talks unless president trump's that his threats. and opec plus ignores president trump. prices surge above $80 as they pledge of supply more oil, awarding of a price spike and triple digit prices. pays $39 billion for sky, and almost doubles its customers. david: welcome to bloomberg daybreak. i am david west and, he looked alix steel because forget about trades, the real news is tiger woods is back. alix: that was really exciting. we all know viewers were shocked, but this was amazing. to see the crowd rushed on like they were rushing -- david: on the 18th hole, it sounded like a football game. they were shouting -- usa, usa! it was pretty exciting. and losers ofers

this unexpected shift for tiger woods. in the markets, the big question is, is it the rally that you want to chase, or did we see tactical trade over the last few days? euro-dollar is up by .1. seen to have breaking news. sirius xm is going to buy at $3.5-- valued billion. david: that is a big move, fascinating. pandora has been struggling and has gone through a series of ceos. sirius has been aggressive, particularly going up against spotify. spotify the big dog here in streaming. alix: and it will be the largest platform. david: good for me because i like pandora and sirius. a share..14 cent

everythingle together with comcast, it is all that streaming. it is a whole new world. it is not about satellite or cable but streaming. alix: how much are you going to pay for that? no doubt, we know that comcast needed sky, but the christian we are talking about is did they pay too much for it? david: sirius has not been shy themselves acquiring things over the years.time for the morning brief . all week long, the un's general assembly will be meeting in new york, clogging traffic. on tuesdayy, -- and when president trump addresses the meeting. the u.s. treasury will auction a total of $23 billion of u.s. treasuries up to seven-year duration. on wednesday, the fed will decide, why they got to be a 25 basis points increase in the rates. on friday, we will learn core cpe numbers when they come out. we are joined by our reporters.

and we will start where alix started, with trade. basically, we have a tit-for-tat going on with we have the usa saying we are not backing down, and the chinese say we will not talk to you as long as you threaten us. mike: this is a big deal. we are now fighting the trade war with real bullets. is sanctions on both sides and the threat of more sanctions that will actually do harm to the u.s. economy and global economy. they cut their global forecast by .1 last night and more downgrades are probably coming. if this continues, you could see inflation and slower growth in the united states. we also have oil prices going up because of sanctions. the priests -- the president's trade wars have started something. beyond the economic impact, the diplomatic impact, the idea we

could be hurting our relations over a long amount of time with the biggest competitor to the united states economic testimony is worrisome to a lot of people. alix: to your points, jpmorgan had a forecast that said, president trump is so overconfident in the economy in the u.s., it will miscalculate. they said u.s. economic and equity market resilience, despite tariffs, will embolden the president on all, and this miss a major calculation that will be tough to calibrate. peggy: i think investors are nervous about whether or not china will be able to find other people to repeated the man they are getting from the u.s., and whether or not he can the u.s. are overconfident about our global place in terms of consumers and if china can go other places to make it up. mike: one of the questions people have had is what happens to the u.s. supply chain through china? senior administration officials

told us last week that the have had six months, they knew this was going on, and they have until december for the 25% tariffs to kick in, so they have plenty of time to replace supply chains. companies, one after another -- bloomberg news has a big story on this today on bloomberg.com -- companies are saying, no, we don't. this will be a material hit to us. it will be interesting to see when this gets into the stock market. alix: at the same time, you have oil prices, brent at a four-year high. it is a similar conversation. president trump says i want to lower oil prices and they say no, i don't see the demand. peggy: there is a lot of global positioning. we have the u.n. meetings and the midterms are around the corner. we have to keep remembering that because of a lot of what trump is doing is in that context. you are right, the middle east is basically saying, thank you for the input but we think we have the supply thing under

control and saudi arabia said they might output oil production for october but not a time. this is a lot about sanctions on iran, a global positioning and battle we are now forging on multiple fronts. david: there the back and forth from u.s. and china, u.s.-iran, that there is the overall question of u.s. and global growth. help globalan not growth. mike: we will watch and see what the oecd does and others who make global forecasts because at this point, with oil prices going up, that is a negative for oil growth demand is there. with the u.s. sanctions on china, that will hurt the supply chains be on china and the united states, definitely into asia, so you do have a threat to global growth going on. that would only rebound back into the united states. david: and they have already taken it down a bit because of trade concerns, even before this. we will turn to comcast the big news about sky. you are a happy person today if you are a sky person.

this is the timeline of what happened. first, fox wanted to buy sky, and then comcast. look at how far it has gone up. extraordinary. the premium originally of sky's price was something. there was really a lot of overpaying going on now. peggy: especially for sky investors, this is great but there are a lot of question marks on whether comcast overpaid. i am not sure, they are making a one-time bet that the crosscurrents between europe and the u.s. viewership will be important to them, including sports. we talked about tiger woods -- they are getting access to some of the u.k. and europe soccer league games. companies thatia live sports are still one of the best revenue makers and the streaming potential for shows across the pond. alix: those of you who do not know, david westin's fancy. fancy stuff, but to that point, what was the conversation about overpaying or

the transformative ship that had to be done? david: people were happy for brian roberts because he tried several times to buy several things, including disney, and it failed. finally, he got a win. on the other hand, robert iger gets the paper some of his transitions into century fox. the question in my mind is, is it worth that much because it is worth more in comcast hands? is there some kind of connection? or is it that everybody underestimated the value of sky? combination.y a the real question, according to analysts looking at this, does comcast benefit because now they have pipes and content now? whichever way it goes, their position to make money on it -- and we have been talking about cord cutting and the fact that nobody really wants to get their television over cable or satellite anymore -- they still need internet. where is the real money going forward? now, brian roberts is in a

position to take it either way. plus, he adds a large customer stream. that we saw a lot of movement among the analysts but nobody said comcast is a sell. ratingsk a lot of buy down to hold because everyone is waiting to see how it lays out. alix: michael mckee and peggy collins, thank you. let's talk about sirius xm buying pandora. stocks valued at $3.5 billion, including a go shopper vision, which is interesting. the total price is $10.14 a share. mike: sirius has been very entrepreneurial. putting them together and they are bullish on their future. at the same time, they have had their own struggles, particularly pandora has been challenged. basically, it was an early adopter or creator of streaming audio services, and then spotify came along, so it became very large. alix: overall, they are looking

at the biggest u.s. audio streaming platform never. the analyst call will be at 8:30, so we will follow that. coming up, trade tensions at the federal reserve policy meeting this week. we will break that down as bonnie want to cool -- with bonnie wongtrakool. check out gtb are not terminal, browse the features and save our charts. gtb -- gtv . this is bloomberg. ♪

emma: this is bloomberg daybreak with your business flash. sirius xm says the new acquisition will turn it into the world's largest audio entertainment company.

they will buy internet service pandora media in an all stock deal valued at $2.5 billion. very gold has agreed to buy an african focused rival in an all stock deal, creating a gold mining giants with a combined value of $18 billion. the shareholders will earn about two thirds of the company -- wrote own about two thirds of the company. there is word there is a deal in the work involving two big names in the fashion industry. michael cores is nearing -- kors is nearing an agreement survivor sachi, valued at $2 billion. people from labor the plan say the versace family will -- sace will continue to play a role. the company was forced to slash its forecast for the second time in two months. the shares are falling the most since the brexit vote.

