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Bank of America is facing a mountain of unrealized losses on its hold-to-maturity portfolio but its quarterly numbers were good today. Shares of BAC are up 1.7% in the pre-market.

For us, what’s more important is the broader economy and Bank of America has an incredible amount of insight into what consumers are doing.

Here is how CEO Brian Moynihan summed it up:

Just a quick note on what we see in the economy. Our team of economists predicts a soft landing. With a trough in the middle of next year. We see that in our customer data, our 37 million checking customers we see their spending slowing down… The Q3 was up about 4% over last year’s Q3. Earlier this year, that would have been more of a 10% increase year over year. And for the entire year 2022, increased 10% round numbers over 21. This 4% level is consistent with the spending we saw in the pre-pandemic period. From 2016 to 2019. That is consistent with a low inflation, lower growth economy. As we move into October, the spending is holding at that 4% level. So growing but growing on a basis more consistent with a low growth, low inflation economy.

TLDR: He sees a return to the pre-pandemic economy.

Here are some other macro takes from CEO’s via @TheTranscript_

  • $JPM CFO: “our US economists had their central case outlook to include a very mild recession”
  • $C CEO: “…recent data implies a soft landing, but history would suggest otherwise, and we are seeing some cracks in the lower FICO consumers”
  • $WFC CEO: “Our base case remains a continued slowing of the economy”
  • $PNC CEO: “In regard to our view of the overall economy, we’re expecting a mild recession starting in the first half of 2024, with a contraction in real GDP of less than 1%”
  • $BLC CFO: “The current macro environment is causing some clients to pause, slowing overall activity in the asset management industry”

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