>> drug companies brace for impact. president trump will outline his plan. the curve keeps a flattening. it could invert my september. get ready for draghi. the topic is the state of the union. the backdrop is italy on the verge of a populist society. daybreak.""bloomberg also.is joining us president trump will tell us what he is going to do about drug prices. before that, he is going to meet automobile companies. we have a lot coming up with the president. alix: for drug companies, we

have been hearing about that -- from before the election. drug places have to become immune to this at some point. david: exactly. he is going to toss what he plans to do it we will cover that on bloomberg television. before that, we get a preview ofh the man who is secretary hhs. we will talk to him in the 8:00 hour. alix: looking forward to that. the markets are relatively come. s&p up by six points. it is now a weaker story, giving out strength after yesterday. the spread that everyone is focused on is the 530 which is 27 basis points of, but we could see in version by summer. crude up just .1%, but the highest level since 2014, as around says president trump is

playing shenanigans when it comes to the oil price. david: a technical term, right? alix: it sounds a lot like me. i would say that. david: now let's go to "first take." we are joined by martin adams, chief equity strategy at bloomberg. the drugrt with companies. we are also joined by anna. equity prices for drugs and stocks, the president has complained about this and it has driven prices down, but they come back down. what will we find today. anna: it will be really important for drug companies to watch because when you saw him say they were getting away with murder, the stock prices reacted. he is going to edged is a plan called "american patients first." he is looking at ways to increase competition and

encourage pharmaceutical companies to compete against each other. it is important not just lower prices for consumer but also for the government for medicare and medicaid. goal is toprimary get the drug prices lower for the patients, people who are voting or is it to get the overall cost of health care down? anna: i think both. successful ase as they expected. that is something you will see the trump administration drew -- do, not just with legislation. also with regulation. any kinds of executive action they can do to bring drug prices down. david: where putting on the screen but the outline of the plan will be, like more generics and rebates. what does that really going to do to the value of the drug companies? alix: that is the question for you, gina.

they are paying attention, especially for the broader performance a year ago. investors had the risk that whether there was maybe a clinton elected or trump elected, you would face risk to health care prices going forward. you have seen this rotation away from the drug providers and away from other stocks and toward somewhere like lower prices like -- health carech tech. life sciences has done reasonably well. investors are migrating to equipment companies that are not trying to expand margins and rise of prices but making more efficiency and growth in the sector. alix: a story that comes back every few weeks and that is the yield curve. an interesting chart here. this the 530 spread. each bar is the time it took to have the same klein in yields.

if we continue at this pace, we could see an inverted curve by september. gina, your thoughts. gina: i am not excited by an inverted curve. the equity market is caught between a rock and a hard place. we need to see the yield curve fairly stable, maybe even becoming flatter overtime, not inverting, and not becoming sloping. we do not like periods of time or it is whiting because it -- widening. back in january and february, this is where we were. the curve was becoming more upward sloping and it was whiting and that was different -- difficult for the equity market. historically, and in version is difficult because it tends to recession and earnings risks. where in the suite spot now, but it is a matter of time before that shifts.

for now, equity investors enjoying this. alix: over the past five days, utilities have gotten hit hard, down 2%. some analysts say they like utilities rotating aztec into utilities. what do you two at a 27 basis point spread? it depends on what the long end of the curve is doing. as long as it is on to move higher, it is difficult to do well in some high-yielding utilities and staples and telecoms and even to the lesser extent the health care. investors are drawn to places for stability but higher yield also. the competitive landscape shifting, and the reasoning itind shifting is because changes. the investor incentive to become defensive is very little right now in an environment where economic growth is accelerated and inflation risks are generally rising, and rates are rising with it. it is difficult to do well in this.

david: we want to turn to the third big story. mario draghi is going to be giving the state of union as it were for the european union. it is against a backdrop of what is going on inside the country which will be italy with big news coming out. anna, what is going on in italy? there was a time when the world but it is almost a disaster to have the league get together with the five-star and now it looks like if it's not inevitable, it is likely. anna: they are still trying to form the government and who is going to be the prime minister peggy see the populist government becoming more power -- minister. you see the populist government becoming more powerful. it is a trend you see not just in italy but other countries as well like hungry. one of the questions we will have to wait to find out is

if the coalition comes together, will it move its position with respect to europe or will it be a problem for mr. mccrone who macron. -- mr. crown -- anna: you see this playing out in other countries as well. that is something to watch to see how they form the government. alix: it brings us to market reaction. this is a 10 year bcp a spread. it was up yesterday. you would not have expected to see that based on the populist government. what is your interpretation for the risk of investors? gina: a lot of risk was already priced in. quite a bitproved as economic conditions have improved and the markets and equity markets are mirroring what you are seeing in the bond market.

i feel -- i view it is that italy was the problem child of europe for a long time. it has had a little bit of recovery and has stimulated flows into assets that are linked to italy. we are questioning that in the short one, but just questioning. -- we are racing to not trying to price in armageddon in italy. alix: with mario draghi speaking later, how does the ecb normalize rates in anyway when there is an underlying risk that they cannot line pricing and and how that affects the market? that could be why yields are a lower in italy because of this. that the big risk is ecb does unwind the quantitative in the similar fashion to the way the fed does, and what does that mean for the bond prices?

for all intents and purposes, the u.s. has gone well. to the extent you can continue to see broader economic growth in europe, inflation pressures rising and improvement in economic growth, it is a good environment for the ecb to slowly backpedal on purchases. that is what the market is telling you right now. it is not h manus risk, but the ecb has not started -- a tremendous risk, but the ecb has not started. and edgerton, thank you, and gina thank you. i am going to say goldilocks. here in the u.s. and there in europe. inflation, not enough. david: markets not overreacting right now to anything. you have to say that mario draghi has a lot of weight on his shoulders. we'll see if we can keep it going. alix: maybe mr. carney can call

him for lessons on communication. are talking about his performance yesterday. coming up, more on what flattening yield curve could mean should markets we worry about a potential recession. we will discuss with david kelly from jp morgan. live from new york and washington, this is bloomberg. ♪

alix: u.s. yield curve flattest in more than a decade. the spread is on the lowest since 2007.

