trump's terms. debt ceiling debate and another shutdown. vows more cost cutting as trading revenue falls. german recession fears. europe'sues spread in largest economy. welcome to "bloomberg daybreak." it was quite an exciting night with lots of things to discuss. david: the president saying he wanted to be uplifting and reach across the aisle. noise --ade some nice at some point, the democrats stood up and applauded him. alix: a lot of the women on the democratic side wearing white.

a lot of interesting discussion about how she reacted throughout president trump's state of the union. david: she looked like a third base coach with the hand gestures to her side. she was trying to lead her delegation. a lot of women in white in solidarity with the suffragettes. time, same wore black. alix: we had a five day rally in the s&p. now, s&p futures down three. nothing materially changed. euro-dollar down .2%. factory orders in germany really tanked, the steepest decline in six months. a lot of that do to trade. here in the u.s., buying mostly

in the bond market overall. lots of orders piling in for 30 year btp's. crude softer by 1%. we are worried about the stockpiles that could be accruing in the u.s. david: we will get u.s. trade balance numbers at 8:30 this morning. at the same time, we will get fourth quarter' earnings. at 7:00 p.m. this evening, jerome powell's town hall meeting with educators in washington. time for the first take. we are joined by shaun donovan -- shaun donovan and lisa abramowicz. here's a little taste of what we saw last night. >> the agenda i will lay out this evening is not a republican

agenda or a democrat agenda. it's the agenda of the american people. victory is not winning for our party. victory is winning for our country. we must reject the politics of revenge, resistance and retribution, and embrace the boundless potential of cooperation, compromise, and the common good. an economic miracle is taking place in the united states and the only thing that can stop it are foolish wars, politics, or ridiculous, partisan investigations. in the past, most of the people in this room voted for a wall, but the proper wall never got built. i will get it built. david: i will get it built. he said the only thing getting

in our way, wars and investigations. what about trade? >> we didn't get anything that new on trade. we got familiar messages from the president on the need to remake catastrophic trade deals, again labeling nafta a catastrophe, talking about china and his negotiations there. the administration sending two officials next week. he didn't drop to potential bombs he could've -- two potential bombs he could have. he has threatened to impose 20% tariffs on auto imports. that would be a big blow. he has threatened to withdraw part of a gambit to get his new u.s. embassy. none of those things came up last night.

alix: did we learn anything? flipside with respect to whether it was soothing or not, it was not soothing, he was not conciliatory about negotiating the wall. not really throwing the democrats a bone at a time when they are coming up against a deadline for another government shutdown. how are they going to breach this impasse? it's not actual deal terms in linguistics, and rhetoric. alix: especially when you have the debt ceiling looming in the background as well. brutal quarter when it comes to their trading. overall trading revenue down 40%. equity trading down about 70%. stocks off the lows of the session. this beat out the worst expectations. going forward, looking at cost

cuts. lisa: is this because of the low rate regime, the negative yielding regime in europe? it is becoming less profitable to make bets with banks' own money. bnp was one of the banks along with socgen cutting their proprietary trading unit. tradewas a derivatives that went awry at the end of the year. there's a question whether the power has shifted from the sell side to the buy side in this era of quantitative easing. there's a question of whether that plastic model of making bets with their own money is not profitable. goldman sachs thinking about cutting the amount of money they commit to their flagship that trading business. why?

they are not making enough money. david: exactly. this is equities in the fourth quarter, which were ms. -- which were a mess. >> that mess in the fourth quarter, those trading losses were related to trade and fears about the trade war's in china. in december, the christmas crash we saw in the markets came after the dinner in buenos aires and the messages that came after that. 4 tweetus december saying "i am tariff man." david: german manufacturing numbers quite a disappointment, really sobering. how much of that is export problems? >> germany is an export driven economy. slowingching the hitting other things.

apple being hit by the slowdown in china. that will hit germany and its export-driven companies. the real tells us changing economic context out there. when trump was launching his trade wars, the global economy more readytronger, to absorb any potential shocks. lisa: this report was -- outside of the 19 nation euro region, orders down 7%, the most since 2012. how much of this is china? germany affected by the slowdown there. where are we in china's slowdown? europe very much and focus. alix: italy is in a recession now, too.

thank you both very much. breaking news here. glaxosmithkline lower in the market over in the u.k. adjusted earnings will decline 5-9% for 2019. the stock was down by over 2%. they see adjusted earnings falling by as much as 9%. for the quarter, they did have a solid beat. the guidance a risk there. markets looking for clues on china, trade and president trump's state of the union. this is bloomberg. ♪ i don't blame china for taking advantage of us. i blame our leaders and representatives for allowing this travesty to happen. ♪

viviana: this is "bloomberg daybreak." spotify is moving into podcasting and the company has a -- recode earlier reported spotify plans to spend more than $200 million on gimlet . homecoming was recently adopted into a tv show for amazon. apple has named its third retail chief in seven years. deirdre o'brien will replace angela, who held the job for five years. some customers complained. tim cook wants to find more revenue streams as the iphone era wanes.

the australian central bank cheap has shifted to a neutral outlook on interest rate hikes. -- the australian central bank chief has shifted to a neutral outlook on interest rate hikes. today, the probabilities appear to be more even now. viviana: that is your bloomberg business flash. david: investors were looking closely at last night's state of the union address for any encouragement president trump might give about a chinese trade deal. the president to talk about such a deal. pres. trump: i have great respect for president xi. we are now working on a new trade deal with china. but, it must include real structural change to end unfair trade practices, reduce our chronic trade deficit and protect american jobs.

