WEBVTT - Bloomberg Daybreak: July 14, 2022 - Hour 2 (Radio) 0:00:01.440 --> 0:00:04.960 By from the Bloomberg Interactive Brooker Studios is Bloomberg day 0:00:05.000 --> 0:00:08.720 Break for Thursday, July fourteen two Coming up this hour, 0:00:09.039 --> 0:00:12.360 Speculation grows about a one percent rate hike by the Fed. 0:00:12.440 --> 0:00:15.720 This month. Wall Street braces for another report on inflation. 0:00:16.079 --> 0:00:19.400 Bank earnings began with JP Morgan Chase and Morgan Stanley 0:00:19.440 --> 0:00:23.200 recording this morning, and President Biden boost Israel's military as 0:00:23.239 --> 0:00:26.680 his Middle Eastern trip continues. Two more shark attacks took 0:00:26.680 --> 0:00:29.640 place within hours off Long Island, plus the New York 0:00:29.640 --> 0:00:33.840 City Council demand's Mayor Adams restore school budgets, Michael barn 0:00:33.960 --> 0:00:37.120 More Ahead, johns fatchtowering sports. The Yankees came for barring 0:00:37.200 --> 0:00:39.440 the feet, the Red the Mets one in Atlanta, the 0:00:39.479 --> 0:00:45.680 Open Championship Go Fuderway in Scotland. That's All's trendy head 0:00:45.720 --> 0:00:49.280 on Bloomberg day Break on Bloomberg eleven three, on New York, 0:00:49.479 --> 0:00:54.160 Bloomberg one, Washington, d C, Bloomberg one oh six one, Boston, 0:00:54.440 --> 0:00:59.160 Bloomberg nine sixties and Francisco Syrius XM one nineteen and 0:00:59.240 --> 0:01:02.319 around the world on Bloomberg Radio dot com and via 0:01:02.400 --> 0:01:09.280 the Bloomberg Business app. Good Morning, I'm Nathan Hagar and 0:01:09.319 --> 0:01:11.880 I'm Karen Moscow and US DOT in next futures are 0:01:11.880 --> 0:01:14.200 following this morning. We're coming up to six oh one 0:01:14.240 --> 0:01:16.280 on Wall Street, and we check the markets every fifteen 0:01:16.280 --> 0:01:19.319 minutes throughout the trading day. On Bloomberg. Right now, SNP 0:01:19.480 --> 0:01:22.160 futures are down thirty seven points down, futures down two 0:01:22.560 --> 0:01:26.160 eighty and NASDAG futures down. The decks in Germany is 0:01:26.200 --> 0:01:28.760 down six tenths of a percent. Ten year Treasury down 0:01:28.840 --> 0:01:31.640 eight thirty seconds, held two point nine six percent. That 0:01:31.720 --> 0:01:34.080 yield on the two year three point one nine percent. 0:01:34.560 --> 0:01:36.840 Nine X screwed oil is down two point four percent, 0:01:36.880 --> 0:01:39.200 down two dollars thirty seven cents at ninety three dollars, 0:01:39.240 --> 0:01:41.800 ninety three cents of barrel. COMEX gold is down one 0:01:41.800 --> 0:01:44.119 in a quarter percent, or twenty one dollar seventy cents 0:01:44.120 --> 0:01:47.720 at seventeen eighty announced, and the euro one point zero 0:01:47.840 --> 0:01:50.680 zero four or five against the dollar. Nathan, thank you, Karen. 0:01:50.760 --> 0:01:54.680 Reaction continues to pour into yesterday's hot reading on inflation. 0:01:54.800 --> 0:01:57.240 The dollar is trading at a twenty four year high 0:01:57.280 --> 0:02:00.920 against the end. Speculation is growing that the Fed's next 0:02:01.000 --> 0:02:03.960 move maybe a one percent rate hike rather than a 0:02:04.040 --> 0:02:07.120 seventy five basis point increase. We caught up with Cleveland 0:02:07.200 --> 0:02:11.520 FED President Laretta Mester. Certainly, the inflation report suggests that 0:02:12.000 --> 0:02:15.040 there's no reason to say that a smaller rate increase 0:02:15.080 --> 0:02:17.400 than we did last time, right because nothing moved in 0:02:17.440 --> 0:02:20.880 that direction. Cleveland FED President Laretta Mester made those comments 0:02:20.919 --> 0:02:24.160 in an interview with Bloomberg's Kathleen Hayes Well. Nathan Mester 0:02:24.280 --> 0:02:26.800 is not the only Fed official hinting of higher rates 0:02:26.840 --> 0:02:30.440 to come. Atlanta Fed President Raphael Bostick says, quote, everything 0:02:30.600 --> 0:02:33.160 is in play for policy action this month. To get 0:02:33.200 --> 0:02:36.480 more from Bloomberg Charlie Pellett. His comment came after data 0:02:36.520 --> 0:02:40.680 showed that US inflation accelerated again to a fresh four 0:02:40.840 --> 0:02:45.160 decade high last month. Speaking to reporters in St. Petersburg, Florida, 0:02:45.520 --> 0:02:48.800 