trade talks with the u.s. as president trump threatens to levy tariffs on chinese goods within days. surviving the storms from u.s. to asia, deadly storms pummeling infrastructure and leaving many homeless. we will talk energy with one of the largest manufacturers of generators. franklin templeton says em near the bottom and the route could be the latest. david: welcome to "bloomberg daybreak." the weather was so nice here, feeling guilty. alix: in terms of florence, we were talking about this this morning, we will not know the real economic impact for a long time because it is still pouring rain. david: the river does not crest for another two days. alix: we will be following that throughout the next couple hours. in the markets, yes, we have trade headlines, but it is feeling calm.

the interesting fact is that many industries are at or below their 200 day moving average, but the s&p around at the record highs. euro-dollar going higher. and it is weaker against the g10. 1.16 is how we present. and and we just made it. will the buyers come in? it feels like that is the story in the bond market. and not pricing in a trade -- right now. david: something magical has happened. time now for the morning brief. on tuesday, the south korean president travels to north korea for a summit with kim jong-un, the first time in 11 years they have met in the north korean capital. and another big week for central banks, with decisions coming from the big of japan on tuesday, the central bank of brazil on wednesday, and then the south african reserve bank and a swiss national bank. on thursday, the u.s. existing home sales expected to extend

their form of trend, are they expected to extend the declines? i think this is speaking of a turnaround. alix: and i want to point out breaking news. coke coming out and saying that they may be, this is according to bloomberg television, may be in talks with a canadian marijuana producer to develop drinks. that would mean marijuana infused drinks. david: i had only heard about these maybe two or three weeks ago. alix: i did not know they existed. david: they will start them in the fall, ivanka rona will be the first out. so i think the idea of coke with marijuana, i interviewed the ceo and i know that they want to buy other manufacturers of soda, but i guess this is a form of soda? it, but alsotion

coors, there are others in talks about this, but as i mentioned, the largest shareholder of coke, i have nothing to base this on. i cannot imagine -- would be into this. david: it will be a great shareholders meeting. a lot of questions about warren buffett and marijuana. it is different. alix: the cleanup from a typhoon began in southern china after the storm left four dead, a halteduildings, and casino operations over the weekend. more from hong kong we have our economics correspondent with us. thank you for staying late. walk us through the damage you have seen and of the estimates. >> we have had certificate damage coming from the philippines where rice production has been hit. and in hong kong, hong kong shutdown in its entirety on sunday with us and if you damage around the city and region. of course, macau seeing economic

loss. decision to close the casinos for 33 hours, as the mail loss for the operators there around $186 million, and it could shave two percentage points off of the third-quarter revenues in total. quite apart from the human toll and all of this, there has been said of the damage to the philippines, hong kong and macau and southern china from the typhoon. david: there were reports that a hurricane would shut down the hong kong exchange, so what was less severe than anticipated? >> i think that it more or less shaves hong kong, it could have been more. the exchange did open, the citi open today, the public transport is still disrupted and the airports are still getting up to schedule after they

canceled hundreds of flights. roads around the city, they are still blocked off and trees have fallen. the windowpanes have been blown out of skyscrapers in hong kong. so that is how strong this half typhoon was -- this typhoon was. they have escaped the brunt of it, but they did expense destruction here. -- experience to section here. david: thank you. not for first take, gina martin adams here, our chief equity strategist and by marty schenker. talk about what we know at this point about florence. we do not know the full extent. we will put of the screen. 15 deaths so far and we have something like 700,000 without power, and about $18 billion in damages, but we just got a report of maybe $22 billion in damages and 40 inches of rainfall. the president said we were ready, was fema ready?

marty: they seem to be, but as you pointed out the impact of the storm is going to play out over days, even weeks. so it is going to be the recovery that is going to be the test of fema, not the immediate response to the storm. david: president trump has made it a hallmark to say i am really good at this, we are good at these disasters, even going back to puerto rico. how important is this to his image with his base that he protect people in storms like this? marty: i think it is very important and obviously this is a region strong on his base. so the perception that he is on top of it is important, but it is interesting that the midterms are coming up and the impact of the storm and response will play out over a couple of weeks, even months, right when the election takes place. alix: because there was not a lot of wind but more flooding, it makes it more of a fema issue than for the insurance

companies. you see it in the markets, insurance companies did not have any downward spike you might have thought. gina: i think we can extend that across the index in general. markets performed well last week. if you look at the stocks that outperformed over the week, we had things like energy and industrials, the 10 year treasury bonds now back above 3% again, seven general we had an inflationary response in the market, which may suggest the market is already trading on repair efforts and spending that naturally comes as a punching of the hurricanes. as a general rule, it is not really impacting the equity market terribly. david: more on the effects of florence when we speak with norbert nusterer. that is at 7:30 a.m., in about 23 minutes. now to the second story, once again trade. we had this morning the president tweeting again, "the terrorists have put the u.s. --

tariffs have put the u.s. in a good position. if countries will not make fair deals with us, they will be tariffed." marty: or tariff-fied. david: the wall street journal saying china will step away from the negotiations if we go forward with a new round of tariffs. where does it stand? marty: i mean, we have a story on bloomberg this morning saying the mixed messages out of the white house are creating a dysfunctional process, because you have people inside of the white house reaching out to china and then you have a report that we broke late last week that donald trump has asked his official staff to impose the $200 billion in additional tariffs. so it is not clear if you are the chinese just you should be listening to.

