deal. alix: no deal, the u.s. pulls out of the iran nuclear deal, raising the possibility of new sanctions as oil hits a three-year high. treasury gets set to issue the most 10-year debt in yields desk in years with yields. walmart gets upstaged. david: welcome to bloomberg "daybreak." i am david westin here with alix steel. alix: i read the whole treasury statement and i found it really fascinating. we are seeing reverberations in the market. s&p futures up by 11 points. the dollar stronger, at one point the highest in four months. .he euro climbing up 1/10 of 1% still a lot of longs on the euro.

, if you are all bond holder unless you are buying peripherals in europe. is, well we finally ca3 handle on that option? .rude up over 2% it was fascinating yesterday watching the iran announcement. president trump was talking big talk, crude went up. then he talks more conciliatory and oil is down. david: different news organizations had different reports. alix: volatility really low and you have high-yield energy bonds not moving, so there is stability in the longer-term price. david: kind of the story of this presidency. it is time for the morning brief. at 8:30 eastern time, we get the u.s. producer price index.

at one :00 this afternoon, the united states treasury sells $25 billion of 10 year notes. at 1:15, the atlanta federal reserve president speaks on the outlook. alix: we are joined by romain bostick and brooks settlement. time for the -- i just said that. let's start off with a big what opsie.- who walmart was going to buy flipkart and then softbank comes in and says, we are going to buy that. >> they very carefully guard these m&a announcements. big what's. -- whoops.

it will be interesting to see how walmart handles this. david: it is not the ceo who steal it is. romain: he got excited about all the money he will make. david: he owns a chunk of flipkart and he could not resist the temptation. as soon as walmart gets around to announcing it deal. romain: he will make out pretty well on this and probably wishes he bought more. this will be a good deal for walmart, assuming they will announce it. they have been looking for growth and that is probably the best way to do it. flipkart andwanted then walmart potential he gets it so it sits up an e-commerce deal that puts the fight to amazon. brooke: you have walmart taking the lead in terms of fighting off amazon. they have been investing in e-commerce.

we have seen that with their acquisition of jet.com. they are going toe to toe with amazon and it will be interesting to see how amazon responds. the whole foods deal would seem to give it an edge when it comes to online grocery. david: the pot of gold at the end of this rainbow may be a big one. we talked about the e-commerce in india, it is enormous potentially. brooke: this is a real growth opportunity for both companies, walmart getting the edge if it gets this deal. we will see if the softbank ceo is correct. over $70 a oil, wti barrel, 2014 high. peopleam hearing from i is it is really going to be a medium-term story, not a short-term story. romaine: i think so. yesterday we were looking at this fed report.

it explains what they think is driving oil. a 10% rise in brent crude from the start of the year, they are only attributing about 4.6 percentage points of that to supply issues. demand, .5%. basically 6% of the price is baked into geopolitical risk. that suggests this could be a temporary rise, particularly if we get some pullback. david: it is official, walmart announced it will invest $16 billion for an initial state of 77% in flipkart. alix: they are going to include $2 billion in new equity funding and if they see and earnings cut by $.25 to $.30 for 2019 if the deal closes in the second quarter. david: this is by far the biggest deal walmart has done. talkingyou are

multiples of what they have paid for jet.com or anything else. it is interesting to see how investors will react to this, when you talk about an earnings hit. traditionally we have seen these old-school companies get into tech deals and investors have not like that. tech deals tend to be more expensive and more growth oriented and not deliver a lot of profit in the beginning. investors have been trained to think in a different way. as walmart competes with amazon, it will be interesting to see. for the morelem traditional companies buying into tech, the startups have very little if any margins. almost automatically it will dilute earnings. brooke: this has been sort of a frustration for these old-school companies. you see ford investing in electric vehicles and investors not giving it a break, versus

tesla. ge is investing significantly in digital and investors are like, where is the profit? it has only been a few years and you have software companies that do not deliver profit for a decade. it is a dynamic that is difficult for old-school companies to deal with. alix: morgan stanley estimates india's e-commerce market will go to 200 billion in about a decade. online sales in india are growing about 35% per year. it also feels if you peeked out in the u.s. or hit max capacity, this is where you want to go. romaine: this is a much better place than china. i think india could be the redemption with regards the flip here is a youart have pretty much gotten yourself and the in amazon -- with amazon.

ambitionort flipkart's to transform to a publicly listed company, and that could be a big boom for them. if walmart continues to push them down that road, this could have some financial benefit. point pick up on that about the difference between china and india. in china, you have alibaba and in india you may have a little bit more running space for a u.s. company to go into e-commerce. brooke: it is more fertile ground, and that is why you saw a amazon and walmart competing for this asset. i think that is why you saw the level of competition. alix: we did a series special on amazon when they reported. we dove into india and how important it was, and it is the payment system. how they wind up paying for things becomes very different.

that is sort of a big barrier for a company like amazon coming in and helpful for walmart with flipkart. david: india is largely un-bank ed. mr. modi has been trying to bring them into the 21st century and maybe they will leapfrog it. not going to outfit areas in africa with a phone line, you will get 4g. it feels like this is part of the story as well and makes a higher hurdle for amazon. david: the geopolitical aspect of it, in china you are not sure what the government will do. what happens in india? does walmart know that world? romaine: i think they are big enough to navigate it, and india is a little more open in terms of welcoming outside investments so they probably will not have to deal with political issues like with xi jinping.

given the size of flipkart relative to amazon, they basically bought the alibaba of india. remain bostic and brooke sullivan, thank you for being here. , theyt made it official are buying 77% of flipkart in india for $16 billion. it will dilute their earnings but they will move big into e-commerce, beating out amazon for the time being. test ourur others to other top story, the u.s. withdrawal -- our other top story, the u.s. which from the iran nuclear deal. we speak with daniel kurtzer. us is bloomberg. ♪

president trump announced yesterday the united states is pulling out of the nuclear agreement with iran, and world leaders were quick and reacting. >> we will wait for some weeks and hold talks with our friends and allies, and other signatories of the nuclear deal. those who will remain loyal to the deal will talk. >> israel oppose the nuclear deal from the start as we said that rather than blocking iran's path to a bomb, it paves he runs past to an arsenal of nuclear bombs -- iran's past to an arsenal of nuclear bombs. >> the deal is crucial to the security of the entire world. >> we encourage all parties to

continue to comply with the deal, and we certainly will do everything we can to support that. us now is daniel kurtzer, the former u.s. ambassador to israel and egypt and professor of middle east policy studies at princeton. as we got a little bit of a sample of world leaders reacting , give us some advice on which world leaders are the most important to determine how this plays out. who does the united states need most? daniel: clearly, the president is going to consult closely with prime minister netanyahu in israel, who has been a major opponent of the deal, for two reasons. israel perceives serious threat from iran and its proxies in syria, and also israel is in iran's middle range missile proximity. there is going to be tight

coordination between the united states and israel. the president has to look at the iranian response. he has handed over the option to iran to do whatever it wants to do. it can remain in the deal and consult with the other partners in the deal to see whether it can continue to gain economic benefit, or restart its program and challenge the president to respond. david: if the primary goal of the president is to get the iranians back to the table to negotiate a new deal, who does he need on his side to get that done? is that possible? i think it isd clear from the start that all the other negotiating partners, the permanent members of the security council in germany oppose the united states pulling out, told the president clearly they were not on board the idea of restarting negotiations in this matter.

