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Wheels Up Now Public, Trading On NYSE · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
• 0:04
  Speaker 1: my co host Matt Miller. Every business day we bring
• 0:06
  Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
• 0:11
  Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
• 0:15
  Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
• 0:18
  Speaker 1: at Bloomberg dot com slash podcast. Let's talk private aviation
• 0:23
  Speaker 1: only something I can aspire to um in the t
• 0:26
  Speaker 1: s A lines like the rest of you. Um. Kenny Dickter,
• 0:29
  Speaker 1: founder and CEO of Wheels up there, based in New
• 0:31
  Speaker 1: York City. They went public today. Vas back. I'm looking
• 0:34
  Speaker 1: at that stock. It's got a great ticker symbol up,
• 0:36
  Speaker 1: up and a stock is trading up about eight point
• 0:39
  Speaker 1: nine percent in early in trading this morning. Kenny, thanks
• 0:42
  Speaker 1: so much for joining us. Congratulations again on your listing.
• 0:46
  Speaker 1: Talk to us about the private aviation business. How has
• 0:50
  Speaker 1: it changed over the years and particularly in the last
• 0:52
  Speaker 1: eighteen months. Give us a sense of that business. Well,
• 0:56
  Speaker 1: I would say, like our ticker symbol, it's up and uh,
• 0:59
  Speaker 1: I would say, we're in the business of democratizing private aviation.
• 1:02
  Speaker 1: So while I think that you're going to continue to
• 1:05
  Speaker 1: travel commercially with you and your family. I think there
• 1:07
  Speaker 1: will be parts, places and times where we can actually
• 1:11
  Speaker 1: swing an airplane for a guy like you. So again,
• 1:14
  Speaker 1: we're bringing this to more people, bigger addressable market. We're
• 1:17
  Speaker 1: uberizing the space where Airbnb eising the space, and just
• 1:21
  Speaker 1: making this more accessible to more people. Part of that
• 1:24
  Speaker 1: is you talk about a strategic partnership with Delta Airlines.
• 1:27
  Speaker 1: What can members then benefit from the Delta Airline strategic partnership. Well,
• 1:32
  Speaker 1: the great news about the Delta partnership and we were
• 1:35
  Speaker 1: able to do that deal off market with Ed Bastion
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  Speaker 1: eighteen months ago, and by the way, in that deal
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  Speaker 1: that contributed his private jet business and they became our
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  Speaker 1: largest shareholder. Um So, a couple of things about the
• 1:46
  Speaker 1: Delta deal. One is it made Delta easily and seamlessly
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  Speaker 1: accessible to our client base, which, by the way, travels
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  Speaker 1: commercially on long haul most of our clients most of
• 1:57
  Speaker 1: the time. So you can put a Hunter thousand dollars
• 2:00
  Speaker 1: down on wheels up and you can use that capital
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  Speaker 1: to fly Delta. Conversely, Delta's first class business class and
• 2:08
  Speaker 1: Bob Summers and their business customers over at Delta now
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  Speaker 1: have access to last mile. So if you're a business
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  Speaker 1: and you're traveling with a couple of people from l
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  Speaker 1: A X to JFK, you can jump on your Porsche,
• 2:20
  Speaker 1: which again is a partnership that we just announced. It
• 2:23
  Speaker 1: will take you wing to wing to the private terminal
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  Speaker 1: and will fly to your your last mile destination, whether
• 2:30
  Speaker 1: that's Schenectady, New York, or whether that's you know, Vermont
• 2:33
  Speaker 1: or a tough to get to place in Rhode Island. Uh.
• 2:36
  Speaker 1: That's that's really the magic of the Delta deal. Can
• 2:39
  Speaker 1: he tell us about the typical Wheels Up customer? Give
• 2:43
  Speaker 1: us a profile. The profile is anybody that's worked very hard.
