david: welcome to bloomberg go. jon: breaking news from the bank of england, rains unchanged -- rates unchanged. a slim majority expecting a rate 0.25, did notr is happen, rates unchanged at the bank of england, 0.5%, they stay where they have been since march 2009, the asset purchase program remains as it was at 375 billion pounds. you see the pound is stronger. betrayed. -- is how we trade. let's bring in the bloomberg team.

johnson joining us from our european headquarters. headline number for me unchanged. guy: they will keep the they purchase facility -- are saying they do not have enough information to make a decision at this stage. maybe at the beginning of august we may see a rate cut. sterling has picked up on the back of that, no rise to see what is happening. we will have to wait a few more weeks before we get that decision. everybody waiting to see what will happen. i do not know a reflection of whether they believe a rate cut will have zero impact on the u.k. economy, or want to see the

effect of the brexit referendum story will have. it: a stronger pound, knee-jerk reaction in the fx market, yields higher off the back of the 10 year gilt yields around 0.7%. is this to do with a lack of data? all we have is a confidence survey. >> a bit of data but not much. sentiment about consumer there are not much -- indications that some businesses are delaying investment and hiring, some signs pretty brexit vote still there. -- paris brexit vote. speculating that maybe mark

carney trying to take preemptive action. he might have been tempted to join some of the most dovish elements and would that have been shown solidarity. if that had been the case may be we would have got this rate cut. pricingk market was not -- they were pricing in a cut, they are quite clear that they do see something happening in august. that seems likely. the bank of england says most expect action in august. policy loosening in august, only three weeks away. we have a bit more data. we said they would not have much more data by august.

unchanged. jon: no hard data to go on. not until three weeks and the quarterly inflation report but a strong message from governor carney, the market reaction is a knee-jerk reaction, i get that, he wants to see how it plays out, the to provide more communication as to how this will play out? >> i think they already have, most officials expect policy loosening in august, they are saying we have a few more weeks, we do not have to do this now. three weeks will not make much difference. the governor will meet with the new chancellor later on this afternoon. had tighter fiscal policy and looser monetary policy, maybe they want a greater understanding of the physical side of the equation and what it will look like the four they make a decision. it seems as august the most likely date, they telegraph to that. -- they telegraphed that.

maybe we will get a little bit more data in august and we may have a greater understanding of what the government will do next when it comes to brexit. maybe more clarity in terms of the financial markets. they said, it is too early to make a decision, we will wait and move forward. they only have 50 basis points to play with. a few weeks will not make much difference. jon: thank you. rates unchanged in the bank of england, a strong signal that easing is calling. -- thewe will bring in overseas -- let's stay in the bank of england, the markets are surprised. were you surprised? >> not exactly, i agree with jonathan, we have to wait and see what will happen to the economy, all sorts of forecasters that will fall

because of the brexit move, not like we are sitting here in monetary policy is tight and they need to do something. talking about a knee-jerk your chart scale of on the two-year note, we jumped up to 16 basis points on the 2-year note. i do not think that extra monetary policy is going to do wonders for the u.k. economy. david: besides the immediacy in the markets, what is the longer-term in the markets likely to be in the long-term, will it calm markets? >> what did that with the bounceback after the initial fall after the vote to leave and then we have a pretty significant bounceback. we are sitting here worried about what is going on in the u.k. markets but the ftse is up 6%, 7%, there is a lot of uncertainty in the market that we have to figure out what will happen but i think that will fold rather slowly. perhaps with a new

government in the u.k. we may see fiscal stimulus which would take the heat off the bank of england, what are the chances something along those lines? >> she said the target of a balanced budget right to thousand 20 is off the table. -- shey policy globally said the target of a balanced budget by 2020 is off the table. we need to see the private sector starting to do things that help the economy move. at the end of the day, not about policy makers, about the private sector and how is that going to affect growth in the future. jon: i want to share this conversation -- shape -- we will get easing from the bank of england, a strong signal from the minister today, the central bank, a strong signal that easing is coming and a strong signal that they capitulated on disparity they try to push the

last few years on the fiscal side, what does that mean for the guilt curve and how to offset the likely inflation spike with softer growth and if someone invested in this market, how does that shape your thought? is a globalit market, 78 basis points, that sounds crazy expensive, in the world of germany issuing at a negative yield yesterday on a 10 year space, 78 basis points is pretty good. i think if you do it on a percentage basis it is almost infinity higher than what is happening elsewhere. that is important. if we just think about the old school of what would happen with loose monetary policy and loose fiscal policy, you would see a steepening of the yield curve but the global pressures will keep that in check. david: you have warned in the past about the dangers of central banks coming in to prop up financial assets, is the bank of england's move a step back

from that danger? >> governor carvey -- carney came out as soon as the brexit phot was heard and in a very quick reaction said we will cut rates. even jonathan mentioned with the minutes. i am not sure this signals the all clear that monetary policy makers are not still running around trying to prop up as a prices. alix: we have not talked about the unconventional told we might see, the bank of england does have a corporate bonds secondary market facility that has not been utilized in a few years and also has the lending, fundings banks can swap treasuries and use it to get loans, that is good to get money but how does that create demand? >> exactly the point, not like it is expensive to borrow money. i do not think it is the price of borrowing that is holding people back. at the end of the day, we saw a boat -- vote that was fairly

substantial for the citizens of the u.k. to see -- to say we want a change, not necessarily we want to move to something that you have clearly stated is better, we just want a change. i think that is the main political topic around the world. we are seeing it in the states with what we have seen so far in the primaries. i think the masses are not particularly happy with what the leads have put forward -- elites have put forward over the last years. david: qb -- jon: qe does not help. i wonder if there is a message from monetary policy, are we reading too much into that? >> probably, i am so that it to what central bankers have to deal with. i am sympathetic to what central bankers have to what central bankers have to deal with, they look at inflation targets and roughly speaking, no

central bank is reaching or exceeding inflation targets, they will work harder to do that. we do not know the unintended consequences of what happens when they keep pushing on that strain. some of it is exuberance in the financial markets. us.d: he will stay with jon: the bank of england keeping rates unchanged, the market expecting action and did not get it, coming up, jpmorgan come out with their earnings. much more on the bank of england decision looking ahead to the rest of bloomberg go. check out the markets, futures, a little bit firmer through much of the session, equities rallying in europe, the ftse up, the fx market, sterling going a bit higher off the back of a surprise decision by the bank of event to keep rates unchanged. ♪

attention of global markets in the city of london, a stronger pound story, the bank of england keeps rates unchanged, markets and economist expecting a rate cut, it did not happen, it means a stronger pound, we trade at 133.18. ftseep drop-off in the following that decision. 1%, the daxof remains stronger. futures remaining firm. call it over a half of 1%. similar on the s&p 500 futures

after a four-day rally. classes, the yen a 105 handle. , the bank of japan supposedly will buy them. a weaker yen. here is the bond story, yields pushing a little bit higher up two basis points, 1.49%. guilt yields pushing higher. some bank stories. alix: talk about a big surprise in the market, jpmorgan with the premarket chart, they release earnings, a big prop up and premarket, making a lot money, over $25 billion last quarter and trading revenue, income currency commodities where equity or investment banking revenue all coming in line or beating estimates.

jpmorgan so record growth in average deposits, more demand and better trading, a double where me for this stock, it saw 13%, theyn equity, had not seen that since the third quarter of 2007. they have a lot more profitable -- they have gotten a lot more profitable. guys in the big premarket, a pop across the board, jpmorgan seen as the bellwether, citigroup reporting tomorrow. the banking's go to and wall street reporter. quite a surprise for wall street . what was your biggest take away? >> whether mortgages you are looking at, and deposits on the regional side, and the investment banking side, fixed trading, equities trading, everything was great. i do not know if one particular

surprise, everything was great. one thing to remember is that jpmorgan tends to be better than some of their peers, last quarter when we saw a lot of the fixed trading a big problem for was downanks, jpmorgan but down the least amount compared to its peers didn't there is optimism coming in but we should be a little bit of cautious. their 2016gan said next charge-offs would be for an three-quarter billion dollars, that will help their earnings at the end of the day, right? >> charge-offs are something we look at but talking more about the bad things, i wanted to mention that we did see that provisions were a little bit higher than some had expected, if you turn to oil and gas, last quarter it was a big story, that was worse, wells fargo reports

tomorrow and it might be bad there because they're one of the bigger energy lenders. alix: have a put aside enough to cover those losses in energy -- half-day put aside enough to cover those losses in energy? yesterday, a warning of mass psychosis in bonds. mass psychosis in bonds, some people would argue it has been there for a while and we could be there longer? >> overlong is the name of the game. realizet people have to is this is a global market, when we look at what the bank of japan and the ecb are doing 160ectively, that is about billion dollars to $180 billion every month they are in the market buying, a lot of money to find a home. they are price insensitive. they are starting to run out of

assets to buy in the bond space, in the government bond space. they are moving into the corporate bond space, i think it is well known that the boj is the largest owner of the equity etf's in japan. what we do not know is their indexes strategy and -- exit strategy and how long does it go on? david: general psychoses do not lead to a good result, what is the danger? they warn the sovereign securities are more risky that people are thinking about, what is the bad consequence of the exit strategy? doug: the price goes down. there is such a demand for yield , the weight bonds work, as the price goes down the yield goes, the alternative is keeping your aney in the bank and getting negative yield or a zero yield relative to let me go out and

