WEBVTT - Bank Earnings Beat, Solomon Interview Exclusive & The Problem With Free Electricity 0:00:02.440 --> 0:00:06.800 Bloomberg Audio Studios, podcasts, radio news. 0:00:09.320 --> 0:00:12.440 This is the Bloomberg Daybreak Europe podcast, available every morning 0:00:12.480 --> 0:00:15.600 on Apple, Spotify or wherever you listen. It's Tuesday, the 0:00:15.640 --> 0:00:18.759 twenty ninth of October in London. I'm Stephen Carroll. Coming 0:00:18.800 --> 0:00:23.000 up today HSBC's profits beat estimates. Is the bank's new 0:00:23.079 --> 0:00:26.440 CEO an ences a three billion dollars share buy back. 0:00:26.920 --> 0:00:30.880 In an exclusive interview, Golben Sachs CEO David Solomon reveals 0:00:30.920 --> 0:00:34.200 he's bullish on the outlook for M and A, plus 0:00:34.360 --> 0:00:38.599 the UK's energy industry prepares to do battle over free electricity. 0:00:38.960 --> 0:00:41.600 We have a special report. Let's start with a roundup 0:00:41.680 --> 0:00:45.120 of our top stories. HSBC is reported better than estimated 0:00:45.159 --> 0:00:48.879 earnings and a fresh stock buyback just days after unveiling 0:00:48.880 --> 0:00:52.760 a major restructuring plan. Third quarter pre tax profit rows 0:00:52.840 --> 0:00:55.480 by nine point nine percent from a year earlier to 0:00:55.600 --> 0:00:58.760 just under eight and a half billion dollars. Europe's largest 0:00:58.760 --> 0:01:00.880 bank says it will now reph heart just shares worth 0:01:00.960 --> 0:01:05.319 up to three billion dollars. Jamana Versecci breaks down the 0:01:05.360 --> 0:01:06.240 rest of the numbers. 0:01:06.880 --> 0:01:10.720 Third quarter revenue coming in at seventeen billion dollars versus 0:01:10.760 --> 0:01:15.440 these sixteen billion estimates or thereabouts. CT one ratio sitting 0:01:15.520 --> 0:01:18.040 quite healthy at fifteen point two percent versus fourteen point 0:01:18.120 --> 0:01:21.319 nine percent, is still sitting on a ton of capital. 0:01:21.720 --> 0:01:24.480 In terms of their guidance CT one, they see it 0:01:24.760 --> 0:01:27.600 within the medium term target range of fourteen to fourteen 0:01:27.959 --> 0:01:31.360 and a half percent target cost rows of about five 0:01:31.400 --> 0:01:34.679 percent for twenty twenty four versus twenty twenty three. A 0:01:34.680 --> 0:01:38.280 lot of focus, of course on HSBC cost suidence given 0:01:38.319 --> 0:01:40.280 the restructuring announcent that they came up with. 0:01:41.480 --> 0:01:45.280 Jamana Versecci speaking there CEO Jangel Hedri, presiding over his 0:01:45.400 --> 0:01:47.680 first set of earning since taking up the job, said 0:01:47.680 --> 0:01:50.760 in a statement the results show the bank's strategy is working. 0:01:51.320 --> 0:01:54.160 HSBC last week unveiled its biggest revamp and at least 0:01:54.160 --> 0:01:58.320 a decade, including merging its global commercial and investment banking 0:01:58.360 --> 0:02:01.920 divisions and making the Hong Kong and UK businesses into 0:02:02.120 --> 0:02:06.680 standalone units. One of Europe's other biggest lenders, Santander, also 0:02:06.800 --> 0:02:09.920 posted better than expected earnings with continued growth and interest 0:02:09.960 --> 0:02:13.200 income and rising revenue from fees. The Spanish bank posted 0:02:13.520 --> 0:02:16.359 third quarter net income of three point twenty five billion 0:02:16.400 --> 0:02:19.880 euros versus estimates of three point one seven billion. Net 0:02:19.919 --> 0:02:23.040 interest income came in slightly below expectations at eleven point 0:02:23.040 --> 0:02:25.840 two three billion euros. The bank says it's confident it 0:02:25.880 --> 0:02:29.880 will deliver on all targets for the year. A growing 0:02:29.960 --> 0:02:33.760 number of money managers are watching metrics on social instability 0:02:33.800 --> 0:02:36.840 in China to try to predict how far President Cheating 0:02:36.919 --> 0:02:40.800 Ping will go to stimulate growth. In September, Morgan Stanley 0:02:40.840 --> 0:02:43.160 debuted a new distress gauge that could be used to 0:02:43.200 --> 0:02:47.000 predict policy