Power Lunch - Energy News Pipeline, TikTok Trickle Down, Bank Of America CEO 1/16/25

Episode Date: January 16, 2025

Is crude oil ready to head back to $100 per barrel, or take a big tumble lower? We’ll ask our energy experts tov weigh in.Plus, TikTok could be banned in the U.S. in just a few days. But there could be a big ‘tell’ about it’s future coming on Monday. We’ll explain. And, we’ll speak to Bank of America CEO Brian Moynihan about the bank’s big earnings beat, the state of the economy and much more. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

And welcome to Power Lunch. Here is what is ahead. Is oil ready to head back to 100 or take a big tumble? Trump and the Saudis may have a master plan. And what about Russia or Iran? Lee McCroft is here and in Riyadh live for you. TikTok you do stop. The social media company could be whack in just a couple of days. But there could also be a big tell coming on Monday. Hmm. At one of TikTok shops, most successful entrepreneurs, Kelly will chime in. And oh, yeah, we also up and have an interview with the CEO of a little company called Bank of America. Looking forward to all that, Brian, thanks. As for the markets right now, the major averages are lower just fractionally, although a little bit more significant for the NASDAQ down three quarters of 1%. And the chip stocks are actually moving higher, helped by Taiwan semi reporting that record profit driven by AI. The chip equipment makers like Amat and Lamb Research are also jumping as a result. Taiwan semi up about 4.5%. We're also keeping an eye on the yield on the 10-year note, which has been calming down considerably in the wake of those inflation reports. Look at this. We're below 4.6% after moving and kind of testing more towards that 5% range. Although, again, this is not doing a lot for markets today, but should help Brian over the medium term. Lower rates, higher stocks. We'll see. All right, Kelly, thank you very much. We'll see you back at the desk in a moment.

We begin this hour, though, folks, with all things energy. Because what you pay at the pump may hang in the balance. There is a lot going on. As oil sort of stubbornly hangs around $80 a barrel, despite incoming President Trump's promise to pump more and drive the price down. As we headlined yesterday, there is hope for a broad ceasefire between Israel and Hamas. Now, some things, they do need to be finalized,

but if we do get that ceasefire, that would be good news. but that is not all that is going on around the world. You've got Trump wanting to go after Iran and Venezuela, reinforcing sanctions. Also, the Biden White House recently going back after Russia, trying to hit Putin more where it hurts in the pocketbook. And threats of tariffs could mean Canadian oil gets more expensive. Remember, incoming President Trump, he wants to throw a 25% tariff on all of those barrels. And that is not all that is going on in energy just today. British energy giant BP laying off thousands of workers.

The new CEO there, unable to help that lagging stock, at least over the past year, BP's strategy continued to get called into question. And all of this kind of leading us right back to OPEC and the Saudis. And when they might put long-delayed oil production back on the market. Let's wrap it up and talk about all that. Here now to lead us off and address the geopolitical side, Fred Kemp, president and CEO of the Atlantic Council. And joining us live from Rio, Saudi Arabia is Halima Croft, managing director and global head of commodity strategy at

RBC Capital Market. Salima, I think it's like one in the morning there, whatever time it is. So thank you for staying up for us. So I'm going to go to you first. You've been hanging out. You've been sort of reading the oil tea leaves, if you will, from the Saudis and maybe a little bit from OPEC as well. What are they thinking? What do you think they're going to do about the incoming administration? Well, there are no indications, Brian, from my conversations in Riyadh, that OPEC, has any appetite to provide a barrel bailout for Washington at this juncture. There had been some speculation with Washington really tightening the sanctions, the Biden administration tightening sanctions on Russia on the way out,

potentially disrupting around 1.4 million barrels of Russian exports. Iran sanctions also set to be strengthened with the Trump administration that OPEC would provide a back bill. But it's pretty clear at this moment that OPEC is going to stay the course on their established production plan and are not going to do a repeat of 2018 where they provided a million additional barrels and then the U.S. switched policies leaving the oil market oversupplied. Yeah, as you wrote in your note, past interactions with Washington also appear to be informing the OPEC decision to stay the course. So let's go to Iran and Venezuela back to you, Halima,

which is this. And Russia, also, by the way, the current White House going back after Russia, Trump going hard, at least verbally, about Iran and Venezuela now as well. If we reinforce, for lack of a better term, those sanctions, what's going to happen to the global oil balance? And I would assume the Saudis and OPEC do stand ready to actually make up any lost barrels. If they don't, we're going back to 100. I mean, here's the question, Brian. Will the Trump administration potentially roll back these Russia sanctions at Biden put? in place, all indications are based on the confirmation hearings that they are going to potentially