buy the 2-year note if it goes up to 1% people will buy the two-year. david: -- jon: we used to risk assets in big selloffs coming off and money going into weasuries, i do not believe have got some historical recedence where we have seen safe haven assets be the catalyst -- what does that look like, the money will go somewhere, in a counterintuitive way, treasuries that are overpriced, the money is back in again because where else does ago -- does it go? doug: we break the world into two kinds of assets, we launch and runs mutual funds with those two areas. one is a risk mitigating and the other is returned. what the central banks are trying to do is make investors move out of the risk mitigating assess and into the return

seeking assets and they have succeeded but they have driven down the price of the return seeking assets to such levels that perhaps in the future it does not provide the same ballast win is -- when the return seeking assets are selling off, as a professional risk taker we say, if i cannot hedge the risk of the return seeking assets by buying the risk mitigating assets, i want to take the risk down in the portfolio. , thehe average investor policy is driving them into those riskier assets. i would argue you have the wrong people owning the risky assets now. even if we have a bond market run af, i do not think -- quick scenario analysis in your head, if the u.s. 10 year note which trades at one .5, if it belongs at three point five, what do you think the consequences are for all financial assets if we go? i do not think the big problem will be in the returns. certainly not the treasuries.

when i go back in my career, 1994 was the worst year in bonds. the fed fund rate was at three and greenspan moved it to six. huge selloff, all sorts of consequences, do you know the return of the ben lehman aggregate index was that your -- -2.5%, not the worst thing in the world. the credit markets certainly did not do very well and eventually it led to a big selloffs in the equity market. word,sis is a strong particularly for bond people. think that overall we have to look at not just the risk mitigating assets at the return seeking assets in a rising interest rate. david: put that together as an investor, someone overseeing investment, what does that tell you about your investment strategy? doug: that we have to understand markets will be more volatile today that may have been in the future.

to go along with that piece of bad news, another piece of bad news -- if we look at five or 10 years, the returns will be lower, more volatility and lower yourns, that means that have to be on the other side of the boat when everybody else is on one side of the boat. you have to be nimble. you have to be willing to go out and buy things when they are cheap. a proxy for risk in the marketplace, dax index, you can see -- the fix index, over the last couple of years, we have not seen a skyrocket higher, we have seen much more volatility. that is what we need to understand. david: thank you so much for being with us. jon: next up, we take you back to the bank of england, a surprise decision to do nothing, rates on hold, a stronger pound story, all eyes on the city, we go there next. ♪

jon: the attention of global markets on the city of london, the bank of england keeping rates unchanged, a surprise move, a slim majority of economists expected a rate cut. a stronger pound story, cable rate up by 1.71%. showed the reaction in the ftse 100, a roundabout session high and then we can lower, not even down a 10th of 1% but obvious market reaction. a stronger pound story and a footsie a little softer. next up, the new u.k. government, we will show you what it looks like. ♪

jon: from new york city, this is bloomberg. global equity markets pretty firm with the exception of the ftse 100, unchanged, a disappointment for some people

that the bank of england keeps rates unchanged, the rest of the equity market, a much firmer story with the germany dax up by 9/10 of 1%. a weaker yen story in the fx market. dollar yen trading with a 105 handle. will we get more easing from the bank of japan? a stronger pound story, we trade up to 1.3387. ,o change to rates disappointment, gilt yields moving in the same direction of the pound, going higher. 30 year yields up six basis points. core government bond market, the bund, 10 year, five basis %.ints, still -0.04 david: we look to japan where ben bernanke been meeting with top officials. thoseene joins us, one of

people he has been eating with is the prime ministers keepers and when reaching at the international economic authorities when reaching out about japan's economy, mr. bernanke has been suggesting -- said during an hour-long discussion the former federal reserve chair warned that there was a risk japan could return to deflation, helicopter money in which the government issues nonmarketable perpetual bonds with no maturity. tom: got all that. it, whatke us through helicopter money is. tom: go back 12 or 13 years when governor bernanke had encouraged to fly to tokyo and lecture japan on how to reflate come he was met with thundering silence. the crime here is that it took a

decade for them to finally begin to talk about and to do the bernanke prescription. --ed up, forget about the look at the reality of a horrific japanese economy, all sorts of moving parts, chairman bernanke is suggesting you have to pick up again and over reflation of the japan economy. david: why is the right way to do this through helicopter money and rather than directly with stimulus from the prime minister? tom: i am not certain chairman bernanke wants to do over helicopter money. -- overt helicopter money. olivia called helicopter money a scam. i am not saying ben bernanke would say that what you have two esteemed academics questioning the second and third round affects of so called helicopter

money. david: second or third round effect is the political process, in theory, in all of these governments, we have an executive branch which is elected -- om: it signals a desperation by a government about how to jumpstart an economy, opposite of that is what we saw from governor carney of the bank of england who said we are here and we are stable and we will be measured and not cut interest rates, that was a signal we saw 10 minutes ago. david: take a deep breath and see what the numbers rather than anticipate them. tom: will you do a pop quiz on helicopter money? david: i have been studying it. is that it is unconstitutional in this country. tom: when in doubt, go with the unconstitutional card. a surprise decision by the

bank of england, the majority of economists expected a rate cut that they did not get. i want to bring in the bloomberg news editor and chief, rates unchanged, where they have been since 2009, a surprise to you? >> it was. was a marginalit thing one way or the other. carney is sitting there frightened by brexit. seehave two bullets and you a chance to hang onto both, only three weeks away, a court in the calendar, gives him time to do those things and see how the markets react, if the markets say you are ok, he will be fine. you also have the fact that he will get more data about what is happening and where he needs to help.

pointsrence and 50 basis and 25 is not a big deal. david: the quarterly of -- jon: he will get more data, and produce more forecasts. alix: how will they judge the markets, what is that data point where he says we are pulling the trigger? esotericing incredibly and we say i never knew that orsumer sales meant so much whatever point it is because central banks have a perverse ,lement, you never quite know my suspicion is that it will be the underlying health and confidence, if he thinks confidence needs another boost he will have to do it. an element in carney where i suspect he is hanging onto whatever leverage he has an whatg a little bit about the new government does, it has inspired a bit of confidence so far and we will see what happens. jon: this decision was made yesterday. before the government was

confirmed. i'm sure he had an idea. of what the government would look like it had not gotten a handle on what fiscal policy would look like in the coming months, your takeaway from theresa may's government. >> carney would -- hammond would be reassured with boris johnson as foreign secretary. initially he would not be boiling over with enthusiasm. but a rather clever political strategy. these were all ministers in favor of leave. said is you created this, you do the negotiations, if this breaks down and becomes difficult to get the sort of things you imagine you will get from the europeans, it is your problem.

clever.quite alix: moves and currency, a shot up on sterling, how much short covering can we expect over the next weeks? >> a lot. one of those moods where you're never sure if this will be reassured and or people will say, he is looking at the numbers or whether it creates a new form of instability in itself. the instability being we do not know what he will do next time. a heavy hit that they probably will cut next time. we can argue he is doing this gradually and we will see what happens, if he gets positive unlikely, thatnd is something that he might cut back on. alix: very different from his dent in the bank of canada where he was, first out there, will cut rates, different perspective. that was at aguy

central bank in a financial crisis and had to do anything, a lot of people on the mpc a relatively new, from the outside looking into the u.k., david davis, you and i are familiar with him, a in the conservative party for a long time, going to take over the conservative party but he lost a race with david cameron, what does that mean for the global investment community who has to get grips on who he is? >> a measured performer, going for a long time, a working-class tory with a good life story, came up and a hard place and worked out well, opposite of david cameron. more of the right of the party. ,retty skeptical about europe he laid out his thoughts about how to negotiate with europe on a website earlier this week. perhaps unaware of his future elevation. it was saying, he used to be a

minister dealing with europe, he has had stuff to do with this. he said, this is what i would do and we have to get a deal by which we still get access to the internal markets. but we can hang on to immigration and the immediate response of the europeans is unlikely to be favorable. the last thing about davis, he has always been along those lines and boris johnson as well, all from the liberal end of the brexit movement in the sense they are all people who one of their main reasons of ditching brussels was that they wanted to help bridge and survive as a free trading notion, the problem with the brexit's, two groups of people, one our liberal lot and the -- the second group is more numerous. alix: do we have a timeline for article 50? jon: the article he points out

gas david davis, in of the he wants it done by the end of 2018. --did wait all the way. i think that makes sense. why give away your one card. or your biggest card. people who can start this, the more you hang onto it, the more the europeans will feel uncertainty and the more you might get some movement. maybe the scandinavians, maybe the dutch saying maybe we should come sort of a deal for britain. jon: thank you for joining us. alix: coming up, how brexit will impact the european travel markets, we pose that question next. ♪

david: this is bloomberg go. hickey joins us to reveal how the market will hold up. -- during earnings season. ♪ >> jpmorgan stock jumping after better than expected earnings. you are looking for a good quarter from jpmorgan, the question is, can that success last? >> it can last for a quarter or two but still a difficult year, expecting earnings to be down year-over-year, and jpmorgan's

presentation today they will give guidance on key numbers like not interest income and fee income, it amounts to their share price which will be down. >> a number that struck me was roe 13%, we, 13% -- what years did you notice that shows the shift of the jpmorgan over the last seven years? >> the 13% was much better than anybody else in the industry producing. revenue,pital markets that is what has to happen and you have to have higher rates to get our only -- roe into the midteens. were two pieces in the reports of the last couple of weeks, one today, jpmorgan have a recovery from their litigation reserve of $430 million.

if you look at the range of possible losses going forward, the lowest level it has been since the financial crisis. it is telling me that the financial crisis is behind him. the other is the regulatory decision to unleash masses amounts of capital. those two events, the recoveries from litigation reserves and the capital return, telling me financial crisis is over. -- how canandidates banks be profitable? how do they deliver the return , the right in 2006 question to be asking after this quarter? thet is, if you look at revenues, we can asset management and cars, mortgage banking was not as strong as hoped and even the top line was weaker than we expected because of the margin pressure. looking for where the revenue will come from going forward. alix: trading, trading, trading.