that is your bloomberg business flash. alix: overconfidence and miscalculating, how jpmorgan sees president trump and the bank sees that as a risk of the market. john norman wrote -- equity market resilience, despite tariffs, will embolden the president on all geopolitical friends and miss a major population from sanctions. -- geopolitical front and miss a calculation from sanctions. square that for me. bonnie: that is a pretty dire prediction he is making. i will also say what we have seen in the yield and bond market, this move up in yields has been predicated on the strength of the u.s. economy and that the u.s. is growing at a faster pace than the rest of the world. i do think the market, overall, is a little bit sanguine and about the risk from the trade war.

we certainly do not know how it will end up but we do know that it will take some time to play out what the eventual resolution will be, and we also know it hasn't really affected economic data yet. i think from here, the bond market should remain somewhat range bound, and that we probably have seen close to the highs. yieldsif the move up and is because of the procedures strength of the u.s. economy, why has the dollar gone the other way? bonnie: if you look to see how the dollar has moved versus yields, the dollar took off before yields. i think it is a catch up and that is why the dollar has stalled out because it has gotten to where it should be and now yields reflect with the dollar did. alix: and the 10 year yield is the white line and the blue line is the bloomberg dollar spot index. does this create asymmetric risk for the fed? bonnie: the fed has been good about keeping their options open. for them, they are weighing on one hand the stronger economy

and potential for the fiscal stimulus to keep things up in the shorter term, and longer-term, what is the sustainable rate of growth for the u.s. economy? i do not think there is a lot of evidence to say the longer term rate is a lot higher than what they thought it was before, but they are keeping their options open because they have to acknowledge that growth has come and more quickly. obviously, wednesday's statements and the press conference at going to be key in giving us more information on how they think about that. david: if they are inclined to raise faster or longer, what is the language you are looking for? bonnie: we are expecting them to say thatbonnie: they will no longer describe policy is accommodative. david: that would suggest they will slow down? bonnie: yes, but i also think they are keeping their options open and will not collect neutral and making the big statements about what they think the initial rate is. it will be -- the neutral rate is. it will be more about the q and a and getting more information from powell. david: i put a chart up now that

suggests technical is breaking 3.0 but not going farther. it really is not that technical -- only mocking you slightly. david: i do not blame you, it isn't. how do you see this? bonnie: i would join you in mocking technicals, but in general, we think 3% is more of the ceiling. because the longer term rate is probably not material changed by the fiscal stimulus. we still have structural forces in the economy, aging demographics and lack of activity growth that will keep the yield contained. david: if we go to 3.0 or slightly above, what does that do in terms of overall policy, financial conditions? does that mean we will not tighten too far? bonnie: so far, financial conditions have held up. the economy can handle this level of rates, but, yes, much about that, it gets dangerous. everyone is watching the 10 year

real yield and we will see how the markets react to it, but i think significantly above that would be detrimental. alix: this week we get auctions, two, five, and seven year. usually, they have been able to absorb the extra supply. will it be the same scenario this week? fed,e: it depends on the but, yes, in general, we have seen better demand for treasuries at this yield. david: bonnie wongtrakool will be staying with us. coming up, sirius xm is set to buy pandora in an all stock $2.3 billion deal. more on that deal, next. this is bloomberg. ♪

merger monday is all about media today, siriusxm will be buying pandora in a deal evaluated at $3.5 billion.

joining us now is costing me -- paul sweeney. welcome. this broke a little while ago, why does this makes sense from sirius'point of view to merge with pandora? sirius is the largest provider, and pandora is one of the largest streaming services. sirius says they have an interest in audio business. we think there is life in the radio business, so they are looking to marry their in car experience with sirius xm to the streaming service of pandora to see if there are synergies. it has also been reported that john malone and liberty media are taking a look at iheart communications, the largest terrestrial radio operator. in thes clearly interest traditional radio and audio and streaming business. david: and the sirius xm stock is way up, so in some ways, it is a discounted price.

this is get into scale compared to spotify for apple? paul: in the streaming business, it does not. you have to look at apple and spotify in the business, but this gets them in the game and gives them the opportunity to see if there is some way to leverage their sirius platform under subscriber base? alix: do you feel like there is another buyerp coming in? paul: i do not. there has been ample opportunity and sirius xm has a convertible pandora, stake in about 15% equity, so this is someplace the marketplace. this would occur, that they would either remainder. deal didere is a huge media also over the weekend, the option of sky assets. that, $38.8nse of billion. paul: this is a little bit over

15 times, and that is it big number in the m&a media space. it goes to show you how much comcast needed the assets from a perspective, particularly because of the international exposure it provides comcast. amcast is essentially domestic u.s. company, and if they want to be a global company, have to go outside of the u.s.. david: they have 53 million users and it increases international revenues from 9% to 25%. this comcast have a lot to offer to sky? is this an add-on? or do they fit together? paul: i think really there is not much synergy bringing the companies together since comcast does not have anything in europe. but it clearly expands comcast's footprint. comcast, with their u.s. business, no set to deal with subscriber relationships, so there are some things to do. i would expect comcast to go inquisitive going forward. david: let's take a look at

their balance sheet because they are paying a lot of money for this. they are paying about $39 billion in the already had a lot of debt. can they afford this and go on to further acquisitions? paul: they will have to go into a debt paydown phase for the near term, and we have a great report saying, this puts the leverage over three times higher than where they want to be but there is a tremendous amount of free cash flow coming out of their balance sheet to look at content acquisitions going forward since they did not get the fox assets. alix: that brings us to the bloomberg, ddis is the function, comcast, their bond principal and loans outstanding. it calculates with the leverage would be, you can see with the increase short-term and longer-term, how over levered our corporate site now? bonnie: in general, in the media

space, there has been a lot of pressure on consolidation and that breeds to the level of m&a there.overall, leverage in the corporate world has risen. but coverage has, as well. interest coverage is really healthy. if you look at the high-yield universe, coverage is closed all-time highs. looking at all of the different metrics, it does not seem like there is a lot of alarm bells ringing yet. we will continue to see corporate profits be healthy the next year because of fiscal stimulus, but it is really the valuations that are the issue rather than the leverage. alix: the bank of national sentiments warned of leverage loans in the high-yield bond market in the u.s. and europe, saying there is complacency. where is the complacency? bonnie: it leverage loans, we have seen talk of covenants and they have been looser, so that is clearly something to be keeping an eye on. again, going back to valuations, think there is a little bit of too much complacency, that there is

perfection been priced into the market, causing this to reduce our risk in the corporate bond space. alix: paul sweeney and bonnie wongtrakool, thank you. bonnie wongtrakool will be sticking with us. what is your biggest question with comcast now? david: my point was going to be bob iger does not have as much leverage because it will be more affordable for him to buy that fox. either that or swap it out for hulu. alix: we are not been talking about this. coming up, the return of $100 oil. is that the reality? spreads climbing after opec and urgency.seek less this is bloomberg. ♪ this isn't just any moving day.

this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows.

