♪ >> there's a high bar to meet for earnings, but i think there's some decent potential for some pockets of outperformance. > i think the dividend buybacks story is going to be important for the banks going forward. >> after the shutdown we had, we were just going to end up with readings of inflation. >> i think for markets, it is 2022 inflation that is more important. >> everything would follow would suggest every bit of inflation is being passed through, and then some. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone.

the earnings season has begun. we welcome all of you on radio, on television as well. jon ferro, it is a boom economy, and we are seeing boom earnings. jonathan: we are seeing boom numbers out of the investment banks. let's talk about where we see similarities between the likes of wells fargo and jp morgan. from jamie dimon, he talks about loan growth being challenged. for the year ahead, what does that mean? does banks have that in common. i imagine the whole sector. -- those banks have that uncommon. i imagine the whole sector does. we face a boom economy in america. tom: in the real yield at -0.70%. forget how odd it is to work in the millieu of a negative inflation yield. jonathan: these banks had a

lovely right off the back of hide yields and steeper curves. i wonder what that means for the market. i want to touch on this. execution. but goldman sachs just did in the first quarter was just brilliant execution, far better than many people expected. let's pick up a nice example of the last couple of weeks. when we talked about archegos, who was holding the bag? not goldman. credit suisse was. that is a tremendous quarter, a tremendously executed quarter from the team at goldman. tom: in the execution of elites within the economy at goldman sachs, certainly at jp morgan as well. lisa, i love what you did i believe in the last hour on focusing on the challenges of the american economy, including small business a bit tepid. lisa: here's the question i havelisa: -- lisa: here's the question i have. why is loan demand tepid? is it because people have so much money in their savings account?

is because banks are tightening lending standards? is because people aren't necessarily buying as many homes? these are important questions and they have macroeconomic implications about just how are best the acceleration is. tom: the vix, 15.70. we will really dive into the data check at the bottom of the hour. alison williams with us right now with bloomberg intelligence, senior analyst for global investment banking. i want to talk about american banking and this lack of loan demand. are we back to the old idea that there are too many banks, and we need mergers and combinations to drive american banking forward? alison: i don't think that is the issue. i think it is really the need to

spend on technology and be competitive there. but in terms of loan demand, i really think, and lisa sort of asks the question, and i think it was the first part of her answer that is the right one in my view, that we have had companies raise incredible amounts of cash. the cash sitting on balance sheets at corporations is at historic levels, both in terms of absolute levels and as a percentage of their balance sheet. we had consumers saving more than they have in many years, being financially responsible. so where we have seen the disappointment, particularly at jp morgan, also wells fargo, is on the credit card balances. so consumers continuing to pay down those balances, and in fact, in the first quarter we not only get some seasonal weakness, but it has been even weaker than expected. that is what we are really thinking about when we look at the second half because a lot of banks are talking about the fact , bank of america talked about

the fact there commercial line utilizations are very low. a year ago, customers were pulling down those lines. now they are very low usage, so as the economy picks up, for the larger corporations that can access capital markets, they are just sitting on the -- on this huge cash horde. so we think they may mitigate the opportunity in the second half. jonathan: just in terms of the high-yield issuance, 70% of that has been for refinancing. you mentioned the consumer side of things. 14% drop in credit card loans. can we draw a big fat line from the fiscal support we have seen towards what is happening here at some of these banks on the loan side for the consumer business? alison: we can definitely draw that line. if you look at the stimulus

payments and different surveys, that is the number one thing they have been doing. saving, paying down credit card debt, putting their money towards housing. we have seen that in the data so far. we expect we are going to continue to see that. you mentioned issuance. the high-yield issuance in march, it was a strong month, but the comparison to a year ago where investment grade was also strong, high-yield really significantly growing. goldman's numbers and parts -- numbers in part are benefiting from that. the divergences, normally you look at the strong capital market numbers and say can they continue, but goldman just made 40% of their year, so there quarter alone is 40% of their full year estimate. tom: alison, thank you, with bloomberg intelligence. we've got the right guest to talk to right now about summing

all of this together. jonathan: geoffrey yu joins us now, bny mellon strategist. how do you read that? geoffrey: one is the government now being the primary source of demand, the primary engine of an economy. if that is so, they can create money through non-loan channels. they are going to accessed directly from capital markets. the fact that fiscal has to do the work, there is very limited private sector loan demand right now, so banks are stuck in that sense. banks will be happy again with steeper yield of course. lisa: can we get true inflation if banks are not increasing

