WEBVTT - Surveillance: Inflation Is A Concern, Moynihan Says 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:09.240 --> 0:00:13.080 with Jonathan Ferrell and Lisa Brown Witz Jailey. We bring 0:00:13.119 --> 0:00:17.159 you insight from the best and economics, finance, investment, and 0:00:17.280 --> 0:00:23.280 international relations. Find Bloomberg Surveillance on Apple podcast, Suncloud, Bloomberg 0:00:23.360 --> 0:00:29.680 dot com, and of course on the Bloomberg Termament. We 0:00:29.920 --> 0:00:32.400 are joined by the Chairman of CEGO of Bank of America. 0:00:32.440 --> 0:00:34.559 He's Mr Brian moynihan. Brian, thank you so much for 0:00:34.560 --> 0:00:37.320 your time today. So the FETE is made it official 0:00:37.360 --> 0:00:39.360 more or less. We need to pay attention to inflation 0:00:39.400 --> 0:00:40.800 and not clear exactly what we're doing, but we need 0:00:40.840 --> 0:00:43.479 to pay attention to it. And they didn't move anything 0:00:43.560 --> 0:00:46.559 except some dots on some plots. But where they did 0:00:46.680 --> 0:00:48.599 they get it right? Are they reacting in the right 0:00:48.640 --> 0:00:53.360 way at the right time or is it too much? Well? 0:00:53.360 --> 0:00:55.880 I think that first, David, good to see you again. 0:00:56.120 --> 0:00:58.520 Let me uh. I think there's three key points. The 0:00:58.560 --> 0:01:03.280 first point is about the virus, the vaccines and the variants. 0:01:03.480 --> 0:01:05.920 The second points about the dot plots, but what is 0:01:05.920 --> 0:01:08.440 the underlying FED predictions of economy, And the third points 0:01:08.440 --> 0:01:11.160 about thinking about this FED and where they we're nineteen. 0:01:11.240 --> 0:01:14.360 So first point, if you have the three VS virus 0:01:14.440 --> 0:01:18.319 variants and vaccines, you really have to listen that they 0:01:18.360 --> 0:01:20.440 need to see the whole that they were trying to 0:01:20.480 --> 0:01:23.920 fill between physical, physical stimulus and accommodation was to put 0:01:23.920 --> 0:01:26.160 the economy back to where it was and with the 0:01:26.200 --> 0:01:29.640 same growth characteristics are frankly even better growth characteristics. And 0:01:29.680 --> 0:01:31.520 if you look around the world, central banks are gonna 0:01:31.560 --> 0:01:34.120 struggles to win. This virus is behind him because at 0:01:34.120 --> 0:01:36.240 the end of the day, is that is the determined here. 0:01:36.280 --> 0:01:38.399 So if you think about India, think about what they 0:01:38.400 --> 0:01:40.240 went through over the last several weeks, think about in 0:01:40.240 --> 0:01:44.120 the UK delaying uh the full of reopening because of 0:01:44.120 --> 0:01:46.640 the variants. That's the variant question. You think about the 0:01:46.720 --> 0:01:50.040 US vaccines through half the population you can see and 0:01:50.080 --> 0:01:52.480 it's pretty open and the questions with the variance effect 0:01:52.520 --> 0:01:55.280 us to pay attention to the vaccine path. The second 0:01:55.360 --> 0:01:57.960 question was the dots, as you said, dot plots, and 0:01:58.600 --> 0:02:00.760 there's great debate whether he's add value at this point 0:02:00.760 --> 0:02:02.120 when they're put in there, it put in for a 0:02:02.160 --> 0:02:05.400 different purpose. But leaving that debate aside, the question is 0:02:05.440 --> 0:02:08.920 the FEDS economic projections. This year seven. Next year in 0:02:08.960 --> 0:02:12.480 the mid threes, the street actually is seven percent. Matches 0:02:12.480 --> 0:02:15.400 have fed this year, but next year Bank America security 0:02:15.440 --> 0:02:17.120 is and our team there and it's a great team 0:02:17.400 --> 0:02:20.840 is at five in the streets at high fours. If 0:02:20.840 --> 0:02:22.919 you believe the street in Bank of America are more 0:02:23.000 --> 0:02:25.400 right as you move through the year. The reality is 0:02:25.480 --> 0:02:28.400 the economy is growing much fashion it was, with much 0:02:28.480 --> 0:02:31.240 more fiscal stimus still to be spent in the customers accounts, 0:02:31.639 --> 0:02:33.920 much more opportunity for the economy around out and grow. 0:02:34.240 --> 0:02:36.240 And that's something people should pay attention to because last 0:02:36.320 --> 0:02:38.760 year this time this year's rate of growth was half 0:02:38.760 --> 0:02:40.760 of what it's turned out to be predicted to be. 0:02:41.200 --> 0:02:44.280 So if those economic growth predictions move, those dot plots 0:02:44.320 --> 0:02:46.520 will become uninteresting because I'll have to move because things 0:02:46.560 --> 0:02:49.120 will be moving faster. And the third things, think about 0:02:49.120 --> 0:02:53.440 two thousand nineteen, same fed, same chairs, different somewhat different people, 0:02:53.520 --> 0:02:56.359 the same research department. They were sitting there mid two 0:02:56.360 --> 0:03:00.000 thousand to two percent plus FED funds rate two percent, 0:03:00.080 --> 0:03:03.760 plush ten tenure Treasury rate. Economic projective forward growth was 0:03:03.800 --> 0:03:07.880 two percent. Unemployment in the threes. Think about that. Where 0:03:07.880 --> 0:03:09.960 we are now, We've got three times the growth rate 0:03:10.000 --> 0:03:12.840 projected next year, even two times the growth rate projected 0:03:12.960 --> 0:03:16.000 a FED unemployment rate projection in the low threes by 0:03:16.000 --> 0:03:19.280 the end of twenty three, high threes by next year, 0:03:19.280 --> 0:03:21.639 in low force bid force. This year there was a 0:03:21.680 --> 0:03:24.280 full employment and what was the only thing concerning them 0:03:24.280 --> 0:03:26.679 and nine team was wage growth. And you're seeing wage growth, 0:03:26.720 --> 0:03:28.880 so that'll be interesting. Tug A wars that seeing normalized. 0:03:29.320 --> 0:03:32.360 So Brian absolutely right. We're have a remarkable story and 0:03:32.360 --> 0:03:34.160 the bounce back of the economy and the growth. But 0:03:34.280 --> 0:03:36.920 what about inflation, because they also have taken way up 0:03:36.960 --> 0:03:40.080 the FED the projection on the PCU deflate or three 0:03:40.120 --> 0:03:43.000 point four percent core is three point o percent. What 0:03:43.080 --> 0:03:46.240 are you seeing? You have your tentacles in to so 0:03:46.480 --> 0:03:49.920 many consumers as well as small businesses more than anybody else. 0:03:50.360 --> 0:03:57.119 Are your customers seeing feeling real pressure from from price increases? Well, 0:03:57.320 --> 0:04:01.000 ye know. The great debate is yea, what is temporary? 0:04:01.080 --> 0:04:04.520 What is transitory? As at SFP, as toom Mus talk 0:04:04.560 --> 0:04:06.800 about this morning, these terms are used to try to 0:04:06.840 --> 0:04:09.400 signal what they think right now. The firm belief I 0:04:09.400 --> 0:04:11.559 think by the FET is most of this is transitory. 0:04:11.640 --> 0:04:14.360 We'll see But the question is what about the stickier things. 0:04:14.480 --> 0:04:16.960 Wage growth becomes sticky, and you're seeing that come back, 0:04:17.279 --> 0:04:20.919 and as unemployment rates come down and you're seeing you know, 0:04:20.960 --> 0:04:23.480 the pick up employement. We'll see what the new claims 0:04:23.480 --> 0:04:26.720 are this morning, but you're seeing unemploy the employment market titan. 0:04:26.760 --> 0:04:29.640 If you ask our small business customers last fall, their 0:04:29.720 --> 0:04:33.520 number one issue pandemic, pandemic, pandemic. This spring, number one 0:04:33.520 --> 0:04:37.080 issue getting people to work and supply chains, that's a 0:04:37.120 --> 0:04:40.000 whole different place. And that means inflation and characteristics are 0:04:40.000 --> 0:04:42.400 out there to be filled. But is it temporary? Is 0:04:42.440 --> 0:04:45.520 it transitory? Um? And there'll be a great debate about that, 0:04:45.520 --> 0:04:47.039 But I think it still comes down to what you 0:04:47.040 --> 0:04:49.760 think next year's projection for for economic growth is and 0:04:49.800 --> 0:04:52.320 what you see in wage growth leading into that, as 0:04:52.360 --> 0:04:54.800 to whether the stickier parts of this will happen. Now. 0:04:54.880 --> 0:04:57.000 The route is in our customers accounts. They still have 0:04:57.040 --> 0:05:00.440 sixty five sevent stiments dollars in those accounts. The average 0:05:00.480 --> 0:05:03.120 balance for people two to five thousand dollars of average 0:05:03.120 --> 0:05:05.360 balunc accounts are up three times and sitting there ready 0:05:05.400 --> 0:05:09.920 to be spent. You're seeing their spending growth year to 0:05:10.040 --> 0:05:13.600 date through the last through the fourteenth of June versus nineteen, 0:05:13.680 --> 0:05:17.880 not eighteen, but not twenty nineteen, meaning the no normal 0:05:17.960 --> 0:05:22.320 year growth that's very strong. So it's all set up 0:05:22.360 --> 0:05:24.479 that inflation could happen. That would be the great debate. 