goldman sachs on deck. u.k. government fights to survive. parliament rejecting a brexit plan. theresa may faces a no-confidence vote. let the doves cry. fedral bankers reinforce a pause in an ecb committed to stimulus. avid: welcome to bloomberg daybreak. i am david westin with alix steel. theresa may resoundingly defeated yesterday and now she will have to go back in this morning for question time before they debate whether she gets to have her job. alix: that sounds fun for her. one of the best analysts notes i have is that it is so bad it is good. it is so terrible yesterday there is no way can be anything but good. david: with what markets seem to

they seem to be saying it will be fine. we wait for an hour before theresa may has the next confidence vote. .ank of america has numbers out some good, some softer. earnings revenue beating estimates. banking beating estimates. ficc down 15%. they were looking for a decrease of 4%. interestingly enough, you're looking at investment tanking fees drop. .here is a drop off again equity underwriting was higher. a mixed bag. the stock not beaten up in the last year. david: my job is to remind stands forhat ficc fixed income currency and commodities. the lesson here is you made money.

brian moynihan making money for the shareholders which counts in the end. joining us is alison williams and greenwood c i/o. -- ceo. alison: so far so good. we are only looking at the headline numbers. isould say ficc disappointing versus consensus but in line with expectations. equities are better. m&a week but we have seen that all year and we are talking about changes and strategies. costs for bank of america look like they are in line. overall revenue looks better. we will want to date into the margin. loan growth similar to what we saw last quarter. i would say so far so good.

a good report except for the trading number. at the same time i sat down with moynihan at the end of september. he said we started out the quarter well and it went south as the quarter went on. is this a surprise to you? >> not really given the results we have seen with citigroup and jpmorgan. it is a very strong number and a very difficult operating environment. look at the return on tangible common equities, over 16%. the strongesttely number early in this reporting season we have gone from a bank so far. alix: would you be buying right now? doter: in this market you not have to buy anything that pops. i do not think there is a chance stuff will run away from you. 4% but i feel% or

much more comfortable today with his holding that i did yesterday before the report. david: when it comes to bank of america weekend a look at how much they are lending. there a more traditional bank. alison: loan growth came in healthy and the net interest margin -- bank of america is more rate sensitive -- the net interest margin exceeding expectations. these are both signals of late cycle but it is good the cycle is carrying on. the provisions -- we will want to dig into see what is happening. across the three big lending banks in the u.s., citigroup is little bit different coming in better than expected. david: brian moynihan has said he is more concerned about the level of interest rates then the curve. if the interest rates go up he makes more money. he does not worry about the curve. alison: i want to correct myself.

jpmorgan's credit was worse than expected but it was provisions on singular stuff. bank of america very positive. with the rates, we do watch the yield curve but i think the fact that rates have gone from the low level gives back pricing power. the other thing we have been watching as the positive -- that is a much of the increase is getting passed on to the consumer. we are seeing left in the wealth business. we would expect to see that, but the core deposit pricing remain subdued and that is a positive. the average loans are driven by mortgage and credit cards. following on that, as we go through these calls, what are we going to be looking for in terms of forward guidance. what will you be keen in on? walter: definitely want to

understand the credit situation. a lot of focus on that market and the lending market. callnk from the jpmorgan you heard they were dismissive of weaker economic numbers. they felt the market had overreacted to slow down in the numbers and other variables. i want to see what brian has to say on the call about that and how the quarter progressed and what they are seeing early in 2019 from a business activity standpoint. one of the big factors that hit jpmorgan and wells fargo is the volume related side. you are making originations and servicing that business. if originations are lower, that hurts volume. bank of america has significantly reduced that business and jumped in reporting some of those numbers. healthy numbers is a positive. alix: what does this mean for goldman sachs? alison: not as pertinent to

goldman sachs except that ficc is down 13%. goldman and morgan stanley are more for that business so that is a negative for their earnings. equities are coming in at more modest gains. bank of america's number, a positive surprise this morning. is the number one thing we are watching. david: bank of america may not tell us much about goldman. what might it tell us about the economy? they are tuned into the broader u.s. economy. walter: i would agree with that. based on the numbers we are seeing i would have to say the conclusion is the economy is not as bad as the market is perceiving it to be or did in the fourth quarter of last year. we have seen weaker data recently. i want to understand how the quarter progressed and what they are seeing today in the economy.

there are a lot of other issues that we are dealing with outside of traditional economic variables as a relates to brexit. the government shutdown, etc.. david: alison williams will be back with us later. walter todd of greenwood capital will be staying with us. bank of america beat out earnings per share and beat on revenues. wasthing there were off trading on fixed income currency and commodities. it appears the markets are reacting positively. alix: another stock reacting positively is m&a wednesday. data will combine with pfizer, a $22 billion deal. tocomes out to our premium first data. first data is a payment solution company and fiserv is a financial services company.

basically banking in the cloud. service, a prepaid debit card kind of realm. it is going to adjust earnings by more than 20% in year one. is as wee question going to more electronic banking , are the traditional banks going to move into that aggressively or is it going to be more digital companies? alix: and more m&a in q1 is good for the pipeline. in the markets is wait and see when it comes to brexit. futures flat. down just 1/10 of 1%. is bad news good news? that is the question we will have to ask. buying across the curve -- selling across the curve, except

in italy. crude up high .8%. we could be a neck exporter -- a net exporter by 2020. theresa may facing her parliament once again with her weekly prime minister questions. u.k. global trade opportunities when it comes to brexit and faces questions on accepting a customs union with the eu. in a few minutes she should be debating the customs -- the no-confidence. watch it is painful to current one of the reasons they wanted to leave the eu's because they thought it would give better trade relations. alix: she is looking for brexit plan that can win partial support. let us listen in. the prime minister is very well aware we want there to be a customs union with the eu.