clearly, we're willing to talk about revising the deal but did not want to do it in this high-stakes gamble the president has entered into. it is a risky gamble. i think he is counting on iran's economy to tank, hoping that stimulates regime change. he is hoping iran comes back to the table begging for changes, but that is an unlikely scenario. david: to pursue that point, can the united states tank the iranian economy itself without the europeans along with us? question wee is no have leverage with respect to the international banking system. there will be potential investments that will now not happen as a result of companies and countries nervous about crossing the united states. that will hurt the iranian economy, which is already in bad shape. the problem with this risk is not that it will not have an

impact on the iranian economy, because it will, that what happens next? we do not do well in stimulating regime change. we have seen that in afghanistan and iraq, we have seen that in libya. do we want another failed state with untold consequences? that is where this high risk policy carries the greatest consequences. david: is there some chance we will not have the problem you identified, which is iran goes black with its nuclear program? possible the iranians will still allow inspectors and will abide by that so we will not be concerned about their nuclear weapons? daniel: in the short-term term, i think the iranians will be smart and not pull out and restart all aspects of their program. they will want to see what the europeans can tell them about how to avoid the most egregious

problems that result from sanctions. if the europeans, russia, and china can assure the iranians they will continue to receive some of the benefits that this nuclear accord guaranteed them, the iranians may stay in. i think after the short term per waiting, theod of iranians will suffer the consequences of unilateral sanctions. david: that is daniel kurtzer. alix: oil prices are rebounding following president trump's announcement. for brent, $77. petri. us is tom he has led more than $200 billion in energy deals, and advised saudi arabia and the u.s. department of energy. great to see you. tom: good to be here.

bloomberg,inside the this is iranian out book -- output. that yellow area is when we released the sanctions. what happens? tom: for now, i think we will see what we have seen very recently. this is in the short-term probably going to be viewed as positive for oil prices. we are in a new zone. , think $65 to $75 a barrel wti 80% of the time. once you get above that $75, $80, youbrent would be will get powerful self-correcting forces i suspect. $65, i thinkow excursions will be short-term. alix: the question is what is saudi arabia going to do? they have a huge impact on that

range and the question is their capacity. -- spare capacity. what do you see it as? what do you see it as? tom: you have the spare capacity in opec and there is a million and a half to 2 million barrels a day, you can be pretty comfortable. in addition to that, you have the response, the supply response to these higher prices which is coming in the u.s., in the permian basin among others, akkenrting of the b drilling and that. we have had a tweet from the president about how he feels about higher gas prices. on.as the spr to call the market's right to believe there is plenty out there to be called upon within a short time. alix: how much would they have to do? i have seen ranges from marginal, 100 billion.

what do you think it will be and why will it be different? tom: i do not think that is the only factor. the higher prices themselves will slow economic growth. if we get into an $80 brent or $75 wti, there are other questions along with interest rates and the strong dollar that leave you wondering just what is going to be global growth. we have had a tail wind with global growth so far this year and late last year. whether that can be sustained much beyond the next few quarters becomes an open question as well. i think it is a manageable proposition and i think those self-correcting forces are largely out there and will work their way when and if we have higher prices. alix: the geopolitical risk premium is still high in oil and seems it will continue to be. you have libya, syria, and the sanctions on iran.

tom: not to mention venezuela. alix: what is your best guess for where this will be felt on the curve? what happens to the mid-curve? does that rerate? tom: we have to rethink where we will be going into 2020. i think we will close 2019, generally we will still have a tailwind. i suspect we are getting into territory where we have to worry about the self-correcting forces kicking in. when not surprise me if a year from now we will be dealing with that. you: tom, such luck we had on this day. always good to catch up with you. david: we want to come back to the lead story of the morning, walmart will spend $16 billion to buy 77% of flipkart. we are joined by joseph feldman. he has an outperform rating on

walmart with the $110 price target. did this, any bit of a surprise? ofeph: there has been a lot reports of this, so it is not too surprising. i would think we have heard -- we would have heard something a day or two ago about this. it seems like a good deal for walmart to accelerate growth in one of the largest growing companies in the world. david: why is it only 77%? joseph: i think that will be a question asked on the call. my assumption is given the partners involved, they see the same tremendous growth opportunity in india, and also the partners that are there, they can leverage them and their expertise to grow and build this business. a lot of technology expertise with microsoft and tencent, so that is probably why. toid: how do you put pencil

paper and figure out whether this is a fair price or not? joseph: that is going to be the thing we are working on this morning. what is hard to do, they have gmv at $7.5 billion, this is kart. you are the second largest population in the world with the rapidly growing middle class. there is tremendous opportunity. alix: what does amazon do now? joseph: amazon is there and they will have to keep pushing their growth vehicles, and try to work harder. amazon is a very strong competitor. it should not be discounted. i don't know that a competitive bid well, out of this, but i think amazon will have to go to india and make hay

there. david: this is a diversification into india as a new business in a new country, but does it affect their core business? could it help like jet.com dead? joseph: first off, it will accelerate some of the growth on the e-commerce side. there are some things they could learn. they could leverage supply-chain opportunities and have a more seamless supply chain. there is definitely good things there on that front. walmart is the low cost provider in the u.s. and many countries around the world. they will be that in india. it is a great place to be learning now. transfer some of that to other markets in the world. clearly, india and china are two big growth areas walmart is focused on. the core is north america, so

there is a lot of good coming out of this. david: with all the initial reports, will this be dilutive to earnings? joseph: not clear yet. it does look like there will be impact. $.25 at $.30 it will be a little bit of an impact. this is a $16 billion deal. david: that is joseph feldman. coming up, disney reported first-quarter earnings -- actually, it is for their second quarter. we take a deeper look and the company's ceo will be talking about the deal with 21st century fox. this is bloomberg. ♪

alix: this is bloomberg daybreak. stocks feeling a relief rally here. the s&p futures up about 12

points. the dax the underperformer of the day, flat. interesting to watch what is happening in the currency market. you had the dollar at a four-month high and as the morning went on, it started to roll over. dollar and yen were the only currencies up. the dollar up by 2/10 of 1%. emerging-market currencies have been hit across the board and the lira is rallying because the n is holding ana emergency meeting to talk about why the lira was at a record low. comes atillion test 1:00 p.m. crude continuing to climb higher. on what isan update making news outside of the business world, here is kailey leinz. secretary of state mike

pompeo has arrived in north korea to prepare for the summit with kim jong-un. it is his second visit in recent weeks. he will ask whether north korea will release three americans it is holding. onico offered a compromise the nafta issue of auto manufacturing. it is not clear if the offer is enough to reach a deal with the u.s. and canada. the u.s. once north american auto content to be 75%. mexico is said to be offering 70%. choice to head's the cia is promising the bureau will not resume torture. -- testified at a senate testifies at a senate confirmation hearing today. her roles in interrogating suspects have not been fully disclosed. i am kailey leinz.

