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Speaker 3: I'm Alex Thee alongside pauls.
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Speaker 3: two thousand companies and one hundred and thirty industries worldwide,
Speaker 3: and we're going to check in with one of them
Speaker 3: now on Goldman Sachs sitting at a record high and
Speaker 3: this was all thanks to the traditional old school Goldman
Speaker 3: Sacks business FIC and equity trading, just crushing analyst estimates.
Speaker 3: For that, we want to go to Alison Williams, Boomberg Intelligence,
Speaker 3: senior analysts for global banks and asset managers. Alison the
Speaker 3: highlights and is it worth the record high on Goldman stock?
Speaker 3: Goldman Sachs stock, that is hard. That is hard to say.
Speaker 5: Well, as you know, we don't make stock calls, but
Speaker 5: I can tell you that the fundamentals are strong and
Speaker 5: Goldman is really, you know, showing that it made the
Speaker 5: right decision in the last couple of years to focus
Speaker 5: back on its core institutional businesses. Out of all the
Speaker 5: global banks, they have been the most focused on this business.
Speaker 5: They earn the most from trading, and they're definitely showing
Speaker 5: progress in different aspects of the business that they've focused on.
Speaker 5: So for example, fixed income trading up fifteen to twenty percent,
Speaker 5: doing a lot of financing assets in that business. Equity
Speaker 5: trading also up strong. The one area that was a
Speaker 5: little bit weak was the M and A fee side.
Speaker 5: They are typically the global leader in fees, but JP
Speaker 5: Morten really sort of leapfrogging them this quarter. But the
Speaker 5: positive thing is that they talked about the investment banking
Speaker 5: feed pipeline increasing sequentially. That looks good for the third quarter.
Speaker 5: On the expense side of things, also showing some good
Speaker 5: cost control on the non compensation expenses, but on the
Speaker 5: compensation expenses the ratio they're actually going up a little bit.
Speaker 6: Ah interesting Okay. Also, what kind of returns do the
Speaker 6: Goldman Saxes of the world earn on their their global
Speaker 6: trading businesses today. I know that you with coming down
Speaker 6: a great financial crisis, lots of regulations, lots of limits.
Speaker 6: Where is Goldman in some of their big peers.
Speaker 5: So certainly, I mean the returns are not what they
Speaker 5: used to be, and it depends on the specific vertical.
Speaker 7: I think if you look at fixed.
Speaker 5: Income trading, it tends to have sort of a higher
Speaker 5: pretax margin, but the returns on equity tend to be
Speaker 5: lower because it's a little bit capital intensive. But for
Speaker 5: the bank overall turning in double digit return, so I
Speaker 5: think showing a good return overall.
Speaker 3: Do you think that Goldman Sacks has left behind it?
Speaker 3: It's Marcus fiasco. It's pushed into consumer banking. Is that
Speaker 3: is that chapter officially closed?
Speaker 5: That chapter is closed. Keep in mind that they are
Speaker 5: still focusing on gathering deposits, right, So what they've closed
Speaker 5: is you know, saying we're going to expand into all
Speaker 5: these businesses incrementally add to something that they've never had
Speaker 5: a leadership position in and sort of you know, making
Speaker 5: an entry a new market, changing the business model, if
Speaker 5: you will. Instead, they said they're going to go back to,
Speaker 5: you know, focusing on what they're good at.
Speaker 8: They do have the.
Speaker 5: Transaction banking business, which is something that they've entered into
Speaker 5: recent years. But we think that business makes sense for them.
Speaker 5: I think it helps them to serve their corporate clients
Speaker 5: and on the consumer side stepping away from lending. So
Speaker 5: they still have a couple of lending products left. But
Speaker 5: I'm sure everyone has seen the headlines related to Apple
Speaker 5: and know that those are probably going away too. They're
Speaker 5: really just sticking to the deposit side of things as
Speaker 5: sort of diversification of funding.
Speaker 6: So talk to us about their asset and wealth management business.
Speaker 6: I know it's about thirty percent of their revenue these days.
Speaker 6: What's their focus for that going forward.
Speaker 5: Yeah, that's a good question, Paul, and really highlights one
Speaker 5: of the areas of strength this quarter, which is raising
Speaker 5: money in their alternatives business. This has been a strategy,
Speaker 5: you know, several years ago they embarked on shifting from
Speaker 5: the Goldman that we know for decades and decades of
Speaker 5: investing their own money, using that expertise to really invest
Speaker 5: more for clients and making those revenues sort of more
Speaker 5: of a fee based revenue management money for clients versus
Speaker 5: just the proprietary gains that they would get on those
Speaker 5: types of assets, and they are doing really well in
Speaker 5: terms of exceeding their targets for raising money there and
Speaker 5: at the end of the day, these are that's sort
Speaker 5: of a better proposition to to investors in the stock
Speaker 5: because investors generally tend to like to have more recurring,
Speaker 5: revenue based businesses and capital light businesses.
Speaker 3: Okay, so tomorrow we get Bank of America, which is
Speaker 3: currently in a fifty two week high, and Morgan Stanley.
Speaker 3: How are they going to do? Knowing what we know
Speaker 3: from City, JP and Goldman.
Speaker 5: Sure, so a couple of different stories. I mean, the
Speaker 5: read through is really positive for Morgan Stanley in terms
Speaker 5: of the institutional business, but certainly they need to jump
Speaker 5: over that higher bar because according to consensus right now,
Speaker 5: JP Morgan moving into the number two spot for equities
Speaker 5: trading revenue. Keep in mind that Morgan Stanley was number
Speaker 5: one for several years, Goldman's number one now and JP
Speaker 5: Morgan moving up. But equities trading should be good, fees
Speaker 5: should be good. I think people will be watching on
Speaker 5: the wealth management side of things just due to some
Speaker 5: pricing changes that we saw at Wells. So I think
Speaker 5: that's what people are going to be watching there also
Speaker 5: the compensation ratio to see what's happening across the industry.
