don't like the fact that donald trump is hurting our image overseas, for example, if you don't like that these fixes to the tax code are not going through despite the fact that democrats, republicans both agree they should, if you don't like the fact we still haven't had infrastructure development, these could change in the house of representatives. moreover, i think there is a real question as to whether or not the house of representatives would reinvigorate investigations over the russia scandal. think that is going to have a profound effect on the operation of how long a leash, if you will -- this ties into the mike pompeo and rex tillerson announcement. we have a change in the administration at the state department in a very fragile time for the u.s. if you are overseas you are

impacted by this, and having that check on the trump administration by a change in the leadership of the house would be healthy for business. david: joe, is the biggest consequence of a shift over to the democrats in the house really a lot more investigation because they will have the majority on those committees? >> that is true. there's no doubt about that. but donald trump at the end of the day is a transactional guy. he is not a partisan politician as we know. all he really cares about is the end result, the bottom line, and being able to say i got this and that done. you elected me in 2016 to get these things done. immigration, you wanted me to get rid of obamacare, you will need to bring back tax reform, so on and so forth. you want to be to forge an agreement with north korea. towards 2020 he will look to check those boxes off. he's already checked some off as you know. he knows that infrastructure is probably not likely in 2018, but he has made north korea -- he's

put north korea on the table. he doesn't necessarily need congress to help them with north korea the story in north korea. guy, is a transactional but we basically know donald trump is on a lot of big issues. do we know where the democrats are? can you draw a straight line from new jersey to virginia to alabama to pittsburgh? these all seem one-off. >> i would differ with that. there is one unifying force among democrats today, and that is a complete animosity towards donald trump. that unify the democratic party more than anything i have seen in my lifetime. there is a shift. over 30 state legislative seats have flipped from republican to democrat. there's clearly a move here, but i think it is important for democrats to rumor that to remember this is not one-size-fits-all -- to remember this is not one-size-fits-all. i will mention somebody by name who i think is very important here.

that is senator sharad brown of ohio. he is the ranking matter of the senate banking committee. senator brown comes from a state that trump won by many points. i believe he is going to be reelected by a wide margin, and i believe he is the kind of working-class progressive that actually stand a chance to go national. alix: after what appears --david: after what appears to be developing in pittsburgh happens, does that reduced the loyalty of republicans on the hills president trump? do they need to run on their own and not necessarily added by themselves with the president? >> all politics are local at the end of the day. they got to be focused on what is happening in their district and how people in the district feel about what is happening right now. how close they are to jump or how far away they pull from him depends on your district. for the most part, it is an odd thing. president is going to be able to retain his base no matter what.

is just a matter of whether or not that works for you if you are a congressman or congresswoman running for reelection in your district. david: we have two dozen districts where republicans are sitting there in a district for hillary clinton, sweating this morning. .hanks so much david: room --alix: coming up, ge plunging as one analyst raises questions about the company's profit guidance. more on that next. tune in to radio. ferro.ain and jon they can be heard across the nation on sirius xm. this is bloomberg. ♪

>> bloomberg television's brought to you by interactive brokers. one world, one account.

reporter: this is "bloomberg daybreak." coming up in the next hour, harvey pitt, former sec chairman. ♪ and now to your bloomberg business flash. broadcom has dropped its $117 billion bid to buy qualcomm. president trump blocked the deal on national security grounds. that ends a month-long battle

that could have resulted in the tech industry's biggest acquisition ever. adidas has returned to double-digit growth. revenue rose 19% in the fourth quarter, more than twice the third quarter. i do this 10% growth for 2018, cashing in on the popularity of its retro sneakers. more problems for toys "r" us, headed towards a likely liquidation. the retailer has missed payments to some suppliers in recent days. some of those people say no when i toys "r" us will respond to questions. the chain filed for bankruptcy last fall and is a $5 billion debt load. that is your bloomberg business flash. david: we turn now to wall street beach come over to cover things wall street is buzzing about this morning. first up, investor shot. ge plunges as the profit guidance comes into question. number two, donors disclose. the irs accidentally identifies the details of three phone

traffic billionaires and how they are giving away their money. three, a group of hedge funds bans together to repair loopholes in the credit default swaps market. alix: joining us now, jason kelly. i want to kick it off with ge, in part because it raises questions about a huge integrated model, which is what we saw was exxon years ago. they had calls to break up, did not, and that actually helped. are these warnings a good thing for ge they have to change their entire business? reporter: it seems pretty clear from this series of events over the past few months that they have to change something pretty dramatically. the confidence of investors clearly if you look at the with the stock has performed versus the dow. they've also lost the confidence -- this is what was so fascinating about this particular story -- of the analyst who knows the company presumably better than anyone outside the company. jpmorgan said management's

