Ep.108: Elon Musk's 'Everything App' & The Latest US Bank Earnings

Hello and welcome to episode 108 of the Market Maker podcast. Two things we're going to discuss in today's episode: Elon Musk's Everything app and the latest US bank earnings. We're recording this on Friday the 14th of April, so they've literally just come out and they're all up. So we'll look to dive into those numbers and understand why that's happened. Um, before I begin though, a quick shout out to 3 people that I've bumped into from the Amplify alumni just this week. You were with me for 2 of them actually. In fact, I think, Pierce, one was Phil. Phil Eamon popped in the office. He did our program back in 2018 and is now an electronic equity trader at Canaccord Genuity. Absolutely rocking it. Yeah, and then we bumped into, on our way to Bank of America midweek, uh, Delic Olken, equity specialist now at Bloomberg. I think she was maybe class of 2020. Um, and then, then the other day, just yesterday, Oliver Larkin is now a manager of private equity accounts at AlphaSights software firm serving the PE community. He grabbed me, collared me aside when I was walking through the city the other day. So yeah, interestingly, the universities, I think I was just having— I remember two of them, Royal Holloway and Loughborough. So great to see a bit of a mix-up from the usual norm, which is definitely what we're all about.

So breaking, breaking down barriers.

Exactly. So yeah, just a quick one, quick shout out for, for those three. Uh, I'm sure there's many more as well. that we come across all the time. But yeah, well done. But let's talk about— pains me to say—

Elon Musk, your favorite, favorite topic.

Oh yeah. So let me just paint, paint the scene first. So it's at the beginning of the week, I think it was Tuesday, um, he cryptically hinted at his plans when he tweeted, of course, 'Just X.' And while he did not elaborate on that tweet, um, it came after it was reportedly revealed through court filings that Twitter had merged into a shell company called the X Corp. Now, I, I know you're going to give us a bit of a brief history of time with that because we have discussed this on a, a previous episode, but I think it's WeChat he's targeting and And the other big thing is the ball's already rolling because Twitter has teamed up with eToro, the social trading company, also just this week as another kind of step in his everything app direction. So perhaps give us the, the backstory here, Piers.

Well, yeah, backstory. Well, I mean, this guy's got— he's just got a bit of an obsession for the letter X. Which kind of goes back to his early, early, early days as an entrepreneur. So he kind of, yeah, he, so X.com, he co-founded, he co-founded this in the dot-com bubble. So in early 1999, Musk co-founded a company called X.com, Okay. And part of that was a kind of spinoff called Zip2, which was like an online directory business. And he basically flogged it to Compaq. The valuation of Zip2 was $300 million. He got $12 million out of that deal. Okay. That's how much he walked away with. He then plowed all of that all of it into this X.com. Okay. And what he envisaged back then was X.com would be— I mean, it was a very pioneering thought at that time. It was— this would be the one-stop shop. It would be a one-stop shop platform for things like financial services, consumer banking, brokerage services, insurance.

Okay.

