Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Lee.
Speaker 1: We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. This
Speaker 1: is Blomberg Surveillance. I'm Shinnali Bassek and joining me now
Speaker 1: is Ken Mullis, CEO of Mullets and Company. Thank you
Speaker 1: so much for joining us. Ken, great to be here.
Speaker 1: So you've been on a world tour. You just came
Speaker 1: back from Russia where you had a panel with Putin.
Speaker 1: What was the big takeaway? What was interesting? You know,
Speaker 1: it's hard to get good information, and you do these
Speaker 1: things because my job is to get as much information
Speaker 1: about the global economy as you can. So there was
Speaker 1: a lot of takeaways about it, just getting up to
Speaker 1: speed on on on the Moscow economy and how the
Speaker 1: sanctions are affecting you know, what they're doing. UM. So
Speaker 1: I thought it was good to um put that information
Speaker 1: in the back of your mind and keep it in
Speaker 1: mind as your advice companies. Are they the next place
Speaker 1: for you to be doing the next big deal? No, No,
Speaker 1: Russia is long. I think it's a while in the future,
Speaker 1: but look, it's a long life. I've been doing this
Speaker 1: forty years, and you know, friends last, long time, loyalties,
Speaker 1: you get to know people, um and and look, it's
Speaker 1: a long time. I think before an American company will
Speaker 1: be Russia will be investable. But someday maybe you are
Speaker 1: also recently in spending a lot of time in Hong
Speaker 1: Kong with the Hong Kong Stock Exchange proposed takeover of
Speaker 1: the London Stock Exchange. What is the tone there right now?
Speaker 1: Are you worried about what's going on there. I've been
Speaker 1: around the world a lot. I haven't been to Hong
Speaker 1: Kong in a while, but look, what's happening in Hong
Speaker 1: Kong is definitely uh concerning. But again the world it's
Speaker 1: gonna be uh. I think would happen with Trump and
Speaker 1: the China and the trade war calming down will be positive.
Speaker 1: Um And again, things are long. These there's a lot
Speaker 1: of issues you go back over. Again. I've been doing
Speaker 1: this forty years. There's always been major issues, but we
Speaker 1: tend to get through these. And actually business is one
Speaker 1: of the key events that keeps peace and things moving
Speaker 1: in the world. People in business want to do transactions
Speaker 1: with each other, want to get to know each other,
Speaker 1: and it kind of supersedes the cycle of almost politics.
Speaker 1: By the way, with so much time in Russia and
Speaker 1: China right now, what does that say about where you
Speaker 1: think power is shifting in the world. We don't overdue
Speaker 1: to Rush. I was there for a brief time to
Speaker 1: you know, to get some information. Um, look, it's it's
Speaker 1: there's obviously China is important, but you know it's interestingly
Speaker 1: just thinking about the United States was twenty three percent
Speaker 1: of world GDP ten years ago. And if you would
Speaker 1: have bet that the United States would have been larger
Speaker 1: or smaller, given the rise of the bricks and all
Speaker 1: those economies, I think we're up to. So there's a
Speaker 1: lot of handwringing in the United States, but we went
Speaker 1: from twenty three of world g d P. The US
Speaker 1: has great laws, it's got a great capital markets, it's
Speaker 1: got innovation. It's still a tremendous place. When you listen
Speaker 1: to Trump speak this weekend, you know Trump, right, you've
Speaker 1: worked for Donald Trump before. How our world leaders receiving
Speaker 1: his message here? And Dave us, Well, look, they receive
Speaker 1: it in different ways. But I think the thing that
Speaker 1: that he did do, that President Trump did when he
Speaker 1: got here was at least very carefully tell the story.
Speaker 1: And it's hard to get it sometimes that the U. S.
Speaker 1: Economy is booming. We do have three percent unemployment. There
Speaker 1: are so many good things going on. We are deregulating,
Speaker 1: there are lots of things in the policies that are
Speaker 1: generating substantial rewards for business and people and and for everybody.
Speaker 1: And I know sometimes you can get caught up in
Speaker 1: the tweets and the presentations, but if you, if you really,
Speaker 1: and I think he did a good job of just
Speaker 1: calming that down and saying, look what we're accomplishing. And
Speaker 1: I do think the policies have been good for business.
Speaker 1: What do you think his prospects are? Given that you
Speaker 1: called his last election, what do you think his prospects
Speaker 1: are for this upcoming one? Look, it's too early to tell.
Speaker 1: We don't have a candidate. You know, in order to
Speaker 1: call a good fight, you have to know who you're who,
Speaker 1: the who the other side is. So I'm want to
Speaker 1: wait on that. I think I think there's lots to
Speaker 1: go in the in the primaries, and lots of stories
Speaker 1: to be told over the next six or seven months.
Speaker 1: I'll wait, wait, let's wait and see who it's between.
Speaker 1: The other thing that everyone's talking about here in Davos,
Speaker 1: at least publicly, is sustainability and green initiatives. But three
Speaker 1: times just today I've had bankers tell me that we're
Speaker 1: talking about green too much here, and so I'm kind
Speaker 1: of wondering what you're hearing. What do you think is
Speaker 1: the opportunity or is it realistic for the financial industry
Speaker 1: and black Rock, which is leading the charge here to
Speaker 1: make real change. So that's a complicated question. And let
Speaker 1: me say this. Look, we have to advise our clients
Speaker 1: on how to navigate in an environment where look, E. S.
Speaker 1: G and all. An environment is going to be part
Speaker 1: of what they're held accountable for. Now, does sometimes Davos
Speaker 1: go overboard on some of the requirements things that they're
Speaker 1: talking about. Sure, people ask me why go to Davis,
Speaker 1: and I say, sometimes to find out exactly what the
Speaker 1: consensus is so I know what won't happen and and
Speaker 1: do the opposite. Um, because you know it's an extremely
Speaker 1: consensus atmosphere here and um, but look, people are gonna
Speaker 1: have to deal with the fact that large institutions like
Speaker 1: black Rock and and like rating agencies and and government
Speaker 1: institutions will be monitoring certain environmental social governance checklist and
Speaker 1: we're gonna have to we're gonna have to help our
Speaker 1: clients through that. Well, you advised a romco. Where does
Speaker 1: that fit into the situation here? Look, the world is
Speaker 1: going to continue to use and need cheap energy. You know,
Speaker 1: there's five hundred million Europeans, there's three hundred million Americans,
Speaker 1: three fifty. There's six or seven billion people in the
Speaker 1: world who still are are struggling, and the access to
Speaker 1: cheap fossil feels it. Look, it's it's their life, you know, India, China, Africa,
Speaker 1: They're not They're not gonna They're not as worried about
Speaker 1: the environment yet as they are about you know, making
Speaker 1: ends meet and and and life. So I think the
Speaker 1: fact that what worries me about this is the severe
Speaker 1: pressure on fossil fuels and the severe pressure not to
Speaker 1: invest in developed countries I think might lead to a
Speaker 1: shortage sooner than we think. Ken real quick, what do
Speaker 1: you think the next big market risk is? As we're
Speaker 1: sitting down us today. Look, I just think markets are
Speaker 1: priced pretty much for perfection. And you don't have to know.
Speaker 1: This is on my I've learned over many years people
Speaker 1: spend too much time trying to predict the event. All
Speaker 1: you have to do is know that there probably will
Speaker 1: be one. I've learned you don't have to know what
Speaker 1: it is. You just have to know that one will
Speaker 1: happen this year. You know, maybe this year. But look,
Speaker 1: I was saying today, if Lehman Brothers had made it
Speaker 1: through that one market that one year, they'd probably be
Speaker 1: a hundred fifty billion dollar market cap company today. So
Speaker 1: you can't get taken out. You have to know that
Speaker 1: risk is possible, um and you have to plan for it.
Speaker 1: And but you don't know exactly what the risk is.
