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tv   Street Signs  CNBC  July 16, 2019 4:00am-5:00am EDT

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i'm joumanna bercetche and these are your headlines bayer stock jumps as investors welcome a decision by a u.s. judge to cut damages in a round-up case by more than a third. ber buurberry shares hit thr highest level in 11 months thanks to new products and strong demand from mainland china. ursula van der leyen heads a
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crucial vote later today >> we want rules based order because we know it is better for all of us. we have to do it the european way. the european financial system marks the 75th a anniversary as one of its keystone institutions looks ahead to transition. we'll speak to david lipton in his first broadcast interview since assuming the acting managing director role good morning ursula van der leyen has told meps that the continent must stick to its free market rule-based traditions in the face of a changing global
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economy. in her pitch before the european parliament in strasburg, she said the eu must be able to hold its own with the likes of the u.s. and china with that, let's get out to david lipton who joins us from paris where the bank of france is marking its 75th anniversary. last time we spoke was a couple month months ago since then there's been a few developments on your side, namely your former colleague, madam regard lagarde will be moving to the presidency of the ecb. can we give an assessment of what you think the typical challenges facing the eurozone economy in the coming months will look like >> joumanna, good to be with you. the global economy is sluggish
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right now. investment is slowing down and global trade has slowed in the first quarter to 1% growth that's the slowest we've seen since 2012 the european economy in that setting has to be concerned about the growth slowdown they experienced in 2019 compared to the year earlier it's very important for europe to maintain growth, given that if there is downturn, if there were a recession, which we're not forecasting, if there were a recession there would be less policy space both monetary policy space and fiscal policy space to deal with that downturn than was the case at the time of the global financial crisis. so it's a time for the world to avoid causing a downturn, that means dealing with trade and technology tensions through dialogue so there are no
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self-inflicted wound but being ready to respond if the economy slows. >> you said it is crucial that central banks continue to support the economy. in light of what you just said, how important is it for eurozone prospects for the ecb to continue to be accommodative does that tie into the imf view of more accommodative monetary policy should be forthcoming out of the european central bank >> we've been saying for some time in light of the global circumstances that i just cited and in a major three countries, the u.s., europe and japan, that continued monetary accommodation is appropriate i won't comment on a particular upcoming central banking decision i think the point is that where some have argued that interest rate increases are needed to create space later to ease, that doesn't make sense i think you don't want to bring on the downturn that you fear
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may happen given that it will be hard to fight that so continued accommodation makes sense. each central bank has to take an approach data driven depending on the circumstances of their own situation. >> sir, i have got to ask you, you're in a unique position of having worked with madam lagarde for many years what do you think she will bring to the table as european central bank president many analysts say she will more or less be a continue ways of the draghi doctrine, the willingness to do whatever it takes to keep the eurozone together >> i think she believes strongly in europe. she comes to the central bank with proven experience in running a large and complex institution that deals with monetary and financial matters it will be a different institution, but i'm sure she will find a way to be as effective for europe at the
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european central bank as she has been for all of our member countries in the world at the international monetary fund. >> let's switch and talk about the u.s. i know you just said you don't want to opine on central bank positions. we have an important fed meeting coming up in a few weeks time. the expectation is that they will go ahead for an interest rate cut how are you thinking about the u.s. economy here and the reason i ask is the "r" word, the recession word does come up a lot in the context of the u.s., this very long cyclical economic cycle that the u.s. has been witnessing, do you see any warning signs on the horizon that the u.s. may indeed be sort of limping towards a recession at this point? >> i think what's interesting about the u.s. economy is how strong it has been in terms of growth being essentially strong enough to lower the unemployment
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rate to 3.7%, the lowest in a very, very long time without leading to inflation now, there are many discussions about what is the right way to measure slack in an economy. i think no matter how you cut it, the u.s. economy is doing well and it's doing well at a time where global trade is very slow in that setting it makes sense for the fed to be looking carefully at the risks both -- if there were some tightening of conditions and some inflation on the one side, to be thinking also about the concerns that there might be a downturn. we don't have a recession in the united states in our baseline, but in light of the trade and technology tensions, in light of the financial markets,
