tv Bloomberg Daybreak Americas Bloomberg March 14, 2019 7:00am-9:00am EDT
-- knowing grounded. the faa worries about a safety feature of the max a it -- of the max heat. u.k. forecast, cloudy. expect some delays. the government will ask for a one-off extension. this is prime minister -- this as prime minister theresa may brings her plan for another vote. hold off on that meeting. president trump and chinese president xi puts off their meeting until april. welcome to bloomberg daybreak. i am david westin, with alix steel. in addition to that, political news this money. texas, there is a picture of him right there -- a congressman saying he will run for president. basically raced on the fact that he is very charismatic. people like him a lot and he speaks fluent spanish. alix: why not? thed: and disagrees with president on immigration. alix: president trump clearly
did not hold off in any capacity. maybe you need someone outside the box like that to gain more attention. david: as i say, he came from nowhere and shocked everyone. beto o'rourke might even beat cruz. president trump had to go down to texas to save it. alix: all gunning for joe biden. announcement, his there with his wife. alix: in the markets, we wound up having a relief rally underway, but now not so much. the headline broke that perhaps the xi and trump meeting are going to be pushed back. sterling down by about .8%. they it will be all about dollar. the cable rate, you thought it was going to be good news. there is going to be a delay, how long is the delay for -- all of that confusion percolating after showing a nine-month high yesterday. a little bit of selling on the
backend of the curve yields, flipping into negative territory also. you wound up having oil shoot higher at a four-month high, but once that trade information hit, boom, it rolled over. david: crude was on a march, but a bit of a pause at the moment. alix: deals pushed back, bringing more confusion to the market as well. coming up, more on oil because we will be speaking to an oil trading cohead. as well as the quality of crude, which is interesting. david: at 8:30 this morning eastern time, we will get weekly jobless claims number, -- jobless claims numbers. -- after the bell today, we get earnings for oracle and broadcom. at 11 a clock tonight, 8:00 on the west coast, elon musk and
tesla putting on a show. coming up later today. in the meantime, let's turn to bloomberg first take. we are joined by lisa and michael mckee. we want to start off with a question of, are we or not going to get a deal with china? onheard from gary cohn economics radio overnight, and he said i think the u.s. is desperate right now for an agreement. the president needs a win. the only big open issue he can claim as a big win would be this deal with china. at the same time, bloomberg is reporting it is not going to happen until april, if then. this big summit between president she and -- between president xi and president trump. michael: they have got some of the easy stuff out of the way. china will buy more soybeans, but are they going to change their industrial policies? so far the chinese have not
conceded. there are political reasons for that. obviously for xi jinping. it will be hard to get the agreement that donald trump wants. you cannot immediately have a summit meeting. there is a g20 meeting in japan at the end of june, and that is kind of being brooded about as the next possibility for some kind of meeting. if they have one. alix: that will look at the dow and the s&p, permeating that. here is the why. free cash flow as negative as $2 billion. the full-year adjusted now, 50 -- $.50 to $.60 per share. not so great numbers coming out of ge. there,y band-aids are on i think that is the question. the ceo is trying to get everything out of it that he can get out. they do say in 2020 their industrial cash flow -- their
industrial cash flow will be positive in 2020, but as you say, anywhere between $2 billion to the negative is flat for this year. alix: a lot can happen between now and 2020. david: it raises the question of what happens with the power unit, because so much turns on what happens with the power unit. it is not a short-term fix. alix: lisa is over here shaking her head. lisa: how many more bad things can happen for general election -- for general electric? at one point will they come clean -- at what point will they come clean? seeing capital income breakeven by 2021. that gives them -- even with all of the sales they are going to be having. david: which happens first? brexit or ge trying to get a round? typically you talk to a big company like this, about their
profitability. we talk about cash flow in part because they are leveraged up. until now we say they are really struggling, but they have the cash to make the debt payments. lisa: there bond payments have been fluctuate in. they have $100 billion in debt. they need the sales to pay down some of their obligation. a lot of people say they have solidified some of the sales. at this point to cover what they have coming due in the next couple of years. the question is, all of the sales have not gone through yet. surprise,s another there are so many unknowns. the contracts they have had -- how is that going to be on round? -- unwound? david: a lot of the power unit deals, the report is that they cut sweetheart deals to get things out the door and on the books, and now they are making -- now there may be choking on those. alix: much more on that story
later. another story of the morning, mike mcgee said it has to do with brexit here is prime minister theresa may. it would allow the government to seek a short, limited, technical extension. let me be clear, such a short technical extension is only likely to be on the books if we have a deal in place. alix: mike, is a delay a reversal at the end of the day? delay, and itis a looks inevitable at this point. it cannot get any kind of deal in place by march 20 nine. yesterday they agreed they would not leave without a deal. they are going to have to ask for a delay. the short technical delay is probably not going to happen either. they will bring, it looks like, her failed motion back a third time next week. it is the only -- it is not going to pass, that so than the question becomes what does the e.u. say about how long the delay will be?
the e.u. coordinator on this issue said a year or longer. a longer delay is possible so britain can rethink its position. david: it will do it if you rethink your position. if not, you will not do it. it is sort of a war of attrition. the big story of the week is boeing. the faa says they will go along with the rest of the world. we were followed quickly by mexico and brazil. this is what the faa had to say. it became clear to all parties that the ethiopian airlines flight behaved similarly to the lion air flight. that data coalesced today and we made the call. i chuckle a little bit. i really wonder -- lisa: i wonder what this will ultimately do the -- due to the faa's credibility. the shares are up a little bit today. perhaps it feels like we are
getting to the end of some of the bad news. but there is a question about the u.s.'s supremacy, having agencies all around the world calling it like it is. for them being last to the party, the faa following all the other nations that have already banned the 737 max 8. mike: we talked yesterday about the faa allowing the aircraft makers to certify themselves. that is what commerce will be looking at. our airlines considering canceling orders? the airbus is backed up 10 years for their a320. so if you cancel boeing, they will not get a plane. it may not be as big a deal in the long run. this will probably be a software fix, not a major issue. so boeing can probably get over this in the long run. that is probably one reason the stock has stabilized somewhat. alix: thanks a lot. lisa abramowicz and michael mckee, thank you.
