>> david davis quits the of a government, protesting the plan for brexit and sterling barely blinks. dominic rob steps up as the new brexit secretary. panic, markets breather five relief is no trade news is good news. morgan stanley's mike wilson starts to get defensive. earnings take the baton, u.s. earnings reporting friday. what companies still have pricing power. in one welcome to bloomberg daybreak, i'm alix steel and david westin ditches me and goes to d.c. and i haven't seen you in over a week in there you go. david: welcome back to boston. i'm down here in the president is doing a reality show thing tonight. is going to announce who's going to succeed anthony kennedy. he's down to four people and he's going to tell us tonight. alix: how do markets wind up looking at this over the next 24 to 48 hours?

the application is going to be really hard to garner. david: a lot of the coverage has been about social conservative, roe v. wade and abortion and things like that. there really are some issues for the markets and for companies that initially about how conservative this court will be when it comes a regulation of how willing be the strike in relation. it may really have in the longer run some serious business implications. forward with you being on aaron's 11:00 p.m. david: should be 10:00. if feelsthe markets like a sigh of relief as no news over the weekend on trade seems to be better news for the markets, s&p futures up by .4%. highlight what's happening with the cable rate, in his dramatic headlines coming out of the u.k. and sterling barely budging, how much more upside can we see? , but 27 basister points where we had last week, the lowest level since 2007 is

all about sell bonds, buy stocks, weaker dollar, and crude rolling over just a touch. for the morning brief. there's a lot coming up this weekend on wednesday the president will be in brussels for the nato summit, and a lot of you are watching that on thursday we get the latest u.s. inflation numbers when the government releases cpi for the month of june. on friday, we're getting earnings from jpmorgan and citi as part of earnings month continues in on friday the federal reserve will some of the semiannual or on monetary policy to the congress. we'reamanda: -- alix: joined by marty schenker analog kickoff with the u.k.. david davis, general direction of policy will leave us in at best a week negotiating position and possibly an inescapable one. marty, what do you make of this? marty: i think she finally was

able to cobble together a consensus within her own governments that there are people surrounding her it would like to use this disarray in figuring out a brexit strategy to take her down. there are some people who are saying that the may government is essentially falling apart. whether they will be able to actually executed brexit plan is very much in question. david: i came expecting to see the pound fall off because of all this uncertainty and it went the other way. it actually went up. how much of that is because they think this might lead to a softer brexit? look at the ftse 100, up about 4%. aeresa may has finally put path forward and it's a very narrow path and certainly a treacherous path that could backfire on us. it's the first time we've really

seen something concrete out of the government to move forward and complete this brexit in some fashion or another. we get more details on thursday when we get the full report. right now you see the reaction by the markets are telling you that this is what they want. they do want some sort of clarity and some sort of finality. this is what i didn't understand. when i first saw the headline i thought this is not a bad thing because now hardliners are out of the government and no one wants theresa may's job so you can make all the noise you want and why is in the narrative we are looking to a softer brexit party? marty: i think her appointment of the new brexit negotiator is a very positive sign for a path forward as she suggested and that is something the markets want. it will take more than just a few days to figure out whether they will be able to execute on the new brexit strategy. alix: they give you hours to comment.

week in the conversation was about trading with the impact really is the economy and the markets. ecb executive board member benoit coeure ray had his take earlier on bloomberg tv. what he did say basically is that he is not thinking that the ecb is when you take any kind of business because sentiment is still good and he doesn't really see the impact for monetary policy perspective. is that kind of what the markets are telling us right now? romaine: trade concerns are being kept at bay in the market. look at the performance today in em currency a look at what's happening in the developed nations and having the weaker dollar today helps a little bit. whether this is sustained going beyond the next week or two, we have to see. by then right now people are come to terms with this is the new reality. things are really not that bad. we're getting some more optimistic forecasts out of the euro region right now with regard to economic growth and if that materializes, i think you could see some of the pain that

without would materialize abate a little bit. david: we just had a chart of what the dollar has done and it's based on the strength and strengthen strengthen now trailed off little bit i guess because it hasn't been worse trade news. isn't there an irony, if president trump is focused on the trade deficit, by strengthening the wrong way. marty: that doesn't really matter for donald trump as long as the narrative stays the same. on the trade issue, no news is good news and i think a lot of people anticipated a very negative market reaction when tariffs kicked in and there wasn't, he gave the market confidence to move forward. it hasn't been any news on the trade front. donald trump is going into the nato conference and that may produce headlines it may be disconcerting to the markets. the third stories fundamentals rather than all the geopolitical stuff, it has to do the earnings. we are starting earnings season and on wednesday thursday, friday, we get wells fargo's,

pnc, and jpmorgan. that's going to be the big one. when we looking for out of financials for last quarter? improve we are hoping -- they improve. people are expecting about 20% plus growth out of the financials alone, which is about where the averages for the s&p is a whole and if we get back, i think that could be encouraging that these companies are sort of weathering this higher in different environments, some of the political and trade was as well. i would really caution i don't think financials are really what's going to lead the way here. we really need to keep eye on some of the multinationals and tech companies, especially some of those consumer discretionary companies and what type of forward guidance they get both in terms of eps and particularly on margins on revenue and whether some of this trade issues have actually have an effect on that. if they don't really signal that, i think it could be full speed ahead. if they do see a little bit more

caution we could see some of the selloffs that we saw going into positive earnings like we did in the first quarter. it's going to be hard for them but it was going to be energy and industrial lead the way which are exactly the type of sectors are going to get hurt by trade war. we heard from morgan stanley they are turning a little bit more defensive under waiting tech now and small caps. what do you make of the earnings season? marty: i agree that financials are not going to be the bellwether. want to stop talking about politics, but it has to do with everything. to me, what you will be looking for is investment decisions. r&d and whether companies are going to commit to making the kind of investments in this uncertain trade environment, that's a key unnecessarily for this quarter, but quarters coming up. marty schenker and romaine bostick, good to see you. you can final the charts by renzi tv on your terminal. save the charts on your desktop.

