equity trading revenue -- putting on the brakes. inflation flows in the eurozone calling into question the strength of the global recovery, and the overshoot era john williams says inflation can overshoot their 2% target. the fed funds rate can rise above the mutual rate. right i'm david westin, here with alix steel. you said it is a sunny morning for morgan stanley. alix: the stock is up over 2%, what will it hold? up 11%, $1.9 billion. equities just killing it, coming in at $2.56 million. atestment banking beating, $1.63 billion. the story will for jpmorgan and citi was that it was not a good time for investment banking and ficc, but morgan stanley proved them wrong.

david: they saved the best for last when it comes to earnings. alix: joining us now is alison , aliams, and devin ryan brokerage analyst. he has a market performance rating at $50 for morgan stanley. give us your details. trading is better than expected, so that is sharing a positive surprise across the board. tough, keepagainst in mind morgan stanley is the biggest. one thing i will point out, is a good quarter across the board from what we have seen, but goldman sachs, there is a lot of nitpicking. they have been losing shares with ficc and underperforming. perhaps they are doing better this quarter. when we look at the december, if

we think about some of the give-and-take, bank of america losing shares in ficc this quarter. alix: that was my question. when the story of morgan stanley and citi, are they stealing market share, or is it -- >> one of the things we are watching is the equities business and market share trends, and it looks like some of the leaders could be gaining share in that business. amid the two reforms that took the year,lier in they are expected to consolidate some of the shares in the research business and research trading commissions at some of the top companies. that could be what we are seeing. we have not gotten results from some smaller companies, but that could be the trend. jpmorgan talked about it. that might be something that is happening, something that morgan stanley and goldman have talked about, so perhaps gaining share in the equities, cash equities

business, equity derivatives, very strong across all the companies. and then with ficc, keep in mind the rates business tends to be the biggest business. that tends to be where jpmorgan, bank of america, the traditional banks are strong. in terms of the year over year, we are seeing the biggest gains at morgan stanley and goldman. david: one of the things that strikes me is that it was said we had a strong quarter, so we hope we will be around that area. they did a lot better than that. 19% yearg, they are up over year. what was that about? very clever guidance. >> that is a big number. being conservative, the quarter was not over, and there are early results here. a lot of the same things -- same -- is, it terms up with agree with alison, this is one

of those quarters where we are starting to see some of the benefits of scale come through. you have new regulations, but i think this is a quarter where there was 27 days where the s&p 500 moved more than 1% up or for all of seven last year. volatility is still back or you can make money from market making. as much as stanley anyone else, and it is an encouraging thing. david: they already upped their targets. were they really able to deliver on those targets for the year? >> it is a great start. on equity, 13%, that is an inflection point for the company where we are moving into a new realm and they are hitting targets. clearly they are starting the year within that range. this is a good head start. the first quarter as seasonality, and can be typically good.

there are a lot of questions like there has been on other earnings calls. how sustainable is it? the commentary we have gotten so far, investment trading trends have been positive. we are in a good spot right here, but we also had think about seasonality in the first quarter. alix: allison, the trend with bank earnings, the quarter was really good and then you rollover throughout the session. does morgan stanley also does that -- also do that? >> we talked about the strength in trading and the other important thing for morgan stanley is there pretax margin target. 26.5%, and that is within the higher range. they did up all of these targets. -- they havets are gone up 26 to 28. that gets helped by interest ofes, but we are in a period

elevated prices. if there is price risk, will they sustain that? q1 is seasonally strong. ceo said we had a great january, but we are going back to the trend of the last several years. 2016 might be an exception because of brexit, but we started off strong. there are strong pipelines across the board. but i think investors might be a little bit worried about will this sustain? it has got away, and trading is such a big piece for morgan stanley. wealthlet's talk about management because morgan stanley has a particular emphasis on that. it looks like they actually missed estimates. they had $4.4 billion, and it was lighter than estimated, than what analysts thought.

allison: one of the things that we have not looked at this quarter, bank of america saw , and it hasclose been their strongest start to their year since the merrill acquisition. the other thing with wealth management is the deposit data, cash deposit beta. that is one area where we saw numbers going up. did that happen on their margin in the quarter? how much did that have to do with it? year over year for asset prices, but sequentially perhaps not so much. net income climbed to over $1 billion in the quarter, so for allison's point, higher asset revenues came from positive flows. rank the banks in terms of which ones you like best to lead. what do you like?

devon: we like morgan stanley quite a bit. what we are seeing is great results, negative reactions on that. i think it is because we came to this year and the expectation was quite high. we had tax reform, and people are moving the estimates up to reflect a better backdrop. we have to hit that. movehe stocks that tend to higher, you see positive estimate revisions. morgan stanley is at the top of the list. opportunity for positive revisions. we will look at these numbers in more detail, but there could be an opportunity were people will pick the numbers up off this. -- not just valuation support, but people saying things will get better than what i really thought. alix: thank you so much. alison williams of bloomberg intelligence, and devin ryan of jmp. focus on and can

the stock actually hold the gains that we have seen? many banks give it away. as we head to the break, watching the end you -- watching -- could there potentially be a wrench thrown into the brexit plan? go to live go on your bloomberg terminal. this is bloomberg. ♪

alix: time now for bloomberg first take, where we go through the top three stories of the morning. inflation numbers out of u.k. and eurozone, plus earnings and the fed speaks out. a former trader and bloomberg guy.america us macro and rachel evans joins us now. what struck me is what happened in the u k and eurozone. you can see the inflation myth that we have seen. it is rolling over, and the trend seems to be lower. overall eurozone is stuck, not able to gain the traction you might have thought. thatthis upon the question the global recovery might not be sustainable? to do withore something akin to chain inflation. we are starting to see a rollover from where we have seen the weaker pound play into inflation.

