Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
Speaker 2: with Lisa Bromwitz and Amrie Hordernt. Join us each day
Speaker 2: for insight from the best in markets, economics, and geopolitics
Speaker 2: from our global headquarters in New York City. We are
Speaker 2: live on Bloomberg Television weekday mornings from six to nine
Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or
Speaker 2: anywhere else you listen, and as always on the Bloomberg
Speaker 2: Terminal and the Bloomberg Business App. Investors bracing for a
Speaker 2: potential government shutdown to begin at midnight, Mark hay Fley,
Speaker 2: the chief investment officer in UBS Global Wealth Management, right
Speaker 2: in the following. With the direct impact of a government
Speaker 2: shutdown on financial markets likely to be muted, we maintain
Speaker 2: a positive outlook for US secrates. Mark joins us now
Speaker 2: for more make welcome back is Vincin long, my friend,
Speaker 2: Let's talk about what's anchoring that view. What's making you
Speaker 2: bullish right now?
Speaker 3: Well, I think we've had continued strong earnings. We've seen
Speaker 3: this continued investment on the AI side, and then we
Speaker 3: have the FED cutting rates, so those are positive backdrops
Speaker 3: would also add in there, you know, the strong fiscal
Speaker 3: spend that continues, and that's been supporting the economic picture
Speaker 3: as well.
Speaker 2: Mark, I know that these are real numbers, real revenue,
Speaker 2: real profits. There's been some concerns recently about circle of finance,
Speaker 2: financial engineering. Do you see any pockets of speculative behavior
Speaker 2: that concern you and the team?
Speaker 3: Absolutely that there is, you know, and there has been
Speaker 3: for several years, speculation in various parts of the market.
Speaker 3: I think focus on quality is something that we have
Speaker 3: maintained and will continue to maintain a focus on cash flows.
Speaker 3: There are plenty of stocks. It does seem like, you know,
Speaker 3: you could put dot Com in your name and your
Speaker 3: stock would go up. Now you put AI in your
Speaker 3: name and your stock would go up. That kind of
Speaker 3: thing is a worrisome sign to a degree, and that's
Speaker 3: why you really do have to start digging in on
Speaker 3: particularly I think on the cash flow side, Mark.
Speaker 4: Until now, a lot of the money that's gone into
Speaker 4: tech investment has been cash flow free cash flow. Now
Speaker 4: we're starting to see more leverage get introduced to more
Speaker 4: of these deals. I'm thinking of the core Weave Core
Speaker 4: Weave deal right now, that we announced this morning.
Speaker 5: With Meta Core.
Speaker 4: Weave is a below investment grade rated company that relies
Speaker 4: heavily on the debt market, and this comes along with
Speaker 4: a slew of LBOs and other deal activity. Does that
Speaker 4: raise concerns about the debt side of the financing structure
Speaker 4: heading into a really uncertain economic time.
Speaker 3: Well, I think it's a I think it's a good point,
Speaker 3: as you've noted. I think rightly we're starting to see
Speaker 3: really just kind of the beginnings maybe of some of
Speaker 3: the more excitement on the institutional side about IPOs and
Speaker 3: other things. So, you know, I think some of this
Speaker 3: financing is absolutely something to watch, but we still believe,
Speaker 3: you know, some of it in the around the core,
Speaker 3: around some of the core of the hyperscalers. That's still
Speaker 3: very early, but there's no question that there are pockets
Speaker 3: of leverage as well building up in the system. I think,
Speaker 3: you know, the way the way we look at it
Speaker 3: overall with the AI project, it's something that we think
Speaker 3: is one of the longer term themes that we want
Speaker 3: to stay invested in because we do see the productivity growth,
Speaker 3: we hear it from our clients who are our customers.
Speaker 3: That's something they're investing in. We still like the power
Speaker 3: and resources story associated with that, We still like the
Speaker 3: healthcare story. These are areas you know, there are big
Speaker 3: problems for governments UH and and where there's big problems,
Speaker 3: there's big money going in. We've seen the President of
Speaker 3: the United States say we're going to win it. We
Speaker 3: must win on AI. These are existential, ultimately defense issues,
Speaker 3: both for companies and for nations, and so I think
Speaker 3: that gives it something of a little bit of a
Speaker 3: different quality. And those are the kind of longer term
Speaker 3: trends we want to be behind. Even if there is
Speaker 3: certainly the potential for some choppy trading into the end
Speaker 3: of the year mark, if you.
