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You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple, card Playing and Broun Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

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Mollie Smith sitting in for Alex Steel on Paul Sweeney. You're live here on our Bloomberg Interactive Broker Studio or streaming live on YouTube as well. Which seems like for the last five, six, seven years, there's been this growing tech cold war between China and the West, and now we've got a story out about the chip maker. ASML Holdings a CEO, he expects pressure to grow from the US to further restrict sales of semiconductor technology to China. That's the biggest market for the Dutch producer of chip making machines. Man Deep Sing joins us, he's the our tech dude, He's ahead of all the technology stuff at Bloomberg Intelligence. Man Deep talk to us about the chip market China as a customer, how do you think this is going to play out? Because again it feels like there is this tech cold war that's right there.

Mollie Smith sitting in for Alex Steel on Paul Sweeney. You're live here on our Bloomberg Interactive Broker Studio or streaming live on YouTube as well. Which seems like for the last five, six, seven years, there's been this growing tech cold war between China and the West, and now we've got a story out about the chip maker. ASML Holdings a CEO, he expects pressure to grow from the US to further restrict sales of semiconductor technology to China. That's the biggest market for the Dutch producer of chip making machines. Man Deep Sing joins us, he's the our tech dude, He's ahead of all the technology stuff at Bloomberg Intelligence. Man Deep talk to us about the chip market China as a customer, how do you think this is going to play out? Because again it feels like there is this tech cold war that's right there.

Yeah, I mean when you look at a company like SML, which almost did you know, forty five percent of their revenue from selling to Chinese customers over the past twelve months and they guide it to that percentage going to about twenty percent next year. So clearly the deceleration is huge in terms of the China exposure, and partly that has to do with the you know, the Cold War or the geopolitical element that you just alluded to. And look, it's not surprising given ASML the machines they make underpin the latest factories that are producing these chips that everyone wants to train their AI on. So when you look at the semiconductor chain, I mean ASML sits at pretty much at the bottom end of what it takes to set up a semiconductor factory. They are deemed as one of the biggest beneficiaries of the Chips Act. When you think about you know, the US government wanting to set up semiconductor fabs in the US, they are one of the prime beneficiaries. But then the offset is the China business that is going down, and that's why you're seeing you know, valuation compressed recently.

Yeah, I mean when you look at a company like SML, which almost did you know, forty five percent of their revenue from selling to Chinese customers over the past twelve months and they guide it to that percentage going to about twenty percent next year. So clearly the deceleration is huge in terms of the China exposure, and partly that has to do with the you know, the Cold War or the geopolitical element that you just alluded to. And look, it's not surprising given ASML the machines they make underpin the latest factories that are producing these chips that everyone wants to train their AI on. So when you look at the semiconductor chain, I mean ASML sits at pretty much at the bottom end of what it takes to set up a semiconductor factory. They are deemed as one of the biggest beneficiaries of the Chips Act. When you think about you know, the US government wanting to set up semiconductor fabs in the US, they are one of the prime beneficiaries. But then the offset is the China business that is going down, and that's why you're seeing you know, valuation compressed recently.

Can you just help catch us all up here, Mandy, because this has been a crazy week with ASML, going back to the earnings announcement last week when they cut their outlook for next year. You know, the orders were very disappointing. This triggered this whole route in the semiconductor industry. Can you just catch us all up here on like what the past week has been like?

Can you just help catch us all up here, Mandy, because this has been a crazy week with ASML, going back to the earnings announcement last week when they cut their outlook for next year. You know, the orders were very disappointing. This triggered this whole route in the semiconductor industry. Can you just catch us all up here on like what the past week has been like?

Yeah, in fact, it's been a roller coaster because you had the ASML disappointment and then TSMC comes out the next day and they say AI revenue will be almost mid teens, which was negligible over the past you know, three quarters. So clearly there's been a big kind of sentiment when it comes to TSMC being very bullish on AI versus ASML downplaying you know, the next twelve months. And that's partly to do with where TSMC sits, which is they are getting all these orders from Nvidia as well as other hyperscalers who want to get their chips manufactured at TSMC, whereas ASML has got two companies that are pulling back on their orders, Intel and Samsung, and TSMC is the only one that's buying from ASML right now. So TSMC has a lot of bargaining power because they are the only ones who can raise their capex. Intel is really struggling. Samsung, we have heard, is also struggling now. So both those companies, the next two big buyers of ASML, are looking to pair back their spend and that's why I think TSMC is in a great spot both from the customer side as well as having the supplier bargaining power.

Yeah, in fact, it's been a roller coaster because you had the ASML disappointment and then TSMC comes out the next day and they say AI revenue will be almost mid teens, which was negligible over the past you know, three quarters. So clearly there's been a big kind of sentiment when it comes to TSMC being very bullish on AI versus ASML downplaying you know, the next twelve months. And that's partly to do with where TSMC sits, which is they are getting all these orders from Nvidia as well as other hyperscalers who want to get their chips manufactured at TSMC, whereas ASML has got two companies that are pulling back on their orders, Intel and Samsung, and TSMC is the only one that's buying from ASML right now. So TSMC has a lot of bargaining power because they are the only ones who can raise their capex. Intel is really struggling. Samsung, we have heard, is also struggling now. So both those companies, the next two big buyers of ASML, are looking to pair back their spend and that's why I think TSMC is in a great spot both from the customer side as well as having the supplier bargaining power.

All Right, ASML is a Dutch company. If the US tells me to do something, why don't I just tell them to go take a hike?

All Right, ASML is a Dutch company. If the US tells me to do something, why don't I just tell them to go take a hike?

Well, I mean it goes back to how these kind of countries work as a block. Look, I think when the US government kind of asks a country to enforce their restrictions, then most of the times they end up doing that because of you know, the trading aspect of how these companies just operate as a block. And in this case, I think the restrictions are very targeted towards the advanced machines that are used for latest leading node manufacturing. So I think again it comes down to how the politics of it is really focused on, and it's hard for the companies to control that, right, So if the governments agree on something they have to comply with the restrictions.

Well, I mean it goes back to how these kind of countries work as a block. Look, I think when the US government kind of asks a country to enforce their restrictions, then most of the times they end up doing that because of you know, the trading aspect of how these companies just operate as a block. And in this case, I think the restrictions are very targeted towards the advanced machines that are used for latest leading node manufacturing. So I think again it comes down to how the politics of it is really focused on, and it's hard for the companies to control that, right, So if the governments agree on something they have to comply with the restrictions.

So we have the ASML CEO.

So we have the ASML CEO.

He's been speaking at the Bloomberg Tech Summit recently, and he said last week that he sees the chip market's long way to recovery extending well into next year. I think that's a fair timeline given all of what's going on in the industry right now.

He's been speaking at the Bloomberg Tech Summit recently, and he said last week that he sees the chip market's long way to recovery extending well into next year. I think that's a fair timeline given all of what's going on in the industry right now.

