JPMorgan Earnings and Citi's Grand Plan

You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio or watch us on YouTube search Bloomberg Global News. Just to rehash, JP Morgan really one of the ones we've obviously been in the front and center today down two point six percent, so it's hovering near it's loads of the session, and this is after the I think it's safe to say Tim the most closely watched bank and certainly the most closely

watched CEO of a bank on Wall Street. They did come out and they said it was a record in terms of making deals, a record M and a quarter. And that's and that's happening in the industry more broadly, kind of record M and a activity but that's certainly offset some of maybe the downside of what we saw for jpmore, but not enough for investors today. Loan growth

still lacking. The bank does see some green shoots. The company's CFO emphasized that excess deposits are stabling analysts, though on the call they were quite curious how the bank intends to deploy its capital. What's the acquisition strategy with all these fintech players that are out there right now? So she has been so busy, you said, just coming into the studio, because she has been nonstopping, probably up since the wee hours. Allison Williams, our senior Global Banks analyst,

a Bloomberg Intelligence here in our interactive broker studio. Thanks because I know it is a crazy day for you and am yes, I did, but this is just the warm up tomorrow. We have four all right, so's today's sort of relaxed and we have had so we actually have had time to go through the numbers and such, and I think you touched on a couple of key points, and really our cheek away is, you know, green joots need to blossoms, right, will they blossom? They So there's

a couple of positive signs. So the consumers are working down the access deposits. And one of the reasons why we don't have card loan growth is because people are paying off their cards with their savings so there, so they're spending, but they're not borrowing. So that's why those excess deposits coming down are sort of a sign of or a green shoot for the future. How important is that on the as a revenue line for these companies, So for JP Morgan and City, it's it's relatively important

because they have more exposure to the card business. If you think about the yields on a card loan, the spreads are much better than some of the other businesses. And then the other area, um, the other area. Sorry, I'm just going to move my challenge. Just get headphones. It's not easy, so the following following the rules. So um So the other positive is that they're seeing an uptick in commercial line utilization. So that's an important reader cross for Wells Fargoing, Bank of the Artist r OW.

So what that means is, you know, banks extend credit lines. During the crisis, we saw people borrowing on those lines, right, so think of it. People have like a whole equity line of credit or any kind of credit. This is available to you, and so banks or companies pulled down, they borrowed, then they paid it all back, and so you use of those lines is very low because again the companies, like consumers, have a lot of cash and

so they're not borrowing. And so to the extent that you're starting to see companies use those lines, right, So they're starting to borrow against them, perhaps too finance inventory needs or or other. Wait a second, I thought the housing market was on fire, and everybody's getting new mortgages at low rates, and they're going out and buying really

expensive homes because the monthly costs are low. That is, and that's all good for origination volumes, but it doesn't necessarily transfer to long growth because a lot of the banks are sell off those loans. So it's good for volumes, it's good for fees um but by the way, we're starting to get up some against some tough comparisons in

those businesses. So it is interesting on the commercial side though, that if they are drawing on the lines finally, right, because we've seen such a such a huge cap raig certainly during the pandemic, right everybody was able to act because money was so cheap. Correct. So we've seen you know,

massive raising of money by corporations. UM. And what's interesting that we saw on the quarter was actually still some good debt feed growth because now with all this M and A right going on, people are borrowing UM with those transactions, so there has there was actually some some debt feed growth advisory. UM. I think as you pointed out earlier, that's really the highlight record fees triple a year ago for JP Morgan, you know, up like uh a hot big percent. I think it's from the prior quarter.

Hey listen. Also, what's always a highlight I feel like is yep, the results. And let's point out JP Morgan has been on a tear up about this year, so it's been a big bump to the upside. We've seen that with some of the big banks. UM. What Jamie

Diamond has to say about the world at large. I have to say, we're getting ready to go to milk in and I was taking notes for some of the interviews and some of the panels we're going to be doing because he's like, I'm going to spend whatever I can have to on fintech, and I was thinking it was really the big I think that's a really big line. And I think that's the other thing that you've seen

in JP Morgan's numbers. I mean, they raised their cost guidence something like five times five billion like over the past year. And we think that that spending is going to go up next year. But I think just him, you know, sort of making that statement, we have all kinds of competition, We're going to spend what it takes um so sort of a mic drop, as my peer put it, spend what it takes to compete, or spend what it takes to acquire. Well, you can buy acquiring, right.

