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Brian Moynihan, CEO of Bank of America Corp., says he does not expect a recession because the US consumer remains healthy.
"But what's going to happen is the underlying US consumer, and the underlying consumer is doing well and making more money, they are being employed, and more importantly, they are spending more money."
The Wall Street Chief's comments, which aired on CNBC on Wednesday, arrive as investors mock the health of the US economy with the Trump government, engaged in a one-year battle against China over politics commercial.
The dispute, which is focused on import duties, has raised fears of a recession that is weighing on the national economy, adding to the concerns of the financial markets. Moynihan however said that a reversal of the yield curve, intervened briefly last Wednesday between closely monitored yields for shorter-dated and longer-dated government bonds, does not necessarily mean that it's not the same. a recession is imminent.
The yield on 2-year US Treasury notes
TMUBMUSD02Y, + 2.15%
briefly traded over 10-year Treasury bill yield
TMUBMUSD10Y, + 0.38%
for the first time in more than a decade, a condition that preceded the last seven recessions.
"Look, when the yield curve has shifted around the pundit-ocracy, she said," Here it means an impending recession, "Moynihan told CNBC.
However, the bank boss said this time that the recession gauge could be influenced by a global market swirling around $ 15 trillion in negative interest rates.
Check-out: After reversing the yield curve – this is how the stock market has tended to evolve since 1978
"But if you really think about it, there could be two reasons why the yield curve moves and you see this debate taking root," he said.
"Which is partly theft to quality. In the United States, 80 to 90% of world production is available. So, the money flies here because you are going to give your money to someone – a thousand dollars – and you make less money in 10 years? Or are you going to give your money to someone – a thousand dollars – and it will give you more in 10 years? And that's why there is a big debate about it, "said the CEO of Bank of America.
Moynihan said the debate on the trajectory of the US economy was up to the consumer.
"And so, among our customers, since August 15, you have seen the amount spent by American consumers at Bank of America: $ 2 trillion," he said.
"This is an increase of 5.9% over last year for the same period. So in [2017-18] you are up 8.5% and 2018-2019 up 5.9%. Imagine that our consumers spend $ 120 billion more this year than in the previous year, which means that US consumers continue to spend and the US economy will remain healthy, "said Moynihan.
According to the Bureau of Economic Analysis, consumer spending accounts for 68% of US economic activity.
Moynihan's optimistic consumer vision is also similar to the Dow Jones Industrial Average.
DJIA, + 1.08%,
the S & P 500 index
SPX, + 0.89%
and the Nasdaq compound
COMP + 1.00%
enjoyed a strong rally on Wednesday at least in part thanks to optimistic profits from Target Corp retailers.
TGT + 19.41%
and Lowe's Cos.
LOW, + 10.03%,
considered as an additional indication of the health of consumers.
Check out the nearly 14 minutes CNBC interview below:
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