>> inflation remain below target. i'd like to re-center inflation and inflation expectations back at our 2% target. i think that would be a great outcome. alix: the dove stays dovish. st. louis fed president james bullard stays behind inflation expectations. jp morgan delivers a solid beat from fixed revenue, while equities trading mrs.. -- while equities trading misses. welcome to global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. -- welcome to "bloomberg tuesday, on this october 15. a real push and pull here between the micro and the macro. you get a readthrough on u.s. growth, as well as bank earnings. euro-dollar modestly weaker.

some pessimism over in europe. the bond rally echoing what we saw yesterday in europe. yields down by about four basis points. bank earnings are kicking off this morning. beats onp reporting everything except equities and trading. sonali: they did not be don't equities trading, but they did beat on fixed income, so that is good. they want to be the number one equities trading shop, so not beating there is not a great sign. average loan growth a little sluggish. jamie dimon put some notes of caution in the initial statement, saying that consumer sentiment might be strong, but generally a lot of weakening sentiment here. in the initial statement, they don't give the outlook for net interest income.

however, if they revise downward once again, they already revised downward last quarter, that could be a big deal as well. alix: net interest income is $14.23 billion this last quarter. walk us through what we did now. billion?ed it to 57 to $57.5he revised it -- they revised it from $57.5 billion to $57 billion. so they were able to make money with what they had. another division that shone this quarter was the banking division. we seen the banks really struggle with investment banking. jp morgan was the lead on wework and other ipo's. alix: investment banking revenue was up.

advisory fees were lower. like you mentioned, that was premature expected. the question on the call -- was pretty much expected. the question on the call, what do we hear from goldman sachs today? sonali: they have a lot of revenue tied to the market, so i wouldn't be surprised if shares were up even before they report. what stronger market figures mean is that hedge funds didn't really stay away from the market , even with higher volatility. with that said, goldman is also growing in the consumer business. the industry outlook from jp morgan now and goldman sachs at the end of this half-hour will be an interesting thing. alix: thank you so much for digesting all of that with me. jp morgan shares now at the highs of the premarket session, up over 2%. it is time now for global exchange. we will bring you the market moving news from around the

world. our bluebook voices are on the ground -- our bloomberg voices are on the ground. bigident trump has promised sanctions on turkey for its military campaign in syria, but they turn out to be a milder punishment that both parties demanded. our correspondent joins us from istanbul with more. reporter: that's right come a much milder sanctions than right, muchthat's milder sanctions than expected. president donald trump said he would destroy turkey's economy if it continued its dangerous , but investors breathing a sigh of relief after this muted sanctions. the turkish lira appreciating against the dollar. the sanctions very unlikely to deter turkey from its syrian military operation. however, we are seeing the first signs of an economic fallout from turkey's military incursion into syria.

a few hours ago, we had german automaker volkswagen revealed that it is delaying its final decision on a $1.4 billion investment in its car production plant here in turkey. we will be following those details closely. alix: thank you so much. now we want to turn to brussels with the latest on brexit. talks are down to the wire ahead of a european union summit thursday. british negotiators sit at a revised plan to brussels amid growing optimism that a deal could be struck this week. the work has been intense all along the weekend and yesterday because even if an agreement will be difficult, more and more difficult, we found, it is still possible this week. alix: joining me from brussels is bloomberg's maria tadeo.

where do talks stand? maria: thing is, and this is the main takeaway, is that this deal has huge momentum going behind it. for the first time in weeks, you actually see every major stakeholder in these negotiations, from michel barnier to the irish to the french, saying a deal is now possible. they do say a proposal put a word by the united kingdom is "serious." over the next 24 hours, two moments we need to keep an eye on. michel barnier needs to turn that into a deal by thursday. that is still the big unknown. tomorrow we hear from emmanuel macron and angela merkel. leaders can agree to this deal. the question is whether there is time to get everything done before thursday, the big make or

break summit. european leaders have made it clear they are not going to on the night. alix: thank you. here with me now is in the ran.ent -- is enda cur enda: the latest reminder that we have a wild to go yet before we have a trade agreement between both sides. china is in the market to buy , $50 billionducts worth annually, but as china rolls back its own tariffs on american goods, the u.s. removes tariffs it inflates on chinese goods. the background to all of this is a feeling that both sides are pushing towards a kind of a in november. both economies are probably looking for a timeout in the

trade war given the pressure on growth in each country. whether or not they can get over this terror hurdle, tariffs have been the main leverage the u.s. has had in all of this -- this tara hurdle -- this tariff hurdle, tariffs have been the main leverage the u.s. has had in all of this. alix: in my terminal, that puts china and a very precarious position, bumping up against their a discomfort level with inflation. enda: that's really driven by what is going on with pork, swine driving pork prices through the roof -- swine flu driving pork prices through the roof. the people's bank of china has more work on growth. alix: st. louis fed chairman james bullard suggesting he would back another rate cut.

"u.s. policymakers are facing too low risks of inflation -- too low rates of inflation." >> the shift in monetary policy in the u.s. has been quite dramatic over the last year. i'd say 125, 135 basis points, not just the 50 that we had. one part of what we need to do is take stock of where we are, we have to also consider additional insurance in the meetings i had. alix: we will hear more in just a few moments. coming up on this program, more of your morning trade and analysis on the markets in today's first take. we will be covering earnings all throughout the morning as they were allowed. i will speak to the cfo of johnson & johnson, joseph wolk, later in the hour. what happens when you factor in litigation? this is bloomberg. ♪

alix: time now for bloomberg first take. joining me is our in-house team of wall street experts and insiders. vincent cignarella and lisa abramowicz. let's start off with banks. jp morgan comes out. they deliver. we are waiting for goldman sachs, waiting for citi. what is your big take away? what do you care when it comes to bank earnings? vincent: i'm a little surprised

about the equities, to be honest. from a bank standpoint, i want to enter this market, and then you fail at it. it is generally not a good sign for the people that have been brought to do that business. my take for bank earnings is they absolutely need to be good because the last round of the bank checks in the fed let reserves go, the boosted dividends and did big buybacks. you will come under a lot of pressure from people like elizabeth warren in the fed if you don't produce -- from .lizabeth warren and the fed if you don't produce. lisa: a couple of things from bank earnings. you look at trading volumes on a year-over-year basis, they were materially higher in high-yield and investment-grade credit trading. that's number one. number two, net interest income higher-than-expected. this is very interesting, and it comes on the heels of a very strong environment for their

consumer lending sector. i am very curious about what jamie dimon is going to say about the strength of the consumer, potential charge-offs, potential risk is rising. that is also going to be really interesting. alix: they did specifically say it was because of the bigger balance sheet, so they are able to loan more, but what does that actually mean? lisa: and we don't know the full year, but this comes as they were also under scrutiny for their commitment with wework. how much risk are they taking in order to expand their balance sheet? how are they getting into some of these things? it was also reported record revenues when it comes to investment banking. again, it was a very robust quarter for high-yield and investment grade bond issuance, but at what risk? we see the big, high-profile wework debacle. vincent: that's a really good point, and i usually don't agree with her. alix: that's a good point.