speak, finally bank of america earnings beat estimates. >> it is clear the house did not support this year but tonight's boat tells us nothing about what it debt -- tonight's vote tells us nothing about what it does support. nothing about how or even if it intends to honor the decision the british people took in a referendum. david: i do not get it. markets like certainty. she says we have no idea where we are going in the markets said we are good with that. ncent: the market saw this. everyone knew she was going to lose the vote. the market -- the margins were wider than expected. the markets are now thinking there be a compromise between the eu and the u.k.. i think that could not be farther from the truth. i think we are a lot closer to a hard brexit than we were before. that has not been priced in. and analyst said this was brexit that the chances for a referendum have increased. with a formering

boe member and he was saying he does it here to the camp that thinks this brings them closer to a deal. he was explaining the economic damage of brexit has become increasingly clear, whether it is the housing market or just in general, the economy out of london, that that is going to pressure representatives to come to some kind of agreement. brussels is saying we are not renegotiating anything or is it bringing us closer to calling it off? vincent: it brings us closer to kicking the can down the road. that is what i think brussels will do. as you can see from the vote, parliament is as far apart as possible and the eu has said, emmanuel macron said this is the deal. we are making no concessions. we have 27 eu members that have

to agree to make concessions. >> that is what theresa may was saying. you do not like it? what do you like? alix: the other top stories are central bankers. mario draghi saying a significant amount of stimulus still needed and then a central banks stock -- shocker here. ifher george said a -- esther george is looking dovish, there is a serious problem. >> the reason why you say that is esther george is the perennial hot on the -- the perennial hawk on the fed board. alix: we do not know yet know the effect of normalization. we have to see how it trickles down. it was not because of global issues. >> they are backing away. it is a pure poison. they do not want to hike anymore

. she is not blaming global issues, she is blaming domestic issues because that is their mandate. it is harder to a sell them for domestic uncertainty than international uncertainty. the fed is a u.s. bank, not a world central bank. david: whether it is mario draghi are esther george, are they reacting to markets, or are the two any different? vincent: i think the markets have over exaggerated the global economic situation. i think central bankers tend to react towards economics. they note the market reactions but they cannot react to the markets in general unless you see something like 2000 and --ht where paulson like 2008 like 2008 where paulson is on the floor. bankers lows being sucked into what we traders want them to do. traders think they follow their lead which is wrong.

i think the market thinks they dictated to the fed. david: what does it mean for the banks? that is the real question. earnings per beat on revenues. they fell short in their trade. you can see the market likes what they've seen from bank of america. there are up almost 4%. i was struck by her conversation with brian moynihan where he said they got to cautious. you saw that with the investment banking side. they did well in mortgage lending. other banks are actually showing declines year-over-year which raises the question how much are they trying to take on risk and is it paying off? is this edification. alix: the fees were lower.

is this a more competitive investment banking world when your budget for mra are lower -- four m&a are lower? vincent: my takeaway as a former is just a banquet for traders to make money. it is a wonderful opportunity. about thatked specifically. i said in volatility you're supposed to make more money. he said not all volatility is good. lisa: there is volatility but liquidity removal. vincent: there is less liquidity but volatility gives you an opportunity for better outcomes. going into the vote was stay away from sterling, do not touch it. the volumes that went through after the vote were enormous. traders i talked to said you could have done anything you wanted. it was ridiculous. all the people who said stay

away were dead wrong. alix: thank you very much. coming up, the u.k. at a crossroads. answering questions in parliament after her brexit plan is voted down. in less than an hour, the no-confidence vote -- the no-confidence debates begin. this is bloomberg. >> this house will give its verdict on the sheer incompetence of this government and pass the motion of no-confidence in the government. ♪

david: the british parliament gave prime minister may an answer on her brexit plan yesterday. a resounding no. >> it is clear the house does not support this deal. tonight vote tells us nothing about what it does support. how or even if it

intends to honor the decision the british people took in a referendum parliament decided to hold. i have now tabled a motion of no-confidence in this government. its verdictan give on the sheer incompetence of and pass thent motion of no-confidence in the government. david: we welcome g plus economics chief economic director. lana, let's start with you. do we know more today than we did yesterday. if we do not, why do the markets seem sanguine? lana: we know a little bit more. we know what parliament does not want. the u.k. parliament does not want a compromise deal. it does not want no deal. i do not think there is a majority for another election or for a second referendum.

what the happen now is parliament and the eu and the markets want to know is what the parliament does want. in this there is a hope that this is what will transpire. -- by monday night she has to come up with a plan b. parliamentaryg arithmetic of a minority government in a hung parliament mean she will probably have to b that is a plan similar to a plan a. something that will satisfy the tories interparty and the northern irish contingency. she will have to come up with something that means she goes back to brussels with a desire to renegotiate that backstop insurance that the u.k. will stay close to the eu. david: walter, turning to you.

she has been to brussels a few times already. it has not worked out. what if it is possible that will parliament once cannot be done? walter: i think i agree with what alex said earlier. the boat yesterday was so bad it was good. rather than negotiating the existing deal, it is a hard stop restart. i think it increases the likelihood of another referendum down the road. remember, only 52% of the population voted to leave in 2016. it is a very narrow majority. you can have a second referendum or have a norway style solution. not an expert, but it strikes me as a reasonable way to go that allows them access to the eu or vice versa but gets them out of the european union. alix: where does this leave the boe? lena: the bank of england is watching developments. it is quite likely the impasse over brexit, which will be

repeated with the plan b the prime minister will come up with -- we are not moving away from the standoff yet. business is already separated. there already pounds that have migrated to the eu. i think the next shoe to drop -- the bad news will start rolling. alix: thanks very much. walter todd of greenwood capital will be sticking with us. coming up, goldman sachs fourth-quarter earnings out in just minutes. this is bloomberg. ♪