[applause] --id: we welcome fredrickson fred berkson, a senior member of the international economics team. with alix steel, sarah hunt. he did address trade. i'm not sure how much he told us, really. question.mitted a big whether a trade deal is likely. i think it is, what if it were to fail, that would be a big hit to the economy. the greatest risk in the short run is the failure of the trade deal with china. if the deal fails, the president says you will put on more tariffs and there will be more retaliation. that would be a big hit to market confidence.

david: you heard in that brief excerpt we listen to, he talked about structural change. is that realistic? fred: the president's right to push for that. there's a good chance the chinese will do it. they realize they've been cheating. they have been treating the world system, they are threatening the system, and they realize they are going to have to make some changes. it may take some time to phase that in. i think they will do it. there's a good chance for a deal that could lead to structural changes and big systemic improvements. alix: did you get any insight yesterday as to how much risk you want to be taking on now? sarah: i don't think you change a lot with that. it was the same discussion we've been having before. i want to talk about

intellectual property and those other issues that have been part of the whole discussion around trade. i agree if we don't get a trade deal, markets aren't looking for that, but if we can continue to negotiate, if we move the deadlines around, that will be ok. if you get a hard stop, markets are not ready for that. david: there may not have been a lot about chinese trade, but a lot about the economy overall. the president took a victory lap. is he right about his assessment for the economy? strong, butonomy is there was the usual trumpian hyperbole. he said where the world's hottest economy. 2.5%.s. is growing at china is growing at 6% or more. china is growing twice as fast.

the other thing he said was we are just getting started. in fact, we are slowing down. the u.s. grew at 3% this year. this year, 2.5%. next year, 2%. down. slowing we hope we can limit the decline. the president was overstating in a couple major respects. new orders, the lowest in 13 months. where would be the safer bet to get some kind of growth? sarah: you've seen some of the technology stocks come in a bit. that's a place that people are looking. even in the places where there's growth, people are talking about costs.

you are hearing a lot of slowing growth. there will be growth, but it will be slowing. there are a number of places where the markets are having trouble going back to where it was before because you are seeing them telegraphed the things they are slowing down. that second derivative turns negative, people are more cautious and they are willing to pay less on the multiple side. david: you said economic growth in the u.s. is slowing down. what about some stimulus? what about infrastructure? he said he would like infrastructure. should we have infrastructure investment right now? >> we should. it is good long-term, it would beef up the economy in the short run. i think there's a good chance we will get it. --re are big budget deficits this is not a great time to increase the budget deficit.

that might be an area where the two parties could collaborate. fred bergsten, thank you for being with us. sarah hunt sticking with us. alix: antitrust regulators vetoing the deal -- we go to brussels. maria? >> good morning. we are being joined by one of today, she has made a to reject theion merger between siemens and -- both companies working on getting this done. you've decided to reject it.

why? two reasons. this is a very important market. there are very high-stakes. this will be the thing to do. competitione concerns because we lost competition with the merger. arguments was the get of china, if we don't through, we could be threatened by chinese companies. is that an issue to look at? >> one has to take it very seriously. there is unfair competition in the global trains deal.

you have to be attentive to these questions. siemens and alstom our local champions. they do well in every contestable market in the rail industry. they are looking carefully at the chinese. they make up 90% of what they do in the chinese market. they have no footprint in europe whatsoever. a very light footprint and other kinds of rail. the chinese are running no trains further than china. you have to use your tools to make sure you have fair competition and fend for yourself. you shouldn't risk that competition for customers in europe to enjoy affordable prices and innovation and choice. decision -- the german

government seemed to be in favor. that therecerned transparent discussion -- >> everyone can see it. they can see that we based our decision on the facts of the case. we had these two last issues remaining. the company chose not to solve them. make sure the case can stand up in court. based on the evidence of the case. -- taintede painted in one political direction or another. we need to make sure that european customers are well

serviced -- governments who argue let's override this. >> the parties are welcome to reconsider how the deal is structured and come back. it's not that the provision is inevitable forever or for a long time. they could do that. dealcould restructure the to solve the issues before the prohibition. this may not be the end of the story. that's for the businesses themselves to decide. this concerns will get addressed -- >> in a number of markets, this was absolutely fine. there's other strong companies. urban cycling was to be sought.

we had these two remaining concerns that couldn't be solved. if they reconstruct the deal, that would be a new situation. the prohibition is not forever. it is for now to protect customers. >> there's been a lot of pressure -- knew what was the precision of the ministers that were interested in this case. >> would you want to be the next commissioner? is that something you would have to consider after the european election? asi want to continue commissioner of competition. of interest in digitization. manufacturing. i think we should make some changes to our competition rules. that was commissioner bruce

vestager. alix: the eu competition commissioner. still with us, sarah hunt. in the context of the data out of europe, where are we? are the markets properly priced? it's very clear that things in europe have slowed considerably. germany being a big part of that. had seven or eight years of expansion and now, things are a bit weaker. deal onred the trade top of the fact that you have slowing auto and all of a sudden, those places you are exporting don't look as good as they used to. they still have a lot of issues. there's a lot of things they didn't do that are still a

problem. it's difficult for europe to get out of its own way here. the stimulusout out of germany? >> i don't really know. most governments would like to try to do something to stimulate. germany has the best chance of doing something. they are talking to italy and to france -- two italy and -- talking to italy and to france. toutingresident trump achievements in u.s. oil. alix: this is bloomberg. ♪ i'm a veteran

and the army taught me a lot about commitment. which i apply to my life and my work. at comcast we're commited to delivering the best experience possible, by being on time everytime. and if we are ever late,

we'll give you a automatic twenty dollar credit. my name is antonio and i'm a technician at comcast. we're working to make things simple, easy and awesome. the latest inisn't just a store.ty it's a save more with a new kind of wireless network store. it's a look what your wifi can do now store. a get your questions answered by awesome experts store. it's a now there's one store that connects your life like never before store. the xfinity store is here. and it's simple, easy, awesome. alix: this is "bloomberg daybreak." the state of the union barely moved any markets. s&p futures down by about one.

