new job, fiat appoints mike manley as the new ceo and the european head of operations revised -- resigns as marchionne resigns. monetary policy at risk. the bank of japan reports changes and the boj to buy unlimited amounts of bonds. iran ire. the president and president trump trade threats. happy monday. welcome to "bloomberg daybreak." i'm alex westin. david westin -- i am alix steel. david westin is off today. the headlines suggest geopolitical and policy risk. s&p futures are off by about three points. the dollar-yen, the one to watch. down .3%. boje were reports that might deliver a policy tweak and

they had to buy an unlimited amount of five to ten-year bonds. the 2-10s wanted to be steeper, we had 30. there is an outage from the north sea strike. that is what is affecting the commodity market. time for the first take, we are by gina adams, the cheap marketing equities -- the chief market the -- chief marketing equity strategist and marty schenker. there, basisloff points rally about five. if you come in this morning and you're looking at this, you have been on vacation. you have not -- you've not been looking at tweets. is there a policy risk we have to add on? couldill say i wish i have avoided the trump tweets well on vacation but i do not

think i can. it is interesting how things have shifted. currencies over the last couple of weeks, you have seen the dollar weakened or at least lose its punch. other currencies are starting to pick up share in this is going to add to that pressure. be a shift in to the currency landscape which could feed through two other markets. this is a new world for monetary policy. europe is inching its way there and maybe the bank of japan is as well. that is different than we have been in for nine years, which we happen easy. you have to factor in a tough monetary policy climate. the balance is going to be how much do economies continue to grow where central banks continue to take away the punch bowl. i brought in the boj in

relation to the overarching political risk. that is the headline. there is also this overlay of donald trump the fed, right? offering the opinion that the fed should not be tightening at a time when they're trying to expand the economy and get the force of the tax cuts. there is that political element that is unprecedented. it is hard for people to calculate what that is going to mean. alix: what he meant to say was. our other top story was fiat. soldierarchionne it had -- had shoulder surgery. that led to a shift with mike manley becoming the ceo. i bring this up not only in terms of fiat, we're looking at risks for companies. you've got geopolitics and now a leadership change. >> investors are not pleased

with this. investors in the equity market are not pleased with unforeseen change. this is an unexpected change. of a loton the heels of risk specific to the auto industry because of trade. you have this specific company risk to add to that pressure. it remains to be seen whether this is a material shift in strategy. investors are selling now, thinking later in the short term because they're worried about that risk. we do not know what this means for the long-term strategy. alix: some of the rhetoric was they are still going to do this switch and they have to wind up dealing with jeep. mike manley has no experience when it comes to geopolitical risk of that caliber. that was the rhetoric. marchionne rescue this

company from the brink and he is a true visionary. when you have someone like that who is removed from the picture, it does raise questions whether you have the leadership you need to keep this company moving forward. our third leads us to story, the backdrop geopolitical risk iran comes in the form of geopolitical risk comes in the form of iran. trump, over the evening, tweeted, never threatened the united states or you will suffer consequences which few have suffered before. we are no longer a country which will stand for your words. your take? >> capital letters? alix: all caps. >> he thinks the rhetoric he used in north korea is going to work here.

think donald trump is interested in creating a couldct with iran which be disruptive to the oil industry. the markets are saying this is talk and not much action. oil is not moving much, equities are not come up on prices are not. the markets have taken this as an idle threat. alix: which is what the markets are starting to do. you might want to think about how you might want to react. there is no change. shows the rally happening when we saw the strike in the north sea. it is interesting to see over the last week how many different tweets have come out and how little change is made on asset prices at large. you had a tweet about monetary policy, about the dollar, all of these seem to have had immaterial affects on asset

prices. investors are defaulting to this is rhetoric, not policy. got: the recent tweets we about monetary policy, is that a response to russia? >> that is just trump. he feels this is the best way to communicate with his base. there is evidence thathe feels s right, that he solidifies his standing with those voters. he has gone back to the pressure probe -- pressure probe. he goes right back again -- russia probe. he goes right back again. schenkera adams, marty , thank you both very much. you can check out all the charts throughout the show if you go to gtv on your terminal. you can scroll through and show it on your computer. coming up, more on those surging

japanese 10 year yields, five basis points. to may be changing his tune easing monetary policy -- changing its tune to easing monetary policy. this is bloomberg. ♪

>> i am emma chandra with your bloomberg business flash. the papa john's pizza chain is trying to avoid a possible takeover by john schnatter. the board adopted a poison poll -- pill defense aimed at schnatter who quit as chairman over reports he used a racial slur. a plan would be triggered as any investor acquired 50% or more of shares without the board's approval.

asked suppliers to return what it called a meaningful amount of money for payments made in 2016. it is seeking price reductions. labor problems are starting to have an impact on ryanair. drop inine posted a 20% first-quarter profit. the discount airline also warned that sporadic walkouts from trade unions as well as air traffic control strikes are making customers hesitant to book flights. benchmark yield seeing its biggest surge in two years. you've got the yen at its strongest level in two weeks. japan is considering changes to its stimulus policy. joining me now is enda curran. thank you for staying up late with us. what happened overnight from japan? >> good morning. this shows how difficult the job is for the governor.

