are but i think they're going to be terrific. pressure, second-quarter gdp. president trump has high expectations. if it has a four in front of it, he will be happy. could drop by single-digit millions. bp's biggest deal since 1999 as they buy bhp getting a way out of a disaster and has resulted in $20 billion of write-downs. david: welcome. i'm david westin. is down 16%, 18%. typically, if falls 11%. that is the move. let's put this into perspective. david: we will see where it ends up. it is about how much money they can make. they outperformed on revenue,

earnings but they came down one million on monthly active users. million on monthly active users. alix: the reason is because they wanted to prioritize the platform. they also had a deal in europe and they did not want to move to a paid carrier relationship. they had a reason for. david: analysts have been saying we think you are improving your platform and engagement. convert that into dollars? the initial reaction is they are. they are doing what analysts wanted. alix: also for the third quarter, the monthly active users may drop by millions. i wonder if that is them recalibrating their platform. we will see how this sorts out. twitter has come back, year-over-year, last year this quarter, they lost $.10 a share.

this year, they had $710 million. it appears a turnaround. alix: they had killer international revenue in the first quarter. look at us defending twitter. david: i'm not defending it. you have to be careful of the immediate reaction of the market. the market proves to be right but it is always -- it is not always right at first flash. is down by about 13% premarket. it is going to be weighing on u.s. market equity futures. pretty much flat, up by one point. dollar-yen is what we are watching. but there are conversations about what the boj is going to do on monday if they're going to tweak their yield curve control estimates. that is going to be a key move. the 210 spread a touch steeper.

earnings are going to be a focus. we have to take it with a grain of salt. who is trading on a friday in summer? you are a medium, long-term guy, the first reaction is wrong. we are joined by clementina fletcher and luke kawa. you because pick on that is what you do is follow twitter. what are you making out of these earnings? is theof the things contagion from facebook earlier this week. ever.l the most it is the biggest we have seen to date ever. a lot of that was to do with the monthly users, are people going to facebook in the wave -- and using it in the way it should -- in the way they should be? twitter moves a lot on earnings days. when the market opens, we will

get more of a view of what twitter is doing. with howcontinuing people use the platform, the issues around privacy, the issues with trump talking about -- these are things that will be rounded up. david: this is a company in transition. we were on death's door. changing the way they are engaging, including bloomberg having tictoc. with twitter, i would like to distinguish one thing between twitter and facebook. this seems to be positive, more so on the financials. it is a social network. you know what is cool, money? that is what is happening with twitter and it does not seem to be getting the love.

there does seem to be this idea that they are foregoing sleazy revenue is what one analyst told me. you can think of that as capital investment in their platform. i think that is the issue with twitter and facebook and for the becomingangs, they are more mature. alix: a great point. i feel like we've been waiting for that to happen. they're just had to be this factor of privacy. said, their monthly active users were down because they had to prioritize the health of the platform and they had to deal with gdpr in europe. the carrier issues, there is a theamental shift and question becomes, have the markets calibrated for that? >> absolutely. with twitter, one of the issues is how they are going outside the u.s.

i have not had a look at their international numbers but europe would have hit that. alix: revenue is up 44%. >> there you go. europe, itan and will be interesting to see how thisgoes as there is discussion about extraordinary items whenever a company comes out with things they give as reasons for misses. i'm looking forward to the next quarter. twitter came out with their earnings and they had a miss on monthly average users and they were down on daily average users. they came in at 335 million users. they said that was on purpose because they are improving their platform and they said they're going to have a decline for the rest of the year. they outperformed on revenue and earnings for share.

the stock is down, over 12%. amazon, looks set to open a record. ,he amazing part is the profit getting it going gangbusters. >> everybody knew that. jeff bezos had this key and it was just a matter of when he decided to turn it. they said amazon is becoming a prescription based website that sells subscriptions. that is about it. there is still that fly in the ointment of investors are going to be worried about growth. shis idea that all of the faang are going the way of apple which term for made growth company below average in the proceeded to rebound. that was a messy adjustment from the heavy days of growth. well all of them be able to make

family? alix: great point. our next top story has to do with earnings and that is big oil. out at 8:00 and chevron at 8:30. what are you going to do returning cash to shareholders? >> this applies across all of the big companies. it is trading at almost $70 right now. a --is going to make inflate their top line. investors are looking at how they control that cost them what they do with that free cash flow is it dividends, buybacks? we are going to be looking for guidance. alix: neither, we're going to wind up doing production. from php,ght assets $10.5 billion. we will be speaking with the --

bhp, $10.5 billion. we will be speaking with the cfo. i think the question was the price, above what analysts expected. we will be talking to brian joel berry later. -- brian gilvary later. permian will come into a. the 3rd street -- come into it. those white bars or what gdp growth has been. is a land of projections, still pretty elevated. this is what president trump had to say -- if it has a four in front of it, we are happy. if it has a 3.9, we're ok. the president does get those numbers in advance. does he know those? >> he went on to say he does not know what it is.

that report is still fresh from two months ago. traded offthe market of that and from the numbers. for me, it is a lot less about what the headline number is. revisions, it lets us change the way we think about the economy. we learned the fiscal cliff was a lot worse than what we thought. for this quarter, looking at measures of private domestic will be a good way to strip out the noise around trade. that is the business consumption, strip out residential and government spending. that average accelerated to above 3% and that is where president trump would like growth. alix: thanks a lot.

