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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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Speaker 2: with Lisa Bromwitz and Amrie Hordernt. Join us each day

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Speaker 2: for insight from the best in markets, economics, and geopolitics

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Speaker 2: from our global headquarters in New York City. We are

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Speaker 2: live on Bloomberg Television weekday mornings from six to nine

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Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or

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Speaker 2: anywhere else you listen, and as always on the Bloomberg

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Speaker 2: Terminal and the Bloomberg Business App. I'm very pleased to

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Speaker 2: say that joining us now is the Bank for America

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Speaker 2: Chare CEO, Brian moynihan. Brian, of course in London, we're

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Speaker 2: here in New York. You're actually in our home and

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Speaker 2: we're in yours. So thank you, sir for making that happen. Brian,

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Speaker 2: Let's get to this leadership shake up because we've got

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Speaker 2: a lot to talk about. Eight lines of business, two

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Speaker 2: very prominent individuals in this bank, at this institution. How

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Speaker 2: do you and the team plan to split up responsibilities.

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Speaker 3: Well, it's good to talk to you both, and thank

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Speaker 3: you for coming.

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Speaker 4: To our great corporate headquarters.

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Speaker 3: Hope that they're treating you nicely out there. Look, this

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Speaker 3: is a recognition of three teammates, said Dean and Jim

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Speaker 3: and Alistair, and they contributed to they made to our

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Speaker 3: company and helping bringing Jim and Dean to help me

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Speaker 3: leverage across the businesses.

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Speaker 4: And there's a lot of initiatives we.

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Speaker 3: Conduct across the company, our growth work streams, our operational.

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Speaker 4: Excellence, our.

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Speaker 3: AI initiatives and things, and I've asked them to come

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Speaker 3: help me. Meanwhile, it also frees up space for that

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Speaker 3: talent group. And you're talking to a lot of today

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Speaker 3: what's Lindsay or Eric or Wendy and others that continue

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Speaker 3: to drive those eight businesses for us and own the

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Speaker 3: business and own the responsibility for P and L.

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Speaker 4: And there's a lot of talent that levels.

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Speaker 3: So the idea is to bring them to help leverage

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Speaker 3: my time, leverage a company's time, leverage a company wide initiatives,

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Speaker 3: and then let that talent that drives those businesses keep

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Speaker 3: making great progress.

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Speaker 2: Brian, there is an obvious I have some comfortable questions.

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Speaker 2: Some people might have responded to this and just thought,

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Speaker 2: is Brian's setting up for six session or is this

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Speaker 2: just about change and how the companies.

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Speaker 4: Run well long term.

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Speaker 3: We have one of the duties that I and the

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Speaker 3: whole management team owes the board of directors as a

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Speaker 3: series of candidates that have the experience to run this

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Speaker 3: company over time. I'm not going anywhere in the short term,

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Speaker 3: but in the medium term. But it takes a while

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Speaker 3: to set that up and get people used to the

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Speaker 3: size and scale this company. So you all report all

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Speaker 3: those ins and outs of succession, but the reality.

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Speaker 4: Is we're a team and we're driving forward.

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Speaker 3: There's a lot of talent teammates and the board will

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Speaker 3: have to make a decision someday based on the facts

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Speaker 3: and circumstances at the time.

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Speaker 5: Brian, you talk about some of the new initiatives and

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Speaker 5: looking forward to the bank, the Dean and the gym

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Speaker 5: that will be of the future partnering together. I'm wondering

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Speaker 5: what you're hoping they can accomplish, whether it's the AI

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Speaker 5: initiatives or beyond, what kind of projects you're hoping that

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Speaker 5: they will spearhead.

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Speaker 3: Well, we have a lot of things going For the

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Speaker 3: last six last year, we've been working on some work

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Speaker 3: streams to help drive expense sufficiency and implementation new technologies

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Speaker 3: and at the same time drive growth. How we take

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Speaker 3: risk and continue to look at our risk parameters and

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Speaker 3: so what I'm asking them is to and they've helped

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Speaker 3: drive those well, they've been doing our old jobs and

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Speaker 3: I've said, come do this full time and that'll give

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Speaker 3: us more leverage across the platform. Our company has a

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Speaker 3: great reach we have, you know, we're all over the

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Speaker 3: globe and Bernie Men's and the team here and out

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Speaker 3: of London run all the.

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Speaker 4: International businesses for us.

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Speaker 3: We're in a lot of countries, a lot of teammates

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Speaker 3: around the world. We just announced a thousand more teammates

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Speaker 3: that we're building out here in UK and they can

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Speaker 3: help the company drive that and put the key to

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Speaker 3: the top of big company of guards is to work

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Speaker 3: the seams, work the business connections. And so Jimmy this

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Speaker 3: capabilities as he works for the Wealth Management Group and

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Speaker 3: Lindsay and Eric on the clients that we have, especially

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Speaker 3: in the high you know, the hirer end clients that

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Speaker 3: he has relationships with who are hedge fund operators and

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Speaker 3: things like that. So there's a lot of inities, but

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Speaker 3: it's it's really about revenue growth, organic revenue growth and

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Speaker 3: expense efficiency and also thinking through how technology applies. It

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Speaker 3: just gives me more power at the top of the

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Speaker 3: house to join us. And these teammates have done a

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Speaker 3: great job.

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Speaker 2: I imagine it's going to be united. From the investor

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Speaker 2: day in November, the first one in some fifteen years,

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Speaker 2: you mentioned the CFO now Executive vice president Alistair Borthwick

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Speaker 2: said this, the most important thing from our perspective is

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Speaker 2: we feel like we've got an opportunity to close a

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Speaker 2: relative value gap. Brian, can we talk about that relative

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Speaker 2: value gap? Where do you think that comes from? What

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Speaker 2: is it that you think perhaps investors don't fully understand.

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Speaker 3: Well, as you look at the company, you have a

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Speaker 3: greater granted growth engine. So we'll do a million new

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Speaker 3: checking households, and our average checking.

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Speaker 4: Balances are three times four times industry norm and we're

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Speaker 4: building that up.

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Speaker 3: What we're trying to showcase is what Bank of America

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Speaker 3: is is an organic growth machine on a very steady

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Speaker 3: compounding basis. So if you look at the projection for

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Speaker 3: our earnings growth rates by the street, they're faster than

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Speaker 3: the average company as the balance reprices and things go on.

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Speaker 3: But trying to showcase is to put on the table

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Speaker 3: basically the metrics that we run this company by across

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Speaker 3: the eight lines of business and how they work together,

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Speaker 3: and then the international piece, and then AI and some

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Speaker 3: of the other things we work on the payments business,

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Speaker 3: which is embedded in the lines of business but is

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Speaker 3: a separate business.

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Speaker 4: It really showed three things.

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Speaker 3: We have a competitive position that no one else has

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Speaker 3: where you know, we just announced yesterday with the largest

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Speaker 3: small business Lenner. We have a competitive growth rate in

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Speaker 3: the organic growth that's there.

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Speaker 4: And then because of.

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Speaker 3: Our the dynamics are a NII lift which it will

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Speaker 3: be growing as we've told people six to seven percent

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Speaker 3: this year. You're going to see the EPs KEYP kicking

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Speaker 3: in and the operating leverage come into the business and

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Speaker 3: the return on tandem common equity keeps moving up.

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Speaker 4: And that's that's when we lay up.

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Speaker 3: But gears off that good core or granted growth with

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Speaker 3: the right risk that we drive.

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Speaker 4: This company by.

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Speaker 5: Brian as John is just mentioning this is the first

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Speaker 5: and fifteen years, why now what changed for you? And

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Speaker 5: is this going to be a new annual thing?

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Speaker 3: You know, I think we have thirty five Analystic covers.

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Speaker 3: We spend time at all the conferences we spend time individually,

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Speaker 3: but think about putting on a table to know where

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Speaker 3: the company stands right now. As we see after the

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Speaker 3: pandemic and after the interest rate changes and after inflation

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Speaker 3: fights and all that stuff, we see that people putting

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Speaker 3: on a table where we are in organic growth and

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Speaker 3: how it works together is critical, and I think, yeah,

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Speaker 3: you should expect us to do it more often.

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Speaker 4: You know, we have a lot of connectivity to the people.

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Speaker 3: Actually own our stock and talk to them all the time,

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Speaker 3: but this is a chance to sort of lay it

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Speaker 3: all out so they can see it together and to

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Speaker 3: look at some of these initiatis are unique, like our

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Speaker 3: employee Banking Investment Initiative, our continuum, our Marril Edge through

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Speaker 3: Merrill Lynch and a private bank, and the ability for

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Speaker 3: us to take a customer literally from the first bank

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Speaker 3: account their entire life, no matter what happens to them.

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Speaker 3: On an individual side, or a small business for me

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Speaker 3: today that becomes the largest company world, or an individual

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Speaker 3: trader that builds up that capability and becomes a hedge

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Speaker 3: fund manager. The idea of these continuums and things like

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Speaker 3: that are really important, and so we hope to put

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Speaker 3: that on a table and make sure people see it,

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Speaker 3: and then we'd annually update it, but sort of put

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Speaker 3: a baseline on the table.

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Speaker 5: So, Brian, it seems like you're moving toward a greater

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Speaker 5: degree of transparency or at least availability at a time

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Speaker 5: where the President is talking about potentially moving from a

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Speaker 5: quarterly reporting system from public companies to a six month

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Speaker 5: reporting season, do you think that that would be helpful

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Speaker 5: for you as a business manager if you had to

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Speaker 5: report less frequently in terms of filing.

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Speaker 3: Yeah, At the end of the day, we run the

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Speaker 3: company along the principal's responsible growth and how we run it,

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Speaker 3: so it won't change how we run the company, may

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Speaker 3: change how often we have to talk about it, and inherently,

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Speaker 3: if you do two times a year versus four times

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Speaker 3: a year, you'd save some money and some effort. But

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Speaker 3: my guess is our investors are going to demand from

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Speaker 3: us more constant reporting. So we'll see it all play out.

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Speaker 3: It's an issue that was talked about over the last

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Speaker 3: several years. If it's going to get done, it has

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Speaker 3: to be done the right way. So it remains in

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Speaker 3: place and we look forward to what comes out of

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Speaker 3: the SEC and the process. But on the other hand,

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Speaker 3: we are very transparent what we do. We put a

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Speaker 3: lot of information out there, things like our digital capabilities

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Speaker 3: that no one else reports on quite frankly, and again

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Speaker 3: with the investor Day, we'll be able to show that

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Speaker 3: and really challenge people say, look, if this is what's

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Speaker 3: going on. If you've taken a company at three hundred

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Speaker 3: thousand people fifteen years ago that has two hundred and

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Speaker 3: twelve thousand people today and applied that technology, you just

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Speaker 3: think as we start to apply AI more fully, we

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Speaker 3: already have Erica three billion customer interactions, but as that

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Speaker 3: applies more fully, you'll see the ability for us to

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Speaker 3: continue to manage the headcount and the company well while

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Speaker 3: the revenue keeps growing. And so I think we'll report

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Speaker 3: on that more often than every six months, is my guests.

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Speaker 3: Based on the demand of our investors.

