what did you make of morgan stanley's quarter? earnings have been kind of what investors thought of bank earnings would be in the middle of the ocean, floating out there with a fear of those sharks. what we are seeing is that actually the earnings are coming in. all of a sudden, it is turning into a little bit of an oasis paradise here. morgan stanley was ahead of what the expectation was by a full 15%. $1.30 when the markets out they were around $1.15. you can see loan growth and super regional banks.investment banking is a litmus test for most morgan stanley and goldman sachs. there are a lot of things going on right now. alix: going forward, did you interpret morgan stanley's feed as taking market shares and is -- or did you take it as banks being able to take on more risk? growing. is a pie that is why it is a litmus test for the economy. all of these banks have actually been exceeding expectations. america, bank of goldman sachs, morgan stanley. alonenot that they are taking market share, it is that activity out there is goin

morgan stanley. strength was across the king was a the deal ma standout and that goes with the theme. e of fits with the them investment banking performing strong. again, morgan stanley saw shares key topics included the institutional securities business and turning in the best the dealsince 2007 and pipelines. we have the investment revenue graphed out for you and you can charts of investment banking rising across the board is where yougreen find morgan stanley. if only all the results could be this easy. really, a strong quarter for morgan-stanley. >> it is tough to find weakness. we have conflicting supply data that we are looking at. bui surprise here with the that was offset by gasoline. you saw oil was lower earlier in the week and it came back and it was a positive for the oil bulls . it is at $69. again, oil is pretty much back ds better results, after being at the lowest we had seen in a month. let's go to the gold holdings because of the bullion-backed a slump andeing there is a lot of spec

nejra: i am glad you bring up goldman and morgan stanley.conomist matt levine wrote that they passed the stress test without actually getting a passing score. can you explain to us exactly how that happened? yalman: yes, that is interesting, the first time that happened. basically, even with -- after the losses -- the last quarter of 2017, tax reform in the u.s. actually made all the banks take big hits to their profits. they had to write down their excesses. so the banks argued that with that in mind, if you take that one-time hit, their capital levels of the fed said, "no, not really. we see that, so we will be a bit lenient, but still, you cannot increase your dividends and buybacks." which is as ugly what banks do when they pass the stress test. after passing, they increase it. but they cannot increase this year so we are somewhere in the middle. it is not what the banks wanted, but the fed give them some slack as well. nejra: so, a compromise, essentially. we saw a rally in the bankshares following the ccar. did this all come down to th

what stood out with morgan stanley? >> morgan stanley is a big investment banks on wall street.here they did their beat this quarter. they were up 20%, which is quite large. larger than other investment banks recover. -- underwriting fees, ecm, really drove it. bank morgan stanley helped bring ipo to market for. that helped morgan stanley and goldman sachs. ramy: let's expand this to the whole, entire earnings session. when we look at this next quarter, what will we remember? laura: goldman sachs have a new ceo. that is something that happened away from earnings, but david follmann will be the new ceo coming in. lloyd blankfein will be departing the day before, september 30. in terms of earnings, what the second quarter told us, the picture that emerged is that the universal banking model is here to stay. most of these banks, with the exception of wells fargo, having trouble keeping the asset cap down, they were the only bank that showed less loans compared to prior quarters. that was a strong point, having forward forsurged the commercial borrowers and consumer. as thesering ex

stanley, morgan stanley. they had unique structural change that was underappreciated the stock then went up a lot the structural progression at morgan stanley is over, and now it's about organic growth. when it comes down to organic growth, we're going with goldman sachs over morgan stanley because goldman has grown organic revenues about twice as fast as morgan stanley >> get back to the citi thing. >> i don't disagree with anything you have said about the banks. and you haven't spoken to the ceos i think the ceos of b of a, of citi, of jpmorgan are the best ceos in the s&p, period. the most battle tested, have come through the brightest lights however, there's still some stocks that are held back by the old paradigms of valuation those are the autos and those are the banks. and i don't think they'll break through them so it's not that i hate the banks, that i'm negative on the banks. excuse me. just that i have other places to put my money where i think i will generate a bigger return. once citi gets more t

the trading business, morgan stanley took the right approach?i think this is a battle they fight every day. ,eclaring that the war is over this is something that will be ongoing. i would say when we keep the notecard and we take a look only at the trading revenues, as you reference to your with the recent ones, but also stock performance over the past few years, i would say that morgan stanley has definitely secured the lead. scarlet: that sounds fair. the question is can morgan stanley sustain this outperformance? what is your take on that, given the way it has reshaped of focus just on -- less on trading and more on wealth management? brennan: i think the shift they have made in balancing the business has been constructive. they did that in the middle of the crisis, and the ironic thing now is goldman is starting to shift itself. i would argue maybe a little bit late. they tried to hold on to the old business and the old ways, and have a consistent hand on the rudder, which in the past has 2009 and 2010. and of the fixed side back then, goldma