clementine fletcher and luke kawa. check out all the charts we use if you go to gtv . at what we are watching. coming up, bp's megadeal. gilvary.brian this is bloomberg. ♪

bp made his biggest deal in almost two decades, agreeing

to pay for bhp onshore assets. i spoke with these cfo about their plan. are you planning on being in the permian? >> we were in the permian in 2010. that was on gases we sold. we have looked at options for the permian. alix: i hear it is in the market to sell. >> i hear a lot of people are pursuing that deal. we look at the permian, the key is any deals would have to be accreted to our shareholders. joining mee -- alix: now from london is brian gilvary. thank you so much for joining us. what changed until now? is a major transaction,

the biggest one in 20 years for the company. tive, $40 per barrel. we are happy with the deal. the upside potential in the numbers we laid out, we have a midstream business. positions andium we get access to permian which is a key part of this. we see a potential huge upside going for. this is a great deal for the company, for shareholders. analysts expected assets to go to about $9 billion. you said it was about 40 to 50 players bidding. why did you have to pay $10.5 billion? >> i think we were the cleanest bid of all the bids. other bids may have been more

complicated or have more partners involved. billion, the5 value is above that from the assets we farmed into in 2014. we were able to double the flow rates with the team we brought in four or five years ago. can see the potential, we have been able to realize that in the assets we have looked at. alix: oil is in his blood with his brother leading chesapeake. let's talk about how you're going to be funding this. how much equity are you going to have to issue? 5.2 $5 billion of cash at the end of october. it will be six monthly payments of the balance, divided across the six months. issue equity or sell treasury shares. we will look to divest $6

billion of assets. that will enable us to buy back assets as we integrate this transaction. alix: what assets are you looking to sell? >> we do not normally talk about specific assets. we have a portfolio. there is no question at the assets we have acquired are a major uplift and we will look at things which are nonstrategic and can be of more value to others around the globe. teams have transacted over $100 billion worth of transactions. we will be getting the data locked and loaded next week. we will start to proceed on a sales basis. alix: would you be selling any assets you're getting from php? -- bhp? >> we are going to comment on assets. we need to get into the permian

to see what we can find. synergy, you've lots ies.ynerg you do not have a lot in the permian. how quickly can you understand that basin? >> we have come out today and 350 clear that there are million dollars worth of annual synergies we can drive through this weird -- through this. we think there is more to do there. also be able to optimize our workforce as we think about activity. these assets will give us access to supply and trading operation, logistics, and they come with a significant midstream position. there is optimization. it is a conservative number.

in talking to a bhp about assets, they want to move to more of a manufacturing kind of assets. do you feel that bp can bring that to the permian? >> that is exactly what we have. ago, weook five years were disadvantaged in terms of performance, operating costs. externallyin a team led by david. they're excited about this transaction and there's no question there is major upside. they have produced a manufacturing business. that is the way we describe it. alix: how aggressively will you be allocating capital? >> it will be in the overall upstream frame. announced is we

will maintain the capital discipline of $15 billion to $17 billion. to 14 we allocated upstream, we are that through capital efficiency. be able to accommodate these assets inside that frame. up to them as to how they allocate capital across the upstream. these are tractive assets and will attract capital going for. alix: -- these are attractive assets and will attract capital going forward. alix: it is an interesting time. there is a dislocation because it takes away capacity. does that motivate you to take a slower development field? that is a great point. value in the-term eagle point. ,f you look at midland prices

if you look at the forward curve out to 2020, they are trading at $1.50. we will be able to evacuate that. we have significant oil businesses around that location. we will have the contracts and logistics and we will time capital investments to make sure we hit the sweet spot in terms of realization. alix: your stock is down. you said the market is not realizing how good the deal is. analysts, your balance sheet leverage is at the higher end of your guidance. debtave wanted to reduce throughout 2018 and you are having a buyback program. how you -- how can you achieve all of this while adding on an acquisition? >> we're right in the middle of

results. in quarter one, we expected that to come down through this year. we have planned this year based on $50 to $55 a barrel. the price has been above that. that would drive free cash flow. debt coming down is a priority. that theced last night board wanted to signal we're ready to distribute to shareholder so our dividend was increased by 2.5% last night. we will continue to look at how we see debt come down as the year progresses. that is an important message. not only are we staying disciplined on capital. we are staying disciplined on balance sheet. alix: what do you think investors are not understanding? the leverage issue is still a problem for them. >> i'm not sure it is.

what you're seeing in the market is in the same way we laid out our strategy in february, we have had five quarters where the market has started to react where they can see those cash flows coming through. as the new projects came on stream, debt will come down. our average cost of borrowing is 3%. you have $40 billion worth of debt and that does not seem to be paid down. >> as i said, debt will come asn at these higher prices the year progresses. i cannot tell you what happens but at the end of quarter one, we would expect debt to come down. welliabilities are pretty mapped out for the next two to three years. we will be able to see the debt

come down. alix: part of that is based on an oil price expectation. if the price does not live up to that, how can you reassure investors? tothe oil price is subject $50 to $55. that is a pretty conservative assumption. to the out from today middle of next year, in terms of where oil prices are, their trading $20 above that. that is not a major concern. alix: to move forward, would you be happy with this permian position? are you done with m&a? >> we will need to absorb this deal. that will not close until the end of october. we will need to assimilate assets and we will look at options. -- doese transactions they add value?

i think we will continue to look at assets going forward but it has to be within the frame we have laid out. add value,u look to what do you anticipate being the biggest hurdle to adding value in the permian? >> you have raised it already. we know what we can do. going to be about the infrastructure and logistics going in. we will look to pace our investments to make sure we hit the sweet spots. alix: it was great catching up with you. bp has been waiting for this. thank you so much for joining us. brian joel berry of bp, cfo. gilvary of bp, cfo. david: that was a great

interview. alix: should i change my name? david: i like you as alix. twitter, still down. a decline in monthly active users in daily active users and they got hit in premarket. they are making money off of those users. alix: those users are slowing. we will delve into that. david: we are going to bring on dan morgan of synovus trust. he is a close follower of this. that is coming up next, with more on 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. happy friday. we made it on this busy earnings week, dow jones futures up by 20 points. you have to wonder how twitter

