high. cash becomes king. china could cut tariffs on imports for trading partners, not the u.s. we will hear from the co-ceo of carlyle group. move creates new billionaires. david: welcome to bloomberg daybreak. i am tired of salzburg and a again come off again, nafta, brexit, every day a new development. david: totally fair. it is the same idea. you inch it along, spots of potential news, then nothing happens to get the currency moving. moving fast.

it sounds like an emerging market currency. -dollar up. euro the dollar index at a two-month low, helping to lift the g10 currencies phase. 3.07 is how we print the two-year, the highest closing high since 2008. not reverberating in the rest of the markets. crude up by .6%. david: time now for the morning brief. 10:00 a.m., existing home sales in the u.s. then the ecb and new york speaking on monetary policy. pgally, pay attention, the championship kicks off in atlanta today, where 30 players alix will bed glued to her television set. alix: where again? david: georgia. alix: super excited.

david: time now for the bloomberg first take. we are joined by a former trader and macro strategist for bloomberg, and lisa is here. we will start with trade. we had li keqiang saying we will liberalize some things. willhing reported as they cut their average tariff on imports from 9.8%, not sure to wear, and open it up for foreign financial services. they seem to be saying we will impose tariffs on the goods in the u.s., but the rest of the world will get a break. about china trying to improve ties with other countries, perhaps to increase trade in other areas of the world aside from the u.s., but this does seem like the u.s. might be part of it in terms of cutting tariffs, in which case this could be an easing of tensions. they could be saying we are trying to do this in a diplomatic way, trying to

liberalize so you can do your thing, but we are the good guys here. alix: you don't believe that? >> i think china is taking the big boy path. they are cutting tariffs, stimulating the economy on a fiscal side, so we will not see what we usually do from the pboc. there is stimulus and trying to -- in china, but markets won't necessarily react to it negatively. they are sending their top premier again. he will negotiate again with the u.s., and i think this will be a stepping stone to potential negotiations, to a potential deal prior to the midterm. there is a report today that is not as optimistic. they took the overall global growth numbers down. this chart comes from the report

and shows the overall trade is sloping downward now. >> what is interesting is the dissonance between the rosy picture out of the u.s. and the the gloom andnd doom projections from think tanks and economic groups. this is causing the markets to ignore some gloom and doom projections. see if that comes to pass in two years, but right now it is party on. david: we will talk about the data in a few minutes with the new economist from the oecd. alix: here is what i find interesting. , tweets ago, 3% yields from bill gross. none of the above. you see the yield above the s&p for the first time since 2008. , go cash but don't

sell risky assets? >> i think this is a healthy response. people foresee future growth. , ipite what the oecd says would like to have seen that forecast in september 2017. in 2018, they are behind the curve. i think we will see good global growth. yields are responding in a healthy way and investors are responding in a healthy way. you talk about stocks as a risky asset class, there is the dividend yield, but also capital appreciation. at a time when they are growing at a fast clip, you have to think people are seeing opportunities, especially if you think inflation is picking up. you will see increasing pressure. next week for the first time since the crisis will give us a higher base rate than the pace of inflation. you are actually getting

something for your overnight rates now for the first time in real terms. this starts to change the equation. when do we hit that pressure point and start to get that turning point where people say we don't see long-term growth , this is as good as it gets, let's hold simon cash and wait to see. david: it is a return to real yields. how important is the rate of change expected? the fed is on pace to go as far and fast as we think, unless the economic portray situation changes. we are at 1% real yields. isare at a point where it too expensive for japanese investors to hedge treasuries, so they will be buying u.s. treasuries unhedged. the does not bode well for yen.

this bodes well for u.s. treasuries and the economy and rates. as we see yields go higher, 3.25%, thatpproach really yield will get richer and attract more investors. i don't think the fed will get carried away. i think the pace will be measured. david: i want to nokia you would have traded tilray yesterday? >> i thought you were going in a complete different direction. david: it is an amazing stock. look at this. it shot up, shut down, stopped trading three different times. >> i would like to see a chart of cheetahs against this. alix: how do you know about that? [laughter] alix: carry on. >> it was fun in college. ,hen you see a stock like this

yesterday we traded three times the actual outstanding shares in terms of volume. when you have 25,000 to 30,000 shares, and i think shares outstanding is 10,000, you are seeing a lot of speculation. has a trader, you go with it until it stops. >> i have to wonder how this is emblematic of the opportunities to get rich quick in markets. when there is a potential opportunity, crypto assets or marijuana, people pile land of thethan the pace growth of the industry. there aren't that many cannabis companies to invest in. if you want exposure to the cannabis boom, you have only a few people. they have all the cash, even if they are not the winners. big tobacco may end up being the winners. pot, we, cannabis drives me crazy.

thank you so much. >> does and make you paranoid? alix: lots of things make me paranoid. heightar earnings, the and at $5.56 a share, saying full-year sales at 2.5 percent after they wound up beating on earnings as well as sales. david: all of garden was up 5.3%. alix: there you go. speaking of munchies, lower import tariffs for trade partners. more on china's latest moves. this is bloomberg. ♪

>> this is "bloomberg daybreak:

americas." i am taylor riggs. the abbreviated auction for sky begins tomorrow and ends saturday. the tubing bidders are fox and comcast. disney has beat comcast to secure assets for $71 billion that includes a 39 percent stake in sky comes of sky if fox wins the auction. nestlé making a plan to focus on its food and beverage businesses. it is putting its skincare business up for a possible $8 billion sale. nestlé said it is conducting a strategic review that should be complete next year. to sellk, nestlé agreed its life insurance unit for $1.6 billion. a chinese food and delivery service rose and its first day of trading, raising $4.2 billion in its ipo. it turned to a public offering

to fund its costly battle for market share. it is up against alibaba in food delivery and didi for ridesharing. alix: thank you so much. china's next way to fight a trade war or raise tariffs on u.s. imports and cut them for everybody else. people familiar with the matter says the country plans to lower cost for consumers in a deepening trade spat with the u.s. joining us now are our guests. let's start with you. your take on that. they could not keep on taxing exports and imports. >> it is brilliant. china is playing chess while the u.s. is playing checkers. the u.s. was relying on the idea that it could have trading partners that would also come to of a spate in terms with china, and now china is starting to separate them out by

