and fiscal policy is that the money is in getting to the right people. >> i think we will be startled by the degree of earnings upgrades. >> monetary policy looks like it is on hold for a long period time. >> the numbers don't tell us as much as we need to know about the future. >> we've never had these kind of numbers before. we've never had these trajectories. >> the fed is very concerned about the outlook, whether it is l-shaped or u-shaped. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: from new york and london, for our audience worldwide, good morning, good morning. this is "bloomberg surveillance, " live on bloomberg tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. we are -0.2% on the s&p 500. tom keene, 20 days to go. tom: really heating up as well. mike allen at axios talking about the scrutiny of mr. biden. as you know, he's been extremely

quiet. you've really got to believe, with the tone we got from the president last night, i thought more invigorated than the recent days, that this is really going to heat up into the kind of campaign money people have been expecting, as you say, with 20 days to go. jonathan: heating up on capitol hill as well. house speaker nancy pelosi under a little bit of pressure. a $2 trillion game of chicken playing out in washington, d.c. tom: she's going after wolf like,r of cnn, which is, un-american to do that. [laughter] seriously, talking to mr. adams of kentucky, mr. adams made clear that mr. mcconnell is comfortable there. political report came out about 4:00 yesterday afternoon and went to a seven seat dane for the democrats --

seven seat gain for the democrats in the senate. the momentum in the change is now extraordinary. jonathan: the shift has been phenomenal. we've got to talk about the back numbers as well this morning -- the bank numbers as well this morning. bank of america provisions lighter than expected, eps firmer than expected. more still to come. lisa: goldman sachs in particular, and wells fargo. i am interested to hear what their debt trading revenues look like. bank of america underwhelming a touch on that front, with jp morgan and citigroup is overwhelming on that front. also today is another day of fire hose fed speak. rida,e getting cla quarles, and barkan. on the fiscal talk side, u.s.

treasury secretary steven mnuchin speaking today at the milken institute conference. interesting to see whether the republican leadership is getting on board with president trump and his proposal at this point. it seems like that fisher is getting -- that fissure is getting more entrenched. jonathan: we understand secretary mnuchin will be going to the middle east week. so if you are hoping for some big talks on capitol hill around the fiscal side of things, secretary mnuchin might be around. tom: but again, i go back to what you said, 20 days to go. every election changes as you get into this stretch in late october. of course, this is a unique election. we can all agree on that. there's 20 days to go, and it is heating up. what are we going to see 24 hours from now after another day of campaigning? jonathan: couldn't tell you. feels like a lifetime. let's get to the price action this morning.

equities just starting to turn lower in the last hour on the s&p 500. negative six, down a little more than 0.1%. nasdaq futures just about positive on the session. down about a basis point or two on the 10 year in the united states to 0.71%. in italy, 64 basis points on the 10 year. decompression across the continent has been remarkable over the last couple of weeks. tom: you see that with that real yield. we are looking for "the real yield" later this weekend, a property of jon ferro. 0.99 45, a negative statistic. that is a recent low for that real yield, one of the indicators of the disinflationary tendencies out there. jonathan: a wednesday promo for "real yield." i'll take it. dan alpert is joining us now, westwood capital partner.

equities are trading on speculation and the absence of any other place to put money. is that all it is? daniel: equity markets rise to extreme nearly high multiples on high-volume during high growth in the economy, and on low ,olume and relatively lower stagnant growth for the economy. anything other than the fantasies equities and able -- equities enable. i don't think it is high-volume and tie growth. tom: what is the view on the american labor economy? i believe elections are about jobs. we learns that in school, didn't we? you are doing pathbreaking research on this. what is the latest you have on the labor economy so we can brief the politicians all on this? daniel: the most salient statistic right now is the

continued high levels of unemployment insurance claims. they range between 800000 and 900,000. this is not stopping. we are getting people who were previously reemployed back into the pool of people who have been laid off. this continues us both small and medium-sized enterprises begin to determine whether or not they can make it for the long haul, those that were propped up by ppp and other programs. you are now seeing substantial layoffs by large businesses, corporations, airlines, etc. that have delayed that pattern, and that is contributing to the problem. is -- thatthat that this is occurring in a vacuum, while jobs picture improves in other data, is insane. to live inntinue

