>> insulation should be going down. the economy is slowing. >> i think it is too early to be calling. >> we should continue to see it continue slow down. it is what the fed wants. >> they could declare mission accomplished except that is a jinx so it is better they do not do that. >> this is "bloomberg surveillance." jonathan: wall street earnings this hour. live from new york city, good morning. this is bloomberg surveillance on tv and radio.

your equity market slightly negative on the s&p. before today, four winning streak of s&p 500. stocks are doing well. yields on the two-year down 28 basis points. tom: it is a huge move. steven englander to join us, that is maybe the interview other day. i have not seen this, and must has been three years. all-time high july. if you're in the american zeitgeist of equity guist, you call it ath, all-time high. jonathan: how close are we to a record? tom: 6%. jonathan: if you're within 7%,

get a call it? tom: that is what was happening friday when the bears get to capitulate. lisa: can i liberate. it may be where you are going is we have heard yesterday that we could get to 4800. jonathan: you're being so kind. lisa: goldman sachs stoppages saying we could get to all-time high. this is the melt up and revisions upward we are seeing towards potential all-time highs, not necessarily july but by year end. tom: friday catalyst moment. is it a melt up? it is not felt like it because it is correlated with dollar. it is movable parts going on here. could you be the first speaker in purdue business school for james bullard?

jonathan: would you like to explain to the audience who might have missed that news are you bringing him up? tom: he is retiring after 33 years at the fed. he's going to redo. where is that? indiana. jonathan: water making headlines, now governor on the board of governors at the federal reserve looking for two more hikes. that seems to be the consistent message. there is a range of data points pointing towards a soft landing and yet still fed officials looking for more. lisa: market saying we know you're trying to jog on us to -- we did not buy it. market is shrugging and off and saying this is the message going to have until you cut and you will cut at some point. jonathan: jp morgan results this hour. equity market slightly negative.

yields a little higher after quite a run on the two year and 10 year. the euro move six days of euro strength against u.s. dollar we are about to snap the streak. euro levels we have not seen since february of last year. tom: solid three standard deviation leap. the strong euro. did you see sterling? can we afford london? i just do not think so. brexit has been a complete failure. lisa: we potential for further dollar weakness. bank earnings, jp morgan and wells fargo kicking off the earnings per unit citigroup expected around 8:00 a.m. analyst calls at jp morgan.

how much more expenses to pay depositors, they interests, how much quickly that is rising, the interest they are learning from loans. 10:00 a.m. to get a read on university of michigan consumer sentiment survey. we expect a sentiment to increase. potential forex based -- inflation expectations to come down. nasdaq is going to announce details around how it is going to rebalance and it is interesting because the nasdaq 100 has gotten concentrated that exceeded 50% of holdings and may make a problem for some of the fund and that cannot track it legally. they're trying to rebalance. tom: i do not understand. lisa: we will find out the details of how they try to rebalance later to the emphasize -- deemphasize. jonathan: they're not going to

wait it by price. steve chiavarone joins us now. it is wonderful to catch up with you. this hour, jp morgan results. what are you and the team looking for? steve: we expect weakness in the bank results but it is been well flagged at this point. it is not like is going to come to a surprise to anyone. goldman sachs is going out of their way to lower expectations. are those earnings, do they offer you a pullback in market? if they would, -- as cautious as we have beenwe have been econome held our nose three times already and bought going for a underweight position roughly 3% overweight in equities. very doing it because we think the rally will have legs here even if storm cloud do materialize on the economic front, which they could, we

think it is a way's away in it's getting pushed out so there's money to be made in meantime. tom: i look at reallocation. we come in every morning. lisa is here at 2 a.m.. i slight in at 5:30 a.m. and john at 5:45 a.m.. everybody is adjusting and rationalizing. do we need to rationalize a legit second leg of a bull market? steve: it depends on the asset class. if you're looking at a fixed income, we all know the list, given where it spreads and rates are, you do not want to get aggressive because it is trying to pick up a penny in front of a tractor-trailer. markets rallied during fed deposits, they will roll over later, but they rally during fed pauses.

historically they do get all-time highs. you have to play that even if you have recognition some of the risk that are out there because he can take another nine months to materialize if it does at all. that is what you see going on, realization that markets tend to fall when the fed is cutting, not while they are still hiking. lisa: where are you getting more aggressive? where is the money to be made based on the fact that perhaps not in the main stocks? steve: we have done small-cap growth site which seems ironic but we have added their, we had a big volume tilt through 21 the look on a two year basis, russell 2000 growth is still down 20% from where it was two years ago. is entered as bear market a year before the large caps. you're not dealing with highflying valuations so you get

to growth exposure, it is a little bit cyclical, at least in short run, and to the music stops playing, it is what you want to be. evaluations are not as demanding. that is what we found the best opportunities. lisa: used to be when jp morgan kicked off burning season, everyone look at them to what to expect for rest of the companies reporting, are they still in that role? will they serve as a tea leaf to what to expect for the rest of the earnings season? steve: i member when it was alcohol with these the kickoff the early seasons -- alcoa who use the kickoff the earnings season. jp morgan always got something in their bag of tricks to beat numbers. you expect they're going to do at least ok to kick things off and as you get through this season with some of the banks

that are not quite as good eggs especially -- setting expectations, you get a better read. in financials for this quarter, how are the big guys doing? we expect weakness on investment banks but things like credit quality we are looking for and long growth which seems to have run into a halt and and perhaps more important, regional banks which will be next week, that is where you have to be vigilant and if you since weakness. tom: i am looking at what we want inflation to go. i think the basic idea is, do equity animals want the yield in inflation and interest rates to go back to 2%? or do you do better if you it is a percent? -- 3%? steve: over the long run, equities are going to do better at 2% rate. equity valuations offer lower

discount rate. when it comes down to is what does the fed do. but the fed is willing to accept three, that may not be great over the long run. in short run, the markets will rally on it. they got to get to two and they're continued to hike aggressively than i think the rally we are seeing ends up being not sustainable. if they accept the higher, stickier number, then this rally could last for a while. they go to two and they stick to that, then the rally will continue for some time because there's no way to tell when inflation is coming down to an acceptable level or it is coming down to a recession level. you do not know until you get there. if they really going to go that far and continue to hike, the risk of a harder landing rise from their. it is a key question. you have to ask chair powell what he is going to do with it. tom: i think he is on the 9:00

today. steve: you got all the fed. tom: jerome wants to talk to you. jonathan: that is fireside chats. what is it like, that moment, we found out about the pandemic? i was thinking we had to go to zero and do qfii forever -- qe, forever. steve, thank you. at the bank of america, tough to get to a recession when unemployment is 3% and budget deficit's 9% of gdp. we say 2023 this inflation will prove transitory. low rates to rise and nothing below 3% -- wrote rates to rise nothing below 2% without a hard landing. tom: steve chiavarone is

outstanding at nuance and asset allocation. if we get the 3.2% and stop? i do not think that is in the thinking, zeitgeist, certainly not in the market. lisa: the point of a soft landing until it is a hard landing is something people have been talking about. jp morgan bob michele who is afraid of bloomberg and yours, said he has more conviction going to duration than he has since the start of the pandemic because what he's seeing around the world is screaming recession every sign and these things can happen quickly. he is the outlier as everybody else gets more constructive. our people getting enamored by the had a fake, this inflation story that may prove to be -- b-

headfake, disinflation story? tom: i do not know. jonathan: great interview and i'm pleased he brought it up. bob committed to that idea you go down to percent. this the 30's in the treasury market. i do not know what you wrote here this morning. ok. ken leon later. then there are 8:00 you get to safety. from new york city, this is bloomberg. ♪

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>> junior business the last of generation of the precrisis federal reserve bank president that were very well-trained trained, steeped in monetary economics and he was more willing than most speak out. there is a risk looming of economic weakness. it is a delicate time for central-bank leadership. jonathan: the former richmond fed president waiting in of james bullard. tom: to keep this short, this is

all geographic. it is what they did in jp morgan library on madison avenue. they did not trust new york city so they made many central banks. lacquer, richmond, virginia. bullard, indiana. they each have a different character. there is an emotional linkage between richmond and st. louis unlike boston and alice. -- dallas. jonathan: he heard -- you heard how the link james was willing to speak out. -- bullard was willing to speak out. ultimately even without a vote, he's able to make way sometimes because he talks so much. tom: i don't want wonderful things with jim bullard and had the honor of lunch and when the

we visit purdue, what is important here is the idea of what he thinks of the dots. he was the outlier. jonathan: a number of years ago. tom: is that a typo on the screen or not? jonathan: as the governor of indiana going to join us? i hurt -- heard her might. i'm not sure any of these people are committed. a lot of data through the week and the data so far fielding hopes and dreams of a soft landing. steven englander calling the game changer for the u.s. dollar. writing we doubt the fed will hike again at the july 26 meeting. we think the recent u.s. dollar underperformance reflect connotative shift in market comfort with being short u.s. dollar as the terminal fed policy rate looks increasingly capped. tom: stephen, i'm going to gopro

question. if you take a blended index, you rented on a long y axis showing percentage change, we've had on dxy a weaker dollar, what is the run rate out one year or two year? can beget scope and scale of dxy at five or 10 figure big move? >> i think there is a risk. i think markets will have to cooperate but i think that this is a game changer because the -- it takes the hawkish wind out of the defense sales and he fears of selling dollar, getting blindsided by the fed extending terminal fed fund rate or hocking up, it seems far less likely giving the nature of

