hands at nafta talks. italy, we have a government for real this time. a populist government forms in italy. no premier yet and markets stay skeptical. present maduro will win the election, but what's next? oil production falling and more u.s. sanctions loom. david: welcome to "bloomberg daybreak." i'm david westin reckoned with alix steel. are you excited about these venezuelan elections? alix: when you talk to experts, this is what they her watching -- they are watching. david: i think i may know how it comes out. alix: do you think maduro is going to win? [laughter] u.s. futures engine their way higher -- inching their way higher and averting all the selloff happening in europe. the euro-dollar a touch weaker. the markets are not buying this italian election sort of selloff

in any italian assets you can find. still 3.11% and that's not one of our top stories today. crude like we mentioned is $71. $79 for brent. right nowaking news -- blackstone selling but it's left of its interest in hilton. this is a big acquisition for blackstone. they bought the whole thing and then sold it with hna and got back almost the entire thing. blackstone will be selling the remainder of hilton. that's the news out across the bloomberg. alix: they bought it for $26 billion, but it was not a sure bet. they had to kick in about a hundred million dollars to survive -- $800 million to survive. it paid off before, but it now really paid off for them. david: isn't it perceived as one of the greatest real estate deals ever? alix: because it took so long to turn around. david: now for bloomberg first take, we are joined my michael mckee and by gina martin adams.

our first story really has to do with the china trade deficit and whether it's going away or not going away. we've had conflicting reports. we will put up a chart that is showing the u.s.-china trade deficit and it continues to grow, including under president trump. the purple line across the middle is $200 billion. the reason why that is relevant as we heard yesterday from a u.s. official that the chinese have offered to cut it by $200 billion, which would be that number. the chinese government came out and said not so fast. michael: the chinese are casting doubt on that as our economist around the world because it doesn't make any sense. what you have to do to get to that number is kind of crazy. i was running numbers for the fun of it. you would have to buy 544 new young 747's to get that or would have to sell 13 times the amount of soybeans we sold in our best year to china. we can produce that could --

can't produce that. even if the chinese agree to it, the idea is basically not going to happen. when you think about what is happening in trade right now, but the chinese deal and the nafta deal, these are not trade deals. we're talking about political deals. the president is looking for some sort of political when to taper of the things. things.o paper over even if they agree to it, they won't live up to it. it's not something that will actually affect the u.s. economy. david: political deal sometimes can affect u.s. economy. let's go to nafta because we did have mr. light has her come out and say yesterday, "the nafta countries are nowhere near close to a deal. as i said last week, there are gaping differences on intellectual property, energy, labor, and much more." that doesn't sound very encouraging. gina: and frankly i don't think

markets are expecting much out of trade. as michael suggested, and a lot of this is politics. politics in the short run markets have gone through the process of trying to adjust for trade risk. now we are not expecting a whole lot of news. we need to get actual news. we need to get actual emotion move.rkets to the risk has been implied in prices. what do we get next? it's a lot of chatter frankly. that is why you do not see markets react to the extent earlier this year. the chatter is not enough. we have to have real action for stocks to move and we are not having it. alix: we're having it in italy. we finally got something out of the italian government and markets reacting. let's look at this new populist government we have in italy. you have it down by about 1%. both of them are off the lows of the session. yields moving higher by about a and cdfasis points

starting to move higher as the credit default swaps move higher on the protection. come inside the blooper terminal and this is your been spread. 65 at 156 basis point spread right now. gina, what do you think? do markets need to price even more risk? gina: probably, but if you look at what's gone on the last year and a half, italian equities have been the darling's of the european equity market. this is been a segment that has outperformed dramatically and banks have performed well recently. we have seen an unwind of that trade. when you look at the relative performance line, there is an about of -- an amount of unwind that could come. markets price things very quickly on the downside. we very quickly take out any premiums. it will happen very rapidly. they climb much lower and then they correct much more quickly.

we in the process of that correction. we already broke through on the italian equities exchange. we broke through january peaks as of yesterday. the next downside is another close to 1000 points lower on the ftse. i think we can easily erase a lot of the premium we built up in the segment over the last year. alix: what i found interesting is we did not include the 250 theyon euro right off, but did talk about how they were going to grow themselves out of the economic issues that they have an talking about public debt reduction continually. what did you make of that? michael: here's the question. why have the markets not priced in more? the chart is great, but go back five years, you see there is almost no move at all. alix: go back to 2011 and you can see the lack of moves. michael: there's a good reason for this. one is that the ecb is still buying bonds. that by about 4 billion euros a month of italian paper. they are a major buyer of last

resort that will keep things in line. the italian political system doesn't move very fast. also the europeans are not going to allow any of this thing to go through. as long as they keep their debt levels in line, fine, but all the proposals these two groups put forward with skyrocketed that. the european union is not want to allow the. than is much less risky people suggest and that's why the markets are not moving forward on this. even if rates rise a little bit and italy could probably afford it, the level i'm told to watch is 2.4%. it's traded in a range of 1.5% to 2.4%. if it breaks the 2.4% level, there's nothing between there and the 2011 levels. no one thinks they are going to get that far because there are so many things weighing on what can actually happen. alix: how many governments have they had since world war ii? talking about governments, we will move to venezuela.

venezuelans go to the polls may 20 and maduro widely expected to become president again. he has what has happened to brent. production continues to get ramped and shut in. from your estimates, how much more upside you think there is in the oil price? gina: if you look at oil in general, we have seen positioning reach extremes. that positioning has come off extremes on future markets. still very high. to prices frankly continued defy anyone's expectations with their move tire. what you are seeing right here is a multi-your new peak and in brent. this implies we are on an uptrend defying expectations. unfortunately the technicals still suggest we are way overbought. we should probably correct, but this is just that at 70. as long as you have these persistent supply concerns and critically an improvement in the u.s., it's going to be difficult

for oil prices to predict tremendously. david: what about a turnaround in venezuela? maduro,a lot about but there's someone running against him. independent polls say he is out polling maduro by a longshot, but most people don't think that will affect the election. michael: funny how that happens. nobody knows where the bottom is. they are close to a collapsed failed state right now. there is a risk to people inside venezuela. the risk is to the countries around it because there is a rapid refugee outflow with people crossing the borders trying to get out of venezuela. the south americans becoming concerned not from trade or an economic standpoint, but from a humanitarian standpoint. nobody knows where the bottom is. one of the issues with the oil price is that you are squeezing venezuela at the same time the u.s. wants to squeeze iran. where do you make of that extra oil? you have to go to opec somehow or russia. prices could keep going up.