i'm a little uncomfortable now. [laughter] i'm curious about your take on the wework situation. they said they preferred the jp morgan offer to the softbank offer, which is their lead investor. how does jp morgan sell this, something like a 15% coupon? unsecured, coupon, payment in kind bond. that means if they don't feel like paying the interest, they can just say we are not going to pay you anything, but we will just add that to the debt. vincent: this smacks of the citibank-enron bond issue. lisa: i'm not going to go there. vincent: citibank basically said his is a citibank paper, but if the stock drops below a certain value, it reverts to enron paper, and all of the investors are wearing enron paper when the stock went down. alix: speaking of, i'm really interested in goldman sachs because they could take a hit of

hundred $60 million on uber, 200 uber, of $260 million on $264 million on wework. it's all so tied together, so seemingly innocently, but i don't know. level, jp broader morgan is expanding its balance sheet in order to increase net interest income. the question is, how much more risk are they talking on -- are they tacking on in order to do that? much more in this environment to lend to corporations? alix: and how much harder that gets when in a press release, jp diamonds has there's a strong -- jamie dimon says there is a strong consumer, but warning of

strong geopolitical risk. gethat gets worse, you worse from consumer discretionary, it's at or. -- this chris neri, -- consumer discretionary, etc. lisa: i really want to hear what jamie dimon has to say about consumer charge-offs and what they are saying with was back to delinquencies and fall off. had the bank of america fund manager survey come out. that was interesting. more money into defensive over cyclicals. what did you make of that? america this is bank of , another bank stepping into this investment space. i think it is an interesting thing, what banks are doing with trying to i versus five -- trying to diversify, going into riskier places to try to keep their income levels. lisa: it does indicate a general caution by investors.

have they always been right? no. but is it an indicator? perhaps. alix: thank you for that, bloomberg's lisa abramowicz and vincent cignarella. coming up, we will speak to johnson & johnson cfo joseph wolk. this is bloomberg. ♪

alix: johnson & johnson up in premarket trading after reported third-quarter earnings that beat estimates. joining us from the company's headquarters in new jersey is cfo joe wolk. good to see you. the story with earnings going into this, the 2019 year, is it a year of transition? did you move the profile ahead, or is this a different turning point? guest: i think it's a little bit of both.

if you think about where we started the year, we had significant projections with respect to loss of exclusivity on major product for us. able to hold onto those a little longer in our pharmaceutical unit. we are a little ahead in our medical device unit. it's the best quarter we've had since 2015, so that turnaround plan is in place. we are very focused in consumer with detailed efforts on skin health, as well as over-the-counter medicines, as well as improving profitability. so it is accommodation of both. we do expect to grow above market in 2020 as well. devices, howical do you understand what is going to happen with the affordable moratorium on taxes for medical devices?how does that play into your growth forecast? joseph: the tax would be a side event to the growth profile. if you look at the execution we

had, we've done a nice job focusing the portfolio. we continue to do well on suit lucian's that's on solutions for stroke in the heart -- on solutions for stroke and the heart. we have really made a deducible difference in -- made a noticeable difference in is the stabilization of our orthopedics unit. alix: how do you factor in litigation risk into your outlook? joseph: if you think about some , they arees out there likely subject to our prevailing on appeal, so there's nothing to book, nothing to accrue at this point. we are continuing to go forward with that with respect to capital allocation. we will look to increase our dividend and make acquisitions when they are value creating. alix: what would be a good resolution for you on all these cases?

because you outlined what you said in terms of pushing forward, wouldn't a settlement make more sense? each case --joseph: each case is unique. court precedent suggests that will not stand up, nowhere near the award that was announced publicly. with respect to talc cases, there were three cases ruled in favor of the company just last week, but we don't hear about some of those headlines the way the losses are. there's one case that has not been fully adjudicated. with respect to the opioids, you've seen two different paths. in ohio, where we found a reasonable settlement to be had, we did that. in oklahoma, where the theory of law, as well as the facts being somewhat ignored, we thought it was best to proceed and defend our rights in that case. alix: what we can agree on is that johnson & johnson has underperformed the whole group, in part because it is litigation overhang. what do you do to incentivize

investors to invest in j&j when even if you can take care of it, it is still billions of dollars that could be at risk that prevents you from doing something like a buyback or something else? joseph: we just completed a buyback within the last quarter. i think investors are starting to come around, starting to get an appreciation and better certainty about the level of risk that is actually with any stock. the best thing we can do is continue to perform the way we did in the quarter, the way we did in 2019, that really bodes well. what thrilled me more was the list of 17 notable development's within our pipeline across pharmaceuticals and medical devices. that really bodes well for the future. alix: stay with me for one second. we have goldman sachs out, and we will pivot back on this. goldman sachs earnings out a bit early at $4.79, a little light versus estimates.

equities trading revenue nicely beats,, that highlighting jp morgan's inability to be on that. investment begging revenue misses, the opposite again at jp morgan. at 3.92coming in billion dollars, better than overall estimations. we will dig into more of these details. that stop lower 0.6% in the premarket. thanks so much, joe, for letting me break those headlines. you?is a good outcome for assuming you are going to have to pay something to settle these cases or the fed is going to make you, what is your ideal here? joseph: that's really hard to pinpoint. what i will say is the management team here will look at what a reasonable outcome could be for all stakeholders involved. so that is inclusive of

patients, inclusive of shareholders, and get to the right solution. products are safe when they are effective. we will look to make sure those products aren't subject to what .as become a big business model more than 400 million dollars is spent on advertising, soliciting plaintiffs for these cases. it's become a $36 billion industry. it is really needed is tort reform because this is driving cost not just for johnson & johnson, but health care at large in terms of the additional cost to defend against frivolous cases. alix: it was really great to chat with you. thanks so much. johnson & johnson cfo joe wolk joining us on earnings. go when sex earnings again, coming in a little light at four dollars 70 -- goldman sachs earnings again, coming in a little light at $4.79. investment banking revenue coming in at $6.19 billion.

jp morgan advisory fees were a little softer, underwriting debt quite strong. we will have to parse those numbers to see where goldman sachs had the most difficulty. joining us from columbia, south carolina is walter todd, greenwood c il, who owns a jp cio,n -- greenwood capital who owns in jp morgan. surprised by goldman, given what we saw was jp morgan. i was figuring jp morgan and goldman would have a strong number, but it looks a little bit weaker. i think what jp morgan is really , the execution that had a very solid quarter. i don't know that the readthrough for other regional banks that aren't as diversified as jp morgan is necessarily great when you look at the lending and loan growth that was pretty cap. but overall for jp morgan specifically, a very solid

quarter. alix: this is going to come up for goldman sachs, as well as citi, as the balance sheet expands, it saves on net interest income. how much risk do they take on? what do you want to see? do you want to see more risks to makeup and volume, what they are losing a net interest margin? to a degree. i think jp morgan does a good job of balancing that, taking on more risk for return. we don't want to see them go too far out the risk spectrum. that is a risk with net interest margins compressing, especially at the smaller banks as they get into ancillary businesses. with jp morgan specifically, that is not really a concern given the management team that you have with the company. alix: we are also getting some color in the press release for goldman sachs. a mixed operating environment. they are still trying to execute on price or 80's -- on