rewarding them for not being aggressive with china in terms of trade. david: what is likely the reaction come it just the u.s., but the rest of the world? >> it is about the yuan and interest rate differentials. the differentials have been an indicator for where the dollar and the yuan are headed. i think china is making an attempt to show it is not devaluing its currency. if they are supporting the yuan and trying to make it stronger, they need to ease things at home. this is one way. where youhe same time have global yield rising and inflows into em, despite the regional issues and trade issues , take a look at the bloomberg, daily bond inflow etf. why? >> this is short-term noise. reached someve

long-term trend support. returnsrsus unhedged em since inception over time, we have reached levels where it 2016,n 2008, 2015 come at so people are starting to dip their toe in. talking aboutalio the overbought conditions in the u.s. dollar, so that might be driving a little bullish sentiment in fx this week. david: if em might be making a turnaround, are we going to see a convergence again? backu expect it will come towards one another? >> we could see that. i would not expect it overnight, but i inc. we will see that. i think it has been a mistake for conventional wisdom to see the u.s. wins a trade war. that is what has been driving a lot of flows to the u.s.. it seems much more likely that both sides are wounded in a

long-term spat. alix: what is the best asset allocation? 51%, yieldsions moving higher, you can't borrow in the u.s. below 2%. what do you do? >> this is a case for diversification. we could see a continued safety play or periods in which there is a desire to move to what are perceived as safe haven risk assets, such as the u.s., but other times we will see the mood change and focus on that where there is the most value and opportunity. investors with a long-term time horizon come it means appropriate exposure to all those areas. >> it depends on which emerging markets. >> you have to be absolutely selective when it comes to em. >> there are some potholes that should be avoided. we will get news on the sovereign, south africa, whether

they keep rates on hold or raise rates, which i am an advocate of. the jury is still out. not sure now is the time to pick the bottom in em. >> now is the time to be well diversified. if you don't have exposure to em , it is a good time to get it. alix: thank you very much. you called it, david come yesterday. opec saying they are ok with oil prices over $80, president trump saying he is not. this morning saying the following. what do you think happened oil? we are up by .4%. david: saudi said maybe we can go over $80. on president has an election

november 6. alix: there is only so much saudi can do. we will see how that plays out. we will talk about this on commodities edge today with my interview with the apache ceo at 1:00 p.m. eastern time. david: coming up, the oecd warning. more on the forecast from the oecd chief economist next. this is bloomberg. ♪

released its new interim global economic outlook, cutting its global forecast for this year and next with sharp revisions for em. here is a part of the report. welcome from paris, lawrence boone, the new oecd chief economist.

good to have you here. >> hello. it is good to be here. david: you took down your overall estimates of growth, but focused on em and how badly they could be affected. what is your analysis? global growth is hitting a not endingt we are the recovery. it is down and emerging, and em the brunt more of than other economies due to a reversal of investor sentiment as the u.s. monetary policy normalizes and global financial conditions tighten. david: part of that is because of trade as we put in the quote at the top. we will put up a chart from your report indicating there may be

some mild downturn already in the level of growth of global trade. is that because of the u.s., or is it a larger problem? issue with rising rejection is him, and what we are highlighting is it is starting to bite on the real economy. you see it most in volume and prices in specifically targeted sectors. for example, washing machine crisis for the u.s. consumer are up 20% in three months. u.s. exports of vehicles towards china down 40% in value terms. sense of what a assumptions you put an about trade developments. t 10%.s. is about to pu tariffs on an additional 200 three in dollars, then go up to 25% if things don't change, then an additional $276 billion.

what protections can you make about increasing protectionism going forward? >> what we do in our forecast is incorporate everything that has been implemented. when it is not confirmed, but still within the discussion, then we are not including it right away because these are ongoing talks. that being said, if this measure were implemented in full as you described them coming you are talking about an impact on prices in the u.s. that could be .25% between .5%, to depending on what is implemented. a shaving of gdp could be between .1% and .3%, .4%, depending on whether you go all the way with these measures. david: your projections for em are particularly concerning. we will put up a chart that

shows you revised downward particularly for em, gdp growth projections. how much of that is trade, and how much of it is other factors such as current account deficits , debt levels, the strength of the dollar? we have been highlighting this morning is , policy, and, em finance. where we see some of those risks , it is mostly trade and em. for emerging economies, differentiation is key. turkey and argentina had some very high funding needs in terms of foreign currency and dollar, but the emerging economies with sound currencies and have not elevated their currency and have

sound monetary and fiscal policy, then they can weather the global tightening conditions with some small depreciation of their exchange rate. we differentiate depending on the macro fundamentals of the emerging economies. david: coming back to develop economies, let's start with the u.s. you do project strong growth, but emphasized the importance of that being sustainable and evenly distributed. what are your concerns there and what are your projections going forward with u.s. growth? >> i will answer very directly your questions. we have not changed our projection for the u.s.. it is still supported by fiscal stimulus, 1% of gdp this year and next. the message we wanted to send this morning multilaterally to the g20 is don't widen fiscal deficits when the cyclical

growth is peaking. it is elevated. looking forward, we need spending directed at investment that will be productive and raise growth. i think that is the message from us. david: thank you very much. lawrence boone, oecd chief economist from paris. alix: coming up, an exclusive the co-ceo of carlyle group in a world of 3% yields. how much risk do you want to be taking on? this is bloomberg. ♪ omberg. ♪

comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers.

"activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. on the go and want to rent a movie? showtime. or buy the hottest shows. even here? we've got you covered. now they are all yours. to take on the go. on any screen. bingo! alright! and watch whatever you buy. wherever you are. head to xfinity.com/stream to start watching. simple to rent, easy to buy, awesome to go. alix: this is "bloomberg daybreak." i am alix steel. pretty calm. points.s up by about 75 s&p futures up by .2%.

