50,160 --> 00:03:53,400 Speaker 3: and resources story associated with that, We still like the 67 00:03:53,400 --> 00:03:57,480 Speaker 3: healthcare story. These are areas you know, there are big 68 00:03:57,520 --> 00:04:00,920 Speaker 3: problems for governments UH and and where there's big problems, 69 00:04:00,920 --> 00:04:03,520 Speaker 3: there's big money going in. We've seen the President of 70 00:04:03,560 --> 00:04:06,040 Speaker 3: the United States say we're going to win it. We 71 00:04:06,160 --> 00:04:13,040 Speaker 3: must win on AI. These are existential, ultimately defense issues, 72 00:04:13,080 --> 00:04:17,719 Speaker 3: both for companies and for nations, and so I think 73 00:04:17,720 --> 00:04:19,919 Speaker 3: that gives it something of a little bit of a 74 00:04:20,000 --> 00:04:22,600 Speaker 3: different quality. And those are the kind of longer term 75 00:04:22,600 --> 00:04:25,479 Speaker 3: trends we want to be behind. Even if there is 76 00:04:25,560 --> 00:04:28,400 Speaker 3: certainly the potential for some choppy trading into the end 77 00:04:28,400 --> 00:04:29,720 Speaker 3: of the year mark, if you. 78 00:04:29,680 --> 00:04:31,919 Speaker 4: Do have all of this investment, the IPO is the 79 00:04:31,960 --> 00:04:36,039 Speaker 4: deals activity. Can you get a real acceleration in growth 80 00:04:36,200 --> 00:04:39,880 Speaker 4: heading into the fourth quarter without a reacceleration and inflation. 81 00:04:42,800 --> 00:04:47,120 Speaker 3: Look, we think there might be some acceleration of inflation. 82 00:04:47,960 --> 00:04:51,200 Speaker 3: It's I think it's something about how much the Fed 83 00:04:51,200 --> 00:04:55,240 Speaker 3: and other central banks would be willing to look through that. 84 00:04:55,720 --> 00:04:59,479 Speaker 3: But also keep in mind for some of if you 85 00:04:59,560 --> 00:05:05,600 Speaker 3: take the tech sector, that inflation is not necessarily an 86 00:05:05,600 --> 00:05:09,160 Speaker 3: issue for them, because if you take the hyperscalers. They're 87 00:05:09,200 --> 00:05:14,440 Speaker 3: not that reliant on debt financing, right, So there again, 88 00:05:14,480 --> 00:05:16,520 Speaker 3: I think it could be a time to get a 89 00:05:16,520 --> 00:05:22,559 Speaker 3: little more selective about who can continue to benefit given 90 00:05:22,600 --> 00:05:25,080 Speaker 3: the very large changes we've had in the way the 91 00:05:25,160 --> 00:05:27,640 Speaker 3: economy has been moving forward this year. 92 00:05:27,920 --> 00:05:30,039 Speaker 2: Mark, I've got to squeeze this in. Got about forty 93 00:05:30,080 --> 00:05:32,279 Speaker 2: five seconds. You're at UBS. I've got to ask you 94 00:05:32,279 --> 00:05:35,679 Speaker 2: about gold, the move we've seen this year this month. 95 00:05:36,040 --> 00:05:38,720 Speaker 2: Can you walk us through how investors have taken exposure 96 00:05:38,800 --> 00:05:42,160 Speaker 2: to the precious metal, whether it's physical paper, and if 97 00:05:42,160 --> 00:05:45,040 Speaker 2: it is physical, whether they're choosing to store it closer 98 00:05:45,080 --> 00:05:45,680 Speaker 2: to home. 99 00:05:48,000 --> 00:05:50,960 Speaker 3: All of the above. Jonathan, you should come visit the 100 00:05:51,000 --> 00:05:56,159 Speaker 3: vault someday. Long long equities and long gold has worked 101 00:05:56,240 --> 00:05:58,800 Speaker 3: very well for us, and we think that will continue 102 00:05:58,839 --> 00:05:59,200 Speaker 3: to work. 103 00:06:00,520 --> 00:06:01,160 Speaker 5: Stay with us. 104 00:06:01,480 --> 00:06:13,880 Speaker 2: Multilomberg Surveillance coming up after this. Monica Querra of Mark 105 00:06:13,920 --> 00:06:16,359 Speaker 2: and Stanley Ontica, welcome to the program. A lot of 106 00:06:16,360 --> 00:06:18,680 Speaker 2: people looking through this Wall Street saying it doesn't matter 107 00:06:18,760 --> 00:06:20,839 Speaker 2: to show me the economic tanctor and everything's okay. Do 108 00:06:20,839 --> 00:06:22,159 Speaker 2: you think about it slightly differently? 109 00:06:22,839 --> 00:06:24,440 Speaker 6: I think you have to look at it, you know, 110 00:06:24,480 --> 00:06:28,560 Speaker 6: from where the risk actually could bubble up. Now, historically 111 00:06:28,560 --> 00:06:31,440 Speaker 6: markets do look through. You get Marcus outperforming at average 112 00:06:31,480 --> 00:06:34,880 Speaker 6: about four point four percent during periods of shutdown. Granted 113 00:06:34,880 --> 00:06:37,320 Speaker 6: they can last from you know, three days to thirty 114 00:06:37,320 --> 00:06:40,240 Speaker 6: four days, so that's a huge window in time. But 115 00:06:40,320 --> 00:06:43,039 Speaker 6: typically even with the long shutdowns, you still have markets 116 00:06:43,080 --> 00:06:46,600 Speaker 6: out performing. So the risk comes and which industries and 117 00:06:46,640 --> 00:06:51,680 Speaker 6: sectors are most reliant on those government contracts and that's defense, healthcare, 118 00:06:51,920 --> 00:06:55,720 Speaker 6: et cetera. Is this a nice by opportunity potentially if 119 00:06:55,720 --> 00:06:58,479 Speaker 6: you're trying to you know, take a tactical approach, But 120 00:06:58,600 --> 00:07:02,039 Speaker 6: again it's a short to a short window where markets 121 00:07:02,080 --> 00:07:02,680 Speaker 6: like to look through. 