's big banks have gotten bigger as a result of dodd-frank, the small banks, community banks, credit unions, the credit providers for the entrepreneurs, the small businesses, the job creators in this country, they are fewer. that is a huge problem for the dynamism and -- of the economy and that's one of the reasons we haven't seen economic recovery the way that we should. dodd-frank has made it more difficult for small businesses and start-ups to obtain capital to grow, invest, and hire. before dodd-frank, small business lending was more than 150% of large bank lending. today due to dodd-frank, small bank lending is about 80% below that of large bank lending. this is why new business formation is at gean racialle low, because small businesses and start-ups and entrepreneurs they have much more success obtaining capital from community banks than wall street banks. financial services have been impaired. since dodd-frank the number of banks offering free checking has gone down. the ranks of the unbanked have gone up. one in five banks in my home state of kentucky have disappeared as a result o

the biggest banks, the most diversified banks. the only bad news we could find was most of the credit cards exposed providers. lobbyistse for the and big ceos. guy: to take that point on board, how do you follow this? it depends on what kind of investors get interested in what they ask for. if you believe that rates can rise, and even if you incorporate credit losses, the banks will still make a ton of money, may be should get involved. saying, why don't you merge? is there a quicker way to grow? is the market growing faster than we intended? investors have been too reliant on the passive idea to sit back and wait for money to flow. it depends on who is buying into the banks and what is their request for the next five years. in europe isy radically different to what it is in the and and it states. banks are on a european recovery. you have to be selective. you talked about the north-south in the european recovery story. if hilderbrand -- as hilderbrand says we are heading for a golden , you have to on them. what is different in eu

around the world federal reserve bank bank of england bank of japan european central bank was to make these loans to the purple. not for a billion dollars though they made loans of over fifteen trillion dollars to the bankers in america and the united kingdom and in europe to pay down on their bond deposits that were technically insolvent remember they said a smaller insolvency problem it's a liquidity problem even though it wasn't insolvency problem so my my my point being that central banks have another fifteen trillion dollars to create in this way yes they do so that's why i don't agree that this is the time for the financial ization bubble to implode to collapse i don't think it's time yet these banks have another fifteen trillion dollars to create the european central bank. bank of japan is a never ending fountain of free cash percent interest rate so this is a way to go he does say that financialization has done some interesting things namely new york city said if you look at it the brooklyn especially all this money has redevelop the city you live here the sixty's seventy's ei

i would also point to bank of america. as you have identified, another big winner this year with a big number a couple other regional banks. regents financial put up a strong number, over 11550 of earnings going back to shareholders this year a very strong number and discover financial, a credit card company doing a good job. everybody had strong numbers with the exception of capital one and wells fargo, they were a little bit less than expected. generally most banks came in better than expected with numbers and many of them came in at over 100% of earnings >> one quick point here, as you look at the banking seblgctor overall, if you want to look at relative strength and weak ps, wheweakness, where would you look who has the brightest outlook? >> monster banks with multiple sources of revenue are the better places to be and more attractive on a valuation basis, particularly bank of america and citi group as you pointed out in your opening about what's going on globally, i would say the economyglobally and volatility picks

broadly speaking, bank lending is up. when you look at slow growth, you look at 5 million to 8 million foreclosures, debt leveraging by overleveraged consumers, short-term pressures, and global chaos. host: dena is calling in from greensboro, -- tina is calling in from greensboro, north carolina on our democrat line. caller: how does the repeal of dodd frank regulations make america greater, especially when banks cannot police themselves and some of their practices led to the crash of the financial crash of the united states, the worst that i have seen in my lifetime? it seems as the republicans are willing to take the country and create some type of chaos for reasons unknown to me. will it have on the dodd frank act? money that is not tax really takes away from the betterment of our country. think that a lot of republicans would argue that they are freeing up capital and capital markets will to -- will invest and once you get the investment going, people will be hired. it is hard to tell a story in which access to financ

the swiss national bank, the ecb, the bank of england, the fed. what the bis would like them to achieve is becoming more difficult. vonnie: it feels like a pause time in economic data until the tea leaves say what they will. do traders take the summer off? richard: i am not sure they take the summer off, but we are probably in for some range bound markets over the next few months. the surprise now will be if the data starts to beat expectations in the u.s. everything seems to be softer. the survey data and hard data is not coming in as strongly as i think a lot of people thought it would at the beginning of the year. if that continues over the next few months -- and there is no reason to believe it would not are choppy and volatile -- we probably will not go anywhere before autumn. mark: carney speaks tomorrow. when i went away for a week, the month two-week u.k. interest 15 months. now at there is an interesting divide forming within the boe, isn't there? richard: i think the 33 months prognosis was a little too dovish. even if it was not there o

