1 00:00:05,120 --> 00:00:09,200 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene along 2 00:00:09,240 --> 00:00:13,080 Speaker 1: with Jonathan Ferrell and Lisa Brown Witz Jailey. We bring 3 00:00:13,119 --> 00:00:17,159 Speaker 1: you insight from the best and economics, finance, investment, and 4 00:00:17,280 --> 00:00:23,280 Speaker 1: international relations. Find Bloomberg Surveillance on Apple podcast, Suncloud, Bloomberg 5 00:00:23,360 --> 00:00:29,680 Speaker 1: dot com, and of course on the Bloomberg Termament. We 6 00:00:29,920 --> 00:00:32,400 Speaker 1: are joined by the Chairman of CEGO of Bank of America. 7 00:00:32,440 --> 00:00:34,559 Speaker 1: He's Mr Brian moynihan. Brian, thank you so much for 8 00:00:34,560 --> 00:00:37,320 Speaker 1: your time today. So the FETE is made it official 9 00:00:37,360 --> 00:00:39,360 Speaker 1: more or less. We need to pay attention to inflation 10 00:00:39,400 --> 00:00:40,800 Speaker 1: and not clear exactly what we're doing, but we need 11 00:00:40,840 --> 00:00:43,479 Speaker 1: to pay attention to it. And they didn't move anything 12 00:00:43,560 --> 00:00:46,559 Speaker 1: except some dots on some plots. But where they did 13 00:00:46,680 --> 00:00:48,599 Speaker 1: they get it right? Are they reacting in the right 14 00:00:48,640 --> 00:00:53,360 Speaker 1: way at the right time or is it too much? Well? 15 00:00:53,360 --> 00:00:55,880 Speaker 1: I think that first, David, good to see you again. 16 00:00:56,120 --> 00:00:58,520 Speaker 1: Let me uh. I think there's three key points. The 17 00:00:58,560 --> 00:01:03,280 Speaker 1: first point is about the virus, the vaccines and the variants. 18 00:01:03,480 --> 00:01:05,920 Speaker 1: The second points about the dot plots, but what is 19 00:01:05,920 --> 00:01:08,440 Speaker 1: the underlying FED predictions of economy, And the third points 20 00:01:08,440 --> 00:01:11,160 Speaker 1: about thinking about this FED and where they we're nineteen. 21 00:01:11,240 --> 00:01:14,360 Speaker 1: So first point, if you have the three VS virus 22 00:01:14,440 --> 00:01:18,319 Speaker 1: variants and vaccines, you really have to listen that they 23 00:01:18,360 --> 00:01:20,440 Speaker 1: need to see the whole that they were trying to 24 00:01:20,480 --> 00:01:23,920 Speaker 1: fill between physical, physical stimulus and accommodation was to put 25 00:01:23,920 --> 00:01:26,160 Speaker 1: the economy back to where it was and with the 26 00:01:26,200 --> 00:01:29,640 Speaker 1: same growth characteristics are frankly even better growth characteristics. And 27 00:01:29,680 --> 00:01:31,520 Speaker 1: if you look around the world, central banks are gonna 28 00:01:31,560 --> 00:01:34,120 Speaker 1: struggles to win. This virus is behind him because at 29 00:01:34,120 --> 00:01:36,240 Speaker 1: the end of the day, is that is the determined here. 30 00:01:36,280 --> 00:01:38,399 Speaker 1: So if you think about India, think about what they 31 00:01:38,400 --> 00:01:40,240 Speaker 1: went through over the last several weeks, think about in 32 00:01:40,240 --> 00:01:44,120 Speaker 1: the UK delaying uh the full of reopening because of 33 00:01:44,120 --> 00:01:46,640 Speaker 1: the variants. That's the variant question. You think about the 34 00:01:46,720 --> 00:01:50,040 Speaker 1: US vaccines through half the population you can see and 35 00:01:50,080 --> 00:01:52,480 Speaker 1: it's pretty open and the questions with the variance effect 36 00:01:52,520 --> 00:01:55,280 Speaker 1: us to pay attention to the vaccine path. The second 37 00:01:55,360 --> 00:01:57,960 Speaker 1: question was the dots, as you said, dot plots, and 38 00:01:58,600 --> 00:02:00,760 Speaker 1: there's great debate whether he's add value at this point 39 00:02:00,760 --> 00:02:02,120 Speaker 1: when they're put in there, it put in for a 40 00:02:02,160 --> 00:02:05,400 Speaker 1: different purpose. But leaving that debate aside, the question is 41 00:02:05,440 --> 00:02:08,920 Speaker 1: the FEDS economic projections. This year seven. Next year in 42 00:02:08,960 --> 00:02:12,480 Speaker 1: the mid threes, the street actually is seven percent. Matches 43 00:02:12,480 --> 00:02:15,400 Speaker 1: have fed this year, but next year Bank America security 44 00:02:15,440 --> 00:02:17,120 Speaker 1: is and our team there and it's a great team 45 00:02:17,400 --> 00:02:20,840 Speaker 1: is at five in the streets at high fours. If 46 00:02:20,840 --> 00:02:22,919 Speaker 1: you believe the street in Bank of America are more 47 00:02:23,000 --> 00:02:25,400 Speaker 1: right as you move through the year. The reality is 48 00:02:25,480 --> 00:02:28,400 Speaker 1: the economy is growing much fashion it was, with much 49 00:02:28,480 --> 00:02:31,240 Speaker 1: more fiscal stimus still to be spent in the customers accounts, 50 00:02:31,639 --> 00:02:33,920 Speaker 1: much more opportunity for the economy around out and grow. 51 00:02:34,240 --> 00:02:36,240 Speaker 1: And that's something people should pay attention to because last 52 00:02:36,320 --> 00:02:38,760 Speaker 1: year this time this year's rate of growth was half 53 00:02:38,760 --> 00:02:40,760 Speaker 1: of what it's turned out to be predicted to be. 54 00:02:41,200 --> 00:02:44,280 Speaker 1: So if those economic growth predictions move, those dot plots 55 00:02:44,320 --> 00:02:46,520 Speaker 1: will become uninteresting because I'll have to move because things 56 00:02:46,560 --> 00:02:49,120 Speaker 1: will be moving faster. And the third things, think about 57 00:02:49,120 --> 00:02:53,440 Speaker 1: two thousand nineteen, same fed, same chairs, different somewhat different people, 58 00:02:53,520 --> 00:02:56,359 Speaker 1: the same research department. They were sitting there mid two 59 00:02:56,360 --> 00:03:00,000 Speaker 1: thousand to two percent plus FED funds rate two percent, 60 00:03:00,080 --> 00:03:03,760 Speaker 1: plush ten tenure Treasury rate. Economic projective forward growth was 61 00:03:03,800 --> 00:03:07,880 Speaker 1: two percent. Unemployment in the threes. Think about that. Where 62 00:03:07,880 --> 00:03:09,960 Speaker 1: we are now, We've got three times the growth rate 63 00:03:10,000 --> 00:03:12,840 Speaker 1: projected next year, even two times the growth rate projected 64 00:03:12,960 --> 00:03:16,000 Speaker 1: a FED unemployment rate projection in the low threes by 65 00:03:16,000 --> 00:03:19,280 Speaker 1: the end of twenty three, high threes by next year, 66 00:03:19,280 --> 00:03:21,639 Speaker 1: in low force bid force. This year there was a 67 00:03:21,680 --> 00:03:24,280 Speaker 1: full employment and what was the only thing concerning them 68 00:03:24,280 --> 00:03:26,679 Speaker 1: and nine team was wage growth. And you're seeing wage growth, 69 00:03:26,720 --> 00:03:28,880 Speaker 1: so that'll be interesting. Tug A wars that seeing normalized. 70 00:03:29,320 --> 00:03:32,360 Speaker 1: So Brian absolutely right. We're have a remarkable story and 71 00:03:32,360 --> 00:03:34,160 Speaker 1: the bounce back of the economy and the growth. But 72 00:03:34,280 --> 00:03:36,920 Speaker 1: what about inflation, because they also have taken way up 73 00:03:36,960 --> 00:03:40,080 Speaker 1: the FED the projection on the PCU deflate or three 74 00:03:40,120 --> 00:03:43,000 Speaker 1: point four percent core is three point o percent. What 75 00:03:43,080 --> 00:03:46,240 Speaker 1: are you seeing? You have your tentacles in to so 76 00:03:46,480 --> 00:03:49,920 Speaker 1: many consumers as well as small businesses more than anybody else. 77 00:03:50,360 --> 00:03:57,119 Speaker 1: Are your customers seeing feeling real pressure from from price increases? Well, 78 00:03:57,320 --> 00:04:01,000 Speaker 1: ye know. The great debate is yea, what is temporary? 79 00:04:01,080 --> 00:04:04,520 Speaker 1: What is transitory? As at SFP, as toom Mus talk 80 00:04:04,560 --> 00:04:06,800 Speaker 1: about this morning, these terms are used to try to 81 00:04:06,840 --> 00:04:09,400 Speaker 1: signal what they think right now. The firm belief I 82 00:04:09,400 --> 00:04:11,559 Speaker 1: think by the FET is most of this is transitory. 83 00:04:11,640 --> 00:04:14,360 Speaker 1: We'll see But the question is what about the stickier things. 84 00:04:14,480 --> 00:04:16,960 Speaker 1: Wage growth becomes sticky, and you're seeing that come back, 85 00:04:17,279 --> 00:04:20,919 Speaker 1: and as unemployment rates come down and you're seeing you know, 86 00:04:20,960 --> 00:04:23,480 Speaker 1: the pick up employement. We'll see what the new claims 87 00:04:23,480 --> 00:04:26,720 Speaker 1: are this morning, but you're seeing unemploy the employment market titan. 