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investment banking future performance looks good. nothing suggests a slowdown is imminent, helping to prop up equity markets. faang stocks in europe getting -- bank stocks finding support in europe. the cable rate is confused. aftert reaction yesterday theresa may lost that vote. 1.28. where that cap will be, uncertainty remains. giltar yield, sell story. does this mean the boe will not hike? are we moving to a deal? bad news is good news? mark carney will have more room? the curve is steeper, 18 basis points where we sit. 1%.e off 8/10's of waiting for goldman sachs. david: disappointing numbers

when it comes to trading, fixed income, currency, commodity trading. bank of america came out 45 minutes ago. they are not as reliant on trading as goldman is. the other issue. we are waiting to see what this will have an effect on. alix: you can see that when it comes to earnings downwards for the major banks. goldman sachs by far, since september, has seen the most downgrades. david: you have talked to them several times. they were struggling with commodities trading before. they made changes. they have other problems at the forefront. alix: walter todd joining us. what do you think of goldman? the big guys? walter: i think, to contrast them with bank of america, it is a more volatile business model,

more reliant on investment and trading versus traditional. we prefer bank of america to goldman sachs. morgan stanley is in between. david: we wait for the goldman sachs earnings. what are you expecting? >> good question. updates wehear any can. we don't think that they will put aside substantial provisions until they are closer to settlement. they could put aside some. they could stall capital returns to accrue capital ahead of that. from a fundamental standpoint, the bar is lowered. is the expectation or the hurdle. they have easier comparisons. before these numbers, people expected modest gain.

we will want to see that -- m&a is strong. that is a strong point for goldman. given that it is such a strong business for them, we want to hear what they are hearing in terms of client sentiment, from ceos, the pipelines are good, according to jp morgan. his goldman sachs seeing the same -- is goldman sachs seeing the same? alix: maybe there was a bad natural gas trade. you have -- you can make the case, are there other sectors you could say the same for or are they reflecting what we will see in earnings reports? walter: tricky question. if you believe we are not going to have recession early next year, cyclical sectors, thanks included, industrials, energy,

materials -- banks included -- look cheap. how much do you think growth will slow down? that is a tough question at this point in the year. david: how much is a feedback loop? even if fundamentals are not there, you can talk yourself into backing off or borrowing. lena: that is some of the commentary we have gotten -- alison: that is some of the commentary we have gotten. we have seen impact in terms of a slowdown in dealmaking, in underwriting. m&a is strong in close deals but the pipeline of those deals in terms of executing on the pipeline to get to fees -- could there be risk? alix: what did you make of that in relation to the dovish central bank speak yesterday after the noted hawk, saying we

do not see normalizing rates in general? contrast to what she said in october about rate increases. the fed is responding to the market. they are responding to data. look at the federal reserve surveys we have over the past several months. think about fedex in december. they saw significant slowdown in activity in europe. alix: hold on, walter. goldman sachs earnings are out. six dollars four cents a share. david: comparable. alix: i don't know if that will be comparable with the estimates. equity beat estimates. similar for bank of america at $1.6 billion, 1.9% above estimate. earnings, wow. $6.04 per share. we do not know if that is comparable.

we will wait for more data to trickle out. i will open up the press release to see if we can get more. david: i don't see fixed income trading. alison: scrolling through. alix: right? let's see. you're looking at $6.04 a share, big beat. atity, revenue coming in $1.6 billion. for the year, they saw double-digit revenue growth. apparently, record earnings-per-share, strongest roe since 2009. at 822umber coming in million. light. we were expecting that. lowas also sequentially third quarter, $1.3 billion in cyclical and now $822 million.

that, a disappointment. wes feels in line with what were expecting after bank of america. alison: we want to see where the big surprise will be. --estment banking revenue coming in better. not hugely. better butequities, in line. fees, that are. investing and lending, low expectations for that. -- fees, better. given the marks, given the asset slide, the credit spread widening, -- that is the line we will look to. david: earnings-per-share. is there something comparable that throws it off? we have seen things like legal release of reserves they have. alison: they had a big -- one

year ago they had a tax charge. david: i forgot that. alison: necessarily for this quarter. the other question is cost. they have shown strong cost control all year. underwriting was a miss at $315 million. at $528erwriting million. both of those below estimate. lowest level for fixed income trading revenue since 2008. alison: probably true for the industry as well. keep in mind. this is the weakest quarter. probably the least meaningful. it was a tough year. the decline, not a surprising.

-- not as surprising. david: you have been listening to this, walter. take a look at the ceos and the jobs. a new ceo it goldman sachs, david solomon, we will see his imprint. how different is situation compared to brian moynihan? brian, been there since 2010, done a good job of managing the firm. david is stepping in to a great quarter here but stepping into a situation with the legal matter. that.l see how he handles considerariable to looking at these companies is the tenure of the ceos and nonbusiness related issues they deal with. volatility cuts both ways. goldman has smart people that did a great job this quarter. alix: investing and lending

side, $1.91 billion. through yet?d read i don't think. it is a smaller part of that business line. if you look at tax provision, that may have been the area where we got the beat for the headline number. david: not quite apples to apples? core as investors may look at it. down, 12%on sequentially, 13% year-over-year. investing and lending line is interesting. marks ined significant that line given market action. were they able to sell off things and realize gains? we saw some activity. they had diversified overdone.

not made a lending push, just markets but across the firm. we will want to see what is happening on credit side. alix: if you are on the call, what is the biggest micro and macro questions? alison: micro, the legal. how are they thinking about that risk? capital? how will that accrue? the biggest macro question, probably what our clients thinking? it is early. other reasons to become optimistic? volatility is something we have been waiting for. we got bad volatility december. what is the outlook for capital markets? other reasons for optimism? pessimism? alix: good. lots of questions we hope to answer for the analyst call.

