Joining us now is Howard Lutnik, Chairman and CEO of BGC, also chairman of Cantor Fitzgerald. And let's talk about performance for a second here, BGC. You looked at equities, it was down, every other business really was on the rise. What was driving performance and where are you going to be making most of your money from this year?
So BGC for years was in the market where there was zero interest rates, and so people sort of forgot about us. We're the world's most valuable wholesaler. So everything in the world that you guys talk about in trade, we're the wholesale market. Like who does Goldman Sachs trade? Who does JP Morgan call when they want to do
their trades? They called BGC where the wholesaler. So with interest rates back, our stock was up ninety percent last year, up thirty percent this year so far, and our business is on fire. Revenues up eleven point seven profits up nineteen point two percent.
And the most exciting.
Thing we're launching in September pretty soon, a competitor to the awesome monopoly the Chicago Merchantolic Exchange. They do one hundred percent of futures in America and now FMX, which is run by the largest wholesale in the world. We brought in some partners, ten of ten of the largest banks and trading firms in the world, JP, Morgan, Goldman, Sachs, Citadel, you name the list, they're all on the list. In September, we bring competition. So I think our stock's going to
be fire. Obviously, we're going to try to do a ninety percent again, right, we got some work to do in the last bunch of months.
Let's talk about that competition.
Because, of course, Terry Duffy of CMEA has had some words for you, both on his earnings call and in the media, and it was one of actually the first question on your earnings call basically Terry Duffy criticizing you clearing trades through LCH when it comes.
Specifically to treasuries.
We know that we've reported that you've struck a deal with LCH rather to basically cross margin with treasuries. Do you foresee any issues there?
No, That's what I found so fascinating. You've got the CEO of the Chicago Market dog changehere. It's seventy billion dollars right with the monopoly on the only exchange doing futures. Now here we come with our competition and we are just in his head. Oh my gosh for him to talk. He said, he said nasty things about me. I mean, imagine saying nasty things about the guy who's going to compete with you.
Well, he says, he's not going to sit by and watch who takes share. At the end of the day, I think Katie and I are both wondering, have you talked to him?
Well, what's he gonna do? Do a dance while I take share? I mean, look, he's got one hundred percent market share. There's no chance we don't take share. And we're going to take serious share because we've got partners of all the big banks, all the big trading firms are our partner. So LCCH clears interest rate swaps, right, so dollar based interest rate swaps, so for futures are
really a future for swaps. So if you can do both things together, it's really efficient, right because you're just basically it's like stock few which you.
Talk about and stocks, right, they're good hits for each other.
That's what interest rate swaps and swap futures or SOFA futures are. So we will have amazing cross margining opportunities, and therefore we're going to bring this competition and investors have not really understood how exciting that is within BGC's stock. So I think what will happen is we're going to launch in September. We're going to come out strong. But it's a marathon. This is not sprint, and you know that.
Assume how much volume could you do in year one?
Well, I think year one we're going to do.
Our goal is to have the world record open interest, meaning trades that are sort of parked at our exchange, where investors are sticking it out with us. They're not just coming and going, they're staying. We expect at the end of the first year we will have the record for the most open interest ever for a new exchange, and that will bode incredibly well. So that's what I'm looking forward to. That's the ribbon we're going to cut. The most open interest ever for an exchange.
Well, we have that on record, so we'll have to check in with you on that. App good with that, But you mentioned the stock. I want to talk about the stock because I was checking it's up eighty nine percent over the past year. But you pointed out in the earnings call that you only traded ten times earnings, and you cited that as a reason why you're buying.
Back the stock. What do you think is a more reasonable valuation. So we're a member of.
The S and P six hundred, which is sort of like the mid cap stocks. We now, unfortunately, we've got a long way to go to catching Vidia, you know, instead of for three trillion sort of world. But so you know, our stock is eleven percent revenue growth, ten percent for the year, right, just had eleven this quarter and nineteen percent profit growth. If you compare that to other SMP six hundred stocks, they trade at twenty five
to thirty times, and we're trading at ten times. And you say, okay, other stocks in the S and P six hundred, and I said, well, those that trade ten times earnings have zero revenue growth. So I'm trading like a zero revenue growth company when we're really eleven percent top line revenue. And the reason for that is because all those years of zero interest rates, people sort of
forgot what a great company we are. You know, I used to describe us like Jillette, you know, every morning, all the men in the earth wake up with a beard and some of them need to shave, not meaning much, but some need to shave.
