00:00Herman Chan we're gonna talk banks and Herman Chan is here and whenever people see Herman Chan
00:03they're like is there a regional bank melting down because I was like do I need to be concerned
00:09but is there like a dark cloud around whenever he walks into the studio it's like it's very
00:13cheerful okay well you have to be stoic to be the grim reaper I love this well we are talking
00:21banks
00:21because Wall Street's biggest banks are set to report earnings next week starting with Goldman
00:25Sachs on Monday it has been actually a tough quarter for the six giants so far the KB Bank
00:30Index had its weakest quarterly performance since 2023 strong earnings could spark a rally next week
00:36we are joined by Bloomberg News senior US bank analyst Herman Chan Christina Kino is also here
00:40she's managing editor for Bloomberg Markets Live blog Herman now covers the big banks as well as
00:46one of the team leaders for Bloomberg Intelligence so Herman I do want to start with you and and you
00:51know when we talk about the banks we often talk about okay what moves the company's stock you
00:55know what what are what are trader what is trading revenue gonna look like I'm not interested in
01:00that right now sure I'm interested in what consumers are telling the banks that they're doing in a higher
01:05in a higher energy prices environment in a higher inflation environment these are the companies that
01:10see what we're spending our money on at that exact moment what are they gonna tell us right so they're
01:15gonna tell you that they're spending more on gas prices at the pump over the past you know the past
01:20month or so so that's gonna be front and center when they talk about the consumers I think you're
01:24also gonna hear about a resilient economy because we're still seeing a lot of GDP growth still chugging
01:30along but there is going to be the question are the higher energy prices going to create some cracks in
01:37the
01:37consumer side well I think the challenge between this conversation that we're having now versus what the
01:41conversation that we had about this in 2022 what the last time we saw inflation like this was consumers
01:46still had that cushion post pandemic that's right that's not still there right so so the savings rates
01:52are are much lower than they were and you don't have the sort of stimulus that was propping up the
01:57consumer back then so there are some questions on where things are going to go going forward but
02:03we'll we'll hear more about that over the next few weeks because that's gonna be front and center for
02:08earnings across the board and Christine we want to talk to you about the markets at large and kind
02:13of what I've been calling this indefatigable possibly delusional optimism we keep seeing but before we do
02:18that I want to talk to you about crypto because we saw Bitcoin and others fell 2% last night
02:23after
02:23this negotiation and Islamabad fell apart and my question for Tim and he said it was actually a good
02:29question I should ask it at the table this morning was I thought crypto was supposed to be more
02:35insulated from being reactive like this I thought it wasn't supposed to be this fluctuate like what's
02:40going on there why are we seeing such reaction from cryptocurrency I mean you know when you see
02:46catalysts as big and broad-ranging as the war in Iran it really just throw away all of your
02:54preconceived notions about what is a haven and what is not a haven in this market I mean you know
02:59ultimately crypto is still probably considered a riskier asset than all the traditional assets that
03:07we have out there and so when something as acute of a risk aversion event hits as the war then
03:14really
03:15the first protocol that people see to sell would be riskier assets such as crypto and I think remember
03:20you know it's had such a massive rally over the past year and then you know issues started coming through
03:27even
03:27before the war started and so I think and now that you got this geopolitical catalyst that kind of just
03:33piles on the
03:34pressure and that's what we're seeing at the moment are you seeing sectors that are still holding up as
03:40havens where people still investing with this uncertainty or is it just all over the place I mean you know
03:45the price action over the past couple of weeks has been very
03:48interesting even energy for instance hasn't been insulated because while higher oil prices in
03:55theory good for energy companies I think now because of that potential hit to consumers they are also
04:02starting to feel that bite in that demand side of the equation and then you know I think things obviously
04:08like consumer stocks have been very much at the forefront of getting hit I think you know things like big
04:14tech still acting actually as a relative hand in within the equity space just because these are big companies with
04:22a lot of
04:22cash and during times of turmoil such as what we are in now investors do tend to flock to companies
04:29are unlikely to go
04:30bust anytime soon. You brought up the volatility that we've seen a good segue to go back to Herman on
04:34what that does for the
04:36banks and the way the traders navigate this volatility and how that could be a boon for the bottom line.
04:41What do we expect this
04:42week. That's right. So we are expecting a big jump in trading revenues both on the equities and fixed income
04:47side. You
04:48mentioned volatility that that's actually a helper for for the month of March given of the uncertainty in the markets
04:55especially in
04:55areas like rates trading and and businesses that were affected by by the uncertainty. So banks like JP Morgan Bank
05:03of America that had more
05:04of their fixed revenues should should bode well for them for the first quarter. And Christine just kind of bridge
05:09our
05:10guests here. How important are bank earnings to markets and where do you see that really reflected the most. Extremely
05:15important
05:15Christine. I mean we're going to be watching it very closely as well. I think you know very much the
05:21steer for the rest of the market is
05:22yeah how much has this volatility kind of created opportunities for banks but also the consumer response as Tim was
05:30alluding to
05:31because that is going to be a very important signal moving forward. I think at the moment investors are kind
05:36of they've
05:37digested the lay of the land at the moment right higher oil prices weighing on everything else. Now we're waiting
05:43for that second order
05:44consumer hit and what that's going to do to consumption and and just consumers ability to spend their money if
05:51they have any money
05:51left. Moving forward that's going to move a lot of market sentiments from here on out. So Christine if we
05:58play out
06:00Christina's question regarding Bitcoin the one thing we can watch is JD Vance goes back to the comes back to
06:06the United States
06:07after I'm not going to say failed negotiations but the war is not over at this point. Unsuccessful. At this
06:12point I think I think that's
06:13fair to say 100 percent. They didn't we didn't reach a deal. That's how markets are treating it. Well so
06:18how do markets treat
06:19it. How does oil look tonight. How do do risk assets look tomorrow. Yeah I mean I think the the
06:25balance tilts back toward that
06:27sort of risk off reaction. Right. I think a lot of what we've seen in markets has been very much
06:32a function of oil prices and we have
06:34seen oil prices pulling back below a hundred dollars a barrel last week. So at minimum that's probably going to
06:40be the first order
06:41reaction. Higher oil prices to start the trading week and that's going to just drive the rest of market
06:48sentiment. Stocks have been negatively correlated with oil. So meaning higher oil prices probably going to mean
06:53weaker stocks to start the week at the very least. We only got about 30 seconds but I do want
06:58to ask you
06:58about this Jamie Dimon letter to shareholders on Monday. We kind of urged America to get back to basics
07:04and calmer politics. Right. Those two streams they usually try not to cross them but is it getting to a
07:09point where
07:09they've got to say something because it's impacting the bottom line. Jamie's sort of a spokesperson for
07:13for the banking industry. And so. Like shove him out front Jamie don't say the thing. Exactly. Okay. So he
07:18the the letter was very wide ranging mentioned geopolitics mentioned the war mentioned also the American dream and also the
07:26importance of creating a very strong military for the United States as a whole. So it's something that he does
07:32do a lot of prognosticating on and the industry is better for it.
Comments