there is hope. the market coming back from last week when investors ran away from whisk -- risk. and cautiously optimistic about reaching a trading arrangement with china, perhaps ending the trade war. and the chinese central bank not only has a new governor, it has a new official to oversee the governor as the top banking and insurance rater is named. welcome to "bloomberg daybreak." i am david westin. julia chatterley with us. better feeling in the market. julia: i was about the said, getting up. and as he rightly said, optimism in the market. let me take it to what we are seeing. happier monday for the european investors, talks are higher by half a percent, bouncing of levels not seen in a year. exports the key driver.

and as far as steel and aluminum. watch the euro-dollar, currency strength does not help the exports, the best weekly gain. .47. the level, 124 u.s. futures are optimistic. and gains as far as futures are concerned after 6% losses last week. and interesting price action. 10 year yield stuck in the range of 284, a familiar level after another choppy week. david: just as we were coming on the air, russia it is said to 10e -- from at least countries come in response to the gas attack in the u k, european countries coming together for a response to russia and will be penalties from at least 10 countries on russia. also, the reports that president trump could kick out russian

diplomat today from the united states. now we will get the morning brief, the treasury said to auction gold notes at this way, the largest o. and ms. monkman the top executive turner broadcasting, the head of dish network's sling to be will testify in court, against the proposed takeover of time warner from at&t. today the first day of the egyptian elections. the president likely to get a second term and voting will left there wednesday. julia: right now, first take, we are joined by rachel evans. and the chief content officer at bloomberg. happy monday. rachel, interesting price action. not only in terms of the weakness we saw the back end of the sessions last week, but also the sectors within it. rachel: we saw a selloff across the board on friday. we started seeing late in the

afternoon as an page kept falling and bouncing off of the two day moving average, it really into the day near its low and pretty much every sector was down. we saw a rally in defensive stocks, which i found curious, consider when we just had the new economic adviser appointed. so loading up on lockheed martin, for example. in related stocks. julia: and i want to take a look at this chart, which it shows the individual performances of all the sessions and to go to the point we were making, take a look at the selloff, increase the volume, pressure at the end of the session. today, we have reprieve and positivity coming prater with risk sentiment. but what is at stake as far as the broader sentiment? interesting statistic was the s&p 500 was on a longer streak, of closing below the midpoint in the entertainment --

intraday movement. we talk about buying the depth, one of my colleagues said sell the rally. it is interesting when we open today without persistent the afternoon. a strange week ahead, and of the first quarter, going into a holiday weekend, it will be interesting to see if people load up on stalks before that, but i suspect they will not. we know werange week had ahead, but last week we did not know we had a strange week, but it all came out of washington and it was a lot of straightness. we do not know what washington will hold. a lot based on geopolitics. >> and the whole trade issue of china becoming more complex. it seems like the u.s. and china wanted diffuse the situation before gets out of hand. i would suspect china wants to be able to give something so that they can declare victory and move on. they need china for north korea. those negotiations are coming up quickly. i want to point out --

julia: i want to point out another chart. the u.s. dollar, despite the yield differentials, the dollar cannot catch a break. rachel: we are looking at a weaker dollar. and it is the case where we have a move into safe havens, the yen doing pretty well over the last few days. we have seen it rebound a little bit today, but for the dollar it is a tricky time. we see some pressure potentially on the treasury situation coming out of china. and the potential threat that they can hold over the u.s. if they decide to scale back u.s. treasuries, so it makes it a mixed picture for the treasuries and for the dollar going forward. david: it may not be the only story, but a major story, the potential trade war. wese are some of the things heard over the weekend, particularly from asia. >> if we start to have a trade war in relation to global trade,

it could have an impact on the global community, and that is something we are watching carefully. >> i do not think sanctions need to have a larger impact on the global economy, but psychological impact of the degree of friction there is right now could be serious for markets. >> wyatt this point we do not see financial markets being overly affected by this protectionism, i think if it keeps going it could be very disturbing. david: as the week progresses, into the weekend, the theme we heard was what they have done so far in itself will not materially affect the economy or the marketplace, but what does it lead to? is it a tipping point? that is why maybe mr. mnuchin tried to back off a little bit over the weekend. marty: there is a tendency of the bark being worse than the bite. even tariffs announced on steel

and aluminum, half of them have been given exemptions, they are not in effect. and donald trump just not waiting that -- tweeting that the economy has never been better. he does not want to do anything to threaten the economic progress that has been made during his administration. that would include not having a trade war. i would suspect that scaling back comments will continue and that we probably will not have any kind of trade war. david: but we have the worst of both worlds, because in a sense donald trump wants to change the regime of china, but you cannot do that this way. and the worst possible thing is you shake everybody up and do not do anything. rachel: you had steve mnuchin say in order to get negotiations sometimes it kind of have to have action or something to hold of her people, and i feel like we have gone from having a --

approach, to a stick approach. korea coming over the weekend with e-sports versus the last -- exports versus the last two years. there is not a lot there. we are getting to the stage where people are trying to wrap up these kinds of negotiations by basically saying, we have a win-win situation here, in the case of korea, a win-win for china, and the world can move on. when: it is interesting, we looked at the response of china so far and i think stephen roach made this comment, we have seen them incredibly moderate. at this moment for china it is a pivotal time, so who knows ultimately what they come up with as far as action is concerned. the hope is for investors overall the action can be taken. and with talking about the south

korean situation, that is positive. marty: who would've thought that china would be the grown up in the room. the statesmanlike organization of the world. but that is the stance they are taking and china knows how to play this game. they have shown an ability to play into donald trump's narrative. donald trump said he had a wonderful relationship with xi. so they will play that. i think that they are doing a fitting right in terms of -- doing everything right in terms of messages. julia: and is saying if you want to pressure your president, then you do your work. withso saw changes further a layer is being put in. man,, a formerew regulator, a reformist at the pboc. rachel: one of the things that happened last week, we saw there

was a lot of talk about the unit technocrat. this was a guy who has been in the central banks for most of his life and is on top of how currency works, how a is getting at shadow banking. and there was a sense that he did not have the political connection. so everything with him, he has the political experience, he was a chief in a province, they has that kind of political know-how. but at the same time he is a reformer, somebody who has made efforts to rein in chinese banking. they should be on the same page. it is an interesting step going for the central -- to strengthen the central bank. david:: message we can take away his usual listen to xi, his remarks were all about party, party, party, how he will be controlling what is going on. marty: you can overstay the influence of xi on what is happening in china, thus the world. and his influence, his

moderation in terms of messaging, it is a key thing for all global leaders to pay attention to. cending sending to -- as to the levels never seen since mao. david: thank you so much, rachel, and marty schenker, bloomberg chief content officer. coming up, a glimmer of hope as he was futures are looking higher this morning after last week's selloff. we will take a look at the bigger picture with anastasia amoroso. this is bloomberg. ♪

