Bloomberg Audio Studios, Podcasts, radio news.
This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along with Lisa Bromwitz and a Marie Hordern. Join us each day for insight from the best in markets, economics, and geopolitics from our global headquarters in New York City. We are live on Bloomberg Television weekday mornings from six to nine am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and as always on the
Bloomberg Terminal and the Bloomberg Business app. Pina Cheer of Academy Securities, writing for the first time in weeks, I'm optimistic about the outlook for the economy and for markets, but it is tempered slightly by all the measures it took to get here. Pete joins us now for more peak and Morning Morning. Where's the encouragement come from?
Well, first, I wrote that like at nine am on Sunday, So.
I'm buying not quite.
As encouraged as I was.
For me.
What I would really like to say see is a true pivot towards domestic growth. Right, Let's get the chipsacked money out there, you know, last Thursday at the cabinet meeting, a couple of the people talked about shipbuilding. I think we have to spend some money do some things domestic growth,
long term contracts. Either with shipbuild there's something to you know, that we can really get our hands around and grow, build up manufacturing without necessarily having to fight with the rest of the world.
Do you think it slightly We'll see that.
I'm increasingly dubious. I did not, like, you know, all the mixed messaging we got on tariffs over the weekend, right from Friday night, no exception exemptions to more exemptions. And I think I'm a little bit worried about bond yields as a whole. Partly I do think foreigners should be selling. I think you can get better yield than your own country. There's all this talk about, you know,
potentially fees on foreign holdings mar Alago Accord. But beyond that, if you just take away, I think we missed three things last week. The budget for the military. Trump wants to do a trillion instead of eight hundred billion. That's going to add to the budget. We just had very
large debt ceiling raises that gives them the opportunity. And finally, dose the Thursday More Cabinet meeting basically said they're targeting one hundred and fifty billion for this year instead of a trillion, and places like the Wall Street Journal things are reporting that they can't even come up with one hundred and fifty billion. So we are not on the right track on the deficit, which I think was everyone's
big hope. So I think bond yields lead US lower across the board right now, until we do something domestic to help.
Growth, bond yields lead US lower.
Can you elaborate on that?
By the way, coming out and saying that you're optimistic and then this litany of negatives really is just you know, yes, which gives you a thing change so quickly things are so what are you?
And I was very, very very so I was thinking, you know, we were like heading towards twenty percent down from here, it feels like it might be more controlled.
I will watch very closely today this. You know, when we went through the GFC and even the European debt crisis, one thing that always struck me as key when we moved to a new leg of the problem was you'd get the announcement you were hoping for, so in this case, tariff exemptions, and if you don't last a full day on the rally, it tends to mean the market's now looking through that and saying, Okay, yeah, these exemptions whatever, let's what we actually have on the table. And it's
a lot of problems out there. And the other part that makes me a little bit nervous that I think we'll see is if we stick to tariff deals. I think teriff deals are easy. I think we're going to go after trade deals, and to me, trade deals will require import quotas something like that on behalf of these other countries and possibly restrictions on what they can do with China. I don't think that's going to be that
easy for them to digest. So I think we'll learn a lot more in the next coming this week about deals. Tariff deals, I'm comfortable with it goes down trade deals, I think we take another leag lower.
You know, I've seen somebody notes where people talk about how exhausted they are and how stressful this period is, and I was thinking about why, and there's this flood of information and it's hard to understand what structure to even put them in. What have we learned versus just tidbits of information that are coming in at you in rapid fire. Have we learned anything from the turmoil of the past week. Are we passed peak uncertainty and heading into something that we can more concretely hold.
So the biggest thing for me that I can't quite figure out, and I think is really critical, is did China get sucked into being more aggressive on tariffs by how we play this out. Did we make it look like it was the US versus everyone China was more aggressive and now regrets it, Or did we learn that China really doesn't care, that China spent four years preparing for this and is really ready for the fight.
