kbw, tommy show is here with a fox business exclusive, which sectors he says will rise along with rates. a firm taking buy now pay later to the next level rolling out a super app to help you handle all of your financial needs in one digital location. paypal cofounder, affirm ceo is here to tell us how his fintech plans to take over your finances one transaction at a time. we do begin with breaking news though. got to look at netflix shares shaping up to be the most dramatic story of the earnings season. right now popping about 8.6%, even though the streamer reported that its numbers a week ago weren't that great. that is when shares began plummeting, eventually losing 25% until news broke last night that pershing square's bill ackman scooped up 3.1 million shares on the dip. the billionaire's investor first foray into the stock, he said in the investor letter, he is ignoring the bear case that there is too much bear competition hurting revenues. he ignored it, netflix's quote, industry leading content and superb quality of that content. ackman led the herd and people are still piling in

david konrad, large-cap bank analyst at kbw, talking about those bank earnings.g kong leader carrie lam presses on with the city's zero covid strategy, extending restrictions into next month. we will discuss the implications. this is bloomberg. ♪ is bloomberg. ♪ jon: this is bloomberg markets. i'm jon erlichman. along with matt miller. in an effort to curb the spread of the covid variant, carrie lam is pressing on with hong kong's zero covid strategy, extending flight bands until after the lunar new year. the focus of the olympics is quickly building. i'm sure every country around the world would like to have no covid, but a zero covid strategy introduces some key differences between china and the rest of the world. what can you tell us about that? >> a zero covid strategy when you are dealing with omicron, which is 70 times more transmissible than delta, you have multiple chinese cities right now in some form of lockdown. six big cities. write ahead of the olympics. -- right ahead of the olympics. 20 million people in some form of lockdown. 1000 lights cancel be

secondly, it is one of the more asset sensitive banks we cover at kbw they have a ton of cash on thece sheet and a low cost deposit structure and they will benefit in a material way when short-term rates move higher late they are quarter potentially. we view that the sentiment and the rates is a great entry point for a high growth name. >> the stock is up 7% today, doubled over the past year explain to me, if they issue bitcoin-backed loans what happens to their balance sheet when the value of bitcoin drops by 40% >> that's a great question you know, i think one of the beautiful things of the crypto margin lending that they do relative to traditional equity marginin lines we might be familiar with is the crypto trading markets never close. they have an opportunity to monitor collateral in real time and utilize certain group of custody partners so they have access to the underlying collateral as well in many ways we would go as far as to say the risk factors around these bitcoin collateralized loans could be lower than traditional equity markets which have more counter-party risk give

you've got the kbw banks index off its lows now, but still down around 0.7%. takeaways from the call today. we will dig into the details and figure out where the sector is going, where the stocks are going. gerard cassidy of rbc capital markets is coming up. we will get his take on what is happening here. the bank sector certainly in focus today. we will deal with the details next. this is bloomberg. ♪ ♪ >> as we said at the outset of this section, we are in for a couple of years of -- returns. despite this, we will continue to invest, and we will not let temporary headwinds distract us from critical strategic ambitions. kriti: that was jp morgan cfo jeremy barnum. the analysts call is underway. bloomberg's sonali basak has been following the calls. she joins us to talk about the earnings take away. what have you heard? sonali: all of the banks really taking different tones when talking about expenses versus the revenue they will bring in for them. when it comes to citigroup, we have seen major transformations in jane fraser's first year as ceo. we are seeing

first up, the kbw ceo. we will talk about the coming wave of bank earnings, one of the hottest sectors on wall street but there is one emerging issue hanging over the group we will explore that and tell you how the profit. >>> the master card ceo's company plan to be a leader in the fast-changing payments space. also landed at number 13 on the just 100 list of companies >>> and the ceo of quantum skate, the battery start-up maker pushing beyond automobiles with a new energy storage deal that could be a game changer for the industry. >> tyler, thank you. hi, everybody. the focus this afternoon is on the weakness in tech the nasdaq taking a leg lower about 90 minutes ago speculation as to why but mike outlined the point is they are selling the rebounds down 1.3%. apple down 1%. microsoft, 2.5%. two thirds of the stocks are in correction territory, down 10 fundraise from their 52-week highs. s&p and the dow trying to muddle through. the dow hanging on to a gain the s&p down 21 right now. the next hurdle for th

