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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside

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Speaker 1: my co host Matt Miller. Every business day we bring

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Speaker 1: you interviews from CEO's, market pros and Bloomberg experts, along

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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast

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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and

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Speaker 1: at Bloomberg dot com slash podcast. I want to check

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Speaker 1: in with Alison Williams of Bloomberg Intelligence Season senior analysts

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Speaker 1: covers all the big global banks, the investment banks, the

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Speaker 1: asset managers. I don't want to start, Alison. I don't

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Speaker 1: want to start with Credit Swiss because it's too depressing

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Speaker 1: from my former employer, and that thing is just a

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Speaker 1: disaster city. Great article in the Bloomberg Terminal City adding

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Speaker 1: maybe doubling staff in Paris, and in this article they

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Speaker 1: talk about more and more investment banks any more and

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Speaker 1: more staff to Paris. Now it's a great city, one

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Speaker 1: of the world's all time great cities. I get it.

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Speaker 1: But is this just another movement of people post Brexit

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Speaker 1: from London to the continent. I believe that is um

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Speaker 1: the case. And we did hear this, you know, from

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Speaker 1: from a lot of bank managements in recent years about

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Speaker 1: some of the changes that we've we've been they'd be making.

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Speaker 1: Um and I think that this is just sort of

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Speaker 1: a continuation of moving some headcount out of London. So

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Speaker 1: what is it when when you think about these big

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Speaker 1: global investment banks, Allison, you know, the JP Morgans is

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Speaker 1: the cities of the world. Where is London in the

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Speaker 1: global picture? I mean there was a time back and

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Speaker 1: I'll tell you where London is. It's in a lower

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Speaker 1: tax regime than Paris. Yes, I mean, are the most

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Speaker 1: important players really going to move to a place that

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Speaker 1: you know threatens like ninety percent income tax? It just

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Speaker 1: seems like too much of a problem for me. Paris

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Speaker 1: is a great city to visit. I adore the French,

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Speaker 1: but um, you know, they're just too unpredictable in terms

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Speaker 1: of how much money they're going to take from you

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Speaker 1: if you live there. Well, I guess that's that's perhaps

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Speaker 1: viewpoint of the employees, right, But I think from the

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Speaker 1: bank's perspective, you have to go where the clients are

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Speaker 1: and if the clients want their trades to be done

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Speaker 1: in Paris, Um, you know, that's that's that's really the

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Speaker 1: movement that's happening. I mean, I remember five years ago

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Speaker 1: when the clients wanted their trades to be done in Frankfort,

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Speaker 1: and bankers said, like, we'd rather work at a gas

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Speaker 1: station in London then go to Frankfort. I remember when

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Speaker 1: Goldman Saxe was pushing people to move there, go to Munich,

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Speaker 1: and I think like Hugh pill went there and then

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Speaker 1: his administrative assistant refused to come with him, Like nobody

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Speaker 1: wanted to go to Frankfort exactly. So I mean, I

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Speaker 1: guess Paris has a bigger draw with the louver and stuff. Um.

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Speaker 1: I think Paris has some baguettes, yes, exactly, No, but

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Speaker 1: I just can't imagine that the big money really goes there. London, Alison,

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Speaker 1: London is still the financial hub of Europe, isn't it correct? Yes, yeah,

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Speaker 1: So it's not to say that, it's just it's you know,

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Speaker 1: it's all sort of I guess degrees or it's all

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Speaker 1: relative um and just you know, with Brexit, you just

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Speaker 1: have to have a presence in more than one place, um.

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Speaker 1: And so you know, some might have picked Frankfurt, and

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Speaker 1: so I might pick Paris. If if you're Bloomberg, you

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Speaker 1: doubled down on London and built the most amazing office

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Speaker 1: building in the city of London, which is smoking on true.

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Speaker 1: But that was before Brexit. Ye still headcount there. We

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Speaker 1: doubled down fingers crossed and then hoops um. Let me

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Speaker 1: ask about Credit Sweee because I was pretty amazed that

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Speaker 1: David Harrow sold the rest of his stake. I mean this,

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Speaker 1: if if anybody had a solid long term backer, it

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Speaker 1: was Credit Sweee and and David Harrow. And now they're gone.

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Speaker 1: Does that mean it's over? I mean, obviously it's it's

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Speaker 1: not a good thing to lose, you know, your biggest

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Speaker 1: backer for a long time. And in some to some extent,

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Speaker 1: it may explain, you know, some of the weakness in

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Speaker 1: the stock over the past couple of months. Obviously there's

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Speaker 1: there was a lot of reasons kind of going into

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Speaker 1: the capital raise. But I think that this just goes

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Speaker 1: to again, I think that the key concern is that

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Speaker 1: there has to be some type of studying, you know,

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Speaker 1: And I saw that Harrow had made comments I believe

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Speaker 1: in in the ft at the end of last year

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Speaker 1: when he had cut sort of his stake in half,

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Speaker 1: just talking about the fact that you know, other banks

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Speaker 1: were generating capital. You know, kartz Sweet is still in

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Speaker 1: a lost position. It needs to show sign of setting

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Speaker 1: and it just it just one could argue, you know,

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Speaker 1: with some investors that the sort of lack of catalysts

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Speaker 1: the upside or stopping them from getting in. But for

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Speaker 1: a very big investor to get out, I think that

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Speaker 1: really does you know, sort of sort of cast out

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Speaker 1: on what's next for this bank. So, Alison, I look

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Speaker 1: at the holders section here on the Bloomberg terminal hd AS.

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Speaker 1: It gives you the stockholders, the Saudi National Committee, you know,

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Speaker 1: the Cutter Investment Authority are the two big shareholders. Is

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Speaker 1: there a point where the Swiss government needs to get

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Speaker 1: involved in terms of ownership? Yeah, Their their capital ratio

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Speaker 1: is one of their strengths at the moment. They are

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Speaker 1: going to obviously eat into that with some of the

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Speaker 1: losses that are expected in one queue and for this year.

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Speaker 1: So I think that that does give them some breathing room.

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Speaker 1: I think, you know, you know, it's the fact that

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Speaker 1: there are other the two anchor investors now are you

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Speaker 1: know the sovereign sovereign wealth funds which have you know,

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Speaker 1: generally can have a much longer investment horizon just maybe

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Speaker 1: speak to the fact that this is sort of a

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Speaker 1: longer term story. And I guess to the point I

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Speaker 1: said before that there are sort of no near term catalysts,

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Speaker 1: and I think that investors do want to see some

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Speaker 1: sign of stability, especially in terms especially in terms of

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Speaker 1: the wealth flows. I think that's that's the most important.

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Speaker 1: We management talked about some green shoots. You know, they

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Speaker 1: said that they've been talking to a lot of clients,

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Speaker 1: et cetera, et cetera. But you really need to see

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Speaker 1: that turn. You need to see that the client confidence

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Speaker 1: has studied. All right, Alison, thank you so much. We

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Speaker 1: really appreciate it. Alison Williams, she covers the global investment banks,

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Speaker 1: all the big banks for Bloomberg Intelligence. Anna, thanks so

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Speaker 1: much for joining us here. Well, you are out front.

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Speaker 1: We really appreciate being the beneficiaries of that called hang on.

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Speaker 1: She also said there was one hundred percent chance of

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Speaker 1: a recession. Really well, I might think I think this year,

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Speaker 1: because it's not fair Anna to say there's a one

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Speaker 1: hundred percent chance of a recession at any time in

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Speaker 1: the future. Yeah, you've got you've got a time stamped

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Speaker 1: and in fact, just to be clear. It's the model

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Speaker 1: model that's as this one hundred percent recession. So our

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Speaker 1: holistic judgment has been in between seventy to eighty percent

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Speaker 1: chance of recession, and we were talking about twelve months ahead.

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Speaker 1: So we built this model that we wanted to tell

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Speaker 1: to tell us be able to send a signal whenever

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Speaker 1: recession probability spike for each of this month for this year,

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Speaker 1: and the model says that recession is with spiked to

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Speaker 1: one hundred percent probability starting in September of this year.

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Speaker 1: It's been sending a pretty steady signal for most guilt,

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Speaker 1: so it's still saying that. It's still saying that. In fact,

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Speaker 1: when we updated it using January's data, it is even

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Speaker 1: even We also rely on a lot of other models

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Speaker 1: to yield curves. We looked at various yield curves, including

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Speaker 1: the one that Chair Powell likes to use, which is

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Speaker 1: the four spreads between three months and eighteen months, that

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Speaker 1: actually saw an increase in recession probability in January because

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Speaker 1: all the yield curves in further in January. So so

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Speaker 1: but our you know, overall judgment is that there's of

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Speaker 1: course twenty to thirty percent chance at least of no

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Speaker 1: recession this year, but as you said, it's just a

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Speaker 1: matter of time. If there's not one this year, then

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Speaker 1: it's just been pushed back to next year. Well, when

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Speaker 1: you say your model, are you talking about chat GPT. No.

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Speaker 1: In fact, if you asked chat GPT to predict anything,

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Speaker 1: they like to take they like to not answer directly

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Speaker 1: to say they're not a prediction model. On the one hand,

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Speaker 1: and then on the other hand, Right, it's learning, you know,

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Speaker 1: how to speak like an economist, and so you know,

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Speaker 1: when we think about a recession scenario, you know, it's

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Speaker 1: it's awful hard to do. If you take a look

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Speaker 1: at the labor market there, how do you and we're

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Speaker 1: going to get some more jobs data this week, how

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Speaker 1: do you square up kind of this strong, really strong

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Speaker 1: labor market and again concerns about the economy going forward. Yeah,

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Speaker 1: so we looked deeply into this. First of all, the

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Speaker 1: very strong January port. You have to remember that it's

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Speaker 1: actually it's a story not about firms busily hiring left

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Speaker 1: and right. It's more of a story of firms retaining workers.

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Speaker 1: Because if you look at the non seasonally adjusted figures,

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Speaker 1: it's all like decrease in hirings. It's just that the

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Speaker 1: decrease in January is less than the decrease decrease in

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Speaker 1: the typical January. And so a second we were looking

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Speaker 1: at these war notices, which is that you know, the

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Speaker 1: Labor Department in this country require employers to file these

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Speaker 1: layoff warnings if they are going to layoff workers. And

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Speaker 1: a lot of these high profile layoffs that we read

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Speaker 1: is ADUs back in January, you know, Amazon, Google, Microsoft, Goldman.

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Speaker 1: We know that tech Sectors has already laid off one

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Speaker 1: hundred k at least of workers. How come it doesn't

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Speaker 1: show up in the initial claims? While the answer is

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Speaker 1: because most of these layoffs have not even become effective yet.

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Speaker 1: By laws, employers have to give at least sixty day notice,

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Speaker 1: and in New York, in fact, employers have to give

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Speaker 1: ninety date notice. So many of these announced layoffs will

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Speaker 1: only be translated to actual layouts where people will go

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Speaker 1: file unemployment claims in March. So we're expecting that there

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Speaker 1: will be some picked up in initial unemployment insurance claims.

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Speaker 1: So how many if you get one hundred thousand layoffs,

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Speaker 1: how much does that translate into in terms of claims

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Speaker 1: for unemployment insurance because we've heard that only anecdotally, I

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Speaker 1: should point out, but we've heard that people who get fired,

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Speaker 1: especially from tech, have like two or three job choices

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Speaker 1: where they can go instantly. Yeah, I've heard that too anecdotally,

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Speaker 1: but I think data wise, so I think that an

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Speaker 1: answer it will be less than the one hundred k

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Speaker 1: that's an announced layoff. And furthermore, anecdotally, I've heard that

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Speaker 1: tech workers might not be eligible for a claims because

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Speaker 1: they are foreign or they haven't worked for more than

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Speaker 1: six months. But I think the point is that the

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Speaker 1: data we have been receiving just do not reflect the

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Speaker 1: softening that had indeed happened in December and January, and

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Speaker 1: we just have to wait for a couple of months

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Speaker 1: to see and I think the FED is aware of this.

