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Alex Steel here alongside Mike Reagan Wolswheeny is off today. This is Bloomberg Intelligence Radio. We bring you all the top news in business, economics, finance, geopolitics, politics through our lens of our Bloomberg Intelligence folks. They cover three thousand companies at one hundred and thirty industries world wide. We also make sure that we tap our great team of reporters all across the globe to really delve into the
key stories of our time. And for that we go to Ethan Broner, Bloomberg News Israel Bureau Chief, and he joins us. Now, where are these ceasefire talks at the moment? The reports are coming in fast and furious, Ethan, of issues that keep bubbling up.
Well, Alex, if we could answer that question, it's a great question. Look, we don't know. For at least a dozen hours. The Israelis have been saying that what the so called finished deal was suddenly reopened, that Hamas was insisting on certain aspects of demands with regard to which prisoners would be released that Israel had not agreed to that was not part of the original deal. And they're
still saying that. The senior officials justin a half an hour ago issued a similar statement that Haramas is making demands that Israel will never meet and therefore, so far there's no cabinet called to approve this deal and the deal is on hold.
I wonder if you could describe to us what it's like on the ground there as this process unfolds. I mean, is there actually peace and quiet right now or is there still conflict brewing? Is there still fighting going on?
So there's an enormous amount of fighting going on. Israel has stepped up its military activity in Gaza today and in fact, at one point Hamas issued a statement saying that one of the female hostages that they're holding that where she was being held in a place that had been hit by the Israelis. So you know, whether that's really true or not, we don't know, but there's there's plenty of that going on as well, so it's not we're not does not feel like we're on the verge
of a real deal. If you forced me to guess, I would guess that they will solve their problems in the Katar and that by tonight or tomorrow there will be a cabinet approval of this deal. But I'm really not sure.
What is it like in Benjaminta who's cabinet right now?
Well, I mean the cabinet is going to approve the deal. He does have too far right cabinet members who are vehemently opposed to it, one of whom has said he would walk out of the government if it passed, the other of whom has said, well, I would give it the first six week tranch that we've talked about, and if you don't promise to go back to fighting after that, then I'll walk. So I think we'll have to see, because it maybe depends on what fighting means and you
know what will happen. But I think for the moment, the cabinet is secure if they can solve the problem that they say is going on in Katar right now.
An Ethan, what sort of how do you sort of handicap the potential success of this ceasefire deal, do you suspect that both sides really will agree to it? I mean, we've seen so many times in the past where we thought we had accords that that sort of fell through. What what do you expect from this one?
I expect failure, Yeah, and what does failure look like?
Smiles.
Failure will mean more of the same. It'll mean that the Israel will not remove its troops from Gaza. It means that they will continue to be fighting, that the hostages will be held. Now, of course, then we'll have a new administration in the United States, which in theory is more hawkish and or in line with that, and we'll have to see what that means in terms of what kind of more severe fighting against Hamas is to be to expect, but that is my instinct.
Do we have an idea of what Israel is going to be or Benjamin and Yah who will be talking to President Trump about come basically Tuesday.
Look, I mean, I think that the few things that the most immediate on their agenda are re stocking Israel's weapons and so on in terms of its ability to fight. And then the biggest question is what to do about Iran and its nuclear program, So I think those are the things that are going to preoccupy them.
Does the hawkishness hawkishness on the part of Trump, do you think that will have any impact on how Hamas views this whole situation. Could it actually scare them into compliance or.
Do the That was the idea, I mean, that was the that was sort of the argument until last night, and it may still. I think that Hamas is in a much more vulnerable position than it was six months ago, not just because of President Trump, but because of having lost its leaders and the fact that his BELA is no longer able to help it. The Syrian regime has collapsed, and that Iran is stripped of a lot of its
air defense systems, so it's alone. It doesn't have the support system that thought it would have, so in theory, it got more involved with negotiating this deal. But you know, it's also you know, a fairly extremist organization that in theory is not afraid of death, and so it's very hard to know.
All right, Well, we appreciate all of your insight. Thank you so much. Ethan Browner. He's joining us at Bloomberg's Israel Bureau chief.
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Some economic data today. It looks like we are still spending not too shabby for December, and we've got some initial jobless claims as well. Luckily Michael McKee, Bloomerg International Economics and Policy correspondent, is joining us. What's my takeaway from jobless in retail sales?
Pretty good day.
Okay.
You know, Joe Biden's economic victory tour continues. He's getting good data as he prepares to leave office. The retail sales numbers disappointing on the headline, but that was largely due to things that don't go into the GDP number. We like to look at the retail sales control group, which is the stuff that actually gets counted in GDP, and that was up seven tenths, which is a lot more than last month four tenth and a lot more than the four tenth that was forecast. So that was
the good news. The jobless claims figures were up, but that was largely in part because of bad weather in the Midwest, but also in part because of the California fires. It appears California jobless claims what more than thirteen thousand during the week. That's unadjusted, so it'll show up as one of the biggest movers next week. But when you look down into the numbers, you can see that this is already having an impact, and I think that's going
to be a continuing story. We're going to be looking at most of the data to see what the California effect, the Los Angeles effect is.
Like, I feel like there have been so many predictions of doom and gloom for the consumer with higher inflation, higher interest rates. Is it surprising to you to see this much resilience or is it just a matter of, Hey, the job market remains strong. Of course, consumers are going to continue to spend.
