Speaker 1: This is Bloomberg Business Week. I'm Carole Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
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Speaker 1: YouTube search Bloomberg Global News. Financials. The big banks really
Speaker 1: under pressure today following earnings this morning, City Group, Wells reporting,
Speaker 1: and of course JP Morgan Creaty mentioning at the top. Overall,
Speaker 1: those bank earnings not so great. So let's get to
Speaker 1: it with Bloomberg Intelligence Senior Global Banks analyst Alison Williams.
Speaker 1: She joins us on the phone in Summit, New Jersey. Allison,
Speaker 1: nice to have you here with Katie and myself. So
Speaker 1: let's get to it. I guess we should start with
Speaker 1: JPM right, because everybody wants to know what they do.
Speaker 1: What Jamie Diamonds says, what do we need to be
Speaker 1: aware of us? Big news today, if you will, UM
Speaker 1: was the guidance for UM costs for this year, and
Speaker 1: that was much bigger than consensus had expected. UM costs
Speaker 1: are increasing. We know that across the industry. We know
Speaker 1: that volumes are very good. UM. With that becomes higher compensation,
Speaker 1: so that's a big driver. UM. Back to work normalization
Speaker 1: of TNE that's also a driver. And then investment spending.
Speaker 1: Obviously it's a very competitive environment. There's lots of emerging
Speaker 1: fintech competitors and and competition broadly. And UH costs are
Speaker 1: going up UM perhaps eight to nine percent this year,
Speaker 1: So I think, well, there's a lot of revenue indicators
Speaker 1: that people have been excited about coming into the quarter.
Speaker 1: UM rates are going higher, that's a great thing. But
Speaker 1: the expense and guidance was the new variable that we
Speaker 1: got today. Take Alison, was it all about just compensation
Speaker 1: or was it all also about cat bex? What was it?
Speaker 1: It's compensation, it's normalization of T and E spending as
Speaker 1: the world begins to go back to work live, and
Speaker 1: it's investing UM investing UM referring to you know, spending
Speaker 1: on technology and keeping competitive on that front. UM JP
Speaker 1: Morgan is obviously a sizeable firm, and they're spending across
Speaker 1: the firm, and I think what's important for investors is that, yes,
Speaker 1: the class are going to be higher, but they're investing
Speaker 1: for the long term and they're still going to be
Speaker 1: earning a return on tangible common equity, which is the
Speaker 1: key metric we look at UM. They're still going to
Speaker 1: be earning one of the highest ratios in the business.
Speaker 1: So UM perhaps a bit below their sevent medium term target,
Speaker 1: but I think that's you know why JP Morgan, you know,
Speaker 1: is the company that is today because it has been
Speaker 1: willing to invest in its franchise. Also, I'm curious to
Speaker 1: hear your perspective on trading revenue because we did see
Speaker 1: a big drop off there jeffries earlier this week than
Speaker 1: JP Morgan's city today, just to name a few. How
Speaker 1: much of that is, you know, just tough year over
Speaker 1: your comparisons versus actually there was a real slow down here.
Speaker 1: So it's it's more the former there that the tough
Speaker 1: year of your comparisons. UM last four q was exceptionally
Speaker 1: strong for the industry, and so UM you know the
Speaker 1: fact that we're only seeing UM, you know, relatively modest
Speaker 1: declines against that for companies like JP Morgan and City Group.
Speaker 1: You know, I think is still a pretty solid result.
Speaker 1: Jeffreyes UM is a bit more Vottle their quarter UM
Speaker 1: ends in November and not December. UM. They were also
Speaker 1: way outperformed the bigger peers UM sort of in the
Speaker 1: good times. And so we're seeing just a little bit
Speaker 1: of normalization there and that on the so trading, both
Speaker 1: equities and FICK trading, we're a little bit light equities
Speaker 1: trading at performing. But fees were really the big story
Speaker 1: for the global investment banking business. UM. That's a lot
Speaker 1: of what's feeding into the higher compensation. It's a talent
Speaker 1: driven business. There is a war for talent going on
Speaker 1: out there, and fees were better than expected for both
Speaker 1: JP Morgan and City Group. UM. We expect that's a
Speaker 1: great indicator ahead of Goldman and Morgan Stanley UM that
Speaker 1: we're getting next week there. Goldman Morgan Stanley, JP Morgan
Speaker 1: are leaders in M and A and I p o
Speaker 1: S record year last year, three end of the year
Speaker 1: and momentum um coming into this year. And I mean
Speaker 1: We're only halfway through, right, So if you look at
Speaker 1: today's tea leaves what we saw today from you know,
Speaker 1: some of the big reporters today, JP, Morgan City, Jefferies earlier.
