wants less confrontation with china. china orders news outlets not to mention made in china 2025. deeper into a bear market, is a trait or the economy? deutsche bank touches a record intraday l, the longest losing streak ever. managers warn of impending market doom. david: welcome to "bloomberg daybreak." great to have you back. alix: i made the plane with two minutes to spare. david: you brought caution with you. alix: i guess i did. david: mr. carney saying tariffs aren't so bad, but it may affect business confidence. alix: it is cautious carney again. how many rate hikes this time? in the markets, caution when it comes to u.s. equities.

european stocks are off the lows of the session. as the yenis lower continues to be the safe haven of choice, but not huge momentum in the currency market, and less it is the new zealand dollar, and you are getting killed. hear did in europe. crude steeper. opec was not front and center. everybody seemed to brush off the trade stuff. david: what about iran? the u.s. is putting the screws on iran. alix: it's like walking on a tight rope. you could see a huge deficit or a lot of demand. david: fascinating. we turn now to the morning brief. we will get economic data, including herbal goods and host cell inventories. , the federal reserve feist

chair speaking on bank regulation at a conference in idaho. this afternoon, the u.s. treasury selling $36 billion in five-year notes. alix: time for bloomberg first word. i want to kick it off with the first topic. what is happening in china? we are over 6.5 to the dollar. are we looking at the yen the valuation and it rocked local market spirit what are trader saying about this now? >> there is worried, but people appreciate to key things have changed relative to that time when we had a lot of depreciation. markets are prepared for the idea the yuan will weaken. if you look at ford points, there is an expectation of declines. we are getting to that point, so

deflation could oriole it. one thing corporate -20 16 is it so15 i had a lot of asset liability mismatches, so the economic damage from a depreciating yuan is not as big as it was back then. alix: i feel like we were confused on why we are seeing this right now. a lot of individuals target the conversation is changing the fundamentals of its economy. >> china has been trying to move from the old economy to the new economy and technology. for 2025heir big plan is all about. we have been seeing the chinese economy slowing, and we saw that

in industrials weaker, retail sales weaker. some of that has been feeding into markets gradually. we remember august 2015 well. towards a move to jump is china depreciating. what we are seeing here is some of that data coming through from the chinese economy starting to weigh on the yuan and the pboc is seeing how far it goes. we have trade issues to worry about, and i don't think this is being used as a trade tool. david: it could feed back into the tr loop. if it is weakening the yuan, it will not help that balance trade deficit. is looking atrump a chart of this and probably not happy. this ishe things about i don't think this has as much with the potential, it is more of like than a potential cause of problems for china.

if you look at goldman sachs financial conditions index, it a one-year tight. biggest driver has been the rise of the dollar. the exchange rate is the flipside of that. this is something that i'd be hurting the u.s. more than china right now. david: let's talk about the second story, which is cautionary. one is what is going on with european banks. brink of beare market territory with the european banks. is this an indication things are getting nervous >>? it has been -- nervous? >> it has been a horrible week for the banks. the richer bank at a record intraday low, which is not a good sign. when you look at the essen s&p financial sector index, that has been going down for 12 days.

if you look at the funds that track that market, something , that has seen outflows for the last nine days. this is bigger than europe. we are seeing it play out in europe. i would be surprised if we did not see that continue into the u.s. david: what went wrong? we went into this you're thinking it would be good for banks. >> on one front, it has been. kre index is still up 6% this year, so having a pretty good year. what i think about when i think about that is maybe that hold yield curve argument that is not that meaningful at all. when i tracked the relative performance of banks versus two-tens, they are negatively correlated, so that banks have a lot of things that are going for

them in markets. ones't know why, but the the most tied to the u.s. economy are doing well and not feeding off the signal of where we are in the business cycle. i look at that as a positive. alix: tech has led the momentum. when does it become about energy and banks, or are we in a bear market at some point? >> that is basically our call. we are in a rolling bear market. we are not seeing a 2008 scenario where everything gives him at once. it is selectively getting markets one by one, this ruling sort of correction. how could i get that wrong? alix: what did you make of that? it seems to be something that is not ridiculous. >> it is interesting. an extension of 2017, where rotation helped the markets stay aloft, helped

volatility stay subdued, but just more to the downside, so maybe things staying flat as other things declined. that is what we have seen. yesterday, we get a day where the russell and momentum stocks really hit it hard, then we start thinking is this going to be a rotation where small caps and tech bytes and banks pick up the slack. then what do we have? pick uping it hard to on when we are going to see a we have not truly seen it. monday might have been a false break on that front. our third story. the caution comes from president trump. yesterday he was speaking at the white house and says when it comes to investment restrictions on china, he thinks it might work all right. >> we have the greatest technology in the world. people copy it and steal it.

we have the great scientists and great brains, and we need to protect it. that is what we have a lot of things we can do it through. david: we started the week really nervous about reports that the treasury secretary to restrict. then we thought there might be something worse than that. a sigh ofeathed relief. >> we were selling the bremmer and now buying the fact. it is interesting how this trade debate has evolved. some the things trump talks about, that would have been enough to send the markets into turmoil a few months ago, but now we are used to these kind of things. this move by canada to come out with safeguard tariffs to protect its economy against dumping when the u.s. tariffs hit there. it is interesting we have moved are we talking about

going to have a trade for with china. that seems to be where we are at. so now how severe and how politically inflaming is that situation? vix shows we are worried, not in 60 days. >> true, we have had some of that abate as risk appetite turned yrday. to take this at face value and square the idea that we are going to take not as hard of a stance on chinese trade and investment, with the idea that what we have been doing has largely been working. we need to do it better. i have a hard time with that. at the end of the day, we have the big trade deficit with china , and a necessary corollary of that is china has a claim on u.s. assets.

this isn't going to bounce completely the way it is being laid out by the political powers that be. david: well done. thank you both very much for being with us. selloffp, more on the in chinese assets. is it 2015 all over again? j.p. morgan that of bank. this is bloomberg. ♪ . ♪

>> this is "bloomberg daybreak." u.k. retailer warning first-half profits will be close to zero. it is blaming amazon and brexit

and says it is unable to give a precise annual forecast because of economic uncertainty. that is compounding the damage from the surge in online shopping. morale steady at deutsche bank as germany's largest lender faces years of restructuring. surveyms annual internal shows 57% of employees are committed to the lender,unchangh followed years of declines. sentiment has been tested by a series of management changes. the meltdown in bitcoin is proving contagious. than 80% ofys more 1500 digital coins it tracks have fallen in price in the past seven days. overall cryptocurrencies have lost 40% of their value in 2018. robert shiller says they are non-rational social movements.