dow futures off by 14. take-two shares falling 9% in the premarket, the lowest open since april. watch out for gaming shares. european stocks slap the dax off despite the fact that german factory orders came in pretty weak. cummins, a big miss here. the estimate was for $3.81 a share. you have to look at industrial type names to see how they will fare. sales did come out a bit better on net sales. -- the top line still relatively strong. stocks reacting negatively to that ups number. ting aent trump tou revolution in american energy. >> the united states is now the

number one producer of oil and natural gas anywhere in the world. for the first time in 65 years, we are a net exporter of energy. it's not too early for billions of dollars to pull into that space. there are six major lng projects under construction. now, david foley, ,lackstone energy partners ceo early into the lng export story. always a pleasure to catch up with you. the net exporter u.s. oil story again. david: it is something that all americans can be proud of, the entrepreneurial spirit. it is really great for jobs, for

trade, for tax revenue for the country. it's great to be a small part of that. alix: do you still want to be a part of that? you can see how much we have been exporting and how much more potential there is. does that make it a good investment now? david: it gives you the opportunity to invest. if there not capital formation, a need to build things, there's less of a need for third-party capital. this tremendous growth in exports has required a lot of cap. we invested six years ago in shin near ahead of the game. it's an incredible wave of investment. we are a risk equity investor. someng in early, taking risks and managing those, we can do well. this is toward the back end of its first phase of growth.

a lot of others still have billions in front of them. we were able to do it during low interest rates and high oil prices and modest steel costs. it will be difficult for the start up lng companies to do what we did seven years ago. alix: how do you find an attractive investment opportunity to play the energy export market? david: there's lots of different products that are exported. lng gets a lot of press. crude oil has been increasing. there is a lot of other things. exportingoducts, gasoline from refineries. that's another opportunity. we are also a producer. we can follow the molecule and not just do pipeline investors

or export terminal investors. see a bit ahead of the other folks which fields are increasing. full, you need a new pipeline and refining the molecule. there natural gas liquids as well. we are making investments downstream of the field and those are exporting. alix: you would be interested in an export terminal for patrick comes -- petrochemicals, for example? david: we are actively looking. alix: is it a price issue or opportunity issue? david: we are always looking for the rate of return for the risk. lng is so hard to permit and build. ,ome of the simpler projects

there's a lot of dock space and storage along the gulf coast, 14 million barrels a day of excess capacity. -- foron barrels a day what's currently 2 million barrels a day of exports. how much contract duration can you get? tont -- if you are going build a building, how many years of rent you have? with crude, it is much shorter. it will continue to go up and down. if the industry gets overbuilt a bit and we have a cyclical downturn, you might have an issue with that building if you have tenants not paying their rent. alix: there's so much oil in the permian.

not a lot of money is coming in. how much risk do you have to take on versus six years ago in this space? david: for long-haul pipelines, there's still a level of sensibility among the companies sponsoring those. it takes time to do those as well. sometimes the prize is commensurate to the difficulty. nothing is easy. there's still requiring long-term commitments from shell. when we partnered with permian highway, there was quite a bit of risk initially. financial, butt we were a shipper. to go from the permian to the $500coast, we committed

million a day of volumes. they had some capacity. exxon is a great partner. steel, couldce the we fill the pipeline? we took that risk shoulder to shoulder with candor. when we announced the final investment decision, we had 10 year contracts with folks like exxon. that provided an appropriate degree of risk mitigation. alix: recently, you created a water-filled midstream which will manage wastewater. what will be your next deal in the permian? david: it's going to be consistent with the theme you are seeing. there's different types of streams that are related to increasing production. people are focused on the crew

because that's where the economics and realities are. and things you can sell they are value added. another pipeline we commissioned for natural gas liquids to take them from the permian to mount bellevue, water is a big issue. you can't flare it. you have to safely and responsibly dispose of it. who was veryeam involved in the industry to help producers in the permian takeaway and dispose of the water. you can get five or six barrels of water for every barrel of oil produced. it's important to dispose of that safely and responsibly. it's a great growth area for us.

'six: what is on david foley list? david: i'm actively looking for export related opportunities. this is a comfort area for us. a lot of capital going in along the gulf coast. alix: thank you so much. take a look at cummins earnings. topline revenue meeting estimates but not getting it done on the bottom line. a big miss on fourth-quarter earnings per share. the full-year revenue outlook 0.4%. north american sales up about 17%, increased by truck 6%duction, higher than the international growth they are seeing. a slew of drug and pharmacy companies reporting this

morning. humanascientific and lowering their full-year guidance. eli lilly seeing downward to divest their remaining ownership interests. humana boosting their dividend to $.55 a share. you are seeing those shares had lower. -- head lower. what'snow, an update on making headlines outside the business world. 's dida: president trump nound to democrats -- seated ground to democrats. pres. trump: an economic miracle is taking place in the united states. the only thing that can stop it are foolish wars, politics, or ridiculous, partisan investigations.

president trump will meet with leaders from other nato countries when the military alliance holds a summit in december. president trump in the past has criticized nato. european union antitrust regulators rejected that proposed rail merger involving siemens and alstom. they said the companies are not willing to address concerns about their control over rail signal systems and high-speed trains. they argue the merger is needed to meet competition from china. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. alix: coming up, equities trading wipeout. bnp paribas gets hit by the stock market rout at the end of last year. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." coming up, senator rob portman from ohio. member.e committee tesla cutting the price of its model 3 sedan for the second time this year. $1100rsions will now cost less. tesla sang the cost cut will offset the end of a customer referral program. mercedes-benz expects earnings to bounce back this year.

