doubts about his presidency. urging opponents of brexit to fight to keep britain in the eu. french bonds drop, german debt rallies. another does of political risk into european markets. "bloomberg daybreak welcome to "bloomberg daybreak." point to a fourth straight week of gains on the s&p 500. futures looking a little softer in new york. we are down .2% across the board. it is a weaker euro story, down .25% and a stronger japanese yen . , if you are surprised by the politics, maybe you should not be. tony blair making a series of headlines as he urged those opposed to brexit to stand up

and fight back. >> the people voted without knowledge of the terms of brexit. as these terms become clear, it is their right to change their mind. our mission is to persuade them to do so. jon: guy johnson joins us now from london. it's a question i was asked this morning. what is he doing? guy: he thinks nobody is making the opposite case. toys are in extent, he has a point. there's very little that represents the people who voted remain. his tony blair the right person to be making this argument? it's very easy for boris johnson it because of tony

blair's history of thinking about taking the u.k. into the euro. he is an exceptional politician was anay's speech incredibly well-crafted piece of political speech writing. is he is damaged goods in many people's minds in the u.k. jon: he has the background to understand issues. the likes of tony blair will not make a difference in this debate. who is his audience as he comes about the brexit situation and urge an uprising? guy: i think he's hoping and i'm not sure that he or i know the answer to that. what i think he is hoping is that there is a group of people out there who are not standing up. let's call them the silent remainers. they are angry, they feel that

they've been let down. that this is not what was talked about vaguely during the debates. he's hoping that somebody within that group -- that somebody stands up and delivers. at the moment is that the pound is the only opposition to theresa may's administration. i think he's hoping is that somebody other than the british currency will stand up. putting aside his difficulties with the british people come is healing a foundation for an argument that make them up later? as the british people look at the details, is it possible that they could have a do over? guy: i think a do over would be an extremely difficult thing to engineer. what we've been debating is the issue of parliamentary sovereignty. this is a political bear trap that people are aware of.

people know that this could be something that does end up catching theresa may. parliamentary sovereignty is the one issue that could start to stand out a little more. -- tony blairndum has argued in the past that we should not be making policy by referendum. that will be a different arc. he's talking about something different than a do over. david: does he undermine theresa may's bargaining position with the eu by taking this position? guy: possibly. bargainingresa may's position with the rest of the year will become crystal clear. -- with the rest of the eu is going to become crystal clear. once article 50 is triggered, the u.k. loses a lot of its bargaining power regardless of

what 20 blair has to say. -- tony blair has to say. it reinforces the argument that there should be some opposition, there should be a discourse that takes place around all this. jon: maybe the message is for his own party and the lack of leadership within it. morning, story this the situation in france. i know you've been following the eurozone debt market all morning. german debt outbid. yields lower across the board. we are down by four basis points on the session. french debt on offer. election inhe france coming up and the potential that the centerleft candidate joins forces with the far left candidate, going into the second round if you put those two together and then they take on lapen. how difficult is it understand

to understand the developments over the last 24 hours? guy: it's about the second round and who ends up in the second choose? how did they combinationy that a of the more left elements of the socialist party will make it into the second round. how will they vote in the second round? that is the debate we need to be having. this muddies the water a little bit. still remain -- how will these people cast their ballot once the first round is over? jon: we have a series of elections coming up in europe. france is just one of them. germany as well. the netherlands coming up this year, too.

you could throw in italy potentially later this year. i want to bring in the fx side of things. mark mccormick in north america. i want to talk about the situation in the fx market. how you set yourself up when politics seem to be the biggest and notf the fx market rate differentials. what is that mean for you? mark: you have to think more about the risks around these political events. markets were caught wrong side on brexit and trump. there's waves of hedging around these international political risks. when you are starting to see is a big move in the three-year risk reversal side on the euro. and a combination of risk eighted dxy you w index that they don't want to play the political game where they want to take the risk in

have a currency view on it. they do have to trade currencies and it's part of their bulk and they need to hedge some of these risks. people are trying to alleviate take a strong not be on the duration of the currency over the next six months. david: is there an opportunity besides the hedging? could there be an uptick if this all sorts out the way that some people would like? way we are looking at the euro is it's almost like a v-shaped recovery. there's two things driving the euro right now. reflation trade that is generally better for the u.s. dollar right now, higher real rates in the u.s. and higher inflation in germany and an ecb on hold. you are seeing the work real rates in the eurozone which is a topic mix for the currency. you are zynga sovereign risks increasing across the eurozone. you are starting to see a pickup of periphery spreads relative to

german bonds. ant we are seeing is influence of the sovereign debt risks we saw around 2011 coupled with an actual shift in monetary policy expectations around the u.s. and the fact that you still have relatively white output gaps between the two countries is an environment that will be very bad for the euro for the next two to three months. people who have to take directional views are looking at different cross opportunities to say i want to sell the euro against a higher-yielding currency because the global backdrop is relatively improving. if you think about what the risks are around some of these trades, you want to be short euro, but short euro across a couple different crosses that allow you to pick a seem that you think is relevant for global markets at this point. to what extent is that expressing itself in the real economy in the real lives of

brits? guy: it will. you can see the input cost story coming through in the prices. the bank of england has highlighted this. be felt in to certain areas -- petrol, diesel, fresh fruits, fresh goods are generally a little more expensive. jon: if you fund them in dollars, you can make big acquisitions. raft-heinz confirms it approached unilever for a merger. we are up by 9.9%. confirmed it approached unilever big a strong

dollar story playing out here. kraft heinz approaching unilever thatmerger another story came out yesterday in the european debt market, if you counter the ecb -- this , they may deviations be permitted. what is the significance of that? guy: it tells you that the ecb is becoming a more and more political story. it basically means they are deviating from the structure of the buying process which is mandated by the relative size of the various economies in europe. you will see more buying of italy and the other peripheral economies. this will not play well in germany. this is part and parcel of the ecb.icalization of the

events,.e political guy johnson, we appreciate your time. mark mccormick is sticking with us. story -- kraft heinz confirming it approached unilever on a merger. , but krafts declined heinz says they made a comprehensive proposal to unilever. the stock reaction clear to be seen. stock up by nine, potentially 10%. also coming up, it is that theater in d.c. donald trump's message to all of us in financial markets is apparently, "you're welcome." >> the stock market has hit

record numbers, as you know. there has been a tremendous surge of optimism in the business world, which means something much different than it used to -- jon: investors continue to follow the money and block out the d.c. noise. happy friday. this is bloomberg. ♪

david: this is bloomberg.

a 77dent trump gave us minute impromptu news conference yesterday and to call it far ranging is an understatement. he covered which morning shows he likes to watch to a possible war with russia. you explain what the president's goal was? >> he was trying to turn the page by taking the media had on. there was one moment during the press conference where he specifically mentioned his chief of staff, the former head of the republican party. priebusved that reince was spending so much time addressing the media issues of that he wasn't able to focus his attention on the legislative agenda of the administration. that is why this matters. it slows down president trump's ability to move his agenda.

i'm not sure the white house understands that. david: what was the effect of the news conference? did you move toward that goal of getting back on his economic agenda? >> he gave people a lot of things to talk about. later today, he will be in charleston, south carolina touring an boeing plant. the question on capitol hill, not just from democrats -- that is why president trump's war with the media doesn't necessarily work. when you talk to people like senator bob corker and senator john mccain, these are republicans within the president's own party raising serious questions about this administration. that's why he's unable to put this behind him. david: we will talk about the boeing visit, coming up. we want to continue with president trump and his news conference. the commander-in-chief also weighed in on the recent market rally. >> the stock market has hit

record numbers come as you know. there's been a tremendous surge of optimism in the business world which is something much different than it used to come it used to mean that is good, now, it means that is good for jobs. trump'shat is president real effect on the markets? we are joined by michael gapen and mark mccormick. michael, welcome. answer that question for us. the president believes he is driving markets. , there has been a notable uptick in sentiment. equity markets have reacted quite strongly. there is still a debate over whether the white house, the house and the senate are all on the same page on fiscal policy. the one thing that is constant across all of those is the desire to reduce corporate taxes and equities are responding to that. we can debate about the other

modalities of the plan but equity markets and sentiment have certainly responded. david: the equity markets clearly one after the election. in recent days committed but a lot of confusion in washington. about exactly what's going on with the priorities -- michael: there's the initial the details then started to matter and markets are saying the more it is about immigration reform and trade and the affordable care act first, the less we will like that. of thethat means a delay factors that we really one which would be personal income tax cuts and corporate income tax cuts and tax reform coming for , infrastructure spending. jon: you are on the board for td securities. -- what the volume up

were you thinking yesterday when you watched that play out? mark: what i really think about when i see that, i look at it like a bigger bloom policies uncertainty index running apple to your eyes -- running out look atar highs and a the mass of the virgins between those two trains and i look at the price action since the election and i see that one of the best performing strategies is a carry base strategy which doesn't particularly perform well with uncertainty. risk assets are trading at cyclical highs. you look at where the emerging markets have traded and where the high beta currencies are moving, this is not really in sync with what you would call lots of political uncertainty, particularly in the unite states. turn the volume down and ignore the news conference. mark: exactly.

