Middle East Tensions Escalate; Government Shutdown Averted

Good morning. 0:00:03.080 --> 0:00:05.920 I'm Nathan Hager and I'm Karen Moscow. Here are the 0:00:05.960 --> 0:00:07.800 stories we're following today. 0:00:08.200 --> 0:00:11.080 The latest developments in the Middle East. Who the militants 0:00:11.119 --> 0:00:13.800 and Yemen have fired missiles once again at an American 0:00:13.840 --> 0:00:16.280 owned commercial vessel, and we get the latest from Bloomberg's 0:00:16.320 --> 0:00:17.240 Rosalind Matheson. 0:00:17.680 --> 0:00:20.759 Most of these attacks have not done significant damage. Some 0:00:20.800 --> 0:00:23.920 of them actually have hit ships but not prevented them 0:00:23.960 --> 0:00:26.920 continuing their journey. But what it really shows is that 0:00:27.280 --> 0:00:30.560 they're succeeding and continuing to disrupt shipping because if there's 0:00:30.640 --> 0:00:33.440 any risk at all that some of these things might land, 0:00:33.520 --> 0:00:35.839 ships are having to take the long way round. And 0:00:35.880 --> 0:00:40.000 that's not just including things like commodities, oil and gas, 0:00:40.000 --> 0:00:43.680 but increasingly perishable stuff fruit and vegetables, livestock. 0:00:43.800 --> 0:00:46.600 Bloomberg's ros Mathieson says this latest attack comes on the 0:00:46.600 --> 0:00:50.000 same day President Biden acknowledged that US air strikes have 0:00:50.200 --> 0:00:52.199 not halted the Red Sea attacks. 0:00:52.640 --> 0:00:56.360 Meanwhile, Nathan Israeli Prime Minister Benjamin Netanya, who is rejecting 0:00:56.400 --> 0:00:59.880 calls from the US to scale back his military offensive 0:01:00.120 --> 0:01:02.440 Gaza or to push for a two state solution with 0:01:02.480 --> 0:01:05.880 the Palestinians after the war. Netanyahu's spoke through an interpreter 0:01:06.000 --> 0:01:06.960 at a news conference. 0:01:08.400 --> 0:01:13.240 In any future arrangement, settlement or no settlement, Israel needs 0:01:13.280 --> 0:01:17.000 security control over all territory west of Georgia. 0:01:17.280 --> 0:01:19.640 Prime Minister inn At Yeaho's comments came a day after 0:01:19.680 --> 0:01:22.600 Secretary of State Anthony Blincoln said Israel will never have 0:01:22.800 --> 0:01:26.640 genuine security without a path toward Palestinian independence. 0:01:26.800 --> 0:01:29.200 I'm back here in the US Karen. Congress has done 0:01:29.200 --> 0:01:31.920 it again, passing a temporary spending bill to avoid a 0:01:31.959 --> 0:01:35.640 partial government shut down this weekend. Details from Bloomberg's Amy 0:01:35.680 --> 0:01:36.920 Morris in Washington. 0:01:37.280 --> 0:01:40.080 The measure will finance some federal agencies through March first, 0:01:40.120 --> 0:01:43.640 and others through March eighth. House Speaker Mike Johnson squashed 0:01:43.640 --> 0:01:46.240 a last minute effort by members of the House Freedom 0:01:46.240 --> 0:01:50.440 Caucus to stymy the legislation by tacking on immigration policy demands. 0:01:50.680 --> 0:01:53.520 Some GOP hardliners are angry that the Speaker went back 0:01:53.520 --> 0:01:56.880 on his promise to not allow any more stopgap funding measures. 0:01:57.200 --> 0:02:00.600 The White House says President Biden will sign the continuing resolution, 0:02:00.760 --> 0:02:03.920 but urges Congress to set along long term funding to 0:02:04.000 --> 0:02:07.360 keep the government open. In Washington, Amy Moore as Bloomberg Radio. 0:02:07.520 --> 0:02:10.200 All right, Amy, thanks we all lawmaker's pass that spending 0:02:10.240 --> 0:02:13.200 bill just in time for another winter storm to head 0:02:13.240 --> 0:02:15.519 toward the East Coast. It's on its way now, and 0:02:15.639 --> 0:02:18.720 we get the very latest from Bloomberg meteorologist Rob Caerala 0:02:18.760 --> 0:02:20.320 and Rob Karen and Nathan. 0:02:20.360 --> 0:02:22.240 Today's storm is going to bring a light to moderate 0:02:22.280 --> 0:02:25.440 snowfall from the district in Baltimore all the way to Boston. 0:02:25.800 --> 0:02:27.840 Looks like the district in Baltimore pick up the most. 0:02:27.880 --> 0:02:30.560 They'll see one to three inches today. It'll taper off 0:02:30.639 --> 0:02:33.000 during the evening hours between five and seven pm and 0:02:33.040 --> 0:02:35.440 the district in Baltimore, so it certainly affects the commute. 