I mean there are two pockets here. One is the AI pocket, which is really firing on all cylinders. I mean, companies have insatiable demand and we've seen that with TSMC and Nvidia really kind of talking about it endlessly. On the other side, the traditional markets like smartphones, PCs, autos, they're still slow. I mean, there has been a rebound, but it's been very kind of flatish for a few quarters. And even the prognosis is not like you're going to see massive acceleration in top round growth. So that's where I think companies that are exposed to AI are growing much faster than the companies that are exposed to these traditional land markets.

I mean there are two pockets here. One is the AI pocket, which is really firing on all cylinders. I mean, companies have insatiable demand and we've seen that with TSMC and Nvidia really kind of talking about it endlessly. On the other side, the traditional markets like smartphones, PCs, autos, they're still slow. I mean, there has been a rebound, but it's been very kind of flatish for a few quarters. And even the prognosis is not like you're going to see massive acceleration in top round growth. So that's where I think companies that are exposed to AI are growing much faster than the companies that are exposed to these traditional land markets.

And is that just because the market for smartphones is pretty saturated at this point? Like don't we all pretty much a lot? I mean, it seems pretty ubiquitous now, I mean, how much more are there really like these big markets that are waiting to be tapped into.

And is that just because the market for smartphones is pretty saturated at this point? Like don't we all pretty much a lot? I mean, it seems pretty ubiquitous now, I mean, how much more are there really like these big markets that are waiting to be tapped into.

I mean that's where AI will play a role in terms of driving upgrade for your smartphone. It's just right now, AI is being consumed and deployed almost solely on cloud. That's where the cloud vendors are seeing it in their results. But for every edge device, whether it's PC, smartphone, nobody has talked about using AI on the device. I mean, you can do it through your app that is running on the cloud, but you don't need to upgrade your smartphone for that, And that's the big driver.

I mean that's where AI will play a role in terms of driving upgrade for your smartphone. It's just right now, AI is being consumed and deployed almost solely on cloud. That's where the cloud vendors are seeing it in their results. But for every edge device, whether it's PC, smartphone, nobody has talked about using AI on the device. I mean, you can do it through your app that is running on the cloud, but you don't need to upgrade your smartphone for that, And that's the big driver.

I just upgraded to the iPhone sixteen pro. Somebody told me that you're partner what's his name, anurag upgrade. Look you show me a bill of goods here trying to pad the Apple numbers it is.

I just upgraded to the iPhone sixteen pro. Somebody told me that you're partner what's his name, anurag upgrade. Look you show me a bill of goods here trying to pad the Apple numbers it is.

And look it's it still has a great camera, So I think that upgrade.

And look it's it still has a great camera, So I think that upgrade.

I was in Ireland. I was in Ireland for like eight days. I took three pictures, two of like sheep and one of the pig.

I was in Ireland. I was in Ireland for like eight days. I took three pictures, two of like sheep and one of the pig.

You're under your lif outset fall.

You're under your lif outset fall.

What's the fascination.

What's the fascination.

With the sheep ball?

With the sheep ball?

There's more sheep than people there, and they're everywhere.

There's more sheep than people there, and they're everywhere.

I mean, it's unbelievable. No wonder my.

I mean, it's unbelievable. No wonder my.

People left when the first potato a bit All right, men Deep saying thank you so much.

People left when the first potato a bit All right, men Deep saying thank you so much.

We appreciated.

We appreciated.

Men Deep sing senior tech industry analysts for Bloomberg Intelligence, trying to figure out what's going on in the chip business again ASML, they're cautious.

Men Deep sing senior tech industry analysts for Bloomberg Intelligence, trying to figure out what's going on in the chip business again ASML, they're cautious.

Taiwan Simmy says, no, no, no, no, no.

Taiwan Simmy says, no, no, no, no, no.

Business is still good.

Business is still good.

So honestly, I'm trying to more figure out what's going on with your picture taking.

So honestly, I'm trying to more figure out what's going on with your picture taking.

Yeah, personally, I'm like what you have to show for from that?

Yeah, personally, I'm like what you have to show for from that?

You know, you got to live the moment, be in the moment, stop recording it and taking photos of it, just live in it.

You know, you got to live the moment, be in the moment, stop recording it and taking photos of it, just live in it.

I think this is really just like right here, this is like the difference between what a man and a woman would take pictures of.

I think this is really just like right here, this is like the difference between what a man and a woman would take pictures of.

I think it's more generational. Actually yeah, okay, we could do generational too.

I think it's more generational. Actually yeah, okay, we could do generational too.

I mean, you know, you see a picture from thirty forty years ago, if Tiger Woods hitting a shout a Jack Nicholas, nobody has a phone out.

I mean, you know, you see a picture from thirty forty years ago, if Tiger Woods hitting a shout a Jack Nicholas, nobody has a phone out.

But now go figure.

But now go figure.

You're listening to the Bloomberg Intelligence podcast. Catch us Live weekdays at ten am Eastern on applecard Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station just say Alexa playing Bloomberg eleven thirty.

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Let's talk about European banks. We had the big US banks report over the last week or so, really strong numbers coming out of the big global US banks and investment banks. We're going to get some of the European folks coming up, and we also got some news coming out of HSBC, one of the big European and Asian banks.

Let's talk about European banks. We had the big US banks report over the last week or so, really strong numbers coming out of the big global US banks and investment banks. We're going to get some of the European folks coming up, and we also got some news coming out of HSBC, one of the big European and Asian banks.

Kind of a little restructuring there.

Kind of a little restructuring there.

So let's check in with our euro banks official, Tamash Netzel. He's a senior European banks analyst for Bloomberg Intelligence. Tomash, thanks so much for joining us here.

So let's check in with our euro banks official, Tamash Netzel. He's a senior European banks analyst for Bloomberg Intelligence. Tomash, thanks so much for joining us here.

Talk to us about HSBC.

Talk to us about HSBC.

First here they got a pretty big restructuring going on at this bank. Tell us what's going on there at HSBC.

First here they got a pretty big restructuring going on at this bank. Tell us what's going on there at HSBC.

Yes, thank you very much for having me. Yes, definitely. Today, all over the U you can hear the biggest restructuring in almost a decade. And I would say that I think it is the continuation of overhaul over restructuring of the business which started at the beginning of twenty twenty more or less by previous COEO. We have got new CEO starting his job at first of September, and I think one of his one of his priority was how to how to make sure that we can sustain meetings rot for beyond two the twenty four to twenty five how do we deal with the business in the clinic interest rate environment? And what do we do with the costs? And the restructuring of the of his business he proposed and introduced from first January twenty twenty five is just to address others the issues that the HSBC is facing, and the biggest one is of course controlling the cost Can you talk.

Yes, thank you very much for having me. Yes, definitely. Today, all over the U you can hear the biggest restructuring in almost a decade. And I would say that I think it is the continuation of overhaul over restructuring of the business which started at the beginning of twenty twenty more or less by previous COEO. We have got new CEO starting his job at first of September, and I think one of his one of his priority was how to how to make sure that we can sustain meetings rot for beyond two the twenty four to twenty five how do we deal with the business in the clinic interest rate environment? And what do we do with the costs? And the restructuring of the of his business he proposed and introduced from first January twenty twenty five is just to address others the issues that the HSBC is facing, and the biggest one is of course controlling the cost Can you talk.

