Skip to main content

tv   Bloomberg Daybreak Americas  Bloomberg  March 4, 2019 7:00am-9:00am EST

7:00 am
want to dollar that will be great for our country. alix: president trump tries to talk down the dollar and blame a certain gentleman for liking quantitative tightening. and a deal insight. china and the u.s. hammer out specifics of a trade deal. we speak to adam posen of the peterson institute. and theresa may accused of trying to buy brexit. theresa may promises money for poor areas of the country. david: welcome to bloomberg daybreak. i'm david westin with alix steel in a very snowy new york. alix: those streets are totally clear and i want to know why my kid not go to school. david: you are in the city. had two snow days my entire life when i grew up in new york city. david: you resent it. not be summer
7:01 am
anytime soon. david: also terrible weather across the south. 23 reported deaths. terrible tornadoes. alix: power prices spiking on the west coast. lots of ramifications for the market and the u.s. economy. here is where we sit. we thought we were going to have a rally with chinese stocks but we are petering out. futures only up by seven. euro-dollar down .3%. the dollar gaining steam despite the fact president trump says he wants a weaker dollar. 10 year yields 2.74. crude up .5%. russia continuing to cut. david: now is time for the morning brief. tomorrow marks the beginning of the national people's congress in beijing with the prime minister delivering his annual report on economic policy. also tomorrow, retail earnings.
7:02 am
target will be announcing its earnings. ecb announces its decision followed by mario draghi's news conference and on friday it is jobs day in the united states and it happens to be international women's day. and chinau.s. reportedly nearing a deal that could result in the u.s. lifting tariffs if china buys more american products and commits to protecting intellectual property rights. what is china willing to buy under this potential deal? has made it clear they are willing to come to the table. they have said they are willing to buy agricultural -- we are expecting the energy area. we do not have the final details on the specifics. we did have more positive mood out of beijing.
7:03 am
a spokesman described the talks as fruitful, intensive. he says they continue to make progress and he spoke about a win/win situation which is classic diplomatic speech from china. all indications are the talks are on track. they are pushing toward some sort of deal. we do not yet have the specifics on the deal. u.s.?what about the what are we offering china? >> we are offering a return to normality. that is the lifting of the largest piece of the tariffs that were imposed on $250 billion of chinese imports last year. it is not clear yet this deal is done. we need to stress that. there are still a few weeks before this gets signed. it looks like i am still hearing pushback from folks in the administration.
7:04 am
getting calls from people who insist the deal is not quite done. we need to be cautious. we are in this limbo stage of the negotiations because of the national people's congress going on in china and the chinese political character. getting a pause on things. we are setting up for the end of the first round of negotiations. david: if it does not happen, why not? what is the sticking point. two things to keep in mind. the first is the politics. the hardest thing donald trump will have to do is selling this deal as a delivery of his promise to get tough on china and rewrite the relationship with china. the second thing is that it is still not clear that the chinese have delivered or are going to
7:05 am
deliver the fundamental structural reforms that the administration is pushing. that is going to be about not just closing the deal in the short-term but what happens afterwards in terms of enforcing that deal. in some ways this deal is only the beginning of things. david: thank you both for much for joining us. now it is time for bloomberg's first take. we are joined by a columnist and by marty schenker. , it is not appen done deal, but if it does happen who will benefit? >> it seems like investors would benefit. the markets team has said this is the gift that keeps on giving in terms of markets. we started to see a slowdown last week in s&p but the markets are responding positively to this indication there could be a deal coming. out of the gate it could be back , but the question is how long it will take, what will be the
7:06 am
pace, and how to we keep the chinese accountable. david: marty, the president has demonstrated you can be a little bit unpredictable so what if the deal grows up all -- lowe's up altogether? what we mean if we are close to a deal went donald trump has to sign off on it. he did make the very positive stance of walking away from the north korea talks. sometimes you have to walk away. it is a possibility on the trade talks if he is not satisfied. alix: especially if there is no rally? where is my rally? president trump very vocal at cpac talking about dollar and an unnamed beneficial. fed want a -- an unnamed official. dollar, butstrong not a dollar so strong it is prohibitive for us to be going with other nations and taking their business.
7:07 am
is this is out policy as we get toward the election, blame somebody else for the rising dollar? >> of course. alix: great. we are done. very interesting to me donald is calling for the dollar to be weaker when he rails against people manipulating their currency. the dollar reaches its level by policy and not by dictating from the white house. it is true in the markets and does not seem to be having much of an impact. the dollar is up this morning. david: you also have to wonder how this might rate to the -- relate to the chinese negotiations. if there is a deal, does the dollar come off? peggy: that is a great point. trump has been critical of the chinese manipulating their currency. it is also interesting the fed is coming up on its next decision within weeks and it seems like a shot across the bow to powell.
7:08 am
he put a lot of pressure on the fed chair in december and it seemed to resonate. also the jobs figures are coming out on friday so the fed has been focused on data. we could see chairman powell in a corner again. alix: if the fed is going to be on hold, now we do not know why. is a trump pressure or they wanted to be on hold? boning that is why joaw from the white house makes it harder to understand fed policy. that is why people argue you should just be quiet and let the fed do what it does. it does create more confusion. alix: it feels to me like the campaign is off and running. it feels like he is out there campaigning and he is going to hit all the issues he wants to hit no matter what. david: and he only has 25 or 30 opponents. hug has to
7:09 am
david: that is a great photo. third story and one of our favorites is brexit. had some ofkend, we the people in the tory party who are most skeptical on theresa may's position repeatedly have a plan that they could go along with theresa may if we beef up the backstop situation so we know we can get out of this. in the meantime, the pound has gone up on the news. peggy: it does seem like positive news out of the cap -- out of the u.k.. theresa may is running out of time. we have a great story that the masterful it off is nearly impossible, but it is possible. she has suggested money to poor neighborhoods in u.k., so she is racing together the support she needs. alix: the interesting part of that is it is volatile. it is kind of like any am currency, losing all steam. marty: a number of us are
7:10 am
feeling brexit the tea. -- of feeling -- a lot of us are feeling brexit fatigue. it seems like there are now positive developments toward getting her deal done. all of us would like to get past that date. alix: bloombergs marty schenker and peggy collins, thank you both very much. you can find all the charts they used and more. on your terminal. posen, peterson institute for international economics president. this is bloomberg. ♪
7:11 am
7:12 am
7:13 am
viviana: this is bloomberg daybreak. eli lilly announcing it will introduce a lower-priced version of an insulin drug. aboutle file is priced at $137. the new list price will be 50% lower than the current price. this announcement coming at a time when both political parties are turning the spotlight on skyrocketing drug prices. it could be a defining issue in the upcoming presidential election. elon musk says tesla will unveil its model y crossover in less than two weeks. there are questions about the carmakers job cuts, store closures, and appeal. elon musk says three quarters of the model y parts overlap with the model 3. in japan, the new lawyer for carlos can -- for carlos ghosn
7:14 am
says his new request for a bail may succeed. carlos ghosn has been jailed for financial misconduct. acceptagreed to surveillance as a way to monitor his activities if he is released. david: markets are responding to reports the united states and china may be near trade deal. morris anddaniel from washington, adam posen. peterson institute for international economics president. adam, we will start with you. the outlines of a deal. china will reduce tariffs. you've been something of a critic of how president trump has been proceeding. , would bet this deal a good thing for the united states? adam: it would be better than the ongoing tariffs and tensions. has become a very china
7:15 am
hawkish place. i do not think that it will satisfy anyone politically. economically, it will have sacrificed several billion dollars of disruption in the u.s. for very little yield. i think it is still a bad idea. what if there is progress on intellectual property and technology transfer? is that a more fundamental change for the better? adam: that is the much more fundamental issue. the tariffs are small potatoes even though they hurt people. the intellectual property is the core issue but it is not something people are looking at properly. on the one hand, companies transfer technology all the time to all kinds of countries. that is part of how development happens and how markets grow. it is in their own interest to do that.
