WEBVTT - US CPI Eases, Bank Earnings 0:00:02.720 --> 0:00:10.520 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.560 --> 0:00:14.480 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.560 --> 0:00:17.800 Eastern on Apple, Cocklay and Android Auto with the Bloomberg 0:00:17.880 --> 0:00:21.000 Business App. Listen on demand wherever you get your podcasts, 0:00:21.320 --> 0:00:23.480 or watch us live on YouTube. 0:00:25.000 --> 0:00:28.440 Matt Miller here in the Interactive Broker Studio with Nora Melinda, 0:00:28.560 --> 0:00:32.200 we are taking you through this trading day where equity 0:00:32.280 --> 0:00:37.159 indexes are absolutely ripping as rates come down. Nora, did 0:00:37.200 --> 0:00:39.040 you see the tenure yield at one point was down 0:00:39.080 --> 0:00:42.440 fifteen bases points and that was the biggest drop that 0:00:42.520 --> 0:00:43.640 we've seen since August. 0:00:43.880 --> 0:00:44.160 Wow. 0:00:44.280 --> 0:00:46.160 I mean we are really on a roll here, Lisa, 0:00:46.159 --> 0:00:48.519 in the equity market. I'm seeing a Nazek up more 0:00:48.520 --> 0:00:52.080 than two percent, SMP up one point six percent. Let's 0:00:52.080 --> 0:00:54.440 to keep an eye on after that CPI data today exactly. 0:00:54.520 --> 0:00:59.520 CPI came out well, the headline figure was still up 0:01:00.120 --> 0:01:03.200 month over month zero point four percent, but the core 0:01:03.280 --> 0:01:05.680 figure was only up zero point two percent. We were 0:01:05.680 --> 0:01:09.119 looking for zero point three and that's what is behind 0:01:09.120 --> 0:01:11.000 the move. I want to talk about that right now 0:01:11.040 --> 0:01:14.000 with William Lee. He's the chief economist at the Milken 0:01:14.560 --> 0:01:18.960 Institute and Bill. Great to have you on the program. 0:01:19.120 --> 0:01:21.440 We'll just talk a little bit about the US, and 0:01:21.440 --> 0:01:24.480 then brought it out to the picture globally, because you 0:01:24.480 --> 0:01:28.400 have so much experience internationally. What do you think about 0:01:28.680 --> 0:01:32.520 the inflation picture? Because until today the worry was inflation 0:01:32.680 --> 0:01:34.640 was back on the rise, the Fed wouldn't be able 0:01:34.640 --> 0:01:37.160 to cut as much as we had thought, and maybe 0:01:37.319 --> 0:01:40.679 some said maybe even would have to raise rates this year. 0:01:42.240 --> 0:01:44.080 It's always dangerous to go against the markets. But I 0:01:44.120 --> 0:01:48.160 still think the inflation rate is on the rise. It 0:01:48.200 --> 0:01:51.200 really hasn't shown really signs of coming down ever since 0:01:51.240 --> 0:01:55.240 the fall. We have corn inflation still covering above three 0:01:55.280 --> 0:01:58.440 percent and persistently above three percent. But if you take 0:01:58.440 --> 0:02:01.920 away the goods and just look at services, that's where 0:02:02.000 --> 0:02:03.800 I'm really concerned, and that's where I think the FED 0:02:03.880 --> 0:02:07.960 is concerned. We have services, ex housings, forget about the 0:02:08.000 --> 0:02:12.960 housing component over four percent, and that has been rising 0:02:13.400 --> 0:02:16.760 since late last year. So what we're seeing then is 0:02:17.320 --> 0:02:21.640 a situation where the downward trajectory to two percent, which 0:02:21.639 --> 0:02:24.400 the FED really wants, really isn't in sight. When you 0:02:24.480 --> 0:02:27.880 take away the goods. This inflation which we have seen 0:02:28.400 --> 0:02:31.160 take place because the supply chains have come back online. 