coming up, more on emerging markets rallying on the potential impact of trade. we break it down with lindsay bell. this is bloomberg. ♪

this is "bloomberg daybreak," on him at chandra. shares of chinese smartphone maker xiaomi fell in that publicly traded debut and is letting trade war may be one reason. plus there's concern about xiaomi's $50 billion valuation. it will be added to the hang seng composite july 23. shares of nissan fell, the

japanese on it are admitted emissions data was based during internal inspections last year. after the inspection process was on a result of. shares of groupon are surging in premarket trading, the tech website reported over the weekend the company has been looking for a potential buyer for the past month. groupon was valued at about $16 billion when it went public back in 2011 and it's now valued at just $2.5 billion. at your bloomberg business flash. president trump followed up on his chinese tariffs on $36 billion with a good last friday i saying over the weekend that he may just end up putting tariffs on all chinese goods, all 500 billion of them. really chart to show you with a trade looks like the united states and china and the blue line is what china -- the blue line is what u.s. imports from china in the red line is june of 50 billion looks against not only north of there. no,elcome now john barrow

welcome. as you look at what's going on with u.s. china right now, give us some historical perspective. does the president really of a point the china really is a closed economy in many respects? >> china open of its economy when it joined the wto in 2000. around five or six years ago, they did start taking a mercantilist act. responded and moved from a position of general support to one of great concern. there is support for the president being more muscular and how he approaches china. there's another chart the basically prepares the u.s. and chinese gdp going back and it starts with when they came into the wto back in 2000. you can see the dramatic chain -- change.

the extent to which china is catching up with us. how much of this is because they have a big population of they are growing and how much is because of restrictions on investment? some of the things the president talked about. mr. veroneau: most of that growth is due to the fact that they have not been restricted. there great leap economically has began -- has been because being graced -- they embraced global markets. movednly recently they towards this more restrictive policy and they will move back to world -- towards a more liberalize trend. david: can president help them move back towards that trend? mr. veroneau: we don't know yet. i think the biggest concern is with the tariffs, people aren't sure where he's ultimate going to go with these tariffs and how great they will become. also, there is great concern over the missed opportunity to create a global coalition to confront china in a

more unified fashion. other countries are having similar concerns with china, but i think the problem has been the president's in a position of tariffs for key trading partners in europe, mexico, and japan have really cause them to step back and be less willing to help us as we confront china. ii, morence world war or less we've understood the u.s. trade policy in the general area of more trade rather than less trade. overall, that's clear. is that changing? you know people close to president trump advising them on trade. it is possible this president is saying we should have less trade? president camehe into office with fairly strong view on trade policy as opposed other policy areas and he has been fairly skeptical of the global economy and i think he views the u.s. economy as so big that we would do fine if more americans bought american-made goods. some of the concern with regard to his policies is that he is less interested in assuring fair

trading practices by our partners and simply more interested in protecting the u.s. market from foreign competition. david: there was a time i can member when figuring out what was an american-made goods reasonably straightforward and that is no longer the case. supply chains have really changed fundamentally since the 1970's and 1980's when we talk about bilateral trade. does the president understand what disruption could cause to people like your clients who are shipping things back and forth across borders to put them together? to veroneau: i can't speak whether the president understand how integrated and involved the global economy is but it's very different than it was even 20 years ago, products move from country to country with value-added in those countries separating u.s. goods from non-us goods, it's much more difficult than it used to be. becomeyou represent buddies with trade issues, how concerned are u.s. companies about what's going on? are quiteau: they

concerned. the level of tariffs are not huge but i think the concern is going to be going after on u.s. to invest for political reasons here in the u.s., to avoid risk associated with tariffs. i think there's growing concern that those pressures will continue. david: i for being here today, john barrow no -- john there are no -- john veroneau. a spoken walker extensively the bloomberg in france. important is to gauge the impact on business confidence. so far it has been limited. we see this escalation process, we start with skirmishes and then skirmishes turned later into clashes and at some point clashes may turn in to a full-fledged war. and i would be very bad for business. so far, the backdrop is very

strong growth in the eurozone, resilient growth in the eurozone meaning that so far, but we have seen has the potential to derail the recovery. alix: join in the in new york is lindsey bell, cfr a investment strategist. good to see you. that as long as business sentiment is holding up relatively well, that we will have insulated markets? some truth toe is that, but there's going to be a point within the next several months where businesses are going to have to make investment decisions and hiring decisions and that's really going to impact the u.s. economy. we saw in this last three quarters increased by 40% on average. in the three quarters following the 2016 presidential elections, is down 3.9% we really need to see expenditures continue to grow. where you think that growth and resiliency can trump trade issues. ?hat areas of the market

ms. bell: we are seeing it in tech. our economy is becoming more connected. everything is becoming connected any really think that sack is going to continue to be an engine of growth for our economy and moving forward. tech earnings this quarter are supposed to exceed 21% for the first quarter in a row. they've easily trumped these numbers in the last five quarters. alix: mike wilson of morgan stanley said he is under waiting tech, he sees a proper rainstorm protect and growth stocks. he said it was too early to get defensive and now it feels like it was morgan stanley is turning a little defense on the margin. what would you need to see to get more defensive in the markets? ms. bell: i would need to see stabilization in the economy and a continuation of growth that we've seen in the last couple of corners, 4% gdp growth in the second quarter, 3% in the next couple quarters. then we can start to see some of the more value-oriented defensive sectors do better. month,in the last

consumers have gravitated towards tech sectors with this fear of trading uncertainty. growthseeing tech and lead the way. alix: how much would you have to dial back on risk allocation? we definitely think you should have some of your allocation in cash right now, you should have some dry powder is a good manager these opportunities when the market does will back and we do see volatility, has returned in 2018 and it's here to stay. alix: lindsey bell will be sticking with us as we move that lends to earnings. coming up, president trumbull announces pick for the supreme court this evening. we talk about his chance to submit a conservative majority in the high court, coming up next. this is bloomberg. ♪

david: president trump is going to announce his choice for the supreme court this evening and that is going to replace supreme court justice for anthony kennedy and his for candidates -- four candidates. greg, what difference does it make? greg: in one sense, doesn't matter that much. the biggest difference maybe style. barrettone woman on amy , who has been on the court of appeals for the least amount of time and she's also the youngest, 46 years old and she said the most potentially polemic things in her academic writings about abortion and other matters. kavanagh judges, judge has the longest record both as a

appeals court judge and for ken starr before that. they have some different backgrounds and that will affect the politics of it. david: what did we learn about his process? some people say it's personal chemistry and he likes thomas hartline. -- thomas hardeman. greg: we heard he liked tom hardeman a good deal of his name started become more prominent yesterday as somebody who the president likes and mitch mcconnell sees as having fewer red flags and might be an easier confirmation vote because he doesn't have the sorts of things i talked about with judge baird and judge kavanagh. david: they have 30 years on the the courtecial conceivably. what we looking at a trump court going forward and one of the major issues? beyond abortion, what are the major things that could be affected by this conservative majority? greg: justice kennedy was in the

middle and this is going to be such aally so many -- big swing. gay rights and religious rights, justice kennedy was on the middle and death penalty issues. he cast a crucial vote to say that someone who committed a murder as a juvenile couldn't be executed. that's an area of the law that could switch, environmental law, the next justice could be more skeptical of government regulations that justice kennedy was in swing the court. david: the affordable care act could come back. greg: democrats if i do make that a big issues that you still have the five votes that voted to a poll obamacare in 2012, that might not shift right away and this may not be president trump last appointment either. we will talk to you throughout the day in the evening as well, greg stohr. alix: i want to share some headlines with you. ecb members begin in zürich, he has a couple of interesting things to say about trade. it basically says first of all the deflation is over, that

end of deflation, fear of deflation is over any says in addition to a trade war, you might see a currency war and it's now -- not possible to give trade war impact forecasts right now. saying we could actually see an fx war, that's a different conversation. this illustrates until now, no one knows how the markets don't know, companies don't know, nobody knows where this is all headed. alix: same thing could be said for brexit because may have a is barely budging on legal turmoil all over brexit. more on that next and what it means for investments. this is bloomberg. ♪ retail.