is less intooast it than the west coast. silicon valley is really into it. ais shows this is not rational response to new information. it is a social movement. it is an epidemic of enthusiasm. it is a speculative bubble. >> that is your bloomberg business flash. david: president trump came to office promising changes with china. it looks like he may be getting his wish with the yuan falling faster against the dollar than at any time since 2015. chinese stocks are entering a bear market and extending declines. we welcome j.p. morgan private investment with us now. >> the question you asked before the commercial break him is this 2015 all over again? china is not witnessing the same commodity

meltdown that has weighed on sectors. witnessing foreignin exchange outflows. if this was a tennis match, i would say the advantage is usa. if you think about the composition of the economy and how fast the u.s. is growing at , and and china is slowing the u.s. is less export-dependent and china is more export-dependent, those are some of the levers the trump administration is able to pull along, and that is why we are trying to extract as much concessions as we can. yes, not surprising it is weighing on sentiment in china, especially when deleveraging is the story there. alix: do you read this as a response to trump? weapon?e yuan a or something on top of what was

already going to be an issue? >> it is bringing an issue underway to the forefront. we have seen the faults pickup in china, the the leveraging progress through the year. we have seen some incremental slowing of economic data, but adult top of trade tensions for a under economy that is 18% dependent on exports, and you will get a pretty error schmick's. the dollar strength -- a pretty bearish mix there. if yoular strength come look at the environment today, u.s. has a growth and interest rate advantage. if the u.s. is successful in reducing its trade deficit, it will also be dollar positive as well. of 2015, theys got concerned about capital flight and had to take extraordinary action. at what point does that become a problem as the yuan continues to weaken? >> we have not seen the capital

rrrflows, but we see the cuts to contain this, and i think we will focus on the fx reserves. we are not there yet. alix: doesad and anchor other assets as well? anchor markets like australia and new zealand? >> this was a safe haven. the fact it is wrapped up in this turmoil does not bode well for the asset class. it started with the more vulnerable countries like argentina, then brazil, and now spreading to china. is the the broader story u.s. fed is tightening, u.s. dollar is up 6% since the bottom in march and april, so that is what this is about. in the short-term, maybe this is a backdrop for emerging

markets, but we are getting to interesting levels. i don't think of time to step in his right now. david: you say the advantage is to the united states right now. at what point does it affect global growth? bute are not there yet, there are some signs worth watching. if we look at the new export opponent of the new pmi indices, it has started to trend down. we have not seen a dent in consumer sentiment broadly. when that happens, you will get more potential announcements like we did yesterday saying the global trade rhetoric is hurting not only sentiment, but hurting trade flows as well. we are not there. the reason we have been concerned about the near-term escalation of trade wars is because the longer it lingers, the more it has the potential to dent sentiment and earnings. alix: i'm surprised you did not

have another tennis metaphor. i was waiting for it. we will continue. coming up, deutsche bank touching an intraday low, and hedge fund managers warning of trouble ahead for mark we will break it down next. this is bloomberg. ♪

alix: european banks on the cusp of a bear market. the second half of the year might not be better. you can see the under performance of the european bank stocks. intradaybank with an low today. still with us is our guest from j.p. morgan private banks. why are the banks suffering so much? >> the rate story does not help. were expecting the phasing out of qe to lift the banking

sector and the eventual rate increases, but the reality is tradee of this war-induced uncertainty, the expectation for rate hes have and more. that does not help in an environment with a negative deposit rate from the ecb. alix: you are talking about the bund spread come and that is why european banks are suffering? thehey are not suffering to same extent in the u.s., but we are puzzled why they are not performing better. into the curve that matters more for the banking sector. the realization we have settled on his the fed is fully priced. if you look at the difference between expectations this year and next year versus fed projections, we are fully pricing in the fed, therefore there is not this element of surprise. bank valuations in the u.s. relative to european and

japanese banks, they are pretty extended. david: what about the release of capital? we will get the stress tests thursday. could that bolster banks to release more capital? >> i do think that is a near-term catalyst. results, i would say the market has revised down expectations, so icna opportunity for a positive surprise as more capital is released versus expectations. i'm not sure we will see that much more on the deregulation front. david: word-of-mouth more -- what about more broadly with european banks? doesn't that give them a comparative advantage and ability to take market share. shouldn't that bolster valuation ? >> it should, does, and it is the point. if you look at the spread valuations andnk

european banks, you see wide gap. european banks have rebuilt their capital buffers as well, but not at the same level of strength that the u.s. banks are operating with. alix: what do you make of corporate credit? we have seen outperformance of european investment grade versus the u.s., but spreads are starting to widen. what do makes of that -- make of that? >> all of these risk assets are moving together in us union. alix: it is investment grade. investmentt-term grade space, you have more issuance, but less corporate demand because of the repatriation flows we have seen due to tax reform. forhad a little backing off the appetite of short-term investment grade paper. that is why we are seeing spreads widen their.

whether it is high grade, which those ratios, debt ratios, are back to 2006-2007 peak. they are moving together in unison in this near-term cautious market environment. alix: we will be speaking with you. check that out. that is serious world in pain. david: it does not end. alix: we speak to the ceo of the largest and oldest iron ore mining company in the u.s.. this is bloomberg. ♪ this is bloomberg. ♪

alix: "bloomberg daybreak this is "bloomberg daybreak." take a look at what happened in the markets --this is "bloomberg daybreak." bank stocks still a weaker in

europe, but only down .1%. a different story in the u.s., still down triple dollar-yen a little bit lower as yen continues to be the safe haven of choice. euro-dollar around the lows of the session, truly emerging in the fx market. 2-10 spread down by 1 basis point, 32 basis points as there is a safe haven bid coming into the market. up is where we fit and crude .6% and the story is the u.s. will be more aggressive, asking iranian oil buyers to stop buying altogether. not reduce, but stop buying. david: japan, for example. 20%: it used to be reduction and then you are fine. not at all. david: serious business for donald trump. emma chandra is here with first word news. good morning.

emma: the bank of england says u.s. companies' increasing debt load poses a risk to financial stability. the boe financial stability report -- loans increased sharply in 2017. total corporate leverage in the u.s. has risen to levels last seen before the financial crisis. presidt trump signaled he may take a less confrontational path toward china as they try to curb chinese investment in sensitive u.s. technologies. the comments occurred to align him with steven mnuchin's approach in an internal administration debate over how to protect u.s. intellectual property from china. mitt romney has won his party's senate primary in utah. romney is now a heavy favorite to win the senate seat in november.