, where j.p.ycle morgan has told us we are in the credit cycle, how much money they will set off for bad loans. >> the crisis has been signals as behind us but a new credit cycle, a new inflection point in credit, jpmorgan debt charge-off, they bonded any third quarter of last year and $960 million and have been creeping up, $1.1 billion, this court $1.2 billion. the debate we are having, how rapidly will they rise and how far will they rise. our position as been it will be an earnings recession this year. next year, not as damning. alix: $4.75 billion for the entire 2016 for net charge-offs. is the risk still in energy? >> the reserves at the big money

center banks for energy loans is mid single-digit, the regional in the high single digits, those reserves will go -- have to go to 10%, 50% before it is over. a risk report this week highlight a commercial real estate which i have been highlighting as potential future risk. alix: tomorrow, citigroup, wells fargo, what are the numbers you look for? >> the capital markets revenue bode very well for city investment banking and some positive surprises there and downtations low, citi is $1.07, wells fargo, mortgage banking not as strong as hoped and that is something you were looking forward to drive their number, the company that may surprise next week isalix: grea. thank you very much. anything you love?

>> citigroup is a great value. crisis --e the credit maybe the crisis is over for jpmorgan. thank you. it easyxit has not made for some businesses trying to grow in the u.k. but one company remains confident it can weather the storm. joining us is sébastien bazin of accorhotels, the ceo who operates more than 4000 hotels and still bullish on the region. great to have you with us. the brexit conversation. are you seeing any fundamental shifts in demands in the u.k. or elsewhere? sébastien: anything is currency driven. what we have seen for the past couple of months is lesser out bond markets, the british likely seen peoplehave taking advantage of the lower pound currency and getting into

london. too soon, not good, i do not see anything good out of it. jon: what about the fx market for you, do you hedge? sébastien: no. we are not being immature, naïve. have 92 different currencies and we have a natural hedge because everything is local cost versus local revenue, the only impact of currency for me is volume as -- volume and the closing of your books, of course we have to take the impact on currency. jon: that classic sign of measurement, how d.c. that developing given this backdrop -- how do you see that developing given this backdrop? sébastien: the u.k. has been flattening out for the last 1.5 years, london has been solid. no good news coming into how you grow. you will have some correlated affect on the continent. you will see --

booming andpe is germany doing very well. the impact is there but we cannot measure it. do not ever predict the british. everyone who has been saying they would lower interest rates, they did not, they enjoy making people wrong. david: in the united states, you have a presence, we are a rough bar, growth is tapering off, are you concerned? yes, the market has been slowing but a lot of people are talking about cycles have to in because the last four years you had cycles of seven years, 10 years, with all the new digital players, expedia, trip advisor, the information is so

large, the supply is so big, you will see those cycles lasting much longer than in the past because you have a lot more travelers and people assessing pricing, selection choices, the digital world will have an impact on the good cycles, they will last longer than people think. -- weull disclosure, no have to ask you serious questions about you will do with 7 billion euros as you have the majority stake, what do you do with the money? sébastien: wise, discipline, thinking ahead, i do not have the money yet. i have to organize the company so i have interested parties, when and if i have money, 10 months from today, bigger in terms of market density, the largest hotel operator in the world, we ought to be all the markets but china and the united states in which we are small. do we need to get bigger in the u.s.?

in thet know, they are hands of five big guy, i am a small guy, elsewhere i am a big. too soon for me to disclose what i will do with the money because the market to in months from today will be different. thinking about tech, you were an early adopter of thinking it will revolutionize your business, what kind of investment might you make any take area to supplement your business? sébastien: we live in a big gettingion economy, into the recommendation industry, they have information but the recommendation of somebody else, you will see us into the digital space, technology driven, you will see us going into the sharing economy, the airbnb of the world's have very good models, i would like to offer to our clients something else in a hotel room, i want my people to believe that my client is not only staying in the hotel but what all the services i can provide him which is not a room,

which tells me something different from you guys, we have a concert rating ourselves, 99% of our client have come to our hotel from elsewhere, a province or another country, we have been missing the biggest population which is the inhabitants living around my hotel, 100 times bigger than the travelers, we have never addressed anything to them and they have never entered -- even ifhis is they do not stay in a room, they are in my hotel and guest tomorrow. jon: thank you for joining us. the accorhotels chairman and ceo. into diving dig -- deep jpmorgan earnings. ♪

alix: this is bloomberg go, jpmorgan earnings better than estimated, what does this mean

for the overall industry? this white line is the s&p around record highs with bank stocks not really participating and that has led many analysts to be concerned about the health of the s&p rally, if banks can now rally from here, some relief in banks that wind up helping propel the sep to even higher -- snp to even higher. david: the wind beneath my wings. alix: there you go. jon: coming up, the pimco global economic adviser joins us. ♪

david: the bank of england survived this. they cut could be coming next month. jonathan: prime minister mays government take shape. and jpmorgan kicks off

earning season rising in the premarket. we will bring you the headlines from the conference call. ♪ david: welcome to bloomberg go. i am david westin with jonathan ferro and alix steel. coming from you in new york city. the bank of england leaves rates unchanged. governor carney is leaving rates unchanged, sending sterling up as much as 2.5% against the dollar. they voted 8-1 against a rate cut. alix: we will decide what that means for the economy. will be joining us

to discuss that. let's go around the world and check in with our bloomberg team for the top stories at this hour. laura keller is in new york on jp earnings. let's start with the decision in the u.k.. jonathan: anna edwards and jamie murray. jamie, let's start with you. what do you think it was that held them back from pulling the trigger? jamie: mostly a communication thing. the three-week wait, they have to wait until august -- it is a very long and give them a chance to explain why they are cutting. forecasts.ew so really just helping to explain what their actions are. jonathan: rates unchanged, the market expecting big things. they are expecting a bit of a move from the bank of england.

did those expectations just get shifted three weeks back? edwards: they didn't give us a clear signal for the next three weeks. august 4 withthe the expectation among the members of the mpc. he market was not expecting it is why we saw a big reaction. i have a noticing view on why they help this time around. talking about in the same way the fed putting up interest was seen as aber sign of confidence that maybe this makes the bank of england look like it is not panicking. it makes the administration look like it isn't panicking. because panic would not be advisable. they do have a new inflation reports that does have a little bit more data but you have to wonder how much they will be able to plug into the forecast. so much a fiscal side will be unknown. we heard from philip hammond,

the new chancellor, about how he cutting the deficit is something in a to do but maybe not as quickly as before? and what we heard from theresa may, the new prime minister, from the uncertainty seems to be on the cards. jonathan: we get a little bit more data. -- and something else we got in the news conference which gives governor carney to lay out more than a rate cut, it could explain other easing measures. what else can we expect in august, other than just using the bluntest tool in the box, so to speak, of cutting rates? jaime: you skirted around it there. just cutting rates today run the risk of looking like you are out of ammo. august is seen as a chance to cut rates, and do something on the funding to lending scheme

which encourages the quantity of lending, and demonstrate that you have other tools at your disposal including asset purchases. i think you can expect a rate cut. you can expect credit easing and measures that promote borrowing but not asset purchases just yet. hold that in reserve. jamie murray and anna edwards, thank you very much. that is the bloomberg team responding to the surprise of england -- rates unchanged. expecting may be a rate cut the next time around. david: the other big story is jpmorgan earnings. we will bring in laura keller. they beat estimates and what analysts thought was going to happen. what were the main drivers? laura: you had a lot of strength in the terms of the retail bank. a headstrong deposits, something that was unexpected. and even in the investment banking side, on every metric we have up, up and up.

so it was across the board. david: looking backwards, earnings always are. looking for its, 25 minutes away .rom the call with jamie dimon what will you be looking for in that call? jamie dimon is a ceo who likes to talk and gets color for analysts. see you can imagine he will be talking about how the brexit impacted the company and how it will go forward. we will have a media call at so i'mm., starting now, sure a lot of journalists will be asking him similar questions. saying, look. we had a good quarter that can we go forward and expect that in the future? david: in particular, that quarter only had one week of post brexit. and you be able to generate the same level of fixed income trading? i'm having a little

trouble hearing you. was a hugee trading leap, up about 30%. analysts were expecting 22% up. that is absolutely huge. even equities trading, we were up 2%, something we didn't see in the past quarters. jpmorgan tends to be stronger than their peers in these classes for different reasons. especially in fixed income. we might be able to see goldman sachs or morgan stanley next week giving us similar numbers. david: thank you. that was laura keller from bloomberg news. we will be monitoring that call starting in 24 minutes. julie hyman will be giving us updates. jonathan: a surprise from the bank of england. not a dent in the risk asset appetite. equities continue to rally. the ftse 100 might be flat. a steep drop-off following the bank of england decision to keep

rates unchanged. outside of that, you see germany's dax down here up by 1.4 percentage points. and futures are firmer in the united states as well. , a strongerrket pound off the back. up by 1.8%. what really captures risk sentiment is the dollar-yen. dollar-yen is pushing higher, once again. another .25 percentage points. a weaker japanese yen as they give more easing that may or may not come out of japan. equities outside of the u.k. are doing well. bonds are hammered. at the very long end of the curve in the u.k., the 30 year gilt yields up by seven basis points off the back of the doe decision. let's get you up to speed on headlines. >> a new poll indicates the u.k.