88 00:04:26,760 --> 00:04:29,640 Speaker 1: If you ask our small business customers last fall, their 89 00:04:29,720 --> 00:04:33,520 Speaker 1: number one issue pandemic, pandemic, pandemic. This spring, number one 90 00:04:33,520 --> 00:04:37,080 Speaker 1: issue getting people to work and supply chains, that's a 91 00:04:37,120 --> 00:04:40,000 Speaker 1: whole different place. And that means inflation and characteristics are 92 00:04:40,000 --> 00:04:42,400 Speaker 1: out there to be filled. But is it temporary? Is 93 00:04:42,440 --> 00:04:45,520 Speaker 1: it transitory? Um? And there'll be a great debate about that, 94 00:04:45,520 --> 00:04:47,039 Speaker 1: But I think it still comes down to what you 95 00:04:47,040 --> 00:04:49,760 Speaker 1: think next year's projection for for economic growth is and 96 00:04:49,800 --> 00:04:52,320 Speaker 1: what you see in wage growth leading into that, as 97 00:04:52,360 --> 00:04:54,800 Speaker 1: to whether the stickier parts of this will happen. Now. 98 00:04:54,880 --> 00:04:57,000 Speaker 1: The route is in our customers accounts. They still have 99 00:04:57,040 --> 00:05:00,440 Speaker 1: sixty five sevent stiments dollars in those accounts. The average 100 00:05:00,480 --> 00:05:03,120 Speaker 1: balance for people two to five thousand dollars of average 101 00:05:03,120 --> 00:05:05,360 Speaker 1: balunc accounts are up three times and sitting there ready 102 00:05:05,400 --> 00:05:09,920 Speaker 1: to be spent. You're seeing their spending growth year to 103 00:05:10,040 --> 00:05:13,600 Speaker 1: date through the last through the fourteenth of June versus nineteen, 104 00:05:13,680 --> 00:05:17,880 Speaker 1: not eighteen, but not twenty nineteen, meaning the no normal 105 00:05:17,960 --> 00:05:22,320 Speaker 1: year growth that's very strong. So it's all set up 106 00:05:22,360 --> 00:05:24,479 Speaker 1: that inflation could happen. That would be the great debate. 107 00:05:24,520 --> 00:05:26,000 Speaker 1: But I think we have to get further into the 108 00:05:26,080 --> 00:05:29,640 Speaker 1: question of what is transitory. So, Brian, the one thing 109 00:05:29,680 --> 00:05:32,600 Speaker 1: that seems clear after the FETE has spoken is that 110 00:05:32,680 --> 00:05:35,520 Speaker 1: we are changing sort of the dynamic. We were on 111 00:05:35,560 --> 00:05:37,800 Speaker 1: a loosening phase. We're not going to start tightening. It's 112 00:05:37,839 --> 00:05:41,200 Speaker 1: not clear when or how how fast we're gonna start tightening. 113 00:05:41,360 --> 00:05:44,120 Speaker 1: What does that due to Bank of America's business at 114 00:05:44,160 --> 00:05:46,440 Speaker 1: its core? And let's start if we could with trading. 115 00:05:46,480 --> 00:05:48,560 Speaker 1: I mean, we've heard from a couple of your rivals 116 00:05:48,560 --> 00:05:50,520 Speaker 1: here the trading is down the second quarter. Were you 117 00:05:50,560 --> 00:05:53,240 Speaker 1: in the second quarter? But could this cause volatility of 118 00:05:53,279 --> 00:05:58,039 Speaker 1: the tightening that could help your trading? Well, let's go 119 00:05:58,120 --> 00:06:01,560 Speaker 1: back to the You know, our economics for economist projections 120 00:06:01,600 --> 00:06:04,240 Speaker 1: are that the economy this quarter will be about the 121 00:06:04,279 --> 00:06:06,960 Speaker 1: same size that was heading into the pandemic, which means 122 00:06:07,000 --> 00:06:12,120 Speaker 1: that you're sort of restored differently constituted with shortages and supply, labor, 123 00:06:12,320 --> 00:06:15,440 Speaker 1: unemployment not where we want. Spending that's migrated from panic 124 00:06:15,839 --> 00:06:18,000 Speaker 1: to sort of do it yourself and now to go 125 00:06:18,080 --> 00:06:21,520 Speaker 1: out and eat and things, restaurants spending up dramatically. Travel 126 00:06:21,560 --> 00:06:23,680 Speaker 1: back to what is all that means economy continues to 127 00:06:23,720 --> 00:06:26,200 Speaker 1: grow In terms of trading, you know, there's always a 128 00:06:26,200 --> 00:06:28,240 Speaker 1: seasonality between the first quarter and the second quarter, and 129 00:06:28,279 --> 00:06:30,360 Speaker 1: we're no different than other people. But the reality, if 130 00:06:30,400 --> 00:06:32,920 Speaker 1: you really think about it, is vaulatility helps a trading group, 131 00:06:33,000 --> 00:06:35,960 Speaker 1: but frankly, from a bank American perspective, you'd rather have 132 00:06:35,960 --> 00:06:39,040 Speaker 1: the economy growing at a solid rate, unemployment down because 133 00:06:39,040 --> 00:06:40,960 Speaker 1: any day that means great for the core business. That 134 00:06:41,000 --> 00:06:44,760 Speaker 1: means great for the UH capital, for markets formation activity, 135 00:06:45,400 --> 00:06:49,120 Speaker 1: less emergency and more normalized. And also it means great 136 00:06:49,160 --> 00:06:51,120 Speaker 1: for loan demand and loan demand were stings start to 137 00:06:51,160 --> 00:06:53,920 Speaker 1: pick up slowly as we moved through the months of April, April, 138 00:06:53,920 --> 00:06:56,360 Speaker 1: May and June, which is better than it was obviously 139 00:06:56,440 --> 00:06:59,480 Speaker 1: last fall or coming into their early spring. So so Brian, 140 00:06:59,520 --> 00:07:01,400 Speaker 1: if ironers that you correctly sounded like you're sort of 141 00:07:01,760 --> 00:07:04,400 Speaker 1: along with your rivals. They are on trading the Siddon quarter, 142 00:07:04,440 --> 00:07:08,600 Speaker 1: which should come down am I understanding that correctly? If 143 00:07:08,640 --> 00:07:10,880 Speaker 1: the market moves, you know, we all maintain our market 144 00:07:10,880 --> 00:07:14,120 Speaker 1: share kind of moves together. So there's nuances that will know, 145 00:07:14,160 --> 00:07:15,880 Speaker 1: we'll get into but when we get to the earnings 146 00:07:15,880 --> 00:07:17,560 Speaker 1: and figure out what happens the last few weeks here, 147 00:07:17,600 --> 00:07:19,200 Speaker 1: but you know, we're not gonna be a heck of 148 00:07:19,200 --> 00:07:21,720 Speaker 1: a lot different from other people. So that I raised 149 00:07:21,800 --> 00:07:22,960 Speaker 1: the question of Okay, what does it due to the 150 00:07:23,040 --> 00:07:25,600 Speaker 1: rest of your business, particularly if we're into a tightening phase, 151 00:07:25,640 --> 00:07:27,440 Speaker 1: as I say, it doesn't know, don't know how long 152 00:07:27,480 --> 00:07:29,400 Speaker 1: it will take tightening phase. What does that do to 153 00:07:29,440 --> 00:07:34,120 Speaker 1: things like net interest margin? Well, that interest margin, the 154 00:07:34,160 --> 00:07:36,840 Speaker 1: deposit bounces are huge, and that's due to the amount 155 00:07:36,840 --> 00:07:38,840 Speaker 1: of physical stimulus that went in the system and amount 156 00:07:38,840 --> 00:07:42,600 Speaker 1: of monetary accommodation, so that deposit bounces are high. The loans. 157 00:07:42,720 --> 00:07:45,080 Speaker 1: The good thing about the business is half our money 158 00:07:45,120 --> 00:07:47,560 Speaker 1: comes from spread deposits and loans, and you're starting to 159 00:07:47,600 --> 00:07:50,400 Speaker 1: see those loans stabilize as we came to the first 160 00:07:50,440 --> 00:07:52,680 Speaker 1: quarter and start to grow this quarter at a modest pace. 161 00:07:52,840 --> 00:07:55,600 Speaker 1: But our credit card balances, you know, fell from ninety 162 00:07:55,640 --> 00:07:58,720 Speaker 1: billion dollars and seventy billion dollars, and that's those are 163 00:07:58,720 --> 00:08:00,800 Speaker 1: the kinds of things indicate the cut are still getting 164 00:08:00,800 --> 00:08:03,160 Speaker 1: back in the game. Our middle market draw rate onlines 165 00:08:03,520 --> 00:08:05,800 Speaker 1: went from the forties to the low thirties. That's lower 166 00:08:05,840 --> 00:08:08,320 Speaker 1: than we've ever seen it. It's stabilized there and starting 167 00:08:08,320 --> 00:08:10,560 Speaker 1: to move out, you know. So I think we're in 168 00:08:10,560 --> 00:08:13,040 Speaker 1: the what I call the twist of both rates and 169 00:08:13,080 --> 00:08:16,040 Speaker 1: economy that you're seeing economy normalized in rates move up. 170 00:08:16,320 --> 00:08:19,080 Speaker 1: Rates moving up helps our business, but if they're moving 171 00:08:19,160 --> 00:08:21,000 Speaker 1: up the wrong reason, it doesn't help our business. So 172 00:08:21,040 --> 00:08:23,440 Speaker 1: the good good thing for Bank America is when the 173 00:08:23,520 --> 00:08:25,520 Speaker 1: US economy and the world economies are growing on a 174 00:08:25,600 --> 00:08:28,520 Speaker 1: fundamental basis. As we look forward, richeld moving up. But 175 00:08:28,600 --> 00:08:31,360 Speaker 1: let's be frank, it's pretty modest still as a practical matter. 