, but still, it feels like a mixed operating environment, what he highlight. y of results within that environment. is alison in new york williams, bloomberg senior bank analyst. do you have a readthrough so far on goldman sachs? alison: i guess the first take is fixed income did not match the stellar jump at jp morgan, so i think that is the negative. we will want to hear a little more about what is going on there. they are the biggest in the business. they've been gaining more share than others. it looks like that continues this quarter. equities trading looks a little better, so that could be a positive thing. last quarter, keep in mind they were probably gaining shares in the wake of the jp morgan shakeup.

investment banking fees also look a little light. alix: what we make of the whole investment begging revenue being down 15% for goldman sachs, but delivering well for jp morgan? how much of that is them taking on more risk versus not? alison: those numbers can be influenced by one or two big happened in the quarter. keep in mind that goldman earned more revenue from m&a than anybody else, so we are going to want to look at that. on the debt side of things, their beste of businesses is the leveraged finance business. that was not one of the better performers this quarter. the better performers were investment grade, high yield. i would say these numbers probably bode well for bank of for aa, but perhaps not morgan stanley from that respect. alix: we bring up the dreaded

color? is that in this alison: the key thing for wework, what does that tell us about the outlook for equity fees? not necessarily fourth-quarter, which is not the biggest for these banks, but as we think about 2020, is there a sign that the ipo market could be slowing? on the debt side, why we did see certain areas with a very strong miss, especially high-yield, it .s a mixed outlook when you look at what is happening to refinancing, we really pull these forward. so a strong quarter and debt fees may mean less opportunity for next year. that i am trying to find interest income for goldman sachs. not finding it just yet. what did we learn from jp morgan so far. that's less of a factor

for goldman. it is really the longer story of building out the consumer .usiness they have a big white space in terms of gaining, so it's more about what is happening with the apple card, what's happening with stores. guidance ise their probably about in-line with what they gave us most recently. what we haven't looked at is are they able to offset them with the market pressure. we did see a pickup and consumer loans and some of the government data. are we going to see that at jp morgan? we will be looking at wells fargo also later today. more just to get some color here, for goldman sachs, they are investing in lending. revenue, and debt

securities it hit a record of $98.1 million. . walter, when i take a look at banks, you could have jp morgan opening at a record high. do you buy the more here? do you just hold for the ride? what you do? importantthink it's to recognize that despite a very good quarter for jp morgan, it's a difficult operating environment overall for banks, with depressing net interest margins, low yields, etc.. i don't think you will want to extrapolate that at other banks, so we hold jp morgan. we are comfortable with that one. i think generally, you don't want to make a blanket statement and by banks across the board because that is going to be unique circumstances to each company. alix: we want to point out for goldman sachs, their provision for credit loss is actually up 67% on a year on year basis.

do we look at that like a good thing? alison: we would look at that as they are growing their portfolio. i would look at that is just sort of a growing portfolio. they need to grow their provisions just as much. alix: we have citigroup coming out at about 8:00 this morning. we spoke to nancy grace against her day. is what she said. >> we are going into the quarter the most positive on citigroup, and he may reason is twofold. number one, they are less sensitive to interest rates. part of it is they are less u.s. focused than the other institutions, so what's happening with the dollar and interest rates is a little less than an issue. i do think you will have some improvement in efficiency. there't be surprised if were some numbers around what the expeditions are for better efficiency as we go into 4 and

as we go into 4q -- as we go into 4q and into next year. alison: they need cost leverage to get there with a tougher revenue environment. they need to show that they are able to do more in costs, and i think this quarter we will see how close they are to getting there. they have announced some staff cuts despite the fact that they are targeting equities long-term . they are committed to the goal, so perhaps i think that's the number one number we will be looking at for citi. fixed income trading is more important to the revenue. we saw a big jump at jp morgan. we saw a lender jump at goldman. part of that has to do with comparison. we will be looking at that number for citigroup. alix: walter, are there some banks on your wanting to buy shopping list?

that if we get some clarity on rates or growth or trade, that you would want to be adding here? walter: not really. we are comfortable with the holdings we have. if you were to see economic growth start to pick back up, let's say a trade deal and brexit was resolved, you may want to look into the regional banks because they are a little cheaper than some of the others, and that would potentially be a good one, but for now, we are comfortable with the big guys we hold right now. sachs, revenue was down 3.8% year on year. earnings came in a little light, but the big headline we are all paying attention to is investment banking revenue, just $1.69 billion. net interest income was up very , 14.3r to what we saw billion dollars as the balance sheet winds up growing. as you wind up lending more,

citigroup coming up in about half hour's time. what is the conversation around the fed rate cuts? that is not a thing anymore. we are not talking about man interest margins. are you used to it by now? alison: i think the question around the fed is still the big question. interest rates are the biggest question for banks. it is just that we are not going to get our answer or any clarity on that today. we are going to have to wait. from that respect, that's why we are focusing on the cost, focusing on loan growth, focusing on mitigating factors, market share, and trading because these are things the banks can control, whereas for rates, i think we have to wait in the coming months to see how that develops. alix: just to add some color, at securities and loans rose to net quarterly interest income, but still kind of a mixed bag for all of these big banks in how they are making their money and

taking on risk to avoid that flatterers yield curve. thank you very much. she will break for us -- she will be back for us to help us break citi earnings. the vr or tattoo is here with first word news -- viviana hurtado is here with first word news. from bothawmakers parties aren't happy over penalties. the u.s. is raising tariffs on turkish fuel. vice president mike pence is going to turkey to demand a cease-fire, but he won't ask for turkey to withdraw from syria. over to the u.k., where prime minister boris johnson's brexit deal is hanging in the balance. the european union says talks may need to continue after the summit that begins on thursday. the telegraph reporting a deal is taking shape. there is a potential solution to the northern irish border problem. st. louis fed president james bullard wants to get inflation

going again. he suggested he'd be in favor of additional rate cuts as insurance. both speaking in london. >> we certainly have a great labor market, but inflation has been somewhat weak. we've been below target. inflation expectations remain below target. i would like to re-center inflation and inflation expectations back at our target. i think that would be a great outcome. viviana: global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. alix: thanks so much. walter todd of greenwood capital is still with me. has your base case for fed cuts changed at all in the last week as all the trade headlines kept trickling out? walter: i think the market

perspective is we are going to get at least one more cut by the end of the year. i know that is flushed away quite a bit in terms of the probability of the fed funds futures, but i we get one cut by the end of the year, more likely this summer than the october meeting, but there is some debate on that point. alix: how do you wrap all of this into a diversified equity portfolio and that bank of america funds survey, for example. the biggest fear they have this trade. what do you do in this kind of scenario? i think you have to --walter: i think you have to lean a little bit in either direction. i thing you've got to keep some cash in reserve. i think you've got to have some allocation to other areas less exposed on the trade side. i think jamie dimon today hit on

the crux of the issue, and that is a healthy consumer low unemployment rate, good wage growth, contrasted with or offset by weakening business sentiment and capital expenditures, at all goes back to the uncertainty around trade. think to act to keep a foot in both sides of the house, so to speak, in terms of the building a portfolio, we don't know how that is going to be resolved. we seem to tick one step forward, two steps back on the trade front. alix: based on that, where do you hide out? j&j.r: we own i know health care has been a challenging sector give it some of the political headwinds. i know some of that overhang with the cases j&j has specifically, but we do think valuation is where you are trying for yield. as this is our operating at a very high level.

