parliament, where she will announce a brexit delay. neutral powell. chair jay powell the next to weigh in on the semiannual testimony to congress. the ftc is holding elon musk and contempt for violating a settlement when he was ordered to get approval for his tweets. david: welcome to "bloomberg daybreak" on this tuesday. is president trump going to hold janet yellen in contempt? alix: i've never heard of nx fed ex fed chair calling the sitting president stupid. oh, myit and i was like, god. she really ripped into him here. david: it doesn't help that

presidenting the going after her successor. wait a second, mr. president. you are the one to tell jay powell how to do his job? alix: the rally we saw yesterday, that is taking a break today. there was the conversation the s&p was an overbought territory. regulators iny, china warning on margins. pound atight is euro the highest level since may of 2017. sterling is just ripping higher here as we head into theresa may talking to parliament in 30 minutes. yields pretty much went nowhere. crude flat after taking a beating yesterday. david: time for the morning brief. jp morgan investor day gets underway in new york city.

they will lay out their 2019 guidance for analysts. then we get building permits for the month of december. then jay powell testifies before the senate banking committee. at 1:00 this afternoon, the u.s. treasury will sell seven year notes. now, time for bloomberg first take. we are joined by peggy collins and the bloomberg cross asset reported. let's start with brexit. saying again may and again we are not going to delight, now, she is saying maybe we will delay. the pound shot up against the dollar. peggy: this is a last-ditch effort in terms of trying to keep her own party together.

there is some consensus in europe that this could be a good thing. do they delay to the end of this 2020?r to the end of it's a lot better than talking about the possibility of a no deal brexit. in the end, it all works out for a net positive. what strikes me is how much this plays into the possibility of a china reflation, dollar down story. 6:15, we are getting all these brexit headlines and rumors, the bloomberg index weakens with the euro over that period. it helps the global economy more than the u.s. economy. it may make it more difficult for companies already trying to figure out, do we move out of britain, do we not?

alix: all those car companies h,at left because of brexit, o just kidding, we moved because of the global slowdown. it doesn't get better with time. we've spent a lot of time negotiating already. go another year or two years. why will they be able to fix it then? peggy: the law of unintended consequences -- when they keep delaying, that heads off any real negative consequences to people being able to travel around europe. alix: our next topic, jay powell testifying today in front of the senate. here's the chart we will focus on today. lower rates in 2020.

this is march of 2019 versus 2020. are not saying we pricing enough cuts for 2021. >> that is something i haven't heard lately. they will are cuts, potentially come in earnest. react, evenling to in terms of just dialing down the expected tightening for this year, which has been akin to using. is jay powell setting himself up for some real problems are here? he is to dovish, the markets -- too dovish, the markets will be disappointed. peggy: one of the key things he needs to do is keep pressing upon people that he's looking at the data as yellen did. alix: what are traders going to

be looking at over the next 48 hours? the lot of these times, questions are more political in nature. traders will be latching onto some elements -- the pushback against unicredit thesis and market pricing. the first to hop on the policy -- he has reintroduced the idea of hikes this year. the minutes also did so. jay powell may be trying to straddle the divide between people who think inflation is necessary and those who think as long as we don't fall apart, we can hike more. david: stay with bloomberg for full coverage starting today at 9:40 this morning eastern time. our third story, our favorite story, tesla and elon musk.

out tesla madeed zero cards in 2011 -- cars in 2011, we will make 500,000 in going to theec now court saying we have a consent agreement, we would like you to hold him in contempt. the stock price went down on the news. peggy: he came out with that tweet and then try to walk it back. it shed some light on the he was last week -- ordered by the sec to run each tweet by someone with insight and the firm -- inside the firm. >> he comes out and says nobody is monitoring or looking at my tweets before hand.

some mistakes might happen. i guess this is a mistake that happened. when the stock was downgraded to neutral, he says it's not investable because of these management issues. david: this is not an eighth grader misbehaving in middle school. they have a board of directors. they made an agreement when the sec issued the consent agreement, he agreed to not issue these tweets. >> we should start looking at what has the board ever done to restrain elon musk? from -- favorite quote at bbo. why not just make cars? panels?ts or solar when we had that debt and convertible bond, do you know where we sit in that?

>> this is another thing i find interesting about musk continuing to wage a public twitter war against the shorts. we've seen shorts really exit recently. short interest in tesla lowest since 2014. people through in the towel that the converts would be able to be triggered. in the towel that the converts would be able to be triggered. more: that may affect them -- the model 3. alix: you can find all the charts we just used on gtv on your terminal. look at our programming online as well. coming up, more on theresa may's

brexit delay plan with mark mccormick. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." home depot coming up short in q 4. comparable sales missing estimates. the largest chain of home improvement stores announced a share buyback program. home depot raising its dividend by 32%. spencer.k., marks & confirming its in talks with oconto. london.f both rising in

carmaker quit selling vehicles in america two decades ago. the group started plotting a return in 2016 as part of the 10 year plan. ines of peugeot will begin 2026. the company trying to become less dependent on europe. it accounts for 80% of its sales. prime minister theresa may has been surveying her cabinet this morning to decide where she should be headed with her brexit plan. speculation she may finally give been -- may finally give in to a delay. how much of it is just inevitable because her cabinet was leaving her? >> she's making policy on the side, trying to avoid a

