Shrink the feds Balance Sheet. David . David were goined by mr. Campbell who covers banks for bloomberg and alice williams. She was a banker for Morgan Stanley and u. B. S. Lets start with the numbers because they broke 15 minutes ago now. Theyre basically up across the board according to estimates and last year. Mr. Campbell thats right. Really what this is about is the expense story. It looks like thats our initial read, noninterest expenses are lower than analysts had expected so bank of america did better on that. Credit cost provisions are ower than analysts expected. Thats a good story. People may have questions on Revenue Growth. Bank of america came up short on Net Interest Income with Interest Rates rising a bit during the quarter. Theres interest there. Bond trade chg was going to be there were a lot of good expectations for bond trading this quarter. Bank of america came in short on that. David focus on the trading because it came in low. As you point out the Fourth Quarter was the quarter of the election and so much was on the market and thought that would be conducive to trading. Dakin thats right. Today, if you read the analyst reports, bond trading, very high, High Expectations. Volumes were up to the extent we can see that sort of across the board. Xpectations were quite strong. Bank of america didnt match up and well have to see what jp morgan does, the Biggest Investment Bank in the world. If jp morgan falls short we have a story on our hands. Jonathan revenue up modestly and e. B. S. Group up 18 . Its an expense story. You wonder how leaner this bank can get given how much moynihan happen done. Where is the Revenue Growth coming from in 2017 . Alison two questions, the revenue side and cost side. I think on the revenue side what people are looking for is help from Interest Rates. Bank of america may be the most sensitive of the larger banks so we did get the one hike in december and that will take time to filter through and you wouldnt have seen it this quarter but a lot of questions will center on the outlook, the sensitivity and the extent and help of those rate increases. On the cost, they did introduce a 53 billion cost program in the second quarter. It looks like costs came in right in line, maybe a touch better, so i think investors are going to feel better about that because there are still so many questions around the rate environment. The costs are something the company can control so to the extent you can keep those costs in line helps to give more comfort and support to the earnings outlook. Alix for more color on that in terms of the rate hike, in the presentation said 100 basis points shift and Interest Rate yield could benefit the income by 3. 4 billion. They said the n. I. M. Will be better in the First Quarter. Do we have an idea how much better, when does that start to trickle through . Alison one of the key things well be watching and most Bank Investors will be watching will see how much that filters through is what happens with deposit pricing. So far in this rate cycle it has come in better than expected, meaning that banks are sort of keeping more of that to themselves. Again, were going up from a very, very low level. But in terms of what happens with deposit rates and what happens with competition, that will help determine how much help for the margin. Jonathan theyve done a great job of capturing deposits and bank of america isnt the only one and have to balance the sheet. In terms of Small Businesses, when you spoke to moynihan, the big boom in business translates to loan growth. Did you see that . Dakin we did see some of that this quarter and i think this he had 20 billion in additional loans and thats year over year. Thats a good sign. We have seen some talk in the industry in general, loan growth coming down a little bit from a stronger trend earlier this year. So theres some questions it what happens in 2017 with loan growth for the industry and whether bank of america can capture more of that. Alison and credit loss was down slightly. Alix to your interview you did with Brian Moynihan, Consumer Banking was up 11 and the deposit growth was up 10 and the idea is they can reflect the benefit of the higher yield because a lot of that deposit is interestfree . David a third of their deposits. They have use to that capital and theyre a huge deposit taker. The real question is how are they doing compared to stock . Theyre up across the board. Theyre up 12 and doing better but their stock has been up 3 this year. 33 . The question is can they sustain that . Alison the stock is up a lot and yet theyre announcing accelerated share purchase in the first half. Bank investors are looking for a signal, what are banks thinking about the future and i think thats a signal. Jonathan we caught up with mike mayo of cisa and he has big plans for the future and sees big rallies down the road. Listen to this. Mike banks for the first time in a decade should translate from value destruction to value creation. What we mean by that is banks earn their cost of capital. If they earn their cost of capital as we think they will, bank stock which is have increased 50 from their lows have another 50 to increase over the next three years, back in black is a good place to be. Jonathan thats mike mayo, clsa. Dakin campbell, lets get on top of the press release and bring in holly renick. The rally we had seen, what does q4 need to do and this is just one hint of what will come on wall street in the next week or so. What do we need to see from these earnings that validate what weve seen in the last couple months . Holly its a good question because theres little well see that possibly could validate what weve seen in the market the past couple months since the election. Its interesting. Im hearing people talk about how basically this is an earnings season that doesnt matter and is cynical but the moves weve had in the market, were based on things speculative and forward looking and dont think there will be a ton from the earnings standpoint to justify those moves. What we could get is something to sort of continue those sort of positive sentiment going into the year, a good start to earnings obviously would be solved especially given we have a lot of expectations for what were supposed to get to. Alix talking about expectations, financial is supposed to be the biggest grower of earnings. 