That is coming up next. I mentioned if the goldman shares soaring after reporting 93 revenue trading in the second quarter. The analyst call is underway. What are some of the highlights you can tell us . There is or uncertainty. David solomon did say violet has been very uncertain as far as outlook for reopening, he gave us expectations on what to expect. The expectations for the u. S. Have gotten better. For the globe, worse. This number is equates to a and more than 6 globally next year. If you think banks are undervalued now and you are seeing this type of expansion next year, you are in better shape. That uncertainty still exists. Goldman also gets credit for being able to improve their capital ratios closer to where the fed wants them to be. By selling off assets here and there, we saw a big insurance sale last week to kkr, and being able to offload assets such as leverage loans of the sword. Of the sort. Carol guy talk about the ratio, they have come up 13. 6. Does that mean investors can assume the dividend is much more safe than it was . Solani investors are going to assume that. They want to stay committed to dividends. Remember, goldman had their First Investor day earlier this year. Theyre on their way to meeting those targets. Our ot up at 11 . Up atmpressive roe 11 . They are also making progress on a lot of other areas. Theyre making change even while meeting Federal Reserve standards. That is expanding consumer business, ill be at at lower rates than last quarter. At expanding in their plans to raise capital to expand their merchant bank. Lets dig into banks more. On the phone, marty mosey. Lets pick up on what we were talking about, that includes shrinking riskweighted assets. They coupled 4 billion in equity that helped the ratio. Are investors going to like longterm on goldman that is going to be taking on less risk . Yes. They really dont get much credit for much of the gains as they get out of that portfolio anyway. Bringing that down and getting capital ratios up. The things we are looking for today is can they continue to preserve capital, and if they can continue to grow tangible capital. The ability to sustain dividends and provide for potential losses. What we are seeing in goldmans they are covering all three of those bases. When you are trading close to tangible value, thats all you have to do. If you can accomplish those, you movestrength, you start to that overall premium back up. Those of the things we are watching for. We are seeing them accomplish that. Guy how sustainable is it . That is the question everyone is asking. Volatilityn a lot of , we have seen Capital Market business is doing really well. Is this something that can be repeatable . Elevatedhas got to be Investment Banking needs as well as transactions and restructurings. Much higherer was than what you would be able to continue at that level. What was also happening was you were providing. You saw jp morgan, Goldman Sachs, citigroup, all the ones that had this extra revenue take it and put it away in other places. Even though revenues can come down, still remain strong but not at the peak they were at the second quarter. You dont have to provide those other losses. Goldman sachs put over 1 billion in that litigation expense. Those are things they are doing while having strong earnings so the net of those two things can come back to a little lower level but sustained at profits. Debt struck by the fees and equity fees almost doubled. There debt underwriting, equity underwriting currently strong. Up. Ceo expects it to pick what is your outlook in the second half for those metrics . Is goldman the one that is going to win . Best toan is positioned be able to help when it comes to advice and strategic positioning. When you talk about debt or equity underwriting, that is Investment Banking business. That can stay elevated because theres that have to be made that will continue for the rest of the year. The part that comes back down is Capital Market transactions. What you are seeing just in trading and restructuring of par 4 leos headtohead of portfolios had to happen in the second quarter. You get into may and june and people get back into the market, the market starts to rebound. All of that was happening through the second quarter. Capital markets will come down. Guy can ask you a big picture question . To think the fed is going to be embarrassed or relieved about these numbers . These are strong numbers at the time when the arrest the rest of the economy is suffering. Is that going to be a problem for the fed . Is goingomething that to come back . No. The fed will take a big sigh of relief. What the fed wants to see is our third point. They want to see these banks providing for potential losses. Havergan, with what they gone through, has provided for 50 of the losses expected. With the elevated covid number losses. When youre looking at the fed come up what they are learning is safety and soundness in the abilities of these banks to have this infusion of earnings up front when there is a lot of restructuring and rebalancing going on. That will drift back down to a more normal level going into next year. The fed loves that these banks are able to create reserves for potential losses and get ahead of the game. That is what they are focused on more. In the call, David Solomon opened up, saying the path reopening and corresponding economic consequences remain unclear. I think what guy is trying to get at is everything is uncertain and everything is bad for a lot of people. A lot of Unemployment Benefits are running out at the end of july. You have Goldman Sachs which everyone loves to hate, having amazing solid results and doubling trading revenue. I wonder if that shines a spotlight back on them in a different kind of sense if we cant get economic recovery going. What you have is assets. The fed can take credit for this, reducing that she talks about, will in fact will investors like the fact that goldman has reduced risk . Yes. When you get into these