he has got to keep stimulating. you are causing damage to financial sector profits. were reports over the weekend that the boj was looking at ways of softening its stimulus plan. what the boys are trying to do , theys of a policy shift are looking at ways of denting the negative side effects of what they are doing. quite a bit of confusion. economistsion among was that was a signal he wants to stay on track for now. finally, the boj zeroing in on profitability. the short-term rate is anchored at zero. where the bank and moves is your profit margin. that is continued -- where the back end moves is your profit

margin. that is continuing to move. >> it is harming bank profits. it has to have some flexibility. they are still a long way away from their 2% target. he said he knew nothing about the media reports. economists described this as a trial balloon. the bigger picture for the boj is even if they do allow tweaks to offset impacts, the bigger picture is they are doubling down on hitting that target which they remain a long way from. the governor has said he will keep the stimulus going until they hit that. any shift will be a surprise. alix: thank you very much. if you take a look at the encapsulates what

we're talking about in terms of the financials. the yellow line is the u.s. financial index as you wind up having the interest paid on access reserve over the deposit rate. it was not the case in europe and in japan. joining me now is kristina hooper, invesco cheap global market strategists and gina adams do with me. -- chief global market strategist and gina adams do with me. if we do see tweaking, is that a signal for japanese equities and banks? >> it could be. let me add some complication to this is area -- to the scenario, global liquidity. we are hearing there is some kind of liquidity suck going on. there is expected to be the end of tapering. the rio jthis move by -- by the boj has uncertainty.

it could be a positive for japanese banks, japanese equities. say, what does it do to global liquidity? global alarmse raised by the bank of india's governor. -- we first heard the global alarms raised by the bank of india's governor. alix: if you have money's going out, does that money come back ?r doesn't get drained >> all banks, all financials peaked in january. are rising,rates even though we are expecting european rates to rise. maybe that is good for financials but what will the impact be on global liquidity?

what will it be on global growth prospects? we're seeing it in the u.s. financials. sales growth is critical to performance. it has been a big differentiator in performance. continue to be a differentiator in globals. what is growth going to be? even if you're going to get higher rates, if you're not making loans, seeing activity, it does not help. alix: then we have a president who wants a weaker dollar. how do you factor that in? i want to remind everybody what he said about fx manipulation. mr. talking about how china and trump talking. about how china and the e.u.

manipulating currencies, taking away our competitive edge. not a level playing field. do we need to look at this? we have a president who wants a weaker dollar. >> the question is, how much impact does this have on the fed. we know that the fed is independent. to worry about that so much as we have to worry about trade diplomacy. we're talking about tariff war's. how much trading partners can trust us and how much partners want to do business with us if you have a leader who is criticizing and calling them out. you could argue that the yuan devaluation of 2015 was a currency manipulation. what werd to argue that have seen recently is currency manipulation. it reflects expectations about chinese economic growth. alix: gina, it could be worse.

it is still 2%. that part has not changed. andonsidering the backdrop the rhetoric we have had, the currency market is benign parent it has not been -- benign. it has not been volatile. it could go there. >> you are heading in that direction. it is tweets that send it in that direction. alix: here's what president trump said about iran, in response to the president coming out saying it could be the mother of all wars. threatened the united states or you will suffer consequences. a country that will no longer take your demented words. be cautious. if that had hit 18 months ago, i would be looking at equities lower. are we buying on the downside. none of it. what does that mean?

>> the market has become immune to tweets and rhetoric. that is a problem when it comes to trade. the president means business and ,hat we see being talked about that harsh rhetoric, is turning into trade policies. alix: is it distinguishing the truth from reality difficult for investors. that has been the question, with little visibility. >> i think we have been rewarded. we have not been on the bottom line. with the waystent the markets have traded the last year or so. what happens on the top line is more meaningful. that is a reflection of sustainability. investors are concerned about the sustainability of trends. of what isy

happening in earnings seasons, investors want insurance and topline gives you insurance. you are going to continue to grab topline growth, investors are willing to pay up. this is another contributor, the tweets. if you can assure investors you're going to press forward and get growth, you're going to get rewarded. of movingre a lot parts, the tax policy is having a one-time impact on growth. and commodity volatility reflecting trade policy is having a similar impact. one thing they do want to pay for is that consistency. alix: how does that manage into your portfolio? do you get more defensive as morgan stanley is looking at? what are you thinking? >> there are a few things you can do. growthr that revenue

because that is helpful in terms of guiding portfolio strategy. stockssis on smaller cap which are likely going to be somewhat less vulnerable to trade wars. we have to look at individual stocks and be choosy and focus on topline growth. area,ocus on defensive dividend paying stocks. technology falls into that category. alix: we're going to get into technology. and christine uber of invesco will be sticking with us. coming up, fiat's dramatic switch. mike manley has taken over as ceo. we are going to discuss the

shoes he has to go. this is bloomberg. ♪

alix: a new man at the wheel of fiat chrysler. the company named mike manley as health crisis a made sergio marchionne unable to return to work. joining me now is the senior italy reporter. thank you for being here. to talk to about the legacy sergio marchionne is leaving behind. sergio marchionne took fiat as the fifth ceo in two years. the company was close to bankruptcy. he managed to revamp and got the access to chrysler thanks to a deal with barack obama and he rescued chrysler and he created the seventh biggest carmaker.

like, whenhe used to he joined the at, the company was worth about $6 billion. together arepanies worth about $80 billion. these numbers show how much value he extracted for investors. is, what wasstion his plan to extract more value? look at itsa valuation versus its peers, it is below that. will they have to make an acquisition? what parts of that plan live on? new plan was presented june 1 and it is a plan he shared with his aides including mike manley. part of the plan is spinning off the car parts unit by the end of this year. this is the way to extract value.