great to hang out with you. 3% remarket., over big beaton earnings -- on earnings. $6.04 a share. revenue stronger, over $8 billion. equity trading revenue up 18%. million, the$822 lowest growth they have had since 2009. more details as we go. investment and lending picking up. outside the business world now. first word news. >> the next hurdle for theresa may, a no-confidence vote in parliament that could oust her government, a day after she suffered a humiliating rejection of her brexit deal. the plan was defeated by 230 votes, the biggest loss for any

british government in modern history. she believes she will survive today. there is growing concern she will not be able to have the impact in time to avoid an economic catastrophe of a no deal brexit. less than 10 weeks to go. she is speaking in the house of commons. >> the exercise i indicated last night is about listening to views of the house, wanting to understand the views of parliamentarians, so we can identify what could command the support of this house and deliver on the referendum. >> in nairobi, security forces ended a deadly attack on an upscale office complex by suspected islamist militants. 14 people killed, along with all the attackers. al shabab is linked with al qaeda and vows to keep attacking kenya as long as it maintain soldiers in somalia.

alexandria will now take aim at wall street. she is almost certain to join the house financial services committee after fellow democrats voted her to the panel. she has called for the breakup to big banks. the new chairman is maxine waters. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. alix: thanks. bond guru jeff. hmmm? he says his breakfast costs 10% more, above the inflation rate. this is bloomberg. ♪

>> this is "bloomberg daybreak," and coming up in the next hour, the chairman and ceo of cisco systems. alix: we turn to wall street beat. first thing, selling in the cold. reversing the course on the incoming ceo. david: andrea. burned by stock trade. losing $80 million on derivative trades, as the man behind them takes a vacation. inflation asning teachers in l.a. go on strike. david: this is my favorite story. andrea.

alix: he can pronounce it. david: i have been involved in these switches. you do not give up your job until you know how much the other guy will pay you. he was owed deferred comp from ubs. oh by the way, this is the price tag. no! >> a headhunter for the industry said this is like amateur hour. alix: 101 jobs. >> 100%. it shows how deferred compensation can be golden handcuffs. he had to decide. $60 million on the table. if they were not willing to cover it, they have to figure out whether it would tell 200,000 employees, we will pay this guy up front without seeing what he has done. alix: --

david: he does not have a job. >> it is unclear. if he goes to a competitor, he will not. there are provisions about how they get deferred,. this -- deferred compensation. $60 million. i don't want to call it a struggle. alix: lawsuits on sanctions, by the way. david: he had a guarantee. they guaranteed that is tax rate would not be moved. i have never heard of that. going.e is no longer moving on. $80 million lost in derivative trade because a guy took a vacay. >> he put the trades on before leaving. while he was on vacation, the trade soured. he is still on vacation. perhaps never to return.

ti, therespeaks to, ci was a bad trade that happened, credit trade. david: i have never been close. equity derivative trade at the end of the year. what could go wrong? you better pay attention. >> there is a bigger issue. the end of the year, trading is thinner. this was especially pronounced last year when there was volatility. it raises the question -- where were the risk managers? really/ ? ype a.we are t i have to have the team charge me if they email me on vacation. >> money on a trade? david: i bet there is more to this story. i bet if he or she were here -- >> it was a good vacation.

jeff is complaining about inflation. netflix is raising prices 13%. local breakfast place raising prices 10%. hmmm? first increase in years. >> i wonder if he can afford his breakfast. this highlights an issue a lot of people have been talking about. the fed says they see little inflation. if you look at real cost, health care, rent, daycare, school, it has all been increasing at a faster pace than headline inflation or any other gauge seems to show. what gives? at one point, your phone is cheaper but all your expenses on a regular basis seem to be going up. this dissonance is creating angst. inlation may not be going up a cycle way but it is going up in a way to crimp spending power of americans.

david: i just finished paul volcker's biography. if you think it has gone away, you are mistaken. alix: the san francisco fed says the link we saw in terms of lower unemployment, higher wages, higher inflation -- not necessarily true. >> the fear is, if cost is rising but wages are not keeping .ace, that leads to stagflation what is the likely outcome in markets? david: on that note. alix: breakfast. >> he goes out for breakfast every morning? a barrel of oil? david: many thanks to lisa. great to have you back. coming up, go back to work. president trump tells furloughed workers to work without pay for the 26th day of the shutdown. that is next. this is bloomberg. ♪

david: i am watching the shutdown. president trump is saying, furloughed employees not getting paid, you can go back to work and not get paid, thank you very much. irs. faa, a nice thing to have around. will they show up? alix: tight labor market. david: they can get another job. alix: i will pay you anything. come over. david: do something else. alix: is it legal for him to ask them that? david: back in the days of ulysses s grant in 1870, they passed the statute that said you cannot disperse funds, unless authorized by congress, unless it is a true emergency like personal safety or a loss of property. is what they are doing now lawful?

alix: didn't the court yesterday rule for president trump yesterday? the unions cannot demand pay. david: that was not about whether it is lawful. that was saying, can you tell employees they do not have to show up? i'm reluctant to say, go ahead. could go to jail for two years under the statute if he is found to have willfully violated it. alix: that is ok. chairman, his outlook on the corporate investing environment. this is bloomberg. ♪ amazon prime video is now on xfinity x1.

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its all included with your amazon prime membership. that's how xfinity makes tv... simple. easy. awesome. alix: goldman and bank of america beat on earnings and revenue trading.

juncker says time is almost up. leaders left stung. u.k. parliament gets ready to debate no confidence as theresa may fights for her political life. trade war continues. chuck robbins, his take on china and global growth. david: welcome to "bloomberg daybreak," on wednesday, january 16. in parliament and the u.k., they are just about to start debating the motion of no-confidence put forward by jeremy corbyn. alix: i learned something. jeremy corbyn will table the motion. i thought that meant you take it off the table. david: which it does mean here. alix: in the u.k. --

david: it means the reverse. table,ou put it on the then theresa may defense herself. -- defends herself. david: it was a resounding defeat yesterday. the worst of feet a government in history. everyone believes -- the worst defeat of a government in history. everyone believes she will keep her job. alix: she was like, you know like my plan, i know that. what do you like? no one has a good answer except for crashing out. david: it is like a conversation with your kids. alix: i know you don't want to go to sleep. mommy needs sleep. america,rket, bank of goldman sachs, j.p. morgan helping optimism in u.s. equities. futures up six points. cable rate flat.