we've seen a lot of bearish opportunities, morgan stanley. staying away from that, i like american express. >> if you're looking for a hot trade check out cupboard staple stocks like kellogg, sissoko, mccormick's, pepsi, up 14% from the low. brian taking the pepsi challenge. >> pepsi keeps it simple, too. the taerngs coming up next week. i want to buy a call it's expire next friday. you're either going to pay off or not due to the earnings play here i'm buying 110 call expiring next week, only paying $1.20 for this above 111.20 i'll have the upside potential in the stock here below there i'm only risking the $1.20 for that option here in this sense i'm risking a little bit to make and participate in the upside here and play it that way. >> is this the way you will play pepsi? >> so often going into earnings we talk about offsetting elevated premiums. pepsi on average the week of earnings moves about 2.2%. what are options implying a mav of 2.2% which actually means that options are reasonably fail priced you're not overpaying to make that bet

he dan, which stock are you looking at >> i'm looking at morgan stanley. it's not worse than any others of them. there was some lapping waj that wasn't great for more fwan and goldman. i want to look at morgan back to the 44 level that is the 52 week low. maybe it finds some support. i want to think about the q2 earnings i think all of these stocks, if they can not ral ill into the q2 earnings, it will be the week of july 13th, i think we're going to see new52-week lows on all of them. today in morgan stanley, if you think the stock is going to continue to trade down into that earnings print, you want to look to the july expiration today when the stock was trading 47.90, you could buy the july 44, 48, paying $1.10, selling one of the july 44 puts at a quarter, your max risk is that $1.10. you can makeup to 2.90, 46.90 down to 44 worst case scenario you're risking a little less than 2% of the stock price. the press is sure, play for a catalyst back to the lows. to me i like the risk reward in this trade it's a 3 to 1 potential pay out. >> one of the things y

with the stress test, they and morgan stanley came in. can't even say cutting it close, they fell below the minimum on a couple ratios. for goldman, it was in line with their expectations but it is not the big story you are getting. alix: joining us also is ken leon, cfra research head of equity strategy. numbers were very good and that strength in equity underwriting m&a as it relates to trading, their strategy which is three years, $5 billion from growth includes fixed income and corporate treasury. that was up year-over-year, so i think when you look at the trading business, what they are trying to do is expend -- expand to more customers. the debate on management. we will hear what they have to say on the conference call. erik was saying the overall uncertainty has contributed to goldman's underperformance meaning you have to beat on earnings to get confidence back. what do you think about that overhang? the the fact that underperformance looks fine, the issue of succession, i don't think this is morgan stanley 2005. this is a transit

morgan stanley says there is more to come. the dax is a little bit lower and as matt indicated, we will not bounce off that level. the renminbi weakens and the real weekend again. let's show you what is happening in the fixed income trade and commodities trade, we are about to talk to bp. that is the japanese 10 year. the commodity index down by .2 of 1%. brent is trading at 74.59. matt: i want to recap what we learned today from the doj because that is going to be not only the top story but also what we are going to be hearing about very soon. should beuroda starting his live press conference right now. policy to stayoj the course for the long haul, he has become a marathon runner as some commentators in tokyo have put it and that is because he cannot get inflation to budge. he did not change his rates, but the boj is going to apply negative interest rates on fewer bank reserves to cushion the impact on lenders. they said in the past they will continue to say for the 10 year bond deal, the question is how much flexibility? th

the morgan stanley chief plans to stay on for several years.a day and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm paul allen. this is bloomberg. let's have a look at this down arrow story in turkey. much for that earnings optimism we had spurring the rally in asian stocks. this stock down 1.4%. rates fallinghore by the most in a week. the currency is edging toward the 670 handle. no relief coming through. chinese officials says that if the u.s. goes low, we will go high. on commodities, we are seeing industrial metals getting hammered. oil is on a retreat. brent is down 1.1%. let's take a closer look at the losses we are seeing in hong kong. tencent is among the biggest drag. sales slowing is a concern. its price target has been cut. developers have been under regarding property stocks in hong kong and china. that power flip from the united states, which included air-conditioners and refrigerators, an ac maker is down by 3.4%. is down by its lowest level since 2001. a bright spot when it c