their lending? geoffrey: banks will only start to lend when they see inflation driven by demand. that is what central banks have been saying. where is the demand going to come from? we want to see inflation on a sustained basis. right now they don't even know how much economic scarring there is going to be. jonathan: let me jump in here. the absence of lending is not because there is an absence of demand. it is because there is an abundance of cash. the numbers are going to be absolutely stellar because people are not spending. they are just not going to the banks with money. that is the story. tom: this is an unfair question to you, but i am going to ask it anyways. is the next frontier for our successful american banks to take on europe and gain market

share on the european continent? geoffrey: i am not sure that is a fair fight. the u.s. has a banking union. so europe, you don't think that is competition, but if you can see lenders of emerging markets that haven't been successful so far, the u.s. banks should probably watch their own rather than looking across the atlantic. right now i think markets are really looking for risk again, looking for carry trades. the euro really is the one we are seeing. the view that europe is no longer a problematic case in terms of the recovery. it is only a question of delay. then with the fiscal, you will see european reflation. maybe somehow you've out -- some

highly valued asian currencies. these are carry trades taking up the u.s. dollar angle. jonathan: so the u.s. is no longer the funding currency? geoffrey: the euro is now probably the reflation currency, and also, taking a step beyond that, european assets, there is a sense that europe is where you want to go in terms of the equities. but again, that investment has to come from governments, and the european union has announced the parameters. hopefully the money starts to flow soon. lisa: this idea of european the reflation trade is borne out by stephen major over at hsbc. would you agree? geoffrey: a lot of good news is in the dollar right now, and that of course relates to the u.s. monetary policy path. if we look at our own data, investors are buying back

treasuries, so it is a sign of that fear in the u.s. recovery. that is in the price right now. what i am watching for is where is the money going in terms of other markets. we want to see a risk on environment. it looks like a good candidate right now. tom: what is your parsing of the inflation dynamic, the separation of services and goods? the industry to industry parsing and the 47 different measurements of inflation that we have? geoffrey: you really need to separate the gift region of that ash the distribution of that. we have been seeing that for several quarters now, since the end of q2 2020.

investors want to get past this hump, and start to see whether it is sustainable. the second point which is crucial, we talk about cash, consumers and households have an a lot of money. in the u.k. as well, it is concentrated in the upper sick tiles of the -- the upper r sections of the population. it is not trickling down. there's a problem there as well. jonathan: geoff yu there out of bny mellon. let's touch base with sonali bassett for what we've got to prepare for for the next couple of hours on the call. sonali: we are listening to jamie dimon and the cfo of jp morgan speak now to media. what jamie dimon had said, he things he made a mistake by using the were challenged in his press release earlier.

he said this is not bad news about loan demand. you are seeing better numbers on charge-offs. really, what they are trying to do is paint a better picture that we had discussed earlier of this being a matter of loan demand rather than a matter of tightening standards. what they had told bloomberg is that risk appetite for jp morgan is starting to get back to pre-covid levels. the question is what to set balance look like at the end of the day? how much does that come into consumer loans when we know that in the corporate debt underwriting area, goldman is indicated asset backed financing is some of the driver of debt financing. tom: is he in the timeout chair? did dimon say something wrong? [laughter] sonali: how often do you hear jamie dimon say he's made a mistake? jonathan: these comments aren't off-the-cuff. they are in the release. tom: when you make a mistake, it is once-in-a-lifetime. jonathan: i think we make them

in every segment. but the economy is better, consumers and businesses are healthier than they were nine or 10 months ago. tom: it is the boom global economy. we have never seen this. jonathan: from new york, for our audience worldwide, good morning. alongside tom keene and lisa abramowicz, i'm jonathan ferro. this is bloomberg. ritika: with the first word news, i'm ritika gupta. good news for the european union after deliveries of the johnson & johnson vaccine were put on hold. pfizer and biontech will now be raising deliveries to the eu by 50 million this quarter. the u.s. drugmaker will bring forward deliveries scheduled for the fourth quarter. bloomberg has learned that by the 20th anniversary of the 9/11 , the biden adminstration is planning to withdraw u.s. troops from afghanistan. the terrorist attack led to the american invasion that outed the country's taliban leadership.