>> this is "bloomberg daybreak." kailey: facebook is the nine

integrate the log of the calls and messages of people using devices. in a blog post, the company says it is part of features and it can be turned off in settings. facebook users discover the call #gging as part of the campaign, only to be surprised by the amount of information the data files contained. uber has agreed to sell its a southeast asian operations, withdrawn from a fast-growing region. acquire their operations in an area of 6 million people. in return, the u.s. ride hailer i will take a 27.5% stake. and they will join the board. and the british based -- sports fashion has agreed to purchase finish line, $568 million is the value.

they have sold merchandise and macy's department stores and it will give jd a presence in the u.s. a sports market. it must be approved by shareholders from both companies. that is your bloomberg business flash. julia: rebounding in the us equities futures offering hope of stabilization after the retreat last week with a trade war fears easing and the best global stock route giving away to a more optimistic mood this week. i remember talking about positive u.s. features on friday morning, so i will counter that slightly. will they stay positive, or will the bears be putting back? joining us is anastasia amoroso, jpmorgan's executive director, global market strategist . what do you think amar we still miss corrective period? anastasia: i think that we are approaching a condition like we saw in early february, but clearly the trade rhetoric is

real and the trade policy israel, so i think it will be a headwind for equities near-term. there is a lot to unpack longer-term. i would say that we have solid fundamentals and the fact that earnings will have double-digit growth once again year into year, we will start that in april, so i think the longer term pillars of support for their, but we have a look at the near-term trade rhetoric. julia: we mentioned the losses for the s&p 500. the dow jones down almost 5% in 2018, the s&p is off 3% year to date. sayhat point do investors that there is huge opportunity and we should be dipping our toes back end, irrespective of the headlines around trade. anastasia: we are looking to put our toes back in. i think what we see this year is not everything is going to go as goldilocks as it did in 2017. clearly, tax reform was a big

narrative then. trade policy will be that for 2018 and it will come with a more volatile path. it is not that the opportunity is not there, it is the path to the ultimate result is bumpier. david: i know it is difficult, but separate trade from the underlying fundamentals, these - -it is easy to forget that we had a fed meeting last week. julia: feels like months ago. david: i want to put a chart up that compares the dividend yield on the s&p 500 and you can see the cash, it is actually up above the dividend yield. what is that telling us about the relative attractiveness of investing in fixed income versus stock? anastasia: fixed income markets have gained some shares, some advantage of the equity markets, and that is with the equity markets have been grappling with, but this is only one measure to look at and one thing

we have been looking at is the buybacks. look at the net by back yield you could end up with a number above the six-month treasury yield. we are expecting hundreds of millions -- of billions of dollars this year and buybacks, so it could be a pillar of support. another way to look at it is in terms of earnings yield versus the 10 year treasury yields. you are looking at close to 5%, whereas 10 year is trading at 2.8%, certainly the event toward equities. julia: what about the supply we will get far as the rates markets are concerned, we have records this week. take a look at another chart. ards for the 10 year yield. and you can see the white lie, the two-year yields. this is tracking higher for the two-year yields. talk about concessions when we

are talking about is levels apply. anastasia: this is why the view we have is the front end rates will continue to go higher, while the back into rates will not necessarily do so. the reason is that when you mentioned, the fed raising rates, but also supply. if you look at the supply come although it will increase across the curve, the supply will increase three times as much in the short end, versus the backend, seo coupled the fed with the supply dynamic, that is why we will be bearish on the front end rates. that: the treasury -- said is their policy, to borrow more the shortened, hwwhy? it is distorting the marketplace. anastasia: over the last number of years, they've extended the average return of their treasury buildings -- yeearnings. they want to what it around that level. so they will issue a lot more treasury bills, which we have already seen, in order to balance them out -- the balance

of maturity around these levels. so the has been a shift in policy and when the has been articulated, and therefore it is something we could break into our forecast. julia: what about the u.s. dollar? i think there is a level of confusion you would expect in the risk off periods, that there would be dollar rallying when we talk about the rates market and higher yields surely that favors yields, surely that favors the dollar here. anastasia: look, the differentials are in favor of the u.s. dollar, but we cannot just look at the nominal, we have to look at the inflation-adjusted one. and what you will see is it is not as favorable as it used to be for the japanese buyer to come into the treasury market. and in inflation is not running away, but it is rising more so than it is in europe and japan. david: you will be staying with

us. coming up, xi tightened his grip, naming the top bank -- to become the regulator of the central bank. we will talk about the next. right here on bloomberg. ♪

hasd: in beijing, the pboc yi gang has party secretary. he will rank above the new covenant yi gang and play a key role in setting policy. it should align the bank more closely with xi's policies. in addition to that, yi gang we said we want to open up markets. how is this affecting the global economy? anastasia: china has been making steps to open up the market. the introduction of the oil futures contract in china, that

is on top of more chinese exposure and industries, and also just making inroads into opening up the market. why china is today has a fine balance and a pair executing whaty well, 6.7% growth is we expect. the big issue there is the impact of the u.s. trade policy and i will say even though longer-term our stance is another will be a resolution to this, the negotiation process can be a source of volatility. and if there is one thing we have to understand about the policy that the administration is pursuing is everything is open for negotiation. julia: you have talked about the traded skirmish, rather than a trade war, as an investor how do you trade these markets where you can pick and choose how we go, based on the fact that this is not going away? anastasia: i think longer-term,