to boost the jeep globally, at this point analysts are saying jeep is worth more than the over $30rket cap, billion. that is why mike manley can be the right man to keep boosting value. there is another message they are giving with this appointment. if anyone would be interested in jeep, he might sit down with john but need to discuss a deal with all of fiat chrysler. alix: looking forward to any kind of management changes. alfredo altavilla has resigned early this morning. a big week for tech earnings. the heavyweights report. this is bloomberg.

alix: this is "bloomberg daybreak." i'm alix steel. feel,le bit of a risk off margins off 21 points. european stocks softer.

i want to point out what is italian sector, the auto index is down. the management shakeup at fiat not helping. in other areas, it was a weaker dollar, that story starting to reverse. exceptions is the dollar-yen, down .3%. the yen getting a boost after reports of the boj having a tweak of monetary policy. they will buy some of those bonds in an unlimited way. the dollar-yen catching everyone ,hat -- catching everyone's i upgrading their forecast for this year and next. trade tensions proliferate on twitter and at the g 20. the 2-10 spread, a little flatter.

the conversation led to that steeper curve. brent up. i'm going to wind up blaming that strike. let's get an update on what is making headlines outside. emma chandra's here. president trump has launched a broadside against iran. president trump told run on he never to threaten the u.s. again or suffer consequences. earlier, he warned the u.s. against threatening oil exports. wouldd a battle with iran be the mother of all wars. no value to decrease its exports by devalue in the yuan. president trump has accused the country of devaluing its currency. exchange rate is determined by the market.

the u.k. says the european union must help on brexit to avoid a no deal by accident. jeremy hunt heads to berlin today to warn that the e.u. must do its parts. the chief brexit negotiator said the government must step up planning for the possibility that talks with the e.u. may collapse. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm emma chandra. this is bloomberg. alix: thank you. it is a big week in earnings, particularly in tech. out of for that kicking off after the bell. onebook on wednesday, amazon thursday. joining me now is david per -- david kirkpatrick from techonomy media. still with me is kristina hooper. google after the bell. the first quarter sales growth was the strongest in almost four years.

is that sustained? >> probably. google is a beneficiary of almost everything happening in the economy. if they have issues here and there in terms of how much they are paying for traffic, they are growing in their core businesses, their new businesses. it will be in next sewing quarter. alix: they had that fine from the e.u. how does that percolate? >> it is a drop in the bucket for google. it is not in the quarter we are reporting today. it will be interesting to what management says about the impact. they will be pressed on that. the answer is, yes. all of these companies are going to be getting more pushback, more concern about privacy, google and facebook most of all. given the scale of profitability of these companies, it is not going to affect their bottom line much. alix: if you're going to see

google move more towards hardware, that is competition with apple. leavingthat wind up volatility and you have headline risk? >> it is more like amazon, google, facebook are dividing up the economy and leaving everybody else out. they may compete with each other more but they will all be doing well as they do so. that would be the way i would think of it. alix: that is a hard case to not want to buy tech. what do you think? >> tech looks good. if we look after the third quarter, it has the second highest expectations for revenue what do you think? >>growth behind energy. tech continues to power ahead. 2019 looks good for tech. it does not mean there are not

vulnerabilities. greater regulation is on the horizon. when we look at geographic revenue, technology derived more of its revenue from outside the u.s. than inside. 58% of revenues for u.s. tech companies come from outside the u.s., the highest of any sector in the s&p 500. that suggests vulnerability but no reason not to invest. alix: if you look at facebook, a close set a record high friday. there comes a point where you're not going to be able to price in any more good news. with facebook, i think the regulatory question is more of concern than google. thisthough google got fine, i would be more concerned about facebook because i do not think they've shown any ability to manage the crisis they are moving into around political manipulation and privacy. i think the company has been

action by the growth they have been continuing to see and the fact there stock shot back up after the cambridge analytica. i think the world is divided andeen wall street everybody else, which is very worried. facebook will pay for that down the road. leads me to an interesting options chart. the blue line the skew for the that has been staying low. the nasdaq skew has risen. though you like tech, do you need to hedge your bets? >> you need to be well diversified within equities. you also need to be well diversified outside equities, including enough alternatives. we could see a selloff.

i expect volatility to increase for a variety of reasons. the more diversified we are, the better off we are. alix: if you do need a position, which tech names might be more immune? are think google and amazon immune to significant bad news. they are beautifully positioned for the long-term. itebook is, if you look at without political issues, but those are real. alix: what are you expecting for amazon? >> everybody is fascinated by how much of a difference they have created out of aws. we except they have taken over retail. is getting more respect and is generating profitability, a lot of their profits are coming from that. we still talk about profit growth with amazon.

their profitability is so miniscule compared to the scale of their revenues. the fact they have profits is because of aws. that hit a record on wednesday. what is priced in? i have a 2019 expectations start showing analyst expectations and the corresponding sector has done in terms of performance. energy, industrial, those are the sectors that have that estimate change, that is that orange. sectors currently have underperformed. which one needs to rerate? argue we are likely to see real rating occur in materials and industrials because there is more uncertainty there. we do not know where these trade wars take us. they can expand as far as technology.

are seeing input costs increase, distortion to commodities markets as a result of initial tariffs that we are talking about. is, we could see a different world in a year if we continue going in the direction we are headed in. alix: that leads us to that g20 communique over the weekend. that mentioned trade. main risks are rising financial vulnerabilities, global imbalances, and weak growth. if i look at that statement, david, that does not imply technology. how does technology get wrapped up into that? >> what i was trying to say, technology exists in a world of its own. alix: can it still if the dollar continues its rally? of these companies are

positioned in terms of how people live at the center. people are going to continue being addicted to smart phones, i do not see how these companies do poorly. there will be blips and apple is interesting because they could get caught up in this trade war because of how much they build and sell in china. overall, real issues are political and other than that, i see no impediments to continue success. alix: a great look ahead for this week. so much, david kirkpatrick and kristina hooper. thank you. coming up, when $2 million is enough. that is good enough to make the cut for a wealth management client. coming up in the wall street beat.

