Bank of America CEO: Capital spending is slowing down

Channel: Fox Business
Published: 8 hours ago

Description
FOX Business’s Maria Bartiromo interviews Bank of America CEO Brian Moynihan about the state of the U.S. economy, capital spending and the U.S.-China trade tensions. FOX Business Network (FBN) is a financial news channel delivering real-time information across all platforms that impact both Mai...



Transcript
Ah, beer aroma is sitting down with myrrh with brian money and that the guy who heads the bank of america and, of course he has probably a thing or two to say about the the federal reserve telegraphic today that may be its next move, is a rate Cut or two: let's listen, a point, five down to two point: four, but they followed this travel to point 6. To point two two point: five two point: four all ...
cross the last six months and that's largely bouncing around some of the topics within in the belief of what the trade issues will solve or whatever and we're not in a worldwide basis. It'S three low threes sothere believe that economy is still growing. Well, we didn't have. The different insight is what our customers are doing, and you know you think about the us economy as two-thirds consumers. If you, the size of that economy, is basically equivalent to china's economy, and so when we think about what's gon na happen economy, i focused a lot on what consumers are doing in in bank of america. You know so far this year through may, we've had a trillion dollars in payments made by consumers a check written their carry debit card payment cash. How the atm ach wires - that is, a five percent plus from last year 17:18 - was eight and a half and it was likefour to five the year before that. So what you saw is the economy grew faster when update and now it's come back down. It'S very strong and it's actually picked up during the year a little bit, and so we feel very good about the consumer and when you talk to our business clients, they're borrowing, money, they're, making things they're worried about all the things that we're all worried about. In this room and the ebbs and flows and like you talked about every morning in terms of trade and what that resolve and those types of things to worry about getting employees but overall they're making money and they're happy and they're borrowing at the highest rateon. The middle market lines of credit that they borrowed out in 10-15 years.

That means they're putting the money to work. Somehow they stored a lot of cash, which means they have more money to invest, and i think it's just gon na take a little bit of clearance away some of these potential bumps that it. That would then kick them back in yeah. It'S interesting that you see an economy that is still strong, despite all of the uncertainty around trade and tariffs. So that's really what i wanted to take get your take on, because capex numbers is something we look at very closely in terms of an indication for the economy and while capex was upabout a year ago, i believe the journal reported was up 20 %. Now it's up about 3 %. Are you seeing uncertainty set in in corporate america as a result of the uncertainty around trade in tariffs? So we'd have different numbers that the same trend, which is it last year? You saw it about twice the rate of this year. A little higher this year than your the numbers you gave, but but it is slowing down again because there was a rush to get things done. You got to think about late 17. Nobody believed tax reform could get done. There had been a plan on a place for the entire administration in the to administration obama that wasagreed to tax reform, never got through the group of six or gang of whatever they call themselves and everything and all sudden it happened, and so the enthusiasm al that Took off and so people went and spent the money and did the things then, of course you know you only need to buy so much, there's a there's, a slowdown in or side of it. That'S we're feeling, but it's still consistent with a healthy economy, but it'll be an economy, probably 2 % issue versus 3 %, and you get and that's that's what's playing out.

So we feel, if you look at the businesses and even capital spending and stuff it is slowing down, it was predicted toslow down. That was the. That was what everybody said early 1918 about 19 in our second year it was gon na slow down. The question is: will it slow down or will slow down and keep going on and that's the p? And you know it's interesting - we are in year 10 of an economic expansion about to break the record of the longest economic expansion. By definition, we have to break it now, unless they revise backwards and in the quarter. That would very good exactly and they you know people are saying. Well, maybe maybe it's just the age of this expansion that could turn it around. I don't know, but so far it sounds like you're notseeing, all that much change, even though yes, things have come in a bit you're, not seeing all that much change from the consumer or business as a result of this uncertainty, access to credits, you're respecting it, but Access to credits, good people's wages are growing. Unemployment is at levels that are on precedent, 50, 60 years. So when we think about all the stuff going on in society, you know when was the last time that new claims for unemployment ran 200,000 wrong number thanks to 68 1969. Those last note society was pretty in pretty rough shape. Then you think about from 1968 nine.

Through 72, three four think about what happened: nixon vietnam was raging, kentstate, martin luther king bobby kennedy, the dnc, the you know, think about all that mmm that went on and then ultimately a oil shock in a in a in a in a oil war and in A shock you think about all that, and yet here we on the other side, you know how many people are important. We are gon na continue following this brenway and talking to our maria bartiromo. He is the guy who runs bank of america, one of the largest financial institutions on the planet he's talking about this better than ten year economic recovery. You know the old market saw that says: recoveries don't die of old age, they're, murdered unexpected development, so theblack swan moment said the oil crisis to which he was alluding, that that that undid of the 60s of momentum that was just evaporated with the 73 oil embargo And opec and all of that, but but that other things get in the way that we don't see now that could disrupt all of this. What he is talking about, though, is an underlying strong economy without much inflation, which is the trigger of jerome powell's remarks earlier today in chicago when he was looking at the prospect of a trade fight that could turn into an outright trade war and tariffs that he Coupled with those on china and now those on mexico that could slow things downmarkedly and produce possibly a reversal on the part of the federal reserve to not only stop continue to raise rates but but but but cut them. And maybe as soon as the end of next month, and maybe another cut after that, so we've seen about 10 rate hikes through this process. This this whole process began with janet yellen, his predecessor, jerome pals predecessor, and now the possibility that two of those 10 rate hikes will be reversed.


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