also warning europe's banking sector faces earnings of banking power. global head of wealth and asset now. thank you for being with us this morning. a big week for banks also into the broader eurozone economy. what does that mean for that provisioning at this point do you expect european banks to provision for the size of credit losses now >> good morning, when we look at the provisioning at the moment i think it truly reflects the uncertainty we see in the market i think it will get to more clarity of the furlough schemes provided for the amount of the 400 billion, which is the base case we expect to happen over the next three years that is 2.5 times what we've seen the last three years and about half of what we've seen. in light of what the ecb has outlined it is important to keep in mind over the next decade, banks really replenish the capital it is a severe shock but they are able to absorb it. >> what do you think of banks lending to these zombie comes? what are the longer term effects going to be for lending to some of these companies that perhaps

big banks beginning three day dash for the two big to fail banks in the u.s. -- too big to fail banksu.s. philippo, i have to stay on the remarkable two year yield of the united kingdom. what does that signal to you? senseuble ahead in the that it is similar to u.s. banks it sweat because the good days are kind of gone in terms of financial income. tom: important question for american and u.k. banks -- did they adapt to the new low or negative rates in the same way continental banks did or is it a different story? filippo: similar in the sense banks, mayghty u.s. have to resort to an old-school management, which european banks have mastered in the last 10 years. profitability is not a trial for america. the balance sheets for the larger u.s. banks is probably inching closer to zero. it presents a challenge. there will be some sort of plan on the cost side. guy: good morning. creditndering when peak stress is for banks in the u.s. crux of thet is the matter. thatere close to provisioning amount, parallel close tope, norway, peak provisioning, then it went up 10%, stock. feel more comfo

banks, but other banks did benefit.iskier parts of the market, leveraged loan markets in particular might be able to come back with new life. the other cohead of investment banking at deutsche bank is a huge underwriter of leveraged loans, expect five to $10 billion private equity deals into the end of the year. that kind of activity in private equity markets might keep investors satisfied into the end of the year. the question is with all of the uncertainties, will they be willing to put that kind of money to work? alix: who wins if the money does get put to work? what bank will win? sonali: deutsche bank is a big bag but goldman has been making a lot of moves. u.s. banks have been winning because of the debt underwriting issuance. less so the european banks. barclays also, if you look at the m&a tables, top five. they have room to gain some shares if they put money to work and if we can work cross-border. guy: one of the things that has defined the transatlantic risk has been the inability of european banks to gain an

is on digital banking.he forces of this pandemic have turned the accelerator up on some of these forces. everything has sped up. tom: absolutely. we are seeing the vix come in. it is really interesting to see, as we go through this trading day, do we have the tech lag we have seen the last couple of days? with the banks, we may get a broader lift to the market. jonathan: equity futures up 40 on the s&p 500. we advanced by 1.26%. goldman sachs up by 4%. this market is doing better. is the rotation back on? we will ask that question to jared watered -- to jared woodard. this is "bloomberg surveillance ." ritika: with the first word news, i'm ritika gupta. china is warning the u.s. to stay out of hong kong affairs after president trump ordered an end to hong kong's special status. he also signaled sanctions on officials cracking down on political dissent in the city. a vaccine produced anybody's for the coronavirus for the first time in its current test -- produced anti-bodies for the coronavirus for the first

well, the second bank of the u.s. started because america was having a tremendous problem with fluctuating currency and it was in part because there was no central bank terrain that in. not only was it a problem of runaway inflation and fluctuation, but the government had no and borrow money from. so the bank of the u.s. was founded and performing for functions. it was going to loan the country money, collect the taxes, test state banks to make sure they were holding true to what they had in their vaults. and establish one unified currency. it did it in a way that the federal reserve does not do, and there's certain things that the federal reserve can do such as low money the banks and pay interest on their reserves. but i think what has been consistent throughout the history of the central banks is the realization that when they are well run they are incredibly useful to society. >> with regard to banking, it is an absolutely exemplary area where we have concurrent activity. the banking system in this country is set

