WEBVTT - Bank Earnings Begin; Apple Makes Another AI Move

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, Radio News. Good morning, I'm Nathan

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<v Speaker 1>Hager and I'm Karen Moscow. Here are the stories we're

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<v Speaker 1>following today.

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<v Speaker 2>Karen, we kick off with earning season. We hear from

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<v Speaker 2>the first of the big banks today, JP Morgan, Chase, Citygroup,

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<v Speaker 2>and Wells Fargo All report. Bloomberg Wall Street correspondent Shanalie

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<v Speaker 2>Basic says inflation will affect the results.

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<v Speaker 3>On one hand, it's kept interest rates higher for longer,

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<v Speaker 3>and it's meant that potentially net interest income could come

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<v Speaker 3>in higher this year than initially expected. Investors will be

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<v Speaker 3>watching out for whether JP Morgan in particular will raise

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<v Speaker 3>or keep their guidance for net interest income. On the

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<v Speaker 3>other hand, inflation keeps costs high for these banks, and

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<v Speaker 3>the likes of Citygroup, Wells Fargo, and Bank of America

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<v Speaker 3>will be watched closely on how they're keeping a handle

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<v Speaker 3>on those costs and what it means for their head

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<v Speaker 3>count in New York. Shanali Basic Bloomberg.

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<v Speaker 1>Rat All right, chan Ellie, thank you. One other note

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<v Speaker 1>on the banking industry, Morgan Stanley dropped more than five

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<v Speaker 1>percent in a report. US regulators are scrutinizing the firm's

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<v Speaker 1>efforts to prevent potential money laundering by wealthy clients. The

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<v Speaker 1>Wall Street Journal says the security is in Exchange Commission,

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<v Speaker 1>the Office of the Controller of the Currency and other

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<v Speaker 1>Treasury Department of fishes are all looking into the issue.

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<v Speaker 1>Bloomberg Intelligences Elliott Stein says the investigation has been in

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<v Speaker 1>the works for some time.

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<v Speaker 4>We already knew from November that the Federal Reserve was

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<v Speaker 4>investigating Morgan Stanley on this very issue. This story suggests

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<v Speaker 4>that the probe is a little broader and other agencies

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<v Speaker 4>are looking to including the SEC, the ROCC and Sert's

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<v Speaker 4>you know it's more than just the Fed right now.

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<v Speaker 1>And Bloomberg's elliott Stein says. A Morgan Stanley spokesperson declined

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<v Speaker 1>to comment on the story.

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<v Speaker 5>Well Karen.

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<v Speaker 2>Economists at Deutsche Bank and Bank of America are commenting,

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<v Speaker 2>joining the growing crowd of forecasters dialing back expectations on

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<v Speaker 2>interest rate cuts in the US. Details on that from

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<v Speaker 2>Bloomberg's Charlie Pellett.

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<v Speaker 6>The move came after the consumer price index rows at

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<v Speaker 6>a faster than expected pace for a third straight month.

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<v Speaker 6>Strategists at Deutsche Bank and Bank of America now predict

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<v Speaker 6>that the Federal Reserve will ease policy just once this year,

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<v Speaker 6>in December. That is a sharp reduction in previous forecast

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<v Speaker 6>from both firms, which each previously saw the Federal Reserve

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<v Speaker 6>beginning to ease policy starting in June. In New York,

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<v Speaker 6>Charlie Pellett Bloomberg Radio.

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<v Speaker 1>All right, Charlie, thanks, We'll be head to Europe now.

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<v Speaker 1>After a mild recession, the UK economy grew for a

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<v Speaker 1>second month, and we get the latest from Bloomberg's Ewen

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<v Speaker 1>Pots in London ew.

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<v Speaker 7>Karenon Nathan UK GDP grew zero point one percent in February,

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<v Speaker 7>with January's figure revised up to an increase of zero

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<v Speaker 7>point three percent. Both manufacturing and services came in stronger

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<v Speaker 7>than expected. The construction was weaker, blamed on very wet weather.

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<v Speaker 7>The figures add to evidence the British economy is gathering

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<v Speaker 7>momentum after sliding into a shallow technical recession in the

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<v Speaker 7>second half.

