WEBVTT - Banks, Israel, Retail, and Choice Hotels 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:05.280 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moving news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets podcast called Apple Podcasts or wherever 0:00:17.400 --> 0:00:20.480 you listen to podcasts, and at Bloomberg dot com Slash podcast. 0:00:21.040 --> 0:00:23.480 Alison Williams Joyce. She's our senior bank's analyst. 0:00:23.480 --> 0:00:25.920 She's also the director of research for all the US 0:00:25.960 --> 0:00:28.280 research stuff they do with Bloomberg Intelligence. So she's got 0:00:28.280 --> 0:00:30.240 a lot of hats to wear, so we appreciate getting 0:00:30.240 --> 0:00:31.200 a couple of minutes of her time. 0:00:32.120 --> 0:00:34.640 Goldman Sachs Bank of America. What do you takeaways today, Alison? 0:00:35.440 --> 0:00:37.720 So it's been a good quarter. You wouldn't know it 0:00:38.120 --> 0:00:40.760 from the stocks, but not interesting income. 0:00:42.080 --> 0:00:44.960 Or I can make huge money running a bank today 0:00:45.040 --> 0:00:48.360 with the interest rates they're paying like nothing to you 0:00:48.440 --> 0:00:50.559 and me to depositor, and they're loaning out at these 0:00:50.600 --> 0:00:51.040 high rates. 0:00:51.120 --> 0:00:52.960 Are what are the margins? What are the margins like? 0:00:53.000 --> 0:00:53.360 Right now? 0:00:53.400 --> 0:00:56.120 They have started they have actually started to pay up 0:00:56.200 --> 0:00:58.120 and so we have seen that, right So that's been 0:00:58.120 --> 0:00:59.920 a little bit of ahead when that's what people. 0:00:59.640 --> 0:01:00.920 Are worrying about. 0:01:01.000 --> 0:01:04.640 But the cost of deposits, the rate of those costs 0:01:05.120 --> 0:01:09.000 increasing is slowing. So you know, we like a second derivative, 0:01:09.120 --> 0:01:10.319 and we like when the second is. 0:01:10.280 --> 0:01:14.280 There an overall number, you know, like at Bank America, 0:01:14.319 --> 0:01:17.400 the average deposit payment is like, I don't know, I 0:01:17.440 --> 0:01:20.080 would guess like zero point five percent, right, and the 0:01:20.160 --> 0:01:23.360 average amount that they're charging on a loan is probably 0:01:23.400 --> 0:01:24.199 more like six. 0:01:24.360 --> 0:01:26.000 I mean, what are we looking at. 0:01:26.280 --> 0:01:28.760 I mean it depends bank by bank and so. 0:01:28.959 --> 0:01:30.839 And by the way, if you know you did your math, 0:01:30.880 --> 0:01:35.200 you'd get a much higher spread. Then you're actually, you know, 0:01:35.280 --> 0:01:37.560 earning on the margin. So it's really like a couple 0:01:37.560 --> 0:01:41.360 of percent depending on the banks, depending on the mix. 0:01:41.360 --> 0:01:44.160 And we could get into the weeds and talk segment 0:01:44.240 --> 0:01:48.840 by segment. The wealth segment, for example, much closer to 0:01:49.000 --> 0:01:51.680 matching the market rate, right, So if you have a 0:01:51.720 --> 0:01:54.000 balance of a few million dollars, you're gonna be a 0:01:54.040 --> 0:01:57.040 lot more sensitive in terms of moving that balance very quickly. 0:01:57.640 --> 0:02:02.040 Commercial balance is similar, right. People that are managing those 0:02:02.040 --> 0:02:04.480 balances are doing it for a living, so they're obviously 0:02:04.560 --> 0:02:07.360 going to move those So in those two segments, we've seen, 0:02:08.000 --> 0:02:11.480 you know, the cost very much matching what's happening on 0:02:11.520 --> 0:02:14.320 the funding side. It's really the consumer banks where you 0:02:14.360 --> 0:02:16.240 have very much smaller balances. 0:02:17.800 --> 0:02:18.960 Even then you would. 