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vulnerabilities are rising where there's reach for yield in quite a number of different market segments in a world where china could -- china's economy slowed a bit, but if there were a more significant slowdown, there's many events in the world that could affect the u.s. economy. it makes sense to be vigilant to all of those >> it seems ironic we're talking about protectionism on the 75th anniversary of bratton woods are you encouraged by the developments out of the g20 meeting and that we may see a resolution between china and the u.s. >> i think you're right it's ironic that at the 75th anniversary of bretton woods we've reached a point where some of the developments in the global economy are leading to discontent and that discontent is leading to different approaches in government
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less willingness to abide by international rules if they're viewed as being to the disadvantage of local populations. political leaders are having to sort that out. i think if the imf and its members work together there will be ways to overcome those problems and the main point is that there is still a lot of growth potential in the world that comes from trade, trade in services, the development of new financial technologies, the lifting up of poor countries who can -- by acquiring technology and capital can grow faster and have rising living standards and provide an engine of growth for the global economy there's plenty of reason for everyone to pull together, to work together, and to find a way through. it will require some new approaches to cooperation and a deescalation of trade and technology tensions. >> talking about financial technology, i know you have done
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a lot of work on payment services, fintech. you have eventually done a lot of work on stable coin as well it seems to me that you're a little bit more open minded to the prospect of a stable coin and facebook's version of a stable coin, libra can you give us a bit more context there? >> we put out the bali fintech agenda last year at our annual meetings in indonesia. it made a simple point we don't know how these new technologies will be adopted we think there's great opportunity for cost cutting for efficiencies, for financial inclusion. when you look at past innovations, sometimes it took years to figure out what were the best ways to use these technologies for example, edison invented the light bulb, but widespread uses of lelectricity in the united states took 20 years, 30 years to be put in place
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our view is let the innovations be adapted, let people try to figure out the best uses, protect against the risks. that's true of the stable coins, too. stable coins have the promise of doing for transactions what the internet did for information, which is to make it instant, secure and nearly free now, that could happen, that will come with all kinds of risks. the risks of risks of misuse oe data the risk of some countries with weak currencies that currency substitution will beyounderline monetary policy. rather than say no, this will not go forward, our view is to allow experimentation and be careful to build a structure around that so these risks can be managed >> finally, i have to ask you, there's a lot of speculation
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over who will ultimately succeed madam lagarde on a permanent basis. >> i'm interested in that, too >> in the past about 50% have gone to frenchmen, and it's typically gone to european from your experience, what are the requirements of that job >> this is for our members to decide i think this will be a task that's completed in the course of two, three months we would look for somebody who embraces the core mission of the international monetary fund. which is to promote growth and financial stability through international cooperation. if a person has the capability to promote that mission, i think they can -- they would be excellent for our job. >> would you put yourself forward for that role, sir >> no, i'm afraid not.
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>> all right thank you very much for taking the time to chat to us on the last ten minutes very comprehensive discussion from everything europe to the u.s. to libra as well. david lipton, acting managing director of the imf there. let's take you to some market price action. the picture for europe is muted. the stoxx 600 is trading slightly up in the green muted gains, about a tenth of a percentage point firmer, this after yet again another record session for wall street. overnight the price action in asia is more lackluster, if anything, trading more to the down side. for europe, it's split between green and red as we get into the heart of earnings season let's talk about the european market breakdown. again, you will see the picture is not that much different from the overall stoxx 600. we're seeing relatively tepid gains, ftse 100 up a third of a percentage point 25 points higher on the session.
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xetra dax trading around the flat line. again here autos back in focus again with goldman sachs coming out and sell ratings on daimler. that's pushing that stock lower as well as on peugeot. cac 40 is up 0.16% ftse mib the relative underperformer today, down 0.20%. pretty much a muted picture for the start of european trading. a u.s. judge has slashed damages in a key lawsuit against bayer but refused a retrial saying that monsanto deserves to be punished. bayer will pay 25.$25.27 millio that is down from more than $80 million to a california plaintiff who said round-up weed killer caused his cancer the company said they will appeal against the latest ruling and faces round-up related lawsuits from over 13,000 plaintiffs that is the picture of bayer stock today, up on the news, but
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still a stock coming under a lot of volatility on the back of the round-up weed cases. another stock we're focused on, burberry has posted a 4% jump in first quarter comparable-store sales beating expectations the luxury group was boosted by demand for new designs, strong performance in china drove growth in its asia pacific business burberry confirmed its outlook for revenue and operating margin for its 2020 financial year. at the top of the stoxx 600, up 8.4% also coming up, it's make or break time for european commission nominee ursula van der leyen. we're live in raurstsbg after this break your joints... or your digestion... so why wouldn't you take something for the most important part of you...