Bostick said, the top line number is a source of 0:02:48.880 --> 0:02:52.560 concern and everything is in play. The comments add fuel 0:02:52.600 --> 0:02:54.560 to be so the Fed is more likely than not 0:02:54.960 --> 0:02:58.839 to raise interest rates by one hundred basis points when 0:02:58.840 --> 0:03:02.400 it meets later the month in New York. Charlie Pellocks 0:03:02.440 --> 0:03:05.360 Bloomberg Daybreak, Okay, Charlie thank you, and coming up today, 0:03:05.400 --> 0:03:07.680 we get another reading on inflation with the release of 0:03:07.680 --> 0:03:10.480 the Producer Price Index for June. Here with the preview 0:03:10.560 --> 0:03:13.560 is Bloomberg's Michael McKee. Though it would seem logical, the 0:03:13.600 --> 0:03:17.000 producer price index actually doesn't really lead moves of the 0:03:17.040 --> 0:03:19.679 consumer price index, and that may be a good thing. 0:03:19.919 --> 0:03:23.360 Unlike consumer prices, producer prices have been falling a little 0:03:23.360 --> 0:03:26.440 bit after reaching a peak in March. The economist consensus 0:03:26.440 --> 0:03:29.600 forecast is that continued to come down in June. But 0:03:29.760 --> 0:03:32.400 CPI surprised to the upside last month, and there's a 0:03:32.480 --> 0:03:35.440 risk at least headline PPI could do the same. Oil 0:03:35.480 --> 0:03:38.200 and gas a lead prices rose as did other commodities, 0:03:38.360 --> 0:03:41.120 pushing up the cost of goods. The unanswered question is 0:03:41.200 --> 0:03:44.960 how service prices have behaved. Watched the Trade Services index 0:03:45.000 --> 0:03:47.800 in the pp I. It's something of a proxy for margins. 0:03:47.880 --> 0:03:51.400 As earning season gets underway in the US, Michael McKee, 0:03:51.440 --> 0:03:54.520 Bloomberg daybreak. All right, Michael, thank you, and speaking of earnings, 0:03:54.520 --> 0:03:56.960 this season gets started this morning and earnest when big 0:03:56.960 --> 0:03:59.200 banks you're poor, And we get the details from Bloomberg. 0:03:59.240 --> 0:04:03.800 A Global Finds Correspondencnally basic, JP Morrigan and Morgan Stanley 0:04:03.880 --> 0:04:07.560 kickoff earnings for the biggest US banks, and recession fears 0:04:07.600 --> 0:04:10.840 are growing across the economy. The question is our provisions 0:04:10.880 --> 0:04:13.880 for loan losses going to build? Especially at JP Morgan 0:04:14.120 --> 0:04:16.919 where net interest income is also rising due to higher 0:04:16.960 --> 0:04:20.040 interest rates. The question is how much will that offset 0:04:20.080 --> 0:04:23.960 any future pains from any potential recession ahead. I'm Shnei 0:04:24.040 --> 0:04:27.800 Bask Bloomberg Daybreak occastionally thanks. As recession fears grow on 0:04:27.839 --> 0:04:30.760 Wall Street, one top tech executive says the industry will 0:04:30.760 --> 0:04:32.920 be able to weather the storm. Let's get that live 0:04:32.920 --> 0:04:35.679 from Bloomberg. Jnading on Good Morning, Nita, Good Morning Nathan. 0:04:35.800 --> 0:04:40.320 IBM CEO Arvin Christna says he believes business technology spending 0:04:40.320 --> 0:04:44.760 will remain robust above GDP growth, including in Europe, and 0:04:44.839 --> 0:04:47.360 this is even after others in the industry have been 0:04:47.440 --> 0:04:51.120 pest pessimistic in the face of a potential US recession 0:04:51.400 --> 0:04:55.240 and resulting slower growth. When you look at supply chain inflation, 0:04:55.440 --> 0:04:59.760 libo demographics, interest rates. Technology offers you away to scale 0:05:00.000 --> 0:05:06.120 without necessary increasing costs that are linear. IBM CEO Arvin 0:05:06.240 --> 0:05:10.520 Krishna is less optimistic about supply chain problems. He says 0:05:10.560 --> 0:05:13.359 they're a real fundamental issue and will go on for 0:05:13.400 --> 0:05:16.240 a couple more years. Live in New York. I'm really 0:05:16.240 --> 0:05:18.599 need a Young Bloomberg daybreak. I real need to thank you. 0:05:18.600 --> 0:05:21.279 Are turning to politics now. President Biden will sign know 0:05:21.320 --> 0:05:24.680 like continuing US commitment to Israel's defense. As part of 0:05:24.720 --> 0:05:26.880 his trip through the Middle East, the President signs a 0:05:26.960 --> 0:05:30.560 joint declaration with Israel's new Prime minister, extending