October 10, 2025 • 38 mins
Bloomberg Daybreak Weekend with Host Nathan Hager take a look at some of the stories we'll be tracking in the coming week.
- In the US – a look ahead to earnings for U.S banks.
- In the UK – a look ahead to the annual New Energy Finance summit in London.
- We also focus on a conversation with Citadel CEO Ken Griffin from Citadel’s securities conference on gold.
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Episode Transcript
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Speaker 1 (00:00):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:10):
This is Bloomberg Daybreak Weekend, our global look at the
top stories in the coming week from our Daybreak anchors
all around the world. Straight Ahead on the program, a
look at earnings from the biggest banks on Wall Street.
What they'll tell us about the health of the US economy.
I'm Nathan Hager in Washington.
Speaker 3 (00:26):
I'm Caroline Hetkin. We away considering how climate change is
hitting Europe the hottest.
Speaker 2 (00:31):
Plus this week's fresh record for Goal. What's ahead for
everyone's favorite metal in the final months of the year.
Speaker 1 (00:38):
That's all straight Ahead on Bloomberg Daybreak Weekend on Bloomberg
eleventh three year, New York, Bloomberg ninety nine to one, Washington, DC,
Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Serrius
XM one T one, and around the world on Bloomberg Radio,
dot Com and the Bloomberg Business app.
Speaker 2 (01:03):
Good day to you. I'm Nathan Hager, and we begin
today's program with earnings from the biggest banks on Wall Street.
JP Morgan, Chase, Goldman, Sachs, City Group and Wells Fargo
kickoff big bank earning season with Bank of America and
Morgan Stanley not too far behind. For more of what
to expect, we're joined by Alison Williams, Senior analyst for
Global Banks and Asset Managers at Bloomberg Intelligence. Allison, thanks
(01:26):
for being with us. Let's just get into it what
to expect, especially now that we've heard some comments from
JP Morgan Chase CEO Jamie Diamond himself. What are you
looking for from the big banks?
Speaker 4 (01:38):
Thanks for having me. Three key things that we're looking
for for the big banks this week. First, the strength
of markets is going to translate into further revenue and
profit momentum, both for the third quarter and the outlook.
We expect this could be a record year for capital
markets revenue and that benefits all of the banks, especially Goldman,
Sachs and Morgan Stanley, but JP Morgan the leader in
(02:02):
absolute revenue. Second, we have the out of tail wind
of improving coordinate interest income as RAY expectations are moving lower,
while loan growth and in particular commercial loan growth is
picking up. Third, credit remains solid and we will see
some provisioning We expect for normalization and loan growth, but
not much change to economic assumptions underlying reserves. So based
(02:27):
on these three core trends, putting them together, we think
their earnings could beat with upward revisions to estimates for
twenty twenty five and twenty twenty six. We are seeing
some estimate increases for the quarter, some positive revisions going
into results, but notably when it comes to trading, which
we think is going to be very strong. Analyst estimates
(02:49):
do tend to be conservative, so we think there is
room for upside there.
Speaker 2 (02:52):
Are you looking for any big shifts in market share
when it comes to trading, because it seems like all
of these banks are really good going after each other
on that front, and we have seen this torrid rally
in the stock market from the April low.
Speaker 4 (03:07):
We do think that the big are going to continue
to get bigger. So the ship that we've seen over
time is that, you know, banks like Goldman Sachs, Morgan Stanley,
and JP Morgan have gained share. We've also seen Bank
America and City Group gain over the very long term.
But we think that this is going to be a
(03:29):
quarter where we see outperformance, especially in the equity trading
business from Goldman Sachs, who is the leader in that business,
and absolute revenue Goldman is also the leader in M
and A and we also expect them to have a
quarter in that business. One of the key businesses that
that has been helping the banks is prime brokerage and
(03:50):
some of the larger hedge funds and the asset levels.
You know, when we look at some of the largest
hedge funds and we look at things like record equity
prices around the globe, we do think that there's going
to be some help to that business. We also saw
record trading volume. You know, when we look at the
(04:10):
underlying trends to trading, the equities trading business should be
supported by continued strength and prime brokerage we saw some
record balances last quarter. We think we're going to see
new records this quarter. We also saw a record in
US exchange trading volume, so that's a big business for
the banks. But we're also going to see strength on
(04:32):
the fixed income side of things, both within rates and
spread trading. So really broad based strength at the banks
and we think that that's really going to help all
the competitors.
Speaker 2 (04:45):
And what are you looking for when it comes to
commentary from these banks on the resilience of the consumer.
That has been the driver for this economy, even when
we're starting to see, you know, cracks in the labor market.
When you think about banks like Bank of America and
City Group that have more of a focus on households,
what could they tell us when it comes to credit quality.
Speaker 4 (05:07):
To your point, we always do get an eye into
the consumer for these banks. The one interesting thing that
we're seeing at the industry level is the commercial side
of low growth picking up. It really has been the
credit card business that's been driving growth, especially at these
large banks in recent years. But we are seeing a
(05:28):
little bit of a shift to that on the commercial side,
and we do think that that's healthy on the credit
quality side of things. As I said, I do think
that we see some normalization, but we don't expect to
see big changes in economic assumption. So we think that
the reserve building should be relatively modest.
Speaker 2 (05:49):
And when it comes to banks with a sort of
a big wealth management focus, I'm thinking of Morgan, Stanley, Goldman, Sachs,
those kind of firms. Is the bar high for them?
Speaker 4 (05:59):
The bar is high, but we think that they are
going to deliver on that bar because, as I mentioned,
we've seen global equity prices and global equity market capitalization
hit a new record towards the end of September. We've
seen new highs already in this fourth quarter, and that
is very good for wealth and banking fees, both for
(06:23):
the third quarter and the outlook going into this quarter.
Speaker 2 (06:27):
All right, well, we'll see as that big bank earning
season kicks off early next week. That's Alison Williams with
US senior analysts for global banks and asset managers at
Bloomberg Intelligence. Alison, thank you. We move next to earnings
from some of the regional banks, Citizens Financial, First, Horizon,
PNC Financial Services. They're among the flood of lenders opening
(06:51):
their books this week. Let's bring in Herman Chan to
preview those results. Herman's a senior analyst for US regional
banks at Bloomberg Intelligence. These banks have been in the
spotlight Herman. Of course, these results are coming off the
heels of the fifth Third Bank deal for Co America
that we all remember so much about. So should we
be looking for more consolidation chatter when the banks report
(07:11):
this week?
Speaker 5 (07:12):
I think that's going to be the top question within
the annas community is which banks are going to be
acquisitive and which banks potentially are you thinking about selling themselves.
We've seen, as you mentioned, the Fifth Third co America deal,
and that comes on the heels of P and C
buying a bank in Colorado, Club First Bank, which really
boosts their Denver presence, and also Huntington, which is an
(07:36):
Ohio based lender that's going into Texas with It's a
very text deal. So there is definitely some consolidation that's
brewing and we'd expect that continue going forward.
Speaker 2 (07:47):
And of course Fifth Third and co America are both
going to be among those banks opening their books. What
are you expecting specifically from those results?
Speaker 5 (07:58):
Yeah, so Fifth Third specifically has talked about some strong
lending trend, so that's great to see, and we'd expect
some further improvement in their top line. What was the
surprise for a lot of the investment community is that
Fifth Third mentioned that they are ensineered in this Tricolor bankruptcy,
(08:20):
so that's going to create a fairly large credit loss
for them, which will hit the third quarter numbers. We
view that as more of a one off issue that
shouldn't reverberate throughout the entire loan book and throughout the industry,
but it is something that will affect their their three
key reporting. In terms of America, co America has been
one of the banks that has taken a bit longer
(08:43):
to recover from the SVB issues a couple of years back,
and so they're they're along the way of trying to
shore up their balance sheet in terms of their deposits
and deposit repricing and growing loans, but that'll be more
steady or going forward, and get the fact that they're
going to do this deal for fifth third, I think
that's going to be less of a priority for a
(09:05):
lot of the analysts and investors.
Speaker 2 (09:07):
Are there some other banks reporting this week that could
be in a similar situation as co America and potentially
be acquisition targets themselves.