All of this stuff. And so So that was his idea. But then a year later, um, it kind of evolved. And basically X.com, it just went down that payments route, and they didn't get a chance to do the other stuff. And X.com got rebranded— you might have heard of them— PayPal. Of course, this is where Musk made most of his— well, his early fortune. So he spun out PayPal. PayPal, um, got sold to eBay. for $1.5 billion. This is in 2002, and Musk walked away from that deal, uh, with $180 million. So, I mean, the guy's got a pretty phenomenal track record. Um, his first gig— let me just go back— his first gig, Zip2, he walked away with $12 million. Okay, 2 years later, 2 years, he flogged PayPal and walked away with $180 million. Okay. Then of course, you've got Tesla. Then you've got the rest of them, SpaceX, Boring, et cetera. And this X.com thing throughout the next 20 years has always been that— I think he feels like it's the one that got away. It was that original concept and idea he had that he wasn't able to execute for one reason or another, went off in a load of other different tangents. And then WeChat, obviously, got born in China, and WeChat is essentially— was his— it was basically what he had envisaged. Okay, it's this one-stop platform. And what WeChat— I mean, because it's weird, most of us in the West here, you presumably heard of WeChat, but maybe never have used it. Of course, in mainland China, it is the single platform that you live on, right? It's messaging, it's voice and video calls, it's social media, it's a payment system, it's It's everything, right? And so I think this is where Musk now is kind of returning back to the idea of fulfilling that dream he had. Now, he bought the URL, X.com, he bought it back off PayPal in 2017, right? So 6 years ago, he's already thinking, right, I would love to kind of fulfill that original idea. At the time, he said, look, I'm just buying it. There's nothing— no more news. I'm literally just buying the URL. I'm going to use it in the future. Well, now it looks like he's using it. And when he got forced to buy Twitter for an insanely overpriced value, his kind of— one of his excuses, I guess, if you like, to justify it was, well, this is now at least part of the platform that I can now accelerate my sort of objective of creating this one-stop shop. And he said back in October, he said this will probably save me about 3 years. I could start this brand new platform from scratch, but buying Twitter probably saves me 3 years. And so he now piggybacks off the existing Twitter platform, which he's now shoved into the shell company, which is X Corp. And yeah, I guess we shall see, right? But his, his obsession with the letter X is quite I mean, obviously you've got SpaceX. One of the cars, his original cars at Tesla, he called Model X. And did you know that one of his children is called X?

Just too much. Too much. I mean, come on. That's just silly. I'm going to call him out for that. I mean, that's just— he's just trying to make headlines there on that last one. And that's a person's life we're talking about.

Yep.

So you mentioned, you mentioned WeChat. Let's have a quickfire round on some numbers for WeChat.

Okay.

Yeah. So first one, of course, number of users.

What are we talking daily active here or?

No, just total. No, actually let's go monthly. Monthly active users.

Mm. Well, I think the population of China is like 1.4, 1.5 billion right now.

Okay, look, so this is Piers sharing his interview technique now.

You obviously got, obviously got a lot of kids in there that won't own phones just yet, so I might strip out a few hundred million from that. You probably then got the opposite end of the spectrum, a lot of oldies that kind of missed the whole smartphone thing. So I reckon that leaves you with a core of, let's say, 800 million. So, and then I'd say there's a really high percentage of those that would use it. So I'm going to go, I'm going to go 700 million.

Okay. Okay. You almost need to double that figure.

What? No way.

Are you serious? It's over $1.2 billion as of the second quarter of 2021.

So I realized, I realized my error now. I was just thinking China, but it's not. It's kind of because where else it does—

yeah, it covers most of that Far East region. Yes.

So there's more than China. I messed up there.

That's the classic interview like a trapdoor that you fell into. You're fired.

I'm definitely fired.

You didn't do your market sizing. Okay, so a couple of other stats on the back of that. Over 83% of internet users in China were using the app as of 2020.

Yeah.

So that was 3 years ago.

Yeah.

So number's gone up, I'm sure. WeChat Pay. So that element of paying on there has over 900 million monthly active users. 900 million. So we are talking 3x the size of the entire population.

Yeah.

Of the US.

Of the US. Yeah.

At the moment. Absolutely dominant mobile payment method in China, has a market share of over 40%.

Yeah.

Just phenomenal.

Yeah, I mean, it's— I know this is why it's, you know, Musk— it's, it's almost weird. Well, in one way it's almost weird that there isn't like a dominant kind of single platform. I guess the way the Western tech giants have evolved is they've kind of come from their own one single area of specialism. Um, let's say Facebook, right? That's the social media you know, king, or was obviously. And then they've always tried to, I guess, have a foray into these other different services. And it's never quite— I don't know why, but they've never quite pulled it off. So yeah, we'll see whether Musk has got— has he still got the magic sauce?

So a couple of things then, because before everyone goes out of their minds, over this X idea and everything app, I'd just like to highlight a couple things.

Go on.