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Speaker 1: And furthermore, there's the weather effect, and you know, we

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Speaker 1: try to quantify it, and you know, there's also a

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Speaker 1: fat paper that try to quantify it, and it turns

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Speaker 1: out that weather tends to warm. Weather tends to boost

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Speaker 1: employment in the months that the weather is warmer, and

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Speaker 1: this effect is especially pronounced in spring. So if we

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Speaker 1: have a very warm spring, then we're likely going to

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Speaker 1: see a stronger employment too, but this effect is going

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Speaker 1: to wash out throughout the year. So with seasonal adjustment

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Speaker 1: the way that it works, we have stronger employment now

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Speaker 1: seasonally adjusted if weather it's warmer, but later in the

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Speaker 1: year it will be more negative than usual because of that.

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Speaker 1: You know, many of the hiring was posed ford. So

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Speaker 1: I also don't affect. I don't expect the strong employment

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Speaker 1: to last. Furthermore, I don't want to, you know, go

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Speaker 1: into weather forecasting, but you know, forecasting economics is part

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Speaker 1: of my job and it is related to weather. And

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Speaker 1: you know, the weather people are now saying that El

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Speaker 1: Nino is likely going to start this summer. And so

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Speaker 1: you know, we had a warm winter here in the

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Speaker 1: in the East coast because of La Nina. But El

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Speaker 1: Nino what it brings a lot of precipitation to the

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Speaker 1: south and flooding of this, so we are we're probably

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Speaker 1: looking at a second half of this year with a

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Speaker 1: lot of you know, weather precipitation that could campen economic activity.

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Speaker 1: So ANA given that backdrop, you know, now we have

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Speaker 1: in the marketplace people looking at you know, the Fed

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Speaker 1: walks saying fifty basis points might be back on the

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Speaker 1: table at perhaps the next meeting. Is that something you

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Speaker 1: guys are looking for, that's not our baseline, And I

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Speaker 1: expect that Powell will say that everything was on the table.

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Speaker 1: They certainly don't want to roll it out if we

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Speaker 1: do have a very very strong HEBI report and a

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Speaker 1: jobs report, say, I mean, of course, if a jobs

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Speaker 1: report of four hundred k was Friday, or a CPI

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Speaker 1: print of core of point six percent, would I think

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Speaker 1: that would put fifty basis point on the tables as

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Speaker 1: a baseline. But right now twenty five basis is still

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Speaker 1: our baseline. But I think Powell will just leave the

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Speaker 1: door open for anything in his testimony this week. What

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Speaker 1: do you think about long and variable lags? You know,

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Speaker 1: how long are we talking about? I know Danny Blanchflower

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Speaker 1: I think, in commentary to the Bank of England said

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Speaker 1: he works typically on eighteen to twenty four months. Is

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Speaker 1: that still accepted as how long and variable? How long

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Speaker 1: the long and variables are? Yeah, this is definitely the

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Speaker 1: debate happening within the central length circle. If you believe

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Speaker 1: that the lags are short, and I think there are

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Speaker 1: evidence to show that the financial conditions are now the

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Speaker 1: lacks of financial conditions very short as a three months

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Speaker 1: only three to six months. Then it means that the

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Speaker 1: tightening from the past FED hikes has already peaked, and

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Speaker 1: that would be a case for further more longer path,

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Speaker 1: steeper path of FED rate heights going forward. But I

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Speaker 1: also think that there's evidence that there's some part of

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Speaker 1: monetary policy that has very long legs, and that has

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Speaker 1: to do with like equities and dollars, those have twelve

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Speaker 1: months legs still, but certainly the financial conditions part have

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Speaker 1: a very short leg. All right, And I thank you

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Speaker 1: so much for joining us. Always appreciate getting your thoughts

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Speaker 1: I want to talk about to me, this China story

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Speaker 1: has really captured my has really fascinated me my attention

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Speaker 1: this morning and last night as I was reading it.

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Speaker 1: The disappointment with economists about their five percent growth target

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Speaker 1: I find interesting, not only because you know we would

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Speaker 1: be jealous of a five percent growth target, but also

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Speaker 1: I think it means more than just a slowdown in

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Speaker 1: your global growth expectations. It means also a slow down

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Speaker 1: your inflation expectations. We haven't seen the reopening provide US

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Speaker 1: with boosted prices for commodities, metals, oils, etc. Yet I

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Speaker 1: want to bring in Everett Millman. He's the chief market

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Speaker 1: analyst at Gainesville Coins. We talked to him about obviously

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Speaker 1: silver and gold coins and virtual digital coins as well.

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Speaker 1: But Everett, just in terms of the of the commodities

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Speaker 1: impact of the reopening of China, in terms of you know,

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Speaker 1: demand from the Chinese after the end of the COVID

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Speaker 1: zero policy, have you seen a big move in prices

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Speaker 1: across the metal that you watch, Not yet actually, And

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Speaker 1: I think that you've kind of hit the nail on

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Speaker 1: the head with the uncertainty surrounding China's reopening. We've also

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Speaker 1: seen some pretty big intra day volatility for crude oil

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Speaker 1: prices and the US dollar. So all of that does

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Speaker 1: weigh on the commodity space and it simply makes the

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Speaker 1: landscape more uncertain and more difficult for producers to kind

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Speaker 1: of plan ahead. So I think all of that is

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Speaker 1: that play here. How important is that part of the

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Speaker 1: world when it comes to gold? For example, I know

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Speaker 1: India is huge, right, what about the Chinese? Did they

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Speaker 1: contribute to price moves in gold, both for industrial purposes

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Speaker 1: or for you know, consumer purposes? Certainly, so China not

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Speaker 1: only has a major over the counter gold market that

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Speaker 1: mainly is dealing in gold jewelry, but it also with

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Speaker 1: the Shanghai Gold Exchange, does exert more pricing pressure over

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Speaker 1: the gold market than it has in the past, and

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Speaker 1: we do often see kind of seasonal flows that when

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Speaker 1: prices are falling in the gold market, China steps in

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Speaker 1: as a major buyer, not just official purchases, not just

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Speaker 1: the government or the People's Bank of China, but also

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Speaker 1: just the general public. So as time has gone on,

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Speaker 1: we've seen that China has more and more of an

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Speaker 1: influence over the price of gold, and I do suspect

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Speaker 1: that's one of the reasons we've seen the gold price

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Speaker 1: hold up even though broader markets have offered better opportunities

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Speaker 1: as gold has kind of trended sideways in twenty twenty three.

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Speaker 1: So Everard, I'm looking at global commodity prices here on

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Speaker 1: the Bloomberg terminal GLCO. I look at silver really gets

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Speaker 1: my attension off eleven and a half percent year today.

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Speaker 1: What's going on in the silver market, m yea. And

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Speaker 1: not only is silver down, but in terms of like

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Speaker 1: the broader precious metals complex, it's usually a somewhat bearish

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Speaker 1: sign if the silver price is lagging gold, and that's

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Speaker 1: essentially what we've been seeing lately. As far as the

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Speaker 1: weakness we've seen in silver, there's usually a strong floor

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Speaker 1: beneath the silver price based on the all in sustaining

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Speaker 1: costs kind of the cost of production from silver miners.

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Speaker 1: Right now, that's around twenty dollars and ounts, just below

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Speaker 1: where we've been trading. But I think an interesting thing

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Speaker 1: to keep in mind is that most silver that is

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Speaker 1: produced each year doesn't come strictly from silver mines. It

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Speaker 1: is produced as a byproduct of other mining operations, mainly nickel.

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Speaker 1: So in those cases, the all in sustaining cost for

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Speaker 1: those miners is actually it's far lower. It's closer to

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Speaker 1: about fourteen dollars announced. So I would not be shocked

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Speaker 1: to see if there is another sell off in silver,

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Speaker 1: that we could see prices fall back near that cost

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Speaker 1: of production, which I think is below what most market

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Speaker 1: participants are actually expecting. Is there still a concern that

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Speaker 1: some of these markets are manipulated? I don't need to.

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Speaker 1: I don't mean to drag up some kind of zero

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Speaker 1: hedgestyle conspiracy theories, but in silver, I mean it was true, right,

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Speaker 1: The Hunt Brothers got busted, and there are major Wall

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Speaker 1: Street banks that have settled on these kind of manipulation probes.

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Speaker 1: Is there concern among traders that there's still a problem

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Speaker 1: with the silver market or others? I would have to

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Speaker 1: say that, you know, where there's smoke, there's fire in

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Speaker 1: these kinds of cases. And although you know, the credibility

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Speaker 1: of such claims as obviously dubious, as you pointed out,

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Speaker 1: in the same way that foreign exchange markets like forex

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Speaker 1: trading of currencies has some of those problems, I think

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Speaker 1: the same is true of silver and gold that because

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Speaker 1: it functions sort of like money, you do see manipulative

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Speaker 1: trading behavior that although on ethical it certainly it doesn't

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Speaker 1: rise for the level of criminality. All of those cases

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Speaker 1: you mentioned have been settled out of court, so it's

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Speaker 1: it's at least a narrative that concerned some investors and

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Speaker 1: kind of pushed them away from getting involved in the

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Speaker 1: golden silver markets. But um, I think the best way

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Speaker 1: to think about it is that it would be very

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Speaker 1: similar with really any any currency trading. Um you can

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Speaker 1: manipulate currencies up and down relative to the trading volumes

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Speaker 1: and similar things happen in golden sils, even bitcoin. Even bitcoin,

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Speaker 1: I think perhaps of the highest probability that that kind

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Speaker 1: of thing happens. And we need to keep in mind

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Speaker 1: with the fallout from the STX scandal, traders on those

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Speaker 1: on those crypto exchanges were entering into contracts for for

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Speaker 1: bitcoin trades when there was no bitcoin being custodied. Um,

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Speaker 1: so you can call that really supply manipulation of bitcoin

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Speaker 1: as well. What if we step back, Everett, what's kind

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Speaker 1: of the big global commodities call of the moment right now? Well,

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Speaker 1: I think it's the call right now is probably sideways

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Speaker 1: until the end to the year because it's going to

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Speaker 1: be very dependent on the reaction function from the Fed

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Speaker 1: and central banks. Higher interest rates they're usually not great

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Speaker 1: for gold, but they do tend to drive copper and

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Speaker 1: industrial commodities higher. So I think everything is going to

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Speaker 1: depend on central bank policy. Do we get higher interest

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Speaker 1: rates for longer or is that you know, once expected

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Speaker 1: pivot going to come sometime in the second half of

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Speaker 1: this year or perhaps next year. It's all about interest

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Speaker 1: rates right now, and the gold call, I mean, as

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Speaker 1: we head into what some expect to be a recession,

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Speaker 1: do you want to buy gold into that? I would

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Speaker 1: say so, but perhaps the gold bowls shouldn't get too excited.

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Speaker 1: Gold will be kind of caught between those two forces.

