How top CEOs feel about private credit risks

00:00 Speaker A

Big banks report. What did we learn? I mean, it sounds like they’re just kind of plowing right ahead here.

00:05 Dave

Yeah, so, uh, I mean, at a high level, they made uh $47 billion in profits between the the big six Wall Street banks. So, that’s pretty good. It’s a 12% increase from the year ago period, so first quarter of last year. Um, and the three main takeaways we got is that, um, I guess one, it’s sort of a delicate dance around private credit right now. Um, two, Main Street is hanging on pretty darn well. Um, and three, uh, in Wall Street, everything is go, go, go.

00:46 Speaker A

About private credit risk, what did they say there?

00:49 Dave

Yeah, so it’s like I said, it’s a delicate dance. Um, you know, uh Jamie Diamond who’s previously sort of uh warned warned about the credit market. He made a um argument on the earnings call um and in the media conversation on Tuesday and he basically um talked about the size of of the private credit industry and how that relates to the rest of the debt markets and how that in general, um it it can’t really become a systemic issue in it and of itself because of the relative size to the rest of the debt markets. Um but he also JP Morgan and the and uh the other money center banks also uh revealed their exposure um to the private credit industry and it’s not small. So in general, um there there’s a lot of uh the bank executives need to move back and forth between talking about um how they are well insulated but they do have exposure. but they also um Goldman Sachs CEO for example, saying, you know, it’s a business that looks good to them long-term and they want to stay in it. Um Ted Pick, uh Morgan Stanley CEO said, you know, uh private credit’s in its adolescent phase. Um and so in general, um they kind of had some pretty positive things to say in terms of the reactions we’ve seen from investors trying to uh get out of these private funds over the last quarter, um largely saying that it’s been overblown. Um but that being said, Diamond and uh CEO uh David Solomon both kind of reiterated the fact that uh a larger uh downturn in the credit markets is a serious risk and that would obviously include the private credit industry.

02:50 Speaker A

On the consumer, um, you know, at least the comments I was hearing, uh from those big bank CEOs, it was sort of like they kind of and tell me if I I was hearing hearing it right. To me, it sounded like they were saying no real change. Like broadly, when they were asked directly, they kind of said, listen, broadly, healthy, resilient, hanging in there.

03:19 Dave

Uh yeah, JP Morgan was talking actually about on the call about compared to last quarter, um the economic picture in terms of the consumer actually looked uh pretty decently. Now, the big thing here is that um oil prices have gone up and gas prices have gone up as a result. Um but that really happened in March. So we only…