washington, d.c., the battle between the globalist and the nationalist unresolved. economybout a stronger -- -- tempered by low inflation. the white house economic adviser is emerging as a clear front runner to replace yellen. a warm welcome to "bloomberg daybreak." i am jonathan ferro alongside david westin and alix steel. after two weeks of losses on the s&p 500, some stability. futures go nowhere. action.uted price euro-dollar at 1.1758. yields lower by a mere basis point, 2.19 on the u.s. 10-year. alix: the real action in the markets has to come at the commodity market. nickel up by 2%, copper up i 1% at a three-year high. goldix calm on the day and

as well. we have base metal seeing some strength today. easternt 9:00 p.m. time, president trump addresses the nation laying out plans for afghanistan and he will hold a rally in arizona tomorrow, the first visit to the state since he was elected. whole foods will hold a meeting takeovere the acquisition by amazon and thursday, the kansas city fed hosts the annual jackson hole economic symposium. janet yellen and mario draghi are on the schedule for friday. the big event. lateran: the big event this week as the president heads back to washington, d.c., investors are left guessing what the latest shakeup in the white house means for policy. after the news van and was out, the markets -- bannon was out, markets initially were up, but then they closed down.

is jan us now for more lloyd, jpmorgan's head of global asset acquisition -- what was the message in the price section on friday? is worried about where policy is going. we are used to politics. when policy gets affected, in particular, can this administration and congress get some kind of tax reform fiscal stimulus going through and we are all kind of not sure it's really going to happen. most of us didn't put it into our forecast, but we all thought if things go wrong with the forecast, at least we get some fiscal stimulus. that is what makes friday all the more interesting because we painted this picture of a tug-of-war between nationalists. it should've been a positive for risk on friday and it was for the best part of five minutes and then it rolled over. i am grappling with why that

happened. we wentwent -- jan: into august historically and investors got nervous. suddenly it comes from washington again. i think it is used to take some profits here and wait for the next signal which will come from the economy. alix: there is another narrative percolating through the market that we saw a cohn rally and not a trump rally. the white bar here is when you wound up having markets that perhaps cohn would leave and you saw s&p decline and the vix rally. left thehere bannon white house. is this really because we want more evidence that the globalists like mnuchin and cohn have more power in the white house? jan: yes, we like to see the progrowth, coherent business people are taking control. what we have right now is not a lot of action.

alix: what would you need to see to be more confident globalist are taking action? what is going to give you confidence? jan: moore the lack of --more the lack of -- more the lack of trump kind of politics. if he goes a bit more quiet, that will be enough evidence that the globalists are having an impact. alix: less tweeting. david: how much of this is policy and how much of it is actually process? maybe general kelly is getting his arms around this presidency wherever it is headed good jan: we can be hopeful on that. we still need evidence on that. process and policy go together. this administration has not been able to deliver much in terms of policy. on paper, it should have been massively powerful. it is a pro business government,

but it cannot get its act together. we are waiting for some evidence that it is making progress. eys will belo staying with us. joining us now is brad blakeman. when you were on bloomberg tv on friday, the markets were rallying on the news steve bannon had left. you came on and said what they need to do is get their act together. get somebody in the white house calling the shots and the markets trailed off. brad: right now there is a void in the senior staff. we have many key people that left, but those positions need to be field -- filled. general kelly has to become limited by a good political person, communications person, and policy person, they need to act as a team. as your guest before me suggested, that got to have an

agenda, a policy for the fall, something that is concrete and something that will get done. promises made must be promises kept and especially getting the economy moving talking about jobs and infrastructure and taxes. things have to get done, we know the debt ceiling has to be raised and the budget has to be done. the legislative component is really key for the fall. david: you worked in the white house and you know how it works. the chief of staff typically is key to that process, not so much in setting the policy as making sure there are affected -- they are affected traffic cops. brad: no question about it. that's why the chief of staff has to take control of the president's schedule. there is only a finite period of time the president has to work with other people's schedule like congress. access, schedule, message, and direction is what this white house needs in order to be effective. alix: part of the rhetoric over the weekend was the globalists

takeover and the economic nationalist take a backseat, but then we heard the white house -- we heard the white house launched an investigation in china. is it easy to dismiss the nationalistic feel in the white house? brad: i think we need to get back to basis that got trump to the presidency and that is, we are going to put america first. we're going to make sure regulation is not stifling jobs and we're going to hold people's feet to the fire in trade deals we have made and i think that is what is missing here, the enforcement and the legislation to back that up to get the markets moving and to create jobs and certainty in the marketplace. jonathan: it was a populist platform. the first thing the president attempted to do along with congress was do something about health care and effectively take things away from people. do not takedidates

things away from people, they give them more. that tension shortly still exists. brad: it does. i am atem is broken bit victim of obamacare and in october i will get my letter .egarding rates and coverage my health care provider pulled out of virginia, so i do not have united health care anymore. unless they fix health care, i am talking about health care fix that israel and certain and predictable, then they are going to have real problems. the people will hold their feet to the fire with midterm elections. david: i want to bring up something on the bloomberg terminal. it's a question of how small cap stocks are doing relative to large-cap stocks as a. -- as opposed to the president's approval rating. the blue here is the ratio at the white is presidential approval. what this says is when the

president came in there was hope and optimism for smaller companies. they were going to really do well. it has gone down with the presidential approval rating. how much of a political problem is this for the resident of the united states? nathan: it's a big prop -- brad: it's a big problem because it is the small businesses that chin up our economy and they need help. they need tax relief and regulatory relief and it's not the talking of regulation or legislation, it's the ability to an act it and that is -- enact it and that is what is going to happen in 2017. that has to be the year of action. if they do not have significant legislation passed by december 15, 2018 will be a rough year for everyone. jonathan: brad blakeman, we appreciate your time. coming up is dan akerson. from new york city, counting you down to the market opened with futures stable, you are watching bloomberg tv. ♪

♪ jonathan: investors are turning attention to jackson hole, wyoming, as janet yellen apparent that prepares to address tempered inflation. >> it is feasible that they could even start hiking before they fully taper. think about it country like germany. what is tapering going to do for germany? not much. they could use a rate hike. investors should more attention to draghi then yellen next week. >> i will more attention to mario draghi. i don't think the fed is going to want to shake the process, so

i do not expect janet yellen as chair of the fed to be saying anything. jonathan: with draghi taking center stage, here to discuss is eys and michael mckee. what can we expect because there were doubts last week as to whether this would be the market moving speech ahead of potential tapering in a couple of might -- months? has becomeon hole this foreign that global wall street expects central bankers to make announcements because ben bernanke did it twice it most of the time the speeches we get are rather bland and academic and i would suspect those concerns are correct because you go back to the last ecb meeting and draghi set at the time the governing council agreed to wait until the autumn to discuss the mechanics of qe and the timing of qe.

to this is not autumn yet and he is also a long way from home and remarks like that are probably better given if you are going to get specific hints or clues at an ecb meeting or a forum in europe rather than here in the united states. jonathan: we also learned of the last meeting that they are essentially worried about getting boxed in. do know that the speech is going to be in line with the conference,e of the but that will hardly restrict him from what he wants to say. michael: you could say anything in that. what may box him in is his counterpart, janet yellen. even mildly that the fed is on track, that's a boost for the dollar and if the dollar goes up, inflation in the eurozone is going down and that is a problem for the eurozone and it moves them farther away from their qe.

that is a problem for them that they are going to have to discuss the other issue for the withdrawal will be more complicated than the fed because of all the things they bought from so many countries and they may not even have the technical details ready by september so they will have to really do a lot of work for the get to the point where he wants to talk about it. alix: from a market perspective, what are you watching more? has ae know mr. draghi program. on paper he is supposed to be purely targeting inflation. he is well below his target. what is he talking about normalization? it is inflation versus growth. on the u.s. side, we have a central bank and supposed to be looking at jobs, the real economy, and inflation. the ecb is only supposed to be looking at inflation, but we all thinks in terms of you have a stronger economy, wire you easing? europe is saying, he don't -- we

don't need this anymore. alix: the other issue is financial conditions they have been tightening over in europe as the euro has been moving and the question is, does he try to drive the euro lower in the speech question mark will that be the appropriate forum for him to do that>? ? michael: he did kind of lay the groundwork for european qe. it would not be a surprise if he said something that does move the markets, but it's probably not his goal at this time. his remarks may be more focused on the generalities of how central banks add to more stable growing economy. bitd: lay that out a little good thousand 14 he laid out a theoretical framework for qe and qe followed it is not likely to do mechanics right now. what if he did lay out the theoretical framework, would the markets move on that and how? michael: yes, because they priced it in. they kind of expect draghi to