it eats away at the inflation as well. the global recovery is sustainable. it is pricing pressure that is not. alix: where do we need to see ?he assets go back u how much has to relate here? vince: it has had a very difficult time sustaining the 1.42, 1.43 level. we still cannot forget brexit. illustrateschart the pound against the dollar in the last year. that illustrates what you are talking about. vince: the blue line is the last closing price,ge and the other lines are the standard deviations from that. isid: in the meantime, there

geopolitics going on. aesident trump is having meeting with the prime minister of japan. he tweeted this morning already about north korea. mike pompeo met with kim jong-un in north korea last week. the meeting meant smoothly and -- the meeting went smoothly and a good relationship was formed. details of the summit are being worked out. denuclearization will be a great thing for the world but also north korea. it looks like they are going to patch things up in north korea, maybe things will not go so bad in trade, so you are seeing fundamentals. s&p futures are up, the 10-year is going nowhere, the vix is down again, so maybe we are returning to fundamentals like earnings for morgan stanley. >> we really put the trade war concerns onlitical the back burner. i do not think they have gone

away, but for now everybody is focused on the earnings picture, whether we can see morgan stanley meeting or beating those expectations. it has been a mixed bag so far, but the s&p was closer to a one-month high. overnight we saw ibm reported earnings, which were significantly more disappointing than people anticipated. anticipate ibm earnings would be more of the same. rachel: everyone was hoping that tech would be a bright spot. we saw encouraging signs from netflix yesterday, that they exceeded expectations. people are looking at ibm and are disappointed. people today have a good excuse to sell tech. stanley is obviously beating, but we have not seen the financial rally last.

it will be interesting on the s&p to see if they mixed earnings potential gives people enough lift. and debt areities returning to fundamentals, what is going on with fx? with geopolitical risk gets expressed. foreign-exchange traders have taken a step back. that is where the volatility has been up. the fx markets will go back to .ricing the fx markets will go back to pricing, more of the reality of geopolitical situations. alix: the equity market is forward-looking, so the reality is that we could anticipate a good earnings season, and bank of america, mutual fund survey they will see profit growth in the next 12 months. what are you hearing about that? comes to where

investors are at, they are trying to work out whether the trade side is a real risk. is that the sort of thing they should be pricing into the market or not? in february and march, people were very anxious about it. the earnings potential, potential profits, were too far be concerned to about trading on a day-to-day basis. the scary headlines put out there about china-u.s. trade tensions, that is what people were trading off. alix: what you have to look at has to do with -- you have different speakers today. i wanted to highlight something john williams said yesterday, the incoming new york fed chair. he said if you look at the and 2020, my own forecast, inflation is just about 2% -- is just above 2%,

just a little bit. it is not surprising to have interest rates above the long run mutual rates. it is a striking statement. what did you make of it? hard time with a lot of what was said yesterday, especially with the yield curve, saying this is a really bad thing. this very much signals a recession. alix: he said not yet. isce: all the while he saying that, the yield curve is flattening even further. i am not sure of what he is looking at. he prides himself on not having a screen on his desk. and not really understanding the markets well. his forecast aside, keeping in mind the fed forecast is terrible. i am not really sure where it goes. david: talk more about inverting the yield curve. actuallyout that we

set a record for the yield curve not being inverted. this goes back to 1980. we have a very long rent. you can see the white triangle there, the length of the trend. we are in abnormal times in terms of there being a yield curve at all. that has a slope to it. rachel: that is a good point. when we see john williams talking about the inversion of the yield cut, you need to put that in context. is more and more of a possibility that we could see that inversion in the yield cut. when you look at it in historic context, it could be a tipping point. it can be seen as the point where you start to see recessionary fears come through. that is what the stock market was looking at in the early part of the year. -- the bond market is wondering if that could be the

case, that could be interesting to watch. david: mr. williams is about to take over the new york fed, and influential position. you mentioned he does not take -- he does not pay a lot of attention to the markets. he is background -- his background is macroeconomics. vince: he is book smart. he has done a lot of the writing in theories. he is powell's pick. my sources tell me that mr. powell says chat amongst want,lves, decide who you but i want williams. and here he is. it is perhaps more what mr. powell sees as the more day-to-day businesslike approach to the fed. maybe together they will figure it out. alix: maybe together they will figure it out. thank you guys. coming up, inflation moderation in the u k and the eurozone.

more on those inflation numbers in the boe next. s&p shooting higher after the morgan stanley earnings, a nice boost there, as we see morgan stanley holding gains at 1.8 percent. in the currency market, the stronger dollar story in some currencies like the pound, down .5%. this is bloomberg. ♪

alix: inflation in the u.k. falling more than expected, the slowest in the year, for the month of march. down by gilts are now four basis points as investors jump in and buy in. what happens with the boe when they boost rates this month? jamie murray joins me from

london. is the down trend in inflation sustainable, or was this an idiosyncratic month? the big picture is that inflation is coming down in the u.k., and that is the effect as speedsg depreciation through. this month in particular, there is some idiosyncratic stuff happening. the weather has been dreadful in march, and all of the shops are full of the wrong clothing. this has led to discounts that otherwise would not have happened. my guess is that you will see a rebound. you will see that in the european data more broadly. alix: what is interesting is how the european market rerate it expectations. expectations. it shows the end rate for 2018. the yellow line is at one more basis point. the purple line indicates a rate of 1%.

it indicates a divergence after they moved in tandem for a couple of months. is that the correct response? my feeling is that the bank of england is looking at the unemployment data most, and then wages. uncertaintyot of about the influence of sterling. you need to look at the labor market. time: every month we spent looking at what mr. carney says about inflation. again, the inflation data is lower than expected. the bank had 3.8% in their forecast. it came in at 2.5%. it ought to be lower, before regions that -- but for reasons that are likely to be temporary, on the wages side, there is not much. there is not an enormous amount of progress.

what the bank of england is worried about is that unemployment is so low by historical comparison, it is hard to imagine there will not be price pressure around the corner. alix: thank you for joining us. my question is, you have mario draghi x week with the ecb meeting. does this give them cover? germany has pressure to raise wages. it should return a little bit of inflation to the marketplace, i would think. alix: which brings us to bifurcated inflation. much more coming up. president trump and shinzo abe hold their second day of bilateral meetings. we will discuss. ♪ retail.