swings. The bank says the measure is currently 0:02:47.080 --> 0:02:50.480 nearing the low levels reached at two previous junctures. Those 0:02:50.520 --> 0:02:53.400 are in twenty fifteen, when Beijing took drastic steps to 0:02:53.480 --> 0:02:56.480 end a seven trillion dollar stock market route, and in 0:02:56.520 --> 0:02:59.640 twenty twenty two when the country abruptly dropped its COVID 0:02:59.680 --> 0:03:04.760 control rolls. Goldman Sachs top executive Saturday bullish note on 0:03:04.840 --> 0:03:08.359 the outlook for deal making, singling out investments in technology 0:03:08.440 --> 0:03:11.040 is a bright spot. David Solomon has told Bloomberg that 0:03:11.120 --> 0:03:14.640 AI is likely to power a new wave of deal making. 0:03:15.240 --> 0:03:17.760 I think the regulatory environment has been a headwind to 0:03:17.800 --> 0:03:20.519 some deal making. Obviously, with an election, we could see 0:03:20.520 --> 0:03:23.080 a change in that context. But there's no question the 0:03:23.120 --> 0:03:25.880 deal making environment is improving. And when you look at 0:03:25.919 --> 0:03:29.640 what's going on with technology and the investments, it's necessary, 0:03:30.520 --> 0:03:32.320 you know the power AI. I think that's a tail 0:03:32.360 --> 0:03:34.560 one for deal making over a period of time too. 0:03:34.880 --> 0:03:37.720 Solomon was speaking to Bloomberg on the sidelines of the 0:03:37.760 --> 0:03:42.960 Saudi Flagship Future Investment Initiative and readd the Global bank 0:03:43.000 --> 0:03:45.600 boss was there to open a new office in the capital, 0:03:45.680 --> 0:03:50.600 deepening its presence in the largest Middle Eastern economy. Volkswagen 0:03:50.600 --> 0:03:53.200 plans to close at least three factories in Germany. The 0:03:53.280 --> 0:03:57.120 unprecedented move is part of a wide ranging cost cutting push, 0:03:57.520 --> 0:04:00.880 which also includes a ten percent across the board paycott 0:04:00.960 --> 0:04:03.720 at its main VW brand, Boomberg's Oliver Crook is more 0:04:03.760 --> 0:04:04.280 from Berlin. 0:04:04.840 --> 0:04:07.200 This is a company that has never in its history 0:04:07.360 --> 0:04:09.960 once closed a factory in Europe. We're talking about closing 0:04:10.040 --> 0:04:12.480 three in its home country right now of Germany, potentially 0:04:12.480 --> 0:04:14.880 one in Belgium as well, and of course this will 0:04:14.880 --> 0:04:18.000 mean potentially tens of thousands of job cuts. So again, 0:04:18.160 --> 0:04:22.120 just to reiterate, Volkswagen talking about closing three German factories 0:04:22.160 --> 0:04:24.279 for the very first time in his ninety year history 0:04:24.320 --> 0:04:24.920 in Germany. 0:04:26.200 --> 0:04:29.280 That's Binberg's Oliver Krook. He says the announcement kicks off 0:04:29.320 --> 0:04:32.159 a tough week for Volkswagen. The carmaker is expected to 0:04:32.200 --> 0:04:35.520 post declining sales and profits when it reports third quarter 0:04:35.560 --> 0:04:40.720 earnings tomorrow. The European Center Banks vice president sees substantial 0:04:40.839 --> 0:04:43.640 risks to the inflation outlook for the euro Area despite 0:04:43.720 --> 0:04:48.640 significant progress, so Leastigindos says policymakers can't declare victory just yet. 0:04:49.160 --> 0:04:52.840 He added that geopolitical conflicts threatening to push up energy 0:04:52.880 --> 0:04:56.520 and freight costs, and that extreme weather and sticky wage 0:04:56.520 --> 0:04:59.880 growth all have the potential to keep price pressures higher 0:05:00.120 --> 0:05:02.280 for longer. To gain US was just one of a 0:05:02.320 --> 0:05:05.440 few ECB officials who hadn't commented on the future interest 0:05:05.480 --> 0:05:08.720 rate path after the Central Bank lowered borrowing costs in 0:05:08.760 --> 0:05:12.359 mid October for a third time this year. In a moment, 0:05:12.400 --> 0:05:15.440 we'll have the latest on all the morning's earnings, plus 0:05:15.520 --> 0:05:18.600 bring you an exclusive interview with the Gulben Sachs CEO 0:05:18.760 --> 0:05:22.080 David Solomon, and look