As how we trade. The dollar, flatter on the day. Less than 82 basis points. This is what the banks will hate. The vix under 10. A tough quarter for them. The morningfor brief. We are going to get weekly u. S. U. S. Priceims and index data. Trump is set to sign an order he says will promote Health Care Choice and competition. At 1 00, the u. S. Treasury will auction 12 billion in 30 year bonds. Emma little progress has been made in talks with the uks with the u. K. Much is deadlock over how the u. K. Will pay for the right to leave. Davis is urging leaders to take a step forward and move talks to trade. The death toll is rising from the wildfires devastating california. At least 23 people are dead. 180 are injured. Hundreds are reported missing. The fire has destroyed at least 3500 homes and businesses. Get congress to repeal obamacare, so he is going after it himself. He will sign an executive order that the white house says will promote competition. It will likely allow people to band together to buy unsubsidized coverage. Critics say the plan well raise costs for the sick. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Before we came to air, we got earnings from jpmorgan. Shares are dropping. Investment revenue was down 9 . Joining us is Allison WilliamsAlison Williams. Cost is one thing we are looking at. With revenue uncertainty growing, it looks like they did well on that front. , spot on. Me trading it is interesting when you can get that exact. Banking fees a little bit better. It is not surprising. Loanve heard slowing growth, that is something we are watching in the banks. As these clients are tapping Capital Markets, less loans but more debt fees. They are down in their trading. How are they making it up . The debt fees coming in stronger than expected. Interest margins are much better than one year ago. Vix is down 26 . Jpmorgan had one of the strongest quarters across the global period. Jpmorgan saying loans and deposits continue to grow. That relationship on loans and what you have to pay on deposits how will that evolved in the coming months and what what have we seen . Alison the interest margins start to pick up. That has been positive. Bit of asts, we saw a pickup. That stabilized this year. Banks have been releasing reserves. That is a thing we are watching, windows that pick up . When revenue picks up, that is good for your lending spread. We are looking at credit card. Good this year in terms of the ratio, coming down. We wont want to get underneath that and hear about more details we want to get underneath that and hear more details. Alix the card revenue is up 7 . There is a higher new accounting origination cost. Is that the sapphire card . Do they have to pay up to win over the consumers . Alison that is generally what we haves teen. What we have seen. Their guidance around the origination cost has been the upfront cost for the sapphire card. It has been a great product. The question is they are paying these cost up front, are they going to be able to keep them on my long enough to make a profit on that investment . Been talking about the lending slowdown. Total loans at a oneyear growth estimate. Jpmorgan is down about 4 . Other banks are faring worse. Walk us through what we are seeing here. Core loans are up about 7 . Where does that leave us in terms of lending growth . Ni growth has been a bigger worry. That has been slowing over the last couple of years. Some of that is tighter underwriting. Some of that is customers tapping me Capital Markets tapping the Capital Markets. The other part of that is the consumer loans. Picked it up. As auto lending has been a relatively big driver. Tanks are starting to pull back from that. Card has been accelerating. That is where the banks are fighting market share wars. In jaywant to bring pelosky. Great to have you on the program. Talking about bitcoin. Here we are, talking about the numbers. Jay on the banks, it is simple. Banks are ahedge hedge with upside. Can they do well in a rising rate environment . They have upside because of regulatory action. You are seeing easing of doddfrank. This market is built on return of capital. Significant to see return of capital. You have a hedge against a sharply higher Interest Rate. Banks benefit from that. You have upside from regulatory relief. Is attractive. Jon who will benefit the most . Jay that is tough for me. The main banks, i dont have a view. I have been looking at u. S. Banks versus european banks versus asian banks. The play has been outside of the u. S. Been in european banks, up 30 , double the almost double the performance of u. S. Banks. General, globally, they are winners from Regulatory Environment. They provide protection against rising rates. Alison it is a question of who is performing the best, who has the best upside to get there. Comingrsus europe, u. S. Out of their crisis earlier. A lot stronger earlier. European banks, people feeling better about it and people looking where the most upside is. Within the u. S. Banking universe, what we saw with capital return, we saw this quarter the fed giving clearance to go over 100 payouts. The combination of every body reaching capital ratio, very positive. The companies that to the group and bank of america, the ones with the biggest catch up. What is the number one headline we need to watch . Alison equities trading. We will talk about that later. Alix Alison Williams will be back at the top of the next hour. Jay pelosky of pelosky Global Strategies will be sticking with us. Coming up, Christine Lagarde at 10 00 a. M. Eastern time. This is bloomberg. Alix trumps meeting with john taylor, the short list of people in consideration to be the next chairman of the Federal Reserve. Kevin warsh is the leading candidate. Jerome powell is