Episode Summary:
In this special episode (Episode 67), we host former hedge fund manager Marc Rubinstein to discuss the key takeaways from Banks' Q2 22 earnings calls. Marc is the author of Net Interest and writes for Bloomberg Opinion. He covers financial sector themes.
Show Notes
00:00:00 Introduction
00:01:30 What Happens During Earnings Season?
00:04:25 The US Banking Industry
00:07:16 Key Takeaways from Banks this Earnings Season
00:16:22 Rising Rates and The Banking Industry
00:18:44 Banking Sector Outlook for Q3 22
00:21:13 How to Analyze Banks
00: 26:32 Fun Takes: Mike Mayo Vs Jamie Dimon
00:30:12 Conclusion
Episode Transcript
Introduction
[00:00:00] Mokaya: Welcome to the Transcript Podcast. This is a special episode where we'll be focusing on banks' earnings. We are privileged to have Marc Rubinstein. He's a former hedge fund analyst and he focuses now on writing on financials, mostly. Welcome, Mark. Maybe you can tell us a little bit about yourself and maybe add a little bit of a thumbnail sketch of your career.
[00:00:18] Marc: As you said, Erick, I'm a financial analyst with an explicit focus on financial companies; banks, insurance companies, asset management companies, and so on. I did that as an investor in a hedge fund for 10 years. I was a partner in a London-based hedge fund called Lansdowne Partners. We ran a fund that launched before the financial crisis, invested during the financial crisis and then we ultimately wounded up a number of years after the financial crisis, focused exclusively on banks and insurance companies, and asset management companies. But my history with them goes back even further than that because I was a sell-side analyst. I worked at Credit Suisse for a number of years looking at European banks. Actually, my very first job you will be interested to know was as a Swedish banks analyst. I used to make regular trips between London and Stockholm looking at Swedish banks as they privatized, as they came back out of government hands after the nationalization of them in the 1990s.
What Happens During Earnings Season?
[00:01:30] Mokaya: That makes sense because in one of the latest articles that you wrote about Klarna, I noticed you linked to the board meetings of companies in Sweden, and that was in Swedish. I was a bit surprised that someone had such refined knowledge about Swedish companies. For those who don't know most minutes of board meetings for Swedish companies are available online for download at a small fee. So earnings season, you spent a lot of time as an analyst and as a hedge fund manager, maybe can give us a quick overview of what happens during earnings season for analysts.
[00:02:01] Marc: It's a great tradition, the earnings call, it used to be going back many, many years before telephony democratized earnings calls, that analysts were called into a room and the CEO, Head of Investor Relations, and the CFO would present the quarterly results to a room full of analysts. Clearly now, initially because of conference calls and then because of Zoom, you don't physically have to go to a room anymore, but once a quarter, the bank, any company will present its earnings to its shareholders. Actually, there were some exceptions within the banking sector, Wells Fargo up until relatively recently dispensed with the idea, they released alongside their financial report and accounts, a kind of a transcript. And that was it. There was no recourse for analysts to ask questions. That was it. Actually, Berkshire Hathaway is another exception. They don't do a quarterly call with analysts but most financial companies do.
One reason why there's a heavy focus, I think on banks, earnings is because they're early in the season and possibly set the tone. And secondly is because they're a good window into the economy.
For banks, it's particularly interesting for two reasons. Firstly, they are early in the earnings cycle. Banks, I think traditionally actually, U.S. Bancorp has been the first US company to report. But JP Morgan comes pretty soon afterward, usually kind of the 14th of the month, two weeks after the end of the quarter, which is quite an achievement for a large complex organization, such as a bank, with trillions of dollars of assets, to be able to turn its books around in the space of two weeks and report to the market what those numbers are. It is quite an achievement, but they come quite soon. One reason why there's a heavy focus, I think on banks, earnings is because they're early in the season and possibly set the tone. And secondly is because they're a good window into the economy. Banks will go in and talk about some of the detail later. Bank of America has got 35 million accounts across the US, so unique access to what's going on in US households. And they even gave a July update when they reported really kind of, almost like a real-time update window into what's going on in the economy.
