shuts down the broadcom qualcomm deal. hits a record high. inflation tightrope, core inflation jumps in january. the u.s. breakeven sits at 6%. david: welcome to "bloomberg daybreak." i am david westin alongside alix steel, waiting for inflation. alix: women's apparel prices jumped the most on record, a huge mover in january. thank you to my mother. does that mean we will see a huge give back? that is what markets have been waiting for. here is how the markets stack up in the u.s. it feels like it is a little bit of a risk supported world. s&p futures up 6 points. it is a mixed session emerging.

treasury market yields moving higher one basis point. we had that option yesterday. yields have to jump for it. 0.4% despite the fact upgraded their forecast once again. david: time now for the morning brief. we will get the latest inflation read at 8:30. at 1:00, the u.s. treasury department will continue their auctions. afternoon, president trump will take a trip to san diego to take a look at those border wall prototypes. in pennsylvania, voters head to the polls for a special election. dealr one, that broadcom

stopped in its tracks by president trump. goldman sachs has named a successor for lloyd blankfein. in thethree, succession spotlight. alix: joining us now is michael mckee and luke kawa. look at the stock of intel, broadcom, qualcomm, except for qualcomm, they are all higher. it was good to be about rollback and regulation. everything was going to be easier for businesses. now we see the fact that for m&a, it is not the case. >> it is about balancing trumponomics. it seems to be if you want to find a way for this deal and the tariffs and this merger dovetail, it would be protecting american know-how and production. if we want to make this

coherence, is all falls under the priority of protecting american production even over the regulation and making things easier for business. david: you have to feel a little sorry for the ceo of broadcom. in february, he said i am going to move my headquarters. by the way, a 40 year tax plan, and now look what happened. tohe is not the first person think he was the darling of the president and have that changed. u.s. to china is closing. the trump administration does not like what china has been doing, particularly in technology. shooting the first shot across the bow.

the committee on foreign investment in the u.s., china's letter was the letter the president used to block this deal. into the u.s.come it will be much easier to block things on national security grounds. it will be hard for the chinese to get into the u.s., and probably trouble for u.s. firms on the other side of the pacific. alix: if you want to take a look at trade war's and escalate that rhetoric, yesterday, i heard the optimism over north korea is the risk of trade wars in the market. about right tods me. it is not like we got a crazy relief rally, but this kind of damper on one

specific avenue, u.s. to china on tech. if you consider how mergers are built, the chinese connection is actually indirect and ancillary to the broadcom, qualcomm tie-up. it goes to show the depth of this issue that even if there is not a direct relation, here is where we are going to draw a the president may move to block other deals. david: there is certainly no damper on goldman sachs' stock today. we know the heir apparent to lloyd blankfein, david solomon. moved very favorably on the news. lloyd blankfein said he is not leaving it. how long can you have this

interregnum where you have the king and the heir apparent? michael: that is the question. lloyd blankfein not giving a specific answer. he has to be leaving. there is so much focus on david solomon. david solomon is an investment banker. lloyd blankfein is a traitor. tra -- trader. trading has not worked so well for goldman sachs group what would david do? be? would his strategy they have to clarify this by having one strategy. david: does this indicate where much of wall street is putting their bets these days? luke: exactly. just as we're talking about a canceled merger, the goldman sachs rally yesterday was not out a teapot dictator going and seeing their currency rally. this seems to be more about we

have the tax reform, tax cut, and a lot of that is going to go to an m&a boom. i think wall street is getting geared up for that. goldman sachs will be part of that. couple years ago, goldman sachs was upgraded, a bullish call on their trading. they are like a bumblebee, so heavy, we don't understand the physics of how it flies, yet it flies. for m&a as long as you are not inbound china on the u.s. tech area. come inside the bloomberg terminal. growth.ppi lagged to chiller number in january. michael: we expect inflation to rise.

did someone mention women's apparel? women's apparel actually went down in november and december. there was a step back. you can see it is a lag onth, april,xt m we will see the cell phone problems, the airfare problems, things janet yellen said are temporary, finally, we will see a rise in march, not in february. if we are able to take a dive inside the terminal. we have two charts showing small business prices, the percent of small business owners who say they have raised their prices.

that is the white line. months, thethree blue line, shares that say they will raise prices, advised level since 2008. -- highest level since 2008. there is this argument going on between the people who look at ata very granular late, and then there are people who look at the macro picture, tight labor markets, small businesses saying they will raise prices, manufacturers saying they will raise prices, and fiscal stimulus. reconciling those stories over the next year is the line. michael: 90% of those small businesses trying to hire people cannot find them. they have to raise prices.

what is the largest cost to a small business? labor. david: thank you very much to michael mckee and luke kawa. coming up, more on the broadcom and qualcomm deal. shares are down in the premarket. that is coming up next. this is bloomberg. ♪

david: the trump administration yesterday blocked broadcom's bid for qualcomm, saying that it threatened the national security of the u.s. trying to understand this, we welcome ed hammond, our bloomberg deals reporter and a reporter that covers the treasury department. inboundction shows

investment from china into the u.s. since 2008. it goes to show how much dealmaking there has been. orange is cash. basically, it is all cash coming in. how much of this is really an attempt to curtail chinese investment in the u.s.? if it isn't an attempt to do that, it is unclear why they are doing it. qualcomm is not a chinese company. it is a taiwanese company. this notion of broadcom as a chinese company is farcical. they are clearly not. if anything, it sounds like qualcomm potentially has more business in china than broadcom. hasthe trump administration focused on the grounds that it gives china a toehold in the u.s. is unclear. david: the reporting has said

that the trump administration has it on their agenda to impose a reciprocal rule between china and the u.s., saying they are not there are not to let us invest in their country the way they invest in our country. >> i think that is right. the government is clear they want the u.s. to be a world leader in 5g. that has been on the agenda for some time. they want to protect the u.s.'s position there. there was a concern that putting qualcomm and brought them together would limit that. they see broadcom as potentially cost cutting. this is so un-american. this is something you would see in china, but we are seeing it here under trump, who was supposed to be so pro-business.

his first year, he blocked at&t, and now it looks like he is blocking broadcom. alix: it is all about patents. basically, the patent corporation treaty is backward looking, but it tells an interesting story. the u.s. has more patents, but in terms of companies, wawe have the most patents overall. is this really what happened? is this what it is about? >> bloomberg has been running about this for more than a year. we think the trump administration is going to use this as a tool to halt chinese investment in the u.s.. that is what we're seeing now. the trump administration wants a lot from china. they want their help on north korea, more market reforms, and reciprocal trade.

