Transcripts For BLOOMBERG Bloomberg Daybreak Americas 20240713

Estimates by about 0. 30. Revenue was also better than estimated, and they see revenue up, so that stock jumping in the premarket. Time now for global exchange, where we bring you todays market moving news from around the world. From hong kong to brussels, des moines, iowa and new york, our bloomberg forces are on the ground with the latest top stories. Chinese growth and imports beat expectations. With us from hong kong is in the curran. Is enda walk us through the numbers. Numbers. Ty good a couple of factors behind these good trade numbers, sentiment was much better in the month of december and late last year in advance of the trade agreement that is going to be signed this week. There was an element of front running of the orders because in Chinese New Year falls january. A base effect gives the numbers a bit of a polish, but also importantly, china found new markets even as it suffered from tariffs on its goods going into , and even into europe. Nd Southeast Asia total chinese exports on the year rose despite the tariffs. Alix thanks for that, bloombergs enda curran. The u. S. Dropped its label of china as a currency manipulator. Manipulator. The Trump Administration unveiled the move before the scheduled signing of the phase one trade deal in washington tomorrow, saying, china has made forcible commitments to committing to devaluation while promoting accountability. Joining the from joining me from washington is shawn donnan. How does this set the stage for today . Important, is very one of the big issues that the Trump Administration had identified as wanting china to address. One key component of this trade currency chapter, but that it is an enforceable currency chapter the administration is pointing out. A largely symbolic declaration of china as a currency to be later last year that set the table for negotiations. The u. S. Would have 90 days to apply tariffs if it decided china was manipulating its currency again. That puts china on a much shorterthat puts china on a much shorter leash, is the argument from Administration Officials here. We will see how things develop. We are still looking for more substance and more details on what else is in the agreement, and crucially, the question is going to be over the next year whether china lives up to this agreement. Alix absolutely. Thank you very much. We want to turned back to some trade issues now between the u. S. And the European Union. With will be a meeting u. S. Trade representative robert lighthizer. Going to me from brussels is maria tadeo. What is a win here . Maria its no secret that this has become a very difficult relationship. Likeow that trump does not the you as a trading partner. He says that the relationship is unfair in the favor of the eu. They will try to deescalate the language, but there are a number of open fronts here. We still have the litigation between airbus and boeing. We also have the french digital tax that could result in tariffs being applied different products. Of course, we have the situation playing in the background over in iran. The u. S. Find it difficult to the differentiation between the tariffs and thats between the situation between the situation and trade. For the administration, they feel the europeans are purposely delaying big decisions. Alix thank you very much. Now we turn to india, where the economy is headed into stagflation. It saw a slowest expansion in more than a decade, while consumer inflation hit more than a fiveyear high, climbing 7. 35 in december. Joining me is Bloomberg Economy and policy reporter. What drove india to stagflation . Reporter well, as you correctly said, growth is off the cliff, below 5 this quarter and the next quarter, and at a time when headline inflation is above 7 and will probably keep rising in the next few months. It is a far cry from what india was growing at about 8 and inflation well below the 4 which the r. B. I. Targets. The other thing is that the ammunition is shrinking all the time. They already cut rates by 35 basis points, but most of the rate cuts have not gone into the economy. All of the eyes are on the budget. The government will be presenting the budget february 1, and there are expectations that the finance minister will be giving out cash through tax cuts to the common person, to the citizens, to go bump up demand and consumption, which has fallen and has been the prime reason for the growth slowdown. Alix thank you. Big Bank Earnings kicking gain. Going me with more is allison williams. Give us some of the big highlights. Alison six trading fic trading is really the number one highlight. This is the number one global bank in this business, and that revenue is growing, almost doubling from a year ago, i think it was 86 . Maybe 1 billion more than expected. Really strong number, really setting the bar ahead of citigroup, who is right up there with jp morgan in this business. It really looks like broad acrossh is monetizing the business. The rates business is a big positive. Securitization i think is where strength. D some another positive which is perhaps a bit more sustainable looking to the future is that income is stabilizing. That is something we are looking for across the banks this quarter. Jp morgan said midquarter that things were coming in a little better, and looking towards the First Quarter, guidance is a bit better. Alix thank you very much. You will be back with us in just a moment to break it down even more. We end with u. S. Politics. The seventh democratic president ial debate will be held tonight in iowa, the last one before the Iowa Caucuses next month. Joining me from outside Drake University where the debate will take place is kevin cirilli. For . Are you looking kevin it is cold here, and it bernie between senators sanders and elizabeth were in the last couple of days and Elizabeth Warren in the last couple of days. Warren taking issues with the that his supporters have had, saying that she is being trashed. Elsewhere, some new polls in the past couple of days show that the race in iowa is fluid, New Hampshire is fluid. Nevada, joe biden Still Holding onto the frontrunner status. This is the last debate before the allimportant Iowa Caucuses in early february, and this is really coming down to the wire here. It is really anybodys guess. Look for Pete Buttigieg to see if you can capitalize off of the tension between bernie and warren. Alix thank you very much. Stay with bloomberg for coverage and analysis of the seventh democratic debate, live from des moines, iowa. One other story i am watching today is apple and the fbi. Apple now pushing back on criticism by attorney general william barr, saying it really is helping the fbi investigate last months terror attack at a navy base in florida. Apple didnt directly address the issue of unlocking devices, but said it will continue to support them with the data available, and made the point that there is no such thing as a backdoor just for the good dies. The company says the good guys. The company says backdoors can also be exploited. Coming up, citi and wells fargo on deck this morning. How much upside can we see . We will break down more earnings next. This is bloomberg. Alix jp morgan popping in premarket after beating tradings for fic revenue by almost one billion dollars. Joining me once more, alison williams. Also joining the conversation, Lauren Goodwin, new york Life Insurance multiasset polio strategist. I guess i am curious what is actually baked in when has been a rotation into financials and value again in the last year. Lauren were looking at the next quarter or so positive for financials, that the yield curve uninvertverted has ed, and that the consumer has been doing pretty well, which is a revenue aid for these companies. On the challenging side looking forward, you have the market expecting cyclicals to continue to do well in line with Rising Economic expectations. A little concerned about that for the remainder of 2020. Alix did we learn anything about that in terms of the earnings . Alison i think what we got i , and we got what we wanted improving rate environment midquarter, income coming in a bit better for this quarter, but for next quarter as well, jp morgan giving guidance a little bit better than consensus and suggesting that we should continue to see some stabilization. Alix is this a jp morgan specific living it out of the water, or a