0:02:35.680 --> 0:02:37.839 New York City will see the snow ending same time 0:02:37.880 --> 0:02:40.480 period five to seven pm. New York City sees about 0:02:40.480 --> 0:02:42.480 an inch or two. It's less in the Hudson River 0:02:42.600 --> 0:02:45.679 Valley and also is less in southern Connecticut could see 0:02:45.720 --> 0:02:48.560 three inches south of the city as this storm system 0:02:48.760 --> 0:02:51.720 passes through the region today. Boston, being further north, doesn't 0:02:51.720 --> 0:02:53.800 see the type of snow that the city gets or 0:02:53.840 --> 0:02:56.000 that we see in the district in Baltimore. Snow will 0:02:56.040 --> 0:02:58.000 arrive late in the day in the Boston area. Less 0:02:58.000 --> 0:03:00.480 than an inch of accumulation in Boston went to trenches 0:03:00.520 --> 0:03:02.600 for the South shore and in the Boston area. The 0:03:02.600 --> 0:03:04.280 snow's all done by ten pm. 0:03:04.919 --> 0:03:07.760 And as Bloomberg meteorologist Rob, Carolyn will be checking in 0:03:07.800 --> 0:03:09.880 with Rob throughout the morning with weather updates. 0:03:10.160 --> 0:03:12.120 Okay, Karen, let's turn back to the markets. Get an 0:03:12.160 --> 0:03:14.880 update there. The NASDAC enters this last day of the 0:03:14.880 --> 0:03:18.800 trading week in record territory despite data underscoring labor market 0:03:18.840 --> 0:03:22.000 strength and signs that the FED could delay rate cuts. 0:03:22.080 --> 0:03:24.600 We talked about the economy in the markets with Blackstone 0:03:24.639 --> 0:03:25.760 chairman Steve Schwartzman. 0:03:26.160 --> 0:03:32.239 The economy is slowing a bit. That's normal with high 0:03:32.360 --> 0:03:36.440 interest rates, So on the other side of the latcher, 0:03:37.000 --> 0:03:43.400 the expectation that interest rates are going down is creating 0:03:44.040 --> 0:03:45.400 animal spirits again. 0:03:45.640 --> 0:03:49.040 Blackstone Steve Schwartzman spoke with Bloomberg from the World Economic 0:03:49.120 --> 0:03:51.560 Forum in Davos and said the timing on rate cuts 0:03:51.560 --> 0:03:53.040 from the FED is not clear. 0:03:53.520 --> 0:03:56.680 Well, Nathan asked for commercial banks, US regulators are getting 0:03:56.680 --> 0:03:59.720 ready to require them to tap the Fed's discount window 0:04:00.200 --> 0:04:02.320 at least once a year, And we get the latest 0:04:02.320 --> 0:04:05.280 from Bloomberg's John Tucker John A bank. 0:04:05.120 --> 0:04:07.600 Taps into the fed's discount window to borrow money in 0:04:07.640 --> 0:04:10.640 a pinch, but it's been something of a badge of shame. 0:04:11.200 --> 0:04:14.080 The new requirement is an attempt to reduce that stigma. 0:04:14.480 --> 0:04:17.039 This comes after the regional bank crisis last year. FED 0:04:17.080 --> 0:04:19.320 officials found that some of the lenders weren't even set 0:04:19.360 --> 0:04:22.640 up operationally to quickly borrow from the window even when 0:04:22.720 --> 0:04:25.359 they needed it or The Acting Controller of the Currency 0:04:25.360 --> 0:04:28.719 says the changes regulators will propose aim to ensure banks 0:04:28.720 --> 0:04:31.560 are more prepared to respond to sudden flights of deposits. 0:04:31.720 --> 0:04:34.680 He says, it's almost like doing a fire drill. If 0:04:34.720 --> 0:04:37.440 it's required when a real liquidity fire comes, then the 0:04:37.480 --> 0:04:40.200 banks can do it in real life. I'm John Tucker, 0:04:40.240 --> 0:04:41.360 Bloomberg Radio. 0:04:41.279 --> 0:04:44.320 Well John One Banks given quite the payday to Jamie Diamond. 0:04:44.440 --> 0:04:47.880 JP Morgan Chase raised the CEOs paid to thirty six 0:04:47.960 --> 0:04:50.920 million dollars in twenty twenty three. That's up four point 0:04:51.040 --> 0:04:53.800 two percent from the year before. That boost came in 0:04:53.880 --> 0:04:56.440 a year in which JP Morgan Chase not the biggest 0:04:56.440 --> 0:04:58.960 profit in the history of American banking. 0:04:59.360 --> 0:05:02.000 Nathan is a big day for the future of Apple now, 0:05:02.000 --> 0:05:04.760 So this morning, the tech giant is taking pre orders 0:05:04.800 --> 0:05:08.240 for its long awaited Vision Pro headset. This will be 0:05:08.279 --> 0:05:10.760 the first real taste of consumer demand for the thirty 0:05:10.760 --> 0:05:13.520 four hundred and ninety nine dollars device it arrives in 0:05:13.640 --> 0:05:20.240 stores February second. Sorry, Nathan, thanks time not for a 0:05:20.279 --> 0:05:22.320 look at some of the other stories making news around 0:05:22.360 --> 0:05:24.799 the world, and for that we're joined by Bloomberg's Amy 0:05:24.880 --> 0:05:26.480 Morris Say good morning. 