profit will rise slightly. it struggled with a u.s.-china trade war and rising expenses to develop electric vehicles. ocontou.k., shares of plunging. the blaze will constrain its ability to meet customer demand, cutting sales growth earlier this week, reaffirming its financial outlook, including an increase of 15% in retail value. we turn now to wall street beat. first up, bnp hit by the market rout. france's largest lender lowering profitability targets. wall street's shrinking cuts, but someb analysts expecting more shakeout ahead. bob diamond steps down as atlas

chair. set -- bnpon paribas, terrible quarter. why isn't the stock down 15% on this? >> in part, people were expecting the stock market rout would affect them. losses on derivatives trades -- the news was out there. the bank is struggling. they were expecting to push into markets like the u.s. and germany. they are struggling more than expected because of the volatility. marketthe equities affected everybody. why did they affect bnp paribas so much more than everybody else? >> i'm not exactly why they've had such a big hit comparatively.

we've seen a lot of firms struggle with their equity holdings that tanked in the fourth quarter. the bank is really showing that some of the trades were poor, potentially overleveraged or over concentrated in the fourth quarter. a derivatives trade gone wrong. -- hsbceet job cuts eliminating 50 jobs. santander, the, list keeps on going. >> some of this is normal for this time of year. we are seeing a number of , notcial firms cut jobs just at the medium levels. state street cutting at the senior level. some of it is automation. where financial services are

cutting costs, places where they can replace people with automation. got $21he banks overall cuts, but they are laying people off. yesterday, goldman looking at cutting back in their currencies business, long a mainstay. this would be a fundamental transformation for the bank. >> it's also interesting because we are seeing a bit of the changing of the guard there at goldman in terms of david solomon taking over for lloyd blankfein. to haveankfein appeared protected the fixed income unit for a while. maybe david solomon is coming and saying we are looking across the board and i am looking at andcuts in fixed income

commodities. bob diamond once ran barclays, then went to an african bank to help that company. focus on otherr executive roles. we saw a lot ago, of reports and people moving into africa thinking it would take off fast. the competition is hard there. there's a lot of unpredictability in terms of government and systemic issues they have in terms of poverty. it's been hard for people to make money there. david: africa was so important to bob diamond. this was his next act. africa over the barclays business. i wonder if this is saying it's a lot harder than i thought. >> he's been a long-standing

proponent of this investment there. they are planning to move their operations from the headquarters in dubai into the local communities in africa. that might be one way they are able to get a step up in terms of investing their. alix: what is his next job going to be? up, disneyng surprise to the upside with its earnings after the bell yesterday. this time, it was good old broadcast.. withscussed the results wolf research managing director -- this is bloomberg. ♪

alix: disney surprises to the upside after posting first quarter earnings that beat estimates. now,ng us on the phone

marci ryvicker, wolfe research managing director. r-ratedl keep making "deadpool" films. made my year. marci: i think more important then what disney printed, they beat expectation, the fact that it sounds like we are going to get a lot more color on their streaming up come april. that is the entire key to the stock. david: bob iger saying he's really happy without going -- espnhow it's going for streaming so far. marci: 2 million subs for espn plus with virtually no marketing. that they will need little marketing. roof, will be through the

putting most of their library on that app. we've seen streaming services not work. most of us who abused directv now or hulu have seen things buffer. david: talk to me about abc. they really shot out the lights, up 40%. the spot was above the upfront. how much was performance, the number of viewers they had? marci: a lot of what was funneling abc's growth came from political advertising to tv stations. scatter pricing is a bit inflated relative to what ends up being in the numbers. there was a lack of impressions and that means viewership is down. theter being up 40% over upfront is definitely a positive data point.

i don't read through that things are booming. david: it's a great print. one cloud was shanghai. how vulnerable are they to a downturn in china? marci: bob said it's chinese consumer and confidence over there. which we totally understand. i don't think shanghai is meaningful to numbers. it is still profitable, just not as profitable as he would have liked. it was never a needle mover for numbers. alix: what do you think investors are missing with your target of $30 above what you think it should be? marci: there's a lot of uncertainty around the app. there's a lot of concern about the paid tv ecosystem in general. at&t was the biggest disappointment. concernsome overriding on the pay-tv ecosystem.

more than that, we need clarity 2021ere fiscal 2020 and numbers go when they launch the streaming service. there will be a significant amount of incremental investment. we need to know what that incremental investment is and how quickly it comes into the model. i'm not surprised that disney trades where it does today. the biggest catalyst will come in april. blackrockng up, the global allocation funds portfolio manager. this is bloomberg. ♪

i'm all about my bed. this mattress is dangerously comfortable. i love my leesa. people everywhere love their leesa mattresses. and now, for an even more luxurious sleep experience, meet the sapira mattress by leesa. sapira is a

hybrid mattress combining performance foam technology with individually wrapped pocket springs. enjoy extreme comfort, minimal motion transfer, and incredible edge support. sapira is the first true luxury hybrid mattress. made in america and shipped to your door in a box. read our reviews, then order online. when your new sapira mattress arrives, try it for 100 nights and love it or get a full refund. order your own sapira luxury hybrid mattress right now to get big savings. order now and get 15% off your mattress - and free shipping too. just go to buyleesa.com today. you need this bed. alix: bipartisan reach on

trump's terms. yielding no ground on a border wall as vice president pence doesn't rule out another shutdown. policy.aribas revenue that's revenue falls. daimler falls -- welcome to "bloomberg daybreak." i'm alix steel in new york. david westin is in washington. it was an interesting evening. kind of like watching someone in their homeland, in there end zone. david: i plead guilty. a lot of it would be the atmospherics. i think it was the year of the woman. we talked about people wearing white. there was a lot of white on the

