we're committed to helping all families stay connected. learn more at xfinity.com/education. >> a lot of businesses are not buying into the v. they see a different destination. >> we are likely facing a slower gross -- growth and sluggish economy. that is a bait -- great backdrop for secular growth. >> this is not a balance sheet recession. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. tom: it's an exceptionally busy morning. the bank derby as they say.

ins a draw as they say soccer right now. jonathan: i'm not sure anyone calls bank earnings season the great derby. darby.y -- the fixed trading revenue number. equity sales and trading revenue. message fromng the the city ceo. balance sheet a has plenty of capacity to serve clients. this is the continued message that the balance sheet is not an issue, this is an earnings issue. the balance sheet is still strong.

tom: every bank has different language. 20 some billion dollars of cost of credit. citigroup and jp morgan lifting a little bit. wells fargo is its own story. sonali basak joins us now. we have citigroup out here now i want to go back to wells fargo. how broken is wells fargo? a $2.4 just posted billion loss. down to is being cut $.10 compared to $.20 expectations and $.51 where it was before. they are putting up a fraction of what they had before. they are jp morgan with relatively solid results in the

face of a tough time. jonathan: is there a broad take away yet for all three? away isroad take uncertainty. jp morgan was able to show the consumer was all right. a lot of people were paying back loans. your summary of these three bank earnings before we get to david bianka? bianco?er of -- david jonathan: i forgive you for the top of the program because i think you were right. tom: my mascara is running. this family is dysfunctional. joins us now with

investment perspective. bernanke's core theory was the financial system in any crisis must stay sound. it is the american financial system sound today? >> it is sound. there are challenges, but it is sound. the banks were very much the patient. this time they are a medic. they are responded to the crisis. there providing credit. their earnings are under a lot of pressure. they are still suffering quite a bit of the brunt. that is hitting the earnings. the big banks are getting through it in part because of fees from other capital markets.

but it's not easy for these big banks. they are making their contribution to observing the .ost of this pandemic but it's good to be a big bank. you'll see the challenges to .maller banks that are typical thatgoing to stay tough in zero interest rate environment. lisa: the implication in your comments is consolidation if not actual purchases. does this mean from your perspective you want to buy the givengan's of the world their beaten up valuations and the scope for their consolidation of market value going forward? >> within the banks, biggest is best. a lot of people are moving the debate to should they own big banks versus super cap tech.

consolidation among banks, the regulators will have to improve and endorse it. hopefully we don't have too much of that activity going on because -- should this go into 2021, that's a real possibility. tom: one of the hallmarks of you over the years is a broader perspective. where do we stand now with this tension with china and how will that impinge on markets? >> we've been pretty bullish on china for quite some time. we recognize the country had its challenges, return on capital.

progressr types of that it's making, coming up later in the world economy. there is tension between the united states and china which is an understatement begs the question should u.s. investors be investing in china. our answer is whether it be investing in a currency that looks like it's going to be one of the world's important currencies over the long-term and companies and an economy that we think is an important part of the global economy. for a long time we would argue just go by china tech stocks. they've performed just as well as our tech names. but at a time like this where the chinese economy is bouncing better since the virus and showing signs of its ability to looking for're

value stocks beyond technology, we would want you in the direction of china. dare i say that even their , i think the currency in the interest rate environment , chinese stocks belong in the portfolio. think every morning we could write the same headline. tensions rising between the u.s. and china. it's almost become a joke. .ssentially kicking out huawei the south china sea once again has become an issue. no one knows what to do with that story anymore. what do you do with it? these big macro pictures, we try to think about how to invest through them, around them perspective about what really matters. are you comfortable with the

currency, the business, the valuation. and in those simple questions we are and that's why china stocks are in the portfolio. i think asia and japan is going to be an equally strategic weight in u.s. investors equity portfolios. unfortunately it's not a joke. it is real. there's a lot of tension between the u.s. and china about the way the world should be run and elements of individualism and the country surrounding china. this is something that won't go away post the u.s. election. the united states both sides of the aisle sees the tension with china and has different ideas of how to deal with it. the u.s.ion between