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silvia is in strasburg 374 is the magic number that ms. von der leyen needs here in theory she should get them if everyone votes in line with their alliance if you add up the numbers from the socialist party, the liberals, the epp you should get beyond that 374. why are people still debating it >> exactly but the vote is secret so it's not certain that all the lawmakers will follow their parties lines and support ursula von der leyen. we've heard different criticisms ahead of today from the socialist group, from the liberal party as well saying her comments on climate change are not strong enough. they want to see a stronger stance from the european commission when it comes to the rule of law as well. so let's see if she will manage to get that magic number as you mentioned. she has made a series of commitments this morning
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she has been addressing lawmakers for about an hour. she is answering questions at the moment then the lawmakers will be voting this evening on whether she should become the next president of the european commission so in those remarks that she made earlier this morning, she mentioned brexit this is going to be one of the most important issues for the next leadership at the helm of the european commission. and ursula von der leyen said she's in favor of delaying the brexit date from the 31st of october if there is a good reason behind it let's take a listen. >> the withdrawal agreement concluded with the government of the united kingdom provides certainty where brexit created uncertainty. in sprefi inpreserving the righf citizens and in preserving peace and stability on the island of ireland. these two priorities are mine,
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too. however i stand ready for further extension of the withdrawal date should more time be required for a good reason. >> when it comes to brexit and extending the brexit deadline, ultimately that's a decision that the 28 leaders of the eu need to take the european commission does not have a final role when it comes to that decision however if ursula von der leyen becomes the next president of the commission, she will be in those meetings, she will be discussing that with the leaders of the eu. but she also made other commitments for instance when it comes to social matters. she said she wants to ensure fair play, she wants to fight inequality so those messages were clearly sent to the socialist group, one group that had the highest criticism on von der leyen's
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appointment, and she also made the point that if she becomes the next president of the commission, her team is going to have a 50/50 gender balance. this is a very important matter for lawmaker here's at the european level she made it clear that she's the first female candidate to be in this position of becoming president of the european commission and she wants to ensure a 50/50 gender balance in her cabinet. in terms of what we can expect here today, at the moment, as i mentioned, she's still addressing lawmakers in the chamber behind me. after that there will be several meetings in strasburg. ultimately lawmakers will vote on her appointment at 6:00 p.m. strasburg time we should expect a result an hour and a half after that >> thank you for bringing us the highlights of that important speech the vote is at 6:00 p.m. if you want to mark your calendars.
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let's bring in kat usita from omfif. so many things to unpack here. i want to start off with what silvia is saying about her commitments to a 50/50 gender balance. that's remarkable coming out of the european presidency. you have two women in major, major jobs in the eu how do you think about it not just as a woman obviously but from an economist standpoint is this going to herald in a new era for the face of eurozone and potentially productivity as well >> we hope it does in the history of the european central bank there's never been a female president crihristine lalagarde, she will the fourth female to serve on the board. not just in europe but also globally this is remarkable. out of 173 central banks there
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are only about 14 that are led by women it's also important to remember that christine lagarde is not a token female candidate, she comes to the table with all her experience leading large financial institutions, not just leading them but leading them during times of crises this will be important in the next few years as she takes the helm of the ecb. >> what does it say in both of these situations it was more or less an outsider suggested for the post neither lady's name was put forward as leading candidates before the decision was taken. >> definitely lagarde was a surprise she was not among the front-runners being discussed in terms of replacements for mario draghi i think it shows the yieuropean counsel is trying to be creative about the choices it makes in the next few years europe is a political project. yes, the european central bank is a technical organization
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being president may be perceived by some as something that should be filled by somebody with more technical economic experience. it is also a political one in the sense that you have to maneuver around politics of the eurozone countries >> are you saying the ecb is not fully 100% politically independent? >> no, i'm saying to be independent you need somebody who can manage that. >> let's talk about the ecb then lagarde doesn't join until later in the year. we have a more pressing ecb meeting coming up in the next couple of weeks. are you expecting to see an increasing amount of accommodation come out of them in the run up to october before draghi steps down? >> mario draghi has signaled that the policy shift within the ecb is that they're looking towards more accommodation this has been welcomed by the imf. david lipton was speaking earlier. this was also welcomed by the
