expectations, giving markets a sigh of relief. germany dodges a recession. in carmakers and pharmaceuticals -- dividendnk reduces its while credit suisse is hit by losses. david: welcome to "bloomberg daybreak." i'm david westin, here with alix steel. --have some earnings coca-cola had a slight beat in revenues. they gave some guidance giving forward for the fiscal year, saying earnings-per-share will and plus 1%.% their stock is down now almost 1%. alix: duke energy coming in five

dollars -- $5.20 per share. earnings for the fourth quarter coming and $.84 a share. they are looking at a pipeline they are building along the atlantic coast. there's last -- less gas in the northeast. they expect construction to resume this fall. schedule, thet cost has increased. a bit of cost overrun for that pipeline for duke energy. david: we will have more on the coca-cola story with the ceo about 10:30 this morning eastern time. alix: coca-cola vanilla orange? is that the new soda drink? have you tried it? david: no. alix: he drinks coke. david: diet coke. alix: you are seeing optimism. you got export data out of china that wasn't terrible, not quite

good. that is offsetting the weakness in europe, particularly the german economy. germany barely grows in the fourth quarter, barely skirts a recession. it wasn't only the autos, it was also pharmaceuticals. yields down by about one basis point. the german ten-year around the 10 basis point level as well. crude up by 1%. at are seeing a new board asa --asset -- paid of pedeveza. take away any trade overhang, oil will definitely run on that. david: at 8:30, we will get economic data, including retail sales and jobless claims. at noon, the u.k. parliament will vote on theresa may's

request for more time to negotiate with brussels. today, we will see earnings from cvs and nvidia. we are joined by gina martin , a formervince trader. a macro squawk. that's great. let's turn to those china numbers overnight. surprising to the upside with exports growing and imports not down as much as they thought they would be. the white line is all those exports. the blue line, imports, which are much better than last month. we are having a bit of a rebound in china. does that encourage global growth? vince: not at all. this had a lot to do with the lunar new year celebrations for a week.

the jobless number up a lot higher than people expected. next month, we will see this number come down quite a lot. wille end of the month, we see two data points coming out of asia. one is a south korean exports. project pmi the data for china, which had been flying. watch those numbers to see what the real story is. this number is inflated. alix: why are the markets rallying, then? gina: because expectations were so very low for everything. what's happening today is partly a reflection of what happened last month. the december numbers were so ugly, it really took the market we started pricing and permanent malaise and weakness coming out of asia, particularly china. earnings are not great, but they are not as bad as expected.

we had priced in a tremendous amount of weakness. ,ven in these moderate beats they are creating a near-term balance in sentiment because expectations got so low. alix: the next story, europe. this is a really ugly chart. german gdp quarter on quarter the white part, it's not even there for last year. is this accurately reflected in the markets right now? that i'm a bit worried europe is not as reflected as china. we spent last year talking about a chinese slow down because of all the trade issues that popped up directly related to china. as a result, europe has shown really strong economic weakness. you saw this play out in the s&p 500 in particular. they are still trading at a

premium to their long-term average. china is trading at a 20% discount to long-term average. i think there is a bit of room to the downside with respect to sentiment toward europe and european shares. we are over the last few months starting to price this an increasingly. that's price this in increasingly. david: how much of the concern about germany is tied to china? they rely on exports. the high machinery type of vehicle -- gm is playing it absolutely perfect. it is well underpriced, the euro is a bit over bid, and no one is taking into account the elections that are coming up. spain will likely call election soon. italy is having elections.

expect to the populist movement, germany is tremendously undervalued compared to the rest of the world. alix: the pharmaceutical industry was very weak in the fourth quarter. that is not a china story. david: there's a lot of issues with europe. i totally agree. we have commerzbank and credit overnight, a out tale of two different banks. commerzbank up 4.4%. credit suisse is now down. initially, it was up 2% or 3%. then they got concerned because they lost money because of their trade. vince: that is going across the board. all of them are having problems with trading. a large part of that is banks have opened up the trading market, complete transparency to the buy side customers, which

has completely limited their ability to gain fees, which is marketing a product, and it also opens this up to other players to come in and provide liquidity to customers at a cheaper basis, so the banks don't have the advantage in the trading markets they had before. you see it in the numbers. alix: why don't we know that by now? why is this continually being a surprise for us? gina: i don't know if it is a surprise on the fourth quarter. all investment banks struggled in the fourth quarter because it's a lot about the outlook and the commentary with respect to the outlook. what created some degree of support for the u.s. financials. even though it was not a great fourth quarter, many financials executive talked about the outlook likely improving, giving confident remarks about the u.s. economy being relatively stable.

europe does not sit in that cushy position right now. the yield curve is really flat, there is not a lot of certainty. moree is in a much difficult position and that is showing up in the financials. there's not a lot of confidence in the outlook, not a lot of confidence that things will improve. structurally, are you making enough changes to create a real difference in the outlook here? alix: gina martin adams does not feel good about europe right now , just in case we weren't clear. you can find all the charts on gtv on your terminal. up, the investor take on progress in the u.s.-china trade talks. the fidelity head of global macro will join us. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." debut raiseds bond $15 billion. it's expected to attract investors to the oil-rich gulf region. it was added to the world's helpst -- five banks will aramco raise cash to acquire saudi basic industries. airbus pulling the plug on it superjumbo after 12 years of service. the european plane maker will cease deliveries of with dutch of the double-decker jet by