use the Russia sanctions as a bargaining chip to try to get concession. So it doesn't look like there's going to be any immediate repeal. The repeals that we're looking for from the Trump administration is the offshore drilling ban, the LNG permitting pause, all related to U.S. production. And there seems to be a hope that U.S. production can come to their rescue, but it's not a just-in-time producer. So, yes, if they go ahead with maximum pressure, if these Russia sanctions stand, that is a tighter market. And if there is no OPEC backfill coming,

that's going to make it exceedingly difficult for President Trump to deliver on his promises of lower energy prices immediately. Fred, one related but almost in a way broader thing that I heard from Besant today, which I thought was quite interesting, is that he said he thinks the president is sort of fed up with sanctions and the way that they're pushing countries out of the U.S.

dollar system where they're, that's the, that is the tool by way. So it's basically a tool of national defense. And he said, you know, he thinks that's why the president wants to use tariffs instead. Just talk about the implication of that of, okay, if we're not going to push further in the directions of sanctions, maybe go tariffs instead. What does that mean? Well, they're worried about dollar dominance over time and that sanctions could cut into that. tariffs is not also the best weapon to replace it. You could also turn to export controls. There are a lot of different weapons in the U.S. economic arsenal.

The question is which one of them gets you closest to the results? And I think it's different in every different situation. And with Iran, you're talking about Iran. You're in a situation now that Iran is in the weakest position it's been in 30 years. Its air defenses are down. It's been shown that it can't success. attack Israel, its proxies, Hezbollah and Hamas have been decimated.

This is a time where you can put maximum pressure on Iran to get a better deal, not just on its nuclear aspirations, but also on its regional behavior. This is really the time to put greater pressure on Iran, and that would be the Trump administration's first instinct. Well, you know, Fred, we've already had, and we still have sanctions on Iran. And yet we know that their oil exports went from about, I call it one ship of day, effectively,

a couple of years ago, to five or six now. What have we done wrong with the sanctions haven't changed? The enforcement of the sanctions has changed. You're absolutely right. It's great to always be on with Halima, and she can talk more deeply about this than I can. But, you know, you had a president running for re-election, President Biden, and became Vice President Harris, but none of them wanted to see inflation

and the rise of energy prices. And so I think there's going to be more room, although President Trump also is not going to want inflation, but there's going to be more room to enforce sanctions on the Trump side than perhaps President Biden gave himself room to do. One thing I hope we do talk about with Helim O'Anne is, for everything we're talking about of economic impact,

and even the ceasefire and the hostage release, The real prize is Saudi-Israeli normalization. You know, that could unlock a Middle East economic boom of some proportions. And it's all been teed up. Secretary of State, Tony Blinken was at the Atlantic Council this week. He says it's all done except for the ceasefire deal and Israel's acceptance over time of a Palestinian state. Now, we've got a long way to go for that. But the fact that it's more or less been negotiated the strategic agreement between the U.S. and Saudi Arabia that we'd

get us to normalization, that would be a huge historic accomplishment. Absolutely, Halima, you know, weigh in on that. No, absolutely. I mean, but we really do have to see the ceasefire. That is an absolute prerequisite to normalization. And they do need to see, you know, clear language and determination on a path to a Palestinian state. It doesn't have to be firmly established, I think, along 67 borders, but they do need to see a path for Palestinian state because that is something that's very important to the populations in these countries. But back to the issue that Brian mentioned on non-enforcement of Iran sanctions, I do think that also underlines why OPEC's not particularly enthusiastic to open the taps right now.

I think there's a view that if Washington had been serious about the Russia sanctions, they would have imposed them, you know, right after the invasion of Ukraine, that they waited to like the last minute of their administration. We did not enforce the Iran's sanctions. So coming to OPEC now and saying solve our problems is kind of falling on death years. Quickly, we got to go. But quickly, is OPEC? Is Vienna over, Halima?

Because I saw they put out a picture with the OPEC Secretary General in Riyadh, the head of communications for OPEC. Great guy. He's now moving to Riyadh. Is Riyadh the new Vienna? Well, I think Riyadh is sort of boomtown right now. And a lot of people are coming to Riyadh. But I do think, or I do hold out hope that we will be back in Vienna for the next OPEC meeting. Never had an invitation to Riyadh.