Speaker 5 (09:16):
Yeah, that's a good question. That's one of the things
that we'll try to suss out. There are banks that
in our coverage that we think are probably better buyers
than sellers at this point. So banks like Regents, which
operates in the Southeast and has a really strong valuation
multiple that has the currency to really do deals. Another
(09:38):
bank based in Buffalo, New York, M and T Bank
also has a track record of doing deals and has
a strong currency to do deals. So those are the
ones that I think the market's going to focus on
in terms of they're going to be the next to
potentially be inquisitive.
Speaker 2 (09:56):
You mentioned one earlier, PNC Financial talking about their expansion
plans in the Southwest in particular. Do you expect that
to show up in the results and bolster the balance sheet?
Speaker 5 (10:06):
At this point, that deal needs to be closed, But
I think the next question for P and C in
particular is what's next for them. They've been vocal about
potentially doubling their balance sheet to over a trillion dollars
in assets, and this deal, while helpful, it's not going
(10:26):
to get them there anytime soon. So there's going to
be some organic growth, but really there's going to be
more consolidation over the next several years. Where do they
go next. They've done the deal with First Bank, They've
acquired BBVA USA, which really is the jump start for
their south West and Sunbelt expansion into California as well,
(10:49):
and now what's a coast to coast lenders? So where
do they grow from here? That's going to be the
next question.
Speaker 2 (10:55):
Interesting Now, one other big I mentioned earlier has been
coming off its own deals as well. What are you
looking for from Citizens? Yeah.
Speaker 5 (11:04):
Citizens has done a string of deals over the past
few years. They really filled in their market footprint which
was missing in the New York City metro area with
Investors Bank Corp. And New Jersey and then they acquired
the branches from HSBC in the New York City metro area,
so that really fills out there their traditional Northeast New
(11:29):
England footprint with the mid Atlantic footprint. So they're comfortably
at Wisconsin the northeast. And do they expand more outside
where a lot of the its large competitors have moved
into the southeast as well, So that's going to be
a top of mind and a good question for them.
There's some scuttle but in the investor community if Citizens
(11:52):
is going to be a seller or a buyer. So
that's an ongoing question, particularly as larger banks try to
get bigger to compete with the likes of jpmworking and
ba AA.
Speaker 2 (12:04):
All right, well, looking forward to regional bank earning season.
Thank you for this, Herman, Thank you. That's Herman Chan,
senior analyst for US regional banks at Bloomberg Intelligence. Coming
up on Bloomberg Day Break weekend, we look at how
climate change is hitting Europe the hardest. I'm Nathan Hager,
and this is Bloomberg. This is Bloomberg Daybreak WEEKND our
(12:35):
global look ahead at the top stories for investors in
the coming week. I'm Nathan Hager in Washington. Up later
in our program after a fresh record for gold, what's
ahead for bullion heading into November. But first in the
coming days, global climate bankers, forecasters, and government ministers will
gather in London for the annual New Energy Finance Summit.
The number of extreme weather events keeps rising and the
(12:58):
economic damage they cause going up too. With the US
pushing the EU to stop buying Russian gas and to
cut back on green regulation, many are asking if the
continent's green plans for the future are still intact for more,
let's go to London and bring in Bloomberg Daybreak Europe
anker Caroline Hepger.
Speaker 3 (13:16):
Nathan, Europe is getting hotter two point four degrees celsius
hotter than before the Industrial Revolution. That's four and a
half degrees fahrenheit For our US listeners. That means the
continent is warming faster than any other region on Earth,
which in turn is disrupting the continent's weather. It's also
getting harder to predict when power grids need more energy
(13:40):
to cope. That hasn't stopped some European politicians from calling
for the rollback of green pledges as they grapple with
high costs of living. Greg Jackson is chief executive officer
of the UK's largest energy retailer, Octopus Energy. He told
us that's a knock on effect of the shift in America.
Speaker 6 (14:02):
You can't ignore what happened in the US. You know,
you went from an administration that passed the ira you know,
one of the biggest commitments to government support for a
specific set of industries in history world changing to an
administration that use the phrase drill, baby, drill. I think
that has really set the tone in a bunch of
(14:24):
European countries, including the UK, where there is now an
intense debate about our future of energy.
Speaker 3 (14:31):
That was October's Energy CEO Greg Jackson there on this
week's Zero podcast, So what does the future of power
look like? Well, in the next few days, the European
Union's Energy Commissioner and Portugal's Energy Minister will be joining
executives right here in London for the annual BNF summit.
(14:51):
Joining me now as Ben Vickers, who is our chief
editor of Bloomberg NEF, and Joe Wurtz, our weather and
climate reporter here in London. Welcome to both the Joe,
can I start with you? Firstly? We're thinking about climate change.
Summers in Europe have seen record breaking heat waves with
really serious consequences. I wonder when you think about your work,
(15:13):
your job as a weather and climate reporter, how has
that changed?
Speaker 7 (15:17):
Well, I mean isn't that the joke right that the
weather is always always changing? You know, my job has
changed quite a bit, you know really as I started
as a climate and environment reporter, and increasingly that became
more and more about extreme weather. And you know, extreme
weather really shapes how people, businesses, you know, power, energy
(15:39):
move across the world. It dictates trade, economy and people's lives,
and that's increasingly you know, the story that that we're
focusing on.
Speaker 3 (15:48):
Ben, how are Bloomberg's n EF teams looking at this
changing world? The impact of climate change are kind of
big big thought?
Speaker 8 (15:58):
Yeah, I was going to say, that's a very very
big question. So, I mean, basically, what we do. We're
a data supplier and we do analysis on the back
of that, and we're looking at the shift in the
economy's worldwide to basically a lower carbon economy for everyone. Now,
climate adaptation and climate risk have come to the fall,
So we're adding new areas of research to help companies
(16:19):
and policymakers sort of navigate not just the climate risk
and the need for climate adaptation, but also how to
keep businesses going, keep them profitable as we go down
the roots, energy transition.
Speaker 3 (16:31):
Really energy transition.
Speaker 8 (16:33):
Yeah, it's very much a changing picture as well. It's
not as bad as the weather, but yeah, the shifting.
Speaker 3 (16:38):
Well, thinking about that weather element, Joe. In the winter months,
Europe has had in the past fears that a sudden
cold snap would cause gas prices to spike. This in
amidst all of the other kind of energy challenges that
we have, is there also a similar concern about that
this year?
Speaker 7 (16:56):
Yes, absolutely, We've already seen an early season snap. We
had had a big one in Eastern Europe already, and
you know, traders and governments are really locked in right now.
This is basically like cold snap hunting season for for
governments and traders there. Their eyes are on the forecasts,
they're they're they're they're watching for any sign that a
(17:17):
drop in temperatures could really throw off balance the sort
of fragile state of the energy markets right now, you know,
increase competition for for for for gas, and so you know,
any any any deviation there, any any cold snap can
really raise demand and create ripple effects.
Speaker 3 (17:32):
And gas storage has also been an issue. It's been
an issue in the UK and across Europe in past winters.
Is it equally bad this time around?
Speaker 7 (17:39):
So you know, UPE did a did a good job
stockpiling gas over the summer. It's still that stockpiling was
below what is is historically the summer you know norm
for stockpiling, but it did beat some expectations for that stockpiling.
So they you know, we started the natural gas winter essentially,
which starts in October. So started that's with about eighty
(18:00):
three percent of the stockpiles four which was better than
a lot of people expected, but still not as good
as it could be. But we've already seen with that
first cold snap we had recently in Eastern Europe that
some European countries are already having to tap into that
gas suppli absolutely.
Speaker 3 (18:20):
Now, of course, there have been incidents of blackouts in Europe,
and I think this is going to be quite crucial
when you speak to Portugal's energy minister, who is speaking
actually at the Bloomberg NEF Summit just in the next
few days. I'm sure there'll be a lot of interest
in understanding what she has to say about how the
country dealt with that blackout. It has been blamed both
(18:41):
on the power grid and also on renewable energy, and Ben,
you're going to be interviewing her, what are you going
to try to ask and find out.
