Transcripts For BLOOMBERG Bloomberg Go 20160715 : vimarsana.

Of trading this week. The dax off by 0. 8 . ,f you lift out the stoxx 600 the biggest moving group is travel and leisure, perhaps no surprise. Switch up the board very quickly. Look at this. Dollaryen. Potentially the biggest weekly gain for dollar and in dollaryen in percentage terms in years. Treasuries having their worst week so far this year. 1. 54 of the u. S. 10year. David w. turning to the attack on nice, president hollande held an emergency meeting after 84 people were killed during a terror attack in the Southern City of nice. We turn to our bloomberg colleague who has been reporting on the story. Please bring us up to speed on what we know about this attack up to now. We know the name of the attacker now. Mohamed lahouaiej bouhlel. He has been identified as a 31yearold french tunisian national. Apparently, a family man with three children. His drivers license was found in the truck and police have man who was is the driving the truck into the crowd last night. He was not known by the National Intelligence services. He was not on the terrorist watch list in france. However, he was known by local police for some petty crimes. David w. is there any indication that he was working with others at this point . At the moment, we dont have any indication. That is where the investigation is focusing on right now. President hollande and Prime Minister vals have just our meetingce and with local authorities and local police to sort out this investigation. David w. have you seen or do you know about any specific steps the french government is taking right now on the security front or with respective borders . Yes. ,n terms of the security steps around 3 00 a. M. I, the state of will be extended for another three months. That should be adopted by the National Assembly next week. That means that local authorities can put some people under house arrest under investigation. It gives the government some special powers to conduct investigations. We will have an extra 10,000 military officers patrolling, protecting some key sites, touristic sites, given they are in the middle of the holiday season. Military forces have been called to offer support. This means that all military officers who have left the army for less than five years could be called to offer more support. David w. thank you so much, caroline. Continuing our team coverage, we will turn to the site of the attacks in nice on the french riviera. Phil serafina, our Business Reporter was in holiday on holiday in nice when the attack happened. Set the scene for us. Phil we came down yesterday to visit friends and we were planning to attend the nice jazz festival. It was supposed to begin tomorrow. In the end, we were having dinner with our friends and decided not to have attend the fireworks. Only after the attack happened did we realize what was going on. We went down to the promenade and it was a terrible sight. Police and military personnel everywhere. Heavily armed, right gear. We have seen it in france several times over the past couple of years. The city was very much on lockdown. Milling about,ts wondering what was going on. David w. give us a sense of the geography. Seaside,ight along the where the promenade des anglais is. How long did the truck drive through the crowd . Phil you know, it was quite a length. This is the seafront road in nice. It is probably the most wellknown site in nice. With a very long boulevard a big pedestrian walkway ended biplane. All of those were closed to traffic for the festivities last night and they were packed with people. Truck coveredthe a considerable piece of ground before it was stopped. When we went down there last night and this morning, much of this is still closed off. The central part of nice is still on lockdown. David w. what do we know, what do you know about what actually stop the truck stopped the truck in the end . Phil i dont have any information on that. The driver did seem to go a considerable length of way before being stopped and it was just a good thing because the road was absolutely packed with people. David w. there are reports that there were explosives in the truck and other weapons. Did you see any evidence of explosions along this route . Phil not at all. We heard explosions because the fireworks were going off, but the reports i have seen indicated that there were gunshots fired and the truck was used as a ram, but there are no reports that explosions were triggered. On the. Phil Serafino phone from nice. Donald trump had been expected to name governor pence of indiana to be his running mate, but he tweeted that because of nice, he would postpone that announcement. Hillary clinton said, we are no doubt at war with terrorism, but it is a very different sort of war. Lets head over to alice. Alice we did want to take a look at the impact on leisure and travel stocks. Leisurethe stoxx 600 index down 1. 5 . On the yearly basis, it is having a pretty tough year, at its lowest level since 2014. Iag, air france, and lift anza all down luhfth ansa all down. This company is saying it is allowing nice travelers to change plans this weekend. The travel and tour operators are getting hit across the board. Cook got 43 of its revenue last year from continental europe, explaining why it is down. Rounding it out with the hotels, accord and Intercontinental Hotels Group Getting hit hard. Accord is getting hit hardest because of 30 of its sales last year comes from france itself. Accor is the biggest decline are in the cac 40. Very much. You coming up on the program, equities have added more than 4 trillion. The s p 500 has set a record for the longest streak. Earningswells fargo due at the top of the next hour. Will the numbers give the stocks the muchneeded boost . This is bloomberg. Jon from new york city, this is bloomberg. What a week of trading it has been. Five days of gains. On the s p 500, a record close. Things a little bit softer. Futures marginally negative. Travel and leisure stocks after the tragic events in Southern Europe yesterday, the softest area. Board, the Asset Classes. Gainsially the biggest since 1999. The worst week for treasuries so far this year. From the markets to wall street, wells fargo and citi release earnings in just under an hour. Hugh, great to have you with us. Any read through from the andrgan numbers to citi wells fargo . Hugh quality bid on revenue, particularly in loans and trading. For citi, we will look at emerging markets, loans, and trading. These are areas where jpmorgan beat. We did see some reserve building when it comes to jpmorgan. People are concerned that the credit cycle is turning for the banks. What kind of indication are going to get from citi for that . Hugh jpmorgan did all that they could to persuade people that that was based on anything in terms of the credit cycle. They said, they are opening up this they get in terms of credit. They say that the credit quality is still excellent, good as it has ever been. They are conservative in their underwriting. In terms of trading revenue, that has been weighing banks down. Jpmorgan did get a pop last quarter. The concern is that this might not be sustainable. Six months or nine months down the road it is another story. By 400hey beat massively million. The first question i have for cfo marion lake, what is your outlook for trading Going Forward . They were more restrained than usual in telling me what their outlook was. They said july was fine. I tend to think they are cautiously optimistic in body language, at very least. David w. we think of these large banks as a group. Is this a tale of two very different banks . One is more international and one is more domestic and retail . Hugh absolutely. Citi is much more international. Wells fargo is almost like a super regional, a bunch of regional banks put together in one. They have Investment Banking aspirations, but that is not fully relies yet. Wells fargo is considered highvalue high quality. Jon hugh son, thank you very much. Tune into bloomberg next hour for a conversation with wells fargos cfo. Alix joining us now is anastasia amoroso. We are going to get to your call on banks, but we want to do touch on the news that happened in nice. We are not seeing fear in the markets right now. Anastasia we are not. Has become a part of our daily reality, which is why you are not the through in the stock market. Unfortunately, there is not a perfect one. That is why the market is moving past that. Of course, as human beings, we cant, to be sure. We had brexit. We had national have National Election day in france in 2017. Are those risks accounted for . Anastasia i dont think so. Nobody is talking about the italian referendum. Alix we are now. [laughter] anastasia i dont think it has made the front page news yet. I think most of the talk has focused on brexit and the u. S. Election. I think the shop has abated, but the brexit reality has yet to set in. Alix turning back to banks, the focus is on the interest margins. How much the banks can make with rates so low. There was expectation that the interest margins would get better. That is now being drained out of the stocks. What do you think about u. S. Banks . Anastasia i really like u. S. Banks, especially when relative to european banks. They are not falling. They are not falling and that is more than european banks can say, for example. When you look at the driving cost of margins, it is not the longterm rate that a lot of people think, it is the shortterm rates. The shortterm rates have risen since december. That is more than the european banks can say. David w. one wonders whether they make it up on value. The j. P. Morgan numbers, they are growing their loans, but it goes back to what was saying, do they have to take more and more reserves because it is getting riskier . Anastasia you have seen some pickup in the auto loans. Cfos have said in the recent couple days, it is a function of the used car market, which has seen a decline. Banks are smart institutions. Seeing continued Consumer Loan growth. There are many loans that could be issued. Loan growth has been very solid. The other theme is brexit and i wonder how much of a red herring that is. Anastasia we dont quite know yet. That is the main message. The initial shock has turned out to be not as big of a shock. The reality has yet to set in. Yes, there will be some impact to the banks. When we turn to the bank of england, it is really great that they are doing everything they can to supply credit, but what they really need to do is prop up the demand for credit, especially in the real estate space. Alix you like u. S. Banks. What else is on your Shopping List of things pullback . Anastasia one of the other interesting things is Consumer Discretionary. Wages are rising, Unemployment Rate is low. If that is the case, you want to look at Consumer Discretionary stocks, but not necessarily retail. The revenue is quite low per employee. Wages rise, they cannot quite offset it with higher revenue. But when you think about stocks where the top line is tied to the u. S. Consumer, but the bottom line benefits from foreign labor costs, what you will see is foreign labor costs are not rising. Great distinction. Always great to have you and get your perspective. Anastasia amoroso. Boost. Xt