0:02:18.800 --> 0:02:21.840 Think it's you know, people should be moving and Paul, 0:02:21.880 --> 0:02:25.400 you talked about your savvy daughter looking at Marcus and 0:02:25.440 --> 0:02:28.720 the highest rates there, but some people are slower to move. 0:02:28.760 --> 0:02:30.279 And if you think about Wells. 0:02:30.000 --> 0:02:36.320 Fargo, Bank America, JP Morgan, huge retail branches, tons of 0:02:36.360 --> 0:02:39.239 these mom and pop deposits, especially Bank of America and 0:02:39.320 --> 0:02:43.920 JP Morgan gaining that share over the last several years. 0:02:44.000 --> 0:02:47.200 And so that's that's really the benefit is those big 0:02:47.720 --> 0:02:50.440 the deposit base and the portion of that deposit base 0:02:50.919 --> 0:02:55.120 that pays you know, closer closer to zero. 0:02:55.840 --> 0:02:58.320 Not the hot money, right. That was the worry last 0:02:58.360 --> 0:03:00.560 quarter is the hot money, which means. 0:03:00.200 --> 0:03:01.200 Like John Tucker's money. 0:03:01.320 --> 0:03:04.480 No, no, okay, I mean and correct me if I'm 0:03:04.480 --> 0:03:08.120 wrong here, but that is basically broker deposits, right, Allison. 0:03:08.280 --> 0:03:11.680 So the worry was that it's not just Marcus that's 0:03:11.720 --> 0:03:12.880 paying more than five percent. 0:03:12.919 --> 0:03:15.520 There are a number of other upstarts that. 0:03:15.480 --> 0:03:19.600 Are paying decent interest rates, and so you have broker 0:03:19.680 --> 0:03:22.640 deposits that just move back and forth all over the place. 0:03:22.680 --> 0:03:26.240 And investors don't like to see too many of a 0:03:26.280 --> 0:03:29.079 bank they own too many of those deposits brokeer, right. 0:03:29.160 --> 0:03:29.640 They don't. 0:03:29.680 --> 0:03:33.000 That's why they really look for the core deposits, and 0:03:33.040 --> 0:03:34.880 they're really looking for those. 0:03:35.240 --> 0:03:37.680 Super cheap deposits that live. 0:03:38.360 --> 0:03:40.440 You know, as I said, in the consumer units are 0:03:40.480 --> 0:03:43.480 not the wealth or the commercial or those the higher 0:03:43.480 --> 0:03:46.120 beta as we would call it, not beta as we 0:03:46.200 --> 0:03:49.320 know in the market, but you know, a deposit with 0:03:49.360 --> 0:03:51.360 a high beta to the market rate. 0:03:52.040 --> 0:03:54.320 So what are we hearing from the likes of mister 0:03:54.360 --> 0:03:57.600 Solomon and Goldman Sachs about just the investment banking businesses. 0:03:57.640 --> 0:03:59.960 Doesn't seem to be a lot going on over there anywhere. 0:04:00.120 --> 0:04:02.360 So if you look at the fees, it doesn't seem 0:04:02.400 --> 0:04:05.480 to be a lot going on. But I think what 0:04:06.040 --> 0:04:08.080 investors are focusing on, or some of the some of 0:04:08.120 --> 0:04:11.280 the commentaries beneath the surface. So obviously you're familiar with 0:04:11.320 --> 0:04:16.560 the fact that there's activity, there's you start those conversations 0:04:16.640 --> 0:04:18.360 and then you see. 0:04:18.120 --> 0:04:20.120 The uplift and fees a few quarters later. 0:04:20.160 --> 0:04:23.200 And what was exciting in September was a lot of 0:04:23.240 --> 0:04:27.760 commentary from the Goldman, Sachs and other banks that things 0:04:27.760 --> 0:04:31.120 were happening beneath the surface. We're hearing a bit more 0:04:31.160 --> 0:04:35.240 of that today from both Goldman and Bank America. Equity 0:04:35.279 --> 0:04:38.760 fees and has been disappointing. We did get a few deals, 0:04:38.800 --> 0:04:40.880 so we're looking for things to get a little bit better. 0:04:41.400 --> 0:04:44.039 Dept fees being helped out on the high yeald side 0:04:44.560 --> 0:04:49.919 and em and A despite very low levels, at least 0:04:49.920 --> 0:04:52.039 increasing from the second quarter. 0:04:52.600 --> 0:04:55.320 So one of the things that I've been amazed with 0:04:55.360 --> 0:04:58.119 over the last ten twelve years is the whole growth 0:04:58.120 --> 0:04:59.880 of the private credit business. 