at why some companies are against 0:05:22.160 --> 0:05:26.799 plans for free electricity in the UK. But first, another 0:05:26.839 --> 0:05:29.320 story that caught my eye this morning. Have we reached 0:05:29.640 --> 0:05:32.520 peak Kroc? This is an increasing number of schools in 0:05:32.520 --> 0:05:34.560 the United States are banning the shoes for what they 0:05:34.600 --> 0:05:37.760 say is safety reasons. Our colleagues have tracked this in 0:05:37.800 --> 0:05:41.960 at least twelve states. The head of the CrOx brand, 0:05:42.000 --> 0:05:44.159 so they're not aware of any data showing that bans 0:05:44.279 --> 0:05:46.440 have increased, but it could be a key factor when 0:05:46.440 --> 0:05:50.280 the company reports earnings later today. Sales more than tripled 0:05:50.640 --> 0:05:53.479 over the past three years, boosted in particular by demand 0:05:53.560 --> 0:05:57.159 for children's shoes during the pandemic, but that estimate or 0:05:57.200 --> 0:06:00.840 that growth has slowed. Bloomberg estimates come piled show that 0:06:00.880 --> 0:06:03.719 growth expects to slow just to zero point four percent 0:06:04.120 --> 0:06:06.640 in this quarter, which includes the keyback skill periods. That 0:06:06.640 --> 0:06:09.880 could be an interesting test for what some consider fashion 0:06:10.000 --> 0:06:13.599 like on others a fashion menace. Well, let's turn now 0:06:13.760 --> 0:06:17.719 to some of the complete results we've had out this morning. 0:06:17.839 --> 0:06:20.479 Our ecuerdy supported Joe Easton is with us for more. 0:06:20.760 --> 0:06:21.000 Joe. 0:06:21.040 --> 0:06:24.680 Let's start with HSBC. We heard from the earlier this morning, 0:06:24.720 --> 0:06:26.960 shares in Hong Kong reacting positively. 0:06:27.560 --> 0:06:29.920 Yes, a pretty decent game for those shows up around 0:06:29.960 --> 0:06:32.320 three and a half percent, as you said a moment ago. 0:06:32.560 --> 0:06:36.760 Now HSBC doing another big buyback, three billion dollars worth 0:06:36.800 --> 0:06:39.400 of stock they're going to buy back That've reported at 0:06:39.480 --> 0:06:42.480 tencent jump in pre text profit from a year earlier 0:06:42.600 --> 0:06:44.800 to around eight and a half billion dollars in the 0:06:44.839 --> 0:06:49.559 last quarter, mostly driven by the wealth business benefiting from 0:06:49.800 --> 0:06:52.799 more money being put into that unit from Asian clients, 0:06:53.040 --> 0:06:55.640 and also the FX business of the trading business, which 0:06:55.680 --> 0:06:58.960 is one of the biggest FX trading units in the world, 0:06:59.080 --> 0:07:02.880 doing really strong earnings as well for that business. That 0:07:03.240 --> 0:07:06.320 share price actually risen around twenty percent over the past 0:07:06.360 --> 0:07:08.080 year already, so it's looking to add on to those 0:07:08.080 --> 0:07:10.920 games today. We wait to see if they continue in 0:07:10.960 --> 0:07:12.160 London this morning. 0:07:12.480 --> 0:07:15.720 Okay, and staying with banks then Santander also a Bee's 0:07:15.760 --> 0:07:17.760 not quite as dramatic though, Yeah. 0:07:17.640 --> 0:07:21.040 So Santander numbers coming in better and expected now. This 0:07:21.360 --> 0:07:24.920 is due to mostly their fixed income and also their 0:07:25.000 --> 0:07:28.000 interest income both rising, so fixed income in terms of 0:07:28.000 --> 0:07:30.000 the fees they make in that unit and also just 0:07:30.400 --> 0:07:33.520 the higher lending profits due to the higher rates boosting 0:07:33.520 --> 0:07:35.840 that stock. But the interesting thing to note is the 0:07:35.880 --> 0:07:39.800 company saying that they've delayed the UK part of their 0:07:39.840 --> 0:07:44.080 earnings because of Friday's motor finance ruling, which we covered yesterday. 