Bloomberg Surveillance TV: July 16th, 2026

Summary

Bloomberg Surveillance TV: July 16th, 2026 — Episode Summary

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Episode Overview

Theme:
This episode centers on major global economic and geopolitical developments, notably the U.S.–Iran conflict and its market impacts, along with earnings conversations featuring United Airlines CEO Scott Kirby and Bank of America CEO Brian Moynihan. The show also delves into the intersection of AI, finance, and evolving consumer demand amid macroeconomic shifts.

Hosts & Guests:

• Hosts: Jonathan Ferro, Lisa Abramowicz, Annmarie Hordern
• Notable Guests:
  • Norman Roule (CSIS Analyst, Iran/MENA expert)
  • Scott Kirby (United Airlines CEO)
  • Brian Moynihan (Bank of America CEO)

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Key Segments & Insights

1. Escalation in U.S.–Iran Conflict

Timestamps: 02:17–08:20

Situation Update

• Report: U.S. strikes on Iran continue for a fifth consecutive day; a sanctioned oil tanker heading for Khark Island is targeted.
• Concern: Potential for conflict to expand from “limited action” to a broader military “excursion.” Uncertainty remains about U.S. ability and will to keep the Strait of Hormuz open amid Iran’s cheap drone tactics.

“A lot of people thought oil would go up to $350 a barrel. It went up a little bit because I had to take tough action. When that settles down… you're going to have $55 oil.”
—Donald Trump (02:20)

Analyst Perspective – Norman Roule (CSIS)

• Iran uses targeted attacks as negotiation leverage rather than all-out strikes.
• U.S. aims to demonstrate costs to Iran for non-engagement by degrading Iranian capabilities.
• Despite military action, diplomatic channels remain “narrow but open.”
• Internal Iranian politics post-leadership funeral sees elites vying for tough stances against the U.S.
• The U.S. is cautious about long-term "boots on the ground," utilizing drone and raid tactics over occupation.

“We’re looking at the Iranians using attacks as part of their negotiating strategy…these attacks are not ‘Satur strikes’, they’re limited but sufficient to demonstrate capability.”
—Norman Roule (04:18)

“We don't need to have personnel on the ground as long as we have a capability to strip the Iranians of their offensive punch.”
—Norman Roule (07:16)

Memorable Moment

• Discussion on tactical evolution from 1980s-style warfare to drone-centric, asymmetric engagement.

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2. United Airlines Q2 Earnings & Industry Resilience

Timestamps: 10:43–18:17

Navigating Energy Shocks

• United faced a $6B spike in fuel costs but managed to raise profit guidance due to robust travel demand and brand loyalty.
• The United Next strategy and focus on customer experience are credited with resilience.

“The fact that we're sitting here today raising guidance… is a remarkable testament to the strength of demand.”
—Scott Kirby (11:30)

Demand Trends & Pricing

• No significant demand destruction despite higher fares and fuel costs.
• Air travel is currently 13% less expensive (in real terms) than pre-COVID, even as other travel sectors' prices rise.

“Our fourth quarter yields are booked 14 points higher… Corporate demand so far in July is up 30%.”
—Scott Kirby (12:45)

Oil Prices and Airfare

• Progressive fare increases have matched ongoing fuel price hikes; consumers have tolerated increases due to overall travel value consistency.

Business Travel & AI Boom

• AI industry growth boosts business travel demand, with business bookings up 30% year-over-year.
• The U.S. economy’s strength is a key driver for United.

Product Innovation

• United invests across premium and economy cabins (e.g., Starlink Wi-Fi, “Relax Row” with block middle seats for added comfort), aiming to “decommoditize” the airline experience.

“We're just trying to build a great airline for everyone… It is a remarkable testament to what it means to invest for the customer and decommoditize this industry.”
—Scott Kirby (15:54)

JFK Service

• Return to JFK on track, promising exclusive Starlink in those markets.

“Once we're back to JFK, we'll be the only airline with Starlink on airplanes.”
—Scott Kirby (17:10)

Memorable Moment

• Hosts and Kirby reminisce about finding empty rows on flights as young travelers—now inspiring the “Relax Row” concept for families.

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3. Bank of America Earnings & Macro Insights

Timestamps: 20:40–40:00

Blockbuster Results

• Bank’s equity trading revenue up 70% YoY, fixed income trading up nearly 9%, with record half-year performance.
• CEO Brian Moynihan credits resilient U.S. consumers and businesses for robust bank activity.

“Every single business grew the revenue, grew operating leverage… The power that the engine of Bank of America is across all the businesses.”
—Brian Moynihan (22:22)

Deal Pipeline & Economic Backdrop

• Strong deal pipeline in investment banking; more deals and IPOs forecast despite global uncertainties (wars, policy shifts).
• CEOs are now more confident amid policy clarity around taxes, deregulation, and immigration—even with new challenges.

“Despite higher energy prices, despite inflation, despite the Fed… the economy is growing through it.”
—Brian Moynihan (23:44)

Borrowing & Lending

• Surprising 30% uptick in mortgage production despite higher rates, reflecting consumer adaptation.
• Commercial loan growth in high single digits for small/mid-sized businesses.

“Mortgage production being up 30% is kind of an interesting statistic in a world where… rates were going to be as high.”
—Brian Moynihan (25:45)

Shift Back to Traditional Banks

• Regulatory pullback and slower alternative fund flows help banks recapture market share from asset managers.

