WEBVTT - Bloomberg Daybreak: October 18, 2022 - Hour 1 (Radio) 0:00:03.360 --> 0:00:06.600 Live from the Bloomberg Interacted Brooker Studios. This is Bloomberg 0:00:06.680 --> 0:00:10.800 day Break for Tuesday, October eighteen two. Coming up this shour, 0:00:11.160 --> 0:00:15.480 Stocks extend yesterday's rally on Wall Street. Golman Sachs wraps 0:00:15.600 --> 0:00:19.160 up bank earnings. Liz Trust apologizes but bounced to stay 0:00:19.160 --> 0:00:21.759 on as UK Prime Minister, and the White House could 0:00:21.760 --> 0:00:25.440 release more oil from its emergency stockpile. He was debate 0:00:25.560 --> 0:00:28.560 night in several key races. Plus a new policy from 0:00:28.560 --> 0:00:31.200 the New York Sanitation Department is making the rats say, 0:00:31.360 --> 0:00:34.840 Oh rats, I'm Michael Barr Morris. Right ahead, I'm John 0:00:34.880 --> 0:00:37.480 stashowards forth. The Yankees and Guardians were rained out. They'll 0:00:37.479 --> 0:00:40.000 play Game five at four o'clock today. The Rangers beat 0:00:40.000 --> 0:00:45.280 the Ducks. The Chargers beat the Broncos. That's All's train 0:00:45.360 --> 0:00:48.720 ahead on Bloomberg day Break on Bloomberg e Living Free 0:00:48.720 --> 0:00:52.960 on New York, Bloomberg nine one, Washington d C, Bloomberg 0:00:53.040 --> 0:00:56.720 one oh six one, Boston, Bloomberg nine sixties and Francisco 0:00:57.200 --> 0:01:00.000 Sirius x M one nine Team and around the world 0:01:00.000 --> 0:01:03.080 Old on Bloomberg Radio dot Com and via the Bloomberg 0:01:03.120 --> 0:01:10.400 Business app. And good Morning, I'm Karen Moscow. I'm Nathan Hagar. 0:01:10.400 --> 0:01:13.000 Bloomberg Daybreak is brought to you by se I. Imagine 0:01:13.000 --> 0:01:16.760 your asset management firms operational infrastructure as a competitive advantage. 0:01:16.840 --> 0:01:18.840 Let se I show you how at se I C 0:01:19.040 --> 0:01:22.520 dot com slash I M, s U S futures are 0:01:22.640 --> 0:01:25.160 higher this morning. It is five oh one on Wall Street, 0:01:25.160 --> 0:01:27.360 and we check the markets every fifteen minutes throughout the 0:01:27.400 --> 0:01:30.480 trading day. On Bloomberg. Right now, SNP futures are up 0:01:30.520 --> 0:01:33.640 forty points, DWAL future is up two hundred sixty one 0:01:33.720 --> 0:01:37.600 and nasday futures have one four ten year treasury down 0:01:37.640 --> 0:01:40.840 five thirties seconds, the yield four point zero three percent, 0:01:41.160 --> 0:01:43.960 yield on the two year four point four six percent, 0:01:44.280 --> 0:01:46.640 and Nimax screwed oil is down six tenths of a 0:01:46.800 --> 0:01:50.080 percent Nathan Well Karen. The rise in futures follows yesterday's 0:01:50.120 --> 0:01:53.080 powerful rally on Wall Street. The SMP five hundred game 0:01:53.120 --> 0:01:56.240 two point seven percent, while the tech heavy nasdacs surged 0:01:56.320 --> 0:02:00.360 three point four percent. David Deet's senior investment strategistic Pepack 0:02:00.400 --> 0:02:02.400 Private Wealth says it was only a matter of time 0:02:02.440 --> 0:02:05.440 for a bounce. We don't know whether we've seen the 0:02:05.480 --> 0:02:08.360 bottom in the sixecal downturn. But we do know that 0:02:08.400 --> 0:02:12.639 the conditions are primed for better returns going forward. I mean, 0:02:12.680 --> 0:02:15.560 we start with the fact that we're down twenty year 0:02:15.600 --> 0:02:19.880 to date on the broad market. On the NaSTA, that 0:02:20.000 --> 0:02:24.000 alone should with the appetite of all bargain hunters. David 0:02:24.080 --> 0:02:26.320 Deets of Pepack Private Wealth notes the S and P 0:02:26.520 --> 0:02:30.440 closed above a key technical support level yesterday. Still, Nathan 0:02:30.560 --> 0:02:33.040 stocks have further room to fall, as according to the 0:02:33.080 --> 0:02:36.360 latest fund managers survey from Bank of America, the respondents 0:02:36.360 --> 0:02:38.839 expect stocks to bottom in the first half of next 0:02:38.919 --> 0:02:42.200 year after the FED finally pivots away from hiking rates. 