let's get to bank earnings. deutsche bank's red headline.aying they are on track to meet all targets. let's get to the numbers coming through. the second quarter fic trading revenue comes in at 2.0 5 billion euros. the estimate was 1.81 billion euros. upbeat on the second quarter f site -- a beat on the second quarter fic. in terms of pretax profit for the second quarter, that comes in at 158 million euros. that's a surprise pretax profit for the second quarter. the estimate was for a loss of 133 million euros. that's what we are looking at in terms of second-quarter net revenue. that comes in better than expected. the estimate was 5.94 billion euros. a lot of lines coming through here. 2020 revenue essentially flat. cet1 reaffirming its 2022 leverage ratio and return on tangible targets. in terms of second quarter net interest income, that comes at 3.0 9 billion euros. ever so slightly light. basically, the main takeaway here is that deutsche bank has reported the biggest gain in fixed income trading in almost eight years. the market rally

banks, bank equities, which have been very much hit and one of the most unloved sectors and perhaps for reason because banks are going to struggle to profite a huge amount of . over the last quarter, you had a suggestedorm that this rush for issuance of debt will be beneficiaries. sheet ofhe balance financial institutions offer great opportunities. i'm talking about debt issued by the systemically important financial institutions. banks are becoming or will become an extension of the fed and the treasury. the fed will be acting almost at continues tohat print that money. decidingury will be how to allocate these resources and it will be down to banks to make sure those distributions take place. futurect the bank in the in more that type of scenario and that respect, i feel better lending my money to banks, buying debt issued by institutions. by all means, engaging in some of this financial debt. francine: what do you do with chinese assets right now? i don't know if it is something you have ever looked at or will in the future, but if you look at the chinese markets, there are questions

banks on aggregate for the last few months have moved similarly to european banks.e did not have -- the euro did not have many downgrades from interest rates falling as they did in the u.k. or the u.s.. the problem for the eurozone banks, they are all catching the proverbial economic flu. you are starting with pre-existing conditions in europe, a much weaker position compared to scandinavia if i can detach them from europe, and the u.s.. the euro zone and the u.k. goes into this pandemic with returns similar to japanese banks. you get hit by your relative weakness, that is what hurts you, pre-existing conditions. aboutne: we talk a lot possible mergers and acquisitions in banking. how close are you to getting something significant across the border in europe? ronit: there has been a definite increase in the talks, specifically talk from policymakers. on a morering this repeated basis from ecb and frankfurt. m&a,u look at what drives in the bank sector it normally happens when managers are confident and have a clear view, a bullish view of the future. you can also ge

>> looking forward to the banks. josh fwroun, are we getting hopes of more growth or of the ppi data this morning, the bond yields move this week or suggesting otherwise >> yeah, the bond market doesn't believe there's any kind of sustained recovery and is acting as though we are still very much mired in the first wave of the infections 60,000 new case s not the recipe for returning people back to their jobs returning consumers back to shopping, selling car, putting kids back in school. all of that stuff is still on hold you have two different stock markets as a result. you have the stock market that resembles main street which stephanie was alluding to which is now only 16 or 20% of the s&p 500 a really doesn't matter. there's a little bit of a bounce in those names today overall they have been absolutely abominable. you have the world's wealthiest, most hilarious casino of all time trillion dollar company, complementary cocktails. tech was 1% on the open. look at the rebound in those names. they took it back in a m

coming up, banking pain.re expected to stay in their numbers this week and analysts expect the worst since the financial crisis. that is next. this is bloomberg. ♪ manus: it is "daybreak: europe." barnstormerto be a of a week. the battle of central banks will continue. here are the events. -- the governor of the bank of england will be speaking 5-5." ebinar entitled " he will be joined by john williams. the panel will be moderated by our very own francine lacqua. the uk's office of budget responsibility well published three economic scenarios on the impact of the pandemic. as a monthly gdp and industrial released.ing data is when you get to wednesday, it is going to be the bank of japan publishing their monetary policy decision. thursday is the ecb and francine lagarde will hold a virtual press conference. and on friday, the 27 nations will meet in brussels to hash out the details of the massive economic stimulus package. what will be the compromises? and another item on the agenda, the u.s. bank earnings are

investment bank.w spending surge on its platform as more merchants switched to online sales. earnings per share came in at $1.10, beating estimates, 220 billion dollars on the back of increased online shopping's. more in the next bloomberg markets, including an exclusive interview with a metals group ceo. stay with us. this is bloomberg. ♪ you doing okay? yeah. this moving thing never gets any easier. well, xfinity makes moving super easy. i can transfer my internet and tv service in about a minute. wow, that is easy. almost as easy as having those guys help you move. we are those guys. that's you? the truck adds 10 pounds. in the arms. -okay... transfer your service online in a few easy steps. now that's simple, easy, awesome. transfer your service in minutes, making moving with xfinity a breeze. visit xfinity.com/moving today. >> it is almost 11:00 a.m. in singapore and malaysia. rishaad: here is a look at our top stories. the fed leaving rates near zero, doing whatever it takes to support recovery.

