Goldman Sachs to Exit Russia in Wall Street’s First Pullout

Bloomberg Business Weekend iTunes, SoundCloud, or Bloomberg dot com. You can also listen to our radio show at two pm Eastern Time on the Bloomberg Radio or watch us on YouTube. Search Bloomberg Global News. The headlines crossing g UH gap, suspending deliveries to Russia and moving deliveries to Port Southern and Eastern ports specifically. And then you've get Disney uh taking steps to pause businesses in Russia that includes content and product licening licensing excuse me, and it also includes

Disney cruise line activities. And then you have Tim our most read story on the Bloomberg and this has to do with the Wall Street Banks Goldman Sachses who were specifically talking about it. And it's an exclusive from shrined Raja and Sally bake Well as finance team leader for Bloomberg Near she's with us in the Bloomberg Interactive Broker's studio. Sally,

you edited this story from shri Um. Talk to us a little bit about the significance of actually Goldman exiting Russia and what are the details with with an exit? Is this like done with Russia indefinitely or bring us into it. I think it does seem like it is done with Russia indefinitely. I don't think we can say that for absolute certain because that is quite a big step to permanently pull out of a country. Massive. It is massive. Although to note city has itself done that,

it wasn't it was in Russia. It pulled out of Russia. We went back right now that bank is assessing um whether it stays in Russia or not um. So I think it is very significant that Goldman SAX has done this because actually no European banks have exited the country. They're all assessing their exposure, but they haven't actually made that step yet. How much exposure do these guys have to Russia and like how much business do they really get in Russia? So Wall Street banks have emphasized that

actually their exposure is quite small. Um. I think the Goldman Sax story said that they have about six dred and fifty million of exposure there. Um City is the largest one. It has a very substantial presence with about three thousand workers. And if you recall City which is trying to um sell its retail operations, Russia is included in some of those, so that sale has obviously been

a bit stalled by by the situation in the country. Sally, we just talked a little bit about the idea that Russia could start to move in and nationalize foreign firms. And I'm wondering about this decision. If it's a decision about Okay, well, we don't want to operate a bank in a place that you know it is doing something we disagree with, like Russia's because of Russia's invasion of Ukraine.

Or is it also about business risk? And I'm not just talking customers when I'm talking like, oh wait a second, Russia could come in and actually sees this bank, right, I think that's probably a question that they are all debating right now. UM. And what is interesting that I think some of the banks are actually involved in the company who were suspending operations and putting out of the country.

They're actually helping UM with that, so it is a sort of business stream for them as it is already UM.

But I think that does complicate matters. I mean that they have to deal with the tremendously complicated Swift situation UM and those transactions that they might have to block, and you know, whether some of the transactions have less obvious sanctioned Russian entities involved in them, and then they have the sanctions to and then now they're going When you say Swift, you're referring to the global platform for messaging that banks used to communicate with one another that

Russia was suspended from that. Jamie Diamonds did there are ways to get around, although that they aren't now that JP Morgan exactly exactly help me out here because and forgive me for being the cynic. I'm an optimist usually and I think good of people and entities. But what's interesting is it's not the first time we've seen the financial sector kind of back away from a troubled area of our world, only to get back in because there's

money to be made. Is that ultimately, I mean, right now, there's sanctions right there's rules when there are sanctions implied against a certain area of the world. How do we think about that relationship right that global banks Wall Street banks specifically have with areas of the world. If there's money to be made, they will go there. I think UM City might again be correct. Yeah, I think They City is an example of that, maybe in the in the sense that it was in Russia and it came

out and went back in again. UM. I suspect that memories become a little bit shorter when there is money on the table. UM. Obviously, the degree of severity of the responses from from everyone, from all corporations and from some banks that we're starting to see now UM do indicate perhaps a slight shift in philosophy about about something like this UM. But I guess time will tell as to whether it becomes a permanent UM sort of frame

of mind about the Russia Ukraine situation. So, Sally, is this the first of every major bank to pull out? I think your going to look yet. This is the first, and I think it's going to look pretty strange if others don't follow from now. UM. So you know, we're chasing hard to see if we can pin down similar, similar decisions. I think every bank now has to be looking at this UM and assessing whether it's a question of winding down some of the business but keeping something there,