we have to admit to the notion that trade wars are not in anybody's best interest, not in the u.s., china, europe or japan. if that is the case and a take a havea year out and we positive fundamentals, i am going to be a buyer some of these markets, but i think patience will be required. the other approach is to say, who is not impacted by trade policy? we know who is, china, europe and japan, those are the key countries, but who is not impacted is the latin american countries. what donald trump wants to pursue is reciprocal and fair trade anything we can define what he means, countries with a great trade deficit with the u.s. and a number of tariffs they impose against the united states. those countries will be subject to trade negotiation. if you look at brazil, look at

chile, they actually are not in the camp. they do not have a trade deficit. david: you are still positive all month and american countries -- on latin america and of those countries? anastasia: yes. julia: you are staying with us. coming up, the president taps john bolton and oil gets a boost. we will discuss with michael cohen. this is bloomberg. ♪

>> this is bloomberg daybreak. alix steel is off. let's take a look at the markets. better sentiment as you can see. are higher byies

4/10 of a percent, slipping 10 basis points in the last half-hour. good news for the s&p futures after a whopping 5% loss in last week's session. and getting higher by one point percent now. down check on the markets, 2%, but really bucking the broader risk off sentiment we saw in the last session from last week my things being attributed to the gains we saw last week, whether it is iran, the new session -- the new national security adviser for the united states. and what is going on in the industrial metal space, copper is a break below the 200 moving the average. we will discuss all these things in a few moments. david: now we want to get an update on what is making headlines outside of the business world. first word news. kailey: in barcelona, protesters have clashed with police after the arrest of called usual mom.

he has been living in brussels. he was arrested in germany and then back to spain to face trial. he has been traveling around europe. and in egypt, voting underway to elect the next president. there are nearly 60 million eligible voters and authorities are hoping enough cast ballots to give the election legitimacy. the president running virtually unopposed, after others were arrested. and china says it is open to negotiating over the growing tariff dispute. businesses are looking for a quick settlement after beijing announced a $3 billion list. speaking in beijing today, a foreign ministry spokeswoman said, "our door for dialogue is always open." global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries.

. am kailey leinz this is bloomberg. julia: thank you. amonge market plunged fears of a trade war last week mental oil was going higher. take a look at the chart. this shows you the relative correlation we see between s&p 500 and the crude futures and as you can see, as we get to the backend of march, significant divergence in the rally, with pullbacks that we saw in equity prices. the biggest coming after john bolton was tapped to be the new economic advisor. and what does this mean for the iranian nuclear deal? joining us is michael cohen, head of energy commodities research at barclays capital. and anastasia amoroso, still with us. talk about the rally.

two things were driving oil last week. weeklylly see eia's reporting, so that was in excess of the market expectations. the geopolitical risk premium which has been present for some time, i think with the of claim of bolton was clearly, the participants looking at the end as of may 12. so i think the market pretty much assumes that there will be some kind of reduction in iranian supply. i'm not sure that is the case. there are many different things iran can do to skirt sanctions. in the past they have built, they have used the more oil in their power sectors and they have sent oil to different places. there is wiggle room from their existing suppliers. that is we would -- why we saw the diversions. upid: why don't they just

the production? we have something from your notes showing what happened is saudi arabia absorbed the shock of the increased oil production from iran, so why not reverse that? production iranian win to down they could go back to the levels of 10.2 to 10.5 million barrels a day. right now they are producing less than 10 million barrels a day. i think there is wiggle room in terms of other opec suppliers, but they are all committed to the deal and i do not expect them to diverge from that. julia: you make an interesting point about the way that opec looks at this and the shift we have seen between the five-year look and the seven-year look. anastasia: that was a cynic and development last week, for the last couple years we have been looking at the inventories relative to their five-year

average. last week, opec changed the threshold the seven years, so what the inventories are today versus the seven year average we still have a lot more millions of barrels to go before we reach of those levels, so i am curious to get your point, does this mean opec will extend their production cuts further into 2019? michael: may have moved the goalposts by talking about the use of the seven-year inventory average rather than the five-year. by our calculations they would likely hit the five-year threshold by sometime between april and may. however, if they use the seven-year, they may not hit it until august or september, which means they would need to extend. the question is not whether they will extend, but at what levels they will extend it at. they have always provided themselves flexibility. the important things that these opec countries have to contend

with is the fact, if the price is at $70 a barrel this morning in midland, in cushing, $60-60 five dollars, they are unlocking more oil production, not in the short term for six months, but over the next two years. julia: when you are talking to is a month ago you said you were concerned about a correction in the second half of this year. does this change your view of that expectation? michael: i think the biggest risk right now for this second half of the year and even for right now goes back to the geopolitical issues, venezuela and the issue of iran. there is not a lot of wiggle room with u.s. a supply this year, but it makes a difference, this current price level, for how we look at the markets for 2019 and 2020. u.s. supply is growing at more than 1.5 million barrels a day and completions are up. we expect the market surplus to

really return as we get into the second half of the year. david: i want to go to the question of u.s. production, we have another chart that shows the u.s. a trade deficit over all and this really shows the way that they diverge, u.s. exports more and more, which cuts into the trade deficit. it has come up with respect to the china deal. michael: we are exporting a lot of crude and petroleum products, liquidsral gas plant and the infrastructure on the gulf coast is expanding, so that will be a continued tailwind for the u.s. economy. julia: so glad we have you, because i want to get your take on this. we spoke with the commerce secretary and he spoke about the prospect of tackling reducing the deficit between china and the u.s. by buying american oil. >> china needs to import very large amounts of lng, and from