this bipolar world where we see these enormous claims on the one you, and on the other hand, start having these very precise discussions over what was the testing for the data in the andn particular month what that actually reflects on the date that the jobs numbers come out. lisa: i am sympathetic to the parish view you have. i am sure that jon is -- the barash view -- the bearish view you have. i am sure that jon is smiling during we say that. they are even having lower charge-offs than they previously expected. a lot of the data is still coming out better than people had hoped. why are you right in that markets are not accounting for distress currently in the economy, and markets wrong? daniel: i am very glad that you asked that question. i was watching a few minutes

ago, where there was that little glitch in the bank of america loan loss provisions data. i started rewriting everything i was going to say. nowwhat i am going to say is what i was going to say before that, which is as a practical matter, we have a huge financialirremediable obligations in what is a slow moving train wreck in terms of financial obligations. you have household rents in multi family that are deferred, but they have not been eliminated, and there is a very high prospect of default in that category, that will ultimately not be paid. the question is what is that going to do to the lenders that have been so far forbearing. you have things like the hotel sector, which is going to be absolutely catastrophic when it is time to reopen. there's no way the bank interest is going to be repayable on most of those loans. there's going to be substantial

write-downs. you may have some degree of household mortgage defaults that come out. not everyone is on the upward end of that case shaped recovery. some people -- that case shaped recovery -- thatk-shaped recovery -- that k-shaped recovery. some people are on the lower end of that. you will have sa me -- you will have sme's that cannot survive. i think the banks are being overly optimistic in under provisioning, and at the end of the day, all of that is driven by employment and aggregate demand. jonathan: dan alpert, great to catch up with you. dan alpert there of westwood capital, and lisa abramowicz very much on brand on "bloomberg surveillance." lisa: for the record, i actually had an argument that was bullish , basically saying the numbers are coming in better than expected. i just want to put that on the record. jonathan: can we clip that

moment and put that in a highlight reel? [laughter] shock. tom: i'm in stock. jonathan: lisa slightly constructive? lisa: you have to look at reality, and this is the challenge right now. is our reality lower loan losses and lower charge-offs? is that a result of the leftover money, or a better-than-expected economy? it is a big question. people don't really have a good sense of that. jonathan: that was the lisa abramowicz correction. [laughter] tom: what a day it has been. we've got claims coming up tomorrow with the kind of gloomy numbers that dan alpert is talking about. the nasdaq now back, slightly green after more green two hours ago. the jumble here is stark, but to be honest, also expected. again, i go back to your top of the show comment. we are 20 days to the election, and it picked up with a vengeance. just this morning, "the new york

post" clearly in support of president trump, out with a lengthy dissertation on the vice president's son hunter biden on ukraine, sourced out of mr. giuliani, who i believe we talked to last week, and sourced out of maybe steve bannon as well. very political, very angled. but all of a sudden, the heat is on, as it has been in elections since the beginning of time. jonathan: one week feels like a lifetime, and we've got three more of them still to come. tom: at 4:00 p.m. yesterday, i literally turned and said, it is wednesday, right? i have lost track of the days. jonathan: alongside tom keene, i'm jon ferro, together with lisa abramowicz. coming up on the program, liz ann sonders, charles schwab chief investment strategist. any words for the dog this morning? tom: it's his birthday. lisa: happy birthday. jonathan: happy birthday.

there you go. this show is nuts. [laughter] equities down two. tom: he wants to move out. jonathan: this is bloomberg. ♪ kailey: with the first word news, i'm kailey leinz. prospects for another stimulus package before election day look bleak. president trump and senate republicans are at odds. the president was urging them to "go big or go home," but senate majority leader mitch mcconnell is only legend to vote on the paycheck protection program for small businesses. house speaker nancy pelosi says it is not big enough. meanwhile, the world's top central banks are urging governments to keep spending. they say concerns about mounting debt should be put aside until economic recovery from the coronavirus is complete. the imf is normally a champion of budget restraint, but the fund agrees it is too early to end support.