democratic side because there's a lot more women. centuryump: exactly one after congress passed the constitutional amendment giving women the right to vote, we also have more women serving in congress than at any time before. [applause] david: you saw that spontaneous demonstration. the women were surprised. they weren't expecting that. usa that usa champ chant. that wasme, something -- david: president trump has had a

woman problem. i think it's fair to say. i think he was enjoying that moment. alix: it's about time. it is a slow week, slow day. s&p futures down slightly. it was a five day rally. you have a gain in stocks like take-two. .1%-dollar down just despite the fact that factory orders in germany fell, hitting the steepest decline in six months. it appears to be a trade issue. the 10 year yield lower by one basis point. crude flat after being down 1%. calm.calm, david: we will get u.s. trade balance numbers at 8:30. at the same time, we will get

general motors fourth-quarter earnings. the u.s. treasury will sell 10 year notes. 7:00 p.m., jerome powell hosts a town hall meeting with educators in washington. alix: president trump calling for bipartisanship but yielding no ground to democrats. he seized on the opportunity to tout his academic achievements. pres. trump: we have launched an unprecedented economic boom. a boom that has rarely been seen before. wages are rising at the fastest pace in decades, growing for blue-collar workers who i promised to fight for. the u.s. economy growing almost twice as fast today as when i took office. an economic miracle is taking place in the united states and the only thing that can stop it are foolish wars, politics, or

ridiculous, partisan investigations. america is again winning each and every day. [applause] members of: congress, the state of our union is strong. [applause] alix: joining us now, marty schenker. the $28 billion blackrock global allocation fund -- it is strong. will it continue to be strong? marty: it's interesting that the economy is strong as long as the government is open. donald trump just helped orchestrate the longest shut down in u.s. history. he overstated some of the facts about the economy. he should take a certain amount of credit for what's happening in the u.s. it is called a recovery. it happens.

it is an economic cycle. there's some prospect that may end in the next year or two. david: the only thing that could stop the economy as a war or investigation. what about trade? marty: it was a real dichotomy. reached out across the aisle, but then immediately took it back on his rhetoric on immigration. he did not spend a lot of time on trade. we know he's working toward an agreement with china. we have to have one. david: one of the most remarkable moments in the speech was his taking credit for avoiding a major war with north korea.

marty: this is a refrain he's gone to a number of times. it is true that tensions were quite high when he took office. then he had his famous summit. the north koreans are still building their nuclear arsenal. he's meeting with kim and a couple of weeks. he deserves some credit there. president lays out things he wants to accomplish -- he talked about drug pricing. he talked a little bit about infrastructure. what is the blueprint he laid out other than that wall? ofty: to me, this feeling bipartisanship will last as long as his next tweet. the referees on the compromise our meeting -- our

meeting behind closed doors. meeting behind closed doors. alix: how does this all work out in the markets? the market responding to a really good, robust economy. what will come next? >> it was a fascinating speech from a politics standpoint. aboutrkets care most trade, drug pricing, infrastructure. there was a lack of detail. 2018 was a good year for the economy, not a great year for the markets. it was difficult because the monetary conditions tightened, valuations went down. it is possible to have a strong economy and a weaker market. so far this year, we are getting a bit of both.

we are getting good economic numbers and some change in the reaction function from the federal reserve. backwardh of those looking because the market reacting to -- the fed looks at weaker loan demand. ism services yesterday fell as well. are we appropriately pricing in the slow down in the u.s.? russ: we are. if anything, markets have been to sanguine -- too sanguine. the impression the fed was going to be more aggressive, they probably priced in the slowdown more than needed. the last six weeks have been different. we've seen a 15% rally in the s&p 500.

people have suddenly become sanguine on the outlook for the economy and the outlook for monetary policy. david: i wonder how different the speech may have been if the market had changed its mind on the rate hikes. imagine if we were still worried about financial tightening conditions. whether or noter trump would have added interest rates to that list of things that would have interfered with the economic miracle he described. chairman powell has sent a real message to the markets that the fed is holding off on any rate increases for the foreseeable future. we will see. he is going to be data-dependent and donald trump will be ready with a tweet if he raises rates again. david: you can count on that. marty schenker, thank you. russ will be staying with us. coming up, more reaction to the

president's remarks on china. we will talk with cinda rob portman -- senator rob portman of ohio. this is bloomberg. pres. trump: i don't blame china for taking advantage of us. i blame our leaders and representatives for allowing this travesty to happen. ♪

david: the business world watched the state of the union last night with the kenai on how much encouragement the president would provide -- pres. trump: i have great

respect for president xi and we are now working on a new trade deal with china. it must include real structural change and unfair trade our chroniceduce trade deficit and protect american jobs. [applause] david: we welcome now senator rob portman, republican from ohio and a member of the finance committee. sen. portman: great to be on with you again. david: you were a trade representative. it was striking to me that he said structural change and fixing the deficit. those are two very different things. addressing the trade deficit would be much easier than structural change. if you want structural change, what does that do to the odds of getting a deal? sen. portman: i think both are necessary. our top priority was china. we were able to make some

success, take china to the world court for the first time and when a case. implementation was lacking. china continues to insist that they will play by their own rules. we need to have them buying more of our product to deal with the trade deficit. they are willing to buy more soybeans, more lng guess. the broader issue is how do you deal with the structural particularly intellectual property and their lack of respect for it and their ability to use the current trading rules to make it more difficult for american companies to compete? the negotiations went well last week in washington. i spoke with robert lighthizer last night. march 1 is approaching quickly. if there is not something done before that, tariffs will go up.