take a look at this terminal here. at this rate of speed to the decline, you could see an by september. joining us from massachusetts is david kelly, j.p. morgan asset chief strategist. what do you think? i am not freaking out about it. i do think we will see more movement upwards also. remember that the federal reserve is increasing its bond sales and reducing the balance sheet. the ecb will get out of the business of buying long-term bonds. i expect the 10 year yield could rise to about 3.5% by the end of the year. that may avoid complete inversion. but if we get inversion, it won't mean anything. inversion used to be a very worrying sign for the economy, but this is basically a broken barometer. we have never had central banks so active at the long end of the

bond market. it doesn't tell us what it used to. alix: yesterday's 30 year auction was interesting. the ratio is the yellow line and the blue bar is the indirect bidders. i wonder how much higher yields would be if we didn't have short covering and safe haven buying potentially. still plentyre is of demand out there and people are grasping for yields wherever they can get it. suppose they do get an inversion deal curve, not only is it a broken barometer, but it does not harm anything. it is a symptom rather than a disease. if you raise short-term rates and cut long-term, what do you do to the private sector? you make it easier to take out a mortgage but you are giving a more income on the bank accounts. the stimulus of a household sector is not harbinger of doom, but it reflects the stimulus of the economy.

i am not that worried about it. i think these are special circumstances. the yield curve will be flat. i'm not worried about it being a recession. david: i expect it is a symptom rather than the disease, but a symptom of what? cyclet the underlying indicate that we are coming to the end? the fed said they have to get the short end up as ammunition and over all the markets are saying we don't think there is a lot of growth left. david k.: i think the other thing people realize is that in the long run, inflation is not going to be a problem. even though you see the spikes ofoil prices, there is a lot conviction that inflation will be low in the long run and they think economic growth will be low in the long run could when you talk about a 30 year bond, it is not about a recession, but

growth in the long run will be slow and you do not need as much compensation when you lend the government money for 30 years. i don't think it is a prediction of recession, but i think it is, along with many things, tells us economic growth will be slow and nominal. david: doesn't the data tend to indicate that in the united states, the projections of gdp growth are softening and not strengthening? should we be concerned? david k.: in europe, i think a lot of this has to do with winter weather. to me, the most important indicator is the unemployment rate. it's going to either go in one direction or the other. in europe labor markets tightening. europe will get its groove back. in the united states, i see plenty of demand and the economy. there is a problem in terms of supply. businesses have not figured out

yet what to do with all that money. more talk ofng capital spending. i think the us will be able to sustain 3% growth year over year into the second quarter of next year. i do not see a near-term softening in the united states or europe. alix: let's go to europe here this is a chart that puzzles me. the spread is at 130 basis points. what is the trade on italy as we head into it populist government and the markets seem passive about it? david k.: that has been the case ever since the ecb a few years ago decided they were going to help a individual companies in terms of overall bond purchases. that come people about the ecb letting in a company go to the wall. it. worried about we have a populist left and right and they agree on not many things. the one thing they agree is that

they won't be too concerned about the budget and cut taxes and increase spending. that is bad for the bond market. italy has a huge amount of debt. i am worried about that in the long run, but in the short run, standk the ecb will behind italy. i do not like the trend. all over the world, there is deficits andus on long-term stability. that is a very unhealthy trend. alix: david morgan, thank you so much courage you will be sticking with us. , health stocksp may have a rocket eight when president trump aligns his plan. more on the prescription. live from new york and washington, this is bloomberg. ♪

david: president trump lays out his plan for cutting drug prices this afternoon. he wants to do something he has been complaining about since

last january, before he came to the white house. pres. trump: they are getting away with murder, pharma. have a lot of lobbyists and a lot of power. there is very little bidding on largest buyerthe of drugs in the world, yet we don't bid rapidly. we are going to start bidding and say billions of dollars over a period of time. with anna who covers health care with bloomberg. in boston.elly is will there be bidding, anna? what will we get? anna: we will not be getting bidding. he is not expected to save the government will negotiate for drug prices. instead, he met with pharmaceutical executives and got a plan. david: what do we get? anna: bring in more generic drugs faster and how finding

ways for foreign countries like the ones with set prices have more socialized medicine and have them pay more for their drugs in the interest of a fair trade. david: this is like a trade dispute. well that bring prices down here? would likeis what he to see. analysts that i have seen have not said that is how it will go. it said pharma companies will get paid more in europe and still get paid high here. we'll have to see how he will go about doing that. david: david, china in here. if he does achieve -- chime in here. if he does achieve something like this, how will it help? inid k.: one of the ironies terms of the evolution of health withis when we were left the affordable care act, we were

be peeling the mandate -- we were repealing the mandates and keeping the pre-existing. that will be a bigger and bigger player and we need to be more intelligent about how we pay for drugs. should, on behalf of the public, excite some market power. need to do it intelligently. you need to promote research into drugs that will save lives and stead of things that will deal with minor conditions. the focus of the research is -- liveswrong -- and instead of things that will deal with minor conditions. the focus of the research is probably wrong. whose excess will

be affected? there are negotiations to get better prices for drugs. the repeals come from the drugmakers and pbms and they are keeping them. the president would like the pbm's to share more rebates with the public. they are trying to rein in how want operate but they also them doing more negotiating on behalf of the government. if you are an investor at this point, are you investing in health care or shying away? would be investing because health care stocks are not particularly expensive, and they are fairly stable. i am not so sure washington as a whole will succeed in reining in the various parts that the

health care sector and the drug companies. iwould invest in it because do not think washington will control the costs. david: thank you anna and kelly. please stay with us. bloomberg will bring you live coverage of the speech on drug prices from the president at 2:00 this afternoon. health and human services secretary is up next hour. up next, iran's sanctions. boston,m new york and this is bloomberg. ♪ mom you called?

