Daybreak Holiday Special: Oil Outlook, Mester Speaks, Bank Earnings

Thanks so much for joining us for the special holiday 0:00:04.360 --> 0:00:07.520 edition of Bloomberg Daybreak. US markets are closed. 0:00:07.520 --> 0:00:08.480 From Martin Luther. 0:00:08.360 --> 0:00:11.360 King Day, I'm Nathan Hager, and coming up this hour, 0:00:11.520 --> 0:00:15.000 we continue bank earnings with a preview of tomorrow's results 0:00:15.040 --> 0:00:18.080 from Goldman Sachs and Morgan Stanley. We'll check back in 0:00:18.120 --> 0:00:22.759 with Bloomberg Intelligence senior Global Banks analyst Alison Williams. Plus 0:00:22.800 --> 0:00:25.560 we'll discuss the future of interest rates and the economy 0:00:25.640 --> 0:00:28.520 in twenty twenty four. We've got a special conversation lined 0:00:28.600 --> 0:00:31.200 up for you with the President of the Cleveland Fed, 0:00:31.400 --> 0:00:34.720 Loretta Mester. First, though, we want to focus on oil 0:00:34.840 --> 0:00:37.360 because that market got quite the jolt at the end 0:00:37.400 --> 0:00:41.360 of last week. Crude jumped following escalating tensions in the 0:00:41.400 --> 0:00:44.240 Red Sea. For more on the overall outlook for crude, 0:00:44.240 --> 0:00:47.159 we are pleased to welcome Stephen Shork, the president of 0:00:47.200 --> 0:00:50.280 the Short Group. Steven, I wonder how surprised you were 0:00:50.440 --> 0:00:54.160 by those strikes on hoothy targets in Yemen and whether 0:00:54.240 --> 0:00:57.400 it shakes your fundamental case for oil heading into the 0:00:57.400 --> 0:00:58.560 balance of twenty twenty four. 0:00:58.840 --> 0:01:01.360 Well, certainly if we look at recent in history, Nathan, 0:01:01.760 --> 0:01:05.120 We've just been seeing escalation of tensions there in the 0:01:05.160 --> 0:01:08.800 Middle East ever since it all started back on October seventh. 0:01:09.280 --> 0:01:13.320 With regard to oil in prices, I've been falling client 0:01:13.440 --> 0:01:16.319 since October that I've been flabbergasted by the lack of 0:01:16.360 --> 0:01:20.120 our risk bringing in priced into this market. To quote Churchill, 0:01:20.200 --> 0:01:23.080 I've said oil prices are riddle wrapped in a mystery 0:01:23.160 --> 0:01:26.560 inside of enigma. So it's been nothing astonishing to me 0:01:26.720 --> 0:01:31.040 that there really hasn't been the reaction I was expecting. 0:01:31.440 --> 0:01:33.760 So back in October, this is what I wrote the 0:01:33.760 --> 0:01:36.240 clients that you know, let's be clear that the war 0:01:37.440 --> 0:01:40.800 between Hamas, or that Hamas declared on Israel, will not 0:01:40.880 --> 0:01:43.240 be limited to a small strip of land between Egypt 0:01:43.240 --> 0:01:46.679 and is Isel. Considering that Israel's finding the terrorist hydra 0:01:46.760 --> 0:01:49.600 of Hamas has blot in Uchis, all of which are 0:01:49.640 --> 0:01:54.000 backed by Iran, Duran dropped it certainly disguised war against 0:01:54.080 --> 0:01:57.040 Israel and choose all out conflict and all bets are off. 0:01:57.160 --> 0:02:00.480 The chance for disruption to tanker traffic through the moves, 0:02:00.760 --> 0:02:03.080 which is the greatest choke point to the flow of 0:02:03.160 --> 0:02:06.840 waterborne crudial in the world, is almost a given. So 0:02:06.920 --> 0:02:09.360 we are looking at this threat, and of course we 0:02:09.480 --> 0:02:12.840 know what's been happening in the Red City that tankers 0:02:12.880 --> 0:02:15.880 are not and traders are not going to the Zuez. 0:02:15.960 --> 0:02:18.480 They're going around the Horn of Africa to get to 0:02:18.880 --> 0:02:21.560 markets in the West. Now, that is a long trip 0:02:21.600 --> 0:02:24.600 that adds a lot of expense to the commodity, and 0:02:24.680 --> 0:02:27.960 therefore we should be seeing higher oil price. But that 0:02:28.080 --> 0:02:31.920 certainly hasn't been the case. So oil traders have in 0:02:32.040 --> 0:02:36.200 my view, I've been whistling past the graveyard. They are 0:02:36.280 --> 0:02:40.040 the go back to Mad magazine, the alfred E movemans 0:02:40.639 --> 0:02:43.560 of the commodity in the world. Hey, what me worried? 0:02:43.639 --> 0:02:46.919 With all of this potential risk to supply out there, 0:02:47.320 --> 0:02:50.760 they have not reacted to this market now. So yes, 0:02:50.800 --> 0:02:53.880 at the end of last week oil prices surged, but 0:02:54.320 --> 0:02:58.320 I'm taking a wait and see attitude. Every provocation up 0:02:58.320 --> 0:03:01.519 to this point had not led to sustained rally, so 0:03:02.080 --> 0:03:05.520 I will believe this rally is sustainable when I see it. 0:03:05.919 --> 0:03:09.160 So it's been a conundrum, and very interesting one at. 0:03:09.040 --> 0:03:11.760 That, while we wait and see. Of course, the big 0:03:11.800 --> 0:03:14.679 story for the oil market up to now has been 0:03:14.840 --> 0:03:19.640 that we've had this imbalance of supply compared to demand. 0:03:20.160 --> 0:03:23.280 Where do you see that shaking out? This idea that 0:03:23.440 --> 0:03:26.440 we've got a glut of oil in the market, and 0:03:26.760 --> 0:03:30.640 Saudi Arabia and Russia have been leading this push to 0:03:30.680 --> 0:03:34.760 try to lower production targets via OLPEK plus. 0:03:34.920 --> 0:03:39.080 Yeah. Absolutely. Now OPEK and OPECH plus inclusive of Russia 0:03:39.240 --> 0:03:42.680 have had the wings cleft over the past fifteen years 0:03:42.920 --> 0:03:46.160 because they've never had the competition that they're facing now 0:03:46.200 --> 0:03:49.800 from non OPEC producers. So last year we had the 0:03:49.880 --> 0:03:53.640 United States, led by the United States, Brazil in Guyana 0:03:54.080 --> 0:03:58.840 leaving the world in production growth. So every barrel that 0:03:59.120 --> 0:04:02.200 Saudi Arabia or Russia or any member of OPEC attempt 0:04:02.200 --> 0:04:05.440 to take off the market has been replaced by non 0:04:05.560 --> 0:04:09.720 OPEC production. So yes, last year twenty twenty three, we 0:04:09.800 --> 0:04:13.280 had record non OPEQ production of one hundred and one 0:04:13.320 --> 0:04:17.280 million barrels a day. The IEA, the International Energy Agency, 0:04:17.440 --> 0:04:19.800 expects that to jump to one hundred and three million 0:04:19.839 --> 0:04:25.000 barrels this year. So Saudi Arabia and Russia and price 0:04:25.279 --> 0:04:28.479 hawks really have their work cut out for them because 0:04:28.480 --> 0:04:31.400 they don't have the power in this market that they 0:04:31.440 --> 0:04:36.320 had prior to the US shale gale, which began in 0:04:36.400 --> 0:04:38.240 earnest about ten to twelve years ago. 0:04:38.720 --> 0:04:41.440 So where does the power lie in the oil market 0:04:41.520 --> 0:04:44.840 right now? Is it in the producers groups like opech 0:04:44.920 --> 0:04:47.760 Plus or even the US now or is it more 0:04:47.800 --> 0:04:51.560 on the demand side what we're seeing, particularly in demand 0:04:51.680 --> 0:04:55.120 from developed markets and developing markets like China. 