To us about what some of those costs are?

To us about what some of those costs are?

And I mean when I hear firms are trying to cut costs, I immediately think they're trying to cut jobs. And if that's also going to be part of this restructuring, yeah, that's.

And I mean when I hear firms are trying to cut costs, I immediately think they're trying to cut jobs. And if that's also going to be part of this restructuring, yeah, that's.

You know, that's very interesting because you know they talk about the restatturing, they talk about new divisions, new heads of the divisions, et cetera. And maybe there's a maybe six cuts on the executive committee. But we don't get any numbers. We don't know how much the restructuring is gonna cost. We don't know what is the black figure in terms of cost savings they would have to expect and more more important, we don't know how much this restructuring will cost. So yes, definitely there's lots of details. There's lots of promises with restructuring, but you know, we are yet still short on details. So we would like definitely know where the cost CUDEG may come. Where they're gonna cut jobs, potentially some jobs if they emerge two divisions. There are definitely some overlaps in operations, so there's definitely some podcasts jobs, potential cuts. So of course we don't know anything of this yet right. I think there was a rumors that two fo weeks ago that reported by Field of Times that there's a around three hundred millions of savings planned by new new management. We don't know whether that's true. It has not been confirmed, but I think three hundred millions would not be enough for HSBC to move that on the investment sentiment. If you look at the forecast for for for HSBC at the moment, you know the revenue is going to grow by not around five million dollars in the next two years, threw twenty twenty six. Costs are going to grow by more than two billions, So they have quite negative gap which they which the CEO I think will have to address with more details and more and more more about to the point of the plan.

You know, that's very interesting because you know they talk about the restatturing, they talk about new divisions, new heads of the divisions, et cetera. And maybe there's a maybe six cuts on the executive committee. But we don't get any numbers. We don't know how much the restructuring is gonna cost. We don't know what is the black figure in terms of cost savings they would have to expect and more more important, we don't know how much this restructuring will cost. So yes, definitely there's lots of details. There's lots of promises with restructuring, but you know, we are yet still short on details. So we would like definitely know where the cost CUDEG may come. Where they're gonna cut jobs, potentially some jobs if they emerge two divisions. There are definitely some overlaps in operations, so there's definitely some podcasts jobs, potential cuts. So of course we don't know anything of this yet right. I think there was a rumors that two fo weeks ago that reported by Field of Times that there's a around three hundred millions of savings planned by new new management. We don't know whether that's true. It has not been confirmed, but I think three hundred millions would not be enough for HSBC to move that on the investment sentiment. If you look at the forecast for for for HSBC at the moment, you know the revenue is going to grow by not around five million dollars in the next two years, threw twenty twenty six. Costs are going to grow by more than two billions, So they have quite negative gap which they which the CEO I think will have to address with more details and more and more more about to the point of the plan.

It sounds like you could all use a lot more detail here.

It sounds like you could all use a lot more detail here.

What I heard you just say is that we don't know a lot of what all of these details are going to be. I mean, it looks like the stocks mildly up a little bit today, houses generally being received you know, by you, by the broader analyst community.

What I heard you just say is that we don't know a lot of what all of these details are going to be. I mean, it looks like the stocks mildly up a little bit today, houses generally being received you know, by you, by the broader analyst community.

Yeah.

Yeah.

Well our initial directional Yeah, well, well done. This is this is the right step in the right directional shoulding separating Hong Kong and China business, creating new new divisions, hoping creating some synergies post PRODUCTIBA. It's all good, it's all good on paper, but you know, we don't know details. We don't know. That's why the h shares price today shroud off this news kind of right with flatish. I think market is expecting more from from more bold moves by new CEO. There's definitely more deeply cost savings measure needed for a bout the banks. So I think we're going to expect day reporting three KY results next week. We don't know how much they're going to disclose over there. Maybe more will be disclosed during the four KY results, but as soon as as as long as we don't have much details nothing to work on, it's very difficult to gauge what is the direction of travels for ROT and HBC and where they want to go to. We do have our focus at the on HSBC. We we talk about where they can cut costs, how they can boost productivity with a better age of those but you know, we expect as well as management to come with a solid plan to do deliver on those metrics.

Well our initial directional Yeah, well, well done. This is this is the right step in the right directional shoulding separating Hong Kong and China business, creating new new divisions, hoping creating some synergies post PRODUCTIBA. It's all good, it's all good on paper, but you know, we don't know details. We don't know. That's why the h shares price today shroud off this news kind of right with flatish. I think market is expecting more from from more bold moves by new CEO. There's definitely more deeply cost savings measure needed for a bout the banks. So I think we're going to expect day reporting three KY results next week. We don't know how much they're going to disclose over there. Maybe more will be disclosed during the four KY results, but as soon as as as long as we don't have much details nothing to work on, it's very difficult to gauge what is the direction of travels for ROT and HBC and where they want to go to. We do have our focus at the on HSBC. We we talk about where they can cut costs, how they can boost productivity with a better age of those but you know, we expect as well as management to come with a solid plan to do deliver on those metrics.

To mush let's zoom out a little bit on your European bank coverage. We've had the US some of the big US banks report and some pretty solid numbers, mostly on the capital market side. What are you expecting from the European banks this earnings season?

To mush let's zoom out a little bit on your European bank coverage. We've had the US some of the big US banks report and some pretty solid numbers, mostly on the capital market side. What are you expecting from the European banks this earnings season?

Yeah, so definitely know the focus will be on on the clinic interest rates and the impact on NII because European banks being running on this on this high interest rates for quite a long time and with now the expectations the interest will gone down, so there's some revenue pressure coming. But if you look at the geographical you know, it's very interesting to look at Europe from perspective or UK banks and europe banks or UK banks are very well positioned to the clinic interest rates because of the hedges. The for revenue forecast is for four to six persons through twenty twenty six, which is much higher than other European banks. So there are some banks which are exposed positively let's put to the clinic interest rates, which can be against common sense, but yes they are UK bank to go the headges. European banks know they struggle more with an II revenue generation. Then when when you look at you know, low base of investment bank revenues for backers and the others know that can be a positively maybe a positive surprise over there as well. So in general I think, you know, we're going to expect more comments on out of twenty five and how revenue will will travel next year. Course rights are going to cut more aggrecively and that would be determined the performance of the short crisis.

Yeah, so definitely know the focus will be on on the clinic interest rates and the impact on NII because European banks being running on this on this high interest rates for quite a long time and with now the expectations the interest will gone down, so there's some revenue pressure coming. But if you look at the geographical you know, it's very interesting to look at Europe from perspective or UK banks and europe banks or UK banks are very well positioned to the clinic interest rates because of the hedges. The for revenue forecast is for four to six persons through twenty twenty six, which is much higher than other European banks. So there are some banks which are exposed positively let's put to the clinic interest rates, which can be against common sense, but yes they are UK bank to go the headges. European banks know they struggle more with an II revenue generation. Then when when you look at you know, low base of investment bank revenues for backers and the others know that can be a positively maybe a positive surprise over there as well. So in general I think, you know, we're going to expect more comments on out of twenty five and how revenue will will travel next year. Course rights are going to cut more aggrecively and that would be determined the performance of the short crisis.