What— well, one of the first things, you know, we were just talking about China there, and I think you're being pretty naive if not to think that centralizing every person's behavior and activities, interactions on one singular platform doesn't serve a very strategic surveillance need of that country and has full board government interaction monitoring of that data set. So that makes the Chinese situation wholly unique. And so the number one single biggest challenge to achieve what he needs to achieve is government regulation, because we, we can't even get America and Europe We can't even get Britain and Europe to agree on even fish, never mind multiple different activities that one would do on a platform like they currently can do on WeChat. So this idea of complying with various government regulations across jurisdiction, region, and a singular global app ain't gonna happen, not in the Western current setup and the way things are at the moment. Um, so valid. That's number one. Number two, I've got several for you. I'll be as quick as I can. Cultural—

it's not like you used to be kind of anti-mask.

You call your child X, you need, you know, you need to even the score here. Cultural barriers. Yeah, WeChat, obviously super popular in China, um, caters to the unique cultural and social needs of Chinese users. I mean, you take a place like Shenzhen, life is very different, I can assure you, to Paris, for example. Like, just the, the interconnectivity to technology is just a different level at that point. Um, so You know, Musk has got to adapt his app's features, cater to them. If you're going to go across different areas in the West, well, you know, people in different areas are very different people. So if you're going to service North America, you're going to have to have a different type of slightly tweaked app that might be relevant for other areas as well.

I'm less, I'm less convinced by this argument. I mean, I think ultimately, what do people want? They want convenience, don't they? Yeah, you know, so if you've got a one-stop shop, I mean, obviously the app's got to be A, super slick from a kind of user perspective, and B, yeah, it's got to give you, you know, seamless access to everything you want to use on a day-to-day basis, right? I think full stop, that's it. If you can, if you, if you can give your customer that, then yeah, they're happy, no?

Yeah, fair. But then something you just said there, the technical, the complexity of pulling this off. Yeah, not only is it a high technical feat, it's expensive. You're going to need a huge team, huge resources. He's the man for that, obviously.

Yeah, yeah.

But how much is it going to take to achieve something within a reasonable timeline?

So this is where, I mean, he's definitely the man for the, like, engineering side of that challenge. Um, I was reading, well, do you see, I don't know why, he kind of randomly did an interview with the BBC.

Yeah.

Um, was it last week or maybe even earlier this week now? I can't remember. But, um, it was just quite interesting to get an update. The big kind of fact from that short interview was that the number of staff at Twitter The headcount's now down to 1,500. And remember that when he bought it in October, literally only in October, right, we're only like just over 6 months in, they had 7,500 headcount. He kind of immediately chopped half of those, but— and that was big news, right? But he's obviously been continuing. He's then halved it again. So they're down to kind of 1,500. And what he's saying is they're actually from a, from a net non-debt expenditures point of view. But we'll talk about the debt in a minute because obviously Musk used a huge amount of debt to buy Twitter. That debt now has servicing costs, i.e., you've got to pay the interest on that, and interest rates have obviously gone up, right? So we'll talk about the debt side. If you just ignore the debt costs for a moment, um, he reckons, and he said that in 2023 he will have reduced the non-debt expenditures from $4.5 billion last year to just $1.5 billion this year. So that is an absolute phenomenal cost, possibly the biggest cost-cutting exercise like ever, maybe, so, you know, relative size of the business. So That's pretty extraordinary. And he said that he hopes to turn positive cash flow in the second quarter, i.e., now, right? So I think we're kind of maybe coming to the end of phase one of his thing, which was, right, let's cut everything to the bone, let's stop hemorrhaging cash, and let's see if we can actually operate on a much reduced revenue, by the way, because revenues have collapsed. Because a lot of the advertisers kind of walked off during all of this and so on. So that's kind of, that's kind of one thing. So at least he might be cash flow positive. Whether there's then enough of a war chest to start setting about what you're talking about with regards to that engineering kind of mammoth task is a separate thing. But I just wanted a final point on that interview. Well, and other things I was reading. Now that he's cut the headcount to 1,500, he's now— at the end of March, he rolled out a new stock options scheme for these staff. Now, as part of these stock options schemes, you, you have to value the business, right? Because there has to be a certain value that's agreed, and then that, that kind of underpins the value of those shares when they're being awarded. Now, Musk apparently submitted a valuation as part of that process at $20 billion. And bear in mind, he bought it for $44 billion 6 months ago, so he's, he's taken more than a 50% haircut. But when you forget Musk and his share options, if you now just look at the business— and it's hard because it's a private business now, he owns it, so he doesn't have to report quarterly earnings. We've got no idea what exactly has happened to revenues, um, but If you valued— so there's no profits, right? There is loss-making business. So you can't value Twitter, you know, based on their kind of earnings over the last sort of 12 months or whatever. So if you valued them in a similar way to how Snapchat is valued— so Snap doesn't have any profits either, so Snap is valued based on, um, so the enterprise value of Snap is equal to 4 times its annual revenue. And if you kind of estimate Twitter's annual revenue, we think it's about $3 billion. It was $5.5. Rough estimates are that it's dropped to $3 billion. So if you take Twitter's $3 billion, times it by 4, which is how Snap's valued, then you get to $12 billion. So what, what's the true value of Twitter at the moment? Maybe $12 billion. However, back to the debt thing, they owe $13 billion in debt. So it's actually Twitter shares are worth nothing. In fact, they're worth negative, uh, on that basis. So yeah, I mean, look, it's early days on his turnaround, but—

