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tv   Bloomberg Daybreak Americas  Bloomberg  July 13, 2018 7:00am-9:00am EDT

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estimates and wells fargo and citi on back. president trump critics theresa may's brexit plan, throwing down on a trade deal with the u.s., and it says boris johnson would be great in her job. i sleep pretty well, how about you? a fed chair says the economy is in a good place despite worries. welcome to "bloomberg daybreak." i is friday the 13th. david westin is off today. i'm alix steel. at a record yesterday for the year. and dollar-yen is the currency breakout to watch. dollar strength is unbelievable this week and dollar-yen not looking at upside resistance, one .15, what does that mean for the u.s. economy? we are watching the spread, 25 basis points off the lows of the session, crude is down by 3/10
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of 1% after a commodity rout really killed the sector over the last week. joining us is allison williams, a senior analyst for jpmorgan, it is up. allison, to me, there was nothing bad about the quarter so far. 7% for core loan growth, what was your take? >> coming in at the higher end of their guidance. . trading is beating expectations. we had a healthy june and we want to hear what is happening in july. it is early in the quarter. credit card rate, that came a little down, that is also something we have been watching. overall, a solid quarter. alix: what about net interest margins. 6%, what can we learn from that? in as the question is really that outlook, it is so is about the outlook.
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the question i think for the stocks as we have global trade concerns, will the effects of those concerns or the risks come of the, offsetting some positive benefits we are expecting from tax changes. alix: jamie dimon saying that the company delivered record results, but we want to acknowledge that the global competition is getting stronger -- what does that mean going forward? >> things are getting tougher, right? i think it would want to hear more about what businesses specifically he is speaking about, the global investment banking business? that is the first thing that comes to mind, but are there concerns related to other businesses. deposit pricing, something i have not looked at yet, but it is something that i think investors are concerned about. we talked about the positive effects of tax reform, but concerns of investors includes do the effects get computed away, and deposit pricing is a
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key area for that. alix: what does it mean for citi? >> it is a little bit different. the equity results are a positive read do for them, credit card charge-off rate is something we are also watching for citigroup, but i think that is a different company to company in terms of dynamics of what is going on. and again, not such a great -- for citi, their business is a little bit different, but the key question for them is what are the global risks that citigroup has. they have a earned have of the revenue internationally, so that is different for citigroup. alix: we have seen the banks trading in tandem, so that will be interesting overall for the earnings. >> i think that tells you that that is what the investor concern is, right? when we have these big macro concerns, the stocks have to trade together and even though we get solid results it is the bigger question or the answer --
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that we need the answer to. alix: he will be back with me in a little bit. it is time for first take. squawk, come inside the bloomberg. this is what made bloomberg's, quarter, volatility and stocks. peggy, it was good volatility for equities, but now finally fix paying off. isgy: it seems jpmorgan benefiting from volatility and trading across the board. and it jumped out to me that jamie dimon said in the earnings release that he is really seen a healthy consumer and that is driving assets off of card sales. he is really indicating a positive business that economic and consumer environment and we were not sure how much the corporate tax cuts were going to
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fade into the rearview mirror for companies like jpmorgan, but it is seeming very positive still. a good green light go for the banks today. alix: but there is good vol and bad. it seems like a good vol world for the banks. will it continue? >> what we have seen is trend must trading -- trend list trading. -- trendless trading. this kind of volatility is the meat and potatoes for traders. it keeps vacillating within that space. you can make a lot of money doing that. i do not think it will continue into the third quarter. we will probably still not get the trend, but we will start to see the spread shrink, and at that is going to eat into trading. alix: that leads to the dollar. taking a look at dollar-yen for example, the question for it industrials is what the strength of the dollar does. it is interesting, come inside the bloomberg. s&p earnings estimates versus
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the dollar, actually a positive correlation, so is that going to hold up? will the dollar really boost? vince: it is possible, the higher dollar would suggest for the industrials and that the trade situation gets better. and that is positive for earnings. then you have the trade situation going into that, a countercyclical for that. i do not know if the dollar will speak to that as much as trade. that will, or that could lean against corporate profits more than what the dollar will do. as for the dollar-yen, i think are we are seeing is we moving away from the idea that it is a haven country. it is an export economy, the two largest export countries are the u.s. and china and you do not buy an export economy in a trade war. i think that people are starting to get a handle on that. and we could see it weaken continue for quite some time. are aimagine this, you
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world leader in another were later comes to your home and it says he may not be good at your job. that is basically what happened with the u.k. and u.s. yesterday. this is the slew of papers on the visit. he gave an interview with the sun. it was startling, because he said boris johnson would be good is premised are, and he threw into doubt the trade relationship, because he does not feel like may is following through on brexit. what does the investor think? peggy: you are basically thinking that donald trump sees weakness in may and he is hammering at home. i was in england last weekend it was apparent to me that the confidence in her leadership is waning, and he is taking advantage of that. how much he is really going to follow through with what it sounds like our threats to walk away from a u.k. and u.s. trade deal, all of the trade talks are still negotiating tactics back and forth and we have seen it with president trump before, said he is taking advantage of
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what he sees as a weakness right now. alix: on the other side come he's that everybody in the u.k. loves him and we have protests on the same side. the city not so much, particularly the mayor, but maybe the countryside. protests continuing out there. about one hour in four to five minutes away from the joint press conference from president trump and theresa may. this goes to the heart of what they are talking about. this is the u.s. trade balance with the u.k. we are in a surplus, which gives donald trump the power, in essence, that maybe he did not have with china for example. vince: it is hard to say what the heck he is thinking, i do not think i would want to get lost in that mind appearedhe is -- with that mine. he is trying to play hardball. it looks like he is trying to go through theresa may to the european union, the same way he went through china to put pressure on canada and mexico. if i can attack my friends,
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imagine how i will be dealing with you. if feels like it is more politics than punch, in terms of the final outcome. the joint press conference is going to be a beauty. i do not know. alix: and it will be live. what do you think investors will be watching for the press conference? peggy: whether or not there are any takeaways on trade. essentially, what could get hit or strengthen and that is what they will trade on. i think they are trying to figure out where he is aiming for and if there is substance to the back and forth we have seen. alix: and we will be watching that, as well as the fed. this is what jay powell said yesterday, "the economy is a really good place. asleep pretty well on the economy right now." they really interesting -- it felt like a relaxed, happy, things are great jay powell. vince: i laughed, because it