and china is we'll. as long as it doesn't explode i think it's investable for u.s. investors. jonathan: because there isn't a follow-up with policy i think people think it's ok to sit back. it's quite clear that for me this is going to get worse, not better over the next 12 months. important.s so what is the real policy outcome distinction between president trump and president biden? i'm not sure there's a wide gap there. jonathan: i don't think there is. they are both aware the electorate wants to see a stronger stance on china. let's say donald trump is there another four years. if you get a vice president joe biden going into the white house, i would say look back to what senator warren put out last summer about standards.

about human rights. to pushgovernment going that issue a whole lot more? we know how uncomfortable the chinese communist party with that. tom: the issue is also overreach. note to your point of senator warren of massachusetts that those sanctions yesterday were mostly republican senators. she's got some report from the republican side. i think this is aligning yourself with your allies in the region. the tribunal back in 2016 that effectively ruled against china, this is the united states aligning itself with that ruling from 2016 and aligning itself with the allies in the region. i would like to see more of a broader approach in the region

on the economics. not just on the foreign policy. tom: in hong kong, the collapse of wto. what you are asking for is an intelligent multilateral approach. we will see. jonathan: it's all about the bank numbers. it's not too anything to dent the appetite in futures. equity futures up .4% on the s&p. from new york, this is bloomberg. >> vice president mike pence tells u.s. governments to protect their citizens however they can. that comes as 13 states reach an alarming rate of positive tests. itsfornia reversed part of reopening by closing indoor dining and bars. the largest school districts said they would offer remote learning only. face coverings will be mandatory in all english shops starting

the 24th. those who don't wear masks can be fined. politicians have been pressuring prime minister boris johnson's government about my -- the masks. mcconnell says he's working with the white house on the plan. returns to work next week, negotiations will begin with democrats. they already have come out with a plan that has passed the house. ban huawei from 5g networks. the decision is about long-term telecom security. president trump has pressured the u.k. to ban huawei and boris johnson's decision to impose the ban is a major reversal from his earlier decision. global news 24 hours a day on air and on bloomberg quicktake powered by more than 2700 journalists and analysts in over 120 countries.

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>> banks are working with the borrowers.

individuals, businesses, larger corporations to help bridge the gap from the pre-covert economy to the post covid economy. jonathan: mike mayo of wells fargo. banks part of the solution this time around. we heard that from many analysts. mike mayo believing this is peak pain for the financials. we are from around 2% in the premarket. advancing .4% on the s&p 500. elevated by around about 12 points. abramowicz.d lisa i'm jonathan ferro. earnings season in full swing. tom: gerard cassidy of rbc capital markets saying this is ,- he was quite forceful particularly looking past two and three quarters. adams is bloomberg intelligence chief equity strategist. what she's really in charge of his courage. more than anyone i know, she's

never gone to cash. she's always participating in the market and that has been a good outcome for her. can you havedams, confidence to be in the financial sector and the too big to fail banks specifically? >> i think it largely depends on your outlook for revenue growth. these are extremely discounted stocks at large. the sector has been trading at an incredible discount for most of this year even though they bounced back significantly from march to early june. this is still trading below five year average. you have a discount available to you. it's a question of where do you think things are going to head. it's got to get better revenue growth.

everybody focuses on the yield curve, but the reality is when you look at the factors driving financials, it's the lack of revenue growth that has been incredibly important. tom: i went right to the revenue growth you see coming across the bloomberg. forget about aggregate demand. forget about yield curve. one of the factors to a better outcome, all of these banks are going to start cutting costs. >> they really have no choice because revenue has been somewhat paltry. trading revenue is extraordinarily strong. that certainly has been an offset to what's happening with the consumer books and the loans in general. the big portion of their core lending operations is a massive drag. cut costs toe to remain some degree -- retain some degree of margin stability. the other thing they've got to