go to your terminal and browse the features. david: back to the breaking news on general electric. country -- the company sees industrial free cash flow to negative too joe dollars -- -$2 billion. >> down just over 3%, they are all flows at this outlook update from ge. at $52.60they see eps a share. since you mentioned industrial free cash flow, down to as much as -$2 billion this year. they also say it could be positive next year in 2020. also seeing that the power unit free cash flow is down this year, too. and again, looking at a few other things crossing the terminal, it sees aviation cash
extrusive interview with brian nickel. he addressed issues that hurt the chain's sales and its stock. >> we are going to be unrelenting and it will be an ongoing process. i believe we are one of the leaders in this area now, and we will continue to invest so we will always be a leader in this space. >> we will have more of that interview coming up in a few minutes. talks ton advanced sell an advanced stake in its driverless car unit. sony says there is no truth to report it will -- acquire the maker of the grand theft audiovideo game. it does not comment on rumors. shares rising 7% on speculation. alix: thank you so much. pushing back the trade talk clock.
between president trump and xi jinping will not happen until at least april, according to people familiar with the matter. when the talks finally happen, does china have the leverage? estate andin real fixed asset investment. overall retail sales and industrial production keep declining. joining us now is senior equity strategist linda duessel. linda, who has the control? linda: i think there will be -- i think the market generally does as well, but the idea they are having to push off some time frame indicates that they are not close enough to where i think the leaders or at least our leader thinks that it would be enough to satisfy the markets and his constituency. so the fact that it has taken this long, something still ought to come out of it. david: that's talk about what kind of a deal it might be. -- let's talk about what kind of
a deal it might be. gary cohn, the former economic advisor to the present overnight on the radio said, "i think the u.s. is desperate for an agreement." the president needs a winter the only open issue he could claim as a big win booed be -- would be getting a deal done with china. if they get a deal done but it is weak, what does that due to to the stock market? linda: i think the stock market, and a lot of the bounce it has made since december has to do with the deal getting done. i do not think the market expects a tremendous amount from that, but i still think both sides really need to get a deal done and that they will. regardless, it does not matter because the big issues are -- i think they have to be pushed off into the future. whatever they can talk about, maybe we can make an agreement where we have regular meetings and make sure they are not cheating, et cetera that is all i think our leaders are trying to get out of it, so they can say that to the base.
alix: do we need to wait for a breakout to happen? the technical talk about the last couple of weeks has been about the inability to break above 2800. that what we need to see to get to the next higher s&p? linda: i don't think so at all it i think the market is too worried about these cuts. we are up against some resistance in order to get through the resistance, but i think the market needs to decide two things. one, that china will not go into recession. that could bring the world into recession even if it is not the u.s. two, we are going to make our way to the back half of the year as an investor group and decide there will not be a recession in the united states in 2020. if we remember that the fed is s&p a, we can get the
federated view by year end. david: hasn't the fed given a fair amount of reassurance to the market and the economy by backing off the rate hike? linda: they absolutely have. the question is, has the fed gone on pause, or are they done? historically when they are done they have made a policy mistake and you are on the way to the next recession within a year or two. why did the fed stop? because they are worried. the big correction, that is what the market was saying. my gosh, we are going to have a recession. probably around 2019. it is about market earnings to evidence that we are finding, we are maybe even accelerating after arguably q1. i am glad you brought up earnings because the news in the last couple of minutes has been ge. play is of the market idiosyncratic versus just buy the market, buy the sector?
-- versus just buy the market, by the sector. linda: by the market is really the biggest box. it is not the case anymore. that is an individual name, and whatever happens to its fortunes i don't believe has much to do with the market and the economy. we need to make our way through the end of march, start into the earnings season, and listen to what corporate managements are saying. so far corporate managements in the first quarter outlook, only 23% have suggested their earnings will be better than what consensus thought. we need a surprise on the upside. david: thank you very much, but you are not done. linda duessel will be staying with us. ge shares falling premarket flow goes to -$2 billion. this is bloomberg. ♪
david: back to breaking on general electric per the country ash the cup sees pre-cash flow this year and -$2 billion. joining us now is joel. itfairness, the signal that might be in the negative territory. -- there was a signal that it might be in the negative territory. joel: he definitely had prepared people, although -$2 billion compared to consensus, which was over $3 billion, that is a pretty large swing and you are seeing that in the stock today. david: i understand that it was -$2 billion to breakeven. that is a $2 billion swing. alix: that is a lot of money. david: shouldn't they have better arms around what it is going to be? that ahat i would say is big issue with general electric is in the power business, where you get advanced payments. those can be very lumpy and big
swing and seasonal peer that has to do with construction of power plants. i can understand why it would be such a dramatic variance between the high and the low end. alix: high many more band-aids does ge need to rip off now? joel: i think what they have done aggressively is attacked in balance sheet liabilities -- it is all about the right-hand side of the balance sheets, generating more cash out of it, and that will come from the power unit where they have to get more profitability. have they fix the financial part of it? that is a big question for them. do we know if there is more coming from there? onl: they had a presentation their insurance business last week to highlight the potential risks. with the case of any sort of financial, that is a risk that will remain with ge for some
time. david: this year they say it is between -$2 billion and zero on the cash flow. what is more reassuring? person, it mayit not be enough. like s&pok at folks and moodys and finch, what they may have said, i would not be surprised to see a negative outlook if not a credit watch on the company, given their goals. for 2020 it sounds like they are doing the right thing. i believe larry is trying to do the right thing and getting his liquidity and balance sheets in place, but it goes back to more profitability out of the assets. alix: a lot of that goes back to the world economy. thank you very much peered still with us, linda duessel. industrials are the second-best sector in the s&p this year. up 16%. do you like them?