in the u.k., there is growing pressure on prime minister boris johnson to order a circuit breaker lockdown. the opposition labour party say it is needed to get the virus under control. deaths have soared to their highest level since june. concerns are mounting that new restrictions are not enough. russia has ruled out a deal with the u.s. on nuclear weapons before the election. the deputy foreign minister dismissed the call for a freeze on their arsenals as an acceptable. thatberg has learned conocophillips is in talks to resources.oncho conoco is looking to make a bet on shale before a historic downturn in the oil industry. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. ♪

judge barrett: i am not sure, to the extent of the suggestion that i have an agenda, that i want to strike down peoples's

protections for pre-existing conditions. that is just not true. i have never taken the position, and as i have said repeatedly, any policy preferences i have don't matter anyway. they are irrelevant. that is your job. jonathan: amy coney barrett there, supreme court justice nominee. that is where the focus is for senate republicans. from london and new york this morning, good morning. alongside tom keene and lisa abramowicz, i'm jonathan ferro. hours, 12 minutes away from the cash open. here's the price action for you in the equity market. the s&p 500 dead flat. in the fx market, the euro-dollar a little bit of a snooze as well, $1.1741. take a look at sterling. the prime minister and discovering right -- the trimester and this government apparently back -- the prime minister and this government a fairly backing away from the october 15 deadline. i think one of the most

important things happening in the u.k. is what happens with restrictions. leader of theer, opposition party in the united kingdom, pushing the prime minister in this government to bring in a two to three week circuit breaker, and national lockdown. the prime minister and the house of commons saying that the tiered regional approach is the right way forward, but every morning, the front page, the pressure building on prime minister boris johnson. tom: we will see where that heads in the coming hours, if not days as well. right now, kevin cirilli. but we take great pride on at "bloomberg surveillance" is taking the zeitgeist and parsing it out. our chief washington correspondent really reports on this in the trenches all day. here's the lay of the land, changing by the moment 20 days to the election. "the new york post," clearly pro trump, puts out a cover treatment on hunter biden come

on ukraine, sourcing from mr. presidentabout a vice -- mr. giuliani, about a vice president compromised by ukraine. it basically says, with mr. biden so reticent because of the pandemic to campaign, that he is really not that she has really not had the scrupulous analysis -- that he has really not had this screw beal's analysis of most candidates. thehat true -- had scrupulous analysis of most candidates. is that true? kevin: you look at pundits on both sides of the il, and what they are doing is lobbying to be analysts. the question from a geopolitical since is who advises the commander-in-chief. we have seen this play out in

the past four years. it obviously predates this white house. but the question "the post" is touching on is on foreign policy. who will have the commander-in-chief's ear? in this case, should it be president biden, as he is looking to rally western allies in europe, looking at dealing with russia, which he says he would be more combative with? who would be arranging his meetings? that is the central question. enough with the gossip. that is the key question. , president a debate trump and joe biden will contrast each other. tom: jon ferro is in london, looking at the football fixtures for the weekend. lisa is worrying about how gloomy to get in the next 10 minutes. i am looking at wall street in none bidenand it is biden, and fox news

is 24/7 on biden. 's it back to jefferson and adams? kevin: i think you can argue snbc did the same thing a couple of years ago, but this is crunch time with 20 days out until the election, and the president is in need of some type of major trajectory shift between now and election day. they are looking at every possible opportunity in order to do so. jonathan: in a locked down liverpool, they show the game for free. that was kevin cirilli down in washington, d.c. [laughter] i'm joking. let's talk about the absence of debate tomorrow and what the candidates are doing.