0:04:56.120 --> 0:04:58.960 Yeah, absolutely, I do believe it's on the demand side. 0:04:58.960 --> 0:05:02.279 Making where the oil bowl got it wrong at the 0:05:02.320 --> 0:05:07.280 start of last year was this assumption that China, which 0:05:07.279 --> 0:05:11.240 has been dormant really since the outbreak of COVID, that 0:05:11.360 --> 0:05:16.200 economy has sputtered it ever since. And the thinking was 0:05:16.279 --> 0:05:19.160 that in the first half of last year that all 0:05:19.200 --> 0:05:21.560 of the demand from China was going to come back 0:05:21.680 --> 0:05:24.920 and hit the market and really drive prices higher. Now 0:05:24.960 --> 0:05:31.000 that never happened because the China economy is still sputtering now. Personally, Nathan, Professionally, Nathan, 0:05:31.360 --> 0:05:36.040 I've been I've never been on the China bandwagon. And 0:05:36.920 --> 0:05:38.599 my view was they're going to go the way, They're 0:05:38.600 --> 0:05:42.040 going to grow older before they become an economic superpower 0:05:42.120 --> 0:05:45.560 that will overtake the United States. So to me, China 0:05:45.600 --> 0:05:49.920 today is looking more like Japan circa nineteen ninety two. 0:05:50.400 --> 0:05:52.919 That's a wait and see. But the point now is 0:05:52.960 --> 0:05:57.159 to answer your question. It's a demand driven market right now, 0:05:57.240 --> 0:06:00.520 so the supply can react to that demand. And what 0:06:00.560 --> 0:06:03.400 has happened is supply was held back and then we 0:06:03.560 --> 0:06:08.680 came I'm coming right after COVID. Supply production came roaring 0:06:08.839 --> 0:06:12.160 back over especially the past six months of last year, 0:06:12.200 --> 0:06:15.240 and now we do have a market that's oversupplied. Demand 0:06:15.400 --> 0:06:19.000 is not there and we know that, Nathan, because prices 0:06:19.040 --> 0:06:22.800 today on the futures curve are incontangedom. That means that 0:06:22.880 --> 0:06:26.839 prices are cheaper than they are three, six, nine months 0:06:26.839 --> 0:06:29.720 from now. So if you are an oil trader, it 0:06:29.760 --> 0:06:32.400 does not make sense to pull your oil out of 0:06:32.520 --> 0:06:35.840 storage and sell it into a discounted market. Now. That 0:06:35.880 --> 0:06:38.760 can only happen when demand is well below a supply, 0:06:38.920 --> 0:06:41.760 and that's where we're at right now. And all of 0:06:41.800 --> 0:06:45.200 my concerns about geopolitical risk with what's going on in 0:06:45.200 --> 0:06:47.760 the Middle East, but look, this is the commodity markets. 0:06:48.240 --> 0:06:51.160 All it takes is one big headline to change that narrative. 0:06:51.480 --> 0:06:54.239 With last week's headline the one that changes the narrative, 0:06:54.839 --> 0:06:56.040 We'll have to wait and see. 0:06:56.279 --> 0:06:59.880 So Stephen, why do you think demand is as suppressed 0:07:00.160 --> 0:07:02.080 oil as it is right now. Does it have to 0:07:02.120 --> 0:07:08.080 do with macroeconomic headwinds, the transition to electrics, milder climate, 0:07:08.320 --> 0:07:09.360 what do you see behind it? 0:07:09.640 --> 0:07:13.200 Well, certainly is a part of it is, of course macroeconomic. 0:07:13.840 --> 0:07:16.480 I'm concerned, have been concerned for well over a year 0:07:16.600 --> 0:07:20.760 now about how squeezed the West consumer is. We're looking 0:07:20.760 --> 0:07:23.520 at inflation, as we saw with the numbers last week 0:07:23.760 --> 0:07:27.040 that are still out of control, especially for food costs, 0:07:27.440 --> 0:07:31.480 So our earnings are being squeezed because of inflation. Credit 0:07:31.520 --> 0:07:36.000 Card debt is well over one trillion dollars, an unimaginable number. 0:07:36.880 --> 0:07:39.600 Interest if you carry debt on your credit card is 0:07:39.680 --> 0:07:42.920 over twenty percent. So to me, my logic here is 0:07:42.960 --> 0:07:46.320 that the consumer has to be squeezed. Yet we looked 0:07:46.320 --> 0:07:50.000 at last Thanksgiving, we had near record demands for drivers, 0:07:50.200 --> 0:07:53.640 for jet fuel, for travelers, So people are still spending money. 0:07:53.520 --> 0:07:57.000 They're accumulating debt, but they're still spending money, and that 0:07:57.240 --> 0:08:01.320 is helping to increase demand that this point. But the 0:08:01.360 --> 0:08:04.640 other side of that coin here is with elasticities of 0:08:04.720 --> 0:08:09.680 demand for any commodity. Now, with oil, you always had 0:08:09.840 --> 0:08:13.880 strong demand regardless of price, regardless of price shock. That's 0:08:13.920 --> 0:08:18.040 because we were always missing the other variable that impacts price, 0:08:18.200 --> 0:08:21.760 and that is a substitute. And today we do have substitutes. 0:08:21.840 --> 0:08:25.240 We have full electric, we have plugging electric hybrids, and 0:08:25.320 --> 0:08:29.600 so each year those markets begin to gain on the 0:08:29.680 --> 0:08:33.720 hydrocarbon markets and they start to erode demand. So yes, 0:08:34.000 --> 0:08:37.559 part of it, I do think is demand from the consumer, 0:08:38.000 --> 0:08:40.839 from the consumer side, but we haven't seen it yet. 0:08:40.880 --> 0:08:44.080 But I just hasn't shown up in the numbers yet. 0:08:45.120 --> 0:08:48.319 But clearly what we're looking at here is a combination 0:08:48.440 --> 0:08:52.480 of demand and yes, the introduction of substitutes into this market. 