0:05:26.480 --> 0:05:29.520 Good morning, Caaren. President Biden is for giving nearly five 0:05:29.600 --> 0:05:33.400 billion dollars an additional student debt as the administration seeks 0:05:33.440 --> 0:05:36.800 to deliver on one of his signature initiatives. Almost seventy 0:05:36.839 --> 0:05:40.280 four thousand student loan borrowers will see debt canceled as 0:05:40.320 --> 0:05:43.359 a result of administrative changes by the Education Department in 0:05:43.400 --> 0:05:46.479 the latest round of relief now. Those affected include borrowers 0:05:46.560 --> 0:05:50.120 enrolled in the government's income driven Repayment and Public Service 0:05:50.160 --> 0:05:53.640 loan forgiveness programs. Each program requires at least a decade 0:05:53.680 --> 0:05:57.000 of payment or service to be eligible for relief. Thousands 0:05:57.040 --> 0:05:59.719 of pro life activists are in the nation's capital today 0:05:59.720 --> 0:06:02.440 for the twenty twenty four March for Life. Linda Bell 0:06:02.520 --> 0:06:04.880 as President of the Florida Right to Life, and she 0:06:05.000 --> 0:06:08.719 says she expects thousands of people to speak out this weekend. 0:06:08.800 --> 0:06:09.760 You know, that's amazing. 0:06:09.839 --> 0:06:14.880 How many people at the own expense, you know, take planes, 0:06:15.000 --> 0:06:15.960 stay in hotels. 0:06:16.000 --> 0:06:18.919 I'm a nursed in upward of one hundred thousand people 0:06:18.920 --> 0:06:19.719 in these marches. 0:06:20.200 --> 0:06:23.040 This is the second march since the Supreme Court overturned 0:06:23.120 --> 0:06:26.359 rov Waite. Hunter Biden has agreed to appear before House 0:06:26.400 --> 0:06:30.000 Republicans for a private deposition next month. The move ends 0:06:30.080 --> 0:06:32.760 months of defiance from the President's son, he had insisted 0:06:32.800 --> 0:06:36.080 on testifying publicly. The House Oversight Committee says the younger 0:06:36.080 --> 0:06:38.960 Biden will sit for a deposition on February twenty eighth. 0:06:39.240 --> 0:06:41.839 Committee chair James Comer, You've done this the right way. 0:06:42.240 --> 0:06:44.320 We are in a position to win in court. 0:06:44.560 --> 0:06:45.520 If we were, he. 0:06:45.480 --> 0:06:48.359 Wouldn't be coming in to do this deposition. We have 0:06:48.440 --> 0:06:49.520 done everything the right way. 0:06:49.600 --> 0:06:51.560 We've been transparent, we followed the law. 0:06:51.720 --> 0:06:55.719 Hunter Biden's attorney, Abby Lowell says his client's cooperation is 0:06:55.800 --> 0:06:59.000 dependent on the Committee issuing a new subpoena, which they 0:06:59.040 --> 0:07:02.960 will now do the updated deposition date. A new poll 0:07:03.000 --> 0:07:06.680 shows just over half of Americans worth thriving. In twenty 0:07:06.720 --> 0:07:09.840 twenty three, a Gallop survey finds that more than fifty 0:07:09.840 --> 0:07:13.680 two percent of Americans evaluated their lives positively enough last 0:07:13.760 --> 0:07:16.840 year to be thriving. That's according to the poll, and 0:07:16.880 --> 0:07:20.240 that's a decline from previous years, where between fifty two 0:07:20.280 --> 0:07:22.880 and fifty five percent of Americans were shown to be thriving. 0:07:23.320 --> 0:07:26.480 The only years the amount of thriving Americans were lower 0:07:26.960 --> 0:07:29.480 was during the Great Recession between two thousand and eight 0:07:29.800 --> 0:07:32.760 and in twenty twenty during the onset of the COVID 0:07:32.840 --> 0:07:36.200 nineteen pandemic. Global news twenty four hours a day and 0:07:36.240 --> 0:07:39.720 whenever you want it with Bloomberg News Now. I'm Amy Morris, 0:07:39.760 --> 0:07:41.200 and this is Bloomberg Karen. 0:07:41.800 --> 0:07:44.400 All right, Amy, thank you, and we do bring you 0:07:44.440 --> 0:07:47.760 news throughout the day right here on Bloomberg Radio. But 0:07:47.840 --> 0:07:50.160 now you can get the latest news on demand. That 0:07:50.240 --> 0:07:53.240 means whenever you want it. Subscribe to Bloomberg News Now 0:07:53.280 --> 0:07:55.760 to get the latest headlines at the click of a button. 0:07:56.080 --> 0:07:58.920 Get informed on your schedule. You can listen and subscribe 0:07:58.920 --> 0:08:02.320 to Bloomberg News Now on the Bloomberg Business app, Bloomberg 0:08:02.400 --> 0:08:05.760 dot Com, plus apples, Spotify, and anywhere else you get 0:08:05.760 --> 0:08:13.120 your podcasts. Time now for the Bloomberg Sports Update. Here's 0:08:13.160 --> 0:08:14.720 John Stashauer John. 0:08:14.920 --> 0:08:18.440 Karen indications the Atlanta Falcons are serious about trying to 0:08:18.480 --> 0:08:21.280 hire Bill Belichick as their new coach. They interviewed him 0:08:21.280 --> 0:08:23.160 earlier this week. They just had them in for a 0:08:23.240 --> 0:08:27.120 second interview. NFL Division Playoffs begin tomorrow. The first game 0:08:27.200 --> 0:08:29.880 is Houston at Baltimore. The Texans have been a you 0:08:30.160 --> 0:08:33.679 surprised this season with eleven wins. That's as many games 0:08:33.679 --> 0:08:36.480 as they won in the previous three seasons combined, but 0:08:36.520 --> 0:08:38.280 there are nine point hundred o of The Ravens have 0:08:38.320 --> 0:08:41.480 outscored the opposition the season by more than two hundred points. 