Layoffs, ETFs, ChatGPT, and David Solomon (Podcast)

Thank you very much. Brian. Let's bring in Sarah Green Carmichael because she wrote an opinion piece at the beginning of the week that really piqued my interest talking about the fact that all these layoffs were reporting on and now it's every day. UM, a few thousand at least could be a really bad idea by the executive board.

So Sarah joins us now on Bloomberg Radio. UM. She's a former executive editor at the Harvard Business Review, where she hosted the HBr idea cast for mentor at Brown University's Women's launch Pad, and of course you probably recognize her from barrens um. Now she's writing for us. Sarah, What's what's the idea here that these companies have just gone through so much and spent a lot to hire people, now they're starting to fire those very same people. Yeah,

it seems like a little bit of wasted resources. It's sort of like you painted the room and now you've decided to get renovate it. Um. So it makes the company's look a little bit uh, shortsighted, I guess, and I think you know, the big message that when I looked into the research and talk to people was that you've spent all this money to hire people. What's most important is not the exact number of employees, but your culture.

Do you have a culture of innovation? Um? If you do, you could weather the recession and ask yourself, you know, what do we do with this extrac capacity? You know, what new things do we create? How do we take advantage of this time? Um? But instead it seems like companies are being a little bit penny wise count foolish by saying, you know, jettison ng um sometimes a small percentage of their workforce, but still you know tens of thousands of people, Sarah. Do we know a couple of things.

One is these companies. A lot of these tech companies have almost doubled their workforces in the last three to four to five years, so one could argue, boy, they overhired. And second, there's also an argument that, you know, like a lot of companies, a lot of industries, they didn't really let people go during the pandemic. That would be kind of heartless here, So maybe they got some ketchup

to do there. What do you do? You get a sense that this is specific to the tech industry because Michael Barr from Bloomberg News was just in here this morning reporting Taco Bell they need employees. You know, Chipotle they need twenty thousand employees. I don't know, it's kind of tough to circle that square there. Yeah, you know, we've been talking about the k saped economy for years now, and it does seem a little bit like this is you know, tech companies, it's also some financial firms UM

and consulting firm UM. You know, maybe some of these firms are a little overstaffed, especially the tech companies, because in some cases, you know, they still have many more employees than they did at the start of the pandemic even with the layoffs. Right, So they're still growing UM, so that you could make it. I think a solid argument is that the tech companies might be in a slightly different position. UM. But I think, you know, for so many companies, you know you mentioned food service, UM,

retail businesses. So many companies are having trouble just hiring anyone. So it's a very sort of weird economy where you can't get enough people at one level and other companies think maybe they've got slightly too many. I do think that if those tech companies are continuing to grow UM, hiring freeze might have been better than the kind of incredibly morale damaging prospect of LAOPP. That's the one of the big problems, right, is the damage to morale, Because

you know, if you get fired, that's bad, UM. But if if you're worried about getting fired for months and then you narrowly avoid the acts, that's still not great. Especially if some of the people out the door are you're you know, you're still close with you might end up hating your managers and what do you call it quiet quitting? Yes, exactly, Yeah, I mean I think one of the things that really comes through in the data

is that layoffs you lead to higher turnover. Do you have the people that you fire, um, and then you have the people who all then spend the next few months dusting off their resumes and looking for work elsewhere. So it really could lead to a lot of attrition which could lead some of these firms to become understaffed, which can be very costly. How much of this is We used to have a function on the Bloomberg terminal l O S S Go Lost Go, and I think

we got rid of it because it felt heartless. What it would do is did put up a price chart of the stock, and then it would put red circles around the firing announcements. And of course usually when you announce firings, Wall Street, being the heartless mob that it is, goes and buys the stock. Right. How much of this do you think is driven by that because these tech stocks have gotten hit hard. I think it's very much

driven by quarterly expectations um so. And I think what's a shame is that you will see if stock rise a little bit, usually on announcing layoffs um. But then you know what happens the next quarter or the quarter after that, You know, the stock usually settles right back down. Again. UM, so it does seem like it's actually very short term thinking kind of saying, how can we play K Wall Street? What can we do to show them that we're taking