see that this will be used as a lever for donald trump get a win on those things, but everyone needs to realize we should not be surprised of some retaliation from china, whether it is subtle or explicit. they will do something in response. david: we are going to put up a chart of some of the big deals they have stopped. the trump administration has stopped a lot of deals, deals a lot of us did not even know about before they came in. >> they are clearly sending a signal with this between the letter and press release about this deal specifically. they know this is a very early move. either there was a very clear national security concern that they are not sharing for their own reasons, or we are in negotiations for tariff carveouts and china market

reforms, so this is just one way to throw down donald trump's power. alix: what does intel do now? where does this leave the company's in this sector that needs to consolidate? >> i think intel does nothing. lastly, it looks like potentially they would wait into this. i don't know how they could do that with so much boring antitrust risk. i think if broadcom and qualcomm merging would have traded a problem for intel, they can now worry slightly less. david: qualcomm has its own challenges. litigation pending, this strained relationship with apple. >> the voting we saw when they were giving the opportunity, they were voting all six of the

qualcomm members who could lose their seats off the board. this will be a difficult one for qualcomm shareholders. they called the government, asked for this, and now the deal is blocked. they are stuck with them like it or not. -- callis could cause into question mark bell. they are based in bermuda. will this cause questions for the administration? will make it harder for companies to know what to expect. businesses obviously want predictability. the trump administration does not offer a lot of that. this is another wrinkle in the predictability they were used to. lobbyists will be heading to the d.c. even more- than before. i think everybody now has the message. alix: david called it on the

election, i am long lawyers. david: it is not a courageous call. alix: but a good one. thank you very much. coming up, solid treasury offerings on the threes and tens, but the government did have to pay for. what it means for cpi. this is bloomberg. ♪

alix: we are about an hour away from the latest read on inflation. investors looking to cpi for close to the fed's rate hikes this year. core cpi lacked by 18 months. they have tracked each other. bnp paribas i is head for strategy on g10 rates. >> there is some risk.

we are the highest since october 2009. there is the likelihood we will get a little pullback. we are waiting a little for march and later in the year for real upsides to inflation. of lackedthe chart inflation against growth. there are many reasons. currency is increasingly important, 10% depreciation last year and continued depreciation so far this year. broader commodity and energy prices alix: as well. alix: that raises the question, what is finally baked into the market? treasuries still cannot beat that 2.95%. yields at-year real

1%, it leaves breakevens below 2.15%, which is below the implied target of the federal -- on core pce. that leaves you with a fair breakeven, a balance outlook. we are still below that. david: if the market is underpricing inflation, where will inflation come from? is it a matter of the government borrowing more money and pumping it into the economy, labor tightness, what is driving it? >> there are many reasons to expect higher inflation. weakness, that's will take headline and core rates systematically higher. seasonals are typically supported in the first start of the year in terms of price increases as well as weakness in the dollar.

5% depreciation this year against the renminbi. they had done in deflation for a long time. they are coming out of that. we think that will accelerate. for the first half, technical reasons in fx, and beyond that more structural reasons. alix: that leads me to the option today at 1:00. this is the moving average versus percentage of indirect bidders. it is basically foreign demand holding steady at 56%. much is the how treasury going to have to keep paying up in these auc tions? >> i think we can expect tails aslarger

we see the lack of supply and this slow indirect unwind of the balance sheet. i think a little more of a tail. despite higher yields, this government is managing to get away its debt at good levels, completely well covered without any negative stories. we don't really see that changing. the pricing level, the yield changes a little higher, and we think we are in a trend of higher yields anyway. global qe continues and questions about longer-term growth, not all good news, but we think demand for treasuries remains strong at the long end of the curve where we think there is a structural demand from pension funds and insurers, which remains on field. scarlet: david: -- david: how much is it the treasuries borrowing more on the short end? >> that is a good point.

the supply point echoes this and 30ss the 10s and flattening. alix: no recession? >> no recession. the yield curve doesn't always forecast the economy. if we look back to the u.k., they were at 150 basis points on tens and 30's. it matters on shorter issuance. alix: the cross you are watching? >> dollar-yen. alix: thank you very much. coming up, david solomon's challenge at goldman sachs. this is bloomberg. ♪ mom you called?

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it's a drone! i know. find your phone easily with the xfinity voice remote. one more way comcast is working to fit into your life, not the other way around. alix: this is "bloomberg daybreak." risk appetite holding somewhat steady. s&p futures are up by six. the ftse is flat.

we have the statement from phil hammond coming in about an hour. we could see the least amount of borrowing in the gilt market just about a decade. you can see how we are prepped on the fixed income market. yields going nowhere. the curve steepening kind of. dollar going nowhere. we are waiting until we get that cpi number. david: you just told me it was spring. that is it news. alix: it is like a days away. it is so close. with: let's turn to kaylee first word news. >> moscow denies it is behind the poisoning of the x russian spy in the u.k. -- e x-russian spy in the u.k. theresa may said the act was a

against the u.k. by russia or russia has lost control of a deadly nerve agent. republicans in the house said they found no evidence of collusion between the trump campaign and russia in the 2016 election. democrats are opposed and will release their own report. according to people familiar with the matter, the present may name the cnbc personality to have the white house economic council within a day or so. he was an economist at bear stearns and served within the reagan administration. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am kaylee line. this is bloomberg. alix: dick's sporting goods out with earnings now missing the top and bottom line. that shares coming in light. ales coming in light.

worst then estimated. david: this was before they came out with their decision to cut back on air 15. it was reported that when they did that, their sales went up. fore this is a good news them. david: gun stocks in general were not performing terribly well with the trump administration. is it because investments were not panning out? why rush to buy a gun? solomon will become sole ceo of goldman sachs when lloyd blankfein leaves the firm. record on an all-time

the news. we welcome joel webber, editor of bloomberg businessweek and max abelson. let's start with joe. what does this tell us about what happened behind the scenes? what caused this? >> wall street is always exciting. meta is a metaboli -- moment. this is 10 years after bear stearns. this is a wall street success story. we have seen firm after firm announced succession, and now we are seeing a transition to goldman, the ivory tower of wall street. >> what i will add. alix: sell yourself, dude. >> i am very important. lloyd blankfein, probably the most important chief executive

on wall street and in corporate america. longestest-paid and serving. goldman sachs has not been killing it in the last couple years the way it did before the financial crisis. you tend to think of goldman sachs as this trading powerhouse. it has not done that well. david solomon in a way represents investment banking, and it is not hard to see why they went with him over a guy associated with not the greatest era in trading. alix: we can take a look at the stock prices versus fic revenue. on the one hand, lloyd blankfein was standing behind the trading business, saying it was --harvey not announced their five-year plan. >> those are all great points.