talk about it. it's kind of this overall theme that you go to jackson hole and you get something from central seems to be aaghi set up. the question is will he disappoints them and not really give them enough to move on? jonathan: to some extent we have the framework in the ecb forum in portugal. if the economy improves, you have to remove accommodations to keep it consistent. isn't that what he is going to a dozen that cancel what you said earlier? jan: the framework says a stronger economy should give you policy number was a -- normalization. jonathan: they are talking about taking the current rate of purchases down a notch. jan: it remains massively low his -- below his inflation target. basist basis, he's got no getting out of quantitative easing so he has a problem

northern europe is pushing him to get out because they don't really believe in this inflation target. it's a political issue rather than mechanical or policy. >> it could be that what he could do is expand on that idea and the markets would want to read into it, but lay out again what the ecb's framework is that they are looking at inflation. if you look at the chart i brought, it's social -- it social -- it shows central banks way below target. it's hard on a political basis to make the case that you want to withdraw accommodation. he could talk about that. david: as jonathan says, it's sintra and he laid out the framework and he actually had to come out and says don't go too fast and don't over interpret what mario draghi said. how can he introduced this framework without driving the euro? michael: if you repeats, basically. what he said at sintra was that

deflation was no longer a concern and that central banks were focused on inflation and that changed the whole dynamic of the conversation. he already said that, so if he repeats what yard he said, you might get market reaction that day, but it would be easier to walk back. loeys will be staying with us. esther george, kansas city fed president robert kaplan, and the cleveland fed president. live from new york, this is bloomberg. ♪

♪ taylor: this is "bloomberg daybreak" i am taylor riggs. the battle foron oncor electric. they've agreed to by the texas utility for almost $9.5 billion. it is another sign that m&a

activity in the energy sector is picking up after a long downturn. total agreed to buy marist order -- oil and gas. assume $2.5lso billion in debt. they say they are ready to make acquisitions to growth production. -- interested in buying fiat chrysler's jeep division. they didn't say whether the companies have begin negotiation. inysler already makes jeeps china with a local partner. in, chair yellen out. the last poll shows two thirds said chair yellen would not be renominated as the head of the fed and 49% of those economist told gary cohn as the front runner to lead. also in contention -- loeyswith us is jan

and michael mckee. some of the rhetoric is gary cohn didn't leave the white house despite pressure because he really wanted the fed job. is that some thing that is true? michael: we are all just speculating. none of the people that enter that survey knows. donald trumpwhy thinks the way he thinks. this is a wild card. he could easily come out and say he is renominated janet yellen. he has done conventional things when he has talked unconventionally. he has not attacked north korea. a lot of what his rhetoric is doesn't match the reality and if he wants low interest rates and the economy to keep going at a time that it has been going reasonably well, there's no reason he couldn't renominated her except for the rhetoric around it. one of the problems they are going to have is republicans on capitol hill know she has

basically been a democrat and was appointed by a democrat and they would like their own person. there is a strong chance she is replaced, not necessarily by gary cohn, a democrat from wall street. and he's part of the selection process, too. michael: we have seen that happen before. you look at the markets in what happened when there were rumors he might be leaving. what happens if you don't name him fed chair and he walks out of the white house? where are you? is wall street feeling it has somebody on the inside that can control the president's impulses. that is an open question. david: how do you take this into account or can you take it into account because we don't even really know what gary cohn would do in terms of monetary policy if he were chair of the fed. jan: i think what we are looking at is do we have somebody that can lead a central bank and who

can make common sense decisions that are right for the dollar and markets. we are wary about this president may be putting in somebody in there that is not what we call conventional. gary cohn will be almost -- not exactly a conventional economists. at the same time, you need some of the that can run the organization and look at all the input. they have enough economists over there. we don't necessarily need another one. as long as they can make appropriate decisions, let's do this, the market is going to be happy. jonathan: the existing fed chair has a speech to make on financial stability and she can echo the stanley fischer op-ed last week or she can set something up that relates to wanted -- monetary policy. any idea where she is going? michael: no real handle except she is going to talk about financial stability. she talked about it in the past relating the monetary policy to asset prices.

qe trying tonto drive up asset prices and they have done that. the question is, have they gone too far? in the past she said no, but if you look at the bill dudley argument from last week that we are seeing financial conditions loosen and markets continue to set new records, that is something to be concerned about. she could endorse that and that would be a concern for the markets and they would start to see that fourth rate increase is priced in. alix: much more on what we will hear from janet yellen on friday. the head of global economics will be joining us. yellen, draghi, which is more important? this is bloomberg. ♪

♪ jonathan: from new york, this is "bloomberg daybreak." i am jonathan ferro two hours away from the cash open. futures are stable in the united states. we go nowhere on the dow and pretty much nowhere on the s&p

500 after two street weeks of losses on the s&p for the first time since the middle of may. we find a bit of stability in today's session. in the fx market, very muted. euro-dollar going nowhere at 2.1764. bank of america merrill lynch survey pointing out this one, catching the story as the most crowded trade in the fx market, it's the short dollar story that is changing throughout 2017. on the other side has been than 1.1 764. story of treasuries have a firmer footing, yields lower by two basis points. 2.18 is your yield on a u.s. 10-year. here is taylor riggs. taylor: in marseille, at least one woman was killed after a car ran into two bus stops. another person was injured and police arrested one man after a witness noted the license plate number. it is too early to call the cannott terrorism, but i

be ruled out. a u.s. warship has been involved in a collision in asia. two american sailors are missing and five more injured when the uss john mccain collided with an oil tanker near single corporate search and rescue efforts are underway and the mccain now docked in singapore with what is called significant damage to its hull. back in june, seven american sailors were killed in a collision between the u.s. destroyer and a cargo ship off the coast of japan. president trump makes a primetime speech tonight on longest war. they have been working on a revised u.s. policy in afghanistan, where americans have been fighting for almost 16 years. the question is whether he is prepared to commit more u.s. troops. you can watch the speech here on bloomberg tv at 9:00 p.m. new york time. global news 24 hours a day, powered by more 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg.

jonathan: everyone is scratching their head over that story. if you've got any faith in autonomous roads not bumping into each other, how do these supertanker ships bump into each other. david: you think when it happened you would send a message to all the other captains, please don't crash your vote into another vote any have a happen -- into another boat and you have it happened twice. jonathan: it is an interesting one. another one that is equally confusing is maybe brexit. the u.k. government published two brexit papers. get excited, the nation called to avoid unnecessary duplication and bureaucracy of goods in the market joining us from london is an arrest thomas -- mo ross thomas. thomas.ross walk me through what we have learned, if anything. emma: it's a reminder of how complicated the paper will be.

one of the papers is about goods already being sold in europe and how they would be affected by brexit. one of the issues is a u.k. car that is already been authorized for consumers after brexit, how will that be affected or do they have to go through authorizations all over again? the other thing that is interesting is they are trying to link together services and goods. if the u.k. company sells a washing machine, that say comes with a service contract with repairs, do those services -- those services should be unaffected by brexit, but most free trade agreements don't cover services. jonathan: i wonder how long of the -- some of these service contracts are been a be now. the other interesting thing here is the sequencing of negotiations. are they still arguing over the sequencing of negotiations? trying to deal with one thing

and the u.k. is trying to get to another quickly. how is that going to work out? emma: the u.k. over the weekend revived the debate about whether or not they can talk about trade before the e.u. is satisfied they have dealt with the issues of the exit. talk about the future before you've tied up the past, if you like. the u.k. wants to press on with the trade deal. the e.u. shot back this morning quite promptly saying it has already be -- saying the sequencing has already then set out and first of all you deal with the exit and only when the leaders decided sufficient progress has been made, will talks moved to trade. there is one sort of elephant in the room, they haven't discussed the financial settlement, the exit bill hasn't been discussed and until there is progress on that, the e.u. will not be willing to move on to trade. jonathan: any dates in mind or summits we need to wait for? is the month of october important, november, december?

