paul: welcome to daybreak australia. i am paul allen in sydney. shery: i'm shery ahn in new york. sophie: i'm sophie kamaruddin in hong kong. we are counting down to asia's major market open. ♪ paul: here are the top stories we are covering in the next hour. a rally for tech drives wall street to franchise on the start of a busy week for earnings and economic data. big banks reporting results. citi beat expectations but investors say it is a low-quality success. talking trade again.

the u.s. team may ahead to beijing for new face-to-face negotiations if talks over the phone go well this week. shery: later in bloomberg technology global link, we take a look at all the concerns around the facebook crypto push. why analysts say libra is fanning the flames for critics. first, let's get you started with a first check of how markets closed on monday the u.s. we have equity markets fluctuating between gains and losses, just the finish slightly higher. investors pretty much focused on second-quarter earnings. we had tech stocks leading the rally with the nasdaq up 2/10 of 1%. steel stocks gaining ground after white house advisor peter navarro talked about an executive order to have companies use more domestic steel and iron for federal contracts. pressure coming from the energy sector and financials. a mixed bag of earnings for

citigroup which plans to kick off the second-quarter earnings season. trading revenue dissing estimates. citigroup leading the estimates. every member of that group lost ground. let's see how we are setting up for the markets in asia. u.s. futures not doing much at the moment. japanese markets reopening after a long weekend. sophie: this tuesday, we have futures pointing lower after the regional benchmark eked out gains on monday. japan back in action as they prepare for the earnings season's. investors will play catch up to the ongoing trade fight with south korea which has companies seeking domestic suppliers. it may be collateral damage. stocks opening higher, 1/10 of 1% as we have inflation numbers from new zealand and australia. data as well as rba minutes. in the tech sector in the radar after talks ended between

broadcom and symantec. holidayff-line for the this tuesday. paul: thank you. let's chicken on the first word news with ridicka. >> brexit talks are becoming more hostile as divorce looms ever closer. officials in brussels say a meeting last week was one of the most difficult of every time in the last three years. the british team seeming to bully gets way to new concessions. the eu is bracing for the expected appointment of boris johnson for prime minister. he is threatening to quit brexit with or without a deal. iran is warnick and might revive its nuclear program back to the status it had back before 2015. tehran may back away if eu powers do not do more to offset u.s. ancients. --sanctions. a return to conditions would createa balance.

. the eu says there is still time to save a deal. >> we will see how we can together with all the member states an internal test -- international partners to maintain the deal with iran and put in place all the measures so iran can go back to compliance as it had been a few weeks ago. >> the eu is bracing for billions of dollars of u.s. tariffs over aircraft subsidies comes to a boil. brussel expects the wto to give washington the green light to impose measures of up to $7 billion. it may be announced in the coming weeks. food products may also be targeted. the move would add to u.s. tariffs already imposed on u.s. steel exports. new york manufacturing has improved, indicating factory activity may be stabilizing after slumping to an almost three year low. the empire state index risen to

4.3, jumping from a june reading of -8.6, the lowest in almost three years. more state factories say orders are lower this month and the measure of unappointed is at its weakest since january 2016. global news 24 hours a day on air and on twitter, powered by more than 2700 journalists analysts. this is bloomberg. shery: thank you. big bank earnings are off to a relatively upbeat start as citigroup beat estimates, recording profit and revenue gains despite a 5% loss in trading revenue. let's look at the numbers with our finance reporter. the results may have been cut, but the enthusiasm not last long. citigroup was under pressure and really dragged down all of the bank stocks with it. what happened? >> i think the second part of your commentary is right, which

is the market was really latching on to the 5% decline in trading. this is not a very good signal for the rest of the banks that will report this week because when you look at trading, that is the lifeblood of what investment banks are trying to do to capitalize on these market changes we have been seeing and they have not been able to do that. what we heard on the call from citi is clients are feeling uncertain. market sentiment is pretty poor and clients are trying to stay on the sidelines. there is not that volume we might expect. -- some bitsf a were quite good. the consumer business did well. the banks sticking to profitability markets so what is driving the equation? lananh: what we are looking at is the boring side of banks, which is really driving the positivity and the optimism. many of the bank ceos in the last few weeks have talked about the fact u.s. consumers are still going strong.