0:02:31.320 --> 0:02:35.120 The real stubborn parts of inflation, the service sector x 0:02:35.160 --> 0:02:37.840 housing is the one that still shows quite a bit 0:02:37.880 --> 0:02:39.800 of persistence. And I think the FED is going to 0:02:39.840 --> 0:02:42.800 keep things tight until they see that going into a 0:02:42.840 --> 0:02:44.799 downward trajectory. And we haven't seen that yet. 0:02:44.919 --> 0:02:46.680 So, Bill, when we look at today's print, and as 0:02:46.680 --> 0:02:49.320 you were mentioning and talking about some of the details, 0:02:49.360 --> 0:02:51.840 do we think that the equity market rallying today is 0:02:51.880 --> 0:02:52.919 a bit of an overreaction. 0:02:54.400 --> 0:02:58.720 Well, maybe yesterday's a partial reaction to PPI, and now 0:02:58.760 --> 0:03:02.760 today's is just a sigh of relief that we are 0:03:02.840 --> 0:03:06.880 not accelerating upwards, that the overall index looks like as 0:03:06.880 --> 0:03:09.920 relatively contained, because I said, there are some vulnerabilities in 0:03:09.960 --> 0:03:12.960 that picture, especially when it comes to services, and and 0:03:12.960 --> 0:03:16.680 and and I think if you're a real investor out there, 0:03:16.960 --> 0:03:19.600 you're going to be looking to see this rally fate. 0:03:20.080 --> 0:03:21.399 And and more. 0:03:21.720 --> 0:03:25.040 More uncertainty that is coming because of fiscal uh and 0:03:25.040 --> 0:03:28.280 and international events is going to keep investors on edge 0:03:28.360 --> 0:03:30.919 and not willing to commit a lot of money. Yes, 0:03:31.120 --> 0:03:31.560 just yet. 0:03:31.880 --> 0:03:35.000 Well, so what do you think about tariffs? What do 0:03:35.040 --> 0:03:37.880 you think about you know, the labor market right now, 0:03:37.880 --> 0:03:40.280 we saw a blowout number. Let's not forget last week, 0:03:40.480 --> 0:03:45.200 and the incoming administration wants to deport people, maybe buy 0:03:45.240 --> 0:03:50.360 the millions. How does that affect inflation at a time 0:03:50.400 --> 0:03:53.760 when we're trying to extend tax cuts and also deregulate. 0:03:54.720 --> 0:03:54.920 Yeah. 0:03:54.920 --> 0:03:57.480 I talked to a lot of investors, especially global investors, 0:03:57.680 --> 0:04:00.320 and and I think the consensus view around the world 0:04:00.480 --> 0:04:03.040 is that the United States still is the best place 0:04:03.040 --> 0:04:06.160 to plet your money. You know, I don't believe much 0:04:06.200 --> 0:04:08.280 in academic studies. So despite the fact that I'm a 0:04:08.320 --> 0:04:09.600 card carrying PhD. 0:04:10.160 --> 0:04:12.600 Did I study under Robert Mondella Columbia. 0:04:13.960 --> 0:04:16.919 That's right, And one of the great luminaries of the 0:04:16.960 --> 0:04:19.240 field came over with a paradox, you said, you know, 0:04:19.560 --> 0:04:22.520 isn't it strange that emerging markets where this capital poor. 0:04:23.360 --> 0:04:25.919 You find that a lot of the investors in emerging 0:04:25.920 --> 0:04:27.839 markets and the rest of the world are coming to 0:04:27.920 --> 0:04:31.359 where capital is really rich, the United States developed economies, 0:04:31.480 --> 0:04:33.920 and that's called the Lucas paradox. And I think what 0:04:33.960 --> 0:04:36.280 we're seeing today is also the fact that a lot 0:04:36.320 --> 0:04:39.000 of people are saying, you know, despite always talking about diversification, 0:04:39.440 --> 0:04:41.080 I want to go where the returns of the highest, 0:04:41.080 --> 0:04:43.719 where innovation is the highest, where we're getting the most 0:04:43.760 --> 0:04:47.440 for our investment dollars, and it's the United States. And 0:04:47.480 --> 0:04:49.840 I think global investors really feel that way and continue 0:04:49.880 --> 0:04:52.279 to feel that way. They always talk about Trump and 0:04:52.320 --> 0:04:54.880 the uncertainties about tariffs and how it might be the 0:04:55.000 --> 0:04:56.760 end of the world and we have a repeat of 0:04:56.800 --> 0:04:58.880 smooth Holly of the nineteen thirties and throwing the world 0:04:58.920 --> 0:05:03.600 into depression. I think that those are analytics that don't 0:05:03.640 --> 0:05:06.480 even pass econ one oh one. Those would be f 0:05:06.640 --> 0:05:09.960 marks if I were still teaching at Columbia. And the 0:05:10.040 --> 0:05:13.480 reason why is because I think people should read Trump's book, 0:05:13.839 --> 0:05:16.320 The Art of the Deal. Right, you always come out 0:05:16.360 --> 0:05:19.440 with a hard negotiating line and then you sort of 0:05:19.440 --> 0:05:22.560 make a deal with people. And remember, make America a 0:05:22.600 --> 0:05:26.839 great agenda? What's that all about? Maximizing high pain jobs 0:05:26.880 --> 0:05:30.800 for Americans. That's really the agenda. And if foreign investors 0:05:30.880 --> 0:05:33.720 can come to this country and offer the opportunity to 0:05:34.200 --> 0:05:37.440 create more jobs for Americans, I'm absolutely sure that Trump 0:05:37.520 --> 0:05:40.200 administration would be jumping at that. Now if it was 0:05:40.360 --> 0:05:43.640 China coming in, there's some high hurdles that they're gonna 0:05:43.680 --> 0:05:47.280 have to meet. But in terms of our allies, the Canadians, 0:05:47.360 --> 0:05:51.480 the Mexicans, the Europeans, we are continuing to welcome investment 0:05:51.880 --> 0:05:54.560 funds to come into United States to create new jobs, but. 0:05:54.680 --> 0:05:57.680 Not the labor right. I mean, we want to During 0:05:57.720 --> 0:06:00.960 the campaign with Trump was talking about fifteen million illegal immigrants, 0:06:01.040 --> 0:06:04.640 mass deportations were the signs being waived at the RNC, 0:06:05.279 --> 0:06:09.039 and in a tightening labor market, it just doesn't strike 0:06:09.120 --> 0:06:12.000 me as the smartest idea to send that many workers out, 0:06:13.720 --> 0:06:17.920 and not to mention the fact that we educate so 0:06:18.080 --> 0:06:24.039 many foreign citizens. Do we give them all the tools 0:06:24.200 --> 0:06:27.000 that they need to succeed and then send them straight 0:06:27.120 --> 0:06:30.080 home when they're done at our Ivy League universities. 0:06:30.800 --> 0:06:32.720 And Matt That's the paradox that I think all of 0:06:32.800 --> 0:06:35.520 the executives from Silicon Valley are trying to correct. 0:06:35.600 --> 0:06:35.880 Right now. 0:06:36.160 --> 0:06:38.080 The key word that you just sad about immigration was 0:06:38.360 --> 0:06:41.320 illegal immigration. We want to sort of I think the 0:06:41.320 --> 0:06:43.880 administrations want to put a clamp on the amount of 0:06:43.960 --> 0:06:47.440 illegal immigration, but they certainly want to optimize the amount 0:06:47.520 --> 0:06:51.000 of legal immigration, especially when we train a lot of 0:06:51.040 --> 0:06:53.080 the students. We want to be able to give them 0:06:53.400 --> 0:06:55.080 green cards to be able to stay here to make 0:06:55.200 --> 0:06:58.160 use of their talents. This country was built on the 0:06:58.800 --> 0:07:01.720 talents of immigrants from the world, and the Trump administration 0:07:01.839 --> 0:07:04.640 has been saying all along they really want that. So 0:07:04.720 --> 0:07:08.679 the key is, how do you emphasize more talented legal 0:07:08.720 --> 0:07:11.600 immigration into this country. Although some people on the ALSA 0:07:11.720 --> 0:07:14.400 might call it a brain train, but we've been draining 0:07:14.440 --> 0:07:16.320 the brains of the rest of the world now for 0:07:16.720 --> 0:07:19.720 decades and even centuries, and so that's not new for 0:07:19.760 --> 0:07:22.680 the United States. What's new for the Trump administration. The 0:07:22.880 --> 0:07:27.040 challenge is going to be to shift from the immigration 0:07:27.280 --> 0:07:30.920 being illegal status, less skilled, into the more skilled and 0:07:31.120 --> 0:07:33.680 talented immigrants that we've always wanted in this country. 0:07:33.960 --> 0:07:37.160 William Lee, so great to get some time with you. 0:07:37.320 --> 0:07:39.200 Never enough. Hope I can talk to you again soon. 0:07:39.320 --> 0:07:41.800 Build Y there from the Milkin Institute, where he is 0:07:42.120 --> 0:07:42.880 chief Economist. 