i do think health care has an opportunity, despite those headline risks. i think consumer discretionary continues to be a good place to be. housing continues to benefit from lower rates. you look at home depot or lowe's as another good place that is not necessarily exposed by the trade front. in technology, semiconductors have been good, but would still benefit if we get some resolution on that front. i think those are some options for investors as you look around the equity market. alix: really appreciate your perspective today. thank you for joining us, walter todd of greenwood capital. coming up on this program, is it jp morgan to the rescue? wework is reportedly looking at the bank instead of softbank. how much risk jp morgan had to take on. plus, if you check out the

bloomberg terminal, go right to tv . this is bloomberg. ♪

viviana: this is "bloomberg daybreak." coming up later today, imf chief economist. now to your bloomberg business flash. the united auto workers union called leaders from around the country to meet in detroit thursday. bloomberg has learned there is no tentative agreement yet between general motors and striking employees, but the union may ask members for input on key issues. the strike began more than four weeks ago.

atigroup plans to set up securities business in china. they may initially focus on brokerage and futures trading. it is now owning full foreign ownership of financial services companies. basketball star lebron james wading into the controversy over china, freedom of speech, and the nba. james telling reporters that houston rockets' general manager was misinformed and not educated on the matter. he sent out a tweet that supported the anti-beijing protesters in hong kong, which led to a backlash in china and prodded a chinese broadcaster to blackout exhibits and games. that is your bloomberg business flash. alix: thanks so much. we cover three things wall street is buzzing about this morning. first up, wework wants that jp morgan lifeline rather than selling a controlling stick to softbank.

flows.lackrock's read on clients move back money into equities in the third quarter. 40 years of outlooks after posting investment outlooks online. joining us now, bloomberg sonali basak. a lot to breakthrough when it comes to wework. what is jp morgan offering? sonali: the coupon on this debt will be 15%, according to bloomberg's reporting right now. it is expensive, nearly double what the junk-bond last year had been offering. so they will have to pay off what they want with this package. softbank, and to they are in talks with more than 50 partners two. . it is risky financing at this point.

they are ready to run out of cash. you can presume that people believe that people can finish through next year, and it gives the new ceos a little bit of time to turn around. restriction is very expensive. firing people is not cheap. alix: how does this bleed into earnings from morgan stanley and jp morgan. jp morgan is embedded in a company, whether it's commercial real estate market, you name it. sonali: one thing that is interesting, putting aside the market to market, jp morgan is a very big stakeholder. however, a lot of their funds are exposed to wework. , their investment banking fees held up very well in the quarter, which i think is really interesting. jan wework, some more troubled on them.morgan was

after these are done, you still are able to land yourself alix:. but can they continue -- land yourself. alix: but can they continue? sonali: i wouldn't be surprised if they get some questions about this in the conference call. that's the question, the sustainability of these numbers. they have strewn up sean this quarter, certainly goldman, where investment banking was a little weaker. maybe aggression has served them well for this quarter. alix: for goldman, i feel it was underwriting that did well. equities did not. sonali: the whole year has been tough, not too surprising. these prizes on the upside are even more surprising. but goldman is the leader here. most.gotten the

we will see whether goldman is an outlier, or whether morgan stanley has joined them. . alix: let's take a look at blackrock third-quarter flows. what if we learned? sonali: we learned total net flows were lower than expected, which is not great. there was a rise in equities. you want to feel that maybe people are ready to take on little more risk. cnbc, and said they had some faith in the markets still. there's some confidence, but not flows coming in less than expected is never really a great sign. alix: especially when client activity for some of the big banks wasn't that bad. sonali: exactly. alix: let's get to build growth -- two bill gross -- let's get to bill gross. he launched his website with

economic advice, right there on the webpage. sonali: i've got to say, the beginning was kind of boring. [laughter] dividend paying stocks, which is not the big stock to go with. alix: i'm sure he took the time where i just go, i'm in the gym, in the shower, and i come up with these ideas. that's how you wind up coming up with the best ones. they are framed in quiet moments in the shower. sonali: the best place to write a story. [laughter] alix: especially if you have little kids. sonali basak, thank you very much. really appreciate it. here's an off the beaten street for you. deutsche bank has responded to reports it made payments worth millions to gain a foothold in china. still, of the bank will say is issues have been dealt with. payments were part of deutsche bank's strategy to become a major player, and apparently a

chinese president received a crystal tiger and a designer sound system worth $18,000. the bank reportedly gave premier on$3000 horse, and his s got a $10,000 golfing trip. coming up, the aussie dollar relationship with the two-year treasury market. we will break it down in today's traders take. if you are jumping into your car, tune into bloomberg radio across the u.s. on sirius xm channel 119 and on the bloomberg business at. this is bloomberg. ♪

alix: joining the is vincent cignarella, voice of the bloomberg audio squawk, who's now going to tell you about bank earnings. what are you taking a look at? vincent: looking at the dollar

and what it syncs up with. i was talking to a trader yesterday, and he was like, where do we go next in this macro story for a day trader? how do they line things up? i was thinking about it last night, and thought aussie dollar ,ust sync up with china exports and it doesn't. it syncs up with imports, but that's not a broad, macro story. the trade situation looks really good. it's six up with the two-year yield. for a guy looking at trading on a day-to-day basis, i think you can look at the two-year yield to get a little direction from the aussie dollar on a daily basis and keep the trade picture in the back of your mind. i do offer an excuse for this. i've probably made about much money trading the aussie dollar driving a used jetta. everyu take a look, $.67, time he gets down, somebody is buying this like crazy.

so if both of them still hold up, you would but in chile get back to the june levels of $.70. not a bad risk-reward when s on theooking at 50 bip downside. it's part of the trade deal as well because you do have better conversation going with the trade situation. i know there's a lot of talk that isn't in writing yet come but we do have a truce, and china did send some high-level delegates, so there's more to be handshaked in this. alix:'s vince cignarella -- alix: bloomberg's vince cignarella. coming up, more bank earnings. this is bloomberg. ♪ from the couldn't be prouders

to the wait did we just win-ners. everyone uses their phone differently. that's why xfinity mobile let's you design your own data. now you can share it between lines. mix with unlimited, and switch it up at anytime so you only pay for what you need.