slowing we have seen in cpi which is likely to continue. tom: go ahead. steven: what we do need and if this is why it is a game changer, if we start getting weaker economic data, payrolls keep declining, the question comes up, ok, the inflation picture looks benign for year but may be a bit longer. the economy is weakening some monetary policy has worked. what is the case for keeping rates as high as they are? the fact is that the inflation trajectory is pointing downwards means there's going to be a lot of sensitivity to any kind -- tom: robin brooks, should member showed trade with euro to a

record high rate at one point the strong euro break germany? at one point the strong euro break industrial europe? steven: i do not think europe's problem is the exchange rate. i think they are structural, being 30 years behind the times, in type of the economy it has at. -- had. if you look at the euro against the dollar, it is still pretty weak. we are just back to where we were before the ukraine war started. i think there's more room to go. i think if nothing changes from here on and, there's some room to go. if these move in the right direction u.s. economic weakness , there is a lot of room to go. lisa: the distinction between disinflation being good and

disinflation being bad is to be considered, how do we look at delhi weakness? does -- if we have the world's largest economy suffering and the disinflation turns into out rate the elation -- this elation as he goes, does the dollar still weaken? steven: it depends, you stay recession -- say recession everyone remembers things falling off a cliff, who remembers 1968, 1970, 1990 which is more typical of the kind of recession you have. things are solved -- soft. the world is not come to an end. that is the conversation -- kind of recession that seems kind of sluggish. lisa: which pair is going to be the most winning one if you do have this week dollar due to disinflation? if it is not the

euro, is it somewhere in asia? where are you looking? steven: asian currencies have a lot of room to go. some of the asian high yield is at the stage look very attractive. we have indian yields quite high. we have idr with yields high and it is been the weaker currency over the ear. but there's a lot of catch up potential out of asia on this but i think even the european currencies look good. brazil could look very good. it's yields is huge to everyone else. what is important is you go along. -- long. we have less fear being blindsided by monetary policy ending you the way it happened

in february. jonathan: wonderful to catch up. always enjoy reading your research. steve england and there on the cpi data and what it means for the foreign exchange market. we caught up with alan ruskin of deutsche bank. writing last night the current risk to the forecast is that the initial move happens more rapidly than projected and this move this week has happened quickly. tom: there's been a quick move and this is something huge advantage of bloomberg terminal, you look at trade-weighted indices. you look at the two major indices, traditional dxy, wonderful math a bloomberg dollar index. which pair wins? it is a raging debate into the weekend. jonathan: favorite tweet, sam rowe, love sam stub.

when you ignore all the positive things, things look really bad. tom: sam is someone people underestimate. this guy is a bulletproof cfa. he keeps the smartness under his cuff. he says wise things at the right time. jonathan: coming up shortly, potentially the next 20 minutes, earnings from jp morgan as we officially kick off earnings season on wall street. from there, it is onto wells fargo and safety and then into next week, bank of america, morgan stanley, and goldman sachs. ♪

jonathan: left new york city, good morning created wall street earnings around the corner. jp morgan in the next 15 minutes. s&p 500 four day winning streak. equities softer come up every single day this week. monday through thursday. nasdaq down .1%. on the week, treasuries rallying hard. two year yield down almost 30 basis points, up about three at the moment. 10 year down a similar amount

but we are up on the session a couple of basis points. in the fx market, euro getting a lot of headline. highs we haven't seen in more than a year. euro 112.18. we stronger euro, stronger euro. tom: it is a game changer. i would look at the other pairs as well. mexican peso sustains. have you seen dollar swissie and even euro swissie? these are stunning numbers. jonathan: you midget sterling. cable, 131 -- you mentioned sterling. cable, 131. tom: i'm watching the swiss franc. i do not think we are there yet. jonathan: i do not think we are

there yet. what do you need is the same kind of data we had this week on repeat and i'll repeat so the federal reserve starts to change its message. lisa: i love what alan ruskin said. the idea that if it happens too quickly and that seems to be what happens. everyone has to reset. at what point people overprice disinflation? an extension of a time when it is expected to do some play -- disinflate. tom: pepsico and the rest i get it. you wonder what the banks will do. this begin our coverage here. lisa has been phenomenal driving out the importance of pepsi-cola, while a number of days ago but it starts for real in 15 minutes -- wells fargo a number of days ago but it starts for real in 15 minutes.

joining us a sonali basak. it is a really strange july. grimm is the operative word. wind is the right size and began to get the february rationalization? i'm going to guess rightsizing the labor day is a big thing. sonali: rightsizing must continue as fungus revenues under pressure. if you look at each of the banks , jp morgan along trading revenue supposed to be down $1 billion and you have investment banking also down. if the consumer bankers that are doing better in the sense of credit card sales going up, but you have pressure on the consumer starting to the end of the year. pressure measly office -- pressure measly office. tom: do you see any given bank according jb morgan -- should be markedly surgical saying we do not want to do this business?

sonali: surgical work has been happening. last year we saw the work happen in the mortgage market. this year you start to see dozens at a time they announce in layoffs you are seen as the investment banks this summer, but do we get more than that? classical 5% there is no doubt you see that. you see it every year. it was a pandemic fluke almost you saw that stop. this gives the banks more wiggle room now to say business is down. lisa: how much are we expecting from the big banks to hear they're having to increase the interest they pay on deposits? that is clipping their income in a way they're not able to offset with higher income loans that are longer-term. sonali: there's a great monitor put out by jeffries, they call it the hot money reporter. you see differences between big banks and smaller banks pay up for deposits. the good jp morgan or bank of america, you are still getting a basis point or two from a

typical savings account. the promotional offers elsewhere but to the point, we've not seen that move for the big banks. there is a is an expectation you start to see that go higher. jp morgan has guided that in prior quarters. when does it happen is what you're asking and does it make a dent for jp morgan? last quarter was a record quarter of revenue. this quarter supposed to be another record quarter. how much does that move really matter for their bottom line? jonathan: next hour, jp morgan and wells fargo institute later this morning. joining us now gerard cassidy. wonderful to get your perspective as always. how bad is this going to be? >> i did not expect it to be terrible. we take a look at current conditions for banks, when things get into serious trouble,

always regarding credit and credit is going to be good at quarter. yes, i margin pressure is going to be there. the banks have to pay up for deposits, particularly regional banks. but we have to remember the banking system is still very flushed with deposits. the loan deposit ratio, a common measure to measure the leverage, is still quite low, especially for larger banks. the numbers are not going to be that bad. the bar is very low. we expect many of the bank banks to have numbers that may become in line better than expectations. tom: make a big deal about apple computer with $3 trillion market cap. pre-pandemic, jp morgan had $1.6 trillion in deposits. it is really slid to $2.4 trillion in deposits on its way model of to something much

larger. explain to mortals how big these banks are in unique business of jp morgan. gerard: you are absolutely right. our banks, the top three or even four if you include citigroup, jp morgan, bank of america, are gigantic banks and compared to the days were we had money center banks like manufacturer head over -- chase, manhattan, look at the size and they were the big base in the 1980's. these banks are multiple sizes of that. when you put out the trillions -- we sit there around billions like it was nothing down. these companies are very arched. in jp morgan and bank of america, extremely well-managed. tom: how do you do a run rate on jp morgan? seven years out --

how do you model it out? as a mid-single digit performer? high single digit? can jamie dimon and his follower, can they do a true double digit performance? gerard: it is a great question because when you think about the size of our biggest banks, banks are products of the economy, our biggest banks grow at the nominal rate of gdp's of you think united states as -- if you think u.s. has real gdp growth of a percent inflation you're looking at topline growth. they can a hazmat to the bottom line of positive -- enhance that to the bottom line a positive and repurchases but if you can consistently run your bottom

line earnings at high single digit earnings growth without any real disruptions over the long period of time, that is creating strong value for shareholders. jonathan: like i you assume jamie dimon will not be there in seven years -- how you assume jamie dimon will not be there in seven years. tom: that is doing a iger. jonathan: i asked ed ludlow about bob iger being a successor. you know this better than anyone out there, when you start to raise interest rates at the federal reserve, banks try to pass it on to lenders before they try to pass it onto the deposit base, they are forced to do the latter, they want to do the former. how is that speed, relationship between rates at the fed pastor deposit base and the people borrowing, what is that look like now? gerard: you're putting your

thumb right on one of the biggest points people are going to be focused on this quarter is the so-called deposit rate or deposit bater. it is been rather slow. it is going to accelerate this colder. regards see the -- the fed funds rates in the second quarter by 50 basis points. we expect to see many banks had deposit rates in excess of that so the so-called deposit is over 100% but that being said we still have to remember it is much lower than 2006 on the loans are deposit ratios were much higher and that is a governor of health as the deposit baiters go. if you get to a terminal rate on fed funds by september, i suggest by the end of the year deposit rates would not be going any higher. they burn out out of the

terminal rate is reached. lisa: has higher rates at regional banks working to attract deposits away from the bigger banks? a pass regional bank with a signed a 5% rate on t-bills. you're getting zero .1%? is it working? gerard: yes, the banks use surgical instrument certificates of deposit to attract these deposits for the higher rates because they do not want to lift up their entire deposit book to find -- because not all depositors are demanding that. they use these today using into the first quarter we had cd's around 10%. in the second quarter i think that is going to go higher but when you compare it to historical times, in 1980's, we had cd's as a percentage of bank funding at 50%. it is nothing wrong with them.

they're just expensive and you will see this quarter many banks to have much bigger funding coming from cd's they did in the first quarter. lisa: minutes away from jp gs. first look into what their planning to do with first republic assets. how important is it to get this read? gerard: for first republic, you think about the size, it was a big bank in of failure, but to how big jp morgan chase is, it will have a positive impact, but i think is going to be a much bigger focus and you touched on it on the investment banking results. a bigger focus on consumer bank, because the, consumer community banking area and also credit. first republic will be looked at but it is not the big swing factor this quarter. jonathan: thank you.