an agreement 0:05:30.600 --> 0:05:34.080 that provides billions of dollars to the country's military. Tomorrow, 0:05:34.120 --> 0:05:38.600 Biden heads to Saudi Arabia. Democratic Congresswoman Abigail Spenberger says 0:05:38.839 --> 0:05:41.159 he'll need to project American values when he meets with 0:05:41.240 --> 0:05:44.520 Crown Prince Mohammed been salmoned. He must raise the issue 0:05:44.520 --> 0:05:49.640 of Jamal Kasos murder. He must continue to ensure that 0:05:49.680 --> 0:05:53.880 we have strong expectations of what our Saudi partners are 0:05:54.080 --> 0:05:56.280 or are not bringing to the table, whether they are 0:05:56.480 --> 0:06:00.600 or are not um meeting the expectations we have in 0:06:00.680 --> 0:06:06.880 terms of the values that they u are abiding. Congresswoman 0:06:06.920 --> 0:06:10.640 Abigail Spenberger of Virginia spoke with Our Washington corresponded Joe 0:06:10.680 --> 0:06:13.479 Matthew on Bloomberg Sound on. Catch the program weekdays at 0:06:13.520 --> 0:06:16.680 five pm Eastern on Bloomberg Radio. Their new developments in 0:06:16.720 --> 0:06:19.600 the pandemic The Battle against the Pandemic. This morning, Karen, 0:06:19.600 --> 0:06:22.640 the nation's top doctor, says all Macron b A five 0:06:23.080 --> 0:06:25.880 is getting more worrisome. Bloomberg said, Baxter has the story. 0:06:26.120 --> 0:06:29.800 COVID Response Coordinator Doctor Ashisha Jaw says it's something to 0:06:30.120 --> 0:06:33.520 very carefully watch. It is certainly the most immunovative. What 0:06:33.640 --> 0:06:37.080 we're seeing as people who are previously infected getting reinfections 0:06:37.080 --> 0:06:39.680 at high rates, people who got vaccinated let's say last year, 0:06:40.000 --> 0:06:42.920 having a ton of breakthrough infections. So something that we're 0:06:43.040 --> 0:06:45.520 you know, obviously paying very close attention to. Yeah. Dr 0:06:45.640 --> 0:06:48.720 Josh has mitigation tools like smart use of masks, and 0:06:49.000 --> 0:06:53.039 of course vaccinations is important. He says, everybody over fifty 0:06:53.160 --> 0:06:56.680 needs a second booster. In San Francisco, I'm at Baxter 0:06:56.720 --> 0:06:59.919 Bloomberg Daybreak and thanks. And despite COVID concerns and current 0:07:00.000 --> 0:07:02.920 economic conditions, back to school shoppers are expected to spend 0:07:02.920 --> 0:07:05.480 a record amount this year. According to a survey by 0:07:05.520 --> 0:07:08.240 deloittch sales for this season are expected to total thirty 0:07:08.320 --> 0:07:11.480 four point four billion dollars. That breaks down to six 0:07:11.600 --> 0:07:14.880 hundred sixty one dollar per student, an increase of eight 0:07:14.880 --> 0:07:18.040 percent from a year earlier. Your local headlines straight ahead, 0:07:18.080 --> 0:07:24.880 This is Bloomberg. Thanks Terence six o seven on Wall Street, 0:07:24.920 --> 0:07:27.720 seventy two degrees in Central Park and better news now 0:07:27.720 --> 0:07:30.000 for rail riders. Let's get that and more on what's 0:07:30.000 --> 0:07:31.560 going on in New York and around the world with 0:07:31.600 --> 0:07:34.320 Bloomberg's Michael Barr. Michael, thank you very much, Nathan. Rail 0:07:34.360 --> 0:07:38.360 communities are saying hallelujah. New Jersey Transit service has resumed 0:07:38.360 --> 0:07:40.840 in and out of New York City. Rail service was 0:07:40.880 --> 0:07:43.600 suspended into and out of Penn Station in New York 0:07:43.920 --> 0:07:48.120 due jamtrack overhead wire issues. New Jersey Transit tickets and 0:07:48.280 --> 0:07:52.000 passes no longer being cross hunored by a path. It 0:07:52.160 --> 0:07:54.679 is the third shark attack in ten days on Long Island. 