is going to fare, down 16%. in europe, a rally underway. bhp getting a boost after selling assets to bp. in other as that classes taking a look at what is going on with the dollar-yen. the yield tweaks curve control policy, does that mean a higher yen? i wanted to point out, the eurosterling, theresa may cannot catch a break. at what point, does she say, i am done? said redline after redline and she has had to cross over everyone. alix: she had this white paper. david: she forces were counterpart to go along with it. alix: they all quit. david: good luck to her. twitter, our big

story beside oil. shares plunging in premarket trading as the company missed estimates for monthly active users. now on the telephone is selina wang, bloomberg technology reporter. tos is what i want reconcile, they missed on monthly average users. they beat onhand, revenue, earnings per share. they beat on revenue, earnings per share. i think people were most concerned about whether they could turn these into money. >> investors are reacting to a couple of metrics. there is the missed active user number. they also missed on their forecast for the third quarter. i will be listening to the conference call for why that is. part of the reason is because of their investment in health and security and that is shifting resources from other areas like

marketing and product enhancement. that is starting to affect the bottom line. there are bright spots, daily , marchingrs group 11% the seventh quarter of double-digit growth. it does have an existing base that are continuing to come to the platform more often. it is a mixed bag. david: thank you so much for reporting. we will be hearing from you later in the day. for more on twitter and the tech sector, we are going to welcome dan morgan, synovus trust. and jim paulsen, luke hold weeden chief strategist. dan, istart with you this a good story or a bad story? >> twitter is an interesting company. we are focused on monthly and daily average user growth.

the key is how to increase in gauge meant time. their average time is about three minutes. compare that to facebook which is about 30 minutes. they have been trying to sign contracts with sports networks to conduct nfl games. is that the answer for them going forward? monthlye to have the average user growth in terms of getting new people. they have to have them being a gauge for a longer time than now to increase market share in advertising, 6% now. is this part of a larger mosaic we are seeing in tech this week overall? had come out and they shot the lights out on profitability. >> amazon had a great quarter. aws, which isin their cloud offering.

also strength in advertising and other revenues. you flip the switch on the other side and you look at facebook who said we are going to increase expenses. you have this pendulum swinging back-and-forth with regards to full throttle growth versus taking a step back. david: i want to bring in jim paulsen. pull up a chart you provided us which is fascinating. is it picks versus pants? versus pans. you are comparing tech versus utilities, the white line is now. the blue line what happened in the 90's going into bursting the tech bubble in 2000. it tracks it closely. are we heading in the same direction now? results have been

good, continue to be good. like the stock market overall getting good are earnings results but not a lot of stock price follow-through. , a lotnteresting to me of great reports in the second quarter in technology, that haveology stocks overall been market equal performers with utility stocks all the way back to almost february of this year. quarters of good earnings results, utilities are keeping up with the fast sexy growing technology sector. reflects their prices uptech stocks overall were in anticipation of the growth we

are seeing reported here. to push to continue prices higher, earnings are nice but you need to have that continues story of growth rates and some of them are starting to slow down. the same thing happened after a big spike in 2000. is that a call to go defensive and start de-risking your portfolio? >> i think it could play out a few ways. it does not mean the market has to collapse. the move in tech relative to utilities has not been near as aggressive as back then that the character has been the same. over the past five years, it started to outperform the market. leadership became concentrated. this year, tech stocks have been andbout 15% in the s&p 500

the rest of the market has been flat. this year, it has concentrated performance. int same character occurred 2000. at a minimum, it could mean risk for a pullback in the market or may be a leadership change that moves away from technology to other parts of the marketplace is forthcoming. one of those is a possibility. david: what about that leadership change? is there a breakdown in the comparison? we had companies that were highly valued. these guys are making money. think this is just the sector going through a necessary process where they're going from growth to a world where they are more focused on earnings? >> i was managing money in 1990'sogy back in the

and i was a part of the tech bubble. you can go through other statistics. at where the overall technology sector was trading back in the summer of 2000, it was 77 times earning. we are 23 times earnings. the concentration of technology with in 2000, it was at 35%. right now, we are at 25%. like were companies internet stocks that had no earnings. we were trading on hope and revenue. now you've got companies of that have strong businesses. i do not think we are at a peak in technology. it is something to watch and it could pullback because it has done so well. all the ingredients are in place. machine learning, artificial intelligence, the cloud, continued movement toward

social media. the buildout of automotive and all these other things using chips. i am not there to say we are hitting a bubble. we have more time left. david: dan morgan, synovus trust and jim polson. thank you for being with us. alix: let's get an update on what is making headlines. emma chandra his here. -- john doerr is here. -- and much under his here. -- emma chandra is here. there was a solemn ceremony at an airbase in south korea today. an honor guard carried the remains of americans killed in the korean war off a plane that had just brought them from north korea. it was the first tangible outcome of president summit with north korea's kim jong-un last month and it signals progress in the talks between the countries.

more revelations from president's former lawyer michael cohen. according to cnn, michael cohen is prepared to tell prosecutors the president knew in advance about a meeting where the russians were expected to offer damaging information about hillary clinton. that would contradict the testimony of the president, his son, and other campaign officials. the options on brexit are shrinking for theresa may. the european union has rejected a key part of her proposal for a trade deal. now she has just 12 weeks to go before the divorce deal is supposed to be signed. the uk's chief negotiator suggests they stay inside the eu's customs union that would enrage may supporters. 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. david: thanks. the u.s. economy may be humming but that is the global story -- but is the global story intact? finkelstein,m goldman sachs. let's start with turkey.

i will put a chart appear that shows the weakening of the lira, that white line. the higher the number, the lower the lira. the blue is inflation, 15% right now. there are reports that investors are nervous. where are you? >> one has to be nervous about turkey. one of the many challenges is the current account deficit. in a more difficult environment with u.s. rates moving higher, how much will they fund that. the burden is on turkey to do everything right and it looks like they are doing just about everything wrong. ofterms of the appointment the new cabinet and economics team, he chose his son-in-law as opposed to an economist. the market is looking for a rate hike earlier and they left rates unchanged.