their point of view it would be very logical to import more of it from us, than for no reason other than to diversify their sources of supply. but it would also have the side effect of reducing the deficit. julia: i am less excited about what he said about lng. let's expand that to oil, the prospects are far greater. talk about the opportunity there. michael: they are importing more lng, something like 60% more or 70% more on a year on year and thatst last month, is data that came out this morning. lng is a part of it. julia: not big enough. michael: right. and it is really about oil. david: as you put this in a larger context, if you could not have a discussion about investment without talking about energy, is it as much of a

factor as it was 10 years ago? anastasia: so many answers. i will pick a couple of them. first of all, as a look from the equity investor perspective, with equity, this does not capture as much as it used to. nevertheless, as we approach a $70 barrels of crude oil it has ramifications, whether it is positive for equities or what we need to think about with demand, $70 versus $45 a barrel. cap-x was5, 2016, nonexistent and a lot of emerging markets were cutting back, and cutting back on fiscal spending. oil was a driver there. having a more stable oil price is helpful in that regard. one of the questions i am wondering about from the energy perspective, the

back end of the curve really has yet to come up meaningfully, so what does it ultimately take for the backend to be sustainably at 65? michael: as we have taken a look back, higher than deferred month, it is actually deferring additional investment into the longer-term oil supply picture, so we do believe that we need to see the higher price in the back end curve as we move into the 2020, 2025 time frame. otherwise there will be a gap between the supply and demand outlook as long as demand continues to go ahead about 1.5 million barrels. julia: that goes to your point on the backend, if we see price adjustment. talk about chinese futures in the oil market, are we excited about this energy space or is it more about the internet as asian -- the internationalization?

michael: the issue is not necessarily whether they will do it or not, the chinese remain committed to this and we should not underestimate the prospect paid at the the issue is when we look at wti, the settling point for an imax is -- and every single week they publish data about inventory changes w atti -- at wti. we do not have anything you that level of transparency in china. that said, the new independent refineries in the shandong province and other parts of china, that the regulatory process will be conducive to more liquidity in that chinese contract. i've heard issues with the amount of time it is being traded, only a limited amount during the day, so there are significant headwinds to the uptake of that contract, but it is something we should look at. julia: how do you hedge with capital controls on the currency

? watch this is space, a long time to come. i want to get your house perspective on what we see with industrial metals. copperchart showing actually falling below the 200 moving day average, but i could have chosen iron ore. what do you think is going on with the industrial metals in particular? and can we tied to the broader story out of china? michael: we have seen high levels in stocks in iron ore, that is also playing into it. copper versus iron ore, more downside risk to iron ore than copper. we see supply disruptions on the cover side, supporting that going for it but the broader picture is one where the real estate sector is slowing and the chinese economy is a slowing, still growing quickly, but not what we saw in the last couple years. so that is moving those two

industrial metals lower. anastasia: and i think there is a distinction to be drawn between the industrial metals versuspper and aluminum iron ore, because iron ore tends to be much more geared toward china. in the construction sector versus the industrial metals that remain constructive, despite the pullback. factina matters, but the that we have strong growth globally, that should be good for industrial metals. yes, thank you both for being with us. up, sanate of -- coming francisco's fed chair could be the front runner. and tom keene is back. pimm fox will join at 10:00. "bloomberg surveillance" can be heard all across the united states of america on sirius xm radio. this is bloomberg.

♪

>> mrs. ♪ -- "bloomberg daybreak." and this is hewlett packard enterprise greenroom. now chair bloomberg business flash. the top executive of turner slated tong testify today as the court fight the takeover of time warner from at&t bid at the deal will allow at&t to raise prices

on just your prayers which will in turn pass them on to consumers. at&t argues the deal will benefit consumers by allowing the company to better compete against netflix and amazon. and that i was packing company has rejected an $11 billion takeover bid. they say that the proposal undervalues the company. the deal would make the memphis tennessee-based company the top producer of paper and cardboard boxes in europe. remington has filed for chapter 11 big up see protection, saying it has liabilities of half $1 billion. the deal had already been negotiated that would cut up by $700 million and inject 103 $5 million of new capital into the company. remington took a hit after the election of donald trump as the self-proclaimed threat of the gun industry. julia: thank you. now we turn to the wall street beat where we cover three things

that wall street is buzzing about. the federal, reserve facing a backlash for a lack of diversity. uber agrees to sell it southeast asian operations to grab. and alexa, sell my shares, alexa coming to wall street. david: jason kelly is joining us , the executive editor for global television at bloomberg. john williams reportedly is one of the candidates for the new york fed. that is not surprising, but the reaction was. >> it is amazing how they the backlash has been paid john williams -- has been. john williams, not the composer, he took over for janet yellen at the san francisco fed, he is a well-known name and he has been floated to replace bill dudley, the outgoing new york fed president. david: widely respected. >> and it is a huge job.

think about the financial crisis, this is where it was really all happening in. and the backlash over the fact that there is another white dude, another middle-aged, older white guy and it has really drawn a lot of criticism, even before -- david: cory booker said, wait a minute. we have never had a woman or a person of color in this job. jason: that is right. there are some things drawing criticism, when the lack of diversity, the other is the notion of is he too much of a wall street insider. bill dudley worked at goldman sachs before he came to the fed job. it is interesting how a vocal of the criticism is. julia: and talking about lack of consistency, uber out of another major market. jason: diminishing their

stake in southeast asia, going to grab, following their sale of chinese operations, this seems to be part of the strategy of the new ceo who really is retrenching and looking to kind of lower the burn. the cash burn. david: i think they are burning through cash and he does not like that. julia: softbank here, so interesting. pushing for consolidation, because they want to make money too. jason: if you go back to the original strategy of uber, they wanted to take over the world, that was really travis' app roach. david: and our third story, alexa taking over the world. jpmorgan is saying you can give me research, they are not to the point of make a trade for me.

but it could be around the corner. jason: they are testing it out and the idea of trading, show me the research -- keep in mind, capital one has already put out something consumer facing where people can check their balance. one interesting thing is the continued collaboration between j.p. morgan and amazon, working on a credit card together, the health care initiative. so these two companies with a touch in the financial world and -- david: and the final four. jason: brackets for a cause. david: we cannot win without taking them on. julia: i have no idea about this. david: the nun. we have to beat sister jean.