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ecb. so this is a welcomed development given the signals that we've seen in the past few weeks. >> we heard from the french central bank governor earlier, and he said monetary policy cannot do everything it cannot perform miracles do you think perhaps with this new european commission, with the changing face of europe that we discussed, perhaps they can open the door to relying a bit more on the fiscal side of the equation rather than being 100% dependent on what the european central bank can do? >> accommodation might be appropriate for the next few months, but there's only so low that you can go. definitely there's a need to look towards fiscal policy and how that can support or go hand in hand with monetary policy >> they've shown a little leeway with italy in the last couple weeks. thank you very much for taking the time to chat with us
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welcome to "street signs." i'm joumanna bercetche and these are your headlines bayer stock jumps as investors welcome a decision by a u.s. judge to cut damages in a round-up case by more than a third. burberry shares hit their highest level in 11 months after sales of the luxury retailer rise in the first quarte thanks to new products and strong demand from mainland china. ursula van der leyen heads a parliament meeting in her final bid for support ahead of a crucial vote later today >> we want multilateralism, we want fair trade, we defend the rules-based order because we know it is better for all of us. we have to do it the european way.
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caution remains as earnings season heats up with investors awaiting clues about the health of the economy the acting head of the imf, david lipton, tells cnbc trade tensions are weighing on the u.s. >> we don't have a recession in the united states in our baseline, but in light of the trade and technology tensions, in light of the financial markets, vulnerabilities are rising where there's reach for yield in quite a number of different market segments. i want to take you to the uk we are getting employment data out. average weekly earnings have come in at 3.5% -- 3.6% rather year on year in the months to may. this is higher than the expectation of 3.5%. also the fastest growth in three
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months to july 2008. may alone was up 3.8% year on year so really beginning to see some significant pick up in wage growth in the uk interesting. that is certainly something that the bank of england have been watching closely those cpis close to target wage growth, there is signs of strength there total weekly earnings in real terms, 1.4%. that's weekly earnings adjusted for inflation. 1.4% this is the fastest growth since october of 2015 as well. just to give you the broader job vacancy numbers. job vacancies came in at 827,000 in the months to june. that's the longest since march to mayl paints a solid picture of the unemployment picture in the uk you have grob growhave job grow
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vacancies going down the picture or the found is weaker today the two men competing to be britain's next prime minister have agreed that the northern ireland backstop is dead in a debate they said the mechanism designed to avoid a hard border would not feature in a new deal with the eu the uk chancellor, philip hammond said he will oppose a no-deal brexit when he returns to the back benches. >> i will not continue in this role under the new government but i will take a close interest in brexit and the way it's managed and in the uk's international trade and commercial affairs generally i will continue to be a member of parliament. the new government -- the new prime minister will have a majority of two or three in parliament i will be one of them. a lot of power rests in parliament going forward >> are you suggesting you might
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make life difficult for the next prime minister >> that's not my desire. i want to work with the new administration, so long as they are focused on doing the things that will strengthen the uk economy and make it resilient in the future i will be fully supportive but if the new government tries to drive the uk over a cliff edge called no-deal brexit, i will do everything i can to stop that from happening. >> every vote counts something that we will no doubt be watching out for the next couple of weeks. ftse 100, the uk index is trading firmer today up a quarter of a percentage point. it tends to have a negative correlation with the pound the pound is trading weaker today. 0.4% weaker. 124.60 is where the pound is at. ftse 100 benefiting a little from that. xetra dax treading water around the flat line. cac 40 is flat as well the italian index is underperforming. i want to take you to airline
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stocks here. that's one sector we're focussing on all are trading higher this morning, especially ryanair, that's one we're focussed on in particular that started off a bit weaker on the session, but since then shares have reversed some earlier losses for ryanair this after the low-cost carrier cut its growth outlook for summer 2020 due to delayed deliveries of boeing 737 max analysts say this will help tighten a saturated airline market in europe which will boost yields so even though that's bad news relatively forryanair holdings you can see other airlines are benefitting from that and there will be reduced capacity in the summer we're also looking at autos today. goldman sachs has initiated coverage of daimler with a sell rating remember, this is a company that's issued multiple profit warnings over the last couple of months so goldman put a sell on fiat