0:02:42.600 --> 0:02:45.280 Right now, according to the survey, investors have six point 0:02:45.320 --> 0:02:48.360 three percent of their portfolios in cash. That's the highest 0:02:48.400 --> 0:02:52.600 level since April of two thousand. One of participants are 0:02:52.720 --> 0:02:56.600 underweight equities in Europe. Today, Karen, we're hearing from Liz Trust, 0:02:56.720 --> 0:02:59.600 the UK Prime Minister, says she's sorry for going too far, 0:02:59.720 --> 0:03:02.480 too fast, after her new chancellor gutted most of her 0:03:02.480 --> 0:03:07.240 economic plan. We have made mistakes. I'm sorry for those mistakes, 0:03:08.000 --> 0:03:12.480 but I fixed mistakes. I've appointed a new chancellor. We 0:03:12.560 --> 0:03:17.040 have restored economic stability and fiscal discipline. What I now 0:03:17.080 --> 0:03:19.680 want to do is go want to deliver for the public. 0:03:20.120 --> 0:03:22.480 Prime Minister List Trust made the comments in an interview 0:03:22.480 --> 0:03:25.359 with the BBC. One other note this morning, the Financial 0:03:25.440 --> 0:03:28.040 Times is reporting the Bank of England will likely delay 0:03:28.120 --> 0:03:31.040 its planned sale of government bonds on October thirty one, 0:03:31.440 --> 0:03:34.040 but the Bank of England is refuting that report. Well 0:03:34.040 --> 0:03:36.640 back here in the US, Nathan, we wrap up earnings 0:03:36.640 --> 0:03:39.400 from the big banks today with Goldman Sachs reporting this 0:03:39.440 --> 0:03:43.160 morning and here the preview is Bloomberg's Jeff Belinger. Goldman's 0:03:43.160 --> 0:03:46.200 revenue and profit were boosted by investment games in the 0:03:46.280 --> 0:03:49.840 third quarter last year. Bloomberg Intelligence expects to hear that 0:03:49.880 --> 0:03:52.680 the numbers were lower in the just ended quarter, which 0:03:52.720 --> 0:03:55.560 saw a slide and banking fees and a stock market 0:03:55.600 --> 0:03:59.840 performance that likely weighed on its asset management business. Investors 0:03:59.840 --> 0:04:02.360 will be interested in what executives have to say about 0:04:02.360 --> 0:04:06.080 the future. Bloomberg reported last month that Goldman was beginning 0:04:06.120 --> 0:04:08.520 the biggest round of job cuts since the start of 0:04:08.560 --> 0:04:12.520 the pandemic, and just yesterday Wells Fargo analyst Mike Mayo 0:04:12.640 --> 0:04:17.760 said Goldman is planning a major reorganization. Jeff Bullinger, Bloomberg Daybreak, 0:04:17.800 --> 0:04:20.240 All Right, Jeff Banks. Goldman's earnings come a day after 0:04:20.279 --> 0:04:23.800 Bank of America reported its highest quarterly net interest income 0:04:23.839 --> 0:04:26.160 in at least a decade. We caught up with CEO 0:04:26.240 --> 0:04:29.599 Brian moynihan. He says, the U. S. Consumer is still spending. 0:04:30.120 --> 0:04:32.800 Their credit quality and a credit quality Bank of America 0:04:32.960 --> 0:04:35.800 in our consumer books is very strong across the board. 0:04:36.120 --> 0:04:38.960 The payment that delinquencies are much slower. They weren't pay 0:04:39.000 --> 0:04:41.680 pandemic much lower they were in any average five best 0:04:41.760 --> 0:04:44.440 year type period. And yes they moved a little bit 0:04:44.480 --> 0:04:46.400 off the floor, but they're still much lower and they've 0:04:46.400 --> 0:04:50.080 been so Consumers are spending. They have money, they're employed, 0:04:50.080 --> 0:04:53.159 you can see the unemployment numbers, and they have good credit. 0:04:53.440 --> 0:04:56.080 Bank of America CEO Brian moynihan made the comments in 0:04:56.120 --> 0:04:58.760 an interview with Bloomberg's David Weston. Stay tuned for more 0:04:58.800 --> 0:05:02.520 of that conversation coming shortly on Bloomberg day Break. Meantime, Nathan, 0:05:02.560 --> 0:05:05.880 we're seeing many companies try to diversify their leadership ranks, 0:05:06.000 --> 0:05:08.640 but that effort could be getting harder as women leave 0:05:08.680 --> 0:05:11.680 top tier jobs at higher rates than ever before. A 0:05:11.800 --> 0:05:14.919 report from Mackenzie and Lenan dot Org finds that for 0:05:15.000 --> 0:05:17.800 every woman who gets promoted at the director level, two 0:05:17.839 --> 0:05:20.960 women choose to leave. A lack of affordable childcare as 0:05:21.040 --> 0:05:23.760 part of the reason. Also, a gender pay gap that 0:05:23.800 --> 0:05:28.559 had been narrowing before the pandemic is now stalling started Washington, Now, Karen, 0:05:28.600 --> 0:05:31.600 the White