WEBVTT - Big Banks Kickoff Quarterly Earnings Period 0:00:02.920 --> 0:00:10.719 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business 0:00:10.720 --> 0:00:13.960 Week inside from the reporters and editors who bring you 0:00:14.000 --> 0:00:18.319 America's most trusted business magazine, plus global business, finance and 0:00:18.400 --> 0:00:22.880 tech news. The Bloomberg Business Week Podcast with Carol Messer 0:00:23.040 --> 0:00:26.079 and Tim Stenebeck from Bloomberg Radio. 0:00:27.600 --> 0:00:30.000 Earning season, Folks, you know officially underway. 0:00:30.040 --> 0:00:32.800 Three of the big ones already reporting, JP Morgan, Chase, 0:00:32.840 --> 0:00:35.760 City Group, and Wells Fargo. They were out this morning 0:00:35.760 --> 0:00:37.680 before the open. A bit of a mixed bag on 0:00:37.720 --> 0:00:39.320 what some would say maybe is a bit of a 0:00:39.400 --> 0:00:40.480 tough backdrop. 0:00:40.520 --> 0:00:41.599 I'm looking at the stocks. 0:00:42.040 --> 0:00:45.400 City is down two percent, Tim as we speak, JP 0:00:45.560 --> 0:00:49.120 Morgan just a little bit lower, down about one percent 0:00:49.240 --> 0:00:51.800 or just shy, but Wells Fargo really taking the hit 0:00:51.960 --> 0:00:54.160 the biggest on a percentage basis, down about six percent. 0:00:54.360 --> 0:00:58.160 Yeah. Three of my decliners that you just mentioned just now, certainly, Hey, 0:00:58.240 --> 0:01:00.360 I'm all three sold off earlier in this set you 0:01:00.600 --> 0:01:03.040 just heard from Carol the latest and Charlie when it 0:01:03.040 --> 0:01:05.360 came to those numbers with our banker earnings round up 0:01:05.360 --> 0:01:08.119 with us, as Bloomberg News Global Finance correspondent Snali Basix 0:01:08.160 --> 0:01:11.160 she's here in our Bloomberg studio. Also, Cheryl Pate, senior 0:01:11.200 --> 0:01:14.399 portfolio manager at angel Oak Capital, joins us as well. 0:01:14.640 --> 0:01:17.960 Cheryl joins us from Atlanta. Okay, Shanali, the good, the bad, 0:01:18.319 --> 0:01:21.200 the mixed. The results from the three give us the highlights. 0:01:21.319 --> 0:01:21.839 Wow. 0:01:22.000 --> 0:01:25.319 So the good news is that you did see a 0:01:25.360 --> 0:01:28.400 tick upward, for example, in investment banking fees at a 0:01:28.440 --> 0:01:31.040 lot of places JP Morgan that was fifty percent higher. 0:01:31.760 --> 0:01:35.200 The bad news is that, for example, at Wells Fargo, 0:01:35.400 --> 0:01:38.840 you saw weakness compared to what was expected in net 0:01:38.840 --> 0:01:40.160 interest income that was. 0:01:40.120 --> 0:01:41.679 Coming though you know, yes. 0:01:41.959 --> 0:01:47.280 But the thing here is is you did see interestingly yesterday, 0:01:47.319 --> 0:01:50.920 for example, when the CPI print was released and you 0:01:50.960 --> 0:01:54.320 saw that sharp moved lower in yields. You actually saw 0:01:54.320 --> 0:01:57.280 the biggest US bank sell off and the regional banks rally. 0:01:57.320 --> 0:02:00.360 And the reason you saw that was because even though 0:02:00.440 --> 0:02:02.880 you're seeing rates potentially come down, I think there's a 0:02:02.880 --> 0:02:07.000 massive question on what does this mean for that mix 0:02:07.200 --> 0:02:11.200 that banks have. What happens to the deposits, but also 0:02:11.280 --> 0:02:14.800 what happens to the money that's being made from the 0:02:14.840 --> 0:02:17.639 loans that are being put out. Remember, we're looking at 0:02:18.440 --> 0:02:21.320 consumers with tons of credit card debt. Right now, you're 0:02:21.320 --> 0:02:24.280 seeing charge offs starting to rise. Provisions for loan losses 0:02:24.360 --> 0:02:27.760 were higher than expected at JP Morgan Fortress, JP Morgan, 0:02:28.080 --> 0:02:30.280 No one. It's not that people are really worried about 0:02:30.919 --> 0:02:33.640 the health of JP Morgan. What they're more worried about 0:02:33.800 --> 0:02:35.840 is Okay, well, what does this say about the propensity 0:02:35.840 --> 0:02:38.119 of consumers to both take on more debt and pay 0:02:38.120 --> 0:02:38.720 that debt back? 0:02:38.800 --> 0:02:39.640 Right exactly? 