0:07:55.360 --> 0:07:57.880 Year old man was attacked by a shark yesterday evening, 0:07:58.200 --> 0:08:01.360 less than twelve hours after a little border was attacked 0:08:01.360 --> 0:08:04.600 at a nearby beach that morning. According to the Suffolk 0:08:04.600 --> 0:08:08.200 County Police, the man was standing waist deep in the 0:08:08.200 --> 0:08:11.160 water at Seaview Beach on Fire Island when he was 0:08:11.200 --> 0:08:14.960 bitten on his wrist and leg. Around six pm earlier, 0:08:15.000 --> 0:08:16.680 a forty one year old man was bitten by a 0:08:16.680 --> 0:08:20.120 shark while palle boarding at Smith Point Beach. Both suffered 0:08:20.160 --> 0:08:24.360 non life threatening injuries. Suffolk County Executive Steve blog I 0:08:24.400 --> 0:08:29.760 think it is an indication, however, that what we're looking 0:08:29.800 --> 0:08:33.720 at is uh something of a new normal. Suffolk County 0:08:33.760 --> 0:08:36.760 Executive Steve Bloone says the tiger sharks are closer to 0:08:36.840 --> 0:08:40.280 shore than they've been. New York City Council members are 0:08:40.320 --> 0:08:43.160 calling on Mayor Eric Adams and the Department of Education 0:08:43.280 --> 0:08:46.840 not to exercise budget cuts and a joint letter council 0:08:46.880 --> 0:08:49.400 members say he will result in the city spending less 0:08:49.400 --> 0:08:52.600 on each child. Last month, the city Council signed off 0:08:52.640 --> 0:08:55.600 on the two fifteen million dollar budget cut and adams 0:08:55.679 --> 0:09:00.360 twenty three city budget, But now council members say that 0:09:00.440 --> 0:09:03.400 the Adams administration misled them by saying the cuts would 0:09:03.400 --> 0:09:07.040 be fully accounted for by declining enrollment. A new mental 0:09:07.080 --> 0:09:09.559 health clinic in the Bronx just opened its doors. Mayor 0:09:09.640 --> 0:09:12.400 Eric Adams says the short term treatment center will provide 0:09:12.400 --> 0:09:16.600 New Yorkers with mental health and substance abuse issues immediate 0:09:16.600 --> 0:09:21.800 access to Service. We unfairly treated the New York City 0:09:21.840 --> 0:09:25.080 Police Department in this city in so many ways. We 0:09:25.200 --> 0:09:28.880 called on them to do everything. We called on them 0:09:28.920 --> 0:09:32.840 when someone had a gun. We called on them, when 0:09:32.920 --> 0:09:35.400 someone had a cat up the tree. We called on 0:09:35.440 --> 0:09:37.640 them when someone was going through a mental health crisis. 0:09:37.640 --> 0:09:41.400 We called on them for everything, and didn't realize that 0:09:41.440 --> 0:09:44.360 we had other agencies that we should have coordinated with. 0:09:44.640 --> 0:09:48.520 Mayor Adams. Manhattan apartment rants reached another record high in June. 0:09:48.520 --> 0:09:52.600 According to appraiser Miller Samuel and brokerage Douglas Element real Estate. 0:09:52.640 --> 0:09:55.079 New leases were signed last month. At the Media and 0:09:55.320 --> 0:09:58.960 A four thousand and fifty dollars Global News twenty four 0:09:59.000 --> 0:10:01.240 hours a day on a R and on Bloomberg Quick Take, 0:10:01.240 --> 0:10:03.760 powered by more than twenty seven hundred journalists analysts in 0:10:03.800 --> 0:10:05.760 more than a d twenty countries. On Michael Barr, This 0:10:05.760 --> 0:10:12.720 is Bloomberg, Nathan, Thanks Michael, tuned up to six ten 0:10:12.760 --> 0:10:14.760 on Wall Street Time for the Bloomberg Sports Update with 0:10:14.880 --> 0:10:17.240 John stash Ower. All right, Nathan, Yankees trying to avoid 0:10:17.280 --> 0:10:19.319 their first four game losing streak of the season. The 0:10:19.520 --> 0:10:22.800 night did not begin well. Lauis Sevareno injured most of 0:10:22.800 --> 0:10:25.240 the last three seasons. He's been so good this year. 0:10:25.240 --> 0:10:27.160 But he served up three home runs in the second 0:10:27.160 --> 0:10:29.800 and then and while taking his warm up tosses in 0:10:29.800 --> 0:10:32.600 the third, departed headed for an m r in his shoulder. 0:10:32.640 --> 0:10:35.840 Yanks trailed the Reds four. Nothing came back. Isaiah kinnerd 0:10:35.840 --> 0:10:38.040 fell left at three run double. They led five to four. 0:10:38.080 --> 0:10:41.280 They fell behind again. John Carlos Stanton game tying home 0:10:41.360 --> 0:10:44.200 run eighth inning, Yanks scored in the tent for another 0:10:44.240 --> 0:10:46.640 walk off win, seven to six. Mets used the long 0:10:46.679 --> 0:10:49.960 ball in Atlanta, delivers and Lindor rips it deep in 0:10:49.960 --> 0:10:53.440 the air right field. Kunia turns around, watches it fly. 0:10:53.840 --> 0:10:57.360 That one's way outta here. But three run blass for 0:10:57.480 --> 0:11:01.800 Francisco Windoor. He comes through in the top of the 0:11:01.920 --> 0:11:05.400 third inning and he extends the Nets lead to four nothing. 