this is staying connected with xfinity to make moving... 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. alix: this is bloomberg daybreak. i am alix steel. last week it was about the risk rally, did you want to buy into

it or was it a tactical trade? futures down by 37 points. european stocks also lower and the dax lower, as well. in other asset classes, it gets pretty interesting. one,dollar up by points ok, but cable rates up by .5.it feels like the government is imploding on itself as brexit continues to climb higher because of dollar weakness, some are saying. and the bond market yields climb higher as the selloff continues in europe and the u.s.. two year five-year and seven your actions, and it will be auctioned in coupons and bills over the next five days. brent crude up 2%, the highest level since 2014. i am waiting for the risks to percolate over global demand. david: i bet they will come, do not worry. we are going to recap that big

deal, sirius xm buying pandora for $3.5 billion. sirius xm radio will own pandora to augment their satellite radio service. you can see on the news, sirius is down in premarket trading and pandora up almost 10% because they have been looking for a solution and this may be it. let's get an update on headlines outside the business world with emma chandra. not: china says there will be any peace talks in the trade war as long as president trump keeps threatening to impose more tariffs. it escalated after midnight washington time. the u.s. imposed levies on another $200 billion with the chinese products. beijing has promised to retaliate with $60 billion of american goods. president trump has said that that happens, he will impose tariffs on more chinese imports. brett kavanaugh's nomination to the supreme court is in danger of falling apart after a new claim of sexual misconduct. according to the new yorker

magazine, senate democrats are investigating an incident said to have taken place during his college years. he's denying the allegation. on thursday this week, a woman who said he assaulted her decades ago will testify before the senate judiciary committee. iran's president lames an unnamed persian gulf country with links to the u.s. for the attack on the military parade, at least 25 people were killed. mike pompeo says president trump is willing to meet with the iranian president. the president will host a security council meeting with iran on wednesday. it is possible the iranian president may be there. global news 24 hours a day on-air, and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. alix: thank you. the backdrop for that potential theing between trump and iranian president is brent crude, at its highest level since november 2014. saudi arabia signaled they are

no longer in a rush to bring oil prices down from current levels, saying the market is well supplied and the reason they did not increase more is because all of their customers are receiving all of the barrels they want. joining us is rbc capital managing marketing director of and bonnietegy, wongtrakool. mike, good to see you. the warning of demand, did you buy that? mike: i think that is part of it. the other part is last week when we saw the headlines suggesting the saudi's are comfortable with $80 oil prices. the bottom line is saudi arabia is an oil-producing nation. certainly they like when prices are higher. the issue is whenever oil prices have encroached on the $80 level, trump's twitter fingers are activated and that puts pressure on the saudi's to bring production online. we have seen over the summer oil

production from saudi going from 10 to 10.8 to 10.4 million barrels a day. we often get nervous or we have been conditioned to be nervous anytime the saudi's rapid production. this time is different in the sense that they are not looking to push down oil prices. the bottom line is the saudi's still have quite expensive extra curricular activities. what i mean by that is they need to find their fiscal spending, -- fund their fiscal spending and military campaigns. on balance, i think they will be supportive of prices over the near-term and they do not want prices to spike too high. alix: i want to focus on that issue. you can see in the bloomberg, the forecast has not gone anywhere despite prices moving. every note i get, i hear warning risks to the upside and i am hearing potential 100. have you back to that in yet, especially with the violence in iran this weekend? mike: we are structurally

bullish on the market. the key is when you look at the broader market over the course of the next 12 months to 18 months, the market will need more barrels coming online because fundamentals will tighten. when you look at who can bring them on, the saudi's can only do so much. the rest of opec and russia can only do so much. permians are all around us on the serpas we have seen over the past years has been eradicated at this point. that is coming at the most inopportune time because with the shock absorbers now gone, you have iran starting a downward spiral, venezuela is not getting better, so when you put these together -- and we have not talked to him and get -- we think the broader narrative over the next 12 months to 18 months will lie with capacity or lack of it. alix: that brings into the foregrounds of what is leading oil? is it washington, d.c., for the first time in a long time? energy administrator

had this to say -- has more to say on price movement then opec because partly maybe because of the tweets, policy, and issues that directly touched the oil market, so i think what is going on in the white house has more to do with the recent increase to $80 brent. i collect washington premium. -- i call it washington premium. alix: basically, what is coming out of d.c. has more impact than anything out of the middle east, which factors in the jpmorgan note. bonnie: trump would like to believe his tweets control a lot of things, but our longer-term view is that there is capacity still in the market. there is still access brent

capacity and the permian volume will be resolved. some say by 2020. where oil prices go in the future could be volatile. overall, we do not expect them to stay in the $80 to $100 range. it is constructive to have higher prices for energy, and we have an overweight energy sector, but we are not advocating it on the higher dollar prices. a lot of companies back in the e 2014 through 2016 became more disciplined under better at managing and deleveraging, and we think they will maintain that conservatism after being burnt. alix: mike, number one wildcard? mike: iran is undoubtedly the most bullish indicator for the market over the course of the next several quarters. is ony reason why is iran the outside looking in with opec. iranian production has fallen about 900,000 barrels a day so far. well.s have followed, as

what is really important here is when you probably look at iran, this all happens before the november for deadline when sanctions kick in in a big way -- november 4 deadline when sanctions kick in in a big way. we have already seen other countries start to do so right now. the key is when people look at who else could potentially wean off, many say china, we have not seen indication china is leaning at all. alix: michael tran and bonnie wongtrakool, thank you. mike: thanks. david: we will turn from one geopolitical risk to another, called brexit. great britain is in the middle of political party conferences at the battle continues with theresa may fighting for a harder brexit and a softer brexit from higher oppositions and those within her own party. peter,ng from london, thank you for being with us, sir peter. >> my pleasure. david: we have a tough time in the united states sorting this

out, but it seems you have two cap extremes, let's do a hard brexit and get out or not at all. theresa may is trying to have something of both. is this a middle position or she tried to have hercake and eat it too? find ashe's trying to middle, which does not cost too much damage as they leave the european union. it is a model because she has a battle on her hands with her own party, the europeans, who are not impressed with her compromise, and at last week's summit meeting, it was a disaster because she thought she was going to be able to ram through her compromise, having been told the other europeans did not like it. we are reduced to four choices, do not do brexit at all, one is what we call no deal brexit, which would cause all problems, and there are two other versions, one of the no way option and the plus option.

none are satisfactory, and there is a sense of gloom and the u.k. at the moment that we do not know how we will make this brexit think work. david: we go back to the original referendum, which was closely divided. they seem to be divided themselves. is it possible to stay in the eu a little bit without being subject to their rules or having any say over what they are? iser: the problem with that that the europeans say if you want to stay in, you have to play by the same rules or that is what we culture in picking and it gives you benefits with no responsibilities of membership. that in a sense is what theresa may has been asking for but she keeps being told by other europeans that you cannot have cake and eat it. make up your mind, if you want to stay with us, that is fine but you have to pay a price, like the norwegians. or you staying completely and forget about brexit, but you cannot do that unless you have a second referendum, which is being discussed more than a few days ago. what you are talking about is

not something of the europeans are prepared to let us have. david: this is devilishly difficult. no one can underestimate how difficult it is. in the meantime, the u.k. economy are almost frozen in place because of the uncertainty that has gone on so long. at some point, is it more important to get a decision so people know how to plan their lives rather than to have a protracted negotiation going on for some time? peter: that is the main argument against one of the things, the labour party, which has been -- which they have been suggesting. europeans want to do that, and as you rightly say, it does not give business or anybody the certainty to make plans or investments. there is a sense, regardless, let's get this done because we voted for it and we now need to make it happen. the problem with that is the more we look at it, all the ways

that brexit can be made to happen that are out there look like that news for the united kingdom, its economy and prosperity. despite the uncertainty, sterling is holding up quite well, and equities, as well. yes, people would like to get it done, but there is growing nervousness that all of the options out there, despite what they were promised at the referendum, that none are good for the country. david: peter, thank you. that is sir peter westmacott. alix: tiger shows his stripes. we discussed tiger's first title in five years, coming up. m ♪ --this is bloomberg. ♪

emma: this is bloomberg daybreak. i am emma chandra. coming up, jonathan gray, blackstone's president and coo . now to your bloomberg business flash, the world's largest privately held technology company is reportedly taking another step toward an ipo. interview several banks for underwriting rules and traditional public offering. that is a backup to another plan that has met resistance. has confirmed it had positive feedback from iraq after making a $15 billion bid to boost power generation. increasethe deal would the capacity by half over four years. the deal is near completion. jpmorgan is carrying out a plan to expand its new bank into more than a dozen new markets.

