the storm beryl's towards florida and could cause $16 billion in damage. deal.k. in eu close to a officials trying to find a compromise for the u.k. to stay in the customs union as the clock ticks towards the next deadline. correlation breakdown. investors sell equities and bonds -- in bonds. david: welcome to bloomberg daybreak. the big news is hurricane michael. we look at some satellite pictures. alix: unreal. david: it is all about to 4 now. it is moving very fast. if you look at my terminal, the path is pretty much unchanged from yesterday. it is supposed to hit the panhandle of florida about 1:00 this afternoon, but then it moves to georgia and off of norfolk. alix: is that good or bad?

for total damages? you have the wind damage. there is that part of it as well. david: you will not have a just sitting there on the water. this is the worst it is if the panhandle in a long time. alix: i was in my editorial meeting on monday. re: going to hit the storm? -- are we going to hit the storm? david: as i recall, when he goes over the waters in the gulf it often gets worse. effects of more steam. -- it takes up more steam. -- it picks up more steam. alix: natural gas prices up almost 2%, the highest since january of this year. part of it is a storage issued. this selloff in the equity market a little calmer, futures off five 1%. -- by 1%. losing a little bit of steam as

risk currencies take hold. big auctions coming in. $23 billion worth in the 10-year. what will be the takedown and how much will be see stocks selloff as that continues? david: time for the morning brief. ppi data for september. at 10:00, wholesale numbers from august. the big week in treasury auctions. $23 billion in 10-year notes. let's turn back to brexit. it is very much at the top of the day. time for bloomberg first take. we are joined by rachel evans. we will take a quick look at the ble, the pound versus dollar trade. we only have another week before the eu has the big summit. >> you are seeing sterling

improve today. i would caution a lot of the positioning you are seeing in the options market and other toging is relatively bearish some folks will stand on the sidelines until they actually reach some concrete deal they can make it to the house of commons. david: it seems complicated to me. i will pick on you given your accent. i don't understand the difference between a customs clearance and a regulatory clearance. at the moment the proposal seems to be a temporary -- all of britain remaining within the customs regime. having a regulatory check over the irc. the democratic unionist party has a majority in the house of commons. they said there is a redline in regarding northern ireland compared to other parts of the u.k. that is problematic because of

the northern ireland troubles in the past. they have shown little willingness to shift. i remain skeptical. it is a very difficult line to walk. bp on one side of the coin. tories on the other side. romaine: one interesting thing with the customs union brouhaha is are getting into the issue with other countries that could potentially strike trade deals with the u.k. are basically saying, we may have to hold off if your tablet to this agreement and someone. we have heard that at of some of the asian nations, even the u.s. indicated that might be the case. alix: theresa may answering questions throughout the next hour. no doubt she will be optimistic coming to a compromise. the other top story -- notice my irony -- is stocks and bonds. this is a correlation. s&p versus 10-year yield.

the bottom is the correlation. is ticking andn the negative territory. business literally alive heard for the last 24 hours. romaine: the significant is the patterns that people have relied on to base their traits doesn't really -- base their drades rades doesn't really apply a more. affecting 60-40 portfolios. bonds and stocks go together, that will wipe a lot of people out. will this time be different? rachel: a lot of people are waiting to see. people saying, we don't really know what's going on here. we have seen correlation breaking down in the past in an equity market correction.

we have been talking about this a long time. people are waiting to see if this will precipitate that but what will be interesting is the cpi data coming up tomorrow. you would hope or my seat it reflected in the cpi. a lot of people are causing. david: you cover etf's. ec anything special? -- do you see anything special? rachel: we saw an outflow from iwb. that has a large cap product. 2.7 billion come out of that earlier this week. we are not actually seeing where the money is landing yet. when we look at the stock market we see a rotation towards defensive type stocks. it will be interesting to see if that continues and where people find places to hide out. david: let's go back to hurricane michael.

it is about to hit land at about 1:00 this afternoon in the florida panhandle. they are now upping the estimate of damages to like $15 billion? $16 billion. what effect this is having on the markets? romaine: as a practical matter not much. they are basically saying this is manageable from a cost perspective. we hear these big, broad numbers. yes, these are tangible numbers that will affect people on the insurersut the way the are structured they have diversify the risk outwards. alix: i found it interesting how quickly some production was shut in. 40% of oil production. you see that reflected in prices. it is also cotton season. it is like a broader question for me. i feel like this is a climate change conversation of how as a company and investor you have to live with these kind of changes. 14 storms so far in the atlantic. have seen a lot of

companies on the utility side and insurance side. when you look at the way they have restructured their haveesses, a large degree restructured their businesses in a way to account for these climate changes. an effect we seeing on insurers in florida? rachel: i have noticed this is so much less in terms of the damage predicted with what we saw with florence. we saw significant predictions of speed. that means they will not get the same amount of rain being dumped on florida that we saw in the carolinas. that really changes the insurance side. fastpends on exactly how this particular hurricane is moving and where it is heading. if it's hitting and a less populated area versus the carolina coastline. that is changing the actual damages we are seeing from the insurance picture. alix: 1:00 p.m. is when we are

watching it to make landfall. thank you very much. you can find all the charts we used in more at dtv g thattv . .- gtv david: this reflects a lot of the entire marketplace. they have their september 2018 daily sales. up 13.5% year-to-year. they met their third-quarter net sales estimates. they are off just a little bit just a tad. they appear to be fairly strong earnings reports. alix: coming up, more on the stock-bond correlation. this is bloomberg. ♪

alix: this is "bloomberg daybreak." hired an advisory firm to repair a bankruptcy filing. goodtruggling retailer file later this week. eddie lampert has rescued companies in the past by making debt payments, but he is said to be pushing for a broader restructuring now. softbank is in talks to take a majority stake in we work. the japanese company is likely to invest several billion dollars. that's on top of the $4.4 billion softbank put in last year. we work has been seeking more funds. underscoresmemo amazon's growing momentum in cloud computing. amazon web services has signed a

deal with s&p and symantec worth $1 billion. microsoft has also competed for the deal. that is your bloomberg business flash. alix: it is the correlation breakdown. we will be checking this out over the next two hours. the s&p versus tenant in your treasury yield. typically the correlation is positive, but it is flipping ever so slightly into negative territory. you sell stocks and bonds or buy stocks and by bonds. -- buy bonds. joining us is dean curnutt. risk? what happened if we do an inverse correlation of yields in the s&p? dean: it is something the market has not had to grapple with for some time. years.egimes can last the precrisis period -- you have to go back to the 1990's, the