note for sadder harvey, first quarter trading is not going to be that bad. >> april 20 will be his last day, right after they announce q1. q1 could be very strong for them. story,e is also a bigger if you look at the financial crisis, a lot of wall street firms changed who they were in ways that mattered. was one that decided to be the risk on powerhouse. that has not been the wisest strategy in the last couple years. wall street still takes risks. in a year from now, we could be talking about goldman taking all sorts of risks, but where it

stands him it was not the best strategy. >> it looks like a bad on the future. -- bet on the future. it will be more finance, less trading. alix: can we look between the lines and say goldman sachs wanted david solomon? >> it will play out in the years ahead. it is not like it is one or the other. it is going to be both. as you look ahead in this business, it looks like something they will prioritize. david: let me know about the reaction within goldman sachs. it is a large institution of people. you have to rally the troops. >> this started on friday with the wall street journal report that it would be one of these two guys. it quickly turned out to be one and not the other. there was the mark twain reference from lloyd blankfein, saying this was not my announcement. he was not denying it.

he said it was like watching your own funeral. sources at goldman sachs who are better read were arguing with me whether it was often or tom sawyer who watches his funeral. i think it was both of them actually. this was not like a smooth handing of power from one person to another. there is precedent for a game of thrones blood on the floor succession. fighter, there was that one level below. it seemed like one of them was going to leave, but it was lloyd blankfein. >> the result being uncertainty. if you are going to rally troops, remove uncertainty. david: you can plan this is you want, and nine times out of 10, it goes sideways on you. someone leaves something. was at the right decision? >> it is up to the board.

from a troops standpoint, this is a guy that has doubled down on diversity. he has really tried to get more women in the pipeline. david: thank you so much to max abelson and joe weber. coming up, gary cohn's successor, donald trump's next top economic advisor. we cover that and more. as you commute today, listen to the radio if you on. on bloomberge radio, in new york, washington, the bay area, and sirius xm. this is bloomberg. ♪

>> this is "bloomberg daybreak." i am kaylee in the hewlett-packard greenroom. coming up matthias mueller, ceo.wagen in airbnb program for cars. the pilot program will allow owners to rent out their vehicles when they are not using them, and share the revenue with the automaker. million in his$8 final months of running general loses well ge was set to $45 billion on the year.

the company sent a letter about its commitment to firearm safety and called gun violence a law enforcement issue. making not plan to stop rifles that fire; medically, like the one used in the florida school shooting. david: we are turning to wall street. gary.up, when larry met that was not my idea. gary cohn exiting the white house, donald trump is expected to favor kerry goodloe. ai posted its worst month on record. be destressed.ay killing it. great stories.

what everybody is top-notch is harvey schwartz leaving and david solomon eating the heir apparent. >> it was amazing to watch this play out yesterday. every story, declined and client. climbed and it climbed. even includes a story we wrote last year about david solomon's favorite restaurant in new york city. david: we try to organize this announcement, and it blows up on you. [crosstalk] >> i will say, i was listening to the previous segment, and after the tweet on friday. it was both tom sawyer and huck finn, but it was in the

adventures of tom sawyer where it happened. i was an english major, ok. david: totally out of control. let's get back to washington. tory kudlow is expected succeed gary cohn. >> this feels like a trump casting call. when you look at the way he has put this administration together . you have larry kudlow, who is by all accounts an informal advisor. he works at cnbc, obviously a competitor of bloomberg television. we will see how this works out. other names are in the mix, peter navarro, mick mulvaney. he will know how to handle this television appearances when the jobs numbers come out. artificial intelligence is not all that smart apparently. whenmans were celebrating

they read this story yesterday. robot takeover stalls. really interesting, basically what it shows is that this ai index lost 7.3% last versus a 2.4% decline for the broader hedge fund world. is a passive v ersus active world. you want an active manager because we have volatility. ai is looking backwards. it will struggle with something that is new. no betais no hedge, when it comes to the vix. even humans are struggling. >> this has been a market that has obviously been very hard to

predict the ebbs and flows. this is obviously just a snapshot. there were likely some ai-driven funds that did well. engineers sure the will say it gets better over time. ai gets smarter over time, we don't. alix: i do. david: i don't. alix: consumer discretionary companies are the biggest bet of clo. i was shocked when i heard that. >> we have been talking a lot about this in the newsroom, think about 10 years ago with the stress from the financial crisis and the lbo boom was coming into play. you are seeing record numbers. the number that jumped out at me imes record ratio of 5.1 t

to debt. david: it is going up. if anything, in part because of deregulation, there is encouragement of more and more regulation. were somewhat insulated during the crisis. what kind of tranches do they have? >> i am never too far away from talking about private equity. this is the case were a lot of this debt is being made available to private equity. retail is an aggressive bet right now. the amazon effect that shows up everywhere has been hitting retail for a long time. you have some private equity names continue to go in human though there are cautionary tales everywhere. david: it shows there is nothing

new under the sun. that is the toys "r" us story. now they are putting the. -- liquidating. >> on that happy note. alix: you made it worse, david. david: you can never have enough of jason kelly. the crucial elections in pennsylvania, where president trump won in 2016, the upcoming midterms. alix: if you have a bloomberg terminal, check out tv . watch us online, click on our charts and graphics. this is bloomberg. ♪

david: here is what i'm watching, pennsylvania's 18th district. six months ago, i did not know where that was.

now it is a big race between rick saccone and conor lamb. in 2016, donald trump swept this district by 20 points, reading hillary clinton. this time, this is an average of the polls from 538, rick saccone is down by 2%. conor lamb is up. those numbers are wrong. %onor lamb is up by 2 according to the average. >> people familiar with this district, it is going to disappear into weeks. david: the fact it is a close race is definitely news. >> i would caution making too big of a leap to the 2018 midterms. local elections are local. it is all about identifying your supporters and getting it out to vote. there does seem to be enthusiastic backing for lamb

and not so much for what everybody describes as a poor campaign organization for rick saccone. david: if you are looking for the antithesis of cono elizabeth warren, you are looking at conor lamb. conservative, a marine veteran. >> the democrats are putting up very interesting candidates in these local elections. that is their strategy in 2018, to put up a lot of the people against what would normally be republican strongholds. people will look at this as some kind of litmus test, but it really boils down to how good the candidates are and how good they are at getting out the votes. alix: the litmus test was all about democratic turnout. is that what we are reading into? there is no gop switching?