or wholesale pulling out. I always think about you guys. I mean, you're a finance team leader. I can only imagine the discussions you guys are having around the desks or on virtual meetings as you look at this, you know,

globally and certainly from the Wall Street banks. What are some of the issues you're thinking about as we continue to watch a situation that we fingers crossed had hoped would never happen, did happen, hoped it would wrap up soon, and now we're in we're entering our third week here or so. So I'm just curious, what are the discussions you guys have been having. UM. Well, A lot comes down to exposure. As I said at the beginning, a lot of the banks have said that their exposure is

quite small. But as time goes on, maybe they start to realize they have more than they thought through various UM complicated financial instruments, UM and so and so we're thinking about that, UM just the very sort of physicality of what they have to do um to move people out. We had a great story today by Jenny Seraine about Visa. UM. The CEO gave this quite harrowing account of how they evacuated their staff from Ukraine, and you know they had

to use mercenaries. Um. The CEO got a text while he was in church from President Zelenski asking for help, and of course Visa suspended its business there. UM. So I think it's sort of about a question of you know, exposure business direct or indirect business. How complicated it is to to wind that down um, and then the actual physics, physical presence. It is tough. Thank you so much, Sally Bell big Well. She is of course financed team leader

at Bloomberg News. This is Bloomberg Business Week with Carol Masure and Bloomberg Quick Takes Tim Steinovic on Bloomberg Radio. Conversation that has been lost I think with Russia's invasion of Ukraine is what the COVID situation has been uh and we're fortunate should be joined by Rapauli LeMay, Associate scientist in the Department of International Health at Johns Hopkins Bloomberg School of Public Health, who joins us now on the phone from Baton Rouge, Louisiana. Dr Limay, it's good

to have you back with us. How are you? Thank you so much for having me. It's great to be back. Well, let's talk a little bit about what your what your focus has been over these last couple of weeks, because we've been talking, of course, a lot about the global economic effects of Russia's invasion of Ukraine. But I think partly lost in that conversation has been what it means for the spread of COVID, especially as you see more than two million refugees flee Ukraine. Um, what have you

been focusing on over the last couple of weeks. Yeah, No, I think you hit it right on the head. There's two million refugees that we know of, that number is likely likely higher than that, And I think the biggest issue that we're seeing is that we do know that conflict and infectious disease go hand in hand. So the concern really here is how do we make sure that as individuals are moving to different cities, to different locations, to different countries, that we're doing all that we can

to protect them from from COVID. Previous to the invasion, I think the rates for primary dose series completion in the Ukraine were not great. So we were already dealing with a large proportion of the population that had not been vaccinated, and so this has really just been exacerbated and that then you add on this issue of not being able to get help supplies in so it's just a really dire situation. Yeah, no, dire situation on so

many different levels. When I you know, anything to do right now with Ukraine, we think about obviously, we talk about so many different impacts on markets of course, and what businesses are doing. But of course it's a humanitarian story that we are all following so closely. We probably I also think it's just a reminder it's hard right now. I'm going to be very honest with you to remember that I'm in a pandemic. We all are still in a pandemic because of what's going on in the world

right now. But you know, I am curious to you guys, like what will ultimately determine that we are beyond the pandemic stage as as a war all and moving to the endemic stage. You know, it's a really good question. And I think in parts of the United States, I think folks are already there. Um. A lot of states are repealing their mask mandates. For example, I mean here in the United States, we still have almost of the population of the adult population that has not gotten vaccinated.

So it's a little bit concerning when you're seeing states doing that when you're also seeing an increase and perhaps a new sort of sub variant that's starting to rise. Um And so I think part of it. To me, no deaths are really acceptable. I think people think about this and say, you know what, only forty four children have died from COVID. I don't I think that number should be zero. I think other individuals would say, well,

it's time for us to quote unquote get back to normal. Well, we have to do that in a way that's equitable, but that also allows for protections if we need them, which you know, again, a mask is one of the easiest mitigation measures that we really have and we should employ. But many states are repealing that right now. What's a what's a realistic way for us to think about how