0:11:05.760 --> 0:11:08.719 CBS solo shots from Mark Canada, Ward Escobar. Mets beat 0:11:08.760 --> 0:11:11.000 the Brave seven three. Chris Bassett got to win. The 0:11:11.040 --> 0:11:13.520 Mets take the series lead at Lanta now by two 0:11:13.559 --> 0:11:16.280 and a half. They visit the Cubs tonight. Two American 0:11:16.400 --> 0:11:19.000 League teams both stretched their winning streaks to attend the 0:11:19.040 --> 0:11:21.959 Seattle Mariners, who have gone longer than any team in 0:11:22.040 --> 0:11:25.720 all of sports without making the postseason, and the Baltimore Orioles, 0:11:25.760 --> 0:11:28.560 baseball's worst team over the last several years. The Mariners 0:11:28.880 --> 0:11:30.920 now tied for the playoffs spot in the Orioles, only 0:11:30.960 --> 0:11:34.880 two games behind Toronto fired their manager, Charlie Montoyo. The 0:11:35.040 --> 0:11:37.520 Rangers of segn Friedge and Vincent tro Check away from 0:11:37.559 --> 0:11:41.840 Carolina Open Championship Golf hundred fifty edition at St. Andrew's. 0:11:41.840 --> 0:11:44.560 An American Cameron Young thirty one on the front night. 0:11:44.600 --> 0:11:47.160 He's just moved into the lead at five hundred. John 0:11:47.200 --> 0:11:50.520 stash Award, Bloomberg Sports Nathan Okay, John, thank you, SMP. 0:11:50.679 --> 0:11:54.720 Futures down thirty eight points down, futures down two nestact 0:11:54.800 --> 0:11:58.200 future is lower five one hundred points. Ten year treasuries 0:11:58.240 --> 0:12:00.920 down nine thirty seconds, the yield two point nine six 0:12:01.080 --> 0:12:08.440 per cent. You're listening to Bloomberg Day Brain Bloomberg eleven 0:12:08.480 --> 0:12:10.800 three oh weather. Showers and storms developing through the day 0:12:10.840 --> 0:12:12.800 as we had near ninety degrees. It will be partably 0:12:12.840 --> 0:12:15.760 the mostly sunny Tomorrow, mixed the sun and cloud Saturday. 0:12:15.800 --> 0:12:18.320 Both days in the upper eighties. Right now, seventy two 0:12:18.400 --> 0:12:24.760 in Central Park Markets, headlines and breaking news twenty four 0:12:24.800 --> 0:12:27.840 hours a day at Bloomberg dot com, The Bloomberg Business 0:12:28.120 --> 0:12:31.520 and at Bloomberg Quick Take. This is a Bloomberg Business 0:12:31.520 --> 0:12:41.000 flash and I'm Cameron Moscow. US stock index futures are 0:12:41.080 --> 0:12:43.160 following this morning, along with stocks in Europe and the 0:12:43.200 --> 0:12:46.840 dollar resuming its upward March checker hi US inflation hardened 0:12:46.840 --> 0:12:50.319 expectations for more aggressive Federal Reserve monetary tightening that could 0:12:50.320 --> 0:12:52.840 trigger a recession. If you check the markets every fifteen 0:12:52.840 --> 0:12:56.000 minutes throughout the trading day on Bloomberg s ANDP futures 0:12:56.040 --> 0:12:58.480 down thirty nine points, now futures down three hundred four 0:12:58.480 --> 0:13:01.000 and NASDACK futures down one hundred five. The decks in 0:13:01.040 --> 0:13:04.319 Germany's down six tenths of a percent, Pennier treasury down 0:13:04.360 --> 0:13:07.319 eight thirty seconds, held two point nine six percent yield 0:13:07.320 --> 0:13:10.080 on the two year three point two zero percent. Nine 0:13:10.120 --> 0:13:12.520 max screwed oil is down two point four percent, down 0:13:12.559 --> 0:13:15.079 two dollars thirty four cents and ninety three dollars ninety 0:13:15.080 --> 0:13:17.360 six cents of barrel coll MIxS. Gold is down one 0:13:17.360 --> 0:13:20.000 point four percent, or two dollars twenty cents at seventeen 0:13:20.000 --> 0:13:23.440 eleven thirty announced the euro one point zero zero three 0:13:23.480 --> 0:13:26.360 five against the dollar, British found one point five six 0:13:26.600 --> 0:13:29.400 and the en one thirty eight point eight four. Looking 0:13:29.440 --> 0:13:32.679 at bitcoin, it's higher, up about seven tenths percent and 0:13:32.840 --> 0:13:36.360 nineteen thousand seven d eighty five dollars. Today we get 0:13:36.400 --> 0:13:38.760 another reading on inflation, the producer price, and next sun 0:13:38.840 --> 0:13:40.680 at eight thirty Wall Street time, we also get the 0:13:40.679 --> 0:13:43.480 weekly report on initial jobless claims, and we're looking for 0:13:43.520 --> 0:13:46.360 earnings from JP Morgan Chase and Morgan Stanley. As a 0:13:46.400 --> 0:13:48.959 Bloomberg business flash. Now here's Michael Barr with more on 0:13:49.080 --> 0:13:51.560 what's going on around the world. Mantel, hearen, thank you 0:13:51.679 --> 0:13:53.960 very much. President Joe Biden will seek the bolster co 0:13:54.080 --> 0:13:57.480 operation between the US, Israel, and other countries. During his 0:13:57.600 --> 0:14:00.640 first full day in the Middle East. Is edual today 0:14:00.640 --> 0:14:04.760 involves meetings with Israeli prim Minister Yar Lapide. In baseball, 0:14:04.800 --> 0:14:07.240 the Yankees beat the Rads, the Mets beat the Braves. 