hemorrhaging of lawmakers from her conservative party. the we understand to be case is that she will offer parliament the option of a vote to delay the brexit date and a vote on a no deal option effort deal is refused by march 12. that is a significant movement from a prime minister who is insisted -- as insisted until now that she did not want to see a brexit delay. theresa has been -- theresa may has been adamant that she didn't want a vote. >> if there's a vote on no deal, it is pretty clear -- there's a small minority in parliament that would support a no deal exit. the big question now is whether

parliament will trust her to go through and deliver on this. there is an important amendment coming up on wednesday in which parliament would have a chance to take this option out of her hands to put a delay for the eu -- in a way, wednesday's vote would become a vote of no confidence in the prime minister herself. those voting for it would say we are not happy with what you just offered us. we want to make sure your hand is being forced. she feels forced into that risky move. david: do we have any sense, will there be a time limit on that delay? tusk yesterdayr. that he wants to see a long delay. onthere very different views

the length of the delay, the purpose of the delay. theresa may would be more likely to propose a short, tactical delay to get legislation in deal or implement her prove a no deal exit. want a delay, there needs to be a reason. they are suggesting a long delay, 21 months, likely to be politically difficult for may. two they reopen the deal -- do they reopen the deal, will the existing unity walk in lockstep or break apart? david: thank you for your reporting from london today. alix: take a look at euro pound.

of 2017 atsince may sterling rick perry -- as sterling ripped here. what do you do with sterling right now? mark: people are still buying it. it is an investable risk at this point. there are different probabilities, different outcomes. people are looking at a potential of a remain or soft brexit or kicking the can down the road. you are seeing the real money community starting to dip their toes back in the u.k. assets. as we get closer to the 135 level, that's when the community will start moving the hedges, reinforcing the upside. alix: interesting take that new money is coming in. sitting on that forecast for the first quarter of 2019 at 131. need to beurple line

revised up? now, thehink right market is trying to figure out the theme around brexit. it is more momentum to price action leading the forecast. as we get around some kind of investable risk around brexit, we can start looking at sterling as an asset that is not entirely driven by brexit risk. doesn'tor investors, matter how far the can is getting kicked down the road? i think it matters in terms of the way they want to present those risks. in the short run, any kind of delay is good. people want a way to assess whether or not there is a hard brexit. if you remove the binary risk of theing or leaving,

extension will reinforce the rally we see in the short run. if it becomes a 21 month or two people seef deal, this as a gentle way of easing through the status quo. the longer it gets delayed, the more bullish it becomes for sterling. david: one vote to take no deal off the table, they will not exit without a deal because there's a delay. the markets are more concerned with taking that no deal off the table, that would have more of an effect. mark: absolutely. are these investable risks? the biggest thing market participants have dealt with, the uncertainty around investing. uncertainty equates to volatility -- volatility is good, but uncertainty is bad. if we think about tail risks being removed, that allows

people to take investable risks. , aething like sterling currency that is deeply held short -- there's room here that momentum builds on momentum. alix: mark carney the poa will --vide this boe will provide mark carney saying the boe will provide all the stimulus if needed. mark: that reinforces a positive european trade in general. there is this overhang of uncertainty clouding the outlook. if you remove the stain from brexit, it gives england a little more confidence to do more. bit, risks are subsiding a offering the ecb uncertainty.

every central bank has used the word "uncertainty," whether it is a link to china or brexit or european political risks or trade. the more you remove uncertainty, the more they can move policy in a gradual manner. , chair powellup begins his today testimony dayre congress -- two testimony before congress. this is bloomberg. ♪

alix: jay powell kicks off testimony before congress today. where will he come down on the big inflation debate? minutes -- only if inflation outcomes were higher than their baseline outlook. several other participants indicated that they would view

the economy is appropriate to raise the target range for the federal funds rate later this year. turning us from capitol hill, michael mckee -- joining us from capitol hill, michael mckee. still with us, mike mccormick -- mark mccormick. michael: he's probably going to walk a middle line. out january -- powell came out january 4 with his hold rescue mission. the fed minutes suggested the fed is waiting on inflation. know,are two camps as you but there were two camps before. the people thinking they can push inflation and see how far it goes. powell probably funds that unts that-- p

question. david: often, fed chairs have gone up there not wanting to make news. where been in a situation they were anticipating rises. now, they are projecting some cuts. does he need to move the ball a bit to get it back to neutral? michael: i don't think so. the markets have said the fed is on hold through march. many people think through june. the chart you are pointing to isn't going to move around a whole lot unless there is a significant turn down. here is laughing about how much is going on on capitol hill this week. if he doesn't force them to have to trade -- alix: you are calling the dollar

based on all the other stuff that's happening. mark: there's two different drivers. right now, the fed being patient , being gradual, talking down the balance sheet, it is a sweet spot for higher-yielding emerging markets and currencies. reserve currencies, euro-yen, the major driver is the volatility sitting at extremely low levels. it's really kind of a division for the dollar. it is good for the higher-yielding currencies at this point. alix: thank you very much. stay with us for a fed coverage full fedtoday -- coverage later on today. ♪ want more from your entertainment experience?

just say teach me more. into your xfinity voice remote to discover all sorts of tips and tricks in x1. can i find my wifi password? just ask. [ ding ] show me my wifi password. hey now! [ ding ] you can even troubleshoot, learn new voice commands and much more. clean my daughter's room. [ ding ] oh, it won't do that.

welp, someone should. just say "teach me more" into your voice remote and see how you can have an even better x1 experience. simple. easy. awesome. alix: this is "bloomberg daybreak." investors taking a bit of risk off the table. increasingators oversight of the unregulated margin that.