Bank of America has got 35 million accounts across the US, so unique access to what's going on in US households. And they even gave a July update when they reported really kind of, almost like a real-time update window into what's going on in the economy.
Mapping the US Banking Industry
[00:04:25] Mokaya: I'm actually very impressed that the US banks get to report two weeks after the end of the season. For comparison, I would say Kenyan banks, where I come from, take like two months to actually report earnings. All these entities, JP Morgan, and Goldman Sachs, they're very big, so to get them reporting that soon after the end of a quarter, it's quite impressive, so to speak. But then I would come back and maybe ask you then, you've talked about JP Morgan, you've talked about Goldman Sachs and Wells Fargo, but what are the big banks in the US that people pay attention to most? Maybe you can map for us what the US banking industry looks like from your perspective.
[00:05:01] Marc: And actually just to back up, you make a really interesting point. It's a good reflection on risk management. One would hope as an outsider, that banks would have real-time valuations of all of their assets and liabilities, and converting that to reporting for external consumption shouldn't be too laborious a process. So they should be able to do it pretty quickly. And I would be nervous about a bank that isn't able to report as quickly. Of the big banks in the US, there are five of them that dominate. They are Bank of America, Citigroup, JP Morgan, Wells Fargo, and PNC as well. And then you have those with more of a capital markets focus that would include Citi and JP Morgan as well but we bring into that Goldman Sachs and Morgan Stanley.
Jamie Dimon of JP Morgan attracts a lot of publicity. He's an excellent CEO. He has longevity. I think he's the longest-serving CEO of a bank globally…So he has longevity. He's seen cycles. He speaks very well and he obviously sits on top of one of the largest, if not the largest bank, in the world and they report early. So multiple reasons why market participants would listen to Jamie Dimon.
Jamie Dimon of JP Morgan attracts a lot of publicity. He's an excellent CEO. He has longevity. I think he's the longest-serving CEO of a bank globally. The CEO of HDFC Bank in India was around for a while longer, but he retired just over a year ago. I think Jamie Dimon now might be the longest-serving CEO in public banks globally. So he has longevity. He's seen cycles. He speaks very well and obviously sits on top of one of the largest, if not the largest bank in the world and they report early. So multiple reasons why market participants would listen to Jamie Dimon.
Bill Demchak, who is the CEO of PNC sits not far behind. Actually, he has a background in capital markets, so he is able to talk about capital markets as well as retail banking. PNC through a series of acquisitions is now kind of the largest super-regional bank alongside USB. We didn't mention US Bankcorp is another one, two of them are the largest super-regional banks in the US. Much more domestic than the others. Much more focused on retail banking than the others. Bill Demchak is excellent. We can go in later to some of the things he said on his call, but definitely another one to listen to.
Key Takeaways from Banks this Earnings Season
[00:07:16] Mokaya: And then you have the Bank of America who has a finger on the pulse of the consumer in the US. I think that's one of the biggest strengths because when you listen to the earnings call their perspective on a trillion dollars moving through their banks every quarter almost. Perhaps, you can give us a bit of a flavor of this earnings season and how you've seen it so far. What's the feel about the globe, about the economy when you look at it from the perspective of the bank.
[00:07:41] Marc: I think the concern going into this earnings season was that recession was a risk. And banks given the window they have into household finances would give a there on that. And actually, it looks okay. One of the features of these bank results is that although earnings revisions are skewing downwards, we are seeing some downgrades, I think the performance of bank stocks in a run-up has been so bad that there was a kind of a relief rally subsequently. And the stocks in the week or so subsequent to the earnings season are up kind of 6, 7% something in that order of magnitude. And that's largely because there was concern about the consumer feeling the pain and so far, and clearly, these things can change very quickly, but we've seen no evidence of that.