Speaker 1: You just have to know you can survive it. Ken,
Speaker 1: thank you so much for joining us. Here's the evident idea.
Speaker 1: You can talk all you want up a happy valley
Speaker 1: in Switzerland, you've got to go out there and do it.
Speaker 1: And if you do it, you've got to move it.
Speaker 1: And the obvious most visible thing out there to move
Speaker 1: it is something for Liverpool football fields long and what
Speaker 1: is it truly a football field? Why are you speaking
Speaker 1: of the MAXX tripling. This would be the boat, the boats,
Speaker 1: the ships that move all this stuff around. To me,
Speaker 1: the most articulate voice on this and shipping and serious
Speaker 1: idea of climate change and the logistics and trade of
Speaker 1: the world, as Mr School of Marri's the chief executive
Speaker 1: officers Sore and School joins us. Uh. Now we talked
Speaker 1: often in London, thrilled they have you here. How do
Speaker 1: you respond to the visible lads are climate change who
Speaker 1: don't realize you've got to get the boxes in Asia
Speaker 1: from point A to point B. Well, first, I always
Speaker 1: say that the shipping is actually the most environmentally free
Speaker 1: in my mentorly way of moving any any type of good.
Speaker 1: So the c U two emission that we have any
Speaker 1: ton of good move this is quite low compared to
Speaker 1: road and rail and air. But we still take on
Speaker 1: the channels. Are wanting to reduce our CU two footprint,
Speaker 1: and we have articulated more than a year ago an
Speaker 1: ambusites to get to zero c U two by by
Speaker 1: twenty fifty, and we have solid plans for how to
Speaker 1: get How do you plan to do that? Talk to
Speaker 1: us about those plans. Well, we want to find it.
Speaker 1: I mean, the obviously is we need to find it
Speaker 1: a different kind of fuel, and we believe that we
Speaker 1: we have fuels that are probable, alcohols, ammonia, bio method
Speaker 1: that can be used on eternative sources. It's important because
Speaker 1: it's about the field and not about a ship. Because
Speaker 1: you're in a really, really tough spot. You have to
Speaker 1: plan a decade multi multi decades ahead from where you
Speaker 1: are right now. So it's not a simplest thaying we're
Speaker 1: going to build a whole load of new ships. Won't
Speaker 1: me throw the strategic thinking around issues like that? Well,
Speaker 1: we we believe first of all that we're having a
Speaker 1: responsibility as a leader in the industry to drive the agenda. Secondly,
Speaker 1: as you say, you know we we we we own
Speaker 1: assets that have a twenty five year lifespan. I cannot
Speaker 1: be caught up by a regulation that tells me to
Speaker 1: do something completely different when i'm when I'm when when
Speaker 1: we operate sim more than seven hunted ships. So so
Speaker 1: we need to we need to think ahead. You are
Speaker 1: a front and center in this new world. Someone suggested
Speaker 1: President Trump has moved aggressively from a multilateral, merisk world
Speaker 1: where trade gets done to some form of bilateral world.
Speaker 1: Are almost Americ until system. How is your business changed
Speaker 1: with not the trade war, but the many trades were
Speaker 1: the new trade Daniel mccows have changed well. Clearly growth
Speaker 1: is down up to the financial crisis twenty five years.
Speaker 1: Leading up to the financial crisis ten years ago, trade
Speaker 1: was growing seven eight per year, trade liberalization and so on.
Speaker 1: And since then we've seen much lower levels of growth.
Speaker 1: And then last year we believe probably in the numbers
Speaker 1: when they all said and done, will come in a
Speaker 1: slightly less than two percent growth. It's a very low number.
Speaker 1: You expect that to pick up. You seeing improving business
Speaker 1: in the new year. I I don't think that we
Speaker 1: will see much higher trade growths. It's just going to
Speaker 1: stay the same, despite the fact that we have some
Speaker 1: kind of trade trade between the United States and China
Speaker 1: and China, what we see in our numbers, based on
Speaker 1: the commodities that are being shipped, is that actually all
Speaker 1: of the consumer goods are holding up quite fine across
Speaker 1: the world. It's the capital goods that are not moving.
Speaker 1: And that's because business leaders like myself are worried about
Speaker 1: the future and we invest list in your Denmark and folks,
Speaker 1: I want to make clear Denmark is the space of economics,
Speaker 1: of geography in the world. It's the best academics and
Speaker 1: is that there is there is the geography of the
Speaker 1: South China, see of Singapore, of Indonesia, and that romantic
Speaker 1: straight that you're You've got to get your boats through
Speaker 1: that straight at night at any time. That must be extraordinary.
Speaker 1: Give us an update on the ability to move mayor's
Speaker 1: ships from point A to point B in the South
Speaker 1: China see in the Pacific. Today we are seeing no no,
Speaker 1: no impediments or any restrictions or anything that we need
Speaker 1: to be concerned about. You're right, the Malaga Strate between
Speaker 1: single point Indonesia is a very narrow channel, but as
Speaker 1: as of today, we don't see any problems there. You've
Speaker 1: said trade is basically where it was last year done
Speaker 1: when he said improving. Let's talk about rates. Contain a
Speaker 1: rate you speaking to your big clients, what have they
Speaker 1: said so far, what a race look like, and how
Speaker 1: things going to evolve in a year ahead. Freight rates
Speaker 1: have gone up quite substantially since the first of October
Speaker 1: last year, mainly because we have switched over to a
Speaker 1: cleaner fuel on the first of January and we're passing
Speaker 1: that onto the through the customers. Well, well, let's cut
Speaker 1: to the chase and we have to make some news here.
Speaker 1: How do your customers receive the new invoice? Well, uh,
Speaker 1: you know, it's always a procurement discussion. But at the
Speaker 1: end of the day, I believe that many, many, many
Speaker 1: of our customers recognized that it's good for everybody that
Speaker 1: we go to a cleaner, cleaner fuel. Quick final question
Speaker 1: just before we let you go, if we can get
Speaker 1: the mess stock out there for people to just to
Speaker 1: have a look at and for our listeners on radio,
Speaker 1: I'm going to tell you it is several digits long.
Speaker 1: Some people always ask me, when are they going to
Speaker 1: do a stock split? What will Mess do a stock split?
Speaker 1: This is getting ridiculous. Now we're gonna do a stock split.
Speaker 1: I could just say we don't have any plans to
Speaker 1: do a stock split. Okay, we'll leave it there. So
Speaker 1: let's go of MESQ the CEO. Look at the numbers
Speaker 1: for our listeners on on radio. Several digits long and
Speaker 1: Danish kronaw we can do digits on the radio that
Speaker 1: works about his plans for the future. The President of the
Speaker 1: the United States just pulling a pin and loving a
Speaker 1: grenade into this conference yesterday and it was a total
Speaker 1: one eighty from what we thought we heard from the
Speaker 1: administration the day before. We can get real reaction from
Speaker 1: Europe now with Mark Rutter, the Dutch Prime minister. Primarister,
Speaker 1: great to see your annual visit, Tom and myself is
Speaker 1: great to see you. How do you respond to the
Speaker 1: President of the United States? Positively because he also had
Speaker 1: a fair successful meeting Urgin Vonderlay as he's a new
Speaker 1: Your Your Commission president. They agreed that it was a
Speaker 1: good meeting that he will continue to dialogue as soon
Speaker 1: as possible. I've had myself many conversations with Trump on
Speaker 1: trade and always found him very pragmatic and very practical.
Speaker 1: He has his irritations about Europe. We have some issues
Speaker 1: with the US, but that is not a problem. That's
Speaker 1: why you have to negotiate. I think we can get
Speaker 1: a deal done. I wonder if you're more annoyed with
Speaker 1: France than you are the United States at the moment,
Speaker 1: because it's the policies of France that are causing much
Speaker 1: of the problems. Secretary Manuchin said the following this week,
Speaker 1: if people want to just arbitrarily put taxes on our
Speaker 1: digital companies. We will consider arbitrarily putting taxes on car companies. Yeah,
Speaker 1: but that's a discussion about digital text. I think still
Speaker 1: be to deal with the issue digital text in the
Speaker 1: context of the O E c D. It can also
Speaker 1: be part of the talks between the US and Europe.