-- margin debt. that sprinted to europe as well. the ftse under performer there, down over 1%. the riproaring higher sterling -- cable rate up 1%. you are seeing selling on the backend, yields up for basis points -- four basis points. the optimism raining in the currency market. jay powell's two day testimony kicks off today. trump's tweetent about opec -- elon musk also not this hasust tweeting now happened several times, something is broken with sec oversight. the sec finding elon musk in

contempt under the agreement that he would run his tweets by somebody in the company. he will continue to talk back with the sec. david: we turned out to washington and health care. now to washington and health care. the senate finance committee, led by chuck grassley of iowa, will hold a hearing today with top executives from seven major pharmaceutical companies. welcome chairman grassley now. it's good to have you. sen. grassley: thank you. good to be with you. david: what sort of legislation is on the table? sen. grassley: pay for delay,

the patent runs out, the brain company pays the generic company to keep their generic off the keepingor a few years, the brand price higher. the other one is to get information to the fda through the generic company from the company that has the brand name. bought, given up or however it happens, that information goes to the fda and it cuts short the time that fda has to review the drug and get the generic on the market sooner. as far as our hearings are concerned, there is no legislation planned right now but there will be legislation -- your opening comments that this is a bipartisan issue are very

correct. we hope to get from the executives today all the information we can of how they arrived at a linchpin. -- list price. that is the price that starts everything off at the higher level. then you have the rebates. you have the list price up here, the rebates in between. why isn't the consumer paying this lower price in the first place? do yourt of mystery have to have been drug pricing -- in drug pricing? we are going to get to the bottom of the secrecy to get transparency in the system so the marketplace works. really glad you raised the rebate question. when you talk to some of the drug executives you have before you today, they say a lot of

problems with these dvms -- pbm's keeping the list price of -- are keeping the list price up. are there any proposals to deal with it and eliminate those rebates? sen. grassley: i can't answer that question right now because i don't have a conclusion on that point. we want to concentrate on the list price. we do not want these executives today to point fingers at someone else is to blame what goes into the list price. you did bring up the pharmacy benefit managers. they are very important part of this. in less than a month, we will have hearings based on what the role is of the pharmacy benefit managers. we need some answers as how these prices are set, would

happens with $170 billion of rebates. why can't we have one price for everybody? david: you spoke on the question of the national debt ceiling. as october forte that to get raised. people are getting nervous about those coming due. why would it be better for the markets to raise it now? i should be able to have an answer to that. congress never makes a decision until the midnight hour. march 1 is roughly the midnight hour. everyone inime, congress knows the treasury department has the capability of borrowing, taking money from this sinking fund or that trust fund and keeping the government

thenng, borrowing and paying back when we make a decision. i would think the market would know the game that's been going on in congress for the last 50 years. they would expect that congress is going to do what we always do. bills.re we pay our it's that simple. david: it seems reasonable. one thing congress doesn't seem to be moving forward on is this house resolution. before the president declared it, you called it a dangerous precedent. now that the now president has declared a national emergency? sen. grassley: what you heard me say previously, i'm looking at the national security

responsibilities of the federal being the number one responsibility of our government. when you have criminals coming trafficking,human all these things are a violation of our law, they are not protecting the american people and we are to protect the american people. the only thing i would disagree with the president on, he could have gotten $4 billion out of the $8 billion with the authority he already has under existing law to transfer funds. he didn't need to do the national emergency. he wants to make the point of the american people that the togress is not doing enough protect the american people, so i'm going to take all the action i can.

he's doing it under a law that was passed in 1976. so muchto review delegation and discretion we are giving to the president of the united states for the last eight or nine presidents, we need to review that. i'm doing that with the president's ability to impose tariffs for national security reasons. we will be reviewing legislation like pat toomey's and senator portman's that would change the dramatic delegation of authority that a 1962 law gave under president to presidents that hasn't been used very much, but if the president has too much authority, it is congress' fault. -- you'vetion 232 been concerned that there's too

much delegation to the president. i don't know how many books we have in the first place. getting it through the congress, we will have a bipartisan bill to get that done. we are going to get it done. david: thank you so much, chairman chuck grassley. alix: great interview. theresa may is speaking in u.k. parliament. goodays they are making progress on brexit negotiations. in case plan for a vote the deal fails. --the deal as well as delay that will happen on consecutive days. they will plan a vote on a no deal and a delay on consecutive days. still not a lot of clarity. still pushing the can down the road.

you are seeing the reaction in the cable rate sort of permeating that. that's right around where we've been all session. eurosterling sitting around those 21 month eyes. -- highs. -- emmaquity market chandra is here with more. and the poundke not been noted in the ftse 100. the ftse falling 1.2%. the shares are largely export oriented, so any spike in the pound actually impacting them negatively. 350.a look at the ftse we are looking at the ftse 350 overall falling, but look at the sectors gaining today.