122 00:07:02,839 --> 00:07:05,400 Speaker 1: Well, that last shutdown that was thirty four to thirty 123 00:07:05,400 --> 00:07:07,640 Speaker 1: five days in the end, what kind of impact did 124 00:07:07,640 --> 00:07:09,760 Speaker 1: that have on Wall Street and the economy? 125 00:07:10,400 --> 00:07:13,960 Speaker 6: Very little, because the macroeconomic factors were really important. The 126 00:07:14,040 --> 00:07:16,840 Speaker 6: other thing that's critical here is that it was a 127 00:07:16,840 --> 00:07:19,440 Speaker 6: partial shutdown. It wasn't a full shutdown. So in twenty 128 00:07:19,440 --> 00:07:21,240 Speaker 6: thirteen we had a full shutdown, and I think the 129 00:07:21,400 --> 00:07:23,760 Speaker 6: estimate from the CBO is that they lost about twenty 130 00:07:23,800 --> 00:07:29,040 Speaker 6: four billion or so in productivity in twenty eighteen, even 131 00:07:29,080 --> 00:07:32,240 Speaker 6: though it was a double the length twice as long 132 00:07:32,400 --> 00:07:35,200 Speaker 6: or more of a shutdown, They only lost eleven billion 133 00:07:35,360 --> 00:07:37,400 Speaker 6: three billion net at the end of the day after 134 00:07:37,440 --> 00:07:38,400 Speaker 6: everyone was made whole. 135 00:07:38,720 --> 00:07:40,000 Speaker 5: So even with. 136 00:07:40,040 --> 00:07:43,080 Speaker 6: That length of time, there could be you know, a 137 00:07:43,200 --> 00:07:46,239 Speaker 6: variety rate of factors that could impact growth. 138 00:07:46,440 --> 00:07:49,360 Speaker 1: The conversation I'm hearing out of Washington yesterday today this 139 00:07:49,440 --> 00:07:52,600 Speaker 1: morning talking to people is obviously the government is shutting down, 140 00:07:52,640 --> 00:07:54,880 Speaker 1: it's the length. What are you thinking about in terms 141 00:07:54,880 --> 00:07:56,520 Speaker 1: of how long the government will be shut down? 142 00:07:56,840 --> 00:08:00,160 Speaker 6: So when we're thinking about the political factors here, right 143 00:08:00,200 --> 00:08:03,880 Speaker 6: with the Democrats, they are taking a stand. Earlier this 144 00:08:04,000 --> 00:08:06,520 Speaker 6: year when Schumer came to the table and they passed 145 00:08:06,520 --> 00:08:10,080 Speaker 6: the cr there was a large outcry within the Democratic electorate. 146 00:08:09,680 --> 00:08:11,560 Speaker 5: Right upset that they moved so quickly. 147 00:08:11,800 --> 00:08:15,320 Speaker 6: So I think it does behoove them from a voter standpoint, 148 00:08:15,400 --> 00:08:18,080 Speaker 6: right of speaking to their base to actually hold a 149 00:08:18,120 --> 00:08:21,320 Speaker 6: firm line. Then they have to balance that with pressures 150 00:08:21,320 --> 00:08:22,880 Speaker 6: that can potentially come from the White House. 151 00:08:23,280 --> 00:08:24,960 Speaker 5: They were calling for mass layoffs. 152 00:08:25,040 --> 00:08:28,320 Speaker 6: That's likely not to happen, but other areas that could 153 00:08:28,320 --> 00:08:31,640 Speaker 6: be a catalyst is potentially, you know, apportionment control, meaning 154 00:08:31,720 --> 00:08:35,040 Speaker 6: that the president could deny a transfer of funds posts 155 00:08:35,160 --> 00:08:39,640 Speaker 6: or daring this shutdown as essentially a catalyst opportunity to 156 00:08:39,800 --> 00:08:41,640 Speaker 6: look under the hood and see where they can cut. 157 00:08:41,679 --> 00:08:44,600 Speaker 4: Why has that been the shift and focus away from 158 00:08:44,679 --> 00:08:49,120 Speaker 4: possibly some sort of mass layoff program and more just 159 00:08:49,160 --> 00:08:51,520 Speaker 4: shifting where money goes in the government. 160 00:08:52,040 --> 00:08:54,040 Speaker 5: So we look at what happened with DOGE. 161 00:08:54,160 --> 00:08:57,760 Speaker 6: They were largely unsuccessful, right, They were able to get 162 00:08:57,800 --> 00:09:02,600 Speaker 6: some cuts through. There was such significant power within the 163 00:09:02,600 --> 00:09:07,720 Speaker 6: federal unions protecting the status of workers, and the legal 164 00:09:07,760 --> 00:09:11,400 Speaker 6: response right was essentially a significant pushback. They don't want 165 00:09:11,400 --> 00:09:14,040 Speaker 6: to run into that sort of hurdle again. So I 166 00:09:14,040 --> 00:09:17,760 Speaker 6: think it's more of an issue of which agencies, which programs, 167 00:09:17,760 --> 00:09:21,280 Speaker 6: which departments are ideologically aligned with the president, and could 168 00:09:21,360 --> 00:09:24,280 Speaker 6: those areas actually be in trouble if they choose to 169 00:09:24,280 --> 00:09:25,000 Speaker 6: withhold funds. 170 00:09:25,160 --> 00:09:26,880 Speaker 5: Okay, so let's talk specifics. 171 00:09:27,000 --> 00:09:30,280 Speaker 4: What are the areas that could possibly see reductions in funding? 