the fact that credit quality is still pretty good. citi leans heavily on the consumer side of the business and the digital side issuing bright spots for the future. on top of that, citi was pressed multiple times about its key profitability target. they stuck to it. that is showing there is some optimism, there is some confidence for a result in the future. shery: will we see something similar in terms of results with jp morgan and goldman sachs tomorrow? lananh: jp morgan has a consumer business which it could li na so that kind of boring side of the bank might help to save the day. goldman sachs on the other hand is heavily reliant on trading. it is a huge trading powerhouse so we have to see whether goldman was able to skate through those markets and capitalize on the market fluctuations now that that the fed is in play and investors have to prepare for a potential fed rate cut this month. has goldman able to capitalize

on that volatility? shery: tell us a little bit about what we saw in terms of city and trying to improve efficiency. this will be a key issue for many banks going forward. what are they doing in terms of cost-cutting? lananh: citi made a huge point to talk about cost cuts because that is something that has disappointed investors and analysts in the past. they hammered on with this point and they have made some progress. analysts did give them credit for improving in terms of cost cuts. this will be key across all the banks. as we head into potentially a rate cutting environment, everyone is going to be asked about cost cuts. everyone is going to be scrutinized on the cost-cutting points. nguyen,l right, lananh thank you for joining us. still to come, facebook's proposed libra cryptocurrency gets slammed again, this time by steven mnuchin. shery: next, wells fargo

margaret patel says markets will continue to surprise on the upside. we will hear why just ahead. this is bloomberg. ♪

paul: i am paul allen in sydney. shery: i'm shery ahn in new york. it was another day of records for major indexes as gains in tech out losses into energy and financials. su keenan joins us with more on today's trading. we really felt fluctuations throughout the session. investors are pretty much focused on second-quarter earnings. su: they deafly are waiting to see what the earnings are and the prediction from some analysts is not great. worst of times is one of the quotes. a lot a focus on fed speak, the retail sales numbers and the chinese gdp. let's take a look at the snapshot because we did see tech save the day, helping push indexes higher. a big boost for some of the chip

stocks. notice the future is relatively flat going into the tuesday session. if we can take a look at the bloomberg gtv where you can find our library of charts. amazon briefly popped up back into the $1 trillion territory. it was prime day, a lot of anticipation on that. has not been up in that range since the fall. last year, a couple of glitches with their website but they ended up having a great day. a little bit of a repeat but by all accounts it was positive. let's take a look at the big movers in the day. top of the list in terms of size of moves is symantec. the deal between symantec and broadcom. there are discussions for a proposed merger. it appears to be dissolving according to people familiar with the matter. discussions at an impasse over the weekend. overstock down in a big way as it announces it will sell its retail business if it makes

sense. advanced micro devices having a great day, the gains we are seeing in the chip sector. paul: su, let's talk about our two favorite commodities -- oil and gold. oil breaking below the key $60 level. do you think china's gdp data had something to do with it? su: china is a big consumer so that goes to global demand. also, the hurricane, tropical storm in the gulf moving out. oil, just a five day has dropped below as the storm has moved out. ,bout 70% of the oil platform down to the sickly percent range. a lot of the oil still off-line but oil sliding lower. oil has come down below the $60 level. many traders say it is a psychological marker. coming into this week, we were seeing the lowest level of hedge

funds, bullish or bearish, in six years which indicates many of the funds stepping aside from this risk asset right now. quickly to gold, it powers higher, near a six-year high. we have one of the chinese analysts saying, yes, it has room to run, particular as there are signs of a weaker economy. not just in china but perhaps in the u.s. as well. paul: su, thanks very much. stocks still have room to rise and yields will stay low. this is the view of margaret patel, wells fargo asset management senior portfolio manager. she joins us from massachusetts. thank you for joining us today. we've got earnings season underway. kind of a mixed bag. i'm wondering if there is a metaphor to what we are going to see in this core? a chart on the bloomberg terminal that shows earnings trending downward, nonviolently though.