alix: come inside the bloomberg and the shanghai comp is below the, really below the route that we saw. what does that tell you? gina: i think that the market is generally aligning with donald trump, in that the u.s. will come out of this relatively unscathed. but if you look at sort of the broader assets, a lot of this has been about the dollar and the dollar has surged so much, which is a symptom of risk and tolerance. people fled into an environment where the risk is fairly high and we happen to be also experiencing a massive earnings boom in the u.s., supporting u.s. stocks. the questions going forward are about will get tougher, at the same time the dollar has lost a little bit of steam, so what does that mean going forward? and if we implement these proposed tariffs the result is probably margin pressure on the s&p 500, so for the first time since 2015 we could experience

margin pressure ended could have consequences it for a potential turnover in shares. if right now. that is a key point, we do not know if these things will be implemented. and that is be reflected in the valuations. we are looking at high equity risk premiums,'s adjusting that investors are quite concerned about whether or not this will impact that outlook. alix: and they have opposing views. the fragments of the 10 saying work around the bottom, they do not know what to do around the dollar. that is a question for them. but they have not seen -- but maybe there close to a bottom. on the flipside, goldman sachs coming out and talking about the short-term yields, like saying once the real rate go positive, em shakeout could be the beginning. we were joking around about 3% on the 10 year, but that is also a driver. gina: absolutely. it is difficult to paint this

with one big brush. chinese shares experience pressure right now, south american shares, brazil as well as north american shares in the form of mexico performing a little bit better. so it is a story of pick your spots. right now, clearly the pressure is on asia and chinese shares in particular. in addition to eastern europe in the form of turkey and other countries that have high external funding, because the dollar is moving. but pick your spots carefully, because emerging markets are broadly down 12% and opportunities are starting to emerge. david: thank you, marty schenker and gina martin adams. you can find all the charts we ,ust looked at at gtv browse recent features and save our charts. coming up, more on the u.s. china trade tensions with

richard lacaille. that is coming up next. this is bloomberg. ♪

>> this is bloomberg daybreak. the world's largest beverage company may be getting into the cannabis checks business. according to bloomberg television, coca-cola is in talks with a canadian marijuana producer to develop cannabis drinks. coke says it is interested in drinks containing cbd. and the billionaire cofounder of salesforce.com has agreed to buy time magazine. he and his wife will pay $190 million in cash to meredith

corporation's for the struggling publication. benioff is a critic of president trump, but says he will not be involved in editorial positions -- decisions at times. and the bid for a parsing it is too low. the china make an automaker will evaluate a potential buyers . kkr offer thus than the $7 billion minimum that fiat was looking for. david: thank you. chain concerns and drove asia equity markets lower today and that was before the president tweeted this more request saying tariffs have put the u.s. in a strong position with jobs flowing into our country, yet cost increase has been a noticeable. if countries will not make fair deals with us, then they will be terrified. tariff-fied. i am getting used to that word. alix: you are still good with the grammar. [laughter] david: chinese official signaling those talks with the u.s. may stop before they get

started, saying china will not negotiate with a gun pointed at its head. -- welcome now, richard lacaille. o will start with a chart -- i will start with a chart. there we go. it basically shows the degree to which u.s. stocks, the white line at the top, for over performing the blue line, and em way down below. there is a divergence right now. how long can this continue? rick: as well as earnings growth remains strong. there are confounding factors, but they removers -- they they may reverse. david: when can we expect earnings performance to continue? can the robust earnings keep going at this breakneck pace? rick: we are low in employment, fiscal stimulus, and kind of a sugar rush in the economy that is helping, plus tax cuts as well. with a corporate america.

so i think it will continue for a while. but history tells you that these things have turning points. alix: the performance has been in the small caps. you can see it, the purple line is small caps, you have s&p, russell 2000 has really been outperforming, so you could make the argument that that is going to be a trade play. but how much is that going to, or how can that really stand up? rick: there are sector fx that affect trade. people have put focus on technology and whether supply chain begins to eat into profitability. i is the big picture is we are at the end of the economic cycle. and is that going to turn and eat into profitability in the u.s.? alix: goldman sachs noted that, saying there was increasing investor inches -- interest in a recession over the next two years. our model shows 36% for recession over the next two years, what do you see?

rick: i think if you look at where the yield curve has been flat, things always look great, yet we know there is a high probability based on the flatness of a slowdown at the very least within two years. they are right in the sense there is no clear sign, no catalyst for slow down, but frankly there never is. i think you have to look beyond it and say we have low unemployment, how much more capacity can it eat out? even with spending and economic cycle, we are close to the end. david: there is come position between when you have unemployment and possible wage inflation, that would drive inflation overall and force the fed to keep rising. where do you see that going over the next 18 months, the inflation and federate? -- fed rates? rick: the dollar has helped keep ppi. that will not last forever. you will have sector effects, whether it is in construction or

other parts of the economy that will bubble up. and i think that that is more of a risk than the fed hiking. alix: the 10 year at 3%, is it sustainable? rick: i think it could go higher. there is no sign of inflation in from an interest rate perspective you could say the 10 year is near the peak. alix: no inflationary pressure, so the rise we have seen cannot be overall sustained, like more of a short-term pop then it will have to go down? rick: i think you will see -- rise but real rates stay where they are. break even rates will rise as people become anxious about the longer run effects and whether we will see inflation. the dollar is strong, that could reverse, but eagerly if they trade talks take a different term after that turn after the midterms. david: 3% is a low number, let's be honest. as long as it remains in there, can the current cycle keep going? rick: i think the credit cycle would keep going as long as the

underlying drivers, the inflation story in particular, are kept at bay. credit cycle is tied up with the question of how you get earnings you can buy inflation -- eight and -- eaten by official. if you look at europe, they are in a different area in terms of economic cycle, but there is enormous yield chasing. alix: especially as the corporate bond markets expand as well. ok, rick will be sticking with us. emerging markets and divergent views, the call to buy and sell emx. this is bloomberg. ♪

alix: alix: emerging markets, divergent views. goldman sachs issues a warning, saying the trend is boiling the frog on risk appetite.

em selloffs only the beginning. franklin templeton says the worst times could be behind emerging markets and of the route is nearing a bottom. still with us is richard lacaille of state street global advisors. is it the beginning of a risk selloff? rick: emerging-market debt offers an opportunity. the risk is visible. i think the contagion effect has been more contained than we have seen before and i think that the yield spreads in local currency markets are rewarding, providing thatf fx is within value. david: you said in the local currency market. are you talking about both u.s. denominated and local currency? the dollar has really hurt places like turkey and argentina. rick: we prefer local debt, it is becoming a bigger asset class. -- i think that ball markets

i think that is where people should focus. alix: where? what countries are on the curve? rick: people would say be selective, so you want to avoid those that are most extreme from a spread and economic risk perspective, but we find diversifying in the whole of the emerging-market debt with weights that reflect volatility and tilt away from high volatility markets. i think a rifle shooting approach, where you look for one or two markets, is misguided because of the political risk and investor risk of panic is high. david: are there some things you say, we are not going there, bitterly in current issues where you have a real deficit going on and you have to have external funding, anything where you say i will leave that out of my diversified portfolio? rick: i think really things out altogether is never a great idea. i think the question is, are you being rewarded for the risk? the risks are incredibly visible. you may be catching a falling knife and some cases, but