periods, they are not shackled by what is happening in the sense of their own Balance Sheet inside their own institutions. The banks, because they are in a better institution, are now being able to do transactions. These are transactions that customers are needing to do to make sure they are taking care of themselves. You are seeing them defer payments, pushing out not just goldman, all banks are pushing out payments to help customers. The strengths of derisking allows this to happen so the Money Center Banks can have the transactional volume to create income. They are helping customers and creating reserves which, in the end, will help our economy bridge over this collapse we have had. Always insightful. Think you for your time. Take mosby giving us his on what is happening in the banking sector. Sachs. Cifically goldman saria malik is going to give us her take on where we are sitting right now. She is not making bids big bets right now. This is bloomberg. London, i am guy johnson. Markets. Loomberg at the beginning of the week, tech was in focus. Completing that rotation story as a result of what we are getting. Here with details Encouraging Development out of moderna. Modernity has cleared an important milestone, it produced antibodies in all patients tested. Astrazeneca is developing a vaccine with the university of oxford. A new report says the medical journal will release positive results from early tests. Their and saw treatment which uses messenger rna get fasttrack status from the fda. All of this means we are seeing the dharna at a record high. Analysts see a 60 upside from here. If thisyst says succeeds based on a 75 price tag, modernity could see 18 billion in revenue. So far, modernity up 300 . Other Companies Working on vaccines are climbing more. This morning, we have seen less enthusiasm for the highflying tech names. The dow outperforming s p and nasdaq. Can returneans life to normal and the rotation is back on into those beleaguered cyclicals. Travel companies, airlines, car rental agencies, resorts all doing better. Restaurants like brinker, all doing better. You have stayathome stocks underperforming. All down. Mazon are so too is zoom. I am hoping we can move on from zoom and see each other in person. Guy that would be nice. Thank you very much. For more on what is happening with stocks and how they are rallying, saira malik. Do i need to start getting my portfolio properly ready for the arrival of a vaccine, and the difference that is going to make in terms of assets saira in terms of assets . Saira we are still in the lower for longer camp. Lower market returns and a longer trajectory toward recovery. Risks,l have election reopenings are going to be staggered. Market valuations are becoming concerning. Yeartodate, markets are flat. A review on earnings is that they want recover to precovid levels until 2022. We dont see the market breaking out to new highs until 2021. Declan that gives us that lower market return scenario. The easy money has been made. Alix breaking news, walmart is requiring customers wearing face masks in their Stores Starting july 20. This is a nationwide policy. A lot of workers have been calling for this. While mark walmart will require that starting july 20. Saira, do you need to be financialnto value materials, industrials out of tech, or is this the call that is never going to work . Saira i think the value call will work for short periods of time. We see these spikes and recoveries. We would not use growth and technology. To fund value calls given what we see through moderate economic growth, you want to stay with quality growth in the u. S. And look for your data outside the u. S. International markets are cheaper than the u. S. There is Interesting TechnologyConsumer Companies and regions you can own outside the u. S. To get your data. You can capitalize on the moderate growth receipt Going Forward. Moderate growth you see Going Forward. Guy which specifically . Saira we like china and asian markets. China has done a good job managing through the covid crisis. Stimulus is in place. Guangdong. To look for really beatendown segments like brazil, which is not doing a great job. The country was one of the worst performing. That could have a nice catch up trade. Europe is more of a valued place. It could have some cyclicals working in the u. S. , but we are , markets china, brazil with very good job stealing with the crisis. Alix is any of that going to be dependent on stimulus from the government . Bid inlike there is a europe because may be recovery funds and new austerity versus here in the u. S. We cant get our act together. View depend on the government and some kind of way . Saira globally, the world is dependent on help from the government. We have seen 3 trillion in stimulus over the past year. We check to see more and we hope to see more. I think that is good support for markets globally. International markets i think is more based on if there valuations are cheaper. Also, how well they have dealt with the crisis i think sets them up for a stronger how very. A strong recovery. Guy what are you taking away from u. S. Bank reporting season . It does seem as if the Capital Markets businesses are doing well. What you take away from that . Is this an area you want to own . Saira our question is around sustainability of the numbers we are seeing with Capital Markets business. Earnings across the board were down significantly. Ray not surprised to see some of these we are not surprised to see these. We do not think we are going to get clear outlooks from these companies. For banks, we are not as positive because we are worried about lower interest rates. We think some of the regions they are doing well right now are for reasons that are sustainable like Capital Markets and trading. Goldman sachs is one of the Higher Quality banks. In that sector, we are Companies LikeGoldman Sachs and jp morgan. But as a whole, we are not a fan. Alix what do you do with tech . Saira you want to stick with