the u.s. will leave a few thousand troops in afghanistan as part of the may 1 target set by the trump administration last year. members of president biden's own party are threatening to stall his agenda. 17 new york democrats in congress say that any economy recovery bills funded by tax increases will also need to fully restore the state and local tax deduction. the deduction known as salt was removed during the trump administration. it is valuable for residents in high tax states such as new york and california. china says the u.s. is raising questions by sending a group of officials to taiwan, traveling to taipei for the anniversary of the taiwan relations act, the u.s. rule governing the unofficial relationship with taiwan. china says it will not change the fact that "taiwan is part of

china." 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 ritika gupta. this is bloomberg. ♪ ♪ >> jp morgan has done currently well. they tend to outperform the other large banks, and i think when you look ahead to the rest of the year for the analysts come of the concern is always the first quarter is typically the strongest quarter, and seasonally it begins to ease. so to put these kind of numbers together for the next quarter and the quarter after that, it is going to be challenging. jonathan: that is the cfra global director of equity research. good morning. alongside tom keene and lisa abramowicz, i'm jonathan ferro. here's the price action one hour

and about 13 minutes away from the opening bell in new york city. equity futures on the s&p 500, we events about 0.1%. in the 10 year, yields higher by a single basis point to 1.60%. goldman advancing 1.7% in the premarket. just a tremendously executed quarter in the first quarter for the investment bank over a goldman sachs. elsewhere, wells pharma -- wells fargo up by 0.3%. i want to talk about the theme that has emerged this morning, and it is about loan demand. mr. scharf at wells fargo saying loan demands are a headwind to this bank right now. earlier this morning, jp morgan's jamie dimon called it challenged. now he says, "this is not bad news about one demand."

typically if loan demand was a problem, we would be worrying about what is happening in this economy. this time around, that is not what we are doing. tom: and we are beginning to get a window of this quarters earnings. not only at banks, but beneath the radar. thanks to sonali basak for mentioning louis vuitton to me. you look at lvmh and what they announced in earnings yesterday, and they are absolutely extraordinary. the theme here is every single statement we are going to see is going to be a beat. jonathan: and i think we have to talk about goldman again. those beats were huge. $1 billion plus in some cases. tom: stephen biggar has seen this before, research director at argus research. if you were to focus on goldman

sachs, which part of the process says wait a minute about dividends, about share buybacks, and what we are going to do with the cash? stephen: it is always a good problem to have. i think the results midyear are going to enter a lot of those questions, but banks are certainly flush with cash right now. they've had moratoriums on dividends and share buybacks for over a year now. i think we are going to have pretty strong shareholder return figures come out. lisa: do you prefer the broker focused banks, the ones less susceptible to loan demand at a time when people do have so much cash as a result of government intervention? stephen: i think there is a natural sort of conclusion at some point to the big capital markets banks. weaver favorable on jp morgan and morgan stanley for the strength we have seen.

the trading has just been phenomenal. all of the things that are in place that you would expect to see, wire those numbers so strong? -- why are those numbers so strong? it is because of the high ceo confidence, the record stock market values. i think there's another quarter or two probably of really strong numbers coming out of thanking and trading, but as you have been talking about on the program, the anchor a bit has been net interest income. there has been a net margin issue obviously, as we are going to start to lap that from one year ago. reduced rates to zero. so the year-over-year comparisons will start to get better. but you really need loan growth for a bank like jp morgan. clinic 5% of revenues in 2021 we expect will come from net interest income. so the capital interest side is only going to go so far. we do think there is a silver

lining for regionals in that as the yield curve steepen's, as those loss reserves deprive profits, so i wouldn't count out the regional banks just yet. lisa: i want to stick on loan demand because that really is the story today as a lot of people parse out how much is it a lock of demand resulting from people perhaps not able to hire or not willing to start a new business after what they experienced, or is this simply because people have so much cash? when does it start to matter that loan demand is tepid when it comes to the economic prospect? stephen: later this year, the expedition would certainly be that as vaccines do their job, as more people come back into the workforce, we have already seen strong demand and housing in cars, which are two really strong segments for consumers in terms of pure dollar volume, but they have found they don't need