what we try to do is think about what is the underlying driver and the modalities around the fx market. ,ut where the global economy is it has closed its output gap and the senate embraced that and embraced the fact that they will issue is a- the rotation from monetary to fiscal. the clouded uncertainty we have around what fiscal policy will look like whether it will be growth enhancing or more reflationary will be the driver of the fx markets. we are seeing the markets are basically pricing trump on when they think we will get progrowth policies and that is good for the dollar. we have a lot of uncertainty on the back end of the year which will not be good for the u.s. dollar as the rest of the world converges towards stronger growth and normalization of their own central-bank policies. if you look through all

the noise on the political spectrum, there has been a cyclical upturn in the industrial data. some of the risk on is in response to an honest-to-goodness improvement in the data and the risk on trade will depend on the timing of the fiscal policies that are coming. more that it is about the affordable care act and you need to repeal and replace that ahead of doing anything on the tax plan, the more it will push that reform later into the air. that could be a problem for markets in february. david: thank you to mark mccormick and michael gapen. michael gapen will be staying with us. from greece to france to britain, political risks front and center in europe. jacob kirkegaard joins us to debate the possible fallout amid rising populist tensions. ♪

jon: this is "bloomberg daybreak

." kraft heinz confirming it approached unilever on a merger my proposal to unilever about combining the two groups. unilever has declined the proposal. market clearin the to be seen. unilever up over eight percentage points. come up to kraft heinz over four percentage points. this could be a monster of a deal. they company in europe with the market cap north of $130 billion and in the united states with over $100 billion. if you put together some of the brands of these companies, that is quite a shoppingover shelf. unilever said than no, but

thank you very much. jon: we are set up like this unk this friday morning. equities this morning looking a bit softer in the united states. the dow negative five points. check out treasuries very quickly. we snapped a five-game slide yesterday. a bit of political risk in europe driving the euro lower by .2%. march is live, apparently. we together a whole week of fed speak. you are watching bloomberg tv. ♪

[ alarm clock beeping ] weather. ♪ [ laughter ] cartoons. wait for it. [ cat screech ] [ laughter ] ♪ [ screaming ] [ laughter ] make everyday awesome with the power of xfinity x1...

hi grandma! and the fastest internet. [ girl screaming ] [ laughter ] jon: let's get a check on the markets quickly. features a little softer in the united states. in europe, the stoxx 600 obsession lows on that report that kraft heinz made in

approached unilever. to unilever.proach treasuries were outbid, yields coming in by three basis points. the euro weaker, down .2%. some political risk injected into european markets. let's say good morning to emma chandra. emma: president trump is trying to erase doubts about his early days in the white house. he attacked the press as dishonest and blamed democrats for what he called the messy inherited. the president also denied his administration is in chaos. >> this administration is running like a fine-tuned machine. despite the fact that i cannot get my cabinet approved. and they are outstanding people. emma: today, the president travels to the boeing plant in

south carolina. tomorrow, he will hold a campaign style rally in florida. mike pence heads to europe this week and to which are leaders that the u.s. is a reliable ally. he will speak at the munich security conference tomorrow and then meet with you leaders in brussels. in south korea, the billionaire in ahas been arrested corruption scandal can make use bribery, perjury and embezzlement. bribery, perjury and embezzlement. prosecutors say it was part of a scheme to lead and consolidate control of samsung. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm emma chandra. this is bloomberg. david: no deal. at least so far. kraft heinz says unilever has rejected an approach to combine the two companies. shares of unilever up 8% on the

news. jeff mccracken joins us on the telephone. this would be a massive deal. north of $200 billion going forward. does it come as a surprise? 120: we are talking like billion dollars deal. we don't know what the price would be. it would be the biggest deal we've had since verizon vodafone. all we know is that kraft heinz has been the 3g people, the brazilians. they are extraordinary at cutting costs. they run the business is very lean, they get rid of a lot of people in close a lot of factories and they frighten the rest of the consumer space they compete with. if they were able to do this deal with unilever, they would the largest consumer products

company that exists in the world. david: $200 billion, including both companies. you put your finger on it, the cost-cutting that kraft heinz has managed. it's been 18 months since craft and heinz got together. what is that say about their ability to cut costs? jeff: they're really good at it. i've spoken to people at 3g about how much they scrutinize every penny that gets spent. they are the same people behind the anheuser-busch acquisition that went on years ago. and the sab miller deal which came down the pipe a year or so ago when abi and sab merged. , a lot oflot of fat overhead that can be taken out of these companies that sell food or beverages. they look at unilever and see a ripe target.

everyone knew 3g would do deal.er big the question now is whether the fact that this came out makes it harder for a deal to be pulled off. how does this one go down in d.c.? >> the fact that it is a u.s. company buying it to europe will make it easier in d.c. the question is how is it going to go down in europe. in the the politicians u.k. or in france or wherever going to view a deal where unilever is being taken over? i have not looked at the employee numbers of late but unilever has thousands of employees in a bunch of different countries. , theythe 3g track record

will get rid of people. there will be a lot of heads that's a lot of jobs will be shut. it will be more ok in the u.s. that over there in europe. both mandal and general mills trading lower in the premarket as well. jeff: i was a general mills was something people expected would happen. colgate.as if you wanted to go in a different direction, they just raised a new fund and people assumed they would go another direction and colgate was a name that was pretty high on that list. investors were hoping something would happen and the share prices will fall over the next couple of days. who knows if this deal is going to happen?

these are hard deals to get done. leaks so early in the process, it makes it much harder to get a deal done. david: put a lot of companies potentially in play. thank you for being with us today. we turn for mergers and acquisitions over to central banks. a busy week in fed speak led by congressional two week testimony. everybody seems to indicate that one message, a rate hike in march is at least live. >> waiting too long to remove accommodation would be unwise. she kept the march meeting live, which i think is the right posture at this moment. >> i don't want to give you -- this ist we consistent with what we thought should be happening around now.

i overall still feel that what i saw at the beginning of the year has the path for the economy is what we are experiencing and i premised two rate moves on that outlook. >> we don't know what fiscal plans congress and the it ministers and will decide on. we are not basing our judgments on speculation about that. david: the fed indicates that three rate hikes might be in the cards. the markets and that futures are looking at two hikes. who will be right in the end? still with us is michael gapen -- does it and matter whether it's two or three this year? michael: not necessarily. the direction is what matters. it is fiscal policy leading the way.

shifte with mark on the in tone -- march will be on the table. it will be discussed. we don't think it will happen. most of the impulse and inflation was about energy and commodities. not so much about wages and domestic prices. it will be discussed, the fed will skip march and depending on the timing of fiscal policy, you will get two or three. markets seem to be ok with that. david: is it fiscal policy leading the way? janet yellen said we are not taking that into account. the trump administration has not come up with a fiscal plan yet. is the fed anticipating? michael: what they are saying relative to history the are not the only game in town anymore. if you do get a fiscal policy expansion, it will make monetary policy more regular. thetiming of that matters,

fed will follow on the back of fiscal expansion with more rate hikes. the timing and the details of that matter. i'm not sure the fed feels lot of urgency to move ahead of that. i told you the data was going to be absolutely solid and there would be a hawkish tilt in every fed speak are rolled out throughout the week come a would you believe that the dollar would be dead flat over the last five trading days? mark: i think so. maybe a more upward bias for the u.s. dollar. we got a really solid inflation number. the fed is not going to front run fiscal stimulus. now, you are seeing an uptick in prices, u.s. real yields starting to fall. bestwe saw as we got the priced and immediately, we saw a huge surge in the dollar relative to lower yielding

currencies within the g10. that positioning is very lopsided. you look at the correlation of all the major currencies relative to u.s. dollar, you are looking at a one-sided trade where all currencies are moving with or without the dollar. the direction of the dollar will hinge on what outlook we get our fiscal. what people are focused on is there's been a bit of a backlash on border adjusted tax -- we have not seen too much discussion outside the last couple of weeks where people are talking about trade imbalances or the international value currency. all those things keep us range bound. more of an impulse for markets to think about what border adjustments do. what are those goodies going to impact currencies from a fiscal stimulus? jon: a couple of points marked is made -- the idea that the fed won't front run fiscal stimulus.

theng into this year, assumption was that we get a push in fiscal stimulus and the fed would react. are we questioning how that is going to play out? michael: we are. we don't know when fiscal stimulus is coming. trump has one version and the house has a version. the composition matters. border adjustment would have a different impact on trade and currencies then a general tax cut. on one outcome, yet the deficit whitening -- widening. we don't have more clarity on that. michael gapen and mark mccormick. political risk front and center yet again in europe. peterson institute senior fellow jacob kirkegaard joins us to debate possible fallout

amid rising populist tensions. ♪

emm this isa: this is "bloomberg daybreak." coming later, mark cuban on where he's putting his cash to work. this is bloomberg. government military officials gathered today for the 53rd annual munich security conference. the first international visit for the new vice president, mike pence. ,e will meet with angela merkel the nato head and the eu president. matt miller joins us from munich.

give us a sense of what's on the agenda over there for these individuals. matt: everyone is focused on what mike pence is going to say here, what message he's going to deliver. this is a culmination of a week for trumpdebuts officials. on wednesday, we had general mattis talking in brussels. rexhursday, we had tillerson addressing the public for the first time and today, we as heear from mike pence starts a series of bilateral merkel, theh angela president from ukraine to the nato secretary-general. ofid: this is a meeting multilateral lists. thus multilateralists. what will the reception before mike pence -- this is a meeting

of multilateralists. what will the reaction be for mike pence? >> there will be skepticism because of the debacle surrounding michael flynn and the misinformation that he gave to the vice president. i asked senator mccain about this a moment ago. are you concerned that mike pence will lose credibility after the michael flynn events? >> mike pence had nothing to do he might haveld been misled, but he had nothing to do with it. matt: he did not mislead himself. i talked to a number of people coming in and out of this conference. bill cohen said it is wait and see mode right now as far as the credibility of the white house is concerned. germany, the heart of

political risk in europe. the socialist party presidential candidate said he's holding further talks with the far left candidate -- yields up by a basis point and german debt outbid. joining us now, jacob kirkegaard . great to have you with us on the program. talk to me about the latest twist in the french election and the potential significance of it. potentiallyis a concerning development because the main risk in the french elections is if you have a single far left candidate lapen, you end

up with a second round that has already been illuminated desk eliminated. -- already been eliminated. knowhow do you really the voting intentions of people with a candidate like this? we know from historical records and france, including when her father was in the second round in 2002, her inst round support currently the 25-30% range is rocksolid. the problem she's had is always to expand that base. she will have great difficulties doing that against any mainstream candidate. if the alternative is a far left candidate, maybe she will.