what are you excited to see in the weeks ahead? margaret: certainly in the financial sector with the banks, i am not looking with much anything. i think this will be lowest quarter in terms of earnings. reflecting the fed having been to type last year, the slowness is reflected in the first quarter. i will be looking for are they seeing you stabilization or are company seeing a pickup in the second half of the year? paul: how much does fed policy have to do with all of this, because the jobs market is brutal, jay powell says the definition of what tight it might be changing. core consumer prices holding up reasonably well. will it get rather tricky for them? margaret: no, i don't think so. i think the fed is reevaluating where the so-called neutral rate of interest rates ought to be. they realize that should be lower, unlike last year where rates were too high. i think we should look for a

two-step adjustment in rates lower to the new level where they think the neutral rate will be. that's what i'm looking for. shery: in the meantime, we continue to see fed support, what are we expecting in terms of equity markets? we continue to see the rally we have enjoyed the last few days. margaret: i think so because a lot of investors have been too short, looking at very bad news. only a few months ago, people were looking for the fed to be raising rates so this is a real seachange. i think after we go through the bumpy first quarter, think we will see the economy begin to accelerate and i think people will be looking towards the third quarter, fourth quarter for the rate of economic growth to increase and earnings to be better. i think it will be a surprisingly good year. shery: really interesting to see about this rally is that small caps has lagged the larger stock names. this chart on the bloomberg showing the s&p 500 and the

russell 2000, but what is interesting within the small caps is that growth oriented small caps are leading the way against value stocks which would be the light in blue. what is this telling us about the sectors we should be focusing on as we head into the rest of the second half? margaret: i think the themes are still the same, which is growth oriented companies will continue to outperform value stocks. i think value stocks are stuck in the mud for the foreseeable future. i think you see that in small caps too. wellhy small caps of done but it shows you the lagging in small caps as there is risk aversion and the equity market. people prefer the smaller companies, feeling they are less risky. paul: i want to talk about what the bond market might be telling you. the three-month, 10 year inverted may be persistent to a degree, but despite that, no when talked to sees a recession in the midst.

what are your thoughts? margaret: i think especially because the fed has readjusted their way of thinking and looking to a permanently lower level of interest rate, and by being more passive and not being aggressively trying to raise rates, i think that really puts recession off the table and i'd soon see a reason why the could to grow for many years. maybe 1.5% to 2% but certainly no recession unless the fed clears it. i think they have learned their lesson and i am not expect that at all. paul: in terms of bond yields, it is difficult to find some decent deals. we have a chart on the bloomberg terminal which shows 1/5 or more of that global debt now paying no interest. is that a trend you ask see continue? margaret: it certainly looks like it is. the u.s. looks like we are able to hold the line on positive rates. moreinly, it sets the

risky parts of the credit markets, investment grade, junk bonds, will continue to do well because the yield advantage is just too wide compared to the risky rates of zero, negative in many countries to say 2% and the u.s. shery: we are seeing pressure on the dollar and short data treasuries. should investors be repositioning for the debt ceiling squabble we should be expecting? margaret: i think we are seeing steve mnuchin indicating he would really like to get the ball rolling on conversations. i don't think we will have a default. i think they will come to the agreement and we will be ok. paul: all right, margaret patel, wells fargo asset management senior portfolio manager, thank you. you can get a roundup of the stories need to know in today's edition of daybreak. bloomberg subscribers can go to their terminal. it is also available on mobile on the bloomberg anywhere app.

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paul: this is bloomberg technology global link. i'm paul allen in sydney alongside shery ahn in new york and emily chang in san francisco. let's take a look at the top global tech stories of the day. emily: it is getting more expensive to hail a ride in new york and that means fewer people are doing it. the number of uber trips in may was down a percent from a record in march and lyft face they slow down. it come six month after new york passed the first u.s. a minimum wage rule for ride-hailing drivers. valve ands a leaky its aborts system needs to be redesigned making it harder to then plan to fly astronauts this year.

spacex has a contract to fly astronauts to and from the international space station but an exposure during a testing in april destroyed one capsule so there was a setback to bring humans into orbit without relying on russian rockets. they say crime does not pay but investing in fighting cybercrime seems to work. one of the year's best performing funds in japan focuses on upcoming u.s. tech stocks that does just that -- mitsubishi, usj, cybersecurity fun has returned 37% this year. says theker cybersecurity market will grow 80% by 2023. those are the top global tech stories we are watching. shery: bitcoin slumped briefly below $10,000 after president trump criticized digital coins on the heels of the recent rally. now, treasury secretary steven mnuchin is taking aim at

facebook over its proposed cryptocurrency. sec. mnuchin: the treasury department has expressed very serious concerns that libra could be misused by money launderers and terrorist financiers. ben bain covers financial regulation out of washington. crypto used to be this french issue in washington. all of a sudden, facebook wants to do it and it becomes a key issue. what can we take away from steven mnuchin's comments when it comes to the timing and what he just said? ben: he is just the latest, as you mentioned, in washington of high-ranking officials to come out and raise serious concerns about what facebook is planning to do. i think substantively what he said today was not that different from what president trump said last week. basically that there is a lot of concerns this administration has about how cryptocurrencies can

