passionate speech. easing off the pedal. central banks in japan to turkey to europe take baby steps toward easing as global growth slows. walmart versus retail sales. how will the numbers match up with the unprecedented slump in december retail sales? david: welcome to "bloomberg daybreak." we have senator bernie sanders saying he is going to run for president after all. we are awaiting walmart earnings, which should be out any moment now. from very scathing words an interview with bernie sanders. really scathing against president trump. david: he said the first reason he's running is the following of the president of the united racist, heenophobic, went on and on.

earlier, himr talk running is no surprise. what is different is the surge of populism/socialism from both parties in some respects. david: enormous difference in four years. when he ran in 2016, he was seen as far left fringe. alix: fourth quarter comp sales grew 4.2%. to see if that accounts for fuel or not. they did reaffirm their full-year guidance as well. earnings coming in pretty good, too. , $41 a share.

it was confusing when you get all the surveys -- walmart coming in relatively strong. david: i believe their full-year guidance is up 3%. it was thought that they may well be that because of the holiday sales -- beat it because of the holiday sales. they reaffirmed their views for the year. that looks to be a strong reading out of walmart. this is the first time they had the dilution from the flip card investment in india. alix: revenue coming in slightly , one hunter $38.8 $138.8n -- 138 $. billion. david: they invested so much in

e-commerce. it was expected that their margins would come down a bit because of so much they invested in e-commerce. they continue to grow at a brisk pace. they want to challenge amazon. they've decided to invest in their stores in particular in e-commerce. alix: the question for investors going forward, will the capex they have to spend on doing that be enough to offset the increase ? david: some strong numbers this morning, walmart up almost 4% now. we are joined by peggy collins and michael mckee. our initial reaction is this looks pretty good. peggy: it does look good. we were thinking that the holiday of sales -- holiday

sales would come out strong for walmart. they have really invested in e-commerce. we had a story out last month that walmart will be hiring 2000 people, particularly for technology. this is where they are putting the pedal to the metal to compete with amazon. david: the pieces don't fit together neatly. walmart comes in, they had a pretty good holiday season. michael: a lot of questions raised about those retail sales numbers. we will see what the january numbers show. this is a good news story for this particular company and the niche they are in, selling to people on the lower economic end of the scale. onsaw e-commerce sales drop an overall retail sales number, but way up for walmart.

alix: sam's club e-commerce sales were up 12% year-over-year. overall, walmart up 43%. this raises a question in general. how much are you willing to offset your capex in order to grow? what is the tipping point for investors? peggy: that's right. a lot of investors for a long time were looking at short-term numbers. we have seen a big push, especially by ceos in the u.s., to say we need a longer term view from shareholders. in order to compete globally and continue to evolve, especially when technology is such a driver. david: these numbers illustrate an ongoing issue. sos "r" us wasn't there, they picked up toys "r" us sales.

people brought forward stuff into december because of the government shutdown. that may have been a timing issue. michael: holiday sales, the biggest sales part of the year, but it is spread out over many months, people's shopping patterns have changed. number, walmart raising its annual dividend, bernie sanders running for president -- bernie sanders has gone after walmart, introducing legislation to force them to raise their minimum wage. with him and elizabeth warren the wealth the left, tax would hit the walton family hard. out,: i think you pointed he had a tweet that said the walton family as a whole makes more -- michael: more in one minute than the average walmart employee

makes in a year. it is true. alix: that is pretty amazing. david: $25,000 a minute. alix: they are still looking at 2.5-he percent same-store sales -- 2.5-3% same-store sales. walmart beating estimates on the top and bottom line. 'sme-store sales for sam club as well. .almart raising its dividend that stock moving higher in premarket. the other story has to do with auto tariffs. angela merkel very passionate on monday. we are proud of our cars. these cars are built in the usa. south carolina is one of the biggest bmw factories, not in

bavaria, and south carolina. in south carolina. suddenly, the united states national security -- that startles us. alix: did we learn anything from china and the u.s.? michael: donald trump likes tariffs. he said that. he put steel and aluminum tariffs on canada and mexico and never took them off. even though they got the new nafta agreed to. there's a possibility he may want to do it again with autos. a much biggere economic effect on the u.s. said we will retaliate. you have to expect that. said theystration wouldn't put tariffs on while they were negotiating a deal.

they haven't started yet, but the europeans are about to approve the negotiating framework. the eu and u.s. will sit down together. that should in theory keep the tariffs ought. react he's got 90 days to to whatever report he got from congress. peggy: that's right. it allows him to get out his two main themes. national security, border security and jobs. it did feel a bit like angela merkel took the gloves off this weekend and basically said enough is enough. south carolina has one of the biggest bmw factories. that is telling. she was saying, look, point to the facts and this doesn't line up. david: next-door he has to do -- the next banks

to story has to do with central banks -- the next story has to do with central banks. bill dudley said the fed is willing to miss a bit on the high side. we've seen other central banks, including sweden, saying they will not hike their rates. michael: the most interesting one, kuroda saying they might ease some more. bonds is they are willing to bonds suggesting they are willing to reverse that. there is concern about global growth. how much of it is psychological and how much of it israel? real? much of it is

do we actually have to put more money into the system? they are not in good shape to do since rates are so low right now. alix: no one was talking about more easing. investors are buying emerging markets. peggy: we see that over in over already -- over and over already. people are bullish on em. that's where growth is coming in terms of population and the younger people coming up the ladder. there was a story about franklin templeton, airing a bit of caution around investors in the u.s. getting too bullish on treasuries. the rally may not indicate a cut and people may be getting too excited about that. alix: bank of america coming back a bit more negative on em. in the markets, it is a mixed