old days when a fed-tightening cycle was the signal stock prices would fall. rates up, stock prices down. risk-offrisk on, phase. the correlation was very dominant. blend of a had some 60 efrin 40 or 70-30 stock-bond exposure. or 70-30 stock-bond exposure. right now we are in one of these testing phases where the market is grappling with, are we comfortable with higher yields? yields the cell signal because you have the discount earnings at higher prices? it reminds me of what we grappled with in january, the precursor to the vix knocked down in february was the same

dynamic. the market is being tested right now. we will see. some would argue the selloff in higher yields is passed us. alix: when you look at volatility implied at the highest level since april 2014 versus realized. this i give you a clue how serious the market is taking a potential breakdown? dean: as a person who uses a lot of options, we want a good deal. a good deal is the price of implied volatility as a function of realized is favorable. it is very, very unfavorable. if i look at the vix and one-month realized in the s&p, it is 6.5. month's5 times last realized. the market is implying a decent amount of risk premium.

it could be a number of things. it could be the headlines from italy, the tariff uncertainty, maybe midterms. it most certainly is options are tough to own and not have them decay to quickly. --some of his designs trades ho designs wh trades, you have to be clever. david: do they really work against each other? the market is nervous. it is not fundamental growth that is driving rates up. there are other things such as trade conflicts or other issues. dean: i would say that is most certainly the case. we just completed a deep dive in the u.s. economy. the macroto focus risk advisors on the thing that can trip up markets like leverage or carry trades or geopolitical risk. asset prices and the economy, fall not near images, are

closely linked. the economy is doing great. it is hard to find a lot of trouble spots with the u.s. economy. you have to come back and say, why is the vix so high relative to realized? there is a lot of forward-looking risk premium the market is implying. alix: give it is not going to be fundamentally driven, what does that wide-out meaning? you can see the questions they are posing throughout the day. will we see yields above or below 3.25%? hatch -- how do you hedge a 3.25% yield? dean: you have to think about why rates are going up. it could be some technical reason but some of it is just the unemployment rate at 3.7%. metric rates are rising in a way that suggested they should go higher.

in terms of your portfolio positioning, you want to belong in the sectors that the better in an inflation-rising regime. what we see is operating margins for sectors like energy, or you can pass through some of the inflation costs back to the user tend to do better in environment for inflation is rising. secondly, stay away from sectors like utilities. stock? a utility it has some stock exposure and some bond exposure. if on yields are rising as stock prices are falling, it is a double whammy for utilities. david: you mentioned financials. raising rates would be a good thing for financials. have not really been rewarded for that. that because the market is not rewarded and yet or is there some of the issue? dean: it is hard to say. are goingew is rates

to rise and the stock market can rise as well, you want to be overweight something like financials. it will completely up in the risk-asset story, they will go down. financials, you want to tilt towards that. alix: the irony is utilities have been forming -- have been performing really well. even high-yield. it spread out to like 331 basis points but you can make the art meant that is nothing. how do you hedge your hedge? dean: if you look at high-yield spreads, they are a little wider than they were a couple of months ago. considered, the damage is minimal. there is a real risk that higher wider credit-and spreads can happen. that is terrible for corporate credit investors.

hedging the hedge is difficult. there are some slightly nuanced trade you can do on an over-the-counter basis. one of which, a very specific risk factor but out argue it is one the market is most unprepared for is you can buy a put option on the s&p that pays off only if rates rise. what is a unique about this trade is typically one stock prices fall interest rates fall. if we are in a regime change where higher rates are causing stock prices to fall, i would argue people's preparedness is minimal. david: dean curnutt will be staying with us. below nine dropped dollars yesterday for the first time in six years. they will talk about these companies' troubles with jeff windau.

this is bloomberg. ♪

david: auto company stocks of been on a slide. there are some differences but they are all heading in the same direction which is not good. they had buffeted by trade tensions and softening sales. joining us now is jeff windau, edward jones senior equity analysts. welcome. ford. we are talking about autos because they did close under nine dollars a share for the first time in six years. jeff: there are multiple elements at work. they have announced a big restructuring plan. we are waiting to hear more details on that. there is some global pressures as well, fears about slowing international growth, the recent september numbers in the u.s. were weaker than expected, and are concerns on how things are going with trade overall.

all of those elements are working to pressure the stock price. david: talk about the restructuring plan. this week we sort of got one announcement of a few white-collar workers being let go. why don't they have an overall plan for the market? jeff: i think that is part of the pressure in feedback and getting, trying to get more information out to the street and the stock market in general to evaluate the plan. they want to be thoughtful, andver it, -- deliberate, make sure employees know what is going on in the company. that is your noble but also there is a sense of urgency that needs to be held and they just need to make sure that communicate the plan as effectively it as quickly as possible. david: one of the issues is trade. the trade issues seem to focus on china. does that make it somewhat less exposed then for gm or a

daimler? ford does not have as big an operation in china. jeff: maybe on the periphery they are a little less exposed but that is a very growing market. it is a focus for the growth moving forward, as well as the other automakers. as china weakens, you will see pressure on the share price. that is a big focus for them moving forward. david: how bad could get with china? vw,don't cover the w -- but they are down 10% in china. jeff: we heard some information from general motors as well that their sales were down 15% in the third quarter in china. we have seen some weakening. we are looking forward from the standpoint of potential trade discussions at the and of november at the g20 meeting with china. we will see where those discussions go. we will have to evaluate how the

plans unfold from there. david: jeff windau of edward jones. they have to make huge investment and autonomous vehicles and electric vehicles. alix: what does forward wind up doing?-- ford wind up what will be the final solution? management. there has to be some urgency, right? when you seeularly so many auto companies getting together with other auto companies. alix: definitely something we are following. the brexit backstop. u.k. it eu officials locked in talks with a potential copper mice. this is bloomberg. ♪

>> this is "bloomberg daybreak." equity futures moving into positive territory. a correlation we have about yields and equities moving higher.

