-- jamie dimon says he can help solve the problem. the amazon of wall street. jamie dimon has big plans for the bank to go bigger. he wants to expand almost everywhere. 2% movengs, s&p sees seven times this year, pressing new portfolio for the normal. david: welcome to "bloomberg daybreak." here with alix steel, the star of "commodities edge." >> if you have your inner commodity nerd residing in your soul, you can join me. should watch the show the same way i should read the back of the new york post to learn about sports. if you are an equity bowl, you are breathing a sigh of relief today, s&p futures up by nine points after being whipsawed all

day yesterday. also a broader stronger dollar story. we are seeing a steep selloff in europe in terms of bonds. getting guilt -- gilts absolutely crushed, some pmi data came in weaker in the u.k. and the eurozone, pretty much flat also rebounding from the selloff we have seen the past couple of days. we are joined by vincent cignarella and lisa abramowicz. i want to start with what feels like this unbelievably moody market. i should call it the toddler market. 2% moves, seven times so far this year. david brought this up, is this o thing we see where all of a sudden there's a trade war and you have to sell or is this a fundamental china deal with new normal? vincent: it is a lot of diaper change if you want to talk about

toddlers. it is not fundamentals. in the ee -- end, the new york stock exchange, the percentage of stocks above the 200 day moving average tracks closely to the bloomberg financial conditions index. it comes back to financials. what we see in equities is part ifo and just part insanity, you will. the other two markets are generally i do not equate the fx guys as part -- as smart as the mixed income guys. both of those markets are taking this in stride looking at this as almost of a negotiation as opposed to a reality. alix: that is what i feel like yesterday we should of paid attention to was the lack of reaction in treasuries. if we had listened to that, you would have been buying futures at lows. lisa: you saw gains in for example, boeing bonds at a time when the stocks were getting slammed. i think there's a broader

takeaway and it calls into question the broader market structure right now. an incredible amount of money has gone into private debt and private securities that are not easily traded. you have to wonder how much stocks have become the goto liquid instrument to how much they could potentially swing as people look for a way to hedge potential exposure. this is something i find really interesting, what does this mean about the structure of today's market? david: it also raises questions about what we know about the structure of donald trump, the president. the first thing i heard from the steel yesterday was treasury market is not moving, that was the first thing you said as you came in. are we sure we are right this time because we might not be right -- there might be a trade war. vincent: i think what we are seeing is a negotiation. at the end of the day, everyone realizes and we have known this for a long time, china doesn't play fair. you cannot be in an open trade

with a country that has essentially a fixed exchange rate because they are essentially that the boy the pressure, it lets the steam out too hot.gs get where do you go to let the steam off? it is not really there and this is what trump is trying to get at i think. lisa: i find it amazing china is winning. today there was a story of the gdp going after and pleading with trump, please, don't go too hard on this trine a trade war thing. -- china trade war thing. china is playing a game and it looks like they are doing it wisely if you look at the reaction. exact you have taken this second story, what is going on

in this negotiation because we heard tariffs and then we heard wilbur ross say they were surprised at the reaction and larry kudlow, the chief economist for the president came out and said none of the tariffs have been put in place, we are putting it out for comment. there's at least two months before any action are taken. when we came in yesterday morning it didn't feel like it was up for comment. is this really a matter of they misjudged the reaction from china and the markets? is our negotiator in chief really doing a good job at negotiating so far? lisa: i am not going to weigh in on the latter point, but the market did think china responded perhaps a little faster and more aggressively than almost everyone expected and this took people by surprise. clearly china was very tactical about which states they wanted to go after and it had the intended impact. david: doesn't it look like the u.s. had to back down a bit? vincent: i don't know about kudlow backing down. he has always been the free

trade guy and taking the path that -- david: your tone was that, too. vincent: the people are talking about if kudlow keeps going down this line, will he beat scaramucci's timeline in the white house. do we -- david: do we think that is what happened or do we think the white house was surprised? wilbur ross seems to be and perhaps the president was watching and said wait a second. vincent: the market reaction yesterday was from china's response. i don't think the white house was surprised, but maybe they needed to take a step forward to calm the markets, which is exactly what kudlow did. as soon as his comment hit the tape, the fx market compensated, bonds traded off. and: jamie dimon weighed in said wait, trade war is bad, but this is what you need to do. you need to send gold, you need

to come out and talk about how you will negotiation. i love that. to negotiate, i will tell you how it is done. vincent: can we do like an alexander haig, everything is going to be ok. david: i am in charge. alix: we just showed you the opportunities jamie dimon -- jamie dimon sees for jpmorgan. he wants to be everywhere. it?question is, can he do as you wind up seeing, big conglomerates always come under pressure for being too big. interesting because u.s. banks have such an upper hand and so many levels, they have regulatory environments getting relaxed, a tax overhaul giving them the benefit. frankly, capital markets are pretty good. if they don't start spending money, if they don't expand and try to get an upper hand, especially as there are sort of more automated parts of their

business used to be lucrative, they will be found flat-footed. he has to go at this approach and he has to sound like we are the dominant ones, but we want to be even more so. david: at the same time, there's a danger of extending supply lines to far. look at wells fargo. as you get bigger and bigger, it gets harder and harder to make sure everyone is the hating themselves. vincent: it is like -- is behaving themselves. when you are like managing so much money, you cannot get the returns you got before. you can easily get too big and run afoul of regulators. you need to stay in your wheelhouse. if you should raise -- if he strays too far -- alix: if we have blurring on regulation on the margin and iplicitly it says to ceos, can take on more risk and do more stuff and i don't have to

worry about things as much unless you are wells fargo. vincent: that is what got us in trouble in 20 -- 2008. they did not understand the areas they spread into and that undermined the entire system. david: i am not even sure how implicit it is. alix: i was trying to be nice. i think the president is saying we want you to go bigger, we want more growth. alix: great to get your perspective this morning. coming up, another rocky week for the markets. more on that volatility we are seeing and why it is not spreading to other assets classes. this is bloomberg. ♪