well, look, you've just done me a favor then. Thanks, Piers.

He got, he got robbed.

So that was pure, that's pure ego. Yeah, yeah. So you've got to pay the cost for ego. Fine.

Yeah. So it's a mistake, but you can afford it.

Back to the list.

Okay, go on.

I'll quickfire through these ones. So one of the things about the bringing together of all of these different services, surely there's competition issues. It circles back up to the regulatory side of things again for a different angle. Which is again kind of a non-issue in China. If it's state-backed, fine, you just do what you need to do in that sense. The other thing then is user privacy.

Yeah.

So WeChat has faced criticism over its handling of user data privacy concerns, as you can imagine. So developing an app that offers users privacy, security, and comprehensive features just adding to that, this mountain. Then monetization. So you've got to create an app which offers multiple features, and we all love a free app, right? With free features where the cost doesn't lay with the consumer. But as we've seen since he took over Twitter and he's hemorrhaging cash, he needs to make money out of this thing.

Yeah.

So then comes this fine balance between servicing users' needs and wants and trying to actually finance a company at that point. And, you know, there's some other companies he's also CEO of as well at this point in time, which I'm sure he'll pinch from in both financial means and skills and knowledge means. Then there's established competition. So obviously WeChat being the huge one, but there are other services out there as well, and there's other competitions. I mean, not to say that they're heading that way, But, you know, if you do think of some other platforms that have tried and failed, i.e., your Meta-type names.

Yeah.

There are other people within this space who've also— aren't small, who could also be, uh, of a challenge to seeing that come through, given the fact that this isn't gonna happen tomorrow. But final thing I will say though, is that if he can pull this off, It would be nothing short of remarkable, and I will bow down at the master's feet, know my place, and never speak anything ill of this man ever again.

I look forward to the day. I'd love it. Love— I'd pay good money to see that. The thing is, on the competition side, he's got no competition from WeChat. You want to know why? Because the West, yep, would never in a million years allow WeChat through the back door. I mean, look what's happened to TikTok, right? So I think that, that from a competition point of view, that's kind of a non-starter. And then Facebook, you're right though, and back to the kind of challenge and the massive challenge of trying to pull this off. I mean, Meta, I mean, they, they set up, um, they tried to do the payments thing, didn't they? And then Yeah, ultimately panned it because they couldn't get it right. And now obviously Zuckerberg's kind of obsessed with his single objective of dominating that future world, um, if it ever arrives, called Meta, the metaverse. But, um, but, but yeah, look, if anyone can do it, he can, but I'm not sure anyone can do it.