this is bloomberg. the walt disney company reported earnings for its second-quarter yesterday that exceeded analyst expectations, as well as showing substantial growth year over year. what comes next and whether it would succeed in its bid for 21st century fox? i spoke to bob iger and began by asking how important this deal is to his strategy overall. will even increasing our intellectual property profile as a company. we believe in increasing the technology we have that allows us to reach people in more unique ways. combination,t the the 21st century assets we have, and you consider the changes we

are seeing in the media is acape, we think there compelling proposition for the shareholders of the walt disney ,ompany and 21st century fox which is why the 21st century fox board gave the deal unanimous approval. why we are confident that ultimately it will go forward. david: you have a deal in place. you need shareholder approval and regulatory approval, and some other people expressing interest in the form of comcast. more toe assets worth the walt disney company than to comcast? bob: that is not something i can speculate about. frankly, i prefer not to speculate about what they are doing, because there are no announcements made, or why they are doing it. those assets are a great fit for the walt disney company and the currency we are using, the disney stock, is very attractive to shareholders. foxeholders of disney and

will look at this quite favorably. david: you have made a number of very successful deals and you are heralded for that, none so big as this one. none of those deals involved open bidding with someone else. there is a possibility comcast might come in and openly bid. are you prepared for an auction? the last 10% of the price is ego. how do you make sure it is not ego in the last 10%? bob: i do not want to sound naive that all or optimistic to a fault. i think it is way too early to speculate that this will result in an auction. i will just leave it at that here it i want to go back to a couple of things. if you are shareholders of the company being bought, 21st century fox, you have to consider not just the total price but the value of the

currency of the combined entity. the other thing to consider is what is the path to regulatory approval. is this a deal that regulators around the world are going to ultimately approve? we are quite confident we will gain that approval. i think if you look at that whateverother offer, that is, in terms of money or source, you have to hold that up against our offer, not just on value but the real possibility of it happening. we are offering shareholders for both companies and outstandingly positive or attractive proposition. david: that was part of my conversation with bob iger, disney ceo. for more on the outlook on the deal and to take us through the second quarter results, we .elcome tuna amobi he has a strong buy rating on

disney. before we get into 21st century fox, mention a little bit about the second quarter for disney. and far exceeded last year exceeded quite nicely analyst expectations. tuna: i think the main take away from those earnings which were far better than expected, the company continues to fire on all cylinders in terms of franchise creation in the pipeline. theme parks have never been stronger. all of these key metrics we track came in higher than expectations. "blackdio of course, panther" was the main headline but when you look at the content pipeline, the studio has set the bar or what to expect from a premier hollywood studio. the main weak spot, espn came up , no spread is. there is a lot of positive

takeaways. david: the weak spot is not just espn but media networks overall. they are losing subscribers. that takes us to the 21st century fox deal. will he get in a bidding war with comcast? will we see a bidding war? tuna: i listened to your interview with bob iger and he made two interest during points -- interesting points. the regulatory approval relative to comcast, he arguably has an advantage. he made a point about the value of the combined entity. if you are a fox shareholder you are not just looking at an all-cash bid, which could initially provide more value, but you want to maintain the off-site super dissipated in the combined entity. i think there is a real likely had -- likelihood we will see a

war. david: what they are talking about with comcast's all-cash. normally, people like cash or stock. one of the things i read, rupert murdoch is interested in disney stock. he kept saying "the currency we are using." why would hena: not? look at the momentum disney is on, all the franchises and content being created. fox shareholders would be about 25%. arguably, cash under normal circumstances is a better consideration than stock but in this case we have unique situations that make it a different scenario. david: that is tuna amobi. coming up, walmart announced its butest deal in history,

someone spilled the beans on the acquisition too soon. you can turn on your radio and listen to tom keene and jonathan ferro and then pimm fox and tom at 10:00. live from new york, this is bloomberg. ♪

kailey: this is bloomberg daybreak. i am kailey leinz. aronov,p, oksana jpmorgan asset management portfolio manager. and now to your bloomberg business flash. and activists firm representing tesla shareholders once the

electric car maker to shake up its board. the firm claims tesla has veered and saysath to profit the board is beholden to elon musk. toyota is forecasting better than expected profit. they have been cutting costs to deal with the slowdown in its biggest market, the u.s. they announced a $2.7 billion stock buyback. vodafone made it clear it will chart -- challenge deutsche telekom. they agreed to pay $22 billion for liberally -- liberty global. it rattled the tv and broadband market and will face scrutiny from antitrust auditors. david: we have been following this vodafone deal very closely and bloomberg tv got a chance to sit down with the deutsche telekom ceo. they would be competing against

this combined entity, and he is not too excited. >> this deal is totally unacceptable. there was a time when deutsche telekom was not allowed to sell their cable business in one piece. , ands sold in three pieces now all those three pieces are coming together in one under the roof of vodafone. david: joining us from berlin is benedict connell. thank you for being here. explain why deutsche telekom would be so dead set against this deal. benedict: the ceo from deutsche telekom is clearly very worked up about this, totally unacceptable is the way he described it. he sees vodafone planting a flag in his home country. he feels this rolls back to the days of these big monopolies that the right should telecoms have hoped to overcome, so he

says it is totally unacceptable and should not happen, and will do what he can to block the deal or releases many assets as he can. on the other side, you have vodafone and liberty global, different view. says this isceo self-serving from the deutsche telekom ceo. the german market is screaming for more competition. we did hear some screaming, but not the kind he was talking about. very different views. it will be interesting to see how this plays out. a lot of optimism on the vodafone side, but it will go to competition scrutiny. david: thank you for being with us. alix: we now turn to wall street beat where recover cover three things wall street is buzzing about. , softbank'sx pas ceo spills the beans.

deutsche bank considers cutting 20% of its u.s. staff. rockefeller records. rockefeller collection brings in $460 million its first auction. five more await. .avid: they are not done yet joining us is jason kelly. i must say, i have seen a lot of leaks on deals but i have never seen one where a ceo goes out and announces it. jason: we know how choreographed all of this is. there are employers, pr people who specialize in this. alix: codenames. jason: codenames, secret meetings, working through the weekend, all in service of the perfect rollout. david: you script it down to the minute.

