June 4, 2025 • 22 mins
Watch Alix and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Intelligence hosted by Paul Sweeney and Alix Steel
**Broadcasting live from BNY INSITE at National Harbor, Maryland**
Today’s Podcast Features are:
Steve Miller, Chair of the ISM Services PMI, discusses ISM Services data. Activity at US service providers unexpectedly contracted last month for the first time in nearly a year and companies throttled back hiring, indicating the grip on the economy from higher tariffs is getting tighter.
Michael McKee, Bloomberg International Economics and Policy Correspondent, discusses U.S eco data, Private-sector payrolls increased by 37,000 last month, marking the slowest pace in two years and lower than all estimates in a Bloomberg survey of economists.
Hannah Levitt, Bloomberg Senior Finance Reporter, discusses Wells Fargo CEO Charlie Scharf clearing the Federal Reserve's seven-year-old cap on assets, allowing the bank to grow and compete with larger rivals.
Craig Trudell, Bloomberg Global Autos Editor, discusses the Bloomberg Big Take story: “Fatal Tesla Crash Shows Dangers of Full Self-Driving.”
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
Eastern on Applecarplay and Android Auto with the Bloomberg Business App.
Listen on demand wherever you get your podcasts, or watch
us live on YouTube.
Speaker 2 (00:23):
We have some economic data coming out right now. I
have some services data coming out forty nine point nine.
That headline consensus on US was fifty two, so not
kind of flirting with a little bit of a contraction
there in the services part of the economy, which again
is about seventy percent of the US economy.
Speaker 3 (00:37):
Let's get right to it.
Speaker 2 (00:37):
Steve Miller, a chair of the is some services PMI
on that data. Steve, I'm looking at that headline data
forty nine point nine.
Speaker 3 (00:44):
That's below fifty. Talk to us about that.
Speaker 4 (00:47):
Good morning, Thanks for having me back. You know, zo
point one percent below the flat in services industries.
Speaker 3 (00:56):
Flat is bad.
Speaker 4 (00:57):
You know, we've seen we see long term growth when
we get to flat or just below flat, certainly negative indicators.
On the positive side, we track the numbers by industry
and how they contribute to overall GDP. What we're seeing
is a slight increase in the percent of GDP that's
representing growth, and a slight decrease in those that are
(01:19):
saying that they're in contraction territory. What we saw bringing
the number overall down was for accommodations and food services
and the real estate rental and leasing. Although both still
an expansion territory, they're not as high or as fast
level of expansion as they were last month.
Speaker 5 (01:40):
So I was confused as to how im services employment
actually ticked above that fifty level, whereas a new order
is just tanked to forty six and the overall index
is below fifty, what does that.
Speaker 4 (01:51):
Mean well on the employment side, my interpretation of those
numbers is that we're still seeing confidence that the terror
situation is going to get worked out and we're going
to be able to return to growth. But the new
orders and actually seeing backlog as well backlocker orders, we're
seeing those very low. And another data point is when
(02:15):
I look at the average of new orders and backlog,
this is the lowest that it's been since two other
points in the last twenty years. One was the beginning
of the pandemic in March and April, and the other
was in the two thousand and eight two thousand and
nine time frame in the Great Recession. So for me,
that's the biggest red flag is the drop in new
(02:37):
orders as well as both the average level between the
new orders and the backlog of orders.
Speaker 2 (02:46):
So we've got new orders lower that's concerned about just
the economy slowing down, and we've got services prices paid
coming in much higher than expected.
Speaker 3 (02:55):
Is that inflation?
Speaker 4 (02:58):
So I can't say yet whether it's inflationary, but I
would tell you that the two month growth rate is
what we saw just at the start of the acceleration
and inflation back during the pandemic.
Speaker 3 (03:14):
So definitely that's right.
Speaker 2 (03:15):
See, we appreciate it.
Speaker 6 (03:16):
Thank you.
Speaker 5 (03:18):
Yeah, we know you've got to run, so we'll let
you go. Steve Miller, Chair of the Ism Services, joining us.
They're really rough new order, so we will keep track
of all of that as it goes.
Speaker 1 (03:29):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am Eastern on Apple, Cocklay and Android
Auto with the Bloomberg Business App. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 5 (03:43):
So the economic data we keep hearing is going to
be a few months off till we see any negativity
hit the hard data. But let's just go over some
of the data we got today. We got the ADP
employment number, disappointing, coming in at just thirty seven thousand jobs.
Then you had the ISM services number and it was
pretty rough. You had the overall index below fifty. That's
contraction territory. But the big thing was new orders coming
(04:04):
in at the lowest level. Like we saw bask in
April twenty twenty. No one likes April of twenty twenty.
Also back in two thousand and eight, two thousand and nine,
no one liked two thousand and eight and two thousand
and nine joining us now for more. Michael mckeib when
we're going to National Economics and Policy correspondent, I'm like,
is this the stagflation kind of thing?
Speaker 7 (04:22):
Well, if you took it at face value, it is
in the sense that we're looking at prices going up
and activity going down.