with the, a squabble u.s. and a threat from the administration on sanctions. it is a vicious cocktail. thed: i think we have president's statement saying there are going to be sanctions against turkey because of their refusal to release this u.s. pastor over there. is there a possibility of economic sanctions? ability, theas the administration has used sanctions against regimes. headlines indicate sanctions are likely. the sanctions take different forms, there are different levels of severity. be modest,y would potentially dealing with arms. it would probably not be outright financial sanctions. alix: quickly, no turkey for you? >> thanksgiving i will have it. chinalet's turn to

because it has been a stunning drop for the yuan, seven weeks down. how are you positioned? >> the one thing that is important about china is trade. increasingn is rather than decreasing. it is not going to disappear soon. china has policy levers and if we look at what has been threatened in terms of tariffs on goods, it would take about .5% off of chinese gdp. china is also stimulating. one of the recent developments is reserve requirement cuts, injecting liquidity into state banks. have gone with tax reforms, infrastructure spending. the yuan has weekend. alix: if you look at seven

weekly declines, that is a 2015 story. this is dollaris driven, it is not a fundamentals driven. if that is the case and do think the government is going to backstop what is going on with trade, how do you play that? >> it is important to compare the moves with 2015 and what is the catalyst. in 2015, it was after years of stability, there was a sharp move in august. what in suit was capital outflows in china. was capitaled outflows in china. they spent months trying to close the capital account. what is happening now is different. due to a slowdown in economic activity, china is stimulating

and ink urging -- and encouragi i. a move in the remnimb these events are welcome to stimulate growth rather than a sign of vulnerability. david: doesn't that drive emerging markets overall? they're is indicating willing to do whatever it takes to keep growth going, isn't that good news for a lot of emerging markets? >> you are right. weakening,imbi is other countries are going to be monitoring their currencies, making sure they're not losing out to china. works,policy of stimulus it is better for the rest of the markets. structuringk about a portfolio, it is good to identify countries that can benefit from the stimulus.

david: great to have you back with us. that is sam finkelstein of goldman sachs. coming up, spacex secret weapon. sells spacean who weapons and deals with elon musk. that is coming up in this is bloomberg. -- and this is bloomberg. ♪

>> this is bloomberg daybreak. i'm emma chandra. hornby, u.s.sa fixed income portfolio manager. this is bloomberg. now toi return

businessweek beat. spacex's sake or weapon. she sells space weapons. the next cancer drug, the iss hopes to provide a breakthrough. found a new way to protect solar orbiter's from heat and radiation. david: joining us now is carol massar. space.ssue is on go torts oshie has to saudi arabia to explain away a tweet. -- starts out she has to go to saudi arabia to explain away tweet. >> this is gwynne shotwell. it talks about elon musk making comments to a news affiliation before a launch of one of the rockets and says something like, it may work or it may not you do

not do this if you run a rocket company. she had to go to london to say everything is going to be ok and she had to go to california for the launch. woman, one of three kids, she is an engineer. she talks about her mother taking her to an engineer society. it made her become a mechanical engineer. came to tesla, she went to spacex. there were a handful of employees. she gets along with elon musk and people say she is a rocket scientist, a star in her own right. business,s is a real it is $20 billion. maybe that is the successful way of doing it.

what is interesting and this is something we should note, spacex changed the economics of space exploration in sending a rocket up. they do it more cheaply in any of the companies. , 50% lessnch alliance than sending a rocket up. they show you can make it reusable. it has changed the equation. it is great beach reading. david: it turns out, space is going to cure cancer. i cannot say i understand it. ndx founder said it seems likely tumor growth will slow down under microgravity. she needs to be in microgravity to prove it. >> we have microgravity particles.

you do not have sediment. you at liquid solution. david: it is still gravity. they would stay in liquid. it would weigh less. >> it becomes a more. environment so it is great for testing. you think about things moving more slowly. they can do some tweaks and that can make an experiment more successful. all of the big companies are up there. there have been projects since 1998. the holy grail is maybe you can do manufacturing of drugs in space. this is how companies are thinking. it might move back to the private sector. david: her experiment was successful, as i understand it. alix: if you're going to the beach, you need sunblock. a satellite is going to the sun.

they have found sunscreen for a satellite. bones --ew that bird this goes back to prehistoric times. think about the drawings on caves. company in ireland that thought of this and they been using medical implants. metalgment gets into the but this has been a protective layer for the satellite. throught will take you 932 fahrenheit. carol massar, thank you very much. tune in to and jason kelly over the weekend. in the markets, you're looking hadhp up by 2%, investors put pressure on the company to change its business and sell its assets, selling for $10.5 billion to bp beard joining us

now -- bp. joining us now is brooke sutherland. i wanted to know what this meant for bhp? >> this price was more than what people were expecting and higher them what bhp valued its assets at. shareholders should be happy. bhp is not talking about reinvesting in other projects. they're going to pay that back to shareholders. what they have not commented on is getting rid of the dual listing structure they have. elliott did want them to have this separating out of oil and gas assets. they have not commented on this. when they do not come out and immediately in favor of a deal, it tells me they're thinking about it or they of other things they want to push for. alix: that is a relatively new

thing, is it not? is riskyin part of it because there's only so much you can do with commodity driven companies. you are driven by where the prices of these goods. there are only so many things you can do to improve earnings. david: how does a dual listing company change to a single listing? the voters have the single listing and do they ever give that up? is a part of the issue and there are a lot of logistics to make that work in mostar tax related. bhp -- and mostar tax related. has listings in australia. this is not a simple thing and bhp has said they do not think this will create value.

value of a higher consolidating the structure than the elliott does. investors to come out with a clear list on this proposal. alix: burke sutherland, thank you. it is a reversal -- brooke sutherland, thank you. it is a reversal. if elliott 16, chances are he can get it. -- if elliott wants it, chances are he can get it. coming up, lisa hornby will be joining us. a huge central bank week next week. this is bloomberg. ♪