12 expectations. Do we get to that kind of growth . Oliver heres the thing. When you look at the market overall and look at where the earnings are supposed to go, theres a lot of things that have to fall in place, getting a big part of the market roughly, really the second biggest part of the market are financials, getting those to rally and do it without getting the p la e to move too high to get p e move too high is important. Oil has to fall in place and we will continue to see oil price maintain where it is and have the year over year comparables and a big part for the consumers. Things need to fall in place because expectations are high for earnings. When you look at the forward p e on that and people obviously are making strategy based on that it banks in a Solid Earnings growth. David i want to come back to jonathans question of cost cut at bank of america. Its not just bank of america but a microcosm for the entry and wonder if cost cuts get in the way of revenue. Is it time for the banks to take a toward back towards taking a risk where they got used to taking risk off. Alison cost cuts are scaling back front office but now the cuts are focused on back office, how can technology cut costs . You think of the transaction in the branch versus a mobile transaction, theres huge savings there and i think a lot of programs are more focused on improving efficiency. In the back office and some of those front office allocations. Jonathan well hear more from Alison Williams of Bloomberg Intelligence and a special thanks to oliver renick. The bank up. 5 . Lets get your headlines outside the Business World with taylor rigs. Taylor on capitol hill, Republican Leaders predict the house would approve a measure allowing a quick repeal of obamacare and the vote expected to take place today. Some republicans are skeptical about the it replacing the Affordable Care act. And there are new questions whether f. B. I. Director james comey will keep his job. The Justice Department has opened an investigation into comeys handling of Hillary Clintons views of a private email server and the probe will focus whether the f. B. I. Failed to follow appropriate procedures and improperly released information about the clinton case. And a new study following working hours among low paid men are contributing to inequality in the u. K. 20 worked parttime in 2014 and 5 did so two decades ago, according to the institute for fiscal studies. Global news 24 hours a day powered by more than 2,600 journalists and analysts in more than 120 countries. Im taylor rigs. This is clerling. John . Jonathan coming up on this program, trump taps goldman again after criticizing Goldman Sachs as a symbol of wall street greed in the campaign. The president elect adds another employee to the administration, joining four others. Well head to d. C. For the latest in another look with bank of america out with eengs, profit up 43 . Largely in line with the estimates on the street. The stock up. 6 in the premarket. Jp morgan and wells fargo results coming up in 50 minutes time. This is bloomberg. Jonathan from new york city, this is bloomberg daybreak. Bank of america out with earnings, 43 , profit up on bond trading, largely in line with the stipts on the street. Jp morgan coming up in 47 minutes time. And the market futures bid, up about 20 points on the do you on the dow, 1 across the board. If you switch up the board quickly, treasuries at the moment, yield down a basis point to 235. The f. X. Market, the dollar headed for the biggest weekly drop since the election. The cable rate 121. 79. He youre is north of 1. 6. David jirgee the president david the president is adding to his staff. Deana powell, the Global Partner and head of Global Engagement would go to the white house as an economic assistant and senior counselor to the president. There are reports out today mr. Trump will announce shortly anthony scaramuchi, founder of sky Bridge Capital will also take a spot. That would bring the total number of goldman alums serving mr. Trump in the administration to five. Kevin sorelli is our political reporter from d. C. The first question people are asking is what are these jobs . Everyone seems to be an assistant to the president. Do we know what dina powell ll be doing and what anthony caramuchi will be doing if elected . Theyre going to collectively be crafting Economic Policy for the entire administration. Talk about things like tax reform, repealing dodd frank, infrastructure spending, economic stimulus, what have you. With regards to dina powell, there are some reports she perhaps will be influential in trying to bring in corporate organizations and engage with them a similar role she played in the Goldman Sachs and she will also work on things like womens issues, trying to again engage corporate relations with fortune 500 companies and bring them in the