my banks other to banks that have the most exposure to credit cards specifically.rgan and citigroup. having said that, both banks have been pretty proactive in trying to get ahead of it and reserving for those losses and taking those losses ahead of time, getting ahead of it pretty proactively. if we do see a normalization and some visibility that they economy is getting better, they are pretty well-positioned to benefit. now to your second part of your question on how much does it depend on covid and reopening, i that clearly is the case. the -- a w-shaped recovery or a u-shaped recovery and the economy reopening, backtracking and government stimulus starting to fade away and that having a negative impact on economic growth, those are certainly risks and they are pretty uncertain because this is a recession that is very unique in a lot of ways. the good news is the banks are well capitalized. they are trying to be conservative in their reserving, but the type of downturn we have, if we don't see a healthy recovery, certainly the banks will post more losses. i woul

dani: a lot of banks today and a lot of contrasts between banks.3 billion quarterly loss. the most out of any european bank. piling up loan loss provisions. they already had the most of any european bank. that is due to their em exposure. deutsche bank up by 2.5%. the outlook more rosy because of their huge fixed income trading revenue. that is helping offset some of the losses in asset and wealth management units. kering looking at a possible rally in shares. their call is up about 3%. huge growth in online sales. about 72% in the quarter. still only about 13% of their overall sales. clear they still have some way to go. the trend is promising versus someone like lvmh, where the earnings were pretty gloomy without the online boost. results wizz air, beating estimates to a pretty significant degree here. coming in at 91 million euros. the estimate for revenue had been 60 million euros. they said that their capacity ramp-up plan has been working well along with cost savings. perhaps that is where the revenue boost comes in. they are still unable to

european banking sector, but the good banks should be able to pay the bills. wouldn't touch it with a barge full. -- barge pole. guy: the recent deals done in brussel basically reduces the risk. banks who peripheral are huge holders should be big beneficiaries of that. seencp market has significant spread compression. that should flow through into the banking sector. i appreciate it is short-term but is there an argument to be made around it? james: absolutely, there is an argument. many what share your analysis, that this is a meaningful positive, with respect to potential redenomination risk. much more powerful impact on financial markets in that respect. i think if you were to look -- it is a bit nice, but if you btb -- look at where the seetrade -- what you will is that there is still a perception of credit risk spread between those two numbers, which tells you that actually this is a flow argument, this is distortion of the btp market. just ait is still short-term salve. you are building up a bigger problem for the future. there is no denying the fed can

banks down again today.nd insurance falling, but gainer, as well as food and beverage so it is not all a loss today and the losses are not all that big. let's get the bloomberg first-order's -- first word news. the european central bank will likely keep policy unchanged at its next meeting. that is after its massive emergency stimulus helped calm markets. times,g in the financial christine lagarde said measures from the central bank demonstrated their efficiency and effectiveness. the governing council's next decision is in just over a week on july 16. the white house has made good on its threat to leave the world health organization. the trump administration has sent a letter to the agency giving it a one year notice that it plans to go. president donald trump says the international body has been too deferential to china in its handling of the pandemic. the move comes as virus cases in the u.s. near 3 million. some advisors to the president want the u.s. to undermine hong kong's dollar peg. the proposal has

this recent bank lobbyist. partial repeal of the dogs they've been on their wish list for ages the stuff thousands tens of thousands of lobbyist essentially are writing the legislation every once in a while a bill will be submitted and the the lobbying firms name will be on it because the congressman messed up you know by not taking it off my question represented god well somewhat mirrors would represent money i'm just curious does it have does the legislation have some connection to alec this bill didn't come to me from alec in answer to your question but the reason i ask is because earlier you passed out a handout that says got walt at the top and it says health care compact and there's a logo right in the middle of that page and i went to the elec website and there is exactly the same the same find the same size in the same logo. on t.v. you know the pain promised after the president is that how to quote do a big number on the dot frank act so he is the financial side to lobbying has succeeded in persuading