0:05:24.520 --> 0:05:26.000 But I think we have to get further into the 0:05:26.080 --> 0:05:29.640 question of what is transitory. So, Brian, the one thing 0:05:29.680 --> 0:05:32.600 that seems clear after the FETE has spoken is that 0:05:32.680 --> 0:05:35.520 we are changing sort of the dynamic. We were on 0:05:35.560 --> 0:05:37.800 a loosening phase. We're not going to start tightening. It's 0:05:37.839 --> 0:05:41.200 not clear when or how how fast we're gonna start tightening. 0:05:41.360 --> 0:05:44.120 What does that due to Bank of America's business at 0:05:44.160 --> 0:05:46.440 its core? And let's start if we could with trading. 0:05:46.480 --> 0:05:48.560 I mean, we've heard from a couple of your rivals 0:05:48.560 --> 0:05:50.520 here the trading is down the second quarter. Were you 0:05:50.560 --> 0:05:53.240 in the second quarter? But could this cause volatility of 0:05:53.279 --> 0:05:58.039 the tightening that could help your trading? Well, let's go 0:05:58.120 --> 0:06:01.560 back to the You know, our economics for economist projections 0:06:01.600 --> 0:06:04.240 are that the economy this quarter will be about the 0:06:04.279 --> 0:06:06.960 same size that was heading into the pandemic, which means 0:06:07.000 --> 0:06:12.120 that you're sort of restored differently constituted with shortages and supply, labor, 0:06:12.320 --> 0:06:15.440 unemployment not where we want. Spending that's migrated from panic 0:06:15.839 --> 0:06:18.000 to sort of do it yourself and now to go 0:06:18.080 --> 0:06:21.520 out and eat and things, restaurants spending up dramatically. Travel 0:06:21.560 --> 0:06:23.680 back to what is all that means economy continues to 0:06:23.720 --> 0:06:26.200 grow In terms of trading, you know, there's always a 0:06:26.200 --> 0:06:28.240 seasonality between the first quarter and the second quarter, and 0:06:28.279 --> 0:06:30.360 we're no different than other people. But the reality, if 0:06:30.400 --> 0:06:32.920 you really think about it, is vaulatility helps a trading group, 0:06:33.000 --> 0:06:35.960 but frankly, from a bank American perspective, you'd rather have 0:06:35.960 --> 0:06:39.040 the economy growing at a solid rate, unemployment down because 0:06:39.040 --> 0:06:40.960 any day that means great for the core business. That 0:06:41.000 --> 0:06:44.760 means great for the UH capital, for markets formation activity, 0:06:45.400 --> 0:06:49.120 less emergency and more normalized. And also it means great 0:06:49.160 --> 0:06:51.120 for loan demand and loan demand were stings start to 0:06:51.160 --> 0:06:53.920 pick up slowly as we moved through the months of April, April, 0:06:53.920 --> 0:06:56.360 May and June, which is better than it was obviously 0:06:56.440 --> 0:06:59.480 last fall or coming into their early spring. So so Brian, 0:06:59.520 --> 0:07:01.400 if ironers that you correctly sounded like you're sort of 0:07:01.760 --> 0:07:04.400 along with your rivals. They are on trading the Siddon quarter, 0:07:04.440 --> 0:07:08.600 which should come down am I understanding that correctly? If 0:07:08.640 --> 0:07:10.880 the market moves, you know, we all maintain our market 0:07:10.880 --> 0:07:14.120 share kind of moves together. So there's nuances that will know, 0:07:14.160 --> 0:07:15.880 we'll get into but when we get to the earnings 0:07:15.880 --> 0:07:17.560 and figure out what happens the last few weeks here, 0:07:17.600 --> 0:07:19.200 but you know, we're not gonna be a heck of 0:07:19.200 --> 0:07:21.720 a lot different from other people. So that I raised 0:07:21.800 --> 0:07:22.960 