Speaker 8 (18:50):
Well, there's a couple of things. There's obviously the human
side to this, because being energy minister and waking up
more morning with the lights off, not just in your
house or down the street, but across the country. It
is probably a nightmare. So there's that personal experience of
finding yourself in the hot seat. And well, three months
after that April twenty eighth blackout, the minister presented thirty
one measures to basically address all the problems they've been
(19:12):
able to identify, and some of those obviously within her remit,
those are the ones she's trying to address. But there's
a bigger, bigger issue of interconnections basically between European power markets,
and for a long time Spain and Portugal have been
asking France to improve the connections between those countries, and
there's a sort of a little bit of a tift
between them and allegations that their interests for the nuclear
(19:33):
power plants were able to sell their power rather than
allowing solar from Spain to come in really cheaply and
so on, So there's a little bit of EU negotiation
to go on there as well. But they're investing one
hundred and thirty seven million in their grid to upgrade
that they're putting in a couple of new power stations
that are going to light up in January, which are
what they call they call them black start stations, which
is basically when everything goes off, these switch on automatically
(19:54):
and sort of a first line of defense. But there's
actually quite a thirty one of these measures. So we're
going to be talking to her a lot about what
the plans are.
Speaker 3 (20:00):
What the plans are on what she's delivering and how
quickly and so on. Yes, I think that will be
really fascinating in terms of though the other major theme
surely is about the backlash against green energy. I mean
a little bit of that comes through in the discussion
around Portugal and the spending required Joe for climate adaptation.
(20:21):
This is a significant issue in the US. It has
also rippled across Europe. Is it gaining traction in particular
parts of Europe or for particular areas in the energy space.
Speaker 7 (20:33):
You know, it really seems to be gaining traction in
all sorts of different corners across Europe. The context here
is that Europe's energy grid energy markets are increasingly renewable
and increasingly rely on the weather. They're dependent on how
much sun is shining, how much wind is blowing, and
also comes with all the you know, international competition for
gas and other factors. Geopolitics can influence the supply side
(20:57):
of that equation. So you know, increased pressure on all
those markets are definitely, uh, you know, raising the stakes.
And in each of these countries, you know, these ambitious
climate targets that they set up have have really been challenged.
You know, last month was supposed to be a big milestone, right,
Europe was supposed to get together and come to this
(21:18):
big agreement, this final agreement on their on their long
term twenty forty targets, and and and they kicked that
can down the road, and and now those countries are
fighting about that. There's more domestic spending demands on each
of these countries. In some cases, these countries are wanting
to siphon off more money for defense spending and things
like that, and and and and more political uh unease
(21:41):
with some of the ambitious spending targets that go along
with these these green goals.
Speaker 3 (21:45):
And if that wasn't enough, you just have to throw
in artificial intelligence, which we have spent months thinking about,
you know, the big build out of our sovision intelligence
the Energy demand ben that is going to also really
underline some of the difficulties in the energy space. How
do you think that the impact of AI is going
to affect your forecast when it comes to power demand?
(22:08):
How are you thinking about this oncoming technology.
Speaker 8 (22:11):
So there's a mass of amount of interest in the
impact that AI is going to have on power demand,
on prices more generally as well for consumers. Yeah, we've
been looking at what the likely development of AI data
centers basically the hyperscals, but we're looking at out to
twenty thirty five the power demand from data centers. We're
expecting to have quadrupled from where it is right now.
(22:33):
That's only actually four point four percent of all the
electricity demand worldwide, So it's a small proportion of the
electricity worldwide, but it's where it happens and when it happens,
I suppose, which is really important. Now, if in twenty
thirty five you put all the data centers together, they
would be and to look at them as if they
were a country, they would be the fourth largest country
in the world, behind the US, China, India. Then there's
(22:56):
data centers that sort of a demand center. So it
is good, it is going to be very big. That said,
as one of the one of the ten executives in
one of the AI compies are saying this week, you know,
if there's only one thing you really need to know
about AI, which is it's changing so fast and we
don't quite know what's going to happen. So so the
forecasting here is going to be is obviously going to
be quite tricky. Yeah, short term, we expect the demand
(23:18):
to be demand for power to be supplied by a
rather traditional sources, so it is going to be cold
and gas coming in. That's in the short term because
the buildout is so rapid so places in the US
like Virginia and Oregon, Texas and Ohio which have classically
I've been able to have been able to supplied again
to benefit from the immediate demand, but longer term than
renewables have an opportunity to move in here.
Speaker 7 (23:38):
Yeah, and that's that's a turn that we see, you know,
generally in such a type market like Europe. Is that
not just with data centers, which are traditional sources of
demand for for for for electricity. When the demand gets
high and the prices spike or maybe the supplies can
you know, constrained, they switch on the traditional sources of
of of of power to supplement that grid. That means,
(24:01):
you know, switching on a gas plant and using what
can be switched on more reliably than maybe the wind
or the solar, which you know might not be coming
in the middle of a cold, dark day.
Speaker 3 (24:14):
EF's Ben Vickers and Bloomberg's Jay Wurtz thank you so much.
We'll have full coverage of the upcoming bn EF summit
on the fourteenth and fifteenth of October across Bloomberg platforms.
I'm Caroline Hepge here in London and you can catch
us every weekday morning for Bloomberg Daybreak you at beginning
at six am in London. That's one am on Wall Street.
Speaker 2 (24:33):
Nathan, Thanks Caroline. Then coming up on Bloomberg Daybreak Weekend,
Gold retreats from a fresh record, we speak to one
of Wall Street's biggest names about the future for everyone's
favorite metal. I'm Nathan Hagar, and this is Bloomberg. This
(24:58):
is Bloomberg Daybreak Weekend Global look ahead at the top
stories for investors in the coming week. I'm Nathan Hager
in Washington. This week, gold prices topped four thousand for
the first time ever. This year has seen a meteoric
rise for the precious metal. Year to date, it's up
a whopping fifty percent, and that gain is catching the
eye of one of Wall Street's biggest names. Ken Griffin,
(25:21):
the CEO of Citadel, says the surgeon gold could point
to a move away from the dollar, and he says
that's concerning. Ken Griffin sat down for a wide ranging
interview with Bloomberg's Francine Loqua to way in on gold's
future and the prospects for a US recession on the horizon.
Let's listen into that conversation now.
Speaker 9 (25:39):
Let's just cut to the chase.
Speaker 10 (25:41):
Inflation is substantially about target and substantially above target in
all forecasts for next year. I mean, it's part of
the reason the dollars depreciated by about ten percent in
the first half of this year. It's the single biggest
decline in the US dollars six months in fifty years.
Gold is that record highs and the appreciation in other
(26:07):
dollar substitutes, to use that word loosely, and items like
crypto for example, is unbelievable. So we're seeing substantial asset
inflation away from the dollar as people are looking for
ways to effectively de dollarize or de risk their portfolios
visa vus sovereign risk.
Speaker 11 (26:28):
Are you really seeing that?
Speaker 9 (26:31):
Just check the price of goal. Well, I mean, I
don't have to look very hard.
Speaker 11 (26:34):
Its own, it's a life of its own.
Speaker 9 (26:37):
Gold, No, but it's a life of its own.
Speaker 10 (26:40):
As you see sovereigns around the world, there's central banks
around the world, as you see individual investors around the
world go, you know what, I now view gold as
a safe harbor asset in a way that the dollar
used to be viewed. That's what's really concerning to me
and There's been plenty of published research in recent weeks
(27:03):
months about foreign investors now when they buy US equities,
hedging the returns back to their local currency. So that
again is a bifurcation of I'm going to bet on
American business, but I want to immunize some of my
sovereign exposure to the United States.
Speaker 11 (27:22):
Can the previous panels talking about the shutdown, given where
we are in the shutdown, can the FED properly do
its job at the end of the month in these
circumstances where we may not have enough data.
Speaker 10 (27:32):
I don't think the data over a few weeks should
really be that determinative to the FED.
Speaker 9 (27:38):
I mean, that's sort of over.
Speaker 10 (27:41):
Overgrandized, is what the impact or importance to that data is,
particularly with the sampling errors that's intrinsic in how that
data is produced and compiled for the FED. I just
think that's a bit of a misplaced warrior concern.
Speaker 11 (27:56):
Do you worry about the shutdown full stop?
Speaker 9 (27:58):
Look?
Speaker 10 (28:00):
Shut down a symbolic of a different problem, which is
the dysfunction between the Republican and Democratic Party on resolving
issues with respect to the budget of the United States
of America, and to be clear both parties today are
guilty of just profligate spending. You know, as I said
at the start, the US fiscal situation is that of
(28:21):
a nation that's trying to work its way out of
a recession.
Speaker 9 (28:25):
Except the reality is we're.