I'd love to go someday. Fred Kemp and Halima Kroff. Thank you very much. Do appreciate it. Helim, it's like one in the morning there. I'd be curious to check it out as well. Let's got it. Power lunch, live in Riyadh. Let's do it. Why not? Further ahead, a power player in banking. B of A beating on earnings. Debt is the name of the game. Loan incomes on the rise. The stock is a little lower, though. It's down nearly 2% as the market sells off. We'll hear from CEO Brian Moynihan. But first, we'll get details on some other key movers today and three stock lunch. Oh, it's early today. In fact, it's right after this. It's time now for today's three-stock lunch where we hit three different stories. Talk about why they matter to you and what's to do with the names here on set with us,

a CNBC contributor, Victoria Green. She's chief investment. You guys know she's chief investment officer of G-square. How many times do we talk about this? So glad to have you here in person. Let's start with Target. They raise the Q4 sales forecast, nice holiday shopping demand in stores, but the shares are selling off. They cut the profit guidance back in November after they had that big earnings miss biggest one in two years then. What do you do here? It's a sell for me. Look, I just don't like this stock right here. Number one, they're way too much in discretionary. It's about 50% of their goods sold versus like a Costco or a Walmart where you have so much more grocery and hard goods being sold. And the people are concerned of how much did you have to discount to get those

sales growing? How much did you put it in? And if you didn't raise your profit guidance, but you raise sales, that means you definitely have a lag there. So for me, it's a sell. I'm a little worried we're going to be retesting that 121 level. And then also, tragically, they do have a pretty large exposure to the California wildfires. I think J.P. Morgan was mentioning 66 stores in the area, about 3% of overall stores. So that could end up being a net drag on them as well. You are a Texan. I am. You do not live in Dallas, but you're still a Texan. I like that you differentiate Texas and Dallas. Well, they're very different places. Trust me, Dallas is more like California in Texas. Anywho, Southwest Airlines, based in Dallas, Texas,

people used to love it. The stock is now down almost half from its highs. of mid-2020. They got all these problems. The DOJs now suing them over delayed flights. But you wonder, will it bottom out? Is there a reason to own or buy Southwest right now? I don't think so. It's still a sell for me because I think there are better airlines.

If you want to own an airline, for me, it's about the Delta or United because it's all about the international routes. It's all about the premium pricing and seats. And yes, they're eventually trying to shift there and they've got the new Elliott board members coming on. But for me, they're struggling because they're losing the very discount travelers to spirit and Allegiate and JetBlue. and then they're losing the premium travelers

to people that actually let you have a first-class seat. So yes, maybe seat changes are coming, but for me, Southwest is just really trying to figure out who they are. Are they a discount carrier? They kind of lost the friendly skies thing when they left everybody stranded over the holidays, so they really haven't gotten that back yet. And so I'm just concerned they're just stuck in neutral right now

and it's still a sell for me. Shares are down 42% over five years. That's a pretty tough stretch. Okay, Taiwan Semi, then they're higher after reporting a Q4B, record profit, all amid demand for AI chips, its partner in Vida, of course, just continues to grow. What do you do with this stock? To me, this is a buy. They haven't had the lift that Navidia's had, and I think they could really take off, and they are single-handedly saving the

semiconductor trade today, right? Semai's been under a lot of pressure so far this year. But look, their numbers were phenomenal. They have 59% gross margins. Their profit is growing, and they're saying, hey, we are going to expand CAPEX, and everybody's excited about that because that expansion in CAP-X means that AI demand, that high-power competing demand, which is a huge part of what they do, as well as smartphones and wearables may not be as bad, but they're saying, look, there's going to be moving for more silicon next year. And that's huge because they're saying more and more chips are coming. And they do, what, 85, 90 percent of high-powered chip production and scale matters there. Navidia, Apple, you know, you can almost name everybody on

the street that has technology. They use Taiwan semi-chips. And so for me, I love this doc. Well, it's interesting you say Apple, because we're getting a lot of questions about why it's down today. You know, sliding throughout the day, down almost 4 percent now. No major news. flow. And I mean, okay, maybe it's losing its iPhone sales crown according to some new reports as we come through. What do you say to investors here? Yeah, I think a little bit it's a read-through on the Taiwan semi because they did note that the smartphone, which of the Apple is one of their biggest customers. Apple's saying, hey, we're by every tip you make in Arizona, right? And so they said, oh, that's a single-digit growth, one of their slowest growing segments. So people are looking at

that. And there is concern. Apple needed to blow it out of the water, get this AI going, really have this fast recycle for the cycle tip on the 16, and there are concerns would have toned with slow. What if we really didn't see the sales? And so I think a little bit on this is, okay, how fast did Apple really sell? I think between the iPad refresh and the Mac, you know, I think doubt Apple at your own peril. All I know is it went straight up under the end of the year, and now it seems to be going straight down. And maybe everything's changed in six weeks. It's a critical question, though, because Apple, even if you don't care about the stock, Apple is a top five holding in like 300 ETFs.