in new york state, banks such as the bank of green county, northeast community bank, lake shore savings bank, and many others throughout the empire state and throughout the country have been burdened by dodd-frank's nonsensical dividend waiver rules. my amendment cuts the red tape, restores the dividend waiver process to what it was prior to dodd-frank, and frees up capital to be re-invested in our communities. i ask my colleagues to support my amendment and i reserve the balance of my time. mr. ellison: i claim time in opposition, mr. chairman. the chair: the gentleman is recognized for five minutes. mr. ellison: mr. chairman, this amendment is another example of republicans choosing to prioritize the interests of corporate insiders over consumers. which is what the wrong choice act really symbolizes. we should not prevent regulators from addressing potential conflicts of interest, but instead let all shareholders have their voice be heard. while democrats stand ready to work on targeted reforms to help responsible community banks and credit unions, we will reject any ideological legis

their banks are banking abroad. they want their banks to be winners. they want the next j.p. morgan chase, the next one. i don't want them to have it. i think we should have it. they could buy us one day. we have got to be very careful when we talk about american business, what we want for american business and how important it is for the success of america, and not just us. but i put a lot of these companies in the same boat, ge and caterpillar. we have to compete, and we have to compete was very large, tough competitors globally. david: you have been running a bank, bank one and j.p. morgan, for about 16 years, so what is the greatest pleasure of doing this, running a bank? jamie: this is my contribution to making it a better world, is running a good j.p. morgan chase. i tell people that if i don't do a good job for j.p. morgan chase, i hurt the opportunities for our people. we can't be philanthropic. we can't grow. if i do a good job, we can do all those things. i'm not an artist. i'm not a tennis player. i'm not a musician. i'm not a politician. this is my contribution. d

banks are and european banks are. if you look at the biggest , they are laying out these plans for rewards for shareholders. raise suisse had to capital from shareholders and popular --en banko it shows the difference between strength, the difference in strength between the two banks. manus: that is donald griffin, investment bank reporter in london. let's talk about the central banks. we have been talking about the gathering, a cola singh, a meeting of minds around one message. the cost of borrowing will be higher. there has been a clear signal that the near zero interest rates were appropriate. mark carney suggested yesterday that the time may be nearing for an increase. the fed chair janet yellen said her policy tightening is on track. >> economic conditions have improved and [inaudible] experienced record profits. where in -- cautious about increasing investment, spending including investment. >> some removal of stimulus is likely to become necessary if continues tof listen. you can see the chart and plot your vie

's big banks have gotten bigger as a result of dodd-frank, the small banks, community banks, credit unions, the credit providers for the entrepreneurs, the small businesses, the job creators in this country, they are fewer. that is a huge problem for the dynamism and -- of the economy and that's one of the reasons we haven't seen economic recovery the way that we should. dodd-frank has made it more difficult for small businesses and start-ups to obtain capital to grow, invest, and hire. before dodd-frank, small business lending was more than 150% of large bank lending. today due to dodd-frank, small bank lending is about 80% below that of large bank lending. this is why new business formation is at gean racialle low, because small businesses and start-ups and entrepreneurs they have much more success obtaining capital from community banks than wall street banks. financial services have been impaired. since dodd-frank the number of banks offering free checking has gone down. the ranks of the unbanked have gone up. one in five banks in my home state of kentucky have disappeared as a result o

and the changing face of banking. this is what we've come to. less a cash machine than a mini bank. and coming up in the sport on bbc news, johanna konta prepares to carry british hopes at wimbledon as she continues her grass court preparations at eastbourne today. good afternoon and welcome to the bbc news at one. the internet giant google has been fined a record £2.1 billion by the european commission for putting its own online shopping services at the top of search results. it's the biggest fine in the commission's history. it said google had abused its market dominance. google now has 90 days to end the practice. more details from our technology correspondent rory cellanjones. but the name of something you might wa nt to but the name of something you might want to buy into google ‘s search engine and right at the top, up pops a helpful box with images of products. do it on a mobile phone and the images are even more prominent. every time you click on one of the adverts, the search giant aims money. it is called google shopping and now it has resulted in a record fine from eur