So yeah, I've, I've, I've not got enough time to research for this episode, but if I did, what I would do is I'd go back through his human history and I'd find other very prominent people like him who've been real, you know, superstars of their time that pushed the human race forward to the point where inevitably they go one step too far. Yeah, and it's the classic human story of the ultimate downfall then. But anyway, let's move on. Yeah, so let's talk about US banks because we've just had the earnings, and of course these are the first earnings which then really unofficially kick off earnings season for the first quarter. And perhaps the one to really focus on is JP Morgan because Wall Street hasn't actually opened yet. The results have literally just come out in the last hour. And they are up about 6% in pre-market activity. They blew away Street estimates on both earnings per share and revenues. But perhaps, Piers, there's some other numbers tucked in there that have boosted this share price.

Yeah, so for sure the numbers, you know, on the, on the, on the face of it look super strong, you know, much better than expected. And it's been a bit of a, well, a surprise. And yeah, while surprisingly positive, they're obviously better than expected and the share price move reflects the positive surprise here. But yeah, when you're delving into it, one thing, a couple of things that stood out to me, one was average deposits because obviously we've had a banking crisis, or at least if you go one run down from the super big boys, of which obviously JPMorgan is one of them. And this banking crisis has been obviously the key kind of focus of Q1 in many ways, right? And it was all about deposits and SVB, Silicon Valley Bank, and depositors fleeing. So even with the big guns here, JP Morgan reported that their deposits were down 8% on the quarter. It's hard to know obviously whether whether that's people withdrawing deposits or whether that's just naturally people spending more of their savings now that the economy is perhaps turning over in a negative way or not. So it's hard to really know why those deposits dropped like that. But I think it brings up a bigger thing about the risks ahead for the banking system we thought were that their net interest income— so that's how they make money, through borrowing money from depositors. So they pay the depositor an interest, and then they lend the money out normally on a longer-term basis at a higher interest rate. And their net income margin is looking at the difference between those interest rates. What we thought was going to happen this year— yes, whilst interest rates have gone up Of course, so the central banks have raised rates. That means that they can increase the interest rates on those loans they're giving out. So that's great, right, from a revenue point of view. But from a cost point of view, we were worried that depositors would start to demand a higher interest rate on their current accounts and their savings accounts. Okay, and we thought this would then squeeze margins, um, and so What the big surprising news for me here, and I think the main reason why JPMorgan are up 6%, is because they raised their net interest income outlook for 2023. So that kind of almost flies in the opposite direction of what we were worried about this year for banks, which was their net interest income margins getting squeezed. Well, here's JPMorgan saying, no, they're not, we're actually now forecasting that they're going to improve. So I think that's kind of the big, the big one here. Jamie Dimon on the call said a couple of things. He said the US economy continues to be on generally healthy footings, consumers are still spending and have strong balance sheets, and businesses are in good shape. So that's obviously very positive. However, he then said, well, he then used the word however, the storm clouds that we have been monitoring for the past year remain on the horizon And the banking industry turmoil adds to these risks.

Yeah, there's a few other ones that I thought were quite interesting. Um, he also said the banking situation is distinct from 2008 as it has involved far fewer financial players and fewer issues that need to be resolved, but financial conditions will likely tighten as lenders become more conservative. Um, I thought, you know, just making clear that, that difference. And then another one he said was, uh, we still see a rather healthy consumer with excess cash, still expects recession, but it may be pushed off a little bit. It was one of the other ones as well. So, but one interesting thing I saw, because I was tracking it, um, to post out on LinkedIn about this as soon as it dropped And the way the earnings reports come out is you have a statement and then you'll have a presentation pack, and then this is where the bank will kind of lay out things a little bit more clearly with graphics and visuals, and they have an analyst call, conference call, and so on. So first thing I looked at was the statement, and on the statement on most of these banks, it's all very small print and there's lots of information crammed into a page. They normally have like a little box, and on that box is kind of bullet point breakdowns of the highlight reel. And so it's the highlight reel that's always a quick one you can cast your eye on and just pluck out some numbers if you want to be quick at this stuff. But I was looking at— I was going down the highlight reel and I was getting towards the bottom, and then I saw, I saw investment banking revenues up 21%. And I was like, what, up 21%? And then it was like, ah, gross investment banking revenues with an asterisk saying C7 in appendix. So I was like, okay, let's jump down then. Um, how many pages is it? 8 pages. And let's go down to the additional notes section. And includes gross revenues earned by the firm that are subject to revenue sharing arrangements within the CIB unit for products sold to CIB clients through the investment bank, we'll take that revenue, thank you very much. And that will be in our investment banking revenue. Thank you. End of show. So I saw that, I was like, and then I looked at the actual presentation And I was like, right, let's jump down to— so CIB is Corporate Investment Bank, it's what they call it at JP Morgan. And I was like, okay, so where's this IB revenue then? Oh, okay, IB revenues for the division down 24% year on year, IB fees down 19%. Okay, so they've basically managed to engineer this top-level bullet point where they've just created a 40% flip on the best of gross investment banking revenues. I was like, that is just brilliant.

