WEBVTT - US Consumer Sentiment Drops, Price Expectations Soar on Tariffs 0:00:02.520 --> 0:00:10.280 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business 0:00:10.280 --> 0:00:13.440 Week Insight from the reporters and editors that bring you 0:00:13.480 --> 0:00:18.400 America's most trusted business magazine, plus global business, finance and 0:00:18.480 --> 0:00:22.880 tech news. The Bloomberg Business Week Podcast with Carol Masser 0:00:23.079 --> 0:00:25.840 and Tim Stenebeck on Bloomberg Radio. 0:00:26.880 --> 0:00:29.320 Well, US consumer sentiment fell to a more than two 0:00:29.400 --> 0:00:32.559 year low, and long term inflation expectations jump by the 0:00:32.560 --> 0:00:35.960 most going back to nineteen ninety three. It does illustrate 0:00:35.960 --> 0:00:39.720 the growing apprehension about the economic impact from tariffs, the 0:00:39.760 --> 0:00:42.800 preliminary March Sentiment index dropping to fifty seven point nine. 0:00:42.840 --> 0:00:45.440 It's the lowest level going back to November of twenty 0:00:45.479 --> 0:00:49.040 twenty two, from sixty four a month earlier. That's according 0:00:49.040 --> 0:00:51.440 to the University of Michigan data issued on Friday that 0:00:51.479 --> 0:00:54.120 was sixty four point seven. That figure weaker than all 0:00:54.200 --> 0:00:56.680 estimates in a Bloomberg survey of economists. From where we 0:00:56.760 --> 0:01:00.440 bringing up Michael McKee's Bloomberg News International Economics and Policy correspondent. 0:01:00.480 --> 0:01:03.279 He joins us here in the Bloomberg BusinessWeek Studio. So, 0:01:03.360 --> 0:01:07.080 Michael McKee, consumers, it seems, are paying attention to what's 0:01:07.120 --> 0:01:10.679 coming out of Washington. I've often wondered if they follow 0:01:10.920 --> 0:01:14.000 all the stuff that we follow here in terms of 0:01:14.720 --> 0:01:18.680 tariff's trade war escalation. It seems like they're paying attention. 0:01:19.080 --> 0:01:21.200 It is one of the interesting aspects of this whole thing, 0:01:21.240 --> 0:01:24.560 because usually they don't pay attention to the details of anything, 0:01:25.000 --> 0:01:27.600 and really don't pay a lot of attention to much 0:01:27.680 --> 0:01:30.840 besides the things that touch their lives on a regular basis, 0:01:30.880 --> 0:01:35.000 like gasoline prices or food prices. And while they're generally 0:01:35.040 --> 0:01:38.400 aware that something's happening in Washington, they don't focus on it. 0:01:38.640 --> 0:01:41.959 And in the past we've seen government shutdowns don't move 0:01:42.040 --> 0:01:45.200 consumer confidence a whole lot speaking of something that is 0:01:45.240 --> 0:01:47.920 going to be news for you later this afternoon. But 0:01:48.320 --> 0:01:52.160 in this case, the whole tariff thing has broken through, 0:01:52.680 --> 0:01:55.640 and it's broken through in a very big way, because 0:01:55.880 --> 0:01:58.960 we've seen not just the sentiment numbers go down, but 0:01:59.040 --> 0:02:02.320 the inflation next spectation numbers go way, way up in 0:02:02.360 --> 0:02:05.280 a way we haven't well five to ten year inflation 0:02:05.680 --> 0:02:09.960 expectations at the thirty two year high. And why all 0:02:10.080 --> 0:02:13.240 this is I'm not really sure, because this is one 0:02:13.240 --> 0:02:15.519 of those situations where you go to the gas station 0:02:16.120 --> 0:02:17.960 and you've got to pay more money. It comes out 0:02:18.000 --> 0:02:20.400 of your wallet right now. But this is all theoretical 0:02:20.480 --> 0:02:23.960 down the road, but it has scared people, and now 0:02:24.000 --> 0:02:26.359 the question is are they going to act on it 0:02:26.720 --> 0:02:29.919 or is there something going to happen that will reassure them. 0:02:30.480 --> 0:02:31.960 We're all kind of up in the air about that. 0:02:32.680 --> 0:02:34.800 So how are we thinking about this with the FED 0:02:34.880 --> 0:02:38.120 meeting next week? Is this some expected? Was this that 0:02:38.160 --> 0:02:40.200 to expect when we think about consumer sentiment here? 0:02:40.560 --> 0:02:43.799 I don't think the magnitudes were expected. They had seen 0:02:43.880 --> 0:02:47.280 a rise in inflation expectations, and we've seen that in 0:02:47.360 --> 0:02:50.760 break evens in the market expectations as well, but nothing 0:02:50.840 --> 0:02:53.560 like we got today where one year inflation's seen at 0:02:53.560 --> 0:02:59.160 four point nine percent, and you know CPI headline CPI 0:02:59.480 --> 0:03:02.920 is two point eight percent now and then five to 0:03:03.000 --> 0:03:07.200 ten year inflation three point nine percent. That gets their attention. 