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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. alix: this is bloomberg daybreak: america. why risks are receding and morgan stanley killed it in the first quarter warning's report with their revenue highest since

2007. european markets not having the same kind of juice. is a currency story. cable falling after inflation slowed, the lowest in months. other asset classes, you can see the damage being done, down .5%. biggest buying coming in the front end, yields coming down four basis points. u.s., it is selling a little bit on the margin, yields moving higher by one basis point, but the two-year spreadt -- the two-year from treasury to bond -- we have not seen the kind of spreading quite a while. asset classes, nymex crude up 1.3% as opec seems committed to keeping a deal with russia in place. you are getting some nice upside

as risk recedes. david: we want to get an update on what is going on outside the business world. trump has confirmed that cia director mike pompeo made a secret trip to north korea to meet kim jong-un. they met to discuss a possible summit between the two leaders. the focus would be on north korea nuclear weapons program. he tweeted that denuclearization would be a great thing for the world and north korea. investigators have found theence of metal fatigue in engine that exploded on a southwest airline jet. one passenger was killed. in-flight fatality in southwest history. it was flying from new york to dallas and made an emergency landing in philadelphia. former first lady barbara bush has died at 92. she was the wife of one president and the mother of another. over the weekend, a spokesperson said she was not in good health

and decided not to seek medical treatment any longer. former president george w. bush said his mother kept us laughing until the end. global news to four hours a day, on the air and on twitter, powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. and presidentabe trump their two days of meetings late yesterday and already it looks like the japanese leader will not get one thing he wanted, the u.s. coming back into the trans-pacific partnership. last night the president tweeted, "while japan would like i do note back to tpp, like the deal for the united states. too many contingencies and no way to get out if it does not work. bilateral deals are far more efficient, profitable, and better for our workers. look how bad wto is for the united states." thank you for joining us.

how big a setback is this for shinzo abe? there is flip-flopping going on there. there were hopes that america weld join the club, that were going to get progress on multilateral agreements. now it is back to bilateral negotiations. for all intents and purposes, that is not good news for prime .inister abe japan is taking leadership to get the trans-pacific partnership group without the united states moving forward, and i think progress will be made. david: it is not the sort of thing that president trump cares about, which is the trade deficit between the united states and japan. alix has put up a chart that shows -- the yellow bar shows japan'sour -- how big trade surplus is versus the united states.

on the yellow bars, that is to how can thatits -- be addressed between the united states and japan? >> it is very simple and straightforward. bilateral of the trade deficit his car and car parts. will you get japanese companies to build more factories in the united states rather than exporting and shipping to america, producing in the united states? that would be the most effective way to address the bilateral deficit. about the president talks a free-trade agreement with japan. that is what he really wants. is that what is required to a dress the car situation you just described? in my opinion that will not move very much. also, quite frankly, on the entire trade front, it is not about cars.

really the future of asia depends on intellectual property . what are the rules of intellectual property protection ? that is what the whole battle of the -- the whole battle with the people's republic of china is agreement a bilateral will not address that. we need multilateral agreements, and most importantly, american leadership, to enforce those rules. david: does that mean that prime minister abe will become an ally trump, involving intellectual properties with china? >> you are putting your finger exactly on the pulse. there is all this rhetoric about deficits, but the underlying issue is china is emerging. china wants to be a leader on intellectual property, wants to be a leader on high technology. the question is, japan and the united states, together with

korea, setting the rules for intellectual property protection, that is what matters at the end. thing thather matters particularly in japan and for the markets is the status of prime minister abe. he has been under some siege with the scandal in tokyo. another thing that has come out of these meetings at mar-a-lago is president trump toss commitment -- president trump's commitment to raise the issue of the people abducted from japan in north korea. how does the president raise that? very important. the relationship between prime minister abe and president trump is a good one. they are playing golf together. they have met several times and they get along very well. here in japan, even though on the global stage it is a minor issue, the abductee problem is a

very big deal. if president trump can help prime minister a out, make progress not just on denuclearization of north korea but also on the abductees, that would be five to 10 points on prime minister abe's approval rating. alix: i want to talk about how you translate all of that into investment when it comes to japan. typically it is about buying treasuries, but the last few months we have seen active sailing of u.s. treasuries, and rotation. the white line is the yield for the 10-year if you factor in dollar hedging. the blue line -- the yellow line is japan's 20-year bond yields. how are you positioning? focus, numbery one, is on japanese domestic stocks, particularly small and medium-sized companies. japanese small caps are the is

beneficiary of what is going on in the domestic economy, which is the revival of activity, revival of wage growth, and revival of profitability of the domestic small and medium-sized sector there. when the i expect federal reserve increases rates more, you will get the big guys in japan -- life insurance out,nies -- moving back capturing the yield spread, and i think the dollar will be a stronger currency. weaker yenu see a and you like japanese equities. jesper: exactly. simply, i think that is the answer. you have a domestic economic revival that is going on. you want to capture that with small-cap exposure. over and above that, the practical plays is that the

exporters will get a good tale win because the global economy is doing fine. the yen has strengthened too much, the dollar has weakened too much. that is where the bang for your buck is going to be. david: that is just a cold from wisdom trait -- that is jesper koll from wizz been tree. is in berlin.ler matt? matt: thanks for a much, david and alix. let me first ask you about the meeting coming up in jeddah in a couple of days, the meeting with opec and non-opec partners. or notstion is whether production cuts will remain in place through the end of 2018 and possibly go into the future.

what would the united arab emirates like to see? >> it is an important meeting, and this is the joint ministerial meeting, a committee chaired by his excellency from saudi arabia. the importance of this meeting is to tell the market what is , from theance levels different countries. as a committee, i would say they are very serious when someone is not complying. they will even call ministers to come in when countries are not complying. the second part of the meeting, opec'sll report as well view of how much this deal has contributed to balancing the market, how much of the

oversupply is still there. in the one sense, how much of this job has been complete and what is remaining. prioreeting is happening to the june meeting for opec and non-opec, and we have the conference this year, so there .ill be a big crowd we are expecting it to be grand with more countries coming. hopefully we can get more countries to join this group of opec and non-opec. we are not discussing the deal. the deal is for the full year. we think it is needed for the full year. matt: the deal has worked out quite well. wti is approaching 68. everyone is complying fairly well.

the some economies, like economy in venezuela, has collapsed. it is possible president trump will take the waivers out of iran and reduce their contribution. with the opec members feel in the gaps if that happens? i think that is what will be discussed when all of the ministers meet. complying, i think. whenever we have a market that is oversupplied, we need to focus on finishing the job first. then work to do after that, that would require a meeting with everyone. but history tells us that opec as a group has been resilient in meeting its contribution to the supply side of the demand of the world. so hopefully, we will be building more capacity with some of the countries that are

already and barking have finished most of the work on building additional capacity. , withvide that buffer additional supply when it is needed. it is building the capacity to $3.5 million. the weight is spending as well in that capacity. so historically, the arabian gulf states have all been there when they are needed to step in. but we need first to balance the market. that is what we have in front of us today. are talkingnalysts about an overbalanced market at this point. when you look at the crude oil chart over the last 12 years, you see a series of peaks that have collapsed.