House is watching energy prices closely, and now 0:05:31.600 --> 0:05:34.359 we're told the Biden administrations making moves to ensure the 0:05:34.400 --> 0:05:37.680 price of gas doesn't go even higher. Amy Morris has 0:05:37.720 --> 0:05:41.159 details from our Bloomberg ninety one newsroom in Washington. Energy 0:05:41.200 --> 0:05:43.919 Department officials have been quietly meeting this week with oil 0:05:43.960 --> 0:05:46.839 companies to let them know what to expect. Sources tell 0:05:46.839 --> 0:05:49.799 Bloomberg News officials are prepared to release up to fifteen 0:05:49.839 --> 0:05:52.800 million barrels of oil from the nation's emergency stockpile to 0:05:52.880 --> 0:05:55.920 keep prices steady. We also expect to hear plans from 0:05:55.920 --> 0:05:59.920 the Biden administration this week about how to replenish that stockpile. Also, 0:06:00.000 --> 0:06:02.960 of the administration is looking at limiting fuel exports to 0:06:03.040 --> 0:06:06.000 keep more gasoline and diesel inside the US, a more 0:06:06.120 --> 0:06:09.000 dramatic step that sources say would not happen before the 0:06:09.000 --> 0:06:12.680 midterms in Washington. I'm maybe more as Bloomberg Daybreak. All right, Amy, 0:06:12.720 --> 0:06:15.000 thank you, and I'm the geo political stage this morning. 0:06:15.080 --> 0:06:18.000 China and Taiwan are in focus the US as Beijing 0:06:18.080 --> 0:06:20.880 could move to seize Taiwan on a much faster timeline 0:06:20.880 --> 0:06:24.880 than previously thought. Bloomberg's and Baxter has that story. Secretary 0:06:24.880 --> 0:06:27.799 of State Anthony Blincoln is responding to Shi Jumping's addressed 0:06:27.800 --> 0:06:30.440 to the People's Congress over the weekend. B Lincoln says 0:06:30.440 --> 0:06:32.680 there's been a change in the approach over the past 0:06:32.720 --> 0:06:36.000 several years towards Taiwan, but says now China has made 0:06:36.040 --> 0:06:39.880 a fundamental decision that the status quo is no longer 0:06:40.000 --> 0:06:44.880 acceptable and that Beijing is determined to pursue reunification on 0:06:44.920 --> 0:06:49.200 a much faster timeline. Having said that, Lincoln says there's 0:06:49.240 --> 0:06:53.000 eagerness to cooperate on share interest given that she will 0:06:53.000 --> 0:06:55.920 be serving a third term in San Francisco. I'm at 0:06:55.920 --> 0:06:58.880 Baxter Bloomberg Daybreak, Thanks, ad s andp feature is now 0:06:58.880 --> 0:07:02.120 a forty one point staff futures up two eighty Nastack 0:07:02.160 --> 0:07:04.839 futures are higher by a hundred forty six points Tenure 0:07:04.880 --> 0:07:08.599 Treasury is down six thirty seconds, yield four point zero 0:07:08.680 --> 0:07:12.440 three percent, and Nimex crude is down six tenths percent 0:07:12.480 --> 0:07:16.000 at eighty fours of barrel. Straight ahead, your latest local 0:07:16.000 --> 0:07:23.440 headlines and a check off sports. This is Sploomberg five 0:07:23.440 --> 0:07:25.960 oh seven on Wall Street, fifty one degrees in Central 0:07:26.000 --> 0:07:28.240 Park on an accident on the way to JFK Airports 0:07:28.240 --> 0:07:32.040 southbound Van Wick at Liberty Avenue. Details coming up in traffic. 0:07:32.080 --> 0:07:34.320 First Michael Barr with more on what's going on in 0:07:34.360 --> 0:07:36.520 New York and around the world. Good morning, Michael, Good 0:07:36.520 --> 0:07:39.680 morning Nathan. New York City announced a new policy meant 0:07:39.720 --> 0:07:42.960 to keep the streets cleaner and free of rats. With 0:07:43.080 --> 0:07:45.640 trash bags filed on the curves at night. There are 0:07:45.680 --> 0:07:48.000 new rules on when you can take out the garbage. 0:07:48.280 --> 0:07:52.000 Sanitation to Mission of Jessica Tish, the biggest swing that 0:07:52.040 --> 0:07:54.920 you can take at cleaning up our streets is to 0:07:55.040 --> 0:07:58.600 shut down the all night, all you can eat rat buffet. 