>> it is all about turnout. this notion of donald trump going out there, there is no evidence that donald trump is able to influence how people vote in local elections. it did not happen in alabama. it is not likely to happen here. it still may be a republican victory tonight by a narrow margin, which would give the narrative to the democrats that they did better than expected, but i think they will be bitterly disappointed if they don't win. david: it is extraordinary what is happening here. i think neither of these people live in the district they will be elected from after the redistricting. >> donald trump has railed against this redistricting plan that the courts have imposed, which clearly favors the democrats. this district may disappear and become much more democratic in nature, but the fact is there are more registered democrats in this district than republicans anyway. there is an embedded advantage

him even though not only donald trump took that counted by 20 points, so did mitt romney. alix: is there anything else before the midterms we need to watch for? >> there is a primary in illinois. that is next week, which is interesting. it is a traditional democrat who is very conservative, who has a primary challenge from a much more progressive democrat. david: often in politics, you want to follow the money. conor lamb has raised a lot of money directly. republicans have had to crash in with national money. >> 4:1 advantage on spending for lamb. if republicans pulled this out, it will be extraordinarily expensive for what was a safe district. alix: when will markets pay attention? >> i don't think they will pay attention to this race. they are looking at broadcom and

tariffs. those are real policy decisions that donald trump is making good david: if the house floods, will markets react to that? >> i think they probably will. we all know that a possible impeachment of donald trump based on whatever bob mueller finds would have a very favorable view from a democratic house. if the senate blitz, then it is really a market event. -- flips, then it is really a market event. alix: are you staying up late tonight or not? >> oh, yeah. for the ncaa game. alix: we are waiting for the all-important cpi numbers. dow jones futures are up by 52. s&p futures are up by six. we get philip hammond's u.k. spring statement coming out later in the hour.

the key will be what kind of supply he will be issuing into the market. beckett have a potential impact on gilt. the market is really waiting and seeing for that cpi number. yields are flat. tens modestly sieber. a little softer. not a lot of positions being taken heading into this number. what kind of giveback will we have after a strong january? will we have stabilization? coming up, focusing on cpi, and emerging markets with mark mobius, former franklin templeton chief executive.

♪ alix: not for sale. shuts downrump

broadcom's bid for qualcomm over national security reasons. they like me, they really like me. goldman sachs raises a record high after what kind of company goldman will be in five years. inflation tight rope. u.s. breakevens it's a 2%. david: welcome to "bloomberg daybreak." i'm david westin right here with alix steel waiting for sepia. alix: it feels like risk appetite remains, but we are coiled like a spring based on the number. as a p futures modestly higher. we have euro-dollar pretty much flat. oil flat. david: it's time now for the morning brief. it is cpi data. 1:00 this afternoon the u.s. treasury continues its auctions today with $13 billion and 30 year bonds. at 2:30 p.m. this afternoon and his inaugural trip in california

, president trump will be in san diego viewing border wall prototypes. voters will vote in the special election in pennsylvania's district outside of pittsburgh. kelly lines is here with first witnes word news. >> moscow denies it's behind the poisoning of that foreign minister claiming it's all nonsense and that they have to provide samples of the nerve gas. it's either direct act by russia or russia has lost control of a deadly nerve agent. republicans controlling the house intelligence committee are ending their investigation into russian meddling in the present election. democrats are post and say they will issue their own report. china has unveiled a restructuring plan that consolidates the party authority. merging calls for

several ministries and agencies and would give china central bank the power to write rules for the financial sector. dayal news 24 hours a powered by 2700 journalists and analysts in over 120 countries, i am kailey leinz. this is bloomberg. david: the trump administration blocked qualcomm's did -- broadcom's bid for qualcomm. we welcome eric gordon as he specializes in a month other things technology and m&a and kevin caring. mr. gordon i want to start with you and ask a very basic question. is this a commercial decision or a national security decision? what is the national security issue here? eric: a little of each. the national security issue is whether the coziness between broadcom and china could lead to

another technology that has the a wayled act backdoor for for chinese spies to get information. commercial side is also they big. the business side is that we are talking about the next generation of chips for our cell phones but also for our cars. the chips that will allow our cars to be self driving. david: it's interesting what you say. company thatgle will move the company back to the united states, but you think is a backdoor. is there a cozy relationship between broadcom and the chinese government? eric: the question isn't so much where the headquarters is. the real question is where is the headquarters and who is influencing it? if the big shots are in singapore or at least in the u.s. or too cozy with chinese companies, than the fact that

you nominally have your headquarters here does not mean much more than one drug companies set our headquarters is really in ireland. alix: kevin, i know your company owns qualcomm so we cannot talk about the stock specifically. semis and m&a was going to be a theme this year. do we need to think that in the market? kevin: we move from an industrial economy to an information-based one where knowledge is what it's all about. when you're talking about looking to attract capital into the united states, being able to blog deals because of concerns about losing intellectual property is a very slippery slope. there are many deals that have gone down this road because a few years ago back in 2005, we had the chinese national oil company looking to buy ginny cal. that was blocked. there were a couple of deals locked for similar issues

regarding a small semi conductor company that looked to be acquired by i believe a chinese firm. president obama blocked that on national security concerns p. if the big idea is to attract capital into the country, is potentially a slippery slope, particular since we're dealing with an information mr. economy ---based economy. david: just to come back to you for a moment, is this 5g at based? what is the fear that u.s. tell communications company will deal with foreigners to go into 5g? erik: 5g is a very big deal economically and possibly for security reasons. i think at heart the u.s. does not want our companies to have to go that china to get the chips or to have to use chinese if thes or chinese gear

center of gravity of the technology shifts from the u.s. to china. david: professor erik gordon, thanks so much. kevin will be staying with us. alix: goldman sachs shares climbing to a record after the bank announced david solomon is the heir apparent to ceo lead lik lloyd blankfein. joining us now is jenny. the conversation is are we going to see more investment driven bank versu? is it too early to make that call? jenny: the fact that solomon has pulled ahead in this horse race really does show the theme of investment banking overtaking the sales and trading side is just going to continue. yesterdayto analysts who noted that for a long time on the executive management committee and has been a largely sales and trading group. those guys had the dominant factor. banking was the second largest

group. folks we are talking to say in the next five years you might see that flip and more investment bankers running the bank and you might just see that play an important role in earnings. alix: kevin, do you like goldman sachs with? david solomon? to commentnot able on goldman sachs, but in general, the movement towards more m&a is going to be clear over the next five to 10 years. getting more of that as part of the business seems to make sense for goldman sachs and many of the other investment banks as well. david: as you look at the economy and regulatory, are the big banks in new york coming together in their strategy or divergent would you said? banks over a long time, have tended to grow together and along similar lines. , it is mostg-term

