ASHLEY:
NEIL: THE MARKET IS DIFFICULT
FINDING ITS OWN FEET AFTER 438
ON THE DOW, GETTING
CONFIRMATION MORGAN STANLEY IS
CUTTING JOBS 2% OF ITS
WORKFORCE, SAME DAY GOLDMAN
SACHS’S CEO WORRIED ABOUT PAY
AND JOB CUTS AND AN IFFY
ENVIRONMENT FOR THE ENTIRE
BANKING SECTOR.
PEOPLE ON AND ON LIKE JAMIE
LYMAN, JPMORGAN J SAYING IT IS
ERODING CONSUMER WEALTH AND
THEN ENTER THIS NEXT GENTLEMAN
WHO NO OFFENSE TO THESE OTHER
GENTLEMEN HAS BEEN MORE
ACCURATE ON THE PACE OF THIS
ECONOMY AND ITS UNDERLYING
STRENGTH AND SAYING THINGS THAT
ARE OUT OF LOCKSTEP, EVERYONE
ELSE IN THE FINANCIAL INDUSTRY.
BRIAN MOYNIHAN IS THE HEAD OF
BANK OF AMERICA AND WHAT STRUCK
OUT IN YOUR COMMENTS.
I FOLLOW YOUR COMMENTS CLOSELY,
YOUR INHERENT OPTIMISM, DON’T
KNOW IF THAT STILL HOLDS ABOUT
WHERE WE STAND, TO PARAPHRASE
YOUR RECENT COMMENTS BUT YOU
DON’T SEE THIS FREEFALL GOING
ON.
EXPLAIN WHERE YOU SEE THINGS
GOING BECAUSE IT’S DIFFERENT
FROM YOUR COLLEAGUES.
>> WE HAVE A RESEARCH TEAM, ONE
OF THE BEST IN THE WORLD.
3 QUARTERS OF NEGATIVE GDP
GROWTH IN THE FIRST PART OF
NEXT YEAR, 1.5%, WOULD BE A
SHALLOW RECESSION OR HOWEVER
YOU WANT TO CHARACTERIZE IT.
IF YOU GO BACK TO PEOPLE WHO
WERE CONCERNED EARLIER THIS
SPRING THEY PUSHED OUT THERE
ASSUMPTIONS FROM THIS YEAR TO
NEXT YEAR.
WHAT IS DRIVING THAT, THE REALITY, 3.7%, WAGES STILL
REALITY, 3.7%, WAGES STILL
GROWING.
IT SHOWS RESILIENCE OF THE
AMERICAN CONSUMER SPENT 5% MORE
ACROSS THE CUSTOMER BASE, THAT
RATE OF GROWTH IS SLOWING BUT
NOT GOING OFF A CLIFF.
THE FED HAS RAISED RATES HIGH
AND WILL HOLD THEM TO MAKE SURE
INFLATION, WITH UNEMPLOYMENT
WHERE IT IS, PEOPLE NOT -- WE
ARE ALL TRIMMING OUR JOB SAYING
WE ARE GOING TO BE MORE CAREFUL
AND CAUTIOUS BECAUSE YOU
BELIEVE RECESSION IS COMING BUT
NOT SEEING MASSIVE DOWNDRAFT IN
THE NUMBERS OF PEOPLE, WHO
REALLY LAYOFF PEOPLE AS OPPOSED
TO TRIMMING JOBS OR NOT HIRING
AS MANY AND A SHALLOW
RECESSION.
THERE ARE ISSUES OUTSIDE THE
COUNTRY ESPECIALLY SUPPLY-CHAIN
PLUS UKRAINE THAT COULD CHANGE
THAT BUT EXPERTS BELIEVE IT IS
A MILD RECESSION, BACK TO
GROWTH BUT THE FED’S RATE STAYS
HIGH THROUGH 24 AND INFLATION
IS GOING BECAUSE THAT WORKS
HARD ON MIDDLE INCOME AMERICA,
AND SEE THAT HAPPEN.