>> this is bloomberg daybreak. i'm emma chandra. coming up in the next hour, righetti, this is bloomberg. bloomberg. righetti the largest ever deal in the semiconductor industry will be dead or done by the middle of the week. qualcomm has been waiting for almost two years for china to sign up on the purchase. shareholders have approved the deal and it will give until midnight wednesday to get it done. buy sintel agreed to

for about 3.4 billion dollars in cash. it would give access to large u.s. customers such as american express. it is based in michigan. hasbro took another hit from the collapse of toys "r" us. sales fell for the third quarter in a row. the toymaker beat estimates thanks to these -- the strength of its big brands. that is your bloomberg business flash. alix: we turn now to wall street the. -- beat. first up, the bear market. investors question the wealth manager growth plan. millions today, billions tomorrow. ubs maintains its $2 million threshold for banking clients. the tax collector comes. thinking about florida to protect tax havens. think again.

joining me now are jason kelly and peggy collins. ceo ofto start with the bear. here's what he had to say. continue to look into opportunities in growth markets. that is asia. am sure that the growth of 24 months will have acquisition opportunities in your. alix: what was the takeaway? >> they're going to be expanding and looking at m&a which is what we have seen a little bit more up in the broader asset management space and specifically in europe, i perked up. >> i think this is a growing trend in terms of buy versus build. asset managers are thinking to betterves, we had

gobble up competitors fast. competitors are saying we are open to being gobbled up. play to expand globally, to scoop up assets in a region like hong kong or europe. >> it also feels like in europe, there is going to be so much andment owing to brexit bankers and wealth management wanting to move or not wanting to move. that would seem to provide a level of volatility and a different perspective. alix: in terms of the spread, are they closer than they were a year ago? >> i think it is getting more competitive. the rates are putting pressure on people in terms of how do we continue to grow and how do we get places first?

the active versus passive trend has not hit asia or europe to the degree it has in the u.s. there is an opportunity to chase the black rocks. alix: let's talk about money. want to put a cap on how much money you make to invest in their private wealth management. we do not want to limit ourselves. that is different from what we have heard. this comes from the head of global wealth management. heard from others is that they are moving that floor up to $3 billion, $5 million. they want to have enough capacity. they haveews for ubs, a lot of capacity. they are the biggest wealth manager. it is interesting to see them want to scale. i also love the idea that $2 million can become $2 billion overnight.

i'm not sure that happens overnight. >> look at china. asia, where in there is not a lot of transparency. ubs is one of the strongest players around the world. that theyis story is were saying this is a play for offshore assets, assets that have moved out of china but eventually onshore assets. we are seeing banks and wealth managers trying to get a foothold in china with their own products. >> this banker did make an example, this is not made up. they did have a chinese, now billionaire, who is not made up, who, because of an ipo, went from a millionaire to a billionaire overnight. alix: this lease into our third story. the tax law passed

and all of the people were going to go to florida? not so fast. >> the laws are pretty strict. people thought they could get away with a little more. the feds and state officials and the irs are strict. days, you're risking an audit. >> technology has made it easy for them to grab people. this is no joke. you should cancel your gym memberships in new york if you move to florida. they track your doctor's appointments and interview your doorman. you can change your billing to your grandparent's house. which is,s a test where is the stuff you care about? is it in new york or is it at this studio in miami for tax reasons? or is it in your estate in

westchester? we have people whom in recent years. it feels like that is going to be over. was that before? now you've got to test them? >> what does a billionaire teddy bear look like? alix: are there diamonds? >> are there are there throw backs to the citizen kane with this old teddy bear who made him who he is today. alix: thanks so much, jason kelly and peggy collins. you have a radio show your joining. >> 2:00 to 5:00, with carol massar. tune in. coming up, sergio marchionne heading over the ceo and the challenges facing mike manley as ceo. this is bloomberg.

chrysler saw a

assets expanded more than 10 fold under sergio marchionne. -- be a chrysler -- fiat chrysler saw assets expand more than 10 fold under sergio marchionne. as marchionne tried and failed to do with gm. chris bryant joins us now from london. what would be the logical merger that would move the story along without marchionne? >> it is an interesting question. the partner in his eyes is gm. there are plenty of other companies who might find fiat's assets interesting. a strong franchise in the united states with jeep and ram which companies in europe might find interesting. that a buyer in china might one day approach.