Speaker 1: But don't forget the US is the number one economy
Speaker 1: the world and the most powerful country. But in terms
Speaker 1: of overall economic science is Europe is bigger. We have
Speaker 1: one a half times the science of the US. So
Speaker 1: when they deal with China, it's not about first places
Speaker 1: about second. But Prime Minister, you bring up a key point.
Speaker 1: Montana has the same voice in President Trump is Mississippi.
Speaker 1: There are many voices of your Europe. What is the
Speaker 1: most efficacious way for Europe to speak to the President
Speaker 1: of the United States and trade directly? And fourth ride
Speaker 1: with Trump? You have to be clear the Strasbourg. I mean,
Speaker 1: who's the voice that's going to set across the table
Speaker 1: from the President that is pressident Jupean Commission, because this
Speaker 1: is a European theme and we are united in the
Speaker 1: European Union on trades. We always have one of one
Speaker 1: of the few very successful things we're doing. I mean,
Speaker 1: we have very many issues in climate change, migration, but
Speaker 1: one of the consistently successful things we're dealing with this
Speaker 1: European Union is trade, and we have to work in
Speaker 1: with bon Force if you're doing that, also with the
Speaker 1: UK when they're leaving from the end from next week onwards,
Speaker 1: we have to create a new day deal. So impossible
Speaker 1: optimistic about it because we know what is important for Trump,
Speaker 1: we know what's important for it for Europe, and we
Speaker 1: are both pragmatical. The retoric in the run up is
Speaker 1: always part of the There are amazing things to do.
Speaker 1: One of them is just look at the tariston autos.
Speaker 1: If you import a car out of the United States
Speaker 1: into Europe ten percent. If you import a passenger car
Speaker 1: out of Europe into the United States, the tariff is
Speaker 1: two and a half percent, but one which goes back deckhead.
Speaker 1: Can we address this? Can we just equalize the whole thing? Well,
Speaker 1: I discussed it the stream myself, and and and on
Speaker 1: average it is about nine percent from a car coming
Speaker 1: out of out of Europe, the two and a half
Speaker 1: twenty five who together is about nine percent, and a
Speaker 1: car coming out of the US is ten percent. So
Speaker 1: it is already almost the same. This is not a
Speaker 1: big issue. I think we can do with this is
Speaker 1: before this morning. I want you to identify what the
Speaker 1: new capitalism will be for Europe. The Dutch of letter
Speaker 1: on capitalism for well in access of four hundred years
Speaker 1: as well. Do you sense with the solution of Brexit,
Speaker 1: do you sense with some form of trade agreement with
Speaker 1: the United States a less multilateral approach, that there has
Speaker 1: to be a new capitalism out of Europe and not
Speaker 1: an attitude, not a new capitalists. But we have so
Speaker 1: learned from the past. Dutch companies like Shell you don
Speaker 1: leave Phillips. Actually they're always We're both successful internationally oriented companies,
Speaker 1: but also very much rooted in the local communities in
Speaker 1: the countries which they were serving. There still are. I'm
Speaker 1: still very proud of these companies. Some of the companies
Speaker 1: recently coming into place have less of a connection to
Speaker 1: the local communities, do not fully realize that next to
Speaker 1: making a nice profit, there's also sociential impact as a
Speaker 1: company and the good you can do in terms of
Speaker 1: making sure that and the changes the environment are not
Speaker 1: taking place in a role you can play there and
Speaker 1: I believe you shouldn't put more emphasised on emphasis on that.
Speaker 1: John mentions the French and the challenges Mr McCraw has
Speaker 1: domestically or the transition of power after the miracle era
Speaker 1: in Germany. What part can the Netherlands play to provide
Speaker 1: a center to Europe and more co co more coalessing capitalism. Well,
Speaker 1: we believe that with the UK leaving, be one of
Speaker 1: the countries with the most international outlook, the most trade oriented,
Speaker 1: the most free enterprise oriented countries. We've worked very closely
Speaker 1: together with the can Scandinavian EU countries, with the Baltic
Speaker 1: country Stovenia, with Ireland, but also with Belgian and Luxembourg.
Speaker 1: Within the Benelucks. That is a powerful group of countries
Speaker 1: who all share this outlook on capitalism, on international trade.
Speaker 1: At the same time, we have a strong political relationship
Speaker 1: with Germany, which France was last week. In Italy, we
Speaker 1: are building a strong relationship with the Italian government, a
Speaker 1: violet relationship within the EU because this is needed to
Speaker 1: maintain that that outlook on the world with the UK leaving.
Speaker 1: We'll pushed for time, let's get the UK leaving into
Speaker 1: the conversation. You're very pragmatic in fact, respectful of the
Speaker 1: US administration, and that's encouraging about ultimately coming to a
Speaker 1: positive outcome with the United States. Are you equally the
Speaker 1: same with the UK At the moment, well, I have
Speaker 1: pune warrior, and that is the time we have available
Speaker 1: because they will leave formally next week, but basically they
Speaker 1: won't leave at all. They will only leave the political structures.
Speaker 1: They will still be part of everything else in the
Speaker 1: EU till the end of the year. And in the
Speaker 1: meantime we have to solve this trade deal. But for
Speaker 1: this trade deal to be solved, we need to agree
Speaker 1: on level playing field all the other issues. It's an
Speaker 1: awfully short amount of time. So I hope that coming
Speaker 1: next summer June July, that Boris Johnson will at least
Speaker 1: contemplate extending, if necessary, this transition face. At the moment
Speaker 1: he is not. At the moment, it's not. But also
Speaker 1: here I would say, let's take this step by step,
Speaker 1: and you just think it's inconceivable that you can come
Speaker 1: to the trade but it's very difficult. So and then
Speaker 1: you and there's there's still the risk in the worst
Speaker 1: case that you have a cliff at scenario like we
Speaker 1: had experienced last year. This is a nightmare scenario because
Speaker 1: what we're gonna end up with the Heathrow is Virgil
Speaker 1: van Dyke is not gonna be able to go through
Speaker 1: customs exactly like he can. Now, let's bring it the
Speaker 1: Gentleman for Britain Grandigan. He's got to get up to
Speaker 1: Liverpool and there he is stuck at Heathrow in the
Speaker 1: new unacceptable. He will return us audience, can we explain? Well?
Speaker 1: I know who he is because I've been lecture greatest
Speaker 1: center bank if football at the one of the great
Speaker 1: players teams, the reason why we will win the European
Speaker 1: champions You think you've got to absolutely not, really, no doubt.
Speaker 1: A couple of injuries. This is a part of it
Speaker 1: and they hopefully will be back in time. This goes
Speaker 1: to the we're gonna have to talk about this later
Speaker 1: on the Dutch Prime Minister's next visit to New York
Speaker 1: and London. I just left. We have the Dutch Prime
Speaker 1: stay with us and we end up talking about your
Speaker 1: favorite topic. I love watching. It's like Aaron Judge of
Speaker 1: the New York Game. He's not a body fantastic is
Speaker 1: something else. Margaret's great to catch up with you once again,
Speaker 1: the Dutch Prime Minister and damaged economic for minister does
Speaker 1: not wait in line when he goes through special Privately,
Speaker 1: I wait in line. When I would travel to Jos
Speaker 1: official capacity, I would be well hovered around, But in
Speaker 1: the private capacity I have to wait in the same
Speaker 1: lineage pharaoh with us for a good conversation of the
Speaker 1: international finance but also strength of the emerging markets and
Speaker 1: some of the weaknesses. Is the chief executive of Standard Charged,
Speaker 1: He's Bill Winters. As always, thank you so much for
Speaker 1: joining us. We every time quisy on Hong Kong and
Speaker 1: whether you've seen money flows, wealthy clients wanting to move
Speaker 1: their bank accounts out, give us an update of First
Speaker 1: of all, it nice to be here. Uh. Hong Kong's
Speaker 1: in good shape, right, I mean, it was a horrific
Speaker 1: six months uh and culminating in a really horrific period
Speaker 1: of violence in December. Uh. But while the issues are
Speaker 1: are as yet unresults and we know that so so
Speaker 1: the idea that this is behind us would would be hopeful,
Speaker 1: but night but pieces prevailing in Hong Kong, and that's
Speaker 1: very encouraging. So what we saw through the through the
Speaker 1: worst of the of the period was some people, frank
Speaker 1: very few on a percentage basis, made some provisions to
Speaker 1: move their money someways else opening an account in some
Speaker 1: plays UH, but virtually none of them actually moved their money.