0:04:59.680 --> 0:05:00.440 That's seems to. 0:05:00.360 --> 0:05:03.479 Be actual fees that are leaving Wall Street and going 0:05:03.480 --> 0:05:05.480 to the private credit business, whether it's from the leverage 0:05:05.480 --> 0:05:08.560 loan business or the high yield market. What are the 0:05:08.839 --> 0:05:11.000 Brian moynihand's, the mister Solomon's lord. 0:05:10.839 --> 0:05:12.400 What do they say about that business? I mean, it 0:05:12.839 --> 0:05:15.080 seems like they just let that go, I mean and 0:05:15.400 --> 0:05:16.520 let it walk across the street. 0:05:16.600 --> 0:05:16.800 Yeah. 0:05:16.839 --> 0:05:20.520 So, so if you looked at large so if we 0:05:20.560 --> 0:05:23.440 looked at sort of large corporate lending, that tends to 0:05:23.480 --> 0:05:26.279 be almost like a has been over the long term, 0:05:26.279 --> 0:05:30.120 a loss leader for the banks they want it more 0:05:30.160 --> 0:05:33.960 for the for the overall relationship, right, and then the 0:05:34.040 --> 0:05:37.400 types of lending that tend to be profitable, sort of 0:05:37.440 --> 0:05:41.360 that core bread and butter commercial business. I think that's 0:05:41.360 --> 0:05:43.520 where maybe some of the BBC's have tried to become 0:05:43.880 --> 0:05:46.560 more competitive. But the but the big you know, the 0:05:46.880 --> 0:05:49.320 business right now that's working and the business that's good 0:05:49.360 --> 0:05:52.120 for these banks over the long term is card because 0:05:52.120 --> 0:05:55.320 that's you know, the consumer business has much higher yields. 0:05:55.560 --> 0:05:56.880 Yeah, but back in the day when I was at 0:05:56.920 --> 0:05:59.960 Chase Elson, I'd do a big leverage loan to comp 0:06:00.040 --> 0:06:02.640 kiss cable billion dollar loan. We'd get a big fee 0:06:02.720 --> 0:06:05.880 up front, we'd get a nice liboard spread, we sell 0:06:05.920 --> 0:06:08.200 off ninety percent of our loans. We don't have to, 0:06:08.640 --> 0:06:10.080 you know, muddy up our balance sheet, and then we 0:06:10.120 --> 0:06:11.080 turn around to do it again. 0:06:11.440 --> 0:06:12.840 I thought that was a really well, you're. 0:06:12.760 --> 0:06:13.400 Talking out loads. 0:06:13.560 --> 0:06:16.440 Leverage lendings is obviously a little bit more exciting, and 0:06:16.480 --> 0:06:19.880 again like you're talking about the full relationship, right, Like 0:06:19.920 --> 0:06:23.240 you're really looking for the fees and the full relationship. 0:06:23.760 --> 0:06:27.640 And keep in mind that, you know, even when banks 0:06:27.680 --> 0:06:30.640 do loan syndications and such like, they're generally selling off 0:06:30.680 --> 0:06:32.880 those pieces as well, right, Like they're looking for the 0:06:33.320 --> 0:06:35.320 overall origination fee on that business. 0:06:35.720 --> 0:06:38.039 So what's what's the outlook for investors here? They are 0:06:38.320 --> 0:06:40.479 clients you talk to, are they are they buying the 0:06:40.560 --> 0:06:42.600 Goldman's of the world, they buying the Bank of Americas, 0:06:42.600 --> 0:06:45.160 the JP Morgans or are they just waiting to see how 0:06:45.160 --> 0:06:46.040 the economy shakes out. 0:06:46.120 --> 0:06:51.200 It's definitely the latter. People are still very focused. Investors 0:06:51.240 --> 0:06:53.880 are very focused on commercial real estate. We know that 0:06:53.880 --> 0:06:55.880 that's something that's going to take so what are a 0:06:55.920 --> 0:06:58.720 long time to play out. I mean, the banks are 0:06:58.880 --> 0:07:01.560 we're seeing weakening and that's what we expected, but it's 0:07:01.720 --> 0:07:04.719 it's going to be a slow process. I think investors 0:07:04.760 --> 0:07:07.799 definitely get concerned when some of those concerns start playing 0:07:07.800 --> 0:07:10.280 