to doanley does not have a deal. the company is better these days than it was when marchionne took over. project aing he will message of steady as she goes. alix: what about management supporting mike manley? of mike an outlay someone- we heard resigned this morning. what could the challenges be? when there are several names to take over, bloomberg reports that the european chief is on the way out. mike manley, they have somebody who is leading the biggest cash contributor. he was a logical choice. will be doing its utmost to make sure other top management stay on. through thes

detriment to ferrari of sergio marchionne no longer being part of that company? it looks like we have an audio issue. we're going to work on getting chris back. marchionne was going to retire anyways next year. investors thought he would be leading for marie until at least 2021. -- would be leading ferrari until at least 2021. lewis is going to lead the ferrari brand. kind oft the same industry experience we would have expected coming from sergio marchionne. a story will be following throughout the next few hours. in the markets, we're looking at a risk off day as the markets

digest idiosyncratic risk but also monetary policy and trump geopolitical issues. dow jones futures off the lows of the sessions. italian equities down .4% and part of that is the auto story. in other asset classes, the dollar-yen the one to watch, the boj tweaks this policy, what does that mean? n grinding its way higher as the curve here in the u.s. flattens. two, down and back up.

our phones are more than just phones. they are pocket sized personal trainers... last minute gift finders... siri: destination ahead. and discoverers of new places. it's the internet in your hand. that's why xfinity mobile can be included with xfinity internet. which could save you hunreds of dollars a year.

plus get $150 when you bring in your own phone. its a new kind of network designed to save you money. click, call or visit a store today. >> a new job.

, and sergioof fiat marchionne faces a health crisis days before earnings. and the doj forced to buy unlimited amount of bonds. you ready for the biggest globals week, while growth, trade risks and monetary policy bubble up in the background. happy monday. you made it. i'm alix steel. in the markets on the margin risk off, slipping into positive territory well off the lows of the day. continuing the steepness from thursday. crude up over 1%. sea is more of a north

strike issue. versustical risk of iran president trump percolating in the background. morning brief. existing home sales data for july after the permits badly miss. president trump speaking at the made in america product showcase at the white house. after the bell, google will report earnings. then they live up to first-quarter sales, after they were the highest in four years? >> president trump has launched andw broadside against iran president rouhani. he told rouhani to never threaten the u.s. rouhani warned the u.s. against threatening the nation's oil exports. iranid in the battle with will be the mother of all wars.

president trump has accused beijing of manipulating the currency. the chinese foreign ministry insists the exchange rate is determined by the market. the president-elect of mexico wants president trump to reach a deal on nafta. afterte to the president mr. trump he may prioritize a trade deal only with mexico. the u.s. mexico and canada have failed to rewrite nafta after a year of talks. this is bloomberg. alix: a new man at the wheel of fiat chrysler but the company named matt malia as its new ceo. welch. me now is david good to see you. walk me through what he can bring to fiat.

manley has been with the company since 2000. jeep has been extremely successful. it makes a lot of money. &a deal,had done an m probably every car company would want to get it cheap. well with thee products out there pretty nifty they are on the head in terms of what the market wants. really writing the suv wave. the branding is consistent. ,hen you look at fiat chrysler sergio marchionne was trying to merge it with gm. looking for a deal. he said companies of that size needed a partner. was toos going forward

much money. in april they said jeep is doing well. we don't need a partner. instead of a cfo, richard palmer -- instead of picking them, they picked mark manley. they wanted somebody more in the marketing product and operations side of the business. this is 48 hours before the company will report earnings with this overarching theme of global geopolitical risk. alix: what are we going to expect with a look forward from manly? sergio was set to retire next year from manly is is going to- manley say sergio has a plan and i'm going to execute that plan.

i do wonder if he is going to tell us about what they are going to do with management. the guy never stopped working. ley going to run that way? they may not have answers to that but his message is going to be here is how we bid. we are going to stick to sergio's plan, or who -- here is a new plan. he is going to have to show there is stability. even though people knew sergio was going to retire shares are still looking down in the wake of this news. alix: much faster than anyone expected. good to see you. earnings season upon us. the anticipated growth rate holding true. 86 companies reporting. by the end of this week earnings

season will be halfway over. we would hear from 170 says of companies.&p thank you for coming. good to see you. walk me through the beads and mrs.. what does that tell us about this busy week? thehe beats have been off chart. a 90% beat rate. the beats have not been that fantastic. beats onto look at the the revenue side. 50% of the companies have beats on the top line number. those companies have relatively been rewarded by the market. when you look at the companies withhave missed, companies company specific problems. ge and baker hughes. wells fargo. they are not been hurt by a broader systemic issue.

this is what investors are looking for. are the problems affecting these companies specific to management or something broader? alix: which leads us to the visibility. we are looking for the most growth next year. all the sectors exposed to trade. that is why the stocks of underperformed. what are you expecting? >> analyst ratings are not -- estimates are not going down. you have to take energy out of mix.ext -- out of the look at retail. when you look at the second tier indexes the retailing sector is the best so far in terms of stock performance and one of the strongest sectors of s&p in terms of earnings expectations

and revenue growth expectation. even those numbers holding into q4 and 2019. that tells you a little bit about how analysts are viewing broader issues in which companies are going to be affected by it. alix: great point. thank you very much. the men of the week. no doubt that is going to be the strongermark, what a dollar may mean for certain companies. this is the dollar index. we have not been able to break above that. , managing now director for tcw. , does the dollar breakout? >> trump did it best to make sure it didn't breakout. the only big piece of economic data they would get be the first

look at the second quarter gdp. this could be the peak growth for the cycle. maybe a little above 4%. alix: we will get that reading on friday. the backdrop is where we will see the cloud. if they did not mention it in march but over the weekend the committee case said trade risks , inequality and structurally weaker growth. is the what conversation? >> we won't speak directly to earnings but i would say as we , the g20undamentals communiqué does a good job of summarizing the huge headwinds the u.s. economy faces and the global economy faces. the president can't have it both ways. bloomberga great

