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BNY CEO explains why there is a disconnect in the markets
BNY CEO explains why there is a disconnect in the markets

Yahoo

time06-05-2025

  • Business
  • Yahoo

BNY CEO explains why there is a disconnect in the markets

00:00 Brian Sozzi Yahoo! Finance descending on the Milken Conference once more. Joining us now is BNY CEO Robin Vince. Robin, good to see you. Feels like I just saw you a couple of months ago at the World Economic Forum. 00:09 Robin Vince Yeah, it wasn't long ago, Brian. It's great to be here. Great to be with you. 00:12 Brian Sozzi Um, last time we talked was actually on your earnings a couple weeks ago, and you made a great point that there's a lot of risks and uncertainty right now because of the trade war. But the market has rallied back, uh, pretty aggressively. Where's the disconnect? 00:23 Robin Vince Well, I think there are a few things to note. So number one, we've essentially made a round trip in the stock market since the election. If you look at where the S&P is today versus the S&P the day before the presidential election. And actually, it's about the same level as it was on Liberation Day. So there's a lot of talk about the anxiety in the stock market, it's understandable because there's a lot going on. But actually, in terms of actual levels, we're sort of unchanged. Now, of course, the world's a complicated place, uh, right now, and there is a difference between the sentiment and the economy, which is pretty poor, and the facts of the economy which have actually held up pretty well. 01:03 Brian Sozzi Then is the market wrong? If conditions are poor, maybe the market just has this whole thing not correct. 01:12 Robin Vince Well, the market looks through to the future. It always does. And so the question is that the market's trying to answer, which is maybe a little different than the question you and I are answering, it's not where are we today, but are where are we going to be. And so, Secretary Benson's here at Milken as well, talking about the three legs of the stool of the administration's policy. It's about trade, including the non-tariff barriers. So it's not just about tariffs. Also about deregulation and unlocking business potential, and then about taxes. And so what we're seeing, I think, with the market moves is the first leg of the market down was focused on one of the three legs of the stool, but there are two other legs. And so now the question is, the market's looking and saying, I wonder how this is going to come together. Now what would be most helpful would be a really good trade deal because that's going to start showing the path if that can happen. And I think the market would take a lot of confidence from that. If we don't see that over the course of next couple of months, the market's probably going to start to question that again. 02:19 Brian Sozzi Is the market too optimistic on a trade deal? 02:23 Robin Vince Well, you know, the market's looking at more than just one thing, and we all should look at more than one thing because the ultimate question here is, how's the US economy going to do over time? And are those three legs of the stool going to come together to be successful? Now, I was just in Europe two weeks ago. I was in the Middle East last week. I was in India last week as well, really getting out there, connecting with clients, talking to our clients, understanding how they're seeing the world. And so it also depends on where you are and who you talk to. 03:00 Brian Sozzi A lot of, uh, of course, big international contingent here at the Milken Conference, as always. A lot of CEOs that I talk to, global CEOs, they are concerned that there has been damage done to the US brand because of everything happening on trade. Do you share that sentiment? 03:17 Robin Vince I think it's a little bit more complicated than that. We saw in the first Trump administration that there was just a change of approach, and some of the European allies, foreign partners just weren't used to that. We're seeing the same change of approach again, and this, this time there's definitely a question on people's minds, but it is different region by region in terms of, okay, what does that mean? What does it mean for the dollar? What does it mean for treasury markets? What does it mean for the US as a, as a reliable global partner? And, you know, you get different answers to that question as you travel around the world. There's clearly more anxiety in Europe. That's probably peak anxiety on this question right now. I think in the Middle East, they were a little bit more sanguine, to be honest, uh, and that reflects their place in the world both geographically and geopolitically. 04:09 Brian Sozzi How disruptive would it be if the international community begins to lose trust in the US brand and they start to sell treasuries, for example? 04:21 Robin Vince Well, you know, you have to remember what the treasuries represent. They represent the safest investment on the planet, and there's a reason why they are considered to be the risk-free go-to asset. And it's all very well to say, hey, let's go and find another one, but there are a lot of things that underpin that US resiliency, that trust, the legal system over a long period of time. All of the big financial institutions in the world that help that market, the depth, the liquidity, the, the predictability of the process. And so there are a bunch of different legs underpinning that stool. There are many countries that would be, would love to be able to replicate that, but it's a little easier said than done. 05:08 Brian Sozzi Is the treasury, is the US Treasury bill, is it still risk-free? Is it still safe? 05:17 Robin Vince So it's always the case that any asset in the world has some element of risk or uncertainty associated with it. There's no such thing as the absolute perfect answer. You can buy gold, but somebody could steal the gold. You can buy treasuries, people can call into question aspects of the treasury market. The right question, I think, is, what is the most risk-free asset in the world, and what is the one that offers the liquidity associated with it? We do a lot of things for the US Treasury market. We have a very good vantage point on that. We're settling over 20 trillion dollars a day of US Treasuries on our various different platforms as a company, and I think you can see with the volumes, with the movements that the market is a very robust market. And it's worked really well. The only thing that we've seen that other market participants have seen is that there has been at various times reduced liquidity because of the volatility in the markets, but that's normal for markets, because when you have a fast-moving market, people are going to make bid offers in smaller size, the liquidity at the top of the order book, the depth at the top of the order book, that's going to reduce. It has, did it for equities as well as for treasuries, but the underlying infrastructure, the rails of the financial system, they've been rock solid, and they haven't wavered through the process at all. 06:22 Brian Sozzi Is our things still functioning correctly? Have you seen signs of stress at all? 06:43 Robin Vince Hundred percent. 06:45 Brian Sozzi And of course, this week we'll have a key Federal Reserve meeting. You've, of course, been in this industry for a while. You've seen a lot of Fed moves, things they have done and haven't done. Do you view right now as the most challenging or one of the most challenging periods for the Federal Reserve? 07:01 Robin Vince Yeah, I think that falls into. I think that falls into the question of it always feels more challenging to deal with a situation when you're in the middle of it, and then with a little bit of the distance of time, you sort of forget how challenging the last one was. We've had a lot of challenges. You know, COVID was, I'm sure, a very challenging time for the Federal Reserve. It was only a few years ago. We've so we have these these periods, and each one, when you're in it, probably feels like the worst. But the Fed's having to navigate this. It's clearly tricky, and there is an issue here back to this point about the facts of the economy compared to the sentiment of the economy. Sentiment is not great on the economy because the administration is taking some difficult decisions that are creating some resets, create anxiety on the expectation and hope of a future payoff from that. And if that's successful, it could be a great strategy. But there's an if in that statement. So the Fed's navigating that, but the reality is, the economy's actually been performing. And so you saw that with the jobs report last week. GDP was obviously more negative, but there's expectation that it'll rebound in the second quarter. So, you know, the Fed's probably, be my expectation that the Fed will do what they've indicated they're going to do, which is wait for more data and wait to see how things develop. There's no particular advantage to them to go rush ahead of the game, although I understand that that's a complicated question, lots of points of views. 07:05 Brian Sozzi Outside of the Great Financial Crisis, of course. 08:38 Brian Sozzi Uh, lastly, Robin, um, amidst this turmoil in markets, have you been able to push through with your business initiatives as a CEO? I can't tell you how many leaders I've been talking to where they've had to put a halt on that big project they're working on or reassess how many employees they're having their business. I know you're pivoting to more of a platform-based company. Have you made any changes? 09:00 Robin Vince Well, we've been forging ahead. I mean, our people are excited about the change that we are on as a company. We're serving clients. Now, clients want more things from us, actually, at times of uncertainty. They want more help. They want more advice. They want to be able to use our platforms as they challenge their own expense models. There's outsourcing opportunities for us because we're a platforms provider. So the short story is, we're going through a transformation. Of course, one has to be careful. One has to prepare for the worst. We're all risk managers at heart across all industries, but particularly in the financial services industry. But we're plowing forward, and we're, we're optimistic about our business model, and we feel we've got the right platforms to help our clients move forwards. That's exactly what we're doing. We're focused on going forward. 09:44 Brian Sozzi All right. Well, good luck at the conference. Uh, we'll talk to you soon. BNY CEO Robin Vince. Thanks for coming on. Appreciate it.