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<v Speaker 4>Of last year.

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<v Speaker 7>In London, I'm you and pot Splinberg Radio, okay you.

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<v Speaker 5>And thank you.

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<v Speaker 2>Moving to the commodity sector, the mad rush into gold

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<v Speaker 2>continues Earlier this morning for the first time ever. Spot

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<v Speaker 2>gold rose above twenty four hundred dollars an ounce, heightened

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<v Speaker 2>Middle East tensions and the outlook from auditary policy of

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<v Speaker 2>fueled these gains. Other commodities are also on the move.

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<v Speaker 2>This morning, silver hit its highest level in more than

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<v Speaker 2>three years. Copper is at its best since June of

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<v Speaker 2>twenty twenty two.

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<v Speaker 1>Well, we're also keeping an eye on oil on Nathan

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<v Speaker 1>After a bearish new report on creude demand, the International

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<v Speaker 1>Energy Agency is cutting its forecast for this year and next,

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<v Speaker 1>predicting demand growth of just one point one million barrels

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<v Speaker 1>a day in twenty twenty five. That's about a million

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<v Speaker 1>less than the increased scene by opek. IA is also

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<v Speaker 1>warning that persistent Ukrainian drone attacks on Russian oil refineries

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<v Speaker 1>could disrupt the global market. Checking nimex crewede oil, it's

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<v Speaker 1>up one and a quarter percent. It's at eighty six

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<v Speaker 1>dollars eight cents a barrel, while Brent is it ninety

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<v Speaker 1>dollars sixty seven and sense well, this.

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<v Speaker 2>Can affect the oil market care and the Biden administration's

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<v Speaker 2>planning a sweeping effort to block Arctic drilling. More on

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<v Speaker 2>that from Bloomberg said Baxter.

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<v Speaker 8>A century ago, the US set aside twenty three million

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<v Speaker 8>acres of Alaska's North Slope to serve as an emergency

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<v Speaker 8>oil supply. Now, President Biden is moving to block any

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<v Speaker 8>oil and gas development across roughly half of it. The

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<v Speaker 8>administration says the effort will boost land conservation and fight

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<v Speaker 8>climate change. The oil industry says the plan is more

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<v Speaker 8>expansive than initially thought and will make it almost impossible

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<v Speaker 8>to build another megaproject in the region. The companies say

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<v Speaker 8>they have recently made large discoveries which would yield supplies

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<v Speaker 8>for decades to come. At Baxter Bloomberg Radio, All right.

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<v Speaker 1>Ed, thanks so. President Biden is also making another move

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<v Speaker 1>to tackle student debt. He's forgiving loans for about two

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<v Speaker 1>hundred and seventy seven thousand Americans, most of them enrolled

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<v Speaker 1>in the government's Safe program, which promises to cancel dead

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<v Speaker 1>after at least ten years of her payments. This move

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<v Speaker 1>will type away about seven point four billion dollars in

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<v Speaker 1>federal student debt. Earlier this week, President Biden announced a

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<v Speaker 1>plan B to forgive loans for more than twenty five

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<v Speaker 1>million borrowers. That move is likely to face court challenges.

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<v Speaker 2>In company news, Karen, Apple is preparing to overhaul its

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<v Speaker 2>entire Mac computer line with a new set of in

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<v Speaker 2>house processors designed to highlight artificial intelligence. Sources say. The

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<v Speaker 2>tech giants also nearing production of its next generation chip,

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<v Speaker 2>the M four processor. Bloomberg's Mark German says this news

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<v Speaker 2>is more to do with AI than the computers.

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<v Speaker 9>It's not necessarily the MAX themselves. Obviously, MAX are a

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<v Speaker 9>small portion of the overall revenue base for Apple on

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<v Speaker 9>an annual basis, something around ten percent, and I'm not

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<v Speaker 9>sure that any investor believes that's going to skyrocket to

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<v Speaker 9>doubling revenue or even going a third hire. I think

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<v Speaker 9>it's the focus on AI. I think that investors are

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<v Speaker 9>seeing that Apple's trying to push artificial intelligence to every

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<v Speaker 9>nook and cranny. It could across the company.