the largest u.s. bank by assets will open about 50 branches in the philadelphia area, including small business and mortgage lending. it is their first week in pennsylvania and delaware. alix: thank you. we turn now to wall street beat, three things, sky is crystal clear with the sky saga nearing an end. new winners emerge, and hedge funds. and then invesco buys oppenheimer funds, increasing the management space. and tiger shows his stripes after scandals and injuries plagued his career and sponsors ship, he wins a pga tournament the first time in five years. david: joining us now is jason kelly, bloomberg's new york bureau chief. let's start with antique investment banks. the one i love is more be

warshaw, or to have not heard of. it is like the best of. jason: it is really interesting to see whowarshaw, or to have ng winners are in all of this from a banking perspective. we can talk about the hedge funds in a minute, as well, which just popped up, but from an investment banking perspective, you hear about the big guys all the time and you assume it is to goldmans and jpmorgan's of the world, but these niche banks, and we have seen more and more, really post financial crisis. it does not make sense to call some boutique banks anymore, but that is really what came out of. as you mentioned, these guys certainly came out of nowhere for most of us. they have passed bank of america in investment banking. alix: you wind up talking to big banks and they say, we do large deals, those guys are small and

medium-sized, so we are not playing the same game and will not compete for business. in reality, that is not true. jason: exactly right, and we are seeing more and more that customers and clients do not really necessarily always want the big bank approach, especially if they feel they don't get the attention. this is ultimately a relationship game, and with a deal like this, which was so complicated, in your world, you know -- david: what the boutique bankers tell you is relationships are based on talent. the fact that small firms can attract big talent -- look at the saudi aramco situation. a 30 person shop with a big player because klein has the relationship. jason: exactly. alix: and the other when, that lovely merger, let's look at the hedge funds, elliott, i mean, there were some big names that had some nice mid-banks over the weekend. jason: right, you see that and that is there holdings of sky --

and they definitely piled into this one. it was interesting to see they were almost certainly going to win some way or another. it was just how much they were going to win, which is a good place to be. we don't talk a lot about the hedge fund winners in the briar hedge fund world. these are big names, and they really cannot on top. alix: let's go to invesco. basically, they are in talks to buy oppenheimer funds asset management unit. this as they continue to buy up what they need to to expand their business. jason: at this table, we have talked about the comings and goings of amended activities happening in the broader asset management unit. this logic comes down to, do you have the large balance of active and passive? david: and are you big enough? you have to be big right now in asset management if you are going to be a player. jason: right, because especially

as you see the fidelity's of the world, we will give you this for free or so you this down the line, you need to scale. alix: you have to have a lot of product. tiger.third story, pretty exciting and dramatic, the huge crowd came behind him in the 18th hole, talk about the winners and losers. first of all, the game of golf a big-time winner. jason: the game of golf is the biggest winner. every person you talk to, you look at the crowds, you look at the ratings, it is tiger and not tiger. it is really amazing. david: i pointed out earlier that in the u.s. masters, when tiger was in contention, i think he came in 32nd or 33rd, cbs ratings went up 14% because tiger was in the running. 2 they were -- jason: they were occasionally going to show him. david: they stayed with him throughout the whole thing, and not all of the sponsors favorite -- favored him. jason: many dropped him during

those scandals. bridgestone golf is a big winner here. you remember nike is only his apparel sponsor and not equipment sponsor. bridgestone has been a vocal sponsor. he is using their golf balls, so they are huge. alix: is it, yes, i get it, i am with you, the next time everyone plays is going to be huge, what if he doesn't do well next time? is it over? david: he has been building up to this. you can watch and climbing in climbing the leaderboard.i would be surprised if the fallback. alix: which would make nikes at so brilliant -- ad so brilliant. it says i'm back, and then you swipe it -- what does it say? let's do it. david: he's done.

and then you swipe it and it says again. and now we have the ryder cup coming up, but another loser is abc end espn because they gave up the british masters. the nbc's and cbs with the golf rights -- jason: he is already the favorite for next spring semesters down in augusta, georgia. that is how powerful he is. and people really want to bet on his continued success. we will see if it continues but to david's points, this was not coming out of nowhere. david: he has been building. alix: i would love to talk about golf more. [laughter] david: we would do a demonstration for you. jason: we have everything else to talk about. david: many thanks to jason kelly. tune into jason on businessweek on bloomberg radio daily from 2:00 to 5:00 p.m. eastern time everyday.

coming up, president trump is considering an executive order in -- that would investigate social media companies for violating antitrust laws. alix: check out tv . interact with us directly, go to t and scroll through check it out. this is bloomberg. ♪

david: this is what i'm watching, the white house is reportedly drafting an executive order where the president says to all its agencies, you take a close look at social media and report back in 30 days. there is a lot of language and i will not bore you by reading it all. tell mek in 30 days and there violations from antitrust laws or bias? he tweeted out earlier that he thinks the media platforms are biased against conservative voices. alix: i have two questions, is there an antitrust issue with the big social media companies? and how do you prove bias? david: the received wisdom, we will see, the perceived wisdom is not under the antitrust laws. having said that, over at the ece, they think differently. in europe, they have already gone after google and they say

may be amazon but they have different rules. i'm not sure what law that would violate. lee, what this is it is he doesn't like what they say about him. david: i am not sure there is a law that prohibits that. alix: they have had to censor soe, but on the right end, -- david: but that is their decision. alix: we are watching it. coming up, china trade talks are off for now but tariff

i'm all about my bed. this mattress is dangerously comfortable. when i get in i literally say, ahh. meet the leesa mattress. a better place to sleep. this bed hugs my body. i'm now a morning person. the

leesa mattress is designed to provide strong support, relieve pressure and optimize airflow to keep you cool. hello bed of my dreams. order online. we'll build it, box it and ship it to your door for you to enjoy. sleep on it to up to 100 nights and love it or you get a full refund. returns are free and easy. i love my leesa. today is gonna be great. read our reviews, then try the leesa mattress in your own home. order during our fall mattress sale and save. for a limited time get 150 dollars off and free shipping too. sale prices are available right now. go to buyleesa.com today. you need alix: tariffs on, talks off.

china will not hold trade talks unless the president stops his pets. we will speak to jonathan gray, the co-coo of blackstone. opec ignores president trump. prices push over $80 a barrel as they stop short of pledging more oil. they one of a price spike in triple digit prices. and brian roberts' knockout blow, transforming his business -- with hisxm purchase of sky. and sirius xm purchases pandora. david: i am david westin, with alix steel. monday fortle m&a you. soft mist the rally last weekend the s&p, was it tactical or sustainable with futures off by five? euro-dollar pretty much flat with deutsche bank saying you will want to buy euros and sell sterling. and the selloff in the bond market moderating but still

holding yields up one basis point and crude at the highest level since november 2014. david: trade tensions between the united states and china are growing with mike pompeo signaling on fox news yesterday that the u.s. is not going to back down. >> the trade war by china against united states has been going on for years. here is what is different in this administration. to the extent one wants to call this the trade war, we are determined to win it. david: and china is warning against any further tariff threats, saying "good work for a trade talks is always open, but negotiations must be held in an environment of mutual respect. negotiation's cannot be carried out under the threat of tariff s." we welcome now deborah lehr and .rom london, george magnus george, i went to start with you