• 2:48
  Speaker 1: I like to say that we appeal to the working
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  Speaker 1: wealthy top one to three, which by the way, could
• 2:53
  Speaker 1: be ten, fifteen or twenty million people deep. Uh. Any
• 2:57
  Speaker 1: business that's doing ten to twenty million dollars and a revenue, Uh,
• 3:01
  Speaker 1: they need to It's an essential for them to have
• 3:03
  Speaker 1: a Wheels Up membership and have access to our fleet
• 3:06
  Speaker 1: of thousands of airplanes. And uh, you know, we did
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  Speaker 1: this fact merger with Robbie Tochran and Scott Dank and
• 3:12
  Speaker 1: his crew over at El Cadaton Robbie had twenty years
• 3:15
  Speaker 1: experience with LVMH, so luxury brand lifestyle person. But more
• 3:20
  Speaker 1: important he was based in Asia, uh chairman of LVMH
• 3:24
  Speaker 1: Asia Scott. You know El Cataton uh, the finest private
• 3:29
  Speaker 1: equity firm on a global basis out there. So we
• 3:33
  Speaker 1: picked the perfect partner in this back and then we
• 3:36
  Speaker 1: got to with our cap table. We had t Row Fidelity,
• 3:39
  Speaker 1: Franklin Templeton. We got to choose our equity partners here
• 3:43
  Speaker 1: almost by appointment. We did a zoom road show in
• 3:46
  Speaker 1: late January. We ended up seeing thirty five companies, twenty
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  Speaker 1: seven of them invested, including folks like Third Point, Henry
• 3:54
  Speaker 1: ellen Bogan and his crew with durable capital, longtime supporters,
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  Speaker 1: and some other great equity firms that are in this
• 4:02
  Speaker 1: for the long haul with us. What does the industry
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  Speaker 1: look like in a post COVID world where I might
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  Speaker 1: actually finally be comfortable having someone sitting next to me
• 4:11
  Speaker 1: in that middle seat. Well, I think that that the
• 4:14
  Speaker 1: first off, I think that the commercial airlines ED was
• 4:16
  Speaker 1: on and at great earnings this quarter. I think that look,
• 4:20
  Speaker 1: you're gonna see a roaring twenties trade. People humans want
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  Speaker 1: to travel, So I think that the good news is uh,
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  Speaker 1: the high tide, As Warren Buffett said, my old boss
• 4:29
  Speaker 1: lifts all boats. I think that our industry, the hospitality industry,
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  Speaker 1: I can't wait till the cruise industry gets back to
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  Speaker 1: where it was. I think that, you know, people post COVID,
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  Speaker 1: I think are going to value experience more than they
• 4:42
  Speaker 1: value what they have. So I think we're in the
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  Speaker 1: experience economy. I think that's it's it's a very hot space,
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  Speaker 1: and I think it's going to be there for a
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  Speaker 1: long time. Miss Traveling, Miss Traveling, and call we were
• 4:54
  Speaker 1: just joking, we'd be willing to sell our house. I
• 4:56
  Speaker 1: drive a Honda just for a chance to get on
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  Speaker 1: that private jet. Actually right, exactly, real quick, Um, can
• 5:02
  Speaker 1: you just give a sense of the competitive landscape for
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  Speaker 1: you thirty seconds? Yeah, I would say, Look, the only
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  Speaker 1: thing standing between wheels up and greatness is wheels up.
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  Speaker 1: I think that we're in a very unique space. Again,
• 5:13
  Speaker 1: we're looking to Uber Eyes and airbnbies the space where
• 5:17
  Speaker 1: others that we compete with the traditional legacy competitors are
• 5:20
  Speaker 1: in the ownership space, which again, you know, does Uber
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  Speaker 1: compete with Hurts. I'd rather be Uber and that's really
• 5:26
  Speaker 1: where wheels up this position fascinating. All right, that's really cool.
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  Speaker 1: Uh analogy there, Kenny Dictor. We really appreciate you taking
• 5:32
  Speaker 1: the time. I know you guys are having a busy
• 5:34
  Speaker 1: day today with your listing. Kenny Dictor, founder and CEO
• 5:37
  Speaker 1: of Wheels Up. It's a fascinating a part of the
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  Speaker 1: travel market that's again allah similar to an uber uh
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  Speaker 1: an Airbnb um. And so the question is, you know,
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  Speaker 1: how broad can that market be. But as Kenny was
• 5:51
  Speaker 1: just mentioning, you know, it feels like people are just
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  Speaker 1: yearning for those experiences in a post pandemic world, as
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  Speaker 1: opposed to maybe you know, at sets they're looking more
• 6:01
  Speaker 1: for experiences, and that would play certainly in two Wheels Up.
• 6:08
  Speaker 1: Let's talk jobs right now. You know, we spend every
• 6:11
  Speaker 1: Thursday talking about looking at the jobs claims and once
• 6:13
  Speaker 1: a month talking at you know, just the unemployment in general.
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  Speaker 1: And what we've seen is generally a pretty solid improvement
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  Speaker 1: coming off those just dramatic job losses of the pandemic
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  Speaker 1: really hit. But what we've also seen is that women
• 6:26
  Speaker 1: have been and continue to be disproportionately hit by the
• 6:30
  Speaker 1: labor market and the challenges in the labor market. Let's
• 6:32
  Speaker 1: get the latest with Neila Richardson, Chief Economists for a DP,
• 6:36
  Speaker 1: cohead of the ADP Research Institute, and she was also
• 6:39
  Speaker 1: a senior economist at Bloomberg. Neila, thanks so much for
• 6:41
  Speaker 1: joining us here. Help us think about our framemat for us,
• 6:45
  Speaker 1: what happened to women in the labor force during the
• 6:49
  Speaker 1: pandemic and now during the recovery. Well, first of all,
• 6:53
  Speaker 1: it's fantastic to join you on the job topics because
• 6:57
  Speaker 1: it's so important right now. But what we've seen with
• 7:00
  Speaker 1: women during the pandemic is this complation of work and
• 7:05
  Speaker 1: home and that's caused many women to exit the workforce.