“We grew commercial loans at 8%. That's a pretty good growth rate.”
—Brian Moynihan (27:52)

Policy and Consumer Behavior

• Despite high consumer anxiety (per surveys), spending remains strong; policy shifts are managed by businesses without significant disruption.

“Right now, the behavior hasn't changed… if the underlying business conditions are fine, they just go to work and get through it.”
—Brian Moynihan (29:16)

Bank of America’s Internal AI & Productivity

• Aggressive AI adoption to boost productivity (110 use cases approved, 37 implemented to date).
• The bank is doing “more with the same staff”—technology augments, not replaces, workers.

“We effectively just grew earnings 30% and we have a little less people than we had last year… programmers just doing more coding.”
—Brian Moynihan (35:13)

Cybersecurity Challenges

• Ongoing collaboration across the industry to address new cyber risks—“a serious issue” with $1B+ annual spend and 3,000 staff.

“You can't think that we're ever going to be able to control this because there's foreign models that people use… but our country’s tried to handle it.”
—Brian Moynihan (36:25)

Lighter Moment: World Cup Sponsorship

• Moynihan discusses BoA’s approach to sports sponsorships, the “Sports with Us” campaign, and their effort to make soccer accessible for more children in the U.S.

“We're trying to help increase the availability of a game that is massively played in the United States.”
—Brian Moynihan (38:03)

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Notable Quotes—At a Glance

• On Iran:
  “This is no longer a ceasefire suffering violations. It is a limited enforcement war with no apparent diplomatic exit.”
  — Norman Roule (03:56)

• On Airlines & Demand:
  “Demand is, is incredibly strong for us… even with fares where they are today, air travel is 13% lower in real terms than they were pre Covid.”
  — Scott Kirby (12:45)

• On Economic Resilience:
  “Despite all that, the economy is growing through it. That's the interesting part.”
  — Brian Moynihan (23:44)

• On AI at Bank of America:
  “110 business cases, 37 that are implemented… they've had a profound impact on the company.”
  — Brian Moynihan (33:06)

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Key Takeaways

• Geopolitics and markets are tightly linked: The U.S.–Iran conflict is both a diplomatic and military chessboard, impacting oil prices, risk perceptions, and, by extension, investment decisions.
• Consumer strength drives resilience: Both United Airlines and Bank of America cite strong U.S. spending—and business confidence—even in the face of cost inflation and global instability.
• AI as an operational differentiator: From internal bank operations to broader economic activity, AI’s integration is boosting productivity without widespread layoffs, and is shaping both travel and finance sectors.
• Industry adaptation is rapid: Banks, airlines, and other large institutions are adjusting not only to macro headwinds (oil, rates) but to consumer preferences and policy pivots with surprising agility.

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Timestamps of Key Segments

| Segment/Topic | Timestamps | |--------------------------------------------------|-----------------| | Iran Conflict & Analysis (Norman Roule) | 02:17–08:20 | | United Airlines: Earnings & Industry Trends | 10:43–18:17 | | Bank of America: Earnings & Macro Outlook | 20:40–40:00 | | AI, Employment, and Cybersecurity at BoA | 32:44–36:25 | | World Cup Sponsorship & BoA Community Impact | 37:48–39:57 |

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This summary encapsulates the tone, expertise, and insight of the episode’s core discussions—cutting through the advertisements, intros, and non-content.

Transcript

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[Jonathan Ferro]

Bloomberg Audio Studios Podcasts Radio News.

[Bloomberg Surveillance Podcast Host]

This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferro along with Lisa Abramowicz and Annmarie Horden. Join us each day for insight from the best in markets, economics and geopolitics. From our global headquarters in New York City, we are live on Bloomberg Television weekday mornings from 6 to 9am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen. And as always on the Bloomberg terminal and the Bloomberg Business app on the

[Bloomberg Surveillance Reporter]

surveillance this morning Escalation with Iran.

[Donald Trump]

They want to settle so badly they don't like what we're doing and they do want to settle. We'll find out whether or not we settle with them or we just finish it off. The country is booming and we'll have Iran to defeated soon. A lot of people thought oil would go up to $350 a barrel. It went up a little bit because I had to take tough action. When that settles down, you'll be I think you're going to have $55 oil.

[Bloomberg Surveillance Reporter]

So here's the latest this morning, the US striking Iran for a fifth consecutive day and hitting a sanctioned oil tanker sailing towards Kha Island. As Tehran shows no signs of backing down. The possibility, the potential that this could spread from limited action to a bigger, she's the President's word excursion, that this could be a return to revisiting the kind of things that we were talking about in March, April, time, which is seizing Khak Island. What kind of military capabilities, resources do we need to achieve that? Because at this point, still seems unclear to me that we have the ability, certainly have the willingness to maintain an open passage through the Strait of Formos, given the asymmetric nature of this, the fact that Iran can make that very difficult for both shippers and the US Alike with very cheap drones. Have we done enough sufficiently to establish, provide any evidence whatsoever that that's achievable?

[Military/Defense Analyst]

Well, I think for it to be more achievable, you would need more troops in the region, amphibious assault ships, and also, if you're thinking about trying to take control of an island, you would need ground troops. Absolutely. So I guess that's, at this moment, that is what the President is weighing. He has given Iran a very long leash to try to come to the negotiating table. And at some point the President might want to escalate because he's left with no other opt.