♪ alix: this is "bloomberg daybreak." daily market swings keep getting momentum. the s&p has moved 1% or more 26 times so far this year. triple that we set seen -- we have seen in 2017 and 2% moves in eight trading days. what are people asking you right now about this? >> i think one of the major things is the divergence between equity volatility and other asset class volatility. when we look at equities last year versus this year, last year we were in a situation where people were worried about rate and affects volatility and people were -- f/x volatility. underlook at vix prints 10, we had a record number. this year we almost had the exact opposite. aat we really haven't seen is

spill over to other asset classes. a chart toave illustrate exactly that point. these are volatility in debt, fx, and equities. they all spiked in early february and since then, it has come down quite a bit in fx and debt while volatility in stocks stayed up. the two markets have diverged. stewart: i think that is partially a matter of -- if you think about vol, it tends to be auto realizing. particularly in the equity sector, central banks have come in time and time again to look at let's say january and february of 2016 when the market collapsed, the fed became more dovish, e.m. rallied and people got back in the markets and became bullish. now later in the cycle, equities are a little more dubious and there are a higher -- there's a higher margin of error. david: that is one of my

questions, what causes this? is a because we think equities may be highly valued so we are not quite as sure? react to the to trade war because it tends to react to geopolitics. as far as the trade war, it's interesting because the amount of uncertainty around the potential outcome whether an all out trade war or ago she did settlement is so high i don't think people can price it in. with equities, people have been planning it. they have been complaining about the stretch valuations, but justified them on the fact the was so low.w -- vol now that you have those conditions out of the way, it makes the equity market more dubious. alix: let's talk about how you hedge. you can see what has happened to apple. this is push relative to calls, the three-month skew, the highest level we have seen in two years, which implies there are a lot of traders who want to

put on bearish bets for apple just in case. how much of this are you seeing in the market and what has that? play out? stewart: there tend to be swings as far as hedging activity because at some point people hedge and at some point they exit does the market is too choppy or declined to much. i think it's interesting to think about this measure because really it is correlated to the level of volatility. skew tends togh, be higher. what this means for specific stocks -- i will not comment on apple, but the tech sector we have seen the vol has outperformed that of other sectors and i think kind of to the point of what were the conditions in place that made the sector rally so much? quantitative easing helping the secular growth story and as well the idea that vol remains low and momentum remains strong. all of a sudden those

preconditions for the continued rally left of the market. alix: if you come inside the bloomberg, i can show you the vix curve and the orange is where we are now and the green is where we were a week ago. you see elevated short-term, but then looking to go down at the end of the day. are you looking for volatility to normalize? greatt: that is a question. i think that is probably the million dollar question and something we believe will happen. if you think about the vix over the lifespan of the index, it has been around 20. that includes times of great market stress and economic expansion. averageo high of an read at any point now, vol is relatively a cell at 20. one-month vol.es it's kind of pricing in, which i think is justified. david: where is positioning right now in equities? where -- what does that tell you about where we are going? stewart: if we look at

proprietary measures of positioning come all of last year despite the fact the u.s. equity market rallied, position was relatively neutral whether we look at fund flows, futures, sentiments, or even momentum in the market. right after the announcement of tax reform and right around the time of the bill signing in september, that is when we saw positioning stretch to unprecedentedly long levels. it snows apprise we saw such a violent and many people described it as a technical selloff given positioning was at a multiyear stretch level. alix: that says a lot about tech , lazy positioning in tech. david: does that mean we are back to neutral in position? stewart: we are almost fastweight in terms of money positioning we tend to track, institutional client position. david: very interesting, stewart warther will be sticking with

us. coming up, jamie dimon has spoken. the jpmorgan ceo released his annual letter and says he says -- sees opportunities for his bank to grow almost everywhere. more on that, next. this is bloomberg. ♪

♪ alix: this is "bloomberg daybreak." -- 3.1n stock up 3.1% point -- 3.14% -- jamie dimon said in his letter the bank can grow almost everywhere, joining and stewart basak warther is with us as well. walk us through how big they want to be in all these different areas. sonali: he had some pretty assertive plans for almost every

division. he saw growth around the world and wealth management, he wants to double the market share in certain areas. he actually ironically named amazon twice in the letter. i like that because we want to pay attention to amazon and financial services. across the board really -- he certainly out lies -- outlines risk to the financial system and said he can grow in fixed income, places where wall street has had issues. alix: i wonder if goldman is like i told you it would work out at some point. david: what does it say about the risk he is willing to take? can he have these expansion plans and not take on risk and regulators in the past that want to discourage? i am glad you brought this up because regulatory concerns are a big part of the letter. he talks about balancing risks and rewards. willlks about the risks qe pose. there's a bit of a balance on risk and reward. alix: they say jpmorgan is going 1000 plus1000 -- hire

wealth advisors in the coming year. sonali: right in the middle market, they see growth across the world -- across the board. david: where does the market share come from as well? but who the employees, is servicing those people now that will be pushed out. is this going against bank of america or is the -- or is it the mom and pops? you have a lot of brokers moving around after the broker protocol changed across the industry. alix: it is a good point because they say for high net worth, they will try to add people as well, which highlights how far ahead u.s. banks. if you come inside the bloomberg, this is price-to-book ratio. the yellow line is the ftse bank and the s&p -- euro banks are the white line. how do you deal with this? stewart: i think there are three

reasons why the u.s. banking sector is trading at a premium to the u.s. -- euro banking sector. myopic.et is they are benefiting from what seems to be a deregulatory shift. another factor would be the fact of the fed is already in a tightening cycle. if you think about europe, core inflation is stuck at 1% and the market is not pricing a hike until 2019 midyear. there is risk premium around can the ecb credibly hike and when will they do it? and finally the fact there is this overhanging nonperforming loan issue with some sectors -- segments of the european banking sector. i would argue that on the margin , we are at an inflection point of the cycle similar to how the

dollar has now begun to weaken --act stations of the fed expectations of the fed end cycle. what jamie dimon is talking about is actually breaking down the distinction alix pointed to between europe or the world and the united states. he knows the fed and regulators. if he is really going to expand a lot overseas, he has a lot of regulatory systems to deal with. can he effectively globalize his bank? sonali: that is certainly what he is saying in the letter. we had the scoop a day ago about hsbc getting out of many countries and jamie dimon saying he is ready to expand. you point out that deutsche bank -- jpmorgan had a note saying they should get out of the u.s. completely. what big bank can benefit as european banks have to pull out of the u.s.? david: if you go investment

banking in china, which is a relationship business, you have to have people with relationships. it is easier said than done. sonali: and wealth management as well. it dominates this market, but camp jpmorgan take more -- can jpmorgan take more share? alix: you end up having short-term rates -- a real rate that will help u.s. banks. the issue for european banks is regulatory rate and -- can the ecbdibly, hike if the u.s. enters a recession in 2019? the market is expecting the deposit rate gets to zero and economists are calling for the deposit rate to be zero by the time mario draghi leaves office, that kind of passes the buck. that's generally a more dovish outcome rather than a hawkish outcome. david: could the differential

between the european central banks and the u.s. affected the economy in europe versus the united states? in europe companies have been dependent upon banks as opposed to capital markets. does that limit the growth potential for europe? stewart: i think that is potentially why the u.s. benefited so much in the capital markets -- and the capital markets in the u.s. are so robust. you can go to the public market and raise an issue. in europe, you are dependent on banks. i think the two are really coordinated as far as europe recovering. alix: sonali bostic and stewart were there -- stewart warther will stick with us. retail.