if maduro wins as expected and the trump administration continues its pressure on iran, we don't know what's going to happen. david: you make an important point. we pay attention to venezuela because it's a large oil producer. there are a lot of people living there an awful circumstances. michael: it's a disaster. you can't describe how bad it is. relative economic basis, it doesn't affect the other countries outside of america all that much. it's the human a terry in crisis at the problem. .- a humanitarian crisis david: thank you both for being with us t com. coming up, as uncertainty around trade continues to swirl, we will discuss with jpmorgan asset management. that's coming up next. this is bloomberg. ♪

kailey: this is "bloomberg daybreak." i'm kailey leinz with your bloomberg business flash. alto says it will raise prices because of higher raw material and freight costs. the company did boost its forecast for the second time this year. blackstone group is checking out of help worldwide. the firm's plan to sell its stake in the hotel chain after the most profitable private equity deal on record. that's according to a person familiar with the matter. blackstone stake is valued at a little less than $1.5

billion. major changes at the fiat chrysler factories in italy. ceo sergio marchionne will unveil a plan next month that has fiat scrapping to budget models in favor of more upscale cars. meanwhile, two plants will be retooled to produce new maserati and jeep suvs. that is your bloomberg business flash. david: thank you. raised last night when a trumpet ministration officials said that china had offered to cut its trade deficit with the united states by $200 billion. you can see a bigger cut that would be. the overall increases the trade deficit between the united states and china. overnight, chinese officials denied the report. the foreignrough ministry, "the question is about some u.s. officials who said china will cut the deficit. rumor is not true. this i can confirm. consultations are still underway. i'm not getting ahead of that. the consultations themselves are constructive." we welcome now david leibowitz. welcome back.

to what extent is the uncertainty about trade, specifically with china at the growth affecting global and the attitude of ceos and i'm nots? david l.: sure we have seen an impact on global growth yet, but we have seen an impact on outlook in business investment in particular. one of the things that has held investment back for the better part of this expansion has been the fact that the nominal growth outlook has been lackluster. global growth last year was very good and the expectation for growth this year was to be very good. the trade conflict throws a wedge in that so we need to watch have these conversations unfold. we need to separate the single from the noise. this want to be a lot of talk about this, but what's important is figuring out what the actual impact on trade is going to be and i'm not sure we have a clear read on that. david: a lot more noise than signals. there's a possibility that is a real signal.

we have a nafta situation and its not the only trade probably have. yesterday they came out officially and said that nafta countries are nowhere near close to a deal. there are gaping differences on intellectual property, energy, labor, rules of origin, and much more. they have got to get this done politically because the have an election in mexico and here are the but not get it done this year. tradeng the 2 -- china uncertainty or nafta, which is more concerning? david l.: nafta is more concerning. u.s. benefits with that relationship with mexico and canada. it's not just about the u.s. in one of the country. it's about this consortium. each of these countries has benefited to a significant extent from the nafta deal. if that were to follow part, that could be the first domino and it brought her that really causes that protectionism, which we are seeing front and center play detrimental role to

global growth. alix: to hear you say it has not had an effect as of yet, but in pockets there are. i love this chart. this is capital spending expectations for the next six month. they have taken a leg lower. russell 2000 outperform right at their highs versus the s&p at 5% away. situationpricing risk or different story? david l.: what you are beginning to see is people are getting more concerned that trade could work out in an adverse fashion. you are seeing plants for cap that's thax that are tied to the nominal growth outlook hold back. thatre seeing investors have a larger domestic orientation and the strike for the dollar has helped that trade to an extent here. you are seeing investors begin to price in some sort of adverse outcome from trade negotiations broadly. i'm not sure it's going to be

china swings one way and nafta swings the other. as investors seem to get thicker skin over the past few weeks, we need to remember that there are still things weighing on folks minds, which is likely contributing to all the volatility we have seen. alix: we have that inflation miss in japan the second month in a row. you are starting to see a rotation there where there's a more defensive play. morgan stanley and hsbc coming out and not among equities but talking about it. what do you make of those? david l.: it's too soon to go defensive. from where i sit and look at the global economy, i think the u.s. will grow by 3% this year on the back of fiscal stimulus. i think europe can grow by 2% and emerging markets can grow in line with their longer-term trends. to me there is much more juice before the local economy runs out of gas. for us, recession does not roll around until late 2019 or early 2020. perhaps at the end of the year, could be time to start having a conversation about positioning

in a more defensive sense. shouldglobal growth still act as a tailwind here and allow the more cyclical parts of the market to continue moving higher. david: david leibowitz, please stay with us. coming up, italy's populace have agreed on a government plan as italian bonds have further worst week in three years. more on that next. this is bloomberg. ♪

david: in italy, the leader of the five-star party announced today that he reached the final agreement with his counterpart head of the league. italian bonds sold off even more on the news as they head toward the end of their worst week in three years. you can see it on the chart that we are putting up. the yield basically shooting up on the btp's, showing how poorly they are doing. ,e welcome now from rome, john who reports on italian politics for bloomberg news.

what in what was announced would've triggered this reaction in the bond market? john: basically the main concerns about the impact on state finances and parallel to that is the relationship with the eu and the budget rules there. what is concerning the markets including pledges like what the program calls a flat tax, although it's actually to rates at 15% and 20%, there's a citizen's income for the poor, which five-star evaluates at 17 billion euros a year while attention institution here says it's more than double that. and then there's also pledges to review or to try to review and eu treaty agreement with fiscal compact and various constraints. david: john, thank you so very much. alix: to dig a little deeper into market reaction, david leavitt it's still with us -- david is still with us.

it's really the btp bund spread on the 10 year now at 155 basis points. i've heard that 160 is the level we have to watch. how are you playing italy right now? david l.: the most likely outcome is that what the new coalition government has requested is not come to pass. the demands seem very unaligned with the broader european project and european construct as we see it today. i think this could represent perhaps an opportunity for investors, but what's particularly interesting is when he factor in not only the fact that spreads and italy have been moving higher, but for u.s. investors, hedging costs are still quite favorable. you ares like mentioning are beginning to take on a more defensive posture and are trying to orient a little more toward the yield producing investments as opposed to growth investments. we think about the hedging benefit anything about the fact that yields in europe are beginning to rise. beckett to look quite attractive for u.s. based investor. talked to the former

prime minister for italy and here's what he had to say about the government and potential . >> the financial dimension of the government contract as it's called is far from clear. normal atn a sense this stage of the difficult operation of shaping up a government coming from two quite different forces and without much government experience. alix: basically saying it's not really going to get done. the government doesn't know what they're doing. are the reasons to be skeptical of europe regardless of italy? david l.: i think to me what the italian situation really represents is the fact that there is still this very skeptical populist momentum in europe. last year the elections went our way with france and the netherlands, but this political story has really not run its course.