[Bloomberg Surveillance Reporter]

Here's the take from Norman Roll of csis. He says this is no longer a ceasefire suffering violations. It is a limited enforcement war with no apparent diplomatic exit. Norm joins us now. From Norm for more. Norm, always appreciate your time, sir. So please elaborate and tell us what kind of phase you think we're in right now and what is the potential for this to become something bigger, something less limited?

[Norman Rouleau (CSIS Analyst)]

Good morning. So we're looking at the Iranians using attacks as part of their negotiating strategy. These attacks are not Satur strikes. They're limited. But they're sufficient to demonstrate that Iran has the capability to close or to restrict traffic in the Gulf, the Strait and in the Arabian Sea. At the same time, the United States is undertaking a series of expanding and widespread attacks that are both degrading Iran's capability to attack shipping and to demonstrate to the Iranians that there is a material price to be paid for their lack of diplomatic engagement. Now, the diplomatic channel remains narrow, but it is open. And through the release of the American citizen, that is evidence of that. But as a cease fire, this construct no longer is working. So what the United States is hoping, apparently, is that its actions will provoke a debate in Iran amongst Its leadership basically. Do they want to. Do you want to take this a lot farther? I think the answer is going to be yes in the near term, but events will dictate the course of this dynamic.

[Military/Defense Analyst]

Can you provide some more context on the debate happening right now within the elites of Iran? Because some individuals are calling the likes of Mohammed Galiboff a traitor for even having these negotiations with the United States.

[Norman Rouleau (CSIS Analyst)]

Well, you want to be careful about anyone outside of that dynamic, especially 6,000 miles away, talking with great clarity. But it is clear that we have, especially in the wake of the funeral of the previous supreme Leader, a space where individuals in this political world are each trying to outdo each other for a tough position on the United States and the region. Now, that is likely going to remain constant for some time and, but again, in the long term, in the medium term, rather, Iran has got to decide do they want the United States to continue to move attacks north, to cut down maybe some of the bridges, to restrict the flow of trade into country which touches their inflation, unemployment. It is a conversation that its leaders are going to have to have to undertake. I think in the short term, the dynamic is going to be for Iran to continue its pressure against the west and its neighbors.

[Jonathan Ferro]

Norm, how much can President Trump escalate without Congress signing, signing off on some sort of resolution of war?

[Norman Rouleau (CSIS Analyst)]

I think the administration would feel that it has considerable flexibility with the personnel that are in the region. As long as the United States is not engaged in a long term boots on the ground endeavor. The personnel that we have in the region are sufficient to conduct clearing operations. That would take some time. But this is not a boots on the ground forever war such as Iraq or Afghanistan.

[Jonathan Ferro]

Well, but that's sort of issue and the tension here. How much are boots on the ground required to really escalate to the degree that really cripples the current Iranian regime as, as AMH was talking about earlier?

[Norman Rouleau (CSIS Analyst)]

Well, the comments that were made earlier are appropriate. I would say that this is no longer the 1980s. We have drones. The Navy has demonstrated some, some unique and special drone capacity involving sea, sea drones. We don't need to have personnel on the ground as long as we have a capability to speak, strip the Iranians of their offensive punch. Now we do have personnel out there that are capable of raiding operations. And that's different from occupation. And even when you think occupation, it's a very long coast. So you know, Putting personnel on 100 miles of coast is not going to be reasonable. So you want to really have your personnel go where the where the where the offensive punch is. And I'll close by saying we also need to keep in mind that drones and missiles can be fired from a long way from the region, so having personnel 10 miles in or 20 miles in doesn't necessarily stop the Iranians from conducting strikes. So this is a recipe that's going to require some complex work, but our CENTCOM leadership are really quite capable and experienced in this regard.

[Bloomberg Surveillance Podcast Host]

Stay with us.

[Bloomberg Surveillance Reporter]

More Bloomberg surveillance coming up after this.

[The Hartford Representative]

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[Brian Moynihan (Bank of America CEO)]

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[Bloomberg Surveillance Reporter]

Earnings season ramping up with results from the major airlines. United boosting its full year outlook, citing strong consumer demand even in the face of higher fuel prices, the United Airlines CEO Scott Kirby saying, quote, united is built to thrive in every environment. Our brand loyal customers value their travel on United, whether they're in Polaris or an economy. United Airlines CEO Scott Kirby joins the program for more. Scott, welcome to the program. So it's good to see you. Before we get into the results, I just want to take a step back because if we were back in the middle of March and I was sitting here and you were telling me what you were about to do, I'd be like, Scott Kirby's gone nuts because energy prices have gone sky high. People are going to stop flying. They just won't pay up. Scott, can you take us behind the scenes how you and the company navigated that energy shock over the past few months?

[Scott Kirby (United Airlines CEO)]

You know, thanks for having me this morning. And it really, it is pretty remarkable. You look kind of at the full year at what happened. Fuel prices are up $6 billion compared to what we thought at the start of the year. And that compares to the best year in history where we made a little under 5 billion. And the fact that we're sitting here today raising guidance and talking about at least having a shot at growing earnings on a year over year basis is a remarkable testament to the strength of demand. And the demand and the economy are really strong, but also that United Airlines has had the right, the brand loyal United next strategy that we had is the right strategy. And the people of United are doing a better job than any airline anywhere in the world at implementing that, at taking care of customers. And we've been able to get to attract enough of those brand loyal customers to United that we've mostly been able to overcome the fuel price spikes. So I'm really proud of the team for what they've done in a tough environment to make it feel just normal if you're flying on United or if you're working at United.