So it moves the whole market or it can't. Absolutely. Without a doubt. All right. Victoria, thanks. Good to have you on today. Victoria Green. All right.

We've got a lot more to do coming up after the break. Whether you are a stock investor or a bond investor, what exactly do you do to navigate this ever-changing rate environment? Well, that's what market navigator is all about today. And it's up next. All right. Well, Kelly and I just talked. talked about Apple, big story. Apple can move the market. Maybe it is a little bit, but pay attention.

If Apple's down 4%, it's hard for the NASDAQ to be higher. And guess what? The NASDAQ is not higher. It is now down one half of 1%. Nice rally yesterday. But I guess today we would say that the tough start 2025 continues Apple, a massive, massive stock. So important. You know who else is so important? Dom Chu, and he is here now with the market navigation. And I'm wearing, I'm not wearing jeans today. No, no, you're not wearing jeans, but, you know, I want to kind of dovetail off this conversation because you'd think what they drop in interest rates, like the way we've been seeing, that technology stocks would be higher, right? But that's not the case. Apple's a big part of the story.

But bank stocks are a big part of the story. They're getting a big boost this week. Some of America's biggest lenders and investment banks are kicking off earning season with a bang. Better than expected results. But the gains in the bank stocks, not just limited to the stocks themselves. bond investors could reap some big gains via the banks as well. So here break it all down for us is Noah Wise, the senior portfolio manager over at Allspring Global Investments. Noah, the big bank story is huge because it is the catalyst for this part of the seasonal calendar, right?

That's earning season, everything is getting going. But you're focused on the banks, not just because of their financial results, but what it could mean for bond investors, explain. Absolutely. Thank you for having me, Dom. This is an interesting time. We've got a big period of regime shift, we think. You think not only politically, economically, but also in the markets.

And I think that the banks do play a big part of this. You're certainly seeing big moves in the yield markets as well. All right. So if the yield markets are moving to the upside for price and the downside for yield, that could be good. It could be speaking some kind of a verdict about the U.S. fiscal outlook and everything else. But how exactly will that affect bond investors and specifically which kind of bond investors and which types of industry would benefit more? Absolutely. So the first thing I think it is worth highlighting the banks. Obviously, an incredibly good set of results that we've seen over the last couple of days from the big banks that you have focused on rightly.

But it is not just an equity story. We do think that there is opportunities in the banking credit sector as well where we do have, over the weight positions in our plus strategies. They provide incremental spread versus the industrial space, higher quality, but also fundamentally less risk. Risk specifically around the M&A environment. It comes back to this regime change. We do expect an increase in deals.

That may mean more leverage for industrial companies, but it means more revenues for banking companies. And so we see a good relative value backdrop for banks. The yield side of the story is a little bit more. more challenging though. We are coming from a period in 2024 where the markets were heavily data dependent. Now we're an environment where the markets are policy dependent. And unfortunately, the timing associated with that policy is a little bit more challenging. We've seen some good data here over the last couple of days. It's provided a little bit of a bid to the fixed income markets. But we think when you take a zoom out, the shorter term challenges ahead of us around

immigration policy and trade policy. Those are the types of policies that are going to be implemented sooner. I think those are more of a challenge for the fixed income markets. As we get to the back half of the year, some of the more positives may be able to re-exert themselves. All right. Noah, thank you very much for the thoughts there. Bank bonds maybe the play out there. We appreciate it. You know, you inadvertently hit on Kelly Evans. Well, I would say it was your favorite story until Apple, but you love the deal flow. And every day, we're not getting the huge $50 billion deals. But like yesterday, there was another bid for a roofing company.

Every day we're getting multi-billion dollar deals. And not just that. Maybe that unlocks or acts as a thawing type process for other bigger deals that happen down the line. Sometimes it just takes more deal flow, small and mid-cap size, to get it all done. Kelly, who wears it best? The full pants and everything else? Everybody is crazy about a sharp-dressed man.

There's a poet philosopher, Billy Gibbons. Yeah. And I can just need the beard. the Zizi top paraphernalia. Drake beard is the only guy that didn't have a beard. Gentlemen, thanks. Still to come, the TikTok trickle down. We're just days away from a shutdown.

Unless the Supreme Court intervenes, the app has transformed industries and lives, especially in retail, where small businesses have gone from a handful of customers to millions in sales. We'll hear from one such business owner next. Welcome back to Power Lunch. I'm Julia Borson with your CNBC News Update.