• 7:08
  Speaker 1: So this has been widely reported. Going into the pandemic,
• 7:12
  Speaker 1: women's labor market participation was at an eight year high
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  Speaker 1: of fifty seven upwards. Off it dropped like a like
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  Speaker 1: a stone to fifty four percent. Is still starting to recover.
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  Speaker 1: It's but it's not quite there. And that's just women
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  Speaker 1: getting in, getting in the door of the workplace, the
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  Speaker 1: virtual door as it may be. So we wanted to
• 7:33
  Speaker 1: look at the actual experience of the women who stayed
• 7:37
  Speaker 1: in the workforce. We wanted to look at this kind
• 7:39
  Speaker 1: of mass excit due to health concern and layoffs, and
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  Speaker 1: complate that with what we know is gender pay gaps
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  Speaker 1: in the workplace. Previous research had told us that women
• 7:51
  Speaker 1: made about of what men made overall across industries. We
• 7:56
  Speaker 1: saw that that pay gap narrowed to but it's mostly
• 8:00
  Speaker 1: because low pay women were forced to leave or dropped
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  Speaker 1: out of the workforce. These are not real wage games. Now,
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  Speaker 1: what is the prescription then to fix this? Is it
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  Speaker 1: having a workforce and companies and employers that indeed are
• 8:17
  Speaker 1: more flexible with the return to office. I think that's
• 8:21
  Speaker 1: a good start tailor. I mean, if you look at
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  Speaker 1: women in the workplace, this is you know, it's not
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  Speaker 1: like we were in a place of rainbows and puppies
• 8:29
  Speaker 1: before the pandemic. But things have definitely accelerated in terms
• 8:33
  Speaker 1: of challenges after the pandemic. One of those barriers has
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  Speaker 1: been full time, full capacity employment. And so the concern
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  Speaker 1: is as companies make this transition, some of them from
• 8:44
  Speaker 1: a completely remote environment to a virtual or office environment,
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  Speaker 1: women will be particularly affected, even if they have a choice,
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  Speaker 1: because our survey evidence shows that women often feeling comfortable
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  Speaker 1: taking advantage of remote opportunities even if they have them,
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  Speaker 1: and so there's still this issue of companies being very
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  Speaker 1: responsive to women right now, especially considering the takeaups no.
• 9:13
  Speaker 1: I mean, one of the big issues obviously is the
• 9:14
  Speaker 1: women and home healthcare, and um, we're hearing a lot
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  Speaker 1: of good rhetoric out of companies about really being sensitive
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  Speaker 1: to that. Are you seeing any concrete examples that might
• 9:26
  Speaker 1: give you hope that, in fact, corporate America is becoming
• 9:30
  Speaker 1: more sensitive to these issues as they try to attract
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  Speaker 1: and retain women. You know that that is the silver
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  Speaker 1: lining of this whole experience about women in the workplace
• 9:42
  Speaker 1: during a very challenging year, companies in corporate America are
• 9:47
  Speaker 1: paying more attention to worker health in general more than
• 9:51
  Speaker 1: ever before, but also the soft infrastructure that women need
• 9:56
  Speaker 1: to actually get to work and be productives, whether that's
• 9:59
  Speaker 1: childcare for safe public transportation. So you're seeing companies the
• 10:04
  Speaker 1: one more flexible in their work from home prop uh
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  Speaker 1: prop uh processes, but also having an ear to the
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  Speaker 1: other things in work life that are meaningful in terms
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  Speaker 1: of production for women especially. You know, now we only
• 10:19
  Speaker 1: have about thirty seconds left. We're not just hearing this
• 10:21
  Speaker 1: from companies, We're hearing it from J. Powell himself saying
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  Speaker 1: that despite substantial improvements for racial and ethnic groups, the
• 10:28
  Speaker 1: hardest hit groups still have the most ground left to gain.