a negative correlation coming into effect. is shaking that off today as bond yields continue to move higher as the selloff continues. you can see the spread coming in at 32 basis points. i want to point out what's happening in bcp. down by about 3 basis points. an amazing statement from the italian deputy premier saying he is sure the spread between italian and german bond yields will not reach 400 basis points. i would love to be absolutely sure about anything in my life. david: i would certainly take his word on that. it has worked so far. kind of fun it was going on outside the business world. we turn to taylor riggs. forecasters are doubling down on their warning about hurricane michael. overnight the national hurricane center said it turned into a life-threatening category 4 storm that is bearing down on the florida panhandle today.

officials say the hurricane has gotten even stronger. top winds over 130 miles per hour. roughly 375 thousand people have been told to evacuate. -- 375,000 people have been told to evacuate. told reporters his campaign schedule prevents a second summit for now. the administration has many incredible progress in negotiations over north korea's nuclear weapons. the treasury department is deciding whether to name china a currency manipulator in a report out next week. has faced pressure from the white house that the china on the list. the yuan has fallen 9% versus the dollar in the last six months. there is speculation beijing is intentionally weakening the yuan as trade tensions increase.

global news 24 hours a day on air and the tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. on taylor riggs. this is bloomberg. alix: if you look at criteria, china does not meet it. they have a trade surplus, with you can make an argument about the intervention. they are not actively doing it. there is not a voracious selloff in the yuan. david: when president trump is running accused them of currency manipulation again and again. does givehin interview with the financial times for he said we are watching it very carefully. alix: and you have to change the criteria. david: at the same time there are reports that says china will let it go no matter what happens. alix: it was a good point that david made. a central bank advisor said he frame -- you should

refrain from market intervention. >> i think it is a danger. i was looking back to the last time we visited some of these currency concerns specific to the dollar. that was early 2016. what was happening then was crude was melting down. china was in a hard landing and there was a lot of concern about an asymmetric move lower in cny. the apply volatility was much higher than it is now. we are getting to that point, especially with steve mnuchin's comments. this is a weaponization of the currency. why do we care about the dollar? the reality is the world needs a weak dollar. it is supported for risk-taking. is potentially disrupting the rally for things like emerging markets. like the indices

corporate bond etf, the emd. emerging-market corporate like e corporate bond credit liquid andd -- il good for selling into an il his face liquid market. -- illiquid market. david: we want to go over brexit. there are reports out the parties are coming closer to a deal. alix globally that when she sees it. is a doesn't have a handle the border with northern ireland. emma ross thomas joins us. explain the difference of being customs and regulation. emma: you really want me to expand the difference? there seems to be a compromise that is a proposal for a compromise they can basically mean the whole of the u.k. would remain in the eu's customs area.

the difference is customs are things like tariffs. it is considered to be more dramatic it is a question of sovereignty or regulation of things like animal health, are your goods made to the right standards? is the northern irish party that is been so keen on remaining totally within the eu with no separation, the idea is they could find it a bit easier to stomach if you checks on the quality of goods or animal health or meat between northern ireland in great britain. that would be easier than a customs border, the kind of thing that happens between countries. there is a bit of a lockdown at the moment when everything has gone of a quiet in london. the best case scenario is towards the beginning of next week an outline agreement might

emerge that would have a positive summit in mid-november another summit is called in the deal to get signed off. buteadlines are slipping -- deadlines are slipping. before the summit things are going well then there was a bit of an upset. these things are not necessarily that predictable. there was a counterargument that said they be october will be a bit of a bloodbath and you end up with both sides needing to show they really are fighting hard to get the best possible deal. perhaps some kind of nasty showdown in october is what is needed to come back in december and get a deal. the best case scenario is this time next week theresa may go to a dinner with the other leaders and we are heading towards a deal. there is still room for an upstate. david: that's a great job of explaining something i find very collocated.

i still the 100% understand it. dean curnutt, look at the implied vol one month for the campbell rate. is some drama priced in? dean: it is so complicated. i myself, is in overwhelmingly complex issue. i tried to learn from the history of relationships and asset prices. when i look at the correlation between the u.k. stocks in the british pound, it is simply very negative. -- it is usually very negative. the poundout in 2016, cells dramatically and equities sell dramatically at the same time. as he tried to design a playbook around understanding what asset prices or relationships are telling you, i look at these correlations and see if there is a return to this scenario where stock prices fall and the pound

falls at the same time. david: is that any more complicated than brexit? people think it is good for exporters but not the economy. dean: that is how i would frame it. david: they can export more for the overall economy is not getting stronger for growth. dean: certainly not in the long-term. in the short-term you look for the deterioration of risk sentiment. when you go back to 2016 and look at the brexit, you saw this big risk-off that was a function of people not understanding how to react. when you don't understand something, you have to sell add volatility rises. david: have you followed the extent to where they can attract foreign direct investment? in theory you think it would get cheaper in england so you would attract a lot of foreign investors in that happening. dean: we don't know how long this will play out.

for the short-term of don't understand it, sell, causes risk assets to fall. there is a self-correcting characteristic of markets which can attract capital, but given the current deficit it makes it harder. get: dean curnutt, so to get your perspective. i will see you next week. nextl be doing that tuesday. we hasn't great guests -- we have some great guests so we will get a great read on women in finance. david: we turn now to erik schatzker for exclusive interview with michael aaron gatty. them asu might think of the dynamic duo of alternative .redit

speculate on what can bring the bull market to an end, the list invariably includes a couple of things you might have some insight into. a said and exhilaration and u.s. inflation that causes the fed to slam on the brakes. the second is a blowup somewhere in the european sovereign debt market, possibly italy. which of those or review the most? we aren't know which supposed to worry about more. i would say the u.s. economy is going about as well as we could hope for. if you're one of those types of folks, the better things are, the more i worry, i think generally it is the u.s. moving too fast. is the economy growing to rapidly -- too rapidly? the midterm elections could also have an impact on the u.s. economy.