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Speaker 2: Lisa, I imagined some CEOs might welcome this. Yes, even

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Speaker 2: if some investors done, they.

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Speaker 5: Might welcome this, but will they be allowed to actually

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Speaker 5: follow it by their investors?

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Speaker 6: And that I think is what Brian is alluding to.

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Speaker 2: I think investors will demand much more transparency. Brian, I

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Speaker 2: want to talk about an initiative close to your heart.

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Speaker 2: The news that we got about fifteen twenty five minutes

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Speaker 2: ago that you're increasing the minimum wage to twenty five

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Speaker 2: dollars per hour. I remember a very early conversation with you,

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Speaker 2: and this is something you're very proud of. This has

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Speaker 2: gone up from say fifteen several years ago. Can you

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Speaker 2: talk to us about why you've maintained this commitment to

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Speaker 2: drive in the minimum wage higher at Banks for America.

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Speaker 4: Sure, so, let me set two things up.

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Speaker 3: One over the course of today and tomorrow and yesterday,

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Speaker 3: we've announced a series of insues.

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Speaker 4: One is to locate one thousand.

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Speaker 3: New teammates in the UK that will work in our

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Speaker 3: operations group, and that was announced by Bernie and Tom Scrivener.

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Speaker 3: The second one is torease to commit to our military

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Speaker 3: hiring at Bank of America ten thousand military veterans over

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Speaker 3: the next five years.

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Speaker 4: We've done this from time.

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Speaker 3: We have about twenty thousand working to increase that. Another

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Speaker 3: is to increase eight thousand people from community colleges to

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Speaker 3: print an opportunity at Bank of America to further the

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Speaker 3: career and get into skills based training. That's a doubling

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Speaker 3: or tripling of what we do today. And then we're

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Speaker 3: the seventy five branches that we're deploying and the teammates there.

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Speaker 4: And the third piece is the minimum wage.

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Speaker 3: And so we started on a travel a number of

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Speaker 3: years ago with a view that to be we want

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Speaker 3: teammates to come to Bank America with a career mindset,

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Speaker 3: so join us. So today we're announcing twenty five dollars

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Speaker 3: an hour, which is fifty thousand dollars for a starting

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Speaker 3: salary across the country and hire in some places where

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Speaker 3: the prevailing wages are higher. Obviously, but what that gives

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Speaker 3: a teammate a chance to join our company, spend their

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Speaker 3: whole career here, and support their families. So not only

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Speaker 3: is it the twenty five dollars an hour minimum starting wage,

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Speaker 3: it's the benefit structure, which is a full four and

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Speaker 3: K match, a full benefit costs that we for the

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Speaker 3: teammates in the brackets of twenty five dollars an hour.

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Speaker 3: We basically dropped their premium coverage and healthcare in twenty

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Speaker 3: twelve from five hundred dollars a month to two hundred

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Speaker 3: and fifty dollars a months.

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Speaker 4: Our family have.

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Speaker 3: Never raised it to provide great health care forum and

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Speaker 3: then our childcare benefits, so it's a package. So where's

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Speaker 3: that payback for the investor. Where that pays back to

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Speaker 3: the investor is the turnover rate. And when we started

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Speaker 3: this program in the high volume operations groups and the

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Speaker 3: branches was twenty percent. It's now down to basically tennis percenter.

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Speaker 4: So even below that.

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Speaker 3: That stability in that career mindset allows us to do a

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Speaker 3: much better job for our clients. And what you've seen

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Speaker 3: is the attrition in the term teammates has gone down.

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Speaker 3: You've seen the attrition the customer's gone down, and you've

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Speaker 3: seen our customer scores dramatically improve over the last fifteen

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Speaker 3: years due to this relentless pursuit to be a career employer.

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Speaker 3: So yes, we're very proud of twenty five dollars an hour,

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Speaker 3: but there's an economic benefit for the shareholder and there's

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Speaker 3: a great position for the teammate at the same time.

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Speaker 2: Brian, I wonder also what it says about the situation

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Speaker 2: the current environment. It's very strange that we're going into

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Speaker 2: this decision with the Federal Reserve talking about twenty five

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Speaker 2: fifty basis points of rate cuts and maybe more. Your

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Speaker 2: team has talked consistently throughout this morning about the amount

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Speaker 2: of resilience they see in the US economy. Payhikes like

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Speaker 2: this aren't the kind of things you would typically see

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Speaker 2: in a recession. What's your sense of just how tight

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Speaker 2: a week loose this labor market actually is right now?

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Speaker 3: Well, I think if you think of twenty three summer,

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Speaker 3: you know, the great resignation, it was very tight, then

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Speaker 3: it loosened up, and it's more imbalanced now. So our

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Speaker 3: turn of rate in our company is running about eight percent.

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Speaker 3: It even in places like tech programmers, of which we

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Speaker 3: have thirty forty thousand of them, we're running in double

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Speaker 3: digits is now and three four percent. And what that

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Speaker 3: shows you the bin in the markets different, which then

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Speaker 3: shows you people being more careful at headcount. And you

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Speaker 3: heard some of my colleagues talk to you about that.

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Speaker 4: So I think the.

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Speaker 3: Unemployment rate is still low, but I think businesses are

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Speaker 3: being much more careful in management a headcount for.

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Speaker 4: A number of reasons.

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Speaker 3: One is to get by understanding how all the policies

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Speaker 3: are coming at and fit together. I'm talking about US

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Speaker 3: businesses mainly, and then secondly, they're also making sure that

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Speaker 3: they're careful. And I heard some of my colleagues talk

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Speaker 3: to you about this earlier. As you think about this

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Speaker 3: application of technology, we know what this does. We have

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Speaker 3: half as many people work in the consumer business, and

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Speaker 3: did we did a decade decade plus ago. We have

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Speaker 3: half as many people working operations. We know that as

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Speaker 3: these technologies could apply to our legal department, our account

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Speaker 3: our finance department under alistair, our risk department, teammates. We

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Speaker 3: know that if we manage the headcount carefully, we will

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Speaker 3: do it. So we look at headcount very carefully and say,

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Speaker 3: don't hire people unless you really need them, not because

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Speaker 3: we're trying to save money, because frankly, from a human

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Speaker 3: management capabilities, we don't want to have people who won't.

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Speaker 4: Be able to have a career here.

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Speaker 3: So we just hired two thousand plus kids from school,

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Speaker 3: so we brought in all those new talent. We'll hire

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Speaker 3: these ten thousand veterans, we'll hire these eight thousand people

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Speaker 3: from community college. But each month we get the right

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Speaker 3: to make a decision on whether we're going to hire

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Speaker 3: about thirteen to fifteen hundred people.

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Speaker 4: And we're just managing that very carefully.

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Speaker 3: So I think we're an example of what's going on

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Speaker 3: to broad a labor market.

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Speaker 4: You heard Wendy and.

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Speaker 3: My colleagues talk about it. All the companies are trying

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Speaker 3: to manage us and make sure they get the headcount

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Speaker 3: right because that is a major expense for a lot

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Speaker 3: of firms.

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Speaker 5: Brian, about a year ago you were talking to us

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Speaker 5: about the ramifications of AI and the explosion of efficiency,

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Speaker 5: and you said that you think that headcount could remain

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Speaker 5: about the same at the bank even as the business

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Speaker 5: continue to expand, just in total size. I'm wondering if

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Speaker 5: that's shifted, if you still see that as the natural

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Speaker 5: progression of the relationship between the adoption of machine based

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Speaker 5: learning and the relationship to your headcount.

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Speaker 3: So there are two things that one, I think the

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Speaker 3: time we were talking, we are probably closer two hundred

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Speaker 3: and sixteen seventeen thousand people or two hundred thirteen thousand,

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Speaker 3: So I think we'll be managing this down.

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Speaker 4: But remember, at the same.

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Speaker 3: Time we're managing out through operational excellence and efficiencies of

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Speaker 3: applied technology. We are now we are deploying, so we're

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Speaker 3: adding when he's added commercial bankers and all the markets

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Speaker 3: and sharing a team added business bankers and all the markets,

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Speaker 3: and Katie and Lindsay and Eric adding financial advisors and

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Speaker 3: private bankers. So we're adding front end people, sales traders,

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Speaker 3: et cetera. To keep building out our capabilities, and so

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Speaker 3: there's a reinvestment going on. The key to that is

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Speaker 3: really to read a eploying people and reskilling them. So

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Speaker 3: when we bring these two thousand plus teammates and who

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Speaker 3: just joined us in the last month and a half,

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Speaker 3: we have to be more mindful about training them along

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Speaker 3: multiple dimensions than we might have been two or three

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Speaker 3: years ago. So I think, yes, I think ultimately the

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Speaker 3: human being content of our work product would probably come down,

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Speaker 3: but if we manage it right, it'll be flat to

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Speaker 3: the same amount of people, maybe down a little bit,

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Speaker 3: but all paid more and all being applied to the

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Speaker 3: highest value tasks where frankly, the machines can't do the work.

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Speaker 4: And that's the important thing.

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Speaker 3: We know these We know what this AI can do

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Speaker 3: in today's world. Erica has been out there for seven years,

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Speaker 3: three billion customer interactions, twenty million customers using.

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Speaker 4: It all the time. We see what it could do.

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Speaker 3: We took that and put it in our commercial business

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Speaker 3: We took that and put it in our internal process.

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Speaker 3: We got other models to help in Jimmy DeMar's business

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Speaker 3: in terms of a thing called optimists and things like that.

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Speaker 3: There's a lot of out there, but what you're learning

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Speaker 3: is is still augmented intelligence and that will be what's

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Speaker 3: driving the near term efficiency. So yes, I think the

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Speaker 3: headcount management is one of the core tasks that managers

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Speaker 3: have to take.

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Speaker 5: Seriously, I'm just wondering, Brian, as you train all of

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Speaker 5: these new students, how do you make sure that they

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Speaker 5: stay with you and don't go to some of your

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Speaker 5: brethren across the way in the private asset sphere.

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Speaker 3: Well, we provide them a good opportunity and look, they

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Speaker 3: can go other places, but we've been able to retain enough.

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Speaker 3: We're completely happy and look even for our clients.

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Speaker 4: Frankly, if they.

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Speaker 3: Hire our teammates, it's not the worst thing that happens

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Speaker 3: in all our businesses. But the roality is is that

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Speaker 3: we want these teammates to have a career mindset. In October,

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Speaker 3: I'll celebrate our teammates have been with our company fifty years,

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Speaker 3: fifty five years, sixty years, et cetera. And you hear

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Speaker 3: their stories and their stories of I joined this company,

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Speaker 3: I worked in a summer internship, I came may even.

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Speaker 4: Work part time during college.

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Speaker 3: I became a full time employee and I started doing

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Speaker 3: this and now I do that. And those are wonderful stories,

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Speaker 3: and we have them tell those stories to our teammates

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Speaker 3: to show you that you can have a long term

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Speaker 3: career at a company like ours. And that's what we

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Speaker 3: want our teammates to come in with. They may not

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Speaker 3: stay in trading or investment banking or corporate banking, but

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Speaker 3: they'll have long term capabilities here.

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Speaker 4: And you've seen that.

