down in south korea sending a message across the board as kim jong-un comes to the table and do a deal. twitter diplomacy emboldening saudi arabia. trump undercuts foreign policy adviser, tweeting his support for the weekends purge. crude holds onto its highs level in two years. political upheaval in the middle east feels a rally in energy stocks. rally in energy stocks. i'm jonathan ferro alongside david westin and alix steel. the s&p 500 closing at another record high on a five-day winning streak. futures treading water at the moment. in the fx market the dollar showing definite strength against the rest of the g10 space. broad-based dollar strength to start the day on euro dollar. in the treasury market yields pretty much unchanged. portuguese ten-year debt south of 2%. alix: i also thought that was crazy.

down three basis points. we have not hit below 2% since april of 2015. that's the dollar index strength. brent is a little weaker by .3%. $64 crude. i'm looking at brent and going what happened? headlines from outside the business world. here's taylor riggs. >> president trump is calling the north korea to make a deal on its missile and nuclear weapons program. the president met with south korea's president. he said the u.s. is ready to use its full range of military capabilities if needed but he said it makes sense for north korea to come to the bargaining table. u.s. on capitol hill house committee has voted to limit the so-called carried interest tax break often used by private equity and hedge fund managers. the new limit would triple the amount of time assets would have to be held to qualify for the capital gains rate of 24%.

the houses spending four days this week making changes to the republican tax bill. in saudi arabia the anticorruption crackdown is expanding. banks are being asked to freeze the accounts of dozens of people who have not yet been arrested. prince, 10llionaire other princes and former ms. investors -- ministers are in custody. global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. i'm taylor riggs. this is bloomberg. david: president trump's agenda on his asia tour is not just about north korea. he's also trying to move forward therade area today and over weekend it was in japan. while he was in tokyo the president urged the japanese car companies to make more vehicles in america, reportedly say, try building your cars in the nuts states instead of shipping them over. that's not too much to ask. he said, is that rude to ask?

the numbers show the japanese automakers already make more cars in the united states than either ford or gm. we will our chief content officer, -- welcome our chief nker.nt officer, marty sche > it doesn't seem concerned about having the facts back up his basic point. let us talk about make america great again. it doesn't look like he's accomplishing very much anyway. david: that's the question. raced in tokyo and korea and china. is he making progress? i get the sense that these foreign leaders are very happy that donald trump is making an appearance and probably just as happy when he leaves. they are making noises that solidify the relationship but in terms of concrete actions there is really nothing much to talk about.

china is the big deal coming up. jonathan: why is the president struggling to get this done? heard reports several weeks ago that he was asking people in the white house, he wants tariffs. what's going on? >> there's a core group of people in the white house who feel very strongly that the risks of a trade war really would be difficult for the u.s. to support. they are probably listening to they are not but implementing those things because they think it's bad for america. david: after mar-a-lago china came up with a few things to give. are we expecting the same with beijing? >> north korea is the gorilla in the room. after mar-a-lago china came up with a few things to give. are we expecting the same with beijing? he absolutely needs china's cooperation to do anything about north korea. he has taken a more conciliatory tone towards north korea in

advance of the trip to china is the key player. there are indications that china has been cooperating and you will notice the rhetoric out of north korea has been basically absent. there was a lot of concern there might be some missile launch and nothing has happened so far. david: marty schenker, thank you. jonathan: joining us around the table in new york is david stubbs of jpmorgan. the president struggling to get it done on the trade front. is he going to get it done? >> a lot of people ask me in london when does this get real for markets outside of the mexican peso. for me the big concern looking at mr. trump's behavior has -- that's part of the global trading system. that's when it really goes after the plumbing that links together the countries of the world and that has a dispute resolution mechanism that is something he is actually using quite

significantly. if you start to get a change aere they pull away that was big negative for markets and they will see emerging markets struggle in that regard. jonathan: any evidence that is where we are heading towards? there hasthe edges been the odd comment here and there but not really in the firing line at the moment. this is contained for regional issues like nafta. alix: how do you prepare for something like that? how do you prepare for the worst when it never happens? >> with great difficulty. for the moment you have to that just like some of the more explosive rhetoric that we saw there is not actually going to come to fruition. cooler heads will prevail and there will be some middle ground where he can say i have addressed some of these issues and when he's going into the presidential campaign have a few

things to hang his hat on without materially damaging the wider global system. david: the good news is we have some time. lawsuit withbe a the wto. this is not going to happen overnight. not.solutely going after wto could mean a whole range of things. if you take america first to its the extreme it is denying role of multilateralism on a range of fronts. trade just being one of them. the whole point of multilateralism from a global is to curb the power of the strongest, allow the weakest to exist in a rules-based system that gives them somewhere to go in their disputes. if you take america first to its ultimate landing point that goes away. i don't think we will go there. that's precisely why -- theyuntries in asia

would much rather multilateral agreements because if they take the full weight of the united states from one-on-one across the table they know they are going to lose. be, is the would united states running the risk of being left behind in that region at the moment? >> there's a whole set of arguments about why america should be engaging in multilateral agreements. things that cover a wide range of countries. global the rules for trade in the region. if you don't, someone else will. we know who that is, that's china. the professional market pulling out from the potential regional trade pacts was something he pledged to do. you can understand how it plays well in the american political arena. america's role in the world looking to shape an entire region, you can understand why we have some doubts. you haverty schenker,

america first and unilateralism coming out of the president of the night states. sheesh and paying is mr. multilateral. how is this going to play out when the president gets to beijing? >> the chinese ruler has talked about how the forces of markets are really what's determining how things are shaping out in the world economy and not any policy of china which is really fascinating that the chinese are citing market structure as a reason for the way the world works and not the united states. david: the chinese leader talks about market forces. does he mean it? or is this somewhat cynical on his part? obviously his country has benefited from his entry earlyhe of eto in the 2000's and continues to benefit from the stability of those rules.

at the same time if you look around the fringes of the economic relations, they are not entirely playing fair on a range of areas. the reality is you need china for many reasons. most of them non-economic and how hard can you push them. not particularly hard. versushe optics president trump, you have president talking strong. at the end of the day, xi jinping has most of the power. >> he definitely has the ability to play the role of the defender of globalization. to step into the void as it were. and play the rhetorical game because what is actually changing between chinese and u.s. economic relations right now, not very much. the previous ministration also put those. and through which kind of system, wto.

jonathan: the media going around saying this is the new face of liberalism. what was last year about and what was everyone doing? alix: we rebranded u.s. jonathan: sticking with us. special thanks to marty schenker. catching a big bed. have we got a floor in the oil market. blanch will be joining us in just a moment to give us his take on the commodity market. from new york, this is bloomberg. ♪ blanch

jonathan: the five-day winning streak in a record high. here are the scores this morning. about two hours and 15 minutes away from the opening bell. futures barely positive on the dow. treading water on the s&p 500. in europe energy stocks really outperforming after that late rally in crude gave the energy producers a bid in europe and asia as well. this is the situation. crude at 5730. rent treading water as well. the yields are higher by a single basis point in the bond market. treasury yields will just not break out of that range. what's going on? >> there's an awful lot of people who wanted duration. central bank balance sheets on aggregate are still going to be expanding probably into 2019. just because the fed is gradually drawing down, we know

the european union's are buying to september probably until the end of the year. japan still going out as well. the earliest is going to be q4 of next year. if they do, it's probably the stock that really matters for these things. if you think falling balance sheets are going to be an issue for markets. thought tax policy would generate high yields as well. the house continues its markup in washington right now with chairman brady pushing through some amendments yesterday. we are joined by kevin cirilli. give us a play-by-play. what are the big issues that are emerging? >> i'm calling the marathon market. the house ways and means committee continues to markup this bill. already some divisive points coming to the forefront.

some amendments have asset managers a bit nervous in regards to several pay for is being discussed including the mortgage deduction. that is going to be interesting to watch. a source yesterday said at the end of the day these financial lobby groups might be concerned that they recognize the importance of getting this done and out of committee before thanksgiving. meanwhile in the senate sources tell me that thursday is now the day we are going to get the senate version of the tax proposed bill. cohn also trying to meet with democrats today in a meeting organized by it a democrat from west virginia. again off the record and behind-the-scenes people are very skeptical that any democrats will be up to get on board with this version of the legislation. david: give me a choice between the real estate lobby which is really upset about some of the changes and the fund manager

lobby on the carried interest. which is more powerful on the hill? >> without getting anyone angry at me i would say the realtors because they are in virtually every once district. they have been out in full force. loophole,d interest chairman brady has offered an amendment that would give it a two-year window. the fund managers -- managed fund associations do not like that one bit. beid: kevin cirilli, we will checking back in with you. wise the second most active nonfinancial issue were also born -- the one with the biggest foreign capital? to be details are going fleshed out. some of the key pillars about u.s. corporate taxes are probably going to go away.

