This is "bloomberg surveillance." israel accepts a cease-fire.
Reports of rockets fired from the gaza strip towards israel.
Jpmorgan and goldman sachs report earnings.
How bad will training -- trading profits be.
Uber and lyft take on the big yellow taxi industry.
This is "bloomberg surveillance." we are live from our world headquarters in new york.
I am tom keene.
Joining me, scarlet fu and adam johnson.
A busy morning.
Adam, what do we have?
U.k. inflation accelerates to the fastest rate since january.
The doj is hoping -- it really moved the sterling.
It spiked on that news.
In japan, it is more of the same.
They will expand the balance sheet by y¢7 trillion.
Economic data, 8:30, retail sales.
We also get import prices.
Business inventories and earnings.
Scarlet is going to be busy today.
Goldman sachs at 7:30. johnson & johnson at 8:00. after the bell, yahoo!, intel.
David wilson suggesting next week is busier than this week.
A couple of items to note.
Janet yellen's today testimony begins.
In virginia, at 11:30, president obama will be speaking on the economy.
One other thing.
The kids it should be able to watch it.
We have to be in bed early to get up at this crazy our.
We have a lot.
10 year yield does nothing.
Hydrocarbons, quite stable.
With the equity markets off of wells fargo, a terrific move.
The six and dow, a certain authority to it.
Up six dollars right now.
That is a pullback the last couple of days.
We are in here at the 1300 level.
We have rolled over a little bit , away from the moment for the gold bulls.
That is a quiet for the asset classes correlated yesterday.
Equity markets moved up.
Gold locked in with the equity.
Equities are still the place to be.
A percent and 9% earnings growth . it will be interesting to see what will happen.
Look for that on "bloomberg surveillance." we have looked at the website.
Scarlet fu has made judicious decisions.
Diplomacy around the world.
Development overnight in israel and ukraine.
Israel accepted an immediate truce, but hamas rejected the plan.
You see the headlines come across and it was painful to see the reality of single line headlines showing how failed this truce was.
The latest article that just came out, there is debate within hamas as to whether or not this should be accepted.
I wonder with the u.s. role will be.
A movable story right now.
U.s. pressing european union to enact sanctions against russia over ukraine.
Massacres were called to the white house yesterday.
The obama administration is prepared to act alone.
There is a claim shot down yesterday in eastern ukraine.
Russian forces may have shot down -- according to is the real question.
The reporting is a best efforts basis.
We are keeping an eye on iran.
This has been a big initiative for secretary of state john kerry.
Perhaps it has been distracting attention from everything else.
People we talk to make it clear that iran should be front and center.
It is the one venue where the u.s. can assert itself and have an impact.
You think about what is happening between hamas and israel, or between russia and ukraine, iran is the one place we may have an edge.
We will keep an eye on these efforts.
The second story is in our wheelhouse.
To earnings reports coming out.
Jpmorgan at 7:00 a.m. we will see if that plays out.
Citigroup made a similar warning and it did not turn out as bad.
We may get an update on jamie dimon's health.
Jpmorgan is the clearest press release.
Goldman sachs is not bad either.
Much more of a play on the capital markets rather than the overall economy.
Analysts expect revenue at goldman sachs to drop 14%. there is a debate about loan demands.
He made clear he is an enthusiastic about this year and into next year, they staunton boring bank business.
Citigroup reported 4% loan growth.
Is that a blended of consumer as well as c and i? we have citigroup report yesterday with the $7 billion settlement.
Look for something from bank of america.
There may be some commentary on how they are making progress.
Citigroup bicycles in front of the plaza hotel looked gorgeous.
That was successful branding.
It looks good.
Let's move on.
Microsoft planning the biggest round of job cuts in five years.
It could happen this week.
It could be bigger than the 5800 cutback in 2009. it will be in areas like nokia and divisions that overlap with that business.
Satya nadella put out a memo that hinted at all of this.
90 some thousand microsoft, plus nokia employees, 120-ish total.
We are going to keep an eye on it.
Those are the big stories.
I would like to see microsoft product out there.
I look around the do not see it.
He is in washington where the day starts at about 8:30 a.m. our guest host, phil mattingly has decided to come to new york.
We welcome him this morning.
8:30? it is more like 10:00. i was trying to cut you slack.
Tell me about the white house response to israel.
Is it the same response we would have seen three years ago or five years ago or 10 years ago?
They have been waiting for what you have seen over the last 24 hours.
The government to step in and start the process of negotiating a cease-fire.
It happened in 2009 and 2012. the wrinkle is the military backed it egyptian government does not have a relationship with hamas.
That is where you see complexity.
The obama administration has supported what egypt has put out and supported israel accepting the cease-fire.
They are in wait and see mode, like we are.
To we have any voice in the region?
I mean within jordan, israel.
What passes for some form of palestine, do we have a voice?
When you see is john kerry very active amidst this time in vienna working on the iran nuclear negotiations.
He has been active with the egyptian government and israel.
Hamas is the wildcard.
And not a great relationship between the u.s. and hamas.
Adam hit on this at the beginning.
There are elements of hamas that seemed open to the cease-fire.
The military wing is the one that said no.
It is tough to know who you are negotiating with when one entity does not exist.
Roger cohen writing in the new york times, arabs should study the holocaust.
The story goes on and on.
The dead die for nothing.
That is my morning must read.
There are so many voices and so much noise and so much misunderstanding.
Is there any central truth that washington is trying to cling onto?
Quickset is tough.
The obama administration went all in on trying to figure out a way to negotiate.
John kerry, with all that is going on, got criticism for putting our sin for being on the plane so often in the region.
Is therefore in a policy overload right now, our congress people drowning in international relations?
Covers people wish they did not have to deal with foreign-policy issues.
It would like to speak about domestic issues.
The obama administration, look at john kerry's travel schedule.
