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tv   Bloomberg Markets  Bloomberg  October 13, 2023 1:30pm-2:01pm EDT

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>> welcome to bloomberg markets. >> session lows -- mystical look at stocks -- let's take a look at the stocks. even though we have seen yields which he debated. look at the 10 year, buying going on there. he's you -- 10 year yield at 4.9
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three. investors selling stocks and buying bonds. u.s -- almost 1275 so getting back u.s. dollar index to cycle highs and nymex crude staging a comeback as well. almost 5% to $86 $.97. what are you watching? >> the investor space decided to sell has been technology stocks today. he talked about the higher price. we have seen the energy names outperforming. the best performing group names like exxon which has gotten back close to levels it was at before we saw the big pioneer deal announced this week. you got a name like dollar general with a former ceo returning to the fold as the chief executive again. we see the gold names trading higher. we continue to watch what is
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happening with the financials. we looking at overall index weakness today for s&p 500 but we are still looking at j.p. morgan and citigroup and wells fargo in the green after they reported the quarterly results. >> a lot of action in bank earnings. record profits in the third quarter. another risk remain for the sector. here is how david george feels about the industry. >> the earnings we have seen has been good. over $13 million the last three months. wells fargo and pnc had good numbers. the resiliency of the business models and the earnings stream and revenue stream of the banks is quite utility like in nature. we feel pretty good. matt: let's bring in david
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konrad, covers the large bank equities for the firm. the idea of resiliency. would you agree with that? david: i think is a true. thank you for having me on the show. we see that more of a market gap in the universal model. part of that benefit we see a lot of trading revenue flowing through. citigroup was up 14% year-over-year off of that last year. earnings are starting to show. i would point out the deposit side which is a big heights button with investors. so deteriorating. we are seeing shifts on earnings. the second derivative, the rate of deterioration is slowing. that created a beat in that interest income for all four banks that reported today. matt: are they having to pay
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more for deposits? they are charging more for loans. after svb, look like there's going to be a big competition for deposits. they're going to go to big wall street banks. are they having to increase interest rates? david: they are. my point is it is still a big headwind. they did come in lower than what we were expecting. they are ramping of. they were up probably 30 basis points from last quarter. i think that it's going to wait in them -- weigh on them until the back half of next year. that is going to weigh on the group but it is getting slightly less onerous each quarter we
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move through. jon: i was speaking to another analyst earlier today. when it comes to some of the lingering uncertainties, earlier this year we saw with this interest rate environment date to silicon valley bank, i think people are so concerned about what is happening with commercial real estate, the idea if these banks could have been setting aside to borrow money for potentially bad loans, may be that would show prudence and if there is that out there, that could come back to bite some of the banks. how do you feel about some of the provisioning now? david: i think is why your see a bifurcation in the market where the larger banks are outperforming the regional banks. the reason for that is two fold. it is the higher rates. the aoc i marks senator bond portfolios were worse than what we expected this quarter.