out in the CNBS market, which moves a lot quicker 0:07:10.840 --> 0:07:14.160 and you know, has shown some significant decline. So we 0:07:14.240 --> 0:07:17.400 know commercial real estate is coming, but broadly credit is 0:07:17.480 --> 0:07:20.440 very strong and investors are also still looking at. 0:07:20.320 --> 0:07:25.400 Those unrealized loan losses. We did see a tick up. 0:07:25.480 --> 0:07:27.360 Bank of Marca spent a lot of time talking about 0:07:27.400 --> 0:07:30.480 their portfolio this morning, and I think that is just 0:07:30.560 --> 0:07:33.120 something that again it's going to be a while. So 0:07:34.000 --> 0:07:36.960 the stocks, as I said, are not responding to the 0:07:37.000 --> 0:07:39.320 good earnings. And then we have these two concerns that 0:07:39.360 --> 0:07:42.640 are just going to take a fair amount of time 0:07:42.720 --> 0:07:45.760 to play out. And at the same time, investors are 0:07:45.760 --> 0:07:47.960 trying to grapple with what do higher rates mean? What 0:07:47.960 --> 0:07:51.520 does that mean for the economy? Credit loss tends to 0:07:51.560 --> 0:07:54.200 be the big wildcard, and what's what's going to happen 0:07:54.280 --> 0:07:56.520 next year if these rates continue to be high? 0:07:56.960 --> 0:08:01.360 Any any most dangerous times quotes today? I mean, well, 0:08:01.840 --> 0:08:02.600 Jamon always. 0:08:02.400 --> 0:08:06.400 Makes Jamie always kicks off earning season, and he always 0:08:06.680 --> 0:08:10.560 does make some high some good headlines. I think, you know, 0:08:10.600 --> 0:08:12.720 the most interesting thing if you read between the lines 0:08:12.720 --> 0:08:16.120 and some of his comments, he's continually said, at least 0:08:16.160 --> 0:08:18.280 for the last couple of years, that the world needs 0:08:18.280 --> 0:08:21.120 to prepare for higher rates, although the number he throws 0:08:21.160 --> 0:08:25.320 out there continues to ratchet up, and so a bank 0:08:25.480 --> 0:08:28.600 should prepare for any type of risk scenario. 0:08:29.280 --> 0:08:30.840 There are there are a lot. 0:08:30.680 --> 0:08:33.080 Of uh, you know, there's a lot of risks out there. 0:08:33.280 --> 0:08:35.959 But he has also been saying, you know, last Investor Day, 0:08:36.000 --> 0:08:39.160 he talked about sort of detailed all the unprecedented times 0:08:39.200 --> 0:08:41.439 and we've continued to have some risks since then. 0:08:41.640 --> 0:08:42.520 All right, good stuff. 0:08:42.520 --> 0:08:45.839 Alison Williams as always senior banks annalists for Bloomberg Intelligence. 0:08:46.200 --> 0:08:49.720 She's also the director of Research for the Americas. 0:08:49.120 --> 0:08:50.160 For Bloomberg Intelligence. 0:08:50.200 --> 0:08:51.920 So a busy, busy plate. 0:08:53.600 --> 0:08:56.960 You're listening to the team Ken's are Line program Bloomberg 0:08:57.080 --> 0:09:00.600 Markets weekdays at ten am Eastern on Bloomberg Dot, the 0:09:00.679 --> 0:09:03.800 iHeartRadio app, and the Bloomberg Business app, or listen on 0:09:03.880 --> 0:09:05.840 demand wherever you get your podcasts. 0:09:07.720 --> 0:09:10.720 The retail sales came in this morning much stronger than expected. 0:09:10.800 --> 0:09:13.920 So you can't keep a good consumer down, it doesn't appear, 0:09:13.960 --> 0:09:15.360 So I'm going to see what this really means for 0:09:15.360 --> 0:09:18.959 the global macro environment. Here, Russell Price joints us He's 0:09:18.960 --> 0:09:23.800 a chief economist at Ameriprice Financial. He's based in Deti, Michigan, 0:09:23.840 --> 0:09:26.520 but he is here in a Bloomberg interactive Brooker's studio. 0:09:26.760 --> 0:09:29.559 We appreciate that, Russell, thanks so much for joining us here. Again, 0:09:29.800 --> 0:09:32.360 the retail sales numbers come out pretty darn strong. 0:09:33.360 --> 0:09:33.960 This consumer. 