0:02:39.800 --> 0:02:39.920 So? 0:02:40.040 --> 0:02:42.960 Is there like so is it mixed? Do you say 0:02:43.160 --> 0:02:46.240 in general? Or is there any trend overall? Takeaway? 0:02:46.360 --> 0:02:48.880 Well, think about it. All the big stocks are lower 0:02:49.040 --> 0:02:52.360 today after earnings, and not by a really small margin. 0:02:52.560 --> 0:02:57.079 They had a really significant runoff into this moment. You've 0:02:57.080 --> 0:02:59.440 seen JP Morgan Wells both at more than twenty percent 0:02:59.480 --> 0:03:03.160 city group thirty percent city groups still trading at around 0:03:03.160 --> 0:03:05.200 sixty six or so percent of book value, maybe a 0:03:05.200 --> 0:03:08.680 little less right now. But you know, the setup was 0:03:08.720 --> 0:03:11.639 pretty good going into this. The future is super uncertain. 0:03:11.919 --> 0:03:13.919 Yeah, that's fair. I think that is so fair. Let's 0:03:13.919 --> 0:03:15.840 get to Cheryl. Cheryl come on in on the conversation. 0:03:16.000 --> 0:03:18.840 Listening to Shanali, who is usually up. I don't know 0:03:18.840 --> 0:03:20.680 at the wee hours and breaking it down and sending 0:03:20.760 --> 0:03:24.440 us all messages about the results. What's your takeaway about 0:03:24.440 --> 0:03:26.120 the three big banks that reported today. 0:03:27.200 --> 0:03:31.520 Yeah, No, I think it's a similar perspective here. I 0:03:31.560 --> 0:03:35.360 really think a lot of the reaction today really hinges 0:03:35.440 --> 0:03:38.360 on the forward guidance, and I think, you know, there 0:03:38.400 --> 0:03:41.600 may have been some expectations that there may have been 0:03:41.640 --> 0:03:44.320 some upside to some of the guidance. The fact that 0:03:45.280 --> 0:03:48.960 JP Morgan reiterated I think was a little disappointing. And 0:03:49.000 --> 0:03:52.720 then you know, Wells on the other side, guiding to 0:03:52.760 --> 0:03:55.839 the high end in terms of in terms of NIM 0:03:55.920 --> 0:04:01.400 compression or NII compression certainly was disappoint team. So we've 0:04:01.400 --> 0:04:05.080 been focused on guidance, on NIM and on credit and 0:04:05.120 --> 0:04:07.920 I think that the question mark really is on the 0:04:07.960 --> 0:04:10.720 forward guidance, and we didn't get a lot there. 0:04:11.680 --> 0:04:17.000 Janellie, Jamie Diamond, we always listen when he speaks. It's 0:04:18.200 --> 0:04:21.760 a letter to investors, an annual report, or an earnings call, 0:04:22.440 --> 0:04:24.440 commentary from Jamie Diamond, anything of note. 0:04:24.480 --> 0:04:25.360 He wasn't there today. 0:04:25.800 --> 0:04:29.360 He was out celebrating the banks one hundredth anniversary in Germany. 0:04:29.400 --> 0:04:30.120 He was in Frankfurt. 0:04:30.279 --> 0:04:31.000 Is that notable. 0:04:31.440 --> 0:04:34.680 You know, it's interesting when Jamie diamond sneezes, everybody catches 0:04:34.680 --> 0:04:35.360 a cold. 0:04:35.160 --> 0:04:36.960 Right, you know, is that what happened to me? 0:04:39.920 --> 0:04:42.800 If he doesn't sound like Tim Stenovick, a deeper Tim Stenevik, 0:04:42.920 --> 0:04:44.280 it is people. 0:04:44.000 --> 0:04:45.560 Want to look for a deeper meaning. You look at 0:04:45.560 --> 0:04:48.120 Morgan Stanley for example, and just kind of how sloggish 0:04:48.120 --> 0:04:51.240 the stock has been relative to the other banks, given 0:04:51.279 --> 0:04:53.719 that there has been a big change in leadership. There 0:04:53.960 --> 0:04:56.599 so much confidence in James Gorman. People are looking for 0:04:56.680 --> 0:04:59.000 direction from Ted Picken who he is as a leader. 