>> welcome to bloomberg markets. let us get a check on the markets, the s&p 500 is looking to snap what would be the third day of declines, caught up in the middle of a fragile earnings season that is more complicated during a deepening selloff in treasuries. s&p up 1/10 of 1%, it was negative on the day am now green. we are taking a look at crude oil on the rise after saudi arabia extended a production cut by another month, keeping output

to the lowest level we have seen in several years. they hinted at more cuts in the future. the treasury selloff is the big story of the day, hitting the long end of the curve drastically. we are seeing much more stark moves in the 10 year and 30 year yields, at the highest levels since november and fluctuating throughout the day. eight basis point move on the 10 year yield and 30 year at about 4.28. earlier today, we asked george come call this about the movement and this is what he had to say -- goncalvas. >> it could be swinging from japan to the u.s., it is sensitive for all parts of the yield curve. we are experiencing a wrecking ball from supply concerns to concerns around buying could slow down and all of that is -- rates have been staying under

fed funds for a long time, that has been the saving grace. sonali: a wrecking ball in treasury markets, we have liz mccormick. when you look at the delusion of issuance paired with the downgrade the u.s. is seeing, what is the ripple effect markets will be feeling? liz: i think what george was saying is right. i was going to say a trifecta of things. like you said, the delusion issuance, and they were expecting a lot. the boj is allowing more room for long-term rates to pick up, which may bring money back home and out of treasuries. i think the fitch downgraded, though important in many ways, a lot of the stuff we knew. deficits are rising, the debt is too much. but it did was light a fire under people who were not aware and it shone a light on it.

i think it is front and center in people's minds that we have debt coming because we have a deficit that is over one trillion going up toward 2 trillion. i think fitch sparked everyone who is not aware of it to realize. all of the supplies, it was just too much and took off. sonali: let us talk about supply a little more, you have seen the market able to adjust the idea of more supply coming to the market. you have the treasury really boosting the amount it is looking to borrow to fill the hole that it had. we love to cover the treasury borrowing advisory committee. they have told treasury secretary yellen that they are comfortable with a larger share of supply is part of the outstanding debt. at what point does the markets are to break against this idea? liz: that is a great point. when i saw the documents come out, i was like wow.

20% was always the upper limit. them saying we know we can go higher in that is ok for a while , you have forecasts coming from wall street -- we already had about 800 billion since the debt limit deal of the new issuance of bills. today, treasury announced bigger sizes in bills. people are saying you could have up to a trillion more coming. there have been buyers, everybody loves the high yields in money market funds. but there is a point where do dealers who are holding a lot of the bills gum up the intermediation capacity of the market? i think that is what is on the radar. all across the curve, you are having lots more bills, they bumped of twos, threes, every tenor. i think that is what is on our mind. we love to talk about liquidity and even just the coupon bearing part of the curve, let us see how the market holds up.

dealers are saying treasure is likely to announce more coupon increases next quarter in the following quarter. it is a lot more supply on the rise. sonali: some call it a wrecking ball and some holiday slow moving train wreck. thank you for your time. we are waiting for the likes of earnings from amazon and apple after the u.s. closing bell. dan chung has a big play in tech. talk to us about the wave of earnings we are yet to see and what it could mean for the market. amazon strong rally this year, it has not yet reclaimed its high. we are sitting on fragile footing in the market. dan: amazon we think is one of the most interesting of the mega caps. the most potential for what we would call a re-rating upward. in particular because their retail business we think will become profitable and show expanding margins.

that is the debate around the company. the retail business has been unprofitable and, in particular, very much subsidized by advertising. during covid, burdened by the buildout in infrastructure. we think they are about to turn the corner on that and generally constructive on amazon over the long-term. a lot of the earnings reports recently have been fine, but met with disappointed expectations. that is the sentiment part of the stock market, we do not try to predict that short-term. sonali: apple has seen a broader rise, do you expect them to continue the rally, given where we are in price-to-earnings multiples? dan: apple is a little different, it is actually pretty slow growth going at apple, but also very steady. we think of apple like a consumer staple. they do have opportunities, apples opportunities are very large.

