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00:00First of all, how's the U.S. economy doing, actually?
00:02How's the U.S. consumer holding up?
00:04The U.S. consumer's doing fine.
00:05And so for the month of November 25 versus November 24,
00:10the amount of money are 70 million consumers
00:12who's pushed about $4.5 trillion plus in the economy every year.
00:16They pushed in about, for that month, about 4.2%, 4.5%.
00:21And so it was good.
00:22And around the Black Friday in the U.S. and Cyber Monday
00:25and all the things they talk about, the spending was solid and good.
00:28And it's consistent with a growing economy.
00:30Our team has economy growing next year at 2.4%.
00:32So Candace and her team, who are the best in the business,
00:35you know, that sort of thing.
00:37But everything we see in the consumer side sets that up.
00:39Is there a worry about affordability?
00:41So we hear it from certain pockets of consumers.
00:44Yeah, there is.
00:44And so this is why you have to sort of sort the agro-economic impact
00:49of the consumer, our 70 million consumer spending,
00:51versus the different deciles of income and things like that.
00:56But if you sort it into thirds in our institute that writes on this,
01:00the bottom third is growing.
01:01It's just growing at a slower rate than the middle third or the top third.
01:04And so that's what you hear about the K economy and things like that.
01:07The good news is with the unemployment rate at 4.4% or so,
01:12the new claims for unemployment is still at a very low rate,
01:15nominally compared to where they compare it to 19,
01:17but the actual will ever force is bigger.
01:19Those are all good things.
01:20So the people are working, they're getting paid, et cetera.
01:25But they are worried about prices and affordability.
01:27And I think that will dominate the conversation until it settles in.
01:30Would a Fed cut help?
01:32A Fed cut helps.
01:34And our team believes the Fed will cut next week.
01:37They came to it slowly because the inflation is still higher
01:39than the target rates that the Fed would have.
01:41And sticky.
01:43It's sticky.
01:44Although right when they started raising rates,
01:47people told me it takes five years to actually squeeze out inflation.
01:50And people just aren't patient.
01:51And so it takes a while.
01:53So it's been coming down.
01:54And it's sort of sticky is that it's not making the incremental progress
01:59a little different.
01:59But I think the belief is because the labor market's softer,
02:03they'll lower rates.
02:04That's how our team got there.
02:05But we get into the hand-to-hand combat of next month and next week.
02:09And the question really is, longer term,
02:12our team thinks the Fed gets down to about a 3% Fed funds rate.
02:16The 10-year rate sits in four and a quarter, four and a half.
02:19And that's a more normal rate structure for the United States.
02:21And I think that's not a bad thing.
02:23If you have a little higher inflation, a little faster growth,
02:25and a normal rate structure,
02:27then I think the incentives created by very low rates and stuff
02:30are out of the system.
02:31And I think people can then act on economic incentives.
02:33And so what does that mean?
02:34That animal spirits are back in terms of also IPOs and M&A?
02:38Or does it take a while to settle?
02:40The market, it was also a little bit of a tistle
02:42because of the possible new Fed chair being Kevin Hassett.
02:45Yeah.
02:46I mean, I think you've got to...
02:48I walked the trading floor this morning.
02:49You've got to sort out people who worry about five basis points
02:51on the 10-year versus people who worry about the next 50 years
02:54in the United States and a strategic view of the world.
02:57But if you look at companies, you know,
02:59the activity kicked up after the new administration came in
03:02because there are a couple of things.
03:04One was that you could get deals through the system,
03:05get them done, especially in the United States.
03:07And that's important.
03:09So in our industry, which we are not allowed to make any acquisitions
03:12and deposits by the law, it's been on books for 30 years.
03:15But in our industry as an investment banking firm,
03:17our advice is you can get deals done.
03:19And you're seeing the time frame to approve a deal drop by half.
03:22And that's important because the idea of a deal being open
03:25for a year and a half, that's tough on the companies.
03:28And so that's good news.