0:14:07.240 --> 0:14:09.679 The Nationals lost both games of a double header to 0:14:09.760 --> 0:14:12.760 the Mariners. As earning hour old say, the Orioles are 0:14:12.760 --> 0:14:15.400 flapping their wings. They beat the Cubs to win their 0:14:15.400 --> 0:14:18.319 tenth straight. The Giants stopped the Diamondbacks. They's lost to 0:14:18.360 --> 0:14:20.640 the Rangers. Global News twenty four hours a day on 0:14:20.720 --> 0:14:24.160 here and on Bloomberg Quick Take Power by more than journalists, 0:14:24.160 --> 0:14:26.520 analysts more than a hundred twenty countries. Michael bar this 0:14:26.560 --> 0:14:28.440 is Bloomberg. What a time to be alive when the 0:14:28.440 --> 0:14:30.840 Orioles are doing well for a change. Thank you, Michael. 0:14:30.840 --> 0:14:32.720 It is six nineteen on Wall Street Live from the 0:14:32.720 --> 0:14:36.320 Bloomberg Interactive Broker Studios. This is a Bloomberg daybreak. Of course, 0:14:36.360 --> 0:14:39.760 investors focused not just on the front of inflation, higher 0:14:39.800 --> 0:14:43.520 rate hikes, but the kickoff of bank earning season. With 0:14:43.720 --> 0:14:47.760 JP Morgan Chase and UH Morgan Stanley reporting this morning. 0:14:47.840 --> 0:14:50.720 Ken Leon is with US now Director of Equity Research 0:14:51.160 --> 0:14:53.000 or at c f R. A Ken, It's great to 0:14:53.040 --> 0:14:55.600 speak with you this morning and wonder what your expectations 0:14:55.640 --> 0:14:58.120 are when it comes to the bank earnings, because of 0:14:58.160 --> 0:15:00.400 course they have so much that they can tell us 0:15:00.440 --> 0:15:03.440 about the strength or or what of you, what have 0:15:03.600 --> 0:15:07.960 you when it comes to the US economy. But that's right, 0:15:08.120 --> 0:15:10.880 and it's really where are we going. We're at an 0:15:10.880 --> 0:15:14.240 inflection point in terms of questions about the economy or 0:15:14.280 --> 0:15:18.720 the consumer. And looking ahead, I think the banks are 0:15:18.760 --> 0:15:21.600 going to be cautious. They need to build up bank 0:15:21.680 --> 0:15:26.000 reserves if we run into recession next year. And of course, 0:15:26.520 --> 0:15:29.400 you know, the investment banking area has been weak, but 0:15:29.800 --> 0:15:34.400 all of that is really factored into expectations and stock prices. 0:15:34.440 --> 0:15:37.720 So I think any any leaf of good news is 0:15:37.760 --> 0:15:42.160 going to help in terms of optimism, and bank stocks 0:15:42.160 --> 0:15:44.960 may be going higher, but this is not going to 0:15:45.080 --> 0:15:49.280 be a pretty firing on all cylinders kind of quarter 0:15:49.360 --> 0:15:51.480 for the banks, and I think their tone is going 0:15:51.560 --> 0:15:54.600 to be pretty low key. I think it has to 0:15:54.640 --> 0:15:58.080 be said that JP Morgan Chase CEO Jamie Diamond may 0:15:58.120 --> 0:16:02.200 have set expectations when he made that well repeated quote 0:16:02.240 --> 0:16:06.000 about an economic hurricane on the horizon. Are you expecting 0:16:06.080 --> 0:16:09.680 that that kind of language could continue or I mean, 0:16:09.800 --> 0:16:12.600 is there is there a possibility that we could see, uh, 0:16:12.960 --> 0:16:17.960 some evidence of green shoots. Yeah, the green shoots. It's 0:16:18.000 --> 0:16:21.800 gonna be tough because of the pressure of rising rates. 