2021. the outgoing ceo protecting a 50% gain in earnings for airbus this year. firstas astrazeneca's year of product sales growth since 2009. forreason, the high demand its new cancer medication. that is your bloomberg business flash. david: china reported better-than-expected trade numbers for last month with stronger exports and imports down less than expected. boston, jurrien timmer, fidelity head of global macro. we are showing some numbers illustrating what i just said. really up on the exports and imports not as bad. is this indicating something longer and broader for china growth or is this about the lunar new year? >> i think it's a bit related to the lunar new year. it also shows what we kind of knewew what -- kind of all

was happening. companies were frontloading china before the tariffs. we have seen that on the u.s. side. earnings were booming last year. estimates for 2019 are falling pretty hard at the beginning of this year. a thing to remember for china is the chinese slow down started long before any kind of trade tensions began, certainly before the tariffs were imposed. the china slowdown story is a much bigger story than just trade. the economy is slowing. they are either unable or unwilling to stimulate the old-fashioned way by creating more debt-financed expansion. as a result, the economy has been in a bind, further heard by the fact that the fed has been

hampers thend that chinese policy makers reflecting the economy. china remains a big story. it's one where we don't really see the roots of a recovery quite yet. alix: do you agree? does the data make you feel more confident taking on risk? >> i tend to agree with jurrien timmer. some of the global indicators we follow that are driven in large part by china have failed to rebound. the fact that is crashing at the same time you are seeing a lot of indicators of global trade softening. another one related to the risk on rally is where there's not been risk on -- industrial prices have not bounce at all during this rally. alix: what does that tell you? is it a quick rotation

allocation? doug: we are pretty cautious. we are cautious on this rally. i do think there will be a retest. think about the fourth order -- fourth quarter decline as anticipating weak economic numbers to come over the coming months. to some extent, the market discounts that deterioration, but it's also weakening confidence. see bottomss, you in the stock market -- that's why. the first one comes out of the blue and the news is still good. the second leg down is when you get the weak news. it's a pretty high risk rally to chase. china we tend to focus on . it's not all of global growth. what about indications outside of china?

there are some indications it's not just a china problem. >> it is a global slowdown. the u.s. saw an extension of that last year because of the deficit spending and tax cuts. now, the u.s. has followed the rest of the world. it has been a europe story, a china em story. doug is exactly right. of are down 20.2% for all new york minute on december 26 and then we saw a 17% rebound. that kind of momentum washout low, you tend to see a strong rebound, which is what we are seeing, followed by the next 4-8 weeks, you see some sort of retest. it may not be a full double bottom, it may be a 50% retracing. the issues that have been plaguing the markets don't go

away quickly. earnings growth estimates are falling off a cliff. tothis point, we are lucky get positive eps growth for 2018 -- 2019. they are falling about 50% a week, actually. alix: it had been dollar and long-duration. is that where you want to be? >> we are light in our equity exposure. we started hedging last year. with the benefit of hindsight, we could have done more. than usual onhter u.s. equity exposure. we've been expecting a longer-term shift toward foreign markets. i really don't have a strong preference for one or the other. it's interesting, cyclical bear markets tend to catalyze major shifts in leadership. what's been leading the last

10-11 years? growth overvalue but certainly domestic stocks over international. over the next year or two, those will change. we will wash things out from a valuation perspective. i know value returning to the floor, maybe a consensus call -- i don't sense that with respect to international stocks. there's a lot of give up. the old argument that you can buy these big multinationals and get your em exposure -- with the 50%.tion gap and david: coming up, coca-cola reporting fourth-quarter earnings, seeing 3-4 percent currency headwinds affecting net revenue. this is bloomberg. ♪

taylor: welcome to "bloomberg daybreak america's." i want to start with canada goose. cheers jumping after quarterly revenue beat the highest estimates. -- shares jumping after quarterly revenue beat the highest estimates. estimates were just 30%. shares were up about 7%. capex is going to rise. they will invest in more retail stores. you are seeing some of those gains being carried back a bit. i want to look at waste management as well. full year earnings per share missing estimates, now looking -- 428-43838 share per share. the lowest revenue going back to the first quarter of 2018. they are boosting their dividend, but that is not enough to rebound the share price decline we have seen.

coca-cola, earnings per in right --the estimates, looking at looking at full-year comp at 1%. some of those numbers pushing these shares lower. a lot of discussion about the currency headwinds throughout the press release. stay with us. we will speak with the coca-cola ceo in just a few hours. alix: thank you so much. still with us, doug ramsey and jurrien timmer. there's two narratives in the market. one is that we will be in an earnings recession. two, we are pricing too much negativity in. which scenario do you see playing out? doug: i certainly agree with the idea that we are in an earnings recession. as to whether we really markdown stocks enough, even at the december lows, we were nowhere

near the valuations of october 2007 market highs. we do a lot of work showing the potential downside if we go to a long-term average valuation. what is the downside if we were to go to an average bear market low? you don't need those exercises to demonstrate the risks in the market. but if we went to an old bull market high? we would still go to the low to thousands on the s&p 500 -- 2000s on the s&p 500? pe, weyear schiller never even got down to where stocks peaked at the 2007 hi. high.7 david: you said 5-10% down for earnings?

analysts have been taking down their calls over the last few weeks. in the last week or so, it has flattened out. is the market properly pricing in decline in earnings? with the market is hoping is that after 23% gain last year and what is now looking like a low single-digit gain at best for 2019, the estimate for 2019 a few months ago was a 12% growth, now 5.4%. the market is assuming this is a temporary decline. two, qmates are at minus plus 2.- q2 at ultimately, this is really a question of margins. price to sales is back to the 2000 bubble piece while

price-to-earnings is around 15-16 on a trailing or next 12 month basis. that all comes down to margins. alix: doug ramsey will stay with us. jurrien timmer of fidelity as well. up, the tale of two banks -- credit suisse and commerzbank out with earnings this morning. this is bloomberg. ♪ this isn't just any moving day.