to take lending out for a lot of other things, including credit card debt which has been reduced over the course of the pandemic as the stimulus measures and others have just been spent less on surfaces and other things, so i think the worry begins later this year. we have moved town from 15% unemployment to 16% -- we have moved down from 15% unemployment. i don't think we will get to the low 3.5% any time soon, and some jobs may not come back at all. it is a testament to how strong the consumer balance sheet is today. they don't feel they need those dollars for lending. i would happen to agree with jamie dimon and his comment about lung growth being challenging. i think that will be the case for the next few quarters. jonathan: what do you think the pressure will be like to drop standards for lending right now? stephen: you mean, what are the

headwinds to lending? jonathan: these banks are sitting on attentive deposits. there's a lot of money that needs to be put to work if they can, so if the demand is not there from traditional sources, where they go -- where do they go? stephen: traditionally, given the strong shape of consumers and businesses, they would lower lending standards and try to push it that way. that always has a counter affect down the road of higher startups , so i think the dynamics are very true on the deposits. we have seen phenomenal record gross and deposits, and i -- record gross and deposits. -- record growth and deposits. so i think that does have to wind down before we see that loan growth, and that is just an additional headwind. so no, i don't think they have a

bullet here to try to increase lending growth. they could try to go out the credit quality spectrum, but that tends to come back to bite, and is probably not a good idea at this time, given we are in the recovery process. jonathan: that a stephen biggar there. we have three very different banks behind us, and just trying to understand the readthrough for other banks as well. tom: i think you were dead on about the separation here, as i mentioned an hour ago or so. what i would just touch upon is how we have regulated these banks into a corner. maybe jammin will talk about that on the various calls today. i can't say enough how michael spence, the laureate which was out front on this. a critical essay 11 years ago.

michael spence said be careful what you wish for with regulation because you are going to have a successful group, and what is their choice of what to do with all of that profit? jonathan: all that profit and all of that cash. consumers, businesses. that is what you've got to wade through. lisa: this idea of how it really just intermediates the banks, that they won't need to lend if they have so much money. morgan stanley shares up 1.5% in premarket trading. that is outperforming bank of america and citigroup's share prices, and this is on the heels of goldman. this goes to the strength and immunization they have given that they have smaller consumer lending and corporate lending footprints. they are less successful to lacking loan growth. i find that an interesting theme in the year very much fueled by the fed. jonathan: sonali basak stopping back in a moment.

from new york this morning, good morning. alongside tom keene and lisa abramowicz, i'm jonathan ferro. equity thoughts of the -- equities positive by 0.1%. heard on bloomberg radio, seen on bloomberg tv, this is "bloomberg surveillance." ♪

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jonathan: live on tv and radio this is bloomberg surveillance. alongside tom keene and lisa abramowicz i'm jonathan ferro. s&p 500 futures of three point. the russell up one third. the nasdaq up one third off the back of tremendous earnings for the first quarter for the likes of goldman sachs. let's get to the banks. goldman really well executed first quarter. goldman sachs up 1.6%. morgan stanley coming along for the ride. morgan stanley up $1.20. i do not want to make a big deal of the price action on the likes of wells fargo and jp morgan.

let sit on jp morgan just a moment. down .6%. not a dramatic move. a big conversation about loan demand. they are so cashed up on a consumer basis on the aggregate level, and at the business level as well. that is why the demand is not there. the economy is so healthy and fiscal stimulus has done so much heavy lifting, particularly on the consumer side. if you cannot make it up in volume, what you have to do westmark -- what you have to do? this will be the key going forward. these banks got a tremendous pop off the back of what is happened in the yield curve. steeper profitability. that is one yield of profitability. it is far more nuanced than that. this is tv and radio. i have 30 seconds left. yields up on the 10 year to 1.63. if you cannot make up in volume, can you get a helping hand from

the bond market westmark that will be interesting -- can you get a helping hand from the bond market? tom: we will get a boom economy. we will see with the yield market will do. the jury is out. jonathan: and story has stalled. maybe that is where you get another left. i do not know. lisa: there is also question about how much the cash people have will be an issue they put towards paying for things and not actually extending and asking for more credit. in other words, this lack of loan demand, when does it start to mean the economy will be capped? cinelli bostick joining us. jp morgan just joining us. what did we learn? sonali: on the consumer side they hinted some of the commercial demand might make up for sluggishness and consumer loan demand. the other thing they talked about was regulation, tom keene's favorite thing to talk about. they were saying they cannot