So one of the things that the banks have done, or I guess two of the things that that they've done, right is that they, um you know, they partners with fin techs, they buy the FinTechs, they have you know, these venture funds where they do different things. Um So I think they kind of look at it from all angles.

And you know what we've talked about is this this go around, right, So in the nineties when there was the Internet and they all kind of dismissed it, you know, this time around the banks from the beginning even with technologies like blockchain or you know, we're gonna make sure that we're involved. We're except for bitcoin. We know how he feels about more controversial on bitcoin. Real quickly. I'm going to squeeze you twenty five seconds. What we've got

city wells um Morgan Stanley tomorrow? What am I leaving out? Sacks tomorrow? Bank America. I think Morgan Stanley is on Friday by forgive me yeah, Strong Equities trading M and A fee strong still looking for some more signs of green shoots on the loan growth side. All right, sorry, you'll get sleep on the weekend or somewhere. Alison Williams, we love her, knows this industry like no other. She's senior global banks analyst here at Bloomberg Intelligence. We are

lucky she's part of our team. You are listening to Bloomberg Business Week. So he writes today on the Bloomberg that quote, perhaps the most important outcome today is that there remains little sign that inflation is turning around. Let's get a market perspective on today's hotter than forecast CPI report with us Cameron Chries. Cameron's back Crow strategist and a contributor to the market's live blog at Bloomberg News.

He joins us on the throne from Westford, Connecticut. Macroman literally Macroman Cameron take us into the reading of today's numbers. It came in a little hotter than expected, but but only a little hotter. Well, I guess it depends on how you wanted to find that. Yeah, I mean that the headline number was came in at zero point four percent on the month. Margaret had expected zero point three. The core reading, which is thought to get a better

um sent some underlying inflation, was zero point two. And that seems very well behaved. But there are a number of things under the surface, uh that that van flow based on what's going on with the pandemic saying UM. But there are some alternative measures, such as those that sort of strip out the very lowest and the very highest readings, the so called shouldn't mean or median c

p i UM. The Cleveland said has a series on that, and that actually rose by zero point four or five, which is the highest in more than thirty years, uh, and one of the highest readings in the last forty years. So from that perspective, what that implies is actually that the scope of price rises is broadening out, and it's not just a narrow set of of components that are impacted by the pandemic understate in price rise. This is exactly what you would expect if inflation is not, in

the fact a transitory phenomenon. But it is starting to build on itself as the public gets used to this idea that the price of everything is going up. Well, and you know what's interesting, Cameron, and prepping for this segment, I wrote to myself a little note. Um, when I'm not speaking to myself, I write to myself. But um, what are we allowed to say that inflation isn't transitory anymore? Like?

What is it technically that happens where say, um, no, folks, this is the environment and it's going to stay with us. Well between you and me. You can say it now. You go home, lock yourself in the bathroom, look yourself in the mirror, and say it loud, to say it proud, um. You know it's it's it's one of these things. You know. It seems like the only people that that that's not there.

But among the the central bankers, the people in charge of policy for the most prominent advocates of this notion that that it's transitory because they kind of they kind of need an excuse to do nothing. Um. You could argue that given what the stock markets done, given what spending has done, that we haven't needed emergency settings for montary policy for quite some time. But yet we've been

full bor QUEI. And one of the excuses is that, well, all this inflation stuff that everyone's worried about, it's just transitory. It'll it'll go away. And you know, in practice life is transitory. You know, in the long run, we're all that. Uh and in between now everybody, uh, we're this is the Sunshine report. Uh you know, uh so at some level, geolove and you know, geologic time, they're all human existence

is so Um, it's an arbitrary construct. Um that that basically I think the central banks are using to mean, you know, until we're proven correct. But you are seeing some uh you know, some fractures in the committee. Uh. Some of the regional Fed presidents in particular has been pretty dismissive of this notion that you can just wave away price rises. And I would say that these are the people that are more in touch with sort of main street and in the real world because they have

business contact they speak to on a regular basis. Well, does it seem like from a policy perspective, the FED is letting the foods footing stuff run too hot? I think so, um And I think one of the reasons is that over the last sort of thirty almost forty years inflation uh. And policy has been thought of from the demand side. Uh. You know, we need to manage demands to get the outcomes we want on inflation. The problem is is that this inflation shock, it is driven

not just by demand but also prominently supply. The supply side, You've had these supply constraints because because of the pandemic

that aren't going away. Um. And when you matched that sort of reduction in the supply with outsized demand last sort of eighteen months or so, that's where you get this sort of dynamic and that the problem with the risk is it becomes sufficiently entrenched, then that permanently changes or or maybe not permanently, but substantively changes expectations and behavior.