0:08:52.600 --> 0:08:56.439 I wonder where you see the transition to renewables standing 0:08:56.720 --> 0:08:59.560 right now. We did get that news last week that 0:09:00.000 --> 0:09:02.160 it Hurts is selling off a lot of its fleet 0:09:02.240 --> 0:09:05.960 of electric vehicles. It's raised some doubts about the sustainability 0:09:06.000 --> 0:09:08.760 of the EV market. Does that affect how things look 0:09:08.800 --> 0:09:10.080 for you in the oil space? 0:09:10.400 --> 0:09:14.240 Yeah? Absolutely. Now you know mea Koppley here, I do 0:09:14.440 --> 0:09:17.720 drive an electric hybred and I love the darns thing. 0:09:17.800 --> 0:09:20.600 It's a plug in so I can get between my 0:09:20.679 --> 0:09:25.280 seventeen gallon tank in my electricity. And I'm a homebody 0:09:25.320 --> 0:09:28.520 now because I'm an emptinester I can get, you know, 0:09:28.720 --> 0:09:32.640 fifteen to sixteen hundred miles on that one tank of gas. 0:09:32.840 --> 0:09:36.079 But here's the thing, Nathan, is I'm leasing that because 0:09:36.120 --> 0:09:39.400 I'm waiting for the technology to continue to improve. So 0:09:39.520 --> 0:09:43.440 this is the second electric hybrid I've leased over the 0:09:43.440 --> 0:09:46.840 past six years. I have no interest in buying one, 0:09:46.920 --> 0:09:49.280 and I would venture no one has an interest in 0:09:49.320 --> 0:09:53.680 buying a used one because the technology will continue to improve. 0:09:54.040 --> 0:09:56.960 So yes, the market, I do believe is hitting that 0:09:57.080 --> 0:10:01.439 roadblock because there is an excess inventory of older technology 0:10:01.559 --> 0:10:05.599 evs on the market. That rightfully, so no one really wants. 0:10:05.800 --> 0:10:09.360 So clearly that is going to slow the transition to evs. 0:10:09.679 --> 0:10:13.320 And let us keep in mind that'll evs with their 0:10:13.360 --> 0:10:18.200 battery concerns with their security, which leads to the heavy metals. 0:10:18.240 --> 0:10:21.960 So they are not in the greatest thing for the environment. 0:10:22.080 --> 0:10:24.760 They're certainly not the greatest thing for security when you 0:10:24.840 --> 0:10:27.600 consider that, where do we get all the medals that 0:10:27.640 --> 0:10:31.960 go into those batteries. China and Russia, okay, two countries 0:10:32.000 --> 0:10:35.959 they don't necessarily have the United States best interest at heart. 0:10:36.200 --> 0:10:38.280 Thank you for this, Stephen, great having you with us 0:10:38.320 --> 0:10:42.000 on this program. That's Stephen Short, the president of the 0:10:42.040 --> 0:10:44.720 Short Group, and still to com on this holiday edition 0:10:44.760 --> 0:10:47.440 of Bloomberg Daybreak, you might want to put thoughts of 0:10:47.480 --> 0:10:49.520 a March rate cut on hold. 0:10:49.800 --> 0:10:50.680 We speak with the. 0:10:50.559 --> 0:10:53.640 President of the Federal Reserve Bank of Cleveland, lo Reda Master. 0:10:54.320 --> 0:10:54.680 Next. 0:10:54.840 --> 0:10:57.880 It's eighteen minutes past the hour. I'm Nathan Hager, and 0:10:57.960 --> 0:11:11.160 this is BLAE. Welcome back to this special edition of 0:11:11.200 --> 0:11:14.160 Bloomberg Daybreak. The US market is close for the Martin 0:11:14.240 --> 0:11:17.480 Luther King holiday. I'm Nathan Hager. Turning it focus now 0:11:17.600 --> 0:11:21.120 to the economy. Cleveland Fed President Loretta Mester says it 0:11:21.200 --> 0:11:24.280 is premature to consider cutting interest rates as soon as 0:11:24.320 --> 0:11:27.760 the central banks meeting in March. Mester spoke with Bloomberg 0:11:27.840 --> 0:11:31.840 International Economics and Policy correspondent Michael McKee late last week. 0:11:32.000 --> 0:11:33.040 Here's that conversation. 0:11:33.200 --> 0:11:36.280 Now, one of the chances that wages are going to 0:11:36.280 --> 0:11:37.600 push inflation back. 0:11:37.520 --> 0:11:41.839 Up again, well, you know, you talk to district contacts 0:11:42.480 --> 0:11:46.000 and wage setters, and what they do say is there's 0:11:46.040 --> 0:11:50.439 been discernible the malavor market they would characterize, is still tight, 0:11:51.160 --> 0:11:53.640 but it's not nearly as tight as it was before. 0:11:54.240 --> 0:11:58.320 There's still you know, jobs at demand higher wages, but 0:11:58.440 --> 0:12:01.640 the rate of increase of way pages has come down, 0:12:01.760 --> 0:12:04.800 so again we see the adjustment coming. You know, if 0:12:04.800 --> 0:12:06.559 you look at a lot of different indicators in the 0:12:06.640 --> 0:12:09.400 labor market, what you see is that supply and a 0:12:09.440 --> 0:12:11.880 manner coming into better balance. Part of that supply, the 0:12:12.000 --> 0:12:14.600 labor force participation rate has gone up. People are coming 0:12:14.640 --> 0:12:16.720 back into the labor market. 0:12:16.360 --> 0:12:18.240 Which is great. I think that's a really. 0:12:18.000 --> 0:12:22.600 Good development and that's helped us in a number of 0:12:22.640 --> 0:12:25.120 ways because it basically we've been able to do the 0:12:25.200 --> 0:12:29.520 disinflation at the same time labor market conditions remain healthy. 0:12:29.559 --> 0:12:32.000 And that's me us not have to face a hard 0:12:32.040 --> 0:12:32.800 trade off there. 0:12:32.880 --> 0:12:36.400 We knew what the job was. The job one was. 0:12:36.360 --> 0:12:40.640 To get that inflation that was exorbitant under control. We 0:12:40.760 --> 0:12:43.120 have had good progress there, but we just have more 0:12:43.120 --> 0:12:43.960 work to do there. 0:12:44.040 --> 0:12:47.800 But this year is going to be one about really looking. 0:12:47.640 --> 0:12:50.920 At the balance now between both parts of our mandate, 0:12:51.080 --> 0:12:53.000 and so we're going to be focused on and I 0:12:53.040 --> 0:12:56.240 certainly we focused on making sure that we continue to 0:12:56.280 --> 0:12:59.160 get inflation on a sustainable and time we've had back 0:12:59.200 --> 0:13:03.600 to two percent while we can maintain healthy labor market conditions. 