Big progress today in fighting the Eat and Fire in Los Angeles County. Cal Fire says the blaze is now 55% contained, up from 35% Wednesday, and the larger Palisades fire is now 22% contained, an increase of two percentage points from yesterday. This welcome news comes as the Santa Ana Wins have died down helping to bring the wildfires under control. Florida Governor Ron DeSantis appointed his state attorney general Ashley Moody to fill the seat of Senator Marco Rubio. President-elect Trump tapped Rubio to become the next Secretary of State. Moody will have to run in a 2026 special election to keep the seat for the final two years of Rubio's term. A new court records show former New York Mayor Rudy Giuliani

settled today with the two Georgia election workers. He defamed over a $148 million payout. He falsely accused them of helping to steal the election for President Biden. The settlement comes after Giuliani failed to appear in court earlier for a non-jury civil trial. He says he will keep his new New York his New York co-op and Florida condo under the agreement. Brian, back over to you. All right, Julie Borsden, thank you very much. All right. In the meantime, the clock is ticking on TikTok as the ban is set to go into effect on Sunday. But incoming President Trump may be looking for ways to block the shutdown. TikTok CEO is actually going to attend the inauguration. What might that mean? Well, it's anybody's guess. But regardless, TikTok will not be the same, whether under new

management or gone for good. any disruption could hit the platform as well, especially what's called the TikTok shop, along with the businesses that use it. And your next guest is the owner and founder of Canvas Beauty Brand, selling one million units total on TikTok on Black Friday, even surpassing two million in sales in one day. One of the first to ever use the live stream TikTok feature. I'm pretending to sound like I know what I'm talking about. Stormy Steel, and we have confirmed that is indeed her real name.

Yes, it is. Joining us coming up from Huntsville, Stormy, welcome. I'm not going to pretend to know half of what I just said. But what would a TikTok shutdown mean for you, your brand, your employees, and, you know, Huntsville, Alabama, where you're based? To be honest, I feel like, I feel like what's not being considered with the TikTok shop band is the morale on the American people, right? I feel like it will be totally against 170 plus million people's right to speak.

freedom of speech, and then on top of that, like, it'll directly impact their income in a significant way. Some people only find joy on TikTok shop platform in the palm of their hands. So outside of just financially, we got to talk about the Americans' like emotional stability. Some people, like, rely on this heavily. And as for me, we've done $3 million in a single day. And not only just us, a lot of people are connected to our brand through affiliates. They make money off of this. So I feel like if TikTok shop was to leave, I would personally consider it to be one of the greatest, like, layoffs in American history.

So what would you do? I mean, thank you for giving us a sense of what the financials are. Because we always feel awkward asking people, like, how much money do you make? You know, but we're trying to get a sense of what's at stake. So now that you know, because we all thought a few weeks ago, maybe this isn't going to happen. And now it's like, okay, maybe it is. So what's the backup plan? So I feel like no one really knows. A lot of people right now are already Omni-Channel.

So we're on other platforms. But there's nothing like the power of the TikTok algorithm and there's nothing like what TikTok has been able to do with TikTok shop. They've somehow figured out a way to seamlessly integrate live selling. What a brand. What a person who's sitting at home who can literally find something in their home and say, I love this. Let me go tell my friends about it and generate it comes.

Have you tried Instagram or some of the other options? Oh, definitely. We've tried other platforms. We've seen success with other platforms, but we've never seen anything like TikTok Shop. So you think they're just better at it? What makes TikTok so good? I think it's the power community.

The fact that you can connect with your consumer, it's the one app, it doesn't matter who you are, how you look, what you have going on. You can turn your camera on, and you can connect to your audience. You can connect to a person that's just like you. And then on top of that, with TikTok Shop, you can tell people about the things that you love

and generate income. I do think, as both a user and as a wannabe creator. It's so hard sometimes to just put this content out. It takes a lot of work. But I do think the algorithms on TikTok are better. And I look at Instagram. I go, you have meta. You have Mark Zuckerberg. Like, how hard can it be to replicate the algorithm from TikTok? And they've copied Snap. They've copied many things in the past. We don't see her getting worked up about much like this. By the way, Stormy. I want to be clear. I went viral my first week on TikTok shop. I went viral my very first week. And we have

been on an upward trajectory since. We did 50 million in sales last year. And it was because of the power of TikTok shop. Not only that, because of our products, affiliates are able to enjoy our products, tell other people about it, and those people are in turn able to make money as well. So when I say, like, to lose TikTok shop, it would be

devastating. So I feel like the entire American morale and people, like, it'll be a big layout. But my guess is, Stormy, that you don't care who owns TikTok. I'm guessing. So if TikTok were to stay alive but be based here and do everything exactly the same, let's say it's

exactly the same. Nothing changes, but it goes from China to Phoenix. Huntsville, do you care? I do care. And I care because as a business owner, I never want someone to be able to tell me who has to own my business. I think that's not right. And I think it goes against, like, once again, the American dream. It's impactful. It makes me feel like my voice does not matter. It makes me feel like someone can tell me what I have to do with my business. And that is not what this company. I mean, this culture of America is supposed to be based upon. So I don't agree. That's fascinating.