the ftse is the laggard in europe. in sterling after you came retail sales came in stronger-than-expected. storyk low --r story, lowest level in about almost two months. in the g10 space, the norwegian krone is what you want to pay attention to. euro krone up by .7%. norway raised rates for the first time in seven years. that currency getting a boost earlier in the day, now off that level. my favorite, brent with a big spike lower. that is after you have president trump tweeting today saying he does not like the oil prices. he wants the pressure to be on. there is something called a nopec bill, and basically they could close opec to antitrust lawsuits. david: that happened in the

way.s's, by the time for an update on what is making headlines outside the business world. taylor: north korea's leader kim jong-un wants a second summit with president trump soon, according to the south korean president who just returned from a visit to north korea. wants to take faster steps towards denuclearization if the u.s. safety.es his regime's in japan, shinzo abe is set to become the country's longest-serving prime minister, winning his third straight three have a near-term. it will clear the way for him to continue with an ultra-loose monetary policy that has helped japan achieve its strongest period of growth since the 1990's. the eu summit, leaders are warning each other the time is running out to reach an

agreement on brexit. the french president said the brexit dilma slump of the integrity of the single market at risk. he called on the u.k. to come up with a fix for the irish border. british prime minister theresa may said talks were not be extended and said there will never be a second referendum. global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. david: thanks so much and we have a very special guest, kewsong lee, carlyle group co-ceo. >> thanks so much. we love talking to private equity guys because they just sit right in his address everything. kewsong lee, co-ceo of carlisle, great to be with you. your fresh off your first annual meeting with your investors in your new role. what was the main message to

your customers as they gathered in washington? >> a couple to results happening. first, investors are pleased with the return. the industry has been doing great. it is fair to say the u.s. economy is doing great. the issues of the day are, how long can this continue? how long can the global economy keep going? we are starting to see interesting signs. in the deal environment, how is all the money going to be deployed that investors have raced, and what will happen to returns? >> roughly $1 trillion, give or take, and so-called dry powder. >> roughly speaking. it is a lot of money. >> how worried are you, given what you oversee across all asset classes, about getting that money out and delivering the returns that you have? >> that is our major focus. tore's nothing more imported us than figuring out how to deploy and manage these investments well and deliver great returns. that is what we go to sleep

thinking about and what we think about waking up. private capital in the global economy is expanding and has to continue, and i believe it will continue to expand. appreciate this, but the number of public companies that are around are about half of what they used to be some 20 years ago. the wilshire 5000 only has 3500 companies in it. we are seeing companies now they do not want to go public. there is so much more invented to working with private equity in terms of long-term growth. we are seeing a tremendous shift in terms of the desire to partner with private equity. but really private capital. you are seeing growth in different asset classes. infrastructure, certainly private credit. underlyingre is an theme at play here in the world, which is the role of public capital versus private capital.

you're going to continue to see the emergence of private capital and fee expense of public capital. there is a role for public capital, but what we can do with the money and all the value add we bring to our companies is certainly going to drive more investment opportunities in the future. >> i want to get back to private credit. before we get there, you have described the attractive landscape that is drawing a lot of competitors into that $1 trillion of dry powder. what is the net effect of prices for deals, l.a. rations, especially given the economic actor? >> the net effect is it is going to get harder. returns have been great in the past. no doubt, returns can be great in the future. keepit will be harder to driving the rate of urgency industry has shown on average. if you take a step back, there are three ways we drive value to equity. you can financially leverage. you can buy low, sell high.

or you can grow the company. leverage is about the highest you are going to be seeing for while. rates may start to go up. i am not sure there's much more upside in financial engineering. multiple expansion, kind of hard to make a case right given how high valuations are. in terms of growth, i think there are real ways to grow companies. that is what we're focused on. 60%, 70 percent, of all the returns we drive for investors buy photo mentally earnings of our portfolio companies. >> those first about things he said are little easier to do. the third is a bit harder and costs more. does that way on returns a little bit? >> it is harder to do. you need to do it over the longer term. and you have defined great ceo's and management partners. then bring to the company a platform of resources, whether it is leverage purchasing or

i.t. or human capital management, a bunch of things that carlisle can do working in conjunction with the ceo's to drive growth and earnings. i think in the future the role of private equity, we are turning more into more of an industrial investor as opposed to a financial investor. used to you can find folks to figure out a great way to raise cheaper debt, but now the folks who do well in private equity are folks who can say that is the right ceo who can execute this business plan at that company and in this sector with all that is going on. a businessmore of judgment, industrial judgment type of perspective that will be critical for successful investors moving forward. >> what about the appetite? carveouts is a place aggressive played since the beginning of lovedrm, taking an under as a company or division.

how hard he is the appetite on your side and then on ceo's to sort of unload things? >> very high. we have made a great business around doing carveouts. exalta was a very successful bill of hours. i think you will see that trend continue. theseu'll see opportunities continue in our business is because the scale and complexity of carveouts is increasing, and we are well-position to go after that. as the world continues to grow and corporations focus on their major businesses and start to dispose of assets that they think they can do less with, there is a real role for private capital to step in and say we can do more with it in conjunction with the new management. >> the other sort of intimate looked at a guy like you gets is how ceo's and boardrooms are feeling about their own

businesses, what they are hearing from the customers. take a sense of those conversations, both with the committees that you own and the companies maybe you want to own. what are they most worried about? >> i think everyone appreciates how strong the u.s. economy is right now. it has accelerated a little bit from last year. but i think we are cautious about the act that outside of the united states, growth has slowed. europe is slowing down a little bit. china has definitely slowed down a little bit, japan. and we're seeing monetary policy and positions the verge. u.s. is trying to raise rates. the rest of the world is waiting to see. in china's case, lowering rates. i think, with respect to the u.s. ceo, they are trying to think through input prices going up and passing the cost through to the consumer, and if they can, they can keep margins high in key profits going. if they cannot, you will see a squeezing corporate profitability. >> how worried are they about trade war?

>> everyone is worried about the trade war, and everyone should be worried about trade tensions. we have not yet seen the mathematical effect of the impact of all of this noise on our portfolio companies. but i am more worried about the second, third effect of what it does to confidence and investment spending and supply chain plans in terms of where you position the factories and points of distribution. i think there is a level of uncertainty that is injected, and we are strong believers in fair trade and free trade, and hopefully the authorities can figure something out. >> kewsong lee, co-ceo of carlyle group, thank you so much. david: terrific interview. coming up, a high-stakes bet on the weed business. surge since its ipo. that is next on wall street beat on bloomberg. ♪

taylor: this is "bloomberg daybreak." , formerp, charif souki cheniere energy chairman. alix: we turn now to wall street beach, three things wall street is buzzing about. surviving the august trade. last month, macro hedge funds with 65% in the red. a surgeon canadian -- a surge in canadian cannabis, tilray has peter teal seeing green. now is lisang us

abramowicz. we start out with the hedge fund guy who shot the lights out. lisa: he devoted his entire letter to investors about his 0.3% gain. why? because it was a gain and that other macro what hedge funds were experiencing. 65% in sparing losses in august, the roughest august in five years, but august tends to be a terrible month. alix: macro hedge funds not so good in general. the next story is tilray, which has gotten the headlines. a lot of highlights on who made bank yesterday. now peter thiel. holds -- you have a copout here. $20 million in 2017 of news, and how much did he make yesterday? a ton. lisa: a lot. peter thiel is the backer of