0:07:59.520 --> 0:08:03.480 I wanted be clear the rats are absolutely going to 0:08:03.560 --> 0:08:07.720 hate this announcement. Sanitation Commissioner Tish said buildings can put 0:08:07.760 --> 0:08:11.040 their trash out no earlier than ANPM and there will 0:08:11.080 --> 0:08:15.560 be more collections. Overnight, New York City arts organizations, including 0:08:15.560 --> 0:08:19.600 the Metropolitan Opera, the New York Philharmonic, New York City Valet, 0:08:19.680 --> 0:08:22.360 and Carnegie Hall announced that they will make face masked 0:08:22.440 --> 0:08:27.080 optional beginning octobery as COVID nineteen cases continue to decline 0:08:27.200 --> 0:08:30.120 across the area. The group at it that it will 0:08:30.160 --> 0:08:35.680 continue to encourage the practice of masking and also of vaccinations, 0:08:35.720 --> 0:08:39.200 which will remain optional as well. Georgia Governor Brian Kemp 0:08:39.200 --> 0:08:43.760 face Democratic challengers Stacy Abrams and Libertarian candidate Shane hazel 0:08:43.840 --> 0:08:47.559 Ford televised debate sponsored by the Atlanta Press Club. Abrams, 0:08:47.559 --> 0:08:50.400 speaking last night as governor, I intend to stand up 0:08:50.400 --> 0:08:52.240 for the right to vote. I will always acknowledge the 0:08:52.240 --> 0:08:55.000 outcome of elections, but I will never deny access to 0:08:55.160 --> 0:08:57.960 every voter, because that is the responsibility of every American 0:08:58.160 --> 0:09:01.160 to defend the right to vote. Kemp responded to Abraham's 0:09:01.200 --> 0:09:04.640 accusations of voter suppression during his time as governor. I'm 0:09:04.679 --> 0:09:08.640 the person that created the online voter registration system in 0:09:08.720 --> 0:09:12.760 the state where any Georgian convert registered of twenty four 0:09:12.760 --> 0:09:15.719 hours a day, seven days a week. Abraham's lost to 0:09:15.840 --> 0:09:18.080 Kemp when they first ran against each other in the 0:09:18.080 --> 0:09:21.800 twenty eighteen race for governor. Democratic Representative Tim Ryan and 0:09:21.920 --> 0:09:24.599 Republican J. D. Vans meant for their second debate to 0:09:24.679 --> 0:09:28.559 replace the tiring O Iisle Republican Senator Rob Portman on 0:09:28.800 --> 0:09:33.440 NBCs w F m JTV. Vans accused Ryan voting for 0:09:33.520 --> 0:09:37.120 tax increases and criticized his support for the Inflation Reduction Act. 0:09:37.360 --> 0:09:40.959 It raises taxes by twenty billion dollars on working people 0:09:41.000 --> 0:09:42.920 in this state and in this country, and then at 0:09:42.920 --> 0:09:45.720 six seven thousand, i R s agents to go after them. 0:09:45.920 --> 0:09:49.559 Ryan replied, Vance is accusing him of being a follower 0:09:49.640 --> 0:09:53.000 of how speaker Nancy Pelosi. You keep talking about Nancy Pelosi. 0:09:53.760 --> 0:09:55.959 If you want to run against Nancy Pelosi, moved back 0:09:56.000 --> 0:09:58.800 to San Francisco and run against Nancy Pelosi. You're running 0:09:58.800 --> 0:10:01.559 against me. Poll shilled race as a tie. Global News 0:10:01.600 --> 0:10:03.800 twenty four hours a day on air and on Bloomberg 0:10:03.840 --> 0:10:05.760 Quick Take Power about more than the twenty seven hundred 0:10:05.800 --> 0:10:08.720 journalists analysts more than a twenty countries. I'm MICHAELA bar 0:10:08.840 --> 0:10:15.880 This is Bloomberg Nake. Thank you. Michael five ten on 0:10:15.880 --> 0:10:18.200 Wall Street Time for the Bloomberg Sports up taking morning 0:10:18.280 --> 0:10:20.520 John stash Our Alright and Morney Nathren. Second time in 0:10:20.520 --> 0:10:22.959 this series where the Yankees and Guardians have been reigned 0:10:23.000 --> 0:10:24.880 out of the stadium, unlike last week when the game 0:10:24.920 --> 0:10:27.040 was called early in the afternoon. The fans were there 0:10:27.120 --> 0:10:29.400 last night, but at nine thirty they called it. So 0:10:29.559 --> 0:10:32.240 Game five is at four o'clock today, and with the 0:10:32.320 --> 0:10:35.240 day off, the Yankees are changing starting pictures. Out is 0:10:35.320 --> 0:10:38.480 Jamison Tyon in his Nestor Cortez on three days rest. 0:10:38.480 --> 0:10:41.640 The Guardians could do likewise with Shane Bieber, he was 0:10:41.679 --> 0:10:43.400 the cy young one or two years ago, but they 0:10:43.480 --> 0:10:47.000 say they are sticking with Aaron Savale. Winner today after 0:10:47.080 --> 0:10:50.199 Houston for Game one of the Alcs tomorrow. The surprising 0:10:50.440 --> 0:10:54.199 n LCS Phillies and Padres starting tonight in San Diego, 0:10:54.240 --> 0:10:56.960 two teams who failed to win ninety games, will