contend with is the yield curve. it does have some predictive power for the financial space. has been about half as much as you usually get following recession lows. so it's been a really slow climb for the yield curve. are going toey have to cut costs to right size operations and contend with what's happening. lisa: it's important you say they need to have some visibility -- one of the supports to profitability has been investment bank revenues. we have jp morgan's cfo coming out saying they do not expect investment banking fees to be as high in the next quarter given that we ought expecting a decline in net issuance. there was a story today, bank of

survey showings that people believe 74% of all respondents believe that tech is the most crowded trade. it is a record for the survey. do you agree? mostch is absolutely the crowded trade. between the consumer discretionary needs and health care, those are kind of the only spaces that investors have been willing to put longer-term capital to work over the course of the last several months. they are hiding in what is more defensive stocks at this point in time and defense is a very different tone and characteristic and it was a year ago. not consumer staples so much as the technology health care communication services groups that actually do have relatively stable growth sospects and even more

stable growth prospects in 2020 but growth prospects into 2021. spaceas been the ideal for people willing to take a chance and equities to put capital to work. is that going to be the winner longer-term? catch up inee some these lower valuation stocks, high cyclical groups, higher risk that no one really wants to own like the financials and industrials. maybe even some energy and materials stocks. that's just been so volatile but it is high-value. extraordinary discounts are available in the space. lisa: catch-up is not the same thing as tech is selling off. do you see poised for underperformance for other parts of the market? >> most of the time what you see and economic recovery is still

participation. cyclical stocks lead the recovery. see an outright decline in tech valuations. there has been so much crowding and selection names and portions of tech, software in the services groups where investors have had no tremendous amount of capital. you may see a modest rotation out of those groups. catcheral it should be a up, not his sara lee a massive selloff even though valuations do look somewhat extended. that's a big if. i don't have a ton of conviction that we are going to have this riproaring economy in the second half of this year and 2021. we are still hiding in those defensive groups. e how manyi'm people have high levels of

conviction about anything right now. with you to catch up as always, gina martin adams. our colleague sonali basak pointing out that the cfo just said may and june are the easy months due to the government stimulus plan. out,any of the loans taken they have been so supported by the amount of fiscal help we had through those couple of months. will that assistance be there for the next several months? lisa: people are expecting a one upping of the stimulus programs. mitch mcconnell coming out of the senate and saying they are going to present their plan next week and that will be the beginning of discussion. two more weeks until those enhanced unemployment benefits run out. jonathan: we will be catching up later,chael mckee and

chris verrone of strategic. this is bloomberg. ♪

jonathan: from new york city, this is "bloomberg surveillance." we are live on bloomberg tv and radio. waiting to bring u.s. ppi data. here is the data. here is michael mckee. michael: is a bit of a beat with the consumer price index. increasing .6 in the month of june, that is a 10th more than forecasted and pushes the year-over-year number up to a .6 gain from a .1 gain last month. still way below what the fed is targeting, a 2% rate on the pce index. food and energy is .2 , the first monthly increase since february. motor vehicle insurance

increasing sharply in june was one of the reasons. the big reason for the higher-than-expected number on the monthly basis is the gasoline index. they gasoline energy index increasing 5.1%. 12.3% after the deal between saudi arabia and russia. gasoline the story for the cpi. we have been looking for some sort of disinflation. we certainly got it, but we got it on a one month basis, increased because of energy prices, particularly gasoline prices. ,ood prices up .6% as well which is about 4.5% on the year, and food at home up 5.6%. that helps drive consumer expectations of inflation, one reason we have seen consumer expectations for inflation rise. jonathan: get to the price action. equity futures are raising all of the gains in the last couple of minutes. not a clear idea as to why.