Speaker 4: Do have all of this investment, the IPO is the
Speaker 4: deals activity. Can you get a real acceleration in growth
Speaker 4: heading into the fourth quarter without a reacceleration and inflation.
Speaker 3: Look, we think there might be some acceleration of inflation.
Speaker 3: It's I think it's something about how much the Fed
Speaker 3: and other central banks would be willing to look through that.
Speaker 3: But also keep in mind for some of if you
Speaker 3: take the tech sector, that inflation is not necessarily an
Speaker 3: issue for them, because if you take the hyperscalers. They're
Speaker 3: not that reliant on debt financing, right, So there again,
Speaker 3: I think it could be a time to get a
Speaker 3: little more selective about who can continue to benefit given
Speaker 3: the very large changes we've had in the way the
Speaker 3: economy has been moving forward this year.
Speaker 2: Mark, I've got to squeeze this in. Got about forty
Speaker 2: five seconds. You're at UBS. I've got to ask you
Speaker 2: about gold, the move we've seen this year this month.
Speaker 2: Can you walk us through how investors have taken exposure
Speaker 2: to the precious metal, whether it's physical paper, and if
Speaker 2: it is physical, whether they're choosing to store it closer
Speaker 2: to home.
Speaker 3: All of the above. Jonathan, you should come visit the
Speaker 3: vault someday. Long long equities and long gold has worked
Speaker 3: very well for us, and we think that will continue
Speaker 3: to work.
Speaker 5: Stay with us.
Speaker 2: Multilomberg Surveillance coming up after this. Monica Querra of Mark
Speaker 2: and Stanley Ontica, welcome to the program. A lot of
Speaker 2: people looking through this Wall Street saying it doesn't matter
Speaker 2: to show me the economic tanctor and everything's okay. Do
Speaker 2: you think about it slightly differently?
Speaker 6: I think you have to look at it, you know,
Speaker 6: from where the risk actually could bubble up. Now, historically
Speaker 6: markets do look through. You get Marcus outperforming at average
Speaker 6: about four point four percent during periods of shutdown. Granted
Speaker 6: they can last from you know, three days to thirty
Speaker 6: four days, so that's a huge window in time. But
Speaker 6: typically even with the long shutdowns, you still have markets
Speaker 6: out performing. So the risk comes and which industries and
Speaker 6: sectors are most reliant on those government contracts and that's defense, healthcare,
Speaker 6: et cetera. Is this a nice by opportunity potentially if
Speaker 6: you're trying to you know, take a tactical approach, But
Speaker 6: again it's a short to a short window where markets
Speaker 6: like to look through.
Speaker 1: Well, that last shutdown that was thirty four to thirty
Speaker 1: five days in the end, what kind of impact did
Speaker 1: that have on Wall Street and the economy?
Speaker 6: Very little, because the macroeconomic factors were really important. The
Speaker 6: other thing that's critical here is that it was a
Speaker 6: partial shutdown. It wasn't a full shutdown. So in twenty
Speaker 6: thirteen we had a full shutdown, and I think the
Speaker 6: estimate from the CBO is that they lost about twenty
Speaker 6: four billion or so in productivity in twenty eighteen, even
Speaker 6: though it was a double the length twice as long
Speaker 6: or more of a shutdown, They only lost eleven billion
Speaker 6: three billion net at the end of the day after
Speaker 6: everyone was made whole.
Speaker 5: So even with.
Speaker 6: That length of time, there could be you know, a
Speaker 6: variety rate of factors that could impact growth.
Speaker 1: The conversation I'm hearing out of Washington yesterday today this
Speaker 1: morning talking to people is obviously the government is shutting down,
Speaker 1: it's the length. What are you thinking about in terms
Speaker 1: of how long the government will be shut down?