it seriously? Um And unfortunately, I think, you know, the message so often to the remaining employees is you know, we'll just have to do more with less. And I think what actually might happen at some of these companies is people will have to do less with less. You know, it will affect revenue, it will affect other opportunities that they you know, I would hope to achieve in the long run. Alright, great stuff. I really appreciate you taking

the time. Sarah Green Carmichael, she is the editor Bloomberg Opinion talking about layoffs and we've seen it again. It's it's tough to kind of, you know, kind of take a look at all the data with the the global labor market is so so strong. But these tech companies, we've seen a lot of headline noise here in terms of layingoff the panel and it hasn't been driving the

price up recently. Maybe initially yeah, maybe, uh, you know, the non tech comes especially when three M says we gotta fire thousands of people, or in IBM says we gotta fire thousands of people. People say, ohs, what's what's the deal with your demand? Exactly right, So we'll see if we're gonna get more of that. We a lot of tech earnings next week and we'll stay on top of that. We'll see what they want to do with

their head count. This is Bloomberg Ben Slaven, global head of E T F S. Yeah, exactly, Ben Slaven, He's a global head of E t S or B and Y Melon Assets Servicing. He's here in a Bloomberg Interactive Broker studio. So he gets the gold star today for showing up when most people don't show up at work. And literally I'm looking around, I don't see a body here. Um, but that's kind of how the world is these days. Ben. I mean it's Friday, right, I know, I guess that's whatever.

So Ben, you at E T F S, I mean, you can't help but grow. It's just a question of how much you do grow in the E T F business. Talk to us about B and Y Melon. What are you guys seeing in the business these days? Well, first, thanks for having me. Great to be here. And before we begin, I just want to give a quick happy birthday shout out to Spy. So we're thirty. We are. We are thirty years into the e t F journey and years maybe Nate Nate most was sort of the

considered the godfather all those years ago. Um, he actually recently passed, but the legacy lives on. But here we are, Oh is that right? Okay? Yet long gone? At this point, I actually think it's condos. But in in this environment, we've seen an acceleration of not only product launches, but also adoption by investors. So last year was a record

for the e t F industry. UM. Actually, in the last two years at B and Y Melon, on our platform that we service a large percentage of the industry, we were launching almost one e t F a day

on our platform. Now that is slowed in. Our expectation is that it will slow a bit and also closures will pickup, so on a net basis, we might not hit that record, but the que looks strong and one of those drivers is really the mutual funds starting to convert to e t reasons right, we had a regulatory change that allowed mutual fund conversions to e t f s and frankly, e t F s are just a

lot cheaper. I mean, if you're an investor, it makes a lot more sense depending on obviously your goals and what you want to deal with, your risk holrange, ceter But, uh, you're looking at twenty five or fifty basis points maybe or a hundred rather than you know, one and a half or two percent. Fees matter um, and that has been one of the drivers of e t F adoption. But look, you know, from an asset manager standpoint, investors are clearly preferring the e t F structure, and that

is putting a lot of pressure on the industry. So some of the mutual fund sponsors are saying, hey, if we can't beat them, join them. And now that the path is open to convert a mutual fund to an e t F, it just provides another way for large mutual fund complexes to enter the e t F space and continue to grow their funds and to some degree stop some of the bleeding that we've seen coming out of mutual funds at the expense of e t F.

I don't. I don't. When I was a sell side of analysts, I made a living with the mutual funds. I go up to Boston, see you know, Fidelity and Putnam and all those guys. So that's because they had a ga jillion analysts covering chemicals and media and all that kind of stuff, and lots of portfolio managers. If they were to convert to an e t F and cut the fees by like a jillion, what happens to all those all that cost, the analyst, that portfolio manages

all that stuff, what happens to that cost? It's putting

an incredible amount of pressure on those asset managers. In fact, I read an analysis UM and I believe it was one of the Bloomberg analysts who made an assumption that roughly twenty billion in revenue has been sucked out of the asset management industry sector, and a large degree of that is due to e t f s, whether it be simply the cost as you were mentioning, but also um, you know, really the fact that it's a lot of that asset is passive UM that has come in to