0:13:03.880 --> 0:13:06.560 You mentioned district contacts. I'm wondering what they're telling you 0:13:06.600 --> 0:13:07.800 about their pricing power. 0:13:07.960 --> 0:13:11.360 So we hear mix as you would expect, right, So 0:13:11.520 --> 0:13:17.680 we definitely have had our contexts tell us that pricing 0:13:17.840 --> 0:13:21.400 pressures have eased, and from their side in terms of 0:13:21.400 --> 0:13:24.640 their input prices that come down, but also their ability 0:13:24.720 --> 0:13:31.640 to pass on past increases has been It's harder now, right, 0:13:31.640 --> 0:13:36.560 customers are pushing back, not uniformly, so some firms have 0:13:36.640 --> 0:13:40.720 been able to maintain pricing power, but there's fewer firms 0:13:40.720 --> 0:13:43.880 that say, you know, we're not going to push back. 0:13:44.040 --> 0:13:46.839 They have to sort of work to get those price 0:13:46.920 --> 0:13:49.319 increases in. But at the same time, they've been able 0:13:49.360 --> 0:13:51.840 to maintain their margins because you've seen goods prices and 0:13:51.880 --> 0:13:55.959 input prices come down, and so you know, wages haven't 0:13:56.000 --> 0:13:58.360 come down that much, but in terms of other input 0:13:58.480 --> 0:13:59.800 costs they have come down. 0:14:00.200 --> 0:14:02.400 Firms have been able to maintain their margins. 0:14:02.640 --> 0:14:05.640 We're going to mix pictures as well from indicators like 0:14:06.000 --> 0:14:08.520 initial job as claims, which have been flat on a 0:14:08.559 --> 0:14:11.600 seasonally adjusted basis, but on a non seasonally adjusted basis 0:14:11.840 --> 0:14:14.160 have spiked in the last few weeks. I'm wondering what 0:14:14.520 --> 0:14:17.200 your business contacts in the district are telling you about 0:14:17.240 --> 0:14:20.600 their plans for their labor force. Are they hiring, are 0:14:20.640 --> 0:14:23.920 they status quo, or are they beginning to think they 0:14:23.960 --> 0:14:25.080 might have to let some people go. 0:14:26.120 --> 0:14:29.360 So we're not hearing much at all about letting people go. 0:14:29.480 --> 0:14:31.560 I mean, you do hear from bankers that, you know, 0:14:31.600 --> 0:14:33.760 in the areas where they're not making a lot of loans, 0:14:33.760 --> 0:14:37.240 like mortgages, they've already reduced staff there, but there isn't 0:14:37.240 --> 0:14:40.480 the kind of staff reductions that one would expect to 0:14:40.600 --> 0:14:43.080 see if the economy was slowing materially. 0:14:43.240 --> 0:14:45.240 A lot of our firms are. 0:14:45.160 --> 0:14:48.280 Still looking for workers. They're still looking for workers, especially 0:14:48.320 --> 0:14:51.880 with hard to find skills. But they do say there's 0:14:51.920 --> 0:14:56.880 more applications and that fewer of their staff were quitting 0:14:57.440 --> 0:14:59.920 to go look for another job, so the conditions are 0:15:00.080 --> 0:15:03.920 still healthy. They still have plans to hire in areas 0:15:03.960 --> 0:15:07.640 where they need workers, and they don't really have plans 0:15:07.640 --> 0:15:11.000 to lay lay off any workers at this point there. 0:15:11.040 --> 0:15:14.320 You know, their order books still look pretty decent. You know, 0:15:14.440 --> 0:15:16.680 one thing that did happen is because it was so 0:15:16.920 --> 0:15:20.600 hard to find workers and all the effort that went 0:15:20.680 --> 0:15:23.400 into We do still continue to hear from firms that 0:15:23.480 --> 0:15:25.840 say we're going to do what we have to do 0:15:25.920 --> 0:15:29.800 to keep keep our workers on staff because it's just 0:15:29.920 --> 0:15:32.920 so costly to the firm if we lose workers and 0:15:32.960 --> 0:15:35.000 then we need to go back into the market told back. 0:15:35.040 --> 0:15:36.720 So that's a good thing in the labor market in 0:15:36.840 --> 0:15:38.320 terms of keeping. 0:15:38.040 --> 0:15:39.760 People attached to the labor market. 0:15:40.320 --> 0:15:42.200 And that's why I have, you know, I in my 0:15:42.280 --> 0:15:45.800 own you know, baseline forecast. I have the unemployment rate 0:15:45.840 --> 0:15:49.000 which is extremely low right now, ticking off a little bit, 0:15:49.080 --> 0:15:52.560 but not really moving up that appreciably. And that's what 0:15:52.680 --> 0:15:58.320 I mean by we can get inflation down by continuing 0:15:58.360 --> 0:16:01.840 to keep some restricted in our monetary policy, but we 0:16:01.920 --> 0:16:05.240 can also have the labor market remain healthy as. 0:16:05.080 --> 0:16:05.520 We do that. 0:16:06.560 --> 0:16:08.840 Janet Yellen, you know her, and she knows a little 0:16:08.880 --> 0:16:12.560 something about monetary policy. I said last week that the 0:16:12.720 --> 0:16:16.720 economy has achieved essentially a soft landing. Would you agree 0:16:16.800 --> 0:16:17.720 or would you push back. 0:16:19.000 --> 0:16:22.320 I think we're aiming to achieve a soft landing, and 0:16:22.360 --> 0:16:24.960 I think the incoming information that we've seen and how 0:16:25.000 --> 0:16:28.720 the economy has evolved has been consistent with that. But 0:16:28.840 --> 0:16:31.560 you know, when you look out there are some risks 0:16:31.600 --> 0:16:35.640 around the forecast, and of course my forecast is basically 0:16:35.680 --> 0:16:38.720 a soft landing, and so you wouldn't want to say, Okay, 0:16:38.880 --> 0:16:42.680 job done, We're on a good path to a soft landing. 0:16:42.680 --> 0:16:46.840 It's it's basically you know made it. We just have 0:16:46.960 --> 0:16:49.440 to keep attuned to the fact that, you know, we 0:16:49.520 --> 0:16:52.960 need to calibrate our monetary policy so that we are 0:16:53.200 --> 0:16:56.040 achieving the soft landing, and we have to be attuned 0:16:56.040 --> 0:16:59.320 to risks around that and risk to both sides and remanding. 0:16:59.520 --> 0:17:02.880 I mean, it's sense. Last year it was the inflation 0:17:02.960 --> 0:17:04.040 part of the mandate. 0:17:03.800 --> 0:17:05.240 Had to have our focus. 0:17:05.520 --> 0:17:09.240 Now as the economy has come into better balance, right, 0:17:09.320 --> 0:17:12.960 the risks have become more in balance as well, in 0:17:13.040 --> 0:17:13.440 terms of. 0:17:13.400 --> 0:17:14.439 Both sides of our mandate. 