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it's a drone! i know. find your phone easily with the xfinity voice remote. one more way comcast is working to fit into your life, not the other way around. alix: in welcome black to "bloomberg daybreak." -- welcome back to "bloomberg daybreak." turned to summer

down here. allergies are bad. alix: don't even talk to me about allergies. i am on allergies and -- i am on pills and shots. up.futures out b is in a gradual pace which has been reflected in the market. european stocks inching into positive. stocks still inching up. looking at asset classes in the at 42.30 is if we keep going, many say the 530 could be inverted by the summer. it is driven by buying on the long and instead. that is an interesting dynamic. euro-dollar up by .1%. it is getting wrapped into a

softer inflation story. bloomberg telling that geopolitical risk has not yet factored into the crude market. for headlines outside the business world will turn to kaylee. she is here with the first word news. kailey: angela merkel is critical of president trump's to pull out of the iran nuclear deal. she said he has damaged trust in international order. it has been discussed with vladimir putin and they agreed to keep in with the iran agreement. president trump is promising to unveil what he calls great health care plans in the next month. he made the pledge at a meeting in indiana. he has tried unsuccessfully to get congress to repeal the affordable care act. international monetary fund later once a quick solution with argentina. they asked the imf for help

after banks were forced to raise interest rates to the highest in the world are they are seeking $30 billion. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm kailey leinz. this is bloomberg. escalate in the middle east as israel hit a rainy and positions inside syria in response to what it said worked iranian missiles fired on israeli held- positions. they said iran had kroos -- crossed a redline and warned against any exhalation -- exclamation. exclamalation. usanyahu said whoever hits will get hit seven times over and wherever prepares themselves to attack us will be attacked

first very that is what we have done and what we will continue doing. let's welcome bill fairies who -- leads ours national coverage. what is going on with: heights and the exchange -- with golan missileand the exchanges? bill: the situation with iran is justifying pressure on the trump administration to pull out of the nuclear deal. the white house would view it if you way -- same way. has been said that they are a bad actor in the middle east. this is the kind of evidence they point to as a reason that the 2015 nuclear deal was not a good agreement from the perspective of u.s. or is really national security. we had a sit down yesterday -- with israeli security. wait a sit down yesterday and

the situation was the key part of the talks. david: mr. yet yahoo! -- mr. night yahoo! -- benjamin netanyahu went to visit with president vladimir putin. what happened there? bill: russia is heavily involved in the syrian conflict. iran is also heavily involved, all on the side of bashar al-assad. alix: that raises an interesting question on how opec and russia responded to this. one story in the market is that saudi arabia will pump and make up the oil goes they want oil places to hurt iran. aat leaves russia in different situation. what are you hearing? in a saudi arabia has long middle player in terms of helping balance out the market. russia has never played along with that. effort from of any

saudi arabia will be matched are compensated by russia. alix: the question for iran is what will they do? if there economy gets hurt, it will be harder and harder to stay in the iran nuclear deal and the public won't stand for it. why does it matter how strict the u.s. is going to enforce the sanctions? bill: right now, people do not anieve russia -- iran has incentive to jumpstart its nuclear program. they are upset with what the u.s. has done and have committed themselves to trying to work with other partners to stay in the deal. they do not get a lot of economic i leaving and jumpstarting the nuclear program. that will cost on trade and investment. for the time being, that is the position they are in. i do not think they see it good to start up. david: historically the united

nations has played a role in the middle east. other playing any role at all? bill: we had this visit yesterday and they were pessimistic about the middle east. you mentioned the conflict between iran and israel. he was a supporter of the nuclear deal and back by the land. when you look at conflicts like yemen and the situation in syria, he called the situation in syria completely stuck, which is a big admission. the yuan has been the single biggest promoter of a peace process there. it has become a battlefield of half a dozen nations and handful of terrorist groups. there is not a lot of political rule to bring that to an end. david: does he take any comfort of what is going on with north korea? not that long ago, that seemed an intractable problem. bill: a year ago we were talking about the possible conflict with north korea on nuclear weapons. he said there are a few reasons.

he said when you're doing with north korea, you're dealing with a single individual. there is no coalition government, no worry about elections. if kim jong-un ask a decision that he wants to scale back hostilities and ease tensions with the u.s. and south korea, he alone essentially has the power to do that. he feels like china has an important role to play. china can guarantee existing sanctions which the secretary general called a straitjacket on north korea. china can guarantee they continue and provide a security guarantee for north korea so that if they scale back nuclear programs, they don't have to worry about the u.s. are south korea taking aggressive action against them. david: bill, thank you so much for joining us. turning back to david kelly, give us a view from the business and investment community. does this matter at all? the price of oil is a

crucial variable here and we are in the 70's on oil. if you sell that iran produces 4% of the oil, and if it were taken out completely, it would have a big impact. a lot of people are recognizing is that the europeans in particular are angry with united states for pulling out of this deal which they negotiated in good faith. the conversation between iran and the europeans, the array nantz are saying they are getting hurt and how are you going to make up for what the they are saying, how are you going to make up for what the u.s. has done to us? it may take a short-term hit. prices may hold in the 70's and come down from their over the next few years.

i don't think you'll see a big strike in oil prices. a lot of people seem reassured but it is an important issue. or 90, it would crush consumer sentiment and a threat to the u.s. economy. alix: morgan stanley already worried about that eating away at that. the question is, what you want to do with oil stocks? energy companies are under running on the oil price and continue. i know you don't expect the spy, how do you explain the gap and the middle of the curve going of yous -- the spike, how do explain the gap and the middle of the curve going upwards? david k.: stocks never failed as much as they should've done when oil prices cratered. when you see it coming back, it is not as much of a bounce back for energy stocks. if you can hold crude prices than the 70's, that should be a

positive single for global oil reducers, particularly if the shortfall is coming not from a supply problem in the west but supply from iran or venezuela. alix: short-term, we do see short-term spreads rolling over, implying there is glut in the market. there a trade to be made playing short-term versus long-term? it is a very dangerous game laying trades. i wouldn't want long-term investors trying to do that. fundamentally, what we know over and over again is that one oil gets to these kinds of races, it encourages more supply and reduces demand. i am going to bet on somewhat lower prices and what we are seeing right now, even if we sustain a price in the 70's. david: david, really great to

have you with us. that is david kelly from j.p. ingan asset management massachusetts. coming up, global cars gears up for a potential ipo. you can listen, to the radio and listen to jonathan ferro and lisa abramowicz in for tom keene. tim fox will join lisa from 9:00 to 10:00. "bloomberg surveillance" can be heard in new york, boston, the bay area, washington, d.c., and all across the united states on sirius xm radio. live from new york and washington, this is bloomberg. ♪

alix: this is "bloomberg daybreak." -- nunn,: coming up, sam nuclear threat initiative cochair from georgia. and now to the bloomberg business flash. the ceo of barclays has survived a year-long investigation with only a fine. rigorous -- british regulars have find him for attempts to unmask a whistleblower. j.p. morgan chase wants to take advantage of the china's latest commitment to open up its financial markets. the bank has a majority stake in a chinese majority center. others have done the same. chinese regulators say they will review the application. apple has quickly porting a key

figure in its quarterly report. the amount of cash it holds overseas. it is not illegal, but it could to figure outult corporate investment in the u.s.. at one time, apple had a $252 billion investment. that is your bloomberg's newsflash. what todon't even know billionbillion -- $252 would look like. david: as kerley pointed out, it means you cannot quite figure out what they are doing with the money. alix: these corporations are huge buyers of corporate debt. are they selling corporate debt and that gives you a good read on the market. david: as we have seen, they keep amassing more and more cash.