privateer holdings. that is how he gets in here. what is amazing to me is how right on he has been with so many interesting companies. peter thiel, an early investor in facebook, lyft, airbnb, spacex. that is a huge and impressive list. -- the stakes that private are holding zone of tilray is now worth $12 billion. it has soared tenfold since the july public offering. david: and with revenue, it may be worth double that or half that. wonder if it is a big ball of money moving away from bitcoin to marijuana. david: as long as we're speculating, speculate on wells fargo. there was a report yesterday that gary: had been approached by the wells fargo board. maybe is important, the chairman it is board said

completely false and he has their complete confidence. a lot of attention. alisa: it is a two-year mark. scherzer done for wells fargo 7% this year, underperforming of banks. they have a serious issue at this raises the question, are they going to have to find a new chief executive. fact that she is so sensitive to this issue means it is not the first time she has heard it and she will have to deal with it again. cohn came up from within wells fargo. maybe they want some of the from outside for a fresh look. alix: what is gary going to do? i think you found out that he is not going to wells fargo anytime soon. david: many thanks to lisa abramowicz. coming up, the senate passed a

stopgap spending bill this week to avoid a government shutdown. speak with republican senator david perdue of georgia, who voted against it. that is next on bloomberg. ♪

david: seems like only yesterday president trump was in the white house complaining about having the omnibus spending bill with everything and it including the kitchen sink. congress is up against a september 30 deadline and yet again going forward with a continuing resolution rather than a real budget. we welcome someone trying to change that, senator are due perdueorgia, -- senator from georgia. explain what the problem is. second how did we get from march to this point? : we stayeddue in august to get confirmations

down and to fund the government, and here we are, two days ago, we voted to pass this down, pass the september 30 deadline. i think it is ridiculous. we got 90% in the senate funded, and now we're kicking it down the road. one reason i voted no is it is totally irresponsible. this is a release all congress has used 184 times. the rate -- the main reason i voted no is it does not take care of the president's priority . he was elected to grow the economy, balance the budget, and secure borders. the economy is growing at twice the way it -- the rate it was over a obama. we have confirmed 16 federal judges. that is historic. having one out of every server -- one out of every seven judges undereen nominated president trump. this is a national security issue. ridiculous. the president is fed up. frankly, so i might. david: senator, you were ceo of

some big companies. you have done the job. you cannot say, sorry, i cannot get my budget together. you had shareholders, analysts, wall street looking at you. what would be the incentives for congress to say, you know, we actually have to get the job done on time? sen. perdue: we fought for three leaders in the senate to help get a select committee, so we have a budget select committee now that i november will provide bills and hopefully change the way we do this. the spending process is broken. in 44 years, congress has only funded the government on-time four times. it has to be fixed now. david: what comes next? a resolution gets us through at least two december. what comes next? agreement, wen

could possibly get this thing in a permanent situation. it is about 25% of total spending, so 75%, we hope, for prop the end of september, we will get that funded and appropriated. the problem is border security is just dripping down the road, and we have to fix that. national security issue per the president is apoplectic. he is tweeting this morning about it. we have to get that done the minute we get past these midterms. david: explain to those of us who do not know washington, explain why it makes a difference. why does it make a difference whether they get the budget are not? it does not ultimately matter how much money we're spending. sen. perdue: we have $21 trillion of debt. how did we get here? under president obama, we added $10 trillion to attend trillion dollar debt he came into. hemarch, the president said would not sign and other

omnibus, and that put religion into the leadership of the senate and we did work through august to try to give is funding done. we got very close and they decided to kick the can down the road. this is important because of our burgeoning debt. if we do not get serious about that, we will get to a point where we can deal with it. social security, medicare, and medicaid need to be saved. they're one of the big problems of this runaway expense over the last decade. david: talk about the discretionary spending. with the president basically said back in march was the only way to get this done was to agree to all of the above. theyrats get everything want, republicans get everything they want, but just add up the bill. that is not the way you run a company, obviously. how do we actually start making tough decisions and saying you cannot have everything you want? a depth --e: we have a proposal from a democrat who says, pick a date in the future, and decide what our debt should be as a percentage of gdp. then do a run that just do a

roadmap back to today where you have wrote and discard rosen what you can spend. in business, you do not have the opportunity to not face the tough decisions. congress, youin have a release valve, and it is this in cities continuing resolution. the prisoner is fed up with this process. frankly, so i might -- the president's fed up with this process. frankly, so i my. lot of spending is discretionary. there is a lot more money, entitlements, social security, medicare, medicaid. we do not even hear people talking about that. in the last presidential election, neither candidate said we will have to address this issue. is there any political incentive to address this? sen. perdue: the medicare trust fund, the trust from the backs of the medicare payments to

people who need it desperately, it runs out of money in eight years. social security in 12 years. when that happens, the crisis will be on the streets. people will be appear with pitchforks talking to congressional representatives. just $21 trillion in the next decade. we cannot let that happen. we have to fix the budget process. we have to reduce discretionary spending. the real issue is mandatory. we spent $4 trillion running the federal government. a little more than $1 trillion of that is discretionary. in the last decade, we borrow 35% of what we spent. every dime we spent of discretionary spending is borrowed monday, military, v.a., and all discretionary programs. elections on november 6, will this be a major issue in any of the districts? or do pot i hope the economy will be the issue.

because what we have done is turn the tide here under president trump's agenda, growing the economy. focus on regulation, energy, taxes, and dodd-frank. we have released $6 trillion back into this economy. by the way, we have not seen the real benefits of that yet. david: thank you so much, senator. republican senator david perdue of georgia. alix: coming up, chad morganlander, portfolio manager, will be joining us. are the tax cuts enough to offset the trade battle between the u.s. and china? this is bloomberg. ♪

alix: world shrugs of 3% bond

yields. .0-year yields at a high and cash is king. china strikes back to her china could cut tariffs on imports for most of its trading partners, maybe not as much for the u.s.. oecd with a warning. we will speak with charif souki, chairman of tellurian. read fear and loathing and pot stops. tilray creating new billionaires. is there real value or is this a bitcoin.com like bubble. david: i am david westin alongside alex still. i am still thinking about david perdue, senator from georgia, republican. nobody is making movements. alix: and who will? and about the market, we were talking last week about the next risk, and a guest said it is the huge budget deficit we have. that is a great thesis, but when? how do you deal with that?