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Speaker 3: Even top of house Alistair was a capital market sead

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Speaker 3: and now he's the CFO, and so that goes on

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Speaker 3: throughout the company.

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Speaker 2: They swear an oath of allegiance, yes exactly, and you

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Speaker 2: see them lining up this morning.

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Speaker 7: That gave in before they come.

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Speaker 5: In, I promise on my capushino, which is very good.

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Speaker 2: By the way, Brian, I want to talk about the

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Speaker 2: main fan that takes place later on this afternoon.

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Speaker 7: I'm not going to ask for your guests.

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Speaker 2: I know how much you respect the team behind me

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Speaker 2: and some of the official forecast of the bank. I

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Speaker 2: once to understand from your perspective, looking across the eight

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Speaker 2: lines of business, whether you see an economy market activity

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Speaker 2: that demands of rate cut from this Furer reserve.

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Speaker 3: Well, you've had the benefit of all our experts, and

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Speaker 3: we have the talent of extremely talented research team, and

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Speaker 3: you also have some online of business teammates talk about

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Speaker 3: what they see out there. I think you have to

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Speaker 3: back up if you're if you think about last year

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Speaker 3: this time, the projected growth rates for our team was

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Speaker 3: probably one hundred basis points higher than it is today

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Speaker 3: for twenty five and so that acceleration of growth, the

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Speaker 3: prediction that was largely based.

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Speaker 4: On a couple of things.

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Speaker 3: One, rates would stay higher because inflation was kicking in,

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Speaker 3: the impact of the uncertain terrorist et cetera, et cetera,

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Speaker 3: all that's coming through the system now, so you're seeing

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Speaker 3: some certainty fall into place on this. And I think

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Speaker 3: also inflation was coming down. And I think so the

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Speaker 3: tension the FED has to deal with, and you've been

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Speaker 3: picking out it all day, is a tension between a

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Speaker 3: higher inflation rate and ultimately where FED funds could settle

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Speaker 3: in at And so whether they do twenty five basis

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Speaker 3: points today or fifty people have to keep in mind

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Speaker 3: the growth rate in economy was brought down and now.

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Speaker 4: It's starting to go back up.

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Speaker 3: So next year is predicted to be better this year

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Speaker 3: and the year after is better than that. So you

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Speaker 3: hear teammates talk about the economy growing back out, and

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Speaker 3: that then means we're on the other side of it,

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Speaker 3: And so the FED has to adjust to the inflat picture.

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Speaker 3: As it got more in control. They can come down.

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Speaker 3: They came down to one hundred basis points already. It

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Speaker 3: can keep coming down, but they've got to be very

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Speaker 3: mindful of the inflation side. And so I think when

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Speaker 3: the people get in the room and they see the data,

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Speaker 3: they have to think it through.

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Speaker 4: The big newsance that you're referenced.

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Speaker 3: Early was the labor market's gotten softer, so that gave

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Speaker 3: them concerns. So I think, you know, the market believes

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Speaker 3: and our teammates believe the cut rates, but I think

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Speaker 3: the key for people is acceleration and growth and will

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Speaker 3: growth reaccelerate. Our teammates seeing that we're seeing consumer spending

439
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Speaker 3: strong and all those things which would indicate we'd see

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Speaker 3: the acceleration next year is better than this year. Unemployment

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Speaker 3: is not expected to go up a lot, even though

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Speaker 3: the employement picture may be softer. But the most important

443
00:19:38,880 --> 00:19:41,720
Speaker 3: thing is the long term interest rate scenario people projecting

444
00:19:42,119 --> 00:19:44,600
Speaker 3: is a more normal rate environment that we saw before

445
00:19:44,640 --> 00:19:47,560
Speaker 3: the financial crisis, say three percent plus or minds on

446
00:19:47,600 --> 00:19:49,760
Speaker 3: the FEDS fund rate of four to four and a

447
00:19:49,840 --> 00:19:52,280
Speaker 3: half percent or so, on a tenure rate, and a

448
00:19:52,320 --> 00:19:56,160
Speaker 3: curve that's not inverted, that's normalized between that. The important

449
00:19:56,160 --> 00:19:58,120
Speaker 3: thing is to get back to more of a normal environment,

450
00:19:58,160 --> 00:20:00,960
Speaker 3: frankly with maybe a little higher in fla because a

451
00:20:01,000 --> 00:20:03,920
Speaker 3: great debate about two percent is something you can get.

452
00:20:03,960 --> 00:20:06,720
Speaker 3: Lots of experts talk about a little higher inflation, a

453
00:20:06,760 --> 00:20:09,639
Speaker 3: little faster growth, and then frankly that'll help with some

454
00:20:09,680 --> 00:20:11,440
Speaker 3: of the debt carry and other things going on in

455
00:20:11,440 --> 00:20:12,320
Speaker 3: the US economy.

456
00:20:13,600 --> 00:20:15,520
Speaker 5: Brian, it sounds like next year you see the bigger

457
00:20:15,600 --> 00:20:18,920
Speaker 5: risk as potentially a surprising a bout of inflation and

458
00:20:19,000 --> 00:20:19,960
Speaker 5: some sort of downturn.

459
00:20:20,080 --> 00:20:20,679
Speaker 6: Is that correct?

460
00:20:22,080 --> 00:20:24,399
Speaker 3: Well, I think the question is is how do you

461
00:20:24,440 --> 00:20:27,280
Speaker 3: tolerate the inflation and temp the nature of it, what's

462
00:20:27,359 --> 00:20:29,879
Speaker 3: come from. But you know, and I think that's the tension.

463
00:20:29,920 --> 00:20:32,120
Speaker 3: All this I think is next year, as you get

464
00:20:32,119 --> 00:20:34,080
Speaker 3: to the second quarter. As these policies are now in

465
00:20:34,119 --> 00:20:35,720
Speaker 3: place and are behind us, are you going to see

466
00:20:35,760 --> 00:20:40,040
Speaker 3: the acceleration and growth and where our businesses get start best,

467
00:20:40,040 --> 00:20:42,640
Speaker 3: even faster if you listen. I think if you ask

468
00:20:42,720 --> 00:20:45,600
Speaker 3: Wendy about it, she would tell you her commercial customers

469
00:20:45,640 --> 00:20:48,120
Speaker 3: that have lines of credit are still borrowing less as

470
00:20:48,160 --> 00:20:51,160
Speaker 3: a percentage of their availability than they did. It's sort

471
00:20:51,160 --> 00:20:54,520
Speaker 3: of the seventeen eighteen nineteen timeframe where rates have been

472
00:20:54,920 --> 00:20:58,119
Speaker 3: have been moved up and the economy is growing, and

473
00:20:58,200 --> 00:21:00,560
Speaker 3: so why is that It probably not seemed quite the opportunity,

474
00:21:00,560 --> 00:21:03,000
Speaker 3: and so they're trying to sort this all out, and well,

475
00:21:03,280 --> 00:21:05,760
Speaker 3: you know, I've got the benefit in the honor of

476
00:21:05,800 --> 00:21:09,040
Speaker 3: leading company, has this talented team behind us, and all

477
00:21:09,080 --> 00:21:11,880
Speaker 3: the talent and money we spend on research and everything.

478
00:21:12,040 --> 00:21:14,000
Speaker 3: If I'm running a company that the three of us

479
00:21:14,040 --> 00:21:15,879
Speaker 3: owned and it was a manufacturing company, I got to

480
00:21:15,880 --> 00:21:18,560
Speaker 3: figure out all myself that tends to hold people back.

481
00:21:18,640 --> 00:21:21,240
Speaker 3: So that would be the case for acceleration. And then

482
00:21:21,640 --> 00:21:23,560
Speaker 3: the question is if rate stay a little higher and

483
00:21:23,600 --> 00:21:26,119
Speaker 3: the growth is hired, that's not a bad place for

484
00:21:26,160 --> 00:21:26,879
Speaker 3: the America to be.

485
00:21:28,359 --> 00:21:29,960
Speaker 2: Brian, just before you go, what is to sneak this

486
00:21:30,040 --> 00:21:32,680
Speaker 2: in one final question, Whose door do I need to

487
00:21:32,760 --> 00:21:34,120
Speaker 2: knock for World Cup tickets?

488
00:21:34,440 --> 00:21:35,600
Speaker 7: Who makes that happen here?

489
00:21:36,720 --> 00:21:37,280
Speaker 4: Well, you missed.

490
00:21:37,280 --> 00:21:39,719
Speaker 3: You didn't bring David Tyree on, who's doing all our

491
00:21:39,760 --> 00:21:44,080
Speaker 3: marketing and work, and so he's the guy that's got

492
00:21:44,080 --> 00:21:45,600
Speaker 3: control of the tickets video has a great job.

493
00:21:45,720 --> 00:21:49,119
Speaker 4: Or is look our relationship with FIFA. You know we

494
00:21:49,119 --> 00:21:50,240
Speaker 4: did the you had.

495
00:21:50,119 --> 00:21:51,720
Speaker 3: The Club World Cup, which was sort of the warm

496
00:21:51,800 --> 00:21:54,359
Speaker 3: up and next year and you'll see us accelerate our efforts.

497
00:21:54,359 --> 00:21:58,359
Speaker 3: We have great capabilities for our clients. But most importantly,

498
00:21:59,000 --> 00:22:03,000
Speaker 3: this is a chance for America to showcase football soccer

499
00:22:03,040 --> 00:22:05,719
Speaker 3: as we call it. It's a case for these cities

500
00:22:05,760 --> 00:22:07,800
Speaker 3: that are hosting to put on a great show. And

501
00:22:07,840 --> 00:22:10,720
Speaker 3: I think I can see the enthusiasm building.

502
00:22:10,720 --> 00:22:12,720
Speaker 4: And you're not the first person that ask for take us, John,

503
00:22:13,560 --> 00:22:14,200
Speaker 4: stay with us.

504
00:22:14,520 --> 00:22:27,320
Speaker 2: More Bloomberg Surveillance coming up after this. Savita Subramani, the

505
00:22:27,359 --> 00:22:29,879
Speaker 2: head of US Equity and Quantitative Strategy, right in the

506
00:22:29,880 --> 00:22:32,600
Speaker 2: following It is difficult to be outright bearish on risk

507
00:22:32,640 --> 00:22:36,080
Speaker 2: assets with signs of profits continuing to accelerate alongside a

508
00:22:36,200 --> 00:22:39,399
Speaker 2: FED that is more likely to ease than hold short rates.

509
00:22:39,440 --> 00:22:42,200
Speaker 2: Savita plus Jill Carey Hall, the head of US Small

510
00:22:42,200 --> 00:22:44,720
Speaker 2: and midcapt strategy at Bank for America, joined us Now

511
00:22:44,720 --> 00:22:46,280
Speaker 2: for more guys going to see you both.

512
00:22:46,400 --> 00:22:48,040
Speaker 7: Great to be Thanks for being here, Savita.

513
00:22:48,040 --> 00:22:50,240
Speaker 2: I want to start with you a central message of

514
00:22:50,280 --> 00:22:54,399
Speaker 2: your research for a long long time. Never underestimate the

515
00:22:54,440 --> 00:22:56,280
Speaker 2: resilience of corporate America.