7:16 am
secondly, if you will do a fundamental change to the chinese system, that could take a lot more enforcement than what is involved and probably not something, whatever the people's congress passes, that will take much affect. david: what about assets? if you look at the reaction of chinese equity markets this year, a lot of it has been driven wine anticipation on some type of deal. the anticipation of what has come out over the weekend is better than they had expected. not much of any reduction in the existing tariff on china. we have to see if that happens or not. if you do get an actual reduction, i think it will exceed expectations and that will give more energy to the rally see in china equities. alix: would you argue em in china are the biggest beneficiaries?
7:17 am
win's for the markets -- two big headwinds for the markets in the u.s.. daniel: china underperformed in trump would when talk about tariffs against europe or against canada or mexico. those markets always underperformed relative to the u.s.. they are more dependent on trade from america than vice versa. if we do reduce tensions around trade, china disproportionally benefits while the u.s. marginally, but not the key thing driving the market. david: president trump came to themarket being -- came to office being very explicit that he likes bilateral deals. if this goes forward, where's the wto? what role do they have to play in trade? adam: the wto idea is it is sufficient to make multilateral
7:18 am
deals rather than bilateral deals. if you look at how bad nafta is versus gdp. it is better to make -- versus ttp. the wto continues to function as an important forum for talking about trade issues and a dispute settlement mechanism as we saw between china and the u.s. on agriculture. wto is howsue for much of this bilateral discussion of intellectual property between the u.s. and china becomes a broader regime. that could take place within the wto, that can take place with japan and europe joining the u.s., it is not clear where it goes from here. that is a lost opportunity by doing this bilaterally. alix: what do we learn from that about how the u.s. will deal with japan and europe and the u.k.? adam: it is the right question going forward. the lesson is -- the lesson trump will take is he is
7:19 am
verified in his believe in bilateral deals. u.s. trade representative robert lighthizer continues to be distrustful of the wto due to an ideological bias. what you will see again, as with nafta, as with north korea, a lot of noise and uncertainty and not much done. the u.k., in particular, being the weakest in the smallest of they leave the eu, which they probably will, they will be the most vulnerable to a trump bullying at. david: daniel morris and adam posen will be staying with us. coming up, buying the vote. some members of british parliament are accusing prime minister may of trying to buy brexit vote by offering poor -- by offering money to poor areas of the united kingdom. we'll discuss that next. this is bloomberg. ♪
7:20 am
7:21 am
7:22 am
to go untilys brexit and theresa may is reportedly gaining support for her plan. a group of tories pushing hard for brexit have a plan that might allow them to support the prime minister. the pound when up on the news and that went right back down. still with us are at impose or and daniel morris -- are adam posen and daniel morris. is this similar to the u.s./china situation? the theresa may deal is better than going out without any deal at all? adam: it is better than no brexit. that is what is driving the people coming to the deal. that has been theresa may's strategy since the bad news she got in the election a year ago is to try to drive things so the only alternative to her deal was no deal and force people to sign up. it is still a bad deal.
7:23 am
it is better than the alternative. better to shoot yourself in the foot than the chest. alix: that is hard to call for currency traders. 1.31 for the cable rate. what you do? daniel: we have to think about sentiment swinging. an end gameoser to where it is not the current , butsal gets voted through it is more likely you end up with a second referendum. i think there is still upside potential. when you get to that eventuality, there will be more uncertainty. in the short-term, more optimistic but also look for a point where we want to turn cautious again. alix: does it also wind up taking the heat off the boe? if we continue get a pound rally the bank of england maybe does not have to end up hiking rates. is that a good thing or a bad thing? daniel: they are a lot of things
7:24 am
to take into account as they are trying to steer the economy through tumultuous waters. if you have strengthen the pound, there is the impact they have to deal with on inflation and also on exports, where what you need to support the u.k. economy, you worried about domestic demand. a lot of crosscurrents they need to address. they are taking a wait-and-see attitude because you cannot make any decisions until you know how things will progress. alix: why you want to build something if you do not know what happens. >> i think america and china has a much bigger risk than brexit. brexit is a more localized risk. agree?dam, you adam: i think that is right.
7:25 am
there'd been financial market conditions between the various banks like the stuff we saw in 2008, then we would be much more worried but this is been so telegraphed in advance. we do have a better bank survey. people are giving the british investments a wide birth. i agree with daniel in terms of the volatility. house of the restaurant big downside. -- if theresa may fails, it will go much worse. david: can the british economy come back from this. adam: yes, but it will take a while. you have to reestablish trust and trade networks. earlier, you can sterling have moved to being like nem currency. alix: daniel, do you agree?
7:26 am
em currency? daniel: hopefully not quite to turkey levels but people have reassessed their assumptions about investing in the u.k. quite difficult to anticipate when a payoff on a project will be if you do not know what the relationship will be like in five years. the short-term it is hitting business investment. even if you do get to a scenario where you are talking about a 20 month extension, you think that investment will be put on hold. alix: daniel morris and adam posen are sticking with us. coming up, trump sings a familiar tune. investors turn a deaf ear. this is bloomberg. ♪
7:27 am
. . . .
7:28 am
comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "activecore, how's my network?"