0:03:07.560 --> 0:03:10.600 But because this is all theoretical and we haven't seen 0:03:10.639 --> 0:03:14.880 it yet translate into hard data, the FED is going 0:03:14.960 --> 0:03:18.240 to sit back and watch what's going on. They're not 0:03:18.240 --> 0:03:20.880 going to rush into cutting interest rates or anything like 0:03:20.919 --> 0:03:23.840 that until they have proof that this is affecting the economy. 0:03:23.919 --> 0:03:27.799 Well, okay, there was this interesting tidbit in the right 0:03:27.880 --> 0:03:31.760 through of this on Bloomberg News that said respondent said 0:03:31.800 --> 0:03:33.760 there was a forty eight point seven percent chance that 0:03:33.800 --> 0:03:36.600 the stock market will increase in the coming year. It's 0:03:36.640 --> 0:03:39.240 the lowest probability going back to May of twenty twenty three. 0:03:39.760 --> 0:03:43.000 How do expectations for direction of stocks play into what 0:03:43.080 --> 0:03:44.560 actually happens in the market. 0:03:44.800 --> 0:03:47.400 Well, it's interesting because stock market does play a role 0:03:47.400 --> 0:03:50.520 in the Michigan numbers because they ask specifically about it, 0:03:51.400 --> 0:03:54.840 whereas the say, conference board conference numbers are much more 0:03:54.880 --> 0:03:58.600 based on the job market. But in the Michigan numbers 0:03:58.640 --> 0:04:01.680 people are worried about the job market as well. The 0:04:01.760 --> 0:04:05.320 stock market probably had an effect, according to Joe Nshu, 0:04:05.400 --> 0:04:08.080 who is the director of Surveys for the University of Michigan, 0:04:08.600 --> 0:04:12.960 because people see it, it's one of those things that 0:04:13.160 --> 0:04:16.680 is in their face and it is actually happening. It 0:04:16.720 --> 0:04:20.440 may not be that they're financially affected so much they 0:04:20.440 --> 0:04:21.200 think they might be. 0:04:21.320 --> 0:04:22.920 I suppose, but. 0:04:24.760 --> 0:04:27.760 People don't pay as much unless you're in the markets. 0:04:27.800 --> 0:04:29.600 You don't pay as much of attention on a day 0:04:29.640 --> 0:04:30.200 to day basis. 0:04:30.200 --> 0:04:32.400 Can't that turn into some sort of self fulfilling prophecy 0:04:32.560 --> 0:04:35.359 when people are planning out future expenditure. So if they 0:04:35.400 --> 0:04:37.800 think to themselves, well, I don't feel as wealthy, so 0:04:37.800 --> 0:04:40.400 I'm not going to plan this summer trip. Maybe we'll 0:04:40.440 --> 0:04:41.760 drive somewhere closer instead. 0:04:42.080 --> 0:04:46.120 Exactly. But this has also been for the last ten days, 0:04:46.120 --> 0:04:48.280 maybe that the markets have gone down like this, So 0:04:49.480 --> 0:04:52.240 it's a question of timing and have you already started 0:04:52.279 --> 0:04:53.800 your planning. Are you going to give up on the 0:04:53.839 --> 0:04:56.320 idea or do you think, well, you know, the market's 0:04:56.360 --> 0:04:57.920 been up and down a lot, and we always hear 0:04:57.920 --> 0:04:59.960 this about by the dip, etcetera. And maybe things will 0:05:00.000 --> 0:05:02.360 get better. This is just what we don't know at 0:05:02.360 --> 0:05:04.480 this point. We're still in that kind of air pocket 0:05:04.560 --> 0:05:08.679 where there are signs and portents that things could go wrong, 0:05:08.760 --> 0:05:11.600 but there's no guarantee that they will. So what do 0:05:11.640 --> 0:05:12.360 you do about it? 0:05:12.400 --> 0:05:12.920 For right now? 0:05:13.000 --> 0:05:15.560 It probably does mean people cut back on spending a 0:05:15.560 --> 0:05:18.000 little bit. We get retail sales figures on Monday that 0:05:18.080 --> 0:05:20.560 will be interesting to look at. But does it mean 0:05:20.600 --> 0:05:23.280 they cut back to the point where we could see 0:05:23.279 --> 0:05:26.080 the economy start to really slow. 0:05:26.160 --> 0:05:28.000 Well, we did have a story go out on the 0:05:28.040 --> 0:05:30.719 Bloomberg terminal today, and it said that the FED is 0:05:30.760 --> 0:05:33.960 expected to cut twice this year. They're hoping that. They're 0:05:34.000 --> 0:05:36.080 saying that the FED will keep interest rates steady through 0:05:36.120 --> 0:05:39.240 the first half of the year before delivering two cuts 0:05:39.320 --> 0:05:42.080 beginning in September. That's according to multiple economists that have 0:05:42.080 --> 0:05:44.760 been surveyed here. What are your main takeaways for that 0:05:44.800 --> 0:05:47.599 when we think about projections and what you're keeping an 0:05:47.600 --> 0:05:49.719 eye on as we head into the FED meeting next Wednesday. 0:05:49.839 --> 0:05:51.719 Well, if that survey we're a milk carton, it would 0:05:51.760 --> 0:05:55.920 probably have an expiration date on it, because nobody knows 0:05:56.160 --> 0:05:57.760 what the Fed is going to do. And I've talked 0:05:57.800 --> 0:06:01.480 to a number of seen fed'lsea makers from the Open 0:06:01.480 --> 0:06:04.920 Market Committee in recent days who all say, we don't know, 0:06:05.560 --> 0:06:07.720 because we don't know what's going to happen. They're in 0:06:07.720 --> 0:06:10.520 the same position we all are with the tariffs and 0:06:10.600 --> 0:06:14.760 everything else. The Fed in December suggested that this year 0:06:14.800 --> 0:06:16.640 there would be two raid cuts, and of course the 0:06:16.680 --> 0:06:19.840 markets have priced in three right now, but at one 0:06:19.839 --> 0:06:22.599 point we're pricing in one or none, and it just 0:06:22.640 --> 0:06:25.280 goes back and forth as people have to guess and 0:06:25.440 --> 0:06:28.200 we go out and we survey these economists and say, well, 0:06:28.200 --> 0:06:31.719 what do you think and their answer is, well, right now, 0:06:31.800 --> 0:06:34.159 I'll go with two because that's kind of where we were. 0:06:34.520 --> 0:06:38.280 But you can't really make an empirical argument for two 0:06:38.960 --> 0:06:41.000 as compared to anything else at this point. 0:06:41.240 --> 0:06:42.919 Hey, Mike, before we let you go, you mentioned this 0:06:42.960 --> 0:06:45.040 conversation out with Joe Anshi a little earlier at the 0:06:45.120 --> 0:06:48.120 University of Michigan. She directs this survey. You spoke to 0:06:48.160 --> 0:06:52.040 her this morning. TERMOL subscribers can get that conversation. What 0:06:52.080 --> 0:06:53.240 were the main takeaways? 0:06:53.920 --> 0:06:59.520 Basically, the disappointment or the decline in sentiment was widespread 0:07:00.080 --> 0:07:05.479 across all income categories. It was across all political parties. 0:07:05.640 --> 0:07:09.360 There has been some thought that this survey is biased 0:07:09.360 --> 0:07:11.960 in the sense that the party that's out of power 0:07:12.040 --> 0:07:15.040 is much more depressed about the way things are going 0:07:15.080 --> 0:07:17.920 than the party that is in power. But even Republicans 0:07:18.320 --> 0:07:21.600 views expectations for what's going to happen to the economy 0:07:21.800 --> 0:07:26.280 declined precipitously, and so it tells her that there is 0:07:26.480 --> 0:07:30.560 something going on out there that we have to keep 0:07:30.600 --> 0:07:31.000 an eye on. 0:07:31.360 --> 0:07:35.360 Michael McKee, Bloomberg News International Economics and Policy correspondent, have 0:07:35.400 --> 0:07:37.920 a great weekend. Mike, good to see you. Hey, I 0:07:37.920 --> 0:07:39.840 do want to check in on what's going on with Apple, 0:07:39.880 --> 0:07:43.440 because we got a redhead crossing the Bloomberg terminal. Apple's 0:07:43.480 --> 0:07:46.880 top