general bank thing . Number was fic really impressive. For the leader to find such a big gain from a year ago, there was an adjustment, but still a big number. We will find out very shortly and get citigroup. They are also big in this business. Whether it was jp morgan specific, we will see strength across the banks. I think Net Interest Income is something investors are a bit more focused on because that is a little more sustainable. For fixed income, i am going to want to hear is there anything in the quarter we can feel better about for 2020. Alix jamie dimon quoting a , consumerition strength. Do you feel like it continues . Lauren it can as long as the labor market continues steady as she goes. Alix so friday was steady, not that. Lauren not bad. Lauren yeah. It is a positive environment now. Theres a delicate balance when we dont see a lot of wage growth in that jobs number, but again, steady, not deteriorating. Alix what do we know about the loan reserves, where the weakness and strength is . Alison again, coming in strongerthanexpected. On the consumer side, seeing some reserve releases. That also continues to be a positive. Not only are we getting loan growth, but on the tread it on the credit side of things, better. The other thing we will be watching is the accounting change. There was some guidance from jp morgan. That is some thing we will be seeing the First Quarter. Alix i learned up on that. When we take a look at loan growth, do we have an idea of where it is happening and where we might see slowing . Dug into theg portfolio, based on numbers we have seen, the consumer has held up, commercial has slowed, but a lot of that in the Industry Data is related to the fact that we have such strong financing going to the Capital Market, so the offset there. Alix Debt Capital Markets up 11 , equity Capital Markets up about 10 , advisory down a touch, but 3 . Nothing to write home about. Alison and i believe a year ago it was a record quarter. The other thing i will point out too, a lot of the strength we saw in the primary markets was on the equity and debt side that helped feed into better trading. Equity trading also beat, just not as much. Alix maybe this is an unfair question, all of the cyclical or value areas, where do you find the best opportunities . Lauren i think that financials, like many of the other cyclicals, are undervalued relative to historical levels, but one of the things i think is really challenging for financials in particular relative to some of the other value areas is the fact that Interest Rates are so low. It is a difficult environment for asset managers. It is really difficult environment for banks, especially as you start to see credit would be deteriorate and loan growth deteriorate. It is a little bit of an uphill battle for the banks over the next couple of years. The it also brings me to point i was talking about. What would you need to see a rebound in capex, to see that demand come back . Lauren i think the trade deal is too little, too late when it comes to the capex story. Ceo confidence is still really suppressed, and it makes sense. Businesses cant change their investment plans on a dime the way that markets can change their sentiment around these issues. Because trade wars have been front and center the last couple of years, because it is an election year, it is not really an environment where you see going to the moon where you see capex going to the moon. Alix and as we look at citi and wells, what is the one thing . Alison taking a step back, the number one thing will be what are their targets for next year. Do they need to reset that target . Not sure if they will give a new return on tangible equity target or some kind of cross guidance for 2020. Wells fargo, Charlie Scharf speaking for the first time on the call. Im not sure how much hes going to give in terms of guidance were strategy. I guess it is going to be a kitchen sink order with wealth. We will see. You alison williams, thank very much. Lauren goodwin of new york life investment will be sticking with me. Ceo says, blackrocks Climate Change will upend Global Finance sooner than everyone letter tohis annual corporate leaders. This is bloomberg. Viviana this is bloomberg daybreak. We begin with indonesias lion air. The air carrier considered putting its pilots through simulator trading before flying the 737 max. The airline abandoned the idea after boeing convince the carrier it was unnecessary. That was months before a lion air 737 max crashed. An internal boeing text message referring to lion air as idiots. The trump Prime Minister will take a closer look at security risks posed by the Trump Administration will take a closer look at security risks posed by foreign investment. That is your Bloomberg Business flash. Alix thanks so much. Has ck ceo larry think message foras a corporate investment. Reporter this is a pretty momentous letter. Its as they will divest from high sustainable risk companies. When you think of any money manager that can have a big impact on the corporate world, blackrock has to be near the top , if not at the top of the list. They manage 7 trillion, so they have big sway over the governor over the governance. Most of their funds fall in the passive management caligari passive management category, but here they cant divest because they have to follow and index. Front, fink also said movinge committed to towards sustainable energy, and this is an area where blackrock can really improve, according to majority action, a climate study group. They said blackrock only voted investments 15 of the time. Lets say this change causes all of the big passive managers to follow suit. There is where we could have really big change when you look at blackrock, vanguard, state street. They own 22 of the s p 500, so that is a really large voting block that trumps any activist investor pushing for a similar goal. Blackrock itself owns 6 of the big energy companies. Theres a lot of room, but we dont have a lot of the details on exactly how larry fink plans to pursue this. For now, we just have the general, that they will divest from some of these higher sustainable risk companies. Alix thank you for that. Still with me on set is Lauren Goodwin to of new york is Lauren Goodwin of new york like investment. Theres only so far they can actually do anything versus their passive funds. How do you look at this shift . Of investment,a and we are moving in the same direction, of paying attention to principles in terms of investing is an important part of the shift. One of the reasons it is hard to find these investments is how we measure what is sustainable, what is a Good Governance principle, is challenging. The more that investors demand this type of Risk Mitigation and the more that investment firms move in this direction, the more information we have, companies will be more focused on meeting the metrics that are deemed appropriate for these type of investments. Alix it has been so hard to walk the tightrope because you cant divest from all fossil fuels because they are in all the indices, and that is what blackrock has to do. Lauren a lot of that comes down to, within an industry, where do want . E the change you whether it is Climate Change or social change or governance change, how do you get to, within industries, the best factors . Alix Lauren Goodwin of new york life investment will be sticking with me. Coming up, all the news and analysis you need. This is bloomberg. Alix this is bloomberg daybreak. We are seeing s p floating around neutral as we see earnings coming out. Jp morgan crushing estimates. A little positive movement in europe as well. Some really interesting nuggets for you when it comes to currencies. Dollaryen breaking 1. 