Trump Wants Tech Giants to Pay for Power. They’d Love To.

Summary

Bloomberg Businessweek Podcast Summary

Episode: Trump Wants Tech Giants to Pay for Power. They’d Love To.
Date: January 16, 2026
Hosts: Carol Massar & Tim Stenovec

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Episode Overview

This episode centers on President Trump’s collaboration with northeastern U.S. governors to launch a groundbreaking plan compelling major tech companies to directly fund new power plants, addressing the surging electricity demand from the AI and data center boom. The conversation delves into the policy’s market reaction, why tech giants are open to it, its implications for utilities and consumers, and the broader economic context, including energy trends, geopolitics, and the crypto market structure.

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Key Discussion Points & Insights

1. Breaking Down the “Emergency Wholesale Electricity Auction”

[02:31–05:36]

• What’s Happening?
  Tech giants like Amazon, Microsoft, Alphabet, Meta, and OpenAI, who are massively expanding data centers, would be required (and are also willing) to underwrite new power plant construction through an emergency wholesale electricity auction.
• Why Now?
  • AI and cloud computing have dramatically increased electricity needs.
  • There is a notable supply-demand imbalance: retail electricity prices rose 7% year-over-year by September and 10.5% over the previous year (biggest in a decade), especially in areas dense with data centers (Virginia, Pennsylvania, Ohio).
  • Impact is acute in the PJM Interconnection region, the largest US grid system.

“The plan is…to force these tech companies to pay more for the data center…energy that their data centers will need. Now, force is a big word here because the data center companies have also been asking for this for quite some time.”
—Michael Shepherd [03:33]

• Policy Intent:
  • Protect consumer household bills from further increases by targeting large-scale, industrial buyers (i.e., tech firms).
  • Directly raise capital for long-term power plant construction through these binding 15-year supply agreements.

2. Why Are Tech Giants On Board?

[05:11–07:25]

• Existing Investments:
  Tech firms already invest in new energy capacity for data centers but need guaranteed, scalable generation.
• Auction Mechanics:
  • Firms bid billions for 15-year bulk electricity contracts with fixed pricing.
  • Offers supply stability for tech companies, supporting future AI/cloud growth.
  • Funds grid expansion for PJM (the power operator), addressing shortages.
• No Immediate Relief:
  Implementation and infrastructure buildout are multi-year projects, offering no quick fix.

3. Market Reaction: Energy Company Stock Drops

[06:33–08:32]

• Tech vs. Utilities:
  • Surprise dip in energy companies’ shares (e.g., Constellation down 11%, Vistra down 7.8%) referenced live as news broke.
  • Investor concern: utilities may lose pricing power if big tech becomes a direct wholesale buyer, potentially dampening their ability to keep pushing retail rates higher.

“Investors are looking at the pricing power that these utilities may ultimately have. Will they be able to continue to see the rate increases that, that you know, retail and residential customers have been experiencing and that these companies have been able to profit from?”
—Michael Shepherd [06:47]

4. Longer-Term Political and Economic Context

[08:58–09:33]

• No Quick Fix:
  Supply still won’t meet demand in the near future; data center expansion keeps pressure on the grid.
• Political Stakes:
  Rising energy costs are now shaping local and national election debates.
• State Pushback:
  Example: NY’s governor challenges tech firms to create more jobs or shoulder more of their own energy burden.

5. Implications for Energy Mix and Infrastructure

[09:33]

• Broader consensus: meeting future demand will require all options—wind, solar, gas turbines—significant investment is needed.