linda: they are fine. they are not particularly one of the most favorites of ours. if you like investors, you have to believe china -- if you are like investors, you have to believe that china have a soft landing, the united states will have a soft lending -- a soft landing, and capital expenditures, which started off with a big run, will have a big break. alix: you said there are better sectors, that would be better exposed to the soft landings? what might they be? linda: that would be a fine one for the soft landing amount. i believe we are on the back half of the cycle and we should get more ballast. you think we are in for more of a correction on the s&p are linda: i just think we on the back half of the cycle, and that is where you are set to make your most money. people tend to them nor them while they keep thinking cyclicals will run. alix: part of the question
becomes the 10 year yield is 2.63%. if that does not jive with the stock market, how do you square it? linda: i always say i like to hang out with the equity people. betterd market is much at forecasting the market. why is the bond market doing that? it reminds us that we are late, that's all. we are not at the end, we are just late. alix: linda duessel. to. parliament is set again vote after a no deal split. this is bloomberg. ♪
and if there is no vote by march 20, the u.k. will face a long extension. it feels like this is more of a stretch continuing, saying if you do not wind up approving my deal, the extension will be long and therefore be de facto in the e.u.. david: it really feels like a war of attrition. i am going to where you guys down one at a time. alix: you know where you want to go, you are going to get there, and you are going to see it. u.k. yields up by about three basis points, the cable rate down by almost a full percentage point. there is give back. overall, it has been weighing on the market in general. we specked a trade deal between china and the u.s., that we expect a trailer between the china in the u.s. david: we will turn to our bloomberg colleague. this news just broke in the united states that apparently theresa may is going to go for a
third vote on her plan. if this is a war up of attrition, is she went -- is she winning it? i don't think there is any way to judge that so far except that she did not do better in meaningful vote number two than in meaningful vote number one peer achieve loss by a substantial marti margin. could she win without number three? takeder if she will soundings from the cabinet. to someone from the institute for government and he said that the theresa may deal, if it lives on, could it be that the party will go against may in these votes? could they still be persuaded to back the deal, if the only alternative is a softer brexit and a long delay? david: it may limp on in
parliament. what about in brussels? the president of the european commission came out with this tweet that we can read here. uco, i, "ahead of the will appeal to a long extension if the u.k. finds a nexus area -- necessary." this is interesting. we are seeing a vote tonight on an extension, but an extension takes two forms. either you ask for a three-month extension, that somehow the meaningful vote works and theresa may gets her deal through, and you need more time to implement everything, or you ask for a much longer extension with no idea what brexit is going to look like. both aro at work right now because there are some on both sides of the health -- of the house. you can either take it at face value and say therefore something softer and a long
delay is more likely, or you could say does it push the right of the tories to back theresa may and therefore make her plan more likely next week if she says it is worthwhile and they vote on it. david: the answer is you cannot get there from here because the e.u. does not have complete flexibility either because the issue here is the backstop, a way to get out of the backstop askingat the same time, that question now, saying doesn't that square with what the e.u. agrees to? >> indeed. there is a good agreement, lay it on top of what is being talked about as the backstop. this is the big sticking point. there is some discussion as to whether the erg has been assistant to the theresa may deal. whether they can be pushed to change their minds on their objections to the backstop. people are talking about, and it
has been mentioned in the house behind me, the vienna convention, do they have the right to get out of treaties that they signed, whether something can be found there by the attorney general to convince the erg that they have enough legal flux ability to accept the backstop? what remains a big sticking point per the irish, as you suggest, leaving the e.u., they do not have much move -- that much room to maneuver. david: i get more confuse the longer it goes on. i appreciate you trying to explain it to us. alix: linda duessel of federated investors -- we once saw the brexit as idiosyncratic. but now the iea talks about it, deutsche bank says europe is there taught risk for this year. that their top risk for this year at how do you see it? linda: i think about two things. one is that the devil is in the details, and they are finding that out now.
two, >> participants. we know the market in general loves it when we kicked the can down the loan. we can kick the trade war can down the room, but this brexit can they gets pushed further down the road is a problem for company's doing business in europe, in the u.k. in particular. they may have to make some big changes, expensive changes. they could have a recession. this will have effects on corporate earnings over there, and in europe most importantly my comment would be that i would stay within the united states right now. europe could be an excellent play at some point, but it has to get really inexpensive in order to be worth those uncertainties. alix: it is a good point. i wonder about the company that has exposure to europe, the u.k., and china as well. do you have to have a small cap in play? in thewe love small caps united states. small growth in particular is not affected by any of this noise.
i also remember that united kingdom and even europe are not as big as they used to be over the whole world. it is important to remember that global gdp last year was i think 45% u.s. plus china. i am more focused, because i am worried about china and whether they are headed to a recession. alix: stay with us. we want to turn now to crude. up almost 30% so far this year. an oil trading cohead this week, and i asked him will the u.s. crude continue to be exported, and can it clear the market? he said the demand there is over worry about exports. >> the u.s. has done an amazing job of building pipelines to get that from in then texas to the coast. the concern is there -- the concern is that is there infrastructure to take that to the world? toneed to get this oil
larger vessels, and the u.s. is not set up to load very large crude carriers. alix: when we saw the bottleneck in pipelines last year, we saw deep differentials with the midland oil crisis. when do we start to see that on pricing? >> you have a difficult situation because it satisfies one problem by the building of pipelines and you are now getting that oil to the gulf coast. then you have a complex situation where the offshore grades, which are generally sour, are now impacted by different factors including a loss of competing grades into the marketplace, generally meaning we have lost venezuela. so you have the light heavy spread that has come right income and it is difficult to see. we solved both of those problems with logistics on the line and the supplied side of the heavies . alix: what was your prediction? >> it is difficult to know how venezuela plays out? if you can tell me other we have
-- i can give you a better forecast on what happens with the heavy. ofx: madura's pulled out relations there. >> there was a combination of factors. to a lotit -- we spoke of our stakeholders, customers, financial institutions, our own staff, and relevant governments. it was a combination of us coming together that we make the , so was the u.s. a factor in this? of course they wear. we have a large footprint in the u.s.. we need to listen to the u.s. government just like all of our stakeholders, but it took time to arrive at this decision. we are comfortable with the choice. alix: you mentioned the light heavy differential was exacerbated by oil coming in so tightly. an exciting time because the heavies have become relatively scarce.
we have access to a number of heavies at facilities around the world. you have to look at what the fine -- what the refining system is going to refine. we have all of this light material coming at us and more with the facilities opening up on the gulf coast. ablee are not necessarily to take this incremental light. we are worried about the quality. there is bigger effort going on at the moment, so the refiners around the world have to modify some of their equipment to be able to take advantage of some of this crude oil that is coming up. but that is a slow process. and at times it is an expensive process. alix: so the u.s. is a sporting 3 million barrels a day. what is your prediction over the next year? >> it is going to continue to grow. you could have one million barrels per day for the foreseeable future. could i see five to 6 million barrels?
absolutely, but it will come back to the same conversation about infrastructure to get it to the world. alix: you mentioned the light crude and refiners around the world trying to change capacity to handle more light. will we get to a where our crude is too light? ben: potentially. item materials may still struggle. crude is edging its way up, getting lighter, and yes, it is a concern that we are producing too much crude oil that is not required. but the market has a habit of coaxing this to work. incentivize refiners to to take it.ways it may take time, but the market will find a way to make it work. with himill have more as well as other heavy hitters on commodities today. as --t or's ceo, as well
as well as -- also joining us is linda duessel. when do, do you like oil right now, and how do you play it? favoritell, one of my resources on wall street has said about oil, the oil patch, playing in this sector, where the price of oil is concerned, nobody knows nothing. we do not know anything and it is difficult to plan that way because it is not as easy as it was when i first started in the business 35 years ago, when you knew there was a range for the price of oil. with the high-end and the low end, i know how to behave. there are so many changes in the landscape your the united states is becoming so energy-efficient that every time i go to texas they tell me how much more efficient they are than they were. that is great news, but it brings down the price. opec is not what it used to be. there is geopolitics in there.