we had bank earnings today. we are going to have more bank earnings tomorrow, right?aylor: we are. so interesting when you look at the underlying fundamentals. let's just pull up a calendar and show you where we are this week. where do we go from here? we heard from goldman, jp morgan, and other banks. crushing,nue is particularly in the equity business. those traders really holding their own. bank of america and morgan stanley, further updates on that trading revenue and health of the economy. good news today from goldman. i want to hear what some of these bank executives had said so far. take a listen. the consequences remain unclear. >> we cannot forecast a future we don't know. >> we are in a completely unpredictable environment. >> you are going to have a murky economic environment going forward. >> we are navigating an uncertain economic backdrop brought on by a global health crisis. >> the pandemic has a grip on the economy and it doesn't seem likely to loosen until vaccines are widely available. >> we expect the impact of covid to continually impact our earnin

a lot of the big money center banks were thrilled with this it's the community banks that like. yes i did support the community bank bill and i think when people mention this to others and what things are that makes it really hard all right one last question you should know regional banks are doing very well thank you. are you concerned that the banking lobby bank lobbyists had influence over this bill that they have too much influence here on capitol hill absolutely i think the bank on the gun lobby the pharma lobby all have too much influence here in congress and this bill to. 152500 1000000 in the kinds of things j.p. morgan so you think the kinds of things that talking about are not small banks so i don't know that anybody with a straight face can say this is an answer to that question this is a. small banks in order to give big banks really great and necessary regulation thank you so much take care. in response to obama's one effort to clean up influence peddling in washington lobbyist simply deregistered became more secretive thousands of lobbyist said we're not even going

and banks that have investment banks inside them are going to really benefit from them.ley, jpmorgan, group and wang of america -- bank of america, we think, will do really well because of that. that's going to be the difference and the driver between the big banks and the smaller banks. jack: they're not as reliable on that interest income which is tough these days. i do want to ask you about what you're looking for. so often when earnings come out, there really aren't that many surprises because guys like you already know what's coming up. but what tells will you be looking for in the commentaries surrounding earnings? >> i think you're so right because, look, we're in a really unusual time. we have a global pandemic underway, unfortunately. we voluntarily shut down the economy. interest rates are headed back or near zero. so there's a lot going on, and there's a lot to look for to understand what the major trends are. we think it's going to be a difficult quarter that they're going to report this week because the loan loss provisions are going to be so large. but we a

why do you like european banks here it is really a valuation european banks have never tried it as low as we've tried it currently. even during the previous crisis, we haven't seen banks right at these levels if you cross back to the previous crisis. what we saw then is banks going into the previous crisis hopelessly under provision banks were earning profitability levels that was unsustainable and undercapitalized going into this down turn, they are so much better capitalized they are not coming from artificially high levels and capitalization are key to look at we also don't believe that although this credit loss are going to surge and it is a meaningful impact, we don't believe that it is going to be as bad as it was during 2009 >> what will be the catalyst for the banking stocks ascending from here. clearly all those points you made are valid what will be the catalyst to buy this sector? >> that comes back to your earlier question i think investors will need to see and get a greater level of confidence that provisioning has been adequate and ongoing to enter into a situation where

jp morgan, bank of america, citigroup and wells in the kbw banking index.ead of pnc and bank of new york, mellon. the question is the company -- on an adjusted basis, it will probably report another quarter of losses after the quarter that had ended. on a gap basis, it has never been profitable. we will stare -- we will see if the pandemic benefited the company, in particular its mobile wallet cash app. perhaps that could replace traditional checking accounts. there's also room to add audio an independentnd bank charter as well. square added 100 million direct deposited towns -- dire deposit account. suntrust says square could capture 20% of the u.s. direct deposit accounts. they have a price target of $150. skeptics will point to the fact that the original payment system , the credit card reader, is under pressure because the small and medium-sized enterprises that make up its customer base are under pressure and not likely to recover soon as long as the lockdown is in place. i would be curious to hear to what extent traditional banks and knowledge the ris

the central bank will lend to bank at a -1%. so that means you don't have interest payments.n fact, you have interest credits. in the central banks will take that debt on. they will own it, and they have a political agenda, not an economic agenda, in which they will determine whether they will be paid back or when they want to be paid back, based on how the economy is doing and what will happen. so in that case, like for example in europe, and the similar situations in the united states and japan to varying degrees, they will make loans that will have interest credits zero -- youet's say don't have to pay interest back -- and you may not have to pay principal back. it depends on the conditions. those are markets which are driven by central banks not only actions but their desire to be an owner of those assets, and their priorities about that ownership when they buy and when they sell are not the same as the classic free market allocations. as a result, the capital markets allocatinge markets resources in traditional raise -- traditional ways. >> one of the questions investors