176 00:08:31,520 --> 00:08:34,600 Speaker 1: And and let's also be honest, the Fed continues to 177 00:08:34,640 --> 00:08:37,240 Speaker 1: buy those bonds, which means there's more stimulus coming to 178 00:08:37,280 --> 00:08:39,719 Speaker 1: the marketplace. Is there demand for the loans, because the 179 00:08:39,760 --> 00:08:41,920 Speaker 1: problem doesn't seem to be the interest rates, it's more 180 00:08:41,960 --> 00:08:46,800 Speaker 1: whether's demand. Are you seeing demand from your customers? We are, 181 00:08:47,040 --> 00:08:49,600 Speaker 1: We're seeing as we came to this quarter. Uh so, 182 00:08:49,720 --> 00:08:53,360 Speaker 1: our small business originations in two thousand, twenty one May. 183 00:08:53,480 --> 00:08:58,160 Speaker 1: We're about our small business originations in two thousand, nineteen May, 184 00:08:58,640 --> 00:09:02,440 Speaker 1: and that's it's finally crossed over in various areas and 185 00:09:02,480 --> 00:09:05,520 Speaker 1: that's good. Now again, it's still not where it was. 186 00:09:06,120 --> 00:09:09,600 Speaker 1: We we fell from nine hundred eighty billion dollars loans 187 00:09:09,600 --> 00:09:11,640 Speaker 1: down to nine hundred billion dollars loans and it's moving 188 00:09:11,720 --> 00:09:13,679 Speaker 1: up from there. But but the reality is that loan 189 00:09:13,720 --> 00:09:15,760 Speaker 1: growth is actually the core business. That means the core 190 00:09:15,760 --> 00:09:18,640 Speaker 1: in the line economy is going well and we expect 191 00:09:18,720 --> 00:09:20,800 Speaker 1: that to continue. And if you think from the first 192 00:09:20,880 --> 00:09:22,680 Speaker 1: quarter to the fourth quarter, you'll see that growth and 193 00:09:22,720 --> 00:09:25,360 Speaker 1: deposits continue. You'll see that growth and loans continue, and 194 00:09:25,400 --> 00:09:28,960 Speaker 1: that's good for banking generally and US in particular. But 195 00:09:28,960 --> 00:09:30,440 Speaker 1: at the end of the day, we are in the 196 00:09:30,480 --> 00:09:33,520 Speaker 1: part of the process where you're seeing companies need to hire, 197 00:09:33,760 --> 00:09:36,240 Speaker 1: need to get goods to sell, need to get goods 198 00:09:36,240 --> 00:09:39,120 Speaker 1: to manufacturer. And that's because a seven percent growth rate 199 00:09:39,200 --> 00:09:42,040 Speaker 1: on an economy that is the size of American economy 200 00:09:42,240 --> 00:09:45,360 Speaker 1: is unprecedented and we haven't seen that in our lifetime. 201 00:09:45,440 --> 00:09:48,000 Speaker 1: So think about that online activity that will be good 202 00:09:48,000 --> 00:09:50,520 Speaker 1: for Bank of americaud be good for America and that's 203 00:09:50,520 --> 00:09:52,679 Speaker 1: what we gotta get focused on. Brian, give us a 204 00:09:52,720 --> 00:09:54,640 Speaker 1: sense of how the pandemic want to change your business 205 00:09:54,640 --> 00:09:56,400 Speaker 1: where it comes to digital. As I understand, you picked 206 00:09:56,440 --> 00:09:58,760 Speaker 1: up a lot more digital users. Where is Bank of 207 00:09:58,760 --> 00:10:03,880 Speaker 1: America right now? Well, the three things that happened in 208 00:10:04,000 --> 00:10:07,719 Speaker 1: terms of digital in the pandemic. Number one, consumer adoption 209 00:10:07,760 --> 00:10:11,640 Speaker 1: continued to go and by necessity it rounded out. What 210 00:10:11,640 --> 00:10:13,800 Speaker 1: do you mean by that? We continue to grow consumer 211 00:10:14,080 --> 00:10:17,480 Speaker 1: digital customers to forty point four million active digital customers today. 212 00:10:17,800 --> 00:10:20,360 Speaker 1: But what happened is the amount of sales went from 213 00:10:21,880 --> 00:10:25,679 Speaker 1: moving up to and now it's settling in in a 214 00:10:25,760 --> 00:10:28,480 Speaker 1: high fifties six. That is very good because that means 215 00:10:28,480 --> 00:10:31,640 Speaker 1: there's efficiency and effective as a reach of the market. 216 00:10:31,679 --> 00:10:33,719 Speaker 1: But the important the second important thing was what it 217 00:10:33,800 --> 00:10:37,560 Speaker 1: happened happened internally our ability to interact with customers, Our 218 00:10:37,600 --> 00:10:40,040 Speaker 1: ability to relate to customers. Think about it, four or 219 00:10:40,040 --> 00:10:43,960 Speaker 1: five quarters of record investment banking fees and customers couldn't 220 00:10:43,960 --> 00:10:45,760 Speaker 1: We couldn't go see the customers do the to the 221 00:10:45,760 --> 00:10:49,599 Speaker 1: pandemic restrictions, So that ability to operate differently, UH is 222 00:10:49,640 --> 00:10:51,640 Speaker 1: really important. And the third thing is it went to 223 00:10:51,720 --> 00:10:54,600 Speaker 1: various businesses. So our wealth management business adoption rates went 224 00:10:54,640 --> 00:10:58,560 Speaker 1: through the roof. In our commercial businesses, the cash pro mobile, 225 00:10:58,800 --> 00:11:01,520 Speaker 1: the numbers of users went up dramatically, an amount of 226 00:11:01,520 --> 00:11:04,480 Speaker 1: activity went up dramatically, and so you're seeing it round 227 00:11:04,480 --> 00:11:07,000 Speaker 1: out through all the businesses that the adoption of digital 228 00:11:07,160 --> 00:11:10,280 Speaker 1: et cetera. It usage of digital is important and that 229 00:11:10,360 --> 00:11:13,200 Speaker 1: gives us more flexibility to continue to manage expense as 230 00:11:13,200 --> 00:11:15,560 Speaker 1: while we're not company, we'll talk about those expenses. Does 231 00:11:15,600 --> 00:11:17,680 Speaker 1: that mean, as a practical matter, you could see your 232 00:11:17,880 --> 00:11:23,840 Speaker 1: number of retail establishments go down. I think here's something like, Yeah, 233 00:11:24,080 --> 00:11:26,680 Speaker 1: it's been coming down for years based on customer behavior, 234 00:11:26,760 --> 00:11:29,440 Speaker 1: so it will continue to will continue to shape it. 235 00:11:29,480 --> 00:11:32,080 Speaker 1: So yesterday, the day before, we open to Kentucky for 236 00:11:32,080 --> 00:11:34,720 Speaker 1: the first time in our history. So think about that. 237 00:11:34,920 --> 00:11:40,360 Speaker 1: So we're opening new markets. We Columbus, Cleveland, Cincinnati, Indianapolis, Minneapolis, UH, Denver, 238 00:11:40,760 --> 00:11:44,760 Speaker 1: Salt Lake City UH, and then now Kentucky. I'm trying 239 00:11:44,760 --> 00:11:46,640 Speaker 1: to think where else we've gone. All have been open 240 00:11:46,679 --> 00:11:48,440 Speaker 1: of the last three or four years while we're shaping 241 00:11:48,440 --> 00:11:51,200 Speaker 1: the distribution franchise and more markets have been in for 242 00:11:51,640 --> 00:11:54,079 Speaker 1: two hundred years due to the fact that you know, 243 00:11:54,160 --> 00:11:56,560 Speaker 1: the customer behavior changes, so we watched that carefully. In 244 00:11:56,840 --> 00:11:59,360 Speaker 1: long term, we've had six thousand branches the high point 245 00:11:59,559 --> 00:12:02,959 Speaker 1: and now we're forties. During that time, the customer satisfaction 246 00:12:03,000 --> 00:12:05,200 Speaker 1: has gone up, which means the digital and other means 247 00:12:05,200 --> 00:12:08,079 Speaker 1: of operating have replaced that activity. And that's a relentless 248 00:12:08,080 --> 00:12:10,800 Speaker 1: trend which we're continue to work up. Brian, you've talked 249 00:12:10,800 --> 00:12:12,880 Speaker 1: about the bounce back and consumer spending that you're seeing, 250 00:12:12,920 --> 00:12:15,400 Speaker 1: and goodness knows, you have contacted a lot of consumers. 251 00:12:15,559 --> 00:12:18,800 Speaker 1: You've got some of your rivals like City changing their 252 00:12:18,840 --> 00:12:21,800 Speaker 1: credit standards on credit cards. We have JP Morgan really 253 00:12:21,840 --> 00:12:24,079 Speaker 1: beefing up on marketing. Tell me what the competition of 254 00:12:24,040 --> 00:12:28,439 Speaker 1: our credit cards and what Bank of America is doing well. 255 00:12:28,600 --> 00:12:31,120 Speaker 1: We've always taken a position to our credit card business 256 00:12:31,120 --> 00:12:33,800 Speaker 1: it's about our core customers and getting a customer in 257 00:12:33,800 --> 00:12:36,320 Speaker 1: the wallet and getting it used by those customers through 258 00:12:36,880 --> 00:12:38,960 Speaker 1: the rewards systems that have so we have the only 259 00:12:39,240 --> 00:12:41,640 Speaker 1: all company rewards. If you have a performed rewards, you 260 00:12:41,679 --> 00:12:44,520 Speaker 1: get rewarded for your cards and your accounts of all types, 261 00:12:44,559 --> 00:12:46,600 Speaker 1: and you get lower rates on your auto loans and 262 00:12:46,640 --> 00:12:49,520 Speaker 1: stuff that so preferred rewards, the holistic rewards programs we 263 00:12:49,600 --> 00:12:52,240 Speaker 1: focus on. The number one thing is the Great Bank 264 00:12:52,280 --> 00:12:55,120 Speaker 1: of America capabilities delivered to you, and the car is 265 00:12:55,160 --> 00:12:57,520 Speaker 1: part of that. And so you're seeing that card origination 266 00:12:57,559 --> 00:13:00,760 Speaker 1: picked back up. It fell probably by seventy percent. It's 267 00:13:00,800 --> 00:13:03,120 Speaker 1: back now at about lower than it was, and that's 268 00:13:03,160 --> 00:13:05,480 Speaker 1: good for good news. Now they've got a bar on 269 00:13:05,559 --> 00:13:06,840 Speaker 1: them and then they got to pay us for bar 270 00:13:06,880 --> 00:13:08,719 Speaker 1: and on them, which which takes some time. But the 271 00:13:09,000 --> 00:13:10,720 Speaker 1: roality is it's a it's a great business and we 272 00:13:10,800 --> 00:13:13,480 Speaker 1: like it, but it's part of our core consumer business 273 00:13:13,679 --> 