-- the secret iced slowdown props of the bond bulls. president trump says he will not meet with chinese president xi jinping before the march deadline to avoid tariffs on chinese goodss. in jeff bezos charges the blackmailnquirer of and hits the bias behind the washington post could be behind it. i'm alix steel with carol massar . david westin is off today. he was pretty tired, i have to say. carroll: you and i came in this morning and said there was not a lot of things going on, but we started the week with the state of the union under continuing to watch u.s.-china trade, and the jeff basil's story on the terminal -- jeff bezos story is the most popular on the terminal. alix: in the market it is risk

off, picking up heading into the open in the u.s.. u.s. stocks seeing $700 million of outflows. it was decidedly risk off yesterday, but now that is spreading. -- s&pfutures off by futures off by .7%. long-term bonds has been the trade of the week, u.s. and your is 2.64, and crude has its worst week so far this year, a brutal week for crude on trade fears despite the bullish sentiment that should not be propping it up. carol: exactly. let's get to the bloomberg first take with rachel evans and mike mckee. great to have you both here. happy friday. let's start off with an interesting chart, because we are seeing despite the jump back we saw in equities in january, we are seeing a different tone in february. but we have seen a lot of money flowing out of u.s. docs. -- u.s. stocks. the u.s. is the only major equity region that investors

continue to exit. s seeing outflows through the week of february 6. we are seeing investors move out of u.s. stocks. a bit of a surprise, considering what we saw in january. rachel: we have an interesting dynamic going on, where stocks rallied through january but etf investors were not convinced. they were going into quality stocks domestically and looking to diversify internationally. you have an interesting vibe where it is risk off in some aspects, but then you have people going into emerging markets, which are a risk on play. they do have more potential for growth, a macro perspective been we do in the u.s. or europe. alix: and the dollar expectations help as well. rachel: absolutely. it is a diversifying play we have been seeing, people thinking internationally rather than domestically. in that respect, it feels more of a slower growth trade in the developed market. mike: we do not think they have

a lot of enthusiasm for developed markets, the economy in the united states. it is going to slow this year, but the question is how much? we don't know because the data has been delayed. .urope is struggling along obviously china has been a big problem -- there is not a lot of reason for enthusiasm. the emerging markets are the interesting thing because with the fed on hold, that gives them a boost. carol: what is interesting is how fickle the investor is, because it makes me wonder who was buying in january that pushed of those u.s. equity averages. rachel: and certainly wasn't etf investors. seen interesting, we have the equity market going up and etf investment flows going out. there is definitely a caution there. if you look at the hedge fund space as well, they weren't going all in either. there is a little bit of a technical feature there or people having sold off in december and the stock is recovering as a result of that overselling, but in terms of

people taking real positions for the year ahead, i think they are still on the fence. alix: which brings us to our second story, china trade. you are just looking for an excuse to sell. that happened yesterday with the larry kudlow talks at fox, where the trade deal is. well, the president set a number of times that he expects to meet with president xi on trade. when and where is totally up in the air at the moment. does it depend on the meetings this week? i would not want to say one way or another. it might. at some point, the presidents, i am sure, will follow it mr. trump has been saying, but that is off in the distance of the moment. alix: reaction, stocks lower. but here is what was said in the afternoon out. it is ridiculous that we follow the headlines without context. positive developments were ignored with no meeting having been set yet. come on, markets, be better than that. mike: that will not happen,

because that is what markets do. the most likely aspect of this is in terms of the china sanctions marks -- march 1 deadline, it gets get down the road because neither side wants this to happen and the administration is trying to grab some sort of deal, but it might not have time. there is something else going on that a lot of people are not focused on, and that is the president is going to use the international economic -- the emergency economic powers act from 1977 to prevent quality wei productshua from being used in five g networks. there have been ways to block them coming in from government purchases, but this would prevent them from being purchased by u.s. civilian companies and could be a major deal. he is also looking at export controls on other chinese companies. settle these things, the trade deal and the

technology issues, which they see as a national security thing, and you can see what follows with trade tariffs. but if chinese families are kept out of the united states, this could upset a lot of companies in the u.s.. brought to itse knees when donald trump pushed back, and this seems like an extension of that. mike: it is potentially a much bigger extension of that. there is a lot to keep an eye on in the trade space. u.s. and china relations are certainly contentious, so are relations between jeff bezos and amazon and president trump. jeff bezos coming out accusing a media ally of president trump of blackmail. he put out a blog post yesterday, saying "my ownership of the washington post is a complex of fire for me. people who experience washington post news coverage

feel i am their enemy." alix: america's media owner is certainly an ally of president trump, and saying there was extortion and blackmail of publishing photos of jeff bezos e we now know was not his wife, and saying this was politically motivated. how do we factor this in? there is a company story, a political story, and entertainment -- mike: a whole lot of stories that will be fascinating to the american people. the least interesting is the company impact. most analysts do not think this will have an impact on amazon shares over the long run because people will call of amazon and if the price is still good, they will still buy from them. what jeff bezos is in his personal life will not influence them. it does not seem to be the kind of overhang. good bezos be so distracted that

a goes off course? people do not think that is going to happen. carol: but you saw president trump take action against the company, pushing back in terms of postal prices and doing other things as well, so it may be becomes a company story as well. rachel: we tend to think that doesn't life influence thing. but if jeff bezos sells his paymentsmeet divorce or to sort out a case with national enquirer, we could see investors have to take account amazon'sbecause if public flight rises, indexes have to buy more. it could be a tailwind for amazon to give it some boost. alix: a really interesting conversation. rachel evans and michael mckee, thank you very much. we have some earnings coming up. it --efiner crushed crushed it, really blew past estimates.

earnings at $4.87 a share. three readjusted earnings, $409 billion. their cash flow operations, $4 billion, versus $1 billion year on year. quarter fromulous phillips 66. the refinery set to benefit from the new roles going into effect in the new year. carol: let's get some headlines on verizon's. -- verizon. verizon chairman lowell mcadam is stepping down next month and the company has named a successor. they will pass the chairman's -- to thetook over as man who took over as chief executive officer in august. alix: and a positive global equity rally. our guest will be joining us next. this is bloomberg. ♪