emma: in the middle of october there will be a summit of the other e.u. leaders and they will decide whether sufficient progress has been made to move onto trade talks. the u.k. government came out today and said they are confident enough progress will be made by october and they hope to move on to trade talks. -- was quite skeptical. he said in private that he thought it was unlikely they would have made progress to move on to the trade talks. jonathan: we appreciate your input and your talks. still with us is jan loeys. they have the knowledge, the stronger position. the u.k. is not prepared. this is not something policymakers in the u.k. are trying to do two or three years ago. this was an accident. now they are trying to minimize the damage. jonathan: it remains to be seen

whether it is a non-goal ultimately. for you it is that way, but what is the base case? jan: the base case of what is going to happen is that the u.k. is going to be caving in. they are going to be accepting the conditions of the e.u. and i think it is going to be some -- they may not call it that, but effectively the best thing the u.k. would hope for is they are still really part of the e.u. in practice, not in name, like having a green card in america. you get all the rights, but you don't get the right to vote. alix: you have to pay taxes, but you can vote. what in your mind does progress actually mean? jan: we need some form of u.k. agreement -- financial settlement. it's not an exit fee. alix: like a written amount? what specifically? jan: what the community and the commission is asking for, an

agreement on how to do it. what is basically the formula, the actual amount does not have to be agreed upon. it is paying on the commitments the u.k. has made while it was a member of the e.u.. they need to make progress on that and the u.k. agreeing on the approach and the model to be used for that. twod: if these were corporations and it was a matter of what the bill is, you would say money is the cheapest cost. is that going to be true here given the politics of the situation? what are the real stumbling blocks at this point? jan: it's a divorce and all divorces are hard. the issues can be amicable and can both sides sit down and say let's make sure we do it in a way that we don't hurt ourselves too badly and we take care of the kids, so to speak, of the future. david: apart from the money, can they get access to the markets without giving up something on the refugee issue, on the immigration issue, on the free movement of people?

that seems to be at the crux of the original brexit vote in the u.k. jan: yes, the u.k. would like to say they have control. the issue is can they set up a search -- a system where looks like they have control, but there is freedom of movement from other e.u. citizens into the u.k. will be staying with us. coming up his dan akerson, we will get his views on the business relationship with president trump and the global auto industry. this is bloomberg. ♪

♪ taylor: this is "bloomberg

daybreak." coming up later today, we will bring you president trump's presidential address on afghanistan and south asia, 9 p.m. eastern . ♪ now to your bloomberg business flash. ackman.aying no to bill they rejected nominees for the board. adp andaken a stake in is calling for changes of the company. jeff in mel will soon have -- immelt will soon have a title once again. he is the front runner to be the new ceo at uber. a direct is at the right hailing company may vote within two weeks. he stepped down as ge's ceo at the beginning of the month. assets under management at the

total return bond fund declined 13% from last december. they say the story is an accurate and is not concerned about outflows or the performance. double line says the biggest funds received -- that is your bloomberg business flash. alix: in the energy market, it was all about total, agreeing to -- the oil and gas showing a sign of the accelerating pace of energy deals treated take a look at where these energy companies really have to come from. this is ma . the red line is the average premium, both of those have moved lower. the total deal value is about $75 billion. the last big one was exxon buying permian assets and shell two years ago. are these megadeals going to start picking up? joining us from paris is

bloomberg's paris bureau chief. is this the start of a bigger m&a push an industry? >> that's very interesting, actually. everybody wonders is this is -- if this is going to signal -- some analysts after having seen thismaersk deal thought transaction was timely and opportune. at $52 a barrel for the brent crude oil price, now is the time. this remains to be seen. we don't know, but it might well. we could see more deals popping up. there have been some and it looks like the industry is growing more and more considering these prospects. about where it is they can add value. with exxon, they wanted to get into permian. with total, it's about north sea consolidation. geraldine: it is more growth,

synergy, doing this, they will increase definitely the profitability. morning -- the total ceo was reported and very good expiration on expertise. this isn't something you get unless you buy it and that's what he is doing. they are both interested in iran and africa. it looks like a very good deal in that respect for hotel. -- total. alix: total said they want acquisitions in europe and this has been the one that held up best. do we have any read on what to be next for total? wish we had been told this morning.

these companies are focused on financial discipline. it remains definitely reasonable when you look at -- you want to take that into consideration. the total ceo said he is xintaining the target -- cap target. they write -- they remain committed to external growth and they will be financially responsible. alix: growing with discipline, thank you very much for joining us. loeys.ith us is jan the hot trade had -- over the past year is you want to buy u.s. independents. shale seems to have the upper hand. you agree and why? jan: i think large companies --

small caps are underperforming and i think we have a worldwide environment where large companies are doing better, so you can rot -- call it the rise of global. smaller companies are having problems getting access to funding. i see it more as part of large companies are still benefiting from the globalization that is there and more companies are lagging behind -- smaller companies are lagging behind. alix: is there a potential for a catch up? if you look at this chart, the blue bar is the energy sector and the white bar is the s&p and energy stock has been underperforming for the last few months after outperforming at the end of 2016. how much catch a potential the think there is? companyot of the large oil performers relative to the rest of the market has to do with oil prices and oil has not been doing well this year on the

surge, the shale production. .e have seen a bit of a rebound inventories are starting to come down a bit and there's a seasonal increase in demand, which is allowing oil to pick up a little bit. oil companies ought to be doing short-term better. , the overwhelming supply from shale is going to be dominating. i think into next year we need to think about weaker oil prices . david: you can have all the consolidation in the world and it will not affect overall demand for oil. this has got to be a question for cost. part of the story here is shale has gone to be so cheap for extraction. especially the north sea, which is traditionally expensive, can they really drive down the cost of the majors? jan: shale has been able to do it massively. they used to have a cost structure 40-70 and they have driven it down. it's harder for the large

conditional companies that has been making investments -- conventional companies that have been making investments 20 years out. rallied andersk they got a better price than many people thought they would get and what is intriguing is over the last few years we talked about the lack of eminem -- m&a and the buyers have approached what the sellers ultimately want to sell for and it is happening in mining as well. why do you think that is? jan: generally in m&a deals we find the buyers make out and the sellers have to bid a high price. it's the sellers cursed. the winner is paying the highest price out there. broadly speaking, you don't really want to buy those companies who are taking over. most of the time they are paying too much for it. it's the ones that are selling that are getting the good price. that's the ones. if you know somebody that is going to be selling, that is the

one you want to own. alix: check out tv . watch us online, click on charts and graphics and interact with us directly. you can check out charts and anything you may have missed. this is bloomberg. ♪

♪ jonathan: from new york for our viewers worldwide, it's the beginning of another trading week. futures are down and on the s&p 500. intriguing stats. a 1% drop on the s&p thursday followed by another day of declines. and i was the first time we have seen that since june of 2016. some weakness into the close last week. today a little bit of stability globally. ,eally muted price action euro-dollar going pretty much nowhere at 1.16 x one. -- 1.1661.

yields a little bit low off by a basis point. david: there has been a struggle between warren buffett's berkshire hathaway and elliott management over texas power contributor encore. semper has swooped in and take in the prize away from both of them. here to take us through the deal is scott. warren buffett said he would not want to go above his offer price of like 9 million -- $9 billion. he is sort of out of it. what does paul singer do? support this or not? >> he does. elliott put out a statement saying they support the sempra bid because it returns more to the creditors than the berkshire hathaway bid. david: that was a potential hurdle to get over because they are in bankruptcy and they have to go through the bankruptcy judge. paul singer owns the majority, so will it go through bankruptcy? aott: elliott pulled a bit of

coux here. they bought the unsecured debt, so they own the majority of the unsecured debt, so berkshire couldn't get that little bit that would put it over the line and it was essentially a blocking position. can? sempra this deal will be fine in bankruptcy court? scott: they actually put an outline of what needed to be done to get this through the regulator. statement 40-point including things they were willing to do to get the deal across the line and the puc staff essentially signed off on that. it's up to two commissioners to let it go, but you would think that if they were going to commit to the 40 things buffett was going to do, it shouldn't be a problem. david: one question is how good this will be for oncor.

we talked to the ceo and he indicated he really wanted berkshire hathaway to take it. >> to be a part of the berkshire hathaway group would be great for us to give us any of capital. we have large capital needs and they would be a great resource for that and we think we would be a good fit for berkshire hathaway and i think they agree. david: the ceo was saying he would like to be a part of berkshire. what about being part of sempra? scott: i think this is a good fit as well. we haven't talked to bob today to see who it is, but i guess he is the new executive chairman under the sempra bid. this one is very similar to what berkshire would have done. it doesn't have warren buffett's name attached, though. story ofs is a real california utility buying a texas utility and that sector has been distressed, especially in the northeast, there have been so many deals with private

equity coming in. how much more consolidation have you heard his left? scott: i think there are lots of players that are still out there that could continue to be balled up into strategic or private equity. david: how big a bite does this take out of warren buffett's strategy on energy because he has been pro-energy and pro-these companies? scott: he owns quite a bit of utilities already and i think this was a great piece that would have added to that portfolio. did a good job. they have been working on this deal for about four weeks in the background while elliott and warren buffett fought in the public realm. i think they swooped in and got a buffet-like asset. it's a great thing. david: at the same time, warren buffett sent a message to future sellers not to go about his face. and he means it. alix: he doesn't like bidding wars. david: coming up next week, i

will speak with warren buffett. we will be talking next week on wednesday in the 11:00 hour. jonathan: coming up in the next hour we get you set up with jackson hole later this week with kathy jones and ethan harris, bank of america merrill lynch head of global economics. as we count down to the market open, here are the scores. futures up pretty stable and we go nowhere on the dow and the s&p 500 after a couple days of losses. going into the open, some stability for the equity boards at last. you are watching bloomberg. ♪

>> the battle between the globalists in the nationalists remain on resolved. a system they see a low inflation. they will feature chair:. the way has economic adviser is emerging as a clear front runner for chair yellen. from new york city, good morning. a warm welcome. i am jonathan ferro. it's begin by getting set up with market action. euro-dollar remarkably stable. one from yellen. treasuries to have them up by basis point.