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Speaker 1: Of it yields nothing, and we want to protect ourselves

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Speaker 1: in case the world collapses, correct, correct, and preserve preserve

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Speaker 1: purchasing power and in the event that, you know, a

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Speaker 1: local currency collapse. So just thirty seconds bitcoin, Yeah, you're

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Speaker 1: nay at this point. Right now, I think Bitcoin is

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Speaker 1: at least looking better than the other cryptos, but of

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Speaker 1: course regulation and the amount of bad press that the

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Speaker 1: crypto space gets generally, I think it kind of ironically

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Speaker 1: it boosts bitcoins appeal, if only because it is the

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Speaker 1: one kind of most noteworthier and most trusted crypto. But

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Speaker 1: the rest of the space I think is obviously in

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Speaker 1: pretty bad shape right now. All right, good stuff. Everett Milman,

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Speaker 1: chief market analyst for Gainesville Coins. Want to get to

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Speaker 1: our next guest, Dan sam And. He's a partner and

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Speaker 1: analyst at New Street Research. He covers the USC He

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Speaker 1: leads to the US Internet team there. He recently joined

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Speaker 1: New Street. Before they had a long career at what

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Speaker 1: I know is Bank of Montreal. The market now knows

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Speaker 1: is BEMO Capital Markets. And Dan's been covering the Internet

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Speaker 1: space since really the inception of the Internet. And Dan,

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Speaker 1: thanks so much for taken a time to join us. UM.

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Speaker 1: I know you've recently ramped up coverage once again here

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Speaker 1: in New Streets. What's your thirty thousand foot call for

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Speaker 1: these Internet names here? They had such a great run,

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Speaker 1: you know, over the last decade, but now there's definitely

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Speaker 1: some some headwinds for the sector and for some individual names.

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Speaker 1: They love to get your perspective. Yeah, no, thanks for

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Speaker 1: having me on, guys. I'd say thirty thousand for view.

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Speaker 1: So we launched our coverage New Street right here at

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Speaker 1: the beginning of the year. The January third was published date.

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Speaker 1: And you know, look at our title of our original

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Speaker 1: industry report was borrowing from the famous Wren Buffet line, right,

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Speaker 1: be greedy when others are fearful, because you know, what

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Speaker 1: we saw was the sector trading essentially at decade lows,

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Speaker 1: right that we hadn't seen it trading this this this

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Speaker 1: cheaply relative to the SMP five hundred for for over

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Speaker 1: ten years. And look, as you said, lots of good

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Speaker 1: reasons for that post COVID hangovers, having more regulatory and

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Speaker 1: policy pressures than we've seen in the past, and probably

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Speaker 1: this this big idea of increasingly you know, amongst the

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Speaker 1: big players, uh, you know, and this crosses more into

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Speaker 1: to some of the other stuff that that I don't cover,

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Speaker 1: like Apple and Microsoft, but you know, these megacap tech

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Speaker 1: stocks starting to swim in each other's lanes a little

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Speaker 1: bit more and compete with each other. So, you know,

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Speaker 1: we definitely sort of frame you know, us Internet as

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Speaker 1: it's it's not a pure growth sector anymore. It's more

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Speaker 1: of a garp sector now. And we can talk a

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Speaker 1: little bit more about the shift to focus on profitability

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Speaker 1: in various groups. But but it's but we thought it

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Speaker 1: was still very attractive to look at these names over

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Speaker 1: a longer term basis, notwithstanding that lots of fear around

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Speaker 1: macro and recession that could impact them as well, But

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Speaker 1: we just found the valuation too attractive. It worked really

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Speaker 1: well out of the year. They pulled back a little

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Speaker 1: bit out of earnings, but still find the group attractive

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Speaker 1: for long term positions. What what is web three, Dan?

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Speaker 1: Do you is it more than just like marketing or

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Speaker 1: a whole bunch of gen z kids push to pretend

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Speaker 1: they have a career. Is it really something that we're

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Speaker 1: going to finally understand at some point and be able

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Speaker 1: to sync our teeth into. So it's a good question.

431
00:25:20,800 --> 00:25:23,960
Speaker 1: I mean, I think it's a series of things that

432
00:25:24,960 --> 00:25:31,560
Speaker 1: whether you go from cryptocurrencies to virtual reality and augmented

433
00:25:31,680 --> 00:25:37,080
Speaker 1: reality and we can you know, talk about metaverse. You know,

434
00:25:37,200 --> 00:25:41,600
Speaker 1: there's even some elements of you know, just just businesses

435
00:25:41,680 --> 00:25:45,520
Speaker 1: like like Twitch at Amazon for example, you know, video

436
00:25:45,640 --> 00:25:48,639
Speaker 1: gaming and gaining sort of the next level of you know,

437
00:25:49,200 --> 00:25:52,600
Speaker 1: watching streamers and things like that, sort of creating this

438
00:25:52,640 --> 00:25:56,800
Speaker 1: sort of digital environment much more significantly than versus what

439
00:25:56,840 --> 00:25:59,000
Speaker 1: we think of as Web two point zero, which was

440
00:26:00,080 --> 00:26:02,960
Speaker 1: you know, not something as immersive, still something on screens.

441
00:26:03,040 --> 00:26:05,119
Speaker 1: Right If Web two point zero is probably mostly the

442
00:26:05,119 --> 00:26:07,879
Speaker 1: web on a mobile screen, you know Web one pointzo

443
00:26:07,920 --> 00:26:10,360
Speaker 1: is it on a desktop screen. Originally, Like I said,

444
00:26:10,359 --> 00:26:15,040
Speaker 1: these are more virtual faces and things like virtual currencies.

445
00:26:15,480 --> 00:26:17,960
Speaker 1: I still think it's pretty tough to pin it down

446
00:26:17,960 --> 00:26:22,119
Speaker 1: to sort of one specific thing right now, but I

447
00:26:22,119 --> 00:26:25,280
Speaker 1: think a few of those things are floating around. And look,

448
00:26:25,320 --> 00:26:28,359
Speaker 1: I think notwithstanding that cryptos come back a lot and

449
00:26:28,920 --> 00:26:31,520
Speaker 1: had its own challenges. I mean, I do believe over

450
00:26:31,560 --> 00:26:33,959
Speaker 1: the long term that you know, things like virtual reality

451
00:26:33,960 --> 00:26:38,560
Speaker 1: and augmented reality will be more significant. But yeah, probably

452
00:26:38,640 --> 00:26:41,199
Speaker 1: not the great big title wave of impact in the

453
00:26:41,280 --> 00:26:43,720
Speaker 1: near term just yet. Hey, Dan, I see that you

454
00:26:43,760 --> 00:26:47,320
Speaker 1: have buy ratings on the two big digital advertising plays

455
00:26:47,480 --> 00:26:50,479
Speaker 1: Meta Platforms and Halpha bit Facebook and Google for US

456
00:26:50,480 --> 00:26:55,240
Speaker 1: old timers, definitely some macroeconomic headwinds there. There might be

457
00:26:55,280 --> 00:27:00,560
Speaker 1: some regulatory overhang. What's your call on those two names?

458
00:27:00,640 --> 00:27:02,760
Speaker 1: So you know, this goes back to, like I said,

459
00:27:02,800 --> 00:27:05,199
Speaker 1: what our positioning was for the sector to start was

460
00:27:05,240 --> 00:27:08,359
Speaker 1: we wanted to be more aggressive, and you know what

461
00:27:08,400 --> 00:27:11,080
Speaker 1: that means in our space. You know, even though Internet

462
00:27:11,160 --> 00:27:14,560
Speaker 1: is a consumer space overall, it's relatively cylical in general.

463
00:27:15,000 --> 00:27:17,320
Speaker 1: You know, when you want to be greedier, you want

464
00:27:17,320 --> 00:27:20,320
Speaker 1: to get along more than digital advertising names where they

465
00:27:20,320 --> 00:27:23,720
Speaker 1: are a little bit more cyclical. And so you know, Facebook,

466
00:27:24,000 --> 00:27:25,960
Speaker 1: I'm an old timer, I still mostly got to you know.

467
00:27:26,000 --> 00:27:29,400
Speaker 1: But Meta was one name that we had function upgraded

468
00:27:29,440 --> 00:27:32,400
Speaker 1: as we came over to the new shop and set

469
00:27:32,440 --> 00:27:35,919
Speaker 1: up here at Dustry and you know, and and office.

470
00:27:35,960 --> 00:27:39,560
Speaker 1: It's worked worked really well to start the year. Um,

471
00:27:40,040 --> 00:27:42,840
Speaker 1: you know, basically that was our view as we started

472
00:27:43,000 --> 00:27:47,280
Speaker 1: was that, you know, especially still the fourth quarter. We

473
00:27:47,320 --> 00:27:50,959
Speaker 1: saw this with fourth quarter results quite choppy. My expectations

474
00:27:51,000 --> 00:27:53,280
Speaker 1: are still really for the first and second quarter to

475
00:27:53,359 --> 00:27:56,280
Speaker 1: still be pretty choppy. U in the in the digital

476
00:27:56,280 --> 00:28:02,639
Speaker 1: at economy. But that, oh it sounds like the telecommunications

477
00:28:02,800 --> 00:28:05,400
Speaker 1: for this Internet analysts or not up the snuff. Yeah,

478
00:28:05,520 --> 00:28:09,360
Speaker 1: telecoms are still as bad as they were in the nineties. Yeah.

479
00:28:09,520 --> 00:28:12,880
Speaker 1: Pros once told me, Um, you know, cell phones are

480
00:28:12,920 --> 00:28:16,040
Speaker 1: like the bane of talk radio. Yeah, you know, the

481
00:28:16,040 --> 00:28:19,520
Speaker 1: old landline. I don't have a landline, and it's no bueno. Yeah.

482
00:28:19,560 --> 00:28:22,399
Speaker 1: I don't have a landline either. Actually, Um, but I

483
00:28:22,720 --> 00:28:25,760
Speaker 1: my cell phone has I think never dropped a call.

484
00:28:26,359 --> 00:28:28,440
Speaker 1: But the cell phones of people who call in for

485
00:28:28,560 --> 00:28:32,040
Speaker 1: radio or television drop every three or four tries. So

486
00:28:32,320 --> 00:28:34,480
Speaker 1: I don't know what the problem is. In any case,

487
00:28:35,119 --> 00:28:38,680
Speaker 1: I was hoping to ask Dan about, Um, what happens

488
00:28:38,720 --> 00:28:41,520
Speaker 1: when you put AI in your name? Does that automatically

489
00:28:41,880 --> 00:28:45,200
Speaker 1: get a buy rating? Yeah, doubles your multiple I guess, um,

490
00:28:45,320 --> 00:28:48,120
Speaker 1: Dan Salman, he is a partner an analyst at New

491
00:28:48,160 --> 00:28:50,600
Speaker 1: Street Research. Hopefully he can get him back on get

492
00:28:50,680 --> 00:28:52,520
Speaker 1: him back some point. Maybe we can get him in

493
00:28:52,560 --> 00:28:55,120
Speaker 1: the studio. Where's he from, Eric, where's he calling it? Yeah?

494
00:28:55,280 --> 00:28:57,160
Speaker 1: All right, oh wait, we got him back. Yeah we

495
00:28:57,200 --> 00:29:01,320
Speaker 1: got Dan, We got you back. Okay, Hey, Danny there,

496
00:29:01,320 --> 00:29:06,800
Speaker 1: bud Well. Eric keeps saying he's there, hey there there.

497
00:29:06,800 --> 00:29:09,280
Speaker 1: We can hear you. You're cutting out intermittently, but you

498
00:29:09,280 --> 00:29:12,240
Speaker 1: should come up to the studio seven thirty one Lexington Avenue.

499
00:29:12,280 --> 00:29:16,200
Speaker 1: You can take the five of the six. We'll do that.