up, chinas gdp chinese equities have led to their steepest in four months. , to our york city viewers globally, this is bloomberg. David w. this is bloomberg. Im david weston. A truck plowed through a group of revelers. At least 84 people are dead. Two of them are americans. Met with hislande security cap men desk cabinet ininet and has now arrived nice. They have it in a by the person who drove the truck. He was a French National of tunisian descent. Jon back to global economics. Is topping estimates. For now, we go to enda curran. I go straight to your bloomberg story that came out. You cant have your fish and t bear paw too. [laughter] enda that is an ancient chinese proverb that sums up where china is. They have stabilized growth. The problem is that it is at the expense of running up leveraging debt once again. Alone, newh of june from the size of chile to the size of vietnam. There is a real fear among economists and analysts is that they are sacrificing growth, reform for nearterm growth and that is going to create problems as the months go by. Jon with this ancient payroll in mind, what gives parable in mind, what gives . This is something in the fx market . Is it something political . Is it all these forces rolled into one . Enda there is a political imperative behind this. China was stung by the criticism during last year and early this year. They dont want to going into 2017, a pivotal year for president she jinping xi , uncertain. They will keep pumping money into the system at the expense of reforms. That is really where we are. It is an old playbook. Very quickly, what are we set to see in the coming months . We have gotten used to seeing more action from the government and not much action from the. Hinese bank are we expecting to see more of that . Enda probably less pressure on Interest Rates right now. They are opening up the fiscals ots ands fiscal spig they will get the Shovel Ready Projects off the ground. Enda curran, thank you so much. I will tweet out that story. I remember the have your cake and you cant beat enda curran,o much. It, but not the ancient chinese thing. Alix we are diving into currencies next. Jon from new york city, this is bloomberg. Im Jonathan Ferro. Marginally negative on the s p 500. In europe, a softer tone with the ftse down. Travel and leisure stocks down by 1. 27 . Switch over to the other board. A weaker japanese yen. Potentially the weakest dollaryen since 1999. Yields up a little higher. Yield, potentially the worst week for treasuries so far this year. Alix no doubt the movements in the currency market were very shocking this week. Lets kick it off this week with sterling. You see the biggest rally since 2009. You have to imagine some shorts have gotten wrapped up. I think there is very little juice left. Nothing really has changed fundamentally, as far as the u. K. Is concerned. There is some sort of uncertainty being taken out. At the same time, the uncertainty, as far as the negotiations are can learn has been to stay there and it is going to be with us. From that respect, i think this is as good as it can get for sterling. Alix what is the downside target . 120 1. 20. Alix that is one of the most bearish views out there. What is it going to take . Absolutely. The way we see it right now is as follows. Yearshe past four or five , we have seen a lot of portfolio safe haven flows. Im not talking about a nasty brexit or a possibility of the break up in negotiations with the eu. I see uncertainty. On the back of all this, i see a reversal of portfolio flows. When we model these, we get sterling somewhere around 1. 25. Obviously, you have to take into account speculative activity and the possibility of some reversals in ftis. Alix talking about reversal flows, that takes us to the yen. It is a mind blowing statistic. How much more of a selloff do we see . Is this a 2013 redux . I dont think so. Dollaryen forces have entered dangerous territory. Markets are getting carried away a lot by this Monetary Policy. I think it is quite likely that the bank of japan does not actually do anything. The yen has been the biggest beneficiary from the dollar selloff. Right now, we are seeing this being unwound. At the same time, you have speculation about the helicopter money. I think it will very soon reach its end and it will start going higher again, the yen, that is area david w. i wonder if there is something a little different . His time this time, it is not just the monetary stimulus, people are talking about significant financial stimulus. Could that make a difference . I struggle with this argument. The way i see it and i think the markets have read it. Abe is going ahead with more fiscal stimulus. He is going to issue more debt. He is going to have the boj buying that debt. I struggle with that logic. I dont see how we go from a to be here. If fiscal stimulus is what japan needs to keep track of the economy, that should be good for the Exchange Rate and not bad. Alix great perspective. Thank you so much. Jon thanks. Time for the morning must watch bloombergbank surveillance this morning. David i think there is a luxury of time. This is not a 2000 a situation by any means. Regulatory restrictions have very much improved. It is not a matter of anything going up in the next couple weeks. Systemic,ertheless, a persistent problem that needs to be addressed and the numbers. Peak for themselves we have 360 billion of nonperforming loans in the italian banks. Billion are of the worst kind. If you take against that the reserving that has been done, you get to about 80 billion. Against that come all you have is collateral. That is very hard to value. The market value of that is very uncertain. The numbers we are hearing being used is probably optimistic. Jon tom keene is here with more on his interview. Here is a man that made a lot of headlines. Where do you begin . Tom i would begin with the word collateral. That is very greecelike. Greece was talking about privatizing collateral and there was a real mystery to that. Within all of his dynamics and the many moving parts of the finance and the politics of the italian banking crisis, the real mystery is what are the assets going to plunge against . What is interesting about his frame is the timeframe. It is not like fix it this weekend, he says you have some time into the summer to get this done. Jon interesting about the paragraph with systemic in it and then the luxury of time they dont go together. Tom they dont go together. , the timeresting continuum that he has. Here thatersation does not circle back to Deutsche Bank, it circles back to the politics of the italian government. Jon that is what is fascinating about this story for me. We look for a political solution to a very financial problem. A political solution has to be how does Prime Minister renzi when his referendum . Tom i wrote a banner on this. Here is how you make the sausage , folks. And then theanner folks make it happen. Renzi cannot do a cramdown on the italian public or you do not get reelected. Jon this is what the Deutsche Bank chief economist do so well. Question is how do you get a solution. And the way you get it done it was mentioned earlier this week is the idea that the equity prices in the banks is a catalyst for people to make tough decisions. Certainly, with Deutsche Bank, we are not there yet. Tom keene, thank you so much. Fascinating interview. Bloomberg surveillance weekdays. David w. thanks very much. We just saw some live pictures as president hollande of france is in nice, just leaving the hospital after visiting those critically injured after the terrorist attack. 84 people are dead, two of them americans, when a truck plowed through a group of revelers along the french riviera. A few moments ago, the uk Prime Minister, theresa may, had something to say about security in england. Prime minister may the threat level is already a severe. That means that a terrorist attack is highly likely. Senior officials will be reviewing much what more we can do to ascertain whether there is further action we need to take. Our Security Forces and police are evervigilant. David w. that is the new Prime Minister of the United Kingdom on threat levels. We are going to join our Bloomberg News colleague, greg, on the recent developments. Still at 84 dead rammed into the crowd. A few more details emerging about the driver. Apparently he is not a french citizen. He is a french resident with a tunisian passport. A few complicating things are coming in. It is being treated as a terror , but french tv reporters have been interviewing his hashbors and they say he been going through a divorce and was not remotely religious. He seemed unstable and depressed about the divorce, but they say he did not appear religious to them. He seems to be a bit of a womanizer, nightclub hopping. That does not necessarily mean he was not inspired by Islamic State, but it is looking more and more like it was one individual who flipped in one way or another. Cant be sure of anything. At 5 00 this afternoon, the main prosecutor will give a press conference and we are waiting for that to get more detail. David w. 84 people are dead and no matter viaedy happened, but it is important to figure out whether he was working with anybody else. Is there any indication . Greg no indication at all. The interior ministry was quick to say that they had not found any accomplices. Last night, there were rumors running around that there were massive gunbattles and hostage situations. At this moment, it does seem that he acted alone. He only had with him a very small pistol. The grenades and major weapons he had with them were fake. You would think a real terrorist would be able to get his hands on real weapons and not just on a pistol. There will be a Live Conference with the price main minister. David w. there were reports that the truck was full of other weapons and hand grenades. If they were fake, that is quite different. France was already in a heightened state of alert. If there is anything they could do is there anything they could do to increase the level . One thing they could do people are wondering how on earth a truck managed to drive down a street that was blocked off for pedestrians only. I went to see the fireworks in paris and they had barriers all around the areas where people were sitting on and hanging out on the streets to watch the fireworks. How this truck managed to get down this road, i dont know. These are details that will come out later. A question of state of emergency or heightened emergency, that seems to be common than. We will keep you updated on this. Alix coming up, you have risks in the u. S. Loan market. Bank regulators warned about commercial real estate. The reason for concern. This is bloomberg. Alix this is bloomberg. Ng up later on bloomberg hewlettpackard on their earnings. Dont miss it. We are learning new details about last nights deadly attacks on france. At least 84 people were killed in nice. Hurt. Ds of others were the driver, identified as Mohamed Lahouaiej bouhlel, was killed in a shootout with police. Earlier today, president Francois Hollande said his country is at war with terrorism. This attack that has all the elements to be called a terrorist attack is once again of an incredible violence. It is clear we have to do