Thank you for coming on to tell your story and how you feel about it. And it can happen to them. It can happen to any one of us. Stormy, we appreciate it. I don't know if the Supreme Court watches power lunches CNBC, but if that's a good message, it's a different take than just the legal argument. There's also, to Stormy's point, the human argument. That's where the politicians come in.

The Supreme Court might have to say what it's going to have to say by law, but the politicians can come in and try to kick the can down the road. Well, the fact that the CEO is appearing at the inauguration, Maybe a tell, because even the Supreme Court says, right? Maybe the incoming president will be like, let's keep it around. Can pull something out of there. Stormy Steel, real name. Yes, real name.

Canvas Beauty. Thank you. Thank you. And congrats on all your success, too, by the way. Treasury yields are better these days. They're sliding on some renewed optimism for more Fed cuts. We'll have more on the bond markets with Rick next. Welcome back to Power Lunch.

Markets are still fractionally lower. We're off some of the sessions earlier this afternoon, though. I mean, the S&P is literally down half a point right now. Maybe they feel better because yields are drifting lower. Rick Santelli is out in Chicago with more on that. Rick, we've had inflation. We've also had Besson's testimony today. What do you think?

Yeah, well, listen, it's going to be interesting to see when all these picks get voted on and see who's in and who's out. But who really knows what's going to happen? You know, conditions of the market, conditions of the economy, domestically and globally, of course, may alter agendas that are far. from set in stone. One thing I can tell you is despite the fact the inflation data really wasn't hugely cool in any way, the anticipation of it maybe being much warmer really has turned out to give us a big move in the marketplace. Now, granted, if you look at the data today, it wasn't bad. As a matter of fact, if you looked at core retail sales, that was up seven-tenths, up seven-tenths. That's really solid. That control number is the third-consum.

consecutive increase in a row. And if you continue to look at the year-to-date of two-year note yields right now, the short maturities, the ones that didn't rally as high as the long-dated, they're toying with potential new low close of the year. And let's go to the long end now, Kelly, because the long end, I think, gives you the most technical information, at least based on all the traders I'm talking to. They're talking about that breakout in a 30-year bond. There it is. It occurred right towards the end of the year when we closed above that 481-ish level. Now let's zoom back a little bit. You can see that on the right side, then you go back to April on the left side and see that 481 area. And when we closed above it, we had some momentum. Now, if we go to the charts on an intraday basis, that close took us to a double touch at 5%. Without a close above 5%. And now as we come down, many traders look at 30s and 10s to see where they consolidate. date. If we start to close below 480 in a 30-year bond, if we start to close below 450 in a 10-year note, these are going to be very significant levels. So those are the areas you want to pay

closest attention to, especially considering let's not forget. The market's doing big things in front of a big day. The new administration takes over on Monday. Back to you. Okay, we're watching 480 and 450. See what happens. Rick, thank you. All right, coming up. Speaking of rates, we've got an exclusive interview, the CEO of Bank of America. Becky Quick, bringing you that live next. All right, welcome back. Well, earning season is off and running. And so far, it's been a strong showing particularly for the big banks, really across the board.

And that includes Bank of America posting a beat on both the top and the bottom lines this morning, growing net interest income by 3%. Joining us now in a CNBC exclusive Bank of America chair and CEO Brian Moore. Moynihan joining CNBC's own. Becky, Quick. Becky, take it away. Brian, thank you very much. And our thanks to Brian Moynihan as well. You saw the stock was down by about 1.8%. But that does come after the stock was up pretty sharply yesterday, as many of its peers were reporting better than expected numbers. Bank of America, no exception to that. Strong numbers across the board. Investment banking fees were up by 44%. And net income interest, as Brian pointed out, was up pretty sharply too. Brian, just wondering what you can tell us about net interest income for 2025 because the analysts I either spoke with today or read that are still recommending shares of Bank of America are saying they're doing that because they expect your bank to outpace its peers when it comes to net interest income in 2025. What do you see?