10 for the first time in almost eight months. Now. Uan flat it did touch a six month high. Thed want to highlight twostens spread, 25 basis points. A move in the bund market yesterday caught investors eyes. It felt like a big Success Story for the markets. Now for bloomberg first take. 20 made from our inhouse team of wall street veterans and insiders are vincent cignarella, voice of bloomberg audio squawk, damian sassower, and still with us is Lauren Goodwin of new york life. Lets talk about currency maybe elation currency manipulation. Vincent i find it really interesting. For me, it is comical after trading the swiss franc that the world has woken up to the fact that the swiss minute delay the currency. They have been doing this the swiss manipulate their currency. They have been doing this since day one. They would call you up and do a trade, and i would say, is this for you or swiss bank . They would say, it depends which way it goes. So today to say the swiss are manipulating the currency is hysterical. Lauren to me, lets not call it random, but certainly uncertain where investors are concerned. You have china one day, switzerland the next. Nobody is really off the hook, and that includes equity markets, currency markets. Alix i also wonder, you take yuan off the list, whatever that it continues to strengthen, that hurts policy, right . Damian the interesting thing to me is who was out fluffed the list who was left off the list, specifically thailand. Tylan not making the list with all that is going on there is kind of interesting to me. In terms of china, the data surprised to the upside for sure. Iron ore prices were up almost 1. 5 . Theres a little but of a switch from the u. S. To the asian region and the eu in terms of export trade, but i think the data is interesting, and we are looking for more out tonight or tomorrow. Alix i love that we had four different topics in one response. It was kind of amazing. [laughter] vincent im surprised there werent more. Alix but your point, the trade data getting better, and my open i was saying green shoots that, so things are getting better. Is that how you feel . Vincent we moved away from china. We talked about this many times. This is the way of the course. Europe is next, without question. Europe is going to be the next spot to get hit. We talked about this with the divergence in the bloomberg dollar index versus the ice dollar index, how there will be less tension in asia, so they will do better. Europe and the pound are probably going to do worse similar because that is the next focus. As we approach the election and things heat up, auto tariffs, that is a brilliant strategy for the administration to gain votes in the midwest. That is the base. Guarantee it is going to happen. Damian and youve got phil hogan meeting with lighthizer today. Lauren challenging all of this is that every currency is a pair, so theres a huge dependency on what happens in the u. S. Economically, in terms of the Market Sentiment that drives the dollar higher or lower. The u. S. Is the largest economy in the world. That is a really important aspect of all of these currency pairs. Vincent i agree. It is the same way when you trade fx rates. Its not one thing. You are trading to rates, and the differential between the two. You can lose a lot of money even though you think you are on the right path. Alix does any of that matter as long as the fed is in there . Vincent i dont think the fed is really part of the game, at least in the First Quarter. The data is coming along nicely. Theres no reason for the fed to inject themselves into the conversation. I dont think they will at least for the First Quarter i dont think they will. At least for the First Quarter, i think we need to look at numbers, but i dont see the fed being part of the story. Damian i think they announced their repo schedule today, so we are going to get a better sense as to whether they will indeed try to scale back some of their operations. If they do, i dont think he market is going to react very kindly. Vincent but if they do, that is a good thing, isnt it . That the situation is calm, we are backing up a little bit. Damian it is a good thing depend on the perspective you are looking from. I believe that Central Bank Stimulus is driving asset prices to alltime highs globally, so if you want your 401 k s to keep going up, you better hope the fed is still stimulating and doesnt pull back. Lauren i think that what we really want is to have the fed out of the game, just quieter. I think the fed would like nothing more than that, frankly. But if we see a regular decline in not only temporary open market operations, but also in the shortterm bills purchases, then you do have a risk to equity markets. This is clearly a liquidity driven market, which is one of the reasons the Cyclical Upside for the First Quarter is temporary. Ofx but i have two schools thought on this, reading a lot of different research. Ele of ubshaef spoke and said it is a liquidity driven rally. On the flipside, it feels like investors are expecting a lot of Central Bank Cuts and a lot more of the fed being there all the time in terms of the balance sheet. If that doesnt happen, then you get a liquidity driven sotloff, a liquidity driven selloff, or antiliquidity driven selloff . Vincent vincent i think that is a big possibility. Central banks are essentially saying negative rates, all of this liquidity really hasnt driven the growth and the inflation that they thought, and they will at some point need to pull back. As they pulled back, it is not necessarily a bad thing for the economy, but lets call it an asset bubble, not bubble, whatever you like. When you look at the fundamental of equity markets, you really need to look at corporate profit and earnings. Corporate profits have been declining. You cant just hope on the fed. You need real results. A pullback in equity markets is just a foregone conclusion. Lauren thats exactly right. Equity markets are pricing not only everything with the fed to go right, but with fiscal stimulus, economic stability, political stability. Alix you think that is credible right now . Lauren i do. While there are lots of elements playing into higher valuations, it is really tough to be able to see where you get paid for risk right now. It is not clear with the catalyst for a correction would be, but there are plenty of options. Damian just looking at the Bank Earnings coming through, we see a steeper curve. That compression might decelerate, so it would be nice seeee deceleration to that come back from the banks here. Vince, to what you were saying, it feels like what we are basically talking about is if we have some kind of liquidity driven rally that then changes, markets react with a risk of a selloff, but then are we going to get more cuts . Is it a catch 22 where you cant really get out of it . Vincent you may get more cuts, but we have to wonder about what this is actually going to do. We will talk about that later in our traders take. That is the endgame, how credit stands for the consumer. Look at auto sales the last year. Really poor. If you are a consumer and you are confident, that is the ticket item you really buy. Markedlybeen declining over the last year. So i question the real health of the consumer and the confidence the consumer has of not so much 2019, but what 2020 and 2021 will bring. To laurens point earlier on capex in an election year, it is not going to zoom. There are a lot of questions still to be asked. That ise get past really the. Question to be answered lauren because we are really the question to be answered. Because of that, you enter a circumstance where markets can really struggle. When you have markets moving up in defiance of private fundamentals, whatever the risk, ones is a real of the reasons we are more defensive despite the Cyclical Upside. Damian lets imagine for one second that Central Banks care less about asset prices and more about fundamentals and inflation. If you look at what is going on in europe, specifically hungary, romania, poland, inflation is ticking up. Alix india today. Damian you can see that maybe spilling over into the broader region. Coming in oni friday. That will be an important print on how much they are able to stimulate. We know from the movement in bunds last year that drew the u. S. Yield higher, if bunds continue to rise, it will be a little more challenging for the fed. Vincent and we are looking for a jump in u. S. Cpi today, which is the other side of the coin. Itthat inflation ticks up, is going to keep them in the corner. You get back to the same story of fundamentals and not Central Banks. Central banks could easily find their hands tied this year, regardless of whether they see Economic Growth slowing. If the inflation number ticks higher, especially in emerging markets, Central Banks are off the table. Ere. En we have two outs th is ecb move in global bunds very much related to Risk Appetite that can change on a dime. Where the fed is concerned, the fed has made a really important shift to saying they wont react to minor changes in inflation. They are looking for sustained and meaningful