you will stick with us to break down the numbers when they drop. jp morgan just around the corner. wells fargo numbers as well and then it is on to citi later this morning. we start to push through earnings season quickly. tom: each bank different. i moving beyond the banks are ready after what we saw with patrick out in revenue. -- pepsico is the revenue growth. i'm fascinated how that carry over to the bank. jonathan: loan losses and loan-loss reserves. big focus on credit come into the cover and a little pushback there from gerard cassidy. lisa: it's going to be key with not only got with loan-loss is going up but what they're expecting going forward. based on the surveys, credit card payments, granular data because this may give the tea leaves to give a sense whether pepsi can continue doing what they are doing. jonathan: it is been quite a week. lisa: it is been crazy.

jonathan: i am pleased the earnings arrived. was it monday or tuesday? tom: what is interesting here is even the people that saw the soft landing coming i think are like oh. jonathan: encouraged by the economic data this week. jp morgan results here in new york. break that down for you up next. ♪ this is ge vernova,

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>> because the bank failures put deposit cost in the spotlight, it feels like that is already priced into the stocks in

further pay. i think the cpi print give bank stocks relief as we can see the light at the end of the tunnel in fed tightening. jonathan: wells fargo it looks like a first look, a bit of a beat here. sonali: it is good news for wells fargo. you have them coming in with revenue at about $20 billion above the $20 billion estimate. -- $20.5 billion about the $20 billion estimate. there's an expectation this quarter that wells fargo is going to come in above citigroup in revenue. you are still seeing pressure on the stock at first. you do have eps beating estimates. charge-offs coming in at 760 4

million just above estimates but nothing to cry home about. wells fargo we wash consumer presence when it comes the mortgage market, there's a question about whether there will be greater delay when we are thinking about those charge-offs when it comes to single-family homes. net interest income coming above expectations. jonathan: jp morgan as well. investment banking revenue 1.4 9 billion u.s. dollars, estimate 1.3 billion. jamie dimon expecting probable changes to come for bank liquidity. there is another headline that jumps out as you work to the release, the provision for credit losses for the second quarter 2.9 billion, the estimate 2.6 2 billion. sonali: that is an important number here.

we need to be market was going to make money but the provisions, jp morgan is the conservative bank on the street. for that to become above expectations, lead to more questions about how quickly these loans are converting into losses. jp morgan has said time and again they want to lend which comes with losses. you look at wall street estimates there is expectation those provisions peek out in the coming quarter, current quarter, but will listen for a commentary on whether that is true or not or whether there is more pain to come. tom: i'm looking at jp morgan quarter as after-tax gained of nearly $2 billion under first republic. my recollection was they alluded to this. are they bringing in this train wreck bank and making profit they want? sonali: there were some parts of first republic and you have jp morgan clipping up hills of

silicon valley bank to bring on new customers when it comes to technology industry over bring on new people. when it comes to people that concern the high net worth individuals. yes, train wreck of a bank. however, they got this deal with guarantees. when you look at their day one lived from first republic, that number is to the expected and nothing crazy. you also have him talk about probable changes for bank liquidity. it is important because there is an expectation feature rules and regulations will start to impact the rle we're getting from some of the banks -- roe we are getting from some of the banks. tom: gerard cassidy with us here. when we were having -- more in boston a few years ago, we were not modeling 25% return on tangible common equity, 20%

return o -- uncommon equity. i've never seen those numbers. are they going to have to hide how profitable this machine is? gerard: i'm glad you brought that up because although yes the provision was slightly higher for jp morgan, the message is these companies are very profitable even with higher credit calls. credit this critical to determining profitability during the cycle. if you go into a soft landing, this possibility for the group is going to remain strong and it is going to be like back in 1995. the banks had a great year after 1994 when everybody thought were going to go into a recession in 1995 but it never happened. this is lining up to be similar for jp morgan and others. lisa: what is to say about the greater economic backdrop?

jimmy deming saying the consumer balance sheets remain healthy saying they economy continues to be resilient saying what they saw material growth across all sectors, even though they did miss slightly on equity sales and trading. their vantage point, how clean of a read is this on the general path forward? gerard: it is very encouraging to see numbers like this. it is broad-based. when you look at the health of the economy and a leverage of the economy, u.s. banking industry has been deleverage because of what happened 2008. u.s. banks strong shape handling what is going on today. should the economy do a soft landing, then the stocks will go well the next 12 months. but if we get a hard landing, it is going to be difficult for the banks including jp morgan but that is not appear to be the case today. lisa: we talk about credit

losses, jp morgan second provision quarter $2.9 million dollars. --billion dollars. this is a time of leveraging the american consumer into a soft patch but not yet? gerard: we all remember what happened during the pandemic and the stimulus payments, consumers do not need to borrow. so they are borrowing now and we are back at and near record levels of consumer credit. we have to remember incomes have gone up the last three or four years considerably and they can handle this. the good debt service of the consumer and it is below the levels of 2006. we have in our motto for jp morgan this year they going to put up 11.3 dollars is

provisions and lesser there were 6.4. there's opening up percent return on equity. -- 20% return on equity. on the revenue side, there still quite strong. jonathan: price action on the scene created jp morgan up about 2% in premarket. jamie dimon saying all the right things about various business lines. an image is this about investment banking fees, there remain a challenge. does that stand out for you for this quarter? sonali: for the biggest number banks is comes down to what they are doing with the consumer here. on the investment banking front, but people like investment banking? all your banks are your banker. they took money off of their corporate book here. you see losses being taken there so i do wonder about underwriting when it comes to the lavish lung markets, when it comes to other -- leverage loan

markets. some of these provisions are actually because of first republic as well. the market can let that go a bit. not just 20% return on equity, 25% on tangible common equity. these are blowout profits for jp morgan regardless of the softness in investment banking. they are one of the banks that have been laying people off by the dozens. tom: want to congratulate all the pr people at jp morgan. you take dividends. you take share buybacks. 33% payout. they have so much wiggle room to give out more money. there like apple. so much air to go beyond any stresses. jonathan: believe that is a beat and a raise. estimate that interest them

about 87 billion u.s. dollars, have been previously 84 billion. chemical that a beat and a raise from jp morgan? -- can we call that a beat and a raise from jp morgan? sonali: we can. it is one of the hottest businesses on wall street. jp morgan has guided us to look at it so even if they have competition from private markets or whatever, that group is doing quite well which means things are being offloaded into the market. you could potentially continue to see that. that is capital markets coming back. jonathan: in front of us, citi and then onto next week bank of america and morgan stanley and goldman sachs. 10 minutes away we catch up with ken leon. on the back of the results, jp morgan positive in premarket. s&p 500 just about turning positive as well.

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>> inflation should be going down. the economy is slowing. >> not expecting a massive pickup it inflation. >> we expect a continued slow down. >> we hope they only hiked one more time. >> they could declare mission accomplished but that is a jinx so it is better they do not do that. >> this is bloomberg

surveillance with tom keene, jonathan ferro, and lisa abramowicz. jonathan: bank earnings coming in. this is bloomberg surveillance on tv and radio alongside tom keene and lisa abramowicz i am jonathan ferro. equity futures just turning positive. jp morgan up in the premarket. it is a beat and a raise from jamie dimon and the team. tom: i want to be clear that every bank is a different story. with citibank coming later it will be a different take. this goes back to our conversation with senator warren. in the defense of anyone of any party we need to learn the enormous nest of these banks. they hide it every day. i happen to be looking at the ♪ of points on asset and wealth management with footnotes of

weakness because of travel. other than that we have expenses of 8% but revenue up 11%. 3 trillion up on assets under management. even asset management is phenomenal. jonathan: let's get to what jamie dimon had to say. almost all lines are business continued growth. let's park the happy talk. outside of all of that, provisions for credit losses creeping a little bit higher. you had your eye on that coming into this quarter that is still the focus. lisa: this is an expected result of consumer spending a little bit last. we did hear that from jamie dimon, saying consumers are spending a little bit more slowly. how does that speak to what is down the line when they are increasing their income more than anyone expected?

they are still lending because they are earning so much. wells fargo reported $13.2 billion in net interest income. that is up 29%. just like jp morgan it was a beat and a raise saying it was probably going to rise 14%. tom: on a conference call may be do not ask this, but on a research pall i want to know what commercial real estate does to these banks. that is what i do not see in the power points. jonathan: will hear about that later. look out for that. it about 48 or 58 minutes we might hear from citibank. lisa will give you the guide on what to look for. jp morgan up in the premarket. wells fargo rallying as well. equity futures positive on the s&p. four day winning streak into friday. equity futures positive .1%. yields have been down all week.

they are up this morning on the 10 year tradition of 3.80. the euro has been strong but weak this morning. euro-dollar slightly negative. lisa: the rally in bancshares not taking a pause. jp morgan and wells fargo reported about 20 minutes ago. the analyst calls will be the key to understand the granularity behind the loan loss provisions. 8:30 for jp morgan, 10:00 for wells fargo, and 11:00 for citigroup. at 10 :00 we get the university of michigan consumer sentiment survey. it is expected to increase. this fix to the soft landing narrative that has got everyone work into a frenzy. today the nasdaq is grappling with how to understand the dominance of the six biggest tech players. they will readjust.

they are announcing the details around this new rebalancing to bring down the concentration of those stocks to below 50% so they do not breach regulatory hurdles for a lot of the funds that are tracking. tom: for all of you distracted by this, this is a huge deal to the equity market. this is not just another thing. i will read every single word i can. it is not a joke about the dow and s&p 500. it is almost nifty 50, johnson & johnson one million years ago. our world has changed, how do we adjust? jonathan: a lot going on. jp morgan up 2.8%. ken leon joins us for more. should i be focused on the beat, the raise, or the provisions for credit losses? ken: i would focus on the economy and the strength of the

results and performance. that is peculiar. you build reserves for loan losses and also looking ahead to weaker performance. sometimes you have loan loss reversals. we had that one year ago. what is likely now as we have a soft landing on the recession the second half of the year. the likelihood is the provision slow down and possibly the reserves may be too high in 2024 when you have the ability for much better comparisons with 2023. this is a good quarter. we thought this would be the trough of the investment banking cycle. the strength of the consumer and commercial loan activity is very promising and size matters and that has been your discussion the last half hour. tom: it is buried in the powerpoint. i know you know this.