Speaker 1: So so so so that the business activity has stayed
Speaker 1: very strong in Hong Kong. So as Hong Kong is
Speaker 1: a as a trading hub, Hong Kong is a financial center,
Speaker 1: and we see it from the I p O calendars
Speaker 1: and is very strong. And if they haven't missed a
Speaker 1: beat in that regard, the hospitality of the retail sectors,
Speaker 1: tourism have been severely impacted. It was a big chunk
Speaker 1: of the tourism came from mainland China. It will take
Speaker 1: a while for for them to come back. They had
Speaker 1: a bad experience when they were in Hong Kong and
Speaker 1: UH and the rest of the world has has stayed
Speaker 1: away while things were unsettled. Now that that pieces is
Speaker 1: breaking out, as it persists, as as we hope it does,
Speaker 1: I think Hong Kong will get back to normal. And
Speaker 1: over the course of this year. Moments ago, China has
Speaker 1: taken steps to actually cancel some of the festivities, lunar
Speaker 1: festivities because of the coronavirle is as a big chief
Speaker 1: executive in the region. How do you monitor and and
Speaker 1: how do you prepare for Well, it's concerning. I mean
Speaker 1: we we first start by by making sure that that
Speaker 1: our on colleagues are taking the proper precautions and safe
Speaker 1: So you can imagine the level of anxiety is very
Speaker 1: very high. If somebody gets a cold, now it's that
Speaker 1: there's a question whether whether it's something much worse, and
Speaker 1: that can cause the whole office to to lock down.
Speaker 1: So that's uh, we start started home. Uh, we're trying
Speaker 1: to stay very close to our clients, help them understand
Speaker 1: what their exposures are. Obviously, people in the transportation and
Speaker 1: and tourism industry themselves are at some risk within China,
Speaker 1: especially coming into Chinese New Year, so trying to help
Speaker 1: identify working capital needs or challenges. It will come up
Speaker 1: if things progress as they have for the past twenty
Speaker 1: four hours. Other than that, we were watching with the
Speaker 1: rest of the world and hoping do you have operations
Speaker 1: that could be directly affected. We do. My I was
Speaker 1: intending to be in Uhan next week. I mean that
Speaker 1: was we have we have a very substantial operation in
Speaker 1: Muhan and Johan Chang and Jian you know, all through
Speaker 1: Western China, and yes, or they're directly affected that. So
Speaker 1: are you speaking with with health officials on the ground
Speaker 1: there or my colleagues, my colleagues in China are speaking
Speaker 1: with health officials continuously. But as as you've seen and
Speaker 1: as you've reported, it's a very fast moving set of facts.
Speaker 1: Even even today, we've we've had material new pieces of news.
Speaker 1: But but we we we have our own intelligence on
Speaker 1: the ground as well, from our clients and from our people,
Speaker 1: and it's it's very consistent with what we're hearing from
Speaker 1: the government. So I'm encouraged by this commitment to transparency.
Speaker 1: I could only encourage it to continue. Are you encouraged
Speaker 1: by US China Phase one deal or actually Phase one nothing,
Speaker 1: because it's it's simply an understanding that you know, things
Speaker 1: won't escalate. Fun It's encouraging because it's they demonstrated that
Speaker 1: they can agree on something and it has stopped the
Speaker 1: cycle of escalation. That's a good thing. There's a bit
Speaker 1: of of of claw back in terms of tariffs and
Speaker 1: protection of intellectual properties and opening up the financial services markets.
Speaker 1: These are all good things. And does it solve the problem? No,
Speaker 1: of course, not that the structural issues are still there,
Speaker 1: but the fact that the two sides have demonstrated willing
Speaker 1: us to agree on some things we have to take
Speaker 1: is encouraging. Does it help statur charger when with the
Speaker 1: tariffs going up there was no particular impact on header chargers,
Speaker 1: so coming down there won't be either. What is what's
Speaker 1: challenging is is the the prospect, the uncertainty around this
Speaker 1: prospect of of a bifurcated world, with with our customers
Speaker 1: and our clients not really knowing how much they have
Speaker 1: to reconfigure their supply chains and which you don't know
Speaker 1: what you need to do, you tend to prepare for
Speaker 1: the worst, which usually means a lot of wasted cost
Speaker 1: and investment. So so the the the increasing uncertainty was
Speaker 1: a problem. It's come off a little bit, but the
Speaker 1: uncertainty hasn't improved too much. President trumpus here yesterday. He
Speaker 1: spoke to a number of business leaders. I think you
Speaker 1: learned some of those meetings. What was the message coming
Speaker 1: from the US administration? I mean, the key message I
Speaker 1: take away from from the messages was that he's running
Speaker 1: for president of the United States, so that the message
Speaker 1: would seem to be quite targeted at the domestic audience. Uh,
Speaker 1: it was. You know, I say that the themes in
Speaker 1: Davos have overwhelmingly been sustainability, to the point that it's
Speaker 1: probably crowded out some other very important discussions like the
Speaker 1: challenges around inequality. But the traction on on sustainability has
Speaker 1: been very impressive. I think, so hardcore commitments in terms
Speaker 1: of the metrics that will be using to measure progress. Uh.
Speaker 1: And I say specifically, you know, what does my business
Speaker 1: contribute to to this climate change dynamic and what can
Speaker 1: I do about it? And then specific commitments from corporations
Speaker 1: and willingness I SNA across the banking industry and sharing
Speaker 1: a session yesterday where we focused a lot of what
Speaker 1: the banks could do collectively to address a sustainability question. So,
Speaker 1: I mean, those are the messages coming out of Davos.
Speaker 1: And then there was some noise on the side. Okay,
Speaker 1: if you look at market, it's what is one thing
Speaker 1: we had to political concerns, you know regarding Iran and
Speaker 1: Iraq um us China trade is the forefront to US elections,
Speaker 1: which you kind of mentioned out of those three, what's
Speaker 1: the biggest risk for the markets? I think the big
Speaker 1: structural risk because it's it's very impactful and and as
Speaker 1: yet unresolved. Although in a peaceful zone right now is
Speaker 1: the US China tentions, Iraq Iran, US Saudi has the
Speaker 1: possibility to explode right now. That's that feels unlikely. I mean,
Speaker 1: it feels like there's been a dramatic escalation and then
Speaker 1: quick de escalation. Uh. And certainly that what I can
Speaker 1: pick up through the hallways, and it's just you know,
Speaker 1: I think everybody's got their views. Uh there there's a
Speaker 1: genuine willingness on all sides to try to de escalate
Speaker 1: at this point. So, but of course have that changed
Speaker 1: and and an impact it all flos through the through
Speaker 1: the straits, then we've been a very different place. Um
Speaker 1: so I So to me, it still comes back to
Speaker 1: US China and getting some real progress there. We're moments
Speaker 1: away from the e CD decision. Are central banks exhausted?