the question for investors is how do you value that foreign exposure and u.s. equities right now. it has been key to gaining u.s. equity exposure. it's not an accident that we have had a slightly weaker dollar this year and tech has outperformed. all of these relations going to change in terms of sectors and currency, we will have to wait and see. jonathan: 94% of its cash overseas, it's a massive cash pile. borrow the bond market at a 30 year rate. what are they going to do? >> they're are going to bring a lot of that home. the bigger question is what they do when it is home. we saw this in the bush administration. be anold us it would investment over 90% was actually depends on buybacks. there's nothing particularly wrong with that.

the amount of cash and profits of u.s. business has not been what has held back investment. alix: what about if you want to expense. that could be somewhat of a game changer. >> absolutely. that could have a quite material impact. there is six cal at a to all of this. -- cyclicality to all of this. combine a cyclical upswing, depressed investment levels from where they have been, confidence and a big tax change with a big incentive, it could be impressive. conservatives are arguing that if you cut the corporate tax rate it will trigger an enormous inflow of investment from overseas into domestic equities. is that right? >> to a certain extent, yes. people will go after the

underlying profitability of the u.s. companies. more of it will fall to the bottom line after the lower tax treatment. obviously the details are the devil in these things. they are probably not going to get done until early next year. our message on u.s. equities remains you don't need tax reform to own them. you need to believe the earnings cycle is going to continue to roll on. happy to hold them. jonathan: for companies with massive cash piles is this going to be a positive debt story or positive equity story for them? >> positive equity story. they will bring that cash home. a lot of it will go into some type of financial structuring. i would imagine a combination of buybacks and dividends will be significant. david: david stubbs will be

sticking with us. live from new york, this is bloomberg. ♪

419 s&p companies reporting earnings. let's take a look at how they are performing today. kicking off with priceline. stock.r day for that potentially its worst day since 2012. they see no structural change in travel industry but they are

dealing with higher costs because of trying to get consumers from airbnb and the ramped up competition in the area. weight watchers, we talk about best stocks of the year. this year. raising its full-year forecast one dollar and $.83 a share. and bmw third-quarter earnings below estimates. there are losing ground to mercedes among luxury cars. supplies driving down for our he tesla in the pre-open. mercedes. on the street i'm like, i want that one. david: that's the story. mercedes is beating bmw. alix: how good are we in earnings seasons in the u.s.? >> we are looking at a pretty good season. we saw some pretty high profile

the us. we still expect the year growth to slow into next year. that we had the energy have all seen. it's going to be very where earnings growth is going to come from. i believe we are going to have a pickup in business investment. also potentially once the fed maybe the dollar resumes its decline a little bit. we think the next six to 12 months the dollar is going to hang in there because the fed is going to raise at least times before the end of next year. companies have the ability to deliver on earnings. jonathan: the stoxx 600 in europe just past that peak. it took a long time to break out in the way people expected. you couldn't push the view through equities since the summer.

why not and how is this going to evolve? people are worried about the strength of the euro. you have had banks in a trading range as well. if you look around the world a lot of indices are broken out to new highs. the ftse 100 hit an all-time high this morning. europe has tremendous leverage. it has the operating leverage to any increase on the top line. one of the things we are excited is financial leverage as well. stubbs isdavid sticking with us. for our audience worldwide, this is bloomberg tv. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store

near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. jonathan: a couple of hours and some change away from the opening bell in new york. futures pretty much unchanged. former by .1% on the dow. the s&p 500 going nowhere.

jpmorgan pointed out yesterday the ftse 100 printed a record high. today a little bit of weakness. you see some strength in asia and early through the european session. crude catches a bit late in the session yesterday. a slight retracement of yesterday surge. on the wti contract. looking at the bond market treasury yields grinding a single basis point higher. we have a nice did in peripheral bond markets in europe. tenure portuguese debt trading south of 2% for the first time since 2015. in the fx market broad-based dollar strength. that's the story across assets. let's get you some headlines. president trump called north korea a threat that is a danger to the entire world. the president met with south korean president moon jae-in.

he called on them to stop doing business with north korea. the president said it's time for kim jong-un's regime to come to the negotiating table. japan is talking with the pentagon about lying the business with north korea. theadvanced ages missile-defense system. it could take several years to complete. president trump urged japan to buy american-made weapons. gunman in the texas church should may have been able to slip through a background check to buy the weapon he used in the massacre. the air force failed to report the attackers 2012 domestic violence conviction to the fbi's criminal database. the senate may look into gaps in the firearm background check system. global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. .'m taylor riggs this is bloomberg. alix: saudi arabia's anticorruption crackdown.

the central bank is now asking banks in the kingdom to freeze the accounts of dozens of people who aren't even under arrest. joining us now is middle east executor for bloomberg news. talk about the latest developments. we had the arrests over the weekend. now you're getting beyond the 49 people that were arrested some very senior people, the first reports that this is going beyond that into the hundreds of people whose accounts are being frozen as part of the investigation. this is obviously causing quite a bit of uncertainty. it's not like the names are being released and there is a where chatter on twitter names are being mentioned and that is hitting the stocks of the companies. it does seem to be pretty senior related to companies. not just individuals. jonathan: we talked a lot about

the prince with the holdings in the west. talk to me about the son of the former king and now he is basically being pushed to one side. all ofentially controls the forces within saudi arabia. talk to me about how significant that is. it has to be said that mbs was the predominant leading person in saudi arabia. ofwas pretty much in control all the money. he had already removed his taking control of the ministry. this was kind of the last military force. it's a very large force that wasn't under his direct control. everything feeds into prince mohammed in one way or another be at the money or the security forces.

the saudi government, what we are getting from senior saudi officials is that this is about corruption. it's not about the power struggle. are driving the corruption thing pretty hard. you are seeing all of these accounts being frozen and companies being involved. it is at least inside saudi arabia a constituency that finds this to be a fulfillment of a promise that they are finally moving againstarabia individualo were before all this considered untouchable. alix: thank you very much. the saudi's are now accusing iran of providing missiles to yemen, saying it's an act of war. it's not just domestic. david: there's a serious proxy war going on between iran and yemen. reallys the oil price enough to encompass all the risk

we are seeing in the region. wti is up i 3%. joining us now is francisco blanch. and david stubbs of jpmorgan still with us. wti is theok at pricing in enough geopolitical the oil markets never praise in enough geopolitical risk. look at what happened into the u.s. iraq invasion in 2003. we knew the invasion was coming in and prices were climbing into it. i remember the day before we took a toll. our price is going to go up or down into the iraq invasion. half the room was split at that time. the price actually came down the u.s. wasause able to secure the iraqi

oilfields over the course of one week so prices came down. there is a very clear war ahead of us happening. we all knew it was happening. so the answer is no. until something big really happens and the violence starts -- until the oilfields we get to that point it's for a hard for oil prices to really pick up a lot of geopolitical risk. alix: you can probably attribute the rise to expecting the opec cut to continue. something interesting happened with the curve. this is just a month ago. this is the curve now. and enormous rewriting at the front end. back end, same deal.