even if they spent a lot of it, it is coming in faster than they can spend it. exactly, which raises the question of what are they going to buy it with all that cash. david: they are doing ok at apple. alix: to the wall street the now -- david: to the wall street beat. , employeetsche bank morale is said to be taking a hit as many people are worried about losing their jobs. can the new ceo turn things around? second, silver lake property and it moves into analytics firms. volvo revs toward an ipo. the swedish automaker is said to morgan stanley as advisors and the potential ipo. what i loved about the deutsche bank story is that this was all the conversation.

>> it really is a piece that takes you inside the thinking because in all the talk about apple, one and with of the cliches and its two on wall street is that the biggest assets are the people. dubai deutsche bank are very worried right now. wall street is also about opportunism. so people at other banks are thinking, who do i like at deutsche bank? alix: everyone has to have a list in your drawer. david: what strikes me is that how they handle their trenches and to the ceo. news gets out and they let it dangle and they let it go. it makes it worse and worse. you decide what you do and do announce it and you don't let it leak out and ask what we should do. jason: i am glad you brought

that up. at lunch yesterday, a wall street guy who is very senior in comm worldrld, -- was talking about that. about between the european banks and the u.s. banks, and this has been a process that has been a bit clumsily handled. david: from deutsche bank, it is hard when you're on the outside and not the inside. silver lake made a big purchase of $3 billion for a property platform. it is in the real estate space. they have bought real estate the u.k.ut this shows e-commerce service deals. this is the biggest by a long

shot. it is an overall strategy to go into monetizing data. jason: you know how much i like to talk about private equity. this one jumped out at me this morning. silver lake is well known to the equity space and in technology, not always grabbing the same headlines as blackstone and they have been savvy over the years. macroave anticipated technology trends, and this here as be the case well as also taking the private equity playbook of building platforms and identifying that forms. have never that i heard of, but they did that. alix: how is it in the u.k.?

jason: it is continuing to build. the global private equity story is one of a whole bunch of money looking for deals and deals tend to be competitive. that is why you have to have a bit of an edge. that seems to be the case with silver lake. it is not an obvious company where there was a robust auction going on. you really have to have an idea. the other thing that is at work clearly in this deal is the global push to invest in real estate. you obviously combine poverty and we have talked about everything everyone is doing led by blackstone building hotels and residential in some cases. but participating from the technology prospect is an interesting point. david: that leads to the ipo from volvo cars, not trucks.

we thought it would be a good time to revisit exactly how the banks are doing with the ipo's. let's look. citi has done very well here. you see the list of banks. notably, goldman not at the tops but clearly in the mix. a wallthe things from street perspective, investors are always like, i want to get my hands on ipo's. what anchors talk about is that they want to get their hands on the fees. ipo's are seemingly coming back and that is good news for the investment banks, who is not have a lot of success. is -- are some big kahuna's out there like aramco that are hanging out, but we have not had nice flow of ipo's.

there is a big -- these are a big money maker for the banks and to get their names out there. what we talked about with deutsche bank, it is a chance to get high-profile bankers, and those of the men and women who bring in the books and can make a lot of money. david: jason kelly, thank you very much. coming up, manipulating smart devices. research finding artificial intelligence to test the boundaries of voice brands. more on what i am watching, coming up next. alix: check out tv . you can interact with us directly very -- directly. this is bloomberg. ♪

david: this is what i am watching. google, a piece out about a developer conference.

they announced a new artificial intelligence assistant that will sound just like a regular human and do things like: to make reservations at a restaurant. inside the hall, they loved it. horrified.ople were this is a quote from a professor who said "horrifying. silicon valley has lost an has not learned a thing." will now having an assistant call and make things that we don't even know about. alix: if they can make a call for me and wait online for so long, i'm fine with that. is who is your artificial intelligence calling and another is who is calling your artificial intelligence. they have figured out that they can send things to white noise and there is a single going to alexa that can tell them also

its of things like unlock your doors or change your credit card passwords and things like that. that is pretty ominous. alix: it always is. it always raises how far tech is versus regulation. we saw this with airbnb and the do-it-yourself companies and if that can tissue's -- continues to happen, because my husband put an alexa in the bedroom and i said it was too close. david: who knows what they're hearing. coming up, we will talk to sam nunn, nuclear threat initiative culture and former senator from georgia heard we will talk about iran and north korea. live from washington, this is bloomberg. ♪ mom, dad, can we talk?

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that's a good one. seems a bit long, but okay... set a memorable wifi password with xfinity my account. one more way comcast is working to fit into your life, not the other way around. mr. elliot, what's your wiwifi?ssword? 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: drug companies research

impact. president trump will outline his plans to improve drug costs. how low can you go? at 27 basis points. at this rate, the curve could invert by september. and the ecb president will speak in florence. the topic, the state of the union. daybreak. bloomberg i am alix steel in new york. david westin is in d.c. he had a fancy dinner yesterday and will be fancy there today. david: it is all work. i miss you. there is a lot going down here. the president will meet with presidents of all companies and give a speech about drugs, and on top of that, we have nuclear issues that affect just about everyone. there is a lot going on in washington. alix: and a lot of questions. if we get clarity from automakers and drug companies,

but on the iranian issue, there are questions on how strict the u.s. will enforce the sanctions. any clarity on that will be what the markets are looking for. david: and ultimately what that means for the nuclear program and iran. we will talk to sam nunn, the former longtime senator from georgia, about the nuclear and iran.north korea he has been a pioneer in this area. after that, we will get back to thes and talk with secretary and get a preview of what the president will layout. alix: it is a pretty goldilocks scenario. s&p 500 futures by five. it was fun but not as firm as we would like, and that has helped prepare -- propel the rally. watching the 27 basis

points, the lowest we have seen since 2007. and crude pretty much flat on the day but a 2014 hi, even though iran criticizes trump for the oil shenanigans. david: and you say it so well. alix: shenanigans. david: shenanigans, i cannot do it as well. kailey leinz is here with first word news. kailey: president trump will propose an effort to lower drug prices to increase competition among drugmakers and lower patient costs. chancellor is critical of president trump's decision to pull out of the iran nuclear deal, saying the president has damaged trust and international order. she discussed the matter with the russian president. the kremlin agrees to keep complying with the iran agreement. and united nations secretary says he is optimistic the u.s.