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looked like he was playing last week when they asked him how he sleeps. he said, i sleep like a baby, i wake up crying every hour. so now he is saying we are in a good situation. the key takeaway was he is more and more talking about trade and he talked about that trade is not in the fed forecast, so at this point whatever the fed is pushing forward in whatever the in sses in terms -- sees terms of interest rates, trade is not built in yet. so if we see tensions increase, maybe we'll see the fed push back on the path of the interest rate increase this year. alix: because it could filter through the inflation. and yesterday the philadelphia fed president, mrs. what he had to say about -- this is what he had to say about inflation expectations. >> the 3% target is symmetric,
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so moving to 2.5% and staying there, i would become to with. >> for how long? >> i think it is a question of acceleration, as opposed -- and the change in inflation, as opposed to the overall number. if we are accelerating past 2.5%, i think we have an issue. anix: i think that is in overshoot. peggy: it is. he was keying into the market not increasing wages, so that was another indication that they are try to figure out inflation, but looking at wage growth and not seeing it move as much as he thought it would, given the fact we are hearing employers say we do not the talent we need to fill these jobs. alix: it is a green light for a stronger dollar? vince: not really. one thing i looked at was real earnings. we have seen increase in hourly earnings and everybody is
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excited about that, but you look at inflation from the cpi standpoint leading into that -- the disposable income for the consumer is declining and if that continues the fed will have to say this will eat into economic growth. how long they tolerate that, or again it is all data dependent, if the number stay solid longer they will stay on the pedal longer and it is good for the dollar, the real yield differential looking good right now, but if you start to see the consumer stepping back a little bit because of the disposable income trenching, i think of the fed will pull back. that will bring the dollar in the short-term. but -- ding the dollar in the short-term. but with all the political stuff going on it still looks like a buy. , lookcheck out gtv at all of the trends we have been running and can click on them, check them out and save them to your desktop. more reaction to the earnings report from jpmorgan and we have
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more to come. we will talk with gerard cassidy, head of rbc capital markets. this is bloomberg. ♪
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>> this is bloomberg daybreak. a jury in st. louis has ordered johnson and john sent to pay $4.7 billion to a woman who claims their products caused her to have a very cancer. the company says it will appeal. and walmart is considering a credit card in its business. bloomberg has learned that the world's largest retailer may move it partnership to capital one. negotiations are still going on and private label credit cards
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have been a business for those that want to monetize a card -- a consumer's loyalty to a store brand. fidel on a hot streak. moved ---strategy gaining 8.8%. the gains led by equity, commodities and fixed-income strategies. citadel has $30 million in assets under management. jpmorgan shares rising in free-market off of the highs of the session. the quarter looks fantastic. investment banking fees were up, equity trading revenue is up, loan growth is up the what about the next six months? joining us is jurrien timmer. the earnings presentation does not have the outlook for the rest of the year. typically, that is provided. what does that tell you about big banks and their quarters? jurrien: that we are in the part of the business cycle where there is not a lot of visibility, if you will.
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where in the twilight zone. and things get harder to figure out. the yield curve has flattened, as you mentioned. that is generally a negative for financials and it is one that i think, one of the reasons why they have underperformed. it all comes down to where the fed takes in this cycle over the next couple of years. and when you are midcycle it is kind of a consistent playbook. but we are in a phase where it is a little more of a twilight zone, where things are harder to figure out, so i am not surprised there is a lack of guidance. alix: how do you handle banks? if you are going to do it from a bottoms up basis, you would want 's buy jpmorgan, but in-flight financials have been trading more the macro risk and not idiosyncratically, so as an investor what do you do with that? the financials were one of the big winners in the playbook that follow the presidential election with deregulation positive for
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financials, lower taxes very positive, the strengthening economy and rising yields -- all positive things for the banks and financials. so it was all systems go, but been about six months ago the yield curve started to flatten and he got people worried because another playbook correlate cycle is that when the invert, the banks stop making money. i think that was premature, because i think the yield curve, there is less than meets the eye in terms of flattening, so i'm not surprised that the overall sector is staging a little bit of a comeback. versus 2.8% in the first quarter, so take that for what you will. when you look at the curve, 25 basis points, morgan stanley mid-2019,ll invert by so what is your call on that? jurrien: i look at the three-month to 10 year curve, i
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do not really look at the two-year curve because already prices in a number of rate hikes, where the three-month is the. pure short grade. that is at 100 basis points. if the fed goes for more times, which it is likely to do, then by this time next year or late next year the curve will be flat as a pancake and in the next one will be an inversion. my sense, i never want to be the one who says that this time it is different, is that maybe when the curve does invert, it is likely to do so at some point, that the signal is going to be premature because what has historically happened is every time the curve inverts the fed policy rate has been 200 or three hedging basis points above the natural rate. if the fed does that this time, we will not be even close to that. so generally the recession signals the yield curve in
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averting comes from the lack of availability of credit, because of net interest margins, and also the high cost of capital because rates are shooting higher. and we would have the former, but not the latter until the fed goes way more than what is currently priced into the market. i think that signal is going to be, at best, premature when it happens. alix: you make a good point. and there are two sides of the business, you have the consumer part and do have the investment banking part, and the equity part. take a look at the equity and fixed trading for a moment. this is what appeared to work in the second corner for banks. volatility and stocks, treasuries and fx. do you think it will continue? jurrien: i think volatility will continue. we have been in a time of, until the beginning of this year, where the returns were extremely high and very one-sided, in terms of the equity market. so the s&p was up 15% in the previous two years, volatility
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was at a record low, i mean the standard deviation of return in 2017 was 3.9, an all-time low. you had the one way return and a super low volatility. now we are in a two-way market, the market is behaving like a normal stock market with lower return and higher volatility as financial conditions tightening. and i expect they will continue to tighten and we will be in this range for a little bit longer, and volatility will continue. so probably a pretty good backdrop for any company that has a trading operation. alix: i want to bring in gerard cassidy, head of bank equity research over at rbc. ok, first blush, what do you make of the quarter? gerard: so far, looking at the jpmorgan numbers, across the board all of their divisions beat expectations on net income, so when we look at the corporate
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investment bank or it as a community bank, it is real good numbers. and wealth management put up good numbers. a very good quarter for jpmorgan. alix: when i saw the numbers, i thought the stock would be shooting up, yet we are off of the highs of the free market session and it seems we are rolling over to yesterday's close. why do you think that is? gerard: it is still early in the morning, volumes are not that heavy, so we will see as the day moves forward whether the stocks go up on this news or on the good numbers, but right now there is maybe skepticism about the growth going forward. we do not believe that, but possibly that is what is happening. alix: on first blush, you have overall lending coming in at 7%, but jamie dimon saying there is competition globally, no slide that talks about the outlook. negativesnpoint the you will be looking for on the call?