the european central bank, the bank of canada, the bank of japan, as they all come up at 9:30 a.m. eastern time. we will bring you the highlights and coverage of that event right there in portugal at the ecb forum. from new york city to our viewers worldwide, this is bloomberg. ♪ ♪ >> federal reserve officials draw attention -- apublicans delay a vote on health care bill. reaches cyber attack asia after hitting systems in europe. good morning. -- jonathan perera ferrero. -- suries >> a little bit more moderate when it comes to the euro-yen. technology the weakest performer over in europe. up and -- we are going to get the advanced goods trade announces for the month of may. to -- continue at 10:00, it is u.s. pending home sales numbers and 30 minutes later we will get weekly crude inventories. the federal reserve -- the -- not >>et yellen but i would not try to come in on appropriate valuations and long-termos depend on history. of course, there is uncertainty. it would be like hours long. john would hate it. the -- jeff rosenberg great to have you with us. >> federal reserve p

barclay's bank. the fca is considering a heavy fine. ba rclay‘s bank bank. the fca is considering a heavy fine. barclay's bank says it faces investigations in the us, as well. simon gompertz, bbc news. the former business secretary, sir vince cable, has become the first to throw his hat in the ring to replace tim farron as leader of the liberal democrats. after losing his seat in 2015, he has just returned as mp for twickenham in this month's general election. declaring his candidacy, he said he would work to secure a second referendum on any brexit deal. 180 families directly affected by the grenfell tower fire have now received more than £200,000 from the government. the payments were recorded by the newly formed grenfell response team which is now managing the official response and support operation to the tragedy. richard lister is at grenfell tower. whilst i am sure the money will be welcome richard but many questions for many families remain unanswered. yes, and work is continuing to get a nswe rs yes, and work is continuing to get a nswers to yes, an

the big banks don't pay attention to that, only community banks do. a couple years later with the help of these kinds of loans from these local banks, these so-called pipe dreams in these small towns and rural counties become successful businesses. they become job creators. these are the ultimate success stories that our communities in america are built upon. this is why the financial choice act is so important. it helps community banks and the small business that is absolutely depend on them, it helps them thrive. it protects consumers by increasing accountability and transparency over the wider financial sector. and it also repeals too big to fail. the rules codified by dodd-frank that have left taxpayers on the hook for too long. ultimately the financial choice act is a jobs bill. it is one that will bring hope back to main street. it is easy to talk about the economy and regular -- regulations as series of numbers. it is easy to talk in vague terms about job creators and small business owners, what is far more important is identifying the problems

in particularly for small banks and regional banks and community banks the regulatory burden has just become too expensive and unnecessary most of this can be done through the regulatory process and we don't need congress to send that okay. you don't need tturn this into a debate. we can get a lot of it done. we appreciate the approach to the choice act and we look for to legislation going through the senate. were very focused on what we can do for executive office -- action. we think we can unlock a big part of the community banking system and regional banks on these reforms. >> let's talk about that consumer financial bureau. you are proposing that the bureau lose its authority to examine financial firms on a continuing basis. was this just more bureaucracy? >> i think that is right. it is one of the few regulators that at the moment can't be removed by the president and at the moment doesn't have a board to oversee it. i think you know there is litigation about this we think it's improper, we take it's also improper that this is funded out of the fed. we think it should be funded b

a gauge of bank financial time. the move came after the german issues.ns the representatives for ubs and deutsche bank declined to comment. that is your bloomberg business flash. >> thank you very much. the secretary of state has weighed in on the qatar crisis and says that they will find it difficult to comply with some gulfds to end the diplomatic crisis. this could be a basis for talks. the diplomatic transport links have been closed and the oil markets are moving and responding to the global aspects. ands a slightly better bid we are joined now by blackrock. of equitieshe head and asset management. welcome. when i look at the oil price, i ive been away for a week and looked at the numbers. the issue is a debate and they cannot get oil off of the floor. rejuvenated and their pumping it out of the ground. range?trapped in a tiny what do you make of the oil markets? we look at the inflation prices and the history of the first oil well. 43.5 and we are in wee with the long-term and can talk about the oil prices and

banks earn. that is relative to europe. i think it is -- i think they are very much apples and pears. matt: speaking of apples and oranges -- ewen: apples and pears. matt: i see. that is a british thing i guess. in any case, not in the apple family are the tech stocks. i guess i am wrong about that if you think about the pond. the strongest performer. this is the stoxx 600 broken down by groups here over this year today. tech stocks, even with the horrible month they have had, have been the best performer. do you think they have run their -- do you think they have reached their limit? is this as far as they can go from here on out? ewen: there is some rotation and market leadership and one should respect the relationship between the relative performance of financials and the shape of the yield curve. the first few months this year, the yield curves were flattening. they were financially underperforming. we are seeing a reverse of that. short inness is very the financials. , that is ampanies big b