global news 24 hours a day, on air and tictoc at twitter, powered by more 2700 journalists and analysts in more than 120 countries. i am emma chandra, this is bloomberg. david: steel remains at the center of some contentious trade issues with reports that canada is considering imposing its own tariffs and quotas in response to the united states. to remain how -- explain how steel and iron or are being affected, lourenco goncalves. of cash cliffs -- cleveland cliffs. welcome both, good to have you here. this. -- take me through in some sense, it will help domestic steel manufacturers. what does it do to iron ore manufacturers? more steel produced in the

united states is positive for cleveland cliffs. we were up before the impact of all these things. demand and demand and the economy is doing very well. david: that is good news. at the time, need these tariffs? why do we need to protect an industry growing already? lourenco: we don't need to protect, we need to level the playing field. china has been the perpetrator of a lot of different actions in terms of making trade not a level playing field throughout the world, particularly in the united states. tariffs have been put into place, we have seen early impact. earlier this week, markets were down and steelmakers were taking a hit, everything was taking a

hit because of concerns trade wars could occur. do you think people are may be blowing this up a bit more? lourenco: i think there is a lot ction one way or another. joe: why? lourenco: at the end of the day, the trade war has been going on for a long, long time. we have been producing fewer tons than the demand of the domestic market for a long time. do you know how many countries in the developed world produce less ton of steel than they use? only one, the united states of america. joe: what about the people that are worried about the knocked down affect? something outside of the steel world, talking ip or something. do you have to say reaction? lourenco: we are prepared to deal with the collateral effects. on the other hand, the united states is a manufacturing

country and we continue to be a manufacturing country and it will have to produce its own steel to theamount and quality and demand of the domestic market. that is how things exist in japan and south korea and italy and the u.k. --it should happen here as well. joe: a lot of people, viewers might understand how impacts are on u.s. still makers. how have you already seen impacts for cleveland cliffs since the tariffs were implemented in march and against trade allies in june? lourenco: tariffs were not implemented against trade allies, they were implemented to protect the domestic market and to bring back the unfair cost advantage outsiders have when they sell in the united states. threefold, the low seller paid to the workers. worst of all, the pollution

steel, thatroduce is more or less the same level they used to have here in the 60, 70, 80 years ago. it is the same standard they were using in this country before world war ii. and a third one are the subsidies. dsw. pollution,-- sellers, low sellers, and subsidies. alix: turning to the tariffs announced yesterday from canada, how much do you sell into canada? lourenco: we sell a lot into canada. a lot of our palates, there are steelmakers in the great lakes on the other side of the border that by from cleveland cliffs. alix: will you see impact from that? lourenco: i do not know. alix: are you worried about it? joe: i am not. -- lourenco: i am not.

completely transparent about that, completely neutral we need to have the same type of rules. otherwise, they will use canada as a shipment playground and there will still be heat throu ca lorenzohank you so much compelled as and to our own -- lourenco can't call this -- ownenco goncalves and our joe deaux. hard to quantify because i know a lot of the research is focused on what percent of gdp is impacted by these categories. the destruction to the supply chain is difficult to quantify. it is difficult to say how much will be shifted from canada to the u.s. or vice versa or heart

-- or how harley davidson will be shifted because of that. that is the piece that weighs on market sentiment and disrupted the markets. one point to make i think on steel and aluminum tariffs, the issue we need to address is china overcapacity. banning steelt imports from the rest of our partners, it is about making -- make sure the overcapacity gets used widely. alix: according to the world steel association, may production in china was up over 6%. we are seeing the first round effects start to trickle in like harley davidson coming at heads with president trump. if you were looking at sectors, which are the most vulnerable to having to move production elsewhere? you have to think about sector

rotation. anastasia: the reality is a lot of sectors are exposed. the technology sector and the to se the two that and out. if you think about this trade and-- playoff between u.s. china. it is about china buying more lmgif the u.s. wanted to have a negotiation advantage and change the course of how china pursues its goals, one thing the u.s. may consider is imposing export patrols -- controls on certain sensitive technology and that exactly what we are talking about this week and what the legislation going through congress is trying to address. if that is why we worry about the technology sector, pieces of the technology sector.

not that we say there is not a long-term secular growth story. absolutely. this is one of the sectors if you ask which one we want to hedge. the other one is autos. lineu look at tariff items, 20 billion dollars here, $20 billion there, $350 billion is auto imports into the united states and we are now talking about really meaningful numbers. that is why we have been cautious for cyclical reasons. when you add trade wars on that, that makes us concerned. david: anastasia amoroso of j.p. morgan private bank will stay with us. the 25 richest families, we will have the list. if you listen to the radio, listen to tom keene and jonathan ferro and then pimm fox is on from 9:00 to 10:00. this ism new york, bloomberg. ♪ bloomberg.

♪

emma: this is "bloomberg daybreak." the next hour, senator rob portman, republican from ohio and former u.s. trade representative. this is bloomberg. alix: we turn to wall street beat, we cover three things wall street is talking about. fund managers see a cliff. -- well-known hedge managers and deutsche bank's morale morale booster. employee commitment is back to level seen in 2017 and the

biggest family fortune, not mine. bloomberg wealth released to the list of the 25 richest families who control, $1.5 trillion of wealth. david: i think you meant yet. $1x: like i am this close to billion. that is nice. david: joining us is jason kelly, the executive editor for global television. good morning. managers, well known, should be in europe. greg coffee and russell clark. >> neither is great although probably -- if investors had their way, they would prefer the tech bubble to the great recession. it is interesting as people start to deal more pointedly with win rather than if the rather thanwhen -- if because it is a when. i was reading over the weekend the new york times had a story

explaining the inverted yield curve and you are like, if that is happening right now and this is moving into the more popular be in forings, we may something. the shape of the recession and what happens nexhe big question. alix: we actually have breaking news. if president decides against harshest measures on china investments. president trump deciding against harshest measures on china investments. they say china must address technology theft, but he will not invoke national emergency says the bestnd approach to protect u.s. technology. i feel like this is a totally different world than we -- then we saw like 48 hours ago. david: or he is just a clever negotiator and got us very scared and said we are not -- it is not as bad as we thought it

was. they scare us with this trade law and scared us all to death. the committee on foreign investment in the united states that andep saying soweeted and said we don't know what that means. alix: we wind up thinking everything president trump does is a negotiation and then we stop thinking that and that was the rhetoric on monday. now it is a trade war and perhaps now we learn, it is still a negotiating tactic. david: it puts a lot of pressure on the treasury department because they will do case-by-case as investments come in set up by congress and this is the way they want to handle it and they decide which investments might pose a threat. alix: president trump deciding against the harshest measures on china investments. we are joined by kevin cirilli in d.c. can you walk us through what we just learned? kevin: senior administration