everything we can within our power to fight this terrorist plague. A shortrived in nice time ago after extending the state of emergency for another three months. Meanwhile, the u. S. State Department Says at least two americans died in the attack. Leaders are expressing dismay, sadness, and solidarity over the attack. President obama condemned what he expressed to be a terrific terrorist attack. The victims were celebrating liberty, equality, and fraternity. Boris johnson also weighed in. An absolutely appalling incident. There will be ministerial meetings later today to discuss the implications for this country, if any. Implicationsany for the u. K. The french Prime Ministers of the country will observe a mourning. Period of prosecutors in paris have begun an investigation. Donald trumps unveiling of his running mate scheduled for today has been postponed after the attacks in nice. The violence came hours after the report that he had chosen indiana governor mike pence as his running mate. There was also push back on that from the campaign, which said no decision had yet been made. Day innews 24 hours per more than 120 countries. This is bloomberg. David w. thank you so much. We will turn to u. S. Banks. Getting our banks to start lending has been an essential part of the economic recovery, but can the be too much of a good thing . Some banks are facing increasing scrutiny. Growing risks in commercial real estate lending. Joining us now is thomas curry to weigh in on rising concerns. Welcome. You have a semiannual risk perspective you issue. Sense of theeral u. S. Banking industry risks. Thomas basically, we take a snapshot twice a year on what we see from a supervisory standpoint. Our industry is very strong. Adequate is ample and reserves. We are trying to indicate where we see emerging risk, so we can inform the banks we supervise and our examiners. Problemso avoid future if possible. David w. one of the things you identify is the growing innovation and competition we are seeing in some parts of lending, particularly commercial real estate. Tell us about what you found in real estate lending. Thomas we are signaling a flashing yellow or a caution light. We think this is an issue of sound Risk Management. We think risks are rapidly increasing. Growth in commercial real estate, over 50 for 100 of our 114 institutions. We are trying to emphasize sound Risk Management and that is focused on management, ability to stress test portfolios, to make sure that there is some Risk Management. The basics, basically. David w. one of the things that has indicated this has been a rapid rise in loan levels, particularly in commercial real estate. Additionally, you say there is an easing of underwriting standards. It sounds like people are really loosening up the rules and getting a little carefree in lending. Is that your conclusion . We are that is what trying to emphasize and what we will follow up in our ongoing supervision. We want to make sure that people are observing the basics of sound Risk Management. Are you seeing this acrosstheboard or is it particularly in some segments . Thomas we are seeing it in a significant segment of our institutions. We are seeing a geographic concentration of this activity. It is occurring in the gateway cities, hot local markets. David w. are you seeing yet any delayed retain meant or nonperforming loans . We are trying to be proactive. Those banks that had significant exposure and manage the issue well worth the ones that had the strongest concentrated Risk Management practices in place. We put out Regulatory Guidance in 2006. We and the other banking agencies reissued a reminder in december of last year. We think that if banks ask now act now and supervisors are vigilant, this type of potential risk can be managed effectively. David w. we talk a lot about the credit cycle. In a credit cycle, people star lending more, taking more risks do you think this is an Early Morning sign that we are getting late in the credit cycle . Thomas that could be possible. You have to have an effective Risk Management framework in place. David w. thank you so much. Alix we do have some breaking news concerning herbalife. The ftc is set to determine that herbalife is not a pyramid scheme and that herbalife will be announcing a 200 million settlement today with the ftc. That is according to the dow jones. Hasuch as bill ackman called it a pyramid scheme forever, the ftc is set to say it is not a pyramid scheme. Coming up, we will go back to the banks. We have all your angles covered. Alix this is bloomberg. Im alix steel. Wells fargo and citi moments away from reporting earnings. Jpmorgan reporting blockbuster earnings yesterday. Heat is on. Investment banking will really be key to see if they can recover profit. What is to come in the second half of the year. Alix right, and how it brexit impacts their business dealings in the u k and worldwide. Numbers are coming up in just moments. Citigroup and wells fargo coming up. We will break down the numbers for you life. This is bloomberg. This is bloomberg. David a country in shock terrorism returns to france, leaving at least 84 dead in nice , as a truck thousand two crowd celebrating bastille day. Jon ringing the alarm warning signs. David and from wall street to main street, earnings from citigroup and wells fargo, along are u. S. Retail sales data all due in the next hour. Alix breaking news for you citigroup, a big beat across the board on every metric. Earnings at 1. 24 a share. That was higher than the higher end estimates at 1. 19 a share. Revenue coming in at 17. 5 billion, in line with estimates. To me, it was the trading revenue that had a big kickoff. And Investment Banking, 1. 2 billion. Last quarter, it was 875 million. Equity trading revenue at 780 million. That is also up quarter on quarter. David wells is also out. Alix wells is also out. We are looking at 1. 01 a share in line with estimates. Also coming in with revenue at about 5. 6 billion. That is net. I am looking for total revenue. 22. 2 billion in terms of revenue. David that is right on with the estimates were. Alix right on with the estimates. Million, banking, 2. 1 2. 1 billion, and return on equity a highlight for both of these guys 11. 7 for wells, and coming in at about 7 for return on equity for citi. David that is a beat, because they were 6. 1 across the board. Son joins us. We are looking at a strong banking sector, especially when it comes to citigroup. Hugh sure. As you saw yesterday, jpmorgan beat primarily on fixed income trading, and citigroup beat on fixed income trading. That is to be expected. The big . Brexit, was at the the big question mark, brexit, was right at the end of the quarter. Alix i wanted to add a bit more color. Wells fargo Second Quarter provisions for credit losses was 1. 0 7 billion, slightly lower than the First Quarter. Citigroup, weto saw reserve releases of 266 million dollars. The trend in recent quarters has been toward a build. Hugh i would want to dig down deeper. With citigroup, i would think it is because they divested some things. The overall takeaway is credit quality is pretty darn good, and there is no sign it is going to get worse. We have the data out of the consumer there is wage growth, job growth. That is excellent. At this point there is no reason to think that is going to stop. Jon the story of wells fargo and citigroup playing out premarket. Wells fargo, in line. Citigroup up about 2 in the premarket. I want to talk about low bars. Citigroups Second Quarter profit fell 17 on lower revenue from Consumer Banking. That is probably the real story. Lets move away from analyst estimates for a moment. What is happening on the Consumer Banking side, do you think . A great point. I want to make it clear, their ceo, mike corbett, at the beginning of june, said we would earn 3. 5 billion. They earned 4. 5 billion. It was on the strength of the trading. Estimates have been falling for the past six months. That is based primarily on the fact that Interest Rates are low and will stay low for a lot longer time. You dont have any sense that the growth, at least on the Consumer Banking side, is that great. The for a lot of people, key take away from the First Quarter and the Second Quarter, as you pointed out, is expectations management. When you look at a bank, and a big bank at that, you dont want the ceo preoccupied with expectations management. You want him to find a way to generate revenue. What is shining bright in this report is fixed income trading revenue rebounding this quarter. The big question on the call for the coming year is whether that can continue, not just for them, but for other banks. What do you think . Hugh they are in less danger. You can not rely on fixed income trading. By their nature, Capital Market businesses are highly volatile. What can they do they have been relying on cutting costs. That is the one lever they have to pull. People want to hear costs are under control. I have plans to further reduce costs through the year. Son to her for breaking down those numbers. Thank you for breaking down those numbers. In terms of wells fargo in line with estimates revenue also in line. In terms of a credit loss provision, that is lower than estimated. Net charge off loans that are going bad, 924 million. Overall, a Strong Quarter for wells fargo, even though the stock is down in premarket premarket. Gangbusters. Coming across the board better than estimated. David we will continue to do just those numbers throughout the program and we want to go to our other major story at this hour. 84 people are dead and scores injured in a terror attack in nice, france and we want to go to Caroline Connan who has been reporting on this story for us from paris. Bring us up to speed on what we have learned. Caroline so, at the present at the moment, president hollande has arrived at the hospital in nice, one of the main sites where the injured have been taken care of. There are at least 18 people in critical condition, so that means the death toll could rise further than the 84 dead that we have at the moment. Investigation, the suspect, who is believed to be a 31yearold, tunisian national, french resident, is being searched, and the latest we heard from the local a volvo withthat explosives inside is being diffused in order to know exactly what was inside his car. This volvo was found near the house of the suspect. The suspect, a family man three kids, recently divorced, and not exactly a religious man, even though he was muslim. He did not do ramadan, for example. David what is next for president hollande we saw him visiting the hospital. He is in nice. Will he remain in nice . With the come back to paris . Caroline we expect them to come back to paris because there will be over the weekend more defense meetings, cabinet meetings, to exactly identify whether this terrorist was alone or part of a bigger network. As you know, france has been on the highest alert since the november 13 attack, and president hollande decided last night he would extend the state of emergency, allowing Police Forces to put people under house arrest and arrest people as part of the investigation. We expect him to come back at some point later today. David thanks so much. Caroline connan joining from paris. We are joined by ian bremmer, president