>> the biggest producer sees a global deficit that really helps with the complex. still a three year high. the vix really steady. the downside down pretty much flat. by two little bit up dollars. coming up what is this week p president trump will address the nation laying out his plans for afghanistan. tomorrow, we hold a rally in arizona. his first visit since elected. a special shareholders meeting , seven point billion dollar takeover acquisition by amazon. by thursday, they hosted the annual jackson hole economic symposium page you yellen and mario draghi are on the schedule for friday. as president trump seeks to turn over a new page, the question is whether we will see turbulence

died down now that steve bannon has left the white house. are things going to settle down for the white house? >> that is progress. i expect tonight regardless of is, he willuation opt for the military option but we will see what happens tonight. weit might be an indication have been talking all morning about the setback. an extension of the global gary cohn and things like that. of a too soon to know

policy shift? >> they both mirrored each other and what donald trump really thinks has changed. what changed is the event in tuesday in phoenix. tomorrow, that will be the key indicator of whether there will be any indication of a change in the presence it. we have heard no indications of anybody specifically being groomed for that spot. very few people are as close to trump's viewpoint in a circle around them now.

>> the s&p high in the session and it was. this is what happened on friday. you had the vix continue higher, the s&p actually closing lower. what gives? is kathy jones, chief fixed income strategist for financial research area from washington, point director for policy research. what happened to a ban and bounce? >> i think the consensus was it doesn't change from. -- trump. maybe the relationship with some of the more traditional

down andns settles that can help with things like the debt ceiling and that can change the tone of what the president believes and is going for. quite how tug-of-war plays out, is at the best way of assessing the white house? >> it is what we've all become accustomed to. my reasoning is there is a whipsaw nature of assessing these west wing wars, the globalists versus the populist. so sure, bannon's exit is a win for the globalists. it is early during the arizona speech.

>> an appropriate construct, how do you think about it. ultimately, what it will mean for policy at the back end of the year. big message is the gop's agenda will have to survive in spite of the white house rather than because of it. i am scared of fiscal deadlines in september and i think bannon's exit increases the likelihood of a 20 -- a government shutdown because he is going back to breitbart. he demands the wall be funded.

as part of the agreement at the end of september. the risk of us -- of the shutdown increases. >> steve bannon's departure increases a government shutdown. he will not be sitting next to a president. >> this might ease the tension little bit and i would disagree and say it might open the door to some conversations to get a pass on the debt ceiling problem. it remains to be seen. >> one thing i just noted is we have the director of the omb backing off of the notion that >> the federal

funding deadline, september 30, i think poses an acute -- rest of the market. there are two separate things. the market is obviously more worried about the debt ceiling generally speaking as an issue. i think that will be handled by lawmakers. the white house uniformity on the issue will finally bring it to a close. jonathan: steve bannon raised this in the comments he made as well. is the ultimate tension between the platform that the president campaigned on in the tension between that and ultimately when the rest of the republicans called the republican establishment -- that tension is not going anywhere, is it? all.t at the economic populist message the president ran on is here to stay and it is not going anywhere no matter -- it is just a question of how love the message will be. much.nks very

news onve some breaking herbalife as i contain an eye roll here. basically, herbalife, there were , and offer,private they will purchase cash for of to $600 million worth of shares. if they were more takeover talks , the company is in agreement with carl icahn. unless it agrees to buy 100% of the company. to recap, you have herbalife not going private here there will be an offer where they will buy out some of the shares to protect

the company against any kind of takeover offer and connecting with carl icahn. 50%.nnot buy any more than people. myi can speak for perspective, the amount of people, what occurs is the story about? that will be it. it is because carl icahn will be it. us on trump.oining a lot to talk to him about. this is bloomberg. ♪

whether it will actually be newsworthy. we're joined from frankfurt with more on what we can expect. a lot of people got very excited about what it may not be out of the ecb's main meeting. some doubts have emerged. >> he changed his speech at the last minute and added a line that inflation expectations were .own

the end of qe, a nice symmetry. it makes the next decision quite logical. johnson: he -- the president will have a lot of's up -- upset people when he comes, doesn't he?

>> at least the sentiment he should be waiting to have the full discussion. that does not stop him setting up the basis for what ultimately they will have to do. that is more question of timing than anything. -- jonathan: the importance of stock versus low. i know it is compress but walk us through how the ecb at one point focused on stock, shifted the emphasis back to flow, and i wonder whether they will look at the balance sheet again and say maybe we need to put the emphasis back on. >> at some point, they will have to do so as the fed has done. will at about trillion euros to the balance sheet or more than 2 trillion euros since then. they have got an open-ended qe program.

all deaths this year or later if needed to the focus is on monthly buying. it is not what the fight -- final balance sheet will be. the fed has probably agreed yes you do. the ecb is likely going down the same line but it will struggle to communicate that. >> there will be two speeches from president draghi this week. we are going to get two from mr. draghi. say i have actually been to the event. get together and give various speeches. kathy jones around the table with us. let's talk about stock versus flow. the importance of stock and the balance sheet, how similar is that going to be even when you do payback on bond purchases? >> that is the big debate or the

fed believes in stock and they believe that is significant. they gradually reduce a lot of stimulus in the market. concerned as we get to the unwinding of the balance sheet that the market does not seem well prepared for it. see aned that we might the in the term premium stock argument may not hold up well. >> we heard a lot of calls for we have beenade hearing that for long time. , knowing they will be fully aware financial editions tightening.

not any time soon things are picking up but not well. they are robust and every section of europe. think they can be encouraged by the growth numbers but not necessarily have to heed them very closely. >> where is the value in europe? >> not a lot of value in the europe in the fixed income market. that is the bottom line. it is really tough to find anything of value and we are tactically cautious in every area now. coming up later this week, a great lineup of said voices from jackson, wyoming. dallas fed president, and

cleveland fed president, all coming up here on bloomberg. ♪

sempra energy has won a battle for oncor electric. $9.5 billion. oncor was being pursued by warren buffett and berkshire hathaway and elliott management. that is according to -- down at the start of the month. david: i understand why that is good news for uber.

that is a tough job to go into. would he need to run a company like uber. not necessarily some with a background in silicon valley. >> the company needs to mature, and this is a step to do that. >> it is ego. come on. about fixedng the 40% sick loss.

the need to fix the part of the business. we have been a chronic outperform her. >> joining us now, that was a couple of weeks ago, what do we know today about how goldman might be able to fix their commodity business? thisey have been running for several weeks if not several months. it has been relatively underperforming for a couple of courses. for goldman,ising it is a powerhouse in commodities. they have recognized they probably cut too many headcounts, they have probably taken away too many resources.

respects, a more traditional credit line, that kind of thing. that is largely a function of the fact it is difficult to make money in the commodity markets right now and particular difficult when most ceo clients are hedge funds or hedge fund like clients. they have not been doing very well. if you remember a couple weeks ago, again, a powerhouse in all trading -- training, that is something we did not expect at the time. >> they need to get the tower could where did they get that from? they need to fuse the sale world with the commodity world. >> in terms of the trading side, we have seen a lot of hedge funds close down. those that remain have seen management shrink. you think maybe there are some traders out there, in terms of trying to fuse the corporate with trading side, it is difficult.

not something they would ever have to rely on. it will be very hard to judge it ahead of time. you generally do not want to bet but it will be, a tough environment for them to turn around quickly. >> what about the unification of sales and training >> -- trading? do they get a lot of credits and trade stuff, is it more with deals, what does that look like? >> it can be all of the above. that is something to be focused on. it is also about relationships. investment bankers forming relationships with corporate, that is not making its way onto the trading floor. it is about getting the different departments to talk to each other a little more i guess, to form the relationships and spread those relationships across goldman's business. >> thank you very much. you i find interesting is can argue what is happening in commodities, oil is actually a structural issue.