we have seen activity like morgan stanley, sticking away from that and sticking with american express i like that. >> kelloggs, sysco some of the names earning high up more than 14% from low and brian is taking the pepsi challenge. >> i'm going to keep it simple they keep it simple, the learnings are coming up next week i want to buy a call, it is expiring next friday t. is either going to payoff or not. i'm buying the 110 call expiring next week. above 111.20 and i'm only risking $1.20. >> is this the way you would play pepsi. >> it is interesting going into earnings, we would talk about the desire to sell options to offset the elevated premiums pepsi on average moves about 2.2% which actually means that options are fairly priced. you're not over paying to make that bet one thing we are seeing is activity going into earnings expiring next week i know you saw this activity we saw the weekly 113 calls training and those averaged about 32%. we are expecting the stock to move, a win pays uyou 2 to 1. >> what do you make of this? >> i think it is not specific to the company. it is literal

morgan stanley's mike wilson starts to get defensive. earnings take the baton, u.s. earnings reporting friday. what companies still have pricing power. in one welcome to bloomberg daybreak, i'm alix steel and david westin ditches me and goes to d.c. and i haven't seen you in over a week in there you go. david: welcome back to boston. i'm down here in the president is doing a reality show thing tonight. is going to announce who's going to succeed anthony kennedy. he's down to four people and he's going to tell us tonight. alix: how do markets wind up looking at this over the next 24 to 48 hours? the application is going to be really hard to garner. david: a lot of the coverage has been about social conservative, roe v. wade and abortion and things like that. there really are some issues for the markets and for companies that initially about how conservative this court will be when it comes a regulation of how willing be the strike in relation. it may really have in the longer run some serious business implications. forward with you being on aaron's 11:00 p.m. david: s

for morgan stanley, i will be looking at fixed income.aying they expect on average a billion a quarter. last quarter, they beat that, nearly 2 billion. spending a lot and their electronic bond trading markets. this is something that they are putting a lot of emphasis on. nejra: i want to go back to goldman. you have got david solomon taking over as ceo, and there is talk the focus could shift into what a consumer -- into a consumer side of things. get equity trading seems to be with push the soft loader -- stop lower -- stock lower. dani: pushing to the consumer side is difficult. we have had a lots of banks harping on their investment results, and questions remain whether that is sustainable. especially with loan growth, especially with the yield curve flattening. it is going to put a lot of pressure. session.because of the the economy needs to keep up, obviously that is important. nejra: and what are we generally hearing about the earnings so far? dani: we have had a lot of variation. looking forward, a lot of it will be the yield curve

morgan stanley, the asset management business. they are not the only ones. ould see and talk about mna -- m&a. jp morgan may be looking at this. vonnie: there is a lot of consolidation in the banks here it the stress tests too rigid? >> this year's stress test was most difficult -- more difficult than most. this year, most past. deutsche bank qualitatively was the only one that failed. it depends on using m&a and if it is good. great story. a replacep, the race to justice kennedy. how the selection will impact the supreme court assuming confirmations long after the president leaves the white house this is bloomberg. ♪ -- house. this is bloomberg. ♪ kailey: i'm kailey leinz. let's get your "bloomberg business flash." the future chief of public security said it wants to stop immigrants from crossing them from central america. the new force will be part of a larger effort to stop violence in the region and along the northern mexican border with the u.s. police have opened a murder investigation in the death of a woman exposed to a nerve agent. please sake she an

. >> sullivan: axel rivera was at morgan stanley when the record 2014 bond deal was done. says that as the island got eroser and closer to default, banks were gettingus. what were you told specificallyy ankers that you worked with at morgan stanley about why they did the deal? >> they wanted to try to get as much as they could of their exposure out of their books. >> sullivan: your colleagues at morgan stanley... >> yes. >> sullivan: ...told you that they had exposure to risk at that time? >> that they had much more than what they wanted, and they needed to unwind that. >> sullivan: that exposure was huge. we discovered the banks had hundreds of millions of dollars tied up in puerto rican debt anm bond dts show almost a quarter of this deal went to pay them back nearly 900 million dollars-- to pay back ksans, pay fees or eliminate other risk for birectly involved. >> slivan: they needed the 2014 bond to get them out? >> that is correct. >> sullivan: then who gets left paying the bill? >> the bond holders, whomever they are. the banks get out, andev ybody else gets stuck wi