172 00:09:30,480 --> 00:09:32,840 Speaker 4: What are the areas that could potentially see increases in 173 00:09:32,880 --> 00:09:35,719 Speaker 4: funding as soon as the next few weeks if there 174 00:09:35,800 --> 00:09:37,520 Speaker 4: is some sort of shutdown, I mean you. 175 00:09:37,440 --> 00:09:38,480 Speaker 5: Could see some risk. 176 00:09:38,840 --> 00:09:41,320 Speaker 6: I mean, this is pretty high level and widespread. It's 177 00:09:41,360 --> 00:09:44,600 Speaker 6: already happening right on the DEI front that's likely to continue. 178 00:09:44,840 --> 00:09:48,480 Speaker 6: They could also look at anything that's clean energy related. 179 00:09:48,880 --> 00:09:51,679 Speaker 6: You could maybe see some impacts to EPA. And then 180 00:09:51,720 --> 00:09:53,960 Speaker 6: the other areas that I think are critical is on 181 00:09:54,160 --> 00:09:58,480 Speaker 6: the Medicaid healthcare front. They're continuing to want to clamp down, 182 00:09:58,559 --> 00:10:01,240 Speaker 6: especially on those ACA subsi that the Democrats are looking 183 00:10:01,280 --> 00:10:02,319 Speaker 6: forward to extending. 184 00:10:03,040 --> 00:10:05,040 Speaker 5: Do they get that that's the big question. What's the 185 00:10:05,120 --> 00:10:07,240 Speaker 5: off ramp. The off ramp here, I. 186 00:10:07,160 --> 00:10:11,000 Speaker 6: Think is if you start getting really notable aggressive activity 187 00:10:11,000 --> 00:10:13,720 Speaker 6: from the White House, and then that could move the 188 00:10:13,800 --> 00:10:18,000 Speaker 6: Democrats forward because there's a significant amount of programs that 189 00:10:18,040 --> 00:10:20,000 Speaker 6: they don't want to lose and they want to make 190 00:10:20,000 --> 00:10:23,240 Speaker 6: sure that their support outside of ACA subsidies. Right now, 191 00:10:23,280 --> 00:10:25,040 Speaker 6: this is their bargaining chip. This is the thing that 192 00:10:25,080 --> 00:10:27,120 Speaker 6: they want to get a win on. If they can't 193 00:10:27,120 --> 00:10:30,040 Speaker 6: get that and everything else starts to see this, you know, 194 00:10:30,040 --> 00:10:31,560 Speaker 6: you start to see the train go off the tracks 195 00:10:31,559 --> 00:10:34,120 Speaker 6: in other ways, that could be the catalyst that gets 196 00:10:34,120 --> 00:10:34,640 Speaker 6: the Democrats. 197 00:10:34,720 --> 00:10:38,400 Speaker 1: The Vice President yesterday was talking about rural healthcare policy 198 00:10:38,480 --> 00:10:40,880 Speaker 1: and how potentially that is one place where they can 199 00:10:40,880 --> 00:10:41,800 Speaker 1: come to an agreement. 200 00:10:41,960 --> 00:10:43,440 Speaker 5: Is this where the off ramp. 201 00:10:43,240 --> 00:10:46,000 Speaker 1: Will be, though it will be in the healthcare policy sector. 202 00:10:46,679 --> 00:10:49,880 Speaker 6: If Democrats get a concession, that's their off ramp. 203 00:10:49,960 --> 00:10:51,600 Speaker 5: The other piece that I'm talking about is. 204 00:10:51,640 --> 00:10:53,880 Speaker 6: The stick off room, right that if the White House says, no, 205 00:10:53,920 --> 00:10:56,480 Speaker 6: we're not negotiating with you, we're not giving you those subsidies, 206 00:10:56,720 --> 00:10:58,000 Speaker 6: then you have to come to the table because we're 207 00:10:58,000 --> 00:10:59,600 Speaker 6: going to cut other things. Right, And it's more of 208 00:10:59,600 --> 00:11:04,960 Speaker 6: a fear tactic now on the ACA and rural healthcare component. 209 00:11:06,320 --> 00:11:09,120 Speaker 6: When you're looking at red states, Rural red states their 210 00:11:09,160 --> 00:11:12,360 Speaker 6: most reliant on ACA. They didn't do Medicaid expansion, so 211 00:11:12,400 --> 00:11:14,800 Speaker 6: the Medicaid rulebcks don't really impact them. So it is 212 00:11:14,840 --> 00:11:17,960 Speaker 6: really all about ACA subsidy extension, and that is an 213 00:11:18,000 --> 00:11:20,079 Speaker 6: area where you do get bipartisan consensus. 214 00:11:20,280 --> 00:11:21,960 Speaker 4: Taking a step back and looking at some of the 215 00:11:22,000 --> 00:11:25,439 Speaker 4: macro implications, not clear what the longer term macro implications 216 00:11:25,440 --> 00:11:27,200 Speaker 4: are for bond yield. It's based on just sort of 217 00:11:27,200 --> 00:11:31,000 Speaker 4: this broader sense that it isn't essentially an economic issue. 218 00:11:31,040 --> 00:11:34,040 Speaker 4: You do see though, longer term an impact on the dollar. 219 00:11:34,280 --> 00:11:37,880 Speaker 4: There has been a weaker dollar associated with shutdowns. Do 220 00:11:37,920 --> 00:11:41,240 Speaker 4: you expect that to be correlation that continues this time around? 221 00:11:42,080 --> 00:11:45,960 Speaker 6: Yes, this is a historical relationship. One of the things 222 00:11:46,000 --> 00:11:49,800 Speaker 6: that we want to note though, is that the length 223 00:11:49,880 --> 00:11:53,000 Speaker 6: of time right is going to impact that how week 224 00:11:53,040 --> 00:11:55,440 Speaker 6: it goes. So if we get a week, that's going 225 00:11:55,480 --> 00:11:57,080 Speaker 6: to be very different than if we get another thirty 226 00:11:57,080 --> 00:11:58,440 Speaker 6: five day window. 