we have to do it. said you would take her down. david: we will be sad, but we will do it if we can. jason: it comes down to who are the bollards positioned -- ballers positioned to win. tome guys have winnings, so who is new to the contest is looking good. tim armstrong looking good if villanova wins. and the dark course, david einhorn, i believe he has michigan. david: he does. not that i have been paying attention. [laughter] jason, thank you so much. coming up, penalizing russia. the president preparing to kick out russian diplomat in the poisoning of a former russian spy in the u.k. , you can tv

.nteract with us directly this is bloomberg. ♪

david: this is what i am watching, russia. reports over the weekend that the president will go along with advisors and kick out russian diplomat, but we want to make sure we do not damage relations too much. we have learned 10 european countries have come together. we will learn about what they have done, but taking sanctions together. julia: only 10, the reports suggested 20, says it will not be involved will be more interesting. and on the u.s. side, congratulating over the elections. david: not mentioning it. theresa may by herself.

we have a chart that shows this, quite interesting in, down to the lowest since 2014. the russian economy is doing pretty well, but perhaps getting larry. -- leary. that theyes who said would do something about poisoning, but only 10 take action. julia: the u.k., who are their allies? and anyway, coming up in the next hour, the global chair of m&a. plenty to discuss with him. this is bloomberg. ♪ retail.

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

near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. david: there is hope, the market coming back after last week when

we were done the most in two years and investors ran away from risk. peace negotiations, secretary mnuchin is cautiously optimistic about china, perhaps ending the trade war before it has begun. and the chinese central bank has a new governor and a new official to oversee the governor, as the president of china names the top insurance regulator to parker terry -- party secretary for the -- i am here with julia chatterley. welcome back. julia: thank you for having me. shall we take a look at the markets? cautious optimism for the markets, s&p futures higher by 1.3% right now, taking a lift fro the european marketsm. levels not seen for a year or so. the u.s. 10 year yields pushing

higher by three basis points, back in the range. the back end of last week losing ground, gaining ground, losing ground. the dollar-yen easing back from the strongest level in more than -- and it was time to the broader risk sentiment. greater optimism coming back to life this morning. i want to do -- a lot to do with the tariffs. watch this space. down 1.3%. that is a china story too. david: now for the morning brief. the u.s. treasuries set to $3ion 3 million -- over billion, starting this afternoon. and the top executive of turner broadcasting and ahead of dish network's sling tv will testify as the court fight resumes over

at&t's proposed takeover of time warner. today marks the first day of the egyptian elections. the president likely to secure a second term. voting will last through wednesday. julia: let's get an update on headlines outside of the business world. first word news. kailey: president trump about to take his most aggressive actions against russia today, likely to announce the expulsion of russian diplomat after a gas attack on a former russian spy in the u.k. other nations expected to the same, after it was said there was no possible explanation other than russia to blame. in barcelona, protesters have clashed with police after the rest of the former catalan leader who is living in brussels. in germany and could be sent back to spain to face trial. he has been traveling around

europe to press the case of catalan independence. voting underway in egypt. nearly 60 million eligible voters and authorities are up and enough people cast ballots to give the election legitimacy. the president is running virtually unopposed after other candidates were arrested or withdrew under pressure. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. david: honestly, the trump administration moved forward, imposing tariffs on imports of steel and aluminum and said it would be imposing tariffs on at least a $50 billion worth of goods from china. andelcome maggie gage yana barton. i will play something that steve

mnuchin said indicating that maybe we are getting too riled up about the problems with china. >> we are simultaneously having negotiations with the chinese to see if we can reach an agreement, we want to cut the trade deficit at $100 billion and we want to eliminate forced joint ventures and we are having productive conversations it with them. i am cautiously hopeful we reach an agreement, but if not we are proceeding with the tariffs. david: how does it look to you in washington, this is your tocialty, is it realistic say that this is what we should do to reduce the trade to visit by $100 billion, please get it done? maggie: it is important to listen to what the secretary is a saying, this is a first step, not a final step. the tariffs are one thing we have, but we are exploring other tools like negotiations and at some point there could be talks of multilateral nations joining

with the u.s., maybe more talks about the wto as a viable option. david: that sounds really good, the first step, but the president has a said that the trade representative would come out with a list of specific products that they will impose tariffs on. do they have time? maggie: i think of history is to be a lesson, what we have seen with this administration is that these are usually negotiating positions and where we stand today may not be where we stand three days from now and they tend to negotiate to a more reasonable position as time goes on, so i think we are cautiously optimistic that that will apply with the chinese tariffs. it is tradeer policy or what we see coming from the white house itself, it just adds to another level of uncertainty for investors.

how do you characterize what we are seeing in terms of price action and investor sentiment right now? ofa: there is no shortage things we are following and when you think about the marketplace there is a function of two key inputs, we talk about the multiple, which has taken a beating due to all the fiscal data points we are watching, the other part is the earnings growth story, the fundamentals side that we are looking at as well. the vix was barely at 11 at the start of the year, now over 23, so 10 year and a 20 year averages tell us we should be around 20, so the volatility levels have been subdued and we are watching sentiment coming out from the washington, but also globally. what we are also watching is the earnings growth that continues to be very strong. julia: two critical issues and what we see with all the noise surrounding the trade environment and what it means

internationally as well for the united states, we do see domestic stocks outperforming. i have a chart here which shows since the beginning of margin the outperformance of the russell 2000 relative to the u.s. major it, the s&p 500. caucus through it, -- talk us through it, do you expect this to continue? yana: what has been interesting to note is the leadership of the market to date. this takewatch a place on a daily basis, there are only two sectors leading the market here today and it is tech, interesting enough, and consumer space. on the industry basis come over 60 different industries and less than a third are outperforming the market. a to be had,alph but you must be focused on the balance sheet quality of the businesses you are investing in