thecial saying administration is getting behind bipartisan legislation that passed yesterday in the house on a 400-2 vote that would extend powers on the investment foreign committee in the united states. that said, this is, as you said, not the me stringent, more aggressive approach that would declare an economic emergency to international emergency and economic powers act. the administration and president trump getting behind treasury secretary steven mnuchin according to my sources, pushing for the extension to use that as a tool to protect technology and intellectual property opposed to a more aggressive approach. alix: what is interesting is we are seeing a market reaction, seeing yield, off the lows of the session. s&p reversing losses and the dow

repairing losses. what have we learned over the last 48 hours of president and his reaction function to the market? what was the original plan in the first place? sayn: it is difficult to what the original plan is. according to administration officials, they believe "-- is the best approach to protect u.s. economy because it provides a comprehensive and agile set of tools the president has led on the issue of foreign competitors." they are hammering home this point of how they have been able to utilize congress to expand cfius. legislation will head the conference. there is not disagreement between the two bills. definitely ahis is win in terms of secretary mnuchin's influence inside the administration because he has been pushing for this as we have chronicled every day, the back-and-forth with the likes of peter navarro advocating for a much more aggressive,

protectionist, nationalistic trade policy and pushing for things like declaring an economic emergency and using .ther tools such as section 232 that, i think, is the big take away from this morning's development. david: stay with us. we want to bring in our colleague from hong kong, enda cuan. it is early going, what was the -- what will the initial reaction be out of china? is this a sigh of relief the way the markets in the united states seem to be reacting? enda: it does seem it is an as aggressive as originally anticipated. that is a possible sign of an olive branch to china. it would be critical if they respond. we must remember china has already had significant concern the u.s. applies extra scrutiny to them than others and it

sounds like this process would go far to alleviate those concerns. the bigger picture it it is not as severe as the industry expected. it should offer some relief to markets, especially china's markets. david: at the very least, given the process of cfius, it will be done on a case-by-case basis it would appear rather than section 301. this wilmean people wi apply and it will go through a process and at least it will diffuse the effects over time. i think china will continue to have suspicions that they will continue to draw greater scrutiny than investments from other countries. anything they consider to be a to slow downtempt their strategy to create a made economy crosses the red line. there may be something here that

allows both sides to move forward. concerns fair enough, but hadn't china already priced that in? the president had not made much of a secret he was concerned about china and technology. he has been using cfius, the committee for foreign invent in the united states, they have been using that more than any other administratn in history, already. enda: clearly scrutiny is there and we are on unestablished terrain for sure. it will it be important -- it will be important to see how the chinese ministry in strong -- responds and how the chinese newspapers respond to indicate how beijing is receiving this development and indicate whether there is an opening for negotiations. by all accounts, those do not seem to be making progress in the last few days. alix: president trump does say congress needs to pass a strong

foreign investment risk review moderate -- act. he still wants to make it stronger, but not as bad as necessarily the markets thought. nationin the navarro-the in drama navarro-mnuch over the weekend, is it a complete win for mnuchin? steven mnuchin has been a bit more working behind the scenes in a way peter navarro has tried to be more out front. there is no question this is a win for secretary mnuchin and the advocacy he has been pushing for. double down in terms of what david was saying is,t cfius and what firma in which the president is saying this bipartisan legislation that has advanced out of the senate and the house and a strong bipartisan showing rarely --

really a nonpartisan issue, that will likely end up on his desk. it would expand the scope of cfius and allow for them to go beyond -- this is a key point. right now in terms of the cfius review process, it only pertains if the foreign country has a in a u.s.take old based company. the change is happening on capitol hill would allow for a cfius review if it did not -- if it had minority stake. not just bite -- not just majority stake, now a minority stake would be able to go through the process. is chaired by the treasury secretary and made up of all the various agencies as well as the financial agencies including the commerce department. there is that criticism, but this started in 1975 and this does expand the scope. and is thethe scope

latest point in ongoing trade negotiation's in china. pleasewe will reset, stay with us. president trump announced he will not use the special powers, emergency powers, instead, he will go through the committee for foreign investment in the united states. the regular process, although he is and/or thing bipartisan proposal on the hill to expand cfius. one of the things it does is expanded to include minority interest. company or a chinese something that might affect national security and allows treasuries to extend the deal while they are reviewing it. the president said that is the way he wants to go which the markets seem to be thinking is milder than what may have happened. we saw s&p futures now flat on the day after seeing a decline earlier.

dollar-yen reversing course and you had yields bottoming off and moving higher although still in negative territory. joining us is stephanie flanders. e joins us from london. the markets seem to take this as a sigh of relief. is it? stephanie: there is a mixed message. the headline is kind of favorable and we were tag about maybe it suggests the treasury secretary has been listened to. the present, -- the president, instead of resorting to the emergency powers act, he is going with the existing system, although agreeing with the legislation currently in the house on trying to tighten it up and make it stronger. i would say, kevin mentioned this. is, in itself, not an entirely rule-based system,

it allows for quite random decisions and discretion for the treasury secretary. if you think the headline is donald trump is actually working with the system and working with congress, yes, but only up to a point. he is pushing a system which could move to what many companies believe is quite a random discretionary decision on these very important deals. alix: word of caution despite the market feeling good about the freedom. flanders, edna karen, and kevin cirilli, thank you for joining us. to go overjoining us some of these headlines and how it might affect investment decisions and what it means for volatility. this is bloomberg. ♪

alix: not the worst case

scenario. president trump decides against harshest measures on chinese investments and will rely on cf to protect u.s. technology. declines -- is it trade or the economy? thanks crushed deutsche bank at one point touching a record intraday low. the longest losing streak ever and you wind up having hedge funds warning on risk. david: welcome to "bloomberg daybreak" we have big news that broke 15 minutes ago the president came out and said what he is going to do about investment from china. alix: the initial market was "yay,as yet a -- cfius, not that bad." david: one of the things it says is it is all under president trump's control.

it is not independent from the president, so he will have his thumb on the scale, as it were. the president has not been shy saying he has concerned about -- concerns about china and technology. alix: if you take it where we look at where we are -- take a look at where we are on the s&p, pretty much flat. we were down and the dow paring triple digit losses. thenger dollar yen because yen had been a saaven earlier when we had the risk off tone and you see that flip all across the board. the 10 year yield down by two basis points. we are off the lows of the session and crude moving on its own fundamentals. david: the big story right now of thenews coming out white house with president from saying what he will do about investments in china and in a nutshell, he said he will not invoke emergency powers that have been talked about.