opinion piece we passed around that you're going to have tax , get astrong economy strong dollar and divergent central bank policy from the rest of the world. europe, japan are in a situation where they are a long way from raising rates. they talk about it but it is talk about talking about it at this point. alix: is -- what is the fair balance there? markets hard to call tops and bottoms. we like to play the cycle over time. we have been adding duration to our portfolios. we think we are approaching that terminal rate. we saw a spike with the president beginning to jawbone the fed. those are buying opportunities in this marketplace. economy, wer global

live in a first derivative world. things are going to begin to turn in the other direction. alix: short dollar, hold dollar? >> the treasury secretary told us don't believe your lying eyes. he said trump did not mean to .nterfere with the fed that he didn't mean to talk the dollar down. the market is trying to digest this news knowing another shoot good drop. alix: what he really meant to say was. >> [indiscernible] [laughter] alix: both of them are sticking with me. japan's best mark 10 year yield seeing a surge after the doj offer to buy an unlimited amount of bonds. more on that next. this is bloomberg. ♪

alix: and not a quiet monday if the doj hasn't been to say about it. the bank of japan coming in and bonds.a five-year also with me here is mark chandler of brown brothers, mark, you are the fx guy question mark what happened overnight? before the weekend. after markets closed there was reporting japanese may change how it is targeting policy breed if it would lift the yield per the target is zero plus or -10

basis points. we were up above 10 basis points. what was your interpretation? >> and economics you can set the price or the quantity of something. they are buying all of it. our interpretation is they are trying to step away from that position of buying it all but it is going to be very challenging for them to actually do this. it will be challenging for the ecb to unwind their policies. alix: you had all of the money coming out of japan. if you have an indication of higher yields, is that a stronger yen story? >> 10 basis points, u.s. yielded

to 90. market inink -- the packs things. the asian stock market did a rally. at the end of the day i think what is driving this is the doj is trying to wrestle with two .olicies the japanese have quietly reduce the number of bonds they are buying but are able to maintain this target. alix: that brings us the broader fx manipulation. what did you make over the weekend? we have mnuchin in when a saris. he said this is not the president trying to intervene in the currency markets. the dollar is not a concern of mine. this is a response to a series of tweets. what he meant to say was.

to walk back a little bit from what the president was saying but at the same time none of this matters in the long term. what is quite to set the difference is economic growth rates and interest rate differentials. ,nterest rate differentials five basis points. phone calls and footlockers. there is nothing here to what the japanese are doing in terms of tightening. howls resolve is going to be that much stronger coming off of these statements to continue his tightening. it is going to lead to dollar strength and more divergence in the foreign currency world and shortages of dollars around the world. we are seeing that already. you're going to see accidents begin to happen. there happening with the chinese insurance companies.

>> the focus on what mnuchin did back off of, china. the weakest currency so far this month. mnuchin suggests maybe the chinese are doing this purposefully. i am not convinced of that. i think market forces alone are driving the dollar higher. it gives the -- against the euro , do we need a separate explanation to see why the dollar is rising against chinese currency? china's allowing market forces to move their currency. the pboc is easing policy. the most in several months. of cross the currency is going to weekend. the fixing of it, they built an eight day streak. alix: it could be worse. we are still somewhat contained.

you were smiling. alexa gets back to this notion of being able to set the quantity of something or the price of something. there is manipulation print china's currency is going to move in the direction of their interest rate differentials. their growth is slowing u.s. growth is reaching peak growth. our interest rates are going out. most estimates say fundamentally for-6%nese currency is overvalued. it is going to come down over time. take a look at ecb versus the fed. points.s you know? how is that question for you? >> it is obvious the central banks have gone through an period.ented

alix: when does that top out? what's it is topping out as we're speaking. our message is you want to add u.s. duration here. we are pushing the cycle. we will see >> develop in u.s. growth. all these things that are perfect, they will look considerably worse. there will be more accidents going on, the central bank is withdrawing dollars, withdrawing liquidity from the marketplace. i think that is going to take longer in europe and other places, see you will see the dollar diverge from these other spots in the world. alix: thank you very much. it was great to catch up with you. cooperman, hen said he plans to convert into a

family office at year-end. this is bloomberg. ♪

plansleon cooper said he to start his own mag advisers into a family office at year end. he said this is a personal want to driven by how i spend my remaining years. chandler. now, mark you have the letter. >> i do have the letter. add color to this, this is in part something lee cooper has been thinking about prompted by a caning -- kenny rogers constant. it kenny rogers is having trouble getting around. , he is doing this

because he is been divorced four times and needs the money, according to kenny rogers. i've got the money. i know when to fold them. alix: pretty amazing comparison. of phrase.at turn this is a giant of the industry for sure. who is an important voice in investment circles. >> i fully agree. this is a generational turn we are saying. politics, as well as business. isx: do we think there nothing else fundamental around this? why now? there has to be something else that will prompt something like this. >> he says no. keep in mind he did settle with the sec. there was an insider trading case. 4.9 million dollars. notably they did not suspend him from trading or doing business.