00:13:18,000 Speaker 1: checking accounts, sorry of cards, auto loans, homeowns, be straightforward 274 00:13:18,000 --> 00:13:20,280 Speaker 1: about it, serve those customers well on The team under 275 00:13:20,320 --> 00:13:22,680 Speaker 1: de Nathan Asia does a great job with it. Finally, Brian, 276 00:13:22,760 --> 00:13:24,360 Speaker 1: I know you said that you're hoping to get most 277 00:13:24,360 --> 00:13:26,480 Speaker 1: of your people back into the offices by I think 278 00:13:26,520 --> 00:13:28,640 Speaker 1: at mid September you've talked about are you going to 279 00:13:28,720 --> 00:13:33,319 Speaker 1: require them to be vaccinated? Have you decided? Right now 280 00:13:33,320 --> 00:13:36,960 Speaker 1: we're moving people back who are vaccinated, which we our 281 00:13:37,000 --> 00:13:39,719 Speaker 1: team under Sherry Bronstein's leadership, our HR team has done 282 00:13:39,760 --> 00:13:42,840 Speaker 1: a fabulous job for us in terms of managing through this, uh, 283 00:13:43,480 --> 00:13:46,240 Speaker 1: not not with any playbook, but doing it because before 284 00:13:46,280 --> 00:13:48,240 Speaker 1: nobody had this happened. They've done a great job. So 285 00:13:48,280 --> 00:13:51,120 Speaker 1: we build a vaccine tool three or four months ago 286 00:13:51,160 --> 00:13:54,200 Speaker 1: and capture voluntary capture. We have seventy plus thousand people 287 00:13:54,200 --> 00:13:56,520 Speaker 1: and it's worth concentrating getting them back to work because 288 00:13:56,840 --> 00:13:59,880 Speaker 1: that allows people to move about under the CDC guidelines 289 00:13:59,880 --> 00:14:02,560 Speaker 1: with out masks and things like that. As more people 290 00:14:02,600 --> 00:14:04,400 Speaker 1: get vaccinated, we keep bringing more back. We've got a 291 00:14:04,400 --> 00:14:05,960 Speaker 1: lot of work to get those back. But the view 292 00:14:06,040 --> 00:14:08,679 Speaker 1: is after labor Day, our view is all the vaccinate 293 00:14:08,679 --> 00:14:10,640 Speaker 1: teammates were back and we'll be able to operate Fairlure 294 00:14:10,679 --> 00:14:13,160 Speaker 1: normally and we'll then start to make provisions for the 295 00:14:13,160 --> 00:14:16,000 Speaker 1: other teammates as we moved through the fall. Okay, Brian, 296 00:14:16,080 --> 00:14:18,040 Speaker 1: thank you so very much for your time. That's Brian moynan. 297 00:14:18,360 --> 00:14:26,440 Speaker 1: He is the chairman and CEO of Bank of America. 298 00:14:27,240 --> 00:14:31,280 Speaker 1: David Rosenberg joining us from Rosenberg Research. Thrill that you 299 00:14:31,280 --> 00:14:34,960 Speaker 1: could join us. David Rosenberg slices and dices inflation dynamics. 300 00:14:35,000 --> 00:14:39,360 Speaker 1: Truly like no one I know. David. We had Goldman Saxon, 301 00:14:39,480 --> 00:14:41,440 Speaker 1: He and you are so much on the same page 302 00:14:41,800 --> 00:14:45,120 Speaker 1: of a slide of GDP back to something normal. At 303 00:14:45,200 --> 00:14:48,320 Speaker 1: some point, if we get a hot seest sub three 304 00:14:48,840 --> 00:14:54,120 Speaker 1: g d P, what does that do to Rosenberg inflation? Well, look, 305 00:14:54,160 --> 00:14:58,160 Speaker 1: I think that if the economy slows down, especially with 306 00:14:58,240 --> 00:15:00,280 Speaker 1: the fiscal withdrawal, we're going to be sing in the 307 00:15:00,360 --> 00:15:04,160 Speaker 1: second half of the year. I think what happens in 308 00:15:04,280 --> 00:15:09,080 Speaker 1: traditional economic terms is the output gap starts to widen again. Uh, 309 00:15:09,160 --> 00:15:11,320 Speaker 1: it's going to bring this in platient run up. We've 310 00:15:11,320 --> 00:15:15,520 Speaker 1: seen reverse course and should ultimately be very good news 311 00:15:15,560 --> 00:15:18,200 Speaker 1: for a long duration assets. So that's really what the 312 00:15:18,240 --> 00:15:21,400 Speaker 1: story there is. But let's say Tom, it was really 313 00:15:21,400 --> 00:15:23,760 Speaker 1: I think less about the dots. The dots have no 314 00:15:23,840 --> 00:15:27,880 Speaker 1: predicted powers. Historically, there was the fat taking this year's 315 00:15:27,920 --> 00:15:30,240 Speaker 1: GDP growth from six and a half to seven percent. 316 00:15:30,720 --> 00:15:32,320 Speaker 1: As you know, when you look at what's baked in 317 00:15:32,640 --> 00:15:35,080 Speaker 1: already for the first half of the year, the Feds 318 00:15:35,120 --> 00:15:37,520 Speaker 1: telling you that they're expecting fourth quarter growth to be 319 00:15:37,600 --> 00:15:40,600 Speaker 1: close to five which is up materially from what they're 320 00:15:40,600 --> 00:15:44,440 Speaker 1: in plicit before. What do you have into two thousand 321 00:15:44,480 --> 00:15:46,240 Speaker 1: twenty two, though, they've got to get to two rate 322 00:15:46,320 --> 00:15:49,240 Speaker 1: increases the year on and so much of it depends 323 00:15:49,280 --> 00:15:51,640 Speaker 1: on that level of GDP. Do we get back to 324 00:15:51,680 --> 00:15:55,600 Speaker 1: a potential GDP two percent? Do we go under three percent? 325 00:15:55,760 --> 00:15:58,600 Speaker 1: What's your guestamate, Well, you know, look the FEDS over 326 00:15:58,680 --> 00:16:01,440 Speaker 1: three percent. Uh. A lot of it depends on the 327 00:16:02,040 --> 00:16:05,320 Speaker 1: fiscal backdrop. Um. But I think the fiscal drawal is 328 00:16:05,640 --> 00:16:08,640 Speaker 1: so enormous um that you're gonna have to have. I mean, 329 00:16:08,640 --> 00:16:11,560 Speaker 1: the FED is I implicitly assuming that private sector demand 330 00:16:11,640 --> 00:16:13,760 Speaker 1: is going to be over six percent next year. I 331 00:16:13,800 --> 00:16:16,160 Speaker 1: am nowhere close to that. I think the economy is 332 00:16:16,200 --> 00:16:19,680 Speaker 1: gonna slow back below trend um starting probably in the 333 00:16:19,680 --> 00:16:22,360 Speaker 1: third or fourth quarter of this year. UM. So I'm 334 00:16:22,400 --> 00:16:25,760 Speaker 1: back the low potential growth for next year. Uh and 335 00:16:25,920 --> 00:16:27,760 Speaker 1: uh And as a result of me, that reinforces my 336 00:16:27,840 --> 00:16:29,640 Speaker 1: view that inflation is going to come back down more. 337 00:16:29,680 --> 00:16:31,920 Speaker 1: The people thinking, David, do you think that the FED 338 00:16:32,280 --> 00:16:36,680 Speaker 1: is committing an error here? Uh? Well, it's too early 339 00:16:36,720 --> 00:16:39,680 Speaker 1: to say that. UM. You know, it's situational and everything 340 00:16:39,760 --> 00:16:42,840 Speaker 1: is really about you know, now moving from moving from 341 00:16:43,680 --> 00:16:47,520 Speaker 1: three um. And so it's still a few years down 342 00:16:47,560 --> 00:16:50,200 Speaker 1: the road to say that Fed's going to make a mistake. 343 00:16:50,320 --> 00:16:52,960 Speaker 1: Right now, they haven't really done anything. I mean, they're 344 00:16:53,000 --> 00:16:56,680 Speaker 1: talking about talking about tapering, which is maybe happening earlier. 345 00:16:56,680 --> 00:16:58,960 Speaker 1: The people pot but they haven't done anything, and they 346 00:16:59,080 --> 00:17:01,120 Speaker 1: just you know, laid say. I guess that will it 347 00:17:01,200 --> 00:17:04,160 Speaker 1: be Will it be a mistake? Should they follow through 348 00:17:04,320 --> 00:17:09,480 Speaker 1: on the median dot plot projection there of hiking rates twice? Well, 349 00:17:09,520 --> 00:17:11,760 Speaker 1: I think it probably will be. But you know that's 350 00:17:11,800 --> 00:17:15,480 Speaker 1: based on that's based on my assumptions. Uh, And even 351 00:17:15,520 --> 00:17:17,359 Speaker 1: on the fom s take a look, there's still a 352 00:17:17,359 --> 00:17:19,960 Speaker 1: wide range of opinions. People look at the median dot plot. 353 00:17:20,320 --> 00:17:23,800 Speaker 1: Not everybody has centered on the media. So I say 354 00:17:23,840 --> 00:17:26,399 Speaker 1: that they haven't made a mistake yet. I thought that 355 00:17:26,480 --> 00:17:31,199 Speaker 1: it was surprisingly either less stubbish um than uh. You 356 00:17:31,240 --> 00:17:33,200 Speaker 1: know that I was certainly thinking about. But they haven't. 357 00:17:33,240 --> 00:17:35,880 Speaker 1: They haven't done anything yet. I mean, look when you 358 00:17:35,880 --> 00:17:37,639 Speaker 1: look at the dots. When they were first introduced by 359 00:17:37,640 --> 00:17:40,400 Speaker 1: Bernankei in early two thousand and twelve, the funds rate 360 00:17:40,480 --> 00:17:43,399 Speaker 1: was pressing against zero. For the next two years, the 361 00:17:43,440 --> 00:17:45,800 Speaker 1: dot plot showed, you know, point seven five they were 362 00:17:45,800 --> 00:17:48,720 Speaker 1: gonna hike rate three times. So we know with hindsight 363 00:17:48,760 --> 00:17:50,920 Speaker 1: they never did that, and I guess that they race 364 00:17:51,040 --> 00:17:52,920 Speaker 1: rates three times. It would have been a mistake, but 365 00:17:52,960 --> 00:17:54,919 Speaker 1: they never carried through the dots. So to say that 366 00:17:54,960 --> 00:17:57,600 Speaker 1: they made a mistake way too premature to say that 367 00:17:57,680 --> 00:18:02,720 Speaker 1: right now, did you so don't see the inflation right 368 00:18:03,280 --> 00:18:06,880 Speaker 1: in your notes you talk about uh cp I gets 369 00:18:06,880 --> 00:18:09,840 Speaker 1: all the attention, and that's up, but the index is 370 00:18:09,880 --> 00:18:12,560 Speaker 1: not accelerating. And if the Fed is even thinking about 371 00:18:12,600 --> 00:18:17,200 Speaker 1: raising rates, why would you like gold here? Well, look, 372 00:18:17,240 --> 00:18:20,600 Speaker 1: I haven't been banging my fist on gold for for months. Um, 373 00:18:20,640 --> 00:18:23,720 Speaker 1: you know I've got dramatically over sold at the lows 374 00:18:23,760 --> 00:18:26,920 Speaker 1: several months ago, it's backed up and now it's rolling 375 00:18:27,000 --> 00:18:29,440 Speaker 1: over again. I mean a lot of the gold analysts 376 00:18:29,440 --> 00:18:32,439 Speaker 1: are saying we can correct all the way down in 377 00:18:32,520 --> 00:18:34,760 Speaker 1: the context of what could still be a secular bowlt 378 00:18:34,760 --> 00:18:37,320 Speaker 1: market and gold nothing moves on the straight line. But 379 00:18:37,720 --> 00:18:40,400 Speaker 1: you know, you folks are talking earlier about the backup 380 00:18:40,520 --> 00:18:44,440 Speaker 1: or less negative results in real rates. Well, golds caught 381 00:18:44,440 --> 00:18:47,560 Speaker 1: a time warm relationship with real rates, and the real 382 00:18:47,640 --> 00:18:50,320 Speaker 1: rates back up here and the dollar continues to strengthen, 383 00:18:50,680 --> 00:18:53,240 Speaker 1: then it's such as gold enditing price in US dollars 384 00:18:53,400 --> 00:18:55,240 Speaker 1: is going to take it on the chin, including most 385 00:18:55,240 --> 00:18:58,800 Speaker 1: commodity prices. Uh So, for the time being. As long 386 00:18:58,840 --> 00:19:00,760 Speaker 1: as real rates back up here are the dollars that's 387 00:19:00,800 --> 00:19:03,600 Speaker 1: broke above the Twitter day moving average, BOLD is going 388 00:19:03,680 --> 00:19:05,840 Speaker 1: to remain under some near turned downward pressure. So to 389 00:19:05,880 --> 00:19:08,320 Speaker 1: say that I'm bullets on gold right now because they've 390 00:19:08,320 --> 00:19:11,040 Speaker 1: been affected, or bullog gold right now, I'd be saying, 391 00:19:11,240 --> 00:19:14,200 Speaker 1: you know that the near term rests similar to the downside. 392 00:19:15,080 --> 00:19:17,639 Speaker 1: David Rosenberg, thank you so much, greatly appreciate it. This 393 00:19:17,720 --> 00:19:20,080 Speaker 1: morning he's with Rosenberg Research. A little much more for 394 00:19:20,240 --> 00:19:23,800 Speaker 1: Mr Rosenberg in the coming days as he writes on inflation. 395 00:19:29,440 --> 00:19:33,119 Speaker 1: Alan Ruskin with the Standard Deutsche Banker Chief international Strategist, 396 00:19:33,200 --> 00:19:35,600 Speaker 1: Alan I, I look at where we are right now. 397 00:19:36,040 --> 00:19:39,240 Speaker 1: That what an interesting press conference yesterday, and I've really 398 00:19:39,280 --> 00:19:42,840 Speaker 1: got to ask you about this phrase substantial further progress. 399 00:19:42,960 --> 00:19:46,400 Speaker 1: We're making a joke about it, but on a theoretical basis, 400 00:19:46,400 --> 00:19:50,720 Speaker 1: out of the textbooks you've used, what is substantial fur 401 00:19:50,800 --> 00:19:55,320 Speaker 1: their progress? How do you define that? Well, Tom, I 402 00:19:55,320 --> 00:19:58,560 Speaker 1: think what you saw yesterday was that the dual mandate 403 00:19:58,840 --> 00:20:02,840 Speaker 1: is so important and at it's both uh, the progress 404 00:20:02,840 --> 00:20:05,280 Speaker 1: you make on the inflation side, but also you know, 405 00:20:05,320 --> 00:20:08,280 Speaker 1: of course the progress you make on the employment labor 406 00:20:08,320 --> 00:20:11,000 Speaker 1: market side, and the market up until now has been 407 00:20:11,040 --> 00:20:13,800 Speaker 1: emphasizing the labor market and the lack of progress there. 408 00:20:13,800 --> 00:20:16,679 Speaker 1: But I think what you finally saw was recognition from 409 00:20:16,720 --> 00:20:20,040 Speaker 1: the FED on the importance of the other side of 410 00:20:20,080 --> 00:20:23,080 Speaker 1: the dual mandate, the inflation side. So um, you know, 411 00:20:23,119 --> 00:20:26,520 Speaker 1: it really depends on what you're looking at on the 412 00:20:26,600 --> 00:20:29,800 Speaker 1: labor market side. I think even there, Chairman Power was 413 00:20:29,880 --> 00:20:33,240 Speaker 1: very optimistic when he starts to speak about the longer 414 00:20:33,359 --> 00:20:36,560 Speaker 1: term view on the labor market, and when you look 415 00:20:36,560 --> 00:20:39,520 Speaker 1: at the Fed's forecasts on the labor market, including an 416 00:20:39,600 --> 00:20:42,080 Speaker 1: unemployment rate of three point eight percent at the end 417 00:20:42,119 --> 00:20:45,000 Speaker 1: of two around four and a half percent at the 418 00:20:45,080 --> 00:20:47,920 Speaker 1: end of this year, those are very you know, consistent 419 00:20:48,040 --> 00:20:52,600 Speaker 1: with substantial progress. The substantial progress could be a green 420 00:20:52,680 --> 00:20:56,560 Speaker 1: light for other central banks given your international preview. Did 421 00:20:56,560 --> 00:20:59,399 Speaker 1: he green light other central banks yesterday to begin to 422 00:20:59,480 --> 00:21:03,080 Speaker 1: nudge read so up as they choose. I don't think 423 00:21:03,400 --> 00:21:07,400 Speaker 1: other central banks are using this flexible average inflation targeting regime, 424 00:21:07,640 --> 00:21:11,000 Speaker 1: certainly not in a religious way that the FED seemed 425 00:21:11,040 --> 00:21:14,679 Speaker 1: to be up until yesterday, So I think there's no 426 00:21:14,760 --> 00:21:17,160 Speaker 1: sort of green lighting per se. I think the FED 427 00:21:17,280 --> 00:21:20,240 Speaker 1: was standing out is really looking like the ultra Dvish 428 00:21:20,320 --> 00:21:23,200 Speaker 1: central bank within the G ten group. UM, I don't 429 00:21:23,200 --> 00:21:26,359 Speaker 1: think it really changes things materially. What you are, however, 430 00:21:26,440 --> 00:21:28,960 Speaker 1: seeing is that some of the central banks that were 431 00:21:29,040 --> 00:21:32,359 Speaker 1: leaning to be more on the hawkish side, like the 432 00:21:32,440 --> 00:21:35,840 Speaker 1: Norgious Bank on our signaling that they will raise rates, 433 00:21:35,960 --> 00:21:39,960 Speaker 1: not not just a taper, but actually raise rates in September. 434 00:21:40,040 --> 00:21:42,840 Speaker 1: So you do have, you know, some central banks that 435 00:21:42,880 --> 00:21:45,959 Speaker 1: are well ahead of the Federal Reserve. There were before 436 00:21:46,040 --> 00:21:50,680 Speaker 1: yesterday and they are after After yesterday, we have seen 437 00:21:51,560 --> 00:21:54,600 Speaker 1: more central banks start to raise rates than cut rates. 438 00:21:54,640 --> 00:21:58,240 Speaker 1: I think there have been eighty four central bank actions 439 00:21:58,280 --> 00:22:01,120 Speaker 1: globally this year. At the beginning of the year, Um, 440 00:22:01,200 --> 00:22:03,639 Speaker 1: there were more cuts and now we're seeing that skewed 441 00:22:03,720 --> 00:22:08,119 Speaker 1: towards hikes. Um. When are we going to see though 442 00:22:08,160 --> 00:22:12,119 Speaker 1: the big ones follow or or is that the way 443 00:22:12,160 --> 00:22:13,760 Speaker 1: it's going to be? Is the easy be really gonna 444 00:22:13,760 --> 00:22:18,920 Speaker 1: wait until after the Fed? Look, I think the big 445 00:22:18,920 --> 00:22:22,040 Speaker 1: ones are, you know, holding back for the most part. 446 00:22:22,200 --> 00:22:24,280 Speaker 1: I think the e c B is also you know, 447 00:22:24,320 --> 00:22:28,320 Speaker 1: obviously said they're not going to taper through Q three. 448 00:22:29,119 --> 00:22:32,240 Speaker 1: There also on this you know, this attempt to look 449 00:22:32,280 --> 00:22:34,159 Speaker 1: at things and see how things are going to change. 450 00:22:34,440 --> 00:22:37,679 Speaker 1: The Bank of Japan is not looking at things for 451 00:22:37,800 --> 00:22:40,439 Speaker 1: you know, the next three or four years really in 452 00:22:40,440 --> 00:22:43,000 Speaker 1: a way, so they're very much on hold. The Bank 453 00:22:43,040 --> 00:22:44,959 Speaker 1: of England maybe is a little bit more hawkish than 454 00:22:45,000 --> 00:22:47,800 Speaker 1: the other central banks. But I think when you look 455 00:22:47,840 --> 00:22:50,560 Speaker 1: at global markets, it's a federal reserve. I mean, we 456 00:22:50,600 --> 00:22:53,880 Speaker 1: just saw it yesterday that, um, you know, it's what 457 00:22:53,920 --> 00:22:56,640 Speaker 1: the federal Reserve does that's going to dictate I think 458 00:22:56,680 --> 00:23:01,520 Speaker 1: going all asset prices. Lisa a great piece out yesterday 459 00:23:01,600 --> 00:23:06,560 Speaker 1: on Bloomberg Opinion about the financial risk that we're seeing 460 00:23:07,320 --> 00:23:12,600 Speaker 1: rate risk intertwined uh with credit risk, And today I 461 00:23:12,640 --> 00:23:15,720 Speaker 1: saw a story on private equity. They've been pumping more 462 00:23:15,840 --> 00:23:18,879 Speaker 1: leverage loans onto the books of their companies than they 463 00:23:18,920 --> 00:23:22,679 Speaker 1: have in the last fourteen years because of these low rates. 