227 00:11:59,280 --> 00:12:02,839 Speaker 2: Sight with us more Bloomberg Surveillance coming up after this. 228 00:12:12,000 --> 00:12:15,600 Speaker 2: FI Lorlando, a Federated Global Investment sees momentum building. He 229 00:12:15,640 --> 00:12:18,959 Speaker 2: writes the following. Given the potential for a strengthening labor 230 00:12:19,000 --> 00:12:22,800 Speaker 2: market and moderating inflation, economic growth could accelerate in the 231 00:12:22,840 --> 00:12:25,520 Speaker 2: second half of this year. Phil joins a snapper more, Phil, 232 00:12:25,600 --> 00:12:27,640 Speaker 2: good morning, good morning, Thanks for having me back, thanks 233 00:12:27,679 --> 00:12:29,360 Speaker 2: for being here. Just to build on that quote, is 234 00:12:29,400 --> 00:12:31,000 Speaker 2: that the story we're priced for. 235 00:12:32,840 --> 00:12:37,120 Speaker 7: Stock market's up thirty eight percent since the Liberation Day 236 00:12:37,240 --> 00:12:40,360 Speaker 7: lows back in the middle of April. So clearly they're 237 00:12:40,400 --> 00:12:43,960 Speaker 7: not jumping out of the upper floors of the towers 238 00:12:44,000 --> 00:12:47,640 Speaker 7: because they're concerned that the labor market's collapsing. Has the 239 00:12:47,720 --> 00:12:50,800 Speaker 7: data been soft the last four months, no question, But 240 00:12:51,480 --> 00:12:54,280 Speaker 7: in our view the data was sort of troughing here 241 00:12:54,320 --> 00:12:56,680 Speaker 7: and has the potential to accelerate going in the next 242 00:12:56,679 --> 00:12:57,079 Speaker 7: couple of. 243 00:12:57,000 --> 00:13:00,120 Speaker 2: Months relative to what this is what I want to understand, 244 00:13:00,160 --> 00:13:02,360 Speaker 2: were priced for a lot of this going into twenty six. 245 00:13:02,440 --> 00:13:05,559 Speaker 2: Expectations have already picked up. We've had the equity market rally. 246 00:13:05,760 --> 00:13:07,719 Speaker 2: How much of that has been about earnings? How much 247 00:13:07,720 --> 00:13:10,120 Speaker 2: of that is just a better economic story or reading. 248 00:13:10,520 --> 00:13:13,120 Speaker 7: So the earning situation we think is excellent. You know, 249 00:13:13,160 --> 00:13:14,920 Speaker 7: you look at the first quarter. In the second quarter, 250 00:13:15,920 --> 00:13:18,880 Speaker 7: second quarter, revenues up six percent, earnings up twelve percent, 251 00:13:18,960 --> 00:13:23,120 Speaker 7: much better than expected, the consensus expectations for the third 252 00:13:23,200 --> 00:13:25,920 Speaker 7: quarter starting to come in. Those numbers look pretty strong. 253 00:13:26,120 --> 00:13:29,640 Speaker 7: We're in the process of upgrading our earnings estimates for 254 00:13:29,800 --> 00:13:32,160 Speaker 7: full year this year, full year next year. So the 255 00:13:32,200 --> 00:13:36,520 Speaker 7: earnings pictures in pretty good shape. Clearly, the labor market 256 00:13:36,559 --> 00:13:39,400 Speaker 7: has been the weekly. Now you look at the August 257 00:13:39,760 --> 00:13:43,280 Speaker 7: jobs report, it was terrible, admittedly, but there are a 258 00:13:43,280 --> 00:13:47,360 Speaker 7: couple of things associated with that number. One, August tends 259 00:13:47,360 --> 00:13:49,720 Speaker 7: to be the quirkiest month of the year. You've got 260 00:13:49,920 --> 00:13:54,400 Speaker 7: you know, schools starting and starting up again, factories taking 261 00:13:54,440 --> 00:13:59,680 Speaker 7: downtime to retool, temporarily furloughing workers. So the August non 262 00:13:59,720 --> 00:14:04,840 Speaker 7: farm payroll report historically is the quirkiest report of the year. 263 00:14:05,160 --> 00:14:09,440 Speaker 7: So you look at for example, Kevin Hassett, the National 264 00:14:09,600 --> 00:14:13,760 Speaker 7: chairman director, came out and said that they're expecting seventy 265 00:14:13,800 --> 00:14:16,800 Speaker 7: thousand jobs to be revised up over the course in 266 00:14:16,800 --> 00:14:19,840 Speaker 7: the next couple of months. That's consistent with what we've 267 00:14:19,840 --> 00:14:23,520 Speaker 7: seen historically. All of the noise and the nonsense in 268 00:14:23,560 --> 00:14:26,200 Speaker 7: August tends to gets revised up. All right, that's point 269 00:14:26,280 --> 00:14:29,600 Speaker 7: number one. Point number two. When we saw the initial 270 00:14:29,600 --> 00:14:33,120 Speaker 7: weekly jobas claims the first week of September, the numbers 271 00:14:33,120 --> 00:14:34,960 Speaker 7: were terrible. I think it was about two hundred and 272 00:14:35,000 --> 00:14:38,480 Speaker 7: sixty four thousand. The market was freaking out a little bit, 273 00:14:38,520 --> 00:14:41,800 Speaker 7: but you know, we suggested take a deep breath. Number one, 274 00:14:41,880 --> 00:14:44,400 Speaker 7: it's a holiday shortened week. And number two, you had 275 00:14:44,440 --> 00:14:48,080 Speaker 7: the allegations of claims fraud in Texas. So as we 276 00:14:48,160 --> 00:14:50,520 Speaker 7: went to the next week, which was the survey week 277 00:14:50,560 --> 00:14:52,880 Speaker 7: for September, the number came down on about two hundred 278 00:14:52,920 --> 00:14:55,320 Speaker 7: and thirty thousand, and then last week came down further 279 00:14:55,400 --> 00:14:57,720 Speaker 7: about two hundred and seventeen thousand. So we think the 280 00:14:57,760 --> 00:14:59,920 Speaker 7: claims are pointing to the fact that the numbers