Dow and about 11 higher than the nasdaq. Lets check in with our reporters. I would like to take a look at one area of underperformance, china tech. Down 2 , lower on the open. But, around the time of the scoop and those headlines, the fact that tariffs will still be in place after the president ial election. Netnet, the worst day since september. Even to the untrained eye, this is somewhat absurd. Unlike u. S. Stocks, not going higher. There was a period of time when these were above the 200 day moving average. Over the last few months, gaining well more than 25 . A very overextended situation. Sometimes, these things go further than you think. There is good reason to think that we will see a reconnection at some point back down to the 200 day moving average. One group that sort of weathered this mini selloff was transportation stocks. Dow jones transportation average gained about 1 . It broke out to the highest level since october. Delta airlines gain a than 3 . Earnings came in well above even the highest expect patients. Fedex did rally about 2 . They lifted restrictions that prevented Third Party Merchants of shipping packages with ground service. The dow joness in transportation average gained today. They record close in the transportation average for believers in dow theory would be a bullish sign. A signal of more gains to come. 3. 5 more gains to match the record it saw in 2018. Renita optimism over the Global Growth outlook has driven copper higher today. It is as high as in april. Analyst said that trade data suggests the economy in china is stabilizing. Also boosting copper today. Copper will be on wednesday. The agreement for phase one. Romaine our thanks to the markets team. Still with us, Bloomberg News across assets reporter katie gry filled. And katie griefeld. And, omar aguilar. We are anticipating the signing of the phase one trade deal and presumably what will be the two deal. Phase how important are these to your Investment Outlook at the moment if at all . Omar they have been very relevant for a while. Clearly, we are at the critical stage. What it is important to note, signing the deal tomorrow does not necessarily take the uncertainty away but it has created much positive optimism. Justoo long ago, we were trading back and forth, the potential trade wars and multiple levels of tariffs. Right now, we are in a more constructive process. The fact that there is a layout plan for phase one and phase two has already been priced by the market. This stays relevant not just because of the Economic Impact globally but also because of certain sectors of the market. We are in a place where manufacturing continues to be under pressure. Having a signed deal at least provides some positive outlook for manufacturing to stabilize worldwide. I think that is probably the most critical part of what happens tomorrow. Earnings season really gathering steam, starting with several banks today, most of which did good. Also we had delta today. Talk about how early earnings might be informing perceptions of how things might shape up. Katie bond volatility in the Fourth Quarter was not high. Still very slim pickings. It is interesting to see those record profits or whatever the superlative was. Of bankut, day one earnings, it will be interesting to see how the rest of the banks report. Financials had a great year next year. They will be interesting to see if that momentum can continue. It will be interesting to watch from the etf perspective as well. Financials have had two straight years of outflows. It will be interesting to see if these earnings will be enough to turn the tide. Romaine the banks like Pnc Financial tend to be a little bit more Interest Rate sensitive. Katie the thought is that maybe with the yield curve steepening a little bit, it looks like that trend is starting to establish itself. Scarlet i think that superlative you are referring to is jp morgan, the best for any bank in u. S. History. Rising 86 he revenue from last year, a billion dollars more than what analysts had been looking for. There is a temptation to kind of extrapolate and have it tell us something about the broader economy, but what does fixedincome trading tell us now . The economy right omar it shows the fact that despite the fact there are alltime lows of the equity , thet, a lot of the stability the fed has created and in general, central banks, there are a lot of opportunities in the fixed income market. People pay more attention to the fixed income market, providing opportunities, taking advantage of the different bets that can be done, it is reflective and some of the results we have seen lately. Beyond that, looking at fixed income going into this year, i want to go back, i mentioned inflation, very mild. Would that reduce rate volatility for a long time. Apid inflation in a the market is pricing full rate cut. Banks will central probably be waiting and see. All of the data in the United States shows that our economy will grow in the 1. 8 to 2 . The fed has all the incentive to basically stay on the sideline, theding the volatility market stays where it is. We continue to see recovery on the manufacturing side. When you put all of this in perspective, the fed does not necessarily want to waste any bullets to be able to whether the next recession. Romaine one thing we did not talk about was what happened in the currency markets. There is a lot of activity. It kind of died down a little bit. Now that we have trade back and focus, the outlook for the dollar seems to depend on the yuan again. 2019, it was a tugofwar between the two. Stronger yuan usually means a weaker dollar. It is interesting to see a lot of bullish forecast for the yuan. Jeffries in particular stuck out to me. Can reach 6. 