maria: morgan stanley came out and you said the tax rate on morgan stanley was what?ective tax rate went down to 20.6% because of the corporate tax change. that was great. redeploying it back into their people. compensation costs were up. they're hitting on all cylinders. maria: we've been reporting e.u. regulators are fining google, it's official, they're fining them $5 billion in the android case. our top story right now, the second round of tax cuts. republicans are aiming for more tax relief for the middle class with the house weighs and means committee chairman saying with the president he expects to vote on the new round of tax cuts in september. joining me now is chairman brady. thanks for joining us. >> thanks, maria. maria: you are on track for a september vote? >> we are. so we had a great meeting with the president yesterday, just getting on the same page on what we see for 2.0 and the timetable. we expect to begin our listening sessions with house republicans next week on 2.0. it's going to be a very tight, very focused package. the centerpiece of course i

i want your view on the bearish market coming from morgan stanley.nk overall in a globally diversified portfolio, we are relatively cautious toward high-yield at the moment. it has not outperformed eiji's this year. a lot of it is down to supply, more supply in ig and less supply in high-yield. it, marketok at versus subordinated debt of european ig issuers, we have a presence -- a preference for those rather than high-yield. jonathan: it's curious there is a bearish argument for u.s. high-yield, and argument that growth rolls over next year and corporate earnings start to disappoint. we are having that conversation in a quarter where we delivered gdp growth. is that strange to you, marilyn? >> i think all the markets are forward-looking. i think when you look at growth potentially, it is going to be strong, but the fed continuing to hike rates, that has to be a factor that you take into account. jonathan: what about the outperformance we have seen relative to that from the high-yield story? >> there are a couple technical aspects of this. on the tri

maria: morgan stanley has offered to buy a stake for 53 euros a share.t is a 10% premium from the friday closing price and would value the customer -- the company at 1.5 billion euros. morgan stanley has also secured a commitment in a company that owns a stake in vtg. is one to watch there. john patrick, what is the deal with it >> what a match with france bringing home the cup. it is a very positive impact from the world cup as they are trading -- very good for the shares, 1% in the market. matt: thanks very much. let's take a look at some live pics here of donald trump getting ready for -- we have a soldier standing right in front of the camera. maybe they don't want these pictures broadcast. we will continue to follow that meeting for you. whether or not they let us see it live. this is bloomberg. ♪ minute awayhan a from the open of european stocks trading. let's look at the asset classes that will get us a clearer picture of what is going to happen at the open. for example, we can look at these four asset classes here. you see the pound rising and st

goldman sachs and morgan stanley are engaged in a heated battle for supremacy in the morgan stanley stands be winning. or coding to our data, they are number one. alix: let's be clear, in each of their press releases they both said that they were number one. this is not like they have a -- like we are making fun of it, they both said it. that is what makes it so crazy. lisa: the point is, this is good marketing for them, to be able to pitch business, right? jason: winning begets winning. if you have a little bit of swagger, if you pitch a ceo in due say i am number one, i will take you public am i will do your deal. whatever it is. blisa: do you think that is endearing, bro? [laughter] i am not sure. jason: maybe not to you, but to a lot of bros it is very endearing. [laughter] i have known some bros in my time. you bring up an interesting point, we are back at a time when morgan stanley and goldman sachs are going at it. this was not the wall street of the last 10 years. this is a little bit of a throwback. jpmorgan in there too, but morgan stanley is reenergized under james gorman. alix:

banks in the spotlight as goldman sachs and morgan stanley prepare the report. citigroup and j.p. an chase have announced surprisingly strong revenue, raising the bar for companies to follow. let's get details from su keenan. su: strong revenues indeed. you will see a lot of red on the screen because citigroup did come in with trading revenues that trailed their big rival j.p. morgan. there were other issues, but let's get to the headlines. jpmorgan got a big bump on large deals that close. aree dimon warned clients worried about global trade wars, even disputes in china creating uncertainty. citigroup ceo echo the concern but said it has not impacted the transactions at this point. let's get to the charts and go through the headlines. j.p. morgan chase did have the strongest results. it is the biggest bank by assets. strong trading revenue and long growth. core loans expected 7%, adding $200 billion in three years. citigroup, the treasury business record -- generate record revenue. they have worried investors in recent months. the firm started a challenging market environment in t

morgan stanley doesn't do that.u compare to investment banking departments. >> they have had a decent week. friday was soft. monday strong, tuesday flat. time for a cnbc news update. >> here is what is happening in a meeting with his cabinet president trump claims no president has been tougher on russia than he has been. he says russian president vladimir putin understands it and is not happy about it. >> we are doing very well and we are doing very well probably as well as anybody has ever done with russia and there has been no president ever as tough as i have been on russia. >> ford has recalled nearly 550,000 cars and suvs to fix a gearshift problem. that recall involves ford fusion sedans and ford escapes from 2013-2014. the issue can cause the vehicles to roll away unexpectedly. >>> seven time pro bowl cornerback darrelle revis has retired. he thanks coaches and teammates and says he is closing a chapter in his life. he spent most of his 11-year career with the new york jets. the thing about reading sports sto