0:17:14.480 --> 0:17:16.639 And I think that's the job this year, is to 0:17:16.680 --> 0:17:21.160 make sure that we're calibrating our policy to maintain healthy 0:17:21.240 --> 0:17:25.480 labor markets even as we continue the process to get 0:17:25.520 --> 0:17:27.320 inflation back to two percent. 0:17:27.640 --> 0:17:30.719 Okay, if you're calibrating your policy, how do you calibrate it? 0:17:31.200 --> 0:17:34.119 Market thinks that May is the most likely month, but 0:17:34.119 --> 0:17:36.600 there's still a very good chance that you might cut 0:17:36.800 --> 0:17:37.840 rates in March. 0:17:38.640 --> 0:17:39.280 Where are you. 0:17:40.160 --> 0:17:42.680 Well, I mean, it's hard to predict the future, as 0:17:42.680 --> 0:17:45.320 you know, and it's really going to be. 0:17:45.280 --> 0:17:47.240 Dependent on how the economy evolves. 0:17:47.320 --> 0:17:51.600 I think March is probably too early in my estimation 0:17:53.000 --> 0:17:56.720 for a rate decline because I think we need to 0:17:56.760 --> 0:18:00.760 see some more evidence. I think the December I report 0:18:00.920 --> 0:18:03.640 just shows there's more work to do, and that work 0:18:03.720 --> 0:18:06.920 is going to take restrictive monetary policy. But I do 0:18:07.000 --> 0:18:12.160 think that as we see continuing disinflation and we could 0:18:12.160 --> 0:18:16.000 get more evidence that is convincing that inflation is on 0:18:16.640 --> 0:18:20.280 a sustainable, dour path to two percent, then I think, 0:18:20.320 --> 0:18:23.280 you know, we'll have that conversation about, Okay, is it 0:18:23.359 --> 0:18:26.720 time now when we look at inflation but also importantly 0:18:26.720 --> 0:18:32.320 inflation expectations, right, is it time now to move the 0:18:32.400 --> 0:18:36.879 inflation move our FED funds rate when monetary policies start 0:18:36.960 --> 0:18:38.400 that process. 0:18:38.240 --> 0:18:39.880 Of moving it back to a neutral rate. 0:18:39.920 --> 0:18:42.960 And what I would say is I do sort of 0:18:42.960 --> 0:18:47.400 the soft landing scenario right as being the most likely, 0:18:47.480 --> 0:18:49.159 but I do think there's risks around it, and we 0:18:49.200 --> 0:18:51.200 have to be attuned to both sides of the mandate. 0:18:51.359 --> 0:18:56.200 So a reduction in the fund rate that is because 0:18:56.280 --> 0:19:00.400 we try to keep monetary policy well calibrated to what's 0:19:00.440 --> 0:19:03.800 happening on the inflation side of the mandate and epployment side. 0:19:04.080 --> 0:19:05.119 That's different than. 0:19:05.000 --> 0:19:07.840 Having to cut the rate because we're heading into a recession, 0:19:08.080 --> 0:19:13.280 so you know, rate it decreases that heap the real rate, 0:19:13.600 --> 0:19:17.120 you know, not from rising. So when inflation and inflation 0:19:17.200 --> 0:19:20.560 expectations begin to come down, right, if you didn't do 0:19:20.640 --> 0:19:24.040 anything to your funds rate, you'd actually be sort of, 0:19:24.800 --> 0:19:27.960 you know, passively saying a tighter policy. That's the part 0:19:27.960 --> 0:19:29.960 of the evaluation that we're going to have coming up. 0:19:30.240 --> 0:19:32.679 But right now, the evaluation I think is and the 0:19:32.720 --> 0:19:36.800 policy evaluation is how long are we needing to keep 0:19:36.880 --> 0:19:41.359 industrates and ontarry policy the restrictive stance. The next phase 0:19:41.400 --> 0:19:45.080 will be about, you know, okay, is it now we've 0:19:45.080 --> 0:19:48.679 seen the conditions we need to start reducing the funds 0:19:48.720 --> 0:19:52.119 rate and reducing our funds rate back to more neutral stance. 0:19:52.200 --> 0:19:54.520 I don't think we're there yet. I would like to see. 0:19:54.359 --> 0:19:58.280 More evidence that the economy is progressing as we expect 0:19:58.320 --> 0:20:01.479 it to, as I expected too, before we can do that. 0:20:01.800 --> 0:20:05.359 And that was Cleveland FED President Lorettamester speaking with Bloomberg's 0:20:05.400 --> 0:20:09.440 Michael McKee. Still ahead on this holiday edition, of Bloomberg Daybreak. 0:20:09.440 --> 0:20:12.880 We're watching for bank earnings tomorrow, will preview results from 0:20:12.920 --> 0:20:17.120 Goldman Sachs and Morgan Stanley just ahead. It's thirty five 0:20:17.160 --> 0:20:21.040 minutes past the hour. I'm Nathan Hager, and this is Bloomberg. 0:20:30.080 --> 0:20:31.800 Bloomberg Radio is where. 0:20:31.600 --> 0:20:35.560 You are get live business news and market headlines from anywhere, 0:20:35.560 --> 0:20:38.560 twenty four hours a day via your mobile device. Listen 0:20:38.600 --> 0:20:41.800 to the iHeartRadio ad tune in the Bloomberg Business app 0:20:41.880 --> 0:20:47.080 and Bloomberg dot Com. 0:20:47.200 --> 0:20:50.680 Welcome back to this special edition of Bloomberg Daybreak. Markets 0:20:50.720 --> 0:20:53.440 in the US are closed for the Martin Luther King Holiday. 0:20:53.760 --> 0:20:56.440 I'm Nathan Hager, and we're getting set for bank earnings 0:20:56.480 --> 0:21:00.399 to resume this week. Goldman Sachs and Morgan Stanley report 0:21:00.440 --> 0:21:03.800 fourth quarter results before the opening bell tomorrow. Of course, 0:21:03.840 --> 0:21:06.320 this follows the slew of reports that we got from 0:21:06.359 --> 0:21:09.560 the others of the Big six Wall Street banks last Friday. 