venezuela knows how this works out. and of course the dollar, and where it is going to move. we at federated investors suggested an overweight on oil this year. it is a trade. but for a long-term hold, what i really like in the energy patch are the integrated companies that give you a serious dividend. they have a dividend that you can afford it and raise it nice and gently. david: thanks so much for being with us today. linda duessel of federated investors. coming up, a private equity's new giant. the oaktree deal creates one of the largest alternative money measures. we will talk about that next. this is bloomberg. ♪
cohn coming up in the next hour, exclusive interview with damen, jp morgan's -- with jamie dimon, jp morgan's ceo. this is bloomberg daybreak. this is your bloomberg business flash per the u.s. government and escalating its investigation into facebook's data sharing process. bloomberg has learned justice department probe of the social network's broad influence improves -- includes a grand jury. records were subpoenaed from at least two smartphone companies with ties to facebook. investigation has power lines caused a fire in 2017.ed 3000 acres
damage from wildfires is pushing pg&e into bankruptcy. investigators -- investors are reacting negatively to general electric's forecast today or chairs are falling after ge said it would burn as much as 2 billion in cash this year. the company forecast earnings that would miss estimates per ge is trying to repair its balance sheet and put is really -- it's power business act on stable ground. that is your bloomberg business flash. alix: thank you so much. ge's story, the question for me is, is this the worst it is going to get? is it just about trying to get the company profitable? david: it is the question everybody has. has his armshe around it. it is not his fault. can i trust the accounting? alix: and can you pay off your debts? and of story. we covered three things in wall street beat first up, private equities new giant, brookfield,
$4.7 billion purchase of oaktree, and then you burn ears uber earns --- an short-sellers swarm over shares of the candidates' company. short-sellers are looking to profit off the top. david: joining us now is jason kelly, the new york bureau chief. let's start with his big announcement in alternative investment. howard marks was pretty clear, only if it can still be a thomas. howard marks, 72 years old, still very much in the drivers seat. of the asset type management people are. what he saw was it probably serves him and his investors well to be bigger. david: can you have the
advantages of being integrated without being integrated if you are really autonomous? jason: that is only -- that is the only really big question about this deal. clearly it puts brookfield into competition with blackstone. blackstone has not really had any meaningful competition across the spectrum. you go back to blackstone's acquisition in 2008 of gs so. they were able to keep that as a little bit of a separate brand but also integrate it. that would seem to be the playbook. bruce a coupleto of weeks ago at here is what he had to say. business,vate equity called industrial in-service bio business, is now relatively small, but we are putting a lot of effort in it, and i think it will be large. it will be as large as many of those businesses eventually. alix: is this a brookfield play or howard marks being like, i am going to be autonomous but it
will be late in the credit cycle? ason: i think it is brookfield play. i caught up with bruce a couple weeks ago in berlin at the private equity conference. notable that he was there given the ambition that he laid out. they invested heavily there, in infrastructure, and investors increasingly want this whole suite of products. it, there wasnd great reporting. brookfield made this play initially back in october. they have been talking for several months, and it was not inbound, as we understand, through howard marks. alix: huber is said to be -- uber is selling is one billion-dollar self-driving stake. softbank is in it to win it clearly with uber. you do have that obvious ipo
coming for uber. the cash burn has been tremendous at uber, and a lot of --has gone to david: they are also a big investor in crude. we were reporting yesterday that mr. phelps, his strategic advisor is on the board and he will get a lot of stock options. the stock shot up. we will pray chart up. the information we have is a little bit dated, but the reports are lots of shorts came in yesterday as the stock went up. jason: this has been one of the biggest bets on both sides of the ledger on wall street right now, is cannabis. there is this huge existential debate about where this industry goes because it is not federally legal in the united states. and clearly the long bet is that it ultimately will be.
the short bet is, not so fast. alix: it was heavily shorted to begin with. the second is that shorts re-upped their shorts. you are basically then saying i am going to bet against it now because i am scared about this industry. david: the states are leading the federal government here. there is a sense that inevitably sooner or later because so many states are legalizing it, the fed may have to go along with the states. jason: with every ceo we talked to, that is their pitch to investors. it is inevitable. it is about skin oils and all these different medicinal purposes that cannabis can be used for. it still remains to be seen. becomesearly then it the next iteration, the companies that are interested in these kinds of things. pharmaceutical companies, that will make it more legit. this goes more to making it more
legit. david: how much of that valuation was really just having his name attached to that company? other canadian companies already had big alignments. tryingand everybody is to figure out what their cannabis strategy is, down to companies,erage whether it is consolation that has the price here, or whether coke and pepsi may integrate it into their products. pot, is you call it that list credible? jason: cannabis, i am interested. bloomberg'ss to jason kelly. you can tune in to him every sigel day from 2:00 to 5:00 eastern time -- every single day from 2:00 to 5:00 eastern time. volkswagen cancels plans to share sales of its truck unit, and that is what i am watching,
watchingday i am volkswagen. volkswagen yesterday, as you know, put off an ipo announcement for its truck unit per they were going to raise $3 billion for a valuation. but they say the market is too turbulent. there is some indication -- it is not so much the ipo market, the car market is pretty weak. it is not the time to do that. alix: people say let's blame the weather. it is an easier thing to make an excuse of. david: maybe one excuse is, network international, that is on deck to go national. the plan is that they will go ahead. it was not just the market overall, it was cars. alix: and the expectation for germany, german growth is only
at .6% this year. of still have the overhang the diesel scandals and all of that that is percolating in the market. david: and, by the way, they have to go to electric vehicles. there was a report in "the wall street journal" they will have to lay off 7000 people over the next five years. it is not the time to raise money in that public market. coming up, erik nielsen will be joining us. and a charles schwab chief investment strategist. what it means for trade. and ge still looking at a difficult couple of years. this is bloomberg. ♪
expect some delays. the government will ask for an extension, and this as prime minister theresa may put -- theresa may rings are plan for another vote. the worldmists think growth -- dimon, speak with jamie ceo of jp morgan, in paris. and chipotle is back in vogue. the stock is at a four-year high. david: welcome to "bloomberg daybreak." news today.with the i have someone from ge here, is athey call it as 2019 reset year. they are trying to clean everything up, focusing on the industrial free cash flow. alix: now it is down by .8%. if you believe this is the worst it is going to get, having profitability, that might not be bad news. david: that seems to be exactly what they are saying.