>> business bloomberg daybreak. joseph toymaker hasbro are falling. the company reported fourth-quarter earnings that missed estimates overall, worse than expected. hasbro says the inventory decline in the u.s. and europe reflects the shutdown of toys "r" us stores. biggestplanning its share buyback ever. the electronic maker will buy as much as $910 million of its own stock. shares are rising more than 4% in tokyo. last week, sony reported weaker profit in its playstation business. sears is back from the brink -- at least for now. a bankruptcy judge approving any lamberts $5.2 billion bid to keep the struggling retailer

open. the plan would keep 425 stores open and save 35,000 jobs. the judge rejected creditors' lambert plundered assets after merging kmart in 2005. alix: one stock we are paying attention to his wirecard. police raided wirecard's singapore offices, due to a potential scheme about accounting fraud that they have been under investigation in the singapore offices. carol: this is accounting fraud, so we will see -- they have been under the gun, under the spotlight, and now there is a formal investigation. alix: they deny it and say they handed over material to police, but they are getting hammered over the past week. pop goes the rally and other equities as well. the equities poised for their worst weekly drop since late

december. outflows of $700 million in the weeks through february 6. joining us now is a jpmorgan global asset market strategist. good to see you. it is not just stocks, we are seeing a tremendous amount of buying interest in sovereigns. what do you make of this? >> i think what is going on here, we overshot to the downside in december and have since overshot to the upside in january. if you look at what has driven this rally, it has been multiple expansion. there has not been an increase no changed earnings, in dividends broadly, it is all about the multiple. market pricinga in progress on china, a dovish fed, moderate economic but is still subject to headline risk. that is what we saw over the past few days, some negative news on trade relations with china sent the market into a bit of a tailspin. where you hide?

the long end of the curve. arguably, rotating words of shorter duration might make sense given the flatness of the curve, but for long-term investors and particularly pension funds, we see value in long-term. carol: it is why the bond market auctions did well this week. look at the markets, we've not seen similar moves in terms of the equity market might rally but the bond market does not move similarly. which market do you believe at this point? rates lead ande equities follow. the tenure continues to sit -- around 2.65, sitting to 75, 2 .65, somewhere in that range, and markets have continued to climb this wall of worry. the big risk coming through here is really in the fourth quarter earnings season. you are seeing companies not merit necessarily -- not necessarily provide negative guidance, but not providing guidance. they say look, we do not know what to expect from a nominal demand point. so we will keep buying back

shares, paying dividends, and maybe that keeps earnings rising gradually. but back in september, when investors were looking for 10, 11% earnings growth this year, it seems like a stretch. like: buybacks are a deal, the big bank deal. this is an indicator of being late in the cycle. david: company's have been hesitant to invest for the better part of this expansion. i do not see that changing until the next business ipo begins. i think you will continue to see financial engineering and continue to see m&a like we have seen and the financial sector, and you have seen m&a broadly be an outlet for corporate cash over the better part of this expansion. alix: the irony is when you have earnings coming out, your stock and still not get hit that bad. if you outperform your stock is off to the races. but then we get this headline yesterday from larry kudlow that to some extent, it is way overblown in terms of the reality. what does that tell you about the conviction investors don't have in the market? david: we are continuing to see the investor base figure out who

is long and who is just trying to play the trade. the longer that bull markets go on, the less stable the investor base tends to become. i think that is what you are seeing at the current junction. people who are getting into the market, trying to capture the last little bit of upside, not recognizing that between now and the end of the bull market, you might make a couple percentage points, but valuation should be a guide and we should be thinking longer-term. yesterday at kudlow headlines, it was set it is ridiculous we swallow these headlines, positive developments are completely ignored. this is a reality of not finalizing a deal. come on market, be better than that. do you get credit for being better than that? david: i don't think you do. there is so much noise in the market right now. investors are so focused on the headlines they are not focused on the fundamentals. as earnings estimates have continued to come down, markets

rallied so far in 2019. we are more focused on the signal rather than the noise, and that is how i think investors should be playing the market. carol: so it is a story of reevaluating your expectations in terms of the market. earnings are not falling off a cliff but they are not as strong as they were. david: carol: we will see that -- david: yes. carol: and they are not reflected in the equity market. david: exactly. it might be a bit of a stretch, given wages are rising and rates could move back up towards the higher end of that range, but it is all about expectations. i think the most challenging thing of the current juncture is where we sit here today on the s&p 500. people inspected for full returns in 2019, high single digits. what does the story like over the next 11 months? to be ready for some shop, because i do not think it will play out the way it is currently being priced in. its, stickingevel

around. up next, bezos bombshell. the amazon founder accusing the national enquirer of trying to blackmail him and setting up a proxy war with president trump. the president hasn't we did anything yet. alix: i know. maybe sleeping in? i don't know about that. carol: stick around, this is bloomberg. ♪

bombshell.s the amazon ceo accusing the national enquirer of extortion and blackmail, and intensifying his proxy war with president trump. bezos writing yesterday, my ownership of the washington post is a complex fire for me -- for me.fier certain people who experience washington post news coverage will wrongly conclude i am their enemy. president trump is one of the people, obvious by his many tweets. joining us now to talk more about this is marty schenker. david level its is still with us as well. i will say what alex said to you

-- what is going on? marty: welcome to the world we live in. we are constantly asking ourselves, have you ever seen like this before? we are constantly saying no, we never have. i will say that this bezos controversy is more than just a post front page story. it will have local consequences and we are just beginning to see what they may be. alix: what? carol: yeah. marty: the interesting thing for me is the link that which ami apparently wanted to stop the bezos investigation on whether there was political motivation behind the original story. carol: ami, the owner of national enquirer. marty: right. what were those connections that they were so concerned about suppressing? it is also interesting to me that david packer, the ceo of american media, has an agreement with the southern district of new york. under the terms of that

agreement, they can ask him to come in and testify truthfully to the prosecutors on what they actually did. if they violated any laws, they could be in big trouble. forl: we have been waiting president trump to do a tweet, and you said he probably will not tweet on it. marty: i think donald trump wants to stay away from this one because it could turn into a real legal moreas. i do not think you want to get his name intertwined with this particular controversy. alix: and if you take a look at president trump lashing out at the washington post or amazon over the past few months anyway, whether it has to do with delivery service and the united states postal service, the washington post, the irs, etc. -- it highlights, for me, the conflict between big tex and d.c.-- big tech and david: and when we think about not what could just happen in the u.s., but what is also

happening overseas, where regulators are latching onto this industry that has experienced unprecedented growth over this cycle, but it has been largely unregulated throughout the process. to me, tech today and some of the issues around data and privacy feels a lot like the banks in the early 2000. there was a lot of stuff going on at financial institutions that regulators were not necessarily fully tuned into, but as they begin to pull back the layers of the onion they uncovered some pretty perverse practices. i think the same could be said for tech. i do not think the regulators will be shifting their focus anytime soon. does a split congress make it more likely that we will see more regulatory oversight of search and social media? conversation is bubbling up more, but as long as we have this shift in washington, i do not expect anything to happen. if democrats were to take full control of congress in the future, you might a more momentum and more rock rest, but

given the division in washington we are not expecting anything in the short-term. carol: no doubt the amazon explosion is going to be all over the conversation and d.c., but next week we have trade and another shutdown, potentially. what are we looking at further risk? i think people will shift focus to the issue of another shutdown next friday. i think the country will reach a deal. it could come as soon as today, but more likely this weekend. and then the moment will come whether donald trump is willing to sign a deal that falls short of whatever he in his mind thinks is what he wants. do think mitch mcconnell is going to play a pivotal role. he might have to go to this president and say look, this is the deal and you have to sign it. carol: i agree with you about what donald trump wants, but what about the democrats? what might they get that might be their personal playing? marty: they want this to be a

straightforward homeland security is built. the democrats have made an offer. it might not be a concrete wall, but physical barriers could be included in this compromise. of republicans and democrats are going to reach a deal. they will. asn it is up to donald trump to whether or not he wants to suffer through another shutdown, which was politically a disaster for him. david leibowitz and marty schenker, thank you for joining us. up next, we will break down bb&t is megamerger and what it means for other banks. john kanas, the carlyle group co-founder. this is bloomberg. ♪ ♪ the latest innovation from xfinity