[Jonathan Ferro]

Scott, I remember earlier this year we were talking about how you expected demand destruction as prices got higher. You didn't see that. Neither did other people. And you said you were surprised that you didn't see more demand destruction. Are you starting to see any signs of that or at least customer fatigue in pricing?

[Scott Kirby (United Airlines CEO)]

No, we aren't. Demand is, is incredibly strong for us. In fact, you know, our fourth quarter yields are booked 14 points higher at this point in time than they were at the same point in time for 3Q. Corporate demand so far in July is up 30%. We really haven't, I think as you sort of take a Step back from it and look at what's really happened. It's air travel share of the travel pie got really, really small coming out of COVID And even with fares where they are Today, air travel is 13. The prices are 13% lower in real terms than they were pre Covid, while hotels are up significantly, cruise lines and rental cars and everything else is up. And so I think we're just returning to a normal historic share of the travel pie for air travel. So the total cost of the trip is staying consistent with inflation, but after under indexing to airlines, it's now over indexing to airlines. And so the total cost of the trip isn't changing nearly as much as just airfares. Returning to the normal historical relationship that we've had there to the total travel pie.

[Jonathan Ferro]

Oil prices have continued to inflect upward as a result of a new resurgence in the conflict in the Middle East. And I'm just wondering, is there more room to go with respect to responding to those extra oil price costs with higher, higher fares going forward?

[Scott Kirby (United Airlines CEO)]

Well, you know, like I said, airfares are down 13% from in real terms from pre Covid. So a short answer is yes. And in fact there's been another fair increase this week. There were five or six when oil prices first spiked. And then when oil came down, you know, they sort of paused. But there was another one this week. And so demand is strong, the consumer is strong, and it really is like our overall cost base, it's not just airfares, but our cost base with airport fees and maintenance and labor, those have actually gone up even more. And so it really is just a case of recovering all the inflationary cost increases that have happened, you know, and recovering from the COVID trough in pricing.

[Jonathan Ferro]

We were joking, Scott, earlier that the airline industry also is an AI trade for a lot of different reasons, but in part because of the business travel and how much is picked up, how much. Do you see that being driven by all the capital markets activity that we keep talking about with the big banks, the idea that everyone needs to fly around, meet their clients as they prepare for these incredible fundraising exercises?

[Scott Kirby (United Airlines CEO)]

Well, I think it's probably more translated through and just what it means for the overall economy as opposed to, you know, just specific the, the trade. But the economy is strong and, and part of it is I all the build out that's happening with AI but you know, as I said, you know, 30% up in business travel so far in July, business demand is really strong. The US economy is, is really strong. And and we're a beneficiary of that.

[Jonathan Ferro]

One thing that we've seen is increasing creativity when it comes to how you approach different premium offerings. The latest being that in premium economy or economy plus the middle seat gets blocked out and there's a shared table. I mean, is there something different about the creativity being used recently? Whether it's different types of offerings, different segmentation, more specific offers to different slices of the consumer base.

[Scott Kirby (United Airlines CEO)]

We really are trying to build a great brand loyal airline nose to tail. We're focused, we're investing heavily in premium, but we're investing just as heavily in, in the economy cabinet. We recognize that today's, you know, basic economy customer is tomorrow's Polaris customer. And we're just trying to build a great airline for everyone. And you know, Starlink is an example. The relax row, which is in economy, I think one of the coolest things we've done in a long time, you know, an extra, you know, a block of middle seat in coach is just another example. And you know, United, we really are trying to just try everything that we can to make the experience better for customers and, and believing that if we do that, we will have a brand loyal customer base that does really well when times are good. But it's also worth proving how resilient we are in times where something like, you know, this oil price spike happens. I mean, the fact that we've got oil prices up $6 billion year over year and we have a legitimate shot at growing earnings on a year over year basis is just a remarkable testament to what it means to invest for the customer and get customers to want to fly us to decommoditize this industry and really proud of United team for what they've done to execute on that strategy.

[Military/Defense Analyst]

Scott, more people in New York might be more willing to fly you when you get back to jfk. Is that still in the works for next year?

[Scott Kirby (United Airlines CEO)]

That is. We're very excited about it. Look forward to getting back to jfk. Looking forward to. Once we're back to jfk, will be the only airline with Starlink on the airplanes. For those of you that care about high true high speed WI fi, we'll be the only ones in those markets looking forward to it.

[Bloomberg Surveillance Reporter]

I love the idea to relax row. When I was a teenager, young, in my twenties, flying when I saw an empty row of three seats and the plane taking off, I'd never been more excited. And as soon as you got up, up to about 35,000ft, I was on it, trying to lie down and move the armrest to make this work. Scott, have you had that idea for a long time?

[Scott Kirby (United Airlines CEO)]

I want to do it. In fairness, Air New Zealand is one that came up with it and I've wanted to do it ever since they did it and now we are. I'm excited about by the way, I spent a number of trips when I was young and non revving doing the same thing. When we get to be our age it's a lot harder to do that on those three seats and so the relax row is going to be a lot better. And for plus you hang out with your kids and it's a of all the stuff we've done, I personally think it is one of the coolest things we've done. It's going to be great for kids and families.

[Bloomberg Surveillance Podcast Host]

Stay with us.

[Bloomberg Surveillance Reporter]

More Bloomberg surveillance coming up after this.