0:08:41.520 --> 0:08:44.600 The Packers tomorrow go to San Francisco. It's the fifth 0:08:44.600 --> 0:08:46.520 time the two teams have met in the playoffs in 0:08:46.559 --> 0:08:49.480 the last eleven years. On Sunday, Tampa Bay at Detroit, 0:08:49.760 --> 0:08:51.960 Lions just won a playoff game. Could they win two 0:08:52.360 --> 0:08:55.040 in the same year. That hasn't happened since nineteen fifty seven. 0:08:55.320 --> 0:08:57.920 And then it's Kansas City at Buffalo. The Bill six 0:08:58.000 --> 0:09:01.600 game winning Street began with a win over the Chiefs. 0:09:01.800 --> 0:09:02.199 Hockey. 0:09:02.240 --> 0:09:04.720 The Capitals and Bruins both won by the same score 0:09:04.760 --> 0:09:07.559 of five to two. Both teams got hat tricks and 0:09:07.679 --> 0:09:10.040 victories tj Oshie for the Caps and the win over 0:09:10.120 --> 0:09:13.120 Saint Louis. David Fostermach for the Bruins in a home 0:09:13.160 --> 0:09:17.080 win over Colorado. At the Australian Open, American tailor Fritz, 0:09:17.080 --> 0:09:20.280 who won his match in four sets. He's into the 0:09:20.320 --> 0:09:23.800 fourth round. The fourth seed, yannicks Seener lost only four 0:09:23.880 --> 0:09:27.200 games in advancing Coco Goff won her match six love 0:09:27.280 --> 0:09:30.120 six twos. He won the US Open in a final 0:09:30.200 --> 0:09:33.800 over Arena Sabolanka. Sabalanka won her match six loves six 0:09:33.880 --> 0:09:38.160 Love Warriors game tonight against Dallas post Bone, second game 0:09:38.200 --> 0:09:40.640 in a row that the game has been postponed because 0:09:40.640 --> 0:09:43.800 of the death of Golden State assistant Coche Dejon Elosevich. 0:09:44.000 --> 0:09:44.720 Johns Deshawer. 0:09:44.720 --> 0:09:50.320 Bloomberg Sports from coast to coast, from New York to 0:09:50.400 --> 0:09:55.400 San Francisco, Boston to Washington, DC, nationwide on Syrias Exam 0:09:55.520 --> 0:09:59.720 the Bloomberg Business Appen Bloomberg dot Com. This is Bloomberg 0:09:59.800 --> 0:10:00.440 Day Break. 0:10:01.480 --> 0:10:01.959 Good morning. 0:10:02.000 --> 0:10:05.360 I'm Nathan Hager on a morning where red sea shipping 0:10:05.480 --> 0:10:07.800 remains under threat from houthy militants. 0:10:07.920 --> 0:10:08.640 In Yemen. 0:10:08.720 --> 0:10:12.640 The Iran backed group fired missiles yesterday at another US 0:10:12.679 --> 0:10:15.280 owned vessel for the third time in as many days, 0:10:15.800 --> 0:10:17.840 and it came on the same day that President Biden 0:10:17.880 --> 0:10:21.600 admitted that US and UK led air strikes against that 0:10:21.640 --> 0:10:25.560 militant group have not deterred the attacks. So let's get 0:10:25.600 --> 0:10:28.160 more now. We're joined by Bloomberg's news director for Europe, 0:10:28.240 --> 0:10:32.040 the Middle East and Africa, Roslind Matheson and roz It 0:10:32.080 --> 0:10:35.560 does appear that deterrence is proving very difficult in the 0:10:35.600 --> 0:10:36.080 Red Sea. 0:10:36.120 --> 0:10:36.679 What is the. 0:10:36.679 --> 0:10:38.360 Latest, Well, that's right. 0:10:38.440 --> 0:10:41.440 Basically, what you have from the US is an acknowledgment 0:10:41.520 --> 0:10:44.600 of reality, and that is that despite a series of 0:10:44.640 --> 0:10:47.120 air strikes from the US and in some cases the 0:10:47.280 --> 0:10:51.439 UK on Houthy targets inside Yemen, they haven't really degraded 0:10:51.480 --> 0:10:53.440 the Houthis to the point that they're going to stop 0:10:53.720 --> 0:10:56.640 attacking or trying to attack ships in the Red Sea. 0:10:56.720 --> 0:10:58.680 And of course the Houthis have been at this game 0:10:58.720 --> 0:11:02.160 for many, many years. They dealt with aerial bombardments from 0:11:02.240 --> 0:11:04.599 Saudi Arabia for a long time, and their stuff is 0:11:04.679 --> 0:11:07.680 quite mobile and they're very astute at hiding it and 0:11:07.720 --> 0:11:10.320 moving it. Around, so it's always going to be difficult. 