whitby yesterday -- whippy yesterday. 31 we could get to over the next six months. risk on takes hold. 74% on the 10 year yield. crude up. goldman hit the mark. shares rising premarket. fixed trading coming up short. bob, take a look at the results. consumer is good. equity is good. do you like banks? >> we have been overweight thanks slightly -- banks slightly. it aligns with our decision to put risk on across u.s. equities, em and global real estate.

these numbers, especially consumer banking side, show that the u.s. economy is resilient. it will slowdown. the fed has every right to be cautious, after a policy mistake in december. we are not forecasting a recession. the market discounting a recession in december was too far. the numbers today hopefully will provide additional stability to equity investors. david: you specialize in credit. what did we learn from this report about credit markets? >> they saw weakening last year and in fixed income particularly. going forward, volatility generally is good for trading. certainly, for the longest time, market participants have been asking for volatility. this is the case of be careful what you wish for. i expect more trading and volatility across asset classes. david: short duration?

>> yes. it is difficult to make the case for long-duration, especially given where the curve is. shortr going long-duration is difficult because looking at the demand from pension plans may still be there, foreign investors short duration offers attractive yield, cash real yield. you have protection from duration risk. david: let's talk about volatility. i talked to brian moynihan about volatility. he was expecting some down in fixed trading. >> fixed income business this quarter has been interesting as we ended. originally, late november, we thought we got percentage points. now we are down. volatility by itself in fixed income is not the best thing. bob, what about that?

bob: from a trading perspective, it would be, from sell side. it might make buy side investors more cautious if they try to navigate future direction of rate and credit. general,, in volatility is an opportunity to trade the market, assuming there is volume. maybe the drop off in volume on the fx side, volatility tends to be good for revenue for banks. that has been our experience in northern trust. alix: earnings visibility. jamie dimon jumped on the call yesterday. someone estimated the government shutdown goes on for a quarter -- it can reduce growth to zero. what is your estimation. bob: we have not made a specific forecast. there are moving pieces. it is not good.

put this on the negative side of the list. broadly at look more the impact -- how continuous? how sustained? whether investors look through it? the answer is, yes. if it went on for another month, will it have sustained impact on long-term growth in u.s.? absolutely not. we don't worry much about it. david: slightly different question. bond traders are having difficulty. they do not get data they need. wall street says it is affecting the business because it is harder to judge with bonds. is that your experience? putri: that is the case with liquidity lower. if you are a high-yield investor or credit investor, liquidity has never been great. now it is worse. in biggest change has been more liquid space,

investment-grade and treasuries, where liquidity is lower. that makes it more difficult to make a decision, especially if you combined that with changing macroeconomic landscapes and investors now care and are pricing and risk. -- in risk. alix: good thing we have the fed to guide us. david: [laughter] alix: the tone change in mario mindful that it has not played out in considering policy actions. a pause would give us time to assess the economy is responding as expected with the slowing of growth at a pace sustainable." bob, how do you understand feedback loop from the fed and what do you do? bob: like any good investor, hopefully the fed is doing that in recalibrating. if you listen to what they have been saying in the past week, it

is hard to believe there was a unanimous vote to raise rates in december. they are starting to realize it was a step too far. we consider it a policy mistake, but not one that can do, that cannot be reversed. not in terms of cutting rates but a sustained policy will give the market confidence the fed is patient. there is skepticism now that they are reacting to a negative market and that it is not what they really believe or want to do. in december, they thought that terminal rate should be 3%. that is where they wanted to go. the market believed it. that is why we had the reaction we did. are they looking for an opportunity to get 3%? remains to be seen. we hope not. that would be a bad policy mistake. bob, both of you are sticking with us. future in the

hands of jeremy corbyn? he is tabling the motion, the vote of no-confidence. this is bloomberg. >> mr. speaker, the prime minister has consistently claimed her deal, which has now been decisively rejected was good for britain, workers and businesses. if she is so confident -- ♪

>> this is "bloomberg daybreak," and i have the bloomberg business flash. big transaction in the financial services industry. to buy $22eing billion in stocks. providing financial payment services to many u.s.

banks. eddie lambert one an auction -- thean auction to keep business going. the offer is for more than five billions. it could preserve tens of thousands of jobs. may,ext hurdle for theresa a no-confidence vote in parliament that could oust her government. she suffered a humiliating rejection of her brexit you yesterday. the plan was defeated by 230 votes, the biggest loss for any british government and moderate history -- in modern history. there is concern she may not be able to avoid the potential economic catastrophe of a nokia brexit. the u.k. is set to leave the eu in less than 10 weeks. -- of a no deal brexit. david: they are debating the no

confidence motion. jeremy corbyn is speaking. theresa may will respond. they expect to vote this afternoon. it is clear after that emphatic rejection yesterday, that parliament does not want to go along with the deal. that left eu officials horrified, but not willing to negotiate. >> what yesterday's vote showed is that the political conditions for the ratification of the agreement are not at their in london -- not yet there in london. >> we regret this. >> i will tell you how i see things. first option, they go towards no deal. they say there is no agreement. the first losers of this are the british people. >> in all probability, the united kingdom will leave the eu at the end of march. that will change the union. i would like to reiterate it is

a sad development from my point of view. maria, who now to has been covering the drama. is there any reason to believe brussels will give the u.k. a break and change the deal? reporter: good morning. no. for a number of reasons. they think the deal, as it stands, will not clear parliament and she has to come up with a plan b. whether that means a softer brexit? question we have to keep in mind. they think there is nothing they can put on the table that can 200 votes in favor of theresa may. the backstop has to be there. they will not change this. they have said this for a year. the eu is a legal union and they have to have legal insurance in the deal. in the u.k., we have been hearing today that they do not

want to extend the deadline and brussels, eu officials think theresa may will have to extend the deadline and brexit will probably not be in march. david: thanks. reporting live from brussels. putri andl with us, bob. as the drama unfolds, the trade today -- is it right? putri: it is reasonable to be short on gild, especially if the brexit clock is looming. yesterday, post vote, the pound was strengthening by so much, it was surprising. .hat was a flip of expectations it split quickly to the fact that hard brexit is off the table. alix: the boe can hike rates, even though inflation came off

the highs of the previous month. is that what we are seeing? is that realistic? putri: the hike is not the question. it is more reflection of risk aversion and what it means to general british economy. david: bob, what do you do at this point with europe and the u.k. as an equity investor? stay out of town? bob: that means neutral. yes. there are other opportunities for greater clarity. who needs this? people, is, business economic decision-makers are coming to the same conclusions. if there is an extension, there is that much more uncertainty. second referendum back on the table? all these things will be top of mind. you can either do that or take on credit risk in the u.s., emerging-market equities, global real estate.