it was a adamant cyclical issue. if we are still at 50 and volatility is low, that will not change any time soon. not a lot of hiring you can do to change that. >> there are those who think technology will keep oil in a way. >> coming up, ethan harris, bank of maryland global head of economics. , we are counting down to the markets this morning. futures are stable on the dow in the s&p 500. you are watching bloomberg tv. ♪

jonathan: this is bloomberg daybreak and i am jonathan ferro. an hour away from the cash open. futures are softer on the margin but pretty much debt flat for

much of the morning. the s&p 500, a couple of weeks of losses. the dow, broad-based weakness, 24 stocks down this month, led by did -- a big drop in disney. potentially the biggest monthly fall in about 20 months on the dow. asset classes quickly in the bond market, yields by about a basis point, this is how we are set up ahead of the jackson hole symposium with janet yellen and mario draghi speaking. bank of america merrill lynch picking out the short dollar trade, the most crowded trade in the fx market, that survey they do, really highlighting how consensus it has become in the fx market. .et's get you the headlines >> search is underway for 10 american sailors missing after

they collided with an oil tanker in singapore. five other americans were injured in the crash. missile destroyer, the mccain. significant damage to its hole. back in june, seven american sailors were killed in a collision with a cargo ship off the coast of japan. in france, at least a one -- one woman was killed after -- slam into to bus stops. police arrested one man and authorities have not ruled out terrorism. suspect has been treated for psychological problems. president trump makes a primetime speech tonight on america's longtime war. the president and his advisers are working on a revised u.s. policy in afghanistan where americans had been -- for -- for 16 years. you can watch president trump 'speech at 9:00 p.m. new york

time. global news 24 hours a day powered by wanted the 2700 journalists and analysts in more than 120 countries. this is bloomberg. jonathan: economists place their bets on leadership. thirdsl shows that two said shery ahn would not be renominated and 49% of those polled are picking -- as the frontline -- front runner to lead the fed. joining us to discuss his bank of america merrill lynch head of economics ethan harris. we had mike mckee on earlier who said those economists do not have a clue what will happen. how you arek you thinking about the potential of a fed share with the name gary cohn and what that could mean for policy. >> i don't have a clue. no, i think: is the most likely candidate just because the name

is floated out there and he is already in trump administration so clearly trump likes him. i think the poll is also correct that janet yellen is an underdog because she is not trump's own pick. not trumps person there. who knows, there could be a long list of names. main thing to remember is they are unlikely to bring in somebody who is a hawkish and tough fed chairman. i do not think that is consistent with the trump administration gold getting gdp growth. i do not think there will be a fundamental change at the fed next year. jonathan: you look at your forecast for what the fed may or may not do and you try to for you and the potential for new fed chair to next year, how are you doing that it bank of america right now? that every to think

scenario you have has a low probability, frankly. our forecast assumes the fed falls through and does three hikes next year. it assumes they go ahead with the balance sheet shrinkage. they pronounced. if you get a more dovish fed chairman than yellen, the fed will do less. you have to stick with a baseline of something like a yellen said going forward. anything else you do will be a low probability. at dotsu take a look , you can describe between the market in the fed. even if they did less and hiked one or two next year, it will be well above where the market is pricing.

no matter what the fed does, are we in for a lot of turbulence in the market unless they go to where the market is? >> i think the market is underpricing risk as the fed .oes at -- goes ahead faster caveat here financial conditions of cut and very easy. the economy is growing above potential. 1.9%. above potential. the numbers are improving, particularly the median wage numbers. the policy rate is still negative in real terms. those are all reasons for the fed to tighten policy or stay on track a little more than i think the market is discounting. >> because you have a delete -- a looser financial conditions, you can go ahead and hiking though inflation is really picking up the forecast?

>> clearly the fed is not backed off from the idea that they will hike three times the year. i agree the case for hiking is still there and the financial conditions are quite supportive p or financial conditions have eased since the fed started to hike. the labor market continues to get better. what i don't think i will get from yellen is a clear signal about december and that is what the bond market is looking for. will you go or not? it is much too early for the fed to make a commitment around december so what you get instead is a little more vague optimism from the chairman, and that doesn't really convince the bond market. that: it is early enough the fed has time to get expectations up for december. that it willidence be specifically above financial stability and what does that

tell us about where it is headed? >> they mention financial stability 10 or 11 times in the --t couple of mrs. they stop sent out. it is clearly a big concern for them. and mentioned asset prices the possibility of them being inflated. i think that is a reason they were probably going september. jonathan: if you offered investors a choice between is the from fed chair janet yellen and mario draghi, they are all putting their hands up at the moment. draghi, from president just give the opportunity to discuss it earlier in the program. what do you expect from president draghi this week? >> i think he will try to avoid saying anything interesting. the problem draghi has right now what policy clear changes they can make it if they feel uncomfortable in their current path. more than the fed, the european

banks pretty much under pre-programmed path, and it is politics of how much bond buying they can do and the limits to how far they can -- i do not think there is much he can say to help the one problem and he would like to sound dovish, but there is not an obvious policy follow-up from just talking about it. they have already been signals for the press and he does not want to say anything interesting. i will put more focus on yellen because the fed ultimately drives markets more and there is just more potential for something interesting. >> alternative viewpoint, that is great. thank you so much. bank of america merrill lynch head of global economics. chief fixed income strategist.

an exclusivet, interview with dan ackerson, former general motors chairman and eeo right here. this is bloomberg. ♪

>> president trump's presidential address on afghanistan south asia, and as 9:00 eastern. >> last week, that all fell

apart in the aftermath of the president pence's remarks about charlottesville. joining me now is a former ceo at the center of how private business can do with the government, including when the government owns a majority stake in the company. -- after the auto bailout, when the company was still in bankruptcy, a year later he led the company out of bankruptcy and jointly from washington. >> take us through the tricky relationship between private industry and the government in the other. they of people thought were excluded from the discussion. donald trump took a very different approach. how has that gone in your estimation? >> the president establish councils on manufacturing. i think that is an important rich if you will to the american

industrial base. i thought it worked pretty well and if you are the ceo asked to join that, you would be inclined because you want to be on the table and policies being made when it is in formulation. it worked well. there were early disaffection's, if you will. if elon musk for example, the president backed out of the pact, because he stands for something and his employees have a perspective pretty narrowly focused. understandably, he looked through. the process has gone on and other councils have been formulated, i think ceo's's were inclined to because it potential he benefited shareholders. we are at a different point now happenedf a lot that in the last week or the last seven days. tois it possible for a ceo

take a semi official position on these public councils and not be associated with more controversial policies of any president from donald trump? >> it depends on what the policy issue is. between the president and his policies, and what the company represents. what happened here in particular, i think it eclipses element, whatthe happened last week at the trump , something nok ceo could have expected when he or she joined the council. ceo ifact it has on the you will, he or she has a they have got customers with a perspective on i served five years in the navy, and i can tell you

, whenis a famous saying principles involved, notwithstanding your companies or even your personal perspectives, i think what transpired last week is a serious breach of what i think this country stands for. >> with the proper balance between principal and expediency in mind, going forward, where will the america business be with this administration. has this polluted the waters, as it were, so would be more difficult to work with the business? >> i don't think so. at some point, and accommodation will have to be made. , the is no question president feels free and in public forum, criticized not only companies but individuals. for example, ken frazier took a

serious position and i think it was the right one. not only as a ceo, but also as an individual. resignationughtful from the council but then there was a personal attack upon him and that sort of dialogue has got to be modulated significantly in order to have a more production -- productive conversation into a specific industry segment and also on an individual basis. respect is critical to a relationship. respect is critical to a >> now underway with a chinese intellectual property. worries about how hard the

administration will still come down on that is still in question. the risk of ae as china u.s. steel trade war? can only speak from a g.m. perspective. we source steel more on a local market basis. we buy primarily steel the u.s. and it comes from steel manufacturers. not all of it. it comes from chinese manufacturers and comes primarily from the european markets. thing about what i see happening with respect to the auto industry with some of the conversation about nafta, these are multibillion-dollar decisions that have been made by the auto industry and the trade mexicohat encompasses and the united states, and it evolved over decades. the production is much more complicated than you might think.

base,e to build a supply in new mexico, canada, and the united states. you recognize there is an understanding, a trade agreement, and to change that, it will be very disruptive to the supply chain and very disruptive to the manufacturing in the united dates. very carefult about how the chain comes about, it could be detrimental to the to manufacturers. even foreign competitors residing in the country that as well asase out, the manufacturing base in places like mexico and canada, gm has a large presence, manufacturing base as well, not only to serve mexican and canadian customers, skillse to understand my

one of the best trading companies in the world and they have trade agreements with 2000 or more countries around the world. mexico andure in certain portions including canada to american and canadian markets, a lot of it goes internationally. it does not have sufficient andcity or overcapacity accustomed to american and canadian markets, and therein lies why it is important the company and the senior level management is thoroughly engaged with government in formulated policy or else you can have the law of unintended consequences kick in an american manufacturers go in through a time of disadvantage. >> think you for your time. we appreciate your perspective. you will be sticking with us.