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

near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. alix: this is "bloomberg daybreak," i'm alix steel. it's a buy stocks sell bonds sell the dollar kind of story. s&p futures up by nine points, the ftse 100 up .3% despite the

fact you are also seeing cable get a nice boost as well. as uncertainty over theresa may's, david davis remind -- resigns. no one knows what that means for you negotiations and you can see that reflected in the cable rate is which of the board you can check it out there. 133 is how we print on cable, 117.uro-dollar, we broke above some key resistance levels, so how much more upside is there? we're steeper, 21 basis points for the 210 heading 27 last week and you talk about flatter curve, when my the fed get worried about that? you about industrials and energy leading the way, but will that continue particular with the trade uncertainties? it's really good to be back. i was in boston last week i'm still recovering from the boston pops fireworks spectacular on july 4 and you see the end of the show.

david: and dylan in your arms, that's pretty late it night for dylan. up till 12:00.d she was ok though, she made it through. she wasn't scared of the fireworks. i try to get a talk on camera but she buried her head in my neck instead. david: her time will come on camera. it was a wonderful spectacular. it was wonderful what you did there. it was a different vibe with all the trauma going on in d.c., particularly when it comes to immigration, everything felt a little different this year when he talked about it and the songs felt a little heavier but it was still a lot of fun. david: the weather held out for you. alix: it was the hottest i've never been in my entire life. it was 130 degrees if you are next to the lights. they took an external temperature, that is some serious hot. david: it didn't show, you

looked great. let's get an update on what's making headlines besides the boston pops, and is here with first word news. too of a daring rescue in thailand. reports that a fifth member of the youth soccer team trapped in a cave has been brought out quickly. crews had to replenish air tanks along the route before resuming operations. seven players and their coach are still in the cave. a murder investigation is open and the poisoning death of a woman exposed to a nerve agent, don sturgis tied yesterday and police say she was most likely exposed to residue from a military great nerve agent used in a march attack on former russian spy. british prime minister theresa may's governments as an plunged into another crisis over her plans for a soft brexit after a key minister resigned. today, she named a new chief brexit negotiator, a former housing minister who campaigned

for brexit. he is replacing david davis, who quit along with his deputy and he set her brexit plans for the you kae inoue coaching position. -- the u.k. in a weak position. global news, 24 hours a day, on-air, online at tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i know chandra. this is bloomberg. david: brexit drama is having a real effect on financial services firm. investment in european banks is up. reporting from westminster. there's a lot of drama going on. in a nutshell, is a moving in a direction that might help the financial services industries because maybe it's moving towards a softer brexit? nejra: judging by the reaction in the pound, which had its highest in almost a month where i think we hit in 133 handle at some point in the session, you

would think that the markets are interpreting this is perhaps the moreheading for a slightly softer brexit and also perhaps interpreting the fact that theresa may might be safe in her position for now. we've got that double resignation last night of david davis and his deputy, the brexit secretary has now been replaced by dominic rob -- raab, a relatively inexperienced minister. from what i'm hearing from people i have been speaking to hear today, it seems that perhaps his appointment does not change too much in terms of the checkers plan we had over the weekend. a number of business lobby groups have come out in support of the plan. and there would be a frictionless border in terms of trade in goods, but services would be dealt with separately. this is something that could perhaps be a little bit of a point of contention when the u.k. starts negotiating again

with the eu, because the eu has staying in thet single market means staying in a single market for both good and services. david: bloomberg's nejra cehic reporting from westminster. joining us is shot john shahab jalinoos and lindsey bell. is may need to see first try to sell the new policy to the conservative and others and get through that phase and see there isn't really going to be an attempt to bring down the government at this point. once we have some more clarity on that, you will see the pound strengthened. alix: we do have a lot of short positions in the market and inside the bloomberg you can see, this is not positioning for sterling, you can see that shorts, the blue bars and white

lines is where we are for the pound spot. what kind of snapback may we see and what kind of levels are you looking at if this winds up progressing and they get through the white paper later on this week? mr. jalinoos: eurosterling is a pure way of looking at the pound. i think it's a very foreign level if we get to that level and push below that, think that will be in new territory. while because there will be for the next couple of weeks, and attempt to bring down the government looming in the background. once we see that's not really going to happen, i think you will see that move. alix: who is going to ever want that job? you may not like theresa may but you need someone there who is not you. lindsey bell, how you wind up looking u.k. assets right now? ms. bell: we see in europe in general the political stance the concerned there really is an issue.

because of that, while valuations look pretty good and right now earnings growth is expected to be pretty decent, 8.5 percent of 2019 versus 10% s&p 500, we are more cautious we do recommend our clients overweight domestic equities. what's the next key thing you are looking for once we get past this? mr. jalinoos: that's going to be the bank of england. in august the bank agreement has another meeting of the market is beginning to think about the possibility of a rate hike. it gets very important, because despite all this noise, clearly it's not performing to badly if they are still considering a rate hike at this point in time. once that becomes the center of focus for the market and the politics died down a bit, i think the pound gets back from that as well. do withe doctor has to the dollar which leads me to what to expect in earnings season. for the dollar perspective, have with the doubt -- have we peaked out? mr. jalinoos: all bets are open

still, but near-term think we have probably peaked out for now, there are couple of things that changed, firstly, china appears to have given many that mayo the market be the 6th avenue level in dollar ch was enough for now. i think the fact that the dollar china's stabilizing is important. you've also seen the mexican and somee quite well of the key currencies the market was concerned about an outperforming the relatively stable fashion. you also have the end of the summer coming up and the european summer holidays. time when volatility and the effects markets subside and the kerry currencies do well and that's good for emerging markets as well. when you put these things together, it suggests that the dollar may have had a local peak for now. david: let's talk about equities as we go into earnings season. earnings,nly get the we understand this projection is like a 20% increase also there will be the earnings calls and