story, a strong dollar story. about seven.ff continued bad news from europe. we still hold the bottom of that range. yields in the u.s. going nowhere. crude up .8%. you have nigeria, venezuela and saudi exports. strong,coming in very beating on the top and bottom line, raising its dividend, raising its full-year forecast for same-store sales. we will discuss more. -- we will discuss more. this is bloomberg. ♪

ifx: the eu vows retaliation the u.s. levy's car tariffs after a commerce department probe into whether imported vehicles pose a national secure the threat. angela merkel calling the idea that european autos are a threat to u.s. security a shock. look, we are proud of our cars, we are allowed to be. these cars are built in the usa. south carolina is one of the biggest bmw factories. not in bavaria, and south carolina. -- in south carolina. suddenly, the united states national security -- that startles us. the cofounderus, and cio -- what did you make of the rhetoric this weekend? >> autos are important to europe. europe is in a weak state in

terms of its economy. if we have auto tariffs, that will be a problem. is more rhetoric. chancellor merkel was saying don't push us on this. this is important. leave us alone. let's negotiate going forward. david: if they do go forward with auto tariffs, what would be the economic effect? >> europe goes into recession. there will be retaliation. the u.s. economy is also slowing. u.s. capacity to implement these things is less then it would have been a year ago. , 2%ou look at q4 estimates -- q1 tracking at barely 1%. the potential for us to impose these tariffs on others has become less and less.

to me, it is rhetoric, not action. alix: come inside the bloomberg, european automakers at the cheapest valuation to other industries since 2007. jay: these things are cheap. they are cheap for a reason. not only the tariff that, but all the sales in europe and china -- not only the tariff sales in europe and china are slow. we need a bottoming of growth in china. that is imminent. we need a bottoming of growth in europe. when that turn comes, the central-bank action is trying to prime the pump, european auto stocks will be bought. david: is one of the biggest risks trade? the distraction? it causes us to focus and blame

those things -- europe, you have big emissions problems, brexit. we focus on things like trade and tariffs without focusing on the underlying fundamentals. jay: we should stop focusing on production and start guessing on consumption. -- focusing on consumption. ,ot only is it a distraction capital investment on the corporate side, that is something we are looking for to affect the economy. tax cuts stimulate capex. on the other hand, all this uncertainty about pricing inhibits capex. you have a tug-of-war that means nothing happens. david: a tariff is a tax on the american consumer. jay: that is absolutely true. if you think the consumer is key, and i do -- i think we

should be focusing more on obviously, taxing the consumer is not helpful. david: demand-side economics. back to this morning's breaking news. walmart brushed off the retail sector's disappointing december sales with the best holiday quarter in a decade. taylor: a bellwether read for the u.s. economy as well. fourth quarter numbers beating on the top and bottom line, reiterating their 2020 forecast and raising their dividend by $.63 a share. let me go through the numbers for you. 3.6% --store sales up being dragged down by walmart brazil. within the gross margins,

shifting through their income statement, we did know their gross margins were expected to contract a bit. we knew that in the fourth quarter during the holiday sales they had fierce competition in the toy sector. that kept prices high and promotions high as well. something that might be pressuring the margins. alix: i was waiting for those margins. coming up, more on walmart's best holiday quarter in almost a decade. chuck. break down with this is bloomberg. ♪

david: walmart posted strong numbers this morning. it's best holiday quarter in almost a decade. the company beat on the top and bottom line and reiterated its full-year sales -- joining us

now, chuck grom. he maintains a $100 price target. strong news across the board. what led the way? foremost, u.s.d 4.2%.tore sales went up or . benefit, theytep would have been up 3.8%. gross margins were stronger-than-expected. e-commerce up 43%, helping the comp by closer to points -- close to two points. david: is this a rising tide that overall retail sales were up? are they doing a better job with the investments they made or is the retail consumer in better shape than we thought?

you go back and look at what target said about the holidays last month, there were a number of retailers that reported very healthy same-store sales. the number from the senses last week were confusing -- the numbers from the census last week were confusing. this is a rising tide type of situation. intoustainable is this 2020? have ahy don't you higher price target? chuck: we will look at our numbers today as we digest for 2019. walmart did back the guidance they provided. in terms of the rating, we prefer other names that benefit from the trend here in retail, particularly the dollar stores,

dollar general and dollar tree. the stock is trading at 20 times earnings. with little earnings power, it's a bit expensive for us. 2019, how mentioned we look forward to the rest of the year. year-over-year comparisons will be more favorable on the investment. chuck: i think there will be some margin benefits in 2019, particularly once you get into the second quarter from falling diesel costs, transportation headwinds have been significant for retailers. and labor, obviously. throughout much of last year, these companies recycling that. -- thesecling that companies were cycling that. e-commerce is something we will be focused on during our 8:00

conference call with management. alix: chuck grom, thank you very much. share? still market steal market share? coming up, bracing for risk. warning signs flashing for hsbc after the company's fourth quarter missed. how that bleeds through into central-bank action all over the world. 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. alix: this is "bloomberg daybreak." happy tuesday. the markets, a softer day across the board. a stronger dollar. europe lower, european stocks down .5%. european banks hit over 2.5%.

it dollar continues to take stronger. euro-dollar down .2%. the cable rate goes nowhere, although apparently, we will have people leaving the labour party and tory party. there's still no deal. honda considering the closure of a plant in 2021. 2-10 spread continues to steepen. .8%, right around a three month high. you have nigeria elections, venezuela still a question and saudi exports falling. all of that helping to boost the sentiment there, even though we are seeing a bit of risk off in the market. 2015.id it in 2011 and david: it was not pretty.