7 by summer. It will be interesting to watch. Scarlet all right. Our thanks to Bloomberg News processes reporter katie greifeld, and omar aguilar in san francisco. Whatd you miss . Is up next where we will take a deeper dive into Bank Earnings including wells fargo. This is bloomberg. Live from bloomberg World Headquarters in new york, i am romaine bostick. Scarlet im scarlet fu. Joe i am joe weisenthal. Romaine the dow was the only index to finish in the green today. Stay. Riffs levies on billions of dollars of chinese goods will remain for at least 10 more months. One of the provisions said to be tied with the phase one trade deal. Three of the biggest banks showed us how they performed last quarter. Will hear from the ceo of one of those banks, wells fargo. And what happens when a fed historian and fomc member square off on social media. The question is whether a fed president should get involved in political issues . Scarlet lets take a look at shares of wells fargo, losing ground here. As much as 5. 5 lower today. 5. 4 . Losed down about this continues a week trend of late in which they have only gained one time in 2020. The lender reported 1. 5 billion in legal expenses. That missed the average analyst estimate. For more, we want to bring in the chief Financial Officer and executive Vice President for wells fargo. Thanks for taking the time to speak with us. We need to start on the litigation expenses. 1. 5 billion dollars for the quarter, making it the Second Straight Quarter in which major legal costs heard earnings. Where is the firm in determining how much more legal liability there is . Second inning, fourth inning, eighth inning . It is tough to talk about active litigation but the cadence of the charges, given that they reflect probability of likely outcomes suggests that things are moving along. Ery constructive dialogue this would include previously disclosed sales practices from a number of years ago. They do obscure the story from the quarter. There were some really good fundamentals in the quarter. Loan growth, deposit growth, payment related income. Investment banking was stronger. Mortgage business was stronger. A lot of the underlying drivers working out pretty well but we had some idiosyncratic things. Scarlet do you expect charges like this to continue in 2020 . That ourexpectation is operating losses will look more normal in the future than in the recent past. Probable is the approach we used to reporting those. Lets let some time pass and watch how it unfolds. Joe you have now been the cfo at wells fargo under four ceos. How would you characterize what is different and how wells fargo operates differently under the new ceo . John charlie has had a range of experiences. Hehas also been a cfo, so thinks about things in very financial terms. He has a very quick study. He has a broad range of previous analogous experiences in the risk and control, regulatory relationship related fronts. I would say, very optimistic. He struck a very thorough tone today on the call. How much work that we have to do. I think he has got a good sense of that already. But he also made the observation about the durability of the franchises, the possibility for growing them. On the one hand, it is an advantage, frankly, having someone who has been through this at other firms taking the reins now as we execute and deliver against some of our regulatory commitments. And having someone who has had the range of commercial experiences. As you deal with those regulatory and legal issues, talk to me about some of the consumer side of the business. Consumer spending has been a big story here. A big boost because of consumer spending. Is that going to improve or do you anticipate it improving from q1 and beyond . Up debit card income spending on debit cards for our customers of 6 . 4 in credit cards. Those who we package and sell for the agencies. The whole waterfront on the consumer side. Revenue for our business. Scarlet you cited positive loan growth. I do you envision closing that in, but , specifically Consumer Banking that has been driving results at your rivals . John we have almost a trillion dollars worth of loans. We sold almost 10 billion worth of loans last year. We had some precrisis loans we needed to dispose of. We have done away with that. Our auto business is one that will probably grow faster than peers. Our credit card business is smaller. We wish he was bigger. It should be bigger and it will be bigger, but today it is smaller. It will have rapid growth rates generate theot amount of dollars. There has been more growth on the higher end between Largecap Companies and other Market Participants who borrow from us, and a little bit of less growth on the commercial side of things , reflecting a standoffish approach to risktaking on that part of our clientele. Joe wells fargo chief Financial Officer, thank you for joining us. From new york, this is bloomberg. Romaine the trump and ministration is planning to change how u. S. Economic data is released, a move that could create a logjam. Lets bring in Bloomberg Economics reporter from washington. Us how just explain to that data gets disseminated right now . On the front and, when readers see, for example, the monthly jobs report. Payroll did this, wages did that. It will be coming from journalists, media organizations. ,he way we get that information we are given this data. About 30 to 60 minutes ahead of time we can ask the Labor Department questions and present our stories. It is the most accurate story possible for our readers and this goes out to the greater public. This process will be completely upended. The bls is