7:29 am
"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. alyx: this is bloomberg daybreak. if you're at work you made it through the snow, good for you. s&p futures up by eight off the lows and highs of the session. what's interesting to me is what's not moving if there's a
7:30 am
u.s.-china trade deal i would have thought the dak would be up in europe. that not happening. our consumer discretionary and communications not, the cyclical sectors like materials and industrials. maybe a profit warning from lynn but nonetheless, you did have cable jumping earlier and maybe you'll get a brexit deal and now reversed all its gains, flat on the day as the dollar continues to ignore trump and ground its way higher. the curve up 18 base points and crude up by 1%age points and traders superbullish on trade, big bullish streak and russia continues to cut production. david: it's time to find out what's going on with the business world and for that we turn to viviana with first news. viff ana viviana: 20 people were killed when a tornado struck the community. the twister destroyed a number
7:31 am
of houses and mobile homes. the tornado was rated a level f-3 meaning wind could have reached 206 miles an hour. another democrat has entered the race for the white house. former colorado governor john hicken blooper said he can ignite people to ignite the social change no one has delivered. and it has been claimed he was too close to the oil and gas industry. china will use a $90 billion tax cut to boost the economy. china will cut the value added tax that covers the manufacturing sector by 3%age points and would help when economies are under pressure from the u.s. trade standoff and domestic debt cleanup. global news 24 hours a day and tic-tock on twitter powered by more than 20,000 jrnlists. this is bloomberg. alyx, the back cut tax might be beginning a week when the
7:32 am
official congress is beginning on tuesday with then things on the agenda with growth and property trade and fiscal balance. we're joined by two guests, a $ 0 billion tax cut that will help manufacturers. what else are you looking for this week? >> i want to emphasis how important the tax cut is because for years the chinese leadership has used crazy credit screens when they've needed to do stimulus and for them to use the tax code is really a step forward. it will be much less distortion area and stable. what else am i looking for from the n.p.c.? there will be a statement about intellectual property and joint ventures. your team has been reporting on that. i think it's all about implementation but there will be a very nice statement and probably rollback of tariffs. that's easily implemented but not the big ticket item. it's the stimulus to keep the
7:33 am
chinese economy stable and using the tax code and intellectual property potential changing and how they treat multinationals. david: there has been concern with china with respect to trade. what is it the good news coming out of n.p.c. to talk about bad news to show they're fundamentally concerned about their economy. >> we've seen this drip feed of relatively minor stimulus measures and the vat cut is the latest and looking at the short term economic data, there's a few green shoots but not all the data is good and the markets rallied quite a bit for the trade deal but it's not clear the economy has turned around and what investors will turn to really to seen if there's a sufficient recovery for economic growth and see if we can get through the the next
7:34 am
few without a shutdown. david: when the leader came in, there is a risk now of the commine he's community if they don't overtake the reforms such as the state owned enterprises. daniel: the contract between this and five or six years ago when president xi was coming out of the national people's congress with a real reform agenda on taxes and real estate and on financial system, it's a huge contract. as my colleague argues in his new book, "the state strikes back" this is a multiyear shift by xi, very fundamental and much more taken control and obviously being driven by political decisions and some of the horrible things just speaking for myself he's doing in the west of the country, the muslims, you know. this is all about political control but the economic costs are very real. i'm less focused on the short term slowdown than your other
7:35 am
guest. daniel was talking about as nick documents, huge amounts of chinese capital are being invested in lower returns, private sectors not getting a share of capital and the private sector continues to be active and vital but the activity, china is slowing down because of the interference of the heavier state hand on the company. alyx: as a market participant, do you feel like there's a china put in the market? daniel: over the medium term you're not as optimistic. rye productivity in china is something the company will need and at the same time can they go back to the same playbook of increasing credit when the economy goes down and i think if the short term it will continue to work. david: i want to return to
7:36 am
currency. president trump repeatedly accused him of currency manipulation. over the weekend he went to c pac. listen to what he had to say about the u.s. dollar. president trump: i want a strong dollar but i want a dollar that will be great for our country but not one so strong that is prohibative for us to deal with other nations and taking their business. david: sounded like he'd like to talk down the dollar. what is it, a strong dollar, weak dollar, where is the dollar close to right now. the dollar went newspaper a way because of the fiscal blowout prumple and the majority put in. in december of 2016, you had me on and i was saying if trump is selected, we'll have a bailout
7:37 am
d the fiscal summit will get to meet again and we have bigger fiscal deficits. the idea of manipulation, it's a real concept partly due to other colleagues and congress passed a law, the treasury has a rule defining manipulation but that's in terms of actual you're resident -- that going against a president pushing up your currency and you're leaning in favor of and expanding trade deficit when at a time there's other stuff going against you. that's not what china has been doing for years. the legal rading definition and operational definition the u.s. treasury has been using for manipulation and like calling every car accident is a vehicular homicide. sometimes car accidents are
7:38 am
accidents. china's currency has been leaning against he -- has been pushed up by the chinese government in recent years. this is a silly thing to be doing not because oh, everybody is a manipulator bahama you're not able to enforce it when there's real manipulation. some control is not a bad thing. alyx: playing devil's advocate, is president trump right in that, if you have a stronger dollar you will have langored 10-year rotation? you need to get that up. is he right? daniel: it's not a huge part of the economy and we need to keep in mind the value of the dollar versus d.m. currencies and the euro and emergent markets because they're going in different directions, versus the euro, it's much more now around the look of european
7:39 am
growth which is weakening and the dollar strengthening against the euro, not so much with the feds having pulled back the cureo is weaker and in the major marketing, it's going in both directions but fundamentally for inflation that won't be the key topic. david: adam, we talked about the need perhaps for reform long term a to health of the economy. you have been critical of the tax cut, the wrong time, the wrong place for the fiscal stimulus, what is the right thing to do for the u.s. economy? it's pretty much obvious but hard to get it done. we need a large scale public investment program, not just roads and tunnels but power grid and human capital.
7:40 am
we need a massive reform of health care because there's easily 5% or 6% g.d.p. which is enormous compared to the results we get for every other advanced economy. we need a tax code change somewhat to where it was and some work on international tax evasion and competition with other countries. that's essential to prevent a race to the bottom, also with a carbon tax but have no idea how to get from here to there. david: there are some democrats suggesting how to get there with regards to health care and f there's 5% or 6% of g.d.p. being gathereds, is it possible without single payer? adam: not where a single parent takes care of it and people buy
7:41 am
bonus stuff and not to be feared unless you're a investors in particular health care companies. it's the right thing for the american people. m.m.t. 't buy the nonsense is costs nothing to pay for it but i do buy there's so much waste and overpricing in the health care system and there are more people expert than me who can talk about this and pay for it. britain, france, germany, switzerland, japan. all these countries pay for as uch health care as we have with roughly 8.9% g.d.p. imagine if 4% or 5% of that is people voluntarily getting plastic surgery and hip replacements at age 92 to play tennis even if you take that out and even if you take out me insisting on paying to go to my doctor i like, you still got several percentage g.d.p. to
7:42 am
save and the most important thing to look at. david: daniel and adam, really great to have you both on. thanks very much. alix: numont mining is rejecting the hostile bid and could come as soon as today. the $17.8 bid made for numont, they're very unhappy because it came to no premium and the c.e.o. said there will be the $7 billion in cinergies and is the premium. numont is not buying that at all. and they are close to considering rejecting it. they'll join with barrack but nevada is where the cinergies would be in the creme day la kim world with barrack, no, i hate you by i'll work with you on this a little bit. david: is this having your cake and eating it, too?