51, 50 two dollars a barrel. >> this is the key to the market. the key question to ask is can the back end of the curve get dee anchored putter it will know what is anchoring the back end of the curve. it is shale. the same shale you're going to be talking about in a couple of days. if the back end of the curve increases by just five dollars a barrel we will have a multi-year your supply growth relative to current expectations and that's going to bite into opec's market share. the curve can't really get d .nchored opec knows that. unless the geopolitics turn for the worse than you can rerate the whole curve. andeed to fill it back up we need the u.s. producers to really ramp up the rate of growth. jonathan: let's talk about the

fundamental geopolitics. tension in yemen is escalating. the proxy war with iran and saudi arabia etc. tension in lebanon is beginning to heat up now as well the prime minister has resigned and blamed the dominance of hezbollah. are those countries heading toward something no one wants to see in the middle east? >> very difficult to say. we have had proxy wars for a long time. we have had the islamic state taking over a large chunk of syria and iraq. the islamic state is retrenching. actually not as proxy war seems to be fading. tension in the region has been there a very long time. the question is does the tension affect the supply. the tensions that affected the price. need to see those

impacting either pipelines or oil wells were operational aspects. same thing in libya and nigeria. oil doesn't wake up to the fact that the saudi's and iranians are poking at each other. that's what they do all day. david: as we look at what the crowd -- crown prince is doing, how does this fit with his vision 2030? what's going on with oil prices doesn't hurt him particularly on the aramco ipo. >> it is a very important piece of the plan. the money he's going to raise and the profile having the -- appleargest listing is moving up so fast. if you look at the plan of aramco it kind of all comes together. the issue is does it have enough time before shale technology ranks lower.

or before the electric vehicles we were talking about earlier, is that going to be an issue in the next five or 10 years. those are the elements we are thinking about. alix: nickel has had a monster run. copper and think as well. inc as well. the chinese are making a huge push for the electric vehicle at home. they have an environmental problem. they have an energy concentration problem. they need to diversify. security ofe a supply issue. china is the world's biggest oil importer. it doesn't have the military capability or bandwidth to

continue to grow its oil imports at the pace it has in recent years. i think they are very focused on this electric vehicle story providing funding, zero interest loans. alix: and some lithium and cobalt. david stubbs, wrap this up for me. the higher oil prices. what is the feedthrough for inflation and growth gecko higher energy prices around the world. i'm not sure economies are quite toht enough yet for that have many second-round effects. i think it's important to recognize it's not an accident we have a synchronized global expansion after energy got really cheap.

things are very laid. for the moment energy is still fairly cheap. we will have a sweet spot right now where they are cheap enough to be a big reason to keep growing. rising to provoke some more industry. industry -- alix: great to get your perspective, francisco blanch. francisco alluded to come on thursday night you can get all you can watch shale at 9:00 p.m. on bloomberg television. shale revolution. how shale change the u.s. and how it could potentially change the world. i break that down in a one-hour special. david: that's coming up on thursday. right now we have a story about disney and fox. how do these merger discussions

really shake up the media industry? live from new york, this is bloomberg. ♪

>> this is bloomberg daybreak. i'm taylor riggs in the hewlett-packard enterprise greenroom. coming up, equity group investments founder and chairman. this is bloomberg. jonathan: tension inside the european central banks. three of the top policymakers push last month to alter a commitment to keep buying bonds until inflation improves. signaling challenges ahead for mario draghi. the heavyweights who reportedly

recommend tying the overall level of monetary stimulus to the outlook for prices according to eurozone central bank officials familiar with the matter. still with us is david stubbs of j.p. morgan private bank. from draghi's point of view it makes sense to try to tie the hands of the governing council to say until we get there we are not pulling back. there is some dissent emerging inside the ecb. >> we knew there was significant disagreement inside the ecb. views on thege of potential threat of inflation getting above target. do you believe what some of the models are telling you about where inflation should be? we saw the bank of england hike basically on the belief that potential growth was going to be constrained and lead to more inflation. europe consistently

miss inflation targets on the upside. activity indicators are facedibly strong and they the dichotomy. at the moment we know the history of quantitative easing an unconventional measures. you need to make it open ended. you need to commit credibly to the market. you need to do what it takes to get growth back where you need it to be. jonathan: is there a reason the portuguese ten-year money should be trading south of 2%? >> one country that has really turned itself around. done a lot of reforms economically and change the conversation about what it can be as a business location. it's portugal right now. everyone's going to lisbon for tourism and business. scene thereew tech as well. they did a huge amount of reforms to their banking sector and business climate as well. what is the prospect of a portuguese default in the next few years, it is actually remarkably low.

havehan: and they don't the populist political bent that other european countries do. maybe that's a tailwind as well. another question. how do you express the positive europe view when one of the biggest overweight in the european equity market right now is just not working? financials. why not? >> there's a few reasons potentially. draghi coming out emphasizing that probably not going to change anytime soon. some questionseen marks about the periphery still being in place. it's a lot better than it was. we still believe the financials are going to work going forward. maybe what the market is missing is that one of the big changes globally is the areas we are deleveraging starting a

deleveraging cycle. there is nowhere that has been more cautious in the last couple of years than large european corporate. we know the bond market is more important than it used to be. it is still about the banks. moneye going to get the from the banks. there's going to be a greater volume of loan growth in europe that people are expecting. it will definitely help the banks. jonathan: david stubbs of j.p. morgan, thank you. dox: deutsche bank wants to five or six when it comes to leveraging loans versus nine. check out tv . you can interact with us directly. go to tv on your terminal. take a look at my specialty. you can do that. jonathan: we will get this every 10 minutes. i will let you have it. friday i will be too tired

to talk. this is bloomberg. ♪

david: this is bloomberg. i'm david westin. we learned that the walt disney company had been talking with 21st century fox about buying a good part of the company. talks have ended for the time being. it does raise some questions about more restructure that maybe to come in some form or the other. we welcome now paul sweeney. when i looked at this -- is this a defensive deal or would it be an offense of deal? are they trying to move into new turf? defensive, part offense if. clearly the media industry is under a lot of secular pressure tied to cord cutting. the way the industry has made money in the past may not be the way they're going to make money in the future. if you're the walt disney

company you know you have to go direct to the consumer with sports, espn, disney content. you need to go direct to consumer. they have announced they are going to do that over the next couple of years. if you go direct to consumer with an entertainment channel you will need a lot more programming. the question for disney is do i produce my own programming or go out and buy some programming. if i buy the 21st century fox studio i get a lot of programming, a lot of library and movie content that could help program the new entity. david: bob iger has said he wants to go direct to consumer. they said they are going to have an espn channel direct to consumer. are they looking at other media companies or are they looking at netflix and amazon and google? >> they are looking to compete and they are looking to do it with their content. they obviously have world-class

content at the walt disney company. maybe in this new digital world you can never have too much content. would beink disney looking to grow their international business. of thethe shortfalls strategy is they have been under weighted in their international exposure. 21st century fox brings a lot of international businesses with their star business in india, .ith their sky investment that could be a real boost to the walt disney portfolio. jonathan: typically when someone is planning to step down they don't make a big acquisition and than 12 months later leave. what's the future of bob iger at disney? >> he is going to step down finally in 2019. what's really pressing for the walt disney company is the succession issue which we have no clarity whatsoever. is howy the bigger issue

do i compete in a world where my is seeingess es pn secular decline in subscribers. i need to reposition my businesses and go direct to consumer and i think this is a way for them to potentially strengthen their portfolio of assets. alix: is fox even for sale? i haves just saying, been following this company since 1991. i have never known rupert murdoch to sell anything. this came as a shock to the marketplace yesterday. up 10% yesterday on big volume. rupert is in fact stepping aside and this is being driven by the sons that are really running the company now. whenreally was a shock rupert murdoch ever sell. david: the way it has worked historically when one of these media companies starts talking about something they are in play very quick.

something usually happens. >> that's exactly right. david: paul sweeney, thank you for being here. jonathan: coming up, tune in for the bloomberg year ahead event where we will be joined exclusively by the citigroup ceo. coming up next in an exclusive interview, sam zell will be joining us around this table for a full hour. new york city. ,or our audience in worldwide the situation in equity markets as follows. record high on the ftse 100. a little bit softer as we kick things off tuesday. this is bloomberg. ♪

>> the president touches down in south korea, sending a message to kim jong-un, come to the table and do a deal. diplomacy in saudi arabia, trump undercuts diplomacy advisors and crude holding onto its highest level in over two years. political upheaval in the middle east. a rally in energy stocks worldwide. good morning to the second hour daybreak.rg i'm jonathan ferro alongside david westin and out steel. streak,ay winning futures unchanged by the s&p 500. in the fx market, reports do nothing to feel the euro bit. strength broad dollar and treasury yields higher by a single basis point. 233 on a u.s. 10 year. alix: living move for me is yields lower by three basis points, 2%.

since april 2015. the dollar index a little .3%.ger, still trading around those record highs. now for your morning brief. a news conference and the anna, what the impact will be on compliance and the oil price. fed chair -- the fed vice chairman speaking at the annual -- new york city. ,lection day, treasury auction $24 billion. david cohen president trump continues his asian tour in korea today and then china. the tale of two continents, we turn to kevin cirilli. start first with taxes.

first with the asian tour. >> traveling with the president on this trip, they are in south korea and are about to continue a series of meetings. all with the backdrop of north korea appear the president having met with the prime minister abe him and they discussed not only bilateral agreements but north korea as well. jong-un casting a very significant shadow over the trip. getpresident trying to china to work together in order to just the threat of north korea. we should note about vladimir putin, there is a meeting between mr. trump and vladimir putin.