the pandemic actually ends? And Carol asked about it becoming an endemic, but but I think how much of the way we of our sentiment has to do with expectations, so help set expectations for us. Yeah, I mean, I think the most realistic way is that if we can make sure and think about community transmission and gets under a specific level, a threshold level, we do know it's going to be with us. So it's not something that

we can eliminate, it's it's here to stay. I think the key here is how do we essentially protect individuals that are immuno compromised or or are at risk for severe COVID And so part of that has to do is we really need to make sure that community transmission rates are very low. That requires a bit of a nuanced approach. And what I mean by that is if you live in a particular area and rates are starting to increase again, then we need to be able to

implement mitigation strategy strategies again. So that can be essentially put bringing the mask mandates back, ensuring that there's ventilation in schools, et cetera, and so forth. I'm hopeful because we're going into the warmer months that more people tend to be outside, there tends to be better ventilation, so we hopefully will see some good downward trends. But I think the question is going to be what happens in

the fall when it starts to cold again. We to see other infectious pathogens like RSV right and influenza start to circulate again, and so I think a more realistic pathway is going to be. We do know it's here to stay. It will be a bit in my opinion, of using of these measures, but we also need to be prepared that some of these measors might be implemented again depending on transmission. We're probably yes, or now we're gonna get you need to get another booster. Oh goodness,

that's a hard time. We do know that immunity, Wayne, So I think part of it will depend on how much transmission is occurring and how many people actually have immunity. All right, so I think kind of not known yet. Okay, that's fair. We're Pobaby LeMay. She's Associate scientists in the Department of International Health at Johns Hopkins Bloomberg School of Public Health. Of course, supported by Michael R. Bloomberg, founder

of Bloomberg LP and Bloomberg Philanthropies. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes, Tim Stinovic on Bloomberg Radio. But the new issue of Bloomberg Business Week it is out. In it a story by Bloomberg's Olivia Carvil, who you might remember reported out a revealing BW cover story that was last summer about airbnb

is handling of violent crimes at its listings. Well, this week, she looks at sexual abuse in the world of show jumping and the efforts to Impede's Safe Sport, which was an organization set up to help young athletes victimized by misconduct. Olivia Carville is an investigative reporter for Bloomberg new She's with us in the Bloomberg Interactive Broker Studio. Joel Webber is editor at Bloomberg Business Week. He's also with us

in the Bloomberg Interactive Broker Studio. Olivia's story featured in the new issue of Business Week magazine, available on newsstands, on the Bloomberg and at Bloomberg dot com slash business Week. Joel, this is a powerful story. It's one about an institution, uh, and one about an institution being set up to try to help that institution. There are a lot of familiar threads here. Yeah, it's um, it's a rarefied world. The sport that we're talking about here is equestrian Uh, it's

an Olympic sport. Um. Uh. Olivia's uh Carverlos reporting on

this has just been an amazing one. UM was was really just honored to the ship in the magazine and and also talk about it UM today because ultimately a lot of this legacy of what what she writes about in this story actually goes back to Larry Nasar and what happened in the gymnastics world UM, and there have been there There have been many things that have changed since that moment um a couple of years ago, one being this organization Safe Spoort that was founded by US

Congress to basically help police sex abuse and protect young athletes. UM. But what's happened and what Olivia's reporting revealed is that there's sort of one community that has resisted any sense of discussion about this and has not liked watching its heroes fall. So Olivia bring us into the story and what happened at the stables? Yeah, sure, and thanks so

much for having me on. This was a really important story from my prospective as well, just to be able to tell the young writers UM stories to hear it in their own words, what happened to them, what does grooming look like to them, and why their community was in in a sense, actually attacking them in some cases, I think with an equestrian we have seen really elite sport be torn apart by um by safe sport be

torn apart by its history. And here you've actually got some you know, pretty wealthy individuals who have spent their life within the sport coming out and attacking safe sport, this watchdog agency and also questioning the antics of some of these survivors, which has been really sad to see. Um, I'm kind of stucked that this hasn't come out sooner. Again, it's like what it was once again, a situation of