Speaker 5: Bank of America on that interest income again, we had
Speaker 5: sort of that negative surprise from Wells Fargo related to
Speaker 5: their wealth management business. What are we going to hear
Speaker 5: from Bank America with regard to that. We do expect
Speaker 5: that we'll see the same capital market strength. We're also
Speaker 5: wondering on the commercial loan side of things. Disappointing loan
Speaker 5: balances hurt Wells Fargo. In the industry. Data looks like
Speaker 5: there was a little bit of a pickup in commercial
Speaker 5: balances at the.
Speaker 7: End of the quarter.
Speaker 5: We don't know if that's just something funky with the
Speaker 5: data or if there might be more to it.
Speaker 7: So that's what we'll be looking to hear about from
Speaker 7: Bank America.
Speaker 6: All right, great stuff as always. Alison Williams is the
Speaker 6: senior financials Banks Global all that kind of stuff for
Speaker 6: Bloomberg Intelligence. She's been doing that for decades, first on
Speaker 6: the buyside at Morgan Stanley Investment Management and then for
Speaker 6: the last close to fifteen years with Bloomberg Intelligence. So
Speaker 6: good numbers coming out of Golden Sachs.
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Speaker 3: I'm Alex Steel alongside Paul Sweeney. This is a Bloomberg
Speaker 3: Intelligence Radio. We'll bring you all the top news and
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Speaker 3: news for you also outside of Bloomberg and joining us
Speaker 3: now as Henry Natrice, Managing partner and director of Economic Policy.
Speaker 3: She joins us. Now, Okay, there is a lot to
Speaker 3: get through here. You cover all of this for Vada Partners.
Speaker 3: There's a lot to pick cherry pick from. But let's
Speaker 3: go to the breaking headline here. According to Fox News,
Speaker 3: and this was according to a post on X President
Speaker 3: Trump will be making his vice president announcement today. Who
Speaker 3: do you think that's going to be?
Speaker 8: Well, I think the base case should be JD. Bay
Speaker 8: Its Ohio is obviously a pretty safe read state right now,
Speaker 8: but I think the two of them have a mutually
Speaker 8: compatible outlook. It really suits the theme of his campaign,
Speaker 8: which is a very sort of robrust, sort of aggressive
Speaker 8: America First campaign. The speculation, obviously, and the real exciting
Speaker 8: component would be if he were to choose Nikki Haley,
Speaker 8: coming off of a twenty two percent when in Indiana
Speaker 8: in the primaries just a couple of weeks ago, she
Speaker 8: has shown that she has a real lock on a
Speaker 8: totally different demographic that Trump has struggled with for many
Speaker 8: years and specifically in the last couple of months, which
Speaker 8: is a female demographic, specifically suburban, married educated women, that
Speaker 8: would make his potential path to an electoral college win
Speaker 8: on part with Obama's in two thousand and eight a
Speaker 8: real possibility.
Speaker 6: So, Henrietta on the VP pick when do you think
Speaker 6: we're going to hear when? Who could it possibly be?
Speaker 6: Because that seems to be maybe at the top of
Speaker 6: the agenda here today, right.
Speaker 8: Yeah, So my understanding is it could happen as early
Speaker 8: as tonight. But I've seen quite a bit of speculation
Speaker 8: and roles changes within the RNC delegation and their committees
Speaker 8: that it could be as late as Wednesday. So while
Speaker 8: I recognize that the administrator of the Trump team is
Speaker 8: saying that it could be tonight, I wouldn't be surprised
Speaker 8: if there were some fastballs thrown in here at the
Speaker 8: last minute. But my base case expectation is for JD. Vance,
Speaker 8: and I'd be pretty alarmed and surprised if it were
Speaker 8: Nicki Haley. The difference between the two campaigns and internally
Speaker 8: within the Trump campaign, I think is probably insurmountable. But
Speaker 8: it would be a very rational sort of strategic move
Speaker 8: to Trump for Trump to move to the middle and
Speaker 8: try to say, you know, this really is a unity ticket.
Speaker 8: Let me show you how and put Meikay Haley on
Speaker 8: the top.
Speaker 3: If you go to JD. Vans for a moment. What
Speaker 3: was striking though, is how he really came out and
Speaker 3: was wimming Democrats for the assassination attempt on President Trump.
Speaker 3: What we've heard so far from former President Trump is
Speaker 3: more of a message of unity. Do you think that
Speaker 3: the unity message prevails here on the ticket or do
Speaker 3: you think that the fracturing prevails on the ticket.
Speaker 8: I think fracturing is where Trump feels most comfortable. I
Speaker 8: think he likes being, you know, sort of the aggressor,
Speaker 8: and a unity ticket is not in keeping with anything
Speaker 8: we've seen from the Trump campaign since twenty sixteen, so
Speaker 8: I'd be pretty surprised if it were Nicki Haley. Again,
Speaker 8: I do think that makes the most political sense for him,
Speaker 8: just in terms of trying to win the electoral College
Speaker 8: and winning the popular vote as well, which could be
Speaker 8: massively helpful to him in twenty twenty five as Republicans
Speaker 8: try to pass get four point six trillion dollar tax bill.
Speaker 8: So there is a lot of strategic benefit to choosing
Speaker 8: in Nicki Haley. I don't know if it's compatible with
Speaker 8: his actual campaign, though my default is going to be
Speaker 8: a gdvanced style candidate. Mark Rubio is another one I'd
Speaker 8: put up there and roughly the same category.