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gerard: jpmorgan has come out earlier in the year, jamie dimon in particular, saying they do not want to go for guidance. it showed up in this quarter's presentation where they did not give guidance and he is trying to push more banks to go that way, but i would say overall, when you hear about global competition we heard that early in the year from the capital market area, because remember the u.s. banks have been taking market share from the european capital players. of now that most them are back on their feet, the competition can be telling us that the increased market shares will be tougher to have in the capital market space because of the strengthening european competitors. alix: and wrapping it up, we have citigroup coming out in 40 minutes, what do you see for their read through? gerard: it should be really good, also for morgan stanley, they all came in strong, especially on the dcm and
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underwriting, both of them big year-over-year. i think the reason for citi will be positive. alix: ok, gerard cassidy, thank you very much. it bleeds through to how the u.s. economy is doing, jpmorgan saying that auto lending was up come over all lending was up 7% and if you ask jerome powell, he is feeling good. in an interview he said, "the economy is in a really good place. i sleep well at night." with me is jurrien timmer. should he? jurrien: yes, the economy is in a good spot. so when the former chairperson, janet yellen, was trying to lift rates off of the zero lower bound, there were some fits and starts, the market was not ready when she tried it in 2015 and early 2016. and maybe a year or two years from now it will be a similarly
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challenging scenario, because by that point the fed will be moderately tight and wanting to go, or wondering how to get more restrictive from their, but right now we are in this zone where if you look at the fed 7/8,y rate it is one and the natural rate is probably around 2.5 on a nominal level, so the fed has gone from super accommodative to basically neutral and of the economy is doing extremely well. the growth rates peaked earlier, but staying at a high level in earnings growing 24% in q1, and expected to grow 22% in q2. and earnings season is beginning. we are in a situation where things are really humming along. and until we get further into the cycle, i think that this is kind of steady as she goes. we are in that twilight zone between mid-and late and a year from now it will be a different story, because men earnings growth will be moderating back
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to trend and the fed will probably be about two or three more hikes into the cycle and we probably would've done 10 hikes by then, we have done seven so far. so it will get more tricky. but that is a 2019 story. alix: ok. you are sticking with me. president trump taking shots at u.k. prime mr. theresa may on her own turf. you are taking a look at live pictures of protests in london. more on the press conference that is coming up in one hour between president trump and theresa may. take a look at that rowdy crowd on a friday. this is bloomberg. ♪ retail.
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leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. alix: happy friday bid this is "bloomberg daybreak." i'm alix steel. the s&p closing yesterday at a ties level since february. the s&p was much flat.
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we had china trade data overnight, imports coming in light for the country. the global growth conversation still a worry for investors, even though the surplus with the u.s. hit a record. and this is all ahead of the interesting press conference between theresa may and president trump later on in the morning. in other asset classes, it has been a run for the dollar, in particular when it comes to yuan dollar. crosse looking at a death for the yuan. also lower, down 6/10 of 1% after president trump blasted theresa may and said a trade deal may not happen. more on that in a moment. two 25 basis points for the two 10 spread. and crude is off, after seeing its worst week since february. now we have kailey leinz with
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first word news. kailey: as you mentioned, in europe or from china underscores the cause of the trade were between beijing and washington. record surplus rose to a $29 billion in june. china's exports also rose to a high. but the u.s. and china imposed tariffs on $34 billion of the other's imports a week ago and the president is threatening more tariffs. maynor, president trump is crazy north korea's leader in an effort to boost nuclear talks. he tweeted, that great progress is being made in the sent out copies of a letter from kim expressing confidence in mr. trump. a series of setbacks has raised doubts on the u.s.'s ability to persuade him to give up his nuclear arsenal. at&t with a renewed attack on the takeover of time warner. the justice department has appealed the federal court decision that cleared the way for the $85 billion acquisition to take place. if the government is successful,
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at&t would be forced to sell the time warner properties. a government law could restrict future enforcement. global news, 24 hours a day on air and on tictoc, powered by over 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. ♪ alix: thank you. president trump and the u.k. prime minister are in the middle of a working lunch and we will hear from both of them at a news conference at 8:45 a.m. eastern. and all the angles are covered for you. we have our correspondent on the ground. alex, who leads white house coverage, is in london. and from washington, kevin cirilli. and on the phone, alex morales , u.k. government reporter. we want to start in london. start the stage for us and what we can expect in one hour's time. >> good morning.
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the first thing we need to talk about is this interview in the sun newspaper. may has wrecked brexit, u.s. deal is off. this is what everybody is talking about, donald dealing another blow to the prime minister. he mentioned that yesterday and he is doing it again. not only is he attacking her on brexit, he said he gave her advice and she did not take it, on how he would handle the situation. he attacked her personally as well. boris johnson left the government this week and president trump said that he would make a great leader. and protesters are saying that they are united against donald trump being here because of his perceived racism, sexism, and the fact that he has a complete disregard for the u.s.'s long-standing allies and international order. alix: this is a women's protest march setting up on the streets of london. trump alex, what does
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want to get from the working lunch and news conference? >> i do not think he came to the u.k. with any big demands of theresa may. they will talk about the situation in syria. there is talk there could be a deal with russia. to scale back the violence there. and i am sure that she wants to talk with him about his meeting with vladimir putin, who is believed to be behind the poisonings of a few ex soviet ex-russian spies. alix: speaking of, kevin is in washington dc, so set us up for the trump from nato to the u.k. and to russia, and what we can learn about what he has put out over the last week. kevin: clearly, president trump is setting the stage that he was there to cause disruption with european and nato allies. this comes following the
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interview he gave in the united kingdom to the sun, with regards to his thoughts on the u.k.'s prime minister. all of it comes as he is set to meet with vladimir putin on monday in helsinki. the senior high ministers and officials have said that they will talk about disarmament in syria and ukraine. president trump has said election meddling will be on the agenda. that has the attention of lawmakers on capitol hill. i have spoken with several republicans on the hill earlier this week him who are urging the president to double down on the issue of election meddling. they led the delegation from the u.s. to russia several weeks ago, as a primer of sorts, ahead of the meeting. a lot of attention focused on this at a time in which republicans are skeptical, not only of how the president is negotiating with russia, but also his policies on trade.