the system run by the treasury to apartment -- treasury department provided congress follows through on stiffening and thatvarious ways is a bipartisan initiative that looks likely to go through. the president said if that does not go through, all bets are off and back to plan a. is --g us on the phone and here in new york is ian harnett and from london is our very ownphanie flanders up bloomberg economics -- of bloomberg economics. stephanie, let me start with you and what this mean for the international trade regime. is this a big shift from what already existed? stephanie: i think when it comes to individual companies, chinese companies trying to get access to the u.s. market and take stakes in u.s. companies, there has always been an element of having to go through the process

and a certain amount of political backlash you had, particularly in the u.s. where there is a concern about strategic investment. we have had a couple of mergers blocked by president obama and the two we have seen from president trump. debate around this and the direction he has gone will give some people concerned this -- america has become not a rule maker or someone who set rules, a dealmaker. this is a president who wants to think about things in terms of individual companies and deals and that introduces a randomness investorsystem that don't like and businesses will be cautious about. you are a specialist in international trade economics. what about that randomness and a fact the president has not been shy to express his view, including to his own cabinet members about how he would like to see things come out? >> the randomness has always

been there and i think the key development this morning is the more moderate voices have notched a victory by walking the president back from a draconian anti-china specific policy. now they are going instead, with allius policy which covers countries. as secretary mnuchin said the other day, what we are going to announce is not going to be directed against china, it will be a general policy that will affect technology in other countries. i would say this is a victory for the moderate forces and a defeat for navarro and the more extreme forces. david: in a broader sense, we heard about this made in china 2025nitiative. how important to that initiative is the ability of china to invest in u.s. tech companies? nick: i think it is a relatively

small component. they are doing a lot to develop technologies on their own and doing a lot to license technologies from other companies -- foreign companies. alix: in the market, the reaction seems to be positive and i bring it back to c assets. the u.n. seeing the biggest decline since it the valued in 2015 and a lot of the weapon -- ideaas they weaponize did. >> i think we are seeing the ability of china to be able to cope with this dollar strength is being questioned. i think what we are concerned about and the reason why the market is picking up is if you targeted china directly, that would've been a red rag to the market. broadening this out makes it clearer. what we are seeing here is our big worry here is trade war's wars.o check wars- tech

inyou undermine confidence tech, you have this problem and with a military digital complex becoming so much more important and the militarization of tech, you will have to see regulation. alix: china and the u.s. have large exposure to tech stocks. if i try and boil this down to something more simple market participants, after the bear market, you need to buy on the sidelines? ian: we think you need to be cautious and grow bill gross is decelerating, so there -- the big lie out there is there is synchronized recovery and we have some of the easy -- easiest recovery since 2012. the effects of tightening is driving this area, not just tech wars. part, ior the most think we are focused on trade issues because we are concerned

about global growth. is something like this development right now with the tosident and cfius likely have a significant or noticeable difference on u.s. growth or economic growth generally? stephanie: i think it is the question we ask about all these deals. it would be hard to trace it to a particular economic impact. i think it is more the issues talking a was others were talking about. what we are more concerned about is the gradual buildup of question marks and uncertainty around the trading regime and the investment regime. this is just the time in the cycle we were hoping and starting to see investment pick up. on the one hand, you are trying to encourage -- i think the president is trying to encourage

-- if you are not sure you can export in the u.s., we are seeing a bit of that, but overall i think it could well be negative for investor confidence and certainly could hurt outside the u.s.. alix: yesterday overnight the u.s. -- the new york times had report u.s. were for bidding u.s. outlets from using china 2025. what you expect the reaction to be on this? think they will respond moderately and regard this as a positive step they are not being singled out. they will be scheduled to an enhanced -- subject to an enhanced process depending on what is passed the u.s. congress. i think they will regard this as and i think what we really should be doing and it we really should be doing is looking ahead and that is, is there any possibility we will

not be seeing the tariffs that are supposed to go into effect july 6? i think this is a positive step forward for those having support of a more moderate policy toward itna and perhaps we will see some kind of solution that will mean tariffs scheduled to go into effect will not take place. i think that would be much more positive than this investment. i think the big thing hanging overts is whether or not we are going to a full-fledged that imposes tariffs on 450ates billion dollars in products from china. i think that would have ffect on market and a and ae -- markets noticeable effect on global growth. i don't think we are out of the woods yet. i think this is a positive step forward, but the big thing to watch is due the tariffs take effect and how far do they go in terms of tech -- coverage? david: even mark carney made the

point this morning, it is not so much the tariffs in and of themselves. they are not that big, but it potentially affects business confidence and investments. are we seeing that yet? ian: i think we are seeing investment indicators here in the united states. we think you are seeing the synchronized growth and we have seen the china growth slowdown and euro growth slowdown and if you add this kind of tariffs uncertainty, you get this investment confidence starting to ebb away and we are seei that in some of the durable goods numbers. it is actually starting to slow and without the boost you are getting from the fiscal easing in the united states, i think we would be looking at a very much weaker u.s. environment. tariffs hit u.s. harder than they do the rest of the world. just about twice as much comes off gdp than the world gdp. alix: usually china will get hit

harder. i want to give a last word to you, stephanie. when we wind up seeing china's response, what is left in china's toolbox that worries you when it comes to trade and economic growth? china --: in terms of looking for a very sort of gradual rebalancing of its economy and we know the long-term story china has and we know it said quite clearly if the tariffs come into place on july 6 that it will have its own amount of retaliation and then get into significant numbers and the kind of indications president trump has given of where it can go next. you are talking about a significant chance of u.s. imports and several percentage points of u.s. gdp. it china do have places to go and they are willing to go down that road unlike other countries who might be hit hard like korea who really feel politically they

cannot respond given their close ties and even their security relationship with the u.s. david: stephanie flanders of bloomberg economics and nick lardy, thank you very much for being with us. ian harnett, please stay with us. we will be talking about the decision ons latest chinese investment in the united states with the man who probably knows more about trade than any other senator, senator rob portman ofhio. he will be joining us next. this is bloomberg. ♪

david: the president takes the

lead on trade relations, but the constitution gives congr substantial role as well. we will, man who helped lead trade policy from both ends of pennsylvia avenue. republican senator rob portman is coming to us today from the pital. we will start with this announcement that came out of the white house about how they will approach this question of investment from china, particularly with investment -- technology. the president said he will not go under the emergency powers act and that he will expand cfius provided you give him the power to do so. did he make the right decision? sen. portman: i think so. i think the changes to cfius are needed, particularly just to update it. i think what he is referring to is legislation we are working on in the senate typically called firma, but it has to go