0:21:09.600 --> 0:21:11.600 So here to get a set for the wrap up 0:21:11.720 --> 0:21:15.800 of bank earning season is Alison Williams, Senior analysts for 0:21:15.840 --> 0:21:19.520 Global banks and asset Managers at Bloomberg Intelligence. Good to 0:21:19.520 --> 0:21:22.359 speak with you again, Alison. First off, let's get your 0:21:22.400 --> 0:21:24.560 read on the results that we saw last Friday, it 0:21:24.600 --> 0:21:25.840 was kind of a mixed bag, wasn't it. 0:21:26.840 --> 0:21:31.000 I think that the core results across the banks in 0:21:31.119 --> 0:21:36.919 terms of net interest income and operating expenses generally looked 0:21:37.080 --> 0:21:40.800 pretty good. The difference there was a big difference in 0:21:40.880 --> 0:21:44.520 terms of the guidance. So JP Morgan, whose net interest 0:21:44.560 --> 0:21:47.880 income has proven the most resilient, and we did get 0:21:47.880 --> 0:21:51.960 an upside surprise in the fourth quarter, they did guide 0:21:52.040 --> 0:21:57.200 higher for that revenue for this year, and yes, they 0:21:57.240 --> 0:22:00.760 also guided for higher costs butt net. We think Earning's 0:22:00.840 --> 0:22:04.439 estimates are going up for JP Morgan. On the credit 0:22:04.480 --> 0:22:07.480 card front, we know that credit card is driving a 0:22:07.520 --> 0:22:10.960 majority of charge offs and provisions across the banks. But 0:22:11.040 --> 0:22:13.560 JP Morgan's guidance came in about in line, I think 0:22:13.600 --> 0:22:20.080 with expectations. And this is in contrast to some trends 0:22:20.080 --> 0:22:23.480 at Wells Fargo, where we saw the expectations are that 0:22:23.480 --> 0:22:26.720 that interest income is going to be lower this year 0:22:26.920 --> 0:22:30.480 and in fact worse than the street had expected, even 0:22:30.520 --> 0:22:34.160 though their fourth Quarternmber came in about in line with expectations. 0:22:34.920 --> 0:22:37.399 And then expense is going to be higher than expected. 0:22:37.960 --> 0:22:41.879 So estimates for JP Morgan going higher for Wells Fargo 0:22:42.040 --> 0:22:43.159 going a bit lower. 0:22:43.560 --> 0:22:46.880 So in terms of that balance between net interest income 0:22:47.080 --> 0:22:50.560 and costs, how can we see that play out for 0:22:51.000 --> 0:22:53.400 Morgan and Goldman when they report tomorrow. 0:22:54.040 --> 0:22:59.120 So for Goldman and Morgan Stanley, really what we learned 0:22:59.480 --> 0:23:02.120 from the bank, I think center is more on the 0:23:02.160 --> 0:23:04.840 trading and investment banking fee side. Keep in mind that 0:23:06.160 --> 0:23:09.040 these two banks are much more focused on the capital 0:23:09.080 --> 0:23:13.120 market side of things. For Morgan Stanley, it's really the 0:23:13.160 --> 0:23:16.920 wealth inflows that we're going to be watching. We had 0:23:17.119 --> 0:23:19.680 very strong numbers from Morgan Stanley in the first half, 0:23:20.640 --> 0:23:23.440 slow down more than expected in the third quarter, and 0:23:24.000 --> 0:23:26.840 so what happens in the fourth quarter I think is 0:23:26.880 --> 0:23:29.320 going to be key in terms of what the momentum 0:23:29.440 --> 0:23:32.639 is there in that unit. James Gorman did set some 0:23:32.680 --> 0:23:38.520 pretty aggressive goals for that business before handing off his 0:23:38.600 --> 0:23:43.280 position to Ted Pick, who takes the reins this year 0:23:43.400 --> 0:23:47.080 of the bank. And so the wealth business is really 0:23:47.119 --> 0:23:51.200 what we're watching for at Morgan Stanley. Trading and investment 0:23:51.200 --> 0:23:54.160 banking fees, which is another business that's important for Morgan 0:23:54.200 --> 0:23:58.760 Stanley but more important for Goldman Sachs. We saw across 0:23:58.800 --> 0:24:03.440 the banks that report on Friday generally a little bit 0:24:03.480 --> 0:24:07.120 softer numbers unexpected across the board. Really where we saw 0:24:07.160 --> 0:24:09.600 the weakness was at City Group and their fixed income 0:24:10.000 --> 0:24:14.879 trading line. They talked about weaker commodities, weaker currencies, So 0:24:14.920 --> 0:24:18.000 that is a little bit of a negative more towards 0:24:18.000 --> 0:24:23.040 Goldman Sachs than Morgan Stanley. Morgan Stanley's trading business is 0:24:23.080 --> 0:24:25.399 a little bit more focused on the equity trading side 0:24:25.400 --> 0:24:29.680 of things, and so we're going to be watching results there. 0:24:30.280 --> 0:24:33.359 What's interesting is Morgan Stanley and Goldman Sachs are the 0:24:33.400 --> 0:24:38.679 two top players in that business. Goldman was the leader, 0:24:38.840 --> 0:24:41.879 Morgan Stanley sort of took that position for several years, 0:24:41.880 --> 0:24:44.920 but now Goldman Sachs is sort of back in the lead, 0:24:44.960 --> 0:24:47.600 and so I think that's that's something that investors are 0:24:47.640 --> 0:24:50.399 watching for, you know, more of the interest of bragging 0:24:50.480 --> 0:24:53.359 rights because as the top two players, they are profitable 0:24:53.400 --> 0:24:54.879 in those businesses. 0:24:54.720 --> 0:24:56.960 And I guess leadership is probably going to be a 0:24:56.960 --> 0:25:00.520 big focus for investors for both these banks. Right as 0:25:00.520 --> 0:25:03.960 you mentioned, Ted Pick is coming in as the new 0:25:04.040 --> 0:25:07.440 CEO of Morgan Stanley, and David Solomon has been facing 0:25:07.480 --> 0:25:11.040 a lot of pressure from investors over the performance over 0:25:11.280 --> 0:25:16.320 several quarters over at Goldman's Sex, how could leadership be 0:25:16.400 --> 0:25:19.560 a focus for investors looking at these results. 0:25:20.440 --> 0:25:22.800 So the big change, as you pointed out, is at 0:25:22.800 --> 0:25:26.560 Morgan Stanley, and I think investors will be watching to 0:25:26.600 --> 0:25:31.240 see what, if any changes Ted Pick will make to 0:25:31.280 --> 0:25:35.320 the strategy. Keep in mind that Ted Pick really had 0:25:35.359 --> 0:25:39.520 a lot of success in building the trading operations of 0:25:39.600 --> 0:25:43.159 Morgan Stanley for the many for the many years that 0:25:43.240 --> 0:25:47.639 he ran those businesses, the business has shifted more towards 0:25:47.640 --> 0:25:51.280 wealth and asset management under Gorman. We don't expect that 0:25:51.840 --> 0:25:56.359 shift will change, but we do wonder what kind of 0:25:56.400 --> 0:26:00.119 investments and what kind of changes Pick may make to 0:26:00.160 --> 0:26:04.040 the institutional size of the business since, as I said, 0:26:05.440 --> 0:26:09.200 you know, some of their leadership has sort of gone 0:26:09.200 --> 0:26:13.840 to Goldman Sachs. In the most recent couple of years, 0:26:13.880 --> 0:26:18.520 Golden Sacks as of third quarter, has shown the strongest 0:26:19.040 --> 0:26:23.200 gains in both FICK and equities trading over the long term. 0:26:23.800 --> 0:26:26.119 And so despite a lot of the noise that we 0:26:26.240 --> 0:26:30.159 hear around Goldman Sachs related to businesses that are not 0:26:30.680 --> 0:26:34.320 the core, we do think that that's important for investors 0:26:34.359 --> 0:26:37.280 to keep in mind. They have talked about building relationships 0:26:37.320 --> 0:26:42.720 with top clients. They've delivered on success in those trading businesses. 