the industry which doesn't require those those analysts. Although there's a lot of actively managed ETFs and they're really gaining in popularity. I mean, Jack Bogel would be ironically, I think celebrating in his grave right now because this is part of his legacy as well, even though he turned down uh what is it, Nate most when he first came to his office. Yeah, I mean the old the old e t f adage is the whole passive is massive, you know, sort of tagline. But you're right, it's changing

from a product development standpoint. If you think at what's happening now versus where the assets are, more than half of the products in the industry that we're launched in this sort of latest sort of wave of new products are actively managed. In fact, that that's what we saw on our own platform and if you look at our que going forward again, the majority of the products are active and if you see what is going on just

this year. At this point in the market cycle, actively managed ETFs are about three percent roughly of the industry, but they've accounted for about forty of the flows here in three in January. So again small base, but you are seeing, um, you know, quite a bit of investor interest. Part of that is the market cycle, and part of that is there's just frankly more product and choice for investors to to choose from and and that's driving it.

So does the corporations to companies. Did they offer e t f s for the four one case because some people study that's that's kind of where that's for mutual funds. Yeah, it's a it's a great question. Um. You know, four o one case have been kind of the last stand um really for mutual funds, and that is where the stickiest and and sort of mutual funds remain dominant. But the bottom line is e t f s are starting to crack into that market. The fact is for more than a decade you can have e t f s

and four oh one case. I've had one myself and invested in e t f I don't think you simply need a broke rach account right to be able to access those ETFs. And so it really is a matter of the four one k plan itself allowing investors to access ETFs, and so we can by the way he manages doesn't fidelity dolom my my guy Rick at a Meret prize UM. He sent me recently a few um

options and s junk was one of them. So I told him, I told him, I want high yield, but so you can and I think the real um One of the other big drivers though, is that the kids are investing in apps right, and they don't want as much of the red tape when they're using robin Hood or we Bowl or whatever. And this is just a much easier way to invest in the diversified product if

that's what you're after. You can also besting single stock ETFs and leverage up, but this just seems like so much cleaner and uh than than a mutual fund, right Lukely. And again there's the other benefits we talked about. Certainly liquidity in the low cost is a piece of it, but remember even when we're talking about retirement accounts, you know, it's also about the ability to construct with precision asset allocation models that fit a variety of not only time horizons,

but profiles. And again, the ETFs continue to proliferate, and that precision allows the asset allocators or those putting that kind of investment advice out there for investors, whether it be packaged or not, with an incredible amount of precision and the ability to again customize those portfolios. That really makes sense for investors, which is just very difficult to do, uh in a mutual fund rapper. I mean, I can't even think of any reason to be long the asset

management business at all. This ETFs thing, it's a long term story, it seems to me. I mean, is Boston Fidelity, Putnam Wellington? You know those guys, what do they do? I mean, a lot of them are trying to jump into If you can't beat them, join them. I mean, Fidelity is a great example. I mean they have come in to the e t F market UM and now they're really starting to ramp up not only the product development but also the distribution of those products, and you're

starting to see the assets move forward. JP Morgan another large firm that's really trying to lean into the e t F effort. That's again had a legacy mutual fund business, so it's it's changed. What do you guys do it? And y Mel and assets Servicing? How do you So? We we provide infrastructure to the entire industry, so roughly we have a quarter of the industry's assets UM and we saw last year because of the record volume, we saw close to one point a trillion dollars in notional

volume flowed through our pipes. And these are the creation and redemption orders that are coming through all the e t f s we service and company we have, you know, again provide all of that back middle office services to power up our sponsors e t f s and again that businesses grow going for sure, and at the same time the complexity is growing as well as these products proliferate UM and you know, again covering almost every asset class, every market in the world that you can possibly think

of putting in an e t F at this point. One of the things that drew me to e t f s to begin with was well, Eric Valtunists and um uh Tony Santa Tara Vegas, who who do research for us, are on the money. UM. They run through the flows and you can really read so much what's going in the broader market by e t F flows. And that's what I thought initially was so cool. What do you see in the flows right now? Lack of conviction.