• 10:32
  Speaker 1: Is the Federal Reserve doing the right thing by focusing
• 10:34
  Speaker 1: on this issue and and adjusting monetary policy appropriately. Yes, uh,
• 10:40
  Speaker 1: this is these These issues are not new, These historical
• 10:43
  Speaker 1: pay gaps are not new, and I think the said
• 10:45
  Speaker 1: has been ahead of the curve and recognizing that through
• 10:48
  Speaker 1: monetary policy they can lift all boats and those boats
• 10:51
  Speaker 1: that are that are lagging behind the rest of the
• 10:54
  Speaker 1: economy in terms of the recovery because they've been the
• 10:57
  Speaker 1: hardest hit by the pandemic, that the most challenged and
• 11:00
  Speaker 1: going into that pandemic. So that policy directed to hard
• 11:04
  Speaker 1: hit groups makes sense if you want a full labor
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  Speaker 1: market recovery where you have the most participation across different demographics,
• 11:13
  Speaker 1: including women. Nila, thank you so much for joining us.
• 11:15
  Speaker 1: We really appreciate your thoughts and insights are very important topic.
• 11:18
  Speaker 1: Neila Richardson, Chief Economists for ADP CO, Head of the
• 11:21
  Speaker 1: ADP Research Institute. All right, let's talk ransomware, thank Colonial pipeline,
• 11:29
  Speaker 1: JBS meat supplier. I mean, the list is getting longer
• 11:33
  Speaker 1: as we speak. It's becoming a big issue. Companies and
• 11:37
  Speaker 1: individuals have to protect themselves. UH. To figure out how
• 11:40
  Speaker 1: we do that, let's welcome Jason Crabtree. He's co founder
• 11:43
  Speaker 1: and CEO of Complex that's spelled with a Q, and
• 11:46
  Speaker 1: he's also a former Special Advisor to Commanding General of
• 11:49
  Speaker 1: the U. S. Army Cyber Command. Jason, thanks so much
• 11:51
  Speaker 1: for joining us here. UM, give us a sense of
• 11:55
  Speaker 1: how big and how concerned should we be about ransom
• 12:00
  Speaker 1: and I guess just cybersecurity in general. How do you
• 12:02
  Speaker 1: guys think about it? Sure? Well, ransomware is just frankly
• 12:06
  Speaker 1: continuing to gain steam as we see organizations that are
• 12:09
  Speaker 1: far too vulnerable being taken advantage of by really sophisticated
• 12:14
  Speaker 1: and sizable transnational criminal organizations that have created a really
• 12:18
  Speaker 1: great affiliate network model. I have an awesome business model,
• 12:21
  Speaker 1: and they've been able to reap in tens of millions
• 12:23
  Speaker 1: of dollars of fees this year alone by exploiting and
• 12:27
  Speaker 1: then actually ransoming and effectively holding hostage a bunch of
• 12:30
  Speaker 1: companies and governments all over the world. Jason, we should
• 12:34
  Speaker 1: note that you are the real deal. As a graduate
• 12:36
  Speaker 1: of West Point, your licensed professional engineer looking at the
• 12:40
  Speaker 1: power grid, the broader energy system. Um, so you're the
• 12:46
  Speaker 1: perfect person to asked sort of big picture? Am I
• 12:51
  Speaker 1: making out to be too big of a deal by
• 12:54
  Speaker 1: saying that ransomware and cyber security is effectively the new
• 12:57
  Speaker 1: way in which some of these states sponsored countries are
• 13:01
  Speaker 1: waging war on us, and and how should our companies
• 13:05
  Speaker 1: be forced to respond given that this seems to be
• 13:07
  Speaker 1: the new frontier. Well, I think there's a couple of
• 13:11
  Speaker 1: aspects in this, the first of which is that criminals
• 13:14
  Speaker 1: go where the money is right, and they've realized that
• 13:16
  Speaker 1: it's quite efficient and effective to go ahead and either
• 13:20
  Speaker 1: take over companies like Cassea. Right, so, a US company
• 13:23
  Speaker 1: based in Miami, a critical software provider, compromise their customers
• 13:27
  Speaker 1: using vulnerabilities and their software just like the Microsoft software vulnerabilities,
• 13:31
  Speaker 1: used that to take over their networks and then hold
• 13:33
  Speaker 1: all their customers costas. So you saw trains in Sweden,
• 13:36
  Speaker 1: pharmacies in Sweden, the largest grocer in Sweden, co Op,
• 13:41
  Speaker 1: not able to operate for days as a result of
• 13:44
  Speaker 1: a Miami based software and you know vulnerability here at home.
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  Speaker 1: So this is this is a great way to sit
• 13:51
  Speaker 1: you know, anywhere in the world and get paid. I
• 13:54
  Speaker 1: think the challenge for us is a society, is our
• 13:57
  Speaker 1: companies in our country very digitally dependent. Risk is a
• 14:01
  Speaker 1: consequence of dependence. So we've got to do two things.