i am surprised to see that. just about positive on the session. the consensus in the economic community is this is a disinflationary environment. any reason to believe it is not? michael: the one thing that has been playing with some wall street traders strategies is if the economy is coming back you may have shortages of goods and that may push up prices in some areas. that is hard to see at this point with the continuing owns wens and the relockd are continuing to see. that is one aspect that could come in to play once was the economy start up again. tom: one quick question on the animal spirit of the economy. you and i have followed those who talk about nominal gdp -- so important to the spirit of america. it is not there right now, is it? michael: we are dealing with the

same problem we have dealt with for some time. do -- doand if they people have confidence to shop, and if they do that would lead to produce more. no one has any confidence at this point. there is a debate about a v and a u and w. it looks like we are somewhere between a u and a w. charts, henow on the is just exquisite on the trends. chris perrone -- chris verrone joins us from strategic. what is the trend on the equity market? chris: i think the tactical trend is sideways. we were digesting a 40% rally off the lows. we do not have much seasonal support over the next 60 to 90 days. the next month or two will look like last month or two, where markets do not make a lot of progress.

lisa: when you think the virus counts will matter again? chris: it is an important question and certainly the topic of almost every conversation we have had. i would encourage people to think about it differently. this is less about the trajectory of the virus. this is about the financial market interpretation of that. what i have been encouraged by over the last several weeks as the news around the virus has got more dire, you've not seen credit position deteriorate to any meaningful extent. it is a big difference from late february and early march, where the credit backdrop began to deteriorate in a quick fashion. that has not happened. i think credit markets are more important than what the daily virus count is. lisa: jamie dimon speaking on the call after jp morgan reported earnings. he was asked about the health of the consumer and said this is

not a normal recession. consumer incomes are up, savings are up, the traditional recessionary part has been delayed and it will come down will see the weakness down the road. how well is that being priced into markets, given the fact we do have delayed pain that will come along with this recession. -- chris: i'mys always hesitant to forecast. i will defer to jamie dimon on his expertise. if you look at what the market has already discounted, you had a 40% drawdown in stocks. did not peak in february 2020. i am trying to ask ourselves the cyclicality -- are they starting to, out of that.

i think the resiliency to bad news over the last five or six weeks, you have to give markets a hot tip. we are talking about discounting mechanisms. the market is aware of what the future will hold. let's get into the technical spirit the post covid highs are something we cannot breach. how key is that for you? lot ofit reminds me a may through july and august of 2009. you had a 45% move off the march 2009 lows and then you went through three months of all of the leading issues starting to correct. it was a tense three or four months that the market consolidated that gain and it resolved higher. it is interesting the expectation is this consolidation we have been in must resolve lower.

i am not convinced of that. surveillance nerd alert, we will do it with christopher verrone. i was stunned to look at the tesla chart and there are five gaps, jumps within the tesla stock price. five since the beginning of june. i believe i can say i have never seen that. mackey inback to john his classic test of 1948, four our global wall street audience ofand his classic text 1948. what does it signal that tesla has searched through five technical gaps since early june? chris: tesla has been the hood ornament of liquidity, the hood ornament of the growth trade. is there an access to correct? likely. we had what looked like low out volume yesterday on tesla similar to what you did on the

high in early february. the trend is up. i would approach this from the perspective of what you do with week as? when trends are positive you are inclined to buy weakness. i would be more inclined to be a buyer of that week is given the trend. tom: bring that over the major growth stocks that have given them -- that have driven the market. is it the same thing, by the weakness? chris: is a process that will play out over the next several months. as some of the high flyers correct, do some of the secondary issues step up and fill that void, for example the banks. as earnings get underway this week in that group, will that be enough to support while some highflying momentum stocks come in. that is a question that will be answered. jonathan: risk aversion coming in ahead of the cash open. mild move, but worth pointing

out. in the bond market yields were higher by basis point, now lower by a basis point the 61%. before we let you go -- by a basis point to .61%. -- how constructive are you on that continuing? chris: i want to answer that through the lens of the u.s. dollar. i am very bearish on the u.s. dollar. i think we are putting in a major top in usd. as a consequence, we should expect to see some new developments in the macro landscape. one of those being the resurgence of emerging markets as a leadership idea. not just em but lest of world starting to outperform. jonathan: i have to jump in. kit jukes of socgen asked this question. if stocks stop going up can the dollar decline? if you think stocks are going

