crushing estimates. city and wells fargo on that. trade whiplash. hesepresident trump says would consider rejoining tpp while asian members opposed renegotiation. sweeping corporate changes as it tries to transition to electric vehicles. david: coming to a beautiful shot and it will bit hazy of the new york city skyline. welcome to this friday the 13th of april. i'm david westin with alix steel. alix: you will be playing tennis in the sun. interesting session that will be evolving as we get bank earnings that the morning. equity futures are up by 3/10 of 1%. the euro-dollar pretty much flat, resilient but also constrained. those are two words many analysts are describing. yields are starting to unchanged. it has been a killer week for commodities across the board.

goldman sachs says buy. aluminum with the best week since 1987. in the markets, the real news is jpmorgan with the earnings out moments ago. $4.5 billion -- it almost beat a quarter before. it was investment banking that seem to be weaker. david: they were projecting trading to be up but not as much as it was. they really had a very robust quarter. a little bit of a miss on investment banking. alix: fees were lower and you have revenue lower as well across the board. for more, here's allison williams. at first, the stock was over over 1% and we are losing a little bit of steam. what was your biggest take away so far? allison: so far, so good. trading coming in better-than-expected. volatility explains both of those things. is good for trading and not for the underwriting business.

the outlook is still constructive so we want to hear on the outlook on the call. the investment bank is a percent and that looks great. -- 8% in that looks great. that's a positive read through for the economy and we will see what wells has to say. citigroup has a different mix. this is probably the most indicative in terms of macros. also looking forward to hearing some more comments and they did map out proposals this week. that is something we're looking forward to hearing more detail on. david: there is also an emphasis on how competitive the lending is. how would affect their business? alison: when you get slower demand and you have healthy banks and a lot of, you're going to get more competition. we have been seeing competition in commercial lending for quite some time.

commercial real estate lending is another area that has sort of heated up. we are still seeing some pretty good deposit growth. that means they have more money to put to work. alix: net interest income is up $13.3 billion.alie can that continue? at what point would they have to raise deposit rates? alison: we have and that is something we are all watching. something we will be watching this quarter, but it's not something banks will talk in advance and something you will see later on. a lot of the competition is expected to come from the traditional nonbank lenders. transparency with the internet then perhaps we have had in the past terms of being able to see what competitive rates are. we are expecting that, but in the near term, the loan growth as spoke about is important in

terms of helping to build healthy margins. it's good for their mix. we want to hear more about the yield curve and more about what they are seeing in terms of the deposit price in landscape when we listen to the comment on the phone. david: one thing i've not noticed yet is where is the credit card business? that has become increasingly important and their staf sapphire car has been good for them. alison: looks like there is a little noise in the quarter in terms of credit cost any consumer unit. they had a right down on the student loan portfolio. updated guidance on the card cost and i am sure those thoughts will be right in line. this tends to be a seasonally good quarter for credit versus some other quarters. it tends to be lower in terms of what is happening with loan growth. want to look a little bit more at that, but they just updated their guidance so they probably came in right in line with that. david: more good news was

loan-loss reserves. 1.46 and weated at would be looking at increasing reserves. alison: did they have to release? alix: it did not say they had a release. david: they just reserved less than they had to reserved. alison: that would bode well in terms of expectations of credit costs. that is one of the reasons why people got very excited about last year. it's not what we saw in the rate but in the reserves. if they are reserving less, that's obviously good for credit. we are going to want to hear about where they are beating expectations or where things are coming better-than-expected. mortgages a big part of their book that has been coming in continually better-than-expected. hitting new lows and that's not surprising because that was the area that really got hit in the crisis. that has been the tightest area coming out of the crisis. alix: going back to lending for

a second and david pointed out and lending is flat competitive as well. how much demand is there and how much competitive can they do that when their other banks out there? alison: we talked about the deposit side of things and loan yield is the other side of that. it's another area where banks can compete. we saw for a while it a lot of competition on the commercial side with that category and the fact that jamie dimon saying it is still competitive and that could pressure the loan yield . alix: walk us through citi coming at 8:00. alison: the bar is raised in terms of fixed income trading. it's more important to them in terms of a percent of their revenue and we did see a nice increase of 8% versus the 5% increase that was expected. equity trading is less important

, but it strategically important. they have been doing a lot to rejigger that business. there is already pretty high expectations in terms of growth, but that bar is raised. for wells fargo, the question is we saw this very strong loan growth at jpmorgan. is there any kind of share shift going on at wells fargo? raisingagain sort of the bar in terms of the importance of the core trends of that bank. williams, thanks for being with us. coming up, a trade pact rethink. president trump has floated rejoining the transpacific partnership. more on that next. live from new york, this is bloomberg. ♪

alix: welcome back to "bloomberg daybreak." now time for bloomberg first take. we are joined by romaine bostick and lisa abramowicz. we know the top stories. ands trading in premarket this is interesting because jpmorgan seems to be all across the board with the exception of investment banking. only up 5/10 of 1%. are we going to be in a world where you have to be a lot to get a big move in earnings season? >> i think we need to see a little bit more out of jpmorgan today. so much of the upside was already priced in. you look at the kbw bank index and we are still 6% off the highs of where we were the last week of january and the first week of february. we are only 4% off the lows from the route in mid february. people have not flooded back

into these banks and the big way primarily because they want to see a pickup and corporate lending. they want to see more on the net interest margin. 10% is good, but are we going to sustain this pace? alix: overall earnings season, the typical media beat was 3.4% for overall earnings season. that would bring earnings growth to 2.2% really. are we going to match or meet that? romaine: it's hard to say. what we know particularly with jpmorgan and when you look at their more direct competitors, they are not necessarily taking advantage of the environment and away that investors thought they would. i'm talking about in regards to volatility and other things. the same side is that investment banking revenue continues to lag. it is still a strong picture, but the question is whether this will drive higher? ok, we call it trade

whiplash. it turns out president trump is may should have joined tpp after all. this is what he had to tweet earlier today. "would only join tpp if the deal were substantially better than the deal offered to president obama. we already have bilateral deals with six of the 11 nations and tpp and a working to make a deal with the biggest of those nations, japan, who has hit us hard on trade for years." do they want to at this point? they have gone off and on their own deal. went backident trump with his tail between his legs and said i'm sorry and misspoke and i was a newbie, take us back. [laughter] it's never going to happen. interpret thato tweet for you, but i will say the australian trade

minister said we welcome the u.s. coming back, but we are not going to renegotiate any aspect of this. you have to come back as is or forget it. david: speculate with me a little bit. [laughter] the big changes larry kudlow going into the white house. we know larry kudlow is more pro-trade. he could say this is leverage against china. you are losing some leverage. the best way to do it is to team up with asia. lisa: this is the amazing thing to me about the whole affair. he tweets this very strange tweet. you can read between the lines that he wants in but wants to stick to his guns. the market moved, which is the most amazing thing of the whole thing. it seems to imply that people were saying that this means there will be a deal. it's amazing that the market is interpreting anything into this given the fact that he has a very spotty past as far as coming through with things and there is no clear way for him to get back and unless he materially comes in with this tail between his legs saying i'm