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chrysler why it gave the psa group a buy rating that's the picture for autos today. fiat chrysler down 4%. renault down 1% as well. amazon workers have staged protests around europe and the u.s. alongside the company's annual prime day sales employees are calling for better pay and work conditions. the german labor union said amazon are depriving employees of a living wage in a statement an amazon spokesperson accused labor unions of conjuring misinformation and argued the tech firm already provides good working conditions facebook will not be launching its cryptocurrency until regulatory concerns have been addressed that is according to the executive in charge of the project. david marcus made the comments in a prepared statement ahead of an appearance in front of the senate banking committee
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elizabeth has been following this closely everyone is weighing in on this topic. for the most part it looks like most policymakers are viewing it with a certain degree of caution. >> we heard a lot of skepticism from policy americas jerome powell saying last week he has serious concerns. yesterday we heard from u.s. treasury secretary steven mnuchin saying he has serious concerns about facebook's planned cryptocurrency called libra. david marcus, who is overseeing this project at facebook, emphasized he wants to work with regulators on this project before it launches that might mean it could be pushed back later, no longer next year. who knows. we have not heard official remarks on the date. but trying to say this is not just a facebook effort we are also working with dozens of other companies on this we want this to be successful. we know we have to work hand in hand with regulators to do that. >> if you look at this, there
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are multiple concerns being raised it's not just one particular topic. central banks are concerned this form of payment will replace traditional monetary policy, as steven mnuchin was talking about money laundering yesterday if facebook -- facebook has their congressional testimony later today. how will they look to address those concerns one by one in your view? what are some major concerns >> so financial stability is a key question we heard that from all of the central bankers, finance ministers, they don't want this to replace the traditional organizations that oversee the financial system we have heard about privacy concerns facebook as we know whhas had a slew of privacy concerns no one is convinced they should be running a financial system. they said we're not going to be the ones in charge of final data her here the other thing is money laundering and then this overarching concerns about facebook's market
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power. we heard so many questions about whether facebook is too big and should they be broken up >> it's something we will continue to watch closely. elizabeth, stay with us. donald trump says u.s. tariffs are having a major effect on china after the country's second quarter growth slowed to its weakest pace in 27 years. in a tweet the u.s. president claimed thousands of companies are leaving china for non-tri non-tariffed countries he said america was receiving billions of dollars in l s is i. philip hammond said he hopes a deal with be found between the u.s. and china >> the problem has to be solved. the chinese have to accept there are some things they need to do differently. we hope there will be an
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amicable solution. i think if the two presidents can get together, they can fix this >> you hope that do you expect it >> i hope it and i expect it i know from talking to both sides, both sides do want a deal there's a genuine desire to get this fixed it's very important for the rest of us as well. china and the u.s. are the two largest trading blocks for the rest of the world, a great deal hinges on this and the fallout, the damage will be huge if it's not fixed >> let's talk about this i want to bring in chris southworth from the international chamber of commerce in the uk. great to have you with us. you are the secretary-general of a business organization that lobbies for lower barriers to trade globally that's not the direction trade is going what is going wrong with the messaging? >> there's a lot of frustration in the trading system. ultimately the trading system was designed a long time ago the way he can do trade, the way consumers behave has changed
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that's largely because of technology the whole system needs upgradinged a mupgradin ed and modernizing. >> would you say there's room for governance at a multilateral level or will we look at situations where countries want to go at it alone? >> the more you go at it alone the more complicated the system gets the reason why we support multilateralism is because one set of rules for everybody is the easiest way to minimize barriers to trade. the trouble is to get everybody to agree to one thing takes longer that creates an awful lot of frustration. >> we're seeing that in the context of digital taxation. i want to talk about that. the u.s. looked at that with some disdain and the president really didn't hold back. but what do you think the french are trying to achieve here >> it's not just the french. it's the french and british who have been arguing that we need
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progress to create a modern, transparent, fair tax system it's not about the tech sector it's about modernizing and upgrading the tax system across the board. it's not about singling out four, five u.s. companies. it's about saying we need an agreed set of rules for everybody. the trouble is we have not had progress the two governments, france and the uk reacted to that and gone out alone contrary to what they agreed at the g20 and the oecd broadly. they both said they will withdrawal legislation if the u.s. come onside >> there's been criticism this tax will ultimately have the reverse effect and the companies will pass down the costs to consumers. how do you structure this in a way that it gets at those big tech companies and not the smaller businesses who it serves and the consumers? >> i think businesses across the board, including big companies, everybody agrees we need a