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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. alix: this is "bloomberg daybreak." i am alix steel. it's a totally different morning if you are waking up. dow jones futures up by 70 move in the dow jones yesterday. s&p futures senior 2% move eight

time so far this year. futures up by 12 points. european stocks feeling good despite the fact composite pmi came in weaker. underscoring potential peak in growth in the european economy. of the dax up over 2%. it's the selloff we see in the bond market, take a look at gilts. seeing yield move higher by about three basis points. we sits points is where headed into jobs friday and it's a broader, stronger dollar story. crude pretty much stable after getting whacked on the trade wars. david: we turn to kailey leinz with first word news. good morning. kailey: more about the trade wars. both the u.s. and china signaling they are willing to talk to avoid an all-out trade war. larry kudlow said there is still time to work out the differences. after each country announced tariffs on the other's products.

the embattled head of the environmental attention -- protection agency -- mounting a campaign to keep scott pruitt in office while he fights a series of ethical allegations. president -- there is more evidence facebook failed to protect people's privacy while making billions from the information. facebook said eta on most of the 2 billion users could have been accessed improperly. mark zuckerberg admits he made a mistake. wei am the first to admit did not take a broad enough of view of what our responsibilities were. i think it is important to keep in mind there are billions of people who love the services we are building because they are getting real value in being able to connect and build relationships on a day to day basis. i proud of our company for doing

that and i know we will keep on doing that. kailey: global news 24 hours a day, powered by more 2700 journalists and analysts in more than 120 countries. i am kailey leinz. this is bloomberg. alix: first to admit? how long did that take again? 14 days. pmi data out this morning showed a drop off in march hitting the lowest level in more than a year. it us from london is david powell, bloomberg economist's senior euro area economist. have we hit peak growth in europe or is this short-term? david: -- david p: the quarterly growth rates are likely to slow going forward. what is happening right now in europe and the euro area is that their capacity is being eliminated. that was opened up by the euro crisis, the rate of growth is going to slow to a trend rate of about 0.3%.

it is slowing, but this was always to be expected by investors and the european central bank. alix: i am wondering if we expected the slowdown in the u.k. the manufacturing side, you can say they had really bad weather and that's why we saw a rollover, services doesn't explain that. what to do make of that data? david p: certainly the weather did have an impact on the number -- the composite number. services can also be affected by the weather. for example, people had to stay home, stay home from work during that period. anyone in london will say the trains basically did not operate. the economy across the entire economy there was an impact and that likely explains it. admitted in their last meeting they expected that slowdown due to the weather. they will also be unfazed by this. davidthank you so much

powell. it raises the question, people like the u.k. because you had global tailwind outweighing any sort of brexit headwind. will that still be the case? david: it's the larger question whether synchronized growth will continue or not. trade backdrop is the dicey question. rapid response to president donald trump tariff proposal drew many reactions to what might happen next. isi think the trade war friction. i do not believe we will have an all-out trade war. -- ank he is willing willing participant in trying to press much harder than what we are used to for better train -- trade arrangements. >> i think we are locked in a good, traditional game of chicken. i do not think we are going

to see those big moves until it becomes attend will reality. david: -- doing their best to figure out how their business could be heard. number one, industrial machinery. mechanical machinery and the list goes down. they have not gone into effect and they will not for a couple months. we now welcome danielle booth, stewart warther still with us. danielle, you worked for years in the dallas fed and advised the president. if you are a central banker looking at this play out, how do you separate the signal from the noise because we are -- we hear there will be tariffs and then maybe not. danielle: if you look into the weeds of the university of michigan's most recent survey data, we saw a protracted decline in upper income confidence and we saw they ask a specific question about news

flow and how it affects their thinking and we have only seen a 50 point positive to negative swing in this particular query among non-income earners -- these were times of tremendous market turbulence. all i am saying is this might be bluster, this might be noise, but it's beginning to seep into the thought process of upper income earners who are the primary movers up stock. david: one of the things we do when things happen unexpectedly is try to go back to past experience. is there anything in history that gives us guidance about how these things should or could be handled? danielle: i think it is becoming very disconcerting because last year there were 52 instances where the vix closed south of 10, unheard of. the prior record was 8 times in one year. awareors became kind of of a pattern that everything

mattered in the last hour of trading. i looked at the smart money flows index and you have seen the big hit or big institutional money decided to forget about the noise and exit stage left and that i think has thrown the trading patterns off. as i said -- as i wrote, investors are losing their moorings because they do not know what to expect day to day as what had become -- there is no pattern right now. alix: that brings us to how the fed will react versus the underlying data. here is what james bullard had to say about trade and a bumpy ride. james: the president has a lot of conviction on this issue and is determined to get better trade deals for the u.s. i think he is willing -- a willing participant in trying to press much harder than what we are used to for better trade

arrangements for the u.s. and that means a bumpy ride, i think , for all of us as these negotiations proceed. alix: does a bumpy ride mean the fed will have to back off on the three potential four hikes? stewart: what i mentioned before was in the past times of turbulence, the fed steps in and becomes more dovish and that is -- is one of the reasons why the market has repeatedly rallied. if you go to the press conference in the march meeting, it may be the fact this was powell's first meeting, but he dismissed two things. one of which was the potential inflationary and deceleration of growth from a trade war and he iporissed the widening of l and what has already happened in the market. i don't think we can say for sure whether it will have an impact now. if these tariffs go into place,

it will not even happen until the summer. if you think the fed really is backward looking, they might not actually make a move until the september meeting, in which we -- case we may have already had another hike. david: you were there. was there ever a push? there's a lot of speculation that mr. powell may not feel he has any responsibility to these markets at all. danielle: back in 2012, he actually said the put had become part of investor's psyche, that they had become trained and he was concerned this policy would actually be perceived as a strategy because investors new the fed had his back. he knew very well there was a put. i think there is a put today and i think the strike price is a lot lower than it used to be. alix: what kind of sector rotation can we expect? what will be the right play for

that? stewart: we began writing about this in june of last year. initially i labeled as the yellen call overwriting on growth stocks in the sense that where the fed had been implicitly selling the market a put before, they were overwriting the market -- also buying from the market of call because in this case, they are asset inflation is potentially a problem and saying they are ending qe and there will be a portfolio balance channel effectively operate -- opposite way and into bonds and other assets that have yield. really, to what daniel said before, the strike price is lower, potentially i was wrong in june saying it was overwriting a call, but we are in a caller market. the fed has put a caller on the market selling the call and offering the put as well. alix: what does that mean? stewart: we are range bound. alix: i am thinking, let's breakthrough derivative nerd talk.