i would expect a fairly low turnout which also would benefit her. david: france is a big issue but not the only political issue facing europe right now. give us france, netherlands, germany, brexit. jacob: the one we can dismiss as a risk right away as germany. happens inhat germany, you will have a pro-european multilateralist chancellor. the formerel or president of the european parliament. is one of continuity. when you talk about the netherlands, i think there is no doubt that the freedom party will do very well. it may become the biggest single party in the dutch parliament. it will be only one of potentially 10 or 12 different parties. is thered, my bet

a non-freedom party coalition established. it will be a more unstable coalition than the current one but one that aske excludes the populist party. the one to watch right now is italy. you are having a development there where there is a risk that the centerleft party will split and in that scenario, the actual is quite support uncertain. so, that is an ongoing story. jon: i want to talk about institutional paralysis within some of these countries. scarye these

scenarios that play out in the pen comes to power in france, talk to me about the effect of power if they get their. .- if they get there pen ends uprine le winning the french presidency, you will have elementary elections. ends up winning the[indiscernible] what the end up with french call -- you have the prime minister and the president opposed to each other. in that scenario, it is the prime minister who commands the majority of parliament who calls most of the shots.

marine le pen would not be able to go forward with her plans for a referendum on eu membership. the main outcome of that would be one ofmarine le pen would noe to go forward with her plans pa. jon: we have all these elections and all this new leadership -- who does prime minister may have to negotiate with? we caught up with the former greek finance minister about negotiations in europe and how it plays out. angela merkel and get one-story, then you go to -- brussels and get another story. you are constantly being referred from one to another. my feisty prime minister may -- my advice to prime minister may, there will be secondary negotiations. she will be negotiating for the right to negotiate. the former greek finance minister and his combative approach to negotiations.

what is in store for the premised minister when she goes over to europe when all of these governments are looking within? within france, within italy, within germany and then they have to negotiate with prime minister may? the first thing theresa may needs to get ready is if she room up to walk into a 27 people which each have their own domestic agendas dominating, she has to get her own story straight what does she wish to achieve a part from the bro ad exit? what kind of deal does she want? if she doesn't have that story straight, she will not be able to succeed. timeis a very inopportune for her to launch these negotiations.

it has gotten worse in the last couple of months for her. the march trigger because we are looking at potential early elections in italy as well. france looks increasingly uncertain. if you had a chance to redo it, maybe she would have wanted to postpone it. to get a better idea of who she will be negotiating with. obviously, that train has now left the station. david: talk to us about tony blair who spoke out this morning saying there should be a second referendum. how plausible is that, what is the role that tony blair has in this? is -- we sawk it in the last couple of weeks what i would regard as a remarkable -- of the sovereignty of the u.k. parliament. they decided to cede all power

of article 50 and negotiations themselves as well as the outcome of those negotiations which was an extraordinary development. and u.k. no organized party or political movement working towards remain or undoing bret. no matter the outcome. there is no deal with the european union, this is a rather , oneordinary development that tony blair is speaking up against. is it realistic that you can now have a reversal? i don't believe it is. we are now looking at either you marine le penthat would be negotiating with european union or you walk away as theresa may made clear. we really appreciate your

time. thank you for joining us on the phone. you and i talked about this. who is the message really for? i wonder how much the message was for his old party and the lack of leadership there right now. david: i'm not sure how much support it has in his own party -- he has in his own party right now. will bef rosenberg joining us. the market versus the federal reserve. from new york city, this is bloomberg. ♪

jon:, on wall street --tradicted by desk

calm on wall street contradicted by fears in d.c. the potential for a monster deal , kraft heinz confirms an approach to li n unilever. good morning to you. the tone in the markets this friday morning a little something like this. features a little softer. the s&p still heading for a fourth straight week of gains. , 242 on a were outbid this morning, a weaker euro story dominating the fx market. not sure we know all that much more today than we do a week ago. even after two days of janet

yellen testimony in congress, the one thing office because are clear on is we will get some increased rates at some point in the future. to remove too long accommodation would be unwise. kept all options open and she kept the march meeting's life, which is exactly what i think is the right posture at this moment. >> i don't want to give you numbers on two or three, but we -- this is consistent with what we thought should be happening around now. >> i overall still feel that what i saw at the beginning of is what we are experiencing and i premised two rate moves on that outlook. >> we don't know what fiscal plans the congress and the administration will decide on. we are not basing our judgments about current interest rates on

speculation about that. mckee with us now is mike lisa abramowicz. he said if a tree falls slowly in the forest, does it actually happen? is that what we are watching with all this fed speak? : it is an asymmetrical trade as far as the fed is concerned. they are going into the march meeting with the market leading the wrong direction. there's no guarantee they would raise rates in march but they don't what the market to completely rule it out. politics is coming into play here significantly in the early part of the spring because you have the continuing resolution that funds the government running out on april 28 and we could have a government shutdown. you have the french elections coming up at the beginning of may.

they might want to be looking at those things and say here's a window of opportunity, we should go. we don't have to do it. we could and we would like the markets to be in a position that we don't shock them. david: is the fed leading the markets or is it following the markets? i've lost track. lisa: the big question people have come is that that getting ahead of itself and tightening to quickly forgetting behind the curve -- or getting behind the curve? if you look at the yield curve and the bond market, the differential between five and 30 year treasuries, you say that that is getting ahead of itself. narrowest since 2008, 2007. this indicates that over the decades, the prospect for preterm growth is

getting lower. jeffi want to bring in rosenberg from black rock. we've gone from 135 down to 111. do you take the same signal from that curve? to be a little careful about leading to much into these short run movements and just drawback for a bit and see where we are. we are on the precipice of a breakout and inflation. -- in inflation. that is the story of the market. the contest what is going on in europe to what is going on in the u.s., you see that monetary policy operates with a long and variable lag. are catching up. you are getting to a point in in the economy when you're beginning to see the accelerations. if it starts to really

accelerate come of the narrative and the sense within the market fed that hasom a long been very dovish to a fed that gets quickly behind the curve. that is correct, the bond market is wrong and set up for a very big correction. jeff: bond markets can be wrong. news. i think we've seen that before. -- newsflash. it's been wrong for so long that it doesn't want to get out ahead of it again because every time we talked about rates going higher and the fed getting behind the curve, we've had some external event that has proven that wrong once again and that may again be the case. signaling faster appreciation, faster normalization than what the market is pricing.

jon: we will bring it up. there you go. old story of the bond market being underpriced, i'm sympathetic to all those views. points really the turning in the economic cycle where you finally get the wage inflation and inflation acceleration that we've been so complacent to finally price into the market? are you looking at it the what you look at it for the last seven years where every meeting you have to say what happened in the economic data, didn't go up enough between meetings to justify a move at this meeting or du start looking at levels that should do you -- or do you start looking at levels? you cannot have an economy running at those levels and not generate higher inflation.

jeff: we look at the levels and then we look at two levels and that is two points and we draw a line between those two points and extrapolate that line. that line is big celebration in inflation. that is where the market starts to worry about whether or not we are really a disinflation point. david: it's one thing to disagree with the bond market. it's another thing to disagree with janet yellen. she would have given a different statement to congress. jeff: she did give a very different statement to congress. six months ago, she was talking about slack in the labor market and the benefits of running the economy hot. how did she characterize the labor market two days ago? that there was virtually no slack and we are at full employment. the difference between having slack and no longer having slack is that with long and variable lags, you begin to see the

impact. the phillips curve, wage inflation, is not linear. it is flat for a long time and then it begins to accelerate and accelerate at a more rapid days. that's more rapid pace. it was a very important shift in her testimony and her characterization of the labor markets. david: did the markets here it? -- hear it? , but it is aard it muffled the message because there's a lot of other noise coming at the market in the system and there's been a lot of skepticism. every year, we talk about four hikes a year, we come in and get all bullish on the economy and it is disappointment. we only get one hike.

that is still in the bond markets. we still think the march probabilities are too low. for the signaling to the market, time for have a lot of the fed to get those probabilities up. jon: the markets been long for so long -- jeff: we've been wrong. the strategists have been wrong. we've had a lot of examples where you predict where you think markets are going to go in terms of higher rates, we've had disappointment on that and that's been a big reason for why there's a lot of skepticism in the bond market. perhaps rightly so. just simply looking at the market doesn't mean that is always the right place. jon: skepticism in the high-yield market right now. is a company that has to

pay a former x a $30 million wage packet -- former executive a $30 million wage packet. lisa: they issued $350 million of bonds earlier this month with a provision that $30 million of those bonds would go toward paying a golden parachute to a former executive before leaving. ofs is an outrageous amount money considering that that is equal to the entire annual payout to this company's shareholders. the company is paying a 9.3% interest rate to do so. bond investors are hoping there's -- holding their nose and buying the stuff. this is the gap between average yields and yields on the new ratesmuch higher interest on those new bonds.

it indicates a top of a market. to be using the bond market as a personal cash register, really? how does this help the company? a 9% coupon. did blackrock buy it? is that a sign of a top? jeff: the theme yesterday after that yielde -- premium is pretty hefty, right? that was a huge differential. the market is getting paid for the added risk. no doubt that the use of proceeds is of concern. this should not be any news to anyone here. this is called a credit cycle. in areasget to the end of a credit cycle, you get this behavior. anymore macrolevel.