-- earning guidance is "not a credible number." the idea that they are calling into question the credibility, and this of course follows on the accounting probe, having to restate several times the ceo changeover, and it doesn't help that earlier this week were late last week that they numbers came out-- the pay numbers came and said the workers are not getting bonuses. alix: jason, you and illustrate the two questions here. one is the fundamental, is consolidation not working. the other, does management know what is going on? or do they not know what is going on? i'm not sure which is the better answer. reporter: neither one is great.

this really has been the continuing story. this is why we keep coming back to this story and this segment on bloomberg television and in bloomberg in general because it is this sort of trip trip -- this sort of drip, drip, drip. you keep thinking this is going to be the last thing and then it is not. that is where you get to this credibility question for sure because people are waiting. they feel like there's a closet full of shoes waiting to drop. david: the second story is like a big oops. goldman has a big fund, they seem to be competing in this. they are not supposed to review, but the irs mistakenly revealed some of the big donors to the fund. you can see it is steve ballmer, laurene powell jobs, and jan

koum.nd jan reporter: what it says to me is how huge and fascinating a part of the philanthropic equation these funds have become. billion fored $3.2 their donor advised fund. what this does is basically allow a wealthy person to get the tax advantages of charitable giving right away. they are then able to park this money in a fund, in this case managed by goldman, and then they are able to give it away while they continue to grow the money because goldman is investing for them, and they get a little more discretion than they would if they were just reporting as a straight up foundation. foundations, as you know, have to disclose where they are

putting their money and a little bit more detail than is allowed them to do or this necessitates that they do. these are three highly influential billionaires. steve ballmer with his microsoft laurene-- forcing, and koum is a real rags to riches story. actually sign the papers at the social services office where he used to backup foodstamp for his family. is an amazing story -- pick up the food stamps for his family. alix: this is like the saga i cannot get enough of. here's the deal. l.a. capital, apollo global management, are trying to prevent investors from engineering default in the company's debt because they got on the bad end of a deal with .lackstone's gsl

reporter: this is one of the things where, as we've seen this side of play out in a courtroom, there's a bit of you that says come awake him a wall street guys are engineering something to make money on both sides of the deal -- says, wait. wall street guys are engineering something to make money on both sides of the deal? what? [laughter] alix: they wouldn't do that. reporter: it is really meant to be a hedge, but apparently -- alix: but blackstone hate i -- played it and got on the other side. reporter: blackstone's contention is the firm that suited them sold to soon, so they are just grumpy they did not make money. david: gaming the system on wall street. is a shot -- it is a shock.

[laughter] great to have you. coming up, targeting china. president trump looking to slap as many as $60 billion in tariffs on chinese imports. if you have a bloomberg terminal, check out tv . live from new york and washington, this is bloomberg.

♪ david: in washington today there are reports that president trump is really going to go after that in some tariffs could be $30 or $60 billion. there are differing reports. these say that the president has a proposal and says that is not enough, go back to the drawing board. let's put a chart which shows

where we are in trade deficit with china. it is that yellow line in the middle. the blue is the imports from china, the white is the exports out. in the last two years get down early in the trump -- it gets down early inped the trump administration, but has gone back up. alix: it is a great comparison to dr. evil, i want $1 million. david: there's concern that they are going to be more hawkish on this as a matter of trade. alix: we will be watching that for the next hour. geller -- jeff geller am a jpmorgan asset management cio of multi-asset solutions. this is bloomberg. ♪ mom, dad, can we talk?

sure. what's up, son? i can't be your it guy anymore. what? you guys have xfinity. you can do this. what's a good wifi password, mom? you still have to visit us. i will. no. make that the password: "you_stillóhave_toóvisit_us." that's a good one.