like at the kbw banking etf and the xbe was up more regional banks there. >> nadine, i see you nodding as well we had a guest earlier on "power lunch" that made this point, sort of leaning toward the mid-sized banks. do you buy that argument in banking as the stronger place to make money now >> you know, there's two things i think to what jeff said. we were laughing about it this morning because we were agreeing you want to rent this trade. you don't want to own it it's time horizon, number one, but then, two, for us. it's not images about the mid tiers. we're going international. we own european banks. you could use the eufn, that's been on a tear we're looking at other parts of the world that are opening up, that individual stricter rules, you know, they have a ton of catch on the balance sheet we think they'll have more value lovers versus the u.s. here, especially since the valuations only more recently have popped up we've seen the u.s. benefiting pretty much all year. >> are you a buyer, renter, seller of banks? >> a buyer and a renter. here's why, tyler. i think this is a great

lisa: i was looking at jp morgan's return over the past 12 months, up 22% but it's lagging behind the kbwhy has it not been able to keep up? >> like betsy, we upgraded wells fargo and bank of america to buy. there is more of a play here to rising rates and interest income going up. jp morgan is more of a hybrid work needs another great print in 2022 for the capital markets. there are banks that have a greater waiting to loan activity that will impact the net revenue. that will be bank of america and wells fargo and we will see it jp morgan but the market is saying let's find something that has more velocity. we have a hold on jp morgan. lisa: you are looking for more lending so what type of lending do you expect to see growing, consumer or corporate? >> it's going to be more of the consumer going forward for the first quarter of this year. what i'd like to see in the fourth quarter is low balances and other consumer personal loans to get back to normal levels. the personal savings rate which was at 18% is back down to a normalized rate of 7%. with the holidays extending, the cart loans wi

that is helping the kbw index. you would think if you saw a rally in the yield u.m.c. tech fall off -- you would see tech fall off. that is not the case. we will see if that can continue. i want to talk more about the bond markets. what do you make of the rise in yields today? >> i think we are playing catch up. going into year end, you see the market is cautious. now, it is game on for the fed as far as rate hikes. the market is starting to rapidly price in three hikes for this year, maybe two the first half of next year. this is getting priced in. that is translating into higher yields across the board. what is interesting today is you see the selloff led by the backend of the curve. alix: it was more the front end, we would assume it is replacing -- repricing rate hikes. on the backend, what we make of that? >> we start to see arising real yields and inflation expectations. i look at this with a tengion of optimism -- tinge of optimism. policy is still very accommodative. the fed will be purchasing assets in the first quarter. rate hikes should not make a big differ

the kbw bank index up 3.6%. a huge part of that is the bond market.ou are seeing the rise continued in the 10-year yield. the 30 year yield at the highest level since the end of october. it was a pretty rough start to the bond market if you are long. so what do you do with this kind of rotation? evan brown at ubs asset management joins me now. are you playing rotation tuesday? evan: we are. we are playing rotation this quarter. we are hoping the price action we are seeing right now continues. it is really just based on what we think will be a stronger economy than consensus expectations. coming into this quarter, you have to rebuild a lot of inventory, still have household and corporate balance sheets in good shape. capex will pick up. in general, the private sector can take over from the fiscal stimulus over the course of this year. that is the price action we are seeing today. alix: as of now, it feels like the overall equity market can handle these higher bond yields, but tech isn't. how far do you need to go for tech to have a meaningful correctio

the trajectory of the curve since the end of christmas is a steepener and it has consequences for the kbwe value trade. we have had doubts from our guests and it is time to pivot. dani: mng saying we need a longer laster period of action to make them question the trade of value. i should say maybe we will get a second day but we are looking at nasdaq 100 futures down, underperforming what we are seeing from the s&p 500. manus: and tell me, what is the new ticker that i need? dani: factors to watch. check it out after this. this is bloomberg. ♪ every day in business brings something new. so get the flexibility of the new mobile service designed for your small business. introducing comcast business mobile. you get the most reliable network with nationwide 5g included. and you can get unlimited data for just $30 per line per month when you get four lines or mix and match data options. available now for comcast business internet customers with no line-activation fees or term contract required. see if you can save by switching today. comcast business. powering possibilities. and there you have

the kbw bank index is down 2.1%.a look at what is happening relative to yields, we are going to see here the five-year real yield, the 10 year real yield, and the 30 year real yield -- a little bit a tongue higher there -- going down. you have i believe the 30 year real yield almost positive. that inflation pressure has been the story of this year. that is why we have tech under pressure this year, but not quite as much today. let's take a look at what is happening relative to the bloomberg commodity index because this is a very interesting divergence relative to the selloff we have seen in stocks this year. all year we have had oil trending higher, so that commodity index right now up about 1%. crude oil, 1.5%, up for a fifth week in a row, at his highest levels since 2014. italy looking like it will go back above $90 a barrel. copper joining in. these are positive reads on the economy, perhaps suggesting that traders, investors think the global economy is strong enough to digest these rising rates. platinum really