hans redeker with us of morgan stanley and antonio pascual with barclays.t the underlying vibrancy of the european economy. i saw france gdp a little light, i read a couple reports, it is all rationalized. is there a spirited eu economy? i think it is quite strong when you look at consumption. it is true france was weak but i think there are factors related to the strikes. domestic moneys are strong. look at the labor market -- healthy in the euro area. look at investment and corporate margins. look at the fiscal stimulus coming up in germany, not at the same order of money in the u.s. but relevant and a bit more easing in countries like italy and spain. i think overall when you look at each and every component, it is in pretty good shape. we are worriedts about, and about trade wars and the slow down in china and what trump could do to the euro area which is a lot if it were to -- looking at the euro area growth a bit over 2%. if there is no acceleration in --de wars would be supported by demand, i think. meeting gotmp minimal play in the u.s. versus all o

but it sets the stage for goldman sachs and morgan stanley reporting this week.ig focus on mergers and acquisitions because morgan stanley and goldman sachs are the leaders here. let's take a look at some of this. you can see how their performance has been. for goldman they are protected to boost revenue more than the other firms. analysts expect 58% jump from equity underwriting. that counters the decline in the debt capital business. investors, let's look at morgan stanley. they are considered one of the top advisers on the street. analysts will see whether the dealmakers can outperform goldman, their key rival. advisory revenue at morgan stanley estimated 14%. that is the biggest jump among five banks. that's now bank of america. a different story. even though they are number six in advising globally, the concern among analysts is revenue tumbled 15%. that would be the largest such drop predicted among the top five u.s. banks. the big question is risk-taking. in this current environment, what risks can they take? that is something everyone listen for on the co

tom: ellen zentner of morgan stanley.a flatter yield curve that we've seen in the united states in with a vengeance. a much flatter difference in yield between the 30, they are very close right now. and the idea of banks almost in bear market, jpmorgan, down 12% from its peaks, this economy that alan describes, how beautiful that in the bonds and then into the financial system? marcus: the flattened yield curve, to my mind, is are getting back to what the fed did in their operation twist in 2011-2012. the barn off a lot of long dated bonds and that's the reason the 10 cities are so tight and that hangs over now is the fed steps of the pace from this month onward at $50 billion per month, long on reinvesting back in to u.s. treasury's. it's a problem of their own making and we should not read too much into the flatness of the yield curve because it is the fed's own making. francine: do you agree? -- wee should be shouldn't be taking it as an impending slowdown of the u.s. economy? to zentner: we are right focus so much on

increased 14%, driven by the strong morgan stanley franchise.nd a global record for antitrust penalties are >> it's a big wind. you want serious behavior changes. when it cited percent of the market, will it really make the market? >> the differences now, we have a choice. those to produce who -- we can choose, if i would like to put and other operating system for those who search rivals to google? a chance to get to us as consumers to show their product. >> she did not actually say how google has to adhere to the ruling, she said that this is what you are doing wrong, you will face if i'm come and let you fix it. it's about the contracts. it will be new phones sold going forward. if you already have an android phone, it doesn't affected at all. the new ones shipped, they have not done an agreement with the smartphone maker that they have to install the suite of google apps. not until the next innovation of owns the comes out this year or next year. ♪ a dailyboc set reference rates for the yuan weaker than the dollar. china is willing to tolerat

morgan stanley and credit suisse has taken similar steps. and shares of -- fell today.e automaker admitted that emissions data with fake this year during inspections. the government said the inspection process was faulty. and it is the final straw for starbucks. the world largest coffee chain said by 2020 it will eliminate single use plastic straws. moreucks has used than one billion plastic straws for years and will replace them with material ones, and recyclable strong list lids -- strawless lids. that is your bloomberg business flash. nejra: let's take a look at where markets ended the day. equities, all higher. gaining. 600 and let's switch the board and look at fx. the pound has been very much in focus. we have seen it weakening after boris johnson resigned from theresa may's cabinet. the pound is weaker. euro flat after strength earlier. and feels pretty much unchanged, even going lower after it was higher earlier. that is what the 10 year yield is doing. down one basis point. we were at 1.3 earlier. bundenure -- ten year yields are higher by eight basis points. t