so sorry, which is not what happened. romaine: is a good thing he is doing this. the tpp nations actually did leave the door open. there are about 20 provisions if you remember that they basically pushed to the side rather than completely erasing off the books. in theory of trump was willing to go back and say give me those 20 provisions, those other 11 nations could say fine. the question is if he comes in and asks for something sky high. david: it selfishly gives us something to do every day. alix: we have got to fill time. david: the president tweets in the markets -- and the markets react. let's go to the drama and germany with the vw change. it was announced earlier this week and it was a strange way. the ceo is going out and will be replaced. over the course of the week, investors basically liked this move, which could be reasonably surprising. they had news conference earlier today to explain it. the thing i keep wondering about

his volkswagen has done very well. he was only there 31 months and basically cleaned up the scandal. why? lisa: he was there for three years and he did really well. the company performed well and their kicking him out and want to move on from the emissions cheating scandal. great question of why? they are also splitting up the business. they call it an evolution and not a revolution. the truck business is going to be listed as a separate business. they are going to focus more on environmentally friendly vehicles. they are trying to move the economy forward in a new way and possibly they want to market themselves for a new generation of buyers. to do that, they have to clean slate from the past, practically with the emissions scandal. david: thank you so much for being with us this morning. alix: we have breaking news for you. this is part of a bloomberg news investigation into saudi aramco. got handsome

financial data that was reviewed by bloomberg and hear things that we can tell you about saudi aramco. it shows up the oil giant is the world's most profitable company and net income was $33.8 billion in the first half of 2017. they mentioned the ultra low production costs and that the company is virtually debt-free. this is all part of a bloomberg news investigation into saudi aramco, where it reviewed some accounts and some figures from saudi aramco to dig through some of these details. virtually debt-free and ultra low production costs. the most profitable company in the world. david: the possible ipo for aramco is how will the government interact with the state owned company? according to the data that we have seen, it shows that saudi arabia has not imposed a lot on saudi aramco. much goes public, how will the government change the

rules as it were? indicateformation does that they pose a tougher road to tax. alix: if you are an investor, why are you going to buy when the majority of the profits are going to have to go back to the subornation? david: can they change the rules of the game in the middle of the game? how stable is it? that's been an issue in russian own oil companies. alix: we want to dig deeper with javier, who is part of this bloomberg news investigation and reviewed some of these figures and accounts. i want to start with some of the highlights. javier: the main number is according to the information that we have been able to review that saudi aramco made net income of $33.8 billion in the first half of 2017. i have to highlight that. this represents the first half of 2017. viewa bit of a back mirror

en oil prices were around $53 a barrel. net income would be higher. that is more than any other company that is listed in the planet. it's more than the big technological giants like apple and jpmorgan. more than the five biggest international listed oil companies like exxon, chevron, and bp combined for that first half of 2017. david: connect the dots if we can at this point. what does that indicate about a valuation if they did go forward with an ipo? javier: that's a very interesting question. salman hasmmad bin said that he thinks the company's value is at least $2 trillion. when you look at other details like cash flow, the dividend

that the company is paying to the saudi government, that is what you see lower numbers. it's kind of a struggle to match the numbers that we have seen with that valuation of $2 trillion. i highlight that. this is a snapshot of 2017 first-half and obviously the numbers will be higher today. you look at the cash generation and the dividend. the dividend they paid in the first half of last year was $13 billion. it's a very large number, but exxon mobil and chevron combined pay more of the same. those companies do not even get to $1 trillion in terms of market valuation. alix: we talked about potentially changing the royalties to make it more appealing. have you learned anything on that account? javier: what we have learned is that saudi arabia announced last year that it was cutting the income tax that aramco pays from 85% to 50%.

that was a move designed to increase the appeal of the company for potential ipo. what aramco did not say at the time is that it also overhauled the royalty fees of the company. royalty fees are very important. while income is taxed, the royalty tax is the top line of revenue. previously aramco was taxed with a royalty of 20%. according to the information we have been able to review, that has been replaced with a new system that increases the marginal rate with the price of oil. $70,l prices stay below that marginal rate is set at 20%. 100, thetween 70 and marginal rate goes to 40%. for prices above $100, a goes to 50%. if the system is still in place when the ipo takes place, it will probably limit the potential of gains for investors when prices go up because the saudi kingdom will take more

money out of the company. david: that's fascinating. ,f i bought a share in aramco that means basically i do not participate in 100% of the upside of oil prices. javier: that is what it means. this is not a unique system. the u.k. has a very similar system in the north sea for oil and gas. russia applies a similar system for petroleum production for its companies. other companies like -- countries like australia considered this system of lesson a flexible royalty. it is a novelty for saudi arabia. alix: rapping about, what's amazing about this news investigation is that people have wanted to know this information for decades. what was your biggest offshoot in the thing that you left out and said i would of not that that was the case? javier: i was surprised by the net profits of $33.8 billion in

the first half of 2017. i was very surprised also that aramco needs high prices to make money. in the first half of 2016, and made $7.2 billion. that is good because oil companies were struggling. the number that really struck me is that aramco is literally debt-free. ebt of $1.5as net deb billion. the other thing is a corroboration of something that we have long known. ofause of the production saudi arabian oil fields is low, we have come with information that we have been able to review that saudi arabia produces oil at four dollars a barrel. if you look at shell and exxon, that is $20 a barrel. david: thank you so much. big changes came today at the top of the world's largest automaker.

volkswagen officially announced its new management team. to take it forward into the future of electric and autonomous vehicles and here to live out for us as a man who knows cars and vw like few others is matt miller reporting from vw's hometown. tell us what we have learned from this new conference because we have been saying i don't understand why they made the change because i thought he was doing a good job. job: he was doing a stellar as far as the financials are concerned and also as far as the organization of the company was concerned. he boosted margins to really enviable levels, especially for the biggest carmaker in the world. it's not easy to do. cash flow is very strong. analysts and investors alike were impressed. he was seen as more of a provincial and brash manager uttgart and

occasionally made gruff statements that got the company into legal trouble and into cultural trouble. not a lot of sensitivity as far as the pay package was concerned. that led to the porsche family and the government of lower saxony to look for a new ceo. he seemed to be the perfect one to bring it forward. in the auto industry he is known as a superstar when it comes to controlling costs. he did an incredible job at bmw, reducing cost by 11 billion euros. after he came in post diesel crisis, which is key, he was able to work out a deal with the to reduce headcount by about 30,000 people. his takeover has really been embraced by the company and the stock has done quite well. david: how much of this is internal to volkswagen? how much of it is the shift to electric vehicles and autonomous vehicles? we are putting up a chart right now and there was a lot of

discussion today about this moving forward with electric vehicles. is a big change for volkswagen, right? matt: it is a big change and his job will be to organize the company in such a way that it's more focused. for example, they want to pave the way for an ipo of the truck unit. investors in a car company don't always want to own a truck company that is completely different customer base and different industry almost. they want to speed up decision-making. that is what he said at the press conference today to get to their goal of leading the way and electric vehicles. this is going to be a $50 billion investment on top of the money that the economy has lost due to the diesel scandal. they need every penny of focus they can on electric vehicles and that is what he plans to do. david: bloomberg matt miller, thank you very much. alix: that is how you feel like when i talk about commodities for a while. david: i've some more things to talk about likely regaining.