Speaker 3 (04:30):
What we haven't seen.
Speaker 7 (04:32):
Is, as you note, the hard data completely reflecting this,
we're starting to get numbers that do. Remember we saw
a big drop in imports during the last month, and
that was largely because so much was pulled forward because
of the impending tariffs, and so that will have an
impact on second quarter growth, but we're not at this
(04:55):
point able to say exactly where we go from there.
It looks like service are bad, and I know you
had the director of the Ism services on earlier and
he said that the new orders really are looking bad
right now. And that's just kind of a scary thought.
Speaker 2 (05:17):
Hey, Mike in our group chat here, I dropped in
a note earlier that I said, you know, maybe a
few months time, we're going to look back on today
as the beginning of something, you know, whether it's tagflation,
whether it's recession, whether it's inflation really warring its head.
Speaker 3 (05:32):
Am I being over dramatic there?
Speaker 7 (05:35):
I don't know if I would say today, but it
could be this week in let's see what happens on
Friday with the jobs report.
Speaker 3 (05:42):
This may be sort of the last.
Speaker 7 (05:44):
Hurrah week where we see numbers that are okay in
terms of those things. The big question is going to
be whether ADP reflects reality or not, because any number
like that for Friday's payrolls figures would really scare the
pants off Wall Street and get everybody excited about FED
rate cuts, even if they're not going to happen right away,
(06:06):
So yes, this could be not mincing those time to remember,
Oh nice new us.
Speaker 5 (06:14):
Then how do you square how do we think about
ADP versus the jolts that we got yesterday. I was thinking, like,
is it the companies just aren't hiring, but they're not
necessarily laying off either, Like how do we square those
two together in the broader economic jobs picture.
Speaker 7 (06:28):
Well, it's not easy to square the two, except that
you note that ADP that the jolts rather is two
months old, so it is past data and things could
certainly have changed, which ADP suggests might be the case.
Now with ADP, what we're not seeing is whether companies
were letting anybody go and whether they have openings that
(06:49):
they want to fill. It just tells you they didn't
hire very many people or add to payrolls. Now, it
has historically been that ADP is usually way off from
the private sector hiring is in the non farm payrolls figure,
so we'll have to see how that proves out. On
Friday last month, ADP said there were only sixty thousand
(07:10):
private sector jobs created and the government found one hundred
and sixty seven thousand, So I don't know whether ADP
or Jolts gives us a better idea of what's going on,
But I don't think people are going to pay a
whole lot of attention to either one once we get
the Friday figures.
Speaker 2 (07:28):
Tariffs, Mike, we have so many tariffs are very hard
to kind of keep them, keep them in focus here.
Speaker 3 (07:35):
There's so many out there.
Speaker 2 (07:36):
Do we have any idea kind of what percentage of
the tariffs have found their way into the economy at
this stage or is it just too early to tell here?
Speaker 7 (07:44):
Well, there have been some rough back of the envelope
calculations that about what Bloomberg Economics has done one about
six percent of US imports have been affected by tariffs,
because we're looking at autos and we're looking at steel
and aluminum. Basically, tariff's likely coming. The Congressional Budget Office
just a short time ago put out a couple of
(08:06):
new reports, one suggesting that the Big Beautiful Bill is
going to add something like ten trillion dollars on to
the overall deficits over a period of years, and then
that the tariffs would reduce that by about three trillion.
So if all the tariffs were carried through and that's
(08:29):
the caveat that the CBO puts on their numbers today
that they don't know what tariffs are actually going to
be imposed. So that's the hard part for everybody at
the moment is how much are we going to tariff people?
And who are we going to tariff?
Speaker 5 (08:44):
Mike, what's what's that nerdy chart that you have on
your desktop right now?
Speaker 3 (08:49):
Actually?
Speaker 7 (08:49):
I was looking at steel today and because of you,
of course, Alex Steele, the fact that when Trump put
on tariffs in twenty seventeen, we saw a short term
rise in employment at steel mills, but then that rolled
over and the number of jobs in the downstream people
(09:13):
who use steel in their industries fabricated medical metal producers
really fell significantly, lost about seventy five thousand jobs there.
So it'll be something we're gonna have to watch those
two numbers in Friday and the following month's reports on
(09:35):
how the steel tariffs are affecting the economy.
Speaker 3 (09:40):
Yeah. I love that. I think I better come in
on Friday, Big Day. Are you going to be off Friday? No,
I think I'll be d I mean the thing is
from what we've been.
Speaker 5 (09:48):
Learning, like maybe we'll get little cracks, but it's stillly
going to be in the next two months, maybe that
we'll get hard data. So I feel like you can
still get that on the Jersey Shore, but it's gonna
be rainy tvd oh well, then definitely come in from that.
All right, thanks, Mike, really appreciate it. Michael mckei, Bloomberger
National Economics and Policy Correspondent.