how much could talk about trade and concerns about trade, hesitancy actually dampen some of the uptick for equities? ms. bell: that's goingms. bell: to be the number one question for equity analyst in general, what is trades impact on earnings? we just got the $34 billion in tariffs on china put into place on friday, and so far we have seen earnings forecast by ceos and cfos do pretty well. they eventually moved of the most that we've seen in several quarters now. theink that because of uncertainty, $34 billion doesn't have a huge impact on the economy here in the u.s., but we do have the wherewithal to withstand that. i think it's one of the number one question because this trade really escalates comments going to be a problem. directit's not a offensive, his decisions are being made, whether it's capital investment and where to put plans, whether to invest in higher, we may get some sense

our ceos just backing off? ms. bell: i want a look at the capital its manager outlook for all of these companies because that's where the goods are going to be. ceo confidence for the second quarter came out about a month ago and it was still very confident. it came down slightly from the first quarter, but they still expend oning to capital expenditures like i mentioned earlier. forbeen up 40% on average the last three quarters and we need investment to continue driving this economy, the tax and jobs cut act really gave these companies dry powder to use generally invest in their businesses but also do some hiring and that stops and goes into buybacks, it's going to be a problem for the u.s. economy. shahab jalinoos and lindsey bell, they can. we take a look at the flow bankers -- the flow bankers

moving into the biotech market. this is bloomberg. ♪

emma: i am emma chandra here in the enterprise green room. carter phillips, former u.s. supreme court clerk. this is bloomberg. now to your bloomberg business flash. the final straw for starbucks on the world's largest coffee shop chain says by 2020, it will eliminate all signal use plastic straws, starbucks uses more than one billion plastic straws each year and will replace them with alternative material ones and recyclables throw us lives.

the long struggling recorded music industry could be making a comeback, china's tencent plans to spin off its online music business analyst shares in the u.s. those services have bought to an industry that seem plagued by piracy. the rolling stones are proving that time is still on their side , the stones of signed what's called an unprecedented deal with universal music group, universal will continue to distribute the bands music catalogs and the company also will handle brand management and merchandising rights. that's your bloomberg business flash. david: we turn now to wall street, recover three things that wall street is buzzing about this morning. first, banking on biotech. citiers leave goldman and c bankers lead goldman and

iti for biotech. in xiaomi may be in troubled water on day one is a public company. kelly,oining us is jason good to see you. i don't understand this banker biotech thing. you go to biotech in hong kong, why? jason: it's owing to a change in the rules on hong kong stock exchange which is more liberal allowing him profitable companies to go public. there's a lot more opportunities to get in on the ground floor and to use your expertise as a banker to take a biotech company public and if you do it all right, make a lot of money. the unfortunate parallel here as you might appreciate is the.com dot come boom. there's a roster of people jumping from big-name banks to biotech stocks. you're not going to get

the huge payouts you would have 10 years ago so let's go find it somewhere else. great point. the ridges are not what they used to be in investment banking, you still see people going to private equity, maybe a little less so to hedge funds, but there often is this lower from wall street to getting into a company and saying that i be the cfo? you think about anthony noto who went over to twitter and now is doing his own job. david: it's better to be an owner than an employee. story also involves theman and that is aftermath of the stress test. we'll paid a lot of attention to but i tend to be attention of what the consequences could make for any big deal goldman stanley might make. as a piece on the bloomberg and the kagan may curtail their appetite. then: not surprising one of most read stories this morning

in the bloomberg in part because it has goldman and dealmaking in the headline. that's easy right there. but this really speaks to his exactly what you said, that there was some talk about a big deal either by goldman or morgan stanley to expand a little bit, there were some hints dropped on the analyst call with the cfo mike mayo prompted them to at least not rule out the possibility of a big deal. but as you say, the stress tests last week put that all under a little more scrutiny because morgan stanley and goldman really just eat by in terms of their capital requirements. it puts a different spin on what we heard at the time which was lloyd blankfein wanted to go back for reducing your mouth was off in your stress test. i thought it was about giving money back to shareholders, maybe was about something bigger. be.n: it could part of this is the balance the regulars are forcing these big things to strike close financial crisis of having enough money on

it comes down to having enough money available in the event of a big, big crisis again. they have to be more conservative with their balance sheet and they have to balance their ability to pay off dividends to shareholders versus using that capital for acquisitions. aix: let's talk about with lack of payoff when it comes to xiaomi. the biggest ipo in hong kong in two years, total data. if you are on underwriter, what do you do today, what are you thinking today? you shed a tear, you are currently a lot of calls from relatively upset clients and in this case, really talking ,bout folks who got in earlier preferred shareholders who are now converting to common shares and it looks like a pretty nice data or delta i should say, given the price they are at and midrange of the ipo.

it just speaks to the lack of appetites for this ipo apparently. david: timing is every thing when it comes to ipo's i wonder if it really does not help the trade talk in the war going on from the s&p in china. jason: clearly that is the biggest headwind for the ipo. you see china ipo, it will be interesting to see related to that what happens with this tencent music ipo that's going to happen in the united states. a lot to look at. alix: bloomberg's jason kelly. just pull the ipo, you have to wonder if that was that trade. how often does ipo's get pulled? alix: true. also they wouldn't have a lot of confidence in the market, etc.

have a serious hundreds maybe had an issue with that or whatever the case may be. i wonder if going forward you are going to see companies be a more tentative about wanting to ipo when there is the overarching geopolitical landscape. and when this and a lot of capital available for venture capital and otherwise. we will see. up, amazon's stock price might look expensive, many analysts say it is still surprising the cheap. more on that, next. out tv , watches online, click on charts and graphics and interact with us directly. go straight to tv under terminal and scroll to the sides. this is bloomberg. ♪

alix: amazon shares are up 47% this year, matt winkler says in a new bloomberg opinion column, amazon could be viewed as a value stock. to understand why amazon remains a bargain means of balancing the

commitment to create efficiency for consumers are spending more money on more works in progress than anyone. amazon's market capitalization just became greater than the combined worth of the leading companies in six different industries wears a competitor and matt winkler joins us now. the thesis of amazon as a value stock. if we go back to 97, the principal editor was barnes & noble for books. within a year, amazon overtook barnes & noble in market capitalization. unthinkable at the time. by 2015, amazon at overtaken walmart in market capitalization. here we are today, just a month ago, amazon overtook every one of the five companies or five

industries and has competed against to become a growth in all of them combined. it's netflix, ups, all that amazonpanies has become a competitor in and has overtaken the leader. that's the whole history of amazon that is one of persistent innovation and persistent attempt to enter a business that if things that can improve customer efficiency and it's doing this ever since it began as a company. that's why the value of amazon keeps going up. because it's actually underappreciated that amazon tomorrow is going to be a different company than it is today. david: there's no question there's value in amazon, it is valuable. the question is a value stock.