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<v Speaker 2>And bloom Grgsmark German says Apples aiming to release the

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<v Speaker 2>updated MAX beginning late this year and extending into early

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<v Speaker 2>next well.

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<v Speaker 1>Nathan Samsung is preparing to take the wraps off of

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<v Speaker 1>forty four billion dollar investment in US chip making as

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<v Speaker 1>soon as next week. It's a signature project in Washington's

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<v Speaker 1>broader effort to bring semiconductor production back to America. Sources

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<v Speaker 1>say the world's biggest memory chip maker plans to outline

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<v Speaker 1>the project in Texas alongside Commerce Secretary Gina Ramondo.

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<v Speaker 2>And welcome to the club. Amazon, the e commerce and

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<v Speaker 2>cloud computing giant, is trading at a record Amazon is

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<v Speaker 2>the last of the big five US tech firms to

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<v Speaker 2>reach an all time high in the rebound from the

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<v Speaker 2>post pandemic sell off. In a bid to win over investors,

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<v Speaker 2>Amazon is slashed costs and restructured its business. Its efforts

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<v Speaker 2>to streamline operations have helped to boost profits and win

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<v Speaker 2>over shareholders.

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<v Speaker 1>And it's time now for a look at some of

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<v Speaker 1>the other stories making news in New York and around

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<v Speaker 1>the world. And from that we're joined by Bloomberg's Michael Barr. Michael,

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<v Speaker 1>good morning, Good morning Karen.

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<v Speaker 5>Today the House will vote on reauthorizing the Foreign Intelligence

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<v Speaker 5>Surveillance Act. Earlier this week, House Republicans blocked FISA from

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<v Speaker 5>being renewed after former President Trump pressed them to kill it,

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<v Speaker 5>claiming it was used to spy on his campaign. Yesterday,

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<v Speaker 5>FBI Director Christopher Ray talked about ongoing threats the US

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<v Speaker 5>faces and urged Congress to renew it.

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<v Speaker 10>Failure to reauthorize seven two, or gutting it with some

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<v Speaker 10>new kind of warrant requirement would be dangerous and put Americans'

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<v Speaker 10>lives at risk.

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<v Speaker 5>FBI Director Ray testified at a House subcommittee hearing on

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<v Speaker 5>the fiscal year twenty twenty five budget requests for the bureau.

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<v Speaker 5>The NYPD has ramped up security around the courthouse where

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<v Speaker 5>jerry selection is set to start Monday in Manhattan. In

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<v Speaker 5>former President Donald Trump's hush money trial, the presumpt of

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<v Speaker 5>Republican presidential nominee as pleaded not guilty. The proceedings present

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<v Speaker 5>his historic challenge for the court and the lawyers, including

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<v Speaker 5>finding prospective jurors who can be impartial. Police. A part

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<v Speaker 5>of New York City will be frozen during the trial.

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<v Speaker 5>The death of O. J. Simpson reminded America about the

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<v Speaker 5>murder victims in the infamous case his ex wife, Nicole

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<v Speaker 5>Brown Simpson and her friend Ronald Goldman. Kat o'kaalin, Simpson's

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<v Speaker 5>former house guest, who served as a witness in the

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<v Speaker 5>nineteen ninety five murder trial, issued a video statement to.

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<v Speaker 11>The family of the beautiful Nicole Brown Simpson, May we

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<v Speaker 11>always cherish her memories. Nicole was a beacon of light

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<v Speaker 11>that burned bright. May we never forget her.

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<v Speaker 5>Meanwhile, Simpson died without having paid the lion's share of

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<v Speaker 5>thirty three point five million dollar judgment. The civil jury

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<v Speaker 5>in nineteen ninety seven awarded it to the families of

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<v Speaker 5>his ex wife and Goldman. The Goldman and Brown families

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<v Speaker 5>could be at the front of the line to get

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<v Speaker 5>paid whatever Simpson left behind. President Joe Biden has added

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<v Speaker 5>more China these companies and individuals to an export blacklist

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<v Speaker 5>than any US administration. The Commerce Department added six Chinese

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<v Speaker 5>companies to its entity list yesterday, bringing the tally of

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<v Speaker 5>new targets during the Biden administration to three hundred and nineteen.