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that is going to weigh on capital as a move into earnings next week. that makes you think back to march in terms of the capital issues. the second issue is what do higher rates due to you asset quality. the consumer fared very well this quarter. credit card charge were relatively stable. jp morgan lower their guide on charge-offs in terms of credit cards. we are seeing assets increase on the commercial side pharmacy made to double-digit growth in outperforming led by office, but some concern in the marketplace it is widening beyond office and normalization and more standard commercial credits. matt: is the concern about the consumer? jamie dimon mentioned cash buffers being burned through. a lot of these banks did well in credit cars which means more
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consumers are putting purchases on cars and not paying off balances right away, rolling over and paying interest rates. david: we are seeing 18% growth in credit cars. one could argue we are still normalizing the balances that most people keep relatives of pre-covid. but you are right. we are seeing strong credit card growth. we would expect as we enter next year two major headwinds, the lack of excess savings you pointed out in terms of the checking accounts, but also student loan payments reinstated as well. some of the consumer headwinds facing. i think the my correction today is telling you that they're more concerned with the cre and commercial net charge-offs. matt: great to get your thoughts. thank you for joining us. david konrad and analyst atkbw
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-- at kbw. let's get to the geopolitical stories. jp morgan jamie dimon had a some alarming comments in today's third-quarter press release. he said this may be the most dangerous time the world has seen in decades. here is what ecb president christine lagarde had to say about geopolitical risk at the imf event in marrakech. >> how we are seeing the situation now and i put the emphasis of it now after the three major crisis we have gone through the last three years and the most recent developments we have not seen the end of and which will have an addition to the human toll and horrible developments that will take place that will have economy
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consequences. it feels very much like -- i want to point to my nose because abhisit them and i want to mention them for you. what i would call the multiple moving parts and were just not yet short relationships will come down -- yet sure where the chips will come down. there are multiple previous shocks from the disruption to the supply button to the volatility of energy prices to the prince of demand against the restrictive supply and all of that happening in very abrupt and sudden way. that is number one. number two, something affected by lag time. i'm not here talking about monetary policy. i am here talking about the adjustment of wages to inflation. there is clearly as everybody
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all central bankers mind the fear of the second round effect. is it happening? are we at the peak? are going to see declining, which increases returning to real rate? that is another moving part. the third moving part is what i would call the strong. we did 450 basis points hike in 50 months which is a huge -- 15 months which is a huge increase and it is what i call the strong but lag policies. we have not seen the end of it yet. we see tightening of financial conditions like it has never happened before. we know there is more in the pipeline and how it is going to impact our economies, how it will have the deflationary impact in our region is also to be seen. matt: christine lagarde speaking
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on the panel at marrakech. a new update from you a w in and president -- uaw, shawn fain says he will call for additional strikes with little notice, not just friday morning event anymore. it is something you have to watch for every single day. this is bloomberg. ♪
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>> today we are not announcing an expansion of the strike we are repaired at any time to call on more -- prepared at any time to call more locals to walk out.
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moving forward, we will call out plans when we need to, where we need to come up with little notice so stay ready. not just friday's and not just ford. jon: that was uaw president shawn fain speaking earlier today. this is bloomberg markets. time for our stock of the hour segment. a check in on the automakers. as we heard there from the union head, they're going to shift away from a new strategy, perhaps create a little bit more uncertainty and potentially strike at random. we did see ford say the offer for 23% wage increase is the best they can offer appreciate it is not what the union is looking for so i guess we see where things go from here. matt: i think ford said that is -- out of frustration.
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saying this is the much we can do without injuring the case for more investment in the company going forward. the union seems to think ford could go more. there is no additional strikes today but they struck on wednesday at one of the most profitable plants in the world out of kentucky. let's start with what we learned today. it is not going to be like a friday think anymore on facebook live. they're going to randomly strike when uaw strike whenever they feel like they're not making enough progress. >> i think that was the big take away from this beach today. this is a shift in strategy. we saw an escalation when they struck the kentucky truck plant. up until now, they're not gone for the jugular, but going after that truck plant was a heavy hit. i think now -- shawn fain said
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he feels like the companies must get to this rhythm of ok, we have so friday to give them something, they feel like they are companies were slow walking talks, that is how the union feels so he decided to shake it up. if they're not making progress -- i -- matt: if they strike the plant where they make the f-150, is that the jugular? >> i think when you hit pickup truck plant, especially for forward, so much of their profit comes from the f-150 and they have already hit kentucky truck, that is a serious blow. if you look at some of the others -- stellantis they have been striking that plants is the beginning but jeep has a lot of wranglers in stock so i think it was barely puts a dent in their sales in that regard. when you hit trucks, that is more serious. jon: you do research and analysis on electric vehicle
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market. the longer this takes to get resolved, the bigger the questions are for trying to transition to a new business when you're going up against the likes of tesla. have you been able to ballpark if you are not able to find common ground on pay increases, is there a number you're working off of you think would ultimately resolve both sides here? >> is not necessarily a pay increase we focus on. it is more of a battery plant question so we flashback last week, gm made a big offer to uaw to putting the battery facilities under the national agreement. we've not seen ford and stellantis match it but that is something uaw will look for from the automakers moving forward. the big three how to balance going forward.