and founder of the eurasia group. As we look at the early stages, you assess risk. How do you parse through how big of a risk this is. Is it a oneoff a bigger thing how do you find that out . Cold we know the ande of radical islam populism has been on the rise in france and particularly across the european continent and the u. K. It has been one of the significant backdrops, one of the reasons why antidiscrimination proves an toue that brought the brits vote for brexit, the biggest market risk in the world all year. It is clearly one of the things that is leading to record numbers, for example, all these antiestablishment parties like the National Front in france, where madame le pen is now polling at record highs, and certainly the expectations would be she would probably be first in a firstround residential about next year, though it is unlikely she would win, even still. These things are systemic in france, with the largest percentage of muslims living in the country of any in europe, about 8 of the population, not in any way integrated in broader society, and this being the highest level state of emergency from president hollande, who himself is not very popular right now, this is going to undermine him. The society is quite divided on issues of National Security. Earlier in the day, he had said of course it was the bastille day in france, and he had given and a dress to the country an address to the country that said the biggest danger to the countrys populism, and that would seem to many dangerously out of touch given that hours later this unprecedented attack against families in nice celebrating the national day. The right wing, in particular mr. Sarkozy, the former president , will take advantage of this politically. This will not be a rally around the flag attack where everyone danced together, as they did over the Charlie Hebdo attacks one year ago. David how is mr. Hollande perceived as a National Security leader in france and within your larger geopolitical Risk Community . Is bremmer beyond francie perceived as a relative france, he is perceived as a relatively Strong Security leader. They have the highest level of surveillance domestically of party much anyone out there. They have been quite aggressive militarily in syria, in iraq, in, of course, mali, when those attacks broke out. In libya, they were the ones that were calling for the removal of qaddafi, when the americans were, really, reductive quite reluctant to do so. Hollande has been going to do that with air power and french troops. It has been robust in the region, in a way that the germans, for example, have been very reluctant. Domestically, france is at its highest level state of emergency. They have just extended for three months. It was going to expire on july 26. Whenever you see this level of attacks, especially one that has not been dominating his own agenda domestically it is the far right in france talking about rounding up and detaining any suspected islamic terrorist. Those sorts of measures, sarkozy actually said after the paris bombing, that the 11,000 that have been on frances terrorist watch lists should be put on house arrest and have 24 7, sort of, gps surveillance. Hollande has not gone in that direction, and there are many good reasons why he hasnt, but, you know, in the same way you see Newt Gingrich coming out and saying anyone that believes in sharia should be deported from the u. S. , irrespective of the constitution those kinds of statements made, particularly in a political cycle when you have elections coming up, well get you attention in the media and will get you both. Votes. Hollande will be seen as much weaker by the french population. This is a clear damage to what was already a very challenging reelection bid by the french president. This is first and foremost a national tragedy. 84 people are dead. As you suggest, it has political ramifications, including back here in the United States. Is it early to tell how this reads against a potential donald trump, Hillary Clinton, as nominees for their parties . Think these i dont attacks yet, despite the fact they are a big deal, are moving the needle much in the United States. I say that because on the one hand you would argue that, well, all of this terrorism, the world going to hell under Obama Hillary was secretary of state. Doesnt that mean you shouldnt vote for somebody like her, but of course, the answer is trumped is not seen as a steady pair of hands. Very intemperate. The comments after the orlando bombing, by far the most important for any American Voter compared to what you see today in nice or other countries. His initial response is dont congratulate me, but i got it right. That really would turn off, i think, a wavering voter, but if you are in favor of trump, you are in favor of trouble, and the same i think if you are in favor of hillary. I think if trump were able to seem more president ial and if vp is ableble to to, and they are more able to patriotic response that seems like a leader response to what is clearly a continued escalation of terrorist attacks, mostly, thankfully, you not in the United States, not in the net states, it could bode well for him. I do not think it will move the needle much, even if he gets it right, and god for bid, if you see forbid, if you see a major attack in the United States. I do not think they should read too much into the u. S. David thanks so much, ian bremmer, president and founder of the eurasia group. X time to save the rally some of the top Money Managers sounding the alarm. We will tell you why. Fargo of citi and wells results out earlier. By 924geoffs did rise million. Thank you very much, energy. Well after market paired you have banking revenue in terms of fixed trading, equity trading, very strong for the quarter. Go is next. From u. S. Worldwide, this is bloomberg. I am Jonathan Ferro. The stocks are a little bit off. The ftse down by 1 10 of 1 . The dax down by. 25 . Ofures five Straight Days gains on the s p 500. Here is a situation in the other Asset Classes. Dollarin, a significantly weaker japanese yen. In cable rate, the biggest percentage terms its october, 2009. This is how we trade at the moment, 1. 3355. Worst week for treasury so far this week. Levels,rading at low 1. 53 on the u. S. Tenure. That is the broader market. s dig into the broader stocks. Alix we just got earnings from citigroup and wells fargo. Citigroup, a beat on the top and bottom line. Coming in stronger than estimated. Releases a reserved rather than a build in shoring up data loans. In terms of wells fargo, the stock is up. Net income still dont 2. 8 year on year, and profit down double digits. It is still pretty hard to be a bank out there. They did see higher credit losses when it comes to oil. Another big mover we wanted to highlight news breaking in the last half hour herbalife. The stock was up 16 . Now it is up by about 7 or 8 . Dow jones reporting the ftc will herbalife as a pyramid scheme, and they will perhaps pay a fine to the ftc. This is after bill ackman has been trying desperately to bring down herbalife, calling it a pyramid scheme for quite a while. Looking at Global Travel stocks in the u. S. As well as europe on the attack that happened in nice , france. Overall, lower hotels and airlines here in the United States on that attack. Delta, in particular, was downgraded to hold. Switching of the board a little bit and looking at eu travel, it has been a brutal day across the board, especially for the largest European Hotel company in europe right now. It gets about 30 of its sales from france. That stock getting hit hard. And thomaseasyjet, cook, a travel tour operator, 2015 revenuets from continental europe. Jon things are softer in europe. In the United States, things are stable. Equities on a fiveday when his. Stocks continuing to make alltime highs. Joining me is korea maria. Europe is a key theme on the program off the back of a tragedy in the south of france. The political backdrop is fragile to the economic backdrop is soft. Brexit has been added to the mix. How do you think see things developing in europe with that as your backdrop for the next 12 months . Is a soft time for europe. A big issue developing there is the fragility in their banking sector. As we have seen since the financial crisis, banks have increased their capital buffer, however in europe, the increases have been much lower than what we have seen in the u. S. , so by ftse standards, for instance, most of the european banks are still undercapitalized, and that is why we see the pressures we are seeing recently. That is on top of the issues that they need to deal with with spain and portugal having deficittheir budget payments, and at the same time we are going through a prolonged period of low growth and low inflation. Alix i am glad you brought up the peripheries because we have seen spanish spreads tighten while european stocks get hit. Talk about that dynamic. You would think if european stocks are lower, the spread should be widening. Maria in the immediate aftermath of brexit, we saw spreads increase, however as stocks bounce back, spreads tighten again. So, it is a question of whether the market anticipates there will be more Monetary Policy accommodations that will support the periphery or not. I think at this point, the rally we see in the equity markets is really driven by more expectations of accommodation, not only from the ecb, but also the bank of england and the bank of japan. Invest based you on macro factors. Maria right. David based on the macro factors you laid out for europe, what does that tell you about investing in europe . The fundamentals are weak, and there is political turmoil. Every time we have political turmoil, that is bad for economic activity. On a relative basis, i am not optimistic about the risky aspects in your assets in europe. The problem in italy is that politics is at the forefront of the conversation. The politics is i have a referendum at the end of the year i need to win, and if i dont, i have an issue. That means i have to make sure the Retail Investors are going to be ok. Can you have a political solution and a real, economic one of the same time in europe . Couldnt. The problem is the new banking regulations that have been you could. The problem is the new banking regulations that have been put in place and gone into effect is beginning of the year. Saysprovision effectively the stakeholders of the banks have to absorb losses up to 8 of the assets of the banks before any funds get into those banks. Now, 8 of the losses this is a really big amount. Losses wepare it to have seen during the financial crisis, most of these banks would really need to be bailed out. That is really the problem whether they can go around these new regulations. Europe does not look too good for you. Give us a minute on what you see the macro factors are. Maria in the case of great britain, we have, of course, uncertainty in what kind of deal they will be able to strike with the european union. The deal could range from Something Like being a member of the European Economic area, which does not change that much in terms of the economics of the relationship, to something more severe, such as being treated like a third country. There is Economic Uncertainty about that. But the effect of the pound has fallen so much, and the fact that the bank of england is willing to step in and provide a lot of accommodations, that will cushion the blow. Alix maria, thank you for joining us. Maria vassalou, partner and Portfolio Manager at perella weinberg. Jon retail sales crossing in a moments time. Well bring you that. Does the rally have more to run were talking credit markets and the hunt for yield next. From new york city, and for our viewers worldwide, a softer session in europe. Equities at an alltime high in the medassets. What a week for dollar yen. A significantly weaker japanese yen, and a stronger british crown. From new york city, this is british pound. From new york city, this is bloomberg. . C sv alix alix we do have some breaking news concerning herbalife. The company has reached an agreement. It will pay 200 million to the ftc within seven days. It has also been freed up that icahn can buy almost 35 of shares, however herbalife will have to restructure its multilevel operations. It will have to pay independent compliance officers and distribute rewards to product sales. They have to change, basically, the whole Business Model. They have to pay 3 million an illinois attorney general settlement. We have some breaking news. Jon lets begin with retail sales the advanced month on month meeting, a big beat, 0. 