That the banksle were the focus point. They seem to miss in terms of overall trade. In terms of miss overall trade. The laststeven, over couple of days, it has been middling, hovering your record highs. When you look over the next few months, do you think we still have sort of enough of a catalyst year to kind of keep this momentum going, pushing equities higher, and how do you think that fits in with, i guess, regards to the earning picture earnings picture that we have . Is no i think that worry. A good deal of this has been momentum. Overall, we are not bearish. We think we have a record high level of eps in the United States this year, and, probably, we can go on to another one in 2020. The problem is it cannot be everything that everyone wants, which is a rapid gain in eps with ever rising asset prices, getting it altogether. Inflation low, profits high, markets high. Broadly speaking again, i do not think we have come to a point where we are just wildly irrational on equities prices. We have got probably too much in the i. T. Sector, lagging in the health care sector, but this is not an environment, again, where i think that we have to do everything right to get markets to go up a little bit further, but we have made so much progress in this year. We are just going to be a little more riskaverse that we would be, say, when we were in january, where we put more money to work and markets. Scarlet all right, steven, thank you for joining us and enduring a very unhelpful ear p iece. whatd you miss . That is coming up next. This is bloomberg. Anchor live from bloombergs World Headquarters in new york, i am caroline hyde. And i am romaine. After fiveains straight days, the s p 500 closing up. Romaine but the question is, whatd you miss . Caroline the sting of falling rates paid we will discuss in a few moments. A busy day on capitol hill, with crypto. Twoyear low, a no rhetoric. T shares of wells fargo falling despite forecasts, with the income of the Second Quarter missing estimates. For more, lets welcome our wells fargo senior executive, Vice President , and cfo, john shrewsberry. Great to have you with us. Talk about net Interest Income, down in the Second Quarter. How does it look for the rest of the year . Sure, so we have forecast the full year down from last year as a result of the overall level of rates, the prospect of cuts at the front end, but also lower longterm rates. We do a lot of investing at the long end of the curve, and lower yields mean a lower opportunity. Having said that, it has been a very good run, as rates have run up to this point, and i think as a sector, we have outperformed expectations on the relationship between deposit costs and riskfree rates, so this little of giveback, bit while it is certainly painful at the margin, it is on top of everything. Second quarter, we posted the highest profit ever of 6. 2 billion, and while Interest Income was a little bit lower, we had higher revenue across most of our nonInterest Income sources because of customer activity, mortgages must bigger in this environment, various fees stronger, so there is something to be said for a softer landing if, in fact, the fed does go and reduce rates and to the extent that it makes credit better and keeps consumers and businesses in the transacting, borrowing, investing, et cetera all of those are good for banks, and they are good for wells fargo. Anchor offsetting that Interest Income is growing the loan base, it was down slightly quarter after quarter. Within the loan segment, where do you see future growth . About mortgages and shifting to other loans . Where do you see growth . John sure. Not nervous about mortgages feed we had 53 billion of Mortgage Loans in the quarter, 20 of them the type of loans that end up on our books and 33 the type that get sold into agency securities. Of what is on our books, the credit quality is very, very high. We have actually continued to sell down some precrisis Mortgage Loans that actually have been performing well, but the time has come to move them off of our books. But it quality very high. The issue with mortgages is, of course, that the lower rates go because they are prepayable, lower yields, good for our customers. Good for our customers, but it contributes to that Interest Income calculus that we talked about. Credit cards are up, reflecting a strong consumer. Auto loans are up for us. We had slowed down our auto business a couple of years ago and restructured it, and we are up 17 in originations, and the net balance has begun to grow. Loans, a variety of categories, they do not all work together. It is a little bit softer in this quarter, but still representing what is going on with a 2. 5 gdp growth environment and what businesses are doing in capex terms to invest or to acquire, and commercial real estate is the category where we are the market leader. We have actually grown a little bit the last couple of quarters, but we have been a little bit more cautious there for a period of time. It tends to be hot space, mostly with nonbanks competing, and we are cautious. E on the consumer side, there was a bright spot in terms of consumer accounts, consumer checking. I am wondering about how youre marketing your products out there to the consumer in light of the scandal, in light of a lot of the concerns about some past consumer accounts, how they were held, what type of eggs you are seeing and getting new customers through the door what type of things you are seeing in getting new customers through the door. John it is actually customer consumer sentiment. That is as high as it has been in three years in terms of the strength of sentiment. On new primary Checking Account acquisition, primary accounts are the ones that customers use as their banks, so they have direct deposit or bill pay or their debit card activity. We have been growing at about 1. 