I lean towards the ladder.
I will give the people who talk about, you know, out of the deal in forty chess, that it could be the former, and I it's the former, that's great because China will have to back off.
It was the ladder.
We're not really prepared for this at all.
And place you went there is there any sign that China's coming to the tango? Do you see an I think it's so no.
I think you know we have to go back and we're about fifteen percent of China's exports, and you know, I think they exempted twenty five percent, whether it last or not, but I think that's also looking at it on the raw dollar value. I think from a profit margins, you know, we exempted probably China's most profitable things that they export to US. I don't see them come to the table. I see the rest of the world talking to them. We've been so, you know, which is very dangerous.
And again, if you're in that part of the world, you.
Probably have to play nice with China.
Their military is there, their nave growing, It's unclear what direction Trump wants to go on some of that, and the rest of the world I think is very tired. The uncertainty doesn't do well, and everyone knows it's going to take years to rebuild manufacturing, which is why I go back to I'd be much more optimistic if we
started doing things domestic. Maybe we buy ten billion dollars of navy ships, but they have to be built in the US shipyard, and that's going to be ten years of delivery, but it can start that process.
We've talked a lot about the pressure that it's put on Europe, and it's push Europe to do things that is good for Europe. And I just wonder if this pushes China to do things that is good for China in line with what the President would actually like to say from China, which is a rep banasy the economy towards domestic consumption.
Are you hopeful?
No, I just don't think Chinese consumed the way we do. I think, like quite frankly, no one consumes the way the US does. We consume a lot, and that's another concern about the economy. Right We're seeing some delinquencies tick up with all this uncertainty. I think China's going to try and do what they do trade with the rest of the world, trade with us, and we're going to figure out where they have the opportunities. Again, they've spilled the last ten years building up ninety percent of rarest
and critical minerals are refined in China. We can get them anywhere. I think that's not the hard part, whether it's cost justified to get it anywhere, it's the refining, and again that's going to take years. So China is putting all this pressure on us. And again, this was ridiculous five years ago. When we talked about this at Academy, Securities, the number of things that are really critical to military equipment that we are getting from China when we were
having all this friction with China was insane. So bringing those back makes sense. But we've done it in such a way that I think we've left ourselves vulnerable in the meantime.
So it seems like we haven't really gotten much clarity when it comes to understanding the off ramp between US and China negotiations.
We do have a sense.
Though, of what that off ramp looks like for President Trump to cater to a market, specifically the treasury market.
And I want to go back to something that.
You said, which is that you think that the bond market is going to lead the rest of the market's lower from here. Have we learned something about where that Trump put is in terms of what kind of levels of bond heals get him nervous.
A little bit?
But I think it was very easy with all the noise last week to talk about this as being foreign selling. This basis trade unwinding, right, So you know, FED said they would you know, incur, you know, they would protect the bond market, which I think they will, they'll buy some here there. I don't think we're going QE, but I think it was very easy to think of this
as a temporary thing. If the conversation starts turning as I think it might, that our deficit isn't going away, dose isn't being as successful as we wanted, we are not being spendthrift. I think that starts putting even domestic pressure on yous and people saying, well, maybe even with inflation coming down, we're not at the right level. So that to me would be a bigger problem, right, and it'd be hard them. So what can he do? I'm not sure at that point.
Okay, so if you get to like four seventy five, if we get to five.
I think they're begging to come up with structure.
I don't know.
I think they're begging the FED to work for And again, a lot of this happened overnight last time.
If it starts happening more and more.
During the day, that's where I think the fear comes out. But I don't know what he can do other than go keeping flip flopping on tariffs. And it feels like they're kind of tired of flip flopping. On TARRAF And the other part is with the sole deficit. Right, we were at one time and it was always confusing how much of that was going to be the case. But tariffs are going to help reduce our deficit. Well, if that income's not really coming in, where are they going
to get other income? And I think they're going to target foreign holders of treasuries again, there's talk about, you know, delisting some of the Chinese ADRs.