president joe biden will be on abc. walk me through how they can get count. kevin: based upon the conversations i've had, they have made a decided decisions that president trump does not need a debate. he is not trying to convince the suburbs. they are really focusing on amplifying and running up the margins in red districts. that is their strategy. whether that is a smart one, we will find out in 20 days. for democrats, they feel they do good in debates. biden had a very strong debate. he got a bump out of the polls. he extended his margins. they are very much trying to get republicans who are skeptical of going democrat, but very apprehensive of giving the president for more years. they are trying to make a play for those votes. they view that as an opportunity. to be candid with you, the

president doesn't see a second debate as helping him. a final debate, arguably one more, that would be something they likely would be or likely to participate in, based on the conversations i am having. lisa: is there any chance that republican leaders, mitch mcconnell in particular, will get more on board with president trump's hope for a bigger stimulus bill? ritika: i think you sought -- kevin: i think you saw this in speaker pelosi's interview with wolf blitzer yesterday, and the intensity around this. i think all sides are feeling this. rank-and-file members in both parties are speaking more vocally about their frustration with leadership for not being able to get a deal. trillion coming from the white house is a nge, socant chunk of ch the idea that that is not a lot of money is not making to sense

to centrist democrats. you can feel their frustration that they are not able to get aid to their constituents. jonathan: kevin, we might have you back tomorrow. kevin cirilli, bloomberg's chief washington correspondent. more bank earnings to get to. goldman dropping across the bloomberg. upside surprise, trading revenues. trading revenue for the third quarter, $4.5 billion. the estimate, about $4.4 billion. investment banging revenue just shy of $2.2 billion. eps, 968. upside surprise across the board it looks like this morning. tom: i really want to give a shout out to him of the distribution of goldman sachs earnings is way better than some of the other banks we have seen. these are very good numbers. i know we will have some experts parachute in here, but i see some nice upper double-digit

growth in the tangible book areas. jonathan: and a move higher in the stock, up by one point in percent. coming up shortly -- by 1.9%. coming up shortly, sonali basak to break down these numbers, and we catch up with marty mosby of vining-sparks. this is bloomberg. ♪ are you frustrated with your weight and health?

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♪ jonathan: from new york and , this is "bloomberg surveillance." alongside tom keene and lisa abramowicz, i'm jonathan ferro. here's your price action on the s&p 500. we turn a little bit lower, then we turn back again. we are unchanged. euro-dollar also unchanged at $1.1743. 10 year into 0.71%. don't let this full view, the week has been fascinating. we had numbers from goldman moments ago. the release this morning, here is bloomberg's sonali basak. sonali: the numbers are pretty clean across the board.

fixed income coming in with a whopping 49% jump. but equities trading is a little bit light. there are going to be some questions about that. we saw them posting a return on equity that was through the roof , 17.5%. an this year said a -- this year set a goal to boost return on equity, showing that they can to get vantage during this time -- they can take advantage during this time. tom: i looked at expenses, and they still got headcount increased by 5% as well. the age-old question, is this really a bank? i don't buy it. they are not giving away toasters at christmas. sonali: we might see that headcount go down over the next couple of years, or goldman moving people to lower cost locations. we know some job cuts are already coming from goldman.

we know they are trying to make their partner ranked much more exclusive. the cost-cutting story, expenses increase, but they also want to stay competitive. you have goldman, you have jp morgan coming back into the office. tom: do you see the shade sonali threw me there? jonathan: she basically told you you're wrong and it really did american polite way. [laughter] -- really diplomatic and polite way. [laughter] lisa: clients are beginning to emerge from the pandemic economy. this looks even rosier than what we have seen and heard from other banks. sonali: it is, and we have morgan stanley tomorrow. james gorman was rosy enough about the economy to make one of the biggest deals since the financial crisis, even when the fed is trying to constrain capital. i know you love debt underwriting, but equities underwriting also going through the roof here, and people going

to public markets again with optimism in the markets, if not the economy. tom: you didn't answer my question, sonali. is this thing a bank? can you actually compare goldman sachs to jp morgan or bank of america? sonali: you certainly can't come about the same time, the consumer business is clocking in more than $1 billion, $1.5 billion in revenue. so they are getting deposits. people want to go digital. but if anybody has a market account, you know the interest rate is falling constantly. they are trying to appeal to consumers with this credit card. it is working on a much smaller scale than you see from the much bigger banks, and they have competition to contend with, too. jonathan: we are looking to have a lot of students that watch this program, and i think they have just learned that what defines banking is whether or not you receive a toaster. [laughter] i am pleased that sonali did not answer the question. the chief guide yesterday was to