are 281 00:15:00,080 --> 00:15:02,560 Speaker 7: to be pretty good. And then you know, we were 282 00:15:02,600 --> 00:15:07,040 Speaker 7: talking about nonfarm versus ADP. Going into this, the expectations 283 00:15:07,040 --> 00:15:11,040 Speaker 7: for ADP about fifty thousand plus. That's kind of the 284 00:15:11,120 --> 00:15:14,080 Speaker 7: number we're looking for for nonfarm That would be a 285 00:15:14,160 --> 00:15:16,800 Speaker 7: number roughly double what we saw in the month of 286 00:15:16,840 --> 00:15:20,400 Speaker 7: August for nonfarm So we think the labor market there 287 00:15:20,440 --> 00:15:25,160 Speaker 7: may be a little too much pessimism built in, so 288 00:15:25,240 --> 00:15:28,280 Speaker 7: our expectation that the number is probably troughed here and 289 00:15:28,320 --> 00:15:29,640 Speaker 7: we'll start to see some improvement. 290 00:15:29,760 --> 00:15:32,160 Speaker 4: Given that backdrop, there's a mystery, and we were unpacking 291 00:15:32,240 --> 00:15:35,480 Speaker 4: that ahead of the Nike earnings after the bell This idea, 292 00:15:35,720 --> 00:15:40,280 Speaker 4: even CEOs don't know how much consumers will absorb price increases. 293 00:15:40,960 --> 00:15:44,400 Speaker 4: What is the connection right now between corporate profits and 294 00:15:44,440 --> 00:15:46,000 Speaker 4: potential inflationary pressure? 295 00:15:47,000 --> 00:15:51,080 Speaker 7: No question. If you look at the piece that I 296 00:15:51,120 --> 00:15:54,120 Speaker 7: wrote last week focused on how good the back to 297 00:15:54,120 --> 00:15:56,880 Speaker 7: school season was, back to school was up four point 298 00:15:56,960 --> 00:16:00,480 Speaker 7: two percent three months through August. Back to school a 299 00:16:00,560 --> 00:16:02,760 Speaker 7: year ago is only up two point three percent. So 300 00:16:03,040 --> 00:16:06,000 Speaker 7: the consumers in pretty good shape, particularly at the high end. 301 00:16:06,200 --> 00:16:11,640 Speaker 7: But I think there is absolutely some consternation about what 302 00:16:11,720 --> 00:16:14,400 Speaker 7: pricing is, particularly at the low end of the price spectrum. 303 00:16:14,440 --> 00:16:17,400 Speaker 7: So companies are going to have to you know sort 304 00:16:17,400 --> 00:16:23,280 Speaker 7: of weigh that that situation high end consumers can afford 305 00:16:23,400 --> 00:16:25,960 Speaker 7: a little bit more in pricing. But the question of 306 00:16:26,960 --> 00:16:29,680 Speaker 7: are there going to be any forced pricing issues because 307 00:16:29,680 --> 00:16:32,200 Speaker 7: of the tariff situation that companies need to pass on 308 00:16:32,280 --> 00:16:35,280 Speaker 7: in order to maintain profit margins. Profit margins have been 309 00:16:35,280 --> 00:16:38,560 Speaker 7: pretty strong up until now. Is that situation going to 310 00:16:38,600 --> 00:16:41,520 Speaker 7: deteriorate in the third quarter in the fourth quarter. We 311 00:16:41,560 --> 00:16:43,880 Speaker 7: don't know the data yet, but that's something that we're 312 00:16:43,880 --> 00:16:44,520 Speaker 7: going to have to say. 313 00:16:44,680 --> 00:16:47,000 Speaker 4: The big question mark over this has been holding back 314 00:16:47,080 --> 00:16:49,800 Speaker 4: the broadening out in the S and P five hundred, 315 00:16:49,920 --> 00:16:51,480 Speaker 4: in the RUSS of two thousand and the S and 316 00:16:51,520 --> 00:16:55,480 Speaker 4: P six hundred Pickure index. How much are you betting 317 00:16:55,600 --> 00:16:57,640 Speaker 4: that we are going to see that broadening out versus 318 00:16:57,800 --> 00:17:00,560 Speaker 4: just this consolidation in big tech, this idea that the 319 00:17:00,600 --> 00:17:04,600 Speaker 4: profits will continue to be driven by the biggest ten names. 320 00:17:04,960 --> 00:17:08,000 Speaker 7: We're absolutely in the broadening out camp, and that's been 321 00:17:08,000 --> 00:17:10,720 Speaker 7: our call for the last year. In case in point, 322 00:17:11,280 --> 00:17:13,960 Speaker 7: look how well the small camps have done both growth 323 00:17:14,000 --> 00:17:16,080 Speaker 7: and value over the course of the last couple of months. 324 00:17:16,560 --> 00:17:20,000 Speaker 7: In our view, the small caps were completely mispriced, and 325 00:17:20,119 --> 00:17:23,840 Speaker 7: once we began to see the fed kipped over their cards, 326 00:17:23,840 --> 00:17:26,880 Speaker 7: they're going to cut interest rates. An interest rate reduction 327 00:17:27,000 --> 00:17:30,320 Speaker 7: cycle is usually beneficial to the small cap companies. It 328 00:17:30,359 --> 00:17:34,040 Speaker 7: improves their ability to self finance, kicks off an M 329 00:17:34,080 --> 00:17:37,720 Speaker 7: and A and an IPO cycle, And you've got a 330 00:17:37,760 --> 00:17:42,119 Speaker 7: situation where domestically, we think economic growth is accelerating. Small 331 00:17:42,119 --> 00:17:44,520 Speaker 7: cap companies do eighty percent of their business here. If 332 00:17:44,520 --> 00:17:46,879 Speaker 7: the US economy is doing well, that's going to benefit 333 00:17:46,920 --> 00:17:47,840 Speaker 7: small cap companies. 