likely that you are going to see the banks come together in one way or another and grow along similar lines. that also brings a lot of competition and consolidation. the trends toward consolidation, we would expect to see those continue as businesses consolidate and you see more competition and ever increasingly intense competition, including investment banking. alix: overall though it's like no one will like anyone as much as lloyd. it's going to be hard to replace. what kind of transition can we expect and how quickly does it have to happen now that the information is out there? jenny: that's the question. there still a lot of confusion on when this all will start to take place. we know harvey leaves in april and it was a story last week that said lloyd would be out by the end of the year. that has not been signaled and

we know what himself weighed in on twitter saying i feel like i'm reading my own obituary. the folks we are talking to think he will be around till the end of the year, but i guess we will see. david: i'm sure no one at goldman sachs will love anybody as much as lloyd. tors inout the regular d.c.? they've not have the same relationship with him as other people such as brian moynihan. both harveych as and david have been around, they have not been super visible. lloyd has been so out there. it will be interesting to see how david now cozies up to both regulators and the shareholders. he is one that large institutional shareholders have not even known. david: he does have a history of 2008-2009. it could be the possibility of turning the page to start fresh. jenny: that's absolutely true. alix: look at where goldman

stock has come from one lloyd blankfein took the helm. you can see the outperformance of jpmorgan, but goldman separate performance of morgan stanley. we saw morgan stanley eating goldman sachs's lunch from an equity perspective. from a jpmorgan perspective, they do have a long way to make up. dimon has not been nice to regulators in his stock has been just fine. alix: it brings into the mix of the businesses you were talking about. i thought it was interesting that harvey schwartz was the one to announce a five-year plan. when you talk to anyone out of goldman's, the first thing out of malice is markets and retail lending. jenny: it's interesting, but i will say that david solomon has more of that financing background them harvey schwartz. if markets is in the future, he deftly has the wherewithal.

also the new cfo has got that tech background. they are totally able to leave the transition. david: we are all left to speculate because we were not in the room. one of the questions you have been asking is what happens in 15 months? one possibility is maybe lloyd really did think they could have copresidents. that has happened in the history of goldman. jenny: he did not turn it down. he's not going to say i'm squashing it right here on television, but it seemed a much more open door. david: he kept it open in your interview with him. maybe that is one thing you might learn. is it possible for these two to cohead the company? jenny: i know that what we spoke to analysts yesterday that that was one of the big risks they pointed out. they call that situation very unwieldy. not saying it will happen just like you come up and i know that is something investors are maybe a little cagey about. alix: kevin, i want to wrap it up talking about a broader bank story. not getting any help from the

yield curve and financials, but it has to come from deregulation down in d.c. we could see rollbacks of dodd-frank coming this week or next. what areas of financials has the most upside? kevin: i think that traditional lending has a good deal of upside particularly as you are looking at a lot of loan books that are tied to short-term rates, and a short-term rates rise, that would probably benefit commercial lending and that kind of thing. the other thing we are seeing is very strong continued data on the economy. the unemployment figure looks good. toactivity continues accelerate, higher short-term rates would be good for those lenders tighten short rates. jenny and kevin, both of you thank you very much. mark mobius will be joining us. his take on emerging markets, plus how he has invested in china. this is bloomberg. ♪

david: mark mobius has been investing in emerging markets around the world for years now and has one about every award in the industry. after heading the e.m. business for frequent templeton, dr. mobius is launching his own investment fund coming up this summer. he is coming to us from london. thanks so much for spending time with us today. mark: thank you. david: i like to start out with china if we could because there was news overnight of a restructuring of the government as part of the national people's congress. i'm concerned how that might or might not affect investment in china. this consolidation of banks with insurance companies. where does that indicate china is going with respect to those industries may be opening up to markets and opening up to china

and financial institutions? mark: i think they realize two things. s of this world are beginning to take over the banking functions. you do not need a credit card now. you don't need cash in china. that is one factor. the other factor is that they realize that some of these institutions went far beyond where they should've gone in terms of lending, in terms of financing, and they have to bring it together again. they have to have some kind of regulatory institution that can control the entire sector rather than just individual parts. david: if you are a western investor looking at china, does that create an opportunity when it comes to the banks or doesn't pose a risk? there's opportunity that they are opening up and would like more investment and a risk in terms of using your cash to finance bad loans. mark: i think it's an

opportunity because the fact that the government is now beginning to look more closely at the industry and beginning to look at the bad loan situation is good for the industry generally. however, in view of what is happening in the internet space with the gradual elimination of credit cards and other payment means, then the banks really have to step up to the plate and begin to change the way they operate. alix: one of the big rotations we have seen if you look at the comp is the change in the sectors leading it. we have tech making much more than it used to be. financials is the same kind of way. industrial's gaining a little bit, but it's been that re-rating and financials in tech that has been and testing. how do you invest in china? mark: what we are doing is looking at the traditional industries and asking, are these industries beginning to adopt the internet strategy and the

type of tech orientation, which is so essential to operating anywhere in the world? it's those industries where the opportunities will be. you see the change and the growth opportunities. i'm not saying we necessarily would go into alibaba directly, but indirectly into other industries that are being impacted by this technology. alix: like what? mark: for example, let's take education. the whole area of education is changing so rapidly in terms of introduction of wireless communication, in terms of the internet, etc., etc. that would be a great opportunity. another area's medicine. the whole medical area is undergoing a big change as a result of what's happening in the tech space. david: what about electric vehicles and batteries and things like that? one of the other restructurings from the chinese government is

creating this new environment ministry over there. are there opportunities for investment in the area? mark: of course. there's going to be a lot of growth and the battery operated automobiles. we must remember that in terms of the production of automobiles in china today, most of it is gasoline powered engines. it will take time for that transition to take place. you've got to be careful. you cannot go into early. there will be too much in one area and it might russia's into this battery-operated vehicle. you got to be careful. alix: do you have this investment thesis at the expense of commodity sectors like energy and industrials or is it with that? mark: at this stage, it's interesting you mentioned that because i believe commodities are where you've got to look. commodities are recovering. going to benitely continuing demand for commodities not only in china but globally. i believe you've got to look at commodities and be in that space.