-- the e-mail scandal has hurt hillary clinton. she is tied with donald trump, each getting 40%. last month, she had a six point lead. two thirds of these polled say she is not honest. john kerry meets with russia's president today in moscow. he will lay out a potential deal deescalate fighting in syria civil war. he will offer to share information for targeting the islamic state. in return, russia would have to steering forces to the cease-fire. china is not backing down from the fight in the south china sea. chinese passenger flights may test flights to the islands that are in dispute. earlier this week, an international tribunal ruled that china has no claim on the south china sea but china has ejected a ruling.

global news, 24 hours a day. powered by our more than 2600 journalists, in more than 120 countries. i am taylor riggs. up, we have a boe on hold. the pound feeling the benefit with a one point rally, the most since 2008. currencies next. this is bloomberg. ♪

jonathan: viewers worldwide from new york city, this is bloomberg. risk appetite is decent globally. and up.res are up likewise on the s&p 500 after a record high closing in yesterday's session. the ftse 100 is unchanged. much stronger after the boe decides to keep rates unchanged.

appetite --risk look at the dollar-yen. still pretty good. up another full percentage point as the debate rages in japan -- when and how big will be stimulus, and how effective will it be when it does come? vassilius now is serebriakov. great to have you with us. a rateg suggestion that hike is coming in three weeks. do you enter short here around 134? for ai: i would wait bigger rebound. at the end of the day, what it does is argues against some of the extreme forecast for sterling. i know we have seen in recent weeks, 125. i think the bank of england is careful about not being too aggressive.

not weakening currency so as to create a negative effect for inflation. or a negative financial market impact. the bank of england does not need to be as aggressive. it may behough difficult as people in the u.k. have to pay more and more money for goods because of the exchange rate, that may depress the overall economic activity in the country. keyili: but this is a point. everybody is looking for a weaker pound but it works the other way around in the short term. your imports get more expensive so the trade balance will probably deteriorate first before it starts improving. and as he mentioned, that is the issue with inflation. i think pound weakness is good. it will help the economy. you don't want excessive weakness. alix: on the flipside you have fiscal policy that might have letter, especially the nontraditional tools. a one. 15then justify

forecast for the dollar? vassili: the pound is down i almost 20%. that is similar to the 1992 episode. if you look at other currencies that did have make balance payment adjustments in the 1990's, it seems to be consistent with it improving by 2%. so i don't think we should be getting overexcited about the pound weakness. 1.29 bywe are targeting the end of the year. jonathan: is the fx channel a priority? vassili: if look like there was preempted easing by carney going into the rate decision. the pound weakened and now they have not delivered. although they will probably do that in august. i think it is an important channel. low can thents, how

bank rate go? they don't want negative rates. even zero rates may be a bit of a challenge. they want to use other tools. alix: what other tools do you think is available? vassili: they could look at asset purchases, we will find out more in august. it have to counterbalance versus liquidity concerns and not disrupting the market so much. our best case is that these are cut by 25 basis points that they could still have another cut on the books by the end of the year, given that it is quite a weak economy. but that might be at. ,avid: when it comes to the fx we talked to the levels that cross. given the uncertainty around the pound right now, it is the volume level of trading in the pound across any currency? would you rather trade another currency right now? vassili: it is a very subjective measure in foreign exchange orchids. i think that the pound has been

very volatile. gets a difficult trade to in and out of in certain environments. but i think it is one of the more liquid currencies. there are other things going on in the foreign exchange market right now, including the yen. actually, it is becoming a fairly exciting point for foreign exchange again and lots of moves over the last couple of weeks. jonathan: the bank of england at the news conference two weeks ago, assessed with domestic politics. they didn't listen to carefully governor carney was saying. he set the policies had to be targeted. that is not rate cuts in anyone's mind. i'm just wondering, what comes in august? if we get a rate cut in three weeks time and he goes into the news conference, does he have anything else along with that? what woulde -- and

be the best targeted measure? if the fx isn't the targeted measure at this point, what is? liquidity think measures are clearly important. we have seen that the bank of england has eased the quiddity measures. but was the first move that they did. we don't expect anything additional in august but i think if they were to do something it could be around the bank lending channel. i really think it is important to realize that the central banks adjust as we go along. at the time when he delivered the speech, risk sentiment was looking terrible but it is looking a lot better now. markets rallied. don't need to do as much, depending on where risk is when we get to august. jonathan: it's funny. we are watching them and they are watching you. that's boy. , the dollar yen

with the biggest pop. is that a sign to buy the market? paul hickey joins us to explain why he is positive on stocks. more "bloomberg is next. ♪

jonathan: this is bloomberg. a global equity rally across much of europe with futures firmer in the united states. let's get to alix steel. alix: it is all about the banks and asset managers today. jpmorgan is the mover of the morning up over 2%. it beat on the top and bottom line. earnings when it came to investment banking, fixed income, commodities -- all higher. giving optimism to the general bank sector. you also have goldman sachs, citibank -- all moving higher as

well. citigroup, that is tomorrow. charles peabody saying this bodes well for goldman sachs because they have a large investment banking unit. the next company want to look at is black rock. , not thatmost 1% terrible. i had profit missing by about 4%. a big asset manager that is good to look at. on the other side we have monsanto, looking at merging its unit with beyer. david: thank you. still with us is that celine boy vassili.ill what do you see in the end, going forward? we are bearish the yen,

going forward. we have always looked at the fed being a potential driver in the strength against the yen but it could be a game changer in japan as far as the idea of helicopter money. i think it shows us the idea that we have had in the first half of the year that central banks have run out of tools but maybe that is getting pushed little bit too far. the route of fiscal spending that is financed by the central bank, it could be quite effective in terms of listing expectations. they're obviously some of the negative side effects around that. but given their profound deflationary environment and the fact that the yen is strengthening, i think it is quite realistic that they could start moving in that direction. taking a look at the longer-term chart, this is the

yen trade weighted index. i'm interested in the next abenomics decline in the yen. in 2003 you can see that there was the big decline in the yen, a ¥10 trillion package and shall the rumors are ¥20 trillion. we looking at the same kind of decline now? vassili: 100 is a key level because it is a 50% retracement of the abenomics weakening in the yen. so i think many people had that pencil thin. we have to wait and see. wait and see what comes out. have to look at what the fed does, if there is repricing or tightening of said expectations, which we do expect at the end of the year. if all of these things come together, dollar-yen could be higher. our target is fairly moderate right now but we are standing ready to review those forecast if the stimulus materializes. reducen: i like to

conflict things down to simple things. if you get perpetual bonds, helicopter money from japan, the genie is out of the bottle. i wonder how the market actually takes that? does that build risk appetite? because for some people, they might be believing that we are near the end game in terms of central-bank policy and where it is going? vassili: you are right. and when you are in the unchartered territory for -- we have had bad press about that. qe a few years ago was a doubtful idea that became widespread. so i'm not saying that this doesn't have risks but for us, we look at the immediate effects . it should raise inflation expectations clearly. they should weaken the currency and that is what we would go

with. you are right. we have to see how the global markets take it. haver, japanese markets taken it well so i do not think it is necessarily negative. david: not that long ago, the yuan has devalued against the dollar and the euro substantially but there has not been a panic. why is that? vassili: i think people have taken their eyes off of it. they have orchestrated some weakening in terms of the baskets they have been targeting. we think there is a little bit more to go. look at thek if you broader picture and pull out the longer chart, this is correcting some previous strength in the currency so perhaps it is a lot less worrisome. it brings up the idea of currency wars and whether there was a priest the court -- there was a peace accord that was

enacted. some people are talking about helicopter money. so maybe we are back to a world where you have to do what is right for your economy and your currency, and perhaps the idea of global accord is less validated? serebriakov,i thank you very much for being with us. jonathan: coming up, one of the most anticipated inc. of england decisions in years. that is next on "bloomberg ." risk on across global equity markets. and a rally in futures here in the u.s.. this is bloomberg. ♪ get ready for the rio olympic games

by switching to xfinity x1. show me gymnastics. x1 lets you search by sport, watch nbc's highlights and catch every live event on your tv with nbc sports live extra. i'm getting ready. are you? x1 will change the way you experience nbcuniversal's coverage of the rio olympic games. call or go online today to switch to x1. jonathan: this is "bloomberg ." on theet a check markets. here's the scoreboard ahead of breaking data. equities higher across europe with the backup.