It's just, it's just all smoke and mirrors, isn't it?

Oh yeah. Um, the other one then, I mean, we did have Wells Fargo, and again, they were up. A couple of interesting things: banking revenues up nearly 40%, uh, they're up 7% from Q4 2022, driven by stronger treasury management that those results reflecting the impact of higher interest rates, higher lending revenues, all the stuff you described. Citi again up, however their markets revenues were down about 4%, um, their global wealth management revenues were down about 9%. Nothing really too shocking there, but maybe BlackRock, quick word, they had a 10% decrease in revenue year over year, primarily driven by the impact of significantly lower markets and dollar appreciation. However, they will be pretty happy about that dollar move if you were looking at it right now. Trying to think, I saw someone's stat the other day and how many weeks it's gone down now.

It's been quite phenomenal.

Yeah. And then obviously lower performance fees. So that revenue figure, not to be too spooked then?

Well, don't forget that most of their revenue is based on fees, which are a percentage of their assets under management. So what's the value of their assets under management? Well, I guess that's determined by two things. It's inflow and outflow. So how many customers are coming in and inflow money into the business for them to manage, and how many are going the other way. But of course, what's been the, the dominant influence on their— the value of their total assets under management over the last few years has been market moves. So like in 2022, when you see the S&P is down 20%, well, you know, the value of their assets under management are therefore down, you know, 20%, let's just say, right? So, um, so to give you some numbers, their assets under management peaked, uh, right at the very end of 2021, which is when the S&P reached its all-time high. And then they got north of $10 trillion, right? They were just above $10 trillion then. Currently, as of Q1 2023, their assets under management is $9.1 trillion. So, you know, just from that alone, that's kind of a 10% drop in assets under management, which is a straight direct through 10% drop in their revenue. So, Yeah, that's very unsurprising and entirely expected.

And so the other banks will presumably follow next week. You'll get MS, GS, so on. Yeah. So do you think that with those particular banks, because we were just talking about like Citi, Wells Fargo, JP Morgan, different ball game obviously for the more purist MS and GS. Do you think that they can get away with the kind of bashing they've had with the lower performance of banking? Do you think that's baked in for those guys who are much more kind of clear-cut with their business model?

Yeah, I think that's— I mean, you're going to see that the market side of these banks have done amazingly well because they generate fees from trade flow, and trade flow and volumes have spiked in Q1 given all the turmoil and the banking crisis and all the rest of it. So their market side would have done very well and their IB, IBD side would have done very badly. And one will offset the other. That's what's going to happen. That's what they're going to tell us. What I'm a bit more interested in with these, with the bank earnings, it's not the big guns, the JPMorgans. They were almost a flight to safety, right, during this SVB thing. That's why I was a little bit surprised because I know that there was deposit flow from the smaller banks to the, you know, the systemically important banks like JP Morgan. So the deposits came out of the smaller ones where people were worried that those banks might fail and they were depositing money with JP Morgan. So, you know, from that, they were a net beneficiary from a deposit point of view. But still, overall, their deposits dropped by 8%. So It's interesting to see all these details come out, but what's going to be way more important isn't these big guys. It's going to be the mid-tier banks. You know, what do their earnings look like? What's happened to their deposit outflows? You know, and it's, you know, what's their forecast? You know, JP Morgan have come out here improving 2023 forecasts. Are you going to see that from for the mid-tier banks, I very much doubt it. Um, so that's kind of, you know, with regards to the banking crisis, which has been the big thing of the year so far, that's what's most important rather than these big banks' earnings.