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Notable Quotes & Memorable Moments

• On AI and Electricity Demand:
  “When Amazon says it’s going to invest in a 5 gigawatt data center, that means it…will need electricity comparable to five nuclear power plants.”
  —Michael Shepherd [05:36]

• On the Market’s Confusion:
  “I'm not getting it 100%. Yeah, I'm not completely understanding the market reaction…it's kind of all over the place still for me.”
  —Carol Massar [08:13]

• On Political Fallout:
  “It is increasingly a political issue.”
  —Michael Shepherd [09:08]

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Additional Segments and Broader Economic Discussion

Geopolitical Risks & Market Resilience

Guest: Leslie Marks, CIO, Equities at McKenzie Investments
[12:31–16:29]

• Despite ongoing global tensions (Iran, Ukraine, Middle East), markets have rallied due to strong earnings prospects, AI-fueled productivity, and accommodative monetary/fiscal policy.
• Growing view that market leadership will shift to sectors/geographies outside pure tech and US equities—emerging markets and Canada expected to outperform in 2026.

“What’s driving the market is the prospect for greater earnings…fueled by artificial intelligence in businesses across multiple sectors.”
—Leslie Marks [13:41]

• Technology’s rising capital intensity (needing more infrastructure) will likely pressure tech stock multiples, reinforcing diversification.

Crypto Market & Regulation

Guest: Maya Vu Yinovich, CEO Digital Assets, FG Next
[18:50–24:31]

• Discussion covers digital asset legislation in the US, banks' discomfort with yield-bearing stablecoins, and the need for clarity without stifling innovation.
• Ethereum vs. Bitcoin: why the guest favors Ethereum due to DeFi and stablecoin dominance.

“Yield bearing stablecoin products really compete with deposits…banks need time to figure out where they fit into this.”
—Maya Vu Yinovich [19:34]

Regional Bank Earnings & Credit Regulation

Guest: David George, Senior Research Analyst, Baird
[28:13–34:51]

• Focused on strong results from regional banks like PNC and First Horizon; importance of middle-market business.
• Reaction to a proposed 10% cap on credit card interest rates: highly unlikely to pass, more political than practical.
• Big banks’ profit taking after high expectations on earnings reports.

“To the extent something like this was enacted…it would actually hurt the constituents that I think President Trump is actually trying to help. It would actually be negative for credit availability.”
—David George [32:24]

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Key Timestamps for Important Segments

• [02:31] — Introduction of the “emergency power auction” news and stock market reaction
• [03:33] — Michael Shepherd explains the government’s plan and why tech wants in
• [05:36] — Differences between previous investments and this new approach
• [06:47] — Utilities’ pricing power and implications for energy stocks
• [07:25] — Structure of the 15-year, billion-dollar energy auction
• [09:08] — Political dimension and state-level responses
• [12:31] — Broader market/geopolitics commentary with Leslie Marks
• [18:50] — Crypto market structure & Ethereum discussion with Maya Vu Yinovich
• [28:13] — Regional banks, proposed credit card cap, and financial sector analysis with David George

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Conclusion

This episode provides a clear-eyed analysis of how surging data demand, AI, and technology’s energy appetite are colliding with political, market, and regulatory forces in the US. The proposed plan marks a striking new precedent—tech firms willingly underwriting energy generation in a bid to stabilize supplies and prices for everyone. Meanwhile, Wall Street, crypto leaders, and energy markets are all recalibrating to this new reality, with broader calls for diversification and regulatory clarity across sectors.

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Hosts: Carol Massar, Tim Stenovec
Featured Guests:

• Michael Shepherd (Bloomberg, Sr. Editor, Tech & Strategic Industries)
• Leslie Marks (McKenzie Investments)
• Maya Vu Yinovich (FG Next)
• David George (Baird)

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Note for Listeners: Episode ads removed. For full context, see original Bloomberg Businessweek episode on your podcast app or Bloomberg.com.

Transcript

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Bloomberg Audio Studios Podcasts Radio News this is Bloomberg Business Week Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg Business Week Daily Podcast with Carol Massar and Tim Stenbeck on Bloomberg Radio Radio.

[Tim Stenbeck]

You probably heard about this President Trump and the Governors of several U.S. northeast Northeastern states agreeing to push for an emergency wholesale electricity auction that would compel technology companies Tim to effectively fund new power plants. This is about the power grab that we are seeing and we've often talked about how we're all paying higher prices because there is so much demand for.