check out tv . you can watch us online, interact with us directly. if you have a question, feel free to send it in and we will do so in a second. this is bloomberg. ♪

david: the automobile industry is in the news a white skin -- scandal involving and -- the chinese automaker may just be trying to buy cheap from field chrysler. still with us is dan apperson, former chairman and ceo of general motors. we've heard of the unfolding scandal starting with admissions issues, spread back over to europe and the german auto industry. what do you make of it from your experience in the industry? >> i only know what i read that the industry generally was shocked with the scandal surrounded the

volkswagen. very unfortunate for the because it puts our reputations at risk. people try to hide these things and got for bid they do, i read recently there were allocations of collusion. while i was ceo of general motors, to the best my knowledge, it was none of that. primarily there was not because they were owned by an american parent. these are great companies, volkswagen, audi, mercedes, they are tough competitors and i know the leadership. it is a question in my mind of what exact he is going on. >> from your experience, you did not have a hint that maybe german automakers might have been getting together and coordinating on development,

which is what the allegations are. >> i have no reason to believe, i have no basis on that. ands a different industry the government is much more involved. the french government is more involved. the best of my knowledge, my instincts are that they were not colluding or that is an uninformed point of view. that kind of prevent them from doing the other things that german manufacturers did. why do you think that it is it , stopping a me company from engaging in the kind of activity live seen in europe? knowledge,est of my

they tethered very closely to general motors going back to 1928. in europe, it was viewed as european company. it was run by an american manufacturer in the united states. we were on man out. brand so they own were an american. i have no knowledge of collusion or bad behavior by the german manufacturers. >> there were reports overnight that china might be able to buy cheap chrysler. what about the field chrysler situation overall? is it stable? -- sustainable? have a challenging strategic position. they have no play and the electric car segment of the market, their product, i think

he does a good brand, and i would have loved to have been able to buy it when i was at general motors when the opportunity presented itself. beyond the trucks, primarily price competitors, they were second tier. i do not think they are in a terribly strong position. >> thank you. up, we get theg week started. counting down in new york, you are watching bloomberg tv. ♪

jonathan: the president of the united states returns to do you

see -- returns to d.c. .anet yellen and mario draghi and will do next year -- will flow next year -- -- wilma next year --will the next i'm jonathan ferro alongside david westin and alix steel. futures are stable after a couple of weeks of losses on the s&p 500. the fx price action in market. euro-dollar just off session highs. up by .16%. of get you some movers. alix: we will start with herbalife.

it ends talks to go private. that ended last week. it will buy back about $600 million worth of shares in order to protect the company against a potential takeover or buyout. carlso entered pact with icahn saying if he wants to buy the company ok but otherwise he can't own more than 50% of shares. he currently owns about 24%. herbalife is very hot in the news when it comes to day trading. ackman has lost quite a bit of money on that trade. adp.takes us to the board unanimously rejecting ackman's slate. he nominated himself and two other board members. the board says they offer no improvements from the current board. he owns an 8% stake in adp.

almost 3% in free market. 18% growth in earnings for 2017. pricing power and international opportunity. not something you hear associated with leisure trends. jonathan: as the president heads back to d.c. investors are left guessing what the latest shakeup in the white house might mean for policy. the markets climbed on friday closed downver and on the session. what's behind the weakness. joining us now is chris harvey. great to have you on the program. let's begin with the weakness into the close on friday. many people have said that headline is going to drop. we didn't close higher on

friday. why do you think that was? onthe market is a little bit edge. there is a lot of uncertainty coming about. we have jackson hole coming up. you are right in front of a weekend. we're not sure what's going to come out. i could see volatility ratcheting up. i have spoken to a lot of people do think it would be political suicide if the republican party don't get through tax reform. where do you sit on that conversation? >> political suicide is a little for us.tough a word i think midterm elections will reflect that. one of the things we are seeing is uncertainty with fiscal policy. people are starting to slow down their decision-making. it's becoming a bit of a problem. suicide slightly too strong. will they be able to get things done? some are looking at the debt

ceiling. that's going to be a huge indicator of where the administration is going to end up. what are you looking at? >> we are trying to read the tea loose. -- t lee use. -- t leaves -- everyone loves a tax cut. need a win.use does we are watching that commentary come from the white house and politicians and i do think something will occur. sometimes it looks more like a coalition than a party. we look at september. we've got a debt ceiling. we've got a budget and funding issue. we've got a tax plan do and they have to do something about the affordable care act or all of those people are going to go off of insurance. how can they get that done in 12 legislative days? >> that's why they get paid the big bucks. alix: that's why they get health

insurance forever. it is a tall order. they are going to try and knock out taxes first. there's not a lot of time to do it. we will see how it turns out. are you taking on more risk? what's the play? risk want them to take off. alix: where do you go if you go up in quality? staples.into better profit margins. at the end of the day there is not a lot of value left in the marketplace and quality will hold its value better in a selloff. when it goes that, it gets worse. are we there yet? >> i think people are getting ready to get ready. there's a lot of tech clients saying i have fear of missing

out. they are waiting and watching. they don't want to miss the upside. sell to weakness. we are not there just yet. david: is it getting harder to find the balance sheet given the amount of debt? >> it's not easy. the nice thing is when you find it kind of investment will stand out in times of weakness. we still find pretty good quality companies out there. you have a year-end target of 2475. is there a catalyst that gets us here or is it grinding higher? >> i think we go lower before we go higher. a lot of people have asked do you want to buy the dip. 2% downside from the peak is not really a dip. it's more of a gyration.

the underlying fundamentals are pretty attractive. fundamentals have to be earnings. what are you projecting? growthre still expecting for the year. 9% growth. it is a little bit backend loaded. from what we are seeing from guidance as well as corporations we will probably get to that high single-digit low double-digit number. up, will bill simon be joining us right here on bloomberg. ♪

jonathan: from new york, this is bloomberg daybreak. i'm jonathan ferro. we are 20 minutes away from the cache a couple of weeks of losses on the s&p 500. futures are a little bit softer now. some broad based weakness. 24 of 30 dow stocks down on the month led by disney. the dow average indicating a third session lower. down by .1% on the s&p 500. other asset classes. the bond market through last week. yields by a basis point. in the fx market euro starting to push higher. central bankers are gathering in jackson hole later this week. as janet yellen speaks

there is growing speculation of how long she will be the fed chair with her term of this coming february. only 17% thought she would still be chair come march. half thought she would be succeeded by gary cohn. mike mckee joins us with more. still with us is chris harvey of wells fargo. you're on your way out. how much is the janet yellen possible lame-duck chairmanship going to affect that meeting? not at all. we don't know whether she will be replaced. we knew going into the 2010 meeting that ben bernanke was going to be leaving. so he didn't attend his last meeting and that took the focus away. it really doesn't affect what she's going to say.

we are still some months from a decision. david: doesn't affect the possibility that it will actually be implemented? >> it depends on what she's talking about. they are supposed to start in september. all indications that we have is that the fed is going to go ahead in september. it will be on autopilot by the time a new fed chair would take over. tohing is really going change. what might change is what the fed does with regard to monetary policy in 2018. not only because she could be couldut stanley fischer be gone and there are already other openings on the fed that have to be filled. we will have almost a completely new fed by the first of the year. are looking for clues as to the big speeches in jackson hole. the line of thinking at the moment is it's going to be very difficult to know. one is going to be the theme of the overall symposium and the other is on financial stability

which could take us in any direction. that one could be somewhat newsworthy in that there have been questions will the fed follow-through with a fourth rate increase. i brought along a chart that shows exactly what will dudley is talking about. it shows that financial conditions continue to ease in the united states and the stock market continues to rise. as the fed funds rate goes up the stock market goes up. this is not what is supposed to happen. it makes the argument for the fed continuing to raise rates which yellen could cement in the markets mind for at least a december she wants to go that direction. jonathan: she could take the stan fischer line but make it exclusively about regulation.

we prevent bubbles. that certainly could be that way if she doesn't want to make news. this raises the question of what it means for the dollar. where do you think we go? during tightening cycles the dollar does show some weakness. we might get a little bit of a bounce. if janet yellen stays on point the markets will calm a little bit. markets may start to firm as well. multinational companies have done really well as the dollar has moved lower and small caps have not been doing well as the mystic agenda has fallen out of bed. does that continue? multinationals continue to do well. a lower dollar does help with

inflation. something that has been problematic. if inflation does come back we can see a normalization of rates sooner rather than later. david: i am really struck by mike's chart. conditions ease. they don't tighten. how concerned are we that some of these models don't seem to be applying the way we thought they should? >> credit spreads help with financial conditions. banks are in a different spot now. they have a significant amount of balance sheet and they haven't done some of the bad loans they have in the past. is leading to financial conditions continuing to ease. i don't expect that to continue. it is an interesting dynamic. do we really face at jackson hole these big names and their objective is not to make news? >> i'm afraid that may be the

case. a lot of people talking about mario draghi making news about qe. in his last press conference they said they are going to talk about it in the autumn. he may not make a lot of news either. i could be totally wrong and you need to tune in because i could be totally wrong. they don't have a lot of motivation to make news. to manipulateing the market. janet yellen may be in a sense would love to put a cap on stocks at this point. it's such a blunt instrument she doesn't want to cause them to go crashing down. the motivation is to talk about monetary policy without moving markets. david: we have been asking various people do you want to hear from draghi or yellen?