decide 0:10:57.000 --> 0:11:00.199 the pennant after three n l teams at won over 0:11:00.240 --> 0:11:03.000 a hundred games and Blue. The Mets were outsted weeks six, 0:11:03.000 --> 0:11:04.760 wrapped up a f C West game in l A 0:11:04.840 --> 0:11:08.120 went over time. Chargers beat the Broncos nineteen to sixteen, 0:11:08.160 --> 0:11:10.199 third straight wins for l A denvers two and four. 0:11:10.280 --> 0:11:13.280 The Jets visit the Broncos on Sunday. Only one a 0:11:13.400 --> 0:11:16.120 f C team has a better record than the Jets. 0:11:16.120 --> 0:11:18.520 Set the Garden, Rangers and Ducks could start for the 0:11:18.520 --> 0:11:23.040 Blue Shirts, especially the man advantage stick Candling stacks it up. 0:11:23.120 --> 0:11:26.640 Let's start to that down low pro Tracker crow the 0:11:26.679 --> 0:11:32.120 bout a draft from the Stars. It was abouder Jets 0:11:32.120 --> 0:11:34.760 Seer got pro check for the first power play goal. 0:11:35.240 --> 0:11:40.640 If time pro Checkbot chat to the great esp and 0:11:40.720 --> 0:11:43.600 Laters manager scored another power play goal. Rangers being Anaheim 0:11:43.679 --> 0:11:45.760 six to four. They're off to a three and one start. 0:11:46.280 --> 0:11:48.840 NBA season tips off tonight with a couple of games. 0:11:49.000 --> 0:11:52.400 Nixon Nets supposed kick going tomorrow, John stash Ay, Bloomberg 0:11:52.440 --> 0:11:54.840 Sports Nacol All right, John, thanks Ses and p futures 0:11:54.880 --> 0:11:56.880 right now at forty point, staff futures have two hundred 0:11:56.920 --> 0:12:00.400 seventy three. Nastatic futures are higher by one hundred forty 0:12:00.480 --> 0:12:08.120 one points. And you're listening to Bloomberg Daybreak, Bloomberg eleven 0:12:08.160 --> 0:12:09.760 three oh weather, It's gonna be cool for the next 0:12:09.840 --> 0:12:13.360 few days. Upper fifties today, mid fifties and sunny tomorrow 0:12:13.559 --> 0:12:17.599 sunshine upper fifties on Thursday right now fifty one in 0:12:17.800 --> 0:12:25.160 Central Park Markets. Headlines and breaking news twenty four hours 0:12:25.200 --> 0:12:28.360 a day at Bloomberg dot Com, the Bloomberg Business Outland 0:12:28.480 --> 0:12:37.880 at Bloomberg Quicktape. This is a Bloomberg Business flash and 0:12:37.960 --> 0:12:40.720 I'm Karen Moscow. And stocks are extending a rebound amid 0:12:40.800 --> 0:12:43.000 a focus on earnings and as the UK's efforts to 0:12:43.080 --> 0:12:46.920 foster greater stability as volatile bond market lifts sentiment toward 0:12:47.040 --> 0:12:50.640 riskier assets. European stocks are stretching their games into a 0:12:50.760 --> 0:12:53.760 fourth day, while US stock index futures are advancing. This 0:12:53.920 --> 0:12:57.320 after the SNP five closed above a key technical support 0:12:57.440 --> 0:13:01.520 level yesterday. Amazon and Microsoft really major technology and internet 0:13:01.600 --> 0:13:04.240 stocks higher in early trading, and we checked the markets 0:13:04.280 --> 0:13:07.160 every fifteen minutes throughout the trading day. On Bloomberg. Right now, 0:13:07.280 --> 0:13:10.319 SMP futures are up about forty two points, DAL future 0:13:10.360 --> 0:13:12.679 is of two hundred seventy eight and nasday futures up 0:13:12.760 --> 0:13:15.640 one hundred fifty. The decks in Germany's up one point 0:13:15.679 --> 0:13:18.400 two percent, the ten year treasury down three thirty seconds 0:13:18.920 --> 0:13:21.920 four point zero two percent, and the yield on the 0:13:22.040 --> 0:13:25.120 two years at four point four or five percent Nimex 0:13:25.200 --> 0:13:27.520 frude oil is down half percent or forty one cents 0:13:27.559 --> 0:13:29.640 at eighty five dollars five cents of barrel, and the 0:13:29.720 --> 0:13:33.079 euro point at nine eight four nine against the dollar, 0:13:33.200 --> 0:13:36.400 the British pound one point one zero as of Bloomberg 0:13:36.440 --> 0:13:38.760 Business Flash. Now. Here's Michael Barr with more on what's 0:13:38.880 --> 0:13:41.760 going on around the world. Michael, good morning, Good morning, Karen. 0:13:41.920 --> 0:13:45.079 Ukrainian President Zelenski says his country needs more help to 0:13:45.160 --> 0:13:48.480 defend itself from the rand rainy and made so called 0:13:48.559 --> 0:13:52.240 kamikaze drones the Russian army has been using to attack 0:13:52.280 --> 0:13:56.240 civilion infrastructure. At least eight people were killed during yesterday's strinks. 