with -- has to do with cfius reform. want to these issues we have a loving playing field -- level playing field. u.s. firms are not able to make the same kind of investment in china and often theye to have a chinese partner. with regard to this decision, it is correct to assume countries in the world will be tre the same way under the traditional --roach, which is mfn, mace most-favored-nation. david: in the statement the 301 and said if we don't getn expanded cfius he might well come back and do it a different way. how likely is it and when my did occur that you would revise cfius? sen. portman: in the senate the prospects are very good to enact the updated cfius and i say that

because it is bipartisan. , -- i think if you get a strong vote in the senate, it is likely you get vote in the house also. david: what about the issue to the extent congress and the senate specifically should have a say in trade relations. i want to remind the audience that is the committee for the foreign investment in united's rates administered -- united states administered by the treasury department. will see whatwe comes out. cfius is a screen on investments. if a company wants to invest in national security, the cfius group, represented by an inter-agency group, would be able to block that investment. it happens rarely, but with regard to investments and telecommunications and defense industries. i think it is very likely there

will be something that pulls it back to congress at some point or narrows the executive prerogative a little bit. for the most part, the decisions have to be made quickly and on an interagency basis, i think that will continue. david: the president is focused on technology with regard to china quite specifically. there is also the intellectual property proceeding, the section 301 proceeding that has to do with companies sharing intellectual property, perhaps theft as it has been called by china and that is a bigger issue . are you satisfied we are taking the right approach to that? i understand we have a lot of allies in europe that would be on our side that we may have alienated with tariffs on steel and aluminum. sen. portman: that is another issue. with regard to intellectual property in china i think there is a global's and -- global consensus something needs to be

done. administration after administration since china came into the world trade organization has tried to get china to live by the rules. i think there is a lot of sympathy for what we are doing and i hope there will be helped from the e.u. and japan and other countries concerned about ip, that could be movies, music, also then you .actoring processes and so on i think there is a lot of support for that. you are right with regard to that you, canada, mexico, there is a separate issue which is the on steel and aluminum and there are concerns about that issue. those countries are threatening to impose tariffs on u.s. products in retaliation for us imposing a 25% tariff on steel and a lower tariff on in the --on aluminum. david: are they separate issues?

we had the ambassador from the saying the united states we have these tariffs getting in the way. do you think they truly are separate? you had these negotiations before? sen. portman: they will do what is in their best interest and i think it is in their best interest to deal with intellectual property concern and challenges with china. with regard to the steel tariffs, our hope is this and get resolved. th iout looking for that level playing field, looking for a -- for more reciprocity specifically on issues, for instance, with automobiles there is a tariff on cars from the united states to the e.u. that is five times higher from the terror -- in the tariffs going from the e.u. to the united states. -- indicated interest that looking at that, particularly the germans have. i think there will be a

resolution of those issues and that the 232 tariffs will not be imposed, but there will be negotiation on other trade disputes. david: what about the larger question about the way section 232 is used? do you feel ble saying to canada you are a national security risk? there is legislation you well know, mr. corker and mr. toomey are blocking right now saying we should curtail the president's ability to invoke national security with respect to allies allies likend -- canada. sen. portman: i expressed that concern as i have in other settings. my concern is it is a national security tool and ought to be used rarely and appropriately for that purpose and this case of using 232 is not appropriate. with regard to steal, it is a national security concern, but you need to target it as to

product and company and if it is not targeted, it is the misuse of 2. mainll either use 232 appropriately and there will be a case against us in the world trade organization and we may lose that and lose the ability to use 232. article 21 of the wto allows you to use it, but only on narrow national security issues. the second thing that could happen is countries will say we will do the same thing and raise tariffs on u.s. products not for national security concerns, but because you can do it without having to prove there is dumping or selling below cost or subsidization. or that there is a surge or material injury, these are all things that have to be proven otherwise. i am concerned about the use of it. we should not be using it too broadly because it could come

back to hurt our farmers, manufacturing workers and my home state of ohio and other places around the country. much, there you so is no one better to talk to about these things than senator rob portman of ohio. alix: u.s. futures trying to get the to neutral, but paring losses we saw after the white house's decision on chinese investment into the u.s. banks are still beaten down, the longest losing streak on record. a little bit of weakness in europe as european financial data two-year low and deutsche bank continues to roll over. whol with us is ian harnett issued a black swan alert for banks earlier this month. -- pressconsidering yet considering what we are seeing. we are seeing pressures on the banks coming from flattening

yield curves, rolling down of economic activity, and the rise in the dollar. the thing we are trying to get across to clients and paicarly the u.s. clients because the u.s. hasn't been too badly, but global banks are being hit by this dollar rise and f dollar denominatedebt in the world, $12 trillion and if that dollar funding gets pulled away from how the banks have been supporting themselves, that makes money more expensive and undermines the quality and the ability of banks to continue to expand assets. we are seeing weakness not only , but it is banks about italian politics or deutsche bank. seeing that in eurozone banks, french banks, chinese banks, and most2 of the world's systemically important financial institutions are in bear market 2006.ory since january

alix: your black swan for u.s. banks, what does that mean? ian: the bad news is the next 5 stocks now down 19% are american stocks. at that point, you will start to hear much more noise. alix: how much more downside from their? ian: the worrying chance we have in the black swan alert is liquidity is being drawn down. this could suggest another potential 20%. that will challenge market expectations because when you get these stocks under pressure, the rates -- do rates go up or down? the consensus is u.s. rates are going up and treasury yields are going higher. we think treasury yields will head 3.5%efore they because of weakening in the financial system. alix: where do you like things? ian: i don't think you want to have any banks at this time.

bankse of these european the cross holdings and interrelationships of the global banking system means u.s. banks will not escape that global liquidity timing. alix: ian harnett making me feel really happy on set. retailest round of u.s. inventories and durable goods data on deck and the latest read of the economy as we wind up hearing a lot from fed speaker and we will talk about the health of the consumer with the head of retail banking and wealth management at hsbc. this is bloomberg. ♪

alix: this is "bloomberg daybreak." dayad a risk off kind of and then we got the news perhaps president trump won't be as harsh with chinese investments coming into u.s. technology.