Speaker 1: Are they running out of ammunition? I think the I
Speaker 1: don't thin they're running out of ammunition, but I think
Speaker 1: the ammunition is is a little bit as effective. So
Speaker 1: I mean, of course that there's new rounds of quantity
Speaker 1: of easing, or there's new new types of assets that
Speaker 1: that central banks could buy to affect credit spreads or
Speaker 1: even affect equity prices at a point, but it seems
Speaker 1: to be an exercise with diminishing returns. So I don't
Speaker 1: think they're out of tools by any means, but they
Speaker 1: might have to use more of those tools if they
Speaker 1: feel the need to use those who's at all right,
Speaker 1: But we've heard presidents leg out of the e CB
Speaker 1: trying to put pressure on fiscal If you were to
Speaker 1: quantify twenty twenty, if we had one, you know, one
Speaker 1: mondary policy or one fiscal policy, would it be, you know,
Speaker 1: government spending more. Does that actually give you more business?
Speaker 1: If there's If there's a lesson that we've learned from
Speaker 1: developing markets through the years, it's that that aggressive fiscal
Speaker 1: programs targeted at things that really improve the quality of
Speaker 1: an economy, so infrastructure, education, healthcare, those things are typically
Speaker 1: a really good use of money, especially when you're funding
Speaker 1: it with very low cost debt, which is what we
Speaker 1: have right now. Fiscal deficits that are that are being
Speaker 1: used to drive consumption give you a sugar high, but
Speaker 1: don't don't structurally improve the ability of the economy to
Speaker 1: grow and strengthened. So I think to the extent that
Speaker 1: the US and Germany, so the two guys with the
Speaker 1: biggest fiscal firepower right now, step up their fiscal spending,
Speaker 1: but focus on on these these structural value creators that
Speaker 1: can be a very important complement to monitory policy. But
Speaker 1: there's a little noise that actually Germany is ready to
Speaker 1: spend what what a lot of people ask of them.
Speaker 1: They're under a lot of pressure. I don't know if
Speaker 1: they've they've internalized that yet. Okay, the negative rates, how
Speaker 1: how much of I mean every bank is complaining about
Speaker 1: negative rates? But actually do policy makers understand that that
Speaker 1: this could not only lead to to really testing the
Speaker 1: banking models even further, but actually social like unrest. I
Speaker 1: think policy makers have to be very careful about what
Speaker 1: they say. But I can't imagine that they don't know
Speaker 1: that it's not just bad for the banking systems, it's
Speaker 1: very bad in terms of creating imbalances in the economy
Speaker 1: and imbalances and capital markets that when they unwind, it
Speaker 1: would be quite dangerous. And since it's clearly part of
Speaker 1: the central banks mandate is financial stability. They know that
Speaker 1: this this is another kind of drug, that it's also
Speaker 1: having diminishing returns, and that that is piling up quite
Speaker 1: a substantial problem for the future. Very quickly on your
Speaker 1: turn around planned? Is it too? Is it? You know,
Speaker 1: time to say mission accomplished? You never say, MISSI accomplished,
Speaker 1: and it's not accomplished. But but what I can say
Speaker 1: is that that that our bank is super strong at
Speaker 1: this point. We have all the foundations that we need.
Speaker 1: We have all the growth momentum in the key areas
Speaker 1: of our our cross border corporate business, our affluent client business,
Speaker 1: and then then more recently our massive investments in digital banking.
Speaker 1: All those things are working extremely well. We just have
Speaker 1: to to to see them through to to fruition bills.
Speaker 1: As always, thank you so much for joining us. He's
Speaker 1: a protective of standard charge. Stacy cunning and joins us.
Speaker 1: She's gone a little bit better than internship as president
Speaker 1: of the New York Stack. Were thrilled here. Thanks because
Speaker 1: the American dream when you were a kid in a
Speaker 1: financial family, that was like Because what was it like
Speaker 1: the first day when you were in turned on the floor.
Speaker 1: I actually before I walked onto the Stock exchange floor.
Speaker 1: I never thought about finance. It wasn't something I wanted
Speaker 1: to do. But those first minutes, the first fifteen minutes,
Speaker 1: I knew it was what I wanted to do with
Speaker 1: my life. I loved it. I love the pace and
Speaker 1: I love the energy, and you know, I love what
Speaker 1: capitalism delivers for this country. And I think that's what
Speaker 1: we should be talking about, because I think that that's
Speaker 1: where we need. Do you think anyone is defending capitalism
Speaker 1: at this conference, Well, no, no, And that's the point.
Speaker 1: I think what I'm hearing at this conference is we
Speaker 1: have to tell our stories better, and I think capitalism
Speaker 1: does not is not immune from that. Right, Capitalism has
Speaker 1: been the engine that has been the growth of the
Speaker 1: you know, really fueling the growth of the United States,
Speaker 1: but it needs a tune up. We need to make
Speaker 1: sure that the American dream is a story of shared success.
Speaker 1: And so we gotta get companies out private, from private
Speaker 1: to public sooner so that others can share in their
Speaker 1: wealth creation. And we need to talk about the good
Speaker 1: that those companies are doing by creating jobs and giving
Speaker 1: back to their community. One of the great voices of
Speaker 1: the n Y s as a guy named Kempoll Curry.
Speaker 1: He's been great, loyal, visible, smart on the markets. Great.
Speaker 1: He and I remember another time is that New York
Speaker 1: Stock has change of today anything like what you knew
Speaker 1: was an intern and where's it going to be in
Speaker 1: five years? Yeah. We kept the best parts of New
Speaker 1: York Stock Exchange, and we brought together modernization where we
Speaker 1: could automate the parts that that really just should be automated.
Speaker 1: And so we really believe strongly that the combination of
Speaker 1: people and technology is so much more powerful. Are you
Speaker 1: keeping at happy with best price? Yes? Explain that for
Speaker 1: our audience that folks on radio and television, this is
Speaker 1: wicked important. You here Arthur love At, the former chairman
Speaker 1: of the SEC with us on Bloomberg Surveillance, and he's
Speaker 1: always talking about the execution. Explain why the execution now
Speaker 1: is different than before ken Ball carry had a beard.
Speaker 1: One of the things that you want to make sure
Speaker 1: is that when somebody wants to buy ourselves stock, they
Speaker 1: can go out and see what is the value. And
Speaker 1: nothing values a company better than the public markets. But
Speaker 1: price is an important part of that, and so the
Speaker 1: exchanges are the ones that set that price. And even
Speaker 1: though market trading has changed and of the market is
Speaker 1: trading in dark and not contributing that price, they're actually
Speaker 1: taking those prices that you the exchange is set to
Speaker 1: determine where to trade, and those are the same exact
Speaker 1: prices that a retail investor logging into their Fidelity each
Speaker 1: trade and merrit trade. You just slipped through trading in
Speaker 1: the dark. Yeah, you tried in the dark. What is
Speaker 1: trading in the so so what that is is if
Speaker 1: you are showing your prices to the world to see,
Speaker 1: so that when someone logs into their online trading account,
Speaker 1: calls they're broker on their Bloomberg terminal and they get
Speaker 1: their prices. Their Bloomberg terminal is showing the best price
Speaker 1: in the market. Stacey, you're making the argument that companies
Speaker 1: should stop staying in private markets for so long income public.
Speaker 1: A lot of people would understand the argument coming from you,
Speaker 1: why and why a direct listening is gonna be such
Speaker 1: an important part of this process. So the two great questions.
Speaker 1: The first one is why should they be public sooner?