That's not a great answer. I knew you were gonna I knew you were gonna You're gonna be unhappy with that, but that is the fact. It is interesting to see. So if you just take something like fixed income, which again we saw a very large churn in fixed income last year. I mean obviously due to the bond market route again money coming out of mutual funds into e t F s UM where E t F again picked up market share. And you look at what's happening in January and I just took a look at the leaderboard

and you see UM not only short duration. You see the long bond tilt. You know that's one of year plus picking up flow. You see high yield, you see investment grade UM. I see a g G which is the total bond market all picking up flow. Hence my comment at this point lack of conviction. The one thing we are seeing that's unique as international UM, and that's been a sort of hot you know, coming into the beginning of this year. All right, Ben, great stuff, Ben Slaving, Global head of e t S b N Y Melon

Assets Servicing chat GPT. I don't know what it is, but you know, you build. You take a look, what's it take to build a website these days? You just hire some kid and he does it for you. I think chat GPT now is that kid and it does it in thirty seconds. I mean it depends again like the AI told us when Sam Potter and Katie Greifeld tried to put an e t F together. It really depends on your parameters, right, You've got to be a little more specific, and you just build me a website.

All right, Let's talk to someone you kind of in this space. James Cliff, founder of the firms called Durable. Uh, James, thanks so much for joining us here. Tell us what Durable does, and then we'll get into the whole chat. GPT MAC can talk about it, because I really don't know. Thanks for having me. Yeah, So, Durable helps small businesses get online in less than thirty seconds. So with three inputs, your location, your business category. Um, wait, there's two inputs,

you essentially have a working website. We rate the copy, we pick your images, we pick your colors, we pick your layout. Give you everything you need to launch a beautiful website in less than thirty seconds. Get a customed domain name, get analytics built in, and then you're off to the races. And what's that called? And what does that cost me? Right now? It's free for thirty days and ten dollars a month. So I so exactly. So

I had read about Durable. I've heard about this, and that's why my guest thirty seconds was pretty much on the money. Um, and then what's the next step. I mean, I assume you can find two in it at some point after you give those just those two variables exactly. There's a there's a custom editor within it. We actually have AI within the platform as well, so you can

regenerate different components, you can test different copy. Essentially, our whole product is thinking it from an AI perse perspective, So just making it really easier for people to play around with different layouts, different images, getting to a point where they're just excited about what they're creating and what

they're launching. So typically this website building process for an individual, one you're doing on your phone when you're in a McDonald's drive through half the time, So like, how do you make that experience fun and enjoyable as opposed to this kind of clunky experience where you're trying to get a pixel to be in the right place. Um. And that's really how we're thinking about, is how do we make this accessible to the folks out there that I

want a website but don't have one yet. The cool thing is I've owned a domain name for I'm gonna say over fifteen years. Have you that? I just have never acted a few of them actually because I had this idea way back in the day. So I bought go to hell pants dot com and Cocktail party pants dot com and Mr fancy Pants where you're going, okay exactly, but I never I was like, I don't know what ht ellie even stands for. So I've never acted on that. So now I guess I could do it with UH

with durable exactly. Who who is your your typical customer James? Yeah, So typically we're we're working with solo business owners, so someone who's I'm an owner operator of their business. So primarily in the services space, so we have a very wide variety of those folks though, So personal trainers, creatives, consultants, home services, essentially anywhere where you're trading your hours for

dollars or hours for projects. Were really great fit because typically these folks don't have the time or the budget to hire expensive web development firms, and they're pretty simple businesses that you're trying to operate. You're not trying to run these complex e commerce inventory. It's Hey, I'm offering a service, how do I get that online? Get more cost mers and make my life easier. UM. That's really who we're working with. All right, So chat GPT you

say it's dominated your inbox and news feeds. Talk to us about that business and kind of the impact of chat GPT on your Um, they're a partner, Yeah, I think, Um. I mean it's the most exciting technology that I've seen in my fifteen years working on the internet. UM. And I think the world agrees. Um. I'm excited about it. And I think it's this new evolution of software. Right.