you can have a transition to people wanting dramatic change, even at the cost or risk of having a negative impact on economic growth. erik: these are questions that you raise. that more interested in your opinion. tony: i think there is a real possibility of folks making politics more important than the economy. that is not good for the economy. erik: since were talking about the u.s. economy, the big debate at the moment around growth is whether it is a short-lived sugar high field by the tax cut cuts, in ay the tax ramp-up in inventories ahead of tariffs. or is it something more sustainable? -- aries has

investments all over the board. energy infrastructure. has tony mentioned, all the fundamental data shows the economy is on an extremely solid fundamental footing. one can argue we have seen an acceleration on the heels of changes to the tax code, but the mood in the boardroom is very good. i think this is sustainable. erik: for how long? mike: that is always the question. if anyone tells you they can predict it, is probably not telling you the truth. would have to be directionally accurate. we can't time the market. that is not what are investors give us capital for. we have to be directionally accurate for if we are a later stage were not and how does that inform investment behavior. given most of what we do as a

result of where we are in the cycle, despite a solid fundamentals, we're moving up the balance sheet, shortening duration, focusing on assets. we have repositioned given the length of the cycle but there nothing the portfolio to indicate it will end anytime soon. erik: what the benefits to having a portfolio as large as yours in private equity and private credit is you see what is happening in your companies. thatu see any evidence some of the things that are economy, a roaring wage inflation for example, higher commodity prices, and at the same time we have this issue. the ec evidence they are creating cost problems for your company's? you see evidence here creating cost problems for your companies. tony: let's not get confused.

that's a good thing for the u.s. economy to have workers feeling empowered an important. from my perspective that's a good thing but absolutely impacting our portfolio company. something in the neighborhood of 1000 middle-market companies we see on a weekly, monthly, quarterly along with our private equity businesses, we see a great deal of businesses every week, every quarter. the u.s. economy is strong. we are seeing across the board revenue and cash flow improvements. we have a very strong economy. but of is maybe to worry love all you can move to cash or you can move to quality. from our perspective we get paid to move to quality, to make sure our underwriting standards don't

change and we don't stretch for yield in a market like this, we stress for quality. that is the important thing. do we see quality businesses we can invest in that we feel good about? the answer is emphatically yes. erik: the european economy is nowhere near as healthy. it is growing slower and there are some policy differences among countries. that israel political risk here in a way that does not exist in the united states. different political risks. tony: there is political risk in the united states. erik: brexit probably tops the list. you just raised 6.5 billion euros for european direct lending. what is it about the outlook for the confident that makes you comfortable extending credit? mike: one of the reasons we like the credit business is the

credit business performs regardless of the trajectory of the economy. in many respects it performs better in a slower growth economy because of the duration of your assets extending. you get paid more for similar risks. when we talk about a slower growth economy in europe, that's a giving for the direct lending business, which may be somewhat -- when you have jurisdictional issues, we have built a pan-european footprint. we have seen a shift in deal flow more towards the continent. erik: you are doing more business on the continent then you are in london? mike: is not the same as five years ago. it was probably 50-50 five years ago and now it is skewing 70-30. erik: will that persist or will it change april? mike: we will have to wait and see. to moveness is built

around the continent and find opportunities where we can. erik: tony, this is your fourth credit cycle. how is what you see today comparing with what you observed in the late 1980's, the late 1990's, the dot-com bubble, in the years before the financial crisis? tony: i would argue each of the adjustments we have seen over the last 30 years, the marketplace has learned and has become somewhat smarter and yet repeat some of the same mistakes. is biggest lesson learned the financial institutions of today are much better run, much more transparent than the financial institutions of yesteryear. that is a huge distinction in my opinion. not that it's going to avoid adjustments, meaningful adjustments in the years to come, but i would argue less

catastrophic because of cleaner, more transparent financial institutions more capable of withstanding the pain-and-suffering. erik: of the problems be outside the banking systems? tony: no doubt. erik: you are seeing less systemically risky leverage. my own perspective given what we do is most of the assets we globally,nt lining up the risk-return seems to make sense on a relative basis. the investor is saying, do i want to be in traditional equities? the pricing in the return is quite rational. in prior cycles you have seen distortions in certain asset markets that would tell you there are structural imbalances in play. erik: investors also have to choose between the asset class they want to be in. if they want credit, aries is a

natural start. your real estate business is undersized relative to your credit business. can we anticipate an expansion? yes, it is undersized if you're looking at assets under management. our private equity business and our real estate private equity business, if you look at his performance, it is certainly large enough to perform at or above its competitors. we love the middle-market private equity businesses we have. yes, to answer your question, we think both will grow. erik: will there be consolidation in the alternative asset -- tony: it's already taking place. there are many asset managers that simply will not get to scale. there are many large investors that simply don't want to deal with a long list of providers.

erik: does that mean aries will be a consolidator? has made a number of acquisitions in our history. we are acquiring capabilities you don't currently have, expanding to the markets, and acquisitions we have not done. there is a consolidation trend. in the alternative markets, and are investors appreciate this mother never, size benefits performance. the mindset historically is the larger you get the harder it is outperform. we have demonstrated the benefits of scale in terms of investing, capturing research and information synergies, it is undeniable. that shows up in better performance and you would expect larger platforms to attract more assets. tony: we see the world predominantly as north america and european assets.

we see a enormous opportunities to grow all three of our polls of capital in those areas. erik: great to see you both. david, that is tony ressler and mike arougheti aries management. david: that was fascinating. we will have an exclusive interview with dwight scott, blackstone's senior managing director. we turn out of wall street beat. our first story is about the aide that jumped to his death. been a meeting with potential buyers after the suspension of the star fund manager. and the valiant short seller turns to tesla. now she sees the same for tesla. alix: joining us is lisa abramowicz. this is the story everyone is talking about even though it is a somber story and that is the man accused of stealing --

stealing david solomon's wine. he jumped from the carlyle hotel in new york. lisa: this is a heartbreaking story to me. he was tasked with helping the ceo of goldman sachs to run his life and help his wine collection. he was stealing more than $1 ne.lion of wi it was bizarre because he was so close with david solomon's family. he said he was going to repay david solomon. he did not and then he went on a next edition around the world. wife: david solomon's issued a statement about how deeply saddened they were by the event. lisa: it highlights the emotional difficulties. gam hashe second story, been struggling because it people they had to suspend.

the reports they are talking with potential buyers in my sell part or all of the company. lisa: this is not surprising. they had been losing assets. their shares have been plummeting given the fact that fund ander, freeze a said he will not get your money back for a while. that is not good for any asset manager and it has been difficult for this asset manager that has underperformed. alix: we know there is more cleanup to go. i just thought we were further along. lisa: no. alix: good thing i'm not an investor. this is a great story. this woman was a short seller who bet against valeant. that is how she gained her name. she went out on her own in january. one of her shorts is tesla. this asked of the one b 6% of

its shares outstanding. lisa: this story works really well with another story that came out this morning talking about how tesla has 143 days before the big debt bills start coming to. tesla has been facing problems for a while. we have not really had -- had not seen them faced some sort of credit pressure. in had 143 days they will see tt come due. $1.5 billion over the next 13 months. david: that theory has been credit is so loose that anyone can borrow money. elon musk will test that. will you landed to me after all the problems we are having? lisa: the market is valuing their debt with an 8% yield.