Speaker 1: And there are a lot of conversations around why they're
Speaker 1: staying private longer, and you can talk about that it's capital,
Speaker 1: it's it's it's it's regulation, it's all these things. But
Speaker 1: with the downsides to the fact that they're staying private
Speaker 1: means there's less discipline governance in companies which are a
Speaker 1: much larger company that's much more impactful. There is less
Speaker 1: clarity around valuation. So are these companies worth what the
Speaker 1: private markets are saying or do you need the wisdom
Speaker 1: and the disclosures and transparency of the public markets to
Speaker 1: determine that. And it's creating a bifurcation of wealth. Let's
Speaker 1: talk about pressure, the pressure on you guys. At the moment,
Speaker 1: we had the like of Larry Think of black Rock
Speaker 1: talk about leaning on the active management world to lean
Speaker 1: out of some companies. Let's say in cold the pressure
Speaker 1: really is going to have to be put on the
Speaker 1: index providers to say to them, you need to get
Speaker 1: these companies off out of the index. That's going to
Speaker 1: make the most difference. The pressure is also going to
Speaker 1: be on the exchanges. Why allow these companies to list
Speaker 1: on your exchange? I think it's really important to distinction,
Speaker 1: to make sure that that investors have access to opportunities
Speaker 1: and the right to choose. And so by putting them
Speaker 1: on exchanges and giving them information about their disclosures is
Speaker 1: helpful for them can make it informed decisions. I think
Speaker 1: it's really important to recognize, what are the conversations I've
Speaker 1: been having here in Davas over the past few days
Speaker 1: are from many CEOs. We're saying, we've been doing all
Speaker 1: of the work around d s G already because it's
Speaker 1: important to our employees. It's an important to our customers
Speaker 1: that we take a stand on these issues, even more
Speaker 1: so than their investors. Let me ask you this because
Speaker 1: I actually it's come up multiple times, not just at
Speaker 1: this conference, but over the last few months, maybe the
Speaker 1: last few years as well. You have minimum standards to
Speaker 1: be listed on the New York Stock Exchange, minimum market cap,
Speaker 1: minimum out of shadholder as well. Why not have the
Speaker 1: s G as part of that. Because our standards are
Speaker 1: very focused on investor protections, and if those companies stay private,
Speaker 1: the conversations we're having are really connected. Right. If we
Speaker 1: put so many standards around requirements for companies to be public,
Speaker 1: they have alternatives. It's a different dynamic than it was
Speaker 1: years ago when you actually had to come to the
Speaker 1: public markets to get money. Because there is money available
Speaker 1: in the private market space. We don't want investors to
Speaker 1: be denied those opportunities entirely. This is not your remit,
Speaker 1: but I want your opinion on this because it's important.
Speaker 1: Pharaoh has just recovered from the shock of losing that
Speaker 1: much money on his eight thousand Listen to this. How
Speaker 1: do you respond when on your floor they do the
Speaker 1: song and dance of an I p O or even
Speaker 1: even a secondary but particularly initial public offerings and they
Speaker 1: come out and they do the whole modern media dance
Speaker 1: and the thing goes down x per set. That's not
Speaker 1: good for the brand, is it. I think we should
Speaker 1: keep in mind that in a large, large IPO like that,
Speaker 1: they sold eight billion dollars worth of stock and it
Speaker 1: opened at a price and stayed right there. Now, over time,
Speaker 1: investors were reacting to the valuations of companies and his
Speaker 1: companies go. Your job is to get it open in
Speaker 1: the early minute, to make sure that investors have the information.
Speaker 1: Did they have the information? And you'll see it's a
Speaker 1: great example of private valuations versus public valuations. And so
Speaker 1: we need to actually make sure companies get out and
Speaker 1: this this this shift because they don't need capital, is
Speaker 1: actually why the direct listing was innovation, an innovation that
Speaker 1: we delivered this year because it's actually not about raising money,
Speaker 1: it's about in those cases you say, so you're nailing,
Speaker 1: there's a private valuation, they go public and so elected
Speaker 1: stocks tank whose responsibility is that it's not you, who
Speaker 1: is it who's respecting questions that they weren't asking before.
Speaker 1: And I think that's what you're gonna see is that
Speaker 1: investor are profitability and valuations. And when you have limited
Speaker 1: people participating in the private space, you're limning access to
Speaker 1: opportunity and you're also limiting access to information. Stacey, fantastic
Speaker 1: conversation one of my work you're looking for work Stacey
Speaker 1: accounting of nicely President. Thank you very much from Davil,
Speaker 1: Switzerland for our audience worldwide. Alongside it's Tom Keane, Jonathan Pharaoh.
Speaker 1: This is the countdown to the open on bloom Black
Speaker 1: TV and on Bloomberg Riding Up. I can confirm then
Speaker 1: in Frankfurt, Germany, there is an absolute snoozer of a
Speaker 1: news conference. In Christine. Everybody asking questions is asking one
Speaker 1: to three in a row. I don't know how she
Speaker 1: does it. If you would like to follow that you
Speaker 1: can on the Blomberg terminal if you are a Blomberg
Speaker 1: subscriber on Life Go. Let's get the price action. Around
Speaker 1: about twenty minutes out from the opening bout in New
Speaker 1: York City, we set up as follows the pain. The
Speaker 1: epicenter of all of it is over an Asia, Chinese
Speaker 1: equity markets down and down hard, in the United States barely.
Speaker 1: And he followed through whatsoever SMP five futures coming in
Speaker 1: just a tenth of one percent in the bottom market
Speaker 1: yields lullaby three basis points TOM one seventy four is
Speaker 1: your yield on a US tenure. What's interesting in all
Speaker 1: of our discussions here, and you learn this in Davos,
Speaker 1: and frankly you learn it on the island of Manhattan
Speaker 1: as well, that each bank is different, each executive and
Speaker 1: set of executives at the banks are different, of course,
Speaker 1: all different challenges at Goldman Sachs, of course, the transition.
Speaker 1: And they've chosen a guy they used to move ice
Speaker 1: cream at Baskin Robbins. This is important, John, You don't
Speaker 1: understand America. The coveted job in high school younger high school,
Speaker 1: all right, you went to McDonald's, you went to the others.
Speaker 1: The Glory Job was best and Robbins ice cream and
Speaker 1: that's how you moved David Selom, a gome sex chairman,
Speaker 1: to see have you ever had an introduction like that before?
Speaker 1: I've never. First of all, thank you for having me,
Speaker 1: but yeah, I've never had What was your favorite flavor?
Speaker 1: My favorite flavor was Rocky Road. Always your favorite introduction? Okay,
Speaker 1: I'm not taking podcast banks the Center. In the conversation
Speaker 1: today with the CP and Frankfurt for the feder was
Speaker 1: a real conversation about what is going on with the
Speaker 1: balance sheet. David would love your insight, just your take,
Speaker 1: your opinion. Is that QI or is that not QI?