500
00:29:16,280 --> 00:29:19,400
Speaker 1: I'll do that properly next time. Um. I think also

501
00:29:19,480 --> 00:29:22,840
Speaker 1: the magic or lack there of a Wi Fi calling

502
00:29:22,920 --> 00:29:25,520
Speaker 1: is letting us here. But but but lonter short on

503
00:29:25,640 --> 00:29:29,080
Speaker 1: the big you know, ad driven names is I think

504
00:29:29,120 --> 00:29:31,600
Speaker 1: the risk to those names is there is a deep,

505
00:29:31,720 --> 00:29:36,080
Speaker 1: extend consumer recession and where you look where employment levels

506
00:29:36,080 --> 00:29:39,240
Speaker 1: are right now, unemployment is still relatively low. I know

507
00:29:39,280 --> 00:29:42,160
Speaker 1: we're seeing tons about layoffs from these companies and other

508
00:29:42,200 --> 00:29:46,240
Speaker 1: tech companies, but across the economy unemployment is still pretty low.

509
00:29:46,280 --> 00:29:48,720
Speaker 1: So we think the risk of an extended consumer recession

510
00:29:49,320 --> 00:29:52,160
Speaker 1: is still you know, manageable, and that you know, we

511
00:29:52,320 --> 00:29:55,080
Speaker 1: want to have exposure online advertising. If that's the case,

512
00:29:55,440 --> 00:29:57,160
Speaker 1: all right, Dan, thanks so much. Next time, we will

513
00:29:57,160 --> 00:29:59,240
Speaker 1: get you in the studio here we'll feed you some snacks.

514
00:29:59,280 --> 00:30:03,040
Speaker 1: It's all. It's a trip worth making. Dan Simmon, partner

515
00:30:03,120 --> 00:30:06,760
Speaker 1: and analysts at New Street Research, longtime media analysts on

516
00:30:06,880 --> 00:30:09,719
Speaker 1: the street at Bemo Capital Markets, talking about his new

517
00:30:09,760 --> 00:30:12,080
Speaker 1: coverage on the internet. Still pretty tell you. He's got

518
00:30:12,120 --> 00:30:14,360
Speaker 1: seven stocks under coverage right now. He's got five buys

519
00:30:14,680 --> 00:30:19,240
Speaker 1: buys on Amazon, Meta Alphabet, Snap and Match, and he's

520
00:30:19,280 --> 00:30:23,400
Speaker 1: got neutral on Trade Desk and Netflix. He's got a

521
00:30:23,480 --> 00:30:25,560
Speaker 1: neutral on Netflix. So interesting. So we'll get Dan back,

522
00:30:28,160 --> 00:30:29,800
Speaker 1: all right. I still think, you know we have. We

523
00:30:29,920 --> 00:30:32,600
Speaker 1: just got through earnings. Earnings matter, I know that, but

524
00:30:32,640 --> 00:30:34,960
Speaker 1: it just seems like this market continues to be held

525
00:30:35,000 --> 00:30:38,000
Speaker 1: hostage by the feeder reserve and and what it will do.

526
00:30:38,120 --> 00:30:41,640
Speaker 1: I wonder what they really smart people are doing these days,

527
00:30:41,640 --> 00:30:45,000
Speaker 1: like the quant people. The people do like math and stuff. Yeah,

528
00:30:45,040 --> 00:30:46,440
Speaker 1: I like to stay away from that as much as

529
00:30:46,440 --> 00:30:49,320
Speaker 1: I can. My Moon Nurani joins us here. He's co

530
00:30:49,400 --> 00:30:51,640
Speaker 1: founder of quant Insight. He joins us in our Bloomberg

531
00:30:51,640 --> 00:30:55,120
Speaker 1: Interactor Broker studio. He's based in London, but he's in

532
00:30:55,160 --> 00:30:57,200
Speaker 1: New York getting into trouble this week's We appreciate him

533
00:30:57,240 --> 00:30:59,520
Speaker 1: taking a few minutes so mama, would I wonder how

534
00:30:59,640 --> 00:31:03,280
Speaker 1: you got at a quant shot up? How you guys,

535
00:31:04,240 --> 00:31:05,880
Speaker 1: how did you do last year in twenty twenty two

536
00:31:05,920 --> 00:31:08,800
Speaker 1: and to sixty forty? Portfolio got crushed? And then how

537
00:31:08,800 --> 00:31:10,520
Speaker 1: do you look at twenty twenty three and going forward?

538
00:31:11,000 --> 00:31:14,200
Speaker 1: So last year it became so what we do is

539
00:31:14,440 --> 00:31:17,200
Speaker 1: there are lots of conflicting stories and narratives in markets,

540
00:31:17,240 --> 00:31:19,320
Speaker 1: and it can get quite confusing. What we do is

541
00:31:19,360 --> 00:31:21,760
Speaker 1: we ask the data what's going on. We have algorithms

542
00:31:21,760 --> 00:31:25,680
Speaker 1: that interrogate all the data about the economic data, what

543
00:31:25,800 --> 00:31:28,480
Speaker 1: the Fed's priced to do, stress in China, the dollar

544
00:31:28,640 --> 00:31:32,200
Speaker 1: or energy prices, and it finds the pattern and the

545
00:31:32,240 --> 00:31:35,880
Speaker 1: pattern last year February March was very clear, and that

546
00:31:35,960 --> 00:31:40,120
Speaker 1: was real rates was the driver. The daily moves we

547
00:31:40,120 --> 00:31:43,240
Speaker 1: were seeing in equity markets were all explained by shifts

548
00:31:43,280 --> 00:31:45,920
Speaker 1: in real interest rates in the US. Real interest rates

549
00:31:46,000 --> 00:31:49,000
Speaker 1: went up, the market went down. As we got towards

550
00:31:49,000 --> 00:31:51,760
Speaker 1: the end of twenty twenty two, the relationships started to

551
00:31:51,800 --> 00:31:55,160
Speaker 1: shift and the algorithms were telling us, actually, rates aren't

552
00:31:55,160 --> 00:31:58,120
Speaker 1: that important anymore. What matters now is the real economy.

553
00:31:58,400 --> 00:32:01,520
Speaker 1: So twenty twenty two was all about the FED. Twenty

554
00:32:01,600 --> 00:32:04,400
Speaker 1: twenty three going in was okay, what impact is the

555
00:32:04,440 --> 00:32:07,760
Speaker 1: FED going to have? We had. Of course, everyone's screaming

556
00:32:07,760 --> 00:32:10,320
Speaker 1: about the inverted yield curve recession is imminent. We haven't

557
00:32:10,320 --> 00:32:13,120
Speaker 1: seen that recession yet. And one of the reasons the

558
00:32:13,160 --> 00:32:15,640
Speaker 1: stock market is doing okay is because it's keying off

559
00:32:15,680 --> 00:32:18,880
Speaker 1: the real economy data now and the credit data. And actually,

560
00:32:18,920 --> 00:32:20,840
Speaker 1: if you look at the credit cycle and you look

561
00:32:20,880 --> 00:32:23,560
Speaker 1: at credit spreads, they're not screaming distress yet. So the

562
00:32:23,600 --> 00:32:27,040
Speaker 1: equity markets okay. What's really interesting is in the last

563
00:32:27,200 --> 00:32:30,440
Speaker 1: three weeks, the machine is telling us that actually rates

564
00:32:30,440 --> 00:32:34,200
Speaker 1: are starting to matter again. But there's another complicating factor

565
00:32:34,240 --> 00:32:36,320
Speaker 1: that's entered the equation in the last two months, and

566
00:32:36,360 --> 00:32:39,040
Speaker 1: that's China. And what the machine is saying is that

567
00:32:39,080 --> 00:32:43,120
Speaker 1: we've got two forces pulling in different directions. On the one,

568
00:32:43,560 --> 00:32:47,240
Speaker 1: FED terminal rates continue to rise, bad for equities. Number two,

569
00:32:47,720 --> 00:32:51,880
Speaker 1: a lot of the price action in equities is keying

570
00:32:51,920 --> 00:32:57,080
Speaker 1: off indicators of China, GDP growth, copper prices, basically China indicators,

571
00:32:57,080 --> 00:33:01,000
Speaker 1: and that's driving markets higher, particularly in Europe. That's why

572
00:33:01,000 --> 00:33:03,520
Speaker 1: we're seeing Europe out performed the US. Are you concerned

573
00:33:03,520 --> 00:33:06,280
Speaker 1: about the China news we had over the weekend that

574
00:33:06,360 --> 00:33:10,600
Speaker 1: they only and I'm using air quotes here, expect growth

575
00:33:10,600 --> 00:33:13,400
Speaker 1: of five percent. I guess that's relative to what they

576
00:33:13,400 --> 00:33:19,320
Speaker 1: would normally forecast low for a post pandemic economy. On

577
00:33:19,360 --> 00:33:21,200
Speaker 1: the other hand, it doesn't seem like such horrible news

578
00:33:21,240 --> 00:33:24,880
Speaker 1: to me, considering they won't be driving inflation at much either. Yeah,

579
00:33:24,920 --> 00:33:26,720
Speaker 1: I think you know what you have to look at

580
00:33:26,720 --> 00:33:30,320
Speaker 1: with China is the swing They went from around analyzing

581
00:33:30,320 --> 00:33:32,840
Speaker 1: two percent real GDP growth to now five percent real

582
00:33:32,880 --> 00:33:36,560
Speaker 1: GDP growth. And the way China is impacting is not

583
00:33:36,640 --> 00:33:39,360
Speaker 1: only the demand that's coming out of China, which is

584
00:33:39,440 --> 00:33:41,160
Speaker 1: hitting Europe a bit more. Europe is a bit more

585
00:33:41,200 --> 00:33:43,480
Speaker 1: leverage to China growth, but the impact that China is

586
00:33:43,480 --> 00:33:46,480
Speaker 1: having on commodity prices. And the big problem for the

587
00:33:46,520 --> 00:33:49,440
Speaker 1: FED is that China growth is creating another massive problem

588
00:33:49,480 --> 00:33:53,240
Speaker 1: for them because the more China stimulates, the higher commodity

589
00:33:53,280 --> 00:33:57,360
Speaker 1: prices go. That's not good for headline inflation. It'll feed

590
00:33:57,400 --> 00:34:00,640
Speaker 1: through to wage growth and core inflation, and it's forcing

591
00:34:00,640 --> 00:34:03,000
Speaker 1: the FED higher and higher and higher all the time.

592
00:34:03,440 --> 00:34:07,240
Speaker 1: Personal view, I think we headed above six percent terminal rates. Okay,

593
00:34:07,320 --> 00:34:11,040
Speaker 1: all right, that's it's two six percent or above six percent.

594
00:34:11,440 --> 00:34:14,920
Speaker 1: I think if China continues to grow above six percent. Wow,

595
00:34:15,440 --> 00:34:17,919
Speaker 1: all right, so that's all. That's a call rate there

596
00:34:17,920 --> 00:34:20,160
Speaker 1: with a capital C And what do you do with

597
00:34:20,239 --> 00:34:23,840
Speaker 1: a backstop of that type of interest rate call? What

598
00:34:23,920 --> 00:34:26,440
Speaker 1: are you guys doing with your capital these days? Well?

599
00:34:26,480 --> 00:34:33,400
Speaker 1: Step one is poke it in short term cash. Step two,

600
00:34:33,560 --> 00:34:36,000
Speaker 1: don't be along the bond market for the time being.

601
00:34:36,760 --> 00:34:40,959
Speaker 1: Step three weight for the buying opportunity that will come.

602
00:34:41,719 --> 00:34:44,319
Speaker 1: Because we know that six percent plus rates is going

603
00:34:44,360 --> 00:34:48,240
Speaker 1: to drive a recession in the ECB four percent plus

604
00:34:48,280 --> 00:34:51,080
Speaker 1: rates is going to drive a recession in Europe. Equity

605
00:34:51,120 --> 00:34:54,480
Speaker 1: markets are very focused on earnings recession, so equity markets

606
00:34:54,480 --> 00:34:56,360
Speaker 1: will head south. But I think it's second half of

607
00:34:56,360 --> 00:34:58,680
Speaker 1: the year. And what's caused the huge delay is China.