and north korea can reach an historic nuclear deal. he gives credit to president trump for pushing a tough series of sanctions that forced north korea to negotiate, telling bloomberg it is votto for north korea to get out what he calls a straitjacket -- telling bloomberg he thinks it is vital for north korea to get out of what he calls a straitjacket. i am kailey leinz. this is bloomberg. alix: thank you. the u.s. yield curve is the finest and more than a decade. the lowest level since august 2007. inside the bloomberg, at this current rate of rereading, the curve could be inverted by august or september. joining us from london is an investment committee member. would you be playing for a flat yield curve for an inverted yield curve right now? definitively are heading there at the federal

keeps hiking rates. so far, looking at the message of the yield curve, i think we have to keep in mind that compared to previous decades because of the extraordinary compression off the long and part of the curve, maybe the message is not as clear as it used to be. alix: what i found interesting is part of what was released yesterday was the longer end. in the bloomberg, you see why. you have that 30-year-old option and the ratio that white line strong and the blue line, as well. thanis a different story factoring in a faster rate hike in the short and moving up. jean: i think you are right. as far as we're concerned, we started the year with a view that boost the growth outlook in the u.s. and inflation will not be as strong as expected.

for this reason, we are not surprised by the behavior of the long end part of the curve. looking to the shape of the real the yield curve in the u.s., i would assume the fed is done normalizing because the curve is flat. i think the real issue will be whether the fed keeps hiking despite long-term yields which remain relatively moderate because they are signaling growth inflation and expectation might not be as strong as what expected by investors. david: what is an investor to do? one way to look at this yield curve is a combination of slowing economic growth, growing but not as fast, and tightening monetary policy in the u.s. and overseas. if those are the facts, how does that change in investment decisions? jean: i think it is a

treacherous environment for investors because it means the kind of long-term trends that investors trade for are not there. what we have seen, and this is true when you look at the european markets is we had this many ways, but without sustained yield for growth acceleration patterns, so for investors, it means the model where you have a combination of equity and risk, this model might not be relevant anymore. you need to be more flexible and have a lot more relative strategies if you want to navigate fiscally the market environment. u.s.,i want to move over this is the two-year treasury at 311 basis points.

is the path of least resistance shorting balloons, etc.? what do you think? jean: what is important is for international investors, in particular japanese investors, once you invest, it is not so much absolute rather than the shape of the yield curve, which measures. in other words, if you are atesting in tenure bunds the currency debated, you will get a high year yield you are investing in the 10 year treasuries in the u.s. on the currency adjusted basis. i think that means that it is keeping the market and check in europe and also explaining why we do not see this kind of arbitrage between europe and the u.s. that everyone was looking for. medecin of carmignac

investment, thank you. the backdrop, the potential populist government in italy. david: that is a wildcard nobody predicted. we will find out what it means. coming up, as the president prepares for historic talks with kim jong-un, we will speak with sam nunn and former senator from georgia. live from new york and washington, this is bloomberg. ♪

david: president trump is making more progress than critics thought possible will north korea. he has pulled together global

sanctions, secured the release of three u.s. prisoners and confirmed a summit with the north korean leader. our next guest says it is only the start of a complicated process. welcome sam nunn of georgia, cochair of the nuclear threat initiative. senator, thank you. great to have you. sam: good to be with you. david: you have a reputation in dealing with nuclear issues and you have written a piece in the washington post three you said if it can be achieved -- washington post. you said, if it can be achieved, it will be the start of a long time, located process that would require unconventional thinking and steps which broader than denuclearization. just as we should prepare for it to go wrong, we should prepare for it to go right. focus ong point and we what happens if the goes wrong but do significance right, that could be the start of things. sam: that is right.

getting rid of nuclear weapons and north korea is the distinction between north korea and iran. this is not just denuclearization that has to take place. if we want stability on the north korean peninsula, it is demilitarization. that will take time. the big obstacle is the north korean demands for economic relief and the united states' commands for immediate disarmament. we have to parallel those things. i think it can be done and lugar and i pointed out it was done after the break of the soviet ,nion would three countries getting rid of all of their nuclear weapons and most nuclear materials, so it can be done and it will take time and patience. we have to avoid either walking

away in despair if we do not get an immediate solution to every problem or determining we are orng to have victory basically high-fiving on the 50 yard line. it will take time. david: back when you and senator lugar were working in the senate, it seems this is more complicated because we did not have troops on the border with kazakhstan at the time or the troops we have in south korea and we did not save the economy. are you suggesting we should go in and help them economically and demilitarization and not just denuclearization? sen. nunn: i think it will have to be apples and sticks. we have had successful sanctions. we have to stick with our allies and we have to continue to be tough on this sanctions, but we also have to understand

that north koreans are going to want to want economic relief. koreans plate a skillful role, and that is a distinction between previous overtures from north korea and now. in the past, north korea has tried to isolate south korea and now south korea has led the way. this is encouraging. david: are you surprised at how much progress has been made so quickly getting to this comment? how hopeful are you going forward? this disc gold or fool's gold? sen. nunn: i think it could be either. we have to be prepared for either. sticking close to our allies, south korea and japan, is essential. also, colleagues from china and russia have to play a role. ans will be multilateral effort and you do not just get rid of nuclear materials by dumping them in the ocean. it takes a lot of care to handle

them safely and make sure they do not get in the wrong hands, and particularly as we go through this, we have to make sure there are no exports of nuclear materials that could be used by terrorist groups that to not have the return address and cannot be deterred. all of those are factors, but we at least are talking in a serious way. i think that is a big plus. alix: what i find interesting is the different ways the u.s. appears to be going about north korea and iran. i feel that the carrot is north korea and the stick is iran, do you get a sense of how strict the u.s. will be in enforcing sanctions that are being re-upped? sen. nunn: it is hard to tell if you are talking about iran, i am not encouraged on that front. we havethat inadvertently and unintentionally thrown a boomerang at the iranians. it is coming back to haunt us because the nuclear agreement with iran was designed for one