you also have the swiss national bank on thursday. en the bank of japan on thursday. for what to watch, we have michael mckee. he s&p will be interesting, but the focus will be on the big three and it's not going anywhere. take the bojcan off the table as they admitted they will not be making changes for quite some time. or was advised that they should start their communications process for one they might want to start tapering, but that is still somewhere down the road. not any change is expected there. it is the united states where the moves are going to come because they are going to be raising interest rates again. we know that is going to happen. becomestion what do they do after that? the big going on and i brought a chart showing this on whether or not the economy is slowing down and whether the fed wants to stay on that path. you look at the surprise index ended is falling off. you can see the bloomberg financial index and it means as it goes higher, conditions are easier. the market is not pricing in any fed tightening even though you can see the fed tighteni

and the us banks and the uk banks, they both have a lot of money. but if you live at the eurozone as a whole, we say it is getting better and the economy is getting better. but when we look at the eurozone as a whole, we see germany getting better and the germany getting better and the german economy is incredibly strong. what about spain? spain is doing pretty well. much better from an incredibly low point. and france. it is not totally germany, is it? not totally but if you look at the finance minister of germany, he is co nsta ntly finance minister of germany, he is constantly asking the ecb to remove the stimulus that is helping them, because there are fears that the german economy will overheat. there is that imbalance, divergences across the board, and there is a fear of picking a problem down the road fear of picking a problem down the roa d a cross fear of picking a problem down the road across the eurozone which we have been doing for ten years. thank you. still to come: cleaning up after industry and its mistakes. we're talking to the boss

banks to ensure that the bank of dandong does not access the u.s. financial system directly or indirectly through other foreign banks. this action reaffirms the treasury department's commitment to ensure that north korea is cut off from the u.s. financial system. in addition, the department of treasury's office of foreign asset control has sanctioned two individuals and one entity for their continued support of north korea's activities. while today's actions are directed at chinese individuals and entities, we look forward to continuing to work closely with the government of china to stop illicit financing involving north korea. we are in no way targeting china with these actions. we will be meeting with china and other countries at the g20 next week to further our efforts to cut off north korea's illicit activities. north korea's provocative, destabilizing and inhumane behavior will not be tolerated. we are committed to targeting north korea's external enablers and maximizing economic pressure on the regime until it ceases its nuclear and ballistic

go back to the european banks. you have a place where you get the growth that is forcing the banks to say we may have missed the inflation trade, this is where you want to be exposed you want to be exposed to the banks that have the most leverage in the economy. >> our next guest is the biggest on wall street they have a very optimistic 11 of 700 the s&p would be higher from about 10%. >> it probably happened before january if it's going to happen. >> what are drives this 10% rise >> it's funny because we were talking about 27% and now we are 10% closer the earnings story has been spectacular. 13 to 14% earnings growth. how do we get the next 10% earnings growth and multiple expansion. the push back i get is on the multiple expansion side. we have better growth in earnings as well as economy. interest rates are a core part of the call. what happened yesterday as we will get to in a minute, i have been saying for a long time, the only way that rates can go up. that's a 5 and a quarter inverted 19 times. this is the

this is the third such banking failure in the yearin third such banking failure in the year in italy, after another bank needed a state bailout around christmas. that was a loud that bank was deemed vital to the overall functioning of the italian banking system. the question now is, is this enough to stabilise italy's indebted banking system ? enough to stabilise italy's indebted banking system? 0r enough to stabilise italy's indebted banking system? or is this just the start? when the billionaire president meets the prime minister of a billion people, the growing trade and business ties betweens their countries will be at the top of their agenda. while donald trump oversees the world's biggest economy, india's narendra modi, is in charge of of the world's fastest growing economy. last year india sold $46 billion worth of goods to the united states, more than anywhere else. but it was also more than as much as india bought from the us. but that imbalance might be changing. since the turn of the millennium, the number of high income households in india has grown more than fivefold. as