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simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. 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." you are looking at s&p closing at four days of gains. s&p futures up .3%. european stocks hitting the highs of the year.

despiteup .2% disappointing earnings from avoiding aarely recession in the fourth quarter of last year -- disappointing earnings from puma. goldman sachs sticking to their short dollar call. a little tighter here. i want to point out what's happening with steel rebar. amazing,xports were so supporting the markets -- that is helping crude. they are also dumping a lot of steel and aluminum. not all amazing news when it comes to that export story out of china. david: dumping is not a good word. alix: there is some dumb. you see it reflected in the dump.-- there is some house isthe white pushing back the deadline to increase tariffs on china by 60

days. president trump indicating he would be willing to extend the march 1 cut off if agreements were close to being made. the president says he will need to meet with xi jinping before agreeing to any deal. paul manafort broke his plea trump's formernt campaign chairman repeatedly lied to federal prosecutors. manafort already faces up to 10 years in jail after pleading guilty to two counts of conspiracy. he is set to be sentenced on march 13. secretary says on extending theresa may's window, it will send an important message to the european union. fox's watching for proof that the prime minister has on anyent's support

concessions she intends to win from brussels. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. alix: credit suisse investors getting cautious on the bank's trading outlook. shares are lower despite the fact that they hold on to some rich friends. we spoke to the ceo earlier at bloomberg. nervous, but it's my job. -- thists are nervous is well known, whether it's the china-u.s. trade discussion, , these are moving us in different directions along with other issues. we as a bank, we don't control the environment.

all we can do is be agile, be organized so we can support different needs of our clients a inferent point in the cycle different parts of the world. we have a strong pipeline. saw a lot of, i clients came to see -- we will stand by them and support them. where you still see quite a bit of confidence in the corporates, a strong pipeline -- the shutdown didn't help. people want to do things. they are not necessarily in a position. david: his clients are nervous. understandably nervous about the markets. in honduras, they are about credit suisse specifically -- they have private wealth management, which did well.

trading did not do well. they the rates they got, still got net inflows. there is new money that came in this year. that was definitely a positive. david: they also struggled in asia pacific. they want to make progress there. it is tough. we've seen other banks trying to marry retail banking and private wealth management with trading. alix: let's go to the retail banking world. commerzbank reporting operating profit for the fourth quarter that beat estimates. they increased their dividend as well. matt miller spoke with the commerzbank cfo. is to keep on doing the same thing that's worked for the last two years, growing revenue and cutting costs. going for a proper return is

what the management team is driving for. given that germany is one of the -- countries around, the negative interest rates are wearing on the country. gdp growth was zero after a decline in the last quarter. they would like to see commerzbank get together with deutsche bank. is that a way to improve returns? >> we focus on the facts. the german economy did grow in 2018. we expected to grow also in 2019. i expect china to grow, i expect the u.s. to grow, i expect europe to grow. we are nowhere near a recession. david: that is the commerzbank cfo talking about a real regional bank, slow and steady wins the race. at the same time, they have to

challenge on growth because they don't have the upside of the securities business. alix: they spent 3% a year. that's below the previous target of $9.8 billion. is deutsche bank the way you are going to want to grow? david: that is the question and the idea, to put those two banks together and you save a lot of costs. you get a big retail base. way, negative rates not good for banks in europe. david: exactly. that's where i want to go with doug ramsey and jurrien timmer. i'm going to put up a chart. it plots the stock price for the european banks against the yield curve. basically, as long as the ecb is europeanis with rates,

banks are not going to have an easy time of it. does that explain a lot of what's going on with european banks? jurrien: the banks in europe were never cleaned up the way u.s. banks were after the financial crisis. the banks remain overleveraged, europe is dependent on the banks for credit growth. intends to be more capital markets and less so the banks. it's an indication of the problems that remain in europe. the economy is growing, but it's a fragile growth. you are constantly getting pummeled by the external factors like italy and spain. you put it all together and you have a market where investors are not willing to pay the same amount for each euro of earnings as they would in the u.s. for each dollar of earnings here. you have chronically lower pe

and it is completely justified in that sense. it doesn't mean the economy isn't growing. growthons will always be -- i want to point out what the ceo said about investor nervousness. that is not a european issue. investors sold $83 billion worth of stock from the etf's, basically locking in a 20% loss. it's very unfortunate to see it. it doesn't show you how widespread the skepticism has been that this big gain over the last nine years was run like a house of cards. the skepticism has been an issue everywhere. david: this is a question of the larger europeans, not just the banks. the blue line showing gdp growth coming down substantially. the white is the european

economic sentiment. this is something the commerzbank cfo addressed. if this keeps going down, does it go into recession? jurrien: if you really impressed pressdoug: if you really s goingo see the european into a recession in the next 12 months. i don't think it will be a deep recession. the amplitude of waves to the up-and-down side are muted. a significant valuation discount on european shares is justified. the issue is i don't think it's going to get much wider. europe was almost at perry with us 12 years ago. now, it has gone to a 35% discount. i don't see that type of reevaluation again downward. alix: how do you know what it's

a value trap or real value? us, we do look at some trend action. i thought it might win the u.s. fell out of bed in december. most global shares held up better on a relative basis. thatss what troubles me is i see the value opportunity, but at the same time, i think europe could use a lot weaker euro. the euro has been around for just over 20 years. 50 peaked five months later. it is down 45%. euro was an of the contrary signal. bitterarring nations, enemies for centuries came together in 1999, it was ultimately a peak in the relative performance of european

shares. i do see the value. if the euro were to slide. that would hurt u.s.-based returns. expect us to be increasing allocations later this year. david: doug ramsey and jurrien timmer, thank you for being with us. coming up, tom barrack is in hot water. he now finds himself in an uproar of his own making. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." hour, thein the next

wear ceo.sports david: we turn now to wall street beat. aramco taps jp morgan and morgan stanley for landmark choosing u.s. banks to manage its first ever international bond sale. for catering to the world's largest investors and corporations molds and take over for access to midmarket deals. founderny capital apologizes for recent comments made about the murder of jamal khashoggi. alix: joining us now, jason kelly. let's start with saudi aramco here. they need to issue some bonds for the takeover of a petrochemical giant there.