Speaker 6: So, and you know, what do you think, or let's
Speaker 6: put it this way, do you think the message from
Speaker 6: former President Trump and his campaign will it change it all?
Speaker 6: Given the events of Saturday, I think.
Speaker 8: The agenda of the campaign and the campaign in general
Speaker 8: needs to just get through the next couple of months.
Speaker 8: We are, you know, in the very early days in July.
Speaker 8: I mean, this should be something that we are expecting
Speaker 8: is a shakeup in October. And it's only July, and
Speaker 8: we've had two massive shakeups in just the last week,
Speaker 8: you know, with the disastrous presidential debates for Joe Biden
Speaker 8: and the dramatic rise we've seen in calls for Biden
Speaker 8: to get off the ticket, and then an assassination attempt.
Speaker 8: So for my CNY, there's a lot of whiplash and
Speaker 8: we still have four months to go till actual election. Deck.
Speaker 3: Part of the Biden campaign has truly been talking about
Speaker 3: how President Trump will fracture democracy and what a big
Speaker 3: risk is big Do you think the Biden campaign can
Speaker 3: continue with that? Now they've already pulled some campaign ads.
Speaker 3: How does that narrative evolve?
Speaker 9: No, I don't think that.
Speaker 8: That's going to hold the idea of staying as a
Speaker 8: unity tickets to spending campaign donations, suspending fundraising, suspending ads.
Speaker 8: That's all going to wrap up. I think in the
Speaker 8: next couple of hours. You're already seeing some policy papers
Speaker 8: come out from the White House. There was one release
Speaker 8: just moments ago on the impact of Trump's potential tariffs
Speaker 8: and replacing the federal income tax with tariffs, which would
Speaker 8: drive drive tariffs up. It would have to be seventy
Speaker 8: percent or higher in order to compensate for the lost
Speaker 8: revenue to treasury if they were to abolish the federal
Speaker 8: income tax. So there's stuff barkolating behind the scenes. And
Speaker 8: then let's be mindful that the Biden team is really
Speaker 8: trying to beat back the base of the Democratic Party
Speaker 8: that's hoping he will step aside. So a whole bunch
Speaker 8: of things went in Biden's favor ironically since the shooting,
Speaker 8: and it is really just that it has taken Democratic
Speaker 8: concerns about his ability to run for another four years
Speaker 8: off the table. I think that's only temporary. In the background,
Speaker 8: you still have from members of the DNC and from
Speaker 8: donors to either suspend donations, not continue contributing to the campaign,
Speaker 8: and to move forward with something akin to a mini
Speaker 8: primary in late July. So all that is percolating in
Speaker 8: the background, and I think Biden's going to have to
Speaker 8: go out in force. The one area he really succeeds
Speaker 8: in beating Republican messaging on aside from things along the
Speaker 8: lines of abortion, is really who has the better state
Speaker 8: of play with regards to maintaining democracy. He pulls ahead
Speaker 8: of Trump by seven points there, we really want to
Speaker 8: watch and see how that plays with voters in the
Speaker 8: week of Saturday shooting.
Speaker 6: So when do you think the Democrats will make any
Speaker 6: kind of moves as relates to their candidate, if at all?
Speaker 6: Here is this something that they have to just see
Speaker 6: how the recent news of the failed assassination, how that
Speaker 6: plays out in the public's mind. Maybe get some polling.
Speaker 6: What's the timing there, do you think?
Speaker 8: Yeah, because we had a tremendous amount of pulling. I mean,
Speaker 8: everybody was interested in seeing how Biden and Trump would
Speaker 8: fare in the wake of the disastrous debate, and in
Speaker 8: the uproar about Democrats potentially replacing Biden, that has all
Speaker 8: taken a back seat. I don't think it's going to
Speaker 8: go away, though there are I think the view in
Speaker 8: the Democratic Party with everybody that's not you know, Team Biden,
Speaker 8: is really that Republicans are on a trajectory to win
Speaker 8: right now, and if Biden stays at the top of
Speaker 8: the ticket, Democrats could get wiped out in the House
Speaker 8: and the Senate and give Republicans not just a statistical majority,
Speaker 8: but a mandate level majority fifty five fifty six fifty
Speaker 8: seven seats in the Senate. So I think there's a
Speaker 8: tremendous amount of focus in the background of getting Biden
Speaker 8: to step aside. Sixty percent of war of Democratic voters
Speaker 8: want someone else at the top of the ticket. They're
Speaker 8: going to need to shake things up. I don't think
Speaker 8: that that's going to go away.
Speaker 3: I'm about thirty forty seconds left. The Trump trade is
Speaker 3: in full effect right now in the market. It is
Speaker 3: that legit for the long term.
Speaker 8: Absolutely. I mean, at this point, the Democrats have a
Speaker 8: candidate that sixty two percent of Democrats would prefer not
Speaker 8: on the ballot. In that scenario, coupled with the resurgence
Speaker 8: and massive galvanization of Trump voters, you really need to
Speaker 8: have another shake up at the Democratic front in order
Speaker 8: for this not to be a Republican win election. The
Speaker 8: two are second neck nationally, but Trump leads by four
Speaker 8: or five points in most of the swing states, and
Speaker 8: that's how you get elected in the electoral college.
Speaker 3: All right, Henrietta, thank you so much. We do appreciate
Speaker 3: you and know it's been a busy of seventy two
Speaker 3: hours for you. Henry A. Trece, Managing Partner and director
Speaker 3: of Economic Policy over at VATA Partners.
Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live
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Speaker 3: We are broadcasting two live from Interactive Broker Studio right
Speaker 3: here in midtown Manhattan. There're two very interesting things evolving
Speaker 3: in the market. One is earnings, that would we do
Speaker 3: with a value trade? What do we do with small caps?
Speaker 3: And the other is the Trump trade effect that if
Speaker 3: Trump wins the presidency, after the events over the weekend,
Speaker 3: what that winds up looking like for the market. So
Speaker 3: there's lots of different stuff to dissect. We want to
Speaker 3: go to Shana Sizzle, President and CEO of banry On
Speaker 3: Capital Management. She joins us from Chicago, Illinois. Shana, let's
Speaker 3: start off with the events over the weekend, the attempted
Speaker 3: assassination attempt from by to President Trump. There is a
Speaker 3: Trump trade in the market. Do you buy it?
Speaker 2: Like?
Speaker 3: Is it real? I mean, typically if you wind up
Speaker 3: trading stocks around who you think is going to be
Speaker 3: the president, that actually hasn't really paid off for you.
Speaker 10: Well, I do think the Trump trade is real. I
Speaker 10: do think it's warranted. I think the events of the
Speaker 10: weekend actually bolster president former president Trump's already uh the
Speaker 10: lead that he has. I think just you know, if
Speaker 10: you look across social media, a lot of folks who
Speaker 10: are not really Trump fans saw the events of this
Speaker 10: weekend as a reason to.
Speaker 9: Vote for him in a way.
Speaker 10: That photo that came out is going to be iconic,
Speaker 10: and people saw it as like America, and you know,
Speaker 10: look at the way he handled this, And I think
Speaker 10: all of those things play into market sentiment, and you're
Speaker 10: seeing that in the Trump trade.
Speaker 6: All Right, Shanon, let's maybe step back from that kind
Speaker 6: of prior to this weekend. What was your market call
Speaker 6: and has anything changed?
Speaker 10: My market call was that we're in a period of
Speaker 10: slowing economic growth, that the FED rate hikes have done
Speaker 10: their job in many respects. We're clearly seeing the economy slow.
Speaker 10: The Fed has made it clear that there's a likelihood that.
Speaker 9: There will be a rate cut in September.
Speaker 10: And I don't think any of that has changed in
Speaker 10: my opinion. I think we still have a slowing economic conditions,
Speaker 10: and we still have probability high probabilities of fad will
Speaker 10: make its first cut in September.
Speaker 3: So the headline to that over the last three trading
Speaker 3: days has been by small caps. Do you buy that?
Speaker 10: Not necessarily. I am very encouraged by the small cap rally.
Speaker 10: Small caps have done horribly for like two years.
Speaker 9: And behaved in a way that.
Speaker 10: We don't really have any like historical reference point for
Speaker 10: Typically small caps behave in a certain way technically, and
Speaker 10: they hadn't been doing that.
Speaker 9: So I'm encouraged by the small cap rally.
Speaker 10: We'd had a very long period of time where small
Speaker 10: caps did not make a new high, something like almost
Speaker 10: two years, I think, And so that is something I
Speaker 10: think is you.
Speaker 9: Know, a good thing.
Speaker 10: But I don't necessarily think small caps benefit in the
Speaker 10: current market environment for a number of reasons. Higher rates
Speaker 10: is just harder for them to tap into the capital markets.
Speaker 10: They're not necessarily the biggest beneficiaries of the hottest trends
Speaker 10: that are pushing earnings in growth like AI, and so
Speaker 10: for those reasons, I'm still cautious.
Speaker 9: On small caps.
Speaker 6: Conversely, how do you think about those magnificent six or
Speaker 6: seven stocks which have been, you know, such a driver
Speaker 6: of this market, accounting for you know, the large majority
Speaker 6: of performance. So one of the.
Speaker 10: Things that you can see in the market right now
Speaker 10: is we're seeing some dispersion of returns, starting to see
Speaker 10: a greater participation across the S and P five hundred
Speaker 10: outside of the magnificent seven, which is very positive.
Speaker 9: It's good for active managers.
Speaker 10: You know, we touched on small caps active management and
Speaker 10: small cap has done absolutely phenomenal and that's a perfect
Speaker 10: example of, you know, why active management can work in
Speaker 10: certain areas of the market. And I think we're starting
Speaker 10: to see that a little bit outside of small caps
Speaker 10: and in large caps as we start to see the
Speaker 10: mag seven kind of take a breather. I think there's
Speaker 10: lots of other opportunities in the market to benefit from
Speaker 10: some of the hottest trends that people just aren't paying
Speaker 10: attention to.
Speaker 3: So tell us you have some nice stock picks here,
Speaker 3: give us your tie right now.
Speaker 10: So I really like VRT. That's a second derivative player
Speaker 10: of the AI trade. So they do cooling systems for
Speaker 10: data centers. It's absolutely critical as we need more computing
Speaker 10: power for anything that is machine learning and artificial intelligence related,
Speaker 10: and they are the leading player with the top solutions
Speaker 10: when it comes to cooling, because a lot of computing
Speaker 10: power gets really hot and you certainly do not want
Speaker 10: things to overheat. So that's probably my favorite stock right now.
Speaker 10: It's a second derivative play of AI. And then I
Speaker 10: wanted to look outside of technology. You know, everybody kind
Speaker 10: of knows me as the in video girl, and you
Speaker 10: know there's other places in the market.
Speaker 9: So no of artists is a healthcare name.
Speaker 10: Healthcare has not done great this year, but this is
Speaker 10: an opportunity to get in with a player that is
Speaker 10: doing some really cutting edge things in oncology in particular.