35% pretax margin on jp morgan asset and wealth management. 35% on the dollar. that is not in the textbooks. what is so important to me, the return on equity leaps from a 25 blend system up to 34% r.o.e.. have you ever seen a big wealth management? ken: jp morgan has done this with less fanfare than others such as morgan stanley that took it from 12% to 25% and probably 30%. these are phenomenal numbers and it speaks to making the right strategic decision to expand asset and wealth management. that is what goldman sachs will have to talk about last week. they made the wrong turn and they are trying to play catch up

in these amazing areas. tom: this is not about -- i've never seen this before from jp morgan and the improvement from gorman. this is about the ones that are not doing it. lisa: we will look to that next week. i am curious your take on the net interest income coming in so strong, upgrading that for the year when a lot of people of critical of the big banks for not passing along those extra profits akin to what we are seeing in the regionals. ken: we have a beautiful chart but basically it is two points. if you have increased loan activity that will spur net interest margins and may be keep the earnings as it deals a decent spreads even though we have this distance remediation where depositors are looking for 5% or so. this is promising. for the larger banks it is about

50% of total net revenue. a little more downstream it is 65% or more. that might help the smaller banks. we will be watching that. jonathan: -- lisa: what are we seeing depositors getting sick of earning nothing and shifting into income producing instruments. is this causing any kind of pressure or are raising a surprising stickiness of these deposits that will allow this type of net interest income to continue? ken: the biggest macro trend is this pivot to getting higher yield and additionally there are non-interest-bearing deposits and deposits that are there because you are a small business doing business like with bank of america and you have relationships. i think that will continue. if we reach next week where we reach the fed finishing its rate

rise regime and pause and perhaps year, this will be less of a factor. jonathan: and we finish on regulatory overhang? a bit of a pushback in the statement from jp morgan. i wonder how much of a pushback that will be from groups in the sector? ken: that is where i would have started this conversation with the holistic capital approach that talks about the interplay of liquidity and capital risks and taking two dollars for every $100. if i am an investor on the total return, this might put some kind of ceiling on buybacks that none of the banks -- none of those in the dodd-frank stress test were allowed to do. return of capital is what jamie dimon's most worried about because a sophisticated investor may say i will go elsewhere. jonathan: thank you.

ken leon. we will check back in with you in the next half-hour. later this morning we will hear from citigroup. we can check out the price action. all three names positive in the premarket. jp morgan, wells fargo, and citi. positive on equity futures 5.1%. jp morgan up 2.1%. city up -- citi up 2.1%. tom: i see some tweaks on amazon. we get tweaks of a one-year review or a two your view that is not priced into the market by institutional wall street? jonathan: prime day, best sales day ever at amazon. did you see the headline? tom: i read some of it. there was a smart note on this. he really tore it apart.

what i do not understand is it benefits all. it is not just about amazon. it is about everybody else competing. it is an online day. lisa: this has been a theme. the consumer is still strong. the economy does not seem to be losing steam that fast. perhaps they are spending less, but not necessarily. this goes to the banks with the question of regulatory overhang. how do we get a recession if we have this type of situation where you have consumer still strong? tom: i point is we are about regulatory overhang. i have never seen those numbers in jp morgan. it is a blended idea. asset management. everyone in the world has reacted. my reaction is everyone worldwide are going i am scared.

where are they throwing money? jp morgan. they will pay whatever it takes. jonathan: finish fighting. tom: we are not fighting. jonathan: it is a disagreement. you're just disappointed with each other. not angry. tom: we do not do passive-aggressive. [laughter] jonathan: jp morgan up in the premarket. equities up .08%. coming up, megan's wiper of bank of america securities. we'll catch up with her in about 20 minutes. the playbook for the rest of the morning. you will hear from citigroup and jane frazier in about 47 minutes. tom: a totally different bank. fascinating to see what she is pulling on. i do not think this is a normal

rightsizing season. july feels like it should be october. there'll will be a lot of tough decisions made. i am interested at a citigroup that has been challenged for a decade. jonathan: what is left to pull back on at citigroup? tom: it is a very valid observation. jonathan: sonali basak will drop by the next hour. anastasia amoroso coming up shortly. call this equity market rally. that rally has continued. anastasia amoroso of i capital coming up next. ♪

>> it was clear inflation wasn't levels too for hikes. we are nowhere near 2% hours and with that backdrop they will continue to say we just have to keep going. jonathan: torsten slok weighing in on the long invariable legs of the federal reserve. the rate hiking cycle of the last year and the timing in this economy. equity futures positive .1% on

the s&p 500. there is a lift in the equity market. jp morgan, citigroup positive after results from wells fargo. wells fargo up 3%. bigger than expected upgrade in terms of longer-term expectations. big banks are getting their capital for free and lending it out the highest interest rates going back decades. this is the underpinning of record revenue. jonathan: is a regime shift for a huge body of the bloomberg surveillance audience. they have never seen somewhat normative rates. a sharp ratio you can actually calculate. to borrow from torsten slok, the long invariable legs of jp morgan in the long invariable legs of james dimon. for me it is the use of cash

where they are delivering 30%. they have room to move to deliver cash to shareholders. jonathan: a decent start to earnings season. tom: we have heard a lot from bears vacillating and readjusting up. anastasia amoroso chief investment strategist at i capital does not have to vamp it up at all. she nailed it. what did you see in october that was enthusiasm for the market? anastasia: in october what we saw were valuations that were discounting a lot. if you looked across the equity market you had the s&p trading in the 40th percentile over the last 15 years. if you looked at investment-grade and high-yield bonds trading in the nine or 10th percentile of their expected ranges. we were discounting a lot.

and positioning. could you get anybody to invest in any risk asset in october of last year? the answer is no. what we saw was that by the middle of the year there was likely to be a gap that was going to open up between the fed funds rate and where inflation was going to be in that gap was going to be positive. that is where we are today. that is what has been happening in the last six months. we have been getting closer to that pivot point. as you know markets price that in in advance. jonathan: what next? you have wrote this -- what you do now? anastasia: you stick with it. we are on track for a soft landing. the bearish camp would say you look at positioning and it is getting exuberant. you look at whether it is hedge funds or cta. all of those investors have quickly positioned.

that leaves you susceptible to a negative catalyst but can you name a negative catalyst. if we have inflation that is easing and the fed that is pausing. lisa, you talk about this all the time. if you have the consumer that is strong, where is this equity market going to go. for now when i swear the valuation supported round these levels and when i square that with 2020 for earnings, which have been de-risk a lot, that gives you close to 2800 on the s&p. lisa: i could give you numerous catastrophic situations but that does not look likely. that is the underscored point we are seeing. this raises the question of leadership. how much do you shift away from what is done best so far to some of the small cap areas, the financials after seeing the results we have seen? anastasia: i think you stick with tack because that is where

the growth will be. i am a big fan of artificial intelligence. that is a big trend adding to earnings of companies starting today. at the same time i am coming around on financials. if you look at the earnings results this morning there is not much to be disappointed about. we know deposit betas are going to rise but that is priced in. we know lending will be slower but that is also baked in. what i am encouraged about are not priced in. the first is the possibility of a steeper yield curve. if we are in a soft landing scenario than at some point the fed will pause and may be easy if inflation comes down and then the back part of the curve should hold up. lisa: the only thing someone would say is if they are bearish and tom would say i cannot stand this, the concept of regulatory overhang. if these banks do too well and the supervisors and congress

members to pry that and try to put more constraints on them. is that something you are watching? anastasia: it needs to be baked into the models for sure. it is a one-time adjustment that would have to be made. it is also being talked about in the research reports. the other thing i do not think is baked in is the possibility of a steeper yield curve and the possibility of deal activity picking up. there is not much to write home about when it comes to ipo volumes. conditions are starting to be in place for capital markets to open up in the back half of the year. more ipo volumes, were announced m&a, more of them getting done. that is positive for banks and positive for alternative asset managers. that is positive for exit opportunities they may not have had. tom: you see a second leg of a bull market to a fossil like me

that is early 1976 and what is the xps call? don't give me this 90 day garbage? we like a one year, two year view. i have missed this. do i have the luxury of a second leg of a bull market? anastasia: i will give you a six-month view. somewhere between the 90 day and the one year. the six-month view i think we push higher towards 4800 on the s&p. i am more cautious going into 2024 because if we are at a point where the real rates to become restrictive, at some point we may have a downturn in the economy. at some point in 2024 we might have to have a different conversation. jonathan: it has been a great call so far this year. anastasia amoroso of i capital. looking for record highs later this month in july. tom: to frame her critical comment on real yields, and i

did a study of where was the 10 year real yield three 2008 and the answer was 2.03%. most experts say we will not get back there. the real yield this morning is lower the last couple days. 1.53%. i would say there is a tendency of 1.5% to 1.7% is a healthy real yield and you wonder where the dynamics of the system, how that will play out. you get the real yield anastasia is talking about? jonathan: anastasia mentioned the banks coming around to the financials. lori calvasina upgrading the banks, a lift to her earnings forecast. going to overweight financials. perhaps encouraged by that. lisa: especially at a time they are gaining so much income from the consumer lending version of the books as well as the potential for dealmaking to pick back up.