0:13:56.559 --> 0:13:59.880 A suspected serial killer in Stockton, California, scheduled to be 0:14:00.080 --> 0:14:03.559 arranged today. Authorities say forty three year old Westley Brownlee 0:14:03.640 --> 0:14:06.840 is accused of terrorizing the community for months. In baseball, 0:14:06.840 --> 0:14:09.800 the Yankees and Guardians will play their deciding game five 0:14:09.840 --> 0:14:12.720 of their A L d yes this afternoon four pm. 0:14:13.120 --> 0:14:16.439 Rain postponed last night's game. Monday night football Chargers beat 0:14:16.480 --> 0:14:20.640 the Broncos in overtime. Nineteen sixteen. Global News twenty four 0:14:20.680 --> 0:14:24.160 hours a day on air and on Bloomberg Quicktake powered 0:14:24.200 --> 0:14:27.560 by more than twenty seven hundred journalists and analysts in 0:14:27.640 --> 0:14:30.480 more than one hundred twenty countries. I'm Michael Barr, and 0:14:30.600 --> 0:14:33.720 this is Bloomberg NA. Thanks Michael. It's five nineteen on 0:14:33.800 --> 0:14:37.000 Wall Street Line from the Bloomberg Interactive Broker Studios. This 0:14:37.200 --> 0:14:39.960 is Bloomberg Daybreak. Bank earnings have been the theme the 0:14:40.040 --> 0:14:42.720 last few days. Yesterday, of course, Bank of America reported 0:14:42.760 --> 0:14:45.640 results that beat estimates. Now we want to hear from 0:14:45.640 --> 0:14:48.400 the man in charge of that bank, CEO, Brian moynihan. 0:14:48.520 --> 0:14:51.360 He tells us, even though spending is slowing, the consumer 0:14:51.440 --> 0:14:55.640 remains strong. Brian moynihan spoke with Bloomberg's David weston late yesterday. 0:14:55.720 --> 0:14:58.440 Let's listen in to that conversation. Now you've said the 0:14:58.520 --> 0:15:00.840 consumer is a strong continue to be strong. I think 0:15:00.840 --> 0:15:03.200 you said ten percent up perhaps from what you saw 0:15:03.320 --> 0:15:05.880 in October. But how long can it last? You have 0:15:06.000 --> 0:15:07.880 some competitors saying by the middle of next year they're 0:15:07.880 --> 0:15:11.600 going to run out of those balance sheets. Let's step 0:15:11.680 --> 0:15:15.160 back and talk about the different ways we talk about resiliency. 0:15:15.560 --> 0:15:18.320 First is are the consumer spending? Are they doing things 0:15:18.400 --> 0:15:20.480 they had drives? The US economy, as you well know. 0:15:21.200 --> 0:15:23.480 And so the spending for the third quarter was ten 0:15:23.520 --> 0:15:26.320 percent higher it was last year's third quarter. The spending 0:15:26.360 --> 0:15:29.120 for the first couple of weeks in October as ten 0:15:29.160 --> 0:15:32.720 percent highed it was last October for the first two weeks. Now, 0:15:33.360 --> 0:15:35.440 what we told people was you're seeing it slow just 0:15:35.600 --> 0:15:38.600 to hair. So it was maybe four fift early in 0:15:38.640 --> 0:15:41.880 the year twelve and now ten, which is frankly, what 0:15:42.600 --> 0:15:44.080 people are trying to do is get the spending down 0:15:44.080 --> 0:15:45.880 a little bit, get the inflationary pressures down in the 0:15:46.000 --> 0:15:47.920 in the drag of the interest rates, but it's still 0:15:48.000 --> 0:15:50.800 strong and then so that's one one way to think about. 0:15:51.240 --> 0:15:52.800 The other way to think about the consumers did have 0:15:52.840 --> 0:15:55.320 money in accounts to spend, and in the month of 0:15:56.080 --> 0:15:59.400 September the account balances were flat or slightly over where 0:15:59.400 --> 0:16:02.040 they weren't odd best, and that is multiples of where 0:16:02.040 --> 0:16:04.520 they were pre pandemic. And they continue to hold their 0:16:04.560 --> 0:16:07.080 own And you can see inside the cash flowing customers 0:16:07.480 --> 0:16:11.560 not not not making any reflection on the This is 0:16:11.600 --> 0:16:14.080 tough on certain customers others, but even customers have lower 0:16:14.120 --> 0:16:17.240 income levels, we can send cash flowing positive. Still, rent 0:16:17.320 --> 0:16:19.760 increases could slow that down. Other things can happen, but 0:16:19.880 --> 0:16:22.040 the core thing is as of the third quarter, they 0:16:22.120 --> 0:16:24.160 continue to cash flow and they can have more money 0:16:24.160 --> 0:16:26.960 in the accounts than they did before the pandemic by multiples. 