608
00:34:58,880 --> 00:35:01,200
Speaker 1: By the way, just to capital BOE is five because

609
00:35:01,239 --> 00:35:03,400
Speaker 1: I like four or five six That works for me. Yeah,

610
00:35:03,440 --> 00:35:06,719
Speaker 1: that sounds about wrong. Yeah. So in the city of

611
00:35:06,760 --> 00:35:08,959
Speaker 1: London with all the financial people, the ones that haven't

612
00:35:09,000 --> 00:35:10,520
Speaker 1: left to go to Paris, which we have a story

613
00:35:10,560 --> 00:35:14,520
Speaker 1: about that because our brekfit. You're not consensus, are you?

614
00:35:14,440 --> 00:35:19,719
Speaker 1: You you sound more bearished than consensus. We don't. We

615
00:35:19,760 --> 00:35:24,560
Speaker 1: don't key off consensus. We asked the data. We're quants, remember, right, right?

616
00:35:24,840 --> 00:35:27,400
Speaker 1: And so I mean do you really have money? Like,

617
00:35:27,440 --> 00:35:31,200
Speaker 1: what's your cash position today relative to maybe where you

618
00:35:31,320 --> 00:35:36,040
Speaker 1: normally like to be. I'm, you know, around eighty percent cash. Wow, dude,

619
00:35:37,000 --> 00:35:39,879
Speaker 1: it's pretty defensive. Yeah, it's been good. Well, look, when

620
00:35:39,880 --> 00:35:43,040
Speaker 1: are you gonna know when to put that cash work?

621
00:35:43,120 --> 00:35:45,600
Speaker 1: What's what are some of the signs that you or

622
00:35:45,640 --> 00:35:49,120
Speaker 1: your model um is gonna you know, suck off the

623
00:35:49,120 --> 00:35:51,719
Speaker 1: Bloomberg term a along? Go? Oh, now it's time to

624
00:35:51,800 --> 00:35:56,759
Speaker 1: buy credit sprints rs high yield credit sprints. So we

625
00:35:56,840 --> 00:36:00,200
Speaker 1: have the default data for January US bankruptcies. It was

626
00:36:00,239 --> 00:36:03,800
Speaker 1: significantly higher than Q four last year. A couple of

627
00:36:03,880 --> 00:36:07,160
Speaker 1: days ago we got the data for February it was higher. Again.

628
00:36:08,280 --> 00:36:13,680
Speaker 1: Credit spreads are still reasonably unworried. When credit spreads start

629
00:36:13,719 --> 00:36:16,560
Speaker 1: to turn higher, and that will be implying higher default

630
00:36:16,640 --> 00:36:18,680
Speaker 1: rates in the US, that is going to be the

631
00:36:18,840 --> 00:36:23,600
Speaker 1: catalyst for equity markets to turn south. And when implied

632
00:36:23,600 --> 00:36:26,239
Speaker 1: default rates getting towards the six seven eight percent, which

633
00:36:26,280 --> 00:36:28,440
Speaker 1: is pretty high and a lot higher than the three

634
00:36:28,480 --> 00:36:32,520
Speaker 1: percent now, that will be somewhat close to the bottom

635
00:36:32,520 --> 00:36:34,719
Speaker 1: of the equity market, and so that's I mean, you're

636
00:36:34,840 --> 00:36:38,520
Speaker 1: keying really off of it a material recession? Is that

637
00:36:38,560 --> 00:36:44,160
Speaker 1: how you guys think about it? Well, given the current regime? Yes, okay? Interesting,

638
00:36:44,239 --> 00:36:46,439
Speaker 1: So any sense like do you have a sense of timing?

639
00:36:46,440 --> 00:36:48,680
Speaker 1: Assist is a twenty three event? I think it's late

640
00:36:48,680 --> 00:36:51,960
Speaker 1: twenty three. And what's delaying it? Because let's face it,

641
00:36:52,280 --> 00:36:54,319
Speaker 1: if you asked everyone a year ago, fens are going

642
00:36:54,360 --> 00:36:56,480
Speaker 1: to go to four and a half or five? Yes? Right,

643
00:36:56,880 --> 00:36:57,960
Speaker 1: what do you think is going to happen to the

644
00:36:58,000 --> 00:37:01,120
Speaker 1: US economy? Everyone would have said to desire pasta well

645
00:37:01,560 --> 00:37:03,840
Speaker 1: Q one real GDP now casting in the US is

646
00:37:03,840 --> 00:37:06,520
Speaker 1: around one and a half percent positive real GDP growth.

647
00:37:06,560 --> 00:37:09,320
Speaker 1: We haven't had that disaster. Bonmarket's been, you know, sitting

648
00:37:09,360 --> 00:37:11,520
Speaker 1: so well a six percent or six and a quarter percent.

649
00:37:13,440 --> 00:37:16,400
Speaker 1: I think I think it will once the China impulse

650
00:37:16,440 --> 00:37:20,000
Speaker 1: has faded. Okay, but you know they China data today again,

651
00:37:20,040 --> 00:37:23,319
Speaker 1: growth a little bit slower than expected. Okay, not good

652
00:37:23,360 --> 00:37:26,240
Speaker 1: for the global economy. But the silver lining is perhaps

653
00:37:26,440 --> 00:37:30,200
Speaker 1: less inflationary pleasure pressure globally. Is that enough of an

654
00:37:30,239 --> 00:37:32,440
Speaker 1: offset or I don't think it is because There's a

655
00:37:32,480 --> 00:37:34,919
Speaker 1: really interesting piece of research from the San Francisco FED

656
00:37:35,000 --> 00:37:38,200
Speaker 1: recently that split out the current core inflation into the

657
00:37:38,280 --> 00:37:43,240
Speaker 1: US into its demand driven or cyclical component, and it's

658
00:37:43,280 --> 00:37:47,000
Speaker 1: a structural component, and they found that forty percent of

659
00:37:47,080 --> 00:37:50,960
Speaker 1: current core inflation in the US is actually structural. So

660
00:37:51,719 --> 00:37:54,439
Speaker 1: what this means is makes life. It makes life much

661
00:37:54,440 --> 00:37:56,120
Speaker 1: tougher for the FED because it means they're gonna have

662
00:37:56,120 --> 00:37:59,799
Speaker 1: to squeeze the demand side even more to compensate for

663
00:37:59,800 --> 00:38:03,640
Speaker 1: the fact that there's this structural and that's driven by demographics,

664
00:38:03,680 --> 00:38:07,400
Speaker 1: baby boomer retirement. You know, offshoring has become on shoring,

665
00:38:07,440 --> 00:38:11,319
Speaker 1: more expensive labor at home. Geopolitics, free trade is sort

666
00:38:11,320 --> 00:38:14,520
Speaker 1: of dying. We've moved to secure trade, managed trade, fair trade.

667
00:38:14,920 --> 00:38:17,920
Speaker 1: There are a lot of structural factors that is driving

668
00:38:17,960 --> 00:38:19,960
Speaker 1: core inflation in the US, and that makes the FED

669
00:38:20,080 --> 00:38:22,680
Speaker 1: job even hardest. It's well, the good news, Mark Mood,

670
00:38:22,840 --> 00:38:25,600
Speaker 1: is that Jerome Powell is going to testify in front

671
00:38:25,600 --> 00:38:29,600
Speaker 1: of the smart, well informed, capable people of the US

672
00:38:29,719 --> 00:38:32,239
Speaker 1: Congress over the next two days. So I'm sure they're

673
00:38:32,239 --> 00:38:34,880
Speaker 1: going to do everything they can to help solve the situation.

674
00:38:35,080 --> 00:38:39,359
Speaker 1: What is the fiscal answer, Well, I don't think the

675
00:38:39,480 --> 00:38:42,319
Speaker 1: US can really embark on any kind of fiscal expansion.

676
00:38:43,040 --> 00:38:46,080
Speaker 1: And one you know, one question, and particularly kind of

677
00:38:46,160 --> 00:38:48,640
Speaker 1: in the retail in can they clamp down? Are they

678
00:38:48,719 --> 00:38:52,400
Speaker 1: partially to blame? I mean, is there they overdid the

679
00:38:52,400 --> 00:38:55,520
Speaker 1: fiscal stimulus. We know this and that that took the

680
00:38:55,560 --> 00:39:00,440
Speaker 1: inflation genie out of the bottle, and the FED is

681
00:39:00,560 --> 00:39:03,680
Speaker 1: left dealing with the issue. And the issue is particularly

682
00:39:03,680 --> 00:39:06,799
Speaker 1: acute because if you look at the amount of government debt,

683
00:39:06,880 --> 00:39:10,040
Speaker 1: not just in the US but all developed economies over

684
00:39:10,080 --> 00:39:14,560
Speaker 1: this whole COVID crisis, it has increased dramatically. So the

685
00:39:14,600 --> 00:39:17,120
Speaker 1: problem for the FED is they cannot afford to lose

686
00:39:17,120 --> 00:39:21,279
Speaker 1: their inflation fighting credibility because if they lose the credibility,

687
00:39:21,360 --> 00:39:24,759
Speaker 1: then the bond market is you know, global bond investors

688
00:39:24,760 --> 00:39:27,120
Speaker 1: are going to demand much higher yields. We saw what

689
00:39:27,160 --> 00:39:29,759
Speaker 1: happened to the guilt market when there was a credibility

690
00:39:29,760 --> 00:39:32,880
Speaker 1: issue with the lizt Trust government, and the US just

691
00:39:32,960 --> 00:39:36,080
Speaker 1: cannot and the Eurozone just cannot afford long term government

692
00:39:36,080 --> 00:39:38,239
Speaker 1: bond deals to rise, which means that FED has to

693
00:39:38,280 --> 00:39:40,960
Speaker 1: be one hundred percent clear to the market that their

694
00:39:41,000 --> 00:39:44,120
Speaker 1: inflation fighting credibility is strong. This is a good car.

695
00:39:44,280 --> 00:39:46,000
Speaker 1: I'm glad he made a trip over from London. Yeah,

696
00:39:46,360 --> 00:39:48,719
Speaker 1: please come over more after we'll go there and you

697
00:39:48,719 --> 00:39:52,360
Speaker 1: take us to your favorite pub. Mahoudnarrani, co founder quant Insight,

698
00:39:52,640 --> 00:39:57,719
Speaker 1: given us his thoughts. All right, right now, let's bring

699
00:39:57,760 --> 00:40:02,000
Speaker 1: you our interview with JP Morgan, c EO Jamie Diamond.

700
00:40:02,040 --> 00:40:05,160
Speaker 1: He sits down with Bloomberg's Ed Hammond. Let's go to

701
00:40:05,239 --> 00:40:09,080
Speaker 1: that conversation right now, Jamie Diamond, Ed Hammond, right now,

702
00:40:11,680 --> 00:40:14,280
Speaker 1: thank you so much. Obviously, we would like to welcome

703
00:40:14,320 --> 00:40:16,880
Speaker 1: now also our listeners on Bloomberg Radio as well as

704
00:40:16,920 --> 00:40:18,640
Speaker 1: our viewers on Bloomberg TV. And I should say we're

705
00:40:18,640 --> 00:40:21,200
Speaker 1: not sitting down, we're standing up. We're here in Miami, Jamie.