• 14:04
  Speaker 1: We have to increase costing consequence for criminal organizations and
• 14:07
  Speaker 1: pursue them around the world. And we also have to
• 14:10
  Speaker 1: acknowledge that we are not defending our networks adequately and
• 14:13
  Speaker 1: that many of these breaches, including things like GPS and
• 14:15
  Speaker 1: colonial we're sort of predictable based on how sort of
• 14:19
  Speaker 1: shoddy a lot of the external security posture and other
• 14:21
  Speaker 1: capabilities were. And that's not victim blaming. It's the reality
• 14:24
  Speaker 1: of under investing in security and having very vulnerable assets
• 14:28
  Speaker 1: connected to the Internet. You look like a target. You're
• 14:30
  Speaker 1: going to be one. Jason, I'm not sure if this
• 14:32
  Speaker 1: is coincidence or not, but the rise of cryptocurrency seems
• 14:35
  Speaker 1: to have mirrored somewhat the rise of these ransomware attacks.
• 14:39
  Speaker 1: Talk to us about the role that cryptocurrencies play play
• 14:42
  Speaker 1: in this whole situation. Well, certainly, people like Putin have
• 14:47
  Speaker 1: strongly encouraged alternatives to international monetary transfer right, so things
• 14:52
  Speaker 1: like swift that are actually much more both monitored and secure,
• 14:56
  Speaker 1: so you know, non fungible tokens. Cryptocurrencies are certainly part
• 15:00
  Speaker 1: of the story, but fundamentally, ransomware has been going on
• 15:04
  Speaker 1: before crypto is mainstream in this context, and frankly they'll
• 15:08
  Speaker 1: continue afterwards. But it's it's a contributing factor, but it's
• 15:11
  Speaker 1: not the cause of the rampant vulnerability or the tremendous
• 15:14
  Speaker 1: leverage you can get over a company when you shut
• 15:16
  Speaker 1: down its operations. It's not just companies. Remember the city
• 15:19
  Speaker 1: of Atlanta, right, tens of millions of dollars in recovery
• 15:22
  Speaker 1: costs school districts in Baltimore. I mean, this is something
• 15:25
  Speaker 1: that's affecting you know, state discor organizations, just like it's
• 15:28
  Speaker 1: affecting big businesses. I am curious what types of companies
• 15:32
  Speaker 1: are coming to you and saying that they are in
• 15:34
  Speaker 1: most need for your services. Yes, so, our business services
• 15:40
  Speaker 1: some of the most prestigious banks technology companies around the world. Um,
• 15:45
  Speaker 1: so we work you know, in dozens of countries with
• 15:48
  Speaker 1: very very large organizations where we you know, many of
• 15:50
  Speaker 1: our clients have tens of thousands of employees or hundreds
• 15:54
  Speaker 1: of thousands in some cases, so we really help them
• 15:56
  Speaker 1: make sure that the catastrophic breach risks aren't there. We're
• 16:00
  Speaker 1: a bit of an air bag in the car crash, right,
• 16:02
  Speaker 1: we help you walk away. Um. I think one of
• 16:04
  Speaker 1: the challenges for people, and you're seeing this actually this
• 16:06
  Speaker 1: week with another deadly vulnerability and Microsoft software related to
• 16:11
  Speaker 1: print spoolers, which is very geeky, but fundamentally it allows
• 16:14
  Speaker 1: people to take over the identity infrastructure. And we saw
• 16:17
  Speaker 1: assists of the Cyber Security Infrastructure Security Agency here in
• 16:20
  Speaker 1: the United States just issue a really urgent alert yesterday
• 16:23
  Speaker 1: because people were taking over identity infrastructure. Remember that's exactly
• 16:26
  Speaker 1: what Russia did in the midst of the solar wind
• 16:28
  Speaker 1: pack to take over major important organizations like Department of Justice,
• 16:32
  Speaker 1: Department of Treasury. Uh Jason just about thirty seconds. How
• 16:36
  Speaker 1: much of this ransomware and cyber issues cyber crime is
• 16:39
  Speaker 1: state sponsored? Do you think versus just some guy in
• 16:42
  Speaker 1: a garage. Well, so, the reality of these are sophisticated
• 16:46
  Speaker 1: criminal organizations. And remember most of them do operate out
• 16:50
  Speaker 1: of places that are strongly influenced or controlled by Putin
• 16:54
  Speaker 1: Iran North Korea, so it's certainly been actively tolerated. Are
• 17:00
  Speaker 1: known about and I think been quite useful to undermine
• 17:02
  Speaker 1: the last. But we've seen less evidence or no evidence
• 17:06
  Speaker 1: in some cases of overt sponsorship. But remember these Folkstentis
• 17:09
  Speaker 1: permit tremendously. Yeah. Absolutely, Jason Crabtree, thank you so much
• 17:13
  Speaker 1: for joining us. Really fascinating discussion. Jason Crabtree. He's a
• 17:15
  Speaker 1: co founder and CEO of Complex, former special advisor to
• 17:19
  Speaker 1: the Commanding General the U. S. Army Cyber Command, so
