James Gorman, Barclays, Europe discussed on Bloomberg Surveillance

Automatic TRANSCRIPT

Would be less than ten percent. There's still a messy public market pool of liquid assets out there. And I think what the pension funds in the damage have done is changed their profile reflecting the duration risk. But I'm assuming that they will manage snail manage their holding enough liquidity for this eventual, downton no, I don't think so it's it's not one of my top. I got plenty of worries. But that's the tough you. I know you go into every new year with a list of ten goals. Yes. What's at the top of your list? The thing I'm trying to get my arms around most is the effectiveness and efficiency that take spent. So what do I mean by that? We spent about four billion dollars a year on technology. There is a massive new technologies that are evident to all of us. Whether it's machine learning robotics, all of a sudden people talk about it in Davos, cloud computing, big data management, cyber digital. And that's a relatively small percent of what we spending. So are we being as affecting in how we're applying at full being dollars efficiency is just. We've changed a lot have. We changed our infrastructure to reflect that so really getting in the weeds of the fastest growing expenditure, and the biggest expenditure and the most important expenditure would argue behind fem is probably number one number two. We've talked to fill in small, and I want to be clear about this not lodged deals in wealth and asset management. We did one last year for about two hundred hundred west. Yeah. That kind of that kind of transaction. Nice little filling to have platform and the other one's a secret. I can't tell you about because they Michael James one last Davos question for you today. I believe you were on a panel with a number of Saudis, and it leaves people asking the question, and it's a legitimate question. Is it time to let the Saudis out of the penalty box. I don't think that's the right way to ask the question. I don't think Saudi Arabia is in the penalty box. I think what happened with the murder of come out. Jamaica kashogi in the Saudi consulate in Turkey was oddly unacceptable and the world, including the Saudis one of understand exactly what happened and until that is resolved and enough. Fly Sean on it people. Keep asking question. The meantime, Saturday's the country thirty two million people. These folks deserve a shot the country's transforming itself at a social level, the gender bias that has been in place. Forever is starting to be brought back to what we would consider sort of normal like letting women drive cars for example, attend sports events, for example. The economy is diversifying away from dependence on oil. They just got included in the in the footsie, and the s&p indices, these are really positive things. Let's not heard all the Saudi people while this investigation goes on. But let's get the investigation done James. Well, put great seeing you here at the World Economic Forum. Great to be with us. Appreciate john. That is James Gorman. He is the chairman and CEO of Morgan Stanley back to you. Thank you very much. Great work, Eric as always a little bit. Of course will be catching up with the Goldman. Goldman Sachs David Solomon right here on Bloomberg TV and on Bloomberg radio. We welcome our listeners and our audience across various platforms right here on Bloomberg surveillance on day three of the World Economic Forum in Davos, Switzerland, from Mr. Gorman, a bang-up eared, ugly, December I'm gonna go Tober was not that sporting as well that's true, all banking, and particularly transatlantic banking that would evolve to the Barclays chief executive officer just daily here. He is in the state of his. Banking. I think the banks are in very good shape. I think around the world the level of capitalisation is a multiple. Was our our capital directly that asks us at Barclays is more than three and a half times what it was in two thousand seven the calculation of risk on our balance sheet is two to three times more stringent than it was in two thousand seven the level of quantity that we are. Required to hold. I think the banking system, actually, whilst I know more than likely there will be financial crisis. It will probably occur somewhere else in the financial ecosystem. They actually think this time. There's a chance the banks will be the buffer as opposed to the cause. Where did you see the next crash is coming from? I what region is. Is what I would say is is there's an there's an extremely high amounts of debt that's been accrued both in sovereign balance sheets as well as corporate balance sheets on the back of essentially zero risk free interest rates. And then I think. The banking sector has shrank disk capacity to take on debt on its own balance sheet that debt has gone to instruments like collateralized loan obligations are called ceelo's. They've gone into more more investment products that have trunch trenching challenges that were created in two thousand seven. So I think the question is going to be whether there'll be some sort of liquid heat shock around credit overall that will pull credit away from the capital markets input issuers under pressure. We sort of saw that in December zero high yield debt issued in the world in December. And there are a lot of companies that have high yield bonds that need to roll them over if that had extended and talking about extension of government stop that had extended into the first quarter that self I think would've created potentially a credit shock in investment banking scale does have value, and you know, we have the same balance sheet risk weighted assets and balancing that Morgan Stanley does. So Barclays has the scale today to compete with the large American banks, and you see that in terms of are gaining market share in terms of of our activities and debt capital markets. And then if you don't have the scale. Well, if you talk to any investment banker who has been to a merger of two investment banks. They will tell you. They do not work. Go talk to someone from DOJ. Go talk to someone from First Boston talk to someone from J, P, Morgan and Bear Stearns. And I was their merger of investment banks does not work as a way to get scale. Mr. barklay for Mr. Gorman a mortgage Stanley. And of course, a lot of other conversations Brian Moynihan