they dominate the tech industry with the iphone and a collection of technologies, services is much faster growing than hardware. we think the weakness in hardware has been well telegraphed. again, in apple's case, there is a little bit of a margin story. they had a lot of headwinds during covid. we actually think they could surprise on margins tonight and revenues align. valuation is tough to say. we think it is fairly valued. sonali: talk to us about the meaning of big tech for this market. what else are the areas you are excited about outside of those big four or five names. dan: the market has been up six of the last seven months, so a pullback is natural. we are growth stock investors,

bottoms up oriented. the economy is not going into any kind of severe recession. in fact, it is a soft landing. we think we will lead in the slower growth period, it will be secularly driven growth companies. so technology, artificial intelligence is the big buzz. but it is real and there will be a lot of investment. e-commerce continues to evolve. health care, personalized medicine and technologies around that. there is a lot of growth trends that have continued through this period and will continue in the years to come, and that is where you want to put your money. sonali: do you think the market is following ai names a little bit too aggressively right now, still in bubble territory in some areas? dan: we absolutely go short in some.

ai has lifted a lot of stocks within technology and software. who will actually be the real winners and when remains to be seen. when is an important note, there will be a lot of investment in building out the infrastructure to support ai activities and ai driven products. microsoft and nvidia will be winners, we think nvidia will be a near-term winner because computing chips are the core foundation for ai. other companies will benefit later, like amazon and apple, which have not really laid out ai strategies, but have the technology, the customer base, the data about consumers and a lot of things they could do both inside and outside the business to improve. sonali: you mention august pullback weakness in the market, but there are catalysts ahead. one investor mentioned the

october budget discussions in washington, that could be a potential headwind to markets in october. are you prepared for further pullbacks in the market, and how would you play those? dan: given the market run it has had, we do think this pullback could be a little bit nasty. there are indicators that suggest five to 7% pullback would not be unusual. it could take one to two months, it could take longer. i have been to bet it will be shorter. mostly because i think the tailwinds to growth are still quite strong. sonali: where are you most bearish with that view? dan: we are bearish on things like real estate and particular valuations around real estate that got driven up so much over the last five to seven years. we do not think they have adjusted and corrected for the new environment. look at the derivatives of real estate, so construction,

suppliers. the big suppliers are the banks and we are pretty negative on banks that were lending too much to commercial real estate as well as homes and inflated values. they will have a difficult time readjusting their balance sheets to the new realities. sonali: this has been a great conversation, thank you for joining us in studio. next, we stick with the realistic conversation because we are talking to brookwood real estate ceo brian kingston in an exclusive interview on the housing and office real estate outlook. this is bloomberg. ♪ ♪

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sonali: this is bloomberg markets. brookfield is one of the world's largest alternative investment management companies and is betting big on u.s. office real estate and other forms of property market. here a breakdown of flagship funds with less than 10% invested in u.s. office properties and 18% in non-us office real estate, we are bringing in the ceo brian kingston for an exclusive interview on what brookfield is doing. we broke earlier this year that according to our sources, brookfield is on the verge of raising $15 billion right now for a new flagship property fund. how are you putting that money to work? brian: thanks for having me. we think we are coming into a very interesting period of time for real estate investment. the last number of years, there has been a pretty big buildup in inventories of real estate, so we are seeing rapid price

adjustments and our business is globally diversified, as you showed on the chart. we are in every major asset class around the world in 30 countries and our business is investing in the back one the world economy. we have a front row seat for all of these changes and things that are happening, so we think we are coming into a great period of time where we will build with capital work at great returns. sonali: office buildings is a controversial space, there are a lot of questions about how they will make it through any hiccups in the market, especially given the changes around how and where people work. how are you viewing the office space in particular? brian: it is important to distinguish between high-quality, modern, purpose built office and older commodity, more traditional office that is becoming quickly functionally obsolete. we often say we are not overbuilt in office, we are under demolished.

a lot of the issues or vacancy you are referring to is concentrated in a pretty small component of the market, 90% of vacancy in the u.s. is in the bottom 30% of the market. for higher quality buildings like the ones that we own, occupancy is very high. we are hitting record rental growth. rents are 35% higher than the tower we completed right next door five years ago. it is important when you talk about commercial office to distinguish between higher quality modern, purpose built. sonali: how do you feel about the future of some of the cities -- new york city, san francisco, l.a. -- l.a. and san francisco have been facing pressures. brian: we've been doing this for a long time, i have been doing this for a long time. this is the fourth cycle i have been through that san francisco is down and out, it always comes

back. i think longer term, there are a lot of reasons to be bullish about san francisco. it is really the center for a lot of intellectual property within the united states, it is a fantastic market to live and work in. it is going through challenges right now, but any forecast looking 5, 10, 15 years down the road, technology will be a bigger part of our lives in it is today and san francisco's the center of excellence for that. sonali: what about los angeles? you faced a building where there was a default on a loan, do you stick with downtown l.a.? brian: it is still the most second populous city in the country, there are a lot of investment opportunities. we have an enormous logistics business in southern california, it is a major entry point into the united states and there is not enough being built. we think there are great investment opportunities. housing continues to be in very high demand.