my hope is that we can resolve these issues. it has to involve more than just by more -- buy more. david: he also talked about nafta, the usmca. he wanted more trade authority. peoplederstand it, some on the hill think we should be going the other way. sen. portman: trade is about a balance. you want to make sure you are dealing with china or other countries around the world on the basis of fairness. if not, it's too easy for those countries to retaliate against the united states and our exports. our farmers are concerned about the application of 232. other countries like canada and mexico are retaliating against

our agriculture products. same thing with manufacturers. 232, the national security waiver, says you don't have to prove any unfairness. you don't have to prove that there is subsidization. you don't have to prove that there's imports arming u.s. industry. you invoke a national security waiver and say we will keep this product out. thate trying to narrow again so it's truly for instances of national security. aall trucks, that would be real problem for american consumers, the cost of cars would go up $2000. for u.s. economies that rely on -- our hope isin the legislation will constrain the 232 power so it goes back to

its original intent. china is not playing by the rules. other countries that are playing by the rules, you have to be careful about slapping tariffs on them. the state of the union address was last night. the shutdown is not fully resolved. he spent a lot more time on immigration security and the wall than he did on trade. he said in the past, most of the people in this room voted for a wall but the wall wasn't built. i will get it built. can we come to terms before a -- nine 90's for now days from now? sen. portman: republicans and

democrats alike are saying, why did we do this? it hurts the families. a lot of people are furloughed it makes no sense for taxpayers. my hope is we will avoid a shutdown. we're working on legislation to stop a shutdown in the future. have 33 members of the u.s. senate on our bill already. our president did a good job of talking about the problems at the border. we are getting hit hard by the crystal meth and cocaine coming across our southern border. the president's plan is better than he described.

it does what many democrats are asking for, relying upon the for thealong the border approach -- members of congress voted for this. where the in places experts say it's needed. way, had explained it that he would get a few more democrats nodding their heads, saying, "that makes sense." everybody agrees that we need more technology, more screening at ports of entry. i hope we can come up with something in the next nine days to avoid a government shutdown and improve conditions at the border. david: thank you so much. always good to have you on. senator robert portman of ohio.

up, bnp stockix: coming wipeout. more on that in today's bottom line. this is bloomberg. ♪

alix: time for the bottom line. three companies we are watching this morning. i'm looking at bnp paribas. they are equity trading division was terrible in the fourth quarter. we knew that, but just how bad was quite staggering. >> i'm looking at the siemens alstom deal and the rejection by the eu. not surprising given the degree -- germanyin the eu and france pushing back on this decision, calling for a broader structural reform. question, raising the

you have a currency union but not a financial union. that plays into the political union getting these cross-border deals done. >> this should not be a political decision. look at the facts and make the and alstom siemens are doing quite well. this idea of china being the big bad wolf is not playing out. cummins is the third story we are watching. top line was good but they are full-year was-- .4%. what is priced in and what is appropriate? russ: we have priced in the slowdown in manufacturing. it is more pronounced in europe and china.

seeings no doubt we are some of the drag from the global trade frictions, but also slower growth in europe and china. alix: when would you want to be a buyer of that space? when our expectations down so much versus the reality? russ: there are names in the industrials sector that look different. for example, lng. you don't build a natural gas thet on the assumption that economy is going to be in 6-12 months. >> they're looking for a margin gain in 2019. this is a company that has faced the brunt of these tariff pressures. that's what you are seeing in terms of their guidance for 2019.

do you feel confident that these industrial companies will get the pricing they need to overcome the margin pressure? russ: it is very company specific. quality is one of the big themes. one of the mentions of that is pricing power. that's whether we are looking at industrials or the consumers. investors have discounted a trade deal. if we do see that the tariffs are imposed, there will be market reaction. this is now something most people have come to believe will not happen. a ceoi was talking to yesterday. he said they are able to pass along all the price increases no problem. margins --ctors on buy sectors on margins? russ: margins are a big issue for a number of reasons. in a slower economy, you will

have slower topline growth. at ising we do look whether or not we've already reached peak margins. we spoke to companies in the industrial sector last year. supply costs are going up. transport costs are going up. wages are starting to rise. maintaining margins is becoming more difficult. >> one thing i thought was interesting, the cummins stock is not down that much today. alix: 100%. if you miss, it's ok, we will give you a pass. blackrock global allocation fund portfolio manager, russ koesterich, sticking with us. this is bloomberg. ♪

alix: this is bloomberg daybreak. take a look at where we are on the equity market. a nice rally on the s&p, now we are going nowhere. european stocks flat as well.

other asset classes, a move lower in the euro but it feels modest compared to the data we have seen and a lot of supply and demand for btp's in italy. yields up by two basis points. oil softer on the day. we are just moments away from general motors reporting. david: we have jim numbers crossing right now. this is fourth quarter. their earnings per share .eported at $1.43 on revenues they beat $38.4 billion. they had a very strong fourth-quarter. for the first year they beat expectations. they had taken down the expectations in second quarter of 2018 and now they have come up and beat the new expectations they said in december. a strong quarter and a strong year, driven in large part by

china. they did well in china but their full-sized trucks, particularly pickup trucks in the united states are driving their profitability. a nice beat on the fourth quarter as well as for the year. 13.5%.otal sales falling is that expected? david: yes in the point is mixed. they are making so much money off the trucks. it is not the number of things, it is how much you charge for them. their price has fought up nicely. total volume is going down but they are changing their mix. they are restructuring and putting more money into their trucks. alix: how does this compare to other carmakers? daimler had a miserable quarter in their outlook does not look great. ceod: we will talk with the at 10:00. i believe what they will tell