0:04:59.320 --> 0:05:01.320 And if Jamie I'm in worre to step down than 0:05:01.400 --> 0:05:03.840 what the same questions arise for JP Morgan perhaps on 0:05:03.839 --> 0:05:06.719 a bigger scale. So people do look for direction. But 0:05:06.920 --> 0:05:09.800 you know, perhaps like many leaders are doing right now, 0:05:10.320 --> 0:05:14.599 giving deputies time to breathe and make their mark is 0:05:14.680 --> 0:05:17.760 prudent coming into the next cycle. 0:05:17.920 --> 0:05:21.680 So Chaneli, is that another sign that you know where 0:05:21.680 --> 0:05:22.280 I'm going with this? 0:05:22.920 --> 0:05:23.880 You can't read into things. 0:05:24.120 --> 0:05:24.800 I can't think. 0:05:24.880 --> 0:05:26.440 We can't read into this, I don't think. 0:05:26.480 --> 0:05:28.679 So he steps down. When he steps down. 0:05:28.560 --> 0:05:30.800 He does, But he's also made some moves in the 0:05:30.839 --> 0:05:33.400 past few months about potential successors. 0:05:32.960 --> 0:05:36.240 And to say talk for the first time ten years. Man, 0:05:36.360 --> 0:05:38.880 this guy has been making moves. 0:05:38.880 --> 0:05:42.000 But didn't he say something different a few months ago? 0:05:42.200 --> 0:05:44.640 He said that you know that five years, five years, 0:05:44.680 --> 0:05:47.400 five years thing that he always said that has gone away. 0:05:47.640 --> 0:05:51.880 It's the horizon is certainly smaller. The bigger question for 0:05:51.920 --> 0:05:55.080 me is are his deputies ready? Is Jen Pipsack ready? 0:05:55.440 --> 0:05:57.560 She's the one that people are watching the most. 0:05:57.720 --> 0:06:00.640 Some would say he's being, you know, maybe really responsible 0:06:00.680 --> 0:06:03.000 as a leader to make sure that bench is ready 0:06:03.040 --> 0:06:03.560 to take over. 0:06:03.680 --> 0:06:04.960 I want to bring Cheryl back in. 0:06:05.200 --> 0:06:07.880 You're hearing us talk about Jamie Diamond, and we know 0:06:07.920 --> 0:06:10.720 there's more than JP Morgan, but we do focus on it. 0:06:10.880 --> 0:06:12.960 You know, what is you're thinking about the outlook for 0:06:12.960 --> 0:06:15.240 this company and then kind of who takes over and 0:06:15.279 --> 0:06:17.000 when they take over from Jamie Diamond. 0:06:18.640 --> 0:06:20.960 Yeah, I think that's been a question for a number 0:06:21.000 --> 0:06:25.960 of years. Clearly as some of the commentary already look. 0:06:25.960 --> 0:06:28.120 I think this was a good opportunity to have some 0:06:28.160 --> 0:06:31.000 more people in the in the forefront, and I think 0:06:31.000 --> 0:06:35.400 it was it was done well on the conference call today. Timing, 0:06:35.440 --> 0:06:39.320 I think it is still uncertain and perhaps maybe it's 0:06:39.360 --> 0:06:42.280 It's dependent on where we go from an economic perspective 0:06:42.279 --> 0:06:46.400 here too. You know, the data now is somewhat supportive 0:06:46.839 --> 0:06:50.440 of moving towards rate cuts and hopefully you know, it's 0:06:50.440 --> 0:06:53.640 off landing no landing type scenario, which which may be 0:06:53.720 --> 0:06:56.600 more opportune than than a more hard landing scenario. 0:06:56.760 --> 0:06:58.560 Cheryl, I want to shift gears to City a little bit. 0:06:58.680 --> 0:07:00.560 City's down two percent, So if it's lows of the 0:07:00.640 --> 0:07:02.920 day down three point six percent at its lows today, 0:07:03.520 --> 0:07:05.520 City warning that costs likely to be at the high 0:07:05.600 --> 0:07:07.799 end of the forecast. What was your takeaway on City? 0:07:07.839 --> 0:07:11.200 What do we need to know about Jane Frasier and 0:07:11.240 --> 0:07:13.400 her team and what they're doing? And as Shaneli mentioned, 0:07:13.440 --> 0:07:15.119 I mean this is another one up twenty five percent 0:07:15.160 --> 0:07:15.880 so far this year. 0:07:17.080 --> 0:07:19.800 Yeah. No, I think the execution so far has been 0:07:19.840 --> 0:07:22.960 good on the restructuring plan, and you know we are 0:07:23.000 --> 0:07:26.520 positive on the name for that reason. I think you know, 0:07:26.560 --> 0:07:30.360 this loops into the forward guidance and expenses have been 0:07:31.800 --> 0:07:34.640 you know, troublesome for the whole sector for some time, 0:07:34.720 --> 0:07:37.240 and moving to the higher end of the range again 0:07:37.320 --> 0:07:41.360 here I think puts more uncertainty onto the forward look. 0:07:41.680 --> 0:07:44.880 I think more of what will drive city looking forward. 