time to get an update on headlines outside the business world. viviana: bernie sanders is running for president again. the independent vermont senator announcing a second bid for the democratic presidential nomination. in 2016, he upended the party establishment by making a stronger-than-expected challenge to hillary clinton during the primary. today, trade talks resume, this time in washington. president donald trump describing last week's negotiations in beijing as very productive. there are still key differences between the two sides. the u.s. is threatening to boost tariffs on chinese goods if there no deal by march 1. president trump is open to pushing back the deadline. time is running out for theresa may to get parliament to support her brexit plan. negotiators from the u.k. and european union are working on a new legal test for the most contentious part of the deal.

the hard stop plan for the border -- theresa may believes she has until february 22 to get a better deal. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. david: hsbc reporting disappointing numbers for its fourth quarter, blamed in part on the equities selloff. the stock is down as a result. we welcome ed robinson from london. let's go to the fourth quarter. the book downget fast enough given their fallen revenues. >> revenue gains compared with cost increases, that was -1.2% for the year in 2018. in 2017, it had been plus 1%.

that was a new low for john flint. he has promised to turn that around this year. david: the chairman said things are really unsettled going into the new year. there are more risks to global economic growth than this time last year. we remain alive and responsive to all possibilities. >> it is a statement of reality. is divided hsbc, it between the u.k. and asia. you have brexit here at home. they have a lot of headwinds they hadn't anticipated. that has a lot to do with the trade conflict between the united states and china. near-term hsbc's future is predicated on chinese business. the belt and road project, the hong kong economy, even the move to lower carbon economy.

hsbc is going after business on that front. that's what tucker is referring to. they didn't expect a lot of resistance there. set, jay.l with us on you had central bankers over the weekend sounding much more dovish, especially mr. kuroda at the boj. the ecb sounding more dovish. justified? jay: i think we are on the cusp of a global easing cycle. it will be led by the emerging-market central banks, which last year were raising rates to protect their currencies. there's room there to cut. we will see it in china, we've already seen it in india. brazil and turkey, there's room to cut. developed economies, the central

ares in japan and europe open to the possibility that they may have to do more. the rest of the world is slowing. the u.s. is also doing the same. we are slowing behind. we are on that cusp, the turn. hsbc,, when i think of ag the news doesn't have to get better, it just has to get less bad. alix: i'm glad you brought up em. hsbcd that monster rally, and bank of america saying you may not want to buy into it. if any hawkish nest comes out of comes out hawkishness of the fed, the dollar will hike. jay: it strengthened because of news out of the rest of the world being even worse.

if we are on the cusp of a turn and we see bottoming in china and europe, that situation reverses. those markets will do better. in terms of the em, we had a big move -- i wouldn't be an aggressive buyer here. , youall this dovishness look at peripheral debt in europe, that is very strong. that is helpful to italy, spain and greece. david: what is going to cause the turnaround? you've been emphasizing the need for demand. central banks can't create demand. jay: they can't. we focus so much on the manufacturing side. manufacturing is 10-20%. consumption is 65-70%. there, the news is much better. we have record low unemployment,

pretty strong wage gains. wage gains in europe are up over 4%. i think there is room if you can ay from all the negative headlines. to me, it's not a question of are we going into recession. it is a deceleration of where these economies can grow given productivity, given demographics. what will keep us from going into recession? the demand side. it is through the consumer, through consumption. david: if you look at europe or the u.s., you see unemployment at record low levels, wages going up gradually, and yet, we see the slowdown in gdp growth. how do you square those two things? jay: it is on both sides of the

atlantic. the service pmi's are stronger. that is what's holding us up. tension as the hsbc chairman noted. there's a lot of tension around the world. decidingou are a ceo whether to invest in a plant or a consumer deciding whether to buy a big ticket item, both of those are like, well, i'm not sure. i don't want to put down that big money. for me, the key is the consumer. we are focused on it in europe and asia and the united states. to us, that's what's going to make a difference. we are finding opportunity in places like europe and japan. i was just down in florida for the big etf conference. crickets in terms of talking about europe or japan. emerging markets, a ton of interest.

europe, japan, zero. alix: if you look at the german investor surveys today, there confidence -- their confidence in the future outlook not so good. you can see china is the yellow line. does that mean you need to buy small caps, not international stocks? in: we are focused on x u.s. particular and more developed markets x u.s. alix: they have to have exposure to their consumer or the chinese consumer, asian consumer? what is the best? jay: in europe, the consumer discretionary trades at half the multiple. opportunity in terms of valuation is still in the balance. we are more on the opportunity

side than the trap side. when we get that bottoming and investors can see the trade deal, take that uncertainty off the table, bottoming in china growth and european growth, you will see good performance on some of those markets. david: thank you for being with us today. coming up, a new agenda for washington, maybe. bernie sanders announces his run for president as elizabeth warren proposes a new tax on the wealthy. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." and stern paul romer, hool -- nyu stern professor of economics. full-year sales growth beat yogurts and drinks recovered in europe. delta airlines and u.k. discount carrier easyjet may take a stake in the struggling italian airline. the two may invest as much as $462 billion. delta and easyjet could own up

to 40% -- the rest would be byed by companies owned italy's government. its 2500lans to close u.s. dollars by the end of may. that's your bloomberg business flash. alix: we turn now to wall street beat. pre-brexitonda's exit. citi brings in the robots. that ceo --ggests the ceo suggests hundreds of jobs at their call center could be replaced by machines. elizabeth warren proposing a tax on the wealthy. david: joining us now, peggy

collins. let's start with this honda plant. the fourth biggest auto plant in they are saying it's not just because of brexit. peggy: brexit is causing uncertainty. particularly a more vile volatile currency. they have seen slowing sales in the u.k. in europe way while -- for a while. they are trying to pivot to electric are making. trying to pivot to electric car making. david: the u.k. says we will just import them. peggy: we are seeing these tariff war is all over the place -- wars all over the place.