0:07:44.520 --> 0:07:48.320 You're listening to the Bloomberg Intelligence Podcast. Catch the program 0:07:48.520 --> 0:07:51.920 live weekdays at ten am Eastern on Applecarplay and Android 0:07:51.960 --> 0:07:54.920 Auto with the Bloomberg Business app. You can also listen 0:07:55.040 --> 0:07:58.280 live on Amazon Alexa from our flagship New York station, 0:07:58.840 --> 0:08:01.480 Just say Alexa Play Bloomberg eleven thirty. 0:08:02.920 --> 0:08:05.880 Obviously the whole market is ripping, not just on the 0:08:06.800 --> 0:08:12.200 CPI number and the lower rates, but probably also something 0:08:12.280 --> 0:08:16.040 to do with financials. Right, definitely, they all beat up. 0:08:16.080 --> 0:08:18.760 I love them, and they're all up pretty big. Even 0:08:18.840 --> 0:08:22.320 City is up like five percent, right yeah. Alison Williams 0:08:22.680 --> 0:08:25.920 joins US right now from Bloomberg Intelligence. She manages like 0:08:26.040 --> 0:08:31.040 everything there, but her main beat is the banks. And Alison, 0:08:32.800 --> 0:08:35.640 how I guess it's a twenty billion dollar buyback that's 0:08:35.640 --> 0:08:39.000 helped investors feel good about City. But didn't they take 0:08:39.120 --> 0:08:41.079 down some of their goals for the year. 0:08:41.760 --> 0:08:44.720 Well, I think they they sort of notched down their 0:08:45.120 --> 0:08:47.959 return on tangible equity target in the near term, but 0:08:48.040 --> 0:08:52.160 I think it's realistic. You know, it's interesting even Goldman Sachs, 0:08:52.200 --> 0:08:56.160 who had like a blowout quarter really strong numbers. It's 0:08:56.320 --> 0:09:00.679 it's it's tough to see them. You know, they say 0:09:00.720 --> 0:09:03.120 they have a path to reach their target. But I 0:09:03.200 --> 0:09:06.160 think what all these banks did was after twenty twenty one, 0:09:06.240 --> 0:09:08.040 which was a blowout year, you saw a lot of 0:09:08.080 --> 0:09:11.000 people raise their targets, but at these very bullish targets. 0:09:11.720 --> 0:09:14.959 And JP Morgan has met their targets. But for everybody else. 0:09:15.320 --> 0:09:17.679 You know, it's tough and even with the markets as 0:09:17.679 --> 0:09:18.760 strong as they are, so. 0:09:20.440 --> 0:09:23.360 But targets were pretty high, right, yeah, I mean Shannali 0:09:23.960 --> 0:09:27.680 keeps telling me that JP Morgan missed on equities trading, 0:09:28.000 --> 0:09:31.040 but equities trading rose two percent. 0:09:31.080 --> 0:09:34.280 Right, I think because I think because they restated their 0:09:34.360 --> 0:09:38.640 numbers and so if you look at the restatement, what 0:09:38.840 --> 0:09:41.760 happened was they shifted a little bit from equities to 0:09:42.080 --> 0:09:45.280 thick and so I think that's why it appears that 0:09:45.400 --> 0:09:47.760 they missed on the equities. 0:09:47.720 --> 0:09:52.000 Line, but really beat on fick and explained to her 0:09:52.280 --> 0:09:56.199 fixed income. Okay, see what's a thank you? 0:09:56.320 --> 0:09:59.120 Yeah, it's an acronym that also doesn't do well in Germany. 0:10:00.920 --> 0:10:02.800 Yeah, I'm not sure what it would be, although Deutsche 0:10:02.840 --> 0:10:05.240 Bank only does fit with oneesay because. 0:10:05.000 --> 0:10:05.800 They're not good. 0:10:05.920 --> 0:10:08.360 More you know, the more you know, so who's the 0:10:08.400 --> 0:10:10.560 front runner here and who are the laggards? 