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like never before store. the xfinity store is here. and it's simple, easy, awesome. 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. alix: this is bloomberg daybreak. i'm alix steel. a risk off field hitting the trajectory, sell stocks, by bonds. futures on the lows of

the session, off 132. the s&p, off by 15, and the european stocks and even the mining stocks getting hit in europe. 1%.cline of 8/10 of worry is percolating in the developed markets. the euro-dollar is flat. a mixed dollar story, but the move to me has been the amount of money coming into the long end of the bond market, whether you are in germany, japan, in the u.s. -- 11 basis points for the 10 year bond yield. we were at 20 not so long ago and the 2-10 spreads flattening a little bit, 16 basis points. the worst drop%, off since december 24. you do not want to be compared to december 24. carol: that is a key point that will stick in our minds for a while. let's get an update on what is making headlines outside of the world of business. viviana is here with first word news. >> president trump and president

xi jinping might not make a deal before the 90 day truce expires. president trump says he will not meet with xi two of her higher tariffs on chinese goods. the trump administration said it would more than double the tariffs on $200 billion of chinese products if there is no new trade agreements. today, theresa may flies ireland's to try to get the prime minister on her side. this is the british prime to --.r raises yesterday, eu officials rejecting may's request for a time limit on the controversial iris backstop -- iris backstop. there are several weeks to go before the uk's scheduled exit from the eu. the longest-serving member of congress in u.s. history has died. john dingell, representing michigan from 1955 to 2015. that 60 years. he is a democrat and a big supporter of the auto industry, national health insurance, and oversight of government agencies .

he was succeeded in congress by his wife, debbie. john dingell was 92 years old. global news, 24 hours a day, on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm viviana ritado. this is bloomberg. carol: bb&t agreed to buy suntrust banks in the largest bank merger in a decade. let's bring in taylor riggs. taylor: you said that announcement, bb&t buying suntrust really pushed all the regional banks higher. if you come into my terminal, you can see the largest outperformance going back and almost a decade of the regional banks relative to the s&p 500 diversified banks -- all but one of the regional banks were higher yesterday, all of the diversified banks and the large banks that we know were lower, like the jpmorgan, bank of america, citigroup and wells fargo. you had that index climbing 2.7%. but that does not take away from the relative underperformance of

the regional banks that we have seen over the past few years or about the time when president trump was elected. the larger banks have really outperformed as they were going to benefit from deregulation and tighter inflationary trends that were expected to push yields higher. some are saying the relative underperformance recently made been, especially on the back of this m&a news, that regional banks can go higher. taylor riggs, thank you very much. the merger could signal a new era of consolidation among regional banks. is john kanas, the cofounder of the carlyle group. what do you make of this? how transformative is this for the industry? john: this is the one everyone has been waiting for. we have been talking about how the relaxation of regulations

for banking was going to affect banking and consolidation -- alix: they are allowed to be bigger. taylor: this transact -- john: this transaction is a perfect example of that. approach both about to $150 billion, which would have caused more regulation. they are now together about $400 billion, which is easier to contend with, plus additional expenses that they put together. up against theck behemoths, like jpmorgan, bank of america, wells fargo. well, everybody dreams about that. [laughter] john: good luck with that, everybody. alix: that they have to do it to compete, right? john: we were talking about their interest rates are and it is unlikely that rates will be moving up anytime soon.

making it very difficult for any of us to see the improvements in revenue and the banking space, which leads inevitably to the fact that this will be a cost savings effort for the next year and certainly, combining institution of this size will affect their ability to save costs. alix: so what are the companies with the most exposure there? john: that is a tough one. if you look at the regions in the united states that are the slowest growing right now, it would be logical that that would be the region where you would find opportunities like this. but you have to look at what size banks are in the industry for the regions. be able to consolidate in the northeast, but not so much with super regionals. our are only a couple of those left. but it is the mid-cap banks from 10 to 50 in size where i think

the action is going to be. a lot more banks in that space, and remember, the $50 million -- the $50 million cap incised is now $250 size is million with regards to additional regulations. so the banks today could immediately merge and still be well below 250. so what conversations are you having a carlyle when it comes to profits and banks? are you looking to make investments? we are not looking at whole institutions, but we are keenly focused on the financial industry in general. the financial industry in general is a wide swath. it is not just banks, but it is tech, anything you can imagine having to do with banks. do you find most interesting when you look at the financial sector? are are so many different ways to play it, so what do you find will be the

most interesting and longer-term investment opportunity? >> i really believe this is a watershed transaction and the consolidation in the mid-cap banks face is where the action is going to be. there is a lot of conversations that have been going on for the past year or two and under the old regulatory regime it was tough to imagine those things going down. well, regulators have been much more open about the fact that well conceived and properly executed transactions will be ceos havend listen -- not missed the point that when this transaction was announced yesterday, both stocks were up. carol: is it a merger of equals? john: it is a merger of almost equal. it was a small, premium deal, single-digit, perhaps, rather than no premium deal. but there were about four big premium deals announced in the last two years, most recently, and keybank with first niagara -- those pretty well fell flat on their face

with regards to investors. they did not go very well. i think the attention now will be on very low premium deals, there was a time when mergers of equal was a curse. nobody said that. carol: well, we didn't believe it. john: everybody thought it means everybody's brother-in-law gets a job. these are pretty sharp guys. they know each other well, they chose each other, it is not their first rodeo. they know the risk they have taken by stepping up and projecting what they think their range will be. by the way, the 1.6 billion -- if i were them, i would be sandbagging a little bit on it, but i think they are going to do better and it will prove to be a good thing. number andwas a big impressive. talk about the midwest, because that is where we see a lot of the banks. you have covington, keycorp -- what areas are over banked? john: you name it.

the nest of banks in the midwest is certainly something to pay a lot of attention to in addition to the northeast. a few daysl ago, getting together to form a 40 something that most of us thought that was indicative of something hot that was going to happen. nobody expected a at&t deal so quickly on the heels of that, but i think that is what you are going to see. look, the strain on bank managers to produce earnings with interest rates where they are and the inability to improve revenue is widespread and acknowledged, and most think the economy is going to slow and something has to be done. what is the biggest challenge for the financial sector? i thought about when bank earnings came out. we talked about a record year for revenues, and some of them got beat up in terms of investors. john: people looking forward and imagining that the best news for banking is behind us -- the

income tax reduction is behind us, interest rates are flat to down, but generally speaking, they had --. what is underlying demand? a serving officer said this week that demand is not there right now. is it having a hard time competing for demand or is it shadow banking becoming their bigger competitor. >> both. banks are competing vigorously as loan demand declines in most untry,of the co getting to the logic behind the transaction like this. alix: john, great to see you. john kanas of the carlyle group, great perspective. up next, the fda cracking down on youth tobacco sales. violators -- walgreens caught in the crosshairs. this is bloomberg. crosshairs. this is bloomberg.