6 . Monthr revision from the before, 0. 5 . That was revised to 0. 2 . Auto and gas. These are much better readings. Cpi comes in at 0. 2 month on month. Softer than expected. Cpi, year on year, if you are still keeping up 1 . The estimate at one point, 1 . The survey, 2. 2 . The Market Reaction pretty clear the dollar index up. 10 after this meeting. Goook at the bond market straight to the treasuries and have a look at the curve. The front end up a basis point to about 69 basis points on the twoyear. Up. Twoyear the 10year up. S p 500 futures positive, around about 2 10 of 1 . Alix lets get more on the cpi numbers, mike holland. What is your general take on the u. S. Economy . Areholland i think we earlier innings in the cycle than people think. There is the general perception we are late in the cycle, we had 7, 8 years into the expansion, but if you look at the underlying sector of the economy, the u. S. Consumer is a great example. The u. S. Consumer is in the early innings of a nineinning game. They have the leopard. They have a lot less debt than they have had at this point in the cycle, and you see that come through in strong retail sales. The job market is in good shape. The banks we have seen a bunch of banks report earnings. In our view, the banks are just getting off the mat. They are just stunning to lend money again. Jon loan books are starting to pick up. Across the board wells fargo, jpmorgan, citi. Mr. Collins they have finally delevered. They have capital ratios where regulators want them, and now they can start lending money again. Everyone is thinking we are late in the cycle. You have banks, consumers, Small Companies that have not levered up because they have not had access to capital. We talk about the cycle, but one of the points you make it different people are at different places in the cycle. The banks might be way behind, for example, commodities. Mr. Collins that is we published a paper on where we are in the global credit sizes, and the whole thesis is wet and are we in, and we are what inning we are in, and it is all dependent on the part of the market. Apple, microsoft, these Big Companies are borrowing like crazy. They have levered up. The commodity copies are actively not only in the ninth inning, but they might be in the first or second inning of the next game, like it is a doubleheader. They are on the deleveraging path already. The Regulatory Environment is a big reason why this cycle is so disjointed or asynchronous. They have held the banks in check and prevented big parts of the economy from real lettering, where is the Capital Markets have been open jon to wide sectors. Jon you run fixed wide sectors. Jon you run fixed income. At a time when loan growth is picking up, it means, just common sense, there is loan demand, so the economy seems to be doing fine. I understand the global story. At the front end, what is the fed play, and are we going to get a big upside surprise when yields of the slow at the front end on the twoyear . Mr. Collins we are cautious on the front end. We are worried about the front end rising, but we are more end. On the back and this fed your your we seem to be going through is on the upswing. Up until the brexit vote, a couple of weeks ago, there was a greater probability of a rate cut by the end of this year than a hike, and now that has swung back to as much as after todays number, maybe a 40 probability of a hike. Our guess is maybe they hike once or twice in the next year or so, but that is probably it this cycle. Maybe they get a few more hikes in and the front end sets off. David david and i would go to ion david and i would go to wp go. David, we are zero on the way out to 2017. It is a couple of percentage points. David, what i am trying to figure out, is how the Federal Reserve really lost the market, and it has lost the market for a long, long time. It has reconciled down to the market at a time when they told us they were data dependent. The jobs growth bar, one number, so far, this year was soft. Retail sales, it is not tremendous, but hasnt been for long time. Still pretty firm. The gdp is not ugly, but it aint great. The idea you have an emergency policy all the way through 2017 . Problem. Is is a real if we all lose faith in the central bank and its ability to really tell us what is going on, that is a bigger problem for all the markets. Mr. Collins yeah, but i think the fed is starting to change their mind on whether they have an emergency policysetting right now. Theyre starting to come around to the idea that maybe zero is a neutral funds rate. They have been at 04 7, 8 years, and the economy is barely growing at 2 , at or slightly above potential. Maybe they dont need to hike rates that much. Maybe their messaging is in line with the market. Alix good to see you, mike collins, prudential fixed income Senior Investment officer. You have growth in the u. S. And growth in asia. It feels like they go handinhand sometimes. Jon i want to go to the Portfolio Manager for blackrocks emerging market debt team. Were talking about low yields. I was talking to several guests about uncorrelated, diversified returns. People talk about emerging markets. Do you see that story play into your world over the next few months . Pablo absolutely. We are on income. Many front pension fund funders are struggling to upcoming liabilities. There is a good portfolio solution to the whole story. Yields isr for longer bringing money to the asset class, and we have seen a surge of inflows, even through and after brexit. Jon pablo, how much of the story in emerging markets can d collect decouple from developed . It seems to be what is driving em right now the positioning in developed that is turbocharging em because people want to reach for you. Are those stories connected right now, and can they really decouple . Pablo the first story is a lack of income. It is a developing market story. Developed slow out of markets, bringing money out of developed markets. The emerging market story is a little unconnected. The cycle in emerging markets is starting to turn up at the time when the cycle in developed markets continues to be quite flat. That is why emerging markets are attracting money being pushed out of developed markets. There are two factors playing. One is the push factor of developed market, and the poll factor that emerging markets are attractive from a fundamental point of view. Jon if i wanted some real capital returns, i am going to local currency debt. Maybe i will go super long in japan and ride the momentum trade that has been playing out well over the last year or so. What is the attractiveness, risk reward to local currency debt in em right now, pablo . Lo this comes at a price the prices you need to take a currency risk, and currency risk is volatile. Currency is the emergency market as the most sensitive part two risk aversion stocks around the world you are captioning more income, but you are at the risk of more volatility coming from the effects. Jon a Big Conversation we have had is the demand coming out of asia we have talked about the demand coming out of developed markets. Talk about the amount coming out of asia for some of these issues in em, the middle east. Do you see more demand coming out of the likes of japan . Pablo i think the geographic distribution that you are talking about is what is going on. We see demand out of asia, out of europe, but you need to think this way from a u. S. Investor, so far they are facing a stronger dollar, ongoing fears of raising Interest Rates in the u. S. , and also, a corporate sector in the u. S. That was not necessarily expensive. These were not the elements playing in europe and japan. In europe and japan ac moore qe. The euro is they are seeing more qe. The euro is depreciating. He did not have as much of a currency risk. Out, forces have leveled and we see more demand out of the u. S. , but still see a lot of demand out of asia. Jon one question and i want an honest answer from you we have talked a lot about the credit guys becoming equity guys and the equity guys becoming credit guys, looking for returns and wreaked equity in places where they otherwise wouldnt have you seen more tourists coming into em, and perhaps they shouldnt be because they do not understand the risk . Money. We see crossover back to the idea of a lack of income i think there are more people looking for Portfolio Solutions to try to fund liabilities, and this is where the connection comes in. The idea of whether they should be or not obviously you need to do your credit analysis, like in any other smart investment, but the fundamental improvement giving ang markets is little bit of a reason to be there rather than a few years back, when emerging markets were dealing with lower Commodity Prices and weaker currencies. Jon pablo, thank you very much. Pablo goldberg. In the markets then, we are just under one hour from the market open. Future stable in the United States. Stocks at alltime highs get a lot of movers to talk about. Lets toss it over to alix steel. Busy morning. Herbalife three parts of the andy and ag settlement, ftc settlement, and carl icahn. The company is paying 3 million to an annoyed attorney general, and 200 million to the ftc. Hose are the numbers the implications are herbalife all have to make changes to its Business Model due to the ftc. They will restructure their multilevel marketing operations. They will no longer provide compensation for recruiting for its program. They also will stop misleading consumers on potential earnings. That comes directly from the ftc. This only applies to u. S. Sales, by the way. Now herbalife must tie distributive records to its product sales. They actually must prove their sales now. Remember, bill ackman, back in the day, over three years, at one point, had a 1 billion short stick against herbalife, calling it a pyramid scheme. Thinking the stock would go to zero. Basically, that they completely misrepresents sales and their company. The