d.c., robert lighthizer briefed lawmakers on a potential china trade deal. half-full or half-empty? china pmi slipping, but it's not all bad. market expectations boost sentiment. -- just howsale rough were fourth-quarter sales? david: welcome to "bloomberg daybreak." i'm david westin, right here with alix steel. march is around the corner. alix: how did that happen? in the markets, you are taking a bit of risk off. what that winds up meaning for a-china trade deal -- u.s.-china trade deal. right around the highs of the session.

you had some stronger inflation numbers out of europe. the 10 year yield moving lower by one basis point. crude just a touch softer, down 20%. -- down .2%. , the vice fed chair speaks in washington. we will also hear from alan greenspan. data, u.s.t economic gdp growth for the fourth quarter. pg&e will release its fourth-quarter earnings. alix: we turn back to the trump-kim summit in hanoi. talks broke down unsanctioned demands. >> basically, they wanted the sanctions lifted in their entirety and we couldn't do that. uke awere willing to de-n large portion of the areas we

wanted, but we couldn't give up all the sanctions for that. we will continue to work and we will see but we had to walk away from that particular suggestion. alix: shinzo abe reacting to trump'sus decision -- decision. walk me through what happened this morning, the reaction on the ground. it was disappointment all around, basically. trump said he went into talks to seal the deal, but it's not good enough and he wants to walk away. he says there comes a point in time when you have to walk away and that's precisely what he did. do it right rather than do it fast. we heard him say that north korea wanted sanctions to be lifted fully, but at what cost?

dismantle their facility, but warheads will have to go as well, but that was not addressed, that is not happening, so the two sides have said they will come together again, discussions will continue from here. relations continue to be good. southhad reaction from korea, saying they regret the decision. the korean peninsula once piece. -- wants peace. they are urging both sides to continue talking. alix: thank you very much. david: time for the bloomberg first take. we are joined by marty schenker and sarah ponczek. we will go back to the china-u.s. trade relations. we heard from ambassador lighthizer testifying in

congress, saying it's not clear there will be a deal done at all with china. >> if we can complete this -- and-- again, i say if can reach a satisfactory solution to the all important issue of enforceability as well as some other concerns, we might be able to have an agreement. much still needs to be done, both before an agreement is reached and more importantly after it is reached, if one is reached. david: there were a lot of if's in that statement. is it too much to read this together with president trump in hanoi? president trump is willing to walk away from the table. marty: to some extent, for many observers, that is good news. there were worries that trump

would give away the ranch to get an agreement. mike pompeo deserves some credit for that. donald trump said we will get a deal. lighthizer says not so fast. it's clear he is ratcheting back expectations. david: do we have any sense of whether lighthizer is speaking for the president when it comes to china? there seems to be disagreement. marty: he is speaking for himself. --ald trump loves lighthizer would he defy him and say no, we will get a deal? alix: the vix at 15. >> it is quiet. you have the summit between kim jong-un and president trump. yesterday, we had three testimonies going on at the same time and markets don't seem to care. they are consolidating after that amazing rally at the

beginning of the year. we are seeing a bit of a risk off trade this morning. gold getting a bid, but it's all small moves. alix: even sterling wasn't rallying as much as they wanted it to. weakness in china -- manufacturing pmi, the white line rolling over. the new export orders, the yellow line taking a leg lower here as well. regardless of trade, china slowing is a problem? or stimulus from china will pop up the market? sarah: somewhere in between. unless we get an extended truce as it relates to the u.s.-china trade war, this will be the trend we continue to see. there has been a lot of hope lately on the investor side that -- president xi saying

they will continue a deleveraging campaign. will it be enough if trade is still an issue to turn things around? marty: all of the signs are that china does really want to get this behind them and get a deal done. we have been talked about india-pakistan -- haven't talked about india-pakistan. david: he's not happy with the indian response. at the same time, he will let the pilot go. are two nuclear powers and we aren't even talking about it. retail sales results -- this is ea . the top bar are sales numbers and the bottom numbers are earnings -- both are coming down

somewhat, but earnings are beating sales as a practical matter. they are still doing better than one might have thought. sarah: the earnings beat rate is around 87% for retail companies, which is higher than the s&p 500 at large. there had been a lot of concern going into these retail earnings because we heard so many warnings that holiday sales weren't as strong as they hoped. toas looking through ea see the average 24 hour reaction. it is near 2%. for the s&p 500, it is 95 basis points. we are seeing these retail companies really take off. the best performer there was best buy. the worst was amazon. i don't think people would typically take that into account and think that. david: this is all a game of

expectations. best buy, the expectations were low and they beat the expectations. marty: let me give a shout out to donald trump. the u.s. economy is doing quite well and outpacing the world. i think people lose sight of the fact that economic conditions in the u.s. are relatively positive in the context of global growth. we shouldn't be that surprised. alix: don't look at the tracking index -- marty: i won't be tweeting on that. alix: you can find all the trades we just used by running gtv on your terminal. coming up, from geopolitical risk to trade talks. steve from federated investors will be joining us next. this is bloomberg.