that's in tandem with other ccc greedy companies. companies.d the chances of them having to pay a hefty premium to borrow and what they will actually have to get to entice as investors is concerning. alix: where will they get it? there is some collateralized debt, but if you get another sale of convertible bonds because that is what he can transfer, would that be the next week? -- tweet? lisa: there is a theory they will have to offer some kind of secured assets to entice investors. what would that do to the other bonds? that would annihilate them. a lot of concerns for tesla. david: it is a car company.

can they make the cars and make money off the cars? if they can turn cash positive, these things will take care of themselves. alix: the answer looks to yes and no. lisa: based on the fact that d is trading under nine dollars, should the valuation be different than what it is? alix: thank you very much, lisa abramowicz. we will have an exquisite interview with dwight scott. we take you back live to the bloomberg invest summit in london. this is bloomberg. ♪

alix: hurricane michael barrels towards florida. officials try to find a compromise as the clock ticks. supplies,braces for $59 billion to hit the market today as investors look at a correlation breakdown. david: welcome. i am david westin with alix steel. that hurricane michael is storming towards the florida panhandle. pictures, courtesy of no other. here 1:00,sed to get eastern time and it is moving quickly. it went from a one to a four which is remarkable. alix: monday it was on our radar and now it is one of our top stories, but the difference between this is -- and florence is interesting.

this is going to move fast. is 14 is theesting number. david: climate change? path, atnt to see the 1:00 it will be hitting the panhandle. 12 hours later, it is going to hit georgia. alix: we will follow that through the next hour. we are talking about the stock bond correlation. it feels like everybody is taking a break. futures are off 55. they are weaker after losing over 1% in october. -- dollar philandering floundering. on the margin in the long and. yields up by one basis point. we get $59 billion worth of notes. with a three and a

quarter yields on the tenure. natural gas, instead of oil is popping over 2%. , 40%atural gas production up for oil. storage is tight. we knew this. the market did not seem to care. david: it is time for the morning brief. ppi and data for september, at 10:00 we get full sail inventory numbers for august and as you said, treasure continues this week. another $23 billion in tenure notes at 1:00 this afternoon. alix: it is the potential correlation break down. had --he s&p, the white glenn and the blue line is the tenure treasury yields. the bottom panel is the correlation between the two. it is positive. you sell stocks, you buy bonds. if you are in negative

territory, you are buying both together that could have ramifications. or.ing us is maddie destin you come up with solutions. if we going to negative, what does that tell you? maddi: what is important for people to understand is -- what is driving the yields? we thought more of that was about to supply demand dynamics, the technical impact we saw? as well as tension plans reducing their buying, given the taxa visions happen september 15. that is what we thought was driving yields. acceleration to our portfolios. it is north of 320 on the tenure. you are getting paid to take out insurance. the negative stock bond correlation is going to have a portfolio benefit 4s and environment -- for us and

environment. david: what we expect rates to do. if you think they are going to go up slow, you want duration. the president thinks they are raising rates too fast. he think that may affect where we are headed. maddi: while we think the fed will continue on a path in december to a three next year, that does not translate into direct 141 in the long and appealed. we think there are anchors on the long end of the yield curve we have seen, whether it is the reduction in inflation pressures . we saw the fastest, the best unemployment picture we have seen in this country in a generation. there was more than one job for everyone that once one and yet we have seen no weight pressure. the global demand for bonds is out there. we think global yields are entering the long and. productivity is slow.

all of those things are going to be anchors on the long and, preventing significant rises from here at least at the long end. 20 -- coming off of quantitative easing may increase on demands rather than u.s. bonds. the other issue is hedging your currency risk. there is a question about what the bonds are returning after you had for currency risks. alix: that has reduced some of the appetite for international investors buying u.s. bonds, despite the fact that is the story we tell ourselves when we look at the treasury data. international investors are still buying. we see increases in interest rates that lead our sovereign bonds to be more attractive, which is where the demand is there and will be there for time. andou want to buy the long --end, you want to buy utilities

or there are plenty of markets. for us, we like to higher-quality markets within the equity factor. that is the u.s. and if you look through to the sector positioning we like, although we did see more savants of dust defensive stocks do well last think investors will remind themselves in the middle of a normalization process, that will hurt higher yielding stocks but also happen to be defensive in nature. we think we're going to see that rotation back into more cyclically exposed. we like financials now. interest margins are going to ,ncrease the profitability particularly when we think about the global exposure we had of moving back towards the u.s. and away from the rest of the world. alix: i wonder what that means from the u.k. some are moving in, some are

moving out. michael j. arougheti spoke about the potential. >> in the way of brexit, we have seen a shift in deal flow towards the continent. alix: do you want to buy or do need to stay away? addi: we are taking wait-and-see approach. we have seen a reduction in the u.k.on, and in if we get positive surprises, we think that affect the currency to the positive side. not a great story for the market. david: when? they say they may have a deal to announce as early as monday. the deal has to be ratified. when would you use investors that now i know it is going to happen? maddi: we try not to trade on individual timing. we are looking around the web for opportunities so to the extent we have even rests, we

are going to stare of that and focus on higher-quality markets like the u.s. david: i am guessing does alix: i am guessing no italy. maddi: it is a little early now. 400 basis points, not going to happen. david: maddie gessner of j.p. morgan will be staying with us. coming up, an exclusive interview with dwight scott. this is bloomberg. ♪

david: erik schatzker in london for another exclusive interview.