because you have a piece out online just today and one of the things you say is this is not a conventional trace back. you say it is about existential matters, the struggle for leadership, and mutually accepted rules and regulations and policy and national security. this is what businesses are most concerned about, that this is a longer-term existential conflict. what leads you to that conclusion? just think that if you look at china over the last 30 years or 40 years, once upon a time, it was a wonderful global customer and then it became a feisty competitor, and now it is all of those things, but it is also an adversary, you can really of the united states. but i think in europe we also feel many of the things that are going on within the beltway, as well. my feeling is, this is not like the terms on which the united states is trading, which describes the concerns that the

white house has over canada, mexico, and a few other countries. this is really about much more substantial issues in the country that america perceives as an adversary. david: what about from your perspective, deborah. you talk about with chinese leadership. to they see it as a longer-term conflict that we risk or that we resolve it in 60 days or 90 days? deborah: the chinese for a longtime pet that there was the need to change our policy, and i think the administration has been focused on that. in chinaow this policy for the last 30 years but china has changed significantly. the administration has made clear that it is not just about resolving this tariff issue, they are looking at chinese investment practices, the students who are coming here who are potentially spying on the united states, china's foreign

policy, not only with united states but globally, so it is clear the administration has put a whole range of issues on the table, and the chinese leadership is looking at that and thinking about how they respond to not just on the tray conflict but the whole range of issues in this changing relationship between the united states and china. alix: 100%, which leads me to ask, what support this president xi have on this front, when some estimates for what the trade war could mean for gdp are quite significant to further out you go? deborah: there was a whole range of speculation about what this is going to do for the chinese economy. one thing clear is they have changed from relying significantly on exports and are much more driven by consumption now, although, government investment is the question. the economy has grown by that previously through the government increasing its investments after the financial crisis. we saw a lot of that.

the question is now, can they afford to do that since they are going into debt? you have an active looking for new export and import markets. they had been courting the middle east, africa, certain countries in latin america and europe to try to diversified away from alliance on the united states. david: i wonder to the extent this is a two fundamental conflict of status or stature as opposed to conduct or behavior. in this sense, there is this perception in some parts of china that what donald trump once is to not pass the united states in their prominence in the economy, which the chinese are not sure is doable or are there things china could do in terms of behavior that could satisfy the united states? george: well, i think it is much more difficult now and i think it would have been perhaps early this year or even last year. i think what is going on in china now is a reflection of the

beens, which has basically running through the veins of the communist party and to the government in recent years, where they kind of thought -- they did not think very much about what other people thought about what they were doing, particularly in areas of industrial policy and this particular policy of made in china, 2025, which is this aspiration to become the world's ,echnological leader eventually aided and abetted by subsequent policies on ai and so on. i think the issue really is whether china can now make concessions or basically -- ofy're not going to give up their sovereign rights to determine industrial policy at home and technology policy, but can they make concessions without appearing to climb down in the face of american pressure? that is what i think the offramp is quite a long way away.

david: coming back to that point, from my going to china over the years, they say they are not a major economical world power, but then we saw president xi, with a very different tone, saying we have arrived and we are a major world power. can he climbed back down off of that? is there any doubt in the regime of the wisdom of that approach? has takenresident xi a different tact on foreign policy than his predecessors, and that no surprise, at one level, when chinese companies are rapidly expanding their presence globally, foreign policy naturally will change. on the offramp, i think certainly there was opportunity for that. you can see there is a potential deal out there that could be a combination of reducing the and increase market access for u.s. companies and increased purchases by the chinese. ultimately, it will take a deal done between president trump and president xi and we are all long

way from getting their given the current atmosphere and that the two sides are not talking to each other at the moment. alix: from a company perspective, a chinese company will make better products and the cannot compete on price and go up the value chain, is that the possibility? george: i think we already have quite a lot of evidence about how chinese companies -- i mean, the days when they did tories and textiles is a long time ago, so now they are quite adept at competing in middle level, technical quality computers, and software and so on, so they do a lot of very conventional western products. having said that, it is still the case that they rely a lot on foreign companies to basically drive that effort, including american companies. madestill have not really the grade when it comes to the really highest level of

technological inputs into very sophisticated product. i think that is why this trade -- i was going to say spat -- it really is more than a spat, this trade war is important because the chinese feel the americans want to contain them, and obviously, the united states feels china is a threat. i hope there will be some opportunity in the future for quiet diplomacy to result in some kind of mutually beneficial way of solving this, but we are always away. alix: deborah lehr and george magnus, thank you so much. coming up, a conversation you do not want to miss. jonathan gray, blackstone president and coo. this is bloomberg. ♪

it is with great pleasure returned to erik schatzker because he is here with jonathan gray, blackstone president and chief operating officer. erik: thank you. jonathan gray, good morning. thank you for coming to bloomberg. athan: thank you. great to be here. erik: you held your investor day in four years on friday and revealed a lot about blackstone's future, and you initiative in life sciences you are talking about with an expansion in asia, and an emphasis on permanent capital, and specific funds you plan to raise. why reveal so much about your strategy? jonathan: it has been a while since we sat down with investors and we wanted to give them a comprehensive update. a lot has changed at blackstone since four years ago.

the biggest thing that has changed is the way the firm is expanding. further, theack firm was more focused, let's say, in private equity and real estate private equity, and we have seen this liberation of things we do, all built on the backs of delivering great performance for investors. we have delivered great returns and that has given us the confidence of investors and they have allowed us to expand our platforms. as you have said, we have different initiatives and we can talk about some, but we are excited about those and we wanted investors to understand the nature of our company is changing and we are moving to perpetual capital, long-term be a close, and that leads to not only accelerated earnings but improvement in the quality of earnings. erik: quality because more of it is fee-related as opposed to kerry? jonathan: yes. we get paid in two ways, they's

management fees and performance fees, the market puts it at your discount on performance fees, even though we have been able to generate them over erik: -- it is a sore spot. jonathan: it is a bit of a sore spot, but the market likes more recurring instead of more predictable, and if you look at happening, if you go back to 2017, about one third of our earnings were fee related and we said that could grow to as much as two thirds. erik: scale is a word used in conjunction with blackstone frequently. you pointed out on friday that blackstone has attracted almost as much capital in the past five years as your three largest competitors combined. why's it important to be the biggest? why is it important to grow by the most? jonathan: burress, scale has proven to be over and over a competitive advantage. what do i mean by that? one, buying assets. if you think about public $1kets, if you want to buy

million of stock and i want to buy $1 billion in stock, you have a competitive advantage. if you go to private markets, where someone wants to do a $20 billion deal, we end up in a bilateral discussion. so shale for us across our platform really matters. it also gives us all sorts of information, if you think about our portfolio companies, what we see on the ground around the world, that allows us to do more, and there are all sorts of adjacencies against our scale. the reason we have been able to move into europe, asia, expand private equity into energy, core private equity, all the activities, is because we have a large base and we can grow off that. or us, scale is important and we continue to emphasize that in our investing. it helps the stripe higher returns, which is the essence of our business -- drive higher

returns, which is the essence of our business. erik: is it as simple as bigger is better? jonathan: if somebody needs a solution in a hurry, if you need to borrow a bunch of money, and you need to billion dollars, you can call us and our folks can give you a solution. erik: what about the risks being so large? jonathan: the classic risks are you have a lot of money, there's not a big opportunity set, and you worry returns go down. if you look at our history overtime, it has been opposite. we report all of our returns. even though our scale has grown, our returns have continued to be strong. if you look at things like the private equity industry, and you went back to 2007, you would say the private equity industry is up 50% in dry powder, yet the isle of large scale funds basically the same, so we continue to find the scale for larger opportunities and we like operating in stocks. erik: all of the drive power we hear about and in which