we kicked off today talking about trade. politics are everywhere that we look. i think we need to be cognizant of the risk this represents. i'm not sure that this could lead to the end of the european union like we were talking about with greece a few years back. i do think there is the potential for volatility because people are looking at this. as a mentioned earlier, it flies in the face of everything europe has try to achieve over the past six or seven years . if we do see success, the risk that calls into question the validity of the european construct and puts germany under the spotlight. david: i will put up a chart right now. is it politics or something more? basically theg blue line is the u.s. and the yellow line is your. you can see the divergence. is that politics or something else going on with europe? david l.: i think what i would chalk that up to is a little bit of softening and economic momentum in the eurozone in the first quarter. if you look at the industrial

production report which was very weak and the gdp print which would weaker than people expected, europe has struggled to maintain the momentum they had at the end of the year. that's more a function of the global soft patch we saw in q1. that was a little bit of softness in cap good spendings and not necessarily a political impact from where i stand. alix: how will mario draghi see that if the data disappoints? you will be sticking with us. coming up, venezuela heads to the polls as the country deals with one of the worst economic depressions and history. more on how the elections will play out and what it means for venezuela's economy. this is bloomberg. ♪ mom, dad, can we talk?

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

that's a good one. seems a bit long, but okay... set a memorable wifi password with xfinity my account. one more way comcast is working to fit into your life, not the other way around. alix: this is "bloomberg daybreak." i am alix steel. we now have a populist government italy and here's what the markets are doing. the u.s. kind of ignoring what's happening in italy. european stocks a little weaker, but those are italian equities

down 1% with the monte paschi being hit pretty hard as italy says they want to rethink the part of the best point of that bank. it's the same kind of situation as bt continuing to sell off around the highs of the session. 2.19 is where we sit on the 10 year yield. the u.s. is a much more muted response with the 3.1% level. we have definitely seen a huge rise in yields. the question is how much more can we continue from here? crude seeing the longest winning streak since 2011. the highest price since 2014. one of the ripple effects is that the dollar continues to push higher. david: it just keeps going and doesn't back off. alix: barclays finally threw in the talon upgraded. they were one of the most bearish and now looking at $70 as yo this year. david: now let's look at what's going on outside the business world with kailey leinz. onley: china's casting doubt

reports that it offered to cut its trade surplus with the u.s. by $200 billion. -- accordingrump to a trump and initiation official, china has agreed to that by increasing imports and other steps, but a chinese foreign official says no such offer was made. the two sides resume talks in washington today. in florida, there has been a shooting at a golf course owned by present chums company. police say they shot and wounded a man that was firing a gun and yelling about the president. it took place at the trump golf club in miami. the suspect has been hospitalized and one officer was injured. and you take him a former russian spy has been released from the hospital more than two months after he was poisoned. he and his daughter were found unconscious in english city of salisbury. they spent weeks in critical condition. the u.k. says they were attacked with a nerve agent and that russia was responsible. moscow denies it. global news 20 for hours a day on air and on tech talk on

twitter powered by more than 2700 was an analyst in more than 120 countries, i am kailey leinz. this is labor. david bloomberg. david: nicolas maduro is up for reelection on sunday with most people expect him to win a second term even as questions are raised as whether the election will be a fair one. all calling on venezuela to suspend the election. with the latest, daniel ca joins us on the telephone from sao paulo. tell us what we do expect and what the results are, what comes after. ? daniel: the polls actually show maduro trailing the dissident falcon. most people believe the actual results on sunday will show something is. you will have a mix of high

extension because the traditional opposition party is boycotting the vote. there's a lot of apathy among voters in general. the economic crisis is such that people spend more time trying to find basic goods to get by than worrying about going to the polls. i think after the election, assuming that maduro wins, there is suspicion that he could either went out right -- win outright because dissension is so high or their suspicion that national electoral council could tweak the results in his favor. if he wins, it certainly doesn't solve any of his problems. he will be facing greater calls for tighter u.s. sanctions and bondholders may begin to think about accelerating their debt. you have seen conoco and other creditors are getting more aggressive. david: all that said, is there any question about a strength of

mr. maduro's grip on the country? is there any weakness at all and his authority? telll: it's a difficult to -- very difficult to tell. it's a tight ship that he runs. he is very close to the cubans still. he has learned a lot of things from them. everyone looks to the military. there have been cases recently of middle ranking officials being detained on suspicion that they were plotting something. there's no obvious cracks. most people believe that if things get so untenable, the military would be the one to step in. so far, there's nothing that would tell us. david: thank you so much for being with us. that is daniel cancel. alix: still with us is david leibovitz and michael mckee joining us. i want to pay some broad strokes on what we know about venezuela. i don't know if a lot of people

know this, but it has the biggest oil reserves in the entire world with inflation up over 13,000%. it has about 12 plus bonds that are going to be do in the fall and $90 billion in foreign debt the next 10 years. i paint that for the dire picture that venezuela is really in. i asked guests yesterday on my commodities show, what is bottom for this country? michael: that 13,000 percent inflation figure is for the 2018 forecast and expect the economy to contract from the already low level. -- thetom it' is much lower bottom is much lower than where people can't feed themselves. why have the markets not reacted more? this gets to what david was talking about with daniel. how long can maduro last? you look at the venezuelan bond situation and they have some bonds, but prices are actually rising because the bond market

seems to be betting maduro will be gone. at some point you will have an argentina situation where you can collect on some of those bonds. it is $.30 on the dollar right now, but that's better than getting nothing. kailey: yoalix: you know where i heard that before? cuba. wait till the casters are gone and that will be a good investment opportunity. scenario,in that that doesn't end of fixing the government. oil production is falling in oil prices are rising. they literally can't make money on the 300 million barrels they have on the ground. david: the cuba contrast is interesting. cuba was never the economic , they areause of oil very different in that regard. michael: you have to look to the fact that venezuela has not invested in its oil industry in many years. and auro were to fall business friendly regime were to take over, there would be a lot of capital flying into venezuela. that could boost that economy tremendously in the short run.