706
00:40:21,200 --> 00:40:22,759
Speaker 1: Great to be back, Great to be with you, Great

707
00:40:22,800 --> 00:40:25,480
Speaker 1: to be standing What are you worried about? Great? Great

708
00:40:25,520 --> 00:40:27,840
Speaker 1: to be here, by the way, so thank you. But

709
00:40:27,960 --> 00:40:30,800
Speaker 1: they are't worry the most about if you go, it's Ukraine,

710
00:40:30,840 --> 00:40:34,000
Speaker 1: it's oil gas. So the leadership of the world, and

711
00:40:34,200 --> 00:40:36,279
Speaker 1: you know our related with China. I mean that that

712
00:40:36,480 --> 00:40:40,279
Speaker 1: is much more serious, like the economic vibrations we all

713
00:40:40,320 --> 00:40:42,280
Speaker 1: have to deal with on a day to day basis

714
00:40:43,280 --> 00:40:45,279
Speaker 1: on the Ukraine question that we talked about it a lot.

715
00:40:45,280 --> 00:40:48,360
Speaker 1: Obviously a year ago, very shortly after the war had started.

716
00:40:48,760 --> 00:40:50,919
Speaker 1: Do you think now a year in that the West

717
00:40:51,000 --> 00:40:53,680
Speaker 1: has become sort of somewhat neured to the idea of

718
00:40:53,840 --> 00:40:55,880
Speaker 1: a conflict of discale on its borders And if so,

719
00:40:56,000 --> 00:40:58,680
Speaker 1: does that worry it? No? No, it looks a little

720
00:40:58,680 --> 00:41:00,200
Speaker 1: bit like people are neured to it. But I think

721
00:41:00,200 --> 00:41:02,560
Speaker 1: that's a little bit of mistake. I read a report

722
00:41:02,560 --> 00:41:04,120
Speaker 1: the other day that there when the war goes to

723
00:41:04,200 --> 00:41:07,640
Speaker 1: one year, it lasts normally last ten. But this is

724
00:41:07,680 --> 00:41:11,360
Speaker 1: a major land war in Europe and a freedom democratic nation.

725
00:41:11,760 --> 00:41:14,080
Speaker 1: You know, the hundreds of thousands of casualties are ready

726
00:41:14,160 --> 00:41:17,160
Speaker 1: on both sides, and so I think we we don't

727
00:41:17,200 --> 00:41:18,520
Speaker 1: know how this is going to end. We know what

728
00:41:18,520 --> 00:41:22,040
Speaker 1: direction it is going to take, and it's affecting global relationships,

729
00:41:22,080 --> 00:41:27,040
Speaker 1: so Ukraine Russia then as oil gas, food of how

730
00:41:27,120 --> 00:41:32,239
Speaker 1: it's hurting poorer countries, and it's royally trade relationships between America,

731
00:41:32,360 --> 00:41:34,239
Speaker 1: China and the rest of the world. So this is

732
00:41:34,280 --> 00:41:37,239
Speaker 1: a probably the most serious geopolitical thing we've had to

733
00:41:37,280 --> 00:41:39,960
Speaker 1: deal with since World War Two? Would you We'll see

734
00:41:39,960 --> 00:41:42,239
Speaker 1: a future way people going to could potentially re enter

735
00:41:42,400 --> 00:41:45,520
Speaker 1: the Russia MAKA as a business. I mean a very

736
00:41:45,560 --> 00:41:48,040
Speaker 1: premature to say, you know, I think if there is

737
00:41:48,080 --> 00:41:51,560
Speaker 1: a one day maybe, but it's very possible that woman

738
00:41:51,600 --> 00:41:55,080
Speaker 1: happened in our lifetime. And you mentioned US China relations

739
00:41:55,080 --> 00:41:58,480
Speaker 1: obviously not at that best right now, particulity posts the balloons.

740
00:41:59,600 --> 00:42:02,920
Speaker 1: I want what role you see business playing in trying

741
00:42:02,920 --> 00:42:05,640
Speaker 1: to sort of moderate those relations and try and keep

742
00:42:05,680 --> 00:42:09,200
Speaker 1: them as good as possible. Well, you know, it's really

743
00:42:09,239 --> 00:42:12,120
Speaker 1: the government. The government has to set the rules and

744
00:42:12,160 --> 00:42:13,960
Speaker 1: fear what they want to do. But I think it's

745
00:42:13,960 --> 00:42:16,720
Speaker 1: a fair complaint about government and business that we probably

746
00:42:16,760 --> 00:42:20,080
Speaker 1: should have started resetting this ten years ago and we didn't.

747
00:42:20,120 --> 00:42:22,279
Speaker 1: I don't like a choir was billed milk and all that.

748
00:42:22,520 --> 00:42:25,160
Speaker 1: But going forward, the government and I think they're doing

749
00:42:25,239 --> 00:42:28,480
Speaker 1: a good job thinking through what is national security? So

750
00:42:28,520 --> 00:42:33,320
Speaker 1: I think it's semiconductors, earth, penicillin, certain drugs, What is

751
00:42:33,400 --> 00:42:36,080
Speaker 1: unfair trade? And then you know, at one point you

752
00:42:36,080 --> 00:42:38,920
Speaker 1: sit down and have a very serious conversation the Chinese government.

753
00:42:39,200 --> 00:42:41,440
Speaker 1: You know, we remember Secretary Blincoln was on his way

754
00:42:41,520 --> 00:42:43,880
Speaker 1: over there to do that. And then the balloon, but

755
00:42:44,080 --> 00:42:46,320
Speaker 1: at one point they'll do that, and business is a

756
00:42:46,440 --> 00:42:48,640
Speaker 1: peripheral player in that. So I think I think business

757
00:42:48,640 --> 00:42:51,000
Speaker 1: will help give advice on how to do things. If

758
00:42:51,040 --> 00:42:54,439
Speaker 1: you're gonna have an outbound investment controls how you said

759
00:42:54,480 --> 00:42:57,480
Speaker 1: that way, that works a huge bureaucracy. And so so

760
00:42:57,640 --> 00:43:00,400
Speaker 1: far all the conversation had been quite rational about it.

761
00:43:01,040 --> 00:43:03,960
Speaker 1: I mean, JP Morgan obviously has a significant business in China.

762
00:43:04,560 --> 00:43:06,560
Speaker 1: I'm sure that the government that would listen to you.

763
00:43:07,200 --> 00:43:09,520
Speaker 1: What are the conversations you have just about sort of

764
00:43:09,600 --> 00:43:12,880
Speaker 1: trying to, as I say, trying to maintain as cordial

765
00:43:12,920 --> 00:43:16,120
Speaker 1: relations as possible between the two nations. I mean, you know,

766
00:43:16,239 --> 00:43:19,120
Speaker 1: for us, we're there and like I said, you know,

767
00:43:19,200 --> 00:43:22,600
Speaker 1: we're we're basically taking a backseat or American government in

768
00:43:22,680 --> 00:43:25,840
Speaker 1: this one, and we're gonna we're obviously have to do

769
00:43:25,920 --> 00:43:28,080
Speaker 1: whatever the American government asked us to do, and we're

770
00:43:28,120 --> 00:43:30,000
Speaker 1: trying to engage in their courage of their own government

771
00:43:30,440 --> 00:43:32,480
Speaker 1: and with the Chinese government and what those things should be.

772
00:43:32,960 --> 00:43:35,719
Speaker 1: You know, I'm hoping cooler has prevailed here. But this

773
00:43:35,880 --> 00:43:38,600
Speaker 1: is why Ukraine is so important. This can cause it

774
00:43:38,680 --> 00:43:42,000
Speaker 1: to go in a bad direction rather quickly. So uh,

775
00:43:42,200 --> 00:43:44,719
Speaker 1: you know, everyone's got to be some little cautions you

776
00:43:44,840 --> 00:43:46,680
Speaker 1: talk about our government. Let's talk about the FED for

777
00:43:46,680 --> 00:43:49,440
Speaker 1: a moment, obviously, I just want to talk about the

778
00:43:49,480 --> 00:43:52,240
Speaker 1: FED for a moment. I have half a dozen posaic

779
00:43:52,360 --> 00:43:54,080
Speaker 1: questions I can ask you about the FED. I think

780
00:43:54,080 --> 00:43:55,759
Speaker 1: I know the answer to many of them. Start trying

781
00:43:55,760 --> 00:43:59,239
Speaker 1: to find one fairly easy one is, you know, when

782
00:43:59,360 --> 00:44:01,680
Speaker 1: do we get to say we're landing, be that hard

783
00:44:01,760 --> 00:44:03,480
Speaker 1: landing or a soft landing sort of when does that

784
00:44:03,920 --> 00:44:06,800
Speaker 1: begin to a cup? You know, forecasting the future is,

785
00:44:06,840 --> 00:44:10,120
Speaker 1: as you know, very complicated. The consumer still has a

786
00:44:10,160 --> 00:44:13,000
Speaker 1: lot more money in their checking accounts than before COVID.

787
00:44:13,400 --> 00:44:16,160
Speaker 1: They're spending ten percent more than last year, forty percent

788
00:44:16,239 --> 00:44:18,520
Speaker 1: more than pre COVID, and it looks like they'll have

789
00:44:18,640 --> 00:44:22,040
Speaker 1: excess point to spend roughly until the end of the year.

790
00:44:22,600 --> 00:44:24,000
Speaker 1: And at that point or you can say, is it

791
00:44:24,000 --> 00:44:25,720
Speaker 1: a little bit of a cliff? Is a soft landing?

792
00:44:26,040 --> 00:44:28,959
Speaker 1: And also QT has nar start to bite That also

793
00:44:29,040 --> 00:44:31,279
Speaker 1: is gonna happen at one point, probably later this year,

794
00:44:31,680 --> 00:44:33,480
Speaker 1: and you know that's when you're gonna know what these

795
00:44:33,520 --> 00:44:36,520
Speaker 1: things do. But you weaken still have a soft landing

796
00:44:37,239 --> 00:44:39,840
Speaker 1: and the other thing about all this economic forecasting is

797
00:44:40,360 --> 00:44:43,800
Speaker 1: Russia Ukraine. I mean that can change it dramatically and

798
00:44:44,120 --> 00:44:47,200
Speaker 1: very very quickly. Do you think absent Russia Ukraine we

799
00:44:47,360 --> 00:44:50,320
Speaker 1: will have a soft landing. I think it's still possible,

800
00:44:50,400 --> 00:44:54,080
Speaker 1: but I would I look at possibilities all possible possible.

801
00:44:54,640 --> 00:45:00,279
Speaker 1: I think mild recessions possible, harder recessions possible. Is a

802
00:45:00,360 --> 00:45:03,160
Speaker 1: good chance that inflation will come down, but not enough

803
00:45:03,640 --> 00:45:06,440
Speaker 1: by the fourth quarter that may actually have to do more.