we are going with the largest banks, citigroup, bank of america, and j.p.n because they are more diversified, they have more levers to pull, and digital banking is being dominated by the largest banks because they have better technology. you are seeing the market share and you are seeing an yeareration of their five because customers have been forced out of the banks. explain why goldman sachs wants to be a plain-vanilla bank? mike: of all of the ironies, goldman sachs strategy has become more bank like, and you can see the second-quarter results, they knocked the cover off the ball with fantastic underwriting, trading, the traditional route of goldman sachs came out. this quarter shows you goldman ,achs is still goldman sachs but not what they want to be in the future. fargo,ke mayo with wells very appreciated. what an extraordinary week. i know jonathan ferro has been hugely europe centric with these critically important meetings, but i have to go back to full faith and credit to see where the bond market is, where the yields end. we now have significant

>> within the banks, biggest is best. a lot of people are moving the debate to should they own big banks versus super cap tech. consolidation among banks, the regulators will have to improve and endorse it. hopefully we don't have too much of that activity going on because -- should this go into 2021, that's a real possibility. tom: one of the hallmarks of you over the years is a broader perspective. where do we stand now with this tension with china and how will that impinge on markets? >> we've been pretty bullish on china for quite some time. we recognize the country had its challenges, return on capital. progressr types of that it's making, coming up later in the world economy. there is tension between the united states and china which is an understatement begs the question should u.s. investors be investing in china. our answer is whether it be investing in a currency that looks like it's going to be one of the world's important currencies over the long-term and companies and an economy that we think is an important

retail banking or corporate banking and a basic trading shock.t suisse was able to ride the results on the bank of investment banking and the global markets group. i suppose you can make the argument it would be best to be morgan stanley and goldman sachs and to generate the retail banking side overall. i think these are very unusual market conditions. --o not think six months ago at the beginning of the year things were looking lackluster in the investment banking sector, and then it roared into shape starting at the end of march. people areink fundamentally rethinking their strategies. it is like a lucky bonus more than anything else, and it just happened that people active in global markets and fixed incomes did well this quarter and the quarter before. alix: i was curious when it comes to credit suisse that their loan-loss positions were much lower than estimated. do you feel like credit suisse frontloaded the first quarter or is not being conservative enough or is there loan book a little bit different? octavio: there loan book is certainly

the banks, the state, and the -- greece's that was central bank governor, yannis stournaras.t up testing facility at terminal 2, according to chief executive. it is also saying they have had more engagement from the governor on covid testing in general. they are saying that they set up testing facilities and they could start in early september if the u.k. gives them the go-ahead. "bloomberg surveillance" continues in the next hour. tom keene joins me from new york. don't miss our set -- special coverage from 7:00 a.m. london time. we will look at the markets and we will look at treasuries. this is bloomberg. ♪ francine: extending lending. the fed prolongs seven of its nine emergency programs until year end in its latest effort to support the economy. washington stimulus talks stall. trading boost. deutsche bank posts a small profit after its best fic performance in almost eight years. the cfo tells us the lender is working towards breaking even this year. and profit at barclays plunges. the british bank warns of a challenging second half of 2020. we'll hear from the chief thi

are you concerned that the banking lobby bank lobbyists have influence over this bill that they have too much influence here on capitol hill absolutely i think the bank will. be the pharma lobby oh have too much influence here in congress this bill 252500 1000000 in the kinds of things j.p. morgan so you think the kinds of things that talking about are not small banks so i don't know that anybody with a straight face can say this is an answer to that question this is. couching small banks in order to give big banks relief from these write necessary regulations here thank you so much take care. in response to obama's one effort to clean up influence peddling in washington lobbyist simply deregistered became more secretive thousands of lobbyist said we're not even going to comply with the registration system and we're going to move into the shadows and continue to influence government but without disclosing what we're doing on paper there are something like 9000 or 10000 registered lobbyist but in reality that the number is closer 210-0000. on paper lobbyist spend about 3000000000 or s

down,state down, banks we'll wait to start the reporting season that is also pressure on the bankingr. we had calls from the ecb indicating there is a desire to limit payout to shareholders for maybe longer than the market was anticipating. the mining sector is higher. i talked about what is happening with the copper story. we are seeing tighter supply-side issues factoring into that copper price. bear that in mind as we watch what happens to the chile in case count. a great chart on the bloomberg you can find. i will try to take that out and we will talk about that later. in terms of some of the individual stocks, let's take a look at names. montclair has a credit line in the luxury space providing good news for it. we have been watching bayer. having an issue with a judge in the united states related to the roundup sentiment. we have to take mitigating measures to deal with the impact the coronavirus is having. the stop getting pounded -- the stock getting pounded on that front. the copper stories worth bearing in mind. the supply squeeze beginning to have a material impact on the