the institution protecting itself. Yeah, that's right. I think if you look back in Olympic sporting communities, there has been a history of prominent figures who have been accused of sexual misconduct being covered up by the national governing bodies, and we've certainly seen that within equestrian Some of the most prominent figures that we mentioned in this piece, um, you know headhead complaints about sexual misconduct raised against them, but it had never really resulted in them being banned

at all. And yet with the creation of Safe Sport, we are seeing some of these individuals finally being held accountable, and the sport doesn't like that. Olivia. The pieces filled with powerful but harrowing anecdotes and stories about people who were affected, but also some really startling statistics. Through the end of seven of the one thousand two sanctions that the Center had handed down and publicized, we're talking Safe Sport here um in its discipline and database, had been

against members of the US Equestrian Federation. By comparison, members of the U S t A, the U S Tennis Associations eight times it's big have only received thirty five Safe Sport sanctions. What's going on with equestrian Yeah, I think we're seeing a bigger number of equestrians sanctioned by Safe Sport than other sports, and that is causing a pushback from within the sport as well. I think that this is a sport that has historically been very insular,

very exclusive. They don't like to let outsiders in. It was quite a challenging story to write because it's hard to break into this community, and so when they started to be sanctioned from historic cases going back to the seventies eighties. The sport started to fight against that. It's a sporting community that doesn't like being told what to do and is willing to push back and challenge those in power when it doesn't believe they're getting it right.

So Jury's Cologne was appointed chief executive officer of Safe Sport. Had a background where she was. She previously had worked at the National Center for Missing and Exploited Children. What was her experience coming in to Safe Sport and taking over the rens of the organization. Yeah, Juris was a pretty incredible interview. Actually, she um she was shocked when

she came in and started running Safe Sport. She had been working in child's safety before, but she had never experienced so much animosity, so much hostility, so much anger. Because when you're working within child's safety at the elite sporting level, these are people who want their children to win. There is a sense of desire to win, but also ambition.

This is particularly equestrian. It's a community of very rich and very powerful individuals, and they did push back against Juriss And she actually mentioned to me and in her interview, how on her first week on the job, she received a call from the mother of a young writer who wanted her daughter's trainer to be reinstated. He had been removed for sexual misconduct and she wanted him back in

the job because she wanted her child to win. And that's something that Dress had never really experienced before in any any of her previous roles in this area. And let's let's kind of talk about who she's had to struggle with, the critics, the people who are critical of Safe Sport. What's the rationale, what are they objecting to? And just unfortunately have about twenty seconds. Sure, the critics are saying safe Sport less transparency, it lecks to process.

They believe that it is unconstitutional in the US to have an organization set up that is labeling people guilty before proven innocent. And they're coming after juriss and they're coming after Safe Sport for that reason. I'm just gonna say a most read, a Bloomberg big take, a must read, and it's in the new issue of Bloomberg Business Week magazine. Unbelievable, Olivia, Thank you so much. Olivia Carvil, investigative reporter, Bloomberg News and of course our thanks to do A. Weber, editor

of the magazine. Yeah, how about you let me drive? No, no hone please, I want to drive. It's good question the drive to the Globe on Blueberg Radio. All Right, just about ten and a half minutes left in today's trading session, getting ready to wrap up another volatile day. We're definitely off our loads of the session, as you just heard from Charlie on those major equity averages. But

tech really still having a tough time. Could be as we've seen Rasco higher here today, Tim, it certainly could be. Let's get into it with Tracy McMillian, head of Global act Allocation Strategy at Wells Fargo Investment Institute. You and joins us on the phone from Winston Salem, North Carolina. Tracy, how are you? I'm well, Thank you, Thanks for having me. Okay, So a lot of superlatives over the last few weeks here, a lot of volatility. Uh, it's difficult to kind of

understand what investors are thinking. Um, what's your read on the situation? Yah? Well, we continue this favorite quality across our equity allocations in particular, and for us that means us that were international. Um, it means that within the US, we're favoring things like large caps and mid caps over small caps um and just today we downgraded emerging market to an unfavorable position, and what that means is that

we're taking some money out of emerging market. We're putting it into short term and intermediate term bonds while we played out some of this disruption with a lower risk profile. Is there a point where you say, Okay, this is going to have a bigger impact on the second half The I m F already has come out. We talked about this a little bit earlier with our TV colleagues as they are putting out there um our thoughts about they say they will likely cut world GDP outlook because

