Brexit, Morgan Stanley, & Trump Under Fire

agreement or whether we're still miles away. Terre's Raphael is going to clear it all up for us. She's a Bloomberg opinion editor in London. So Terre's are we going to get a Brexit deal or is this sort of more uh, sort of tenuous negotiating that's gonna get shut down on both sides. Well, there's one final bridge to cross, um, but it's maybe the wobbliest and most difficult bridge to get cross across. Maybe that's the way to put it. So, there is a deal that has been agreed between the UK,

the European Union. Ireland crucially has signed off on that, and that is a huge accomplishment because it looked, um, you know, only say twenty four hours ago, like that wouldn't happen the you know, giant capital letter. But here is the Democratic Union's Party of Northern Ireland, a key ally for the Conservative government. UH, is absolutely opposed to the deal, has said they will not vote for it.

And the question is whether Boris Johnson can gather enough votes in the House of Commons from his own party and other parties to make up the numbers that he needs. So Terre's I know you wrote a column on this, This the Northern Ireland issue, um, and that is continues to be a major UH stumbling block here. Historically the

DUP has been able to block such a deal. What is the sense right now, given maybe where the parties are just that in terms of exhaustion, so normally a no means no from the d u P. I think that Johnson probably is hoping, um, that there's some chance they'll change their mind if, for example, he has enough votes in the Common The reason is this, he's offered the DUP reportedly quite a large sum of money to go along, and this is a DUPS moment of maximum leverage if they uh, if they say no and the

deal doesn't go through the Commons, then they're going to get a share of the blame for that. And we don't know how that would play out in a future election. The DUP may find that it gets hurt. If they say no and the deal does pass, the DUP may have given up an opportunity to uh, you know, to to to gain some benefits out of it, whether monetarily or in terms of you know, future influence. So the DP has to think very hard about whether it's going

to stick by by the position. And then the key question is whether their allies and the Conservative Party, which are now known as the Spartans, those that refuse Theresa May's deal three times before on the grounds that it hurt the Union in its cause among other among other things, whether they will stick by the DUP or instead decide to back Boris Johnson's deal. And I think once we know that it will be easier to say whether this

deal has a chance on Saturday. Meanwhile, of course, the Labor Party, by Jeremy Corbyn is well is expected to throw a spanner in the works. It's already declared the deal worse than Tersa May's deal, so it's not clear it gets through the House of Commons. I think it's got a better chance than May had um, but but that may not be saying enough a better chance than May's head. What does this deal have that is so much better in terms of being more conciliatory to all

sides than Theresa May? Right? Okay, the main difference is that Teresa's May's Teresa May's deal included what was known as the Irish Backstop, which was a sort of insurance policy, but it locked the UK into the US Customs Union indefinitely if other solutions weren't found to take it out. Now, that was completely UH, anathema to the d U, P to UH, to conservatives, even too many in the Labor Party because it tied the UK for you know, UH an indefinite period of time to EU rules. This deal

gets rid of that. Instead, it aligns UK goods with the EU um UH for regulatory purposes. But it also has this sort of innovation on customs where the goods that are destined for the UK would pay UK customs. Goods that might go to the EU through Northern Ireland would pay EU customs and there'd be a sort of committee that decides which are at risk of going to Northern of going through to the EU. So it's complicated, it's a bit messy, it's kind of even hard to explain.

But crucially what it does is it gets rid of the backstop and that was what Boris Johnson promised and that's what gives it this acceptability for Conservatives. It also has a consent mechanism so that the Northern Ireland parties can themselves approve it periodically every four years. Torre's just about twenty seconds. Can you can just give us a sense what's going to happen Saturday, what's supposed to happen, what's scheduled to happen. I'll give it to you in

five seconds. It's going to be a vote, okay, and beyond that, and beyond that, I can't tell you whether it's gonna pass. All right, So we're gonna pay attention to that vote Saturday, and we'll hopefully we'll have some more clarity the next time we speak to you, which will probably be next week. Tres Raphael, thanks so much for joining us. Trays is a Bloomberg Opinion editor. Covering European politics and economics, especially Brexit. She is the go

to voice. She does that from our London bureau. You can read more on this and other stories from Bloomberg Opinion at Bloomberg dot com, slash Opinion and on the terminal by typing an O, P, I N go. Well are good friends at Morgan Stanley reported earnings better than expected earnings is trading up about three points seven percent today. To get the latest on Morgan Stanley and all the big investment banks that have reported this week, we welcome

Alison Williams. She's a senior annalysts covering global investment banks and asset managers for Bloomberg Intelligence. She joins us on our Bloomberg and Actor Broker studio. So, Alison, um Morgan Stanley kind of bringing up the rear for the big investment banks this week. What are the key takeaways for you? So for Morgan Stanley, Uh, you know, strong quarter at least versus the expectation sort of across trading and fees.