>> this is bloomberg daybreak. coming up in the next hour, linda jane, purview investments founder and ceo. carol: this is -- your bloombergth business flash. job cuts are on the way at one of the world's largest videogame makers. bloomberg has learned activision blizzard plans to announce the cuts next week. they could number in the hundreds. in november, activision it knowledge that some key gains were seeing flat or declining numbers of users. no idea what he is doing -- except to run the french bank into the ground. these are harsh words from jeffrey gundlach about the ceo from --.

bank stocks falling to a five-year low yesterday. it announced plans to shrink its trading deficit. processing payment company wirecard says it is cooperating with the police fraud investigation in singapore. --y turned over at material to authorities. senior say two executives of wirecard knew about the accounting fraud. the company's denying the accusations. carol: and the fda is taking sellinggainst retailers tobacco products to minors, and that includes walgreens. joining us now is dr. scott. lee, fda commissioner. -- walkis through the us through the findings of the surveys that you did? ott: we do undercover

shopping and secret shoppers to see if they sell tobacco products to minors. if you look across large national corporate chains, walgreens is one of the highest violators. they are a very big recidivists. separate warning letters to walgreens stores and hit them with civil penalties. 22% of the stores we inspected 6500 stores at a total footprint about 9500. 22% of the stores we inspected tobaccore selling illegally to minors. carol: we want to bring everyone the statements we got from walgreens. they said, we recognize the seriousness of this issue and made the opportunity to meet with the fda administrator to go through all of the steps we have taken. this is from a walgreens spokesman, who put this out an -- in an email statement.

what further steps will you take against wall? monetary policy of? what more might come? thisottlieb: when we see many violations across a large national chain, it calls into question the overall compliance policy and the culture of compliance at the corporate level. there are actions we can take up the corporate level to potentially find the company or send a warning letter to the company. we have done that in the past in other situations. the larger messages that we are starting to look across national chains. historically we have looked at individual stores for violating sales to minors and we have individualsnalized or said no sell tobacco orders. we are now looking at the corporate level of large national chains and chains with a high rate of repeated violations, and starting to examine the overall culture of compliance and policy that the corporation takes to compliance at their individual locations. alix: so does that mean you are

going to have to ask them for payment? early days of not being able to sell does not seem like much of a drama for them. what will you do that will move the needle? dr. gottlieb: there are other things we can do. there are ranges of options, including running off individual stores from selling tobacco altogether and other penalties that we can bring, and civil action and criminal action, although we have never taken a criminal action against individual stores or locations for tobacco sales. it is within the remit of the agency to escalate the kinds of enforcement actions that we can take. at this point, i think the broader message is, we are starting to look at the corporate level. we have looked at our data at chains that everything violations, and walgreens is very high on the list. right now, we have not found a big national chain that is higher. there could be chains that are higher, but when we look across our data so far, walgreens is up there, and they are a pharmacy. there is questions about whether a pharmacy environment is contributing to perceptions around tobacco that are facilitating the illegal sales.

manufacturers do not do a better job of policing all of this, how far is the fda willing to go? could you do a possible ban of all e-cigarettes? john: it is in the scope -- dr. gottlieb: it is in the scope of what we could consider if we see the data in youth e-cigarette use go up. we saw an increase in high school students last year and we will be in the field doing a national survey, march to may of this year. if we see big year-over-year increases in e-cigarette sales, we have to reconsider our enforcement policy. e-cigarettes continue to be sold on the market after an exercise in enforcement. we allow them to be marketed because we see an opportunity for these products help currently addicted adult smokers migrate off of combustible cigarettes, and we view these products as less harmful. sut we cannot allow use rate to continue to go up in the matter that they have. we consider our own enforcement

policy, if we start to see big increases year-over-year with these products. i'm worried that there will be big increases this year. i have seen nothing to suggest the trends have abated. alix: so would you do things like cap and nicotine level, ban the flavors, and go to a full on ban and then a monetary fine? can you rank what you might be working with? rampinglieb: we are significantly heightened age verification requirements for the flavored products sold in convenience stores, and that will be implement it in the next couple of months. we will have that policy out in draft form. some companies, they are taking steps to implement that right now. we are camping down on the sales of flavored products that if we see big increases in youth use -- remember, that is being driven by the pod-based products and flavor products. that is what the kids are using. we could and woman tightened restrictions and even outright bans on the flavored products, or their sale in the locations in which kids are accessing them.

by and large, the adults, the vaping systems sold in vaping , those are, by and large, not being used by children. the biggest increases in youth use have been in pod products, agreed tompany withdraw all of their fruity flavored products on the market last october, and they did that before, obviously. they went out and made a big investment in juul. gottlieb, great to get your perspective. more on the news surrounding wirecard. the prosecutors are now starting a market manipulation probe on wirecard reports that the times, saying the police in singapore rated them, based on accounting fraud. wirecard is denying the report says well. theyprosecutor is saying see no reason to probe wirecard managers, but they are starting

a market manipulation probe on wirecard reports, carol. carol: the stock down 8.5% in the early hours. coming up, decked out in air m -- decked out in hermes. how to get any item you want covered in hermes leather. the: check this out on bloomberg terminal. you can also ask us a question. this is bloomberg. ♪ ♪

alix: our return to pursuits, where we cover all things luxury. first up, hermes can do it all, from jets to boxing gloves. and then a guide to over rated wines. critics pick out the overrated wines we are and the underrated ones you are not. and charred cheesecakes. why birds and bitter are the latest craze in desserts. carol: joining us now is james

gady, executive editor of bloomberg perspective. what is going on? james: most normal people -- carol: don't want that, ok. [laughter] james: most people going to the retail store and can find something they like. for other people, it is not quite enough. they want to get something and have it be personally made. hermes has a studio in a suburb outside of paris were they will make just about anything you ask. alix: anything, like what? james: a lot of these products are more whimsical. alix: like a boat. carol: a boat? of leather? james: they are getting away from some of their leather goods. you can get the inside of a bugatti, your seats outfitted in leather, but they will make foosball tables, canoes --

carol: boxing gloves. what was it? james: $44,000. even your high estimates -- alix: the next one has to do with wine. overrated wines, whatever. what i care about are the underrated wines. tell me, tell me, tell me. james: our wine critic has come up with a list -- coming up on valentine's day, you will be ordering a bottle of wine, probably, and one of her under wines, if you like white, is one from france. it is very crisp and has a great refreshing quality. alix: samples, please. james: swiss lines also. she suggests looking away from the popular, trendy categories -- cabernet is, those that are over $100. you are not getting a great value for those. if you look for underrated regions from portugal,

switzerland, old vines from south africa, that is a good place to look. alix: and you don't have to bottle lot of money on a of wine. let's talk about burns cheesecake. hottest desert of the year? james: it has a shrek factor. it is ugly but oddly compelling. alix: shrek factor. james: burns but gooey on the inside. in need to make, but impossible to perfect. carol: that i make all of my desserts. next, the head of capital market. -- the syrian head of capital market. this is bloomberg. ♪ bloomberg. ♪