at what point do you start to feel uncomfortable at about oil prices? is it $80, $90? at what point do you start to worry? suhail: what worries all of us during 2015of -- -2016, if you look at the level of investment that was not invested that was meant to be invested, you are looking at 25% to 30% reduction in each one of those years. you come up with a staggering number of an investment that was supposed to come to the market. that the sharend do notction came, but i think shale oil production can substitute the world demand increase that we have seen. plus, there was a natural about 4which adds million to 5 million every year.

so there is a gap if we do not invest. we have seen some investments come into the market, but i can tell you my biggest worry is investments, that if we did not have, we would definitely have a problem. matt: thank you very much, your excellency. we appreciate your time. alix: thank you so much, bloomberg's matt miller. that wallhree things street is talking about this morning. first up, a jet engine explosion as metal fatigue is discovered on a southwest flight that killed one and left others injured. and bill ackman goes after longtime rival carl icahn. a --ly, as tensions ran up tensions ramp up, sit down.

david: we want to start with those three words you never want to hear -- jet engine explodes. a woman was killed. there are real ramifications for the airline industry, for the manufacturer of the engine, boeing. aware of any issues with the airplane, any issues with the engine involved. the airplane was delivered in july of 2000, and the last date that it was inspected was april 15. obviously there will be an extensive investigation by ntsb. inre was an initial reaction stock with southwest and boeing. what does this mean for the industry, for people who manufacture airplane engines? was manufactured between ge and a french company.

if you look premarket this morning, southwest is recovering some of that. the ntsb will do a thorough investigation, but there apparently was some metal fatigue. so the constant bending and flexing back-and-forth of the engine caused it to get distressed, and that may have led to this. just this morning, southwest has said they will be ultrasound in all of their engines. david: those engines appear in a lot of aircraft that are not southwest. >> it is a very common part. it is the first death caused in a u.s. registered airline in almost nine years. as you say, a very tragic story, horrifying, the details. this lady was sort of sucked out of the window at 30,000 feet, and other passengers pulled her back in, but she passed away. alix: literally all we were

talking about this morning was this. a fear of flying, how you deal with that. for herou feel terrible family and the other people who were injured, but also when you get on an airplane, you say, who made this engine? could it apply to me? it was inspected just in april. and this isntly, obviously something that was not found. what they have not said yet is whether or not there was something wrong in the engine that they could not identify. alix: the other story we are watching is bill icon -- bill ackman versus carl icahn. ackman on bill tuesday was asked a question during a fireside chat about newell and carl icahn investing in the company. ll -- hey newe

said, "they made a deal with the devil. actually, i meant that -- ackman has been out of the headlines lately. he said i will be speaking less publicly, not out there waving my flag. he has gone back on that, it seems. he came out and slammed carl icahn. david: it brings a whole new meaning to proxy war. ackman does not have a dog in this fight. without fighting. >> he is saying it is a terrible deal, not what he would want. it is fascinating. he has no dog in the fight.

he is just a spectator, but his staras a spectator is that wars probably has a better slate here than icahn. alix: the other story has to do with blankfein having a wonderful meeting. this has to be my favorite story. mr. blankfein is sitting down for lunch, talking about the how it encompassed both firms and how they go forward. >> they both stood their ground, by the sound of it. this is one of these gifts that keeps giving. yet than 300 of market cap, it seems to involve some of the biggest companies on wall street. so blackstone did this very smart, with slightly questionable trade, where they defaulted on some of its bonds, but they held the cds. they were refinancing. goldman, on the other side of

some of those contracts, are unhappy understandably because they are on the hook for a lot of money. apparently this was something discussed at the lunch between john gray and lloyd. familiar with the matter said blackstone has pulled back, doing some business with goldman. interesting thing to me, economists from bloomberg got together because this was the incoming head, and lloyd blankfein -- there was this nice lunch together, but it came up, which is what happens when you are leading off. you do not think this is where you want to fight a battle, that you get dragged into it. >> it is a tiny company, but it has become a proxy for a much bigger thing. there is that line where it is not very nice. david: thanks so much for being here. bloomberg's ed hammond. up, regulators are wrapping

-- are ramping up. alix: and check out tv . direct they. us go to tv on your terminal. pick up the chart. this is bloomberg. ♪

david: this is what i am watching. it is the fcc and china, which normally you would not put together. there is increasing tension between the united states and china between -- over intellectual property and tech. huawei from doing business in the united states. that would really shut down hua

wei's ambitions to compete with cell phone business in the united states. billion worth6.5 of their equipment now. isn to 20%, but still that $46.5 billion. china might say, no more apple iphones. sc, the smaller 1 -- they had that because they wanted to sell the smaller phone in china. that is where they want to see their revenue growth, at the saturation point, not seeing the turnover, the replacement cycle theythey sought -- that thought. so here is a dumb question. how can they do this? david: the claim is there is a national security issue because the are worried about chinese getting into our

technology too much. it goes back to hacking. i do not know enough to be able to evaluate that. that techderstand battle, but isn't more of a sin national -- more of a national security issue in things like car parts? that seems more dangerous than a phone. david: phones have gotten so sophisticated. there is so much memory in our phones. really interesting conversation, interesting how that plays out. as we head to break, morgan stanley holding on those gains, up 3% after a great quarter across the board. strong.revenue very more next. this is bloomberg. ♪ this wi-fi is fast.

i know! i know! i know! i know! when did brian move back in? brian's back? he doesn't get my room. he's only going to be here for like a week. like a month, tops. oh boy. wi-fi fast enough for the whole family is

simple, easy, awesome. in many cultures, young men would stay with their families until their 40's. alix: magic morgan. morgan stanley crushes estimates.

equity trading revenue all sore. putting on the rakes. inflation slows in the u.k. and eurozone, questioning the strength of the global recovery. and john williams says inflation can overshoot the 2% target and he worries about the inversion of the yield curve. david: we look down towards pennsylvania and the capital, the flag is that half-staff because of the passing of barbara bush, the former first lady. welcome to "bloomberg daybreak." i am david westin alongside alix steel. geopolitics, you highlighted even before this came out. morgan stanley is able to hold onto the premarket gains unlike goldman sachs and other banks. the euro-dollar is modestly stronger. the real story is in the gilt market, particularly in the

short end of the curve in the u.k.. basis points, strong buying coming in as the market rolls back the second hike expectation this year. may seems to be in play. but it seems to be a one and done after that inflation data. commodities jumping across the board. aluminum seeing the biggest jump so far since -- two years, rising over 5%. dragging copper of with it. thank you, sanctions. this is developing into a bigger story. companies that are unrelated who may not be able to produce aluminum, because they may not have enough alumina. david: a very big issue. i'm not sure that was the intention. alix: maybe they talked about that in the white house? maybe. at 2:00 today eastern time, the united states federal reserve

releases the beige book. after the bell, american express releases the third-quarter earnings and this evening, trump and prime minister abe hold a meeting. with kailey leinz is here the first word news. confirmed thats mike pompeo made a secret trip to north korea to meet kim jong-un. they met to discuss a possible summit tween the two leaders with the focus on the north korean nuclear weapon program. the president tweeted that denuclearization would he a great thing for the world. investigators have found evidence of metal fatigue in the southwest engine jet. the boeing 730 seven was flying from new york to dallas but made an emergency landing in philadelphia. barbara bush has died.