scaling might be more appropriate than really things out altogether. alix: what about equities? rick: the earnings a story and a trade issue is looming large for many of those markets. if you look at asia, i think we are not out of the woods. i think after the midterms, if you see a little bit of change in tune, may be emerging-market equities could become a lot more interesting. valuations are very high. david: if you go big in the emerging-market debt, do you had to that with some other asset class, or simply by diversifying within the emerging-market debt? rick: if you look at our portfolio, we are risk on, but the biggest risk is u.s. equities. for many investors that has been -- to say that they are overvalued, but if you look at it in a portfolio, including

emerging-market debt, it balances out nicely. alix: a lot of emerging-market numbers coming out after the surprise a rate hike from russia. what are you paying attention to? which is central bank decision are you paying close attention to this week? rick: some who look like they're behind the curve, brazil, indonesia, where there is a lot of pressure and people are looking at the differential and saying that they have caught up with events, because in some cases they haven't. alix: thank you so much. coming up, more on the aftermath of hurricane florence. we will speak to the president of one of the largest manufacturers of generators, norbert nusterer. this is bloomberg. ♪ this isn't just any moving day.

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simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. >> this is "bloomberg daybreak." trade tensions reverberate. it is very calm in the equity markets. shanghai closing at its lowest levels since 2014, but here

futures only off by four. european stocks in positive territory and the one loser happens to be the dax, down 3/10 of 1%. a a lot of exposure to trade, as was china. and as i mentioned, 2% on the 10 year. where is the freaking out? it is a broader dollar story this morning. and the cable rate is 1.31, although the headlines keep coming out. boris johnson challenging theresa may in the conservative party. can you keep out with -- up with all the drama? and could is up. -- crude is up. and it is a copper story today, off by 1%. david: exactly right. now an update on what is making headlines outside of the business world. kailey leinz has your first word news. >> rising floodwaters from hurricane florence have

virtually cut off the city of wilmington, north carolina. mercy officials plan to airlift food and water to the city. florence now blamed for killing 17 people in the carolinas. rivers are days from cresting, so it may take time before companies and environment the groups can assess the damage. and mixed messages coming from the u.s. on the trade war with china could hurt chances of a resolution. the president has told aides to proceed with additional tariffs on chinese products. that has beijing considering whether to decline the offer of a new round of negotiations. and two senate republicans calling for a confirmation vote bebrett kavanaugh to delayed, because of allegations of sexual assault. a woman told the washington post that he assaulted her in high school. is senatecorker say committee should not vote on brett kavanaugh until they hear from the woman. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries.

i'm kailey leinz. this is bloomberg. david: thank you. havee just told us, rains subsided, but river flood he has yet to crest, leaving whole communities underwater in north carolina. taylor riggs is in raleigh and has a report. what does it look like? taylor: we are here in the storm center operations at duke energy headquarters, and it is very interesting, the floods are expected to get worse. two weeks from now, as you know north carolina uniquely positioned with three rivers from the coast, and the flooding is really bad one hour inland. we are in downtown and there has not been much flooding here, but we are here because we wanted to speak with the north carolina president of duke energy, talking to us about the updates on recovery. they have about a quarter of their customers without power. that was at one point, but one million have been restored. now, more than 3000 without power.

we got an update from him yesterday. >> it is nonhazardous. so we believe most of the material was contained on-site and we certainly have our confidence that the environment is ok for public health and safety. our team is managing that and once the floodwaters receded we will be a book ago in and perform minor repairs, but right now we are very confident in the safety of the public and in the environment. wasor: and david, that david fountain speaking about a ash anddous coal, containment area, but there are environmental concerns. but you just heard him say he believes it is nonhazardous and as soon as the floodwaters receded they will check it out and see how they are able to cope. with matthew two years ago, that was a big hurricane, and with

florence, what they can do to prevent things going forward. alix: for duke energy, they just settled suits from 2014. that was an issue. they were trying to get in with the land falls. david: this is toxic stuff. alix: even if it is safe, if there is a little bit of a trace it will seep into the ground and that is a recurring issue going forward. 708,000 people left without power. and officials do not know how long it will take to restore it. one company that could help is cummins power systems, which provides standby power and auxiliary power for residential, commercial and industrial needs. --ning us from minneapolis indianapolis, indiana is the president of the business, norbert nusterer. walk us through what you see

from the carolinas right now. norbert: good morning. thank you for having us. let may start out by saying that i have spoken with all the people affected by the storm so far, and we have seen on tv how strongly affected some areas are. our assessment on the ground is the damage has been fairly localized. i think that the worst has come through, but at this point the real risk stems from all the excessive water that is on the way down to the coastal areas. and we have a couple operations in the area that are mostly up and running as of this morning, so we have been a little bit on the fringe of where the storm came through, but we definitely are on standby for everybody still experiencing power interruptions, or need help with equipment. david: it feels like there is going to be a need for a lot of generators. what is your experience in prior storms? what is your spirits in terms of the peak need -- is your

experience in terms of peak need for generators? norbert: after the storm, there is always before the storm, so we were very active. we already have between 1-2 gigawatts of standby power in the general area of the storms, so we were super busy the last 10 days getting all of the equipment in perfect operating condition, we were deploying fuel, going around and making sure everything was running. we are confident that the significant equipment we already have in the region is working. stations,e pumping the hospitals, the critical if a structure that wilmington and surrounding areas have. going forward in terms of demand, we typically see 2-6 mon ths where people rethink their emergency plans and invest in additional standby backup structure they may not have right now. so it will be busy helping those

businesses think about what they want for the future. alix: what was your experience with the storm in houston last year, how did it affect your business and what is the readthrough for the carolinas? norbert: we are looking at a similar event progression as we had in texas last year. i think that the opportunity for us is really helping customers assess what they might want to do to further failsafe their systems. as a typical requirement, we work mostly with a stationary equipment from residential environments, where people probably in the next few weeks have a lot of quoting activity and of them will install the next three or four months, so we will see like we did in texas a big bubble there. the commercial and industrial customers, typically it takes longer. these applications are more complicated, the way that you feel safe the manufacturing