and the topline trajectory. selection will be key. i think you need to see organic growth come through. and financial stability of the underlying company is paramount at this point. david: media has a tendency to focus on the last thing we heard, but we have to bear in mind it is not just china, not just aluminum and steel tariffs, it is also nafta. how do these fit together? is there an overall policy that the in ministers and is pursuing? that the administration is pursuing? maggie: that is yet to be seen. i will note on nafta, in recent weeks, stalled negotiations have started to move forward again. whether there is a grand plan, i am not sure we can say that is in place at this point, however

more negotiations and negotiators seem to be getting more serious when it comes to our neighbors to the north and south. david: i cannot the force this from the changes made with the administration, does mr. pompeo plan on staying, are changes likely to affect this trade? maggie: i would say they have to, particularly you have mr. bolton coming into the national security position, he will have the ear of the president on a daily basis. i think mr. light house or and all of the people in the trump administration certainly have their role in shaping the policy. i think with the president, it is sometimes unclear who has his ear the most on a given day. he has said he likes a lot of differing views in his inner

circle and he seems to reinforce of that as he makes staff changes. and i think that is part of the uncertainty in this whole process, you never know who is going to go to the top on any given day. toia: i think it is great have you on the show, but we need to talk about the rallies we have seen from young adults around the united states over the weekend and the prospects of action over gun control. do you expect any stands to be taken, whether it is the republicans or democrats, and does it move the dial as far as midterms are concerned? policy pointe what we have seen will happen has already happened. i think what was passed last week addressed in a small way some of the gun regulations, or opened the possibility to study gun violence in the u.s., and that is a step forward. and in addition we heard the attorney general talk about bump

stocks, exploring the ban of bump stocks, so these things will be considered by the administration to be a legislative win going into the midterm elections, but it is clear that based on the number of people who turned out in washington dc this weekend and today hit enter 55 other -- and rallies throughout the world, that may not be enough and the voice will be brought to the polls in november. julia: maggie thank you so much. yana staying with us. amidility striking a gain, the market slump last week.how are investors digesting -- adjusting. that is next. this is bloomberg. ♪

julia: this is "bloomberg daybreak." the top executive of turner broadcasting and the head of dish network's sling tv will testify today as it forces resumed the court fight against the proposed takeover of time warner. the government said the deal will allow at&t to raise prices, at&t denies that and this says the merger would allow it to better compete against netflix and amazon. facebook denying that is secretly log calls and messages of those using mobile devices, following media reports and user complaints. they say that blogging is part of one of its features and it can be turned off. fist that users discover the call logging after getting to download their facebook data as part of the delete facebook campaign, only to be surprised at the amount of information the files contained. and berkshire hathaway says

there has been a nonbinding offer for a building materials manufacture that they have invested for over a decade. higher thanwith 10% the closing price on march 23 and values the building material company at four to family and dollars according to a filing today. that is your bloomberg business flash. julia: and the s&p 500 posting its worst week in two years last week my volatility spiked once again and the flareup underscores the return of volatility to the markets and investors are having to adjust. still with us, yana barton. investors underestimated the return of volatility, but since this year we have seen an increase. to what extent have investors adjusted in the way they put together portfolios for the pic above volatility and how much still has to be done? yana: i think when we are

looking at what is selling in the market, last week was certainly a reminder that equity asset classes and de-risk on assets, you have to understand what you are investing in. when you see correlations -- we saw that last week, you had three-month correlations spike, what is telling you is the movement of stocks is really in unison, which means there is indiscriminate selling, that is an opportunity for active investors to see what is selling more than it should, not based on fundamentals but on fear or sentiment or uncertainty, which as certainly ticked up. volatility is a friend for active managers. julia: i think the classic example of that was forge a 50 declining stocks in the s&p 500 -- 450 declining stocks in the s&p 500. where are the opportunities?

what we have seen as well are the stocks like tech stocks and financials under pressure, particularly at the back end of last week. yana: we need to remind ourselves what has caused the ascent higher with the blue-chip companies, some of them are within cloud computing and others, these are mega trends. trends thatclical will be with us for a long time, meaning the industries are being disrupted by new technologies. we have talked about total media ad spend growing double digits. that is being taken over by digital platforms. when you talk about cloud computing, that is just starting. when you talk about e-commerce, that is still less than 10% of over $20 retail pie, trillion in total. the reason i mention this is a

fundamental investors watch earnings and earnings growth trajectory for consumers and information-technology companies in aggregate compares really strongly relative to the markets. in 2018, information technology sectors are expected to post in excess of 10%, 400 basis points higher than that of the market. we watch the earnings because we believe they are the leaning -- a leading indicator to price. julia: and you can get in at the lower levels. david: is this sector by sector, -- byck buy stock stock? you can say within the sector i want to look for free cash flow, all the things you traditionally think about. yana: we have actually looked at the market and we've tried to figure out, where is the greatest alpha generation coming from. it is industries over alpha. this skews within the sector,

you get three times the returns you would in making sector bets. when i mentioned about a third of the industries are performing in the market, they are not just tech and consumer, they happen to be within the health care space, and astral space, and slivers of consumer. there are different opportunities for us to look at company by company, industry by industry, where the greatest opportunities are. you bring up a good point, the market over the past week is now selling at 16.5 times next year's earnings. that is cheaper than it was the beginning of the year and the earnings growth trajectory continues to be strong, that is 18% growth year-over-year, they are getting something for six in at 18%.rowing julia: do you think you'll get back in the market, rather than stepping back to see how much further we could fall? yana: i think selection is key,

being active is key. for the longest time, retail investors probably thought that fang is a stock. this is associated with ia company. it is important to know what you are investing in. perhaps we made it too easy to mimic a fang like exposure, to mimic an etf in tech space, perhaps now is an opportunity for the investors to ask the question, what my investing in? it is easy to get in and out, but do i understand 25% of my exposure is in one stock, one sector? understanding what you are investing in is key. david: you will be staying with us. coming up, international paper in a bind, the largest paper producer's bid rejected.