be used by criminals. however, the fact he came out four days later, right before facebook's top executives working on this libra project is going to go before the senate banking committee tomorrow and the house financial services committee in washington the next day on wednesday, and basically repeated all of the administration's concerns and gave a pretty stern warning to facebook and basically told the, look, we are not totally on board, totally comfortable and you have more explaining to do. marquezacebook's david who will be testifying tomorrow made the argument in his written testimony that if we don't do this, if the facebook or u.s. does not do this, somebody else will. is that going to work with lawmakers? ben: look, i think congresspeople like to have the economy going well. they like to have businesses in

their home districts doing well. at the end of the day, technology companies are a great source of growth. i think that argument does carry some weight on capitol hill, but at the same time, certain things about this libra project has drawn concern. one being that it is set up with a nonprofit in switzerland. we understand that some lawmakers are asking why isn't this libra project going to be based in the united states? i think the idea that no one wants cryptocurrency to go abroad they certainly going to come up tomorrow. at the same time, u.s. lawmakers so far have not shown themselves willing to actually set clear rules for exactly what is ok and not ok. shery: something that seems pretty impossible seems to be happening. we are seeing president trump uniting with democrats against libra. we have those hearings in congress. what is david marcus expected to be asked and how will he handle this? ben: i think the fear for

facebook is that this hearing tomorrow is not just going to be about libra. it is going to be about the 2016 election. facebook tos using influence it. we're going to probably here lots of things about data privacy concerns. i think facebook probably wants to keep this about libra, but it is unlikely that is the only place is going to go. paul: ben bain, thank you very much for joining us. i want to get to across some breaking news out of australia. production numbers for rio tinto for the second quarter. a little bit unexpected for iron shipped,million tons better than expected. rio tinto affirming its full-year guidance from 320 to 350 million tons for the year. still doubt h percent of the

year -- 8% on the year. plenty more to come on daybreak australia. this is bloomberg. ♪

shery: you are watching daybreak australia. let's get the first word news. >> thanks. the british pound is at its weakest ever july level. a two-year low against the dollar and suffering a record run of weekly losses against the euro. further withen consistent falls against the dollar and euro in august in recent years. the pound may weaken as the u.k. conservative party chooses a new leader with a no deal brexit still a possibility. thetwo top banks working on budweiser asia ipo has said to be missed out on up to 170 milli-dollars in fees.

jp morgan and morgan stanley would have split the cash have the sale not been canned at the last moment. bloomberg data marks morgan stanley number one for equity offerings in asia since 20 17th. china says it will impose sanctions against american companies involved in potential u.s. arms sales to taiwan. the deal could be worth $2 billion and include tanks and weapons. fighter jets sale is still under review in washington. china says it is concerned about the possible deal and has urged the u.s. to call it off. italian police have displayed a missile and a cracked out a neofascist political party. police found a huge stack of automatic weapons and nazi memorabilia. it is linked to investigation of italians who took part in the russian backed insurgency in ukraine. five men have been arrested, including one who ran

unsuccessfully for the party in 2001. global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. paul: thanks very much. let's get a quick check of the markets at the moment. not a lot of action on the futures at the moment. nikkei futures looking pretty flat. other futures slightly weaker in australia. a shade less than 1/10 of 1%. new zealand has been trading for 32 minutes now. a count higher by 1/5 of 1% after we saw gains in the u.s. market. the s&p still hovering around record highs. let's get more on what we should be watching as trading get underway in asia. adam is with here. cautious start expected for equities. what are investors looking for that could give us the next leg

up? adam: this period before we get the fed meeting is often when you get the last kind of group of speakers before you go into the blackout period. a few more policymakers will be speaking this week. earnings season is starting to ramp up. what you are seeing is the equity rally marley -- rally starting to plateau. people wondering if they want to add more risk where there has not been further positive development in the trade negotiations between the u.s. and china. also, as you can see from this chart, the bottom section which shows you how much valuations have gone up since the start of the year. equity prices have gone up. what you are not seeing is the earnings component of that really coming through. we are starting to hear from companies, the fundamentals. citigroup overnight and later into that is -- tuesday, jp morgan and goldman sachs. that really could provide the next catalyst. if we get a big miss or beat on