changes in inflation. , a minor change in inflation was a major market fear, be that will change maybe that will change. Alix we will leave it there. , vincentssower cignarella, and Lauren Goodwin of new york life investments, stay with Bloomberg Television later today for the interview with wells fargos cfo. Those earnings coming out in 20 minutes. Any charts we are using throughout the show, go to gtv on the here mental and check them out as on the terminal and check them out. This is bloomberg on the terminal and check them out. This is bloomberg. Actually, an update on the first word news. Heres Viviana Hurtado. Viviana the Trump Administration says it is no longer calling china a currency cheat. They say china made enforceable commitments not to dig down the yuan. The move coming two days before the u. S. And china are set to sign phase one of the trade deal. The u. S. And the European Union squaring up for a fight over trade this week. The e. U. s new trade chief will be in washington. Phil hogan is trying to head off the transatlantic commercial war. The prospects for success look slim. Both sides have revived old disputes and triggered new ones. Next week, president trumps impeachment trial is likely to begin. The senior senator from texas john cornyn says a week from today, he expects opening arguments. There will be a unique series of rituals that include a procession of house numbers carrying the articles of impeachment through the house were tender to the senate chamber. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Of yellow hurtado. This is bloomberg. Im Viviana Hurtado. This is bloomberg. Alix thank you very much. Coming up, jp morgans best year ever. We will take a look at how Investment Banking fared. If you have a terminal, check us out at tv. This is bloomberg. Viviana youre watching bloomberg daybreak. Taking theth amazon a 10tep in combating billion contract for microsoft. Amazon says that because of interference by president trump, it lost the pentagon contract. For a second listing in hong kong. Yum china is considering a sales share. One of the champions of private equity now a top debt underwriter. Into new u. S. Buyout loans. Rotondo im Viviana Hurtado. That is your Bloomberg Business flash. Alix we turn now to wall street beat. First, jp morgan posting its best year ever. Wells and citi on deck. Then, visa goes all in on plaid. 5 billion for pay the fintech start up that make sit easy to apps. And blackrocks larry fink sends a grave warning on climate. Joining me now is bloombergs sonali basak. What was your biggest take away from jp morgan . Sonali that fixed income trading revenue blew it out of the mark. Everyone was talking about it. Blah, blah, blah. Alix blah, blah, blah. Its been 47 minutes. [laughter] alix i know what youre saying. Sonali jp morgan x a lot of the low Interest Rate could be an issue come up on top of that, we have to also think about what Investment Banking revenue will look like across the board. They beat on advisory, although slightly lower. They beat on equity underwriting. They were a little shy on debt underwriting. The reason i want to bring that up is because on debt underwriting, a lot of the big banks tend to complain about other people rising up and taking share on what the markets look like these days. The question here for bank of america and others moving forward is how much are the shadow banks edging into their world. Alix do we know that that is the reason . If you look at Capital Markets, it was up 10 year on year, but you are saying it still wasnt as good as it should have been, therefore someone is eating your lunch . Sonali it could has been. It was a little shy of estimates. They did hold share against the kkrs of the world. It is even more of a question for the banks moving forward. Barclays, Credit Suisse have a lot of work in that business also. For jp morgan, they are the behemoth. They have a lot of businesses to worry about. We will want to hear about the strength of the Investment Banking world overall. Alix visa getting into the fintech business. What is in it for visa . Sonali for visa, it is pretty unbelievable, the growth of plaid. We had at 1. 1 investor pledging to buy shares at more than four times the share price we had at one point, one investor pledging to buy shares at more than four times the share price. They are being acquired at more than double the last funding round. At lessgot in in 2016 than 500 million in valuation, so goldman, kleiner perkins, all of these people are seeing a very healthy exit from this firm. Alix do we know if Companies Like these make money . This is not a wework situation. Sonali its very different. This is a infrastructure company. When you use venmo, plaid is the company that helps connect it to your bank. Something very interesting about them, they have created some very interesting relationship across the entire industry, working with the likes of robin hood and venmo and paypal, and even jp morgan opens up their data. That is something to think about. People think this is just fintech, but really come the big banks are involved. Alix lets wrap it up with blackrock, larry fink, and actavis investment when it comes to climate. Sonali it is mostly passive, so how far can this really go in his ability to really make a change in terms of Climate Change . People are believing that Climate Change has a real opportunity here to be one of the four fronts for esg initiatives. Event driven funds and actavis investors have been raising the most money in the Hedge Fund Industry and doing extraordinarily well. Typically, they have been seen as the types of investors that have been looking for more profit. So how do the interests of activist investors start to conflict or line with the blackrocks and vanguards of the world who want to focus more on esg, but have others that may want profitability first and foremost. Alix wells fargo is coming across with earnings earlier . 50expected, coming in at 1. 20. As opposed to i should point out that this also includes a 1. 5 billion for litigation for the fourth quarter. That stock now down by 0. 8 . You had a visceral reaction when was 0. 60 e ups was 0. 60. That stock is still down 0. 8 . If you are jumping into your car, tune into Bloomberg Radio on sirius xm channel 119 and on the Bloomberg Business app. This is bloomberg. Alix just to recap wells fargo share. S, . 93 per average loans pretty much go nowhere, and there is money set aside for litigations. That stock down almost 2 . Vince cignarella, voice of the bill burck audio sqawk of the bloomberg audio squawk. Squa on your terminal. Vincent i just saw a shout out to my guys at jp morgan. Nice job in trading. Report, areally cool really nerdy report. The National Association of credit managers extended credit, which is the blue one, this is credit that eventually shifts down to the consumer. The white is the s p pure growth index. As credit flows to the consumer, it flows into growth in the economy, and the credit managers report follows both the service and the manufacturing sector. Really drills down to a lot of details. It fell in december. This is a three month moving average showing it higher, but it fell from the november numbers. But it has been positive. The economist of the report says not dancing in the streets, but the number has been solid. What to note Going Forward is the worst number for 2019 was january, so we will see if that happens again in 2020. Alix vincent cignarella, thanks a lot. Coming up, more on Bank Earnings with jp morgan shareholders David Bahnsen and Tony Scherrer. This is bloomberg. Alix citigroup earnings out right now. About 0. 07 higher than expected. Fic coming in at 2. 9 billion dollars, crushing estimates, a similar story to jp morgan. That stock rising about 0. 9 in premarket. Welcome to Bank Earnings day. This is bloomberg daybreak americas. You have dealt a beating. Jp morgan as well as citi now. Wells fargo was a bit of a different story. That stock is down. S p futures totally flat. Eurodollar down a touch. It is really a g10 dollar story. Treasury, they say the swiss franc is manipulated. 1. 