if you bring up oil prices, obviously good for the global economy. alix: i had a question about the politics here because before we heard that there could be sanctions from the u.s. and we would sanction venezuelan imports. we import a solid amount of venezuelan oil. with the seizure of conoco assets and the caribbean, does that take sanctions off the table or does it get worse? michael: it does not take the sections off the table because it's something of a moral issue with the united states and they are still threatening to the sanctions. it may have a little bit of an effect, but it will be accompanied by refiners still having a problem. if we cannot get oil into the united states, they're going to suffer. the other thing happening at the same time as we are trying to sanction iran. if we start pushing iranian oil off the market and venezuelan oil off the market, then it becomes a bigger issue for the world. david: give me some sense of how markets and investors react to a failed state of the size.

i cannot member the last time we had this big and important of a failed state. what do markets do? do they just ignore it? do they bet on going down? do they come back in? david l.: i think the issue here is the oil issue. if you assume that things in venezuela continue to get worse and you overlay the iran sanctions on that, you are looking at an oil price that is going to keep rising. the big concerns that investors have after the weakness we saw in some of the consumption figures globally during the first quarter is, does the higher oil price offset any sort of fiscal stimulus in the u.s.? does it offset the tax cut? does the consumer not really get the boost that everyone was expecting? from an investment standpoint, higher oil prices are the bigger risk because i could drag on consumption. alix: the brings us to broader emerging markets themes. out that a report saying taking up china and some emerging markets will be ok with higher oil prices and some are not. they are highlighting thailand and taiwan because they're having their weakening current

account. how are you differentiating yen right now? alix: you need to put em into two buckets right now. david l.: you need to separate countries that have revenue streams that come from services or commodities that are seeing prices rise and have stable governments from some of the more politically unstable and commodity reliant countries. that draws a line in the sand between southeast asia and latin america. that very much reflects our preference from a market standpoint as well. we are much more comfortable on the equity side investing in southeast asia. somee finding idiosyncratic opportunities within latin america just because the debt markets there tend to be a bit larger. obviously steering clear of some of the problems like venezuela given the money outlook. david: how much does the emerging markets issue depend upon the strength of the dollar? it was different, but it seems to be driving em right now. michael: as the dollar goes up, you can see almost a one-for-one relationship between emerging-market equities and the

dollar. as the dollar goes up, they go down. it's a question than of what is the debt sustainability for all the debt that is priced in dollars? interest rates are not that high yet. the dollar has not gone up that much yet. it is a concern out there that people the imf are watching. david: what is your outlook on the dollar because that affects the probability of large u.s. companies because som much of their profits come offshore? alix david l.: 45% revenues come outside the u.s.. the currency performance is tied to the current account balance. over the short to medium term, it's about growth differentials. i think it environment where the fed looks of the height three to four times this year that u.s. growth should be around 3%. you look at the eurozone where the ecb is probably on hold with rates sometime into the back half of 2019 and growth is set to slow a little bit. the dollar could see some near-term strength. alix: bring it back to

venezuela. what is the contagion probability? michael: not a lot economically. you have some secular improvement in argentina and brazil as they are much bigger economies helping latin america. they obviously have their political problems at the moment. venezuela's economy has not been a big player in latin america for quite a while. as we talked about earlier, with the refugee problem, thousands of people leaving venezuelans other countries that have to absorb them and deal with them. there are some offset to that because educated classes are leaving venezuela. they can add to economic growth in other countries. it's a question right now of how do you support all the people who can't live in venezuela right now? david: it starts to sound like syria or the middle east if you don't watch out. david and michael mckee, think you both for being with us today. coming up, it was the most popular private equity deal ever. now blackstone is checking out of hilton. more on that next in the wall street beat. you can turn on your radio and

listen to tom keene and jonathan ferro and pimm fox. bloomberg surveillance 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'm kailey leinz in the hewlett-packard enterprise greater. coming up in the next hour, jerry storch, former husband they ceo. -- hudson bay ceo. ♪ and now to your bloomberg business flash. there is a change at the top of campbell soup. the company says the ceo is retiring today.

no reason was given. morrison has been with campbell for 15 years. she will be replaced on in her basis by a board member. shares of campbell soup are lower in premarket trading. they are down more than 18% for the year. regulators and china have cleared the way for toshiba to sell its memory chip business for $18 billion. a buyer is a group late but -- led by bain capital. the deal is set to close on june 1. it is selling the ship units to repair a balance sheet hammered by billions in losses on energy. barclays has agreed to buy a book of irish residential mortgages. the price is $5.4 billion in cash. it is part of late strategy to become a li na retail bank focused on the cap. lloyds has steadily reduced its presence in ireland after it was left with bad loans following the financial crisis. that is your bloomberg business flash. david: we will turn out to wall street beat. this is where we cover three

things that wall street is buzzing about this morning. first of all, blackstone check out. it was the most profitable private equity deal on record. now blackstone plans to sell its remaining stake in hilton. now develin the derivatives. i mean that literally. put francis scores the cds market, calling it a ticking time on and profiting off the failures of others. dancing.so pollin ball moments before it was set to auction, valued at $70 million, it was damaged by falling poll. this is not the first time it has happened to its owner, steve wynn. alix: i want to start with hilton. you are literally following this .eal since the beginning >> i will never forget this because july 3, 2007, the day before independence day, it has been a long time in the lbo

market at this point. this was really at the peak. kkr was about to go public at 5:00 p.m. and hilton announced it was being bought by blackstone at about 5:30 p.m. a ruined everybody july's fourth weekend. -- and it ruined everyone's july 4 weekend. the credit market sell out and the global economy went into the great recession. folly and a lot of voice. -- in a lot of ways. and yet over the subsequent years and as the financial crisis setting, john gray, now the president of blackstone -- we will get to him in a second. he would stop me on the street and tell me you guys have it wrong. the market has it wrong about hilton. this will be one of the best deals of all time. turns out he was right. literally the most profitable private equity deal of all time. it was the biggest check that blackstone had ever written from a real state and private equity perspective. they pooled their money and was not without a lot of drama along

the way. david: not only in a deal this big, there is some luck in this. talk about the smarts of this. what did he see that no one else saw? jason: what they saw was really the playbook that blackstone had used for the previous decade as john gray had built the real which is thiss, was a fundamentally undervalued publicly traded asset. it was not run especially well. it was a family business based out in beverly hills. you know the hilton family with pari hiltons. they brought a new management who is a ceo at this point. they did international expansion and expanded the brands. they really went and did a lot company. this came at a time where there were big existential questions about private equity. are these guys stripping and flipping? this is going to be probably it probably- but