Speaker 6: So when we're thinking about the political factors here, right
Speaker 6: with the Democrats, they are taking a stand. Earlier this
Speaker 6: year when Schumer came to the table and they passed
Speaker 6: the cr there was a large outcry within the Democratic electorate.
Speaker 5: Right upset that they moved so quickly.
Speaker 6: So I think it does behoove them from a voter standpoint,
Speaker 6: right of speaking to their base to actually hold a
Speaker 6: firm line. Then they have to balance that with pressures
Speaker 6: that can potentially come from the White House.
Speaker 5: They were calling for mass layoffs.
Speaker 6: That's likely not to happen, but other areas that could
Speaker 6: be a catalyst is potentially, you know, apportionment control, meaning
Speaker 6: that the president could deny a transfer of funds posts
Speaker 6: or daring this shutdown as essentially a catalyst opportunity to
Speaker 6: look under the hood and see where they can cut.
Speaker 4: Why has that been the shift and focus away from
Speaker 4: possibly some sort of mass layoff program and more just
Speaker 4: shifting where money goes in the government.
Speaker 5: So we look at what happened with DOGE.
Speaker 6: They were largely unsuccessful, right, They were able to get
Speaker 6: some cuts through. There was such significant power within the
Speaker 6: federal unions protecting the status of workers, and the legal
Speaker 6: response right was essentially a significant pushback. They don't want
Speaker 6: to run into that sort of hurdle again. So I
Speaker 6: think it's more of an issue of which agencies, which programs,
Speaker 6: which departments are ideologically aligned with the president, and could
Speaker 6: those areas actually be in trouble if they choose to
Speaker 6: withhold funds.
Speaker 5: Okay, so let's talk specifics.
Speaker 4: What are the areas that could possibly see reductions in funding?
Speaker 4: What are the areas that could potentially see increases in
Speaker 4: funding as soon as the next few weeks if there
Speaker 4: is some sort of shutdown, I mean you.
Speaker 5: Could see some risk.
Speaker 6: I mean, this is pretty high level and widespread. It's
Speaker 6: already happening right on the DEI front that's likely to continue.
Speaker 6: They could also look at anything that's clean energy related.
Speaker 6: You could maybe see some impacts to EPA. And then
Speaker 6: the other areas that I think are critical is on
Speaker 6: the Medicaid healthcare front. They're continuing to want to clamp down,
Speaker 6: especially on those ACA subsi that the Democrats are looking
Speaker 6: forward to extending.
Speaker 5: Do they get that that's the big question. What's the
Speaker 5: off ramp. The off ramp here, I.
Speaker 6: Think is if you start getting really notable aggressive activity
Speaker 6: from the White House, and then that could move the
Speaker 6: Democrats forward because there's a significant amount of programs that
Speaker 6: they don't want to lose and they want to make
Speaker 6: sure that their support outside of ACA subsidies. Right now,
Speaker 6: this is their bargaining chip. This is the thing that
Speaker 6: they want to get a win on. If they can't
Speaker 6: get that and everything else starts to see this, you know,
Speaker 6: you start to see the train go off the tracks
Speaker 6: in other ways, that could be the catalyst that gets
Speaker 6: the Democrats.
Speaker 1: The Vice President yesterday was talking about rural healthcare policy
Speaker 1: and how potentially that is one place where they can
Speaker 1: come to an agreement.
Speaker 5: Is this where the off ramp.
Speaker 1: Will be, though it will be in the healthcare policy sector.
Speaker 6: If Democrats get a concession, that's their off ramp.
Speaker 5: The other piece that I'm talking about is.
Speaker 6: The stick off room, right that if the White House says, no,
Speaker 6: we're not negotiating with you, we're not giving you those subsidies,
Speaker 6: then you have to come to the table because we're
Speaker 6: going to cut other things. Right, And it's more of
Speaker 6: a fear tactic now on the ACA and rural healthcare component.
Speaker 6: When you're looking at red states, Rural red states their
Speaker 6: most reliant on ACA. They didn't do Medicaid expansion, so
Speaker 6: the Medicaid rulebcks don't really impact them. So it is
Speaker 6: really all about ACA subsidy extension, and that is an
Speaker 6: area where you do get bipartisan consensus.