7:43 am
we don't need to merge the two companies but would get the benefits that would acquire. alix: you're not getting a premium so why would you want to do that deal and if there are cinergies to take place why not? and they talked about this efore, the c.e.o. of barrick is very stubborn and see what he says. there were harsh words at the mining conference in florida. david: expect a lot of banking investment work going on behind he scenes. talking nordia, inc, about money laundering, this is bloomberg. ♪
7:44 am
7:45 am
7:46 am
viviano: i'm at the hewlett-packard greenroom. -- ng up, viviano: i have your bloomberg business slash, the cfo of mawae filed a lawsuit with authorities claiming she was illegally detained. you may remember she was detained after a request from the u.s. government. canada has agreed for a extradition hearing and accuses the huawei to violate trade sanctions against iran. it's a key milestone for spacex and nasa. docking with the international space station. it paves the way for a plan for
7:47 am
the summer. the flight including a dummy inside the capital and elon musk. the company is competing with boeing for nasa. a group of working moms at amazon tried to persuade jeff bees owes to provide a backup daycare plan for employees. bloomberg has learned women have been collecting anecdotal evidence showing how the lack of daycare support could hurt careers and later they're scheduled to meet with the senior managers. now back to you. alix: a dummy named bridley going to space ex-? it's brilliant. rst up, nordick slips on fierce of money laundering. and then the end of gross' alpha era. bill gross says the era of beating benchmarks is over.
7:48 am
bezos and gates hunt for cobalt. they're betting on data to scan for cobalt. david: jason kelly has been in germany. let's start with nordick about money laundering and the stock is down on news there's going to be a report by the finnish broadcaster that will say that they're guilty of money laundering. >> a lot of drama here. it's a little bit contained but contagion. a nordea we've talked about don scope but now you have nordea and they're getting looped in and argely has to do with estonia. david: and sweat bank was involved, accused of money laundering, too.
7:49 am
>> investors are worried because this is a report coming out later today, they don't know what's in it. you have spokespeople saying no, all in has been out there before but this is a real worry for people all these shares. alix: oh, money laundering, you were saying nordea. >> this is a bank off of cyprus. they put all the money through cyprus and shut down cyprus, let's pick estonia. alix: let's go to bill gross in the bond market 38 years and could be the end of alpha. >> there are things to look at in the market that can generate alpha. the probabilities of generating historical alpha in the same way are much less than they
7:50 am
were. alix: it was interesting because you were at the conference. did you get that feeling, too? >> i didn't in part because the private equity guys are so confident in their ability to keep delivering these sorts of returning whether that confident is misplaced, that's another big question. this was pass fating and a exit interview that was done with bill growth. and you're saying it wasn't as good as back in the day where i could make money and all these things going on, there is a through line with all the trading going on and the computer based trading going on. he does make a really good point that it's a lot harder to make mine. the back half of his career really bears that out. david: he's exactly right and struggled at the end is fair to say because in part when you read about it, the good old days. nobody knew anything and when the bonds came up, nobody knew
7:51 am
what they were and could make money. >> he pointed out he had a unconstrained fund at janice henderson. maybe some restraints are good. he had too many things to look at and too many to pull. this is prospecting for cobalt. i never heard of machine prospect. i thought you got out with a shovel and pickax. alix: horse and buggy time. david: an outfit put together with bill gates and bees owes. -- and bezos. they're going to try to find cobalt in the earth crust. >> google map for the earthst crust. this is a business. sort of going back to what you said at the top, they use technology but it's really around processing and their own
7:52 am
processes. and is taking it to a whole other arena. i worry from you, is this something you talk in your commodities, yeah, this is where the world is going or system under the counter? alix: the technology is unclear and they picked cobalt. you need cobalt to make an e.v. but that story is well known in the market and prices down 60% in the last year for cobalt. why that? why not find something else like nickel or lithium which you really need. >> maybe you go somewhere else other than d.r.c. to find it. alix: yes, technology for these guys definitely will be key. you're right, barrack doesn't have the ability to go of the uge drone and search for gold. there's that thing.
7:53 am
david: can you hear jason kelly on business week from 2:00 to 5:00 eastern time. coming up here, the next step in the space race. the crude dragon docked at the international space station monday. more on what i'm watching is next on bloomberg.
7:54 am
7:55 am
david: this is what we're watching is spacex crude dragon. spacex has launched a vehicle up to the space station that although it didn't carry people it can carry people and it carried a surrogate person. alix: ripley for those under the age of a certain age that is sigourney weaver's name ripley and pretty cool. david: this is going in the spacex capsule and preliminary to sending the vehicle up with
7:56 am
real people as early as july it turns out. it's a competition, not the u.s. versus russia but boeing. boeing is two weeks behind them. alix: they secured pace on a russian aircraft because they weren't sure it would work out and is not deemed successful until it returns to the atmosphere and lands safely. david: we'll be launching from the united states instead of russia. alix: coming up, liz young, head of market strategy will be joining us on the potential of a u.s.-china trade deal. this is bloomberg. ♪
7:57 am
7:58 am
7:59 am
♪ alix: a deal in sight. china and the u.s. hammer out specifics of a trade deal from
8:00 am
tariff rollbacks to china buying more. how much is priced in to u.s. stocks. china's $90 billion tax cut. the company planning to cut the value added tax rate to 3% to boost the manufacturing sector as peoples congress kicks off tomorrow. and it's draghi's turn, the e.c.b. is the next bank to meet. the market looking for a signal of more bank loans at cheaper rates. david: welcome to bloomberg daybreak, i'm david here with alix. all the weekend shows and news programs were given over to the mueller investigation and the congressional investigation of president trump coming off the cohen testimony last week. alix: i'm dealing with a cranky toddler so kind of the same but different. david: to a lawyer a problem, when a prosecutor decides not to prosecute they let it go and done explain. you should give us all your information whether you decide
8:01 am
to prosecutor not. alix: and president trump was campaigning saturday. anything you could think of he was talking about. david: including a word you can't say on the air. alix: the markets here, it feels like it wants to risk but the futures up despite the fact the chinese stocks closed and the euro-dollar down. it was a mixed dollar story and the dollar merging. the 10-year field goes nowhere and not a lot of movement in the bond market after the steepener, crude up by .8%. crarb is cutting output and bullish positions in the crude market. more of a relief rally in the commodity space. david: time for the commodity brief. tomorrow will mark the beginning of national people's congress in beijing and a annual report will be delivered on economic policy.