♪ >> i think they are going to be

terrific. with president trump have a high expectation for today's read on growth and says if it has a four and fun of it, he will be happy. twitter's monthly active users will be down. and bp's biggest deal since 1999. billion.ets were $10.5 bhp gets away out of a disaster. david: welcome to "bloomberg daybreak." i'm david westin with alix steel. exxon is out. earnings are coming in at $.92 a share. maybe it is comparable. estimates came in at $.90. don't know if that is

comparable. was --s of production, it was less than estimated. capx came in much stronger. the state more in the second -- they but production spent more in the second quarter, but production is light. this seems to be of substantial miss for exxon. the row question is what they do -- the realh or " question is what they do with any cash? david: you have to give me perspective because i thought the idea for exxon was to go the other way? alix: they are doing the opposite. everyone is returning cash to shareholders, but axon -- but but is standing firm --

exxon is standing firm. david: were they seeing results in this quarter already? alix: these are longer-term investments. in terms of pickup growth, you would not see them that -- in the market, you are looking at a market dominated by earnings with s&p futures a touch lower. part of the market is being moved by twitter. boj change its euro curve profile? is that a stronger yen. jpmorgan says yes. crude off by .2%. eight -- added: 30 this morning, a read on

second-quarter gdp numbers. at 10:00, we will get the consumer index. and 21st century fox and disney votes on the cash and stock offer for fox entertainment assets. alix: 50% of companies on the s&p out with earnings results and the big performers are energy and tech. are our guests. fernando, i want to start with exxon. how do they talk about this quarter? >> this is a little bit expected. the were talking about capital reinvestment. that has been the story since darren woods took over. when you look at the five pillars of growth they outlined, they have been acquired since 2014.

they recognize their is a hole in the portfolio. amidave seen total, shall, big acquisitions. a lot of these guys missed the boat on shale and are catching up now. alix: we saw a big mess on net and cash flow operations and oil and gas operations are very weak. these are all going to be flashing yellow and red lights for investors. when with the strategy payoff? >> this is a five to 10 year cycle, so it takes a while. compact ceo,me at -- when you become exxon's ceo, you have a five to 10 year tenure. those are not being dividends right now. they need to reinvest. more of the majors need to do

that, too? david: investors are notoriously not that patient. how does he persuade people to hang with him for five to 10 years? that is a long time. >> there are two ways. expressing success in --has been a major breakthrough, and showing operational improvement in the permian and their downstream business, where they have made heavy investments. the balkanat point, had an increase of 30%. they are getting that growth. will that be good enough for investors? to justify the price they had to pay for it? >> probably not. keep in mind, they had some outages and accidents in canada. it is a quarter that has a lot of maintenance. conoco was down yesterday as well. it is expected. atx: chevron is coming out

8:30. on --ch camp are they reinvestment or buybacks? i think they are on the share buybacks side. they concluded their last big project in australia in june, so that you start giving new clash flow -- you cash flow. david: thank you so much for being with us. paul sweeney, let's bring you in a talk about twitter that broke before we came on air. what is the big story there? they missed a monthly average users and did well on daily average users, but that killed in the premarket. the issue for twitter is size and scale and are they really big enough for advertisers. so they continue to look at monthly active users and a are guiding -- and they are guiding

lower. their cleaning up their platform, trying to get rid of that accounts. an investorre worried about scale, that is not the number you are looking for. david: and also increasing other costs, little bit like facebook. at the same time, i thought we were worried about if they could use the average users to make money with advertisers. is this a good story on that front? paul: the daily active users were up, so there tends to be better engagement. it i think investors for this name are always concerned about there a place for a platform with 335 million users when you are going up against the facebooks of the world. david: let's talk about amazon because they don't have to worry about scale. my goodness sakes. paul: they can generate huge

profits whenever they want. they can dial up or down there spent is on a quarterly basis and deliver a blockbuster number and they do it every quarter. they show investors, we can give you profits, but this has been a story of topline revenue growth and don't worry about the bottom line profits. we believe in the long-term growth of e-commerce and the cloud and these great businesses, but again, they can show profits. profitsits these -- the this quarter was driven by advertising. alix: the narrative yesterday after facebook was that hedge funds will dump their shares. did amazon change that narrative today or is it idiosyncratic? to learn fromoing yesterday and today that we have winners and losers with twitter is a loser today. when you are priced to perfection as some stocks are in the tech market, you have to deliver. when you do deliver, you will be

rewarded, such as amazon. but when you don't such as twitter and facebook, you will pay the price. david: and we are seeing inversions. alphabet did awfully well and facebook not so much and twitter not so much. is there more diversions happening in this group? paul: the overall topline story as a whole, including facebook, maybe not so much twitter, but the top line, secular growth story remains in tact. that is what has been driving us stocks over the last four or five years. in a marketplace looking for growth, these names consistently deliver growth, whether it is on the advertising front or the e-commerce front. david: what are we looking for from apple next week? paul: it is a phone company and people will look at the units in

the average selling price, but l of apple,a bul you will be looking for -- is if ie final question am willing to upgrade my phone? david: i cannot believe you are admitting that on tv. [laughter] david: paul sweeney a bloomberg intelligence, thank you for being with us. coming up, a trio of central banks will be out with numbers next week. this is bloomberg. ♪

♪ >> this is "bloomberg daybreak.

mark posted second-quarter results that beat estimates. one big reason was his cancer treatment. went from 90%rug from a year ago. kkr is considering whether to buy young china. the firm is talking to banks about financing a possible deal. yum china operates kfc restaurants on the mainland. bp has agreed to make its biggest acquisition in almost two decades. the energy company will pay $10.5 billion. that includes the price permian basis, the fastest growing oil region. david: this week, it has been about tech earnings in u.s. gdp

numbers. next week, central banks will take stage -- will take center stage. guests.to our you, let's start with showing you what is going on jgb. the 10-year japanese there was speculation that the bank of japan might back off from some other loosening policies. overnight, they said, will buy them all. the bank of japan is trying to decide what is going on as well. next week, there are several central-bank meetings. the doj is the most important one. the analysis -- the boj is the most important one.