464 00:23:22,760 --> 00:23:27,600 Speaker 1: Is this a dangerous situation certainly for someone like myself 465 00:23:27,640 --> 00:23:32,359 Speaker 1: intends to emphasize the assets cycle is ultimately driving the 466 00:23:32,400 --> 00:23:36,879 Speaker 1: business cycle. Um, there's plenty of signs of a bullians really, 467 00:23:36,880 --> 00:23:41,000 Speaker 1: and I think the Fed has been very restrained, just 468 00:23:41,080 --> 00:23:44,119 Speaker 1: to put it charitably, in terms of the way they've 469 00:23:44,160 --> 00:23:48,240 Speaker 1: spoken about, you know, the ideas of bubbles of bubble letts, etcetera. 470 00:23:48,320 --> 00:23:50,680 Speaker 1: So I think you know the the example you cite 471 00:23:50,720 --> 00:23:53,040 Speaker 1: on the leverage loan side. I think one could just 472 00:23:53,119 --> 00:23:55,760 Speaker 1: look in terms of just some of the more orthodox measures, 473 00:23:55,920 --> 00:23:59,680 Speaker 1: the most obvious being, you know, just equity p ratios, 474 00:23:59,720 --> 00:24:03,800 Speaker 1: just say that, yes, there are dangerous signs there, and 475 00:24:03,920 --> 00:24:06,640 Speaker 1: you know it's not obviously just as surprises, but now 476 00:24:06,640 --> 00:24:09,760 Speaker 1: where we've seen it in consumer prices, I mean the 477 00:24:09,840 --> 00:24:12,800 Speaker 1: danger is upon us really in a sense. So, um, 478 00:24:13,000 --> 00:24:15,760 Speaker 1: you know that the whose action and I think the 479 00:24:15,840 --> 00:24:19,000 Speaker 1: FED did the minimum yesterday, So I want to talk 480 00:24:19,000 --> 00:24:21,160 Speaker 1: a little bit about the market reaction. We did get 481 00:24:21,160 --> 00:24:24,040 Speaker 1: an immediate knee jerk increase in rates as the FED 482 00:24:24,080 --> 00:24:26,800 Speaker 1: took a more hawkish till makes sense today you're getting 483 00:24:26,840 --> 00:24:29,640 Speaker 1: some buying people coming in and seeing some opportunity. At 484 00:24:29,680 --> 00:24:32,840 Speaker 1: what point does the international aspect of the bond market, 485 00:24:32,880 --> 00:24:35,520 Speaker 1: the fact that if the US does tighten, they look 486 00:24:35,640 --> 00:24:38,600 Speaker 1: better on a relative basis, their yields are higher, the 487 00:24:38,640 --> 00:24:41,960 Speaker 1: dollar strengthens, people go into these bonds and yields go lower. 488 00:24:42,200 --> 00:24:44,959 Speaker 1: How much without the rest of the world moving, does 489 00:24:45,000 --> 00:24:47,720 Speaker 1: the balance of motion and go to the lower when 490 00:24:47,720 --> 00:24:50,480 Speaker 1: it comes to bond yields even with a more hawkish FED. 491 00:24:51,359 --> 00:24:53,080 Speaker 1: Well these I mean, you know, we just have to 492 00:24:53,119 --> 00:24:55,800 Speaker 1: think back to Q one, where the bond market was 493 00:24:55,920 --> 00:24:58,320 Speaker 1: very much in the frame and the bears were, you know, 494 00:24:59,119 --> 00:25:02,600 Speaker 1: very much taking up the running and quarter two has 495 00:25:02,640 --> 00:25:05,960 Speaker 1: been very very different, and the dynamic there's different because 496 00:25:06,400 --> 00:25:10,480 Speaker 1: on the supply side, the Federal Reserve, you know, it's 497 00:25:10,520 --> 00:25:14,080 Speaker 1: obviously been holding huge treasury balances that the Treasury has 498 00:25:14,080 --> 00:25:17,359 Speaker 1: now been running down, so the net issuance, particularly the 499 00:25:17,440 --> 00:25:19,439 Speaker 1: last couple of months is going to be negative. So 500 00:25:19,520 --> 00:25:22,399 Speaker 1: that supply side has been very helpful for the bond market. 501 00:25:22,680 --> 00:25:24,800 Speaker 1: And then on the demand side, obviously got the Federal 502 00:25:24,840 --> 00:25:27,840 Speaker 1: Reserve dominance sort of taking down, you know, it's close 503 00:25:27,880 --> 00:25:31,919 Speaker 1: to say, sixty percent of issuance quarter by quarter, but 504 00:25:32,040 --> 00:25:34,399 Speaker 1: on top of that over the last few months, but 505 00:25:34,440 --> 00:25:36,399 Speaker 1: you know, we really have got good data for March 506 00:25:36,400 --> 00:25:39,600 Speaker 1: and April. Foreigners stepped up their game as well. So 507 00:25:39,640 --> 00:25:43,760 Speaker 1: our foreigners do seem to be interested in US bonds 508 00:25:44,040 --> 00:25:47,280 Speaker 1: and Treasury bonds in particular when you see heels above 509 00:25:47,359 --> 00:25:50,200 Speaker 1: one point five percent. So previously I thought, look here 510 00:25:50,359 --> 00:25:51,840 Speaker 1: the ten you can easily get to two and a 511 00:25:51,880 --> 00:25:55,560 Speaker 1: half percent. You know two's tens to fifty basis points 512 00:25:55,600 --> 00:25:57,600 Speaker 1: is not unusual, but I think what you're seeing in 513 00:25:57,640 --> 00:26:01,040 Speaker 1: this low yield environment is that and this will restrain 514 00:26:01,119 --> 00:26:03,760 Speaker 1: the bond market. But Corter two has been a special 515 00:26:03,800 --> 00:26:06,320 Speaker 1: because of the issuance science. I think there's definitely a 516 00:26:06,440 --> 00:26:09,640 Speaker 1: danger that when we get past this rundown of treasury 517 00:26:09,680 --> 00:26:12,520 Speaker 1: cash balances, bond heels are going to start backing up 518 00:26:12,560 --> 00:26:15,760 Speaker 1: in a more material way. That's really interesting basically waiting 519 00:26:16,040 --> 00:26:18,800 Speaker 1: for the taper to actually begin. Just to sort of 520 00:26:18,840 --> 00:26:22,440 Speaker 1: wrap this all together, Did anything change about your investing 521 00:26:22,480 --> 00:26:26,680 Speaker 1: thesis after yesterday's FED meeting? Yeah, I think things did 522 00:26:26,760 --> 00:26:30,040 Speaker 1: change because the FED has really been you know, ultra 523 00:26:30,240 --> 00:26:33,240 Speaker 1: ultra dovish, really and you know, I still think they're dovish. 524 00:26:33,320 --> 00:26:35,600 Speaker 1: I still think, you know, there's an argument that there 525 00:26:35,640 --> 00:26:38,240 Speaker 1: should be finishing tapering at the time when they're starting 526 00:26:38,280 --> 00:26:41,959 Speaker 1: to talk about tapering, so you know, we're still you know, 527 00:26:42,119 --> 00:26:44,360 Speaker 1: dealing with an ultra dovish FED. But I think they're 528 00:26:44,400 --> 00:26:47,359 Speaker 1: catching up with the market. And the key element is 529 00:26:47,359 --> 00:26:50,280 Speaker 1: is the FED behind the curve or not or certainly 530 00:26:50,280 --> 00:26:53,480 Speaker 1: behind the market, because you know, if they lag behind 531 00:26:53,520 --> 00:26:56,000 Speaker 1: the market, then for example, in the FX arena, the 532 00:26:56,040 --> 00:26:58,600 Speaker 1: dollar will tend to be weak if they catch up, 533 00:26:58,720 --> 00:27:00,639 Speaker 1: and certainly if they're ahead of them pocket then the 534 00:27:00,720 --> 00:27:03,199 Speaker 1: doll is strong. So you know, we're at that cusps 535 00:27:03,240 --> 00:27:05,720 Speaker 1: really when we're making up on mind just exactly where 536 00:27:05,720 --> 00:27:09,240 Speaker 1: the fit fits in relation to the marketplace. Ellen Russ 537 00:27:09,240 --> 00:27:12,480 Speaker 1: can thank you so much, greatly, greatly appreciated this morning 538 00:27:12,480 --> 00:27:20,880 Speaker 1: with Deutsche Bank there John Gollob writes two and three 539 00:27:20,920 --> 00:27:25,080 Speaker 1: page notes that are massively sector dependent and data dependent, 540 00:27:25,320 --> 00:27:27,359 Speaker 1: and we're thrilled that he joins us this morning in 541 00:27:27,440 --> 00:27:30,880 Speaker 1: his optimism. John Gollob, I like what you say about 542 00:27:31,119 --> 00:27:34,760 Speaker 1: high sales growth companies. It's a struggle. It's a it's 543 00:27:34,760 --> 00:27:37,399 Speaker 1: a yin yang kind of thing there. Tell me about 544 00:27:37,440 --> 00:27:42,520 Speaker 1: the substantial further progress of high sales growth companies. Well, 545 00:27:42,920 --> 00:27:45,680 Speaker 1: you know, what we've seen is that the market has 546 00:27:45,720 --> 00:27:49,440 Speaker 1: been a value driven market and growth is lagged. But 547 00:27:49,480 --> 00:27:51,920 Speaker 1: if you look at kind of growth on steroids, these 548 00:27:51,920 --> 00:27:55,919 Speaker 1: are companies with higher sales growth, not just higher earnings growth. 