executive overseeing its serie virtual assistant told staff that 0:07:46.960 --> 0:07:50.200 delays to key features have been ugly and embarrassing, and 0:07:50.240 --> 0:07:53.360 a decision to publicly promote the technology before it was 0:07:53.440 --> 0:07:56.640 ready made matters worse. We're talking about Robbie Walker, who 0:07:56.640 --> 0:07:59.840 serves as senior director at Apple, delivering a start comment 0:08:00.240 --> 0:08:02.760 during an all hands meeting for the Siri division, saying 0:08:02.760 --> 0:08:05.480 that the team was facing a bad period. Walker also 0:08:05.520 --> 0:08:08.040 said it's unclear when the enhancements will actually launch. That's 0:08:08.040 --> 0:08:10.040 according to people with knowledge of the matter who asked 0:08:10.080 --> 0:08:12.680 not to be identified because the gathering was private. This 0:08:12.720 --> 0:08:16.000 story on the Bloomberg Terminal by our own Mark German, 0:08:16.040 --> 0:08:20.320 who oversees technology coverage around the world, Chicken out. Shares 0:08:20.360 --> 0:08:22.880 of Apple higher still by just about eight tens of 0:08:22.880 --> 0:08:24.720 one percent, but they did give up some of those 0:08:24.760 --> 0:08:26.600 gains after that news came. 0:08:27.320 --> 0:08:31.040 You're listening to the Bloomberg Business Week podcast. Catch us 0:08:31.120 --> 0:08:34.080 live weekday afternoons from two to five eas during listen 0:08:34.160 --> 0:08:37.720 on Applecarplay and Android auto with the Bloomberg Business app, 0:08:37.880 --> 0:08:40.240 or watch us live on YouTube. 0:08:40.559 --> 0:08:43.120 We were just talking about with Michael McKay. US consumer 0:08:43.160 --> 0:08:45.560 sentiment fell to a more than two year low, and 0:08:45.760 --> 0:08:49.040 long term inflation expectations jumped by the most since nineteen 0:08:49.240 --> 0:08:52.760 ninety three. It illustrates growing apprehension about the economic impact 0:08:52.920 --> 0:08:56.200 from tariffs. Then there's the raid path ahead of next 0:08:56.200 --> 0:08:59.760 week's FED meeting. Rates and consumer health is very important 0:08:59.760 --> 0:09:02.720 to Isa Washerman. He's the CFO of Huntington Bank Shares. 0:09:02.760 --> 0:09:05.240 It's the holding company of the Consumer and Business Regional 0:09:05.240 --> 0:09:08.360 Bank Huntington National Bank. It's got locations in a handful 0:09:08.360 --> 0:09:11.840 of states, including Ohio, Minnesota, Wisconsin, North and South Carolina 0:09:12.120 --> 0:09:15.839 and more. Zach joins us from Columbus, Ohio. Also with 0:09:15.920 --> 0:09:18.640 us is Nina Trentman, senior editor at Bloomberg News. She's 0:09:18.640 --> 0:09:21.079 the author of the CFO Briefing newsletter. You got to 0:09:21.120 --> 0:09:23.800 sign up for it at Bloomberg dot com slash CFO 0:09:24.280 --> 0:09:29.040 Dash Briefing. Zach, Nina, Welcome to Bloomberg BusinessWeek. Zach, You've 0:09:29.040 --> 0:09:31.760 got this great read on the consumer. Given what Huntington 0:09:31.760 --> 0:09:35.080 does for businesses and what Huntington does for consumers big picture, 0:09:35.400 --> 0:09:37.679 how would you characterize how consumers are doing right now 0:09:37.679 --> 0:09:39.600 and how would you characterize the economy right now? 0:09:40.920 --> 0:09:44.400 You know, consumers continue to perform pretty well in terms 0:09:44.400 --> 0:09:51.680 of spending, lending activity, credit performance generally looks pretty solid. 0:09:52.240 --> 0:09:54.240 You know, throughout the course of the last year, there's 0:09:54.240 --> 0:09:57.040 a bit of a tale of two cities with respect 0:09:57.040 --> 0:10:00.720 to the consumer. If you look at consumers to above 0:10:00.800 --> 0:10:04.559 the median income, there's been a lot of strength, strong employment, 0:10:05.040 --> 0:10:10.960 good spending trends, great underlying activity. Consumers below the median 0:10:11.040 --> 0:10:15.640 income have been showing some signs of stresses. For Huntington, 0:10:15.760 --> 0:10:18.800 that's not really our business, but just characterizing kind of 0:10:18.800 --> 0:10:20.360 broadly what we're seeing in the industry. 