for we don't want to do business with saudi arabia. aramco is the most desired client, first on the ipo's and then when they shifted gears a bit to pursue the acquisition. they will raise $10 million or so. -- $10 million or so. -- $10 billion or so. david: does this give them a leg up? see the first real look into aramco's finances, what they think about the oil market, how it is all structured. that is a window no one has ever had beyond the saudi government. alix: smaller investment bankers were taken over. it was a big deal. , aid: goldman sachs

may be doingory -- a deal with smaller shops. jason: they had talks with william blair last year. a much smaller bank, a regional bank. give them presumably a window into the types of deals they haven't been able to pursue as much in that so-called middle-market. all. we can do it they are thinking cross-selling. we spoke about goldman and the boutique investment bank. >> what you really have is not a smaller firm versus bigger firm. there six or seven firms, big and small, that do 85% of what's coming on with advisory and m&a.

goldman continues to be a jargon not. alix: hence the potential deal. -- continues to be a juggernaut. boutiques, you think the world.mullis' of they really gotten market share over the last few years. you do wonder if these all come said we again -- dave are not doing anything right away. yet, this is the david solomon goldman. he is taking a fresh look at the whole thing. >> absolutely. there could be something to buy, someone moving toward retirement, a nice little exit for themselves. david: unfortunate story with our friend, tom barrack.

he decided to speak out about the murder of jamal khashoggi. he said we've done worse things here in the united states. uproar.s an tom barrack apologized, saying khashoggi's murder was atrocious. i consider the killing reprehensible. tom barrack has had a fair number of financial dealings over in that part of the world. >> for decades, as you know. many people in the saudi government going back into the 1970's, where he cut his teeth as a dealmaker. he ran president trump's inaugural committee. some of what he says initially did echo what we've heard from the u.s. administration. president donald trump being pretty careful all along the way not to go too hard on the crown

prince of saudi arabia, who he considers an alley. david: i don't want to be an apologist. that -- i made a mistake. i had to go out and say i'm sorry, i got it wrong. is expensive -- expansive. he tends to unwind and he goes and goes. you can see how he might have gotten to that place. this was unfortunate, for sure. it's interesting how much he had to walk it back. talk: coming up, we will about the shutdown with the person who negotiated the compromise. ♪

bipartisannight, a congressional team reportedly came up with a compromise bill funding increased border security and avoiding a government shutdown. senator capito. you must be tired at this point. sen. capito: we've had a successful conclusion. that's all that matters. david: we know the outlines of the deal. there is going to be more money put forward for the barrier with some other border security. lowey said there's a lot of other things in there. how are the people who are going to vote on this know what's in the bill? sen. capito: the other six bills

that are included in this have been out in the open since they were passed through the appropriations committee. they have not changed significantly or not at all. the homeland security bill has the most moving parts. we've been pretty explicit about what's in it. i don't think you will find anything surprising or unknown. with a lot of the portions already being well-known, a lot of portions are being studied as we speak. david: does this take care of the issue for the foreseeable future or are we going to have to come back every year and revisit it? sen. capito: this is a one year appropriation bill. it is part of a larger plan. the border patrol has a 17 point plan. ofs gets to the third point 55 miles of new border, more

money in technology. this is a gradual process. over the 10 year span, we will see huge improvements. it is something we will have to talk about and then see what effect the dollar is having. david: congratulations on getting it done. we assume the president is going to sign it. let me turn briefly to another subject -- the issue of stock buybacks. we had mr. rubio come out yesterday and say he wants to change the tax law to include buybacks. have you taken a look at that? do you have a position on whether something should be done? sen. capito: i do think we need to look at what affects the tax code had. in my state, they've been very positive. stock buybacks is something we would look at.

and may be too early to tell what effect this has had. david: is there a perception of constituents in west virginia that the large corporations benefited more than the individuals? do your constituents feel they personally benefited from this? sen. capito: they are getting more on their paychecks, their wages are going up. west virginia had a tough time with a massive downturn of coal. we are on an upswing. a lot of this had to do with thevestment of capital -- optimistic feeling in my state is a result of the tax bill and the regulatory relief. positive towards the tax reform bill. trump lostpresident any of his luster in your home state? sen. capito: not really.

the president understood how we felt. administration, our coal industry was decimated. it was really sad to see. the president made the case that he can make it better. it is better. i think the president remains popular. he's doing what he said. david: thank you, senator shelley moore capito of west virginia. alix: coming up, michelle meyer demarc. t this is bloomberg. ♪

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high-level trade talks kickoff in beijing. earnings recession -- fact or fiction? earnings estimates stop falling. consumer confidence, retail sales on deck. we will speak with the columbia sportswear company ceo. happy valentine's day, by the way. bill comes do if a across your desk about tax buybacks -- taxing buybacks? david: we've had marco rubio saying he wants to change the tax laws. alix: you have bernie sanders and chuck schumer and marco rubio saying the same kind of thing when it comes to buybacks. what does that mean? david: how did the american people react to the tax code?

we heard shelley moore capito saying it was good for the state of west virginia. at the same time, we should look at what the effects will be. alix: investors putting pressure on companies, saying we don't want buybacks, we want. -- we don't want capex.s, we want take a look at european growth in the fourth quarter. germany barely digging itself out of any kind of recession. yields a bitield, softer at 1.69. with theting a pop strong chinese export number alleviating the short-term fears. good for some commodities.