eric:? with -- i am here with dwight scott. good to see you. >> good to see you. the target.k at treasuries are backing up. credit spreads are widening. widened by 30 basis points in the past week alone, are cracks starting to show? in the economy is a time to be cautious. the things you mentioned are after a year of tightening spreads in high-yield, tightening spreads in pieces of the market. you start to see treasuries at three and a quarter were at a level people were going to be nervous about. that is where we are and you have discussions about growth from their so we have a lot of

conversation about what happens of treasuries go to five and we think that means you are to be cautious in fixed income, particularly high-yield. those are places where you need to be careful. erik: is the treasury headed to --? dwight: the economy is strong. you see that in any measure you see, including portfolio companies. growth is in the market and the fed is going to continue to tighten. does that mean treasuries give out much? i do not think so. you look for that risk. erik: how late in the credit cycle are we? dwight: in the economics cycle, we are late in the economics cycle. we are 10 years in depending how you measure it. has the dust it has been a slow growth cycle -- it has been a slow growth cycle. it has been slow and steady. the credit market had its last many cycle in early 2016 and we

have been up into the right to these cracks. erik: you would call the cracks? dwight: i would. had one thing that had snuck out the -- market, what would it be? dwight: a lot of discussion you hear is about a trade war. that is one thing everyone is watching. i believe the parties have reasons to find the right outcome. wouldight out trade war create issues in the market. that is number one. number two, disruption in the u.s. -- are we going to approve budgets? the things that happened in the summer 2011 when the market corrected significantly? the equity markets fell hard. erik: it is amazing how far in

the past that seems but we could live with that again. what about inflation? what about runaway inflation that causes the fed to clamp down on monetary policy and makes 2018 look like 1994? would: runaway inflation be a problem. that is not we you see. you see controlled inflation and deflationary pressures offsetting growth. we do not see runaway inflation is an issue. we see concern about disruptive issues in the market than some broad change. given we are late in the cycle, everybody is beginning to look at what happens on the other side. largesthe world's manager. did not formures well after the financial crisis. they going to perform better after the next downturn?

dwight: i will argue. clo structures performed well. erik: fairpoint. dwight: recoveries were high and losses were low. clos will continue to have that trend. we do not see the mortgage market issues you saw in 20 -- 2008 in the market today. we do not see that thing working to cause. instead you see mark -- aggression everywhere. you talked about high-yield. this year, treasuries were moving up. --h-yield was able the hope hold to a return profile you would not have expected. it started to fall this year. it is more a series of small things that the market has been aggressive. erik: you are not a big holder

of fixed rate instruments? dwight: we are not. it is less than 5% of our portfolio. which is protective in that recovery, that market downturn and recovery. erik: you put money to work, capital were just working europe. what in europe is attractive now? dwight: the most interesting thing about europe is it is three years behind the united states. the recovery in the economy -- europe is not as much or. when you sit in -- mature. when you sit in front of a client, there are not as many .hanks --banjs --banks. erik: will you grow your book faster in europe than in the u.s.?

dwight: we have seen more good opportunities out of europe and we expect that to continue for the next few years. brexit, good or bad from the tso's perspective? or do right scott -- or dwight scott's perspective? dwight: we do not want market disruption. we have $20 billion of funds -- in drawdown funds to react to market disruption. would we see that in brexit? do we want that to happen and do we think we -- it is going to happen? good,it may not be so certainly for the economy. not so good for some of your credits, but you see an opportunity. one of the largest direct lending forms to you exited that

, now you are year going back into direct lending and you talk about a $10 billion near-term target for assets. where will that business go after 10? how big of a business should it be? dwight: you have to go back in time and remember why. we built our business with our leverage business and there was a hole in our strategy. eight-10% return loans. they do not have enough return to going to other funds. we built the business to address that. i think that is going to continue to be a large opportunity for us for the perceivable future. , ik: before i hand it back am going to ask you a question. that is about energy. -- wti's, $12

behind. the downturn in oil -- what are you doing? dwight: it is hard to understand what is happening in the capital markets because commodity prices are coming back for oil. markets are still hands off to a large degree. equities are still down somewhere between a third and 50%. credit is hard to find. the banks are inside their cell protecting themselves. we see opportunities to put capital to work that are unique energy has. erik: as a lender, do you think there is a stronger likely of -- hitting $100 or going back to $70? dwight: forecasting is a

difficult thing to do. it depends what happens on political disruption. heart of what you see in britain today is political disruption around iran. it depends. i would bet more towards $70 than $100 that is more my nature and what i do for a living. it did not do good for us to go to $100 so we watch that carefully. >> alex --erik:alix, you know him well. interesting. coming up, we are going to look at earnings that could give us into how industrials did in the last quarter. this is bloomberg. ♪

david: time for three companies

we are paying attention to. already own a chunk of this 4.4 billion but they are going to up this for going to the you see. their stock yesterday was down on the news. it is up now in trading. it is fascinating. -- believes in the growth potential. alix: there is an article out that said that they need each other and it is not just about we work. they need to cash yes but softbank needs task growing startups because they need to generate returns on their cash piles. $100 billion. david: they are going to raise what -- another $100 billion. it is amazing. alix: let's talk about what they will not be buying and that is years. here's continues to into closer

towards potential bankruptcy. it is hired. a groep the could come as soon as this week. i was talking to bank experts and it is not going to be a liquidation we see in retail but a balance sheet restructuring. it might be different but this is like the company that has clawed its way from the depths of nothing. it is still living at $.45 a share. earnings were encouraging. we are joined by brecksville open. >> this is not a well-known company outside of the industrial -- but it is an important company. some of its biggest customers by that we areal guys going to hear from later. earnings are looked at as a harbinger of what might be to come when those because report.

it was not great. the key member is its gross engine test margin. it was a decline from the third quarter of last year. it has been a focal point for other distributors because of the entrance of amazon into the industrial distribution. this has brought price transparency, forced companies to open their business model and adjust rices to be competitive. people watch that number. the other part is people are worried about finding peter earnings. freight costs were up. of salesaw a tapering in terms of the largest accounts. 79 of the top 100 customers down from 80 the quarter before. that is not alarming but it is not the signs of peak earnings. competition aspects you

have touched on. in all have competition their markets so it is something you have to be aware of especially amazon or something larger trying to go more. is better than something like granger. presence thism a is physical for amazon's replicate. thank you very much. coming up, we are going to look at price pressures, how long those are weighing on the economy. president and ceo, also the help of a consumer.