I don't see what.
That really does at this point, but you know that probably triggers yet another response from China. And I just keep thinking that we expect China to make these simplified moves, and we've talked about this before. She has learned something Trump one point zero. She was the first one tomorrow lago. Every time Trump said tariffs, they raise their hand trade delegation.
They have played this very differently. So just like Trump administration has had four years to plan this, China has had four years to plan this.
And it's beginning to look.
Like China spent a lot more time and money planning this than the US did.
It doesn't look like a negotiation right now. In fact, at least when I were talking about this, yesterday. It looks like the US is negotiating potentially, but itself of the moment, you're not hearing much back from China.
I wanted to finish on one final point with.
You, because you've been very consistent about this, is we work our way through learning season.
You've ready ready rised the.
Flag about the damage being done to the American brand, not about the attractiveness of US assets, but the attractiveness of US goods, US services. How much damage has actually been done.
I think we are going to see some of that, and it's this first wave is going to be a little bit difficult to tell whether it's just because of global economic weakness that foreign sales sell down, or you're going to have to start looking is there an indication that's ay Cadbury, for example, starts doing better than some of our brands overseas, and that I think will be the real key. Try and figure out pairs where Okay, here's a European or other brand and are there sales
declining or changing relative to the US brands. And I think that would be a big shock to the system, because I do think people believe and you can see it in some of the price action today that there's just this huge demand for our brands globally and it's only being affected by tariffs. I think we've diminished that as part of this overall trading strategy, and that's going to be harmful, and I think we may even see
some companies talk about it. I think it's too early this quarter, but as this goes on, I think that becomes an issue for the rest of the year.
Interesting want to watch, Peter, it's going to see you. Thanks for dropping by bitter chair there and Academy Securities. If you look at for stability in the bond marketing, you've got it. At the moment, we're down across the board. Here across the curve, we're down six or seven basis points at the front end on a ten year maturity, the yield is down six to let's call it four
forty three. Let's turn to the economy. US consumer sentiment falling to its second weakest reading on record, while inflation expectations saw to multi decade highs Nita Richardson of ABP, writing, inflation has made consumers cautious, but rising incomes can help cushion any tariff driven price increases if they come neither joined us now for more need a good morning. Let's just focus on the data and get away from the politics. Or income is still rising, you.
Know, we're seeing that when we look at payroll at ADP, they're certainly rising, not as fast as they were two years ago, but at a healthy clip, faster than before the pandemic. There's also a different source of income that's really important to think about, which is the housing market. We get housing starts this later this week. Home equity for home owners is up almost nine percent from a year ago. So no, it's not the highest home equity
we'd seen on record, but it's close. It's like the third highest, and so that's another level of question.
I don't mean to be.
Too polyann on a Monday, but I also want to give a real data reality check to all the uncertainty that's out there in the market.
I was just going to say, you're not complying with the narrative. I love it.
I think it's great, and I think it's good to push back against it because there's so much gloom and doom about companies who are frozen, who aren't going to be hiring, They're not going to be firing, but job mobility just isn't there. You're still seeing just some signs the consumers are maintaining resilience through other means, even with the stock market that may be rallied last week, but certainly didn't feel like it, and even with the idea that it might be harder to get a raise.
I don't discount the sentiment because sentiment usually triggers certain behaviors. And you see downbeat sentiment with consumers, with homebuilders, with CEOs, everywhere you go. There is a pessimism in the outlook. But then when you turn to the raw data, this week is super important. Why this is the reference week.
This is the week that the BLS will start counting the number of people who got paid for their employment report, and this is the week the ADP will report in of two weeks to talk about the labor market.
And if you look at this week and you.
Compare it to March, what you're seeing is that hiring is still solid. And if you look at one area of sentiment that is holding up worker sentiment, we're actually going to produce a worker sentiment index tomorrow, publish it at adpresearch dot com. What you'll see is that while consumers are downbeat, workers are highly engaged.