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daybreak." bank earnings coming fast and furious for you. citi is the latest out. earnings better than expected, $1.97. $3.12beats coming in billion. equities light, $760 million. equities following jp morgan a little lower, but the beat in fixed coming in the same lines as jp morgan as well as goldman sachs. wells fargo also out. taking a look at these numbers here. -- wellsest income fargo, looking at these numbers here. just total average loans up 0.2%. 940 $8.9 billion. there's of the readthrough's -- coming in at $948 billion.

. this will be the first quarter for new ceo of wells fargo charlie scharf. still taking a look at citi, unfixed.enue overall revenue was just up by about 1%, coming in at about billion. aboutid reflect a gain of $250 million. banking revenue rose 5% year on $5 billion,t including some loan hedges. the market pre-much unchanged. they say they do see improved activity with investors and clients. equity markets decrease, saying in that area they are seeing lower client activity and lower balances in prime finance. they are seeing better climate

activity in derivative, so an interesting readthrough there as well. busy day. joining me for the hour, bob doll, nuveen chief equity alison williams, bloomberg bank analyst, and tony scherrer, smita capital management. alison: coming into the result, our focus was about in-line, perhaps a little higher. we will help want to hear the results for next quarter. again, fourth quarter tends to be the weakest for capital markets revenue, so what is the outlook going into that quarter? aviously we will compare to very difficult year ago, fixed trading better. that is a bigger business for them in terms of percentage of .arnings

so far, so good. in terms of banks, you own jp morgan, bank of america. what is your take this morning? bob: there are so many --tony:: there are so many tentacles into the overall economy. jamie dimon pointed out the consumer looking strong, and i think that is the theme going forward for the next little while. the consumer is very strong on all accounts. you saw a lot of repurchase -- sorry, resetting of mortgages, but not a lot of purchase of new homes comparatively. that is something we would expect to pick up over the next aseral quarters to a year

the demographics and the house buying window start to improve. they've had a great quarter without that being the big thing that fuels the quarter so far for them. alix: let's talk about the consumer, alison. wells fargo average loans were barely up overall, just up 0.2%. it looks like they had earnings that wound up missing. are we having readthrough on the consumer at all in terms of wells fargo? alison: i think it is tough to have a readthrough on the consumer just from headline numbers because they do have the balance sheet constraints. they had pulled back. they do have some room to grow. we want to see what is happening with in their outer portfolio. industry -- happening with their auto portfolio. they talked about getting more involved, so what is happening there?

for wells fargo, we are really going to look at what is happening with deposit, with deposit pricing, and with deposit growth. alix: our nonperforming assets were down 21%, overall loans down 0.5%. they are losing less, but maybe not loaning out as much at wells fargo. bob, welcome. good to see you. thanks, do you like them? are there some winters here -- banks, do you like them? are there some winters here? bob: we do. i think the banks are doing an amazing job with headwinds in their face. a low interest rate structure, the flatter yield curve, they are able to generate earnings. they are trying to make it a little over here and a little over there. they are watching their expenses. the balance sheets in really good shape. if they can only get a little break on the interest rate front. alix: fair.

in the last few earnings reports, jp morgan expanded their balance sheet to make sure interest income with it to percent. net interestre the income was up. how do you see the risk-reward here? bob: are they taking more risk than a year ago? absolutely. they have to if they want to grow their business. at this point in the cycle, the quality is still really high. in prior cycles this far in, you would be wondering about what's going to go bad, how big are the loan-loss reserves going to be come up with that is not a particular problem yet. alix: one of the particular problems has to do with wework. i just want to highlight what we learned from goldman. net revenue and equity securities fell 40%. "significantly lower net gains for investment and private equities." is this a wework thing, or were

there other one offs throughout investment banking? alison: broadly if you look at equities prices, that is a good cross, and that is basically flat. wethe other side of things, saw credit spreads really coming in this quarter, or over the last several months as well as bond prices doing better, which means lower yield, so that is supportive of the debt side of things, that we did see gains there as well. the other thing i will add its wells fargo, it looks like they had a really high expense ratio, say we are trying to see if that relates to some of their legal accruals. we are hoping they can get that behind them. we haven't seen goldman, but that is the other thing we are watching there. you were talking about risk and credit. keep in mind, one of the benefits of rates coming down is

support for corporate's. that is one of the reasons why we saw a lot of refinancing at lower rates. that should help credit hold. that's been a great story for the banks. we expect it to be very solid this quarter. that's one of the offsets of the interest margin. alix: when you look at your holdings in banks, do you view them as a cyclical value play, or that these banks make a lot of money and are able to mitigate risk? tony:: that's a great question. -- tony: that's a great question. into what theng economy is going to do, but we .ee what banks can benefit from i mentioned earlier the key homebuying demographics. we think that new key homebuying 35 toaphic indicates 44-year-olds. that is going to explode over the next 12 to 14 years. these banks have the money to lend with.

we hear a lot about shadow banking and how that can come in and fill the gap on the lending need, but what you need in the economy is the animal spirits to start coalescing, and when that happens you will see the banks explode to the upside. jp morgan coming in at 18% r.o.e., a couple of years back no one would have believed they could do that. was a pretty well contained expense and efficiency ratio. wells fargo, you mentioned the efficiency ratio wasn't quite so good, but again, they are on the heels of a pretty substantial change. just next week, i think charlie scharf starts on october 21. . we think there will be tailwinds for the banks that they haven't even seen yet. as bob said, they have been facing some headwinds, and still doing very well. alix: bob, you were nodding and laughing. bob: i was first of all agreeing. i view them as cheap cyclicals. the option for the better news

that was just potentially put on , butable, i will take that i don't pichai have to pay anything for right anymore. these are pretty cheap stocks. -- i don't think i have to pay anymore. right now these are pretty cheap stocks. conferencergan's call is underway. we want to go right to sonali basak, who is listening in. what are you heard so far? sonali: so far, the first two questions from journalists talk about the ipo market and what jp morgan's impact was from wework. the new cfo has already weighed in and said the market has been rotating for a bit to value, and that had some impact on ipo's overall, but they are still seeing strong sentiment in the ipo market. they did have higher underwriting revenues and in comparative banking, but they

said they are sticking to earnings. this is on the call with analysts. we've already seen goldman sachs take some declines when it comes to investing and lending. we will see how it is impacting jp morgan overall when it comes to private investment, but like i said, they are not answering anything on individual names so far. alix: let's see if they get away with that when it comes to the analyst call. thanks very much. let's recap. we've gotten four bank earnings over the last hour. jp morgan is really the outperforming on the upside. the rest of them getting hit a little bit. the reason jp morgan is doing so well, in part because investment banking. when sex had solid equities trading revenue. solid commission -- goldman sachs had solid equities trading revenue. solid commission. then you wind up having

citigroup a little bit of a mixed bag. solid numbers in terms of revenue and earnings, but they did see lower client activity in some areas of the equity market. they did have better fixed revenue coming in, and net interest income came in a little -- a little bit light. -- if you are learning more, you got to put away a little more. a little bit anemic, overall loans just up zero point 5%. that is all playing into the micro of the market. in the macro, you still have questions of uncertainty related to trade in the equity market, pretty much going absolutely nowhere. euro-dollar on the back foot, down by about 0.2%. weakening sentiment continues in germany. the bond really continuing from europe, really catapulted here

in the u.s.. yields down by about four basis point. up on this program, china asks for more. the company will struggle -- the $50try will struggle to buy billion of farm goods unless both countries roback tariffs -- of u.s. farm goods unless both countries roback tariffs. that's coming up. this is bloomberg. ♪

alix: this is "bloomberg daybreak." viviana hurtado is here with first word news. viviana: the u.s. is raising tariffs on turkish steel, halting talks on a trade deal.