happens, 7:01, this happens. head of comps for walmart is saying, what? jason: banging their head. alix: that reminds me of the microsoft-linked in deal. we were on set and we were like, how did this not leak out? this one was like, what? jason: we did not tell people about this giant deal? alix: there is no, oh my god, damage control. david: he is making so much money in the deal. a lot of his investment in flipkart has gone up. jason: this is a massive deal. it is one of the biggest e-commerce deals of all time. it sets the stage and a lot of different ways and shows the immense power that softbank has in terms of picking winners, and

the vision fund is arguably, when you talk to investors, arguably the prime mover in investment around the world. alix: you can see wall street licking their lips. a $16 billion deal, you will have to issue equity. david: a big, traditional company going big in the new digital world. that has got to raise questions. alix: it does. the stock is down 2%. jason: it will be interesting to watch this, although whoever does a deal next, just keep it down. alix: or just be like, it is public, it does not matter. yesterday the news came out that deutsche bank is potentially cutting 20% of their staff in the united states. noise there is so much around deutsche bank right now,

we have been talking about this for a couple of weeks. every day there is a drip, drip of somebody new or somebody old leaving and moving on, as the new ceo starts to put his stamp on it. in these sorts of situations, --ors around job cuts arm are ferocious. the headline from bloomberg today is up to 20% or around 20% of staff in the u.s., and it comes at a time when they are talking about a lot of things in the u.s., moving offices and all of these things that tend to diminish and freak people out. david: they are not asking for my advice, but i made a big cut at abc news when i was running it and i said, we have to get as fast as possible to say, this is it so everyone knows they have a job. least you still knew

what company abc was. i have no idea what deutsche bank is going to be and what businesses they will be into in 18 months, so how do you bet a career on that? jason: we will see. you mentioned linked in, linked in is probably getting a lot of business now. alix: there is a story there, somewhere. is thethe third story rockefeller family, david rockefeller who we knew somewhat, a real legend. , great-grandson of john d rockefeller and his dad put together an enormous, incredible art collection. they founded the museum of modern art. his father gave a bunch of art to the museum and this is what is left over. jason: i was at the moma

recently and some of that art is going back to the rockefeller collection. ,646 million in the first round above what they expected. this is some very special art. matisse, monet, christie's is handling this. david: this is a picasso of a young woman nude, which hung in their library. alix: just whatever. jason: i love this quote at the end of the story, because it talks to, rockefellers are as close as we have two american royalty. they live adjacent to the area they created and lived in and many of the rockefeller still live there. business royalty, the combination of royalty and business. jason: and philanthropy. alix: do we have a breakdown on who wanted to buy? jason: we do not have a clear

idea yet. as the auction -- because as you said at the top, there is several more that will happen. one of the interesting quotes at the end of the story, it mentions this idea of american royalty and if you are a new collector it is great validation because it was owned by this amazing family. if you are an old collector you think it is cool that you have a piece the rockefellers had. david: where is the money going? every dime is going to philanthropic organizations. including the council on foreign relations. jason: we talk about this a lot, this notion of what happens to the next generation of these types of business titans? do they follow this same model as they collect and we look down the line? it is an interesting arc. david: thanks to jason kelly.

seeking insight into the presidency. at&t confirms it hired a firm with donald trump's lawyer. alix: on the bloomberg terminal, check out tv . check out our charts and graphics. this is bloomberg. ♪

david: this is what i am watching -- actually, whom i am watching. it turns out he did have another client. it turns out, at&t was a client. to his law firm because they wanted to get insights into the new administration. at&t has a little bit of business in front of the united states government with time warner. let's retain his law firm.

alix: is that legal? david: it is not illegal. it is quite a coincidence that he gets a nice retainer from at&t in order to get some insight. antitrust laws. alix: i feel like these stories are so juicy and we like talking about them, but i wonder how it ends up inching toward president trump. pointalliere made the that the cases coming up more for an impeachment scenario versus before. david: if at&t does not take you there, there is another story out that the lawyer for stormy daniels says a russian oligarch gave $500,000 to his lawyer, and that might've been used to pay some of the hush money. that gets a little more interesting if there is a russian oligarch funding hush money.

i do not know if it is true or not, but it is very detailed. alix: it is slowly starting to form more of a direct line, and that is where there is a problem. as we wind up getting rid of the side stuff and have more of a direct line, the market will have to think about this. david: you know who we have not heard from? rudy giuliani. alix: kate mckinnon was so good. , on a up, oksana aronov $25 billion 10 year auction today as well as our peripheral bonds a buy in europe? this is bloomberg. ♪ mr. elliot, what's your wifi password?

wifi? wifi's ordinary. basic. do i look basic? nope! which is why i have xfinity xfi. it's super fast and you can control every device in the house. hey! let's basement. [ grunting ] and thanks to these xfi pods, the signal reaches down here too.

so sophie, i have an xfi password. and it's "daditude". simple. easy. awesome. xfinity. the future of awesome. ♪ alix: walmart's largest deal ever. the retail giant agrees to buy a

stake in flip cart, the biggest online retailer, to take the fight to amazon. of the iranls out nuclear deal, raising the possibility of new sanctions hitting and oil three-year high. treasury is set to issue its most ten-year debt and years. the deal is already over the 3% level. david: welcome to "bloomberg daybreak." it is wednesday, may 9. i'm david westin right here with alix steel. it's really market interesting because we have a relief rally in equities, but the story will be at 1:00 with that bond market auction. $25 billion and we see 3%. what will the bid to cover be? you get the next of billion dollars added on to the auction and how do we absorb it? that euro-dollar up by 1/10 of 1%. it was a stronger dollar story and we have now reversed that. the dollar-yen continuing along

the lows of the session and crude continuing up 3%. how much geopolitical risk premium is in that? the new york fed is assuming 5% right now. david: crude is the story. the 10-year is 3.00 and we don't talk about it. remember a week or two ago and it was 3%? alix: if we wind up pricing with a three handle plus, it will definitely be a mover. david: time now for the morning brief. we will get the u.s. producer price index for april. at 1:00, it is the u.s. treasury auction of $25 billion in 10 year notes. at 1:15 p.m., atlanta federal reserve president speaks on the economic outlook down in jacksonville, florida. alix: doesn't mind that overshoot. now let's get an update on headlines outside of the business world. kailey leinz is here with first news.dispute kailey world kailey: iran and the european

union is facing an uphill battle to keep the nuclear deal alive. will stick toa the commitment and the iranian president says he will keep working with other persons of participants. secretary of state mike pompeo has arrived in north korea to prepare for present trump's summit with kim jong-un. pompeo will ask whether north korea will release the americans being held there. for the first time in seven years, there is a three-way summit taking place between japan, china, and south korea. in tokyo, prime minister shinzo abe welcomed south korea's president and china's number two leader. the three countries disagree over the way to deal with north korea and its nuclear weapons program. global news 24 hours a day and on twitter powered by 27 journalists and analysts in over 120 countries, i am kailey leinz. this is bloomberg. david: walmart announced its