3 net. We sold some branches last year, so the growth number reflects organic growth, and it is not a bad number it could always be higher. But we were starting with a very big base of about 30 million customers in that category, so to be growing at, you know, between 1 and 2 per annum, income income pounding, and the way the market is a whole value proposition, where there is still a very big physical presence in banking. Our digital capabilities are as strong as anyones. We have got any product a customer could need, so if they want it, it is one stop shopping, and it is very competitively priced. As you know, most Servers Services are free to customers if they are regular customers. Your name is in the ring, but there is an interim ceo. With him, the changes, and, indeed, will be see your name as ceo sometime . John you know, the board has been pretty clear that they are looking for a ceo from the critics who to calm have been critical of people who have been in the company for a long time, so i think that is what is going to happen. He is doing a great job as interim ceo. He was asked this morning on our investor call to respond to that and responded completely what he has been asked to do, but he is doing, and the board has lots of confidence in him. The operating committee, we are running the firm. U have good cadence. We have. Members in that group and leadership. It is going very well we have new members in that group and leadership. In the interim, everyone is focused on what is most important for wells fargo. The operations are running smoothly, and he is doing a fine job. Will keepank you. We our eyes out. That was the wells fargo cfo, john shrewsberry. Fullrnings this week in swing. Goldman sachs has revenues standing out, second highest in four years, well jp morgan is lowering its outlook, now to. 5 billion. I want to bring in a reporter. It is one thing that we did not get to speak to the cfo of wells fargo about that i am curious on. Sales and trading. I am wondering how much of this is structural. We have heard the fed talking about lowering the rates of unemployment, anchoring longterm rates down on the low end, so with lower volatility, how much of the declines are structural and not cyclical . Two elements to this. This, we pointth out that the overall is increasing, so you have to grow by increasing your market share and not staying steady. At the same time, look at some of the key factors that have impacted trading this quarter, the macro uncertainty, and looking forward, the rest of the year, has any of that changed . Uncertainty about fed moves, brexit. When you look through the rest of the year, does not look like any of those are going away. In fact, just this afternoon, the president said he might impose tariffs on china, and it went up, so that backdrop will stay with us at least for the foreseeable future, and that will have an impact at the trading desk. i remember listening to jamie dimon and touting the net interest margins and how great they were, but they seemed to be more dismissive. Jamie dimon, i believe, he was on a Conference Call with journalists and said it was the wind out there blowing, we do not have any control over that. Do not Pay Attention to that. Pay attention to whatever we are doing. The other interesting thing i think about the net income margin, right, we have to keep in mind the deposits, but it is not like they can also cut the deposit rate as much as they used to, because now, with all of the online banking, digitalonly banks, you have them competing. Andomorrow they went out said, 1. 5 , 2. 5 , we have to cut back on that significantly, people will get over that inertia and shift their savings somewhere else, so that create something for them. So that is the challenge that they are dealing with. The economy remains strong, so even if the margin is shrinking, as long as it is broadening, it is not bad news for the bank. In some respects, Goldman Sachs has been doing well by stealing some market share from deutsches. Deutsche. What about other big players . Looking at,we are bank of america and Morgan Stanley, bank of america, i do not think he will see much difference there. Theere trying to see about investment banking. They have been in a rebuilding, rebound phase, so it will be interesting. It might be different from the rest of the banks. Beenn stanley, they have known as a top equity trading shop on wall street. Usually. O Morgan Stanley is also benefiting from some of the same dynamics, like getting market share from some competitors who have been retreating from that space, or like some of the other folks, reporting a downturn. That is a key one for me. Romaine more for Morgan Stanley thursday morning. And now, to our bloomberg reporter. Coming up, blue apron, adding beyond meat to its meal kits. That is coming up next. This is bloomberg. Want to bring you some breaking news, stocks, two breaking stories. The railroad missing on secondquarter earnings, missing on Second Quarter revenue, and, more importantly, their fullyear revenue, they are looking at a decline of about 1 to 2 . They had previously protected growth for the full year. You see shares down about 5. 5 to get on the flipside, United Airlines actually rising a bit after hours, the company saying there secondquarter operating revenue and a lot of other key metrics also rising, slightly above what analysts were expecting, also giving a fullyear forecast on capacity a little bit light of 3 to 4 . Going redue apron is hot, the meal kit maker saying be beyond meat option will offered. They will have the blue apron menus added in august for joining us is an editor over at bloomberg news. What is so fascinating is that blue apron, arguably much more so than beyond meat, really needed this, i mean, massively unprofitable. What are they hoping beyond meat can add . You remember, two years ago, blue apron was the beyond meat. They were down about 90 before this announcement, having a hard time maintaining subscribers, the kind of people who like meal kits learned to cook, and then they do not need them anymore, so the idea of this company, the unicorn, fell flat, so this