not the ones they are exporting, however. 8:30, we will get retail sales and jobless claims. at noon, the british parliament will vote on theresa may's request for more time to negotiate with brussels. fromwe will get earnings cvs and nvidia. alix: our next guest says it may be time for correction. calledmark -- tom demark the bottom, now saying the models are turning cautious. you are well known for looking at your historical models to know what to do in the future. what is your model telling you know? tom: we would like to go back markets to search

for comparison. market resembled 1973. dow jones industrial average, there was a claim of 20%, almost identical to the climb we had in , which is something that is unique. we have seen a sharp rally off the low. it encompassed 36 trading days in 1973 from the low in september to the late october high. currently, we've had 34 trading days. , youu were to magnify that would see there were 21 higher closes.

currently, we have 20 -- at the 1973, we had 18% movement off the bottom. currently, we will also have an 18% move. retracement in 1973 with 68.6%. overlay.st an we are not saying this is what's going to unfold. that is the closest to the current market. we have to see after this decline. the next one or two days, we could see a peak in the market. then we go into the long weekend. that's when the federal reserve or central banks tend to interfere in markets. we are getting to a low in the

euro-dollar. we have high-yield corporate bonds coming up close to that index, the etf coming close to a peak. gold moving toward a peak. there's a convergence of a lot of markets at this time. bex: calling cops can can be a- calling tops lot harder than calling bottoms. if we do hit a top, what happens? tom: we will evaluate the subsequent decline. we will take a look at the trajectory of the decline. if it starts like it has in previous declines, that will tell us that we could mimic 1973 in one sense with a sharp move down. and occurs after the top the severity of that decline will tell us after four or five trading days.

we are playing defense, looking for a top as the market rallies and then looking for a bottom and that is difficult. that panic at the bottom, it's usually 1-3 days. at the top, it can spread out. upside is only 1%. we will know then. you really won't know for certain until three or four days after the peak. nasdaqake a look at the and how you wind up calling top. about this learn verse is something more dramatic? tom: we have a convergence of all stock indices. they are all confirming -- we have the shanghai and the hscei

within one or two days of a peak. it's a convergence in the confluence of the number of market indices that will tell us the severity, what to expect on the downside. -- weally at market tops are an alarmist in that sense. it doesn't always unfold in that way. we're pretty confident something will happen here in the next few days. marketspositive news, generally top on positive news, not negative news. at theom demark looking next few days for signs that a top will be completed. david: we will come from milwaukee, wisconsin, michael antonelli. you just heard tom demark.

is he right that this looks like 1973? if that's true, it's not pretty. do you see a justification for this bounce back? michael: i do. i'm super excited to be here with you guys. here's the thing about markets. it trades on better or worse, not good news or bad news. macro data not as bad as people thought. the bounce makes a lot of sense to me. the 200 day and 50 day are both moving sideways. we had a point where the trend makes sense. whether we bounce to the highs ows willck to the l depend on the evolution of data from here on. does economic data get better or worse? that's really important right now. to be trade data seem

indicating that we will be coming to some sort of terms with china. are you seeing any weakening in the eco-data? michael: no. i think both trump and xi jinping need a win. you know what you need to look forward to see if the trade war is getting better? look at the korean index. very trade sensitive. it's doing pretty good this year. you have to look in odd places to see where sentiment is being expressed on that. in terms of economic data going forward, weekly claims is the most important economic indicator. my bloomberg, i'm knocking it out. we want to see weekly claims not fall. they tend to rise into a

recession. we haven't seen that yet. david: michael antonelli will be sticking with us. alix: what is the indicator you want? a lot of people sing jobless claims. -- asaying jobless claims lot of people saying jobless claims. david: is wall street getting the message? we will talk about that, next. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." jpmorgan chase plans to run trials of cryptocurrency for clients of its wholesale payments business. it uses blockchain technology. the initial test will involve a tiny portion of payment. airbus pulling the plug on the a380, scrapping the slow selling superjumbo. deliveries will end in 2021. 3500 jobs will be impacted. the outgoing ceo sees a 15% gain in earnings for airbus this year. renault warning a hard brexit would kill most growth this year. they were still able to meet forecasts for 2018 despite falling sales in europe and emerging markets. predicting a drop to around 6% -- that is your bloomberg business flash. aix: maybe mr. ghosn playing part in the downside business for renault.

latest, taylor riggs. taylor: wanting to start with renault. shares are still higher after revenue and profit fell. applauding the guidance -- the relationship is cordial. the financial results are taking a backseat to see if the nissan-renault marriage continues. shares of yelp rising. top line growth of 8-10%, looking at the midteens in the next few years, introducing three new directors to the board. centurylink, shares off 10% after analysts saying the dividend cut to one dollar is tough but necessary. a lot of growth concerns remain about the company.

the ceo lowering that leverage target to make sure the balance sheet is in line. david: the stock market goes up and down. the fundamentals of the u.s. economy are strong. the question is for how long. there seems to be a lot of uncertainty but not much agreement. >> we are going to have a recession whether or not we get a u.s.-china deal. recession increasing probability over the next three years. >> i recession risks have declined significantly. >> it is pretty likely. better than even odds we will have a recession. >> i think economic activity will begin to wane on the back half of 2019. by the middle of 2020, we will most likely be in a recession. >> the economy is not ask slow as people -- not as slow as people discounted. recession is not likely to happen by 2020.