I think importantly that their wealth margin um is running at the higher end and and the bottom line is really that they are well within their range to make their target for the year, and I think that's sort of the kind of takeaway as we're exiting the quarter, who who's sort of on track to meet their targets and in a good position for next year, and who's not? And so Morgan Stanley falls into the positive bucket JP

Morgan also their Bank America showing really positive trends UH yesterday. However, a city group, I think it's going to be a closer call. They basically said they're going to do everything they can to make that twelve percent return on tangible equity target common equity target UM next year. My guess is they're going to have to lower UH their target for next year, and then Goldman that doesn't really manage to a target, at least not now. We'll probably hear

more from them on specific targets next year. But I think UM it was a combination of costs coming in higher than expected, as well as disappointing banking fees. So I wanna talk about debt trading revenues because I like talking about them, but also with Morgan Stanley that really was the front and center. Their beat was really remarkable. UH. Debt trading revenues surging twenty one percent in set of dropping five percent is analysts had predicted. Do we have

a sense of what drove that? So there were a few things that they talked about. Basically, credit trading was strong for them, UM as and rates was a little weaker. That was similar to comments that they had made in September. The commodities business US was also good for both UM

Morgan Stanley angle up in this quarter. Think about what was happening UM with energy prices, but UM Morgan Stanley's business, which we haven't talked about in a while, and commodities can be lumpy, so that may have been part of it. But JP Morgan and Morgan Stanley both having really strong quarters on the front, on the thick front. People right on the thick front. I'm wondering how much of this is taking business away from Deutsche Bank, and that's what

we're seeing. So there we're hearing less I think specifics in terms of thick where they're gaining shared and I think that's really gonna be the number to watch next week. We definitely are hearing about market share gains in prime, whether they're specifically calling it that or not. Prime brokerage

meaning the business catering to hedge funds. Correct, and that is a business where um, you know, Deutsche Bank sort of never recovered coming out of sort of their their legal concerns of that businesses sort of continued to slip away. That's a business that they, um have stepped off of. We the Bloomberg News reporters have been talking about different market share wins UM from the banks that we heard

from the banks themselves. You know, Bank America talking about higher balances, Goldman talking about higher balances, and Morgan Stanley perhaps the most specific talking about higher prime balances UM and wins from Europe. So alson. You know, having listened to the conference calls this week, I WHI I know you have. For the big investment banks, what are they

saying about the regulatory outlooks? And then there's been some talk about rolling back some of the regulations that were put upon the financial services industry after the financial crisis. What's the status of that. The one regulation that I think bank confessors are most focused on, we're most focused on at least is um you know, the final capital rules, and there's two rules right now they're sort of in progress. One relates to one capital measure and one relates to

the other UM. One's gonna make things tougher and one's gonna make things easier. But the net net UM things could be tougher for Morgan, Stanley and Goldman because they're basically tailored to UM, sort of charging them more for certain related investment banking businesses. And so I think that's the key that that people are watching. However, we've seen in the last couple of stress tests and capital returns the banks sort of being a little bit more conservatives

as we sort of wait those final rules. There were UM questions sort of throughout the calls on the political landscape, different things that have been going on. I think managements generally we're trying to change the subject and and not kind of go down that path shocking, I will say, I mean, honestly, they don't want to answer these questions

because how can they possibly have a lens out. I am curious though, just at a larger level, how much are US banks just absolutely trouncing the European and other global peers at this point. So to your point, we've seen that UM in the numbers, We've seen it in the trading numbers and we've seen it in the fee