guide to what capital return will look like. tom: they do not have choices. sonali: they do not know what they can do. the slr is something they have been talking about a lot, making the pandemic restrictions continue to way more for the banks trying to show quarter after quarter that things are getting better. jp morgan, more than $5 billion of reserve releases are very significant. at wells fargo, more like a little over $1 billion. we will see what bank of america has to say tomorrow. jonathan: compare the banks. you did that early. let's do that again. can you do that right now? sonali: it is my favorite thing to do. right before this i wrote down everyone's advisory numbers and debt underwriting numbers goldman sachs bringing in $1.2 billion in advisory revenue. that little line in the press release, that is the number to

look at. goldman sachs is the number one m&a advisor in the world. at jp morgan they brought in almost half of that amount in advisory fees. on the debt underwriting side you have jp morgan bringing in $1.3 billion. it was rising at goldman. there is a differential. morgan stanley is the one to watch out for. are they keeping up on raising money for their consumers? they were above robust market capital arm and how does that translate into revenues? morgan stanley is the number one when it comes to equities. jonathan: you've been with us for last couple of hours pouring over the numbers. i know you've put together a list has questions about 20 long. what is top of the pile in outstanding questions that have not been answered? sonali: still cost-cutting. we know they have more to go. where does that come from? as you know, how i feel about

wells fargo, the same story. what does employment look like on wall street and that couple of months, especially because a lot of these numbers are very volatile. tom: headlines still coming out. we will let you get to them. the chief financial officer of -- saw strong fee generation across the entire franchise in the first quarter. away from fee generation is the reality also supported by a boom economy your seth carpenter of ubs has been wonderful about parsing this boom economy. describe how opaque it is to get out beyond q3 of this year? seth: so much uncertainty at that point. we are pretty optimistic. we think 2022 will be a solid year, coming in just under 4%. that could go wrong in any number of ways. we still of fiscal policy, a debate about a new

infrastructure package, a debate about how much taxes will go up in 2022, and the overall question of what will happen globally to the virus. tom: described the turbulence, a phrase from alan greenspan, the age of turbulence, let's take a boom economy as turbulent. is it good turbulence? is it a constructive turn of the capitalistic system? seth: good turbulence depends on whether you are a vulture or not. there is a lot here. the first important part is seeing how quickly people who are out of work get back to work. that is more a matter of survival than some underlying medium trend for the economy. i think there are lots of trends that existed pre-covid that are getting accelerated. think about retail. for years there was a decline in employment and retail as there was more online shopping. that trend got massively accelerated with covid.

i think we are going to see a transformation in the way the economy works because of covid. jonathan: there's so much uncertainty about what the shape of the cycle looks like. when we came out of the last crisis we had mohamed el-erian talking about the new normal. we had larry summers reintroducing secular stagnation . we got a quick understanding about duration and the likelihood we would get a shallow recovery. this time around it could be anything. morgan stanley talking about shorter and hotter. others talking about a return to trend over the next couple of years. what are you anticipating? seth: there is no question that right now there is a huge amount of impetus coming out of fiscal and monetary policy combined. if our forecast -- we will see the unemployment rate backed out of the 3.5% range we saw just before covid before the end of 2023. if that is right that means we got through what it took us a 10 year cycle to do in a few years.

the next question is what happens next. we know the last business cycle was not going to end right away. it did not end on its own. it ended because we have shots of covid. i am optimistic there plenty of possibilities for more productivity gains spirit i am also curious how far the labor market can go in terms of drawing people back in that have been outside of the labor market. lisa: how much is that view predicated on the idea that -- that they actually spend a lot of that money very ugly? seth: it is only partially predicated on that. we think consumer spending will pick up. a lot of that is getting back to a more normal relationship with consumer spending on one hand and income. consumer spending is very depressed relative to what you would normally expect given where aggregate income is, especially consumer spending on services. that is down 6% or 7%.