516
00:22:56,400 --> 00:22:56,720
Speaker 6: That's right.

517
00:22:56,880 --> 00:22:59,040
Speaker 2: Is that a mistake? People have made it too many

518
00:22:59,080 --> 00:23:00,000
Speaker 2: times this year so far.

519
00:23:01,080 --> 00:23:01,359
Speaker 6: Yeah.

520
00:23:01,400 --> 00:23:04,520
Speaker 8: I think we even made it after Liberation Day and

521
00:23:04,640 --> 00:23:07,359
Speaker 8: thinking that, you know, we were going to see companies

522
00:23:07,480 --> 00:23:10,240
Speaker 8: not being able to guide, not being able to navigate

523
00:23:10,760 --> 00:23:14,560
Speaker 8: this really complicated environment. And what we saw is corporates

524
00:23:14,560 --> 00:23:20,600
Speaker 8: handling this with a plum and essentially they continued to

525
00:23:20,680 --> 00:23:24,760
Speaker 8: guide on earnings. We saw no paucity of information. We

526
00:23:24,840 --> 00:23:28,879
Speaker 8: heard a lot of companies talk about their teriff mitigation tactics,

527
00:23:29,320 --> 00:23:32,000
Speaker 8: which I think was interesting because they've seen this before,

528
00:23:32,160 --> 00:23:35,399
Speaker 8: they went through this in twenty eighteen. Obviously this is

529
00:23:35,440 --> 00:23:39,360
Speaker 8: a little bit more extreme, but companies know how to manage.

530
00:23:39,400 --> 00:23:41,720
Speaker 8: They just need a plan, and I think that was

531
00:23:41,800 --> 00:23:44,200
Speaker 8: what we were hardened to see.

532
00:23:44,680 --> 00:23:46,760
Speaker 2: It's all to have this conversation about twenty five or

533
00:23:46,800 --> 00:23:49,520
Speaker 2: fifty from the Federal Reserve. At the same time, the

534
00:23:49,560 --> 00:23:52,159
Speaker 2: equity market is close to all time highs, and you

535
00:23:52,240 --> 00:23:54,280
Speaker 2: and the team here at Bank for America are essentially

536
00:23:54,280 --> 00:23:57,400
Speaker 2: forecast to get acceleration and earnings for twenty twenty six.

537
00:23:57,920 --> 00:24:00,680
Speaker 7: Can you make that make sense to people I'm listening to.

538
00:24:00,600 --> 00:24:04,679
Speaker 8: This, Well, yeah, we're actually forecasting a slight deceleration but

539
00:24:05,280 --> 00:24:08,159
Speaker 8: broadening out of earnings. And what I think is really

540
00:24:08,240 --> 00:24:11,199
Speaker 8: noteworthy and what investors need to pay attention to, is

541
00:24:11,200 --> 00:24:15,000
Speaker 8: the idea that the four ninety three is actually back

542
00:24:15,040 --> 00:24:17,440
Speaker 8: in the black. These are companies that are making money,

543
00:24:17,680 --> 00:24:20,760
Speaker 8: so it's not just tech all the time, which has

544
00:24:20,800 --> 00:24:23,840
Speaker 8: been the story for the last few years. I think

545
00:24:23,840 --> 00:24:26,560
Speaker 8: what's also interesting is that tech companies are spending, and

546
00:24:26,600 --> 00:24:28,280
Speaker 8: they're spending on everything.

547
00:24:28,359 --> 00:24:30,320
Speaker 6: They're spending on power grid.

548
00:24:30,280 --> 00:24:34,000
Speaker 8: Which is actually positive for overall economic growth, it's positive

549
00:24:34,040 --> 00:24:37,640
Speaker 8: for commodities, and I think that's the message we're giving

550
00:24:37,720 --> 00:24:42,360
Speaker 8: investors today. What's really thwarted broadening this year, I think,

551
00:24:42,480 --> 00:24:46,400
Speaker 8: is just this bomb of tariff uncertainty that was dropped

552
00:24:46,440 --> 00:24:49,800
Speaker 8: on April second, and we're at a point where clarity

553
00:24:49,880 --> 00:24:53,800
Speaker 8: has improved vastly around that, and that issue.

554
00:24:53,400 --> 00:24:55,320
Speaker 5: Not just the four hundred ninety three the two thousand,

555
00:24:55,600 --> 00:24:57,919
Speaker 5: and I am wondering jail. We have seen a complete

556
00:24:57,920 --> 00:25:00,639
Speaker 5: outperformance from the Russels two thousand of late, and you

557
00:25:00,720 --> 00:25:04,040
Speaker 5: actually increased your expectations for some of these companies after

558
00:25:04,080 --> 00:25:07,080
Speaker 5: being pretty sour on them earlier this year, especially after

559
00:25:07,160 --> 00:25:09,800
Speaker 5: Jackson Hull. How much is this entirely predicated on what

560
00:25:09,800 --> 00:25:12,160
Speaker 5: the FED does rather than what Savita is talking about,

561
00:25:12,200 --> 00:25:13,920
Speaker 5: which all sounds lovely, but it's been in effect for

562
00:25:14,000 --> 00:25:14,920
Speaker 5: quite a while.

563
00:25:15,040 --> 00:25:17,560
Speaker 1: Right Well, I think the FED has certainly been the biggest,

564
00:25:17,720 --> 00:25:19,680
Speaker 1: one of the biggest drivers of the Russell two thousand

565
00:25:19,720 --> 00:25:21,680
Speaker 1: over the last year or two. Some of the biggest

566
00:25:21,760 --> 00:25:24,240
Speaker 1: rallies and sell offs we've seen have been around FED

567
00:25:24,280 --> 00:25:26,280
Speaker 1: expectations or data that feeds into that.

568
00:25:26,400 --> 00:25:29,120
Speaker 6: So I think, you know, the expectation of.

569
00:25:29,119 --> 00:25:31,840
Speaker 1: Cuts coming is certainly more positive for the Russell and

570
00:25:31,880 --> 00:25:33,480
Speaker 1: should lead it to outperform near term.

571
00:25:33,760 --> 00:25:34,480
Speaker 6: But I think.

572
00:25:34,280 --> 00:25:36,879
Speaker 1: Also what investors have been focused on, perhaps more so

573
00:25:36,920 --> 00:25:39,320
Speaker 1: than usual, has been the profits backdrop. Because a year

574
00:25:39,320 --> 00:25:42,240
Speaker 1: ago everyone was expecting that by mid twenty twenty four

575
00:25:42,400 --> 00:25:45,040
Speaker 1: small caps would have come out of their profits recession,

576
00:25:45,200 --> 00:25:48,320
Speaker 1: that earnings would have broadened out and been outpacing large caps,

577
00:25:48,359 --> 00:25:50,600
Speaker 1: and that just kept getting kicked out and kicked out,

578
00:25:50,880 --> 00:25:53,520
Speaker 1: and we finally saw small caps come out of the

579
00:25:53,520 --> 00:25:56,120
Speaker 1: profits recession. This earning season, we saw a big beat

580
00:25:56,160 --> 00:25:59,080
Speaker 1: by these companies. We saw much better guidance, So that's

581
00:25:59,080 --> 00:26:01,600
Speaker 1: been a positive sign. I mean, the sales data, the

582
00:26:01,680 --> 00:26:04,359
Speaker 1: top line growth was a bit more lackluster relative to

583
00:26:04,440 --> 00:26:06,640
Speaker 1: large caps, So that's something to pay attention to as

584
00:26:06,640 --> 00:26:09,640
Speaker 1: we go into the next earning season. But the fact

585
00:26:09,680 --> 00:26:13,640
Speaker 1: that profitability is finally recovering and speaks to that broadening

586
00:26:13,680 --> 00:26:15,280
Speaker 1: out of earnings is a positive.

587
00:26:15,440 --> 00:26:17,320
Speaker 5: Is the pop on the heels of a potential fed

588
00:26:17,400 --> 00:26:21,240
Speaker 5: rate cut because of just simply evaluation story that lower

589
00:26:21,280 --> 00:26:24,720
Speaker 5: benchmark rates make it more attractive on a relative basis,

590
00:26:25,080 --> 00:26:27,040
Speaker 5: or is it that actually they will borrow more, that

591
00:26:27,080 --> 00:26:29,280
Speaker 5: they can do more that they aren't doing now, whether

592
00:26:29,320 --> 00:26:31,919
Speaker 5: it's engage in M and A, whether it's engaged in acquisitions,

593
00:26:31,960 --> 00:26:34,120
Speaker 5: whether it's engaging in hiring plans.

594
00:26:34,680 --> 00:26:36,119
Speaker 6: Right, I think it's a bit of all of that.

595
00:26:36,200 --> 00:26:38,679
Speaker 1: I think, but for small cap companies, they have a

596
00:26:38,680 --> 00:26:41,399
Speaker 1: lot of debt, much more than large caps do. They

597
00:26:41,440 --> 00:26:43,359
Speaker 1: have a lot of refinancing risk, they have a lot

598
00:26:43,359 --> 00:26:45,639
Speaker 1: of debt that's coming due over the next five years,

599
00:26:45,680 --> 00:26:48,920
Speaker 1: so there's a big focus on their interest costs at

600
00:26:48,920 --> 00:26:51,840
Speaker 1: a time when their earnings have already been struggling for

601
00:26:52,280 --> 00:26:55,439
Speaker 1: several years now in this profits recession. So you know,

602
00:26:55,480 --> 00:26:59,080
Speaker 1: the FED is likely a bigger driver than usual given

603
00:26:59,119 --> 00:27:00,880
Speaker 1: that focus, given their leverage.

604
00:27:00,600 --> 00:27:01,800
Speaker 6: Profiles right now.

605
00:27:02,600 --> 00:27:06,440
Speaker 1: So combine that with some of the positive positives we're

606
00:27:06,440 --> 00:27:08,520
Speaker 1: seeing on the profits backdrop, and I think that's a

607
00:27:08,560 --> 00:27:11,159
Speaker 1: positive near term. Now, the sustainability of the rally, I

608
00:27:11,160 --> 00:27:15,280
Speaker 1: think will depend on you know, revisions, those top line trends,

609
00:27:15,320 --> 00:27:18,920
Speaker 1: the manufacturing recovery. Small caps tend to be very sensitive

610
00:27:18,960 --> 00:27:21,960
Speaker 1: to the ISM manufacturing indicator, which has struggled to get

611
00:27:21,960 --> 00:27:24,919
Speaker 1: back above fifty. So a lot of these factors will

612
00:27:24,960 --> 00:27:27,359
Speaker 1: be what we're watching to see how sustainable this rally

613
00:27:27,359 --> 00:27:28,280
Speaker 1: in small caps could be.

614
00:27:28,440 --> 00:27:29,760
Speaker 2: We had a guess to come on the program a

615
00:27:29,760 --> 00:27:32,440
Speaker 2: few weeks ago that said to Lisa, can you name

616
00:27:32,480 --> 00:27:35,720
Speaker 2: a company on the Russell two thousand? Very few people can.