ftc saying you can keep operating, but you have to make changes. At one point, herbalife was up 16 . Now it is up 8 . Carl icahn is a lot to have a 35 stake in the company. He has an 18 stake. He is calling for changes, saying herbalife should consider options including roll ups with competitors and strategic transactions. A huge mover today. Keep your eye on it. Banks earnings from citigroup better than expected, wells fargo profit net income, still lower. David thank you. Donald trumps planned unveiling of his running mate has been postponed after the deadly attack in nice. Up next, we will discuss the presumptive nominees response to the tragedy. Jon this is bloomberg this s bloomberg. I am jon ferro. Coming up later, john shrewsbury, wells fargo cfo, on his firms earnings. We are learning in details about last nights deadly attack in france, the seventh in the last four months. At least 84 people were killed in nice when a truck drove for more than a mile along the boulevard pact with bastille day revelers. The driver, identified as Mohamed Lahouaiej bouhlel, was killed in a shootout with police. Earlier today in paris, president france ball on said his country is at war with terrorism. Mr. Hollande this attack that has all the elements to be makes a terrorist attack it clear we have to do everything in our power to fight this terrorist plague. In nice ae arrived short while ago. He is the point 10,000 members of Security Forces. The u. S. State Department Says at least two americans died in the attack. World leaders are expressing dismay, sadness, and solidarity with france. President obama condemned what he said appears to be a horrific terrorist attack. Donald tusk called it a tragic paradox, noting the celebrated celebrated was were celebrating liberty. Senior officials today will be reviewing what more we can do to ascertain whether there is further action we need to take. Our Security Services and police are ever the joint. The french Prime Minister will says the country will observe a threeday period of mourning beginning tomorrow. In the u. S. , a longshot attempt by rogue delegates to thwart Donald Trumps president ial nomination was rejected by a key Republican National convention committee. The panel voted overwhelmingly to turn away a proposed amendment that would have let delegates vote their consciousness and ignore the results of primaries. Was a setback for antitrump insurgents that view trump as an unqualified candidate. That is your bloomberg headlines. Back to david. David thank you very much. The Presumptive Republican and democrat nominees for u. S. President weigh in on the attacks in nice. Donald trump tweeted this last night in light of the france, attack in nice, i have postponed tomorrows news conference, and Hillary Clinton on the other side of the isle said every american stands in some strong solidarity with the people of france. Heilemann, only john the host of with all is here. You are running a campaign, you think you know what to expect, and Something Like this happens. N nice we thought we would be talking to you about the nominee for Vice President. John it has happened to its in a row. The entire campaign in dallas got blown up. Butrrible metaphor disrupted in a fun away. Novices happened again in the moments before or the day before the Vice President ial selection. This is an eventful time in the world. It is one of the things that tests campaign and candidates. The bubble that they live in, which is an intense bubble, is still a bubble. Every once in a while the reality comes crashing through, they are tested, have to adapt and deal with situations. David what you see about how the campaigns are approaching this particular issue . John both of them were on television. Into oh riley on fox news. Hillary clinton did the same thing. Was relatively walking, something you would expect to hear from a secretary of state or former secretary of state trying to talk about alliances within the region. Trump was trump, saying i would call for a declaration of war against isis. We need to look more carefully, playing up the thread at home, declaring himself a law and order candidate. There is a lot of political appeal to the way trump is handling this. Course, thatof president obama has been seeking authorization of military force against isis for the better part of the year and the public and congress has not acted on it. Politics, substance, but the candidates are playing to type on this so far. David what do we know about what the american people, at this stage, which is still early, think about these candidates in terms of National Security . John well, the polling suggests, pretty much consistently across the board, that trump is performing better on the character trait of handling terrorism. He has the advantage over Hillary Clinton there, but she is, at the same time, seen as better on the question of Foreign Policy more broadly. There is some degree of conflict there. He has done very well politically speaking by projecting the image of a strong man. That seems to be working with republicans and independents voters around the country, specifically on the issue of terrorism. David lets turn to the Vice President ial candidate for republicans, with the reporting turning to one direction, mike pence, though the campaign is saying we have not decided yet. What is your reporting telling you about that who it will be, and does it make a difference . Well, mike pence is here in new york city. Expecting to still be the choice. Trump, last night, said he has not made up his mind. There is a little uncertainty about this, and i dont want us to you not want to impugn trumps motives for deciding to delay the announcement in the wake of what happened in nice, but it seems to us the campaign was fully on track to do an announcement today that unveiled mike pence as the running mate. It also seems to us that there is some degree of conflict inside of trumps world and that it is possible that trump himself is not fully, completely settled on the matter. You may know that governor pence is up for reelection. At noon today, he needs to decide. Ballots. Be on two he needs to file for reelection today by noon or not. If he does not file and he decides to go in a different direction, mike pence will be out of a job. David he has not decided, because there was one report that he had withdrawn his name. John it is not a question of withdrawing. It is filing. Need to file or not. He is not dispatched anyone to turn in the piece of paper that says he is the claim. He has left that. He has to affirmatively go and declare. If he does not declare, he will not be on the ballot. If trump were to change his mind and not go with pence, it would be with one of the great political humiliations of all time because pence came here with the understanding he would be put on the ticket, but it is donald trump. Even all day yesterday when all reporting was suggesting all signs were for pence, a lot of people around the trunk campaign were telling me and others dont get too far out of your skis. We think it is pence, we think trump thinks it is pence, but trump could change his mind. Almost certainly, but not 100 . Have the Republican Convention coming up in cleveland we will hear about donald trump and the republicans. What do Hillary Clinton and her campaign do in the meantime . Will they go quiet . A fair amountl do of campaigning. It is Common Ground that there will be a large democratic presence in cleveland helping to fact check and counter spin. Hillary clinton may have a public schedule. She may or lets go down. Her,we will wait for from almost certainly, friday morning, after Donald Trumps big speech except in the nomination, we will almost certainly, as has become standard practice, learn her running mate. If you are going second, you roll out your running mate the morning after to step on the headlines for the previous night. The next morning you come out and say i just picked david westin to be my running mate. David that would be news. John talk about crushing Donald Trumps headline. David that would be a big headline. Thank you so much, john heilemann. Alix always very feisty. Over 30 minutes to go until the u. S. Open. The dow and the s p at record highs. The nasdaq clawing its way there as well. 523194. That is the number you want to know, the alltime high to keep an eye on. Features now trading at 4593. Features indicating more gains. We will see if the techheavy nasdaq can get the next it. It is very exciting, especially as earnings start rolling out. More is next. This is bloomberg. Welcome to bloomberg. Happy friday, everybody. Davidlix steel along with westin and Jonathan Ferro. Jon markets on the move. Global Financial Markets look like this stocks up by 130 after the tragedy in the south of france. States, futures are largely stable throughout the session after another record high close yesterday. Switch of the board this is the scene in other Asset Classes. Potentially the biggest weekly pop in percentage terms since 1999. It has been a strong pound story through much of the year. Yields higher on the 10year. Atfar this year, the yield 1. 45 7 . Alix you mentioned the tragic attack same france were 94 people have died. Much more on that in a moment. With ouro check in stockmarket reporters. 84 people have died in france, i should say. Abigail doodle is looking at the Abigail Doolittle is at the nasdaq. Julie hyman, we had earnings before the opening bell. Mixed it looks like a picture for the earnings, or at least a reaction to the earnings. Citigroup saying secondquarter profits fell by 17 . The earningspershare did come in better than estimated. Fixed income trading, just as we saw at j. P. Morgan, coming in ahead of estimates. Consumer banking, which was strong at gpm, was not as strong at citigroup. As for wells fargo, that Company Matching analyst estimates. Wells fargo did increase loans, collect more fees from credit cards, but it did not beat estimates. There you have wells fargo falling back. Herbalife is the other big stock we are following this morning on its settlement yearslong in the making settlement with the federal trade commission, which ruled it is not a pyramid scheme. However, herbalife will be paying 209. It will also be paying money to the illinois attorney general office, and will have to intimate a host of changes to its Business Model. Al so, part of this also, as part of this, carl icahn will have the ability to raise his state to 35 . Abigail. Abigail in the wake of the areng nice, travel stocks trading lower. These stocks have traded lower after other recent attacks, but it is worth noting the resiliency of at least the largest priceline shares are trading higher than they ahea of the paris attacks lastd november. Analyst david wong believes competition could increase from amd and intel and create headwinds for growth. Those stocks are little changed in the premarket, but david wong does see more than 40 Downside Potential for shares of nvidia. Lets over head over to the u. K. For more with mark barton. Mark we are down in the u. K. By. 3 . We are up for the week. We are still 2. 