0:07:44.960 --> 0:07:49.000 That is going to be execution on restructuring and also 0:07:49.160 --> 0:07:52.120 working to deploy some of that excess capital. And I 0:07:52.120 --> 0:07:55.040 thought the buyback commentary was helpful from that perspective. 0:07:55.080 --> 0:07:58.720 Today, Cheryl, what is your favorite choice among the banks 0:07:58.760 --> 0:07:59.200 and why? 0:08:01.400 --> 0:08:01.600 You know? 0:08:01.680 --> 0:08:05.000 I think today we would say JP Morgan would be 0:08:05.000 --> 0:08:07.360 our top pick. We do like the large cap banks 0:08:07.480 --> 0:08:11.480 generally given more diversification. We clearly saw that come through 0:08:11.560 --> 0:08:15.040 in the capital markets revenue, and I think, you know, 0:08:15.120 --> 0:08:20.040 JP Morgan was the standout winner there today. But also 0:08:20.160 --> 0:08:23.440 in case of looking towards any wobbles and credit going forward, 0:08:24.200 --> 0:08:28.160 the prudence the fortress balance sheet concept, I think really 0:08:28.200 --> 0:08:31.640 stands the test of time in a more difficult environment. 0:08:32.400 --> 0:08:34.360 So that's you know, where we would put our top 0:08:34.400 --> 0:08:34.960 pick today. 0:08:35.720 --> 0:08:37.840 Hey, just to wrap up, guys, just got about sixty 0:08:37.880 --> 0:08:39.439 second Cheryl, let me start with you and then we'll 0:08:39.440 --> 0:08:40.760 go to Shanali next week. 0:08:40.840 --> 0:08:44.720 Holman Sachs. Bank of America, what is on your radar, Cheryl? 0:08:46.200 --> 0:08:50.200 I think we're mostly watching for credit, particularly from Bank 0:08:50.240 --> 0:08:52.000 of America, and then starting to get in some of 0:08:52.000 --> 0:08:56.959 the regional banks. We've clearly been concerned about commercial real 0:08:57.040 --> 0:09:00.520 estate exposure, but also some weakening in the consumers side. 0:09:00.640 --> 0:09:03.760 I think we were encouraged today with the comments from 0:09:03.840 --> 0:09:08.160 JP Morgan on credit card and also City that it's 0:09:08.440 --> 0:09:12.439 just regular, sort of normal course normalization, seasoning of vintages. 0:09:13.080 --> 0:09:15.160 But I think that'll be important to see out of 0:09:15.200 --> 0:09:18.640 Bank of America and then you know, the Goldman's and 0:09:18.679 --> 0:09:20.920 Morgans of the world. Clearly it's been a good quarter 0:09:21.000 --> 0:09:26.000 for capital markets, particularly strong investment banking revenues and equity trading. 0:09:26.320 --> 0:09:28.800 Shanali very briefly next week, Bank of America, what are 0:09:28.800 --> 0:09:29.559 you looking for In. 0:09:29.480 --> 0:09:32.760 Addition, in addition to what Cheryl was saying about credit quality, 0:09:32.920 --> 0:09:37.120 I'm also watching for trading because if you saw fixed 0:09:37.120 --> 0:09:39.680 income coming in a little light at JP Morgan and 0:09:39.679 --> 0:09:42.400 even City Group, that's a big, big, big business for 0:09:42.480 --> 0:09:45.160 Goldman Sacks. They have been leaning in on prime brokerage 0:09:45.160 --> 0:09:47.599 and of course Morgan Stanley equities trading as well. It 0:09:47.720 --> 0:09:49.880 was a huge bite spot this quarter so far. Let's 0:09:49.880 --> 0:09:51.439 see how that competition plays out. 0:09:51.520 --> 0:09:53.880 All right, great setup of what's going on today and 0:09:53.920 --> 0:09:55.160 then of course into next week. 0:09:55.360 --> 0:09:56.720 Shanelli Bossk, thank you so much. 0:09:56.760 --> 0:09:59.359 As always, we always appreciate your input and the researchers 0:09:59.480 --> 0:09:59.920 end us. 0:10:01.679 --> 0:10:03.120 I know this kid doesn't sleep. 