Well, happy New Year, Becky. And yes, we expect it to go up next year. So today we told people, our investors and the public, that basically had two basic points. First of all, it'll be flat. the fourth quarter 24 to the first quarter of 25, which with two less days, that's really a growth, 250 million that cost, you believe it or not. So that's actually good performance. And by the year end, it'll be 155 to 157, 15.5 billion to 15.7 billion. And all in next year, five to seven percent growth rate over this year. And that's different because the way our balance is constructed, we keep working up the ladder and you expect that to continue grow. But the thing that people get caught about the financial measurement, the reality is what's really happening is our loans and our deposits are outgrown the industry because we're doing a

great job with the customers. And so, you know, our deposits bottomed out six, seven quarters ago, have it been growing since then. It's now rounded out to all the businesses. That will continue into 25. And our loans, we had $9 billion in the third quarter, $20 billion in the fourth quarter, and that compounds in, and we expect that to continue. So it's really a great job our team does with those wonderful clients and customers that actually drive this. We talk about it like But it's an output, not an input. We have been hearing time and time again that business confidence is up. I've heard this yesterday from another survey at Taneo that said business confidence up 32% year over year.

A lot of that has since the election. But how is that business confidence actually translating into action, whether that be investment banking, M&A, whether that be increased demand for loans? What are you seeing on the ground? Well, I think if you have to sort of split that into different. types of businesses for small and medium-sized businesses and we're the largest small business lender in America. What you're seeing is that a combination of their belief that regulatory burdens will be less, their belief that interest rates have come down because they typically

borrow lines of credits which are very sensitive, short-term rates, and those rates have come down, and a belief that there will be better prospects of them to serve their customers and sell products because customers' spending strong. They have moved fairly dramatically. You see at the small business confidence levels have moved up dramatically. And the same for the mid-sized companies, you know, 50, 70, 100, 150 million revenues. When you go to the higher-end businesses, it's a little bit different. They've been sort of sitting there saying, if I wanted to do a $5 billion, $10 billion transaction by another company, or I want to sell my company, or I'm a private equity firm and I want to put a company into the market,

that's been held up because of concerns about antitrust and things like that. Their belief is, with the incoming administration, that will encork a lot of activity, and they can be much more aggressive. Even in our industry, even though we can't make deals, obviously you're reading a lot about the idea that deals can get done. And I think that's good for America because at a day our companies are worldwide leaders across large companies. Our banking system is a worldwide leader and allowing them to continue to make strategic progress, i.e. combined to serve customers and clients in America. But a whole world is good for our country. Brian, you returned $21 billion to shareholders in 2024.

I think you bought back about 3% of the shares outstanding over that period of time. What's the plan for 2025? And would it increase if Basel 3, if those restrictions are loosened once again or if they go away? So in a broad context, we have three uses for the income or capital we generate for our good work our team does. One is to pay our dividends. Second, to support business growth. And third, if we don't need it, is to set it back to the show. And as you said, 21 billion between dividends and buybacks last year.

We expect the 3.5 billion quarterly run rate where we are now to continue. We've got to let all these rules sort of settle in, and then we'll figure out what that means. Right now we have about 11.9 percent of required capital level CET1, so-called our industry. Our requirement is 10.7, so that's a fairly healthy excess. We would run more at 11-2, given the current set of rules, but we also think the rules are going to change, and hopefully they don't change to be adverse. I really don't think that will happen. So all that bodes well.

we just have to let some things get figured out. But the idea of us returning $3.5 billion in this court and continuing a clip like that and increasing as earnings grow is basically what we've been doing for a long time. What did it mean for Michael Barr to be stepping down? Of course, he was the Fed Vice Chairman in charge of supervision for the banks. He was the one kind of responsible for heading up some of these Basel three rules too. And it was a pretty unusual pushback that a lot of big banks had against their regulator. That's very uncommon to see people actually come out and say,

don't like these rules, we think it's bad for business. It's exactly what you did, Jamie Diamond, a few others, Jane Frazier, too. What did it mean to have him stepping down? And where do you see the future of these Basel III rules? I think you'd heard a proposal that a reproposal and obviously a disagreement among the various agencies. And hopefully we can get a set of appointees in that will look at it, come to a determination, get it done across the agencies that put this behind us. Basel 3 finalization has been. open for too long. We have such a higher capital standard in our country than we do in Europe. And theoretically, we're standardizing two systems, which, you know, don't really aren't close

in terms of the amount of capital. We're probably 30 to 40 percent more capital, American bank for the same risk as the European bank. All that is what it is, but we just need a set of rules. And so what we all hope as an industry, and we had to push back because it was a little bit just, it was getting worse every year. It's unpredictable. Our shareholders are starting to say this industry is hard to invest in because the rules change all the time. We've got to get to a set of rules that we believe in, the regulators believe in, and push them through and get them done. In the end of the day, all the companies you mentioned, plus many more, we underwrite the safety and soundness of the bank industry.