7 below the level we close that on june 23 here to this is the travel and leisure index. Only one of 23 companies is rising today. , theave thomas cook, accor french Hotel Operator they are leading the index down. It is the worst performing on history has shown the impact on indices like this has been shortlived. A collapse in firsthalf profits, showing how the malaise anditting the luxury sector spreading from hong kong to markets like france and switzerland to shares are down a mere 7. 5 . This is sterling on a weekly basis since 2009 against the dollar. Love this chart. Check it out. Sterling, 3 higher against the dollar. That is the best Weekly Performance since 2009, david. We have political stability, and of course, thats a prize from the bank of england, giving sterling a real boost. Surprise from the bank of england giving the sterling a real boost. David at least 84 people were killed last month when a truck plowed into bastille day celebrations. France wall on will be speaking france while aland will be speaking shortly. We have Caroline Connan. What more have we learned . Caroline we have learned in the past that the main suspect exwife is being held in custody. Killed the suspect was the truck driver was killed by the police after driving into that crowd last night in nice. He is a 31yearold tunisian who is a french resident. He was married with three children, but he recently divorced, and his exwife is being questioned right now. His house has been searched. A volvo car near the house was also being checked for, supposedly, having some explosive device in the car. This is where the investigation is at the moment. Looking at the video right now, it looks like much of nice is a crime scene right now. Is nice largely shut down . Water yeah, theyll the water promenade has been closed the entire day, close to cars, tourists. You can see from the pictures earlier, the scenes of panic on the promenade after the truck trove into the crowd and the scene is still under lockdown. President hollande has just been visiting a hospital. He met with a few people that survived the attacks but were severely injured. At least 18 people are still in critical condition. David so, i assume president hollande is still in nice. Do we have any guidance on what he will be talking about . So, yes, we are waiting for him to speak. He is still in nice, as you are mentioning. He should be speaking in the next few minutes. He will probably give his condolences to the victims, offer support to the local charity, the mayor of nice, and carryinglice of nice, out this investigation. About 500 local police are currently working really hard on trying to identify whether this suspect had any accomplices. He will probably also mention the actual security measures that he announced last night the state of emergency extended for another three months, an extra 10,000 military officers patrolling on the main tourist sites, and the main churches and religious sites across the country, and the reserve forces, those people that have left the military less than five years ago, also being on call at all times in case this event happens again in the next few days. David do we have any further information on the injured . Early reports are we had 84 people dead, two of them americans, 18 politically injured, critically injured, and that we were told scores do we have any more information about the injured . Caroline we heard earlier from the German Government that they were concerned about three classes of High School Students new berlin being in nice the site when it happened. Apparently at least two german people were among the dead, but they were trying to identify more of these young germans who were among the injured. Also, belgium is still awaiting news from about 20 of their nationals, and the italians have also set a lot of italian tourists were among the injured. What we can say, and this is also the drama of the event bastille day this is a family event. You go there with your kids to watch fireworks. What we know is that there will victims. We will know the exact numbers, but there will be some children among the victims. The former mayor of nice was one dozen children among the dead, and we know 54 children were admitted to hospitals last night. David that is bloombergs Caroline Connan reporting from paris. We will dig into the big earnings of the day citigroup and wells fargo. Citigroup delivers a beat. Secondquarter profit still down 70 on lower revenue from Consumer Banking. A stock up in the premarket,. 39 . Wells fargo, softer, down just about. 4 . Stocks are at an alltime high. In new york city, for our viewers worldwide, this is bloomberg. David we now have breaking news. President hollande speaking from nice, france. We will take that. a defenseollande counsel with the main secretary of french people as much as we can. We have to be strong. The whole world is looking at us. Solidarity. They have been expressing solidarity through supportive work. And the whole world knows we are a Strong Company country, able to overcome what has been thrown at us, and we had to face a number of these the last few months, but we are showing a great example to the rest of the world because we have been able to show cohesion, togetherness. My job is to stick to the commitment that i took to support the french people when it comes to having the right response to the challenges that we have to face with all necessary means. This unity, this cohesion that i am calling for today here in nice, so that france can be stronger than those who wish france ill, who want to harm france we can defeat them because we are all together. David ok, this is bloomberg. I am david weston along with Jonathan Ferro and alix steel. We have seen president hollande speaking from nice, france, on the treasury last night, and he said on the news there is one suspect, did not rule out there were others involved. He predicted there will be children that will be casualties. He gave credit to Security Forces for stopping the person who drove this truck through a large crowd of revelers at bastille day, and it struck me as i watch this, how many times president hollande has had to give these remarks. He has paid a price for leading the country to this terrible time. Jon too many times maximum security alerts for 18 months now. The tragedy is we have gotten used to these kinds of events that the youve gotten used to these events, but it has become all too familiar. What has become all too familiar is the kneejerk narrative off the back of these events is that these this will fuel populism, the debate and discussion over increasing border patrols. Beyond that, were talking about French Nationals. Were not talking about immigrants. David it is not somebody from syria. Jon and not somebody with ak47s. Somebody with a truck. Alix and over the 18 months, 240 dead. More bloomberg next. David this is bloomberg. I am david weston. Citi and wells fargo reported earnings this morning. Both reported falling profits. Joining us is morningstar analyst jim senegal. Lets start with citi. Shares are up in the pretrading. What did you take away from the report . Mr. Senegal with respect to citi and jpmorgan yesterday, it is really a case of no news is good news. Investors were worried about that affects of brexit. There is worry about consumer credit, and what we saw this quarter is one of those things were a big problem. Navigated the quarter well on the trading side of things, though investment revenue was down. Consumer credit performed well around the world, in the u. S. , asia, latin america. Credit quality is actually improving to some extent. For citi, at least, the rate environment has not been as big of a head wind as we might have expected. Finally, we think management at citi has done a great job cutting expenses now for a number of years. That continues this quarter. Nothing too big to worry about, and a lot of positives within the quarter. Lets talk about Michael Corbett the Management Team although they beat expectations, they are actually down year over year. Is this because of the retrenchment Michael Corbett has brought about with the team . Part of the declining results are because of the retrenchment. It was something they needed to do. Citi had been too big for a long time. Investors had been looking at that differently than we have. Citi we thinkciti is the one bank we think citi is the one bank that has the opportunity to cut costs because they were so much of an outlier. Investors were looking that as a negative reviews the, but it is turning out to be a positive as expenses keep going down over time. Go over to wells fargo they have been a driver in her needs large banks. A little disappointing this time. What was the driver there . Mr. Sinegal i think wells fargo is more interestrate sensitive. They placed a bigger better than other banks on rising rates. The outlook there does not look as bright as it did a few months ago, and longterm rates are continuing to come down. That is part of it. Also, wells did not grow loans and the part deposits quite as much as jpmorgan. Results, theys were so strong in terms of gaining on both sides of the Balance Sheet. There were expectations that esults would be similar to just a slight result. David thank you so much. Jon the open just over four minutes away. Lets get to the boards. Futures are from her. Stocks at alltime highs firmer. Stocks at alltime highs. A terrible week for u. S. Bonds. Treasury yields up for basis points. At58 we opened the week 1. 536 . A move of 22 basis points. Perhaps the worst move for treasury so far in 2016. In the fxaker yen market. From new york city, this is bloomberg. Get ready for the rio Olympic Games by switching to xfinity x1. Show me gymnastics. X1 lets you search by sport, watch nbcs highlights and catch every live event on your tv with nbc sports live extra. Im getting ready. Are you . X1 will change the way you experience nbcuniversals coverage of the rio Olympic Games. Call or go online today to switch to x1. This is bloomberg go, we are Just Moments Away from the opening bell. This is how we are shaping up after a winning streak on the s p 500. Record high. About seven points ahead of the cash open here in new york. Much of it is down about 1 10 of 1 . Bigou want to see the weekly moves, switch across the board. Potentially the biggest weekly move higher since 1999. Treasuries heading for the first week. Some solid data out of the United States today. Look at treasury yields, backing up to 1. 