the question of Okay, what does it due to the 0:07:23.040 --> 0:07:25.600 rest of your business, particularly if we're into a tightening phase, 0:07:25.640 --> 0:07:27.440 as I say, it doesn't know, don't know how long 0:07:27.480 --> 0:07:29.400 it will take tightening phase. What does that do to 0:07:29.440 --> 0:07:34.120 things like net interest margin? Well, that interest margin, the 0:07:34.160 --> 0:07:36.840 deposit bounces are huge, and that's due to the amount 0:07:36.840 --> 0:07:38.840 of physical stimulus that went in the system and amount 0:07:38.840 --> 0:07:42.600 of monetary accommodation, so that deposit bounces are high. The loans. 0:07:42.720 --> 0:07:45.080 The good thing about the business is half our money 0:07:45.120 --> 0:07:47.560 comes from spread deposits and loans, and you're starting to 0:07:47.600 --> 0:07:50.400 see those loans stabilize as we came to the first 0:07:50.440 --> 0:07:52.680 quarter and start to grow this quarter at a modest pace. 0:07:52.840 --> 0:07:55.600 But our credit card balances, you know, fell from ninety 0:07:55.640 --> 0:07:58.720 billion dollars and seventy billion dollars, and that's those are 0:07:58.720 --> 0:08:00.800 the kinds of things indicate the cut are still getting 0:08:00.800 --> 0:08:03.160 back in the game. Our middle market draw rate onlines 0:08:03.520 --> 0:08:05.800 went from the forties to the low thirties. That's lower 0:08:05.840 --> 0:08:08.320 than we've ever seen it. It's stabilized there and starting 0:08:08.320 --> 0:08:10.560 to move out, you know. So I think we're in 0:08:10.560 --> 0:08:13.040 the what I call the twist of both rates and 0:08:13.080 --> 0:08:16.040 economy that you're seeing economy normalized in rates move up. 0:08:16.320 --> 0:08:19.080 Rates moving up helps our business, but if they're moving 0:08:19.160 --> 0:08:21.000 up the wrong reason, it doesn't help our business. So 0:08:21.040 --> 0:08:23.440 the good good thing for Bank America is when the 0:08:23.520 --> 0:08:25.520 US economy and the world economies are growing on a 0:08:25.600 --> 0:08:28.520 fundamental basis. As we look forward, richeld moving up. But 0:08:28.600 --> 0:08:31.360 let's be frank, it's pretty modest still as a practical matter. 0:08:31.520 --> 0:08:34.600 And and let's also be honest, the Fed continues to 0:08:34.640 --> 0:08:37.240 buy those bonds, which means there's more stimulus coming to 0:08:37.280 --> 0:08:39.719 the marketplace. Is there demand for the loans, because the 0:08:39.760 --> 0:08:41.920 problem doesn't seem to be the interest rates, it's more 0:08:41.960 --> 0:08:46.800 whether's demand. Are you seeing demand from your customers? We are, 0:08:47.040 --> 0:08:49.600 We're seeing as we came to this quarter. Uh so, 0:08:49.720 --> 0:08:53.360 our small business originations in two thousand, twenty one May. 0:08:53.480 --> 0:08:58.160 We're about our small business originations in two thousand, nineteen May, 0:08:58.640 --> 0:09:02.440 and that's it's finally crossed over in various areas and 0:09:02.480 --> 0:09:05.520 that's good. Now again, it's still not where it was. 0:09:06.120 --> 0:09:09.600 We we fell from nine hundred eighty billion dollars loans 0:09:09.600 --> 0:09:11.640 down to nine hundred billion dollars loans and it's moving 0:09:11.720 --> 0:09:13.679 up from there. But but the reality is that loan 0:09:13.720 --> 0:09:15.760 growth is actually the core business. That means the core 0:09:15.760 --> 0:09:18.640 in the line economy is going well and we expect 0:09:18.720 --> 0:09:20.800 that to continue. And if you think from the first 0:09:20.880 --> 0:09:22.680 quarter to the fourth quarter, you'll see that growth and 0:09:22.720 --> 0:09:25.360 deposits continue. You'll see that growth and loans continue, and 0:09:25.400 --> 0:09:28.960 that's good for banking generally and US in particular. But 0:09:28.960 --> 0:09:30.440 at the end of the day, we are in the 0:09:30.480 --> 0:09:33.520 part of the process where you're seeing companies need to hire, 0:09:33.760 --> 0:09:36.240 need to get goods to sell, need to get goods 0:09:36.240 --> 0:09:39.120 to manufacturer. And that's because a seven percent growth rate 0:09:39.200 --> 0:09:42.040 on an economy that is the size of American economy 0:09:42.240 --> 0:09:45.360 is unprecedented and we haven't seen that in our lifetime. 