Speaker 1 (10:04):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am Eastern on Apple, Cocklay and Android
Auto with the Bloomberg Business App. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 5 (10:18):
All right, let's pick up with one of the stocks
that Norm was just talking about, and that is Wells
Fargo taking a look at that asset cat finally being
removed and what does it then mean after the seven
year old cap is removed for CEO Charlie Sharp, joining
us now is Hannah Levett, senior finance reporter from Bloomberg News. Now, Hannah,
Wells Fargo's been working at this for a very very
long time. How are they then positioned for this next
(10:39):
stage of growth?
Speaker 8 (10:41):
Yeah, so this has truly been such a long saga
for them. Like I started covering Wells Fargo more than
seven years ago, they had just gotten put under this cap.
At the time, I was still enjoying my mid twenties,
and you know, now we are no longer there. For
Charlie Sharp, this means that he can finally play offense.
(11:02):
He can you know, they're not capped in size to
their level at the end of twenty seventeen anymore. And
remember that's been a huge deal for them along the way.
I mean some of the businesses that he's marked for growth,
like the trading business most notably, that's been constrained because
it's more balance sheet heavy and they haven't been able
to allocate that balance sheet because they're restricted. And like
(11:23):
just for context, JP Morgan, the biggest US bank, has
grown almost an entire Wells Fargo in terms of assets
in the time that Wells has been capped.
Speaker 2 (11:32):
Wow, all right, hann I you know full discorder. I
have my checking account with Wells Fargo, but I'm guessing
the CEO and the management team there they want to
do something more than that. They think they can do
a little bit bigger and better than Paul's. And he's
checking account. So what are some of the businesses you
mentioned trading? Are there other eritors where they think they
can really grow by allocating more capital there?
Speaker 8 (11:54):
Yeah, absolutely, so the businesses that Charlie Sharff marked for growth,
you know in time while he was running the firm,
but it was still under the cap where investment, banking
and trading and wealth management and credit card. But he
was saying on CNBC today that virtually every business aside
from mortgage, which they've said they're shrinking, and remember wells
(12:15):
Farga used to be huge, and mortgage at one point
they were churning out one in every three home loans
in the country. Every business other than that should grow
now and they have room to do that. But I
think those businesses where they've already said that they're targeting growth,
that may be where the earliest moves are. You know,
we've reported that they're working on a high end credit card,
(12:37):
so that could be something that people see. But yeah,
so it really just it goes across all of those
and beyond now because they don't have this constraint anymore, so.
Speaker 5 (12:49):
How quickly can they scale in the other parts of
their business.
Speaker 8 (12:52):
Yeah, Well, it's an interesting question, right because we've seen,
you know, the tales of banks trying to grow too
fast and then having you know, a calamitous blow up,
and so that's something that they definitely want to avoid.
And Charlie Sharff has talked about that that it's not
like an on switch day one, but it does give
them more flexibility so they can you know, the most
(13:15):
immediate thing is the trading business, where they just have
capacity today that they didn't have yesterday. But besides that,
it's more being able to lean into more enthusiastically those
growth initiatives that they've already kind of outlined.
Speaker 2 (13:33):
Right, So, Hannah, they now have the regulatory capability to
maybe do more, to maybe grow a little bit more quickly.
Speaker 3 (13:41):
Did they have the balance sheet to do that? Did
they have the capital to do that?
Speaker 8 (13:44):
Yeah, they have a ton of excess capital. And that's
been a theme throughout. I mean even in the earliest
days of the asset cap like they couldn't deploy that capital,
so they gave investors a bigger dividend and more buybacks
than they were expecting. It was sort of like a
you wouldn't think that would be the outcome, but it
was at the time so they've had excess capital, and
(14:07):
also because the banks in general were preparing for the
possibility of tougher capital rules that have not panned out,
so they were a lot of them have been hoarding
capital anyway, sitting on a bunch of extra.
Speaker 5 (14:20):
Well, we're seeing in Wall Street it's definitely a competition
for talent, particularly if you wrap in hedge funds as
well as huge ass at managers.
Speaker 3 (14:26):
Are private equity.
Speaker 5 (14:27):
Can weils Haargo play in that game?
Speaker 8 (14:30):
Yeah, they already have been. I mean they hired Fernando
Rivas who is the head of the corporate investment bank there.
He was a major hire from JP Morgan, so that
that was huge for them. And you know they've made
other hires over the years. Doug Bronstein is there, another
former JPM executive and he's vice chair. They have Vary
(14:54):
Summers running wealth, so they have you know, they've been
able to get talent at the highest level and then
you know even further down as well.
Speaker 2 (15:02):
All Right, I think the street kind of like this.
Stocks up about seven tens to one percent today, It's
up eight and a half percent year to date, up
thirty percent over the trailing twelve months, so it looks
like this street is kind of warming up to a
story which has been going to middle of the road.
Given some of the regulatory constraints, will stay on top
of that.
Speaker 3 (15:16):
He a lovit.
Speaker 2 (15:16):
Thanks so much for joining us at Bloomberg Senior financi
reporter on Wells Fargo.