Speaker 1: What is that? So the monetary policy that's been around
Speaker 1: and has been in place for a long time obviously
Speaker 1: has been an enormous stimulus. When we when we sit
Speaker 1: here today and I kind of think about, you know,
Speaker 1: the path forward. I think we're now in a period
Speaker 1: this year after three mid uh three mid cycle cuts
Speaker 1: for lack of a better term, that I don't expect
Speaker 1: a lot from the Fed in the context of this year. Obviously,
Speaker 1: the balance sheets come down a lot over the course
Speaker 1: of the last couple of years. UM all of this
Speaker 1: supports or impacts liquidity in markets, and I think the
Speaker 1: FED has done a reasonable job managing liquidity and markets
Speaker 1: even with a speed bump back. So I'll ask it again, then,
Speaker 1: is that Q wait as they start to buy tapos
Speaker 1: and a balance sheet stops to expand again, any time
Speaker 1: the FED uses its resources to affect liquidity in some way,
Speaker 1: shape or form, it's having an impact on markets. I'm
Speaker 1: not going to answer the question that you're looking for
Speaker 1: me to answer it because I I don't think it's
Speaker 1: a black and white answer. You tell me what Q
Speaker 1: he is? Who ask Bill Dudley. But the answer here
Speaker 1: is we get a lot of different opinions, including the
Speaker 1: former member of Golden sexually someone that drove your economics
Speaker 1: for Mr Dudley of the New York Fed. We get
Speaker 1: all these different opinions, and what our audience wants to
Speaker 1: know is what you have learned from your prose on
Speaker 1: the desk of those reactions, the movements that you've seen
Speaker 1: in the short term paper market. What have you actually
Speaker 1: observed in the market that gives you information about these
Speaker 1: balance sheet challenges? Well, I I think that everyone observed
Speaker 1: that the FED had a very very significant balance sheet investment,
Speaker 1: and it reduced that balot and cheat. There have been
Speaker 1: a bunch of regulatory inputs the amount of liquidity that
Speaker 1: banks need to hold as the regulations have changed, and
Speaker 1: at some point you can reach a supply demand where
Speaker 1: for a variety of reasons, some of them can be
Speaker 1: idiosyncratic around a moment time maybe tax payments, that the
Speaker 1: supply demand of liquidity changes and the price for short
Speaker 1: term liquidity rises. And we saw that the FED responded
Speaker 1: appropriately by saying, we want to make sure that there's
Speaker 1: enough liquidity in the system. I think all the banks also,
Speaker 1: I know we did. I can't speak for others. We
Speaker 1: positioned ourselves so at the end of the year we
Speaker 1: thought liquidity might be type. We have liquidity to contribute
Speaker 1: to that felic good question. Are you constrained by the
Speaker 1: new set of regulations? Are you're happy with them? Or
Speaker 1: do you just see I need to see amendments so
Speaker 1: you do finance better? Now? We we we we are
Speaker 1: an adapter to the regulatory framework, and so I think
Speaker 1: as an organization we've adapted very well over the regular
Speaker 1: over the decade to the regulatory framework. And look, the
Speaker 1: regulatory framework continues to evolve, and so our job is
Speaker 1: to make we can serve our clients well, that we
Speaker 1: have the right resources and we do not see we
Speaker 1: do not feel constrained to serve our clients well and
Speaker 1: run our business based on the regulatory framework. We want
Speaker 1: your take on the market. So the price action we've
Speaker 1: seen over the last couple of months, the community, the
Speaker 1: investment community in the World Economic Forum pretty polarized on
Speaker 1: what we're seeing at the moment. We've had a hole
Speaker 1: range of fuse. We had Gougenheim Scott mined to say
Speaker 1: that it resembles someone we had boot prints of Bridgewater
Speaker 1: say the boom bus cyclists, we know it is over.
Speaker 1: When do you come down those two extreme views? Generally
Speaker 1: not a man of extremes, so um So I'd say
Speaker 1: that there will be booms and bus again at some point,
Speaker 1: although I don't see one anytime, you know, anytime soon.
Speaker 1: And you know, as I've been around talking to clients
Speaker 1: over the last few days, and that's one of the
Speaker 1: principal things I do while I'm here, you know, i'd see,
Speaker 1: I'd say, I see and I hear what I call
Speaker 1: kind of a confident middle of the road view of
Speaker 1: the current economic environment, US economy is in good shape.
Speaker 1: Manufacturing sector is a little bit soft. Capital spending been
Speaker 1: lower than people would like to see, but the consumer
Speaker 1: is overcompensating for that. Europe a little bit better. Headwinds
Speaker 1: of the Phase one deal helps a little, but in
Speaker 1: the distribution of outcomes overwhelming likely scenario is economy chugs along.
Speaker 1: That well said, but the distributions of outcome And I
Speaker 1: remember this and Mr Varney in August of two thousand seven,
Speaker 1: you get a three standard or even four point one
Speaker 1: standard deviation moment is golden sas And for that matter,
Speaker 1: your view of global Wall Street position better. Now boom
Speaker 1: bust if we get that jump condition, that abrupt movement
Speaker 1: as we saw in August of two thousand seven. The
Speaker 1: banking systems positioned incredibly differently that it was positioned in
Speaker 1: two thousand and seven. There's been an enormous amount of
Speaker 1: leverage that's come out of the banking system. There's been
Speaker 1: a huge amount of equity that's going into the banking system.
Speaker 1: I also think the risk management activities of the industry
Speaker 1: have improved materially, so there will be cycles, there will
Speaker 1: be events um that stir markets, JE don't really they
Speaker 1: repeat differently. So the last time there was a significant
Speaker 1: economic recession, it affected the banks significantly. I think the
Speaker 1: banks are in a different position. And when we do
Speaker 1: have you know, trouble um in the years ahead, which
Speaker 1: at some point we will the range of things we
Speaker 1: can see, but I think the banks will be more
Speaker 1: resilient in the context of that, based on the way
Speaker 1: they currently talk about how your position in the bank
Speaker 1: for the years to come best. Today, I believe it's
Speaker 1: next Wednesday investerdays. Next Wednesday, Investor Day is right now,
Speaker 1: Let's begin, right now, come on investor Days. Investor Day's
Speaker 1: next Wednesday. It's our first investor day ever since we
Speaker 1: went public in twenty years. Um. I'm a big believer
Speaker 1: that that you know, our investors and more broadly are stakeholders,
Speaker 1: you know, deserve transparency around the way we're going to
Speaker 1: grow the organization, expand our franchise, serve our clients, and
Speaker 1: ultimately deriver deliver higher returns for our shareholders. And so
Speaker 1: we'll lay out a series of initiatives, many of which
Speaker 1: we've spoken about, you know, individually publicly, but with more information,
Speaker 1: we'll put out some targets with respect to returns that
Speaker 1: we can be held accountable to. Targets. So we're gonna
Speaker 1: put out targets with respect to returns that we can
Speaker 1: be held accountable to, and we'll talk a little bit
Speaker 1: about how we intend to run the bank so we
Speaker 1: can deliver for shareholders over time. Let me set up
Speaker 1: a scenario. Let's say a week before you're investigating, a
Speaker 1: competitor comes out and says on new profitability target is
Speaker 1: fifty to seventy pace and return on equity step my laugh,
Speaker 1: A little bit difficult for you next week. I We're
Speaker 1: focused on running our business. I don't I don't think
Speaker 1: that that that that the anyone came out and said
Speaker 1: fifteen to seven pc return at equity. They said fifteent
Speaker 1: return a tangible equity. Okay, But we're focused on our
Speaker 1: business and so our returns and our messages are going
Speaker 1: to be rooted in what we want to do as
Speaker 1: an organization so we can deliver competition. Everybody's always benchmarked
Speaker 1: against competitions. We're gonna we're gonna deliver what we think
Speaker 1: we can deliver over time for our shareholders to build
Speaker 1: a better, bigger, stronger organization. Part of the side grilling
Speaker 1: you on this investor investor Day, and you've got a
Speaker 1: whole team on this, and you've been very experiences. This
Speaker 1: is they're going to talk about strategic vision, and so
Speaker 1: much of this on investor Day is explaining to investors
Speaker 1: do you want to expand through acquisition of a bank
Speaker 1: or just small bolt on acquisitions that advanced golden Sex
Speaker 1: intellect and technology. What you're feeling on that right now?
Speaker 1: Given the terrific equity markets of the last twelve months,
Speaker 1: are you are you priced out of opportunities globally? Well,
Speaker 1: I've I've said this repeatedly that I think God and
Speaker 1: I come to this from my own experience as a banker.
Speaker 1: I think anyone, any leadership team that's running a big
Speaker 1: organization always has to be aware of both or of
Speaker 1: both organic opportunities to grow and also in organic opportunities
Speaker 1: to grow. We're always looking and thinking about things that
Speaker 1: we think can expand our franchise and allow us to
Speaker 1: serve our clients more effectively and ultimately deliver for shareholders.
Speaker 1: But the bar for us to ever do something significant
Speaker 1: and organically is extremely high. But on a strategic basis,
Speaker 1: is that a geographic choice. Obviously it's a financial choice.
Speaker 1: But tell me about the Goldman Sex geography right now?