do you take -- trade tactical opportunities? what is the strategy behind the call? stewart: tactical opportunities of course. is really thehat best opportunity we have seen in a long time, the quality of relative value -- the quantity as well. i think the range is really interesting because if you think about volatility itself -- it should be reflective of where you go from and to on a point to point basis. andwas very low last year we moved hundreds of points. now we will be in a tight range, but vol is high. david: on the equities side. if that is right, why do we see volatility equity? does the market believe there is a caller? would volatility be where it is right now? stewart: no and that is a good point. i think we have a couple things going on. one of which is the shift in products from the bits exchange rate being out of the markets. there's a lot of fundamentals on

a micro basis changing the way trading occurs. we have yet to really feel and understand that collar. danielle: i would add that what we have not seen his movement in the move equivalent to the vix in the bond market. i think that is what is really going to make markets jittery. clearly we have seen a protracted rise in short-term interest rates. everyone has been speaking about libor, but we have not really seen a spike -- a similar or sister spike in the bond .olatility index, move i think that will really spook markets and central bankers because they pay attention. thelearn after being on inside for a decade, they pay attention to seepage and any hint of contamination from one market to the other. remember, the credit markets are much larger than the stock market. if we don't see movement there, i think we have the range.

i think the caller is intact. david: that was your point yesterday. danielle: it was brilliant. alix: i don't remember yesterday. david: stewart warther and danielle booth, thank you both for being here. later today on "bloomberg markets" the atlanta fed president will be here. he joins us at 11:00 london time and 4:00 p.m. new york time. -- as youlook at commute, you can turn on the radio and listen to tom keene and jonathan ferro from 7:00 to 9:00 and pimm fox will join from 9:00 to 10:00. this is bloomberg. ♪

♪ kailey: this is "bloomberg daybreak." coming up in the next hour, the u.s. china business council president. ♪ beat time for wall street where we talk about three things is buzzing.l street meeting expectations, jamie dimon goes to war on bureaucracy and says meetings are a waste of time. then tossing the coin, currency dealer leaves deutsche bank to enter the crypto industry. high-yield higher. -- a former star bond trader for his hedge fund. david: joining us is megan

collins. we want to start with this meeting issue with jamie dimon. we have been talking about his letter all morning long. there is one quote "urography is a disease. "bureaucracy is a disease. it's often the petri dish of great politics." great language. i believe this, i think this is right. i have almost never heard a ceo that doesn't say this, but it never happens. megan: i said to myself, i do not even know if i want to get started on this because i agree. it was not only in the letter from jamie dimon, but excerpts from people who run the different units below him. it was echoed and certainly seems like a big theme in terms of like let's bring back some of the entrepreneurial spirit. it's very hard in a bank of that size. david: it's very hard. it virtually never works when people try this. i wonder if there's a little tension. but it's not have bureaucracy,

but let's get really big and go into every business and expand them. if you don't watch out, you have a lot of people doing what they want and without anybody supervising them. peggy: on the other side, he is going gangbusters in terms of we are growing in every part of the bank unit. i agree, you have to have a strategy. alix: he does say there should be war rooms, so basically operating committee to streamline tasks. what is the difference? more room in the meeting. david: the only thing he left out was skunk works. get a team and you say you start from scratch and come up with something new. these are standard moves from the company. you have war rooms and try to cut meetings that have agendas. alix: don't you usually do that when you are struggling and need to revamp. it's funny to think about it now when they are doing well. david: executives do this. this is what they do. i'm totally sympathetic to the

motivation. i have been in so many meetings that are too long and nothing comes from them. peggy: i also think it's an indicator they are paying attention to tech firms. tech are competing with firms right now like google for talent. i think he is indicating if you come to us, -- the things tech firms do is there are no chairs, you have to stand because that's a natural limitation to how long the meeting is. peggy: it also burns more calories. alix: we sometimes do that here. moving on from deutsche bank to starting your own crypto fund. a sales manager left in december and is starting a cryptocurrency exchange in japan and it was really interesting the way he phrased -- he said the current turmoil is typical of the dawn period and this is a turning point, the japanese cryptocurrency market will be

sound when the exchange operators and investors instill discipline. peggy: one thing that jumped out about this story is he has currency experience. he actually myself, has been in foreign-exchange and currency before. we have seen so many people jump into crypto who have been on the asset management side. david: it raises the question whether there is currency. sox: do you buy stuff therefore it has to be gold or commodities -- david: we are not sure what it is. maybe it is a currency. and japan is one of the biggest markets for cryptocurrency right now. we have seen a lot more regulation and hacking they have had to deal with. david: last subject, hedge funds. , he ispoint capital hiring a name we have heard before, john hoffman. peggy: from lehman brothers. this is one of the most highly anticipated hedge fund losses of the year. he left millennium last year. we are hearing he already raised

several billion dollars and hired several people, including john hoffman, break -- big .redit trader he try to get an $83 million bonus back from lehman at the time. he was not successful in doing. said, you court already have been paid the $83 million, you cannot get it twice. alix: are they going to poach talent from pershing square? the wall street journal reporting most investors in pershing square capital management have asked for their money back with about two thirds of the cash could be withdrawn by the end of the year being pulled. peggy: it looks like this is .nother sign -- is struggling he has not really been able to pull it together since the valeant loss where he took about a $4 billion loss. potentially at kind of a low and he has struggled to make that back. he had a good bet on nike, but

this is another sign a lot of money is leaving because of the stress of losses. alix: i have a hard time feeling bad for him. david: really? alix: yeah. david: you are tough. great have you, peggy. .oming up, the viacom merger more on what i am watching, next. alix: bloomberg users, you can interact with charts using gtv . you can save charts for future reference. you can watch the video where we talk about it. this is bloomberg. ♪