Speaker 1: What is that portend for what we're going to come
Speaker 1: back to next week? Because I think we were looking
Speaker 1: forward to Goldman, Morgan Stanley, Bank of America. The list
Speaker 1: goes on. The figures that we have so far UM
Speaker 1: bode very well for the revenue side of Morgan Stanley
Speaker 1: and Goldman Sachs, especially with regard to the strength and
Speaker 1: investment banking fees UM trading as I said, might might
Speaker 1: be a little bit weaker UM, but also the asset
Speaker 1: and wealth businesses, especially UM for Morgan Stanley also going
Speaker 1: to come in and benefit from very strong markets. Costs
Speaker 1: are going to be the thing that we're watching for
Speaker 1: both of those companies, as well as for Bank of America. UM.
Speaker 1: You know, on Bank of America, we're looking for loan
Speaker 1: growth as well as a key indicator. I would say
Speaker 1: that UM, you know, investors were relatively bullish, especially with
Speaker 1: regard to some of the industry data. Bank of America
Speaker 1: is even more bullish, I think than the industry a
Speaker 1: lot of that relates to commercial industrial UM. I think
Speaker 1: the numbers generally support that the card is a little
Speaker 1: bit weaker for for the big um players. UM, but
Speaker 1: the costs are going to be UM. The key if
Speaker 1: if you have JP Moore in who's sort of um,
Speaker 1: you know, the biggest out there upping they're spending by
Speaker 1: the this degree, I would think it's it's hard. It's
Speaker 1: going to be hard for other companies not to also
Speaker 1: up their game. All Right, Gonna leave it on that note. Hey, Allison,
Speaker 1: as always appreciate your insight. She is Bloomberg Intelligence Senior
Speaker 1: Global Banks analyst, Allen Allison Williams joining us on the
Speaker 1: phone from some New Jersey and Uh, Katie, were seeing
Speaker 1: a little pressure on those bank names today, but they've
Speaker 1: been running up higher this year so far. Yeah, absolutely
Speaker 1: having a fantastic year. But JP Morgan shares down six
Speaker 1: percent today, Carol, Yeah, that's quite a haircut. All Right,
Speaker 1: you're listening to Bloomberg Radio. This is Bloomberg Business Week
Speaker 1: with Carol Messer and Bloomberg Quick Takes Tim Stinovic on
Speaker 1: Bloomberg Radio. We are continuing, as Katie mentioned earlier, tracking
Speaker 1: those headlines when it comes to COVID. We have b
Speaker 1: of A pushing back its return to office for staff
Speaker 1: in the US again until at least the fourth week
Speaker 1: of January. Katie BP telling its employees at its large
Speaker 1: US office in Houston to work from home until next
Speaker 1: month due to those rising almicron cases in Texas. Yeah,
Speaker 1: I mean those headlines coming hot and heavy. He almost
Speaker 1: expects the question, I mean, who hasn't pushed back the
Speaker 1: return to office date at this point? I'd love to know.
Speaker 1: It's a really good point. Let's see what Dr Ian
Speaker 1: Lsbader has to say, his clinical professor of medicine over
Speaker 1: at n y U Land and we check in with
Speaker 1: him every week. Uh. And he joins us on the
Speaker 1: phone in New York City. Uh. Dr Lsbader, nice to
Speaker 1: have you here with Katie and myself. How are you?
Speaker 1: How are you feeling much better? Thanks Carol and Katie,
Speaker 1: your pleasure. Last week, YEP, I was sick. I had
Speaker 1: thought perhaps I had COVID. I tested negative, but there
Speaker 1: are many other viruses going around RSV respiratory. Sincecial virus flew,
Speaker 1: we don't really test for all of them, and we're
Speaker 1: seeing a ton of people call in either COVID positive
Speaker 1: um or with symptoms that turn out to be negative.