[Carol Massar]

Energy right now, yeah, we're seeing this move markets. I'm just pulling up the S&P 500. And the top decliners in the S&P 500 are energy companies. Constellation down 11%. Vistra down 7.8%. It's an unprecedented plan. It seeks to address those growing tensions without simultaneously hiking utility bills for homes and businesses. I want to bring in senior editor for technology and Strategic industries for Bloomberg News, Michael Shepherd. He joins us from Washington D.C. this news breaking late yesterday. We're seeing the market reaction today. The president at the White House with some of these executives for and with a governor of Pennsylvania earlier today. Mike, what exactly is going on here? What is the plan here?

[Michael Shepherd]

Well, the plan is and gave a quick snapshot of it. The idea is to force these tech companies to pay more for the data center for the energy that their data centers will need. Now, force is a big word here because the data center companies have also been asking for this for quite some time. Really the advent of the AI boom really forced them to reckon with their electricity needs and really come to grips with the notion that the grid right now and power supply right now from utilities will not nearly be enough. And we've seen that supply demand imbalance really show up in our utility bills. The cost for retail electricity in September rose 7% and from January last year to last August it was up 10.5% for residential customers. That's the most in more than a decade. And the people who are feeling are really in these areas where data centers are being built the most and what the agreement today sought to do was address the grid operator where that is happening with the greatest frequency. And that is PJM Interconnection. They oversee the grid in roughly a dozen states and that includes Virginia and Pennsylvania and Ohio. And these are places where data cent are being built more and more. Virginia happens to be the place in the world that has the highest number of data centers. So consumers and retail customers in those areas have already been seeing the electricity prices rise. And it's becoming an election issue too.

[Tim Stenbeck]

Yeah, no doubt about it, Mike.

[Leslie Marks]

But I don't understand.

[Tim Stenbeck]

And as our team reports out, you know, you've got Amazon, Microsoft, Alphabet, Metta, OpenAI already collectively investing in the development of several gigawatts of new power. So I'm just, I'm trying to understand, so what's the difference? What are they going to do? Why will they pay up? Why will they make this commitment? What's different between the investments they've been making and what they're being asked to do here?

[Michael Shepherd]

Well, the investments they've been making in those data centers, the data centers really measured in terms of computing power comparable to what we see for electricity. They both use the word gigawatt. So when Amazon says it's going to invest in a 5 gigawatt data center, that means it, it will need electricity comparable to five nuclear power plants. But a lot of times the electricity generation is not there in place. And that's what this forced auction is designed to try to do, to raise the funds from the buyers, namely the tech companies for the grid operator PJM Interconnection to be able to then fund over the next decade the actual construction of more power plants. Now this will not provide enough immediate relief though for consumers because like any infrastructure project here in the US it will take some time.

[Carol Massar]

So why then are we seeing shares of Constellation, Vistra and other providers of energy lower? It doesn't necessarily change the amount of electricity that will be bought from these providers of electricity. So help explain the market reaction here.

[Michael Shepherd]

Well, the market reaction for them, it's interesting in this case they, you know, the investors are looking at the pricing power that these utilities may ultimately have. Will they be able to continue to see the rate increases that, that you know, retail and residential customers have been experiencing and that these companies have been able to profit from?

[Tim Stenbeck]

But Mike, I do wonder that if they, if these big tech companies get involved in the auctions and are paying for power, do they go to the top of the list when it comes to power demand? Like I just do wonder how that plays out.

[Michael Shepherd]

Well this, this auction would actually be laid out at a wholesale level and it really is aimed at the tech industry. And the idea is that you get the tech companies to pay a billion or more at the auction to agree to buy electricity over a 15 year period at that price, the grid operator PJM would take that money in and then be able to invest it but in return. And the tech companies get a stable source of energy. So if they see some peaks, they will still be paying that same price that they've agreed to over a 15 year period. So it does work out for them in a way.