Tomash Great Stuff has always appreciated Tomas set so he's a senior European banks analyst for Bloomberg Intelligency is based in London. HSBC is in the news today kicking off for restructuring and trying to get that cost structure more in line with what they expect to be at a tighter revenue environment with interest rates coming down. New CFO, the first female CFO, and the bank's history.

Tomash Great Stuff has always appreciated Tomas set so he's a senior European banks analyst for Bloomberg Intelligency is based in London. HSBC is in the news today kicking off for restructuring and trying to get that cost structure more in line with what they expect to be at a tighter revenue environment with interest rates coming down. New CFO, the first female CFO, and the bank's history.

How cool is that.

How cool is that.

You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Affo card playing Android otto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

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Let's talk about real banking, regional banking.

Let's talk about real banking, regional banking.

Joe Castillia joins us.

Joe Castillia joins us.

Castilia joins us President and CEO of Citizens Bank of Edmond.

Castilia joins us President and CEO of Citizens Bank of Edmond.

That would be Edmen, Oklahoma.

That would be Edmen, Oklahoma.

Right now, which is basically by Google maps, oklahom.

Right now, which is basically by Google maps, oklahom.

Because I have no idea where that is.

Because I have no idea where that is.

It's basically Oklahoma City, so you're right there in Oka City. So there's a lot of stuff going on in the National Cowboy and Western Heritage Museum.

It's basically Oklahoma City, so you're right there in Oka City. So there's a lot of stuff going on in the National Cowboy and Western Heritage Museum.

That would be my first stop.

That would be my first stop.

I mean, I would think going on Oklahoma football game now.

I mean, I would think going on Oklahoma football game now.

That yeah, Oklahoma that would be a little bit, Yes, a little bit. Jill, thanks so much for joining us here. Talk to us about your bank. Who is your customer for your bank?

That yeah, Oklahoma that would be a little bit, Yes, a little bit. Jill, thanks so much for joining us here. Talk to us about your bank. Who is your customer for your bank?

Yeah, So I get the privilege of being a CEO of a one location, one hundred and twenty four year old community bank located in suburban Oklahoma City and we're located on the same intersection and.

Yeah, So I get the privilege of being a CEO of a one location, one hundred and twenty four year old community bank located in suburban Oklahoma City and we're located on the same intersection and.

We've been since nineteen oh one.

We've been since nineteen oh one.

So that's history, very very trying to a very traditional community bank. The name of citizens been citizens since nineteen oh one. Literally citizens pulling their money together kind of the first like crowdsourcing and then loaning and money out to the rest of the community. But on our board about in two thousand and eight, thousand and nine, the bank went through a turnaround and after that point decided we want to be here.

So that's history, very very trying to a very traditional community bank. The name of citizens been citizens since nineteen oh one. Literally citizens pulling their money together kind of the first like crowdsourcing and then loaning and money out to the rest of the community. But on our board about in two thousand and eight, thousand and nine, the bank went through a turnaround and after that point decided we want to be here.

For another one hundred years. And so it's a very technologic forward bank.

For another one hundred years. And so it's a very technologic forward bank.

So we just launched a digital military bank, so we have a large military group that's part of our customer base. But it's primarily just a traditional community bank where the geographic center.

So we just launched a digital military bank, so we have a large military group that's part of our customer base. But it's primarily just a traditional community bank where the geographic center.

Militaries all through your family, right.

Militaries all through your family, right.

Yeah, So I was enlisted, my husband retired Army's sons Army daughters.

Yeah, So I was enlisted, my husband retired Army's sons Army daughters.

Navy, well not just West Point Enaval Academy. That's right, Wow, you did your research.

Navy, well not just West Point Enaval Academy. That's right, Wow, you did your research.

Yeah, So I mean so I mean so for a bank like yours, I mean it's I need a checking account, I need a savings account.

Yeah, So I mean so I mean so for a bank like yours, I mean it's I need a checking account, I need a savings account.

Do I do?

Do I do?

Do you guys also do like a mortgage and we do business loans and all that type of thing.

Do you guys also do like a mortgage and we do business loans and all that type of thing.

It is the whenever people say like you should have a niche market and that's the way to be successful, we're the antithesis to that.

It is the whenever people say like you should have a niche market and that's the way to be successful, we're the antithesis to that.

So we do everything. So one stop shop for every it is everything.

So we do everything. So one stop shop for every it is everything.

So I literally will work with a small business perspective owner for three years to help them get bankable so they can achieve their dream, help with families, buy their first home, get that first checking account, stavements account for a youngster. So I mean it's being part of someone's life. And even like when in this environment where the interst rate's changing, if there's any kind of difficulty with the business, we're just walking along the entire way. As someone gets alone. It's not just ending in with that transaction. It's really a relationship over time.

So I literally will work with a small business perspective owner for three years to help them get bankable so they can achieve their dream, help with families, buy their first home, get that first checking account, stavements account for a youngster. So I mean it's being part of someone's life. And even like when in this environment where the interst rate's changing, if there's any kind of difficulty with the business, we're just walking along the entire way. As someone gets alone. It's not just ending in with that transaction. It's really a relationship over time.

And what are your clients coming to you for? Like when whether it's an individual or a business like what. I'm sure they most hear, Oh, rates are going down, but you know, inflation and whatever, and they're probably all like, they have a lot of questions for you, I'm sure, So what are they coming to you for most these days?

And what are your clients coming to you for? Like when whether it's an individual or a business like what. I'm sure they most hear, Oh, rates are going down, but you know, inflation and whatever, and they're probably all like, they have a lot of questions for you, I'm sure, So what are they coming to you for most these days?

Yeah, so we talk really more holistically about the whole business. So it may be that their costs are going up, and how do I know achieve some a scale or how do I partner to be able to get input costs lower?

Yeah, so we talk really more holistically about the whole business. So it may be that their costs are going up, and how do I know achieve some a scale or how do I partner to be able to get input costs lower?

What are some different labor options.

What are some different labor options.

Some of them have left their businesses where they've hired employees now to run and start off the family owned business. Well now they're having to move back in the business because they can't afford the labor costs associated with it. So it's really talking about it all holistically and how do we help them be a competitive advantage for them to be able to manage their business the best way possible. And if that means that it's a lowe own that we can provide, or if it's investing in some type of money market or other asset, and then we're helping them make those decisions.

Some of them have left their businesses where they've hired employees now to run and start off the family owned business. Well now they're having to move back in the business because they can't afford the labor costs associated with it. So it's really talking about it all holistically and how do we help them be a competitive advantage for them to be able to manage their business the best way possible. And if that means that it's a lowe own that we can provide, or if it's investing in some type of money market or other asset, and then we're helping them make those decisions.