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. alix: we are moments away from the price index for september. you have dow jones and s&p in negative territory.

by 2/10 of 1% as the pound goes all over. it is a mixed dollar story. dollar 1.14. the sellout in the bond market, yields in italy one basis points, a reversal of the buying we saw earlier. i promise we are going to defend that 400 basis point spread. that is in the u.s. if you back out of food and formy, due .5% for pbi up 2.3% in august. , a touchand coming in lighter than expectations and fighter than estimates that 2.6%. this looks like a pretty solid job in the month by month and year on year core of pti. david: if you take trade outcome it jumps up on month-to-month. there is a difference when you take x trade. it is a different number. alix: that is a great point.

it is less inflation when you keep trade. indexo recap, the price energy coming in at 2.5%. this is thent out first increase we have seen in three months for the ppi. there is that to consider. there is an uptick in passenger services for airlines. who would have thought? rail transportation of freight in mail is up, the most since 2012. david: maybe some shortages with truckers and things like that. desner, initial reaction to these numbers? seeing inflation pressures that are significant enough to squeeze margins for ,he corporate world in the u.s. so i think there is room to run

for this environment and economic coupling. like ---- if anything lengthens the cycle we are on. heard -- we have heard of price pressures with labor construction and aluminum tariffs. used -- do you distinguish? maddi: when you look through recent data, specifically around labor, while we saw an increase in labor prices, which inflation last month of 2.8%, when you look to the data despite we are seeing anecdotal evidence of weight pressure and tightness in , the truckingor environments are 2.4% increases in which inflation. we are not seeing in the data the kind of anecdotal evidence we are hearing in the market.

bloomberg,u said to this is what you have been saying. the white minus the 10 year yield. we're jumping. the blue line is cpi. i added the yellow line which is the five-year reggae been -- breakeven curve. this is not inflation driven. maddi: week think -- we think some is at supply -- supply demand technical issue. on the got issuance treasury side that has impacted. we think there are growth expectations that are significant for the u.s. that will continue to provide the , although we have that anchoring on the long and given there is a lack of inflation. recapmaddi desner, and to , this is the first of pbi driven by airline passenger services and break -- freight

transportation. turning to inflation and how hard it is to run a business, ww the farm -- country formally known as weight watchers is shifting its focus to overall wellness. driving the change is mindy grossman. the stock has more than doubled in fact -- price. >> great to be here. david: coming off these numbers, whether it is ppi, whether it is cti, what are you seeing in terms of inflation? >> we see that consumer spending. our business is different. it is a subscription business. what are they spending it on? they are spending it on travel and experiences. they are spending it on wellness. they announced numbers the economy has gone from the .7

trillion to 4.2 trillion. there is health and that. it is what people are spending on and on our and, the challenges with that spending on wellness, the world is not getting healthier. inherently that is what we're focused on. david: how was that distributed? there is income and equality, wealth and equality. there was a line tell me we lucked -- talked about wealth because of spies. with: there is an issue accessibility. if you look at the numbers around health. -- health, they are negative everywhere. when you go to lower income, it is that much more genetic. -- dramatic. be aidea of being able to partner to people in health is critical. david: is your business a consumer discretionary business? mindy: mostar of course.

what we are trying to do is create value for what people are spending. if you look at our subscriber who has the app, that is $19.95 a month. if you look at what that costs come it is reasonable. what we're trying to do is create more value. moving from a leader in healthy weight loss to an ecosystem of wellness, which you put in a body how you move, your mindset and the way you like to think about it is for science and community focus. we think of how much more value can we add for what somebody is paying for. that is what is driving the business. our biggest competitors, people who get -- of themselves. we need to help. alix: you have been there, david.

to the point, do you feel you have more or less pricing power today than you did two years ago? it differently. i look at it in terms of what value are we adding? if you look at our business, it is recruitment with tension and how would do we elevate the brand? the more values we give for what our pricing is, the more we week -- recruit. if we retain, people are having more success and are getting healthier and it is a journey. --used to be people used to in terms of what they wanted to in terms of health. that is not relevant. your health journey is different at different stages of your life. we can keep giving tools. david: retention is critical in every subscription business difference. mindy: our attention is the highest. aboutd like to be talking

retention in years, not months. if you look in gross and look at the lowest hanging fruit, is it new subscribers or people that you have longer? mindy: they are both important because we are diverse a dust diversifying the base at who we are attracting. lifestage, very important. moms, they at young want to be healthier for their kids. you see this desire in across the board in people saying i want to lead a healthier life. they are all going to say yes. it is not their primary motivation. their motivation is to get healthy. if we give them tools, they are going to have greater success. 2019,as you look out in

what is the biggest risk you see? the biggest risk is -- are we ensuring we are keeping pace with changes in technology? we are a technology platform company today. we are investing significantly in the tools to be able to enable that within our app platforms and everything else. like anything else, having the talent and the capacity to be able to be agile enough to keep pace, we are in innovation like company. that is what we are focused on. david: since you took over the company, the stock prices more than doubled. what is the biggest driver of that? was it the move to wellness? when you had first taken over, you emphasized wellness. was that it? mindy: that has been a part of it. really getting people to understand very holistic in terms of what the approaches but

.ou asked me about the spend giving people more value. the second is deepening our community assets. from the time we launched in round the science of food in the power of community. david: thanks so much for being with us. tune in later for more. we are going to have an exclusive interview at the close. that is that 3:30 this afternoon. alix: let's get an update outside the business world. taylor riggs is here. taylor: hurricane michael is likely to slam the florida panhandle today. overnight, the national hurricane center upgraded michael to a category four storm. the hurricane has gotten stronger.

375,000 people living along the ghost -- coast have been told to evacuate. is not expected to meet with kim jong-un till after next month's election. the president told reporters his campaign schedule events second summit for now. the administration has made progress in negotiation over north korea. major slammed a major sanction. legislators will name 50 of the country's biggest blunders. you still have to put aside more capital and base more rose on leverage and risk exposure. global news 24 hours a day, on-air at tictoc on twitter, powered by more than 2700 journalists and analysts, in over 120 countries. i am taylor riggs. this is bloomberg.