those mustards -- those measures, it prices through the roof. it's not a bargain. david: it actually is a question if you define a value stock that is consistently underappreciated, the definition of a value stock does break the mold. no question about it. if you look at why do analysts so persistently and want to keep , the compiled i bloomberg recommendations, that's the reason. is because with a is the is a company that tomorrow is going to be in a business it isn't in today. and it's going to become a leader in that business. alix: that's not like value guessing? you don't know what company next

they are going to have to tack onto that chart. one of our favorite tests for interns of bloomberg as we give them all kinds of financial arithmetic to do and permutations and one of them is companies that spend the most on r&d. and the one that fooled thatbody all the time is amazon spends more and r&d. the many of the company. you test for interns, didn't know that. matt winkler, i don't want to do that test. up, isaac boltansky and why things deteriorate in the near term. this is bloomberg. ♪

alix david davis quits the u.k. government: protesting the

government exit. no trade panic. no trade news is good news. morgan stanley's mike wilson starts to get defensive. earnings take the best hawks. big banks reporting on friday. can financials get a boost while companies still have pricing power? happy monday. i'm alix steel. my colleague david westin ditches me to go to d.c.. david: when the supreme court calls i answer. i love that institutions on down here for the president possibly announcement. this is what you need to know. four candidates. they have done full rollout plans for all watch wrote so they have the whole thing including a strategy for each of

these candidates. alix: for markets perspective, social a lot about more issues. from a market perspective how can one start thinking about this? david: i think this is underappreciated. one of the things the president is focused on is the growth agenda. andhinks de-regulation cutting back on the power of regulatory agencies to do things without his ok. it's i might go to bed but definitely stay and watch that special at 9:00 p.m. futures are up about 12 points. cable, a lot of uncertainty surrounding threesome may cost government. a softer brings it an agreement reached within the government despite david davis resigning. the 210 spread a little steeper 29 basis points did hit at 27 last week but the fed continues to be unconcerned.

crew down by 3/10 of 1%. energy earnings supposed to lead the way. can they with a stronger dollar? david: it's time for the morning brief. pretty busy week. on wednesday the president heads to the rustles. -- heads to brussels. get theday we will latest u.s. inflation numbers when the government releases cti for the month of june. this week start earning season and we have jpmorgan city announcing earnings on friday and we find out how well they did in the second quarter. the federal reserve will be submitting a semiannual report on monetary policy to congress as well. british prime minister theresa may continues to struggle with her brings a plan. note in her head she got her cabinet to agree on her approach than her brings it minister decided up and quit on principle. kitty donaldson joined by john redwood a programs

it member of parliament. kitty: welcome to westminster. david davis quit last night before midnight and all hell has kicked loose. we are joined by john redwood who is a pro brags it lawmakers. what is the mood in the party -- a pro brexit lawmaker. what is the mood with the party? john: a large number of members of parliament don't think the script is right. they say they want to and freedom of movement. get rid of the powers of the european court of justice take back control of our laws. some of the details contradict all of that. we are saying redraft it and have a policy that really works. i think the way to negotiate is to say to the european union we be happy to give you easy access to our markets in return for the

same to yours. here's a comprehensive free trade agreement we drafted earlier would you like that or not? if not, let's just leave. -- kitty: one of the charges of renegotiation and what does that mean for the prime minister? john: we are asking the prime minister to think again. i think the european union last the prime minister to think again because the yuan is not rushing to say that checkered statement answers our prayers. they want to shove it in the other direction make brings it more difficult so it has to be rejigged. david: thank you so much, kitty. that is john redwood and kitty donaldson reporting. alix: that is the political reaction how about the investor reaction? monitoring their reaction to exit news. has entered detail. very important in that job.

having worked with him in the housing department i've seen that firsthand. equally importantly, he's a sincere and logs set -- long-standing brexiteer. >> the soft brexit option seems to be the most likely. politicians will run up against the reality that hard brings it is a catastrophe. >> collective responsibility on the cabinet. she's allowed more to play but now the games are over and you have to stick to the government line. alix: joining me now is david sowerby joining the onset. cap, i want to get your take. how much upside is for sterling right now? it: sterling has not got that much upside independent of euro. willie look at the pound against the dollar i think that reflects sterling against -- the europe

euro is up for tenths of percent against the dollar. that is a better indication of what it is doing independently. good news at the margin. twice as mucheact to any good news that comes along because sentiments so negative. in euro sterling terms which is probably what matters this is worth a miniscule amount. euro gets a big lift makes it up through 118.5 silicates news on its own 135 is unlikely we are not going to go too far sterling against the dollar. alix: from another perspective which narrative do you see? but this is a softer scenario or theresa may might lose her seat? david: probably a softer exit but take a step back and say two

years ago the brits decided they wanted to control their own destiny. they did not want someone in brussels telling them how to run their own economy and to the extent that they continue to pursue free market reforms, capitalism, the u.k. consistently ranks in the top 10 in economic freedom. it says this is a country you want to be investing in for the long-term because of what they chose to do to create their own path to prosperity. i think in that backdrop amid all the political turmoil you will get buying opportunities in u.k. stock. david: the thing that i do not understand is the issue of time. whether holed up in parliament we do not know what the eu response will be. as we get closer to october for effective deadline to get everything ratified doesn't the odds of a hard brexit go up? kit: they can although she has

support to push that. i think if the u.k. is pushing for a soft brexit from the leadership i think the willingness of the european union to extend and push on for another two years to sort the final details out -- in a sense we're moving toward the extreme outcomes. in some sense not leaving at all. hard brexit got more likely this morning. me ifrket reaction tells the market has to flip which of those relatively unlikely outcomes is the one wants to focus on? it's looking at the world as being a glass half full not half empty this morning. westin: given all of that uncertainty about where we will going and where we will get there what is a total about europe? do you stay out of the u.k. but

stay in europe? david: if it is trying to get country specific i think the u.k. represents value. i think the northern states in europe represent value. in lois come down to a single security selection. globally?they selling i think if they are still a company that represents value, europe can be positioned in your portfolio to be a buyer along with some of those mistrusted em stocks. within your stock portfolio it's about four dollars in u.s. stocks one dollar in non-us stocks at that time. alix: how much risk premium do you think is currently still in the cable rate for example? how much would need to be priced in over medium-term?

