BofA's Mensah Says Recession Projections Have Diminished

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00:00On the macro front, a reminder this morning in terms of the tariff volatility,

00:03the tariff threatened 50% on Brazil, 50% on copper, yet markets, global markets,

00:08global stocks are close to record highs. Is that rational to you or is there complacency in these

00:14markets? I think we said the markets are always rational at some level at some point in time.

00:20I think that the markets are pricing in there. There's so much more information now versus

00:25early April. And I think what the markets are saying is, OK, we have a lot of information

00:29that might come in on specific tariffs. You mentioned the ones that came through last

00:32night. But looking through that, where do we see value or where do we see opportunity?

00:38So in very specific sectorial areas and specific companies, I think people see value there.

00:44I think in other areas, the value has diminished, absolutely. So the headline numbers may be

00:49where they are, but I think what we need to look through is say, where in tech is it doing

00:52or where in the supply chain might things not be doing so well.

00:56And in your conversation with corporate clients, what are they telling you?

00:59In terms of where the cost of tariffs lands, is it squeezed margins or are they passing

01:04the cost on to the consumer?

01:06It's interesting because also you're trying to look at that in the inflation data and

01:09saying, is that going to hit? When is it going to hit? Right. So a lot of economists projections

01:13on, is there a recession? A lot of that has diminished. In our fund manager survey, the confidence

01:18in terms of, I would say the US economy and the broader economy is much better than two or

01:22three months ago. I think from the corporate space, they would, my sense is that there is

01:27some absorption of the cost there. It would be really interesting to see as we get through

01:30Q2 what earning results are like. So there's been some sense that there's some absorption

01:34of the cost. But there's also real efficiency gains. There was some pre-stocking coming up

01:38in March. And one or two have sort of said, well, we had a four, five-month, maybe three,

01:44four-month horizon in terms of where tariffs might settle down. Then we know what to do.

01:48We're in that zone now. We're sort of three, four months in. I think if there were further

01:52volatility around tariffs, then things might be back on the drawing board.

01:55And as a US bank, but with your global purview, the time you spend internationally, we've heard

02:01from some banks that they're losing out on bond deals, for example, to domestic banks because

02:06those clients don't necessarily want to deal with US banks as much. Are you seeing that at all?

02:11Are you losing out on any bond deals as a result of that?

02:13No, I haven't. And I have been asked that a couple of times. There's been nothing that

02:17has hit my radar. We have to be out there all the time. And I think our proposition, which

02:21is trying to be close to clients and provide that value, remains. And I think there's very

02:25few of us at our scale that can do that across the globe. So as we're in the C-suite, in the

02:32treasury offices, in the CFO's office, I really haven't seen that.