she was 92 years old and the wife of one president and the mother of another. over the weekend, a family spokesperson said she was in failing health and decided not to take medical treatment any longer. she kept usush said " laughing until the end. " global news, 24 hours a day. powered by our more than 2700 journalists and analysts, in more than 120 countries. i am kailey leinz, this is bloomberg. morgan stanley out with the first quarter earnings, blowing past estimates. trading up 19%. investment banking up at -- up as well. story for a jpmorgan and citibank who didn't have the great result. joining us now is alison williams and from boston, david donabedian.

allison: i think they are more focused on the is this. a have a higher share of 20% from revenue from equity. the other banks have a much more diversified business bank. and morgan stanley is the absolute leader in that business so it looks like they are getting shares to the extent that bigger banks are gaining share and it continues to be a big business. it benefits morgan stanley more than others. is thatthe other thing as we look where some of the weaknesses were in other banks, wells fargo, a have a unique situation there because the stock has underperformed without -- underperformed throughout results. citibank, the card business, some weakness there. and morgan stanley was actually outperforming coming into today and leading the stock. david: what does it say about

james gorman's strategy? by going with wealth management and building the business up but at the same time he cut back in the staff and trading. yet they come in trading and they have the wealth management at the same time? alison: the diversified model is working for them. it is a strong, seasonal quarter. trading has been a great business for the wealth management business. i think that is something investors like to see. they want to see a recurring revenue, something less dependent on transactions. skew do have a stronger towards that business but we are executing across the business line. so it is a story of mixture and theyting in the businesses are in. alix: do you like banks? david d.: we are positive on banks and in general. nothing is ever perfect.

everyone would have liked to have seen more organic loan growth but when you look at data quality and the return on capital and the underlining profitability with the backdrop of the more positive tax and regulatory environment, we are overweight in the financial sector. david: what does it tell us about the economy, generally? you can't get the economy going if you don't have the strong space. but now they have a fair amount of money and capital to deploy dave:. dave:that is one of the things that ishave -- dave: what is the things that we have strong economic strategy. the industrial economy and the industrial economy are doing well now. we seem to be in the early stages of an uptick in the bank lending i was talking about. so it supports the notion that we have a strong and sustainable

economic expansion. our view is that this year will end up being better on the economic growth front even than the consensus. bloomberg consensus is 2.8% for real gdp growth. we think that will be exceeded. the best year of growth since 2005. alix: what if the next catalyst for banks? it was buybacks and deregulation? alison: c car is the annual stress testing process for the banks. how the capital holds up and improve the capital plans which includes dividends and buybacks. we have u.s. proposals that came out in april and will affect this cycle but could provide optimism towards the next cycle. the other specific catalyst is that we have a wells fargo investor day coming up. that will be important for both cargo because they will set the -- important for

wells fargo because they will set the expectation. said the current range is reasonable. citigroup reaffirmed the $20 billion target. thing point last year and investors may be thinking, what is the tipping point this year? where do we get the upside? david: how concerned should we be that we don't have more loan growth than we do now? if everything is going as well as you say and the banks don't have to worry as much about managing risk, why do we see lower loan growth? of a it is a bit conundrum. some companies have turned to the bond market where it has been relatively easy and efficient. generatinghave been tremendous cash flow so there has been more self financing. and there has been as long of an economic expansion as we have

had, it you reserve economic investment capital decisions by many companies. so that is the thing i am looking at. if we see a pickup in capital spending activity, you will see that feed into a pickup in loan growth. alison: and i think we are seeing an improvement in loan growth. america, and back with the weekly data from the fed, it seems like stabilizing is improving. demand -- normally there is caution with the optimism but banks say they see optimism on the consumer and commercial side. pipelines look good. it bodes well for any outlook. and davidon williams donabedian, you will be sticking with us. different scenario for the global synchronized growth recovery, next?

and a conversation coming up with the south african president. this is bloomberg. ♪ . this is bloomberg. ♪

kailey: this is bloomberg daybreak. tesla will begin round-the-clock production of the model 3. elon musk told employees that the electric carmaker will try to build 6000 sedans a week by the end of june. tesla needs revenue from delivering more cards to customers after spending billions to increase manufacturing capacity.

in germany, prosecutors have facilities.sche regarding and omissions scandal. -- regarding the emissions scandal. leaders,ny biggest including carl icahn, are also read calls on shareholders to block the fuji deal. and that is the bloomberg business flash. alix: the global synchronized growth narrative is showing signs of weakness. revising lower and inflation is decelerating in the u.k.. i should say up less in the u.k. as well. in the u.s. we have a slew of fed speak this week and the question is, is the fed close to achieving the target? for the u.s.k economy is positive.