0:10:10.800 --> 0:10:14.719 So you know, JP Morgan really continues to post the 0:10:14.840 --> 0:10:18.079 leading returns of the group. As I said, there, you know, 0:10:18.200 --> 0:10:20.760 exceeding their target in the near term. We expect they'll 0:10:20.800 --> 0:10:24.360 meet their target again next year. But I would say 0:10:24.440 --> 0:10:26.960 that for I say you that all the banks really 0:10:27.160 --> 0:10:29.680 had a good quarter. And it's not just the quarter, 0:10:29.800 --> 0:10:33.600 it's the guidance and so interest income coming in better 0:10:33.679 --> 0:10:38.839 than expected. You know, Wills Fargo and JP Morgan in 0:10:38.920 --> 0:10:43.160 particular raising their guidance for at interest income for next year. 0:10:43.920 --> 0:10:47.400 The City Group, as we pointed out, you know they 0:10:47.480 --> 0:10:50.560 had the buyback is about fourteen percent of their market cap, 0:10:50.679 --> 0:10:53.000 So that's pretty significant. I mean, keep in mind the 0:10:53.080 --> 0:10:57.960 valuation at City and so that's why I think investors 0:10:58.000 --> 0:10:59.640 are even more excited about that. 0:11:00.000 --> 0:11:02.920 Well, you know what that brings up an interesting question. 0:11:03.520 --> 0:11:06.760 We have the inauguration in just a few days and 0:11:07.360 --> 0:11:09.200 will be a different regulatory regime. 0:11:09.760 --> 0:11:10.120 Not just. 0:11:11.600 --> 0:11:14.640 Throwing out the Basil three endgame, but I wonder if 0:11:14.720 --> 0:11:17.640 these banks are gonna be able to do more buybacks, 0:11:17.640 --> 0:11:19.600 Are they going to be able to pay more in dividend? 0:11:19.600 --> 0:11:21.640 Are they gonna be able to return more cash. 0:11:21.480 --> 0:11:25.439 To show that is that is definitely the thesis. 0:11:25.120 --> 0:11:25.559 If you will. 0:11:25.640 --> 0:11:27.599 And so a lot of the run up that we 0:11:27.760 --> 0:11:32.880 saw in the banks was due to this lighter regulatory environment. 0:11:32.960 --> 0:11:35.559 A big part of that, to your point, is the 0:11:35.679 --> 0:11:39.920 capital rules. So Basil three endgame as we call it, 0:11:40.120 --> 0:11:43.760 sounds like a movie, Yes, right, So it will eventually happen. 0:11:44.080 --> 0:11:44.520 I mean. 0:11:45.920 --> 0:11:46.520 For the banks. 0:11:46.559 --> 0:11:48.880 It's probably a good thing actually if it happens under 0:11:48.880 --> 0:11:53.439 the current administration, because the current administration, as we know, 0:11:53.920 --> 0:11:58.120 is very US focused and a lot of the issues 0:11:58.160 --> 0:12:01.000 that the banks had with the capital rules was that 0:12:01.080 --> 0:12:06.079 it was very punitive versus some other jurisdictions. So it 0:12:06.160 --> 0:12:08.160 felt like it put them at a disadvantage, especially in 0:12:08.240 --> 0:12:11.040 something like prime brokerage, and that's not a business that 0:12:11.160 --> 0:12:15.199 regulators are necessary. You know, regulators generally they're looking to 0:12:15.320 --> 0:12:18.439 protect the smaller banks and do things, and you know 0:12:18.559 --> 0:12:22.559 they're not as concerned with trading and prime brokerage. But 0:12:23.040 --> 0:12:27.679 to the extent that this at this administration, you know, 0:12:28.240 --> 0:12:30.880 we would see the lighter rules come through. It could 0:12:30.920 --> 0:12:34.480 be good to get them solidified. The other thing, M 0:12:34.559 --> 0:12:37.599 and A less antitrust should be good for M and A. 0:12:38.000 --> 0:12:38.880 It's actually a little. 0:12:38.679 --> 0:12:40.400 Bit of a how many banks are there in the US, 0:12:40.559 --> 0:12:42.319 in the United States of America, how many banks do 0:12:42.360 --> 0:12:42.520 we have? 0:12:42.880 --> 0:12:46.400 Well, it's not it's not it's not necessarily even the 0:12:46.440 --> 0:12:49.400 bank insolidation. It's the fees that they'll make advising other people. 0:12:50.040 --> 0:12:52.760 Right, Okay, so you're saying advising M and A for 0:12:52.880 --> 0:12:55.720 other industries. I think you're talking about in banks, because 0:12:56.040 --> 0:12:57.960 you know, in some countries they. 0:12:57.880 --> 0:12:59.920 Have like four or five, but just a couple of 0:13:00.040 --> 0:13:01.359 you can count on your hands. 