biggest acquisition ever. it will be buying a 77% stake in flip cart in a deal valued at $16 billion. that is how much walmart will be paying. joining us now is andrew wolf could it's goodne to have you here. to us who owns the rest after this deal is done. andrew: i think softbank is selling and at some other private equity players. david: how do you assess the value of the company they are buying and whether they overpaid or underpaid? andrew: a lot of these companies are valued on their sales growth rate and their sales growth potential. i think the excitement here is that it is the biggest e-commerce company in india. india is going to be the fastest-growing country in

e-commerce. given e-commerce is about the up and this deal lines that paradigm very positively. up a bar chart actually on the screen that shows the projection at least of how e-commerce will be growing. it's by and or miss levels by 2026. walmart has been aggressive in the past by vietjet.com. buying jet.com. is this it for walmart? does this take care of its acquisitions? andrew: probably not, but i would imagine they will probably have to digest this just like they did with jet. this is a big one for now. walmart is a store retailer. if they will continue to be a bigger player in e-commerce, i would imagine acquisitions. they have said this.

they will continue to be bold on acquisitions. that's where a lot of the market is shifting obviously. they have another reason, which expands the addressable market. they can do acquisitions like that and it can enhance brand equity of the entire walmart business platform. alix: what do you make of the stock reaction today down 4%? is that reaction to the fact that they will have to issue to pay for that end cut their 2019 earnings or is that commentary on the deal? andrew: it's the latter. anddeal has been out there you and others have reported on it. it's definitely the financial impact the worse than anticipated for equity holders. david: they are competing to a large degree at this point with amazon. amazon does not seem to feel a great need to keep margins up. how can walmart compete against

that? what will this do for margins for them? what kind of profits will they make with this deal? andrew: i don't know the exact profit structure of fli flipkart per se, but it's similar to jet, which is an early version of amazon. it's making a lot of money and its projected to make even more money going forward. the have reached critical mass and then some. jet is losing money and still losing money when purchased. and i imagine flipkart is the same. that's in addition to the equity issuance. it definitely for shareholders is a huge dilemma because shareholders of walmart are judging the company on traditional earnings metrics kind of blended with how the e-commerce business goes whereas

amazon shareholders are traditionally much more topline driven. directly your question , it is challenging to say the least for walmart to keep up ifh amazon on sales because it hits their bottom lines, there is a chance, a much higher chance, that walmart will be penalized in today's stock action shows you. david: let's go back to jet for a moment. it was almost something like an aqua higher. they were bringing the head of jet and other people that could teach them how to sell online. is there something similar to that possibly with flipkart? jet is a goodk business, but obviously they did need to bring people from outside of the store-based culture. i agree with your question.

is onto flipkart -- flipkart becoming the big kahuna of india, taking on amazon. if they could just split india with amazon, i think they will end up doing pretty well over there. it's about the next great market to be in. the interesting thing about walmart is it's a global retailer. its are treating some markets. its expanding in india. they have little over a dozen. they will be really well-positioned in india where e-commerce will take the lion's share of market share going forward for retail sales. sense tox: do you have a model this acquisitions with the sales they will have to make up? do you have an idea of how that balances out? andrew: the best you can do with public information honestly,

especially for a deal like flipkart, is look at amazon and see how long it took them to scale. if you can get to topline and make a some since about where they are at on scale and the margins are the same, you can kind of figure out when they can hit breakeven to some extent. alix: are they going to have to make other ventures in india or is flipkart enough? there other competitors, but flipkart and amazon are the leaders. will they have to do more if they are not over the hurdles yet? andrew: i don't know that. i'm not in india expert on the e-commerce. i don't want to mislead your listeners or viewers. i would say for now as an analyst, as a company, i think they are probably going to digest this and see what they have got. they could do that because referencing back to jet, they have done a lot of that in the u.s. it's really about expanding not just the market, but enhancing

brand equity. when you find sort of offbeat, smaller e-commerce platforms with more deals like lord and taylor which was a joint venture, particular for a brand like walmart it can make you look more interesting to a more upscale client, which has been a huge issue for walmart going back over 10 years, trying to expand their addressable market below what it is now, which is middle-class and working class. david: what does this mean for other brick-and-mortar retailers whether it's in groceries like kroger or more broad? does this really become a two horse race? its amazon and walmart and everyone else getting left behind. you need a certain amount of scope and scale to move into digital the aggressive way that walmart is an amazon always was. andrew: that's a question that a lot of analysts are all

grappling with. i think the short answer is it means they are going to have to add to their scale. i cover kroger and i have a hold rating. kroger is a wonderful company and very well-positioned. all the brick-and-mortar retailers have this ultimate dilemma of how do i scale up in e-commerce without really diluting my earnings? and my big enough? --and am i big enough? those are questions that they are dealing with every day. david: thank you for joining us, really appreciate it. coming up, we will take a look from the fallout from the u.s. with drawl from the 2015 iran deal. that is coming up next. live from new york, this is bloomberg. ♪

kailey: this is "bloomberg daybreak." i'm kailey leinz with your bloomberg business flash. the battle for e-commerce supremacy has gone global. agreed to pay for a 77% stake in india's biggest online retailer flipkart . it is walmart's biggest deal ever and gives flipkart expertise to fight walmart, which is trying to gain customers in india. they will challenge portugal telecom on its home turf. the world's second largest mobile carrier has agreed to pay $22 billion for liberty global's

german and eastern european unions. the deal rattled europe's broadband market to which the deutsche telekom ceo said the agreement will distort competition. the world's largest . ma beer maker posted earnings that the estimates. per is ramping up its soccer campaign for the world cup, the most-watched sporting event in the world. alix: president trump announcing his decision to pull the u.s. out of the iran nuclear deal and this is what happened to oil. and initial dip did not seem as bad as feared, but climbing higher with the last two days of brent up. joining us from dubai is the middle east executive director. i want you to bring the chart that i know the answer to. you could see what happened when the u.s. had its first sanctions. it's the red circle.