BNY kicks off 2025 with higher Q1 profit, helped by jump in assets under custody
BNY kicks off 2025 with higher Q1 profit, helped by jump in assets under custody

Reuters

time11-04-2025

  • Business
  • Reuters

BNY kicks off 2025 with higher Q1 profit, helped by jump in assets under custody

April 11 - BNY (BK.N), opens new tab reported a 17% jump in first-quarter profit on Friday as it managed higher assets under custody that boosted its fee income. The bank's fees, typically calculated as a percentage of assets under custody, benefited from the acquisition of new clients and heightened market volatility that led to investors aggressively revamping their portfolios to cushion against the impact. The Reuters Tariff Watch newsletter is your daily guide to the latest global trade and tariff news. Sign up here. Adjusted profit applicable to BNY shareholders stood at $1.15 billion, or $1.58 per share, for the three months ended March 31, compared with $982 million, or $1.25 per share in the same period a year earlier. "Looking ahead, we are prepared for a wide range of macroeconomic and market scenarios as the outlook for the operating environment is becoming more uncertain," said Robin Vince, BNY President and CEO. Its total fee revenue grew 3% year-on-year to $3.40 billion in the reporting quarter. Net interest income - the spread between earnings from assets and expenditure from liabilities - rose 11% to $1.16 billion. BNY's assets under custody and administration were $53.1 trillion in the first quarter, 9% higher than last year.