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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: the bond bull run. see $700 million of

outflows this weeks as investors erign that. sov trump says yes, no, maybe. and bezos proxy war with trump -- amazon ceo jeff bezos charges the national enquirer with blackmail and hence the presidents -- hints the bias behind the washington post could be behind it. i'm alix steel with carol massar. david westin is off today. carol, wonderful to have you. it has been an interesting week. carol: it has been, and we have a headline crossing, the company is planning to split into two and talking about its dividends. this is one of the names we will talk about in just a little bit. cutting into the dividend by two cents, so we will get into that a little bit more this hour. alix: alcoa is the aluminum arconic is the

downstream maker. it was not going to be subject to the aluminum prices in the same way, and that did not wind up paying off. you had the eu leaving this week as well, -- the ceo leaving this week as well -- a lot of controversy. it is bouncing around in the premarket and investors are trying to figure out what is next for this company. alix: and elliott, activist investors. carol: that is why the ceo was pushed out, because he did not listen to or welcome the activist investors and what they had to say. we will talk about this more with brooke sutherland later on. alix: the market is risk off, starting yesterday and spreading to today. you have worries about a trade deal, so that weighed on europe and in the u.s.. the euro-dollar pretty much flat. a mixed dollar story -- oh, now it is a weaker dollar story. the pound, the crowd in the

and theanc -- the kron, swiss franc doing ok. an unbelievable move we have seen in the crude. the worst daily move yesterday that we saw since december 24 -- speaking of, pop goes that rally. withanuary stock surges u.s. stock flows hit the hardest, in the weeks through february 6. joining us now from dallas is allianz global investors portfolio manager and here is the head of capital and institutional strategy. make of the did you big rally in the global bond market? >> in december, what we saw was uncertainty around the fed, trade wars, and investors were essentially risk off. they were looking at the bond

market, other cash alternatives and thinking, if i can make 33%, that seems better if we are headed for recession. why take the risk? then we saw the fed remained neutral and dovish, the china trade war news sound ready to -- sounded pretty good, and now i think it goes back to the same geopolitical stuff. china war, china tariffs are uncertain. that news out of the eu, and investors are reacting and pulling out. for some of the investors that are looking at these stocks falling, it might be interesting to think about short-term opportunities for the month if we get there. carol: come in on our conversation, because you think we might be in the late stage of our bull market, but you say investors should sit tight. is the glass half-full, half-empty? how do you see it? >> i absolutely think we are in the late stages of bull markets. it is hard to say when you have had a double run going for about a decade now. but bull markets do not tend to

of old age. they are usually killed off by an overly aggressive fed, and we have seen in the statements of the past month that the fed will be more data dependent and is less likely to make a policy error, where they are killed off by a recession. there is a lot of our recession monitors are not showing red lights -- they might be approaching yellow lights, signaling that maybe we are late in the cycle. they are not signaling recession over the next 12 months. we suggest it is long in the tooth, but you go to a rock concert and you might be 80% of the way through it, but you don't want to leave before the end. the encores oftentimes the best part. [laughter] burns: and valuation is on your side more than it was a few months ago, so sit tight. how yout is interesting say, you don't think extensions die of old age. in atlanta during january 4, you had ben bernanke, janet yellen

-- janet yellen made that comment, and ben bernanke shot back, yeah, or they get murdered. the new york fed recession indicator, they take a look at the ten-month three year treasury yield curve. it is at its highest rate of 24% at this point. the 11th time the indicator has risen to this level since the 1960's. eight have been accompanied by a recession, according to our data. that is the new york fed recession indicator -- should we expect a recession in the next 12 months? what are you looking at? i think it is hard to call it right now because we are experiencing global slowdown. in europe, they have a gdp of 1.9% in the eu. china is pulling back. positive news out of the china, will let get back to 2% to 2.5%.

earnings looked pretty good. we had a couple of notable earnings names, like facebook, apple, and boeing. some of these companies did really well and they are saying yes, we will slow down, but if you get 6% to 9% return on equity is, that is good as an investor. you might hang tight in the market for another year. next week, if we hear shutdown, no agreement with china, the fed raising rates, call it off. larry kudlow seems to back away yesterday from a potential deal. was said look, it seems ridiculous that we see the headlines without context. positive developments have been ignored in favor of a meeting that having been set yet, which is a logistical view in making a deal. come on markets, the better. so specifically, what names, burns, do you want to be buying if markets are overreacting? burns: again, you are looking

for beaten-down names. because the markets have moved a little bit risk off, one of the places to look for stability and dividendnse would be paying names. i think within dividend pay are in regionalthings banks that might benefit from continued consolidation. industrials have been badly beaten down. a lot of the industrials are trading relative to the market, where they were 10 years ago and the great recession. some of the names, like united technologies, they have raised the dividend by high single digits per year over the past decade. they have a lot of company specific benefits, with closing the rockwell collins merger, a one-stop shop for airplane manufacturing, but again, when you combine that with a lot of other businesses that they ultimately may split up to realize value, you have a lot of good after my get -- aftermarket service and parts business, which might make the more

cyclical than their industrial conglomerate counterparts. carol: so where are you seeing money come in and go out, so leeco -- sylvia? sylvia: this week we are seeing money flow out of tech and some tech names, like semiconductors that have done well. some of it is going to things like consumer staples, with consistent demand and consistent growth, but a big flow has recently been in biotech. it has been so beaten up at a multiple of 10 to 11. in that space up .lmost 50% of year to date health care, aging population, strong m&a, fda approvals -- persistent demand, people will continue to get sick and need those services. carol: but the money going into emerging market etf's -- you do have the trade issue we are talking about with global the secret eyes growth -- how does that make sense? synchronized growth --

how does that make sense? sylvia: i think the hail mary is where we can make money, expecting higher gdp growth in the u.s. and internationally. it is an opportunity to look abroad and try to make some gains, but a clear point -- it is all the same geopolitical instability. i think the market probably does expect some sort of -- either to kick it down the curve or get more time on china, or an agreement on china. part of that, look at emerging market while we are at an all-time low. thank you to our guests. coming up, more than 60% over u.s. earnings season. it's and mrs., where -- beats and misses, where the opportunity will be. this is bloomberg. ♪ bloomberg. ♪