84 is where we sit on the 10 year. Basisare down 16 points, which feels like a big move over the last couple of days. Joining me in new york is david andsen, Bahnsen Group cio anagen partner, and Tony Scherrer, snead Capital Management Research Director and portfolio manager. Jp morgan. Own kenny get better from here can it get better from here . It can. For me, but continues to be shown is how much they are benefiting now from actions that took place 10 years ago. That acquisition of bear stearns and the bottom of the financial crisis, the washington mutual. They have a built up leverage and a scale that none of their competitors have. They are operating with an entirely different set of rules about how much Pricing Power they have and how much operating leverage. It is a phenomenal story, all without any assistance from Net Interest Margin. Alix tony, walk me through the highlight for you. 9 topline growth is phenomenal. 1 billion in positive surprise on the trading side was phenomenal. Realis before theres any wind to their backs in terms of net lending. It is a great quarter. To say that they would have had oe, i dont think anyone would have believed that you are to ago, or even coming into this quarter, for that matter. I think they have a very efficient story, and they are ready to continue making money is the economy continues to pick up in lending, which is a side they have not seen yet. David i think what is interesting about the Dividend Growth aspects we hold onto so much at Bahnsen Group is how much jp morgan did forecast a strong return on equity. They grew that dividend Third Quarter of 2018 by 43 , in the middle of what they anticipated to be a big tightening cycle with the fed. They were all kinds of headwinds which trade war and Monetary Policy, and jp morgan was boosting higher, and that is what we love to see as management, saying heres how confident we are about our ability to execute and deliver these results. So you see here a foreshadow of positive Earnings Results and operating results. Alix i look at the numbers on fic and Investment Banking, and wrap in citi as well, it is totally trumping it. When you take a look at these numbers, are they taking each others market share . Is the pie getting bigger . If it is the former, they cant put up these numbers always. Tony i think the market share story has to do with scale. They and all the big banks are really taking market share from the regional. Wells fargo, they are still sorting through things today. Theyve settled 16 billion in q3 to try and move back and forth in that regard. The bottom line is wells fargo, bank of america, j. P. Morgan, the guys that have the money, jp morgan just grew yet again, another 6 in a lower Interest Rate environment, so people are putting money into their bank even though they are willing to receive less. So scale matters quite a lot here. They will continue to benefit from that. They can put up these numbers if the economy is growing. Tois very procyclical overall economy. When you look at fixed income trading, but also Investment Bank activity and lending businesses, if the economy is growing, these are all things they are now making profits from. Suntrust see a bbt and merger is regional banks coming together to compete with larger deservest jp morgan distinction from even the other big banks. I think they actually have embedded Pricing Power globally to continue expanding. Alix i guess my question is what is going to be the next catalyst to continue to drive earnings estimates higher . Isid Net Interest Margin what has not been there, and yet they have been pushing higher. Steeper yield curve is just a mathematical earningspershare, right off the top. Then again, macroEconomic Growth that continues to provide that boost. Alix tony, i wonder how you look at it. Jamie dimon talking about the Consumer Holding up, but i guess the question is when you get to capex, commercial and industrial lending, is that going to be in earnings catalyst . How do you look at it . \ how do you look at it . Tony in our opinion, the ingredient that is missing is the consumer to actual take on keynesian,in a animal spirits type of way. Warren buffett said he is surprised by how long its taken for housing to get underway and show signs of life, but we think it will, and when it does, wells fargo might be a little better to benefit from that. They are still the biggest Mortgage Lender out there. We think that will continue to drive earnings forward here. The breadandbutter of the banking business is the thing that will be the wind in their sales Going Forward that we havent quite seen yet. David we keep putting this chart up in front of clients. It is fascinating to see over the last 10 years. Obviously, huge growth up in corporate spending and debt as a percentage of gdp. Household debt as a percentage of gdp has dropped substantially. An evend they be is gettingst, that higher and higher. In the future, i dont want to see an over levered household roomr, but we dont have by which the Banking Sector can grow. Alix here onset, we have bloombergs sonali basak and romaine bostick. Sonali, what stood out to you . Sonali Debt Capital Markets was a really great bright spot for citigroup. Jp morgan fell a little shy have estimates there. Fic beat as well. Got to Say Something about trading revenue here. What is impressive at jp morgan and citigroup is doing more with less. They are investing in electronic capabilities, so to be able to rake in that much money while cutting down costs, that is what wall street needs. Romaine we heard from jamie dimon and a couple of the ceos when the environment got some change, but wasnt changed was the environment outside. It was the environment inside. Alix alix youre going to be talking to the cfo of wells fargo later today at 4 00 p. M. Romaine yes, and obviously, this is a big deal because you have a new ceo, the first full quarter with him here. It will be interesting because the deal here isnt so much about the fundamentals, per se, but really about customer retention, branch expansion, and regaining confidence with regulators. Alix tony, you were talking about may be getting positive on wells fargo. Walk me through that thesis again. Well, First Quarter of the new ceo, we think they are in a regulatory cleanup period. As they go from bad to better to best is when the stock its atalued, so youre looking 12 times priceearnings. It typically gets treated as a premium it might take a while to get back to the premium for the bank peers, but that is a good thing. That is when you want to own the name as things get resolved. So it is a great franchise. I think theyve got a lot of probably low hanging fruit in terms of management to right the ship and get regulatory behind them. Theres a bargain for it. I saw something about a week ago that said the average loan to is about 70 right now, the lowest since 1985. In other words, banks arent lending versus the amount of deposits theyve got. They are over capitalized. Down, david was just talking about it, the velocity of money is at the lowest levels you have seen since 1980. So theres ample room for this to be taken on, and wells fargo should be a beneficiary of that. David i agree. The thesis would be beneficial to wells fargo, but i think theres a better opportunity in jp morgan. Wells is trading at 12 times. Jp is trading at 13 times, and has been the better performer and executor. I also think wells has more political overhang still in the clouds over them where they go from a regulatory standpoint. Sonali a lot of people want to bet on the thing with scale, take a lot of space romaine, i really curious to hear later what he says about how long it will take to cross the hump in terms of these regulatory hurdles. Romaine i think that is a really big question here. Ask. Lets go ahead and sonali basak, thank you. Scherrernsen and tony will be sticking with romaine and i. Also joining us is gerard cassidy, rbc Capital Markets managing director of equity research. Is this sustainable . Gerard sure. When you look at the numbers so far between jp morgan, citigroup, and wells fargo, the two winners are jp morgan and citigroup. Jp morgans were even better than citis, but the common theme for both of them is that they had very strong Consumer Banking results and Capital Market results, so i think this bodes well for bank of america when they report numbers tomorrow. Those are the driving factor in this quarters numbers, and if it is sustainable, i think the consumer business is. Look at the employment rate last week, 3. 5 . Record employment. The consumer lenders, i think 20 20 could be their year in the sun. We talk aboute the mild compression. Is that a concern for you at all . Good pointis a because that was the concern in. He summer thehe fed has paused, funding has eased up. We expected to ease up further in the first half of 2020. 