You know, when Molly and I hear from the you know, the big banks when they report their earning is one of the things they say they're spending money is in tech technology. But for a bank of your size, how does technology do you? Guys have to play in that game too and have all the apps and do all that kind of stuff.

You know, when Molly and I hear from the you know, the big banks when they report their earning is one of the things they say they're spending money is in tech technology. But for a bank of your size, how does technology do you? Guys have to play in that game too and have all the apps and do all that kind of stuff.

There is no customers not going to say I'm not going to have the same quality of banking services at your bank that I can have somewhere.

There is no customers not going to say I'm not going to have the same quality of banking services at your bank that I can have somewhere.

Else at Chase.

Else at Chase.

So we have to provide the same level of technology, and even better we invent technology. We have a patent on a small business remote small business kind ATM and they're a little bank invented.

So we have to provide the same level of technology, and even better we invent technology. We have a patent on a small business remote small business kind ATM and they're a little bank invented.

And I would.

And I would.

Challenge you if you open your account as a doesn's bank evment, I bet that you would have a better experience doing that then you would at a large institution for no cost. You can sit there and have your checking account, wunch your credit score, not have a lot of fees, and then be able to call me or tech spee twenty four to seven the bank CEO to say hey, I have a question about this.

Challenge you if you open your account as a doesn's bank evment, I bet that you would have a better experience doing that then you would at a large institution for no cost. You can sit there and have your checking account, wunch your credit score, not have a lot of fees, and then be able to call me or tech spee twenty four to seven the bank CEO to say hey, I have a question about this.

Wow that yeah, imagine, I'm not sure.

Wow that yeah, imagine, I'm not sure.

I think you're probably much more accessible than he is, probably to your customers.

I think you're probably much more accessible than he is, probably to your customers.

And I said in the lobby, so you're able to see if there's any anxiety or if there's any concerns, and so you're really accountable and transparent with your customers so that you can really help your community grow.

And I said in the lobby, so you're able to see if there's any anxiety or if there's any concerns, and so you're really accountable and transparent with your customers so that you can really help your community grow.

It was so interesting when you were just saying, I assume this is about small businesses talking about still grappling with labor costs, because I feel like that's something that anecdotally and in the data, we see a lot of that has subsided from really the peak times of you know, maybe two three years ago. But you're saying this is still really a prevalent issue in your community.

It was so interesting when you were just saying, I assume this is about small businesses talking about still grappling with labor costs, because I feel like that's something that anecdotally and in the data, we see a lot of that has subsided from really the peak times of you know, maybe two three years ago. But you're saying this is still really a prevalent issue in your community.

For sure, labor availability I think, O, let me say we have thirty seven months that consistently get below four percent unemployment, and if we hit one more month.

For sure, labor availability I think, O, let me say we have thirty seven months that consistently get below four percent unemployment, and if we hit one more month.

It's a record hot a record long.

It's a record hot a record long.

Period of time of low unemployment. So labor availability is really scarce. And so then you see again like people recruiting their sons and daughters to be working in their food truck where they could previously be able to hire someone to do that.

Period of time of low unemployment. So labor availability is really scarce. And so then you see again like people recruiting their sons and daughters to be working in their food truck where they could previously be able to hire someone to do that.

So talks about the economy in Great Oklahoma City. Is it what is the basis? Is it still energy or is it have you diversity from what is the e commune.

So talks about the economy in Great Oklahoma City. Is it what is the basis? Is it still energy or is it have you diversity from what is the e commune.

It's quite diverse, and so you have to come and visit Oka City and let me give you the grand tour. But I mean a large amount that we have military basis there, large federal government presence, still energy.

It's quite diverse, and so you have to come and visit Oka City and let me give you the grand tour. But I mean a large amount that we have military basis there, large federal government presence, still energy.

Some agriculture.

Some agriculture.

But it's a much more diverse community than it was back in the eighties whenere we were so dependent upon oil and gas. But it still permeates everything in our economy.

But it's a much more diverse community than it was back in the eighties whenere we were so dependent upon oil and gas. But it still permeates everything in our economy.

And how about like what are some of like the you know, the bigger small businesses in the area, Like what kind of what kind of work are they engaged in?

And how about like what are some of like the you know, the bigger small businesses in the area, Like what kind of what kind of work are they engaged in?

Yes, so we have a large presence in the aerospace industry. So Boeing has a large manufacturing plant.

Yes, so we have a large presence in the aerospace industry. So Boeing has a large manufacturing plant.

There, exactly a small business, not a small business.

There, exactly a small business, not a small business.

Really great restaurant scene if you're a foodie, would love a city. So lots of manufacturing, so parts for especially the oil and gas industry. You find there lots of great small businesses. Loves travel stops not a small business now, but started in Oklahoma City. So really great stories of growth and resiliency.

Really great restaurant scene if you're a foodie, would love a city. So lots of manufacturing, so parts for especially the oil and gas industry. You find there lots of great small businesses. Loves travel stops not a small business now, but started in Oklahoma City. So really great stories of growth and resiliency.

You know, the only time I actually have been to Oklahoma was back after one of the tornadoes.

You know, the only time I actually have been to Oklahoma was back after one of the tornadoes.

I think it was about ten years ago near More.

I think it was about ten years ago near More.

Oklahoma, And I'm thinking now, you know, as we've just had these pair of devastating hurricanes in the southeast, I mean, how has it been with I mean, you guys have obviously had your fair share of tornadoes over the years. Like what is it like for you in the banking seat when you have these kind of events and the rebuilding efforts and how much are you involved?

Oklahoma, And I'm thinking now, you know, as we've just had these pair of devastating hurricanes in the southeast, I mean, how has it been with I mean, you guys have obviously had your fair share of tornadoes over the years. Like what is it like for you in the banking seat when you have these kind of events and the rebuilding efforts and how much are you involved?

I mean, what a great question. So as a community bank, you're just always ready. And so whether those are really small disasters that really only you see in your community that don't make the national news, you're running to the aid of your community there, and it certainly at a broader scale, And we're so grateful to be part of a greater community banking network that when are even in this situation where the hurricanes were able to rally around our community makers that are directly impacted to help them in their customers. So I'm having those networks of communities both internally in this little small community kind sector as well as kind of broad in the nation has really allowed a community bank to be much more impactful than just the bank itself.

I mean, what a great question. So as a community bank, you're just always ready. And so whether those are really small disasters that really only you see in your community that don't make the national news, you're running to the aid of your community there, and it certainly at a broader scale, And we're so grateful to be part of a greater community banking network that when are even in this situation where the hurricanes were able to rally around our community makers that are directly impacted to help them in their customers. So I'm having those networks of communities both internally in this little small community kind sector as well as kind of broad in the nation has really allowed a community bank to be much more impactful than just the bank itself.

What's a typical consumer customer for your bank.

What's a typical consumer customer for your bank.

Oh wow, there's just no typical.

Oh wow, there's just no typical.