Speaker 10 (28:26):
Multiple years into a very high period of growth. This
is where we should be running a deficit of you know,
in the Clinton day, as we ran a surplus at
this point in the business cycle, We're now running a
deficit of close to six to seven percent, depending upon
on where a number of things land. That is just
completely irresponsible. And so what's amazing is we're having a
(28:50):
shutdown debate over the scheme of things a relatively small
amount of money, and neither party is stepping up the
plate to deal with or grapple with the reality that
the United States needs to endure a fair amount of
fiscal reform to be in a path for long term sustainability.
Speaker 11 (29:06):
Why is it not being talked about?
Speaker 10 (29:09):
It's politically unpopular, and unfortunately politics have gotten shorter and
shorter and shorter in horizon. You know, can you imagine that,
like I said, in the Clinton day, as they signed
a budget with a surplus, and yet that was in
our lifetime. It's been a long time since we've seen
that level of discipline in Washington around managing the affairs
(29:30):
of the US economy.
Speaker 11 (29:32):
You worry a lot about debt, or you worry about debt,
what's the way I don't.
Speaker 10 (29:36):
I mean you must also, like we all have to
worry about the level of debt we have in the
United States, and the market is pretty.
Speaker 9 (29:42):
Cool about it. The market is we'll look past it
for a few years.
Speaker 10 (29:49):
But if you go out with anybody to talk about
what they worry about.
Speaker 9 (29:53):
With respect to the US economy, the.
Speaker 10 (29:56):
Fiscal situation is almost always top of the So you know,
I think there's one thing to keep in mind, which
is acid prices reflect a level of exuberance that we
see today.
Speaker 9 (30:08):
But I got to tell you, if you're out with.
Speaker 10 (30:10):
With anybody who's the asset manage of business top of
his concerns, the level of spending in Washington is always
top three, if not.
Speaker 9 (30:20):
Number one, on the list.
Speaker 11 (30:21):
What's the way out?
Speaker 9 (30:23):
Well, the way out is we need I mean, first
and foremost.
Speaker 10 (30:28):
Growth is an important part of the way out, and
this is where the Trump's administration focus on deregulation is
so important. It's so important in terms of creating an
environment in which growth can exist, like really important. Unleash
unleashed the animal spirits in America. And the one thing
(30:49):
about this country different than most countries is the entreal
class in this country is incredibly ambitious and it's really
able to make profound changes happen.
Speaker 9 (31:00):
I mean, if you look at if you look across
our investment.
Speaker 10 (31:02):
Portfolios, a substantial portion of all the money we invest
is in business has started in the last fifty years.
I mean, it's it's remarkable the wealth created in this
country by newly formed businesses.
Speaker 9 (31:19):
It's just stunny. It's the envy of the world.
Speaker 10 (31:23):
And the Trump administration is certainly taking steps to help
encourage that continued American success story. But we also need
to give real consideration to tax policy and to spending policies.
And I think that the the how are they rebranding,
(31:44):
rebranding the Big Beautiful Bill at this point?
Speaker 9 (31:47):
Do you know what the rebranding is going to be? Yet?
Speaker 11 (31:49):
How would you rebrand it?
Speaker 9 (31:51):
Well?
Speaker 10 (31:51):
I mean, I don't think there's a nice way to
put lipstick on that pig. I mean, it's it's a
it's a pro cyclical tax cut late in the in
the economic cycle, and you know, everybody in this room, like,
let's be clear, no one wants to pay more in taxes.
But if you're not on a sustainable set of tax
policies in the best of times, what policies.
Speaker 9 (32:14):
Will that unleash in the worst of times?
Speaker 10 (32:16):
You know, for example, the United States head towards a
wealth tax when the inevitable bills come due, will be
head towards tax rates that we last saw in Europe
sixty seventy eighty percent as the inevitable bills come do, Like,
what is the long term consequence of these policies.
Speaker 9 (32:35):
Right here, right now?
Speaker 10 (32:36):
And I think people are very concerned about what that
might be in ten or fifteen or twenty years. How
to inheritance taxes have to change in light of the
tremendous amount of wealth held by the baby boomers and
the tremendous amount of debt that their generation was a
part of. So I think these are going to be
really interesting policy debates that will merge seven years, ten years,
(32:58):
fifteen years down the road, which could have some pretty
adverse consequences. I mean, particularly for America. Not furialism today
is not sure. You're like, if I build a great business,
I will get to keep a substantial amount of wealth
I create. If you go back to a world of
seventy percent tax rates that we had in this country
in this last century, maybe throwing a wealth tax for
good measure you may really impact that zeitgeist that is
(33:22):
so powerful in terms of our economic prosperity.
Speaker 11 (33:25):
And where do you see the animal spirits in the
US Because a lot of chief executives say, look, they
like some of the policies, but there are also a
lot of policies it could be visas or others, and
because they're uncertain where the next one comes from, they're
a little bit reluctant to spend.
Speaker 10 (33:40):
Right now, Well, I mean, let's be clear that the
Trump administration has been able to give us a lot
that we love and a lot that we hate. Right,
They're an equal opportunity giver. And on the pro side
is clearly the push for deregulation is clearly a message
to American whether it's small business owners or entrepreneurs, that
(34:03):
this country wants to see our commercial class succeed. That's
like a foreign language to the Biden administration. I mean
they had no connectivity with American business. The Trump administration
is very connected in a very different and profound way.
Speaker 9 (34:19):
But having said that, the terror policy has.
Speaker 10 (34:22):
Had incredibly uneven impacts across the commercial landscape.
Speaker 9 (34:28):
I mean, I really do feel sorry for the small.
Speaker 10 (34:30):
And medium sized businesses that are single source in terms
of their goods from from Asia who are now seeing
tariffs that are at levels that are unimaginable in the
context of their business model. They're really going to be
in a world of hurt over the months ahead, and
they're not going to have the flexibility that a large
(34:50):
conglomerate will have and being able to re architects, supply
chains and navigate around these issues.
Speaker 9 (34:56):
So that's an.
Speaker 10 (34:57):
Area that's that's quite painful to watch. The impact on farmers.
I mean that the Chinese have voted very clearly to
buy their food products from other countries, and it's really
hitting the American farming community quite hards. That's painful to
watch play out. The immigration policies, I must say, I
scratch my head over we as a nation are facing
(35:22):
a birth rate that's below that required to maintain our population.
So unless the United States actually wants to shrink in size.
Over the next fifty years, we're going to have to
permit immigration, and I would think that our policies would
be around trying to encourage the best and brightest around
the world coming to the United States and building careers
(35:44):
and building families and building roots in our country. You know,
I've long said every single student in the United States
with a STEM degree should get a green card, staple
that diploma and a path to citizenship. You know, roughly
fifty percent of all the Silicon Values startups are started
by immigrants. I mean, it's just remarkable how this country
(36:06):
has won in the global war for talent, and.
Speaker 9 (36:08):
We should continue to pursue that aggressively. And then on
the millions of people who came.
Speaker 10 (36:14):
Across the borders in the last several years, you know,
I applauded the President for controlling our borders. It was
really important to stop that flow of illegal immigration. And unfortunately,
as you and I both know, a number of countries
in South and Central America didn't send us their best
and brightest. They did empty their prisons and send people
to the United States that we really should not have
(36:36):
welcomed warmly. So I applaud the President for starting the borders.
But those who've come to this country, who have placed
roots here, who are working and contributing to our economy,
we should find a path for them to be able
to stay here and continue to contribute. They're important in agriculture,
they're important construction, they're important in the leisure industries. They
(36:58):
do a lot of jobs that will be damn near
impossible for us to fill with American American born labors.
Speaker 9 (37:06):
That's just gonna be really tough.
Speaker 10 (37:08):
And what gets lost in some of the debate is
they're not taking jobs from Americans buy and large, they're
actually playing critical roles at help.
Speaker 9 (37:17):
American businesses thrive and succeed that.
Speaker 10 (37:19):
Allow us to employ more people at higher wages across
the broader economy. So I think when it comes to
immigration at large, I think we've come off the rails
and we really do need to rethink our policies.
Speaker 2 (37:31):
That's Citadel CEO Ken Griffin speaking with Bloomberg's franc Sine Laqua.