wells fargo saying its average deposit cost soared to 1.1%, up from 0.4% compared to the 5.5% being offered. they are passing it along but not nearly at the pace. it is pathetic. jonathan: pathetic. 1% on deposits. i guess they get away with what they can get away with. tom: their people on airplanes traveling worldwide and people are throwing money at j.p. morgan just for the name. they don't have to work. all they have to do is show up and people say j.p. morgan and i will give you .2% interest. tom: equities -- jonathan: equity slightly positive. this is bloomberg. ♪

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jonathan: andrew hallman horst making a move on rates just published. looking for a hike in july. we now expect a skip in september with a subsequent and possible last of this cycle hike delivered in november. on the soft inflation patch, the soft spot might last for several months and possibly the remainder of the year but still tight labor markets and a rebounding housing market risk say be acceleration in inflation late this year or early next year. that is the latest from andrew hallman horst.

tom: i remember sitting with steve roach over the investment all over the phrase soft patch and roach just saying what have we become, what is a soft patch? jonathan: a soft patch means a temporary reduction in inflation. tom: to a point. hollenhorst has been better on this. for his to go to a hawkish pause -- we have to get somebody to write a paragraph where they get be shaped, soft patch, and pause. jonathan: there is one camp who think this is it, we are on a sustainable trend back to 2%. there are others who think what is happening in the labor market right now is inconsistent with a sustainable path and they believe you might get the soft patch through summer and potentially wreak celery later this year. lisa, those are the camps right now. lisa: it has accelerated the

debate when you hear the likes of jamie dimon saying the consumer is still spending and there is still a lot of strength in the economy. can you have strengthen the economy once the comps get less easy to hurdle? this is the question into next year. jonathan: that is the bit -- that is the debate for bonds, equities, and affects. lisa will bring you the bank earnings. that provided a bit of a lift to the s&p 500, turning positive .1%. kpn wells behind us. -- j.p. and wells behind us. the two-year up not even one basis point. the dollar a lot weaker. the euro is now positive for a seventh consecutive session against the dollar. the euro slightly positive to 1.1233. lisa: we have focused on the

banks. j.p. morgan the first we will look at all the wells fargo came out first. beats notable for the magnitude. j.p. morgan reporting record revenue in the second quarter, $31.3 billion in one quarter, beating expectations. they also lifted guidance for net interest income. wells fargo also lifting expectations given the fact they are paying 1% to their depositors. 1% from nothing a year earlier saying they expect their income to jump 14% for the year. previously they had send 10%. citigroup coming up. a lot more questions around citigroup. if you look at your to date, and when we talk to investors about where they see the opportunities, here is why. j.p. morgan shares up 11%. when you compare that to nvidia

gains, you will say why they underperforming if they are continuing to deliver these results. wells fargo up 6%. do you start to see more investors rotate into financials because of the sheer revenue from the interest increases we have seen from the fed that they do not have to pass along to depositors? evidently depositors do not need to get paid. jonathan: you are very passionate about that. lisa: that is one of the key questions because this gap is taking money from depositors. jonathan: any other business we would be like they have to make money, but when it comes to banks we are like pass it on. lisa: it is personal. you think about these ballooning deposit accounts, you're giving them free money and they're making bank with it. tom: one of the first things i heard was from a banker of a tiny bank and i said why have emerged with somebody? he said we like to go to lunch.

at the small bank level, they are trying to keep at it so they can go to the rotary meeting or the lunch. why are super regionals any different? if i'm one of the 15 banks under these guys come and i am looking at j.p. morgan, why are the super regionals merging? jonathan: some of those banks were out for lunch in the last year or so. tom: i think so. sonali basak says it nicely in a note. many wins for j.p. morgan. meghan swiber joins us, director of rate strategy at bank of america. does brian moynihan call you up to get a briefing? brian is wicked informed from his research staff. does he call you up to say what is a terminal rate? meghan: occasionally.

i would say that has been the focus of markets more broadly, what is the fed going to do at the next meeting, where it is neutral said, and that has been important for the bond market. as we were just talking about the equity market. tom: there has to be mathematics you go out to a place. we are back to eight normal environment. what is the new terminal rate you are working with. meghan: what it comes down to is the inflation picture. part of the reason we have seen rates rally is at the end of the day we got a promising cpi report. when you're looking at inflation being able to moderate, when we dive into the details -- tom: what does that do to the terminal rate? meghan: it reduces how much more we think the fed will have to go. if we listen to the hawks on the

committee, suggesting there is still more room for the fed to hike, what it comes down to is whether inflation is persistent or not. this course serving at housing component printed at 0% month every month. it takes a little bit of the wind out of the sales of the more hawkish camp. jonathan: one thing i can get hawks and doves to agree upon is the soft summer patch than there is a divide on the potential to wreak celery. where are you on that -- the potential to re-accelerate. where are you on that? meghan: there is diversions whether we will settle closer to 3% or is that closer to 3%? we are a little bit more so in the sticker your -- in the stickier inflation near-term. we look at inflation below 2.2%

this morning. even with our house view for a mild recession starting in the first half of next year that is still 40 basis points below where we are expecting. i will say the market seems to be overly optimistic around where inflation will settle, even over the near term. i think what will come down to is this question of how quickly they will be able to see inflation moderate down to target. it will be a matter of how strong the u.s. economy will continue to be. a lot of that economic resilience does few the risks towards more persistent prints stop lisa: do you think it is too early to get bullish on longer-term bonds at a time the market is repricing the softer landing with yields and robust growth? meghan: what this presents for us right now is when we look at what the market is pricing, it

is too early to get bullish on the front of the curve. as was just highlighted we have seen that notable rally in the two year rate. what makes more sense is going long further, closer to the 10 year point. that is because when you look at prior hiking cycles, when you look at how the market performs 12 months after the fed delivers that final height, you usually see tends rally about 100 basis points over that 12 month period. the ability for the front end to come down is a question about when does the fed deliver these cats. -- these cuts? lisa: you talk about a deepening and this would be a re-inversion to record lows or post 1981. what does that mean for some of the dynamics we are talking about this morning with banks and whether that increases the risk of this shallow recession

becoming something more? meghan: deeper inversion will put more pressure on banks. what i think the curve inversion is telling us is it is not reflecting recession concerns as some of these recession probability models will tell us. it is reflecting expectations for the fed to cut, and the fed cutting alongside inflation being able to moderate makes sense. the fed thinks about setting interest rates. it is different when inflation is running at 4% versus when it is running at 3%. tom: beautifully spoken. that is the underlying belief structure we have. jonathan: it has not been shattered. meghan: it has not been

shattered. you look at five-year five year breakevens, they've been pretty consistent. jonathan: that is the credibility test for chairman powell. can we finish on the global backdrop. does it matter to you or call that china is experiencing what some people might refer to as disinflation? the u.k. has problems with inflation. there is tension abroad. how important is that? meghan: it is definitely important. when we think about the china story, that will way more so when we think about what are inflation forecasts are to the commodity story. that is a major reason year-over-year inflation has fallen so much because commodity prices have fallen. the fact we are seeing more of this weaker china story does endorse the fact the market has been able to price inflation down so much. when you talk about how the market prices inflation it is

highly correlated to the commodity story. that does help support lower inflation compensation priced across the curve. jonathan: thank you. a big fan of your work. meghan: thank you so much. jonathan: meghan swiber of bank of america on rate strategy. encouraging numbers this week. a big debate on whether this continues. meghan thinks it might be able to. then you have and you hollenhorst pushing back. lisa: there's attention when you have jamie dimon coming out cigna consumer is still strong, people are making a lot of money, to then saying the disinflation will continue and the year-over-year comps will still allow that to happen. that is the tension. jonathan: the s&p 500 with the lift as well. positive .08%. take a look at the fx market.

positive on the euro against the dollar. euro-dollar 1.1227. seven consecutive days of this. if we close, positive on that session. longest streak since july 2020. lisa: i agree -- tom: i agree that the persistence of the streak is a big deal. i alluded to steven englander. it will be a theme to move to index analysis to trade-weighted analysis. on friday i have not done the work. if you look at 5, 6, seven major imf trade-weighted series you will get a real story about the tensions between enjoy a trumpian weak dollar. the former president screaming we needed a weak dollar but what is the impact on strong euro? jonathan: 1.12 is not it yet. let's be clear.