is really smart. They are teaming up with beyond meat, the next hot trend, hoping it makes customers stay. I do not understand how it offset some things, particularly when it comes to environmental efficiency when it comes to blue apron. Being 81 about it lower, a small tick up higher. It will affect some of the main headwinds . One of the questions about blue apron is all of the packaging. I do not know if you have gotten it, but everything comes shrink wrap. Wrapped. You could argue that beyond meat is a lot greener. If you care about the environment and do not want to be eating meat, it uses a lot less water and land than cows do. Considered is still to be a little bit of a fad or fadish, and people move onto the next hot thing. Where does that leave either of these companies . That is a good question. I think this is a riskier move for blue apron. They are certainly throwing everything at the wall, and they need to be, because what they are doing right now is not making investors happy. For beyond meat, i do not see a lot of risk. It will not hurt them to be in a meal kits. Maybe they will get more customers out of it. Most of the blue apron subscribers are millennials, and that is who knows about fake meat, so you are not going to a new part of america who maybe doesnt know about these products, so no riskier, but maybe not a lot of reward either so no risk here, but maybe not a lot of reward either. Googled lets talk about the british luxury anchor lets talk about the british luxury firm of burberry, sales growing at double what analysts had expected, with sales and Mainland China rising. Reporterur retail joining us been we just saw that share price spike. The best we have seen in how long . Since 2000 two, the best day since 2002. Also, trading at its highest in more than a year. Withig headline was samestore sales, coming in at 4 higher. That is double what analysts had been expecting for that quarter. There was the design to really take it for the first time, around 50 of the products he had designed in the store. All about the monogram, and one thing analysts are saying is that the chinese buyers are really loving this monogram style, and it helps them compete. Signature move . The new designer coming in, focusing on the monogram . Exactly he brought in this monogram, with the original founder with burberry, a pattern. L it is known. When he was over at vinci, he really when he was over at overchy, he really won people like the kardashians, from clothing to scarves to bags, that is what the Chinese Consumer has like. Particular, it is important in attracting millennials, but there is also Significant Growth in the number of chinese shopping on Mainland China but also the tourist spending. Romaine do we have any sense of if this trend is going to translate into europe or into the u. S. Here . I mean, i understand why the chinese are clamoring for it. Emma particularly within that millennial group. You have to have a fair amount of money to be able to buy burberry, but 40 upward sales now come from china, which also means there is risk. When you look at a potential trade war, implications, and a slowdown romaine i think john was excited. Emma, thank you. And lets get a check in the latest business flash headlines. U. S. Retail sales in the u. S. Did better than expected in june. That indicates Consumer Spending was already healthy before an anticipated Interest Rate cut this month. The value of overall sales rose 4 10 of 1 if you factor out cars and gasoline, sales up 7 10 of 1 . A disappointing quarter for dominoes, the pizza chain with sales missing estimates. Still, earnings were better than expected. Their shares are lower in trading. And tesla is cutting the prices of cars shipped to china. The electric car maker is trying to boost sales in its second largest market. Prices of the tesla model s and x were cut about 4 . And that is your business flash update. Romaine . Today, another story the tight labor market, and when you think about it, we have talked about labors lack or if s lack or if labor it exists, and a lot of companies have had trouble finding workers we have talked about labor slack. They do not have that same pool. A lot of people they may not even have considered for the job 10 years ago, they are taking a much harder look at them and actually putting money into trading them and bringing them on. Anchor this is a social enterprise. It was taking the u. S. By storm. U. K. Massive in the they have tried to hire homeless and then maybe exconx. Excons. Amazing,his is an positive story out of an issue when it comes to hiring. Anchor now all we need is jay powell to sort of focus on this analysis as we analyze the tight labor market and what it means. Anchor a whole new pool of people. Anchor one of the benefits of a tight labor market. Coming up, silicon valley. Executives on capitol hill, addressing everything from cryptocurrencies to concerns. We will take you through the highlights next. This is bloomberg. Im Mark Crumpton with first word news. Senate Majority Leader Mitch Mcconnell is standing behind President Trump in the firestorm that has arrested since the president s tweets about four democratic female congresswomen. The leader said today that words matter but that the political rhetoric has got overheated. The president is not a racist. I think that the tone of all of this is not good for the country. But it is coming from all different ideological points of view. Thats the point. To single out any segment of this i think is a mistake. On the house side, democrats were not buying the characterization. The comments made about sitting members of congress cannot be tolerated. Because you cannot have the ship sink, this historic american castigate, you cannot members of congress who go to a border state like texas and see conditionsnhumane and chastise them. The house toin condemn his tweets was halted after Speaker Nancy Pelosi called mr. Trumps comments racist on the house floor. Republican doug collins said it