plant or a big warehouse is more complicated and they may want to do a little bit of consulting work ahead of time to optimize the solution and most likely somebody decides to put equipment in, we will install in the next 2-8 months. david: talk about the longer-term trend, because there are reports of extreme weather because of climate change. over all, there is more extreme weather. does that mean there is increased in demand -- increase in demand? what do you see it with the generators helping against destruction? norbert: you are right, we are seeing more and more events like we saw this weekend. on my way appear i was on the phone with our counterparts in china. we have a large organization and south china that is just recovering from the super typhoon there, a gigantic storm system on their southern coast, so we are experiencing these catastrophes on a growing scale

really all around the world. there is definitely indication that these events, are maybe not more frequent, but much more severe in intensity with a lot more water involved. there is a lot more moisture in the atmosphere. and the initial storm starts to become less of a concern, it is really the flooding afterwards, which can really delay the recovery, the re-installment of the logical grid supply, as you heard from those folks at duke. it could be dangerous to go in with a lot of water going on and the electricity. so that is something that is driving more demand. the other thing i should say is also much more critical infrastructure for business operations are more decentralized. when you look at the average factory, in typical warehouse versus 20 years ago, you have some much more critical equipment at the frontline with the sites, and you have to have electricity to keep a gas station going, they warehouse

going, these are much more dependent on electricity, which it drives increased demand for us. alix: also the question of safety. had carbon monoxide poisoning from a generator. as generators become more important, has you expectedly secure their safety? norbert: thank you for asking. when we installed equipment we have high standards from a local code point of view that we have to comply by, so getting clean air in, the other air further away from the users. so if you follow proper code procedure, there is little risk coming out of stationary equipment. what we see is in these situations people often buy portable equipment, small units in the residential environment that are not quite so cautious and how they use it. we have heard of people running

equipment inside of their house, inside of their garage, and you have to be truly careful when you do that. so properly installed equipment and never pose a threat to the users or the media environment. david: thank you so much for joining us. norbert nusterer, you will be a very busy man of the next few weeks. still with us is richard lacaille. an investor cannot take into account an individual store for investment decisions, but what about over all? the overall trend with marching climate, how does an investor take that into account? rick: it is important to get yourself lined up for trouble. we talk about weather portfolios, looking at the downside risk in terms of volatility. when it comes to climate change, we have to take account of that. we need to ensure that boards understand the risk to their business of potential changes to the private and how they will deal with that, and that is part

of our stewardship and engagement program, because we invest in thousands of companies around the world and that is important in our engagement, to make sure the long-term value for shareholders is realized by paying attention to a number of important factors. david: do you think the markets are properly assessing, discounting or giving premiums the companies based on their ability to withstand climate change? is that in the marketplace? rick: there are risks. markets find it hard to get the right discount rate or forecast beyond even maybe two or three or four years. we have to try harder. the insurance industry is better this because they are aware of climate change. david: thank you. coming up, dimon squares up and back down. we discussed the jpmorgan's chief food with the president. -- feud with the president. this is bloomberg. ♪

>> this is "bloomberg daybreak." i' kailey leinzm. coming up, mike mayo, wells fargo securities head of large caps bank research. ♪ now to your bloomberg business flash. shares of age and am rose the most in six years after posting quarterly sales that be estimates. the fashion retailer offer discounts to clear out inventory, plus a boost from the swedish krona. it has faced increasing come petition from online stores. and abu dhabi's sovereign wealth fund pushing ahead with what could be the largest oil ipo in a decade. the investment committee will

offer a stake of 25% in the spanish oil company. the offering could raise $3.5 billion. bloomberg has learned that they want an ipo rather than a sale, after bidders were never down to the carlyle group. and the largest beverage company may be getting into the cannabis tricks business. according to bloomberg television in canada, coca-cola is in talks with a canadian marijuana producer to develop cannabis tricks. cook says the interest in this says nos in cbd, but decisions have been made at this time. that is your bloomberg business flash. alix: now we turn to wall street beat, we cover three things this morning. the financial regular scolds the bank for failure to oversee a fraudulent wealth manager. and the hedge fund seeking its largest real estate fund ever and dimon jobs politics, after

saying he could be president with a run for the office. but now says he is do with politics. david: shortest political career ever. it lasted about one hour. david: ok, peggy collins with us now. first is credit suisse. the financial regulator for this which makes basically rapping them on the knuckles for this. a wealth manager went to jail and was convicted. >> the regulator was basically saying, in part, credit suisse, you did not do a good enough job of regulating him. and slapped them on the wrist for rewarding him as his profits went up. they say credit suisse was not paying attention to what was driving that. and essentially they said, you need to up your compliance and credit suisse says they are doing that. it was an interesting play on the short-term thinking of when

profits are going really crazy, to take a step back and make sure you know why that person is making those trades and if they are legitimate. alix: when they say, lone wolf you always say, hm, ok. david: they already have problems with fifa. they have a lot going on. alix: where they so behind on compliance -- why are they so behind with compliance? >> they definitely say they have some of their problems out of the way, some allegations date all the way back to 2015, but it is not the only thing that has the regulators coming out today saying they need to up their game. david: we keep hearing about the european banks with money laundering. alix: and with the lone wolf conversation you are thinking, there has to be more. now a company looking to raise about $2 billion, but they will have to compete with $18 billion from the blackstone at the same time. >> real estate is the word this month.

we reported on friday that blackstone is seeking to raise $18 billion for their biggest real estate fund. and now och-ziff looking to raise $2 billion. it is interesting because they are known as a hedge fund first, but they have tried to diversify since the bribery scandal they suffered in the last couple years. david: that is the question, is this a redirection? >> we saw a new ceo come in and he has decided to diversify assets. they have gone big into credit, real estate as well, so he is saying we are trying to right the ship. they have suffered withdrawals from the hedge fund side, so the real estate bet is part of their strategy going forward. alix: and again, when you are about hedge funds and private equity, talking about billions of dollars in the market, is there enough actual investment to put your money into and where does it go?