, i know that my local bank, community banks, regional banks are all very skeptical going into this. but i can tell you that they are not happy with the way things are, but they are pleased with the way things are going because they realize that they could be a lot worse. just a couple of quick questions, because i know we are running low on time. but you have done a lot of mortgage backed security jeanne may and jimmy mac those precluded intel for, but in 2008, mortgages that weren't backed. my question is i've written a letter about this are you considering including those non-agency backed mortgages and consumer loans -- >> so the answer is on and be yes, that is something that we have under consideration and your rights. as a general matter we have been willing to and eager in fact to expand things where it's appropriate. and consider installment known as a little different, they don't have the history in the it securities market so we struggle a little bit with that one, but we are looking at it as well. >> one last question intercontinental exchange and other clearinghouses for

more consumer facing bank.tion toay bank earnings season because they can give us a raid into how their customer base, customers are faring through this reopening of the economy. bracingl us they are for a wave of this loan payments. wells fargo, jpmorgan, and citigroup set aside $28 billion for potential that loans. that cautious outlook is weighing on their share prices. highlighted wells fargo, it is the worst performer in the kbw bank index. it is consumer facing, does not have the wall street trading operations that jpmorgan and citigroup do. this anyst called environment where the strong get stronger. those that have different businesses can pull those different levers to get them through this environment. or jpmorgan, trading revenue rose almost 80%, a record. fixed doubled in that time. citigroup also surged almost 70%. investment banking was a bright spot as well as citi collected a lot of fees from companies that rushed to raise cash. wells does not have the lever to pull. adjustingw is wells to the l

i know that my local banks, community banks, regional banks, were all very skeptical going into this. but i can tell you that they're not happy with the way things are, but they're pleased and way that things are going because they realized that they could be a lot worse. just a couple of quick questions, because i know we're running low on time. but you've done a lot of mortgage backed securities that are with fannie mae and freddie mac and ginnie mae. those included in talf, but in 2008, mortgages that weren't backed, the non-agency mortgages were included in talf. and my question i've written you a letter about this, are you considering including those non-agency backed mortgages and consumer installment loans in talf? >> so the answer is on mbs. that is something we have under consideration and you're right. i mean, as a general manner, we've been willing to and eager in fact to expand things where it's appropriate. consumer installment loans is a little different. we don't have the history. they don't have a history in the asset backed securities market. so we struggle a little b

when people hear the word bank they usually think of money but today we want to talk about a different kind of bank one for things like being the nana's and barley hear what's being stored and saved our seeds the right cheese adapted to the changing climate welcome to this new edition of equal africa i'm never tideway and i'm not alone sunder trying to be in uganda is with me what can you tell us about seed bank sandra it is nice to see you too near to well i know that in western uganda farmers helped him with this bank to enable them to grow healthy and nutritional crops for their communities more on that in a moment but 1st a look at what else is in the program. took a look. at other generates electricity while eliminating west and we will also hear how covered by road traffic. in kenya's capital nairobi. we started the program right here in uganda around 10 years ago jane and a few other farmers used a few bucks of beans and a bun in a seed start up capital to set up that is a community sit back and the course of tas proved fruitful yields in the region's green harvest have risen up

investment bank. how peopleties are are increasingly referring to banks.f there are more utilities in the credit offsets affect -- in the credit loss aspect taken off the table, how much does this become an income gain? ellison williams of bloomberg intelligence was talking about a dividend game more than anything else. christian: it is a great question. i think if i look at goldman sachs, for example, in the middle of a fairly steep recession, their posts are close to 9%. that gives you a sense of the resilience, particularly of the players, thefied bigger banking institutions. it is a fair question. i think ultimately, that is more of a regulatory question for the fed. if you look at what has happened recently, the fed has tried to restrict capital returns into a , so it is unclear if the fed will be allowing banks to pay out much more in dividends just because you want that sort of capital buffer in a downturn. i would say fair question. i think what this recession has really proven is the resiliency of the models, relative to what the fed told you. the