we would rather be in markets where we think clarity around risk and return payoff is better. david: where do you find growth? underlying economic growth and investment? mario draghi said they need to keep stimulus up for growth, not so much geopolitics. geopolitics,way would there be a case for europe? camp of lowin the structural growth in europe for extended time. it is already discounted in the markets. you're getting paid for it. that is the question for investors. we are getting close. relative to global asset allocation opportunities, there are other places we would rather be. growth in the u.s. will slow down but slow down to below 2's. not a half a percentage point. we are good in valuations after the selloff. we do not see the same opportunity in europe now. alix: what do spreads predict?

putri: in the u.s., credit spread is reflecting good fundamentals. 2.5% growth. low expectation of default. in europe, the spread is tighter due to ecb support. the spread is reflecting the fact that although that support is going to taper, it is still generally positive, because they are reinvesting. if yougiven that view, want to invest in credit, where is the biggest bargain now? biggest upside opportunity given the price? putri: as a fourth quarter, high-quality credit in u.s. offers good bargains. the market has snapped back quickly. credit moving 10-15 points down last quarter. much of that has been regained in january. usever, the market will give

other opportunities. there are plenty of opportunities within u.s., high-quality credit, both in leverage loan and high-yield space. that might be worth a bargain. it is company specific, especially considering brexit, consider whose businesses will be impacted? in the case of apple, consider whose businesses will be impacted by the slowdown in china consumer? oh gosh. i am not cheap enough. alix: what do they get to? wipeout? putri: the liability is the question. that is still up in the air. alix: i was joking but also it comes down to idiosyncratic micro events and the larger macro events. when you have trade and brexit, if we get past those in the world does not fall apart, are we in for big reassessment of recession non-risk

to the upside? bob: brexit risk is here and real. we are dealing with it every day. the markets have done ok. sterling rallies. good lesson. even with perfect foresight, you might execute the wrong trade. the chinad to trade, trade u.s. issue, similar to brexit, is ongoing. there will be some type of agreement march 2. it will be the first of a series. point being, it will get slightly better and not worse. on china-u.s.tion trade direction, will be a catalyst in the second quarter. much: thank you both very for being with us today. coming up, a snap departure. the social media company ceo quits eight months into the job. more on that in today's bottom line. this is bloomberg. alix: give me a snap.

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david: time for the bottom line, where we look at three companies worth watching. goldman sachs out with earnings. s much asup, not a it was. they had expenses up. 4%. -- 12%. they had a better operating performance. they faced significantly higher litigation and regulatory. i wonder if that has to do with 1mdb. alix: outlook is good. david: first quarter, ceo. he does not get a clean start. alix: no one gets a clean start. resigns after eight months on the job. the second ceo in a year. that is never good.

when you have management leaving in eight months, stock getting downgraded. issues about growth and daily active users. david: the number two left as well. zer.d company is fi is it that big a deal? >> it is. equity value $22 billion. large combination in financial plumbing world. we have seen consolidation. combined, $10ance million deal at the time. scale is the name of the game. that is why you are seeing them with these big revenue synergy numbers. i get skeptical when companies talk revenue synergy. they think they can get $500 million revenue boost. that includes combining merchant

solutions with digital banking. david: all stock? >> we have in hearing so much about the debt markets potentially being closed to would be m&a requirements. we have not seen high-yield issuance over the past couple months. first data is a high-yield company. it has a fair amount of debt on the balance sheet. it was important to have investment grade rating going forward. you're not adding debt here. given this will be a diversified, bigger company, they think they can hold the rating. you will see movement in cbs. kbw just had a note out, that this will spark more m&a deals. a ton of m&a this year. david: biotech, a couple big ones. >> that is not what we were

expecting. trade uncertainty, economic questioning, would keep a lid on m&a. most of it has been in biotech. unique animal. alix: you can make that argument for first data as well. >> a lot of places you have seen so much consolidation, there is not a lot of room left. alix: brooke, good to see you. coming up, caught in the crosshairs. we speak to chuck robbins, on how the dispute is weighing on the company and what they are hearing from clients. this is bloomberg. ♪

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"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. i am a techie dad.n. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. steel, we are having a more the start to the mornings here, a big part of that will be goldman sachs and

bank of america, in particular up over 4%. yes, it is on point and that was somewhat expected by equity trading with mortgage growth and loan business coming in quite strong. goldman numbers having a little bit of overhang with litigation thected, moving higher in fourth quarter. overall european equities in positive territory with the ftse, still trying to figure out what's going on with brexit. cable is flat because no one knows what to do. lowerediately moved during the brexit, theresa may had the humiliating defeat, but the traders made some money and now it's a wait and see approach. sell the bond market, sell the safety with the guilt, that's how it he printed the curve a little bit here with u.s. crude off in the markets. david: month over month is down,

a little bit less than the projection, but if you take up petroleum, that's up .3% compared to the flat projection. export prices are up year-over-year. interesting. and apparently december air fares. what's going on? david: someone has pricing power. alix: cannot sustain with a government shutdown? david: well that's the question? how many of those people flying around were federal government employees? tech companies have been at the forefront of leading the stock market up and down or the epicenter of trading a national securities between the united states and china. welcome now the man who runs one of the leading tech companies in the world. chuck robbins, cisco systems. great to have you here in person, it's a great treat. about your business overall. in a general sense, where is your tech business with assets and to what extents are

companies investing in tech it? chuck: last quarter we had revenue growth of 8%. for a company of our size, we are pleased with where we were and it was probably the most consistent quarter geographically and across our portfolio. i think that it is indicative of the underlying infrastructure, the things that we do our frankly the digital nervous system for the economy and companies today realize that technology is defining their not anstrategies on optional cost center anymore and it's the heart of what every entity is doing around the world. expensing those capital investments, did you see a result from that and is a continuing? >> it's funny, i have been asked over the last four earnings calls how much of your current success is due to tailwinds in how much of it is better execution?