Speaker 9: And then you know, I have Apple on my lists.
Speaker 10: You know, I just said, let's think outside a tack,
Speaker 10: and now I'm going to throw Apple at you. But
Speaker 10: that's a stock that hasn't participated as much as some
Speaker 10: of the others. We've seen a rally recently, but the
Speaker 10: stock is treating at you know, our reasonal valuation and.
Speaker 9: It has some really interesting opportunities going forward.
Speaker 6: Hey, Shane, what do we know about this AI tech spending?
Speaker 6: We hear about it, you know, from all sorts of companies,
Speaker 6: And I guess one of the questions I have is
Speaker 6: how much of this AI spending is incremental versus maybe
Speaker 6: just shuffled from another tech budget, whether it's you know,
Speaker 6: information technology or something like that. What do we know
Speaker 6: about that well.
Speaker 10: I would argue that AI should be part of your
Speaker 10: information technology budget because that's where it sits.
Speaker 9: I think that it is incremental, though.
Speaker 10: I do think companies realize that they need to have
Speaker 10: both the infrastructure for traditional IT and then have to
Speaker 10: really be thinking long term as it pertains to how
Speaker 10: these things can improve business efficient I know at Bondran
Speaker 10: we're finding ways to incorporate AI in our tools and.
Speaker 9: The way that we do our business as well.
Speaker 10: We use AI to help us with due diligence, and
Speaker 10: we use AI to help our clients use our technology.
Speaker 10: So I think everybody should be thinking about it because
Speaker 10: not only does it improve the user experience and improve
Speaker 10: business efficiencies, but it can save you.
Speaker 9: Money in the long run.
Speaker 3: But also one company that you have here on your
Speaker 3: list is air Cap Holdings. It's the world's largest aircraft
Speaker 3: leasing firm if you're just looking at by fleet value.
Speaker 3: It also just hit a fifty two week high just
Speaker 3: a couple of days ago. I think it's i'll say
Speaker 3: all time high. Really why do you like this company
Speaker 3: in this particular environment.
Speaker 10: Well, we have the Boeing fiasco, which I think kind
Speaker 10: of makes.
Speaker 9: People look for other areas where they can be.
Speaker 10: Taking advantage of, you know, kind of the shortfall of Boeing.
Speaker 10: But it's also a really well managed company trading adding
Speaker 10: massive discount to the market. So those two things more
Speaker 10: than anything or the reason why I like the stock.
Speaker 9: But you know, you can't overlook sort of market trends,
Speaker 9: you know.
Speaker 10: I think you could argue that the Boeing situation doesn't
Speaker 10: necessarily affect them directly, but any kind of headline that
Speaker 10: would make people think about how airlines and fleets are managed,
Speaker 10: I think is beneficial to Aircap.
Speaker 6: Shane, I know in your career you've spent a lot
Speaker 6: of time on alternatives investing. What's the alternatives that you
Speaker 6: think is most interesting these days that you're talking to
Speaker 6: your clients the most about.
Speaker 10: Oh Man, So, one of the things that has been
Speaker 10: coming up a lot lately is sports rights. It's one
Speaker 10: of my favorite topics because I think everybody out there
Speaker 10: can kind of connect with it, and we talk a
Speaker 10: lot about having advisors use alternatives as a way to
Speaker 10: connect with their target market of the types of clients
Speaker 10: that they want, and I think sports is, you know,
Speaker 10: universally one of the ways to do that, and sports
Speaker 10: rights is becoming more and more common. I know Avenue
Speaker 10: Capital is launching a sports rights fund, and there are
Speaker 10: others like cas Investments that have these accredited investor only
Speaker 10: and I just want to preface that opportunities in sports,
Speaker 10: but I'm seeing it more and more, and I think
Speaker 10: that's a really interesting play right now as you see,
Speaker 10: you know, the Boston Celtics are being sold and the
Speaker 10: multiple that they will get for that is going to
Speaker 10: be huge, and those opportunities are things that people pay
Speaker 10: attention to and connect with.
Speaker 3: Hey, Shannon, we really appreciate it. Thank you so so much,
Speaker 3: Shannon sis Old, President and CEO at Benjin Capital Market.
Speaker 3: So is that like everyone can get involved in sports rights.
Speaker 6: I think if there's certain funds, I think that will
Speaker 6: invest and you can be investor in those funds. But again,
Speaker 6: I think, as Shane was saying, the evaluations that you know,
Speaker 6: they just continue to go up and up and up,
Speaker 6: and you know, some people thought there might be a
Speaker 6: top with the struggles of some of these traditional media
Speaker 6: companies and the amounts they can pay for broadcast rights.
Speaker 6: But for every one of those media companies that's struggling,
Speaker 6: there's a technology company that's doing really well. And so
Speaker 6: whether it's you know, you can find these games on
Speaker 6: YouTube and Amazon Prime and all these other pipes.
Speaker 3: And do the sports leagues makes the same whether or
Speaker 3: not like Netflix is paying them versus like CBS. It's
Speaker 3: the same kind of money.
Speaker 6: Sure, yeah, And the rights go right to the athletes
Speaker 6: in addition to the owners of the teams and everything
Speaker 6: like that.
Speaker 3: So I need to know anything about sports to be
Speaker 3: able to invest in sports. Nope, Hey, there we go,
Speaker 3: go exactly right.
Speaker 6: So the money keeps going up. It seems like.