we are not building enough homes. multifamily and other sectors like that. with office, there is a certain component of the market where it is more challenging because of the age of some of the assets and i think that will get worked through in time. the stte of those buildings will be repurposed into other things or continue to exist. sonali: let us talk about the defaults, there are a lot of questions about how much more the market is bound to see in terms of default rates. you are one of the biggest players in town. you and blackstone have faced defaults on certain properties. bring us inside what the process looks like and the decision. brian: it is important to distinguish between a default on a commercial loan and what most people think of with a residential mortgage default. often times, defaults get described as mailing the keys back to the lenders. that is not what is happening in these situations. they are really just one step in

the negotiation or restructuring of the loans. as one of the largest users of capital markets, we have a great relationship with all of our lenders. we are not walking away from assets, we are sitting down and working constructively with lenders. we had a default on a building in denver recently that has not resulted in a five-year extension on the loan and it is back in good standing. i think this is all a natural part of working through the impact of some of the changes we have seen with interest rates the last 12 months. sonali: curious about the cost of debt. there are a lot of questions about higher interest rates and lagged effects, how dramatically is the cost of debt rising, especially with massive players like regional banks? brian: over the last 12 months, we have seen a really concentrated change in interest rates because of increases put through by the fed and the widening of credit spreads in real estate. a lot of that was driven by

turmoil in the regional banks. we are starting to see all of that calm down. we expect rates are going to settle in at some point, the fed is closer than it was a year ago to stopping raising rates. we think there is a lot of scope for spreads to come back down. we see the cost of interest rates moderated. sonali: we would love you have you back -- love to have you back. just an update on today's big political story, donald trump is on his way from new jersey to washington, d.c. for his january 6 arraignment. we will have updates and be covering story throughout the afternoon right here on bloomberg. still ahead, we will hear from harold hamm. this is bloomberg. ♪ 76% of 23andme health customers surveyed reported taking healthier actions. because they know health isn't just a future state. health happens now.

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sonali: we are turning now to our weekly bloomberg green segment. earlier this summer, blackrock's larry fink said he was retiring the term esg, seeing it has become weaponized and misused by the left and right sides of the political spectrum. alix steel sat down with harold hamm in an exclusive interview. as part of the conversation, they spoke about this issue. we now bring in alix steel from oklahoma city. what did harold hamm say in response to blackrock's moves? alix: first of all, there are a couple of things he has to say about blackrock. one is in his book, game changer, which is why i was here at his book launch. he says larry fink has been very manipulative and manipulated esg for his own gain, really harsh words. we spoke about that, i said you

were instrumental in trying to turn around the esg mentality and really moving into the anti-woke world. do you think there are more legs to run? sonali: what does this mean for oil companies? does this mean they are totally anti-green? he used some choice language with you here. alix: definitely not. i think if you ask any oil company today, they will talk to you about how much money they are spending on things like carbon capture. just because they are not necessarily going to be green or buying wind or solar does not mean they are anti-green. there was a great piece talking about how much money will have to be spent on the energy transition, we are talking from $300 billion now to 14 trillion dollars in about 10 years. this is a lot of money and that is where a lot of oil companies are doing other stuff, whether it is carving capture, looking

for the theme or using their technologies. we talked to scott sheffield yesterday, he was talking about finding lithium minerals and water. harold hamm said there is no way he is doing lithium, he is finding oil and he thinks there are legs for the anti-e's g momentum. here is part of the conversation. harold: i think everybody got critical of what was going on with esg. they said they suddenly realized how bad it was for business, how bad it was for the consumers. that should not be happening. there has been a tremendous amount of pushback right here in oklahoma. alix: you can see, as you mentioned, wall street coming around to a new version of green or esg, you tell me. sonali: talk more about the oil market. you are seeing crude higher on the day, we have the hints from

saudi arabia about more output reductions moving forward, above and beyond what they have said. what does he say about the oil market more largely? alix: he says he sees oil between 70 and 80, he does not see it going to 100. in the book, he is very much into energy security and independence. if the politics do not change and promote those policies, we will be in deep trouble. i said if that happens and you can pump more oil, oil prices go down. won't that be horrible -- hurtful? he said short-term, maybe. he thinks there has to be a transition, that you need fossil fuels to do that. if you are against that or have policies against it, it will harm energy security and energy independence. in terms of where oil prices are going, may be around this level or a little lower, not necessarily to 100.