Yeah, no, it's a very valid point. And let's, let's wrap up then. Let's have a quick chat on the— take a step back on the macro front just generally. Then we've had some bigger data points this week, namely US CPI headline dropped quite substantially, but the core actually picked up by 0.1 to 5.6%. And you just had retail sales come out. The headline on that month-on-month was -1%, which was slightly deeper than the analyst expectation of a drop of 0.4%, but the previous was subject to an upward revision. Really not too much there. Looking on the surface level. Any of this important? Change, change your mind at all on Fed?

Uh, well, the Fed's next meeting, it's in May, isn't it? When in May is it? You'll, you'll know better than I. Um, come on, it should be beginning of May.

I'm gonna go 4th of May.

Okay, May the 4th, Star Wars Day.

Um, it's the 3rd of May.

Okay, close. Um, so I don't know, that inflation data, which is the key, right? I think it was mixed enough to really not give us any clear indication either way, right? Because the headline number was down and the core reading was up. And so it's like, eh, all right, it's mixed. So what happens with the Fed? I still think that— what are the probabilities at the moment? What's the Fed funds futures pricing?

77% for 25.

Yeah. So I think it was quite critical to get through this data set in the first 2 weeks of April. And I would say what we've seen probably means— yeah, I'd say that's probably right. I think they will hike unless the earnings that we get in the next 2 weeks from not just the banks but all the other sectors, unless that reveals something really bad.

They don't care about the earnings, surely.

Well, I'm just saying, from a— ultimately, from a recession risk point of view, because it's not just because inflation, right? Well, how, how long will inflation stay high? Well, that's all about when will the recession begin and how deep will it be. And, you know, when you listen to Jamie Dimon, you know, who's telling us that consumers— well, what did he say, um, the economy continues to be generally healthy, right? So that means that inflation is going to stay higher for longer, which means the Fed are going to have to hike. But if you get some other companies coming in with their numbers and forecasts, you know, maybe on the retail side, or I don't know, which indicates that there's weakness in other sectors, maybe then we'll, you know, alter our expectations. But I think it's, as you say, I think it's too late. I don't think there's going to be anything significant enough in the next 2 weeks to stop the Fed hiking.

And then is that it? As far as we can see for now?

I would— yeah, that's what I would bet on. But, you know, they're data dependent, right? I mean, what happens if core inflation continues to rise? Then maybe it won't be the last. But yeah, if I was betting, I'd say it'd be the last one.

Yeah, the market agrees with you at this point.

It's whether they cut, it's whether they cut. You know, people have been desperately hoping that they might start cutting rates by the end of the year, and that's much harder to call, right? Because it's just further in the future and there's a lot of moving parts and it's incredibly difficult to forecast. But given what's happened with core inflation here, where it's ticked back up I just can't see them being able to cut by the end of this year unless the recession is super bad, in which case that's just super bad anyway.

Yeah, because looking out at market pricing, once we get to the July meeting, the markets then started— still starting to price cuts. It's still on the fence between holding at the hiked, agreed one in May.

Yeah.

And then the— there's a 40/40 split there on holding at that rate or cutting by 25 in July.

In July, if you're away— if you're hanging on for a rate cut in July, you're gonna get very, very disappointed.

Uh, it could be a trade on there for you, Piers. Okay.

As soon as we finish here, I'm, I'm all over that.

And on that note, let's wrap it up. So thanks very much, uh, as ever, everyone, for listening. Uh, if you've made it to the end, thanks very much. Don't forget, if you haven't already done so, please do give us a rating, a review would be amazing, really helps get the shout out to as many people as possible. But Piers, thanks very much, and have a great weekend, everyone.

Have a good weekend.