0:09:34.000 --> 0:09:36.040 You can't hold this consumer down. How did you read 0:09:36.040 --> 0:09:38.280 these numbers? And how does that kind of kind of 0:09:38.280 --> 0:09:39.679 weave into your economic outlook. 0:09:40.360 --> 0:09:44.440 Yeah, certainly it's a further upside that's likely for third 0:09:44.480 --> 0:09:49.120 quarter GDP. But retail sales that shows the consumers still 0:09:49.160 --> 0:09:52.880 have a lot of money available to spend, even if 0:09:52.880 --> 0:09:55.240 they don't maybe they're adding it to the credit card 0:09:55.880 --> 0:09:58.760 and they're certainly willing to spend. A big jump for 0:09:58.960 --> 0:10:04.560 this morning's retails came from restaurants and bars. Nine tenths 0:10:04.600 --> 0:10:07.600 a month over month shows consumers are still looking to 0:10:07.960 --> 0:10:11.040 enjoy themselves after the pandemic. Some of the areas that 0:10:11.080 --> 0:10:13.560 were down were even just down after big jumps the 0:10:13.559 --> 0:10:17.080 prior month. We had a eight tenths decline in electronics, 0:10:17.080 --> 0:10:19.240 but that comes after a month that we saw a 0:10:19.320 --> 0:10:23.160 one point two percent increase the month before, And so 0:10:23.320 --> 0:10:25.800 consumers are still driving this bus. And even if we 0:10:25.880 --> 0:10:30.160 have the student loan repayments beginning here in October, it's 0:10:30.800 --> 0:10:33.080 still there. Still seem to be spending at. 0:10:32.960 --> 0:10:33.560 A good level. 0:10:33.640 --> 0:10:36.520 Where are they getting the money or is it credit? 0:10:36.679 --> 0:10:40.160 Because I recall at one point looking at a graph 0:10:40.240 --> 0:10:43.280 from Torsten slock over to Pollo that showed credit card 0:10:43.360 --> 0:10:45.920 usage taking off. It scared me at the time, but 0:10:45.960 --> 0:10:48.520 everybody I ask about it says well, we're just getting 0:10:48.559 --> 0:10:50.400 back to pre pandemic levels. 0:10:51.880 --> 0:10:52.640 How do you see that. 0:10:53.200 --> 0:10:55.840 I'm not very worried about credit card debt, because, yes, 0:10:55.920 --> 0:10:58.600 we are at an all time high, but just because 0:10:58.640 --> 0:11:00.920 of the way the federalies are met measures credit card 0:11:00.960 --> 0:11:04.400 debt gives it a natural upside bias. It measures on 0:11:04.559 --> 0:11:08.320 average monthly based on an average monthly balance, and so 0:11:08.480 --> 0:11:11.120 the more and more we as consumers use our credit cards, 0:11:11.320 --> 0:11:14.000 you know, the days of emergency use. Only those days 0:11:14.000 --> 0:11:17.360 are long gone, it gives it a natural upside bias. 0:11:17.360 --> 0:11:20.520 So what I do, There's no real way to factor 0:11:20.600 --> 0:11:22.559 that part out, But what I do is I look 0:11:22.600 --> 0:11:26.720 at consumer credit card debt relative to overall consumer income, 0:11:27.080 --> 0:11:30.240 and on that basis, we are at very healthy levels. 0:11:30.440 --> 0:11:34.920 We're well below what we were pre financial crisis two 0:11:34.920 --> 0:11:39.000 thousand and nine timeframe. So even though it's at record 0:11:39.080 --> 0:11:41.840 levels on a dollar basis, it's still very manageable. 0:11:41.960 --> 0:11:43.840 I mean, to me, it would be worrying to roll 0:11:43.880 --> 0:11:46.560 over any debt at what are rates on credit cards. 0:11:47.559 --> 0:11:49.559 People are just putting stuff on credit cards and then 0:11:49.600 --> 0:11:53.400 not paying them off every month With twenty five percent rates, 0:11:53.480 --> 0:11:54.920 that doesn't sound like a smart decision. 0:11:55.000 --> 0:11:57.160 Well, even if you pay it off at the end 0:11:57.160 --> 0:12:00.239 of every month, just because your average monthly balance. 0:12:00.840 --> 0:12:01.560 It's still. 