we are seeing a lot of the turmoil in the automakers overall as they try to adjust to this changing landscape. stands -- the sedans are being phased out. alix: the good news, they can still trade derivatives in london. that is pretty good for the financial industry. peggy: they do love their derivatives. alix: our second story has to do with michael corbat. he basically said he could cut tens of thousands of the u.s. bank's call center jobs. automation and the jobs around automation have been targeted towards things that are repetitive. certain amount of people you expect to call up,

you can program the natural liquid processing to deal with that -- language processing to deal with that. he said part of the reason we are not anticipating doing anymore m&a, we have scale, equal to target technology already. i would not have connected those two things. part of it is i think i can make more money, i can increase my margin by using machines. i don't need to buy another company. peggy: the banks are saying technology will enable us to continue to grow. that also involves getting technology to work really quickly. alix: i can't tell you how much i hate automated services. david: you cannot find a person.

i don't need any of those options. alix: good fodder for the 2020 democratic presidential portion. we knewlizabeth warren, she had tax plans, taxing wealth -- now, she wants to have universal childcare, which is not a terrible idea if we can afford it. peggy: she's been writing about this issue for years. one of her first books in 2003 -- this whole issue of the middle class, one of the things holding the middle class back is this shift to two income average of it's an $1400 a month ofor families which is a huge

expense her number. for thewealth tax is $50 million. people set the number in lots of different places. last timenie sanders was all by himself in that position. now, he's got elizabeth warren, a lot of people it wit with him. alix: she's been doing this for years. theories, asthese well as bernie sanders. david: childcare could improve -- it could be progrowth as a practical matter. we are seeing a lot of states and cities shifting to pre-k. publicly funded pre-k. we will see. more withwill discuss dr. paul romer.

coming up, more on that bernie sanders announcement and what he thinks of the current occupant of the white house. the democratic candidate pulling no punches. this is bloomberg. ♪

david: this is what i'm watching. bernie sanders has joined the race. with more, marty schenker joins us now. not a big surprise. marty: he was expected to jump in and he did this morning on vermont public radio and then on cbs this morning. about he went on and on the president of the united states. he called the man an embarrassment. marty: that is a narrative that is pretty common among the democrats. bernie sanders is a self-described socialist. thinkings definitely

that's a winning issue for them in 2020. david: he said these are the things i believe in. an increased minimum wage, single-payer health care system. a lot of those principles he espoused last time and seemed almost extreme. marty: it is rather extraordinary in the space of two years what were considered theeme positions are now mainstream narrative of many of the democratic candidates. david: what net effect does that have? does that move the entire national discourse in that direction or isolate the democrats? marty: a lot of these things are pendulum swings. when the pendulum moves all the way to the left, there may be a move toward the center, which is

good news for someone like amy klobuchar. it does seem increasingly that the left decided the democrats are all trying to reach that sweet spot of the electorate that can defeat trump. i don't know if they can get their. -- i don't know if they can get there. that is where the discussion among the democrats gets to be really interesting. a lot of these ideas you mentioned earlier are probably good ideas, but how do you pay for them? the tax cut donald trump executed was what the right thought was a great idea and they just did it. the democrats could do the same thing. isid: at the same time,

president trump enjoying this thoroughly? marty: oh, yes. he will bang on the whole socialist notion. he's doing that at the same time they are planning to appropriate private land and our southern our southern border, which seems like a socialist idea. principal.e gop it is going to happen on the southern border if he wants to get that wall built. this will play out in the courts, like donald trump predicted, and probably get to the supreme court. david: many thanks to marty schenker, our chief content officer. alix: coming up, the morgan

stanley chief u.s. policy strategist and ubs asset management head of u.s. intrinsic value equity. market off the lows of the session -- the european banking sector getting no help from hsbc, down 1.5%. in the market, the dollar stronger against most currencies with the exception of the cable rate, flipping into positive territory. crude moving on its own fundamentals on this risk off day. this is bloomberg. ♪

alix: walmart crushes it. the company delivered its best

holiday quarter in years. flying in the face of unprecedented drop and retail sales. -- in retail sales. europe bows retaliation for u.s. auto imports. --ren's childcare plan europe vows retaliation for u.s. auto imports. we speak to dr. paul romer. david: welcome to "bloomberg daybreak." president trump tweeting out about this lawsuit that's been filed by 16 states. it got filed in the ninth circuit in california, the state that has wasted billions of dollars on out of control -- not sure how those things connect. not directly talking about elizabeth warren or bernie sanders, but how the stock market would be down 10,000

busy day in the white house for donald trump. s&p futurests here, off the lows of the session because of walmart. stella numbers came out. -- some sayweaker should be even weaker considering the data that's come out. didgerman investor survey see future optimism. a positive silver lining for europe. the real action is selling over in italy. that.eld moving higher on crude up .9%. right around the 200-day moving average for brent. brent andigeria, venezuela and-