-- companiesceeds take advantage at this point in the cycle to fund in the bond markets to pay higher dividends to the equity holders. it accelerates a signal of where you are in the cycle. it should be no surprise to anybody that eight years into a an average of cycle that lasts seven that we are pretty long in the cycle. the cycle is being extended. horizon,nger investor you have to appreciate that we are later in the cycle. that means you are closer to the next cycle. being closer to the next cycle is closer to when you start to see that the asset class is high-yield for a reason because it has high risk and you are highlighting one of their reasons why it has high risk.

if it is a surprise to you, you should reconsider whether or not you have the stomach for this kind of risk in your portfolio. one person who might be surprised is the president of united states. thecompanies cannot borrow money they want to borrow and we have this company borrowing $30 million to pay executive comp. mike: commercial industrial loans have soared in recent years. is it about smaller companies? there seems to be less demand their. only 2% of small business owners think that credit is a problem. credit is not the issue right now. jon: lisa abramowicz, thank you for your time. two michael mckee as well. to michael mckee as well. jeff rosenberg is sticking with us. and dallaso ceo

mavericks owner mark cuban later in the day. let's get you up to speed very quickly. futures a little softer, down .3% on the dow and s&p 500. outbid.es very yields at four basis points and a weaker euro as well. this is bloomberg. ♪

emma: kraft heinz has confirmed

it has approached unilever about a merger. unilever declined the proposal. the committee says it looks forward to trying to reach an agreement. the financial times has warned buffett and 3g would be involved in the financing side. the world's largest maker of farm equipment has raised its forecast. up from 1% previously. the company has been on a campaign to cut costs. eere posted fourth quarter profit that beat estimates. u.s. government accusing united -- theof overcharging insurer falsely claimed its members were treated for conditions they did not happen united health rejects the accusations and says they will fight the lawsuit. jon: interesting session developing in europe to start french that and german debt looking like this. french debt on offer this

morning. in at 0.3%.coming joining us to discuss is jeff rosenberg of black rock. you get the centerleft candidate pairing with the far left candidate which makes it harder to do the math on who takes on marine le pen in the second round and therefore, you get the you get the centerleftspread bl. is there enough in the spread a hedge of the french election -- ahead of the french election? mike: there's a lot. changed that dramatically. s quite a bit move to reestablish the relative value between france and germany especially when we think about what the potential outcomes are

and whether or not the market is overpricing some of the political risk story. jon: some breaking news in the last minute or so. in the last hour, we learned that kraft heinz made an approach to unilever about combining the two companies to create a consumer goods giant. in the last minute, we've had unilever come out and say that the kraft heinz proposal valued the company at $50 per share. the reaction in the market clear to be seen. by 8.83% in amsterdam. the stock reaction pretty clear. a deal that not many people saw coming. it would create an absolute monster. rejected the deal so far. david: a seven dollar premium is not that big on a $43 stock. you wonder how far the negotiations are going to go.

the european risks we face in politics and the debt market, france is one thing, italy is another. what worries you most in europe? i think there's a scenario where we've had these political scenarios, we've gotten them wrong and then we've gotten the wrong twice. we cannot get the political reaction correct and we cannot get the financial market reaction correct. there is a scenario in europe that is underappreciated. there is a potential of good outcome from the european political space. you do have the scenario where the frenchough elections and german elections and what comes out of that is disillusionment with the center parties and you might

have a realization that the political risk in europe is being overpriced. that might lead to a much better outcome in terms of the european outlook. europeanrop of that is fundamentals are improving from a low base and slow. if you take away the political risk and refocus on the economics, you might see that a better picture emerges. there's so much focus on the continuation of brexit, that's a solution meant that the disillusionment. -- continuation of brexit, that the solution meant. thatntinuation of brexit, disillusionment. that goes way quickly in an environment where the market is starved for yield. deal: coming up, a big that is not happening so far.

kraft heinz and says unilever rejected an approach to combine two companies been shares of unilever surging on the news. this is bloomberg. ♪

david: this is bloomberg to huge . to huge food companies are discussing combining. ruth joins us now from london. are you there? ruth: good morning. can you hear me? david: thank you for joining us. what do we know about this deal? was it a big surprise? it is, especially because we had kraft heinz saying yesterday that they weren't

doing any big deals. unilever is a giant that has personal care and home and food. it's a mixture of so many things , not to mention that it is a company with a market cap of over $100 billion. unilever said no thank you very much so far. if this deal were to come to fruition, is there a lot of overlap? or is in a different management style? >> there is definitely a different management style. where does unilever see itself? it's gone into these new industries -- they bought dollar shape last year. -- dollar shave last year. and then 3g with cutting costs. there will be a culture mismatch. unilever's statement is

interesting. they are not interested in further talks at this time. maybe 3g will come back with a much better offer. i love how quickly bloomberg crunches the numbers. 10,909 calls traded on every 15. -- every 15. -- february 15. contracts changed hands -- polish contracts changed hands -- bullish bullish bullish contracts changed hands. the realm of in speculation but is this about unilever trying to get a bigger and better deal?

this rumor was in the market yesterday. in thethere were rumors papers talking about it. they will take a look at that i can't remember a time when there weren't leaks. with sab miller, something similar happened. david: reports came out $50 a share. looking at the balance sheet on the bloomberg mcrae has $32 -- unilever has $32 billion in debt. reports syncope dollars a share. analyst reports saying $50 a share. i don't think they will pay a

generous price for this. the interesting thing to see is how badly they want this deal . can they get it past the governments and the regulators and all of that? it seems like a big task. typically when this happens, other ceos get ideas in the sector. does this put foodstuffs in general in play? what does this mean for mondele eze? >> there was speculation that 3g would go for them. are lookingmpanies at what this means for the market. we don't get the sense yet that this deal is something that is going to go ahead. we have to wait and see over the next days and weeks of whether they managed to come to the negotiation table and reached

agreement. to comeer they manage to the negotiation table and reach an agreement. jon: a hurdle to get them through. that's part of the reason why you are seeing these big deals. it's another message about accessibility of credit. a different conversation than the one we talked about earlier. you about the health of financial institutions, the ability to broker those deals. and the openness of capital markets. we appreciate your time, ruth, to come on the program and break down the potential for a monster deal. we are one hour from the cache open. the situation across assets like this. cash are one hour from the

open a series of record highs throughout much of the week. it would've's office in global equities today. -- that injection of political risk, the rise of populism in story andweaker euro the stronger yen in the g10 space. that is the situation in the markets. let's get you up to speed on emma: president trump is aimed at dismantling obama era regulations. the president is waiting for a new leader of you -- the environment protection agency. his nominee is on track to be confirmed by the senate today. former british prime minister tony blair is urging opponents of brexit to fight to keep the u.k. in the european union. he spoke today at bloomberg's

european headquarters in london. knowledgeers, without of the terms of brexit, as these terms become clear, it is their right to change their mind. themission is to persuade to do so. primeblair accused minister theresa may's government of pursuing brexit at any cost. in south korea, the billionaire bribery,arrested in a perjury, and embezzlement scandal. into they are looking consolidateave control over samsung. the company denied the allegation. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am emma chandra, this is bloomberg. jonathan: i turned out to the morning meeting, where we hear what the banks are watching.

fromornton joins us now new york to discuss the potential impact of president trump's border adjustment tax on retail. they got crushed yesterday after paul ryan voiced his support. it's the elephant in the room for many of these retails. how do you get it into the price when you don't know with the potential of actually happening is? mr. thornton: we think it's unlikely to actually happen. i think that is generally the view that most people hold. clearly, if it does, there are a lot of retailers that have significant risk. we have done some work to suggest there are some retailers that look through well-positioned. it shouldn't be much of a negative. home depot and lowe's are some of those that we talked about on that front. we also talked about allete -- aldi and dollar general. it's difficult to know what will

happen. trump is a populist. this may be perceived as a regressive tax, depending on what happens with currencies. there are a lot of retailers that are big employers. that could be a headwind as well. those are among the reasons why we don't think it sort of happens in its current form, and we tried to focus elsewhere. jonathan: what kind of form could it take? mr. thornton: back to the point about retail, you are likely to see some sort of carveout. even brady, kevin brady, while the authors of this, indicated some flexibility when it comes to what exactly the plan is going to look like. phasing inobably be certain things may get exemptions. one of the issues people have is the price of energy. people don't want gas prices going up.