average to those earnings expectations, that might cause a little bit of a re-rating, higher or lower. absence of any real development on the direction of fed policy for the meeting at the end of the month, and absent any developing on the china-u.s. trade talks, there is little to push investors further into risk-taking mode. shery: despite all of that, we are seeing what equity fund that has been performing really well and all because of cyber crimes. tell us about this. adam: yeah. the returns have been really remarkable in a year where people found it quite difficult to make money in some equity markets. this is a private security fund yeartsubishi, up 37% this and really among the top performers. they invest in u.s. i.t. stocks that try to benefit from the industry of cybersecurity. they are looking at areas of

cloud security and a company which is their biggest holding. it is a way for people to useegate passwords and only one secure password across multiple sites. some really stellar returns. an example of how people are very very esoteric, defined industries to try to make some money in these tough markets at the moment when the market itself is showing some signs of plateauing. shery: thank you so much, adam haigh. you can find his charts on the library on your bloomberg terminal. now, u.s.-china trade talks may be getting back on track after nearly two weeks of silence. treasury secretary steven mnuchin says phone contacts are likely this week and could lead to face-to-face talks in beijing. talks come amid china slowest growth on record which president trump says shows his tariffs are having their intended impact.

let's go to selina wang in beijing. are we getting way too excited over just another phone call? what kind of progress has there been since the g20? selina: when it comes to the u.s.-china trade negotiations, every phone call is considered a big deal. this would be the second phone call since the trump-xi meeting in osaka. we are hearing inflicting prospectus about what china's data dump means. trump believes it will give him more negotiating leverage. we are hearing it may give beijing more leverage because the numbers were not as bad. a number of areas of disagreements that has transpired over the last few weeks. trump has been complaining that china has not kept its promise to increase purchases. beijing said they never made that promise. it depends on how talks progress. we heard larry kudlow make statements recently that implied

china has increase its purchases of u.s. farming products in order for talks to continue. at the same time, china wants the u.s. to remove all existing tariffs. politically, that is going to be hard for trump to do given that they don't want to remove those tariffs until beijing has made real progress in areas of disagreement. we were talking yesterday about huawei which are still making some progress. the u.s. has said they will allow some u.s. companies to resume some of their shipments and sales to huawei. from beijing, they still want huawei to be removed from the blacklist. still a long way to go but progress is being made. paul: selina, let's get back to china's big economic data dump from yesterday. the headline gdp number is a predetermined look we have become accustomed to. where there any other key takeaways? selina: i think the really

interesting numbers were not the gdp numbers but all of the june activity data which fared better than i can ask economists had hanected -- better t economist had expected. the june retail sales, factory output, the investment data, that came is better than expected. it's unclear however whether that is going to last. there was an uptick in the last month. when retail sales were propped up by auto sales. the issue is that was largely driven by temporary discounts as a lot of auto dealmakers were trying to clear some inventory to reach compatibility with new emission standards. retail sales may drop in the next month. overall, economists think that this is positive data and suggests stimulus data is working, the consumer base and someone holding up, but the economy probably still has not bottomed out yet and makes

monetary and fiscal policy measures cutting still necessary. shery: selina wang, thank you. with china's slowing growth adding to headwinds, we will learn of the direct impasse on a variety of businesses that has faced uncertainty from tariffs. sophie kamaruddin is in hong kong with the latest. what bellwether's are being watched for trade war troubles or triumphs? sophie: it's companies with a large exposure to china that will offer a fuller picture of the trade fallout. the semiconductor industry, china is a major market. in april, intel said a drop in orders was more pronounced there. plus, huawei. watch for the update on july 25. apple is up to bat on july 30. we will see of the new trade talks support the company's outlook. boeing has been caught in the fray. it has been negotiating one of the biggest orders ever of

jetliners with chinese airlines. 's office to say, this is expected to be --'s office to say, this is expect it to be a down quarter. that would signal an earnings recession. of to wrap things up, a chart showing earnings revision tracking chinese pmi more so than the u.s. data. indicating that shares out of china are having a larger impact to global earnings outlook. the top panel on the chart illustrating a stronger correlation to manufacturing pmi. paul: thanks very much. president trump has doubled down on his attacks on four minority female congresswomen. he started his campaign on twitter over the weekend and now has stood his ground after an event at the white house. president trump: if you are not happy here, you can leave. that is what i say all the time. that is what i said in a tweet