0:10:20.760 --> 0:10:21.679 That is certainly the case. 0:10:21.720 --> 0:10:26.480 I think fundamentally, employment remains relatively strong, and I think, 0:10:26.640 --> 0:10:30.520 you know, notwithstanding elements that are going on now that 0:10:30.559 --> 0:10:34.720 could drive uncertainty, we're seeing fairly healthy trends in the consumer. 0:10:35.000 --> 0:10:37.400 Of course, that could change, and we're watching it very carefully, 0:10:37.400 --> 0:10:41.440 but as of right now, looks really relatively good in 0:10:41.520 --> 0:10:44.880 terms of the economy overall. You know, I've been remarking 0:10:44.960 --> 0:10:46.400 to a number of people in the last couple of 0:10:46.440 --> 0:10:49.120 weeks that. You know, if you were just to look 0:10:49.120 --> 0:10:52.120 at the results of our business and not read the headlines, 0:10:52.400 --> 0:10:55.240 you would say, gosh, the economy is performing exceptionally well. 0:10:56.160 --> 0:10:59.480 Our business continues to drive forward very powerfully into the 0:10:59.520 --> 0:11:05.439 first core. We're seeing terrific trends in underlying activity. Of course, 0:11:05.480 --> 0:11:07.560 there is a lot of headlines coming through and that's 0:11:07.559 --> 0:11:12.079 causing uncertainty, and so we would potentially see some things 0:11:12.120 --> 0:11:14.520 coming through later in the year if this continues, but 0:11:14.600 --> 0:11:17.319 as of right now, remarkable resilience. 0:11:17.360 --> 0:11:17.720 Actually. 0:11:18.840 --> 0:11:21.679 Yeah, to follow up on that, Zach, thanks for joining us. 0:11:22.480 --> 0:11:25.280 So you're basically saying sort of the headlines, as you 0:11:25.440 --> 0:11:29.079 characterized it, that has not really fit into your business, 0:11:29.120 --> 0:11:33.280 Like we are seeing surveys of businesses declining, we're seeing 0:11:33.360 --> 0:11:37.840 consumer inflation expectations really changing. So you're saying, basically that 0:11:37.960 --> 0:11:39.520 is still not showing in your business. 0:11:40.440 --> 0:11:43.440 Yeah, I think, I mean, certainly there is the effect 0:11:43.480 --> 0:11:47.760 on the psyche of the consumer, of the commercial customer. 0:11:48.400 --> 0:11:52.160 You can't ignore the headlines. The actual activity on the ground, though, 0:11:52.280 --> 0:11:55.400 is be lying that and we are seeing continued growth, 0:11:55.720 --> 0:12:00.440 for example, the lending activity, continued deposit gathering strong, a 0:12:00.480 --> 0:12:05.360 customer acquisition and underlying behavioral trends look relatively normal for 0:12:05.400 --> 0:12:07.920 this time of the year. I think, you know, you've 0:12:07.920 --> 0:12:11.319 got to look hard for signs that what's happening right 0:12:11.360 --> 0:12:15.360 now could well start to affect the real economy. And 0:12:15.760 --> 0:12:18.800 there are some harbingers of that, you know, in our 0:12:18.800 --> 0:12:22.920 commercial segment, where we interact with customers who might be 0:12:23.040 --> 0:12:27.320 involved with buying goods on a forward basis where they 0:12:27.360 --> 0:12:30.959 could be exposed to uncertain pricing given tariffs in the future. 0:12:31.080 --> 0:12:32.720 We're seeing a little bit of halting. 0:12:32.400 --> 0:12:37.959 Activity there other places where there's commitments around capital expenditures 0:12:38.200 --> 0:12:40.240 in the second half of this year. Most of the 0:12:40.240 --> 0:12:42.320 first half is fairly well committed, but in the second 0:12:42.320 --> 0:12:46.080 half of the year seeing some signs of decision making 0:12:46.120 --> 0:12:48.920 slow down and other things that would what you'd expect 0:12:48.920 --> 0:12:49.480 to see if. 0:12:49.400 --> 0:12:51.040 There was uncertainty in the environment. 0:12:51.120 --> 0:12:53.280 So you can see it if you look, but you've 0:12:53.280 --> 0:12:56.600 got to look hard, and I would say, broadly speaking, 0:12:56.600 --> 0:12:59.480 in the first order, certainly and certainly the view we've 0:12:59.480 --> 0:13:02.959 gotten too this quarter looks like not much impact on 0:13:03.000 --> 0:13:03.720 the real economy. 