Akwy sessiak ak akwywy situation of etrade. Will has the highlights. Hey, carl as you said, just last hour we were talking with james gorman, the ceo, and said he first got attracted to etrade back in 2002 when he was still at merrill. He said the conversations this time got real in december. Heres what he had to say about that 13 billion price tag i never worry about strategy. Im never trying to copy what somebody else is doing we have to do whats right for Morgan Stanley you have to be opportunistic, move and move quickly. We put in a very full, i think appropriately, a bid for a Great Company with an iconic brand if we tried to to do it on the cheap, that would have created turmoil. You get the job done thats what we did this is what he said about the rationale for the deal we bring in a group of technologists that i think will drive Technology Platforms even further than that weve been able to do they have Online Banking we can roll that to premium clients. We have a lot of young clients, a lot of clients who dont have a lot of money, but most of our business the is in the 1 millit 10 million. The demographic is different its an option play. It gives us access to a different demographic. Finally, you know, this can be a platform to take internationally. Ive been very interested in having a digital platform outside the u. S. Rather than trying to rebuild massive Financial AdviserNetworks Share price is trading down but only by about a couple of 1. 5 now this is diluted to the tune of about 12 or 13 , so could have been down a lot more interesting, carl, also to see Goldman Sachs trading down, albeit again its recovered from some of its losses, less than 1 purse down, perhaps from the opportunity cost of not having done this deal great interview and repo reporting. Was this type of potential deal making whether todays deal with Morgan Stanley and etrade, was this inevitable or perpetuated by some of these disruptors, these startups like robin hood coming in and giving everybody a run for their money . Listen, i think as weve discussed at length over the last six months, the likes of robin hood certainly were a catalyst, a spark to lead to the original price cutting amongst the brokers and then the consolidation that saw schwab by tv am td ameritrade. Since then, ebay was thrown around as a potential takeover target for the likes of Morgan Stanley and Goldman Sachs. Their share price is up 40 or so since october clearly, that gave them much more currency to act than they had previously Goldman Sachss share price also up in that period of time, perhaps not quite so much. Some people are wondering as to whether or not they could have done this deal also. It fits in what theyre trying to do in terms of buildout and online bank and Trading Platform i spoke with the ceo at Goldman Sachs who suggested they looked at it does v but decided not to go for it because it wasnt right for them you see the market relative to the dilution, i think a Goldman Sachs banker would point out theyve achieved 60 billion of deposits themselves organically through marcus without having to pay the 13 billion that Morgan Stanley has to pay to for Goldman Sachs, maybe a big mess in terms of expanding what they do in scale and market share. On the other hand, you could argue this validates a little im assuming that framing it as a miss is probably why theres pressure on Goldman Sachs stock today yeah, definitely. But listen, Morgan Stanley has been the clear winner share Price Performance year to date of all the banks Goldman Sachs would be second in that list. Both have done well. Morgan stanley, the clear winner here today when they announced their strategic plans after their earnings, the stock jumped its essentially where that still was despite a diluted deal the market warming to this deal, no doubt about it. Will, good stuff as always. For more on the deal, lets bring in former wells fargo ceo. Where do you think the magic is in the deal in this case well, this is really James Gormans vision. He wanted to emphasize the brokerage and Growth Management business reminded me of the dean witter deal it was a main street Brokerage House basically. And i think he believes that emerging wealth is the emerging wealth customer base, many of those or some of those will become fullfree brokerage customers as they increase their wealth over time i really think etrade had to make some sort of a deal given the nofee trading situation in the discount brokerage business. And i think they got a really good deal. This is a fullpriced deal it makes a lot of sense for them well see how it works for Morgan Stanley it is a good deal you would argue from etrades perspective and i think some of Morgan Stanleys competitors are making the same argument. Whats the worstcase scenario here so that investors understand largely they seem to like it because Morgan Stanley is hardly down at all. How does this go wrong if it does it could. The dilution may not get to zero or positive over a period of time and probably get close to that, so i dont think its going to be a disaster by any stretch of the imagination where it becomes a single, theres probably a question mark i dont see how it becomes a home run given the price but it could i mean, you know, who knows how this is all going to the disruption that is occurring in financial surveillances from all kinds of areas, its very hard to predict how its all going to settle down. I think its a risk, but i thought quite frankly that his decision to go as far as he was going with Wealth Management and brokerage and eliminate, you know, a lot