purpose, to stop the nuclear weapon program. it has done that. it has not stopped their vessel development. it was not -- there missile development.it was not intended to. it was not behavior.here by it was not designed for that. we could never put together a coalition to squeezed iranians, had we had those goals. right now, we are basically ofing -- we being the group countries that put this together with iran, and it was not a u.s. bilateral agreement with iran but multilateral. we have seemed to have forgotten that. more onw, we will focus economic disputes with our allies about secondary sanctions than we are on stopping the other behavior of iran that is so dangerous to the region and world, so i am concerned we are heading in the wrong direction. i hope we can pull it together. it will take a lot of dialogue with their european allies and

other allies to help negotiate a deal, including russia and china. companies havech been asking for a waiver. angela merkel will be meeting with leaders in brussels to discuss the sanctions next week. what is the bigger risk, between the u.s. and europe or iran pulling back on the deal because the economy hurts? sen. nunn: i think the two go together. the europeans will try to keep the agreement. keeping the agreement and russia said the same thing, it means doing business with iran because that was the quick for the quote. right now, doing business with uniteduld run into states' secondary sanctions, which would affect european investments. telling the europeans ineffective trade with iran, you cannot trade with the united states, a serious strategic error and it will do more damage unless it is turned around than anything we have seen in many years.

david: had you assess the risk iran will reactivate their nuclear program and look forward with speed? president trump has said they should not do that and has warned him of consequences. if the state in a deal with europe, maybe that could constrain them, so do you think they will really ramp up their nuclear program that? sen. nunn: i hope they stay in the deal with the europeans but we have to show skillful diplomacy and economic reality on that. i think jim mattis said it well you -- iestified, if am paraphrasing -- but if you basically throw diplomacy out the door, which we have done by withdrawing from the agreements, you better buy more ammunition for the secretary of defense. we do not need another war in the middle east. right now, help we can avoid one. i do not think it will be immediate, but the iranians have gotten rid of an awful lot of

nuclear material. it was not what the grade but it could have been converted to weapons grade. they could start back up the program and to help they will not. david: former senator sam nunn, thank you for being with us today. president trump will lay out his plan for cutting drug prices at 2:00, seeking to do something about a problem he has complained about before he came to the white house. president trump: they are getting away with murder, pharma has a lot of lobbyists and power, and there is little , and we are the largest buyer of drugs in the world, yet, we do not bid. we are going to start bidding and save billions of dollars. david: for a preview of his plan, we are joined by health alex, thankcretary,

you for joining us. the primary goal is to get the cost down of out-of-pocket payments by patients or is it to affect the overall price of health care? alex: each and every one of those things. we want to get down list and net prices, and we want to reduce the out-of-pocket suspended senior citizens and reduce the preloading of american investment innovation. david: we are putting on the more used outlined as of generics and rebates pass to patients, seniors pay less, and getting developed countries to pay more. about one thing, and that is bargaining between the united states government and pharmaceutical companies. what role will that play, if any? it will play a big role. we will be using private market competitive tools to do so, so

that the president wants us to negotiate better and smarter deals, we have parts of our program right now, and they negotiate, but we need to bring those tools they had, like our prescription drug program, and give them the modern tools the private sector has to negotiate and unleash them. we have parts of our drug program that we do not negotiate at all. you get a bill and repay it, plus the markup. that is what the president will be aiming for. david: what is the reaction of karma? alex: every player in this is -- david: what is the reaction of pharam? alex: every player is going to have to be in the this. looking at a fundamental shift in the system. it will not be overnight but the president is rolling out the most conferences affordability

of drugs than any president in history. it is multifaceted, multi-stakeholder and comprehensive. david: you said it will not be overnight. do you have a sense of how long it will be before we see some of these drug prices come to patients? alex: we have seen tremendous action by the president during his term last year. the fda approved more generic drugs than ever in history, yielding savings of over $8 billion. he has made changes to the medicaid program, where senior citizens are saving millions out of pocket a year, and that has already happened. actions we will be calming for today and a lot of those changes are one that we believe we can drive administratively. some require congressional action and some of them are

going to be some very disruptive changing of the entire system concept that we will be laying out there, saying we need to have a national debate and discussion about a complete reform of the drug channel system. david: let's talk about pharmacy benefit managers. or dou willing to repeal away with safe harbor provision? a we need to have a seriouslex discussion -- alex: we need to have a serious discussion. right now, if you are a pharma company or distributor, everyone in the system benefits from higher list prices because they are wetting their beak on higher list prices. this system of high list price, big discounts capturing, paying the system weust

have and it doesn't suggest anything of evil intent but we have to look and see if we have the right incentives to get list prices down and negotiate the best deals. david: some other developed countries have gotten list prices down and have taken action to keep the cost down. one proposal will say, we are not going to do that anymore. we have to get the prices up so it is even. will that bring prices down here to get their prices up? alex: it is a two-part strategy. we need to bring what we paid down, so he has initiatives that will work to bring what we paid down for our drugs because we are overpaying now. then we need to use our trade agreements and the power the united states has to get other countries to pay more of their fair share. right now, they are picking and choosing medicines, denying access to their patients, and precluding drugs unless they pay

below market for product. god help you, if you get cancer in one of these countries, in terms of access, that is where the president is more sophisticated than trite answers. we want to bring affordability and keep access and innovation for this new golden age of medicines we are on the cusp of. david: i daresay no patient is going to disagree with that but experiences in the past is proposals come up and the president talked about it, there are a lot of lobbyist rooting for pharma and they did not repeal. how are you going to get past this? alex: there may be resistance but my message to everyone is we will do it is right for patients. the president will put american patients first and make drugs more affordable in the country. you can be part of the solution and constructive and help us get to results by redesigning a system to work for patients and

taxpayers you can keep being part of the problem. i think they will be constructive and see this is the pathway to access, affordability, and innovation the president is designing. our,: thank you, alex is u.s. health and human services secretary. bloomberg will bring you live coverage of president trump's speech at 2:00 new york time. coming up, another item on the president's agenda is a meeting with auto makers. we will discuss it with adam jonas next. live from new york and washington, this is bloomberg. ♪

alix: welcome back to bloomberg daybreak. i am alix steel. david westin is in d.c. we are few minutes away from export and import prices. i wanted to touch on that.