sideways, is that in environment where the dollar goes weaker? chris: i think it is. i think weaker dollar is a headwind to some of the big index weights that have driven the market over the last four or six weeks, while it may be a tailwind to the industrials. i think what we are on the cusp of his leadership change and i think the dollar is driving that this is the most important chart in the world. u.s. dollar is popping. that is a bold call. youthan: just bouncing as -- i appreciate this is a five minute call and not a long-term time horizon. christopher verrone -- i think it is longer-term time horizon in five minutes. how many times have we heard this call, the dollar weakness call. here we are again this morning. tom: no question we are hearing the call again. i do not have any ax to grind. swissie ande euro

the fact is it has been very quiet. we have to see which way it breaks. jonathan: this has been a story that continues to build over last month. what is unique about this moment , and forgive me for sounding like a broken record, is people think u.s. equities can do poorly and the dollar can still weekend. that is the change. typically risk appetite needs to remain elevated to get the dollar week is. now they are looking for u.s. equities to look weak, but still get the risk appetite elevated elsewhere abroad. maybe, a weaker dollar in front of that move. this call is paired with the idea that europe is ahead of the u.s. fighting the virus. europe will approve the 750 million euro plan they have on the table. a lot of questions remain but a lot of it hinges on your strength and that is the big question. jonathan: a week for europe.

coming up, a key couple of weeks in big tech. why amazon could go higher. citigroupinet of coming up next. federal government has carried out its first execution in 17 years. a man who killed an arkansas family in 1996 was put to death by legal -- by lethal injection at a federal prison in indiana. president is downplaying a rift with infectious disease expert dr. fauci. over the weekend, white house officials tried to discredit dr. fauci's work on the coronavirus. the u.s. is escalating tensions with china on another front. is trump administration denouncing beijing's claim to the south china sea. that is combined with the u.s. and a ruling by the united nations tribunal.

the u.s. sees china stepping up a campaign to dominate the dominatech region and the smaller countries there. bloomberg has learned -- considering the move as a way to punish china for infringing on hong kong's freedom. they dropped the idea after opponents argued it could hurt the u.s. top of theis back on pop music world according to the bloomberg pop star power rankings. lady gaga was the biggest pop star the world. after aed bad bunny three-month run. her new record was the best-selling album in the u.s.. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. . am ritika gupta this is bloomberg. ♪

>> you have a set of assets that are unique to walmart and we are trying to put them to work, so maybe one of the big differences at relates to a digital commerce

view is how we are doing -- how we are using our stores. jonathan: the walmart ceo on the importance of the e-commerce channel. seriously important given how many stores have been shut down. from new york this morning, alongside tom keene and lisa abramowicz, i'm jonathan era. unchanged in the s&p 500 -- i am jonathan ferro. unchanged in the s&p 500. we will cover earnings season. at the back of the hour, a conversation with andrew balls on pimco on a tremendous week ahead for the continent. tom: i hope you get to the united kingdom two year yield. for our american audience, negative yield in the united kingdom, and going ever more negative. jonathan: and trading inside japan just briefly. he exchange and a huge amount of uncertainty dragging down the front end worldwide. tom: interesting to see, and

with red green on the screen. real turn to the market in the last hour. this will be fun. what is interesting about jason bazinet's work about citigroup's you have a headline that will grab you but what is required of jason bazinet is you have to read into the report. i did that the other day on a shopping call for amazon to move up higher for an percent. is the discussed extrapolation of the business model of amazon. you can do that if you have a mechanical engineering degree from vanderbilt. jason bazinet joins us. i love the way you engineered the report with amazon essentially being an exercise in systems analysis, an exercise in industrial engineering. what will jeff bezos engineer next? jason: thank for having me on.