of the investment banking, i thought that was a bigger risk than this risk hes taking now he was successful in doing that. Yeah. In politics, and i say this coming off that democratic debate last night where there was a lot of focus on the middle class or the trump administrations bluecollar boom, there is so much more focus on the middle class, you can make the argument that thats actually happening in banking right now too, whether its the Morgan Stanley deal today or the fact that ubs announced a new ceo, outside ceo that has a Retail Banking background what do you make of that what is it about this i guess as you put it emerging wealth customer that becomes so attractive so recently im surprised they didnt do it before. Ive always believed in it the essence is at 70 of the Financial Services revenue is in the consumer side, and a huge percentage of that is from middle market upward so if you want to be a diversified financial institution, which i think you should be, you have to be in the middle market of the middle income consumer. It took a long time for some of the Financial Institutions to believe it how do you think about m a in the space overall . B bsh bb t suntrust, franklin, legg mason earlier this week. Where should we look for m a to happen with the fastest pace well, theres going to be more consolidation the large institutions really arent able to do m a, at least in the areas of which they are already operating. So it will be the Smaller Companies that continue to combi combine. Technology is the cost of technology and the value of technology is that you can reduce costs by having greater volume and so thats driving it and the competition is hard. Margins are decreasing so you have to consolidate so just to take a step back or i guess look at this deal specifically, dick, its the biggest takeover by a big u. S. Bank since the 2018 crisis any reason to think this is going to have any kind of issue going through regulators and lawmakers in d. C. . I dont think so. I think that if this was a mainstream bank, put it that way, as opposed to an investment bank, i dont think this deal could get done i think theres still a lot of concern amongst the regulators to see, you know, jpmorgan or bank of america or wells fargo get bigger Morgan Stanley is not that large compared to those. This is in a business they are already in and i think they could do a deal like this, certain goldman could do a deal like this, but im not sure that a large financial institution, that the regulars would allow it one last thing. Yesterday in a filing, bank of america cited the possibility of negative Interest Rates in the United States as a Business Risk for the first time is that something thats being talked about more openly, do you think, than say last year . The only talk about it is it doesnt make any sense i dont believe in negative rates. How long have we had negative Interest Rates in japan . How has the their economy done in the last 15, 20 years i dont think it helps i think it hurts you have to have a Strong Financial institution and of course it reduces the income of Financial Institutions so i dont think theres any possibility in the near term that we have negative Interest Rates in the United States your point on japan is a good one on the heels of that last gdp print. Thank you as always for the guidance dick kovacevich. One of the big earnings movers is viacom cbs. Julia boorstin has more on the results. Jon, thats right vie come cbs shares plummeting down about 15 after missing wall street expectations for top and Bottom Line Results and giving lower than expected guidance the ceo on the call this morning tried to shift focus away from what we called a transitional quarter to a new strategy. In contrast to rivals netflix and disney, ramping up spending, he says his company is focused on making more from their current investment our strategy isnt about spending more. Its about better aligning the combined Company Spending with Growth Potential and maximizing the value of our content franchises across our larger asset base that means putting the full power of the Company Behind our biggest priorities he laid out his plan to accelerate viacomcbs momentum in streaming and digital video announcing they have 22 million users of free pluto tv and 11 million skrooubers between showtime, cbs all access all access will become the base of one of their content platforms and expand it with content from the companys cable ch channels it will have free, broad pay, and premium pay segment, and just like in a linear world, well have streaming product for each hes increased the companys guidance on cost savings from the merger by 50 to 750 million, though that has not helped the stock today analysts are starting to weigh in citi warns that if the ad market performs worse than expected viacomcbs could face greater pressure than the rest of the overall market, but ever corps saying it could serve as a good entry point for longterm investors. Julia, my head is spinning looking at these results as we talk about a golden age in television across revenues and operating income its like everythings down. Tv entertainment, cable networks, publishing, film, entertainment year over year all down is there something looming on the horizon for viacomcbs that would be positive . You look at disney or comcast, you win some, lose some, somethings down but Something Else is up i dont see anything up. Its a golden age of television for consumers but a very tough time for the media businesses everyone tries to sort out the future of streaming. What viacom and bakish