0:12:03.559 --> 0:12:06.480 And now I'm coming along with you. Now I'm getting 0:12:06.520 --> 0:12:08.600 on the same page here, I see. So that doesn't 0:12:08.600 --> 0:12:10.800 sound like a I mean, if you looked at what 0:12:10.920 --> 0:12:15.440 I charged every month, you would be probably shocked. 0:12:15.800 --> 0:12:17.559 Sure, you have a huge cash burn with. 0:12:17.559 --> 0:12:21.320 Your it's massive, and I mean probably spend, you know, 0:12:21.480 --> 0:12:22.720 like a good American. 0:12:22.280 --> 0:12:22.920 More than I earn. 0:12:23.360 --> 0:12:26.600 Right, But I do pay off the balances because I 0:12:26.600 --> 0:12:28.960 don't want to get hit with that interest rate cost. 0:12:29.080 --> 0:12:31.240 Hey, Russell, are we gonna Are we gonna see a 0:12:31.240 --> 0:12:31.920 recession here? 0:12:31.960 --> 0:12:32.960 And if so, how deep? 0:12:33.000 --> 0:12:36.840 I mean, personally for my forecast, I've taken that off 0:12:36.840 --> 0:12:39.679 the table. Although no one cares about my forecast, they 0:12:39.679 --> 0:12:41.400 care about your forecast. What do you what are you 0:12:41.440 --> 0:12:42.040 thinking about that? 0:12:42.160 --> 0:12:42.319 Well? 0:12:42.320 --> 0:12:45.000 I think the most likely path still implies that we're 0:12:45.120 --> 0:12:49.079 likely to avoid a recession. But as we were talking earlier, 0:12:49.280 --> 0:12:52.800 I think the negative influence of higher rates are still 0:12:53.120 --> 0:12:55.840 to be seen as their full impact on the economy, 0:12:56.120 --> 0:13:01.480 particularly when it comes to small businesses, refinancings, office refinancings, 0:13:01.520 --> 0:13:05.199 and auto loans things like that. So there's still more 0:13:05.240 --> 0:13:07.400 pressure to come. So we do expect the pace of 0:13:07.440 --> 0:13:10.760 economic growth to down shift over the next few quarters. 0:13:11.440 --> 0:13:14.679 And as such, it really wouldn't take much to for 0:13:14.720 --> 0:13:17.199 that downshift to push us a little bit lower if 0:13:17.240 --> 0:13:19.240 we were to see something such as a spike in 0:13:19.440 --> 0:13:24.280 oil prices to boost the gasoline prices to push us 0:13:24.280 --> 0:13:27.160 into negative territory for a short period of time. So 0:13:27.280 --> 0:13:29.199 even if we do see a recession, I think it 0:13:29.200 --> 0:13:32.240 would be very shallow and it would not what's most 0:13:32.240 --> 0:13:35.520 important in most people's mind, it would not likely push 0:13:35.559 --> 0:13:38.440 the unemployment rate up beyond five percent. 0:13:38.880 --> 0:13:41.439 What's your view of you know, federal spending to me 0:13:42.160 --> 0:13:45.440 seemed to be moving at cross purposes with what the 0:13:45.679 --> 0:13:47.960 Federal Reserve was trying to do, right, I mean, we're 0:13:48.040 --> 0:13:51.440 just pouring money on this economy out of Washington, DC. 0:13:52.000 --> 0:13:54.200 As the Fed is raising rates to try and slow 0:13:54.280 --> 0:13:58.160 down the economy. The bond market seems to be a 0:13:58.160 --> 0:14:01.920 new player though involved in this. As they drive up 0:14:02.000 --> 0:14:05.240 rates on the long end. Is that tightening financial conditions enough? 0:14:06.120 --> 0:14:09.959 Well, it certainly is, clearly, But I do think we 0:14:10.080 --> 0:14:13.800 will start to see some alleviation in the upward pressure 0:14:13.960 --> 0:14:19.200 in market based rates, Treasury rates particular because part of 0:14:19.240 --> 0:14:22.360 the boost that we've had over the last few months 0:14:22.680 --> 0:14:25.840 was from the federally from the Treasury Department rebuilding its 0:14:25.920 --> 0:14:30.480 checking account. Back in June, we had the Treasury balance 0:14:30.560 --> 0:14:34.080 down below forty billion, and now it's built back up 0:14:34.120 --> 0:14:38.120 to over six hundred and forty billion, So the checking 0:14:38.160 --> 0:14:41.360 account is largely rebuilt. Usually they keep that at a 0:14:41.440 --> 0:14:44.120 level between three hundred and five hundred billion, so it's 0:14:44.120 --> 0:14:49.440 pretty flush today, so that component should alleviate. We still 0:14:49.480 --> 0:14:53.160 have obviously deficuspending and the Federal Reserve working off its 0:14:53.200 --> 0:14:55.560 balance sheets, so there's still a lot of upward pressure. 