NEIL: STRATEGISTS AT BANK OF
AMERICA, THE SAME GROUP THAT IS
FALLING 20% FROM WHERE IT IS
NOW.
WHAT DO YOU THINK OF THAT?
>> THE MARKET DYNAMICS AND
PRICING, LOOKING AT THE
ECONOMY, THAT IS A 35 -
CONSUMERS CHECKING ACCOUNTS
WITH SPENDING, RECORD AMOUNT
OVER THANKSGIVING, THAT IS
REAL. WHAT HAPPENS TO THE RECESSION
WHAT HAPPENS TO THE RECESSION
OVER NEXT YEAR, WITH ECONOMIC
ASSUMPTIONS, IS MILD RECESSION.
THAT IS WHAT THE FED IS TRYING
TO DO SO YOU SEE THE MOST
INTEREST RATE SET TAKING THE
HIT FIRST AND HOUSING CRISIS,
DEMAND FOR NEW HOUSE, THE
MARKET’S LEVERAGE COMES OUT OF
THE SYSTEM.
THAT IS WHY PEOPLE ARE NERVOUS
ABOUT ESTIMATES OF THE S&P BUT
BE A LONG-TERM INVESTOR LIKE WE
ARE, IT WILL WORK OUT, THE
GREATEST COUNTRY IN THE WORLD.
NEIL: YOUR COUNTERPART AT
JPMORGAN CHASE THE JAMIE LYMAN
TALKED ABOUT, HURRICANE WINDS
FACING THE ECONOMY, DEFINITELY
HEADED FOR SEVERE RECESSION,
LOOKING AT A SLOWDOWN OF 3
QUARTERS, HOW WOULD YOU
CHARACTERIZE, IN LIGHT OF THE
STORIES THAT HAVE THE FEDERAL
RESERVE, FAR BEYOND WHAT WE
THOUGHT, WELL BEYOND 5% FOR
FEDERAL FUNDS.
THAT IS A BIG WALL TO CLIMB.
>> IN THOSE ESTIMATES, THE FED
FUNDS RATE GOING UP 5%, COMING DOWN A LITTLE BIT AT THE END OF
DOWN A LITTLE BIT AT THE END OF THE YEAR.
THE YEAR.
475 TO 5%, THIS IS NOT THEY ARE
GOING TO RAISE RATES, THEY WILL
GRIND INFLATION, 23 TO 24, THAT
IS WHAT THE FED SAID, THE
DURATION OF THIS RATE HIKE, MAY
BE CLOSE TO WHERE WE MIGHT PUT
IT UP FURTHER BUT THE LENGTH OF
WHICH WE WILL HOLD IT LONGER
THAN PEOPLE THINK.
THAT IS WHAT YOU SEE IN MARKET
REACT, TO GET INFLATION AND
CONTROL.
WITH THOSE STATISTICS, YOU
DON’T SEE INFLATION TIPPING
OVER, YOU SEE IT PLAY OUT, THEN
CHANGE THE POSTURE BASED ON
THEIR VIEW THROUGH 23.
ECONOMISTS THINK IT WILL TAKE
HIGHER RATES TO GET INFLATION
UNDER CONTROL.
THEY COME DOWN MORE THIS YEAR.
HOUSE PRICES ARE COMING DOWN.
POCKETS ARE DIFFERENT, IT WILL
BE INTERESTING TO SEE THE RATE
DRIVEN ECONOMY COME DOWN,
COMMERCIAL CREDIT, GROW SINGLE
DIGITS, SOFTER THAN LAST
QUARTER, CONSUMERS HAVE MORE
MONEY.
THAT IS THE MIX.
THE AMOUNT OF MONEY AND
CUSTOMERS ACCOUNTS IS DIFFERENT
THAN THE FINANCIAL CRISIS AS A PERCENTAGE OF WHAT THEY HAVE
PERCENTAGE OF WHAT THEY HAVE
BEFORE THIS.