if that comes back over the next two or three quarters, that is a huge increase in spending. if we are right, that will be the initial -- sure, there is probably spending out of that pent-up savings. what we know is savings if it is cap long enough becomes wealth. we know consumers -- first order is let's get back to normal, that urge people will have to get back to normal. jonathan: clarify again, retail sales tomorrow rate cpi tuesday, bank earnings this morning. what is your number? seth: we think it will be very strong. 5% to 8% is all possible on a month-to-month basis. what we saw in february was a shortfall, partly driven because tax refunds were low. that should be a boost this time. then we have the stimulus checks coming in and warmer weather and

falling covid mortality. we are looking for a really big number for march. we think that is just the starting point for a strong second quarter, probably close to 10% or 11% at an annual rate. jonathan: good to catch up. seth carpenter ubs chief u.s. economist your number tomorrow, your median estimate 5.8%. bank of america at 11.5%. carl riccadonna at bloomberg looking for something close to 10%. we could have a very big number. tom: i mentioned it earlier. i looked at the asian number and the china number for lvmh. these numbers are stratospheric, up 83%. it seems we are getting what david beyond the talked about yesterday, there is a whisper up and the real whisper up, which is even higher. jonathan: the challenge in the near term is to try to work out whether these better numbers

will show up on the balance sheet to show these companies where to go traditionally you might go to the banks, but when it comes to this morning, loan growth, loan demand. lisa: people have got more than $800 billion of direct payments in the united states. this is some of the map i was doing yesterday right that is how ice -- this is the math i was doing yesterday. people spend the stimulus checks pretty quickly. after that, then what? can they spent them on vacations and travel if there is friction of you cannot get a reservation? have you tried to book a flight or go somewhere in a car? it is hard to find any kind of services. tom: it is just out in the middle of the calls at j.p. morgan and the headlines are streaming out. the chief financial officer says march was the best month on record for auto origination. i see it anecdotally in new york. who is not buying a new car? jonathan: the traffic has

returned to new york in a big way. we have to talk about capacity. capacity will return through the summer. that is what we have to see, the supply-side respond in a big way. alongside tom keene and lisa abramowicz, i'm jonathan ferro. earnings season in america. coming up on the banks, gerard cassidy. and we will catch up with jill carey hall of bank of america and pgim's greg peters. this is bloomberg. ritika: with the verse were news, i am ritika gupta. egypt has seized the giant container ship that blocked the suez canal. egyptian authorities are seeking more than $900 million in compensation. the ship insurer for third-party losses said claims of damages is largely unsupported. warren buffett, amazon, and

blackrock are amongst the hundreds of companies and executives uniting to oppose limits on voting. they signed on to a letter denouncing any discriminatory legislation, making it harder for people to vote. republicans have been trying to enact new election rules in almost every state. we are still talking about it. bloomberg has learned credit suisse has sold about $200 billion of stocks tied to the implosion of archegos capital management. last month the firm became the center of one of the biggest margin calls of all time and cost credit suisse and other banks about $10 billion in losses. mcdonald's will require anti-harassment and workplace violence prevention training at all 39,000 locations. it is a move that helps fend off criticism that the chain overlooks workspace abuse. the management training at both company-owned and franchising locations will start next

february. 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. i am ritika gupta. this is bloomberg. ♪

>> coinbase in 2013 and 2014 has

been the first stop for anyone looking to get into bitcoin and they have managed to cement that , nunley for retail traders but also institutional spirit if you think about those two markets -- also for institutional. if you think about the markets coinbase have gone after, there are competitors, but they've managed to defend that position well. michael: coinbase -- tom: coinbase. there it is. it is an app. i am the only one of the planet that does not have it. by himself bitcoin. coinbase. -- by and sell bitcoin. coinbase. lisa: the reason why tom sounded far away is because he was looking at his phone and trying to register for coinbase. jonathan: i think i need to sign up -- tom: i think i need to sign up. here to advise me, mike mcglone

of bloomberg intelligence. we have been kidding about it all morning. the symbolism of this moment. what is the symbolism? mike: going to the mainstream adds to the milestones of 2021 for crypto. the key thing about coinbase is something significant has to go wrong. it makes money. the next step is maybe going into the major indices. it is part of crypto going into the mainstream. what will make it stop? i do not know. jonathan: is there a comp -- tom: is there conflict with coinbase that they are also doing too much or is that a distraction? mike: i think it is a distraction. they are a major custodian. moneymaking money. all of that can be sec lended. lisa: of course. do a lot of sec lending on bloomberg surveillance after we say transitory enough times. there is a question as we look

at coinbase, valued at $8 billion in 2018 and could have a market rating of $118 billion. how is this being valued at a time when it is not analogous to any other bank? mike: it is a new world. it makes money. let's look at tesla as an example. the largest market cap and all of auto manufacturers. what will it take that to change? i don't know. it is representing the new world of technology. just kicking and suddenly. the thing about coinbase's people love to trade. tom showed it on his phone. you can trade in and out so easily. tom: let me try. mike: there you go. i look at it every day. lisa: i am so sorry. just keep going. he will be looking at coinbase for the rest of the show. tom: i want to catch up with matt miller. lisa: it is interesting when you do your taxes they say how many