[The Hartford Representative]

Support for the show comes from public.com if you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, Putting on a hedge on Public you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English like if the Vix hits 25, buy a put option on the S&P 500 or if my cash balance goes above $20,000, move the excess into my direct index. You approve the workflow and your agent handles the risk, monitoring the market, watching for your conditions and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com market and fund your account in five minutes or less. That's public.com market paid for by Public

[Brian Moynihan (Bank of America CEO)]

Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors, LLC. SEC registered advisor complete disclosures [e-mail] disclosures Amazon Pharmacy presents Painful Thoughts of course I see my co worker in line at the pharmacy. Can you tell I'm picking up prescription hemorrhoid cream? I'm probably standing weird. Why is he smiling? He knows he's gonna call me Hemorrhoid Lloyd tomorrow. I know it. I gotta quit my job. Next time avoid awkward conversations and get fast free delivery with Amazon Pharmacy Health care just got less painful. He's dribbling the ball with everything on the line. He's driving down the pitch. He's facing price hikes and cuts past him. Carrier contracts tries to block him.

[Bloomberg Surveillance Podcast Host]

Oh, he leaves him in the dust.

[Brian Moynihan (Bank of America CEO)]

He's at the edge of the box. He cuts past the nonstop group chat, trash talk he clears on goal.

[Scott Kirby (United Airlines CEO)]

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[Bloomberg Surveillance Reporter]

Bank of America the stock sitting at record highs after delivering blockbuster results. Equity trading revenue rising 70% in the second quarter. Fixed income trading climbing nearly 9. Making a record first half of the year for the sales and trading division. The bank of America CEO Brian Moynihan saying against the healthy economic backdrop, resilient consumers and businesses are turning to bank of America to spend, borrow and invest. Brian, I'm pleased to say joins us now for more. Frank, good morning.

[Brian Moynihan (Bank of America CEO)]

It's great to be here.

[Bloomberg Surveillance Reporter]

It's good to see you, sir. What a fantastic start to this year. Now, forgive me, with journalists, we've got to ask can this really continue at this rate?

[Brian Moynihan (Bank of America CEO)]

You just saw, you just saw two statistics that I watch carefully which is what the activity the consumer is and then ultimately what the unemployment new claims are. That's people argue it's leading or trailing, but it's actually indicator of the health of the employment market and a 4.2% unemployment rate with new claims at 1.8 on long term claims and 208,000. You know, everybody looks at it says well that's in line with 19. Remember that the workforce has actually grown a lot since 19 terms of size. And so you argue about 7160 million workers or something like that. So it's a pretty small number. It's anomaly, it's a low number and percentage wise it's a low number. And that's good news because that means the consumer spend and what we see in our data is a consumer spending. The consumer spend in America that means economy is okay. And that probably means the rest of the markets in the construction product and the final demand is there.

[Bloomberg Surveillance Reporter]

The weather for the banking industry has been shining brightly. The sun is out, the backdrop's great. The environment has been good. I want to draw a distinction between the environment and execution because fees were up everywhere. What are you proud of after that quarter on execution where you can in

[Brian Moynihan (Bank of America CEO)]

market share, Every single business grew the revenue grew operating leverage, which is critical because that means your revenue is growing faster expenses and increase the returns. Every single business grew the customer bases and all those things. So what you're seeing us is the power that the engine of bank of America is across all the businesses. So our consumer business made 3 billion after tax this quarter. Plus you know, that's as, that's half as much as Wells Fargo made. And you know, it's a big number. That's one of our four businesses that we disclose in the, in the smallest of which made a billion and a half this quarter. So these are big businesses are scaled. They're accumulating new clients, accumulating new activity. The markets business had a great quarter and investment banking had a great year over year comparison. But at 2.1 billion for the quarter that we were 2 billion last quarter 2.1 it looks like a huge increase because last year, second quarter we all thought the world was coming in. And with Liberation Day this year it's different. But what's really important is the pipeline they have is strong, the deal in discussion are strong. And you're still seeing deals announced every day across all the spectrums. M and A strategy, financing, all of which is important.

[Bloomberg Surveillance Reporter]

Just elaborate on that a little bit more. How strong is this pipeline? Because things just look phenomenal. We've had a record IPO Alphabet came out with a monster equity capital raise. We saw SK Hynix more recently do something similar. We're going to see more of that in the year ahead.

[Brian Moynihan (Bank of America CEO)]

Yeah, I think so. If you look at we and all our peers are deploying more balance sheets. Our balance sheet to the markets business went up $100 billion for the quarter. What they thought they were going to be at, just to give you a sense. And so we have that capital base and that capability just to meet the moment. But if you look at investment banking, the deal when you talk to CEOs, because if you think about last year's time and the amount of things they had to think about, we've added one with the wars. But at that time it was taxes weren't set yet. The immigration policy was. People were trying to figure it out. Trade and tariff policy and then deregulation. You come to the fall, they felt that that was sort of working its way through whether the tax and the tariff policy kind of looked at and said it's sort of 10 to 15% of countries willing to do business with United States and 50 if they're not. I can figure that out. Let me go figure out how to run my business. That got with the court decision. All the work that's gone around in circles a little bit. So we added some uncertainty. But on top of that, what you added is a year's worth of growth and a year's worth of belief that this year is going to grow 2% plus next year is going to grow 2% plus. That's creating people's. Convincing people that despite higher energy prices, despite inflation, despite the Fed having to keep rates higher, despite all that, the economy is growing through it. That's the interesting part. And I think CEOs last year got clarity on taxes, got clarity on deregulation, got clarity on immigration, and now are thinking hard about, wait, I can do things, I can see a little more distance the future. Does that mean there's a parade of possibilities that change that that's out there every day.