a european bank fails. we start with the big issue, another political surprise in the u.k. >> it is very, very surprising. >> the old rules don't apply anymore. >> i have to refresh my screen. >> there are a few bleary eyes eyesere are a few blurry in london today, and maybe a few surprised faces. i think with the business community wants to see is the economy at the top of the agenda. >> it was always obvious that this unnecessary, reckless austerity was going to have an impact, and that is what it seems to have done. we will see going forward. -- it hasing is it is weakened her hand in these brexit negotiations. >> the conservative party has a right under the constitution. she has no legitimacy at all. >> she is, effectively, a lame duck. this will make it difficult to bargain hard. jonathan: let's bring in our roundtable. around the table with me in london are our guests. we have a guest joining us from california. guys, great to have you with us on the program. we begin with the e.u. go function on the

bank of america -- both america, and bank of the expectation was for big payouts. bank of america saying they would buyback 12 billion in shares, boosting dividends to $.12 a share. investors were paying attention to wells fargo as a risk factor that they might offshore in the wake of their accounting scandal. but no, they joined the party, boosting the dividend by 3%. the plan was for an $11.5 billion buyback. all of it setting up for a very strong thursday for banks. it is in a very strong week for banks as they tried to be a part of this. the surprise was the capital one test results. it is conditional, they have to resubmit. what in particular was the take away from that one? su: they did not identify material risks, which is what the fed wanted them to do. they need to shore up their risk oversight, resubmit a plan at the end of the year. there was a lot of after-hours activity here and they were down initially by the end of the extended session. the concern was that they did not identify these risks, ordered them to resubmit and broadly said banks are expecte

julia: it is not all about american banks, but european banks that operate in the u.s. there have been gains over the last two years. dividends holdings, of the $5 million. several years of the fun and games now they are announcing they will push capital out to shareholders. yalman: yes, they kept trailing, the qualitative portion. the models were great. which meant that even though qualitative, they cannot send money back to their parent company of spain. was not onsantander the qualitative group or part of the 13 banks that fall under that. thus, we knew they would pass. the quantitative numbers were good. not surprising they are giving money back to spain. scarlet: wells fargo getting no objection to their capital plan, they are seeing a boost of $.39 a share from the previous $.38. that was a little bit of a surprise. if anything, analysts were saying wells fargo might be more vulnerable to more scrutiny because of the fraudulent accounts scandals. yalman: very similar to capital one. they had issues. wells fargo's were a bigger scandal. we talked about it for a lon

drag at the european central bank. more money matters coming up next coincidentally including a look at where the increases in the minimum wage really make any real difference to people's. fears will people been saying about rejected in the recession. it's full on. the only show i go out of my way to. the really packs a punch. john oliver a party america is doing the same we are apparently better than. the sea people you've never heard of love back to the night president of the world bank so take. me seriously send us an e-mail. what politicians do. they put themselves on the line to get accepted or rejected. so when you want to be president i'm sure. some one of. the two going to be able to like them before three of them or ten people. i'm interested always in the water. for shit. i'm lindsey francis boom bust broadcasting around the world from here in washington d.c. tonight's end of the road japanese air bag maker to cut off files for bankruptcy protection as it faces billions of dollars in liabilities in relation t

whether it is the european central bank, bank of england, throw in the bank of canada as well -- across the board, expectations increased off of a loaded central-bank speech. margaret patel, do we have a market that is more in line with the direction of the central many, that in the words misjudge the speech? margaret: no, i think the banks will maintain the dovish posture. we have seen this pattern before with strong talk and weak action. it was a momentary reaction to the markets but i don't think it will be material change in rates. jonathan: my colleagues here at bloomberg news in london are pointing out that there is a strange paradox at the moment, more inflation expectations are diminishing or completely rolling over, and yet central banks are redefining and recalibrating the reaction at the same time. i have on my screen a charge related to the central discussion -- inflation breaks even in the eurozone as compared has beenthe bund trading, and if you look at the reaction for the last two weeks or so, you can see the increase in inflation expectations. the reaction in bunds has

a bank stone gate bank ride exactly because are they above bar is not some kind of wacky you know miami vice type thing now that's the whole point zero point is still gave bank. you know got the pools most back to do business with cuba the first place i'll be obviously is so you have a fishy history how and how can i say there's there well they all say that they're above board they're ok aboveboard well we got to go and i think other times report got it right pleasure for this edition of the tabs or follows me mast as a station i would like to thank our guests of area from cuba ventures corporate generators on twitter it's time to report and so on next time hasta la vista baby. i don't know what it will be well how it's because you're one of them. coming up on the hard see millions of american voters data on line we'll tell you who is behind this massive trove and what it means for your personal information. and aim for. when your man is arrested for the beating death of a muslim teenager we'll tell you why investigators won't call it a hate crime and so many disagree. then later on the