So previously is there's this world where um, the user has to do the work, UM, which is you gotta log in, you gotta click the buttons, you got to think of what to say, you gotta think of what image to choose. UM. For a knowledge worker, it's hey, I need to create this formula and excel, I need to write this document. Um. Whereas now this new AI revolution is creating this um different world where the AI does the work and your skill and knowledge is what

can actually tell the A what to do. UM. So it's this new paradigm shift that I'm just so excited about because so much of work and even for our users, right, it's UM, it frustrates me that they have to do these things within the app. Um, why don't we just make it automated? Why can't you just talk to your app to ask it to do things? How much smarter can software get? Um? So I'm just looking at this

as a brand new user experience. UM, that's gonna open up just so many opportunities for folks to UM make their jobs better and easier. I mean, this kind of technology is finally starting to work in places where we've been trying to make it work for a long time. Right with sirie and you know your car, My car can finally call my mom when I push the talk button and say call mom. It hasn't been able to

do it for a decade. Um, is this going to replace a lot of you know, for example, what me and Paul do, I saw the Wall Street Journal reporting earlier that UM BuzzFeed, which is you know, journalistic news site, is gonna rely on chat GPT to write some of its content. Yeah. I think if you look at any evolution of technology, there's always this sphere of job replacement. UM. What I believe in is it's gonna let people focus on what they're really good at. So y'all are very

good at your jobs. You've got an audience, you've got a personality. UM one, you could train your own AI model to scale yourself, so maybe you start doing fifteen different radio shows and fifteen different languages in real time. UM. So I think the the individual actually becomes more important.

And everyone says everyone's worry about A replacing their jobs. UM, I think it's gonna replace a lot of employers, whereas the individual can now become their own business of one and scale themselves and solve all the things that UM employers or corporations do well. I think individuals will have the power to do that. So I think it opens up a lot more opportunities than it takes away. And yeah, I think we again, we haven't seen what this can

do yet. But I think for folks like anyone with a skill and who can think critically and use this technology, I think it makes them a lot or powerful as an individual and gives them a lot more economic opportunity across the world to UM. And there's a lot of a lot of markets that we're seeing. Even UM that English is their second language. They're building a website in English, and now they can offer their skills to a brand

new market and communicate in not their first language. It's like it's been compared to Calculator a lot, right, So Paul Universe, you guys grew up with that Hewlett Packard you know, yeah exactly, that didn't replace you, that made you better at your job exactly. Alright, So I think it's pretty fascinating. I guess Max Headroom isn't coming to to replace us anytime soon. Um. So what's the uh what's the path forward look like for durable then? Um? You know, how do how do you scale up from here?

When's the I p O? Yeah, I mean we'll we'll ask the AI when the I p O is. But the traction has been incredible. So there's so much market demand for what we're doing. We're growing like month over month um and the numbers are not mall at this point. So it's really just trying to catch up on building technology. So we've got a massive backlog for engineers to work through. We're retraining and retraining our own AI models. Um, we're building these brand new user experiences. UM. So again thinking

AI first, what what? How how minimal can these inputs be to to build workflows for our customers. So really looking at abstracting as much as possible UM for this solo business owner. So one part of that marketing and websites, and then you have UM workflows like invoicing and scheduling and then accounting and kind of the back office stuff. So every piece of this workflow for an individual business owner, how do you make their job so easy that all they have to do is show up do the work?

And I think, in my ideal world, you can say, hey, I've got this skill, Um, I pressed two buttons, I've got a business, I've got a customer lined up tomorrow, and all of a sudden, I just have this complete freedom over my pressing, my schedule flexibility, um. And to me, that's the utopian world that we're trying to create, all right, James, great stuff. James Clift is the founder of a durable

creating websites. It's like a matter of seconds. How cool is that this move to somebody who does this stuff for living and he is working in a huge scam. This is don Steinbruger. He's been covering markets for a long time. He's a CEO and founder of agecol Partners. But he's working down and he does it from Richmond, Virginia, which is probably my favorite town in America. I love Richmond, went to school there, my twins were born there. Great

great town. Somehow, Don who is the proud member of the Summit High School, New Jersey Class of Night, somehow he's working his scam down there in Richmond. Don, Thanks what for joining us again here? I mean, what are you telling your clients about these markets? Here? I mean, earnings are coming in, the Fed Reserve is moving a lot of moving pieces here. What are you telling your clients? So, Paul,