,avid: we welcome to new york michelle meyer. michael antonelli is still with us in milwaukee. you can break the tie. michelle: that was a great series of clips there. most people would agree, at some point, the cycle will end and a recession will come. when? the consensus was 2019. that no longer seems to be the consensus. we think rightfully so. as you look further into 2020 and 2021, when you start to see an economy that is overheated a have thestart to ability to pull back, areas of the economy that could contract in a normal recession -- as you

accelerate, it could paint that picture. alix: earnings estimates for 2019 continue to come down. now, they have leveled off. what is baked in? what is more downside? michael: you could find --essionary signals anywhere we are not on recession watch. what is baked in? i think slowing is baked in. we know the tailwind from the tax reform is going to end, earnings will slow. what is the depth of the earnings recession? is it a shallow, close skim to the ground? we have massive earnings recession in 2016 -- there was no economic recession there. i don't think they make a lot of sense right here, right now. alix: what areas are pricing in a steeper recession than they

should be? michael: the industrial sector is starting to pull that up. look at the xl i. industrials thought a global manufacturing recession was upon us. things are better, things are not as bad as they christmas eve christmas eve the massacre i sat through. david: what does that say about the economy? which parts will benefit from that environment? michelle: you have to think about where the risk factors are coming from. the reason the industrial space got hit at the beginning of the year, the concern about the business cycle was due to what's happening abroad. the manufacturing sector was going to weaken, trade volumes you sawng to weaken,

negative signs in the manufacturing ism in december as well, adding to that fear. those risks are coming down a bit, you probably do have an opportunity and the more cyclical portions of the economy -- in the more cyclical portions of the economy. when you focus on the more domestic parts of the economy, the household sector, that has been pretty robust throughout the cycle. you have wage growth picking up, tight labor market, household balance sheets that look well supported. seeing a pretty decent backup. david: thank you for being with us, michael antonelli. michelle meyer will be sticking with us. itsus says goodbye to superjumbo plane.

more in the bottom line. this is bloomberg. ♪

david: time for the bottom line. airbus, we have a new ceo coming in, old ceo going out. doing the new cla favor.- ceo a the business of months with the outgoing ceo. we are trying to find solutions for this a380 situation. we will wind down the program. david: the big right on west write down was the

a380. alix: cisco earnings rising in premarket. analysts saying you are clicking on all cylinders here, the company is doing pretty well. we will speak to the ceo later on. maybe this is actually real. chuck robbins will be joining us later on. david: the third company we are watching, caterpillar. we have brooke sutherland here to tell us about caterpillar. >> caterpillar released its january machinery sales data. we saw deterioration in the asia-pacific market, a 4% drop in retail sales, the first contraction since 2016. that underscores what caterpillar said, they are not

seeing the growth there that they had seen in recent years. you're coming off strong years in 2017 and 2018. it's not a huge percentage, about 5-10% of their overall business. north america is the key market for them and that did remain fairly robust in january. the question is how long they can keep that up. does the slowdown in china and europe started to seep into the u.s. market? outperforming. goldman sachs saying if you want to get alpha, you have to go there. what do you see? michael: i understand the whole move, i get what trends are going on, but there's a lot of

great stories out there. i've got three great ideas. this morning, yet he comes out -- yeti comes out. it's a good story, consumer facing. one, paypal and been venmo. last one, lululemon. they are all consumer facing. these worries about a consumer slowdown aren't manifesting. they are selling $100 yoga pants by the bucket load here. david: we are saying we will get an extension in this china deal. michelle: even if there is an agreement, companies are still making changes in real-time because there's uncertainty. you see it in the manufacturing

surveys, business confidence measures talking about challenges around the supply .hain alix: deere comes out tomorrow. michelle: the tariffs overhang is the issue right now. construction demand may be getting a bit softer. resolution in trade -- retail sales on deck. we will talk consumer sentiment with the columbia sportswear company ceo. ♪

alix: this is bloomberg daybreak. about 30 seconds away from the latest data dump. s&p futures holding on to the rally. in other asset classes, take a

look at the currency market. a mixed dollar story. despitelar goes nowhere the fact that germany barely grew in the fourth quarter. commodities.t some getting a pop on a potential trade deal. crude, yes, iron ore and steel, no. retail sales. that is not good. if you look at a month by month basis in december, that is coming down 1.2%. a huge miss versus estimates. even retail controls is down 1.7%. that is negative. david: let's start speculating. is that the weather, is that the shutdown. that is a surprise. alix: take a luke -- take a look at producer price index. 2.6%. higher than estimated. in terms of the inflation picture, a goldilocks scenario.

demand for ppi is negative, down .1%. higher.claims move the bond market reacting. you are seeing some buying in the back end. look at what is happening with equity futures. not a lot of movement, but off of the lows of the session. i'm taking a look at the dxy, dropping into negative territory . sell the dollar, by the long end. david: it is one data point. it is wobbly. certainly not a robust set of numbers. alix: we will have to dig through that. luckily michelle meyer from bank of america is with us. what do you make of this number? michelle: it was an ugly number. hard to make any other story out of that. core control down. november was up 1%.

there is little bit of a payback you are seeing. this is a pretty weak number. i just pulled up the economic summary. it is across the board weakness. department stores down 3.3%. it was not just one or two areas where there was weakness which makes you think it is something more significant in terms of that decline. we know retail sales get devised so we could see this number come up. it is likely to remain quite negative for december. david: december, as i recall, had christmas in it. a big retail sales time. you do not want to miss in december. michelle: now the christmas season is november and december combined. the fact that december -- november was up 1%, but you are right, this is particularly bad for the end of the year. it is a december number, not january. we look at our own proprietary

and one of our pushes is to use more of our data analytics. our core data shows that january look soft. our indicators suggests the softer might continue into the new year. alix: if you look at jobless claims, at the four week average, they are still the highest level in a year. how much do you learn about that? uber that with the internal data and you could be looking at consumer -- a slower consumer. michelle: i am not as worried as the jobless numbers. that is within the normal range of jobless claims and historically a low level. the jobless numbers i am ok with. i do not think we can call that an upward trend. numbers is hard to ignore. that is a big downshift for the consumer. david: let's talk to somebody .ho does this retail sales