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when it comes to, stellantis gm, ford there a link doing small portion of sales this year. they're falling behind. we see mercedes increasing their ev share. matt: the concern for the union is ev require fewer workers to put together. have you researched that? have you look into it? seem to think they would need the same amount of workers for ev for the was they need now. is tesla doing it with fewer people? does it require fewer workers on the assembly line? >> there was a report out last week that covered this question arguing that more labor. in this decade yet to look at it as the deal is self adding on
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the battery manufacturing as well as the components that go into those batteries. it is complicated question. the big creature is whether you're talking about the industry as it is today or where it is going tomorrow. the big three are falling behind. the important part it is been a tough year of the ev front because they're going through that manufacturing challenge. moving for they're going to have to increase their ev adoption and as they go through negotiations, ev sales have not been hit at the high level yet but they are not moving up the volume at the level they have to. the move from gm was interesting even though their sales has been quite low compared to the sales of the chevy bulk . jon: appreciate the breakdown. we continue to track it.
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justin trudeau signature environmental law struck down by canada's supreme court. we will have the details on that and we want to mention s&p 500 bouncing off session lows but still under pressure with a lot of geopolitical banks in the air today. we have seen investors shifting away from tech stocks this friday. more market coverage ahead. this is bloomberg. ♪ ♪ explore endless design possibilities. to find your personal style. endless hardie® siding colors. textures and styles. it's possible. with james hardie™.
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jon: this is bloomberg markets. we want to get to our weekly bloomberg segment because we had news here in canada and the supreme court in this country declaring key parts of a major environmental law unconstitutional which potentially triggers changes in how the country manages energy y
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projects. what's up again in bloomberg's helps cover the -- we heard from the federal government minister to get the reaction but i think people are looking at this as a blow to the trudeau government which wanted to have more say in the environmental footprint for bank projects in the country. >> that is a fair point. canada made a lot of commitment when it comes to reducing emissions to committing to the paris accord agreements. this is a bit of a blow at essentially what the core is really that maybe they overstep into trying to reach the goals. it is a 5-2 ruling. it is logically unconstitutional so going on to say that it does exceed the balance of federal jurisdiction and this is an act passed by the federal government back in 2019 and the goal was to review the major infrastructure
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and resource projects. major pipelines. a tougher approval process will make the project likely to survive core challenges which would increase certainty for these companies and their investors but the industry is self was very opposed to this. especially the oil industry arguing it did not increase certainty. it made things more difficult and the approval process and for major projects became more burdensome. gave too much way they said from input for parties that are not directly impacted. jon: you cover all the big energy companies in canada as well. what would you say about how when they commit to new projects, they are thinking about when it comes to their green footprint? >> i think most of them already had this very much at top of mind. they do not want to cause environmental damage. they have a lot of their esg commitments in place.
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when we think of our largest producers, they are part of this alliance so it is the top producers that count for 95% of the oil production here and they committed to net is greenhouse gas emissions by 2050 so they are already on board and they felt as though this at -- federal government is stepping in and making them jump through even more hurdles than they are ready jumping through on their own path. we are seeing industry groups that are applauding this one of which being the canadian association of petroleum producers. a number of other groups as well , even canadian taxpayers federation saying that between 2013 and 2023 is costing canada i think 12.8 billion dollars when it comes to what would have been proceeds from all the jobs and revenue from these projects. matt: sounds like less red tape, less regulation and this is easier to do. terrible over talking to us about the supreme court decision.
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romaine: investors in search of a haven. live from new york, i am romaine bostick. >> wiki off to the closing bill in the u.s. we do see a flight to safety taking place come putting a bit own treasuries. 10 year yield coming down to 4.60% pushing yields

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