kit: if we decided not to do brexit i would expect to get back to 150. i would expect us to do exit and that is the problem. room fors you there is the pound to stay around this level even if the euro would rally. tore is room for the pound gain against the euro if you see more european uncertainty. a few percentage points of upside from shifting the balance brexit toward softer being something the government is pushing for. if we start off by saying where should sterling be if we did not do this at all, 150. alix: always good to catch up with you. 150 we could go out. david sowerby will be sticking with us. as trademarkets rally sears take a break for now. with compassss

point director of policy research. this is bloomberg. ♪

emma: investors in hong kong biggest coming-out party industrial years. selling their publicly traded debut. escalating trade may be one reason. thestock will be added to competent index july 23. the japanese automaker admitted admissions -- during car inspections this year. halted registration/director the

government said it inspection process was faulty. shares of groupon are surging in premarket trading. reported over the weekend that the company has been looking for a potential buyer for the past month. groupon was valued at about $16 billion when it went public in 2011. now valued at just about $2.5 billion. westin: president trump followed up on his chinese tariffs on $36 billion worth of goods last friday by saying over the weekend that he may end up putting tariffs on all chinese goods, all 500 billion. a chart shows bilateral trade. the blue line is u.s. importing things from china. the redline across the middle is 250 billion which is about half the total of imports from china. joining us now in washington is isaac boltansky, director policy research, david sowerby is still with us.

i've put this chart up to trade is. how big the the president says we may go the whole 500 billion. isaac: i don't think that is realistic. we are in a moment where the president is demonstrating his long-term and long-held view that relative strength and leverage are important in any negotiation. so what we have is the president enjoying strong economic fundamentals in the u.s. which means there is no near-term catalyst to force his hand on these trade negotiations. david: he put something in the bank with tax cuts. he has momentum going his way he can afford to use. i want to illustrate what the tension is in china. a chart here that shows u.s. gdp blue, china and read and it

demonstrate -- china in red and it demonstrates -- there are real meaningful issues here and this is not pure rhetoric whether it is intellectual property or the growth of chinese gdp or the liberalization of investment in mainland china these are real issues in the hope at this point is that all of this rancor and these headlines will deliver meeting will -- deliver meaningful reforms. alix: there are two schools of thought. by into a weakness for a stronger second on exporters. the other side comes from scott mine in. he tweeted that markets are crazy to ignore the risks and consequences of a trade war. nowstors should sell speculators may do better in august. isaac: it is never a binary event. i would agree with the latter. what started off as a couple of

kids shoving on a playground has a chance to turn into an outright brawl. that is what this is becoming with trade. good luck counting the numbers but i think you have about $150 billion between what the u.s. has announced and retaliatory terms throw in that with higher prices at the gas pump them we were a year ago and we are probably diluted half of the good positive effects of the tax cut and it only has the potential to go higher. i think that is a risk to the market in 2018. ?lix: do you get more defensive do you go to cash or pick a spot? isaac: i don't think you go to cash. having more than your normal amount of cash in total portfolios is probably a good thing. if you look at the proverbial trade the domestic producers blessed -- u.s. small cap's on the back of the positives. thateration and earnings

has limitations and trade exposure. i think that is a place to go to within portfolios is just one idea. david: one of the questions, what does the president want out of this? wanted moretimately trade, not less. this president may be fine with less trade. isaac: i think the endgame is still more trade. what we've seen out of germany is important and the conversation has shifted towards a consideration towards of no tariffs. i think that is the ultimate goal. i agree with the broader point. the risk aversion is important at this phase. friday is a big day for that. ,s we move from the theoretical friday we get a real look at the big bank ceos and how that is impacting the economy and what chairman powell thinks with his

report to congress. david: great to be with you in washington. david sowerby will be staying with us. its: $.10 spinning off online music business. what this means for spotify, that is coming up next. ♪

alix: three company stories, comcast, 10 sent and health insurers expected to move off of the obamacare curveball over the weekend. david, you are in d.c. where that trauma is taking place. david: joining us now is brooke sutherland, bloomberg opinion columnist. on with theg decision coming out of the administration? brooke: the u.s. centers for medicare and medicaid service is citing a court ruling that they

need to suspend payments into this risk adjustment program and the way this works is insurers who end up with healthier less expensive groups of patients pay money into this pool that gets redistributed to those stuck with costlier patients. it's important to note the government is not paying any money here. they are saying they need to suspend these payments and it's hard not to read politics at play here. there are ways they can change this regulation in order to comply with that federal court ruling. they have done so for 2019. the fact that they are suspending these payments is throwing another curveball at health insurers who have seen a number of actions on the part of this administration to try to disrupt these health care exchanges and is just adding another element of uncertainty. is arats are saying this big issue with the supreme court nomination. comcast may be in the news big

time today because there is some talk they may counter bid against disney. brooke: the watch is on. we are keeping tabs waiting to see what they are going to do. disney made that counter bid. a higher offer. they did introduce cash into that component. they got regulatory approval which is a key advantage. the other thing to consider is that disney's offer gives a significant advantage to the murdochs leva have a cost basis in their shares and fox giving the share component will allow them to avoid a significant tax offerhere as comcast tax implies a bigger bill so comcast would have to raise its offer more in order to equal out the ultimate payday for the murdoch family. david: that is all the business. i'm interested in what's going on at sun valley were all the

people will beginning together this week. what do you think is going to happen? david: brian roberts bob geiger all together socializing together. we will see particularly if brian comes with a bid. alix: the other thing that caught our eye, 10 sent. spinning off its -- its online business serve this music service. i would not have thought they'll be something we'll be interested in. the screaming industry did not seem like it would make it for the music world. brooke: the music world has found a second act. i will note this not quite as big as the music industry was back in 1999 but you are starting to see growth. a recovery. interesting this is coming on the heels of spotify's listing which has gone fairly well. hard to judge how accurate that valuation is because spotify shares are so thinly traded there are a lot of questions about its business model. it is very dependent on the

music labels continuing to provide content and finding ways to diversify to justify that valuation. they're looking to more focused their business. their main profit drivers are onlinesaging app and gaming. this is a way for them to simple by their story. as a possibility we could see more actions like this from 10 road alix:.e it's hard to know how many businesses they actually have and how they monetize it. brooke: they are investing in things heavily like cloud computing, payments. a damper onng up their margins. at a certain point you have to wonder our investors going to see those as areas of strength or a distraction from the main profit engines. as you see 10 sent dipping its toes in the streamlining approach we've seen from a lot of u.s. conglomerates it does make you think could we see this down the road in terms of other businesses. they taken their chinese

literature public. the online reading app. this could be a trend for 10 sent. -- or 10 universal is another one we've been watching in terms of a the vendee's of listing. to some extent the timing is right. spotify is very dependent on the content from the record labels but they talk about diversifying and could they expand to their own content. now could be the time. alix: brooke sutherland. thank you very much. earnings season kicks off. this is bloomberg.