And the consumer, I feel like a broken record. The consumer right now is in great shape - JPMorgan Chase (JPM) CEO Jamie Dimon
Jamie Dimon of JP Morgan, for example, said, consumers are in good shape. He said they're spending money. We heard the same from Citi. Citi has said that consumers are spending well above pre-COVID levels. We heard from Bank of America, I talked earlier about the 35 million checking accounts that they have. They said US consumer remains quite resilient and that the word resilience was mentioned a number of times across these calls. Bill Demchak, who I said is definitely worth listening to, pushed right back. He said, And I'll quote this one. He said:
"Investors are completely wrong about the banking system right now. If you look at the market cap that's been pulled out of the banking system and take your worst-case reserve to build and charge-offs, it's just wildly wrong. Yes, we'll have increased losses, but not anything close to like we put in during COVID."
And then he went on to talk about the specific competitive opportunities for PNC. Things can change, overall I think one highlight was resilience, but actually, things can change. And another highlight is uncertainty and the capital markets banks emphasized uncertainty a bit more. So Goldman Sachs, for example, spoke about a cautious tone because the environment's uncertain, very uncertain. We don't have a crystal ball to tell you exactly how military policy will navigate the inflationary environment that exists, they said.
Again, back to JP Morgan, so Mike Mayo is an analyst who has a long history with Jamie Dimon and he was pushing back on Jamie Dimon about this point Jamie Dimon had talked about a hurricane. He talked about the recession using the analogy of a hurricane and yet was talking nevertheless about investing for the future. So my push to this analogy talking, "If there's a hurricane on the horizon, why are you waxing the surfboard?" Jamie Dimon's response was again, there's a lot of uncertainty, there's a range of potential outcomes. He said from a soft landing to a hard landing. We are pointing out that the probabilities and possibilities of events are different. But he said he's waxing a surfboard because it's not going to change how we run the economy over a 10-year view. Its not going to change how we run the company over a 10-year view. The economy will be bigger. So I think two real themes, one this notion about resilience to the consumer, no evidence yet, and that goes right down into delinquencies debit and credit card spending. No signs of consumer stress yet, but two that there is uncertainty because the range of outcomes is complex.
Could you help me reconcile your words with your actions? After Investor Day, Jamie, you said a hurricane is on the horizon. But today, you’re holding firm, which you’re sending $7 billion expense guidance for 2022. I mean, it’s like you’re acting like there’s sunny skies ahead. You’re out buying kayaks, surfboards, wave runners just before the storm. So, is it tough times or not? - Mike Mayo from Wells Fargo Securities.
[00:11:31] Mokaya: Definitely. That's why he moved from saying storm clouds are coming, the hurricane is coming, and now I think in these earnings calls, from what I could read, he had toned down a bit on that, but he says that currently there are two perspectives, the first perspective is currently as we see things, the data. I think it was Citigroup CEO, Jane Fraser who was saying, the data as we see it currently, we don't see issues to do with delinquencies increasing or charges-offs increasing or anything like that. But when you look ahead a bit into the future, we are a little worried about that. That's what I could pick from my perspective on the banks. Would you agree on that? And also maybe to add on that I wanted to ask, they say that things are looking okay right now, but then JP Morgan cut off buybacks a bit. I think also Citigroup is doing the same and you could sense it from the other teams, they're trying to shore up capital in that regard. How do you think they reconcile these two views so that they're able to handle the next couple of months and quarters?
[00:12:26] Marc: Okay. So I make two comments. The first one is that banks earning statements are quite unique. They reflect because of an accounting standard called C-E-C-L (CECL) because of an accounting standard that was introduced at the beginning of 2020 called CECL, they reflect the future. When a bank makes a loan, it has to provide for the possibility of loss embedded in that loan upfront. And if a scenario changes, they take a kind of weighted average. They look at different future paths and they take a kind of weighted average of where the economy may transition to, and they disclose actually all the underlying assumptions. And all of that percolates down into a single number, which is the provision they put against that loan at the point in which they make it.