0:26:43.119 --> 0:26:45.800 The other area where they've focused on is the asset 0:26:45.840 --> 0:26:50.400 management side of things. They are executing across against their 0:26:50.440 --> 0:26:54.120 plan for the alternatives business. So those are two key 0:26:54.119 --> 0:26:57.919 things to keep in mind. They're the bank has definitely 0:26:57.960 --> 0:27:01.639 shifted over the past year. They narrowing their focus. So 0:27:03.400 --> 0:27:06.199 you know, under prior management they had this expansion, they 0:27:06.200 --> 0:27:09.800 were sort of reaching more towards the consumer, the retail 0:27:09.840 --> 0:27:13.080 side of things. That's not something that Goldman has typically 0:27:13.119 --> 0:27:15.840 been known for, and now we've seen over the past 0:27:15.880 --> 0:27:18.520 year sort of retrenching and kind of going back to 0:27:18.760 --> 0:27:22.640 their core business focus. That has certainly created a lot 0:27:22.720 --> 0:27:27.080 of noise in terms of charges and sales and such 0:27:27.240 --> 0:27:32.280 over the past year. We do think that their compensation costs, 0:27:33.160 --> 0:27:36.600 while we know that they've had several charges related to 0:27:36.680 --> 0:27:38.840 severns in the year, but we think that those costs 0:27:38.880 --> 0:27:42.560 actually do tend to be a little bit more sticky 0:27:42.600 --> 0:27:47.640 for the bank as the bank looks towards twenty twenty four, 0:27:48.320 --> 0:27:52.800 and most of the most of the managements have been 0:27:52.840 --> 0:27:56.120 more optimistic about investment banking fees this year What we're 0:27:56.160 --> 0:27:58.520 going to be looking to hear from Goldman, Sachs and 0:27:58.600 --> 0:28:04.080 Morgan Stanley relates really to what are their clients saying, 0:28:04.119 --> 0:28:08.920 What are CEOs feeling, How confident are they can we 0:28:09.040 --> 0:28:12.320 expect an uplift in deals. M and A is a 0:28:12.320 --> 0:28:16.119 great business for the banks. It's also a good business 0:28:16.119 --> 0:28:20.440 for the several boutiques they met. The companies have been 0:28:20.600 --> 0:28:25.480 optimistic about this business for this year. Will we get 0:28:26.320 --> 0:28:28.880 some reasons to support that optimism with results. 0:28:29.119 --> 0:28:31.159 You raise a really good point when it comes to 0:28:31.200 --> 0:28:35.439 the outlook for deal making into twenty twenty four and 0:28:35.720 --> 0:28:39.560 the challenges that could be ahead in terms of an 0:28:39.600 --> 0:28:43.680 elevated interest rate environment potentially that these banks could be 0:28:43.720 --> 0:28:47.200 facing over the next several quarters. How could that play 0:28:47.200 --> 0:28:50.120 out in what we're expecting from Goldman and Morgan Stanley. 0:28:50.920 --> 0:28:54.360 So for Goldman and Morgan Stanley as it relates to 0:28:54.880 --> 0:28:59.240 interest rates, what could be positive for the banks is 0:28:59.520 --> 0:29:05.720 if the market implied federal reserve pivot does come to 0:29:05.920 --> 0:29:12.600 fruition in twenty twenty four. So if in fact, managements 0:29:12.640 --> 0:29:17.960 of corporations can get confident in the indust rate outlook, 0:29:18.080 --> 0:29:22.920 in the economic policy outlook, perhaps that could feed into 0:29:23.000 --> 0:29:26.000 more deals. If we get a lifting confidence, if we 0:29:26.040 --> 0:29:29.400 get lower borrowing costs, that could be good for M 0:29:29.440 --> 0:29:32.000 and A. We know that there's a fair amount of 0:29:32.000 --> 0:29:34.840 cash sitting around on these companies ready to do deals. 0:29:35.160 --> 0:29:37.960 It's really been a lot of the volatility and uncertainty 0:29:38.760 --> 0:29:42.880 that has kept some of the managements on the sidelines. 0:29:43.280 --> 0:29:45.640 Okay, lots to look forward to as we await those 0:29:45.680 --> 0:29:48.800 results before the opening bell tomorrow from Goldman Sachs and 0:29:48.840 --> 0:29:53.760 Morgan Stanley, thanks to Bloomberg Intelligence Senior banks analyst Alison Williams. 0:29:53.800 --> 0:29:56.280 And still ahead on the special edition of Bloomberg day 0:29:56.280 --> 0:29:58.720 Break for the Martin Luther King Holiday, We're going to 0:29:58.840 --> 0:30:02.400 check in with black voters heading into a pivotal election cycle. 0:30:02.840 --> 0:30:05.760 It's fifty minutes past the hour. I'm Nathan Hager, and 0:30:05.840 --> 0:30:20.520 this is Bloomberg. Welcome back to this special edition of 0:30:20.560 --> 0:30:23.560 Bloomberg Daybreak. The US market is closed for the Martin 0:30:23.640 --> 0:30:26.560 Luther King Day holiday. I'm Nathan Hager, and as we 0:30:26.600 --> 0:30:29.320 reflect on doctor King's legacy, we want to check in 0:30:29.400 --> 0:30:32.920 with black voters as we head into a pivotal election cycle. 0:30:33.200 --> 0:30:36.280 For that, we turned to Bloomberg Black Business Beat host 0:30:36.560 --> 0:30:37.240 justin Milliner. 0:30:37.640 --> 0:30:41.080 It is because of this congregation in the black community 0:30:41.120 --> 0:30:44.800 of South Carolina, and not an exaggeration in Jim Clyburn, 0:30:45.200 --> 0:30:48.160 that I stand here today as your president because of 0:30:48.200 --> 0:30:51.000 all of you. That's a fact. 0:30:52.200 --> 0:30:55.760 That's a fact, as President Joe Biden at a recent 0:30:55.800 --> 0:30:59.600 event speaking to the largely black congregation at Mother Emmanuel 0:30:59.640 --> 0:31:03.800 AMA in Charleston, South Carolina. It's a historic black church 0:31:04.000 --> 0:31:07.360 where a white supremacist gunman killed nine people back in 0:31:07.400 --> 0:31:11.520 twenty fifteen. It's no mistake that President Biden chose that 0:31:11.600 --> 0:31:14.880 location as the site of one of his first appearances 0:31:14.960 --> 0:31:18.720 of twenty twenty four as he ramps up his reelection campaign. 