58 . Julie that data you are boosting to is helping to stocks this morning. Just a bit out of the gate as we see all three major averages rise. That means another pays for record close for the dow and s p. Both of those records on a closing basis. We are getting into earnings season. Citigroup beating estimates. Equity trading also rising more than estimated. Consumer banking not as strong. Even though the Company Reported gains in Consumer Banking, also collecting more credit cards if numbers just met estimates. Coming to a settlement with the federal trade commission that has been a long time in the making. Allegations against the company saying he was shorting the Company Aggressively and it has been in the intervening years he has called for an investigation. Is paying a settlement of 200 million. Also having to make a number of different changes to the business. Were also watching Walgreens Boots Alliance on friday. Walgreens attempting to take over right aid. Abouthas been questions whether it would get regulatory approval. Walgreens is in talks with the ftc about what it means to sell and gain regulatory approval. Week, more on that record we bring in john wilson, Asset Management ceo. Here in new york, u. S. Equity and derivative strategy at ups. Upside surprise. In the bearish market, tell me about why we could get another upside surprise in the months ahead. We have gone from abject fear to fear of mix of missing out. The debt in than 2009. Are more expensive than they have ever been. We think they could become more expensive. The news is good economically in the u. S. Overnight is the public is perhaps coming to the equity market, something we havent seen in two years. The retail money as the headline reads alltime high. A 13 billion of influence in the equities just last week. Nothat point do investors want to keep paying up for limited return . The competition is a 10 year yield of 1. 5 . Equities are still attractive and we would point out when you look at passable bull markets, you are still in excess of one turn, almost 10 on the s p 500 below averages. Do you think the underlying earnings will support a Global Market . I largely agree with julian. Of those things, both Energy Earnings and Foreign Exchange translation will be much more muted. People are playing catchup and that is going to give the market a boost going into the back half. Have beenstion we struggling is what happens if we see a 2013 tapered tantrum where you do see a rise in yields . I know treasuries has had a bad week. Work toggling to work out what a selloff looks like. What does that mean for other Asset Classes . Eventually there will be a day of reckoning. In our view it will because by Interest Rates. We made a generational low in the 10 year yield in the same way we made an alltime high in the s p 500. They arent going to do that second hike. Sufficient to support earnings and support stock prices. The long end of the yield curve is doing the work. Weigh in on this the 2013 playbook tells me not good for equities. Say we have a backup in treasury yields, input yields. Suddenly you have that inflationary play tradein. Is probably going to be a big headwind. That breeds instability in commodities and it is a credit market. Then the whole thing loops around again. Us are think any of thinking we are off in 30 . In the very early stages of a good old market run. We will have to see what happens then. Do the Central Banks have a next strategy . The fed that led everyone into these nontraditional policies was very clear. It was this idea that they would stop adding to the Balance Sheet. And then finally after that they anticipated allowing their Balance Sheet to roll off. That has proven to be far more difficult than what they have laid out. Certainly it is going to be harder to do. The ecb and the bank are going another way. Central banks are in the Risk Management business right now. We expect the japanese yen to have gone on the 121 versus the , planning the central that is why chairman yellen talks about data dependency. Where does that leave you in terms of the playbook . Interested in goal equity. How do you we call it the original alternative asset. If you look at the world today it is not only an negative nominal rate, it is a negative rate. We were talking about, people are beginning to lose confidence that the Central Banks have a good plan. Negative Interest Rates did not work out the way they have expected. Thosek both of fundamentally are supported. When you look at the right playbook, what comes up . We continue to like equities. We like what we call quality. It is consumer oriented, technology oriented, names above market. Politics and commodity fluctuation, these businesses will make more money next year than they did this year. What about International Exposure . You have heard the commentary from the financial sector, while disruptive is not necessarily going to be this major cataclysm event. We are looking for commentary specific to those kinds of companies. The International Exposure is not an outright negative. A u. S. Equity and derivative strategist. Also thanks to john wilson. Thanks both of you for being here. More on the terror attack last night that left 40 people dead the left 80 people dead. This is bloomberg. Coming up later today on bloomberg television, wells fargo cfo will be talking about his firms earnings. Coming up next it is bloomberg markets. Very busy day in the markets and internationally. Today has been overshadowed by the events in nice overnight. A french member of parliament was close to the scene of last nights terror attacks. It will be fascinating to hear what he has to say. Securityormer homeland secretary, looking forward to his view of the events of the last 24 hours. Strategist will be telling us why he prefers u. S. Equities to all other equity markets. An scarlet fu will be with me. Cant wait. Thank you so much. We are looking at another record high. Too much scarlet. A lady who isnt impressed by alltime highs, her name is julie hyman. I know the deal. You can hear john on the radio in the morning. Lets get to some movers here. Cvs down 2. 5 after it was cut to sell. The analyst is talking about the second half of this year. The National Trends will not be positive. The macro backdrop does not continue to support added strength. This reading is quite rare for the company. Green would be the december by ratings. You dont see any reds, do you . Until you get to this one rating. I had to go back to find a significant number. Chipotle is another stock being affected by a downgrade. A Sales Recovery, a full Sales Recovery could take years for chipotle, prior peak volumes could be a years long process. Of chipotle customers have stopped going or reduced their frequency six months after the last reported food safety incidents. Travel stocks are being affected by this attack in france, as well as a downgrade for delta, talking about corporate revenue trends. You now have this negative sentiment, how much people are going to be traveling in the wake of this attack and the string of attacks. Want to head over to the nasdaq with Abigail Doolittle. in the wake of that tragedy hack tragic attack it nice tragic attack in nice. Fact ambery could in Leisure Travel in the world. As julie mentioned there is a downgraded delta at isi. Derives 20 of its revenue from the interNational Front. That is down the most in the travel related area is down more than 3 . The european terrorism is really weighing on this company. It is fighting a steep recovery in pricing. Alex . Joining us from the nasdaq. We now turn to the latest on a terror attack that left 84 people dead, including two americans. The attacker has been identified as a French National of tunisian descent. 84 people have lost their lives. And about 50 people are in a critical state. Among those victims are many french citizens but also foreign citizens from various continents. There are a lot of children among the victims. We go live to london and are joined by the by matthew henman. Seems to bestion was this a lone wolf attack or what kind of infrastructure might have been needed to have this kind of attack . There has been no official word and no official claim. We know supporters of the aremic state and al qaeda crowing and gloating about the attacks, celebrating it having taken place. No indications of any organizations or affiliations between the alleged attack and the individual who has been named and any militant Islamist Groups so far. The attacker was a lone actor, someone who has been self radicalized and supports the ideology and the extremism that the Islamic State propagates. They have decided to carry out this attack. One of my issues was why france . Why does this seem to be happening so much in france . To a dress your point, these attacks are impossible to detect when they really happened. When you have organized networks of attackers directly launching attacks, like we had with the paris attacks, there are opportunities for the Security Forces to identify individuals, to monitor and surveilled individuals and prevent these attacks from taking place. With maybe a small number of others, there is maybe not the electronic communication acting outside of the countries where they live. It makes it far harder for countries to identify them and realize that planning the attack you study terrorism around the world. Are you aware of any other instances where someone took a large vehicle and drove it into a very large crowd . And how could this be prevented . It is not a new tactic. We have three instances of these kind of vehicle impact attacks in france alone. Attacks on a Christmas Market in december 2014. We saw an Islamic State toporter using a vehicle kill a soldier outside of the recruitment center. It is not a new kind of attack. These kinds of attacks are used very often by Palestinian Militants in israel and the west bank. If you associate yourself with that kind of extremist islamist ideology, those are the circles you moving ideology movein, this is not a new phenomenal feud. But the scale, the organizational planning to target a large crowd where you can drive hides jive high in shows a Straight Line really interesting evolution of and to really expand and decrease the lethality of that tactic. We hadwas a shoe bomber to take our shoes off of the airport. How could you defend it if you are a part of Security Forces . Thats why tactics like this will likely continue to beat lloyd by these kinds of loan actors. We have had speculation from certain individuals about pacing. Around key buildings to keep car bombs away from key buildings to prevent vehicles from being able to mount the pavement. The cost of installing concrete barriers along every pavement and the destruction it would cost. It becomes completely cost ineffective. The Security Response in france, which is on a state of high alert at the moment, is actually pretty good. Thing is stopping them taken place in the first place and that has to keep that has to be the key priority and focus. Coming up, a member of parliament in france who is near last nights attack will be joining bloomberg. Jonathan we begin to wrap up the final day of the trading week. I think the repricing is much more interesting to me. Some solid Economic Data out of the u. S. We had howard marks, we had larry finkel saying maybe this had gotten too far too fast. M of the other big mover is in the fx market. And the yen actually falling. Years we have not seen it for the yen. And unbelievable week in the markets. By 1. 5looking at s p up points. This is bloomberg. We have some breaking news. Kong, live from london i am scarlet fu with mark barton. This is bloomberg television. Get to julie hyman at the markets desk with the university of michigan data. Those numbers on retail sales came in better than estimated. Here it is coming in worse than estimated. Deskis a preliminary preliminary reading for july. At 89. 5. Sentiment 89. 5 is what weve got. That is a little bit worse than estimated and the expectation, how are people feeling about the future. In contrast with some of the numbers we got earlier today on things like consumer level inflation and retail sales, this number coming in worseha