nonetheless, still down. it dow and s&p futures o. banks erasing losses in europe. strong dollar story and buying in the long end of the treasury market. the 2-10 spread continues to flatten. the latest eco-data is here. a durable good if you back out transportation for may, coming in negative .3%. april revised upwards by 100 basis points. may looks to be a relatively disappointing. if you look at retail inventory, up by .4 percent. we keep talking about when inventories will replenish and that will be a big boost to gdp and we continue to not see the voracious inventory build we might be expecting. i want to point out the goods trade balance, negative 64.8 billion less bad than maybe

anticipating, less wide. david: capital goods orders whether you include air or not are off the estimates by a good margin. it was estimated to be plus .5% and it's actually plus -2%. it is interesting because president trumwill be happy he does not have as much of a trade deficit, but he is hoping to take tax benefits and employ them in and i am wondering if we see indication of that. alix: i am trying to look through the details. we will continue to get in there. 10 year yields still buying on the long end. it doesn't feel like a huge shift for the market. david: still with us is ian harnett of absolute strategy you are ae -- professional, tell us about it. ian: what is not happening is you are not seeing this risk up

and if you look at what happened --2015, we saw half of that it is going to go back into dividends, not into capex. alix: a lot of it is aircraft orders like boeing received almost half the orders they did from april. nonetheless, you have to wonder how much is trade. how much of the uncertainty is filtering through. david: because of business sentiment. thingsere were two other that happened. the previous 18 months bond yields have gone up from one and a half toward three. that squeezes economic activity. think about gas prices. gas prices have been 50% up over the last 18 months, that is squeezing consumer confidence and retail activity. reportthey was a stock buybacks were way up because one of the questions we had with tax cuts is where the

money would go to and we were told it would be capital investments. ian: i don't think they were and that is why we see the dollar going up and the banks under pressure because we saw a rate of$633 billion -- profits $633 billion. a lot of the money came out of the market and the question is is it going to cap ex or buybacks? and it looks like it's buybacks. alix: what makes you pull the panic button? ian: what we are saying to clients is it depends on the policy response here. if chair powell goes ahead with that multiple rate rise sequence he outlined a week or two back, we will get very worried, particularly if that leads to a stronger dollar because emerging markets cannot cope and there is about a trillion dollar of dollar market denominated debt. it will not be em currencies, a lot of the developed market like

canada. 80% of canadian corporate debt is dollar-denominated, that dollar strength and higher rate are a toxic combination and that makes us push the big, red button. david: what you are concerned about, not saying pushing the button, you are concerned about what fx will do to repayment? of debt? debt,ollar denominated there is a lot of it out there and a half to roll it over. a lot of banks have been doing wholesale funding as well and that is going to compromise the ability of the credit cycle to get going anywhere in the world and that is the biggest risk here on top of all the trade concerns and that is why these systemically important financial institutions really are important. david: that is why they are called systemically important financial institutions. ian: absolutely and even the u.s. banks cannot ignore that. david: ian harnett, always great to have you with us. on another -- for another take

on economy, we welcome pablo sanchez. welcome to the program. perspectiveifferent because you are at the retail level, retail banking. what are you seeing in terms of retail customers? how are they reacting to this economy? pablo: so far it has been . we see customers looking to buy more homes. we relaunched our credit card platform and we have seen historic levels of interest in our new credit card product sweet -- suite. you think about jobless rates and things like that and what we spending more.s the one worry we have a little bit is customers are saving a little bit less. they are actually spending more and we see that in terms of our lending products and deposit accounts. david: you have a big credit card business, are you seeing any softness in terms of delinquencies or defaults? pablo: actually it is at the

best levels we have had in a very long time. we don't see spikes in terms of delinquency and first payment defaults. all the metrics we use to look at consumers and how they behave in it has been very strong. david: is there any indication the average consumer is getting nervous about this trade talk? pablo: it is on people's mind and gives us an opportunity to talk to our wealthiest clients around what is happening in the marketplace. they are curious, but it has not stopped them from investing and doing the things they want to do. we see more activity than we have ever seen. alix: what about auto and auto lending? pablo: it is not something we really participate in in terms of auto, but what we see is customers who really want to be able to update their own inventories and things like that. right now we do not see a slack so much in that space. david: rates have been going up. is there any sensitivity to

rates on the part of retail customers? pablo: sure, there is. have been muted for a long time and customers now in terms of liquid savings accounts start to think about that, the checking accounts, traditional liquid savings accounts. they are rate conscious this day. david: any pressure they would like to get paid on those saving accounts? pablo: customers really want to talk to us about the entire picture. was had annderstanding it muted in terms of rates and they see what is happening in terms of advertising. we have moved our rates up to make sure we move with that demand. alix: i was going to say, how competitive are you planning to be? pablo: it is really important we be competitive in this space. we have done things like launch a brand-new savings account online and we want to be in the -- and we want customers to feel like we are paying them for their deposits.

david: you have something called pepper. describe to us what you are doing with this robot in branching. pablo: it is important for us to understand we are not replacing humans with robots. alix: instead of talking to a human about -- it will be a robot? pablo: on our branch on fifth avenue -- in our branch of fifth avenue, one of the things we wanted to do was provide a retail experience like no other. there is no reason banking needs to be boring. when you walk into that branch, you will see our humanoid robot that will be able t triage what you want to do and point you to people if you have a more complex question or if you want to be educated on products and services, pepper can do that. david: is it more informational or transactional? does that keypad actually do things or is it more informational?

pablo: right now it is more informational and that is what we wanted to look at for phase 1 . as we think about phase 2, let's say you want to understand what our credit card products are and you want to apply for one. we see the next phase being you being able to do that. right now, it is more for information. david: thank you pablo sanchez so much for being with us. alix:ecap of that data we got a few minutes ago. it did not look good for capital goods after the april surge. nonmilitary capital goods orders excluding aircraft fell .2 percent after surging over 2% in the prior month. the question becomes does that mean we are seeing business sentiment come off and translating into less money flowing into orders and growth this a of trade or was one-off, a volatile kind of series and these are the kind of numbers we can be expecting? bookings for all durable goods actually fell by .6%.

in the markets, we are seeing a reaction and you have dow jones futures and s&p futures flipping into positive territory. dow still at the highs of the session. you are seeing buying in the bond market. basis lower by about 2 points on the 10 year. south african rand leading declines in the emerging market fx world. a day three of our navigating emerging markets series is next. this is bloomberg. ♪

emma: this is "bloomberg daybreak." i am in the hewlett-packard enterprise green room. in the next hour on bloomberg markets the open, an exclusive interview with the prime minister of greece.