we look forward to 2021. although they still have the power unit issues they have to work through. alix: opec in its monthly report, they are urging oil producers to prevent the return of surplus this year. it has been a battle in the last couple of weeks between president trump and opec producers. president trump says, relax, we do not want higher oil prices. and opec hitting back and saying we do not want to prevent a surplus. we see a lot of supplies in the u.s. not -- in the u.s., we are brimming with supplies in the u.s. beessence, they are going to cutting to bump up the price. david: how much can they control production when they cannot control shale? alix: that is the struggle between the two. at some point, it is market share versus price. they did that before and it went
up, not having any effect on producers. producers are stronger than four years ago. that is an interesting headline, preventing the return of surplus this year. the markets being monitored all over the place. it was in negative territory, down about six points as we got trumpadlines of xi and putting back their meeting to april. another vote on a delay later on today, there may be leggett to but he or confusion -- negativity or confusion. is crude.t, 2.62 david: it is time for the morning brief. a little less than a half an hour, we will get weekly jobless claims numbers, followed by january new home sales coming out at 10:00. telecom company, --
elon musk and tesla are going to unveil their model three crossover at the automakers l a design studio. day, anotherher parliamentary vote on brexit. theresa may has not given up on getting her deal ratified. her office says she put in a third vote that she would put a third vote to parliament if it was worthwhile to do so. is, eighte question appears there is going to be a delay. for how long and to what end? you.deed, good morning to good afternoon from london. that is going to be a crucial question of the e.u. seems to be open to the idea of this delay because if the u.k. votes for a delay, it will be a request they make to the e.u., they are not certain of getting approval. at what this will it become yet -- at what price will it come?
there are different types of delays. theresa may talked last night about asking for a three-month delay till the end of june to a short tactical delay to kind of tie up loose ends of her deal can be voted through. or there is a much longer delay that could be asked for if it seems her deal cannot go through, and that a plan b for brexit needs to be found. david: the e.u. has something to say about this. they do not have to granted. there was a tweet earlier today, itting it to ms. may, saying will appeal to the e.u. to be open to a long extension if the u.k. finds it necessary to rethink its brexit strategy. that sounds like do not count on a short one, ask for a long one so we can have a referendum again ahead of a general election. a the e.u. has never made
secret of the fact that they a change of mind and to stay. into then read more tweet and say maybe he is trying to help theresa may get her deal through. because by saying these things, he might scare the erg, which has been reluctant to back theresa may because they do not like parts of her deal, and perhaps when they hear about the possibility of a long delay, it might make them come around to backing theresa may next week if she puts it to a vote. david: thank you so much per that is anna edwards. joining us now is erik nielsen, and liz ann sonders. erik nielsen, you're laughing at what are you laughing about? erik: the show. it is a complete facade. right, theree is
are different ways of interpreting the statement, but the other thing that is important, there is not just one view within the e.u.. the commission clearly wants a delay, but people like macron and some of those hate the idea that britain has another vote into the european parliament -- they have to be out by the end of june, otherwise they have to have the election for the european parliament. alix: how do you look at it? zen diagram ofa possibilities that does not get any less complicated throughout the day. even separate within the various factions relative to the e.u. the overarching issue is that broadly in europe, not just in the u.k., there is a halting of activity, and it is almost like
brexit represents the china-u.s. trade war in terms of business confidence and unwillingness to make long-term investments. everyone is in a holding pattern because there are so many outcomes. even with the vote yesterday, from what we understand, even that vote is not legally binding. so this notion that a no-deal brexit is off the table is not necessarily true. maybe it is still a low likely scenario, but not fully off the table. erik: it is not legally binding, but it is a political statement. it is inconceivable now that you go out with a no deal. the other thing that is important to remember, they go into the transition period, and nothing changes. thingsre quite different because you still have the transition period, to implementation. david: putting aside what it means for politicians, what does
it mean for the economies of europe as well as the u.k.? we heard from mr. hammond yesterday, the chancellor, who said we are getting hurt. what about europe? while europe is consumed brexit, they are not dealing with fundamental issue that mario draghi is saying, i the way you have to deal with those issues to grow. game inere is no other town then brexit in london, but in europe, i do not quite subscribe to that idea. but it is true that it has hurt already. s from europe to the u.k. is down 5% last year. one of the bigger hits. think they will take another leg down, you will probably see the bottom of it. the u.k. economy has gone from the top of the g7 to the bottom. alix: i should point out that hammonds did say that from 2021
to 2022, they revised up. germany is seen as growing. if you want to see value, europe is a no-brainer. liz ann: from a trade perspective, what is not getting sufficient attention is the tariffs on europe and auto production or there is so much of a blinders-on with regard to the u.s.-china deal that we are not focused with that and the impact that would have not just on europe but from a global supply chain perspective. a huge impact. not to mention the fact that there is not still a signed in usmca.l on a lot of people think that is in the bag, but it is not this issue on trade is much broader than just china, and as i mentioned before, it is an impediment across the globe to long-term kind of capital investing cycle kicking back in.
david: we do not think about that. everything is backed up. geopolitics is backing itself up there it we have to get to annpean issues, which liz races here. it is going to be longer on the u.s.-china summit between president xi and president trump. erik: you said it exactly right. we have old-fashioned commercial bank, so we have primarily corporate clients throughout europe. the number one issue people want to talk about in the corporate world in europe is trump and the risk of terrorists. trump is the number one risk factor for businesses today. without a doubt. alix: like volkswagen, it is just a bad market. david: was anderson -- liz ann sonders and erik nielsen will stay with us. coming up, signs of recovery. china's real estate investments
alix: real estate investments picking up. the fixed asset investment. china and the rest of the world still not out of the woods, that is according to the jp morgan conference in paris. beenworry that growth has subpar everywhere, whether it is in developed markets or emerging markets. in the u.s. it has been some power that it has been subpar. >> the problem i see is that
when the u.s. has a recession, by contagion in europe we also have a recession. at the moment, ok, we will have to face up to it. >> this is the longest cycle we have been a long time. liquidity,the market the situation of a lack of market liquidity, these reactions may happen again. who knows? erik nielsen, which are you? erik: i think green shoots. one thing i have is global trade. we are watching very carefully. global trade may still be dropping by 3% or something the individual numbers here that we see, what took us down in europe, we see green shoots
there. maybe it is stabilizing. looking backwards, i will put a chart up here that goes through december to show what is going on in global trade. it really is coming down. liz ann: it is. it is interesting, jean-claude trichet's comment about bringing the u.s. and the world down with it. i think it is the opposite way around. in most recent deterioration u.s. growth is weighing on overall growth. even if it does not cause a recession beginning in the united states this year -- and there is some chance that could happen -- it will contribute to the likelihood of an earnings recession. we are in negative territory for q1, and we have to use -- we have to concede that the index is a percentage of top and bottom line growth overseas. david: to oversimplify, do central banks trump trade, or
trade --p difficults a really job to be a central banker right now because if you are taking trump cost trade tariffs, that trade terrace,s that means the central bank should do nothing. the shock that we have now, which is more likely on top of the other issues -- i think if there is one person who deserves the credit for the nice margins we have had since new year, it is your fed. i have never seen the fed move this fast in terms of changing the tone, even before anything bad happened in the u.s. economy there and it was all in europe and asia. already.as out there david: from that -- alix: from that end, it is sort of a search for yield response.