Speaker 1: So people are in a bit of a panic, and
Speaker 1: many patients are saying, oh my gosh, what do I do?
Speaker 1: Is there some treatment for me um And unfortunately there's
Speaker 1: a lot of limited treatment. A lot of what we
Speaker 1: have is really regulated by the state and limited to
Speaker 1: either elderly people or people with a significant underlying medical problems.
Speaker 1: So people feel very frustrated, and Dr I am curious
Speaker 1: to hear your perspective on what the path forward looks like,
Speaker 1: because you know, like I mentioned a minute ago, we
Speaker 1: did hear from maderna co founder today saying in a
Speaker 1: Bloomberg television interview that two is going to be the
Speaker 1: year that this pandemic turns into an endemic. Would love
Speaker 1: to hear your thoughts on that. First of all, would
Speaker 1: that change our day to day life? And also do
Speaker 1: you think that's a realistic timeline? I do for both.
Speaker 1: I do think that this will turn into an endemic problem,
Speaker 1: which basically means covid will be omron will be like
Speaker 1: a seasonal flu. You know, we get um hundreds of
Speaker 1: thousands of cases of flu every year. Uh and unfortunately
Speaker 1: thousands of deaths from flu every year. You know, the
Speaker 1: flu vaccine helps, it's somewhat limited. It doesn't work a
Speaker 1: d I do think we're seeing really a plateau, and
Speaker 1: and soon we will see a drop in the number
Speaker 1: of cases. Certainly in some areas. We're seeing that already
Speaker 1: in the Northeast. So I think the number of O.
Speaker 1: Macron cases and COVID cases will be dropping in the
Speaker 1: next few weeks. We still are seeing some hospitalizations and
Speaker 1: and some deaths, but overall this does appear to be
Speaker 1: much more mild, and I think until we really are
Speaker 1: able to eliminate it, and we may not be able
Speaker 1: to do it, we will just have to live with it.
Speaker 1: And oh Macron or covid, maybe another seasonal UH coronavirus.
Speaker 1: And we have many coronaviruses that we test for in
Speaker 1: a nasal swab, a PCR nasal swab. It's called a
Speaker 1: respiratory panel. When people come in they're sick UH, either
Speaker 1: in the emergency room sometimes in local offices, we do
Speaker 1: that swab and a test for you know, ten or
Speaker 1: fifteen different viral pathogens. And I think, oh Macron, and
Speaker 1: this will be enough. They're coronavirus that will be testing
Speaker 1: for and hopefully we will have some anti virals like tamiflu.
Speaker 1: Right now, a lot of the medications like the IVY
Speaker 1: monoclon antibodies Strova MEB very limited in amount packs. Leavitt
Speaker 1: has a lot of drug interactions, so we really just
Speaker 1: offer people supportive care and fortunately most people do well,
Speaker 1: you know, hydration and mucus centers and cough suppressants. So um.
Speaker 1: Sadly we don't really offer people a lot of magic bullets.
Speaker 1: Hopefully over the next year or so we will get
Speaker 1: more effective therapies. What is it, though, Ian about you know,
Speaker 1: We've been talking with you throughout the pandemic. I'm going
Speaker 1: to be fully transparent. I tested positive for rapid test
Speaker 1: and I'm at home, no symptoms so far. But I
Speaker 1: have to say I had felt so lucky navigating up
Speaker 1: to this point, um, and it was real shocking to me.
Speaker 1: And I'm like, you know, what is it that you know?
Speaker 1: I know you have said to us, everybody's going to
Speaker 1: get this. It's just the way it is. It's getting
Speaker 1: much more contain ages, but it is still scary because
Speaker 1: you do talk to people who said it was nothing,
Speaker 1: and then there's other folks, younger folks, older folks, you
Speaker 1: name it, who say, yeah, I was knocked off my
Speaker 1: feet for a couple of weeks. You know, what is
Speaker 1: it about this virus that is still so tricky. Well,
Speaker 1: many viral infections knocked people off their feet. They do
Speaker 1: cause fatigue, you know this. We don't really know all
Speaker 1: the details about this um coronavirus. We certainly know the mutations.