0:16:27.200 --> 0:16:28.880 And then you go to their credit quality, and a 0:16:28.920 --> 0:16:31.880 credit quality Bank of America in our consumer books is 0:16:32.000 --> 0:16:35.120 very strong across the board. The payment that delinquencies are 0:16:35.520 --> 0:16:38.000 much lower they were pre pandemic, much lower they were 0:16:38.040 --> 0:16:41.040 in any average PI best year type period. And yes 0:16:41.120 --> 0:16:42.840 they moved a little bit off the floor, but they're 0:16:42.840 --> 0:16:46.200 still much lower they've been. So consumers are spending, they 0:16:46.280 --> 0:16:48.800 have money, they're employed, you can see the unemployment numbers, 0:16:48.880 --> 0:16:51.960 and they have good credit. And that's good news for America, 0:16:52.280 --> 0:16:54.400 but also makes the feeds jobs suffer because they're trying 0:16:54.400 --> 0:16:56.320 to slow down this American consumer, which is a very 0:16:56.360 --> 0:16:58.680 resilient thing. But just to make sure I understand it, 0:16:58.760 --> 0:17:00.960 and obviously you can't promise what's gonna happen next year, 0:17:01.000 --> 0:17:02.680 I'm not asking you to do that, but a lot 0:17:02.680 --> 0:17:04.720 of condems are saying the reason consumer is so strong 0:17:04.800 --> 0:17:06.800 right now is because the balance sheet were so strong 0:17:06.920 --> 0:17:09.360 coming out of the pandemic. At this point, you don't 0:17:09.480 --> 0:17:12.000 see those balance sheets really turning down as we get 0:17:12.040 --> 0:17:16.119 into next year. We don't see it yet. And so 0:17:16.480 --> 0:17:18.359 if you look back to two quarters ago when we 0:17:18.400 --> 0:17:20.480 did Darns Called, people are like, oh, the consumers getting 0:17:20.560 --> 0:17:23.760 knocked out of the game. They're spending their accounts. Six 0:17:23.840 --> 0:17:25.439 months later the money is still there. So I think 0:17:25.480 --> 0:17:29.679 people are over anticipating future. We as our projections Canada 0:17:29.720 --> 0:17:31.960 bout Spot and the team and our research group, which 0:17:31.960 --> 0:17:33.560 is one of the best in the world, has the 0:17:33.640 --> 0:17:37.240 third quarter positive, the fourth quarter negative, the first quarter negative, 0:17:37.320 --> 0:17:39.880 the second quarter of negative, the third quarter of twenty 0:17:39.920 --> 0:17:41.720 three negative, albeit a like a one to one and 0:17:41.720 --> 0:17:45.239 a half percent GDP analyzed growth right negative growth rate. 0:17:45.359 --> 0:17:48.359 So we're predicting a shallow economy. That's our core assumptions 0:17:48.359 --> 0:17:50.080 and embedded in that if you look at how we 0:17:50.119 --> 0:17:52.360 set our reserves, we have the assumption that we're gonna 0:17:52.400 --> 0:17:54.119 have five a half percent unemployment. I don't I'm not 0:17:54.160 --> 0:17:56.600 sure it's gonna happen, especially this quarter. We have it 0:17:56.680 --> 0:17:58.640 a five per step. But that's the conservatives. We build 0:17:58.640 --> 0:18:00.480 our balance sheet from an operating ass but if you 0:18:00.520 --> 0:18:03.119 look at the consumers, there's there's not the signs that 0:18:03.240 --> 0:18:05.560 we see in our numbers or other people's numbers. Quite frankly, 0:18:05.600 --> 0:18:08.159 it says they're slowing down yet, or they're in stress yet, 0:18:08.280 --> 0:18:10.040 and that will have to be part of what happens 0:18:10.080 --> 0:18:12.480 in order for there to be a de procession, because 0:18:12.480 --> 0:18:15.200 if the consumers have money in this big consumer driven economy, 0:18:15.680 --> 0:18:18.680 you know, that's that's what keeps America strong. Brian, You've 0:18:18.760 --> 0:18:21.520 always taken great pride in the Bank of America research 0:18:21.680 --> 0:18:24.080 unit and how good they are. Let's assume their numbers 0:18:24.080 --> 0:18:26.080 are exactly right. It could be better, could be worse. 0:18:26.200 --> 0:18:28.760 Exactly right, three down, quarters, five, five and a half 0:18:28.800 --> 0:18:32.280 percent unemployment. What does that do for your loan lost provisions? 