Now, if they get a little bit more bearish on the economy and Jamie Domin JP Morgan did, not in the second quarter, he did actually in the first quarter, did that one quarter ago. What he did was he nudged up the kind of the tail risk of a worst-case recessionary scenario. I can't remember the exact numbers, maybe from 10% to 20%, but he nudged up that weighting and that had an impact on provisions, and we saw that in the first quarter. It's a really important point because a traditional earnings statement reflects the past. It's the earnings the company made last year, a balance sheet reflects the present, but a bank's earning statement actually kind of reflects the future because within that there's this one line, this provisions for credit losses line which embeds a view on the future. So that's kind of already in there. It's already in the earnings. So that's one point.
In the second point, you make a point about buybacks, which is a good point. They froze buybacks. The reason for that I think is less around, well, it kind of comes to the same point, really, which is that in addition to that forward-looking earnings point, the Fed does a stress test of all banks once a year. And it can put in there, whatever it wants, it can put in there the most wildly bearish stress tests, which it has done. Again, Jamie Dimon, I come back to him a lot because he's so vocal, he pushed back on that he says, you know, the Fed does want stress test, he does a hundred stress tests, but the Fed's stress test is bearish. Actually, he said COVID proved that because he said the Fed's stress test says that when we're in a kind of recessionary environment, then trading activity declines as well.
And he said actually in COVID that wasn't the case. We saw trading activity increase, and the capital markets business did okay. So there was a kind of an offset there, a hedge almost between those two businesses. But he said under no circumstances, wasn't the case in 2008, and it wasn't the case in 2020 will earnings develop in the way the Fed anticipates in their stress test, but nevertheless, banks go through the stress test that defines the capital they have to hoard against those potential stresses. And they, therefore, have to flex their capital position according to that. And so they froze their buyback because they're kind of running up against the top end of that kind of capital buffer. That's basically that second point. As I said, Jamie Dimon pushed back, he said there are ways around that, you know, a capital ratio is also a function of the denominator of the balance sheet size. And he said there are ways of reducing that. There are various mitigation techniques they can employ. So that's a possibility that they could do in which case they'd be able to turn the buyback back on but it was, I think, a feature less of the company's view of the prospects and more on the Fed's view of how the bank is exposed to those prospects.
“And we don’t agree with the stress test. It’s inconsistent. It’s not transparent. It’s too volatile. It’s basically capricious arbitrary. We do 100 a week. This is one. And I need to drive capital up and down by 80 basis points. So, we’ll work on it. We haven’t made definitive decisions” - JPMorgan Chase (JPM) CEO Jamie Dimon
Rising Rates and The Banking Industry
[00:16:22] Mokaya: Yes, I noticed from the earnings call Jamie Dimon was really furious about the stress tests and would love them gone as soon as yesterday. So maybe talking of the Fed, what impact is the raising of rates, and of course, the recession risk having, especially on banks. So far, I know that some banks have benefited from higher rates. Some have been hit pretty hard, less like Wells Fargo in terms of their mortgage business. You'd expect banks to benefit from higher rates, but it's not always necessarily the case. What's your perspective on that?
[00:16:52] Marc: It's a fascinating tension. I wrote a piece back in January, a net interest piece on this point about banks' sensitivity to high rates. It's fundamentally a positive. They have huge deposit books. Deposit books grew through the pandemic. Actually, one of the reasons banks are now saying that consumers are resilient is because consumers have built up quite large liquidity buffers to protect themselves from a downturn and banks benefit from that through their deposit holdings. As rates go up, then the value of those deposits goes up. A bank's deposit franchise is a low-cost source of funding, and the advantage of that is higher when market rates are higher. And banks talk about kind of a beta. If rates go up a hundred basis points, deposit rates don't have to go up a hundred basis points. Maybe the beta’s 25% deposit rates only have to go up 25 basis points.