moving to second place, tied with janet yellen. Peloskymckee and jay still joining us. To me, this says a powell fed. What are you hearing . Jay this would probably be aj powell fed. It suggests one of the things that is in attribute of powell, he looks like a central banker. Trump likes those things. You could probably say maybe powell. Terms of his experience on the board, regulatory overview, which is to pull back from the regulations of doddfrank, he fits what the Trump Administration seems to be looking for. Alex is what about the relationship between the fed and the treasury . Mike it has been generally good. Ruben, theays of bob sort of thing that bill clinton adopted. This suggests may be Steve Mnuchin thinks he has a Good Relationship with powell. Does mnuchin think he can influence powell in the fed. The economy starts to grow fast and inflation picks up, how hard will the fed lean against them . That has to be a consideration. Said pull back a little bit. Trump does not talk about pulling back a little bit. Who isooking for someone a little more of a hothead than Jerome Powell . He is open to making changes. The fed cannot dial back everything. The question would be, would be fed chair support action on capitol hill. We dont know how powell feels about that. Cohen, the most deregulatory, the guy who came from the industry. He has slipped down the ranks of the possibles. David how was scheduled to give a speech. He canceled it. Do we read anything into that . Michael i dont read anything into that. Kevin warsh was also to give a speech and he canceled. Just be wise not to say a lot in advance. Alix harold hamm canceled something when he was supposed to be in deese the and i had bn d. C. When he was supposed and i had this whole story in my head and it did not happen. Of thist you think horse race . Jay not much. One of the issues in the next six to 12 months is the tradeoff between fed winding back its Balance Sheet, versus the possible trump tax plan. Bese two things, they will important. The market will appreciate someone with continuity. Jon the Federal Reserve, inflation and the latest minutes. It is set for a rate hike at the end of the year. The headlines from the appeared contradictory. Many said they are not sure inflation is going to pick up. The feeling would be you dont have an inflation problem, it is just at a low level. You might as well get rates back to a normal level. In the future, you may need to cut rates again. We havetes back up what heard from janet yellen, there is growing concern inflation is not rising and dynamics have changed. Alix a few want to wait until inflation was on a path to 2 . Charles evans. S he spoke yesterday. To 2 isg inflation important. Moving expectations by talking about it, we are willing to go above 2 if that happens. Inflationsymmetric perspective. We should push inflation above 2 . We have spent a lot of time below 2 . Michael of jpmorgan said the december hike goes from layup to free throw. What do you think . A free throw is better. The layup was easier, you are closer. Play basketball. I was a football player. What do i know . You know what you get with me. The market is expecting a rate hike. It is baked in. The fed has done a great job of communicating what it plans to do. The market has absorbed it nicely. It is a solid environment for the fed to move forward and give itself optionality on the other side. If they need to cut rates, the higher they start from, the better. This get a tax cut, economic recovery goes for another year or two. Rates can gently drift and the fed can do its thing and get us back to a better place of optionality. Jon jay pelosky of pelosky Global Strategies sticking with us. Michael mckee, thank you. The cable rate, lower. The chief brexit negotiator tells us something i thought we already knew. Brexit talks have reached a deadlock. Stick with us. This is bloomberg. Hsbc has made it official. They have picked john flint to be the next ceo. He is currently head of hsbcs Retail Banking and Wealth Management units. Oil stockpiles will fall this year. That is the First Time Since prices slumped in 2013. The rationale, stronger production curve. Surging supplies from the u. S. And elsewhere prevent inventories from dropping and that could limit price rises. Bmw is talking about outsourcing the mini brand to china. The automaker has been in discussions with chinas biggest suv manufacturer. Than 230,000 manys worldwide minis worldwide. Jon at best, brexit talks are going nowhere. At worst, they are going backward. In italy, election risk lies around the corner. Political skies are darkening again. Still with us, jay pelosky of pelosky Global Strategies. We peaked back in may. We seem to be treading water at the moment. Jay the markets have climbed a wall of worry all year. The only mistake is to not be invested. That has been true, notwithstanding brexit, the French Elections, it set her up. Spain French Elections, etc. An issue. Europe brexit is a plus because it drives inflation further. Macron workingnd together gives a unique upside over the next couple of years that the world does not have. Europeans driving integration, but i dont see it in policy. I see a lot of distracted countries. Emmanuel saying lets do something. Rajoy is looking the other way. Jay it is not a oneday event. The process is going to move forward. Is takinggration place, if you focus on the politics alone, you will miss it. Integration is taking place at the corporate level. M a is picking up. If you look at steel and rails, and the big one coming, banking. You see rumors about commerce bank. When you get europeanwide financial integration, the process is underway and it is going to be deeper integration amongst the political space. The guys in the