0:07:44.160 --> 0:07:46.840 So this is a ruling where a court said that 0:07:46.920 --> 0:07:50.520 lenders hadn't been transparent enough when at brokering at these 0:07:50.600 --> 0:07:53.320 deals for people to take out car loans, and therefore 0:07:53.640 --> 0:07:57.240 there are expected to be significant compensation pals, one analyst 0:07:57.280 --> 0:07:59.440 saying Santander could be on the hook for around a 0:07:59.440 --> 0:08:02.680 billion pound worth of compensation. For Santander saying in a 0:08:02.720 --> 0:08:05.280 statement that they haven't been able to work out in 0:08:05.360 --> 0:08:07.160 time for the results how much this is going to 0:08:07.200 --> 0:08:09.400 cost them, so delaying that part of the report. 0:08:09.680 --> 0:08:11.920 Yeah, very interesting. I'll be watching with interest to see 0:08:12.040 --> 0:08:16.040 what those numbers reveal as well. You've plenty more company 0:08:16.120 --> 0:08:18.480 results to pick from, Joe, what else are you watching? 0:08:19.000 --> 0:08:22.040 Yeah, so I've got my eye on Deutsche Liftanza. Those 0:08:22.120 --> 0:08:25.400 numbers actually just coming out a few moments ago. Liftanza 0:08:25.640 --> 0:08:28.680 does look like a beat on the headline profits, but 0:08:28.800 --> 0:08:31.760 some weakness in some of the EBIT numbers of some 0:08:31.880 --> 0:08:35.680 specific earning examples that we look at dropping slightly. Passenger 0:08:35.800 --> 0:08:39.080 numbers seem to have actually dropped a little bit in 0:08:39.120 --> 0:08:42.120 the last period as well, potentially maybe due to the 0:08:42.200 --> 0:08:44.840 high affairs that we've seen, though we are expecting fairs 0:08:44.840 --> 0:08:47.319 to start coming down, thankfully. The other one I've got 0:08:47.360 --> 0:08:51.199 my eye on was Novartis now that does look strong. Actually, 0:08:51.320 --> 0:08:55.600 Novartis over in Switzerland, one of Europe's biggest pharmaceutical companies, 0:08:55.920 --> 0:08:59.320 do a lot of respiratory drugs, looking like they're beating 0:08:59.360 --> 0:09:01.720 and all of the top lines in terms of the 0:09:01.840 --> 0:09:03.760 report that's just hit the wise for that one, So 0:09:03.800 --> 0:09:06.000 that could be a strong one in the farmer space 0:09:06.000 --> 0:09:06.520 this morning. 0:09:06.679 --> 0:09:08.599 Yeah, indeed, looking at those into the details that have 0:09:08.720 --> 0:09:11.040 Hansa results it it's inting to see that. In terms 0:09:11.040 --> 0:09:14.320 of future looking they're talking about passenger demand being above 0:09:14.440 --> 0:09:18.640 levels seen last year. They're planning to increase capacity in 0:09:18.679 --> 0:09:22.079 the fourth quarter, and the company expecting to report positive 0:09:22.120 --> 0:09:25.360 operating profit for the final three months of twenty twenty 0:09:25.400 --> 0:09:28.360 four as well, and they're expecting air travel demand to 0:09:28.440 --> 0:09:31.199 remain strong. So some positive signals the future coming out 0:09:31.200 --> 0:09:33.800 of that major airline group. Joe Eastern, our equities reporter, 0:09:34.040 --> 0:09:36.280 thank you very much for joining us, and of course 0:09:36.320 --> 0:09:40.000 will have plenty more on those throughout the program as well. 0:09:40.200 --> 0:09:42.480 Let's turn out to one of our top interviews this 0:09:42.600 --> 0:09:46.880 morning from Saudi Arabia's Future Investment Initiative summ At Bloomberg 0:09:47.240 --> 0:09:50.720 has been speaking to CEO of Goldblin Sachs, David Solomon. 0:09:50.920 --> 0:09:54.600 Our Horizon's Middle East Africa anchor, Jimani Brossecci has been 0:09:54.679 --> 0:09:57.800 speaking to him. Here is the exclusive interview in full, 0:09:57.880 --> 0:10:02.040 starting with David Solomon's thoughts on Saudi as an investment destination. 0:10:02.440 --> 0:10:04.800 We are excited to be opening up a new office 0:10:04.920 --> 0:10:08.640 in the financial district, and I would say we are 0:10:08.640 --> 0:10:13.080 committed to our presence here in Saudi Arabia. I was reflecting, 0:10:14.559 --> 0:10:17.800 you know, last night, around the past eight years, seven 0:10:17.840 --> 0:10:19.439 or eight years that I've been coming to this event 0:10:19.840 --> 0:10:21.760 and just watching the progress, you know, and the progress 0:10:21.760 --> 0:10:25.680 has been meaningful, and we've participated in that progress. It's 0:10:25.720 --> 0:10:28.199 interesting to watch our clients here on the ground participate 0:10:28.240 --> 0:10:29.080 in that progress and be. 0:10:29.080 --> 0:10:31.000 In a position to try to help them. But also 0:10:31.080 --> 0:10:32.760 as you look at the international. 