And this is exactly the phenomena that we had in the nineteen seventies where there was an energy supply shock that was met with policy that said well, we're not going to we're not going to address to sort of head on because it's it's going to be ephemeral. But it influenced people's expectations the wage demands. And the next thing we know, you had this sort of wage price spiral where people got paid more and they were willing

to pay more for good services. Price that those went up, the people demanded more wages, and that just kind of fed on itself. And there's there's a risk that we're going to see the same sort of thing that you realized this tumeral. Hey, when it comes to wages, and

I was just looking at your work. I mean you point out real wage growth is negative using both hourly and weekly earning series, and funny enough, there's a prominent shortage of lab or perhaps the public is sharper than we've been led to believe because one of the things I thought about, I don't know if the feed is watching,

because they talk about inequities and equalities. Certainly the lower end of the income strata, you know, has not seen the benefits at the higher end has seen, especially when it comes to wealth gains and wage gains. Um and so in a funny way, this shortage of labor has you know, drove companies to increase what they pay, certainly hourly workers. And in some way is that a benefit? But help me out here is the real wage inflation? We keep hearing about it? How do you see it? Well,

this is the issue, right. Uh. Yes, wage growth has been has been stronger than it has been historically. But if you get a four percent pay rise, but the call us the living goes up by five, are you better off? No? You can buy one percent less stuff. Um. There's a phenomena known as money illusion, which means that there is has historically been intensity tendency to say, well,

I've bet a wage drives a four percent This is fantastic. Um. But if the public is now aware, because of this narrative of watch tran inflation, that that four percent wage growth isn't going to cover the cost of living, there there's a problem. And um, you know, there's an argument that if if people aren't compensated adequately, and you would say that negative real wages wage growth is not a

particularly remunerative compensation, then the the largeal propensity to actually work. Uh, and say safe exposure to COVID or what have you is least and if you have positive wage so cavin here we are earning season has kicked off officially. We heard from Delta, We heard from Fast and Hour earlier this week, and we heard of course from jpmore in Chase earlier today. UH Delta saying that fuel prices have risen six this year. The company is saying that could

really hurt. What happens this quarter. What should we be on the lookout for when it comes to other companies that are reporting over the next few weeks when thinking about these pressures on the supply side and on the demand side. Yeah, one word margins um uh if uh you know, the good question is uh, input costs are gone up in terms of raw materials, weren't terms of labor? Uh?

You know, companies have two choices. They can either raise prices uh and passed pass those costs onto somebody else, whether it's their business customers or their their their their ouphold customers, or they can absorb hit too margins and essentially make less per dollar of good service as their assault.

In probability some combination of the two. So I think the thing to focus on is to what degree or a company seeing a squeeze a squeeze on margins, because that is obviously not a positive or uh for the equity market. Right, and that's when you know, if certainly, if you're a publicly held market, you gotta care because you know, if those margins start to um, diminish, go down, decline, uh, you're gonna get punished probably when it comes to your

reporting season, and certainly a to the stock price. Hey, Cameron, thank you so much. Really some great insight into terms of some of that inflation data that we got today. Cameron cries. He's macro strategist, He's the macroman here at Bloomberg. He is a contribute to Markets Live blog at Bloomberg News on the phone from Westport, Connecticut. Well here in

our interactive broker studio two days in a row. I'm gonna just say that Tim and I are super, super lucky because Jenny Seraine, she's our finance reporter here at Bloomberg News. She's got the cover story of Bloomberg Business Week this week. It's all about the relatively new CEO on Wall Street, not new to the company she now runs, but she certainly is making some changes. When it comes to City Group, we're talking about CEO Jane Fraser, Jenny

here in our studio. Congratulations, thank you great cover story. First of all, Um, tell us about writing this and kind of what you set out to do. Yes, well, we set out to really tell the story of City right now, Um, and we were fortunate enough to get an interview with Jane and have her kind of walk

us through some of the big changes that she's got planned. Um. They're just an interesting company, you know, They've had a really off go of it recently, and I think they needed this fresh air and fresh blood and they've got that, and so it will be interesting to kind of see

where she takes it from here. Well, speaking of fresh air, I mean, the piece literally opens with fresh air talking about an outdoor space that that city has for employees and also the way that that city is different than the other majors in thinking about a return to work. Take us through what Jane Fraser was doing and why this is this is kind of crazy for for what's happening in Wall Street. Yeah, I think that's exactly right.