wait for the earnings call. what happened yesterday for jp morgan and citi, and what are you looking out for later this morning? sonali: you are right, at first it looks really rosy, but people listened to the calls and realized they are going to be see in pain for the banks through the end of next year at least. if that is the case, what are the banks going to hang their hat on when it comes to growth in different business lines? even with goldman, there are troubles in the consumer. are they seeing the ability to rake in a lot of revenue from businesses that are not wall street businesses? tom: sonali basak, thank you so much. right now, martin mosby joins us from vining-sparks. what is the plan forward for the new goldman sachs? martin: the goal of goldman sachs is basically to be a leaner machine on what you are

calling the nonbank area, or the broker area. they are trying to get more efficient, more effective, and they are getting a little bit of that effectiveness with a lot of transactions. while you are getting everybody issuing deals because rates are so low, the stock market has rebounded, so valuations are fine in certain industries. they can go out and raise capital. andnvestment banking capital markets at goldman sachs, at jp morgan, at morgan stanley are all hitting record revenues. so you get that leverage on the nonbank side. great revenues, focus on building efficiency. on the banking side, what you have is because they are going to be regulated as a bank, even though they are not really a bank, why not take advantage of other businesses? that is why they are filling out that consumer bank. right now it is going to work out a lot better than what they even imagined because consumer

finance businesses, which is what they have, they have a very high quality consumer finance business, but can get funding at very low levels. you don't push those yields down with interest rates as much. the spread that they are getting off that balance sheet size is going to actually be wider in this lower for longer rate environment. so it is a nice business to begin, and they are getting the benefit we talked about on the nonbank side. lisa: this is a strange recession. a lot of people saying we don't understand the true pain because of the amount of money pumped into the system on the fiscal and monetary side, supporting the balance sheets of consumers. jamie dimon indicated some caution earlier this year. are the results we are seeing now with lower write downs does this indicate that the economy is in better shape and the banks are poised to do well in the coming quarters? marty: actually, it doesn't

reflect any of that. was fighting this as we were going into it, this new accounting that creates this dynamic. if you look at credit cost, true costs,crusts, ash credit absolutely flat to last -- credit costs to last year, absolutely flat. it has been so bad as we went through the downturn in the shut down in the shutdown and second quarter that the accounting forced all of this build of provision, so the earnings were getting hit just on expectations and guesses of what was going to happen. it wasn't real losses. the thirdt we have is quarter economic activity gets better while the accounting forces provisions to fall dramatically, which is why you have such dispersion out there with people trying to estimate what the provision is going to be. they haven't really locked in yet to this accounting. all of that to say there has

been a lot of dislocation, a lot of disruption. the banks have built provisioning three times faster because of the accounting then what they did in the last recession. now it is a wait and see. 2021 is when the actual losses will begin to be realized and recognized. it will become clear as we move through next year, did they get ahead of it, or do they still have more to go? either way, this isn't about survivability. they have enough capital. if banks can sustain dividends, if they can preserve their capital, if they can build a provision, they will accomplish success through this recession in the discounted valuations -- recession and the discounted valuations will eventually be proven wrong. jonathan: how dependent is that siri on what happens next in washington? much, not really that

other than how is the economy if tax reform to happens, or what happens if regulation kicks back up again. the economy is going to go through the dislocation that has happened, well beyond which administration is going to be in place. there's things that are just going to change behavior that are going to upset the businesses. that has already been built into what we've experienced this year. tom: we've got wells fargo at 8:00. let's drive forward to the train wreck. how are they doing in restructuring? how are they doing in erasing 10 years of challenges? marty: at this point it is almost like there's two points on wells fargo. ae is what they have done as management team and been forced to do this year disconnects wells fargo from anything we have known before. the legacy of being a high-performing bank, a legacy