0:16:21.840 --> 0:16:24.360 You know, the fact going maybe up on our basis 0:16:24.360 --> 0:16:29.080 points next time on their meeting, and you know, I think, uh, 0:16:29.120 --> 0:16:31.960 you know, the real secret to the story is banks 0:16:31.960 --> 0:16:36.480 built reserves and if we go into a shallow recession 0:16:37.120 --> 0:16:40.440 next year, possibly they can reverse those and and that 0:16:40.480 --> 0:16:43.600 could help earnings next year. But the you know, the 0:16:43.640 --> 0:16:47.120 health of the businesses lending is likely to be less 0:16:47.160 --> 0:16:49.760 than the second half first the first half of this year. 0:16:50.200 --> 0:16:54.280 Capital markets is a big, big question more particularly in 0:16:54.400 --> 0:16:59.400 terms of underwriting and overwall. You know, right now, the 0:16:59.680 --> 0:17:03.560 bank just aren't selling cracks in terms of credit credit risk, 0:17:04.400 --> 0:17:08.280 particularly in on the commercial side. There isn't a distress industry, 0:17:08.480 --> 0:17:12.520 so you know, again it's a cross roads. And banks 0:17:12.240 --> 0:17:15.960 are very different than a industrial company where they can 0:17:16.000 --> 0:17:18.600 build reserves. And if if things don't get so bad, 0:17:18.640 --> 0:17:22.560 then that's gonna help earnings next year. Could the volatility 0:17:22.600 --> 0:17:26.600 that we've seen in the market, uh, and the possibility 0:17:26.840 --> 0:17:30.600 that trading desks have been able to manage to do 0:17:30.720 --> 0:17:34.240 well based on that, could that sort of outweigh some 0:17:34.359 --> 0:17:37.879 of the headwinds that banks could be seeing from some 0:17:37.960 --> 0:17:41.800 of the other issues surrounding rates they are, and that's 0:17:41.800 --> 0:17:46.119 going to offset you know, lower underwriting and mergers and acquisitions, 0:17:46.240 --> 0:17:51.120 equity and fixed income trading or up anywhere twenty um 0:17:51.200 --> 0:17:56.760 and volatility has helped, But for investors, bank stocks never 0:17:56.800 --> 0:18:01.080 really get rewarded on the volatility of trading because it's 0:18:01.119 --> 0:18:05.440 so difficult to sustain or predict. But yes, the print 0:18:05.480 --> 0:18:08.000 is going to be positive for trading, you know when 0:18:08.040 --> 0:18:11.720 they report soon. Does that make it tough to think 0:18:11.720 --> 0:18:14.680 of financials more broadly as a buy when it comes 0:18:14.680 --> 0:18:18.240 to investing in some of these big Wall Street names. 0:18:20.200 --> 0:18:25.080 Banks are constantly trying to get higher recurring revenue, more 0:18:25.080 --> 0:18:29.199 more consistency in their performance. They're getting that from asset 0:18:29.280 --> 0:18:33.960 and wealth management and trust services UM and some other 0:18:34.040 --> 0:18:37.320 areas related to the consumer. But the deltas against that 0:18:37.520 --> 0:18:42.480 higher growth would be you know, obviously higher credit card 0:18:42.600 --> 0:18:47.600 spending and then also loan activity. But we're saying all 0:18:47.640 --> 0:18:50.040 of this where the bank stocks are at a fifty 0:18:50.119 --> 0:18:53.720 two week low, they're trading at record low priced and 0:18:53.840 --> 0:18:58.680 that tangible book value we had a nice um announcements 0:18:58.720 --> 0:19:01.199 have to the Fed Bank in terms of return of 0:19:01.280 --> 0:19:05.439 capital with siven in increases and buy backs. So the 0:19:05.480 --> 0:19:08.679 bank stocks even they're yields some of them, like Morgan 0:19:08.760 --> 0:19:12.399 Stanley JP Morgan around three and a half percent for 0:19:12.520 --> 0:19:16.320 really great franchises in our fu Thanks for this, Ken, 0:19:16.359 --> 0:19:19.399 great having you on this morning. Ken Leon Director of 0:19:19.440 --> 0:19:22.680 Equity Research at cf R A as we await JP 0:19:22.800 --> 0:19:25.720 Morgan Chase second quarter earnings are duet around seven am 0:19:25.760 --> 0:19:29.320 Wall Street Time. Morgan Stanley follows at seven thirty. We 0:19:29.400 --> 0:19:31.639 will of course have full coverage for you throughout the 0:19:31.720 --> 0:19:35.800 day here on Bloomberg Radio. SMP futures right now down 0:19:36.080 --> 0:19:38.880 forty one point. Staff futures are lower by three twenty. 0:19:38.920 --> 0:19:42.560 Nasdaq futures down a hundred seven points. The tenure Treasury 0:19:42.600 --> 0:19:45.520 is down six thirty seconds. Yield two point nine five percent. 0:19:45.640 --> 0:19:49.240 Yield on the two year three point one nine percent. 