0:10:32.200 --> 0:10:34.840 Community, the international community is more interested in what's going 0:10:34.880 --> 0:10:38.000 on from an economic development perspective here, and we're delighted 0:10:38.000 --> 0:10:39.960 to be positioned to help our clients in this region. 0:10:40.240 --> 0:10:42.840 Yeah, and it feels like there is so much dealmaking 0:10:43.280 --> 0:10:46.640 even IPOs last year. It was a great year in 0:10:46.720 --> 0:10:50.120 terms of activity across all these exchanges. This means also 0:10:50.400 --> 0:10:52.640 more and more banks are looking to get involved in 0:10:52.640 --> 0:10:56.720 the action. Are you finding it difficult to retain an 0:10:57.000 --> 0:10:59.679 attract talent given increasing amount of competition. 0:11:00.440 --> 0:11:03.520 We have a very very deep bench of bankers around 0:11:03.520 --> 0:11:06.160 the globe, including here in the region. We have a 0:11:06.240 --> 0:11:08.240 number of bankers from the region that base out of 0:11:08.280 --> 0:11:13.120 London and sometimes move back to this region. We've been 0:11:13.160 --> 0:11:15.600 able to attract talent were golden Sacks. We've been able 0:11:15.640 --> 0:11:17.640 to track talent here in this region all other places 0:11:17.679 --> 0:11:20.040 in the world. I do agree there's more competition here, 0:11:20.080 --> 0:11:23.120 but that's positive. Actually, the levels of activity are picking 0:11:23.200 --> 0:11:25.680 up and I feel very very confident and our ability 0:11:25.720 --> 0:11:27.960 to have really extraordinary people on the ground here to 0:11:28.000 --> 0:11:29.240 serve our clients very well. 0:11:29.559 --> 0:11:31.920 One of the stories that our Bloomberg News team have 0:11:32.000 --> 0:11:34.080 been reporting on is the fact that the PIF have 0:11:34.200 --> 0:11:38.560 been sort of refocusing some of their investment efforts domestically, 0:11:38.960 --> 0:11:41.800 which means that in terms of the relationship with asset 0:11:41.840 --> 0:11:43.840 managers in the region, there's been a lot more focus 0:11:43.920 --> 0:11:46.840 on or questions asked about what some of these asset 0:11:46.880 --> 0:11:50.000 managers are delivering on the ground within Saudi Arabia. How 0:11:50.040 --> 0:11:52.600 do you think that is going to shape up the 0:11:52.679 --> 0:11:56.800 asset management ambitions within the region and specifically with the science. 0:11:57.240 --> 0:12:00.000 It's a very very natural progress and we've been talked 0:12:00.240 --> 0:12:03.720 about what's going on here in the kingdom, but the 0:12:03.800 --> 0:12:06.319 level of investment in diversifying the economy here in the 0:12:06.400 --> 0:12:10.280 kingdom is significant, and of course that's a significant focus 0:12:10.280 --> 0:12:13.920 of the PIF. For a firm like Goldman Sachs, where 0:12:13.960 --> 0:12:16.880 we're well positioned to serve as an investment banker, to 0:12:16.920 --> 0:12:18.640 serve as a trader, to serve as an asset and 0:12:18.679 --> 0:12:21.440 wealth manager, I think the firm is incredibly well positioned 0:12:21.760 --> 0:12:23.760 to help in this part of the world, regardless of 0:12:23.800 --> 0:12:24.439 the trajectory. 0:12:24.600 --> 0:12:26.360 So we're excited about what's going on here. 0:12:26.520 --> 0:12:28.880 I'm excited about the opportunities we'll have to help serve 0:12:28.920 --> 0:12:29.640 our clients here. 0:12:29.880 --> 0:12:31.880 I can ask you what your level of concern is. 0:12:31.920 --> 0:12:35.120 Who's the geopolitical situation in the region right now. 0:12:35.640 --> 0:12:39.240 I'm concerned about the geopolitical situation in the region. It's 0:12:39.240 --> 0:12:41.559 not good for security, it's not good for safety, it's 0:12:41.559 --> 0:12:45.360 not good for economic growth and I'm hopeful that leaders 0:12:45.400 --> 0:12:47.760 both in the region and around the world, and important 0:12:47.760 --> 0:12:50.440 governments around the world will be edible to find a 0:12:50.440 --> 0:12:52.840 path to settle it down as we move forward. But 0:12:53.160 --> 0:12:56.040 of course, anytime you have geopolitical uncertainty, that's not good 0:12:56.080 --> 0:12:57.559 for economic growth and prosperity. 