-- like lamborghini. alix: he's a point person when it comes to getting trump appointees on capitol hill. we will talk about what congress is thinking about trade war's. take a look at jpmorgan up 6/10 of 1%. it's a move, but the numbers seem to be amazing. beating on earnings and revenue with equities trading coming over $2 billion. the only downside it seems is from investment banking coming in a bit like. a bloomberg news investigation piece on saudi aramco shows the company is the biggest in the world. this is bloomberg. ♪ welcome to the xfinity store.

i can tell you about... streaming the most free tv shows and movies on the go. yeah, and... xfinity internet. it's so fast! and you can save by... by getting up to 5 mobile lines included. whoa, you're good. i'm just getting started. ♪ simple. easy. awesome. come see how you could save $400 or more a year

with xfinity mobile. plus ask how to keep your current phone. visit your local xfinity store today. ♪ alix: this is "bloomberg daybreak." i'm alix steel. happy friday. here's where we stand in the markets. the dow jones up by 60 points and looking at and s&p and nasdaq en route for best weekly gains since the beginning of

march. the dow is up 550 points so far this year. a little bit of a risk on feel over in germany as well come up 7/10 of 1%. there helped by volkswagen and sweeping corporate changes. the dollar is mixed. the euro-dollar a little on the downside now at 12317. it feels calm, but i wanted to highlight the 530 spread flat again. areasis points is where we as there is still concerns about the stability of inflation and how hawkish the fed is. in the market to me it was obviously about commodities this week. aluminum now down 6/10 of 1%, but nevertheless headed for its best weekly gain in 30 years, since 1987. you also have oil headed for a very good week. goldman sachs says by commodities. this is where you'll be able to play inflation risk and give you the best return.

markets taking their cue from bank earnings. wells fargo on deck for 8:00. investment banking coming in a little light and that's the good nevada volatility. total lending up by 4% as well. we're looking for more details in the lending environment and you deposit beta and what that ends up doing to the net interest margins. david: we turn to washington now and it's fair to say that every administration struggles to get its new team in as fast as possible come up with the trump administration has had a particularly part-time. the man responsible is none too pleased about it. earlier mr. short tweeted, "the senate is back this week and it's time for senator schumer to stop his historic obstruction of the president's nominees. the white house submitted the nominations for deputy secretary of labor to 93 days ago and for deputy epa minister to 186 days ago. there finally scheduled for votes this week. it's time to confirm them."

we welcome mark short. you got the deputy epa confirmed yesterday. are you happier? marc: we got the deputy epa and the deputy secretary of labor. we also had a record number of judges confirmed and the supreme court justice. the level of obstruction is historic. between the presidency of george h.w. bush, clinton, george w. bush, and obama, and their entire first terms, there were 32 filibusters on nominees. for the first 15 months of this initiation, we have had over 80. 16 years of presidents with a total of 32 filibusters. in 15 months, we have had more than 80. it's a historic level of obstruction and its continuing to leave the senate into a place where there will probably be rules changes and a continued deterioration of the ability to work together. david: that is in the percentage compared to what you got versus

president obama or bush. you are at a lower percentage. you've also had fewer nominations. why are you not sending as many nominations up to the hill? marc: you are correct actually that we are behind, but it's a very small statistical number. when he put this forward at this point, over 500 nominees, we are couple dozen behind where previous administrations where. you are correct that it's marginally behind, but it's not that significant statistically. the number of filibusters when you consider it's more than three times close to 15 months relative to 16 years of presidency, that's quite a dramatic statistic. david: i want to turn out to the meeting of the white house that you attended yesterday where the president met with some governors and leaders from the hill specifically about trade actually. one of the things addressed was agricultural issues because obviously china has really target on things like soybeans.

what can you offer people up on the hill? what can you offer people from agricultural states to reassure them? marc: there's a lot of things this president has done to help the agricultural community, particularly with the tax packages. embedded in that is the doubling of state taxes which is most beneficial to farmers. there's a lot of things that the farming community and the president are in sync with. the low commodity prices right now and how long that has lasted and concerns about trade with china. the president is continuing to advocate for greater market access and more exports. just today, the notion of argentina opening up markets for pork is big news. the vice president has been at the summit and peru and it shows continued conversations and negotiations to open more markets to our products. david: the issue is not just china. our largest exporting partners are mexico and canada actually

. the president is not in a big becauseting nafta done that means more plants in mexico. all: the president is using the leverage possible to get the best deal for american farmers. when this process is complete, you're going to see a much better deal for the american farmers as well as for auto exporters and others. david: the president also in that meeting and a tweet overnight said let's go back and take another look at tpp. he said i will only do it if i'm getting a better deal in fairness. with thesident obama democrats controlling the senate, it was far from clear that tpp would've cleared congress. what are you advising the president about the chances that if he does renegotiate tpp that you can get it through congress for him? marc: it's a fair question, but it depends on what it looks like. the reality is the president to not like the previous deal and did not think it was good for american exporters.

he felt in many cases that barriers to other markets are not being lowered and at the same time there were a lot of tariffs being removed here in america. he thought it was an uneven trade deal t. he says he approves a multilateral trade deal. he says we want to have more access to other markets, particularly asian markets. we does think this further isolates china. tapped the president ambassador light house or -- light hazard and larry kudlow to take a fresh look at it. david: year for to the historic number of filibusters for your appointees. one rare area of bipartisanship we have seen is on the budget. there was bipartisan support for the budget. the president did not like how it came out and said there was too much to spend. your talking about revision. are you going to go for revision? marc: i think the initiation

will be putting forward a rescissions packet. there were 1200 rescissions asked for between the presidency of carter and clinton. the last two presidencies did not take avenge of that tool. this is not so much unwinding and omnibus. there are many accounts that have resources let over that congress never lets you asked in question. inside a bill of on $1.3 trillion, there are parts of that that none of us ever saw including congress. appropriators right that. we talked about ball funding and funding for our troops, but there's a lot of things snuck in that nobody ever sees. we think the american people should see that light of day transparency. david: when do you expect us to see the package and how much money will it save us? marc: we are a couple weeks off and we are still working through the details of what the size of that package would be. yourld encourage re viewers that there were 1200

rescissions offered between the presidencies of carter and clinton. this is a common tool that lasted ministrations did not take an inc admin adjusted davi: always -- did not take evangelist. david: always good to talk to. alix: fears of a global trade war are subsiding after a very mixed message week. the white line is the volatility in equities. then you have treasuries and fx of all continuing to roll over. how will you deal with that? joining me now is christian lawrence. he's a senior market strategist. do we wind up seeing volatility spread? christian: i don't think so. it tends to follow realized vols and bones are essentially range trading. we are trading largely sideways.