he wants the freedom to pump as much as he can. sonali: thanks for that interview. we are going to take a check on the markets, we are near session highs. s&p in the green, nasdaq 100 and the green. more markets next on bloomberg. ♪

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jon: welcome to bloomberg markets. sonali: we are in the green, not by much, but a little bit. s&p up less than 1/10 of 1%, nasdaq 100 up more than 2/10 of 1% rate before really big earnings coming out. a check of yields, the two-year is not moving very much. looking at 489 on the two-year handle. more movement is on the 10 year

and 30 year. 11 basis point moves, those are tighter financial conditions. if you look further on the curve, it is worse. jon: certainly the yield story has played a role in influencing the stock market in this choppy session. of course, we have all of these earnings stories that the market continues to digest. clorox shares of sky high, 9% today. some pricing power for that consumer-products player. expedia down 15%. some of what the company had to say echoes what we heard from domestic carriers in the united states about the fact there has been international travel, but less activity at home. then, you have got a lot of the tech stories we have been tracking. paypal's profit problems front and center, off by about 10%.

etsy is down 11.5%. apple and amazon set to report results after the bell. sonali: earlier today, we discussed views on earnings season outlooks so far. >> when you look at forward earnings expectations, full year 23 and 24, not changing much as a result of the less bad and feared second quarter, same as the first quarter. i think it is saying earnings are mixed. jon: let us bring in linda duessel. that theme of the less bad, coupled with increasing calls that may be a recession is not a scenario that will become a reality have fed into this idea of possible momentum for stocks. we started august with a little bit of uncertainty. how are you characterizing the mood of the markets right now?

linda: the market short-term was very much overbought, it was widely expected august -- which is notoriously a more difficult month -- might see a pullback. so far, the pullback is not very much. we are positive on the day and around 4500 is a pretty good support level. it seems like it will be a shallow pullback. we are actually pretty good across the board in many cases. jon: one of the questions people wonder about is whether we see julie a pullback or a reassessment of where people want to be. i know you have been watching the performance of small-cap stocks versus the outsized influence of big technology companies in the s&p 500. linda: one of the most powerful reasons many people got much more bullish through the summer

is you actually saw a broadening of the market. the magnificent seven, if you will, have not been hit that hard at all as the rest of the market has been broadening. everywhere you mention, small caps, we were waiting to see if they would catch a bid. cyclicals catching a bid, even the energy patch, which had a tough first half of this year, catching a bid. the only place that sees value is the high-quality dividend strategy, the defensive strategy, which did very well yesterday. sonali: when you look at the magnificent seven, what would it take to crack the surface and create more negative sentiment around these names, given where pe multiples are now? linda: the multiples are definitely high for these stocks and higher than they are for the rest of the universe. but it is not outsized. if you would compare this time

back to when the internet boom occurred around 2000, you had eye-popping multiples. this is nowhere close to that. these companies are getting the benefit for being extremely profitable, even as the outlook for productivity and enhancements with ai will benefit them. yes, they are expensive and the rest of the market is broadening and getting more expensive, we could talk ourselves into holding onto these names if we believe the inflation problem is settling down through the end of this year and into next. sonali: if inflation does not make rates go any further upward trajectory, there are other forces. treasury issuance or u.s. downgrade, that could lead to tighter financial conditions and higher rates. at what point does that filter into the market at a greater rate and where has the market not been touched enough by the pains felt in rate markets today? linda: if you look at the 10 year -- i believe the entire

yield curve is over 4%, something you could not have set for a long time. this is something we are not used to insofar as we have been in a 0% feds fund rate for 10 of the last 13 years. 4.25 was may be the high figure for the 10 year so far. in fact, a rising long-term yield is a nod to the fact that the economy very well may avoided the economic recession many had called for. i would argue so far, so good in terms of a yield curve. it is hard to see inflation coming up so much to really rock this boat right now. that is not the problem. the problem will be if the jobs report is too strong, if the fed gives us another rate hike and says may be another and we keep raising the expectation for what the final fed funds is.