0:31:19.640 --> 0:31:23.080 Black voters have long been an important voting block for 0:31:23.120 --> 0:31:27.480 Democrats and for Biden. Bloomberg White House correspondent A. Caleb 0:31:27.520 --> 0:31:30.760 Gardner talked to me about how South Carolina is symbolic 0:31:30.880 --> 0:31:32.400 for Biden and his campaign. 0:31:32.680 --> 0:31:36.200 He became president because he had a big primary win 0:31:36.280 --> 0:31:39.640 in South Carolina after not performing well in the first 0:31:39.680 --> 0:31:43.160 two primaries, and that really turned around his candidacy. And 0:31:43.200 --> 0:31:46.400 that's a huge part because of the significant black population 0:31:46.880 --> 0:31:49.360 in South Carolina. So I think it's an owde and 0:31:49.520 --> 0:31:53.160 acknowledgment of how Black voters have paved this way to 0:31:53.200 --> 0:31:55.680 the White House for him, and also that he's willing 0:31:55.720 --> 0:31:59.040 to invest in them again, and he is acknowledging that 0:31:59.080 --> 0:32:01.080 he needs to court them, he needs to speak directly 0:32:01.120 --> 0:32:04.080 to them if he wants them to turn out for him. 0:32:04.080 --> 0:32:06.120 And I think that also comes at a time where 0:32:06.160 --> 0:32:09.040 we've seen in polling that Black voters are not the 0:32:09.120 --> 0:32:11.600 happiest with Joe Biden. He's not very popular with them 0:32:11.640 --> 0:32:12.240 at this time. 0:32:12.640 --> 0:32:13.480 He is not. 0:32:14.040 --> 0:32:17.280 Recent polling from Bloomberg News and Morning Consulted has support 0:32:17.320 --> 0:32:20.680 for Biden in the black community slipping. Bloomberg White House 0:32:20.720 --> 0:32:23.880 Politics reporter Christian Hall has been on the campaign trail, 0:32:24.320 --> 0:32:26.920 and when he's spoken to black voters, he says he 0:32:26.920 --> 0:32:30.760 hears a lot about the economy, and he's starting to 0:32:30.800 --> 0:32:34.480 hear a lot more about another presidential candidate. 0:32:34.720 --> 0:32:36.960 A lot of the sentiment that you're seeing right now 0:32:37.120 --> 0:32:39.320 of how black voters are feeling, a lot of it 0:32:39.400 --> 0:32:42.160 is rooted in the economy. They're not happy with what 0:32:42.200 --> 0:32:45.800 they're seeing from Joe Biden. A candidate that's kind of 0:32:45.800 --> 0:32:49.080 picking up some traction with black voters, I would say 0:32:49.280 --> 0:32:53.960 is Donald Trump. I know, it sounds really wild, considering 0:32:54.000 --> 0:32:56.360 the rhetoric that Trump has had in the past and 0:32:56.600 --> 0:33:00.320 some of the racially divisive language that he's used, but 0:33:00.360 --> 0:33:02.800 Black voters are really interested in what he's saying, and 0:33:02.840 --> 0:33:06.960 I think that as the election continues, we're going to 0:33:07.040 --> 0:33:10.960 see Donald Trump kind of trying to court black voters 0:33:11.040 --> 0:33:11.920 more and more. 0:33:12.120 --> 0:33:14.760 Bloombers A Kayla Gardner says that if there's a pathway 0:33:14.800 --> 0:33:17.680 for Trump with black voters, it might be less to 0:33:17.720 --> 0:33:20.200 do with what Trump is offering and more to do 0:33:20.320 --> 0:33:21.640 with what Biden isn't. 0:33:22.040 --> 0:33:25.200 I think black voters right now are in a wait 0:33:25.280 --> 0:33:29.240 and see mode. They want to see more from President Biden. 0:33:29.920 --> 0:33:33.400 He really hasn't done that many events before this event 0:33:33.440 --> 0:33:37.400 in South Carolina, specifically talking to it focused on black voters. 0:33:37.480 --> 0:33:40.040 So I think they're really watching to see whether he 0:33:40.120 --> 0:33:43.600 is going to actually get in full campaign mode and 0:33:43.640 --> 0:33:46.480 go across the country and court these voters. He really 0:33:46.520 --> 0:33:50.880 has been focused on sort of these Middle America voters 0:33:50.880 --> 0:33:53.440 for a very long time, which of course tend to 0:33:53.480 --> 0:33:57.800 be wider than the average metropolitan city, and I think 0:33:57.840 --> 0:33:59.680 they've felt a little bit left behind. 0:34:00.080 --> 0:34:04.080 What's really happening is more than ever before in history, 0:34:04.200 --> 0:34:08.359 black voters are open to their two different options, right. 0:34:08.760 --> 0:34:10.880 I think in the past we saw a lot of 0:34:11.600 --> 0:34:14.640 black Democratic voters saying, you know, we have to vote 0:34:14.680 --> 0:34:18.160 for Democrats. This is what you know we were raised 0:34:18.160 --> 0:34:20.759 to do through the civil rights movement movement. We have 0:34:20.880 --> 0:34:23.400 to use our vote and support you know, this party. 0:34:23.880 --> 0:34:26.760 And I think we're seeing more than ever black voters 0:34:26.760 --> 0:34:29.640 saying I am open to someone who's going to represent 0:34:29.680 --> 0:34:30.320 me the best. 0:34:30.520 --> 0:34:33.239 That's Bloomberg Christian Hall and of course Bloomberg'sai Kayla Gardner, 0:34:33.280 --> 0:34:35.879 who are both doing great reporting on this. If we 0:34:36.000 --> 0:34:38.520 do end up with a Biden Trump rematch, a lot 0:34:38.520 --> 0:34:42.320 of pulling now sees that race being pretty close. So Nathan, 0:34:42.440 --> 0:34:44.719 it looks like how all these candidates do with black 0:34:44.800 --> 0:34:47.040 voters could end up making a pretty big difference by 0:34:47.040 --> 0:34:48.160 the time we hit November. 0:34:48.600 --> 0:34:51.320 Our thanks to Bloomberg's Justin Milliner as well as Stephen 0:34:51.400 --> 0:34:54.440 Shark of the Short Group and Bloomberg Intelligence senior banks 0:34:54.440 --> 0:34:57.359 analyst Alison Williams, we'd like to thank you as well 0:34:57.400 --> 0:35:00.000 for joining us on this holiday. We will be back 0:35:00.200 --> 0:35:03.799 tomorrow ahead of the market open on Bloomberg Daybreak, but 0:35:03.880 --> 0:35:06.760 for now, stay with us. Today's top stories and global 0:35:06.800 --> 0:35:10.360 business headlines are coming up right now.