pick one or the other. look, i think that the regulatory environment, the tax reform, that all the crews positive. we have been in the midst of one of the most consistent global macro environments that we seen in a long time and i think that there is truth to the fact that technology is at a different place today relative to the strategic value of our customers . it has been strategic but it is at the heart of everything they try to drive now. alix: not only that, but it's a different world in terms of companies battling this technology. we had some people looking at this technology iron curtain between the u.s. and china. what do you see with your global i.t. glasses? >> it's interesting, what we do creates this flat world that we live in, fundamentally the technology that we built has created a flat world and now we find ourselves with lots of

conflicts around the world. the geopolitical dynamics are clearly complicated for all of us. i think that countries are just trying to figure out how i deal with this technology change .ccurring so rapidly frankly, it's difficult because the governments around the world don't necessarily have the expertise inside of the government to be able to regulate or determine what they should do. that leads us to a very binary decision. it's difficult to understand how to do it surgically, so i have to do it with brute force. you understand some link that we don't, how much of the u.s. china trade dispute, how much of it is trade and how much of it is national security? the hallway situation is a substantial national security concern. is that right, or is it more of an economic issue? chuck: i get the same issue that you guys -- information that you guys get on this issue. there are aspects of intellectual property and trade

deficits. aspects of the view that this 5g is critical to every country's future and there is this competitive race going on around the world. i think it's a bit of all of that. my hope is that we can get to a place where we can all move lifts the a way that global economy again and allows us to take advantage of the technology with what it can do for business and, candidly, we are at a point in time where technology can help to solve some of the biggest problems in the world. how do you handle that? howdy your clients handle that? spinning offes different businesses, what do you hear? what do you do? multiple aspects to this. the tariffs that we do with, we continue to have discussions with the administration to help them understand the impact of

the tariffs. optimizing our supply chain over the years, we will continue to do that as we always have. to the extent that we have been able to we have had to pass through those prices to our customers and in china that's a relatively small percentage of our business, still. there has been quite minimal and we try to be a part of the discussion. we try to bring logic to what needs to be done. frankly, we are trying to help educate people inside of the governments around the world as to how they should think about regulating this technology and think about data privacy. what should we do to help alleviate the concerns around achieving what they are trying to achieve while not destroying the global benefit of connectivity. that. let's talk about it was hank paulson who referred to the possibility of a technology iron curtain being imposed. if that happened through a binary alternative, if that happened with that help or hurt those businesses?

is china a friend in me? chuck: our business there have been going moderately over the last few years. if that happens there, it's just bad. we need to figure out a compromise position to help both countries get to what they are trying to get to without raking down the fundamental bal you of the first place. alix: for connectivity or government's going to hurt or help you this year? >> that's a good question. i'm an eternal optimist. i think it's in everyone's best interest to get through it. the idea that the big conglomerate tech world is going hot.

do you feel that yet? know, we have taken a real approach that in every country we operate in, we try to be very local and make sure that we are great citizens of the communities and countries that we operate in. we have great relationships. what we are trying to do is help to resolve these issues and help governments and tech companies, frankly, think about how we should be doing some of these issues so that we can get past them and think about how to operate in this new world. i think that that's what's going to happen this year. i really believe that. thatsecurity is something you have been very involved in. there's a lot of talk about that these days. david: do we get it? are we doing enough or are we way behind? david: -- chuck: we are in great shape. last year we blocked 7 trillion threats against our customers.

good news that we blocked it, the bad news is that that -- there were that many attempts. look, it's really part of our business where we have to think of the active adversary. that's not about how we think about parts of our business. by and large, when you look at the cybersecurity organizations inside, they are very good. we just talkedt about, the numbers of attacks, they just have to be the right one. look at where we are. when you talk to clients, customers, what are their biggest concerns? >> geopolitical dynamics. thing orthat a u.s. does that brought in out to russia, the middle east? chuck: primarily, it's anchored

around the china u.s. thing. that's the biggest issue that needs to be resolved, as well as getting the government open again. how much of your growth will be organic if? are you looking to buy more? little bitill be a of both. organic growth, it's a unique position as a company that has been around for 42 years with company, a company our age would be looking at the core franchise investing in our businesses. we have done some of that, but we are seeing strong growth filled because in order to solve what we are talking about you have to do it deep within the network infrastructure. we are rebuilding network infrastructure for customers around the world in order to do this. it's very consistent right now. david: your position for growth,

what could limit that? what could throw a wrench in the works? chuck: if we keep talking ourselves into a slowdown, that could. david: are we doing that? chuck: bank earnings were strong and everyone thought they would be terrible this morning. there's obviously some concerns out there. about the rates, your comps are going to be tougher, we all know that. generally what you are hearing is that the overall economy is still doing reasonably well. emergings go up, countries have those potential challenges and we talk about them so much, it's making people nervous. with: great to have you us. that's chuck, cisco systems ceo. headlines's making outside the business world? : a live look at

parliament right there, later today the house of commons, would you just saw, there we go, they will vote whether to oust the theresa may government, what they after lawmakers overwhelmingly rejected her brexit plan. the government still wants to leave the eu as scheduled on march 29. she left the door open for an extension that could allow her to come up with another divorce plan. security forces have prevented a deadly attack on an upscale office complex. the kenyan president saying that 14 people were killed, along with all of the attackers. a militant group linked to al qaeda has lamed responsibility and they have vowed to keep attacking kenya as long as they maintain soldiers in somalia. senator kiersten gillibrand of new york has taken the first for theards running democratic nomination for president, forming an exploratory committee. she is one of the dozen congressional democrats who are