but you say it seems to be defensive, 2.62 on the 10 year is right. which camp? liz ann: there is a separation between what the bond market is telling us about the economy and what the stock market is telling us about the economy. the market lift came because of the loosening of financial conditions, which have been one of the primary reasons you saw multiple contraction last year in the face of a strong earnings environment. looking ahead to 2019, it has been a little bit of the opposite. financial conditions allowed for multiple and spansion, even though the denominator has been seeking that has been sinking into negative territory in q1. the multiple expansion we got so far this year, that has about as much as we are going to get. we now have to get into earnings season not only looking at what other companies can do to beat the lower expectations, but what guidance looks like. david: if the bond market
signals something differently than the stock market, we should listen to the bond market? liz ann: you should never not listen to the bond market. the bond market tends to be maybe a touch more accurate on the economy. as an economist, you start when the market is wrong. that is how you make money think -- how you make money, in a sense. through the end of last year, i still think we are looking for 2019 to see global growth coming down. as i said, the stock market has already been feasting on power statements. one of the ways i have been describing it to our clients is that the sweet spot in terms of monetary policy, the diameter is narrower. when the fed started raising interest rates, financial conditions were loosening, inflation must picking up from a
low level. they were in an extremely tight mode. that makes the sweet spot from a risk assets perspective was much wider. now it is narrower because there are two sided risks. we were slipping into a recession and they had tightens too much, or if they decide to let inflation run hot for a period of time, then do the bond vigilantes step back in and send the message that the fed is behind the curve? they are in a tighter box than they were earlier in the cycle. david: we heard gary cohn overnight on the radio saying that the president is desperate for a deal. does it make a difference what kind of deal they get? is -- if the real problem is that we are leading pain on the trade, does it matter? erik: if the president steps sentence this ongoing
with china, the story of the slowdown in the u.s. and the world will be delayed. but the overall piece, unfortunately, i feel is that trade tensions between the u.s. and china is probably here to stay for many years. but the president has been sort of -- maybe it is coming back a little bit. from china andk needs another enemy to go after, then he looks at europe. david: thanks so much. liz ann sonders have charles schwab, thank you for being with us. erik nielsen will stay with his because he has more work to do. sees to build dollars in cash burn. more on today's bottom line. this is bloomberg. ♪
line, where we look at companies that are worth watching this morning. it is boeing, third day in a row worth watching. the faa decided to ground the 737 max 8's, and you can see the stock is down, not falling as rapidly as earlier in the week. boeing the remains very much in the news. alix: i am looking at facebook. remember there was an outage yesterday. we would have thunk it? based on 2019 sales estimates, facebook has an average daily revenue of 189 million dollars. what did you do when facebook was down? david: they had to refund some money to advertisers. alix: they have 150 million users. people have been calling each other or something insane. david: a little bit of an this morning, general electric. for more of that, a bloomberg
opinion columnists. little bit of numbers around their cash flow situation. >> they did. if you are metric, we were expecting to get the outlook on fourth-quarter earnings. larry said the other week they expected cash flow to be negative in 2019. i personally was not expected it just was not expecting it to be this negative. they were looking at it as a 2 billion-dollar cash burn in 2019. that is a change in tone from the fourth quarter earnings call when they were talking about substantial growth in 2020 and 2021. i do not think anything is growing substantially at ge for a while. up 1.5 percent. is it a relief that it is not worse than we thought it was? >> i think maybe people need to do more digging into the numbers. i have questions about the aviation cash flow number because they also have this
corporate and eliminations bucket that is very large. i wonder, are things being taken out of the businesses and being put into the corporate eliminations bucket that makes the business cash flow look better. i also have questions about impact from dispositions. that previously was a $1.2 billion number. into thehow you bridge 2020-2021 timeframe. part of that could be that positions underperformed. it could be the timing of when those took place. what is the culpability with markets and the analysts? think he has a little bit more time to prove this out. this is a big test case. to their credit, they put free cash flow numbers on the business units, something ge has not been willing to do before that is a level of transparency that i appreciate. the fact that he is being honest about how bad this is -- this is not a pretty picture, and it is
one that the agencies are not going to look favorably on, given their internal targets for cash flow, putting pressure on ge's credit rating. it requires some guts. david: at the same time, as a new guy, you want to clean it all up and grow it from there. thank you so much, brooke sullivan. coming, chipotle's fresh start. we will hear from the ceo a year after taking the helm. that is coming up next, and this is bloomberg. ♪
in other asset classes, cable up .6%. gilttle over in the u.k. market and crude now up .5%. eco-data, export prices coming in up .3%. down 1.3%.es jobless claims coming in right in line, 229,000 claims. david: erik nielsen is still with us. what does that tell us about the world? erik: it tells us the u.s. is looking ok. the numbers you quote from germany are not so bad. it gets better. erik: i think the story is still
when does the u.s. slow? you'll probably have a nasty , a slowdown many of us expect. alix: is is reassuring -- david: is this reassuring because we do not see inflation and the fed does not have to move? erik: you have a short dollar. that is good for you in many ways. it means the real disposable income is higher and that can keep you floating longer. the u.s. is not a trait trading economy. david: erik nielsen of your credit, you did it, you told us about the entire world. zhou put lay shares are trading at their highest level -- chipotle shares are trading at their highest level since 2015. we spoke to the ceo about food safety. brian: food safety will be
something that is ongoing. our commitment to bringing in real ingredients and doing classic cooking in the restaurant requires us to deliver top-tier food safety protocols, practices and standards. we'll be unrelenting in this area. it will be an ongoing process. i believe we are one of the leaders in this area and we will continue to invest so we will always be a leader in this space. we want nothing more than to give people access to delicious food that is fresh and prepared in front of you and done in a way when you get to customize it the way you want it. it is an unrelenting commitment. david: you know brands. has the brand recovered? it was a powerful brand and it took some dings. what is your assessment of the state of the brand right now? brian: the chipotle brand is
strong. we have a neat point of view on food culture and a unique point of view on the food we will source gives us a strong position in the restaurant space and in consumers minds. frankly what you have seen us do is remind people at the core of what makes chipotle special is its commitment to fresh food, clean food done in a way you get to customize it exactly how you want it. it is a tremendous value. i'veost powerful brand always seen have tremendous value and the strong point of view and a strong point of difference. chipotle has all of those things. the brand is strong. we have to remind people why they felt in love with the brand and why they will continue to chipotleove with what can do today and in the future. that is why we've been modernizing it with digital access and along the way giving people more access to the food they love and enjoy.