8:02 am
retail earns continue tomorrow with target announcing before the markets open. on wednesday the fed releases the beige book and on thursday the central bank announces the decision followed by draghi's news conference and friday is jobs day in the united states and it happens to be international women's day. alix: just to confirm here, it's nugget, newmont is resisting the proposal. and are interested in working with barrick in working in nevada where is a big spot for cinergies. barrick is not announcing its bid and newmont buying cold rps and bear rick buying newmont and doesn't like the deal. and sticking to the original deal and saying no thanks, barrick. david: a soap opera. alix: one i under. this one buying this one and who is what?
8:03 am
now i got this one. we'll see what mark does from barrack. u.s. and china possibly with a trade deal if america buys more products to protect property rights. tail lower, what are we looking at here? taylor: if the trade deal goes through and a lift of tariffs you see things outperform on the hopes this would come through. if you go to gtv go, good sector and durables are a clear performer. we're talking about boeing and 3-m caterpillar and companies like nike, all of which have big exposure to china. again, a lift here on some of the hopes the trade deal would go through. we talked a lot about the auto sector and if you pull up the chart we have a full screen is. the auto sector tesla has its own risk and i'll
8:04 am
focus on g.m. our analysts are saying the strongest headwinds are slowing demand in china and the trade fight. interestingly as well, we talked about the grains and soy bean. you see soy bean the big underperformer here going back since the start of the trade war last january. if china has started to import some soy beans we would see a lift for these markets. they are one of the biggest u.s. importers and of course it comes down to what it means for the broader markets and a lot of strategists from bank of america and u.b.s. said it would give a lift to the overall markets and if you see the trade headwinds start to disappear, bank of america said they could reach 3020 and would exceed the high of 2930 and a reversal would boost earnings share growth by 1% and u.b.s. saying in december it could rise again to 2920 and that would be approaching their year end target on the s&p of 2950.
8:05 am
david and alix? david: joining us is liz young, head of market strategy and nancy, also a chief investment strategist. liz, we just heard how markets may be anticipating this deal. is that because in fact if this deal goes forward on the sorts of terms we talked about, we have a general undergo, if it goes forward we'll be better off, that is to say not just better off than having a war but better off than when we started. liz: it would close the deficit. david: trade deficit. liz: right. the battle is won, not the war. but really what we're still after is the intellectual property piece and still is a question mark we need to wait and see what will happen. david: what will it do to the dollar as a practical matter and is there a risk that will heat the economy and cause the fed to come back and raise
8:06 am
rates again? liz: backing up a bit, what's going to happen here, the economy i think is already getting ready for a trade deal, the market is pricing in a positive outcome here. so it will be less of climactic event if we get a deal. the bigger risk is it we don't get a deal because the market is catching up to that. the dollar is an interesting piece, a head scratcher for a lot of people this year. what we're seeing is the fed on pause and you would expect the dollar to depreciate but since there is so fewer options sentiment has driven people back in the dollar so it kept it propped up. so i would expect the dollar stays relatively strong the first half of the year and later in the year because we see the fed having to hike once and maybe twice in we upside surprise and then the dollar, who knows what will happen. alix: nancy on a individual company level, when you woke up, were there any stocks more interesting to you than on friday? nancy: not yet or danell but in december we anticipated china
8:07 am
was strengthening and then at that point we added in tiffany which would benefit from improving chinese consumer. we added some semis through broadcom and added cloud play with strong exposure to china which would include sales alix: is there a china put and things get better in china or more like u.s.-china won't fall out of bed and be ok? nancy: both. china is global growth so if we didn't have an improving china, the country has eased dramatically today we saw more news and saw increased lending in january. so these are all things, there are about 70 eases in the second half of the year, not just taxes and not just monetary policy but reserves, etc. so we anticipate that china will be stronger in the second half and also we think the market has been pricing in a deal so we've benefited from that but would expect to see a
8:08 am
little bit more. david: nancy, you focus on the u.s. consumer a bit and u.s. discretionary, does it affect what happens with china? nancy: yeah, look at starbucks which has been in china 20 years, they've seen 18% unit growth through store openings, just 1% in terms of organic growth. if we see some easing with the china relationship, i think the chinese consumer will return to star bucks. yes, there's a lot of competition, we're aware of that but think there's a number of companies we own, tiffany is another one that will benefit, apple from a i'm proved consumer. alix: it goes back to the dollar because as state haven currencies which is what we were talking which is why we had more inflows despite the fact the fed was getting off the pedal and president trump talking down the dollar and here's what he had to say at cpac. president trump: i want a strong dollar but want a dollar that is going to be great for our country, not a dollar so
8:09 am
strong it is prohibative for us to be dealing with other nations and taking their business. alix: how do you take a longer term view on the dollar? liz: can you do it on a trading range or a 3-5 year period. when you take a longer term view on the dollar, i think you see moderation. and when i say longer term, call to the next two or three years, you'll see moderation and probably weakening but this year because there's still so much out there with brexit and trade and obviously we have europe slowing and japan which i say a lot of like a bowling ball moving through molasses, there aren't better options so as we move through the rest of the year and if the fed hikes again, we'll see that flat to slowly melting up dollar. david: do you take the dollar in account when investing and given the s&p for example which makes money overseas, a weaker dollar means they get bigger earnings. nancy: oddly enough, david, those companies rallied more
8:10 am
than the overall market. those in fact the multinationals that are exposed to dollar exposure. david: despite the strong dollar? nancy: yes. you couldn't have anticipated that because we're large cap investors and seek value at evaluation level, those were the attractive names, boeing, johnson & johnson, 3-m. so we were actually committing capital to those stocks in the first part of this year and they've continued to generate outperformance. alix: bowling ball through molasses. liz: they've seen me bowl. alix: both of you ladies will stick with us. coming up, buying the vote. members of the british parliament accuse prime minister teresa may of trying to buy brexit votes and the latest on her irish backstop. this is bloomberg. ♪
8:11 am
8:12 am
8:13 am
viviana: your bloomberg business flash. newmont mining rejected the barrick takeover bid and is not in the shareholders best interest, the company saying the previous combination with gold corp would create new value and newmont proposed a joint venture with barrick in nevada. eli lilly will produce a lower version of an insulin drug. a single vial is at $137. the new list price will be 50% lower than the current list price. this announcement coming at a time when both political companies are turning. it could be a defining issue in the 2020 presidential election. british prime minister teresa
8:14 am