♪ david: this is what i am watching. it's the media. to-viacom, they are trying put the company's back together. they originally were together and these are the three people really involved. viacom, sherry

redstone basically owns them, the majority interest, and we moonves who has made a bid. the word is bob bakish doesn't really want to run it and sherry redstone -- shari redstone last time.ed bakish maybe he thinks he should get to run the place? here is what stocks have done since the separation. the white being viacom and the yellow being cbs. moonves like the god of programming? what would a cbs-viacom be without him? david: i have known him a long time, i would not call him god. he's a really super programmer and he has done a heck of a job. when these companies separated,

everybody bet the wrong way and they thought viacom would be the future and cbs would be the past. sherry redstone -- shari redstone gets the say. les is not being shy. alix: how long is this going to take? david: i think it is up to shari redstone. she is a determined woman and she will decide. david: i love talking media with him. -- alix: i love talking media with him. -- potential china response, how do we move forward in a market that is relatively calm after the turmoil we saw yesterday. 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. round two, trade wars are

and negotiation ploy. jamie dimon says he can help solve the problem. analysts said the worst is over for facebook after mark zuckerberg talk about closing security loopholes. mood swings, s&p sees a 2% move seven times this year. david: welcome to "bloomberg daybreak." i am david westin. i am with alix steel in new york. that is the white house, of course. it is the source of turmoil. alix: what do you think happened yesterday? what do you think president trump thought? speculate.s easy to he does watch cable news almost all the time. wilbur ross said there was no expectation of this, and he comes from wall street. alix: and you know that china has a checklist of what to do the second u.s. took out tariffs

. david: their word news reports last week that they had prepared them already. whippyt was a very session yesterday. at one point, the dow moved to 700 points. now s&p futures up by about 11 points. it is a broadly stronger dollar story. trade war settles down, and we're heading into jobs friday. yields up by about one basis point. but a selloff over in europe after weaker pmi's. .1% and also got caught up in the trade war and a big risk off but stable now. pay attention to these -- monsanto, second-quarter net sales missed the lowest estimate, coming in at just over $5 billion. share, also a

missed estimates. interesting to say that they are looking to close the merger with bayer. they are optimistic from that. i have not read anything it on china and potential trade wars. it will be interesting to see the longer-term effects. david: the market suggests there will be more volatility than normal. a lot is going on. there is that merger and then possible effects on monsanto from the tariffs. stock missing that sales there. david: let's check on headlines. kailey leinz has first word news. kailey: the leaders of the u.s. and china are waiting to see who blinks first in a high-stakes fight over trade. both have announced plans to impose tariffs on each other's products, and attention is now on whether president trump will try to make a deal.

there's still time to back down. the u.s. tariffs can be imposed for 60 days. the trump administration is backing off one of the biggest sticking point in negotiations for a new north american free trade agreement. the u.s. is softening its demand north american content in car manufacturing. the administration is pushing towards a stopgap deal this month. in brazil, it looks like the former president is heading to prison. his appeal was rejected to stay free. leads opinion polls for october's presidential election. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am kailey leinz. this is bloomberg. david: breaking news. we have learned that the parent company of the new york stock exchange will require the chicago stock exchange. there were reports of

discussions going on. exchange triedck to sell themselves to a chinese company, and that was stopped. the parent company of the new york stock exchange will be buying the chicago stock exchange. alix: the sec blocked that deal in february. it speaks to the change we are seeing in how you trade. if you have exchanges struggling, it is a very small portion of what we used to be. david: and the new york stock exchange is a big one. chicago is like less than 1% of u.s. equities traded. it is a changing complexion of the marketplace. it is an interesting story. alix: the stock is unchanged on the news. david: people spent yesterday trying to sort out the exchange of trading threats between the u.s. and china and what they amounted to. no clear answer insight. >> i think it is a good

traditional game of chicken. >> we have to be prepared to carry out the threat. i think the danger of a real trade war is far higher than it has been for decades. >> i do think we have entered a and thebetween china u.s., but i am not expecting this to be what you saw announced over the past 24 hours, to be the end game. >> there are many ways to win the situation. -- athink he is willing willing participant in trying to press much harder than what better trade for arrangements for the u.s., and that means a bumpy ride. >> the situation is very unfortunate. are enjoyingries the most benefits of all the global trades. dani: john frisbie is the

president of the u.s.-china business council, and he is trying to improve commercial relations between the two countries. he joins us from washington. good to have you with us. how are you doing with that job? >> [laughs] we will know more in a few weeks or a month. all the activity over the past couple of days, your reporting is spot on. it is not the end game yet, nothing was actually implemented. looks like we're triggering a phase where negotiations can kick in, and that is with the business community wants. tariffs,noise about and there are some very real issues on the table. u.s. government actually started pursuing it last august, and that is around china's policies and practices that require technology to be transferred for market access and mexican sectors. the biz -- in certain sectors. the business community would like to see those addressed but

without getting into a trade war. to do collateral damage to each country's economy without some kind of result or david: it seems that everyone in the u.s. agrees something needs to be done. jamie dimon said something needs to be done. but are we going at it in the best way possible? the chinese think they are getting the upper hand in negotiations. this is part of what "the global times" had to say. as china deploys its country attack, -- counterattack, it will cause the united states suffering as financial and global gains diminished to z ero. do they have a point? we came out and said we're going to be really tough, and almost immediately the administration dialed it back. fromthink the quote there

the chinese media outlet underscores the point that no matter who gets hurt more or get hurt, sides will and that is the danger of going down this road. if you get to the negotiating table, it is important to figure out the objectives. the trump administration has not articulated that wealth. the trump- administration has not articulated that well. businesss.-china council, we're focused on the issues at hand. to endd say to get china requirements for joint ventures in certain sectors which give them the leverage to require technology to be transferred. we have not seen what the administration is setting up or its objectives, so it is hard to assess the risks about whether or not they will be able to achieve the results they want. been something i have thinking about is, as we see economic data will over a little bit, a trade war is a backdrop

of a global recovery losing steam. what would china do if that happens to their own economy? will they say that we will do four things to offset any issue we have with the u.s.? prepared its counterterror for list, you can that bank they probably looked at -- you can bet they probably looked at products that are part of the debate in the u.s., but you can also bet they have alternative suppliers. i suspect that, given they have a large domestic economy and that economy is growing pretty silently, they feel like they can weather a storm. at least that is what they are saying. be that sure it will simple. i do not think either side will win if we get into a trade war. i think there will be a lot of collateral damage. my hope is that both sides will recognize that and will realize it is that are to negotiate a solution. david: you must be talking to

these people every day now. what are you hearing? is there a deep level of concern, verging on maybe panic, or are they taking it in stride? >> companies have been aware of the risks around possible tariffs since the beginning of the trump administration. as you recall, the use of tariffs was floated early on. so i think they have been looking at their exposure related to china and potential tariffs. now that it is getting closer, think companies are more concerned. businesses want solutions to the problems, not just sanctions that will do more harm than good. what they're having difficulty connecting is how to get from tariffs to a solution. that is what they want to see fixed. they do not want see both economies damaged trying to get there and not having any results. john frisbie, u.s.-china

business council president. thank you for being with us. lori kudlow spent much of the day yesterday trying to calm the markets. in an interview, he said that none of the tariffs have been put in place yet and these are all proposals we're putting out to comment. joining us now is kevin cirilli. out the way the white house had it planned? if a like they were calling audibles after the initial announcement. perception of the most republicans today who are still in recess from congress. mitch mcconnell told a local report in his home state of kentucky earlier this week that he is nervous about what type of political hurricane is headed for republicans in the midterm elections. ther republicans, such as iowa senator, are speaking out about the president's trade policy.