seems a bit long, but okay... set a memorable wifi password with xfinity my account. one more way comcast is working to fit into your life, not the other way around. ♪ >> inflation, just writing to

keep the fed on a steady rate path. retail sales are falling. a 3% break on the 10-year. the dollar will be lower on the next move. president trump's threatens more firings. thisgood morning to you on wednesday. i am alix steel. david westin is in washington dc today. all the people on the chopping block are in president trump's cabinet, working in senior positions at the white house. reportedly, rex tillerson did not even have time to get his coat. the president is saying, i am not done.

maybe this is why the markets are reacting the way they have. alix: you can't price any political -- political risk. the dollar moved lower yesterday. you have to wonder if that filters into any policy movement. part of the business getting done in washington is bank deregulation, rolling back dodd-frank. a bill is pending in the senate. i will be speaking to the dean of securities and regulation in washington dc, a former chairman of the sec. boutill talk to - a regulation in the financial markets. alix: it feels very calm in the market. the zero dollar is pretty much flak on the day. -- flat on the day.

recentraghi said strength had been driven by external factors. yield, a bit of selling on the back end of the curve. steady as she goes. jgb was traded over in japan. talk about a snoozer. solid at china data, the other part is production restraint. lines let's go to kailey for the first word news. : too close to call in the pennsylvania congressional elections some are seeing as a referendum on president trump. conor lamb is beating rick saccone by a little more than 600 votes. talks about how she plans to retaliate against

russia over the nerve gas attack on a former spy. she met with her intelligence and national security chief to discuss whether russia has given a credible answer to allegations behind the poisoning. stephen hawking has died. he brought science to the masses with his bestseller "a brief oftory of time" and is one the longest survivors -- was one of the longest survivors of als. he was 76. global news 24 hours a day, powered by more than 2,700 journalists and analysts in over 120 countries. lines.iley this is bloomberg. the installation read. in at 2.6% year on year. retail sales down from last month. markets and inflation feet-through -- feed-through

will be discussed with jeffrey geller, cio of multi-asset solutions. always a pleasure. how would you be allocating your assets based on rising inflation? jeff: we are just off our quarterly strategy summit. february, there is a lot of discussion about changing views on inflation and the pickup involved. are ak some of our views bit more nuanced with respect to equity markets. inflation,t to inflation is likely to trend but basically moving back to about the 2% level. there is a two-way risk in the market, where they might overreact one way or another two

different inflation purposes. -- to different inflation purposes. rates may be drifting a little bit higher here. this is nothing we would dramatically make a big bet on duration. >> the weaker dollar is bad for equities. do you think the markets will handle that? jeff: we think equities will still do ok. the unitedry them in states will be earnings. you will see solid earnings in the united states this year. up, but not enough to derail. we came into the year with a view you would see a big upgrade in terms of earnings. that is somewhat modulated. to ais really what has led bit more of a nuance for us,

particularly outside the united states. thought there would be an upgrade to earnings, but really, in a global, diversified way. what has been more nuanced is emerging-market equities, versus the euro and japan. you will see an above-trend continue tot will trade above trend race we have seen. that becomes our most favorite market outside the united states. we have a fairly substantial fiscal stimulus coming into effect. a tight job market. you would think that would lead to inflation. what are your views on

productivity, because you could raise that fairly abruptly and take this thing on inflation? we have not made aggressive assumptions about productivity raising all that dramatically. it is more about inflation that could move at a much more moderate pace. inflation is going to move more to the 2% target the fed had. it is not something that is going to be disruptive in terms of equities. this is a great start from bloomberg intelligence. line is the u.s. five-year break even. absent in value versus growth. value is starting to outperform -- we have not seen value start to outperform. how is what you were seeing in terms of the equity rotation?

with higher inflation, you should see value. it isi am much or if going to be value versus growth, with companies that deliver on earnings this year. will be more about where the earnings come through if you are not going to get multiple expansions. david: what do you think the biggest headwind is for equities right now? jeff: there are two things driving that. eventll be a right-tail with respect to inflation. wrong in terms of a steady as you go, grinding toward 2%. it is hard for us to see right now a growth shock, given how well the united states is performing, which will drive

global growth. there could be a growth shock. cash will beh united states be sitting on? jeff: we tend to be fully invested. we have updated our view on cash. we would want to employ leveraging portfolios right now in terms of reflecting any allocation views. we would rather be fully invested. two-year isnk the might to trend higher, we be modestly fading duration portfolios. it is not a place we look to make an aggressive bets. alix: would you be making a credit risk?