• 17:22
  Speaker 1: he certainly knows what he's talking about. And again, as
• 17:25
  Speaker 1: um uh, you know we were talking about it seems
• 17:28
  Speaker 1: like this is an issue cybersecurity broadly defined as teller's
• 17:31
  Speaker 1: mentioning is a big issue. It's it seems like it's
• 17:33
  Speaker 1: in its early innings and it's something that corporate America
• 17:36
  Speaker 1: and individuals need to pay more attention to. Well, the
• 17:38
  Speaker 1: more coming up this is Bloomberg Taylor. You know, it's
• 17:44
  Speaker 1: a busy bank earnings day when Shannali Bossik, Wall Street
• 17:47
  Speaker 1: reporter for Bloomberg News literally is running from the TV
• 17:50
  Speaker 1: studio to our radio studio because she has so many
• 17:54
  Speaker 1: different obligations to do. She is running around for us
• 17:58
  Speaker 1: covering not only the Gray m Live t Live blog
• 18:01
  Speaker 1: that we have on the Bloomberg terminal. But joining us
• 18:04
  Speaker 1: for radio and TV. What a slew of earnings And
• 18:06
  Speaker 1: you know this from your days, Paul of Uh, just
• 18:09
  Speaker 1: what crazy days these are listening to both the analysts
• 18:12
  Speaker 1: and the media call and of course the earnings report,
• 18:14
  Speaker 1: and I just think it's so silly for these big,
• 18:16
  Speaker 1: big banks all to report on one day. It's just ridiculous.
• 18:19
  Speaker 1: Spread it out a little bit. But anyway, Shanali, thanks
• 18:21
  Speaker 1: so much for joining us here again we get Bank
• 18:23
  Speaker 1: of America, City Group, Wells Fargo. When I think of
• 18:26
  Speaker 1: these institutions as opposed to the Goldman's and JP Morgan's
• 18:29
  Speaker 1: and Morgan Stanley's, I think of corporate banking, consumer banking,
• 18:34
  Speaker 1: making loans net interest margin, and I think one of
• 18:37
  Speaker 1: the takeaways was the loan growth really isn't there? Is it?
• 18:41
  Speaker 1: You know, it's so funny because on these conference calls
• 18:43
  Speaker 1: this morning, Bank of America with journalists and analysts, same
• 18:46
  Speaker 1: with City Group, they're trying to convince people that this
• 18:48
  Speaker 1: loan growth will come back, that it will be there.
• 18:50
  Speaker 1: But you can see from the investor reaction that they'll
• 18:53
  Speaker 1: believe it when they'll see it right, that they're just
• 18:56
  Speaker 1: not buying this, Yet how much of this can be
• 18:59
  Speaker 1: one offs? I in everyone was really working on sort
• 19:02
  Speaker 1: of wrapping up our balance sheets right, making sure that
• 19:06
  Speaker 1: if you were laid off or what you do with
• 19:08
  Speaker 1: the stimulus checks was paying off some of your dead
• 19:10
  Speaker 1: is their appetite for people to want to take on
• 19:13
  Speaker 1: new loan. It's self fascinating because from this you're seeing
• 19:17
  Speaker 1: wealthier individuals expand their loan on average, with the biggest
• 19:22
  Speaker 1: banks Bank of America, JP, Morgan Goldman sacts sometimes at
• 19:25
  Speaker 1: very fast paces. Will be very interesting, by the way,
• 19:27
  Speaker 1: to see what that looks like in Morgan Stanley Tomorrow,
• 19:29
  Speaker 1: which really excels in this space. But the average consumer
• 19:33
  Speaker 1: is not borrowing. So you've got to wonder why there's
• 19:35
  Speaker 1: such a divergence for the wealthiest of America to lever
• 19:38
  Speaker 1: up the way they are, and then where are they
• 19:40
  Speaker 1: deploying those funds right investments and whatnot. Another interesting thing
• 19:45
  Speaker 1: that I can't really get over because it matters so
• 19:47
  Speaker 1: much to markets is Bank of America said that they
• 19:50
  Speaker 1: are sitting on so much dry powder that they are
• 19:53
  Speaker 1: deploying this into securities, So don't worry so much about
• 19:56
  Speaker 1: the loans. They're they're putting it to make markets. They
• 19:59
  Speaker 1: all so said, we're not a hedge fund, so you
• 20:02
  Speaker 1: know clearly there is a limit to how much risk
• 20:05
  Speaker 1: they'll take on. I've been watching this over at JP
• 20:08
  Speaker 1: Morgan as well. Their value at risk has dropped significantly. However, again,
• 20:12
  Speaker 1: this dry powder is so interesting at a time where
• 20:15
  Speaker 1: global banking is in an upheaval. It's in a total
• 20:18
  Speaker 1: shake up, and the American banks and Frankly City in
• 20:22
  Speaker 1: Bank of America, which have less share than their bigger
• 20:24
  Speaker 1: three peers, has room to take some of that share
• 20:27
  Speaker 1: and markets. How about the credit quality discussion. What are
• 20:31
  Speaker 1: the banks saying as to the quality of their loan portfolio.