They're plugged in.
Maybe it's because they're cautious about their job loss, but they're showing off the hair or engaged, and they are productive and they're doing so because they want to make sure that they keep those jobs as they move into the rest of the year.
So qui quitting has died basically is what you're saying, which is actually.
Pursueing really welcome. That's fantasting less.
I'm curious you say that hiring is remaining solid. Is it in specific industries they give you a sense of contentially whether this is a resilience factor or whether this is people getting old and needing to cater to them of getting fatter.
Yeah, that's a great question, because we really do see a good news bad news scenario there. We're seeing hiring across firm sizes. That's good news, especially if you look at small businesses who are price takers in the global input market. We're seeing solid hiring across the board, but not every industry. In fact, if you look at consumer facing industries or somewhat discretionary like leisure and hospitality, it's been weaker. If you look at retail also weaker, so
we're seeing hiring and ironically manufacturing. So we don't know if that's pull forward hiring they get ahead of some of these tariff and trade changes, or if this is a real rebound and we're seeing it in B to B services but not so much in consumer facing. In the series, that is a sea change, and it's tied directly to consumers and how they're feeling about the economy.
You talked about the importance of expectations. Let's talk about how consumers are feeling about this economy. You med Channel Friday consumer sentiment almost three year low, inflation expectations, multi decade highs unemployment expectations the worst since two thousand and nine. Are you seeing anything in the hard data to validate consumer confidence that week? That poor that we saw on Friday.
On the labor market, now, layoffs are at a two year low. They continue to hover around those two year lows in the private sector. Different for the federal government, but in the private sector, we are not seeing that kind of upturn and upheaval and pause and hiring that is being projected or picked up in the sentiment. Now, things can change rapidly I'm not saying that the outlook that we're seeing right now is going to be consistent
six months from now. But if you're looking at the starting point in the baseline, you're seeing, and I think Chair Pal said this and his recent remarks, a labor market that is solid and continues to perform.
Still this massive, massive sprint lace of bestween the soft and hot data. I keep going back to that headline from you, Mitch. To see unemployment expectations down at the worst levels we've seen since two thousand and nine is pretty staggerant.
It was funny you were mentioned that. In the past couple of weeks.
Lori Cavasina put that out in a report, saying that in all of the earnings calls also, corporate executives have been talking about how this reminds them of two thousand and eight, This reminds them of twenty twenty, This reminds them before that of the two thousands.
You see that in the.
AAII sentiment survey as well. So at a certain point, have we really reached a new paradigm shift though, where suddenly the soft data has not been predictive of the hard data. Are we going back to something more normal where you would normally see a correlation there.
So the Federal Reserve is not blinking and Native the Federal Reserve will be meeting in early May. That meeting and Cluthes, we'll get that decision on May seventh. What you make have kind of navigated things so far and what would you expect to see in a few weeks time.
I think the Fed is navigated the way Main Street has. They're waiting and watching. There hasn't been any big money moves that we can identify, and I think it's too early on the policy front to make any firm movements. And that's what you're seeing from the FED. But it's also what you're seeing from small businesses and medium sized businesses who can't change operations on a dime. Consumers can't
change spending patterns on a dime. So what you're seeing is an economy that started from a solid baseline in wait and see mode, just like the FED.
You know, there is this discussion that we had and it was off air, about whether this FED is going to be really just targeting dysfunction in the treasure market or whether they actually were going to be looking at levels we're not going to close the spreads until the spreads get too wide, and then we're going to close them,
akin to maybe what the ECB has been doing. I am curious about this theory that Neil Koshkari put out over the weekend saying that we at the FED have no ability, zero ability to affect that destination of your yields as investors try to get some sort of price discovery here. Do you believe that or do you think that there is a level at which they do step in.
