Bank of America's Investor Day, McDonald's Earnings Report, ISM Services Data

Summary

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Bloomberg Intelligence Podcast Summary

Episode: Bank of America's Investor Day, McDonald's Earnings Report, ISM Services Data
Date: November 5, 2025
Hosts: Scarlet Fu, Paul Sweeney
Feature Guests: Catherine Dougherty (Bloomberg News), Red Brown (Bloomberg News), Steve Miller (ISM Chairman)

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Episode Overview

This episode dives into major market events: Bank of America’s first Investor Day in 15 years and their forward-looking targets, a detailed breakdown of McDonald's earnings amid shifting consumer spending, and an analysis of robust ISM Services data, including persistent inflation trends. The hosts leverage expertise from Bloomberg News and the ISM to decode each story’s impact and implications for the market and economy.

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1. Bank of America's Investor Day

Guest: Catherine Dougherty, Bloomberg News
Key Segment: [02:01 – 05:55]

Key Points & Insights

• New Long-Term Growth Targets:

  • Bank of America announced new goals, including “at least 12% earnings per share growth annually over the next several years.”
  • CEO Brian Moynihan introduced a new narrative beyond the “responsible growth” mantra, emphasizing growth that "'sticks to the ribs.'"
    • Quote: “We want to have growth that sticks to the rib. So put it on the T-shirt. This is the new phrase of Bank of America.”
      — Catherine Dougherty [03:00]

• Strategic Focus:

  • Little talk about M&A; instead, emphasis is on leveraging existing infrastructure, technology, and driving deposit growth.
  • The bank is highlighting its progress since 2019, with data reaching as far back as 2010—demonstrating a commitment to both the future and the past.
  • Quote: “It’s not just the emphasis on where they hope to go in the next three to five years, but an emphasis on where they’ve spent come from.”
    — Catherine Dougherty [03:55]

• Consumer and Wealth Management Strength:

  • BofA is the second largest in deposits; over 90% of customers have a core checking or savings account.
  • Strategy: Use core accounts to cross-sell and introduce other products, potentially graduating retail users to business partnerships.
  • Wealth management’s brand recognition is touted as a key driver for attracting new assets and clients.

• Markets Unit Performance:

  • The markets unit achieved 14 consecutive quarters of YOY growth, reflecting continued internal strengths.

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2. McDonald’s Earnings Breakdown

Guest: Red Brown, Earnings Reporter, Bloomberg News
Key Segment: [08:17 – 13:14]

Key Points & Insights

• Shift in Customer Demographics:

  • McDonald's leadership discussed a “bifurcation” between higher and lower income diners.
    • Higher-income consumers are “trading down” to McDonald’s, attracted by ongoing value promotions.
    • Middle-tier brands like Chipotle and Cava are struggling as their price-to-value proposition wanes.
  • Quote: “The higher income consumers seem to be coming down into McDonald's... drawn in by the value that McDonald's has been pushing.”
    — Red Brown [08:56]

• Value Strategy and Profitability:

  • McDonald’s is investing heavily in restoring its value reputation, even at the cost of some near-term profitability (SG&A up ~20% mainly due to marketing support for franchisees).
  • Company supports franchisees financially to implement these value deals.
  • Quote: “It's kind of remains to be seen whether or not the foot traffic is… driving the bottom line... But they see it as so important to...reintroduce the brand proposition… they’re willing to commit to this. Take a little bit of that short-term pain for the long-term benefits.”
    — Red Brown [10:35]

• Cost Pressures and Scale:

  • Rising beef prices noted, but McDonald’s large scale provides negotiating leverage.
  • So far, beef inflation has not led to an outsized negative financial impact compared to peers.
  • Quote: “McDonald’s is the largest buyer of beef. So that scale... allows them to take it.”
    — Red Brown [11:18]

• Technology & Digital Initiatives:

  • Rapid expansion of digital ordering and app-based loyalty programs (e.g., Monopoly game now fully digital).
  • Increased tech aimed at driving traffic and lowering costs; focus on making promotions available primarily through owned digital channels.
  • Quote: “A lot of them don’t even have people practically taking your order. It’s all done electronically.”
    — Co-Host [12:29]

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3. ISM Services Data & Economic Analysis

Guest: Steve Miller, ISM Chairman
Key Segment: [16:18 – 18:38]

Key Points & Insights

• ISM Services Index Surges:

  • Index came in at 70, well above the consensus of 60.
  • Business activity and new orders rose sharply, even amidst concerns like government shutdown impacts.
  • Notably, real estate, rental/leasing, and retail trade swung from contraction to expansion.
  • Quote: “We saw new orders come back and we saw business activity increase...the rest of the economy seemed to hold up.”
    — Steve Miller [16:41]

• Inflationary Pressures Persist:

  • Prices Paid index rose to 70 (first time since Oct 2022), up from 69.4 prior.
  • Tariffs are having visible effects, especially in chemicals, electronics, and some commodities.
  • Labor market in services remains surprisingly soft, but most industries (save for utilities) show available capacity, which could dampen consumer inflation pressures.