it is still something many people are focused on here in washington as well. david: we had some amendments yesterday i saw. alexius. day two of the committee where they are marking of this bill. the loophole is raising a lot of controversy here in washington dc with managers and fund folks concerns about that. . senior consultant told me potentially -- they recognize the importance of getting a tax package done by the in of the .ear they still want to get it done by the end of the year. david: thank you. we really appreciate it. it comes out, the tax

plan was like it will affect most in the economy. investors welcome -- sam zell, the chairman of equity group investments. he has invested in everything from real estate to energy to commute patience. also joining us as michael mckee. sam, welcome back. investor, i am sure you are following this. how will this affect your business? >> as it stands, not significantly. -- there are a lot of tweaks and an obvious attempt to lower which iorate tax rate, think is detrimental to the united states, having the third highest corporate tax rate in the world. it just does not make sense. from my perspective, that is the most significant change that we

should all be encouraging. david: do you pay a fair amount of corporate taxes? will you make more money if the corporate tax rate is reduced? sam: some. but three of my companies have rates -- one of them is a full pack -- taxpayer and we pay a lot of taxes. it in the negative competitive position with competitors around the world. david: what about if it is limited to 30%. sam: hard to say. that is likely to be a minor problem. david: i understand the amendment would expand the amount of time to hold the interest in order to make the federal capital gains tax treatment. it is something the president campaigned on. why is it a surprise?

>> it does not result of money for the treasury so they could get rid of it but the people who take advantage of it have lobbied hard to keep it. it willge they made is still be there but you have to hold onto an investment for three years before you can claim the benefit. alix: how do you feel about that? sam: nobody understands. carriedlking about interests. the interests for sponsors of funds. these begin and end in one year. the funds begin and end in three years. i did a few major funds in the 1990's. one was nine years and one was 10 years. the fact that i and effect was a tenure investor in my own fund, it suggests a capital gains

treatment is most appropriate. david: -- and i this is symbolic because it became an issue of the president against the wealthy. sam is a perfect guy to have on because he is involved in different businesses entries a lot of different businesses in different ways. estate investments and real estate will do well because of the 30% cap on interest payments, it does not apply to real estate developments. real estate developers get to keep state and local tax breaks, which other people will lose. treatment for pass-through businesses, but if you are in private equity, on interest reductions, it hurts you. there are many different moving parts that make it hard for a howof people to figure out to come out of this. sam: in a lot of cases, people

will restructure the way they do transactions, as they always have since the beginning of time, to accommodate whatever the government does on taxes. david: rising above the individual vagaries of the tax law, where are you on growth? because that could affect your business. you could significantly increase gdp growth, it would help your business. sam: it is broadly you asked that question. there is no question the country needs growth. the most important thing to make growth happen is reduction in writing -- and regulation. you want to talk about growth. costs have gone up 500% in the last eight years. it is nonproductive costs. compareda small player

to the compliance costs of many of these corporations. the goal is we want to create an environment where people are encouraged to take risks and if they take risks, they get paid for taking the risk. alix: 10 the house bill is what winds up getting past. what needs to get the boot for what you say to play out? sam: it is hard for me to identify any one thing. i am most in favor of reduction in corporate taxes. i think that has the biggest impact, worldwide competitiveness. what what i lobby against? i am not sure there is anything i feel strong enough or that i think they are doing enough on that it matters. david: are you talking to the lawmakers in the white house? sam: indirectly.

alix: what are you doing in d.c. at 2:00? sam: to have lunch with somebody. [laughter] a non-legislator. jonathan: michael mckee, thank you. much more with sam and his tax proposal next. this is bloomberg. ♪

house: 500,000 versus one million. what does that wind up meeting -- meaning? when we talked to john on friday, he said it would not bother market. you feel good about your job and wages, you will buy a

home. a smaller one, but you will buy it. sam: there is a lot of focus on this issue, national homebuilders and realtors are screaming. number one, the very wealthy, the top 1% that everyone wants to punish, does not have many mortgages. a deduction is not terribly relevant. the middle guy making a reasonable amount of money, a $500,000 mortgage, 700,000 -- that is manageable and not a big deal. the place for this has the most mansions where they hustle a lot of people to buy overpriced houses was -- with overpriced mortgages. i am my next house planning to buy, it would affect me severely p or i'm in the $1

million range and that will hurt to not have that deduction. rent instead? >> i have a hard time believing you will not buy a $1 million house. alix: it is maybe 1100 square feet. sam: you have chosen way to live. is, you're not going to get a 90% mortgage. outs: no, but 80%. sam: 80% mortgage on a million-dollar house stretches the limit. you have to look at your budget again. ofid: you on a lot multifamily homes. tax code went through, would there be fewer people buy houses and more people renting your houses question mark to your prices go up? sam: no. my prices are a function of supply and demand. if there is a lot of new supply,

my prices go down. or stay flat. if supply shrinks, my prices go up. david: forget for a moment -- >> more demand for rental -- >> yes. eliminate the standard deduction. it gives less of an incentive for someone in a smaller range to buy a house because they do not get the deduction. sam: i have never believed the biggest motivation for people buying houses is anything other than where they live and how well. david: and we shouldn't have a marked reduction at all. sam: kamman debt -- canada eliminated it years ago. all of the realtors screamed and yelled and what happened? nothing. outs: what do you like in real estate? sam: not a lot. i'm a seller rather than a

buyer. how easy is it to sell right now? sam: ought harder than years ago. not talking about commercial real estate. we have a lot of supply, talking about new york, 10 million square -- 15 million square feet of new office space. will that do to 6th avenue, 3rd avenue? i do not know the answer but i would not want to be the owner of that kind real estate competing with subsidized -- jonathan: how much cash are you sitting on? sam: we have a company liquidating, reducing our exposure and converting to cash for the last four years. i think we have $2.7 billion in cash earnings. david -- .onathan: that is a lot

when will this change? what is a place like new york city a place to invest? sam: i cannot answer the question but i think the market will be a challenging question for a while. talking five or 10 years? sam: i am not good at timelines but it is certainly not next year. in realu are a seller estate and at sesame more broadly, what does that say about the economy question my in has been a large driver of the economy historically. you concern about the softening of the economy? sam: let's separate single-family from commercial real estate hear it when you talk about commercial real estate, it becomes less a track supply has increased. when supply has increased, there is a lot more building activity.

we are building 387,000 new multifamily -- in this country. i think that is the largest 1971. since a lot of people are employed and a lot of things are being bought and a lot of activity is happening. i do not think oversupply, which reduces to man or attractiveness, is necessarily bad for the economy. it is just bad for real estate owners. alix: he said how would you catalyze -- categorize the strength in the mid--- in the commercial environment? multifamily, one is a mobile home park in one is office. the office one is the one i think that would be most threatened and that is what we converted to almost cash. multifamily one is definitely

assessed by supply and in the other is the best performance and modern era. is no new supply. alix: sam zell, you will stick with us. it could be the biggest tech deal of all time. coming up, a 105 and dollar takeover was proposed. what they are using to make the deal happen. this is bloomberg. ♪

jonathan: a5 billion dollar takeover of qualcomm, a price tag that could have one of the biggest debt races ever. now is the bloomberg

.orporate finance reporter great to have you with us. talk about the history, and highly confident to do these kinds of deals. collects my colleagues said we should have copywritten this. this is for bankers like mark milian, it was designed so corporate rate would not have to pay the fees but you might have to pay to get fully committed say i have a you letter for the banks that say they are highly confident they can do the deal and raise money for the debt it. jonathan: is there any reason to say they should not get them funded? >> these are wide open.

some of the bank is on the deal think they could raise $100 billion for this deal altogether. >> who is putting this together, silver lake? financingme in with or two point $5 billion in cash themselves, the biggest equity check they have written. they have five of the top eight stanley.luding morgan highly confident. >> any sense of what the interest rate will be? junk.is on the cusp of some investors we were talking to said they would probably than whatittle more the index pricing and spirit 125

over treasuries. we have seen some of the tech companies go pretty wrong. >> michael milken is an old friend of mine. it is a marketing tool. first, there was skepticism. it became almost a commitment. him -- sam: we are dealing with historically low interest rates. we went through the whole thing may be as much as you know 170 over instead of 140 over.