it is not parity. 1.12 is ok. citi earnings coming up in 17 minutes. we will break the numbers and then we will get reaction from ken leon on those results very shortly. sonali basak will drop by as well and going to the numbers. tom: what are you reading this weekend? jonathan: credit quality. tom: what is it called? jonathan: david? tom: he is a great economist. whatever he drives, he has some new car. ricardo was named after david ricardo, the scottish economist. jonathan: i never knew. [laughter] equities positive. this is bloomberg. ♪

somebody would ask her something and she would just walk right past them. she didn't know they were talking to her. i just could not hear. i was hesitant to get the hearing aids because of my short hair. but nobody even sees them. our nearly invisible hearing aids are just one reason we've been the brand leader for over 75 years. when i finally could hear for the first time, i started crying. i could hear everything. call 1-800-miracle and schedule your free hearing evaluation today. >> there has been a tremendous demand for bonds. i think a lot of it is there is

a determinism in of liquidity. i think the bonds are ok and the stocks still have upsides especially in the laggards. jonathan: still bullish. weighing in on this equity market. future slightly positive on the s&p 500 by .1%. the numbers out of the banks are pretty decent. jp morgan, wells fargo, citigroup coming up next. jp morgan, wells fargo the same thing. jp morgan up 2.8%. wells fargo of 3%. citigroup up 1.85%. tom: most of our audience knows each of these banks have a character, there is a culture that goes from mergers and acquisitions. bank of america was pieced together out of 47 banks. brian moynihan having a lot to do with that on the northeast coast. there will be a discussion

monday, tuesday. wednesday there will not be any discussion but the future of the house that weinberg built. i think it will be key, the messaging of goldman sachs and how it is taken on wednesday. jonathan: and david solomon. the bar has been set so low. tom: there is a crew that says this guy has been tarred and feathered, lloyd blankfein screw this up, david solomon did not. i think wednesday is more important than we think. lisa: at some point -- jonathan: at some point you own it. tom: the bottom line is that is the zeitgeist from a certain group and we will have to see. that is all there is to it. futures have improved. jp morgan alone has lifted futures. someone who is logging this is an expert on it for bloomberg news. he is doing the zeitgeist but

also the reporting. what is the immediate reporting of the future of the leadership of goldman sachs. sree: let's look at what jp morgan posted. when you have a bank that is up 11% that posted in r.o.e. of 20% and the stock bounces another 3%, that sets a high bar for others to follow. that is something that will make bankers sweat because they have made clear the numbers they are going to post are going to be pretty bad. r.o.e. will be in the low single digits. it will not look pretty. they have to play the game of telling investors and analysts not to look here but look there. don't look at q2. look at what is ahead. it remains to be seen if they can sell the market on that. tom: there all of these rumors. what is the train wreck moment on markets? when did they fix markets?

>> we are nine months into it. they committed to it. they also made a 180. outside of the successful high-yield savings account they pre-much out of it. there is even a question of their partnership with apple and gm. it still might take up some airtime. jonathan: how rare is it for goldman to set the bar so low? >> when you talk to analysts, they do not normally do this. goldman's family reticent about any intra-quarter guidance. they talk about the 25% slowdown in trading and specific hits they will get in the real estate

market and the right down they will get from the acquisition which is an acquisition they only completed a year ago and already trying to sell it off. for a firm that is run by expert investment bankers it has never been good at doing acquisitions. here is the bigger issue. have they been able to drive down consensus estimates low enough because it is clear from what they have said publicly and what we hear from investors and analysts talking privately they are really trying to drive down expectations. is it a case of under promise and over deliver or the more worrying scenario of promise and under deliver? lisa: you said it will be a quarter of saint do not look at this, look at this. where is the growth they could point to in the future? >> green shoots, the favored for every investment banker. they will talk about how this might be the trough for investment banking after the boom we saw through 2021.

investment banking has been sliding down. they are hoping q2 is the trough. capital markets opening up. tom: i will interrupt because this is really important. they are hopeful. i do not hear other banks hoping. they have a strategy and plan. the ratios of asset and wealth management for jp morgan is an act of god -- will goldman sachs have those kind of numbers and asset management? >> they have a stork -- they will slice and dice. they will try to tell you ignore the laws we have from the balance sheet but if you look at our revenue, they will try to sell that story. there is a reason they have to leaning on hope. the other banks can point to a 20% r.o.e..

you cannot go out and have a 5% r.o.e. and say this is why you need to believe in the stock. that is why they have to paint a rosier picture. lisa: are they done with layoffs? >> they will not say that. james gorman was asked are you done with layoffs and we just went through around of job cuts, we do not have a reason for more layoffs. goldman is not committing and realize they've already done three rounds of job cuts in the last 12 months. if the markets do not realize as quickly as they would like to see they may have to take more actions because expense is one thing they can control in their underlying business is not going on all cylinders. jonathan: citigroup, what are you in the team looking for? >> it is a bank under transition under jane fraser. do not care so much about the

investment bank. they are growing their transaction business. there relations across the world. how they are sitting other assets globally and focusing the bank in a way that will start out because the last five years of not been pretty for citibank. tom: when these calls start are you -- jonathan: when the call start are you listening to them or you watching djokovic play? >> it depends if it is before or 8:30. the problem is jon ferro's country will not give me a visa? that is the problem with the indian passport. jonathan: there is no agreement visa? i was not aware of this. you cannot travel from jfk to heathrow on a tourist visa? >> i need a tourist visa. jonathan: how easy is that access? >> not that easy. tom: that is a window into this world we live in.

jonathan: going to the u.s. open later this summer? >> absolutely. no visa there. tom: i saw you there -- jonathan: i saw you there a few weeks ago. looking out to goldman coming up next wednesday. citigroup coming up in about five minutes. tom: i do not think you will hear hope from jane fraser. there'll be nothing done of this hopefulness stuff. full disclosure, i am not into it. am i be glued to it? no. jonathan: tryout 10:30. watch a couple of games. the intensity of it. tom: he be the american, right? jonathan: watch a few games and you will be impressed. that will be sticky viewing. tom: i am starting to steal up for budapest and david ricardo come back.

jonathan: what is the comparative advantage? tom: it a comparative advantage. david ricardo against perez will be something. i will let you explain that. jonathan: not now. ken leon coming up shortly. looking forward to that. we'll catch up with sonali basak as well. from new york city with equities positive, this is bloomberg. ♪ >> welcome to a special wimbledon update. the first unseeded player to reach the ladies final in the open era with a win. the check star is looking for her maiden grand slam crown in london. she will face last year's

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>> i still believe that we are turning toward a recession. . because >> are not going to have

an economy wide recession. >> recession is not a guaranteed outcome. >> you are not going to get the rate cuts we are expected for 2024. >> late do another one and then pause, likely -- will they do another one and likely pause, likely. tom: it is an historic earnings day for the big banks. jimmy diamond list features. right now, the starkest of moments coming out. back to 2007, july for the crisis of the third week of august of 2007. since then, j.p. morgan up 11% per year, citigroup down 11% per year.

that is the massive divide. >> fixed sales and trading revenue for the second quarter comes in at $4.45 billion, the estimate $3.51 billion. second quarter and at 1.33. sonali: if you take a look at what citigroup is posting, they were bringing in revenue higher than expected. it is stellar. they are investing in institutional businesses and punching on all fronts. when you look at the first thing they tell you is they returned to billion dollars to shareholders in the form of dividends, why does that matter for citigroup? we are worried about their

buffer in the wake of the stress tests. we are going to be looking at citigroup. the total cost of credit is lower than the prior quarter. like the other banks, not as bad as things could possibly be but remember citigroup has started to lay people off. we will look at what they say about the severance costs because we have seen wells fargo increase costs. jonathan: investment baking revenue $7 million. tom: second page the top about culture and talent, transformation, to me the major headline with a big banks is

general. no other institution in manhattan is under transformation like citigroup. jonathan: the commentary from the ceo saying we are executing strategy. can you summarize what is the strategy and how it is different to what came before? sonali: frazier exiting certain markets. it is announced and we are getting there. we have the first phased at the end. it doubling down on wealth management. asset, wealth management's, this is citigroup managers are very global. that is not what you see at morgan stanley. citigroup in particular would be the beneficiary of this. tom: what is so important is

goldman sachs on wednesday is surrounded by hope. does citigroup have the same desperation over hoping this or that a purse or is this a more stable enterprise? sonali: citigroup trading at half of its book value this morning. would hope they had nowhere to go up at that level. the pure group returns at goldman are lower and almost everyone. so next week will be a week for investment banks after you just saw a big lift, $4.5 billion in fixed income trading at citigroup is nothing to write home about. tom: joining us and continuing to port -- to support us is can leon -- ken leon.

is citigroup a big bank? ken: the group is enormous. she is on the right course. she would prefer to under promise then over deliver. that changes because we got through event driven selling the nonconsumer banks. by 2025 they are going to take it public. the conversation we had during corporate years and knowledge inflation is heavy investment and technology platform and compliance and regulation. that should improve margins for the business as investors focus on operating performance in 2024. this story is in the years, not months.

lisa: city reaffirming the full year revenue forecast. we have seen reaffirmation and upgrade from the likes of j.p. morgan. what are the themes that stick out of who is executing the best? ken: it depends in what area, but when you say who is firing on all cylinders it is j.p. morgan chase. it was spearheaded a few months ago showing the depth of management, strategic plans and ability to drive higher returns on equity and return of capital. they have moved a few pulses ahead of the peer group. lisa: given the fact that other banks are trying to compete, citigroup saying expenses were what they previously thought.

how much is the upgraded the image of citigroup in your mind to something that has a more optimistic trajectory? ken: citigroup is on the right course but investors have been burned waiting. she has the right strategy and she needs time. when you are trading at such low price, that is opportunity. so this is attractive or value trap. it is more promising but we have a whole rating on citigroup. tom: tell me about wealth management. james gorman at morgan stanley acclaim for his success, goldman sachs struggling. citigroup is an enigma, can she compete? ken: you can. she has a strategic leadership.

in asia they are one of the top three players from the u.s.. in north america, it will be trying to scale up against the dominant players of bank of america and morgan stanley. they see opportunity and the ceos are telling the citigroup if you want to get a higher multiple for your stock you need more businesses that have recurring revenue and attractive fee income because you can't always play the net interest income game all the time. tom: this is germane in the immediate time, talking about goldman sachs being. how do you hope to compete with a juggernaut like j.p. morgan. jonathan: goldman sachs is not a city and not those fargo or j.p.