0:12:57.640 --> 0:12:59.480 And one of the things I just noticed I. 0:12:59.400 --> 0:13:01.560 Spend time with people here on the ground, people want 0:13:01.559 --> 0:13:06.280 to find a path to a secure, prosperous economically vibrant 0:13:06.280 --> 0:13:06.880 in Middle least. 0:13:07.120 --> 0:13:09.199 Has it impacted business trading in. 0:13:09.120 --> 0:13:13.040 The region, You know, it's interesting. People are obviously concerned 0:13:13.040 --> 0:13:15.760 and very very focused, but it's not had a significant 0:13:15.760 --> 0:13:18.880 impact on activity up to this point, on activity in 0:13:18.920 --> 0:13:19.760 this part of the region. 0:13:19.920 --> 0:13:20.599 Yeah. 0:13:20.640 --> 0:13:23.320 Well, let's just talk more broadly. Your earnings came out 0:13:23.679 --> 0:13:27.080 very strong, so fascinating expectations. Obviously, the stock has had 0:13:27.120 --> 0:13:29.560 a good run this year. You must be feeling good. 0:13:29.559 --> 0:13:31.280 But let me just ask you how you're feeling about 0:13:31.280 --> 0:13:32.199 the outlook in general. 0:13:33.120 --> 0:13:36.760 I feel good about the outlook. I think you know, 0:13:36.800 --> 0:13:38.280 if you took a tour around the world, the US 0:13:38.360 --> 0:13:42.400 economy is actually doing quite well. It's been very very resilient. 0:13:43.000 --> 0:13:45.760 I'm a little bit more concerned about European growth and 0:13:45.840 --> 0:13:47.800 also the economic situation in China. 0:13:48.320 --> 0:13:50.040 But overall, the engine of the. 0:13:50.120 --> 0:13:53.679 US has been quite powerful, and our building our business. 0:13:53.240 --> 0:13:56.040 While global, is quite correlated to US growth. 0:13:57.080 --> 0:13:58.920 I can give you a list of things to worry about, 0:13:58.920 --> 0:14:01.560 but generally can tell you also a list of things 0:14:01.600 --> 0:14:05.480 that I'm quite optimistic about. The progress around technology and 0:14:05.520 --> 0:14:09.319 AI and the opportunities to increase productivity or real progress 0:14:09.320 --> 0:14:12.520 that we're seeing around healthcare or medical technology or extraordinary 0:14:12.520 --> 0:14:13.600 and the impact that they'll have. 0:14:14.080 --> 0:14:16.280 So there are a lot of reasons to be optimistic. 0:14:15.840 --> 0:14:19.800 About the growth and trajectory of economies around the world, 0:14:20.360 --> 0:14:23.280 but there's also fragility and things can go wrong. 0:14:23.360 --> 0:14:24.800 Well, I was going to pick up on that because 0:14:24.840 --> 0:14:27.760 it's been really difficult to sort of track the narrative 0:14:27.800 --> 0:14:30.000 around the US economy the last few months, because we've 0:14:30.000 --> 0:14:32.400 gone from hard landing to soft lanning. I'll people are 0:14:32.400 --> 0:14:34.160 talking about no lanning. I'm not going to ask you 0:14:34.200 --> 0:14:36.720 for a descriptor of the US economy, but what I 0:14:36.760 --> 0:14:39.600 will ask you is, where are some areas of concern 0:14:39.640 --> 0:14:40.440 that you're seeing right now? 0:14:40.440 --> 0:14:42.520 Well, the base case in the US is certainly at 0:14:42.520 --> 0:14:44.960 this point for a soft landing. That doesn't mean that 0:14:45.000 --> 0:14:47.120 at some point there can't be, you know, some sort 0:14:47.120 --> 0:14:49.520 of a slow down in economic growth. But what I 0:14:49.520 --> 0:14:51.479 would say is the US economy is proving. 0:14:51.200 --> 0:14:52.320 To be incredibly resilient. 