The shadow of Trump looms over a cautious Fed
The shadow of Trump looms over a cautious Fed

Yahoo

time27-01-2025

  • Business
  • Yahoo

The shadow of Trump looms over a cautious Fed

The Federal Reserve will gather this week for its first meeting of 2025 under the looming shadow of a new US president who is already posing challenges to the central bank with his words and possible actions. Trump hinted at a coming clash with Fed policymakers as he spoke virtually before the World Economic Forum last week, saying he would "demand" lower interest rates. Trump doubled down on his comments later while talking to reporters, noting that he wants rates to come down "a lot" and that he thinks the Fed will listen to him. He said he expects to talk directly with Fed Chair Jerome Powell "at the right time." Where Trump and Powell could be at odds is that Fed officials have sent multiple signals in the opposite direction, hinting that rates may not be changing for awhile after being lowered by a full percentage point at the end of 2024. And investors are betting rates won't change at the Fed's policy meeting this Tuesday and Wednesday in Washington, DC. What Fed officials repeatedly have made clear in the run up to this meeting is that they are increasingly concerned about signs of persistent inflation, citing that as a reason to move cautiously in 2025. Some also have aired concerns behind closed doors that the trade and immigration policies of the new Trump administration might provide even more upward price pressure. In fact, Fed officials recently lowered their forecasts for additional rate cuts in 2025 from four to two, due in part to their concerns about inflation and the economic effects of Trump's agenda. Some watchers of the US economy are now raising the possibility that the Fed could even be forced to raise rates this year — a move that would surely invite Trump's wrath. Harvard economist Ken Rogoff told Yahoo Finance he doesn't think the Fed will fire off the two cuts predicted. "I think the odds of a hike are the same as the odds of a cut," he said, pointing to the potential for higher deficits and investments in AI driving the economy. BNY CEO Robin Vince told Yahoo Finance he also thinks rate hikes are possible, but it's more likely the Fed will hold rates steady for awhile. If the Trump administration unveils new tariffs on China and the European Union, that opens more extreme possibilities. "I think rate hikes are possible. Anything is possible. You've got to be prepared. Being resilient really matters," BNY (BK) CEO Robin Vince told Yahoo Finance at the World Economic Forum in Davos, Switzerland. But hiking rates "doesn't feel like the most likely outcome. To me, the Federal Reserve has been on a path that looks like they can pause for a little while and take stock of where things are." Nouriel Roubini, CEO of Roubini Macro Associates and professor emeritus for the Stern School of Business at New York University, said he sees no cuts happening this year but wouldn't take the possibility of a rate hike off the table. "The risk is the Fed that told us last year, 4 cuts this year, then in December said only 2 cuts. And now the markets are pricing maybe only 1 cut, there will be zero cuts,' said Roubini. If core inflation goes higher, he added, a rate hike cannot be ruled out, even though that's not his baseline. Tariffs, restrictions on immigration and high deficits could add more inflationary pressures. "This stuff that can increase inflation … literally this year," he said. Fed policymakers have suggested in their recent commentary that they want to move slowly in 2025, as they assess the impact of Trump's policies, even though some do still expect rates to eventually fall further. Federal Reserve governor Michelle Bowman said earlier this month that the Fed's rate cut in December cut was the "last step" in the central bank's "policy recalibration." Kansas City Fed president Jeff Schmid said recently that "I believe we are near the point where the economy needs neither restriction nor support and that policy should be neutral." Schmid added that he is now in favor of adjusting rates "gradually." Trump's new comments last week suggested that he may not be so patient as he waits for rates to fall further, setting up a possible collision course between Trump and Powell in the weeks or months ahead. The president's comments at the World Economic Forum in Davos, Switzerland, were not his first on the subject this year, either. At a Jan. 7 press conference, Trump also said "interest rates are far too high." On the campaign trail in 2024, Trump regularly weighed in with criticisms of Powell, offering that the president should "have a say" in Fed decisions and that Powell has "gotten it wrong a lot." In 2018 and 2019, Trump lobbed regular critiques at Powell — whom he appointed to the role — as the Fed raised rates and triggered a stock market sell-off that year, at one point likening the Fed chair to "a golfer who can't putt." After Trump's win in November, Powell has also staked out seemingly immovable ground, saying there is 'no legal authority' for him to be removed before his term as chair ends in 2026. Trump said last month on NBC's Meet the Press that he has no plans to remove Powell before the chair's term is up. Roubini warned that if the Fed lost its independence it would make inflation worse because he believes inflation expectations would rise and the bond market would send interest rates higher. Even holding rates steady may result in a clash. "I think that even no cuts, as opposed to raising rates, puts the Fed on a collision course with this administration because this administration wants easy money to strengthen economic growth," Roubini said. Click here for in-depth analysis of the latest stock market news and events moving stock prices Sign in to access your portfolio

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