driving of the value? david: and we have heard about how much drive power is out there not being deployed. alix: and blackstone last week, the head of infrastructure saying it is a sellers market, not the buyer's market. david: a lot seeking properties and prices go up. weekhird, jamie dimon last , he went out of his way to say he could beat president trump, then turned it around. nbc news spoke with him. >> i should not have said it. and it was more out of frustration, but i should not have said it, so they also proves i would not be a good politician. david: so maybe too much much easement -- machismo. >> this was a quick retraction last week when it exploded in the private eye, in terms of

jamie dimon saying, i am smarter than him. and he has walked it back ever since. essentially, is there an idea that the presidency still deserves respect, or if he is actually thinking there are things i still need out of the president like deregulation? david: or he does not want to get in a twitter fight with the president, because the president really came out right away and really reamed him saying he is not very smart, not very charismatic. alix: i love that comment, he had a smirk. i can imagine the medication director being like, just read this sentence. and then move on to the financial crisis. and he could not help it. like why, why did you have to go there? david: the election really opened it up for all sorts of people thinking, why not me? i have heard of many ceos

saying, i could be president. alix: blankfein. david: bob iger. there was a rumor he was considering. not sure if it is true. alix: that is a good point, you have money, this opens the door. there could be a long line of people who want to run in the race. >> the question will be will they really do it, why back off when they feel the heat coming at them? david: a lot of heat. thank you, great to have you. command, benioff expanding his interests. his one had a $90 million purchase of time magazine is what i am watching. alix: and check out tv , watch us online, interact with us directly. go right to the bloomberg terminal. this is bloomberg.

david: ok, this is what i'm watching. marc benioff made his big move, imitating jeff bezos, says he will by time magazine. just the same way jeff bezos purchased -- it has a circulation of 2 million. it has come down. now compared with the washington post, jeff bezos paid to it a $50 million for that and has a paid its objection of about 400,000. alix: it also raises the question we had about that, if you have a lot of money and you do not want to get into politics, you have to purchase a print circulation paper to get a message across, is that how you will sway the public? is that a conversation we are having? david: he has said in the past he will do things with salesforce because of social

justice issues. it is important to say that this is not salesforce buying it, just like it was with the jeff bezos, this is him personally buying it. $190 million, that magazine historically has been with several times that, in the billions, so you can see how far down the print publications have come. he says he will keep running it the way it has been run. i will talk about that coming up. financiallk with a ceo. alix: and then we will have -- joining us. this is bloomberg. ♪

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cut power and leave many homeless. we discussed the cleanup with the ceo of clean harbors, who has cleaned up after hurricane and the bp oil spill. china will not play ball with donald trump, threatening to back at of trade talks as the president threatens new levies. franklin templeton says the em bottom is near. the monday after lehman failed, the 10 year anniversary. we talk with mike mayo about the health of u.s. banks and the next crisis. david: welcome to "bloomberg daybreak." i'm david westin with alix steel. o have to think about -- you have to think about those people in the hong kong and the philippines, we will have a tough time to come. alix: as the climate changes you to get more of these storms and when you hit a developed market, it will have an impact. we think in the next couple

quarters, it will be better, but for the emerging markets they do not have those resources. david: maybe those resources not prepared, as well, so the consequences could last for quite some time in asia. alix: a little bit of selloff in asia and is spreading to. europe but s&p futures only off by three. euro-dollar is a little bit higher, a weaker dollar story in the g10 space. and 1.16 is how we print. and with a selloff persist? if wes the question, are not able sustain that level? crude is up by 8/10 of 1%. and you have to look at metals, they are getting crushed. david: copper. alix: it aluminum and lead. david: a lot of concerns about trade. time for the morning brief.

on tuesday, the south korean president will travel to north korea for a summit with kim jong-un. the first time in 11 years the leaders of those two countries have met in the north korean capital. another big week for central banks with decisions coming from the bank of japan on tuesday, from brazil on wednesday, and then we hear from the central african reserve bank and swiss national bank. on thursday, the with existing home sales expected -- the budget is whether they will expand their four months of declines. alix: the cleanup starts in hong kong and china after they were hit by the most powerful storm so far this year. the typhoon left at least four dead and damage to buildings, as well as suspended a casino operations. joining us from asia is our correspondent. any rate on the damages inflicted and how long it will take to repair? of macau, weterms

can put some numbers on it. the casino had to close on saturday. and they were close for 33 hours. estimate loss of revenues around $136 million. they may shave 2% off the revenue growth rate for the third quarter. but macau and hong kong, hong kong was a shut all of sunday as well, but not the casinos are opening and the airports are getting back to normal. right around hong kong, you can see how significant the damage has been. windows have been blown out of skyscrapers. roads have been blocked by falling trees. and a lot of bankers, where they live in hong kong, there has been damage. it is significant. alix: thank you. enda, stay safe. david: now back to north carolina. rain has subsided, but river

flooding has yet to crest, leaving whole communities underwater. taylor riggs has a report from north carolina at did power. taylor: we are at the center of operations for duke energy in raleigh. we spoke with the north carolina president of duke energy and he just gave us an update. more than a quarter of customers lost power at one point, 1.4 million people, but they have restored power not to one million customers, but over 300,000 remain without power. the may concern has not just been flooding. as you know, they have three rivers here. flooding may not even peak for another two weeks. the flooding has been a may concern for them, even though it was just a category one instead of a category five, that is the may concern going ahead for the next few weeks. david: thank you. alix: joining us with more right

now on the set is gina and chuck. chuck watson from savanna. walk us through the damage overall. tell us individually by state. chuck: it is tough to get estimates, that is why we use computer modeling and satellite reports at this stage. florence was another strange hurricane, if it had just been a traditional storm that came and hit land and moved on, it probably would have been about $12 billion in damages, maybe $7 billion from the surge on the coast and another $5 billion in led. but we are still in the middle of the disaster and it will not dry out for a couple days, and some of the rivers may take a week to crest. so we are still in the middle of the actual event.

our current estimates are it will add about $10 billion to this. it will be really close to breaking the top 10 damage storms in u.s. history. david: as you say, we have not had the cresting yet, does your $10 billion extra, does that take into account what you think is the reasonable case of the worst case? what is the over and under on this? chuck: that is if we let the water run off, the computer models stimulate this and try to figure out what the end result is going to be when we look back on this. our models try to look at it after one year. so you mentioned the economics earlier. and you maybe have a casino that shuts down, like maybe macau, there is a short-term hit. they will gain some of the revenues back because people will come back and spend a little bit more. so over the course of time, it a lot of the losses will be recovered. so it is a little tricky when

you look at short-term versus looking back at it a year later. you mentioned gdp and things like that. just for comparison we are thinking that the -- will be about a $32 billion hit. for the chinese economy long-term. $18 billion of that in hong kong alone. so you look at the philippines -- again, the economy in china is so huge, even $20 billion in the u.s. is tragic, but not huge. compared to the philippines, where we estimate about $17 billion if you use the purchasing power parity. that is 6.5% of their overall due to be. % of is a percent of -- 8 their agriculture on the northern islands, which is so google to the economy. they lost -- which is so critical to the economy. they lost it a percent of their harvest. -- 80% of their harvest.