A bank's deposit franchise is a low-cost source of funding, and the advantage of that is higher when market rates are higher. And banks talk about kind of a beta. If rates go up a hundred basis points, deposit rates don't have to go up a hundred basis points. Maybe the beta’s 25% deposit rates only have to go up 25 basis points.
So, banks are big beneficiaries of higher rates, but there's tension because higher rates normally come alongside a deteriorating economic environment, and detest a deteriorating economic environment. And at the same time, it's difficult to disentangle the two credit losses gap. So it's very difficult to disentangle them. There's a tension there. There's a benefit in net interest income. And certainly, JP Morgan actually upgraded its estimate for net interest income, but the flip side is credit losses might go up and that's kind of the tension. And clearly, investors don't buy a single line of the earning statement. They're buying the entire earning statements in aggregate, and that's the tension that's going on right now in stock markets.
Banking Sector Outlook for Q3 22
[00:18:44] Mokaya: So from your overall perspective, are there any other key points that we may have missed, especially to do with banks from Q2 going into Q3?
[00:18:52] Marc: I think the focus will still be on them. I think maybe what's special about this, we haven't had a recession since 2008 or, maybe we had one in 2020. But we haven't had an unmitigated recession since 2008 and the playbook that investors have reached for when looking at banks ever since 2008 has been that 2008 playbook. This is why Demchak in this quote I talked about earlier talks about it's not going to be that bad which is why Jamie Dimon always rallies against the amount of capital that he has to have, which is much higher than banks had in 2008. Banks have been trying to make this argument since 2010 and 2011, coming out of that last financial crisis that they deserve a lower cost of capital, and a higher stock market rating because they're more resilient. And the market, frankly, hasn't believed it and they sold off hard in 2020. They recovered, they've sold off hard again, now it could be, they almost need a recession to prove that they are resilient. And that's ultimately what could lead to some kind of a rating. So some banks they're not actively wishing for it, some on calls have hinted at that. Certainly, they've talked about the competitive advantage that such an environment would give them, which is also true, but that's one thing to look at going forward. And then the other things are things that we discussed. I think the second is consumer resilience we get a snapshot once a month from credit card trust data, from securitization data, and how credit card trusts are performing. So we get that data and banks talk intra-quarter at conferences, so we get consumer delinquency data once a month, quite a good data series.
We get spending data actually kind of real-time now. JP Morgan, Bank of America, and Citi, they've got the biggest credit card businesses in the US, and a huge amount of data there that we get. So we get that in real-time. So right now things are looking okay, but we'll know when that turns. And then the final point is this point about uncertainty, which is more of a capital market point. Goldman Sachs actually said that 2022, won't be as good as 21 because, in 2021, he says we saw opportunities to deploy resources, serve our clients and expand the revenue opportunity. There was so much liquidity in the system, clients wanted to do things and that's not as much the case in 2022. So those are the three points. I think uncertainty, actually on that final point, I can't remember which call it was, whether it was Morgan Stanley or Goldman Sachs, there was pushback on this analysts often talk about when looking at capital markets business, kind of good volatility versus bad volatility. Good volatility, a little bit of volatility, which gets clients trading helps trading activity, widens spreads on that trading activity. Bad volatility and everyone's caught on the wrong side of it and there's almost like a trading strike. And what we've seen recently has been good volatility. I can't remember whether it’s Morgan Stanley or Goldman Sachs that's one of them pushed back on that phraseology. But it could be, that no one wants a liquidity scare, which would be very negative, but a little bit of volatility is quite good. I think those are the things to look for. We look at volatility, we look at consumer spending, and we get those both in real-time. And that's, what's going to feed into earnings as we go into the third quarter and beyond.