will be a harvard business school case study for a deal that can actually work. not for nothing, it probably seald john gray at least -- he came out all right and was named earlier this year the president of blackstone. david: we will go from john gray to the pope. let me transition here. put francis came out with a scathing statement about cds. i did not know he was following this. basically this is gambling. he said the market in the wake of the economic crisis was imposing enough to represent the gdp of the entire world. i believe he is right. as you look at the nominal value , i'm not sure it's a lot smaller today than it was in 2007. jason: and he did point out that gambling on the failure of others is unacceptable from an ethical point of view. that's pretty tough stuff. we should remind you that all the way back in 2003 warren buffett essentially said the same thing. he has been a very vocal critic

of the cds market. it is clearly indisputable that it played a role in the financial crisis that we have already been talking about. alix: when i first heard it, i was like this is crazy. it's income inequality and the pope is all about income inequality. i think the public say it's income inequality for people who'd don't deserve it. they're not making the world a better place. they just betting on things. alix: it's talk about who is making the world a better place. steve wynn. he wants to be i an art dealer . wo was going to sell to pic pablo picasso paintings. one of them was hit by a contractor painful and they had to withdraw these pennies from auction. jason: steve wood has had quite a six months and had to leave the company that bears his name. he was trying to get into the

our business and may still, but this was an incredibly unfortunate accident. david and i saw each other yesterday in the newsroom and had this knowing look. this is not the first time that steve wynn had a painting damage. david: the first time he backed into his own painting and ripped it. you go to a major auction house and go to the dry cleaners and the have a smudge in your seat. alix: someone is going to get sued for that. jason: it's also a key moment in the art market with the rockefeller selling. david: that's a tough business. you have sotheby's and christie's really fighting it out with each other. it doesn't help the auction house. alix: sotheby's, christie's, and now steve wynn. david: many thanks to jason kelly. ceo sergioer marchionne is making some sweeping changes on production. more on what i'm watching next.

it's of course cars. alix: i'm watching oil. if you up tv , watch is online and clicked on our charts and graphics. go to tv on your terminal and scroll through. this is bloomberg. ♪

david: ok, surprise, surprise. i'm watching cars and trucks. fiat ceo sergio marchionne, who is retiring this year, has made a big announcement today. basically fiat is largely going to go out of the small passenger

vehicle business, which is shocking because it was fiat's hallmark. he's going to go upscale going to suvs and a big fancy expensive car. you can see during his tenure exactly what the stock has done. it has had a nice little run here. alix: when i saw this headline, i was like his is a comment on italy? about carsa comment in general and the automotive industry? david: exactly and you look globally basically and there is a shift away from smaller passenger vehicles and it's a cars and suvs. see what's happened over time with cars. the white line is trucks and suvs. the blue line is passenger vehicles. we talked to afford recently and they are going to 80% to 90% now trucks and suvs. alix: let me ask you a question. do you feel like that is falling the top?

we have gasoline prices start to rise. you still had a lot of suv sales. you have electric vehicles going to suv market. how does that wind up playing out? david: gas has been relatively cheap and there has been a lot more efficiency. electric vehicles have put pressure on this. everyone is taking one side of that trade. alix: at some point, who is left but elon musk and a couple divisions within gm? ok you go. david: you do it. jerry storch, former hudsons bay ceo, is going to be right here. this is bloomberg. ♪

money. me the

china offers to cut trade surplus, maybe. , we have a coalition plan for real this time. it populist government formed. market stay skeptical. venezuela bolts. president maduro will win, what is next? somebody's seizing assets and more sanctions loom. david: welcome to "bloomberg daybreak. ." it is all about italy and it doesn't seem to be doing well. alix: i have read the u.s. government will dictate oil prices. it is all about government. david: is that right? alix: it is on how they are going to do sanctions. all about government and oil. david: all about washington. alix: selloff over in italian equities, down 1%. in the u.s., futures inching out

a gain up by three points. the dollar modestly stronger across the board. euro-dollar cannot gain traction. not what youff but might expect your deals up seven basis points. in the u.s., 10-year yelled, not -- yield, not moving much. rune having its best weekly for the best winning streak since 2011, thank you very much, venezuela and iran. david: who would have thought? alix: now we're getting upgrades at about a hundred dollars. david: markets, that is what you get. betweenory was trade they possibly said they would cut by $20 billion married joining us to sort this out is chief washington correspondent kevin's early from

the white house. have it been offered a $20 billion cut or not? kevin: not if you ask the chinese. the state-run media said it was not true. it is said that the white house suggested china would back of the $200 billion deficit with the chinese. this has sparked a lot of back and forth in the top trade negotiator as they continue talks with steven mnuchin as well as other senior administration officials. he also reportedly met with president trump himself, but president trump said he is not too optimistic about the likelihood of a u.s. china trade deal, saying the chinese as well as europeans have been on -- "very unspoiled." there has been talk about agriculture and intellectual property. you have to talk about north korea, head of the summit in singapore with the north korean

leader, a lot of folks are wondering what china's role will be in that. yesterday i interviewed senator john kennedy from louisiana about the relationship. take a look at what he told me. >> china completely controls north korea and if you took president xi jinping and turn it upside down and shook him, jim thome -- kim jong-un would fall out of his pocket. he said they also have the same type of economic restrictions based upon larger economies such as the united states in trade agreements such as the world trade organization. david: thank you so much, kevin cirilli from the white house. alix: joining us is sameer samana, wells fargo investment global equity and technical strategists. how do you understand what is happening with trade? how do you price that risk? sameer: what you want to do is

try not to overreact. a lot of this has to do with political posturing. both countries trying to come out with a win-win deal but neither one walks away looking like a loser. it will take some time and a lot of back and forth. at the end, what we think will happen is there might be some , but for thessions most practical economy will be ok. david: what about nafta? we had the u.s. trade representative come out and say "the nafta countries are nowhere near close to a deal." energy, labor, geographical indications and more are at play. how worried are we about nafta? sameer: it does not sound very encouraging. we have heard they have been close to a deal goal -- to a deal, and times they have not. priceare times you try to

in risk. yet seen emerging markets comfortable air -- market have trouble. it has put a damper on the mexican currency. as you are allocating emerging markets, this could be a situation where you avoid mexico and go toward asian countries. what we believe is, by the time you get on trying to account for all of the risks and run away from each of them, what you end up with is a well diversified portfolio because but time you account for all of the different things and diversify, you end up owning a little piece of all of the different countries in the world. alix: fairpoint. what we have seen in market reaction is small caps. s&p is still 5% away from the record that it hit in january. isyou view this as a play or