So it could be I just had a conversation this weekend with an elderly woman who was wanting to buy a trailer, and so we were talking about options for her to be able to have an independent living.

So it could be I just had a conversation this weekend with an elderly woman who was wanting to buy a trailer, and so we were talking about options for her to be able to have an independent living.

Where she wanted to be. So it could be at that level.

Where she wanted to be. So it could be at that level.

Or it could be that you're buying their second home on a really nice lake, or a new car, or that they're trying to finance their kids' education.

Or it could be that you're buying their second home on a really nice lake, or a new car, or that they're trying to finance their kids' education.

So it really runs the gamut. So, but it's typically someone I know.

So it really runs the gamut. So, but it's typically someone I know.

I mean, usually I'm working with them face to face, but it could be just a connection. Actually, last time I was in New York City, there was a small business customer I was connected with. I was trying to sustain their small business. So it just happens, all three connections and relationships.

I mean, usually I'm working with them face to face, but it could be just a connection. Actually, last time I was in New York City, there was a small business customer I was connected with. I was trying to sustain their small business. So it just happens, all three connections and relationships.

How much are you seeing both between individuals and businesses looking for any kind of loans right now? I imagine that they're still probably pretty spooked by the interest rates that are out there, maybe thinking oh rates are coming down, can hold out a little bit longer.

How much are you seeing both between individuals and businesses looking for any kind of loans right now? I imagine that they're still probably pretty spooked by the interest rates that are out there, maybe thinking oh rates are coming down, can hold out a little bit longer.

Is that kind of the narrative right now?

Is that kind of the narrative right now?

Yeah?

Yeah?

I mean, but a lot of them are like, if there are truck stops working, they need the truck now, they can't wait, and so they're trying to figure out how to I work away around this interest rate environment to ensure that can still be profitable. So they're not really playing like the markets like you may do at a larger scale. They really are having to buy something when they need it, but they are considering it as I think about growing or expanding locations or scaling their businesses.

I mean, but a lot of them are like, if there are truck stops working, they need the truck now, they can't wait, and so they're trying to figure out how to I work away around this interest rate environment to ensure that can still be profitable. So they're not really playing like the markets like you may do at a larger scale. They really are having to buy something when they need it, but they are considering it as I think about growing or expanding locations or scaling their businesses.

But many have adjusted to.

But many have adjusted to.

This rate environment and there's still a lot of demand out there, and there's a lot of other cash sources beyond loans still with private equity investors and other government type of programs still available for small business to scale without having necessarily get loans. So the raid environment then it becomes a little bit less consequential.

This rate environment and there's still a lot of demand out there, and there's a lot of other cash sources beyond loans still with private equity investors and other government type of programs still available for small business to scale without having necessarily get loans. So the raid environment then it becomes a little bit less consequential.

Is there a lot of going on in the housing market right there?

Is there a lot of going on in the housing market right there?

Wow?

Wow?

The housing market I think is just tough everywhere. Supply is just so limited, and you have those low rates that people have in their mortgages keeping them from moving, and then the cost of constructions. We didn't have transformers of itailable forever, so they've may be able to bring online developments and you didn't have a lot of availability to be able to build. And so there's still some supply hiccups, especially when you think about municipalities and a lot of the infrastructure that's occurring that's taken away some of the pavers and earth movers that would normally be used to be able to provide greater development opportunities.

The housing market I think is just tough everywhere. Supply is just so limited, and you have those low rates that people have in their mortgages keeping them from moving, and then the cost of constructions. We didn't have transformers of itailable forever, so they've may be able to bring online developments and you didn't have a lot of availability to be able to build. And so there's still some supply hiccups, especially when you think about municipalities and a lot of the infrastructure that's occurring that's taken away some of the pavers and earth movers that would normally be used to be able to provide greater development opportunities.

For one to four family loans.

For one to four family loans.

Was during the pandemic, was Oklahoma City a city that maybe gained population or lost population, goes to New York City here everybody left, you know, and all went down to Florida and so on.

Was during the pandemic, was Oklahoma City a city that maybe gained population or lost population, goes to New York City here everybody left, you know, and all went down to Florida and so on.

Yeah, everybody's becoming in Oklahoma.

Yeah, everybody's becoming in Oklahoma.

So it's like a reverse great Sir Wrath, you know where how so many Californians coming in and so that is putting prices, you know, some price pressure on one to four family homes. But yeah, we have we are a net gain and when it came to migration, both during COVID and afterwards.

So it's like a reverse great Sir Wrath, you know where how so many Californians coming in and so that is putting prices, you know, some price pressure on one to four family homes. But yeah, we have we are a net gain and when it came to migration, both during COVID and afterwards.

We're Norman, Oklahoma, home of the university. Oklahoma's right there. Yeah, So is that where you guys get a lot like your employees, if you need some employees to should hire some graduates.

We're Norman, Oklahoma, home of the university. Oklahoma's right there. Yeah, So is that where you guys get a lot like your employees, if you need some employees to should hire some graduates.

Community we're smacked between University of Oklahoma and Oklahoma State University, and then the state's oldest institution, University of centralklahom It is about two blocks away from the bank. Wow, our bank helps secure the land prior to statehood for that university to be built.

Community we're smacked between University of Oklahoma and Oklahoma State University, and then the state's oldest institution, University of centralklahom It is about two blocks away from the bank. Wow, our bank helps secure the land prior to statehood for that university to be built.

I would think that's got to be pretty good for labor costs if you've got a whole lot of college kids right around there.

I would think that's got to be pretty good for labor costs if you've got a whole lot of college kids right around there.

Now, it helps with having that, but we also have to compete against Texas, which is a growing market and recreuse. More than half the students that are at the University of Oklahoma from Texas. Yes, so we have to keep them in Oklahoma so that.

Now, it helps with having that, but we also have to compete against Texas, which is a growing market and recreuse. More than half the students that are at the University of Oklahoma from Texas. Yes, so we have to keep them in Oklahoma so that.

We can better growing.

We can better growing.

Yes.

Yes.

I mean I went to Syracuse University. Obviously very different climate than in Oklahoma.

I mean I went to Syracuse University. Obviously very different climate than in Oklahoma.

But similar in the sense that they like.

But similar in the sense that they like.

A lot of the employers in the area would say, like, the biggest struggle is that the graduates don't want to stay.

A lot of the employers in the area would say, like, the biggest struggle is that the graduates don't want to stay.

They want to go back to wherever they came from. I imagine maybe that sounds like a little bit of what you're talking about.

They want to go back to wherever they came from. I imagine maybe that sounds like a little bit of what you're talking about.

Yeah, we're much more successful now, and there's a lot of regional institutions that in the rural communities that are producing a lot great talent.

Yeah, we're much more successful now, and there's a lot of regional institutions that in the rural communities that are producing a lot great talent.

Jill, thank you so much for joining us. Jill Stee.

Jill, thank you so much for joining us. Jill Stee.