When the FDIC bails out a bank or takes a failed bank and passes and sells it and there's losses, that cost us in the stuff that happened a year and a half ago or so, $2.8 billion. And so we have a high interest to having a very sound industry. And so, but we have to also high interest in a set of rules are predictable, fair, understandable, clear, transparent. And people can understand the cost benefit of adding more capital, the extra capital occurrence we took on through some of these proposals would have stopped us from making $300 to $400 billion of loans. That's not good for America. The competition for the loans will generate the business fuel to help them go out and execute their business plans. So we need a group of regulators who are sober.

Understand there's a long-term play here to get this done, get it done on a basis. could all get done and agree with and then move forward. I know you've had a pretty busy day with earnings with having to talk to the analysts on the street and having a town hall with everyone there, too. But maybe you've got a chance to listen to a little bit of what Scott Besson had to say today in front of Congress. Of course, he's the Treasury Secretary nominee. Some of the things he picked up were no new taxes. Those 2017 tax cuts will be extended. He said it's really important. Also saying that he does believe in an independent Fed, what do you think about the incoming, very likely income? coming Treasury Secretary, Scott Bassett, and what it means for the banks.

Well, he's got a great reputation. He's been in the markets. He's been an investor. He's been a, you know, so he understands. And he also understands the dynamics of debt and global debt. So I think today I just saw some of the headlines across your station. So I did have time to sit and listen to it. But it seems like he acquitted himself well or maybe he's still up there.

But the end of day, you know, Becky, we need good people because in a day we got tough issues to solve. for America. The debt is very high. We've got to start to curb its growth rate relative to the economy. It doesn't have to go down. We don't have to, but if we can cut expense a little bit, we could figure out a more effective revenue place, keep the growth going so the pie grows. All that's good stuff, but it's going to take a wise steward. And I think the secretary that was proposed today, Scott Bassett, has a good chance of doing that. And I think the hearings seem to go well from what you all said. You know, just this month, Savita Subramanian at Bank of America has said that she does not anticipate there are going to be any more Fed rate cuts this year.

We've seen treasuries push up higher, the yields push up quite a bit higher. Some people say it's because of the debt and deficit picture that we're saying. Facing, other people think it's really sticking inflation. Why do you think we've seen treasury rates push higher? I think it's a combination of the yield curve sort of normalizing its shape, given the fact that we're going to have a little high inflation. It'll take a while to ring that out. And we always said that if, you know, Savita and her colleagues, you know, a year and a half, two years ago, said this would take two or three years to get it out of the system. They still have it going down to an acceptable level low twos, you know, 25 into 26.

And if you look at the math and you can see it kind of work this way down, but it's going to, they've got to have a real interest rate. And that will, and they've, and they're restrictive right now still. But the question is how restrictive you are over this inflation rate. In the end of day, the rate curve that we've all witnessed since. 2008 or whatever it was, is the unusual part. The usual part is actually have something that starts with a three handle for Fed funds. It has a four and a half percent tenure. I think I look at somebody looking up today. 75 percent of all the days of 10 years traded. It's been four to half or something, you know, around a four and a half range in history, except for the

financial crisis forward. And so we just got to get used to that it's good for America if we have higher growth, a little higher inflation. We spent 15 years trying to get inflation. You know, we couldn't get inflation back to target. It's not bad if we can have this happen. And frankly, as it relates to debt, it helps lessen the debt burden of time because the pie's growing faster. So you don't want to hope for inflation, but inflation is not necessarily a bad thing. And they've got it under control, and they've got to maintain their diligence. And that's why Savita said, look, as we see it now, she and the research team said, you know,

we don't see a need for a cut until the inflation war is won a little bit. But they actually have seen it come down. It's just they want to see it go down a little faster. Okay. Maybe it's the new, new normal. Brian Moynihan, want to thank you very much for being with us today. We appreciate it. Thank you, Becky. Kelly, we'll send it back to you. Wonderful. Thank you both really appreciate it. Becky, with the CEO of Bank of America. And don't forget, markets are closed Monday for MLK Day, but we will have live coverage of the inauguration of President-elect Trump at 8 a.m. Eastern on CNBC. Becky will be back for that. Heading up the coverage, speaking with major players like Walmart's Doug McMillan, Stan Drucken Miller, who knows Besson-Berry. very well, Walter Isaacson and others. We'll be right back.