goods andsehold household construction with good gains there. the risk of a no deal brexit seems to be diminishing. not seeing a huge reaction in the u.s. major banks today. although domestic news impacting those, including jay powell's testimony later. still with us as mark mccormick of td securities. -- still with us is mark mccormick of td securities, how do you think the markets will be reacting? mark: i think this continues. labor has a mandate as well, they have come out in favor of

the second referendum. theresa may thing if we don't agree on a deal and have a backstop, we kicked the can down the road. the other thing, we have a snap election, we have labor as the thatng front-runner, leads to a second referendum. you put those two things together, the market is looking for a team -- you can see all the stress priced into the market and you have the ingredients for a short-term rally. bone toe is giving a labor. there's a lot of that coming out as well. debate -- thea longer-term projection for the

dollar, on the one hand, it is a bee haven currency, it will up to the central bank to do something. we will have to catch up on the ecb and boj and not get the boost of the dollar. mark: medium-term, we are dollar bears. we have a sweet spot for higher yielding emerging markets. emerging markets are a big holder of u.s. credit. theother side of the story, g10 is largely a function of the delta of interest rates. shorting the dollar against the euro right now is a very caring intensive trade. the spread between the g10 and the u.s. will compress. two-yearr has ignored

interest rate differentials for the better part of the last few years. on the way down as the delta of the u.s. rates starts to fall, correlations will pick back up. last year was an equity story. this year will be a relative delta of interest rates story. euro is stuck in a range. alix: theresa may saying she doesn't want to see brexit deadline extended -- flies in the face of the reporting over the last two days. i'm taking a look at what's happening with the cable rate, off the highs of the session, still up .8%. that's interesting. i wonder if that is game and ship or for real -- gamesmanship or for real. she's recognizing she might not be able to get there.

alix: she doesn't want to delay brexit. deal. -- pass my deal. david: great to have you with us today. viviana: it was a volatile fourth quarter for goldman sachs. the firm says it had 19 days of trading losses in the last three months of the year. to $100ed $75 million million -- standard chartered aiming for $700 million in cuts .y 2021 operationstructure in india and south korea as part of a long-awaited turnaround

plan. soothinters is trying to investor worries over lackluster returns. shares of wayfarer burned to short-sellers -- they have $1 billion in market losses after wayfarer's 78% rally. adjusting to their highest level friday since the ipo -- that is your bloomberg business flash. david: we turn now to wall street beat. diamond faces expectss -- jp morgan expenses ahead of the company's investor day today. standard chartered's neil gorsuch after dark days -- new course after dark days. women at the top at credit suisse.

three women promoted to executives. alix: i will take it. joining us now, peggy collins. jp morgan down over 1%. it expects a slower pace of growth. ofitive growth of 2% because quantitative tightening and higher rates increasing the need for more expensive funding. peggy: they are also saying they will invest more in technology. one of the ones first move on the digital coin -- to move on the digital coin. thingsxpect to see shooting the lights out in terms of growth for us. are going toy we

grow our profitability -- increase efficiency through technology. peggy: we saw the citigroup ceo hitting that team. -- theme. saying it will expand its branches into more states, putting the pedal to the metal. it's on the backdrop of an environment in banking where we are seeing smaller players starting to emerge. alix: goldman sachs says they had 19 days of trading losses in the fourth quarter. standard chartered's ceo came up with his plan, cutting costs, reconfiguring businesses int india and south korea.

investors did not stand up and applaud. peggy: it has been a muted response to this three-year plan. it seems like they are in 60 geographies. there saying -- need to saying we readjust our flows. a lot of growth was going to be global. shaking upse senior management -- he has three women, including the chief risk officer. she was the chief financial a of the investment bank for a while. has handled some big issues for them.

-- she was the chief financial office of the investment bank for a while. -- she was the chief financial chief financial officer of the investment bank for a while. alix: still wouldn't take no deal off the table. she says they will vote on a no deal and then a delay on consecutive days. the cable rate off the highs of the session. not a huge move in the markets. i don't know what we learned in the last 24 hours. david: or the last two years. coming up, musk in hot water again.

next. coming up this is bloomberg. ♪

>> i do not respect the sec. >> you are abiding by the aren't you?don' >> because i respect the justice system. tweeting teslak made zero cars in 2007 but will in 2019.000 and we welcome now john coffee, professor of law at columbia. he joins us now over the phone. i want to start with the board. the sec saying the board is taking responsibility for this.

ben musk does appear to violating this commitment. board has the done nothing. this is deja vu all over again. he was not allowed to make any statement about tesla's overall position without getting approval from a general counsel. that did not happen. the next day, the general gned after two months. that is a crisis. what can the board do? they should take his phone away cannotem and say you make any statement without prior board approval and the general counsel's approval. morning, mr.y this

-- itas tweeted out again has moved the markets because you have this contempt thing. something is broken with sec oversight. elon musk has decided to go toe to toe with the sec. who's going to win? >> it's up to the federal judge. i believe the federal judge will see the court as desk case as much stronger for the sec -- will see the case as much stronger for the sec. think a federal judge is going to accept that for very long. this as apresent modest mistake, not a fraudulent act, and thereby get the court to settle on a response from the board. in thiskes this on

total frontal confrontation, he could lose very badly. the sec has authority to suspend an officer from serving at any public corporation. david: elon musk seems to be testing them. alix: who's going to oversee the board? david: the sec, ultimately. alix: coming up, macy's earnings due in a few minutes time. will the quarter give any boost to the stock? this is bloomberg. ♪

>> let me be clear. extendedsee article 50

50i do not see article extended. alix: the pound gives back some of its earlier gains. fed sharewell -- to weigh in -- fed share jay powell wool -- fed chair jay powell next to weigh in. earnings coming in at two dollars on adjusted basis, $2.73 a share. that seems quite high. david: the eps of $2.37 would be low. apples, wepples to will have to wait to see what's adjusted.