804
00:45:06,840 --> 00:45:08,320
Speaker 1: And I think a lot of things that happened in

805
00:45:08,360 --> 00:45:11,960
Speaker 1: the world, think of the bigger trends are inflationary. You know,

806
00:45:12,120 --> 00:45:16,040
Speaker 1: infrastructure spending, the IRA Act less, any trade with you

807
00:45:16,080 --> 00:45:19,680
Speaker 1: know certain parts of the world, we bringing trade back

808
00:45:19,760 --> 00:45:23,880
Speaker 1: into America. Those things are all the green transition is

809
00:45:23,880 --> 00:45:25,839
Speaker 1: going to take a lot of capital to all those

810
00:45:25,920 --> 00:45:28,800
Speaker 1: things kind of have inflationary attributes that are very different

811
00:45:28,800 --> 00:45:30,640
Speaker 1: than we've been through the last twenty years. I'm gonna

812
00:45:30,680 --> 00:45:32,520
Speaker 1: come back to the consumer point in a second. But

813
00:45:32,880 --> 00:45:35,080
Speaker 1: last year you talked about and your letter this sort

814
00:45:35,080 --> 00:45:38,560
Speaker 1: of confluence of three major effects. It's qt the America

815
00:45:38,600 --> 00:45:41,520
Speaker 1: rebounding from a sort of post COVID economy, fedly, strongly

816
00:45:41,920 --> 00:45:44,719
Speaker 1: and then oversee the wall as well. You talked about

817
00:45:44,760 --> 00:45:47,480
Speaker 1: them sort of leading us into an unprecedented period. How

818
00:45:47,560 --> 00:45:50,279
Speaker 1: do we get out of that period? You know, it's

819
00:45:50,400 --> 00:45:53,239
Speaker 1: it's diplomacy. I mean, that's why this is not you know,

820
00:45:53,280 --> 00:45:55,960
Speaker 1: we always talk about uncertainty in the economy and the incertainty,

821
00:45:56,160 --> 00:45:59,080
Speaker 1: but I call it normal uncertainty. The weather is, you know,

822
00:45:59,160 --> 00:46:01,239
Speaker 1: we know what the west, there's life. That's why these

823
00:46:01,320 --> 00:46:05,279
Speaker 1: things are different. Qt coming out of COVID, the war

824
00:46:05,360 --> 00:46:07,439
Speaker 1: in Ukraine. I think it's been pushed out a little

825
00:46:07,440 --> 00:46:09,160
Speaker 1: bit further. I would have thought we'd be dealing with

826
00:46:09,160 --> 00:46:11,120
Speaker 1: this a little bit sooner, but it does look like

827
00:46:11,239 --> 00:46:13,960
Speaker 1: some of that stuff it's coming to fruition at the

828
00:46:14,040 --> 00:46:16,560
Speaker 1: end of this year. Russia, Ukraine, we sussif we don't know,

829
00:46:16,960 --> 00:46:19,239
Speaker 1: I think it's wrong. It's didn't predict because if you

830
00:46:19,320 --> 00:46:22,160
Speaker 1: look at the history of wars, they've been pretty much

831
00:46:22,239 --> 00:46:26,000
Speaker 1: unpredictable and how they play out, and which ones affect

832
00:46:26,160 --> 00:46:28,480
Speaker 1: the global economy, and how they took a lot of

833
00:46:28,520 --> 00:46:30,960
Speaker 1: wars they didn't affect the global economy, but they were

834
00:46:31,080 --> 00:46:33,759
Speaker 1: literally in very small parts of the economy. This is

835
00:46:33,840 --> 00:46:36,400
Speaker 1: not in a small part of the economy, and this

836
00:46:36,600 --> 00:46:40,640
Speaker 1: is a European nation, it's Russia, and it's oil and

837
00:46:40,760 --> 00:46:43,600
Speaker 1: you know, major oil and gas supply and food supply

838
00:46:43,719 --> 00:46:47,040
Speaker 1: around the world. So this is a whole different attribute

839
00:46:47,040 --> 00:46:49,480
Speaker 1: to it. But then why does the consumer, particularly here

840
00:46:49,520 --> 00:46:53,600
Speaker 1: in the US, remain, as you say, fairly bullish there

841
00:46:54,360 --> 00:46:56,200
Speaker 1: Over a period of time, their home pride has been

842
00:46:56,239 --> 00:46:58,840
Speaker 1: going up, jobs a plentiful ways of going up to

843
00:46:58,880 --> 00:47:00,799
Speaker 1: the lower end, which I think it's a good thing.

844
00:47:01,080 --> 00:47:04,120
Speaker 1: They've got a lot of money to checking account. You know, Uh,

845
00:47:04,520 --> 00:47:07,480
Speaker 1: stocks generally been had gone up for ten or fifteen years.

846
00:47:07,840 --> 00:47:11,240
Speaker 1: The consumers, if you look at today, in great shape.

847
00:47:11,719 --> 00:47:13,799
Speaker 1: But I'm telling you that's going to end at one point.

848
00:47:14,480 --> 00:47:16,560
Speaker 1: But even if we go to recession, then the consumer

849
00:47:16,880 --> 00:47:19,560
Speaker 1: is entering a recession better shape, far better shape than

850
00:47:19,560 --> 00:47:21,360
Speaker 1: they didn't know eight you know, no way when we

851
00:47:21,440 --> 00:47:23,680
Speaker 1: went to that recession knowing did own employment go through

852
00:47:23,719 --> 00:47:27,040
Speaker 1: the roof. But their home prices are dropping dramatically, jobs

853
00:47:27,080 --> 00:47:30,680
Speaker 1: are disappearing, the stock market is way down. So this

854
00:47:30,840 --> 00:47:33,560
Speaker 1: one is a little bit better than that. One of

855
00:47:33,640 --> 00:47:36,480
Speaker 1: the sort of narratives that it's fairly popular at the moment.

856
00:47:36,480 --> 00:47:39,359
Speaker 1: It's the consumer doesn't like uncertainty. I would even though

857
00:47:39,400 --> 00:47:40,800
Speaker 1: as far as saying it's it's sort of one of

858
00:47:40,840 --> 00:47:43,520
Speaker 1: these false axioms, that's you know, that's payble the thought

859
00:47:43,640 --> 00:47:45,480
Speaker 1: now that you know, when it's times are uncertain it

860
00:47:45,560 --> 00:47:48,160
Speaker 1: consumer freaks out. They stopped spending, They stopped doing the

861
00:47:48,239 --> 00:47:49,680
Speaker 1: things that the consumer needs to do to keep the

862
00:47:49,719 --> 00:47:52,319
Speaker 1: economy going. That doesn't seem to be the case here.

863
00:47:52,360 --> 00:47:55,160
Speaker 1: The consumer's done pretty well through uncertainty, through COVID, through

864
00:47:55,160 --> 00:47:57,799
Speaker 1: the wall, through everything else. So I wonder what when

865
00:47:57,880 --> 00:48:00,640
Speaker 1: we get to this point of you know, the wallet

866
00:48:00,719 --> 00:48:03,200
Speaker 1: being hit and the consumers saying we're gonna stop spending.

867
00:48:03,360 --> 00:48:05,719
Speaker 1: Is it just reality catching up with them? Is this

868
00:48:05,800 --> 00:48:07,200
Speaker 1: some kind of deflection point? Where is it just that

869
00:48:07,239 --> 00:48:09,800
Speaker 1: they run out of money? I early is destroyed by COVID,

870
00:48:09,960 --> 00:48:13,800
Speaker 1: including quote uncertainty. So you have, you're obviously correct confidence

871
00:48:13,880 --> 00:48:17,279
Speaker 1: consumer covers is dropping it. But I think your pocketbook

872
00:48:17,320 --> 00:48:20,080
Speaker 1: trump's confidence. But they have a lot of money, they

873
00:48:20,160 --> 00:48:22,600
Speaker 1: tend to spend it. And you see here like look

874
00:48:22,640 --> 00:48:25,279
Speaker 1: at the travel in Miami and the building and the

875
00:48:25,440 --> 00:48:27,839
Speaker 1: optimism around. But if you ask me how they're doing,

876
00:48:27,840 --> 00:48:29,800
Speaker 1: it's very good. And then they tell them they're not

877
00:48:29,880 --> 00:48:34,040
Speaker 1: comed by the economy. So jobs are plentiful, wages are

878
00:48:34,080 --> 00:48:37,040
Speaker 1: going up. I mean, what, that's what's really affecting them.

879
00:48:37,280 --> 00:48:38,680
Speaker 1: You know, when they wake up the morning, they feel

880
00:48:38,719 --> 00:48:40,720
Speaker 1: pretty good about that, and then they read the paper

881
00:48:40,760 --> 00:48:42,920
Speaker 1: and of course you can get a little depressed and

882
00:48:43,239 --> 00:48:45,320
Speaker 1: views at the end of this year. What's towards the

883
00:48:45,400 --> 00:48:47,120
Speaker 1: end of this year that sort of begins to tell

884
00:48:47,160 --> 00:48:51,120
Speaker 1: it looks but it looks like the excess cashle be disappearing.

885
00:48:51,600 --> 00:48:53,680
Speaker 1: And then but the jobs are still there, so you

886
00:48:53,719 --> 00:48:55,520
Speaker 1: could That's why he said you could have a soft landing.

887
00:48:55,600 --> 00:49:01,720
Speaker 1: So now Jeffrey Epstein, obviously hey specter continues to haunt

888
00:49:01,760 --> 00:49:05,360
Speaker 1: the global elite and most recently JP Morgan have been

889
00:49:05,440 --> 00:49:07,480
Speaker 1: sort of caught up in it. How has that made

890
00:49:07,480 --> 00:49:11,040
Speaker 1: you feel? I can't talk about litigation, but you should

891
00:49:11,200 --> 00:49:13,600
Speaker 1: you should know that a JP Moore, we got top experts,

892
00:49:13,840 --> 00:49:15,640
Speaker 1: including some of the best people that come out of

893
00:49:15,680 --> 00:49:19,680
Speaker 1: the DOJ, etc. Who review and make judgment decisions like this,

894
00:49:20,320 --> 00:49:24,040
Speaker 1: and we've they've generally do a very good job. But

895
00:49:24,160 --> 00:49:25,840
Speaker 1: how does it make you feel? As the CEO of

896
00:49:25,960 --> 00:49:28,320
Speaker 1: JP Morgan as a figureheads for the bank. It's unfortunate,

897
00:49:28,440 --> 00:49:32,520
Speaker 1: but it's life. And look, we're here in Florida. We

898
00:49:32,640 --> 00:49:35,880
Speaker 1: have to talk about politics because we always talk about politics.

899
00:49:35,920 --> 00:49:38,960
Speaker 1: Obviously we're into census. It's back yard. What do you

900
00:49:39,080 --> 00:49:42,239
Speaker 1: make of his if you like hands on approach to

901
00:49:42,320 --> 00:49:43,920
Speaker 1: business and is that something you would like to see

902
00:49:44,000 --> 00:49:48,480
Speaker 1: more of in even higher office? Solution an approach the sentence. Look,

903
00:49:48,520 --> 00:49:52,160
Speaker 1: I know, like I've learned and listen and read and

904
00:49:52,160 --> 00:49:54,040
Speaker 1: stuff like that. You know, it's it has got a

905
00:49:54,080 --> 00:49:56,600
Speaker 1: little complicated between business and government and stuff like that.

906
00:49:56,800 --> 00:49:59,320
Speaker 1: But but you know, anyone here knows that I'm a

907
00:50:00,040 --> 00:50:05,520
Speaker 1: full throated, red blooded American patriot supporter free enterprise. So

908
00:50:05,800 --> 00:50:08,200
Speaker 1: you know, I hear the complains on both sides, but

909
00:50:08,360 --> 00:50:09,919
Speaker 1: you know you listened to learn from them. I don't

910
00:50:09,920 --> 00:50:13,840
Speaker 1: worry that much about it. And we've been We've loved Florida.

911
00:50:13,920 --> 00:50:17,239
Speaker 1: We're growing in Florida left and right. You know, small businesses,

912
00:50:17,480 --> 00:50:20,160
Speaker 1: large companies. We've got. I've got how many total employees

913
00:50:20,160 --> 00:50:21,560
Speaker 1: we have for you. I'm on my way to Tampa.

914
00:50:21,560 --> 00:50:25,319
Speaker 1: We've got you know, major operations there Orlando, major operations

915
00:50:25,920 --> 00:50:28,839
Speaker 1: were opening branches and so the mayor just joined us

916
00:50:28,840 --> 00:50:31,040
Speaker 1: in a small business event we did here we're very

917
00:50:31,120 --> 00:50:34,320
Speaker 1: pro pro Florida. And this is long dates at Florida.