about 100 billion .ollars i remember when i bought u.s. treasury bills in 1981. he tells you how old i am. onid: a certain discipline the dealmaker. do you see that fading or going away? deals that do not make sense but the money is so cheap, you would afford them? sam: no, i don't see that at all. i was around seeing very dumb deals being done. i do not know enough about this irticular transaction but don't see that at all. if anything, it is surprising that wee in the cycle have not had more dumb things done. it is the quote of the

day. bill ackerman says he has -- his bid for the him and -- and it has been a real bad year for bill. valeant? sam: i get in trouble if i weigh in. twice thank you for joining us. energy producers doing well. from new york, this is bloomberg. ♪

jonathan: another record high that closed yesterday to kickoff the trade or pre-much unchanged on the s&p 500 and on the dow as

well. benchmark, by the the end of it, you see oil and gas outperformed on the session. crude bounces up toward a two-year high. softer, and the fx based dollarod strength. the euro back and the cable rate heading back toward one dollar and $.31. let's get you some headlines now . here is taylor riggs. president trump is calling to make a deal on the nuclear weapons program. he met with south korea's president and he says the u.s. is ready to use its full range of military capabilities if he said it make sense

for north korea to come to the bargaining table. japan is talking about possibly buying the advanced missile defense system. according to officials, that sale could take seven years to complete. on his visit to tokyo, president trump urged to -- japan to buy american-made weapons. the anticorruption crackdown is expanding according to people familiar with the matter, banks are being asked to freeze the account of dozens of people who have not been arrested. dozens of former ministers and businessman -- businessmen are in custody. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. alix: thank you. we have a report coming out with really staggering headlines. u.s. shale production powering ahead.

a couple of details within the. oilaises american shale .stimates another million barrels of oil .dded to show production a lot of conversation in -- it looks like opec says yes. really takennd, momentum and taking that market share. perfectlythe backdrop , really see demand putting the pressure on the saudi arabia and government to change the way they -- that they source their revenue. is this a way to talk about supply 20 years ago, talking about demand?

myce: you should look at special thursday. [laughter] i want to bring in where the politics are in the saudi arabia and government. executive editor for bloomberg news, these opec headlines setting the scene for what the government is trying to accomplish. >> absolutely. they are fundamentally changing the way they do business. oil has toe on change. in order of doing business, private investment by getting citizens to rely less.

alix: where are we, those who control -- b john into this shift in power? >> we are today, 100 names being associated. they are basically saying if you see any these names, please let us know. they seem to be asking. -- weis some expectation don't know where they will be. alix: sam come what is your take

on saudi arabia in the last 48 hours? sam: i am a little skeptical about the word arrest. the holdup in a seven star hotel is not exactly -- i'm not suggesting in a serious. -- it is serious. the 32-year-old -- is doing is long overdue. saudi arabia has been in many ways resisting modernization. they had an unlimited amount of oil and income. though this is scary to a lot of do nothing saudi arabia has any options.

responsehe kind of from him and other people resisting it, different from resisting the president of the united states in the u.s. >> does he have the support of the people and is it relevant? relevant. very he is 32 years old. saudi arabia has 25 million people. 70% of them are under 40. is appealing to the majority of the population, not necessarily the majority -- >> if you are an investor and you're thinking about a significant capital to saudi arabia, over the weekend.

>> we will see how much is confiscated. everyone in the world is ready to write checks? no. lotaudi arabia have to do a in the law? yes. is it possible, yes, is it necessary, yes. investyou more likely to than a week ago? >> more supportive of set investments today than i was a week ago. alice: pivoting off the opec 7.5 million barrels per day.

really -- where are you now? >> we haven't really changed where we were. refinery andnother we are a little more downstream. i think opec's announcement today does not necessarily nature and intensive this is probably a more optimistic than reality. near production is nowhere as prolific in terms of production. very rapid first and second your revenue and shale and it drops off quite a bit.

it changes capital requirements significantly. i think she'll has a higher capital requirement. has a returnent and i have not seen a change in return expectations, in have i seen a reduction shale production. going forward, i just do not think it will grow quite as fast as opec suggests. alix: it will be more in the transport sector. made midstream investments. storage investments, refinery investments and we continue to do that. stuff.am, good he will be sticking with us.

if you are around thursday night will tune in you for an hour-long special on shale. i detail how shale really changed the u.s. and what is it -- what is the potential to change the world. 9:00 p.m. eastern. who is excited? >> i am excited. waiting till thursday, you can tune into tom keene and david gura on the radio. can we heard all across the country on sirius xm radio. this is bloomberg. ♪

alice: coming up in the next hour, chief market strategist. ♪ now to your bloomberg business flash. investor bill ackman has lost for automatic data processing according to peaceful familiar with the matter. he had nominated three directors including himself heard a 2% stake in adp. apple pay annulus mobile payments. enrolling tens of day ands of new users a it is now available in almost 4800 stores. it will beat out apple pay annulus users by the end of next year. deutsche bank is doubling down on lawns in the u.s. to restore growth. day and it is now available in almost 4800 stores. they have added two dozen managing directors.

that is the most ever. surged amid low interest rates. that is your bloomberg this is flash. david. david: talks between disney and 20 century fox may have ended for now but enough to send shares higher than they have been in month. of fox's number -- majority stakeholder were weaker on the news. paul sweeney, sam zell of equity group -- equity group investments is still with us. reportedly, disney was interested in buying the good part is what would they be interested in and why? >> the main interests would be the studio. as they go totent the consumer with a disney

themed app and sports app. i think it gives them international exposure. one area it has lagged its peers is international assets. and substantial non-us business. david: is that also a disney is seeking in the united states at least? classic will be post -- both. right now a disney would be looking at is simply the u.s. market a more mature media market. right now a disney would be looking at is simply the u.s. and the other cable networks are to the extent they could get non-us exposure, that would be in the portfolio. it would cost tens of billions of dollars here. the real question is what assets would they be looking to sell.

david: the question is why would you be looking to sell? what is in it? sam: someone before the show raised the question of whether it was looking to sell out and my question -- my answer is i cannot imagine that. the selloff selected assets that and,ore valuable absolutely. on the other hand, kelly is important and i do not think there is a halfway role to be played. jonathan: probably rested this is just a rumor. people will be thinking of netflix and twitter. what kinds of companies? >> they are clearly looking for

content and international exposure. on the technological side, that's to be there technological solution to date. into social to get media or digital advertising businesses such as twitter, or a bigger company like face? i do not think that is where they are looking to go at the moment. if you are bob, you only have 18 months left in your tenure -- tenure. it looks like he is looking to make a transformative move in this business. david: from what you know the business, is it possible for a more traditional of the like walt disney to move into a new space like netflix and google and yahoo! really occupying, word will be the new guys? sam: i do not know the answer. but i have personal experience, they are talking about a real culture clash.

h fish and politicalavid: from what go environment company. i think putting them together with unstructured and different orientation companies is likely to cost a lot of friction and not produce results that everyone expects. david: what is next for the industry? >> in the industry, you see everyone talking to everyone. the cord cutting issue goes to .undamental economics people are looking at portfolio aspects, people are saying to any different aspects in my portfolio? he saw disney acquired networks. we think we will see more m&a.

the smart money in london is that the deal will get done and will get approved. they certainly cannot take any more bad publicity. sam: i was just thinking. alix: great stuff. sam zell still with us. online,still watch us click on our charts and graphics and go to tv on our terminal. this is bloomberg. ♪

jonathan: yields are unchanged, crude is still trading near a two-year high and that kind of situation, stable treasury not strong through 2017. still with us around the table is sam zell. let's talk about a meeting you had with the leader of argentina. sam: we have been on the cusp of making new investments in argentina. before and hehere has got a real terrific orientation. it starts in real estate.

real estate opportunities are interesting and they have made modifications and laws that made it better. we think there will be a lot of demand in argentina over the next few years. the answer is look at the history. 1920, fifth largest and most successful country in the world. how do you go from that to argentina today? it is called last -- lack of discipline. society has been trained not to follow the rules. and hopefully represents a shift in that direction, hopefully a permanent shift. collect some want to update you on breaking news we released earlier.

bill ackman did not line up adp.ng any board seats to 80 beholders voted to elect all 10 of adp passes directors and so the nominees only had less than 20% of support from holders. a real blow to bill ackman there, failing in his bid for board seats at adp. it is a really tough year. a rough go. more on that over the next hour. david: still some positions at our troubles. jonathan cohen you are talking about putting money to work. .ive me one idea of size sam: i do not think that could answer that. every decision is a function of what is the opportunity and there are multiple different kinds of opportunities and time will tell.

david: how worried are you about the election coming up next year in mexico? sam: i believe the talks will basically goes nowhere. there are some adjustments and some savings on all sides, but i beneficial on all sides. david: there is a lot of talk about a populist candidate that is very popular. point. very important what does it do to the election? >> hope -- opens up a whole different election. nafta gets torn apart, it is likely that election will get much more contentious than what i envisioned today.