increased 14%, driven by the strong morgan stanley equities franchise. >> google was fined $5 billionn order to way it puts certain apps on android devices. it is a global record for antitrust penalties. >> it's a big fine. you want serious behavior changes. but when it is 90% of the market in terms of search, will it really make much of a market? >> the differences now, we have a choice. those who produce mobile phones for us, we can choose. if i would like to put and other operating system for those who are search rivals to google? they make it a fair chance to get to us as consumers to show their products. >> she did not actually say how google has to adhere to the ruling. she said that this is what you are doing is wrong. you will face a fine if you do not fix it. ultimately it is about contracts that they agree with the smartphone makers and it will be the new phones going forward. if you already have an android phone, it doesn't affected at all. it just means the new ones shipped, they have not done an agreement with the smartphone maker that they have to install all of the suit

names like morgan stanley, bigger bank names. sticking with an american express here, i like that trade, mike. >> if you like a hot trade, check it out kellogg's, cisco, up 20% from the recent lows. some of the names making all-time highs you can add nestle it is up more than 14% in the low. brian, you're taking the pepsi challenge. >> i'm going to keep it simple with pepsi as pepsi keeps it somewhat simple. the earnings are coming out next week i wanted to buy a call at the money call expiring at the weekend option it's either going to pay off or not expiring next friday i'm buying the 110 call expiring next week. i'm only paying $1.20. above 111.20, i'll have all the risk i'm risking a little bit to hopefully participate in the up side and play it that way. >> is this how you would play pepsi? >> it's interesting. oftentimes going into it we talk about selling some options pepsi on average the week of earnings moves about 2.2%. options are going to move about 2.2% which means options are reasonably fairly priced you're not over

morgan stanley's beaten on all three. 1.7 revenue versus $1.5 billion.he sub sectors did well but ipos, that was a strong performance. fixed income trading, $1.4 billion versus forecasts of $1.3 billion. slightly ahead decent equity trading was $2.5 billion. the forecast was $2.3 billion. up high single digits. almost 10% now, wealth management which has really differentiated themselves from goldman sachs that's still up year on year and the margin was very good at 27%. so pretty decent across the board here i think people also will be focusing on the efficiency ratio keeping costs under control. it means the shares are up over 3% in the pre-market guys >> okay, wilf. got the quarterly dividend up 20%. thank you. it's good to have you, wilf. because you seem to -- you seem to not mind doing this >> you're finding a nice way to say this. >> yeah. >> i'm a geek at heart i love it. >> we appreciate that. >> geek at heart you're a geek. we know and we love you. >>> coming up, new data on the housing market this morning. details on who's buying and what mortg

marilyn, i want your view on the bearish opinion from adam richmond at morgan stanley.ilyn: i think overall in a globally diversified portfolio, we are relatively cautious toward high-yield at the moment. it has not outperformed ig's this year. a lot of it is down to supply, more supply in ig and lack of supply in high-yield. when you look at it, market versusging market subordinated debt of european ig issuers, we actually have a preference for those rather than high-yield. jonathan: it's curious there is a big bearish argument for u.s. high-yield, and argument that -- an argument that growth rolls over next year and corporate earnings start to disappoint. we are having that conversation in the quarter where we have just delivered gdp growth at 4.1%. is that strange to you, marilyn? marilyn: i think all the markets are forward-looking. i think when you look at growth potentially, it is going to be strong, but the fed continuing to hike as rates increase, and that has to be a factor that you take into account. jonathan: jack, what is your view on the underperformance we

morgan stanley beat by 13% and those are wide beats and more importantluidance has been strong.strong, csx, united airlines all guided higher in the last 24 hours on earnings or revenues. that means earnings expectations remain strong for the third and e fourth quarter. if this keeps up, we'll have a shot at passing our first quarter earnings growth record of 26%. what does it all mean? these are very early results and it's clear the beats go beyond cuts.ax there's been emphasis on the global economy and revenue is up and not just because of cost-cutting and companies are buying back stock and they're generally raising dividends and guidance has remained roughly intact or higher. so the bottom line is this, we may be appaching peak earnings growth some time this year, but we're not hitting peak earnings. that will continue into 2019. for "nightly business report," i'm bob pisani at the new york >> as for the whole market today, the dow extended the win streak to five straight sessions as investors continue to focus on corporate earnings. the dow rose 79 points, today and the nas