less a cash machine than a mini bank. on these ones, you can even open a bank account. signing your name, it will take my photo as welljust to prove that it's me. you will be able to see and talk to bank you will be able to see and talk to ba n k staff you will be able to see and talk to bank staff directly on the screen and take out money using your mobile phone. you do not have to have the card. so we are light—years ahead of yea rs card. so we are light—years ahead of years ago but is this the kind of banking that we actually want? doing are banking on mobile phones, la pto ps, are banking on mobile phones, laptops, why do i need to do it as a cash machine? you're not the only user, there are other users. a machine is a piece of real estate and what can you do with real estate thatis and what can you do with real estate that is expensive, how can you bring more things into it. it is a piece of real estate which changed our lives because you didn't have to worry about when the banks might open. now cash itself is under threat from contactless cards and smartphones

banks. >> you can see shares up 3% after the bank absorbed good assets from lenlders as part of the deal 4.8 billion euros to keep its capital ratio. they say it is fully neutral in terms of the ratio and dividend policy we have spoken to a range of experts about intesa some say they could have approached in a slightly different way, most positive about the latest effort to clean up the financial system. >> what the government did this time was really to use money to safeguard the senior bondholders. i think at this stage could have been different choices. >> such as >> it would not have undermined financial stability, i think overall this decision is positive although -- it reduces uncertainty. >> they're slightly caught. they have to exaggerate the significance to get away with state aid. in a sense, they have to talk up potential disaster, otherwise they wouldn't be able to take the action they're taking. thank god we're getting pragmatism here. i can't help but think, when did tim geithn

you suspend coupon payments before the bank fails to keep the bank functioning. week?as it this what was the take away from the first real workout for the securities? >> scott is right. if you think about what risk you are taking, you are getting paid a high interest rate. these are contingent convertibles, which means they convert into equity as a bondholder at exactly the wrong time. when the bank or institution is in trouble, these bonds get converted to equity and you potentially lose capital, but that is the nature of these bonds and investors have to understand they are getting paid a huge amount of premium to buy how debt, and the pace and quickly it happened, something like $2.2 billion of cocos have lost their value, i think people need to be aware of of what they are getting into. jonathan: well was can you do this with the bank that is too big to fail? can you do this in italy, where are noters of cocos institutional investors? is the point. how do you test the wider market. they were held in a restricted number of accounts. that havethe ones been heavily so

focus on the pound on comments from bank of carney. >> bank of carney. >> bank of england, mark carney. >> he would love to be called bank of carney the bank of england's mark carney says now is not the time to raise interest rates. he warned of weak wage growth and a potential hit to incomes as britain begins talks to leave the eu >> before long we will all begin to find out the extent to which brexit is a gentle stroll along a smooth path towards the land of cake and consumption. but whatever happens, monetary policy will be set to return inflation sustainably to target while supporting as best it can the necessary adjustments in the economy. >> carney says depending on how brexit talks progress, businesses may need to activate contingency plans. >>> speaking of brexit talks, david davis heads to spain today to meet with members of the government the uk brexit secretary began formal negotiations with the eu yesterday in what's being called an early concession the uk agreed to brussels' demands on the sequencing of talks, meaning trade negotiations will have to wait until other key is

what you're seeing is banks are doing quite well. despite spain, banks up 1.3%. chemicals down by .3%. santander is taking over banco popular. they're buying it for the symbolic price of 1 euro. santander says the popular brand will completely disappear in the deal. pimlico is also wrapped up in this deal. they're the largest holder of the bank's riskiest debt with 279 million euros. karen has been breaking the story all morning long. to me, karen, it seems like this is a banco popular specific story. it didn't send shock waves through the industry, right? >> it is a specific story but it talks about bank rescues here. it is a private twist, a private sector bailout. very interesting when you talk about the direction for rescues here in europe. the other big point here, you mentioned symbolic amount, 1 euro was the buyout price. santander has to reach into its pocket to provide provisions for popular. there is a cost percent. you might ask, you know, what is in it for santander. the argument is from 2019 onward it starts to generate profit. it bolsters the share

our top trade, bank shock. why one well known marketwatcher says that space too treacherous to invest in. you'll hear from him live in just a moment. with us josh brown, john terranova, erin brown with us as well. let's begin with the banks. the red flags, some executives are raising on that space. words of warning that sent many of those stocks selling off this week. they are higher today. markets setting new highs. it does raise questions about whether many of the biggest names are simply worth your money or not. doc, you've been talking about the banks being a good place to be. jpmorgan's cfo starting this yesterday whether brian moynihan, morgan stanley sounding the same sort of alarms. why should investors be in these stocks? >> you should wait for a moment like yesterday in goldman sachs and you see a $7 or $8 collapse. that happens. it happens in great stocks, jpmorgan, whether it's the whale. yesterday it was reaction to the venezuelan bonds that goldman sachs purchased for 31 cents on the dollar. peopl