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transparent, fair tax system the way that businesses operate today is different than the way they were operating 10, 15 years ago. we need a tax system that works for everybody. we don't currently have that so i think we have to acknowledge, you know, in the popular public there's a huge amount of frustration, they see companies earning a huge amount of money, not paying a fair tax, and we need everybody to agree on the tax >> the challenge with that is getting the u.s. on board but also countries like ireland and the netherlands. if you think about it, this is something elizabeth and i were talking about last week n teshgn terms of jurisdictions, those jurisdictions would be most affected how do you get the buy in from those countries who are also part of the oecd and also resisting. >> it goes way beyond europe and the u.s. there's an army of less developed countries dealing with
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an enormous digital trade deficit. looking to generate revenues from new cross border goods and services it's a much bigger problem than dealing with the u.s. or countries dealing with local cooperation tax. it's not just about cooperation tax either it's cross-border taxes, customs and duties as well we need an agreement we need an agreementthrough all, and we have to answer the k concerns of the u.s. singling out u.s. companies is not the answer we need a system and solution that works for everybody >> i worry about the idea that these u.s. companies are tied up in the trade there's individual specific names that are being singled out. how does that affect the investing environment broadly for these companieswhen they'r thrown out in this trade war >> yeah. it's unfair actually you see it in the wto all the time really people are talking about one name a lot of the time it's not right to be talking about a multilateral trading
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system and naming one company. we should not be designing systems around one or a handful of companies we need to look at the system, look at what the modern trading environment requires, and then find solutions and answering concerns people see an unfairness in the system that's what is driving governments to act we can't keep sweeping that aside. on the u.s. side they need to listen to what the public is saying as well ultimately governments are responding to the pressure they're under. so you can't stick your head in the sand we need solutions on the table >> big tech scrutiny will not go away any time soon thank you very much for joining us today >> thank you coming up on the show, mixed results from citi kick off earnings from key wall street banks this week what to expect from today's batch of results after the break.
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lawmakers are close to a deal on raising the u.s. debt ceiling, that's according to steven mnuchin the u.s. is due to hit the limit in early september mnuchin said both democrats and republicans would like to raise the debt ceiling in conjunction with a two-year budget deal. nancy pelosi ruled out a short-term hike putting pressure on lawmakers to come up with a budget deal before congress goes into recess. and in earnings, citi group shares lost ground during the u.s. session yesterday to close flat despite a 12% jump in second quarter adjusted earnings per share. the u.s. bank got a boost from lower operating costs and a strong performance in its consumer lending division shrugging off concerns over a weaker economic outlook. revenue at citi's fixed income and equities trading unit fell as michael corbitt flagged develop the. >> citi's revenue and eps were
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flatted by one-off gain. a lower tax rate and cost controls also contributed in terms of the actual performance, net interest margin fell to 2.67%, lower than the 2.71% expected that said 3% loan growth and 5% deposit growth met net income did grow overall asset quality metrics were sound. the markets related businesses were down year over year but slightly better than expected. trading was down 5% year over year the market was expecting down mid single digits. investment banking was down 10%. finally worth noting that return on tangible common equity was 1 11.9%. the reiteration of guidance on roe helped the shares intraday citi group shares up sharply
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year-to-da year-to-date, close to 40% on tuesday we have results from jpmorgan and wells fargo. several key u.s. banks are set to report earnings this week, today we will see numbers from goldman, jpmorgan chase and wells fargo. bank of america will present their latest figures on wednesday. big week for the banks calling from new york is jason benowitz from roosevelt investment group thanks for dialing in. what was your takeaway from the citi results here and i'm referring to the fact that they posted a relatively healthy consumer banking business at the expense perhaps of their corporate banking business >> thanks. so from the citi results we felt like the most important takeaway is the bank is on track to deliver its 2019 target of 12% return on common tangible equity it was able to keep guidance
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intact citi is a bank where by improving efficiency and capital return it can pull levers internally to allow it to weather a challenging environment. the market sensitive businesses declined, relative to what the bank said a month ago, that was consistent then in the card business, we felt like this was strong both spending grew 8% and revenue actually grew 7% so that suggests good branded card results from the other banks when they report >> one big macro question that people are asking going into the earnings season is the impact the fed rate cuts and the market is pricing in a rate cut, it hasn't happened yet, the impact that will have on banks and net interest margins what was interesting about the citi call yesterday they spelled it out. they said it would cost city $5 million per interest rate cut of net interest revenue per quarter. $50 million is not that big.