[Tim Stenbeck]

Okay, I'm just going to tell you, Tim's a super smart guy. I consider myself, thank you. Fairly smart. Like I think we just still don't under. Do you understand?

[Carol Massar]

I'm not get it. I'm going to be honest, Mike, I'm not getting it 100%. Yeah, I'm not, I'm not completely understanding the market reaction. We have an over higher on, I guess optimism over wind turbine sales. As a result of this, we have gas turbine sales. Excuse me, sales. Thank you. And yeah, so I mean it's just, it's kind of all over the place still for me.

[Michael Shepherd]

Yeah. And I think the difference really is that PJM is actually the grid operator and Constellation and others like Dominion Resources, they provide the energy that that goes into the grid. So they're kind of different entities, yet they are connected together. And the concern is that if you are at the actual power plant, power generation location, you could be seeing increased competition for the scarce resource that you currently manage right now.

[Tim Stenbeck]

See, and that to me is kind of the interesting story. Right, Mike, in just 30 seconds, nothing really changes in the short term. We're still going to see over demand versus what's out there in terms of energy supply.

[Michael Shepherd]

Well, that's right. Especially Carol, as we see more of these data centers come online and it is increasingly a political issue. We saw New York Governor Kathy Hochul take on tech companies over this earlier this week, saying that data center operators would have to bear more of the burden of their own electricity needs unless they can show that they are generating more jobs in the given region. In New York, where they might be might be going into place.

[Tim Stenbeck]

Sounds like wind, solar, we need it all.

[Carol Massar]

Stay with us. More from Bloomberg Business Week daily. Coming up after this.

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[Tim Stenbeck]

All right, let's get into the global market trade. I am curious to see what our next guest has to say about what Jamie Dimon had to say. Along with David Rubenstein there with us is Leslie Marks. She's chief investment officer, equities at McKenzie Investments. They've got about 175 billion in assets under management. She joins us from Toronto. Leslie, happy Friday. Good to have you here. Little wacky, yes, indeed. But I do want to address what Jamie Dimon had to say about what would be maybe the next financial crisis. It might he doesn't expect it to be like the great financial crisis in 08. He talked about geopolitics. That's one of the big risks in the market.

[Leslie Marks]

I think it's certainly a risk. And what makes it a big risk for the market is because it's very difficult to position or to anticipate. So it creates almost a bit of a randomness. And so getting ahead of that risk means that you have to be mindful of how you're positioned for many different scenarios. And that's where, you know, diversification, all of the sort of golden rules of investing really come into play to prepare for that event before you have visibility on that event.

[Carol Massar]

I don't, I don't understand, though, because, okay, we, the US Bombed Iran last year. Russia's invasion of Ukraine continued. There was the escalation of tensions in the Middle east and the S&P 500. If you were to go to sleep in January of 2025 and wake up December 31st, you were up, you know, close to 20% on the year. Here we are. President Maduro was taken in the middle of the night by US Forces and brought to the United States. There's talk of involvement in Iran now there's talk of taking over Greenland by the United States. And markets aren't really reacting. So how is geopolitics a risk?

[Leslie Marks]

Well, first of all, I do think that that has been a bit of a surprise for investors to see that the Market is not really reflecting the increased potential for geopolitical risk. So I would say, myself included, I've been a little bit surprised at the strength in markets coming into the year. So then we have to question, you know, why is that? What is really driving the market? I think the reality is, is what's driving the market is the prospect for greater earnings. And that does tend to be the most important driver for medium to long term performance. Geopolitical can create short term risk and short term volatility. But what the market is really trading on right now is the prospect that we have strong tailwinds from monetary policy, fiscal policy, and a productivity boom that is pretty much fueled by the use of artificial intelligence in businesses across multiple sectors. So it's an earnings story that is really driving the outlook and the behavior that we've seen year to date.