the yellow circle is when the sanctions were lifted. what are the workarounds iran has to sell its oil? look, i mean iran's and exports really jumped after the sanctions were moved t. yes, iran may have found various ways to sell some oil to third parties by circumventing the sections before. replace never able to the exports that they lost through the sanctions. thehere is a return to sanctions now, there is no doubt that whatever measures they take , they are going to be able to sell this oil. the estimates of that very between 200,000 barrels to a million barrels. timell probably vary over and depending on what sort of secondary sanctions the u.s. may take. the difference of course this time from the previous time is that it is the u.s. that has

left the agreement where the europeans and the chinese and the russians want to stay in. alix: i was hearing all the workarounds and terms that the europeans could buy it in the ruble so you do not be the dollar funding system. the sectio secondary sanctions would not matter and that china and india say they will keep on buying. there could be swapped in terms of selling one for the other. does that mean we are not going to have as much impact we had the last time? it might have less impact this time again because this time it is just the u.s. it does not have the european support. it does not have russian and chinese support. i think it will certainly be less. i think the secondary sanctions are important because the iranian economy is in a difficult situation right now. you have the currency plummeting. you have a banking system crisis. they do need the money. they are seeking investments.

the reason why they did the deal the first place is they wanted investments and wanted europeans to come and invest. some deals have been done. all that is up in the air now and is being question, even the limited deals they have done because iranians have not been happy with how limited they are because the money has not been of existing u.s. sanctions or restrictions on their financial transactions that have caused companies to stay away. if we are going to back this deal, doesn't mean that european companies are going to rush in. alix: the question is is it over? i was struck by john bolton who said yesterday it's entirely possible that additional sanctions will follow as new information comes to light. that is something we should pursue vigorously because we want to put as much economic pressure on iran as we can and

deny them the revenues they would of gotten from the transactions we are not eliminating. what is the tolerance that we have here? you take that as harsh rhetoric or do you think there is a reality of ramped up sanctions? riad: i think you have to take it seriously. bull is now part of that administration and not a commentator on the outside. there's a lot of people who see this move as being part possible -- part and parcel of john bolton's appointment could he is on. john bolton is a man advising the president on these moves so you have to take it seriously when he's talking about secondary sanctions and talking about getting tougher on iran. that has been his believe all along and the belief that you need to be tougher on iran and put them in a difficult situation to get them to cease actions that the u.s. and some of its allies consider to be done to mental to its interest. alix: thank you so much for joining us.

great to get your perspective, joining us from dubai. the big test -- treasury gears up to issue $25 billion of notes with a 3% yield right now on the 10 year. this is bloomberg. ♪

alix: the u.s. 10 year yield on the rise ahead of its $25 billion sale. 10 year yields rose above 3% for the first time since january 2014. today would be the first time in seven years that investors would be able to purchase 10 year notes with a fixed 3% coupon at auction. joining us now is oksana are anov. good to see you. what yields will bring in the buyers? ksana: we did see a little bit and the yield fell back a couple basis points, but yields are heading higher and is

the markets are starting to reckon with that reality it's the biggest game in town. there's geopolitical noise and constant economic data noise and the central banks are the biggest game in town and that's the most important thing affecting the bond markets removal of that liquidity. alix: if you look other bid to cover ratios, if you look inside the bloomberg, this will show it. the white line is the yields. there are two ways to look at it. rising yields are not enough yet to ruin the buyers. the other is that you still have saved i -- safe haven demand. which one do you see it as? oksana: where has the majority of demand come from when we talk about that buyer still supporting the treasury? the largest buyer of treasuries has been the fed followed by china, followed by japan, and followed by arguably banks. all those are moving in the opposite direction. is there still a bid from

sovereign funds and other investors and pension funds in the u.s.? sure, but most likely that it will hit the longer end of the curve because that is more related to longer term liabilities. for a minuten that because we care about pension funds and insurance companies needing longer-term securities. is that 30 years extensively or does that include 10 as well? oksana: it's generally longer than 10. it means really long-term liabilities and as one theory why we have seen that long end of the curve 10 down and the curve flattening as opposed to the front and leading in the back and following. david: i saw it steepened some. oksana: even in the high rising rate environment, we have not seen the long end of the curve immediately. it took a number of months for the long until follow, but it eventually did.

as we continue to get data on the economic front, that will eventually happen. everything this administration is doing is absolutely inflationary and that seems to be the one missing puzzle piece that everyone is waiting for . whether you look at tariffs or reducing the labor supply or immigration policies or pulling out of iran deal, all of that is absolutely inflationary. alix: that raises the question of what happens with the dollars in yield. negative correlation and now it's turned positive. the dollarl, does sustain its rally or does it to cow and what does it mean for yield? oksana: the dollar does sustain a bit of a rally even from the standpoint of the is less petrodollar circulating and especially now with the news from yesterday. i do think the dollar sustains its rally some, which by the way will continue to be bad news for emerging-market debt coul there's a lo.

there's a lot of pain there and a lot of voices talking about what a great opportunities are in the em. emerging-market debt to be clear is definitely going to come under pressure from everything happening in the developed world. the dollar eventually strengthening and oil really having a cap. alix: any value in local? oksana: local is going to struggle for the same reasons, especially of the dollar strengthens. that is what we have seen as well as local has not been able to hold up. alix: arc you will be sticking with us. and be able -- mba mortgage applications fell and we will discuss the fallout of the housing market with the largest provider of whole set mortgages. 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. alix: this is "bloomberg daybreak." i'm alix steel. feels like everyone is waiting for that auction at 1:0. up 99 points in the futures

market. the dax a little bit softer. than the currency market, it has been a very interesting morning for the dollar. earlier it was a stronger dollar story across the board. the dollar-yen is on the upside, but the euro-dollar is pretty much flat and 118 is how we print. i want to highlight the turkish lira because that is having a rally as well with it down by about 1%. we have some eco-data crossing right now and here is what we know. we take a look at ppi so the producer price index is if you backup energy year on year, coming in at 2.3%. it is lower sequentially lower than estimates. , if month by month basis you strip out energy, 2/10 of 1%. demand is a little bit lighter and coming up 1/10 of 1%. this feels like the story we have been hearing and the inflation wil world. it is here little bit. david: backing off a little bit

and it does not put a lot of pressure on the fed. there are no alarm bells going on. alix: i wonder what it means for ppi. comes in sequentially lower, you don't necessarily have that pressure to pass it on a consumer level as well, which is debate on whether consumers can handle on that level. david: backing off a little bit from the inflation story. alix: does not seem to change anything yet in the market with the dollar index rolling over and you still have yields moving higher as the selloff it's all areas of the bond market. oksana is still with us. where do we stand on inflation? oksana: here's the issue with inflation and you just sort of illuminated it with your comments. it has been almost entirely priced out as a risk, which makes it a risk by that very sort of way of thinking. these numbers show us that inflation generally will continue to move along the same trajectory, meaning constructive trajectory.

the danger is that any reading in the future that we get that may slightly exceed expectations by the same tiny margins will spur expectations. the fed may not feel pressured by these numbers, but the fed will continue doing what they are doing and they are telegraphing three more hikes this year. david: i want to interrupt from a moment because there's a tweet from the president out about the three hostages held in north korea. they're coming back with secretary of state mike pompeo. "i'm pleased to inform you mike pompeo is on the air and is on his way back t from north korea with the three wonderful gentleman that everyone is looking forward to meeting. they seem to be in good health. good meeting with kim jong-un. date and place set." they thought they would be returning those three hostages as a token of good faith to the president and it also its planes why the secretary of state was not there for the announcement on iran yesterday.