he was able to get right back into it. hewas most worried of things saw as his legacy at that point. he wants to go out on top, it feels like. soros, weabout george are at this generational pivot in the hedge fund world. you have a birthday today. >> i'm happily married and in good health. i'm not quite ready to fold my cards. ulie: -- alix: good stuff. when you have the people in the industry to have to step back, if they want to or if they are forced out, goldman sachs, desk, thatstrategy changes how you are able to

translate market dysfunction or risk. >> it is hard to think about what you have to go through now. have six or $7 trillion of negative yielding bonds. ,he other mind blowing thing despite the fed interest rate hikes we are looking at -10 year bond yields. despite being out of -- being in the report of very -- recovery for so long. jasonthank you so much kelly and mark chandler, sticking with me. this is bloomberg. ♪

alix: this is bloomberg daybreak. happy monday. the s&p flipping into positive territory. european stocks making up those losses. the italian index off by half a

percent. onopean automakers weighing equities. the dollar-yen is the currency pair to watch. the yen getting a bid after potential reports of a tweaksation they may their monetary policy. morgan stanley saying trade tensions are going to escalate. volatility will rise. that also percolating in the market. crude up byer but 9%. ranmight want to blame i and president trump it could be because of a strike. take it with a grain of salt. now an update on headlines in the business world. alix: president trump a warning for iran's president. never threaten the u.s. again. i ranesident promised

would to suffer consequences the likes few have suffered before. he warned the u.s. against andatening the oil exports said any battle with a rental be the mother of and said any battle with a rental be the mother of all wars. two people in toronto were killed when a gunman shot 14 people. too early to say whether it was terror related. it took place in toronto's greektown neighborhood. must helpropean union on brexit. over the weekend the u k's chief brexit negotiator said the government must step up planning for the possibility talks may collapse. day onnews 24 hours a tictoc and on twitter. this is bloomberg. move over private equity. private credit is the new game in town.

investors can't get enough. biggestagement with the direct lending fund. erik schatzker joining us. >> good morning. >> thank you. >> direct lending is a mystery to many investors. it makes sense to begin with the basics. what is direct lending? how does it differ? for decades most of this business existed in the banking system. through bank consolidation, a moved out ofending banks into institutional money managers like this. it so popular? institutions?

purse --the older oldest profession in the world, lending. simple.it is quite if you think about where we are in the cycle, we are nine years into a very long extended cycle. de-risking.urally folks are worried about rates. they are trying to de-risk by taking on security. people are finding the correlations between asset classes are much higher than they thought. direct lending allows people to get senior yield when people are struggling to make returns. >> the private lenders. >> if you think about the skills that it takes, putting aside

operational excellence, you have to be able to underwrite the capital cash flow. it is easy to transfer that skill set to underwriting credit. , 6.5e fund you just raised billion euros. 7.6 billion dollars. you plan to add leverage. why is part of the money and unleavened -- on ?evered >> if you're a german insurance company and you make a low return, and you can make five or 6% floating rate with short duration it is a good alternative asset class.

>> there is a lot of stuff in between. europe doesn't have the same high-yield market. there are european leveraged loans you could buy. >> much different valuation. the allocation is coming out of an institutional investor, moving for incremental yield. when you look at the development of the european market, unlike the u.s. market, the development of their liquid loan market still yields. the acceleration has been more dramatic than what we saw in the u.s. >> the acceleration has a lot to s. with investor demand what impact is that having on spreads or yields? what impact is it having on lending terms?

>> there is a lot of activity in the market. later inn is probably terms of where we are in the cycle. with the amount of capital coming into the markets spreads have tightened. the market has become more borrower friendly. that speaks to the need to people to invest with managers. ares has been in this business for 20 years. we have the longest track record in private credit. knowing how to navigate the cycle -- >> there are parallels to be drawn. >> for sure. yields on middle ?arket, senior loans >> it depends on the structure of the phone and the company. premium available in private

credit relative to a liquid alternative is between 150 and 200 basis points. 1.5 to 2%. >> given the fact this is -- liquidity discount. those were unsecured. liquidity is a big piece of it. investmental behavior, many institutional investors appreciate they were probably too liquid and that didn't benefit performance. now there is a willingness to move out of the spectrum to capture that. >> regulations are being gradually rolled back on banks. 7% yield on at at leveredloan, five times

. >> you hit the nail on the head. many of the people that used to do this business have come out of the banking system. there has been so much bank consolidation in the u.s. market those institutions are not portfoliohaving these management infrastructures. , the regulatory capital burden of holding a middle-market loan doesn't make it do its work. what we have seen is banks become more active lending to folks to make middle-market loans. it requires less infrastructure and comes with higher à la we. >> having been in this industry for years, every credit story ultimately is a horror movie. how does this one end? >> winners and losers like there

always are. the larger managers have gotten larger. they have come up with competitive advantages in terms of people and product risk. research and information. i think this asset class is durable. >> how do you know when the market peaks? >> there is no way to know. you have to look at the indicators. you have to stay close to your borrowers. give to structure things for the rescue take. >> is in it alarming there is no transparency? if not, companies like yours which have to be concerned? >> i am always nervous. i can't say i'm any more nervous now.

i don't think a lack of transparency is cause for alarm. the interesting thing is it is happening at such a slow and measured pace. when i look at the risk behavior in terms of risk people are hugeg, we are not seeing imbalances in the market which gives me some comfort. the market is acting rationally. >> thanks for having me. the excesses aren't here yet. alix: erik schatzker with mike era getting. -- mike. i want to turn to the week ahead we are going to see. meeting withmp john called longer --

jean-claude juncker. what are you most interested in? the other shoe drops with president trump. the ecb is going to be on hold. talk about the potential auto tariffs and whether the u.s. and europe can get an agreement on all those .eparate from the wto i am not convinced it is going to happen. i think the u.s. gdp on friday, this is an amazing thing -- consumption is likely to jump. >> stagnating for the economy as a whole. consumption was .9. two or three points stronger despite earnings stagnate. i don mean corporate -- corporate earnings. i mean wages.