the administration is calling for a cease-fire in syria, but not a withdrawal. the european union says brexit talks may need to continue after the summit that begins on thursday. reports a deal is taking shape, saying there is a potential solution to the northern irish border problem. the u.s. and china are far apart entree despite the handshake deal. -- far will struggle apart on trade despite the handshake deal. asian will struggle to purchase $50 billion of u.s. farm goods unless donald trump removes tariffs. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. alix: thank you so much. jamie dimon on the media call saying that china and trade are

reducing ceo confidence, as well as capex. recession is ahead, but doesn't know how soon. still likes the u.s. consumer, but honing in on uncertainty. still with me, tony scherrer of smita capital and bob doll of nuveen. ad capital and bob doll of nuveen. what do you make of this? bob: friday was a cease-fire. that's all. the chinese are asking for more conversations. uncertainties are still high. i think what we can hopefully count on is that we are not going to get escalation. we are just going to for around with the same terms we have. for the markets, it moves from the front burner to a side burner, if you will. it is still not a positive, but it is not the negative overhang. alix: if you take a look at the

bank of america fund managers survey is a readthrough, and we see things like the cash balance has risen to about 5%, overweight treasuries, cyclical versus defensives, do you need to be counterintuitive here? tony: i think that's a great point. it kind of dovetails into our conversation about financials, which bob said they were cheap cyclicals. in part because of the trade conversation, all cyclicals are cheap. what is rich is defensive stocks , the low vol stocks, and the things that have topline sizzle and revenue growth you can see optically. we are constructive on the market overall, but particularly the cyclicals, things exposed to these stories, are incredibly cheap. if the economy moderates to the

upside and it isn't as bad as people might expect, we think there's a lot of stocks in that group that could do well. bob: i think tony is right. maybe we don't even need upside in the economy. we just need the absence of further downdrafts because the cheapness of super kohl's over defense -- of cyclicals over defense is value overgrowth. we might get some better international markets if the global economy stops deteriorating. there are some green shoots to suggest that might be the case. alix: where are the green shoots? bob: in china, bits and pieces. in the u.s., manufacturing numbers are turning mixed. they are not all falling through the floor. of course, consumer numbers stay very strong. alix: tony, what do you like in that scenario? what stocks? bob: the other surprise to the upside is housing. you see it in the stoxx. -- in the stocks.

throughe very doubted 2018, and have rebounded all year long. they've done so because the fundamentals look very strong. again, even jamie dimon talked about that. there might be a backing off of and business spending, but not the -- of capex and business spending, but not the consumer. bob: who would have thought 11 years into this recovery, we housing?talking about that is supposed to be an interest rate sensitive sector that does its thing in the first two and three years, and dies into the cycle, and here it is with a rebirth. tony: that is normally something you get several years into an economic recovery, not 10 or 11. there's a lot of green shoots right there, and it's late in the economic cycle by any almanac you would look at. alix: so what's going to be the juan -- the the wax

black swan? it won't last. we are going to hit some kind of speedbump, even with the green shoots, just because the macro is so pervasive. bob: we are not going to get a riproaring economy. we are going to get one where over here, it's ok, over there it's not, and it will switch places. r word out of our vocabulary, there is nothing wrong with 2% growth in economies as mature as the u.s. everybody looks as if tomorrow is going to fall off the cliff, and that is how the market is pricing a lot of these cyclicals and defense names. alix: close if you're going to stick with me. we have breaking news comes to aboutaramco, set to pay

$450 million in fees to ipo advisors. you laugh, bob, but it's true. if you are a bank, you are loving those fees, particularly if you are goldman sachs, jp morgan. it is set to pay about $450 million in fees to ipo advisors. coming up, johnson & johnson shares up after the earnings beat. this is bloomberg. ♪

viviana: you're watching "bloomberg daybreak." shares of german payment firm wirecard plunging. "the financial times" reporting it found a concerted effort to fraudulently inflate sales and

profits of businesses in dubai and ireland. wirecard calling the report "total nonsense." shares in johnson & johnson higher, beating third-quarter estimates, raising sales and earnings forecasts. that was welcome news to investors. many are concerned about the more than 100,000 lawsuits alleging injuries and illness caused by j&j products. here is the company's cfo. >> if you think about the cases out there, there are likely subject to our prevailing on appeal, so there's nothing to book, nothing to accrue at this point that would even meet the accounting standards. viviana: it's estimated that j&j's legal risk run anywhere from $10 billion to $50 billion. alix: thank you. with me still is tony scherrer of smead capital. you just sold your shares in

j&j. why? tony: just because we felt like there were better opportunities in other areas of our portfolio. i will mention we don't feel like we are very good at handicapping prolonged legal battles. johnson & johnson is a stock that probably deserves a market multiple, trading at about a market multiple. it little bit of a discount on a forward basis right now. we just felt like there was better opportunities in other parts of our portfolio. alix: fair point. coming up on this program, st. louis fed president james bullard issues a warning of two low-inflation. a surprise for you here, he's dovish. how accommodative is monetary policy? this is bloomberg. ♪ everyone uses their phone differently.

that's why xfinity mobile lets you design your own data. you can share 1, 3, or 10 gigs of data between lines, mix in lines of unlimited, and switch it up at any time. all with millions of secure wifi hotspots and the best lte everywhere else.

it's a different kind of wireless network, designed to save you money. switch and save up to $400 a year on your wireless bill. plus, get $250 back when you buy an eligible phone. that's simple. easy. awesome. call, click, or visit a store today. alix: this is "bloomberg daybreak." i am alix steel. happy bank earnings day. that is dominating the micro headlines.

the macro is still uncertainty over trade. as in p futures up .3%. european bank stocks higher. part of that story will be lower yields. take a look at what we are seeing in the bond market. yesterday we were seeing a monster rally in europe in bonds. now we are seeing the follow-through in the u.s.. the two-spread a little bit steeper. --are seeing a little bit one on the turkish lira. also the table right up .1%. we had a monster rally before. we are paring some of those gains. i love france. they say we think the u.k. has an "serious proposal." versus the other ones, that were total playtime. james bullard says the treasury yield curve is a worrying signal. speaking in london, bullard suggested he wanted more easing.