2 on theo a 10 year, that will improve things. Alix how do you feel about lung reserves and how much money these banks have had to set away for bad loans on the consumer side or otherwise . Gerard this quarter, credit was even better than expected at three banks. I think what youre going to find is we have a new accounting treatment that is coming into play. The day one reserves are not a big issue, but credit coming into 2020, very strong. Once again, the banks learned their lessons in 2008 and 2009, so the underwriting standards are stronger. A lot of the risk has been pushed into the shadow baking industry. So iect the cranks expect the banks to remain in good credit. Romaine what about from a competition standpoint . This does raise the potential you might have to loosen. Tandards gerard the banks are very good at underwriting credit. So far, they really havent done that. So banks, as you guys know, are in the business to make loans and take deposits, and they are always looking for new customers. So the customers going to shadow banks and fintech, those are the customers that banks dont want because they are too risky from a credit perspective. Alix interesting. Always good to catch up with you on banks earnings day. Coming up on this program, we take a look at the broader earnings season. 2020, p margins, and all of the good stuff . This is bloomberg. Alix we are going to focus on corporate profits. This is u. S. Aftertax corporate profits come on some kind of decline since 2014. With me, David Bahnsen of monson group and Tony Scherrer of snead Capital Management. M foru see roo improvement within corporate profits . David you had a market slow down, because it doesnt line up perfectly with calendar years, we didnt talk about it. Period inwoyear flat which Earnings Growth was really decelerating. You had a huge pickup in corporate profit in 2018, and the market was down because it had been up so much in 2017. That chart tells the story of stockmarkets being discounting mechanisms, pricing and what they believe about tomorrow, anticipating 2020 profit growth. If we dont get that 9 10 that 9 , 10 growth, that bodes poorly for stocks. ,ast year, all four quarters profits were better than expected, even when slightly negative. Tony lets stick with that glass halffull idea. We think about the two backtoback quarters weve had with regards to slowing profit growth, people will point out every time youve been in this position before, we had pretty significant rebound of about 7 here. Are you looking at this more of a floor of where we should be . Tony i think the earnings expectations have been ratcheted down. I think it is a relatively low bar for companies to be able to beat on earnings this quarter, broadly speaking. Are at a higher bar is pe expansion. Apple, as an example, has worked well because of pe expansion, not so much Earnings Growth. So i think where theres an expectations mismatch is the multiples that have been put on exciting companies or maybe the safe. Ys perceived to be i think thats where expectations need to come down i dont think its the ability for companies to beat this quarter. David any market that becomes dependent on multiple expansion is generally setting up for disappointment. Look, i think people have been saying it for a long time, this should really be a stock picker ickers a stock p year. What you can get is companies that outperform expectations. 2020 should be a very good year for a talented select of members. Alix much more coming up next. We will talk about larry fink and his promise to black box to blackrock. This is bloomberg. Viviana youre watching bloomberg daybreak. Indonesias lion air considered putting its pilots through simulator trading before flying the 737 max. The airline abandoned the idea after bowing convinced the carrier it was unnecessary. That was months before the lien airmonths before the lion 737 max crashed. A text message at boeing calling the airline idiots. Preliminary data for 2019 suggests mobile debt to gdp io is growing as it growing at its fastest pace in three years. Alix thanks so much. Something else i am fascinated with today is what is happening with blackrock and larry fink. In his annual letter to investors, hes urging Corporate Executives to shift their opinion on Climate Change. Theres 7 trillion that follows the money. Theres still a lot of money that could put away behind it. Romaine its interesting. How does a company like blackrock unwind a lot of it . It is easy to say we are going to do it. Put up a curtain and say, look how green we are now. As weve heard, hes run into issues with regards to criticism and people saying that maybe the strategy needs to be more detailed. David theres no detail at all. I woke up to the headlines at there was this massive Global Capital reallocation coming, comparisons to how this is far bigger issue than the financial the 1970slation in and 1980s. It is a thoughtful article, but i think people we need to get to see that there is action happening with this. What does it mean that Capital Markets are going to be dramatically reallocated and a paradigm shift is coming . I think it comes off a bit more preachy. Romaine thats a part of this also because clients have been watching for this as well. David when he says the number one thing investors are talking to us about, i cynically do not believe that. I met asset manager i met asset manager. Clients ask about returns. Theres a wide diversity of opinions. I think jamie dimon has done a little butter of a job then ere, pointing out that we all care about sustainability. We all care about stewardship. The devil is in the details, and they are so much that has to be wired out. Alix David Bahnsen of Bahnsen Group is sticking with me. We have cpi numbers coming out in a few minutes. This is bloomberg. Alix this is bloomberg daybreak. I am alix steel. Lets check in on the markets about 20 seconds away from cpi for december. Pretty much going nowhere in the equity market. Wells are the downside. European markets going nowhere as well. The only real move in the currency market is the stronger dollar in the g10 space. You have the yen following, you have the yuan maintaining stability as well as the cable rate. We have the numbers dropping. If you back out food and energy, in in line with in in line wits at 2. 3 . On a monthly basis, a little bit weaker. Including food and energy, up. 2 . It feels like a muted number but nothing to break the story of inflation hanging out. Romaine when you break it down, there were some Interesting Data on the shelter costs and elsewhere, but this is been the same story we have seen month after month. It does not move the needle much for investors and im not sure how much it will move the needle for the fed. Alix lets ask bloombergs michael mckee. Also with this David Bahnsen and tony scheer of smita capital. Michael it looks like a decent report in terms of what the fed wants, inflation moving up, not too far. The headline number goes down. Rod price gains but muted. The housing numbers only up. 1 . Is oer for residents, which the proxy for housing costs, only up. 2 . Prices getting a little tamer. Food prices only up. 2 . Apparel prices the big mover along with, as always, energy. Down intoices were the holiday season. No signs of inflation pressure. I want to show a chart of what the fed will be looking at. Take a look at what has been happening with the cpi. Im using the headline number because the fed uses the headline number. They use headline pce which runs four or five basis points below the cpi. It has been rising. Look at Inflation Expectations in the market. That is what the fed has been looking at. If that starts to move up, they will feel like they are getting somewhere. But starts to fall, they get worried. Right now, in the middle. Not where they wanted to be but not calling anymore. Romaine tony, maybe you can pick up on this idea of Inflation Expectations. The market has not done much to meet the fed hopes that the market would take a stronger view with regards to rising inflation. What is going to be the catalyst that gets that . Tony increased consumer spending, and i go back to what i was talking about earlier. The millennial starting to show signs of life which we think is a matter of time and not a small