coming up, bank earnings kickoff friday. there is also michael mayo right here. this is bloomberg. ♪

taylor: coming up on bloomberg markets, tony fernandez there is a group ceo. -- air asia group ceo. get anchortart to earnings this friday with j.p. morgan reporting. welcome michael mayo. it is the man we like to turn to on bank earnings. what should we look for? bankdo not think big

earnings will be that exciting. i think you will see structural progress when it comes to credit quality and capital return is the highest in history. revenues should be soft. if you are looking for that extra excitement because revenues are accelerating, you might be disappointed. if you were a long-term investor, you want to see sustainable progress. david: what happened to net interest margin? if you get interest rates up some a we are going to make a lot of money. michael: there is short-termism when it comes to the banks. the margin is the difference between what banks collect on their loans, what they pay on deposits. , theinterest margin biggest decline in 80 years up to a couple years ago and now it has been increasing. that rate of increase is less as banks pay more in deposits and repricing is not as much as some

had thought. alix: you think this is going to be the time when we see it this -- start to happen. deposit data leads first to how much bank deposits go up for every increase in the interest rate environment so those data's are increasing so as the fed continues to raise interest rates, the race -- rates you get on your deposit has gone up. as long as that deposit data is good.one, it is why is the rate increasing? we think the economy is strong so you have other positives. the quality of bank loans remains excellent. that is the most important factor for investing in banks. david: one of the banks we hear from is goldman. there is a change. there are changes around. they are maybe going to cut back.

is this moving faster than you anticipated? theael: i did read bloomberg article saying goldman sachs is not pushing markle's -- markets. that is the consumer lending outfit. for 149 years of goldman sachs, they served customers and now they are expanding to the person on the street. the issue is the quality of those loans is less than your typical loan. it is unsecured credit. we do not think goldman was ever going to reach its target and now you have a new ceo coming in. , we thinkably like the new feel would not want on those targets for markets so you cannot get over -- go over. for the short-term, they are going to be tactical. alix: you are going to be on the call with these guys. what is going to be the question

you need to know to prep your thesis? michael: i think the question the market wants to hear is, what is the outlook for growth? bank earnings might be ho-hum. the excitement will be in the question-and-answer session at the outlook. his loan growth picking up? are you seeing extra animal spirit? follow-through from the tax cuts we have seen. that is where the banks have not been the best performers. is, is this to see cost control continuing? what is the rate of branch closures? how was technology driving efficiency? is cap return the highest in history? about i want to talk proxy advisory world changes. there is legislation pending. proposal, there is a

peers registration for proxy advisors and they are not to disclose conflicts of interest and make sure they disclose basic research. that sounds reasonable. it is called the corporate government reform act. the proxy advisory firms conduct research. the issue recommendations. investors listen to them and .ometimes you have votes the first thing is -- of all shareholder proposals, 873, how many happened? of this is finding. the issue is the proxy advisory conduct the research and let's take citigroup. as a past the citigroup test? if one of these proxy advisory firms once to conduct research on citigroup, and is she a recommendation? it could be on the chair ceo split.

research to show that to citigroup before. david: in a nutshell, the basis of security is disclosure. why not require the proxy advisors to disclose things? why isn't that good sense? is neededisclosure but welcome to financial services. you need to have the adequate fireballs. you need to have disclosure. let's make sure all participants have closer. it comes to having to show research to companies before releasing it. i have seen enough of that in my three decades. no way. this is an easy call. governance corporate . i will give you a long list of things. i will take the opposite side. alix: good to get your perspective. i brought you a gift. alix: oh i love shareholders.

david: ok. alix: thanks. david: i am watching hurricane michael, set to make landfall in florida. an hour.to 140 miles it could cause 1600 billion dollars in damage. maggie really? --rulli? it doesn't hit land again for another four hours or so, right? >> we have mantra lowers till it makes landfall but we are starting to feel of ask. the brain is getting heavier. this storm is massive. we are expecting hurricane strength winded the outer band a few hours from now. this scene may look different. people say they are ready. many officials have been wanting this is a storm unlike one we have ever seen. even if you have waited out storms in the past, do not do

that with this one. this could be the largest and strongest storm we have ever seen in this region. they are telling people to evacuate. time is running out. this comes down to how you prepare for how you when your family are going to fair. david: the governor has been stark in his warnings. you are down there. do you have a sense -- have people left? you rarely hear such strong words from officials like -- they are calling it catastrophic, life-threatening, people, urgingto them that this storm is going to affect them. it is about their lives mother children's lives. along this road where we are in panama city beach, this is under mandatory evacuation. so it is only for responders and people of the media. all the shops are boarded up. gas stations were closed.

for the most part, people are evacuated. we have seen a few people not listening to the governor and saying we are going to weed out this storm. we have supplies. i would say for the most part, people are taking this seriously and are evacuating. david: ok, maggie really. thank you so much. alix: joining us on the phone for more impact on the commodity impact is our guest. what is the impact for oil and natural gas? what has been shut? >> it is 670,000 barrels they sudden accorded offers now. 's the storm pathway looks like it is going to pass along the eastern edge of the reduction so we will see how it goes. it is not directly -- most of the production in the gulf is not in the eye of the storm in the main pathway. has been big impact

natural gas since january. why would natural gas be disproportionate to oil in this storm? >> i am not sure we think it would be. you get gas if you move to the west. frankly, the gulf of mexico gas production has become a smaller proportion of u.s. gas supply in recent years. i think it is more about what is happening with storage numbers and what we see broadly. alix: i am glad you brought those numbers. you store natural gas as the excess reserve in the u.s. they are low-end have been declining at a 15 year low. how much of a squeeze are we set up for and how long does that squeeze last? say given theto weather and how things can go. from our standpoint and view, we , justlatively comfortable

on the back of the amount of production coming on stream and the pace on the supply side. numbers butonishing i think when you think about supplies and how that is projecting, that is less concern. see -- do we see in other leg lower? >> i do not think we should be as direct as that. going into winter, there is uncertainty depending on how cold it gets. it is freezing. alix: thank you. -- david, i am struck by the fact we have had 14 storms in the atlantic this year and the conversation in the markets and to be about climate change. researchd -- rich --read research.

david: does that change the business models to make sure they have renewables? goldman sachs did a number saying if you pare back on oil activity, that oil activity will be worth more and offset lower trans you get from renewables. you have to protect yourself. david: there are studies coming out that this does pay for themselves but there are a lot of upfront costs. coming up, the open with on ferro. this is bloomberg. ♪

>> from new york city, i am jonathan ferro. the countdown to the open starts now.

coming up, investors are ignoring the financial shock. evaluations look stretched. stocks enteredr a bear market and we will look at italian populace throwing a line in the sand. let's get price action. 30 minutes from the opening dow. we are down 10 points. the fx markets, you're a 1.15. there we go. treasuries starting to bleed. yields up three basis points. price action in the top stories for us, breaking news. let's get it to you from bloomberg's taylor riggs. taylor: that deal between cbs and aetna is