planning on taking away computers from that room, which takes away our ability to write those stories. When it hits, we just wont have story to put out. A reporter. Ng in you are a fund manager for different hedge funds. How would it change the way that the government releases data, how would it change the way that a certain Portfolio Manager would do his or her job . Promulgating the data through the newswires. That a fund manager will read a story and be able to react and put on a probable trade, those days are long gone. Frommove instantaneously algorithmic strategies. If they are still able to 8 30 01the data at and implement their trades, than the initial reaction of the market will be different than it is currently. Those of us both on the pundits side and risktaking side, we are just going to be left scratching our heads a bit longer than is currently the case. The Immediate Reaction now is done by quantitative algos. Joe if there is no lockup and they post the data to the web, does the bls or any agency currently have the Computer Systems in place to withstand the number of scrapers and everything that hits their websites from media, funds, traders, everyone else who wants quick access . Katia this is a key point right now and it is something we have been asking bls. If you have data coming in from blscentral source, the online, there is the risk of hacking attacks for example. Tryingdo have investors to access that data, or media as well as the public, they will be. Craping that data they have to invest in that infrastructure. In the past, we have seen that this does not work out very well. The fda for example doing things with their lockup procedures. One of the websites crash. You have instances where hedge funds or quad traders can scrape that a few seconds in advance. Romaine when we talk about the level Playing Field, the Current System with reporters handling this system has been fraught over the years, do you think that potentially the government could blow this off anyway that there is a level Playing Field for everyone involved. I am a little skeptical. Even if the data is only eased on a website implement a trade before any human can. If we are talking about a leak coming before the release, this would solve the issue. I dont think in the United States that this has been a problem at all. Scarlet thank you so much. Really appreciate your reactions. From new york, this is bloomberg. Crumpton withrk bloombergs first word news. Engine fuel apparently dumped by an aircraft returning to los angeles airport fell onto an Elementary School playground. Outside of los angeles are assessing multiple people who are hit by the fuel. Tota Airlines Flight 89 shanghai, china, departed lax and circled back over Southern California before returning to the airport. Senate Majority Leader Mitch Mcconnell says he believes President Trumps trial will begin next tuesday. He said today that the house did an incomplete job during impeachment hearings. They did almost nothing that you would expect the house to do in order to set up this case to be considered by the senate. With regard to what witnesses are necessary, we are going to vote on that at the appropriate time after we listen to the arguments. Liaison told house reporters today that President Trump still wants the Senate Procedures to include a dismissal of the case. Mike teo didstate not appear today for a congressional hearing on iran. Chairman, new york democrat eliot engel, said he considered taking other actions in the future including subpoenas if pompeo did not cooperate with the investigations into the developments around the killing of iranian general Qasem Soleimani and escalations between the United States and iran. Being a world leader means emulate your adversaries. Andng to diffuse conflict prevent led shed. A representative from texas quoted mike pompeo saying that Qasem Soleimani was planning attacks that constituted an imminent threat. Tariffs on chinese goods coming into the United States are likely to stay in place until after the election. Bloomberg has learned that any move to reduce them will hinge on beijings terms for a agreement. Today withike pence a swearingin ceremony for the first ever chief of the u. S. Space force. General john raymond will conduct operations such as enabling satellite based navigation and communication for troops and commanders in the field, and providing warning of missile launches abroad. Historical,is this but it is critical. This establishment is absolutely critical to our National Security and allies. President trump initially launched the space force last month. Global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. Lets walk back to what Mark Crumpton was just talking about. With the u. S. Holding off on lifting those chinese tariffs until after the president ial election in november this year. Ass new timeframe comes investigators are set to think the new trade deal in washington. Shaun donovan is covering trade for Bloomberg News. The details with regards to the tariffs taking place, is this being written into the trade set to signu hu is tomorrow . A we are hearing that this is tacit agreement from both sides, that there will be no tariff relief. What we are told, from people familiar by these familiar with these negotiations, is that the u. S. Will take 10 months to figure out if the chinese side is living up to its commitments. At that point, it can start living up to tariff relief. I think the president is keen to take both his tough approach to china and his deal into his run for reelection. Personnel is policy and who or what will be doing the monitoring, making sure the review is being held to objective