yesterday and David coming up as well and even them and their entourage is their teams. All eyes will have to Frankfurt Germany here in a moment. Follow constructive for the global banking system compared to where we were maybe a month ago. Just. Different American conversation versus what we've seen from Europe and competitive Europe over the last several years. There's a reason why the Europeans have struggled so much compared to the Americans. And it's not just about a recapitalization of the banks that America versus Europe a decade ago is about the negative interest rates of the want to set this up for Bloomberg radio and Bloomberg television, WorldWatch Europe a decade ago. It's about the negative interest rates of the want to set this up for Bloomberg radio, and Bloomberg television worldwide, and one of the great distinctions here is how these press conferences work is a bad way. That's each different. Mr. Draghi's gonna come out with that. I think are comfortably brief comments. And then there's a Acuna John wants a difference in his comments versus the line by line careful minutia almost that we get out of the fed. I have to say that it's become a chilly a lot more confusing under Maria, Dr greed, recently, I'm competitive straight-talking champion, pow which has been proven to have its faults as well over the last few months for for president Draghi. I think increasingly the audience that listened to him and follow that news conference that finding it hard. How he sees the euro-zone economy and the risks around broadly balance when what we see is a weakening pitcher for the continent. Let's go over to foreign exchange right now look for John show next year, the real effects, we look forward to that is this is important sterling moving its own story euro grinding weaker over the last couple of days, but then blended affects index X Y his barely moved. There's different currency dynamics. Among all the major currencies. EM or they so part of the g seven. Yeah. And if you think about why we have negative interest rates and just think about the sequencing of all of this going back to two thousand fourteen it was really difficult for President Mary to get what he really wanted which was QA and one of the options he did have was the take the deposit right into negative territory. And there is a decent arguments have make that actually did work through the FX channel it helped to weaken the euro one, it harms think within the argument of a lot of people out there, it harmed the financing and the financial system for the banks. If you ain't the tax for the back BNP Paribas in France or Deutsche Bank in Germany, dealing with a two year piece of negative rate that doesn't work, but to the point of a balance sheet, and what will listen for your John frame before we go to poor Gordon inferno for the difference in the EU balance sheet. UCD balance versus the fed balance sheet. They're totally different while the Federal Reserve balance sheet is rolling down because they're allowing things over getting smaller CD balance sheet is not rolling golf because they are investing maturing assets on the balance sheet how invested over the next several years really reminds to be Japan, and like the essence as far as I know they've gone that far but the next hour. Story. I think the next option for them. I think in the mind and how thanks a little bit more. Once again, some in France, Germany, Paul Gordon with us, our European central banks editor Paul Gordon. Very interesting. What we're going to hear from Mr Draghi? What's the first question? You would ask Mr Draghi? Well, it depends on what he says in his opening statement because the key phrase, which you have alluded to here is whether he says the risks to economic growth are now tilted to the downside or whether he sticks to the car language, which is broadly, balanced, but moving toward the downside economic data this morning. The purchasing managers index is pretty bleak. It does show for example, GM and manufacturing contracting for the first time in more than four years and the your air economy as a whole not far above the fifty level, which is the dividing line between expansion contraction. So it'd be changes it the language. We will be asking him does that mean you putting off the challenge of a right hike until maybe twenty twenty as markets generally expects? And if he doesn't chase language you have to ask why why you domestic. Gordon? Thank you so much greatly. Appreciate it at the European Central Bank. Banking will look forward to the drug headline as well. Joining us right now, an important voice for Europe, an important voice for the transatlantic politics going back to the Atlantic charter of ages ago, the debris out of World War Two and the development of the North Atlantic Treaty organization that leads us to the Norwegian Jens Stoltenberg, and among other things I should say absolutely remarkable that seven or eight years ago, you wander to the self poll honor of your Amazon, what was it like going to the south pole, not by Hillary? Now what I didn't go on skis to south pole. We went in by plane, but we were there to to to celebrate the hundred over the first mind reaching this Seoul, South pole knuckles action. Priming is we had the big event to Mark the big event for NATO is its survival. You ever challenging President Trump. You have a challenge. And now you re group who forgive us the NATO philosophy for two thousand nineteen into the future. So NATO philosophy is that as long as Europe and North America stands together, then we are strong. Then we are fifty percents of world's economic might. And fifty percents of the world's military might so. So from my main toss needs to make sure that we stand together despite some differences on issues like trade climate change NATO has proven extremely capable of uniting around the courthouse to defend each other. And the good thing. Now is that European allies are stepping up when it comes to defense spending since President Trump came into office in twenty sixty talk about that. Because the president's instinct that is correct. The various governments of NATO have not made their contributions and the way they promised to. Did you agree with him? When he first started making those concerns and vocalizing them a whole lot more loud over the last year or so I agree with him..

Coming up next