jonathan: there is a big conversation us to whether it has anything to do with d.c. is it more important the democrats have left or that trump is in the white house? deregulation. a bit more deregulation. there really is no substitute. if you look at what the president has done and not what the president has said, this has been productive. jonathan: great to catch up with you. from new york city as we count you down, 34 minutes away. futures treading water. this is bloomberg. ♪

♪ jonathan: the president touches

down in south korea, sending a message across the border to kim jong-un, come across the table or extended deal. crude, holding on to its highest level in more than two years. political upheaval in the middle east helps to fuel and -- a rally in energy stocks worldwide. for our audience, globally, good morning, good morning. we count you down to the opening bell, just under 30 minutes away. after a record high, the close are again in 2017, futures treading water. going nowhere on the s&p 500. likewise on the 10 year yield. a decent rally over in the periphery earlier this morning in the session, sending portuguese ten-year yields south of 2% for the first time in a couple of years. the fx markets, a dollar that's just strong, strong, strong with a euro on the double back spurt.

that gives you across asset feel of the market. here's alix steel. processing, adp, down 2% in premarket -- premarket. bill ackman, no seats on the board. all curis 10 members reelected and bill ackman got less than 20% of the vote to get one of his guys on the board. he did say, though, that he's going to maintain his stake, no matter what. down bye gets smacked 8% in the premarket. you are looking at potentially the worst day for this company since 2012. the deal is that costs are rising as priceline has to spend more to lower customers from other spaces like expedia and air b&b. inght watchers, crushing it the premarket.

291% rally this year. good thing for oprah. she owned a 10% stake. it is the eighth straight game as weight watchers continues to crush it. john? winning, they are that's for sure. another thing winning for the last couple of weeks, crude near its highest level in two years. with a shakeup in saudi arabia, investors are piling into oil. ,oining us now is tony dwyer the chief market strategist. great to have you with us. talking about crude, what does this mean? >> it has a lot to do with saudi arabia and more to do with global demand. a synchronized global recovery, there is a consensus call on that, but you have a significant pickup in global demand for all commodities. it has been that moved to value, moved to commodities benefiting oil. jonathan: is it a tactical story

where longs are piling up, piling up question mark or is it more fundamental? tony: if it was all about saudi arabia, it wouldn't be down today. onin, it's pretty overbought the breakout. if you look at the chart on your bloomberg terminal, it would be pretty interesting. you generally get a pullback with that kind of move. alix: oil versus energy stocks, reverting to what? >> february of 2016, you remember this them -- in or miss decline in energy followed by a rally. i think that the supply of energy stock is higher than it was in early 2016. we have been overweight energy. we are still overweight energy. probably looking more to neutralize it rather than go up. alix: where would you be making more of a play? upstream versus european and u.s. energy? break itdon't really

down that much so i'd rather not go into that. from a sector performance it's everything but the refiners. at this point oil prices are benefiting oil stocks. it's been a long time since you had this euphoric feeling about global economic activity? that was in the 2000's. it's been more of a slog, next record high. [laughter] you have pretty sustainable growth and you don't have inflation for the most part. are you at all concerned as you look at commodity prices that there is any indication we may be facing an inflation challenge? absolutely ethic we will face that challenge. what hits the yield curve for the viewers, when short-term trades higher than long term that always happens because the fed is behind the curve. their own philly fed found that

since 1965 nominal disposable income is underestimated by 8.4% per year. think of the impact on wage inflation that is underestimated . we think that as we go into next year the fed will have to become more aggressive, as it's already being perceived. more aggressive than what? right now it suggests three increases. you think more aggressive than that? tony: there may have to be for them and even a more hawkish tone regarding the balance sheet. the reason is they are not used to the post financial crisis, having everybody doing alright. back when the ecb made its decision in 2015 to purchase corporate debt, that kick started and unbelievable boom in europe that has not abated. if you look at a heat map or a color-coded map of the purchasing manager out of europe, it's been very positive since that point. it hasn't abated, even though so

many people like me have called for the second derivative of purchasing managers declining. this has drained the value out of purdue much everywhere, though. nationalizing, the ecb nationalizing parts of europe as well with spillover effects globally. it might help the economy of it, but it has shortly made your life difficult. actually made life a little bit simpler. a buddy of mine told me one time so what, now what. the central bank seven telling us for years what their plan is and we keep trying to figure out why it's not going to work. i'm on the game plan of it's going to work. intervening,re they should or should not, that's not relevant to me. what is is what it means towards activity and credit leading to a boom. the boom has continued economic activity i've been a permanent

bull9ll -- nceu since 2009. jonathan: european credit was tight since the economy turned. we now have this counterintuitive story that credit will underperform in that environment, when it should have been outperforming. haven't we already had the gains? jonathan: you could have said the same thing two years ago. rather than thinking academically about what could happen, but so do what has happened. our example has not been a terrible bear market, the fed has raised interest rates and better economic activity. spreads are as tight as they have been and you have had a historic supply of corporate credit coming to market. a record level of corporate credit coming to market. spreading as tight as they have been. because corporate credit has rallied and demand is extraordinary.

we try to make this so great and aademic, but if you are pension fund and you need to make 7.5% return and a highest area of risk is at 4%, the math doesn't work. you have to find ways to increase your risk. let's tidy's conversations together. hopefully this chart will do that. this is the oil price versus the 10 yield year -- 10 year yield. typically they tend to move each other. more global growth, more inflation with higher yields. that's not happening, though, right now. these conversations together, you have the two-year at 2.3%. that doesn't say global growth or inflation. jonathan: it does relative to the current -- tony: it does relative to the current level, but earlier this year we were talking about the citigroup economic surprise index going to -70 with interest rates going to

1.5% and i said no, it goes the other way. it's a stimulative effect. oil prices on the rebound go with it. the opposite is likely true. the surprise index is rally to degree thatficant the rates are probably peaked, which shows on the chart, meaning oil prices can back off a bit as well. i would like to extend the timeframe of the chart and look at what it looks like to each cycle, not just of past couple of years. -- just a couple of the past years. alix: tony, sticking with us. if you want to learn more about oil, tune in on thursday, we have an hour-long special on how shale changed the u.s. and what the impact would be on the world. can we see these developments? at 9 p.m. eastern time, i will be looking forward to it. jonathan: i'm going to watch a preview. can i? quite yet, but i

really really tired on friday because i am staying up to watch it. jonathan: just round the corner, in the market this morning after a record high closing in yesterday's session, futures are going nowhere on the dow and the s&p 500. with the opening just why minutes away, this is bloomberg. away, this0 minutes is bloomberg. ♪

really believe it makes sense for north korea to come to the table and make a deal that is good for the people of north korea and the people of the world.

i do see certain movement, yes. let's see what happens. that was president trump changing his tone on north korea. moving more towards rex tillerson. kevin cirilli has more on the president's agenda over there in asia. what is he doing, what is he trying to accomplish, kevin? kevin: first stop, japan, after that, china. in north korea is clearly what's on everyone's mind for this trip in particular. in japan he met with the victims and family members of folks that had been abducted by kim jong-un. this comes as he was trying to get china and russia to the table to pressure north korea economically. they want to try to limit his ability to keep testing these missiles. that said, the backdrop to any

talks with russia will be a robert mueller investigation that is heard much ongoing here in washington. so, that poses some geopolitical risk for the president on this trip. if that weren't enough, there's this little thing called tax reform right now. when do you think we will have the bill that will be voted on tothe house? they plan market up in the committee been out on the floor. and when will we have the senate version? i'm told that will be thursday. we had the one-day delay last week, but i can tell you that your cone will be on capitol back --gary: we'll be gary cohn will be back on capitol hill today. joe manchin, the centrist them a craft lock in a tough 2008 midterm reelection fight, he is one of the democrats that

organized this meeting. the divide amongst republicans in the senate, as well as the house, is forcing the white house to try to look for different avenues to get both. if they are able to convince someone like heidi heitkamp or joe manchin that this will be good for them in states where president trump does have strong support, you could see some more pressure on them, which will be interesting to watch. kevin, thanks for reporting with us throughout the program. still with us in new york, tony dwyer. as you described yourself, you ull.a permab the potential in washington, does that make you more of one question mark is it irrelevant? tony: the only thing that is left is the corporate tax rate. did a study for us that found that operating would be up 10.5% if you get a