• Sectoral and Macro Context:

  • Services sector continues to outpace manufacturing, which has now seen eight months of contraction.
  • Strong new order numbers (index at 56.2 vs consensus of 51) point to continued service sector resilience.

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Notable Quotes & Memorable Moments

• On Bank of America’s New Approach:
  “We want to have growth that sticks to the rib. So put it on the T-shirt.”
  — Catherine Dougherty [03:00]

• On Consumer Spending Shifts:
  “The higher income consumers seem to be coming down into McDonald's... drawn in by the value that McDonald's has been pushing.”
  — Red Brown [08:56]

• On Taking Short-Term Pain for Long-Term Gain:
  “They’re willing to commit to this. Take a little bit of that short-term pain for the long-term benefits.”
  — Red Brown [10:35]

• On ISM Data Resilience:
  “We saw new orders come back and we saw business activity increase... the rest of the economy seemed to hold up.”
  — Steve Miller [16:41]

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Important Timestamps

• Bank of America’s Investor Day: [02:01 – 05:55]
• McDonald’s Earnings Discussion: [08:17 – 13:14]
• ISM Services Data with Steve Miller: [16:18 – 18:38]

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Overall Tone and Takeaways

• The tone is analytical and conversational, mixing expert insight with market savvy observations.
• Performance and strategic shifts in both banking and fast-food giants are treated as robust signals about consumer and investor sentiment.
• Service sector strength remains a bright spot in the economy, even as inflation lingers.

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Transcript

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[Podcast Host / Bloomberg Anchor]

It is bank of America's investor day and this is the first investor day the bank has held in about 15 years. And it comes as the stock of bank of America has trailed its big bank peers not just this year, but as Catherine Dougherty of Bloomberg News points out last year and for the past five years as well. Catherine joins us now from Boston, right outside the bank of America investors aid taking place. Catherine, bank of America has come out with some new targets that it's talking up, talking about at least 12% earnings per share growth annually over the next several years. What is the unifying narrative that the bank is offering up right now to explain these new targets?

[Catherine Dougherty]

So we have a new narrative today and it expands from the old narrative of responsible growth. That is a phrase that CEO Brian Moynihan has used talking about building the bank coming out of the financial crisis. He's talked about using responsible choices and being explicit about the risk that the bank is taking on in order to grow revenue. Well, today we heard a new phrase he's been repeating this phrase where he says that the growth is one that they want to stick to the ribs. I know it sounds like a funny phrase or at least it's one that has stood out to me and it also makes me think of, I don't know, barbecue or, or some sort of food. But he's repeated it time and time again this morning and on media. Now he's saying we want to have growth that sticks to the rib. So put it on the T shirt. This is the new phrase of bank of America.

[Podcast Co-Host / Bloomberg Anchor]

So Catherine, is there a sense here that bank of America is comfortable with the assets they own? Do they feel like they need to acquire something or maybe divest something? What are they saying about kind of the way they're constructed right now?

[Catherine Dougherty]

So there hasn't been a lot of talk about acquisitions or add ons. It has been a large emphasis on existing either infrastructure, technology and the deposit growth that they say they expect in the future. But also they're giving a lot of detailed information about where they've come from really since 2019. Some of the stats even go back to 2010. So it's not just the emphasis on where they hope to go in the next three to five years, but an emphasis on where they've spent come from.

[Podcast Host / Bloomberg Anchor]

In terms of what it's doing. Well, we know that the markets unit has posted 14 straight quarters of year over year growth and of course most of the big banks had incredible performances for their markets businesses in the last quarter. What do we hear about how they're going to double down on the things that are working?

[Catherine Dougherty]

So another business line just sat through the presentation this morning is Consumer B of A is the second largest bank given its deposit franchise And Holly o', Neill, the head of consumer and retail talked about how they are seeing really 90% plus of their customers have a core checking or savings account and they are pointing to that as a particular strength because once you have the core checking or saving you can then add on and introduce customers to other parts of the business. Maybe they can even grow to be a banking partner if they are a CEO or owner of a company. So that is one particular emphasis that the bank executives have made today. The other wealth management, they're really emphasizing just the brand recognition that comes with if you are an advisor out and looking to take on new clients and bring in more assets to the bank having B of A's larger franchise is something that they're speaking to as a core strength. So these are just some of the beyond the numbers, the details that they're going through this morning in Boston.

[Podcast Co-Host / Bloomberg Anchor]

Stay with us. More from Bloomberg Intelligence coming up after this.