numbers over the past US a few years. We've seen it in the first half, and so it's it's interesting because it's it gets tougher and tougher to do a read across from the US because all Thick broadly beat expectations. So every single bank beat and Thick Equities was a little bit mixed, but in aggregate better um, and we'll find out next week UBS reports Credit Suiteen Deutsche Bank the week after Barkways is also sort of in that mix. Um. We'll find out exactly how much of the better numbers

are coming from, uh, those share games. Allison Williams the busiest person in Bloomberg these days. Thank you so much for being with us, Alison Willis. Allison Williams is a senior analysts covering global investment, banks and asset management for Bloomberg Intelligence. Joining us here in our Bloomberg Interactive broker studios. Wax Software Wax Inc. Melissa Smith, president CEO, joins us right now to talk about the electronic payments business Wax is.

You can find out on New York Stock Exchange trading onto the symbol w e X, about a nine billion dollar market cat Melissa, thanks so much for joining us on the phone from Portland, Maine. I want to talk a little bit about WAX. What is kind of the key driver for your story right now? I know about two thirds of your revenue had historically been about the truck fleet fuel payments business, but I know you've been trying to diversify that. So tell us a little bit

about what the current growth drivers are. Sure Sure So we're a financial technology service pro fighter and she talked about one of the industries that were in his fleet.

We're also in healthcare, travel and accounts payable. If you look at the growth and I'll talk about healthcare just for a minute, Um, if you have an h s A or an f s A or any type of tax defered account where the technology that sits behind that, and so one of the growth drivers for us in that business is the fact that you continue to see people moving to high deductible healthcare plans that have HS

accounts associated with that. So is you see that movement, we continue to add accounts, uh, and as healthcare costs keep changing, that's a place that we we um see continued growth in our business. It's it's a place that we've been playing on a lot of focus over the last um last several years. So your shares are up almost fifty year to date, so UM, not too bad. Well, I hope you have stock options. I'm trying to figure out going forward what the barrier to entry is this?

What's the competitive landscape for you? Yea in each of the industry sphere and so so, first of all, we operate at scale. We have about eighty billion dollars worth to spend volume going through our business in our different verticals, so we have scale. We'd use our own internal network, so I think of that as relationships. So we've developed

ourselves and then through some of the networks. But really the two big various for us, it's that the technology is highly integrated into our customers and partners, and and they're of all size. They're really large companies and really small companies. UM. And what we do is is uniquely solve problems that sit in a particular vertical, whether that's fleet or travel or healthcare. So I know you have some pretty aggressive growth targets ten and fift reruven and

growth maybe a little bit more than that. Earnings where what are the businesses that are really going to drive you to that growth. Because as I look at the fleet business, that seems to be a slower growing business. Yeah, you um, if you look at the sleep business, it's it's a predictable grow. We had a big stuff I've been growth this year and fleet. We migrated over both

Shallenge Chevron's commercial car portfolios. They were big contract wins for us, and we've gone through the implementation process for that. So you get a little bit of lumpiness sometimes in the growth and sleep, but it is it's predictable. And then at the same time, if you look at the growth that we're getting in healthcare and travel, there are really good macro that sit behind that, meaning that the

markets are growing themselves and we're benefiting from that. Both in online travel, so our biggest customers and travel or online travel agencies, so as they continue to see a lift in their business, we have seen the benefit of that, and then we keep adding new partners and customers. Globally.

We just entered on the travel side and to the U A E. And so as we continue to extend the presence that we have and the capability that we have, we get a natural lift from that, you have an incredible viewpoint into just the thinking right now of executives.

It's some of these companies that are affected by politics and thinking healthcare, or by international national trade tensions, online travel companies, and I'm wondering how much uncertainty you're feeling from them, and whether there's a reluctance to invest in some of your products because of that. I'm not seeing

uncertainty around UM or an unwillingness to invest. What I have seen over the last several years is a desire from some of the biggest companies that we work for to have us work on innovation with them, which has more to do with a trend of technology changing and it's a strength of ours UM to innovate to bring new tech into the marketplace, and so we have seen more of an interest of doing things like we created a product called driver Dash, which is mobile enablement of

fleet payments where you use facial recognition to turn on the app, and the app itself turns on the pump as a driver sits next to it. So think of a someone who's moving a forward f to fifty that's pulling up to a pump. The technology makes that transaction that much more secure, and that's something we did initially with Exa Mobile and and now we're we're doing with

Shell as well. So I think that there's more of a desire to um to partner and to partner with people that can move quickly in the space, which I think is a benefit of ours. Melissa Smith, thank you so much for joining us today. Melissa Smith is President, chief executive officer of WAX, joining us from Portland, Maine. President Trump is coming under some widespread criticism for his Syria policy, and it's not just from Democrats this time.