20% corporate tax rate next year , by company. it was a terrific study that's real. that's the only thing that trump has said is an absolute, he won't change the 20%. i think that the president's comment means that's what i'm focused on, but i don't need it. it's not in my numbers. you don't need it, but what if you get it? tony: i will go over a 20 multiple on the next earnings but i think that's too conservative. so many of us are focused on a p/e. the market is overbought. the peak of a cycle only comes with a recession. the only thing that rings on a inversion ofthe the yield curve shutting down credit. on average the market takes 7.2 months prior to a recession. you aren't going to invert the curve until the third quarter of next year. your main inversion is 13 months

and you've got a couple of years left. it's going to be more volatile, i can promise you that, but it will be upside with volatility. ,onathan: you are a permabull but what's going on? tony: and i suppose to raise it that i'ms just so right? that's a strategy stupid thing to do. i've been focusing on the s&p 2800 because none of the institutions that we service actually think that i'm any good .t that short-term stuff so, i'm not focused on the next month. i'm focused really on the next six to 12 for our client base and i think you can have meaningful upside from there. could the market pullback? totally, but you could have made that call six months ago and i choice -- i chose to avoid it. jonathan: at the start of the year, a lot of people talked about the repatriation holiday that these companies might get. looks like they will be forced to bring this money home, they will be charged 12% and what can

they do with the money then? no companies will be paying 12% to bring her money back home. they have been preparing for this for a couple of years. odds are that cash under one your paper has only been moved into extended duration. it may sound great for soundbites in the various -- when the congressman and the senators talk on tv, but it's really unlikely that a company will be paying 12% on that. jonathan: great to have you with us, tony. program, we the talk about the company that maybe i don't want to talk about . valiant shares, up in the premarket by 15%. the drugmaker, reporting better results as they recover from years of turmoil. i remember when it was over $200. now it's $13.86. jonathan: those were good times.

[laughter] alix: one hour session, man. jonathan: i bet. that's coming up next. this is bloomberg. ♪

it's a tough day for bill ackman, failing at his bid for board seats at adp. may lessy his proxy than 20% of all the votes for the board. to add insult to injury, take a look at valeant, up 16%. surging after it maintained its profit forecast and modest sales growth for the year. joining us for more, cynthia, who covers the pharmaceutical industry. i feel like i've had a break. company? we in the cynthia: this is an interesting

point in the story, they are really trying to prove the turnaround because there is no more bad news here. they were able to reiterate earnings guidance on the bottom sold some units, so that wasn't necessarily a terrible move from an investor perspective. i think they are trying to show that they can grow the base business. they are trying to be an ordinary drug company and they still have a way to go. there are still some investigations and lawsuits to get through but they are trying to get down to basic business. with no guidance for 2018? not yet, but that's normal. it could come from volume or potentially even raising prices on the lower end, which is controversial for valeant, because they got in trouble for really large price hikes. is standard form of behavior

small price increases as they go so they want to get back to that. fair point. where are we in earnings season? we haven't seen the nice rewarded much. that's a great point, but when you take the insurance industry out of the financials because of the hurricane impact, you have close to double-digit earnings impact for the quarter. as we look at the market getting ahead of itself, associated with good fundamentals, there's double-digit earnings growth for the last few quarters. that's going to really, that should be a good, solid underpinning for stocks. when you put all of what we do a aside, other is is the direction of earnings, so you have to have a negative direction to justify taking a really defensive position. looking at the revenue beats, they are not nearly as

interesting as the earnings beats. how concerned should we be? right, butre statistically there better this quarter than they have been in last quarter's. on a percentage basis you are above what normally happens. this is again according to thomson reuters. david: never heard of them. [laughter] jonathan: never heard of it, either. tony: do it on the bloomberg terminal. alix: there it is. [laughter] the earnings are pretty solid, even on the revenue side. if you take out the insurance an increase on the top line, that's not a 2% recovery and the problem we have had in looking at earnings, i don't understand why next year people have not upped their numbers. you just don't have the same headwinds that have created a 2.5% gdp growth in the u.s.. jonathan: on the top line, name

a sector where one of these companies has pricing power right now. don't know if it's pricing power, but when you flatten the yield curve you accelerate credit. most people don't realize that. the financial should do well until you invert the curve as well. david: and tech, if you look at the apple x. tony: kevin: how could i leave that out -- tony: how could i leave that out? [laughter] that europe isng really slowing down or the chinese debt is really a problem. it is a problem, but not right now. just to be clear, because my , they know that this is going to end badly. you cannot fix debt with debt. when it slows down and shuts down, the shadow banking system will shut down and it will

really create a problem. we are a couple of years from that. it's an great to have the program. and to cynthia, thank you so much for joining us as well. coming up next, the opening bell right here in new york city. the stage is set. another record high at the close of the s&p. futures are treading water over in london, a record high this week and then we are softer in today's session by one third of 1%. big lift after the political upheaval in the middle east. we will trace them again, down by 1%. from new york, this is bloomberg. ♪

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see how much you can save. choose by the gig or unlimited. xfinity mobile. a new kind of network designed to save you money. call, visit or go to xfinitymobile.com. 20 secondsonathan: away from -- jonathan: 20 seconds away from the opening bell. coming off the back of another all-time high at the close with

futures unchanged and the dow, slightly positive by 16 points. call it 1/10 of 1%. yesterday, we gave some of that up and in today's session you see the dollar reemerge.tarting to the dollar index, reclaiming oft 95 handle, up one third 1%, stronger against most of the team in the session so far. in the bond market in the united states, remarkable stability in the face of a ton of supply. year, new on the 10 york city this tuesday, let's get you to the cash open with alix steel. alix: the s&p is pretty much flattened. the nasdaq is marginally flattened. we saw a weaker opening yesterday and yet we still closed at a record high. energy stocks yesterday had the best day since june. ?hat kind of upside will we see

will anything disrupt the winning streak we have seen out of these indexes? individual up,s reporting out, valeant the quarter was less bad than expected. that's all you need to know there. boombudget, the hurricane becomes a bust. they didn't get the expected price increases for rentals and they did get more costs to repair their fleets. that was a negative. skyward solution is down by 4%. and they didn't raise their guidance. the question is, what does it mean for apple for the great iphone 8 and iphone x sales? that's a question we will be examining for the next couple of months as well. fox, disney, i don't know, the with is heating up broadcom and telecom, so i wanted to take a look at what

was going on with m&a. so far we are at 38 in the third quarter. you saw a decent climb over the last few years, both a little bit lower. media not as strong this year and the question is do we wind up seeing more? the high equity prices, what do they mean for that? do we see even higher record highs on the s&p, the dow and the nasdaq? there is more hitting going on. jonathan: let's bring in paul .weeney paul, deals after deals after deals. and then something we didn't even know was in the cards and probably isn't anymore. disney talking to 21st century fox? what's going on? big companies looking around saying that our business is and is good as it used to be,

facing cord cutting and disruptions like net x and a lot of the media companies are starting to say let's take a look at our portfolio in do we have the right assets to compete going forward? need to get bigger or tear down the non-growth assets? you are seeing that here. you saw it earlier in the year when discovery acquired scripps. but we are seeing to very different approaches. disney saying bigger, 20 century fox saying let's get smaller. jonathan: that was surprising, we have never stash paul: that was surprising, the murdoch family have never sold anything , them potentially breaking it up would be very surprising. what would be less would be the broadcasting or news operation looking more like cbs looks today. that was done great well and i think that people feel generally pretty good about the over the air broadcast business the people thought was dead, as cbs has shown it is still very much

alive. in the semi conductor space, it's been a massive story. deals on top of deals on top of deals. getting biggert that's so important to these companies right now? paul: it's a way to find growth. this is a function of money moving into the credit markets from pension plans, where if you look at the last year or two years, most of the money is moving into credit. you can see it going into credit and m&a funds. all of the different kinds of vehicles where you can get that are than market returns. private equity has been so important to the whole m&a business that it's migrating to the whole market. how could this be a plot to make more money from disney? it could be bigger, but that's not the same as making more money. adding help their

situation? paul: i think they getting bigger, having more scale in the business, helps with your negotiations with your distributors, but i think what is really getting them would be,y interested first, the studio, the studio that reduces a lot of those films and videos, along with disney content, could be used to fuel what would be the direct sumer offering for disney content. more content is better in that case. they are also looking to beef up international exposure. they are probably underrepresented. fox has a lot of very attractive international assets. david: media is going through a lot of disruption because of digital. paul: everyone is. david: everyone is. but to companies do better by

getting bigger to deal with media disruption? it's one of those times where you could ask tony: -- it's one of those -- tony: it's one of those times where you could ask us and we could give you an answer, but as paul has pointed out, there are two very different cultures between fox and disney. it will be on the management side, whether they can integrate. we don't want to get ahead of ourselves, bob iger, his track record for big decisions has been pretty good. >> particularly on the film studio side. those acquisitions of exar, lucasfilm, marvel, have been -- pixar, lucasfilm, marvel, have for disney.ns most investors are questioning whether the murdoch's are really

ready to sell. looks like he has handed over the company to his two sons and are they ready to sell? it just doesn't make sense. many are skeptical. >> with the economy the way that it is, globally, the rising tide lifts all boats. when you go into a recession, let's see how some of these bigger companies do and how well the management has integrated. guys, great to have you with us around the table. m&a is still a big, big thing. alix: a huge thing. if you want to play with etf's, we can help you do that. i'm an investor and i want to play in the market, what do i do? icyhe positive one is the ticker m&a. alix: right.