morgan. everyone has their own identity. the point of the releases this morning that might view encouragement uncertain parts on into next week. ken: they are not small and they are the top players in asset management. wealth management's, they are way behind. that will be the right spot along with areas of transaction services. the body language from david solomon, we do have a strategy and did outperform the s&p 500 i took over. only 2% or 3% is owned by partners. we are moving on the right course and we are going to gain wallet share. and they will gain while at sheraton the next 12 to 18 months in trading and investment ranking. that is where we were when they

went off the page into consumers. lisa: can you expect to see dispersion were j.p. morgan doesn't have to pay for deposits and others have to pay a lot more? ken: everybody has to pay for deposits. even my mother knows she can get 5% yield. those days are over. that was the decade of free or low rate money. it is just part of the business. what drives the revenue is low-volume. if you have a healthy economy, even when it breaks and some deposits spread narrow, it is a good picture for banks. jonathan: wonderful to get your perspective. he will be with us a few times with this as we work through the bank earnings. that is it from citibank, wells fargo, j.p. morgan. next week, so far so good.

airlines, pepsico. earnings season has been pretty good. tom: i think we have gina martin adams to talk equity strategy through next week as well. are we just going to see continued multiple expansion? does the multiple on j.p. morgan expand criticism -- expand? jonathan: there has been criticism by the people in this rally. lisa: the earnings and revenue have started to catch up and that is what people are watching with the economy continuing to chuckle -- struggle. jonathan: just tuning in, welcome to the program. stocks are positive by 0.2%. coming up, conversation and

interest rates. and the latest for the dropping call for a rate hike possibly expanding into november. tom: that was a chart avenue five or six -- that was a chart for an average of how you work it out with disinflation and the pros are not doing that. some are looking for lower inflation, some are looking for stability but there is a growing crew assange we get to where are mabel week take up. lisa: this is from citigroup -- that to where we are may be up. lisa: this is from citigroup, offsetting the surge in

write-offs tied to consumer loans. this is the theme a lot of banks are increasing loans even as they see a weakening in the credit profile because they are earning so much. this is a fascinating tension when you love her up -- when you are levering up. tom: they do that in the united kingdom? 22% for interest on credit cards? jonathan: it is next, yeah. tom: and we were in school noted talked about 24% charge cards. lisa: i didn't have a credit card when i was in college. ♪

>> the bearish camp would say if you look at positioning it is getting very exuberant based on metrics. you at whether it is hedge funds or ctas, investors have very quickly bullish lee ash bullish. -- bullish. chief investment strategist summing up the decent news we have had. your equity market slightly positive by 0.2%.

let's check out the banks and financials, city grant, -- citibank, j.p. morgan, wells fargo. j.p. morgan is up by 2.71%. wells fargo at four point 51% and a citigroup by .8%. -- wells fargo at 4.51% and a citigroup by .8%. stocks still positive in the premarket. tom: spf up seven points. the vic's is stable. this is the conversation of the day for people looking for stability of thought on the rate market and how it folds over to the fed.

padhraic garvey, absolutely brilliant notes written where he sets up ranges around the 10 year and two year. how has it changed your guesses given the glory of what we saw two days ago? padhraic: it has been an astonishing week. annualized it is up 3%. 0.1 percent ppi analyzes to below 2% and we need to keep that up. when the 10 year cat 4 percent, it looked really comfortable. the big question now is how far can the 10 year fall? if you know nothing else about bond rockets, you -- bond

markets, you take it out two or three years and you look at what is the rate and at 30 basis points. the rate is around three point seven around 30%. that tells me there isn't huge room to the downside. the question is why is the long-term vent funds rate high -- fed funds rate high? preventing rates from gapping down. tom: if you get weak dollar and you have some implied hope for wealth creation. isn't that price upfield down? padhraic: absolutely. if you look at the demand for

treasuries over the last three or four weeks, it has been following. spent good demand for duration and good buying. it has prevented the 10 year yield from dropping dramatically. if we are talking about range, i would still think the range for the 10 year is 3% to 4%. there is not good rationale for a going above 4%. i also don't see a good reason to get to below 3%. right now there is difficulty in the 10 year gapping down unless something changes. if you give me a negative payroll's outcome, that changes the game, but give me that first. lisa: as we get earnings from the biggest banks, j.p. morgan

reporting record revenues. all of the bank executives saying they see strength, and they are building credit provisions. is there an uncomfortable and un-reconcilable tension right now between the strength we are hearing about from jamie diamond and this recession feeling you are seeing in the 10 year with people piling in the long and and expecting gains -- long end and expecting gains. padhraic: it is consistent with what jp is a about the economy. look at survey information sent it tells you something different. ceo confidence and small business sentiment on the floor. all of that has traditionally anticipated a recession. but then you look at services ism fighting back, housing market fighting back, consumer confidence fighting back.

one of the catalysts for a positive june was the banking crisis that we had in march. rates collapsed in the rate discount collapsed as well. once they feel secure about the banking story and it took about six weeks, we went risk on. lisa: you say this 3% for the 10 year, does this suggest you think the tension isn't going away and the display sherry -- the fact that we will toyed with the fact with sticky inflation for several years? padhraic: several years, tough one. i would say is certainly for the next number of quarters. we feel confident by 2024 we are not going to be worried about inflation, i'm issue give me a

shock i don't know about. until we get to that period, demand is beginning to wane. the impact of higher rates and inflation will ultimately have an impact on the economy. the external influence is weak. all of that is manifesting in a lower inflationary pulse. the odds are we will get a rise in headline inflation over the next couple of months but by the end of the year we expect core inflation to be below pre-percent. so confident there. tom: what is the fed call? have you changed it? padhraic: recently no but have we changed it, we have a. july, 25 basis points hike and we think that is it.

jonathan: done after july? padhraic: there is an argument whether they need to go in july at all. that really should be it. jonathan: don't expect a repeat of the january 2023 meeting. it is not talking like that? padhraic: no, the fed has a definite hawkish mandate at of it even if july is the last hike. they have got to keep the pressure on we won't know until the september meeting and arguably we won't know until the november meeting because they skipped in june. the fed will keep the hawkish rhetoric through november and it will be the end of the year before we know if they hiked in july. jonathan: rate as always.

-- great as always, padhraic garvey there. coming up, mohammed al arian on what we have seen. and an upgraded earnings forecast on the s&p 500. and still bullish at morgan stanley. looking forward to that. dave george joining us around the opening bell to break down the banks. hopefully that is enough for you in the next hour. equities up by 0.15%. ♪ om innat no upfront cost. sometimes you need a second opinion. [coughs] good to go. yeah, i think i'll get a second opinion. all these walls gotta go! ah ah ah! i'd love a second opinion.

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tom: i think we need a market checked. that's market check. -- market check. we will summarize the drama of next week. i am not sure i expected these numbers, up 3%, up 3.9%, up 1.8%. i just did not expect it. lisa: fixed earnings across the board.

they are in the middle of a revamp. i am struggling from what we saw from jp oregon, another record. a similar dynamic with wells fargo with a net interest income very much in focus and expected to be up 14% year-over-year by the end of the year versus the 10% previously expected. the big takeaways, the economy is still strong. ever, consumers are still spending, albeit at a slower pace. and we have a situation where banks are willing to lend even if they have to increase the loan loss reserves because they are making so much money. tom: the credit dynamics were studied what i am focused on is the idea of people knowing money at money market funds. people are throwing money at j.p. morgan. jonathan ferro protect --

preparing for the next hour. futures up and advancing to the morning. the dow is up 169 points. what we need now is a reset on the american economy. pooja sriram, economist at barclays, joins us now will be the theme of the weekend note of real gdp, consumer investment? pooja: that is a good point. we have been seeing very strong consumption spending since the beginning of this year. lisa went out there are signs that perhaps mendham is slowing but still fairly high. to give you a sense of the numbers, we are tracking gdp in the second quarter.

it is still close to 1.5%. that is a resilient economy. where we see signs of weakness is perhaps in business fixed investment that is supplemented by data with, pmi. that is where the weakness seems to be building up. we expect some drag but overall looking at gdp, we are looking really strong. tom: as we focus on the banks, it hasn't come up but what is barclays and all of your studies in london say about commercial real estate? i understand it will not move the needle on gdp but the commercial real estate analysis in your american economics. pooja: we forecast on office cre

and that is where at this time there was a lot of discussion about stresses. some of the takeaways was office cre is one third of all of the cre in the markets. the second is it depends on how stresses play out. typically you find loan majorities staggered. a lot of exposure for crts is with smaller banks. for it to become a macro scenario, we need a solid down and that is something we don't see at the moment. lisa: week that has been pivotal, with distillation -- distillation -- disflation and earnings from banks that highlight the strength of the consumer. is this an economy that has any

chance of a recession this year? pooja: as the look it seems hard to see how the slowdown is but it is likely that momentum will slow toward the end of the year and a lot of that is contingent on the hawkish rhetoric and for the rate tightening. we think higher rates will start to bite we see some signs of slowing perhaps in the economy and we think with further rate tightening we should get to a point where we see a mild and shallow recession towards the end of the year. lisa: a lot of banks increasing loans to consumers. they see the money signs because they are getting good interest rates on these loans.