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david: it's the art of no deal with president trump and his trade representatives saying they will walk away from the table rather than make a bad deal. >> basically, they wanted these sanctions lifted in their entirety and we couldn't do that. nuke aere willing to de- large portion of the areas we wanted, but we couldn't give up all the sanctions for that. we will continue to work and we had to walk away from that particular suggestion. >> if we can complete this -- and-- again, i say if can reach a satisfactory solution to the all-important outstanding issue of

enforceability, as well as some other concerns, we might be able to have an agreement. much still needs to be done, both before an agreement is reached and, more importantly, after it is reached, if one is reached. david: joining us on the telephone from washington is researchmpass point policy analyst. breakdownthe hanoi have to do with the china talks? does it affect them in any way? isaac: sure. president's core beliefs is that leverage will ultimately produce a victory in any negotiation. with the sanctions on north korea, he believes he still has

leverage there. dotead, what he's going to is pivot with gusto to the chinese trade negotiations. win on is they want a the global stage, they are near a win on the china negotiation m increasing the odds of a deal in china. david: did you get a sense that robert lighthizer was saying we are near a win on this? went out ofhizer his way to tamp down expectations, which should be expected. that is his role. he outlinedt time, some of the enforcement mechanisms that are being discussed. areenforcement mechanisms the central and core pillar in

all these talks. the fact that we are getting a bit of detail around that is a bullish signal in my view. thinkhow far apart do you mr. trump and robert lighthizer are? >> both of their statements can exist in the same world, even though they are a bit far apart in terms of semantics. a deal is not imminent, but they are closer to a deal than they were a few weeks ago. both of those statements are accurate. lighthizer is most likely more in the details and understands 0-page document they have still needs more meat on the bone. there is political uncertainty here at home and economic uncertainty in china.

david: president trump might need a china deal even more not having one with north korea. at the same time, he is saying to the chinese i can walk away from the table. >> sure. all of these dynamics are interconnected, whether it's north korea and china or the eu auto tariffs and the iran nuclear deal. there are strings that tie these altogether. the president showing this strong hand to north korea will send a message to china. let's not let the work that's been done go to waste. let's put together a fair and viable enforcement mechanism and move ahead. david: that's isaac both jansky ansky joining us in washington. boring,you talk about

you talk about low volatility. the fed was in play four or five months ago. they are not in play today. there is less uncertainty over where the 10 year will be. that lack of uncertainty flows through. the fed's underwriting a move up in risk assets. tech,for the whole month, industrials of materials where the performers. steve: there's a lot more room to go. everyone is looking at this 20% down move and the reality -- rally off of that. the market had been flat for five months. , earnings growth and economic growth were peeking, the fed was hiking rates, we were paying 18.5 times

that. q1ay, they are bottoming in and starting to re-accelerate, the trade war coming to some sort of resolution, we are paying 16.5 times that. david: there are two major forces. one is the fed, which has come around to more dovish orientation. the other is the trade uncertainty. which one is the market following more? steve: the fed is more important. if you think about it, our thesis has been simple -- the market was pricing in a recession for q4 of 2018. therefore, the bull market shouldn't be dead. you get recessions when the fed continues to hike and causes a policy error. you don't get a recession when the fed is on the sidelines.

trade is important as well for longer-term growth and productivity. the fed being on the sideline is the most important. alix: does that continue? where are there opportunities in the marketplace? is one monolith or not? the easiest money to be made is in the united states. all we need for those cyclical sectors in small caps to continue to do well is no recession in the u.s. in the fed being patient -- and the fed being patient. maybe you need politics in europe to not be politics in europe. david: steve chiavarone of federated investors will be sticking with us. the silver lining in china's pmi miss.