sector. A hony scaramuci has personal relationship with donald trump by sources i talked with and is someone well liked by trump himself. David dina powell won the 10,000 women for goldman initiative. As you describe their jobs, looks like theyll be working closely with gary cone putting together the Economic Policy. That sort of gary cones job. Kevin hes top dog with the Economic Team being assembled. Everybody else i would argue, according to my reporting is reporting specifically to gary cone and hes someone i would expect to be the architect of a lot of the economic relingt regulatory agenda as well as the economic partnerships that are going to be coming out of this white house. I spoke with a senior aide to speaker ryans Leadership Office and he said that, you know, we look at things like tax reform and things like deregulatory policy and theyre already engaging with cohn specifically. Jonathan is this necessarily a problem . Are we surprised the best candidates come out of harvard and why are we surprised the best candidates for the job come from Goldman Sachs, one of the elite companies on the planet . Kevin goldman has a long reputation of knowing how to work not only with wall street but also with washington. And if you look at administrations previously on both side of the aisle, whether its the obama administration, the Bush Administration or the clinton administration, a lot of these economic advisors came from Goldman Sachs. That has drawn, by the way, criticism, as we all know, from the more liberal left, people like senator Elizabeth Warren frequencyly chide this type of revolving door, what have you. More of the moderate, pragmatic progressives and republicans say they have the experience to know what to do. David kevin, thanks so much. Bloombergs kevin sureli reporting from washington today. Coming up, no help from a weak currency. Chinas exports fall victim to subdued Global Demand as overseas shipments drop more than 6 in december. Well dig into mounting challenges for the Worlds Largest exporter and talk the future of china relations with nick burns, harvard professor. That is next and this is bloomberg. David this is bloomberg, im david weston. Overnight data out of china showed an uptick in imports, 3. 1 . Exports didnt do well with overseas shipments falling 6. 1 year over year. Within those export numbers, chinese experts of the United States continue to rise. With the softness coming mainly from trade with europe, perhaps reinforcing Donald Trumps claim he needs to take action to rebalance u. S. Chinese trade relations. Joining us from boston is nicholas burns, a professor at Harvards Kennedy school of government. Earlier he had a distinguished career as a u. S. Diplomat, having served as an undersecretary of state and ambassador to greece and nato. Thanks for being with us. And lets start with those Economic Data and what kind of pressure they put on both the Chinese Government on the one hand and on the Incoming Trump administration on the other. Nick you heard president elect trump has made china a particular focus not just during the campaign but during the transition and even during this week when several of his cabinet nominees have been testifying for confirmation, you heard from Rex Tillerson, some very pointed criticism of china and the administration thats coming in is clearly pointing towards a toughminded policy, they wanted to send very tough messages on trade, on currency manipulation but also on South China Sea. A lot of people are wondering can they back that up because the more immediate challenge is the administration appears to be on russia. Theyll have to decide how they sequence what we come in china as well as russia. David pause on that currency manipulation point. Because we talked to Kellyanne Conway and asked if hed follow through on his commitment to declare china a manipulator. What would be the consequences . Nick that would be about as harsh a measure as we could take. It would back the chinese into a corner. It comes on top of what president elect trump has done and thats question the one china policy and thats the policy thats been in place for 44 years where the United States recognizes the peoples republic as the sole representative of the chinese people. Are exo extensionily existential issues and theyll have to calculate do we really want to start off with china in crisis mode, or are there other things that we need to do, for instance, in europe, that are more immediate . And if you look, david, at some of the confirmation hearings, youve seen a succession of cabinet secretaries coming in who essentially have been walking back Donald Trumps positions on major issues. Im not at all convinced theyre going to start off with currency manipulation or attacks on chinese imports into the United States or to continue to even question the one china policy. Jonathan the approach here as weve spoken about is a businesslike approach towards china but wonder where the sensitivity lies outside of the xf fx market. At do you think theyll be more sensitive to, as a manipulator, taiwan or the South China Sea, what will push their buttons the most . Nick taiwan will be the issue theyre most sensitive to. When i say existential, i mean this is the identity of the chinese state, the fundamental american understanding of china from president nixons time that we recognize beijing, so i think that will set them off the most, the phone call with the taiwanese leader and president elect trumps subsequent statements. South china sea we have a legal difference but i dont think theres an imminent crisis between the United State