0:14:52.680 --> 0:14:54.440 We do have an election in the US, and there'll 0:14:54.440 --> 0:14:57.800 be policy decisions that come out of that election, and 0:14:57.880 --> 0:15:00.120 so you know, certainly those will have an impact of 0:15:00.160 --> 0:15:02.600 a trajectory in twenty twenty five and twenty twenty six. 0:15:03.880 --> 0:15:07.040 With respect to you know, European growth, European growth is. 0:15:06.960 --> 0:15:08.040 More sluggish at the moment. 0:15:08.520 --> 0:15:11.360 And I'm concerned about the same thing that many people 0:15:11.400 --> 0:15:14.880 I know are talking to you about at this event, geopolitics, 0:15:15.080 --> 0:15:18.760 US China relationship, the situation in Ukraine, the situation we 0:15:18.880 --> 0:15:23.280 just touched on in the Middle East. Also concerned, you know, 0:15:23.360 --> 0:15:27.000 broadly about inflation in the world. Concerned about energy policy, 0:15:27.120 --> 0:15:29.800 which is obviously a significant issue. I'm concerned about immigration 0:15:29.880 --> 0:15:32.320 and migration, which is an issue in different parts of 0:15:32.320 --> 0:15:35.320 the world. So these are all issues that require leadership. 0:15:34.880 --> 0:15:35.840 And policy direction. 0:15:36.200 --> 0:15:38.760 And I'm hopeful as we get past the election in 0:15:38.800 --> 0:15:41.120 the US and we continue to move forward, we'll see 0:15:41.120 --> 0:15:43.440 a clear direction of travel on some of these significant 0:15:43.440 --> 0:15:44.160 policy issues. 0:15:44.320 --> 0:15:45.960 Well, I mean the other big development is obviously the 0:15:46.000 --> 0:15:48.240 said have started cutting interest rates. And I think you 0:15:48.240 --> 0:15:51.160 were asked about what your expectations were for the said 0:15:51.160 --> 0:15:53.040 the last I already said a thirty percent chance of 0:15:53.040 --> 0:15:55.000 a fifty basis one cup. So we'll give you that 0:15:55.520 --> 0:15:58.000 one for the fifty. But what matter is more as 0:15:58.000 --> 0:16:01.800 you think for financial markets, how quickly they go or 0:16:01.840 --> 0:16:02.640 where they end up. 0:16:02.680 --> 0:16:05.080 And then I think there's an awful lot of attention 0:16:05.720 --> 0:16:08.760 on short term rates. I'd actually be focused over time 0:16:09.440 --> 0:16:12.880 on longer term rates. And you know, I you know, 0:16:12.920 --> 0:16:16.360 I continue to be concerned about the level of spending and. 0:16:16.400 --> 0:16:17.840 Deficits in the United States. 0:16:18.440 --> 0:16:21.800 I don't think that's a short term you know, crisis factor. 0:16:21.840 --> 0:16:25.520 But unless we have policy change and get our spending 0:16:25.560 --> 0:16:28.040 and our debt under control, you know, ultimately that's kind 0:16:28.040 --> 0:16:30.040 of a bigger impact on long term rates. And I 0:16:30.040 --> 0:16:32.960 think people are anticipating today with respect to the short 0:16:33.040 --> 0:16:34.280 end of the curve. I think it's going to be 0:16:34.400 --> 0:16:37.760 very data dependent, and that data will be driven in 0:16:37.800 --> 0:16:40.040 part by what kind of policy we see coming out 0:16:40.040 --> 0:16:41.920 of the election. Yeah, and so I think it's I 0:16:41.920 --> 0:16:45.080 think it's important to watch carefully. It seems like the 0:16:45.120 --> 0:16:48.520 FED has been relatively transparent that we'll get another interest 0:16:48.600 --> 0:16:51.040 rate cut before the end of the year, But after that, 0:16:51.480 --> 0:16:53.400 I think it will be very data dependent on what 0:16:53.520 --> 0:16:57.000 kind of policy implementation. What happens to growth. Are the 0:16:57.040 --> 0:17:00.400 inflation numbers actually improving further? You know, those are all things. 0:17:00.280 --> 0:17:01.760 I think the FED we'll be watching carefully. 0:17:01.880 --> 0:17:03.840 Can I just circle back to your first point these 0:17:03.880 --> 0:17:06.800 a v spending, the tenure treasuries trading around four point 0:17:06.840 --> 0:17:09.800 three percent, So you think that is adequately pricing in 0:17:09.960 --> 0:17:12.320 the fiscal premium in the years to come to us? 0:17:13.680 --> 0:17:16.159 The market's the market, and so it is absolutely pricing 0:17:16.200 --> 0:17:17.080 in the premium. 