0:09:45.440 --> 0:09:48.000 So think about that online activity that will be good 0:09:48.000 --> 0:09:50.520 for Bank of americaud be good for America and that's 0:09:50.520 --> 0:09:52.679 what we gotta get focused on. Brian, give us a 0:09:52.720 --> 0:09:54.640 sense of how the pandemic want to change your business 0:09:54.640 --> 0:09:56.400 where it comes to digital. As I understand, you picked 0:09:56.440 --> 0:09:58.760 up a lot more digital users. Where is Bank of 0:09:58.760 --> 0:10:03.880 America right now? Well, the three things that happened in 0:10:04.000 --> 0:10:07.719 terms of digital in the pandemic. Number one, consumer adoption 0:10:07.760 --> 0:10:11.640 continued to go and by necessity it rounded out. What 0:10:11.640 --> 0:10:13.800 do you mean by that? We continue to grow consumer 0:10:14.080 --> 0:10:17.480 digital customers to forty point four million active digital customers today. 0:10:17.800 --> 0:10:20.360 But what happened is the amount of sales went from 0:10:21.880 --> 0:10:25.679 moving up to and now it's settling in in a 0:10:25.760 --> 0:10:28.480 high fifties six. That is very good because that means 0:10:28.480 --> 0:10:31.640 there's efficiency and effective as a reach of the market. 0:10:31.679 --> 0:10:33.719 But the important the second important thing was what it 0:10:33.800 --> 0:10:37.560 happened happened internally our ability to interact with customers, Our 0:10:37.600 --> 0:10:40.040 ability to relate to customers. Think about it, four or 0:10:40.040 --> 0:10:43.960 five quarters of record investment banking fees and customers couldn't 0:10:43.960 --> 0:10:45.760 We couldn't go see the customers do the to the 0:10:45.760 --> 0:10:49.599 pandemic restrictions, So that ability to operate differently, UH is 0:10:49.640 --> 0:10:51.640 really important. And the third thing is it went to 0:10:51.720 --> 0:10:54.600 various businesses. So our wealth management business adoption rates went 0:10:54.640 --> 0:10:58.560 through the roof. In our commercial businesses, the cash pro mobile, 0:10:58.800 --> 0:11:01.520 the numbers of users went up dramatically, an amount of 0:11:01.520 --> 0:11:04.480 activity went up dramatically, and so you're seeing it round 0:11:04.480 --> 0:11:07.000 out through all the businesses that the adoption of digital 0:11:07.160 --> 0:11:10.280 et cetera. It usage of digital is important and that 0:11:10.360 --> 0:11:13.200 gives us more flexibility to continue to manage expense as 0:11:13.200 --> 0:11:15.560 while we're not company, we'll talk about those expenses. Does 0:11:15.600 --> 0:11:17.680 that mean, as a practical matter, you could see your 0:11:17.880 --> 0:11:23.840 number of retail establishments go down. I think here's something like, Yeah, 0:11:24.080 --> 0:11:26.680 it's been coming down for years based on customer behavior, 0:11:26.760 --> 0:11:29.440 so it will continue to will continue to shape it. 0:11:29.480 --> 0:11:32.080 So yesterday, the day before, we open to Kentucky for 0:11:32.080 --> 0:11:34.720 the first time in our history. So think about that. 0:11:34.920 --> 0:11:40.360 So we're opening new markets. We Columbus, Cleveland, Cincinnati, Indianapolis, Minneapolis, UH, Denver, 0:11:40.760 --> 0:11:44.760 Salt Lake City UH, and then now Kentucky. I'm trying 0:11:44.760 --> 0:11:46.640 to think where else we've gone. All have been open 0:11:46.679 --> 0:11:48.440 of the last three or four years while we're shaping 0:11:48.440 --> 0:11:51.200 the distribution franchise and more markets have been in for 0:11:51.640 --> 0:11:54.079 two hundred years due to the fact that you know, 0:11:54.160 --> 0:11:56.560 the customer behavior changes, so we watched that carefully. In 0:11:56.840 --> 0:11:59.360 long term, we've had six thousand branches the high point 0:11:59.559 --> 0:12:02.959 and now we're forties. During that time, the customer satisfaction 0:12:03.000 --> 0:12:05.200 has gone up, which means the digital and other means 0:12:05.200 --> 0:12:08.079 of operating have replaced that activity. And that's a relentless 0:12:08.080 --> 0:12:10.800 trend which we're continue to work up. Brian, you've talked 0:12:10.800 --> 0:12:12.880 about the bounce back and consumer spending that you're seeing, 0:12:12.920 --> 0:12:15.400 and goodness knows, you have contacted a lot of consumers. 