[Tim Stenbeck]

Totally get that right. And you know we're going to be watching the earnings this season, right? What the CEOs have to say, what their, what their forecasts are for the year. Having said that, are there certain, certain geographical or geopolitical plays beyond that, whether it's Canada, when, whether it's Europe. Right. Which has been building up defense, building up some of their industries. I mean, as everybody kind of looks inward, is there certain plays that you think might be out there for investors?

[Leslie Marks]

Well, I'm sure you've heard from lots of guests about the prospect of broadening out this market rally, which had been primarily technology driven. And we are certainly in that camp in that sense. We also see that broadening out, expanding across geographies because the US Is primarily a stock market that is driven by technology and the consumer. But when you think about the prospect for other sectors like materials, financials, defense, some of the more value oriented sectors, the bigger plays in those sectors are, as you pointed out, in other parts of the world, most notably Canada in the materials sector and defense and financials in Europe. So there are lots of opportunities in other parts of the world and investors have been rewarded by focusing in an outsized way on US equities for many years now. But what we saw in 2025, and we expect that to continue in 2026, is leadership to come from other areas of the world. And I'll take that back to my point around earnings. Guess what? 2026, the biggest earnings growth that we're expecting is coming from emerging markets first and Canada second. So investors really do need to think more broadly.

[Tim Stenbeck]

Hey, just got 30 seconds here. And I think we'd be remiss if we didn't ask you about the energy story. The Bloomberg exclusive about, you know, President Trump pushing for emergency sea power auction to support the AI boom and have technology companies be participants and help pay for all of this. Just quickly, again, about 25 seconds. Is there an investment play that you think because stocks, depending on the name, some are up a few, but a lot are down today. Just quickly.

[Leslie Marks]

Well, I think that the most important part is actually the macro in that the fact that technology plays are continuing to become more capital intensive. They have very high multiples because of the high free cash flow and the lower capital intensity. As that shifts, those multiples will come down and that again increases the thesis around broadening out across market.

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[Tim Stenbeck]

Interesting story today on the Bloomberg we talk a lot about AI and crypto and other things that are disrupting our world. But what something there's something that's going on that's really creeping, I feel like, increasingly into our narrative. We're talking about the once distant threat of quantum computing that has prompted one of the most closely followed market strategists to walk away from Bitcoin, underscoring how doubts over the token security are creeping into mainstream portfolio thinking. And Tim, we're talking about Christopher Wood. He's the global head of equity strategy over at Jefferies, removing a 10% allocation to Bitcoin from his model portfolio.

[Carol Massar]

So you do wonder because of these quantum computing fears. Right?

[Tim Stenbeck]

Right. That it could undermine the cryptocurrency. So there's that going on. There's some other stuff going on.

[Carol Massar]

Yeah. Also this week, the Senate Banking Committee delaying its discussion of a digital asset bill amid debate over the treatment of stablecoins, with Coinbase Global actually pulling its support for the latest version. Curious what our next guest has to say about this. Maya Vu Yinovich is CEO of digital assets at the publicly traded microcap FG. Next, it's got a micro cap of about $126 million. It trades under the ticker FGX. It's an Ethereum treasury vehicle. It acquires, it stakes, it builds around Ethereum and Ether. She joins us from Miami. What is your position on this market structure? Bill?

[Maya Vu Yinovich]

Well, it's a first of all, it's a timely question, a very important one because, you know, in the US we are all about innovation and I think what the rest of the the world has seen is that without that innovation we simply don't progress. So I think what's interesting is that many people don't talk about is, you know, which we've seen in crypto, if you've been in it for a while, is that banks are essentially greedy and that's okay because everybody's protecting their own territory.

[Tim Stenbeck]

Right.

[Carol Massar]

And you're talking about the idea here that the stablecoin, it's a big bill, but you're specifically focused on the part where the legality or the allowance of stable of. Of these companies of being allowed to pay as a result of people holding their stablecoins on their platforms. Right. Offer rewards, if you will.