617
00:27:36,240 --> 00:27:39,360
Speaker 2: When they buy the Russell, what are they buying? What's

618
00:27:39,400 --> 00:27:43,400
Speaker 2: the concentration risk around say, small caps relative to Saveda's

619
00:27:43,440 --> 00:27:45,359
Speaker 2: world large caps in the s and P five hundred.

620
00:27:45,800 --> 00:27:48,600
Speaker 1: Right, Well, there's some sector skews, certainly in terms of

621
00:27:48,800 --> 00:27:53,200
Speaker 1: more biotech. There's a lot more non profitable, non earner

622
00:27:53,240 --> 00:27:56,080
Speaker 1: type of companies within the index, whether it be in biotech,

623
00:27:56,160 --> 00:28:00,159
Speaker 1: small caps, software, regional banks, reach. There are some of

624
00:28:00,160 --> 00:28:02,320
Speaker 1: these areas that are bigger within the Russell. But I

625
00:28:02,320 --> 00:28:05,320
Speaker 1: think what's important is that there are still risks to

626
00:28:05,359 --> 00:28:07,400
Speaker 1: the index. There are a lot of like I said,

627
00:28:07,400 --> 00:28:11,040
Speaker 1: nonprofitable companies that's elevated versus history. So I also think

628
00:28:11,040 --> 00:28:14,560
Speaker 1: it's a very good environment to pick stocks within the index.

629
00:28:15,160 --> 00:28:18,159
Speaker 1: Our analysts here cover over nine hundred small and MidCap

630
00:28:18,240 --> 00:28:21,520
Speaker 1: US stocks, So you know, amid all of these uncertainties,

631
00:28:21,560 --> 00:28:25,920
Speaker 1: whether it's tariffs, whether it's how sustainable is this profit's recovery,

632
00:28:25,960 --> 00:28:28,440
Speaker 1: if you can focus on companies that you know have

633
00:28:28,480 --> 00:28:31,120
Speaker 1: better earnings, revisions, have stronger margins. There are a lot

634
00:28:31,119 --> 00:28:34,520
Speaker 1: of beaten down stocks within the Russell, and small caps

635
00:28:34,560 --> 00:28:37,920
Speaker 1: overall are trading at these big relative discounts to larger companies.

636
00:28:38,000 --> 00:28:40,160
Speaker 1: So it is a good environment for stock selection, and

637
00:28:40,200 --> 00:28:42,400
Speaker 1: we've seen the interest there. We saw a big uptick

638
00:28:42,400 --> 00:28:45,600
Speaker 1: in attendance at our recent Smidcap conference. We've seen investors

639
00:28:45,640 --> 00:28:47,040
Speaker 1: buying small cap stocks this year.

640
00:28:47,080 --> 00:28:49,160
Speaker 5: Well, when you brought it out, this sort of complicated

641
00:28:49,160 --> 00:28:52,160
Speaker 5: backdrop goes to cdda recent change or both of you

642
00:28:52,280 --> 00:28:55,080
Speaker 5: at recent change. In the outlook ahead, you only see

643
00:28:55,080 --> 00:28:58,680
Speaker 5: a six percent gain from here until twelve months out

644
00:28:58,760 --> 00:29:01,280
Speaker 5: until the same time next year to a better seven thousand.

645
00:29:01,360 --> 00:29:03,560
Speaker 5: That's far below where a lot of other people are.

646
00:29:04,000 --> 00:29:07,080
Speaker 5: Why not hire, especially given the expectation for earnings growth

647
00:29:07,160 --> 00:29:08,440
Speaker 5: to truly reaccelerate.

648
00:29:08,760 --> 00:29:12,960
Speaker 8: Well, I mean, here's the here's the problem. The ballast

649
00:29:13,120 --> 00:29:16,240
Speaker 8: of the S and P five hundred has been tech,

650
00:29:16,560 --> 00:29:20,160
Speaker 8: and tech earnings are slated to decelerate. I mean, these

651
00:29:20,200 --> 00:29:23,600
Speaker 8: companies are really big. It's harder to grow as fast.

652
00:29:24,120 --> 00:29:27,160
Speaker 8: These are companies that are spending more money on CAPEC

653
00:29:27,240 --> 00:29:29,400
Speaker 8: so they're returning a little bit less capital than they

654
00:29:29,520 --> 00:29:32,120
Speaker 8: used to doing less buyback. So I think that's the

655
00:29:33,080 --> 00:29:36,479
Speaker 8: other side of the story is the theme around AI,

656
00:29:36,640 --> 00:29:38,680
Speaker 8: and I think what we would need to see a

657
00:29:38,760 --> 00:29:42,680
Speaker 8: much higher return and even a positive surprise and earnings

658
00:29:42,680 --> 00:29:49,440
Speaker 8: at an index level is continued AI monetization, big surprises

659
00:29:49,440 --> 00:29:52,800
Speaker 8: akin to what we saw in the second quarter, And

660
00:29:53,000 --> 00:29:55,600
Speaker 8: it's harder and harder to forecast that as we move

661
00:29:55,640 --> 00:29:59,600
Speaker 8: forward and these companies get bigger and we're more deeper

662
00:29:59,640 --> 00:30:03,760
Speaker 8: into ai monetization cycle. So our analysts are bullish, but

663
00:30:03,800 --> 00:30:06,280
Speaker 8: we are still seeing a deceleration in that area of

664
00:30:06,280 --> 00:30:08,760
Speaker 8: the market. And then the other kind of simple fact

665
00:30:08,760 --> 00:30:11,240
Speaker 8: that we all know is the market tends to anticipate

666
00:30:11,320 --> 00:30:14,960
Speaker 8: earnings recoveries. We've seen some great returns this year. I

667
00:30:14,960 --> 00:30:19,960
Speaker 8: think that's in anticipation of what's to come. And you know,

668
00:30:20,240 --> 00:30:22,560
Speaker 8: typically in the best earnings years for the S and

669
00:30:22,600 --> 00:30:25,800
Speaker 8: P five hundred, the market actually posts kind of you

670
00:30:25,840 --> 00:30:28,800
Speaker 8: know mech returns. So I don't know if we're going

671
00:30:28,880 --> 00:30:31,719
Speaker 8: to see another blockbuster year of returns, but I do

672
00:30:31,760 --> 00:30:33,600
Speaker 8: think that earnings are going to broaden out and that's

673
00:30:33,640 --> 00:30:34,840
Speaker 8: going to be an exciting story.

674
00:30:35,000 --> 00:30:38,160
Speaker 2: Given the focus today anticipating the federal serve decision, how

675
00:30:38,200 --> 00:30:40,160
Speaker 2: relevant is that to your world?

676
00:30:40,440 --> 00:30:44,240
Speaker 8: Look, I mean, I know everyone is obsessed with the Fed,

677
00:30:44,720 --> 00:30:47,440
Speaker 8: but I think that long rates are much more important

678
00:30:47,480 --> 00:30:50,000
Speaker 8: for equities. And we've talked about this, so you know,

679
00:30:50,160 --> 00:30:54,600
Speaker 8: short rates have actually done very little to stemy large

680
00:30:54,640 --> 00:30:57,320
Speaker 8: cap company performance because their balance sheets are healthy, they

681
00:30:57,320 --> 00:31:00,520
Speaker 8: have less floating rate risk, they learn their less during

682
00:31:00,520 --> 00:31:05,160
Speaker 8: the financial crisis and really managed their debt risk. So

683
00:31:05,760 --> 00:31:08,280
Speaker 8: I think the long end is more important. And here's

684
00:31:08,320 --> 00:31:10,640
Speaker 8: where it gets complicated. If the Fed is cutting but

685
00:31:10,720 --> 00:31:15,360
Speaker 8: inflation has not been you know, sufficiently managed, I think

686
00:31:15,600 --> 00:31:18,640
Speaker 8: that's the that's the risk. It's the long end, you know,

687
00:31:18,680 --> 00:31:21,680
Speaker 8: absent yield curve control. The long end, I think is

688
00:31:21,960 --> 00:31:25,760
Speaker 8: is really you know, potentially more dramatic for the S

689
00:31:25,760 --> 00:31:25,920
Speaker 8: and P.

690
00:31:26,080 --> 00:31:26,920
Speaker 6: So that's what we're watching.

691
00:31:26,960 --> 00:31:28,600
Speaker 2: Is that something you're focused on, the risk of a

692
00:31:28,640 --> 00:31:31,000
Speaker 2: repeat of what we saw last year when the Federal

693
00:31:31,000 --> 00:31:33,400
Speaker 2: Reserve cut interest rates and the long end actually sold

694
00:31:33,440 --> 00:31:34,480
Speaker 2: off and yours rose.

695
00:31:34,480 --> 00:31:36,400
Speaker 7: But I think about one hundred basis points.

696
00:31:36,120 --> 00:31:38,680
Speaker 8: Yeah, we had a real steepening. I mean, I think

697
00:31:38,720 --> 00:31:42,000
Speaker 8: that's good for certain sectors and bad for others. One

698
00:31:42,040 --> 00:31:44,800
Speaker 8: reason we're overweight financials, you know, energy some of the

699
00:31:44,840 --> 00:31:50,480
Speaker 8: more inflation positive sectors that are geared to inflation, those

700
00:31:50,520 --> 00:31:52,760
Speaker 8: are sectors that can do well in that environment. As

701
00:31:52,800 --> 00:31:55,880
Speaker 8: long as this is not a disorderly increase in the

702
00:31:55,920 --> 00:31:58,320
Speaker 8: long end, which is what you know we all worry about,

703
00:31:59,320 --> 00:32:00,440
Speaker 8: especially on this desk.

704
00:32:00,880 --> 00:32:05,440
Speaker 2: The good news is so far through September, stay with

705
00:32:05,560 --> 00:32:18,080
Speaker 2: us more Bloomberg surveillance coming up after this, let's keep

706
00:32:18,080 --> 00:32:20,520
Speaker 2: it on the federal reserve. Sticking with the economy, the

707
00:32:20,600 --> 00:32:23,840
Speaker 2: senior US economists here at Bank for America Securities with

708
00:32:23,960 --> 00:32:26,240
Speaker 2: this to say, another cut in October maybe on the

709
00:32:26,240 --> 00:32:29,200
Speaker 2: table if the labor market were to weaken significantly further,

710
00:32:29,560 --> 00:32:32,320
Speaker 2: but it isn't our base case. A DT joint us

711
00:32:32,320 --> 00:32:33,280
Speaker 2: now for more at each and.

712
00:32:33,320 --> 00:32:35,200
Speaker 4: Monk, good morning, Thank you for having me.

713
00:32:35,360 --> 00:32:36,600
Speaker 7: Thank you for having us.

714
00:32:36,720 --> 00:32:39,400
Speaker 2: Twenty five bases point cut expected later on this afternoon.

715
00:32:39,560 --> 00:32:41,840
Speaker 2: How much guidance can they provide beyond just that?

716
00:32:42,320 --> 00:32:44,360
Speaker 9: I think that's going to be the key question. What

717
00:32:44,440 --> 00:32:46,840
Speaker 9: does the dark blot show? So our base case is

718
00:32:46,880 --> 00:32:49,960
Speaker 9: that the dark blood medion will show only fifty basis

719
00:32:49,960 --> 00:32:53,200
Speaker 9: points of cuts this year, so another twenty five potentially

720
00:32:53,240 --> 00:32:53,760
Speaker 9: in December.