[Jonathan Ferro]

Let's talk about the parade of possibilities. Sorry, I'm a journalist so I have to. There's this question about how market dependent some of this capital markets activity will be for the rest of this year. The idea that a lot of people are borrowing money they don't even need right now because the market is so wide open to them. What are the potential thresholds, whether it's in rates or whether it's a sell off in equities that could potentially stymie some of the pipeline.

[Brian Moynihan (Bank of America CEO)]

So if we were here a year ago, you'd say nobody's ever going to get a mortgage at six and a half percent. Just to give you a sense, we were 30% up in production mortgages this quarter. So as people get used to environments, they start to behave differently. And so the consumer borrowing is strong, but there's a lot of capacity left. But mortgage production being up 30% is kind of an interesting statistic in a world where if you said rates were going to be as high to be doing mortgage volume. If you go to the commercial side, which is where you were talking about, you know, we're seeing good loan growth, high single digits year over year in our core middle market small business area. We're the largest small business lender, United States. That's good news because that means. Back to John's question, that's a little bit that if I'm not going to borrow, if I don't need the money, I'm not going to borrow if I don't need to do something. Despite what people talk about, you're not going to issue debt and increasing interest cost and have just sit there because the arbitrage. If you don't issue below Treasuries, which these guys, no borrower does, you're going to pay 3 or 400 basis points to let money sit there. It's just not going to work. So people are borrowing because they see opportunity. What's equipment buying, whether it's hiring, whether it's building a plant, whether it's inventory buildup. And so they're going to be more worried about can they get the margin on that. That's the question of inflation coming through the system. Later on they're going to be more worried about will the final demands that that's watching the consumer behavior. If they're in consumer side driven or if they're in supply chains, is the demand going to stay there? So I think it's the markets will stay there if the companies see opportunities, whether small, medium or large size. And they'll stay there as long as they have something to do with the money. Nobody borrows money just to have it sit around.

[Jonathan Ferro]

Despite what people think about SK Hynix and what just happened. I mean just, you know, one could

[Brian Moynihan (Bank of America CEO)]

say you've got to have a view or they're going to do something with or else they just aid in the profit margin. So whatever they're going to do with it, they're thinking about something.

[Jonathan Ferro]

One thing that you noted, the mortgages is something that Tommy show mentioned earlier and he was saying that you've seen a lot of the traditional financial institutions gain market share back from alternative asset managers and that's one of the reasons why the regulatory pullback has been so beneficial. Is that in your experience as well?

[Brian Moynihan (Bank of America CEO)]

Well, I think also, you know, the investor money going into the private capital funds and stuff has been slowed and there's been withdrawals and people getting out and that then slows down the activity. But I think also the questions are raised around how much leverage is is too much. And I think if you looked at the average leverage of the different deals, it was different inside the banking system and out. So I think we've seen a little bit of pullback pushback to the system. And I think we also had to come with competitive response. So we put together pools that we could, we and our peers and two different pools where we could, when the opportunity was there, hit the bid for. The core difference is if we do a $5 billion transaction, we tend to syndicate it and get five banks in. That takes time and effort and creates a little bit of uncertainty. The other players are saying, I'll give you all 5 billion, I'll bring you the equity plus I'll bring you all debt. We build a practice where we can do more of that. For a good middle market company companies, it still will be laid off it's just when you lay it off up front or behind. And so we put a couple of things I think between that and the efforts the industry and the efforts our company, you're seeing some of the market share come back in. So it's a lot of factors. But we grew a commercial loans at 8%. That's a pretty good growth rate.

[Military/Defense Analyst]

Brian, you continuously measure mention if we were this time last year Liberation Day, unsure about tax policy, where the deregulation was going, where immigration policy was going. Are you more focused on Washington now than you have been in the past because of how pronounced this administration has been on policy?

[Brian Moynihan (Bank of America CEO)]

Well, I think we're the company's been around for 242 years. So we've been around through every, every administration that you can name pretty much. So it, so it affects the economy when it affects the economy, affects CEO views of what they want to do, all that that affects us. But I think you know, so now interesting question is right now is that you know, if you there's a say do paradox is as high as it's ever been. If you read the consumer surveys, it says I'm worried about and listed out look what you just saw in retail sales in the in the month of June, the money moving out of the bank of America customer accounts was 7% high sixes and in July it was the same strength that is stronger than was in May and April and March. That is counterintuitive to what the people are. So people are upset about high gas prices, are upset about affordability. That's a fact. That's a fact that may change their behavior. Right now the behavior hasn't changed. And I think that's sort of a parallel to all the things about policy. People talk about it and think about it, but if the underlying business conditions are fine, they just go to work and get through it. And so the question is when does it affect their things? When supply chains become uncertain because for pricing, because of tariffs, they had to slow down and wait it out. Now they've got it kind of figured out and they can pass it through. When the immigration policy meant they might not get workers, they had to think that through. They're used to that now. And a lot less immigration. They've rearranged their work supply. You still hear that from our small businesses that workforce availability is a big issue for them, especially in construction, things like that. And so I think we got to get that rational at some point. But, but right now there's enough momentum behind it that we're Going through it.