it has had a huge impact on u.s. treasury yields and other central bank government bond yields as well. it is because of the relative value dynamic. japanese banks and insurers pouring into the u.s. market. if they lift yield curve control, that means there is less control in the market. think it is the correct time to tweak their yield curve and that the back end like a little bit? >> it is a difficult choice because of all of the three central banks meeting next week, by far the japanese bank of japan -- by far, the bank of japan has it hardest. come out and say, i am adjusting policy and tightening while your inflation goals seen so far out of reach? i would not be surprised, and it would make sense for them to do something behind the scenes, but

not announce a change. announce amay not change, however, if they do, is 10 to 20 point basis points toferent -- different enough -- >> it is the signaling than the change of yield. you can see that in the market reaction. curve steepening in the u.s. and have seen the reaction in global markets. let's turn to the federal reserve. it seems that people are expecting a september hike. do we have two more coming this year? >> we definitely have one. i think the second one is still what they question mark. need clearly there, so we

to take it at face value, however, no central bank really has monetary policy. we are still data-dependent. in his testimony, two more words were mentioned which were for now. we are expecting perhaps a little more clarity to what that really means. --us, it has two meanings one, it has to do with the magnitude impact of trade policy. what are the certainties occurring on that front and have a play into how they affect the real economy. now, speaks toor us about for now meaning until we get to what we believe to be a neutral rate of interest. from there on, the calculation becomes much trickier. ared: so, lisa, we data-dependent. that is one difference from the last time we talked about this. we know what the president

thinks. >> there has been a lot of questions about central bank independence being raised. but this has come up many times over history. this is not completely abnormal. i think trump put powell in the seat and he knows that powell is a pragmatic guy and is looking at the data. and you have to trust him that he will do what is the right thing. alix: if we take in the context the central banks and the market reaction, it has been about -- >> i think the structural trade is -- going forward. i think there is a path of least resistance. i think if you are positioning for the next big trade, it is steepening. i would put it on the u.s. i would say letting us that steepening at this point. numbers will be one

of the big pieces of data and we had a little bit of a teaser from the president who said, it could be really good. three's be in the high or high four's. what you expecting in terms of gdp numbers? >> i don't think it will be five. if it hit five, that would really be a surprise given pullback in housing activity, the june trade numbers were not that great. i would be surprised to see a five, but i would not be surprised to see something above four. david: so, lisa, the white bar is the blurb great -- is the growth rate. >> i thought it had come down. david: it was up over four, i believe. >> i think the inventory numbers yesterday was a part of it .

it will be a pretty strong number. one-off,t it is like a almost. how much will that last? >> it strips out those transitory factors on inventories. that is what they will be looking through. that is a sustainable part. the part we can see productivity rise and see potential gdp numbers rise. alix: except, producers in texas are starting to pull back because of issues in texas. it is all about investments in oil at the end of the day. david: we know that. [laughter] alix: obviously. now, it is all want to be about david because we are talking about the shareholders of disney

and 20th century fox giving a thumbs-up to a deal. more on that next. this is bloomberg. ♪ this is bloomberg. ♪

♪ david: shareholders of 21st century fox and disney are voting on an offer for fox entertainment assets. so, where are they meeting because you have two different shareholder's meetings? >> they are meeting at the hilton at new york in different rooms at the same hotel at the same time at 10:00 this morning. we are told the meetings will only last for a few minutes because this is a done deal. the only shareholder that had wassed the fox tie up because he wanted a higher offer and voted earlier this week and voted for the deal. so, that does it could -- so

that is a done deal. david: brian roberts has the high bidder. will my old boss try to come back in and out bid brian? brian will say, fine, you got it. [laughter] has bob gotten what he wants? announced thethey deal, bob said it was the crown jewel. sky showed that yesterday. they added another half a million. how muchood asset, but do people want to overpay? he has already paid 36% more than he originally wanted to -- that he wanted to. david: does he have to go by

something else? >> we think people should look at discovery again. ands gate is up for sale others on the block at the moment. comcast shareholders don't want him to go into content in that way. they want him to do more cable and want to stick with the broadband and cable because they think that is the stronger part of the business. david: but will it be five years from now. comcast when they pulled out, their shares rose because shareholders were happy they were not going to overpay. david: why haven't we heard from bob yet on the sky bid? >> he doesn't have to say anything. set it up for to the sky bidding process. it they did come out -- they did come out and say disney and fox

may need again. that was pretty standard language. don't count them out because the have been in the filings. david: have a great time at the hilton covering two shareholder meetings. thank you for being with us. alix: do you know what floor of the hilton? david: the ballroom level. alix: coming up, president trump says he will be happy if the number comes in above forward out. above four.in this is bloomberg. ♪ . ♪

♪ alix: this is "bloomberg daybreak." i'm alix steel. equity markets going nowhere with dow futures off by five points. earnings taking the dominant

factor. twitter leading down. calm dollar wants to grind higher with the exception of dollar-yen. gd -- gdpinto the print. gdp. a second annualized 4.1% is not as high as estimated. the estimated was 4.2%, but the first quarter was revised higher. blowing itnception out of the water coming in at 4%. byelped that quite a bit redoing my wardrobe, so you are welcome. quarter on quarter coming in at 2%. sequentially lower and missing estimates. david: the president was out yesterday saying, it could be five or in the high four's. but i thought he was signaling

because it was thought that he knew the real number. he has been saying we need to get up to four. there is the question about the way he did that in if it will linger? there has been some advance purchasing because of the fear of tariffs. it is the fastest growth in 2014 -- since 2014. that will be high on the list. pointories subtracted one and that is the most since 2014 as well. i think it is part in partial to a couple of things -- there was a decline in soybean and petroleum stocks. we were also looking for an increase in inventories as companies by ahead of the tariffs. the exportst, neck contributed -- net exports