may is being accuse fed trying to buy support for her brexit plan. may is promising a $2.1 billion boost. she is offering sweeteners for members of parliament to back her unpopular withdrawal agreement. david? david: whether because of buying votes or otherwise, the british prime minister may apparently got help over the weekend on her plan with the sunday times reporting a group is pushing hard for breast wit a plan of their own that might allow them to support the prime minister. joining us from london. is this coming together for prime minister may at the 11th hour, 59th minute? >> it looks like it is. it looks like the really hard line conservatives have opened the door a crack and that said, i think we have to see what the attorney general comes back from brussels with. you also can see how the hard line of her party could simply
8:15 am
look at it and say this isn't good enough and this isn't the alternative to the irish backstop we wanted to see and we can't support this. we'd rather go for a long delay or no brexit and then things could start to fall apart for her. i say things are conquernling more in her favor but we're still a long way from feeling that with any certainty. avid: thank you so much. alix: nancy and liz are still with us. this is a backdrop to the e.c.b. meeting, president draghi will address that as well as looking at the growth projections that continue to be downgraded. what do you expect out of mario draghi and the projections? liz: europe is in a world of hurt and we're still concerned with that through the end of the year. usually when clients ask where are you more positive, is it the u.s. internationally developed or e.m.? internationally developed is last because we have italy in a recession and draghi who will
8:16 am
retire october 31 and that obviously will take support off the table, there whatever it takes. and europe has a lot of things to figure out especially with the bad debt on their balance sheets. alix: the dax and cyclical sectors aside from the discretionary weren't performing and china and u.s. with a trade deal should alleviate the pressure on draghi. what do you make of it? nancy: to liz's point because there are so many instructional problems in europe you won't see short term bounces until the good news is already reflected in the growth. so i also think that there is concerns over the u.s. in autos and what we city to do after the 232 investigation. so we're also underweight, the developed market. and if you look at our -- it's more of a barbell, our exposure is u.s. and e.m.
8:17 am
you won't see a lot of europe in the near term though we've got a decent pop in the markets. david: if you look at the employment situation in europe, the job situation in europe, it's strong and the consumers are strong in europe, is there a possibility it could bring them out of it. liz: i don't think it will bring them out of it completely. there's too much structural issues there. as they move through this you might see them have to stimulate the economy as the year progresses? david: are they stimulating already, germany announced they'll have an increase in wages for teachers and employees and looked like a fiscal stimulus. liz: it's a piece of it a sliver of a stimulus but not a broad reaching stimulus so they may have to take more drastic measures as the year goes on which would be positive but don't expect it to be that effect pitch. alix: the conversation for thursday is will we hear specifics about teltros, bank loans at lower rates, do you
8:18 am
expect it to happen thursday, what's your outlook? liz: i think we'll hear something on financials because that's the spot in europe hurting the most and causes the biggest risk and doesn't get enough air time to be honest. we look at the doom loop scenario because there's so much bad on the sheets and there's not a healthy lender. alix: cue argue because they have a negative 40 basis point deposit rate, aside from reform which is not helping them. at what point would europe represent value versus value trap? nancy: not for the last 10 years. alix: i'm dodging your question because i don't know. liz: we had a great 2017 in the developed markets but don't know what it's going to take to get the structural problems solved. nancy: germany is so dependent
8:19 am
on autos. and you know, that's great when it's great and it's not so great when it's not. so between italy and france and the protests and then you have brexit. i'm on the sidelines because i just don't see the catalyst. alix: liz young, thank so you much and nancy tengler of butcher joseph will stick with us. a stock favored by hedge funds and earnings ahead of the bell and today's bottom line. this is bloomberg.
8:20 am
8:21 am
david: time for the bottom line. big tobacco companies like philip morris, have a big problem from canada i had not seen before and a huge judgment has been upheld, $17 billion canadian and $13 billion in u.s. dollars and basically the quebec focus class-action
8:22 am
that's gone against them and so dire saying if this is upheld, they'll have to go out of business in canada. tobacco will have to get out of canada because they can't no longer afford the liability. alix: can they sell pot in canada? because actual tobacco is no longer loved. how about no longer loved, the c.e.o. is taking a voluntary break with the company as they kind of digest what's happening with brazil, a city they project 81 million tons of year of iron ore out of the brazilian market and not just what's happening at the dam but will they go back to operations the way they were before at vale or will there be more oversight for the dams to get rid of mining waste and what it means for their business model. david: i bet it didn't come as a big surprise. when you have that big of a problem as a company, talking about ppg&e.
8:23 am
alix: it gets worse, with the criminal investigation that takes hold in brazil could get worse and not as simple as what we thought. david: it's not clear how to fix it. that's the big problem. the third story is sales force for more on taylor rigs joins us and nancy tengler of butcher joseph with earnings. alix: after the bell and most analysts are positive of the stocks and were an early cloud adopter and have the early mover advantage. looking at organic sales to be growing 15% to 20% and top line revenue growth under our estimates to look at growing 26%. this is for a large cap tech company and pretty good and moving down the income statement, our analysts are expecting margins to increase though slowly as some of their existing cloud applications gain scale. you're still looking at growth margins of 77% and net profit margins for their fiscal 2019 at about 15% so so far pretty good and most analysts are positive and heard from oppenheimer and jeffreys who
8:24 am
have a rating to beat in q-4. the average analyst looking for 180, the stock now is 165. david: you're an investor in the stock, it's been remarkable and grown dramatically. a lot through acquisition, can they keep this pace up? that's the question, david. i'm an owner and on weakness would buy more and this is trading at a hefty multiple so the growth has to continue. and so we initiated a small position and you know, if it goes up and it has, we win. but if it goes down we have the opportunity to buy more. alix: sitting a the a record high now. when you have an earnings, ease in where you don't lose a lot, you're not terrible, your stock can actually rally. i wonder if you just deliver as -is, is there a downside risk? taylor: the tech has been mixed and we look for the future earnings growth to come in and our analysts or most of the
8:25 am
analysts on this route think they can deliver and there is still more upside potential. a lot of that of courses that to be from the organic sales because you can't just do acquisitions forever. if you're still able to grow organic sales by 15% to 20%, that speaks to sort of your scale and being early adoption or early mover and made 20% of the cloud market share which is two times the next one which is microsoft. then g they have that scale. david: what about the competition issue. s.a.t. said they'll go in that business. does it make you nervous? nancy: when there's a business with big margins, competitors enter in. i'm not concerned about that. i'm just concerned this stock has gotten ahead of itself. wall street analysts do tend to like stocks at turning points and that's not a good thing. so i'm waiting and hoping to have the opportunity to buy more. alix: is there a derivative play, the sales force?