suggest theould beat is the right number. alix: you immediate moved to the moveide -- the immediate to the downside. it feels like they are digesting what that means. that sales come in at $8.46 in atn -- net sales come $8.46 billion. david: some of the traffic numbers indicated there might be some challenges. it's been bouncing around quite a bit. alix: down 18% for the month. dbs head ofow, -- the ubs head of investment. >> roughly in line with what was

expected. corporate estimates were much lower given that early reporting of holiday sales. was something to keep a close eye on. that came in around 37.5%. a slight uptick -- the margins falling because they seem to be having inventory problems. david: they are taking a charge to cut their upper management. >> that is something a lot of people have been saying that they need to do. they still have 650 stores. a lot of people saying that is far too many.

now, theere starting magic number would be much lower in terms of stores. certainly in terms of restructuring at macy's, that is something a lot of analysts have said they need to do. there online component is getting better. their online component is getting better. calledve this strategy -- the vast majority of macy's stores becoming neighborhood stores where you can buy online and pick up in store. we've seen a lot of other retailers trying to do this for the last two years. -- few years. david: we had that remarkably disappointing number in december.

what does this say to us about the state of the retail consumer? >> i wouldn't be too into department store results in terms of understanding the u.s. consumer. department stores are facing a number of secular headwinds at this point, including shift to e-commerce. we question the retail sales number as well. those declines we saw we hadn't seen since 2009. given the positive fundamentals we see, the fact that retailers are still hiring above trend, that didn't seem to put with the strong backdrop for the u.s. consumer we see now. david: macy's down 18% into the print and the stock is all over the place. terrible, actually better than what we saw in the third quarter. >> it all depends on what is

priced in going into the print. macy's had some sad news already. these headwinds facing department stores are pretty well known. they are just monitoring the resultsd seeing if the are worse or better than expected. david: there seems to be so much divergence among retailers. home depot disappointed earlier this morning. alix: they never do. they are the gold standard. david: who is doing better and who is doing worse. >> when we talk about retail, it is such a diverse sector. etsy seeing a huge amount of growth, but that is all online. you have the likes of walmart who are able to invest in e-commerce and their stories. for more difficult department stores because of the

secular challenges they face. -- invest in e-commerce and their stores. david: overall, you mentioned online, how it is disrupting the business fundamentally. could it be that the consumer is doing well but there's pressure on margins because you have things like online? >> that's exactly right. we are seeing that the companies are able to use technology to differentiate their businesses. those are the ones that will stand out. whether it is participating in using technology to enhance the in-store b experience, that will help certain retailers to stand out. strong brand is still meaningful in this market.

up .7%, but they did cut on their same-store sales view. it wasn't terrible in the fourth quarter, but they are cutting their full your view -- full year view.. they will cut some of their upper management structure, even though sales beat. 1.8%.tock up chandra and laura cane sticking with us. that's the macy's story. in the broader story, you had weakness over in asia translating to weakness in europe. s&p closing at a four-month high yesterday -- you are not seeing

weakness in the cable rate, up .7%, off the highs of the session as theresa may puts cold water on any brexit delay. yields coming lower by one basis point. we have $32 billion worth of seven your notes -- seven year notes. promiseseresa may parliament able to delay brexit vote toeal fails -- a delay brexit if her deal fails. ♪

escalatingon musk

his fight with the securities and exchange commission, pleading "something is broken tweetingoversight -- "something is broken with sec oversight." the agency claims must violated violated at -- musk settlement. home depot coming up short in the fourth quarter. chain of home improvement stores announced a new $50 billion share buyback program. home depot raising its dividend by 32%. shares of caterpillar falling in premarket trading. ubs downgrading the maker of construction equipment two ell.hes from but to s shares ofay, caterpillar were up 25% from the october low. buy tonotches from

sell. david: theresa may promised a vote to delay brexit if her deal fails. rejected leaving with the deal negotiated with will onthe government march 14 bring forward a motion towhether parliament wants seek a limited extension to article 50. david: what did we learn from theresa may's remarks? how different was it from what we expected? >> broadly in line with what we've been led to expect overnight. she would pursue the strategy of promising a bit of a delay does the pound rallied this morning and the of a delay

pound rallied this morning. we did see the pound give back some of its gains on that. we know that that is not preferred by the eu or the market. david: that is charlotte ryan reporting from london. the optimism in terms of the brexit no deal is going to happen kind of thing? theyr base case is that reach some kind of agreement where we avoid a hard brexit. we still see all scenarios on the table. at this point, we are not jumping into the u.k. market. we are preferring to take our exposures in the u.s. and em at this point. alix: here's what mark mccormack had to say about the risk profile now.

mark: what we have with sterling, it is an investable risk at this point. the real many community, they are buying u.k. equities. as we get closer to the 135 level, that's when the community will start removing the hedges. >> it is too early for us. at this point, all scenarios are still on the table. we see better opportunity in other markets at this point. david: you said the united states particularly. >> u.s. and em until we get a whatr picture of going on around growth. industrial production data has come in quite week. until we get a better picture, we will sit on the sideline. datadustrial production ak. come in quite we

valuations do look attractive. that's not enough to pull us in at this point. alix: the risk rally we saw had less to do with u.s. china trade and more with china not deleveraging anymore. -- whichack the brakes narrative do you buy? >> i think it's a combination at this point. the u.s.-china trade situation is being watched carefully. the fed's tone will be another major driver. all of these things are coming together.