It has been major issue after major issue.
It is crises.
It is not just an issue.
The band with is lacking and the administration is stretched thin.
We will talk more with phil mattingly.
Right now, let's get to company news.
We begin with a dublin-based company.
Boredom must sign off.
The drug maker is backing the offer.
A former credit suisse mergers executive held out.
They could cut the tax bill by moving space to u.k.. boeing collected $21 billion in sales.
Most of the buyers are taking in the new model.
Airbus tripled boeing's total.
Boeing is expected to bounce back today with a $9 billion order.
Expanding a u.s. plan that was once the scene of a labor dispute.
Vw will build in a factory at tennessee.
They voted against joining the union.
Vw will invest in chattanooga, creating up to 2400 jobs.
That is this morning's company news.
Will congress approved president obama's requested resources to deal with the children at the border.
1000 come in per day.
The stakes are very high.
We will discuss here on "bloomberg surveillance." we are back momentarily.
? clicks futures negative three.
Think of the word exclusive.
The former saks fifth avenue chief executive offer as "in the loop" with betty liu.
On the many things on the white house's plate is immigration and how to resolve that.
Two lawmakers offering a bill to deal with the border crisis.
President obama request for emergency funds has turned into a partisan proxy fight.
Politicians struggling to compromise on a fix.
The president's long-term reform -- a far out fantasy?
It is not just politicians struggling here.
It is a struggle and split within the democratic party.
It is no longer a republican abstraction.
It splits within the democratic party and that is what they're going to do with these 50,000 plus kids.
All the news organizations talk about putting the mothers and children on a plane to fly them back to honduras.
What happens to them when they land?
The understanding is that the department of homeland security work with the government where they send the individuals back, to have some type of arrival greeting party.
After that, it is up to the party.
If you send these kids back, what are we doing as a party.
The house democrat in this bill, his parents were fifth-grade educated migrant workers and he is one of our smartest congresspeople.
An interesting point is it is a bipartisan bill.
A conservative member of the u.s. senate.
He would not be turned by anyone.
Does nancy pelosi listen?
She listens to the hispanic caucus.
What henry says, generally should reflect what the chc is saying.
There is a split within the hispanic caucus.
Henry is a border congressmen looking for a solution.
A solution that does not fly with the majority of democrats in the house.
A wonder few could talk about the process.
It would effectively bring 40 new judges into being, it would commission them to try to hear cases.
Is that what might cause the resistance?
This is what democrats want.
This is a surgeon us in the administration.
It is a severely lacking -- in resources and in individuals.
They have a backlog.
240 judges right now are handling the backlog.
What they're looking for is -- we will give you more court resources to deal with these kids and not a republican side, they say we will give you that as long as we get the legislative fix.
They're trying to find some sort of middle ground.
The president did not visit the border.
He is having trouble getting the money he requested.
What are his next steps?
We talk about what is going on internationally.
The president wants to focus on the economy.
He wants to focus on domestic issues in advance of november.
These issues crop up.
He has to -- the public sphere is the only lever he has to push forward.
He is in a wait and see for what house republicans decide to do.
I was with carlos gutierrez the day of the collapse at immigration, where senator kennedy got crushed on the senate floor.
What is different now?
To be honest, i think the republican -- as much as that -- you had a republican president in 2005. you had the amnesty issue.
It was no different this time around.
The difference is there were republicans in the u.s. senate that because of the republican president trusted the president.
Ted kennedy trusted george w. bush.
Republicans in the senate and the house have zero trust with the white house.
This frustrates the white house.
Republicans do not trust the president.
Democrats don't trust the president.
Phil mattingly, our white house correspondent.
Quickset like the way you put it.
The huge deficit of trust in washington.
Chris grisanti will join us.
We will get his take on the financial sector.
? good morning, everyone.
Our twitter question of the day, the ability worldwide to answer -- who wins in five years -- uber or licensed taxis.
Uber or the yellow taxis of your city.
This is a contentious issue.
This is "bloomberg surveillance." i am tom keene.
With me, scarlet fu and adam johnson.
Nick lehman wrote a profile on janet yellen.
She has her hand on the lever of the economy.
I chose the segment on too big to fail.
This was key to her being nominated and approved.
In public speeches, she has used the phrase too big to fail, but treated it as a concern, rather than as a description of reality.
It goes to show how much regulating the banks has taken over as one of the federal reserve.
The fed does more than an fomc meeting.
Part of it is the new financial -- the role has gotten much more bigger after the financial crisis.
Much of the critics of -- the chagrin of the critics.
How many bills have passed this year and how many fewer is that than in past years?
We are in single digits at this point.
The interesting part about the said and regulation, reluctantly, the fed regulates.
Luckily, they have taken on all of this power.
Janet yellen is in a tough spot.
She has so much to do on the monetary policy.
The yellen testimony will have that for you later this morning.
Coming up, throughout the week, we are going to be focusing on challenges facing millennials.
Why income for this group of young adults is on the decline.
This is "bloomberg surveillance." we will be right back.
? good morning.
I am tom keene.
With me, scarlet fu.
Let me do a data check.
Commodities off a little bit.
Jpmorgan and goldman sachs will move numbers around at the beginning itof 7:00. it is a millennial week on "bloomberg surveillance." how millennials fare when they have less education or more education.
It shows the rising income disparity, depending on whether you have a college degree versus a two year degree.
Versus a high school diploma.
For millennial's, you could do better if you have a bachelors degree.
Your income tends to rise, but the same cannot be said for lesser degrees.
We had to drag a millennial onset today.
A smart millennial.
Phil mattingly, this is something that plagues your generation.
How much discussion is there that college is not worthwhile?
I think the issue here is that for a lot of millennial's, the idea of what is it worth when it comes to the cost of college, when it comes to the amount of things you can do at a young age.
No one will argue.