record high closure yesterday and this time the futures are up. s&p 500.n the right now is 1.52%. alix: we are waiting for initial jobless claims coming in, 200 54,000, lower than estimated and in line with what we saw the week before. people filing0 for initial claims as of last week. the other big pisa data was the producer price index. we actually did see a rise of .4%, higher than estimated. the little bit of inflation on the producer price index level. and jobless claims are coming in lower than expected. we are seeing market reaction when it comes to the two year

yield. it is jumping on the news here so a little bit of not buying the short-term treasury yields that would leverage any sort of fed rate hike. year, seeing year on 1.3%. climb, climb. [laughter] jonathan: the bank of england is keeping rates unchanged. owen, heng in david said he would not be surprised to see the bank of england delay a rate cut until august and he joins us now -- unsurprised. what difference does three weeks make, let's start there? made it clearrney that they are going to ease policy over the summer but the meeting today was always going to be viewed as the intro meeting. you will see that they can

basically wrap everything up into communicating the policy move far better. they provide new forecasts and we are in a world where the u.k. is set to exit the eu, so the new forecasts will include all of those elements. then, will have more information as to what is happening in the economy itself. i highlight it is possible that they don't cut rates by 25 bits. they could go by 50. a better impression of that after some keynote speeches tomorrow and monday, and next week, the bank publishes its own survey. oni wouldn't rule that out august 4. jonathan: there is any just in case study going around the block now, and economy goes to a rough bench with a central bank that is limited on what they can

do -- does it make sense to pull the trigger and shoot all the ammunition you've got at once? or does it make sense to keep some on hold for a few months or a year? david: you are right. the logical thing for the bank might be to go 25 in august and another 25 in november rather than the full 50. but i will say we have a new chancellor in the u.k.. we know there will be a statement in november. and there is much more to be discussed about using fiscal policy. if we have investment spending in the u.k. brought to a halt the cause of uncertainty about brexit then the case of the government stepping in and spending on infrastructure -- it isn't inconceivable that they could issue infrastructure bonds and the bank of england could end up buying the paper. one thing i would strongly

suggest is that mark carney says they will be looking at everything and they may end up doing something which they've never done before. which begs the question -- what can they do? maybe it is linking in on a cherry policy closely with fiscal policy? jonathan: so the autumn statement happens at the back end of the year, typically happens at the start of winter. i wonder whether it is brought forward this year? in august, they will be forecasting the on forecast the unforcastable. david: maybe they can bring it forward. not in november, but maybe october? noknow that there will be emergency budget in the u.k., there never was going to be. but they could bring it forward, as used just. from my perspective, there are other things that they can be thinking about doing.

and with this level of interest rates, there is an increasing discussion now about using fiscal policy. it isn't purely about the u.k., this discussion is happening globally. it will be relevant in other parts of europe as well. me, they will ease policy in august and there will be more discussion around fiscal policy moving forward. jonathan: one and p did come out and say you wanted to pull the trigger now. all that we have had so far is confidence surveys and they haven't looked great. we have had a single pmi. for market participants and someone like yourself, what are you looking at to gauge what should push the bank of england to do something? with the ecb, it was the level of the euro and per referral yields. but what is it in markets right now that is going to drive the decision-making with the bank of england? david: you have the banks own

agents. the bank is lucky because it has agents up and down the company who report back on a regular basis about what is actually happening. the mpc will have a strong view about what they are thinking at the moment. and they publish the results of these surveys next wednesday. so they will have no the results when they made the decision to the market today but we won't know until wednesday of next week. and then there are all of the other surveys that are published. but the thing about a slowdown in any economy is that there are lags. and it may not be until we go into the fourth quarter, q1 of next year, where we see the full impact of everything that is going on beginning to feed through. and article 50 in the u.k. will not be invoked until early next year, so there is heightened

uncertainty. the political situation has gotten better. have a government again in play with a new chancellor. the mpc will be taking comfort from the fact that markets have stabilized and share prices have been moving in the right direction. and unsurprised david owen. thank you very much. alix: as we look at futures, above the intraday record and record closing highs. , ining us is paul hickey keep getting notes at about how unhealthy this rally is. you don't have banks, you don't have volume -- is this a false breakout? necessarily think so. i think you did post frexit but now we have rebounded. i think you have seen the magnitude of the trade move post frexit was ridiculous. we have seen the second biggest

shift following those 10 days from oversold to overbought. so look at other times when we have seen these really steep over, short-term returns one week or two weeks, the market tends to digest itself, they be hit or miss on gains. but the long-term returns have been positive. , we wouldf pullback be buying right now. a decent exposure to equities for clients right now. so you are not going to go all in on margins. we use weakness to add more exposure. what we are seeing as we come into the earnings season is increased volatility in the market and individual stocks and we can use those opportunities to buy on volatility. are fascinated

on the same chart -- we wound up negative revisions outweighing the positive revisions as it goes below zero. that means analysts are negative on what they cover. david: no question. the interesting thing about paul's analysis, the analysts are more often wrong than right. paul: when they're cutting estimates more than they are raising estimates, go back over the last 8-10 years. what you have seen is that when they are raising estimates more than they lower forecast estimates, it declines about 1.5%. negativesee more whations like we see now, you see is that during these times when there is negative revisions, the market tends to do well with an average gain of over 2%. is --t you want to do

there is a strong inverse correlation. david: it is a fascinating phenomenon. why? paul: you have companies coming , maybe they are giving the heads up to analysts but they are setting the bar low and it makes it easier for companies to exceed. and while skeptics will say that the numbers are not real anyway, the market has tended to react positively. the numbers are what the numbers are. alix: there is a distinction you make between i will be the numbers versus actual topline, quality revenue growth that can sustain a pop. how sustainable is that post earnings? companieswant to see who are beating on the bottom-line earnings and the companies who exceed the topline numbers. you will see more of a positive reaction on the shares on those. ir departments are doing a really good job about talking their numbers down. [laughter]

--l: that certainly be certainly could be the case. whatever the cause, the effect is this and it has been consistent in this. investors should be playing that trade. alix: the other part of the market is the rally we have seen in consumer staples and utilities. how much more expensive can these guys get? paul: you would have thought a couple of weeks ago that staples couldn't get more expensive but then you see bates for hershey and in the sector. so who knows where that is going to stop? so if you start to see yields stop declining or leveling off, those sectors could be in trouble, especially if the u.s. economy -- the numbers we saw today, the jobless claims, it is not good for interest rates. alix: always good to see you. thank you for joining us, paul hickey. next, we bring you the

latest headlines from jpmorgan's conference call. us, who is at the top of donald trump and hillary clinton's vice president wish list? ♪

jonathan: this is bloomberg. i'm here in the hewlett-packard green room. fels will joachim discuss the bank of england decision to hold rates. ♪ jpmorgan stock is up over 2% in the market trading after better-than-expected earnings. the call began 50 minutes ago. julie, what have we learned so far? financial chief

officer has been speaking and looking at some notes, she is going through what we already no. the details of the company's earnings. she is going through, group group, sector by sector within the bank. she is pointing out we're up 16% and fixed income trading rose by 35%. talking about some of these details. she also made some comments on the u.k. vote. she did note that there was uncertainty heading into the vote and volumes were higher in the immediate aftermath. the market function quite well and the systems were stable. she says they continue to work on plans for the full range of outcomes. so she is not talking about any speculation that we might see a migration of employees away from london that she does say they remain fully committed to supporting european and u.k. clients. as i from that, she did mention that the capital return plan on jpmorgan was approved by the u.s. federal government and the

bank is pleased by that. the question and answer session has not begun yet. expect more questions about the u.k. vote and more details on that. alix: great stuff, thank you very much. revenue coming in was over $25 billion. , youllow along with a call can go to the bloomberg. a great resource if you want the nitty-gritty on the market. david: which we all will be doing. in the meantime, we are down to the finish line in donald trump's quest for a vice presidential candidate. he tweeted yesterday he will make an announcement tomorrow in new york at 11:00 local time. this comes after he and his family met with mike pence and chris christie. for more, we bring in steven yaccino. give us a site into this three-member race? it looks like they have narrowed it down.