0:13:03.800 --> 0:13:07.600 Yet there's of course a range of indicators that track 0:13:07.679 --> 0:13:10.120 the economy, and then that we could be looking at 0:13:10.600 --> 0:13:14.360 in order to gauge where where sentiment is. Probably not stocks, 0:13:14.360 --> 0:13:19.280 given that they are currently a bit of a turbulent time. 0:13:19.320 --> 0:13:21.720 But what's the metric that you're looking at in order 0:13:21.760 --> 0:13:23.720 to really get a sense of where your businesses? You 0:13:23.760 --> 0:13:26.880 mentioned deposit growth earlier. Is that the metric that you're 0:13:26.880 --> 0:13:29.640 looking at? Or are there others where you'd say that 0:13:29.760 --> 0:13:31.400 gives me a sense of where things are headed? 0:13:32.360 --> 0:13:34.880 Yeah, of course, not just one. There's there's a lot 0:13:34.920 --> 0:13:36.320 of them, but I think you know one. 0:13:36.360 --> 0:13:41.880 We look at business Live weekdays starting at two pm 0:13:42.520 --> 0:13:48.400 on Apple You can also listen live on Amazon Alex 0:13:48.760 --> 0:13:50.320 from our flagship New York stations. 0:13:53.760 --> 0:13:57.280 Last year, do you sustain fairly strong, good visibility and 0:13:57.720 --> 0:13:59.400 long growth into the second quarter? 0:13:59.440 --> 0:13:59.959 At this point? 0:14:00.480 --> 0:14:03.840 We also look at customer acquisition trends and just underlying 0:14:03.880 --> 0:14:08.559 activity that would indicate just normal consideration behavior from customers, 0:14:08.559 --> 0:14:09.760 and that looks pretty good. 0:14:10.760 --> 0:14:10.920 You know. 0:14:10.960 --> 0:14:14.360 Another thing that we watch very carefully, of course, is credit, 0:14:15.400 --> 0:14:18.680 and we're not seeing any indications of any move in 0:14:18.800 --> 0:14:22.560 delinquency rates or more early indicators of credit stress. 0:14:22.600 --> 0:14:23.440 Is quite the opposite. 0:14:23.480 --> 0:14:27.440 Actually, we're seeing a lot of stability and strength, So 0:14:27.480 --> 0:14:29.560 those are some of the things we look at a lot, 0:14:29.640 --> 0:14:33.320 and again, as I said earlier, you're really not seeing 0:14:33.360 --> 0:14:34.720 anything on the real economy yet. 0:14:34.800 --> 0:14:37.240 I want to stress we're. 0:14:36.680 --> 0:14:40.040 Not Pollyanna here, and there are a lot of concerning 0:14:40.720 --> 0:14:43.720 uncertainties being put into the market, and those could cumulate 0:14:43.760 --> 0:14:44.960 into real effects later. 0:14:45.440 --> 0:14:47.160 We're just not seeing that well, Zach. 0:14:47.240 --> 0:14:50.160 I know we have the FED meeting coming up next Wednesday, 0:14:50.360 --> 0:14:52.720 and we have a market that's pricing in two rate 0:14:52.760 --> 0:14:55.800 cuts this year. I understand that Huntington has already reduced 0:14:55.800 --> 0:14:59.160 the interest it pays clients in response to lower interest rates. 0:14:59.440 --> 0:15:02.440 Do you agree with this projection of two rate cuts 0:15:02.440 --> 0:15:04.560 this year and how far do you see stagflation risk. 0:15:06.200 --> 0:15:08.360 It's a great question, and I will tell you I'm 0:15:08.360 --> 0:15:11.360 not an economist, and we purposely don't make a specific 0:15:11.360 --> 0:15:14.240 prognostication about the indust rate environment. We rather plan for 0:15:14.320 --> 0:15:17.200 a range of potential interest rate environments, and we're trying 0:15:17.200 --> 0:15:19.520 to make sure we can execute our plan and support 0:15:19.520 --> 0:15:22.320 our customers under any of them. I will tell you, 0:15:22.640 --> 0:15:24.280 throughout the course of the last couple of years, we 0:15:24.360 --> 0:15:27.680 have continually bit of the view that it felt like 0:15:27.760 --> 0:15:31.200 inflation was pretty sticky and that would likely cause the 0:15:31.200 --> 0:15:34.120 FED to go slower in actions. But then maybe the 0:15:34.160 --> 0:15:36.920 forward yield curve had implied at various points in the 0:15:36.920 --> 0:15:40.080 past and that interest rates would likely stay higher for longer. 