[Maya Vu Yinovich]

Exactly correct, exactly correct. I mean yield bearing stablecoin products really compete with deposits. Right. And so that's, that's just the bottom line. And so I do think that banks just have need time to figure out where they fit into this and how they played the market.

[Carol Massar]

My opinion, what is your position on it? Are you supportive of the bill? Because it was a. Think of a big surprise to see Brian Armstrong post support.

[Maya Vu Yinovich]

Of the current bill. No, I'm not.

[Carol Massar]

Okay.

[Maya Vu Yinovich]

I think you know what was proposed until about yesterday because that actually puts us back. Right. And so we need to see something forward. We need to see clarity. We need to see clarity not only to your point about stablecoins, but we really need to see it around tokenization. We need to see it around defi. And so, you know, I think until now we've been thriving under this administration and I, I'd rather have it as it is now than have something that is going to be completely stringent and allow us not to kind of evolve. And even as the dad at FG Nexus, right. We are looking at this very closely because most stablecoins already live on Ethereum. And so we positioned around Ethereum because of those reasons. And so it really would benefit all of us if we had some clarity around securities and tokenization.

[Tim Stenbeck]

But we need some more rules, wouldn't you say?

[Maya Vu Yinovich]

Yeah, absolutely I do. I do think we need rules. Now if you've had a bunch of crypto, right. OGs and kind of maybe a purist in that sense, they would say we don't need rules, we can just operate all on bitcoin.

[Tim Stenbeck]

That was the original premise, right? This whole idea of being outside the financial establishment. So it is kind of fascinating to see. This is kind of where we're going. And you do wonder, okay, then I don't know, what is it or how does it it operate Yeah, I love.

[Maya Vu Yinovich]

This conversation and I think you guys are really nailing on something that a lot of people don't talk about. I still think that it's not a thought. Right. It's all on chain. Bitcoin still does live outside of the financial system and so you know, their lightning network is there, there's, there, there is a somewhat of a utility to Bitcoin, right. It's also seen as a digital gold. So you know, reality is blockchain is separate, right? You've got bitcoin blockchain and then you've got other blockchains and those block. Blockchains are extremely useful not just for stablecoins and passage of our genius act, but really for tokenization and everything else that we can be doing and even then later for AI and blockchain and AI and what that potentially could do. So I think there are two different things that we should be looking at and I don't think actually that kind of the world where bitcoin lives and that community really wants to be kind of separate from everybody else to some extent is going to go extra extinguished. Right? I mean those, there is a space for kind of institutional and there's a space for native users as well.

[Carol Massar]

Your big bet is not on Bitcoin, it's on Ether. And if we look at the market for Ether, it's a fraction of the market cap for Bitcoin but it's still the second biggest cryptocurrency out there. Why are you betting on Ether and not Bitcoin? Why is that the right move to make with this crypto treasury vehicle?

[Maya Vu Yinovich]

Yeah, also a great question. Look, I'm, I came into a space for Bitcoin and I'm staying in it because of further evolution of Bitcoin and other coins such as Ethereum. And reality is most stable coins and defi is on Ethereum. You can have other tokens come, you can have Hyper Liquid and Solana and others, right? But reality is right now where we see the most adoption is with Ethereum and where you see most the defi liquidity which by the way ties directly into the market structure. Bill and the Clarity act is really on Ethereum. And so we chose that because, because it's a yield bearing asset. At FG Nexus we thought about, hey, you know, I was an early proponent of basically saying that dads cannot stay a debt, they have to evolve as a business. In early days I wasn't really much liked for that. But people thought, well I know this is crazy. You can only be a debt and there's only business for dads. But reality is for us at FG Nexus, I said from the beginning we are wanting to do this, participate in the ecosystem. Etherium is a clear winner for stablecoins and for DeFi and we are going to evolve right and potentially looking at a number of different optionalities.