steven: yes. start your countdown clock. we will know by tomorrow at 11:00, like you said. are hard to read, to be honest. there are a lot of people who think it is down to two people. mike pence and newt gingrich. and we think that make sense but there are other people telling us that chris christie is still in the mix. donald trump did an interview with fox news yesterday and he kind of was all over the place. he said i've narrowed it down to two people but maybe it is three, probably four. he seems not really sure where he will go. we are pretty sure it is down to mike pence and someone else. we arei'm not sure what learning about donald trump's ability for president but he's a good tv producer. i thought giving remarks yesterday where he teased the crowd about mike pence and newt

gingrich. quite extort neri. on the democratic side, hillary clinton is campaigning with a possible candidate. steven: yes. she is in virginia campaigning with senator tim kaine, who is believed to be near the top, if not at the very top of her the p shortlist. good,ine would be a very safe choice for hillary clinton. he is a legislator who has been around. he knows a lot of people and he is well respected on the hill. and he comes from a swing state so it would be a big boom to her candidacy. t2 safe?ion is, if does he pleased the bernie sanders progressive side of the party that hillary clinton is trying to attract? david: you are in cleveland for a reason. monday starts the convention itself. we have a list of who will be speaking. this list came out this

morning and it is extraordinary. he has a little bit of everything. theas some survivors of benghazi attacks, so we can expect the criticism of hillary clinton from them. tebow sports stars -- tim , the ufc president dana white. business community folks like tom barrett. and then you have an astronaut and a former underwear model and some of his employees will probably talk about how he is a great boss. and everyone will be watching his family closely. his wife and all of his kids will have speaking spots spread out throughout the entire convention. we will be watching closely to what they say. david: before we get to the convention, there are committee meetings going on. bring us up to speed over this

fight over whether the trump delegates could be released or not? itven: this goes down today, it started this morning in the convention will committee meeting. , fairy loudmall group of anti-trump delegates on that committee, who have been trying to unbind the delegates who are forced to vote for donald trump at the convention because of the way their states voted in the primaries. passing as of them new rule change is fear he slim. i don't think they have the numbers. but if they could get enough people, they could write a minority report each would force a full convention floor vote. i still don't think they have enough numbers to do anything that impacts this convention. but it could be messy. finally, there is also discussion about the platform.

platform coming out of the democratic party. it is surprisingly antibusiness. there is a lot in there that is as leaders would take umbrage at. what are we looking for coming out from the republicans? we actually saw some interesting additions to the republican platform this week. one of them that is particular actually went in trump's direction. there is language that was added that is more cautious on free trade them previously expected from the republican party. so we are seeing this on both sides. that is steven yaccino. thank you very he is out in cleveland to cover the republican convention. coming up, japanese investors are flooding into foreign bonds. ♪

david: this is "bloomberg ." time for battle of the charts. this is special. ferro takes on alix steel. i have no idea who will vote. alix: i am competitive. remember that. this chart is looking for yields in all the wrong places. as you have global yields heading south, they go lower and slower and investors pour in to risky countries like malaysia, ukraine and uruguay. this white line is ukraine where the 10 year yield is around a little over 9%. that is the difference of where it was before crimea was annexed. so a lot less risk in this market. the blue line is malaysia. they just wound up cutting rates and the purple line is uruguay. they had a debt offering that

was five times oversubscribed. david: beat that. to then: i will take you epicenter grow the real action is happening. last week treasury 10 years were all time highs. and the big question is why? here is one reason. showed. finance minister foreign purchases of bonds and stocks. and last week, medium and long-term debt was $25 billion worth they're about. it was a record week for four porches is and foreign debt. that is what you see here, an explosion of japanese investors looking outside of the country and reaching for yields. up, the yieldss and treasuries start to come down. happening in japan, it is happening right here in treasuries. david: that is a great chart but i'm voting for uruguay and

yields. alix steel is the winner. this is what is so fascinating about these two charts. the macro view and that is the micro view. they work really well together. david: they are asking for a recount. coming up, pimco's global felsmic adviser joachim will join us to discuss the boe decision to hold rates. this is bloomberg. ♪

jonathan: this is bloomberg, i'm jonathan ferro. yesterday was an all-time high for u.s. equities, futures are a little bit firmer.

across europe a little bit of a rally with the ftse shrugging off for some what was a disappointment for the bank of england. if you are looking at the fx market, stronger pound but capturing that rich sentiment is dollar-yen 1.05. nicely,oving along yields are higher. at the very long end of the curve in the u.s., 30 year yields are seven basis points. this is bloomberg. ♪ david: we are just about 30 minutes away from the opening bell in new york, this is "bloomberg go." alix: lots to talk about coming

the pimco global advisor will be weighing in on the bank of england decision to keep rates unchanged and a little later, henry mcveigh will be joining us on his outlook for the market. that, i: you have seen have given you a market check. 150res are firmer up about even after the record high close yesterday. we are going to turn to jpmorgan because their earnings were coming out earlier today. they came out with their earnings and shares are up in the premarket after reporting a 35% rise in fixed income trading. julie hyman is on a call right theand joined us in newsroom. i understand we are not going to hear from jamie dimon. julie: marion lake has been

doing most of the talking and she said you may hear him chime in but apologies in advance, he has a course voice. hoarse voice. she has been talking about the various sectors of the business and what to expect, speaking about corn -- core loan hoarse h growing by 15%. underway, has gotten she also talked a little bit more about the u.k. vote and the effect of that. andsays it is very early she pointed out the new government is just forming, and negotiations have to be given some time to take shape. said, we would hope we can continue to operate as we do now in the u.k. but it is very early, and she emphasized they continue to support their european clients.

there are a lot of questions again about the various parts of the business and about net interest margin for jpmorgan, which she set will grow by $2 billion to two and a half billion dollars year over year in part because of the strong loan growth that we had seen last quarter, that it sounds like they expect to continue. as the call has gone on, we have seen some lengthening, some extending of the gains. the stock is now up about 3%. david: earnings are always backward looking. are we getting insight into the rest of the year or next year from jpmorgan? interestere is that margin that lake is saying will grow slowly. that is a little more forward-looking. besides that, there has not been a lot of commentary. it has been one of -- more sort of qualitative as opposed to quantitative in giving exact numbers.

she talked about growth in the auto loan portfolio to some degree. remember, when you point out earnings being backward looking, i went all the way back to 2006 and they have only missed earnings estimates and about three quarters. as you say, the commentary around the earnings and anything looking forward is going to be important to investors. david: for all of you with bloomberg terminals, if you want to follow tlive. alix: abigail doolittle joins us with more at the nasdaq. seeing the round 5000 number we like to see. abigail: biotech will be a big piece of it, a drag yesterday but moving higher in the premarket. gilead, it is thought they could yeartaxes by $10 billion a

as they move offshore and one of the company's other hepatitis c drugs was approved for use in canada. this is a stock down 15% on the are expectingsts the first revenue client in at least 10 years. from a bigger picture standpoint there are certainly pressures. tradinggy, brocade is are down. jason nolan sees a disruption to flash business and has a new price target of eight dollars per share, suggesting they could call about 18% from current levels. england ratek of cut that never was, 80% was the probability investors priced in prior today. 6% -- 56%.said 50's

it is likely we will see some loosening next month. look at sterling when the bank of england kept interest rates unchanged, at a record low .5%. up 2.5% in a jiffy and now up a mere 1.3%, still gaining for the fourth day in five. the yield on the 10 year -- u.k. 10 year rising, gaining roughly six basis points 2.82%. .82 percent. stocks gaining today for the fifth day in six but we are the july 23.elow -- june 23. we are still getting over the boa shocker. -- boe shocker.

jonathan: for more on today's bank of england decision we bring in pimco's global advisor who joins us from newport beach, california. you do expect the rate to come down to zero eventually. does it come all at once? joachim: i am not sure about that. if you look at today's decision, only one member voted for a rate cut and he voted for a 25 basis point cut. will do sure if they all of the 50 basis points that we expect in august but we will get at least 25 and i could see a bigger move of 40 or 50 basis points in august. another option is to do more qe and asset purchases. i do not think this will be announced in august. jonathan: the comments from governor carney two weeks ago was that anything that needed to

be targeted, they had ammunition, but we could do some of the stuff we have done before or some things we have never done before. what kind of shape does that take in terms of monetary policy? joachim: i think they are still considering all of these options and they want to see the data between now and august 4 when we have the next mpc meeting. full set of see the forecasts from their staff for inflation and growth, and they want to see what other central banks will be doing. the ecb, full set of said, and boj will all have policy meetings in the end of this month. i think they will initially focus on interest rate as i said earlier. the next one is asset purchases and i think that could bring them all long way towards at least stabilizing confidence which has been hit severely by the brexit decision. alix: all of this has

implications for the global bond market as we see yields lower. can you make the case to buy bonds? there is a distinction between a risk reward versus yield liquidity. i think we are in a situation where virtually all asset classes are very highly valued, maybe overvalued in some cases, particularly if you look at equities. it seems painful to buy bonds at these low yields but they still offer diversification and otherwise risky portfolios, so we have learned there is no zero bound for interest rate or bond yields. even if you own a negatively -- you cannd, if you still see price appreciation for those bonds. investors are buying bonds at these low yields to give their portfolios diversification.