She's a president and CEO of Citizens Bank of Edmund, Oklahoma. So for Ever and Edmund, I Google mapped that it's basically part of the Oklahoma City metropley a little bit north, but I mean everything's right there.

She's a president and CEO of Citizens Bank of Edmund, Oklahoma. So for Ever and Edmund, I Google mapped that it's basically part of the Oklahoma City metropley a little bit north, but I mean everything's right there.

Yeah. So anyway, I mean, my brother and his friends actually for a bachelor party just went to a football game at Oklahoma, which was, like, I think, got'd be one of the more fun ideas, you know, not doing like the Vegas booze cruise scene, but going to a college football game.

Yeah. So anyway, I mean, my brother and his friends actually for a bachelor party just went to a football game at Oklahoma, which was, like, I think, got'd be one of the more fun ideas, you know, not doing like the Vegas booze cruise scene, but going to a college football game.

Yes, awesome, big big player, love that Oklahoma.

Yes, awesome, big big player, love that Oklahoma.

You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple car Play and Android Auto with the Bloomberg Business. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa playing Bloomberg eleven thirty.

You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple car Play and Android Auto with the Bloomberg Business. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa playing Bloomberg eleven thirty.

Let's break it down to the GM stuff with David Welche's the Detroit Burea, chief of Bloomberg News. Hey, David stocks up. Big market likes what they see. I guess the world wants big trucks.

Let's break it down to the GM stuff with David Welche's the Detroit Burea, chief of Bloomberg News. Hey, David stocks up. Big market likes what they see. I guess the world wants big trucks.

Big trucks, big SUVs. Yes they do, and and they're selling them a huge prices. GM's average vehicle in the quarter soldess sold for more than forty nine thousand dollars.

Big trucks, big SUVs. Yes they do, and and they're selling them a huge prices. GM's average vehicle in the quarter soldess sold for more than forty nine thousand dollars.

WOWW what happened to the the incentive thirty market vehicles?

WOWW what happened to the the incentive thirty market vehicles?

Not even I mean wow, which is amazing.

Not even I mean wow, which is amazing.

I mean I got the Ford F one fifty electric one Matt Miller got for me to test drive.

I mean I got the Ford F one fifty electric one Matt Miller got for me to test drive.

That was ninety four thousand dollars to the price.

That was ninety four thousand dollars to the price.

So give it with What's what's GM saying these days about how they're managing this transition to evs.

So give it with What's what's GM saying these days about how they're managing this transition to evs.

Look, there are sales in the quarter for evs. They sold over thirty thousand of them, which by Tesla standards not a big number, but it was enough to put GM in second place in the US market EV sales. The real story there is they're getting sales volume up, which is a good thing, and that means they're getting scale in their battery plants. The battery is the most expensive part of the vehicle, and so they can start to bring costs down. And they're saying that fourth quarter and into next year they will be at be making a variable profit on the vehicles, which means that if you forget about all the fixed costs, the billions they've invested in battery plans, forget about those vehicle plants and all the engineering, they're making money. But look that it's a step toward making money on vehicles that are pretty expensive to produce. And you know, GM's gaining market share. And the EV situation is very interesting because Tesla has five models if you count the cyber truck for sale GM. By the end and next year, by the end of this year, they're going to have I think ten, and by the end and next year they'll have about a dozen different models. That's a lot of variety. It's also a lot of production. So if the market for evs continues to grow pretty nicely, GM will have the best variety and a lot of production to be able to get it, which is exactly what that the domestic producers in China did to steal their home market away from GM, Volksweg and Toyota, Ford, et cetera. It's a market doesn't materialize and you know GM is going to probably have to lay off a few workers in some of these EV plans.

Look, there are sales in the quarter for evs. They sold over thirty thousand of them, which by Tesla standards not a big number, but it was enough to put GM in second place in the US market EV sales. The real story there is they're getting sales volume up, which is a good thing, and that means they're getting scale in their battery plants. The battery is the most expensive part of the vehicle, and so they can start to bring costs down. And they're saying that fourth quarter and into next year they will be at be making a variable profit on the vehicles, which means that if you forget about all the fixed costs, the billions they've invested in battery plans, forget about those vehicle plants and all the engineering, they're making money. But look that it's a step toward making money on vehicles that are pretty expensive to produce. And you know, GM's gaining market share. And the EV situation is very interesting because Tesla has five models if you count the cyber truck for sale GM. By the end and next year, by the end of this year, they're going to have I think ten, and by the end and next year they'll have about a dozen different models. That's a lot of variety. It's also a lot of production. So if the market for evs continues to grow pretty nicely, GM will have the best variety and a lot of production to be able to get it, which is exactly what that the domestic producers in China did to steal their home market away from GM, Volksweg and Toyota, Ford, et cetera. It's a market doesn't materialize and you know GM is going to probably have to lay off a few workers in some of these EV plans.

Yeah, maybe just a few.

Yeah, maybe just a few.

I mean you're talking though about how GM was able to sell a but like all these cars at these above average prices. Is that true for the evy market as well, or are we talking more gas powered there.

I mean you're talking though about how GM was able to sell a but like all these cars at these above average prices. Is that true for the evy market as well, or are we talking more gas powered there.

It's both because evs are pretty expensive. The difference though, and this is where GM is starting to get a lot of its electric vehicle growth, is they have an electric version of the Chevy Equinox that starts at thirty five thousand after government credit, it's about twenty seven and a half. There are many vehicles for sale period of any kind that run on anything, you know, alcohol, electricity, a fusel earlier, you name it. But that self for blow of thirty thousand dollars, so you know, and probably most of them are selling for closer to forty before the federal tax credit. So but that's a pretty cheap vehicle, and they're getting a lot of growth there. But generally speaking, yeah, Cadillac lyric expensive vehicle, even the Chevy Blazer, a lot of those can go from more than fifty thousand. Then you know that's an electric as well. They're pick up certainly very expensive Silverado pickup in the GMCCRA pickup, and the Hummers are well one hundred, so you know, these are expensive vehicles for the most part.

It's both because evs are pretty expensive. The difference though, and this is where GM is starting to get a lot of its electric vehicle growth, is they have an electric version of the Chevy Equinox that starts at thirty five thousand after government credit, it's about twenty seven and a half. There are many vehicles for sale period of any kind that run on anything, you know, alcohol, electricity, a fusel earlier, you name it. But that self for blow of thirty thousand dollars, so you know, and probably most of them are selling for closer to forty before the federal tax credit. So but that's a pretty cheap vehicle, and they're getting a lot of growth there. But generally speaking, yeah, Cadillac lyric expensive vehicle, even the Chevy Blazer, a lot of those can go from more than fifty thousand. Then you know that's an electric as well. They're pick up certainly very expensive Silverado pickup in the GMCCRA pickup, and the Hummers are well one hundred, so you know, these are expensive vehicles for the most part.

All right, very good, David Welch.

All right, very good, David Welch.

We appreciate that.

We appreciate that.

David Welch, Detroit, Burachief for Bloomberg News, joining us from Detroit. And again I was looking at the stock of you know, GM at fifty two week high today, just a really nice move. Stocks up about eight percent and change. It's up about close to forty eight percent.