0:13:01.160 --> 0:13:03.400 And this country we have we have a lot, a lot. 0:13:03.640 --> 0:13:06.800 I I'm not far off with five thousand, right, Yes. 0:13:06.880 --> 0:13:08.280 So you're not far off. 0:13:08.559 --> 0:13:11.920 But I mean the size of these g SIPs as 0:13:12.000 --> 0:13:15.440 we call them, which globally systemically important banks. I mean, 0:13:15.480 --> 0:13:18.880 the big really have gotten bigger. They have consolidated share, 0:13:18.920 --> 0:13:20.960 and they've gotten bigger globally. 0:13:22.360 --> 0:13:24.599 I don't know if Nora remembers, but there was a 0:13:24.720 --> 0:13:28.280 time when we were concerned about banks being too big 0:13:28.440 --> 0:13:30.440 to fail. Okay, I mean you were probably in middle 0:13:30.480 --> 0:13:33.760 school at the time. But now they're even bigger. I 0:13:33.840 --> 0:13:36.599 don't know that. I shouldn't assume that your age is. 0:13:36.840 --> 0:13:39.559 But you know, twenty ten now is fifteen years ago, 0:13:39.720 --> 0:13:43.720 so into two eight, right, seventeen years ago? What grade 0:13:43.760 --> 0:13:44.040 were you. 0:13:44.120 --> 0:13:45.600 In seventeen years ago? 0:13:45.600 --> 0:13:47.439 I don't think I'm allowed to ask. Actually, forget that. 0:13:48.320 --> 0:13:51.440 In any case, these g sibs are g sippier than ever. Right. 0:13:51.559 --> 0:13:53.920 I'm also so I keep an eye on real estate stocks, 0:13:53.960 --> 0:13:56.319 so I'm covering office rates and one thing that I'm 0:13:56.320 --> 0:13:58.520 always looking at is return to office. So we did 0:13:58.600 --> 0:14:00.959 have JP Morgan saying that they're pushing people back into 0:14:01.040 --> 0:14:04.000 the office. What has been the general mandate and what 0:14:04.120 --> 0:14:06.640 has been the conversation for the banking industry in general? 0:14:07.440 --> 0:14:08.160 In general? 0:14:08.600 --> 0:14:10.840 You know those that are front office, if you will, 0:14:11.040 --> 0:14:13.080 that are out there. You know, we have this banking 0:14:13.120 --> 0:14:16.160 fee recovery. Banks are competing with each other, so a 0:14:16.240 --> 0:14:20.240 lot of those senior people happen in office or traveling again, right, 0:14:20.360 --> 0:14:22.840 so a lot of for investment bankers, a lot of 0:14:22.920 --> 0:14:25.600 it is not necessarily sitting in your office, but being 0:14:25.680 --> 0:14:26.960 out there and visiting clients. 0:14:27.720 --> 0:14:30.040 So we definitely saw that return to travel. 0:14:30.200 --> 0:14:32.800 And JP Morgan, even though the five days a week 0:14:32.880 --> 0:14:35.280 is getting a lot of headlines, you know, the senior 0:14:35.320 --> 0:14:39.360 people at JP Morgan have already been back. You know, 0:14:39.440 --> 0:14:41.480 people that I talked to at the company were back, 0:14:41.640 --> 0:14:43.600 you know, May of twenty twenty, they were back in 0:14:43.640 --> 0:14:48.240 their office five days a week. So yeah, so definitely 0:14:48.440 --> 0:14:50.160 there is the return to office. 0:14:50.600 --> 0:14:50.920 Office. 0:14:50.960 --> 0:14:54.040 Commercial real estate, as you know, was a big concern 0:14:54.640 --> 0:14:56.200 about a year ago. 0:14:56.080 --> 0:14:59.080 Or I guess talk to us about where that stands now, but. 0:14:59.160 --> 0:15:04.160 We're definitely seeing some stabilization there and credit. You know, 0:15:04.400 --> 0:15:06.440 we talked about the net interest income side of things. 0:15:06.800 --> 0:15:09.800 When you don't hear about credit, it means it's good, okay. 0:15:10.080 --> 0:15:14.240 So you know, the office commercial real estate is a 0:15:14.320 --> 0:15:16.920 significant business for Wells Bargo. We're always looking at the 0:15:17.960 --> 0:15:21.160 trends for them, and we saw solid quarter overall net 0:15:21.280 --> 0:15:26.800 charge offs, very stable provisions less than expected at Wells 0:15:26.960 --> 0:15:30.680 and JP Morgan. And that's a clear signal for Bank America. 