he spoke to tom keene and rinsing lacqua on "bloomberg surveillance." >> i think we have moved a lot in the last year. had we been sitting here a year ago, we would've been talking about the fed raising rates. instead, in january and february we said we were taking the interest rate hikes off the table. then into june and july, we started talking about reducing rates. the shift in monetary policy in the u.s. has been quite dramatic over the last year. i would say 125, 135 basis points, not just the 50 basis points we have had. one part of what we need to do is take stock of where we are, but also consider additional insurance in the meetings ahead. francine: should the fed be more aggressive given the risks to the economy? >> if you buy the argument i just made, we have been pretty aggressive.

with long and variable lags and policy, it would take a while for those things to have an impact on actual hard data in the u.s.. i would expect those kinds of effects to come online during the second half of 2019 on the first half of 2020. you are seeing some of that in housing markets, where refinancing activity and other things have picked up. dissented for half a point cut over a quarter report cut. do you still think we need have a point cut? like to do more but i do not to prejudge the meeting. let's get to the meeting and make a decision. policy assuagery a trade war. can you fix the pain and agony of a trade war? james: i got this question earlier today also. we cannot do anything directly about trade, but we do have our maintain high

employment and low inflation and we are trying to do the best we can to take on board what is going on with the trade war and all the risk to the global economy and the u.s. economy and conduct a monetary policy that will help us meet our objectives as best we can. , we have a great labor market. the inflation side has been week. inflation expectations remain below target. i would like to re-center inflation and inflation expectations back in are 2% target. that would be a great outcome. alix: that was james bullard speaking on bluebird surveillance. schererth me are tony and bob doll. skeptical. the curve is telling the fed they have to lower rates again. yes there mandate is price

ntability, but they have an eye focused overseas. we just heard that interview. behind it was the uncertainty related to trade in 2019 has been responsible for a lot of the, oh my goodness, we have to bring rates back down. how much of a penalty it has been on gdp we do not know, but it is noticeable and substantial in my view. we have two problems. the level of interest rates and the shape of the curve. that is not a fun place to be this far into the cycle. remember we had wage growth move from two to 3.2 announced. myt was the only place in view you could see inflation beginning to show up. it is almost nowhere. alix: i like that you mention that, and you can see it in different areas. we will stay in the u.s.. this is the bloomberg two to

five breakeven expectations, anchored to the downside. the white line is the two-year. an investinghave strategy for structurally lower investment expectations that the fed will want to fix but cannot? that,the best part about from an equity perspective, is that it seems to us so much of that is discounted the stock prices of anything economically sensitive or cyclically related. we feel like we are getting awarded and paid in the margin built into the prices of a lot of the stocks that benefited by an economic stability center or resurgent center, which nobody believes in. part of that ties into fiscal policy. in the bloomberg, this is the other lack of inflation story. the is in china, where cpi,

white line, is disappointing, versus ppi, the blue line continues to deepen. prices continue to pick up. if businesses get squeezed, do you have a base case forgetting getting fiscal stimulus out of china? was it the same we have seen in 2016? does that help able case? tony: good question. we are domestically focused. we look at what is going on in the u.s. what is going on in the u.s., we think the fed's policy mistake will be the fact that they are lowering too much too fast. they are on trajectory to do that. we think at some point the consumer will show its animal strength and drive this economy forward, both in terms of what they will do from a spending perspective as well, which will ultimately be inflationary, which is something nobody is talking about. you cannot see that right now, but we do think that is on the horizon. the fed needs to wake up to

that. bob: i think tony is right on. the easing now -- globally, how much interest rates have come down. -- put the trade uncertainty we have a little bit less uncertainty around trade, then you begin to see the effects of all the stimulus. we could have come at a minimum, no further deterioration. tony is right. the next move is the economy will get a bit better. alix: we do not need fiscal stimulus and modern monetary policy? bob: i do not think so. we have had a lot of stimulus. look at the way china has stimulated in the last eight months. it has been a lot of stimulus and i think the economy will begin to respond. our word will disappear from vocabulary -- the r word will disappear from vocabularies. alix: are you talking the risk

of inflation moving much higher in relation to the fed? tony: it goes back to inflation expectations. for it to move where it is even in the conversation would be a surprise to the market at this this point.-- at alix: what you put in your portfolio to say just in case it starts to turn? tony: black swans, you mentioned earlier. i cannot help but thinking the right down goldman took from uber or what jp morgan might have to do with we work or softbank with we work. swansak -- the black might be price exhaustion by the momentum stocks not having any more bids to come their way in our view. alix: what about you? bob: i agree. remember how big the capitalization is of the names that have done so well.

if they start with inflation expectations moving from nothing to a little bit, and the stopping of the central banks may be having to go in the other direction, the pe will come in. that is a big part of the market. the cyclicals are not big enough, even if they do better come up to push the market higher all by themselves. we could have more of this choppy, frustrating thing, but rotation within the market many of us have been waiting for for a while. some of it is a bit early. i think it is still coming. scherer, really appreciate your perspective today. bob doll will be sticking with me. now we want an update on what is making headlines outside the business world. viviana: congress wanted the trump administration to impose tougher sanctions on turkey over the military operation into syria. lawmakers from both parties are dissatisfied over the penalties. the u.s. is late -- is raising tariffs on turkish steel and

ending talks on a $200 billion trade deal. mike pence is going to turkey to demand a cease-fire, but will not ask for turkey to withdraw from syria. volkswagen delaying a decision as to whether to build a factory in turkey. vw says it is monitoring the situation and is concerned. vw hoping the turkish factory would grow sales across eastern europe and the middle east. strictest esg's funds are snuffing the world -- the $15 trillion u.s. treasuries market. the so-called socially responsible funds shun treasuries based on the u.s. government stance on capital punishment or climate change. one of those funds, a $36 billion french pension plan. 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. i'm viviana hurtado. this is bloomberg. alix: bob doll is still with me.

do not think i have ever heard of that. maybe when it comes to tobacco stocks, big oil, but shunning treasuries over climate change? what you think about that? bob: it is a moral issue, isn't it? alix: but that is a huge market. what is your outlook for this going forward? bob: i think we'll have climate change and other things creep in. the world is changing and this notion of what is acceptable and what is not, what is moral or what is not will create a lot of dialogue. it has already had dialogue in certain parts of our society, but as it creeps into the financial markets it will be a new dimension. and the treasury market afford to lose pension buyers overseas? i do not know. i will have to look at the numbers. bob: as long as rates are where they are, someone will buy them. alix: that is an excellent point. bob doll of nuveen is sticking

with me. executive just wrapped up the media conference call. they did talk about we work. more on that is coming up next. gtvmberg users, check out . ♪

viviana: this is "bloomberg daybreak." i'm viviana hurtado in the hewlett-packard enterprise greenroom. coming up later today on "balance of power," an exclusive interview with ashton carter. now you're bloomberg business flash. the united auto workers union

calling leaders from around the country to meet in detroit on thursday. bloomberg has learned there is no tentative agreement yet between gm and striking employees, but the union may ask members for import on key issues. the strike began more than four weeks ago. citigroup plans to set up a wholly-owned security system in china. bloomberg has used citigroup may focus on brokerage and futures changing -- futures trading. test.ory alix steel may human getting pigs preparing for the world largest flight. qantas will test 787 flights nonstop from new york city to sydney. the flight will last nearly 20 hours. scientists and doctors will turn the plane into a flying lab to monitor passengers and see how they hold up. i'm viviana hurtado and that is your bloomberg business flash. alix: i would totally do it.