Speaker 1: The real origins we've talked about, you know, are still
Speaker 1: a little muddy and murky, and so it's unclear if
Speaker 1: whether or not, you know, this was engineered in some way,
Speaker 1: but it's certainly a very effective virus. It's highly contagious.
Speaker 1: It's obviously mutated to be much more easily spread by
Speaker 1: people who have no symptoms. Hopefully you're young and healthy.
Speaker 1: Hopefully you'll have a pretty simple course. But you may
Speaker 1: have cloth sneezing, sore throat, laryngitis, bad for an anchor
Speaker 1: to have larynchitis, but usually within ten to fourteen days
Speaker 1: people will get over it. You should speak to your
Speaker 1: doctor some you know, there are some people if they
Speaker 1: have bad costs, will give them a short course of
Speaker 1: steroids to decrease some inflammation. But most healthy people will
Speaker 1: get over it. If you're people have underlying problems that
Speaker 1: really puts them in a different risk group. And there
Speaker 1: are some therapists like monoclone at Lanta Buddy, although it
Speaker 1: is very limited. It's regulated by the state. You can
Speaker 1: prescribe it, it has to go through a committee that
Speaker 1: has to screen people. But I think most people, you're
Speaker 1: a perfect example. You've done everything right. And if you
Speaker 1: look back over really a century, there are very few
Speaker 1: pandemics we've successfully dealt with small to box took years,
Speaker 1: decades and decades of slowly getting everyone vaccinated, So I
Speaker 1: think it was unrealistic to think we could sort of
Speaker 1: jam everyone in with a vaccine that honestly is not
Speaker 1: totally effective. Right, people have three shots, they still get
Speaker 1: O macron, So I think it was unrealistic without tremendous preparation,
Speaker 1: lots of maths, lots of tests, lots of treatment to
Speaker 1: think we could have really succeeded. Well, We're glad to
Speaker 1: hear that you're doing okay and um and I love
Speaker 1: you forever that you were calling me young and healthy,
Speaker 1: So I'm all in. Hey Bewell. Dr Ian LUs Better,
Speaker 1: Clinical Professor of Medicine at n y U Land. Going
Speaker 1: on the phone in New York City. You're listening to
Speaker 1: Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes
Speaker 1: Tim Stinovic on Bloomberg Radio. We've talked a lot about
Speaker 1: the increasing legitimization of cryptocurrencies. We've seen that, Katie, safe
Speaker 1: to say, in a big way this past year, whether
Speaker 1: it's government's officials, companies, you name it. Our next guest
Speaker 1: lived in Africa and Latin America for over a decade,
Speaker 1: worked on building up mobile payment platforms. She is former
Speaker 1: CIO of Emerging Tech over at GE Digital. Today she's
Speaker 1: the founder and CEO of O Group. We're delighted to
Speaker 1: bring in with us. Maya vo Unovitch, she joins us
Speaker 1: on the phone in Miami. Maya. Nice to have you
Speaker 1: here with Katie and myself and I hope I got
Speaker 1: your name right. Oh, absolutely, such a pleasure to be
Speaker 1: on and happy New Year to both of you. Well,
Speaker 1: happy New year as well. Tell us a little bit
Speaker 1: about your background, because I think you know, Katie and
Speaker 1: I we watched the established financial guys kind of playing
Speaker 1: catch up now with the crypto world, and for a
Speaker 1: long time they shunned it. It does feel like, you know,
Speaker 1: the emerging markets and disruption innovators, those folks were really
Speaker 1: ahead of the curve. Your experience in the emerging market world,
Speaker 1: how does that give you maybe a different perspective when
Speaker 1: it comes to the world of cryptocurrencies. That's an on
Speaker 1: point question and a very relevant relevant one to what
Speaker 1: we are seeing today. When I started oft in early
Speaker 1: two thousands, I went on to do payments in Africa
Speaker 1: and then Latin America followed. That was at the same
Speaker 1: time when Impressive was starting, and now you're seeing this
Speaker 1: incredible reversal where actually Africa is leading in adoption of
Speaker 1: cryptocurrencies even comparison to to North America. So the perspective
Speaker 1: is absolutely different in a sense that I've lived there,
Speaker 1: I have paid employees, I've received my own salary and
Speaker 1: these things. And when you realize that the amount of
Speaker 1: money that it takes to actually pay the banking fees
Speaker 1: and cross board of payments and the difficulty of doing
Speaker 1: all of that. This is where I had my lightbulb