Bonds always, there's just going to be more issued.
If you're in the bond business, I promise you next year there'll just be more to trade.
Good business for you as well.
Speaking of trading, you were bang on when it came to kind of seeing the direction of interest rate cuts this year. You never really thought we were going to get five or six. You said September was when you would see one. Now the market is aligned with what you had said many months ago.
How about that? Right? I said it in December.
Now the whole world believes they're not going to cut today, and they're.
Going to cut September. So they're basically we're saying, yeah, what about what about next year?
You think about the pace of cuts moving past September? The election coming up, a lot of people are thinking about what it would mean for Trump versus Kamala Harris to take the office, whether those tariff policies will be inflationary going into next year. How much room will there really be to cut rates going into twenty twenty five.
I think both candidates both would like to cut rates, so that's good for the bond business.
Right, when you have everybody.
Running, you have one hundred percent coverage, you have people in politics want to cut rates, right, So I think we get a September cut. I think that's in the cards for sure. And you start Germany had negative growth, I mean negative growth from such a big economy like that is going to drive all the central bankers are now looking to cut, all right, So it's really that's sort of the word out there now cut. So September. I think the market's building in a one hundred percent probability of a cut.
Now, how about that. That's a good percentage itself, sort of it.
I think there'll be some cuts next year. But you have to remember zero is just not a thing. Okay, it was a manufactured thing to get us out of the Great financial crisis, right, So it's just and the pandemic.
It's just not a thing. So I think a couple of cuts.
Maybe in the mid fours is a reasonable rate for us to live and breathe in. So I think two or three cuts next year. I'd say two cuts next year, one in September. And that's the whole thing. It's not unfortunately it's not that exciting. It's not seven cuts and then seven hikes and all.
The way back to zero.
It's just not no chance, zero chance. We have a good economy, we have good interest rates.
For the Fed, it's their tool, right if they at zero, what tool do you have that you can't?
What did they do? Quantitative easing? You're like, how is that even on the menu? What they buy all the bonds of America?
But you have to remember, as the FED runs off its balance sheet, Okay, that means I'm not buying bonds you are.
That's tightening tightening.
It's like it's cutting you know, it's it's cutting off your credit card for the economy.
So, you know, if you think about the path forward, a lot of people are waiting for stability in the markets to finally see more IPOs. Candor Fitzgerald, big underwriter in the IPO market, what's your expectation for the year ahead and do you see bigger or smaller companies really coming to fruition here? It's really a market that is hoping for that small cap rebound.
So canter is in a really good place.
I mean we're third so far this year, and it's you know, we're going on, you know, going into August, so we're doing it.
We're in a really good spot.
Caner's got a great healthcare franchise. Now we don't do the big giant companies. We do the small, smaller companies where we focus on raising them for phase two and phase three drugs sort of. The one of my favorite days of the year is our healthcare conference because we're not sort of pumping up big companies. This is where all of the new developments in biotech and biopharma present themselves and it's so fun to see the things that
are happening and we're helping them raise money. So our IPO business is very successful.
I think the.
Market twenty twenty five, you're going to see the IPO market open, and you're going to be talking about companies and on this show all day, you're just gonna have fire talking about because there's so much pent up demand, so many companies want to go right, and as the market starts to crack, which we're feeling now right, they're gonna start coming.
You're gonna start.
Seeing three a week, and you're gonna start seeing four a week and next year.
By the middle of the next year, five a week.
They're gonna be coming hot and heavy, and you guys are gonna be awful busy on the show.
Well, I know that.
You're hosting a dinner on August second, basically asking attendees to pay twenty five thousand dollars to attend, and even more so if they want, of course a photo.
It's gonna be a great chick out. It'll be really great chicken h.
But how much are you looking to raise here? Are you trying to set any sort of record here when it comes to fundraising.
I think we'll raise over ten million dollars for the evening, and I mean, what an honor to have President Trump come over the house. We've got really a great, great crowd will come. I'll probably keep it to one hundred people so because I don't want it to be too big, and it's really gets to talk. He gets a meet and he hosts a roundtable. So the biggest donors who pay two hundred and fifty thousand sit at a dining room table and spend a half hour just asking him
questions and talking. And you know he needs money, right. It's a race now. It's a hot race now. And you know Donald Trump needs the fundraising, and I'm trying to help everywhere.
I can to that end.
You actually donated to the twenty sixteen Senate campaign for Kamala Harris. How do you think her entrance into this race changes the game?
Well, putting on me what my wife does is not really fair.