The conversation was part of this week Citadel Securities conference
in Manhattan, and for more you can catch the full
interview on the Bloomberg Podcasts YouTube channel. And that does
it for this edition of Bloomberg day Break Weekend. Join
us again Monday morning at five am Wall Street Time
for the latest DOUN, markets overseas, and the news you
(37:53):
need to start your day. I'm Nathan Hager. To stay
with us. Top stories and global business headlines are coming
up right now.
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:10):
This is Bloomberg Daybreak Weekend, our global look at the
top stories in the coming week from our Daybreak anchors
all around the world. Straight Ahead on the program, a
look at earnings from the biggest banks on Wall Street.
What they'll tell us about the health of the US economy.
I'm Nathan Hager in Washington.
Speaker 3 (00:26):
I'm Caroline Hetkin. We away considering how climate change is
hitting Europe the hottest.
Speaker 2 (00:31):
Plus this week's fresh record for Goal. What's ahead for
everyone's favorite metal in the final months of the year.
Speaker 1 (00:38):
That's all straight Ahead on Bloomberg Daybreak Weekend on Bloomberg
eleventh three year, New York, Bloomberg ninety nine to one, Washington, DC,
Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Serrius
XM one T one, and around the world on Bloomberg Radio,
dot Com and the Bloomberg Business app.
Speaker 2 (01:03):
Good day to you. I'm Nathan Hager, and we begin
today's program with earnings from the biggest banks on Wall Street.
JP Morgan, Chase, Goldman, Sachs, City Group and Wells Fargo
kickoff big bank earning season with Bank of America and
Morgan Stanley not too far behind. For more of what
to expect, we're joined by Alison Williams, Senior analyst for
Global Banks and Asset Managers at Bloomberg Intelligence. Allison, thanks
(01:26):
for being with us. Let's just get into it what
to expect, especially now that we've heard some comments from
JP Morgan Chase CEO Jamie Diamond himself. What are you
looking for from the big banks?
Speaker 4 (01:38):
Thanks for having me. Three key things that we're looking
for for the big banks this week. First, the strength
of markets is going to translate into further revenue and
profit momentum, both for the third quarter and the outlook.
We expect this could be a record year for capital
markets revenue and that benefits all of the banks, especially Goldman,
Sachs and Morgan Stanley, but JP Morgan the leader in
(02:02):
absolute revenue. Second, we have the out of tail wind
of improving coordinate interest income as RAY expectations are moving lower,
while loan growth and in particular commercial loan growth is
picking up. Third, credit remains solid and we will see
some provisioning We expect for normalization and loan growth, but
not much change to economic assumptions underlying reserves. So based
(02:27):
on these three core trends, putting them together, we think
their earnings could beat with upward revisions to estimates for
twenty twenty five and twenty twenty six. We are seeing
some estimate increases for the quarter, some positive revisions going
into results, but notably when it comes to trading, which
we think is going to be very strong. Analyst estimates
(02:49):
do tend to be conservative, so we think there is
room for upside there.
Speaker 2 (02:52):
Are you looking for any big shifts in market share
when it comes to trading, because it seems like all
of these banks are really good going after each other
on that front, and we have seen this torrid rally
in the stock market from the April low.
Speaker 4 (03:07):
We do think that the big are going to continue
to get bigger. So the ship that we've seen over
time is that, you know, banks like Goldman Sachs, Morgan Stanley,
and JP Morgan have gained share. We've also seen Bank
America and City Group gain over the very long term.
But we think that this is going to be a
(03:29):
quarter where we see outperformance, especially in the equity trading
business from Goldman Sachs, who is the leader in that business,
and absolute revenue Goldman is also the leader in M
and A and we also expect them to have a
quarter in that business. One of the key businesses that
that has been helping the banks is prime brokerage and
(03:50):
some of the larger hedge funds and the asset levels.
You know, when we look at some of the largest
hedge funds and we look at things like record equity
prices around the globe, we do think that there's going
to be some help to that business. We also saw
record trading volume. You know, when we look at the
(04:10):
underlying trends to trading, the equities trading business should be
supported by continued strength and prime brokerage we saw some
record balances last quarter. We think we're going to see
new records this quarter. We also saw a record in
US exchange trading volume, so that's a big business for
the banks. But we're also going to see strength on
(04:32):
the fixed income side of things, both within rates and
spread trading. So really broad based strength at the banks
and we think that that's really going to help all
the competitors.
Speaker 2 (04:45):
And what are you looking for when it comes to
commentary from these banks on the resilience of the consumer.
That has been the driver for this economy, even when
we're starting to see, you know, cracks in the labor market.
When you think about banks like Bank of America and
City Group that have more of a focus on households,
what could they tell us when it comes to credit quality.
Speaker 4 (05:07):
To your point, we always do get an eye into
the consumer for these banks. The one interesting thing that
we're seeing at the industry level is the commercial side
of low growth picking up. It really has been the
credit card business that's been driving growth, especially at these
large banks in recent years. But we are seeing a
(05:28):
little bit of a shift to that on the commercial side,
and we do think that that's healthy on the credit
quality side of things. As I said, I do think
that we see some normalization, but we don't expect to
see big changes in economic assumption. So we think that
the reserve building should be relatively modest.
Speaker 2 (05:49):
And when it comes to banks with a sort of
a big wealth management focus, I'm thinking of Morgan, Stanley, Goldman, Sachs,
those kind of firms. Is the bar high for them?
Speaker 4 (05:59):
The bar is high, but we think that they are
going to deliver on that bar because, as I mentioned,
we've seen global equity prices and global equity market capitalization
hit a new record towards the end of September. We've
seen new highs already in this fourth quarter, and that
is very good for wealth and banking fees, both for
(06:23):
the third quarter and the outlook going into this quarter.
Speaker 2 (06:27):
All right, well, we'll see as that big bank earning
season kicks off early next week. That's Alison Williams with
US senior analysts for global banks and asset managers at
Bloomberg Intelligence. Alison, thank you. We move next to earnings
from some of the regional banks, Citizens Financial, First, Horizon,
PNC Financial Services. They're among the flood of lenders opening
(06:51):
their books this week. Let's bring in Herman Chan to
preview those results. Herman's a senior analyst for US regional
banks at Bloomberg Intelligence. These banks have been in the
spotlight Herman. Of course, these results are coming off the
heels of the fifth Third Bank deal for Co America
that we all remember so much about. So should we
be looking for more consolidation chatter when the banks report
(07:11):
this week?
Speaker 5 (07:12):
I think that's going to be the top question within
the annas community is which banks are going to be
acquisitive and which banks potentially are you thinking about selling themselves.
We've seen, as you mentioned, the Fifth Third co America deal,
and that comes on the heels of P and C
buying a bank in Colorado, Club First Bank, which really
boosts their Denver presence, and also Huntington, which is an
(07:36):
Ohio based lender that's going into Texas with It's a
very text deal. So there is definitely some consolidation that's
brewing and we'd expect that continue going forward.
Speaker 2 (07:47):
And of course Fifth Third and co America are both
going to be among those banks opening their books. What
are you expecting specifically from those results?
Speaker 5 (07:58):
Yeah, so Fifth Third specifically has talked about some strong
lending trend, so that's great to see, and we'd expect
some further improvement in their top line. What was the
surprise for a lot of the investment community is that
Fifth Third mentioned that they are ensineered in this Tricolor bankruptcy,
(08:20):
so that's going to create a fairly large credit loss
for them, which will hit the third quarter numbers. We
view that as more of a one off issue that
shouldn't reverberate throughout the entire loan book and throughout the industry,
but it is something that will affect their their three
key reporting. In terms of America, co America has been
one of the banks that has taken a bit longer
(08:43):
to recover from the SVB issues a couple of years back,
and so they're they're along the way of trying to
shore up their balance sheet in terms of their deposits
and deposit repricing and growing loans, but that'll be more
steady or going forward, and get the fact that they're
going to do this deal for fifth third, I think
that's going to be less of a priority for a
(09:05):
lot of the analysts and investors.
Speaker 2 (09:07):
Are there some other banks reporting this week that could
be in a similar situation as co America and potentially
be acquisition targets themselves.
Speaker 5 (09:16):
Yeah, that's a good question. That's one of the things
that we'll try to suss out. There are banks that
in our coverage that we think are probably better buyers
than sellers at this point. So banks like Regents, which
operates in the Southeast and has a really strong valuation
multiple that has the currency to really do deals. Another
(09:38):
bank based in Buffalo, New York, M and T Bank
also has a track record of doing deals and has
a strong currency to do deals. So those are the
ones that I think the market's going to focus on
in terms of they're going to be the next to
potentially be inquisitive.