in the credit space, there are still some attractive opportunities despite the low level of yields, but you can earn some positive carry that you do not get in government bonds. is there some kind of yield level on the 10 year in the u.s. that if we get to that it will trigger the opposite and the selloff in markets? joachim: i do not think there is any particular yield is there sf yield level on the 10 year in the level. if you look at u.s. yields in isolation, yes, they are low, but i think the way investors are looking at it is they still offer relatively attractive levels compared to what you get or do not get in japan and europe. that is why i think we could see even u.s. bond yields going lower from these very low levels. david: one of the things that some people are warning about is the possibility that we would continue this low rate of growth and have inflation kick in. we just got to be i and it is , and it is-- ppi

surprising on the upside. are you concerned and what does that mean for year investment decisions? joachim: i think that is a clear risk as we are seeing a rise of populism everywhere. i think there is a rise of populism in many countries. current and future governments will pick up that sentiment and it could lead to more protectionist policies, more curbs on immigration, and could lead to more risk redistributive policies. it is swinging from policies favoring capital to policies favoring label and all of that -- labor. and all of that is inflationary because it is bad for growth but it will bring inflation higher. this is the long-term risk, not the near-term. particularly if i look at the u.s., what is priced in for

inflation is too low in our view. we think we will see cpi inflation moving back and potentially even above 2% over the next six to 12 months and that is not priced into markets. that is why it makes sense to buy insurance against inflation. jonathan: let's talk about what this means for gilts and the u.k.. do you see a situation where you have to build in more of a risk premium into the yield or a situation where investors are willing to accept a negative real yield, how do think that will evolve? joachim: my guess is that yields will be capped by weaker growth. we think growth will fall to zero or below zero and two slightly recessionary territory over the next 12 months. we think the boe will cut and they may well restart a gilt

purchase program so that means tsere will be a cap on gil even though we see inflation rising. we think cpi inflation will go to about 2%. core inflation is already at about 1.2%. given all the monetary policy action that we are likely to see , given the risk of recession, i think gilt yields are capped. alix: as we continue to have a record rally in stocks, what is the number one best place to put your money right now? joachim: i think right now as investors, if we look at asset classes most of them are highly valued. i think it makes sense to have some cash on the sidelines because i think we will see more risk off moves along the lines of what we saw in august or

january of this year, and then you will want to be able to have some cash you can deploy. at the moment, we prefer credit over equities, particularly u.s. credit. we think that inflation linked securities offer you some protection, cheap perfection against that -- cheap protection against that rides in inflation -- rise in inflation. david: we want to head back over to julie hyman who has been listening to the jpmorgan earnings call and contrary to what we have heard, we did hear from jamie dimon. julie: mike mayo specifically ask for his comment on the u.k. vote saying, yes, we have heard from marianne but let's hear from jamie as well. of the said is in terms u.k. vote and the effect it would have, they think it would reduce u.k. and eu gdp, it will

create uncertainty. they are hoping the political leaders are sensible but he emphasized, and this is something lake emphasized, jpmorgan is going to continue to emphasize serving client. he added the nuance that even if that means jpmorgan has to spend more money to do so, if there is an extra cost as a result of the u.k. vote they will spend that cost. they are not going to avoid that cost. he said it would be nice if this whole exit does not cause extra turmoil but there will be a range of possible outcomes. we are not going to put ourselves at a competitive disadvantage to try to avoid strength. hyman that is julie monitoring the jpmorgan sales call. jonathan: coming up, henry mcveigh joining this program.

we are about 14 minutes away from the market open in the usa. stocks at an all-time high and futures are firmer. this is bloomberg. ♪

alix: oil prices around $45 a barrel in the u.s. and this is one of the reasons why you have seen weakness in the commodity price. this is north seat area and you have nine oil tankers just sitting there. that is up by about 15%. 9.3 million barrels sitting in the north sea. the contango which is pricing it cheaper now is not that great and does not incentivize using storage for economic profit. in theory, the oil is sitting

here because it has nowhere to go because we do have extra supply, and the demand is not really picking up. this is a pivotal story in the oil market, is the demand there in the world for the commodity? cusick, lead joe strategist for the q sick group. how much are demand fears weighing on the oil price? joe: this morning, they are not. the oil is moving with the market but fundamentally, you are completely spot on. the stocks are around 520 million which if you look at the five-year average, we are well above the average as for us stocks. you have also seen that the stocks in the state have increased by 16 billion barrels. , not only hashina the demand dropped but you are

also starting to see they are going to start capping refinery. companies -- state oil companies came out and said they are going to be cutting refining which is very interesting. we are worried that is putting some pressure but we have not seen it. alix: we have seen a lot of imports into china for the have cut their refining runs. we are seeing a rally and oil because of the risk on trade but we are far from $50. what is the trading range? joe: going into mid august we are looking at it trading a just trading range of around $50 and there's a 50% quad -- probability of getting there. we are going to look around the $45 level. that will be a pivotal support level. there is only about 40% probability of touching there. if it does challenge on that

step contract then we could see that shift we have been looking for. that really lines up fundamentally but trading wise has not been there yet. sick, lead strategist for the q sick group -- cusick group. we are digging deeper into earnings next. this is bloomberg. ♪

."this is "bloomberg i am david westin. jpmorgan reported a 35% increase in fixed income trading. marianne lake talked about the markets after brexit. let's bring in laura keller. start with the fixed income trading. that was a surprise to people. does it tell anyone as we go forward? laura: it really does not.

we would like to understand what that might mean for the banks. jpmorgan last quarter did better than the other banks. they did pretty good in comparison. i wish they had given a little more color. i have not heard anyone ask any questions about why exactly six was so good -- fixed was so good. they said trading was better, currencies, and credit improved slightly but it does not really tell us enough. was that just a jpmorgan phenomenal or will we see it elsewhere? david: we only had one week of brexit in this quarter. any idea if this affected their fixed income trading? laura: that is another area i wish they had given a little more color. maybe they decided it was not something they wanted to talk

about yet. marianne lake said, we have not seen enough yet and told us a little bit of things we already know, we would like to keep our headquarters in london, we will spend if we need to, that type of thing. jamie dimon did type in earlier. -- pipe inn earlier earlier and gave a little bit of color on the politics. can you maybe give credence to these rumors we have seen going into the brexit vote? we did not see anything. david: what about return on equity? laura: that is of course a measure of their efficiency so what you look at their deposits, their loans, they did a lot across the board. we do think of jpmorgan as a stronger bank overall so in this sense, maybe we will see other banks as well. david: that is laura keller.

jonathan: we about five minutes away from the market open in new ,ork, it is very much a risk on: and futures are firmer after we closed out at all-time highs in the united states yesterday. dow futures up 0.83%. this is the situation in other asset classes, the classic risk on capture in dollar-yen, up 1.25%. the bank of england does nothing. we traded at 1.33 on cable and yields are up seven basis points. from new york city, the open is next. ♪

jonathan: this is bloomberg go. we are moments away from the market open. futures firmer, up 140 on the dow, after a record high close,

yesterday. we are up 7/10 on the s&p 500. as you hear the opening bell ring, live. japanese mobile messaging company nokia meeting a little bit later today on bloomberg. isget you up to speed what going on in other markets, this is the situation in the fx market. dollar yen 105 spot, 79, we are up by 1.24% on the session. the bank of england disappoints, a rate cut expected, rates remain unchanged. yields pushing higher again, the u.s. 10 year yield up seven basis points. where are we? about 40 seconds into the market

open, let's cross over to alix steel. alix: another record rally for is --p, ucf 2165 above it above its intraday as well as closing high and part of the reason why is because of jpmorgan. the bank beating on earnings. stocks popping about 3%. the reason why today's rally is so significant is because banks have not been participating and that has led some analysts to think the rally looks relatively unhealthy and what kind of early we can see in stocks. you can see the whole bank group is being led higher. citigroup and wells fargo are reporting, tomorrow. we had over two more financials and they look at black rock. -- and a look at -- blackrock. the ceo says he does not think the rally in stocks is justified.

he also says that he does not think the fed will ease. another area you want to look at our airlines. delta was a beat on the bottom line. the stock is up by almost 5%. to payeadline you want attention to is that delta is cutting some of its planned capacity growth. thee is a concern in industry that there is so much capacity that these guys have a hard time rowing. they will grow by about 1% versus 2%. stocks keep marching higher, should you invest in either or neither? for some perspective and thoughts on how to make money, henry mcclay, head of global allocation at kkr. -- >> stocks near record highs,

bond year -- yield near record lows, the old rules of the game to not apply, what are the new rules? henry: they are not new rules, but i just got back from london and it is clear that money is going to leave europe and move into the u.s. when you look around the world, we've got 12 children. that -- $12 trillion in negative interest rate. that money is trying to find a home. when you look at the u.s., we are one of the few places that has a positive government bond yield. there are a few stocks in the growth,t have earnings that have dividend yield. there is almost a euphoria and panic toward buying yielding instruments and that is what is moving stocks, particularly in the u.s.. in the last 12 months, most indexes are up, some are down 10% to 15%.