[Bloomberg Surveillance Reporter]

I've always given you credit to really understand where your research team is at with regards to their outlook to know what they're thinking about with regards to rates. Other banks don't really do that. You do their view on interest rates right now just share that with us. And if you can build on that what does it mean for the business if they're right that trajectory for interest rates turns out to be right later this year.

[Brian Moynihan (Bank of America CEO)]

Well number one they're a great team and that that's why I listen to because they know a hell lot more about this than I do. Number two is it's a big investment so I better get you better take advantage of that investment on an annual basis. They, they I have to say I have this Friday they re upped their things. They had three rate rises this year and I think that's that was an outlier and with some of these numbers they may change that. But the principle they're saying is inflation will be here longer. It'll take us into 28 to squeeze it out. That's probably a year later than they thought six months a year ago. But they've raised their you know if you think about the travel over the last 12 months 2 1/2 2% GDP growth of 26 down to 1 1/2 back up to 2, 2, 2, 3. That's showing that they're believing that the AI build out the consumer spending consistency, the employment consistency overweights this and that's why rates will stay higher because the economy is strong enough in the inflation and then they've got to wait through the second wave of inflation for gas prices. First it comes to the, the fast turn stuff and it comes to slow turn stuff. And what I mean by that is this, this keyboard is produced with petroleum related products to produce the plastic. It just takes time to get through the supply chain. So we'll see that their views three rate rises this year. I can't speak for them but I think the new numbers may change that a little bit. But we'll see that they're out there in dependent they make their decisions. But the principle was inflation is going to be sticky and we think it's a year sticker was a few months

[Bloomberg Surveillance Reporter]

ago is a piece of that. And maybe you can speak to what's happening internally at the bank right now. We've seen plenty of examples of certain companies, certain firms maybe backing away on spend telling the staff internally not to do this, maybe to focus on that instead. How have you approached this moment just On a cost basis.

[Brian Moynihan (Bank of America CEO)]

We realized that was a risk from the start. So we built, we built optimization models on top of the models for lack of better terms.

[IBM Representative]

So.

[Brian Moynihan (Bank of America CEO)]

And then we also negotiated for lack of better terms for the fixed base pricing, so subscription model pricing. So, you know, like with your firm, we pay a subscription and inside you have the Bloomberg as Bloomberg or whatever, the capability. With other firms, we did the same thing. And so will that hold forever? I don't know. But right now we're not seeing a big cost increase, and so we expect to spend more on it, but it's more about implementation. And then if we look across, I think, the two big differences in the accelerator, we've had Erica, for almost a decade now, and we could talk about that and what we've learned from that. But if you think about the implementation since the ChatGPT moment type of thing, you've had one implementation where we're just spending money to get people really used to this, and that was to roll out across 200,000 people the ability to have AI and use it and do things with it. Everything else we have had, and that's very much its cost, when you think about a $72 billion expense base, frankly. And with Microsoft and Copilot and all that stuff, we already had a big license fee increased to some, but that we said it would be hard to measure the incremental return. Everything else. 110 business cases, the 37 that are implemented, all have a business case that says, here's the cost, here's the benefits, revenue, expense, whatever it is, it makes sense. Let's make the investment. 37 are implemented, we implement about one a week, 110 are approved. It's just a matter of getting the work done. And they've had a profound impact on the company. Now the reality is it's slower than people might think and has to be done much more carefully because the $3 billion we spent on data over the last decade allows us to have these models operate in our company. Otherwise it'd be a problem because they'd be picking up wrong stuff and it'd be problems. So you had to, you had to have your data right? You had to have your structure right. You had to have your security right. Yeah, Isolate your data so it isn't taken into the world, so to speak. And so there's a lot of pre work that the team got right now that allows us to go faster once a product, once an idea comes up.

[Jonathan Ferro]

About a year ago, maybe a little bit more. You said that you Thought that the effect on the overall employment picture for bank of America was that you'd be able to do more with the same volume of staff. Is your view the same today?

[Brian Moynihan (Bank of America CEO)]

We effectively just grew the earnings 30% and we have a little less people we had last year. And so that's. But meanwhile in that is a very subtle exchange. So 18,000 programmers using technique AI coding. We didn't cut the programmers, we just are doing more coding. We're just doing more activity. Relationship managers picking up agent force and that's going to the system right now. We didn't change the number of relationship. We were adding relationship managers all time. But, but if you had 100%, the 100 in an example 100 we have today could get 10% more efficient. They can do 10% more work. It doesn't mean we're not going to go to 105 because we want to have more production capacity. So it really is a very subtle answer depending on the activity. Our job is to handle it well and redeploy people. Last year we redeployed 14,000 people. We just hired 2,000 kids that will start next week from school. We hired 2,000 summer interns. We agreed to hire 10,000 military veterans. We are hiring a lot of people. We have to hire 1300 people a month to have neutral headcount.

[Jonathan Ferro]

How concerned are you and how much oxygen has been sucked out of the room from Methos and some of the cybersecurity concerns from earlier this year. We heard some of your peers talking about that and anecdotally we hear a lot of fundamental concern about the risk to the financial system.