now, the news we are getting is incrementally positive. we are still taking a cautiously optimistic tone. we are later in the cycle. any news we get in the wrong direction, we see investors are more risk-averse at this point. david: you mentioned emerging markets a couple of times. where in emerging markets specifically do you find a lot of interest? >> emerging markets broadly will be among the top beneficiaries of a resolution of the u.s.-china trade situation. with the more dovish fed, we've seen dollar strength back off a bit. that is also positive for em more broadly. we do like china because of these efforts that the government is undertaking to downeer a soft slow throughout the turbulent

geopolitical times. david: let's go over to emma chandra. just getting a number of headlines from macy's. we saw adjusted eps coming at $2.73, beating the estimate. .7%,sales came in at missing estimates. estimates had been driven lower since we got the january holiday sales number. -- margins have been pressured by inventory at macy's. they are estimating for the full your to be between $3.05 and $3.25 -- they are estimating for the full year to be between $3.05 and $3.25.

still looking at shares rising moment.p 1.3% at the like thatnvestors macy's will be streamlining upper management. alix: they are not cutting the back office. coming up, more on macy's earnings. we will talk about that with chuck grom. we will break down his reaction to earnings. this is bloomberg. ♪

alix: time for bottom line, to companies worth watching this morning. first up, macy's. for more, we are joined by chuck grom, who has a hold rating on the stock.

full year earnings lower than estimated. same thing with comp sales. but, they are looking to streamline upper management. chuck: we are most focused on the guidance for 2019. it came in a bit worse than expected on a core. be asset sales expected to $100 million in 2019 -- we thought the guide excess of --es coming closer to $3.20 inventory levels look like the company did a good job getting those under control. kind of a mixed bag. stock had investors super confused. what do you make of the fact that we are still looking at a 2% rally in shares? chuck: it's only 20 minutes into

a long day ahead . the conference call is at 9:30. we will be focused on what the company is trying to do. see what they say in terms of the drivers on that front. alix: is there a read through to other peers in the group or will this be idiosyncratic risk? chuck: for most of these guys, we've already heard about their holiday sales. we are looking at the complexion of the gross margins in the quarter inventory levels and the year. we are looking at home depot's numbers today, trying to get a sense for how retail was in the holiday period. alix: what is your headline for that? chuck: i think the consumer is

strong in certain pockets. andwinners continue to win the companies that have been struggling continue to struggle. we are looking for what they are doing to control their own destinies. alix: chuck grom, thank you very much. macy's cutting, cutting, cutting. david: the second company is caterpillar. ing took it down two notches. >> not exactly what you want to see. anytime you see that double downgrade, you will see stock reaction. me, hownteresting to much caterpillar stock is driven by sentiment on the cycle. you sell the stock selloff in october after the concerns about the earnings came back into play

you saw the stock selloff in october after the concerns about the earnings came back into play. analysts seeing signs of a slowdown in europe he north america and china, sees that coming to 2020. analysts from ubs took it down 8% globally. that caught my attention. >> that is a pretty significant step down. you are seeing some warning signs. mostly on the china side.

we are starting to see the early stages of not a dramatic drop off but a significant slowdown there. alix: do you like industrials? laura: right now, we are underweight industrials. it's more of a hedge against the u.s.-china trade situation. what may wind up happening with the global growth environment. overall, we think the global growth fears back in december were overdone. the environment is moderating. it is not tipping over to recession. the call behind are underway on industrials was more about hedging our bets because we had a lot more cyclical exposure within our other sector overweight. david: there's a huge tailwind

that could kick in behind industrials. laura: we are already seeing that. in the seen this support industrial segment. how much is already priced in? i don't know. >> we saw that report last week that the european union is preparing to slap tariffs on caterpillar. david: i forgot that. good point. >> it will be interesting to see how it plays out. alix: laura kane will be sticking with us. coming up, the latest read on the u.s. housing market. this is bloomberg. ♪

alix: this is "bloomberg daybreak." the latest housing data just moments away. giving up some of the rally we saw yesterday.

giving back some of the gains after a monster rally. the ftse off the lows of the session. the cable rate up .7% but off seemsghs as theresa may to back off from extending the brexit plan, and if she does it will be mid-june she is looking at. down 11.2% in december and building permits up .3%. housing might've been distorted looking at whether or the shutdown. the permits seem to imply you have activity ahead. up .3%. thousand housing -- that is an ugly housing start number. david: last month they revised those. alix: quite a bit. november was revised down. an interesting call. i'm trying to get into some of

the details. single-family starts fell the 758,000 multi family starts at 320. on the heels of home depot and their sales doing estimates. david: we want to welcome stephen stanley. still with us is laura kane of ubs. continuing softening in the housing market, is that too simplistic? stephen: housing was weak at the turn of the year and there was some hint at a turnaround in the spring. the homebuilder settlement and dekes has rebounded. i think december was close to the bottom, at least hopefully appeared -- at least hopefully. alix: how much of this will be distorted? luke: this is a big problem. most of the data has been

quirky. given that fact, i think we have to take the data -- not only is it old news but it also seems like we have to take it with a grain of salt. david: we talked about this with respect to retail sales for the month of december. quirky data. how can you square these numbers with what we think about the consumer. more people have jobs, they are getting paid more, wages are going up. there more disposable income and why isn't it going into things like houses? laura: the consumer and the overall housing market are both tied to what is going on with the tightened labor market. ,n terms of the housing starts i would not put much stock in any one number. the data has been quirky. housing starts are volatile and a lot of the weakness we are seeing is reflective of the environment in november and december. now as we get to january, the fed has shifted to a more dovish tone so we are seeing mortgage rates soft and.