david: it does not seem like the politicians in washington care all that much. alix: in the markets, a little bit of movement. as of the up by about seven points, .3 percent. the dollar index is lower. euro-dollar at $1.17. the 10-year in the u.s., more selling on the market and dish margin. you have global equities rise as yields rise? watching brent. president trump came in with a tweet egg using opec of wanting prices too high. coming in on twitter. much more excitement there. david: it was just a matter of time. alix: thank you. david: time for the morning brief. existing home sales for august this morning. and a member of the ecb will be speaking on monetary policy. and the pga tour ticks off in

atlanta today with 30 players. a new world number one player that will be there. alix: i am so excited. let's get an update on what is making headlines outside the business world. taylor: president trump has returned to a familiar thing, demanding opec reduced the price of oil. saudi arabia indicated it was going to see prices go above $80 a barrel or this morning, the president tweeted, we protect the countries of the middle east . they would not be safe very long without us. yet, they continue to push for higher oil prices. we will remember the opec monopoly. they must get prices down. north korea's leader kim jong-un wants a second summit with president trump soon, according to the south korean president who just returned from a visit to north korea. moon says kim wants to take faster steps towards denuclearization if the u.s. guarantees his regime's safety. in japan, shinzo abe is set to

become the country's longest-serving prime minister, winning his third straight three -year term as head of the liberal democratic party. that will clear the way for him to continue with an ultra-loose monetary policy that has helped japan achieve its strongest period of growth since the 1990's. global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. much a tradeou so tensions, molitor and policy tightening, falling u.s. assets, major headwinds into the flow of global markets. this is what investors and economists have been saying. >> we're very cautious about the fact that outside the u.s. growth has slowed. europe is slowing down a bit. china has slowed down a bit, japan. we are also seeing monetary policy and conditions diverge. issue with rising

protectionism, and it is starting to bite on the real economy. >> there is a ton of uncertainty and the environment right now. >> a downturn in the u.s. equity market, that is quite possible. you could have some event, whatever it may be, causing a big fall in u.s. markets. that would frighten capital markets around the world, and you would see a correction not only in the european markets and japan but an emerging markets, as well. alix: joining us is chad morganlander, a portfolio manager. what is the bar for taking on risk right now and how has it changed? >> you have seen a rise within the risk-free rates here in the u.s. keep in mind the fed funds rate will continue to go higher, so that will become more of a headwind for u.s. equity evaluations and performance. also, you have a huge fiscal stimulus push that is going through the economy bringing of gdp growth here.

overall, what i am trying to say is you have to be much more cautious at this point in time, stay balanced within your equity exposure. alix: earnings estimates keep getting revised higher. david: earnings and sales, they are not coming down. right now,ey are not because the u.s. economy is quite robust because of a 4% budget gap. -- no, they are not right now. gdp growth, although it is starting to moderate, it is still growing roughly 3.7% on a global gdp expectation. i do agree with the oecd that you will see that expectation continue to go lower because of perhaps a soft landing within china as well as within the eurozone, the economy there is tied towards china's growth. alix: but the story today is still very different than the story when we last talked to three month ago. these trade battles, there is no way you cannot call it a war.

they're slapping tariffs on each other you see the 10-year at 3%. how does that change sector rotation? where wee time being, have not changed, this is what you would call scrimmage, like jamie dimon suggested yesterday, but it is not all-out war. when you start to see boycotts, for example, on nike shoes or perhaps technology, then you consider it a full on war. but now you have a mathematical situation where it has not really dragged yet on the global trade environment. theation expectations in u.s. will go a bit higher, but i do not generally think that we are going to be lifting our fed funds expectation by 150 basis points to take that into account. david: who is driving global growth, china or the united states? u.s. is growing to china's growing even though it is moderating. which is more critical to future

global growth? >> future global growth is all about china. you have credit creation there. when you look at the bank of international settlements number, they have over $16 trillion of nonfinancial credit created over the last five to six years. that is outstanding and that is much larger than what happened to japan in the 1980's. how that moderates, that is going to decelerate global trade. it is good for china to decelerate the credit growth to balance other overall economy. but that is not that good for the developed market. david: it is not that easy to do. you need the proverbial soft landing out that. china, when you compare the gdp, it is way up there. and thatletely agree, is why china and the emerging markets have been the major engine of growth, contributing to over 60% of global growth

over the course of the last five years. i may actually be low on the number. as that moderates, that will sap some global growth. yields ontart to see the long end of the u.s. curve actually start to moderate. that is what is going to keep the 10, 20, and 30-year low. alix: that is long-term. what about the short-term? days, threet two have enough t-bill yield versus the s&p, finally in positive territory for the first time since 2008. essentially, your cash is worth something. how has that changed? haven assetssafe it we are recommending investors allocate some money towards that and moderate their equity allocation, especially on the em side. we believe the fed will raise rates perhaps before the end of the year. -- look, we are at a point

where the fed funds rate is now going to be above the rate of inflation. you have not seen that in over nine years. difference for risk assets. we have to take that into account. david: go back a year. what are the biggest changes versus cash, equities, debt, domestic, em, versus europe? >> last year we were overrating on equities. we were quite optimistic about the global growth environment, although we were taking into account that we thought that synchronized growth expectation was going to dislocate somewhat. at this point now, we are balanced within our portfolio. and we are very light on emerging markets at this point. we're still quite pessimistic. we do think the u.s. dollar can continue to rise as the u.s. economy continues to move along. david: chad morganlander will be

staying with us. coming up, the u.s. 10-year yield sits at a four-month high. more on that next. this is bloomberg. ♪

taylor: this is "bloomberg daybreak." i am taylor riggs. edition abbreviated auction of sky begins tomorrow and saturday. disney is already beating out comcast in securing most of murdoch's stocks. fox's 39% stake in sky. disney would get control of sky the auction.

aston martin is filing for an ipo that could give it roughly the same multiple as ferrari. the company seeks a valuation of about $6.7 billion. trading will begin on the london stock exchange in october. online meeting and planning service eventbrite raise $230 million in its ipo. at the top end of an increased marketed range. sell ticketss to for concerts, classes, fundraisers, and other events. cheers begin trading today on the new york stock exchange. and that is your bloomberg business flash. david: thanks so much here at we're looking at a 10-year rate that is close to 3.1%. there was a time when we were really concerned about 3.0 percent, despite that, not seeing a big move up for the dollar. we welcome now michael mckee and chad morganlander. mike, the thing that struck me

arenight, i am surprised we pushing 3.1% of the markets do not seem to be reacting. michael: i can see your chart and raise you one. alix: i have one, too. michael: chart wars. this is the bloomberg eller index. -- dollar index. you have to look at the timeframe. this is a low bit longer than you had. but you can see we have been through this since the month of june 3 times, where the dollar has already started falling and then rebounded. we are all the way back to june levels in the dollar index. it is not like there is a dollar crisis going on right now. there is some unexplained aspect to why the dollar is not going sayer, but a lot of people the trade war has pulled in some extra money from overseas into treasuries in the past, and that does not seem to be happening down -- now.