721
00:32:53,760 --> 00:32:54,880
Speaker 7: And the reason we think that it.

722
00:32:54,840 --> 00:32:57,560
Speaker 9: Will only be fifty rather than seventy five is that

723
00:32:57,600 --> 00:33:00,720
Speaker 9: if you look at the macro forecasts from the June

724
00:33:00,840 --> 00:33:04,600
Speaker 9: SEP they've actually aged remarkably well. Unemployment is on track

725
00:33:04,640 --> 00:33:07,320
Speaker 9: to meet their forecast, so as inflation and growth, if anything,

726
00:33:07,360 --> 00:33:09,800
Speaker 9: will come in a little bit stronger. Obviously, you've already

727
00:33:09,800 --> 00:33:12,480
Speaker 9: heard a lot about the risks of reacceleration here.

728
00:33:12,880 --> 00:33:14,520
Speaker 4: So given that, and.

729
00:33:14,480 --> 00:33:17,360
Speaker 9: Given that the dot plot medium almost showed one cut

730
00:33:17,520 --> 00:33:19,880
Speaker 9: back in June, even a little bit of a dubbish

731
00:33:19,880 --> 00:33:21,560
Speaker 9: move would still probably keep it at two.

732
00:33:21,880 --> 00:33:24,400
Speaker 5: You talk about a dubvish move, there's a question about

733
00:33:24,440 --> 00:33:27,600
Speaker 5: the actual cut or the signal going forward, not just

734
00:33:27,600 --> 00:33:29,960
Speaker 5: the signal and number of rate cuts. But something Mark

735
00:33:29,960 --> 00:33:32,720
Speaker 5: Cabanni or colleague talked about earlier was the idea of

736
00:33:32,720 --> 00:33:37,000
Speaker 5: the third mandate, the idea of keeping rates moderate over

737
00:33:37,040 --> 00:33:39,160
Speaker 5: a longer period of time as one of the three

738
00:33:39,200 --> 00:33:42,239
Speaker 5: pillars of the federals or if that were adopted, how

739
00:33:42,320 --> 00:33:44,720
Speaker 5: much would that change your outlook as an economist.

740
00:33:45,200 --> 00:33:48,880
Speaker 9: So moderate is not a clearly defined term, So we'll

741
00:33:48,880 --> 00:33:53,200
Speaker 9: have to see if going forward, potentially different group of

742
00:33:53,200 --> 00:33:55,520
Speaker 9: people at the FED have a different have a more

743
00:33:55,560 --> 00:33:59,080
Speaker 9: specific definition of moderate. But for now, what I see

744
00:33:59,280 --> 00:34:01,640
Speaker 9: is an eon me that's probably pretty close to the

745
00:34:01,680 --> 00:34:04,240
Speaker 9: neutral rate. You look at where stocks are, you look

746
00:34:04,280 --> 00:34:06,320
Speaker 9: at the fact that productivity might be picking up, and

747
00:34:06,360 --> 00:34:08,000
Speaker 9: I don't think there is a clear case here that

748
00:34:08,040 --> 00:34:09,760
Speaker 9: the economy is screaming for rate cuts.

749
00:34:09,840 --> 00:34:12,480
Speaker 5: If that's the case, why is an inflation more of

750
00:34:12,520 --> 00:34:15,200
Speaker 5: a concern, Why aren't we seeing that baked into market

751
00:34:15,239 --> 00:34:18,239
Speaker 5: expectations just a bit more so, you are.

752
00:34:18,239 --> 00:34:21,960
Speaker 9: Actually seeing inflation fixings showing a little bit of a

753
00:34:21,960 --> 00:34:24,600
Speaker 9: pickup in inflation. Our core view has been that it's

754
00:34:24,680 --> 00:34:29,200
Speaker 9: not just about trade policy, it's also about underlying inflation,

755
00:34:29,239 --> 00:34:32,520
Speaker 9: and underlying inflation for US is stuck around two and

756
00:34:32,520 --> 00:34:34,640
Speaker 9: a half percent, and we think it'll remain that way

757
00:34:34,680 --> 00:34:37,280
Speaker 9: going forward, which is why even as the tariff effects

758
00:34:37,360 --> 00:34:39,160
Speaker 9: roll off next year, we only have the core PC

759
00:34:39,360 --> 00:34:40,720
Speaker 9: going down to two point six percent.

760
00:34:40,960 --> 00:34:43,759
Speaker 2: There was quite a difference between July chair pal and

761
00:34:43,880 --> 00:34:46,319
Speaker 2: Jackson holl chair pal, and understand it was a big

762
00:34:46,360 --> 00:34:48,719
Speaker 2: payroll report in between, but it was a difference in

763
00:34:48,760 --> 00:34:50,680
Speaker 2: approach and how we anchored his view around the labor

764
00:34:50,760 --> 00:34:53,439
Speaker 2: market that got my attention. He anchored his view around

765
00:34:53,480 --> 00:34:56,040
Speaker 2: the labor market, around the unemployment right in July, and

766
00:34:56,080 --> 00:34:58,239
Speaker 2: then we got to Jackson Holl and clearly he was

767
00:34:58,400 --> 00:35:01,640
Speaker 2: spoot by a step down in payrolls growth. You've been

768
00:35:01,640 --> 00:35:04,080
Speaker 2: focused on measures of slack and now traditionally that's something

769
00:35:04,080 --> 00:35:07,480
Speaker 2: the feder Reserve monetary policy makers would be focused on too.

770
00:35:07,800 --> 00:35:11,240
Speaker 2: Have you seen a significant deterioration in measures of slack

771
00:35:11,320 --> 00:35:14,840
Speaker 2: alongside this monster step down we've seen in payrolls growth.

772
00:35:15,080 --> 00:35:17,960
Speaker 9: So what Powell said in July, which was viewed as

773
00:35:18,040 --> 00:35:21,520
Speaker 9: very hawkish by markets, was that even if payrold growth

774
00:35:21,560 --> 00:35:24,560
Speaker 9: is zero, if the unemployment rate isn't increasing, then that's

775
00:35:24,600 --> 00:35:26,600
Speaker 9: where break even is and the FED doesn't really need

776
00:35:26,640 --> 00:35:27,440
Speaker 9: to be concerned about that.

777
00:35:27,480 --> 00:35:28,920
Speaker 4: And what we wrote at the.

778
00:35:28,960 --> 00:35:32,239
Speaker 9: Time was it's one thing to say it, and it's

779
00:35:32,280 --> 00:35:34,680
Speaker 9: another thing to walk the talk when you actually see

780
00:35:34,680 --> 00:35:37,360
Speaker 9: the data and that number, that two hundred and fifty

781
00:35:37,400 --> 00:35:39,640
Speaker 9: eight thousand downward revision, I think.

782
00:35:39,520 --> 00:35:40,400
Speaker 4: It's spooked the FED.

783
00:35:41,040 --> 00:35:44,720
Speaker 9: And yes, there's been some deterioration and signs of labor slack.

784
00:35:44,800 --> 00:35:49,080
Speaker 9: You can look at the ratio of vacancies to unemployed workers,

785
00:35:49,200 --> 00:35:51,360
Speaker 9: you can look at the labor market differential from the

786
00:35:51,360 --> 00:35:54,160
Speaker 9: conference board. All of those are showing some increase in slack,

787
00:35:54,239 --> 00:35:55,920
Speaker 9: but it's been relatively modern.

788
00:35:56,120 --> 00:35:57,040
Speaker 7: Spook them into one.

789
00:35:57,360 --> 00:36:00,320
Speaker 2: I think that's what we're wrestling with today, to a

790
00:36:00,400 --> 00:36:03,799
Speaker 2: twenty five basis point risk management decision, or spoke them

791
00:36:03,840 --> 00:36:06,719
Speaker 2: into We need to come out and convey to market

792
00:36:06,800 --> 00:36:09,800
Speaker 2: participants today that this is the journey back towards neutral

793
00:36:10,120 --> 00:36:12,439
Speaker 2: and We think neutral is around three, and we're looking

794
00:36:12,480 --> 00:36:13,200
Speaker 2: to get there quickly.

795
00:36:14,080 --> 00:36:16,040
Speaker 9: The Committee is going to be divided on that question,

796
00:36:16,480 --> 00:36:19,280
Speaker 9: and the key question that will hat to answered today

797
00:36:19,480 --> 00:36:22,280
Speaker 9: is where does powel land. Is he on the side

798
00:36:22,440 --> 00:36:23,960
Speaker 9: of we need to do a little bit, but we

799
00:36:24,000 --> 00:36:25,520
Speaker 9: don't need to do a lot, or is he on

800
00:36:25,600 --> 00:36:27,279
Speaker 9: the side of we need to go all the way

801
00:36:27,320 --> 00:36:30,040
Speaker 9: back to neutral. We're in the first camp, but we'll

802
00:36:30,120 --> 00:36:30,960
Speaker 9: learn more today.

803
00:36:31,239 --> 00:36:33,839
Speaker 5: How much are you going to take true signal from

804
00:36:33,880 --> 00:36:36,400
Speaker 5: whatever Governor Myron has to say? How much is he

805
00:36:36,600 --> 00:36:39,800
Speaker 5: the new loadstar in some ways of the committee in

806
00:36:39,840 --> 00:36:41,879
Speaker 5: twenty twenty six, if not today.

807
00:36:42,080 --> 00:36:44,840
Speaker 9: I think it'll depend on how much the committee changes

808
00:36:44,920 --> 00:36:48,040
Speaker 9: next year. That's still an open question. We don't know

809
00:36:48,120 --> 00:36:50,680
Speaker 9: how many seats will be available on the board, we

810
00:36:50,760 --> 00:36:53,080
Speaker 9: don't know how much turnover potentially they'll be amongst the

811
00:36:53,120 --> 00:36:55,600
Speaker 9: regional presidents, So that's I would say, very much an

812
00:36:55,680 --> 00:36:58,160
Speaker 9: open question. But for this meeting, we know that Governor

813
00:36:58,200 --> 00:36:58,840
Speaker 9: Myron will.

814
00:36:58,719 --> 00:37:00,840
Speaker 7: Be an outlier stay with us.

815
00:37:01,239 --> 00:37:13,600
Speaker 2: More Bloomberg surveillance coming up after this. I'm pleased to say.

816
00:37:13,600 --> 00:37:16,240
Speaker 2: They were joined by Bank of America's newly appointed co president,

817
00:37:16,560 --> 00:37:17,960
Speaker 2: Jim Demard, Jim's good to see you.

818
00:37:18,160 --> 00:37:18,680
Speaker 4: Great to see you.

819
00:37:18,760 --> 00:37:20,960
Speaker 2: Is it Jim or Jimmy? I'm always confused. Brian called

820
00:37:20,960 --> 00:37:22,600
Speaker 2: you Jimmy. You can call me whatever you were gone

821
00:37:22,600 --> 00:37:27,440
Speaker 2: with Jim either either's either's a more than an except Jimmy. Congratulations, congratulates,

822
00:37:27,480 --> 00:37:29,600
Speaker 2: Thanks very much, appreciate. It's fantastic to get some time

823
00:37:29,640 --> 00:37:31,440
Speaker 2: with you. I want to shout by talking about markets

824
00:37:31,440 --> 00:37:34,279
Speaker 2: before we talk about the operations stuff. I've lost count

825
00:37:34,320 --> 00:37:35,880
Speaker 2: of how many quarters that you've seen growth in the

826
00:37:35,880 --> 00:37:36,440
Speaker 2: market's unit?