I think it's a good time for the hedge fund industry. Uh, you know, I am not optimistic on the capitol markets this year, as you know that that is said they're going to continue to raise rates or that though at a slower pace. Uh. You know, people have known for a long time. You don't want to fight the fet theF THATT is not going to lower rates probably until at least two thousand and twenty four. I think there's gonna be a recession. It's going to cause some headwinds

for the equity market. So I'm not looking at the equity market oring back up interest rates go up a little bit more, it's not going to be good for the bond market. So, you know, relative value UH hedge fund strategies, I think it make a lot of sense. UH hedge fund strategies that aren't correlated to the U SMP five hundred, I think helped diversify a portfolio, like global macro and UH quantitative global macro strategies like C T A S. I think it's gonna be a year

where UM active management outperforms indexes. You know, we've seen volatility come down a lot across people tell us that every single year, like active management is going to outperform every year. That's that's the beginning of the year mantra for people in the financial industry. Well, you know, for a decade, it didn't happen for a decade. You just had everybody putting money in index funds and that just

caused index funds to outperform. So last year you did see UH long shirt equity managers at a lot of alpha relative to the SMP five hundred, and I think you're going to see the same thing this year because I think you're going to see more volatility in the marketplace and volatility is good for active management because active managers are you know, picking a target price to sell at, and if you have volatility, it reaches that target price quicker.

You also are able to buy securities at a lower price because you have high volatility, prices go below the intrinsic value. So what about then, value versus growth or small versus big. I think a small and mid cap or where you want to be, relative valuations look very strong. I also like outside the US, so international small cap um much greater inefficiencies, better valuation standpoint. I think you're

going to see a weekend into the dollar. There's greater inefficiencies, not as many Wall Street coverage of companies over in Asia. So that's an area we're focused on. Hey, donn it used to be, you know, back in the day, if I had two or three good years on the bond desk, or equity desk or commadi's desk, a Goldman or fixed income, I could just go out and hang my own shingles, start a hedge fund, raise a billion dollars. Is that still? Is that still a thing? It is not. I mean,

it's the most competitive industry there is. There's probably fifteen thousand hedge funds and they're all calling on the same institutional investors to get money. So these pension funds and Downmond funds, foundations, I mean, they are literally getting called by thousands of people that want to sell hedge funds,

private equity, real estate, long only. So brand is becoming more and more important in the industry and you're seeing, you know, for example, a majority of hedge funds have less than five hundred million assets, and probably five cent of flows are going to hedge funds with less than five million assets, which is a problem because these firms are getting too big, and the bigger you are, the

harderness to generate the terms. Well, who are the biggest The biggest winners last year were the absolute behemoths, right, Um, Bridgewater and Citadel, Right Citadel, Yeah, and all those guys. So so if you look at the HFR index that they have one index that equally waits hedge funds, and that was down about four. They have another one that's asset weighted, kind of like the SMP asset weights companies.

The asset weight of one was flat performance wise, but that's really unusual if you go back over long periods of time, smaller hedge funds significantly outperform large hedge funds, and I think that's going to be the case going forward. So if you really want to generate a lot of returns for hedge funds, you don't want to invest in the largest hedge funds. You want to find the up and commerce. How about the commodity space? How does investors

play that? Because commodities have had a big run and we're talking about inflation here and China's reopening, China's reopening, well, obviously, Uh, commodities did really well last year. There are a couple of different ways you can play it. I mean they're they're pure commodity managers that you can invest in. You could also invest in you know, global macro that's allocating the equities, fixed income, curgencies, commodities and let them choose,

you know, what weight commodity should be. There's also, uh, these quantitative managers I mentioned before, C T A. S. It's probably the hedge fund industry. They're quantitatively trying to determine where the best value is and again you let them determine whether they should be heavily weighted in commodities or not. Alright, good stuff all right, don appreciate it as always giving us a lay the land of the Hedge Fund biz Don Steinbrug, founder and CEO of age Croft.