[Tim Stenbeck]

One thing I want to ask you though, and I do wonder Maya, is I'm looking at Ether down about more than about 32% from late August. Bitcoin's down about 24% from last May. I mean last October. Excuse me. So we've definitely seen, seen this come under pressure. This is happening in an administration a year where you have a very favorable administration, a president whose family is involved in this space. So like if we're seeing the pressure in this environment, I just, I don't understand how it can do really well longer term.

[Maya Vu Yinovich]

Yeah, I think it's fair what you're saying and I think it's a real question. However, though I don't see innovation and I don't see rails stopping the price has been a bit of a choke point, that's for sure. But the actual infrastructure is just, it's really just continuous continuing to be built. The growth of those stable points, the growth of the defi, the growth and the demand for tokenization of the real world assets. It every day I get a project or two on my desk that is wanting to do something in this space. And so I agree with you that the price has kind of lagged. But I think it's also because look, look at the last year that we've had, right? It's just continuously up and down for various reasons.

[Carol Massar]

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[Bloomberg Announcer]

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[Tim Stenbeck]

I was just putting up there KBW Bank Index Index because this has certainly been a big week when it comes to bank earnings. Right. We've heard from the big banks. We've also started to get from some of the regional players. KBW Bank Index, it is down about 1.7% in today's session. You do remember like kind of earlier in the week when JP Morgan came out a couple of other names they got beaten up in the stock market. But you did see yesterday, was it Morgan Stanley and Goldman both rallying in a big way. So it's been interesting to kind of parse through some of the different reports.

[Carol Massar]

For more on financials. I was going to say a lot.

[Tim Stenbeck]

Of the metrics they actually, you know, beat. So it was interesting.

[Carol Massar]

It was funny because a lot of the conversations that we had really focused on the credit card comments.

[Tim Stenbeck]

Yeah.

[Carol Massar]

And then also David Solomon yesterday said about prediction markets. Yeah. So I don't know, I think that stuff's really interesting.

[Tim Stenbeck]

I think it is too because I think they're the traditional, the establishment and what they do and then it's like looking at the changes, the innovation that could potentially pick away at their traditional businesses.

[Carol Massar]

I want to bring in David George, senior research analyst at Baird. He joins us from Franklin, Tennessee. As Carol mentioned, a big week of financials. We're going to talk about some of the big ones in just a minute. But first want to get to some of the smaller players. PNC shares up 3.6%, a four year high. Today the bank reported a 9% increase in fourth quarter revenue. It beat analysts estimates financing and deal making by middle market customers accelerated. What are we missing here? What am I missing?

[David George]

I Don't think you're missing a lot. They had a great pnc. PNC had a great, I think you said it. While they, they had a good. They're a Main street bank and Main street is doing relatively well. They've also got a fairly robust middle market M and a practice down at Harris Williams headquartered in Richmond, Virginia. And they cater solely to middle market companies or sell side M and a shop. And they had an exceptional quarter and it's really been a great business for pnc. But they continue to execute relatively well. They raised their buyback as well, Tim. So it's generally a pretty good fundamental showing out of pnc.

[Carol Massar]

So how does a bank like PNC compete with the big ones? You said they have a good middle market business where they go after those, those middle market clients. Do the big banks not do that?

[David George]

They all do. And I think that, you know, it's funny, we had these kinds of discussions tim, during the 23 regional bank panic. I know a lot of people call it a crisis. I called it really more of a panic. It's been 25 years, but I started my career in commercial banking. And you realize that not every borrower, not every consumer, not every company wants to do biggest business with the biggest banks that there are on the regional level. And PNC I would consider to be a super regional bank. They're the, the seventh largest bank in the country. But typically smaller banks, you can get things done a little faster. You're able to deal with decision makers and get loans approved maybe a little bit quicker, particularly on the corporate side. But they have an exceptional treasury management or cash management products which has given them a lot of inroads into middle to even larger corporate companies, particularly in the healthcare space. So PNC has been an excellent, an excellent company from an execution standpoint and one that we think is going to continue to win on a day to day basis.