20 our flight. let's be clear, not in coach. get to drink, take a long nap. bob: watch a movie. you can get it all done in 20 hours. alix: thank. -- thank you. we are joined now by emma chandra and sonali basak in new york. united health care pretty solid. emma: that's right. up around 2%. they beat and raised earnings, coming in higher than analysts had expected and the company raising its full-year forecast. i keep with stabilizing medicare costs and the health insurance -- medical loss ratio came in and 82.4% lower than in the second quarter. this may have impact on other companies in this space today as

you and hc is a bellwether when it comes to medical costs. the company also saw continued growth in other parts of its business. it's medicare advantage program added members and also gains to its health service business. the company could also have another catalyst today, but that will not come until after the market closes. we have a democratic debate tonight. 12 candidates are likely to be asked about their health care policy. we have seen that policy news has moved stocks in this space through this year. alix: thanks so much to emma chandra. jp morgan just finished their media conference call. sonali has the latest. sonali: we have obviously seen strong bank investment numbers from jp morgan so far. they say the pipeline is healthy, but that does not mean revenues will be up. there is expected to be a decline. one of the biggest questions from journalists and analysts is

why jp morgan was not a bigger participant in repo markets. jamie dimon is saying a lot of that is because of regulatory reasons and he is sticking to that line. they would not answer many questions about it, but they did say the results are not material in terms of the decline in valuation for wework. obviously jp morgan and its funds are among the biggest investors in the company. alix: the third company we will take a look at his walmart. we are joined by brooke sutherland of bloomberg opinion. this is walmart in relation to vendors and amazon. why did you find it interesting? brooke: walmart is going to third-party vendors to say we want to offer your product at a much lower price, especially as we get into the holiday season. they are saying to the vendors, we will make up the difference in price. they are saying whatever your

product was selling for before, we will make up the difference. this is a vendor heavy tactic at a time amazon is leaning on its vendors in a not so friendly way. it has come under fire for its practice of price alerts, where it notifies the vendors if selling for ais lower price and puts pressure to sell for higher prices elsewhere so they do not get locked out of that by box on the amazon website. amazon has a lot of products, and if you are not the top results, your product might not be bought as much. bob: you like this move -- alix: do like this move from walmart? bob: i think it is novel. they are trying to get vendor loyalty. it might work in a market where vendors are wondering who i can sell with. look at the difference in the prices. i would lap -- i would rather

own walmart than amazon here, yes. alix: walmart has the money to do that, but smaller companies will not and that is a different bag of chips for them. brooke: they have the money to do that, but it is interesting when you look at amazon versus walmart, the tolerance among investors for that margin hit is sometimes not always equal. it will be interesting to see. this vendor policy is not great for walmart's own profits. how tolerant investors are on this will be dependent on how much of a volume they get. alix: this builders into the peak margin conversation we been having for eight orders. -- eight quarters. is this peak margins? bob: we talked a little bit ago about labor costs picking up, the unemployment rate in a 50 year low. we talk to ceos in their complaint is i cannot find workers. a year ago was i cannot find skill workers, now it is i cannot find workers.

that is not good for profit margins. you at this story on top, i do not think margins will collapse, but i think we have seen the peak, which makes me wonder how possibly can we get 10% earnings growth next year. i think the number is too high. alix: where is the worst offender? what sector needs to get re-rated the most? bob: probably some of the commodity sectors. the big boost next year. alix: bob doll, thank you very much. rook sutherland, thank you as well. coming up, it is all about the banks. we will take a look at the trading ranges for the u.s. banks in technically speaking. if your jump get your car, get into bloomberg radio heard a plus the u.s. on sirius xm channel 119 and on the bloomberg business app. this is bloomberg. ♪

alix: time for technically speaking. bill maloney, voice of bloomberg's equity squad joins me now. jp morgan earnings solid. good open and a record. what you see? bill: it is all about trading ranges for the u.s. banks. jp morgan indicating a high at 11907, yesterday 116 oh five, key level 119 120. the stock is in an uptrend from december lows. your bigrom january is resistance level. if we can get above 120, stocks above all-time highs. alix: how would you know if we are overextended. we did have a big trump a few weeks ago -- we did have a big jump a few weeks ago. bill: we want to see a big volume break above 120 before it gets to its breakout. alix: let's go to goldman sachs, also delivering on earnings. when you take a look at investment banking, it was a

different kind of story than jp morgan. jp morgan crushed it, goldman sachs coming in light. that is a mixed bag on goldman sachs. what you see for the breakout? bill: another trading range. resistance,ou closed yesterday at 205.82. stops fading in the premarket. -- stocks fading in the premarket. your to fail breakout here and in september. alix: let's take a look at citigroup. also mixed bag in earnings. taking a look at net interest margins versus estimates, they came in light and average loans up to percent. wider trading range. bill: wider trading range but the same chart. the 200 day at 65, maybe support around the 100 day around 68, but nothing but a trading range. alix: if we get above the

resistance level, is that a record high? brooke: it is not. -- bill: it is not. jp morgan is the best looking of the bank stocks. alix: great to get your set up. you can listen to bill all day starting at 6:00. he will give you his traits in the technical charts throughout the trading day. that doesn't for bloomberg daybreak: americas on this earnings day. goldman sachs, citigroup, j.p. morgan, wells fargo. coming up on "the open" jared watered to discuss the latest fund manager survey. bloomberg. happy tuesday, everybody. ♪

jonathan: from new york city for our audience worldwide. i'm jonathan ferro. "the countdown to the open" starts right now. ♪

jonathan: coming up, earnings season begins with the biggest names on wall street reporting. looking to avoid softbank's rescue effort. china wants the u.s. to rollback tariffs so it can reach a $50 -- a $50 billion bond product target. good morning. here is your tuesday morning price action. equity futures firm nine points on the s&p 500. .33%. market, the dollar stronger against the euro. treasuries, waking up from a long weekend. yields coming into 1.70 on the u.s. 10 year. a ton of news to get to. we have to talk about the banks and just a moment. breaking news from the imf and the latest outlook with bloombergs michael mckee. michael: the imf telling us what we already knew, a dismal year for global growth in