0:18:32.440 --> 0:18:35.800 What kind of provisions you have to make for that? Well, 0:18:35.920 --> 0:18:38.400 inherently we're always just counting in future because the way 0:18:38.440 --> 0:18:40.879 the Cecil rules work so called, you look out for 0:18:40.920 --> 0:18:43.400 the life alone. So you build reserves, and we built 0:18:43.400 --> 0:18:45.600 four hundred million or so this quarter, which is building 0:18:45.720 --> 0:18:48.480 that scenario, which is six to the base case, which 0:18:48.560 --> 0:18:51.560 is the average of blue chip economist an adverse case. 0:18:51.920 --> 0:18:55.840 When you blend that together, it implies those advocates have 0:18:55.960 --> 0:18:58.879 high inflation and have high unemployment in them, and you 0:18:58.960 --> 0:19:01.359 blinded together. The core what we did at the end 0:19:01.400 --> 0:19:03.280 of the third quarter has five percent uneployment for the 0:19:03.320 --> 0:19:06.240 fourth quarter of twenty two and more than like five 0:19:06.280 --> 0:19:08.520 and a half or next year. So it's very conservative built. 0:19:08.720 --> 0:19:11.479 So your provisions will go up against that backdrop. At 0:19:11.520 --> 0:19:13.200 one point you'll start to see the other side of 0:19:13.240 --> 0:19:15.280 it emerge. And that's what it sort of happened. Back 0:19:15.359 --> 0:19:16.919 in the penalty. We put up a lot of reserves 0:19:16.960 --> 0:19:18.560 and we took them back in once you saw that 0:19:18.680 --> 0:19:21.879 the impact of because what the administration did and what 0:19:22.000 --> 0:19:24.520 Congress did, and what the central banks did around the world, 0:19:24.880 --> 0:19:28.000 you actually mitigate the effects of the unemployment numbers that 0:19:28.040 --> 0:19:31.919 won't happen in a standard recession I would uh would expect. 0:19:31.960 --> 0:19:34.080 But on the other hand, the consumers are going in 0:19:34.200 --> 0:19:35.919 much stronger shape than they did even in in two 0:19:36.000 --> 0:19:38.679 thousand and six seven leading into the Great Financial Crisis. 0:19:38.920 --> 0:19:41.600 And that was Bank of America CEO Brian moynihan speaking 0:19:41.640 --> 0:19:44.679 with Bloomberg's David Weston. You can catch the full conversation 0:19:44.800 --> 0:19:48.320 online at Bloomberg dot com or on the Bloomberg terminal. 0:19:48.960 --> 0:19:51.760 SFP futures right now up thirty seven points stuff futures 0:19:51.800 --> 0:19:54.240 are hired by two hundred forty eight and Nasdaq futures 0:19:54.280 --> 0:19:57.160 on the rise by one thirty nine points. Tend your 0:19:57.160 --> 0:19:59.680 treasuries down to thirty seconds now the yield of four 0:20:00.240 --> 0:20:08.960 zero two. This is Bloomberg Bloomberg eleven three oh weather clearing, 0:20:09.000 --> 0:20:12.440 cooler today, upper fifties for highs, sunny, mid fifties Tomorrow, 0:20:12.880 --> 0:20:15.960 sunshine into Thursday, with highs back in the upper fifties too, 0:20:15.960 --> 0:20:18.800 Around sixty degrees right now fifty one in Central Park. 0:20:22.119 --> 0:20:26.640 Broadcasting live from the Bloomberg Interactive Broker Studio in New York. 0:20:26.800 --> 0:20:31.399 Bloomberg E loving freedome to Washington, d C. Bloomberg to Boston, 0:20:31.560 --> 0:20:34.800 Bloomberg one oh six one to San Francisco, Bloomberg N 0:20:35.040 --> 0:20:37.840 sixty to the country, Sirius XM to A one nine, 0:20:38.240 --> 0:20:41.720 and around the globe the Bloomberg business in Bloomberg Radio 0:20:41.880 --> 0:20:50.480 dot Com. This is Bloomberg Daybreak. It's five thirty on 0:20:50.520 --> 0:20:53.400 Wall Speak. Good morning, I'm Nathan Hager and I'm Kared Moscow, 0:20:53.760 --> 0:20:56.359 just about four hours away from the open of US trading. 0:20:56.440 --> 0:20:57.840 Let's get you up to date on the news you 0:20:57.960 --> 0:21:00.560 need to know at this shower. US futures are rising 0:21:00.640 --> 0:21:03.960 at her. Ending to yesterday's big rally, The SMP posted 0:21:04.000 --> 0:21:06.560 a gain of two and a half percent in Monday's session, 0:21:06.600 --> 0:21:09.960 while the nastack rows three point four percent. Still expect 0:21:10.000 --> 0:21:13.919 more volatility ahead, that's according to Samir Samana with Wells Fargo. 0:21:14.320 --> 0:21:15.800