that is what can get us in trouble. jon: i am glad you brought up all of those considerations. when you look at the historical interest rate hiking cycles, then look at what happens to the s&p 500 when we are near the end of one of those cycles, it does appear that performance for the broader equity market often depends on whether or not you see a recessionary environment emerge from that. i guess that is what investors have to try to determine if after the momentum we have seen for the broader s&p this year were to continue into next year. linda: definitely. we felt all along that this year would be a strong year, there is so much money sloshing about the system and inflation was coming down. it was never whether it would, but to what level. we will not know that until next year. if the inflation rate comes down toward 3% and not 2% and the fed

would perhaps claim victory and stop raising rates, just to stay higher for longer, that is a pretty good scenario for the market. when they start cutting historically, it is often a sign the see trouble in the market starts pricing a recession in. i do not see that anytime soon. it is too strong. sonali: speaking of earnings season, a very intense 24 hours. we do have big tech earnings around the corner, we have the jobs report around the corner. how are you setting up for some of these catalysts? linda: we are in the middle of earnings season, you can have mixed information. you see some of the big names that had a great run year to date, that is just the nature of the game and expectations. if you are buying growth at a reasonable price, you may not be outsized on price-earnings multiples. the mega names you talk about

that are telling us earnings today, among the magnificent seven, probably would have a hard time this appointing enough to see the stocks get rocked. maybe take a breather and acknowledge multiples are on the high side. sonali: a big day of earnings. the other big news is outside of markets. that is former president donald trump's arraignment in washington, d.c. occurring later this afternoon. former president trump is on his way, kailey leinz is outside at the courthouse with details. kailey: this is the third time the former will have been arraigned and he is going to travel from new jersey to the washington reagan national airport, then travel to the federal courthouse at 4:00 p.m. eastern.

he will be fingerprinted. although the former president said earlier this afternoon he will be arrested today, u.s. marshals say that is not the case. he will not be placed under arrest, as we have seen with previous arraignments. nonetheless, it is significant. this is the third indictment of the former president, the charges he is facing are quite serious. conspiracy against rights, the right to vote and have votes counted. if convicted, they could carry a penalty of up to 20 years in prison. this is an example of the legal woes stacking up for the former president and another step in that as he gets ready to appear here in washington, d.c. jon: in terms of messaging from the former president in anticipation of this, what has been some of the communication from him and how does it compare to other recent events you have referenced? kailey: the messaging has stayed

fairly consistent from the former president, his campaign and supporters, that this is an example of a corrupted justice department being weaponized against him as he is seeking the presidency. he is in the running to be the republican nominee in the next presidential race and they say this is part of a two-tier justice system that is being targeted toward him and less so toward members of the biden family. that messaging has remained consistent throughout, as we saw in the indictment in miami, and federal case related to classified documents and the indictment in new york with charges related to hush-money payments to stormy daniels. the messaging does resonate with trump's supporters. in both of his prior indictments, his poll numbers have climbed in the aftermath, especially after the first indictment in new york. he raised millions of dollars off the back of that. it seems to galvanize his support. the thought as this would affect

him more negatively in a general election. he is the presumptive republican nominee as he is a so far ahead in the polls. with legal challenges stacking up and trial dates that will interfere with primary races, it will be a challenge for the president to keep this up and pay for it. jon: helpful context, thanks so much. the arraignment is expected at 4:00 eastern. coming up, the state of the private equity industry. apollo hits a record high, we will walk through what is happening next. this is bloomberg. ♪ what do you see on the horizon? uncertainty? or opportunity.

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jon: this is bloomberg markets, i am jon erlichman with sonali basak. time for the stock of the hour, apollo shares sitting right now at a record high. apollo recording a record profit as it continues to focus on areas such as credit and insurance. sonali: absolutely. adjoining is to discuss that are allison mcnealy and cameron. allison, you not only have a record high for the apollo shares, you have the minting of more than $1 billion in profit. what does this mean for the path forward for apollo? when you hit a record, the pressure is up to hit another one. allison: the path forward is credit.

private equity has been going through a bit of a tough time right now, but with higher interest rates, there is a ton of investor demand for private credit, which is something that apollo specializes in. sonali: a couple of days ago, you had written a profile of who took over apollo and had been known to be changing apollo's image from a feared asset manager to your friendly neighborhood asset manager. how much is that working for them and is it true? allison: based on the stock performance, i would say it is working pretty well. the stock is trading at a record high because the company has tilted more toward the insurance arm. sells annuities to mom-and-pop investors or retirees, takes the cash, then invest it in private credit securities. this is really his baby, his