that would not be a very popular proposal. that is something that could be made exempt. and again, there are a lot of uncertainties around policy. that is why we try to focus -- we did a piece earlier in the week they really focused on what we know trump is trying to do, which is create jobs. especially for people who have felt left out from the expansion of the last eight years. david: that drives us to geography here in the united states. i noticed in your note, you distinguished between retailers that have concentrations in the rust belt, the dollar general. is that break down? mr. thornton: we took a look at a number of different economic statistics and ranks the states on those stats. we cannot with a total ranking. 15 states have generally seen worse income growth and 10 to have high manufacturing -- tend to have high manufacturing and

lower and household income. we felt like these were the states that have been left out from the expansion, it happened that all 15 of these states voted for trump. if you look at the top five states, that was the look best, all those voted for clinton. we should look at these states to see which retailers -- not even retailers, but also restaurants. talked about equipment rental companies and boat dealers. a whole bunch of things that popped up, companies that have a lot of exposure to these states. banks are another one. there are a number of banks that are exclusively exposed to these states. there were 97 countries that have 30% or more exposure to these 15 states, they have only 20% of u.s. gdp. , if thesetj, quickly fears over the border adjustment onceeceipt -- they are

again viewed as tax reform beneficiaries because of the effective tax rate they will end up paying if you get the big tax cut. is that enough to upset the structural issues they face? mr. thornton: i think that is a good point. soon after trump was elected, the view was these retailers would be beneficiaries. on boardarted to focus adjusted taxes, there was a big selloff. that coincided with what was a weak holidaya period. in the short-term, the way we think about it is if these fears around that ebb a bit more, you also have positive seasonality. people start to focus on the fact that if personal income taxes go down, a lot of these guys to be beneficiaries. thinking about the next few -- in in quarters february and march, retailers do tend to perform well. they tend not to perform well

over the holidays. people seldom after the holidays thinking ok, it's over. either the good news is out or the bad news has hit the stocks and we are concerned about sales. at that point, they tend to bottom over the short term. jonathan: there's a guy with a baseball bat. mr. thornton: i actually know that guy. i'm even more concerned. jonathan: there's a wager on the jeffries trading floor to get that guy in the shot. tj thornton of jeffries, thank you. david: retailers are trying to sort out whether the trump administration is good or bad for their business. one company had particular challenges in sorting it out, that is under armour. it makes a lot of goods overseas , which is not something that your trunk particularly likes. -- mr. trump particular likes. he characterized the president as pro-business and a real asset. it's sure to say that neither customers nor celebrity endorsers reacted well. joining us now is joe

weisenthal, and oliver renick. welcome. taking through what happened to mr. plank. >> he cannot little while ago and called donald trump" asset to the country," that got pushed back from some of under armour's star athletes, who disagree with that characterization. analyst came out, it was one of the most fascinating stories of the week saying this was a reason to downgrade the company. there's logic to it. not in the sense of whether he is right or wrong, but from now on, or from this week forward, buying under armour is at least a political act. if you oppose what he said, maybe you will be less inclined. if you support trump, you are more inclined to buy under armour.

you can imagine how a company brand that is offensively politically neutral -- ostensibly politically neutral ken become pro-trump very quickly. -- dig in and a big portion of the market may be unavailable. ivid: he says the fact that sent that doesn't mean i agree with him, especially on immigration. joe: the rotation of some of the star under armour athletes, the pushback. i don't think any company really wants to be the pro or anti-trump company. every ceo would like to say we disagree with this. i wonder if that's even possible in four years, whether there will be any company in the world that is not known or being on one side or the other. jonathan: it doesn't want to be talked about. under armour specifically, i wonder whether this is a story specific to under armour, because the stock has done so badly this year.

whether there is a bigger picture. oliver: there is a lot of reason, at least on wall street, they believed to be bearish on the stock. there were three downgrades after earnings reported on january 31. stock trading at half the price as it was six months ago. it is particularly relevant for onompany that relies a lot its celebrity endorsements. makeur caterpillar and you tractors, whatever industrial equipment, and you say you like trump, i don't think eyes you need that equipment say we all like this. but when you have to count on big star athletes and famous players, people were very much in the public spotlight, and you have someone who is very toxic in some circles -- roughly half of america -- is not really the field you want to be playing in in terms of politics. i do think the fact that

the consumer brand and associated with celebrities, the fact if you where under armour, you are probably wearing and under armour ad. these things make it especially important for that tight rope to be walked. jonathan: it's being talked about. i'm cynical about these things. joe weisenthal of bloomberg, and oliver renick, thank you. coming up, dallas mavericks owner mark cuban on where he is putting some of his cash to work. from new york, as we count down to the open, that's 49 minutes away. from new york, this is bloomberg. ♪

"bloombergis

daybreak," i am emma chandra. we speak with cory johnson at the tech summit. david: this is bloomberg, i'm david westin. gets is boeing made air force one to fly to a boeing air force facility. joining us is kevin cirilli. what does the president expect to publish in visiting boeing? kevin: he will be in charleston, south carolina. some sources are not anticipating any major policy announcements at boeing. however, he will be attending the rollout of their new dreamliner aircraft. that said, behind the scenes, there have been some conversations with folks as well as within the administration on

potentially reauthorizing the export import bank. that could bust some heads on capitol hill with conservatives who are against the bank. boeing has been one of the top supporters of the banks reauthorization in filling out its board. thed: we heard about economic plan in various respects. have we heard about training skilled workers for boeing? kevin: we have not actually heard specifically how president frontline address that. this is not something he has truly focused on. he focused on the regulatory policy and tax policy, but we haven't heard specifically how he would train workers. at the question that really has gone unanswered as of late. david: thanks, kevin. later today, we hear the remarks from president trump as he gives them come alive on bloomberg tv at 1:05 you sometime this afternoon. on the subject of jobs, i set down with the chief executive , he'sr of snap-on inc.

learned why business confidence is building and what president all from can do to create jobs and with the business sector needs from u.s. economic policy. >> for something the president can do, he can encourage the upscale american workforce and create a technical base that will fill this gap, both in the factories in the garages. go to a garage, they can't hire technicians. david: julie sweet is ceo, and she just rolled out a new initiative that will raise the u.s. workforce to 165,000 employees, a 30% increase by 2020. welcome. heels of what the he said, tell us about the new initiative and what you are trying to accomplish. investmentthis is an in innovation and our people. we agreed of her economic growth, one of the first things you need is the right people. we done a lot of work in

research on workforce transformation. we don't have enough skills. if you look in what we are doing, we are for small investing in rolling out innovation hubs across the country, because our strategy is to be the innovation partner for our clients. and with one make them successful in the future, we believe, is continuous innovation. to innovate, you have to have the people, and the most talented professionals. we are investing $1.4 billion in training our people, giving them the really coveted skills they want, that our clients need. david: what does that tell us about our school system? wired schools teaching our children, so you don't have to train them? mr. sweet: it's not just about deficits in the school system. we are known for additional capabilities, 40% of our business is working with emerging technologies. is training for

skills that just aren't out there because things are new and emerging. all ofn we have to have our employees able to understand technology. it's really across the spectrum. as you sit as a business leader, is theversations across educational system is not producing the right graduates and we have a real deficit in stem graduates. computer science degrees, 500,000 new jobs last year required to view resized reason over 40,000 new graduates. david: when you launch this? next week, we are opening up the first innovation hub in houston. we are focusing on industrial clients, fiber and robotics. you walk in and there would be a drone running around showing how we monitor manufacturing facilities to preventative maintenance. it's an exciting place where we collaborate with our clients. we are able to rapidly prototype and develop solutions, go test them, come back, and the next

wave of competitiveness, the next wave of growth is going to go to those companies who innovate continuously. we want to bring innovation to the doorstep of our clients. david: how are you going to measure success? successt: we measure from shareholder perspective, it's absolutely about growth. from the people's perspective, it's about getting the best and most talented professionals. david: thank you, so much. julie sweet. jonathan: if you have a bloomberg terminal, check out tv -->, you can walk online watch online. interact with the threat that. just go to tv on your bloomberg. features softer ahead of the market open and a monster deal to discuss as kraft heinz says unilever rejected approach for a huge potential commendation. this morning, we down about one third of 1% on the board. from new york, this is bloomberg. ♪

jonathan: from new york, this is bloomberg. the potential for a major tie up. the potential merger between unilever and kraft heinz. kraft heinz making an approach unilever rejecting the approach and recommending holders to take no action. aboutued the company of $50 a share, that 18% premium fundamentally undervalues it. the story in amsterdam trading, we are applied 10.7%. on unilever, if you look to where kraft heinz is trading in the premarket, up by almost five full percentage points. there's a deal that might be in the deal that might not be. there's a talk of a tie up between them and others. those stocks trading lower. if kraft heinz goes after the likes of unilever, those potential deals don't go through. it's a potential that this leaked and lisa big time. a lot of people -- leaked

big-time. a lot of people are talking about it. unilever's u.s. ticker, almost 11,000 call traded on february 15, the most since 2011. bets,ruary 16, 31 bearish 5186 bullish contracts changing hands. david: some securities regulators are taking a hard look at this. jonathan: looking at the potential for leaks and what it means for this deal. negotiations will continue. let's turn now to cory johnson, live at the 16th annual nba all-star technology summit in new orleans. did i get that right? cory: does it really matter? i'm in new orleans. [laughter] it's the first technology summit in 2000 in san francisco. the ritz-carlton hotel in san francisco. mark tatum's deputy commissioner for the nba. talk to us about what this is? all-star weekend is a really unique american events that

people don't understand all the stuff that goes on will be on the game and slamdunk. >> this is the 18th annual technology summit that we conducted. the very first one was in the bay area. for us, it's an opportunity to bring people together, ceos, team owners, people like mark cuban. cory: for what? mr. tatum: to have a discussion on the trends in sports. a lot of the topics are social media and how that is changing the engagement with fans, or investing in sports technologies. how do these owners and executives make those kinds of decisions? landscape isedia changing, and how technology can be used to elevate the game of basketball. ago, iore than 20 years started a basketball magazine called slam magazine and we had a lot of tension with the nba. it was hard for the nba to believe it was going to be something other than the major daily newspapers, tv networks,

and sports illustrated. we had a new magazine and way of telling stories, but the explosion of social media, blogs that no one ever heard of, some kid in his basement who is going to have some relevance to the way the league is covered. the nba treats that in a different way than the abuse i suffered from the league 20 years ago. mr. tatum: we embrace it. we find is such a terrific benefit of the explosion of these different forms of media is the one-to-one dialogue and engagement that our fans can have directly with consumers. or players can have directly with consumers and with fans. same thing with the league. we can engage directly with fans and consumers about the things they like. cory: look at the players twitter accounts. you've given guidelines about things not to do on twitter to boost the image of the league. ng some control by letting them be on twitter. mr. tatum: our players understand that they are global brands. we have over 1.3 billion likes

and followers on social media globally of players, the league's, and the teams. players understand the brands they are, they are using it as a way to give insight into them as people. that is what is resonating with fans. cory: we have a lot of stuff coming up, we're going to be a haul they -- going to be here all day talking to a lineup of people all day long from this tech summit in new orleans. at the nba all-star game. jonathan: great to see you. coming up, mark yusko, morgan creek capital ceo, to discuss these markets. the first main session developing with future softer down. from new york, this is bloomberg. ♪ with x1 you get the best of the oscars.