emma: now to your bloomberg business flash. --.gra is buying if the acquisition will help them capitalize on the growing demand for frozen food. more than half of pinnacle's revenue comes from brands including birdseye. janice partners has been pushing pinnacle to sell since april. world wrestling entertainment five-year agreement with usa network and fox sports. it will contribute hundreds of dollars in revenue growth. a smack down alive will air on fox every friday. the terms would not disclose, but the company expects revenue to double to $462 million by 2021. billionaire george soros is backing mighty group. the firm bundles cash advances -- in return, the company takes

a cut of future settlements. marketigation funding averaged returns a 20% per year. bloomberg business flash. alix: thank you so much. president decides against harsh measures on chinese investment into u.s. sensitive industries like technology. the white house will push congress to strengthen an inter-agency panel that will be the main tool to monitor. joining us from london is karen curtis. shanghai confidence in a bear market and the biggest valuation since 2015. does this make you rethink how you might invest in china at all? >> i think the shanghai composite is generally not highly correlated with the chinese economy. it tends to be much more of a policy driven instrument for

domestic investors. i think we have to be careful inferring too much with exactly how the composite is trading. alix: i think what i am getting at is yes, you cannot draw a we seecorrelation, but an of selling, is there now good value in china somewhere that you are interested in? kieran: one of the more obvious places for value in china at the moment is the bond market. you get pretty decent yield for , atirly solid macro story least at government level and we are seeing continued easing, albeit targeted easing from the pboc. chinese bonds is one area we think is quite interesting to investors at the moment. bex: kieran curtis will king with us because the chinese selloff has spread

concerns in emerging markets and there are countries that have unique issues and we are spending this week to define the problem and find opportunity and today we are looking at south africa. south africa caught in the wave of emerging-market pain. the rand one of the hardest hit of the year as the country experienced political turmoil and changes in the constitution. joining us now from johannes mbatha.amo can you walk us through what happened politically in the last 6 months that led to the outperformance of asset classes? amo: we know the ruling african congress elected a new leader and a few months later, his predecessor, jacob zuma was ousted as the head of state and therefore, the government in -- is the new president. ,oreign investor holdings

however, have really dropped to the lowest level in more than a year. n debt in the first south quarter on optimism -- could zuma.he havoc wreaked by attract investment in the country may not be as quickly feasible as he may have first anticipated it to be. while outflows occurred in the backdrop of a broad selloff in emerging-market assets sparked by a stronger dollar and rising u.s. rate, south africa is caught in that wave. outflows in themselves highlight the country's vulnerabilities, that being high unemployment rate, economic growth that is fiscal and current shortfalls that keep widening. it certainly does not look like it is an attractive investment

destination at this point in time. alix: thank you so much. david: south africa struggled to gain footing ever since jacobs in a was elected in 2009. this gives the story of the rand over time. this is when president zuma returned to power. green is when they had the big problem with the finance minister and they had a replacement and saw the rand strengthen and all of these are scandals that ultimately led to a yellow line. you can see it strengthened the rand and now it turned around the other way. posen -- pamaphosa -- damian sassower and kieran curtis is still with us.

he seems to have the best of intentions, but it is not easy get done. -- damianis all about : it is all about confidence. he needs to attract offshore investment paris to the current of gdp.deficit is 4.8% they have a problem and they need to fund it somehow. large part, the reason it is not coming is because of land reform and the fact they cannot convince companies like glencore and big mining companies they will not have their land and withoutnes expropriated compensation. david: it's hard when you think about changing the constitution. it is supposed to be reporting at the end of august, this is the ruling party proposing this. david: corruption is endemic there right now. the pic, the largest public

pension fund, they have been accused of impropriety in theyion to the fact that cannot find themselves and there are rolling blackouts in the economy and you cannot even quantify the impact of that on gdp. if really what they need is confidence of the international business and financial community, what is the root to that -- route to that? is there one? kieran: i think there is one and there have been some progress made by the new government in south africa to try and change, in particular, some of the personnel at the top of the agencies and state owned industries to improve management, processes, and make things more transparent. in particular, the intentions the executive with respect to land performer our widely misundood, especially abroad. i do not believe it is the

intention of the executive to change the constitution. i think the executive wishes to show in limited cases, it may be possible to transfer land to particular people under the current constitution. as i said, in very limited ways, that will help to entrench investor expectations about what any new land purchases and legitimately purchased land -- the fact that they have rights over those holdings. alix: how do you want to buy south africa right now? kieran: we quite like the bond market and we also increasingly like the rand. both appears quite overbought in january and essentially we rate the country as a buy on dip. as a result, we are quite happy to add the holdings. attractive inflation

continues to be on the low side. they mean to raise taxes and get the fiscal deficit under control, but inflation remains below target even after that implementation. it does not appear to be a strong case for rate rises in south africa, but bonds are newly 200 basis points above the policy rate. he yields are very attractive -- yields are very attractive and we think back and ultimately make the rand attractive once the international environment becomes a bit more favorable for emerging markets. alix: thank you so much kieran curtis and damian sassower. we have some breaking news on comcast. don't count it out. it is not out of the bidding for fox. david: it up or is it is exploring deep pockets. dow jones is reporting comcast is exploring tieups with private equity firms and say they do not need to tap funding sources

until the bidding reaches about $90 billion. disney is $71.4 billion. it was speculated there could be a billion more and it looks like comcast wants to send a message the markets and including fox that we have deep pockets and we can go higher, thank you very much. alix: that stock down .7%. this is bloomberg. ♪

david: we have a lot to watch today. one thing i am watching is comcast. if bob iger was looking for any protection against over bidding, brian roberts is not giving it to him. the report as they are exploring a tie up with private equity that would allow them to get into the $90 billion plus range in britain -- in bidding. alix: and private equity has a ton of money. they clearly have money to put in. -- digestingting

that and markets continue to digest news out of the trump administration that we will not see the worst case an area when it comes to chinese investment in sensitive areas. -- won't be more news, as mr. trump would like, on more stringent -- even european banks saw the worst selloff in about two years. alix: they could use it -- david: they could use it. alix: the special at deutsche bank. seeing a stronger dollar although we around the highs of the session. coming up on "bloomberg markets," the open. this is bloomberg. ♪ retail.

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

near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. jonathan: 30 minutes unt the start of trading, this is the countdown to the open.

coming up, stock markets recovering, the trump administration taking a softer than expected approach to chinese investment. chinese equities falling deeper into a bear market. spookingakness investors, banks talks pressured worldwide. u.s. financials posting the longest daily losing streak on record. 30 minutes away from the opening bell, the set up as follows. we were deeply negative earlier in the session. s&p 500 futures now very much unchanged. in the fx market, euro-dollar south of 116 and 100 1599. a big focus on europe, coming up at the top of the next hour in a bloomberg exclusive, an interviewthe greek prime minister, alexis tsipras, who is optimistic about the future of greece. alexis tsipras: we won't become part of the establishment. we wil