0:10:03.440 --> 0:10:06.080 Global finance correspond at Bloomberg News and Cheryl Pate are 0:10:06.080 --> 0:10:08.480 thanks to you as well, and the analysis senior portfolio 0:10:08.480 --> 0:10:11.400 manager at angel Oak Capital Advisors there in Atlanta. The 0:10:11.480 --> 0:10:14.240 KBW Bank Index little change and actually most of the 0:10:14.320 --> 0:10:15.600 names are higher in today's session. 0:10:15.720 --> 0:10:18.000 Okay, So now to our other big focus this week, 0:10:18.000 --> 0:10:20.600 and that was two prints on inflation fed cho J. 0:10:20.679 --> 0:10:24.200 Powell updating US lawmakers on the economy and monetary policy, 0:10:24.640 --> 0:10:26.840 and then how it all played out in moves along 0:10:26.880 --> 0:10:29.560 the treasury curve. Carol's safe to say a reset on 0:10:29.640 --> 0:10:32.199 rates again, which makes us wonder have we talked out? 0:10:32.280 --> 0:10:33.880 Yeah, it's a great question, and we've got a great 0:10:33.880 --> 0:10:36.040 person to answer back with us. Is Bloomberg News rates 0:10:36.040 --> 0:10:39.559 reporter Michael mackenzie. He's out there in New Jersey. All right, Michael. 0:10:39.640 --> 0:10:42.760 Another inflation print today. We had one yesterday. We definitely 0:10:42.760 --> 0:10:46.120 did see the treasury curve move. How are you kind 0:10:46.120 --> 0:10:49.040 of adding it all together? Have we topped out when 0:10:49.040 --> 0:10:52.120 it comes to some of the levels that we've seen 0:10:52.240 --> 0:10:53.120 on the treasury curve. 0:10:54.480 --> 0:10:57.720 I think that's a pretty reasonable conclusion to control, Carol, 0:10:57.760 --> 0:11:01.920 I think the rally you're now seeing this week has 0:11:01.960 --> 0:11:05.080 actually one investor described to me as a bit of fomo. 0:11:05.360 --> 0:11:07.600 People who missed the top and yields back in April 0:11:07.720 --> 0:11:10.600 when we were around four seventy five, for example, in 0:11:10.679 --> 0:11:14.400 five years are now having to buy because the data 0:11:14.520 --> 0:11:17.960 is slowing and the inflation picked. The inflation printly got 0:11:18.080 --> 0:11:21.200 yesterday on CPI was really important because there was a 0:11:21.200 --> 0:11:23.680 bit of anxiety going into that, but the fact that 0:11:23.720 --> 0:11:26.320 it came below expectations, the fact that it shows that 0:11:26.600 --> 0:11:29.360 FED is probably done enough here in terms of tightening 0:11:29.920 --> 0:11:32.920 interest rate policies is twenty twenty two that they are 0:11:32.960 --> 0:11:34.680 going to win the fight on inflation, and they are 0:11:34.679 --> 0:11:37.800 only get it closer towards that two percent target, And 0:11:37.840 --> 0:11:40.680 I think you're now going to get the market beginning. 0:11:41.080 --> 0:11:43.400 We've seen some big trades go through FED fund's futures 0:11:43.440 --> 0:11:46.120 today where people are beginning to speculate on whether the 0:11:46.120 --> 0:11:49.280 FED will go fifty in September. I think that's not 0:11:49.320 --> 0:11:52.960 on the table at all at the moment, but it 0:11:53.040 --> 0:11:55.000 is interesting to see when you look at rate cut 0:11:55.040 --> 0:11:58.959 expectations for twenty twenty five, they're beginning to build again. 