[00:22:16] Mokaya: Speaking of volatility and its impact, I think this quarter has also been the quarter when across our banks, investment banking revenues have been hit pretty hard because people are not trading, markets are closed, no IPOs, investment banking deals are pretty low, what's your take on that? Is investment banking revenues, such a significant part of these banks, especially the major banks and their revenues? What's the exposure to that, and what's your take on the decline? Does it have an impact say on, would you perhaps then foresee layoffs in these kinds of markets, especially in this segments that are heavily impacted, or are they keeping the employees now and perhaps preparing for better times hoping that this is a mild recession? I know BlackRock is very clear that they're cutting down on hiring especially on the senior level. So they're okay with recruiting at the junior level for now. Are they hunkering down for a recession is about to happen?.
[00:23:08] Marc: On the investment banking side, banks are not especially exposed to pure investment banking revenues, M&A, equity, debt, and underwriting, and we saw record earnings in those segments in 21, anyway. It is inherently a very cyclical business, so downturns are to be expected. Trading activities actually have held up quite well. Again, it was a record last year, but trading activities have held up quite well. The more exposed to that segment would be the pure play, smaller kind of investment banks which just do advisory work. So that's kind of less of an issue, I think, but certainly, it's a source of less capital-intensive revenues which will go into reverse. On the layoffs, to be honest, I don't know. It's a good question. I'd have to go and check actually to see. I wouldn't think it would be on a par with the tech sector, which was really at the forefront of that cycle, but for sure there was additional recruiting but I'd have to go back and have a look to see what extent that actually took place.
How to Analyze Banks
[00:24:13] Mokaya: What are the key things you pay attention to when you're analyzing banks?
[00:24:17] Marc: Well, there are some classical ratios to look at depending on the type of bank. If we're looking at traditional lending bank, then the net interest margin is the spread they earn off their balance sheet, principally the loan book funded by the deposits. So we look at the net interest margin, but what's different about banks is that the earnings they book or the revenue, the net interest income, they book in a single period isn't the end of the story because the loan loss, that cost of doing that business can come many quarters down the line and correlation can go up to close to one across what may appear to be uncorrelated lending assets in the event of a recession or something like that. The two ratios would be net interest margin, and we'd look at that against the cost of risk, the provisions, and the loan losses, you can generate a high net interest margin, but the cost of that will be high loan losses.
I wrote last week about Klarna and in the context that it was looked at by tech analysts as a tech company who looked at it on the basis of price to revenues and just its revenues, but the cost of those revenues come through loan losses, which have to be taken into account, so I adjusted for that in my analysis. So those are two ratios to look at. You can look at efficiency as well. People talk about the cost-income ratio or the efficiency ratio. So those are the three ratios on the income statement. And then you'd look at the capital ratio, which is kind of a way of looking at leverage. There are various regulatory capital ratios to look at. So we look at those four ratios and then the way to tell a good bank again, a lending bank is really to go through its history and look up historically, has it priced credit correctly? I don't just look at the net interest margin versus the cost of risk today. Go right back through history to see if they've been able to sustain a high-risk-adjusted margin over time. And that's a good way to understand a good bank.
Fun Takes: Mike Mayo Vs Jamie Dimon
[00:26:32] Mokaya: One of the things that I've enjoyed in reading your letters is the exchanges between Mike Mayo and Jamie Dimon. Just before we talked, I was looking at one exchange, I think back in 2013, where Jamie Dimon tells him "I earn more money than you." I think you have a very nice front-row seat to this kind of banter between Dimon and Mike Mayo. Any quick takes or fun takes on this?
[00:26:55] Marc: It's very good. It's very funny. It's almost like the meta play within the earnings season. So Mike Mayo, for those who don't know is a banks research analyst, currently at Wells Fargo Securities, where he covers the big banks. Doesn't cover Wells Fargo, covers the other banks. But prior to that, he was at CLSA and he's been in the past at Credit Suisse. He's been at Deutsche Bank. He's been a Prudential, he's a long-time banks analyst. He's written a book and actually, he refers to the earning season as Kabuki theater, where this kind of dance takes place between the analysts and the management for air time. Often the analysts want to look. They want to often ingratiate themselves with management. They want to give the appearance of doing so in front of the investors who are their clients who were listening to the call. There's a kind of a meme Twitter account called great quarter guys. Just the concept of a great quarter. In the piece you're talking about, there was another analyst who, on the fourth quarter, 2021 Morgan Stanley call was kind of praising the company, praising their strategy, saying if more investors knew about this, there'd be a rerating and the CEO comes back, oh, it'd be a $200 stock, my friend, all very charming, all very close.