what is happening right now is s&p earnings after six quarters of negative earnings are turning positive. money is probably going to chase the dollar in the u.s.. the third thing is we are in an economy that is a domestic consumption economy. we are much less reliant on this global phenomenon to drive growth. if the reach for yield is turning into a lunch, shouldn't that set some alarms? a growing risk that when you look at the market today, we call it simplicity is overvalued. a revenue stream in the form of a government bond or a dividend yield, earnings stream will continue to get -- forever a lot of the market is being left behind were complexity is being sold off. nobody wants to buy a company that does not have good earnings or visibility on those earning because the pressure for hedge

funds has been too great, so it is reminiscent of what we saw in 99 and 2000 were people bought tech and telecom. a lot of value in the rest of the market and right now, i would say yield is working .oward getting overpriced your update and it is available on the website, you say here in this is a direct quote, we are not suggesting as alligators stop deployment of -- and, we prefer using you were just making that point, some of the complexity is interesting and perhaps appealing, but what is the argument for investing at all, because there are people out there who say the situation, stocks are record highs, bonds near record lows it may be the

best thing to do is just start taking money off the table and sit back and wait to see what happens. henry: we are running with a slightly higher cash balance. point number two is the result a lot of volatility we had over 2436,st 12 months past but in the game today, it is harnessing the volatility. where are we seeing issues? europe,ing system in banks are shrinking, they have negative rates. thanks have to sell assets. as a provider of capital, we have been able to step in and get low double-digit returns for investors were banks do not want to play anymore. there are opportunities, but you need to find ways for you are turning a volatility or regulatory change to your advantage and not making it a disadvantage. is second point i would make kkr was celebrating our 40th anniversary. we can look back over a lot of data and what we find is, if we made mistakes and if we don't

make too many, it is over deploying too much capital or not doing anything. what we see is our best performance is where we are consistent over time, we find opportunity. we are a north american business, a big europe and asia business. we cover all the sectors. it is hard for me to believe given what i said about that fiber case -- bifurcation that we cannot find something to do in most of the regions. eric: especially when cash earns you not think you may actually have to pay for the privilege of putting a deposit at the bank. henry: i want to make an important point which is traditional asset allocation over the past five years. 12%, in the u.s. 30 year, you may 20 2% this year. people should know returns are coming down. in that environment, it is what can you earn over the risk-free rate.

there are a lot of opportunities out there right now in credit, particularly nontraditional credit to earn, 8% or 9% to earn a nice, decent tens return. eric: public or private, equity or credit? henry: on credit, we are overly credit. the liquid credit and the private credit. on the liquid credit, if you look at the volatility we have had -- eric: you are talking about investment grade and high-yield. henry: moore levered loans, structured products and some high-yield. having the ability to rotate in and out is important. thanks for getting hung with loans. you are seeing things in structure products deals cannot get done because they are worried about the macro. if you can step in and provide liquidity, you can deliver some sound performance and we have

been able to do that, this year. on the private side, it is a much more structural change. the banking industry's assets are down about $5 trillion. that is five morgan stanley's exiting the business. somebody has to step in and provide that liquidity. world is getting more complex at a time when the regulatory environment is saying we do not like lexi. i would say some of the alternative managers have been able to step in and provide growth to companies, and that is a decent return for the company, and also on behalf of the investors, we have been able to deliver some decent returns. eric: are you getting enough of a premium on that yield to compensate you for the liquidity evidence suggesting that the credit cycle is beginning to turn.

-- reported its latest quarter and we see the charge-off rates in auto loans and credit card receivables sorting to tick upward? henry: on the credit cycle, our base view has been that this would be a long cycle. we are 85 months into the economic expansion, which is long by historic standards. we think it can go on until 2018. i don't think you will have a massive upturn in credit, but you are seeing cracks. autos are starting -- have reached a peak is level -- peakish level. the way i think about it is, if the government bond is at 2%, traditional credit gives you about 500 basis points above that, but you are making nine in private credit. that premium of 300 basis points must justify for locking up the money. that is where the debate is.

i know in real estate, is where side,uity and the credit -- it is very expensive, yet the credit is yielding 11. to me, somebody is wrong, and i think i would lean toward the credit side. two things we are trying to find. where is their volatility we can harness to our advantage and where are their arbitrage is where simple city is expensive, complexity is cheap, cap rates are here in a debt 11, all else being equal, those are interesting places to play. eric: what about commodities? henry: our basic view commodities has been to go more the thingspipelines, that yield overall, we are changing our tune. we think the secular bear market in commodities, particularly oil

and copper are starting to bottom out. i would contrast that with steel. overall, you will see us be more active in parts of energy credit and energy equity, as well as other industrial related commodities. eric: there are still concerns out there that we are looking at a potential bear market or some kind of crash in public equities. that may not apply to the private market. henry: keep an eye on china, they have had a 73% increase in debt. the currency continues to push out. two would be the banking system in europe. , they areequities wildly levered. 10 chilean dollars of assets on the top eight tanks supported by 280 million of equity market cap. that is 43 to one. the third thing is, i would say there is a panic to buy yield.

that feels uncomfortable. central banks want to prop up financial assets, but i think we are getting towards an extreme level on that. eric: thank you for coming. that is henry mcveigh, head of global macro and as it allocation at kkr. alix: thank you for bringing us that interview. appnese-based messaging line goes live, today. we will review the details, next -- we will bring you the details, next. gold is down $21. ♪

david: this is bloomberg go. coming up later today, eric

mentor, he is former house majority leader. coming up at the top of the next hour, bloomberg markets with vonnie quinn. what do you have on your show? >> we are looking into jpmorgan's results. we will have one of 29 by ratings. asking -- we will be speaking with the chief economist at of the -- condition season of that mark carney do not have to do anything? speaking withe the chairman and ceo of milan-based company that sells fabrics and manufactures everything for yachts and all

sorts of luxury goods. alix: looking forward to it. markets are on the move. jonathan: fifth straight days of gains for the s&p 500. we are about 17 minutes into the session. futures would point in higher and equities have opened much firmer. another -- the rally continuing in europe, the ftse a little bit softer compared to the rest of the continent. some underperformance and here is the wine. it is the stronger pound story after the bank of england votes to do nothing to interest rates. story, not today. dollar yen at 105.

potentially, the biggest weekly pop on dollar yen since 1999 if we close out around. these numbers. 10 year yield, what a journey we have been on, year -- yields up monday and tuesday, and then popping out again, up eight basis points. yields 1.55% on a u.s. 10 year. let's go across to abigail doolittle from the nasdaq. >> in line with that firmer open, we do have the nasdaq trading higher by half a percent that follows a small decline, swivet of a recovery, now outperforming our shares of cypress semiconductor. based on m&ato be speculation saying that cypress semiconductor is holding out for $15 per share after rejecting a $14 share bid just three weeks ago. if this is true, it shows cypress semiconductor can rise by more than 20%, to this would

be a good one to keep an eye on. gopro shares are higher by 7/10 of 1%. they are having their best week since the middle of february. is behindclear what this strength, some say it has to do with pokemon go. some analysts at oppenheimer say the place of the shares could outperform over the next three months and we will be digging into this one. david: coming up next, we dig into the biggest tech field of the year, it is called line and goes to market today. ♪

david: it is the biggest tech ipo of the year, japanese-based messaging app line goes live today.

betty liu is now at the new york stock exchange with more. why is this tech ipo so important? >> it is important because it is the biggest tech i -- ipo we have seen so far. we have not seen a lot of apps here, and just right behind me -- just behind me are all the customers who are waiting for the orders. they are controlling all the [inaudible]- this had been delayed before, they finally got into the right time, them of the executives said they were a little nervous after brexit that this may have to be delayed again. they are very relieved that this is going to happen.

what is on everybody's mind is what exactly are they going to do? how much are they going to expand the u.s. and what about the growth market? it is not in japan, it is in taiwan, it is in thailand, indonesia and countries like that. david: i know it is hard down there, is or anything you can do to get that mike closer to your mouth? how are they making their money? revenue fortional line has been gaming and in those digital stickers, you might have seen them. people traditionally by sets of those through -- for a couple of dollars. you can bring up that charts that shows the different from

's. it is advertising. they have something like 200 million users a month. they are starting to become more of a marketing platform and others have been trying this out as well, seeing if they can just sell ads directly or show sponsored ads in front of their users. everything from playing games to scaling taxicabs, that is what they are doing online. and anal note on revenue, lot of revenue per user in the domestic markets, but they make practically none on outside -- that is a very big challenge for investors, how they will get that average revenue per user -- per user per month. david: the ipo is about to go out. alix: the other big mover is jpmorgan, the stock up by about one and three quarters of a

percent in the market. dimon spoke earlier about political leaders and how he helps they will be sensible after brexit. >> we are hoping that the political leaders are very sensible and make sense for both eu and for britain to think through the process to make it sensible, whatever changes they make, to give businesses time. i am talking about years. time to adjust to the new reality. alix: the new reality is very important for the likes of jpmorgan because of their investment banking revenue. david: it is nice to hope that the politicians are sensible. it does not always happen. word coming out of brussels, they want to speed things up. jonathan: i don't think it will happen until the turn of the year. what interests me is they want

another direction of travel, not necessarily the conclusion and it will only get a gauge of that in about 12 month. those stories of bank ceos suddenly getting people out of the city of london, that is not going to happen anytime soon. once you understand the direction of travel, then i think they can start thinking about whether they should or should not those calls. david: some people are not happy with him repeatedly saying he is going to pull thousands of people out. that does it for bloomberg go. bloomberg. ♪

♪ 10:00 in new york and 10:00 p.m. in hong kong. i'm vonnie quinn. mark: and i'm mark barton. this is "bloomberg markets" on

bloomberg television. ♪ vonnie: we are live in new york and london in the next hour covering stories out of japan and italy. jpmorgan kicks out running season thanks to a rise in fixed income trading as the global bond market rallies. lows --ank keeping cost cost? low? mark: keeping banks at record lows. one of the biggest public debuts of the year. we will hear from the cfo from the new york stock exchange. let's check again on the bloomberg first word news. >>