Antony Blinken, Lloyd Austin, Zelensky discussed on This Week


In over a 120 countries This is Bloomberg radio Now a global news update Secretary of State Antony Blinken and defense secretary Lloyd Austin are said to be taking part in meetings in Kyiv today Ukrainian president zelensky announced the surprise visit on Saturday although there has been no confirmation from The White House Congresswoman Victoria spartz is calling for the reopening of U.S. diplomatic facilities in Ukraine That's a part of your job to do your service and if you are not on the ground it's very difficult to do your job Appearing on CNN State of the Union the Ukrainian born Indiana Republican stressed the importance of having a visual American presence in the country She suggested moving the U.S. embassy temporarily to lviv which has seen fewer Russian attacks since the start of the invasion The longest serving Republican senator in history has died Orrin hatch passed away this weekend the Utah lawmaker was in Congress for 42 years from 1977 until 2019 He died Saturday in his Salt Lake City home surrounded by family He was 88 years old That's the latest I'm Dina kodiak Your listening to balance and power with David Westin on Bloomberg radio My conversation with Bank of America's CEO Brian moynihan continues for his view on how the U.S. consumer is holding up despite rising inflation and interest rate hikes We're not seeing people buy less things yet because frankly because of some of the shortages any price is fine So they're willing to pay the price So the transaction volume of our customers activity is going up 7 8% the dollar volume is going up higher and that That means you know some of that's just price increases So corporate world is making good profits They're passing through when they can and you're seeing that in some of the corporate earnings it will be a very interesting earnings season But they're out either handling the shortages and are paying the inflation It can't go on forever that way and that's why the fed has a job to bring the inflation back in line because that kind of spiral is not healthy but it takes rapid movement to get more efficient and rapid movement to move price and with more wages people can pay the prices and do their things So when you're talking about your corporate clients particularly are you seeing much wage pressure and therefore margin compression are they concerned about that They're all concerned about getting workers more than they are about the price because they've all raised wages dramatically Over the last 24 months So to get the workers off the sidelines and you're starting to see that come true you start seeing just in the last step our economist in Martin was telling me that basically the number of people who quote early retired a large had come back in the system So you're starting to see the people come back to the wage force participation rate has to go back up But it's really can I get workers It's not the price because people feel the shores of workers is a shorter project a shorter popular shortage of sales And they're trying to get them and those people in services business It's even more acute Brian you mentioned earlier the anticipation that the fed is going to be raising rates They pretty much said they're going to do that We heard from the Chicago fed president Charles Evans and the economic club of New York And one of the things he talked about was how far he thinks they're going to have to go This is part of what he had to say Probably we are going beyond neutral I mean that's my expectation when I see that taking out special factors I'm still left with three to three and a half percent inflation That's not what we want If we put two and a half percent inflation rate I think we have more things to ponder there So Brian he's saying that he expects at least that the fed will go above the neutral rate Does that make sense to you And by the way do we know where the neutral rate is Well I think our economists likewise going back almost two months ago now put a pretty aggressive at the time they said 7 rate increases 7 quarter point rate increases this year and people were like that can't happen and all of a sudden the market moved with them So our people are pretty thinking they got to move pretty quickly and they have the license to do it because they're talking about three 50 basis point hikes at the next three meetings and things like that So Ethan Harrison team better to give you the exact estimates But the reality is if you even listen to chair pow and others and just like the president there the ideas are going to have to move past because the inflation is much higher than what they were dealing with and that team was barely getting the target level Now it's clearly through it And so the move passed it But they'll bring it back down I mean people forget to come up and come down if they have to It's not like they just sit there and wait it out So yes they're going to have to move higher than what people may feel short term rate is what the economists believe And I think the data shows With the move from the fed obviously we're seeing actually the negative real yield actually flirt with positive believe it or not Backup deposit real yield Assuming that happens which seems to be where the fed is heading what does that do for your business The question is if it's done the right way and it's going up for the right reasons you don't have a deep recession Banking is making more money because the flip of that real yield is we have been effectively subsidizing our customers because of what we call the zero floor So what is your floors Real rates go below zero We can't give a consumer less than zero in their accounts We stop at zero That squeezes our margins As the rates go back up we have it Frankly you remember I've been CEO of since 2010 And most of my career isn't a zero rate environment It's just a short period of time where it moved and went right back down with a pandemic but the rallies will make more money and we told people what those estimates were for NII at 600 plus $1 million next quarter and then grows from there And we have a 2 trillion deposits and they're very stable and it'll be very good for our bank Given that it's done in a way that doesn't create a deep recession on your side $2 trillion in deposits is really important The last time I checked I think Bank of America is the largest dollar deposit taker in the world Do you have to pay more for those deposits in a world where you're going to positive real yields in the rates are going up And it's been a long time since we actually bought CDs and we thought we didn't make some money off of them Well that's what happened So the more rate sensitive product goes up But the rowdy is 40% of those 2 trillion are not interest bearing So zero is zero in any environment And the only question is will people pull money out of the accounts that didn't happen last time They actually grew during the repricing cycle we grew all through and even during the fit balance sheet being leveled off and came down a little bit Now this is different There's just a lot more liquidity in the system and we'll see it in money will go into markets if the returns are better and it's short term medium term treasury rates go up and money market funds have become more attractive but we have those products too So we place our customers where they get the best deal But what drives our deposit base is the huge non-interest bearing checking accounts We have 5 million more digital customers.

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