It shows a perfectly.
A bachelors degree, a college education is still the way to succeed.
There are a lot of options out there.
If there are other options, other pathways, -- let's bring in a wreck friday.
Our chart has shown that if you earn a college degree, -- if you have gotten a high school diploma, your earnings stops.
Quickset has a widened in terms of earnings.
Today, the typical millennial will get about 35 grand a year.
Earnings are about 32 grand a year.
You are looking at a $17,000 gap.
As opposed to that, if we go back to the boomers back in 86 or 79, you will see the divergence was much narrower.
It was about a $10,000 gap.
One distinction we should mention is the challenge of getting a full-time job in the first place.
Securing that job to get full-time earnings is a different story.
Whether we look at the unemployment rate, you will see that millennial's, compared to gen xers and boomers, they were having a harder time finding work.
The real diversion version is not so much before the college-educated millennial's and the college-educated boomers and has gotten harder for the college educated, but it has gotten harder for the less educated.
I am looking at some of your other data.
Early boomers, 8% were in poverty versus millennial's. that rate has doubled in effect.
Is the government falling down, is the economy falling down?
What are millennial's -- millenials sang about that.
The economy is much different than it was 30 or 35 years ago.
You can get a good manufacturing job at a high school education for the boomers.
That option is gone.
Who is more likely to be represented by a trade union question a given the rise of a public sector trade union, college educated millenials are more likely to be educated in college boomers.
The loss of manufacturing, the decline of trade unions, this is why opportunities for millenials to and their education after high school has dramatically dropped.
There has been a big push for both parties on the federal and state level 2 -- if you cannot get into a four-year college or it is not your options are, there are other options.
Do you think that is misguided or what do you attribute to the disparity?
I do not think it is misguided.
If we look at the four-year millenials, there is a different outcome.
We say that about bachelors degree holders.
The same thing applies to young adults who get two year degrees.
It depends on whether they are vocational or academic.
There is a different variety of outcomes.
Some are quite lucrative.
Others do not pay so much.
In those charts that you see, there is an average over a lot of different pathways.
Some of them are quite renew more it is.
We talk about millenials -- is there any sort of conversation?
There is a problem here.
Millenials have a bad.
Millenials are a key voting bloc.
Do people try to figure out policy prescriptions.
Where you have seen the rates had the most is in the student loan debate.
That is a major issue trying to figure out how to do something.
The broad issues they do not have as big a voice.
There is a couple of generations above us that look down and do not have as big an impact.
Quickset looks like we pay attention to the millenials generation because they're bigger than the baby boomers.
Given the challenges they face, projectile for five to 10 years, what will look like for the millennial generation as they mature.
There is a lot of attention focused on the student debt issue.
For good reason.
For the college-educated, for many of them, student loan burdens are manageable.
They are not in default.
Most of them, earnings are going to hold up.
They will get married, they will form households, and they will start building wealth.
Where i think the averages, one needs to be concerned, the less educated millennials they may not be burdened with student loan debt.
Earnings are much lower.
We see they are not getting married.
70% of high school educated boomers were married.
Only 40% of high school educated millennials get married.
Given low earnings, you are right that they're going to struggle to build wealth.
The gap widens.
Thank you so much.
Coming up, we speak with the former new york city taxi and limousine commissioner and chairman about uber and lyft.
That brings us to our twitter question of the day.
Who will win in five years from now?
Will it be uber, lyft, a competitor, or your average licensed taxi?
We want to hear from you.
? good morning.
This is "bloomberg surveillance." i am tom keene.
With me, scarlet fu and adam johnson.
A rebel attack destroyed nearly all planes at the airport in tripoli.
Rockets hit aircraft part near the runway and set them on fire.
Two people were killed.
Rival groups have been fighting to take power.
A shakeup in britain's government.
William hague will quit.
He wants a lower cabinet position.
He will stay on until next year's selection.
David cameron is expected to announce a successor later today.
Bowe bergdahl is back on regular duty.
He is getting a desk job at a texas-based.
Investigators want to know about his disappearance in afghanistan.
He was held captive for five years.
Five guantanamo prisoners were treated to win his freedom.
Those are the top headlines.
The last one strikes me as -- i have to read up on that.
It is out of the blue.
The national basketball association wants to cash in on the demand for live sporting events.
The nba wants to double the amount of money a gets from espn and turner broadcasting.
Contracts do not expire for another two years.
A new eight year deal could be worth up to $15 billion.
It is the last major sports deal up for grabs until 2021. espn and turner will probably push back.
Live sports events are ratings gold mines.
This is why lebron james negotiated a two year -- only two years.
He can renegotiate his contract after the nba figures out it's new tv deal.
I wonder if mr.
James sends a fruit basket to steve ballmer.
He got this going.
With the value of the clippers.
If it is two point billion for the clippers, what is the tv package worth?
We have gone from one sporting event -- from hockey into u.s. golf open, into wimbledon, into world cup.
The trophy came in a louis vitton -- mrs.
Brady carried it out.
Gisele carried it out.
Save us with top photos today.
Do have a photo of mrs.
Starting with the number three, israel accepting an egyptian proposal for a cease-fire offer with hamas.
Hamas has rejected the offer.
Rudy's dramatic to see these images.
That would be a troop carrier.
We will have this all day.
This is a dynamic sequence of events at 3:00 a.m. this morning.
It seems to change hourly.
It is not just israel.
The troop carrier, you see it with an israeli flag, but it could have been in ukraine.
If it had been in iraq, who knows whose flag.
The amount of war around the world right now is shocking.
We have not even talked about syria.
Number two, pro-immigration activist gathering in battery park.
They called on president obama to issue executive orders to reduce deportations of illegal immigrants and their children.
Can he do that?
He announced immigration was officially dead a few weeks ago and said his lawyers are working on executive orders that he can sign to do things of this nature.