they hope the president reconsiders. ernst says that it is my hope the trump administration will reconsider these tariffs and pursue policies that enhance our competitive rather than reduce our access to foreign markets. she and her state are impacted by the soybean market. groups inside and outside of the beltway are also calling on the president to reconsider. there is some speculation this might just be an opening bid for the president to get china to the drawing board, but we just don't know. alix: thank you so much, kevin cirilli. coming up, that has all led to a very rocky week for the markets. more on the volatility we are seeing next. what is the new normal ahead? this is bloomberg. ♪

alix: mood swings in the s&p. yearves eight times this and 26 moves of 1% or more, triple the total of 2017. feels like a whole new world from last year. joining us now is karyn cavanaugh. thanks for being here. is this the new normal? >> we have not had a lot of volatility at all and make equities. now we're seeing a normal volatility, a vix around 20. that is a 20-year average. investors will have to get used to the normal volatility. david: we have it in stocks,

nodded bonds. -- not in bonds. the normally track each other, which we see on gtv. the white line is equity volatility, and it has come act up, but the other two have not. why? >> i think the u.s. economy and the global economy are doing quite well, and things are not as bad as people might and they are. we had a really smooth ride in equity, and now we have a correction and investors are more skittish, and more risk-on attitude. it overall, conditions a pretty good. wrong, coming in next and we will get the labor market report on friday. the adp report was very good yesterday. so things are good. but investors are once bitten and twice shy. they're worried about volatility. we are also not getting earnings

until starting next week. the earnings will calm down the markets. we have expectations of 18% earnings year-over-year, and who can argue with that? pretty darn good. investors will take that and go, wow, i think those are pretty good. alix: i think six months ago, you wanted to buy european equities, come out of the u.s. because it is no longer the only good shop in town. is that story still holding? composite pmi and the u.k. and eurozone, seems like they have peaked. has that shifted? it, they arek at still in expansion territory. looking at valuations, there still confined. when i look at europe and japan, it is still attractive. now the u.s. has become even more attractive. having that global diversification is key, especially if you are an investor that gets skittish when

you see these ups and downs. alix: does that also apply for sectors? looking at discretionary versus s&p, they sort of topped out. into procyclical sectors or do you need to get more defensive? sectorsnk the growth are still a great story. but i think investors should be across the board. consumer discretionary was beaten up at the end of the year. retail was bad. now tech is getting punished. but the growth is really there. i think investors are trying to get out in front of what they potentiallyappen, with the trade wars, potentially with anything political going on. what happens if the trade wars do not materialize and it is actually good for u.s. markets, good for u.s. companies? and then they are trying to get

out in front of it and in-depth shooting themselves in the foot -- and end up shooting themselves in the foot. financials, consumer discretionary, and tech, i think is are still the strongest sectors. david: as you plan your investments, how important is the fed today? we have jobs day tomorrow, and we have chairman powell speaking out next week on economy. were verye, they concerned about these because of what the fed would do. >> the fed still is important, but they are not driving the bus. they have the ability to really cool things down if they get aggressive and raise rates too fast. the important thing is that the fed and market volatility has not come out and said, oh, we're hearing case you need us. that it -- we are here in case you need us. we do not have the fed standing

as the implicit put. that is the good news, that markets are strong enough to stand on the road. some are still nervous. that is why we are seeing the volatility exacerbated, because investors are still worried that maybe i cannot stand on my own. but having the fed not come out and be there is a good thing. alix: what is on sale right now? >> i would say a lot of things, a lot of large caps are on sale. they are a lot cheaper than they were before. i think there is value in the small caps. the tax cuts and pro-business policies have really unleashed gross, and that will work its way through the economy. i do not think it has really been shown yet in that business. i think we will see that, especially in mexico all caps. it is easier to -- especially in small caps. investors have been gravitating

towards those large-cap names the all-knowing love, but i think a lot of small caps have been in north. kailey: karyn cavanaugh of voya investment management, stay with us. cargo up, monsanto -- warns of a-- cargill trade were causing bigger problems in the industry. from new york, this is bloomberg. ♪

there is going to be a trade war in that kind a, the first casualties will likely come from the u.s. agree cultural industry. soybeans tops the list of sanctions that china says it will impose. expressed concerns, saying the impact of a trade conflict could lead to destructive trade war with serious consequences for economic growth and job

creation. we welcome mario parker. welcome to the program. how big a problem is this for the life of cargill? problem for the agricultural sector in general. soybeans are a top crop in the midwest, $14 billion in exports. that is not a small number, and the agricultural sector is already going through tough crops.ith a glut of they need things to go in mecca different direction. the last thing they need is for more pain or things that will depress prices even more. david: for those of us who do not cover agriculture and what are the biggest companies in soybeans, adm, cargill, monsanto? ofyou have the abcd's agricultural trading. depend on what

is called frictionless trade. trade tensions continue to heighten, and one of the things economists have said is that the companies are like a highway, really smooth and frictionless. these companies want to see. g,ix: in terms of china's ad china crush margins and he was soybeans are up. but if we see that shrink in china, how does that impact someone like cargill that is expanding big in china? upwell, the crush margins go because there is the perception or speculation that if china buys less soybeans, they will and thatsoybean meal, will insulate some of these large companies that process the isin into a protein that

usually fed to livestock. alix: how does that change their business model? it does not necessarily change the business model, but it does bring challenges in terms of the flow of trade. one of the things cargill warned about yesterday in its statement was that there are no winners and a trade war, but it does have an effect on the economy of the biggest countries. alix: mario, thanks for the perspective. we are waiting for their earnings in about half an hour. new in today to my commodity show. and alsoking soybeans oil. this is bloomberg. ♪ this wi-fi is fast.