0:11:10.760 --> 0:11:13.480 But what we've got is really an acknowledgment from the 0:11:13.600 --> 0:11:16.960 US President that they haven't managed to achieve very much 0:11:17.040 --> 0:11:21.280 despite quite a few serious strikes on their targets. Inside Yemen, 0:11:21.360 --> 0:11:24.560 we've seen yet another attempt to attack a ship in 0:11:24.640 --> 0:11:28.000 the Red Sea. We're seeing shipping still having to divert 0:11:28.240 --> 0:11:30.760 a long way around, and that's not just aill in gas, 0:11:30.800 --> 0:11:35.480 but that's also increasingly produced fruit and vegetables, livestock, things 0:11:35.480 --> 0:11:37.920 that don't do very well on very long trips on 0:11:38.040 --> 0:11:41.760 ships and can end up degrading as a result. And 0:11:41.800 --> 0:11:44.880 it just points again to the reality the US has 0:11:44.960 --> 0:11:47.680 kind of boxed in on two fronts. One is what 0:11:47.800 --> 0:11:50.320 to do about the Houthis and secondly, what to do 0:11:50.400 --> 0:11:52.319 with Israel and the war in Gaza. 0:11:52.400 --> 0:11:55.000 Now that box gets even tighter when we've just heard 0:11:55.040 --> 0:11:58.760 once again from Israeli Prime Minister Benjamin Netanyahu yesterday that 0:11:58.840 --> 0:12:01.680 he's going to keep up his war against Thamas until 0:12:01.720 --> 0:12:04.560 it's completely destroyed, and he's rejecting the idea of a 0:12:04.559 --> 0:12:06.520 two state solution after the war's over. 0:12:07.240 --> 0:12:09.840 And that's right, and that's the issue really fundamentally a 0:12:09.920 --> 0:12:13.400 disagreement about what the future might look like for Gaza, 0:12:13.840 --> 0:12:16.320 and if Israel is insisting that cannot be a two 0:12:16.400 --> 0:12:19.480 state solution, and the starting point for the US and 0:12:19.840 --> 0:12:22.160 countries in the region is that you have to have 0:12:22.160 --> 0:12:25.520 a two state solution to have a proper resolution of 0:12:25.559 --> 0:12:28.120 this issue in the longer term. So they can't agree 0:12:28.120 --> 0:12:30.480 on that, they won't be able to agree then or 0:12:30.720 --> 0:12:34.119 who's going to rule or manage Gaza in the aftermath 0:12:34.200 --> 0:12:37.880 of this conflict Benjamin who is now saying it can 0:12:37.920 --> 0:12:40.320 be a civil authority, but it has to be the 0:12:40.320 --> 0:12:43.280 one that he's comfortable with. And so there's a lot 0:12:43.360 --> 0:12:46.199 of obstacles in the way here to getting some kind 0:12:46.200 --> 0:12:49.560 of resolution to that conflict. And despite all the US 0:12:49.679 --> 0:12:52.480 trips to the region, despite the US pressure, and we're 0:12:52.520 --> 0:12:56.480 really talking about the biggest ally for Israel on the planet, 0:12:56.559 --> 0:13:00.280 militarily and economically, to some extent that Benjamin and you know, 0:13:00.360 --> 0:13:02.360 he's just not paying any heed to that. He's saying, 0:13:02.400 --> 0:13:04.720 I need to do what I need to do for Israel. 0:13:04.760 --> 0:13:08.079 And you're seeing that hardening in general in Israel now 0:13:08.520 --> 0:13:11.920 publicly also not just with the with the politicians, but 0:13:12.040 --> 0:13:14.560 a sense that they feel that this war has to 0:13:14.600 --> 0:13:15.080 play out. 0:13:15.400 --> 0:13:17.920 So in our last minute, Roz, what can we foresee 0:13:17.920 --> 0:13:20.000 that could get the US out of this box. 0:13:20.880 --> 0:13:23.240 It's very difficult to see what that is. I mean, 0:13:23.280 --> 0:13:25.880 in reality, the thing that will probably wind a lot 0:13:25.880 --> 0:13:28.200 of it for the US is for the conflict in 0:13:28.240 --> 0:13:32.600 Gaza to wind down, for Israel to slow down the 0:13:32.600 --> 0:13:36.440 fighting there, to accept some kind of conversation around a 0:13:36.480 --> 0:13:39.920 solution for Gaza, because that might then slow the houthy attacks, 0:13:39.960 --> 0:13:42.400 for example on ships in the Red Sea. It might 0:13:42.400 --> 0:13:46.880 stop Hasbalah and their aerial attacks from Lebanon. So things 0:13:47.000 --> 0:13:50.600 might sort of slowly unwind in all those directions. But 0:13:50.679 --> 0:13:53.240 that's really dependent on the on the conflict in Gaza 0:13:53.320 --> 0:13:53.920 slowing down. 0:13:54.320 --> 0:13:58.880 Okay, Roslind Mathis and our EMEA news director for Bloomberg News, Roz, 0:13:58.920 --> 0:14:01.760 thank you as always. Now we want to take you 0:14:01.800 --> 0:14:05.480 to Davos for a conversation with Bank of America CEO 0:14:05.600 --> 0:14:10.400 Brian moynihan from the World Economic Forum. He says four 0:14:10.600 --> 0:14:13.520 interst rate cuts could be coming from the Federal Reserve 0:14:13.720 --> 0:14:16.959 in twenty twenty four and twenty twenty five. He also 0:14:17.000 --> 0:14:20.280 says proposed regulatory changes that would require an increase in 0:14:20.360 --> 0:14:23.840 capital at major US banks need to be altered. Brian 0:14:23.880 --> 0:14:27.240 moynihan sat down with Bloomberg's Jonathan Ferrell and Lisa Bromwitz 0:14:27.280 --> 0:14:31.120 for an extended conversation from the World Economic Forum in Davos. 