0:12:15.559 --> 0:12:18.800 You've got some of your rivals like City changing their 0:12:18.840 --> 0:12:21.800 credit standards on credit cards. We have JP Morgan really 0:12:21.840 --> 0:12:24.079 beefing up on marketing. Tell me what the competition of 0:12:24.040 --> 0:12:28.439 our credit cards and what Bank of America is doing well. 0:12:28.600 --> 0:12:31.120 We've always taken a position to our credit card business 0:12:31.120 --> 0:12:33.800 it's about our core customers and getting a customer in 0:12:33.800 --> 0:12:36.320 the wallet and getting it used by those customers through 0:12:36.880 --> 0:12:38.960 the rewards systems that have so we have the only 0:12:39.240 --> 0:12:41.640 all company rewards. If you have a performed rewards, you 0:12:41.679 --> 0:12:44.520 get rewarded for your cards and your accounts of all types, 0:12:44.559 --> 0:12:46.600 and you get lower rates on your auto loans and 0:12:46.640 --> 0:12:49.520 stuff that so preferred rewards, the holistic rewards programs we 0:12:49.600 --> 0:12:52.240 focus on. The number one thing is the Great Bank 0:12:52.280 --> 0:12:55.120 of America capabilities delivered to you, and the car is 0:12:55.160 --> 0:12:57.520 part of that. And so you're seeing that card origination 0:12:57.559 --> 0:13:00.760 picked back up. It fell probably by seventy percent. It's 0:13:00.800 --> 0:13:03.120 back now at about lower than it was, and that's 0:13:03.160 --> 0:13:05.480 good for good news. Now they've got a bar on 0:13:05.559 --> 0:13:06.840 them and then they got to pay us for bar 0:13:06.880 --> 0:13:08.719 and on them, which which takes some time. But the 0:13:09.000 --> 0:13:10.720 roality is it's a it's a great business and we 0:13:10.800 --> 0:13:13.480 like it, but it's part of our core consumer business 0:13:13.679 --> 0:13:18.000 checking accounts, sorry of cards, auto loans, homeowns, be straightforward 0:13:18.000 --> 0:13:20.280 about it, serve those customers well on The team under 0:13:20.320 --> 0:13:22.680 de Nathan Asia does a great job with it. Finally, Brian, 0:13:22.760 --> 0:13:24.360 I know you said that you're hoping to get most 0:13:24.360 --> 0:13:26.480 of your people back into the offices by I think 0:13:26.520 --> 0:13:28.640 at mid September you've talked about are you going to 0:13:28.720 --> 0:13:33.319 require them to be vaccinated? Have you decided? Right now 0:13:33.320 --> 0:13:36.960 we're moving people back who are vaccinated, which we our 0:13:37.000 --> 0:13:39.719 team under Sherry Bronstein's leadership, our HR team has done 0:13:39.760 --> 0:13:42.840 a fabulous job for us in terms of managing through this, uh, 0:13:43.480 --> 0:13:46.240 not not with any playbook, but doing it because before 0:13:46.280 --> 0:13:48.240 nobody had this happened. They've done a great job. So 0:13:48.280 --> 0:13:51.120 we build a vaccine tool three or four months ago 0:13:51.160 --> 0:13:54.200 and capture voluntary capture. We have seventy plus thousand people 0:13:54.200 --> 0:13:56.520 and it's worth concentrating getting them back to work because 0:13:56.840 --> 0:13:59.880 that allows people to move about under the CDC guidelines 0:13:59.880 --> 0:14:02.560 with out masks and things like that. As more people 0:14:02.600 --> 0:14:04.400 get vaccinated, we keep bringing more back. We've got a 0:14:04.400 --> 0:14:05.960 lot of work to get those back. But the view 0:14:06.040 --> 0:14:08.679 is after labor Day, our view is all the vaccinate 0:14:08.679 --> 0:14:10.640 teammates were back and we'll be able to operate Fairlure 0:14:10.679 --> 0:14:13.160 normally and we'll then start to make provisions for the 0:14:13.160 --> 0:14:16.000 other teammates as we moved through the fall. Okay, Brian, 0:14:16.080 --> 0:14:18.040 thank you so very much for your time. That's Brian moynan. 0:14:18.360 --> 0:14:26.440 He is the chairman and CEO of Bank of America. 