jeff: again, it is the trade-off. our view is on credit versus government bonds. we would rather take that risk in equities versus credits right now, given where we are in the cycle. there are portfolios that are much more fixed-income heavy. alix: good stuff. jeffrey geller of jpmorgan asset management will be sticking with us. david: coming up, i will speak to harvey pitt, next. this is bloomberg. ♪

david: the senate took another step toward cutting back on dodd-frank think regulation yesterday. there is this back and forth between the financial industry and washington regulation that has been going on for a decade. harvey pitt has been a leader with kalorama partners for many years. -frank is mainly targeted on the smaller banks, under $1 billion. is it the right time? does regulation go too far? way toododd-frank went far.

we needed regulatory reform, not the reform we receive. now is a good time to try and roll back some of the worst aspects of dodd-frank. david: there is a lot of special interests. we have a chart illustrating the basic changes. this illustrates the full panoply of potential regulation. the smaller banks will be subject to stress testing. and they are going to do away with the volcker rule altogether. cuteat a reasonable way to cut up the high?

-- the pie? but the senate bill reflects a bipartisan compromise and getting some regulation through will be enormously helpful. bipartisan?s this some democratic senators are ag ainst this, but a lot of democrats are going along. they realize that particularly for community banks and a smaller banks, the -frank does of dodd not have enough discernment between the sizes of banks, the nature of their businesses and the like. we need regulations but we don't need the kind of regulations that apply one size to everyone. this goes forward, and there is a house version as

effect will this happen the real world, particularly on the banks? harvey: it is hoped they will make more loans. been,f the difficulty has although efforts have been made to free up money by banks making loans, they have been afraid of regulatory overkill. they have been concerned if they start making those loans, they if someheld accountable of the loans don't pan out to be good risks. we have seen more community loans and consumers will see cost, because the regulatory impact and cost will diminish. david: we have pretty good growth. north of 2.5%. unemployment is really low.

loansreally need more right now? there are reports lenders are cutting back. harvey: i think we do. dependent onth is the startups and mid-sized companies. that is where the attention should be focused. clos, the leverage rate has gone up five times. it tends to be on the way up. if you are not concerned we might be overheating -- no, but it needs to be monitored very carefully, to avoid over leveraging. i don't think we are anywhere near that level, yet. we are focusing on regulated banks. there are a lot of other institutions that come into this

market place and our lending money that as regulated, private equities, things like that. you are a regulator. how difficult is it to expand the scope of regulation to keep up with the marketplace, because it is always innovating? harvey: it is very hard. regulators are always two or three steps behind. the approaches are always coming up. things have changed in washington. the chairman of the sec has kept a good focus on innovative ideas in the marketplace. one of those innovative ideas is no currency. -- cryptocurrency. the sec is issuing subpoenas for hedge funds. can the sec keep up with things like bitcoin?

harvey: they are catching up and this has been made a priority by all the commissioners. they can succeed in that effort. david: thank you so much, harvey pitt. coming up, broadcom has abandoned its bid for qualcomm and shares are up. what is next? live from washington and new york, this is bloomberg. ♪

alix: broadcom officially dropped its bid for qualcomm after president trump blocked the bed. shares of stocks are higher on the news. the cop -- broadcom has issued a statement saying they will comply with the order. joining us now is brooks sutherland. -- brooke sutherland.

we also have a senior equity research analyst with a bi-rating on broadcom. where does this leave individual semiconductors? could be are chilling effect on mna. was so striking about this intervention on the part of the president is that there was no deal. into this has nothing to do with the nationality of broadcom. they are concerned about the business model of broadcom. got are worried they would research and development at qualcomm. gut research and development at qualcomm. so many deals in the semiconductor industry are based on the premise alone.

trouble,ers will be in one is a bermuda-based insurer. alix: you have a bi-rating, cody. will this be rethought if they can't wind up relying on mna? cody: you do. a venture capitalist at heart relies on mna to drive that bottom line. problem is he has to be that much more careful because he cannot afford to fail twice. if you were to go after something of size, and there are not many left of that similar was blocked a second time, there might be a change of leadership. david: what is left? >> not many. if you look at texas instruments, or even nvidia.