0:17:16.800 --> 0:17:17.920 That the market perceives today. 0:17:17.920 --> 0:17:19.840 What I would just say, if you look at the 0:17:19.880 --> 0:17:22.359 trajectory of our spending and our debt and the interest 0:17:22.400 --> 0:17:25.600 burden that we have, I think over time and over 0:17:25.640 --> 0:17:27.520 time is through the rest of the decade, et cetera, 0:17:27.760 --> 0:17:30.399 we'll have to bring new buyers into US treasuries and 0:17:30.440 --> 0:17:33.440 that will potentially have a risk of putting pressure on 0:17:33.520 --> 0:17:36.240 longer rates unless we want to finance the whole treasury 0:17:36.280 --> 0:17:38.080 stack at the front under the curve, which will be 0:17:38.119 --> 0:17:39.720 a very very significant policy shift. 0:17:39.760 --> 0:17:41.880 Yeah, I want to ask you a little bit more 0:17:41.880 --> 0:17:45.280 about your trading numbers, as they came in very stronger 0:17:45.280 --> 0:17:49.840 than expectations, and earlier on you had guided that fixed 0:17:49.840 --> 0:17:54.040 income trading was a gonnessee'sa clients, but overall for the quarter, 0:17:54.080 --> 0:17:56.359 you ended up posting quite strong trading results, namely on 0:17:56.400 --> 0:17:59.159 back of your equity trading business. Was this sort of 0:17:59.200 --> 0:18:01.320 a one off because there was so much volatility and 0:18:01.400 --> 0:18:04.800 equities this quarter, or can we expect that momentum to continue. 0:18:04.960 --> 0:18:07.679 Our equity franchise is performing very, very well. We have 0:18:07.720 --> 0:18:11.080 the leading equity franchise of the big banks. It's something 0:18:11.119 --> 0:18:13.119 we've invested in, it built over a long period of time. 0:18:13.440 --> 0:18:16.960 I can't tell you quarter to quarter what the market 0:18:17.040 --> 0:18:20.480 environment will put up for that franchise, but we were 0:18:20.640 --> 0:18:22.760 our positioned very well to serve our clients that have 0:18:22.800 --> 0:18:26.200 a leading share position in that business. When I commented 0:18:26.200 --> 0:18:29.800 about our trading revenues in early September, at the very 0:18:29.840 --> 0:18:32.520 beginning of September at a conference in New York, the 0:18:32.560 --> 0:18:35.639 business was softer. It had been softer in August, particularly 0:18:35.640 --> 0:18:38.399 in fixed income. We had a very very strong comp 0:18:38.440 --> 0:18:41.480 from the third quarter in twenty twenty three and ultimately 0:18:41.960 --> 0:18:43.919 our fixed income business. 0:18:43.600 --> 0:18:45.200 Was softer year over year. 0:18:45.840 --> 0:18:47.679 But I did say when I made that comment that 0:18:47.760 --> 0:18:50.879 it would be very very dependent on what happened in September, 0:18:51.160 --> 0:18:53.760 and we actually had a more robust September than we expected. 0:18:53.960 --> 0:18:56.520 Yeah, I love well to Marcus said, do you think 0:18:56.520 --> 0:18:58.800 you can continue to gain market share of the trading side. 0:18:59.000 --> 0:19:01.840 We do believe there are opportunities for us to continue 0:19:01.880 --> 0:19:06.000 to take share, although we're operating in a leading share position, 0:19:06.480 --> 0:19:08.760 so those gains will not be as pronounced as they've 0:19:08.800 --> 0:19:10.879 been over the last five years. But we think we 0:19:10.920 --> 0:19:13.359 have a very very powerful ecosystem in our Global Banking 0:19:13.359 --> 0:19:17.000 and Markets franchise. Our one GS operating ethos is helping 0:19:17.080 --> 0:19:20.760 us serve our clients in a very very forward and 0:19:20.840 --> 0:19:24.000 exceptional way. And if you are patient, you take a 0:19:24.040 --> 0:19:26.520 long term view, you earn trust, you show up for 0:19:26.520 --> 0:19:29.080 your clients, and good times and bad over time, you 0:19:29.200 --> 0:19:29.960 gain share. 0:19:29.760 --> 0:19:31.520 In these businesses. And we're very focused on it. 0:19:31.680 --> 0:19:35.320 The outlooks like right now for deal making, yeah, look 0:19:35.320 --> 0:19:38.640 for deal makings improving. You know, I talked I talked 0:19:38.680 --> 0:19:41.359