0:14:27.240 --> 0:14:31.280 David Rosenberg joining us from Rosenberg Research. Thrill that you 0:14:31.280 --> 0:14:34.960 could join us. David Rosenberg slices and dices inflation dynamics. 0:14:35.000 --> 0:14:39.360 Truly like no one I know. David. We had Goldman Saxon, 0:14:39.480 --> 0:14:41.440 He and you are so much on the same page 0:14:41.800 --> 0:14:45.120 of a slide of GDP back to something normal. At 0:14:45.200 --> 0:14:48.320 some point, if we get a hot seest sub three 0:14:48.840 --> 0:14:54.120 g d P, what does that do to Rosenberg inflation? Well, look, 0:14:54.160 --> 0:14:58.160 I think that if the economy slows down, especially with 0:14:58.240 --> 0:15:00.280 the fiscal withdrawal, we're going to be sing in the 0:15:00.360 --> 0:15:04.160 second half of the year. I think what happens in 0:15:04.280 --> 0:15:09.080 traditional economic terms is the output gap starts to widen again. Uh, 0:15:09.160 --> 0:15:11.320 it's going to bring this in platient run up. We've 0:15:11.320 --> 0:15:15.520 seen reverse course and should ultimately be very good news 0:15:15.560 --> 0:15:18.200 for a long duration assets. So that's really what the 0:15:18.240 --> 0:15:21.400 story there is. But let's say Tom, it was really 0:15:21.400 --> 0:15:23.760 I think less about the dots. The dots have no 0:15:23.840 --> 0:15:27.880 predicted powers. Historically, there was the fat taking this year's 0:15:27.920 --> 0:15:30.240 GDP growth from six and a half to seven percent. 0:15:30.720 --> 0:15:32.320 As you know, when you look at what's baked in 0:15:32.640 --> 0:15:35.080 already for the first half of the year, the Feds 0:15:35.120 --> 0:15:37.520 telling you that they're expecting fourth quarter growth to be 0:15:37.600 --> 0:15:40.600 close to five which is up materially from what they're 0:15:40.600 --> 0:15:44.440 in plicit before. What do you have into two thousand 0:15:44.480 --> 0:15:46.240 twenty two, though, they've got to get to two rate 0:15:46.320 --> 0:15:49.240 increases the year on and so much of it depends 0:15:49.280 --> 0:15:51.640 on that level of GDP. Do we get back to 0:15:51.680 --> 0:15:55.600 a potential GDP two percent? Do we go under three percent? 0:15:55.760 --> 0:15:58.600 What's your guestamate, Well, you know, look the FEDS over 0:15:58.680 --> 0:16:01.440 three percent. Uh. A lot of it depends on the 0:16:02.040 --> 0:16:05.320 fiscal backdrop. Um. But I think the fiscal drawal is 0:16:05.640 --> 0:16:08.640 so enormous um that you're gonna have to have. I mean, 0:16:08.640 --> 0:16:11.560 the FED is I implicitly assuming that private sector demand 0:16:11.640 --> 0:16:13.760 is going to be over six percent next year. I 0:16:13.800 --> 0:16:16.160 am nowhere close to that. I think the economy is 0:16:16.200 --> 0:16:19.680 gonna slow back below trend um starting probably in the 0:16:19.680 --> 0:16:22.360 third or fourth quarter of this year. UM. So I'm 0:16:22.400 --> 0:16:25.760 back the low potential growth for next year. Uh and 0:16:25.920 --> 0:16:27.760 uh And as a result of me, that reinforces my 0:16:27.840 --> 0:16:29.640 view that inflation is going to come back down more. 0:16:29.680 --> 0:16:31.920 The people thinking, David, do you think that the FED 0:16:32.280 --> 0:16:36.680 is committing an error here? Uh? Well, it's too early 0:16:36.720 --> 0:16:39.680 to say that. UM. You know, it's situational and everything 0:16:39.760 --> 0:16:42.840 is really about you know, now moving from moving from 0:16:43.680 --> 0:16:47.520 three um. And so it's still a few years down 0:16:47.560 --> 0:16:50.200 the road to say that Fed's going to make a mistake. 0:16:50.320 --> 0:16:52.960 Right now, they haven't really done anything. I mean, they're 0:16:53.000 --> 0:16:56.680 talking about talking about tapering, which is maybe happening earlier. 