That is the case. I am a little surprised in the sense that Americans got very used to low interest rates and got very used to discount pricing all the time during the two twenty tens, and so the fact that they're willing to overlook where interest rates are now is kind of interesting now that people at the lower ends of the economic spectrum are struggling now at least inflation has come down, but they don't have the money that other people do, so this is driven more by
the upper middle and upper classes. But it's still kind of interesting given that we've sort of flipped from the old normal to the new normal and back to the old normal.
Yeah.
I think one of the wildest headlines I saw the morning was surprisingly strong sales of Cartier jewelry, So I guess that speaks to that high end.
I guess you talk Alex about that in no way whatsoever.
Tom Kum is just expounding on that, but to the point that the high end consumer still do particularly.
No, we've seen that, and there was a story today on how European luxury brands are all launching new products and doing well even though the economy in Europe is much worse than ours in.
China's still a little bit TVD on that as well.
What's the next set up? What you care about?
Give me the NERD.
PCE is going to be the one that people care about because it will influence the FAED, although it's not going to have any influence on this month, but it could come in about as forecast. Yesterday we were thinking of come in a little light, but then international airfares came in high in the month of December, so that might push it up. But at this point we're all kind of looking to March, and the data point for March comes in on Monday.
Well, speaking of Chris Waller is on CNBC right now and he's saying that he doesn't think March can be ruled out for a.
Rate cut, So to give the devil there, we could get strong enough growth and it's just going to depend on how the markets react to whatever Belald Trump does.
All right, Mike, thanks a lot. Mike McKee, Bloomerg International Economics and Policy Correspondent.
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So the other side of the coin is what's happening with big banks. I mean, these numbers were just tremendous. We've got all of them in Bank of America Morgan Stanley today. I mean Morgan Stanley profit doubling as the company takes some big stock trading beats. Here, let's get more on this with Allison and Williams. She's a Bloomberg Intelligence senior analyst for global banks and asset managers. Okay, what's my word to describe the big banks over the
last forty eight hours? Green green, Okay, meaning they're making a.
Bowl, not green, climate friendly. That's that's the whole other story. But I would say, you know, I mean, first of all, the trading members, wow, especially for the leaders. You know, Morgan Stanley really coming with that fifty percent growth and equities trading, but you know, Morgan Stanley, gold and JP Morgan really strength. I mean big Bag also had good numbers, but especially strong there. The banking fee recovery is what people are focusing on, you know, not as strong, but
really positive comments around the pipeline. Morgan Stanley's saying today IPO pipeline like best in several years, or to that effect. Golden Sachs also talking about strength and the equities pipeline and the fees there really strong. Deaf fees actually disappointing a little bit, but they've been so they've been sort of carrying the ball for the banking business for a while, so IPO fees. I think really the strength and the
banking pipelines trading good. But at the core for the banks is better net interest income, better net interest income in the quarter, better net interest income guidance, a cost guidance better than feared. For Wells Fargo and City Group in particular. That's a key positive back of America talking about operating leverage and credit credit solid. We haven't talked a lot about credit and generally that's a good sign signed that things are good that there's not much talk about.
Yeah.
Also, I wonder if those high trading revenues is that something typically we see around presidential election. I mean that I'm assuming that creates a lot of volume that is sort of not indicative of what the rest of the year is like.
Yeah, I think, I mean especially for you know, this election, right, so anything that is driving people to reposition their portfolios. So the volatility numbers, if you look at headline volatility, it's probably not you know, especially for last year, the numbers have been kind of disappointing. But I think just the fact that underneath the service there are a lot of shifts in trades and portfolios, so that has that's been helpful. But the strength in equities trading is the
prime brokerage business. Record quarter at Morgan Stanley. Think about hedge funds, you know they've been hitting a new record and balances. You know, we'll see when the numbers come out shortly if they hit another record. But global equities the market cap record high in December, right, so prime broke bridge, the trades, the balances are you know, they're
they're paying the prime brokers on those balances. Goldman Morgan Stanley, JP Morgan, the ones that I said had the blow out trading, they're the leaders in that business.
Right.
We know that a lot of the hedge funds had a good quarter. So to your point when you're talking about the election, especially some of the macro bets paying off, that really helped the hedge funds, help the prime brokerage.
Which is just in stark contrast to like the P and C and US Bank Corp numbers that we got out today, right Like they're you know, large regional banks and their net interest income growth was a bit muted on that loan demand. So if you strip out all that trading that you guys are talking about, how are.
Things and that really I mean the capital markets, I mean for the big banks that I cover, the capital markets momentum has really been the we talked about trading banking fees. We didn't talk about wealth and asset management. Right Again, businesses that are helped by high asset values
flows really strong at these companies. So the you know, the regional banks of the world, they really are focused on that, you know, the net interest income and the credit so that that solid credit is helpful for them, and the net interest environment and that interesting income environment
should be helpful to them. But you know, they're not as strong in products like credit cards, so JP Morgan City Group back America even whilst vargo growing in that business, right, so they their net interest margin is benefiting from that loan growth. That's the area where we've seen loan growth. Commercial loan growth is something that we expect is improving. We're getting the benefit to credit of the lower rates, right because in commercial real estate they can refinance, et cetera.
But but yeah, not seeing that blowout those blowout numbers like we're seeing the last thing, you know, you brought up the election you know, the left regulation that's Keith positive and again that's more skewed to these big bangs, right that had bigger Capital Worlds coming twenty billion buy back announced by City Group investors really getting more focused on that part of the story as well.
Green, she said it green, and it kind of goes all around that, all right, Alison, thanks a lot. Alison Williams of Bloomberg Intelligence. She covers you wes banks and asset managers for us. She covers all that good stuff.
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