So interesting.
No, there's a good balance in every marriage. There's a good balance. But my wife actually has moved over to Donald Trump, which is unusual for her because she says Israel is her number one you know, her number one policy, her number.
One issue, and she knows that.
Donald Trump literally sat down with my wife and told her, I will be the best president for Israel. I will protect Israel and take care of them. So you know, in my house we have unit inmity around Donald Trump.
And of course you have big plans at Canter Fitzgerald with FMX as well. But if Donald Trump were to win, are you angling for a spot in the administration?
Would you serve?
You know, the rules are if the president asks you to serve, you kind of have to say yes. I'd rather help him with transition, you know, I'd rather help make sure they put great people in the administration. I mean That's the most important thing is you have the people around you are smart and capable.
So I'm going to offer to help him there.
But if he asks, you got to do what the president asks you to do. I'm in love with Running Canter Fitzgerald and BGC though, I just want to be crystal clear.
I love I want a little story time.
How did your relationship with Donald Trump develop and how did you become such kind of a critical part of this fundraising effort.
Well, I've known him for thirty years. I mean, when you're in New York, I've known him for thirty years. If you go back and look at the first season of Celebrity Apprentice, I was a guest appearance, right, So, I mean I've felt him a long time. This isn't like politics, right, this is I've known him a long time.
He's extraordinary.
I went with him to a Minnesota rally, okay, and you know, I didn't know what to expect. I've never been to a rally with him. It's like going to Mick Jagger without Mick Jagger to a rock concert. They're lining, lining the streets, thousands of people lining the streets, fifteen thousand people in the arena and twenty five thousand outside watching on a jumbo Trump and you just can't You just can't understand what that feels like. And then when you see it, you're like, holy moly. So they let
me introduce jd Vance. So I walked out in this rally, right and there's I mean, they're cheering.
It was a rock count. I thought, you know, a guy like me.
Doesn't usually feel like a rock concert sort of guy.
Now, where do you worry about some of the comments that Jade Vance has been making lately about childless women and what it could mean for Trump's campaign?
I think the vice president quickly moves to behind the president. You know, lots of things people talk about they try to make the vice president something. But the vice president's job is to strongly support the president of the United States.
That's their job.
So are you not then concerned about the speech he gave it the R and C for example, which was very anti Wall Street.
Well, I think he wants to bring He wants the common people, right, the people on his neighborhood where he grew up to feel that they've got a voice in the White House, which I think is really important. Right, And I think it will resonate with the people on main Street.
But the fact is the only.
Policy that's going to matter is by the President of the United States. For both parties, Whoever they pick is a good running mate, is a smart person. There a heartbeat away from the Oval Office, as we know. But I mean, and Kamala was closer than most people.
The Trump trade in your view as somebody who knows him.
I think the Trump trade is a broadening of the base, right.
So what we've seen is this rally. He's been the Magnificent seven right.
He's going to cut corporate taxes, which is a broad base move. He's going to cut regulation, which is a broad based move, and he's probably going to put on tariffs on China, which isn't good for the Magnificent seven. So I think what you've got is a constraining of the Magnificent seven and a pounding up of the rest of the market. So I think if you were going to do a trade, it.
Would be long the broad base right.
Right against the Magnificent seven, which is sort of the opposite of what we felt for the past year.
So Howard, somehow we only have a minute left with you. You were with Donald Trump in Minnesota. You were also with him in Nashville at that bitcoin conference announced that Canter Fitzgerald announced a new multi billion dollar effort in bitcoin financing. Can you give us any details on what the potential timeline for that is?
Sure?
So you know securities markets, everybody finances securities and nobody finances bitcoin. Bitcoin is market cap is over a trillion, three hundred billion. So we've figured out how to do it, how to custodian it will work with other custodians, but they're going to have to work with us because we have to control the bitcoin, can't let it get hacked.
And we're going to start lending on bitcoin. We're going to start with two billion dollars of loans and then we're going to go up in increments of two billion dollars. So it'll be a huge business because it's a huge asset and it's only bitcoin. We're only focused on bitcoin. But with Canter Fitzgerald will be financing bitcoin. And I think it's a fun business and it's a big asset class, but it's more.
Like a commodity. People talk about it like it's a currency.
Get by bread with something that goes up and down, so I think of it as a commodity.
Howard, I got a producer in my ear. We have to have you.
Back very soon, maybe in September. Our thanks, of course to Howard Lutnik. He is Chairman of Canter Fitzgerald