let's check in on oil after those various comments that we heard from morgan stanley and from president rouhani on the day it's a mixed picture. brent trading a bit stronger almost back up to the $80 mark wti a tad weaker on the day. >>> bp and conocophillips agreed to a deal to swap energy assets which will see bp increase its steak in a major north sea development. conoco will sell a stake in clearfield to bp where the british oil giant hopes to increase production to 200,000 barrels per day by the end of the decade in return conoco will get the entire 32.9% stake in the oil field in alaska. >>> coming up, trade war fears continue to spook asian markets after declines in u.s. tech stocks heighten worries over impending tariffs >>> welcome to "street signs." i'm joumanna bercetche these are your headlines european markets open in the red as trade worries weigh passing a shadow over asian equities despite a positive service sector pmi from china. >>> the efo director tells cnbc that the world trade organization should stay renewtrenewt -- reunited in the face of tough trade rhetoric >>

mid-2019, morgan stanley saying you could see the curve in burning.rst day since 2016. it was a very dramatic session yesterday, cooling off today. david: time for the morning brief, as if we did not have enough happening. at 8:30 we get perhaps the most important economic data of the week, u.s. cpi numbers for the month of june. 12:15, after carter will have a on stage conversation with our own mike mckee at the rocky mountains summit. and then the u.s. treasury will be auctioning $14 billion in 30-year bonds. let's get an update on what is making headlines outside the business world. kailey leinz has first word news. says hepresident trump is committed to nato and everyone has agreed to increase their financial commitment. the president spoke in brussels after an emergency session prompted by president trump's attacks on allies over defense spending. french president macron said spending plans have not changed. president trump's latest threat make the u.s. and china resume talks through a new round of negotiations. the trump team is also willing to

jonathan: i want to get across to the morgan stanley view of things, recommending to avoid triple c's "some investors argue that growth is strong, earnings growth is solid and defaults are low -- all good for high beta credit. our answer is that credit markets are forward looking." marilyn, i want your view on the bearish argument that comes from adam richmond over at morgan stanley. marilyn: i think overall in a globally diversified portfolio, we are relatively cautious towards high-yield at the moment. it has outperformed ig this year. a lot of it is down to supply, both more supply in ig and a lack of supply in high-yield. i think when you look at the risk-adjusted returns you can get in high yield versus emerging market, versus subordinated debt of european ig issuers, we actually have a preference for those rather than high-yield. jonathan: it's curious to me there is a big bearish argument for u.s. high-yield, an argument that growth rolls over next year and corporate earnings start to disappoint. we are having that conversation in the quarter where we have just delivered gdp gr

morgan stanley are you ready to take your then you need xfinity xfi.? a more powerful way to stay connected. it gives you super fast speeds for all your devices, provides the most wifi coverage for your home, and lets you control your network with the xfi app. it's the ultimate wifi experience. xfinity xfi, simple, easy, awesome. >>> a big day for the market yesterday with the dow gaining over 200 points. the nasdaq closing at a record high slightly higher in premarket joining us now steve portfolio manager at federated what a week for global affairs >> it's been full. >> nato, defense, we have the meet coming up with president trump and prime minister may >> the start of our earning season we start off with the big banks today. we certainly pay attention to the headlines and they're all over the place i think if you were trying to buy or sell the news over the last year or so that was a losing strategy. if you look at the earning strength we're going to kick off a heck of a season starting today. >> speaking of earnings, we pay attention for what they

a move that morgan stanley would see how promotions at the bank affect the possible successor to ceo mes gorman. this is bloomberg. ♪ bloombergis is markets. i'm vonnie. shery: i'm shery ahn. morgan even though stanley ceo has indicated he plans to stay on several more years he has been moving senior executives in an effort to groom his successor. joining us to discuss the details is shown alibaba suck. what caught your eye? >> ted paik is 49 years old. age matters here. it's a succession plan we are talking about at morgan stanley. he's a rising star. he helped lead it into the shocks -- equity stocks globally. he moved over to run bond trading and now he's running all of ranking and trading operations. frank peddie have go who has been long time in london overseeing european investment banking operations and was cohead of the investment bank. vonnie: it's fascinating. there's always two. it's like a race or a wrestling match. is that the case? there is two that were very clearly moved around significantly in this latest transition. -- rendition. now we the top right have andy sapers