827
00:37:36,480 --> 00:37:37,040
Speaker 7: What are we on now?

828
00:37:39,239 --> 00:37:42,960
Speaker 10: Thirteen as of the lasts of the second quarter earnings

829
00:37:43,000 --> 00:37:43,600
Speaker 10: are coming soon.

830
00:37:44,719 --> 00:37:47,040
Speaker 4: We have to wait till those come out.

831
00:37:47,120 --> 00:37:49,919
Speaker 10: But you know, we indicated at the Barclays conference last

832
00:37:49,920 --> 00:37:53,120
Speaker 10: week and when Brian's woke before, you know, in single

833
00:37:53,160 --> 00:37:56,279
Speaker 10: digits for the market. So knock on wood, we should

834
00:37:56,320 --> 00:37:57,640
Speaker 10: be u we should be at fourteen.

835
00:37:57,800 --> 00:38:00,279
Speaker 7: Where's that growth coming from? And just how crazy? See

836
00:38:00,880 --> 00:38:02,960
Speaker 7: was the start a Q two yeah, twenty five?

837
00:38:03,160 --> 00:38:03,359
Speaker 4: Yeah.

838
00:38:03,400 --> 00:38:06,399
Speaker 10: I think for us it's been a story of having

839
00:38:06,400 --> 00:38:09,920
Speaker 10: the additional financial resources to help clients execute one on

840
00:38:10,000 --> 00:38:12,680
Speaker 10: what they want to execute because markets have grown considerably

841
00:38:12,760 --> 00:38:16,160
Speaker 10: in size and market value, and taking a step back

842
00:38:16,200 --> 00:38:18,160
Speaker 10: from that. For us, our equities business, it's been a

843
00:38:18,239 --> 00:38:20,400
Speaker 10: huge focus for us the past four years, investments in

844
00:38:20,880 --> 00:38:24,600
Speaker 10: you know, financial resources plus people plus technology, and then

845
00:38:24,800 --> 00:38:27,680
Speaker 10: you know, within the thick kind of sector, if you will,

846
00:38:29,880 --> 00:38:31,919
Speaker 10: the rates business has been a place where we haven't

847
00:38:31,960 --> 00:38:34,480
Speaker 10: done as well as we think we can, and we've

848
00:38:34,520 --> 00:38:35,719
Speaker 10: seen it turn around there as well.

849
00:38:35,920 --> 00:38:38,200
Speaker 5: Maybe the FED will help you out, especially today.

850
00:38:38,680 --> 00:38:43,000
Speaker 10: A lot of anticipation, as you mentioned, you know, great

851
00:38:43,080 --> 00:38:45,719
Speaker 10: deal of variance in terms of not necessarily this meeting

852
00:38:45,800 --> 00:38:48,200
Speaker 10: but you know with the next six to ten months

853
00:38:48,239 --> 00:38:48,680
Speaker 10: brings us.

854
00:38:49,000 --> 00:38:50,560
Speaker 5: John alluded to it, and I think it's a really

855
00:38:50,600 --> 00:38:54,440
Speaker 5: important point. There's a tension between this push for the

856
00:38:54,520 --> 00:38:58,640
Speaker 5: FED to ease financial conditions given the fact that financial conditions,

857
00:38:58,920 --> 00:39:01,160
Speaker 5: at least you could probably tell us what other people

858
00:39:01,200 --> 00:39:03,440
Speaker 5: have told us, seem pretty easy. Yes, they seem like

859
00:39:03,520 --> 00:39:05,920
Speaker 5: pretty flowing and people can go out more money if

860
00:39:05,960 --> 00:39:06,320
Speaker 5: they need to.

861
00:39:06,480 --> 00:39:07,799
Speaker 7: Can you square that circle for us?

862
00:39:08,560 --> 00:39:09,799
Speaker 10: You know, I think what we've done a very poor

863
00:39:09,920 --> 00:39:14,560
Speaker 10: job of is talking about financial conditions based on size

864
00:39:14,600 --> 00:39:18,640
Speaker 10: of companies or you know, individuals themselves. We've broken it down,

865
00:39:18,840 --> 00:39:21,439
Speaker 10: you know, you had Liz on this morning. We're talking

866
00:39:21,440 --> 00:39:25,480
Speaker 10: about small business and what's going on there, you know,

867
00:39:25,600 --> 00:39:28,200
Speaker 10: smaller businesses and on the lower end of the economic

868
00:39:29,920 --> 00:39:32,000
Speaker 10: kind of scale, if you will. For individuals, they're more

869
00:39:32,040 --> 00:39:36,960
Speaker 10: sensitive to short term rates in floating rates. So yeah,

870
00:39:36,960 --> 00:39:40,040
Speaker 10: if you're a large corporation, you've been you've had you know,

871
00:39:40,160 --> 00:39:42,880
Speaker 10: easy access to the markets have been very favorable. You issued,

872
00:39:43,080 --> 00:39:45,319
Speaker 10: you know, you refinanced that back in twenty twenty one,

873
00:39:45,800 --> 00:39:49,000
Speaker 10: and you locked in some very low rates. Homeowners did

874
00:39:49,040 --> 00:39:51,560
Speaker 10: the same, you know, mortgage rates were below you know,

875
00:39:51,719 --> 00:39:56,200
Speaker 10: three percent. And again if you were you know, if

876
00:39:56,239 --> 00:39:59,040
Speaker 10: you're a smaller business and you relied on floating rate

877
00:39:59,080 --> 00:40:01,360
Speaker 10: det and you don't have access to the broader capital markets,

878
00:40:01,400 --> 00:40:03,799
Speaker 10: this will be a relief. So I think, I think

879
00:40:03,840 --> 00:40:05,319
Speaker 10: that's a story that people should focus.

880
00:40:05,400 --> 00:40:07,560
Speaker 5: So I guess another way of saying this is when

881
00:40:07,600 --> 00:40:10,080
Speaker 5: the Fed started hiking rates, people are surprised at the

882
00:40:10,160 --> 00:40:13,600
Speaker 5: economy can just tumble into recession. Are we going to

883
00:40:13,680 --> 00:40:17,520
Speaker 5: be surprised by if the Fed cuts rates how little

884
00:40:17,880 --> 00:40:20,160
Speaker 5: it helps boost growth or do you think that it

885
00:40:20,160 --> 00:40:22,279
Speaker 5: will boost growth substantially, that we will see m and

886
00:40:22,320 --> 00:40:24,760
Speaker 5: a pick back up, that we will see borrowing increase

887
00:40:25,080 --> 00:40:25,600
Speaker 5: even more.

888
00:40:26,000 --> 00:40:27,960
Speaker 10: I think we're going to have to again bifurcate it

889
00:40:28,040 --> 00:40:29,880
Speaker 10: and take a look at different parts of the economy

890
00:40:29,920 --> 00:40:32,279
Speaker 10: and see who's benefiting. But your partner, you know, point

891
00:40:32,360 --> 00:40:36,400
Speaker 10: on MNA and activity. For all the pessimism and climbing

892
00:40:36,400 --> 00:40:38,960
Speaker 10: the wall of worry, I don't you know, there's a

893
00:40:39,000 --> 00:40:41,520
Speaker 10: lot of activity happening across a lot of sectors, whether

894
00:40:41,600 --> 00:40:46,240
Speaker 10: it's you know, tech, energy, utilities, power, you know, data,

895
00:40:46,800 --> 00:40:48,800
Speaker 10: financial services. We just saw you know, in M and

896
00:40:48,840 --> 00:40:51,040
Speaker 10: A activity and you know there's more discussions on that.

897
00:40:52,080 --> 00:40:54,560
Speaker 4: Healthcare, I don't know.

898
00:40:54,880 --> 00:40:58,360
Speaker 10: Equity prices are high, credits how suficed, and people and

899
00:40:58,440 --> 00:40:59,439
Speaker 10: companies are making money.

900
00:40:59,560 --> 00:41:01,520
Speaker 2: So where on earth are we going? The Fed's about

901
00:41:01,560 --> 00:41:04,399
Speaker 2: to reduce the whole thing. How are you thinking about things?

902
00:41:04,480 --> 00:41:06,480
Speaker 2: You've seen so many cycles?

903
00:41:06,680 --> 00:41:07,160
Speaker 4: What is this?

904
00:41:07,600 --> 00:41:09,840
Speaker 7: What is this moment? Very spooed period.

905
00:41:09,920 --> 00:41:12,600
Speaker 10: It's a very different one, that's for sure. There's some

906
00:41:12,719 --> 00:41:15,680
Speaker 10: information we put out recently that showed when the FED

907
00:41:15,800 --> 00:41:18,080
Speaker 10: is cut almost every I think it's been every single time,

908
00:41:18,120 --> 00:41:21,040
Speaker 10: and I don't remember the exact number, but into a

909
00:41:21,120 --> 00:41:24,279
Speaker 10: strong kind of equity market, we continue to get a

910
00:41:24,360 --> 00:41:25,800
Speaker 10: rally for the next twelve months.

911
00:41:26,640 --> 00:41:27,719
Speaker 4: So that's there.

912
00:41:28,000 --> 00:41:30,680
Speaker 7: At least, But can I just push this point.

913
00:41:30,920 --> 00:41:33,080
Speaker 2: I want to understand from your perspective, whether it's something

914
00:41:33,520 --> 00:41:36,600
Speaker 2: more than that, whether some kind of great misallocation of

915
00:41:36,680 --> 00:41:40,479
Speaker 2: resources is building care. I can't think of many times

916
00:41:40,520 --> 00:41:43,200
Speaker 2: where I've met investors who are incredibly aggressive about the

917
00:41:43,239 --> 00:41:45,960
Speaker 2: capex spend of a handful of companies. Yes, it's sent

918
00:41:46,040 --> 00:41:48,640
Speaker 2: the equity markets to all time highs, and the Federal

919
00:41:48,640 --> 00:41:51,040
Speaker 2: Reserve again is about to come out later on this

920
00:41:51,200 --> 00:41:54,320
Speaker 2: afternoon and duce the whole thing by even more potentially.

921
00:41:54,360 --> 00:41:56,960
Speaker 7: I understand what they're responding to. It's the payroll story.

922
00:41:57,200 --> 00:41:59,719
Speaker 2: I want to understand the consequences from a market perspective,

923
00:42:00,239 --> 00:42:02,359
Speaker 2: just how dicey things might get further down the road.

924
00:42:03,640 --> 00:42:05,520
Speaker 10: Again, I think you, I think we have to see

925
00:42:05,560 --> 00:42:08,279
Speaker 10: a considerable drop in longer term rates to really get

926
00:42:08,360 --> 00:42:12,040
Speaker 10: that traditional impact. You know, we had an inverted curve

927
00:42:12,120 --> 00:42:14,600
Speaker 10: for an extended period of time, which everybody indicated should

928
00:42:15,120 --> 00:42:19,000
Speaker 10: should indicate a weakening economy, which we which we didn't see.