Speaker 1: moment about bitcoin. And when I received the Bitcoin white paper,
Speaker 1: I thought, if this happens, this would be unbelievable and
Speaker 1: that was in two thousand nine and ten, so I
Speaker 1: have lived it. We've built some of these platforms in
Speaker 1: emerging markets and when you actually see, um, the amount
Speaker 1: of money that it takes in a difficulty for people
Speaker 1: to launch businesses, for people to get paid, for people
Speaker 1: to transfer money to their dear ones. It is absolutely
Speaker 1: an incredible solution and no surprise that it's gaining such
Speaker 1: traction and emerging markets and maya, when we talk about
Speaker 1: emerging markets, Uh, where do you see the most potential
Speaker 1: two in a great crypto when we talk about the
Speaker 1: different countries. Yeah, sure, Um, I think that's also an
Speaker 1: excellent question in the sense that there is a uh,
Speaker 1: there is a bit of a divergence. And what I
Speaker 1: mean by that is you will see regulation in some
Speaker 1: of these emerging markets really clamped down in crypto. We've
Speaker 1: seen it in Nigeria, We've seen in Zimbabwe. We have
Speaker 1: seen it in some of the Latin American countries as well.
Speaker 1: But if you look at Brazil, if you look at Argentina,
Speaker 1: if you look at Venezuela, these are old countries where
Speaker 1: the currency, the local currency, fluctuates tremendously and if you
Speaker 1: look at apps like, for example, Reserve that is a
Speaker 1: stable point in that is mainly in Venezuela, but across
Speaker 1: Latin America. It's currently being used I think about sixty
Speaker 1: million dollars of transactions monthly volume is being used currently
Speaker 1: to keep the stability of boliviar while the currency fluctuates
Speaker 1: or depending on what happens with the US dollar. Right
Speaker 1: in Africa, you're seeing a huge potential because obviously, um once,
Speaker 1: if you look at Nigeria for example, right, which is
Speaker 1: the most populous country in Africa, it is full of
Speaker 1: extremely impatient youth, youth that is hungry for innovation. And
Speaker 1: when the oil supply goes down, right and the dollar
Speaker 1: is actually the dollar supply squeeze out, many of the
Speaker 1: businesses are simply unable to pay foreign suppliers and lenders, right,
Speaker 1: And so this becomes a really big use case for
Speaker 1: countries like that as well. Yeah, let's dig into some
Speaker 1: of those use cases because I mean, crypto it's such
Speaker 1: a broad umbrella. People usually think just bitcoin, but I
Speaker 1: mean we start thinking about cross border payments, stable coins,
Speaker 1: I mean, what are what are some of the big
Speaker 1: ease here? Yeah, absolutely so one of them that I'm
Speaker 1: so one. One simply can just be accessed to earning
Speaker 1: money right in a different way and access to some
Speaker 1: kind of a financial freedom. Yes, it comes with risk
Speaker 1: because it is not regulated, it have huge fluctuations. So
Speaker 1: one could be just a massive umbrella access to ability
Speaker 1: to earn money besides what your government is offering you.
Speaker 1: So you could for example, there's another platform that is
Speaker 1: being launched very soon. It's called Toucan. It is a
Speaker 1: mature based carbon token right that is linked to a
Speaker 1: verified carbon credit market and it connects crypto capital um
Speaker 1: to kind of a planet positive projects around the world.
Speaker 1: What does this mean for emerging markets suddenly, Katie, means
Speaker 1: that folks can access a fractionalized version of a carbon
Speaker 1: market that is usually very tainted that is only available
Speaker 1: to those that actually have a lot of money. It's
Speaker 1: a democratization of assets, right, and so you can now
Speaker 1: buy into something that you believe in um, not just
Speaker 1: what your government or what the local news might be
Speaker 1: offering to you. So so that's another example. You would
Speaker 1: end up using some of the crypto and lending against
Speaker 1: your cryptos for a local currency to go and then
Speaker 1: take money for your local business, right. It offers a
Speaker 1: pleathora of opportunity for people to do that. Maya, you
Speaker 1: are full of information. You've got to come back and
Speaker 1: and share some more with us because your perspective is
Speaker 1: obviously unique, especially when it comes to all your time
Speaker 1: you've spent an emerging market. So we hope you do
Speaker 1: come back. Maya Vuyanovitch, she is the founder and CEO
Speaker 1: of O Grip, joining us on the phone in Miami.