0:12:00.160 --> 0:12:03.520 His expectation of bomb market that the FED is going 0:12:03.559 --> 0:12:05.600 to do a lot more easy than people think, well 0:12:05.960 --> 0:12:07.440 at least what the FED says they're going to do 0:12:07.480 --> 0:12:09.920 by next year. So I think there is a bit 0:12:09.960 --> 0:12:13.000 of pomo going on. Retail sales. Next Tuesday will be 0:12:13.040 --> 0:12:16.760 an important piece of data, and I think really it'll 0:12:16.800 --> 0:12:19.280 be the next couple of payroll numbers that we get, 0:12:19.280 --> 0:12:23.040 because if the labor market softens further, then I think 0:12:23.200 --> 0:12:26.040 you definitely get the cut in September. You might even 0:12:26.080 --> 0:12:27.400 get another one in November. 0:12:27.600 --> 0:12:31.640 Michael Weed, we often ask you about a peak on 0:12:31.679 --> 0:12:35.160 the tenure, but how low could the tenure go this year? 0:12:35.440 --> 0:12:38.000 Well, it's chatter today that you're going to see a 0:12:38.000 --> 0:12:41.840 three handle on the ten year. I think you. 0:12:41.880 --> 0:12:43.600 Said three handle, You said a three hand. 0:12:43.960 --> 0:12:46.679 Get below four percent? I think again, we're in this 0:12:46.720 --> 0:12:49.880 tricky period now where the inflation number was such a 0:12:49.880 --> 0:12:53.600 good number for the bomb market. You just cannot really 0:12:54.080 --> 0:12:56.280 assess just how big this buying is going to come 0:12:56.320 --> 0:13:00.920 in the drive prices down, actually drive prices up and 0:13:00.960 --> 0:13:04.120 yeelds down. Sorry, so, and we have been here before. 0:13:04.160 --> 0:13:05.760 We've had these big pivot trays that have been put 0:13:05.760 --> 0:13:08.839 on the last couple of years. But the CPI was 0:13:08.880 --> 0:13:12.400 also It came after two days of testimony from Chair Power, 0:13:13.080 --> 0:13:16.120 and he kind of brought back to duel mandate for 0:13:16.160 --> 0:13:18.760 the fair here. He said, we're watching employment, and I 0:13:18.800 --> 0:13:21.040 think if you get cracks in in labor over the 0:13:21.040 --> 0:13:23.240 next couple of months, you're definitely going to see the 0:13:23.240 --> 0:13:24.480 bomb market rally harder. 0:13:25.720 --> 0:13:29.319 So I am thinking we all are thinking about Monday 0:13:29.440 --> 0:13:32.120 at twelve thirty pm Wall Street time, when Fetcher J. 0:13:32.240 --> 0:13:35.160 Powell will be interviewed by David Rubinstein at the Economic 0:13:35.160 --> 0:13:35.880 Club of Washington. 0:13:35.960 --> 0:13:36.160 D C. 0:13:36.960 --> 0:13:39.040 Powell asked for this conversation. 0:13:38.800 --> 0:13:42.720 Is this kind of a victory speech a little bit 0:13:42.840 --> 0:13:44.360 or I don't know, how are you. 0:13:44.600 --> 0:13:47.520 I don't think he's going to play it that way. 0:13:47.559 --> 0:13:49.720 I think he's going to continue to be pretty careful. 0:13:50.080 --> 0:13:51.920 The one speech you really got to look forward to, 0:13:52.000 --> 0:13:54.760 I think is the end of August at Jackson Hall, 0:13:55.360 --> 0:13:59.359 because that'll be about what twenty days before the September 0:13:59.360 --> 0:14:04.200 eighteenth BED meeting, and that's going to be the pivotal 0:14:04.240 --> 0:14:06.240 one because then you have seen more data. Don't forget 0:14:06.240 --> 0:14:09.199 they're very data dependent. They keep telling us they're data dependent. 0:14:09.640 --> 0:14:11.640 I think Monday he'll be a bit he'll stick to 0:14:11.679 --> 0:14:13.559 the script, the recent script. Then you know, they looking 0:14:13.679 --> 0:14:15.800 at both the labor market, they're looking at inflation. They 0:14:15.840 --> 0:14:19.360 probably he's probably has more confidence that inflation is coming down. 0:14:19.880 --> 0:14:22.640 Don't forget this week he said they didn't have enough confidence. 0:14:22.640 --> 0:14:25.640 So there may be he could get the market fired 0:14:25.680 --> 0:14:27.920 up again if he says we do have confidence. But 0:14:27.960 --> 0:14:30.520 I think he's going to be pretty cautious still. But 0:14:30.600 --> 0:14:33.720 I think that Jackson Hole speech he makes at the 0:14:33.760 --> 0:14:36.240 end of August, that's going to be that's going to 0:14:36.280 --> 0:14:37.880 be the big thing, the big event for the market. 