that a lot of people think is controversial. a lot of people love it. if you are not happy in the u.s., if you are complaining all the time, very simply, you can leave. you can leave right now. come back if you want, don't come back. that's ok too. caitlinoomberg editor weber joins us from washington. for those of us who missed the event today, what was the president's response to all those questions about his sunday tweet? caitlin: the response certainly was not an apology. if anything, the president was turning up the volume on these accusations against these group of four progressive democratic lawmakers. he amplified the message that these lawmakers are un-american. he said they hate america, they are anti-risen -- anti-israel. issued a charge of they don't like his policies and don't like

america, they should go back to where they come from. although three of the four lawmakers are born in the u.s. there was no apology. if anything, it was the opposite. trump is not want to issue an apology and here he seems to amplify his message from over the weekend. shery: we were just watching those pictures of the news conference the lawmakers help. what exactly was their response? caitlin: the response was a bit mixed. on one hand, the lawmakers said the president is trying to abit bait us. this is a distraction for me a policy work.we want to be focusing on health care , preventing gun violence. let's not take his bait. this is a distraction from our important work. on the other hand, two of the lawmakers said that the president's behavior over this incident really shows that we need to start impeachment proceedings. it will be interesting because they were issuing a charge to house democratic leadership who they have had disagreements with

to start immigration proceedings and house speaker nancy pelosi has been reluctant to do that so far. it will be interesting to watch to see how this fight changes the calculus for her. shery: thank you so much for that. caitlin webber from washington. next, citigroup -- kicked up earnings season for the big banks. we will crunch the numbers next. this is bloomberg. ♪

shery: earnings season has kicked off for the big u.s. banks with citigroup leading the way. it beat profit and revenue gains despite a 5% loss in trading revenue. joining us now is tony scherer. great having you with us. -- ife seen the weaker you take out the one-time gain. is that something that concerns you at all? tony: i think that concern has

been discounted into the prices of the bancshares, whether it is citigroup or in our case, wells fargo, jp morgan and bank of america. the valuations they have today is pretty ask ordinary and -- extraordinary and attractive price. it has been discounted to an attractive degree. shery: yet, you don't own citi. why is that? tony: we don't. domesticolio owns shares and we want to be in front of what we consider to be the best economic story going on on the planet today which is the united states economy. citigroup is more leveraged to emerging markets and international then say wells fargo which is still today even after all the things, sorting through the sales practices, still the biggest lender. bank of america has outside the u.s. that is the kind of thing we want to be in front of.

cheap access to cost of funding so that if and when we can ever imagine an increase in the velocity of money where the tailwind becomes lending and traditional loans, we have not seen that thus far since 2008-2009, it would be a phenomenal force to be reckoned with in the banking sector that no one believes right now. paul: in terms of velocity of money, i note it is something you are concerned about. do you see that picture changing? tony: to say we are concerned about it, it is not really discussed in the modern-day vernacular of when it comes to the world of investing. if you look at a chart, it is on the floor. nobody really brings it up anymore. that is because we had a long period of time where the animal spirits have not kicked in. no one has demanded loans to get going with their lives and go out and buy a house and get back to some level of normality in the u.s. if and when that happens, you

are going to see a pickup in velocity. we absolutely expect that. you never know when that's going to happen but it wouldn't take much because no one is looking at things like that anymore. for example, no one is talking about inflation if the money actually increases. paul: the fed is concerned about inflation as well, part of the picture here. what do you think it would take to bring the consumer back to life in america? tony: well, it is funny you say that. the consumer is very strong. the fed notes of last week, even powell was talking about the consumer is not the problem. the consumer is strong in terms of spending, confidence. the consumer is there. u.s. economyof the that gdp makes up. that is not the issue. what you need is just time. you need kind of a confluence of things for the millennial generation to get going with their lives. then, they are engaged in

household formation activities, just early stages right now. that is the kind of thing that is missing within the banking sector that's we think we will see a pickup. citigroup is not leveraged to that story. they are leveraged to other things globally, emerging-market wise. is any kind of rate of what is going on in the banking sector, it was a strong quarter. they did a good job of managing their expense line. it looks like they are on track to hit the return on total equity they laid out. that looks attractive too. that is one read on what the banking sector is going to look at. shery: yet, you have concerns over multiple rate cuts and what this could do to the banks. the chart on the bloomberg showing the s&p 500 bank index, which today, all 19 members felt the pressure. this bank performance has tracked the five year treasury yield. if you factor in what the fed could do and consistent flat