this a higher yield play? how do you read that? sameer: it is a cleaner story and a time of uncertainty. if you look what has happened over the past month, tax reform, ends upulation, it being a cleaner story. it had a tough year last year sgg -- lagged. look at trade and tariffs or the dollar and tariffs or the dollar, all the things impact small caps to a lesser degree. if you do a sector decompensation of a small versus large, smalls are cyclical here financials, industrials tend to be less impacted by staples. alix: i want to point out is that in other areas of the markets, like japan, a shift as investors move into defensive play. we have inflation slowing in

japan. d need to think differently about different regions? for example, more isolated in the u.s.? how do you view those differentials? sameer: you are later in the cycle. the way to think about that is that earlier in we had less dispersion and higher correlation and a rising tide lifting. all we had to get right was whether we ran risk on or risk off. later in the cycle, what you need to focus on is sharpening the pencils and making sure you are doing the work and being more selective. from that standpoint, we tend to like pacific. we are neutral on europe. that has a lot to do with political concerns, etc. in emerging markets, we had preferred asia, but they got expensive and we saw the huge rally with technology and we pulled back and got more neutral. we are not really seeing

compelling opportunities in emerging-market equities now to the area we like now is emerging-market debt, especially in u.s. dollars, where spreads have widened out and you get paid 6% to 7% to hang on and wait until spreads tighten back in. samir simona, of wells fargo will be staying with us. simona of -- samir wells fargo will be staying with us. this is bloomberg. ♪

>> and this is "bloomberg daybreak." i'm kailey leinz. blackstone group checking out of worldwide. the firm is claiming to sell its chain in helton stakes -- hilton. the firm took hilton private and then took the company public again in 2013. there is a change at the top of campbell soup here the company says denise morrison is retiring today. campbell has been struggling through a slump. she will be placed -- replaced by keith maclachlan. shares down more than 18% for the year. the world's largest farm equipment maker posted disappointing earnings. it will also raise prices because of higher raw material and freight across. -- costs. that is your bloomberg business

flash. italy, a coalition government agreed on. here is what we know. the plan seeks limited deficit spending. a review of the eu fiscal, lower and russian sanctions. italian bonds not taking well to the news. come inside the bloomberg. headed for their worst week since 2015. this is the yield on a 10-year joining us is rosamaria at firsta lecturer luiss university. a mild selloff in equity. with pricing the risk you may

see and is this appropriate? reaction and we are scared. there is uncertainty. uncertainty of the coalition agreement that came out of the two parties in italy is quite scary. we have wishes and desires it between them. spending.ve public no plans for recovering money. if you are an investor in such a business, you would be scared. investors are scared about the italian debt. wanted to tackle the public debt reduction. they said in a statement that the government will aim at reduction but not through austerity but through growth.

they consider it a priority to introduce the european commission to deduct the productive investments from the deficit to grow the economy. oft sounds like a little bit debt forgiveness paid how do you take that statement? priorities --re there are priorities of the coalition and there is nothing about growth. there is no plan and nothing in place about reform. there is only a plan which is likely to be happening. there is some talking about reinvestment. ofre is a wide proposal reducing the debt. in economics knows this is technically impossible. what i think is that this firm is more like the last outcry

rather than a serious proposal to improving the italian economy. david: perhaps reflective of what the at sign people ask for. they didn't like what came before. they wanted a fundamental change. is it likely this coalition, assumes it comes together -- assuming it comes together, how stable will they have the power to get it enacted? rosamaria: i think they have strong populist support right now. italy has been seriously hit by the recession and hasn't reached growth levels. growthre huge amounts of rates. much more hung up if policies and acted because the consequences will be higher market instability and inability to keep pace with the gdp and markets.

i think even though the electorate seems to want the guys are, the two main markedly different. middle ground and that is huge promises they made to the electorate to keep the pace with european partners. samana, we can see you now and not just hear you. what is your perspective? how much is limited to the four quarters of -- corners of italy and how much is it europe broadly? it is deftly not restricted to italy. we start to question the european experience once more. i would broaden now about develop market debt. over the last two years you have seen yields go to multi-decade

if not historic lows, and you are not getting compensated to get the risk and bond markets. that was ok when you are frontrunning the central bankers and they were bailing you out. now, you have to think about whether you want to take these risks here diverge you guys talk about, does italy at a yield lower than u.s. treasury compensate, and we would say no. market debt would include japan, europe, the u.k. and all of those. we would tell investors this is another good opportunity and there is time to shine from the asset class. alix: if you come into the bloom be your -- bloomberg, this is increased with italian risk. back to 2011,h -- you can see how far we are from the spread at levels, 700 basis

points. --there a relatively play relative play? sameer: you are getting low yields. tough to calls her and we would bring back money home. we see value on the short end, traditional fixed income, where you can pick up almost 3%. alix: sameer samana of wells fargo and rosamaria bitetti. thank you very much. probe overery dealings in the congo. an investigation is in the preliminary stages. stocks were down on that news. you -- thenote --ion of

we will find out what that is about. coming up, a victory in court. shareholderuss with michael cuggino. that is coming up next. this is bloomberg. ♪

david: yesterday, the court in delaware handed a big victory for control of cbs. a ruling said ms. redstone had the authority as majority voting shareholder could take action. the news.d down on wall street reacted to the greater likelihood that cbs would merge with viacom. welcome now michael cuggino, president and portfolio manager of the family funds with

positions in cbs and viacom. he joins us by phone from san francisco. thank you for being here. good to talk to someone was skin in the game. you are in the same place with sherry redstone, and you own both. are you happy or not? michael: good morning, david. biggest thing is that it was not a surprise. you are dealing with a situation where a significant shareholder has a certain desire. management of one company or both may be doesn't want to do this deal, but they are fighting against -- walking up the waterfall so to speak eventually. the legal ruling was no surprise . i do not think cbs has been wanting to do this deal for a while. they see better opportunities elsewhere. the controlling shareholder seems to want to get it done.