929
00:42:19,800 --> 00:42:23,839
Speaker 10: Into your earlier question, I don't think we ever had

930
00:42:23,880 --> 00:42:29,359
Speaker 10: in history fiscal and monetary possible policy at odds.

931
00:42:29,160 --> 00:42:29,920
Speaker 4: And that's what we had.

932
00:42:29,960 --> 00:42:31,799
Speaker 10: I mean, everybody talked about, well rates are four hundred

933
00:42:31,840 --> 00:42:34,280
Speaker 10: basis points. Well, you know, we also had the largest

934
00:42:34,280 --> 00:42:38,520
Speaker 10: spend by the federal government, you know, in history, not

935
00:42:38,640 --> 00:42:40,960
Speaker 10: only an absolute dollars, but as a percentage of the economy.

936
00:42:41,040 --> 00:42:43,000
Speaker 4: So the policies weren't aligned.

937
00:42:43,200 --> 00:42:45,279
Speaker 10: That's a that's a We talked about it a bit,

938
00:42:45,480 --> 00:42:48,719
Speaker 10: then you know, two years later, three years later, we're

939
00:42:48,760 --> 00:42:50,640
Speaker 10: talking less about it. But I think it's going to

940
00:42:50,680 --> 00:42:52,799
Speaker 10: be you know, is this going to be inflation area.

941
00:42:52,800 --> 00:42:54,880
Speaker 10: I think people have to also think about fiscal policy

942
00:42:54,920 --> 00:42:57,040
Speaker 10: and what's going to happen there relative to what the

943
00:42:57,080 --> 00:42:58,080
Speaker 10: monetary policy is.

944
00:42:58,320 --> 00:43:01,719
Speaker 5: There's also the idea of doria, which se quite a

945
00:43:01,760 --> 00:43:03,400
Speaker 5: bit and that's one reason why people have been very

946
00:43:03,440 --> 00:43:06,640
Speaker 5: optimistic banking space. Does that allow you to take more

947
00:43:06,719 --> 00:43:09,279
Speaker 5: risk and compete more significantly, say with some of the

948
00:43:09,320 --> 00:43:12,839
Speaker 5: private asset managers that have really made more headway into

949
00:43:12,880 --> 00:43:13,799
Speaker 5: the space. Yeah.

950
00:43:13,840 --> 00:43:16,240
Speaker 10: I think for us on the and for the industry

951
00:43:16,640 --> 00:43:18,680
Speaker 10: on regulation, it's more about clarity, which is one of

952
00:43:18,760 --> 00:43:20,880
Speaker 10: the things that you know, we've talked about a great bit,

953
00:43:20,920 --> 00:43:25,239
Speaker 10: whether it's stress testing, some things on slr G, SIB,

954
00:43:25,640 --> 00:43:28,040
Speaker 10: you know, those are all things that I think play

955
00:43:28,080 --> 00:43:31,800
Speaker 10: an important role in regulation, you know, in a safe environment,

956
00:43:31,920 --> 00:43:33,480
Speaker 10: but you know a lot of questions around where they

957
00:43:34,120 --> 00:43:38,160
Speaker 10: uh too restrictive and you know, countpounding as opposed to

958
00:43:38,560 --> 00:43:41,160
Speaker 10: kind of catching the bubble from or the balloon from

959
00:43:41,160 --> 00:43:44,239
Speaker 10: squeezing out in another direction, I.

960
00:43:44,360 --> 00:43:49,200
Speaker 4: Think one of the one of the and the broader economy.

961
00:43:49,920 --> 00:43:52,000
Speaker 10: I think there's a lot of regulation that's occurred that

962
00:43:52,160 --> 00:43:57,160
Speaker 10: we're less familiar with because we're not in that environment.

963
00:43:57,200 --> 00:44:00,560
Speaker 10: But if you go across the country in many industries,

964
00:44:00,920 --> 00:44:04,680
Speaker 10: the excitement is around less regulation there. I think it's

965
00:44:04,719 --> 00:44:07,120
Speaker 10: going to be less about us, quite frankly, and more

966
00:44:07,200 --> 00:44:09,000
Speaker 10: about for the broader economy.

967
00:44:09,160 --> 00:44:11,520
Speaker 5: I wonder how much we keep talking about the dollar

968
00:44:11,600 --> 00:44:13,600
Speaker 5: as the backdrop here and how much it's been weakening.

969
00:44:13,640 --> 00:44:16,560
Speaker 5: And I wonder for you, as the head of capital

970
00:44:16,600 --> 00:44:19,080
Speaker 5: market is the co president of a bank that has

971
00:44:19,160 --> 00:44:22,759
Speaker 5: America in its name, how much more difficult it is

972
00:44:22,840 --> 00:44:25,680
Speaker 5: for you to compete globally at a time where there's

973
00:44:25,719 --> 00:44:30,200
Speaker 5: a real question about US policy, about the dollar and

974
00:44:30,320 --> 00:44:32,680
Speaker 5: about what the relationship is going to be.

975
00:44:32,840 --> 00:44:35,839
Speaker 10: Yeah, it's certainly, you know, it's certainly a topic meaning

976
00:44:35,880 --> 00:44:38,640
Speaker 10: the dollar. You know, we're a global business, Yes we are.

977
00:44:39,120 --> 00:44:40,840
Speaker 10: You know, we are Bank of America. We have a

978
00:44:40,920 --> 00:44:43,680
Speaker 10: dominant position in the US. We've grown our you know,

979
00:44:43,840 --> 00:44:46,279
Speaker 10: international business, which I didn't highlight what we're talking about

980
00:44:46,280 --> 00:44:48,480
Speaker 10: areas of growth, but international is a focus for us,

981
00:44:48,600 --> 00:44:51,239
Speaker 10: not expanding beyond where we are, but just being more

982
00:44:51,320 --> 00:44:53,600
Speaker 10: meaningful in the in the regions that we are. And

983
00:44:53,800 --> 00:44:55,000
Speaker 10: you know, we just look at it and say, we

984
00:44:55,040 --> 00:44:57,759
Speaker 10: have global capabilities and you know we can, we can

985
00:44:57,840 --> 00:45:00,920
Speaker 10: transact and you know, where house risk where we need

986
00:45:01,000 --> 00:45:03,880
Speaker 10: to you know, for clients one of the big I

987
00:45:04,000 --> 00:45:08,799
Speaker 10: think misunderstandings or or where it's not thought through enough.

988
00:45:10,719 --> 00:45:14,799
Speaker 10: It's going to take some considerable time for this to occur.

989
00:45:15,080 --> 00:45:16,680
Speaker 10: You know, we're looking at you know, weakness and dollars

990
00:45:16,719 --> 00:45:19,479
Speaker 10: ten percent, fifteen percent versus you know, versus its peak.

991
00:45:20,800 --> 00:45:25,680
Speaker 10: We're still the largest capital markets to invest in.

992
00:45:27,680 --> 00:45:29,000
Speaker 4: And you just have to keep that in mind.

993
00:45:29,440 --> 00:45:31,640
Speaker 2: I want to finish by talking about you. Yeah, you've

994
00:45:31,680 --> 00:45:33,520
Speaker 2: had a pretty ti remit for quite a while.

995
00:45:33,719 --> 00:45:33,919
Speaker 4: Yeah.

996
00:45:34,000 --> 00:45:36,359
Speaker 2: Are you excited about the prospect of stretching your legs

997
00:45:36,360 --> 00:45:38,680
Speaker 2: a little bit having a look at other business lines?

998
00:45:39,000 --> 00:45:39,200
Speaker 4: Yeah?

999
00:45:39,360 --> 00:45:41,520
Speaker 10: I mean, you know, I've been in the market's business

1000
00:45:41,600 --> 00:45:44,480
Speaker 10: thirty five years in different capacity. But I've always had

1001
00:45:44,600 --> 00:45:46,920
Speaker 10: interaction across the firm, whether it's been investment banking or

1002
00:45:46,960 --> 00:45:49,440
Speaker 10: corporate banking or whatever it may be. And I think

1003
00:45:49,480 --> 00:45:51,600
Speaker 10: if you take a look at you know, these areas

1004
00:45:51,600 --> 00:45:53,640
Speaker 10: of where there's Brian talked about organic growth and where

1005
00:45:53,680 --> 00:45:56,680
Speaker 10: we can do it, I think there's there's some considerable

1006
00:45:56,719 --> 00:46:00,000
Speaker 10: opportunity for us to be more consistent in our delivery.

1007
00:46:00,239 --> 00:46:02,279
Speaker 10: You know, we did it in the markets business. Try

1008
00:46:02,280 --> 00:46:04,440
Speaker 10: I tried to de emphasize Fick versus equities and think

1009
00:46:04,480 --> 00:46:07,000
Speaker 10: about markets and how we how we can deliver for clients.

1010
00:46:07,040 --> 00:46:09,120
Speaker 10: And I just view this as an expansion you know

1011
00:46:09,200 --> 00:46:11,800
Speaker 10: of that and trying to help everybody bring that to

1012
00:46:11,960 --> 00:46:15,440
Speaker 10: fruition because you know, ideas are great, execution is everything.

1013
00:46:15,640 --> 00:46:18,759
Speaker 7: Does that mean spending less time with these guys, They're

1014
00:46:18,760 --> 00:46:19,239
Speaker 7: going to miss you.

1015
00:46:20,200 --> 00:46:24,760
Speaker 10: I'm going to miss it. I've said, I'm a trading

1016
00:46:24,760 --> 00:46:26,680
Speaker 10: floor for thirty five years. Yeah, you know, it's a

1017
00:46:26,719 --> 00:46:28,560
Speaker 10: great thing. It's been a great experience. It's given me

1018
00:46:28,600 --> 00:46:31,040
Speaker 10: a lot of opportunity. We have a lot of talented

1019
00:46:31,080 --> 00:46:33,879
Speaker 10: people that you know, as I said in the meeting

1020
00:46:33,920 --> 00:46:35,560
Speaker 10: we had earlier in the week, you know, I know

1021
00:46:35,600 --> 00:46:38,400
Speaker 10: everybody's saying congratulations. Now the next question is what about me,

1022
00:46:38,680 --> 00:46:40,440
Speaker 10: which is for everybody else in the room, what does

1023
00:46:40,480 --> 00:46:42,520
Speaker 10: this mean for me? And you know, we're gonna be

1024
00:46:42,520 --> 00:46:44,239
Speaker 10: making those decisions over the next couple of weeks. But

1025
00:46:44,320 --> 00:46:47,000
Speaker 10: we're pretty excited about it. Team's pretty excited about it,

1026
00:46:47,120 --> 00:46:48,719
Speaker 10: and response has been very good.

1027
00:46:49,800 --> 00:46:53,319
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1028
00:46:53,360 --> 00:46:56,640
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1029
00:46:56,760 --> 00:46:59,600
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1030
00:46:59,719 --> 00:47:03,520
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1031
00:47:03,719 --> 00:47:05,920
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1032
00:47:05,960 --> 00:47:08,359
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