genius, his core strategy he has had the firm pursuing for over a decade, but especially the last two years since he has taken over. the stock market seems to like it. jon: does some of what allison is talking about a line with what you have been hearing and the creativity not just where the investment is taking place, but how money is being raised? cameron: even to allison's beautiful story, apollo generally has this brand of being such a shrewd investor and getting people in negotiations to get the lowest price. i think there is a real race against private equity firms to get outside of private capital and try to make themselves a better name for consumers. you see them trying to make that twist to twist their brand a little bit to become better for value investors and individual investors. especially as the fundraising

environment has been tough across the board, now they have to go back out and find new lps and new investors. we are in a race against private equity firms. i think now, you are seeing private equity firms across the board go out and brand themselves. they are tweeting more, they are more active when it comes to engaging with the press. across the board, you see a lot of people trying to rebrand the firm. jon: let us talk about josh harris shifting into the arena of the nfl. kamaron: sure. he recently purchased the washington commanders for $6.7 billion, one of the most expensive sports teams. we just released a quasi-deep dive into how the deal came to be, this is probably one of the biggest investor groups the nfl has ever allowed to own a team. i think this is the second act for josh harris.

often, there was a theme he got looked over for the top job at apollo. they are really feeling like that is not the case for him and he has his own brand, his own thing. he is ready to do more outside of apollo. sonali: it is interesting to see what private equity titans are doing next. there is a point on how the nfl is not like english football and does not allow private equity in , which makes josh harris able to do it as a family office billionaire rather than an apollo titan. if you look at the challenges private equity is facing, you have been reporting extensively on the new structures they are trying to put forward that investors are not biting on. what are they trying to do? allison: extending on the theme of what he was addressing, but we are seeing is private equity firms essentially going into a bag of tricks, you might say, to

try and extend the life and investments to give them more time to wait for a better m&a cycle. if they can't, do something else to come up with the quiddity and cash to return to investors. one of the most popular strategies we have seen is something called a continuation fund. it means a private equity fund sells an asset to itself by moving it from one fund to another fund and bringing in new investors. these deals can be controversial because there are concerns if you are the buyer and the seller on both sides of the transaction, are you getting a fair price? are you getting the best deal you could for your lps? jon: when you were talking to the street about some of those structures, does it get too confusing? does the message resonate? kamaron: it is getting tougher them across the board. allison says they are getting into their bag of tricks and i would say that is exactly right. i was in berlin a month or so

back for a super return and talking to some of the top brass across private equity firms, it is getting tough. they have been over allocated to a degree, especially as interest rates have risen. some of the top brass have had to go out and do some real pitching. they have to leave the top floor of the office and go out, find new investors and new lps. that is part of the rebranding we speak of an allison story as well. they are trying to go to the next phase outside of the private capital world and find new investors. jon: kamaron leach and allison mcneely, appreciate you joining us as we continue to watch the private equity sector. an update on former president donald trump and his arraignment, he has boarded his plane just moments ago. we will have updates and be covering the story throughout

the afternoon. coming up, bank of america reversing its recession call thanks to what has been happening in the data. whether it is the job story or consumer spending, we will hear from the chair and ceo brian moynihan next, this is bloomberg. ♪ of health customers surveyed reported taking healthier actions. more exercise. eating healthier. and simply getting more sleep. because they know health isn't just a future state. health happens now. with over 150 personalized genetic reports from 23andme you can start your dna-powered health journey today.

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jon: this is bloomberg markets. time now for today's for what it's worth. how about 2%? that is bank of america's new gdp growth call for the u.s. this year, up from the previous prediction of 1.5%. b of a making headlines for no longer anticipating a recession. they become the first big bank to make that call. earlier, brian moynihan spoke to david westin at the annual meeting about the economy and health of the consumer.

brian: if you think about the consumer, it is wages and wage growth and other things that went into the accounts during the pandemic. it is the ability to borrow and the rate at which they have to pay to borrow. what we see as consumer spending -- last year this time, 10% year-over-year. that was inconsistent with a low-inflation economy. that is down to 5%, you have seen it drop by half. so you are seeing a slowdown. what spending is at the month of july is consistent with lower inflation, very much like 1718 and 1719 as the economy settled in. there is a battle between the consumer and the fed and the consumer has won the battle back, but they have to be careful of over winning. the risk goes to over tightening and slowing down the consumer to much, then we would have a recession. jon: as we look at the markets

this thursday, investors are trying to figure out whether or not this economic story ultimately plays out with a recession being avoided. it certainly going to be watching what happens when we get jobs report tomorrow. s&p close to the flatline. this is bloomberg. ♪ or filing returns. avalarahhh ahhh sleepovers just aren't what they used to be.

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