0:19:49.720 --> 0:19:52.679 Just ahead, you look ahead to another read on inflation 0:19:52.800 --> 0:19:56.280 in producer prices and why a big tech ceo thinks 0:19:56.320 --> 0:19:59.560 his sector can weather the storm. Five things you need 0:19:59.600 --> 0:20:02.760 to note start your day. Coming up on Bloomberg day 0:20:02.800 --> 0:20:10.160 Break Bloomberg eleven three oh weather showers and storms developing 0:20:10.200 --> 0:20:12.200 through the day as we had near ninety degrees. Will 0:20:12.240 --> 0:20:14.880 be back in the sunshine oper eight ees tomorrow mix 0:20:14.880 --> 0:20:17.880 of sun and clouds ouper eighties Saturday right now seventy 0:20:17.920 --> 0:20:25.040 two in Central Park, criadcasting live from the Bloomberg Interactive 0:20:25.080 --> 0:20:28.119 Broker Studio in New York. Bloomberg e Living Free on 0:20:28.320 --> 0:20:32.480 to Washington, d C. Bloomberg to Boston, Bloomberg one O 0:20:32.680 --> 0:20:35.760 six one to San Francisco, Bloomberg No. Sixteen to the 0:20:35.760 --> 0:20:38.879 country Sirius XM Chad A one nineteen and around the 0:20:38.880 --> 0:20:42.960 globe the Bloomberg Business and Bloomberg Radio dot com. This 0:20:43.280 --> 0:20:51.600 is Bloomberg Daybreak six thirty on Wall Street. Good morning, 0:20:51.640 --> 0:20:54.639 I'm Nathan Hagar and I'm Karen Moscow. We are just 0:20:54.720 --> 0:20:57.439 about three hours away from the open of US trading. 0:20:57.480 --> 0:20:58.960 Time for the five things that you need to know 0:20:59.080 --> 0:21:01.960 to start your day out to you by Interactive Brokers. 0:21:02.200 --> 0:21:05.440 Interactive Brokers Global Analysts helps you find new global investment 0:21:05.440 --> 0:21:09.879 opportunities to diversify your portfolio and discover undervalued companies that 0:21:09.960 --> 0:21:13.360 may have greater growth potential. Try ibk our Global Analysts 0:21:13.400 --> 0:21:16.720 today at ibk R dot com slash g A. A 0:21:16.840 --> 0:21:20.320 first reaction, still rolling into yesterday's hot reading on inflation 0:21:20.480 --> 0:21:23.199 and their speculation that the FEDS next move maybe a 0:21:23.320 --> 0:21:26.840 one percent rate hike. Cleveland Fed President Loretta Memester says 0:21:26.880 --> 0:21:30.120 there's more work to do to cut inflation. Job one 0:21:30.480 --> 0:21:33.119 for us is to get inflation under control. And I 0:21:33.280 --> 0:21:36.800 say that knowing that the risk of recession have one, 0:21:37.240 --> 0:21:39.800 but that's part of what we're trying to do is 0:21:40.280 --> 0:21:44.800 normalize or or moderate demand, because if we don't do this, 0:21:45.200 --> 0:21:48.359 we're gonna have many more problems in the economy going forward. 0:21:48.600 --> 0:21:51.000 Cleveland Fed, President of the Rerdemester made the comments to 0:21:51.040 --> 0:21:54.600 Bloomberg's Kathleen Hayes. No earning season gets underway today, Karen 0:21:54.640 --> 0:21:57.040 has big banks open their books for the second quarter 0:21:57.080 --> 0:22:00.680 of Bloomberg's Jeff Bellinger has more analysts say that overall, 0:22:00.720 --> 0:22:03.639 the numbers from the financial services sector will likely be 0:22:03.800 --> 0:22:06.960 lower by comparison to the very strong results from a 0:22:07.040 --> 0:22:09.960 year ago. Will hear from JP Morgan Chase and Morgan 0:22:10.040 --> 0:22:14.640 Stanley this morning. Bloomberg Intelligence says JP Morgan's market leadership 0:22:14.680 --> 0:22:18.720 positions support profitability and long term growth. A profit of 0:22:18.720 --> 0:22:21.800 two dollars nine two cents a share is predicted. The 0:22:21.840 --> 0:22:24.320 forecast for Morgan Stanley is for a profit of a 0:22:24.359 --> 0:22:28.760 dollar fifty seven a share. Jeff Bellinger Bloomberg Daybreak. All right, Jeff, 0:22:28.760 --> 0:22:31.240 thank you. As your session fears grow on Wall Street one, 0:22:31.280 --> 0:22:33.800 top executives in the industry will be able to weather 0:22:33.840 --> 0:22:36.439 the storm. And Bloomberg's Rnity Young joins US Live with 0:22:36.520 --> 0:22:40.000 more Good Morning Radio, Good Morning Karen. IBM CEO Arvid 0:22:40.080 --> 0:22:44.360 Krishna says he believes business technology spending will remain robust 0:22:44.720 --> 0:22:49.760 above GDP growth, including in Europe. This following pessimistic sentiment 0:22:49.880 --> 0:22:52.600