Speaker 1 (15:22):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am Eastern on Apple Cocklay and Android
Auto with the Bloomberg Business App. Listen on demand wherever
you get your podcasts, or watch us live on YouTube during.
Speaker 5 (15:35):
Alex Seal alongside Paul Sweeney. This is Bloomberg Intelligence Radio.
We are broadcasting to live from the Galor National Convention
Center right here in Maryland. We're overlooking the Potomac. We
are at BNY Insight twenty twenty five as we talk
about wealth management and all the tools and tricks that
can be used to help navigate these markets. We're also
continuing to take a check in here on what's happening
(15:58):
in the overall market. We turned out to today's a
Big Take story. It talks about Tesla and what autonomous
driving and robotaxis say in Austin as Elon Musks keeps
talking about them, are talking about investigating whether the system
is actually too dangerous even if you have a human
behind the wheel. Joining us now is Global Autos editor
(16:20):
Craig Trudell. Craig, So, here's the title of the big take,
A fatal Tesla crash shows the limits of full self
driving walk us through the details of what the issues
are surrounding completely autonomous vehicles.
Speaker 6 (16:34):
Yeah, so, I guess maybe the thing to start with
is the Teslas that you can buy today that are
on the road now are not that right, They are
not autonomous. You can pay extra for a system called
full self driving, and yet it's a miss snowmer. It's
a system that you have to pay attention to at
all times. You know, if you get into a crash,
(16:57):
it is on you. And we've seen that, you know,
play out. When Tesla customers have you know, tried to
come after the company, the company says, look, you know,
we we warned you. We told you that you know
you're you're responsible for driving while using this system. The
company is trying to make this leap that's been trying
to make the sleep for years to eventually get to
(17:19):
a point where you do not have to to supervise
and you know, even to take it further than that,
you know, take the human out from behind the wheel altogether.
And we hear Musk, you know, talk about that quite
a bit lately because it's something that they're actually trying
to commercialize, even just in the next matter of you know,
next week or so. There's a lot of questions about
(17:42):
how exactly they intend to do that, whether they can
do it, especially after he's predicted, you know, year after
year that they're on the cusp of doing it. And
part of the reason there are doubts is is because
of the hardware. And I think that's kind of an
important aspect of today's story is is this particular crash involves,
you know, an incident where a driver was using full
(18:04):
self driving driving into the sun, and that appeared to
play a part in the crash, which resulted in a fatality,
and it led to a federal investigation that is ongoing.
Speaker 5 (18:20):
I mean, this is all very much feels as part
of the growing pains as we kind of understand this
technology and how it works itself out. So what are
the steps that Tesla's taking and that the regulators are
taking at this time?
Speaker 6 (18:34):
Yeah, so you know, we should acknowledge that this incident
happened in November twenty twenty three. You know, Tesla has
has changed. They've they've made upgrades both to hardware and software.
You know, hardware for certain customers, they should say, but
you know, in terms of their approach to the sensor
(18:55):
system for their vehicles, Elon Musk has been you know,
really sort of down a limb and having this view
that all you need is cameras and company companies that
are also in this space. I think the one people
recognize the most is Weymo, the Google company, and they
use a mix of camera, radar and wide R and
(19:17):
their sensor set is much more expensive. It's more extensive.
You know, these sensors are placed all over the vehicle.
But you know, the sort of bet here on the
part of Weimo is that is worth it. It will
mean this system is safer. What Musk has tried to
do is go with the cheaper route, go with the
you know system that he can afford to put in
(19:38):
every Tesla, and make this bet that you know, he
can develop his way to autonomy faster by sort of
leveraging the broader Tesla fleet. Even if it means putting
you know, cars on the road that you know, draw
scrutiny from federal regulators as to whether or not that
this is you know, unreasonably unsafe.
Speaker 2 (20:01):
So, Craig, I think Elon Musk is back at the company.
Speaker 3 (20:06):
What does that mean?
Speaker 2 (20:07):
I mean, are you hearing anything like, Okay, now we
can get back on track, Now we can really move forward,
maybe at you know, a higher velocity.
Speaker 3 (20:15):
What's that mean?
Speaker 6 (20:17):
Yeah, I'm you know, I think it's difficult to tell
at this point because he's kind of coming back to
business means coming back to so many businesses, right, and
so on a day to day Yeah, we're you know,
we're seeing him travel to to his various companies, you know,
devoting some time and attention to to them. But it's
(20:38):
not as though he's sort of one hundred percent, uh,
you know, focusing in on Tesla and neglecting all of
his other businesses. We see him you know, regularly engaging
with you know, users on x about you know, troubleshooting
problems that they have with that service. You know, I
would say he is you know more actively engaging there
(21:00):
on Tesla matters and definitely is trying to sort of
send this signal that you know, okay, it's it's time
to get back to business here. But whether or not
that's you know, resulting in sort of tangible changes at
the company, I think remains to be seen.
Speaker 5 (21:17):
I guess, I mean quickly twenty seconds. What's the rush
for autonomous driving?