the economy is on course to be a strong as we have seen and many decades and inflation moves into the 2% target. the challenge is for monetary policy to keep it that way. this is never an easy task but we are well-positioned to achieve our goals and to handle unexpected twists and turns ahead. alix: with us is david donabedian. in -- where interns are we in terms of fed talks? dave: when they look at the domestic economy, i think they mostly see strength. the other thing they see is the long for stats it -- the long forecasted pick up. it is an forecasted anymore, it is actually happening. if you look at the average hourly earnings and the deflator, they all have accelerated. i wouldn't call it a 1970's

style price spiral but they have begun ticking higher. and that is why the language from the powell fed has been more hawkish and we think that will translate into three more rate hikes this year. alix: does this wind up being the peak? waste at yesterday said it less reason to act like it was m ourning then happy. -- ask like morning in america than happy hour in america. dave: there is no question based on the way the tax bill ended up being written that the tax stimulus was loaded into the front of this year and into 2019, so that would be consistent with that argument. on earnings growth we know that

the peak is likely to be the third quarter of this year. i think as we move forward through the summer here, the market is going to have to grapple with the fact that earnings are terrific in 2018 and we knew that, what about 2019? right now the consensus is a 10% increase in operating earnings in 2019. it would be well received by the market. but it is relatively early to know about 2019. we are not in the camp that says earnings will be great in 2018 so we have a big year in the equity market. i think we see here that good earnings have been a comforting or thein recent days market, after a volatile macro driven first quarter. but good warnings are largely baked in the cake. david donabedian, great to have you here today. here from atlantic trust. this is bloomberg. ♪ . this is bloomberg. ♪

david: opec and to non-opec ministers will be meeting tomorrow in saudi arabia to keep the global oil glut from returning. earlier matt miller spoke with the uae energy minister ahead of the meeting. hopefully, we can attract more countries to join this group of opec and non-opec. indeed, it it is for a full gear and it has already been decided the --re not discussing for the full year. david: joining us now is francisco blanch.

if you listen to the energy minister, he was very confident saying that demand is going up and shale is going up. do you agree? francisco: for the next 3-6 months, i agree. longer-term you have to have a better plan. but shale is hitting modeling's. midland prices falling off sharply. the same thing happened in western canada. so clearly there is a bit of a slowdown in domestic supply, coming up. but you can't expect that to go on forever. david: you have taught me about this. is happening to shale? there are things called pipelines. and where the bottlenecks are -- as much as nine dollars. it has been worse but going into the back end of this year, here is the thing i don't understand

about opec. we are tight. thato they make the case they need to extend the cuts when the market is looking tight? francisco: you have to go back to the leader of the cartel. saudi arabia. they have a big fiscal hole. $300 billion in fx reserves and that is roughly the government budget gap for the last three years. around $85 as are barrel to keep the government in balance. so they need and want more money. so i'm not surprised the saudi's want it. but the rest of the country have ofusted to a lower budget $60 a barrel. so the rest of the countries may not want to have a higher price. and then what has changed recently is russia. toy have a strong incentive

get back market share starting next year. the problem is, now the ruble off.-- ruble has come and they have to get closer to the saudi's and the rest of the cartel. which is partly why things are starting to move higher from here. and we will begin to see $80 a barrel this quarter partly fueled by the closer correlation. alix: take a look at the short-term spread. for white prices it is wti. you can see how brent continues to outperform. it is reflecting the bottleneck issues. this quarter and to be sustained and? or is this a short-term phenomenon? francisco: i don't see us $80ting -- us sustaining

all season. the peak is the fourth of july. and every american will be on vacation in july and august which will push up the price of gasoline. beyond that, we see a rollback. we may go back to $70-70 five dollars on brent. it really depends on how the global growth momentum gets sustained through the rest of the year. david: if the bottleneck situation is driving the spread, if that's true, why doesn't that get corrected? in a different administration there were regularly restrictions on pipelines but one of the things that trump said is that they would be able to build pipelines. francisco: it will come eventually.

it takes time to build this stuff. cannot drive past 30 miles per hour on that road. david: is that five years? 10 years? ofncisco: 18 months widespread and weaker markets to get that corrected. the u.s. is growing very fast. opec cut production but got lucky with venezuela closing on the back end of it. fallinga has been sharply since june and july of last year. shale has to make up for the opec cut and the venezuelan implosion. alix: let's go back to aluminum and the sanctions on russia. aluminum rallying the most today in years. coleman had a $300,000 price target on that. goldman sachs had a $3000

price target on that. francisco: we first had aluminum with tariffs and now we are taking 6% of supply out of the market. we are making it tight. the issue, domestically, we pay high aluminum prices. david: is this pure geopolitics? we keep hearing that trump and putin want to make an agreement so it could go away, like that. if a patch things up? francisco: i don't know. i am not in that discussion. david: but is that what is driving the price? it is definitely the sanctions on one of the world's largest aluminum players. 6% of supply in the case of oil would be bigger than iraq. it is a big player. alix: but there is a conversation that it is ok because we will redirect trade flows. why is that wrong? francisco: china is the world's

biggest aluminum producer already so they have been exporting aluminum for a while. alix: other countries? francisco: some countries might be able to take it. and if may alleviate part of the pressure but certainly, i think the risk to supply coming on the back of this are pretty meaningful. alix: francisco blanch will be sticking with us. and coming up, what banks are seeing in consumer lending and how it could be affecting american express learnings. also on debt, morgan stanley's earnings after a monster quarter. this is bloomberg. ♪ this is bloomberg. ♪

alix: this is "bloomberg daybreak." on-ish --eing a risk morgan stanley earnings were

great. futures are up by nine points. european stocks are wishy, washy. the story with the ftse 100 has to do with the cable rates, inflation rising less than expected. removing the potential possibility of a second rate hike in 2018. may is still looking like the target for the first rate hike. you see a selloff continue all across the curve in the front end of yields by four basis points in the gilt market. the spread between the two year yield in the u.s. and germany? 300 basis points. the whitest we have seen in years. nymex crude up 2%. david: an update now on what is making headlines outside business world. kailey: trump says a secret anding between mike pompeo

kim jong-un went smoothly. he traveled to north korea in advance of a possible summit tween the president and john kuhn. the focus is on the nuclear weapons program. trump says details are being worked out. vladimir putin is trying to dial down the tension with the u.s., according to people familiar with the matter. he wants to give trump another improvingmake good on ties and avoiding escalation. earlier this year, trump act away from imposing more sanctions on russia. u.s. taxpayers have been given another day to electronically file their tax returns. that is after a computer malfunction disrupted the irs website. the irs says the processing systems are online at the new deadline for filing is today. global news, 24 hours a day, powered by more than 2700

journalists and analysts in 120 countries. alix: thank you. a business area that global sack says it wants to continue to expand -- >> we are evaluating credit you have heard us say. we are looking at wealth management and retirement products and personal finance. and we look at the adjacencies among our various businesses as we put all these things out. alix: joining us now is sanjay sakhrani. smialek. us is jeanna potential for goldman sachs to come in and buy a credit card company? sanjay: it is certainly possible. there isn't a lot of sizable companies up for sale but if the

price is right, i think years are open for the companies that i follow. david: why would they want to? is that a good business now to invest in? quite a profitable business and there are not that many players. in many cases there are a number of key players in certain niche is and it is a profitable business and a good starting point to build a broader relationship with the consumer on. alix: how is revolving credit card growth? what kind of default rates are we seeing? and which is the strongest? so, it has been an interesting couple of years. you have seen rising credit costs. a lot of that is correlated with each other. havese as companies accelerated growth, they have seen higher provisions coming from the growth and from fallout in credit.