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there was bubbling over this week on legislation that would rein in his authority to use section -- on trade deals. alix: speaking of trade, our government reporter, this is an important today, but walk us through what we have learned about brexit in the last 24 hours and how it has made the job harder in this conversation with president trump. >> theresa may finally unifying her cabinet behind the vision of what the u.k.'s post-brexit relationship with the european union will be and president trump was asked about it. and he said, if she strikes a deal like that, expect a trade deal with the u.s. to be killed. that is the biggest post-brexit prize that she is seeking, a trade deal with the u.s., so it has given her an awkward hand to start off the presidential visit. alix: we have all the angles covered. thank you so much to all of you.
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and still with me is jurrien timmer of fidelity and the question, why did president trump go after theresa may? there is one option floated by bloomberg opinion. "trump has good reason to focus on the details of the great divorce, because of what it says about his own grand project. the mexican border wall, trade wars, when they come up against reality." would you agree with that? jurrien: i stopped trying to figure out what every chess move means until i actually see the numbers. about, markets care obviously, things that are systemic to this economy and trade is a big part of that. i do not know what the master plan is, but obviously there is a reworking of the status quo in place. and that is certainly a message from the u.s. election, but also
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from brexit and other elections around the world. so clearly there is a change in tone and everything seems to be on the table. so it is certainly an interesting time. but ultimately, these trade issues are obviously a negative. if globalization meant to better growth and lower inflation, because of the global labor arbitrage, then if you view protectionism as a form of deglobalization, it will be a negative. the market already has been the earnings in the u.s. -- booming earnings in the u.s. and not the rest of the world, and we have a tightening fed and a tightening ecb, so you have crosscurrents where the market no longer has valuation going up and trade adds to that. if trade sanctions or tariffs are stagflationary in nation -- in nature, then we went out to the earnings that would've been here he year ago. alix: tech is front and center.
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morgan stanley downgrading tech earlier in part because of valuation, but also the clouds, saying small caps were overvalued. wantat your speak -- you to buy devaluation? jurrien: i am not quite defensive. i think the markets are in a holding pattern, because the earnings are booming, but they are offset by tightening liquidity conditions and trade concerns. the s&p has gone sideways for six months and it would not surprise me if it goes sideways for another six months. and the need to service you see a more -- surface you see a more fractioned story. six months ago, it was about plus 10 or 15, now we still have respectable earnings growth but decelerating. and the russell 2000 is making new highs, obviously the faang trade has been strong and bond proxies have been very weak.
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on the duration front, the 10 year around 3% makes sense. if the fed is going to go another three or four times and the term premium remains negative, that is a big threeon, but bonds around or 3.25 seem ok to me. alix: thank you so much, jurrien timmer of fidelity bid later today, that fidelity. later today, jpmorgan. and the joint press coverage between president trump and theresa may at 8:45 a.m. coming up, wilbur ross divests. why he is selling equity holdings. that is up next in our wall street meat. -- beat. this is bloomberg. ♪
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alix: this is "bloomberg daybreak." broken coming up, leave
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rogan. now to bloomberg business flash. in-flight wi-fi service go go considering splitting up. it is looking at a number of options. one could divided into several companies serving commercial and business aircraft. for daca bankems am which faces allegations of money laundering for russia and azerbaijan. hermitage capital's ceo has filed a credit -- a complaint against the bank and make using the bank of laundering more than $8 billion in funds. the ceo has apologized for the make's failure to stop laundering. and the founder of alibaba has lost his position as the richest person in asia, replaced by the chairman of india's conglomerate reliance industries.
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according to the bloomberg -- according to the index, he was with more thanks to a rise in alliance shares. billion, that is where alibaba's stock is traded. that is your bloomberg business flash. alix: now turning to wall street beat. cohen's crypto investments. he is courting the ultrarich, stepping up efforts to cater to alter high net worth individuals by hiring a veteran to lead investment banking and ross sells out. wilbur ross selfie will -- says he will sell his equity holdings. is jasonming out kelly, r bureau chief at bloomberg and kelly collins.
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let's kick it off with steve:, the next guy investing in cryptocurrencies. >> i saw this and thought, he is going in and it is notable that this fund is self economist and is led by a woman, so that is notable in the hedge fund world. but has also drawn investment from union square ventures, from the ceo of coinbase, so this actually feels like something real in the world of crypto. ofgy: it started at the end last year and it is important to note that the money going into this is coming from his cohen private ventures, not from the hedge fund that he runs. it is part of his asset base that he uses to invested longer-term capital. this is definitely a longer-term play. and into the asset class. that is important, because sometimes when people here that somebody is going into crypto, they think immediately about the coin and this is thinking about investments across the board in the asset class, in terms of
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infrastructure for crypto assets, in terms of privacy, better privacy for privacy coins. alix: 249 crypto funds have opened and 70% did so last year, so not just bitcoin. big names are finding different ways of doing it. >> it will be interesting to see if this is a path of investment for him. if it becomes something he is really adjusted in. is really interested in. if you have a steve cohen pushing the idea that crypto is profitable, that will move the needle. alix: talk about change up. we have the expert. jpmorgan, those from what is behind that? peggy: jason notes this. --. the burgeoning wealth around the world. lots of people are forming family offices. they have been around for a long
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more but they are getting and more sophisticated and they are doing more and more direct deals, where they are not doing everything through hedge funds or private equity funds. so i think this is a win for ubs. they have a huge wealth management business and is already a leader when it comes to managing money for family offices, but it is a win. family offices are so secretive, so you hire somebody with ties to them and it knows who they are, they often name themselves something that you cannot even make a tied to the family with, so this woman has already been in this space for a long time, so that is a huge win. >> the point about direct deals is important, this has become sort of the sub asset class. and really a target for private equity firms and hedge fund firms looking for substantial investment. they are very sophisticated, they often have people managing their money for them, so teams of people really managing their money for them, so it is interesting.
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alix: talk about one of the sophisticated investors, so this was wilbur ross selling out his equity holding he had on short. remind us about why. jason: well, this has been really, to use one of the technical terms, this has been a doozy in the sense it keeps coming up. there were some short sales, then it turned out there was $20 million worth of invesco stock he had not managed to dispose of. by law or statute he was supposed to get out of all this, divest 90 days after he was confirmed, but that was quite some time ago. alix: when we spoke to him just a few weeks ago and asked about the shortselling, he had to describe to us what shortselling actually meant. this is what he had to say. wilbur ross: this is not what you would typically call a short sell. what happened is some shares in
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one company were not physically in my possession and if there was a whole process i had to go through to get them into possession, so i could sell them. alix: that was not invesco, but the idea that he was pushing back on an ethics issue. explainhen you have to that much, you are not in a position that you want to be in. peggy: it is puzzling. from one point of view i think, people like wilbur ross have such a complicated assortment of assets and it is fair to say that most of them are in trust, and they may not know where everything is. and if they have already divested interest in it from a trust or not. there is also a lot of complicated lawyers and tax attorneys who do this for people all the time, so i am confused why this has become somewhat of a doozy, as you said appeared alix: and all the senate -- as he said. alix: and all the sum, nonetheless.