i think what is next on the agenda for amazon is to take its logistics infrastructure and do what it has done in the past, which is repurpose that to save businesses with higher-margin services and take on fedex and ups. that will be the next light of growth for amazon. a lot of the story is obvious, but you bind to this idea they will find a new business away from the cloud, away from moving cardboard boxes , taking on fedex. what will be there delivery distinction? jason: the distinction is if you talk to our logistics analyst who covers fedex and ups, what he talks about is e-commerce for the big guys is not that attractive of a business because the package density is so low, where the package density goes side, where the

packages per stop almost triples. amazon shareholders are absorbing the cost of the very low margin logistics business associated with e-commerce. what is yet to unfurl is the higher-margin logistics business serving businesses. now amazon is priced as if it were a global superpower baker than the entire world retail sector according to research affiliates, saying perhaps things are getting frothy. what is the right comparison for amazon given valuations and its expansion into logistics area as well as a ws? jason: i am not sure there is a great to global cop. that is the beauty. amazon has such an unbelievably unique strategy that there is no pump -- there is no comp. pricesdid year end stock

over the last six years, amazon is at somewhere between 26 and 37 times ebida. our price target is 27 times. that is a get to 3550. i do not feel like anything is stretched. we are uncomfortable if you're looking at the market cap, you can say it is a bubble. if you look the numbers and the multiple, i do not think is a bubble. part of that is driven by the fact that amazon went into hibernation for 18 months through the middle of 2018 through the end of 2019. the numbers, if our forecasts are right, absently support the stock moving higher. have broughtople up regulation and regulatory risk again and again. people looking at it seriously last year, this year shrugging

it off and saying regulators will not get to that. you think this is more of a risk than people are pricing in? jason: not for amazon. if the press reports are accurate the area antitrust are digging into is the use of data for third-party vendors to influence what amazon sells as a first party product. that is not even on the buy side's radar screen. if that is where the regulations land, i think it is a big nothing burger. tom: one final question. i will not do a lot of math but there is a way you do a logarithmic extrapolation of any blue-chip stock. inr target is somewhere 2021, maybe early 2022. douglas kass talks about amazon 5000, which is obviously out further. your critics would say all you are doing is extrapolating out the 10 year trend of amazon.

are you above that extrapolation or on it? jason: i do not know if i am above or on it, but i can tell you the analysis we are doing is looking to make sure the growth at amazon does not slow. if the growth slows -- as long as you have ample headroom and e-commerce and these other verticals amazon is pursuing, i do not think the growth is going to slow. i can give you a couple quick data points. digital advertising -- the world's 50% digital advertising. e-commerce is probably 15%. if you look at amazon's market share, it is probably 35%. if you look at their market share in a lot of these verticals, we are in the bottom of the second inning. there's a lot of growth left. tom: thank you so much. jason bazinet with citigroup. it is an extraordinary story.

that aimple to say is heated cocktail conversation to talk about amazon two or five years out. lisa: shares up 70% year to date. the question is where does the growth come from. but thes are promising question is where will the growth come from heaven the challenges with fedex and ups. retail -- how much can they consolidate the retail sector. how much further does that have to go given where we are now? tom: let me start a rumor. they will go into banking and by wells fargo. it is a troubled story, no question about it. jp morgan doing better than good. citigroup coming out with earnings tomorrow. clearly there is a troubled bank -- wells fargo. there chief financial officer will join bloomberg this afternoon to dime into the financial dynamics that leads to a better -- to dive into the

financial dynamics. look for that at the 4:00 hour. an extraordinary day on bloomberg radio and bloomberg television. stay with us. this is bloomberg. good morning. ♪

♪ jonathan: from new york city for our audience worldwide, i'm

jonathan ferro. "the countdown to the open" starts right now. ,quity futures rolling over down 11 points on the s&p 500. we begin with the big issue. earnings,kicking up delivering solid results. one word dominating the release -- uncertainty. jamie dimon saying despite recent positive eco--- positive macro economic data, we still face uncertainty. we are prepared for all eventualities as our fortress balance sheet allows us to remain a port in the storm. ofls fargo saying our view the economic downturn has deteriorated considerably from the assumptions used last quarter. cautioning the reopening recovery is stalling. the ceo saying demand growth has largely stalled given the combinedffts