alix: this is bloomberg daybreak. happy monday. how do you trade a trade war? byity markets s&p futures up about 10 points. morgan stanley getting more

defensive under waiting tech and small caps. jpmorgan says you want to buy on the weakness. the ftse 100 up by 3/10 of 1%. part of that is you have a softer brexit scenario playing out in the u.k.. the question becomes does theresa may keep her place in the government. if you take a look at the other board you see three is how we print, 4/10 of 1%. how much more upside could you see? euro-dollar up by 3/10 of 1%. half the dollar peaks is a story into earnings season. the curve, the fed says no big deal. the 530 is at 20 basis points. bite -- 3/10e up of 1%. obviously i'm watching

commodities but i have started to see some crazy calls for crude. if you have a full iranian liket coming up the market to barrels for something and you have a real issue with supply you could see 150 on brent in the near future as you wind up having not enough supply overall in enough investment. david: you were away win at 150 call across the bloomberg. if only alex were here she would be all over this. you are watching commodities i'm watching england. i'm watching it because of wimbledon. it is still early going but it is really dramatic a number of upsets particularly on the women's side. of the 10 top-seeded women nine are out. led really by simona halep going out. williams isvenus out. quite dramatic. cilic is out on the

men's side. alix: i know you play tennis on the weekends. a lot during the summer as well. what is the highest seeded woman now? david: i forgot. number seven. the main story, it shows how competitive the game has become. be ast sure it's going to equally true on the men's side. roger federer is through and .oger nadal on the women's side it has become competitive. some american women playing really well are out. alix: if you cannot find david he is watching tennis. david: that is actually true. it is time for an update on what is making headlines designed wimbledon. emma chandra is here. emma: all eyes in england on the world cup semifinal on england. they too of a daring rescue bid

in thailand. eight members of the youth soccer team trapped in the flooded cave have been brought out safely. that would leave four players and their coach still trapped area crews are racing to finish the operation before rain raises floodwaters inside. theresa may's government being pledged into another crisis over --ns for software exit after rob is a former housing minister who campaigned for brexit replacing david davis who quit along with his deputy. and president trump is making it clear where he stands on nato before the alliance summit this weekend in brussels. the president tweeted the u.s. is spending more than any other country on nato. he says it is neither fair nor acceptable. global news 24 hours a day on air and on tic toc at twitter powered by more than 2700 journalists and analysts in more alix:20 countries.

investors turning attention away from trade tensions to focus on the upcoming earnings season. fargo.n, city and wells can financials get it boost with the curve flattening? .till with us is david sowerby thanks for sticking around. expectations for earnings season are high on sales and revenue. sowerby: 20% seems to be the number year on year. , toplineraight quarter growth probably 6% maybe a touch better. it should be the crescendo of earnings in this business cycle. alix: peak earnings? sowerby: peak profit margins that profit margins that stay high. that is the saving grace in this trade turmoil. not just profit margins but free cash flow margins are still quite healthy. companies are generating

sufficient free cash flow this market still has some legs left in it despite near-term pain. alix: if you come inside the bloomberg, earnings growth in the second quarter you are learning -- looking for potential growth after 15%. it does look to be a kind of topping out. where and how do you find companies that can sustain their margins still have growth and also represent good value? sowerby: good luck. awareactive investor be of for fully a managers who come in five you and say it's a great time to be an active investor. we do. we wired that way every morning when we get up. the empirical data says the s&p 500 on a cap weighted basis large company dominated is uninspiring and that you had better opportunity to outperform as an active investor if you pay

heed to is the company generating high free cash flow, are they cognizant of shareholder value, good allocators of capital. and if you go downstream outside of the big cap into the mid-and small cap stocks and some of the undervalued stocks i think you have potential to fare well in a market that is facing headwind. david: one of the things i find interesting, not just comparing large-cap and small-cap value versus growth. i've got a chart of my bloomberg that illustrates the point. growth is outperforming value in the s&p 500. also true in a small caps. all of them are up in the small caps as opposed to being down without you in the large caps. what accounts for that? in a small-cap sowerby: space value has done well this year because of the positive impact of the tax cuts and more sensibility on regulation. that has been positive for the

small-cap value stocks. i will say the growth value and beate, i want -- you want to leaning to the small side if you look at rolling five-year and 10 years of growth versus growth and value that valuations being able to buy stocks at 12 -- 12 to 13 times earnings is compelling. i think value is where you want to be migrating. since theback, inception of the russell value indices value out -- a lower standard deviation and as mean reversion starts to play to value that is where you want to be looking for more stocks than the price for perfection large-cap growth stocks. david: is there something of a premium because of lack of discovery as you go down the size? we pay so much attention to the s&p 500 there are some things that are not covered as much as you get down to smaller sizes.

sowerby: if you look at a stock like hamilton beach, $400 million market cap. only one analyst follows the company. we know the products, it's blenders but it goes deeper than that, high-end commercial products as well. one analyst follows the company and so often you can find value a large company spends on a smaller company usually unlocks value that is usually a good source for hunting and fishing in small-cap stocks you will always have that opportunity this year number stocks that can double in a indices makes that so much more compelling later in a business cycle than many large-cap stocks. alix: you have marathon, discover walk us through why you like these guys. sowerby: largest refiner in the united states, merger with endeavor represents the merger that can work.

what's positive with marathon besides the refining business is the retail space. speedway retail. two people operate the store the highest sales per square foot. highest margin of convenience in the gas retail space that's why marathon has been a good stock and has been since you saw the activist elliott and to the stock a couple years ago. discover, financials represent value. growing its dividend in the consumer finance space. well.ash flow is caesar came out of bankruptcy, it's the gaming stock down 10% this year with it's more in that small-cap space. they are doing share buyback, pretty good allocators of capital. that's why think it represents value. none of these are big cap names that they are much more interesting. point.hat is kind of the

you go with momentum versus individual diets. david sowerby, really great to get you one set. david: president trump's " exceptional" choice. more on how he is remaking the high court. that is next and this is bloomberg.

emma: this is bloomberg daybreak. coming up later today an exclusive interview with ie x group's cofounder and ceo. now to your business flash.

starbucks is by 2020 it will illuminate will use plastic straws. starbucks uses more than one billion plastic straws every year. --will replace them with china's tencent plans to spin off its online music business for shares in the u.s.. services have brought to an industry that has been plagued by piracy. afterhan a half-century the got together the rolling stones are proving that time is still on their side. the stones have signed what is called an unprecedented deal. universal will continue to distribute the band's music catalog. the company will handle brand management and merchandising rights and that is your bloomberg business flash.