0:14:38.000 --> 0:14:40.560 Michael, just thirty seconds. What about the July thirty first 0:14:40.640 --> 0:14:42.760 fal Reserve meeting? Is there any chatter of a rate cut? 0:14:42.800 --> 0:14:43.000 There? 0:14:43.600 --> 0:14:44.560 No, why not? 0:14:46.880 --> 0:14:49.480 I think you just haven't seen enough data. I think 0:14:49.480 --> 0:14:51.040 the Fed has made it pretty clear they want to 0:14:51.040 --> 0:14:54.040 see a series of data prints. The inflation is moving 0:14:54.080 --> 0:14:57.320 the right direction. Labor market okay, unemployment rates ticked up 0:14:57.360 --> 0:14:59.680 over four percent. That's not enough to get the Fed 0:14:59.680 --> 0:15:02.880 to read You think about, you know, bringing right cards forward. 0:15:03.160 --> 0:15:06.280 They want to give themselves, you know, play flexibility. Still, 0:15:06.360 --> 0:15:09.800 But everyone I've spoken to this week as even people 0:15:09.800 --> 0:15:12.280 who didn't think September was in play before now say 0:15:12.280 --> 0:15:14.520 it's in play and they expect to cut in September. 0:15:14.520 --> 0:15:16.360 Plased on what we're currently seeing in the days. 0:15:16.400 --> 0:15:20.400 An amazing week again, Michael McKenzie, Have a great week 0:15:20.440 --> 0:15:23.000 and Bloomberg News Rates report. Michael McKenzie out there in 0:15:23.000 --> 0:15:23.600 New Jersey. 0:15:24.960 --> 0:15:28.480 You're listening to the Bloomberg Business Week podcast. Catch us 0:15:28.520 --> 0:15:31.720 live weekday afternoons from two to five pm Eastern Listen 0:15:31.800 --> 0:15:33.960 on Apple card Play and then Bright Auto with a 0:15:34.000 --> 0:15:38.120 Bloomberg Business app, or want just live on YouTube. 0:15:39.080 --> 0:15:42.080 All right, folks, Tesla always on our radart fields like 0:15:42.360 --> 0:15:45.880 shares of Tesla did sell off earlier today, I think 0:15:45.960 --> 0:15:46.280 I'm just. 0:15:46.200 --> 0:15:48.120 Gonna they turned around there up three point eight percent. 0:15:48.160 --> 0:15:48.280 Now. 0:15:48.360 --> 0:15:50.840 Yeah, we've definitely seen like a rally around Trail market 0:15:50.880 --> 0:15:54.760 right a little bit yesterday we did see the trade, 0:15:54.800 --> 0:15:57.960 though there was some pressure. The stock today was downgraded 0:15:58.000 --> 0:16:01.280 by ubs and concerns at the US Carmaker's shares have 0:16:01.360 --> 0:16:04.480 risen too much too soon, that's their words on optimism 0:16:04.560 --> 0:16:07.840 over its artificial intelligence plans. Meantime, Tim, we've got another 0:16:07.840 --> 0:16:10.160 story on our radar when it comes to Tesla, or 0:16:10.160 --> 0:16:11.720 should I say the anti Tesla crowd. 0:16:11.920 --> 0:16:14.760 Yeah, the other EV startup that's persuading buyers to drop 0:16:14.840 --> 0:16:17.360 seventy thousand dollars on its EV's, but still has a 0:16:17.400 --> 0:16:20.640 big hurdle to get over and that is making money. 0:16:20.880 --> 0:16:23.080 The story is in the upcoming issue of Bloomberg business Week. 0:16:23.120 --> 0:16:25.800 It's coming out next week. It's the August issue we've 0:16:25.800 --> 0:16:28.440 got with us Bloomberg Technology co host ed Ludlow. He 0:16:28.520 --> 0:16:31.000 joins us on his Business Week story in our San 0:16:31.040 --> 0:16:34.080 Francisco bureau. And you know a lot about Tesla, you 0:16:34.120 --> 0:16:37.520 know a lot about Rivian. This is the focus of 0:16:37.560 --> 0:16:40.480 the story that you wrote with Max Chafkin. How is 0:16:40.520 --> 0:16:42.000 the company doing? 