that, you get down into the 10 and $20 million, which is not small by any mna, but it does not move the needle like a qualcomm would do for broadcom. you have to tick the box. these companies are not being ball run, part of the structural challenge for qualcomm. a lot of these smaller analog names are being very well-run. qualcomm, theyo have to wind up proving that they can be in the ball game. how long do you think before the market becomes impatient? >> not long. qualcomm shareholders were unhappy with management.

qualcomm shareholders were not happy with the current management team and the status quo. i would hope they are not celebrating in san diego. they have a lot to prove and need to come up with a critical plan for how they are going to get their business back on foot. in it is currently mired this lead to -- legal battle with apple in facing antitrust challenges. qualcomm has not had good answers as to how this business is going to be profitable going forward. alix: cody, how long does management have at broadcom? tan will continue to make acquisitions. the underlying business that broadcom has is actually pretty solid. it is a cash flow machine. but i think broadcom will do just fine on a standalone.

he will have to decide where he goes with mna. the saving case for broadcom is going to be 5g. we are on because of that usp ofpment -- on teh c that development. can continue its leadership as we go to 5g, it may fix a lot of ails. >> qualcomm criticized 3g andm's handling for 4g. the pressure is going to be on. alix: this is bloomberg. mom, dad, can we talk?

sure. what's up, son? i can't be your it guy anymore. what? you guys have xfinity. you can do this. what's a good wifi password, mom? you still have to visit us. i will. no. make that the password: "you_stillóhave_toóvisit_us." that's a good one. seems a bit long, but okay... set a memorable wifi password with xfinity my account. one more way comcast is working to fit into your life, not the other way around. alix: this is "bloomberg daybreak." dow jones futures are up on the highs the session.

it is a broader-weaker dollar story. zero-dollar slightly lower. 1.23. solid data story for china. atyou take a look producer-price index, if you look at core on a month by month basis, up by 4/10 of 1%. if you look at the year-on-year, prices are coming in below estimates at 2.5%. sales, estimates are up 3/10 of 1%. there is also a january revision, slightly higher. steady as she goes. solid retail sales.

--ar producer-price index solid producer-price index. a little bit of buying in the two-year. ten-year slightly lower. in.d: it fits right very consistent. alix: the goldilocks scenario continues to permeate in the market. not too hot or too cold. the fed can raise rates, but they don't have to think about a rate hike scenario for 2018. fsid: lara rhame is investment's chief u.s. economist. is still with us in new york. my partner said this is a

goldilocks scenario. is that how you take it? lara we have had more ripples in the water in 2018 so far. iserlying investment manned enough to keep the fed on track for one rate hike every quarter. to me, when you look at the what is morere, important is not the snapshot of growth right this moment of the economy, but the ark of the business cycle. you have to stay much heard getting into the political phases. is a place of itself that has led to higher volatility outcomes. does that fit with your expectations, longer in the tooth with the business cycle?

we are not necessarily anticipating volatility like we saw in 2008. the types of movements we are percent-1% ishalf consistent with the normalized level for us you tend to see. it is this risk you are seeing around inflation risk. number youn to the are seeing this morning, when we looked at the weaker retail what was important for january was a much more .ransitory figure the higher gasoline prices at the pop. retail sales were in good shape.

we are positioned for the number you are seeing. a look at you take producer prices, at some point, they have to move that cost on to the end user. the markets are going to shrink. what do you wind up seeing in terms of when they are going to pass that on? we have had big drops in the dollar before throughout the cycle. we are going to see inflation come from wages. there are tiny pieces chipping away at to the news of tariffs. it is not making an impact enough to cause a broader increase. it is going to come from the wage side. when i look out at the labor market, i don't think the laws of gravity have changed. the tighter labor market is going to cause wages to become higher.

this idea of passing it on is important. when i talked to hr leaders. -- when i talked to hr leaders, they are having a problem with publicly traded firms passing those costs forward when they are struggling to find workers. you were going to get earnings season when i bought of, they are going to have to pass on the cost. alix: retail sales were down by 1/10 -- 1/10 of 1%. you have car dealers, building materials, gasoline stations. that's rose 1/10 of 1%. the real core of retail sales is not holding up as well. major retail categories are showing declined. that's may be a potential reaction to the markets.