Speaker 2 (09:56):
You mentioned one earlier, PNC Financial talking about their expansion
plans in the Southwest in particular. Do you expect that
to show up in the results and bolster the balance sheet?
Speaker 5 (10:06):
At this point, that deal needs to be closed, But
I think the next question for P and C in
particular is what's next for them. They've been vocal about
potentially doubling their balance sheet to over a trillion dollars
in assets, and this deal, while helpful, it's not going
(10:26):
to get them there anytime soon. So there's going to
be some organic growth, but really there's going to be
more consolidation over the next several years. Where do they
go next. They've done the deal with First Bank, They've
acquired BBVA USA, which really is the jump start for
their south West and Sunbelt expansion into California as well,
(10:49):
and now what's a coast to coast lenders? So where
do they grow from here? That's going to be the
next question.
Speaker 2 (10:55):
Interesting Now, one other big I mentioned earlier has been
coming off its own deals as well. What are you
looking for from Citizens? Yeah.
Speaker 5 (11:04):
Citizens has done a string of deals over the past
few years. They really filled in their market footprint which
was missing in the New York City metro area with
Investors Bank Corp. And New Jersey and then they acquired
the branches from HSBC in the New York City metro area,
so that really fills out there their traditional Northeast New
(11:29):
England footprint with the mid Atlantic footprint. So they're comfortably
at Wisconsin the northeast. And do they expand more outside
where a lot of the its large competitors have moved
into the southeast as well, So that's going to be
a top of mind and a good question for them.
There's some scuttle but in the investor community if Citizens
(11:52):
is going to be a seller or a buyer. So
that's an ongoing question, particularly as larger banks try to
get bigger to compete with the likes of jpmworking and
ba AA.
Speaker 2 (12:04):
All right, well, looking forward to regional bank earning season.
Thank you for this, Herman, Thank you. That's Herman Chan,
senior analyst for US regional banks at Bloomberg Intelligence. Coming
up on Bloomberg Day Break weekend, we look at how
climate change is hitting Europe the hardest. I'm Nathan Hager,
and this is Bloomberg. This is Bloomberg Daybreak WEEKND our
(12:35):
global look ahead at the top stories for investors in
the coming week. I'm Nathan Hager in Washington. Up later
in our program after a fresh record for gold, what's
ahead for bullion heading into November. But first in the
coming days, global climate bankers, forecasters, and government ministers will
gather in London for the annual New Energy Finance Summit.
The number of extreme weather events keeps rising and the
(12:58):
economic damage they cause going up too. With the US
pushing the EU to stop buying Russian gas and to
cut back on green regulation, many are asking if the
continent's green plans for the future are still intact for more,
let's go to London and bring in Bloomberg Daybreak Europe
anker Caroline Hepger.
Speaker 3 (13:16):
Nathan, Europe is getting hotter two point four degrees celsius
hotter than before the Industrial Revolution. That's four and a
half degrees fahrenheit For our US listeners. That means the
continent is warming faster than any other region on Earth,
which in turn is disrupting the continent's weather. It's also
getting harder to predict when power grids need more energy
(13:40):
to cope. That hasn't stopped some European politicians from calling
for the rollback of green pledges as they grapple with
high costs of living. Greg Jackson is chief executive officer
of the UK's largest energy retailer, Octopus Energy. He told
us that's a knock on effect of the shift in America.
Speaker 6 (14:02):
You can't ignore what happened in the US. You know,
you went from an administration that passed the ira you know,
one of the biggest commitments to government support for a
specific set of industries in history world changing to an
administration that use the phrase drill, baby, drill. I think
that has really set the tone in a bunch of
(14:24):
European countries, including the UK, where there is now an
intense debate about our future of energy.
Speaker 3 (14:31):
That was October's Energy CEO Greg Jackson there on this
week's Zero podcast, So what does the future of power
look like? Well, in the next few days, the European
Union's Energy Commissioner and Portugal's Energy Minister will be joining
executives right here in London for the annual BNF summit.
(14:51):
Joining me now as Ben Vickers, who is our chief
editor of Bloomberg NEF, and Joe Wurtz, our weather and
climate reporter here in London. Welcome to both the Joe,
can I start with you? Firstly? We're thinking about climate change.
Summers in Europe have seen record breaking heat waves with
really serious consequences. I wonder when you think about your work,
(15:13):
your job as a weather and climate reporter, how has
that changed?
Speaker 7 (15:17):
Well, I mean isn't that the joke right that the
weather is always always changing? You know, my job has
changed quite a bit, you know really as I started
as a climate and environment reporter, and increasingly that became
more and more about extreme weather. And you know, extreme
weather really shapes how people, businesses, you know, power, energy
(15:39):
move across the world. It dictates trade, economy and people's lives,
and that's increasingly you know, the story that that we're
focusing on.
Speaker 3 (15:48):
Ben, how are Bloomberg's n EF teams looking at this
changing world? The impact of climate change are kind of
big big thought?
Speaker 8 (15:58):
Yeah, I was going to say, that's a very very
big question. So, I mean, basically, what we do. We're
a data supplier and we do analysis on the back
of that, and we're looking at the shift in the
economy's worldwide to basically a lower carbon economy for everyone. Now,
climate adaptation and climate risk have come to the fall,
So we're adding new areas of research to help companies
(16:19):
and policymakers sort of navigate not just the climate risk
and the need for climate adaptation, but also how to
keep businesses going, keep them profitable as we go down
the roots, energy transition.
Speaker 3 (16:31):
Really energy transition.
Speaker 8 (16:33):
Yeah, it's very much a changing picture as well. It's
not as bad as the weather, but yeah, the shifting.
Speaker 3 (16:38):
Well, thinking about that weather element, Joe. In the winter months,
Europe has had in the past fears that a sudden
cold snap would cause gas prices to spike. This in
amidst all of the other kind of energy challenges that
we have, is there also a similar concern about that
this year?
Speaker 7 (16:56):
Yes, absolutely, We've already seen an early season snap. We
had had a big one in Eastern Europe already, and
you know, traders and governments are really locked in right now.
This is basically like cold snap hunting season for for
governments and traders there. Their eyes are on the forecasts,
they're they're they're they're watching for any sign that a
(17:17):
drop in temperatures could really throw off balance the sort
of fragile state of the energy markets right now, you know,
increase competition for for for for gas, and so you know,
any any any deviation there, any any cold snap can
really raise demand and create ripple effects.
Speaker 3 (17:32):
And gas storage has also been an issue. It's been
an issue in the UK and across Europe in past winters.
Is it equally bad this time around?
Speaker 7 (17:39):
So you know, UPE did a did a good job
stockpiling gas over the summer. It's still that stockpiling was
below what is is historically the summer you know norm
for stockpiling, but it did beat some expectations for that stockpiling.
So they you know, we started the natural gas winter essentially,
which starts in October. So started that's with about eighty
(18:00):
three percent of the stockpiles four which was better than
a lot of people expected, but still not as good
as it could be. But we've already seen with that
first cold snap we had recently in Eastern Europe that
some European countries are already having to tap into that
gas suppli absolutely.
Speaker 3 (18:20):
Now, of course, there have been incidents of blackouts in Europe,
and I think this is going to be quite crucial
when you speak to Portugal's energy minister, who is speaking
actually at the Bloomberg NEF Summit just in the next
few days. I'm sure there'll be a lot of interest
in understanding what she has to say about how the
country dealt with that blackout. It has been blamed both
(18:41):
on the power grid and also on renewable energy, and Ben,
you're going to be interviewing her, what are you going
to try to ask and find out.
Speaker 8 (18:50):
Well, there's a couple of things. There's obviously the human
side to this, because being energy minister and waking up
more morning with the lights off, not just in your
house or down the street, but across the country. It
is probably a nightmare. So there's that personal experience of
finding yourself in the hot seat. And well, three months
after that April twenty eighth blackout, the minister presented thirty
one measures to basically address all the problems they've been
(19:12):
able to identify, and some of those obviously within her remit,
those are the ones she's trying to address. But there's
a bigger, bigger issue of interconnections basically between European power markets,
and for a long time Spain and Portugal have been
asking France to improve the connections between those countries, and
there's a sort of a little bit of a tift
between them and allegations that their interests for the nuclear
(19:33):
power plants were able to sell their power rather than
allowing solar from Spain to come in really cheaply and
so on, So there's a little bit of EU negotiation
to go on there as well. But they're investing one
hundred and thirty seven million in their grid to upgrade
that they're putting in a couple of new power stations
that are going to light up in January, which are
what they call they call them black start stations, which
is basically when everything goes off, these switch on automatically
(19:54):
and sort of a first line of defense. But there's
actually quite a thirty one of these measures. So we're
going to be talking to her a lot about what
the plans are.