David Welch, Detroit, Burachief for Bloomberg News, joining us from Detroit. And again I was looking at the stock of you know, GM at fifty two week high today, just a really nice move. Stocks up about eight percent and change. It's up about close to forty eight percent.

Year to date.

Year to date.

Whereas you look at General Motors, I'm sorry you look at Ford year to data sucks down ten ten percent.

Whereas you look at General Motors, I'm sorry you look at Ford year to data sucks down ten ten percent.

I think the more amazing thing here is that David was talking about is how they've been able to sell at all these above average prices. I mean, the story of the car market lately has been incentives and markdowns, you know, and especially with like auto loans being as expensive as they are, how they're able to do this is remarkable to me.

I think the more amazing thing here is that David was talking about is how they've been able to sell at all these above average prices. I mean, the story of the car market lately has been incentives and markdowns, you know, and especially with like auto loans being as expensive as they are, how they're able to do this is remarkable to me.

Yeah, and I remember talking to Kevin Tynan, who was the auto analyst of Bloomberg Intelligence for many years, and he just said, listen, they make so much money with these crossovers, SUVs, trucks, whatever you want to call them. Literally, on a perdutive basis there so profitable that the incentive to switch over to EV's is just isn't there, and they're not going to do it until the economics makes sense.

Yeah, and I remember talking to Kevin Tynan, who was the auto analyst of Bloomberg Intelligence for many years, and he just said, listen, they make so much money with these crossovers, SUVs, trucks, whatever you want to call them. Literally, on a perdutive basis there so profitable that the incentive to switch over to EV's is just isn't there, and they're not going to do it until the economics makes sense.

So you're saying, as GM or as a customer, to sweat no.

So you're saying, as GM or as a customer, to sweat no.

As GM said, automakers they're so incentive to make these big trucks because they sell them and they're very profitable to the highest profit margin products they have. So the US auto companies have very little financial incentive, economic incentive they switched to evs. Now it's the government's gonna, you know, incentivize you to do so or force you to do so.

As GM said, automakers they're so incentive to make these big trucks because they sell them and they're very profitable to the highest profit margin products they have. So the US auto companies have very little financial incentive, economic incentive they switched to evs. Now it's the government's gonna, you know, incentivize you to do so or force you to do so.

Well, that's another whole thing.

Well, that's another whole thing.

But I think as most auto investors, they were just concerned, do I want to own a company where you know, their incentives are not really aligned with maximizing profits.

But I think as most auto investors, they were just concerned, do I want to own a company where you know, their incentives are not really aligned with maximizing profits.

So often see.

So often see.

You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa, playing Bloomberg eleven thirty.

You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa, playing Bloomberg eleven thirty.

Let's switch gears.

Let's switch gears.

Let's talk about real estate, commercial real estate. We love to talk about commercial real estate because I have no idea what's going on. I know I've made the mistake in the past thinking commercial real estate's office, but that's only like three and a half percent of readesks to talk.

Let's talk about real estate, commercial real estate. We love to talk about commercial real estate because I have no idea what's going on. I know I've made the mistake in the past thinking commercial real estate's office, but that's only like three and a half percent of readesks to talk.

About the malls.

About the malls.

I know.

I know.

I know Rich Hill, he joins us. He's had of real estate strategy and research at Cohen and Steers. Before that, he was at Morgan Stanley with all those other Morgan Stanley real estate crazy people, which they just have owned real estate across Wall Street my entire career at Ward Stanley. So those are the folks that get it done. Rich thanks so much for joining us here in our studio. I mean, where do you go in commercial real estate today?

I know Rich Hill, he joins us. He's had of real estate strategy and research at Cohen and Steers. Before that, he was at Morgan Stanley with all those other Morgan Stanley real estate crazy people, which they just have owned real estate across Wall Street my entire career at Ward Stanley. So those are the folks that get it done. Rich thanks so much for joining us here in our studio. I mean, where do you go in commercial real estate today?

I know there are different silos.

I know there are different silos.

Where do you guys think the best opportunities are these days?

Where do you guys think the best opportunities are these days?

Yeah, maybe we.

Yeah, maybe we.

Can just take a step back. It has been a really tough two years for commercial real estate, but we think the market is finally in the process of bottoming. There's been three price in disease that we follow pretty closely, all of which showed increases for the first time in more than two years in recent months. So valuations down more than twenty percent, and that doesn't happen very often. You go back to the early nineteen nineties in the GFC, those are the only two times evaluations have fallen. So it's getting people pretty excited again. I will note, though, before I talk about the opportunities, we think the cycles playing out sort of in textbook fashion. What do I mean by that? Well, list it reached trough first, they troughed about a year ago. Then private valuations trough twelve months later. But there's a really important point here. See our debt distress. So distress in the debt markets doesn't peak out for twelve to twenty four months after property valuations trough out, So the headlines are actually going to get worse before they get better. You're going to be talking about office valuations being down, borrowers given the keys back to lender. That's what happens at this point in the cycle.

Can just take a step back. It has been a really tough two years for commercial real estate, but we think the market is finally in the process of bottoming. There's been three price in disease that we follow pretty closely, all of which showed increases for the first time in more than two years in recent months. So valuations down more than twenty percent, and that doesn't happen very often. You go back to the early nineteen nineties in the GFC, those are the only two times evaluations have fallen. So it's getting people pretty excited again. I will note, though, before I talk about the opportunities, we think the cycles playing out sort of in textbook fashion. What do I mean by that? Well, list it reached trough first, they troughed about a year ago. Then private valuations trough twelve months later. But there's a really important point here. See our debt distress. So distress in the debt markets doesn't peak out for twelve to twenty four months after property valuations trough out, So the headlines are actually going to get worse before they get better. You're going to be talking about office valuations being down, borrowers given the keys back to lender. That's what happens at this point in the cycle.

So what if you're looking at valuations bottoming but you know that this distress is still going to be coming. That's still got to be a really tricky position. If the equity valuation is maybe looking more appealing, but you're worried about the death side coming back to bite you.

So what if you're looking at valuations bottoming but you know that this distress is still going to be coming. That's still got to be a really tricky position. If the equity valuation is maybe looking more appealing, but you're worried about the death side coming back to bite you.

Yeah, so commercial real estates inherently elever a class. What do I mean by that, Well, there's very few people that buy a property and don't put some level of debt on it. So the availability of debt and the cost of debt is super super important. We are beginning to see signs of thawing in the debt markets. I'm gonna get really wonky here for a second, but we follow something called the Senior Loan Officer Opinion Survey quarterly.

Yeah, so commercial real estates inherently elever a class. What do I mean by that, Well, there's very few people that buy a property and don't put some level of debt on it. So the availability of debt and the cost of debt is super super important. We are beginning to see signs of thawing in the debt markets. I'm gonna get really wonky here for a second, but we follow something called the Senior Loan Officer Opinion Survey quarterly.

Sur We love that survey. We don't have to call this loose.