549 00:27:56,440 --> 00:28:00,040 Speaker 1: They're really doing quite poorly and they remain expense of 550 00:28:00,400 --> 00:28:03,879 Speaker 1: So think about some of these more speculative companies. We 551 00:28:03,960 --> 00:28:06,800 Speaker 1: think that they're going to going to lag in the 552 00:28:06,840 --> 00:28:10,199 Speaker 1: current environment. And we continue to believe that even with 553 00:28:10,240 --> 00:28:13,280 Speaker 1: the FEDS saying what they did yesterday that the value 554 00:28:13,359 --> 00:28:15,960 Speaker 1: cyclical trade is gonna work in the market's gonna be strong. 555 00:28:16,080 --> 00:28:18,040 Speaker 1: And what's great here in radio you can't see it 556 00:28:18,080 --> 00:28:20,640 Speaker 1: but galu But you know, forget about having the fancy 557 00:28:20,720 --> 00:28:25,760 Speaker 1: bookcase behind you. Lisa Gollub's got Henry Kissingers Magisterial World 558 00:28:25,880 --> 00:28:27,880 Speaker 1: Order behind him. That was my book of the Years 559 00:28:27,920 --> 00:28:31,720 Speaker 1: million years ago, with two really pressian chapters on America. 560 00:28:32,080 --> 00:28:34,879 Speaker 1: Still true today. So what's the world order going forward? 561 00:28:34,920 --> 00:28:37,880 Speaker 1: If you're gonna have that tone behind your head when 562 00:28:37,920 --> 00:28:41,240 Speaker 1: it comes to a potential hawk ish FED doesn't kill 563 00:28:41,320 --> 00:28:45,040 Speaker 1: off some of the transformation that we've seen in equity markets, 564 00:28:45,080 --> 00:28:50,320 Speaker 1: like increase in meme trading, like the increase in spac issuance. Well, 565 00:28:51,040 --> 00:28:54,880 Speaker 1: let's let's put this in perspective. We know there's inflation everywhere. 566 00:28:54,920 --> 00:28:57,680 Speaker 1: We had a five percent inflation prints on CPI, a 567 00:28:57,760 --> 00:29:01,560 Speaker 1: six post persition of inflation prints on PPI, and the 568 00:29:01,600 --> 00:29:04,560 Speaker 1: FIT was acknowledging it, and they said, okay, we may 569 00:29:04,600 --> 00:29:07,080 Speaker 1: have to raise rates in two years from now. At 570 00:29:07,120 --> 00:29:11,360 Speaker 1: the end of twenty three, expectations of sixty basis points 571 00:29:11,720 --> 00:29:14,440 Speaker 1: and and and in a market that or economy that 572 00:29:14,600 --> 00:29:19,040 Speaker 1: is on fire, if they didn't acknowledge, um, what we're 573 00:29:19,120 --> 00:29:22,440 Speaker 1: all seeing, I think they would have lost credibility. So yeah, 574 00:29:22,520 --> 00:29:24,320 Speaker 1: they you know, they took a little bit of our 575 00:29:24,400 --> 00:29:27,880 Speaker 1: candy away. We were incrementally unhappy. We're one percent of 576 00:29:27,920 --> 00:29:30,640 Speaker 1: all off of all time eyes. But I don't think 577 00:29:30,640 --> 00:29:34,000 Speaker 1: that that we're really changing this. This is still zero money. 578 00:29:34,120 --> 00:29:37,080 Speaker 1: And and unfortunately, I think that some of the specular 579 00:29:37,120 --> 00:29:40,200 Speaker 1: trades are going to continue to work because it is 580 00:29:40,240 --> 00:29:42,760 Speaker 1: still a very combinative environment. All Right, we'll go from 581 00:29:42,760 --> 00:29:45,560 Speaker 1: the speculative to I guess the more stable companies here, John, 582 00:29:45,600 --> 00:29:48,560 Speaker 1: When we talk about evaluations in this market, there was 583 00:29:48,600 --> 00:29:51,480 Speaker 1: an argument being made last year and into this year 584 00:29:51,520 --> 00:29:54,440 Speaker 1: here that a lot of the highest valuations were actually 585 00:29:54,440 --> 00:29:57,000 Speaker 1: assigned to some of the highest growth companies, at least 586 00:29:57,000 --> 00:29:59,200 Speaker 1: on a revenue basis. Here. Is that still the case 587 00:29:59,240 --> 00:30:02,880 Speaker 1: going forward? It is? And that was actually the point 588 00:30:02,920 --> 00:30:05,640 Speaker 1: of that note that that Tom was mentioning, is that 589 00:30:05,760 --> 00:30:09,560 Speaker 1: the market's expensive, but it's not the average company that's 590 00:30:09,600 --> 00:30:12,880 Speaker 1: that's out of whack. It's really the stuff at the 591 00:30:12,960 --> 00:30:15,800 Speaker 1: very top from evaluation perspective, and a lot of these 592 00:30:15,840 --> 00:30:19,600 Speaker 1: things are very speculative in nature. Um those stocks we 593 00:30:19,680 --> 00:30:22,920 Speaker 1: think are going to be vulnerable, and which is probably 594 00:30:22,960 --> 00:30:25,880 Speaker 1: a good thing for investors who do the fundamental work 595 00:30:26,040 --> 00:30:29,400 Speaker 1: and focus on the underlying earnings and cashitlows and all 596 00:30:29,440 --> 00:30:33,360 Speaker 1: that boring stuff. John John from Coventry emails and he says, 597 00:30:33,400 --> 00:30:35,920 Speaker 1: did you guys stop talking and ask him what SPX 598 00:30:36,000 --> 00:30:39,080 Speaker 1: is gonna do? What's your standard reports target? Out one year? 599 00:30:40,600 --> 00:30:43,280 Speaker 1: We have you know, we have the highest UM target 600 00:30:43,320 --> 00:30:46,760 Speaker 1: according to Bloomberg Survey at fort hundred. That's a little 601 00:30:46,760 --> 00:30:49,680 Speaker 1: bit less than ten percent. That's pretty bullish. We think 602 00:30:49,680 --> 00:30:53,360 Speaker 1: that earnings are gonna be about two hundred UM, which 603 00:30:53,520 --> 00:30:55,360 Speaker 1: you know that that's a that's a big you know 604 00:30:55,440 --> 00:30:58,880 Speaker 1: that that's a big number. But companies are beating really 605 00:30:58,920 --> 00:31:02,160 Speaker 1: really strongly. Hopping at this is great. John sending more 606 00:31:02,280 --> 00:31:05,240 Speaker 1: questions Lucy Jonathan. There's a question of how far we 607 00:31:05,280 --> 00:31:07,960 Speaker 1: can project this into the future. Are we still bringing 608 00:31:08,480 --> 00:31:11,480 Speaker 1: the returns of the future to the present or is 609 00:31:11,480 --> 00:31:15,440 Speaker 1: this something that's sustainable with ten percent returns foreseeable for 610 00:31:15,520 --> 00:31:18,880 Speaker 1: a number of years out for the SMP you know, 611 00:31:19,080 --> 00:31:21,480 Speaker 1: I think that was one of the challenges with the 612 00:31:21,800 --> 00:31:24,240 Speaker 1: FED report that you were seeing a more of a 613 00:31:24,320 --> 00:31:27,480 Speaker 1: dispersion of what the FED governors were seeing because there's 614 00:31:27,520 --> 00:31:30,560 Speaker 1: just so many unknowns on how this reopening is going 615 00:31:30,600 --> 00:31:33,040 Speaker 1: to do. The real question is when do we get 616 00:31:33,080 --> 00:31:35,560 Speaker 1: to normal, because then you would expect, you know, your 617 00:31:35,600 --> 00:31:38,240 Speaker 1: typical eight percent return. I don't think we're gonna get 618 00:31:38,280 --> 00:31:41,440 Speaker 1: to normal from an equity perspective until the early to 619 00:31:41,560 --> 00:31:44,840 Speaker 1: mid part of three. At that point in time, the 620 00:31:44,880 --> 00:31:48,479 Speaker 1: Fed's probably already moved. At that point in time, GDP 621 00:31:48,680 --> 00:31:51,479 Speaker 1: is already growing at two percent, back in line with 622 00:31:51,800 --> 00:31:55,040 Speaker 1: normal history. Between now and then, I think stocks continue 623 00:31:55,080 --> 00:31:58,440 Speaker 1: to be on fire and value continues to win. You 624 00:31:58,440 --> 00:32:01,480 Speaker 1: have been killing it. Look at twelve trailing market returns. 625 00:32:01,520 --> 00:32:03,600 Speaker 1: Folks to know that John got all the credit. Sweez 626 00:32:03,920 --> 00:32:06,440 Speaker 1: has just absolutely nailed it there with a bold call 627 00:32:06,480 --> 00:32:11,160 Speaker 1: out to SPX. I'll triangulate and find out what that 628 00:32:11,200 --> 00:32:20,120 Speaker 1: means for the dal Jones industrial average. Eric Adams joins 629 00:32:20,160 --> 00:32:24,080 Speaker 1: us semoral candidate in the June primary. And this has 630 00:32:24,400 --> 00:32:27,160 Speaker 1: a national I should point out really a national view 631 00:32:27,480 --> 00:32:30,720 Speaker 1: as well as what we see. I was thunderstruck, Eric, 632 00:32:30,800 --> 00:32:32,400 Speaker 1: and I don't know where you came in on this. 633 00:32:32,520 --> 00:32:36,360 Speaker 1: But in the debate transcript, I looked at once again 634 00:32:36,920 --> 00:32:40,640 Speaker 1: the fancy suit and Ties have a middle class definition 635 00:32:40,640 --> 00:32:43,880 Speaker 1: of a hundred and thirty seven thousand income per year, 636 00:32:44,280 --> 00:32:47,120 Speaker 1: and one of the candidates said, wait a minute, it's 637 00:32:47,160 --> 00:32:51,000 Speaker 1: more like fifty four thousand a year. Explain to me 638 00:32:51,080 --> 00:32:55,520 Speaker 1: if you are mayor where your middle class is define 639 00:32:55,960 --> 00:33:03,400 Speaker 1: middle class in your New York City. Well, and that's 640 00:33:03,400 --> 00:33:06,400 Speaker 1: a that's a moving target. As I stated during the debate, 641 00:33:07,280 --> 00:33:11,400 Speaker 1: when you looked at the United Ways report of New 642 00:33:11,480 --> 00:33:15,520 Speaker 1: Yorkers have a sufficiency deficit. So if