Speaker 3 (20:00):
What the plans are on what she's delivering and how
quickly and so on. Yes, I think that will be
really fascinating in terms of though the other major theme
surely is about the backlash against green energy. I mean
a little bit of that comes through in the discussion
around Portugal and the spending required Joe for climate adaptation.
(20:21):
This is a significant issue in the US. It has
also rippled across Europe. Is it gaining traction in particular
parts of Europe or for particular areas in the energy space.
Speaker 7 (20:33):
You know, it really seems to be gaining traction in
all sorts of different corners across Europe. The context here
is that Europe's energy grid energy markets are increasingly renewable
and increasingly rely on the weather. They're dependent on how
much sun is shining, how much wind is blowing, and
also comes with all the you know, international competition for
gas and other factors. Geopolitics can influence the supply side
(20:57):
of that equation. So you know, increased pressure on all
those markets are definitely, uh, you know, raising the stakes.
And in each of these countries, you know, these ambitious
climate targets that they set up have have really been challenged.
You know, last month was supposed to be a big milestone, right,
Europe was supposed to get together and come to this
(21:18):
big agreement, this final agreement on their on their long
term twenty forty targets, and and and they kicked that
can down the road, and and now those countries are
fighting about that. There's more domestic spending demands on each
of these countries. In some cases, these countries are wanting
to siphon off more money for defense spending and things
like that, and and and and more political uh unease
(21:41):
with some of the ambitious spending targets that go along
with these these green goals.
Speaker 3 (21:45):
And if that wasn't enough, you just have to throw
in artificial intelligence, which we have spent months thinking about,
you know, the big build out of our sovision intelligence
the Energy demand ben that is going to also really
underline some of the difficulties in the energy space. How
do you think that the impact of AI is going
to affect your forecast when it comes to power demand?
(22:08):
How are you thinking about this oncoming technology.
Speaker 8 (22:11):
So there's a mass of amount of interest in the
impact that AI is going to have on power demand,
on prices more generally as well for consumers. Yeah, we've
been looking at what the likely development of AI data
centers basically the hyperscals, but we're looking at out to
twenty thirty five the power demand from data centers. We're
expecting to have quadrupled from where it is right now.
(22:33):
That's only actually four point four percent of all the
electricity demand worldwide, So it's a small proportion of the
electricity worldwide, but it's where it happens and when it happens,
I suppose, which is really important. Now, if in twenty
thirty five you put all the data centers together, they
would be and to look at them as if they
were a country, they would be the fourth largest country
in the world, behind the US, China, India. Then there's
(22:56):
data centers that sort of a demand center. So it
is good, it is going to be very big. That said,
as one of the one of the ten executives in
one of the AI compies are saying this week, you know,
if there's only one thing you really need to know
about AI, which is it's changing so fast and we
don't quite know what's going to happen. So so the
forecasting here is going to be is obviously going to
be quite tricky. Yeah, short term, we expect the demand
(23:18):
to be demand for power to be supplied by a
rather traditional sources, so it is going to be cold
and gas coming in. That's in the short term because
the buildout is so rapid so places in the US
like Virginia and Oregon, Texas and Ohio which have classically
I've been able to have been able to supplied again
to benefit from the immediate demand, but longer term than
renewables have an opportunity to move in here.
Speaker 7 (23:38):
Yeah, and that's that's a turn that we see, you know,
generally in such a type market like Europe. Is that
not just with data centers, which are traditional sources of
demand for for for for electricity. When the demand gets
high and the prices spike or maybe the supplies can
you know, constrained, they switch on the traditional sources of
of of of power to supplement that grid. That means,
(24:01):
you know, switching on a gas plant and using what
can be switched on more reliably than maybe the wind
or the solar, which you know might not be coming
in the middle of a cold, dark day.
Speaker 3 (24:14):
EF's Ben Vickers and Bloomberg's Jay Wurtz thank you so much.
We'll have full coverage of the upcoming bn EF summit
on the fourteenth and fifteenth of October across Bloomberg platforms.
I'm Caroline Hepge here in London and you can catch
us every weekday morning for Bloomberg Daybreak you at beginning
at six am in London. That's one am on Wall Street.
Speaker 2 (24:33):
Nathan, Thanks Caroline. Then coming up on Bloomberg Daybreak Weekend,
Gold retreats from a fresh record, we speak to one
of Wall Street's biggest names about the future for everyone's
favorite metal. I'm Nathan Hagar, and this is Bloomberg. This
(24:58):
is Bloomberg Daybreak Weekend Global look ahead at the top
stories for investors in the coming week. I'm Nathan Hager
in Washington. This week, gold prices topped four thousand for
the first time ever. This year has seen a meteoric
rise for the precious metal. Year to date, it's up
a whopping fifty percent, and that gain is catching the
eye of one of Wall Street's biggest names. Ken Griffin,
(25:21):
the CEO of Citadel, says the surgeon gold could point
to a move away from the dollar, and he says
that's concerning. Ken Griffin sat down for a wide ranging
interview with Bloomberg's Francine Loqua to way in on gold's
future and the prospects for a US recession on the horizon.
Let's listen into that conversation now.
Speaker 9 (25:39):
Let's just cut to the chase.
Speaker 10 (25:41):
Inflation is substantially about target and substantially above target in
all forecasts for next year. I mean, it's part of
the reason the dollars depreciated by about ten percent in
the first half of this year. It's the single biggest
decline in the US dollars six months in fifty years.
Gold is that record highs and the appreciation in other
(26:07):
dollar substitutes, to use that word loosely, and items like
crypto for example, is unbelievable. So we're seeing substantial asset
inflation away from the dollar as people are looking for
ways to effectively de dollarize or de risk their portfolios
visa vus sovereign risk.
Speaker 11 (26:28):
Are you really seeing that?
Speaker 9 (26:31):
Just check the price of goal. Well, I mean, I
don't have to look very hard.
Speaker 11 (26:34):
Its own, it's a life of its own.
Speaker 9 (26:37):
Gold, No, but it's a life of its own.
Speaker 10 (26:40):
As you see sovereigns around the world, there's central banks
around the world, as you see individual investors around the
world go, you know what, I now view gold as
a safe harbor asset in a way that the dollar
used to be viewed. That's what's really concerning to me
and There's been plenty of published research in recent weeks
(27:03):
months about foreign investors now when they buy US equities,
hedging the returns back to their local currency. So that
again is a bifurcation of I'm going to bet on
American business, but I want to immunize some of my
sovereign exposure to the United States.
Speaker 11 (27:22):
Can the previous panels talking about the shutdown, given where
we are in the shutdown, can the FED properly do
its job at the end of the month in these
circumstances where we may not have enough data.
Speaker 10 (27:32):
I don't think the data over a few weeks should
really be that determinative to the FED.
Speaker 9 (27:38):
I mean, that's sort of over.
Speaker 10 (27:41):
Overgrandized, is what the impact or importance to that data is,
particularly with the sampling errors that's intrinsic in how that
data is produced and compiled for the FED. I just
think that's a bit of a misplaced warrior concern.
Speaker 11 (27:56):
Do you worry about the shutdown full stop?
Speaker 9 (27:58):
Look?
Speaker 10 (28:00):
Shut down a symbolic of a different problem, which is
the dysfunction between the Republican and Democratic Party on resolving
issues with respect to the budget of the United States
of America, and to be clear both parties today are
guilty of just profligate spending. You know, as I said
at the start, the US fiscal situation is that of
(28:21):
a nation that's trying to work its way out of
a recession.
Speaker 9 (28:25):
Except the reality is we're.
Speaker 10 (28:26):
Multiple years into a very high period of growth. This
is where we should be running a deficit of you know,
in the Clinton day, as we ran a surplus at
this point in the business cycle, We're now running a
deficit of close to six to seven percent, depending upon
on where a number of things land. That is just
completely irresponsible. And so what's amazing is we're having a
(28:50):
shutdown debate over the scheme of things a relatively small
amount of money, and neither party is stepping up the
plate to deal with or grapple with the reality that
the United States needs to endure a fair amount of
fiscal reform to be in a path for long term sustainability.