Well, I think this comes to your sentiment momentum distinction. I mean, the FED operates at the short end of the curve.
That is their mandate, and.
So I think if you take the literal interpretation of the Fed's actions, yes, they are not responsible for the longer end of the curve. But we know that the FED has a huge sentiment role in all of us in itself, and just by their forward guidance, they can change the way the bond market reacts. So yes, and no, pardon thoft, we're still back in that distinction.
So I guess to sum it all up, do you see the unemployment rate rising quickly enough to get the FED engaged in terms of cutting rates or having some sort of stimulative effort in the near term, in the next two weeks, the next three weeks before, or the next two months, right before the economy really can turn.
Not in the next month.
No, we have not seen the transmission mechanism multiply to an effect that it hits the real economy in a way that you would see the kind of staggering job loss that would justify on its own a rate.
Moved by the Fed.
The labor market is still holding up two hundred and nine thousand private sector jobs created according to the federal government last month. That's not going to be a downbeat measure by anyone's estimation.
NATA, it's going to say, as always, thanks for dropping by NATA. Riches in that of IDP, go to surround a Tengo here in New York, Hendrida Trice.
If I had to promise Hendra go to see you. Let's just get to this.
I'll be allowed exemptions or not do they exist?
I mean under the AEPA tariffs that went on that are already at twenty percent, there are no exclusions except in the case of like if you're giving a donation from a religious and the semiconductors are tariff, the pharmaceuticals are tariff. Everything coming in four hundred and ninety eight billion dollars is effectively tariff.
So it's just going to get worse from.
Here with similar with all these different buckets. Speaking of getting worse sectoral tariffs, what would they look like and when would they be announced?
So I think that the two two tariffs are the most pernicious kind that we can get, and in the twenty twenty five environment, thirty day comment periods are pretty much.
All we should expect.
We saw with the auto investigation back in twenty nineteen, was it that they don't even necessarily release the investigation after it's confirmed.
You know, they're just putting these tariffs on.
So I think for pharma and for semiconductors, the worst case scenario is that sometime in this thirty sixty ninety day window, the tariffs go on, the comment period happens, and the tariffs are on.
Before the summer.
What's the strategy here, That's a great question.
I mean, they want pharmaceutical manufacturer back in the United States. We know that that takes five to seven years to get the various approvals for even opening the facility, let alone having the workers come in and actually do the manufactur on those kinds of products. I think that the
semiconductor space is exactly the same. When I'm on calls with investors, they're talking about, Thank goodness we had the investment from the last administration into semiconductors, from the Chips and Sciences Act of Bipartison.
Build it passed years ago.
To keep providing any kind of support to the industry because it's going to get slamed from the tariffs.
I'm just asking, because the complications here are pretty dramatic. Trying to keep track of which tariffs have gone on. Where is a gold task when you try to talk about what the actual effective tariff freight is, let alone, how you plan for the future and what that could be with additional rounds of tariffs coming on.
What are people telling you?
That's the stories that I hear the most are the anecdotal data points. As you were talking before about connecting the soft data to the hard data. The bankruptcies that they're expecting, the seizing up at the ports, the manufacturers halting, hiring, halting production, keeping their products on ships.
In cargo ships.
There's a lot of reminiscing about covid era when the ships were just in the port. We're going to have to all go back to like monitoring the Pacific Ocean and see what.
Kind of fleets are out there.
That's what folks are talking about now and anticipating seeing in the hard data in the next couple weeks.
It just got a message from a Limbug subscriber. This sounds very chaotic. The market seems to have price peak, chaos is behind us.
What are we missing? What are we missing?
I don't think the stories have come out yet about how this is going to impact actual domestic manufacturers who rely on foreign imports. You were mentioning critical minerals before. How are you supposed to make your windshield wiper sensors if you don't have the magnets that go into it. So if you stockpiled enough in the last couple of months to get in around that, you have some certainty for a couple of weeks. But it's not a sustainable situation.