Speaker 1: Is it a gold division? Goldmen Sex Goldman Sax is
Speaker 1: a global firm. I think one of our competitive advantages
Speaker 1: is we truly are a global platform in the businesses
Speaker 1: that we operate in. Historically, if you look at our
Speaker 1: investment banking business, if you look at our sales and
Speaker 1: trading business, you look at our asset management business, we
Speaker 1: are a global organization and we have an ability to
Speaker 1: work anywhere in the strategy and wealth management right now
Speaker 1: and Golden Sax asset management, what's the strategy right now?
Speaker 1: So on wealth management or on an asset manage I'll
Speaker 1: take both. You asked one and then the other. I'll
Speaker 1: take you for two. Um, let's start with asset man um.
Speaker 1: On asset management, we run one of the top three
Speaker 1: global active asset management platforms. It's an advisory red lead business.
Speaker 1: In other words, we think our clients come to us because,
Speaker 1: in addition to strong investment performance over a period of time,
Speaker 1: we package it around advice to help them meet their
Speaker 1: long term investment needs. We think advice is differentiated and
Speaker 1: you can still get paid for advice and that's what
Speaker 1: our asset management business focuses on. We're also very unique
Speaker 1: and that when you look at the three largest global
Speaker 1: asset management businesses, we may be the only one that
Speaker 1: really in every product category, including alternatives, is really as scale.
Speaker 1: And so you know, across liquidity products, across active equity
Speaker 1: and fixed income, across alternatives were its scale on a
Speaker 1: global basis, and I think for our institutional customers that's
Speaker 1: an advantageous position. So when you look at our ability
Speaker 1: to acquire assets over the last three or five years
Speaker 1: long term fee based assets, we've outperformed relative to people
Speaker 1: we'd be benchmarked against. It. Talk to us about how
Speaker 1: hard it is to make a strategy, strange strategic decision
Speaker 1: for the bank that will work out a ten years,
Speaker 1: not just for now. So ten years ago the right decision,
Speaker 1: some people might say, would be to beeft Wealth Management
Speaker 1: and scale back fixed income trading. Ten years later, that
Speaker 1: might be the right strategic place to be in. But
Speaker 1: as we sit here now, ten years out, how hot
Speaker 1: is it to get that strategy right? To look forward
Speaker 1: and say what works now might not work in the future. Well, look,
Speaker 1: I think that's what CEO is always have to do
Speaker 1: um and I think the right CEO is make investments
Speaker 1: to ensure that the competitive position of their franchises strengthens
Speaker 1: over time. And when you get it right, your franchise
Speaker 1: is strengthened. And if you don't get it right, you
Speaker 1: know over time, you know the evidence comes forward. So
Speaker 1: we are going to grow our asset management business. We
Speaker 1: are going to grow and expand our wealth management business.
Speaker 1: And we think over the next decade those are opportunities
Speaker 1: that take core competencies at Goldman Sachs and we can
Speaker 1: expand on them. So if I don't want to talk
Speaker 1: about the sensitivities at the moment and this comes out,
Speaker 1: I think of William Cohen's book on Goldman Sex, and
Speaker 1: there's that a claim scene, a scene. It's Scotty's over
Speaker 1: Excel and sandwich, and it's Mr Weinberg and others that
Speaker 1: go down to Scotty's and over lunch they do Golden
Speaker 1: Sex business. This is a whole new world. Now. Tell
Speaker 1: us about the shift that you've had as a new
Speaker 1: chief executive officer, and this is vesterday coming up. Tell
Speaker 1: us internally at Golden Sex. The mood as you go
Speaker 1: to your first investors to day. What's the day to
Speaker 1: day mix at Goldman Sex right now is you move
Speaker 1: forward with your strategic plan well, along with the rest
Speaker 1: of our leadership team were uh, you know, I'm very privileged,
Speaker 1: were very privileged to lead an organization that's filled with
Speaker 1: extraordinary people. And I think they're excited about the investor day,
Speaker 1: but I also think the organization is energized by the momentum.
Speaker 1: The firm has to serve our clients holistically through a
Speaker 1: program we call one Golden Sacks to really make sure
Speaker 1: we're delivering as much as we can for our clients. Broadly,
Speaker 1: there's a real client service mindset in the organization that
Speaker 1: this leadership team is really you know, pushing hard at
Speaker 1: making sure we get right. And when they look at
Speaker 1: the areas where we're investing, whether it's transaction banking, it's uh,
Speaker 1: it's the alternatives business and asset management, it's the expansion
Speaker 1: of our wealth management opportunities, or it's our digital consumer
Speaker 1: banking platform. They're excited about the investments and excited about
Speaker 1: thinking about a Goldman Sex where more of these businesses
Speaker 1: make us more more new new. Is that Goldman Sex.
Speaker 1: It's not like Scotty's in the romance of Exhale and Sandwiches.
Speaker 1: I don't remember important I don't. I read, but I
Speaker 1: don't remember. This is an important scene of how Goldman
Speaker 1: Sex operated within the mythology and legend of the company.
Speaker 1: I want the new Goldman Sex look like. I can't
Speaker 1: speak to how Golden Sex operated historically going back that far,
Speaker 1: because I wasn't there today today. Look, we have a
Speaker 1: very very young, vibrant workforce that's very focused on serving
Speaker 1: our clients. Um, We're very, very focused on making sure
Speaker 1: we continue to have the best, the brightest, the most talented, motivated,
Speaker 1: driven people to serve our clients. Well, I think we're
Speaker 1: in that position. This management team leads with an open,
Speaker 1: communicative style. I think that's what the organization wants, and
Speaker 1: I I feel like the organization is excited about the
Speaker 1: direction we're moving it. But we have a lot of
Speaker 1: work to do. When we have a lot to accomplish,
Speaker 1: and like any organization, we're focused and committed to getting
Speaker 1: that done. How do you open up to the consumer
Speaker 1: at the same time maintaining that Goldman Sacks gold plates
Speaker 1: at branding Because I'm not concerned about that. Look, we
Speaker 1: think a lot about about our brand and our position UM,
Speaker 1: But at the same point, I think there's lots that
Speaker 1: we can do for consumers that makes our brand and
Speaker 1: our approach, especially on the digital platform, aspirational for consumers.
Speaker 1: And look, when you talk about consumers, there is a
Speaker 1: wide swath of people that you can deal with and
Speaker 1: UM and I feel good about the way our brands are.
Speaker 1: One of the one of the big one of the
Speaker 1: big endorsements I think of our brand is that when
Speaker 1: we partnered with Apple around the credit card, they wanted
Speaker 1: Goldman Sachs on that credit card. And I think that
Speaker 1: speaks to how you know our brand you know is
Speaker 1: viewed by some out in the marketplace that we we
Speaker 1: want to find ways to use that man effectively to
Speaker 1: serve individuals for their financial needs. And there's no reason
Speaker 1: if we do it well, it's differentiated. We ease their
Speaker 1: pain points, we give them information and resources that allow
Speaker 1: them to make any decisions that that can't represent that
Speaker 1: brand with consumers in a very effective way. Are you
Speaker 1: going to take technology at this investors and drive it forward?
Speaker 1: Is there another announcement with Apple or some there there's
Speaker 1: no There's there's no there's no big review. I got
Speaker 1: here in my ear. You're not going to You're not
Speaker 1: going to make a lot of news where we we
Speaker 1: will talk about our technology investment. We have some new leaders,
Speaker 1: you know outside. We'll talk a little bit about some
Speaker 1: of the technology investments were making, like all financial services
Speaker 1: firms of making. You're excited about that, um, but but
Speaker 1: I don't know that I'm gonna help you make some
Speaker 1: great grand you know, curtain raising news. Um, the investor day, Well,
Speaker 1: come next Wednesday. Your facing interview is so over all
Speaker 1: the sacks by to catch How do you thank you?
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and
Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast
Speaker 1: platform you prefer. I'm on Twitter at Tom Keene before
Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg Radio.