blackstone has -- how much? jonathan: 88 billion today on levered. erik: you could put 80 billion -- 88 billion to work and all of a sudden we are not talking about a large amount of money. jonathan: yes, but a large amount of buying power. erik: you don't feel that having that much to commit, if you will, to put to work is problematic? because, again, the markets are enormous. that 88 is across all sorts of industries, in infrastructure, credit, real estate, private equity, in the u.s., europe, asia, and we have time. havet all of the funds five plus year durations. we are not forced to put the capital out. we are being patient, looking for good opportunity, waiting for when you are looking at balls and strikes, you swing when you see a good pitch. i feel really good about the

our prospects to deploy capital, and if the markets turn sideways, we will be patient. erik: some years ago, eric schmidt use the term four horsemen to describe the unrivaled power capabilities and influence of google, facebook, apple, and amazon. should we think about alternatives the same way? meaning us -- jonathan: meaning a small number of firms? erik: a small cohort of firms with enough scale to put distance between themselves and the rest of the industry? jonathan: well, there is clearly a group of us growing more quickly who are larger, but there are also a lot of small and medium-sized players. it is not necessarily a winner takes all business. erik: but it winner takes most maybe? jonathan: maybe we are getting greater share but it is based on performance. if we deliver great returns, capital flows are way. that has been the virtuous cycle of our business. deliver great returns, investors

have confidence in us, and you mentioned earlier about us emphasizing growth, right? that is an area we have not done as much in historically. we have the ability to move in that area, be it to life sciences, technology, or asia. but i do not think that pointing to a firm or group of firms that is lacking out or limiting competition in any way, shape, or form. we see that as our firm does better, we had the opportunity to grow. erik: if you are not carlyle, oaktree, brookfield, pbg, they are all either at or in excess of $100 billion. if you are not in one of those firms, it is hard to get there, isn't it? jonathan: it is harder to get there, but there are great firms out there aspiring to size. size.are advantages to

there is the ability to attract people. i will mention my favorite stat from investor day on friday. incoming analyst class, we had 15,000 applications for 86 spots. the power of the brand -- and that is something also special about the farm -- is really valuable to us. yes, as we move into some of these other areas, be it retail or insurance, the large and being able to offer a range of products and geography is a competitive advantage. erik: do you see yourself on a collision course with blackrock? jonathan: not really. they may have moved into the private space and bid into the alternative space, but their business, i think, is primarily about liquid markets. erik: sure, but they grow on an annual basis by more -- buy assets than blackstone has. jonathan: yes, but more liquid in nature. blackrock and blackstone, which started in the same building, on the same floor, not that long ago, are benefiting from the

powerful trends in the asset management area, which is low-cost etf's, and index funds are seeing huge flows. and alternative managers, blackstone, are seeing big inflows. that is because we have seen stronger performance. i think both firms succeed going forward. erik: one thing that did not add up for me friday is you have $439 billion now. you laid out the trajectory to get to $1 trillion in 18 years or so. -- in eight years or so. at the same time, you expect an additional $200 billion or so to come from retail, private wealth, and your predecessors president says insurance could be the biggest business in terms of a u.n.. aum. that is $400 billion more over where you are now, which suggests to me that you are doing one of two things, either are additional investors,

investorsaditional are going to invest less or you are lowballing that $1 trillion number. which one is it? jonathan: i do not think we are though bolling this. we definitely are not -- though low-balling -- this, but i think we are giving the sense there are huge opportunities with private equity, are secondaries business, big opportunity in the perpetual capital and long duration open vehicles, and there is big opportunity in retail and insurance because unlike the institutional market, which is a quarter allocated to alternatives, in those areas, they are 5% allocated. we think they face the same challenges in terms of return and they have the ability to invest in a long-term. we look at this and say there is a lot of white space. we have a terrific firm, great

ability to deploy capital. but returns time are the essence of this. we do not want to raise capital and not do a great job. i do not think it is low-balling. i think we are taking a long-term approach to building the business. erik: permanent capital, why is it important? jonathan: because it compounds and grows and allows us to serve our customers in a different way. if you look at real estate, we were in the opportunistic space, buy it, fix it, send the money back. some investors said, that is great, but that is a small portion of real estate. can you give us long duration capital in the ground the whole time, will take lower returns, operate with lower leverage and we get the benefit of decades of compounding? we moved into that space. we managed to do a great job delivering for investors and it has grown from 05 years ago to 30 plus billion dollars today -- zero five years ago to 30

billion plus dollars today. erik: where do you think it will be five years from now? they said overnk the next several years, it could grow to 60 billion plus, which is doubled from today. and from a revenue standpoint, we talk about going from $250 million today to more than $1 billion in the next few years. the potential on this on infrastructure, a whole range of these perpetual capital activities, the potential is big. erik: life sciences is an example of this tilt -- i am using your words -- toward growth and tech. what else belongs in that camp? up, the reasonng why you want more exposure to growth as we are moving out of this environment of rates coming down, which we have been in for 30 years. in an environment of rates going up, you are less likely to see multiple expansion. to drive earnings value or value

growth, you need an increase in earnings. so where does the growth come from? life sciences, tech, growth equity, which is an area we have invested in, but we could do more there. asia, which you mentioned, which is going to .5 times as fast as the rest of the world. as a firm, dutch which is growing two-point times -- 2.5 times faster than the rest of the world. erik: tony james listed other initiatives underway. let's go through them and you can tell me what blackstone is doing. capital markets. jonathan: today, we serve and have done a ton of transactions in the several hundred billion dollars a year. through that, we get a lot of market insights. i think we could create value doing that. we have the market value which helps customers today but we want to be sensitive to not being an asset heavy company.

that will continue. erik: you talk about the possibility of placing the debt that year deals, and private equities, for example, incur debt you previously gave. what do you mean by that? jonathan: today, when we buy a business and borrow money, we finance it with third parties. that is pretty much what we do. have investors that have come to us and say, we would like to get that on the more direct basis. the banks are still going to do the lion share of this, but we might be able to do a small piece. erik: a tranche of that. how would you do prices without running into the visible problem? jonathan: he would only be able to do that if you took a minority stake in the pricing was done by a third-party. you have to be thoughtful on conflicts when engaged in these activities. erik: growth equity is a component of the gross tilt you described. does that mean you will do it

the pg does that or general atlantic does now? jonathan: over time, we would like to have more of those capabilities. we are building some of that capability. i think that is a real opportunity given the way the economy changes rapidly. erik: how do you define scale in that business? jonathan: i do not really want -- again, we have to have enough scale so we can do a good job. i think having scale matters but often times, we start businesses smaller. not every business starts at a huge number. it starts and then we grow it. erik: there are a bunch of others, chimeric, private equity come up to funds, structured debt, what is going on with -- private equity, fund to fund, structured debt.what is going on with that? jonathan: we will not get into all of them tomorrow but it is just a sense of it is a very big market. there was essentially on that

you could only get so big. when we went public, there was a lot of questions about whitespace. was there enough capital? the reality is investors are interested in alternatives. they want to take a long-term view. i think not everybody needs money for a daily basis. it is true in the individual investment side, as well, and we are filling in the board. erik: i know blackstone has looked at leasing. where did that go? jonathan: you mean like the abs market? i think as part of lower returns, fixed income, that could be an area. there are always things we're looking at. what matters so much -- steve touched on this in the meeting -- we need the right leadership. to do these things, either we bring in people internally, and often we bring them in externally -- we do not want to go into a business that there is not a market opportunity and we cannot be great at it. we need a great investment process.