most people have been saying draghi. he has a different point of view. >> i'm going to put more focus on yellen because the fed ultimately does drive markets more and i think there's more potential for something interesting from her. david: do you agree with him? >> i would put more focus on draghi. janet yellen there's a little bit of uncertainty. she has been hawkish -- dovish her whole career. i don't see that changing. draghi will be here for the long term. it's the marginal player at this point in time. that will drive markets. alix: investor after investor will say the value is going to be in europe. do you feel the same way? >> we find opportunity in emerging markets. we think they're going to pause. there continue to be

opportunity. we are moving up the quality ladder. we are moving away from the risk because things have performed so well. valuation call? >> if we are looking for value we would look in your because there is a lot of value opportunity. vix a lotook at the of the good news in the equity markets is already priced in. not getting paid in the u.s. to take on too much risk. we are taking risk off the table. with regard to europe that's where you can find good value. if you took the latest minutes for the speech you should deliver, the council don't want any of them to feel boxed in. concern about euro strength as well was pretty clear in the latest minutes. thoseg at euro-dollar

accounts did not induce a significant amount of euro weakness. this euro strength here to stay and what does that mean for your conviction long call? we are not fx experts. if you look at growth in europe growth is improving versus the u.s. so you should start to see the euro improve. you should start to see interest collide. and that should support the euro. as we look forward we can see that. is it too far too fast? perhaps there that's on their area of expertise. alix: michael mckee will be flying out to jackson hole. later this week we will bring you a great lineup of fed voices from jackson hole. you have to tune in for these interviews. kansas city fed president as well as president of the dallas federal reserve and the

cleveland fed president will all be joining us. this is bloomberg. ♪

alix: the big questions for banks come with goldman sachs. apparently going to fix their fixed business? here's what he had to say. business commodities commodities have been in recession and very few of the other banks are in that business. if you look out and about and look at other firms that transact in commodities that's been in a bit of a recession. that's a cyclical matter. do i think that oil is always going to be this price within three dollars for a long time? i don't think so. you would have to scale it for the environment that we are in. alix: joining us now is michael moore.

talk to me about this. many of the banks think it is a structural shift we are seeing in commodities. ofk me through the steps what they are going to do to help themselves. some of this is to try to attack -- attract more corporate clients. they want to build up in the corporate clients and part of that is hiring more sales people. specifically the commodities they feel like they have lost some talent over the past few years. they have been cost-cutting. and i think they're going to try to replenish those ranks. alix: how much money isn't going to cost to fix it? >> we don't have an exact idea. they did this month-long review over most of the second quarter and they had the option of really shrinking this business

as a lot of their rivals have done. it seems they have decided instead to invest. raised a david westin good point in the commercial break. if you work in the goldman sachs commodities sector right now do you feel good because lloyd blankfein has some faith in the are you nervous because someone else might come in and say we want to shake things up? >> you are feeling nervous because the first half was the worst half in a number of years for the commodities business and the first few weeks of the third quarter were not much better. if one of the things that was on the table was really shrinking the business you have to be a little relieved that lloyd did and theyome confidence can get through this. it's not the worst of outcomes.

certainly you have some reason for nervousness. david: is it the mission of falling short on the part of lloyd blankfein? people know you have to cut costs. this looks like they may have cut them in the wrong place and it really hurt our shareholders. >> you are seeing some admission they haven't performed the way you would expect goldman to. they have fallen short even relative to their competitors and a lot of the banks are much smaller in commodities now. ofy aren't seeing the type revenue declines that goldman has seen this year. on naturalbad trades gas. chris harvey of wells fargo also here with us. the catalyst for the banks was supposed to be deregulation and improvement in the economy. where are we with those catalysts? we are embarking on a return

of capital and we think that's a great opportunity. dividend and buybacks is very attractive. we are looking at on average 6% to 7%. we haven't even talked about eps growth or price appreciation. , the openinging up bell right here on bloomberg daybreak. futures a little bit soft. the opening bell up next. ♪ ♪

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change the way you wifi. xfinity. the future of awesome. jonathan: two weeks of losses on the s&p 500. two days of losses on the dow as well. a bit of softness creeping in and of the opening bell. futures down by just over .1%.

potentially a month of losses in store as well as we approach the end of august. there's the story in terms of futures. the weakness over the nasdaq remarkable as well. here's the story in the bond market. yields lower by a basis point. the dollar short trade out there is the most crowded fx trade. down another .2% on the dollar index this morning. that's the story to get you set up for the cash open. here's alix steel. on theretty much flat day. dow jones flat by 14 points. the nasdaq slipping into positive territory. not a lot of action being felt in the market. it's a slow monday headed into the last two weeks of august. beinglot of positions

taken in front of jackson hole as well. take a look at what's happening in equities. a solar eclipse. how many times does that happen. over 12 million people live along the path of the eclipse and over 7 million people are supposed to be driving to the eclipse as well. i heard the traffic was going to be worse than rush hour on a train here in new york. canadian solar off by almost 3%. downgraded at are pleased to underweight. inching into positive territory. the whole electrical grid is going to shift to gas along the path of a solar eclipse today. lower residential demand in california hitting natural gas prices. the switch is going to be very interesting to monitor. earnings season pretty much over with. we talk a lot about the guidance in terms of earnings. let's talk about the guidance in terms of sales.

forhave the yellow bar 2018. the oranges for 2017 and the blue is for 2016. next year looks pretty good. double-digit earnings growth. energy you arey seeing much lower growth for 2018 than you might expect. lower growtha much in terms of sales from the entire s&p. on the surface those numbers look quite good. backing out of energy the picture looks a lot less rosy. are we in a point of slowing growth when it comes to earnings? thank you. still with us is chris harvey of wells fargo. it's an interesting story and it has gone on for years now. the struggle to generate topline

growth or the ability to generate significant bottom-line growth. how long can we keep doing this? >> a little bit longer. i think we peaked on year-over-year growth. that will come down. i don't think we are sitting on a ton of growth. demand.not a lot of there's not a lot of great organic opportunity. we should expect to see more m&a activity. once we get clarity on the tax position the m&a will start to fill in. jonathan: clarity either way? what the sellers are saying is we want the tax benefit and the buyers don't want to give them. as soon as we figure out whether we are going to have tax cuts or tax reform then we can rationally price that better and people can come together. david: earnings have been really good and stuck prices have gone up. today continue to go up as much

as earnings? it seems to be tapering off. >> one of the more interesting elements of this earnings season is markets are moving up. price-earnings multiples have come down off the highs. that's what happens when you get solid substantial year-over-year growth for a couple of quarters. pretty much until a quarter ago every time we would have these types this is basically a new high. a degree of price appreciation on the multiple side. now we are actually seeing that stabilizing a little bit. for a lot of people that is a vote of confidence in the market against you can have both cylinders firing at the same time. earnings doing well. market doing well. next step is what degree of multiple appreciation there will be. does that give you a

reason to believe we may have another big push up? >> it doesn't. our price target is 2475. we don't see the multiple expansion. you have investment grade credit spreads. you have already have double-digit year-over-year growth. we don't see how you are going to have multiple expansion from here. de-risked?he market michael wilson said we de-risked last week and that's it and now we are going to go higher. it has very much happened to a large extent. before we had our decline last week there was another one in two weeks ago when we thought about what was happening with north korea and we quickly bounced back from the unit there is a flow ofequities either to s abroad or other assets. terms of actually looking at

the parts of the market i think are probably assuming a lot from trump and legislation in the financials area where investors are looking for tax or regular term there are still sitting at levels they got to after the election. because ofnot it's expectations is hard to suss out. based on the calls with investors a lot of people had expectations for some kind of outside force in terms of regulation that is going to help the bottom line for a lot of these companies. until that happens there's probably plenty of risk. alix: it seems the lack of correlation is going to be about earnings season. right now there is still a good bit of dispersion in the marketplace. look at last week. utilities and safety stocks were still up despite the market and

energy and some of these telecoms were way down. to a certain degree that volatility can stay somewhat low. a lot of people getting very cautious. i'm wondering how much you are focusing on that particular asset class. >> credit spreads are historically tight. usually when you have credit spreads compression you have multiple expansion. talking withwe are credit strategists. they think things will widen from here. that's a concern for us. that is one of the key issues we are watching as we move forward. any kind ofre leverage issue because it really is hard to find concise point on leverage. a couple things about leverage. , leverage inerage the portfolios. corporate leverage has come up.