of the gold standard, you can just throw it out the window. what we have now is it is too early now to look at charlie scharf and say, what is the report card? it is like brian moynihan when he was just going through his process. tom: well said. marty: what we have to do this with just a throwaway year so many different things happening. they are recalibrating every thing. so we are going to build from this space and move forward, and next year be the year when wells fargo has to prove itself. it has to start reversing the path instead of going down. they have to start building, and they have the risk -- they have de-risked. and had a chance to do that move forward with what the rest of the group may look like. jonathan: good to catch up, as always. marty mosby there of vining-sparks. goldman up a little more than 3%

in early trading. 19 minutes away, wells fargo. tom: marty had some nice comments on the challenges as well. i've got to go back to the merseyside derby of liverpool. this year it really matters, doesn't it? sir paul mccartney likes both teams. he mentioned that in "gq" a couple of weeks ago. tell us about come out of nowhere, everything gets better -- tell us about, out of nowhere, everton gets better? jonathan: a player out of madrid. tom: so this is like a real game? jonathan: absolutely. plus, there's a really important cultural aspect to this. liverpool has just gone through a locked down. bigger restrictions coming from this government. this saturday morning, they see both sides of that city play

each other. the pressure is on for the local broadcasters here in the u.k. to make sure that the people liverpool can watch that game live on tv for free, and i hope they do that because i think that would be a nice gesture. tom: it wouldn't be what you have in america, where even the radio you have to pay for. lisa, his tone just changes when he starts talking about this. lisa:? my understand. but there's a lot -- yes, i understand. but there's a lot going on in the u.s., too. tom: the jets are 0-9. lisa: let's go to london. jon, keep talking. [laughter] jonathan: how are the mets doing? lisa: you brought it up. you wanted to talk about it. jonathan: liz ann sonders coming up from charles schwab. this is bloomberg. ♪ kailey: with the first word

news, i'm kailey leinz. president trump is battling democrats and republicans over a stimulus package. he is telling senate republicans to "go big or go home," but mitch mcconnell is only promising a vote on a paycheck protection plan for small businesses. house speaker nancy pelosi says the white house plan comes up short. she is demanding significant changes. supreme court nominee amy coney barrett avoided any slips in the first day of questioning on capitol hill. democrats asked her about abortion rights, elections, and guns. still, they made local progress -- made little progress derailing the nomination. there is pressure on opec members who have not been living up to their promises. oil prices are barely above $40 a barrel, and new curbs from outbreaks are threatening

demand. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. ♪

>> we are seeing advanced economies doing better than emerging and developing economies, excluding china. within countries that are

uneven, you are seeing low skilled workers and women doing worse in labor markets. we are seeing rising inequality. that is why we described this as a long, uneven, and highly uncertain ascent. jonathan: that was the imf chief economist speaking of an upgrade for 2020 and a downgrade for 2021. the message from the international monetary fund as the meetings commence. from new york this morning, good morning. alongside tom keene and lisa abramowicz, i'm jonathan ferro. a busy one this wednesday morning, with bank earnings coming through quickly. let me get you through the price action. equity futures unchanged on the s&p, and then lower again, down six points, off by a little more than 0.1%. the big move to the upside this week started monday with big 3%h, the nasdaq by about coming into wednesday. in the bond market, huge rally in europe, particularly in italy.

btp's railing aggressively. we will talk about it -- rally and aggressively. we will talk about it later in the hour. fargo.re, wells a downside surprise on credit provisions. that is a good surprise, and we are seeing that from a series of lenders over the last day. tom: as marty mosby said, it is such a changed wells fargo as well. we will get to that in the moment. we got the headlines coming out on restructuring charges and that, but it is a different bank than the ones we have been reporting on. right now, liz ann sonders joins with charles schwab, chief investment strategist. i got on the screen the spx, down 16% december of a few years ago. and in the recent pullback, down