You have no idea how much what is going on right now on the border with the kids is complicating the process of the president doing anything.
Go back to the photo.
I look at that photo and i cannot tell who is for what.
That says a lot about the debate.
Are they for the kids coming in, the kids going back.
That is how jumbled this debate is.
Every child that comes across the border is granted an opportunity to go before a judge to make a case why he or she can stay or move on.
The number one photo of the day.
We are going to the u.k. swans released back into the river thames during the annual swan upping event.
This goes back a few years.
Edward the fourth, 1482. queen elizabeth attended in 2009. this is the territory of the royals owning the swans so the regular guys -- this goes back to the war of the roses.
20 years after that.
You are fond of british history.
Everybody has jen and.
That is all i know.
Or of the roses.
-- war of the roses.
They are capturing the swans.
They are silent.
There you have it.
Photos of the day.
Who will win in five years -- uber, lyft, halo, or licensed taxis?
It is an all-out battle.
? in the complex international relations of the united states of america, the secretary of state, he is in vienna, austria or the air ran -- for the iran talks.
He is even away from iraq.
Kerry taking questions right now.
When i talked to people, they say this is the focus.
John kerry in vienna.
This is "bloomberg surveillance." i am scarlet fu.
Let's get company news.
Microsoft planning it's a biggest round of job cuts.
Most reductions are expected in the nokia handset unit.
The layoffs could be announced sometime this week.
The operator of japan's most popular messaging service is planning an offering.
It could be around the $10 billion.
A new place on the web to find advice about dating or flabby abs.
The subscription video service is called cosmobody.
Customers can browse for workout videos and lifestyle advice.
It costs $9.95 per month.
I was only doing that because you were looking down.
I have to go to my -- i was looking at cosmobody.
Uber, lyft, they are shattering the tech start industry.
Partner and head of transportation litigation, matthew daus knows it is a battle for drivers.
We are thrilled to have you.
Give us immediacy right now.
What is the key element of this battle?
It is an amazing phenomenon.
There are private equity investors investing heavily in a variety of different apps.
The disruption is taking place everywhere.
I got back from london and the stuff going on in new york, it is marketing, politics, lawsuits, 30 plus lawsuits.
You have been on both sides of the fence.
How does a traditional yellow cab industry defend against technological progress.
The resources these companies have are tremendous.
They are fighting back.
Companies like uber are waging a war on several fronts.
They have lawsuits from passengers.
At their heels, you have lyft, making a dent in the sharing economy.
Why did my family take five ubers yesterday?
Which they have good service for the most part.
The companies have stolen the limo industry.
They went to different cities and they have taken the drivers who are in better cars, well-dressed, and it used them with an outapp that can get you from point a to point b quickly.
They are cheaper in boston then i cap.
Is that a price war or the new low price we're going to see in transportation?
Doing that is more about lyft then the taxi industry.
I do not think the taxi industry is threatened at all.
The time you can hail a cab at most times of the day, there is no way you can get an uber or l yft as quickly.
There are portions of the business that will be taken away.
During peak hours, when you cannot get a cab, right now in new york, what you most people do?
There are black cars that pick up illegally.
Those cars are being replaced by uber cars.
I am not saying the taxi industry will not be affected, but it will not be as mass as people think.
Quickscan you -- can you explain why it is relevant in the age of uber and lyft.
Commissioner josie just shut down lyft.
She, for the first time ever, went into court with the attorney general and financial service commissioners and brought a lawsuit to stop them.
This is the only city i can think of with the exception of maybe london, where they were stopped from operating without a license.
Thank you so much.
We will have you come back for a longer interview.
Phil mattingly, thank you, as well.
Euro, 1.3635. ? . . this is "bloomberg surveillance." good morning, everyone.
"bloomberg surveillance." confusion reigns as israel except the cease-fire.
It are reports of records fired from the gaza strip towards israel.
J.crew morgan is -- and jpmorgan is out with earnings, goldman sachs and 7:30, and we will look at johnson and johnson in this hour.
The idea of johnson and johnson benefiting the time from obamacare.
Good morning, everyone.
This is "bloomberg surveillance." scarlet fu of course does such a great job on earnings, and right now it is a very big beat.
I have yet to see it in futures, scarlet, but jpmorgan like citigroup and wells fargo joins better than good.
Expectations were very low for the big banks overall, so we have adjusted earnings per share number.
The consistence among analysts that we surveyed was for earnings of one dollar 30 one cents, so this looks to be a big beat here.
-- for earnings of $1.31. in other words, you back to $.13 off the $1.59. $1.59 is the number we want to look at here.
It is a comparable number to the consensus of $1.31. in terms of revenue, $25.35 billion is higher than analysts were looking for, beating most optimistic forecasts, which was for 24 point $4 billion.
It does look to be flat with the same time last year.
$25.93 billion, so slightly lower.
I was looking for the fixed-income rep . -- fixed-income revenue line.
Still lower than the same time last year and from the previous quarter, but perhaps not as bad as what jpmorgan had been warning, which was a 20% drop.
A return equity of 19%. what a different picture from citigroup.
Really dramatically a different snapshot.
I would notice also, scarlet, up top, i had never seen such link the comments from jamie dimon.
It is more than a read on it.
It is a virtual dialogue by james dimon versus what we normally see.
It is pretty much a boilerplate you would expect from any bank ceo toward the end of the second quarter.
We saw encouraging signs, but of course it is his announced illness with throat cancer.
I do not see a mention of his illness and ain a press release at this time.
There is no weston that jamie dimon can run the bank.
Futures improving -3 now up to -1.30. one of our great abilities is to have the staff of bloomberg industries with us.
Allison williams does riddick, terrific, relative work, and she joins us now.
You do not have the earnings in front of you.
I'm sure you got a heads-up from mr.