• 20:34
  Speaker 1: I mean, again, we've come through this once in a
• 20:36
  Speaker 1: lifetime pandemic and economic disruption, but it seems like, you know,
• 20:40
  Speaker 1: individuals and corporations are kind of doing okay. I can't
• 20:44
  Speaker 1: get over what it must be like to be a
• 20:46
  Speaker 1: banker right now and not get the love from investors.
• 20:48
  Speaker 1: When the consumer is in such apparently decent shape. They're
• 20:53
  Speaker 1: paying down their balances, which is why loans are pretty
• 20:57
  Speaker 1: flat everywhere. I gotta say, the one place that I'm
• 21:00
  Speaker 1: concerned about is Holmes, Uh, that is where they're seeing
• 21:04
  Speaker 1: lower balances at a lot of these banks, and that
• 21:07
  Speaker 1: wasn't the case as we know before. So what are
• 21:10
  Speaker 1: people actually lending borrowing for it? That's not clear to me.
• 21:14
  Speaker 1: They're spending more, they're just not borrowing more. So much
• 21:17
  Speaker 1: of this can be I think about Walls Fargo. What
• 21:20
  Speaker 1: do you think of home loans, auto loans, you name it.
• 21:21
  Speaker 1: We're gonna speaking with the Walls Fargo CFO Mike Santo
• 21:25
  Speaker 1: Massimo just after the closing bell. If you had one
• 21:29
  Speaker 1: question you'd want to ask him. What would it be? Oh? Boy?
• 21:32
  Speaker 1: How much is the asset cap by the numbers and
• 21:35
  Speaker 1: impacting them? Still? Right? How much of it is? What
• 21:38
  Speaker 1: do you define with the asset cap? Is? It is
• 21:40
  Speaker 1: basically the Federal Reserve saying that you can't get your
• 21:43
  Speaker 1: assets over a certain amount, you cannot be lowing you
• 21:45
  Speaker 1: in the time out box. Yeah, I mean it is never.
• 21:48
  Speaker 1: I mean that is really an unprecedented type of punishment
• 21:51
  Speaker 1: that's spooked all of Wall Street when it happened. Right,
• 21:53
  Speaker 1: banks are afraid to behave badly? Are they the only
• 21:58
  Speaker 1: big bank that has a asset cap? Correct? And remember
• 22:01
  Speaker 1: this is still relatively early days for Charlie Sharff, the
• 22:04
  Speaker 1: new CEO, who's also treating seeking to keep it lit
• 22:07
  Speaker 1: on costs. The bank is becoming more efficient. They and
• 22:10
  Speaker 1: Bank of America this morning said headcount has dropped by
• 22:13
  Speaker 1: thousands in the last quarter alone. Is that intentional? I
• 22:16
  Speaker 1: think there are two things. I think part of it
• 22:18
  Speaker 1: is intentional. Bank of America talked about that shifted digital
• 22:21
  Speaker 1: in that retail business. But also they're paying people more,
• 22:24
  Speaker 1: so wages are going up, so head count must go
• 22:28
  Speaker 1: down if you're controlling costs. So I'm just looking at
• 22:31
  Speaker 1: the stock prices, you know, wells Fargo up, I guess
• 22:34
  Speaker 1: forty year to date. Looking at some of those other
• 22:38
  Speaker 1: kind of you know, uh, commercial banks out there, that's
• 22:42
  Speaker 1: a pretty good performance. So it looks like the streets
• 22:45
  Speaker 1: giving this new management team or just I guess, and
• 22:48
  Speaker 1: this turnaround plans some credit incidents, and you know, similarly
• 22:52
  Speaker 1: at City Group, this is Jane Fraser's first full quarter
• 22:55
  Speaker 1: s CEO. We saw the stock up in the morning
• 22:57
  Speaker 1: and now it's moderated a bit like it's ending fly
• 23:00
  Speaker 1: their cheaper than on the other banks. You've got to
• 23:02
  Speaker 1: wonder whether Wall Street will give her the same kind
• 23:05
  Speaker 1: of grace period that they've given Charlie Sharfs and she,
• 23:08
  Speaker 1: to her credit, have been one of the few that
• 23:10
  Speaker 1: have embraced the more flexible lifestyle. I'm gonna be that