standards . That is one of the features are potentially the bugs of this deal. There is an impeachment mechanism, by which robert lighthizer, the u. S. Trade representative, and is chinese counterpart, will continue to meet, discuss any issues coming up. They will trigger a dispute mechanism which will give them another 90 days to solve the issue and then potentially whack each other with tariffs. Both sides have committed that they will not retaliate to any such move. There is another mechanism, that any side could simply pull out of the deal if things do not go the way of their plan. Joe what are you most interested in learning tomorrow . Shawn i am most interested in what comes after this deal. There is commitments on International Crop in intellectual property, commitments for the chinese to prompt the lifting of the designation of china as a currency manipulator. The real question is when will we really get to the tough issues such as industrial subsidies. Afternumber one gripe intellectual property and possibly before it is the unfair competition from Chinese Companies and the support they get from the state. The whole state capitalism model that the chinese have, this deal does nothing to address that. That is really where the relationship starts to change. I want to know when that is coming. Joe thanks to bloombergs shawn donnan in washington. Departmentbor planning to remove computers from media lockup. For more on how that could affect markets and anything else, we are joined by Family Management corporation chief investment officer. Are you excited about freeforall fridays one everyone is scrambling at the same time to see what the jobs data looks like . When we add this on top of it, i think it will be quite interesting. Whenever the data comes out, we often look at, how is the s p responding . I think that will be exacerbated. It will be very interesting to see. Also, who capitalizes off of that . Scarlet who does capitalize off of it . Quant funds,gos, macro funds. It is going to be very interesting to see. Lets talk about the Broader Market for a second. You look at the headline data, you see above that 200 day moving average. That would give you a sense that everyone is participating in the rally. But this is still a very narrow rally. I was doing some work in excel this morning, looking at five or six companies, over the past decade, how much they have contributed. Google, apple, amazon, microsoft. The collection of those companies have grown top line, over 300 , and net income close to 300 . When you look at the overall growth in that income over the decade, those companies have accounted for 25 of the full growth. You talked to a lot of High Net Worth individuals. International exposure in a lot of cases. Do people feel stressed out, even though this is an impressive bull market, that they are still underexposed or underinvested in these banks or u. S. Stocks in general. Is this a situation where even though it is a bull market, that david there is prudence on one side and on the other side, agreed. Last year, if you are in the value fund, if you look back to that, if you were in a u. S. Value fund last year, you still did pretty darn good. Maybe you made 20, 22, 23 . S p 500, you likely made close to 30 . There is this pressure of prudence. Create structural difficulties for Fund Managers who have to post quarterly results. Are there opportunities for those who are like, 25 is great. I dont have investors complaining that i didnt have enough tesla or apple or whatever, take the 25 , other stretches depending on where you are in the food chain . Getd investors satisfaction in finding changes in the market. Last year was growth. This year is finally going to be international, value. In reality, you look at a lot of the top companies. It is not just that their multiples expanded but the revenue and earnings have exploded and they have become more and more dominant. It is clearly earnings driven. Is likely to be the biggest change in the market . Rom 2020 to 2019 is an it looks like this annual conversation. With the fed, lowinflation, not really any excesses. Really anywhere you go, they are not flashing that high. We are in this environment. What is it going to take to stop tech from going, the multiples from expanding. Difficult to very answer. I think, right now, it is going unknown, theknown end of the cycle. Myself, along with a lot of others, are not seeing that in the near term. Romaine our thanks to David Schawel of the Family Management corporation. Coming up, President Trump is not the only one tweeting concerns about the fed. How minneapolis fed president got into a debate on the social media platform. We have one of the people who squared off. That is coming up next. From new york, this is bloomberg. Joe kashkari, the president of the minneapolis fed, is proposing a change to minnesotas state constitution. An amendmentdd that would guarantee all children the right to equality public education. Peter contibrown tweeted at him, does anyone else feel uncomfortable with a central banker playing such a pivotal role in a Divisive Political campaign. That started a debate on twitter between the two. Joining us by phone is peter contibrown, professor at the wharton school, a fed historian. Why is it so problematic for a regional fed president to get involved in a state political question such as changing education law . Peter to be clear, i have no informed view on what the state of minnesota and its people should do. Either,doesnt really or should not at least. If Neel Kashkari as a citizen wants to be involved in political activity, of course that is every citizens right. Stature andhis status. The prestige