Lisa but interestingly, they also took down their loan loss estimate, so that basically speaks to the strong consumer. The question is if wall street revenues dont pick up and trading volumes dont pick up, will it be enough to have a strong consumer to drive Bank EarningsGoing Forward . David it is not just jp morgan. It is also Johnson Johnson. We got earnings from them, and they beat on earningspershare and revenue. 2. 58,spershare was revenue was 22 billion. It was driven by pharmaceuticals, but most of the queries will be about the legal complications from opioids and talchis asbestos in allegation. Lisa it will be interesting how they frame that. David we will have more on j js earnings later this hour with joseph wolk, Johnson Johnsons cfo. Climbing a little bit. The dollar getting a bid, and to year yields up just a basis point. David at 7 30 this morning, Goldman Sachs reports secondquarter earnings, followed by wells fargo at 8 00. At 8 30, the u. S. Releases retail Sales Numbers for june. At 9 15, we get u. S. Industrial production data for june. Ad willks crypto he appear before the Senate Banking committee for plans on libra. Testifych executives before a house subcommittee on whether more needs to be done to ensure competition in the sect in the tech sector. We are joined by Marty Schenker and luke kawa. Lets go right to Bank Earnings and take a look at what we are looking at, particularly when it comes to trade. These are estimates for jp morgan because the numbers just came out, but basically we are looking at downgrades across the board. Luke there hasnt been a good trading environment apparently ever for wall street banks. I tend to focus less on this because i dont know what the readthrough is for the broader economy. Banks have not been a Market Leader for the last few period. Cept for a brief i wonder if all the Broader Market needs from banks is a signal the u. S. Economy is ok, not falling off a cliff, and any hint that a secondhalf recovery is expected. It doesnt necessarily speak to that, but that could be more of a margin view based on what we see in the bond market. Lisa from washingtons perspective, isnt this exactly what they want to see . In other words, banks putting their money into consumers and lending more to main street, and perhaps not getting as much from whats going on on wall street . Marty i think thats exactly right, and i think that the tax cuts donald trump put through congress are reflected in these Bank Earnings numbers. It is really good news for the economy, and it further questions whether or not cuts by the fed are really appropriate in this environment. That the banks are still earning record profits even if they are not growing tremendously fast is still good news. David the question is what is going on with trading, really. How could it be affecting trading in terms of uncertainty, or maybe it is just like a volatility . Marty it could be both of those things. Lisa hold on a second, though. There have been studies that show that when the Federal Reserve lowers rates, that dampens volatility because they are under pending a lot of the action as they are underpinning a lot of the action they are underpinning a lot of the action. Just i dont think you can boil it down to the fed, but certainly its been a long time of a lack of volatility across the markets that has not been good for banks. David later today we speak with wells fargos chief financial officer. Lets go to our second story, all to do with tech on capitol hill. One issue is the scrutiny of libra, the script of currency being proposed by facebook. This is what this cryptocurrency being proposed by facebook. Treasuryhat secretary Steven Mnuchin had to say. So marty, facebook has brought all of washington together. Republicans, democrats, the administration, jay powell. Everyone is against cryptocurrency from facebook, and we havent even seen it yet. Marty i do think libra is somewhat of a stalking horse for concerns in general about facebook and what happened in the 2016 election, and there are issues about security and safety. Here it is, facebook coming up with a cryptocurrency idea that causes a lot of concern on wall the world. Throughout germany today said they have concerns. I do think it is a reflection of the general suspicion about the power of facebook. Lisa my favorite part of this is that everybody is railing against facebook and uniting d. C. ,ody on washington, and investors dont care at all. Take a look at the reaction in the market. They really didnt move that much. You can see a blip, not even. What will it take to actually create some kind of downward momentum at facebook . Luke a lot more, i think. There was a speech a little over a month ago from the assistant doj attorney in charge of antitrust, where he more laid out a roadmap, like if i were to go after companies or if there are things i see, things like mentioning that price is not the sole determinant of anticompetitive behavior. That is jeff bezos calling out search as something that needs to be more understood, and buying out earlystage companies by very entrenched people, very entrenched companies. Facebook, instagram. It is a question of whether there is the will. Prettyek we had some incredible questions from congress to the fed. It seemed like the think tankers across d. C. Stepped up and educated staffers in congress. Im wondering if it gets better this time because the last questioning for Mark Zuckerberg was pathetic. I think that is what people remember most from those hearings. Lisa meanwhile, it brings us to our third story because when you talk about this dissonance on wall street and main street, you look at retail sales coming out later this morning, especially in light of that consumer