alix: somewhere in that space? mark: you'd have to look at africa to begin with. we believe africa has tremendous opportunities now. it's a frontier area, but it's great opportunities, and parts of america. brazil comes to mind. david: mark mobius, please stay with us. we will talk about other emerging markets you are taking a look at. live from new york, this is bloomberg. ♪

alix: brazil bring in the bulls as it rallies past its peers and analysts are boosting their profits forecast. earnings per share are expected to jump over 50% this year. that's an earnings revision for you. still with us is mark mobius, whose new fund is expected to open. you mentioned brazil is an opportunity. and what sectors? mark: obviously commodities like

iron ore, coal, you name it. brazil has tremendous opportunities in those areas. low-cost production of these commodities. at the same time, we have got to look at the consumer space. now in brazil you are beginning to see a recovery in your economy as a result of the changes taking place with these investigations of scandals. i believe there's going to be great opportunity in that area. an education as well as medical. it's pay someone to china. there will be big changes in those areas. alix: go ahead, sorry. mark: the interesting thing about brazil is that they have not fully adopted the technology that is being adopted in china. but i think it will come and that is where there will be great opportunities. alix: i just wanted to drill down quickly to the commodity part. would you be playing the producers or midstream size or

exporters? what is going to be the best value? mark: i would go to the producers. many of them are exporters as well. that is where you want to be. david: let's stay in latin america for a moment. mexico -- where are you on investing in mexico given all the political and geopolitical uncertainty there? mark: things are not as bad as they seem. everyone was very much down on mexico last year. we figured that was a time to get a look at mexico despite all the negative news. let's face it. the mexico and the u.s. are joined at the hip. there's no way they are going to separate and things will look up for mexico going forward. as you see bilateral agreements coming out with the u.s., i think it will be fine. david: in terms of sectors, is that also commodities are manufacturing? what are you looking at? mark: i look at manufacturing because those are the people that were fundamentally hurt by

the talk of some trade sanctions by the u.s. some of these companies were depressed and now it's probably a good opportunity. don't forget mexico has a very big consumer sector. we will look at that retail space for example. alix: you mentioned the consumer sector a few times. you mentioned retail in mexico. what about brazil? is it a broad consumer base as these economies are switching over? mark: very similar to mexico in that sense. a big consumer society. the savings rate is relatively low and lots of consumption. they are used to that because they've gone through all this inflation over the years and it's used to going out to buy something as soon as they get money. that would be a very interesting space for brazil as well. david: you make a very interesting point could what is the situation of the household leverage in brazil compared with mexico? mark: leverage now in brazil is

lower because of this problem they had with the economy. the economy actually shrunk last year. now they are just in the recovery phase. i believe in that sense mexico is in a better space in terms of the consumer debt, but brazil is a big, big market. we would look at that very carefully. david: and my understanding correctly that you may believe the market is over pressing risk like nafta or trade war's? are the prices artificially depressed? mark: i believe so. i think all the talks about trade war is overdone. i don't see that happening. you will see in the u.s. bilateral negotiations are beginning to have positive effects. you will see positive news coming out. we've got to be aware of that. alix: i understand from a macro perspective that it might not underscore your investments, but a trade war has real effects implications if were talking about the mexican currency.

how do you factor that in? mark: we look at how much fear there is out there. if there is really a fear of a trade war, they're probably opportunities. it will not be as bad as it appears. you look at the u.k. with brexit and europe. there is no way they can have a real brexit because there just closely tied together in that strip latin america and other parts of the world. david: putting aside whether there is a trade war or not, the talk of it and the rumors affect the volatility in the fx. it's really driving fx up and down. how do you handle that with your investments? do you hedge? mark: what we do is try to make an assessment of whether acorn currency is overvalued based on price parity and invest accordingly. iswe think a currency undervalued, of course exporters would be the place to go. it just depends on the individual company. that's the only way you can really hedge. otherwise it gets really expensive when you try to hedge

a hold portfolio. david: let me give you three currencies -- the u.s. dollar, mexican peso, brazil. are any of those undervalued? mark: the brazil realities slightly undervalued. the mexican peso is more or less where it should be. the u.s. dollar is getting undervalued, but it will probably go down further going forward. alix: as we wrap that up here, want to get your take on other areas of emerging markets that you like. you mentioned brazil and mexico and china. what me to other countries and sectors. -- walk me through other countries and sectors. mark: we love africa because they are growing at such a fast rate. that includes commodities and to a great extent telecom. telecom revolution is hitting africa in a big way. people are giving smartphones. smartphone prices are coming down so that would be a very interesting space to be. alix: what about russia? mark: russia, that's a good question.

the more that we see these scandals coming out here in the u.k. as you know, the poisoning scandal and so forth, it's very bad. there arey is that great russian companies and some of them are very undervalued. the problem is we face restrictions on where we can invest. as you know what the u.s. restrictions. alix: we had to get your perspectives really drill down. great to see you. 45 seconds away from the all-important cpi report and we are having some market moving into the numbers here. the dow jones up by 30 points in the futures market. the s&p up by three. the ftse on the lows of the session as well down at half a percent into that spring statement. classes, we are seeing buying all across the curve with yields moving lower at the lows of the session. stephen you ever so slightly by two basis points. the currency market not going anywhere with the dollar pretty

much flat. you do have the japanese yen and the big downside mover against the dollar. by 70.yen down you have some risk on rally like the new zealand dollar. basically steady as she goes waiting for the cpi number to come out. we actually got a stronger cpi number. cpi you're on your coming at 2.2%, bang in line with estimates and higher sequentially from january's print. if you back out food and energy on a month-to-month basis, that comes into percent. it's a story of a study inflation picture. take a look at what we are seeing in the market and that's a busy screen. s&p futures spiked to the highs of the session and the dollar index goes nowhere. i cannot see the move in the treasury market. i will bring it up on my screen and check it out for you. basically not a lot of action coming for the treasury market.

you are seeing yields move off the lows of the session, but the move seems to be an equity market as we see a stronger inflation trend. david: we bring into people who can really help is going to all this. we have the chief u.s. economy and luke from across assets. nothing going on here and you can move along? steve: it's a bit of a return to goldilocks. it takes a little bit of the pressure off the federal reserve to move from three to four on the projected rate hikes at the upcoming march fomc meeting. that in itself is a positive environment for equities. were discounted three and they were not discounting four. looking at that look becomes less of a probability that the equity market will do well. payrolla repeat of the and employment numbers friday. luke: if you're china to look for a reason or excuse why maybe yields don't selloff and we are

not getting a rise in yields on higher inflation on a pickup and a lack of giveback, think of positioning going into this. duration equivalent all the way out. position is very extreme short treasuries. we got in themph last two inflation reports have been in synchronicity. it just seems like we are in a position even with a pickup of inflation. alix: that the exit questions -- do we wind up seeing the market reconciling more fed rate hikes later rather than sooner? that seems to be the conversation after friday. of thathere is part factor going on, but the real risk is whether or not the federal reserve would make a pronouncement in terms of the number of press conferences that they were going to have per year. that would bump up the whole probability of the number of fed rate hikes in people's mindsets