saudi exports falling. negotiations -- wednesday, the federal reserve releases the minutes of the january meeting. on sunday, berkshire hathaway releases its annual report and warren buffett's annual letter to shareholders. walmart reporting its best holiday quarter in a decade. taylor riggs digging into the numbers. taylor: key crucial holiday sales rate -- they are the largest private employer here. fourth quarter beating on the top and bottom line, reiterating their fiscal year 2020 forecast -- three things i'm looking at. same-store sales, you can see an

increase of 4.2% in the fourth quarter. 2020, still year looking for 3% sales growth. being dragged down by the walmart result operation and the reduction in tobacco sales at sam's club. walmart brazil operation and the reduction in tobacco sales at sam's club. you do need to start to see that growth really pick up and boost the overall increase as a percent of total revenue. one of themargins, toughest income statements have had to read. is what i'm coming up with, a beat for full year 2019.

i was looking at a drop of about a full 1%. you're getting a lot of fierce competition from the toy sector keeping prices low and promotions high. david: china is not the only trade issue for the united states. yesterday, president trump the --dings he had asked for president trump the findings he had asked for. >> look, we are proud of our cars. these cars are built in the usa. in south carolina is one of the biggest bmw factories. not in bavaria, and south carolina. south carolina delivers to china. suddenly, united states national security startles us. ,avid: we welcome michael zezas

morgan stanley chief u.s. policy ,trategist, and thomas digenan ubs asset management head of u.s. intrinsic value equity. let's talk about with the practical effect of this report what the's talk about practical effect of this report is. >> the report has been transmitted. under the law, the president has 90 days to act. summer, the u.s. will either execute these tariffs or not. a lot of negotiation has to happen with europe on many complicated issues, including agriculture. if the u.s. gets frustrated, our concern is one of the learned behaviors of this administration from the development of the china talks is that tariffs can be a compelling way to get the

other side to the negotiating table. david: the president originally talked about 25%. michael: so far, that report has been made confidential. obviously, the effects of audit tariffs --auto that's something the consumer is immediately affected by. alix: we can see your estimations of the effect on sales. pretty stark. what do you do with that? is this a buying opportunity? thomas: you have to look at the valuations. you have to look at the u.s. automakers and see how they repositioned to the extent that they've moved out and reduced their exposure to europe.

they had large european businesses that traditionally lost a lot of money. alix: on the flipside, though, you see a lot of european automakers still heavily invested in the u.s. we have a bar chart that shows the cars produced in europe, sold in the u.s. jeep has sold quite a lot here in the u.s. do you have to invest with this kind of template? thomas: how is this going to play out? it is hard to determine. think back to what we've gone through with china. neither side benefits from these tariff war's. merkel is correct in saying it is not rational to want to put a tariff on cars that are built in south carolina and sold in the united states. it's one more bargaining chip, one more ball juggling in the.

-- in the air. david: it's not just trade. there's issues with emissions and brexit. is the market overreacting? michael: i don't think we are overreacting. this is a wide concern. it is very difficult to call at this point if you should have 90% conviction this will happen. markets are right to react to that. the reason we have a little less , here, there this is a potential political circuit breaker. a couple bills going to the son could take back this tariff authority from the president before it is put into place. i don't think this will happen -- thant becomes more it already is.

alix: let's pretend something goes into effect. 25%, how long does that stay? a bigl: this would be enough negative shock economically and politically in terms of markets that it would resolve itself pretty quickly. the same dynamics that helped push the u.s. and china closer , the immediate effects of this would be quite sharp. that would motivate both sides to come together. the political landscape is less permissive in the u.s. you have foreign automakers operating in states with republican senators. you have the notion of china is economic rival and

europe is our ally. whether or not you can rush legislation ahead of the there wouldaction, be a higher probability that you would get legislation to push this back. david: to what extent will this affect trade? to what extent do you take that into account into your investment recommendations? thomas: it increases the discount rate, your level of uncertainty. investors don't like uncertainty. cfos don't like uncertainty. whether it's the discussions with china -- you will see a pullback in planning capital expenditures because it's hard whenke a plan and invest there's uncertainty around what the rules will be. david: michael zezas and thomas

digenan will be sticking with us. the year of the dove? central bankers around the world suggesting they may be willing to back off on monetary policy. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." twitter is taking steps to stop russia or others from meddling with european elections. warned techthe eu .ompanies to step up

honda confirming its plans to close its factory 80 miles west of london. they employ 3500 workers. it will close in 2021. on saying it's making the move as it speeds up its commitment to electric cars. designer carl lagerfeld has died. outdesigner turned collections for fendi and his own label. he had been ill for several weeks. react to aal bankers loss of momentum in the global economy. this is the oecd leading indicators for china and the u.s. and europe. china is the yellow line. still with us, michael zezas and thomas digenan.

thomas, if you take a look at that chart, the reaction has been go by emerging markets. does that make sense to you? thomas: it does. the banks are in an easing process. there's a reason the banks are using. -- easing. it's interesting, for u.s. investors, there is tremendous opportunity. we are in a low interest rate environment. alix: how long will that last for? mr. kuroda today talking about there is more potential easing from the boj. you have bill dudley talking to us about inflation being a target. michael: we tend to agree that em is your best opportunity within equities at the moment.

motivated? being if you're looking for the fed to become more dovish, there's plenty of economic data points to get you in that direction over the course of the year. we tie this to the downside of fiscal stimulus. got $1.5 trillion worth of tax cuts relatively frontloaded. that was a very traditional stimulus. now, we are coming down off of it, it has created these procyclical incentives for companies. on top of the normal downdraft you have to growth, it increases the downside risk. it's not surprising to us that the fed took a dovish turn earlier this year. the incentives might get stronger. david: a bit of a dovish turn might be an understatement.