03:29Then the second thing is settling out the major policies
03:31that you guys talk about every day on trade and immigration and tax.
03:36Those are settling in so people can see that.
03:38There's still work to do.
03:39But I think that that means that companies can look
03:42and discount cash flows and make decisions.
03:44And then even a rate structure that's higher
03:46as long as it consists that they can plan into it.
03:49Brian, you know Kevin Hassett.
03:51And you've known him for quite some time.
03:53What kind of chair do you think he'll be?
03:55Will he bow to the president's will?
03:57Well, he's got to be nominated first.
03:58So that's let the president do his work and make his decision.
04:02But look, I think all the candidates are highly qualified.
04:05Our job is to work with him.
04:06I think the Fed as an institution has to be independent.
04:09There's no question that.
04:10I think the U.S. Fed is the example for the world
04:14of how to run a centralized Federal Reserve with independence.
04:18There are parts of it that there's a lot of commentary
04:19about the supervisory side and the reach and the activities.
04:23That's a separate question.
04:23But the Fed independence on monetary policy is key.
04:26I think Kevin and all his colleagues that have talked about
04:29would all believe that and understand that and drive that.
04:31Brian, there's a lot of geopolitics today.
04:33Macron's in China.
04:35We have Vladimir Putin over with Prime Minister Modi in India.
04:39There's a lot going on with Ukraine.
04:41How do your clients work around this internationally?
04:44So you say some of the tariffs have settled.
04:46Do they worry about anything more for 2026?
04:50Or do you think, again, they're ready to do deals?
04:52Well, generally there's things that you look at.
04:55You say, I can have an impact on this or control it
04:58or I can make a decision on it.
04:59And other ones you can't.
05:00And kinetic wars, war in Ukraine, getting the Middle East settled,
05:06Israel and the Gaza Strip settled down.
05:09The debates around Taiwan.
05:11All these things are on people's minds all the time.
05:14But the reality is there's not much you can do about it.
05:17Trade and tariff is different because that comes down
05:19to where they might locate supply chains,
05:20how it'll affect the cost of goods sold.
05:22And if you watch through the summer, it's become clear that there's sort of 10%, 15%, 10% to 15% increase
05:30is generally across the board result.
05:32That's helped business understand it better.
05:35And so I think that's been worked into their plans.
05:38And that's why you're seeing the relief come off from Liberation Day where people were very confused
05:42to now, people have generally said the issues of China and national security and stuff are unique.
05:46The issues of solving the Russia-Ukraine war are unique.
05:49But I don't think businesses sit there and say if that doesn't solve or does solve,
05:52if they're in very specific businesses, yes.
05:54But generally, they're more worried about the ability to address markets and drive.
05:57And I think one of the things the administration's worked on that gets lost in the percentages and count
06:01is the non-tariff barriers.
06:03And those are real barriers, both in the EU, frankly, through regulation and stuff,
06:09and in China and other places.
06:10And working on that is important for multinational companies,
06:14not only in the United States but around the world,
06:16because to get access to markets without having to change product is a big deal.
06:20What's your take on the U.K.?
06:21So we had a budget.
06:23It didn't 100% go well for all companies,
06:26but I think there was a sigh of relief that at least we know what there is.
06:28J.P. Morgan's building, massive building in London.
06:30Are you committed to London?
06:33We have 6,000 teammates.
06:34We just announced we're adding another 1,000 teammates in Belfast
06:37that will specialize in certain areas that we know we can get the talent there
06:40and help grow that economy.
06:43And so we're in London.
06:45We believe in London.
06:45We've been here for a long time.
06:49It's just part of who we are.
06:50I think the U.K., London in particular,
06:53is a great place for multinational, international operations.
06:55The Bernie Men's that runs internationals here.
06:57And I walked the trading floor today,
06:59and the Asian traders and the Middle Eastern traders and the EU traders,
07:05and everybody was up and working.
07:06And so I think it's a great thing.