0:15:31.600 --> 0:15:34.880 And it also means that the credit outlook for twenty 0:15:34.960 --> 0:15:37.920 twenty five feels good and lower rates have really helped 0:15:37.960 --> 0:15:40.760 on the commercial on the office commercial real estate front. 0:15:40.920 --> 0:15:44.160 Interesting, yeah, very interesting stuff. Alison, thanks very much. I'm 0:15:44.200 --> 0:15:46.360 sure is today the busiest day of your year? 0:15:46.640 --> 0:15:49.880 Today is the busiest day. But Martly, we have three 0:15:50.040 --> 0:15:52.720 but today we have we have four big banks that 0:15:53.080 --> 0:15:53.680 that I look at. 0:15:53.760 --> 0:15:56.680 We had black Rock, we had Bank in New York. 0:15:56.800 --> 0:15:58.920 So so busy bank day. 0:15:59.040 --> 0:16:03.040 But it's always easy year when the numbers come in 0:16:03.160 --> 0:16:05.840 solid right, and the trends are you're tackling it. 0:16:06.440 --> 0:16:09.480 Alison Williams, thanks very much for that. She covers all 0:16:09.520 --> 0:16:11.960 the big banks for US. At Bloomberg Intelligence. 0:16:13.640 --> 0:16:17.280 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:16:17.400 --> 0:16:20.480 weekdays at ten am Eastern on Apple, Cocklay and Android 0:16:20.520 --> 0:16:23.760 Auto with the Bloomberg Business App. Listen on demand wherever 0:16:23.880 --> 0:16:27.000 you get your podcasts, or watch us live on YouTube. 0:16:28.760 --> 0:16:32.760 John Tucker, Nora, Melinda your subs today for Bloomberg Intelligence. 0:16:32.920 --> 0:16:36.400 As Lisa just told you, risk assets well, bonds too, 0:16:36.680 --> 0:16:40.920 also surging. And to today's inflation news, Let's get to 0:16:41.600 --> 0:16:45.440 some more insight. Lauren siddel Baker is accountabis and senior 0:16:45.480 --> 0:16:50.480 consulting speaker at ITR Economics. So, Lauren, you know, I 0:16:50.560 --> 0:16:54.400 get it Core is down, but is this an overreaction. 0:16:54.720 --> 0:16:56.240 I mean, it's not down that much. 0:16:57.760 --> 0:16:59.680 It's not down that much. If anything, I see this 0:16:59.720 --> 0:17:02.000 as a continuation of the trend we've been on. 0:17:02.160 --> 0:17:05.160 We like to see those splitting hair surprises to sake 0:17:05.400 --> 0:17:08.040 or not, you know, quite so so elevated as we 0:17:08.119 --> 0:17:11.520 have been. Certainly beata expectations. The market's going to like 0:17:11.600 --> 0:17:14.080 this for at least a few minutes. But I really 0:17:14.119 --> 0:17:16.159 think this keeps us on track with the trend that 0:17:16.240 --> 0:17:16.879 we've been seeing. 0:17:17.520 --> 0:17:20.359 Lauren Rope really stuck out to you through this report today, 0:17:22.000 --> 0:17:22.560 So it's good. 0:17:22.480 --> 0:17:25.359 To see shelter costs those contribute for just such a 0:17:25.480 --> 0:17:27.800 large percentage of overall CPI. 0:17:27.840 --> 0:17:30.520 Still rising, still one of the stickier. 0:17:30.600 --> 0:17:34.400 Aspects, the stickier components of inflation, but starting to cool 0:17:34.480 --> 0:17:37.880 off a little bit more. Again, housing affordability is going 0:17:37.960 --> 0:17:40.400 to be a concern going forward. We know that we're 0:17:40.440 --> 0:17:43.520 seeing more folks looking for rents right demand for apartments 0:17:43.600 --> 0:17:46.119 is up, Vacancy rates very very low for apartments, so 0:17:46.200 --> 0:17:49.000 the rental component, I do expect that to be a 0:17:49.040 --> 0:17:50.600 little bit stickier going forward. 0:17:50.960 --> 0:17:52.560 Otherwise, though the big. 0:17:52.800 --> 0:17:56.600 Drivers here things like airfare, medical care. Those are things 0:17:56.640 --> 0:17:57.920 that we know do cost more. 0:17:58.080 --> 0:18:01.000 So no big surprises on the core front. 