Speaker 1: This is Bloomberg Business Week with Carol Masser and Bloomberg
Speaker 1: Quick Takes Tim Stinovic on Bloomberg Radio. Folks, let's get
Speaker 1: to it. We've got just about ten minutes left in
Speaker 1: today's trading session, getting ready to wrap up another wild
Speaker 1: week here uh in two weeks in but we are
Speaker 1: near our best levels for the most part on our
Speaker 1: major equity averages. Carol Masser alow with Katie Gryfield. Let's
Speaker 1: bring in our guests. Darryl Great, chairman and managing principle
Speaker 1: at Easterly Investment Partners. He joins us on the phone
Speaker 1: from Massachusetts. Darryl, how are you oh well today? Thanks?
Speaker 1: How about you guys? Do it okay? Trying to you know, uh,
Speaker 1: just watch the economic news. The FED speakers a lot
Speaker 1: going on. It does feel like markets are a lot
Speaker 1: more nervous than they were perhaps even at the end
Speaker 1: of Fundamentally, how do the markets look to you? Yeah,
Speaker 1: I think what we're seeing is this fundamental transition from
Speaker 1: from growth stocks to value stocks as people fear the Fed.
Speaker 1: You know, Um, you know, this is beginning a theme
Speaker 1: that we're going to see probably for the next year
Speaker 1: or two. The forty year bull party for for bonds
Speaker 1: is over. Jerome Powell has turned the lights up and
Speaker 1: he's asking everybody to leave, you know, with very low rates,
Speaker 1: Investors are discounting ear things that are twenty years out
Speaker 1: in today's growth valuations. And we're seeing a shift to value.
Speaker 1: And why why should we believe that this shift of value?
Speaker 1: Because you know, we've seen some runs at this rotation
Speaker 1: a few times in the past two years or so.
Speaker 1: What makes this time different? Why would value stick around
Speaker 1: this time? Oh, it's a great question, you know. And um,
Speaker 1: what what is different this time is that we're going
Speaker 1: to see three, four or five six rate hikes over
Speaker 1: this over this next year. And what you saw in
Speaker 1: two thousand, seventeen, eighteen nineteen as the FED took interest
Speaker 1: rates to zero. Earnings for growth stocks, Um, we're discounting
Speaker 1: earnings that were again fifteen or twenty years out that
Speaker 1: were significant. And as that as those rate hikes hikes
Speaker 1: go up, what you're going to see is those growth
Speaker 1: stock valuations declining and m and that and that is
Speaker 1: uh that that's that's going to have a permanent effect
Speaker 1: on the market. So at this point, what would you
Speaker 1: recommend to investors that they do at this point, because
Speaker 1: there's still a lot of questions out there right safe
Speaker 1: to say, we don't have the playbook for exactly how
Speaker 1: we come out of this easily. Our Eric Shatzker gets
Speaker 1: catching up with Dr Kaufman and really nervous about that.
Speaker 1: We don't necessarily have a FED out there right now
Speaker 1: led by J. Powell that's going to maybe make the
Speaker 1: uncomfortable aggressive moves that we need to really reign in inflation. Yeah,
Speaker 1: I think you're right on it, which is, you know,
Speaker 1: our fear is that they don't move fast enough, and
Speaker 1: there's also a fear that they're going to overreact. So
Speaker 1: you know, today, coming out of the pandemic, supply and
Speaker 1: demand and balances or the source of the greatest risk.
Speaker 1: You know, they're the driver of both this real and
Speaker 1: transitory inflation and UM and how the FED reacts is
Speaker 1: going to change the amount of liquidity and the economy
Speaker 1: through consumer purchasing power as well as the supply of credit.