334 00:17:47,960 --> 00:17:50,480 Speaker 1: But aren't more tariffs going to hurt small cap companies 335 00:17:50,520 --> 00:17:52,080 Speaker 1: even if they do business here? A lot of the 336 00:17:52,119 --> 00:17:54,000 Speaker 1: import could be coming from other countries. 337 00:17:54,040 --> 00:17:57,679 Speaker 7: Well, again, that's a case by case situation. I was 338 00:17:57,720 --> 00:18:01,239 Speaker 7: on Bloomberg Radio recently and we were talking about this, 339 00:18:01,320 --> 00:18:03,760 Speaker 7: and I got some random person that sent me an 340 00:18:03,800 --> 00:18:06,800 Speaker 7: email when I got back to the office asking that question, 341 00:18:07,119 --> 00:18:10,280 Speaker 7: isn't that going to impact pricing and imports and won't 342 00:18:10,359 --> 00:18:13,880 Speaker 7: Christmas sales be a disaster? And the answer in our 343 00:18:14,040 --> 00:18:15,880 Speaker 7: situation is, we think it's going to be a case 344 00:18:15,880 --> 00:18:20,600 Speaker 7: by case situation. How is a company sourcing what they're selling? 345 00:18:21,600 --> 00:18:24,280 Speaker 7: What's the pricing of that? Can they source more domestically? 346 00:18:25,119 --> 00:18:28,399 Speaker 7: What's their labor situation? Immigrant versus native born that there 347 00:18:28,440 --> 00:18:30,639 Speaker 7: are a lot of factors here that are going to 348 00:18:30,680 --> 00:18:32,240 Speaker 7: dictate the answer to that question. 349 00:18:32,480 --> 00:18:34,840 Speaker 1: Is there an area within the small caps that's immune 350 00:18:34,880 --> 00:18:35,399 Speaker 1: to a lot of this. 351 00:18:35,880 --> 00:18:43,080 Speaker 7: We love healthcare and within healthcare biotechnology. These are biotechnology 352 00:18:43,119 --> 00:18:46,560 Speaker 7: gurus are telling us that the pipelines have never looked 353 00:18:46,560 --> 00:18:50,040 Speaker 7: better yet, the valuations have never been more extreme out 354 00:18:50,040 --> 00:18:52,919 Speaker 7: of favor. And what we've been waiting for is some catalysts, 355 00:18:52,920 --> 00:18:56,600 Speaker 7: and we think the interest rate cutting cycle is that catalyst. 356 00:18:56,640 --> 00:18:59,879 Speaker 7: The big cap companies Pfizer and MERKETC will start to 357 00:18:59,840 --> 00:19:03,920 Speaker 7: think about you know, M and A activity. Lower interest 358 00:19:03,960 --> 00:19:07,240 Speaker 7: rates again will make it easier to self finance, and 359 00:19:07,359 --> 00:19:10,359 Speaker 7: people are now going to focus on the really good 360 00:19:10,680 --> 00:19:13,600 Speaker 7: phase one, phase two, phase three clinical work that these 361 00:19:13,640 --> 00:19:16,840 Speaker 7: companies have done with their drug development. That's the sector 362 00:19:16,920 --> 00:19:19,000 Speaker 7: we think is poised to move higher. 363 00:19:20,080 --> 00:19:23,600 Speaker 2: Stay with us more Bloomberg Surveillance coming up after this. 364 00:19:33,400 --> 00:19:36,400 Speaker 2: Investors looking for signals the US economy is heading back 365 00:19:36,440 --> 00:19:41,000 Speaker 2: towards stable growth of vlacility and higher inflation. Bruce Van 366 00:19:41,040 --> 00:19:43,480 Speaker 2: Sun is the CEO of Citizens Financial Group, which serves 367 00:19:43,480 --> 00:19:47,439 Speaker 2: approximately six million consumer and business customers. Bruce joins us 368 00:19:47,440 --> 00:19:48,800 Speaker 2: Now for more Bruce, good morning. 369 00:19:48,600 --> 00:19:49,240 Speaker 5: Good to see you. 370 00:19:49,240 --> 00:19:50,320 Speaker 8: Oh, it's great to be here. 371 00:19:50,400 --> 00:19:55,200 Speaker 2: Do we say happy anniversary? Twelfth anniversary, Yeah, that's twelve years. 372 00:19:55,040 --> 00:19:57,560 Speaker 2: That's well, it is flown by. You've got to read 373 00:19:57,560 --> 00:19:59,640 Speaker 2: on both the consumer and businesses as well. We talked 374 00:19:59,640 --> 00:20:01,800 Speaker 2: a lot of our corporate confidence, the m and A, 375 00:20:02,160 --> 00:20:04,960 Speaker 2: the boom things picking up. Consumer confidence still hold back. 376 00:20:05,000 --> 00:20:07,080 Speaker 2: Would you see across the business a difference between the two. 377 00:20:08,119 --> 00:20:11,480 Speaker 8: I'd say we're in generally good shape. So I think 378 00:20:11,720 --> 00:20:15,640 Speaker 8: everybody's still a little holding back because of the uncertainty 379 00:20:15,760 --> 00:20:19,600 Speaker 8: around tariffs and some of the fiscal policies, but that's 380 00:20:19,640 --> 00:20:22,159 Speaker 8: become the new normal, and so I think businesses now 381 00:20:22,200 --> 00:20:25,800 Speaker 8: are leaning in a little more. And I'd say consumer 382 00:20:25,880 --> 00:20:29,160 Speaker 8: is split. So the higher end consumer is still enjoying life, 383 00:20:29,160 --> 00:20:33,080 Speaker 8: sees the stock market very strong, spending money, a little 384 00:20:33,080 --> 00:20:37,280 Speaker 8: more pressure at the lower end. Inflation still is persistent 385 00:20:37,440 --> 00:20:40,679 Speaker 8: and real wage gains haven't fully covered that, so they're 386 00:20:40,800 --> 00:20:41,719 Speaker 8: pulling in a little bit. 387 00:20:41,800 --> 00:20:43,840 Speaker 2: What opportunities are available to you and the team right 388 00:20:43,880 --> 00:20:46,000 Speaker 2: now to lean into that higher end consumer just a 389 00:20:46,040 --> 00:20:48,800 Speaker 2: little bit more higher income the private side of the business. 