contributed to some growth. that is a tariff story, getting the soybeans out there before any tariffs hit. david: the question is how is the fed going to regard these numbers because it is pretty robust growth. interesting too, americans are saving more. it is up from where we saw it. david: i thought it was at 4%. alix: they revised it. americans are saving more, which is an interesting tidbit. lisa hornby is here to help us break it down. miss on gdp. your initial take, some own a. -- your initial take? >> it came better than what the

fed had. it depends on what you compare it with. this is a solid number. we should recognize this is more than twice the pace. that is good news. the issue is consumption has and youuge driver cannot rely on it contributing to the same extent going for it. i say let's enjoy the second quarter number, but recognize that one quarter does not make a trend, and this is already in the rearview mirror, and the core issue is, how do you transition, turn this quarter into a trend? what do we need to do, what other policies do we need to follow? that is the question and it comes back to capital spending. lisa, let's enjoy this

quarter because there are a lot of good in these numbers. but we had been growing in increasing numbers. but core pce is moderating. how can we grow this strongly -- see see inflation are inflation, or are we about to? lisa: we will see inflation pressures come through. this is goldilocks for the fed. they don't have to accelerate their hiking policy. from my perspective, the fact that inventories are not as strong as expected both well for q4 gdp david:. david: what do we think of policy in the -- will demand be there? when you see consumer numbers, maybe it is time to increase operations? lisa: you see that in consumer

sentiment numbers as well and that is a good thing. things feel pretty good in the u.s. right now. it is hard to point to the holes in these numbers and point to why, you know, why a cfo is not going to allocate number towards capx. has beengh capx running historically low. this is probably the time. alix: non-residential business investment over 7%. you said youw enjoyed the quarter, but if we had two point 2% in the first quarter and get 4.1% in the second, for the third and fourth, are we back to a duly don't handle? handle?e back to a two

simona: what could spoil the party is, to me, is one thing -- trade. how sears of the trade tensions -- how serious are the trade tensions? it makes sense for corporations to divert money towards capital spending, but you become a little weary of doing that if you don't know exactly which way trade policy goes. how you are going to sort those out, etc. assuming that the trade tensions subside in the rhetoric subsides, actually i think we are well-positioned to enjoy a capx wave that could last for years. in turn, it could boost productivity. we haven't turned about productivity so far, but this is how you transition from one quarter of strong growth to many future quarters of strong growth. and capx can give you some of

that. david: how directly related are -- howata how things directly related are those two things? lisa: corporate tax rates were cut at the same time to get companies the ability to deduct their capx for the next five years. that is different from previous administrations. the hope is companies use some of that money to reinvest. alix: thank you so much to lisa hornby and simona moncuta. , theor the second quarter first week coming in at 4.1%. deeper, inventories subtracted 1% growth and neck he et imports and neck in sp

coming in at -- the reaction in the market is pretty modest. it was by immediately as it yields dropped by one basis point. the long end of the curve re-rating. also, i want to update you on earnings coming out. chevron joining its. pier and a miss for the company. it is this idea if you got good oil, yet big oil continues to miss, not being able to deliver the profit many were estimating. david: i am surprised because of the price of oil. coming up, the final day of our health care checkup series.

today, we focus on drug pricing. we speak to a senior director of drugs and medical devices. that is coming up next. and this is bloomberg. ♪

♪ >> this is "bloomberg daybreak." coming up later on bloomberg markets, an exclusive interview with the goldman sachs head of global sponsors. this is bloomberg. ♪ bloomberg/, french luxury company is a victim of its own success. itses are falling after popular fashion house grew only -- in the second quarter.

gucci has grown 49% in the previous period. there is concern about growth in the -- there is concern about growth with intel. therenvestors decided could be less robust growth in the second quarter. eichman predicted the collapse of the subprime global market. -- ells bloomberg that is your bloomberg business flash. energy,ot just tech and but health care has its fair merck reporting today. we are focusing on pharmaceuticals. , takeoff and what is to be done about it? the prices of life-saving

prescription drugs have been going up far faster than other pharmaceuticals with most of the burden of the cost -- -- allan coukell is here and tim armstrong as well. we showed you some charts. give us the overview of pharmaceuticals. they're consuming more and more of the health care dollar and it keep going in this direction. pharmaceuticals are not the biggest share of health spending, but the fastest-growing share of health spending, so right now, prescription drugs account for total healthof care spending in the u.s., and as a country, we spent north of $450 billion a year on drugs. david: the u.s. investment and costs of pharmaceutical drugs

show that we far outstrip everywhere else. but if you look at life expectancy numbers, i am not sure it is delivering. tim: we spent more on prescription drugs than other countries. in large part because other countries are less willing to pay them we are, and they put a range of different policies in prices andld down away we have not here. david: why are the costs so high? people are willing to pay to much, so drug makers can charge that much because the research investment must be equal? tim: it is really complicated and really expensive to develop a new drug and get it to market. that said, the prices that we pay are based on a willingness to pay. and historically, we have paid for new drugs when they come to market, whether they are

tremendously life-saving advances, or really incremental advances over cheaper drugs already on the market. david: the president has not been shy about weighing in on the subject. he has tweeted and said that he thinks the costs are way too high. i think we have a trump tweets about pfizer, sing pfizer another should be ashamed they've raised drug prices for no reason and they're taking advantage of those who are unable to defend themselves while giving bargain-basement prices to others. seen this action from the president were he has gone after individual drugmakers, and said, we are not going to take any more price increases this year and rollback the ones we did take. and a number of other drugmakers have said similar statements.