the emerging markets, they are so different. alix: 100%. the difference with the u.s. is also we have a very tight labor market, which is something you may not have seen during other storms. walk us through the implications. gain: i think -- gina: i think that will be interesting to play out in the carolinas, because one area where the labor market has been tight is in the concession market. we saw that as an impediment to rebuilding in houston last year. i think a be interesting to watch how it plays out as these folks look to rebuild homes, sort of get the if a structure back into shape. it could be a closed recovery period need it will be interesting. david: what about wages? if you have a shortage of workers, and increased demand, wow. >> particularly in the southern states, you could definitely see this really sort of construct that pipeline of workers

available for other projects as well and you could see this seep into some of the construction related prices for maybe new home prices for the next couple months. that is the thing to watch. this will make a lot of the how they related data and construction related data potentially the manufacturing data, a little bit quirkier over the next quarter. david: how can the fed rely on the data at this point, because we will have another month or so where we have inflection. >> i think we consistently see that in the job-related market data, and we will likely see some sort of effect in the employment report. it should not affect the unemployment number much, because if it was only a few hours, that may not affect things. but you can certainly see people sort of drafting down there hours as a result of this. alix: that is the economic impact in the u.s., but with

asia, you mentioned the philippines. how long do something like this, when you hit an emerging market, how long does it take to fix it? what is the timeframe for this? chuck: it is tough. the philippines are still recovering from an earlier typhoon, say you look at the long-term hits, in some cases it is many years. here, with a quarter over quarter numbers, basically weather disasters do is rearrange money through the economy. we talk about damages and losses, but in the u.s. it is rearranging the deck a little bit, the net effect tends to not be as bad as they lot of people blow it up to be. certainly, it is sector specific, but in the philippines you will see a long-term hit to their gdp and this year it might drop 2% overall. again, the immediate impacts probably near 6.5%. and it may be several years before the agricultural sector

recovers and that is bad news for an em economy. alix: great to get your perspective. thank you. and coming up later on in this hour, the clean harbors ceo will join us to talk about the aftermath of natural disasters. responsible for cleaning up the bp oil spill. and the u.s. sending mixed messages to china on trade, which could hurt negotiations before they begin. we will talk about the market impact. this is bloomberg. ♪

david: president trump tweeted

this morning that we are in a strong bargaining position because of the tariffs, and any country that does not make fair deals will be tariff-fed. comesomes against -- this against the backdrop that the chinese may refuse negotiations if the u.s. imposes tariffs more on chinese imports. we go to burns mckinney. great to have you back. i will put up a chart. this shows the equity markets, s&p 500, against europe and em. you will not be surprised when it shows the u.s. has been on a steady march up. aroundd -- an roaming equal for europe, em on the way down. can we continue with this? burns: we did not expect to see the divergence widen a whole lot. one reason it has is contrary to

the president's statements of the trade wars are easy to win, they are not easy to win, but there are relative winners and losers. the u.s. has less exposure to a reduced trade environment than the emerging markets or europe, but at the same time that counterforce that should help rain -- rein in the divergence would be the valuations, the valuation gap has also widened so that the trade has been at wide levels relative to europe and japan and is certainly the emerging markets. david: they did not read every word in the tweet, but he said part of the advantages are this has not affected the price for consumers. is that a timing issue or will it continue? burns: that is probably largely a timing issue in probably has a lot to do with the fact that if you look at tariffs put in place

so far, the u.s. has placed tariffs on about $50 billion of chinese imports. the discussion now is to quadruple that. so that would obviously be more easily felt. when one things about this simplistically, a tariff by definition raises prices. they are not inflationary, they are stagflationary, they cool down the economy and raise prices. so we would expect, given the fact the job market here is already starting to tighten, we believe we may be on the cusp of higher inflation down the road. but raising tariffs will only accelerate that. alix: many agree with you, except maybe goldman sachs. there was a note talking about the risk, saying they disagree with investors saying there will be a chance of a recession in the next couple years. they give 36% of a recession in the next two years, so what do

you see that tells you more late cycle and how do you invest for that? burns: it is interesting to see how they came up with 36% versus 37% or 34%, but we do not necessarily disagree in the short-term. a lot of the indicators we are looking at the just we are not necessarily seeing a recession within the six months or 12 months. i think a lot of the key indicators would be the conference board, the leading economic indicator index, that tends to go down three months prior to a recession and it has been going up for the last three months. the pmi index is something that typically, going into a recession or leading into a recession, it goes below 50. and at the latest readings, i believe we are the highest we have seen for this cycle. all the metrics have shown green light's. the one place that could be more concerning is looking at the

yield curve and what it has done, it has been flattening. the important to station for investors to make is that it is an actual inversion of the yield curve that tends to forecast a recession, it is not just the flattening. we have had instances where it has flattened an we have not hadd recessions. we are not necessarily having a recession immediately. three years out would be beyond what we would be able to forecast. alix: what we see today is the dollar touching a daily low, yields in the u.s. over 3%, and the question being, will there be a shakeout in risk appetite? another note on that, the appeal of risky assets could fall and is saying that it is boring -- boiling the frog. do you agree with that? the last couple weeks where just an -- were j in appetizer tray risk off moveust?

to are just an appetizer risk off move? burns: one of the things we see as a way to protect our client'' money in this tub of environment it's a look oto lower value names that have a cushion. we have been, in the last 10 years, we have seen easy money bailout a lot of riskier companies, those companies that do not have earnings. so warren buffett likes to say when the pitbulls out, we will see -- the tide pulled out we will see who has been swimming naked. we think we may be on the cusp of that. looking at companies that have stable balance sheets. maybe you would not want to go into the bond proxy if rates are rising, but if you look at the diversified portfolio that should be a way to predict capital in case we move into a risk off environment. alix: i will get to those in a moment.