also, we have some treasury selloffs as companies are repatriating money under the tax bill, so that may he keeping a lid on the dollar right now. the fed is expected to raise rates again, so the dollar is not going to reverse. alix: my turn. the white line is the dollar index forecast for december 2019, with expectations coming down. the blue line is fed funds rate 2019 versus december 2018. it equally does not make any sense to me. michael: there are a lot of things that do not make a lot of sense right now. i have a chart on my screen that i will not bring up because we have too many. oh, they're putting it up anyway. this shows you basically what the impact of a stronger dollar is. yellow line is exports. when the dollar is weak, exports are higher. when the dollar is stronger, exports are lower.

weightedhe trade dollar, the blue line, much higher than the dollar index. dollar index is a smaller group of currencies, more of an indication of trading index. but that is the biggest a virgins we have seen and five years. why is that? that is an interesting question. are doing something with the dollar that the broader market is not. david: take all those charts and put them together from all this data points, what does it say to a potential investor? >> in the long run, the dollar will be going higher. that is based off of positive economic growth here in the united states. and the ecb being quite dovish because of that segment of the economy decelerating. in the short run, if he really asked me what those charts mean, i would have to tell you because the trade negotiations are

somewhat more dovish, and that is the reason why the u.s. stock market went higher as well as the em market town's back over the last five sessions. over the long winter my thing dollar will go higher. markets are anticipating perhaps it will get resolved with china. >> i think it is that the trump administration is going a little slower. the 10% tariff, 20%, not accelerating. ,he additional $200 billion this relief rally in the market. but that is like a short-term trading thing. a are trying to draw up narrative to the dollar move over the last five to 10 trading sessions, and it can be confusing. alix: longer-term, back into the fed, we talk but how the markets have not picked up with the fed and the markets have been right in the past six years about changing outlooks. that is a backdrop.

the markets are convinced the fed will raise rates next week. that is 100% certainty. and the market is betting that the fed is seeing enough inflation that it will keep going into 2019. the real question is not what they do and december but whether they're going to do to bob, three, or four rate moves in 2019. david: you are such a student of this. is it fair to say at this point the real question is, when are they going to stop? if anything, they have said, you know what, we see an end game here. michael: that is what will be interesting about jay powell's meeting next week. we will get new economic forecasts and new forecast for where interest rates are going. the question is, are the close enough to neutral that they drop the life from their statement about monetary policy remains accommodative? they have dropped the idea that they have to keep raising rates.

so do they change the statement in a way that suggests we are close enough to neutral but we do not know, so we do not want to lead the market into believing there is a lot more in the pipeline? alix: and there will be press conferences at every meeting. mike mckee, thanks very much. chad morganlander is a sticking with us. david: coming up, tilray's rise, up over 1000% since its ipo just last july. more on that next. this is bloomberg. ♪

a three company stories we are watching sky or will be on saturday. takeover said one day, give us your best shot. three rounds, best offer. then shareholders decide which one to take. we have comcast versus dustin simply fox -- versus aston

simply intersperses fox. is like talking to survey on the phone and you hold. anx: similar for tilray, unbelievable ride yesterday. it was a 100% at one point and then down 2%. chad morganlander is with us. you look at stocks like tilray, do you say, wow, look at that speculative ball of money moving into pot stocks? >> it depends on what your definition is of down the road. if it is 20 years to 25 years, yeah, it is interesting. but over the course of the last three to four weeks, this is a speculative firm. it will take a while for real money to be earned on this with real revenue. it is looking a little bit more like a bitcoinish kind of trade or the internet stocks in 1997 through 1999.

i would be somewhat more, let's just say, circumspect. alix: what, that kind of rice is circumspect? want to focus on darden coming out with earnings this morning. we have our bloomberg opinion columnist joining us. company that has staged an extraordinarily unlikely turnaround. i am sure you member star board comes in and criticizes the entire board in a 300 page report for things like not salting pasta water. it became the emblem with everything that was wrong with casual dining. 5.3% comps today. increasing profit, and those cops will going traffic. wider restaurant industry traffic has been challenged for quite some time. all ofwhat happened with garden? more breadsticks? alix: all you can eat but even cheaper. >> some of what they have done

is sensible. instead of nine promotions a year, they are doing six. it is a lot of clutter for customers to process the deals, and it was a lot for the employee is have to be trained on all the stripper promotions and inks like that -- things like that. so it took some costs out of their system to not have these extra a gradient and not all this training, and consumers are responding better to the deals that they have. >> we do like the food companies, in particular when you look at staples. that is what we think is a tremendous value. i will give a bunch of names that i think can do quite well. i think you could have a hershey's, a pepsi, coca-cola, budweiser, anheuser-busch, those are the kind of companies we think will do well. when it comes to the restaurant companies like mcdonald's, we do favor that one. we think valuations are appropriately priced.

you can get return with less volatility. david: do they do this with blocking and tackling? >> they will have to do something else. they have other chains, longhorn steakhouse, which is starting to do some of the same tactics, and they just bought cheddars scratch kitchen, which is pretty small but has potential to expand. the key will be how they handle e-commerce and delivery wars. we have seen with that has done for dominoes, for the valuation and sales, to come out as a leader on the technology front. i think we have seen all of garden not quite be as assertive in that space yet -- olive gar den be not quite as assertive. alix: woodcut of names do like an retail? >> we do like starbucks, as well as walmart. overall, theart street is missing the fact that they are going to go through this transition where online sales to the direct point of the store will become more robust.