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 6: Well, let's go to move over to the world of
Speaker 6: financial stocksure Goldman Sacks. They had some numbers came out
Speaker 6: today a little bit better and expected. We're gonna break
Speaker 6: them down later with Alison Williams and Bloomberg Intelligence. Also
Speaker 6: interesting story on black Rock, just extraordinary how big they
Speaker 6: are ten six trillion dollar assets and they're setting ETF
Speaker 6: is a big reason here Neil Sipes Joints is financials
Speaker 6: analysts for Bloomberg Intelligence. Joints is here in studio. Neil
Speaker 6: talk to us about Blackrock. It's obviously a monster financial institution,
Speaker 6: but I think it's probably the biggest financial institution people
Speaker 6: don't know about. Yeah, the news today on Blackrock.
Speaker 1: I think obviously over the past eighteen months, banks have
Speaker 1: been much more in the focus asset managers, maybe a
Speaker 1: little bit of a sleepier name, so to speak. But
Speaker 1: like you said, Blackrock eclipsing ten and a half trillion.
Speaker 1: Of course, a lot of that is due to markets.
Speaker 1: We're up, you know, fifteen twenty percent so far you're
Speaker 1: to date. But Blackrock sort of that perennial grower in
Speaker 1: the industry where organic growth, those flows from institutional retail
Speaker 1: clients have been harder to come by. Blackrock, having that
Speaker 1: breadth and diversity of the platform, has really been able
Speaker 1: to deliver growth through varying market cycles. We think that's
Speaker 1: one of their strengths and why they're the leader in
Speaker 1: the space in terms of size. In terms of the
Speaker 1: second quarter organic a little bit lighter than expected. Part
Speaker 1: of that due to the fact that we saw some
Speaker 1: larger institutional clients sort of rebalancing portfolios. That's just sort
Speaker 1: of natural in the business, especially when you're at all
Speaker 1: time highs. Nonetheless, margin really improved. Again, that's on the
Speaker 1: heels of stronger markets. Most of the revenue here is
Speaker 1: asset based fees, so as markets move higher, the top
Speaker 1: line expands as well. And so really, you know, you
Speaker 1: highlighted the last thing. I guess ETF's another strong suit.
Speaker 1: That's really the bread and butter of black Rock again,
Speaker 1: and obviously, now with some of that private's markets push
Speaker 1: that we've seen in the past couple months.
Speaker 3: When do they hit the law of large numbers thing?
Speaker 1: Yeah, I think that is becoming the more popular question
Speaker 1: for I asked this.
Speaker 3: Question forever, right, and it is still do it?
Speaker 1: Yeah, and they and they continue to target this five
Speaker 1: percent organic based feed growth figure. They've been lagging that
Speaker 1: over the past couple of quarters. Obviously, markets you know,
Speaker 1: since the beginning of twenty twenty two were less conducive.
Speaker 1: They've been more conducive for the past three quarters or so,
Speaker 1: But the question still remains, how do you continue to
Speaker 1: grow at that five percent clip when you're talking about
Speaker 1: a ten trillion dollar asset base. And we think blackrocks diversity.
Speaker 1: When assets are in motion, they can continue to garner
Speaker 1: share from less diversified, less price or these you know competitors.
Speaker 6: Stock hasn't done anything this year, kind of up one
Speaker 6: percent just on the year, lagging the market. What's the
Speaker 6: what's the investment call here on blackro What are the
Speaker 6: investors saying?
Speaker 1: Yeah, So I think, you know, a lot of what's
Speaker 1: been baked into this year is sort of market growth,
Speaker 1: which is going to be a benefit to all asset
Speaker 1: managers in the space. So I think the skepticism of
Speaker 1: are these gains lasting? What happens obviously in November when
Speaker 1: we get this eventual FED pivot to cuts, How is
Speaker 1: that going to impact you know, client allocations, How is
Speaker 1: that going to impact the business model? But we do
Speaker 1: think Blackrock is you know, a is position to benefit
Speaker 1: in pretty much all market cycles, and a lot of
Speaker 1: that long term story is now shifting into that private
Speaker 1: market's focus with prequel acquisition just announced a couple of
Speaker 1: weeks ago and Global Infrastructure Partners in January.
Speaker 3: Can ask a really dumb question at this point, who
Speaker 3: are Blackrocks actual competitors? Like who can actually compete with
Speaker 3: this company?
Speaker 1: Yeah? So there are plenty of competitors. I mean, asset
Speaker 1: management can be somewhat commoditized in a lot of spaces.
Speaker 1: You know, there's competitors like a Vanguard. There's competitors like
Speaker 1: a Schwab, in Vesco, Franklin, Tira, Price, There's plenty of
Speaker 1: names out there. The question is who's able to compete
Speaker 1: on price with Blackrock? And that's where scale really becomes
Speaker 1: paramount here because they can continue to innovate with new products.
Speaker 1: If a new competitor comes out with, you know, a
Speaker 1: new flashy product, Blackrock tends to match that and can
Speaker 1: sometimes beat it on price. And we know that Blackrock
Speaker 1: is entrenched with pretty much every institutional client, every retail client,
Speaker 1: so to speak, and that really gives them the strength
Speaker 1: of distribution to kind of leverage across its platform.
Speaker 3: All right, really good stuff, Thank you so much, Really
Speaker 3: appreciate it and all of your insight. Neil Neil Sipes,
Speaker 3: Bloomberg Intelligence of Financials Analysts, the numbers are so big,
Speaker 3: it's like hard to comprehend like how big this company
Speaker 3: actually is, and.
Speaker 6: It's across the board at all lassclasses. Yeah, so the
Speaker 6: ETFs being a new source of assets there, it kind
Speaker 6: of makes a question like I grew up with the
Speaker 6: mutual fund business that flities zero presses. It just seems
Speaker 6: like all the money's going to ETFs, and even the
Speaker 6: mutual funds are converting to ETFs, so that seems to
Speaker 6: be the wrapper of choice.