growth is still improving. until that tops out that's not a major concern for us. within the portfolio how levered the buy side. it's very difficult to figure out. when we test things it doesn't look like there's a ton of leverage. roll the clock back to 2007 and there's not the same type of leverage on the table as there was that then. systematic risk is still at day. we are not at a level that is highly concerning. david: what is the trade you have the most conviction in right now? >> high quality. up for't have to pay quality. as everything gets more expensive quality becomes a better value. credit spreads are very tight. credit spreads came crashing in

and low-quality outperformed. we have credit spreads historically tight. risk has more or less been cauterized. thank you for joining us. nine minutes into the session. a very flat open after two days of losses. and thewhere on the dow s&p 500. price action on the ftse 100 as well. a move to the downside on the decks. going into speeches from fed chair yellen and president draghi. the euro showing some strength. you're watching bloomberg tv. ♪

>> this is bloomberg daybreak. i'm taylor raikes. coming up later on bloomberg markets, republic of ireland prime minister. this is bloomberg. ♪ david: herbalife just may be the stock with the highest ratio of mentions to market cap of any traded company in the past few years and it's back in the news today with its announcement that it will buy back a good portion of its stock in a reverse dutch auction and the major shareholder has agreed to limit his holdings to know more than 50%. unless he wants to buy the whole company. now are matt townsend and scott to vote. if this carl icahn's victory? >> certainly his fight with bill ackman in the stocks. he has taken the short position.

was at 50% below where it's trading now. it's not the best return on a short position. >> carl icahn is dancing a happy dance today. why is ackman still in this? >> he has been very vocal about this as a social good. he sees herbalife as preying on disadvantaged people. it's over four years. what he actually thinks about the long-term play i'm not sure. he sees this as doing a social good. it's him coming to the rescue of people being harmed by this company. jonathan: what happened to his fund in terms of assets? becoming married to losing trades isn't a good thing.

it can't be a good position to be in if you've got money in his fund. >> it's been well reported that he has been struggling. they haven't had many successes lately. herbalife seems far off from being a success. there are in the money at $38, $39. pershing investors can't be happy about today's result. guess the argument is at some point this is going to pay off in a big way. idea was when the ftc probe was going into herbalife that the company would collapse. he said that as much as last fall. the $200 million payment settlement would cripple the company and eventually lead to its collapse. deliver their first quarter results. that wasn't the case. they have increased their forecast and what else was

revealed today was that they were in talks about a private transaction up until next week. there is some interest in this company. aside from the five day traders why do i care about this company. help me find purpose. >> the ftc is just now going into effect. we will see over the second half businessar if the u.s. does sufficiently deteriorate with these sonnet via the ftc order. beyond that it has been a big obvious show in the financial world with ackman, icon going at each other. it could be interesting in the later half of the year what happens. there are rumors about things going on overseas like in china.

>> is there a larger story here? just real life billions being played out by everybody? >> people like seeing billionaires fight. these are big-- names. these are big personalities and they have been clashing over this $6 billion company. it has been somewhat entertaining. plexus is counterproductive to the strategy of the individuals involved? typically these guys would take a stage and then make a very constructive points about what the business would be doing and the business would listen and maybe give them some board seats. that's not happening this time around. a recent an inflection point for the louder you talk isn't the more you get from these companies? >> i think if you talk about and you have a good point that still resonates. perhaps some of the issues we have been faced with is that maybe those messages aren't

resonating with investors in the way they have in the past. alix: why would private equity be interested in this company? >> undervalued. some view it as a $100 stock. looking at its past performance that it's been hindered by some of the things it has gone through. that's just a basic play. from the short perspective there have been rumors about bios for a long time. people thought icon was going to make a play. the fact that it didn't happen they could see as private equity did their due diligence and said we are going to walk away. there's two sides to this. matt townsend, thank you coming. if you have a bloomberg terminal you can interact with us. just go to tv on your terminal. this is bloomberg. ♪

david: this is bloomberg. i'm david westin. steve bannon's pass to the white house has ended in his ouster. a tumultuous week afraid tied with business leaders and a lukewarm response to white supremacists. what's bring in bloomberg businessweek's josh green. he has written the book on steve bannon. devil's bargain. available at fire in bookstores. david: timing is everything. you did talk to him since he has left. >> he told me he is going to war on behalf of the trump agenda as he understands it.

that is the key. that is code for he is going to push his nationalist policies from outside the white house. that could have all sorts of ripple effects on the market beginning with i think this is going to be a good thing for silicon valley. one of his projects this far he had been talking about internally was trying to regulate companies like google as public utilities. he was trying to build nationalist momentum toward that idea. i think that now falls back. very important deadlines coming up in washington on keeping the government open and you have people now in control of economic policy in the white house and gary cohn and steve mnuchin who do not have relationships with the right-wing republicans in congress who i think are going to be key to deciding whether that happens. you will have been in on the outside agitating. david: let's take a couple of issues. the wall and whether they will

have to do that to keep the government-funded come september. also trade war with china. in an interview with prospect magazine steve bannon said specifically we are at war with china right now. >> that's classic been in language. -- bannon language. probably weakens the nationalist positions on hase and china the trump been getting a lot of pressure to listen to. trump at various points has walked up to the edge of slapping down tariffs and really making a big deal and has always pulled away at the last minute whether it is by gary cohn or someone around him. that seems like an area that might change now that bannon won't be in the west wing in the presidency year again him on the way he likes to do. did you get a handle as to what he thinks the channel of influence ultimately is? news aref breitbart there people in the white house -- where is going to get that influence?

>> he thinks he is the leader of the nationalist movement in the nine states. he doesn't think trump is the leader because trump often wavers from that commitment. has an unflagging commitment and he thinks he can use the platform of breitbart to pressure republican politicians in congress and the administration. there is a history that suggests he could have success doing this. it was breitbart that drove out john boehner. scary thing to watch for me is that we have these very important decisions coming up that are going to depend on republicans coming together in congress and now you have this outside divisive force pressuring a significant contingent of them to go in his direction when other people in the white house are going to want to go in a different direction. jonathan: we're going to have that here in the states? >> that's the perfect it now do. that's exactly right. alix: isn't that exactly what

got him fired? >> yes. it is. alix: not necessarily tuesday in charlottesville. >> i don't think his firing had anything to do with charlottesville. that and his inability to get along with other people in the white house. elbowed guy, sharp who doesn't play well with others. able to build coalitions and get along. he could never do that. david: and a desire for the limelight. the question is how much did you have to do with getting him fired? green of bloomberg businessweek and the author of the new book devil's bargain. jonathan: about 25 minutes into the session. after a couple of days of losses in the equity market we have had a day of losses potentially today as well.

off by .1% on the dow. very marginal going into jackson hole this week. the story in the bond market yields are lower through much of the morning by a basis point. in the fx market the dollar showing weakness against pretty much everything. euro-dollar rolling up. ahead of those speeches from fed chair janet yellen and ecb president mario draghi. alix: and before all of that we get an eclipse. parts of the u.s. will plunge oregon toess from a south carolina and america's power companies are taking the rare opportunity for some experimentation in the form of testing software and markets refined in recent years anticipation of the day when for noble energy becomes the dominant source of power. fieldors at giant solar will see it market share to natural gas generators. duke energy will use up to 1200 megawatts of natural gas to replace power in north carolina.

guard 13 billion 10 year projects to modernize the state grade. we're being told to put on these super cool solar eclipse glasses. jonathan: i am actually getting paid to put these on. and now you are completely blind. i know people who traveled. i heard there's going to be more traffic to see the solar eclipse than there is on the subway in new york during rush hour. david: i can see stuff around here. does that mean i'm going to go blind? ferroan: jonathan alongside david westin and alix steel. you're watching bloomberg tv. ♪

got you outnumbered. the dinosaurs' extinction... don't listen to them. not appropriate. now i'm mashing these potatoes with my stick of butter... why don't you sit over here.

find your awesome with the xfinity stream app. included with xfinity tv. more to stream to every screen. vonnie: it is 10:00 a.m. in new york, 3:00 p.m. in london, at 10:00 p.m. in hong kong. from new york, i am vonnie quinn. mark: and from london, i mark barton.

welcome to "bloomberg markets." ♪ here are the top stories we are covering from the bloomberg and around the world. president trump is back at the white house. plus, with steve bannon now gone, what is next to the trump agenda? pagell try to turn the tonight by talking about his plan for the war in afghanistan. and the biggest names in investing are grabbing headlines today. berkshire hathaway loses out in its bid to take control of encore. a pact withnters herbalife as the supplement company ends talks to go private. today as opecting meets to check compliance with its production goals. will libya and nigeri