from four to potentially more than four. people were getting very, very overly aggressive in terms of their calls. i think with the number coming in a bit more but nine in terms of hitting the year-over-year inr number we will see that about two weeks time that the fed is really not under any immediate pressure to go out and ramp-up policy. luke: i got the call a friend lifeline in my ear right now. he is telling me one interesting part of it is obviously the shelter story has been very important to the rising core story. this pick up in court inflation that we saw actually helped with the shelter side decelerating. about a moreking broad-based contribution to inflation and inflation is really a rise in the general price level, but this is a positive story in terms of the reflation story if core cpi can pick up. alix: in the market, we are

seeing the most dramatic reaction in the dollar. what does that tell you? luke: if anything, maybe perhaps it would tell me the extent of the positioning off-site maybe with more extreme rates than it is in the dollar and also just the idea that this is not something the federal reserve is not behind the curve and they will have to ratchet up an excellent rate rate hikes and really change that two-year spread relative to other major crosses. that is something this print might be showing you. are we getting some kind of steepener on this? i don't know. that would be my guess of the top. david: why isn't inflation going faster than it is? steve: as indicated a minute ago, part of the process is the compositional ship within the conflation opponents are adjusting. you're going to see what the dollar having weakened some component lift in the core components of the cpi, but if

you reduce the health care or reduce the shelter component because you do have an older building and they love the saturation and a love of the key markets driving up rent, that tends to moderate things and hold the family to a better perspective. this is why you cannot completely ignore the deflationary risks that are out there. hereyou are really seeing is sort of a channeling of a lower dollar. that is why the dollar is really the critical component here. throughollar breaks this 90 level on a sustainable basis and keep some moving lower, that will be bigger concern about deflation than anything else we have coming across the board. that will allow import prices to come up and competition to arise through and a broader base projection move in terms of the inflation numbers. we've kind of broken through that 90 periodically and just up there. we are at the bottom of the range and we will see if we hold. retail sales tomorrow could be critical. alix: onto's year outlook for

retail sales. morning,ushed at this but you also saw companies seem to be more apt to raise their prices. steve: again that's from the import price component that i think is happening. when you're looking at the retail sales number, we know the gasoline component. we know the auto component. we know it will not be a strong headline retail sales number or a core retail sales number, but if there is a surprise to the upside in the retail sales, that is going to be pivotal in terms of what it does in terms of the currency and in terms of forward expectations of what monetary policy will do. if it winds up being a disappointing number, then you will have people ratcheting back and you will get a weaker dollar starting to show. david: you have a fan here who what 2018 gdp will be. steve: the real level of the federal funds rate should be

2.25% and that is where we should be. 2018 gdp number, i think it's probably about 2.5%. i don't think it's any stronger than that and that's in big contrast to the numbers out there that are 3% or more. luke: i remember last time we came here, we were talking at the flattening of the yield curve and possible inversion this year. what we had last wednesday is for the first time this entire cycle was the inflation breakeven curve completely inverted. andhe context of this print the last 30 years of realized inflation, what kind of inflation risk premium you think there should be in the curve? is that going to be something that continues to contribute to flattening or has that run as far as it can run? steve: it's not initially running as far as it can go, but i do not think you will get a real ratcheting of the efficient risk premium. what you are seeing from this federal reserve is a concept that they will get ahead of the curve and that will risk the

whole idea that we could have more flattening rather than a steepening of the curve as we go forward. alix: thanks for a much -- thanks very much. good to see you both. the kid chancellor philip spring is delivering his statement. the k's raising his 2018 economic growth forecast to 1.5% versus 1.4%. in 2019 ofs growth 1.3% and that continues in 2020. the k forecast its budget deficit at about 45 billion pounds through the next year. you are seeing the pound move higher on the news. the conversation is the uk's not going to need to borrow as much and that there will not be as many gilts in the market. yields moving lower by about two basis points. david: not going to borrow as much and it will have more growth. he says don't worry about this doom and gloom from the labor party. alix: inflation will fall and

everything is great. i'm reading between the lines. david: it is spring after all. coming up, the latest numbers and forecast for the global economy from the oecd. we will go over that with the oecd acting chief economist next. you can tune into her colleagues tom keene and jonathan ferro and then ti pimm fox joins the conversation. they can be heard all across the united states on sirius xm radio. live from new york, this is bloomberg. ♪

kailey: i'm kailey leinz in the hewlett-packard enterprise greater. ising up as th the portfolio manager. ♪ kailey: and now to your bloomberg business flash. amazon is now trying to

people leaving and the present

tweeting he has not done yet. he says he likes to embrace conflict and even chaos. he seems to be a couple sing that, but there's not a lot of continuity. i'm: really interesting and very curious to see what winds up happening with rex tillerson and where he goes. i want to point out what the markets are doing. i do not know if it's related to the headline or what's going on what the market, but i do want to point out what's moving. you do have yields around the lows of the session at 223% on a 10 year is how we print. we have equities moving to the lows of the session and the dollar losing it some steam. if i take a listen what's happening overall in the bond market, it seems to be a bind coming in. that seems to be a safe haven buying bid. however, we don't know if it's completely related to that. david: the dollar was heading down already, but it continues that downward slide.

there was a fair amount of controversy around rex tillerson's tenure. there is an open secret that ,here was disagreements including north korea where he said you are wasting time talking to kim jong-un. it was openly thought in washington that mr. tillerson was not necessarily happy. he was the former ceo of exxon mobil who had quite a good deal there. he was term limited. he need to leave that job as ceo anyway. he certainly looked the part of secretary of state. yet something of a rocky time. a lot of talk that the state department is lesser for having rex tillerson there because president trump was saying we are going to cut. alix: market reaction has the dollar index with the lows of the session and yields at the lows of the session. equities a little confused. thatad a nice pop on stronger cpi, but we are still holding steady with the s&p up by 10 points. if you take a look at what is

happening with the curve after that cpi number, the curve is flattening as we go. down by about one basis point as you can see the heaviest find coming at the 10 year and the seven year. according to "the washington post," its mike pompeo. it is widely thought that president trump was close to mike pompeo. they dealt with each other very well and it was generally thought that rex tillerson did not fit as well with the president. a lot of speculation over the last 90 days that mike pompeo might be replacing rex tillerson and it appears that is what is happening. we make a lot out of the revolving door of the white house and that if you do not agree with president trump that you will be out. cohn was backing up on the aluminum and steel tariffs. was it all handled differently? david: you want people to get in