burns is sticking with us. coca-cola eyes a new potential ingredient for its strengths, pot. get your sugar, get your weed. feel good kind of day. this is bloomberg. ♪

alix: time for three company stories we're watching. coke maybe the next to jump into the cannabis during business. they say they are checking out non-drugs to be in their drinks. i have a chart in my terminal. it shows you maybe the why. quarterly revenue for the nonalcoholic beverage segment and you can see 2013 to where we are now, that is what coke wants to fix and maybe cannabis can help them do that.

david: and unlike pepsi, who has gone into food and they need to double down and beverages, they need to expand within beverages. alix: what is that? you have a little bit of weed, sugar, what will it do to your system? will you have the munchies? david: amazon has a fascinating story, where they are investigating the possibility that there is bribery going on with people in china, not only china, but basically third-party sellers saying give us insight in algorithms, in maybe help our reviews a little bit too. they are getting paid and amazon is upset about the possibility. alix: but you know what they should do, spin off the cloud business and retail business. david: the margins are so high is growing so rapidly with the cloud business. that would be interesting. alix: and luke, you were looking

at deutsche bank. luke: a story first reported by ft, then deutsche bank with a response, saying that the brexit impacts, they might be moving a large portion of their balance sheet that is in london back to frankfurt. and it might result in them becoming a ring faced entity. having a branch operating in london. david: that would be two thirds of the balance sheet in london, a lot of money. luke: we are also talking about a thousand employees, toy a lot , so a lotxit -- 8000 of the brexit story has been about gaining sovereignty and this is one case where you might have sovereignty over a smaller kingdom, because now the ecb is pressuring deutsche bank into bringing back some of the capital back home. david: for whatever reason, it is not just deutsche bank, we

have heard from ubs, and they say they are going to frankfurt. >> yes, it is confirmed. we will be having existing operations in frankfurt. that was one of our choices to have multi locations strategy, where frankfurt will be the base. david: this comes right wing theresa may is trying to negotiate a deal within her own party and with europeans, so more pressure. luke: that was really the worst case fear that you heard there. the city of london is, i have seen it said that it is massively short, so the more you hear this talking, this finance operation with a very high fixed cost, and they could be sensitive to revenue changes and now they are thinking about spread operations and brexit could be a catalyst. alix: you said there is a flip side, which is labor and the

opposite pressure, they do not want them to leave. david: we do not wanting to go back, we want you to stay in london, some may be good news. alix: if they wind up leaving, then active managers will have to sell that stock if they move and that is a big issue. david: moore brexit drama. alix: or move for frankfurt, . come at, all things banks with mike mayo. wells fargo, goldman sachs, 10 years after the anniversary of lehman failing. this is bloomberg. ♪

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europe. indexe dollar, the dollar has yields in the u.s. grinding a little higher. dollar is now up .4%. cable is up. you've got rising yields in a weaker dollar, how does that square out? will we be able to sustain 3%. crude is up. that is the anomaly, you have coffee at the lowest level since 2008. the base metals are getting killed. it is pretty brutal when it comes to trade issues. david: let's look at what going on outside the business world. >> rising floodwaters of cut off the city of wellington, north carolina. they will airlift food and water to the city. florence has killed 17 people in the carolinas.

cresting, days from it could take a while before environmental groups can take assessment. president has told aides to proceed with additional tariffs on chinese products. aboutas beijing thinking decline the offer for new negotiations. to republicans are calling for confirmed that confirmation of brett, to be delayed. kavanaughs said brett sexually assaulted her in high school. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. david: thank you so much. 10 years ago, lehman brothers collapsed, sparking a crisis in

the financial system. this is what jamie dimon said about now versus then. >> it's very healthy. they should take a victory lap because that would not happen today. there will be a recession one day, but it will be something else. david: joining us now is mike mayo from wells fargo. banks are among his expertise. should they take a victory lap? mike: absolutely. thank you, regulators. the capital, you have the strongest balance sheets in a generation. control, the oversight is much more powerful. back then, it was pretty weak. banks are focused on costs.

we think they will have the best efficiency in history. compensation, far from perfect, but top executives are incentivized on returns instead of just reckless growth. it's not just growth, it's responsible and wrist -- sustainable growth. it's much more mature when it comes to helping to support the overall economy. david: how long can they remember when they have competitors? -- berkshire have to raise, hathaway's, they have more flexibility. competing against nonbank players. we go to annual meetings, we asked a lot of questions. proxy, bankl of the

executives and ceos get paid more for showing better returns versus growth. we like it when the incentives are aligned with the wallace and pocketbooks of top executives. what kind of banks do you like? have a regional banks exposure. they have been challenged by slower loan growth. there are good regional banks opportunities. comerica we added recently. names have been busy -- mikeiciaries as identified, like morgan stanley. alix: it's going to be more cost efficiency, pay ratios, how does that get you excited about owning a bank?

burns: nobody thinks dividends are exciting. that is the key thing that does drive us. we are with the banks, looking for firms that are growing dividends and growing them aggressively. i mentioned comb erica. they raised their dividend. they have a buyback of 10%. morgan stanley is another one, even though they did get a slap on the wrist, they made the decision to pull back buybacks a little bit. they raised dividends by 20%. aside from the fact that we are looking for low valuations, if you can pay attractive dividend paid of 3%, investors get to wait. banks areng

beautiful. alix: i know you like citibank. how long can the retail business benefit that? two: the next one to decades, this is a structural change in the industry. the reason there are it'stunities in the banks, crisis this and crisis that, everybody wants to know what the next crisis is. when it comes to the next crisis, don't look at banks for causing that. they are very strong. beautiful banks mean boring banks. you get there by driving earnings growth through better cost control. david: one bank we would've said that is not boring is goldman sachs. they are buccaneers. are they getting more boring? david solomon has appointed his

president, another investment banker. solomon, banker and client oriented person, the number two person is historically a client oriented person. dimon, if to jamie you are worried about proprietary trading, the top two people at goldman sachs now have nothing to do with proprietary trading. it's about client businesses. it should it become more boring. goldman has performed well. for all the trading, they have gotten the job done. i thought you were going to say citigroup when it comes to banks that are not boring. quickly, they are the other big banks. how do you rank them? , they couldank