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Speaker 6: Alex Deal, Paul Swinging. We're live here on our Bloomberg
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Speaker 6: Say head over to YouTube dot com and search Bloomberg Podcasts.
Speaker 6: A lot of things that this market's trying to digest
Speaker 6: right here, and most recently the domestic politics to fed
Speaker 6: assassination temp of former President Trump. We've got global geopolitics
Speaker 6: still out there. We've got earnings for Rakesmack in the
Speaker 6: middle earning season, and then we've got the ever president
Speaker 6: fed watch. What is an investor to do? Let's check
Speaker 6: in with professional Sylvia Jablonski, chief executive officer and chief
Speaker 6: investment officer at Defiance ETFs A Joints, is here. Sylvia.
Speaker 6: We come into the markets here on a Monday morning.
Speaker 6: Another key issue out there in terms of domestic politics.
Speaker 6: What it means for these markets? How did you layer
Speaker 6: in what we learned over the weekend to what was already,
Speaker 6: you know, a challenging process for investors.
Speaker 8: Good morning, Great to be here with you today.
Speaker 4: Well, you know, I think this weekend was a shock
Speaker 4: for many, and you know, I think it's.
Speaker 7: Somewhat unsurprising that the market is selling today off of
Speaker 7: what happened.
Speaker 4: I think that there's some sentiment in the market that,
Speaker 4: you know, perhaps this turns out to be a Republican
Speaker 4: favored win. And you know, if that's the case, if
Speaker 4: you think about kind of like big corporations and things
Speaker 4: that benefit from them or benefit them, things like policies
Speaker 4: for lower taxes and you know, less kind of regulation,
Speaker 4: more m and a activity, this tends to be positive
Speaker 4: for some of the mag seven types of firms and
Speaker 4: things like this. But I think the other side of it, though,
Speaker 4: is I do think that we need to be a
Speaker 4: little bit cautious and see what happens in the market
Speaker 4: in coming days. The other way that this could have
Speaker 4: gone is that, you know, we could have seen a
Speaker 4: lot of volativity in the markets, which I did and
Speaker 4: will expect to see in coming months if the election
Speaker 4: kind of goes back to you know, he said, she said,
Speaker 4: he did, he didn't do, versus let's unite.
Speaker 9: You know.
Speaker 4: I think if it's kind of a united front type
Speaker 4: of election, you get more stability in the markets.
Speaker 7: If you don't, you're going to see a lot of
Speaker 7: that volatility, and.
Speaker 4: It'll be interesting to see at that point where where
Speaker 4: asset allocations go.
Speaker 9: It is really interesting.
Speaker 3: It is really interesting to see the Vics curve, for example,
Speaker 3: like it hasn't really moved upwards, Like we do get
Speaker 3: that spike in the VICKS if you look at your
Speaker 3: function CCRV right around the election, but it hasn't really
Speaker 3: re rated in the last couple of days. Sylvia. The
Speaker 3: other thing that feels, irrespective of what's happening in d
Speaker 3: c is this massive Russell two thousand rally. Multiple choice
Speaker 3: question is it short covering? Is do you fade it
Speaker 3: or do you buy it?
Speaker 4: I think that there's you know, there's there's an argument
Speaker 4: here to buy Russell, to to you know, start dipping
Speaker 4: into small caps just for the sake of the fact.
Speaker 7: That the FED is very likely to start cutting.
Speaker 4: You know, the data is arguably more favorable than not
Speaker 4: in terms of inflation going down.
Speaker 7: We've heard fret share Pal talk about it. We've heard
Speaker 7: a lot of the.
Speaker 4: FED, you know governors come on and talk about you know,
Speaker 4: their their views that we're finally going in the right direction.
Speaker 7: They need more data and things like this. But overall,
Speaker 7: rates coming down is probably going to be good for
Speaker 7: small caps.
Speaker 4: It could be some short covering, but that also comes
Speaker 4: because of the fact.
Speaker 7: That you know, rate cuts are likely to come forward.
Speaker 4: So I do think that you're going to see some
Speaker 4: of that diversification into areas of the market that haven't
Speaker 4: performed as well as the MAGS seven. So that's also
Speaker 4: the natural inclination I think of longer term investors. You
Speaker 4: have these huge gains on some of the large cap names,
Speaker 4: maybe you hang out with those but you put some
Speaker 4: of your extra cash to work in places like small caps,
Speaker 4: and then I would argue, you know, after this weekend bitcoin, right,
Speaker 4: we see the rally there digital assets and crypto had
Speaker 4: a good, good fall, good pullback, good dip to buy.
Speaker 7: On, and so that might be part of the diversification
Speaker 7: trade too.
Speaker 6: So we we're just kind of getting into the teeth
Speaker 6: of this earning cycle here. What are you looking for
Speaker 6: this time around?
Speaker 7: I'm looking for the same thing I was last time around,
Speaker 7: you know.
Speaker 4: Overall, I mean, it would be it would certainly be
Speaker 4: good to see that ten percent growth that's estimated out
Speaker 4: there for S and P five hundred earnings growth. But
Speaker 4: the truth is, I think we're all going to be
Speaker 4: looking for mag seven. What is the video going to
Speaker 4: do or continue to Will they continue to do what they've.
Speaker 7: Been doing all along? What will Apple look like with
Speaker 7: some of the positive news.
Speaker 4: We've seen about demand picking up WI those will those
Speaker 4: seven hang time continue leading?
Speaker 7: And I think that's what a lot of what the
Speaker 7: market wants to continue to see this year.