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the oscars, live sunday, february 26th 7eâ4p on abc. ♪ jonathan: from new york city, welcome to "bloomberg daybreak,"

on jonathan ferro alongside david westin. 30 minutes away from the opening bell. futures a little softer, down 131% after a series -- one third of 1%. a softer session and a little the risk off emerging yields up by four basis points, a stronger yen and a weaker euro in the fx market. front and center for this market is the potential for a megadeal. let's cross over to abigail doolittle. abigail: the big stock story is kraft heinz and unilever. although the shares trading higher, unilever soaring earlier , touching his best day ever. said that kraft heinz they approached unilever to potentially acquire the company, but the unilever rejected the bid. unilever is saying despite the 18% premium, they felt that was an undervalued bid. what stands out here today is

yesterday, kraft heinz did trade sharply lower on what was perceived to be a disappointing earnings report because kraft heinz said they are not going to pursue an m&a strategy. they're going to pursue organic growth. yesterday we had food companies trading lower, down again. we just spoke to a bloomberg intelligence analyst who covers us and says he says the message clearly a heinz was smokescreen, and they are wanting to make a big global deal to create a consumer staples powerhouse in the likes of nestlé. he is involved with procter & gamble, and is trying to make another big company in that image. it's going to be adjusting to see what shakes out. we do have some of these smaller deals, smaller food companies trading lower. put theth noting if you market caps of all three companies together, it is still smaller than unilever. kraft heinz clearly wanting to make a very big megadeal. jonathan: abigail, thank you. we are joined by mark yusko,

morgan creek capital managers the i/o. -- cio. joining us is oliver renick. on the programme may say we're going to pursue organic growth. the worry about that. underneath, there's a megadeal brewing. mr. yusko: there is organic growth. consumer companies are all falling, the consumer struggling globally. the money is cheap, m&a is easy. you can get growth that way because people never go back and unpack the earnings which you announced later. i think you are going to see lots of m&a, as long as rates stay low. to say we're going to pursue organic growth, and the next day megadeal, crazy. jonathan: someone knew about it, and the options market we saw terrific activity in terms of lish investment for unilever on the u.s. ticker. for the company, we've seen megadeals fall apart. we talked to jeff mccracken about the potential of this

going through. buying a big european player, unilever in amsterdam, the dutch prime minister asked about this morning. he refused to comment at this point. do these kind of deals get through with the way they used to? mr. yusko: they don't. i'm shocked there hasn't been a tweet from the tweeter in chief already. these big deals given a lot of people. there are synergies. a euphemism for downsizing. it's not good for jobs. historically, they are not good for profits either. big megadeals, they look good and they are splashy. in the end, i think is going to struggle to get through. jonathan: you mentioned the tweeter in chief. yesterday was theater for a lot of people, the president weighed in on the make it -- on the recent market rally. president trump: the stock market has hit record numbers, as you know. there has been a tremendous surge of optimism in the business world, which to me,

means something much different than it used to. it used to mean that's good, now it means that's good for jobs. jonathan: that's a change, that's good for jobs. that's the way that mark yusko looks at the market hitting a record high. mr. yusko: people want to believe. goings a giant hope trade on. but it's all based on the trifecta. you have to have tax reforms, you have to have regulatory reforms, you have to have spending. but yesterday, the guy from goldman sachs says he thinks 25% my get through. -- might get through. stocks are basically flat since the first week of december. i think there is a lot of would chopbefore we -- wood to before we can say things about it -- things are getting better. david: you don't need a trade war. mr. yusko: i write these long letters. the one i wrote to quarters ago was all about the idea that this

was funny to look a lot like the 1930's. the one i just released on monday was called welcome to who rebelled. david: you use the h word, who -- over. -- hoover. mr. yusko: it's not so much that hoover was a bad person or caused the crash, is the reaction of congress to the slowdown in the economy that causes the problem. if the economy slows, which i think it is doing right now, if you react by limiting tariffsion, you enforce , that is negative for trade. in the 1930's, what happened was the u.s. exports fell 35%. because all the other countries react. david: you said the economy is slowing. that's a contrarian call. everyone else says it is growing.

maybe not robustly, but growing steadily. wasyusko: fourth quarter 1.6, a year ago, they got it was going to be three. 237 -- zero for 237 on market growth. i don't think gdp is accelerating. you have working age population growth plus positivity. i don't know how you get to meeting above 2% this year. jonathan: you have the theater in d.c., the optimists, and then you have cynicism of mark yusko. or skepticism. what do you make all that? oliver: this involves a very simple come in on quantitative, very qualitative approach to figure out why people keep buying stocks. we look at the numbers, the data, the economy. we called fund managers. we called 10 or 20 fund managers

together and the message is pretty consistent when you say why our markets not only rally in post trump, but continuing over such a long time, three months since the election? they don't care about anything else besides the fact that they believe we are shifting from a 180 from a president who is andritizing regulation regulatory moves, to a president that is prioritizing free markets and pro business activity. what form that takes and how much of that is there -- they are looking beyond all of that. they are looking beyond the gridlock and saying democrats can stop these guys from getting in. they are all going to get him except for those who decide to resign. once that's there, they see ,eople like cohen in mnuchin those guys are going to prioritize the economy and small businesses, and that's not the end of the conversation for them. jonathan: there's a

contradiction, a picture of a business friendly administration. and then when you see cios -- ceos lined up in front of the president and he is selling them to southern about prices, that doesn't feel like free-market to me. when we face in -- what are we facing? mr. yusko: i think you have to look at actions rather than words. we had all of this talk about all of these big things were going to happen. as soon as they got in in the first 100 days. we haven't seen even one proposed bill, let alone any real activity they could take a vote on. there than executive orders on things that are peripheral to the big three. i want action. i want, other than just talking about what you are going to do to be pro-business and having a couple of guys -- some of the appointments are pro-business guys. but at the end of the day, congress passes the laws. if you have created this rift with the people you have to work

with, i don't how these things are going to get done. the longer they don't get done, the worse the downdraft is going to be. when people stop thinking the hope is going to work. david: congress passes the laws, the executive branch enforces them through regulation. one thing they have done issuing an executive order saying we're going to take a hard look particularly in the financial sector, id regulars and. isn't that potentially a real stimulus? proponent i am a huge of get rid of dodd-frank. i hope they do. getting rid of glass-steagall was a huge mistake. because i will argue a huge potential cause of the global financial crisis. bring it back, get rid of the regular tory aspects of banking. -- the regulatory aspect of banking. even though big banks were rescinded and activities, the nonbank financial have created a $600 billion lending business

that is actually functioning pretty well. contact, i don't know that you need the big banks in a lot of cases to have the liquidity and the lubrication of business to work well. i'm a big fan of synthetic and the future of finance. david: oliver renick and mark yusko, staying with us. we have a great line of guests next week. ellen zentner and wednesday, we hear from sam's they'll, and thursday, deutsche bank. it's all coming up next week. jonathan: on the markets, 20 minutes away from the open. features softer, the s&p 500 police for a fourth straight week of gains. the longest weekly winning streak since july last year. from new york, this is bloomberg. ♪

jonathan: from new york city, this is bloomberg. is the gossip on wall street in the last 24 hours -- don't shoot the messenger. a five-point million-dollar fund -- 520 million-dollar fund firm, as markets turned against them. the firm claims the trading was too little to move the market after receiving heat from investors. burger,us now is dani he is still with us. and the story, i've heard a lot of people talking about it. talk to me about what happened and we can talk about the potential consequences of what they did. dani: this is a trade it's been transfixing wall street for the past 36 hours. this fund from catalyst capital is about $3.4 billion. they did something called short

gamma, using options on the s&p to bet that we are not going to very much. this is a position they had acquired over a couple of months , and a long investors i talked to said this is not that bad of a trade when you look back when they were putting this on. the vix is at all-time lows, in the low teens. we don't seem to have that much to push is up further. we have is amazing rally in february. the past 13 trading days, the s&p has been up 11 of those, about 3% this month. as he got closer, they were selling calls, and they said we are taking a huge hit. we have to kick in some safeguards to make sure we don't lose that much, according to the sf that value, they lost about $600 million the week through yesterday. he started to find out those calls. this is a pretty big trade, the hot gossip on wall street -- are they moving the market doing this trade? are they a big wheel in the

market? jonathan: are they? mr. yusko: $3.4 billion fund is a yale -- is a whale right now, i'm going to cash. high-frequency trading is all the liquidity away, and we are in trouble. jonathan: this fund it, the performance since last week is not great. on the last few years, it's been tremendous. -- that the aging thing is the interesting thing. people love selling volatility. in a low interest rate environment, this is a good way to get yields. now,a strange environment is not necessarily the market plummeting which these funds have to worry about. they have to worry about them blowing through the strike price. i talked to the ceo who said who would have thought that all wise, going on, political who would've thought this is what we had to be dealing with? they did not anticipate that. david: did they lose betting against the trump trade?