>> this is bloomberg daybreak. i'm here with your bloomberg business flash. shares of hasbro are falling. the company reported fourth-quarter earnings that missed estimates. sales were also worse than expected. hasbro says retailer inventories declined significantly in the u.s. and europe. this reflects the shutdown of toys "r" us stores. sony is planning its biggest share buyback ever. the japanese electronic maker will buy as much as $910 million of its own stocks. today's shares rising more than 4% in tokyo. last week, sony reported weaker products in the playstation business. ,t also cut its annual forecast beating the share drop. carlos ghosn plans to pay back the palace of versailles for cost related to his marie and when it seemed wedding party. chairman may have improperly used a sponsorship deal to host the event. he will pay back the palace, which will then pay --.

he has been jailed in tokyo since november on allegations of financial conduct. that's your bloomberg business flash. alex and carol? carol: we were just talking with jim gady about normal people. they do it differently. alix: $57,000 in personal benefits related to the chateau -- how is that ok? apparently he had a deal that let the carmaker throw events at the palace, and i don't know, something happened and anyway, he reimbursed them. alix: but it is interesting that he is now investigating him as sn as-- investigating gho well. carol: several companies are out with earnings this morning. taylor riggs has a roundup. from arconic,ws planning to split the company after a failed buyout offer.

split into a forgings business and the global world products. they will also consider a sale of all the other businesses that do not fit into those two categories. they cut their dividends to two cents a share from six cents a share, not expected, but they are getting a better earnings-per-share guidance, which is higher than estimates. they are talking a lot about the negative impact from aluminum prices throughout their press press release. mattel and hasbro -- hasbro under a lot of pressure after mattel did better than expected yesterday, but they are not getting it done. they are missing on the q4 earnings and it has climbed in the owning of the toys "r" us stores, impacting them negatively during that crucial holiday period. season, werap up the have had several companies come out and report 59% of those beating on the top line, 72% beating on the bottom line. the big winners are utilities,

energy and tech. but it is getting very close to our full valued model as expected i bloomberg intelligence. if you come into my terminal here, we are just below 7.5 times, our fair value model that on a forward pe basis in white, about 16 times, well above the lows in the december route. been neededment has to improve do see these multiple to expand higher. alix: still with us, sylvia jablonski and burns mckinney. where is the opportunity, and where do you see more ability to reraise? think there are some positives to the numbers coming down. last year's numbers were boosted by the tax cut, but that suggests that investors are not

overly optimistic. look at the way companies have reacted to earnings. last year, a company might beat earnings and the stock would go down. whately, companies have been missing earnings and the stocks have gone up. i think that suggests a possible upside. alix: that is what you were talking about earlier. the earnings season has led to some of performers here. to this point, i think earnings were so stellar in 2018 that stocks were not rewarded for publishing them and sharing the news. now we are beating a little bit but the outlook is a little bit gloomy. investors were expecting the worst, but it seems like the optimism has played out. it wasn't tech, financials, energy, bp, boeing, facebook, all of the faang names -- a lot of flow in there as well. alix: what do you feel like we are hearing from ceo's? this could affect the outlook and what they are seeing. you think they are holding back and waiting for some clarity on big macro issues? sylvia: if you look to the big

u.s. corporations that have 10% to 15% exposure to china and the tariffs and trade agreement do not get done, that will impact their top and bottom line. i think they have to be cautious, but rates are at an all-time low. been caps have outperforming large caps by 3% over the past couple of weeks. that might be an area to look to, where the lower interest rate helps serve them well. there are still opportunities out there. alix: and we talked about the trough in earnings season yesterday and waiting until the payoff until 2019. >> if you look at the estimates in and of themselves, we do not get earnings growth until the fourth quarter. issue, because the fourth quarter of 2018 was not as high a growth quarter as the previous quarters, so when you cycle it, you can get a higher growth quarter. alix: burns, how do you know what to pay for a stock if you do not get the earnings pay back until the fourth quarter? burns: you rarely ever do.

i think the best thing we can hope for is to look at companies that trade at discounts to the market, companies that we like for good dividend growth, and companies that have some secular trends going in their favor. you noted a few minutes ago that hasbro and mattel have been hit by the closing of toys "r" us stores. who is benefiting? that is something like target, where they have been making reinvestments in the business to better keep up and compete with amazon. they have been growing the dividend for 40 straight years and have good private label brands, it is one of the thing. -- brands.lennials it is one of the things driving millennials into stores. carol: so would you advise investors to go into target? burns: it is one of our holdings. carol: we also heard about foot locker, united technologies,, erica. is there an underline -- united technologies, comerica. burns: develop a attractive

dividends, they are growing dividends attractively. look at a name like foot locker, they have raised the dividend by over 10% per year over the past several years. you look for companies that can defend themselves against the sorry,f walmart -- against the likes of and amazon, and they are one of the few brick and mortar retailers that are doing well. you have to try on shoes to buy them, and in that case, it is a backdoor play on nike, trading at over 20 times earnings. you get foot locker for 12 times earnings and they have more cash t ondebt -- cash than deb the buying sheet. outflows from etf as if stockpicking actually mattered. are you noticing this reflected in the flows? sylvia: we are, but we are noticing the opposite on the high beta etf's. some of the names just mentioned, foot locker, target, walmart, a lot of these are in

consumer staples. consistent demand and constant, persistent demand activity. consumer discretionary, nike did great, starbucks had great reporting, and the flows from high beta funds have picked up in the short-term. in the longer term, i would expect some of the flows to go to things like relative weight, where people are looking at developedver . mckinney, have a great weekend. sylvia jablonski will be sticking up with us. coming up, today's bottom line. this is bloomberg. ♪ ♪

alix: time for the bottom line, three companies worth watching this morning.