shares are down. more in the paper chase, next. this is bloomberg. ♪

david: consolidation may have returned to the paper industry with the $11 billion bid rejected by the smurfit board, saying international paper company undervalued smurfit. you were talking about disruption of the business and my understanding is part of what is to rising -- is driving this is international retail, because you need a lot of cardboard boxes. yana: the other point is rising inflation. pricing power of the underlying companies. there a a lot of different trends going on, but i think e-commerce is a big one. over $20 trillion in total retail spend, less than 10% in

e-commerce. last quarter, q4, e-commerce was 9%. we are talking about billions of dollars potentially going to trillions, so this is still in its infancy. david: we want to bring in peter over in dublin, explain this. we know international paper in the united states, explain why this would be a major geopolitical move by international paper from your point of view. peter: sure, for international paper most operations are in the u.s., despite their name and smurfit is based in europe, but has significant operations in south america, so there is not a lot of overlap between the two companies, this would give international paper a grayscale in europe and -- great scale in europe and south america. david: so they rejected the bid, but left the door open, saying you undervalued us, leaving the

door open. peter: they rejected their first bid on march 6. there was expectation international paper would come back, now they have rejected the second bid. they said the offer undervalued operations and they seem to be leaving the door open a little bit, and as we have reported in the past they would consider an offer around 40 euros a share. so it may seem the door still open, it depends on international paper and what they want to do. julia: leave a sense of what they could get to -- do we have a sense of what they could get to? 40 euros, that seems to the upside of what they provided. peter: international paper, since they made the first offer their shares have dropped, so with the new offer today they've moved to the cash element quite a lot, but share prices have a fallen.

julia: which makes total sense. it is getting more expensive for these guys to achieve a higher price. david: briefly, does it cause problems with the european union, would they let it go through if they accepted it? could say thatwe they definitely will, but i'm not sure if there will become petition. others say there is not a huge overlap between the two, so that would depend on what the eu makes of it. nice. tax breaks could be yana and peter, thank you so much. plenty more to come. this is bloomberg. ♪

julia: this is bloomberg daybreak. .'m julia chatterley positive hand over from europe. stocks rising by 5/10 of one

cent. higher by 1.4%, positive news from steven mnuchin regarding situatione u.s. trade . --e than three and a half and but the industrial and medical space copper breaking its today at moving average, down by one and a half percent. david: let's get an update on what is making headlines. negotiatingopen to with washington over a trade dispute. beijing announced a thrill billion dollars -- $3 billion list of imports that could be the target of a trade war.

president regimes spoke today before a turkey euttend summit meeting. he told reporters he would urge the eu to remove artificial turkey'sgainst membership. police in siberia says a criminal probe is underway into possible negligence and fire safety violation. fire alarms did not go off. global news 24 hours a day powered by 24 -- 120 countries. president trump's plan to cut back on bank deregulation is preceding ahead with bills pending in both houses that would trim back on the toughest requirements of the dodd-frank

act. it is a major step in the right direction for the banks, whether it is released from volker, whether they care at all about trading securities but they have to develop the expensive infrastructure, or relief from the more onerous capital requirements, there are real steps in the right direction. >> we welcome claude davis who joins us from naples, florida. good to have you here. to say.d what he had is that how you see it? >> we do. this is a good first step to deal with the issues in dodd-frank that were an overreach for smaller community banks. most ashat hurt you the

a practical matter in your day-to-day business? flex day-to-day the biggest thing has been when dodd-frank was passed to arbitrary thresholds were put around assets. we are beginning to pass that and with that comes additional cost in lost revenue of $15 million. if we can deal with those issues that don't make sense, and weren't a cause of the financial crisis it can help community banks. about you are talking your merger with main source of bank and that combination puts you over that $10 billion asset level. merger not have made financial sense without the deregulation we are talking about? >> it made strategic sense for us. it was an opportunity to gain scale. with the increased compliance

cost them with the investment in technology required today, scale does matter in the banking business. we think it is a good step building that scale. terms of action going forward, will you be extending more credit as a result? is providinge credit to our local markets is a key part of our charter. the other thing we have done is announced a $1.7 billion community development program which is an investment in our lending andortgage income neighborhoods, as well as additional direct philanthropy. thed: where'd you see biggest mismatch that would be addressed in part by this revision? it is the fact

that it reduces the burden of certain things like stress testing, where dodd-frank in place a rigorous stress testing regime for all banks above 10 billion. this bill increases that level to 100 billion. it lowers our cost, which is critical. giving us additional scale allows us to move our lending limits up where we can do a small business or middle-market credit up to 30 million, as an example. julia: one of the things he said underestimate the burden of technology and the investment that requires. scaling that about investment deciding what amounts of money to put where and when? about -- weto think

all have to protect against cyber security. cyber risk requires significant investment by all banks. we need to make sure we stay competitive with the larger ,anks like j.p. morgan investing heavily in mobile applications because many clients prefer to interact with us via mobile versus in person. , weg a small original bank have to match those investments and capabilities on a risk management side and on the client access side. you have a window into households and small businesses. is it going forward? is there increased demand? economyld tell you the is strong. we feel good about where the economy is. unemployment is low.

.eople are making investments people are more optimistic than i have seen them precrisis. what has been interest in, --ital investment has been what has been interesting, with the optimism we are seeing in the economy, we are going to see capital investment pickup which will increase loan demand which has been tepid. david: is that part of the reason you are hoping this will pick up? >> we are. we see with the optimism from lower taxes and lower regulatory industriesoss all come on our clients are more optimistic, talking more actively about capital investment and growing through acquisition, looking for more opportunities to invest back in their business. >> are there any alarm bells

being signaled on the commercial real estate side? is anything there that gives you pause for thought if not alarm? with rates being as low as we areve been, what seeing is a stretch for yield. classes, ifll asset i have a concern, people are moving asset prices up in that search for yield. as a result, we have seen the cap rates on those properties come down. those are still reasonable. we are seeing some low cap rates in commercial real estate that could be long-term cause for concern.