Speaker 6 (21:24):
You know, I think forty thousand people die on US
roads every year, right, and so the rush, of course
is to bend that, you know, to change that. And
I think one of the challenges that you have if
you're a company in this space is we've now you know,
seen a lot of companies pursue this for you know,
roughly a decade that number has not budged. So you know,
(21:46):
we still have a long way to go to where
this capability is you know, making putting a dent in
those figures.
Speaker 5 (21:56):
All right, Craig, Thanks A Lott, Really appreciate credit you
Dale joining US Global Auto's editor on Tesla and autonomous driving.
Speaker 1 (22:02):
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Speaker 2 (00:23):
We have some economic data coming out right now. I
have some services data coming out forty nine point nine.
That headline consensus on US was fifty two, so not
kind of flirting with a little bit of a contraction
there in the services part of the economy, which again
is about seventy percent of the US economy.
Speaker 3 (00:37):
Let's get right to it.
Speaker 2 (00:37):
Steve Miller, a chair of the is some services PMI
on that data. Steve, I'm looking at that headline data
forty nine point nine.
Speaker 3 (00:44):
That's below fifty. Talk to us about that.
Speaker 4 (00:47):
Good morning, Thanks for having me back. You know, zo
point one percent below the flat in services industries.
Speaker 3 (00:56):
Flat is bad.
Speaker 4 (00:57):
You know, we've seen we see long term growth when
we get to flat or just below flat, certainly negative indicators.
On the positive side, we track the numbers by industry
and how they contribute to overall GDP. What we're seeing
is a slight increase in the percent of GDP that's
representing growth, and a slight decrease in those that are
(01:19):
saying that they're in contraction territory. What we saw bringing
the number overall down was for accommodations and food services
and the real estate rental and leasing. Although both still
an expansion territory, they're not as high or as fast
level of expansion as they were last month.
Speaker 5 (01:40):
So I was confused as to how im services employment
actually ticked above that fifty level, whereas a new order
is just tanked to forty six and the overall index
is below fifty, what does that.
Speaker 4 (01:51):
Mean well on the employment side, my interpretation of those
numbers is that we're still seeing confidence that the terror
situation is going to get worked out and we're going
to be able to return to growth. But the new
orders and actually seeing backlog as well backlocker orders, we're
seeing those very low. And another data point is when
(02:15):
I look at the average of new orders and backlog,
this is the lowest that it's been since two other
points in the last twenty years. One was the beginning
of the pandemic in March and April, and the other
was in the two thousand and eight two thousand and
nine time frame in the Great Recession. So for me,
that's the biggest red flag is the drop in new
(02:37):
orders as well as both the average level between the
new orders and the backlog of orders.
Speaker 2 (02:46):
So we've got new orders lower that's concerned about just
the economy slowing down, and we've got services prices paid
coming in much higher than expected.
Speaker 3 (02:55):
Is that inflation?
Speaker 4 (02:58):
So I can't say yet whether it's inflationary, but I
would tell you that the two month growth rate is
what we saw just at the start of the acceleration
and inflation back during the pandemic.
Speaker 3 (03:14):
So definitely that's right.
Speaker 2 (03:15):
See, we appreciate it.
Speaker 6 (03:16):
Thank you.
Speaker 5 (03:18):
Yeah, we know you've got to run, so we'll let
you go. Steve Miller, Chair of the Ism Services, joining us.
They're really rough new order, so we will keep track
of all of that as it goes.
Speaker 1 (03:29):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am Eastern on Apple, Cocklay and Android
Auto with the Bloomberg Business App. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 5 (03:43):
So the economic data we keep hearing is going to
be a few months off till we see any negativity
hit the hard data. But let's just go over some
of the data we got today. We got the ADP
employment number, disappointing, coming in at just thirty seven thousand jobs.
Then you had the ISM services number and it was
pretty rough. You had the overall index below fifty. That's
contraction territory. But the big thing was new orders coming
(04:04):
in at the lowest level. Like we saw bask in
April twenty twenty. No one likes April of twenty twenty.
Also back in two thousand and eight, two thousand and nine,
no one liked two thousand and eight and two thousand
and nine joining us now for more. Michael mckeib when
we're going to National Economics and Policy correspondent, I'm like,
is this the stagflation kind of thing?
Speaker 7 (04:22):
Well, if you took it at face value, it is
in the sense that we're looking at prices going up
and activity going down.
Speaker 3 (04:30):
What we haven't seen.
Speaker 7 (04:32):
Is, as you note, the hard data completely reflecting this,
we're starting to get numbers that do. Remember we saw
a big drop in imports during the last month, and
that was largely because so much was pulled forward because
of the impending tariffs, and so that will have an
impact on second quarter growth, but we're not at this
(04:55):
point able to say exactly where we go from there.
It looks like service are bad, and I know you
had the director of the Ism services on earlier and
he said that the new orders really are looking bad
right now. And that's just kind of a scary thought.