I think the hard data is going to come out next for the next couple of weeks and months, and these tariffs are not going to come off, especially if they're done during under two thirty two, those are the most pernicious.
Three oh one is pernicious. I mean these have real standing power for years, and.
Then we need some relief taxes. What's changing with the tax push at the moment?
Man, You know how I feel about this. The tax component they're now President Trump is talking about is tax cuts and deregulation. You are not permitted to pass deregulation via reconciliation instructions, and Democrats will not be working with Republicans on a crypto bill or any other deregulatory legislation.
So unless you like the emission standards.
Components which are going to get produced in a what seventy five dollar barrel oil situation, you're not going to see a deregulatory push anytime this year, and certainly not until you get certain agency officials seated in their positions.
In the first place.
And then the tax bill I think is going to take until the end of July, and as you know, it includes four trillion dollars in deficit increases and very little in the way of new stimulus. So I think there's a disconnect between the narrative and reality.
Given that is there a loss of power that Trump is having or a loss of a clutch over the Republican House Caucus.
I don't buy that argument.
They passed the budget vote last week, and I think that was the biggest hurdle. The next step is are you going to vote for tax increases on every single American?
Or are you going to vote for this bill? And that's a cut and dry. The whip is easy. All members are going to support that.
There is a theory that if things get chaotic enough, and if some of these proposals are outrageous enough, there is going to be the ultimate check, which is going to come by congressional action against some of these tariffs or potentially a court action. Do you see any pathway to that or are people just wishful thinking?
No?
I see no path for that either. If you can get six or seven Republicans to join on to a Senate bill, that is wildly insufficient. I think that President Trump needs these members through this budget vote that happened last week, and now through you know, let's call it Memorial Day or July to pass this tax bill, and then he doesn't need them at all, and no legislation is going to pass.
There will be no Reconciliation Authority. There will be no more legislation, which.
Is, by the way, the playbook from the first term, where we got a tax bill initially and then spent the next three years doing tariffs.
And that's what I expect here.
Just quickly we have the point where they're all quote saying treasury yields to each other down on campbel Hill.
No way, not that yet.
I'm not sure we'll ever be there. I wouldn't expect that.
I hope we never get that, because if we get that, we've got major problems.
Yeah, at one level, I kind of hope that they do pay attention because it does actually matter suddenly, if you have a fifty basis point increase in tenure yields, that increases by billions of dollars the.
Amount of the United States is paying. So I hope they do quote those treasure yields.
Congress Members, if you are listening, please get a Bloomberg termin'll take a look at that ten yure yield, take a look at a thirty year yield.
That's a sales pitch. I'm right there with you, and please get that Bloomberg terminal. Clearly, the President was looking very closely last weekend coming into the trade and weak.
Yeah, I got yippie people got a little nervous. But he dealt with that in one statement, and that's what he said. The issue is, do we have a true sense of where that Trump put is.
Do we have a sense of what level, what type of.
Chaosk potentially end up dealing with some sort of response from this administration.
Henry answer, it's good to see you. Thanks, thanks for dropping by. Thank you, Henry to trace their evde upon visit. Dorman Sachs adding to banking optimism after posting a record revenue hall from its equity trading unit.
The stock is up by two percent.
To discuss some place to say is David Edison of Fannessy Funds. David, Welcome to the program, sir, appreciate getting some time with you. We've heard from Jape, Morgan from Morgan Stanley from Goldman. How would you grade the quarter so far?
Well, the quarters were great. I think the industry is showing that they have done a great job of dealing with credit and liquidity and capital managing the buybacks. So I think the you know, it's like that's all in the past, unfortunately, but I do think the industry is in great shape to weather what's ahead. I think your conversation with Gerard Cassie this morning sort of put it in focus. But I think the industry is in great shape.
Doesn't mean the stocks are going to double or triple or go down fifty percent, but I think as an industry they're ready for whatever happens in Washington.