9%. you've had the courage to stay in the market and participate. justify that. how do you go through the process of staying in the market when we pullback? liz ann: it depends on what you mean by stay. what we have been espousing, which is not terribly unique versus any other "normal" time in the environment, is not just stay, but be disciplined. specific to that come our message has been for investors that have historically done rebalancing on a calendar basis, on a quarterly or annual basis, similar to what mutual funds do, to let volatility be your guide as to what to rebalance, or have your portfolio dictate a message around rebalancing, so you are turning to some of these big pops in the market, adding during periods of weakness. it keeps you in gear and forces low and trim high.

it is that rebalancing shift that we have been pushing this year. jonathan: just in terms of your approach to single names, what are you advising clients at the moment? liz ann: i don't analyze individual stocks, but to investors who like to pick tellingbut we have been investors to focus on is factor in any sector over style. the factor that has been most consistently successful in this environment, really throughout the entire year, pre-pandemic into the bear market portion of this, and then since march 23 low, is balance sheet quality. even in sectors that have not been as dominant from a performance perspective, that quality factor has been leadership. you can look for that quality basis, and i think factor in particular is more important than sector in this environment. blackrock'sday,

chief executive came out after they reported that assets surged, and said, "i believe we have more to go on the upside. we have a strong conviction that the average investor is still under invested." do you agree with him? liz ann: it depends on what you mean by the average investor. you can break the market and investors into cohorts. i think the cohort that is getting a lot of attention recently, i have been calling the newly minted day trader. i am not sure there's a lot of liquidity left there, but they are trading fairly small amounts. if you look at other measures of sentiment, certainly from an attitudinal standpoint, older investors are little more cautious. when you look at money market funds and the amount sitting a cash on the sidelines relative to overall

market funds, it is a fairly low number. if you look over the long term at household exposure to equities, it is down a little bit off the recent peak, but in the highest quintile historically. so i am not so sure i buy the argument that there is just massive amounts of money sitting there, waiting to go into the market. i think it is a mixed bag. tom: i want to go back to the work of stephen ross at m.i.t. on factor analysis. you've got to talk more about this. i want you to explain why so much of what we do day-to-day, within investment firms and the newly minted, ignores factor analysis, and what is going to be the variable out three and five years that drives stephen ross's original world. dayann: the newly minted traders, the data we have anecdotally and just looking at the activity among that cohort,

clearly is not focusing on anything terribly fundamental, be it valuation factors, long-term earnings growth. i think it is purely a momentum play, and that momentum can be in areas that may be justified by some fundamentals, certain tech stocks, but also your lee gambling plays like some of the activity we saw in areas like the bankruptcy stocks. in asdn't add that cohort making decisions based on any fundamental. i think the reason why the quality factor -- and i agree, i think there will be increasing focus on factor based decision-making, not just because of the positive bias it has had in terms of performance in this environment, but the realization that there is so much diversity within sectors that making that blanket sector pathis probably not the

towards long-term investing success. those factors around things, like in this environment, quality, should precede a more some plastic focus just on the sector level. jonathan: great to catch up this morning. liz ann sonders of charles schwab weighing in on this equity market. the provision for credit losses lighter than expected. that is the good news. eps coming in a little lighter than expected. i would keep an eye on net interest margins from here on out. third quarter quarter net interest margins for wells fargo, 2.31%. the estimates, 2.91%. slightly coming down. it is the difference between the interest i would pay for lisa's deposits and the interest i would earn on your loans, and the difference between the two. does that help? tom: that helps. it is the 31 page wells fargo supplementary perspective, and what is so important is on page three, they have bar charts and

talk about above the regulatory minimum. it is a different bank. jonathan: more to come with andrew sheetz of morgan stanley. from london and new york, good morning. this is bloomberg. ♪

>> the failure of both monetary and fiscal policy is that the money isn't in getting to the right people. >> i think we will be stunned by the degree of earnings upgrades. >> monetary policy looks like it is on hold for a long period of time. >> we've never had these kinds of numbers before. we've never had these trajectories. >> it all comes back to the fed. the fed is very concerned about the outlook, whether it is l- shaped or u-shaped. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. what i day