at in terms of loan growth is in the mid-single digits for the industry. some grow faster than that and some growth slower than that. but generally speaking, we are in a good place for loan growth and as far as credit is concerned, it has been an overhang but it does seem like we are on the other side of this where credit losses are abating and provision growth is coming down as well. alix: is the fed seeing the same thing? jeanna: one of the things the fed is paying attention to put the consumer is the fact that they are confident. retaila real pullback in sales and we have seen the consumer come back with confidence and they are spending again. prettyink it is a positive consumer story when you talk to the fed. and we don't see any kind of credit growth. they're not too concerned about

what we have seen up to this point. alix: when you look at competition, the competition between credit cards versus banks and alternative lenders -- what is the probability that alternative lenders will put pressure on banks, increasing deposit rate at and forcing ranks to compete for the deposits? it is interesting. one would argue that some of the banks themselves could compete against the model line companies that i follow. and i haven't seen a time of that because a lot of the rules that came in to during the recession made it tougher to re-consumers through a cycle. so what you are seeing is more rational competition on the yields. clearly someone could come in and compete on price. that is an area where there hasn't been a lot of competition but the risk would be what the

returns would be in a down cycle. the concern among investors is that we are closer to the end of the cycle than the beginning. sanjay sakhrani, thank you very much. all that winds up on what they andk of the growth inflation. john williams spoke yesterday. john: the outlook for the u.s. economy is very positive. economy is on course to be as strong as we have seen in many decades and inflation moves into the 2% target. is for monetary policy to keep it that way. and this is never an easy task but we are well-positioned to achieve our goals and respond to unexpected twist and turns that may lie ahead. alix: jeanna smialek is still with us. what did we learn from the fed speakers yesterday? .eanna: we learned quite a lot what we heard from john williams

is that he is confident the fed will hike above the neutral rate , which is a pretty big deal. we heard from john williams was a clear explanation of why they are thinking that. the idea is that they want to slow down the economy but not too dramatically. inflation hitting 2% in the next few months and staying there and overshooting slightly but he isn't concerned about the upside overshoot because he thinks it is a good thing and something you would expect. alix: what does it mean for gold? , not only higher overnight interest rates, but also a wider spread. and that means the market is getting pretty tight. we think part of that is driven by the compression in the fed balance sheet. so the tightening on higher interest rates and production in the fed balance sheet is one of the forces driving up volatility

and prices. interestingly enough, we see a strong relationship between tighter policy and the end goal. the -- we some of haven't seen yet will get higher because when the market gets tight, after many years of the zero interest rate, there will be problems under the hood. and when they pop up, it may change course a little bit and it is good for gold. exercise,ed tapering not as aggressive as they andially anticipated, excess of $1 trillion, we could see a rally in old prices. so we are constructing gold looking past into what could be the next slowdown in the economy. david: the imf and the world bank are having meetings this week. they are off with the gold financial security report. not to be too concerned too soon but a natural vulnerabilities

have accumulated during years of extremely low rates and it could make the year ahead bumpy and put growth at risk. they say in their report that the valuations are stretched, particularly risky assets. making decisions that may not be too prudent and it may hurt growth. jeanna: absolutely. they say that investors are not paying enough attention to inflation. it wasn't priced into the market. they say that prices are frosty and they are looking at stock prices which are high relative to fundamentals particularly in the u.s. francisco: i agree with the idea behind the report. will be talked to managers we see them focused on a growth asset but now they tilt into inflation with nothing on the defensive front. so looking at the asset it is really about growth and a little bit about inflation.

it is really the defensive bucket where we still see some rotation. david: i am interested in how to put that together. but it at record levels hasn't had the dramatic ramp up that you happy for a crisis. from theve this report imf. are we in danger because it is going up gradually of missing the crisis before it arrives? jeanna: when of the reasons the about not as concerned the growth in consumer credit is because we don't see the activities on the banking side of things that we saw on the run-up to the financial crisis. the savings rate is low, credit has been growing. we have seen that with subprime auto lending but we haven't seen the same kind of subprime mortgage activity. we haven't seen leverage behind the mortgage lending. so i think they feel that some of the riskier activities happen in the financial sector with the

financial crisis has been happening because regulation has dealt with a lot of it. alix: in the report, they say you could see a repricing of risk premiums and risky assets. what does that mean for commodities? if you have a repricing of risky assets, it could be bad for a commodity like oil? francisco: in some sense i think we go back to the mid to thousands when growth was strong 0's when growth00 was strong. but with almost a decade of a 0% interest is not easy. some of the gaps are not visible but as rates creep higher and if john williams is right with interest rates well above the equilibrium rate, we could wind up. i can't imagine that everyone will be able to pay back their

loans, given what has been going on around the world and also in the u.s. for the last 10 years. david: francisco blanch and jeanna smialek, thank you for being with us. coming up, part of my can'tsation -- if you watch tv, turn on the radio and listen to tom keene and jonathan ferro trump 7:00-9:00. "bloomberg surveillance" can be heard on sirius xm radio. this is bloomberg. ♪

kailey: this is "bloomberg

daybreak." the lit packard enterprise green room. coming up later today, alan greenspan, former federal reserve chairman. -- i am in the enterprise theard -- i'm in hewlett-packard enterprise green room. coming up later today, alan greenspan, former federal reserve chairman. david took that and went broader with it about the various giants of industry has been able to work with. i think about my last 30 years in the business and it sort of is like what you want for your children. you are who you hang out with. and it really helps define you. the narratives you here and the questions you here. i look back over the last 30 years and 15 years and listening

to why jack didn't want to do an acquisition or what we need to do with cable. bob wright, one of the most successful guys running nbc, the newhouse family, bob miron, a genius. and john malone. when i think about where people should be spending their time, yes, you would like to get the right job. yes, you would like to think you will make money, but i took a from a cut to go to nbc law firm. because maybe someday i was going to get to meet jack. a lot of the way i see the world, i still talk to jack all the time. i hear jack's voice. i'm hearing bob miron's voice .nd john's voice i one of the luckiest guys. david: it strikes me that you are now running discovery.