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a wall street bonus for you. here is a picture of the morning from the u.k. this is the trump baby balloon in full glory over in the ok uu.k. we know the city of london will be anti-donald trump, but we do not know how the rest of the country feels. this is exactly what happened in the u.s. when it seemed like all the metropolitan city said, he will not win, and we were shocked when he did. jason: what we have seen around brexit this week, the soft brexit, but really not positive for the bankers who are there in the city. so this visit really brings a lot of that to the fore. if you see brexit falling apart or going in a different thistion, or get harder, has real implications for the financial services sector. alix: how did they make that billion? that is what i want to know --
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balloon? that is what i want to know. check out gtv click on our charts and graphics and interact with us directly. you can send me a message or tweet me. the demand for safe haven wanes. itsan going towards his worst week in months. this is bloomberg. ♪
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alix: it was a move in the currency market this week, take . look at yuan dollar reversing what we normally see. the longer average moving above the shorter term average that tends to signal a bearish trend when it comes to the yuan. jordan rochester is on the phone. jordan, how much more downside yuan?we see for the
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jordan: we have a strange mix of factors. we had a big trade war hedge build up. and we have seen trade war's ramp-up with the extra fret, but dollar yuan has gone higher. first of all, the china market fears have been localized. fears, it would be dollar china instead of dollar yuan. there was a long position on yuan. and we have seen it break through a trend line. but also, it is the lack of -- in fixed income. looking at bonds or treasuries, this makes it easier for japanese investors to get involved. dollar-yen is unlikely to trade lower with this dynamic. what could change that is if you have trade war's with market
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risk off. right now, it is focused on the key market, such as china, rather than s&p for example. alix: what upside do we have? what is the next level for dollar-yen? jordan: we have broken the trend line already, so we have to look back at years ago in dollar-yen. if we are looking at the charts, 1.14 would be a big resistance level. we have some in between, around the 1.13 level, so the guys playing this over the next month is what they want to focus on. alix: what about the upside, the dollar index at 95? ardan: if we do not have de-escalation, the dollar -- if we do not have china and the u.s. come to the table for talks, the china and the dollar move, the broader move as a result of it, continues. until that happens, we could be
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talking about 80% move over the next month or so. but beware, you get the one headline saying trade talks resume between the u.s. and china and the markets will find a relief rally. you will see the assets do well, hedge stabilizes. alix: thank you for your perspective. and the markets, what we're watching the bank earnings. jpmorgan giving up gains from earlier. solid quarter anywhere you look. yet it is the worries about the macro and what will happen with trade in the outlook going for the has investors more concerned. you have citigroup up by 5/10 of 1%, those earnings on deck. this is bloomberg. ♪ phones have made our lives effortless.
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jpmorgan crushes it, beating estimates. citibank revenue comes in light. wells fargo on deck. the shame game. president trump critiques theresa may's brexit plan. he says boris johnson would be great in her job. jay powell says the u.s. economy is in good shape despite worries about trade policy. a warm welcome to you. i'm alix steel. here we go. citigroup with earnings that did wind up beating estimates. estimates,on missing 3.16. also just to quickly touch on wells fargo it is harder to get a read. while the issues they are going $94 billion.s hit
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that is lighter than estimates on a quarter that is down sequentially on a quarter on quarter basis. that appears to be a big miss from expectations. i do not know if they are totally comparable. the big number is citigroup which is what we are watching here. allison, citigroup was going to be good. do you have a need yet? yet? you have a read >> that takes away some optimism for the industry but one thing i would point out is city does have a strong emerging market. they flagged that as an area of weakness. it is not surprising given what we saw.
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it may just be weakness in that them worse than expected. equity growing well. jpmorgan was up. can make some of the strength and equity derivatives there. .e have not seen the car charge that is another thing we are looking at for citigroup. for wells, the expense ratio is a standout. for that include a criminal ual foruel -- accr legal troubles. when you take it how do you filter through their news that they are down a bit? >> that is disappointing for us. that is one thing we have been watching. you can look at it two ways. growing more than
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expected. regardcern for us with to the car business is competition. they have been growing faster than competitors. selection asdverse the business becomes more competitive, that has been our main concern. we can see the consumer as healthy from a credit perspective but could there be issues of profitability? the headlines, earnings come in 163. revenue was up 2%. light versus estimates coming in just over 18.4 billion. equity trading was up at 864 billion. that was lighter than estimates. banking was also down at 1.42%.
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the city brand was up by 1%. net income rose 16%. we have a lot of have and have-nots shaking out between j.p. morgan and city. for wells fargo, the bid headline is -- big headline news, is that a wells fargo issue, what is your read on that? >> i think we are going to want to dig in and see what is happening in terms of what types of loans what is driving the decline? they do have these constraints. they have to manage in terms of businessesthe core while controlling other parts of their business. commercial real estate is something investors are not worried about. we are going to see where the growth is how they are growing that business. auto is another area they have gone back on.
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u core happening in the residential business. jpmorgan as a for side note in terms of auto loans. joining us, kevin whole to billion invested in banks. citigroup is a top holding. are a city holder. what do you think? number isdit card weak. that is one of the key issues with the stock. it is a legacy issue. these rates have been in place for the last 18 months. as we get into it, in the back half of the year and they pull back on the teaser rates in q1 we would expect those numbers to improve. but that is one of the key issues with the stock.