yield curves, are you still write to be this optimistic about valuations? tony: well, i think the reason why people were so focused on citigroup and their expense cut they is because -- consensus is exactly what you said. if you believe that and the world wants to believe that, they will look for efficiency ratios, expense cuts to manage through this if we are on the cusp of an economic recession. no, we don't think that is going to happen in our opinion. we think the fed has caved to the wishes and mandates of the market. maybe more towards the market than anything else. the economy right under our nose is quite strong. i'll stay away from the conversation about whether there are events politically or not. we don't think they are. they are looking at the markets and want to continue to have the fed be a factor. they have come to life -- i should say, caved is what they

have done. they may very well cut rates but we think the economy will bail this whole thing out and be quite strong. maybe not tomorrow but 6, 9 months from now, we think it will show to be very strong. paul: all right, tony sc herrer, thank you for joining us today. you can watch us live and see our past interviews on our interactive tv function tv . you can dive into any of the securities were bloomberg functions we talk about. plus, you can become part of the conversation by sending us instant messages during our shows. this is for bloomberg subscribers only. this is bloomberg. ♪

paul: a quick check of the latest business flash headlines. being forced to slow down over an oversupply of fuel.

it is expected to process less crude during the third quarter as ample supplies continue to weigh on margins. either already cutting or planning to cut. profits shrink, stoking concerns about global demand as the oil demand swells. rulingbaier has won a that slashes a fine by the roundup root -- weedkiller by $80 million and penalties after claims that roundup causes cancer. it is being cut to $25 million with the judge saying punitive damages should not be more than nine times bigger that compensatory damages. the judge rejected the request for a new trial. paul: asian food giant may be about to deliver china's biggest ipo of the year. it plans to raise up to $2 billion by selling a 10% stake in its chinese unit of the shenzhen stock exchange.

it might get more than half of its total revenue from the unit and plans to use the proceeds to finance a new project in china. amazon's prime day is underway with more than one million days on all members. according to research, shoppers who spent nearly $6 billion over the the -- 48 hours sale, an 11% jump from last year's event which was a half-day shorter. spencer soper is tracking this from seattle. already a few hours and since the sale started. do we know what consumers are buying, how much they bought already? electronicsh, well, -- sales of electronics and small kitchen appliances are way up compared to a typical day. four to five times typical sale. that is expected. one thing that is jumping out is sale of nonperishable grocery items, things like potato chips,

crackers are up two to three times. it shows how the bargain-hunting on prime day extends beyond these big-ticket purchases and includes more everyday items peopled by at a grocery store. paul: anything new about this year's event? spencer: a couple things. one would be worker unrest. amazon has faced protests in the past in europe around black friday and prime day. this is the first year they faced a strike in the u.s. on their big prime dale saiz of it -- prime day sales event. workers in minnesota were staging a protest. amazon liens very heavily on celebrities. it is a traditional market tactic. they use celebrities to move merchandise, to get people on stores or websites. it is something amazon typically has not done. they usually have their own deals and known products like their echo speakers and such.

this is the first year amazon has really embraced celebrity star power to maintain the hype around this event which is now in its fifth year and facing a lot of competition. shery: we have seen them rely on mainstream marketing methods in order to gain more market share. what do we know? spencer: they were using people like mark wahlberg to sell protein powder and kobe bryant to sell deodorant. kind of mainstream actors and athletes in the u.s. very difficult for marketing. even some of the people that they have pushing merchandise on amazon also have deals locked up with their biggest competitors like walmart and target. it is a new phenomenon for them. shery: spencer soper, thank you so much. we have breaking news. the manufacturer ams is saying they are ending talks with -- the german lighting firm. we heard they have made a fresh

offer. we are hearing ams saying they are ending talks. plenty more to come in the next hour. this is bloomberg. ♪ i don't know why i didn't get screened a long time ago.

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so why didn't we do this earlier? life line screening. the power of prevention. call now to learn more. paul: good morning. i am saikawa in sydney. we are under one hour away from the market open in australia, japan, and korea. shery: good evening. i am shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." paul: our top stories this tuesday, asian talks looks at for a mixed -- looks at for a mixed -- look set for a mixed start. banks begin reporting