>> does the consumer have more money? >> we have not seen stress yet. we were hopeful with this tax cut impacting the middle class they will have more money in their pocket to look for continue tos, to make purchases. at this but we have not seen any consumer stress and we continue to see good optimism. thank you for joining us this morning. wins for wall street were few and far between. to discuss the current great toy climate,

have you with us, what is your thought on this sector specifically? >> as growth managers our exposure to the financials are small. less than 5% and pales in comparison to that. close to 15%. madel echo the comments earlier that the financials space as a whole is a beneficiary from the tax and regulatory overhaul. we are still yet to see the dividends of the tax benefits. and his bank raised pages for many employees, invested back into their business. this is what we are talking about. it should lead to better loan growth. the financial space has gotten a little ahead.

but overall it continues to be a beneficiary. if that doesn't mean you want to invest, what does that do for your investors? to be strongs have to support economic growth. absolutely right. it does the backbone of our economy. if you think of the consumer, you want to see that demand for a loan come through. think what type of, the investment comes in all shapes and sizes. perhaps the hard assets we are used to is becoming soft in some ways. when we think about security and cloud computing, mobile, that is

a form of finding its way on the tech side of the equation rather than traditional hard assets sides. julia: so we need to rethink our thought process. we are not quantifying it properly. yeah, it is just -- spending is really coming through. tax bill.e companies were investing in their number one asset, people. you are putting money into their wages,plans, increasing putting money back into the business to enable you to continue to excel. no matter what the environment is. capex is something we have not seen picked up as much. thew a statistic that majority of capex was driven by

cloud computing. something to the tune of 70% s&p 500 in 2017 driven by cloud computing. the nature is changing. julia: critical for productivity. exactly right. thank you for spending time with us today. heating up this year, could president trump's america first agenda cool them down? and you could turn on the radio, from 7-9 in new york. bloomberg surveillance can be heard in the bay area, washington, dc, across the net .t states on sirius xm radio this is bloomberg.

today, anup later exclusive interview with the volkswagen cfo. now to your bloomberg business flash. withdrawing from you another fast-growing region, they will acquire 620 million people including deeds. the u.s. ride hailer will take a snd. in a combined and rejecting a sweet and $11 billion takeover bid, the

proposal undervalues the company and was the second attempt to buy smurfit. the british-based jd sports fashion has agreed to buy u.s. sportswear real taylor finish line -- retailer finish line. the purchase would give jda significant presence in the u.s. sports market. your bloomberg business flash. david. david: although short of the record facing them at two years ago, as you can see from this chart, 100 $98 billion of deals already completed. another $555 billion in proposed deals. for an update we welcome bob. great to have you back.

where are we? >> it has been a solid year so far. the pipeline is astonishing. factorsd think these going up 50 basis points would have an effect. not really. in fact, that may be short-term stimulative. is a fly ing that the ointment is all this stuff about trade and tariffs and merger control. that doesarely a deal not have a lot of global ramifications anymore. if it starts during that i am not sure where it goes. david: let's talk about the half-full part. factors that are causing them to say it is time to take a look at jumping into the lake?

arehe drivers of m&a particularly tepid growth. you have to grow some other way. affects every business, not just tech companies. it is the relentless pressure to change and become more efficient , technology is the biggest driver. the capital markets have been good. we thought going into the current administration they would be more accommodating in terms of antitrust issues. frankly that has been true. factorhave this other which we will have to see how that plays out. ceos and boards are generally pretty optimistic but there is this issue looming. david: -- julia: you call it a queen bee.

a loud buzz going on. broadcom and the administration, the united states is two thirds of global m&a, problems here are a real problem globally. >> there are a few deals that don't raise these kinds of issues. a years ago there were few handful, the threshold for the chinese being able to decide on a transaction is $60 million of activity in china. lots and lots of companies beat that threshold. today you have these issues, all the stuff you used to have. it is this governmental pushback.on, this we are putting up a list now

under president trump. that did not include the broadcom. so, it has become a mainstay. it was broadened a little bit too critical infrastructure. it was supposed to be for things that were important. this is an administration that has scotched more deals than all the rest combined. sot made broadcom significant is it blocks the deal that was not a deal. it was a proposal. did theyer you think buyer get a chance to make his case? no. how do we do that? are we acting like the chinese on this? david: are we?

>> may be. obviously not all of these issues raised these kinds of problems. it is going to affect things. david: it is it affecting the climate in the board room, is a ?aving a chilling effect i don't even want to think about it because it is so fraught with peril? >> i don't think so. but all directors know about this stuff. they will raise more questions. i had a deal recently where there would have been free board meetings one usually there would have been one. i don't what to lose that of the fact this is only a handful of deals. i think there has only been three officially blocked. that is three out of thousands let's not get too carried away. on the competition antitrust side, over 100.

not realize that. are they consistent? as a lawyer, how do you maneuver through these? >> some of them, like in india, they don't even have rules. it is hard to know. it is not easy. controls, not unusual. julia: own laws or guidelines? -- when knees laws or guidelines? hundreds of testers march in washington in the push for greater gun control. -- hundreds of protesters marched in washington in the push for greater gun control. this is bloomberg. ♪

david: we have just had breaking news. julia: this is something in the

news already prayed the potential for snap, unanimously proposed the proposal by berkshire hathaway. taken ahave not position on this deal. but they say no thank you very much. 21%.at is higher by almost ahead of that. right now, rejection from that proposal. >> coming up, of black rock, here with jonathan ferro. this is bloomberg. ♪

>> from new york city, i'm jonathan ferro. this is the countdown to the open.

coming up, finding a firmer footing bouncing up to the biggest losses in two years. trade war softening. the u.s. hoping a truce can be reached china. and before $300 billion of treasury supplies this week alone. a littlerkets look something like this. equities firmer on the s&p 500. 12%. fx market, dollar weakness, of 4/10 of 1%. yields up three basis points. globally, stocks rebounding as fears of the trade war soften a little bit. through the weekend, business leaders voicing their concerns. >> if it keeps going on this