0:14:56.040 --> 0:14:59.680 So once we see further confirmation that inflation truly is 0:15:00.080 --> 0:15:02.320 sid and I think that's what the market's waiting for, 0:15:02.480 --> 0:15:06.120 is further confirmation of that data, that we should start 0:15:06.120 --> 0:15:08.280 to see rates moderate a little bit. 0:15:08.640 --> 0:15:11.880 But we're on I mean five percent watch yeah, out 0:15:12.000 --> 0:15:15.040 thirty years right, the thirty year right now four point 0:15:15.160 --> 0:15:20.280 nine nine percent, up ten basis points today. You know, 0:15:20.280 --> 0:15:24.760 the twenty year has already been in past five percent. 0:15:24.880 --> 0:15:27.960 So does that you think is that a high high 0:15:27.960 --> 0:15:29.800 water mark for yields. 0:15:30.040 --> 0:15:31.800 I think it will end up being close to it. 0:15:32.120 --> 0:15:34.400 I think we'll probably be at this these levels for 0:15:34.440 --> 0:15:37.040 a little while longer. But again, as we move into 0:15:37.040 --> 0:15:39.720 twenty twenty four, the inflation outlook starts to get a 0:15:39.760 --> 0:15:43.120 little bit better. The Federal reserve insin indicates that they're 0:15:43.120 --> 0:15:45.920 more on pause. I do think that we'll see those 0:15:46.040 --> 0:15:49.200 rates come down a little bit, maybe somewhere between a 0:15:49.280 --> 0:15:53.280 quarter and fifty basis points, so they'll come down somewhat. 0:15:53.440 --> 0:15:57.280 That'll alleviate some of the concern about the economic environment, 0:15:57.600 --> 0:16:01.400 and I think we'll have some up side for twenty 0:16:01.560 --> 0:16:02.560 twenty four overall. 0:16:03.120 --> 0:16:05.320 Andy Russell, just real quick, you're based in Detroit. A 0:16:05.400 --> 0:16:07.720 lot of your fellow Detroit folks are on strike here. 0:16:08.400 --> 0:16:09.960 When are they gonna work something out here between the 0:16:09.960 --> 0:16:11.320 auto companies and the audio? 0:16:11.400 --> 0:16:15.160 Yeah, that's it is a very difficult question. Certainly, I 0:16:15.160 --> 0:16:18.560 don't have much insight into the negotiations by any means, 0:16:18.600 --> 0:16:23.880 but it is something that's a rolling pressure on activity 0:16:23.880 --> 0:16:27.080 in the area. Fortunately, we didn't see much of that 0:16:27.160 --> 0:16:32.320 in today's industrial productiony. Manufacturing activity still expanded, but certainly 0:16:32.400 --> 0:16:35.480 the auto industry needs to see that resolved sooner rather 0:16:35.520 --> 0:16:35.880 than later. 0:16:35.960 --> 0:16:37.280 You guys have a football team this year. 0:16:37.360 --> 0:16:38.920 That's a very good that's a good. 0:16:39.760 --> 0:16:40.360 With the Lions. 0:16:40.480 --> 0:16:42.800 Yeah, that's right, that's the NFL. 0:16:42.880 --> 0:16:45.080 Met That's okay with me as long as we're just 0:16:45.120 --> 0:16:47.000 talking about the Lions and the NFL. 0:16:47.120 --> 0:16:49.320 Yes, that's all you need to know. Russell Price, thanks 0:16:49.320 --> 0:16:51.400 so much for joining us. Russell Price is the chief economist 0:16:51.600 --> 0:16:54.560 for Amerprice Financial. Joining us live in our Bloomberg Interactive 0:16:54.560 --> 0:16:55.320 Brokers studio. 