as a shareholder in both, we are looking to maximize value in both companies. position to be in. i would not necessarily agree with the redstone family per se, but if it has to happen, both pieces might be better off with somebody else and not combined for we will wait and see what happens. david: i am going to pull a chart. toshows what has happened the stock of cbs viacom as opposed to the standard. since the companies originally separated, the white line is the lowest line which is viacom. cbs has done much better than viacom did. both lag the s&p media group as a whole by question is -- as a do youlder in both, think cbs will bring viacom up or viacom bring cbs down? michael: probably the latter. i guess it remains to be seen. the media landscape is changing

so dramatically with different distribution models and so many other new players getting into , witht and content itself specialized shows versus traditional models we have seen. thrivedcompanies have that. we are aware of that. it brings up the point -- are they both better off with it are suitors that can maximize assets versus being together? a concern isch of the marketplace and you as a loss?older is a michael: that is a possibility. find a way to to get away from the situation of ownership they are currently in. you could say that they were going to be successful. it is another step in the

process that solidifies that wasn't going to happen. hasou mentioned, cbs underperformed over the longer term. how big of an issue is that? i don't know. if they were about by someone else who could maximize him, he has certainly been a good operator. he has been better than viacom. but i do not know how significant that is. viacom is struggling with management issues. if they are combined, he would seemingly be the guy to run it, other than getting someone else from the outside, which would also be a possibility. neither one has been blowing the marketplace away in this current media market. as a shareholder looking to maximize both, we knew what we were getting into by owning both companies with significant ownership. we are looking to have each company maximize value.

i think they are likely both better off with other players than they are together. david: thank you so much. very good to get your perspective. michael cuggino of the portfolio family funds. alix: i guess they are better off together. breaking news. 60 minutes story that alleges google stifles competition and that steve craft is reporting on power that they stifle competition and anti-frosts -- antitrust forces are taking action. i'm not surprised. david: it has been said that google is too big and needs to be broken up. alix: glencore hitting hit -- getting hit on potential inflation. this is bloomberg. ♪

>> this is "bloomberg daybreak." if you are short, italian equities are happy. unchanged off high

sessions. italian is down by over one percent. you have a coalition government, a populist government, but the market not taking kindly. you can see that reflected. yield higher by eight basis points on a 10 year as a spread continues. euro-dollar a little weaker, but modestly. heart of that is due to significant dollar strength. yields here in the u.s. had a at week, but tread nowhere just over 3%. crude having its longest winning streak so far for a weekly gain since 2011. 2000 11,s oil back in now is the highest since 2014. that will be a geopolitical risk story. we have the latest upgrade to oil prices today. david: let's turn to bloomberg business flash -- kailey leinz

first word news. trumpording to a administration official, beijing has offered to reduce trade gap increasing trade. no such offer was made. the two sides resume talks in washington today. in florida, there has been a shooting at a golf course owned by president trump's company. lease shot and wounded a man who was firing a gun and yelling about the president. golf club in at a miami. the suspect has been hospitalized. one officer was injured. in the u k, a former russian spy released from the hospital more than two months after he was poisoned. he and his daughter were found unconscious in the english city of salisbury. weeks in critical condition. the u.k. says they were attacked

with a nervous agent and russia was responsible. moscow denies it. 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. alix: thank you so much. , a on the news that the preparing office is to open a bribery investigation into their dealings with the drc in the congo. tina davis leads our coverage in the u.s. and joins us. was this a surprise at all? tina: it was a long tortured world for the glencore in the congo. they are already in legal .eopardy with royalties the congo is a difficult place to do business. this is just another issue they will have to deal with. david: the allegation appears

and there are question being asked is whether glencore had bribery dealings in the congo. i understand there were private -- previous allegations. tina: it is a long, twisted history. david: it is interesting that it comes out of the u.k. because glencore is swiss. there is a terror -- territory aspect. alix: it is interesting in this situation. tina: it is very and testing since the other company is dealing with electric cars. alix: venezuela heads to the polls on sunday. president nicolas maduro seeks a second term. many expect him to win, despite sitting on the largest oil reserves. venezuela is literally starving.

u.s. is leaning towards sanctions which would hit manus venezuela and the u.s. imports. joining us is jimena blanco. what is next? jimena: we are looking at what government stability would look like in venezuela. we are coming and after several years of high levels of instability and public protests speaking to remove the madura government. we look at the projections index after the election, we expect an improvement instability, simply because the government would have successfully removed threats like the national assembly and has suppressed protests. alix: the backdrop has gotten worse for the venezuelan economy.

they seized storage tankers in the caribbean in part because they are oh $2 billion. why was the such a game changer? jimena: there been a lot of companies gone -- that of gone to the international court saying they are owed i venezuela. -- by venezuela. they did not take the cautions that they normally took, and that is to block access. conical phillips has been successful in claiming the oil. .hey have three tankers we are seeing nine tankers make abrupt changes to stay out of the way. they have gone after assets in the islands, and that is a jurisdiction where they have been successful. alix: this is the tanker map we have on the bloomberg.

they do not want to send takers out. david: i want to step off of this and say -- isn't this part of a larger album that mr. murder has? maduro has? -- mr. i understand he has more stability, but will that take the company in a good direct -- country in a good direction? jimena: absolutely not in terms of the crisis. it is only going to get worse. that is conflating into a humanitarian crisis. if you look at the universities out of venezuela, nine out of 10 live in poverty. they are fleeing the country. not and the hundreds of thousands, but possibly millions will flood the regions.

what they are facing now is a that even with financial injections, it will take generations to recover from. alix: we heard about conical advises, do you and that more will continue the precedent? is important to look at what that case may do in terms of setting precedent. companies maybe waiting to see whether conoco is able to make agreements based on that. clearly it is all about how venezuelavestors in are. there has been default. it is whether they will wait to get late payment or seek to increase the rate of payments in legal action. alix: him and him long ago,

thank you. a story just across the terminal. we have talked about the carolina panthers and we talked about structuring the hedge fund to avoid taxes. -- he can afford to $.3 billion for the carolina panthers. alix: think goodness he got that. david: he is two and 25. he has a 7% return. david: he did it by betting against treasuries. he went along on tech. bets andlike smart they are paid off. alix: wieters on facebook, i can't tell us that was wrong, he , peoplealso on facebook said he liked the bets in vegas.