He is uh proud of lum of the University of Richmond. He's a fellow Spider like me, and he's a lum of Summit High School. In Summit class of night. Some stellar people came out of that class, I can tell you right away. One of the most read stories on the terminal deals with our good friends of Goldman Sachs, the CEO David Solomon. His pay is getting cut by twenty five million dollars. And that's during a year which the share price and profit tumbled and the firm retreated

from a highly public effort to create a consumer. Who broke that news only Bassett and Steve Dixon. She's only backs bass She covers all things Wall Street for Bloomberg News. She joins us here in our Bloomberg Interactive Broker studio. When I first read your reportingly, I said, good for Goldman Sachs, Good for David Solomon. The rank and file are taking pay cuts this year. Bonuses are down, and here's my leader participating in the pain too. Yeah, I

think that was my read. Well, you have to look at two things here. According to people familiar with the matter, this is definitely in line with cuts you're gonna see for partners and senior managers at Goldman. But then you also have to take a look at what the filing says here and what it says about why. Look, I look at a lot of filings. It's the only place anymore after f t X that I could trust anything anymore.

But I think it's really important to look at it because board determines compensation at the end of the day, his basse page stay the same as a two million, which is often done with the variable compensation was what dropped off meaningfully. Last year was a record year. But the one thing that they said also is that this is kind of in line with his ability to strategically reposition the firm. So both the fact that you have come down from a record year last year you had

record levels of pay. You also had special awards tied to last year's pay for David Solomon. But this year you have to remember that this thirty percent drop in his total compensation package is just so much steeper than you're seeing at the other banks, Morgan Stanley's drop is only ten percent. Jamie Diaman at JP Morgan, it's stable. They did get rid of his special award package that shareholders kind of revolted against last year, so it's not

like there was no pressure on Jamie Diamonds pay. But you do see this kind of a typical compensation package really follow a lot more Goldman Sacks than you saw at the other banks. So how much does the do we say the failure of Marcus? That is that safe to say? The reason you could say that is because there are parts of Marcus that they're unwinding. I think

it's confusing because it's really like a lending business. But they have Green Sky, which is a separate lending business, So it's not like there's not a consumer of this there. They just bought a huge one. Yeah. No. But when they first announced these plans, um some of us who know less about Wall Street than you and Alice and Williams thought, Okay, Goldman Sax is gonna come in and rule. You know, everyone's going to be using Marcus. They're gonna

own the high end consumer segments. Let me do something, do you really use Marcus? Who? How many people. Do you know that uses Marcus to borrow money from, or even Goldman Sacks to borrow money from. What you did at Marcus was put your cash in at an interest rate that was way higher than you got anywhere else for a long amount of time. So when they engage with consumers, because remember they still have a lot of high net worth individuals that are really important to their

going forward strategy. Goldman has always managed money for the richest of the rich in the world. Do they keep a business like Marcus where they're working with so many companies and they want to get these younger folks that are going to get wealthier over time that work for those companies and you know, manage their money, have them saved with them. I think these are big existential questions for Goldman Sacks, which is very different than like, hey,

let me get a Chase card. But at the time time it seemed like they were gonna beat Out and twenty six and Revolute. I didn't At the time, it seemed like they were going to take they were going to be the American Express Platinum card of the future, and they're not. I think that that was a pipe dream always. Frankly I think that that was a bit of hype around. Well. I was excited about it, and now I know you never were. I sat next to you reporting on Matt Miller, who always said that the