0:18:01.320 --> 0:18:03.320 I think this is a manageable result, and I think 0:18:03.359 --> 0:18:05.320 this again keeps the FED on pace for those fifty 0:18:05.320 --> 0:18:05.960 basis points of. 0:18:05.960 --> 0:18:06.560 Cuts this year. 0:18:06.920 --> 0:18:11.119 Okay, so maybe we're headed the trajectory is headed in 0:18:11.320 --> 0:18:14.600 the right direction. But you know what, maybe teriffs are 0:18:14.920 --> 0:18:18.399 are headed our way and there are a lot of 0:18:18.520 --> 0:18:20.239 iffy situations coming up. 0:18:21.720 --> 0:18:24.240 Yes, tariffs are a big one we have seen. 0:18:24.320 --> 0:18:27.119 If we break down inflation to the goods components and 0:18:27.160 --> 0:18:31.040 the service components, goods really have been mundane. 0:18:31.119 --> 0:18:34.040 Now in this most recent print, energy prices starting to 0:18:34.080 --> 0:18:34.399 come back. 0:18:34.480 --> 0:18:37.240 We have been enjoying lower oil prices right lower gas 0:18:37.320 --> 0:18:38.560 prices at the pump for a while. 0:18:39.359 --> 0:18:41.400 Starting to see a little bit of pressure building there, 0:18:41.600 --> 0:18:44.040 just with the macro cycle picking back up. But if 0:18:44.119 --> 0:18:45.240 we do get in a. 0:18:45.280 --> 0:18:49.400 Tariffs, excuse me, especially those universal tariffs, that could drive 0:18:49.560 --> 0:18:51.720 more broad based inflation on the good. 0:18:51.640 --> 0:18:53.160 Side of things service sector. 0:18:53.200 --> 0:18:55.440 Again, labor market is tight, it is going to remain 0:18:55.520 --> 0:18:58.320 tight for the foreseeable future. So our base case is 0:18:58.480 --> 0:19:01.560 just for wages to cost work, for wage inflation to 0:19:01.640 --> 0:19:04.680 be higher going forward. It's really the risk to me 0:19:04.760 --> 0:19:07.280 of tariff's bringing good side back to keep up with 0:19:07.720 --> 0:19:10.040 the wage side of things, with the service side, that's 0:19:10.080 --> 0:19:12.160 when we could start to see inflation really reignite. 0:19:12.800 --> 0:19:15.280 When we think about the idea of tariffs, Lauren, are 0:19:15.320 --> 0:19:18.000 there any particular sectors or industries that you're keeping an 0:19:18.040 --> 0:19:18.320 eye on? 0:19:21.000 --> 0:19:23.240 So much of this remains political at this point. 0:19:23.800 --> 0:19:26.720 You know, maybe we'll get one company asking for waivers 0:19:26.800 --> 0:19:29.639 on one thing or another, but really, if we do 0:19:29.920 --> 0:19:33.560 get tariffs that are universal tariffs that just affect everything 0:19:33.640 --> 0:19:36.639 coming into this country, not targeting just China or just 0:19:36.840 --> 0:19:39.040 you know, some other jurisdiction, some product line. 0:19:39.520 --> 0:19:41.160 That's where I see the real risk. 0:19:41.440 --> 0:19:45.600 So I'm waiting to see what the incoming administration releases 0:19:45.720 --> 0:19:48.000 for their policy proposals. Some of this might just be 0:19:48.160 --> 0:19:50.760 campaign rhetoric that they leave behind on the campaign trail. 0:19:51.000 --> 0:19:53.600 They do target those kind of high value, you know, 0:19:53.720 --> 0:19:58.000 really buzzy items like steel or things that are more 0:19:58.040 --> 0:20:00.600 targeted to China. I just I think at this point 0:20:00.680 --> 0:20:03.360 it's a political decision. I will be a political analyst. 0:20:03.440 --> 0:20:05.000 I'll just analyze the economics of it. 0:20:05.680 --> 0:20:08.000 Lauren, As we think about the trajectory for the Fed's 0:20:08.080 --> 0:20:11.080 policy this year in twenty twenty five, is the focus 0:20:11.280 --> 0:20:14.359 really on employment data inflation data? It feels like that 0:20:14.480 --> 0:20:17.480 has shifted as we've been moving the past couple of years. 0:20:17.560 --> 0:20:19.560 What are you keeping an eye on, which prints really 0:20:19.600 --> 0:20:20.560 are most important to you? 0:20:21.880 --> 0:20:23.960 I am absolutely focused on inflation. 0:20:24.200 --> 0:20:27.200