in terms of fx volatility, i think there's an element of it being a rabbit in the headlights. the markets are somewhat frozen and unsure of which way to go. a lot of traders are essentially sitting on the sidelines now. there is the potential for a big pickup in fx volatility, but it's going to have to be on the back of a huge event happening and a more substantial and solid outcome to trade worst. alix: is that why we see currencies trade in these tight ranges while we have a lot of risk on risk off and other asset classes? we are not see not the extent that we have seen an fx. christian: there's more risk off and risk on the nimby past and is more differentiation for sure. the ranges are a lot more muted and this comes down to the dollar. there no consensus as to whether a trade war is positive or negative for the dollar. it depends on what timeframe you're looking at. ethic of the short-term its dollar negative, but looking

further out, it's probably going to be dollar positive. alix: deutsche bank had a note out yesterday said it was a stalemate for the euro-dollar because you have some stuff like twin deficits that are going to be dollar negative and trade war protectionism that's also dollar negative, but then you have essential bank ketchup which is euro positive. not enough to support a stronger dollar. how do you wind up doing those factors? christian: one of the key things here is that when you look at monetary policy, a lot of the u.s. policy is now baked in the cake with respect to the dollar. it's unlikely we will get major shocks. i do not think we will see the fed rapidly increasing rates at 50 basis point clips. i think that is in the price. when we look to the euro, it does look as though qe will finish that end of the year. it will probably not be until the back end of next year. it's a stalemate situation. we have euro-dollar trading down to 1.21, which is not far off

current levels. alix: that brings me to the other part of the market that's confusing and that's the 530 yield curve at 36 basis points. much flatter than the 210. what is that telling you? christian: the flattening of curves is something we have been expecting for a while. there are structural reasons why long end rates will remain low. if you look at the very long-term chart, we have seen yields heading lower for decades. with demographics and with automation and quite frankly with the idea of a consistent bid and maybe not a consistent central banking anymore now that central banks are stepping away from treasury purposes, but we are likely to see continued monitoring of that back and. there are good structural reasons why rates will remain relatively low. even from a cyclical perspective, inflation is likely to start slowing. whatever way you look at it, i think they will be relatively well anchored. alix: foreign investors kind of

did not show up. yes, there are structural changes for central banks, but the foreigners need a higher yield to get that, does that change your thesis? christian: i don't think so. there will be a lot of demand domestically. there is still a very strong relationship between inflation and 10 year yields. i certainly expect that inflation pressures will start to ease in the second half of this year, particular in 2019 as well. alix: if i need to get ahead and protect against tweets, how do i expressed that? christian: is the question everyone would like an answer to. -- itain think the certainly think the way is to look at the high beta currencies and perhaps protecting to the upside probably through options. fx volatility is still low so options are relatively cheap. alix: christian lawrence, great to see you. saudi aramco is the world's most profitable company. more on the bloomberg news investigation into the oil giant's finances in the wall

street beat next. you can tune into our colleagues tom keene and jonathan ferro over on radio. pimm fox joins the conversation at 9:00. "bloomberg surveillance" can be heard all across the u.s. on sirius xm. this is bloomberg. ♪

kailey: this is "bloomberg daybreak." i'm kailey leinz in the hewlett-packard and the cries -- enterprise green room. the research and portfolio manager coming up. ♪

david: we turn now to wall street beat, where we cover three things the wall street is buzzing about. women of wall street. female bond managers win as they fight for jobs on wall street. aramco secrets revealed. we get a look inside the world must profitable company. finally, lobbying for washington. of that that amazon's headquarters number two will choose the nation's capital as its new home. alix: joining us now is vince and is also a guy on wall street who know some guys on wall street. this femaleart with bond fund manager because this is super interesting. fix mutual funds run by women have outperformed funds run by 513, but only a small percentage of funds are run by women. >> it's not a story that women

are really good at managing money could for some years it's been a men's club and it's been hard for women to break in and get to that higher echelon of is this where they are managing funds. personally i'm in the business because my professor had a seat on the stock exchange and she took me to the floor. i saw that cacophony in those days. i fell in love with it. david: it's a big story but not necessarily a new store. it was 47. it's not just a men's club. nsier.getting more me alix: that is not a word. [laughter] vince: it's difficult to say. made in decision gets the financial markets, it's a difficult story. the women i've known in business have all been sensational. there are two particular that i

worked with -- one went on to be head of the emerging markets desk at jpmorgan and was a absolutely phenomenal trader. the other actually runs global foreign-exchange for jpmorgan. these are really formidable forces. all the women i've come in contact with, there were no slashes. it begs the question as to why more opportunities are not given to women. the second move onto story, which is the bloomberg news investigation into saudi aramco. net income $33.8 billion in the first half of 2017. the world's most valuable company and it's also debt free. how does wall street look at a saudi aramco potential ipo and its $2 trillion valuation? vince: that will be something for the investment bankers to sit and couple out. when you look at a company that is debt-free, first of all, that is kind of a layup.

there's all that and come and zero debt. do they come to the market with this ipo? there raising funds. they will have all this cash from the ipo and there's no real interest to raise that afterwards. this is going to be a very profitable company that will enjoy the price of oil. ow that transpires going forward is a very volatile country. david: is this sort of a cookie jar for the kingdom? cannot dip their hands in the cookie jar whenever they want if they are controlling it? vince: they have probably been doing so all along. david: you are shareholder and your money. vince: now you will be able to see it. if it's a public company and the kingdom dips into it, it will have to be recorded. you cannot walk away with a few billion dollars and say where did that go? alix: that's one of the reasons why as a foreign investor, why would you want to buy shares? there was amazing reporting on

it and hear details. basically the royalty of the government is tied to the oil prices. 40% in over $100 is 50%. that's a significant re-rating. who knows if we will get to $100? you do not get the upside to the oil price that you would want to in a company whose net income was almost $34 billion in the first half of last year. david: the reports are is that one of the issues is do they want to tell us all this? if they keep it listed justin just inabia, it -- will they tell? vince: the gives into the cloak and dagger thing you don't know what's going on in the background. david: very tempting for a lot of investors. vince: you talk about the u.s.

with ultralong bonds and there's no attraction for that. no one wants u.s. debt out 40 years. david: for the third story, let's turn to washington real estate now. on any in potentially move by amazon for the second headquarters to the washington area because they own a lot of real estate in crystal city across the area. their speculation because they've got a lot of millennials. how much of it is lobbying? vince: a lot of its lobbying. it's prime real estate and it's right on the cusp. it's in the best area in virginia and the most profitable waterstate area over the to washington and up the street to new york and philly. it is probably properly valued at where it is an neighbor -- in the neighborhood of $30 per share. if they get the amazon account, it's anyone's guess.