Diamond at 3:00 a.m. this morning.
Wells fargo up, citigroup, the first blushes of jpmorgan up.
When the trading came in much better than they had forecast, that definitely raised expeditions, so city thought the y had training revenue down.
I think people had better expectations coming into the report.
One of the things is the ability of any company to cut their expenses.
What is the elasticity or responsiveness of any given bank to somebody saying cut 6% now.
Can a bank do that?
It depends on the opportunity and where your cost structure is.
I think that was one of the more exciting things that people got from citigroup yesterday.
It is something that people have been looking for for that story.
There are two parts to it.
We have the ongoing expenses and the second part of it is the legal expenses, and that has been a huge had one.
I think investors are looking at that as an opportunity.
Ask is banking saving the day, mergers and acquisitions and transactions?
Dimon or his minions going six floors below in saying -- champagne for everyone?
It definitely feels a little bit like that for the m&a business for example, so we have been waiting for him for years now.
We have had great on the minerals in place, low financing cost, castle balance sheets.
People have been wondering -- when a record to get some traction?
We're finally getting that this year.
One of the most encouraging things that we heard last quarter from goldman ceo as he felt that we were finally getting past the point -- enough far away will from the crisis where we get them.
How many pages, like 147 bazillion pages?
It is hard to say.
What do you see?
Overall falls 12%. remember, jpmorgan had more be second-quarter market, it would be off 20% year on year, so this is a better-than-expected read.
Again, excitations were fairly low coming into this as well.
Our guest has been long banks for a long time.
Tangible book value goes from $21 last year up to $43 and.17. in other words, they got a big cushion and a big capital.
I think it was a perfect number.
We are optimistic.
They really beat our numbers.
Let's put it in perspective, though, because revenue as scarlet point out are actually slightly down year on year.
The expectations for all of these guys are much lower than they were a year ago, so revenues were only down 12%. are you overweight too big to fail banks?
Does but jpmorgan morgan stanley now, both of them look ahead to work a name that may be rising and that in -- and that interest margin.
That may be the lovely step in the story.
Like some crystals and pyramid'ss movie?
"nim"? the same once again for all these big banks is the sluggish to trading slowdown.
As long as that does not change, can we expect that trading revenue will plod along?
I think so.
We are in a new normal as far as trading revenue goes.
The robust trading revenue we saw at the end of the last decade is probably not going to come back anytime soon.
When you look at jobs, do you just resume that banks will rationalize?
Can you partition a between big banks, regional banks, and the little guys?
The way i would partition it is looking at the different businesses.
If you look at where revenue is and where staffing is and if you look at six versus equities, you will see that equity revenue per nativity per employee is actually higher than it was in 2010, where in fact it is lower, so there could still be a little bit capacity -- and i was going to say and part of that -- one of the big trends is electronic trading, and within equities, we have made a lot of progress.
You will see across the bloomberg folks another transaction as we talk about the banking industry, reynolds american to buy lorillard for $24.7 billion.
Do the bank at these banks, when you see a megadeal of $27 billion, does that ring the register for these banks?
One of the benefits of those deals is a can actually be a catalyst to more deals because people look at these big transactions happening in their industry and they start thinking more strategically.
What do i need to be doing?
Where are people going?
Are they going to the other boutique-type operations?
Roger altman will hate me for saying that.
Or are they staying at the big banks or going to the foreign banks?
Be bigger shift you see is on the bigger side.
You see a lot of the m&a bankers going to the smaller boutiques.
They want to be in a business that focus on making money on a speed generation and a growing business.
The headline number, jpmorgan return on equities 11%. i misspoke earlier.
That was my mistake.
Oh, tom, not at all.
Actually, my mistake was rooting for argentina, but i am in therapy.
Chris grisanti, curious, that record business banking, loan origination's up 46%. curious we get that headline is the moment we get a headline of a $26 billion merger deal.
What is the best way to participate on what is an incredible dealmaking environment right now?
Not only that, it is everything that alison said.
It is a great environment.
You have to offset that with relatively slow loan growth.
This part of the cycle, we are still disappointed.
46% of not get your attention?
I would have to compare that against the period because i think the volumes are still quite low.
That is understated.
The growth of total loan in the expansion of the economy has been sluggish.
Chris grisanti through with us through the hour.
Jpmorgan reports a better-than-expected second quarter.
Earnings per share adjusted $1.46 versus the consensus of $1.31. coming up, we head over across the pond to the international air show.
We will be right back.
Good morning, everyone.
"bloomberg surveillance." i am tom keene.
This man is not our guest host, christopher grisanti.
It is in the dog of dogs, downstream, oil refineries, of string is the -- upstream is the production.
We are going to kazakhstan.
The state of the business.
It is actually an ugly duckling turning into the swan because of the american oil renaissance.
Oil production in the united states has gone up 4 million barrels a day to 5 million barrels a day.
That is like discovering an entire iran inside united states, so we are getting less of oil in different locations.
First those obama, now is down south of the gulf coast.
That means that oil is somewhat cheaper than oil coming in from france or mexico would be.
Even in a mediocre economy, they are making almost record profits.
Are they essentially a tobacco industry where they bring in the money into this game the cash flow coming out the door?
It is a great cash flow business, but unlike tobacco, we cannot run without them, so these are essential to the economy.
You will not -- the barriers of entry are quite high.
And they have gotten much more efficient and they haven't exports story that they've never had before.
We have an advantage over every single company and making gas and diesel fuel.
What is your single best own right now?
I think there is a great opportunity in valero.
The disappointed last night.
They issued a warning.
That means that stuff in the summer is a little bit soft.
That gives investors i think it opportunity as things get tight and oil comes down the old coast and the discounts get wider -- are you optimistic on refineries that use cell axon, you underweight the big oil's and go right into the downstream -- that you undersell exxon and you underweight the big oils and go right to the downstream?