boardrooms trying to decide the future over the next five years, they have to build champions to compete and protect their space against the chinese and the americans and to have the half to go out heft to go out and compete globally. David you are right. You are seeing really big deals. Market share has been tough. Going to recognize the threat of china . Jay you are spot on. Where europe is being a roadblock is technology because. Hey dont have tech champions if you look at the European Equity market, Technology Makes up 8 , versus 20 in the u. S. Roadblock is in technology because they dont have their own champions. I look for the digital Single Market in europe to come in the next couple of years. Jon jay pelosky of pelosky Global Strategies sticking with us. Ask this guy if he has advice for Governor Carney bank of england. E lesetja kganyago, that is coming up. Jon this is bloomberg daybreak. A little softer. Of 1 after2 10 closing at an all time high on wednesdays session. Organ coming out with fixed income trading profits. The banks are the underperformers. The loser on the dax today is deutsche bank. Stock on thening equity benchmark in frankfurt, germany. Market, Something Like this. A decent bid. Two basis points at 2. 33. Price subdued in effects. The cable rate is the one that makes the move. Down 6 10 of 1 on the following headline area brexit talks have reached a deadlock. I thought we concluded that over the last x months. David the last six months or so. Outs get you some headlines side the business world. The wildfires in Northern California have an area covering now cover an area bigger than chicago. Fires have destroyed at least 3500 homes and businesses. Wind is preventing firefighters from containing the fires. The situation will get worse before it gets better. Trump is promising his tax plan will save money for american families. Spoke in harrisburg harrisonburg, pennsylvania. He argues corporations get to keep some of their profits and will use some of the money to reduce wages. If he is found to be in violation of the law, he will be given three days to back down. After that, rajoy can force the cattle and government from office. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im emma chandra. This is bloomberg. They may get aid deal and they may not get a deal. To report on what could make or break the deal, we bring , andher David Scanlan kevin cirilli. To start with you. We had your Prime Minister visit d. C. And go to mexicos eddie. View from the canadian point of view. What can they agreed to, what do they have to walk away from . The Prime Minister will be. Appy he has been positive up until now that nafta can be reformed. Deal is indged this trouble. Chapter 19. Tecting this is the dispute mechanism that allows independent panels to settle issues around trade. That is important for canada. They have done well by that. Rules of origin are important. Trump would like to increase the number of spark plugs in u. S. Cars. Canada wants to maintain the levels where they are area supply management, a system dairy isy is where fairly protected. David lets go to mexico. What are the red button issues for them . Mexico has been clear the line in the sand is no new tariffs or quotas. The Agricultural Chamber has told me mexico would be dead set against any kind of limitation for seasonal trade on the agricultural fronts. Rules of origin is also a big issue, other reports of high rolls of origin and on in the automotive reports of high rules of origin in the automotive sector. By staying benefits in nafta. There is no reason for them to get up and walk away from the table. Our understanding is they are willing to finish out all seven rounds, bring the proposal to mexico city and discuss and a stay in the negotiation as long as they can. The biggest threat is if trump leaves before or during the president ial election of 2018, which could throw everything into disarray for the election here. There is no reason for mexico to leave. David given some of the things of origin,rd, rules dispute resolution, those are things wilbur ross has said is critical for u. S. To get concessions on. The administration and trump feels unpredictability is going to help. International dispute settlement boards, from the administrations perspective, they are focusing on dairy intellectualell as property rights. When you look at the comments of secretary ross, it is interesting to see how politics influence policy. It has states it has impacted include upstate new york and wisconsin. Unpredictability has been interesting. Press not have a joint conference from Prime Minister trudeau or trump this week. It has been interesting to watch. Everyone thought mexico and states had the most contentious relationship, but it is really canada and the United States. David what are the chances we have a 21 action going on with Justin Trudeau in mexico city . Is it possible mexicans and canadians could team up . Has said he is going to go to bat for mexico. He has to protect his own interest at the same time. If you parse trumps words, he said maybe we do a deal with one and not the other. Assuming they are talking about canada, not mexico. Long before there was nafta, there was a freetrade deal between canada and the u. S. A nafta falls apart, there is chance they will go back to that agreement, which candidate did well by. Ondeau has an upper hand mexico given that. David we want to thank our three were orders. Our three reporters. Alix still with us is jay pelosky of pelosky Global Strategies and Michael Mckee. From mexicoback city. What was your read on the ground . Changed mexicans have their strategy. They said they made a mistake by assuming the threat from the u. S. Was so great a needed to be afraid of the United States