of the Ukraine War. We did have the g E CEO on our air with David Weston, and you know, they have put out their fiscal year outlook because they say that's based on the things that they can control hole and have a good grasp of, but again pointing out the Ukraine War and that that volatility is something that you know, is a variable that nobody can ignore. So when do you get to a point where you say, okay, this is going to be a different year and definitely

a different second half. We didn't kind of re evaluate. Yeah, I think we're there on the direct impacts outside of Russia are definitely falling hardists on Europe, and now we do accept a recession later this year in Europe. We don't think that the US is going to see a recession, um but we're reducing our growth and our equity forecast for the US along with our growth expectations for the rest of the world. And at the same time we're

increasing our inflation expectations. Al right, so just a recession in Europe, not in the US, but you're reducing your growth estimates for the for the US this year, that's right, really reducing the growth estimates of around the world. And the reason for that, of course, you know, is that we're seeing this higher inflation, and we're seeing centual banks that are going to have to come in and they're going to have to fight these higher levels of inflation.

You know, we think here in the United States, but that is going to start with a fifty I'm sorry this point increase next week. And then the impacts of the Russian invasion are reinforcing our belief that they're going to have to keep raising rates multiple times. And we started the year thinking they were going to raise rights four times. We've just increased that just six times because of these lingering, persistent inflationary pressures. So stagsflation, So not

necessarily stagsflation. I guess that depends on how you define it. So we define that as a persistent level of very low growth with high inflation. And yes, we're seeing the high inflation part, and we do you think that all thramps to lower inflation has gotten longer because of the const lift, But we don't necessarily think that growth here in the Young State is going to fall to a level that would be considered slow growth. We're still seeing about three and a half percent growth here in the

nth States, and that's above trends. Okay, so three growth here in the United States. Of four rate increases, what you were thinking at the beginning of the year, Now you're up to six times this year, So one point five percent interest rates a d fifty basis points at the end of the year. Is that what you're thinking or could there be a fifty basis point raising there? And if there could be, but we're saying anywhere from

one point five to one point seven five. Okay, um, hey Tracy, what would change your view on a recession in the US? If if oil keeps spiking, for example, and at leadst to demand destruction, could we see a recession in the US. It's it's very I shouldn't say very, it is palps hole. So within the realm of the scenarios that you know, we would be considering, but it's

certainly not our base case. Um. If we were to see oil slides to say one fifty of arrel, then that would definitely lead to some demand instruction, um, and we would we'd also, you know, uh, factor into that view that other commodities prices are also rising. So not only our consumers being faced with higher oil prices, they're also facing higher food prices. And while you can moderate your your driving or vacations, you can't necessarily stop eating.

So as that is going to continue to weil on consumers, and should those prices continue to rise much more than you know, we might have to reevaluate our Ryan Vastelica has a story in the Bloom Bargains is tech valuations back and focus on the anniversary of the dot com peak.

So the sell off a major US tech and internet stocks coming at an in a space just time as March tesch parks the anniversary of the peak of the dot com era, after which some of the markets and then biggest names began a collapse that would take years to recover from. We are seeing a lot of pressure on tech. We're rethinking maybe some of what is the outlook for some of those fang names. UM, how do you see it? You see the opportunities in some of big tech? Correct? We do? We continue to life to

information technology. There are just a few sectors that we like right now, information technologies, one of them, communication services and financials round delta top three for US. UM. We do think that technologies earnings and revenue are going to continue to be attractive to investors. And our planning frame here is sixty eighteen months, so over that time frame, we we think revenues, earnings are are are going to

continue to come in pretty strong. We also think that those earnings are high quality earnings and the leverage of those companies generally speaking, is pretty low. Is there just really quickly fifteen that cons This is a particular area within tech because when we say tech, it covers a lot of ground. It does cover a lot of ground, and we are more broadly speaking about technology here and not not necessarily a particular area, but we'd be diversified.

All Right, We're gonna run. Hey, Thank you so much, Tracy McMillian ahead of Global Asset Allocation Strategy. It was Fargo Investment Institute. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg dot com, and you can also listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube. Search to Bloomberg Global News