erik: there has been discussion about taking the quarantine inside your hedge fund solutions business and creating something that would compete with an aqr or dimensional, where is that going? jonathan: what we are most focused on is harvesting the information we get from our portfolio. if you look across blackstone and think about the scale, the multi-hundred billion dollars of assets we control, we gets lots of data -- we get lots of data. erik: you get it from portfolio companies and other private equity firms or hedge funds in which you have stakes. jonathan: real estate, we own all sorts of things. if we want to maintain our edge, i think there is more we can do. could we manufacture things in the hedge fund solutions area? yes, but we are not there today. erik: what kind of economic signals are you getting right now from this portfolio of 180 companies? not to mention all the real estate assets. jonathan: i would say on the

ground in the u.s., very positive. oryou look at revenue growth are sentiment surveys, they all look like rate, very positive, which is consistent with the data we see in the u.s. with unemployment claims down and consumer confidence. the one cautionary side is the difficulty of attracting labor in the u.s. and wage rates. erik: how difficult is it? jonathan: it is getting harder. labor, generally, the headline number was 2.9%. our our data would indicate it is maybe even higher, 3.5%, some industries even 4%. that is a positive for u.s. workers, but for companies, bottom line, there will be impact. erik: what about europe? jonathan: what we see on the ground is decent. the headlines in italy are tougher. the headlines on brexit are tougher. but our businesses are generally doing pretty well. i would say in places like spain, where we have made a

large call on hotels and residential, the signs are pretty good. i would say europe, things are ok. investment-- from an perspective, global enthusiasm for europe is lower. it made it an interesting place. erik: blackstone owns an awful lot of office space. why don't you do, with that space which you already own, what we work is doing? jonathan: we have a little bit of that. we have a company in london called the office group that does this on a small scale, a small, small scale. i would say for us, it is not the business we are in. it does not mean we could not expand into it. we work has done a tremendous job building a great business. there is an opportunity and flexible workspace. i don't want to expect we will be a major competitor. erik: on real estate, are you raising funds to take advantage

of president trump's tax cut and jobs act, especially associated with the benefits in qualified opportunities? jonathan: we have not. it is an interesting area for individual investors but has not been a focus for us. erik: why not? jonathan: it is more development oriented than what we do. a typically buy assets at discount replacement cost. there is a scale question for us. for some people, it makes a lot of sense. erik: thank you for being here. jonathan: good to see you. erik: we covered a lot of ground with jonathan gray. much, eric.s so i want to come in on a live shot at the united nations. president trump is there. that is u.s. ambassador nikki haley at the united nations, and event on combating the world unitedoblem at the nations. later, we talked a series of bilateral agreements with north korea, france, and others. keeping you updated on the

president's doings in new york with united nations. ambassador haley: all i care about now is how hard it -- alix: all i care about now is how hard it will be for me to get to an appointment on the upper west side in new york later. is the short covering rally tactical, or a rally you need to buy buy? most of asia the day. in the currency market, who would have thought the outperform or is sterling -- outperformer is sterling? some are blaming it on the dollar being weaker. are going to you have a lot of volatility in emerging markets. the euro modestly stronger. in member of the ecb says you should consider tightening modesty -- monetary policy. david: and a chandra is here with first word news.

emma: china says there will not be peace talks as long as president trump continues to impose more tariffs. the u.s. imposed levies on another $200 billion of chinese products. asian has already promised to retaliate for duties on $60 billion of american goods. president trump said if that happens he will impose tariffs on more imports. britt kavanaugh's nomination to the supreme court is in danger of falling apart after a new claim of sexual misconduct. according to "the new yorker" magazine, senate democrats are investigating a case during his college years. he denies the allegation. a woman who says kavanaugh assaulted her decades ago will testify before the senate judiciary committee. has won hiser woods first pga tournament in five years. he captured the tour championship in atlanta by two strikes. his career has been plagued by injuries and scandal the cost him millions of dollars in

sponsorships. next up, the ryder cup in france that pits the u.s. against europe. global news on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am emma chandra. alix: thank you so much's warning for the market talked about president trump, saying equity market resilience despite tariffs will embolden the president on all geopolitical friends and is potentially a miscalculation from sanctions that are tough to calibrate. joining us from munich is peter oppenheimer. this is all j.p. morgan trying to quantify blanket tariffs and what that would do for s&p year on, down 5% to 10% year. do you agree that this is a conversation that needs to be had? i think the markets have already absorbed the risk to some degree of escalation from ?ach of these levels

the overall macro effect globally i think is relatively modest. there is a multiplied effect through all of this. at this stage, i don't think it will be very significant. david: we were taken last week with a report from you and your team, the ball/bear indicator goldman sachs maintains. he will put up a chart you know, that we are at the highest levels of 1969, which is historic. we may be due for a rough patch. explain that. yes, absolutely. i think there are two ways of interpreting this. one is that we are at risky levels. there is potential for a sharp drawdown in equities. a pointr is, we are at where we are likely to see a very significant slowdown in get a muchd will flatter profile. it is the latter we would think more likely. one of the main reasons is that

although this aggregate indicator is at very elevated levels, not every component underlying it is at such worrying levels. one important one is inflation and interest rates. still, despite the economic cycle, they are unusually low. without them going up a lot, it is difficult to see a sustained drawdown. is it topline revenue growth, earnings, because there is a limit how much stock you can buy back? how much does the slow down? peter: it is interesting. if you look at the contribution of the bull market since the low in 2009, roughly twice as much as average in the cycle could come from margins going up. that has largely been because of technology contribution, and about twice as much has come expansion, which

has affected the impact of policy. very loose financial rates, qe -- topline growth has oftributed around a third its normal contribution to the equity bull markets. compare it to other cycles, topline growth has been unusually weak in all major markets. that reflects much lower inflation, the impact of disruptive technology, and so on. i think that will probably continue. without the policy driver of valuation expansion, without technology margins rising much more, we would expect profit growth to be driven by the top five, -- the top line, which is likely to continue at a modest pace. alix: what does that mean for global equities? i have a chart on my terminal that shows u.s. performance versus europe and emerging markets. the u.s. continuing to grind higher. how do you think that plays out? the u.s. comes to the rest of

the world, or vice versa? peter: firstly, i think it is important to understand why the u.s. is up just since last may. it is really since 2009. part of this has to do with buybacks being much more impressive in the u.s. than elsewhere. -- equityurope supplies increased in the last several years. tax reform were recently. technology, which has a much bigger contribution to the aggregate index in the u.s., nearly 30% of the index is made up of it, compared to around 5% in europe. that has been a driver as well. looking forward, we would expect the distances to narrow, particularly on a shorter-term basis, where we think there is an opportunity for rebound, particularly in dm equities. europe would benefit. as we look forward to next year,

we think the differences will narrow. there will not be such big differences between the u.s. and other global markets. in contrast to what we have seen over the last few years. short-term, it is a question of how much money companies are making. in the medium and longer-term, it is a question of what they do with the money they make, how they reinvest for the longer term, the growth pattern. what things do you look at to get a sense of the medium and long-term, particularly capital investments? is a very interesting point. we have different slices of the equity market we put together, which reflect the types of companies and what they are actually doing, and companies buying back shares aggressively. in the u.s., they generally outperform significantly in recent years. now we are finding companies reinvesting in capex and r&d are generally outperforming, not