this should help the housing market. overall, in housing we are expecting single-digit growth in home prices. we expect the environment to be ok. alix: ok, and a more dovish fed. stephen stanley, you've been hawkish. no doubt the fed is dovish. now it seems to be the question mark of what side of the inflation debate you are on. the things have to be better to get a hike or stay where they are? stephen: i think the committee is divided on that question. is the williams camp, which is it things stay the way they are which is -- we're fine, and in the camp that if things stay the way we are we need to hike more. a good fed chair will new wants the differences -- will nuance the differences and not take a firm stand. i think it is moot because i

think we will get higher inflation as the year progresses. i do not see the fed is having an itchy trigger finger, but i think the economy will evolve in a way that generates further rate hikes. are data dependent, but as jay powell goes up to capitol hill to testify, does he have any goal at all of getting back to neutral? back in december, the market thought he went too far and then he turned around in january. has he gone too far? now we have gone from expecting rate hikes to rate cuts. not just neutral -- cuts. laura: we do not expect jay powell to surprise the market. we think he will stick to the tone of the last statement during the last statement removed the mention of gradual hikes and included the word patient about future adjustment. what we will see that is

incremental as if jay powell mentions anything that alludes to future hikes. i do not expect him to make any kind of strong statements that differ from what has already been said. our base case is we do get one more hike this year, provided inflation gets to that 2% level. alix: the conversation last week with the minutes was the fed underpinned volatility. you see in industrials, technical, energy all outperforming. if your scenario comes true, what does that look like? stephen: a couple things need to happen. we need to remove some of these uncertainties that if pushed the fed the sidelines. the government shutdown. the trade discussions. brexit. a number of other things. in addition to the volatility of the data. i think it takes well into the spring to remove some of those

question marks from the outlook and then it is a matter of where does the economy of all to? -- the economy evolved to? growth.et view is 2% if that is what we get it will be tough sledding for the fed to do much. if the economy turns out to grow more strongly, or if inflation accelerates, that i think the question becomes easier for the fed answer. david: if the market is wrong, what will of made it wrong? what drove the inflation? is it wages? stephen: i think it is more than that. the labor market is important, but it is not the only thing. if you take a look at corporate earnings, in some cases than to be a function of labor but i think it is a function of the strength in the economy. the flip side of the tight labor market is that households have good income growth and therefore

they are more willing to accept the price increase in a market that is tight. alix: what is the sector allocation for that kind of outlook? laura: at this point we are overweight financials which do tend to benefit a rising rate environment. also technology, we like some of the secular growth stories with companies investing in things like cloud technology and automation. within software and services we are positive. we think the more negative news around things like smartphones is priced in. alix: stephen, i cannot let you go without asking you what you made of janet yellen's comments yesterday which said i do not believe president trump would do anything. i cannot think of an fed chair ever criticizing a president. stephen: it has never happened before. i do not think it is her place.

whether it is true were not come it is not something she should have said. david: i'm not sure she did jay powell any favors. stirring up a hornets nest. alix: just a matter of time. david: i'm not sure if i were jay powell i would say "you go, janet." thank you both very much for being with us. alix: jpmorgan investor day is underway. that stock down 1.5% talking about raising spending on technology. bloombergs taylor riggs joins us now from headquarters in new york. taylor: it is the last time we will be here for the investor day before they terror down and start to rebuild. a bittersweet moment. nonetheless, we heard from cfo marion like. we'll get jame and -- we will get jamie dimon later on to

cleared out. the balance sheets are harder to characterize. they are talking about slowing growth and increasing risk and slowing deposit growth at around 2%. the high-quality loans as they think we might be near the top of the cycle. how to protect that balance sheet going forward. you also mentioned tech spending. we do think tech spending will be up by $2 billion to $13 billion in total. when we talk about responsible growth, you think bank of america, which headlined that catchphrase. jpmorgan trying to balance the expenditures, increase market share while also being responsible. we do know that within the tech sector they are the fifth largest spender on tech after amazon, alphabet, walmart, and microsoft. in terms of our we, they do it -- in terms of roe, they expect that at 17%.

it is higher than their competitors, which are at 16% to 11% and much lower. r.o.e. is about 26%. we spoke with the analyst who covers jpmorgan at wells fargo and he says this is a better risk-adjusted r.o.e. something to be aware of. i will highlight cost of capital. -- cost to capital. that will come down for jpmorgan. we will pop in and get more comments from marion lake. as slowinging this growth and how to make sure your balance sheet is in line to prepare for that. david: taylor riggs talking about cost of capital -- cost to capital. let's get an update on what is making headlines outside of the business world. viviana: pakistan says it is preparing for all eventualities after india said its fighter

jets destroyed a terrorist camp inside pakistan. in indian officials says more than 300 people were killed. pakistan denied the airstrikes did any damage. pakistani tv's showing little more than bomb craters and downed trees. tensions rising following a bombing in kashmir. today on capitol hill, the house votes on whether to block president trump's declaration of a border emergency. that would push republicans to take a stand on how far they're willing to let the president go to spend taxpayer money on a border wall. the bill is certain to pass the house and may squeak through the republican-controlled senate. there is not enough support to override a presidential veto. on the eve of the summit in hanoi, vietnam, an australian who impersonates -- a man

who impersonates donald trump was told he could stay as long as he quits his impersonation. 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: you cannot make it up. alix: i have to say that a president trump impersonator, alec baldwin takes the cake. you have to look three or four times. david: he might be a little tall. like,i love that there get out, thanks. next, you areup seeing a live shot of parliament. prime minister theresa may is still there. saying there will be a deal to delay brexit if the vote fails but that is not how she wants it to go. this is bloomberg.