priced in theket fact that the fed is not in a big hurry to raise rates? --y're still upside in em there is still upside in em. thomas: multiples are not where they were a year ago. you had a rally the last six weeks that is still not back where it was given the earnings growth we've seen in the u.s. em is a longer-term plate. to the extent you think the fed will do another 180, you might want to be cautious. the timing is unlikely. we can continue with fairly good economic strength without a fed tightening. they don't want to be too far on the other global easing and we expect to tighten and the dollar strengthens. david: to what extent are the markets anticipating a china

put? they are counting on china coming through with stimulus that will reignite growth. thomas: i think there is a bit of a china put out there. investors look at china as a controlled economy, they can turn it on. you have to be cautious. alix: when you talk about the impulse from the fiscal stimulus, what will it take to see more fiscal stimulus globally? obviously, we've already started seeing it in china. it's hard to predict how the euro region reacts to their own economic downdraft. in the u.s., you would need a much more significant and sharp economic downturn. in the short term, the rate hope

is infrastructure spending and whether it be the shutdown or tweets this morning, all this telling you it's not a great environment for bipartisanship. there's serious disagreements on both sides of the aisle, how you get an infrastructure package done. you probably have to wait until the next cycle to get anything . david: michael zezas will be staying with us. -- estonia said we would like you to close your operations here right away. they will not have a real bearing on their guidance for 2019. this is where there was the awful money laundering scandal.

bank has responded, saying they will close in all the baltic states and russia. alix: how does that not affect the 2019 outlook? david: not entirely unexpected. alix: not at all. walmart givesup, retail a shot in the arm, posting remarkably strong fourth-quarter results. this is bloomberg. ♪

david: time for the bottom line. first of all, softbank. investors -- two

displeased with how softbank is investing their money. it's almost two thirds of the ownership of softbank. alix: maybe you should listen. david: it is serious business for softbank. alix: i'm looking at blackstone and targa resources. blackstone buying a 45% stake in targa resources. you've seen equity very active in this space. the trade has been to buy some midstream assets and partner with a midstream partner to get paid on that. you have oil, you need to get it out, you pay a toll to midstream operators. blackstone operates their own gas and oil production. i don't know if they have it close to where target winds up operating.

operating.nds up this is not new for the private equity space. david: the third company we are watching his walmart. walmart.-- is for more, let's start with walmart. comparableong same-store sales. they've maintained their guidance for the coming year. we got disappointing december retail sales numbers. that left people scratching their heads. this is a reiteration of the imbalance. sales, with such strong such strong commentary, raising questions about the december retail sales. we have macy's, nordstrom in the coming weeks. macy's has made some comments that sales in early december

were sort of disappointing. i wonder if that was driving the weight of that disappointing resales -- retail sales number. david: the longer-term story is online and the progress they are making with respect to amazon. >> they have emerged as the champion of the old school brick-and-mortar retailers taking on amazon. they were in line with analyst estimates, really strong. he saw a bit of a takedown and the profit margins, which goes hand-in-hand with expanding online. alix: the ceo talking about the e-commerce business. we need to make more progress and profitability. we are on it. so far, it feels like it's working out in the shorter term. 2019 guidance was short on

the sales front, looking at a 1-2% sales growth this year. that signals a slowdown from last year. this is more reflective of the slowdown we've seen in autos. you've seen that show up for industrial companies. the demand is not as strong as it once was. that is coming out of china. advance auto parts is more geared toward the consumer. a bit of a softening here. romercoming up, dr. paul on taxing the wealthy. this is bloomberg. ♪

alix: this is "bloomberg daybreak." happy tuesday. a little bit of a risk off field digesting earnings and a possible part tariff between the

u.s. and the european union. walmart holding on to gains despite the call going on right now. european banks getting hit. hsb disappointed, warning of a more stressful global climate. that not helping the sentiment within the banking sector. in other asset classes, a strong dollar story. the data keeps getting worse. italy industrial production was down. survey from germany, current conditions keep getting lower. if you look further out they feel little bit better. the current situation stressful for investors. a little bit of selling in italy in the btp market but otherwise calm in the bond market. update one for an

what is making headlines outside the business world. they got a hurtado is here with bloomberg first word news. viviana: trade talks between the u.s. and china resume in washington. president trump describing last week's as very productive. if there is no deal by march 1, the u.s. is threatening to boost tariffs on chinese goods. president trump has said he is opening -- open to pushing back the deadline. negotiators from the u.k. and -- theopean union backstop plan for avoiding -- between the u.k. in ireland. advisors for theresa may believe she has until february 27 to get a better deal before lawmakers vote to take control of the process. bernie sanders is running for president again. the independent vermont senator announcing a second bid for the democratic presidential nomination. bernie sanders is 77. party5 he upended the

establishment by making a stronger-than-expected challenge to hillary clinton during the primaries. >> i am going to run for president. >> what is going to be different this time? >> we're going to win. we are also going to launch what is unprecedented in modern american history. tot is a grassroots movement lay the groundwork for transforming the economic and political life of this country. that is what is different. 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. david: thanks. senator bernie sanders announced this morning he will make another run for the presidency, adding one more democrat to the mix who believes we need to ramp up taxes on the wealthy. it is time to consider what any of these proposals would mean for the economy. we welcome a leading economist to studying the productivity