just in the u.s., but in europe as well. i think the markets are becoming more tolerant, and not expect them to of companies using their cash a little more proactively to generate future growth, particularly as global growth rates may be slowing as the cycle becomes very mature. we do think that companies that , particularly into businesses where there is improving return on cash investment, that is a strategy that will be well rewarded by investors. oppenheimer, while sex chief equity strategist, stays with us. oppenheimer aeter chief equity strategist, stays with us. coming up, the first installment of "weathering climate risk." ♪

is bloomberg daybreak. coming up later, an exclusive interview with mike freeze. this is bloomberg. now to your bloomberg business flash. the world's largest privately held technology company is reportedly taking another step toward an ipo. according to "the wall street journal," dell plans to interview thanks for underwriting rolls and a traditional public offering. a buyout of its tracking stock. replaced its ceo after a botched trouble forecast for an unusually hot european summer. that forced the company

to/forecasts for the second time in two months. thomas cook finance chief l scott will step down. shares are falling the most since the brexit vote. germany confirms it has had positive feedback from iraq after a bid for power generators. a german newspaper says the deal would increase iraqi opacity by half over four years. the deer is -- the deal is near completion. that is your business flash. week inhis is climate new york city. as new york leaders gather to discuss the climate changes we have faced, but bloomberg daybreak will take a closer look at climate change. we will have an installment of weatheringubg -- climate change series. tomorrow we'll look at agriculture, wednesday, security risks, thursday, policy initiatives, and friday, the effects on investing. alix: a boston consulting group is releasing a study about how

countries that take on climate make a seriousan impact and boost economic growth. joining us from berlin is philipp gerbert, boston consulting group partner and general director. walk us do the impact a country can have, and the price tag they have to put to move the needle on climate change. aliz, -- alnk you, ix, and good morning, america. i look forward to talking to you about the finding on climate change. in our research, we found that countries can take decisive change,gainst climate and it can be economically beneficial for them. we started with a report done here in germany, where we worked with the entire german industry into lotsn, and went of detail about every single measure, and showed that when you take everything together,

germany can achieve its climate goals, and at the same time strengthen the economy. the fact base of the of the report was held by parties ranging from greenpeace all the way to the coal industry, for providing the fact base. we plan toweek, release a report where we look at the global action, and found again that countries, if they take -- they can, with existing technologies, mitigate almost 90% of what they would need to reach for the paris climate goals. and it is economically beneficial, at least the first part of the actions. there is no disadvantage for action against climate, and actually, there is advantage. david: you say your analysis will show it is economically advantageous. it is not free. there is substantial upfront investment that needs to be made.

give us a sense of how substantial that is for the united states, for germany, for china. where is it going to come from? i will give you a global number. -- a 2030, it will take little bit more than $20 trillion in terms of investment. , wheniple of that number you get to the really hard parts, until 2015. this is clearly an enormous amount of money. the important thing is, if you invest the money correctly, you can actually strengthen the economy, not hurt the economy. the important part is to optimize the actions that you do read the, and to economic benefits from that investment. david: as you say, that is a very large amount of money. standpoint, isl that the student did over taxpayers, or is there a way of having industries fund a lot of this? certainly, industry

will contribute substantially. it is important that government provide the right regulatory action, and also in some instances to revive the right incentives for it to happen in particular, the economic benefits that accrue to other people than the company taking the action. about emerging markets? it is great if germany is in there, and western european countries, with emerging markets responsible for so much of the emissions, do they cancel each other out? philipp: let's look at the world in several parts. there are obviously the clearly developed markets, the mature economies like europe and the united states. as you mentioned, they are taking decisive action already. there is china, which is a little apart. the chinese government is taking very strong actions against climate change. it still has to increase.

then, there is the rest of the emerging markets. for some of them, given high financial costs, the investments are difficult to take. but you have to differentiate a lot between those markets. if you take something like they have excellent renewable power generation, with lots of hydropower. they are left to work on their agricultural sector. someplace like india will have 700% of economic growth expected through 2015. clearly, they will increase greenhouse gases from where they are right now, but they have enormous efficiencies they can beneficially rates, and increase the efficiency both of the power sector and of the energy sector. for them, this is good at least for the initial actions. philipp gerbert of boston consulting group, and still with us, peter oppenheimer of goldman sachs. we walked through what countries can do for climate change. what sectors, what areas are

best prepared on a company level? where do they have to spend a lot to catch up? well, i think we should think of this from a corporate anspective very much as opportunity, both in emerging technology, companies that can help to facilitate the increased focus on green revolution, of which there are many, particularly here in the european region -- that will certainly be an emerging part of the technology revolution as we move forward. those sectors that may have to spend a lot i think will also tend to find that they will get high returns over time. a good example would be in the energy and utilities sectors, if we take europe in particular. -- the costindustry of spending the huge amount on upgrading infrastructure to be consistent with digital

distribution, for example, smart grids -- that will be a very significant cost over the next one or two decades. investment will come with a positive return on capital that i think generates improving growth, as well as the previous commentator digesting that in aggregate terms, the upgrading of infrastructure will bring with it lots of other opportunities for other businesses and industries. that are driving technological solutions in the green tech space, and there are more traditional industries with utilities, for example, as well as the car industry, that could, while spending a lot of money, generate high returns over the medium to long-term as part of these important evolutions. oppenheimer, really appreciate that insight. coming up, the m&a of the morning. pause the music. sirius plans to acquire pandora. ♪

alix: i am watching m&a in the media space, pandora being acquired by sirius. i am joined by the bloomberg director of north american research. what have you learned so far? xm saying,is sirius we want to get bigger in the audio business. they are the leading subscription satellite radio operator. fedora, in the u.s., is the largest streaming audio service. this is an effort -- john malone of liberty is a big owner of sirius xm. they say, we have a lot of interest in the audio business. they even have an interest in i media, the largest radio operator in the u.s. i think this is sirius xm doubling down in the audio business. david: everyone agrees this is

the golden grail, to pursue streaming. alix: holy grail? did you mix up your metaphors? david: thank you for calling me on that. thinks this is a good thing to occupy, but is this going to get them -- paul: this is a small deal. it has attends the market cap of sirius xm. this is sirius xm -- it has a the market cap of sirius xm. this is sirius xm looking to get big on a subscriber basis. that makes it a difficult competitor. alix: thank you very much. coming up, the open. we speak with julian emanuel. ♪

i'm all about my bed. this mattress is dangerously comfortable. when i get in i literally say, ahh. meet the leesa mattress. a better place to sleep. this bed hugs my body. i'm now a morning person. the

leesa mattress is designed to provide strong support, relieve pressure and optimize airflow to keep you cool. hello bed of my dreams. order online. we'll build it, box it and ship it to your door for you to enjoy. sleep on it to up to 100 nights and love it or you get a full refund. returns are free and easy. i love my leesa. today is gonna be great. read our reviews, then try the leesa mattress in your own home. order during our fall mattress sale and save. for a limited time get 150 dollars off and free shipping too. sale prices are available right now. go to buyleesa.com today. you need alix: 30 minutes until the start of trading. this is the countdown to the open.

talks off, tariffs on. china will not hold trade talks unless trump stops his threats. j.p. morgan warns of overconfidence. of pledginghort more oil. an exclusive interview with argentina's president as distressed funds start to circle the country. in the market, the conversation was, do you want to sell into this rally, or is it a tactical buy? of euro getting a little bit steam. the dollar struggles to find its footing. yields up by one basis point on the 10 year. onlinef supply coming this week. crude at its highest level since 2014. what that means for global growth, we will discuss.