So a lot of where this started was just we were hearing grumblings over and over again, that people were leaving other banks and joining cities simply because they really liked the way she talked about the future of work and and what that looks like. And so you know, she's doing the thing where they are allowed to work from home at least two days a week on a permanent basis. That's one thing. But I think the more interesting thing that she said is, um, it's not just

about this hybrid half in, half out situation. They're also being really flexible. So you know, if it's three o'clock and you want to knock off and go pick up your kids from school or or take them to a soccer game, that's fine. You know, log on later and finish your work up whenever you can. Um, it's this whole idea of flexibility that people seem to really appreciate. You know, she's acknowledging that people are not just robots at a desk, that they're real people with real lives

and really embracing that. All right, So don't penalize me because I really hate this. Is like it's because she's a woman that she looks at it differently, because that kind of makes me crazy. But there is that, But is it also a leader who's understanding that the world has changed because of the pandemic and we have shown, certainly the big banks how much they could get downe home.

Is it also third um kind of her sticky to the other banks and saying, you know, it's a fight for competition, uh, and so if this is what we have to do to kind of draw on talent, this makes sense. Yeah. I think she's she's definitely unique, and that she seems more willing to listen to her employees and has kind of let that guide a lot of her decisions, you know, since becoming CEO, And also she

was president before that, So I think she's very unique. Um. A lot of the other CEO is kind of get an idea in their head and and stick to it and and don't really let a lot of um advice um come their way. But I think she's she's very unique in that sense. UM. And I do think, you know,

it's a war for talent right now. These banks are it's a very cutthroat environment for for bankers, for traders, for engineers, for all sorts of different folks, and she's acknowledging that and I think really kind of setting them apart I thought of the other cover story that was on Business Week. I don't know, is it over the summer where it's like, basically, I don't get out of bed for thousand dollars just to steal you know, the

supermodel line. But it was basically because we just continue to see, right tim that Wall Street, the big banks, the big firms are upping kind of salaries for some of their you know, starting junior bankers whatever, you know, we just see that happening. Well, well, when Jenny, will we start to see this payoff? If there is this talent war, and we know this talent war is happening, when will we start to see the moves that Jane Fraser's making, uh, in terms of poaching talent and perhaps

just as important retaining talent. Yeah, so that's the big, big question, I think facing all of the efforts that they're making. They've already started to have some successes. There's been some big names that have left Goldman, Sachs, JP, Morgan, Google and joined Jane Um and her big journey UM. And I think it's not just talent, you know, it's also this whole energy that she's trying to bring to

the turnaround. There um and really just trying to set them apart and set them on this path towards um. Excellence is the word that they like to use, um, which is all, you know, to be fair there, she did work for Mackenzie. She did work for Mackenzie. She's sorry, I love you Mackenzie. But you know, she's definitely I mean, she has that consultant brain and and the kind of see a lot of that Mackenzie touch um and the strategy rematch that she's partake or that she's kind of

venturing out on. So she's you know, focused on wealth. She talks a lot about prioritizing high return businesses de prioritizing the low return businesses. That's McKenzie. Well, let's talk about it. I remember very early on my career when uh Sandy Wild was at City right and he bought Smith Barney. He was making this financial supermarket company, and I remember under the red umbrella and like doing the

whole thing, doing a stand up. But what's interesting is wealth management, right, they lost Smith Barney eventually are sold it off. Is that an area they've got to be a bigger player. And so Jane certainly thinks so, and I think, um, you know, if you look at some of the big success stories on Wall Street of the last decade, it was wealth management shops. Morgan Stanley bought Smith Barney and has since turned it into this powerhouse UM and so I think, you know, it's definitely a