. >> there's a famous picture at morgan stanley of the entire puerto rico financial team celebrating.ey had their hands up, they were smiling. you could tell from the body language. i said, "i don't know exactl what we are celebrating here. this is not good." >> sullivan: the celebration didn't last long. just 15 months later... >> late today puerto rico, he to nearly four million americans, defaulted on its largest debt payment so far. >> we're calling it america's greece, and for very good reons. the fact is puerto rico, yes, they have just run out of other people's money. >> let me put this verr: we are out of cash. >> so chapter nine... >> sullivan: within a year, congress put puerto rico on a path to bankruptcy and under the financial control of an oversight board. but we kept wondering, why would the banks do a $3.5 billiodeal with an island on the verge of default? the bank said they were trying to help puerto rico manage its finances. but we talked to half a dozen people who either worked on the deal or were close to it what they said, is that this deal seemed to be moreth jus

sophie: we have morgan stanley raising the price target 66% on prospects for commercialization.also want to highlight softbank after tiger global takes a $1 billion stake. and fast retailing and daily march on the radar as both are due to report results today. sliding in tokyo and the region. we're seeing a drag in tokyo, but that is resuming gains. we're keeping an eye on retailers of well given the nikkei report that walmart is going to sell its japan unit which is far behind the leaders. consumer stocks gaining ground. staples segment up 1.5%. telco upre, utilities, over 4.5% and it looks like a good day here for japanese stocks after the selloff we saw of late. that's a snap of what is going on into lunch break. this is bloomberg. ♪ rishaad: the bank of korea. one member called for a rate hike. they say they will be approaching their target of 2% inflation around this fourth quarter of the year. this is a story we are keeping tabs on. let's go to the first word news. talks between the u.s. and china are said to have ground to a halt as the trump administration steps up the t

nejra: investors do tend to compare goldman and morgan stanley.aroline: what happens with goldman was did take expectations heading into tomorrow. the other couple differences are morgan stanley has little bit more emphasis on lost management. investors will be looking to hear they say around the consumer business. it's narrative and talking a bit more about. dave solomon is a big proponent of that. will they articulate more of a vision about how that might feel their growth going forward? we will have to see. thank you so much. caroline gauge. thank you. in theup, discontent tory cap as the prime minister changes a key piece of brexit the station a week after was agreed. that next. this is bloomberg. ♪ nejra: this is bloomberg surveillance. a i am in london. let's check in with trending across the universe. the richest person in modern history. it $150 billion yesterday. in brexit strategy is disarray. she bowed her plan. story, minneapolis fed president says he isn't buying it's different when it comes to the yield curve. glutenefusal to condemn

want to own morgan stanley this morning? we watched the financials roll in morgan stanley coming up with a quarter, frankly, beat on virtually every front. it does appear the trading business, equity trading, in particular, was better than had been anticipated by the analysts who follow the company overall, jim, a strong quarter and that is reflected, of course, in more than 3 percent. >> that's the goal i have some disagreements with the negativity involving with goldman's call yesterday i don't mind investment banking doing badly. this has been a weird banking period whatever has been we thought we cared about before now we don't. what matters is the yield curve. by the way, larry, had a good explanation for flat yield curves don't look at the bill look at the two. what is important is they delivered on every single line item everybody else had some issues that are a little bit awry but it was the lowest here the bar was low. >> it was low and they beat it currency commodities, revenue $1.4 billion that was up 12% equity t

reportedly three banks, goldman, sachs, straight street and morgan stanley had cap levels too low to pass the test i wrote about these a few weeks and and appreciate your response to be clear, after they flunked, did you give too big to fail banks a failing grade? >> we gave them what we call conditional nonobject. >> that's not a failing grade, right? >> they suffered the same penalty, which is to have to limit distributions to prior years. >> that's what i want to ask if you didn't flu, did you givee new plans that make them pass the test. >> we don't require them to resubmit. >> you don't require them. >> many times we used that tool over the years, we have not required that. >> in other words, the fed looked the other way you let banks off with what you call financial nonobjection, letting them distribute capital to shareholders instead of keeping it on their books. in fact, because of your action, morgan stanley, goldman, sachs investors took home about $5 billion more than they otherwise would have that's a nice gift to the bank, mr. chairman on top of that, the fed also propos

now morgan stanley is saying, you know what?'s go to underweight on the small caps, that trade is overdone and overbought. >> well, liz, over 50% of the s&p earnings come from overseas. so the small caps do have businesses overseas or they sell to people who sell overseas, so this does affect them. i think what morgan stanley might be looking at is the big bull run might be over, small caps do better when the market is going up, and some of that might be flattening out. and you want to be with companies with better cash positions that have a solid footing if something does happen. so i think that's what they're saying more than anything else. i still think if you're a stock picker, you can find values in small cams, but that's -- caps, but that's their opinion. liz: everybody who was worried last week, we have a gain of 339 points, folks, this is a market high. matt, alan, luke, glad you could be here on this monday, thank you so much. appreciate it. what's victoria's china secret? with the closing bell ringing in 47 minutes, up