390 00:20:48,880 --> 00:20:51,159 Speaker 8: Yeah, So one of the moves that we made a 391 00:20:51,160 --> 00:20:53,480 Speaker 8: couple of years back was we tried to buy all 392 00:20:53,480 --> 00:20:57,880 Speaker 8: the first Republic JPM. Ultimately was successful, but we hired 393 00:20:57,920 --> 00:20:59,359 Speaker 8: a lot of the talent, a lot of the private 394 00:20:59,400 --> 00:21:02,639 Speaker 8: bankers came over to citizens. Hired one hundred and fifty 395 00:21:02,760 --> 00:21:05,879 Speaker 8: folks on day one, and then we've ramped that up 396 00:21:05,960 --> 00:21:09,159 Speaker 8: now to close to five hundred people. We're a cross 397 00:21:09,359 --> 00:21:13,400 Speaker 8: ten billion of deposits and we're kind of target at 398 00:21:13,480 --> 00:21:16,480 Speaker 8: year end hitting twelve billion in deposits eleven billion of AUM, 399 00:21:16,600 --> 00:21:20,840 Speaker 8: So the business is basically exploding in terms of new 400 00:21:21,200 --> 00:21:24,360 Speaker 8: customers coming onto the platform. I think we're delivering really 401 00:21:24,400 --> 00:21:27,520 Speaker 8: good quality service at this point, and we're integrating that 402 00:21:27,600 --> 00:21:30,040 Speaker 8: with our commercial bank. So a lot of our middle 403 00:21:30,080 --> 00:21:34,560 Speaker 8: market companies are successful people. They have families in need 404 00:21:34,600 --> 00:21:37,880 Speaker 8: of both business services on the commercial side and then 405 00:21:38,080 --> 00:21:42,000 Speaker 8: individual banking and wealth services for the family and for 406 00:21:42,119 --> 00:21:46,040 Speaker 8: the individuals, and so we bring that together to provide 407 00:21:46,040 --> 00:21:48,359 Speaker 8: really robust solutions, and I think we're doing that better 408 00:21:48,359 --> 00:21:49,879 Speaker 8: than anybody in the market these days. 409 00:21:50,000 --> 00:21:52,640 Speaker 4: Can you give a sense of just the rapid rate 410 00:21:52,680 --> 00:21:55,040 Speaker 4: of growth and what you see over the next say 411 00:21:55,359 --> 00:21:58,919 Speaker 4: couple of years in terms of that wealth management sector 412 00:21:58,920 --> 00:21:59,760 Speaker 4: that's been driving growth. 413 00:22:00,000 --> 00:22:02,440 Speaker 5: I've been driving growth at a lot of the major banks. Yeah. 414 00:22:02,480 --> 00:22:05,280 Speaker 8: So one of the things we said is that by 415 00:22:05,440 --> 00:22:08,760 Speaker 8: this year that that business would be five percent accreative 416 00:22:08,760 --> 00:22:11,280 Speaker 8: to our bottom line. So it's basically a startup inside 417 00:22:11,280 --> 00:22:14,320 Speaker 8: a two hundred year old bank, And so we had 418 00:22:14,480 --> 00:22:17,400 Speaker 8: all the expenses day one, and now revenues are kind 419 00:22:17,400 --> 00:22:21,600 Speaker 8: of exceeding those expenses, and we'll be well over five 420 00:22:21,680 --> 00:22:24,040 Speaker 8: percent of the bottom line this year. You played that 421 00:22:24,080 --> 00:22:26,400 Speaker 8: out three to five years, this business could be fifteen 422 00:22:26,400 --> 00:22:30,080 Speaker 8: percent of our bottom line. So anyway, we're kind of 423 00:22:30,200 --> 00:22:35,360 Speaker 8: continuing to be finding the sweet spot between growing it 424 00:22:35,440 --> 00:22:37,919 Speaker 8: at a nice clip but growing it profitably. So one 425 00:22:37,960 --> 00:22:40,439 Speaker 8: of the issues at First Republic had is their return 426 00:22:40,480 --> 00:22:43,679 Speaker 8: on equity never got above eleven percent. We're running this 427 00:22:43,760 --> 00:22:46,960 Speaker 8: business today between twenty and twenty five percent. So we 428 00:22:47,040 --> 00:22:51,320 Speaker 8: have good operating discipline on this thing. As we continue 429 00:22:51,320 --> 00:22:53,920 Speaker 8: to grow, then we reinvest back in the businesses. We're 430 00:22:53,920 --> 00:22:56,800 Speaker 8: opening up new regions. We open southern California, We're going 431 00:22:56,880 --> 00:22:59,439 Speaker 8: to expand in Florida, put more teams here in New 432 00:22:59,520 --> 00:23:02,840 Speaker 8: York tonight, in fact, we're opening our flagship private bank 433 00:23:02,920 --> 00:23:06,679 Speaker 8: office on fifty second and six, so really exciting times 434 00:23:06,720 --> 00:23:10,040 Speaker 8: and great initiatives. Our team is executing very well on. 435 00:23:10,359 --> 00:23:13,679 Speaker 4: It's amazing how many points of contact you have to 436 00:23:13,760 --> 00:23:15,639 Speaker 4: gauge consumer and business sentiment. 437 00:23:15,680 --> 00:23:17,120 Speaker 5: As John was talking about, I just. 438 00:23:17,160 --> 00:23:20,320 Speaker 4: Wonder what is the sort of feeling not just about 439 00:23:20,359 --> 00:23:22,480 Speaker 4: investors people who are trying to manage their wealth. Is 440 00:23:22,520 --> 00:23:24,760 Speaker 4: it risk on, is it risk off? But also the 441 00:23:24,800 --> 00:23:28,520 Speaker 4: companies in terms of are they moving past that waiting pattern, 442 00:23:28,560 --> 00:23:30,800 Speaker 4: the holding pattern that we were talking about earlier this year. 443 00:23:30,920 --> 00:23:33,639 Speaker 8: Yeah, I'd say they're not fully leaning in yet, so 444 00:23:33,680 --> 00:23:36,920 Speaker 8: we're not seeing our credit lines that we have out 445 00:23:36,960 --> 00:23:41,160 Speaker 8: with companies really being taken down to invest in growth, 446 00:23:41,240 --> 00:23:44,040 Speaker 8: in capex and things. But having said that, all of 447 00:23:44,040 --> 00:23:47,280 Speaker 8: our businesses are having very strong years, so cash flow 448 00:23:47,359 --> 00:23:51,120 Speaker 8: is good, businesses are solid, We see no real credit issues. 449 00:23:51,960 --> 00:23:54,600 Speaker 8: I think with a little more certainty, they'd be leaning 450 00:23:54,640 --> 00:23:57,119 Speaker 8: in more and they'd be doing more investing. So I 451 00:23:57,119 --> 00:23:59,000 Speaker 8: think that's still to come. The good news is on 452 00:23:59,040 --> 00:24:03,240 Speaker 8: the private equity side, on the kind of financial sponsor side, 453 00:24:03,400 --> 00:24:07,119 Speaker 8: there's now a kind of tick up in deal flow, 454 00:24:07,440 --> 00:24:09,720 Speaker 8: which we've been waiting for over three years to see that, 455 00:24:09,840 --> 00:24:13,479 Speaker 8: and so our commercial bank has been positioned for this 456 00:24:13,560 --> 00:24:16,480 Speaker 8: to happen. We've really invested in it. We've got great people, 457 00:24:17,200 --> 00:24:19,760 Speaker 8: and so I think we're having a great quarter in 458 00:24:19,840 --> 00:24:23,480 Speaker 8: terms of our capital markets revenues. The deal machine is going, 459 00:24:23,520 --> 00:24:26,800 Speaker 8: the flywheels going, so I think that'll continue. So that 460 00:24:26,840 --> 00:24:29,400 Speaker 8: feels really good. So the corporate side has a little 461 00:24:29,440 --> 00:24:32,359 Speaker 8: bit to catch up, but the financial sponsor side that's 462 00:24:32,400 --> 00:24:33,520 Speaker 8: ticking up very nicely. 463 00:24:33,720 --> 00:24:36,000 Speaker 1: You mentioned Florida. How much wealth have you seen move 464 00:24:36,080 --> 00:24:38,320 Speaker 1: down from Florida, But you're still doubling down on New 465 00:24:38,400 --> 00:24:41,400 Speaker 1: York and I want to be concerned about the mayor race. 466 00:24:41,560 --> 00:24:46,480 Speaker 8: Yeah, it's interesting. So we're focused big on three regions 467 00:24:46,560 --> 00:24:48,800 Speaker 8: right now for growth. One is the New York metro, 468 00:24:48,880 --> 00:24:52,960 Speaker 8: so we bought HSBC's East Coast branches to get a 469 00:24:52,960 --> 00:24:55,960 Speaker 8: foothold in New York. We bought Investors Banks and we 470 00:24:56,040 --> 00:24:58,560 Speaker 8: now have two hundred branches in New York City. We've 471 00:24:58,960 --> 00:25:01,920 Speaker 8: invested in middlem market banking teams here, so we're really 472 00:25:01,960 --> 00:25:04,760 Speaker 8: gaining market share in New York. The other two regions, 473 00:25:04,760 --> 00:25:07,000 Speaker 8: one is Florida, as you mentioned, and one is California. 474 00:25:07,080 --> 00:25:09,440 Speaker 8: So we now have over three hundred people in both 475 00:25:09,480 --> 00:25:14,080 Speaker 8: locations and Florida has a lot of tailwind. During COVID, 476 00:25:14,080 --> 00:25:17,600 Speaker 8: a lot of people moved down to Florida. That's continuing 477 00:25:18,200 --> 00:25:20,960 Speaker 8: and so we started with a private banking team in 478 00:25:21,000 --> 00:25:23,760 Speaker 8: Florida and now we've added middle market, so we have 479 00:25:23,840 --> 00:25:27,920 Speaker 8: both corporate and private bank working together. That's a market 480 00:25:27,920 --> 00:25:29,800 Speaker 8: where we don't have a lot of retail yet. So 481 00:25:29,920 --> 00:25:31,840 Speaker 8: in New York we have the full ground team with 482 00:25:31,880 --> 00:25:34,880 Speaker 8: the retail. Florida, I say that we're coming in over 483 00:25:34,920 --> 00:25:37,520 Speaker 8: the top of that market to really bank successful people. 484 00:25:37,800 --> 00:25:41,280 Speaker 8: Same thing in California, over three hundred people there coming 485 00:25:41,320 --> 00:25:43,520 Speaker 8: in over the top. We have private banking teams, we 486 00:25:43,600 --> 00:25:46,600 Speaker 8: have corporate banking teams, and seeing a lot of growth 487 00:25:46,640 --> 00:25:48,600 Speaker 8: there as well. 488 00:25:48,640 --> 00:25:52,200 Speaker 2: This is the Bloomberg Survendics podcast, bringing you the best 489 00:25:52,240 --> 00:25:55,560 Speaker 2: in markets, economics, anngient politics. You can watch the show 490 00:25:55,600 --> 00:25:58,560 Speaker 2: live on Bloomberg TV weekday mornings from six am to 491 00:25:58,680 --> 00:26:02,440 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify 492 00:26:02,600 --> 00:26:04,800 Speaker 2: or anywhere else you listen, and as always on the 493 00:26:04,800 --> 00:26:07,240 Speaker 2: Bloomberg Terminal and the Bloomberg Business app. 494 00:26:11,600 --> 00:26:11,719 Speaker 4: HM