line and president trump has made it known that he did not appreciate gary cohn being such a globalist. guy replacing gary cohn is something of a globalist and he thinks the tariffs are really bad idea. the president says he wants complex an agreement but maybe just up to a point. at some point, he wants people who would support him. you know the story about what happened with gary cohn in the oval office and the present turn to him and said, are you with me on this, gary? alix: mike pompeo director of the cia will become the new secretary of state. they will do a fantastic job. thank you to rex tillerson for your service. firstaskell will be the woman to head the cia. you have to wonder what foreign policy is next. david: you talk about foreign policy. for some time it's not just under president trump, but

foreign policy has largely been set at the white house and the secretary of state has been a good job going around the world and meeting with people and exercising in implementing the foreign policy of the white house. alix: that was john kerry. david: a long list of people friendly. you have to go back a long way at this point. was when it was set at of the secretary of state office. marty shanker knows all things washington. this is not a huge surprise and was widely speculated that rex tillerson was not very happy and trump was not happy with him. marty: timing was always surprising. he has been in and out and give an endorsement by trump and a behind-the-scenes been criticized. it is clear that donald trump wants and he said last week that they're going to be changes in his staff. he has come through at least today. this is now become the new normal in this white house. donald trump wants to become trouble with the people that surround him and he has lost

some key people who he had high comfort level with and now he's bringing people like mike pompeo closer to him even though he was having daily conversations with him at the cia. now he's given him the mantle of executing this policy. david: what do we know about mike penc pompeo as secretary of state? what in his background informs what kind of secretary of state he will be? marty: in some ways it's just like rex tillerson. there's really nothing in his background that would suggest he has a great grasp of the historical sweep of foreign relations, but that doesn't seem to matter to this president. loyaltyre interested in and a firm embrace of his policies. what is really interesting is that this comes just on the heels of direct talks with north korea and with the introduction of a new mideast peace plan.

and right before you are doing that come your changing -- you're doing that, you are changing the jockey on the horse. mike pompeo will have a lot of catching up to do. david: how much will the president rely on the state department as opposed to cia and for paying with those talks of kim jong-un? we talked to the deputy director in charge of career yesterday and he said the cia is going to play the role because they know nothing about this country. marty: that is correct. china is also very supportive of our north korea talks, but at the same time, relations with extremely important to this and ministration. on the verge of possible trade issues with china, mike pompeo with his background at the cia might find that very advantageous in dealing with the chinese. alix: want to go over the market reaction because it's been quite interesting. if you take a look at yields come he did have yields moving lower by three basis points.

off the lows so far the session. it feels like it was an immediate reaction in a safe haven bid in terms of treasuries . interesting story there with the dollar as well. the dollar index the worst performing g10 currencies with the exception of the japanese yen. stocks off the highs which feels relatively immune at the same time. i wonder what that is in reaction to. is it the cpi story? is it so payment really pushing sterling higher? is it the cpi data or the change in administration? david: there's so much going on to figure out what's causation. alix: i feel like what we have to think about is what we talk about political risk from the white house, the markets were set to ignore it. is this a different narrative now there will be by the depth and have an immediate reaction and in to second's no one cares? marty: this is the new normal. if you expect consistency and a

calm policymaking apparatus in the white house, you're sadly mistaken. interject hereo because they're something historic that happens, which is the first woman ever appointed to direct the cia. she's a career intelligence officer. she has been the deputy director of the cia and has been there forever. she has been involved in some difficult operations for the cia , but that's a start to have a woman as director of cia. marty: it is an for an administration that has a real poor record frankly on females to-is this an's, this is something that donald trump can point to proudly. she will need to get senate confirmation, but i suggest that will probably be pretty easy as will mike pompeo. alix: let's dig down into the market reaction. joining us now is gina martin adams. what do you make of the market reaction? gina: it's more of the same

. markets have been much sheltered out of the news in washington and accustomed to a lot of volatility and turnover in the white house. i don't necessarily think that this is going to royal start markets. -- roil stock market. you think about what really triggered the stock market correction back in february. certainly rising inflation pressures were one thing that was nagging at the equity market so the more confirmation we get that inflation is still contained, this inflation beast like i call it is caged up. that will soothe any equity market woes. i'm surprised we are not seeing more negative reaction to the broadcom qualcomm news from last night because the semi conductor stocks have been such big gainers.

equity market. i would suggest that the biggest risk going into today. maybe you will see a deflation of the optimism intact, which has really been carrying the equity market for the last several weeks. in terms of washington, it's just really tough for stocks to price this kind of thing. turmoil and policymaking can only be priced until you actually have policies that are result of that. i think that you watch the real action and the real action right now is broadcom qualcomm is not going to happen and that was stopped by the president. alix: i like that you brought that up in terms of more the same because it seems like you go ahead and buy stocks and bonds and you sell the dollar and still by the debt and that's a scenario. alix:you ignore the headline ri. is that because we are in the goldilocks and that is why we can take the broadcom headline in stride? gina: the data would suggest that you still have very robust growth relative to expectations and you still have somewhat contained inflation. if that's your definition of

goldilocks, the goldilocks still lives. now isity market right very supported by strong earnings outlook. as long as the economic data continues to support that outlook, the equity market is probably going to remain relatively a bullying. bullient. we did fail to surpass critical levels. it does seem more vulnerable to bad news. we cannot ignore these headlines as they come across because we need to parse through them for which ones are really relevant for stocks. the ones most relevant for stocks will be the ones that impact the potential earnings outlook. david: i wonder if there is apparel between the markets and wall street and what's going on in washington. we've gotten so used to it now. whether it's the markets were people in washington, we never know what's happening next, but we sort of go on. there's a lot of people who feel that this normalization

of erratic behavior is something that's dangerous. at the same time, donald is doing exactly what he said he would do. he was going to operate a nontraditional white house. turmoil is what he thinks is normal operating procedure and we should just get used to it. it doesn't mean condoning it. it means factoring it in your investment decisions and everything else. alix: gina martin adams, thank you very much, as well as marty shanker. it's a buy stocks sell bonds scenario. in line cpi banging with estimates and the have rex tillerson out as secretary of state. much more on this and market impacts. this is bloomberg. ♪ mom, dad, can we talk?

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breaking news, secretary of state rex tillerson is out. cia director mike pompeo is to be the replacement. president sends a clear signal, blocking broadcast bid for qualcomm. inflation picks up, but not enough to speed up the fed. 30 minutes away from the cash open. futures bid still up 11 following that breaking news, euro-dollar up to 123.68. to get straight to that breaking news with the president of the united states ousting secretary of state rex tillerson. the president tweeting just moments ago that mike pompeo will become our new secretary of state and will do "a fantastic job.