07:08The key is, I think, for the policies to make sure that you distinguish
07:12between companies that are here because they're running international operations,
07:15the companies that are indigenous and working with the citizens of the U.K.,
07:18and make sure you get the regulation strategies right.
07:20because if you're a good place with a rule of law and a great city of London
07:25and a great country of the U.K. is, there's plenty of upside in the world
07:29where there's not that many places where people can get young kids to go to work.
07:33We're just about young kids.
07:34Remember, we bring 2,000 kids in from school every year.
07:36They've got to want to work in the cities.
07:37And so, you know, New York and here and other places have a leg up if they just handle it right.
07:42So what do you tell the prime minister?
07:44I tell them to make sure the regulation's fair, but also don't –
07:50materiality is the hardest thing for governments to understand.
07:53We have 6,000 teammates here.
07:55It's an incredibly important operation.
07:57It's 20 percent of our revenues.
07:58Our international business has grown nicely.
08:00But it's 20 percent of our revenue and things like that.
08:02We have hundreds of billions of dollars of capital to make sure things are right.
08:05So if you make it hard to operate, that's when people start to make decisions
08:09or make it uncomfortable for taxation for their workers, that's where they make decisions.
08:15Or expats coming in, that's where they make decisions.
08:17So I think our advice is be the best place for a non-UK-based company to operate,
08:23and you'll get companies coming here.
08:24And it won't be the people who leave.
08:26It's just where the next 500,000 people are going to go.
08:28Brian, talk to me about your investor day.
08:30I mean, this was the first in 15 years.
08:31You set up some really ambitious targets.
08:33Are you happy with the way it went?
08:35And the way it was received?
08:37Yeah, it was great.
08:38It was a chance to show the hugely competitive advantage we have as a franchise.
08:42The moats we have are on it.
08:43What all the technology spending done.
08:45We talked about what we do in AI that people are asking a lot about.
08:48We showed that it's actually not theoretical.
08:50Bank of America, the Erica, when we're faced with 2 million customers today,
08:53at Bank of America, which is an AI bot.
08:55So we gave that view.
08:57And we showed in each of the businesses how the competitive position they have.
09:00They're top businesses, number one, number two, number three.
09:03They're growing organically, have been.
09:05And then the returns come back as the NII and the pricing on the fixed assets.
09:09So we talked about our net income growing at 5% to 7%.
09:13The industry's growing at 2% to 3%.
09:14That's really coming from the balance sheet, continue to reprice while we generate good organic growth.
09:20And it was good.
09:20And so we said the returns have reached 16% return in tandem of common equity, moving up to 18%.
09:26And last quarter we had 15% and we grew EPS like 25%, 30%.
09:32It was a good quarter.
09:33And the team does a great job for us.
09:35You know I need to talk soccer or football.
09:37I may get my nationality pulled away if I call it soccer.
09:39But are you now a football guy?
09:41I mean, you're sponsoring FIFA.
09:42The World Cup is coming to America.
09:43Well, I have to say, as an American, I am a football person.
09:46It's just not the same football.
09:48Look, the draws tonight.
09:50We're very excited.
09:50We are a sponsor.
09:52We are the major financial sponsor for FIFA.
09:54We're working with Gianni and the team for the last three or four years now on this.
09:58Our team has got a set of programs.
09:59Just today we announced that if you apply and get a credit card, you get a chance to go into lottery to buy tickets and things like that.
10:07And our clients are excited.
10:09The cities are hosting.
10:10They're excited.
10:11We're working in the cities.
10:12We're putting, working with other colleagues, other companies to put fields in these cities, the FIFA and these and others.
10:18These are all important things because what we're trying to do is bring soccer into places and have it, when the World Cup goes away, which will be a wonderful event, to have the FIFA World Cup continue through these fields.
10:29Brian, the most difficult question.
10:30Who do you support if not USA?
10:32Well, we have to support the USA.
10:33I know, but your second team.
10:34Do you have a second team?
10:35I've got too many colleagues around the world that will come after me for that.
10:38You're going to get the calls.
10:39I hate calls.
10:39I hate calls.
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