Speaker 4: What would be healthier for the market is if we
Speaker 4: saw broad diversification and earnings growth and broad participation across
Speaker 4: the market, But I think the overall sentiment right now
Speaker 4: is still really heavily linked to the mag seven.
Speaker 3: Going back to the bitcoin comment that you said, I
Speaker 3: don't get the bitcoin trade with President Trump, Like, go
Speaker 3: ahead and buy bitcoin shore like safety trade. Okay, fine,
Speaker 3: Like golds at a record high or near a record high.
Speaker 6: Why not?
Speaker 3: But what's the specific link to President Trump here?
Speaker 4: Well, he's crypto friendly, right, He's he's thought to be
Speaker 4: crypto friendly anyway, in recent times he's been you know.
Speaker 7: A little bit more more favorable or.
Speaker 4: At least less doubtful about the viability of crypto as
Speaker 4: an asset. And so, you know, I think that there's
Speaker 4: there's this idea that because he's a potentially crypto favored,
Speaker 4: you know, favorable president, that you know, policies will kind
Speaker 4: of support or at least not diminish the growth of crypto.
Speaker 4: And that being said, I mean I think, you know,
Speaker 4: micro strategy is actually one of my bias too. I think,
Speaker 4: you know, with crypto falling as much as it has
Speaker 4: because of the splid, because of the you know, German
Speaker 4: government offloading positions you have, you have a real good
Speaker 4: dip there, and that's you know, that's part of the
Speaker 4: rally too, but notably crypto rose over the weekend, So
Speaker 4: you have to think that there's a link, you know,
Speaker 4: due to his kind of favorable opinion about digital currency investment.
Speaker 3: Well, I also have the wonder, Paul too, if it's
Speaker 3: just a deregulation and environment for sure, deregulation all the
Speaker 3: way if President Trump wins. I've already seeing that with
Speaker 3: the courts.
Speaker 6: Right exactly. So, uh, Sylvia valuation here, boy, if I
Speaker 6: look at valuation just the surface for y S to
Speaker 6: P five hundred, it feels maybe not frothy, but it
Speaker 6: certainly expensive. Now, some folks say, well, he pull out
Speaker 6: the handful of stocks that are really driving that in
Speaker 6: the Market's not that expensive. How do you kind of
Speaker 6: pursue that?
Speaker 7: Yeah, I agree with that ladder comment.
Speaker 4: You know, pull out, pull out some of the top names,
Speaker 4: and actually it doesn't look so frothy. But I would
Speaker 4: even argue that even for some of the top names
Speaker 4: out there, if you look at companies like Navidio for example,
Speaker 4: that have just you.
Speaker 7: Know, skyrocket in terms of stock performance.
Speaker 4: You know they're certainly justifying their their valuation, right, I Mean,
Speaker 4: earnings have been positive, a lot of these corporations have
Speaker 4: cut you know, massive spending and costs over the last
Speaker 4: couple of years. They're running leaner and meaner. They're more
Speaker 4: efficient or top and bottom line earnings are coming in.
Speaker 4: You know, the valuations for now to me have been justified,
Speaker 4: and you know, they wouldn't keep me from investing in
Speaker 4: these stocks going forward, particularly when you get market pullbacks.
Speaker 4: You know, when you get a couple of days ago
Speaker 4: nas XL you know, over two percent and things like that.
Speaker 4: I mean, those are times to enternto the market, particularly
Speaker 4: if you're a longer term shareholder. I'm not opposed to
Speaker 4: getting in, but there are opportunities outside of you know,
Speaker 4: the Mag seven, the companies that do have the higher
Speaker 4: valuations too. So when you hear things like small cap
Speaker 4: rallying and also you know, other parts of the AI trade,
Speaker 4: like like you know, energy and you know, uranium, copper,
Speaker 4: things like this.
Speaker 7: That there are other areas of the market to participate in.
Speaker 7: What the Mag seven are doing.
Speaker 5: Well.
Speaker 3: It's interesting. You know we talk about a rotation though
Speaker 3: right like out of growth into value, but both are
Speaker 3: moving Like you have growth the MAG seven, you have
Speaker 3: the Nasdagnatic one hundred, the S and P and you
Speaker 3: also have the rustle you can you have all these
Speaker 3: things at once, like what what does this tell us
Speaker 3: about where we are?
Speaker 4: Well, that tells us in my mind, that tells us
Speaker 4: that you know, we're in a soft landing and that
Speaker 4: you know the market is a good place to be.
Speaker 4: And so for all of the investors that have you
Speaker 4: know that six trillion of cash that they're sitting on
Speaker 4: in their four to five percent and you know, different
Speaker 4: fixed income types of products, money markets, treasury, things like this.
Speaker 4: You know when you have an S and T five
Speaker 4: hundred and NASDAC that are returning double digits. And we
Speaker 4: do have the sense of a soft landing. We have
Speaker 4: rates coming down. Electioneers had to be favorable for stocks.
Speaker 4: I think you're going to see participation across the markets.
Speaker 4: There will be those who favor momentum and the mag
Speaker 4: seven and there will be those who you know, strategically
Speaker 4: diversify and have have wider market breath exposure. And I
Speaker 4: think that both of those things are happening because we
Speaker 4: are seeing that inflation coming down, that soft landing, and
Speaker 4: that's you know, that's that's what markets want, and that's.
Speaker 7: The sweet spot right now.
Speaker 4: Not to say that volatility isn't going to come our way,
Speaker 4: but I do think that at this moment, we're in
Speaker 4: that soft landing sweet spot.
Speaker 6: All right, Sylvia, thank you so much for joining us.
Speaker 6: Silvia Derblonski, chief Executive Officer and Chief Investment Officer, defines ATFS.
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