Speaker 11 (29:06):
Why is it not being talked about?
Speaker 10 (29:09):
It's politically unpopular, and unfortunately politics have gotten shorter and
shorter and shorter in horizon. You know, can you imagine that,
like I said, in the Clinton day, as they signed
a budget with a surplus, and yet that was in
our lifetime. It's been a long time since we've seen
that level of discipline in Washington around managing the affairs
(29:30):
of the US economy.
Speaker 11 (29:32):
You worry a lot about debt, or you worry about debt,
what's the way I don't.
Speaker 10 (29:36):
I mean you must also, like we all have to
worry about the level of debt we have in the
United States, and the market is pretty.
Speaker 9 (29:42):
Cool about it. The market is we'll look past it
for a few years.
Speaker 10 (29:49):
But if you go out with anybody to talk about
what they worry about.
Speaker 9 (29:53):
With respect to the US economy, the.
Speaker 10 (29:56):
Fiscal situation is almost always top of the So you know,
I think there's one thing to keep in mind, which
is acid prices reflect a level of exuberance that we
see today.
Speaker 9 (30:08):
But I got to tell you, if you're out with.
Speaker 10 (30:10):
With anybody who's the asset manage of business top of
his concerns, the level of spending in Washington is always
top three, if not.
Speaker 9 (30:20):
Number one, on the list.
Speaker 11 (30:21):
What's the way out?
Speaker 9 (30:23):
Well, the way out is we need I mean, first
and foremost.
Speaker 10 (30:28):
Growth is an important part of the way out, and
this is where the Trump's administration focus on deregulation is
so important. It's so important in terms of creating an
environment in which growth can exist, like really important. Unleash
unleashed the animal spirits in America. And the one thing
(30:49):
about this country different than most countries is the entreal
class in this country is incredibly ambitious and it's really
able to make profound changes happen.
Speaker 9 (31:00):
I mean, if you look at if you look across
our investment.
Speaker 10 (31:02):
Portfolios, a substantial portion of all the money we invest
is in business has started in the last fifty years.
I mean, it's it's remarkable the wealth created in this
country by newly formed businesses.
Speaker 9 (31:19):
It's just stunny. It's the envy of the world.
Speaker 10 (31:23):
And the Trump administration is certainly taking steps to help
encourage that continued American success story. But we also need
to give real consideration to tax policy and to spending policies.
And I think that the the how are they rebranding,
(31:44):
rebranding the Big Beautiful Bill at this point?
Speaker 9 (31:47):
Do you know what the rebranding is going to be? Yet?
Speaker 11 (31:49):
How would you rebrand it?
Speaker 9 (31:51):
Well?
Speaker 10 (31:51):
I mean, I don't think there's a nice way to
put lipstick on that pig. I mean, it's it's a
it's a pro cyclical tax cut late in the in
the economic cycle, and you know, everybody in this room, like,
let's be clear, no one wants to pay more in taxes.
But if you're not on a sustainable set of tax
policies in the best of times, what policies.
Speaker 9 (32:14):
Will that unleash in the worst of times?
Speaker 10 (32:16):
You know, for example, the United States head towards a
wealth tax when the inevitable bills come due, will be
head towards tax rates that we last saw in Europe
sixty seventy eighty percent as the inevitable bills come do, Like,
what is the long term consequence of these policies.
Speaker 9 (32:35):
Right here, right now?
Speaker 10 (32:36):
And I think people are very concerned about what that
might be in ten or fifteen or twenty years. How
to inheritance taxes have to change in light of the
tremendous amount of wealth held by the baby boomers and
the tremendous amount of debt that their generation was a
part of. So I think these are going to be
really interesting policy debates that will merge seven years, ten years,
(32:58):
fifteen years down the road, which could have some pretty
adverse consequences. I mean, particularly for America. Not furialism today
is not sure. You're like, if I build a great business,
I will get to keep a substantial amount of wealth
I create. If you go back to a world of
seventy percent tax rates that we had in this country
in this last century, maybe throwing a wealth tax for
good measure you may really impact that zeitgeist that is
(33:22):
so powerful in terms of our economic prosperity.
Speaker 11 (33:25):
And where do you see the animal spirits in the
US Because a lot of chief executives say, look, they
like some of the policies, but there are also a
lot of policies it could be visas or others, and
because they're uncertain where the next one comes from, they're
a little bit reluctant to spend.
Speaker 10 (33:40):
Right now, Well, I mean, let's be clear that the
Trump administration has been able to give us a lot
that we love and a lot that we hate. Right,
They're an equal opportunity giver. And on the pro side
is clearly the push for deregulation is clearly a message
to American whether it's small business owners or entrepreneurs, that
(34:03):
this country wants to see our commercial class succeed. That's
like a foreign language to the Biden administration. I mean
they had no connectivity with American business. The Trump administration
is very connected in a very different and profound way.
Speaker 9 (34:19):
But having said that, the terror policy has.
Speaker 10 (34:22):
Had incredibly uneven impacts across the commercial landscape.
Speaker 9 (34:28):
I mean, I really do feel sorry for the small.
Speaker 10 (34:30):
And medium sized businesses that are single source in terms
of their goods from from Asia who are now seeing
tariffs that are at levels that are unimaginable in the
context of their business model. They're really going to be
in a world of hurt over the months ahead, and
they're not going to have the flexibility that a large
(34:50):
conglomerate will have and being able to re architects, supply
chains and navigate around these issues.
Speaker 9 (34:56):
So that's an.
Speaker 10 (34:57):
Area that's that's quite painful to watch. The impact on farmers.
I mean that the Chinese have voted very clearly to
buy their food products from other countries, and it's really
hitting the American farming community quite hards. That's painful to
watch play out. The immigration policies, I must say, I
scratch my head over we as a nation are facing
(35:22):
a birth rate that's below that required to maintain our population.
So unless the United States actually wants to shrink in size.
Over the next fifty years, we're going to have to
permit immigration, and I would think that our policies would
be around trying to encourage the best and brightest around
the world coming to the United States and building careers
(35:44):
and building families and building roots in our country. You know,
I've long said every single student in the United States
with a STEM degree should get a green card, staple
that diploma and a path to citizenship. You know, roughly
fifty percent of all the Silicon Values startups are started
by immigrants. I mean, it's just remarkable how this country
(36:06):
has won in the global war for talent, and.
Speaker 9 (36:08):
We should continue to pursue that aggressively. And then on
the millions of people who came.
Speaker 10 (36:14):
Across the borders in the last several years, you know,
I applauded the President for controlling our borders. It was
really important to stop that flow of illegal immigration. And unfortunately,
as you and I both know, a number of countries
in South and Central America didn't send us their best
and brightest. They did empty their prisons and send people
to the United States that we really should not have
(36:36):
welcomed warmly. So I applaud the President for starting the borders.
But those who've come to this country, who have placed
roots here, who are working and contributing to our economy,
we should find a path for them to be able
to stay here and continue to contribute. They're important in agriculture,
they're important construction, they're important in the leisure industries. They
(36:58):
do a lot of jobs that will be damn near
impossible for us to fill with American American born labors.
Speaker 9 (37:06):
That's just gonna be really tough.
Speaker 10 (37:08):
And what gets lost in some of the debate is
they're not taking jobs from Americans buy and large, they're
actually playing critical roles at help.
Speaker 9 (37:17):
American businesses thrive and succeed that.
Speaker 10 (37:19):
Allow us to employ more people at higher wages across
the broader economy. So I think when it comes to
immigration at large, I think we've come off the rails
and we really do need to rethink our policies.
Speaker 2 (37:31):
That's Citadel CEO Ken Griffin speaking with Bloomberg's franc Sine Laqua.
The conversation was part of this week Citadel Securities conference
in Manhattan, and for more you can catch the full
interview on the Bloomberg Podcasts YouTube channel. And that does
it for this edition of Bloomberg day Break Weekend. Join
us again Monday morning at five am Wall Street Time
for the latest DOUN, markets overseas, and the news you
(37:53):
need to start your day. I'm Nathan Hager. To stay
with us. Top stories and global business headlines are coming
up right now.
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