you is they have set it up so they can operate in such a way that even when there is adversity, and they had adversity from input costs, they have been saying they would do this and what they are claiming as they can operate even with some headwinds. alix: g.m. has made a lot of ,nvestments into the new market which is part of what daimler is struggling with, having to invest so much of the same time dealing with falling sales. david: they are throwing off enough cash, gm is. they are partners. they have honda, they have softbank. daimler has said they will start working with bmw that seems to be the pattern in the automotive industry. everyone once to pair up with somebody. question? is your david: my main question is can

you keep it up? this has been an impressive performance but how you will you maintain this? i want to know where they are in the restructuring plan. they caused some controversy. lix, not mentioned in the state of the union address. no shot at gm for taking jobs away from factory workers. alix: or european trade leaders either. really looking to that interview coming up later on. part of theportant gm earnings story is there strong performance in china despite trade tensions. hillme ambassador karlov and the former u.s. trade representative. it is good to have you here. let's start with the trade issues with china and why that is not affecting general motors. general motors is going to produce in china? >> i think there is a great deal

of uncertainty with respect to trade in china. it may not have affected the fast -- the past with gm, but i would not want to be leading gm and have the skill on for a long. of time. david: if you were leading g.m., you might -- how would you feel about what the president had to say about his negotiations with president xi? there was not a lot in the speech. carla: there was very little on trade. rules say they want fair and we want them to buy more products. differences with china that are built upon reasons. their percentage on our investments. china agreed to when it joined the world trade

organization's, national treatment and nondiscrimination and they have not given us national treatment and they have discriminated. i talked with the ceo of paypal. this is what he had to say about the importance of getting into the chinese market, which has not been easy for western payment systems. with 1% of the market in china you are still seeing a tremendous move from cash to digital. i think there is room for multiple players. this is not a winner take all market. that is one of the nice things about this market. it is growing so quickly that there is room for every player. david: you can hear more of that interview tonight on big decisions at 9:30 p.m.. he is saying there's a huge market and a huge opportunity. for the master cards and the

visas, they have not had an easy time of it. letting mastercard and visa in will be in china's interest. they are funneling capital into state enterprises not making money and restricting opportunities for the private sector that is making money. ,f they let these companies in they would advance their growth and the applause of the chinese citizenry. it is not that we are trying to for something that is bad for china. david: it makes good sense. not everything that makes good sense get done. when you talk about things like state-owned enterprises and reform, there are a lot of issues, including employment issues for president xi. is it realistic to think president can get them to change their economy with respect to state owned enterprise? amb. hill: you cannot make them be a democracy. they want a communist system.

former leaders showed you can minimize the state owned enterprises. people, off a lot of but had a program. he did not throw them into the river. they have to deal with that issue. if they continue to give subsidies to companies that are zombies, they are not going to achieve the kind of growth that the bulk of the population wants to see. david: we do not have a deal with china yet. at the same time, has president trump made more progress and at least gained the chinese government's attention than recent presidents? amb. hill: he certainly got the attention of the chinese and americans that have built pipelines. probably have set up an enforcement stature with

respect to the nondiscrimination. these percentage cap do not make any sense. if you can only own a minority percentage in a company, then your intellectual property, your plans are open for copying. that is one of our basic complaints. david: let's go back to something you said. what about the enforcement? whatever they agreed to, market access, reform, how do we know they will do it? amb. hill: we should have a strategy. the best strategy in my view would have been to join hands with all of those that are on our side on this issue. europe, canada, japan, south and soand confront china you wanted to be in the wto. you promised nondiscrimination. let's fix it. you give us how soon you will

move in each of these areas where we have legitimate complaints and we will work with you. if you cannot, you do not belong in the organization. the wto rules to govern. we could be as harsh as we wish. david: that would certainly get the chinese attention. thank you so much for being here. what you do with companies that have a large exposure to china right now? >> i would ask what parts of the economy they have exposure to curate there are areas of the chinese economy doing well. manufacturing is slowing. we're not seeing as much infrastructure spending, but chinese consumers are doing well. there are great opportunities in china's internet and liquor companies. i think china is a big company. it is not homogenous.

there are opportunities but you have to pick your spots. alix: how and where? the where is more leverage for the chinese community. they are still selling cars in china. you're seeing tax breaks in china. the wrong way, that will have a big impact on valuations. longer-term, there are -- for the chinese consumer that offer good opportunities. overwhelmingly, trade is positive. they say it is bad but not as bad as you think. analysts have a much more negative view because of that trade issue. how do you understand that? russ: this is challenging because you're talking about a binary event. , and ifre be tariffs not how long do you go with the

negotiation? you're correct to talk about europe and china in the same breath. one thing we saw was a pronounced slowdown in europe, particularly in manufacturing. that is not a coincidence. european manufacturing, the middle sized companies were leveraged in china. if china slows, europe is likely to slow as well. russ will be sticking with us. turn to taylorto riggs with more on general motors. taylor: strong numbers, coming in at $1.43 a sale. revenue much better than expected. even though we saw total vehicle sales fall 13.5%, driven by a drop in china, is the pricing that is winning over volume. we are looking at the truck

business. they're going to release new trucks this week that will go on sale in new -- in june. we will get new versions of the chevrolet cerrado. 6.50e now looking at dollars to seven dollars a share -- 2019 versus previous x -- versus previous estimates of $6.27. take to software the worst performer in the s&p 500. slowing sales for fortnight pushing those lower. david: i will be speaking to the gmm -- to the gm cfo. alix: dueling governments in venezuela. guaido has president trump support.