>> you have that backdrop you macro risk of tweets. what do you do? it is not a buy gold story. what do you guys think about it? >> we are stuck in the trading range. the euro has been there more or less. ranges, people feel like ranges are being intact until told otherwise. , waiting for the dust to settle. not freaking out yet. a big week for health care earnings. how amazon is reshaping the , for day one of the health care checkup series. this is bloomberg.

♪

>> this is bloomberg daybreak. wells fargo managing director of equity research. this is bloomberg. alix: health care's biggest names out with earnings. we close the week out -- looking at the biggest issue in the health care industry. focusing on consolidation. here is what we know so far. they're looking not only at drug distribution but medical

supplies at the change consumer care. joining me now, drew armstrong and mark chandler, still with me. the reality they could disrupt the drug delivery system? >> this is one of the most interesting things. it is a pharmacy service. in all pharmacy licenses 50 states. health care is so regulated you need those regulatory approvals to get into this business. it is not like saying we are going to sell vacuum cleaners. i just bought birdseed. it is on my mind. you actually need a lot of permissions to get into this business which makes it hard very health care has a lot of

moats around it which is why it has been so resistant to the types we have seen in other industries. it gives access to that. it is definitely the start of something that allows them to get into what is close to a half trillion dollar market for prescription drugs. is $400ll health care billion. do you think amazon can disrupt it? what you get is pharmacy licenses in 50 states per you get the pharmacy benefits. you get the distribution. you get customers that are already online on their system. it is extremely difficult in a regulatory environment to get these prescriptions to tie together.

this really accelerates the ability to break into this retail pharmacy system. the hurdle?s >> how do i get more customers on board? people are slow to move from the health care supplier standpoint. things are working. they don't want to switch. switching can potentially create risk. as you think about the customers , makingkets focusing on those changes can be scary and difficult. and take those customers, and that is going to be powerful. it gives you a lot of benefits. alix: you got a year younger today. would you draw your -- by your drugs through amazon? what does this do for the general price levels?

this is another deflationary impact, which will complicate the task of getting inflation to a target. >> one of the things we are saying when we talk about pricing, there is this serious shift happening in the drug industry. look at the supply chain. drugstores., cbs, we are seeing forces come to play for a significant long-term reset of how this massive ecosystem works. you have a trump administration taking action on the regulatory front. people have not given it credence. saying we are going to go after the safe harbor rule. .he consolidation the companies combining. the rise of companies like pill pack being acquired. there are things consolidating

and happening at the same time. if you look at what the long-term result is going to be a supply chain that looks very different than it did five years ago. alix: take a look at the graphic. what amazon buying pill pack would mean. 12% of looking at full-year earnings. where will the consolidation have to take place? >> you will see changes .appening particularly in health care that you have seen. i think you're going to see more to come. the question, how do you reposition your business to take it vantage of that? amazon will want to go after the

$400 billion asset pool. of course amazon wants to play there but they are not going to be the only player. , doe can i go and disrupt some combinations to make the supply chain more efficient and put myself at an advantage? area?there another medical supplies becoming a tool for different types of individuals. consumer care. >> we want to keep in mind what you are discussing. foods,azon bought whole this was a known existing animal. when they bought pill pack of a something that is significant, that tells you how the system is going to be rebuilt and can inform the other things. they bought outside the regular system. this system doesn't work

anymore. inple are rebuilding parallel to the existing health care system. those are the things. they're working to create a parallel disruption to the existing health care insurance problems that are out there. the provider relations. you look at what people are doing, people are saying you have these folks consolidating in the traditional models. saying they look at it as so entrenched. they are building a parallel structures. that is important to keep in mind. when you look at those things you have on the list, that is one way to keep thinking about that. things, ik basic

don't know that one. >> we are a long way away. >> thank you very much. pleasure. thank you for sticking with me for the last hour. . want to make you a cupcake investors looking to google to jumpstart momentum. more on what i am watching. this is bloomberg. ♪

alix: what i'm watching, google earnings coming out after the bell. what can we expect? the market is expecting about 25% increase in revenue. what will be interesting is trying to see the impact of the general data protection which gives consumers more control over how big tech uses that data. may be google has benefited from it.

complex.ng to be >> profit margins are working? the forecast to see what impact that is, that is vastly profitable. it is not a major concern, i don't think. what i am watching. that wraps it up for bloomberg daybreak. i will be speaking with dan ives of the gbh insides, expectations for apple bets quarterly ward this afternoon. what he is looking at in the numbers. this is bloomberg. ♪

alix: i'm alix steel. 30 minutes from the start of trading. this is the countdown to the open.

coming up. threat to wet. hassan rouhani and president trump trade threads. mike pompeo calls the come -- calls the country hypocritical and crooked. and reports of changes forced the doj to buy unlimited amounts of bonds. trades.eking morning risk off on the margin, now flat on the day. futures coming in 2800 flat. a euro-dollar, somewhat reversed with the exception of the dollar-yen which is lower. 290 in the 10 year. around 29 basis points.