• 23:14
  Speaker 1: Millennia brings that up in her being a woman, really
• 23:18
  Speaker 1: understanding the need, particularly for women. Though everyone across the
• 23:22
  Speaker 1: board feeling this, the need for flexibility, where are we
• 23:26
  Speaker 1: and who is doing what? It's so funny because you
• 23:28
  Speaker 1: and I talked about this earlier this week that one
• 23:30
  Speaker 1: of Goldman's top investment bankers they had had more than
• 23:34
  Speaker 1: of the market share of M and A, and so
• 23:36
  Speaker 1: did JP Morgan. Goldman's told me that, you know, part
• 23:40
  Speaker 1: of this is coming back to work and being there
• 23:42
  Speaker 1: for clients. That absolutely helps market share. But for City Group,
• 23:46
  Speaker 1: what their plan here is to retain an attract most
• 23:49
  Speaker 1: importantly talent, and Paul, you and I have talked about
• 23:52
  Speaker 1: that so much. This game of musical chairs on Wall
• 23:56
  Speaker 1: Street must be one of the hottest we've seen in years.
• 24:00
  Speaker 1: One bank president told me that every day, right we've
• 24:03
  Speaker 1: talked about this, every day he's coming in and a
• 24:04
  Speaker 1: new banker is either threatening to leave or asking for
• 24:07
  Speaker 1: new terms of their employment there. And it is just
• 24:10
  Speaker 1: a hot market for jobs. What's it's it's interesting. You
• 24:14
  Speaker 1: know we're going to hear from the European banks, I
• 24:16
  Speaker 1: guess later. Um is the theme that US banks aren't
• 24:21
  Speaker 1: fact taking global market share, certainly because you see these
• 24:24
  Speaker 1: banks eyeing that weakness over there in Europe because they've
• 24:28
  Speaker 1: not only have had they had those extra regulatory constraints
• 24:31
  Speaker 1: since the last financial crisis, they have also had even
• 24:35
  Speaker 1: more so of a regulatory constraints since this COVID crisis.
• 24:40
  Speaker 1: So you know, you can bet your dollar that Goldman
• 24:43
  Speaker 1: and JP Morgan are ready to take that share in
• 24:46
  Speaker 1: Europe and in the US when it comes to those clients. Interesting,
• 24:49
  Speaker 1: I'll be interested to hear from the Deutsche banks of
• 24:51
  Speaker 1: the world and the Barclays and things like that to
• 24:53
  Speaker 1: see how they're performing visa VI. The U S peers say, Bassk,
• 24:56
  Speaker 1: thank you so much, Thank you so for rushing over
• 24:59
  Speaker 1: from TV to radio. We appreciate your efforts. Shinelli Bassak,
• 25:02
  Speaker 1: Wall Street reporter for Bloomberg News, joining us here in
• 25:05
  Speaker 1: our beautiful Bloomberg Interactive broker's studio. So again, Uh Taylor
• 25:10
  Speaker 1: got Morgan Stanley Uh tomorrow, Uh, pretty high bar for
• 25:14
  Speaker 1: some of the some of the performances there. Yeah, at
• 25:16
  Speaker 1: least when it comes to M and A and invest
• 25:18
  Speaker 1: in banking. Reminder, we've brand Moyniham at three thirty, followed
• 25:21
  Speaker 1: by wals Bargo, CFO just after the closing belt. Awesome.
• 25:24
  Speaker 1: So you guys have got the lineup, got it all
• 25:25
  Speaker 1: covered from the bank's perspective, and uh, you know, we
• 25:28
  Speaker 1: will certainly cover the remainder of these bank earnings as
• 25:31
  Speaker 1: we continue this earning season. This is Bloomberg. Thanks for
• 25:35
  Speaker 1: listening to the Bloomberg Markets podcast. You can subscribe and
• 25:39
  Speaker 1: listen to interviews with Apple Podcasts or whatever podcast platform
• 25:43
  Speaker 1: you prefer. I'm Matt Miller. I'm on Twitter at Matt
• 25:46
  Speaker 1: Miller three. Got on Ball Sweeney. I'm on Twitter at
• 25:50
  Speaker 1: pt Sweeney. Before the podcast. You can always catch us
• 25:53
  Speaker 1: worldwide at Bloomberg Radio.