david: this is speculation, but i wonder how much of it is directly tied to mark zuckerberg. the value of amazon five years out or 10 years out, how much is going to be tied to what goes on in washington? vince: there's a vested interest for the politicians if amazon comes to the washington area to make sure that that states a profitable company despite what trump wants to do to amazon and attack situation. -- the tax situation. alix: when are they going to decide? i feel like this is a reality tv show. [applause] [laughter] idol.""american alix: are stranded think of one. -- i was trying to think of one . david: former fbi director james comey compares trump to a mafia boss and his new book. alix: check out tv . you can watch is online and interact with us directly. scroll through and check it out

for anything you may have missed. this is bloomberg. ♪

david: this is what i'm watching. i suspect a lot of america will be watching -- it's the james comey interview. he has a book coming out and my colleague sat down with him for an interview that will air sunday night. we have a clip of what will be seen when he goes on. maybe not. let's quote from something. this is fascinating to me. he used to prosecute mob bosses. he likens the president of the united states to sammy the bull gravano. this is why they are similar.

assent, theircle of boss and complete control, the loyalty oath, the us versus them worldview, the lying about all things large and small and service to some code of loyalty that puts the organization above rally and above the truth. this is not a ringing endorsement of the president. alix: here's a thing. his wall street going to care? you're going to want to read all about it and chat with your friends at your dinner parties. on a fundamental basis, the actually care? david: maybe they will go back into tpp. of earnings,g two more wall street banks reporting -- wells fargo and citi. jpmorgan set the bar high for citi. can they need it? this is bloomberg. ♪

alix: jpmorgan up with earnings.

volatility boosting. citi also out. fixed revenue missing estimates. trade whiplash, president trump says he would consider rejoining tpp. and inside saudi aramco, an investigation reveals it is the most profitable company in the world. no debt and four dollar reduction costs. citi earnings out. coming in at $1.68 a share. the fixed-income revenue is interesting, coming in at $3.42 billion. the estimate was for $3.7 billion. i find that to be very interesting considering that jpmorgan had a beat. miss: it certainly did not . the earnings per share was nice at $1.68.

alix: the stock is dropping off the highs of the session but is still up by about 1%. you wonder if they were on some or if they of trade were in areas that were not seeing action. david: we will have to wait for this to develop. and wells fargo is out. $1.12 per share. it was estimated to be $1.06 per share. have a lower provision for credit losses, at $191 million. it was estimated to be $730 million, so much less. they are reducing their balance sheet. we expect revenue and earnings to be down. it will not be apples to apples. with wells fargo, loans coming in at $951 billion, down sequentially. also joining us is allison williams, a bloomberg

intelligence senior u.s. bank analyst. and also joining us is tony sherrer of smead capital management. financials make up 15% of that portfolio. let's talk about citi. >> we will want to hear if there was any sort of accounting impact, anyone-timers. jpmorgan looks like a beat. it was probably about in line, perhaps a little light depending on what the actual adjustment is from them. but we will want to hear what the puts and takes are in terms of strength. we have heard from jpmorgan, emerging markets business was strong. citi is generally strong in that area. the rates business is another area that is not as good. credit not as strong.

everything across both reports, wells fargo's cost ratio much higher than its target. are there some legal costs there? they have been accruing those, trying to get the department of justice settlement behind them. and costs related to other issues. barclays settled their lawsuit with the u.s. or announced a settlement in the past quarter. thought, based on previous cases, that that could bode well for wells fargo. we will want to know what is in that manner -- and that number. david: i know it is early going, but explain one thing. there has been a lot of volatility in the first quarter, so trading should be much better. when the trade was not doing so well, we heard it was because there was not much volatility. what is this? >> it depends on the comparison. if you look at revenues versus

.ourth quarter, up 50% to 100% so coming from the fourth quarter, we normally get some seasonality. but a bigger jump of volatility. year over year, last year was a strong quarter. coming in flat against a strong quarter, still strong. alix: and we're getting because on citi. investment banking so revenue fall 10%. is this really a big surprise? jpmorgan investment banking revenue also came in light. toities nailed it, up 38% $1.1 billion. the equity trading business very strong. tony, i want to get your take. you on some of the banks. what bank is best positioned to take advantage of rising volatility in equities, as well as potential raising interest rates like libor?

>> well, i think you saw very strong results from jpmorgan this morning, and i think that is because they are very well- positioned to be able to dominate on those items. they are in a place where they are playing offense. probably anyone that owns the stock this morning is very happy with the results more or less across the board that you saw in jpmorgan. they are setting up well for the future and to be able to continue to dominate. alix: is there one in particular? is someone stealing market share from somebody? what bank will be at a disadvantage? >> for us, we on bank of america, wells fargo, and jpmorgan. we own those three because they have the money to lend. they have the depository base, and they have gained market share in that regard since the financial debacle of 2008 and 2009. we like a position.

aey are all around and have stronger position today than what they have had in the last decade. david: if you like citibank, how much of that is about shareholders. the revenue is right with estimates, but there is a report that says it might have been because of a stock buyback. >> we do not own citigroup. we own jpmorgan. we do like the return of capital that they have committed to. the metrics they outlined last 100% return ono capital on dividends and the efficiency ratio, they are coming in line. we will see if they can achieve that, and in some ways they are already exceeding that on the roe in this last quarter, so we really like what we see. alix: moving to loan growth, what have we learned in the last hour from jpmorgan, citi, and

wells? >> jpmorgan is the more important bellwether to look at. they are more involved in commercial businesses and commercial real estate, more involved in the bread and butter banking. i have not seen the number yet for citigroup, but that will be more indicative on the consumer side and specific to the credit card strategy, an area that they are sort of overexposed to versus broadly banks and larger peers. wells fargo, i have not seen the number yet. it will be an important metric for wells fargo. investors are concerned about the the impact will be from fed constraint order. david: exactly. they have talked about some mitigating actions. they did talk about a sale in the quarter of, i think, a puerto rican auto loan business.

they have talked about pulling back on nonoperational deposits. couple years ago, they were able to quickly bring those down. wells fargo's overall deposit headline number might be weak, but we will want to do into the details to see what is happening. alix: i want to get your take, tony, on taking advantage of net interest margins. the big story for a lot of these banks is they are not increasing their deposit payouts, so they are getting a lot of nice juice when they're loaning out money because libor has increased so much. how long do you think that will last? >> well, you're asking a question that is well-debated. in our view, we think rates will continue to rise, perhaps slowly, but we think they will rise because of economic growth. the fed seems to have inflation targeted at 2%. they seem to have some

visibility to that if gdp is double that, let's say you get to 4% on the 10-year, that will be solid for banks across the board. that is not part of our thesis particularly, but it would be a nice detail went the banks. alix: we know the fixed revenue for citi dropped 7%. the bankside is a less favorable environment and lower investor rates.ctivity in g10 it seems to be the divergence of volatility in the market. >> that is what we talked about before. citi and jpmorgan both sort of flat. equities strong, emerging markets strong. rates and credit not so much. bodeweek, these results pretty well for goldman sachs and morgan stanley, perhaps less over bank of america. remember that bank of america is relatively weighted toward the credit rating business.