0:16:55.760 --> 0:16:58.840 You're listening to the tape cans Are Live program Bloomberg 0:16:58.920 --> 0:17:02.840 Markets weekdays ten am Eastern on Bloomberg Radio, the tune 0:17:02.840 --> 0:17:04.520 in app, Bloomberg dot Com, and. 0:17:04.480 --> 0:17:05.800 The Bloomberg Business App. 0:17:05.840 --> 0:17:08.680 You can also listen live on Amazon Alexa from our 0:17:08.680 --> 0:17:13.760 flagship New York station. Just say Alexa, play Bloomberg eleven thirty. 0:17:15.080 --> 0:17:18.520 Talk about It, Diplomatic, full court Press. 0:17:18.880 --> 0:17:22.000 US Secretary of s Anthony Blincoln in Israel for the 0:17:22.040 --> 0:17:23.080 second time in like a week. 0:17:23.440 --> 0:17:23.640 Now. 0:17:23.640 --> 0:17:27.240 We've got news that tomorrow President Biden will be going 0:17:27.280 --> 0:17:29.720 to Israel as well. Let's get the latest on kind 0:17:29.720 --> 0:17:32.840 of what this means for this difficult situation. Henry Meyer 0:17:32.920 --> 0:17:37.080 joins a season reporter for Bloomberg News based in Tel Aviv. Here, Henry, 0:17:37.200 --> 0:17:39.919 it seems like the United States obviously the top, top 0:17:40.840 --> 0:17:43.480 political folks making their way to Israel to try to, 0:17:43.760 --> 0:17:47.399 I guess, improve a very difficult situation. What's the feeling 0:17:47.400 --> 0:17:50.080 in Israel about President Biden coming over tomorrow. 0:17:51.560 --> 0:17:55.200 Well, clearly it's seen first of all as a signal 0:17:55.240 --> 0:17:59.400 of US support at this really critical time for Israel. 0:18:00.600 --> 0:18:05.119 You know, they've been preparing now for a grand offensive 0:18:06.280 --> 0:18:09.359 into Gaza, and the US has been pledging, you know, 0:18:09.480 --> 0:18:13.800 military support and also saying that it supports Israel right 0:18:13.840 --> 0:18:16.159 to defend itself in the face of a lot of 0:18:16.160 --> 0:18:20.159 criticism now of the bombing which has taken place in 0:18:20.560 --> 0:18:24.919 Gaza and concern about the civilian casualties that will result 0:18:25.040 --> 0:18:29.000 if Israel does indeed decide to send grand troops into Gaza. 0:18:30.320 --> 0:18:32.600 What is the status of that right now? I mean, 0:18:33.400 --> 0:18:36.480 I imagine they're still all amassed at the border. They've 0:18:36.520 --> 0:18:39.600 swept as many are pushed as many people from the 0:18:39.640 --> 0:18:42.639 north of Gaza down to the south in order to 0:18:42.680 --> 0:18:43.320 get in there. 0:18:45.160 --> 0:18:45.840 Is it imminent? 0:18:46.000 --> 0:18:47.800 I mean, are you hearing anything about the timing of 0:18:47.840 --> 0:18:48.600 the invasion? 0:18:50.400 --> 0:18:52.920 I mean, what we understand is that you know, it 0:18:53.000 --> 0:18:57.240 is planned to take place imminently. I mean, clearly it's 0:18:57.240 --> 0:19:01.480 not going to take place while these visits are occurring. 0:19:01.520 --> 0:19:04.520 I mean, today we have the German Chancellor who's visiting 0:19:04.520 --> 0:19:08.760 tomorrow President Biden. But you know, it is anticipated that 0:19:08.800 --> 0:19:11.280 it could start pretty soon after that. 0:19:11.880 --> 0:19:12.080 You know. 0:19:12.160 --> 0:19:15.320 At the same time, you know, the US has also 0:19:15.520 --> 0:19:19.960 been telling Israel, both privately and publicly, that it's got 0:19:20.000 --> 0:19:23.960 to do everything to avoid civilian casualties. So you know, 0:19:24.040 --> 0:19:28.119 it's not clear whether that will influence the type of 0:19:28.160 --> 0:19:30.480 operation that Israel is going to conduct and go. 0:19:31.400 --> 0:19:34.879 Henry, I guess you know here in the States, you know, 0:19:34.920 --> 0:19:37.680 we're watching like everyone else here. One of the questions 0:19:37.680 --> 0:19:39.720 that I think a lot of folks have is how 0:19:39.800 --> 0:19:44.399 much collateral damage to civilians and others do you believe 0:19:44.440 --> 0:19:48.520 that Israel's willing to inflict in an effort. 0:19:48.200 --> 0:19:49.960