you will see much more volume there. that is going to expand on multiples. david: sounds like adavid: soung -- thank you to you both. tune into balance of power later today for my interview. 12:10 eastern. alix: i have been thinking about the food commerce, and what if i sent breakfast on saturdays and sundays? david: deal. alix: coming up, talking trade tensions with charif souki, a big player in the market. this is bloomberg. ♪

alix: this is "bloomberg daybreak." i am alix steel. a few seconds away from an initial jobless claims. futures keep climbing higher. ftse only up report 1%. part of that is sterling having

a nice pop. better-than-expected retail sales. it is a lower dollar story. dollar index at a two-months low. the new region credit actually turning negative despite raising rates -- the norwegian krone actually turning negative. 201,000 jobs, people file for jobless claims last week. the philly fed index out, of 22.9, better than expected -- up 22.9. david: that business survey is interesting. alix: new orders rose. prices paid and prices received were lower. orders better, prices lower. that appeared to be a positive circumstance. tensions between the u.s. and china creating an environment of uncertainty for trade flows. >> a shift in the relationship

between the u.s. and china, and i do not think it is going away anytime soon. >> 80% of the growth in the middle class in the world over the next 20 years is going to be in asia. if the u.s. does not have open markets and asia that it is able to compete for, we're going to lose out. >> the objective is to open of the u.s. markets to china. if we're successful, that will be great for u.s. companies. >> it will slow growth over time. the actual effects will depend on a variety of factors. it will slow activity. >> it almost looks like the tariffs are being averted because it is coming in through the back door, for lack of a better term. yes, there are tariffs on china and other places, but you can shift to differ parts of the world and bring it into the united states. alix: companies have to business decisions with all these questions. one industry caught in the cross-ice is liquefied natural

-- and the crosshairs is liquefied natural gas. it is the growth market. charif souki is german and founder of tellurian -- chairman and founder of tellurian. they are getting funding to the doctor export terminal. he has a long history in the lng world. thanks for joining us. on a company basis, you are in talks with 25 companies to get them to invest interest would. -- driftwood. are any of those partners still chinese, and does this change the game? >> yes, there are some chinese companies in the mix. you can note that there is lots of enthusiasm. it is just a piece of the total universe, so it is not a big deal. alix: why would a chinese

company still want a long-term contract? why wouldn't you go towards more european companies, like shin near just did? >> fundamentally, the chinese need to guess. they are going to continue to increase the gas flow. despite all the news and the about chinese demand, it is probably still understated given the massive amounts of guess they will need on a long-term basis. they really do not have much of a choice. they are playing this political game where they are going to put some tariffs on chinese consumption, but that only affects their customers. it is only going to make lng more expensive in china. it changes nothing. alix: longer-term, we're looking at the second wave of lng projects of which tellurian is part of. will there be more money into russia, from qatar,

canada, or else tell you? >> i think if they could, they would. that there's been enough gas. the next wave of natural gas will come from the u.s. fundamentally, you cannot change that. we have the cheapest gas on a global basis. only a couple places around the world that can compete with us, russia and qatar in particular but for finite amounts. something i consider very interesting, aside if tatar -- qatar, it is very hard to get it. -- what has been done is remarkable. so if you had our project and the next one, there is an increase in demand for one year. they are going to need to address it a lot more, and the u.s. is fortunate to be in a very competitive position.

we have a german to cement of guess and can put it on the water cheaper than anybody else a tremendous amount of gas. given what is happening in the permian basin and what we have in the eagle ford and the gas coming from other areas is very cheap. we have a massive advantage. very cheap gas, and we know how to build it cheaply. that is not going to change. chinese demand for natural gas is going to continue to increase. that is not going to change. they are only 10% of the market. they are not going to end that. david: i hear what you are saying, the chinese need the gas and we have the gas. we have a natural advantage, as it were. over time, if this dispute with china lasts, could be years

actually, could there be other workarounds? i talked to kevin rudd yesterday, and he addressed this in so there could be real disruptions. listen. the measures now being embraced by china and the united states, if they began to affect radically global supply change -- chains, it is potentially disruptive. also in the united states, it is judged that china has a limited policy for a practical reason. china currently exports $500 billion per year to the united states. united states currently exports about $150 billion to china. so whatever measures the chinese exports ismerican not going to match quantitatively the impact that american measures on chinese exports.

he said there are other things beside tariffs that china can do. outside ofk lng is that normal equation where there could be supply line changes over time? >> of course, there are some impacts. what people do not talk about now is it is our view that we are going to have massive investments in the united states to continue the infrastructure. you would have several tennis committees making significant investments in the united states to build infrastructure and build the pipelines to get access to this cheap gas. that is no longer happening. about we ever talked tariffs, mostly because the chinese investors are concerned about being a lot to make the investments. they do not want to be embarrassed.

so it already has some impact in terms of the investment. tariffs is not the right way to go about it. that will not change anything. they are going to change some things. it is not going to be a deterrent. alix: what i find interesting is the longer-term impact in terms of how lng is being bought. you look at the length of contracts, and we're seeing shorter and shorter contracts, less 11 to 20-year contracts and more one to four-year contracts. the spot market will be sensitive to extra tariffs from china. what do you think? >> i completely agree with you that the energy market is becoming commoditized, and we will have a global crisis that will be transparent and people in terms ofecision

building infrastructure not. something that has been unmistakable, three dollar gas prices are less in the united states, and you now have $30 in asia, and $10 in europe for next summer. we need to have additional to build up production for everywhere, not just china. it is not happening. what i have read in the last six months, they have all been under market. it is coming from companies they can actually afford to take some of their portfolio and sell it at very discounted prices and convince people to buy. what you're not finding is sufficient demand. cheniere is a portfolio and has signed a few. the rest is really not very convincing. aat i am looking at is really commodity market that is similar

to any other commodity. when you have a gold miner copper mine, you do not think of a 20-year contract to support this. here is the right price. here is my cost for the infrastructure. do i want to take a risk or not? i think the energy market is going in the same direction. alix: really great to talk to you. no one knows this market better than you. charif souki, tellurian co-founder. do not forget to watch "commodities edge later today for my interview with john christmann, apache ceo. 1:00 p.m. will be watching. it now let's get an update from outside the business world. deal -- atimism for a nafta deal as the latest deadline approaches. a u.s. trade representative and canada's foreign minister met twice yesterday and plan and

other meeting today. a tree do is probably needed within days to meet a deadline that would allow it to be signed by mexico's outgoing president. china is taking steps to lower costs for consumers as the trade war with the u.s. escalates. bloomberg has learned that beijing plastic of the average tariff rate on imports from the majority of its trading partners as soon as next month. at the same time, china is raising duties on some american goods to retaliate for new u.s. tariffs. maybe you cannot be a movie star, but if you have the money, you can display rare hollywood memorabilia around your home. at an auction today, you can purchase the fedora from "raiders of the lost ark," and his jacket from "star wars" could raise $1.3 million. and another prop is a stormtroopers helmet from the last jedi. and the hoverboard used by michael che fox and "back to the for $39,000.hat