0:16:56.680 --> 0:16:58.960 The people pot but they haven't done anything, and they 0:16:59.080 --> 0:17:01.120 just you know, laid say. I guess that will it 0:17:01.200 --> 0:17:04.160 be Will it be a mistake? Should they follow through 0:17:04.320 --> 0:17:09.480 on the median dot plot projection there of hiking rates twice? Well, 0:17:09.520 --> 0:17:11.760 I think it probably will be. But you know that's 0:17:11.800 --> 0:17:15.480 based on that's based on my assumptions. Uh, And even 0:17:15.520 --> 0:17:17.359 on the fom s take a look, there's still a 0:17:17.359 --> 0:17:19.960 wide range of opinions. People look at the median dot plot. 0:17:20.320 --> 0:17:23.800 Not everybody has centered on the media. So I say 0:17:23.840 --> 0:17:26.399 that they haven't made a mistake yet. I thought that 0:17:26.480 --> 0:17:31.199 it was surprisingly either less stubbish um than uh. You 0:17:31.240 --> 0:17:33.200 know that I was certainly thinking about. But they haven't. 0:17:33.240 --> 0:17:35.880 They haven't done anything yet. I mean, look when you 0:17:35.880 --> 0:17:37.639 look at the dots. When they were first introduced by 0:17:37.640 --> 0:17:40.400 Bernankei in early two thousand and twelve, the funds rate 0:17:40.480 --> 0:17:43.399 was pressing against zero. For the next two years, the 0:17:43.440 --> 0:17:45.800 dot plot showed, you know, point seven five they were 0:17:45.800 --> 0:17:48.720 gonna hike rate three times. So we know with hindsight 0:17:48.760 --> 0:17:50.920 they never did that, and I guess that they race 0:17:51.040 --> 0:17:52.920 rates three times. It would have been a mistake, but 0:17:52.960 --> 0:17:54.919 they never carried through the dots. So to say that 0:17:54.960 --> 0:17:57.600 they made a mistake way too premature to say that 0:17:57.680 --> 0:18:02.720 right now, did you so don't see the inflation right 0:18:03.280 --> 0:18:06.880 in your notes you talk about uh cp I gets 0:18:06.880 --> 0:18:09.840 all the attention, and that's up, but the index is 0:18:09.880 --> 0:18:12.560 not accelerating. And if the Fed is even thinking about 0:18:12.600 --> 0:18:17.200 raising rates, why would you like gold here? Well, look, 0:18:17.240 --> 0:18:20.600 I haven't been banging my fist on gold for for months. Um, 0:18:20.640 --> 0:18:23.720 you know I've got dramatically over sold at the lows 0:18:23.760 --> 0:18:26.920 several months ago, it's backed up and now it's rolling 0:18:27.000 --> 0:18:29.440 over again. I mean a lot of the gold analysts 0:18:29.440 --> 0:18:32.439 are saying we can correct all the way down in 0:18:32.520 --> 0:18:34.760 the context of what could still be a secular bowlt 0:18:34.760 --> 0:18:37.320 market and gold nothing moves on the straight line. But 0:18:37.720 --> 0:18:40.400 you know, you folks are talking earlier about the backup 0:18:40.520 --> 0:18:44.440 or less negative results in real rates. Well, golds caught 0:18:44.440 --> 0:18:47.560 a time warm relationship with real rates, and the real 0:18:47.640 --> 0:18:50.320 rates back up here and the dollar continues to strengthen, 0:18:50.680 --> 0:18:53.240 then it's such as gold enditing price in US dollars 0:18:53.400 --> 0:18:55.240 is going to take it on the chin, including most 0:18:55.240 --> 0:18:58.800 commodity prices. Uh So, for the time being. As long 0:18:58.840 --> 0:19:00.760 as real rates back up here are the dollars that's 0:19:00.800 --> 0:19:03.600 broke above the Twitter day moving average, BOLD is going 0:19:03.680 --> 0:19:05.840 to remain under some near turned downward pressure. So to 0:19:05.880 --> 0:19:08.320 say that I'm bullets on gold right now because they've 0:19:08.320 --> 0:19:11.040 been affected, or bullog gold right now, I'd be saying, 0:19:11.240 --> 0:19:14.200 you know that the near term rests similar to the downside. 0:19:15.080 --> 0:19:17.639 David Rosenberg, thank you so much, greatly appreciate it. This 0:19:17.720 --> 0:19:20.080 morning he's with Rosenberg Research. A little much more for 0:19:20.240 --> 0:19:23.800 Mr Rosenberg in the coming days as he writes on inflation. 0:19:29.440 --> 0:19:33.119 Alan Ruskin with the Standard Deutsche Banker Chief international Strategist, 0:19:33.200 --> 0:19:35.600 Alan I, I look at where we are right now. 0:19:36.040 --> 0:19:39.240 That what an interesting press conference yesterday, and I've really 0:19:39.280 --> 0:19:42.840 got to ask you about this phrase substantial further progress. 0:19:42.960 --> 0:19:46.400 We're making a joke about it, but on a theoretical basis, 0:19:46.400 --> 0:19:50.720 out of the textbooks you've used, what is substantial fur 0:19:50.800 --> 0:19:55.320