higher returning business. City has long um you know, punched under their weight there, and so it's kind of an easy one where they already have a little bit of scale. They just got to invest in and get it a little bit bigger UM internally or do they have to acquire or can they acquires anything out there? They're a

little bit hamstrung right now. They've you know, last year they had the O c C and the FED ding them for some long standing issues with their internal controls, and so they're really limited in the amount of M and A activity that they can do because of that. UM everything has to be run by their regulators. So I think they're you know, really focused on an organic growth strategy with this UM and yeah, wealth management. Everybody

is making lots of money there. So Okay, no, we already talked about work life balance, but I I'm stuck on this one quote that you include do work life and do the different parts of business, because I was pretty surprised to to to read this. When I was reading it this morning, she told you quote the number of dads that came up and said, it's so neat because I can work from home and therefore I can get to the kids school play. First, first of all, she called out the dad's right, which was I think

huge as a dad. And and too, this is not Wall Street, right, this is not the Wall Street that's portrayed by the media, and certainly not the one that's been portrayed over the last couple of years as we've seen so much burnout. Yeah, that's absolutely right. I mean, I think that's what is so fascinating, Um, you know, to cover with city right now, and that just totally different tone we get from them than a lot of their competitors. And so, um, I think she really embraces

she's a mom herself. She embraces that side of her and talks about it openly and talks about, you know, going part time when she first had her kids as a partner at Mackenzie, and I think she definitely brings all of herself to that role and encourages other people to do the same and um that what that's really what makes her kind of stand apart and a lot of these discussions, I feel like she brings a much

more authentic and kind of genuine um tone to it all. Um. But you know, at the same time, she's got a really tough job. So I think a lot of it is, you know, the communications and the approach. But then there's execution, and that's where we really have to see kind of going forward. Well, execution is such a big thing. And again going back to the pandemic, I think we were all shoved at how well things worked, and certainly the big banks, right, I mean, they did really really well.

Productivity returns uh as she continues to be really flexible. What is she seeing? What are they seeing in terms of city and we'll get we'll get a read right in terms of earnings this week. Yes, so we have earnings tomorrow, So it'll be very interesting to kind of see how it all plays out. I mean, she said that they watch productivity very carefully, and none of what they've done so far has let anyone to slack off, and no one seems to be using the like extra

flexibility to um not work. Um. At the same time, their returns are much lower than a lot of their rivals, and she is that. Um. I mean, I think a lot of it is just that they had more catching up to do. You know, they took the biggest bail out.

They set aside nearly one trillion dollars worth of bad, unwanted toxic assets that they had to sell off from the crisis, from the financial exactly, and so that's you know, that's a big pile of stuff to work through, and they've done that now and that it's kind of the next step is here and Jane is the one to lead them out of it. But um, but it's definitely there behind and they have to catch up. She knows that. She's pretty public about wanting to do that. Um, and

crush the competition along the way. What do we always say is the right way to crush the competition to get to a point where they're actually valued like one of their peers. And by that he means Mike Mayo. No, I'm just kidding. We talked about Mike Mayo yesterday. Yeah, everyone everyone wants to see them do better. I think the big thing that a lot of folks really want to focus on actually is their payments business. It's um a little bit of a sleepier business, but it actually

handles payments for most of the world's largest companies. So you know, if you're a major company like a coke or something like that, and you need to pay a supplier and Kenya or wherever, you lean on City Group they're basically the only bank that can really help you do that because so their international footprint. That's exactly right. Yeah, and so analysts want to just see them talk about that more and kind of give that size and scope a little bit better. Um, you know, payments companies are

super hot right now. They're getting all these fun valuations. City Group is sitting on this enormous payments business. Analysts just want to hear them talk about that more. The international part. Is it good that they're everywhere? I mean, because that's one of the things you get into in your story. They certainly put it out there that it is right, I think. I mean, they're torn on it.