[Baillie Gifford Representative]

What is actual investing? We believe that it's a real world task to deliver thoughtful capital deployment. It's not about speculating over the short term. It's about understanding the long term opportunities for companies through technological progress or new business models. So we seek out those exploring big new ideas that will change the world. Then we back them to give those ideas time to flourish. Baillie Gifford Actual investors Find out [e-mail].

[Podcast Co-Host / Bloomberg Anchor]

Support for the show comes from public.com you're thoughtful about where your money goes. You've got your core holdings, some recurring crypto buys, maybe even a few strategic option plays on the side. The point is, you're engaged with your investments and Public gets that. That's why they built an investing platform for those who take it seriously. On Public you can put together a multi asset portfolio for the long haul. Stocks, bonds, options, crypto. It's all there plus an industry leading 3.6% APY high yield cash account. Switch to the platform built for those who take investing seriously. Go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market paid for by Public Investing. All investing involves the risk of loss, including loss of principal. Brokerage services for U.S. listed registered securities options and bonds in a self directed account are offered by Public Investing Inc. Member FINRA and SIPC. Crypto trading provided by ZeroHash complete disclosures available at public.com disclosures introducing the all.

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[Podcast Host / Bloomberg Anchor]

The earnings parade continues. Paul and of Course, we're talking about blue chip companies, McDonald's being the latest one.

[Podcast Co-Host / Bloomberg Anchor]

Yep, absolutely. McDonald's, which by the way, it's number two with a Coke, that's been my order since Summit 14. Nothing's changed. They had, I think, pretty good numbers coming out. The stock's up a couple of percent here today. So. Red Brown joins us, earnings reporter for Bloomberg News. This is a busy time for the folks in our stock desk because earnings are coming out fast and furious and they stay on top of it. Red, what you make of the McDonald's results?

[Red Brown]

I think in the context of the other results that we've gotten in the last week or so from a couple other restaurants, I think it's really interesting. During the call, the McDonald's CEO CFO really talked about this bifurcation that they've been observing for the last few years between higher income diners and lower income people. And it seems like that trend is continuing, persisting, potentially accelerating, it seems like. And specifically what I'm talking about is the higher income consumers seem to be coming down into McDonald's and shopping a bit more, drawn in by the value that McDonald's has been pushing over the last couple of quarters. And we're seeing that across all of the fast food chains. That's yum as well. And also Burger King, things like that. And then on the other side of that, companies like Chipotle and Kava, these kind of like middle tier that, you know, $20 bowls of food are struggling a little bit more as like people lose interest in that value proposition that they're offering. So I think McDonald's, obviously the biggest name in the space, really kind of hammers that point home for this earnings season. And I think that's kind of the thing like the main takeaway for me at the moment.

[Podcast Host / Bloomberg Anchor]

And of course McDonald's is leaning into this idea that it offers value at a difficult time for a lot of consumers. It's got a lot deals and promotions to maintain that reputation. Does that cost it in any way or do the same sort of sales kind of back that up that this works?

[Red Brown]

I think it's a little early before they've seen that like benefit from it quite yet. Like they have seen a little bit of pressure on the profitability because the company is so committed to this. Like getting, restoring the value reputation is kind of the language that they use with their customers, that they're actually supporting the franchisees, they're giving them marketing, they're helping them make up some of that losses that they will make they will have from offering these discounts on the menu. So McDonald's is committed to this. It sounds like they're committed to this in the long term because they do want to get people back in the stores. It doesn't. It's kind of remains to be seen whether or not the foot traffic is actually benefiting such that it is driving the bottom line as well. But they see it as so important to kind of refreshing or kind of reintroducing the brand proposition to people that they're willing to commit to this. Take a little bit of that short term pain for the long term benefits.

[Podcast Co-Host / Bloomberg Anchor]

What are they saying about their cost structure here? I see beef prices much higher over the last year or two. What are they saying about some of their cost of goods sold here?

[Red Brown]

Well, the one thing to call on the cost of goods sold before we get into the beef issue is the marketing. So they are bumping up the marketing. They saw around a 20% jump in their SGA expense because of that. But on the beef thing, McDonald's is the largest buyer of beef. So that scale kind of allows them to take it. They can take advantage of the scale and, and you know, and negotiate strong contracts when it comes to beef. Obviously beef inflation has been hitting all of these companies, but not in a way that the companies are like outsized, negatively impact thus far. But definitely something to watch as the beef prices continue to go higher and.

[Podcast Host / Bloomberg Anchor]

The improvement here, especially for its US comparable sales. Really it comes at a timely point because for a while the company had been a laggard when it came to comparable sales, at least domestically.