dani: when they initially went in, it wasn't a bet against the trump trade. they thought we slowly climb up, and they would have made money. they did not bet on the ceo called a trump bubble. they became short once they got close to the strike price, but it wasn't something they actively thought they would be doing. mr. yusko: this has been going on for a long time. the real issue is not just this fund. the real issue is there a big pension funds doing this trade. there's a lot of money, you have one risk parity fund look like it's in trouble when treasuries start to go down. the problem is, all the other funds doing it. it's not just the catalyst fund, is a whole much of people have been sold this bill of goods that you'll yield -- a low yield environment, with no risk. jonathan: yesterday, we had a guest talking about premium

generation could get on the vix. surely you can go much lower from here. mr. yusko: absolutely. we can't until we do. options are wonderful thing. they have embedded leverage. it's like anything. if you buy a house for cash, there's no risk hardly, because prices don't move that much. you buy it for 20% down, still not bad. you put 1% down, and now the price moves even a little bit, all your equity is gone. david: bloomberg dani burger, you to have you. and mark yusko of morgan creek capital will be staying with us. seven weeks and counting, apple is on its longest weekly winning streak since 2012. we talk about whether the dow's top performer this year has more room to run. that's next. thethan: we look at potential for a monster deal, unilever getting an approach from kraft heinz. the stock of over 10 full percentage point in amsterdam trading. unilever says the offer fundamentally undervalues the company. they reject the approach.

this will carry on, and we carry on covering it. from new york, this is bloomberg. ♪

david: this is bloomberg, i'm david westin. it's the top performer in the dow this year. apple has led the way, reporting seven straight weeks of gains. white, us is brian welcome back to the program. i think is the highest target price there is. tell us, this is what i can understand. ,hat understand -- what changed was wonderfully different than what we thought before? mr. white: there's a misperception. we saw iphones turned negative, this was the start of a secular change. it really wasn't. 37% in fiscal 15,

so you have a downdraft in fiscal 16 and value are starting to calm that. -- comp that. of 5% return to growth and apple regained it is number one title in the smartphone market for the first time since the fourth quarter of 2011. iphone 10 is coming out, and a lot of good things for apple. david: you have been bullish on the stock every time you been on the program. , youentioned repatriation have the iphone coming out in the fall. you also have stumbles from samsung. which of those of the biggest effect on apple's prospects? mr. white: i would say the iphone 7 has been a strong product, but i think people now see a durable cycle with the iphone 10. is probably the most important. i will say the services business , they came out and said this will double over the next four years. that's very important as well. i put all this together and i think we are just at the beginning of a major shift in

sentiment around apple at 10 times x cash. are the most bullish analyst on the street this morning, and when you look at the chart, this is the an hour function on the bloomberg. this is a 12 month consensus price of all the analysts we track, at 143. there is a message in the spread, it's heightened a significant lead. we haven't seen it that tight for a long time. these guys are nowhere near as bullish as you are. what is everyone else not quite getting? mr. white: 11 of people don't like to go on a limb and put something that is that much higher than the stock price. i am always the believable that apple can trade at least in line with the market, if not higher. i look at it next cash. 10 times x cash on 18, the market 16 right now on 18. our price target is based on 15 times x cash on 18.

185 is a reasonable price target, and i think this sentiment is just outage of change. you see stocks coming up a lot this year up about 18%. we have a long ways to go. david: where does the growth come from? they have difficulties in china, they have competitors. where's the growth from from -- come from? mr. white: it's going to grow 18% to 20%. you start to see china turned positive in the next two to three quarters year-over-year. they grew 84% in fiscal 15 on the iphone six, that wasn't sustainable. in india, you see a lot of reports about opening of a manufacturing plant and producing in india. one billion mobile subscribers, china is about 1.3 billion. the opportunity is almost as big as china. jonathan: what is your take?

liked apple for a long time. it's over, it's going down, china is going to have a hard landing and apple is done. but apple made more profit last quarter than amazon has ever made. let that sink in for a second. in one quarter, more profits than other companies made an entire 20 years. apple is a machine, and it trades at a discount to the market. it makes no sense, and i think the street is way low. i think is nice to be sitting here with a guy who has the right answer. why itn: the story on was priced below the market in a much more significant way last year was the idea that it had gone next growth. is that different now, the people got that wrong? mr. white: it is a value stock for sure, but i do think it can return maybe 10% or 12% eps growth. sales being in the single-digit type range. if we step back, this is looking

in the next few years. if we step back, everything is becoming a computer. watches, tvs, automobiles, our houses, tvs -- everything is becoming a computer. no one is better positioned in the world to capitalize on that with hardware and software than apple. that will open up new virginity. david: they are -- that will open up new opportunities. david: they are known for the iphone. can they make the tradition to the internet of things? mr. white: the way the iphone will interact with other parts of our lives -- if you have an automobile, you have connected home, you have a tv, you have a smart watch. integrate them with your operating system on your phone, that's ecosystem needed. it's great to have a phone. think about the competitors who don't make profits. what is the future for them? internet can be around. david: it's a remote control for your life. jonathan: how much before the

next stock split? mr. white: i remember before they let go for a while, so i don't expect anything. jonathan: drexel hamilton very own, one 85 the price target, the close yesterday at 135. mark yusko is sticking with us. as we count you down to the open , and the closing of this trading week eventually, later on today. features a little soft, down 131% across the board. the potential for a fourth straight week of gains on the s&p 500, the longest of july of next year -- of last year. you are watching bloomberg tv. ♪

jonathan: from new york city, this is "bloomberg daybreak," on jonathan ferro. about .4%ofter, down on the dow, negative one third

1% on the s&p 500. you would need a significant flying today to take that away. classes, asset treasuries big, use coming in by four basis points, 641 on the u.s. tenure. the dollar showing the strength right now, up .1%. that's the story across asset. a lot of starks -- stock to get through. abigail: looking at a down day on the open for the major averages. the dow, s&p 500, and the nasdaq trading lower. this is actually the fourth down day, these losses are more than we have seen. all of those losses have reversed, and we are actually even looking at six simultaneous days of record intraday highs. the s&p 500 and nasdaq finished down yesterday, they did put it into intraday record highs. lots of records, and we do have the s&p 500 on piece for its

fourth weekly gain. first time that's happened since august. ,t's been a wild week in d.c. investors don't seem to care. we agree chart that addresses this, g #btv 4350 in orange, we have the vix with the fear gauge, worth noting it is options expiration date we could see volatility. in white, we have s&p 500 and after the elections, the vix dropped, big complacency and investors don't have a lot of fear as the s&p 500 has clinched all-time highs. a big space here. there's been a reconnection as we can see after the brexit and other macro fears, it may suggest we can see the s&p 500 dropped as the next likes. only time will tell, but it's interesting to see that we are having this big time of complacency. stocks moving on the open, looking at kraft heinz and unilever. unilever soaring on pace for its best day since 2000. kraft heinz up more than 5% after reversing big drops from yesterday.

hope beingve m&a intelligence analysts said after kraft heinz announced that unilever rejected and 18% premium bid for the company, that this suggests that it's very clear that kraft heinz backed by warren buffett is really wanting to make a powerhouse deal in the consumer staples-based in the image of nestlé. jonathan: abigail, thank you. what we do the next time a ceo comes on and says we are only exploring organic growth after this? david: taken with a grain of salt. mr. yusko: i asked my first boss why don't we ever talk to management? -- allsaid all we redo they ever do is live. they tell you what they believe. jonathan: they want to believe they're going to get growth. in the markets, we look like this about three minutes of the session.

moved to the downside, down about one third of a percent on the dow and s&p 500. joining us around the table on "bloomberg daybreak," jason hunter. i want to look at what you think is a breakout, or acceleration. ? why? mr. hunter: this is a view we have had for a while, going late back to 2014. the fed has gone from easy policy back to neutral. it would be nice and 83, nice and 84, the market did a similar thing in each case. it traded in a violent range of you look back, you are talking about nine percent to 15%. multiple lacks, but it didn't end the bull market. that was just cause. at that time in 2015, still rallies year 2100, down to 1800. that's a time to buy and hold positions.

turn into, that would a more linear rally and we think that's what's unfolding right now. but we seen over the last couple of days or weeks is a confirmation of that view is we are pushing out to new highs, the rally looks like it's accelerating. jonathan: you're looking abroad sector participation. you find that encouraging. mr. hunter: not individual stocks, that's what you see individual stock cap falloff. that's what we had, the small-cap index moved sideways while the nasdaq large cap led rally. what i'm looking for a sector participation. what we saw during the initial rally last year first was defenses, then value, but each one would rally at the expense of the other. we see early this year are defined periods where both are as lighting. jonathan: runs after participating is the same to you. mr. yusko: i think that we've gone from excitement, things are great, to throw, things are really great, and we are heading

towards euphoria. things can't get any better. that's when we have the crack. i do think this is like a 1929 kind of euphoric bubble opportunity. know everyhere, we action has an equal and opposite reaction. i think we will have a crack after that. it depends how extremely euphoric we get. that's the last part of bubble we need. david: take a hypothesis. assume for the moment that mark is right. what we see in their technical that would indicate he is right? mr. hunter: you would see what we're seeing now in the acceleration phase. at some point, he will see the rally decelerate. you want to look at market and sentiments. if those never started suggest what he is saying, that's a concern. the important part about late cycle rallies, if you go back and look at x86 in the late 19 986, was the acceleration

starts, you're not sure how long it's going to last and how far it's going to go. we have managed her risk with a trailing stop lost and we say that way. the dangerous part of a late cycle rally is you are not sure how the macro environment is going to develop. if you decide not going to buy this and you wait and you wait and you go back to the late 1990's -- all of a sudden the supply side of the economy starts to improve and things start to accelerate. it's a tough decision to make. we let's not make that decision and be there as it develops. when we see the cracks in the wall emergent we will get out and turn the other way. we still look like we're in that acceleration phase. a hair trigger saying if we were about to turn around, we have to get out of this. mr. hunter: i wouldn't call it a hair trigger. as the old adage that equity bottoms, equity topped its formal process. usually we get multiweek or multi-month warning that you were in a distributional process and that it's time to get out. jonathan: if everyone thinks

they can stay long and get out of the right time, does it work that way? mr. yusko: you do get around in top and you will go through the moving average with a clear signal, the problem is, you won't pay attention to the signal because you think it's just another debt -- dip. these are speculative, not investments. if you want to trade between now and 2800, go for it. i am much happier being in cash and weeding for the bottom with a knife hits the ground. i think we pick it up at a cheaper price. jonathan: what is the crack? give me the road guide. common vision's a of things. if you see leading indicators, the move of inequities, as we develop, we start to see an increase in technology. they are good leading indicator. if we see a prolonged time where

semiconductor on performance while the rest of the rally continues, where it's one sector continued to lead. that last for a while. if you look at the late 1990's, that was a mega cap rally that left a year or more. we look at price pattern development as well. if we see the pattern decelerate and that a clear distribution pattern started unfold, we get the sense that at the very least, this is deceleration. we will really open our eyes and start look at things much more clearly that point. jonathan: consumer discretionary, final thoughts? mr. hunter: we turned long on that, got bullish after a long period of underperformance. could be a nice catch up through january and february. we just published a second piece on that recently, looking at the homebuilders index. not that it fits squarely with consumer discretionary, but that's an industry group that underperformed moving towards the upper end of a two-year long range.