0:16:43.720 --> 0:16:46.400 It's hard to say, and we wrote four thousand words, 0:16:46.440 --> 0:16:48.280 so you think we'd come to a conclude. It's a 0:16:48.320 --> 0:16:51.600 great story, you know, So thank you guys. 0:16:51.600 --> 0:16:51.800 Good. 0:16:51.880 --> 0:16:54.120 Where have you two been all over the place? West coast, 0:16:54.160 --> 0:16:56.680 East coast again? Look, you guys kind of. 0:16:56.680 --> 0:16:58.920 Teaching a lot of EV's, we have been. 0:16:58.960 --> 0:17:02.440 I will exactly different, I know types, and I'm really 0:17:02.480 --> 0:17:05.160 grateful for you guys getting hands on with that world. 0:17:05.359 --> 0:17:08.000 Like the point or the open of the four thousand 0:17:08.040 --> 0:17:11.000 word BusinessWeek article is that Rivian or the first iteration 0:17:11.240 --> 0:17:14.719 of it was like the anti Elon anti Tesla. Tesla 0:17:14.800 --> 0:17:18.080 had small form factor cars, Model three, Model Y. They 0:17:18.160 --> 0:17:22.080 have Elon, and we you know, Elon is divisive. I 0:17:22.080 --> 0:17:25.400 think that's a fair and objective thing to say, frankly. 0:17:26.280 --> 0:17:28.840 And so in the first instance, Rivian was able to 0:17:28.920 --> 0:17:31.359 sell it's kind of very large suv and very large 0:17:31.400 --> 0:17:34.520 pickup to that kind of market somebody that didn't want 0:17:34.520 --> 0:17:37.200 a Tesla but wanted MeV or just didn't like to 0:17:37.560 --> 0:17:40.240 be assated with Elon's products. But it had a super 0:17:40.240 --> 0:17:43.399 limited shelf life. Now they've hit reset, they are on 0:17:43.480 --> 0:17:47.000 Rivian two point zero, and we went super detailed on 0:17:47.040 --> 0:17:50.480 the strategy to actually stop burning through billions of dollars 0:17:50.800 --> 0:17:52.480 and start making some money down the road. 0:17:52.640 --> 0:17:54.480 Okay, And I have a sort of how the sausage 0:17:54.520 --> 0:17:57.560 has made question for you because I imagine while you 0:17:57.600 --> 0:18:00.800 were reporting the story, news of that five billion dollar 0:18:00.840 --> 0:18:03.080 investment from VW came in. 0:18:03.480 --> 0:18:11.000 Oh so, without betraying confidence, it's brilliant timing. It gives 0:18:11.040 --> 0:18:13.040 the story new life and energy. Like the way that 0:18:13.040 --> 0:18:15.639 I would put it is that Volkswagen almost comes in 0:18:15.680 --> 0:18:19.560 at the eleventh hour, and because an injection of five 0:18:19.600 --> 0:18:21.960 billion dollars certainly helps, even if the story is that 0:18:22.000 --> 0:18:25.200 you're burning through billions anyway, having some more billions is good. 0:18:25.480 --> 0:18:27.800 But Max and I certainly got the sense a few 0:18:27.840 --> 0:18:30.959 weeks ago that something was happening. And I've got a 0:18:31.000 --> 0:18:33.040 pretty good track record, right I've broken quite a lot 0:18:33.080 --> 0:18:36.280 of news on Rivian, frankly, and I just had no idea. 0:18:36.320 --> 0:18:38.480 I didn't see it coming. You know, we did learn 0:18:38.520 --> 0:18:43.120 the backstory, which is that Oliver Bloom and Volkswagen were 0:18:43.160 --> 0:18:44.360 admirers of Rivian. 0:18:45.200 --> 0:18:45.440 RJ. 0:18:45.680 --> 0:18:48.439 Scaringe, the seer of Rivian, met with Oliver Bloom about 0:18:48.920 --> 0:18:52.480 less than a year ago. But like last summer in Atlanta, Georgia, 0:18:52.520 --> 0:18:55.399 where Porsche has its kind of excellent center. It's somewhere 0:18:55.440 --> 0:18:57.520 you can visit, and he rocks up and in the 0:18:57.560 --> 0:19:00.240 parking lot they've got some Rivians and he's like, that's 0:19:00.280 --> 0:19:02.960 kind of neat. But the idea is, like all car 0:19:03.000 --> 0:19:06.120 companies benchmark against each other by testing other people's vehicles, 0:19:06.480 --> 0:19:08.640 and they kind of went from there. And the main 0:19:08.680 --> 0:19:11.040 thing you need to know is that Rivian needed money 0:19:11.320 --> 0:19:13.760 and it has some access to that now. But it's 0:19:13.800 --> 0:19:16.200 also kind of a big vote of credibility for Rivian 0:19:16.400 --> 0:19:19.119