[Red Brown]

Yeah, definitely. And it does speak to the kind of strategic changes that they've, they've made. Like they did act maybe a little bit late in the game. Burger King has been rolling out their value offerings for a little over a year but, but McDonald's has like acted and acted swiftly. Like you know, it's a big deal I think to get the buy in from the franchisees of McDonald's. Like they had almost a consensus. It's very rare that you see almost like a high 90 percentage of franchisees that willing to take the prices because they're the ones that are dealing with this at the end of the day. But I think, you know, McDonald's acting fast, acting boldly to kind of get back into the green.

[Podcast Co-Host / Bloomberg Anchor]

I've noticed really, really in the last several years so much more technology in the stores. Like you can, A lot of them don't even have people practically taking your order. It's all done electronically. What are they saying about their investments in technology, maybe even AI? How's that impacting that business?

[Red Brown]

Yeah, for McDonald's like they it was there's a quite a bit of talk about their, their digital offerings for, for this quarter. All of these companies. So between McDonald's Yum. Which has KFC, Taco Bell and a couple other brands under that umbrella are all really pushing the digital for that exact reason, to get the cost down. You know, McDonald's just rolled out their monopoly program and when I was a kid, monopoly was the, the peel off on the cups. It was very exciting. Now it's completely digital.

[Podcast Co-Host / Bloomberg Anchor]

Right.

[Red Brown]

So like that's another way of they're trying to drive people into the app to get people to shop through theirs. It's where a lot of promotions are that'll help also drive foot traffic. So it's helping in two ways. It's helping people get in shop more and also helping them the cost front.

[Podcast Co-Host / Bloomberg Anchor]

Stay with us. More from Bloomberg Intelligence coming up after this. Support for the show comes from public.com you're thoughtful about where your money goes. You've got your core holdings, some recurring crypto buys, maybe even a few strategic option plays on the side. The point is you're engaged with your investments and Public gets that. That's why they built an investing platform for those who take it seriously. On public you can put together a multi asset portfolio for the long haul. Stocks, bonds, options, crypto, it's all there plus an industry leading 3.6% APY high yield cash account. Switch to the platform built for those who take investing seriously. Go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market paid for by Public Investing. All investing involves the risk of loss, including loss of principal. Brokerage services for U.S. listed registered securities, options and bonds and a self directed account are offered by Public Investing Inc. Member FINRA and SIPC Crypto trading provided by ZeroHash complete disclosures available at public.com.

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[Podcast Co-Host / Bloomberg Anchor]

Some services index came in at 70. The consensus was 60. Seems pretty good to me. Let's check in with Steve Miller. He's the chairman of ism, joining us via Zoom from Aledo, Texas. Think Oil patch and that's where Aledo is. Think Landman, which by the way second season starts in like a week.

[Podcast Host / Bloomberg Anchor]

So that's I know you're all over.

[Podcast Co-Host / Bloomberg Anchor]

That huge Steve, talk to us about this ISM data here. What stands out to you?

[Steve Miller]

Well, one of the things that was great news is we saw new orders come back and we saw business activity increase. So a little bit of a surprise to me given the government shutdown. We saw public administration go into contraction from expansion month over month, but the rest of the economy seemed to hold up. Real estate, rental and leasing and retail trade returned from contraction to expansion. So those were some of the leaders.

[Podcast Host / Bloomberg Anchor]

At the same time though, it seems like inflationary pressures remain because you look at prices paid and prior month in September was at 69.4 and economists had anticipated it to decline to 68, but instead we got an increase to 70. Talk a little bit about that.

[Podcast Co-Host / Bloomberg Anchor]

Sure.

[Steve Miller]

The the index the first time it's been in 70 at 70 since October of 2022. So we're definitely seeing in the commentary as well tariff impacts starting to flow through for some commodities we see chemicals, electronic components, some other things are showing in increases to prices paid. I think the positive side on the inflationary, inflationary aspect is employment is still a little bit weak and we're seeing that the supplier and supply chain performance is still strong. So in that environment where it looks like there's available capacity in all of the industries except for, except for utilities, I believe that's a very positive sign for competition in the market and keeping inflationary pressures from hitting the consumer.

[Podcast Co-Host / Bloomberg Anchor]

Steve, thanks so much for joining us. Really appreciate getting a couple of minutes of your time. Steve Miller, he's the chair of ISM Services, pmi. We get some data here. Looks pretty good to me. And one of the things that jumped out to me, Scarlett, is the, the new orders 56.2. The consensus was 51. Last period was 50.4. So nice jump in new orders there.

[Podcast Host / Bloomberg Anchor]

And of course, the services part of the economy is much bigger than the manufacturing side of the economy. And earlier this week we heard from ISM that manufacturing remains in the, I believe, an eighth month of shrinkage in manufacturing.

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