0:14:31.320 --> 0:14:33.840 Let's talk about this economy and the consumer. You are 0:14:33.880 --> 0:14:36.600 the number one small business lender in the country. You've 0:14:36.640 --> 0:14:38.880 got a massive retail business. What do you see him 0:14:38.960 --> 0:14:41.760 right now versus where we were, say, twelve months ago. 0:14:42.280 --> 0:14:45.720 So we got sixty six million consumers and we track 0:14:45.800 --> 0:14:47.760 every week sort of how they move money in another 0:14:47.760 --> 0:14:50.560 accounts to credit, debit, card, spending, checks, written cash on 0:14:50.680 --> 0:14:53.960 the atm xell payments and everything, and so over the 0:14:54.000 --> 0:14:55.640 last twelve months, they've gone from a year of year 0:14:55.640 --> 0:14:58.440 growth rate in the first part of twenty three versus 0:14:58.440 --> 0:15:00.600 twenty two of ten percent, down a year of year 0:15:00.640 --> 0:15:03.160 growth right now, four and a half five percent in December, 0:15:03.280 --> 0:15:06.280 in the first part of January, pretty consistent since the midsummer. 0:15:06.440 --> 0:15:08.400 Now that's good news and bad news. The good news 0:15:08.440 --> 0:15:10.800 is it's slowed down because it's more consistent where it 0:15:10.880 --> 0:15:14.080 was sixteen seventeen eighteen, sort of low inflation, lower growth economy, 0:15:14.120 --> 0:15:16.640 meaning the drag effect is starting to tame their behavior, 0:15:16.640 --> 0:15:19.480 which helps feel inflation. The bad news is as they're 0:15:19.480 --> 0:15:22.000 slowing down. You know, our core prediction by our research team, 0:15:22.000 --> 0:15:23.760 which is the best in the world, is we go 0:15:23.800 --> 0:15:25.400 from almost a four and a half whatever it was 0:15:25.440 --> 0:15:27.560 in the third quarter growth rate to a one percent 0:15:27.600 --> 0:15:30.480 positive soft landing. That's still a quick slowdown. 0:15:30.800 --> 0:15:33.000 Mike Gaben, who leads that team on the economic side 0:15:33.000 --> 0:15:34.520 of things, looking for that early rate cut from the 0:15:34.520 --> 0:15:37.680 FEDA reserve insame March. Based on what you are seeing, 0:15:37.720 --> 0:15:40.000 do you think that's necessary that the Fellaw Reserve would 0:15:40.040 --> 0:15:41.480 need to be doing that as early as March. 0:15:41.680 --> 0:15:43.600 You've seen the marketplay out here a pretty good swing 0:15:43.640 --> 0:15:44.240 on that debate. 0:15:44.320 --> 0:15:45.000 But it's great. 0:15:45.640 --> 0:15:48.560 Our core team has four cuts and four cuts twenty 0:15:48.560 --> 0:15:50.520 four and twenty five, and so if you sort of 0:15:50.600 --> 0:15:52.880 sort that through, people would interpret that. But that is 0:15:52.880 --> 0:15:55.280 actually higher for longer because you came off of twenty 0:15:55.280 --> 0:15:56.880 five basis points and if you end up at three 0:15:56.880 --> 0:16:00.200 and a half next year, eight quarters away from now, 0:16:00.960 --> 0:16:03.080 so I think the team might get the team they 0:16:03.160 --> 0:16:04.760 basically they're saying they're going to have to start cutting 0:16:04.760 --> 0:16:06.680 because they have a space to cut and the economy 0:16:06.680 --> 0:16:08.280 can keep growing and the last thing you want to 0:16:08.280 --> 0:16:10.200 do is tip this thing over. And so the consumer 0:16:10.280 --> 0:16:12.960 spending good shape, their credits some pretty good shape. The 0:16:12.960 --> 0:16:15.520 credit statistics for everybody's all. It's normalizing. It's normalized in 0:16:15.800 --> 0:16:18.560 nineteen and eighteen. Those are like fifty year good records 0:16:18.600 --> 0:16:21.880 in our companies. It's not normalized in too stress. It's normalized. 0:16:21.880 --> 0:16:24.760 And then the base case. So if you think about that, 0:16:24.800 --> 0:16:28.000 they've got access to credit. Inflation hurts, especially meetia income. 0:16:28.200 --> 0:16:30.800 That's tough on people. That's what you read about. But 0:16:30.840 --> 0:16:32.080 in the end of the day, they've got to set 0:16:32.120 --> 0:16:34.520 up so they have to start cutting lest the drag 0:16:34.560 --> 0:16:36.720 gets too strong. And the housing market's got to get 0:16:36.760 --> 0:16:39.840 a little more oof to it. You've got to get 0:16:39.840 --> 0:16:41.840 a car purchases up. You've got these things that kind 0:16:41.840 --> 0:16:42.880 of keep the economy roll along. 0:16:43.160 --> 0:16:45.680 Just on the housing point, how much do rates have 0:16:45.720 --> 0:16:47.720 to drop before you really see the mortgage. 