global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. alix: david is rolling his eyes. david: i think you want the jacket, nothing hoverboard or -- helmet. me well.knows definitely the jacket but the hoverboard is pretty cool, too. david: i loved indiana jones. alix: jacket for me. fedora for david. david poppa if only i had $1.3 million. coming up, puerto rico one year after hurricane maria. we will get efforts to help rebuild the island. that is coming up next. and this is bloomberg. ♪

taylor: this is "bloomberg daybreak." i am taylor. coming up later, larry merlo, cvs health president and ceo. david: one year ago today hurricane maria may landfall in puerto rico, bringing devastation. estimated death toll is 2975, 90 hunt -- billions of dollars in damage. the longest power outage in his -- u.s. history could tim o'brien is a bloomberg opinion columnists. in new york with us is david investmentan capital president. he is looking for investment opportunities. an update on where

puerto rico stands today compared to a year ago. certainly in san juan, it is much better than it was when i was down here a year ago. lights are working. banks are open. businesses are operating again. tourism has come back a little bit. but when you get outside of san juan, there are still problems with roadways and still a lot of ,owns with devastating housing and the electricity grid here did not get fully restored until about a month ago. on the other hand, for our bloomberg viewers, the government has made some the last month and restructuring or attempting to restructure about $74 billion in debt it owes to investors. that is likely to involve a haircut on different portions of that debt in varying ranges. the country is putting that debt

agreement to the courts in october, and we will see where that lands. some of the big investors and a hedget is bob post, fund that has been involved for a while. between intense battle a hedge fund and the puerto rican government over how to handle those debt obligations. the conundrum being puerto rico will not be about to rekindle its economy and probably payback that debt over the long-term unless some kind of restructuring agreement is met. in the meantime, there are still a lot of people on the ground here, average puerto ricans who are struggling. david: you say you do not own this debt, but you are looking for possible opportunities. ago,ally plummeted a year but it is working its way back up now. what is the market telling us about the credit worthiness of puerto rico? >> i do not think it is saying much about the creditworthiness of puerto rico.

we have owned the debt off and on over the past couple of years. we actually think it has gone to a point now where the expectation is that there is going to be a restructuring that will be announced, especially on larger portions of that debt. it is going to take some time for that restructuring to go ahead and be swallowed by the public markets. puerto rico will want to get back to the broader markets and will need financing on a going forward basis. i think with the market is telling us is there is a framework for restructuring here. there are a number of obstacles. we want to go ahead and complete that restructuring, but we want to see what puerto rico can do on a go forward basis. that is where we are looking for opportunities. can wave acine you magic wand and restructure the debt -- let's assume you can wave a magic wand and restructure the debt.

would it have what it needs to sustain debt going forward and repair? >> that is the larger question. the answer might only be time will tell. the thing to remember is that in addition to the $74 billion in debt obligation puerto rico has, there is also about $49 billion in unfunded pension funds. there is just a massive amount of financial obligations sitting on this government. it is an economy that depends on tourism and agriculture. the coffee industry has been down. tourism has only started to come back up. it used to have tax advantages, and those disappeared sometime ago. it can no longer offered to corporations coming here. there has to be a solution tool that will involve the government, investors, and puerto ricans themselves. i think without an agreement,

they are not going to get an economic rebound. in that situation, everyone loses. alix: everyone might lose in that scenario. but you still need to rebuild. that has to create potential opportunities. where do you see that within puerto rico right now? >> and the nearest term, to go to his point about tourism and lodging, we see some opportunity there. i spend a fair amount of time in some puerto rico further reaches of the island, apart from san juan which is where lots of people go. this part of the island and i get hit as hard as san juan and the surrounding areas. that one of the island is just as beautiful as the east coast of the island. with respect to lodging, as a result of hurricane maria, the number of hotels across the island that were shuttered and evidently was incredible, well

over 60% of lodging. since the west coast of the island did not get that hit, the lodging is there and has been able to rebound quite quickly. it has been able to go ahead and actually show incredible numbers in terms of bookings and stays and being full at most times of the year. so we're looking at the more luxury and more touristy end. in contrast with tim said regarding the corporate tax and status of the island, the individual tax haven status has not changed at all. so there are lots of folks still lookingin contrast with tim ther capital gains taxes. there are a number of industries popping up there, whether it is currency and blockchain or with sports betting. there are a number of less hands-on or less blue-collar industries, much more service

oriented industries, popping up there and an enabling people to shield in again. mind: what is the state of of the puerto ricans down there, tim? how are they feeling about their economy and their government, and about their island? >> you know, there is san juan and then there is the rest of the island. san juan proper, i still think there is a little bit of a traumatic response to the hurricane. the devastation touched everyone san juanhere, but san juan hasd back more quickly. when you go to the coast where the hurricane first hit or some of the rural areas, i think people feel that they are at a loss. i think there is quite a bit of sectors ofacross all society about some of the recent statements from the president about conditions here. i think they're looking to more constructive solutions and name-calling -- van name-calling.

we should remember that new york city got through bankruptcy by virtue of created public financing and the public and private sectors joining in and finding a solution, and the city rebounded. same kind of thing could happen and puerto rico. alix: tim o'brien and puerto rico, thank you so much. and david tawil of maglan capital, to what. coming up, crude getting lower. more on what i am watching next. and remember, go to gdp go to check -- gtv to check on our charts. this is bloomberg. ♪

what i am watching, oil shock appeared president trump going after opec, tweeting that they must get prices down and we will remember these higher prices. can saudi arabia and russia do anything about that is the question.

they might not want prices over $80. they might have to deal with that. it is a different scenario. oild: they cannot humble that fast? alix: they can on a really short term basis. it is pretty minimal. you need investment. it will take nine to 12 months to bring that on, so there could be a price spike right before the midterms. that is what president trump is worried about. david: not good news for republicans. alix: and i will talk about that on my "commodities edge" show. the open, we will be door -- joined by diane jaffee. this is bloomberg. ♪

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

vonnie: -- supporting a slowing economy. to emerginging back markets, one etf is tracking its biggest inflows and more than a year just as treasury yields begin to take flight. 10-year yield slowly approaching highsar yield preem in the fx market, the dollar cannot catch a bid. 1%./10 of one etf attracting the most money and more than a year. >> now is one of those times, it is a once in a few year opportunity to own a dm assets -- own