he would say he's over in north korea. alix: he mentioned it planning -- many many times. what does the u.s. have to give up if anything or is this a better way for north korea to start negotiations? david: we don't know. in my judgment, the u.s. give up a lot by saying the president of the unite states would meet face-to-face with kim jong-un. that is something the north korean regime has been after forever, not just kim jong-un but his father and grandfather. they want respect on a national stage. meeting face-to-face one-on-one with the president of the united states is the ultimate respect. alix: that was the rhetoric after the iran deal. you pull out on one end and start to tighten the screws on iran and mental the flipside meet with the north korean leader and try to find some kind of agreement. i wonder how those two that seem to be in opposition with each other play out. david: it's enormously complicated no question about it. it sounds really good and is encouraging, but what ultimately will be the result?

what are the results you get out? alix: what role does china have to play with that as well and what can china due to pressure north korea? david: just to recap again, president trump just tweeting, "i am pleased to inform you that secretary of state mike pompeo is in the air and on his way back from north korea with the three wonderful german that everyone is looking so forward to meeting. they seem to be in good health. also good meeting with kim jong-un. date and place set." those hostages have been held in north korea. we have the consumer price index down a little. i want to come inside the bloomberg here. this is the 10 year breakeven versus crude. they seem to rally in tandem. if crude can hold these levels, does that change the conversation? oksana: that will contribute to inflation continuing on a trajectory upward, but it will not be a straight shot. i don't think anyone is in the camp of inflation heading 5% or

some such number. the issue is that we are in a territory where even the -- the market up is such a coiled spring that any incremental data point tends to move it significantly. i think we are going to see that support from inflation numbers . alix: have you position that real quick? "bloomberg daybreak." our oksana: our position was it was like floating-rate loans and cash certainly. certain pockets of the securitized market, specifically risk transfer securities and shorts. there is still a world where we have $7 trillion of negative securities. you can be sure and earn. definitely keeping liquidity in our portfolios to take a banjo volatility, which will be the defining characteristic of this year. alix: pivoting on to another area of the bond market, mortgages. they felt for tens of 1% last

week after falling 2.5% the prior week. joining us now is matt, president and ceo of united wholesale mortgage. seeing reaction to 10 year yield at 3%. matt: we all know and feel rates are going up. less sordability is people are slow to buy maybe when they would be a little faster if rates were different. that's a market we are in with all the things going on. we are seeing that trend. mortgages are low in general and people are buying. david: at what point does an increased mortgage rate hit the housing market? we had jim on recently from principal housing advisors and he had some pretty alarming ask to say. -- things to say. 200f rates did backup t or 300 basis point, which i

will, but ifhey they did, it would kill the housing sector dead and provoke a recession. i don't think the housing market can take the 3.5% yield and continue functioning well. david: do you agree with that? matt: partially. there is a lot of things that can change the way the market is going to react. with rates going up and how things are happening, the market is definitely going to be if it raises 200 or 300 basis points, but i don't see that happening anytime soon . oksana: we had the housing bubble happen with mortgage rates between 5% and 6% and subprime rates about that. when we think about household and what affect higher mortgage rates will have on households, households have roughly three times more interest paying securities or investments as opposed to the mortgages, which are the major interest paying

liability that house will to have, and they are generally fixed rates. it may ultimately be a positive one. as matt pointed out, the big issue in the housing market is not mortgage availability or affordability o but really supply. the loanhave also seen officer survey from the fed with auto loans and car loans, the demand for those, and commercial real estate loans have rolled over a little bit in terms of demand. that does make me question the longer-term inherent demand for housing. matt: absolutely. with the way the market is moving, rates going up and thinks changing. the demand is different from a year ago or post-brexit. now it's more important than ever to be shopping for a mortgage and find a great local mortgage broker that can help you get the right deal for you. with rates going up, there are

some different options out there and we are seeing that housing is going fast. if you're not going to get a great offer on a house quick, someone will grab it up. alix: is it more floating-rate? mat: it's all most exclusively fixed. bonds rate will be much more relevant in a couple of years, but people are still slow with the subprime thing years ago. david: what are you seeing in terms of credit quality? our people backing off on the stringent requirements? mat: it's a pendulum and swung very tight. it is easing back. i do not think there is some risk that this will become the next big bubble. the mortgage market and all those people did a really great job of putting us in a great position for the mortgage industry. it is not too loose if that's the question. alix: what do you do with mbs? oksana: there's an interesting pocket. the securitized market or the classic mortgage backed securities is an extremely sensitive instrument.

pocketike a specific where fannie and freddie have been essentially ordered by the government to de-risk the balance sheets. they are restructuring certain securities and saying we are no longer on the hook for the default risk on these. do your own research and look at the underlying tools that have a certain amount of history. decide what sort of risk you want to take on here. you're taking something that was very interest rate sensitive instrument and make it credit rate sensitive instrument. because you can do the research and death on underlying tools and the risk-taking ability. oksana, thank you both for being here. i want to come back to what is happening with north korea this morning. we've had two presidential tweets. the verse one read as follows, "i'm pleased to inform you that secretary of state mike pompeo

is in the area and is on the way back from north korea with the three wonderful gentle and that everyone is looking so forward to meeting. they seem to be in good health. also, good meeting with kim jong-un. date and place set." those three german were prisoners of north korea. the president has a second tweet saying, "secretary an pompeo and his guest will be landing at andrews air force base at 2 a.m. in the morning and i will be there to greet them." the president greeting those former prisoners at joint base injuries. alix: this is a huge win for the trump administration. david: absolutely. i think that they have gone farther and faster on north korea than anybody expected. it does not mean it will end than but they got faster the critics would have anticipated. mike pompeo has not been secretary of state very long. he has been to north korea twice

to set up the summit and bringing back hostages is pretty impressive. alix: it calls into question the entire foreign policy of mr. trump. it seemed like everybody ended up doubting his strong hand. it is the stick and the carrot. david: it is not over till it's over, but you have to give him credit that he's right that the pastor ministrations have not made any progress in north korea. this may not end up working, but so far, so good. alix: time and date set. also watching china and what role they play. david: maybe they will tell us when and where. disney may have beaten second-quarter results, but investors are really focused on what comes next in the media space. we discussed the outlook for the company's fox deal. commuting today, tune on your radio for tom keene and jonathan ferro.