were saying on the call, this a moment of transition they had 11 lower content licensing revenue. Thats because weve seen so many Different Streaming Services launch. A lot of them are spending more on their own content look at disney as an example netflix, theyre still buying some content, also producing a lot internally what hes saying is this was a transition the future is going to be about us making more from the amount were spending on content. It was notable he did not say theyd be spending billions and billions more but they want their content to be more effective and theyll be pulling all these assets together, creating a multitiered streaming service more similar to what we saw from peacock, which is that Comcast Service thats going to be launching over the next couple months. So he really wants to make it onestop shopping, bring together all of their assets a lot of analysts on the call pointed out some of their cable channels like nickelodeon, their ratings have been in the decline so they need to transition that content to be more valuable for streaming consumption. Yeah. Big question well see if they can do it. Julia boorstin, thank you. Speaking of streamers, a report in the Washington Post this morning details the flood of political ads to streaming Services Like roku and hulu. Loopholes that traditional tv broadcasters are not subject to, not to mention social media. Henry blodget of Business Insider and joanna stern of wall street journal join us now. Welcome. Good to be here so many conversations for the past, i dont know, year now, henry, about things like political advertising in the social media sites weve seen streaming coming into play with spotify saying it was going to not take any political advertising back in december, but this has not been a topic of conversation yet why not . Well, it is starting to be. What we are learning is political campaigns will do absolutely everything they are not explicitly prevented from doing. The thing thats different is you look at the different rules for the social folks, the streaming companies versus broadcast. There needs to be one set of rules here otherwise well see what were seeing i think the worst thing we can do is conflate streaming with linear, regular broadcast tv they are completely different beasts when it comes to ad targeting, and i think what a lot of consumers dont understand is how much of what they watch is being targeted or being tracked. So this is a completely different beast when looking at what can political campaigns gather about their viewers or the viewers and then target ads against that joanna, maybe targeted ads ought to be regulated, period, not even just talking political ads. I think about junk food or housing and employment, even if its not a direct solicitation for employment or for housing. There are discrimination issues there potentially. How is anybody going to know if targeted ads are creating issues unless somebody is looking at whos placing the ads, who i theyre targeting, and tracking what the results are i could not agree more. How about that the biggest thing is transparency is key and i believe facebook will be a leader in this, as much flak weve given facebook over the last two, three years, theyve made big inroads in giving us transparency about why were seeing those ads what info is gathered, why were seeing that particular thing in our news feed, instagram feed, i dont know, plastered to our head its important because the experience is the same for the consumer, right . You dont understand why youre seeing it. Youre just seeing it the way you would watch something on tv. Arguably, the experience can be much better for the consumer if its well targeted. Ads have always been targeted. There are demographic assumptions. Advertisers are always trying to figure out which ads are working, which arent. Watching television, 80 of the ads are about something you wouldnt buy in the next ten years. To joannas point, its how far you go with it facebook got to the point where you could target five pool with certain carc tryst, on a particular block maybe thats too much. We have to figure out what makes sense. Big questions that i have a feeling are not going to be answered anytime seen, but well see. All right. Carl is doing a million things ill get it in a second another story weve been watching closely, forget tesla, wall streets new favorite stock is apparently Virgin Galactic rising again this morning. Actually, its turned negative in the last hour, down about 5 today, still up up 10 a few moments ago. It was. Just to put this in perspective, when it went public back in october, the stock was priced around 12 a share its currently trading around 35 and change a tech company saying that largely millennial investments is what its focused on, just passed tesla has the most traded stock on the platform. Henry, you were around you saw the dotcom bubble. Comparisons with the tesla chart to that period of time, b this chart has been stratospheric as well they havent started service yes, theres longterm targets in place, but the move weve seen in this name, does it feel like that to you its a speculative play toy thats fine. Speculation can be fun and lucrative. At some point, Virgin Galactic, will trade at 20 to 25 timeser that doesnt mean if there are no earnings today it will go to zero it means at some point in the future, they have to merge if you were speculating in Virgin Galactic, and want to be investing, saying this is a good price, you want to draw on your spreadsheet how many people are they going to send people into space ever