in the markets, and the equity markets, in other asset classes, it is around 27 basis points. euro-dollar unable to regain .hat 120 it feels like a goldilocks market after that weaker cpi yesterday. we have breaking information, the import price index coming in lighter. 3.3%. march was revised lower, as well. the export price index year on year rising to 3.8%. i thought the import price was interesting because as we had seen data rollover globally, particularly in china with dpi weakness, meaning we will not be importing any inflation, so how does that support the inflation picture the u.s.? david: it is funny. i would have expected it would go the other way with the weakening dollar. of the more

expensive and exports cheaper. this should translate into helping with the balance of trade deficit, which the president is concerned about. for me, i am mildly surprised. it is different than what i thought. alix: you do have dollar strains easing in the middle of the month and the first tough, the dollar rolling over but we saw a strong rally with around 92 for the dollar index. the question is, can the dollar continued to appreciate or is there a reversal or cause? i do not think the marketand the key is what the fed will do. david: maybe there is enough of the dollar strengthening to drive the numbers. alix: the question also becomes, how does this affect with oil prices rally and if we do get $70 or $80 and how that winds up affecting import prices? something to keep your eye on. david: time for an update on

headlines outside the business world with kailey leinz with first word news. kailey: president trump is promising to unveil what he calls great health care plans. he made the pledge at the campaign style rally in indiana that did not elaborate. he has tried unsuccessfully to get congress to repeal the affordable care act. the trump administration has imposed sanctions targeting and iran currency linked exchange network. nine companies were penalized. they were accused of transferring currency to a unit that has been blamed for terrorism. hong kong is growing at the fastest pace in seven years with gdp rising in the first quarter. tourism in shopping have rebounded. world'sprices are the least affordable and hong kong could be heard by rising interest rates in u.s. global news 24 hours a day on twitter,n tic toc on

i am kailey leinz. this is bloomberg. david: thank you. top executives at general motors, ford, and others are scheduled to meet with president trump today for fuel efficiency and trade at the top of the agenda. joining us is our bloomberg reporter who heads up u.s. are the coverage. what we know about what the president will say to audit executives? i think there were 10 ceos in total. >> it will be interesting. this is a classic case of careful what you wish for, where automakers went to the administration and asked for relief from the obama fuel economy targets locked in by the epa in the final days of the obama administration. the trump administration has granted that request but sort of gone above and beyond what automakers were asking for and have signaled their going to

take on california, which is something the auto industry does the strength of the regulator in that state, the air resources board and governor jerry brown. there is a situation where automakers will get relief but they do not want a war with california so they have to walk a fine line. the other half of the agenda is trade, nafta is a huge issue for this industry, so that is something the industry will make the case on again. david: on those so-called cafe standards, the fuel economy standards, and talking -- in washington, i understand the president will say, are you with me or not because i want to take , but i will not do it unless you are with me. if you are not with me, maybe i will not give you what you socked. if the question is in those start terms, what will the ceos say? in a realy are

pickle. on one hand, they could say i am with you and the consequence would be them having to answer to two regulators in the same country and meet a different set of regulations in california and other states that adopt .alifornia's rules it would be a mess for them. on the other hand, if they say, we are not with you, mr. president, it is not a good look for them either and they have these other issues that they need the administration to help with in terms of trade. they are in a difficult situation. it is a careful what you wish for situation because it is when they asked for and the fact they made so much noise about the obama rules in the early part of trump's presidency. david: thank you, craig trudell from detroit. joining us on the telephone with jonas, the meeting, adam

morgan stanley global auto's and should mobility analyst. thank you. let's start with this cafe subjects. have you heard about what auto executives are likely to do? adam: no, not specifically. i would have to agree with on the accusation careful what you wish for. the only thing i would it is auto companies really do not want the pr blow backs. they definitely want one standard and they do not want this going to the supreme court and being dragged out in the media and being in the public affiliate with hostility towards the world's largest economy, or the fourth-largest, california. if their hand is stronger then perhaps the administration mayizes, those 10 ceos represent the better part of one million jobs in the united states, indirectly supporting millions more, particularly in

states that supported the administration, such as michigan. i am not saying it will come to the purposes to gently remind the administration how important the auto industry is to the economy, especially in the next years, and the need to get along on these issues of regulation. david: there are also factors such as products that might cause executives to have different viewpoints on how important it is to go to war with california. adam: great point. all three, the detroit automakers, have something in common they have been. exiting the car business. chrysler does not make cars in the united states anymore and ford followed up by exiting, and we think gm will follow.

consumers have done that for them, but when they sit with the administration, they say, we have two businesses, we make trucks, which is a different different, and with fuel economy standards, and we do not make that many cars anymore so we can go all in on ev's. one possible message today in the station could be understand we are in a commercial pool business of pickup trucks, but on the car side, we will side with california given an ultimatum. we want to be part of the future and escape to where it is going and do dvds and not get caught up in a politicized thing, where we are in combustion technology not going anywhere. steelhow will trade and and aluminum tariffs play into the conversation? adam: i would say they are all in the same boat. while the tariffs will be one issue that will come up, i would

say global trade with china will dwarf that. cara is the world's largest market, accounting for maybe one third of free cash flow from the likes of gm and ford. so keeping things cool and and control with the trade partners in china, again, i think the other companies will remind the administration how important that is as a source of profit for u.s. companies in the auto industry. andd: china is important also mexico given the supply chain. are we about to get a deal? mexico is proposing they make it the 75%ittle south of asked for, but a good offer, isn't it? specificallyspeak to the economics of that because then you throw and currency moves and they are unintended consequences. haven spoken to all three of

the detroit auto industries, they went to make sure that -- their position is, paraphrasing, there was a lot of room to streamline nafta, lots of ways to improve it, but avoid unintended consequences of adding unnecessary complexity that requires spending billions pulling out of mexico and going into higher cost areas and then a few years, going back again. they want to avoid shuffling around. oil: i want to talk about and gas prices. $2.85 is what you spend for one carve when filling up to for regular unleaded, up 13% in the past month. what car companies are most exposed to consumers switching preference it oil stays around there? adam: we're at 70% of a mix of truck and suv. we forecast that going to 80%,