0:16:47.320 --> 0:16:48.040 Market come back. 0:16:48.240 --> 0:16:50.320 Well, I think there'll be two parts of that equation. 0:16:51.560 --> 0:16:54.200 If you've got to all the people in the consumers, say, 0:16:54.240 --> 0:16:56.520 if you get a six handle consistently, even you know, 0:16:56.560 --> 0:16:58.840 I five's low sixes, then people sort of get just 0:16:58.880 --> 0:17:02.360 need time too, and so when I got my first 0:17:02.360 --> 0:17:03.840 mortgage eight and a half, I thought I had a deal. 0:17:03.880 --> 0:17:06.760 You know, I first went into business in the primary 0:17:06.880 --> 0:17:09.600 was twenty three and so, but I was everybody's used 0:17:09.640 --> 0:17:11.680 to that. People aren't used to. So it's going to 0:17:11.760 --> 0:17:13.920 just take time for them to think about it differently 0:17:14.080 --> 0:17:16.240 and get used to the pricing. It's got to flatten 0:17:16.240 --> 0:17:19.480 out and adjust. Their wages have to come up. But 0:17:19.480 --> 0:17:22.480 the good news is, you know, most Americans have a 0:17:22.480 --> 0:17:24.879 fixed rate mortgage, which in an inverse sort of is 0:17:24.960 --> 0:17:27.359 a is an asset right now and to have against 0:17:27.400 --> 0:17:29.119 the market. And so it's going to be slow in 0:17:29.160 --> 0:17:30.680 the first part of next year. It should start picking 0:17:30.720 --> 0:17:32.080 up as people get more and more used to this. 0:17:32.200 --> 0:17:34.520 And frankly, there's just a turn of in a housing 0:17:34.560 --> 0:17:38.720 because people get divorced, gets sick, you die, move to 0:17:38.800 --> 0:17:42.200 bigger house. Those are very pleasant things. But the rallities, 0:17:42.240 --> 0:17:43.080 that's what happened. 0:17:45.160 --> 0:17:45.280 Here. 0:17:45.440 --> 0:17:47.760 So there's always an activity. It's just that the refinance 0:17:47.800 --> 0:17:50.320 activities were mortgage driven. But that's that's done. 0:17:50.200 --> 0:17:50.640 For a while. 0:17:50.680 --> 0:17:53.679 But the purchase activity will pick up because people have 0:17:53.800 --> 0:17:55.080 kids in one houses and things like that. 0:17:55.080 --> 0:17:57.000 I'm curious you know in your in your earnings call, 0:17:57.320 --> 0:18:01.240 you express some cautiousness around your outlook. Other CEOs of 0:18:01.359 --> 0:18:03.840 certain financial firms have been less so, particularly at this 0:18:03.880 --> 0:18:06.200 defic speeding you talked about hiring, talking about the incredible 0:18:06.240 --> 0:18:09.479 boom and m and a IPOs, everything coming back. How 0:18:09.520 --> 0:18:10.399 do you explain the difference. 0:18:11.040 --> 0:18:14.400 Well, we're cautious because economy is slowing down and that's 0:18:14.440 --> 0:18:16.359 just how you have to manage expenses. You know, we 0:18:16.440 --> 0:18:19.359 have a big enterprise. We over the course last year 0:18:19.440 --> 0:18:21.560 probably went down four or five thousand headcount. We still 0:18:21.600 --> 0:18:24.760 hired fifteen thousand people last year, so we are always 0:18:24.840 --> 0:18:26.960 hired people hire a thousand to fifteen hundred people a 0:18:26.960 --> 0:18:28.800 month and with a turn of a rate which has 0:18:28.800 --> 0:18:31.080 actually gone down to six percent now probably the lowest 0:18:31.080 --> 0:18:32.760 we've ever had. And reason why numal times in the 0:18:32.800 --> 0:18:34.760 company's history that we can find you don't have to 0:18:34.840 --> 0:18:36.760 hire as many as you did in the Great resignation. 0:18:36.920 --> 0:18:39.280 So we looked three years out for headcount. We plan 0:18:39.359 --> 0:18:40.760 into but it's how you keep the expensive At the 0:18:40.840 --> 0:18:44.560 end of day, our expense phase sixty three billion, thirty 0:18:44.600 --> 0:18:48.199 eight to forty billion is people and so it's all 0:18:48.200 --> 0:18:51.959 about managing people and using AI and technology and applied 0:18:52.000 --> 0:18:55.479 technologies take work away and then migrate people to other 0:18:55.520 --> 0:18:57.679 places we need to work. And so are we hiring 0:18:57.960 --> 0:19:02.320 commercial bankers absolutely, Financial advice is absolutely middle market investment 0:19:02.359 --> 0:19:04.360 bankers will probably double that staff for the next couple 0:19:04.359 --> 0:19:06.960 of years. Will be hiring salespeople in the branches. Yes, 0:19:07.000 --> 0:19:08.879 but at the same time, the service side of that 0:19:09.000 --> 0:19:11.760 keeps going more digitized and automated. Even deep in we 0:19:11.840 --> 0:19:15.359 had a billion two digital reactions and consumer last quarter. 