david: president trump will be announcing his pick for the supreme court justice to succeed anthony kennedy tonight and it's narrowed down to four court of appeals judges. you can see them. greg, why don't we go through a couple that are by consensus sort of in the lead. those are thomas hardiman and brett kavanaugh. he is a pittsburgh guy, a former cabdriver, does not have some of the elite things on his resume. did not clerk for the sick in court. notre dame and georgetown. david: as opposed to ivy league. greg: did some pro bono work for immigrants and actually won and asylum case in his first trial. still has a solid conservative record on the federal appeals court it is a little of a different story and perhaps a better story for the white house to tell about the nomination. david: president trump liked him when he named gorsuch.

he talked to him and like him. greg: there was still talk that he might get the appointment. apparently he did have good rapport with the president both times. school.e is yell law big clerk with the supreme court. greg: he is a total creature of washington. he grew up in this area. he went to the same high school as neil gorsuch in maryland. he worked for ken starr during the clinton investigation back in the 1990's and worked for george w. bush and was a top aide. he's been a source of controversy. nominated for the appeals court george w. bush democrats refused to allow a vote on that nomination for three years. david: we will be talking with you throughout the day and this evening. hr who specializes in the supreme court. one of the nations most

experienced appellate lawyers. carter phillips has argued 76 cases in front of the supreme court, more than any other lawyer while in private practice . thanks for taking time off from your well-deserved vacation. really appreciate it. let's take a look from a point of view of an advocate for the spring court. how much difference does his appointment going to make? anthony kennedy was a swing justice but really on a couple of issues. on many things he voted with conservatives anyway. carter: if you are saying as an advocate for the business community i think all four of these people will be at least as strong as justice kennedy in terms of support for the issues businesses are most concerned about. i don't see them tilting in favor of class actions. i don't think any of them would want to expand big litigation, expand intellectual property antitrustexpand

protections for consumers. i think in that score you can choose any four and they would be fine. in terms of oral argument, judge -- they have all been there a long time. they work hard. that is not a knock on judge barrett. david: it is not just a question of what the supreme court decides that what cases get brought. are we seeing a shift with the trump administration as part of its deregulatory agenda to challenge more agency regulation? carter: sure. i think they're smart enough to realize they have the power to deregulate. the way the litigation is going groups injurede

by de-regulation will fight these things in the court and end up back in the supreme court. is going to fight take place in the d.c. circuit which has been significantly tilted in favor of -- by the obama administration. david: we saw the cfp be challenge that was upheld there was the nlrb. after we saw in obamacare decision a lot of talk about cutting back, really going after the very existence of some of these independent regulatory agencies are. carter: i would think judge kavanagh who seems a skeptical as anybody about undue administrative decision-making seems to be in that situation where you become too close to the situation you walk away with contempt. he has seen how the sausage gets

made. both administration and on the bench. my guess is good be the most skeptical. ofid: you seen any number supreme court appointments. through history that you have watched what would you advise the president should be taking a look at in making the decision? it's hard to know what they're going to do once they get up there. what sort of factors are most important? carter: it depends on what you are trying to accomplish. justice and i clerk stewart told us the only requirement for being a supreme court justice was to be a top 10 graduate from a top 10 law school. i don't know if that is a valid basis on deciding but that was his view of the world. if you are trying to guarantee a particular set of issues will get decided you pick somebody you believe will decide those issues. i think that is pretty

shortsighted appointment. i think you need to think about people who had as firm a record as you can establish of deciding with a judicial philosophy that tells you they will stick through for the long haul. to say you're not going to change over 30 or 40 years. everybody does. david: we saw potter stewart and how well he formed relations across the court. people who played an inside game really go out and talk to other justices. others tend to be loners. how important is that, picking who will be able to put together five votes? carter: justice brennan was the one who had this extraordinary ability to talk to people. even conservatives, and picked up the five votes he needed to get action taken.

that was based on personal interaction. it can certainly work. whether it works now in a world that seems to based on e-mail and less and less face-to-face communication, where the meetings of the justices themselves are significantly shorter than when you and i clerk is another issue. there are not those same kinds of interpersonal connections that seemed to exist even 30 years ago. david: i really do appreciate you taking the time to be with us today. and tune inips tonight for special coverage of the president's supreme court announcement. i will bring that to you live from washington at 9:00 p.m. eastern time. we will know who will will be and say it what -- and say what it might mean. alix: particularly when we're in a world where tech and

innovation is moving so much faster than the regulatory framework which it feels like sets it up for a lot of battles. at some point for the supreme court. david: there are a lot of issues the court is not addressed in this new technology oriented world. we saw that this year with the state sales tax decision. alix: trying to get our arms around what that means for a company like amazon. i really hope you can stay away for it -- stay awake for it. .his guy does not eat food i like wolfing it down at my desk. is set tomario draghi speak and mike pompeo is meeting with north korean officials. this is bloomberg. ♪

david:david: now to what we are watching we are watching a live shot of secretary of state mike pompeo speaking with the president of afghanistan in

cobble after he's been in pyongyang. it looks like a pretty rough set of meetings. the north koreans said we are not going to denuclearize that way. mike pompeo is caught between donald trump and kim jong-un. alix: it seems like when they first had that meeting it was the same sort of thing. the korean leader is saying we're going to get sanction relief right away. president trump has said no relief until we get denuclearization. it's like they were already talking on different sides. david: president trump came away saying we will see denuclearization right away. if anything it looks like it's going the other way according to remote-sensing photos we've seen. alix: i'm going to be watching the ecb president. he's going to be speaking momentarily at european parliament's committee on monetary affairs in brussels. his speech might not be that

exciting. the q and a could get interesting especially when it comes to trade. we could see a currency war. not just a trade war. it will be interesting if we get any detail on that. david: we keep waiting for them to raise rates. trade -- something like trade gets in the way. twistalso operating . what is that going to all pan out to be? i will miss you in d.c. for the rest of the day but looking forward to your special. bloomberg markets, the open is up next. this is bloomberg. ♪

>> from new york city i am alix steel. 30 minutes until the start of trading. this is the countdown to the open. ♪

up, no trade panic, markets breathe a sigh of relief as no trade news is good news. brace for the storm and -- a lull in the trade war sparking recovery in emerging markets are it developing market currencies -- markets. developing markets recording a rally. big banks reporting on friday. financials look to capitalize on pricing power and a flattening yield curve. here is howeryone we trick, you are to be buying stock or selling bonds across the board. s&p futures up. 117 after breaking through some key resistance there. selling on the backend, 285 is how we print. some auctions this week. crude for tenths of 1%. --t days