we think i could be a nice tailwind for the consumer as well. jonathan: jason hunter from jpmorgan and mark yusko of morgan creek capital, thank you. coming up, a stacked lineup of guest next week. tuesday, morgan stanley's ellen wednesday, equity group investors and on friday, the big bowl coming up, banking china -- binky chada. nine minutes so far, equity a little lower, off about one third of a percent on the dow and s&p 500. from new york, this is bloomberg. ♪

"bloombergis

daybreak," coming up, strauss zelnick, seo take two. ♪ david: this is bloomberg, i'm david westin. 77sident trump give us minutes of a press conference yesterday, and i think you can say it is unprecedented what he did. i have never seen anything like it. whole range ofe issues, including spending a fair amount of time criticizing the press. president trump: i see many untruthful things. and i see tone, you know, the word tone. the tone is such hatred. i'm really not a bad person, by the way. the tone is such -- i do get good ratings, you have to admit that. hunt, ioining us is al don't know anyone as experienced or reasonable inside of the

beltway. i have never seen anything like this. the danger of being around as long as i have, david, you can get jaded and say i have seen it all before. seen anything like this. this wasn't a presidential press conference the likes of which we have both seen scores and scores , this was really a reality tv show based at 1600 pennsylvania avenue. he wasn't governing, he was entertaining. he was cajoling, he was haranguing. he covered a range of issues, but remarkably few substantive issues. he seems to have very little interest in governance, but a lot of interest in being the showman that he has been successfully for so many years. us in a reviewg of his television programs and likes to watch. this was unexpected, not planned. what was he thinking? what was the plan?

mr. hunt: he was angry. we are told he thought he was getting a bum rap, with media criticism. from other politicians, including republicans, about the first month had been unfair. yesterday, he said they had a fine tuned machine. i think that was news to almost everyone in washington. the michael flynn national security episode was part of a fine-tuned machine, and of the disastrous rollout of the immigration ban is a fine tune machine, that some of the backbiting in the white house -- he complained a lot about leaks, and to be sure, there are always leaks. but a lot of the leaks are coming internally about other people internally. that's not the mark of a well tuned machine. he wanted to make the case, he didn't think anyone else can make the case that way he can. david: clearly, the drive him nuts, and who can blame him? i didn't like leaks either.

but you and i have seen this with other presidents. the harder you go after those leaks, the more they pop up, as a matter of practice. mr. hunt: basically, people leakelike the league -- e... if they are the subject. leaks from house every politician leaks, they just don't want to have people league about them. --leak about them. needs to get used to this. he has been involved in things like this, but nothing like this. the time.happen all on a more serious nature, when you go after the intelligence agencies the way he has, they have a way of getting back at him. you better be very careful about that. ,avid: apart from the theater there was a lot of theater involved, let's talk about what difference this makes in the real world.

he needs congress to be on his side to get even half of what he wants to get done accomplished. how did congress respond to this? mr. hunt: i think they were shocked. i talked to a couple republicans , i could see them shaking their heads. with 46% of the vote. he didn't win the popular vote, but he got 46%. i think 16% or 17% of those voters couldn't stand hillary. he has a visa maybe 39%. base liked entire that performance. he also solidifying the people who are against him. he is not picking up anyone. i think is hard to govern that way. if he has successes, if the economy is able to create a lot of new jobs, if he can have a good foreign-policy success, people will pay attention to that. i don't think he helped himself yesterday as far as either the public or as far as congress is concerned. david: one of the success of the business community is looking

forward to his tax reform. if you plotted out today, is he closer to tax reform today than a week ago? mr. hunt: no, i think the tough slugging. i am so old, i was here the last time we did tax reform. writed a helped edit and a forward for a book about tax reform. gulch.wdown at gucci it was tough then, is going to be much tougher today, i don't see the people who made it happened back then, i don't see those types of people around today. david: he's getting his own executive branch team together, how is that progressing? is he getting the team together? mr. hunt: the confirmation has been a problem. he will have most of his cabinet in place within a couple of weeks. there's a labor secretary that is still outstanding. but he has a white house problem. , thed to dump mike flynn admiral, very respected admiral

they wanted to take his place said that i want any part of this. he have to put that together. there also are to appointments at the subcabinet level that haven't been made. he does not anything like a team together yet. david: al hunt, we are so happy you are with us. thank you for joining with us. jonathan: coming up the next hour, "bloomberg markets," with vonnie quinn. vonnie: we speak with senator john thune, how he is expressing the first month of the demonstration and what are the major questions that lie ahead, including the border attacks and whether it's even possible that it will get done. we really -- we are going to be at the munich security conference, vice president mike pence is on his way. we speak with the u.k. defense minister asking about tony blair weighing in at this stage and what exactly tony blair is calling for. jonathan: looking forward to the program.

if you have a bloomberg terminal, make sure you check out tv , you can watch us online, click on the charts and graphics, and interact with us directly. go to tv on the bloomberg terminal to check it out. we will get you up to speed. 29 minutes into the session, a little bit of a softer session, though we are down about 25% after record high close on the dow and s&p 500. hae -- ut .2% as we head in. you down, we have a weaker euro story and dollar strength emerging in the last 30 minutes or so. from new york, this is bloomberg. ♪

jonathan: from new york city, this is bloomberg. let's get you up to speed on the market. earlier this week, we had a seven-day rally on the s&p 500, and then took a pause very briefly. this morning, softer, no drama, down about 2%. -- .2%. if you look at the dow, well north of 20,000. softer on the session after a series of record highs. down about 25%, seeing that softer tone emerge in global equity markets as well. capturedoff tone elsewhere in the bond market is well with the u.s. lower by about four basis points. if i'm baseline on treasury with a tuesday rally. biddollar getting a decent in the last couple of minutes as well. the euro weaker, down by 25%. .5%.ound down by and the political risk

around the euro is not going anywhere anytime soon. david: we are waiting with bated breath for what happens in the u.k. we are waiting for inflation to pick up, we haven't seen it yet. --sident hollande: jonathan: the squeeze on retail hasn't happened yet. the other thing that hasn't happened yet, the megamergers. earlier today, we learned that two monster food companies are talking about getting together. kraft heinz says that unilever rejected an approach to combine the two companies. by over 10 full percentage point in amsterdam trading, 11% at 10.9%. shake, us is can bloomberg intelligence senior analyst. great to have you with us. talk to me about the potential for these two companies to get together, and what kind of beef could that, nation be? -- the that combination be? ken: they are powerhouses in

food and consumer products. and household products. i think it's a good opportunity here. clearly, this is initial bid varoufakis , they will have to make more competitive. it will require a higher bid. unilever saying the current proposal is valued about $50 a share, in 18% premium fundamentally undervalues it. years, this for many what kind of premium needs to be offered up? ken: it's hard to tell, but will getthe premium mid-20 or so multiple. look at some of the familiar names. also, there are not many retailers that are going to not want to stop these goods, given

the consumer loyalty of these brands. they deserve a premium. forward, this did go it would be only 18 months after kraft heinz got together. are they already digesting the merger and getting the cost savings they wanted? ken: wednesday night, they were in the late stages of their post merger debt reduction plan. the human race across the generation outlook and i think they are at the point now where a lot of analysts were skeptical about that. clearly, this is a company that wants to be a rival to nestlé in being a global packaged goods leader. this would take them in a big way to that goal. it expands their space geographically, and by market. and their partner, warren buffett, it's not about getting big, it's about getting

rich. can they get a profit margin? ken: it's unclear about the financial backing. clearly, we know warren buffett -- i'm not sure about 3g's role yet. but the ability to provide the financing to get it done will not be an issue. their ceo has compelling reasons to get it done. it really does raise the stakes on all the other packaged food companies or consumer good companies. david: thank you. jonathan: we have to leave it there. for "bloomberg daybreak," thank you. average continues with -- coverage continues with "bloomberg markets." you are watching bloomberg tv. ♪

♪ london is 3:00 p.m. in and 11:00 in hong kong. it i'm on a claim. -- vonnie: i'm vonnie quinn. mark: and i mark barton.

this is "bloomberg markets." ♪ vonnie: we are going to take you from new york to london and stories out of washington d.c., munich, and amsterdam. here are the top stories we are following. president trump is heading to south carolina where he will speak about jobs at a boeing plant. how can he -- can he turn words into actions? how was the trump administration a game changer for defense spending? we will speak to u.k. michael fallon live from the munich security conference. is a megadeal brewing in the consumer products business? kraft heinz targets unilever, but so far, unilever rejects the deal.