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<v Speaker 5>Global News twenty four hours a day and whenever you

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<v Speaker 5>want it with the Bloomberg News Now Michael Barr and

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<v Speaker 5>this is Bloomberg Karen, all right.

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<v Speaker 1>Michael Barr, thank you, and it is time now for

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<v Speaker 1>the Bloomberg Sports Update with John stash Hour.

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<v Speaker 12>John, thanks Garrets by the early rain, they got most

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<v Speaker 12>of the Masters opening round in. There are some golfers,

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<v Speaker 12>including Tiger Woods. You need to come back early this

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<v Speaker 12>morning to finish it up before playing round two, Tiger

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<v Speaker 12>was steady one under part through thirteen holes, the leader

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<v Speaker 12>with a seven hundred and sixty five racing Deshambo.

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<v Speaker 13>It's always great getting off the hot start three under

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<v Speaker 13>through first three holes, kind of get you settled. I

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<v Speaker 13>knew it was going to be a tough day today

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<v Speaker 13>with the wind and even tomorrow, so a lot of

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<v Speaker 13>patient this is required around this golf course and making

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<v Speaker 13>sure you're just stroking it on your line, putting a

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<v Speaker 13>good hitting good iron shots and driving it well.

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<v Speaker 12>And he drives it farther than pretty much anyone. World

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<v Speaker 12>number one. Scottie Scheffler never seems to have a bad round.

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<v Speaker 12>He's one shot behind Rory McElroy, shot one under defending

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<v Speaker 12>champ John Rahm one over the Knicks in Boston, meaningless

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<v Speaker 12>game for the Celtics. They've clinched home court in the playoffs,

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<v Speaker 12>but they did use all their guys and the next

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<v Speaker 12>beat him easily, up by twenty nine going to the

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<v Speaker 12>fourth quarter of the final was one eighteen to one

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<v Speaker 12>oh nine. Jalen Brunson continues his scoring taar thirty nine points.

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<v Speaker 12>He scored thirty five or more and each to the

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<v Speaker 12>last five at the Garden in Philadelphia beat the Rangers

0:10:37.360 --> 0:10:37.839
<v Speaker 12>four to one.

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<v Speaker 5>At Ubs.

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<v Speaker 12>The Islanders now on the verge of making the playoffs

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<v Speaker 12>with a six win in a row, three two in

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<v Speaker 12>overtime over Montreal. Kyle Palmery the game when You Go

0:10:45.559 --> 0:10:48.319
<v Speaker 12>The Devil's won the Capitol's lost Day game for the Mets,

0:10:48.320 --> 0:10:51.120
<v Speaker 12>and in Atlanta, they scored seven runs in the first

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<v Speaker 12>three innings and nine more in the last three a

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<v Speaker 12>sixteen to four ro out of the Braves. Metsri five

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<v Speaker 12>and two. Since that zero to five started, Fenway the

0:10:58.480 --> 0:11:01.200
<v Speaker 12>Orioles with a six ron tenth Denny and Fit used

0:11:01.200 --> 0:11:03.240
<v Speaker 12>a sweep with the Red Sox nine to four. College

0:11:03.280 --> 0:11:07.840
<v Speaker 12>Hockey's frozen four semifinals saw BC shout out Michigan bu

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<v Speaker 12>who's an overtime with Denver BYU basketball coach Mark Pope,

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<v Speaker 12>who with a new coach at Kentucky who we played

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<v Speaker 12>for in the mid nineteen nineties, replaces John Calipari who

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<v Speaker 12>made the surprising move to Arkansas. John Stashedwer Bloomberg Sports, Karen.

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<v Speaker 1>Nathan all Right, John, thank you, and futures are mixed

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<v Speaker 1>s and p futures down a tenth of up percent

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<v Speaker 1>down futures up a tenth of up percent, Naw's day

0:11:29.160 --> 0:11:31.400
<v Speaker 1>futures down three tenths of up percent, and the ten

0:11:31.440 --> 0:11:34.040
<v Speaker 1>year treasury yield four point five four percent.