NEIL: WE WILL START SEEING THAT
ON REAL ESTATE APPLICATIONS,
REFINANCING.
ARE WE SEEING THAT AT BANK OF AMERICA?
>> IT IS 130 MILLION HOUSEHOLDS
TOTAL, RENTERS, SMALL
PERCENTAGE, THE MORTGAGE LOCKED
IN.
OF PEOPLE WANT TO BUY NEW HOUSE
OR SELL THEIR HOUSES, THEY ARE
SEEING THE STRESS.
THAT IS A SMALL PART OVER THE
YEAR.
THAT IS AFFECTING THE HOUSE
PRICING SALE MARKET, AND NEW
PERMITS ALL OF WHICH ARE COMING
DOWN BUT THEY ARE RUNNING A
HEART A HOT RATE FROM 19% TO
20% MORE WITHOUT POPULATION
GROWTH, WHY IS HOUSING STOCK
MORE EXPENSIVE WITH POPULATION
GROWTH?
IN TERMS OF INFLATION THEY ARE
CUTTING IT BACK OFF.
DOESN’T MEAN LONG-TERM HOUSING
- EVEN IF IT COMES DOWN IT WILL
BE IN EXCESS OF WHERE IT WAS,
10% OR 15%, BETTER THAN IT WAS.
NEIL: ON CRYPTO AND ALL THE
ALLEGATIONS AND PROBLEMS, WHO
KNOWS, MONTHS OR YEARS, GOING
OFF TO JAIL FOR MALFEASANCE,
DON’T KNOW WHERE THIS IS GOING
BUT PEOPLE LIKE JAMIE LYMAN
TALKED ABOUT CRYPTO FOR THE
LONGEST TIME BEING A SIDESHOW.
DO YOU COME BANK OF AMERICA,
THINK OF CRYPTO AND THE
AGGREGATE BEING A SIDESHOW?
>> WE ALWAYS BELIEVED THERE ARE
TWO PART, WHAT IS THE BLOCK
CHAIN TECHNOLOGY, WE HAVE 2 OR
3 PATENTS ISSUED ALREADY.
WE BELIEVE THAT TECHNOLOGY HAS
PURPOSE AND WE DO THINGS RIGHT
NOW.
THE IDEA OF DIGITAL CURRENCY WE
DON’T DO ANYTHING WITH, NEVER
THOUGHT IT WAS A GOOD IDEA.
YOU HAVE TO SEPARATE THE
TECHNOLOGY, DOES MONEY MOVE
DIGITALLY?
60% OF MONEY ON THE CONSUMER
SIDE, 98% OF THE COMMERCIAL
MONEY OR CORPORATE MONEY MOVES
EVERY DAY, TRILLIONS OF
DOLLARS.
THE IDEA OF A NEW CURRENCY,
THEY ARE NOT GOING TO CHANGE
THE SYSTEM, AND THAT IS A
FANTASTIC SYSTEM.
ARE THERE PLACES TO MAKE IT
MORE EFFICIENT?
THE PURPOSE OF THAT CURRENCY
SIDE IS SOMETHING WE WERE NEVER
INTERESTED IN.
THE TECHNOLOGIES INTERESTING
WHEN YOU APPLY TO CERTAIN TYPES
OF TRANSACTIONS.
NEIL: YOU HAVE NOT GIVEN UP ON
CRYPTO?
>> WE NEVER GIVE UP ON CRYPTO,
WE WERE NEVER FOR CRYPTO
CURRENCIES.
WE WERE FOR THE BLOCK CHAIN
TECHNOLOGY, TWO VASTLY
DIFFERENT THINGS.
NEIL: HAVE A GOOD HOLIDAY.
BRIAN MOYNAHAN, THE CEO OF BANK
OF AMERICA, THIS ECONOMY IS NOT
DOOM AND GLOOM.
WE WILL SEE HOW THAT PANS OUT
WITH SELLERS AND BUYERS TODAY.