85%. they are all together making these larger vehicles. i would say right now fiat chrysler might be the most catchd, but the other two up. they are all in the same bucket. $2.85 is not a dealbreaker. we had a psychological level at four dollars. one thing to talk about with the president today is infrastructure. gas tax has not gone up in 25 years. three ceos, we do support an increase in gas tax if it helped make necessary improvements to the structure? all three gave a an affirmative response -- an affirmative response that this would be important. finally, let's go to where the puck is headed with electric vehicles. let's go back to elon musk. i do not think he has gotten

enough publicity in recent days, so let's give him more. did that analyst called change of you want tesla? -- change your view of tesla? adam: elon musk reserves the right to do difficult stuff that requires an of seeing amount of upfront capital. investors also reserve the right to get transparency on how much it costs, where it goes and how they will fund it. he made a mistake in the approach in the tone of that call. i think he admitted that publicly afterwards. he might have wish he had that fact. that materially affects the value of the company. they have a lot of other stuff on their plate. the some investors, it is symbolic or suggestive of the level of difficulty of manufacturing and perhaps over ame, their help to remain

going concern and the need to partner with better companies that access and capital for manufacturing. david: are they going to have trouble raising capital going forward? adam: they have not historically. we have modeled in in our current model equity raised in the third quarter. virtually every investor we speak with expects some order of capital rates and even as we speak to bears, they cannot expect to have problems raising the money. alix: i want to echo something said today that tesla may have 500 the share. and the market will shift from market opportunity and growth burton, when do you see that starting to happen? adam: it is binary. cases are in that magnitude of 500 and the bear case is below 200. if you limited your view of

tesla to the spreadsheet world, it looks scary. you are wondering, are these guys going to get the money and how much? if you look at what they are trying to do with the 40,000 men and women around the world not just making cars but getting into transportation as a service etc., thispplied ai, is one of the largest teams in the world and this is what the dream comes in. you have a reality of short-term liquidity and the dream of really big market doing very interesting things with one of the most -- with the most talented software engineers in the world. it is equal weight and could go either way. we do not think tesla is a great investment but it may not be a good short either. we are comfortable with equating. david: thank you. great to have adam jonas of morgan stanley.

do not forget to tune in next week because not just tesla but all of tech when bloomberg tech heads the boston. fromr will broadcast live a different location each evening, showing the diversity of the regional tech economy. bloomberg radio will also be live in boston. the st. louis fed president has been speaking and he sounds dovish. he says, do not raise fed rates and do not risk inverting the yield curve. sees tax reform could spur faster growth without inflation. talk about that yield curve potentially inverting. david: he is rooting for a steeper yield curve, who could blame him. coming up, we are going to talk trade next week. next on what the to expect from the meetings.

this is bloomberg. ♪

kailey: this is bloomberg daybreak. coming up on bloomberg technology, an exclusive with -- president premier will visit washington, d c, to continue discussions with trump's economic team. the person we turn to when we want to understand china is deborah lehr.

welcome. what do we know about this visit ? deborah: i think it is very important. it indicates the progress we have made in trade talks only have four cabinet secretaries in beijing and there was in the momentum to want to continue and we also have the team already on the ground at the working level to continue talks to prepare for the visit. david: there were reports that the chinese are saying, maybe not the $200 billion to reduce at, but we are willing to buy more things from the united states and bring deficits down. is that on the table? deborah: that is on the table. the chinese are saying it is not so much as resolving the issue but transforming the economy to focus more on consumption and the chinese people want to consume more and they consume a lot from the united states. david: chinese position as we do not have our thumb on the scale,

do they have to admit they have the ability to control how much they buy from us? deborah: it is a push and pull thing. they have tothem be more market oriented and others saying, you have to bioproducts. when president trump went to china, they bought around $260 billion worth of goods. it is not clear what other purchases they can make at this stage. david: how does this discussion fit with the china 2025 issue? the other shoe of property and technology, where we push them -- the other issue of property and technology, where we pushed them hard, and we said, if you back out of it, you are wrong. deborah: china has indicated they want to push innovation and focus on secure sectors. peopleu have 1.3 alien and the state says, focus on

these sectors, you will have a rush of people going in, whether state-sponsored or not, still overwhelming. david: the president of united states seems concerned about investing in tech related things and wants to curtail it and is also concerned about the chinese having their from on the scale -- having their thumb on the scale. is it existential for the chinese? deborah: there are tremendous opportunities for our goods to be going to china, particularly in the tech area. as we look an investment, there is bipartisan consensus that starts to shut down or at least look for chinese investment in the united states. reasonable senators have used the term weapon rising investment. david: how much time do we have? the clock is ticking on that $150 billion with the tariffs. deborah: it is not clear.

the administration has not put the list out yet but they are against a deadline. it would not surprise me if they would like to see progress or an announcement on this, and that was positioned nicely going into that. lehr, all right, deborah thank you. always good to have you. alix: what i am watching, the turkish lira at session highs with a dollar year following -- with the dollar falling. what i am watching next in the ramification of a weaker dollar. this is bloomberg. ♪

alix: here is what i'm watching. it is not oil. i will look at the dollar-lira at a session high. it the president of turkey once the pulldown interest rates, he must pull them down, he says. there are multiple stories. surprise.mes as no he has been anti-higher rates for a long time. the other part of the story is the application for emerging market fx on the stronger dollar. the other day, the president of turkey called an emergency meeting to to the fact that lira picked a record low, so how do you have low rates and alira at a record low if the dollar is in the cause today and will resume higher? david: we thought he called the meeting to get the rates up, to it is about up, and inflation, so let's cut interest rates and keep them down. it cannot be good for the lira.

understand, but he is pressing the central bank to keep low rates. alix: he also said that what has happened in the markets has been global issues and that is true, but there are the idiosyncratic issues in turkey and argentina that have brought down the currency in respect of what is happening with the dollar. david: it is going to be a challenging time for those investing in turkey. alix: david, pleasure to see you from d.c. come back on monday. david: i will be there. alix: next up, bloomberg markets. that flattening yield curve front and center, no doubt. this is bloomberg. ♪ ♪

citythan: from new york for our viewers worldwide, i'm jonathan ferro. this is the countdown to the open.

♪ coming up, weaker than expected inflation, solid demand for treasuries. the yield curve the flattest since 2007. volatility rolling over, and had rates becoming a distant memory. and the president outlining his plan to cut prices and boost competition. 30 minutes away from the opening bell this friday, and after a week of gains we are shaping up with the s&p 500 up by over 2%, futures positive by four points. just over 4/10 of 1%, we have and dollar weakness treasury -- that bid sticks. to 2.96 on the u.s. 10 year. so with the economy in 2018 shaping up to look like 2017, strong growth and consumer prices. >> inflation is pretty tame. >> we think the