Speaker 2 (05:17):
Hey, Mike in our group chat here, I dropped in
a note earlier that I said, you know, maybe a
few months time, we're going to look back on today
as the beginning of something, you know, whether it's tagflation,
whether it's recession, whether it's inflation really warring its head.
Speaker 3 (05:32):
Am I being over dramatic there?
Speaker 7 (05:35):
I don't know if I would say today, but it
could be this week in let's see what happens on
Friday with the jobs report.
Speaker 3 (05:42):
This may be sort of the last.
Speaker 7 (05:44):
Hurrah week where we see numbers that are okay in
terms of those things. The big question is going to
be whether ADP reflects reality or not, because any number
like that for Friday's payrolls figures would really scare the
pants off Wall Street and get everybody excited about FED
rate cuts, even if they're not going to happen right away,
(06:06):
So yes, this could be not mincing those time to remember,
Oh nice new us.
Speaker 5 (06:14):
Then how do you square how do we think about
ADP versus the jolts that we got yesterday. I was thinking, like,
is it the companies just aren't hiring, but they're not
necessarily laying off either, Like how do we square those
two together in the broader economic jobs picture.
Speaker 7 (06:28):
Well, it's not easy to square the two, except that
you note that ADP that the jolts rather is two
months old, so it is past data and things could
certainly have changed, which ADP suggests might be the case.
Now with ADP, what we're not seeing is whether companies
were letting anybody go and whether they have openings that
(06:49):
they want to fill. It just tells you they didn't
hire very many people or add to payrolls. Now, it
has historically been that ADP is usually way off from
the private sector hiring is in the non farm payrolls figure,
so we'll have to see how that proves out. On
Friday last month, ADP said there were only sixty thousand
(07:10):
private sector jobs created and the government found one hundred
and sixty seven thousand, So I don't know whether ADP
or Jolts gives us a better idea of what's going on,
But I don't think people are going to pay a
whole lot of attention to either one once we get
the Friday figures.
Speaker 2 (07:28):
Tariffs, Mike, we have so many tariffs are very hard
to kind of keep them, keep them in focus here.
Speaker 3 (07:35):
There's so many out there.
Speaker 2 (07:36):
Do we have any idea kind of what percentage of
the tariffs have found their way into the economy at
this stage or is it just too early to tell here?
Speaker 7 (07:44):
Well, there have been some rough back of the envelope
calculations that about what Bloomberg Economics has done one about
six percent of US imports have been affected by tariffs,
because we're looking at autos and we're looking at steel
and aluminum. Basically, tariff's likely coming. The Congressional Budget Office
just a short time ago put out a couple of
(08:06):
new reports, one suggesting that the Big Beautiful Bill is
going to add something like ten trillion dollars on to
the overall deficits over a period of years, and then
that the tariffs would reduce that by about three trillion.
So if all the tariffs were carried through and that's
(08:29):
the caveat that the CBO puts on their numbers today
that they don't know what tariffs are actually going to
be imposed. So that's the hard part for everybody at
the moment is how much are we going to tariff people?
And who are we going to tariff?
Speaker 5 (08:44):
Mike, what's what's that nerdy chart that you have on
your desktop right now?
Speaker 3 (08:49):
Actually?
Speaker 7 (08:49):
I was looking at steel today and because of you,
of course, Alex Steele, the fact that when Trump put
on tariffs in twenty seventeen, we saw a short term
rise in employment at steel mills, but then that rolled
over and the number of jobs in the downstream people
(09:13):
who use steel in their industries fabricated medical metal producers
really fell significantly, lost about seventy five thousand jobs there.
So it'll be something we're gonna have to watch those
two numbers in Friday and the following month's reports on
(09:35):
how the steel tariffs are affecting the economy.
Speaker 3 (09:40):
Yeah. I love that. I think I better come in
on Friday, Big Day. Are you going to be off Friday? No,
I think I'll be d I mean the thing is
from what we've been.
Speaker 5 (09:48):
Learning, like maybe we'll get little cracks, but it's stillly
going to be in the next two months, maybe that
we'll get hard data. So I feel like you can
still get that on the Jersey Shore, but it's gonna
be rainy tvd oh well, then definitely come in from that.
All right, thanks, Mike, really appreciate it. Michael mckei, Bloomberger
National Economics and Policy Correspondent.
Speaker 1 (10:04):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am Eastern on Apple, Cocklay and Android
Auto with the Bloomberg Business App. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 5 (10:18):
All right, let's pick up with one of the stocks
that Norm was just talking about, and that is Wells
Fargo taking a look at that asset cat finally being
removed and what does it then mean after the seven
year old cap is removed for CEO Charlie Sharp, joining
us now is Hannah Levett, senior finance reporter from Bloomberg News. Now, Hannah,
Wells Fargo's been working at this for a very very
long time. How are they then positioned for this next
(10:39):
stage of growth?
Speaker 8 (10:41):
Yeah, so this has truly been such a long saga
for them. Like I started covering Wells Fargo more than
seven years ago, they had just gotten put under this cap.