david: which leads to the question of where does the growth come from? the growth of the brand and the business? is it digital access, is a drive-by, is it delivery, is an expansion overseas? where is biggest opportunity for you for expansion? brian: in united states we only have 2500 restaurants. the number one complaint about chipotle is convenience. that is twofold. convenience to the current stores we have, meeting the line. how else could i interact with the chipotle experience? put a hard we've effort on giving people the ability to get delivery, order ahead, mobile pickup. walkmers order ahead, they into a restaurant, their food is ready to go because they've selected a time. it is arguably the fastest way to get great food in the country.
then there's the other piece, which is we see an opportunity to build restaurants. there are a lot of communities. chipotle's purpose and career opportunities would make a lot of sense for these communities. on top of it, they are craving great breeders done the way chip wayreat burriots done the chipotle does it. we are in early stages on evaluating outside the united states. we have a handful of restaurants in the u.k., france, and germany and a couple dozen restaurants in canada and we are in the early days of that. near-term, huge growth opportunity in the united states and that i think medium to long-term there'll be opportunities to take this proposition beyond the united states. tells about cost and cost of labor. we see minimum wage requirements going up.
how's that affecting your cost situation? brian: luckily for us, we have the market onove wages and benefits. our employee proposition is strong. people love joining chipotle because they get excited about their compensation package, but with the group -- the growth opportunity in front of them. one of the best ways to handle rising costs is to grow dramatically within our current restaurants as well as building new restaurants. you can join our company as a team member, earning above average hourly wage, definitely well above benefits. we were just in a conference and rolled out for all of our folks 100% tuition reimbursement. we've also rolled out english as a second language and ged programs, not only for our
employees but their family members. it is these benefits we think how people grow personally but also professionally. david: that was part of my interview with brian niccol, chipotle ceo. and analyst says the national launch of chipotle rewards could add to margins in their bottom line. david: also they would not be doing this if they do not think their brand was restored. coming up, we will go live to paris for an exclusive interview with jamie dimon. this is bloomberg. ♪
the former u.s. ambassador to canada. welcome back to bloomberg daybreak. paris whereo now to francine lacqua is joined by jamie dimon talking about brexit and global growth. francine: we are delighted to be here in paris at the 2019 global markets conference and the man of the hour, jamie dimon, the executive the bank joins us now. thank you for giving us a little bit of your busy day. you said with the u.k. retrenching from their global duties it makes it harder to do business. what does that mean for running a global bank worldwide? is an issuenk there about the fundamentals of american foreign-policy and british foreign policy is changing. we do not know the potential of the future so there is a risk
factor. it is not going to change anything we do. we will go country by country and client by client and understand the risks that we have to react to. francine: it must change the business with your clients. you have to be nimble and what kind of services they want? jamie: take brexit. clients are preparing, clients are requesting. we have to get forms and documents clients have to sign. where they want to do business, less people, we are investing in china because they will see how the trade thing sorts out. these do change the flow of trade investments. it does not change what we're going to do. francine: is the u.k. ready for no deal brexit? jamie: no. i think it would be a bad idea. it is not just the u.k., it is the eu. they did not prepare for a no deal brexit. a lot of things would change immediately.
i huge negative effect on the economy. we are prepared because we have to be prepared. we do not think it is going to happen. we think there will be an cannsion so both parties think about what they're trying to accomplish and what the downsides are. francine: a 10% risk? at 20% risk question mark if it does happen -- a 20% risk? could it frees the markets? it gets to that we will go to a 24/7 war room status to make sure we are prepared -- potential banks, liquidity, clients, demands. things like this will have unintended consequences. francine: can london survive as a financial center? jamie: i think london's financial status will diminish over time because other countries will demand things be done there. technology, risk, compliance, i think it changes the forecast we
expect. hopefully it will still be a financial center. it will be not quite what it is today. francine: you mentioned brexit and china. how worried are you on china? how should we look at china? jamie: china, the trade issues are real. they need to be resolved. francine: will they be resolved? jamie: we expect so. we think both parties want it, but they are complex. they talk about hundreds of pages of memorandum. china will be a fully developed nation in 30 years, the economy will be bigger than the united states but they have a tough road. they are smart but they do not have enough food or energy, they have corruption. the markets you have here in terms of research and knowledge and rule of law, you do not have all of that yet. it is not a criticism. they will have a way to go.
they will grow now but there will be times in the future weather will be bumps in the road. francine: what does that mean? as an investor do you stay down or do you go all in? jamie: we're not slowing down. people are slowing down because of trade. my point is when they do have that will come home to roost. right now they can handle it. china can macro manage. they can tell the monetary people and the companies what they need to do, who they need to hire. that will not always be true. one day there will be a recession. francine: financial crisis kind of disruption? jamie: could be. we had a financial crisis and markets panic. they cannot today but five to seven years they need to be careful building up their balances.
the bigger the markets get the less things they can control. i'm not saying is going to happen. china's growing at 6% and 7% but the second they don't the world acts more scared than it should be. francine: where is the next financial crisis going to come from? jamie: i do not think there's going to be a financial crisis. the last one, there is far more leverage in the system. there is not one showing dollars of bad mortgages. trillion ofnot $1 bad mortgages. there are mounting potholes. i know daniel said this morning that we see growth. we are not overweight but these issues -- trade, shut down, mount.brazil, they it may not be one thing. it may be a complex of factors that cause the dreaded recession. francine: when will we see a recession in the u.s.? jamie: i don't know.