traits and digital currencies, it is new categorization some of your state and federal taxes there is a question going forward about regulation, about being able to pay your taxes in bitcoin. how is coinbase getting ahead of that as they are one of the dominant platforms for the crypto asset? mike: the question i like to ask when i hear that question is can you pay your taxes in gold? no. you monetize it and put it in dollars. dollars are the best vehicle on the planet for transactions. we are seeing the digitization of money. cryptocurrencies, all of them are speculative assets but the taxes are profits. that is a good problem, having to pay taxes on profits. a good thing to remember is what happened in this space. the most widely traded cryptocurrency is the digital version of the dollar. this is the dollar gaining dominance organically. if we will see regulation, it will probably be on things like

-- the u.s. has to do nothing and dollar dominance will increase, most notably what we hear with all of this cbt talk in china. tom: the phrase in the ipo racket is we left too much money on the table. if we are priced at $250 and guesstimating up to 650, who is being harmed this morning or this afternoon? who is leaving too much on the table? mike: i don't know. we will find out. the way i look at it is if something happens and it fails, i since rising bids below the market, most notably bitcoin. most people are looking to buy lower prices. the key thing i like to point out is technically bitcoin volatility has just dropped to the lowest since the breakout above 10,000. the market is ready for a catalyst. something has to go wrong. maybe it is overpriced, maybe it

is overhyped for bitcoin to go down. otherwise expect more of the same. lisa: i love speaking with you because you have an incredible view into the confluence of gold versus bitcoin. we have seen bitcoin search to record highs, we have seen gold not participate in the rally. is that duality explored to its fullest? have people gone into bitcoin that wanted to go into bitcoin, now if they are doing this kind of macro trade gold will get a bid? mike: i think it is early days. that is what i am scared about. think of the entities that have held gold for centuries are realizing this analog value is being shifted to digital. if you do not allocate some of your wealth from bonds and gold to some of this bitcoin, you might be missing out. your greater risks are not allocated. that is part of the domino trickle up theory that will continue. tom: i am crushed because i

wanted to get my five dollars for joining coinbase. i tried my password and they did not take it. lisa: we will check in with you later on your effort. tom: mike mcglone, thank you very much. really an eventful day. went you know when this thing is worth? mike: we will know by the end of the day. i expect it will be higher. tom: mike mcglone, thank you so much on bitcoin and coinbase. even if you are a major bitcoin critic this is worth studying. coinbase, a new step within this entire regime. lisa, an eventful day. your insight. lisa: i would say the lack of loan demand at the big banks will be the talking point for the weekend month ahead. how much have we seen the gap build in some of the activity from last year by the stimulus plans but no more? people are not necessarily wanting to borrow more because they do not have need for it.

that does not bear at that well beyond the next couple of quarters. tom: far more importantly to me is what they do with the cash. there ratios are getting stupid. 30%, 18%, growth to book value. high single digits. lisa: where they put that money? mike: mario gabelli 101, give it back to shareholders. lisa: that is not what shareholders want. shareholders want them to do something with it to create a new business. to gina martin adams's point, how much will going to wage increases? tom: we will see this and other indices as well a five-year dividend of high single digits or even 11% year. that speaks volumes about persistency. lisa: and i wonder how much people be looking for that even though they say they want capital expenditures. tom: we will be following

coinbase again. bloomberg tech tonight at 5:00 p.m. very important conversations about coinbase. the chair speaking at the economic club of washington with david rubenstein. that is important as well. this is bloomberg, on radio, on television. ♪

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jonathan: the quarterly numbers are coming. new york city for our audience worldwide, good morning. the captain to the open starts right now. equity futures slightly negative. we begin with the big issue. earnings season underway. >> we have such high expectations for earnings season. >> expectations are pretty high. >> a lot of positive tailwinds. >> the earnings growth will be extraordinary. >> it is the forward-looking comments that we hear from companies. >> i think it is time management chart providing guidance. >> we have an earnings catch up. >> companies have been remarkably resilient. >> the prospect of rising and sustainably higher prices >>. >> as the earnings report, in. >> if earnings do not deliver. >> very lofty expectations. >> tt