Right now that some Democrats, some Republicans are also challenging that policy. To get more we welcome Stephen Dennis, senate reporter for Bloomberg News, joins us on the phone from Washington, d C. So Stephen, give us the latest on how this whole Syria policy is playing out for President Trump in Washington. Yeah, I mean, it's basically overwhelming bipartisan opposition to his decision to basically let Turkey invade without us

taking any real steps to Vntham. You know, we're starting to put in play some sanctions and and of course Mike Pence was sent over there to talk to the Turkish president. But basically you have a lot of Republican leaders over here who are a cast that the Kurds, who fought alongside us to help the feed Isis are being basically left defend for themselves as the Russians and Syria forces and and and Turkish forces close in on them.

And so you know, yesterday in the House, so there was an overwhelming vote only sick as your Republicans stood with the President against this resolution that effectively rebuked him for not standing up for the Kurds. And now in the Senate, Mitch McConnell, the the Senate majority leader, says he wants an even stronger resolution um on Syria. So uh, Chuck Schumer, the Democratic leader, wants to have action today

on a resolution. So we'll see what ends up happening. Ing. Uh. In the meantime, sort of a fluid situation on sanctions. The House Foreign Affairs Committee is looking at sanctions. And now we have on the Senate side today Christmin Holland Democrat and Lindsay Graham Republican, sometimes chief ally of the President, but on this his chief opponent will be introducing sanctions later today much much stiffer than what the President has

been putting forward so far. So House Speaker now Nancy Pelosi currently talking actually, and yesterday she made some news when she talked about the meeting with President Trump with House leaders with congressional leaders about the serious issue, saying that President Trump had a quote meltdown. Do we have a sense of, first of all, whether that's accurate, but second of all, what the broader implications are of the pushback the president is getting from Republicans in Congress. Yeah,

you know, there definitely was a dust up. Um. Pelosi basically accused the President didn't on issues including Ukraine and Syria and other issues as well, saying that all roads would you lead to putin and and basically are helping out the Russians and Russian foreign policy and uh, the President wasn't happy and and called her a third grade

politician whatever that means. Um. And at some point the name calling got to be so much that Schumer, uh Stenny, Hoyer and and Pelosi decided to get up and leave. This is not the first meeting where one side has gotten up and left. It was months ago when the President sort of stormed out of a meeting that he had called on infrastructure, and he was upset with investigations into him. And of course now the House is poised

to impeach him in the coming months. So this is not that big of a surprise that they are at each other's throats, if you will that. There is one thing I'm watching is whether Republican angst and an upset

overseer impacts the impeachment to calculus over here in the Senate. Um. Some Senate Republicans and Democrats have talked to don't see it affecting it right now, but you know, if you actually get to a point where some Senate Republicans are considering voting to convict the president, which right now none of them are really there. Um, this could just be one more feather on the on the scale because Mike Pence is seen as somebody who who would have had

a different foreign policy in this case. So Stephen just quickly, what are next moves here? I think the next big decision point is what does Mitch McConnell do on this sanctions package? Does he want to bring something real with teeth to the floor that would defy the president? Um, it's one thing to have a non binding resolution um, which he's done before. It's another thing to actually start having Congress take over some big pieces of foreign policy.

That's something that he's gonna be probably fairly reluctant to do, but he's getting a lot of pressure from Republicans who want to do something to push back on what they what they see happening over there with our allies getting killed. Stephen Dennis, thank you so much for spending time. I know you've got a very busy schedule. Stephen Tennis and a reporter for Bloomberg News, joining us from Washington, d C. Thanks for listening to the Bloomberg P and L podcast.

You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. I'm Paul Sweeney. I'm on Twitter at pt Sweeney. I'm Lisa Abram Woyds. I'm on Twitter at Lisa Abram woits one. Before the podcast, you can always catch us worldwide on Bloomberg Radio.