that drive growth. of themer's director institute for urban management prize in018 nobel economic science. you heard senator sanders say it is time we transform the economic life of this country. what any of these proposals increasing taxes transformer economic life? paul: it is probably good to start with the basics. how much total taxes government going to collect? who pays whichis portion. a lot of the discussion is about adjusting how much different groups pay. the democrats are saying the rich should pay more. there is some suggestion that there are ways to collect more total revenue and do new things. it is probably helpful to keep those separate. the debate is about who pays or what we want to do with some additional revenue? david: let's start with the

basic division. we put up a slide with elizabeth warren saying let's tax wealth. not income, wealth. $50 million and above. saying we have to substantially increase the marginal rate on income up to 70%. in history, those things have been tried. do they affect the economy in different ways? inl: one of the problems this debate is people who are thinking i do not want people like me to pay the taxes, i want somebody else to pay the taxes will prevent arguments of the form it is better for the economy of those guys pay taxes. there is a lot of discussion about this will boost growth or that will boost growth. we have to discount most of that. the levels ofin total taxation and the way you collect taxes are not closely associated with wage growth -- with growth in the economy. a nationte is how as

arrange itself so everybody feels like they have a stake. right now, correctly or incorrectly, many people feel like they are getting left out. they are not getting their share. their operatives of bidding in the benefits the economy offers so the question is how do we address that? for growth, there are other ways to get at that more directly. david: what about the blunt assertion that say if you text me at 70%, i will not work as hard. paul: the evidence does not support that. most of the things that drive people to go to work are the intrinsic satisfaction, the sense of accomplishment, the meaning they derive from work and the sense that i need to get ahead of you because it makes me feel like i won. response,abor/supply you will stop working if you're not being paid as much, the data does not provide evidence of that. iix: i was type a even when

worked as a paralegal. paul: i believe that. alix: what about the proposals of -- if you're going to bridge the income he quality gap, is that the kind of thing that would work? paul: this discussion of the buybacks is a response to we tried this with taxes, we did not get what we were promised so we will try to add another band-aid. i think it would be better to step back and say this is a fight about who pays how much, but what is an efficient system. if you're unhappy with corporate finance, the fundamental problem is we give an incentive for firms to take on too much debt. we want to address that problem, and we should go at that directly. restrictions on buybacks are probably a band-aid on top of a band-aid and not likely to achieve what people want. morgan stanley public

policy analysis still with us as well. .his is the underlying economic if you take a look at what the world will look at in 2020, are we into a populist socialism world regardless? >> i do not think you have to put the word socialism on it, but populist is a good way to look at it. there is a lot of evidence piling up that when it comes to the benefits that investors and corporations were to get from tax and fiscal policy, the best days are behind you. if marco rubio is proposing tax changes and the democrats are proposing a variety of tax changes their is an argument to be made that the ark of tax levels might be upward. that is one side of the ledger. our best cases that is what has happening. the 2020 elections will be interesting because we also want to see if the dynamics and norms around spending will change. the one thing that is less talked about is there a lot of

big social spending programs being pushed on the democratic side. it is not talked about that they want to be fully paid for. this will stimulus, i do not see you will see more of that between 2020. 2021, the process of the primary starts lifting up more deficit friendly policies. david: it is not just a question of who you tax but what you do with the money? we have elizabeth warren saying my tax on the wealthy, i were used to have universal childcare. is that the sort of big government program that could improve growth and productivity? paul: when you look at history and say what things have mattered, big commitments to education for everyone have paid off extremely well for the nation. they paid off in both senses. we get more average income, more growth, also a reduction in income inequality.

i think it is smart for us to be thinking about how can we best spend our resources on education. we should not going to this blindly and say more money will pay off. isneed to look carefully this type of spending paying off , and if not how to we tweak it and get more out of it? has been in education the constant policy in this nation since it was founded and when you keep pushing on that. david: there is a question when it comes to education in this country. federal level, state level, local level. historically education has been much more local and not federal. has federal spending been affected? paul: we have this instinctive idea we do not want the feds to control things but we need to look at that objectively. one of the things we see is that poor families move a lot. if all of the schools are following the same curriculum, they can move to another state

and they will not find themselves completely at a loss. there can be some advantages to some coronation in this educational process. alix: what would be the stomach in ec for some kind -- in d.c. for some kind of financial support for education? michael: i think we're about to learn that. we have a lot congress at the moment. part of the lees and -- part of the reason we have elections is we can decide what we want for ourselves. these social spending issues, education being one of them, democrats in polls tend to have the high ground. the question is how far do they want to push it, which is a function of which candidates are going to rise up. on that debate stage, when someone says they want to push a very ambitious social spending program and someone pushes back

and says how we you pay for it, if that person does not fall in the polls that tells you something about what might, after 2021 in terms of fiscal spending, education whatever you want to fill the blank with. right now we think you have the best you will get from fiscal policy to markets to maybe 2021 characterizes another ramp-up. david: one suggestion bill gates has made is there should be more tax on wealth, estate tax in a capital gains tax. he thinks it should be treated the same as ordinary income. does that increase capital formation? paul: we agree we need revenue. there are different ways to raise it. how much damage does a particular tax do? we want to look at one's to look at once it did not cause evasion or wasted effort. wealth or on taxes on taxes on gains in asset values, it is worth looking objectively

and saying what would cause the least damage given the amount of ?evenue we want to attract separate this question about efficiency and growth from the question about who should pay, is it us or is it them. easyucation, and makes it to say we will get more money from those guys and here is how we spend it. we should focus on making people say if you could spend it on infrastructure, or education, which do you think is better? that trade-off is going to better focus our thinking then saying we will spend it on both and get it from those guys. david: many thanks to paul romer and michael's a this -- michael zezas of morgan stanley. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." coming up later on balance of power, bill welsh, former governor of massachusetts and former libertarian party presidential candidate. alix: wal-mart posting strong numbers this morning. the company beat on both the top and bottom line. 3%. stock up almost the cfo speaking on the call, saying there is still uncertainty in the macro economic climate.