also, they have a relatively balanced business. you, one ofn, thank the best on the street. and tony sherrer of smead capital. one person that is not following bank earnings is the president of the united states. tweeted. james comey has given an interview in his book is coming up. this is part of the tweet and -- james comey is a proven liar. leaked classified information for which he should be prosecuted. he lied to congress under oath. t goes on and and i on. they say the books came from notes he took that should have been classified.

so the president is going on the offense or defense already on james comey. alix: he took the bait. books.it will sell some the book publishers are feeling pretty good. alix: exactly. coming up, more with tony sherrer, the latest on what he is watching into earnings season. in bank stocks, here is where we stand. all bank stocks seem to be up by about 1%. jpmorgan's blowout quarter. record profits. citigroup with a mixed picture. equities better, investment banks weaker, and fixed weaker. outperformer, the 947 million in at -- $947 billion. their net interest margin did come in light. we are going to be following

bank earnings throughout the show, specifically the consumer lending world and what big banks are telling us about loans. this is bloomberg. ♪

is bloomberg daybreak. saudi aramco data shows the state of oil giant is the world's most profitable company. according to numbers, aramco had almost $34 billion in net income for the first half of 2017, more than apple, j.p. morgan chase, and exxon mobil. aramco is virtually debt-free. an ipo may take place next year. shares of tesla are rising. ceo elon musk says the electric

carmaker will be profitable in the second half of the year. he made his remarks on twitter. earlier, economists tweeted estimates that tesla would raise up to $3 billion this year. the ousted chairman of qualcomm is making progress in lining up enough funding to take the company private. paul jacobs can make a bid within a few months. he left qualcomm after a failed hostile takeover event of broadcom. alix: thank you. earnings season is upon us. let's look and said the bloomberg white bars are earnings estimates, about 5%. the blue purse our revenue estimates, about 1%. revenuelue bars are estimates, about 1%. that is for sales. joining us from seattle is tony sherrer of smead capital. is the market accurately reflecting higher earnings of

stock to revenue growth? think the expectations of the market for earnings coming into this season is about as optimistic as you had for the expectations that people have coming into any earnings season we have seen in the last five plus years. and some of that is because of the tax reform we have seen. the tailwinds are there. the optimism is there. will cause the forward p/e to look a little bit more appealing going forward. that is fine, and that is not the problem. where we see the problem is the ofuation disparities, some the really exciting stocks out there that we think are problematic. david: can you be a bit more specific on those problems? musk,l, you know, elon ok, not to pick on him for an example, but maybe they will be profitable, maybe they will not.

maybe amazon will be profitable in retail, maybe not. we do not think it will the problem is that investors have built in all the assumptions that they will be profitable and will be for the next 20 something years today into the stock price. right now, we have a very narrow market. to what you saw in the late 1990's the narrowness. wey narrow leadership it think the market is trying to regain footing over the future of leadership will be. we do not think it will be what led in the last decade, for example. alix: a lot of that is going to come from what we hear on the call. if you look at this chart that shows ceo confidence, it shows it has continued to rise. but now we have a lot of uncertainty in the market and uncertainty in trade in d.c. how do you expect the outlook to continue, and what are you looking for? >> from a geopolitical and

political perspective, we think there will be continued clarity over the next six to nine months. the tariff question is going to get sorted out, in our view. onis the thing to trade apparently. we try to really dialed on the noise on that and try to find great companies that can do very well. we were just talking about jpmorgan in the last segment. they are hitting on also it is right now, and you can buy that stock for less than 12 times forward earnings, a company that is winning and dominating. that is the kind of companies we think we can own and do well in regardless of what goes on in washington, d.c. alix: ranks so much, tony sherrer of smead capital. eric rosengren making interesting to this morning, saying that more hikes may be needed than what the fed meetings show.

he says the jobless rate could drop by 3.7% by the end of the year. now we're almost a full percentage point below nehru. there could be of boom and bust scenario. that looks like a four rate hike conversation. he is projecting things are going faster than others are. he also says he's worded about -- he is worried about trade affects. overall, sounds like mr. rosengren is inclined to four. i agree. alix: it is a tough position. if the labor market is tighter and you still have these overhangs and do not know how it will affect the real economy, that leaves the fed in a bind. david: the fiscal stimulus is not helping the fed. you have the president saying he

will give people a lot of money in tax cuts, but then we may have a trade war. alix: if you look at the 10-year, we are now trading at 2.83%, so we are on the highs of the session but not seeing a ton of movement. that hawkish and is potentially priced into those minutes. david: coming up, it is one of the world's most secret of companies, and now we know it is one of the most popular -- profitable. in fact, the most profitable. inside saudi around code -- aramco. light oni coming in fixed. wells fargo sings i would load growth.-- loan we will break down how to play better environment for loans and for trading. this is bloomberg. ♪

david: we had the completion of

president trump's tweet about james comey. arlier, he called james comey proven leaker and liar. he said that he was fired. he leaked classified information, for which he should be prosecuted. he lied to congress under oath. he is a weak and..... now we know the rest. whountruthful slimeball was, as time has proven, a turk director of the fbi. his handling of the crooked hillary could in k's and the events rounding it will go down as one of the worst botch jobs of history. it was my great honor to fire james comey. comey'safter james interview on the book release. aramco.ll, inside saudi accounts show the energy giant is the world's most profitable company with a net income of $33.8 billion in the first half of 2017. we have learned the companies virtually debt-free.