thing. We do think this will pick up in a surprising way at some point Going Forward. Right now the market is not really looking for it. The headline is inflation is dead and that has been the theme for quite some time. This is another data point to cause people to remain complacent in that way. Demographicassive on. And the python going we are in the early stages. The ancillary spending around the phenomenon is no small thing on 86 million millennials. Pig and the python, ive never heard that before. David that kind of activity is not inflationary. This is the confusing where the phillips curve has gotten so beaten up. You can have productive growth and it is not inflationary. The feds desire to create inflation if they wanted asset price inflation, they got it. That is not what they wanted. Even the talk will now go to averaging, being able to look at 2 to run hot to make up for the periods you ran some 2 . The fed has told you we will redefine inflation or be tolerant of running above inflation as long as we need to run accommodative Monetary Policy for the foreseeable future. One of the problems is no one knows what is driving inflation. I was just in san diego with the economists at the American Economic forum. There is a big debate. There is a supplyside debate, we have too much labor, too many goods, too many things to be absorbed. The other side, which Larry Summers represents, is there is a demand problem. People are not buying. We do not need as much stuff. The sides cannot agree on what the issue is. The fed is sitting this out, trying to figure out what it is that the inflation dynamic they admit they do not know. Alix i wonder, is it possible you have different dynamics in different sectors . Some sectors we are looking at things like peak margins and unit labor costs being too high, versus others that have a lot more flexibility . How do you look at it . Forget, weets not have been importing deflation, if you want to look at it that way, particularly since we let china in to the wto in 1989 until today. We have had this deflationary cost of goods in a world where the demographics has not been where it is at today. Now we have this demographic ahead of us and we have a point in time where perhaps over the next decade plus, the deflation importation story might be broken. The phillips curve has looked broken for a long time. There might be some point where it starts to matter again. We think we are ahead of that Going Forward. There have been points where it appears it is mattering. Economic laws do not work that way if it is broken it is broken. The reason the phillips curve appears broken is because it is a flawed theory. The demographic story could go that way. The idea that us importing deflation is about to stop or has bottomed ignores the debt worldwide. Risis i think this is a generational story. Michael it is going to depend. I hate to be a two handed economist. We are not sure. One of the issues is baby boomers are hanging on, they are staying in the marketplace and savings has been going up. Our people more concerned about their ability to afford retirement . That goes back to Alan Greenspan and the savings block of the 1990s and early 2000, why the fed did not want to raise Interest Rates. At this point we do not know where we end up on this. It is one of those debates in economics it is going to take time to figure out. The good news is what is ever is happening with inflation is not happening very fast. Alix for Sector Allocation or company allocation, ubs said you have to lower your expectations. Returns will not be what it used to be. The earning cycle will not deliver the same kind of returns we expected to see last year and asia might do better. Is that going to be the story of 2020 . , so we are Value Investors where you want to be is where people are not. Where people are not is economic lee economically sensitive things, cyclicals. Where they have too much excitement is the perceived safety trade and the faang and the exciting tech, new economy stuff. That is where you dont want to be. It is totally abnormal for the next decade of stock market leadership to be the same thing that let the market over the last decade. We have had a decade where that stuff has led the way. To believe in the economy, to believe in the bread and butter guts of the economy working, like main street working and being good, is really doubted. That is where we think you want to be. The easiestf forecasts for 2020 is asset market returns should not be as positive in 2020 as they were in 2019. Overallpectations for asset class returns is different than saying they will be negative. I am a bottomup guy as well. I think you want to be selective. It is interesting to hear the most overheated things are safety traits and fangs. I do not think it can be both. Ultimately there are pockets of bottomup opportunities but all of the above sectors. Alix great conversation. Michael mckee, thank you for joining us. Sherrer,nsen and tony thank you very much. We want to giving update on what is making headlines outside the business world. Viviana we begin with the political reversal. The Trump Administration no longer calling china currency cheat. The Treasury Department says china made enforceable commitments not to devalue the yuan. The move coming two days between the u. S. And china are set aside phase one trade agreement. The u. S. And the European Union squaring off her a fight over trade. The eus new trade chief will be in washington dc, trying to head off a transatlantic commercial war. The prospects for success look slim. President trump has backed off a threat to hit cars and auto parts with tariffs. Both sides have revived all disputes and trigger new ones. Next week Donald Trumps impeachment trial is likely to begin. A texas republican senator says a week from today he expects opening arguments. Therell be a neat there will be a unique series of rituals including the members of the house carrying the articles through the Capitol Rotunda to the senate chamber. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am Viviana Hurtado. This is bloomberg. Alix jp morgan just wrapping up its media call, executives now speaking with analysts after the massive beat on trading. Sonali basak has been following that call. Sonali a lot more color now that we have heard from the ceo and cfo. A lot of the things highlighted or your intentions. They did not say a lot about how that is impacting sentiment, something we will be looking out for in the year. We are also hearing more about their decision to increase fees on the chase sapphire card. They highlighted their partnerships with lyft and jordache, which are also Investment Banking clients with jp morgan. You see jp morgan starting to win over the technology. That is the main takeaway. We already know they had a lot of strength in fixed income trading. They are highlighting their strength and equities trading. What we want to see is did they take share from the number one player at Morgan Stanley, which we will be reporting thursday. Alix that stop jumping in premarket. Coming up, we will look at the outlook for health care dealmaker. The j. P. Oined from Morgan Health care conference on todays bottom line. Bloomberg users, check out all the charts throughout the show at gtv. Viviana this is bloomberg daybreak. Im Viviana Hurtado with your Bloomberg Business flash. We begin with amazon, the company taking the next step in a fight over a 10 billion pentagon contract. It will ask the judge to temporary block microsoft on performing any substantial work on the deal. Amazon says that because of political interference from donald trump, a loss the pentagon contract. Young china is moving ahead with a proposed second listing in hong kong. The restaurant chain is working with Goldman Sachs and China International capital. Young china is considering a share sale in hong kong as soon as this year. The titans of private equity also a top debt underwriter. 