918
00:50:34,400 --> 00:50:36,360
Speaker 1: This isn't part of the sort of recent influx of

919
00:50:36,400 --> 00:50:40,239
Speaker 1: capital in Florida or financial wild and Florida packs. I

920
00:50:40,320 --> 00:50:42,040
Speaker 1: think they've been great. I mean, you know, if you

921
00:50:42,160 --> 00:50:44,439
Speaker 1: were running the state, you know you should be thinking,

922
00:50:44,480 --> 00:50:46,640
Speaker 1: how can I make this date off good? Well off

923
00:50:46,760 --> 00:50:50,879
Speaker 1: my people. So Florida likes business. They want you to come.

924
00:50:51,000 --> 00:50:52,600
Speaker 1: You know, you come to Florida, you see the opting

925
00:50:52,920 --> 00:50:55,640
Speaker 1: Texas is the same way. You know if I was

926
00:50:56,040 --> 00:50:58,080
Speaker 1: some other states. If you think about why do people

927
00:50:58,160 --> 00:51:00,320
Speaker 1: like going to these dates, it's their tax is is

928
00:51:00,360 --> 00:51:03,080
Speaker 1: their pro business. They want better life for the people.

929
00:51:03,320 --> 00:51:05,600
Speaker 1: It's not necessary some of the parts we've talked about.

930
00:51:05,880 --> 00:51:08,360
Speaker 1: So you know, we now have more employees in Texas

931
00:51:08,440 --> 00:51:10,600
Speaker 1: than the New York's day. You know it should have

932
00:51:10,680 --> 00:51:13,160
Speaker 1: been the way, but Texas loves to be there. I mean,

933
00:51:13,200 --> 00:51:16,800
Speaker 1: you go through there optimistic. They're optimistic here pro American

934
00:51:16,880 --> 00:51:23,359
Speaker 1: optimistic business. No. Unfortunately, No. Every year there's a sort

935
00:51:23,360 --> 00:51:25,560
Speaker 1: of tech topic to jur that we talk about last

936
00:51:25,600 --> 00:51:27,480
Speaker 1: year as a metaverse, and I think we talked briefly

937
00:51:27,520 --> 00:51:30,360
Speaker 1: about you appearing in a non physical form in the

938
00:51:30,440 --> 00:51:32,919
Speaker 1: lobby of the METS verse. This here, it's uh, it's AI.

939
00:51:34,239 --> 00:51:37,040
Speaker 1: I asked chat GPT what I should ask Jamie Diamond.

940
00:51:37,040 --> 00:51:38,200
Speaker 1: I was hoping he would come up with a really

941
00:51:38,239 --> 00:51:40,600
Speaker 1: smart answer. I wouldn't need to write any of my questions.

942
00:51:40,600 --> 00:51:42,160
Speaker 1: I could get it to do the whole interview for me.

943
00:51:42,719 --> 00:51:45,920
Speaker 1: So so it didn't. Unfortunately, it asked what would I

944
00:51:46,000 --> 00:51:49,480
Speaker 1: asked Jamie Diamond about AI and what it meant for

945
00:51:49,520 --> 00:51:53,719
Speaker 1: the future of investment. Let so AI is real. This

946
00:51:54,000 --> 00:51:57,719
Speaker 1: is not great total, that's not cryptn't this is a

947
00:51:57,880 --> 00:52:02,160
Speaker 1: technology which is staggering. Already lose three hundred AI. We

948
00:52:02,280 --> 00:52:05,680
Speaker 1: have thousands of people of thousand involved data, machine learning,

949
00:52:05,800 --> 00:52:08,520
Speaker 1: natural language process saying, we have two hundred people in

950
00:52:08,560 --> 00:52:14,600
Speaker 1: AI research labs. But we're already used to do risk fraud, marketing, prospecting,

951
00:52:14,960 --> 00:52:17,040
Speaker 1: and it's the tip of the iceberg. So you know,

952
00:52:17,160 --> 00:52:19,960
Speaker 1: to me, this is this is extraordinary. And the other

953
00:52:19,960 --> 00:52:22,839
Speaker 1: thing to keep in mind there's good use, but bad

954
00:52:22,880 --> 00:52:24,480
Speaker 1: guys are going to use it too, So it's a

955
00:52:24,520 --> 00:52:27,160
Speaker 1: little bit of arms race and how you have to

956
00:52:27,280 --> 00:52:29,200
Speaker 1: use it to protect your company and protect your clients,

957
00:52:29,280 --> 00:52:32,480
Speaker 1: protect data, etc. And we're fully engaged and the other

958
00:52:32,520 --> 00:52:34,680
Speaker 1: thing you have to keep about AI. You need to

959
00:52:34,719 --> 00:52:37,400
Speaker 1: be in the cloud to use the compute power fundamentally

960
00:52:37,640 --> 00:52:40,320
Speaker 1: that you need for AI. And so that's why the cloud,

961
00:52:40,440 --> 00:52:42,759
Speaker 1: digital AI, they're all kind of related that way. What

962
00:52:42,960 --> 00:52:46,400
Speaker 1: was behind the decision to ban chet chpt on the

963
00:52:46,680 --> 00:52:51,680
Speaker 1: on the trading float on company owned devices. That's why

964
00:52:51,800 --> 00:52:53,440
Speaker 1: you could do it in your own device, but we

965
00:52:53,520 --> 00:52:57,239
Speaker 1: also lab people use it within our own firewalls, so

966
00:52:57,360 --> 00:52:59,400
Speaker 1: we didn't take it away just you have to go

967
00:52:59,520 --> 00:53:01,759
Speaker 1: within our firewall to use it, and it was just

968
00:53:01,800 --> 00:53:05,000
Speaker 1: for control purposes and riskpers There's no wasn't a statement

969
00:53:05,080 --> 00:53:07,440
Speaker 1: of any time before we end up. I want to

970
00:53:07,440 --> 00:53:10,120
Speaker 1: get on celebriage finance obviously that's in large part why way, Hey,

971
00:53:10,120 --> 00:53:11,920
Speaker 1: it's still about the conference. One of the things Stavid

972
00:53:11,960 --> 00:53:14,120
Speaker 1: Morgan still at the moment it's very interesting is lending

973
00:53:14,239 --> 00:53:16,560
Speaker 1: from its own balanced sheet and direct lending. If you're like,

974
00:53:17,360 --> 00:53:19,279
Speaker 1: at the moment, I think it's ten billion dollars is

975
00:53:19,280 --> 00:53:23,239
Speaker 1: what's been allocated? How big can that business get? So,

976
00:53:23,400 --> 00:53:25,799
Speaker 1: you know, I mean, it's amazing. And this is when

977
00:53:25,880 --> 00:53:29,200
Speaker 1: you look at something like this for reviewers American capitalism,

978
00:53:29,360 --> 00:53:32,080
Speaker 1: there are two thousand investors here from around the world.

979
00:53:32,480 --> 00:53:36,880
Speaker 1: Hundreds of companies still inventing ideas and growing and expanding,

980
00:53:36,960 --> 00:53:40,279
Speaker 1: both in the US and overseas. It is, it is extraordinary.

981
00:53:40,440 --> 00:53:42,200
Speaker 1: So direct lending, you know, obviously one of the biggest

982
00:53:42,239 --> 00:53:44,080
Speaker 1: lenders out there, but a lot of people here are

983
00:53:44,080 --> 00:53:46,759
Speaker 1: also huge lenders. So you know, I meet with them all,

984
00:53:46,800 --> 00:53:49,680
Speaker 1: and you know, direct lending away from banks to become

985
00:53:49,800 --> 00:53:51,879
Speaker 1: equally in size and something. Think of those heals as

986
00:53:51,880 --> 00:53:53,759
Speaker 1: competitives there and there. You know that's a lot, but

987
00:53:53,840 --> 00:53:56,800
Speaker 1: we deal with competitors and collaborators all the time. So

988
00:53:57,280 --> 00:53:59,759
Speaker 1: we do direct lending and all. It is fundamental if

989
00:53:59,800 --> 00:54:04,839
Speaker 1: you're viewers, you know, unitron quicker, more flexibility, and certain

990
00:54:04,880 --> 00:54:07,480
Speaker 1: type of covenants not necessarily cheaper for the borrower, by

991
00:54:07,520 --> 00:54:09,439
Speaker 1: the way, so you gotta look at it all things.

992
00:54:09,480 --> 00:54:11,880
Speaker 1: So we've done I think ten million forty deals. We

993
00:54:11,960 --> 00:54:13,759
Speaker 1: could do a lot more, and you know we can

994
00:54:13,840 --> 00:54:15,560
Speaker 1: work with partners or some of the deals, etc. But

995
00:54:15,800 --> 00:54:18,520
Speaker 1: we'll do what we need to do to compete. Feel

996
00:54:18,560 --> 00:54:20,600
Speaker 1: someone pass to ask you about succession. You get asked

997
00:54:20,600 --> 00:54:21,920
Speaker 1: about it all the time. I'm not going to do that,

998
00:54:22,600 --> 00:54:25,200
Speaker 1: but I am interested. You talk a lot about the

999
00:54:25,320 --> 00:54:28,560
Speaker 1: need for sort of unified responses to global conflict. You

1000
00:54:28,640 --> 00:54:30,680
Speaker 1: talk a lot about things that are needed domestically, whether

1001
00:54:30,719 --> 00:54:35,880
Speaker 1: it's better health, better education, raising wage inequality or reducing

1002
00:54:35,880 --> 00:54:38,720
Speaker 1: i should say wage in equality. It seems very obvious

1003
00:54:38,800 --> 00:54:41,160
Speaker 1: that you could go into public office if you chose

1004
00:54:41,239 --> 00:54:43,560
Speaker 1: to when you leave, Jake Mulgan, it's that's something we

1005
00:54:43,600 --> 00:54:45,880
Speaker 1: can expect. I'm not going to go into public service.

1006
00:54:46,239 --> 00:54:49,120
Speaker 1: I love what I do here. You know you mentioned succession.

1007
00:54:49,440 --> 00:54:53,400
Speaker 1: I enjoy it. I think you should practice it a

1008
00:54:53,440 --> 00:54:55,759
Speaker 1: little bit before you go into it, and I mean

1009
00:54:55,920 --> 00:54:57,920
Speaker 1: I feel that I do here's a huge contribution to

1010
00:54:58,040 --> 00:55:01,800
Speaker 1: my country, My clients are around the world, etc. And

1011
00:55:01,840 --> 00:55:04,480
Speaker 1: the other thing about succession, you got you guys already

1012
00:55:04,520 --> 00:55:06,719
Speaker 1: know who that we have a lot of potential successors,

1013
00:55:07,160 --> 00:55:09,400
Speaker 1: so you can add right about it frequented exactly, so

1014
00:55:09,760 --> 00:55:12,439
Speaker 1: you know, I couldn't answer that you already know, all right, Bil,

1015
00:55:12,600 --> 00:55:14,880
Speaker 1: Jamie Diamond, great conversation. Thank you so much for having us,

1016
00:55:15,320 --> 00:55:17,040
Speaker 1: and with that guy, I'll tide it back to you

1017
00:55:17,120 --> 00:55:21,560
Speaker 1: in New York. Thanks for listening to the Bloomberg Markets podcast.

1018
00:55:21,960 --> 00:55:25,120
Speaker 1: You can subscribe and listen to interviews with Apple podcasts,

1019
00:55:25,320 --> 00:55:29,239
Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm

1020
00:55:29,280 --> 00:55:32,719
Speaker 1: on Twitter at Matt Miller nineteen seventy three. And I'm

1021
00:55:32,760 --> 00:55:35,760
Speaker 1: fall Sweeney. I'm on Twitter at pt Sweeney. Before the podcast,

1022
00:55:35,880 --> 00:55:38,359
Speaker 1: you can always catch us worldwide at Bloomberg Radio