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<v Speaker 5>Coast to coast on Bloomberg Radio, nationwide on Sirius XM, and.

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<v Speaker 6>Around the world on Bloomberg dot Com and the Bloomberg

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<v Speaker 6>Business app.

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<v Speaker 5>This is Bloomberg Daybreak.

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<v Speaker 2>Good morning, I'm Nathan Hager, and we are getting ready

0:11:51.720 --> 0:11:54.280
<v Speaker 2>for the kickoff of first quarter earning season. The biggest

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<v Speaker 2>Wall Street banks start to open their books before the

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<v Speaker 2>opening bell. JP Morgan, Chase, City Group and Wells Fargo

0:12:00.960 --> 0:12:03.520
<v Speaker 2>will be first out the gate. Joining us now with

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<v Speaker 2>a preview is Bloomberg's Charlie Wells. Charlie, good morning, thanks

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<v Speaker 2>for being with us. Good morning, Thank you so much

0:12:09.080 --> 0:12:11.920
<v Speaker 2>for having me. Big day, Yeah, absolutely, it's a big day.

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<v Speaker 2>So much focus on what these higher for longer interest rates,

0:12:16.160 --> 0:12:19.360
<v Speaker 2>this prospect for them, is going to mean for these

0:12:19.440 --> 0:12:21.959
<v Speaker 2>banks net interest income outlook.

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<v Speaker 14>Net interest income, which that you know is the biggest

0:12:25.200 --> 0:12:27.160
<v Speaker 14>source of revenue for these banks, and what a lot

0:12:27.160 --> 0:12:31.080
<v Speaker 14>of executives have been saying late last year was that

0:12:31.120 --> 0:12:33.520
<v Speaker 14>they needed to kind of dampen expectations for the year

0:12:33.559 --> 0:12:36.720
<v Speaker 14>going ahead. But if we enter this world where rates

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<v Speaker 14>are higher for longer, what that could potentially mean is

0:12:39.440 --> 0:12:41.920
<v Speaker 14>that this crucial source of income for these banks could

0:12:41.920 --> 0:12:44.079
<v Speaker 14>be bigger than expected. So what I'm really watching for

0:12:44.200 --> 0:12:47.200
<v Speaker 14>is the potential guidance that some of these executives give.

0:12:47.600 --> 0:12:51.000
<v Speaker 14>Something else that's so important is investment banking revenue. So

0:12:51.040 --> 0:12:53.680
<v Speaker 14>we've heard so much about better news on M and A,

0:12:53.800 --> 0:12:56.720
<v Speaker 14>We've heard so much, you know, about more IPOs. Does

0:12:56.760 --> 0:12:59.040
<v Speaker 14>that translate into these earnings? I think those are two

0:12:59.160 --> 0:13:00.640
<v Speaker 14>key areas to folkocus on today.

0:13:00.679 --> 0:13:02.839
<v Speaker 2>And we did get a little bit of a preview

0:13:03.320 --> 0:13:06.440
<v Speaker 2>from Jamie Diamond, the CEO of JP Morgan Chase the

0:13:06.440 --> 0:13:09.880
<v Speaker 2>annual shareholder letter. A lot of the focus on artificial

0:13:09.960 --> 0:13:13.599
<v Speaker 2>intelligence makes you think about whether efficiencies are going to

0:13:13.679 --> 0:13:16.240
<v Speaker 2>come into play for a lot of these banks. When

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<v Speaker 2>you think about interest rates potentially adding to the costs

0:13:19.960 --> 0:13:22.640
<v Speaker 2>that some of these firms are facing, that's exactly right.