0:15:40.120 --> 0:15:44.040 And so we still see that that is a probable 0:15:44.080 --> 0:15:47.720 outcome here. Inflation continues to be higher than the FED target, 0:15:48.120 --> 0:15:50.360 there's a lot of reasons why they would be on 0:15:50.480 --> 0:15:51.400 pause for a while. 0:15:51.720 --> 0:15:54.640 With that being said, something like two cuts does not. 0:15:54.640 --> 0:15:58.480 Seem unlikely to us, and so that's sort of a 0:15:58.520 --> 0:16:03.480 reasonable default scenario to plan around, and for us, we 0:16:03.520 --> 0:16:05.840 can execute our plan if that happens or if there's 0:16:05.840 --> 0:16:06.640 no cuts. 0:16:06.920 --> 0:16:07.120 Yeah. 0:16:07.200 --> 0:16:09.000 To follow up on one thing that we've talked about 0:16:09.040 --> 0:16:12.480 in the past, SEC we've talked about potential deal making, 0:16:13.000 --> 0:16:16.200 the outlook for investments. Wondering, given that you're in the 0:16:16.240 --> 0:16:18.840 banking sector and the financial sector is one where we're 0:16:18.840 --> 0:16:22.560 expecting some regulatory changes from the Trump administration, do you 0:16:22.600 --> 0:16:24.960 think those will be positive for your business? 0:16:27.000 --> 0:16:29.520 Well, look, I think we focus on what we can control, 0:16:29.760 --> 0:16:33.480 and what's happening in terms of that is certainly out 0:16:33.480 --> 0:16:36.600 of our control. I do think that that more clarity 0:16:36.720 --> 0:16:40.080 around the rules for m and A review will cause 0:16:40.240 --> 0:16:43.440 more activity within the industry broadly, We've been pretty clear 0:16:44.080 --> 0:16:46.880 for Huntington that we're focused on organic growth and so 0:16:46.920 --> 0:16:49.000 it's not something that would really have a significant bearing 0:16:49.440 --> 0:16:53.440 on our business, but certainly the expectation that there could 0:16:53.520 --> 0:16:56.440 be more consolidation at an industry level, which could be 0:16:56.480 --> 0:16:58.320 a return. Frankly, just what we've seen for the last 0:16:58.320 --> 0:17:01.600 twenty years is is certainly likely. 0:17:01.960 --> 0:17:04.280 We're trying to get an understanding from executives we speak 0:17:04.280 --> 0:17:06.879 to about how they're using AI in their businesses. I mean, 0:17:06.920 --> 0:17:08.959 so much of the discussion about AI is focused on 0:17:09.400 --> 0:17:12.119 companies that actually create the products and services or actually 0:17:12.160 --> 0:17:14.800 make the chips that power these things. How are you 0:17:15.000 --> 0:17:18.760 using AI right now? Specifically when it comes to increasing 0:17:18.800 --> 0:17:21.800 deposits for example, personalization, take us through that. 0:17:23.000 --> 0:17:25.920 It's tremendous actually that there's a lot of energy around 0:17:25.920 --> 0:17:28.879 it that you know, AI will touch virtually every area 0:17:29.160 --> 0:17:32.919 of the business over time, and it's already making significant impact. 0:17:33.040 --> 0:17:37.359 We use AI a lot in understanding customer behaviors and 0:17:37.400 --> 0:17:40.560 how we can better serve them with additional products and 0:17:40.640 --> 0:17:43.520 with with with you know, when to reach out to 0:17:43.560 --> 0:17:46.160 them for products that could be a beneficial to them. 0:17:46.160 --> 0:17:49.480 So there's a lot of focus or leveraging AI for that. 0:17:49.960 --> 0:17:51.640 You know, the other side of the coin is really 0:17:51.720 --> 0:17:55.119 looking at fraud and potential risks within the system, and 0:17:55.160 --> 0:17:58.439 so AI is certainly helping us to to look and 0:17:58.520 --> 0:18:01.440 find those kind of indicators can make our own efforts 0:18:01.440 --> 0:18:03.480 more efficient to protect our customers. 0:18:03.680 --> 0:18:06.000 Well, speaking of the protection, does it make it more 0:18:06.000 --> 0:18:08.720 complicated that you're in such a heavily regulated industry and 0:18:08.760 --> 0:18:11.840 you have to be careful about discrimination and internal biases 0:18:11.880 --> 0:18:13.480 that are created within these algorithms. 