10 busting into the top rangers of u. S. Buyout loans. Until 2017 the firm do not even make the cut into the top 20 underwriters. Im Viviana Hurtado. That is your Bloomberg Business flash. Alix breaking news. The u. S. , eu, and japan will seek topper wto rules on industrial subsidies. That will expand the list of illegal eight. They also want to discuss rules to prevent tech transfer. China is a huge focus of this porch. The question is how effective can the wto be when the u. S. Is pushing back. Japan, the eu, and the u. S. Looking at the wto and more rules for industrial subsidies. Time for bottom line, we look at three Companies Worth watching. I am watching apple, and the issue between the fbi and apple, the fbi wants apple to unlock and investigate some of their phones in related to a terror attack and enable base in florida. Into a naval base in florida. Apple says we will not do that. They say you cannot have a backdoor for the good guys. If you do that for the good guys, it will be there for the bad guys. Romaine this is a point apple has hammered on a lot. Tim cook got up at a conference in press this issue of privacy and made a pitch directly to customers. If you want to have that privacy , than apple devices are the one you go to. Or not,that is true they have drawn their line in the sand. Alix looking at delta. Romaine the banks are rallying the premarket, but once you get back once you get past the banks, the biggest mover on a percentage basis is delta. They beat handily. This is a consumer story. People are flying more. This is all about u. S. Travel and they are benefiting from that. They are also benefiting from the 737 max. They are getting customers from southwest and some of the airlines in the scene. There capacity drop down. The one caveat is that costs are going up high, about 3 which is high for them on the year. The good side of that a lot of that is for the higher salaries. Alix that is interesting. They are now able to get more customers. That is good stuff. For the third story we will head to san francisco, where the j. P. Morgan Health Care Conference is in full swing. Big mergers failed to materialize at the annual event. ,oining us now is chris schott jp morgan Senior Analyst for pharmaceuticals. Thank you for joining us. I know it is early there. Where is all of our m a . Was definitely an expectation coming to the conference. If we think about m a as a group , 2019 was the year of the megadeal. Yeard this conference last with bristol acquiring celgene. We are still thinking 20 20 is an active year for deals. We think it will look different. We are expecting much smaller transactions a lot of customers doing talk in deals to try to build up their pipelines. The conference has been a bit light. We believe it will be a fruitful year for an m a perspective. Romaine one of the big stories has been the issues going on in washington and the attempts to change the health care system. That weighed on a lot of the Big Health Care players over the past year. Investors seem to be more forgiving at this stage. What are your expectations . Christopher it is a dynamic situation, obviously. Drug prices and drug affordability is a core issue. A topic of conversation at every meeting we are having in san francisco. I have covered this group 20 years. When i look at changes in the health care system, they have always been incremental versus transformational. When we are thinking about 2020, we will have to watch what plays out from a political standpoint. Some of the policies that could reduce patient outofpocket could be beneficial for the sector as a whole. We would be more concerned about a medicare for all. The challenges to getting that implemented are significant and we are not expecting that. Romaine what about on the Drug Development side . We have seen a lot of big misses and big hits. There is an idea you have to allocate a lot of that Research Money to trying to hit home runs rather than going for something that is more slim. Is that trend going to continue our or are we going to see more diversification where those companies allocate Research Money . Christopher i like the r d approach to try to go for the home runs. We have had a problem for the industry going back five to 10 years. Folks want a smaller benefit or drugs that were not that transformational. What i hear from all of my companies is trying to take these unmet needs head on. There are a lot of new technologies to do that. Gene therapy, specific antibodies, and we are thinking about harnessing those technologies and we have breakthrough medicines coming forward. From a productivity standpoint, the last three years we have seen more drug approvals then we have ever seen. We think that level of high approvals will continue. While there has been notable misses, we think the overall story is a positive one. Alix are there different types of mergers happening, not between the big guys or generic and specialty drugs, but will it be about innovation in technology and the use of data or something along those lines that is transforming the industry . Christopher those are great points. Data will be core. Consolidation is about getting players together. ,ou have a company like merck they have the largest oncology drug ever launched. They do not have a broader oncology portfolio. There are dozens of companies that could partner with. The challenge will be do you have partnerships, do you acquire, but it will be much more about collaboration. The good news is that innovation has been a challenge over time and we are seeing very positive trend on the underlying science going in the right direction. Alix appreciate the perspective. Chris schott of jp morgan, thanks a lot. Romaine, thank you for joining me for the hour. Romaine so glad to join you again. Alix good luck with wells fargo. Romaine that will be at the 4 00 hour on the what did you miss show . Alix coming up we will look at the winners and losers among banks. If youre jumping in your car, tune into Bloomberg Radio on sirius xm channel 119 on the Bloomberg Business app. This is bloomberg. Alix time for technically speaking. Bill maloney joins me now. Listen to bill on bloomberg. Type in squa. Jp morgan crushed it. What are we looking at . Bill beat estimates. Up around 1 . Off its premarket high. A long trading range. A breakdown in october. Resistance around 141. 141 being the alltime high. Alix citibank also had pretty good earnings. I want to see how much upside there could be there. Bill citigroup also up in trending higher from the december 2018 lows. 81, for resistance around which is the january 2018 highs. If you get a solar breakout around 81, the next focus may be 80. Alix with the numbers you would put up you would think the stock would be extending. Bill wells fargo started dragging the other names lower in the premarket. They were fading a little bit. Turning to wells fargo, down 3. 5 . The worst chart among the banks, the only one trading below the 50 day moving average. The stock was rolling over prior to this number. Toential support around 49 49. 50. Those are your levels of support this morning. Alix great stuff. Bloombergs bill maloney. That wraps it up here for me at bloomberg daybreak americas. Peterup on the open, tchir will be joining jonathan ferro. The markets going nowhere. Earnings coming in, but the equity market stays flat. Europe trying to get some kind of upside. In other asset, a similar story. Bank out with its defense of the swiss franc. Youre also looking for banks like you heard bill talking about. Wells fargo starting to drag down the group. Jp morgan and citigroup are Still Holding up. Happy earnings day. This is bloomberg. Good morning oh no, here comes the neighbor probably to brag about how amazing his Xfinity Customer Service is. Im mike, im so busy. Good thing xfinity has twohour appointment windows. They have night and weekend appointments too. Hes here. Bill . Karolyn . Nope no, just a couple of rocks. Download the my account app to manage your appointments making todays Xfinity Customer Service simple, easy, awesome. Ill pass. Jonathan from new york city for our audience worldwide. Im jonathan ferro. The countdown to the open starts right now. Jonathan coming up, earnings season begins. Jp morgan delivering the best year in u. S. Banking history. The united states, eu, and japan putting pressure on china to cut subsidies. Inflation america fades. Here is your Tuesday Morning price action. Down a single point on the s p 500. Eurodollar 1. 1110. In the bond market, treasury yields creeping lower, down a single basis point to 1. 84 on the u. S. 10 year. Lets begin with the big issue. The financials in the spotlight. Wall street kicking off earnings season following the best year and more than two decades. Kickingn and citigroup off earnings, but wells fargo falling short. Goldman sachs, bank of america, and Morgan Stanley all still to come