joining us now with more from london is will kennedy. congratulations. this is a bloomberg news investigation. walk as the the biggest take away for investors. >> thank you very much. it proves what people have always known. when you pump that amount of oil , you make that kind of profit. there is a lot that is impressive in these numbers, the fact it carries no debt. oil at one-fit that the cost of those such as exxon and shall. statenancing in the saudi . in this new tax regime that saudi arabia has imposed on aramco, and i think investors who are contemplating buying this company will look at how

much they have to share this money with the saudi government. david: while we knew saudi aramco was important to the kingdom and its budget, can you compare what we thought before to what we know now with the budget revenues and the saudi kingdom and aramco? >> it is impossible to say exactly. but what i can tell you is that when oil prices rise, they will take more and more money out of aramco. toshows there very keen preserve the economic upside of oil prices for the kingdom, rather than for outside investors. that gives a real illustration of just how critical this company is to financing a vast majority of government spending and saudi arabia. alix: $2 trillion valuation -- and do these numbers support that? >> i think a lot of people today will be doing those calculations. it looks tough when you look at

how much the new tax regime limits the potential of oil upside for investors. clearly, the numbers we presented today give figures for the first half of 2017. the numbers this year will be huge. what will worry investors is that they do not get enough upside for that, and i think that makes the valuation potentially would challenging. alix: thank you so much, will kennedy. great reporting by you and your team. coming up, jpmorgan, citi, wells fargo all reporting this morning. deep into consumer lending. this is bloomberg. ♪

from new york, this is bloomberg. ♪ -- alix: this is "bloomberg daybreak." i am alix steel. dow jones futures up. s&p futures looking at its best

week since early march. the dax climbing higher as the volkswagen news buoys that index. sweeping change in management over there. look at the currency market, a mixed dollar picture. euro-dollar modestly weaker, 1.23. marketis the stagnant fx they cannot seem to break any cut of range. yields pretty much go nowhere in the u.s. aluminum and oil are neutral on the day. goldman sachs says buy commodities. iea says the opec job is almost done. aluminum having its best week since 1987. david: when i heard that, thought about mission accomplished actor in the iraq war. you have to be careful about declarations like that. now it's good first word news. kailey: if president trump wants

to rejoin and asia-pacific trade real, it will be on a take it or leave it basis. the president told officials to explore rejoining, but he wants a better deal than president obama got. several trade ministers from the region say they are opposed to any renegotiation. it appears that british prime minister theresa may will join the u.s. and france if military strikes launched against syria. she spoke with president trump yesterday. and she agreed on the need to determine further use of chemical weapons by the syrian regime. may be able to say mission accomplished and its quest to shore up the oil glut. oil futures had a three-year high in new york this week. global news 24 hours a day powered by more than 2700 , journalists and analysts in more than 120 countries.

i am kailey leinz a this is bloomberg. alix: it is a big day for banks to it we wanted to dig deeper into the underlying growth for consumer loans. jpmorganlights, charge-offs climbed by $100 million in the first quarter, mostly driven by an increase in souring credit car loans. up 3% because of that card business. they say their private label credit card business client 16%. is mike mckee, bloomberg international economics and policy correspondent, and david ridder of bloomberg intelligence. can you talked about consumer credit card loans? michael: i want to start with a longer time period. this is fascinating. you look at this chart, the history of lending. on the loans, credit

cards, and consumer loans -- non-revolving loans. wen david and i were born, were not borrowing a lot of money. about the time that alix kim long, people were in love with their credit cards. now we are back in love with our credit cards. that is after it fell into doesn't nine. -- that is after it fell in 2009. you see the white line on the far right, the revolving loans. they have started to come down. people are borrowing less money. there is definitely a question about how much people want to borrow, let alone whether the banks are willing to lend to them. they seem to be willing to lend if you want the money. david: square that with the savings rate, which has gone back down again. it went up after the crisis and is going back down again. they're not borrowing the money,

so are they just spending cash? michael: they continue to borrow. these are rates of change. the economy continues to get bigger, but people do seem to be spending down her savings as opposed to be taking advantage of credit. we had the crisis in 2008, andicularly in mortgages everybody was cashing in on the valley of their mortgage. then it fell apart. alix: new look outstanding consumer credit card debt, it is at a record. how sustainable do you think this is? >> i think you are going to see that ease a bit going forward. for the big banks, you mentioned j.p. morgan chase's charge-offs rising, for them and for citi, they were a little bit later to start to aggressively land in the credit card space, where companies like capital one and .iscover were little earlier on

that explains part of the rise in charge off. but the rise in consumer debt, there is all kinds of companies, including no goldman sachs, that are in the business of trying to help people consolidate that theyand reduce the rate p.m. credit cards by taking out a personal loan. i am talking the likes of lending club, goldman sachs, and some of the credit card citi are like amex and offering personal loans to their credit card customers, too. they do not want to lose those high interest-rate balances completely to competitors. david: you have wages on the one hand and debt on the other for households. we're starting to see wages go up some. as they make more money, do they pay off the loans or do they borrow more? >> i think it is a combination both. it is a little too soon to see how the tax cuts that were recently passed are going to impact that. i think you will see some people

paying down debt and also spending a little bit more. as far as how credit quality performance more broadly, you know, until you see a big change in the labor market, you are not going to see a real deterioration in credit card quality. that has been the trend for a long time. alix: a good point. usually you think if credit card debt is rising, that should be bad, more leverage, but we also wanted because it shows the consumers are spending. card, the bank lending that david was just talking about is tied to incomes, but it is tied to whether the income increase is permanent. to rampe are not going up their spending or credit borrowing because they got a one-time bonus. if they got a full-time raise and they think that will continue and they will not lose their jobs, that is what leads them to spend more and borrow

more. but we have to keep in mind that we are in the first quarter. consumer spending is historically weaker in the first quarter as the whole economy seems to slow down on a seasonal basis. i have a chart here, bank consumer lending. the shows large banks, banks reporting earnings today, and all through 2017, rising, raising, rising, and we hit the first quarter and it flames out. into the hole -- and it just out.ens they shop during the holiday season and then have to pay it back a little bit so borrowing goes down. david: what is the relationship between consumer confidence and consumer credit? are they linked? >> i think the link has always been pretty weak between consumer confidence and, on the one hand, spending, and on the other hand, credit growth.

mike makes a good point. you have to look at longer-term trends. it is hard to make a conclusion on month to month how consumer confidence is. it is more about long-term employment and confidence that, hey, i can take on this little bit of additional debt. alix: i want to get your take, david, we see libor increasing, so what banks are most exposed to floating-rate debt and what could that mean for potential profits? can you walk us through with a filter on that? >> sure. for credit card lenders, the rates they charge to consumers are tied to prime rates. prime rates go up, the cost to the consumers will go up. there is a limit. if you are looking at average interest rates already in the mid-teens, from a competitive standpoint, and i mentioned goldman sachs and lending club,

you have these companies trying to help people refinance debt already so there is a competitive aspect. the other downside of higher rates for the credit card lenders is they have the biggest margins in banking. w cost.s lo but companies like discover and capital one and amex, they are starting to ratchet up the rates. it is crazy when you say ratchet up the rates, 2%. big people, right? that when you are talking margins as big as there's, it will start to have an impact -- as big as theirs, it will start to have an impact. alix: really appreciate it. and michael mckee. thanks for a deep dive in consumer credit for banks. david: taylor riggs is monitoring jpmorgan.

i understand we're not hearing from jamie dimon. we're hearing from the cfo. taylor: the cfo said jamie dimon is on the road with clients so we will not hear from him today. let me recap the guidance and the tone we're getting from the cfo. she did a call with the media in the last 30 minutes or so about credit cards, something you have been talking about this morning. she was asked about credit card charge-offs, and she said they were seasonally high but in line with guidance. she talked about tax reforms, and the impacts are still to be seen in the future. there is a little bit of a lag, so they have not felt the effects so far. they expect that to pick up. when it comes to trade, tensions are holding back clients from engaging. she said those tensions and not spilled over get into ceo confidence. if things escalate, that is something the bank will worry about. so far, things look good.