[laughter] >> this is basically a watered-down version of true m&a . it goes long on the target company and shorts in this case the whole market. premium that exists that the deal might fall through. by doing that you are collecting a little bit of return with a low volatility stream. the difference for the m&a take partially hedges. it would short the acquiring company and they would basically have net zero long position. areas,t of etf quantitative, they take it true strategy and add some more beta into it. something more correlated to the market. but advisers especially like that. , it not true, but beta tries to harvest the returns from the deals.

alix: the equity tends to go up, as well as the target, disney hitting a two-month high, for example. has that changed the returns for the etf's? that going eric: -- -- eric: going up, they would feel it a little bit, but this one tries to do the exact same thing . i think they would tell you that it's just not the strategy, doing it the way that everyone has done it for years, capturing a target company over that time. alix: are there any other strategies? eric: go for the equal weighted etf. xpi is a great example. yourself, give to targets.

they did that after the fact, but by doing this, they have outperformed the ibb by a significant margin. etf soundsnting gimmicky. it a huge lift. somatic and weight. we know how much the pops happen. john? jonathan: moore intraday record highs in the market in the united states. another record on the s&p 500. the coverage continues right here, on bloomberg.

>> this is "bloomberg daybreak." coming up tomorrow, we will be joined exclusively by the citigroup ceo, michael cormack. this is bloomberg. ♪ alix: the banking industry kicks off its conference today. dozens of financial and i doubt it leaders are attending the clearance held conference. this we the first time that we hear publicly from randy coral.

tony, take a look at the , 20% in like two months. what a that is baked into deregulation? >> some of it is baked in and unlike taxes, you won't have a possible failure. we are rolling back regulation and it has that theme of the trump administration. there has been a tremendous rollback of regulation, i think, and the new fed is going to do that, clearly. i think that rolling back some of the volcker rule would be helpful, just something that the banks cannot trade for their own account. it's clear that they're not going to roll back all of it but if you do there is some can of liquidity squeeze that has come from a lack of banks participating in the markets, other than for customers.

when will we be seeing it showing up in banking is in this? will they be able to lend more? for example, if you lose in the capital restrictions, they will lend more and have more capital available for lending. it's the shadow banking because the regulatory environment for the banking industry was so onerous coming out of the crisis that it shifted some of the lending to non-bank lending. can regulatef they the non-bank lenders and are trying to loosen the regulation to be able to increase what they regulate in terms of lending. david: we don't see the ceo saying that what keeps us from lending is regulation. there's a solid chunk of

competition out there categorized as shadow banking and is making up such a big part of lending. mortgage lending, something like 50% of it is not done at the traditional bank level. quicken loans, rocket mortgages, things like that, they have taken the market share from the regulatory environment that was so difficult to them that they wanted out. one of them is going into the leverage loan business. they are not worried about -- this whole story of this cycle, since trump got elected, has been about the animal spirits being alive. not because i don't believe that donald trump is seen as a great savior of the markets, but because you know your regulation isn't going to get worse and you know your taxes are going to get worse.

jonathan: democrats out, republicans in. tony: you know it's not going to be a nancy pelosi get business, get the bad guys. it's a more business friendly environment and the new fed going to probably continue that, but again, i don't think that is something that you bet on. we can talk about it on set but i don't talk to fund managers who say -- i know he's going to do this, so i will buy this stock. alix: fair point. take us behind what's realistic in terms of deregulation that we can see? >> no new rules is a key point. and the big question is what, what first. he has talked about the stress test with more chance to their.

that is something that investors have asked for. it's something that they are set to tackle. a lot of the thought has been that most of the benefit if you will will go to midsized banks but for the larger, could there be potential less regulation in terms of the leverage ratio? that's another thing we want to hear more about in terms of the stress test. obviously, coming back to the proprietary trading the way that it was. tony: the interesting point in the howell resume is that he wasn't a trained economist. is that a bad thing? someone

involved in markets but on the board of the fed? all of the new appointments made following the trend of following the people in the government but understand the markets of it. jonathan: i think the point is that it's not a bad thing now, but it might the in the next downturn. you -- i tell you what, ben bernanke new a lot about it, by renamed him submarine. markets werethe screaming at him to ease more aggressively. everyone was screaming at him to do that, he didn't and he knew all there was to know about it. so much, guys. coming up, a look at what's next for the house tax plan as a gets marked up over the next 72 hours . and if you have a bloomberg terminal you can check out tv , watch us online, click on

our charts and graphics. just had to tv on your terminal. this is bloomberg. ♪

this is bloomberg. house, marking up its tax plan as we speak. the senate is set to release its own plan maybe this week, perhaps. , ourme back, michael mckee international economics and policy correspondent. what are the issues in the prospects? michael: on the house side they are numerous and they work their way through them yesterday. they carried interest provisions to live up to the politics of this, with donald trump saying they should do that. tax onot the excise money that they bring from their offshore affiliates into their

own companies. there's a bit of a worldwide minimum tax that deals with intellectual property. that's a big issue. the net interest questions are a big question. as well as dealing with the whole idea of paying for it. that's a problem for the senate. the senate releasing a bill this week that will look nothing like the house will. they may not even get to 20%. the bottom line, to make a long story short, both chambers want to pass a bill that will be different in conference committee and they try to work it out. us --re there in 86, take david: you were there in 86, take us into what the process looks like. cbo says theyel: my feeble to score it this week, but it's a moving target. it will be difficult for them. they will likely allow amendments on the floor. the joint committee on taxation

is the official referee and have already scored the house bill as presented as a $1.5 trillion contribution to the deficit, which means it can go through the senate must they find in of -- find enough offsets. what is your trending guide? people will be sitting around the staple and saying -- this does not get done, the market sales off. are you telling people to ignore the advice? i am. yieldyou get an inverse curve in shutting down credit, you never, ever, ever want to get defensive. just 30 basis points right now in the treasury market. tony: and again, in version is lower. what's interesting, jonathan, is the two best sectors in the last leveraged cycles have outperformed as the curve was

flattening as it is now. financials and infotech. i don't think it's any different this time and it's possible we have a selloff. 2% selloff at this point would be a standard deviation event. 12 would be like and armageddon selloff. however, that should prove to be temporary. think of our careers. what non-recession pullback wasn't to be bought? even the crash of 87 wasn't the peak for the cycle. it was fun credit shutdown and ual didn't get the financing. jonathan: japan is still waiting. we are obviously not japan, we would have been in trouble in 2011. think of the headwinds in the cycle that you could think. you have had a european debt crisis every year with a chinese real estate crisis and currency crisis, ammodity fiscal cliff, no affordable care act.

everything. what's mattered? saudi arabia, about to go to war with yemen. back-and-forth. the s&p is up four points. it's been great to catch up with you for the last hour, tony dwyer. mckee, thank you very much. tomorrow, don't miss this, a new weekly show, the bloomberg etf iq. , 12:30g wednesday eastern time, 5:30 in london. the first show solely focusing on etf's, industry data and analysis. that does it for us here on "bloomberg daybreak." for our audience worldwide, this is bloomberg tv. ♪

vonnie: it is 10:00 a.m. in new york, 3:00 p.m. in london. from new york, i am vonnie quinn. mark: live from london, i am mark barton. welcome to "bloomberg markets."

♪ vonnie: here are the top stories we are the top stories we're covering from the bloomberg and therld the world -- around world. tax a form in the spotlight. the house ways and means committee continues to markup a tax to uphold the nation's laws. and signs of dissent at the european central bank. why some policymakers are challenging the ecb's qe pledge. bidbill ackman fails in his to win chairman at adp. what does today's decision mean for the company and for ackman? we are