more on venezuela's ongoing crisis in today's follow the lead. this is bloomberg. we stand with the venezuelan people in their noble quest for freedom. ♪

viviana: this is bloomberg daybreak. coming up later on "bloomberg markets" the general motors cfo. david: it is time for follow the lead. a deep dive into the stories making headlines and moving markets with t headlines from into see veterans and insiders. today our focus is on the development in venezuela. president trump and key european leaders said they would support juan guaido as the countries

interim president. russia continues to back president maduro but is showing signs of doubt about his ability to survive and opposition challenge. the eurasia group latin america director and still with us in new york is rusk ostrich erich of blackkost rock. we see increasing country switching over. is that putting pressure on the military? >> it is putting a sense of inevitability in terms of nicolas maduro's ability to survive. the military is sticking with maduro for now but the fact that europe and the u.s. are all blacking -- are all backing juan guaido, that does factor into the military calculation. david: it is interesting you say starting to have economic consequences. my estimation is the economic consequences have been pretty

dire. what is happening on the ground? risa: the u.s. sanctions were very aggressive. it is an oil import ban. that will hit very hard. even though those are primary sanctions, companies upstream, midstream, and downstream are canceling contracts because they have exposure to the u.s. and do not want to risk it for venezuela. that will have a real impact. we also see the bank of england blocked the governments access to their gold. recognition of juan guaido is starting to have a ripple effect in terms of the government's ability to operate. perspective market it affects regional differentials and spreads in the oil world. the overall oil story, where do you see it of all going? russ: this has to be a humanitarian disaster. you cannot imagine this getting worse.

the drop in production in venezuela, which has been going on for years, coupled with the sanctions are giving some bid to oil prices. not all oil is the same. when you think about what comes out of venezuela, many refineries in the u.s. are calibrated for that particular type of crude. if you interrupt that supply, you have seen a scramble to get supply from other regions, primarily canada to make up for that loss. alix: is it making you worried in terms of refiners. they are huge tires of that kind of crude. is there risk for the u.s. consumer if they cannot get that crude, gasoline prices go up? think it is there yet. they're all alternative supplies. at some point, if you interrupt the flow, that could impact, definitely. david: looking ahead, this will

resolve itself at some point. perhaps one quite a will take will-- perhaps juan guaido take over. how long will take venezuela to be a member of the latin american ecosystem? risa: it will take a long time. any recovery will focus on the oil sector and trying to stabilize production. that will take an improvement in the oil framework, political stability. the companies there start to investment. investment takes longer -- new investment takes longer. then you have to consider the price control and you will have to resolve debts with bilateral bondholders, arbitration claimants, it will be a tricky process. what do you like in latin america? have seen a strong performance out of the latin american markets. brazil was on fire.

we do see opportunities in debt in places like argentina, mexico, and i think there is an interesting longer-term question. you go back to the discussion with china. if you do start interrupt the global supply chains, which have focused on asia, where they reemerge? this notion of renationalization , that is not just a u.s. story, that is a north american story. mexico may be one of the beneficiaries. alix: risa and ross koestrich. always a pleasure. david: g.m. boasting fourth-quarter earnings thanks to trucks. more next. this is bloomberg. ♪

david: this is what i'm watching right now. it is general motors. joining us is david welch,

bloombergs detroit bureau chief. pretty strong numbers. what caught your eye? to me wasmped out the $36,000 number. that is the average transaction price of the vehicles gm is selling. that means they are selling a lot of expensive vehicles and that is where they are making their money. that ispensive stuff bringing home the bigger earnings than expected. david: how much of that is their full-size trucks? they brought that online they seem to be selling a few of them. >> they are, and when they last gave us an update they said half of the inventory in the u.s. was the new truck versus the old one. as december war on in january were on, you're getting even more of the newer trucks. you are also -- it is also new crossover suvs. chevy launched a new ones. cadillac has new ones.

there is added revenue there, even though it is a small luxury suv it is still pricey and that is a good moneymaker. it is an old story but is a new one. expensive suvs and pickups. david: is it a story that carries over to china? they showed a downturn in the number of vehicles sold in china. their cadillac sales were up more than 17%. are they making it up on price? >> they are. overall, for gm, china was not bad but the overall market was down. they are looking at china being flat this year. cadillac has been growing great guns over there. the core of your grant and the chevy brand has been down last year and they have their brand that sells small inexpensive vehicles. those are low-margin cars in small delivery trucks they are selling.

it is cadillac that is keeping them a float in terms of earnings in china until the market starts growing. david: finally, a look forward to 2019. they will be moving forward with that restructuring plan. at the same time, they have collective bargaining agreement with uaw. what does that mean? >> they do. the restructuring will help earnings to the tune of $2 billion. that is what is helping them get between $6.50 and seven dollars a share in 2019. uaw negotiations will not happen until later in the year. any costs added to that or anything they take out will not affect much in 2019. it is the restructuring of those 14,000 layoffs that they announced in november that will help profit in 2019. who runs ourwelch

bureau in detroit, thank you for being with us. stay with bloomberg. i will be speaking with general motors cfo dhivya suryadevara at the 10:00 hour. alix: really looking forward to that. great to see you in d.c., in your home zone. cannot wait to see you back later. that does it for bloomberg daybreak. coming up next, bloomberg markets the open with jonathan ferro. in the markets you had a five-day rally in the s&p, gm will propel the sentiment higher. the dax is still soft in europe. a broadly stronger dollar day. this is bloomberg. ♪

jonathan: from new york city for our viewers worldwide, i'm jonathan ferro. the countdown to the open starts right now. ♪

jonathan: coming up, the president making another push for a border wall between one shut down and seemingly the start of another. and chairman jay powell delivering his first public remarks since starting at the white house with president trump. the ecb said to see note urgent need to welcome new bank loans. good morning. five-day winning streak on the s&p 500, futures barely positive. in the fx market, euro weakness again. at 1.1387. stands yields up by two basis points. president donald trump underlying the state of the economy. >> we have launched an unprecedented economic boom. the u.s. economy is growing almost twice as fast today as when i took office.