how do you watch this, the real averaging of the american consumer -- re-leveraging of the american consumer? pooja: see stresses in terms of delinquencies like you pointed out. eventually the u.s. consumer is likely to slow. it really depends on what happens to the labor markets. we see strong consumption spending that is a reinforcing of a strong labor demands feeding into income and consumption. in order for this to slow what we need is for labor markets to ease. i think that is the key point we want to see and i think that is where we are looking at in terms of where consumption spending is headed. tom: what i see is everyone is

telling me hour after hour that the stock market is dealing from the economy. what i see from jp morgan is the rich people are basically throwing money at a financial system and rocketing from it and the haves in america are doing well. and you are qualified to do this. you are distant from it which

nice update. and the weekend reading on this think is going to be fascinating. the process of notes coming out after this week. the great reset, the disinflationary pulse that everybody was seeming to buy into this week. and then what this means about soft landing, how much everyone just pushes out recession until over or 2025 or who knows when she sends notes out. what you don't see from sonali basak off camera is she's working away, diving into what,

lisa? 40 pages for each bank and coming up with summary notes. is this a celebration today? shonali basak of the prosperity of the haves in america is this just a boom economy for the kind of people that actually speak to jpmorgan? there's a number we haven't talked about yet, tom, today. and it's this idea that jpmorgan bringing in $87 billion in net interest income for the year, that is comfortably more than jpmorgan has ever bought in before. and to the point that lisa is making this idea that charge offs are coming back, but not at the same rate. if you look at the biggest banks in america, if you look at the total federal reserve data, charge offs are kind of normalizing here. and it's what jpmorgan is telling people, that it's a normalization, not a deterioration. but if you look at the data from the federal reserve outside of the top 100 commercial banks that charge off rate is meaningfully higher. it is more than 7%. it is easily the highest level we've seen since the financial

crisis by a landslide. and so you're not seeing the same thing occur across all the banking system. and jpmorgan is consistently coming out as the biggest beneficiary. how much isn't that interesting boon that we're seeing pretty much across wall street tied to the increase in loans to consumers, to businesses versus just the deposits that they don't have to pay anything for. they pay 1% and they can cash in on the short term rate side at 5%, 4.5%. yeah, it's interesting. you hear jpmorgan talking about this as well. why haven't they raised rates? because they're not deposit chasing. they're flush with deposits. they don't need that many more of them. and we have seen that natural flight to safety anyways in the last couple of months. so the point that you're making here is that's not the same picture for the regional banks that we're going to hear from next week that are going to have a lot of pressures. if you also

sonali: that the pressure he will see is over quarters. you talking about goldman sachs, one thing we haven't talked about is they might take a hit tided some of its credit products and commercial real estate as well. when you take a look at what else you might see, not just for wells fargo or goldman but the regional banking system as well. tom: thank you so much. we will see you again next week. we have bank of america, first national. lisa: the regionals as well. tom: don't we agree that what

pacific -- pacific west says is it? lisa: they provide much more funding than the footprint would suggest in the american economy. tom: i had this done to me i have made a mistake mistake andf citigroup, stilt nicely elevated off of the previous $47.68. investment banking revenue return average equity, tangible or be careful the sources you see today. dow futures up. lisa: we are looking at the bank earnings today, important to get a gauge on the u.s. consumer and the u.s. economy.

reid has been across-the-board. things are going well and for the banks it means record revenue. they are talking about how some regulation is overstepping. we are hearing that from jamie diamond. how long can this dynamic continue if lending is continuing to increase but delinquencies and write-offs also continue to take higher. tom: my most important interview, i know jamie diamond listens to the program but i don't want to talk to them. i want to talk to mary at j.p. morgan. there has not been nearly enough credit done here. i think what we will hear from her behaviorally is in the last six month crisis we are now at a point and i'm saying this as an uninformed amateur, people are throwing money at ap morgan -- at j.p. morgan.

it is the construct that get you to 35% return on equity. that number is crazy. lisa: they don't want to attract more deposit so they don't need to pay. that will be a very different story next week when we hear from regional banks where they are offering other products short-term at 5.5% rates. tom: very interesting. we will continue with futures up and dow futures up. dollar weaker is the headline story today. we are going to continue. reset for the weekend for global wall street. on the equity market you missed, we will do that next. this is bloomberg surveillance. ♪.

if you're trying to get a view of the whole organizational financial health and you're trying to do that through multiple systems, that makes it very, very cumbersome. ♪ it's not just tech, it's not just people.

it's how they work together to provide that experience to the customer. as a finance organization that is what you want to do. ♪ and your store was also the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com >> when you look at the health of the economy and the leverage in the economy, the u.s. banking

industry has been de-leveraged because of what happened in 2008-2009. in this economy do a soft landing is critical base, then stocks will do well over the next 12 months. if we get a hard landing, it will be very difficult for the banks. tom: some of you of the younger persuasion may say who is that guy? he is gerard cassidy, many years of experience. think he has worked for 42 firms over the years. he is definitive on the banks and has a certain style to his research that is of huge value. we thank him for his commitment to bloomberg surveillance. he has been great and he sends the creative 12 lobsters. lisa: he does not bribe us with

lobsters. tom: gina martin adams with us on friday as we reset for the bear market summer as well. sell in may and go away. how is that working out? gina: not so well. we publish that july is a seasonally strong area in the market. it ignores the fact that july tends to be very seasonably strong, one of strongest earnings seasons, quarterly seasonal trends which seem to work this month specifically. it is tough to play the games. especially when we have seen broadening your throughout june and have seen the market perform well. tom: requests fundamentals --

world-class fundamentals and collective memories of the third and fourth week of august. things always get challenging at the end of the summer. are we prepared for that? gina: i don't think the market is necessarily prepared for that because they have been getting more and more optimistic. in the spring everyone was talking about the narrow market not optimistic. the narrative changed a lot in the month of june and continues to change throughout july where we see all caps breakout and some of the value-oriented growth leadership we have experienced so far this year. we probably need to continue to see that for the market to perform. we can only ride on the shoulders the giants for so long . as we get closer to the end of august, that is when we will get tangible evidence as to what is

happening with interest rates with respect to the economy. there is an 18 month lag between economic performance and interest rate changes. we will start to see if there are negative impacts it to the economy we will most likely see that late into the year. the market at large has just started a more optimistic tone, certainly that can continue if we see strong earnings as the earnings from the banks so far have blown away consensus expectations and in particular for that space such negative sentiment. lisa: is this when we will see people diving into financials and in that sector appealing? gina: we are a long way from

that. the banks did much better than expected but the real weakness in the financial sector is expected to be in the regionals and smaller banks i think we need to wait a little bit to get deeper into earnings. consumer finance companies could be incredibly interesting of this earnings season and how they are contending with higher interest rates and what is the consumer hey vera shift in response to higher interest rates. how desperate are consumers to take on that. and frankly when you look at the broad financial sector, insurance is a huge part of financials at large. we focus on banks as an economic indicator but insurance companies are the leaders in financial space in terms of fundamental trends. they have done reasonably well with price trends.

i want to watch the insurance companies for signs of potential weakness or strength. lisa: every guest this morning has said what a week. we got a complete reset with expectations of dis-inflation taking hold or specter jobless claims or earnings we are getting increasingly. how have you reset? do you think this amid the downturn in inflation? gina: no single week makes a huge change for me. we have talked about inflation for the last two years as the driver. the consequential shift was in the december-january period one were getting clear evidence inflation was turning from headwind for stocks into a tailwind. that has continued over the last several months.

we got this week was the confirmation that inflation is still accelerating significantly more than people had anticipated and is literally contained supportive of margin conditions. as much as you get confirmation, it wasn't necessarily a big change but a continuation of the trend. the one thing that to potentially change is initial claims. tom: amos gina martin adams claim is that are in the market. you are a player and always playing. what is the behavioral process with bears who have been wrong on the bull market? how they rationalize over the next four weeks? gina: the bear case is made

based on higher interest rates ultimately constraining economic growth. this goes back to what we were talking about earlier, there is this underlying tension with respect to the traditional relationship between interest rates and the economy and there is an underlying assumption in the bear case that at some point in the future ultimately and we don't know when, there is this underlying uncertainty with respect to how will the economy contend with higher interest rates? that is the bear case right now and feeds through to several things, such as interest rates are too high. you hear all of the narratives. the trouble with this case is so far these higher interest rates have only slowed economic growth and frankly inflation has been the bigger story has driven the equity market.

maybe ultimately we have bearish correction until the data tells you it truly is coming, you have to participate in the equity argot. -- equity market. follow the data and the data and models have been constructive since the end of 2022. tom: thank you so much. bramo actually has credibility. your world of credit absolutely nailed this over the last three months. credit spreads did not widen out, or optimistic, corporate credit as compared to full faith and credit said no, we are narrow, there is optimism. i got goosebumps over this. credit nailed this time. lisa: in fairness, so did mean

stocks -- meme stocks. people believed in this recovery. right now what we are seeing as we get bank earnings is a resilience, although on the margin some signs we see a levering backup the consumer. the citibank ceo said credit card average loans rose 14% in the quarter. people are charging all of their trips and airplane tickets for the points, maybe, maybe not in the banks are there for that. tom: is citigroup basically visa? lisa: i won't go that far but you are seeing and expansion of consumer credit. tom: cut the plastic is the summary from bramo.

dow futures up. have a good weekend. am i here monday? lisa: you are. ♪ when people come, they say they've tried

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jonathan: live from new york city, good morning. we are advancing for seth confect -- fifth consecutive session. account onto the open starts now. -- the countdown to the open starts now. announcer: everything you need for the start of u.s. trading, this is lou berg the open with jonathan ferro. jonathan: equity markets heading for a big week of gains as the latest data