Transcription
We turn now to the economy. On Thursday, we spoke with Bank of America CEO Brian Moynihan and asked him for an update.
>> Well, affordability is a challenge. It talked about challenge that we see in our customer base, but as you look at what's really going on, we see a couple things. One is the consumers in that our 70 million consumers who spend about $400 billion plus a month are spending about five or 6% more money this month of June of '26 versus '25 and likewise in a few first part of July here. So, they're spending money.
Um, and you, well, the consumers reflect on higher gas prices or higher food prices and inflation and things like that and are worried about it. What you see is especially the middle third of households and the top third of households by income, their spending is growing faster. What's been interesting frankly in the more recent past in the last couple months is we're seeing the wage growth of all income cohorts kind of coalesce together around 3 to 4%, which is good.
>> So, they're holding in there even though we're seeing gas prices have raised the cost for drivers by 31% since this war with Iran began. I know fuel, fuel inventories remain low. How are you thinking about how this geopolitical uncertainty, uh, factors in to planning?
>> So, the, the price of oil and gas affects not only the gas at the pump, which is what you're, uh, first reflecting on and that is up. It actually started coming down and if, as the oil prices rise up, it rise back up, but it, it basically when we were running around $100 barrel equivalent oil, you were running about a $4 and change, uh, gas price. It actually had come down from the months of May to June because that's when, uh, the oil started flowing more, but I think if you talk to businesses, it's different. What consumers see is in a, in a concerning nature that is out there, but when business see it, they worry about the cost of goods that's coming through the pipeline. So, the goods are being manufactured now have, you know, input of the oil and gas to go into the, uh, the plastics production of the, or the, uh, material production or, or the, whatever it was, uh, during the time the gas prices were high. And that's why our team has inflation staying higher all the way into '27, '28 and why the Federal Reserve will probably, uh, you, our belief is we'll raise rates, uh, whereas 6 months ago they thought the Fed would be cutting rates. They're actually believing they'll raise rates to fight off this inflation and it will take them a while to get through it.
>> So, raise rates, you think the Fed will act as soon as next week to do that? Or excuse me, end of the month to do that?
>> Think we, no. More towards the end of the year. Our team has them raising rates and, you know, I think based on the recent data came out, they had three rate rises. Whether they hold that with the, some of the inflation numbers, but it, but the reality is it's sort of the tail end of this, this year and the next year. And it will really, it will depend a lot on the path of other price cohorts other than just oil and gas at the pump. And, and that's the question of what's going on in housing and food and other places where you're seeing some pri-, continued progress being made is drifting down. And it's drifting down slower than people would like it, but the reality is this type of inflation takes a long time to squeeze out of the system. When you go back to the post-pandemic infusion of, of cash and infusion of activity, that just takes a while to squeeze out.
>> When we looked at Bank of America's earnings recently, you had record sales and trading revenue in, in the quarter past. A lot of that, some of it churn from, you know, energy price swings, but some of it it seems from the tech boom of these massive AI companies and, and the public listings. How do you think about that, what looks like a tech boom?
>> It, it's absolutely a strong market for technology and other IPOs. There's biotech, there's biology, there's drugs going out getting IPO'd and, and things like that. There's M&A activity. And so, when you're talking about the investment banking activity of Bank of America was up 70% year over year or something like that and our peers were up like amounts and that has a lot to do with, at 50% actually. That has a lot to do with the, the amount of activity our corporate clients are doing in part also compared to last year which was liberation day quarter. The good news is that our company, the nominal dollars we earned in the first quarter and the second quarter went up in investment banking and that's reflected in the environment around us.
>> Yeah, that Jamie Dimon said it's getting close to as good as it gets. We just don't know long how long it's going to last. I guess you're, you're in that same camp. You don't, you don't know how long this is going to last.
>> That's always, that's the pipeline. We, we measure what we call pipeline. So I, I, what's the forward activity that yet not having yet booked. In other words, the deals in process and, and that activity is as, as strong as it's ever been.
>> Well, it's fascinating because Wall Street is benefiting from this IPO boom around AI, but it is the state of New York where you are sitting right now that has now become the first state to bar the construction of large-scale data centers. There's just so much political heat around this, this idea of not in my backyard. And the president argues this is all a driving force for jobs and a good thing. Do you see more states following suit?
>> This is a classic struggle of land use and, and everybody's working it through and everybody will work it through differently whether it's the stories about, uh, New York putting a pause on, on terms of further development while they try to figure out the dynamics of electric electricity pricing, water pricing and things like that. There's other states are saying build it. Louisiana has a major facility going in. So I think we see it hailed differently, but it really comes down to America being America. My community, my, my town hall, my town meeting, my mayor, my council deciding what they want to do or my governor. And I think that's where the population is trying to figure it out. And so there, there's a pretty good tug-of-war going on, but I think, you know, the facts ought to get on the table. The, the ought to follow what people want for their community and then frankly the data center builders will go to the communities that want them.
>> So I know you've got a FIFA sign next to you and the FIFA World Cup finals are this weekend. The world's going to be watching. You're a sponsor. Given how high ticket prices are to these matches, have you been surprised at the, the turnout at the tournaments and the spending?
>> Absolutely not. What we, we, our team did a research piece, Margaret, that said that the total amount that is economically generated around FIFA is about 40 billion, 20 billion being the US. And then what even we look in the host cities like in Kansas City, we can see the growth rate in spending faster than other cities. So it's having this on the ground economic impact and that spending's going into what we call bricks and mortar. It's going to the bars and restaurants and, and things like that. Not necessarily only the people in the stadium. And so it's, it's an unbelievable phenomenon I think the United States hadn't seen for a while seeing again. And to put it in context to, you know, that they estimate 2 billion people will watch that, uh, uh, the finals on Sunday, which is just an amazing amount and that's what the brand strategy for us was is we, we had a great quarter internationally. We have a great international business. It's very important part of what we do.
You can watch our full interview on our YouTube channel or on facethenation.com.