one of the companies that but the sales numbers for december was columbia sportswear. we welcome tim boyle, the columbia sportswear president and ceo. my first question is did you see a trail off in your numbers for december? tim: we are global. only about 60% of our sales are in the u.s. in our outerwear business, whether trumps almost any economic indicators. we had a decent december and talked about it on our call recently. david: you did not see a weakening in december. these numberspate from what you have seen in terms of mall traffic, store traffic, things like that? tim: i'm here in portland. i've not seen the numbers yet. it is not surprising if you take one million people out of the workforce with the shutdown and

tell them they will not work for a year, that is going to impact retail sales. david: give us your sense with regards the numbers -- i can tell you the control number was down 1.7% for the month. the estimate was up .4%. as apprising number to the downside. does that conform with what you see in the business overall? tim: we do not guide into recorder. we cannot talk about what the results for our company are. for our business, where we have a heavy component of outerwear and winter boots, the weather trumps almost any other economic indicator. we had great weather in january. this is michelle meyer from bank of america. outside of the near term fluctuation, what do you think

generally for the appetite of consumers to spend in the new year? tim: we are talking about a globalgenerally for the appetitf consumers to spend in the new year? tim: we are talking about a global business. 40% of our sales are outside of the u.s.. in general, the consumer is strong, healthy. there is some discussion inside our company that maybe the smartphones are so advanced that the sales of smartphones might be weakening and providing moneys for other kinds of commodities, including ours and others. david: you said you were a global business, so talk about globally. we hear talk about a global slowdown, in part because of trade constraints. are you detecting that globally? there is probably a high-level economic slowdown. we have seen it in china. we are a3 billion, small player in the business. when we have success, it is about what we do with our

, which is less impacted by the, which is less impacted by the global economic overcast. frankly, i think the consumer globally is in a reasonably good generally, which is less impactd by the global economic overcast. frankly, i think the consumer globally is in a reasonably good place. alix: what kind of pricing do you feel like you have? tim: are you talking about our supply chain and the cost pressures? alix: that is good, but i was also dealing with your end user product. what pricing power do you have on your supply chains? tim: we lean heavily on innovation and we try to differentiate our products from others. we talk a lot in the company -- there does not need to be another brand of outerwear or fort where in the world. there are plenty. if you're going to run it -- if we are going to run a business successful, we have to

differentiate ourselves. successful, we have to differentiate ourselves. we chose innovation so we have different ways of keeping people warm. protected from rain. we lean heavily on those commodities to try to differentiate ourselves from the global plethora of apparel companies. michelle: one of the things that matters when you think about pricing is how much competition there is. now with the shift toward more onlinenow with the shift towarde online retailers, how are you handicapping that? are you trying to move more of your carcass toward online spending? you feel like there has been more competition from online retailers? tim: certainly in the u.s.. you have to be specific about the global markets. u.s., we have become over

u.s., we have become over stored, we have lost a lot of customers. retailers that carried our products. we replace those retailers with our own direct to consumer business or businesses with some of our retailers who have good-sized online businesses. our own online business is around 11% of our sales. consumers are moving that way. there is plenty of room for brick and mortar retailers and many are very successful. as you look around the world of various markets, where is the greatest strength and demand and where is softness? there must be difference among those countries. tim: are difference in asia is pretty good. our china business is not growing as rapidly as we would like. i think the chinese economy has weakened, but our business reflects issues we have within our own company. we have a strong business in russia. our european businesses quite strong. we are small by comparison to many of these global players. we can be successful even in an where general macro economics are not strong.

david: very interesting. thanks for being with us. that is tim boyle, columbia sportswear ceo. michelle meyer, thank you as well for being with us. now let's get an updatedavid: ot is making headlines outside the business world. today marks the one-year anniversary of the marjory stoneman douglas high school massacre. 14 students and three school staff members died last valentine's day when a gunman opened fire inside the building. you can see the video of students and staff members running for their life. an interfaith service will be held near the parkland, florida school. students will observe a moment of silence to remember those who died. paul manafort's plea deal is off. a judge ruling that trump's campaign manager lied to , this after agreeing to kwok with robert mueller's investigation into russian interference in the 2016 election. does not bode well for paul

manafort, who pleaded guilty to two counts of conspiracy. russia floating the idea that the u.s. attempt to deliver humanitarian aid to venezuela is a cover-up for military intervention. americans --saying a dirty provocation. truckloads of food and medicine have been piling up near the border with colombia. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. alix: thanks so much. it gets more complicated. you have a different board for the state owned oil company. the opposition owner named its own board. david: there's a whole issue about sicko. who runs sicko -- who runs citco? there are competing boards. companyu can see the

trying to stay with the nicolas maduro's landscape. citco is here. there may be a legal framework for juan guaido to get control of that. we will talk to the tiffany's ceo about how a jeweler is sourcing ethically mined diamonds. that is coming up at 1:00. david: coming up, housing outperforms. we talk about how the sector has surged. that will come up next. lime from new york, this is bloomberg. ♪

viviana: this is bloomberg daybreak. coming up in the next hour on bloomberg -- the open. the cisco ceo.

this is bloomberg daybreak. i'm viviana hurtado with your bloomberg business flash. manhattan are seeing increased demand allowing them to raise rates and giveaway fewer freebies. the share of new leases in january that included free rent and her gift cards fell from a year ago. landlord saw their first year-over-year decrease after months of games. is growing its instant offers real estate flipping business. the seattle-based-based company buys houses, fixing them up, and resells them. zillow is better known for operating asset websites that helps buyers find home. alphabet is the top pick among u.s. internet stocks knocking amazon out of the number one stock.

