Bank of America CEO does not foresee deep recession

For the fourth consecutive time, the Federal Reserve on Wednesday raised interest rates an additional 0.75% in an attempt to bring inflation down to 2% over time. Although some economists have predicts a deep recession will take place, Bank of America CEO Brian Moynihan has a different opinion.

A recession next year “nearly has to happen because rates will slow housing, cars down,” Moynihan said at the Fortunes annual CEO Initiative Event Wednesday in Palm Beach. “But if you look at the same economists, they’re predicting that unemployment won’t be well above five [percent],” he said. “So it’s hard to believe that you can have a deep recession while people are working,” he added. “That’s the debate.” And Moynihan pointed out that consumers “If you look at customer data through October 24, customers spent 8.5% more than last year in those three weeks,” he said.

In a discussion with Fortune CEO Alan Murray on a more human-centric approach to capitalism that considers the needs of all stakeholders, Moynihan, who is also chairman of the World Economic Forum’s International Business Council, highlighted the Bank of America’s commitment to sustainability. He has worked with the World Economic Forum and the Sustainable Markets Initiative to create a standardized set of stakeholder metrics. And Moynihan has made it his mission to persuade businesses to adopt them. He believes profit and purpose are not mutually exclusive.

“The world has told us what it expects of all of us,” he said. “It’s the [UN] Sustainable Development Goals. Today, 197 countries said it was a good development. If we don’t conduct good development with capitalism, it won’t happen. And therefore, whether or not capitalism is the right system is in question, Moynihan said. “We need to simplify what it means to be successful,” he said. “You need metrics so society can see we’re making progress.”

“Ultimately, we’re creating record earnings and record purpose in our business,” Moynihan said. He continued, “There is a business attached to this. The mark is the highest it has ever been. The company has the highest number of employees and turnover is at its lowest, he said.

Bank of America Chief Financial Officer Alastair Borthwick said during the company’s recent earnings call for the third quarter of 2022 that employee headcount for the quarter increased by 3,500, including sales, specialists and technology professionals. “We continue to invest steadily in our human, technology, marketing and financial resources,” Borthwick said on the call.

Bank of America reported an increase in net income 8% to $24.5 billion for the quarter, exceeding estimates. Net income fell to $7.1 billion from $7.7 billion in the same period last year as profits fell in the wealth management and global banking segments. Investment banking revenue fell 46% in the quarter, but less than the 47% decline analysts had expected. Borthwick recently told Bloomberg that “at this stage” the bank does not plan to reduce the number of employees in the unit.

When it comes to ESG investing and sustainability, there have been some repression the caller “woke up capitalismand critics say CEOs of banks like Moynihan should just stick to business. “What do you say to these people? Murray asked him. “When you run a large financial institution, with a team, and you only pass on capitalism, [for someone to ask] “Are you a capitalist? What else could we be? said Moynihan. Driving stakeholder capitalism is about aligning “capitalism with what society expects of us,” he said.


Until tomorrow.

Sheryl Estrada
[email protected]

Big deal

Morgan Stanley’s E-Trade has released data from its Monthly Sector Rotation Survey. The top three sectors in September and October were consumer discretionary (non-essential goods and services, such as cars and entertainment), utilities and communication services. The results are based on the trading platform’s client notional net percentage buy/sell behavior for the stocks that make up the S&P 500 sectors. All three sectors rose between September and October, with utilities rising from 2.74% to 8.67%, according to the report.

Courtesy of Morgan Stanley E-Commerce

Go further

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Ranking

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Understood

“Even if, as some forecasters expect, US inflation peaks in the first half of 2023 and the Federal Reserve may slow or even halt the pace of rate hikes, the US dollar will still have a monetary tailwind to support it. .”

—Former Federal Reserve Chairman Alan Greenspan, now a senior economic adviser at Advisors Capital Management, written in a comment dated Wednesday, Fortune reported.

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