the dollar index is moving lower as well. david: i to talk about pricing power. is this wage or producer pricing power? the laws of gravity have not been repealed, but they have been suspended for a lot longer than we expected. that is due to the larger size of companies. is a lot more oligopoly power when it comes to imposing wages on workers. we're also still suffering from these big demographic shifts happening in parts of the economy. parts of the country -- there is still unevenness about employment, and it is dragging the overall average down. seeing a changing

pattern around tax refunds. tax refund paul is getting larger and pushed out later. ool is getting larger and pushed out later. i think it is causing anomalies in the first quarter. alix: good context. seeing lower demand of furniture and furnishings. it feels like an outlier in that way. what does it all mean for the fed? line is the additional fed rate -- fed rate hike by the end of 2018. jeff, do you look at asset allocations based on three this year and one next year? of rate hikes this year, we are looking at three or four. for next year, 324.

-- three to four. isthink the bigger impact going to be the flattening of the curve. -year moves up a lot more and the back end is supported by two different things. we are not seeing inflationary pressure in the eurozone or japan. will have an effect on dampening the back end. what you are seeing when you are looking at the 30-year. we are continuing to see some plans.rporate db there is a modest backup in rates. the back end is likely to continue and accelerate. lara, when you look at

potential investments, how important is three or four hikes next year, as opposed to two the ultimate destination? destination?imate want rates to ignore realize is what i hear from investors, so we can get back to this steady income in our investments. think rates are going to rise significantly anytime soon, especially when it gets to long-term rates. factorse cyclical keeping rates low and structural factors. and finally, global factors. not going to give room for u.s. rates to rise in the long end. becomes howestion far and how fast the fed can hike. jeff, where do you see that

neutral rate with the thirty-year bund yield? jeff: fed funds are moving to 3.5% over a few years. the fed is still moving gradually. agree is that there is modest inflationary pressure in the united states. in the not seeing that euro-zone or japan. it will keep rates at the 10-year or the 30-your part of the curve. rates are probably going to go up on more of the short end, with more flattening on the two-year. that is more of a flattening we would expect. we see it much more gradual.

it comes more from the endpoint. this is why we felt comfortable staying long-risk assets. david: congress will have $300 billion pumped into the economy in the next two years. where is it going to show up? lara: the money goes directly to the economy. whereu don't really know it is going. we're all notching up the gdp forecast, but that is less meaningful than seeing how that will impact the economy. uncertain. -- where i get concerned is that it is so unprecedented.

putting a stimulus into the economy, when it is already growing well. alix: thank you so much, lara rhame getting up early for us and jeffrey geller, cio ofm multi-asset management. the dollar index is moving lower. s assets are hanging on. hanging p assets are on. there was a rise in cost for services. 2/10 of 1% after 4/10 of a 1% gain for january. retail sales, disappointing overall, falling 1/10 of 1%. january, slightly higher. a lower demand for furniture and home furnishings. potential weaker retail numbers, but inflation's are still solid.

a goldilocks scenario for the fed. david: coming up, the collapse of the broadcom-qualcomm deal. your radio, turn on and listen to work hard legs from 7-9 in new york -- and listen to our colleagues from 7-9 in new york. life from washington and new york, this is bloomberg. ♪

kailey: coming up at 1 p.m. the u.s. administration administrator. -- the u.s. small business administration administrator. theresa may is giving her pm qs strong words for russia. expel 23d kingdom will russian diplomats in response to the attack. russia has not given a satisfactory response to the poisoning that occurred in the u.k.. russian assets will be frozen where possible. as to theg words potential poisoning of a russian spy living and the united kingdom. theresa may is addressing parliament, looking at

sanctions, human rights violations, expelling diplomats and freezing assets where possible. a contrast compared to the white house response. david: the trump administration shook the world in mergers -- the world of mergers and acquisitions when president trump blocked the bit of broadcom to by qualcomm. this chart,e from there has been a lot of investment by china into the united states. shows the rate of investment by china into the united states. joining us is reed phillips iii. good to have you. let's talk about china and the united states. what do you think of this decision on broadcom and qualcomm? us about deterrence to chinese investment in the united states in the future? this activity already started