i know! i know! i know! i know! when did brian move back in? brian's back? he doesn't get my room. he's only going to be here for like a week. like a month, tops. oh boy. wi-fi fast enough for the whole family is

simple, easy, awesome. in many cultures, young men would stay with their families until their 40's. "bloombergis daybreak." a gritty futures rallying, dollar stronger, yields higher -- equity futures rallying,

stronger, yields higher. a selloff in europe. u.k. guilds getting the biggest selloff. a stronger dollar. dollar-yen at the highest and about three weeks. let's get initial jobless claims. 242,000. up sequentially and up from estimates. but we're still in a very strong bond market. we could be eroding some slack and neck the market. -$57.6at trade balance, billion. the month before was revised lower, as well. i want to get a stat for that. trend.it is a this is the number given what is going on with the threat and

that is, so i think this is the number that will be focused on. wouldesident promised he fix the trade deficit. it has gotten worse under his tenure, not better. alix: dollars at the high of the session to u.s. trade gap is widening for the six-month, increasing 1.6% in february. out asr how it will play the tariff war's continue to battle. imports advance, 252 billion. that is the issue. if you have a lot of the tax cuts and stimulus, you will need to import more because of domestic demand, but then that will increase the deficit. how do you square that? david: at the same time, dollar has been weakening for quite a while. so that is worse news in a sense. alix: imports did rise. $204 billion. industrial supplies, automobiles, capital goods, and

materials. karyn cavanaugh is still with us. also joining us is stephen stanley and a bloomberg reporter. >> this is a very politicized issue, the with the u.s. economy strong, the trade deficit typically widens. the good news is you saw increases for both imports and exports, and i think that is a good sign for the u.s. and the global economy. alix: you are one of the most bullish economists i know in terms of the fed and the economy. , what does itcit do differs quarter gdp? >> definitely going to be a drag . we have fallen into that pattern again where looks like we will get a low first quarter gdp now. that happened for the last five years. looks like we will see five out of six. where we have seen softness in the first quarter is in trade and consumer spending. again, naturally, you go back to

the last expansion and trade was consistently taking about a percentage point off of growth. as you said, as you have strong domestic demand, some of that is from overseas production. david: we saw the dip last year, and it came back up to what are you looking at this year in terms of gdp growth? >> conception will be soft in the first quarter, and it will thece back nicely in q2 and rest of the year. every time we have had a weak first-quarter in the recent years, second quarter has bounced back. what do you think the tax cuts will take effect? are we seeing it yet? >> i think we are starting to see appeared a think business investment will pick up the slack. consumption might be a little quarter.in the first trade is a drag. the business investment is really the component we think

will make the difference, and it is getting stronger and stronger. alix: luke, this brings me to where we are in the cycle and what it means for the market. there was a great article on bloomberg best that we can be at that last leg, but if you jump out now, you will miss some still are returns even if we wind up in a recession as some point. >> i think so. talkinger somebody about during the incitement of january saying the best reason to be bullish over the next one to two years is this idea of a big blowoff top, and i don't want to miss it. book talking about imports and the trade balance, the main reason we talk about imports being a drag on growth is to avoid double pounding. consumed andetting invested, we talk about wanting to boost productivity. necessary evil to a certain extent, and that is

part of the trade story, a nuance that is glossed and a lot of the political discussions. jobs numberse tomorrow, stephen. isn't asou expect, and important as a had been in recent months? asi think -- and is it important as it had been in recent months? >> i think it is important. i think we take for granted now that we will get strong employment numbers virtually every month, and i think we'll see that again. we are watching the unemployment rate, which has fallen to levels we have not seen in the last several decades. the markets have started to focus more on the wage number. if we're getting to a point where labor markets are so tight that you are starting to see a little bit of overheating in make the labor market, the missing part so far has been that we are not seen a definitive increase in wages. that is what people are looking for. alix: this chart might be the conversation tomorrow, the

unemployment rate versus the pce price index. in the 1960's, this is what we talk about, chopping and a plum into a low of 3.6%, and inflation double the next year. right in that same period now? if we dipped below 4% on unemployment, do we see a doubling of inflation? how do you expect us to play out? >> i think we will get inflation. alix: but a doubling? >> a doubling does not have to be very much of we are starting at, say, 1.5. could we get to three? absolutely. i am typically pretty hawkish, but i am starting to see the beginnings of that. there seems to be stress in mecca supply chain, higher backlogs. supply deliveries are going up. complaining about commodity prices increasing. people forget about the fact that the double-digit inflation

we saw in the late 1970's took build. decade to we went for a long time when unemployment was low and inflation did not respond. was it did respond, that dynamic -- onceo feed on itself it did respond, that dynamic starts to feed on itself. do not get to a more neutral stance with monetary policy. see younot really takeoff in inflation occurring in the near future. market,ook at the labor we still have a lot of slack in the labor market, as evidenced by the events between the u3 and u6 unemployment rate. slack. see some also, there is the globalization, technology. i do not think inflation is that much of a worry for me.

i think it will get a little bit hotter, but i do not see it 2%.g much over i do not think we're going to see those inflationary pressures that we saw in the 1960's or 1970's. , what do you think? >> that is the question. 1990's the 1960's or the and a continuation of the globalization, higher part 70 -- productivity, dampened cap on inflation? there is not much of a sign that folks think it will get out of hand, like over 3%. the floors are still fairly low. you want to look for a pickup in inflation across the spectrum, look at freight costs.

look at the end consumer goods and how you can get a feedthrough. that might be one place to look at. that could be a way where we do get higher prices across the board. david: is productivity mentioned in the question on how much inflation we might get? think that business investment is going to be stronger on the back of these tax cuts, in particular the reforms that were made to the corporate tax code that will encourage investment. that is the answer in the sense of it is a bit of a free lunch. you can get faster growth without it being inflationary, and that is what this economy needs. we're doing great cyclical. very low unemployment rate. but growth has been very low. that is what the economy needs, and hopefully we are on the cusp of getting some relief. alix: with ism, there was a decline in that business activity. at what point do we see the

filter through to ceo confidence? what is the measure that you will be looking for to see if it filters? >> that is hard to gauge. any kind of uncertainty is bad for business, and companies are making business plans five years, 10 years and make advance. any uncertainty now will slow things down, obviously, put some mud in the wheels of that. i would look at what companies are saying when they get the forward guidance and see how much this affects their estimates for earnings. it is really earnings that will drive the markets. if the companies can continue to come up with these high earnings, then the markets will be ok. but it does take confidence with all this turmoil and talk about trade wars. think abouto you inflation, stephen? >> the stock market is keyed in because of the growth impacts

and inflation impacts of being bad for stocks. rallying.arket was if we end up in a trade war, which i think is not a high probability, then inflation will be another contributor to higher inflation. uke, what about tomorrow and jobs? >> it is rare to see another nerves ast soothes much as the last one did. some form, it is disappointing relative to have good last month was. cavanaugh of voya investment management, stephen stewart, and luke, thank you for being with us. do not miss our interview with raphael bostic at 11:00 this

morning eastern time. coming up, facebook shares a rallying in premarket as mark zuckerberg sees limited effects from the data problem. we will get a shareholder's take next. and listen to our colleagues on the radio from 7:00 to 9:00 in new york, and then 9:00 to 10:00 and new york, boston, the bay area, washington, d.c., and london. this is bloomberg. ♪

kailey: this is "bloomberg

daybreak." coming -- coming up later, raw feel bostick, atlanta federal reserve president -- raphael bostic. and now to your bloomberg business flash. fiat chrysler approved a spinoff of a parts maker, one of the last items on the ceo's to do list before he leaves. he says it will increase value for shareholders. he had sales of about $9.7 billion in 2016. the head of ubs' investment bank says he has an aggressive plan for the u.s. he is doubling down on a pledge to ramp up this was bank's presence in wall street deal. he says he wants to assemble meeting teams for retail and software. a person briefed says ubs will double the number of those bankers and the americas within three to five years.