you have a 643 00:33:15,560 --> 00:33:18,400 Speaker 1: family of four and you're making a hundred and fifty 644 00:33:18,440 --> 00:33:21,680 Speaker 1: thousand dollars a year and you're living in Park Slope, 645 00:33:22,240 --> 00:33:25,560 Speaker 1: you are challenging to actually make ends meet. And there 646 00:33:25,560 --> 00:33:31,040 Speaker 1: are many parts of the city where based on your income, 647 00:33:31,160 --> 00:33:34,479 Speaker 1: your family, your rent, and dealing with everything from student 648 00:33:34,560 --> 00:33:38,240 Speaker 1: loans to tuition. You know, it's a very difficult time 649 00:33:38,320 --> 00:33:41,080 Speaker 1: for middle class New Yorkers. And we have decimated the 650 00:33:41,120 --> 00:33:43,240 Speaker 1: middle class in the city and if not throughout the 651 00:33:43,320 --> 00:33:46,560 Speaker 1: entire country. Part of the decimation of the middle class 652 00:33:46,640 --> 00:33:49,719 Speaker 1: is their fear of crime. Certainly, we've learned at Bloomberg 653 00:33:49,720 --> 00:33:53,760 Speaker 1: in the last number of weeks, crime is front and center. Uh, 654 00:33:53,800 --> 00:33:57,080 Speaker 1: there's a lot of people talking. Eric Adams, I would 655 00:33:57,080 --> 00:34:01,440 Speaker 1: suggest war the blue was a police officer. I want 656 00:34:01,480 --> 00:34:05,760 Speaker 1: you to provide the distinction of your approach to NYPD 657 00:34:06,160 --> 00:34:10,799 Speaker 1: versus the candidates who don't have your public service. And 658 00:34:10,840 --> 00:34:14,000 Speaker 1: that's a great question because many of the candidates refused 659 00:34:14,000 --> 00:34:16,880 Speaker 1: to talk about this real issue of crime. They wanted 660 00:34:16,920 --> 00:34:19,239 Speaker 1: to look at public safety through the eyes of a 661 00:34:19,280 --> 00:34:23,400 Speaker 1: bumper sticker or slogan. Unless we clear the prerequisite to 662 00:34:23,480 --> 00:34:27,319 Speaker 1: prosperity is public safety and justice. We're not going to 663 00:34:27,360 --> 00:34:30,760 Speaker 1: recover as a city or country if we don't get 664 00:34:30,800 --> 00:34:33,560 Speaker 1: this crime under control. No one is going to come 665 00:34:33,600 --> 00:34:36,759 Speaker 1: here as a tourist, a multi billion dollar industry if 666 00:34:36,800 --> 00:34:39,719 Speaker 1: you have three year children shot in Times Square, no 667 00:34:39,760 --> 00:34:42,280 Speaker 1: one wants to ride out subways to get back into 668 00:34:42,320 --> 00:34:45,200 Speaker 1: the office spaces if you're slash or shove to the 669 00:34:45,239 --> 00:34:48,239 Speaker 1: subway system on the subway tracks. And so my goal 670 00:34:48,360 --> 00:34:51,640 Speaker 1: is number one, get gun violence under control. We want 671 00:34:51,719 --> 00:34:55,280 Speaker 1: to put in place a plain closed anti gun unit 672 00:34:55,440 --> 00:34:58,480 Speaker 1: there zero and or gun and gang violence, use out 673 00:34:58,520 --> 00:35:03,120 Speaker 1: gun suppression unit to really collaborate together with our other 674 00:35:03,160 --> 00:35:07,160 Speaker 1: agencies to identify who's using the guns, stopping guns from 675 00:35:07,200 --> 00:35:10,120 Speaker 1: coming into our city, and then we must deal with 676 00:35:10,160 --> 00:35:14,120 Speaker 1: our street homeless problem, really dealing with the mental health 677 00:35:14,600 --> 00:35:17,759 Speaker 1: illnesses that we're facing. We're losing the quality of life. 678 00:35:17,840 --> 00:35:19,360 Speaker 1: No one is going to stay in the city or 679 00:35:19,440 --> 00:35:22,560 Speaker 1: building the city if we're viewed as a city that's 680 00:35:22,600 --> 00:35:26,680 Speaker 1: not seen. Uh. Certainly so, uh, Mr Adams. Obviously a 681 00:35:26,760 --> 00:35:31,080 Speaker 1: prerequisite to that prosperity is public safety. So is education here. 682 00:35:31,320 --> 00:35:33,560 Speaker 1: A lot of folks want to know how what's your 683 00:35:33,560 --> 00:35:36,359 Speaker 1: approach gonna be with regards to the public school systems here, 684 00:35:36,520 --> 00:35:39,400 Speaker 1: with regards to staffing, and more importantly, with reguards to 685 00:35:39,480 --> 00:35:43,400 Speaker 1: the prosperity of our children. Well said? Well said? Listen, 686 00:35:43,560 --> 00:35:45,720 Speaker 1: let me tell you the biggest embarrassment in this city, 687 00:35:46,120 --> 00:35:49,680 Speaker 1: uh is how we treat our children in education. Education 688 00:35:49,840 --> 00:35:53,120 Speaker 1: is not K through twelve. That's wrong. The neurologists and 689 00:35:53,120 --> 00:35:57,239 Speaker 1: pediatricians would tell you. Education is pregnancy through profession. We 690 00:35:57,320 --> 00:36:00,560 Speaker 1: must make sure that every area of a vacation is 691 00:36:00,600 --> 00:36:04,000 Speaker 1: handled right, everything from nutrition on when mothers are pregnant 692 00:36:04,320 --> 00:36:06,560 Speaker 1: to the time that we give them the right too 693 00:36:06,719 --> 00:36:10,400 Speaker 1: they need and brain development. But also are the real embarrassment. 694 00:36:10,600 --> 00:36:15,120 Speaker 1: Sixty five of black and brown children never reach proficiency 695 00:36:15,360 --> 00:36:18,440 Speaker 1: in the department education in the city. So one, we 696 00:36:18,520 --> 00:36:22,000 Speaker 1: must return the joy of learning in our schools. We 697 00:36:22,120 --> 00:36:27,080 Speaker 1: must look into internships. Externships, leaning too, vocational trainings allowed 698 00:36:27,160 --> 00:36:31,160 Speaker 1: the business community, our tech and other industries to be 699 00:36:31,320 --> 00:36:34,600 Speaker 1: part of the curriculum that we develop in our school systems. 700 00:36:34,880 --> 00:36:37,600 Speaker 1: And then we must get technology in our schools, access 701 00:36:37,640 --> 00:36:41,160 Speaker 1: to WiFi and all the twos our children need. And finally, 702 00:36:41,320 --> 00:36:44,840 Speaker 1: our fundation not be based solely on what happens in 703 00:36:44,880 --> 00:36:47,880 Speaker 1: a school building. We need to look at the issues 704 00:36:47,920 --> 00:36:51,120 Speaker 1: around the schools as well. Is your vision centered around 705 00:36:51,160 --> 00:36:56,960 Speaker 1: the public school system? Mr Adams? My business is surrounding 706 00:36:57,640 --> 00:37:01,960 Speaker 1: lifted up excellence. If that needs charter schools, public school 707 00:37:02,040 --> 00:37:07,080 Speaker 1: private schools, let's duplicate successful schools in our city and 708 00:37:07,160 --> 00:37:09,800 Speaker 1: go across the country to do so. I got forty 709 00:37:09,880 --> 00:37:12,799 Speaker 1: five seconds, Eric, How are you gonna cut costs? How 710 00:37:12,840 --> 00:37:15,319 Speaker 1: are you going to manage costs in a city where 711 00:37:15,400 --> 00:37:19,840 Speaker 1: costs are unmanageable? I'll city is dysfunctional as cities across 712 00:37:19,840 --> 00:37:24,680 Speaker 1: America's Americas, they are number one. We're going to reign 713 00:37:24,719 --> 00:37:26,920 Speaker 1: in a three to five percent of cutting all of 714 00:37:26,920 --> 00:37:29,080 Speaker 1: our agencies. There's a lot of fat. We have a 715 00:37:29,080 --> 00:37:31,960 Speaker 1: twenty billion dollar increase in our budget. Uh, there's just 716 00:37:32,040 --> 00:37:35,160 Speaker 1: too much waste and mismanagement. And we're not going to 717 00:37:35,280 --> 00:37:38,480 Speaker 1: hurt those communities that were hardest hit during COVID and 718 00:37:38,520 --> 00:37:42,040 Speaker 1: even pre COVID. UH. This city is manageable. Taxpayers are 719 00:37:42,080 --> 00:37:45,080 Speaker 1: doing their dollars of doing the right things by paying 720 00:37:45,080 --> 00:37:47,359 Speaker 1: their taxes. It's time for us to do the right 721 00:37:47,400 --> 00:37:50,719 Speaker 1: thing with government by using those dollars correctly. We're too expensive, 722 00:37:50,760 --> 00:37:54,280 Speaker 1: too bureaucratic, and too difficult to do business in this city. 723 00:37:54,360 --> 00:37:57,080 Speaker 1: And that's going to change day one. He is from Brooklyn. 724 00:37:57,360 --> 00:37:59,800 Speaker 1: Eric Adams, thank you so much for joining us twenty 725 00:37:59,840 --> 00:38:02,960 Speaker 1: seven at the mayoral effort here with that very unique voting. 726 00:38:03,320 --> 00:38:07,120 Speaker 1: This is the Bloomberg Surveillance Podcast. Thanks for listening. Join 727 00:38:07,239 --> 00:38:10,240 Speaker 1: us live weekdays from seven to ten a m Eastern 728 00:38:10,480 --> 00:38:14,520 Speaker 1: on Bloomberg Radio and on Bloomberg Television each day from 729 00:38:14,600 --> 00:38:19,880 Speaker 1: six to nine am for insight from the best in economics, finance, investment, 730 00:38:20,000 --> 00:38:25,040 Speaker 1: and international relations. And subscribe to the Surveillance Podcast on 731 00:38:25,120 --> 00:38:28,920 Speaker 1: Apple podcast, SoundCloud, Bloomberg dot com, and of course, on 732 00:38:29,040 --> 00:38:33,239 Speaker 1: the terminal. I'm Tom keene In. This is Bloomberg