of the fed itself, to lend nonpartisanship to this divisive idea. This is an area where peoples will differ. Ts thats what makes me feel cautious, even as i profess no insights into the underlying issue itself. Romaine i just want to be clear with what you are quibbling with. On the outside edges of it, a lot of what he is supporting is not really outside the realm of what we have heard other fed president s speak about. Is your issue more that he would speak about advocating the amendment, or do you have a broader issue of his speaking about this at all . More i am in favor of a expansive view of what Monetary Policy is and can be. Banksample, more central have started to think about how climate changes related to monetary, financial, and regulatory policy. I think that is appropriate. Even if you have ideas based on this research that may require some public comment, that is all to the good. Here, president kashkari has become the face of a campaign to the to the voters to amend constitution. That is where i have a problem because it is so highly politicized because i worry about the blowback not just to the minneapolis fed but to the Federal Reserve system itself and this blowback to the fragile idea of fed independence. Scarlet i know that he has teamed up with abigail wozniak, an economic professor at notre dame, to do more research on inequality, something that others have spoken about in the past. Janet yellen among them. An issue that weighs upon the economy. To become the point person, the front man, is the problematic part . Peter that is right. Not only janet yellen. The issue of wealth inequality was the banner topic for the 1998 kansas cityjackson hole fed symposium. Totally appropriate for president kashkari to devote resources for understanding problems of inequality and even education. Some see this as mission creep. I am not one of those critics. If the fed or banks think they should put research around issues that are adjacent to or even indirectly connected with on a tory policy and stability, more power to them. But the press in minnesota is publicly calling this amendment and identifying it with Neel Kashkari and the Federal Reserve. Whendo you have a problem we heard people like fed chairman bernanke talk about the need for Fiscal Consolidation . Some things that were extremely high politicized, whether we would have to cut medicare down the road. You never really hear much they weigh into these Divisive Political questions like fiscal policy. Does that ever in your view cheap the independence and technocracy of the Federal Reserve . Peter i think the dividing line opining,ighing in, not not thinking about the expertise that chairman bernanke he or president kashkari have developed that might inform the Public Policy discussion. Some people say that the fed should stick to its knitting. But the feds knitting has always been Public Policy at large. Said, i am going to hold town Hall Meetings and hold a Constitutional Convention to rewrite the constitution in my image, i would be one of his chief critics. Wanting to change the laws, i think that is where it is more problematic. Torlet we did reach out Neel Kashkari at the minneapolis fed. He declined an interview. Coming up, the worlds fastest economy plunging into stagflation. We have got it covered in asia ahead, next. This is bloomberg. Scarlet india grappling with a twopronged economic problem. What was once the fastestgrowing economy has now plunged into stagflation. Shery ahn is here with the story. Was over 8 . Owth right now, growth for this fiscal year coming in at 5 . You might be thinking, what is wrong with 5 . Narendra modi promised a 5 trillion economy by 2024. 2. 7 trillion. That means they need growth of 9 . Ae modi has introduced number of things that have not growth positive. There was the demonetization thing, the rollout of the National Sales tax. Are these things that may work at some point or just did not deliver . Shery the reviews were not very good, leah very good, especially the way the gst was rolled out. They are still struggling. Right now, they have this controversial and restrictive citizenship law. Prime minister modi has gotten himself into a lot of policy missteps here and there. Romaine any sense of what they are doing to right the ship . Shery they are going to start spending more. To deficit expected to grow 3. 8 of gdp from a target of 3. 3 they have given about 20 billion of tax cuts to companies. Inefficientging state run banks. We have seen some signs of potential bottoming out. Of course, it raises questions about what kind of policies modi will continue to pursue. Shery we continue to see social unrest because of that restrictive social restrictive citizenship law. The bank may have enhanced inflation now peeking above 7 when the r. B. I. Target is for 6 . You have food prices surging. Scarlet 7 inflation, can you imagine . We cant here in the u. S. For more on these stories, dont miss daybreak australia and daybreak asia. Bankr news continue with of america and Goldman Sachs reporting fourthquarter results. Joe the u. S. And China Signing phase one of their trade deal at the white house. Romaine coverage and analysis of the seventh democratic debate, live from des moines, iowa. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Oh no, here comes gthe 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. Riggs in santaylor francisco in for emily chang, and this is bloomberg technology. Jp morgans record year. We break down how tech helped push the bank to its most profitable year ever. Plus, crystal ball. We will look at one of the internet pioneers and what he sees for tech in the years to come. Hacking ukraine