Jane is in the midst of selling off about a dozen room consumer operations in Asia and Europe, so they seem to be de emphasizing that aspect, but they are very much emphasizing that they are staying in those countries. Um. From an institutional side, and I think, you know, it is something that makes them unique, the fact that they have these operations and can do payments and can you know, sell to customers and be there for folks anywhere in

the world. Um. But it means that anytime something you know goes wrong and in some far flung place, City likely is there and has a view on it. And I think that sometimes gives invest There's a little bit of Jenners dare I ask about bank earnings? Darre I even go there, Jenny, sir. So you know the card business we talked with Alison Williams would be out. We know the card business is an important one, right, yeah. And what do you keep an eye on for later

this week, especially when it comes to city. I definitely. I mean cards. We had JP Morgan this morning. They are also huge in cards and they were seeing really big upticks and spending on cards and it just didn't materialize into loan growth. So I think the big question folks have is when does this turn into borrowing. Are people continuing to pay down their their their debts and and what does that mean for the way these businesses

are structured and how these banks bank money. Is there something that it sounds like you guys got to cover a lot of ground. Is there something that you would like more particulars on or as you continue to cover UM City Bank and continue to report that that you will be watching really closely and think these are going to be future stories that that I expect to come.

I definitely think the wealth management that is an interesting one, and I love that she's going about it in such a different way because I think that will be really fun to watch and kind of see who ends up being right. You know, Morgan Stanley, they like this big asset manager. They've married it to their wealth management business. UM so their asset managers turning out products and this

fleet of brokers will sell that for them. She's going on a very different path, and so I think that's, you know, a fun storyline to keep on track of and see who's right. You know, who ends up making more sense as we all go more digital and and also just the insane explosion and wealth that we're expected to see around the world. What's gonna be interesting what

she like? And the reason I asked is I think about the recent meeting that Biden just had President Biden with the big bank ceo s and they were talking about uh, they're talking about the dead ceiling, and she was the one who spoke first. Um and so I thought that was pretty impressive. But what is she like as a person in terms of the field that you got from her and the time you spent with her? Yeah, I think, I mean, I think she's a really genuine,

authentic person. I think Mike Mayo and his note this week, he said he's word change agent. And I definitely I think a lot of folks get that vibe that she's there and it's ready to put her own stamp, and she's very much willing to kind of go her own path to do that. Um. And so I think people respond to that. And you know, it's working on the recruiting side. We'll see how it goes on the retention side. UM. But I definitely think she's she's the fresh air that

everyone talks about. What do other big bank final question, Big banks ceo? What do you hear like? Kind of back channels? I think, you know, I mean, I think everybody has their own flavor. I mean, Jamie Diamond is Jamie Diamond. He's very out there and very outspoken, and I mean he's been in the seat for so long and so he's kind of like father time on Wall Street. Um, so she's new and she's different. She's definitely not you

know Jamie. So I think that's the big difference here and what we were trying to capture with the piece this week, and to show like there's someone new. There's a new sheriff in charge of city and and they've got a lot going on. Definitely different feel. Do we see Goldman, Sachs and other banks adjust their hours and adjust their schedules for their bankers as a results. I don't. I don't think. I mean, they just seem so adamant. All right, we gotta run. Sorry forgive us great cover story.

Jenny Seraine, we love it, City Bank and Jane Frasier. I'm broc journal now. But you let me drive. No, no, no no, no home honey, please, I'll do the right drivel Let me I want to drive, Just drive the question. Try this is the drive to the Globe Commune. Thanks, we'll try us down on Bloomberg Radio. All right, So we've got about tennants left in the Wednesday trading session. Lucky for us. Back with us is J. J. Kinahan, chief market strategus over at t D A Merry Trade,

joining us on the phone from Chicago. We do this as we see stocks definitely off their loads of the session and really the momentum coming out of the tech sector as we've seen certainly yields come down, particularly that tenure bond coming down. Hey j J. Nice to have you back with Tim and myself. What are you guys

talking about at t D Merriagory today. Uh, you know, I think everybody was very interested in the start of earning season primarily, and I would say that although the stocks maybe haven't responded, we were off to a good start overall in terms of what the uh financials kind of laid out for us this morning. And you know, uh, Delta, maybe it start down a little bit. I know, as I said, the stocks are down, but I think that the overall tone of the earnings was still pretty good.