8:26 am
nancy: we own some oracle. yeah. but you want to kind of own best in class. and we look at price-to-sales ratio, relative price-to-sales ratio and the stock has been a buy on that basis. sales you can't fudge or you go to jail. i pay much more attention to relative prize ratio than p.e.'s. alix: that's the great statement right there, you'll go to jail. and we discuss lyft and uber i.p.o. plans with kathleen smith of renaissance capital next. this is bloomberg. ♪
8:27 am
8:28 am
8:29 am
alix: i'm alix steel. it is monday. you made it through the snow day. you made it in. as an be futures up by nine, dow jones up 93.
8:30 am
chinese stocks that any month high. spread to europe. the dax the underperformer. iffy guidance from linde. in other asset classes, i thought it would be a weaker dollar. president trump talking down the dollar. euro-dollar down .2%. cable all over the place. did have a rally, the negative, now positive .1% as theresa may tries to wind up votes for her brexit plans. a big steepener last week now taking a pause. crude up around 1%. that is trade optimism. david: now we will talk about lyft and ipos. lyft file for initial
8:31 am
public offer -- public offering as it competes with uber to hit public markets. we malcolm kathleen smith. -- we welcome kathleen smith. is likely to be in renaissance ipo when it goes public. an ipo etf at some point it is no longer an ipo, it is just a stock. etf, whichur ipo tracks an index is a rolling two year population of nearly public companies and it is rebalanced every corner, especially when there is a large ipo that comes out in the case to of lyft and that would get into the index on a fast entry basis with a week of it is -- of its training -- of its trading. allowss the ipo-ness and
8:32 am
investors to get exposure to the returns of newly public companies. david: you take all of the newly traded companies? kathleen: we take the top 80% of the market cap of the ipo's that have been done over the two year period. very small ones are not included. basket describe it as a of the largest most liquid ipos. alix: something that caught my eye on friday when we got the lyft details is there be another dual share structure which did not go over well for shareholders with facebook. what does that do for the appeal of general investors for ipo's? it is not the greatest thing but investors have been willing to tolerate it. it will probably have a small hit to the evaluation. the extra voting shares here are .ot as bad as it was with snap snap issued shares with no votes.
8:33 am
we have seen many limited voting shares issued over time and basically investors have to be aware that is not a favorable item. we look to the board and whether the board will represent shareholders, which they should in these companies. that is even more important. that struck meg as they are not making money. they are losing money every year. i'm not sure if in their filing they are prospect of making money anytime soon. kathleen: definitely. making money is a key issue. we know what we will ask during the roadshow. the real challenge we have is its billion dollars in losses and $2.5 billion in revenue needs to show us how soon it will be profitable and how profitable. our worry is the profit model, the margins are small on this model and we can-look at uber
8:34 am
because that company is -- we cannot look at uber because that company is not making money either. we do not have a model. i'm concerned that could this model be a low-margin business and if it is, can you justify what has been thrown around the valuations of $20 billion or so? the public market will have to figure that out. that may be hard to justify. alix: still with us is nancy tengler. when that be a stock he would want to own? nancy: i'm in a point where i do not want to own these companies with dual voting structures. i think we saw what can go wrong .ith that with facebook i do own facebook and google. going forward i will be very uber-skeptical of these deals. secondly the valuation, this is a company going public at $20
8:35 am
billion. amazon went public at $400 million. because these companies are waiting longer, a lot of the money has already been made the private equity market. the way i would own it is through something like ipo to etf's, which i had not heard of prior to today. that is a way to dilute your ownership. i do not want exposure to this company. david: the dual class of voting has been around for a long time. the theory was it would avoid that yourtermism people trading in and out of the stock. your shareholders in it for the long haul and to make better decisions. has that been proven wrong? nancy: opinion? yes. with some of the leadership we have seen come out of silicon valley in lease and -- in recent years i do think it has been overdone in the other direction and the boards are not stepping in. look at tesla.
8:36 am
the board is not stepping in and providing governance. maybe with larry ellison that will be different. we are out of tesla because of the government's -- the governance issue. it is no longer investing. it is gambling. alix: interesting. do not hear usually from tesla investors. what is your ipo backlog? what does it look like? kathleen: the ipo backlog is enormous. ipo backlog had slowed down since november of 2018. partly because the markets were in such turmoil and then the government shutdown. we are seeing a wall of ipo issuance which would give investors a lot of choices. if lyft, a fast-growing money-losing company is not your cup of tea, i can offer you levi strauss, which has $5 billion in revenue from it is profitable,
8:37 am
in double-digit growth. how about a cloud tech company called a light? it serves workday and success factors. there are a lot of very large ipo's that tend to hit the market. david: i wonder whether the news of a possible deal with u.s./china trade will benefit you and take some of the volatility out of the marketplace. there has been so much volatility. volatile market is favorable to the new ipo's denny stock investor. to china -- ipo's to any stock investor. one company that is decided listing in hong kong to list in the u.s. is the chinese starbucks. we are getting chinese listings here. chinese adrs listed here will do
8:38 am
well as investors feel more comfortable with china. alix: interesting point. nancy, if you like u.s. consumer companies in china, do you like chinese companies that list in the u.s.? nancy: that is super interesting. we will take a look. we are usually not first in because we need some history as a public company. i do think, and we saw with alibaba, that is been a great place to be despite recent underperformance. i think absolutely. especially if nationalism continues to be the chinese consumer bent at the moment. alix: what is the biggest concern for ipo's going forward? it depends on what side of the equation you are on. we are on the buy side. we are looking to make sure investors make money. we are aligned with the buyers.