picture that does look rosier from the Bank Earnings, u. S. Disposable incomes are increasing by the most since 2015. You can see there has been this sort of steady improvement in the consumer Balance Sheet. Oft does this say in terms heading into the 2020 elections, in terms of what policies should be that the consumer continues to show incredible strength . Marty donald trump continues to beat the drum that the stock market is at records, americas economy has never been better, and the economy is a winning issue for this president going into 2020. With the numbers coming in of retail sales today, industrial production, they are still going to be positive. There are no signs of recession looming. I think it is going to be a very positive message for the president. David which makes it more difficult for the fed. If the consumer keeps going in the united states, it is hard to have the economy stumble. Luke it makes it somewhat more difficult. You can talk about the fed, and i think James Bullard has talked about, well, we were very preemptive in raising rates. What is going to say that we will be very preemptive to cut rates to avoid a global slowdown . A lot of people in Financial Markets are generally happy when he fed is cutting rates, so i doubt it will be a heart of a communication when the fed is cutting rates, so i doubt it will be as hard of a communication issue. The case not to cut rates i think is incredibly high. David he all but said it in front of congress, dont you think . Marty he basically all that said we are going to cut rates. It would be an extraordinary surprise to the markets if they did not. Lisa i know, but we get strong numbers. Who cares . David the data we are dependent upon is the market data. [laughter] lisa thats true. David there is that little thing. Lisa bloombergs Marty Schenker and luke kawa, thank you for being with us. You can find all of the charts we used and more by running gtv on your terminal. You can browse recent features and even save our charts. Gtv. Coming up, a mixed bag of earnings for the banks. Consumer strong, Investment Banking not so much. Strategiesick, td global Td Securities head of fx strategy, joins us next. This is bloomberg. Viviana this is bloomberg daybreak. Planning an union is finale to the fiveyear crackdown on amazon. Theyve ended they want to see how amazon may be unfairly using sales data to undercut smaller shops on its marketplace platform. In california, a federal judge giving a partial victory to bayer in a case involving roundup weed killer. A jury awarded 80 million to a plaintiff who alleged exposure to roundup caused cancer. The judge cut that to 25 million, but says he still found the companys behavior reprehensible. Bayer inherited hundreds of roundup lawsuits when it bought monsanto. The billionaire founder of el graham says he wishes he had never crossed paths with jeffrey epstein. Leslie wexner saying he was never aware of any illegal activity of any illegal activity. The financier has been accused of sex trafficking of minors. That is your Bloomberg Business flash. David jp morgan reported secondquarter earnings a halfhour ago, and beat on earningspershare and revenue. Their stock is down slightly, perhaps in part because trading was a bit disappointing. We welcome now alison williams, bloombergs senior bank analyst. Howilar to this similar is this to citi . Alison pretty similar. The Net Interest Margin, which is our focus in this quarter, coming in light. Jp morgan guiding down. Citi kept their guidance. Jp morgan versus all the other bigger banks that we follow had not yet taken that down, so taking that down a bit. I dont think that should be surprising. That the last quarter yield curve can shift, and they werent going to just lower guidance at that point based on one quick move, but things have gotten worse since then. They are basically taking it down 4 versus a prior 5 consensus. It looks like it is going to move down because they are reiterating expenses in that chargeoff. Lisa it is early yet, but we have jp morgan and citigroup. Is it fair to say that the narrative right now is that banks are looking increasingly like utilities going back to once they once were utilities, going back to what they once were, catering to consumers but not necessarily making bank on it . Alison for the banks we have a few core businesses. Jp morgan is a great bellwether across those businesses. We have the consumer bank, the. Nvestment bank Investment Banking, trading has been weak, and we continue to see that. Asset management has its own. But i think the consumer will continue to gain in the narrative. It is a little more insulated from that income pressure and chargeoffs, which you generally see tick up. In card tick up chargeoffs this quarter. Overall credit looks solid, and a release in the reserves versus a build. David Going Forward for financials generally, is there perhaps an indication in the economy more broadly that the is doing well, commercial not so well . Is this reflecting that the consumer is really strong, companies are not investing as much . Alison that is a great point. We look at banks broadly as a mirror of what is going on in the u. S. Economy in the world, and the u. S. Economy, still healthy. Consumer business, still healthy. Where there is a little more uncertainty, they serve a lot of global corporations. Obviously what is happening in a global macro environment, a lot more risk. We are seeing that kind of , to theto the results extent it cant come in it can come in and affect the u. S. Rate environment. That is the concern. Lisa is the consumer a lagging indicator here . Our companies the leaders . It is a really good point, and something we will continue watching. Alison, thank you so