getting operation shut and after shut-in in brazil. looking at 70 million tons per year that has come off line. many say that is not a big deal, but the headlines keep coming and the question is, will we see criminal prosecution and does it change where vale can operate? carol: this certainly was a factor before. tight thealso, how markets are, the underlying basis -- you can really see that and how good this might be for rio, bhp, or glencoe. the generaling of environment between president trump and jeff bezos, it is not good, everybody. you have a few picking up some steam -- you have a feud picking up some steam. nationals saying the inquirer threatens to publish risque photos unless he ended the investigation of a

girlfriend of his was politically motivated. we had a chart that talked about this ongoing war that jeff bezos of amazon and the president have .ad with amazon we have seen in past posts, had go against the reporting that the washington post does. they have also pushed back in terms of what they pay the post office for delivery -- there is a lot of stuff, going back and forth. this is a complicated one. alix: and american media -- they are not allowed to commit crimes right now. immunity, so they can't get in trouble or it will get really bad. and we are also working on -- watching or chronic -- are chronic, going to split -- our conic -- arconic. this is all a variation on aluminum parts, but they feel it will be better split into two. is the result of a split

in alcoa. utis is part of the buyo that fell apart in the 11th hour and apollo's inability to come up with a funding ability that would satisfy them. carol: how do we read this as investors? >> there is not any other way to except it at -- financial engineering. they have led a series of pushes to get people on the board of our conic -- arconic. a large number of people on the board were backed by elliott. they are looking to britain dissipate in the sale with apollo and it did not work out, and now you are seeing the breakup as the last option on the table. some this reminds me in ways of jcpenney, where they were there for so long and they could not make it work. does elliott stay? >> i think they have to stay,

because you want to recoup the value of your investment, but it is notable when they launched project, pushing up the previous ceo, that was on the basis of an operational turnaround. they thought they had better ideas and management to bring up margins and boost the stock price. you have not seen that play out. a lot of those have been factors beyond elliott's control. the price of aluminum, the tower fire in london -- it is a challenge here. alix: because you cannot predict what president trump will do here. brooke sutherland, thank you so much. coming up, she has been described as the etf industry leader. we will discuss with linda zhang , coming up. this is bloomberg. ♪

alix: this is "bloomberg daybreak." i'm alix steel. we'll end with the risk off. dow jones up 104.

i.t. has some earnings that may be disappointing but is more of a trade issue. european stocks down .3%. still down despite the fact that iron ore is at a four-year high. the dollar using a bit of steam. the euro inching higher. german bund yields 10 basis points. 2.10 spread in the u.s. continues to flatten. flipping into positive territory -- crude looking into positive territory. worst day since december 24. carol: let's get an update on what is making headlines outside the world of business. viviana hurtado is here with first word news. the u.s. ambassador to the eu county -- telling bloomberg there is not been good

faith and understanding that once existed. agreement, president trump imposing duties on steel and aluminum imports. the eu retaliated with its own terms. to rate -- today theresa may flies to ireland to try to get the prime minister on her side. european leaders are resisting changes to the brexit plans. yesterday eu officials rejected mays request for a time limit on the irish backstop. there are just seven weeks to go before the uk's scheduled exit from the eu. the feud between france and italy could put his this at risk. the crisis began when the italian leader visited with the leader of the yellow vests protesters. emmanuel macron retaliated by withdrawing his ambassador to italy. the first casualty could be a plant $10 billion high-speed link.

global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. news out of europe builds on the negative narrative of the global economic slowdown. noland,wn with kevin meritor cfo. the company makes supplies for trucks. i talked to him the operating environment in north america and europe. kevin: right now the truck market is strong. we are seeing peak levels of demand. the highest levels since 2006. alix: how quickly do notice a downturn in the market? kevin: we have visibility at least two to three months. we also have a backlog of orders today that causes -- that carries us through 2019. we are confidence in how 2019 will play out. the question comes what happens

after 2019. alix: many expect a recession in 2020. you have any visibility on what kind of decline we might see? kevin: hard to tell the moment. the big indicators for us is what is happening to gdp. right now those are all strong positive signals and indicators. alix: you've not seen any cancellations? kevin: cancellations have kicked up, but we have a backlog of almost 300,000 class a trucks. what is been the impact of president trump on your business? kevin: from a steel price perspective, steel is an important component. most of the sourcing we do is domestic. uphave seen steel indices 20% to 30% depending on which index you look at. we have recovery mechanisms with our customers that allow us to recover any inflationary impact of steel from them and they pass

it on to the market. alix: you are pricing power to your customers and their pricing power to theirs. kevin: by contract. that is why even in volatile steel markets we see improvement. we get a lag from our customers but we're ok with that. alix: has trade crimped any growth in europe? kevin: at the moment we are seeing strength around the globe. our north american truck market is at the strongest level since 2006. ,he european market is stable at levels around peak level since 2008. very strong market. you look at other geographies. india is operating in an all-time high. 40% above previous highs. china is still a solid market, as well as brazil which is coming off a recession. alix: do you compare and contrast the backlog and order book for the next month?

kevin: the backlog is strong in north america. alix: what about europe? kevin: we have visibility in europe and the sides in europe are we expect a stable market through 2019. alix: that conflicts with a lot of the data we are seeing, like the sentiment data, pmi's for example. what you see that people miss? kevin: we are looking at our order boards and what the customer's demands are. we have seen growth slowing but still seeing overall market growth in the european union by and large. truck legislations are about flat to slightly down to slightly up depending on whether you are looking at medium duty or heavy-duty. overall, a stable market for us as we look to the last of the year. alix: is it bifurcated at all? north-south? kevin: not much.

have seenlly we difference, but today if i were to look at demand, not much difference today in terms of us supporting northern europe versus southern europe. alix: that was part of my interview with the meritor cfo. a very different view. carol: a lot of optimism. let's get less -- let's get you next day. linda is with us. linda, i want to pick it up with you. he was really optimistic. do you share his optimism? linda: depending on which part of the market. , the economy is clearly very strong. if you look at pmi manufacturing and services, both are kicking up. if you look at china and germany , on the manufacturing side we did see pmi starting dipping below 50. if you look at the service sector, you see an uptick in both the economy in asia and

europe. alix: it a domestic play versus a trade play. does that leave the market exposed? are all of our problems fixed? linda: i wish that were true. i do feel optimism in the domestic sector and the service sector. longerlook at one of our themes is to play through consumers, to play through the transition. restructuring in china from manufacturing to high-value added economy, tech driven, consumer driven, and greener. we continue to see that transition. we do see that in play. you can see that in earnings season.