There's no question about that. JP Morgan, black Rock down a little bit, no doubt about it. But uh, you know, I think there were some worries going in that what

if the financials have issues? Also because I think most of us are expecting that as the earning season goes on, particularly as we get towards the tail end, when we start to get more retailers, it's going to be very difficult because of you know, you talk about supply chain issues on the show a lot, and that's something that's gonna come into bear, and I think it's gonna be very difficult for some of those CEOs to put a real positive picture around that, particularly as we had the

holiday season. So I think the fact that the financials came in, Yes, the stocks are down, we know there were a lot of expectations around the financials. I think we're going to continue to see that pattern over the next few days. A lot of expectations. Tough to meet those expectations, but the tone of the earnings calls pretty

positive overall, and the growth continues, but at a slower pace. Okay, even Delta Airlines, I mean shares down more than yeah, the airlines as I'm sorry, uh, you know, the financials I thought were good the airlines. This one's a little bit tougher overall, right, And I think we may see

a similar pattern for some of the transportation companies. Let's face it, the biggest, their biggest input in most cases is gasoline, and we know what happened with gasoline, and we also have you know, the Southwest story seems to be a little bit more stock specific rather than an overall airline story. However, the uh, you know, maybe a little bit of a slowness of people taking up domestic travel.

And I think the other thing that's really may hurt the airlines is, you know, anecdotally, I traveled a lot for business. I just think business travel is continuing to be taking a little bit longer to get back on track than the airline's expected. And now you're at this time of year where a lot of family holiday travel is over because the kids are back in school. Business travel hasn't picked up necessarily to the level that I think many of the airlines would have expected. So it's

a tough time for them. Yeah, I'm wondering, you know, Caroline, are actually jumping on a plane tomorrow for the first time travel. Well, I traveled for work once over the summer, but you haven't traveled for working months. February Super Bowl we were doing some stuff down in Miami, a big broadcast, live event. That's it. I have not been on a plane. It's almost two years. I mean I had to you and we were talking about T S A. I had to like re up my thing because it expires. I

know you're not j J just getting out. Yeah, we'll see the supply chain problems, inflation problems transitory. If these things are a bigger dislocation, that's just not a temporary thing that this becomes part of the new norm. What does that mean for our environment? Is it a case of an uncomfortable adjustment for a few more quarters and then it just becomes part of the way things happen, or um, I don't know, or yeah, how do you

see it? Well, so inflation, you know, is in my experience, is something that kind of goes slowly, slowly, slowly, and then all of a sudden and so you know, you see the reaction in the bond market today in terms of maybe, uh, not as frightened I guess about it, because bonds being higher, yields being a little bit lower. That would tell me that people learn is frightened about it. But again, this is a this is one day where

we are having this big move. I certainly don't think you can say inflation is over by any strutch of the imagination. Um, but it's a it's just such a strange time the supply chain, you know, l A ports

going seven. Hopefully that helps. I really don't think we start to see the true effects of that until for another problem, in about a month to a month and a half, I think we'll have a real clear picture why because at that point, holiday shopping season should be in full uh you know, full level, so to speak.

And if there isn't things that people can get delivered quickly or probably more importantly for many of these stores right now, this is why you have a brick and mortar stories usually the holiday season and a there's not the things on the shelves that people want. That unfortunately could be other death knell for many of the brick and mortar stores. Hey, speaking to the holiday shopping season. Apple shares taking a hit today, Not that big, just

down close to half a percentage point right now. This on our colleagues report that will likely slash it's projected iPhone thirteen production targets by as much as ten million units. We hit that hard yesterday. How did you read into that news and Apple's ability and other company's ability to successfully navigate the supply chain issues in the fourth quarter. Well,

you know, um, Apple obviously superior. But one thing I will say, tim in terms of just how our clients trade that stock, the Apple and Microsoft are in a little bit of a category under themselves. And the reason I say that is they get a they get a unique benefit many people you know, seeing them as blue chip mature companies, which they are. So when we headed a downside, a lot of retail traders will go to

those two stocks for you know, air quote safety. However, when things get better and we start to see in tech stock start to go up, they also go to them for growth stocks. So you know, it doesn't surprise me actually that the bad news there isn't met with some you know, a bigger reaction than it is. Because again this is one when we talked about that by the dip has has worked for many people over the last you know, eight ten years take your time frame.

This is one of the stocks that usually from a retail perspective, is one of the first leaders in terms of by the dip. So people are looking for opportunities. If Apple this isn't one where Apple goes down, people say, oh my god, God, I get rid of it. When Apple goes down, people say I gotta get more. Alright, Hey be well. J J. Kinahan, Chief Market Strategies at t D Marriage Right. Thanks for listening to Bloomberg Business Week.

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