0:18:14.320 --> 0:18:17.960 You know, it's a very important areas. It's probably the 0:18:18.000 --> 0:18:22.000 most important place we look before we ever institute any 0:18:22.119 --> 0:18:25.760 kind of machine learning or AI model is really what 0:18:25.920 --> 0:18:30.600 is the impact on the customer in terms of fairness, clarity, 0:18:31.320 --> 0:18:34.040 and adhere it's to compliance and regulatory rules and so 0:18:34.080 --> 0:18:35.240 it's a huge focus. 0:18:35.760 --> 0:18:37.359 So if I say, though, we think we can. 0:18:37.680 --> 0:18:41.720 Solve those challenges and really create great tools that can 0:18:41.760 --> 0:18:45.439 live within the baluands of that, So it's got a 0:18:45.440 --> 0:18:46.040 ton of promise. 0:18:46.080 --> 0:18:46.240 You know. 0:18:46.359 --> 0:18:48.840 The other big area that we're putting a major focus 0:18:48.880 --> 0:18:52.160 is our own internal efficiency and processes. You know, how 0:18:52.200 --> 0:18:55.960 can we leverage this technology to make us more efficient 0:18:55.960 --> 0:18:59.160 as an organization? Which ultimately gets fed back into customer 0:18:59.280 --> 0:19:02.240 value and savings to customers over time. 0:19:02.320 --> 0:19:03.680 So it's very promising. 0:19:04.080 --> 0:19:06.640 Hey, Zach, in about thirty seconds or less, so your 0:19:06.680 --> 0:19:09.159 shares are down nearly ten percent this year. How much 0:19:09.200 --> 0:19:11.000 are you all keeping an eye on share price and 0:19:11.000 --> 0:19:12.880 how are you thinking about the forward outlook? 0:19:14.480 --> 0:19:16.760 You know, we try not to get too wrapped up 0:19:16.760 --> 0:19:18.720 on what's happening in the equity markets in any given time. 0:19:19.200 --> 0:19:21.200 The goal is a long term value creation. 0:19:21.760 --> 0:19:24.640 I will say it appears that there's you know, all 0:19:24.680 --> 0:19:27.600 the uncertainty in the world generally is coming through int 0:19:27.600 --> 0:19:31.200 equity markets and you're seeing that. But frankly, the profit 0:19:31.240 --> 0:19:33.720 growth outlook for the industry and for Huntington in particular, 0:19:33.760 --> 0:19:36.080 it's very strong. So you know, for us, I think 0:19:36.119 --> 0:19:37.720 if we just keep our heads down and keep driving 0:19:37.760 --> 0:19:40.439 profitability higher, we're going to see the stock prices respond 0:19:40.800 --> 0:19:42.680 and see those go up higher over time as well. 0:19:42.720 --> 0:19:44.679 So trying to get two wrapped up in it. 0:19:44.920 --> 0:19:47.000 Hey, Zach, thanks so much for joining us on at 0:19:47.000 --> 0:19:50.760 Bloomberg Business Week this afternoon. Zach Wasserman, CFO at Huntington 0:19:50.800 --> 0:19:53.080 at Banks Shares also a big thank you. Anina Trentman 0:19:53.320 --> 0:19:55.960 she's senior editor at Bloomberg News. She's the author of 0:19:56.040 --> 0:19:58.399 the CFO Briefing newsletter. You can sign up for the 0:19:58.440 --> 0:20:03.240 CFO Briefing newsletter at Bloomberg dot com slash CFO dash Briefing. 0:20:04.359 --> 0:20:08.040 You're listening to the Bloomberg Business Week podcast. Catch US 0:20:08.119 --> 0:20:11.119 Live weekday afternoons from two to five eas during Listen 0:20:11.160 --> 0:20:14.720 on Applecarplay and Android Auto with the Bloomberg Business app, 0:20:14.920 --> 0:20:17.240 or watch US Live on YouTube. 0:20:17.880 --> 0:20:20.560 Let's talk tariffs because senior members of the European Union's 0:20:20.600 --> 0:20:23.639 Executive arm in the US and US officials rather spoke 0:20:23.720 --> 0:20:27.800 on Friday to explore ways to move forward after President 0:20:27.840 --> 0:20:31.280 Trump's metals tariffs prompted a trade war. This call came 0:20:31.320 --> 0:20:34.040 after Trump imposed twenty five percent tariffs on steel and 0:20:34.080 --> 0:20:36.720 aluminum imports, in a massive escalation of the trade war 0:20:36.760 --> 0:20:39.960 between the long standing allies. That decision was shortly followed 0:20:39.960 --> 0:20:43.280