Is a lot of the natural gas stocks a few years ago.
Chris grisanti on the downstream of oil.
Terrific earnings day today.
We will focus on the banking earnings of jpmorgan just out, and again goldman sachs at 7:30 this morning.
William cohen will join us.
More mergers and acquisitions.
Did you own tobacco stocks, chris grisanti?
We did not.
That will be a debate here.
Chris grisanti here with us from grace on the capital markets -- from grisanti capital markets.
This is "bloomberg surveillance." good morning, everyone.
"bloomberg surveillance." incredibly busy morning.
Scarlet fu and adam johnson with us.
Chris grisanti of grisanti capital management with us.
You mentioned futures are unchanged, but they did move higher right here on the same time the jpmorgan return -- reported earnings.
Jpmorgan reported earnings per share that beat earnings estimates, $1.46 is the number, but there is a legal expense as well.
$1.31 is what analysts were looking for.
Revenue did not fall as much as anticipated and better-than-expected trading numbers.
Trading overall in the second quarter fell 12%, but that was better than what the bank had warned, which was a 20% drop.
Similar story from citigroup yesterday.
And about 10 minutes, we are waiting for goldman sachs to come out with results, and the numbers there to watch for our trading revenues from not just fixed income but equities as well.
It really underscores how each bank is different.
And jpmorgan shares we should mention are trading higher in the premarket right now on the better-than-expected results.
My takeaway, tangible book value up about 4%. thank you, it chair yellen.
Talking about inflating release flying, we're going to over to the farm bureau international air show.
This is a very big deal.
All the players are there, people like steven udvar-hazy, the ceo of airily scored, one of the largest aircraft leasing companies.
He joins us right now.
Take it away.
Thank you very much.
I am pleased to say that i am joined by steven udvar-hazy.
Thank you very much for joining us.
Yesterday and today, boeing, let's start with the airbus deal.
This is a big order.
Confidence for this trend toward putting new things on older aircraft.
Yesterday, air lease corporation place an order for an additional at21 aircraft.
It hold up to 240 passengers and it is a very economical aircraft on a worldwide basis.
Do you like this idea of putting new engines on older models?
It make sense to you?
It make sense for the airlines.
They get about a 15% savings in fuel, lower maintenance costs, lower emissions, environmentally friendly, they are quieter, so it is a positive step forward.
What can you tell us about the aviation cycle, that the leasing companies are playing a big role in fambre this year.
Aircraft leasing has become a mainstream way of airlines financing their airlines.
So other large customers of airbus.
That is amazing.
Rather than getting something cyclical.
Increasingly factor, the marketing distribution channel all over the world.
Where do you put these aircraft?
Where do you see the demand coming?
Markets in asia, china, latin america, europe, middle east.
It is a global marketplace.
Let me ask you about that global business because you like many companies supply aircraft to russia.
Is that a difficult thing to be doing?
It is tentative, but alternatively we do in russia is boeing and airbus product that we send there, so we are not leasing russian-built airplanes.
We are actually placing a320 aircraft into the more profitable, dominant russian airlines.
If there would be sanctions on russia, you would have to rethink them.
Yes, but existing aircraft will be protected, grandfathered.
It is just additional would be affected.
Ask in terms -- in terms of the chinese market, the chinese aircraft manufacturers are trying to cash out and aircraft is a long way to go.
Would that be an interesting trend is that we would see?
Initially cormac is.
Focused on penetrating the chinese airlines with her new arg21 and the 919, and the next phase of their development will be penetrating the international marketplace, and that is exporting at rest house -- exporting aircraft out of china.
Steven, thank you very much for joining us.
Enjoy the show.
-- it is a pleasure.
Enjoy the show.
Steven udvar-hazy, chairman of air lease corp.
Thank you, and edwards -- anna edwards.
There was a ukraine plane reportedly shot down.
We do not know where.
Shares are moving higher in the premarket by 1% ahead of results because jpmorgan reported better-than-expected trading.
Still it draws a double-digit present the times, but not as bad as what had been anticipated.
Chris grisanti with us from grisanti capital.
More trading, less banking.
I think be jpmorgan numbers are quite good.
We are looking at the core value.
What is the distinction you see echo i see a focus on trading at goldman.
What is going to have a things are among with all of the other reports of the goldman trading revenue will drop ;eless than expected.
We will look at the total firm revenues and earnings, which is 309. i think it will be higher than that.
Scarlet, to compare and contrast, jpmorgan -15% versus -12%. i just want to mention jamie dimon talking about encouraging signs across the business including an uptick in wholesale your elation, strengthening -- wholesale your elation, strengthening pipelines.
Goldman sachs results due out in about five minutes.
We will be all over it.
Meantime, goldman sharing trading higher.
Good morning, everybody.
Between jpmorgan and goldman sachs, let's get right to top headlines.
Here is adam johnson.
Breaking news from eastern afghanistan -- a car bombing has just occurred.
It killed 89 people.
Military officials say a suicide bomber triggered an explosion that happened in a busy market near hamas.
It is the most serious incidents of the rival presidential candidate said there presidential dispute.
And rockets hit aircraft that were parked near the runway in tripoli and then set them on fire.
Two people were killed in the attack and the control tower was damaged.
Rival groups have been fighting for powers in the fall of cut off muammar gaddafi.
And william hague says he will quit.
He says he was a lower level cabinet position.
Ron minister david cameron is expected to announce a successor later today.
In between all these earnings news, there was a big merger and acquisition announcement this morning.
Reynolds american, the maker of camel cigarettes, is now buying lorillard in a deal worth $27.4 billion including debt.
We bring our own olivia sterns for more.
This has been anticipated for a while.
We have been expecting the deal to go through for a couple of month and finally saul shares surge on a potential of the deal.
What this is about is creating a duopoly in the american tobacco industry.