double over the next few years. far under optimized from where they could be. you have an activist in the house for the first time. meansnk the combination greater optimization at a time when they have better risk control at the top. david: i'm feeling nice insecure here. didad jim milstein on, he the work out guy for aig. this is what he said. >> banks constitute one third of credit intermediation. we have a very bank centric regulatory structure. two thirds of the credit is happening outside the banking system. this is something we have yet to address in a comprehensive fashion. david: how do you factor that

in? the banks you are investing in have competition from shadow banks. there are some failures outside of regulation. burns: it's a great question. we don't have a fantastic answer for it. one of the places we see that is one of the primary challenges you face in the regional banks, you have three growing economy over the last nine or 10 years, loan growth hasn't kept up. one reason for that is the increased competition. we look at how do we as an economy invest and protect ourselves from issues like shadow banking, you can protect yourself from everything. a lot of what regulators have done a great job and been more successful at is protecting the economy from systemic risk that

will see through to everything else. we feel pretty comfortable. alix: the idea is not the nice crisis will because by the banks, they could get sucked into it. what do you think is the next financial crisis? it driver of a big crises, whether it's the home crisis or emerging markets or the shadow banking system. one topic that is not been mentioned enough would be the threat of much higher interest rates. we have not had a time where rates of gone up a lot in almost 25 years. int people were not around 1994. ifhad low rates for so long, they shot up too much too quickly, you have derivatives losses and mismatches in the system. short-term, that's not front and center now.

that's why it's a risk. it's not something we are looking at right now, 10 years from now it may have caught us. the other factor we're trying to get our arms around with bank research is the threat of cyber security. the biggest strength of the banking industry is the use of technology. they are much more efficient. customers can access their banking more easily than ever before. that's why we think the industry becomes the most efficient in history over the next five years. that can be a weakness if it leaves some banks vulnerable. do some smaller banks get hurt? that is are mine. david: that is a big risk. , thank you very much

for being with us. coming up, cleaning up after hurricane florence will be no easy task. we have the ceo of clean harbors. york, this is bloomberg. ♪

>> we are in the green room. later, the balance of power ceo. now to your business flash. shares of h&m rose the most

after posting quarterly sales that beat estimates. they offer discounts to clear out inventory and got a boost. have been facing increasing competition from online stores. abu dhabi is pressing along with the largest ipo. offering $3.5 billion. they wanted the ipo rather than a sale after they were narrowed down to private equity firms. the world's largest beverage company may be getting into the canada strengths business. coca-cola is in talks with canadian cannabis growers. beveragesnterested in that contain cbd. that's your bloomberg business

flash. david: torrential rains from hurricane florence may have subsided, but river flooding has yet to crest. major poultry and meat companies are starting to resume operations. they don't know how hard the storm hit. newsng us is bloomberg agriculture reporter. what do we know, what don't we know? >> thanks for having me. are getting of them back into the fields. that havee crops feels that are flooded. it looks like they are trying to make their way back there. i am heading to newbern right now to see what they are like right now. thank you so much. she is reporting from the

carolinas. alix: the cleanup will be no easy task. one company that knows what it takes is clean harbors, they provide services and offer hazardous waste management and recycling services. irma, and in katrina, harvey. we are joined by the ceo. what do you know right now about the impact? we are in the early stages right now with the recovery and rescuep is more in the and supporting the government agencies that are looking for the resources we have, whether they are boats or any kind of response equipment they need. matter,s a practical you have to know what you are cleaning up first. when will you know how big the

job is? alan: these take quite a bit of time to materialize as you can imagine, whether it's katrina or reallythese large events have a timeline that can't be well-defined until the storm passes over and people can bat -- get back to business. responsese emergency every year. we are able to handle any event. this, ithing like involves oil tanks, livestock withal, anything to do household hazardous waste that might be toxic. a lot of that activity takes time to materialize before we really know the extent of what it's going to be. alix: how many people do what you do? alan: there are a number of regional players. we are the largest with 15,000

employees full-time and 450 locations. we are the largest in north america. we have seven locations that are impacted in this region. one of them was significantly impacted. we are working to take care of our employees. have our of customers immediate concern and we will begin helping them get back into business. david: there was whole asked from the duke our company, it was spilled. we have conflicting reports about it. aw will we know when there is problem with that? alan: i'm not personally familiar with that. subsides as the water

and they get a chance to see the extent of the residue how it may have migrated it, they may assess that and contain it. they will get the lagoon back together again and get it working right. these sites are all unique. i don't have any first-hand experience on that particular one. david: explain your business to us. who is your customer? how do you price this? alan: we have standby agreements with many of the federal agencies that will call us and to respond. we have rates that are on standby. positionedipment throughout the u.s. and canada to respond to any kind of event. it could be the government or an oil company or a small distributors it needs our

services. aurauld be a gas station dry-cleaning facility. any kind of customer that has any kind of nature with chemicals or oils or a need for removing water, contaminated water from their facilities. it really runs the gamut depending on the nature of the operation we can help them with. alix: the conversation out of hurricane florence has been about the impact of climate change and we will continue to see more extreme storms. how does that change your business? alan: we certainly have seen a big change in the last 10 years. more and more of these severe storms of have major impact on a lot of our customers, particularly recently in the gulf.

we have been looking at positioning more equipment to the available, to make sure we have the preparedness plans with their customers. i would say the government has facilities on the shores, they have standby agreements. a lot of effort has been done to beef up what seems to be more and more of the storms hitting the u.s. alix: thank you very much. it's great to get your perspective. managers havey bullish bets on trade tensions. this is bloomberg. ♪

alix: we are watching the selloff in industrial metals. we are learning that intentionally we could see tariffs come down on chinese goods at a 10% level. copper and nickel will be the two to watch. to watche other thing will be the effective dates. it's getting pretty bearish. and they are down for a seventh straight week, the longest slump since 2012.

that is the sentiment, the question being fundamentally the copper should be down that much. if we get something that's not as bad, maybe you will see some rebound. david: are we going to have trouble -- global growth or not? you don't need as much copper. alix: the recovery story changes. that is very much the conversation. by mohamedjoined el-erian. this is bloomberg. ♪

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

coming up, the united states sets to proceed with extra tariffs. the chinese are prepared to turn down talks. the 2020 recession calls keep climbing. goldman sachs is sounding a little more relaxed. futures are a little bit softer after a week of gains. .e are down three points on the we have banks up 3% on the u.s. tenure. the crate spat with china is heating up. the president is threatening to impose tariffs on $200 billion .f chinese goods isthe first point