considering or have announced their running. global news 24 hours per day on tictoc in twitter, 2400 journalists and analysts in more than 120 countries. this is bloomberg. set tong up, the u.s. is be a net oil exporter by 2020. we discussed the new forecast the someone -- we discussed new forecast, coming up. this is bloomberg. ♪

up later oning "balance of power," the former u.k. ambassador to the u.s.. -- u.s. alix: well, the u.s. is set to

be on course to be a net exporter of petroleum by 2020, producing 13 millions -- 13 million barrels of oil per day. joining us now, tom petri, the petri partners chairman. that prediction, what do you ofnk? tom: the ability producing that much oil is clearly there. the ability to deliver it to a relevant market remains to be seen. this year the move that we had from 10 million barrels per day to 6 million barrels per day was impressive. it doesn't surprise me, but spending some time on this, a 11.5, maybe even retracing a little bit, the basic forecast, the basics were there. then it's the global backdrop, getting into the relevant market.

david: and more product driven than straight up crude. tom: absolutely. alix: taking a look at that can of forecast, where does that leave opec? out andi ministers came said that they are taking those actions quickly in december and it will be implemented, the cost of what they extended. what is the sensitivity of u.s. sales around what saudi arabia does? well, we have got a balance because of russia and saudi arabia and what they do. but it's a fragile balance and of they don't continue doing it, we have seen it recently, it becomes very much the case, volatility is back. the basic site is that saudi arabia and russia have both seen or above $80 per

barrel. the u.s. can do very well at 60, 65. opec is hurting at $57. with thet happens iranian sanctions? we had a big department official talk about these waivers the other day. here's what he had to say. >> we are not looking to grant any new waivers. fromhas been the policy the beginning. we are not looking to grant any exceptions to our campaign of maximum economic pressure. anytime we do this it's in the context of oil prices. as i said, so far we have been very successful at striking the balance between our national security and economic interests. you interpret that? tom: that was interesting wordsmithing, considering last fall's head fake. reality last fall. what they were representing before didn't make sense. whether this is going to make

sense or not remains to be seen, but in some respects, much more aggressive forces could work here in terms of what's needed to keep things in that fragile balance. david: but i really didn't understand what he was saying. they won't do any new ones, but we will continue to renew the ones that we have artie done? those are two different answers. >> ambiguity at its worst. it's the administration saying that if oil prices are high, there will be waivers and if they're not, we won't. this that mean that the quest to get to zero is still on the table? and is priced in? 4 i don't know, i don't know. i don't think -- tom: i don't know, i don't know. i don't think any of us know at this point. things have changed so much now, no one is predicting 75 on the way to 100.

they did discover that it kicks in somewhere well south of 100. they have got an interesting issue. this is an important component in u.s. economic growth. there's going to be a data that proves this government shutdown problem. data that shows that we would rather have economic growth at levels that we can work with rather than the situation that we get cumulative hits to economic growth. so far it has not hurt the industry much. another month or two, we will start to see how much it hurts. alix: all right, tom petrie, always way to get you here on the east coast. coming up, we are taking a look at the market. futures around the high of the session after bank of america and goldman sachs, we will be talking about tom to mark, the analytics founder and ceo. don't miss it. this is bloomberg.

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alix: what i'm watching? signals in the market, eco-tom demark data andtom demark the u.s. equities market. join me on the phone now,. -- joining me on the phone now, tom demark. what does the market data tell you about where we are headed? were warnedember we that there was a good possibility that the market on the long-term basis could top as early as october and it did. that was based on two indicators that we monitored very closely on a long-term basis, consumer confidence and unemployment. both of those numbers are so dominantly negative as of october, they really are dictating the long-term trend of the market. fundamentals do dictate those long-term trends and we do try to identify intro long-term market tops and bottoms based

upon psychology. the marketif provides opportunity in the context of a long-term market, we think that we will be in a major market and it will take some time for the market to revisit. looking at where we are in the medium-term trend line, the monster rally since december after this bad month, where do we go from here? tom: december 24 and the 26th, it was too late. it had already bottomed. identified the bottom that was as intense and exhausted as it was in 2009. i think we have a history of identifying bottoms. 2 thousand 12. those lows were in a sense identical to what we recorded in

december of this past year, as well as in 2009. what distinguishes 2009 and december of this past year is the fact that we rebounded to the point where we have almost done the reciprocal to what we did to that bottom in 2009 as well as december of 2001, 2018. the difference is that the overall context is negative because of the economy. we were at the bottom of the economy and we made a peak in october that had really negative implications on the longer term. but because the market rebounded so strong in 2009 off that low, we had it between then and december of 2018, we are experiencing a steep advance and we have used indicators to connections in 2006 and for the people who follow us on bloomberg, we projected an upside high of 2607

and we are commerce that yesterday. no one thought we would see that. we thought that we would do it wehin 13 trading days and did as expected. today we are up in early trading . if we close higher today, we know that after this correction, which should begin tomorrow, the short-term correction, we will ultimately reach 2713 on the s&p that time,hink at the market could resume its big risk downside again. tom, always good to catch up with you again. tom demark, of tom demark analytics. coming up, bloomberg markets, the open. this is bloomberg. ♪ ♪

jonathan: the countdown to the open starts right now. better news on wall street, solid numbers, goldman beating estimates. deflation reaching the fed long looking forgeorge, a pause. parliament handing prime minister may a humiliating behind a vote to oust her government. good morning, good morning, futures are up nicely here, one quarter of 1%. 114 at 113 91. treasury yields are just a little bit higher, two basis points on the 10 year. for investors, earnings coming from financials in 2019 will be very different than 2018 for that sector. giving you there best valuations. >> there is still good underlying earnings growth. >> it's ok.