This is now reynolds and lorillard joining forces to compete with marbury oh.
Marlboro cigarettes have about 45% of the market share in the u.s., so it is about an industry in a state of structural decline.
They want the size to compete and they are spinning off cash, bringing about $30 billion a year if you look at reynolds combined with lorillard.
It will put them in a better position in the u.s.. will it help them overseas as well?
That is where the real growth is.
That is where the real growth is.
Overall, direct sales in a state of structural decline.
18% of adults now smoke.
Mental cigarettes are declining at a slower pace.
Menthols are holding on, not for their interested in lorillard, because they make newport, and that is where the the strength.
What do you use?
I vamp to the vape.
Are we moving to a duopoly, it's not like a classic business text model -- went out, consolidate.
When we say deal, it is not a deal.
It is a consolidation of an industry.
Ask which you have seen for the past several years as all of these big players buying up smaller brands, essentially letting them die out.
Everybody is trying to get into e-cigarettes.
What i think is interesting about this is even the ceo of reynolds came back after she tried to retire.
She vapes herself.
She likes e-cigarettes.
In this deal because what these two countries are doing, regulators want them to spin off assets.
Imperial tobacco is going to come in.
They're going to buy up blue e -cigs.
Bolivia, one big question that seems different than a coke-pepsi duopoly -- is there really pricing power anymore?
Does it make sense to these guys raising prices or does it not work in the cigarette market?
You think about why would anyone want to invest in an industry that is in decline, particularly one selling a carcinogen.
The answer is yes.
They still have rising power.
I don't mean to interrupt.
I does have about eight questions on this.
When you are in london, were people using electric cigarettes?
No, you know the trend globally, you cannot even smoke in paris anymore.
They're still calling them fags.
An e-cigarette is the thing.
In london, they have not laid down the law on e-cigs yet.
You cannot vape in a closed space, you cannot vape in front of most buildings within 30 feet.
It is not real smoke, is it?
Yes, but it is being treated as smoke.
What you're talking about is the regulatory uncertainty.
Why are you investing in e-cigarettes when you do not know how it will play out, and why are you buying in the big menthol brand when the government may in them altogether?
They are trying to get ahead of the brand.
Thank you, olivia sterns.
It is a huge megadeal.
Almost 28 billion dollars worth.
We have retell sales coming out at 8:40 a.m.. ahead of that, jpmorgan's better-than-expected results.
Good morning, everyone.
"bloomberg surveillance" on bloomberg television and bloomberg radio.
Green on the screen, negative 3 on futures, looking at the bloomberg terminal, we await goldman sachs earnings.
Scarlet fu armed and ready.
You just like in all n ighter.
I did, actually.
Adam johnson with us as well, chris grisanti from grisanti capital management.
We will go beneath the headline.
Jpmorgan shares are trading higher in the premarket by 2%, which gives you an indication of the read on the results.
Results better than anticipated.
But earnings -- adjusted earnings for share $1.46. better-than-expected trading results.
When you combine fixed-income trading and equity trading, it was down 12% from last year, but given the bank had warned it would be down 20%, it is better than expected.
Goldman sachs numbers just coming across the wire right now.
I am looking at the compensation ratio.
43%. that begins to show how they are correcting.
Oh, my goodness, tom, this is a blowout.
That is what analyst were looking for, 43%. earnings-per-share, $4.10. i not know if that is a comparable number.
If that is a calm, that is a blowout.
If they were supposed to be down 17% -- understood.
Both, we thank kevin reynolds, revenues are a total blowout, $9.1 billion versus $8 billion, which really shows you that animal spirit.
That is the comparison you want to, adam, $4.10 versus $3.09. net revenue overall -- $9.13 billion.
Analysts at the highest end of the consensus looking for a .74 billion dollars, so this is much better than what analysts were looking for.
Goldman sachs continuing their leadership in investment banking.
Our leadership is to get you to guests that matter.
William cohan joins us now.
His book on goldman sachs, "money and power," the authoritative read.
Bill, good morning.
Wells fargo, citigroup, j.p. morgan, and now goldman sachs are better than good earnings.
Why are we seeing these more attractive revenue growth and earning growth?
Are you surprised?
No, not surprise at all, tom.
What i am surprised that is the little game they are playing of badmouthing their earnings and then blowing them out or badmouthing the revenue and blowing out.
This is an old game that we have seen before, but as i have said before on air, this is the new golden age of wall street.
There's a lot less competition, the economy is improving, the demand for investment banking services is increasing.
You see that in him in a, and underwriting, this is the new golden age of wall street, and so these firms are blowing out as a result.
I like how you call it a game.
I will go with you on that.
You and i have seen that over decades.
Are these banks being run as partnerships now?
Oh, god, partnerships, no.
You see with the compensation ratio at goldman, 43%, again, this is back starting to inch up again.
Revenues higher than expected, comp is going to be higher than expected or at least the accruals of comp.
One of the partnerships, as you well know, they pay partners out of the pretax income of the firm at the end of the year.
This kind of thing where they are accruing big bonuses is a new public a buddy phenomenon.
Bill with us -- two point two $2 billion, higher than anticipated, down 22% from the preceding quarter, down about 9.8% in the same time last year.
Equities revenue pretty much a mind with what analyst's were looking for, $1.61 billion.
So that year-over-year 9% is a good number.
Asked by the way, do scrolling through the press release, the reason they are making so many outside gains, revenues up 40% percent year-over-year, about $1.3 billion taken from investments.
That might be why the beat.
Bill cohan, thank you so much for coming to us across skype as well.
Users advancing negative 3 before the the 30's, now -1. stay with us.
It is "bloomberg surveillance." good morning, everyone.
"bloomberg surveillance." goldman sachs on the move, up a good 2%. i'm tom keene.
With me scarlet fu and adam johnson as well.