Goldmen card sucks. He always did him and Tom Keane, but there was never really that much of a product. Just anyway, do you think he from shareholder's perspective, the board perspective, maybe the partnership of perspective, does he get mark it down for Marcus And if so, how much? Well, listen, at the end of the day, there were parts of the bank that we're having record numbers, really just blow out, blowout,

blowout performance. Remember Goldman's acts, their equities trading desk last year had some quarters where the even surpass Morgan Stanley. Their dealmakers blew through the roof by a margin though I have not seen in many, many many years relative to the other banks, but up markets, this seems reputational to me. And I don't know if that was blank find? Was that blank find was that? I can't remember really

because I'm wondering if I'm aboard, if I'm Solomon. I mean, do I have to worry a little bit here that I'm going to be painted by this marketing is really going to be an issue for me longer term. This consumer business lost two billion dollars last year. It lost four billion dollars over a couple of years, a few years there, and so even beyond the reputational issue, it is a money issue. And not for nothing. Million bucks

for the CEO of Goldman SAX, that's nothing. You walk across the street to Carlisle Group that KKR, those guys are really making the bank. So one thing we didn't see yet this was just the ceo paychecks that we're seeing the compensation packages that are coming out through regulatory findings. What has not come out yet is my favorite filing, which is the proxy where you see the total executive and directors compensation. So what is his number two, number three,

number four making? Are they facing the same types of pressure on their compensations? If the trader makes a hundred million bucks, Goldman Sax doesn't report that in any filing, right, and and there are plenty of people who make more

money than the CEOs at these banks. To your point, and to the other point you're making, that's interesting speaking of Wall Street talent and hiring, you know, Jonathan Great black Stone this week had told me they're slowing hiring at black Stone, and they had a huge compensation package for their private equity guys last year, but that was mostly because they were able to sell a lot of companies at the beginning of last year. The Goldman Saxes

of the world. Are they going to bring in their two hundred analysts to their investment bank or three hundred anar whatever it is like City and Goldman Sex Works. Are the big banks still doing it or they paired that back. That's a great question. I don't know what younger people hiring looks like this year. My friend hughes Son who works at the NBC, what does Tom King

call it? The death star air? I'm agnostic, and so a news is news is news, and so when you look at what he had kind of calculated, it was interesting if you look at the severance packages for all the people who are being laid off at Goldman that if you average it out based on the number of people who are being let go, it's like a hundred forty dollars, I want to say, which is a very low end um in terms of pay scale, which means either younger workers are being laid off. Her back office

workers are being laid off for the most part. They're definitely retirements happening across Wall Street at a faster rate. So you are seeing people leaving on the higher end of the pay scale. But do you then hire a lot more young people coming in? I don't. I'm gonna I'll go down to Duke in a couple of months for my board meeting. I'll get the first hand skinny because that we get those numbers. You're they're nervous. I hear MBAs and young people are nervous. Can I just

talk about something else? Question? Talking about next week? Yes, I'm going out in Miami tomorrow. Nice it's hedge fund week. Oh of course. And they're not meeting in Cleveland, meeting in It's called Singer's Kim Kardashian, who is now wait wait all Singer makes sense to me, Elliott. Kim Kardashian

now has a private equity firm. My newsletters coming out calls her the buyout queen because remember, there's not that many women leading private equity firms, and so she's doing kind of like the keynote like end speech at this big conference. There are four conferences down there in Miami starting this weekend. Morgan Stanley's Big conference, a huge prime broker, the m f A conference, that Eye Connections conference. There's Tiger twenty one, which is a lot high worth individuals.

Oh yeah, that's right. We talked to the Tiger guy. Yeah. Yeah, So I'm gonna be kind of hanging out in a lot of lobbies. Nobody better that we would want down there than no. I'm excited. Uh and I'm Sanale is one of the best reporters that I know here. Can I carry your bags? Can I I would do that? Guys? So nice to me. Well, we look forward to we look forward to getting the download the skinny or whatever you call it from Miami from Shanale next week when

she is down in Miami. You'll call in right, call in excellent, excellent. Mike mcgloane's down there too. Maybe we'll get him to go over there and do some you know, frontline reporting on maybe you know, the E T F S and crypto and all. Maybe Mike mcglogan can talk to Kim Kardashian exactly. I'm sure you like that. Thanks for listening to the Bloomberg Markets Podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast

platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller three. Put on fall Sweeney I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio