morgan stanley outpaces goldman sachs. the central bank is examining options to wind down qb in september. from new york city, good morning and a warm welcome to "bloomberg daybreak." i'm jonathan ferro alongside david westin and alix steel. let's get you up to speed very quickly. the story in the markets is that futures positive. the euro-dollar moves back from a 2017 high. some telestrate and some euro weakness and of the ecb decision tomorrow. treasuries go nowhere. the yield on the 10 years to is 2.26. alix: morgan stanley -- the call is going under right now. we know that the vix came in better than estimated. here's what we're learning from the call. the deposit rate is lower than i thought. as the fed hikes rates, they do not have to pass those on to consumers. they can pocket that difference. in light of that come you wind up having the cfo saying that there is good growth in net interest income. also putting out that there is less volatility and a bigger trading band for commodities, but they have a benefit with f

we also got news today about morgan's emily -- morgan stanley's location. it is going to pick frankfurt as the e.u. trading hub. what can we take away from that in terms of what some of the other banks might do, perhaps? laura: some of the other banks may choose langford. when i talk to different bankers, with a talk about his frankfurt, paris, -- talk about is frankfurt, paris, luxenberg. a lot of these banks already have a banking license in dublin. when you have these four different areas and frankfurt, i been, theys always don't have good schools for my kids, not as much to do, the nightlife is and is great, which is something people think about when you are moving wholesale these entire units. if you have somebody like morgan stanley going and saying we are probably going to be picking frankfurt, then you start to have more of a banking community and there will be others who choose that as well. julie: interesting. we shall see. thank you so much laura keller. still ahead, what could help media companies cut costs, gain negotiating leverage, and expand

liz: we have breaking news on morgan stanley. credit suisse just raised the price target on morgan from 47 to 49 and right now morgan stanley is at $46.70. and look at goldman. it is down about a quarter of a percent. goldman always sort of the crown-wearer, certainly when it came between market cap between the two but just moments ago morgan touched the same level when it comes to market cap. charlie gasparino, now it is slightly below but what you does this really mean? >> what do we talk about when we say market cap? the market value how much your company is worth based on shares and what the price is. this is a big barometer of a company's wealth. just a few minutes ago we checked it was morgan stanley having, with a market cap of 85.7. goldman sachs with a market cap of 95.9. liz: morgan has gone up to 86.3. goldman, 86-point. it is neck-and-neck. that was the first time in a decade that morgan stanley pete goldman in market cap. they have not been that close over the decade. since 2006, particularly in 2006, right after the

. >> let's get to morgan stanley better than expected quarterly results. trading revenue down one jp morgan down 14 and goldman down 17. >> let's revel in what james gorman has been able to do the mojo is clearly back here. they have quadrupled wealth management it's up from $1 billion a year to $1 billion a quarter. he joined in 2006 and they were doing $300 million pretax in wealth management. do you know they now do that in four weeks this is a model that works. >> that sort of helps. it's not like it's all been organic. i'm just saying. the strategy is one you're clearly applauding it's being rewarded in the marketplace. >> i am applauding the fit was good it was only down a little less than goldmans and david, i think that you have to -- the higher multiple is coming this should not be at 12 times earnings you're going to say they're going out the door every morning in the elevator. >> right they have been talking about this higher multiple for a long time. recurring revenue from wealth management and it's deserving of it but they still have a lot of

we really like morgan stanley still. great storyy have a around earnings as they benefit from higher acid levels. i think that's a name we would focus on. more broadly you'd have to be picking your spots after some nice moves. ryan, i want to show our viewers something particularly exciting. it's a new function we have on the bloomberg. typeu look at equity and gp tv you will see a list of stories related to that particular company. check in on the first word news. here's emma chandra. >> president trump had a second meeting with vladimir putin at last week's g20 summit. said they hade previously undisclosed conversation during a dinner for global leaders. said theia group's meeting lasted over an hour and the only other person present was prudence translator -- putin's translator. >> never have i seen two major countries with a constellation of national interests that are as dissident while the leaders seem to be doing everything possible to make nice and be close to each other. that's what people don't understand. >> p

stanley by a lot >> yeah, it is obviously morgan stanley made a major, major play in that area the whole company took a bet on investment management, wealth management, and it is paying off in a major fashion but i'm a believer in investment banking. i think investment banking is where the future is for the financial services industry and i think the investment bankers should be running that company >> what i'd say to dick and to jim is that clearly, dick, your comments put a target on mr. blankfein's back i think that there will be a target on the people who ran fixed income commodities trading, currencies, and all the rest at goldman sachs. i don't think this takes down lloyd. i think one of the people who are in charge of those divisions are worried right now after this report they were worried before report, and they're worried now. >> here's a point that we haven't brought up, which is that lloyd blankfein and gary cohn are very close. if suddenly there's this move under foot to undermine lloyd blankfein, seems to me as a shareholders and director of the company, we should think is

morgan stanley was the heed underwrite for snap, responsible for taking the company public. back in late march, the first analyst gave it a $28 price target shares only down 30% since then. shocking the proukt is not evolving quick enough. they got competition coming from facebook who tried to acquire them a while back. no doubt they're under facebook. setting up for an interesting trading opportunity here, no question the company on the street, numbers down, they couldn't blow q2 if they blow the first two quarters, it's lights out. you look at the morgan stanley downgrade today, is it catalyst for shares to go lower it's a set up for buy into earnings when they report on august 15th. when is the lock up expiration in august? >> in my opinion, less of a threat here. the threat is the lock up comes off and you've got a disappointing q2 they need to make sure they beat street expectations. >> some say the card that will sin was blowing q1 >> yeah, that's a bad one. high profile one like that and come out of the gate because you could see it though in the s1, some of the metri

happens to be at morgan stanley. reporter: former lawyer, now banker at morgan stanley. happened to be joined by david rosewater. thanks for being here. global head of corporate defense at morgan stanley. a good day to have you. with the news that nelson pelt looking to get a board seat at procter & gamble. the largest committee company ever to face a potential proxy fight here. i'm curious, is this a trend or the targets just getting bigger and bigger? do we expect the targets to get bigger and bigger among the top activists? >> i think so. it's one of the trends we're seeing in recent particularly year or 18 months. the targets are getting bigger. if you look at the activity level that we're seeing among large companies, it's at all-time highs on an annualized basis. you just see very, very large companies, you had potential activist situations at g.m. and that was a full proxy contest. you had at bristol-myers. you see necessarily. lots of other ones. so big -- nestle. lots of other ones. big companies have been v

he is killing it at morgan stanley as well so we are looking at morgan stanley earnings to come up and sometimes come up early. james gorman is very unpredictable. that is how i would put it. tv , we are bringing it up for you. isyou have a bloomberg this how you watch tv live but way more important than watching my ugly face live, you can come over here and you can click up francine lacqua is killer chart on chinese steel production bonus round. you can steal francine lacqua's brilliant chart. i say you could steal them. this is bloomberg. ♪ tom: bloomberg surveillance. banks derby. here is the bank chart. we have shown this for 10 years, the collapse of for banks down to the same place. what a difference in recovery. this is something bloomberg has followed for years. the late great mark bittman giving us guidance on the mortgage debacle. jpmorgan of here in white, wells fargo stagecoach in yellow, citigroup can barely get it going with no lift and i will give brian moynahan some credit with the lift up here. christine harper joins us now, executive editor and someone who has g

scarlet: so of all the things we can look ahead to, we have morgan stanley results due out tomorrow. what do the goldman results suggest or is that not a fair comparison because they focus on different parts of trading? guest: i dig is a fair comparison. it is worth noting the commodities business, morgan stanley has largely gotten out of that or they have gotten much smaller there, so you probably won't see that showing up tomorrow. in the first order, morgan stanley have higher revenue from fixed trading than goldman for the first time since 2011. you could see a second straight quarter of morgan stanley outpacing that quarter which has a lot of wall street talking and there is some schadenfreude and we will see. all of the bond trading businesses on wall street are not doing well. if goldman was down 15% or 20%, no one would he talking about -- we would be talking less about it. much.t: thank you so fora: coming up, a slamdunk king james. his restaurant stock in blaze pizza is heating up. this is bloomberg. ♪ scarlet: this is bloomberg markets. let head over to abigail doolittle

we are expecting morgan stanley earnings later this morning. so far whenever we have gotten the reports no matter what earnings have been, for the most part they've been good with the exception of a couple lines of misses within various earnings reports, the stocks trade lower. >> what you said is correct. the financials are beating and we're seeing positive growth, especially in the banks and in the capital markets. the consumer finance is under pressure overall the earnings are good. so investors are reacting negatively to that i think financials are a great spot to be in. we have not seen tax cuts. we have not seen the trump agenda taking place. when we do, i think financials are going to be a great spot >> let's assume the trump agenda doesn't happen it's hard to trade on the promise of policy, especially in an environment which we're seeing now taking that out, all the reasons that have lined up, c-car with 90 billion there buybacks to come, what are the reasons to be here, the stocks are faltering on the release of earnings >> well, the e

vonnie: morgan stanley has reason to celebrate. traders posted more fixed income revenue than goldman sachs. the smallest drop among the top five u.s. investment banks. how did morgan stanley managed to better than goldman? >> one of the things we were highlighted in the choices of writing was the commodities sector. this is something morgan stanley has largely gotten out of. interestingly enough, goldman sachs did not exactly say we had a terrible loss in commodities. >> they said it was the worst quarter ever. >> maybe not a lot, but certainly bad. that could be one of theforwardg on a very narrow things. one other item that morgan stanley talk about in terms of fixed income was they had the rates, they are not good for them. >> the bank of japan. as expected, they took no steps to downgrade their aggressive program. >> to central bank acknowledged it was the being too optimistic with 2% inflation target. >> the date for when they will hit of the 2% target around april 2019 which is pushing it a year. their quantitative easing, t

i don't know with morgan stanley, but we will see. lea: let talk about what we hear from bank executives in earnings reports from financial corporations see in a positive impact the fed's announcement to rate hikes again. the announcement back in june. your normal mainstream people are not seeing more return on their checking accounts. right now it's 100 bucks they have in the checking account. when will they see more of her return for what they have? >> it's awfully tough because the interest rates came down so close to zero that the gap between for money and what they provide and pay in interest. do we have to see interest rates return to a more normal level, which is what the overriding monetary policy right now is normalization, which is a little bit higher in short-term rates. lea: thank you for your insight this morning. good to see you. >> good to be with you. lori: coming up in sports, los angeles dodgers barely beat the white sox and the new york yankees. we will tell you that they got. british make her french's mustard -- [i

morgan stanley topping its biggest competitor, goldman sachs, for a second straight quarter. in one of wall street's most hotly contested arenas. a new bloomberg poll finds that fewer than one third trust bank executives and billionaires. in politics, president donald trump trying to rally republican support at a lunch with senators taking place right now. could the health care impasse leave the president without any legislative victories for 2017? let's get up to speed here. two hoursts close in time. >> we have the s&p 500 and the nasdaq trading at record highs. the nasdaq up for a ninth day in a row. some bullish action for the major averages. the dow up the least, up .2%. near session highs. some bullish action as earning season is getting underway. stick to the tech heavy nasdaq and the nine-day winning streak. cap tech -- the month of july has been very kind for technology and for the nasdaq. that pullback has been erased. june being the first down month for the nasdaq in eight months has also been erased. the certainty and bullishness for the highflying sector back on.

. >> morgan stanley has reason to celebrate. for the second straight quarter the bond traders posted more , fixed income revenue than its larger rival goldman sachs. ,they also reported the smallest drop among the top five u.s. investment banks. how did morgan stanley managed to do better than goldman yet again? >> one of the things we were highlighting in the stories we were writing was the commodities sector. this is something morgan stanley has largely gotten out of. interestingly enough, goldman sachs did not exactly say we had a terrible loss in commodities. >> they said it was the worst quarter ever. >> maybe not a lot, but certainly bad. >> not good. >> yeah. that could be one of the things. one other item that morgan stanley talk about in terms of fixed income was they had the rates, they are not good for them. but fx was something that did offset that. >> the bank of japan. as expected, they took no steps to scale back their aggressive program. they are looking for the exit. >> the central bank did acknowledge it was th

this is something morgan stanley has largely gotten out of. interestingly enough, goldman sachs didn't say we had a terrible loss in commodities. anchor: wasn't of the worst quarter ever for commodities? reporter: right, maybe not a loss -- anchor: but not good. reporter: one other item was that they've got the rates that did offset that. ♪ the bank of japan, as expected, took no steps to dial back their aggressive monetary stimulus program as other central banks around the world are looking for the exit. anchor: but the bank did surprise biotechnology it was too optimistic on achieving its 2% inflation -- did surprise by admitting it was too optimistic on achieving its 2% inflation target. risks.e are a number of there are the tax hike schedules for 2019. it is pretty bad timing. i think it would be best if the government delayed the consumption tax again. another is much bigger, much more important, the ability of prime minister oabe. we have seen the decline of prime minister abe's approval. is that goes, there goes the support for the ba

that's something but we do at morgan stanley is balance that risk. a lot of the funds, we strip at that interest rate component and isolate the credit component. in some cases, when we look at spreads and yields, they can be attractive for a. period of time. jonathan: d.c. the risk around it. ? guest: when i look at high-yield, you are taking fundamental credit risk. that's how you lose money. longertter to have a duration risk in height yields because it is not in the risk of rates. 360 basis points, which i don't think is coming and when you look at the default rate at 2%, that is a low risk market. you are gain paid to extended duration. jonathan: i get the rest of the last 10 years has been interbank policy. his central bank still your friend? guest: they are certainly going the wrong way to be good friends. with the federal reserve tightening, the next step the ecb tightening. about they unclear next step for the boe. the only front we have is over in asia, the bank of japan, for the most part right now. that said, whether a central bank is supp

analyzed morgan stanley. let's start with you.

still with us from new york, our guest from morgan stanley and wells fargo. you are talking about this, the story of covenant light in the junk bond space. walk me through it and whether we should be concerned about appeared -- about it. >> it is the kind of protection that the bond investors get, so over the last several years we have seen a gradual deterioration in the quality of the covenants and today in the high-yield bond market and alone market, quality deterioration is substantial. for example, the covenant light is a big what is. and what you pointed out, the moody has a quality index that has reached the weakest point in june. without a doubt, quality has deteriorated. what are the implications? one when you weaken the covenant, the likelihood of default. default occurs and it gets pushed out further. when the default does occur, postyou have in a company, default recovery is going to be lower than fully recovered bonds. the prospect for recovery, in the event of default, remember we are talking about high-yield companies so their frequency for defa

. >> morgan stanley had a good quarter at the expense of goldman. morgan stanley did well in. mick mull vai had a call out saying it was time for leadership. he went back a decade and showed top line and bottom line at goldman have not climbed higher in that time. >> this has been a period where they have done fabulous as well. >> there is a lot of those goldman sachs people in the white house. i want to talk about general levels on the market. we do keep setting records. most of people are happy but i'm anxious and nervous about what's to come. when you look at the balance of the year, in october people get anandd get antsy. >> a lot of people are concerned the healthcare package didn't go through. yet the market is reacting very favorably. i think we count that. this is real numbers holding up this market. if we got fiscal reform i think it would be higher. david nelson, thanks for coming on. great to see you. we have a programming alert. stay tuned to fox business tonight for the nascar truck series and the super car series live tonight. right here on fox business at 9:00 p

fixed income research at morgan stanley. joining us from wisconsin, jim cohan. the chief income strategist at wells fargo. guys great to have you. let's begin with transit -- it seems like a crutch. how long before the soft inflation data becomes what it is for many, a trend? >> the inflation data has started to slow down quite dramatically in the last few months, but if you look at the three-month average, of the cpi, that actually bounced from zero to 1% this month. i think if you listen to what fed chair yellen has been saying in her speeches, she has turned it away from march and april has transitory factors and more toward for looking data. the three-month average could be only going forward. >> i have a slightly different take on that. this is the fourth consecutive month where we have seen cpi numbers drop. it is hard to make the argument that you have seen some of those arguments coming from the rnc, that this is a transitory phenomenon. so if you start looking, start looking at some of the data some of the indicators that the fed -- the dallas fed does,

. >> weiss, you have morgan stanley to deliver their results. you feel better or worse about the financials today than you did go into earning season >> i feel the same i feel it's going to take longer to work out. i look at a 2.31 ten-year. >> 2.26 today. that's unbelievable. >> it is that's where i'm at going forward. i don't know who is going to be the first major commercial bank to say, look, we're separating the business because this is holding us back. i don't really care. here's what i do know. private equity has had a record raise of capital apollo, 23.5 billion, kkr down there at 22 billion. it goes on and on and on those will lead to fees for the investment banks will those fees have moderated somewhat, it generate as lot of cash flow. you set the barlow for the transaction business and the day-to-day business in goldman's commodity business i'm glad to have the bar set low. i think it goes lower. it doesn't dissuade me. >> kevin, you tried to warn them you said, don't go into these stocks you said grown men are going to cry. i don't s

. -- with morgan stanley and from boston, senior portfolio manager with the wells fargo asset management. let's get to the quote itself. these are the words that seem to move markets . he e.c.b. forum in central portugal. >> as the economy continues to recover, a constant policy stance will become more accommodative. the central bank can accompany the recovery by adjusting the parameters of its policy not in order to tighten the policy stance but to keep it broadly unchanged. jonathan: they were the words of president draghi earlier this week. big moves on the bond market off the back of it. treasuries and yields and bonds plummeting. did the markets misjudge the speech? according to people familiar with the thinking of the e.c.b., it kind of did. >> it is interesting. i think what draghi said was 100% correct. they are not looking to tighten. they are just looking to remove excess accommodation and stay with where financial conditions need to be. i didn't view his talk as otherly hawkish. i think it was a reinforcement of what he has been saying. people were expecting a dovish comment.

waiting on results from goldman sachs, morgan stanley, morgan stanley, bank of america. it was a really interesting start. yesterday better than expected results on friday and basically changed across the board. people getting really worried about the future of land in and really worried about the long dated treasury yields in the impacted starting to have fun banks. lea: how is it doing in the u.k.? only a few seconds here. >> a lot of uncertainty about yet no one knows what is going to happen in terms of the impact. so far things seem to be relatively ready in the u.k. we will see when we get a little more clarity on what it will look like. cheryl: thank you for your time this morning. lea: little delay. nice to have repo with us. thank you for joining us this morning on "fbn:am." cheryl: great to see you as well. a lot more coming up. maria moran is starting now. dagen mcdowell who we hear has nascar segment. dagen: i do because there's nascar on fox business. al gore, fox business. kevin harbert, one of the nascar champion. good morning. i'm in for maria bartiromo. m

chief economist at morgan stanley is here to answer that. the question is how do you factor in something like tax reform into your forecast if you don't know what it is going to look at morgan stanley is here to answer that. like? >> the answer matters greatly for where the economy goes, where monetary policy goes. if the u.s. remains a leader in the global economy, it is huge. i can tell you we know the effects we saw already on just the so-called survey data with the hopes and relations after election on what congress may deliver. now the way i would look at it as an economist is luckily markets have adjusted to the election on what congress reality that market predicting is difficult and we may not get what we wanted in terms of magnitude as early as we wanted. what i would like to see now is the economy is standing up on its own, the global economy is standing up on its own and bootstrapping u.s. activity, to invest inreality that market prg activity and that is coming from fundamental growth in the economy and not just from smoke and mi

morgan stanley back on top. yesterday the firms asked goldman sachs in terms of market value for the first time in decades. morgan stanley votes the market cap is about $86.5 billion, 500 million more than goldman. cheryl, let's check on what is happening now. cheryl: amazing morgan stanley last night. speaking of a win, republicans really needing it. john mccain returning to cast his vote health care bill. let's bring in former advisor to president george w. bush rightfully claimed. ann rabin by rail. good morning to you. brad, and are they going to have the votes? >> estimate they will. but john mccain coming back, wait until you see the reception he gets from his colleagues. if john mccain can do the right thing with illness that hangs over him, shame on on any republican who goes south on this procedural vote. this is not substance, just moving the bill forward for debate. republicans are going to veteran john mccain will get great reception. cheryl: the president said yesterday republicans failed to vote. t

that's something but we do at morgan stanley investment management is balance that risk. a lot of the funds, we strip at out that interest rate component and isolate the credit component. i agree with god. guy. in some cases, when we look at spreads and yields, they can be attractive for a period of time. jonathan: do you see that as well -- the increase in the effect of duration risk and the risk around it? margaret: when i look at high-yield, you are taking fundamental credit risk. that's how you lose money. it's better to have a longer than average duration risk and high yields because it is not in the risk of rates. you have 360 basis points, which i don't think is coming and when you look at the default rate at 2%, that is a low risk market. you are being paid to extend duration and the high-yield market and get that extra yield. jonathan: i get the rest of the last 10 years has been central-bank policy. are the central banks still your friend? guy: there's certainly going the wrong way to be good friends. with the federal reserve tightening, the next step the ecb ti

emily: morgan stanley talked about the ad products that hadn't involved. facebook, the same moment snap went public, they really stepped up at how aggressive they were being. they have copycat at snapchat features across all platforms whether it is facebook, messenger, instagram. former --ing to a take a look at what he had to say about the prospects of snap. >> they're going to try to figure out these letters on facebook on the outside. emily: very positive about evan spiegel but cautious about competition from facebook. what do you think? >> haven't had this whole story that we would be the product innovators and we will have to keep updating to stay ahead of facebook and it clearly hasn't sort of reuven true yet. we will need to see a facebook is just a really good copycat and they are not too embarrassed to say it. their stock price took an even worse beating when they first went public. you come out, you have a lot of shares tied up. time we'vee first seen it. emily: uber backing out of the russian market. it will still have a stake in this company, b

and lam research doing positively at morgan stanley. quite a bullish like today. let's look the market that is less bullish today. oil down about 3%, taking another leg lower. the baker hughes rig count did come out not so long ago, adding 12 rigs to the u.s. fleet of 952. this after a bullish department of energy report yesterday that were looking at. let's take a look at the influence of the rig count on worry -- oil, one more for investors. this is a one-year chart. in blue, we have oil. in white, we have the rig count rising. this is a big piece of the u.s. inventory productions that is weighing on oil, not being offset by those opec cuts. this is important to keep an eye on this. julia: abigail, we will see you shortly. let's get to the latest on the g-20 summit in homburg, germany -- hamburg, germany. the meeting with vladimir putin and donald trump lasted for two hours, and ended in an agreement for a cease-fire in syria. this cease-fire has been in the works for a lot longer than those to our talks come but we also got a denial from prudent -- putin on ele

jens: morgan stanley came in better than expected and gained 3%. most of the american banks surpassed wall street expectations, but not all is shiny, especially if you look at the trading environment in the fixed income area. all of the major banks had to drop that area by quite a bit. there is also some uncertainty regarding the future, because we do not really know what the regulatory and the tax environment will be. that could mean that a lot of big corporations are delaying big deals. that could be to the expense of big financial institutions. that overall, earnings season was rather successful for the big u.s. financial institutions. javier: we will see if that continues. thank you for the analysis. protesters have resumed demonstrations on the streets in venezuela, setting up roadblocks in the capital of caracas. the blockades, head of a general strike on thursday, which is set to bring the economy to a stansell. opponents of the president are outraged at his plans to change the constitution. he wants to increase his grip on public institutit

the parent company was downgraded by morgan stanley. the stock has plunged this week to break below the ipo price of $17 a share. what does this signal to ipo's on the horizon? joining us to discuss, alex barinka in new york. how do you think these other companies are perceiving this market? >> one thing is for sure. for ipo, you have got to get the evaluation right. that is the biggest takeaway from the snap move. if you do not give investors any forward-looking benchmarks to work off of, that could resent an issue -- present an issue. when snap listed in march, the company did not give overlooking guidance. backwardhave the numbers to work off of and create their own models. after the first earnings report, you saw the stock fall off. it has not recovered and has gone down since then. a lot of this is lack of conviction in the fact that snap has something to show investors. this is always going to be a prove it/xiaomi story because their management did not give a lot of information as to what incremental changes look like and how they

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i think morgan stanley will do fine morgan sacks is the wildcard everybody knows that it wasn't great but it wasn't as bad as we expected i think that banks really need to show leadership here as well. >> but can they break away city was a really good quarter and what i felt was like, wow, they didn't even read the quarter. it was so much better. they have a changeable book value. >> there was c card. they are giving back a little bit. >> that's right. >> let's go back to apple for a moment. >> sure. >> i don't want to gloss over what you have character rised as a really great note. what did you love about that >> not unlike tax reform, anything that gives you hope for 2018 all they said is those of you who are trading it, forget about that this is not about that this is about a great next year. there are consumer product company like what warren buffett says they don't want to produce the product before it's ready. that's their style they don't put out something until it is ready. >> their competition has done that but they have not done that. >> the firephone >> and the phone was on

that's something we do at morgan stanley investment management is we try to balance that risk. we try to strip out that interest rate component and try to isolate the credit component. in some cases when we look at spreads and yields, they can be somewhat attractive for a period of time but as long as we're cognizant for the risk of higher rates. jonathan: do you see that as well? the increased duration risk and the risk around it full stop? >> when i look at high yields, you're not taking duration risks. you're taking fundamental credit risks. that's how you lose money. i think it is better to have a longer than average duration risk in high yield. it is not a risk of rates. you still have 350, 360 basis points to absorb and move in treasuries, which i do not think is coming. really when you look at the default rate of 2%, that is really a pretty low risk market. you're being paid to extend duration in the high yield market and get that extra yield. jonathan: the anchor for risk over the last 10 years, it has been central bank policy. are central banks still your friend? >> th

something big oil has dropped according to a morgan stanley report but as a store of value it spectacularly people see this as a safe haven for an. exposed vulnerable a turkish news agency publishes a map of american military base locations in northern syria it's a concern for the pentagon. trouble in the dumps as the us president gets a record low ratings look at why the poles failed to predict major of a. little gray shouldn't processing the spark angry protests in thousands of migrants in limbo in both greece and also in italy is the latest refugee crisis in gold you. are there this is art international with me kevin owen for the morning for me it's just turned ten in the morning here in moscow now first on this thursday the american military says it's concerned for the safety of troops after a turkish news agency released him up showing the location of u.s. bases in northern syria in a comment to r.t. the u.s. central command said that the sources which contributed to the story can't be independently verified but went on to add that it would be very concerned if officials from its nato

redeker with us from morgan stanley. we will be focusing up until the fed meeting on currency dynamics of the global system. scarlet fu leading our coverage. the fed decides. a great set of guests lined up. smart discussion. 2:00 p.m. on wednesday. this is bloomberg. ♪ ♪ taylor: this is "bloomberg surveillance." let's get to the bloomberg business flash. ryanair reported that 55% increase in first-quarter profits. europe's biggest airline says strong summer bookings boosted revenues. higher sales and profits in the second quarter. the dutch health equipment maker maintained its outlook for revenue growth. bank and j.p. morgan have agreed to pay $140 million to settle claims they conspired to rate interest rates. investors including hayman capital management and the california public teachers pension fund had sued the banks. that is your bloomberg business flash. francine: thank you so much. the imf estimates u.s. growth at 2.1% this year and next. meanwhile the fed dominates the macro outlook. investors will be looki

financials, bank of america morgan stanley above $48 >> banks are having a good day about that. >> and after last week, we were kind of a little bit uncomfortable about where banks were going to be going on the backs of earning but industrials is strong. a lot of optimism. >> so what stands out, cat highest since march 2012, mcdonald's, dupont all time high so many names. united technologies good earnings a good outlook >> in general, what we're supposed to be a fully invested here and riding this rally on the other hand, and i said this last week, you have to keep an eye for things that could go awry i'm not saying stocks are priced for perfection being but they ain't cheap either 3 m is one of the ones that missed and its stock is off 5% you mentioned the industrials. it's a bevy of industrials trading at these 18 to 22 times forward multiples which are a little bit rich and it just shows you if you trip up, you can expect to give some of this back >> and you're the value guy looking for these stocks to have a renaissance. but now it sound like you're raining on their parade. >> i'm

that stock is rallying after morgan stanley valued it jay is doing it. good to see you. >> good to see you. >> so you think the window to buy nike at the bottom is closing? >> absolutely. >> get in now or don't get in? >> right i think the biggest push back that investors have had on nike over the last 18 months is the growth rate in north america this quarter the growth rate is going to be negative 2%. after this quarter we think the growth rate will start to improve. we see it approaching the mid single digits. that will be a big catalyst for the stock as we go through the rest of the year. >> stocks did a nice little comeback up 14.5% over the last month. >> what's interesting, there's a near term story and longer term story about all of the investments to really adapt to this changing retail environment where amazon has been so violent. that's something that's helped the stock. >> jay, you just mentioned amazon i would submit to you that's not the issue. the issue is adidas has a lot of mojo going under armour looks like it's fallen on hard times, bu

. >>> anyway, speaking of apple, stock moving higher today after morgan stanley upped the price target to 182, pushed iphone 8 shipment expectations back to october in light of recent delay rumors despite the delay, the firm did say hype for the highly anticipated new smartphone is not yet priced into the stock. new features could spark the next supercycle. really not priced into the stock, pete? >> i agree with that not only is that not priced in, i don't think repatriation is taxed in >> that shouldn't be. >> i agree with you, it shouldn't be, but it's not how many times with we heard, well, a lot of different stocks are moving up because the trump policy which obviously is repatriation, tax reform, all the rest i don't believe that i don't think that's priced in yet. what you're trading on apple now is just the numbers. i still think it's cheap there's the potential, if this is a supercycle like i tend to believe. katie has been nothing but right. she raise the the price target about a month ago. she comes out today and pushes it up to 18 2 because she's looking further out at some

>> morgan stanley with the lead underwriter for the ipo as well. this was the analyst saying, we no longer have a buy conviction. we think you should hold the stock. the share price target cut by 43%, down to $16 a share in mostly pointing to snap not impressing them enough in terms of how it is rolled out. the analysts came out and said we were wrong about how quickly we thought snap would improve scale and proved to its advertisers the return on investment. they are comparing this to the likes of instagram, which of course is owned by facebook. when you look at snap and what they are trying to do and getting users in, posting videos and photos to the story, they have 166 million daily active users. instagram stories alone, which is the rolling video feed -- 250 million daily active users. already behind. now the stock is down below the ipo price for the second day. not a good look here for snap. vonnie: beautiful synopsis. at $15wn 7.5% today .70. thank you. leaving workrkers early. discussed the job in trading revenue, next. this is bloomberg. â

stanley. rishaad: later, find out when june prices are released, breaking down the numbers. this is bloomberg. ♪ rishaad: "bloomberg markets: asia." you are back to -- you are back to "bloomberg markets: asia." i'm rishaad salamat in hong kong. reopening the blame on poor weather and rail pricesance that helped rebound into a bull market. shipments from australia are expected at around 330 million metric tons compared to the forecast in april of 330 million to 340 million. the online financial division start servicing international clients out of singapore next month. city state regulators have given "in principle approval." haidi: said to be seeking a buyer from -- for a bundle of crop care assets as it looks to incorporate the acquisition of syngenta and meets antitrust demands. buyers are said to include chemical companies and australia's new farm. chinese small caps fell to two year lows monday, but msci china, seeing that index of about 30% this year.let's discuss what else is going on