8:39 am
i think it is a good time for ipo buyers as long as there is price discipline and we see that coming out of this. it is the sell side i think will be more challenging with this wall of ipo's. fors going to be harder this large backlog to get forum and notblic have to discount, given how many other competing companies there are. david: nancy tengler of butcher joseph and kathleen smith, thank you for staying with us. let's get an update on what is making headlines outside the business world. southeastern alabama, at least 23 people were killed when a tornado struck a rural community. authorities calling the devastation incredible. the twister destroying a number of houses and local homes. the tornado was rated and
8:40 am
8:41 am
8:42 am
8:43 am
8:44 am
viviana: this is "bloomberg daybreak." coming up on "balance of power," republican senator jake langford .f oklahoma lead,time for follow the a deep dive into stories making headlines and moving markets with key industry veterans. we will be taking a closer look at the state struggling with debt and the ones that have successfully managed it. david: one of the states doing something right is california, one of the biggest debt issuers. investors eager to invest will get a chance this week when
8:45 am
california sells $2.3 billion of lawns, the largest bond sales in six months. joining us our bloomberg bonds reporter amanda albright and david cote talk, cumberland advisors chairman and ceo. amanda, let's start with you. it is a fascinating story how different different states are in terms of per capita debt. there is a big range. why is california doing it right? california has a history. about it get dutch about a decade ago it group comparisons to greece -- about a decade ago it to comparisons degrees because of its debt. its credit rating has improved -in 10 years, which is remarkable for u.s. state. david: is that just old-fashioned cost-cutting? amanda: really strong fiscal
8:46 am
management. jerry brown is credited with that. investor gives -- investors are curious whether kevin newsom will continue the legacy. david: we do not think of california has cost cutters, want -- much less jerry brown of all people. what brought them to the realization they had to get their house in order? david: this is a common occurrence around the united states. are in serious problems with underfunded pension systems. all the states have to do with the promises of post entire meant -- postretirement employee benefits. -- they areillion 100 billion -- all 50 states -- there are some good ones. have to confront fundamental changes of all types in their budget. if we have a chance, there is a major change underway which will
8:47 am
be asset sales by the states. alix: you can see we have this heat map that comes from moody's that shows a general obligation. the greener you get, the worst it is. munis has outperformed treasuries. why is that? are in a great credit moment with the second longest economic expansion. that is lifting up tax receipts. there's a lot of demand for debt in states like california because it is such a good credit. investors are looking for tax haven. one thing about this moment we are in is even the struggling states, new jersey, connecticut, illinois, you are seeing leaders not necessarily kicking the can down the road. the question is whether other lawmakers will sign on and what form those fixes will take. david: david, you raise an
8:48 am
interesting point, selling assets. did california -- selling assets in their credit rating? david: i do not know the details in california. i am here without a camera. i have in front of me the movie studies-- the moody amanda just mentioned. there is a great case study. new jersey. the new jersey turnpike just did a bond issue. it was about 4% tax-free. it is a high tax state and with the salt provisions that bond is very attractive to a new jersey taxpayer. them still bunch of there. some moved to florida but the rest live there. if you look at the combination of that and you say what about the equity value of the new jersey turnpike? what does it happen equity value ? what if that was used to shore up and underfunded pension plan
8:49 am
as opposed to sitting on the books of the state of new jersey at zero value? of an assetxample sale which can be replicated in cities, counties, states all over the country. alix: what do you like? david: i like the new jersey turnpike at 4% tax-free for new jersey tax paying client. when the 30 year treasury is at 3% taxable. that to me is a great gift if you are in new jersey and you do the work on the credit so you get the first lane, you get the superior lane, you do all the things you need to. david: at the same time, a lot of pension obligations. the states have to have some general obligation bonds. what pressure does that put on the general obligation fund? david: the pressure on the general obligation bonds is growing intensity. it is a political promise to
8:50 am
fulfill an obligation and the obligation eventually is not fulfill a ball if they run the pension system to zero. illinois is headed that way, new jersey is headed that way. jetton talky, connecticut -- kentucky, connecticut, a lot of states are in trouble. why do you get a state like a utah, one of the strongest sovereigns in the world? happens to be a state in the u.s.. compare utah to all of the countries in europe and it exceeds in credit worthiness nearly all of them. we have a big divide between well behaved states and states year have squandered away, after year, raised budgets, imposed taxation, watched wealth fully and ignore their infrastructure. how we close that gap is huge. david: which brings us back to
8:51 am
california. what can california do about their pension obligations? i know they cut cost and balanced their budget but they also addressed the pension issue. amanda: california is still grappling with its pension. with a large population you have so many retirees. people paying into the plan. an aging population. california is not done fixing the pension. most u.s. states are not in a position where they're able to stop fiddling with the pension. the question is when we will start to see pension liabilities , which the fed estimates are $4 trillion for state and local government. when will we start to see defaults or bankruptcies by u.s. state or city or a town. it is an issue every community in the u.s. is facing. alix: quickly, where's the risk underpriced? creditin the lower grade
8:52 am
, one has to be careful. they have had 10 years of zero interest rates shoring them up. that is over. credit analysis is most important. the difference in priority of liens must be understood. the legal structure. we have 50 different states so we have 50 sets of laws. to amanda's point, when you go back to detroit, puerto rico, and others. there are defaults at the city level in the territorial level. we have seen any of the state level. it is not likely get but the trends work unless they act we will start to see those threats at a state level, certainly at-large county levels. alix: great stuff. bloomberg's amend all right and david scotexit -- and david kotok. more on what i am watching is next. this is bloomberg. ♪
8:53 am
8:54 am
8:55 am
alix: here is what i am watching. and baruch. joining us -- newmont and baruch. newmont evidently rejecting bid.h -- berrick's >> now we know the board rejected the deal. now we will see how the shareholders react. initial plan to lower the threshold from 25% to 15% still needs by in from 15% of the shareholders and it is unclear whether they will get that. alix: do you think mark bristow and baruch would be -- and barrick would be interested in nevada? >> a lot of the disagreement goes back, especially what he harped on in the analyst call was that they tried and it fell
8:56 am
through the cracks. perhaps now that both companies have a little bit of skin in the game and want to move things forward, perhaps things are different. gary goldberg stepping down. people have made changes. maybe we can move forward in a different direction. alix: andrew cosgrove of bloomberg intelligence. both stocks down on the news. david: that is interesting. alix: if the $7 billion over time is real, you want that. the question is how you get it. that wraps it up for bloomberg daybreak america. this is bloomberg. ♪
8:57 am
8:58 am
comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers.
8:59 am
"activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. jonathan: from new york city for our viewers worldwide. i'm jonathan ferro. "the countdown to the open" starts right now. ♪
9:00 am
jonathan: coming up, is groundhog day for global equity markets. stocks rallying on trade optimism. saidnited states and china to be closing in on a breakthrough deal that could lead u.s. tariffs and the president renewing his attack on the fed, complaining about rates and dollar strength. live from new york city, good morning. futures up 10 points on the s&p 500 after five weeks of gains. up another point for -- up another .4%. dollar strength out there despite the president's words. euro-dollar 1.1342. we begin with our top story. our investors becoming desensitized to groundhog day tread headlines -- trade headlines? >> a sentiment boost. >> i do not think this is a framework that will lead to long-term resolution. >>


info Stream Only

Uploaded by TV Archive on