for all i know, he will go after the world bank. how should the world bank respond to a president?id: i was not selected by him, i was proposed by him for the world bank, and a look at numbers of the world bank unanimously, and it has been going well in terms of changes we are making that can help countries with growth, with better living standards, with all of the things that we are trying to do. climate, education, health, and on down the line. poverty is a big prater the -- big part of the problem. if you boil it down, we want to have international cooperation among the various organizations, but the drive for growth has to come from individual countries. that is what we are trying hard to do at the world bank. we have country offices in almost all of the developing countries, and those work with the government to find what will work next for the countries, and then we can help fund it with loans. the world bank is heavily doing grants, which work with the net positive flow into the poorest countries. that is what we want others to do. it is hard to say you're going to make a lo

once banks, mostly large banks here, not relevant to banks like ours, but for large banks when they writef their book value is resilient, people take comfort in that and then people take that one-time write down and look at the cover operating and make determinations as to how they are positioned to withstand any further write downs or just how their core operating businesses are doing. >> jeff, volatility is the new normal even before the pandemic based on what the administration's policy has been, but based on what we heard from the former vice president yesterday and the trump administration today, it seems the political reality is that populism and nationalism is here to stay for the next four years regardless of who is in office and we're expecting forthcoming executive orders from the white house. on shoring supply chains as the vice president proposed and we're expecting a tariff announcement from the u.s. trade representative today how focussed should investors be on that even as we're watching the virus and hospitalization numbers go up? >> i think investors should be focussed on

banks for the european banks >> a little bit. don't forget business models are a little different capital positions are a little different. but i think there is a take away one that, yes, on the negative we have to continue to make credit adjustments the european banks, of course, have faced these margins for a long time. this is nothing new for them the balances, the european banks, in particular, whether it be trading revenues or asset management fees or selling insurance out of branchs and other financial services, european banks have been able to sustain earnings and maintain earnings power despite the narrow spreads meanwhile, the european banking sector, in general trades probably less than half of what the u.s. sector trades and the u.s. sector is cheap compared to the rest of the market i think the european financial sector, broadly speaking, whether it be insurance or asset managers like a schroder, a credit squeeze, private bank, and investment banks these companies are trading at around half, two-thirds, 50 or 60% of b

two central-bank losses matter? central-bank losses matter?ey are going to have some losses unfortunately. over the long term i think they will be in good shape. over the short term there is going to be some bumping this and they will have to absorb that in order to get back to more liquid while operating market. think over the long-term things will pan out fine. lisa, a hung -- a $120,000 loss for the fed. lisa: i don't love that they suffered a loss. jonathan: don't you? lisa: what is fascinating about this story is that highlights how different corporate markets are from treasury markets. the federal reserve is buying directly from the banks in order to support this market. they are subject to the whims of a market that is traditionally over-the-counter, not done electronically. what that means is potential losses right off the bat. they are price insensitive by which will lead to trouble at some point. i don't know how you do that with an infinite balance sheet. tom: where did this word come from? everything is resilient right now. jonatha

didn't might mean there is an improving trend for other banks. the other key point, tim that dianna mentioned this is nothing like the situation in '08, '09 if banks make a lot less money this year than last, some are priced as if there is a chance the future is in question. >> yeah, i think the issue for banks here are not related to residential mortgages despite the fact if someone tells you you have a chance to push off paying your mortgage for three months or six months, you're going to take it and i think we have to be careful some numbers may be skewed to people being opportunistic. the cnbs, what is going on in commercial mortgages and real estate markets, that is where banks have a lot of exposure yes, you referenced the stress test and talked about a number of those scenarios and largely, the banks came out okay. they have been trading heavy since the stress test in the sense that again, the nationalization risk that hangs over banks is part of what i think holds them back even though i think their balance sheets are in great shape relat