joining us from washington is sarah housing, bloomberg opinion columnist. your biggest take away from this? sarah: the most important number was though growth and e-commerce. when walmart reported holiday results, it's shares have their worst one-day dive since 1988 and it was all about that e-commerce number. it had slowed because they struggle with these operational difficulties. the fact that they were able to get back into gear and a liver these 4.2% increase in comparable sales, that is a well mounted dutch a well-rounded report for walmart. alix: is it sustainable? sarah: there are head winds they will have to contend with. the china tariffs. thendia, where they made $15 billion acquisition, there is a new regulation that could

show growth in that market, and the u.s. consumer, also uncertain signals. ghastly december retail sales report from the commerce department that suggested the consumer is not as upbeat as they were a couple of months ago. walmart will have all of those difficulties to contend with in the year ahead. it is facing them from a position of strength. alix: thanks so much. david: time for follow the lead. a deep dive into stories making headlines. today our focus is on india's e-commerce crackdown. the indian government implemented new regulations which walmart says could affect their business in the country. byare joined from washington the federation of india chambers of commerce and industry usa director. thanks for being here. explain what these new

regulations have to do with e-commerce in india and why were they adopted? >> the e-commerce business was based on a marketplace economy. because of the surge of internet users from 450 million in 2017 to 800 million in 2020, there was a surgeon e-commerce and in -- the government came into regulate the model. -- there was a surge of companies coming in to make that investment. december of last year the government came in with a further definition of what they andt by marketplace models prohibiting inventory-based e-commerce. that means there is a certain amount of disturbance in the existing business model for e-commerce companies. i think the other view is that

the e-commerce industry in india is growing so rapidly the regulator and the regulated are learning off of each other, involving simultaneously. the benefit is for the consumer because the regulator wants to make sure the consumers not coaxed into buying something online and the e-commerce giant wants to make sure the consumer gets the maximum choice. we are focused on the united states because of the e-commerce moving into india. to these apply equally to domestic companies? we heard amazon had to take a lot of products off-line. is that true for the native indian e-commerce companies? i think the regulation is trying to make it a level playing field to make sure how are consumers

getting affected? i think the jury is out on that. the statistics six i gave you on , the surge of internet users, all of that, e-commerce constitutes just 2.5% of the retail trade in india. projected to be 5%. saying the consumers might get affected, the economy will come down, i think it is a stretch and it is yet to be seen how it will affect. foreign you're a company like amazon or walmart europe already spent billions trying to access that e-commerce area. is that going to continue to be a good bet or do they need to rethink the strategy? ridhika: i do not think it is a .ad bet

ages evolving, it is growing. i do not think it is a bad bet. -- asia is evolving. it is growing. i do not think it is a bad bet. david: the battleground over digital and india. we have china and the u.s. battling out in india. ridhika: that is a space to watch out. most of the text giants from america set up their outpost .ith the brand names amazon or apple or netflix or google and so on. how the chinese would make investments in india is through portfolios and venture capital. the consumer would not know the umbrella company is a chinese company. is uc,, which is a black -- a browser from alibaba comes installed as a

default. that influences the consumer behavior. market share in india is 51%, compared to chrome which is 30%. is 16% andindia uc chrome is higher. alix: thank you very much. coming up, we look at the crisis in venezuela. how president nicolas maduro and richard branson are holding dueling concerts on the colombian border. this is bloomberg. ♪

alix: here is what i am watching. venezuela. we heard from president trump over the weekend. here is what he had to say. >> they are turning the page on socialism, turning the page and dictatorship, and there will be

no going back. [applause] basically doing the same thing on twitter, saying there is no going back, turning the page, etc.. he also points to the military to stand up to president maduro and get involved. david: you have to wonder how long the country can keep going. you hear such horrific stories about the lack of food and medicine and treatment. it is a terrible tragedy. alix: and president maduro calling on venezuela to reject what president trump says, military do not listen to him. president trump has pointed out that 50 countries are recognizing a different government. alix: and we have dueling concerts. david: remember live aid raised a lot of money. branson -- a concert on the colombian border. alix: versus on the venezuelan

side. david: president maduro decided to have a concert on the other side, maybe on the bridge or they haven't blocked. they will have dueling concerts. alix: that is exactly what we need in venezuela is dueling concerts. excellent. still watching that, as well affect on oil, particular with nigeria and that election. that wraps it up for bloomberg daybreak. bloomberg markets the open. risk off continues in the equity market. this is bloomberg. ♪

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

jonathan: coming up, u.s./china trade talks resume in washington. deputy level meetings today. higher-level thursday. europe the next battleground for friction with the trump administration focusing on european auto. and the slowdown sounding alarms in the ecb. from new york city, it is tuesday morning. good morning. with the countdown to the open 30 minutes away, futures are negative .33%. the euro dollar just south of 1.13 and treasury yields coming up does go basis points to 2.64. it is feeling like groundhog day . another week with trade talks front and center. >> hard to have a clear production. >> big uncertainty is what will come out of the u.s. administration. >> if you talk to the american