[Brian Moynihan (Bank of America CEO)]

I think the, you know, the, the administration looked at it quickly. Secretary, treasurer and others said ways I could end. So we all got started on this and we've all been working a long time and yet it just speeds up the pace of the work you have to do to patch the systems and do the things. It's a serious concern. I think the so called AI industry and industry writ large have worked together. But you can't think that we're ever going to be able to control this because there's foreign models that people use. Not everybody's going to have the same thought process that our country has. But our country's tried to handle it and tried to be fairly systematic about it. But it's a big change in the amount of work that will have to go on and the pace at which these tools will affect your vulnerabilities in your system and how fast you have to take care of that. That's the core work that's going on. And then you've got proprietary software, open source software, open source supported software, third party software. And it's. We're making sure the third party are doing the work and, and working cooperatively with the team. We have a great team there. We have 3,000 plus people that work in that area. A billion dollars plus a year in spending. And they do a tremendous job under a fellow named Chris Feder, under Hari's leadership. And they do a tremendous job for us. But. And they work very cooperative with their peers. And so you should rest assured, we're all working hard on it. You should rest assured. It's a serious issue.

[Bloomberg Surveillance Reporter]

I've been saving the most important question.

[Brian Moynihan (Bank of America CEO)]

Do you recommend.

[Boost Mobile Advertiser]

Ready?

[IBM Representative]

Yeah.

[Bloomberg Surveillance Reporter]

How many World cup games have you been to?

[Brian Moynihan (Bank of America CEO)]

I've only gone to one, but I'm going to some this weekend.

[Jonathan Ferro]

I knew it.

[Brian Moynihan (Bank of America CEO)]

Too easy.

[Bloomberg Surveillance Reporter]

One game.

[Brian Moynihan (Bank of America CEO)]

There's 102 of them.

[Bloomberg Surveillance Reporter]

You sponsored the World Cup? One game.

[Brian Moynihan (Bank of America CEO)]

We share the fun. So we have teammates. It's been an unbelievable experience. And so we got my fan band on and we've given out about a million or three of these so far this year. We've had 102. 102 games. Yeah. 102 games left to left.

[Bloomberg Surveillance Reporter]

Which game did you watch?

[Brian Moynihan (Bank of America CEO)]

I was in the quarterfinal. Boston.

[Bloomberg Surveillance Reporter]

Okay.

[IBM Representative]

Yeah.

[Brian Moynihan (Bank of America CEO)]

And, and look, you know, it has been something that has been very interesting for our company, but the way we, the way the team went after it, you know, with the military tickets or the soccer fields, we. This is part of our Sports with Us complex, which the Golf with us is the Masters in the Golf with Us program. Kids getting on munis for five bucks. The running.

[Bloomberg Surveillance Reporter]

I saw the Masters ad campaign. It was fantastic, by the way.

[Brian Moynihan (Bank of America CEO)]

The running campaign. Lots of people see what they did.

[Bloomberg Surveillance Reporter]

Yeah, they went back to like legendary golf shots and the kids replicated them. It was very cool.

[Brian Moynihan (Bank of America CEO)]

And so now the campaign you're starting to see now is around the World cup is sort of the, the, you can do it, you know, with David talking to the young lady named Callie who's working with Street Kids United, which is a UK based charity which runs a Street Kids World cup that the commercials filmed at with David and Bono and U2 in the new song. So it was kind of fun. But the idea is what we're trying to do is say fields and places. We're trying to soccer in schools. We're trying to help increase the availability of a game that is massively played in the United states, but just the availability on an access basis without having to, you know, spend for travel teams and stuff like that.

[Bloomberg Surveillance Reporter]

You've got to pick a team, you know, Spain, Argentina.

[Brian Moynihan (Bank of America CEO)]

I don't pick teams. David's a good. David's a good friend and unfortunately, that

[Bloomberg Surveillance Reporter]

was a tough result.

[Brian Moynihan (Bank of America CEO)]

Yes.

[Bloomberg Surveillance Reporter]

Basically crying last night.

[Brian Moynihan (Bank of America CEO)]

That was a tough result. So. And I. Look, I never played the game. I have no merit to talk about the quality of any decision or anything that went on, the refereeing or anything. I played football and rugby and I have no idea how soccer is played.

[Bloomberg Surveillance Reporter]

But you could call back now and get his opinion.

[Brian Moynihan (Bank of America CEO)]

He might have an opinion. I'll ask him.

[Bloomberg Surveillance Podcast Host]

This is the Bloomberg Surveillance Podcast bringing you the best in markets, economics and geopolitics. You can watch the show live on Bloomberg TV weekday mornings from 6am to 9am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen. And as always, on the Bloomberg terminal and the Bloomberg business, apparently

[Boost Mobile Advertiser]

it's called soccer. It's called football. Soccer.

[Donald Trump]

Football.

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[Brian Moynihan (Bank of America CEO)]

Yeah, fully.

[Boost Mobile Advertiser]

So pineapple.

[Brian Moynihan (Bank of America CEO)]

Don't ruin it.

[Boost Mobile Advertiser]

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[Bank of America Announcer]

Dom.

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[Brian Moynihan (Bank of America CEO)]

M&M's popped caramel do sound different. Oh no. People are going to be obsessed.

[IBM Representative]

What do you mean?

[Brian Moynihan (Bank of America CEO)]

People hate the sound of chewing.

[Boost Mobile Advertiser]

Maybe they won't like the crunch.

[Brian Moynihan (Bank of America CEO)]

Maybe we're saved. Wait a minute. Yellow. Have you been eating them this whole time? Mmm. So tasty. Hands off us. M&M's popped caramel. It's more fun together.

[Jonathan Ferro]

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