the kbw bank's index up 11% year-to-date it all comes as the banks kick off earnings later in the weeklls fargo ceo banking analyst. the kbw ended in the green today, but actually the investment banks morgan stanley and goldman down following less stronger capital market performance. did that spook you ahead of earnings >> look, bank stocks outperformed last year we expect bank stocks to outperform in 2022 and the theme of the year is main street banking or traditional banking revenues over the next couple years should see the best growth since the 1980s. so go ahead and get your pack man out and get your mtv and get your old neon pink t-shirt because we're going back to 1980s in terms of the degree of growth in mainstreet banking revenues that's what's going to drive this year, and that will supersede a decline in capital market revenue that's already in our numbers. >> i guess your numbers, which you already factored in the outlook for the year, already has seen share price targets come quite close because of a strong start to the year for this sector as a whole much lessupside than

first up, the kbw ceo.oming wave of bank earnings, one of the hottest sectors on wall street but there is one emerging issue hanging over the group we will explore that and tell you how the profit. >>> the master card ceo's compan

boring, traditional, regional bank names that lead us higher especially on a relative basis >> yeah, the kbw or near all time highs. the named indexes are doing great. any names inside those indexes you guys like more than others right now? >> congratulations to our bank research team. it looks like they nailed it pretty well, especially on friday, to have more of a tilt toward the regionals this week coming up we like cfg, citizens, it's a cheap bank leveraged to higher rates. i think it gets a little bit harder from here because to your point, banks whether regional and larger cap are up over 10% on the index level to start the year so i think it becomes more of a stock picker's game. so we like the cheaper banks that are massiveliy levered to higher rates so cfg would be a good pick there. >> cfg leaving us with a name pl we'll call it opportunity tuesday here on "worldwide exchange." rj grant, we appreciate you getting up early although i figure you're at your desk anyway because it's a big week for you. >> thanks, brian, have a good one. >>> coming up, your morning rbi and why new engla

e the kbw, far more weighed towards these large cap banks, a lot more regionals in there. way they traded on friday same thing happened today. so i think there's a lot to what you're talking about and just to button up that point. if you look at, say, the blackstones of the world or blackrocks of the world, if my thesis plays out that later in the year you see interest rates actually back off a little bit, those are the names that are going to win and those are the names that have been losing by a lot. you throw in there s&p global, cme group, i think some of those financials can be interesting in the second half of the year when the fed is unable to do what the market is currently pricing in. >> tim, your take on the banks -- or guy, rather. sorry. >> tim, guy. at its zenith, jp morgan was trading close to 2.6 times tangible book. what's happened here, valuations are starting to matter when jp morgan comes out and reports a tangible book of $71, people are doing that math and what's the right valuation if you think it's two times, then you have $142 stock but i don't thin

the aftermath was in the markets, the kbw bank index one of the outperformer's, up 0.7%, along with somef the other value cyclical names like energy. downside has been tech. let's take a look at the arc etf , for example. on the upside today, this is kind of idiosyncratic, s&p 500 hotels index up 1.5%. in incorporates some of the cruise lines. crews stocks can stick out as an over compelling idea. this comes from steeple nicholas. -- from steeple nicholas. that is sort of the fundament a backdrop. funny you should make that call in the middle of omicron and winter, but in the last, it is the year for cruising. guy: we are additionally going to put that out on social. thank you. let's talk about the inflation narrative out of the euro zone. inflation picking up and continues to pick up. the number we got today accelerating beyond already record levels. we are at 5% in december, defying expectations for a slowdown in making the ecb's job a little bit harder. kristine aquino heads bloomberg's rates and fx team here in europe or get is that the case? is this making the ecb's job a little har

the kbw, i think, is up 10% this week alone. i've got a minute to go then. fed running off the balance sheet, not just tapering anymore. tapering rate hikes and balance sheet. is there anything else we should be worried about, rob? what's the next negative that can derail this marketsome. >> yeah, tax hikes, right? let's remember, that's going to be on the table this year. we're not hearing a lot about it early on, but you start raising corporate taxes, you start raising personal income taxes, that's definitely going to put pressure on the market that i don't think has been priced in. charles: i've got to leave it there, guys. tough week for the market, two guys that have done it well and done it really well for a long time. see you both very soon. now, want to take you out to liz claman in las vegas for the ce e s show. all i saw yesterday with, liz, was all kinds of articles. that thing is hopping. there's some great stuff going on out there. liz: it is arguably not just a huge business and technology story, but it's a news story. of course, because of the