Speaker 1: I think the recent good news we see is that
Speaker 1: Senators Cinema and Mansion have decided to be the designated
Speaker 1: drivers in Congress, and they're going to prevent officials from
Speaker 1: throwing more gas on the fire while the FED is
Speaker 1: trying to get it under control and get us back
Speaker 1: to a time of great price stability. I love to
Speaker 1: talk a little bit about that dynamic between fiscal and
Speaker 1: monetary policy because I mean, with all those uh rounds
Speaker 1: of stimulus that we saw, fiscal policy was maybe it
Speaker 1: wasn't in charge, uh, you know, but definitely had a
Speaker 1: big role to play. But at this point, I mean,
Speaker 1: do you think that monetary policy is really the dominant
Speaker 1: factor driving markets at this point? Well, I think all
Speaker 1: of these things that work together, you know, to create
Speaker 1: an economy. I mean, for for the last twenty thirty
Speaker 1: years pre pandemic, UH, the economy became more and more
Speaker 1: refined with just in time processing these very complicated supply
Speaker 1: chains that were able to meet demand in an instant
Speaker 1: and the pandemic just through everything a foul. So we
Speaker 1: need proper fiscal policy, we need monetary policy, and we
Speaker 1: just need the economy to get going. I mean, these
Speaker 1: are these you we need this pandemic to end. I
Speaker 1: think that seems like we are getting near with with
Speaker 1: a macron if you look get you know, we watched
Speaker 1: closely the r in a factor in wastewater in a
Speaker 1: in large metropolitan areas, and that in the last two
Speaker 1: days has declined materially. Uh So you know, as we
Speaker 1: see over the next week or two, that's going to
Speaker 1: work its way into the system and we're going to
Speaker 1: get to a hopefully what is a new equilibrium. We've
Speaker 1: heard a lot from various FED officials and other market
Speaker 1: watchers Darryl about the difficulty though of the FED right
Speaker 1: now in terms of threading the needle and not making
Speaker 1: a policy misstep that leads us into a slowdown in growth.
Speaker 1: Um is that likely? Do you think about a recession
Speaker 1: potentially next year or maybe getting into three. I think
Speaker 1: if there's a certainly an overreaction will cause recession. I mean,
Speaker 1: I think today That's why finding companies with with strong
Speaker 1: balance sheets, you know, that are favored in this market
Speaker 1: environment are really the way for equity investors to to
Speaker 1: play at this period. You know, as we look at
Speaker 1: these fourth quarter earnings and and see how this is
Speaker 1: going to come together, I think material stocks and consumer
Speaker 1: consumer discretionary stocks are going to do well. Um. You know,
Speaker 1: in Key four, buyers wanted what they wanted and when
Speaker 1: they saw it, they bought it markdowns. Um in h
Speaker 1: for consumers that we've grown used to in the past,
Speaker 1: we didn't see it. So looking at stocks today like
Speaker 1: coals um is is a is a great place for
Speaker 1: investors to look, as well as anything that's selling into
Speaker 1: the home that's continued to be strong companies like Mohawk,
Speaker 1: Mohawk Carpet and Daryld. What don't you like right now?
Speaker 1: When it comes to the markets, I think you've got
Speaker 1: to be careful around banks. I mean, we're going to
Speaker 1: see we saw some surprises this morning, but as you
Speaker 1: look forward, you know their ability to retain talent is
Speaker 1: is going to be difficult. Um. You see, these large
Speaker 1: money center banks that work in large cities have had
Speaker 1: a real workforce issue and as inflation is here. We
Speaker 1: you know, we all see it in the grocery store
Speaker 1: every day, paying ten more for chicken meats, you know,
Speaker 1: the things that are on our table. Um, you're going
Speaker 1: to see wage inflation. You know at these institutions that's
Speaker 1: seven or eight percent. They have not dealt with that
Speaker 1: in many, many, many years. So um, you know, the
Speaker 1: their their margins are going to be under pressure. Notwithstanding that,
Speaker 1: a yield curve is good for banks. But you look
Speaker 1: at companies like like Western Alliance, you know, who are
Speaker 1: trying to reinvent themselves in a way, you know, to
Speaker 1: address the new digital economy, which will which will help them.
Speaker 1: All right, Really appreciate your time today. Darryl Great, chairman
Speaker 1: Imagining Principle of Easterly Investment Partners, on the phone from Massachusetts.
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