[Music Wall Street gears ░░░░░░░░ for Bank earnings and ░░░░░░░░ from the US Central ░░░░░░░░ s Chief welcome to ░░░░░░░░ Insight I m David ░░░░░░░░ hopes that the recent ░░░░░░░░ rally will broaden Beyond ░░░░░░░░ Tech will be put ░░░░░░░░ the test this week ░░░░░░░░ second quarter earning season ░░░░░░░░ off JP Morgan City ░░░░░░░░ and Wells Fargo get ░░░░░░░░ ball Runing on Friday ░░░░░░░░ investors are looking forward ░░░░░░░░ Fed share Jerome Powell ░░░░░░░░ Congressional testimony and key ░░░░░░░░ later this week seeking ░░░░░░░░ bolster bets for rate ░░░░░░░░ to begin in September ░░░░░░░░ joining me now to ░░░░░░░░ his thoughts on all ░░░░░░░░ is Peter Anderson CIO ░░░░░░░░ Anderson Capital Management welcome ░░░░░░░░ let s start with ░░░░░░░░ Powell he delivers his ░░░░░░░░ to the Senate Banking ░░░░░░░░ starting tomorrow is the ░░░░░░░░ on him now to ░░░░░░░░ a doish note the ░░░░░░░░ has been on him ░░░░░░░░ would say ever since ░░░░░░░░ started raising rates so ░░░░░░░░ is not new to ░░░░░░░░ he s very much ░░░░░░░░ in navigating this very ░░░░░░░░ fragile narrative about trying ░░░░░░░░ do what s best ░░░░░░░░ the economy but also ░░░░░░░░ to appease those investors ░░░░░░░░ have been pounding on ░░░░░░░░ table for months now ░░░░░░░░ having rates lowered so ░░░░░░░░ think he ll as ░░░░░░░░ do a masterful job ░░░░░░░░ don t expect him ░░░░░░░░ actually give us any ░░░░░░░░ Insight but uh he ░░░░░░░░ do a thorough job ░░░░░░░░ at the end of ░░░░░░░░ the markets will probably ░░░░░░░░ stay the same that ░░░░░░░░ the problem with all ░░░░░░░░ is they speculate about ░░░░░░░░ actions he ll take ░░░░░░░░ he ll say but ░░░░░░░░ have to be very ░░░░░░░░ to ever literally interpret ░░░░░░░░ of the phrases that ░░░░░░░░ s going to say ░░░░░░░░ week now the testimony ░░░░░░░░ against a backdrop of ░░░░░░░░ labor market data according ░░░░░░░░ Friday s non farm ░░░░░░░░ report which shows unemployment ░░░░░░░░ up to 4 1 ░░░░░░░░ are you seeing in ░░░░░░░░ labor market and does ░░░░░░░░ get scope for earlier ░░░░░░░░ than later Cuts or ░░░░░░░░ the onset of the ░░░░░░░░ presidential election put pay ░░░░░░░░ those ideas so many ░░░░░░░░ Parts in this you ░░░░░░░░ this is the the ░░░░░░░░ time to actually speculate ░░░░░░░░ in a in a ░░░░░░░░ uh especially with the ░░░░░░░░ election about what the ░░░░░░░░ will do you know ░░░░░░░░ first off I think ░░░░░░░░ a presidential election the ░░░░░░░░ tends to be on ░░░░░░░░ so let s assume ░░░░░░░░ s as a baseline ░░░░░░░░ then all the issues ░░░░░░░░ mentioned you know everybody ░░░░░░░░ closely looking at every ░░░░░░░░ data point about the ░░░░░░░░ market and all other ░░░░░░░░ Etc that always comes ░░░░░░░░ periodically so this is ░░░░░░░░ calculus that everybody has ░░░░░░░░ struggling with but I ░░░░░░░░ think that the Fed ░░░░░░░░ not lower rates through ░░░░░░░░ end of this year ░░░░░░░░ probably through the next ░░░░░░░░ of last year uh ░░░░░░░░ have forgotten that rates ░░░░░░░░ are really not abnormally ░░░░░░░░ historically they re probably ░░░░░░░░ average so we have ░░░░░░░░ put that in perspective ░░░░░░░░ know we would like ░░░░░░░░ to be lower but ░░░░░░░░ re like children wanting ░░░░░░░░ go out in the ░░░░░░░░ and looking out the ░░░░░░░░ and saying oh it ░░░░░░░░ like it s cleared ░░░░░░░░ maybe we can go ░░░░░░░░ and play but we ░░░░░░░░ to realize you have ░░░░░░░░ get total trend of ░░░░░░░░ before you can actually ░░░░░░░░ out in that backyard ░░░░░░░░ play again but of ░░░░░░░░ the next big data ░░░░░░░░ in this whole debate ░░░░░░░░ of Thursday s inflation ░░░░░░░░ which is followed by ░░░░░░░░ University of Michigan s ░░░░░░░░ Indo on Friday what ░░░░░░░░ your assessment of the ░░░░░░░░ consumer and of price ░░░░░░░░ at the moment the ░░░░░░░░ consumer it s very ░░░░░░░░ I hate to hedge ░░░░░░░░ it has been very ░░░░░░░░ to get a comprehensive ░░░░░░░░ of the US consumer ░░░░░░░░ anything it seems like ░░░░░░░░ are so called bifurcated ░░░░░░░░ there is a large ░░░░░░░░ of consumers that are ░░░░░░░░ exceptionally well but then ░░░░░░░░ is another class of ░░░░░░░░ that are doing very ░░░░░░░░ so that tension between ░░░░░░░░ two extremes continues to ░░░░░░░░ out but in general ░░░░░░░░ would say when you ░░░░░░░░ all of this in ░░░░░░░░ consumer tends to be ░░░░░░░░ very well compared to ░░░░░░░░ Covid of course and ░░░░░░░░ to co I would ░░░░░░░░ we are almost on ░░░░░░░░ same track as we ░░░░░░░░ prior to co which ░░░░░░░░ great news and I ░░░░░░░░ the Fed has done ░░░░░░░░ remarkable job navigating through ░░░░░░░░ changing Cycles but in ░░░░░░░░ it s very hard ░░░░░░░░ give a uh Global ░░░░░░░░ of the US consumer ░░░░░░░░ now very challenging let ░░░░░░░░ move on to this ░░░░░░░░ s big earnings story ░░░░░░░░ Banks with JP Morgan ░░░░░░░░ faru and City Group ░░░░░░░░ coming up on Friday ░░░░░░░░ interest rates and economic ░░░░░░░░ they have weighed on ░░░░░░░░ sector but are things ░░░░░░░░ to look up do ░░░░░░░░ think for the sector ░░░░░░░░ think so you know ░░░░░░░░ one of the one ░░░░░░░░ the several good things ░░░░░░░░ believe it or not ░░░░░░░░ are some good things ░░░░░░░░ what people are calling ░░░░░░░░ rates but what I ░░░░░░░░ call average rates is ░░░░░░░░ it tends to make ░░░░░░░░ business of banks do ░░░░░░░░ because of their lending ░░░░░░░░ then uh borrowing rates ░░░░░░░░ the difference between those ░░░░░░░░ if the rates are ░░░░░░░░ generally that means that ░░░░░░░░ will tend to be ░░░░░░░░ profitable than they were ░░░░░░░░ when rates were virtually ░░░░░░░░ not a lot of ░░░░░░░░ have focused on that ░░░░░░░░ they seem to be ░░░░░░░░ pounding on this Mantra ░░░░░░░░ when are we going ░░░░░░░░ get lower rates so ░░░░░░░░ would say if there ░░░░░░░░ the case of rates ░░░░░░░░ lower and we ll ░░░░░░░░ to hear what the ░░░░░░░░ think of this because ░░░░░░░░ course their economists are ░░░░░░░░ much focused on this ░░░░░░░░ if they expect Banks ░░░░░░░░ be lower then I ░░░░░░░░ t be surprised for ░░░░░░░░ stocks to trade off ░░░░░░░░ of course that would ░░░░░░░░ that their profit margins ░░░░░░░░ be decreasing in the ░░░░░░░░ and as we go ░░░░░░░░ the second quarter earning ░░░░░░░░ how crucial is the ░░░░░░░░ story to the continued ░░░░░░░░ for us share markets ░░░░░░░░ year is there simply ░░░░░░░░ much hype around AI ░░░░░░░░ AI story has eclipsed ░░░░░░░░ every sector out there ░░░░░░░░ t it and of ░░░░░░░░ there s always a ░░░░░░░░ when we get so ░░░░░░░░ with one topic however ░░░░░░░░ does appear we are ░░░░░░░░ starting to see some ░░░░░░░░ the early benefits of ░░░░░░░░ you know this buildout ░░░░░░░░ has been going on ░░░░░░░░ it is still in ░░░░░░░░ buildout stage I think ░░░░░░░░ puts a lot of ░░░░░░░░ on the show me ░░░░░░░░ in other words once ░░░░░░░░ buildout is completed how ░░░░░░░░ this going to benefit ░░░░░░░░ consumer how is it ░░░░░░░░ to benefit profit margins ░░░░░░░░ we re still waiting ░░░░░░░░ that but we are ░░░░░░░░ to see now for ░░░░░░░░ if you had asked ░░░░░░░░ 6 months ago about ░░░░░░░░ I would have a ░░░░░░░░ um optimistic outlook on ░░░░░░░░ buildout results but now ░░░░░░░░ are starting to see ░░░░░░░░ and I would say ░░░░░░░░ AI could probably carry ░░░░░░░░ to a higher Market ░░░░░░░░ the end of this ░░░░░░░░ it is remarkable the ░░░░░░░░ that has been emerging ░░░░░░░░ I do think we ░░░░░░░░ are just starting to ░░░░░░░░ the beginning of that ░░░░░░░░ Peter has been great ░░░░░░░░ be talking to you ░░░░░░░░ Peter Anderson of Anderson ░░░░░░░░ Management many thanks for ░░░░░░░░ your thoughts with us ░░░░░░░░ is Market Insight we ░░░░░░░░ more videos on Reuters ░░░░░░░░ Music]