At the time, I was still enjoying my mid twenties,
and you know, now we are no longer there. For
Charlie Sharp, this means that he can finally play offense.
(11:02):
He can you know, they're not capped in size to
their level at the end of twenty seventeen anymore. And
remember that's been a huge deal for them along the way.
I mean some of the businesses that he's marked for growth,
like the trading business most notably, that's been constrained because
it's more balance sheet heavy and they haven't been able
to allocate that balance sheet because they're restricted. And like
(11:23):
just for context, JP Morgan, the biggest US bank, has
grown almost an entire Wells Fargo in terms of assets
in the time that Wells has been capped.
Speaker 2 (11:32):
Wow, all right, hann I you know full discorder. I
have my checking account with Wells Fargo, but I'm guessing
the CEO and the management team there they want to
do something more than that. They think they can do
a little bit bigger and better than Paul's. And he's
checking account. So what are some of the businesses you
mentioned trading? Are there other eritors where they think they
can really grow by allocating more capital there?
Speaker 8 (11:54):
Yeah, absolutely, so the businesses that Charlie Sharff marked for growth,
you know in time while he was running the firm,
but it was still under the cap where investment, banking
and trading and wealth management and credit card. But he
was saying on CNBC today that virtually every business aside
from mortgage, which they've said they're shrinking, and remember wells
(12:15):
Farga used to be huge, and mortgage at one point
they were churning out one in every three home loans
in the country. Every business other than that should grow
now and they have room to do that. But I
think those businesses where they've already said that they're targeting growth,
that may be where the earliest moves are. You know,
we've reported that they're working on a high end credit card,
(12:37):
so that could be something that people see. But yeah,
so it really just it goes across all of those
and beyond now because they don't have this constraint anymore, so.
Speaker 5 (12:49):
How quickly can they scale in the other parts of
their business.
Speaker 8 (12:52):
Yeah, Well, it's an interesting question, right because we've seen,
you know, the tales of banks trying to grow too
fast and then having you know, a calamitous blow up,
and so that's something that they definitely want to avoid.
And Charlie Sharff has talked about that that it's not
like an on switch day one, but it does give
them more flexibility so they can you know, the most
(13:15):
immediate thing is the trading business, where they just have
capacity today that they didn't have yesterday. But besides that,
it's more being able to lean into more enthusiastically those
growth initiatives that they've already kind of outlined.
Speaker 2 (13:33):
Right, So, Hannah, they now have the regulatory capability to
maybe do more, to maybe grow a little bit more quickly.
Speaker 3 (13:41):
Did they have the balance sheet to do that? Did
they have the capital to do that?
Speaker 8 (13:44):
Yeah, they have a ton of excess capital. And that's
been a theme throughout. I mean even in the earliest
days of the asset cap like they couldn't deploy that capital,
so they gave investors a bigger dividend and more buybacks
than they were expecting. It was sort of like a
you wouldn't think that would be the outcome, but it
was at the time so they've had excess capital, and
(14:07):
also because the banks in general were preparing for the
possibility of tougher capital rules that have not panned out,
so they were a lot of them have been hoarding
capital anyway, sitting on a bunch of extra.
Speaker 5 (14:20):
Well, we're seeing in Wall Street it's definitely a competition
for talent, particularly if you wrap in hedge funds as
well as huge ass at managers.
Speaker 3 (14:26):
Are private equity.
Speaker 5 (14:27):
Can weils Haargo play in that game?
Speaker 8 (14:30):
Yeah, they already have been. I mean they hired Fernando
Rivas who is the head of the corporate investment bank there.
He was a major hire from JP Morgan, so that
that was huge for them. And you know they've made
other hires over the years. Doug Bronstein is there, another
former JPM executive and he's vice chair. They have Vary
(14:54):
Summers running wealth, so they have you know, they've been
able to get talent at the highest level and then
you know even further down as well.
Speaker 2 (15:02):
All Right, I think the street kind of like this.
Stocks up about seven tens to one percent today, It's
up eight and a half percent year to date, up
thirty percent over the trailing twelve months, so it looks
like this street is kind of warming up to a
story which has been going to middle of the road.
Given some of the regulatory constraints, will stay on top
of that.
Speaker 3 (15:16):
He a lovit.
Speaker 2 (15:16):
Thanks so much for joining us at Bloomberg Senior financi
reporter on Wells Fargo.
Speaker 1 (15:22):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am Eastern on Apple Cocklay and Android
Auto with the Bloomberg Business App. Listen on demand wherever
you get your podcasts, or watch us live on YouTube during.
Speaker 5 (15:35):
Alex Seal alongside Paul Sweeney. This is Bloomberg Intelligence Radio.