president of the united states probably wouldn't object to. i understand he is a fan of shark week. you helped to create msnbc. a verys a channel in different place. what do you think about the media landscape in the united states? because it has become much more polarized. : when we launched msnbc, there was a group of us who said that we would launch the best news network in america and we will use the number one division in the world to do it. we had an amazing library and restructured a deal with microsoft to get them in and that was our ambition. i won't game out the other news networks but we have to be practical and recognize that, at least some of them, are following that model.

on one hand, you want to do the best journalism possible and on the other hand you want people to watch you for as long as possible. and part of how we, as human beings, determine our success is first place or third place and how many people love us and that is the journey. and luckily i am one of the guys who figured that out. david w.: that was part of my conversation with david zaslav. it was fascinating to hear what it was like working with jack welch and bob mirren. and also, passing the buck. saying that things will change but it is the other guys problem. david w.: he is happy not to have to worry about trump tweeting about him the way he does about jeff zuckerberg for cnn. alix: the question also becomes of where this ends up with disney and the consolidation and how the landsburg -- and how the

landscape will change in the next few years. david w.: a lot of the conversation was that. alix: the set looked really cool. david: you can watch the entire interview with david zaslav tonight at 9:30 p.m. in new york. morgan stanley's conference call is underway and after reporting record profits and revenue, we want to hear what they are talking about. taylor riggs is here. taylor: we are just getting to the cumin day now. hear from the ceo, james gorman. is that it was an importantly strong quarter. all business segments did well. he reiterated that on the call. three analysts say it was a great quarter with standup results relative to their peers.

with sales and trading, james gorman said that business traded especially well against a backdrop of heightened volatility and client activity. there has been a big focus on the investment and wealth management is this. he said it remained a solid quarter for them and it remains an attractive return. -- reiterated the same sentiment who said it was solid results despite softer asset prices. we will bring you more. the new south african president, cyril graham oppose a, is committed -- cyril oppose ramaphosa, is committed to fighting corruption. much for youro time. i was in south africa a month

ago and the optimism around your presidency is incredible. you talked as you were gdp economyfor a 3% this year. pres. ramaphosa: we certainly wanted to happen. we will make every effort to make sure we get close to that. revisedeard the imf has the figures upwards and our treasury has also revised upwards and i'm hoping to revise mine upwards as well. so i think it is possible. what we need to do to make sure that we do reach higher levels is to create investment in our economy. and that is why i have decided i would like us to raise $100 million over the next five years with four investment envoys who go around the world to cultivate investment.

this cultivates in the investment conference i intend to hold at the end of the year where i will invite permitted investors to come and invest. so i am doing a build of investments leading up to the conference. so that should be able to lift growth and generate growth. some of the reforms we said we would embark on, we have already started the process of doing so. so it is increasing investor confidence, as well as investment. we should be able to generate growth. >> as they go around the world, what message will they be taking with them? what is the pitch? pres. ramaphosa: the pitch is, we are open for business. lead to south africa becoming more attractive than it

has been. depending on which sector you want to invest in, we will have investments to invest in. some will be incentives. others will be general incentives giving rise to a particular sector. is, we are serious and we are creating a good environment for investment to come into the country, and we incentives. ourwe will ensure that infrastructure stays in place and we remain a well infrastructure country, if you like, and we have a good regulatory framework. those things, a combination of all of them, it

will give people a good package and offering for them to invest in south africa. of the things that i'm sure the investors will look at is the level of the rand. up 20% since november. it was kind of telling because it coincides with your arrival. let's talk about whether you are comfortable with where it is now -- is that a reflection of international sentiment towards south africa being more positive? would you be more positive with , to make thed investment you are talking about easier to make? pres. ramaphosa: it is a double-edged sword. in that the rand, where it is now, reflect the level of confidence that the world has in south africa. because they can see that south africa is going somewhere. but for exporters, from our own country, the stronger rand is

not so positive for them because they bring in fewer. >> is it balanced now? pres. ramaphosa: it is near the balance. it is quite fair. but it is near the balance. it is a double-edged sword. >> one of the things that people will look at closely is the land.of expropriation of this is what we care about, time and time again, with south africa. where do you sit on it? is he going to happen? what does that indicate to investors who are thinking about south africa and the country's attitude about copyrights? you talk about institutions and the governing framework that exists. where does that say it in the story? i have justosa:

come out of a lunch with investors and potential investors. this needs to be looked at from a historical point of view, where land was taken from our people. and the amc, the governing party, was formed around the land issue. as our people were being dispossessed of land. of historical demand and objective. they came into power and as it came into power, it came about with the construct that would deal with the issue of the land in the constitution, in a constructive way for all. and 24 years later, it hasn't worked the way we intended it to work. so it requires that we go back to the drawing board and we are saying that we want all people of south africa to dissipate in

this process so it should never be a unilateral process. so we want a roundtable dialogue over the discussion of land, because we want the protection of property rights should not be to a few people only, like it has been in the past. it should be the protection of happy rights for all the people of south africa and, as we deal with the land question, we want to see it as a process through which we grow our economy. because our economy has been by which the land, a powerful resource, has been reserved for just a few. so we want to unlock the growth around the land and we should go back to the original demand of our people. the land must be shared. let us share the land and lastly, i want to say that they do everything we do on the land

question within the parameters power. thank you very much. , thewas cyril ramaphosa president of south africa. alix: thank you. it will be interesting but follow-up with opportunity. david w.: south africa has so much to offer. i thought that interview are presented well the two things of contention.- of we want investors to comment but we want land redistribution. we want justice. site two things don't naturally with each other. alix: how do you get foreign investors coming in but you protect the rights of those who live there? we spoke to -- of that as well. to correctou want the injustice but investors want

security and stability. they don't want changes all the time. alix: that does it for "bloomberg daybreak." morgan stanley is still front and center. fromng past estimates investment banking and trading, all banks holding up relatively well. take a look at equity futures, up by nine or 10 points in the market. ferro is up next with "bloomberg markets, the open." ♪ he open." ♪ jonathan: from new york city to argue is worldwide, i'm jonathan ferro. this is the countdown to the open. ♪

jonathan: coming up, morgan stanley wrapping up earnings season on wall street. the total ram geopolitics softening. mike pompeo visiting kim. u.k. inflation misses estimates. cpi revised lower. 30 minutes away from the opening bell come the story looks a little something like this with futures firmer throughout the morning. 31% on the s&p and the euro-dollar driving toward 124 at 12391. year and i can tell you the 2-year note in the last 24 hours as well. the bank earnings om