an analyst report saying the reason uncertainty over amazon's hq to facility in new york is among the reasons for the change. in company's plans to build long island city are moving forward. alix: thank you so much. with us are experts. michelle meyer, bank of america merrill lynch and neil a richardson. we had a bunch of housing stories come out. what is the story to you right now? nela: it is all about interest rates in the new year. buyers cannot shell off -- selloff like markets can. these rates are drawing people back into the markets. the meantime, if you are going to go rent something you will not get that sweet deal. apparently that is going away in new york good michelle: -- in new york. michelle: that is all relative. it is a regional story.

new york had a bit of an excess supply. you saw more of a compression in generally speaking , when you are thinking about homebuying, it is the level of interest rates. it is not just where home prices are today, it is where people expect home prices to be tomorrow. thatee with nela near-term lower interest rates -- has become but more negative around housing. david: the housing sector dominates today's follow the lead segment where we dive into the stories making headlines in moving markets. home-building sector has outperformed, up 14% over the past month. still with us are michelle meyer and nela richardson's and. a, take this out more broadly.

2017 themplify for me, but the goodyear, 2018 look like a bad year, what you expect in 2019? nela: i think it will be a pretty good year. we will not shoot the lights off. there is this disparity between growth growth. and wage it is entirely tied inventory. that is not changed growing into this year. we are still undersupplied. what is changed his it will look murky. what is changed his it will look murky. we will see a pickup in inventory at the higher end of the market. it is not where the demand is, which is for starter homes, new homebuyers, millennials. housing is bruised but not broken.

there are still bruised spots in the housing market that only regulation will fix. that will drive inventory forward. it will continue to limp along well well because of these lower interest rates. alix: some of the construction stocks have been crushing it because we have not been crushit because we have not been building much. do you agree we are limping along? michelle: yes. it is a bifurcated market. on balance, interest rates are low. we over built in the luxury part of the market and others more opportunity in the first time home market. business owners have to contained that wages have continued to rise and pricing power might not be as supportive as their ability to push home prices higher given the divergence of income. david: given your view of the market, is this a good time to invest in home-building stocks? nela: it is. expectes are low and we building will catch up to where demand is. if demand was weaker, if we saw demand falling off, if we saw downturn and purchase

applications, if we saw an increased in interest rates, then the housing market would be much more vulnerable. we are not seeing those things. we still expect growth to continue. growth is good news for the housing market. in that sense the outlook is good. there are headwinds that are significant for housing long-term. that should be part of the real estate investment strategy. how does the industry handle these headwinds that michelle mentioned. labor costs, land zoning, that is part of housing futures. david: when you talk to homeowners, they say one of the problems with catching up with demand is they cannot get the workers. when you have to pay more for the workers that will affect the price of the house. michelle: with those costs going up they will try to increase the price of the home. there are fractions were you do not have pricing power. pricing has exceeded income. one of the things we look at his new home prices versus existing home prices.

the story is interesting. the ratio between new home prices and existing home prices got to a high level. builders were trying to build to the areas where they have pricing power. the luxury homes. , you willoving down see the ratios come down. it will not be as attractive. alix: you mentioned a backstop of government help to jumpstart the housing market. what stands out to you? nela: in terms of help from the government, i think it is the local government. it is regulation. land zoning, that is part of housing futures. zoning costs, the fact that a lot of these cities are zoned single-family pushes up the cost of building a house. it is also tied to these macro issues that the market is struggling with. tariffs impact housing. they have impacted the price of new construction. housingion affects

because a lot of construction workers come from other countries and mexico -- the fact that we do not have short-term visas to draw in the labor and lower the price of building a home. this is a global market even for the most domestic of assets, which is a house. it is part and parcel with all of the other policy initiatives weighing on the stock market. alix: that is a structural view versus short-term. michelle, what do you think? michelle:alix: that is a structw versus i think she is absolutely right. there are bigger factors influencing what the breakeven level of housing might be. when you look at the simple math and you think about the population dynamic, you can come up with a household rate that will yield about 1.5 million housing starts on aggregate as the breakeven. that is what we used to think historically, what it does not think that is the case anymore. it seems like it will be lower than that. you have the dynamics that have impacted how high supply might

go, but at the same time you of structural dynamics that have also impact the equilibrium rate for household and that is keeping it lower. we are talking about lower breakevens. alix: thank you very much. michelle meyer's and nela richardson's and. always great to see you. retail sales the biggest slump in nine years and markets reacting. you're seeing the dollar move lower. this is bloomberg. ♪

i am watching -- then expected slump in retail sales in the market reaction. the superlatives are pretty bad. the worst drop in nine years, broadbase. whether you are dealing with online, health and personal care, everything was bad. that reacted immediately in the market. you see a big move. u.s. yields down six basis points.

dollar using steam. as in slipping into negative territory. the curve flattening. alix: it is not -- david: it is not every day you get that big of a surprise. this was the holiday shopping season. we were told will be record sales. alix: the scene we have seen throughout other data has been goldilocks. this is just bad data. david: the markets have been reacting accordingly. squaree'll see how they that retail sales with good retail season. coming up, bloomberg markets -- the open. coming up, chuck robbins, cisco ceo. this is bloomberg. ♪\/

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jonathan: the president considers pushing back the deadline for higher tariffs on chinesejonathan: import by 60 d. the uncertainty weighing on europe. germany entering the new year barely avoiding the recession and the u.s. is not escaping weakness. retail sales falling the most in nine years. it is thursday morning, good morning. 30 minutes away from the opening bell. futures were positive 30 minutes ago. they are down .33% on the s&p 500. the dollar is weaker. six basis points lower on the 10 year. 2.64%. investors grappling with the possibility of an earnings recession. >> we have a negative earnings momentum. >> slower earnings growth. >> negative global earnings growth. >> i would not be surprised if we had an earnings recession. >> a little bit of an earnings recession. >>