7% is a nice return compared to a negative. had volatility and that is the point. in this case, it appears to paid off. david: good for david tepper. alix: and the panthers. david: coming up, the final day of retail therapy series. the death of the mall. we speak to jerry storch. as you command today, you can listen to our colleagues jonathan ferro and tom keene. "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. in the hewlett-packard enterprise green room. live from new york, this is bloomberg. ♪

this is "bloomberg daybreak." i'm kailey leinz in the hewlett-packard enterprise green room.

u.k.'s white-collar prosecutor opening an investigation into glencore. according to people familiar with the matter, probe has to do with dealings with dan gertner and the congo. the company is not commenting. the 60 minutesng treatment sunday night. the cbs graham alleges the program stifles competition. shares are lower in premarket trading. as thehanges on the way crisis in italy. sergio marchionne will unveil a plan next month that has been scrapping to budget models in favor of more upscale models. two plants will have tools to produce maserati and jeep suvs. david: we talk earnings in focus this week.

today, for the fifth and final day of our retail therapy series, we look at the death of the american mall and release its illness. the mall is under a lot of stress. as we can see from this chart, rapid increase of store space across the country. it goes down at the end because we are only into may. that is year to date. joining us from new orleans is jerry storch, ceo of storch adviser tod former toys "r" us. joining us is also brian jones from neuberger berman group. some stores are closing fairly rapidly. the death of retail has been grossly exaggerated, just as some of the resurgence we have too that people have been optimistic. the reality is the winners and losers, like there are in any environment exists.

the pressures we see will continue, but the imminent demise of most of these companies is not in the works. david: brian, i do not think we are talking about the death of a retail, but death of the mall. that is an exaggeration, of course. can we flourish with less space? i want to show the chart of the price per capita. it has ramped up. compared with europe, we have a love more store space. brian: i would agree. u.s. overall is over retailed. the number of stores relative to the retail spend, particularly considering the growth of amazon and e-commerce players, we do have an excess of retail locations. however, the quality of retail locations and the eight quality malls that center with high sales productivity are performing quite well in this

environment and are able to gain c quality the b and locations which are most vulnerable to the growth of e-commerce and the challenges faced by the overall retail environment. alix: we have a chart that shows the bloomberg index versus rate index and the underperformance we have seen in the malls. jerry, where would you target the opportunities in the mall space? jerry: i agree with what he said. there are a players and there are companies who are not a players. there are a lot of animals. some of the others -- a malls. some of the others are not so good. be a malls are limited. whether it is department stores or four themed restaurants and entertainment venues. i am not worried little bit about the a real state.

the population continues to grow real estate does not. if you look at retailers, they will succeed in any environment. they are low-cost reducers like cosco. they do fantastic no matter what happens. vertical,o is more they are not subject to the same pressures as retailers who simply sell goods that others manufacturer. there is still opportunity for and winnersinuses and losers in both the landlord and property market as well as the retail market. players.ined the "a" where is the opportunity? likeivate equity firms warehousing will see opportunity. will that be the next step for the "b" and "c". will be thehing

impact it has on distribution warehouses and growth in that environment has been tremendous. if you look at rental rate growth in 2017 in the warehouse intor, it has been over 10% some of the coastal markets. that is in the environment were inflation is only 2%. has hadth of e-commerce positive implications for that sector of the real estate market. a company like the largest owner of industrial warehouses globally and a large holding fund has been well-positioned to take advantage of development opportunities and rental rate growth opportunities driven by withinply changes e-commerce distribution and overall growth of demand for warehouse space. david: jerry, i understand you

believe it retail is not dying areasu also leave the "a" are good at let's talk about the "b" and "c". ." these spaces are still valuable. the real estate underlying the malls is valuable. that is why they were that there to begin with. with all the things that are hot at the are on the ground level. this real estate will be repurposed. i am not worried about that at all. and "d's,"t to "c"

they fill them up when they should not have filled them up when there -- where a should i have been in that location. dentist offices and places to get cat scans and those things. number onlicate rough how much space has to be repurposed? we look at the moment landscape in the u.s., there are over 1000 malls in the u.s., i would argue that 300 of those malls are structurally obsolete to some degree. it can take a while for that space to be repurposed and put it to better use, but we think that over the next five to 10 years, you could see 300 malls repurposed. an important point is that for the "a" malls, there is opportunity to bring other uses to the malls that are more relevant to consumers that fake about health, wellness, entertainment -- that think about health, wellness,

entertainment, and make those centers more relevant to millennials and today's consumers. anoticed this morning, property group, which is a toppling of ours, announced they are partnering with marriott hotels to open five new marriott hotels inside the malls over the next few years. you are seeing increasing mixed-use opportunities within the better malls for hotels, apartments, and other uses that can replace some of the struggling department stores or other less relevant retail uses. couldn't have a retail segment without talking about e-commerce, even about malls. tell me about mixed-use. are we seeing mixed-use were people are in malls but it is an e-commerce site where you go in and interact with the internet and by things that way? are they doing that

successfully? jerry: there is no doubt people will be on their mobile phones all the time, including in the stores. tothe time the customer gets the store, if they are there to shop, they want to shop and take the prize home. it is the height of arrogance on the part of retailers to think customers would go to the mall in order to order something from their website. that just does not happen. what does happen is there is an integrator where the stores and internet are linked. the company -- customer will buy something in it go to the store to pick it up. this is for something if you want to try on and then decide if it fits or for convenience where you want all the work done for you so you go to the store and pick it up. increasingly, we talked distribution earlier. the stores themselves are becoming distribution centers. they are well located. distributionlding

centers, more are shipping a high percent of goods out of the stores that are sitting there. 1.i want to make, is we are talking about malls, but it point i want to make is it we're talking about ubsds, but they are the hop but we have millions of retail locations that depend on the mall to survive. all of that space needs to be repurposed. starts -- jerry storch, and brian jones, thank you. a south african company that has been dragged down by investigations. lost after to post a the first half of 2018. that is no supplies. rising yearrly after year. to banks got hit and had

write it down in the fourth quarter. much more coming up. i am watching a potential investigation by the u.k.. this is bloomberg. ♪

alix: i'm watching glencore and the damage that could be done. they are facing a bribery flow -- probe in the congo. toughtough -- david: situation. alix: we do not know what they might be accused of. that is it for "bloomberg daybreak." this is bloomberg. ♪

jonathan: i am jonathan ferro, 30 minutes until the start of trading. this is the countdown to the open. ♪

jonathan: china reportedly did and did not offer to cut the trade surplus by the u.s. one of trade issue that is clear, nafta talks are nowhere near complete, one official for jesting there are massive differences. in italy, we find -- official suggesting there are mastic to francis. in the markets -- suggesting there are massive differences. 1% on the s&pof 500. 1 anddollar back to 117.7 treasuries find a bid to close out, 3.09%. china casting doubt on reports it offer to reduce the annual trade surplus with the united states by 220 --