banks. >> yes, it feels early to be extrapolating quit so much i think there's also a bit of contagion generally that is less on the face of it stress in the financial sector but on top of that, i would say the comments from draghi, maybe seeing interest margins improve with the fact that interest rates might improve and obviously we've seen gilt yields rise that helps >> i'll come to the draghi and carney comments in a bit i want to dwell on what happened with the u.s. banks. after hours and during the session we saw a jump up because 1$100 billion will be returned o shareholders i wonder whether this rally based on the capital return story has legs we saw the rally, the rally based on deregulation and corporate tax cuts coming off the boil quite a bit if we get no sustainable, no substantive tax reform, do you think bank stocks can continue to rally >> clearly reform has been a nice tailwind. i think fundamentally, it's the improvement in the margins if interest rates continue to rise in t

central bank. not so. they are looking at an agenda, which is what we criticized greens bank for not having many years ago. guy: what is interesting is, in some ways, central bank are doing this for different reasons. carney was out yesterday and we will hear from him later on as well, talking about pockets of concern within the u.k. surrounding credit cards, car finances, etc. it is not clear that there are threads that joined the central banks together. it is an individual their attempt that in aggregate makes sense. >> i think this is coincidental policy. i agree we have seen a shift, but every central bank is acting for a different reason. the economy in canada has been picking up this year, and the macroeconomy got worried about the home capital problems and possibly, the property market. overall though, the economy is doing well and it makes sense that it turned hawkish. as george said, the ecb is getting closer to tapering more aggressively than we thought, but it is nothing too massive. tom

money to than any other learned, and that bank is deutsche bank. a major reason he owes they will hundreds of millions of dollars is because for a long time, deutsche bank was pretty much the only bank that would still do business with him. during his decades in the new i don't work real estate world, donald trump became notorious for reneging on his financial obligations for failing to pay back loans. i'm not saying whether that's good business or bad business but that's famously the way he did business to the point every bank in new york refused to take him on as a customer anymore, except one. except for deutsche bank. and the weird thing about that, by all appearances, deutsche bank had just as much reason to want to be rid of him as customer as the other banks did, maybe even more so. less than a decade ago, not only did trump fail to pay deutsche bank over $330 million he owed them on a loan for trump tower in chicago. when they tried to collect only loan, he turned around and sued them. he claimed it was their fault that the apartments in hi

they're prepared to these banks. this is all sold to get for you. this is money that's been taken from our pockets why should we have to worry about saving the failing banks there are so many other priorities ospital schools and small businesses are in crisis if politicians want to help the telling economy they should start with the middle class not saving the banks we've had enough no no it's not right the banks do not deserve to be given this money the people who made the banks fail should be held responsible because a lot of these civil i am very angry about the situation i work hard to earn money we can't go on like this you know complimenting more it's completely immoral we're all angry because really being shit will hit a bank manager should take responsibility for the failure not small time savers let me. go to school it's and he will get some help from the country's biggest retailer by contest has some power which is going to take all the good assets the rest those big golf into a toxic at taxpayers' expense

banks will have fewer people running the banks. it is going to be a lot more machines and technology. >> to rewind up seeing that in the short term though, what is the next catalyst? what have we priced in in terms of that deregulation story? tom: any sector, probably. alix: i'm talking about financials. tom: i don't know, david, do you have any thoughts on that? [laughter] i mean, one of the issues of the total capital requirements and the multiple levels of capital requirements and the stress tests, all result in this pilot of capital. it is hard to get a mortgage. psycho standards are still -- fico standards are still quite high. there will be a fair amount of pressure to get back into some sanity. we cannot say the only way you can get a loan is to prove you don't need it. there has to be a better middle ground here. there will be a lot of push to try to bring more sanity there. there is some easing off into mortgage areas. >> thank you so much david kelly and tom lee. they will both be staying with us. 9, 19 here in new york a