Mayo takes a totally different stance and sees this as being one of his jobs. And I should say I've written another piece on equity research, the whole idea of equity research, and what these analysts actually do. And it doesn’t boil down to a simple task, you know, the kind of jobs to be done by an equity research analyst. It's about 10 different tasks and each of them weighs them differently. The one, Mike Mayo rates very highly is management accountability, you know, traditionally investment firms haven't paid for that. Why would they, it's not their kind of job to do. It's a public good, but Mike Mayo nevertheless views accountability as being what he strives to do. And so he asks some tough questions and he did it again, as we said earlier on this earnings call where he pointed out the inconsistency, Jamie Dimon talking about the hurricane or the storm on one side, and yet his heavy investments spend on the other. Look, I should say I've known Mike Mayo for a number of years. I used to be a client of his. There are lots of great analysts out there but for anyone kind of cold to the earnings season, who's reading transcripts, then there is a history between him and Mike Mayo. Great to go straight to his questions, partly because of the accountability issue, but partly because of that testy relationship he has with Jamie Dimon.
[00:29:33] Mokaya: Feels like friendly banter. At this point, they should be friends.
[00:29:37] Marc: I would think so. Actually, there was another case. Before Wells Fargo, Mike Mayo lost his job at his previous firm and nevertheless, he's covered I think 120 different earning seasons, you know, four a year for many, many years, 120 different earning seasons. So addicted is he and compulsive is he to earning seasons that even when he lost his job, he turned up on the calls as an independent analyst and he asked Jamie Dimon a question and Jamie Dimon to be fair was very encouraging. Probably gave him a good reference.
Conclusion
[00:30:12] Mokaya: Nice. That's why we love earning season at the end of the day, it's a time to get a good feel of how the economy is doing. And again, just before the rest of the company's report, you can get a bit of analysis on how the consumer is doing and fairing. So for me, I think this earnings season the question is “recession”? That would be the theme of this earnings season. And the other thing that I've also noticed so far is that, if things are not as bad as people expected, then your stock will rise. That's happened to a lot of the big banks. So if you're not making as many provisions as people expected, or if you're Netflix and you lost fewer customers than people expected, then your stock will definitely be positively received at the end. My take on this earnings season is it's not going to be as bad as expected. I think that would be my takeaway, any closing thoughts for today?
[00:31:01] Marc: No, that's good, Erick. It's great work that you are doing at The Transcript because as you say, the companies now are so polished in terms of the way they present their earnings. There's been lots of talk, and it kind of came to our head with community-adjusted earnings with WeWork. The way they actually present and market their earnings, so polished, so tailored, so staged, and also with their prepared remarks on these calls, where clearly they've rehearsed, but it's through the Q&A where they're not reading off a script where, you know, they'll say something like Demchak said this time around the environment and the way he thinks the market is valuing banking stocks as Jamie Dimon has done. That's when some of the interesting nuggets come and it's great work that you do, actually bringing that to the fore.
[00:31:50] Mokaya: Yeah, we really enjoy the Q&A section. Always like it when let's say companies like Netflix, jump straight to the Q&A, their prepared remarks are in their quarterly letter and then the Q&A just gives you a flavor of exactly what they're thinking. And occasionally they slip up and actually tell you what exactly they think about a lot of things. We do enjoy that. Thank you also for joining us. We hope we can do this again next quarter when the banks have another great quarter, hopefully. So thank you Mark and it's a pleasure.
[00:32:19] Marc: Thanks, Erick.
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