♪

viviana: this is "bloomberg daybreak." coming up later, the discovery cfo. this is "bloomberg daybreak." in the u.k., marcus spencer confirms it is in talks with hope cotto regarding a joint venture. cotto and markof spencer are rising in london. a french carmaker is coming back to north america. they quit selling vehicles here

does go decades ago. the group started plotting a return in 2016 as part of a 10 year plan. sales will begin in 2026. the company is trying to become less dependent on europe. shares of general electric rising again. wall street analysts say the sales of ge while pharma business to danna her will -- to danaher well a lemonade some of the concerns about liquidity. and analyst says ge's top priority should be turning around the power business. david: walking the story -- alix: walking the story forward with ge, yesterday was the materials when for the company. david: they set out a strategy. it was a big step. he said it was two thirds of the deleveraging he promised. $21 billion of it. he said he got a good price but

he was quick to say it is not over. this is not the war. a long way to go. some public events. they will be talking about what they are doing. alix: swift action. the market likes it. non-swift action -- that is tesla. -- now the fccs came out and said you misstated that. therefore we are going to a judge and say about being in violation of the agreement that someone is actually going to be looking at your tweets. oppenheimer manage meant director has a price target on tesla. the stock went down on that. how do you have that kind of buy rating and price target when you have this overhang from the fcc? >> the stock is not going to be impacted to aggressively. what we saw with the settlement

is it was not8 massive compared to the concern. obviously this was an unnecessarily error on elon musk's part to send out that tweet. he continues to take issue with the fcc but we think the stock is about the cash flow. we see sizable opportunities to do that. as they want costs down we see the potential demand for a vehicle to expand robustly, especially as we move into europe and china. david: i want to spend one more minute on the sec. year whene a larger you have the ceo of a publicly traded company who appears to be flagrantly disobeying a court order opposed by the sec. even if it was not material, when the sec tells a publicly

traded company to do something, i think they better do it. you certainly want to maintain the integrity of the system for the securities industry. we are talking about the specific stock movement with tesla and how big an issue this will ultimately be to elon musk. the real risk for the company is elon musk would not be able to run the company. i do not think this is a big enough infraction toward that penalty. there will be -- infraction to warrant that penalty. david: you raise the model three. let's talk about the model three, which is becoming the center of that company. you talked about consumer report saying there are problems with the model three. they say they do not recommend any of the tesla because they are hurting to put them together . isn't that a problem for the brand and the company? that is a major concern

and that is something that kept us on the sidelines until august of last year. we were seeing a significant amount of work on those vehicles. you are seeing consumer reports catching up with what was happening six month ago with the company manufacturing. tesla has implemented measures to improve the quality and maintain better customer service. what we are seeing is they have continued to have a strong relationship with the customer. they are cleaning up their act on these model 3 is. i did not -- i would not be surprised if see consumer reports flip their ratings. we've seen them go back and forth in the past. alix: does that mean you would be advising to buy? colin: we are still constructive on the name. we think they will make their debt payments. they have sufficient us -- they have sufficient cash. cleaning up the balance sheet

will help the equity. cash generation in the second quarter, i think the credit on tesla, particularly the high-yield they issued will start to trade better. alix: my question is when? when does all of this external stuff start to impact the fundamental running of the company? you see the cielo and the general counsel all bleeding staff. there is no doubt the sec will get harder on the board because elon musk is tweeting anyway. when does that start impacting how you look at the stock? colin: it already has. the brain drain has been a concern. it has lost senior leadership over the last couple of years and they have grown a certain number of folks internally into those positions. over the next months you will see whether the company can fulfill its mission with the

current staff. they have not had major problems with folks leading the -- leaving the company. it is something we continue to watch. the real metric for us is around the sales of vehicles, the production of vehicles, the ability of the company to walk costs lower and the most important is cash generation. alix: colin rusch of oppenheimer , thank you so much for your time. more on macy's and other retailers next. this is bloomberg. jonathan: -- this is bloomberg. ♪

david: we're going to go back to breaking news. falling ases investors applaud the companies plan to streamline its business. chandra has more. emma: they were broadly in line

with estimates. those estimates were driven lower by last month's announcement of holiday sales. the full-year not looking great. below estimates. also seeing owned and licensed comp sales flat. they had been expected to be 2%. take a look at the terminal. i have the same store sales chart. they did put in a fifth consecutive quarter of sales growth but the trajectory is downward. investors not liking that. now looking at the shares in the premarket, roundabout flat. investors like plans to slim down management. will be focusing on new economic models this year , including the number of in-store pop-ups. they are trying to create a sense of better experience

within macy's stores and a bit more of the marketplace way of finding new and exciting products at macy's. a couple of other retailers to mention. home depot were out with earnings earlier this morning. they increase their dividend amount -- their dividend by back. the stock of home depot rising 50% in the past three years but they missed today. did really well. experience.er buyer david: always good to have. alix: that does it for bloomberg daybreak america. coming up with jonathan ferro, jared woodward, global investment strategist. 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: global equities inching lower. the optimism over u.s. china trade talks fading. chairman powell facing down congress. his semiannual testimony beginning in the next hour and elon musk facing down the sec. the regulator asking a judge to hold the tesla ceo in contempt. 30 minutes away from the opening bell. good morning. -.33% on the s&p 500. treasuries yields lower by 20 basis points to 2.63. we begin with our top story. one question as we await chairman powell. what would test the fence newfound patience -- what would test the fed's newfound patience? >> inflation. >> inflation is