We are broadcasting to live from the Galor National Convention
Center right here in Maryland. We're overlooking the Potomac. We
are at BNY Insight twenty twenty five as we talk
about wealth management and all the tools and tricks that
can be used to help navigate these markets. We're also
continuing to take a check in here on what's happening
(15:58):
in the overall market. We turned out to today's a
Big Take story. It talks about Tesla and what autonomous
driving and robotaxis say in Austin as Elon Musks keeps
talking about them, are talking about investigating whether the system
is actually too dangerous even if you have a human
behind the wheel. Joining us now is Global Autos editor
(16:20):
Craig Trudell. Craig, So, here's the title of the big take,
A fatal Tesla crash shows the limits of full self
driving walk us through the details of what the issues
are surrounding completely autonomous vehicles.
Speaker 6 (16:34):
Yeah, so, I guess maybe the thing to start with
is the Teslas that you can buy today that are
on the road now are not that right, They are
not autonomous. You can pay extra for a system called
full self driving, and yet it's a miss snowmer. It's
a system that you have to pay attention to at
all times. You know, if you get into a crash,
(16:57):
it is on you. And we've seen that, you know,
play out. When Tesla customers have you know, tried to
come after the company, the company says, look, you know,
we we warned you. We told you that you know
you're you're responsible for driving while using this system. The
company is trying to make this leap that's been trying
to make the sleep for years to eventually get to
(17:19):
a point where you do not have to to supervise
and you know, even to take it further than that,
you know, take the human out from behind the wheel altogether.
And we hear Musk, you know, talk about that quite
a bit lately because it's something that they're actually trying
to commercialize, even just in the next matter of you know,
next week or so. There's a lot of questions about
(17:42):
how exactly they intend to do that, whether they can
do it, especially after he's predicted, you know, year after
year that they're on the cusp of doing it. And
part of the reason there are doubts is is because
of the hardware. And I think that's kind of an
important aspect of today's story is is this particular crash involves,
you know, an incident where a driver was using full
(18:04):
self driving driving into the sun, and that appeared to
play a part in the crash, which resulted in a fatality,
and it led to a federal investigation that is ongoing.
Speaker 5 (18:20):
I mean, this is all very much feels as part
of the growing pains as we kind of understand this
technology and how it works itself out. So what are
the steps that Tesla's taking and that the regulators are
taking at this time?
Speaker 6 (18:34):
Yeah, so you know, we should acknowledge that this incident
happened in November twenty twenty three. You know, Tesla has
has changed. They've they've made upgrades both to hardware and software.
You know, hardware for certain customers, they should say, but
you know, in terms of their approach to the sensor
(18:55):
system for their vehicles, Elon Musk has been you know,
really sort of down a limb and having this view
that all you need is cameras and company companies that
are also in this space. I think the one people
recognize the most is Weymo, the Google company, and they
use a mix of camera, radar and wide R and
(19:17):
their sensor set is much more expensive. It's more extensive.
You know, these sensors are placed all over the vehicle.
But you know, the sort of bet here on the
part of Weimo is that is worth it. It will
mean this system is safer. What Musk has tried to
do is go with the cheaper route, go with the
you know system that he can afford to put in
(19:38):
every Tesla, and make this bet that you know, he
can develop his way to autonomy faster by sort of
leveraging the broader Tesla fleet. Even if it means putting
you know, cars on the road that you know, draw
scrutiny from federal regulators as to whether or not that
this is you know, unreasonably unsafe.
Speaker 2 (20:01):
So, Craig, I think Elon Musk is back at the company.
Speaker 3 (20:06):
What does that mean?
Speaker 2 (20:07):
I mean, are you hearing anything like, Okay, now we
can get back on track, Now we can really move forward,
maybe at you know, a higher velocity.
Speaker 3 (20:15):
What's that mean?
Speaker 6 (20:17):
Yeah, I'm you know, I think it's difficult to tell
at this point because he's kind of coming back to
business means coming back to so many businesses, right, and
so on a day to day Yeah, we're you know,
we're seeing him travel to to his various companies, you know,
devoting some time and attention to to them. But it's
(20:38):
not as though he's sort of one hundred percent, uh,
you know, focusing in on Tesla and neglecting all of
his other businesses. We see him you know, regularly engaging
with you know, users on x about you know, troubleshooting
problems that they have with that service. You know, I
would say he is you know more actively engaging there
(21:00):
on Tesla matters and definitely is trying to sort of
send this signal that you know, okay, it's it's time
to get back to business here. But whether or not
that's you know, resulting in sort of tangible changes at
the company, I think remains to be seen.
Speaker 5 (21:17):
I guess, I mean quickly twenty seconds. What's the rush
for autonomous driving?
Speaker 6 (21:24):
You know, I think forty thousand people die on US
roads every year, right, and so the rush, of course
is to bend that, you know, to change that. And
I think one of the challenges that you have if
you're a company in this space is we've now you know,
seen a lot of companies pursue this for you know,
roughly a decade that number has not budged. So you know,
(21:46):
we still have a long way to go to where
this capability is you know, making putting a dent in
those figures.
Speaker 5 (21:56):
All right, Craig, Thanks A Lott, Really appreciate credit you
Dale joining US Global Auto's editor on Tesla and autonomous driving.
Speaker 1 (22:02):
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