[Tim Stenbeck]

Hey, one of the names we want to also ask another regional in your neck of the woods and that's for First Horizon. They came out yesterday morning, stock rallied about 1.6% a little bit. It's giving back about 1.4% today. Walk us through what we got from that one.

[David George]

Yeah, First Horizon, which is Memphis based and primarily Tennessee and Florida footprint, they had a great fourth quarter as well. They had very strong loan growth and they had very good expense control as well. And their guidance was for a little bit better what we call pre provision earnings, which is really the foundation for bank earnings that emanates from PP and R. So they beat there and had relatively upbeat commentary, Carol as well on the credit side of things.

[Carol Massar]

So on a different type of credit side of things, I told, I was saying to Carol this week and earlier today that a lot of our interest this week when talking about these financials, the larger firms has been on the President's edict a week ago that called for a cap of 10% on, on credit card interest rates. You know, we talked about the bank of Americas and the, the Wells Fargo's and J.P. morgan chases, of course, and it affecting those companies. What about the regionals that you cover? Does it affect those companies?

[David George]

Yeah, there are some companies that are in the credit card business, but it's primarily the money center banks, pnc, US Bancorp, Fifth Third, they're in the card business. And I think I was on your morning show, I think it was either Monday or Tuesday when this came out. And I'm of the view that this has a 99% chance of not happening. I don't think that it's got congressional support and I actually think, and I'm sure you've covered this all week.

[Carol Massar]

Yeah.

[David George]

To the extent something like this was enacted, Tim, it would actually hurt the constituents that I think President Trump is actually trying to help. It would actually be negative for credit availability and I think you would see particularly higher risk borrowers or non prime borrowers would actually have much less availability to credit. To the extent something like this was.

[Tim Stenbeck]

Implemented, David, is that really the case with these big bank firms? I mean, I feel like the big banks increasingly, you know, they have really emphasized, first of all, wealth management businesses and really catering to the higher income echelon. And so I'm just kind of curious that it feels like they've already been kind of limiting their exposure when it comes to credit cards. So would it really, really impact them?

[David George]

It would impact, it would impact them some because they do B of A as an example that just the first one that comes to mind, they do business, I believe with one out of every three households in the US So it may not be a direct impact, but clearly there would be but business impacts.

[Tim Stenbeck]

But doing business with one out of three doesn't necessarily mean they give a credit card to it or should we assume that.

[David George]

No, of course.

[Tim Stenbeck]

Okay.

[David George]

Now of course I think the biggest impact, I was getting ready to say is on the monoline credit card companies. So we cover Capital One, Synchrony and American Express. I think that those are, those are going to have probably the biggest impact there. But I think as the week has gone on cooler Heads have prevailed. We've been like today we're seeing a pretty nice rally in Cap 1AMX as well. Synchrony. And I think that as market participants are starting to get more comfortable with the idea that this probably isn't going to happen.

[Carol Massar]

So the reaction that we saw on Monday with a lot of these, the stocks of these firms totally overdone in your view?

[David George]

Yeah, I think so. It's, it's like I said, 99% chance of not happening and it just, it would be difficult to implement. It's, again, it's only for one year. So I just, I think it's more of a political, a political stunt than anything else.

[Tim Stenbeck]

Hey, I want to ask you about the big banks overall. I mean it was quite a weak JP Morgan I'm looking at down maybe about five and a half, half. Five and a half percent for the week overall. You've got Goldman up more than 2% for the week overall. I'm just kind of going through some of the names here on the Bloomberg. We know that these names and big banks overall did really well in terms of their share prices last year. What happened this week? Oh, and we've only got about 10, 15 seconds. I wasn't watching real quickly.

[David George]

Oh, yeah, sorry, Carol. It's a function of just coming in with too high expectations. Both J.P. morgan, Wells Fargo have never been more expensive. So I think it's just a question of kind of a very high bar going in.

[Tim Stenbeck]

All right, that makes sense. Ah, thank you so much for getting that in there.

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