bloomberg radio can be heard all across the united states on sirius xm radio. live from new york, this is bloomberg. ♪

kailey: this is "bloomberg daybreak." i am kailey leinz in the hewlett-packard enterprise greenroom. coming up later today, republican senator james rice of idaho. ♪ david: the walt disney company announced its second-quarter earnings yesterday and much of the talk was about disney's proposed deal to acquire much of play for century fox. rob i grew just after he announced earnings and he made his case for why the disney offer for fox was better than whatever comcast might offer. >> first of all, if you are

shareholders of the company that is being bought in this case, 20 for century fox, you have to consider not just the total price, but you have to consider the value of the currency of the combined entity. the other thing you have the consider is what is the path to regulatory approval? is this a deal that you believe you lingers around the world -- because around the world is very important here -- will ultimately approved? we are quite confident that we will gain the approval. david: we welcome now ng and our bloomberg deals reporter and paul sweeney. paul, i always turned to you when it comes to disney or any media company. let's talk about their second quarter and what we learned about the walt disney company yesterday. paul: they had a very good quarter yesterday and that's a good place to start. the strength came from the film entertainment business. it seems like it's in every

court is that they have a blockbuster film and put up huge numbers as one of the biggest quarters ever for that business. the theme park is listed very well against. it's another business that gives you double digits every single quarter. they continue to invest in that business. the media networks business is a little light as they continue to deal with cord cutting and what that means for espn. david: which takes us directly to play for century fox. that is what bob is trying to do with 21st century fox. he talked about the currency being offered. it is disney stock versus potentially comcast cash, which i inferred rupert would like to hold disney stock. there's also regulatory issues. paul: we will have to see what happens with at&t and time warner. as it relates to cash versus stock, the sellers in this case -- rupert murdoch -- he has a big tax issue. i think he is very comfortable holding disney stock longer-term. i think he is less comfortable holding comcast given the

balance sheet that comcast will have the that the. for that deal. david: let's talk about the media space. we are seeing talks of consolidation across the board. is it going to work, these traditional company saying they want to plunge into over the top with both feet? danny: it is worth reminding ourselves that this is all because of the massive disruption in the video system. that is why this consolidation is happening. there's an increasing realization that scale is what it is going to take to win. that is why you are seeing all this m&a activity right now. content players are looking to get scale. they're looking to secure their indirect distribution, but also more portly, can they get into the direct consumer this tradition piece? they need that scale. you see distributors vertically integrate because they need to guarantee access. increasing from a globale

end, tv is good right now and quality is great, but it's expensive. they need global markets to advertise the cost of this. david: everyone agrees it's a short a right now, but people are overpaying. they are trying to get into business so they are not worried about making money on tv. if you throw a lot of money at hollywood, you can do pretty good to be. tv. danny: there is no doubt that this is the heyday of tv now. you have netflix and amazon spending multiples of what traditional payers are spending in terms of content. this is an interesting time from that aspect. david: how are they going to afford all this? >> they absolutely are. if comcast doesn't go through this bid, they will become the most indebted borrower in the u.s.. they will have $173 billion, which is kind of a lot, right? [laughter] and you have seen the media telecom companies bulking up and

debt. you're going to have comcast and at&t and verizon as the biggest borrowers. they have said that they want to deleverage. comcast has said that, but how you do that and still pay for the assets is a big question. david: come back to netflix, which i think is a catalyst for a lot of this. netflix really got this going. a lot of traditional companies looked at netflix and evaluation of said how are we going to compete with that? does netflix need to get bigger? they are spending a lot of money, but do they have the library and resources? danny: i think you are onto something. that is what everyone is responding to right now. they are the global leader right now. do they need to get bigger? i think the dynamics are going to move such that their content is going to start to become more expensive and people are going to start pulling stuff away from them. i would not be surprised even from an m&a perspective that you

see them make moves going forward. alix: what kind of deals would we be looking out for in the space? nabila: everybody is rushing to consolidate. fox is the last big remaining global asset so that will be a bidding war. bob iger told you yesterday that he does not think it will be that. you have cbs and viacom trying to emerge as well. you talked about this deal and nausea for a number of years now. i'm hearing from my sources that sherry redstone is kind of getting a bit fed up. david: she keeps giving concessions to les moonves and he says it's not enough. latest the greatest -- round of concessions is that he doesn't have to be on management and can be on the board, but cbs is pushing back on that point. that is where she is getting fed up and ultimately she will have to decide how far she wants to push it if he really does want to bring the companies together. she has wanted to say that they should decide themselves. cbs has said they understand

strategic rationale, but they do not want to do the deal. david: more drama going on in media than i can remember. we are probably going to have a bidding war as a practical matter. paul: i think so. if you are brian roberts of comcast, the same reason bob iger wants to buy fox, the same thing applies to comcast and brian roberts. the have the ability to lever up. they can get the shareholders a clear path down to deleveraging. the stock has gotten crushed since he started announcing his intentions here. is shareholders really don't want him to make this deal. david: that happened when they made that bid for disney. the shareholders ran for the exit. alix: great conversation. bila, paul, na sweeney, thank you all. pompeiuse on secretary returned from north korea with three detainees. more on what i'm watching next.

go.o gtv you can look at some of the chart we talked about on the program. this is bloomberg. ♪

alix: this is what am watching today. i'm watching president trump in north korea. a tweet from earlier -- "i'm pleased to inform you that secretary of state mike pompeo is in the air and on his way back from north korea with the three wonderful gentleman that everyone is looking so forward to meeting. they seem to be in good health. also good meeting with kim jong-un. date and place set." david: i think about that young man, the uva student who is over there in prison and he was sick and died right after coming back. president trump was really moved i that. remember his parents were at the state of the union address this last january. i think but i don't know if this is somewhat personal for him to

bring back those three americans who have been in prison north korea. alix: it sets up and adjusting dynamic ahead of this meeting how important it is for the two leaders to me. what will the u.s. have to offer to get these three people back? and it's just showing up. and his people, he can say i got the president of the united states to come to the table and talk to me, that gives you enormous status, which is important to him. alix: that does it for "bloomberg daybreak." coming up on "bloomberg markets: the open," christopher harvey of wells fargo securities. everybody watching that 1:00 p.m. bond auction. $25 billion coming online. 3% is how we trade on the 10 year. this is bloomberg. ♪

jonathan: from new york city to our viewers worldwide, i'm jonathan ferro. 30 minutes to the start of trading, this is the countdown to the open. ♪

jonathan: coming up, president trump exiting the iran deal and the united states stepping back from the landmark agreement, re-imposing sanctions. european allies pledging to stick with it. european businesses facing a much more difficult decision and crude catching a bit of a bid. iranian oil buyers have six months to occur purchases. 30 minutes from the opening bell and the story looking like this. futures update. in the fx market, a stronger euro. treasuries on offer ahead of the 10 year auction with yields up three basis points to 3.01%. the story in the oil market is the president keeping his promise on iran, exiting the 2015 landmark agreement, reinstating sanctions. >> the united states will withdraw from the