real estate prices in san francisco are soaring. the median sales price of a house there rose 24% in the last year to a new high of $1.6 million. a real estate company says fear of possible interest rate hikes might be one reason. san francisco home prices have been rising steadily in recent years thanks in part to the booming silicon valley economy. and that is your bloomberg business flash. david: think spirit we heard from mark zuckerberg yesterday in a conference call and learned that the cambridge analytical problem maybe worse than we thought with 87 million users' information affected. in onors have weighed consequence with a substantial reduction in the market cap of the company. is joining us, bloomberg intelligence director of north american research. feels like the market is punishing facebook. >> absolutely. and the stock is down 20% from its high. this is affecting the whole tech

industry, but the issue of regulatory risks for these companies, this issue happened to be about data security. does facebook really understand the data it has and how it is used? how much of an issue will it be for the company? as we talked to investors, the expectation is there clearly will be an increased level of expenditures of the company to deal with security of data. so they will probably face margin pressure. have not seen any real issue on the revenue line. advertisers are still with the company. david: do we have any degree of confidence at facebook knows how big the problem is? with other companies, something goes wrong and we are not sure, kind of like with general electric. does facebook know how big the challenges? >> i am not sure they do. i think they did yesterday throwing out the 87 million user number. i think that was there worst

case, thinking about accounts being shared with other users. i think they tried to put the worse case scenario out there, but i think we will see more news about how much data was shared, to whom, and with what other actors. what i think we're starting to see from the company, and maybe it is a little bit late, is they are trying to get ahead of this problem a little bit after being behind the problem and reacting. david: joining us from stockholm is sasja beslik. he oversees about $250 billion at and the biggest bank in the region has quarantines facebook. thank you very much for joining us. explain what went into your decision. >> we have been analyzing facebook for basically a year together with other companies in the sector. finding out that the company la

ck systematic information needed for us to make investment decisions, that being privacy issues and also how the company manages systemically third when they interact with them and underlying assets being taken from clients. in that sense, when the cambridge analytica case came up, we realize this is like a pandora's box. when you open and, you do not know what will happen in the next two to three years. based on that, been made the decision to basically stop further investments in that facebook, and we have quarantines the stock. alix: what would you need to see to buy again? >> first of all, a bit more systemic transparency from facebook in how this information is managed. systems use for, securing that the third party cannot be misused, and we also need far more better information from the company, sort of

long-term on how they will deal with regulation issues in the u.s. and europe. david: did you own this stock before? or did you not own it and do not want to buy it? >> we did own the stock. given that these products have a specific focus of investment in companies with long-term sustainability connotations, we do not believe it is the right thing to do. are notmoment, we buying more. we do not want to buy more risk. david: paul, we hear investors like sasja say they do not want to be in the stock. and then we talk about the revenue line. don't those things have to come together? >> potentially, the biggest risks to facebook and the social

media companies, maybe the larger tech sector, is, you know, i think the viability of the platform -- due advertisers have confidence in the platform? the users have confidence in the platform? if you are facebook, you sell to the size of your audience and to the engagement of your audience. if the audience believes the data may be misused, you will see a reduction of both of those measures. as mark zuckerberg said lessnau, they are not seeing that yet. alix: it is interesting, the thers cents -- divergence in is. deutsche's says they have not seen meaningful issues with advertising. bank of america says they look like they are seeing the all clear. are analysts taking mark zuckerberg to do blow moving on to the bluff us? >> i think the stock is starting to stabilize a little bit.

i think the market is saying, ok, we know there are problems with facebook and with security, but we believe they will be addressed. will it be costly? yes. but the one thing that drives investors in this sector is the understanding that advertising is drawing 20% a year, so you have travel exposure there. you want exposure to that kind of topline growth, and there is only google and facebook for that. into: getting sustainability issues, i ask, is this purely a business judgment that the risks are a known or perhaps too great, so it does not make sense is a business matter, or is there another element to your decision? sustainabilityhe investments include the more responsibility angle to them. they are long-term, and we need to be able to evaluate companies with a long-term perspective. but the biggest challenge with facebook is the issue of trust.

that is something that will either cost them a lot of money or it will be forced upon them from the regulation side. alix: a real quick question, are you selling facebook shows it -- shares? rightannot answer that now. portfolio managers have full freedom to deal with that. it depends on the services they have. they can hold or sell, but they cannot buy them. alix: good answer. thanks very much here at sasja beslik, thank you. coming up, emily chang will have a sit down with sheryl sandberg of facebook. that is at three clock p.m. coming up, what i am watching is what i am always watching, commodities. a look at reaction today. we will have more. this is bloomberg. ♪

alix: what i am watching is what i hope you are watching today. e"dg w show "commodities discussing the biggest stories and commodities and trends. i have jeff curry of goldman sachs. and we will talk about a cool spread, interesting dislocations in the market. and i will be talking with a ceo about individual trends in their own business. premieres at 1:00 p.m. today. that does it for bloomberg daybreak. jonathan ferro of next with the open, looking at the calm in the market. this is bloomberg. ♪ welcome to the xfinity store.

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with xfinity mobile. plus ask how to keep your current phone. visit your local xfinity store today. jonathan: from new york city, i am jonathan ferro. this is the countdown to the open, 30 minutes to the start of trading.

coming up, global equity markets rallying. the u.s. signaling it is looking to come to the negotiating table with china. jpmorgan and tend building the amazon of global finance. jamie dimon seeing growth opportunities in make everything, everywhere. facebook has good news from investors, the data crisis is not hurting the business. we had a ridiculous session yesterday and make equities. up 14 points in the s&p 500. the dollar a little stronger against the euro. treasury yields at 2.81%, up a basis point. world's two biggest economies showing willingness to come to the negotiating table. >> i think we are locked in a good traditional game of chicken. >> there is no trade war here. there is no trade