guysve seen some of these pushing this stuff 5% to 10% year, but it looks like the main thing the administration has done that has had an effect so far has been the negotiations with the president is stepping in, and going company by company. we're still waiting to see what the broader impact of some other propose policies, which will take a long time in may require new laws will be. there probably will end up having a broader effect on the market overall, if they are able to move forward with some of this. david: the top yellow line is pfizer, the middle one is mark, and the bottom one is -- this is going back to when trump made strong statements about drug pricing. it is not clear that it has affected the stock prices. allan, what is the vulnerability of the pharmaceutical companies when it comes to presidential or

government intervention overall? allan: the administration has proposed a number of policies, and they have been in an information-gathering phase where they have laid out a lot of actions to take him and have asked from input from stakeholders. we are waiting to see what they will move forward on. of the policies they laid out, some has had an effect on what patients pay out-of-pocket. and that does not have any affect on what we spend on pharmaceutical company revenues. a number of the policies are aimed at increasing competition in the market. but nothing really goes straight at the thing that is a major driver of increasing drug spending, which is the high launch prices of new, very expensive drugs. up a good brings point with the pain people feel

at the pharmaceutical counter. this became a big political issue. made this a pocketbook issue for a lot of people. medicaidre a beneficiary and don't get coverage or in a high deductible plan, those high list prices, you are bearing the brunt of them. that is one of the interactions everyone has what the health care system that they really feel. that is one of the reasons it has become a big public issue. david: thank you both very much for being with us. bhp: bp is buying most of onshore u.s. national gas and oil assets. cfo could --bp's bp's cfo. we are very happy with the

deal. there is huge upside potential with the numbers we have laid out with investors this morning. get two premium positions and we get access to permian, which is the key part of this transaction. upside goingial forward. it is a great deal for company and for shareholders could alix: fit is a great deal for bp, but -- it is a great fit -- it is a great deal for bp. what worries you the most about this deal? guess this deal is positive for bp's portfolio, but it is not without risk with regard to declining range in the geological risks on the subsurface these days. bp in theeal with

lower 48, which is an area that had serious weakness in their portfolio. and it could really compete with chevron, exxon and shall in the lower 48. isx: the downside i feel they paid a lot and will have to issue equity. there is $40 billion sitting in debt. how do you offset that with the growth potential? roy: that is true, but bp did put a target on the stock for production growth target it laid out last year. if you are looking for production growth, this deal really offers a lot of upside. there is risk, but there is upside potential as well. productivity by 5% over the next five years, it has $3 billion to that valuation of the package by 2025.

really the most important thing we think is it gives scale to bp in the lower 48. it comprises about 9% of its global production. this takes it to about 15% by 2020, which is quite significant for such a big company. alix: what they have to do more m&a or continue drilling to get that kind of scale? roy: that is true. but we have seen was shorter in terms of lateraling. they are about one mile. we are seeing them do two-mile laterals. the a.p. rates on some of the permian were low. it depends on what bp wants to -- n terms of there is a lot of upside potential i would say. alix: lori martin, thank you for martin,us -- roy

thank you for joining us. more andspending earning less and not returning money to shareholders in the form of buybacks. they're free cash flow is the lowest since 2016 i cannot cover their dividends can it get any worse? joining us is -- do you want to sell on this news? >> i am not sure we want to sell. patience is beginning to run out of it. when you miss a quarter as exxon missed it. the most difficult part of reading the results is the fact that the international downstream is also much, and they claim it was because of the fact that there was planned and unplanned downtime. but again, you get back to transparency. and when you have down time like

this, a lot of it should be able to be forecast and told to the industry. you look at something like that, and it was a huge down miss. alix: huge. and you said your patience is wearing thin. they have to grow their production of their decline rate can replace the reserves they are depleting. they are not participating in the buyback theme that investors want of these big oil companies. how patient are you going to be until you see that production growth, which we did not get in the second quarter? >> it is a really good question. the other day, they reported an update on -- which had a very big upside surprise. withyou increase by 24% the expectations of what they have done, ok, if a hand been spending a lot in capx for that

kind of project, you would not be seeing that. the give and take is a tough one here. they had mated very clear, -- they have made it very clear that it is for the long-term and they will spend money. and as an investor, if you don't have enough patience for that, you should move on. to probably have more patience than most, especially after you see some of the nearer term results, but notwithstanding that, the transparency does continue to still be a disappointment. alix: my point is, why own exxon when you can buy shell? and also has a $25 billion buyback program that they announced. what is the trade-off? >> the trade-off is what you expect from exxon. you have to believe that they will execute. all of a sudden, you see significant increases in reserves. the bet is exxon management,

notwithstanding great transparency and they are not returning with people today want, which is stock buybacks, that the bet is they will be able to execute and have those reserves be there and 21 -- be there and 2021, 2022, and 2023 when capx returns value to the shareholders. -- there is some investors that one it today. and we are in some of those. we are willing to do this. david: mark, you mentioned transparency. maybe they did not have their arms around the number to understand it. sure if it is that or if it is they did not sure as much as they should have. today, i cannot say they did not have their arms around it, but i think it is that they did not share as much in that goes to transparency could alix: --

transparency. david: we want to jump back to the gdp numbers. president trump says he will speak to the nation at 9:30 about the economy. and finish to the president, he said -- to credit to the president, he said there would be substantial growth and people were really skeptical, but he delivered. a lot of people said it would not happen. alix: and reaction to those numbers on the gdp. that wraps it up for "bloomberg daybreak." this is bloomberg. ♪

jon: from new york city for our viewers worldwide, i am jonathan ferro. this is the countdown to the open. ♪

jon: coming up, the u.s. delivering the strongest growth since 2014. amazon delivering big profits, jeff bezos is now talking about efficienciesa. er projecting users will continue to decline. 30 minutes away with the opening futures aren't changed, the dollar is giving up a little bit of a strength, euro dollar unchanged, and treasuries of a little bit of a bid. in 30 minutes, the president weing a victory lap and expect them to speak on the economy and 9:30 eastern time. with u.s. growth accelerating since the fastest pace since 2014, wall street weighing and if this is a