Right now we have betty liu of "in the loop," and we have retail sales coming out 8:30. what you have planned around that?
With the perfect guests to plan around retail sales, steve sadove, chairman of the national retail federation.
I will get his take on the funk that is happening around retailers with all of the technology and consumer slump, how are the surviving?
Also, janet yellen, we will read up through her testimony.
Senator david vitter is on the senate banking committee, oppose her nomination, actually, so we will find out what kind of a job he thinks she is doing so far.
A sounds good.
-- all right, sounds good.
Scarlett, adam, are you going to get this started?
Jpmorgan reported results, better-than-expected numbers.
Trading revenue that -- jpmorgan shares up by more than to bring percent to two 57.50. a-. that great is important because i think the market with exciting a solid b. i would give it an a except you cannot give it such a great great when it is still down from last year.
That is right, down 12%. we will let you put on your offense or had again, but first, this thing was a total blowout.
Goldman earnings beat the forecast by 15%. it was an increase of 15% versus the forecast decline of 17%. again, an absolute blowout earnings results for goldman sachs, maybe a $1.25 billion gain on some of their investments.
You can see the stock up 1.8%. chris, what do you think?
What is your grade for goldman?
What i think is happening here is investment banking is a one beer business.
You are seeing a blowout, but you will not see that kind of a blowout with jpmorgan.
I'm excited about it, but i will say let's stay tuned.
Other things are going quite well for goldman, but one quarter does not a year make.
This is part of our earnings edge.
After the bell, intel and yahoo!
, jb hunt is coming out.
I will be watching that one.
Tomorrow, we have got a number of other earnings we want to tell you about.
Blackrock, big of america, and ebay.
There is your earnings edge, scarlet and tom.
You wonder if it will be a settlement between bank of america and the government given that citigroup announce the $7 billion settlement.
And the government wants $17 billion to?
Bank of america out it was saying we would be $11 billion or $12 billion.
Minutes away from now, johnson & johnson will be reporting it second quarter numbers.
We will see how the world's biggest health-care company performs in the first half of 2014. carol massar will also join us.
She is on site at j&j. we will be right back on "bloomberg surveillance." good morning, everyone.
"bloomberg surveillance." morally program, professor hensel joins us, migrating to the stern school of business at new york university in the autumn.
Brad hintz will join us to sum up what appears to be a better than good inking response.
Futures were -3, now up 2. off of scarlet fu's earnings analysis.
You have single-handedly move the market.
Oh, really, you are giving me way too much credit.
Jpmorgan and goldman sachs beating estimates.
Our guest host for the hour, chris grisanti of grisanti capital management.
We want to get to company news from the files of "lumber was." -- of "bloomberg west." people familiar with nokia say a layoff could be announced this week.
6000 people could be out of work.
I'd be the biggest restructuring in microsoft history.
The operator of japan's most popular message service is going public.
Almost $10 billion.
Line could seek a u.s. actor.
And there is a new place on the web to find out advice about dating or flabby abs.
"cosmo" magazine launching an app called "cosmo body." customers can browse workout videos and lifestyle advice.
The cost $9.95 a month.
That is this morning's company news from the files of "bloomberg west." let's go to johnson & johnson's earning news.
This is a better-than-expected earnings report.
$1.66 is the adjusted earnings per share.
The consensus was one dollar$1.50. on top of that, j&j increasing its forecast for the full year, now looking at much as $5.92 a share, two cents more than previously forecast.
The dividend in the last 10 years at johnson & johnson has gone from $.29 of two a $.70 forecast.
The dividend growth as a single digit growth, and what i will really be paying attention today , do they manage their dividend rose up to double-digit?
Chris grisanti, this is a world apart.
When you get double-digit growth, you're treated differently.
You sure are, and what an impressive job for a company as big as j&j. what you are seeing are these corporations well run being able to return the massive cash amounts to shareholders and push the ball along.
I think it is remarkable.
There needs to be somebody to go visit j&j. don't you think that would be a "surveillance" idea?
Speaking of which, tom keene, our correspondent carol massar joins us now from the company's headquarters in new brunswick, new jersey.
How did that happen?
I was going to say, tom ask for it, and that is what we go do.
We have been visiting various j&j facilities.
I've been listening to you breakdown the earnings.
What caught my attention in the pharmaceutical sales at johnson & johnson came in at the quarter at 8.5 billion dollars.
That is up $1 billion from the quarter before, and pharmaceuticals has been a real bright spot along the company making up for slower growth against their two other major business, medical devices and the consumer business.
Pharmaceuticals have been the bright spot.
I spent some time -- as tom ask, i have been traveling romney country.
I was up at la jolla, california, visiting johnson and johnson's innovation laboratory.
All of the companies are competing for the next big thing.
They are being very aggressive in terms of going after early stage of a new stage, late stage product relevant.
At this incubator, entrepreneurs can come into the facility, the rent space at the market rate, they could do their research, they get access to millions of dollars worth of equipment, also to j&j expertise and scientists.
They can do their research.
If they do not want to work with j&j alternately, they can take their research elsewhere.
It is pretty interesting.
Carol, as they go through the press release of the earnings, it looks like johnson & johnson guides up ever so slightly a few pennies.
Where is the growth coming from?
Well, it is largely from the pharmaceuticals.
They have got three dynamic businesses.
Pharmaceuticals, everybody, as i talk to analysts or investors, they really city bright spot right now is the pharmaceuticals business and the growth that we are seeing.
That is why i mentioned, you know, they are being very aggressive in going after different products.
The other thing is i heard you talk about all the cash they have on hand.
They have a very healthy balance sheet, and they also sell ortho, they completed that sale in june.
I give this another 4 billion dollars in cash.
We will hear more about what they might do with that later.
They have done some acquisitions.
We will see if any of that -- or whether boosti