in the obama administration, with extra scrutiny on deals with chinese buyers. that will only continue. abating.ee that trend the united states will likely become more aggressive in blocking deals with chinese buyers. mnad: is that affecting the business? are you hearing less interest at this point of chinese investments? reed: i don't think it will affect mna. if you are selling a business out of the market and a chinese the highest price on the market, you are very happy as a seller. there may likely be a price right behind that, from a buyer in europe or the united states. i don't think this slows down m&a activity on the parts of

united states sellers. chinese buyers are used to regular story -- to regular -- two regulatory restrictions. the outflow ofo money from china into united states companies. isn't affectede by that. david: to what extent have sellers in tech and semiconductors have been looking to inbounds in investment? : the market is strong across the board. buyers are on the sidelines in the semiconductor industry, i don't think that will deflate m&a activity. i think there are plenty of other buyers. m&a is as strong as it has been in many years. broadly,at about more

regulatory restrictions from the trump administration? m&a, quite apart from sify us, if you look at at&t and time warner. is the reality of the trump administration. people are getting more and more used to that. m&a is more challenging. the hardest thing for a company is to lock up with a buyer after going through the whole m&a for eight months and the deal blows up to two regulatory concerns. david: we have some news out of opec. alix: the headline is quite interesting. u.s.sees rival supply,

shale, seeing demand growth. this is the first time supply is .vertaking demand supply cuts are not working in part because of shale growth. brent is still holding firm by 4/10 of 1%. below 10 million barrels of oil per day. question, reed. sorry for the interruption. compare the climate today to two years ago under president obama? reed: activity is much stronger today. topanies are going out markets, particularly in the manufacturing industry, with the tax law changes. we are seeing interest

worldwide, other economies around the world have improved, particularly in europe. there is much stronger interest in buying companies, whether in the united states or worldwide. there were 30 transactions in 2013 that went up to 90 in 2016. i will expect this to accelerate, despite regulatory issues on the sides of china and the united states. david: thank you for your time today, reed phillips iii. later today, justin trudeau will be speaking to michael mckee at 6:30 p.m. eastern. that will be coming up on bloomberg. alix: i want to get back to that breaking news out of the united states. the response to the nerve agent attack on a former spy and his

daughter in the u k. very harsh rhetoric coming out from theresa may. be expellingm will 23 russian diplomats in response to the attack, saying that russia has not given a satisfactory response to the poisoning. all high-level contracts will be suspended with russia, russian assets will be frozen, travelers will also be monitored to the united kingdom. erasing gains for the day. russian stocks are falling. the sterling is moving a little -- a round a little bit. 139. it now seems to be holding in neutral. the ruble is moving as well. russian stocks are falling. harsh rhetoric we are looking at. we will continue to monitor those headlines as we cross. is now expecting rival oil

supply to -- to exceed growth and demand on the year after exceeding forecast from other producers. joining us is bloomberg's oil strategist. let's check in. what is different about this? >> this is the first time in the forecasting of 2018 they are seeing the year on year growth in oil demand. demand is growing stronger than supply. changing that outlook, there is less oil needed this year and then was needed last year. >> there was a dinner between

the shale producers and opec. what is opec going to learn going forward? reed: to some extent -- >> to stem extent, they are stuck. areome extent, they stuck. oil supply has not responded to the u.s. it shall sector, but people are starting to take the first steps toward final investment decisions on conventional oil products as well. mind ishave to bear in that last year was the year in which oil inventories came down very sharply. balance, opec is seeing interest building in the first half of the year and falling in the second half. alix: thank you so much, julian lee. am watching the sterling.

russian stocks are coming off the highs of their session. from theresaetoric may against russia, after a nerve agent attack on a russian spy in the u k. david: she said this is serious business. it serves a contrast into the rhetoric we hear out of the white house, freezing assets, taking out 23 diplomats, all of that affecting the markets. coming up on the open, tcw group. this is bloomberg. ♪

>> from new york city. 30 minutes to side of trading. open.s the city

half selectional seen by gop policy in pennsylvania. too close to call. closer, u.s. equities in washington d.c. retail sales fall break third straight month. 30 minutes away from the opening bell. the story as follows. 500.es still up on the s&p posting quarter of one percent. here.ollars weaker treasuries with the yields up a bases point. the story in pennsylvania too close to call. conor lamb narrowly sacconerepublican rick in the tightly contested special election in pennsylvania. therace could test president's clout out