companies that can capitalize on megatrends. Software, a handful of companies have gotten above the 5 billion revenue level. If youre going to pay the premium for technology, though with the winners that can capitalize on trends. Robotics, artificial intelligence, the cloud, there are times when if you can find the right company that could get up above the 5 billion paths plus revenue and stay there. You have to be careful out, you have to be careful, otherwise you are paying premiums. Question, do you feel like you are flying blind . A huge portion of the esan is not giving guidance the s p is not giving guidance. Do you wonder about how much guidance is coming from the rest of them . As we look at recently stretched multiples whether or not you feel you can make accurate decisions when it comes to making investments in these kinds of corporations . Nearterm values are exactly that. It is murky. We expect volatility around things like the election. This is where you want to focus on the long term. Where and when can earnings get to levels we can count on . We are saying we think we can hit precovid levels of earnings in 2022. 2021, thate that in gives us a single digit upside. This is where you can be able to forecast and a couple of years what we will look like when we are more back to normal, and look at the markets based on that. The shortterm is going to be challenging given the valuations and uncertainty. Alix always good to catch up. Saira malik of global equities. This is Bloomberg Alix ben bernanke is back writing an op ed. His part of phil murphys restart and Recovery Commission in new jersey, basically saying local and state governments cannot recover by themselves. They need help. We think about what is happening in washington, in the next round of stimulus, this is important. U. K. , weurope, in the tried austerity after the last crisis. At some point you have to balance the books, but you dont want to do it shortterm. It has devastating consequences. At a moment like this, i would argue the lessons of history need to be learned. It is interesting, the debate in the u. K. Is about making the debt that has been taken on super longterm. You dont have that shortterm need to balance the books. In the states, the states have to balance those books. Alix i wonder if we are leaning more towards repeating those mistakes that erupted in the last crisis. I wonder if we are seeing that reflected in the market. Euro continues to get big. There is trade inflows going into the european market. More rotation, less tentativeness about buying europe. I wonder what part that plays into the narrative even when, as bernanke pointed out, comes with tight restrictions. We have not even gotten to that fourth stimulus which you know its going to be controversial. Guy that election is going to be critical. See if be interesting to the democrats were to win and there would be a blue sweep how we would see them spinning money. Towas interesting listening joe biden talking about what he is going to do on sustainable energy. That sounds similar to europe. The need for this new deal for retooling the economy. Yes, the u. S. Is behind in this way, but if it spends big it can catch up. It will be interesting to see what direction we had there. Whether that ultimately does take place come up because that will be a fight for europe. That may put europe trade in balance. Alix more difficult as we keep having regional shutdowns. Coming up, we are talking opec and its allies looking to boost production in august. We will discuss that. This is bloomberg. Guy from london it, i am guy johnson. Alix steel in new york. U. S. Berg users expecting a crude stockpile draw of 7. 5 Million Barrels aired barrels. Is coming out now. The reason will be tracking out this data is that it is going to have a passthrough on overall inventories. This sets the stage for opec as they are looking to increase production. Here are the numbers. You have a sizable draw. A 7. 5 million barrel draw in overall inventory. Remember, keystone and the Dakota Access pipeline cannot continue its flows. The dakota gas inventory also saw a draw. I wonder how long that can be sustained. And demand all across the board stronger, but again, can that stay as regional lockdowns or even just fear continues in those sun belt states . Joining us is amrita sen, a chief oil analyst. Picture inemand terms of what we do in regional shutdowns in some ways makes opecs job harder. Where are they at in terms of raising production in august . Amrita i think it is very much said to be for august. We have been saying this for a few weeks. They will go to phase two, if you were to call it that. Right now, they will be cutting production by around 9. 7 billion barrels a day. Tore is a baseline that goes 7. 7, but it is actually 7. 6. The important thing is that you iraq whostan and need to catch up. The net increase in production for opec is going to be potentially 2. 2 Million Barrels per day. Yes, demand is wobbly, but seeing an increase in supply. If there was another problem, how flexible is opec going to be . It seems to take quite a lot of effort to get this deal done. Honest, the latest meeting was relatively easy compared to the last few. Comments have been quite promising in that they do acknowledge, and i know from our sources yesterday they did discover they did discuss the potential for a second wave. Remember this is a to your framework a twoyear framework. The framework is there. If demand were to falter, they would be quicker to go back and say, why dont we go back to the phase one cuts rather than moving to phase three . Just as an example. Alix what they are also trying to commend contend with is the demand side. Part of the rhetoric is a hake, demand is picking up. They have a demand forecast that is bullish for next year. What do you make of that . Amrita that does stand out. Our demand recovery is more like 5 Million Barrels per day. They have come in with 7 Million Barrels per day. Right now, we are lo