haslinda: selina wang bank, -- selena ling, from a cbc bank. in the states hit a record high. what is behind that decision. chinese citizens living abroad as the government moves to make them pay levees back home. we have details on that on the way. this is bloomberg. ♪ haslinda: china has started tracking down some of its citizens living abroad to collect taxes, surprising ex-pats have never had to pay tax on overseas income. let's get more on this with our consumer reporter in hong kong. is the chinese government doing in terms of taxing ex-pats overseas? tothis may sound familiar many americans living abroad as the u.s. also has similar taxation. it is new and surprising for many chinese ex-pats. china did not really enforce this power until recently. we have learned state owned operating in hong kong -- to declare the 2019 income so they can pay taxes at home. are informing employees working at other places such as singapore. the reaction is from the people affected? they cannot be particularly happy. how big is the likely impact for these

and the bank of england and other central banks around the world are caged in a criminal conspiracy but now let's talk about the stock market as it relates to the coin poloroid and the man on the street and they lunchbox guy that you know bag it down it's apparent you know there's a huge. disparity here right stock markets are all time high and we are and the beginning of a depression right while we work through this before us charlie said this many times. already and that was going to respond but we had a really good coalition that she 1000 i crush you thought security done extremely well let's go back to our record levels of. assets that would stroll into people's lives that were destroyed many is. what happened at the time was. with huge potential on a system i don't know maybe that was close when time should. it not disobeying the problems it may produce a little a little baby a lot of the same so i'm out looking not so sure with a cause greater ability to whistle on than. because for various reasons but she's been documented already and i just i start to say to take a picture n

the central bank will lend to banks at -1%. that means you do not have interest payments. interest credits. the central banks will take that debt in. agenda,e a political not an economic agenda. they will determine whether they will be paid back or when they want to be paid back, based on how the economy is doing. in that case, like the example they will make loans that will have entrance credits. let's say, zero, you do not have to pay the interest back. it depends on the condition at the time. those are markets driven by central banks, not only their actions but their desire to be an owner of the assets. their priorities about that ownership when they buy and the when they sell are not the same as the classic free market allocations. as a result, the capital markets are not free markets. >> one of the questions investors are wrestling with is how far central banks are willing to go in their effort to reflate financial assets to begin with. they hope transmit something through to the real economy that would result in growth and jobs. how far are central banks willing to g

four of them the last three months alone two smaller banks faced bank runs over the past weekend; so i'm interested in your reaction to this interpretation that the deleveraging campaign is less costless so to speak and might change your perspective of state capacity. the second set of comments is crisis manage independent general. you place emphasis on the savings rate, rightfully so but it's hard to redirect savings in a crisis and you're completely correct to focus on the funding sinusoid banks about balances sheets but those are eroding. the interesting thing here is if the pboc can always inject liquidity to manage a crisis but unless the crisis is acknowledged as a crisis, and china might not ever actually acknowledge a crisis that is correct don't necessarily have the capacity to do so. so, i think the argument relies a lot of government creativity so i put these questions to you. does -- can you real deploy crisis management tools if you never admit that you are facing a crisis itself? and if you do so doesn't that make it look like a financial crisis? the second is, governme

the normal bank banks are going to face a bigger wave of losses than the investment banks and i thinkhat's one reason why these stocks are breaking out better than the commercial banks. top of that, you know, for goldman and morgan there is a lot of low loss content in their loan book. [indiscernible] jon: i think we have a bit of a problem with your line there, chris. chris kotowski, thanks for joining us. i think we have a bit of a problem with that line, tom. i hate keep bringing up the political question, but we see it again and again as the numbers come out, fantastic numbers at a difficult time for this country and the problem for me goes back to something that we discussed on this program just a couple of months ago. when you engineer monetary policy and fiscal policy and it shows up in the real economy like that, it's much, much later. who gets the leverage before anyone else? the banks on wall street. not saying that the objective was to help wall street and no one else. clearly the objective was to keep the companies financed and keep the payroll levels maintained through th

deutsche bank has said it is willing to help them bank. -- help wire card bank. you thinking about? >> i know you will be disappointed, but i am not prepared to give a lot of details. one thing is clear, last year, we formed the corporate bank. that is the heart of deutsche bank that is why deutsche bank was founded 150 years ago, to support and facilitate corporations around the world. for that, you need the basic product to be cash management and payments. there is the potential opportunity to look into technology, to look into payment schemes. of course, we are assessing that, and that is exactly what we currently do, whether there is something more to that, it is too early. we now own the transparency, and that is the first thing to be done. players inof the key the payment and transaction banking services, and we almost have an obligation to look into the situation and think whether there is an opportunity or whether we can save a lot. >> there might be a situation where if it turns out to be valuable enough and interesting enough, you would think about buyi