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investment banking numbers generally for them are pretty good. trading numbers lighter for city. they do have more currency trading as allison mentioned. that does affect them. alix: city reported a drop in investment banking fees. when you are trying to make asset allocation how do you distinguish between j.p. morgan and city? in are you heavily invested citi? >> jpmorgan as we saw in the earnings numbers is not going to cover off the ball in a most every division. withinhave a turnaround the card business. you're hoping for profitability. if you think about that, when it was added, that is starting to mature. rough and ability should be better in the back half, having that contract. it comes down to execution. you are paying a multiple and a
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half less for those earnings. in addition you have some of the emerging markets issues. they are a little bit cheaper. they are returning $20 billion of capital this year. they are buying back 10% of their stock if they can execute on credit cards. we think it is the attractive. allison: the one thing i would add is you have to look at the year ago comparison. citigroup is stronger. they have been making progress on the equity side. debt fees last year at this time were incredibly strong. still healthy. to crowded by the comparisons. in general good for both. alix: what did you learn about
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the deposit data? i was interested in jpmorgan in particular. what did you learn from that, how competitive are the banks getting? is on the margin getting more competitive. we had one data point from a smaller bank. i think that is something we are going to be increasingly looking at. i have not looked at wells fargo. bank of america. that is something we're watching. we're going to hear about where the deposit competition is. we know there's more, a higher beta in the commercial business. what is happening in the core retail business? we would expect to see that starting to rise. we have come in better than expected. is that changing? alix: when you take a look at investing in banks, is your big goingon for jamie dimon
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to be macro or micro? s&p 500 financials have been with together not an idiosyncratic of them. how would you think about them? where the asis going, not where it has been. the key issue in the back half is trade war. most of the rest of the market generally shrugged off these trade concerns. in the banks there is a correlation with the yield curve. the banks have under convert -- underperformed. they are a prisoner i would say of these trade powers as the rates have come down. if it is resolved i think people will continue to be optimistic. you are going to have to listen on the calls for what jamie things growth will do. alix: great stuff.
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thank you for helping me go through those numbers. kevin holt will be sticking with me. let's recap earnings. citigroup is down by 3/10 of 1%. equity trading revenue up 19%. it stands out because jpmorgan was so strong across the board. jpmorgan is giving up most of its gains. earnings presentation does not give outlook for the year. global competition is getting stronger. wealth is going to get hardest of -- well that is going to get hit hardest of it all. that is something we are going to break down as the calls start to roll out. in general, the highest level since february last year, now we are pretty much flat. banks are not getting a huge boost either way. a dollar has been the standout. will be the next resistance?
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the 210 spread, kind of steeper but not really. 20 five basis points. unbelievable flattening. 3/10 of 1%tiny bit, as you look at the commodity rout ending at the end of the week. coming up, wall street kicking off bank earnings season. next week, netflix, ge and a few other names reporting. how will investors reward them? this is bloomberg. ♪
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>> this is bloomberg daybreak. johnson & johnson says it will appeal a multibillion dollar
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verdict. a jury ordered them to pay $4.7 claimedto a woman who causedout products cancer pre-walmart is considering a major change in its branded credit card business. they may move is partnership from synchrony to capital one. negotiations are still going on. they are a little iterative business for banks. will get aetflix chance to validate the $46 billion added to its market value since the blowout earnings report in april. the question, whether it added another streaming customers to satisfy investors. month are up 106% second-best performance in the s&p 500. stranger things, i am scared to watch. wall street banks reporting,
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jpmorgan kicking off the earnings season. we are going to get more. microsoft and ge, how is the trade were going to impact earnings? so far no problem for the second quarter. all poised for killer growth. they are exposed to some kind of trade war. , still withfounder us as well. what are your earnings estimates? >> consensus for 20% growth. hard to be disappointed with that. a lot of it does come from the tax plan. that is the biggest we have seen since 2010. alix: do you think beats get rewarded? more, withgoing on accurate,, a more
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lot of it is being baked in by the time the company reports. yields basis a need to beat by a significant amount to see that pop. alix: jpmorgan is a great example of that. earningske a look at expectations that have climbed versus how the sectors have performed you are seeing a divergence. we have a chart that we can pull up. materials for example, earnings estimates have climbed 11%. the stocks are down 8%. industrials earnings up 9%. equities are down. what do you make of this? sell side will be slow to revise on the downside. they always do that. by the time the current quarter comes around they will advise down. ticke seeing that downward
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. the more interesting thing is the market tends to be a doesn't matter until it matters kind of thing. this will matter all at once. we will see a large volatility event when we wake up one morning and some industrial company reports numbers outside of expectation. alix: as long as they do not say high watermark on the conference call. how does the dislocation create opportunity for you? -- as a value investor we look at where it is discounted in and there are opportunities. financials are traded down. we think there is opportunity. if you look at the trade wars the areas most susceptible which haven't reflected a lot yet is technology. technology is susceptible to the areas targeted in the trade
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wars. and industrials. is as wehe expectation move into august and september we will get a trade deal. if that happens you will get a of these areas, particularly financials. if not you will up with an earnings miss. some of the weakness starts to reverberate through other parts of the market. alix: what is on your value list? or does it matter when it matters? >> we have been positioned in the financials with a lot of pullbacks of 15-20%. we think they have been much more responsible on lending and they are buying back depending on the company. that is pretty donna attractive. we are still cautiously optimistic. we do not think there's a lot of earnings downside.
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like which is we completely countercyclical is energy. it is trading on its own supply fundamentals. sudden supply and demand has gotten tight around the world. alix: i do want to point out something has changed, that has to do with the strong dollar. it seems the dollar is going to be good for earnings. the correlation is positive. how do you see that playing out? >> we talked about tech a little bit before. we really like tech here not only because of the dollar but because of the margins story. of 18 isthe back have about margins because of the tight labor market. if you look at why financials may be underperforming you start to see where there is innovation in the economy and leverage on
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people, you see technology doing a better job of being able to produce that extra dollar revenue per person that they have to hire. we think that is where the money is flowing. the dollar should help that. alix: do you think we are peak earnings? >> know. probably two quarters out. if the trade wars continue in a real way and trump doesn't back down from this we will start to see people discount what is going to happen in 19. the market will always move to quarters away from peak earnings will be. alix: great to catch up with you. thank you. with us.sticking commodities getting hit hard this week. more on how investors are playing that. energy suffering the worst supply -- worse downtrend since 2015. this is bloomberg. ♪
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alix: commodities having their worst week since february. take a look at the index. versus s&p energy index. commodity moved much lower. likess is kevin holt who oil and gas stocks. top holdings, bp and chevron. did you buy the dip or did you expect equities need to rerate a little? exactly good to know what they are going to do. .tocks have had a strong run to take a step back, energy has gone from 30 to 70. we still think these stocks when you look back on historical bases are discounting low 50's, $53 oil, not $70 oil.