0:19:16.960 --> 0:19:18.800 Just think about that, and you still have a lot 0:19:18.880 --> 0:19:20.680 that isn't so you can you always get an a 0:19:20.720 --> 0:19:23.359 bene for that. So it's a balance. Core economy we 0:19:23.359 --> 0:19:25.280 think is solid. Most people think I'm optimistic and just 0:19:25.280 --> 0:19:27.480 giving the facts of whether our talent team tells us. 0:19:27.800 --> 0:19:29.119 But you know, at the end of the day, you 0:19:29.160 --> 0:19:32.080 have to manage expenses because it's ani flattens out and 0:19:32.119 --> 0:19:35.680 then starts growing, and that's income that's sixty percent of 0:19:35.720 --> 0:19:37.440 the revenue. So you've got to make sure the expenses 0:19:37.440 --> 0:19:40.440 are in line with the next question, Bazil three, end game. 0:19:40.760 --> 0:19:43.320 It sounds like a bad movie. Let's talk about it. 0:19:43.800 --> 0:19:46.720 Given what's proposed, do you think it will go through 0:19:47.080 --> 0:19:49.679 as proposed, and let's start with what's proposed. What are 0:19:49.680 --> 0:19:52.280 the conversations, what do they sound like between you? And 0:19:52.320 --> 0:19:54.680 regulates to the moment. I think there's an openness. 0:19:54.920 --> 0:19:56.920 You don't have to really take what I say, just 0:19:57.000 --> 0:19:58.359 listen to the people who are going to actually have 0:19:58.440 --> 0:20:01.440 the vote, that people actually have to prove it. And 0:20:01.520 --> 0:20:04.359 the difference of opinion, which which is a bit unusual. Honestly, 0:20:04.359 --> 0:20:06.520 I've been doing this stuff around forty years and I've 0:20:06.560 --> 0:20:10.600 never seen that the board itself have out in the 0:20:10.680 --> 0:20:13.880 open divergence of opinion. And that's because what it affects 0:20:14.040 --> 0:20:18.040 is so penetrative across the society. A small business, lending, 0:20:18.440 --> 0:20:21.680 you know, mortgages, tax credit, equity deals, trading things. So 0:20:22.040 --> 0:20:23.959 a lot of what you heard after financial crisis really 0:20:24.000 --> 0:20:26.000 had about ten or twelve of us that you know, 0:20:26.160 --> 0:20:29.520 we're making adjustments that then another group came behind this 0:20:29.680 --> 0:20:31.480 goes deep and saying that's what you're hearing more noise, 0:20:31.520 --> 0:20:34.080 And of course they're going to their Congress team people, 0:20:34.160 --> 0:20:36.280 they're going to the regulars and saying, wait a second, 0:20:36.359 --> 0:20:38.200 is this what you want to do? And so I 0:20:38.320 --> 0:20:41.120 think that means there's going to be debate around changing 0:20:41.160 --> 0:20:42.879 and probably change, but we'll see a play out and 0:20:42.960 --> 0:20:46.040 even you know, even the Fed self has said that 0:20:46.480 --> 0:20:48.000 do they have to change it? Yes, because I don't 0:20:48.000 --> 0:20:50.119 think it's the right balance. And that's why the comment 0:20:50.200 --> 0:20:53.359 letters flooded in to this day or whatever. It was 0:20:53.480 --> 0:20:55.760 all over the place. And you know, we've made the 0:20:55.800 --> 0:20:58.119 points clear. Twenty percent increase our capital doesn't seem to 0:20:58.200 --> 0:21:01.280 make sense given where we are now. We have one 0:21:01.359 --> 0:21:03.760 hundred ninety five billion dollars of regatory capital. 0:21:05.240 --> 0:21:08.280 This is Bloomberg Daybreak Today, your morning brief on the 0:21:08.359 --> 0:21:11.719 stories making news from Wall Street to Washington and beyond. 0:21:12.040 --> 0:21:14.760 Look for us on your podcast feed at six am 0:21:14.880 --> 0:21:18.520 Eastern each morning, on Apple, Spotify, and anywhere else you 0:21:18.640 --> 0:21:19.600 get your podcasts. 0:21:19.920 --> 0:21:22.600 You can also listen live each morning starting at five 0:21:22.640 --> 0:21:25.239 am Wall Street time on Bloomberg eleven three to zero 0:21:25.320 --> 0:21:28.080 in New York, Bloomberg ninety nine to one in Washington, 0:21:28.240 --> 0:21:31.480 Bloomberg one oh six' one in Boston, and Bloomberg ninety 0:21:31.480 --> 0:21:32.840 sixty in San Francisco. 0:21:33.240 --> 0:21:36.359 Our flagship New York station is also available on your 0:21:36.480 --> 0:21:41.480 Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty. 0:21:41.600 --> 0:21:45.359 Plus listen coast to coast on the Bloomberg Business app, SERRIUSXM, 0:21:45.480 --> 0:21:49.040 the iHeartRadio app, and on Bloomberg dot Com. I'm Nathan 0:21:49.080 --> 0:21:49.600 Hager and. 0:21:49.640 --> 0:21:52.919 I'm Karen Moscow. Join us again tomorrow morning for all 0:21:53.000 --> 0:21:55.480 the news you need to start your day, right here 0:21:55.680 --> 0:21:56.920 on Bloomberg Daybreak