it does not look like 2019. wages are going up, the financial markets are open. confidence of the consumer is in the upper quartile. the consumers still spending money. some numbers weekend recently but it was nothing that says we should grow 2%? francine: is president trump a two-term president? in thethere's an article paper about presidential politics and primaries. he could be, particularly if you have a strong economy and the democrats, depending on who they take, if their way left, if their mid-center. it remains to be seen. this article went through the democratic primaries, who the front runner was, how wrong they have been. francine: what to the markets want? is it too soon to say whether they want trump twice or someone
leaning more socialist. jamie: i think it is what individual voters want. that is too soon to say. people do listened all sides and all issues. on the democratic side, my view is people want a strong politician who is also more of a centrist who knows economics and policy and foreign policy. slogans are not policy. we have to be very careful. the road to hell is paved with good intentions. among the crowd, hopefully they will merge with a strong candidate. francine: when you look at small businesses in the u.s., how much are they getting hurt by google, facebook, amazon and the big tech companies -- should they get broken up? jamie: i do not think they are being heard. some are being helped, some are being hurt. being broken about up, but there are serious issues around privacy which i think europe is ahead of also on -- is
ahead of us on. the second is democracy itself. should people be allowed to use these systems to affect our democracy and the answer is absolutely not. i do not know how to stop that. the third is competition. the folks you were speaking about -- no one should be using their platform to kill competitors. we always believe in an open system and some do are quite good job. some have not. francine: this changes. it feels different. before you competed in bricks and mortar. jamie: exactly. that is creating an opportunity. some small retailers have been hurt by that but the consumer votes with their feet. governments cannot say you will not buy there. if you want to all we have to do is find a way to serve you so we do not get killed by competition.
asking the government to protect me is a big mistake. francine: when we look at m&a, bb&t and suntrust, what does that mean for consolidation? jamie: america has a little less than 5000 banks. we support the smaller banks. regulators have been top on them. we support that. you'll see consolidation. the banking system in the world needs diversification. people will find it. if they do a good job of execution and be a tougher competitor, and they do a bad job they will be less of a competitor. francine: will they be a real competitor? jamie: our competition is in every city the bank in that city. they can be really good in a city. yes, at the small business, as enemy, -- sme, they could be real competitors. on global mortgage, no.
francine: what do european banks need to do to become more like u.s. banks? jamie: the american system recover quicker, reacted quicker and probably started more conservatively. i'm very sympathetic to european banks. the point of the common market which is still true, a big company allows markets to compete. because of global crisis they were constrained. --se banks need to merge product diversification. if politicians fight it, they will be subscale forever. that is not good for their economies. they should think through the choices and allow the banks to merging go pan-european. francine: doesn't need to start domestically? do we need to see a deutsche bank commerzbank merger? jamie: i have not analyze that. to me all mergers are the same
-- is the business logic real? is the price right? can you execute properly? execution is usually where people fall. that is merging cultures, merging system, if they do it right they will be a better bank. it will be based on execution. francine: you have a number on how many european banks you think should be in the region? for a moment people are saying this is an overbank region. jamie: there is some truth to that. america had 30,000 banks. now it is 5000. the merger was a hard process. , lot of those mergers failed but they did put together bigger companies that could be globally competitive. francine: is a regulations? what is europe not doing? jamie: i think you need to
change regulations to allow pan-european banking and consolidation. you have to allow them to become efficient. that means layoff. it is better for the long-term industry. it is not good in the short run, particularly for those people. i'm sympathetic. that is a political issue. both sides need to think about what they want. francine: do think the western economies will go through a bigger wave of populism? jamie: i think emmanuel macron has done a great job here. slogans are not policy. there are legitimate complaints. there are segments of society who are left behind. inner-city school kids are not graduating in the united states. infrastructure is not being built. the opioid problem. we have these issues. minimum wage is not a living wage and they need to be. when it the government to work how to educate the kids and get living wage jobs. we have earned income tax credit
which is like a negative income tax, we need to fix the problems. my view is business has to help. business has to step up and help. it cannot be done by government alone. francine: you said 30 million in paris. how you measure success? jamie: what we expect? how much do we put in, how many kids trained, how many got jobs? how much can we put into affordable housing, how much affordable housing was there? helping cities grow. affordable housing, venture capital for entrepreneurs of color, venture capital for women , skills is probably the biggest part. there are a lot of jobs. kids are graduating and they're not job ready. jobs create dignity. francine: what about getting into politics? jamie: that is not me. francine: you're doing it. trying to bridge the divide. jamie: that is the best i can
do. francine: if somebody opportunity you a job in politics, would you think about it? jamie: i don't think so. i love what i do. hopefully i can do it longer. francine: how to politicians -- if we lost trust -- jamie: we all lost trust. if anyone is to blame it is the elite. it is not just banks, it is companies, government leaders. something went terribly wrong and people paid a heavy price. the only way you earn trust his day by day, every interaction with every client and every company. there are a lot of great politicians. i think emmanuel macron is doing the same job. if you go the of -- is doing a great job. francine: their huge protests in france. -- he i think he is doing is listening to them. he reversed the gas tax. let's looksaying is
at your problems and fix them. what can we do to help you? whoe's a mayor in detroit turned detroit big on civic institutions, schools, companies, help me with streetlights and securities and we are helping him and it is working. it is working at that level. francine: thank you so much for joining us. that is jamie dimon, the chief executive of jpmorgan. at the 2019 today global market conference in paris. we talked about brexit and the u.s. economy and the risk of a global recession. alix: that was francine lacqua. a couple things to note. they save your clients have been investing in china due to trade issues. very important. there is money on the sidelines. david: he said china has a way to go. it has 30 years before it is developed. in the meantime he called for pan-european banking.
he says there are too many banks . he thinks there should be a change to regulation. alix: that was interesting because i wonder if you combined deutsche bank and commerzbank's like that or it is constituted -- it is competition? that doesn't for bloomberg daybreak. coming up with jonathan ferro, robert tipp and in the markets, it is a mixed market reaction today. you didn't wind up having the president xi and president trump pushing back the trade deadline muting any rally in the market. the dax able to get up by .4%. pressuree still under as brexit continues to unwind in the market. oil getting a lift. this is bloomberg. ♪
jonathan: coming up, china's slowdown deepening. a trade meeting with trump and xi pushed back. parliament gearing up to delay brexit and the u.s. grounding the boeing 737 max, putting a $600 billion order at risk. 30 minutes from the opening bell, here is your price action thursday morning. three days of gains on the s&p 500 coming into today. futures dead flat on the session. likewise on the treasury market, muted price action through the year. 2.62 is your yield on u.s. 10 year and a dollar stronger against everything through the morning. euro-dollar back to 1.13 flat. we begin with our top story. investors adjusting to a much slower chinese economy. china isowth model in basically done. >> china has been slowing. >>