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we can just get the stocks to stay around 55 or 70. which is why we think that. if you are looking at the big oil. walk me through the diversification. >> we are bottom-up stock pickers. we love free cash flow. when you look at the integrated, the capital restraint they have put in place, and they maintain the same level of capital, they are generating large amounts of deployingthey are back into dividends. we'll look at chevron to institute thereby back -- there buyback.- their everyone thinks the old oil from
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10 years ago, we think tillman and team have done a great job over there to an unconventional play. thestock sells a one of lowest cash flow multiples in the group. as they get throughout the year, their caches is building to a point we think they can -- they have a buyback in place. he said im that way to tell you but we will buy back stock. companiesny of the invest more, would you still want to own those stocks? >> i think it comes back to balance. 2005 topened between 2015, ceos were compensated 100% on production growth. have been proponents of look at the rates of return. i don't think the answer is by 100%, use all your money to buyback stocks but it is also not use all your money to find
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reserves. it is a cyclical business. ,f prices moved slightly higher maybe they move their budget to 55, 57. i would not move than expecting $75 oil in perpetuity. stickingin will be with us. our top stories can affect stocks. earnings wound up being a beat. revenue is up. it was thick and equities trading that hurt the company. and city branded card business revenue is up 1%. net credit losses were up 18%. some weakness for citi. this is bloomberg. ♪
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alix: this is bloomberg daybreak. i'm alix steel. pretty much flat on the day. a couple of seconds away from
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the import price index. china trades surplus hit a record in june. in addition to the fact we had stronger overall cpi. we will see that read through. can the curve continues to trade around 25-24 basis points. here on year, lower than expected. little noise here. it may number has been revised. at ae to wonder if we are watch here. the price index is down 4/10 of 1%. man was revised up. joining me now is frances donald. also kevin is still with me as well. , weking high import prices had trade issues, what is going on here?
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>> this number is backward looking. moving forward input price data is going to take on a lot more economic focus. markets are going to have to pay attention closely. these are the canary in the coal mine. we will see the impact of tariffs filtering through to the economy. it going to show up there before the cpi. they are not as strong as we would have expected. we are starting from a lower base. it may be easier at the margin to take on that in this data point. alix: take a look at what this is felt. capital goods fell pretty consumer good prices fell. imports from china were unchanged. maymost we have seen since 2014. quite so much of what has happened, the escalation in trade tensions can we are not going to see that for another month or later. this big chunk of potential tariffs on 200 billion chinese
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imports is not going to say -- shop until q4. a lot of the economic data is going to be backward looking and considered stale. it is not going to be a helpful in telling us what is the impact of this trade war going forward? alix: it was doubled or what you said, i had no problems about the u.s. economy. he said the economy is in a good place. economy atl on the night. on the flipside he said the administration says what it is trying to achieve is lower tariffs. if it works out that way it will be good for the economy. if it works out the other way, we have high tariffs, that could be a negative. if we wind up seeing higher inflation does the fat look at that as transitory? >> yes. when it comes to the inflation component able call this an idiosyncratic factor. suddenly we are going have a big
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jump. year-over-year will adjust over time. see downgrades to the growth forecast, at the margin the fed and central banks facing a more difficult central bank scenario. inflation, lower growth. i am not saying we are going there. >> if you're going to wind up protecting yourself against inflation you haven't been rewarded for that. how will you be hedging inflation if you would at all? >> it is difficult at this point. from a stocket standpoint, that will minimize downtime. the economic numbers are backward looking. prisoners of the
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investigations. .t is really binary the u.s. is at a trade disadvantage. if this goes to the mat, tariffs get in place on both sides, economic growth is going to go down. we see what has happened in the chinese market. if this is not resolved by the midterm election the president would want this resolved. alix: some fed officials might look through some inflation. the fed president was talking and said the same thing. here is what he had to say. >> the target is symmetric. moving and staying there i would be comfortable with. i can't say. i think it is a question of acceleration as opposed to the change in inflation and the overall number.
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>> are we going to realistically have and overshoot? >> it is possible. the problem is when we talk about trade tariffs, we are not talking about what trade is going to look like over the next year. we are talking about having to longer run.r at the margin most economists are going to agree it is deflationary. decemberhis is the 2020 spread. we basically now, it slipped below december 1. it is negative territory. we could see a hike. towards noting more easing. did that mean anything?
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>> my focus is on what this is doing to the yield curve. end brings the front higher. the view that that is not going to be able to continue to raise rates over the longer run is contributing to the flattening we are seeing. do you agree? what excited to have. if the trade issue resolves to see the're going 10 year pop over 3%. if this point with the fed on point raise rates to more times this year, turning down because of trade fears the historically when you go into a potential inversion that signals inversion. trade gets resolved.
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get into a trade battle, going to get messy. alix: when you talk about the thed curve, take a look at 10 year. they are high. universe that, there is no way you will get a steeper curve. when is -- when does it frighten you? >> there's going to be opportunities to replace them. to me they are just tactical opportunities. necessarily this environment on the yield curve, the fed has been focused on this. the level i will get worried is 20 basis points. basisooks less than 20 point. probability starts to rise dramatically. we have had a flattening environment. question, what are
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you going to be on working on? we have to start overlaying this component that is difficult to predict. we have to know how the fed is thinking about it. let's get an update on what is making headlines outside of the business world. >> president trump insists he and theresa may have a good relationship. thatresident told the sun she failed tons, take his advice. coming up president trump and prime minister may hold a news conference. watch it here.
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a new report from china underscoring the cause of the trade war between beijing and washington. to 29 billion dollars in gene. exports rose to a high. the u.s. and china imposed tariffs on the other imports a week ago. -- ident trump >> new attacks on the takeover of time warner. the justice department cleared the way for the $85 billion acquisition to take place. forced to sell the time warner properties. day onnews 24 hours a air and on tictoc on twitter by 2700 journalists and analysts in 120 countries. this is bloomberg. the jpmorgan conference call just started. taylor riggs is monitoring.
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the stocks fell 9/10 of 1%. the analysts call starts. what is your takeaway? x pretty boring. going through the numbers. on that media call, let me bring you a few of those comments. there were questions about brags it around the uncertainty. the said there is a significant amount of uncertainty. she continues to plan to be ready. with loan growth and the trade prices, she is optimistic economic growth will be a tailwind. they do not have a loan growth target. no them from the trade fights. jamie dimon said that are you worried. with regards to tax reform we have not heard as much in the second quarter as we did in the
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fourth quarter. out.thing planning finally to wrap it up with trading revenue, clients have been more participating in the markets. she expects expansion in markets and pick up and volatility. we might see that coming soon. coming up, minutes away from president trump and theresa may's press conference. we will have that. this is bloomberg. ♪
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>> this is bloomberg daybreak. today, brigadier general mark kamman, the secretary of state. we are minutes away from president trump's news conference with theresa may. it is basically a countryside retreat. i am thinking about it as u.k. count david -- can't david. intake us through the latest what we can expect, alex wayne, and the bloomberg opinion columnist. kevin cirilli also joining us. i want to head over to you first. what are the expectations? optics of this
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meeting are the exclusive interview of donald trump. the u.s. deal is off. he is going hard on trade. personally,,more saying boris johnson will make a great leader. thousands of protesters came from west london. they are going down to parliament square. where the baby donald trump is hanging. they are going to come back through trafalgar square. a lot of the signs are pointing towards the reception of the .gbt q community women's rights activists are also here. we have a lot of european union flags as well.