0:13:22.679 --> 0:13:25.160
<v Speaker 14>I mean, they are under so much pressure to show

0:13:25.200 --> 0:13:28.440
<v Speaker 14>that they've got expenses under control. They're under so much pressure,

0:13:28.760 --> 0:13:31.040
<v Speaker 14>you know, to show profitability, and you know, look, a

0:13:31.080 --> 0:13:33.640
<v Speaker 14>lot of the shares for these banks have been performing

0:13:33.679 --> 0:13:37.160
<v Speaker 14>really well. The narrative around them has been really popular. Actually,

0:13:37.240 --> 0:13:39.440
<v Speaker 14>the gains have been outperforming the broader s and P

0:13:39.600 --> 0:13:42.280
<v Speaker 14>five hundred and so if they can keep up that

0:13:42.520 --> 0:13:45.520
<v Speaker 14>story of you know, expenses under check, that could be

0:13:45.559 --> 0:13:48.360
<v Speaker 14>really positive for them. But also, you know, we've been

0:13:48.360 --> 0:13:51.440
<v Speaker 14>hearing some commentary about how AI could kind of dramatically

0:13:51.520 --> 0:13:54.520
<v Speaker 14>change the role of analysts about these banks, making it

0:13:54.559 --> 0:13:57.640
<v Speaker 14>more efficient, but as you say, also potentially less expensive.

0:13:58.360 --> 0:14:01.840
<v Speaker 2>And I got to wonder how much attention is going

0:14:01.880 --> 0:14:04.920
<v Speaker 2>to be later on this week on Morgan Stanley with

0:14:05.000 --> 0:14:10.160
<v Speaker 2>this report that its wealth unit is under federal regulatory investigation.

0:14:10.679 --> 0:14:12.520
<v Speaker 14>This is not the sort of news that they wanted

0:14:12.600 --> 0:14:16.400
<v Speaker 14>going into their earnings report. And so what we got

0:14:16.480 --> 0:14:20.320
<v Speaker 14>yesterday from a report in the Wall Street Journal was that,

0:14:20.680 --> 0:14:25.000
<v Speaker 14>you know, a broadening caudra of federal agencies are looking

0:14:25.080 --> 0:14:28.760
<v Speaker 14>into controls to prevent money laundering at Morgan Stanley. And

0:14:28.840 --> 0:14:31.160
<v Speaker 14>so we knew that the FED was looking into this,

0:14:31.680 --> 0:14:34.360
<v Speaker 14>but we what we have been learning is that, you know,

0:14:34.360 --> 0:14:37.040
<v Speaker 14>it is enough. It is a larger group of organizations,

0:14:37.080 --> 0:14:40.440
<v Speaker 14>including the SEC, the Office for the Comptroller, and several

0:14:40.720 --> 0:14:44.600
<v Speaker 14>Treasury offices. And the key question is did Morgan Stanley

0:14:44.680 --> 0:14:48.800
<v Speaker 14>do enough to investigate potentially risky clients. And you know,

0:14:49.040 --> 0:14:52.880
<v Speaker 14>wealth management has become a really important unit for not

0:14:52.920 --> 0:14:55.400
<v Speaker 14>just Morgan Stanley, but for all of these Wall Street banks.

0:14:55.400 --> 0:14:57.960
<v Speaker 14>And one of the big risks is how are you

0:14:58.080 --> 0:15:00.800
<v Speaker 14>looking after who you're letting in to do business with.

0:15:01.560 --> 0:15:04.160
<v Speaker 2>Got about thirty seconds left in terms of the banks

0:15:04.200 --> 0:15:06.960
<v Speaker 2>that are going to be reporting this morning. What is

0:15:07.200 --> 0:15:10.000
<v Speaker 2>the main focus that investors are looking at?

0:15:10.480 --> 0:15:13.280
<v Speaker 14>Yeah, so, you know, definitely net interest income, but also

0:15:13.360 --> 0:15:16.960
<v Speaker 14>investment banking. So we've got JP Morgan coming up, and

0:15:17.200 --> 0:15:19.640
<v Speaker 14>City Group and Wells Fargo, and I think another thing

0:15:19.680 --> 0:15:22.120
<v Speaker 14>that we should really watch out for huge story has

0:15:22.160 --> 0:15:26.640
<v Speaker 14>been commercial real estate. Now sixteen percent of Wells Fargo's

0:15:26.960 --> 0:15:29.960
<v Speaker 14>loan book is commercial real estate, So it'll be really

0:15:30.040 --> 0:15:33.120
<v Speaker 14>really telling to see how they report on that commercial

0:15:33.120 --> 0:15:36.200
<v Speaker 14>real estate front, which has been under so much stress lately.

0:15:36.880 --> 0:15:39.800
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