when looking at fixed trading and the fixed income market, she said she did not want to get too offensive, but the last quarter tough.year was really she said there for suffocation has helped them, that the bank so strengthen emerging markets and commodities. notolatility in equities do quite spill over into the fixed business, but that is something they are working on. that they areaid leaning into the blockchain technology that they will not comment on bitcoin. ont that.put a cap bank earnings today. you heard about the call with jpmorgan. a solid beat bank. investment banking revenue did have a mess, but equities with a solid quarter. citigroup is next.

revenue exceeded $1 billion for the first time since 2010. fixed did disappoint, but citi winds up hedging more. investment banking revenue came in light. wells fargo with loans just under $950 billion. avid: coming up, there is trade pact rethink maybe. president trump has floated maybe rejoining the transpacific partnership. be sure to listen to our colleagues from 7:00 to 9:00 on bloomberg radio. all across the united states on sirius xm radio. this is bloomberg. ♪

kailey: this is "bloomberg daybreak."

i'm kailey leinz. coming up, the cfo of fiat chrysler, sergio marchionne. david: overnight, prisoner trump confirmed he is open to the u.s. joining the transpacific partnership trade agreement after all -- president trump confirmed he is open to the u.s. joining the transpacific partnership trade agreement. he said he would the open to joining only if the deal was better than the deal with obama. webber, u.s.itlin trade policy analyst for bloomberg. i think we have some bullet points about what tpp is. we hear about it a lot. it was a very sweeping agreement that potentially affects 40% of global gdp. a lot of tariffs and nontariff areas.

why didn't president trump want to go whento -- go into this to begin with? >> he a lot of critical things to say about it on the campaign trail. wereid the constant rules not tied to us and it was a gift to china. he said a lot of the risk depends on japan and manipulating currency in the future, really a whole host of issues that he wanted to change. he wanted to make the tariffs even longer. so it is stunning to hear that one of his first actions was to exit the deal and now he might reverse that. david: we have a bar chart over the years about how much trade the u.s. does with those 11 nations. it is a lot of money. what is causing him to change his mind? could there be a lever against

china? caitlin: i think it is all about china. of course, the president understands that the other 11 countries in the tpp have moved on and signed a new deal. their ratifying that deal as we speak. -- they are ratifying the deal as we speak. pact, alarge trade powerful tool against china. and the reason we're hearing is sort of ahink, reassurance he is trying to give in --mers and republished republican constituencies who nervous about the trade war. there is every reason to believe that these countries are not eager for us to come back in now. caitlin: they have said they made a new deal, in part of that was taking out 20 provisions the u.s. wanted. to be more it

beneficial to the u.s., beyond those 20 provisions here it there is a long way to go. david: he has a lot on his plate right now. caitlin webber of bloomberg intelligence, thank you. alix: the impact of geopolitical risks on emerging markets, shamaila khan joins us. ab.manages good to see you. what did you do with the russian bonds you owned in the last week? >> we were always cautious on russian corporate bonds because of the sanction risks. and with what the u.s. has done in the last week or so has raised the stakes. there is a series sanction that company,ed on the making it extremely difficult to trade it.

we are very cautious. we have not been overweight on the sovereign side or the corporate bond side. alix: what is the implication for u.s. investors having to dump these bonds by may 7? does that mean the corporate still not want to issue in dollars anymore? is it a buying opportunity if you are a european investor? >> and is difficult. thereally cannot buy company and you really cannot sell it. that is raising the stakes on owning rushing -- russian corporate bonds. we do not know what will be next, and it is not clear how u.s.-russia relations will progress. david: sovereigns, russia had to pull back on the bond offer.

qatar just came out with one, and that is pretty close to syria. how is the geopolitical site affecting sovereigns? >> russia is more being affected on the sanctions. offering really attractive yields. paying you for the geopolitical risks, which is one of the reasons why the bond yield was so heavy. alix: if you look at the risks and russian sovereign debt, he was the other loser and the other beneficiary? if you were to sell the russian debt, where does that money go? >> with russian sovereign debt, there really are no restrictions. we believe that would be the last option for the u.s. to get outu wanted altogether, where do you put that money? >> relocating in terms of russia? there many countries where we

think there has been positive political change. we like brazil, argentina, south africa. there's a countries where we think they are doing -- those are countries that we think are doing extremely well. alix: where does the contagion spread? to a look at turkish bonds that hit this week? >> that was more due to syria. rebounding, as well. in terms of russian sanctions, if you review what happened last time, it was fairly idiosyncratic. in theou mentioned qatar bond offering, $12 billion. i want to point out how the bonds have performed since their last big auction. you can see the yields. for saudi arabia, 4.2%. qatar, 4.5%. you said you feel you're getting compensated for the risk.

are you a buyer? >> we would be interested in buying. they are pretty cheap for the rating, and these are interesting countries for us. a significantng yield cut. alix: where would you not allocate? >> pretty cautious on russian corporate bonds. alix: but where else? >> really, the lower beta countries, strong investment grade in emerging markets, comparably rated securities. more on valuation reasons than fundamentals. david: shamaila khan, thank you for being here. we have headlines coming out of mr. rosenberg's remarks. he said he was predicting the jobless rate would go to 3.7% within the year. now he says it could go to the low threes. he says that the tax cuts should help the consumer overall.

concerned that we have to be worried about a boom and bust if we go to the below low. -- if we go too low. alix: aluminum having its best week in more than 30 years. goldman says buy. this is bloomberg. ♪

aluminum. watching the best value since 1987. what does it mean in russia? 3.7 million tons of aluminum but only 650,000 tons used domestically. they need to sell it. do they redirected so they can sell it? it is hard to do. the some of the internal force have to buy rusal? david: is it sold on a spot

basis or long-term contracts? alix: some are long-term contracts, but you can sell on the spot. david: it is sometimes hard to redirect. people are locked in with long-term contracts. alix: exactly. komen sex said some of the banks in russia could buy rusal. -- exactly. some of the banks in russia could buy rusal. david: is a vladimir putin upset because his friends are getting hurt? alix: coming up is the open. we will be talking with george goncalves of nomura. happy friday the 13th. this is bloomberg. ♪

[no audio] o from new york city for our debt -- jonathan: from new york city for our world wide viewers, this is "bloomberg markets." this is the countdown to the

open. i am jonathan ferro. ♪ record profits, revenue. jpmorgan delivering a volatility fuel quarter that beats estimates. trade softens as the white house takes a second look at the tpp. we take a look at the world's most profitable company. the story across asset looking like this, futures grinding to a decent week of gains, positive almost 0.6%. fx market underperforming. the japanese yen giving you that feel of that risk on. u.s.e at 2.83 on the 10-year. two banks kicking off the earnings season,