want to stay with the banks and bring in ceo of kbw. sometimes we have the big bank names.ity right now in your opinion? >> so, we think last year was the year of the universal bank stock and that they were performing better than the typical spread lenders in regional banks and we think there are forces that are absolutely true. but we think the ben ifs's going to be better in the regional banks and the banks more spread dependentant improving loan growth as well as higher rates, taking off some of the pressure of zero interest rates are happening sooner and probably to a larger degree than we anticipated when we upgraded the sector last september. we think this year will be the year of the more spread-dependent banks the regional banks trade at about 69%. the last time the fed went through a rate increasing cycle over nine times and 15 to 18, the relative multiple average was 91%. our view is the underlying fundamentals with rates and loan growth, probably mean bank earnings estimates are too low and the stocks are still trading at a big valuation gap >> to dig in more on

>>> welcome back financials one of the best performing sectors this week kbw banks index rallying sinceonday let's bring in gerard cassidy at rbc capital markets. great to see you thank you for joining us to what extent have things run up too fast this first week of the year and brought price targets too close for having a bullish call on the sector for the whole year >> thank you for having me you're right the stocks have really rallied strongly here. kind of remind me of the start of 2018 with a similar rally in the beginning of the year. i think what's going to happen is as you know the banks start to report a week from today with jpmorgan, citi and wells kicking it off they can review from the policy to tightening and if that happens obviously with them raising short term interest rates that's positive for the banks. price targets and earnings revisions in 2022 could be increased. >> how much when you make the picks which we want to get to particularly let's say amongst the big cap six bamgs how much do you look at multiple versus fundamental exposure for the bank >> it's a combinat

. >>> welcome back banks earnings tomorrow, kbw bank index up over 50% since the start of last year andr to date. so the bar is certainly high what's going to be interesting, guys, is that the results looking backwards will match that share price performance probably all of the big banks will release record all-time high revenues for the entire year but the focus as to whether those share prices can hold up, mike, will be the guidance, both on capital markets and the net interest income, the interest rate for parts of the business it remains to be seen whether that will be strong enough given this short-term run-up in share prices >> the group is trading near the highs. i would say in valuation terms it's a little bit short of where the big banks got to let's say in the last tightening cycle, 2018 and consumer, that's an emerging area of concentration in terms of what kind of footing the consumer is starting off the year on when we're kind of lapsing the stimulus from last year >> including loan growth, which some say is picking up but others are not sure about. don't miss our interview

the kbw bank index up 5% since monday, though it is down today.pportunities here, especially among the payments sector which lagged last year and looked like it was starting off this year strong >> well, i think if you're a trader, these stocks look horrible short term. i think if you're an investor, some of them have come down so much that they're worth taking a look the name in this group that i'm long is paypal, and i continue to think that the venmo franchise is going to be one of the dominant ways in which people not only pay for things amongst each other but now start to pay vendors and even start to express trades in things like crypto the venmo platform, i think, is going to make paypal a super app. i think in fintech you have to be a super app i am much more bullish on this than a lot of the other names that have come down that are one-trick ponies, robinhood comes to mind. so this is the type of name -- and, by the way, this thing down 1.73% on a day like today, that are just shows you how much it's already sold off from its high this wa

the kbw bank index up 11.25% this year. on friday we saw citi and jp morgan both fall.s fargo did say that their net income should rise about 8% this year, so that is the macro story of perhaps a steeper yield curve helping the banks, but it is a different macro story that hurt citi and jp morgan, and that is the inflation story, specifically wage inflation. costs were much higher for these banks. valuations looking good for jp morgan to start the year. thousand for people to be concerned about what expenses mean for these banks. i should say jamie dimon, along with talking about seven interest rate hikes, said it is good for workers, good for business rise wages, and also said people shouldn't be crybabies about it. [laughter] anna: thank you very much, with the latest on how the markets are pricing in the fed and what that does to the yield curve in the bank earnings story. get some market analysis. let's welcome to the program jason draho, head of asset allocation for the americas at ubs. the markets tell us now that four hikes or more are expected from the fed this