much. One thing certainly weighing on banks this year is the prospect for even lower yields ahead. This has become the consensus view. Whatagers widely see is the chance that the consensus is wrong . Joining us from toronto is Mark Mccormick, Td Securities head of microstrategy of fx strategy. Do you think consumers are overweight on bonds . Dont think so. I think fixed income is a view that the Global Economy is teetering. We are not in a recession, but we are muddling along slowly. We are seeing more downside than upside misses. Especially with the overhang, big tail risks, whether it be brexit, geopolitical tensions, trade escalation, those are all big risks that can tip the Global Economy into recession. I think the fixed income market is playing with that narrative versus the equity market, which is playing with the narrative that theres a lot of liquidity, and the Central Banks are doing whatever they can to ease policy. Thereso you dont think is incoherence with the rally we have seen in stocks . You think these paths can continue the way they are . Mark no, that is probably unlikely. The construction of two different narratives underlines that theres different drivers for each of these markets. What i think is most likely to happen is Central Banks are going to continue to pursue easy policy, so rates are rallying in the short run. What is more likely is that we dont slip into a global recession. The Global Economy continues to muddle along, buffeted by really low levels of volatility across asset prices. In my view, we are still in this reach for yield environment or equities move a little bit sideways, but this is one where if Central Banks are going to continue to do what they want to do to achieve their narrow inflation targets, that is probably good for the reach for yield. But this is probably a very crowded trade, so it probably just keeps moving a little bit sideways. David it is reaching for yield, not necessarily for growth. If you look at the bond market, that is indicating that we will not have a lot of growth. That is why Central Banks feel they have to be so accommodative. Equities compared with is better, but not because you think theres going to be longerterm growth. Mark thats a great point. Theres a Global Economy that doesnt have that much divergence across growth numbers. This is why people are dipping their toes back into emerging markets. We have a massive capitulation in the emerging markets trade in may, but people have di pping back into emerging market currencies. It is not really a growth story. Theres very little diversions across growth, which is why we are not seeing deflation. It really becomes a reach for yield, largely because if you thing about where the u. S. 10 year real rate is, it is at 30 basis points. Anything in excess of that, whether it is growth in emerging markets or asia, all of those things look more attractive now. David Mark Mccormick is going to stay with us. Coming up, the hunt for yield. A sinkhole of negative yielding em debt doubles in a week. We will talk about that. This is bloomberg. Lisa the global hunt for yield has investor looking in every corner of the market, and it is sending billions of dollars in outstanding debt into subzero territory and boosting demand for emergingmarket assets. Still with us, Mark Mccormick of Td Securities. You talked about how emerging markets may see some more upside. Doesnt make sense to you that nearly 250 billion of emergingmarket debt has currently negative yields . Mark i think it makes sense because if you thing about where , if you thinkare about the imbalances between savings and investment, theres definitely investors looking for any kind of yield. As we talked about earlier, if you look at the 10 year yield rate and the potential for the fed to continue to ease monetary policy, essentially they are pushing investors out into the higheryielding categories. I can see the elements where you have capital flows coming into the u. S. , largely because you have maybe 150 to 200 basis points of real yield versus u. S. 10 year. You can probably see the same dynamics in highyield credit. These are driven more by the push of capital flow outside of the developed world back into emerging markets. David where does it all end . I dont understand quite how this plays out ultimately. A lot of people who need yield over the long term longterm investments. If they are investing in negative yield, sooner or later theres going to be a reckoning. David its the same thing mark its the same thing with equity and credit. Thats what we experienced last year. Of the yieldeeping curve driven by a selloff in 10 wass, and the outcome driven partly by geopolitics and trade wars that kind of spooked the central bankers, but we are back in a world where Central Banks are trying to engineer a global put. They are trying to push people out of the fixed income market, a little more back into risky assets. When you think about the Pension Funds and some of the government sovereigns that have to manage this exposure, essentially the only thing they had is to push themselves into equities. Lisa art mccormick of Td Securities, you are sticking with us Mark Mccormick of Td Securities, you are sticking with us. Earnings crossing the bloomberg right now. David it looks like earningspershare Second Quarter missed. Lisa we will get more. This is bloomberg. Hey im bill slowsky jr. , i live on my own now ive got xfinity, because i like to live life in the fast lane. Unlike my parents. You rambling about xfinity again . Youre so cute when you get excited. Anyways. Ive got their app right here, i can troubleshoot. I can schedule a time for them to call me back, its great you have our number programmed in . Ya i dont even know yo