banks bracing for a cash squeeze. go back live to the ubs and chinese manufacturing association of hong kong event. stephen engle joining us again. good to see you. to get some real insight into the chinese banking system. we have been talking about the differing views we get from both worlds, the western view of china and the internal view of china. how bad is this debt pile and how much goodwill this deleveraging campaign half on the chinese economy, let's put these questions to the luminary in this field, the senior fellow at the asia global institute, chief aide pfizer to the cbrc, also a former central banker and financial regulator. you have the credentials. what is the risk in the chinese economy to its massive debt pile? >> i think you need to understand china from the viewpoint of the whole global context. the whole world is changing very fast indeed, and china is moving from an old the supply chain of energy, resource consuming andstries to provide goods services, mostly physical goods to the rest of the wor

currently the banks down in syd ney fall. currently the banks down in sydney trading. to tell us more about this downgrade and the outlook for the banking sector, i'm joined 110w for the banking sector, i'm joined now from moody ‘s. frank, great to have us. so, 12 banks have been downgraded. what will it take to improve ratings again? we need to see a period of relative stability. we need to see a period where income sta rts we need to see a period where income starts to write in household debt does not increase of march. that gives households a chance to reduce their leveraged and if those mortgages start to perform in line with expectations, then that is of benefit to the banks. if that trend continues for a while then there could be upward pressure on bank ratings. how long will these banks ta ke to ratings. how long will these banks take to get back to that level? i think it will take some time. if you look at at forward projects and is and predictions for income growth, it takes a while, even at the current levels of debt, just to bring the leveraged down. you n

up top, we have the bank stocks, the s&p 500 bank index, up about 5%. i was told these bank stocks are still overbought, so we could see selling for a few more weeks yet. we have more life to go, vonnie. vonnie: abigail doolittle, thank you for that. time now for significant stories to talk about. you walk us through the stories is bloomberg's m&a reporter alex sherman. alex: walgreens had a deal with right aid that has been kicking around through the sec, deciding to they've it will not even wait to hear back from the sec to find out whether or not this deal will go through. instead, they reached a new deal buy friday --- rite aid to 2200 stores for $5 billion. walgreens is getting in front of the regulatory decision by doing this. they pay a $325 million .ermination fee to rite aid most of the stores in the northeast and mid-atlantic region. what happens to rite-aid now is the big story carried they are left with about half their stores and no clear plan forward here. another company to take a look at today has spread -- a little-known drugstore -- an

he says that banks are getting cheaper, banco popular only 1 he says that banks are getting cheaper, banco popular only1 euro. he says this underlines the risk of that banks face and the desperate need to recapitalise. indeed. we have been seeing these problems in the banking sector going back to northern rock in the uk, although we had a liquidity crisis which has been one of the problems for this particular bank. and there are still ongoing concerns. and for viewers in spain, the european commission is at pains to say that their deposits are safe. indeed. that is the message we are getting, that the supervisory mechanism across europe is doing what it should do in terms of making sure, and guaranteeing that a failing bank is taking over by another one, well funded institution such as santander so that investors will see their deposits maintained. we note that there will be no uncertainty in that context. jeremy is coming back later. two. to us about other stories. —— to talk to us. still to come, build it and they'll come. we get the inside track on dubai's latest building boom

the central bank saying they will remove -- or the central bank buying fewer bonds? think it is all in the turning point in the message around that. they reached the point where they have to make a choice. the ecb has managed to take the and setn and rates down the foundations of the economy normalizing with massive on purchases and negative rates. roada small turn in the means they have to start signaling that they are making a choice here it in the currency market, if you have got negative they areon buying, saying we will have to choose normalization and the currency will have to be allowed to move. jonathan: if the currency is allowed to move, let's take removehis, if they accommodation, if you just look at where inflation is now, where is the evidence that is nation will be durable and self sustained, given that the labor market is not delivering the goods in the way it should be? >> i do not think there is much evidence at all that inflation is coming back in a sustainable way. but i think the pressure on the ecb is to start normalizing policies. the extraordin

it could be a bank. that is something we are very carefully looking at at the moment. >> france, luxembourg permanent -- luxembourg, germany? we don't need to put a flag in any specific place. it is more about finding the right institution that is the right fit with the right regulatory environment that allows you to expand into investment banking. >> you think london could lose its competitive advantage? >> absolutely. london is to start with a very expensive place. start to open the door and people are starting to leave the place, it is going to lose. the play's works, people speak english and everybody is there. change, that starts to it is gone. >> that was the interview with michael lowy. you can get that story and many more you need to get your day going in this days iteration of daybreak. it is also available on mobile in the bloomberg anywhere app. you only get the news on the industries and assets that you care about. this is bloomberg. ♪ >> this is daybreak asia. i am betty lou in new york. >