carol: sylvia, when you're hearing so much optimism, does it jive with what you've been seeing? sylvia: i agree with linda. it depends. right now i like u.s. over international. i think we have more stability here even though we are expecting the slowdown. unemployment is at an all-time low, consumer spending, we still have the good fundamental data. in china you have 6% gdp growth. a lot of that depends on negotiation between trump and president xi. if we get positive news, that will help with the china stimulus. in europe i am more hesitant because we have brexit and a low projected gdp growth. or 1.9 is the number that

came out. you have conflict between france and italy, you have the italy deficit. and the slowest projected growth in the u k. with europe i would take away and see approach. alix: which is totally different from a year ago. linda, you been in this market for a long time. risk?u hedge the linda: you have to see the near-term risks and longer-term risks. relieved, that global capital markets did have a healthy correction in last quarter. valuation has come down. alix: i think everybody was glad because it was crazy in terms of the move to the upside. we needed to see something more realistic. linda: absolutely. the caution about whether value from the day after

christmas eve can sustain wealth into this year. play, a in domestic small cap is less prone than big caps because their love and new -- their revenue is less exposed to international trade. i will be cautious about small markets, in emerging both technically and long-term, i still believe in consumer theme, particularly we like the internet and e-commerce play in china and in brazil. something like a web, they are a great get something like pay web , they are a great play. companies that leverage on the incredible growth of e-commerce. china actually leads the globe in terms of digital payments. that is in trillions of dollars. carol: they do everything on

their phone in china, versus we have credit cards. they kind of jumped over that step. linda: when i travel in china i do not carry my purse. i only need my phone. carol: we will continue the conversation. linda shang will stay with us and sylvia jablonski. we will talk about ethics incorporate government principles. that is next on bloomberg. ♪

viviana: this is bloomberg daybreak. coming up later today on balance of power, the fl cio president -- the afl-cio president. isx: -- viviana: this

bloomberg daybreak. at ones are on the way of the largest videogame makers. activision blizzard plans to announce the cuts next week. they could number in the hundreds. activation big knowledge to key games were seeing flat or declining users. germany, a market manipulation into reports about wirecard. they say they are not investigating the managers of the internet payment and processing services company. the financial times reporting senior wirecard executives knew of accounting fraud. the company denying the accusations. uber is laying out a plan for long-term self disruption. it prepares for an ipo. it makes the case it is more than a ride-hailing at. -- a ride-hailing app. it is betting big on scooters. those services are already

replacing ridesharing in some spots. alix: time for a deep dive. the sg. are looking at linda -- at esg. is still with us as well as sylvia jablonski. i would love if you can have a conversation. linda, walk us through your principle of how you deal with efg and what is the return like? purview, for my whole i've made global multi-asset manager. i always look at risk returns.

that is my only objective. i think more investors are looking for the third dimension of investing which is impact. what is the environmental social impact of my portfolio. continuew, how can we to build a global martine -- multi-asset portfolio that satisfies your risk return goals but at the same time has the emission?bon the carbon emission is the key cost of climate change. it is the key cause for more intense weather-related events. climate risk to us is economic risk. it is business risk. it is humanity risk. global we do is we make asset location by using cleaner etf's, primarily esg etf's. sylvia: i have two feelings on

this. ihave looked at the data and think morgan stanley put out a research paper. andof global asset managers 90% of millennial's believe company should invest in global sustainability. it is a true trillion dollar -- it is a $2 trillion market. the etf is crowded, it is like what we do next? even in our firm we are careful about putting out products that stick to our dna. i think the sg -- i think esg came out of that. what can we bring to the market that is new? areanies that environmentally diversified, gender diversified, focus on the global sustainability 90% of the time tend to do as well. it all sounds good. my other side of it is i was looking at the indices yesterday

, and i'm just not sure yet. facebook,e names like exxon, tesla, pg&e, those are top esg ranked names. pg&e had the wildfires. there were checks and balances coming up. facebook privacy issues. of women on the boards in senior positions. i like the gender diversity but then we have oil spills. even tesla, the cars are great for the environment but the battery production has a carbon emission issue. linda: i agree with you. and some of the issues i'm taking notice on what you just said. year, the cambridge analytics to handle came out in march. -- the cambridge analytics scandal came out in march.

an australian etf kicked facebook out. carol: isn't this tough about etf investing. there is not just one index that measures it. there could be a company that does great in terms of gender equality but their carbon footprint is terrible. how do you make sense? linda: there are two market leaders and how to define esg. msci is a leader. sustained analytics is a leader. a majority of the etf are modeled after msci. position to unique monitor what should be the standard of esg. obviously this is a journey. sylvia: it is not going to be perfect, and i imagine it will evolve over time. data,is no standardized

but it comes out once a year. msci has the closest version of data that is accurate. interest. that in the three chile dollar etf span it is a drop in the bucket. i think it feels good -- there is a 3 trillion dollar etf span it is a drop in the bucket. it feels good to invest in companies that are good for the world. alix: i think about bloomberg. we have created a gender equality index. a lot of big firms have signed on. everybody is taking into account certain criteria so the measurements are the same from company to company. that is an important issue. you can make a fair assessment. alix: to make the return you want. weda: last year at purview used 10 to 12 on average etf to gain exposure. i check every single one of them.

there are either returns close to it or slightly above it. there is a reason for why esg etf's have a closer tracking to a traditional index. that was by design. that was a choice by msci. they have tight sector control. you can get the performance that is so devastating. sylvia: and they have done well. a lot of the tsg -- a lot of the esg names of bloomberg have been in financial and tech. those have kept up or done just as well. alix: what are your client reactions? what is your conversation in the market? linda: it is almost like the extreme. generation, or to people who tend to be on the east or west coast, when i talk about this idea of low carbon footprint, they are excited.

you mean i can contribute to climate change? i say yes you can do more than just cutting down your beef consumption and pick up the trash. is you lookimpact at your investment portfolio or retirement funds and how much that is. that is perhaps the biggest impact you can make on the climate change. alix: linda zhang of purview investment, great to see you. and sylvia jablonski. thank you so much as well. it is a report that can give up a boost to the sleepy grain market. the usda is finally going to release its monthly crop report. this is bloomberg. ♪

alix: i am watching the usda

data dump at noon. it has not been released for a while because of the shutdown. joining me is michael, bloomberg economics market strategist. what will be the market mover? michael: it will probably be ending stocks for corn and soybeans. the way i look at it is the markets wait for that, it is waiting for an excuse to go up. i have to make the call because indicators are all working that way. alix: if you can take a look at some of the futures. what does that tell you? michael: we have not had a lot of data that we can still see what the market is. futures are shifting -- away from container. the curves are showing demand increases versus supply. the worst is probably up in. the brazilian real is starting to recover. once we get this data in, unless it is bearish, markets will say

the private is more likely to go up. carol: the biggest surprise would be bearish data? michael: yes. is already expected they will pull back the deal and production. the market is waiting for the data. my indication is it will likely go higher. alix: so excited. noon. thank you very much. that does it for bloomberg daybreak. carol, i appreciate it. fridaynice to sprint my with -- nice to spend my friday with you. alix: coming up with jon ferro, the head of equity strategies and marc chandler, a global forex chief strategist. this is bloomberg. ♪

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

coming up, pessimism returning. stocks ending the week lower. president trump says he will not meet with president xi before a march deadline fueling fears the sides will not strike a deal. the u.s. ramping up the pressure, ready to ban chinese telecom equipment from u.s. wireless networks. good morning. we are ending the week lower, with futures negative .5% on the s&p 500. the euro-dollar going nowhere. treasury yields coming in by just a single basis points. is 2.64.ear investor confidence shaken. >> nervousness and uncertainty. >> fragility in the economy. there is no shortage of things for clients to be worried about. >> certainly brexit is up there. >> the china trade war. >>