I think let's talk about that as a portfolio manager, just how defensive do these names trade in growth scares? And how has that changed over the last decade.
Say, well, I think since you know, two thousand and eight, we've been worried about a credit cycle, worried about a rate cycle.
We've had an inverted curve.
So the financials have been, you know, frankly not the place to be for ten or twelve years, and I think the color of my hair shows it. So I think the hope is that as we go forward here, there's going to be a you know, a little less pressure on them as they you know, in a sense, the terrorists are not attacking financial services products.
They're attacking physical goods, and so.
I think people maybe are going to be more worried about the physical good traders and makers than they are about the financial guys. So we'll see. I mean, Wall Street finds a way to make money in all environments. People need to lend money to grow. The economy is not going to go to zero, and so I think, you know, these companies could be the safe harbor that they haven't been for the last ten or twelve years.
David, the narrative around banks has shifted. At the beginning of this year, it was the growth stock, given the fact that there was supposed to be a wave of deregulation as well as a boom in mergers and acquisitions and all sorts of deals. Now it's a defense stock, where suddenly banks are buying back their own shares and pretty large quantities. We just heard about a forty billion dollary purchase from Goldman Sachs.
Which is it? Is it defense or offense?
Well, when you sort of have one guy deciding what the world trade environment's going to be and a bunch of other stuff, I think, you know, you look for defensive names, and that means you look for a good balance sheets, You look for capital, you look for liquidity, and you look for good managers. And I think the banks have that and so you know, this weekend was pretty quiet on the Washington front. So the market's up.
So I think the general move of the market, I think is, you know, the market generally wants to go up in my view, and it's being held back by sort of one guy making decisions about how the world's going to function, and that I think will calm down and we'll I think we'll be okay.
On the other.
Side, another way of sort of approaching the same question is which banks are best positioned for the next phase of whatever is to come. Is it the ones who are going to benefit from volatility and markets trading revenues, some of the potential other opportunities there, or is it going to be the lenders the Bank of Americas They're going to go out and actually be able to create credit at a higher rate based on where the treasure yield is right now.
Well, I think one of the concerns I think that's coming up on the analysts that I've talked to and the companies that I talked to prior to earnings was that is this disruption going to really hurt small business and therefore hurt the lending of the traditional banks that we haven't heard from.
Yet, but we will in the next in the coming weeks.
I think the big banks, you know, they have the earnings, they have the in the sense network effect of having a lot of customers and a lot of data inputs about what's going on. But I think the overriding thing about this industry is that we need new products, we need innovation, and we need companies to do transformative acquisitions to kind of get them back on a growth path.
They've lost so much share on the lending side to private equity and private debt and other sources of income that the loans just don't grow anymore, and so they need to do other things to get out of that box that they're in. And hopefully that will happen as we move forward with the new administration.
We've had lots of people say the same thing, that we're expecting consolidation, particularly between the regionals and the smaller lenders. David, what are you anticipating for the year ahead on that front, Well, it.
Started off pretty good. I think that, you know, I don't think that's.
Going to stop.
I don't think whatever the administration is doing now is going to stop that. I think at the end of the day, the smaller banks know that they're losing share. They can't invest in technology, it's hard for them to compete with these new platforms that seem to be popping up every day. They're competing for deposits and loans, and so they need to get bigger. And that's, you know, sort of the process that you see that in the marketplace.
The bigger companies have the higher valuations and the smaller companies are going to being left behind. So I think the market is telling you something and hopefully the managers are hearing that and seeing it.
David, appreciate your time. Tricky moment for you all, I'm sure, David Allison of Fantasy Funds. This is the Bloomberg Seventans podcast, bringing you the best in markets, economics, antient politics. You can watch the show live on Bloomberg TV weekday mornings from six am to nine am Eastern. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and as always on the Bloomberg Terminal and the Bloomberg Business out
Mm hmm.