Speaker 4: Taking a step back and looking at some of the
Speaker 4: macro implications, not clear what the longer term macro implications
Speaker 4: are for bond yield. It's based on just sort of
Speaker 4: this broader sense that it isn't essentially an economic issue.
Speaker 4: You do see though, longer term an impact on the dollar.
Speaker 4: There has been a weaker dollar associated with shutdowns. Do
Speaker 4: you expect that to be correlation that continues this time around?
Speaker 6: Yes, this is a historical relationship. One of the things
Speaker 6: that we want to note though, is that the length
Speaker 6: of time right is going to impact that how week
Speaker 6: it goes. So if we get a week, that's going
Speaker 6: to be very different than if we get another thirty
Speaker 6: five day window.
Speaker 2: Sight with us more Bloomberg Surveillance coming up after this.
Speaker 2: FI Lorlando, a Federated Global Investment sees momentum building. He
Speaker 2: writes the following. Given the potential for a strengthening labor
Speaker 2: market and moderating inflation, economic growth could accelerate in the
Speaker 2: second half of this year. Phil joins a snapper more, Phil,
Speaker 2: good morning, good morning, Thanks for having me back, thanks
Speaker 2: for being here. Just to build on that quote, is
Speaker 2: that the story we're priced for.
Speaker 7: Stock market's up thirty eight percent since the Liberation Day
Speaker 7: lows back in the middle of April. So clearly they're
Speaker 7: not jumping out of the upper floors of the towers
Speaker 7: because they're concerned that the labor market's collapsing. Has the
Speaker 7: data been soft the last four months, no question, But
Speaker 7: in our view the data was sort of troughing here
Speaker 7: and has the potential to accelerate going in the next
Speaker 7: couple of.
Speaker 2: Months relative to what this is what I want to understand,
Speaker 2: were priced for a lot of this going into twenty six.
Speaker 2: Expectations have already picked up. We've had the equity market rally.
Speaker 2: How much of that has been about earnings? How much
Speaker 2: of that is just a better economic story or reading.
Speaker 7: So the earning situation we think is excellent. You know,
Speaker 7: you look at the first quarter. In the second quarter,
Speaker 7: second quarter, revenues up six percent, earnings up twelve percent,
Speaker 7: much better than expected, the consensus expectations for the third
Speaker 7: quarter starting to come in. Those numbers look pretty strong.
Speaker 7: We're in the process of upgrading our earnings estimates for
Speaker 7: full year this year, full year next year. So the
Speaker 7: earnings pictures in pretty good shape. Clearly, the labor market
Speaker 7: has been the weekly. Now you look at the August
Speaker 7: jobs report, it was terrible, admittedly, but there are a
Speaker 7: couple of things associated with that number. One, August tends
Speaker 7: to be the quirkiest month of the year. You've got
Speaker 7: you know, schools starting and starting up again, factories taking
Speaker 7: downtime to retool, temporarily furloughing workers. So the August non
Speaker 7: farm payroll report historically is the quirkiest report of the year.
Speaker 7: So you look at for example, Kevin Hassett, the National
Speaker 7: chairman director, came out and said that they're expecting seventy
Speaker 7: thousand jobs to be revised up over the course in
Speaker 7: the next couple of months. That's consistent with what we've
Speaker 7: seen historically. All of the noise and the nonsense in
Speaker 7: August tends to gets revised up. All right, that's point
Speaker 7: number one. Point number two. When we saw the initial
Speaker 7: weekly jobas claims the first week of September, the numbers
Speaker 7: were terrible. I think it was about two hundred and
Speaker 7: sixty four thousand. The market was freaking out a little bit,
Speaker 7: but you know, we suggested take a deep breath. Number one,
Speaker 7: it's a holiday shortened week. And number two, you had
Speaker 7: the allegations of claims fraud in Texas. So as we
Speaker 7: went to the next week, which was the survey week
Speaker 7: for September, the number came down on about two hundred
Speaker 7: and thirty thousand, and then last week came down further
Speaker 7: about two hundred and seventeen thousand. So we think the
Speaker 7: claims are pointing to the fact that the numbers are
Speaker 7: to be pretty good. And then you know, we were
Speaker 7: talking about nonfarm versus ADP. Going into this, the expectations
Speaker 7: for ADP about fifty thousand plus. That's kind of the
Speaker 7: number we're looking for for nonfarm That would be a
Speaker 7: number roughly double what we saw in the month of
Speaker 7: August for nonfarm So we think the labor market there
Speaker 7: may be a little too much pessimism built in, so
Speaker 7: our expectation that the number is probably troughed here and
Speaker 7: we'll start to see some improvement.
Speaker 4: Given that backdrop, there's a mystery, and we were unpacking
Speaker 4: that ahead of the Nike earnings after the bell This idea,
Speaker 4: even CEOs don't know how much consumers will absorb price increases.
Speaker 4: What is the connection right now between corporate profits and
Speaker 4: potential inflationary pressure?
Speaker 7: No question. If you look at the piece that I
Speaker 7: wrote last week focused on how good the back to
Speaker 7: school season was, back to school was up four point
Speaker 7: two percent three months through August. Back to school a
Speaker 7: year ago is only up two point three percent. So
Speaker 7: the consumers in pretty good shape, particularly at the high end.
Speaker 7: But I think there is absolutely some consternation about what
Speaker 7: pricing is, particularly at the low end of the price spectrum.
Speaker 7: So companies are going to have to you know sort
Speaker 7: of weigh that that situation high end consumers can afford
Speaker 7: a little bit more in pricing. But the question of
Speaker 7: are there going to be any forced pricing issues because
Speaker 7: of the tariff situation that companies need to pass on
Speaker 7: in order to maintain profit margins. Profit margins have been
Speaker 7: pretty strong up until now. Is that situation going to
Speaker 7: deteriorate in the third quarter in the fourth quarter. We
Speaker 7: don't know the data yet, but that's something that we're
Speaker 7: going to have to say.
Speaker 4: The big question mark over this has been holding back
Speaker 4: the broadening out in the S and P five hundred,
Speaker 4: in the RUSS of two thousand and the S and
Speaker 4: P six hundred Pickure index. How much are you betting
Speaker 4: that we are going to see that broadening out versus
Speaker 4: just this consolidation in big tech, this idea that the
Speaker 4: profits will continue to be driven by the biggest ten names.
Speaker 7: We're absolutely in the broadening out camp, and that's been
Speaker 7: our call for the last year. In case in point,
Speaker 7: look how well the small camps have done both growth
Speaker 7: and value over the course of the last couple of months.
Speaker 7: In our view, the small caps were completely mispriced, and
Speaker 7: once we began to see the fed kipped over their cards,
Speaker 7: they're going to cut interest rates. An interest rate reduction
Speaker 7: cycle is usually beneficial to the small cap companies. It
Speaker 7: improves their ability to self finance, kicks off an M
Speaker 7: and A and an IPO cycle, And you've got a
Speaker 7: situation where domestically, we think economic growth is accelerating. Small
Speaker 7: cap companies do eighty percent of their business here. If
Speaker 7: the US economy is doing well, that's going to benefit
Speaker 7: small cap companies.
Speaker 1: But aren't more tariffs going to hurt small cap companies
Speaker 1: even if they do business here? A lot of the
Speaker 1: import could be coming from other countries.
Speaker 7: Well, again, that's a case by case situation. I was
Speaker 7: on Bloomberg Radio recently and we were talking about this,
Speaker 7: and I got some random person that sent me an
Speaker 7: email when I got back to the office asking that question,
Speaker 7: isn't that going to impact pricing and imports and won't
Speaker 7: Christmas sales be a disaster? And the answer in our
Speaker 7: situation is, we think it's going to be a case
Speaker 7: by case situation. How is a company sourcing what they're selling?
Speaker 7: What's the pricing of that? Can they source more domestically?
Speaker 7: What's their labor situation? Immigrant versus native born that there
Speaker 7: are a lot of factors here that are going to
Speaker 7: dictate the answer to that question.
Speaker 1: Is there an area within the small caps that's immune
Speaker 1: to a lot of this.
Speaker 7: We love healthcare and within healthcare biotechnology. These are biotechnology
Speaker 7: gurus are telling us that the pipelines have never looked
Speaker 7: better yet, the valuations have never been more extreme out
Speaker 7: of favor. And what we've been waiting for is some catalysts,
Speaker 7: and we think the interest rate cutting cycle is that catalyst.
Speaker 7: The big cap companies Pfizer and MERKETC will start to
Speaker 7: think about you know, M and A activity. Lower interest
Speaker 7: rates again will make it easier to self finance, and
Speaker 7: people are now going to focus on the really good
Speaker 7: phase one, phase two, phase three clinical work that these
Speaker 7: companies have done with their drug development. That's the sector
Speaker 7: we think is poised to move higher.
Speaker 2: Stay with us more Bloomberg Surveillance coming up after this.
Speaker 2: Investors looking for signals the US economy is heading back
Speaker 2: towards stable growth of vlacility and higher inflation. Bruce Van
Speaker 2: Sun is the CEO of Citizens Financial Group, which serves
Speaker 2: approximately six million consumer and business customers. Bruce joins us
Speaker 2: Now for more Bruce, good morning.
Speaker 5: Good to see you.
Speaker 8: Oh, it's great to be here.
Speaker 2: Do we say happy anniversary? Twelfth anniversary, Yeah, that's twelve years.
Speaker 2: That's well, it is flown by. You've got to read
Speaker 2: on both the consumer and businesses as well. We talked
Speaker 2: a lot of our corporate confidence, the m and A,
Speaker 2: the boom things picking up. Consumer confidence still hold back.
Speaker 2: Would you see across the business a difference between the two.
Speaker 8: I'd say we're in generally good shape. So I think
Speaker 8: everybody's still a little holding back because of the uncertainty
Speaker 8: around tariffs and some of the fiscal policies, but that's
Speaker 8: become the new normal, and so I think businesses now
Speaker 8: are leaning in a little more. And I'd say consumer
Speaker 8: is split. So the higher end consumer is still enjoying life,
Speaker 8: sees the stock market very strong, spending money, a little
Speaker 8: more pressure at the lower end. Inflation still is persistent
Speaker 8: and real wage gains haven't fully covered that, so they're
Speaker 8: pulling in a little bit.
Speaker 2: What opportunities are available to you and the team right
Speaker 2: now to lean into that higher end consumer just a
Speaker 2: little bit more higher income the private side of the business.
Speaker 8: Yeah, So one of the moves that we made a
Speaker 8: couple of years back was we tried to buy all
Speaker 8: the first Republic JPM. Ultimately was successful, but we hired
Speaker 8: a lot of the talent, a lot of the private
Speaker 8: bankers came over to citizens. Hired one hundred and fifty
Speaker 8: folks on day one, and then we've ramped that up
Speaker 8: now to close to five hundred people. We're a cross
Speaker 8: ten billion of deposits and we're kind of target at
Speaker 8: year end hitting twelve billion in deposits eleven billion of AUM,
Speaker 8: So the business is basically exploding in terms of new
Speaker 8: customers coming onto the platform. I think we're delivering really
Speaker 8: good quality service at this point, and we're integrating that
Speaker 8: with our commercial bank. So a lot of our middle
Speaker 8: market companies are successful people. They have families in need
Speaker 8: of both business services on the commercial side and then
Speaker 8: individual banking and wealth services for the family and for
Speaker 8: the individuals, and so we bring that together to provide
Speaker 8: really robust solutions, and I think we're doing that better
Speaker 8: than anybody in the market these days.
Speaker 4: Can you give a sense of just the rapid rate
Speaker 4: of growth and what you see over the next say
Speaker 4: couple of years in terms of that wealth management sector
Speaker 4: that's been driving growth.
Speaker 5: I've been driving growth at a lot of the major banks. Yeah.
Speaker 8: So one of the things we said is that by
Speaker 8: this year that that business would be five percent accreative
Speaker 8: to our bottom line. So it's basically a startup inside
Speaker 8: a two hundred year old bank, And so we had
Speaker 8: all the expenses day one, and now revenues are kind
Speaker 8: of exceeding those expenses, and we'll be well over five
Speaker 8: percent of the bottom line this year. You played that
Speaker 8: out three to five years, this business could be fifteen
Speaker 8: percent of our bottom line. So anyway, we're kind of
Speaker 8: continuing to be finding the sweet spot between growing it
Speaker 8: at a nice clip but growing it profitably. So one
Speaker 8: of the issues at First Republic had is their return
Speaker 8: on equity never got above eleven percent. We're running this
Speaker 8: business today between twenty and twenty five percent. So we
Speaker 8: have good operating discipline on this thing. As we continue
Speaker 8: to grow, then we reinvest back in the businesses. We're
Speaker 8: opening up new regions. We open southern California, We're going
Speaker 8: to expand in Florida, put more teams here in New
Speaker 8: York tonight, in fact, we're opening our flagship private bank
Speaker 8: office on fifty second and six, so really exciting times
Speaker 8: and great initiatives. Our team is executing very well on.
Speaker 4: It's amazing how many points of contact you have to
Speaker 4: gauge consumer and business sentiment.
Speaker 5: As John was talking about, I just.
Speaker 4: Wonder what is the sort of feeling not just about
Speaker 4: investors people who are trying to manage their wealth. Is
Speaker 4: it risk on, is it risk off? But also the
Speaker 4: companies in terms of are they moving past that waiting pattern,
Speaker 4: the holding pattern that we were talking about earlier this year.
Speaker 8: Yeah, I'd say they're not fully leaning in yet, so
Speaker 8: we're not seeing our credit lines that we have out
Speaker 8: with companies really being taken down to invest in growth,
Speaker 8: in capex and things. But having said that, all of
Speaker 8: our businesses are having very strong years, so cash flow
Speaker 8: is good, businesses are solid, We see no real credit issues.
Speaker 8: I think with a little more certainty, they'd be leaning
Speaker 8: in more and they'd be doing more investing. So I
Speaker 8: think that's still to come. The good news is on
Speaker 8: the private equity side, on the kind of financial sponsor side,
Speaker 8: there's now a kind of tick up in deal flow,
Speaker 8: which we've been waiting for over three years to see that,
Speaker 8: and so our commercial bank has been positioned for this
Speaker 8: to happen. We've really invested in it. We've got great people,
Speaker 8: and so I think we're having a great quarter in
Speaker 8: terms of our capital markets revenues. The deal machine is going,
Speaker 8: the flywheels going, so I think that'll continue. So that
Speaker 8: feels really good. So the corporate side has a little
Speaker 8: bit to catch up, but the financial sponsor side that's
Speaker 8: ticking up very nicely.
Speaker 1: You mentioned Florida. How much wealth have you seen move
Speaker 1: down from Florida, But you're still doubling down on New
Speaker 1: York and I want to be concerned about the mayor race.
Speaker 8: Yeah, it's interesting. So we're focused big on three regions
Speaker 8: right now for growth. One is the New York metro,
Speaker 8: so we bought HSBC's East Coast branches to get a
Speaker 8: foothold in New York. We bought Investors Banks and we
Speaker 8: now have two hundred branches in New York City. We've
Speaker 8: invested in middlem market banking teams here, so we're really
Speaker 8: gaining market share in New York. The other two regions,
Speaker 8: one is Florida, as you mentioned, and one is California.
Speaker 8: So we now have over three hundred people in both
Speaker 8: locations and Florida has a lot of tailwind. During COVID,
Speaker 8: a lot of people moved down to Florida. That's continuing
Speaker 8: and so we started with a private banking team in
Speaker 8: Florida and now we've added middle market, so we have
Speaker 8: both corporate and private bank working together. That's a market
Speaker 8: where we don't have a lot of retail yet. So
Speaker 8: in New York we have the full ground team with
Speaker 8: the retail. Florida, I say that we're coming in over
Speaker 8: the top of that market to really bank successful people.
Speaker 8: Same thing in California, over three hundred people there coming
Speaker 8: in over the top. We have private banking teams, we
Speaker 8: have corporate banking teams, and seeing a lot of growth
Speaker 8: there as well.
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Speaker 4: HM