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with -- no war with iran. thousands of signs. a largell be quite protesting here in central london. london, what does trump actually want to get out of this? trade surplus. >> i don't think he was paying much attention at all to a trade did with the u.k. until the last couple of days when reporters started asking about it. undermine the prime minister. it is not clear he wants much of anything other than to consult before he talks to vladimir putin. i'm sure she would want him to discuss the assassination russian spy.e
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>> may be the optics are more important than the reality. saying a great piece brags it does matter for president trump. can you walk me through what you wrote? >> of the brexit referendum was a big moment. like the trump candidacy, this was a come from behind victory. it was -- the campaign rally .ehind the nationstate call forrallying people to restore sovereignty. trump identified with that. taketeers have the slogan back control. make america great
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again. a longtimeaken interest in brexit. he has commented on it. that hemade statements was being defeatist. i think he sees a parallel in flow of the brags it and his own campaign and movement. from that perspective you wonder if he is looking at this great dream that is dying. whether he is wondering whether that indicates vulnerability in his own project. alix: is that at stake for him? brexit too get behind make his agenda at home legitimate? represents a global
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coalition of the populace movement president trump seized upon in his first presidential campaign. this is president trump embracing steve annan. this is president trump doubling down on a time in which the u.k. prime minister is concerned as back footed,on flat-footed. the president is said to meet with a vladimir putin and has been forecasting criticism not just a gets by minister may but also against angela merkel, particularly for europe's relationship in the energy sector with russia. chancellor merkel and prime instrument representing different coalitions. taking the criticism head-on. you can see, how does this set him up for monday?
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>> he has put himself in a position where they are looking at contrasts between the way he behaves with allies and the greatest american adverse i -- adversary in the world today, vladimir putin. we're expecting him to look cozy with then angela merkel theresa may. out,gislators have pointed this doesn't reflect well on the president. him up for this set the optics? you can help speak to this as well. will his image transfer in russia? >> i think the question is how he dropped bombshell
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translates into brexit. they will be watching closely. here, they were a huge story. no british officials went to the world cup to watch england play. that was seen as a way as protesting the state back support for british soil. ist we will see in this interesting. groundto try a common with trump, and emphasize common interest. doing furtherp damage. alix: you showed us the front
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page of that when you are on the street. what was the reaction in the government? it felt like they were calm. walk me through the angle there. duncan, talking to bbc radio saying brags it, he is quite a character and a controversialist. he and may have a good relationship. article wasll of an dropped as they were having this chummy dinner. winston churchill was born. they still have a very strong special relationship that has existed since 1946. the iron curtain speech in missouri. focused on that agenda
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and keeping the u.s. close to them. this has done some damage. the: they are taking podium. let's listen in. more thancountries do ours to keep their people safe and prosperous. .e want to deepen that further this morning president trump and i visited where we saw a of british and american special forces. one example of what is the broadest, most advanced cooperation of any countries in the world. whether it is our pilots to turn the use of chemical weapons, our soldiers at the forefront, our neighbors in the pacific enforcing sanctions on north korea, or our intelligence sharing partnerships thwarting
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attacks. our security cooperation is saving lives here, america and across the world. that partnership is set to grow. the u.k. set to spend 24 billion pounds on u.s. equipment and support over the next decade. we have discussed how we can respond towork to maligned estate activity. in particular i think president trump for his respond to maligned estate support respondg to the use of a nerve agent in salisbury after which he expelled 16 russian intelligence officers. i welcomed his meeting with president putin monday. we agreed it is important to engage russia from strength and unity and we should continue to counter efforts to undermine our democracies.
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we want to go further. we agreed as the u.k. leaves the european union we will pursue a u.s. u.k. free trade agreement. provides the platform for donald and me to that builds on the uk's independent trade policy, reducing tariffs, and as two of the world's most advanced economists, seizing the opportunity of new technology. all of this will enhance or economical operation creating new jobs and prosperity for generations to come. the u.k. is defined by the worldly palais on the world stage. calls andaking tough being prepared to say things others might not here. president trump has been clear about how he sees the challenges
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we face. theagree -- we agree on threat of the dprk. or the need to address the destabilizing influence of iran in the middle east. we have discussed what more we can do to push back on iran and reduce humanitarian suffering. spendinged to increase where we saw increases it yesterday's summit. this includes afghanistan. an ongoing commitment to a mission that began as nato's only use of article five acting in support of the u.s.. let me say this. it is all about responsibility to ensure the transatlantic unity injures.
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it has been fundamental to the projection of our interest and values for generations. with u.s. leadership at its those values are something we in the u.k. will always cherish as i know the u.s. will. it is the strength of these values and common interests they create that we see across our societies. that is why i am confident this alliance will continue to be the bedrock of our shared prosperity for years to come. trump: thank you very much. it is my true honor to join you at this remarkable setting. truly magnificent. we celebrate the special relationship between our two countries. i want to thank you for the gracious hospitality.
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willnight melania and i delighted to join you for dinner blenheimgnificent palace. it was a remember a book evening we will not soon forget. visit thevilege to store checkers i have heard so much about and read so much about growing up in history class. to continue our conversation which has proceeded around rapidly. for generations our predecessors toe gathered at this retreat strengthen a bond like no other. the relationship between our nations is indispensable to the cause of liberty, justice and peace. the united kingdom is bound together by an historic heritage language and he rose. the traditions of freedom and the true rule of law were our
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shared give to the world. there are now our priceless inheritance tree civilization. we must never cease to be united in their defense and renewal. , we joineddinner prime minister may and the duke and duchess of marlborough for a tour of the winston churchill exhibit. it was something special. from here at checkers prime mr. churchill phoned after pearl waror and the horrific american and british service members shed their blood a long -- together we achieved a magnificent victory. victory.
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prime minister may and i have come from a productive summit where my top priority was getting other nato members to the prime minister was right there with me. i want to thank you for the united kingdom's contribution to our common defense. the u.k. is one of the handful of nations, five out of 29, not good but it is going to get better really fast. in addition to the meeting, the 2% minimum gdp defense commitment. --ing the summit commodities some of them i make clear that all allies should honor their commitments and we have received substantial commitments from members to increase spending and a much more timely manner. in our meetings today, the prime minister and i discussed a range of shared priorities,


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