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>> yes so that was something i think encouraged investors the stock did decline slightly yesterday. that comes on the heels of a strong gain year-to-date holding those gains tells you investors were happy with the results more or less so what you describe is correct. we'll be listening for all these banks what is their sensitivity. we know net interest margins are going to decline because of what happened with the yield curve and what the fed is doing. the question is how will that impact overall business. if they can weather that in the way citi did, investors will be pleased. >> you say that, but i see you're underweight banking stocks why then >> sure. so we are underweight the banks. banks as a group have underperformed it's not been dramatic but persistent over this long economic expansion we've seen slow growth and low yields
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these conditions weighed on bank stocks there's no reason to believe they'll change as we talked about, the fed change in its tenor will pressure net interest margins. we know that the conditions are troubled especially for the trading business which has been weak for several years in a row. the advisory and underwriting businesses, while they will probably decline in the quarter, they're not as weak generally speaking over a multi-year period investors think of these being at peak levels and discounting them accordingly on the regulatory burden, both believe it's improving and that's a reason to invest. but the amount of improvement you see goes down the bigger the banks you're talking about for the ones we're talking about it seems to be going slow. you could look at wells fargo where they have an asset cap there. they're not feeling the relief of deregulation. so we are not construct shive on the group at this time >> wells fargo are reporting today. there's the search for a new ceo under way there. how are you thinking about the other name reporting, goldman
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sachs. they have been embroiled in this malaysia scandal >> yes for us at goldman sachs, the malaysian scandal is front and center we'll listen for how many billions of dollar also it cost the bank to settle will the bank take a charge in the current quarter for the costs, and we know they're conducting a strategic review. we know goldman has a lot of headlines for their investments in the consumer space, expanding markets into wealth management or the apple card that will launch in the next few months. so we'll listen on how big those initiatives may turn out to be >> finally i want to ask about jpmorgan the other bank posting results later today. they are perceived to be the crown jewel amongst the u.s. investment banks can we expect any negative surprises out of earnings later this afternoon >> we are shareholders of jpmorgan we agree with your characterization we think they're a crown jewel they've been a consistent market
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share gainer they are creating opportunity and have a deep management base. we'll be listening for what they have to say about net interest guidance for the full-year and there's risk they may reduce it because of what's happening with the yield curve. we'll see if loan growth can offset that. beyond that we're interested in the growth initiatives at the bank like digital wealth management products. and finally listening for the new chief financial officer at the company, this will be her first conference call. >> jason, we'll leave it there thank you for giving your opinions on the u.s. earnings season later today that is it for our sw.ho i'm joumanna bercetche "worldwide exchange" is coming up next. my digestive system used to make me feel sluggish
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it is 5:00 a.m. at cnbc global headquarters. can this rally hold? stocks trying for another day of record highs, but will earnings get in the way of the rally? big tech heads to capitol hill today for not one or two, but three hearings covering everything from antitrust to cryptocurrencies very serious concerns. treasury secretary steven mnuchin calling out facebook's proposed libra currency asking the social network for mor


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