we will go find it. that is next. this is bloomberg. ♪

david: china's latest manufacturing pmi measure for february fell to a three year low. more, let's bring in bloomberg's chief economist in washington. we put up this chart showing the manufacturing number, the yellow line at the bottom is really bad, really dropping off. tom: right. you put your finger on it. it was a weak number. we have the chinese new year holiday, the entire population leaves the factory and goes back to their home for a week long break. it's hard to interpret the data

in china at the start of the year. we think the pmi number weakened, but less than we would normally expect given the holiday affect. this is not a positive number, but we don't think it's a very negative number, either. david: this chart shows the pmi numbers and china business conditions shooting up at the same time. the so-called green shoots. what is accounting for that? tom: policy is a hugely significant factor in china. sawhe start of the year, we a couple of decisive indicators that policy has shifted to progrowth mode. we had xi jinping giving a big speech, calling on local officials to stabilize growth. you better believe local officials are going to react and there's going to be more infrastructure investment,

bolstering demand. the second big number, the credit numbers. we had a monster credit number 4.6 trillion in new lending. that's an even bigger number than we would normally expect given the seasonal numbers. those factors together are pushing china's big businesses to expect slightly better times to come. alix: how do you possibly fight massive stimulus coming from china? steve: i don't think you do find it. -- fight it. an export-based economy. they are feeling the effects of this trade war. youou want to be bearish, can look at the trend today and say things are bad. if you want to be bullish, you

say the second largest economy droppingrld is yuan out of helicopters to drive the economy. if they are able to stabilize growth enough that it does not impact global growth, that works just fine for risk assets elsewhere. alix: how long will it take for us to feel the effects? tom: we are looking at a bottom in q1. it will be around 6.1% year-over-year. then, we are looking for q2,ilization starting in driven by the strong credit numbers. it is hard to understand trends in china at the start of the year because of the seasonal effects. we thought the january numbers were ok, encouraging in terms of the credit data.

orlik, thank you very much. steve chiavarone of federated investors will be sticking with us. david: we are now applauding the fact that -- we were concerned there was so much credit because it's overleveraged. alix: consumer spending was not good in china at all, the lowest since 2005. haves and haveil nots. that's coming up next. this is bloomberg. ♪

w?w?uhió'ñó alix: this is "bloomberg daybreak." a bit of risk off this morning. dow jones futures down by 35, s&p down by six. european stocks a bit lighter as well. take a look at euro-dollar,

moving higher throughout the session. you have better-than-expected inflation numbers coming out. still better-than-expected. the cable rate taking a break after some monster rally over the last few days. need to hike now as sterling keeps moving higher. jcpenney earning $.18 a share on adjusted basis. the estimate was for $.10. but theirike a beat, comp sales down 6% versus estimates of 4.7%. it will be more about the outlook. ranged fromstimates -$.11 up to positive $.27. analysts are saying we are not sure where the company is going. alix: the stock is up 6%.

comp sales missed big-time. more, let's bring in emma chandra. still with us, steve chiavarone of federated investors. emma: the earnings-per-share beat is bigger than expected, but david mentioned that range. everybody thought comp sales were going to be bad. .hey preannounced last month the stock reaction is coming back down. it will be all about the outlook , especially when we get the new ceo on the call it 8:30. -- at 8:30. she is retrenching, getting rid of home selling and household

goods online. we need to be focusing on women's apparel, which is the core for jcpenney. stores.ll have some 864 david: let's close some stores and retrench. does the street believe this? emma: they want more detail. lowe'slyst who now runs says they want to see the strategy going forward. , whatooking at e-commerce they are doing there as well. alix: what is the low hanging fruit they still have? what levers can they pull quickly? stores ising something they can do quickly. they have a huge backlog of

inventory at the moment, putting pressure on margins. they need to get rid of this huge backlog of inventory and focus on women's apparel. customers seem to have liked what they've come up with so far. alix: take a look at the reaction. sales are bad, worse than expected, earnings really good, the stock jumping 10%. how do you understand something like that? steve: this is the story of this earnings season. if you are bearish, this has to be the scariest thing. december was the worst month since 2001. during -- a month there was not a month during the great recession that was worse than december. if you don't see recession in the numbers, there's upside. we think about the retail sector

specifically, that sales number in december was abysmal. that thereworried was fundamental slowdown in the consumer and the earnings have been ok. experiencey level, still matters. companies that can provide better experiences are doing better than those that can't. david: one headline crossing named a new've chief merchant among some other senior staff. they are getting their act together. they have a new team coming into execute on the strategy you described. perhaps a reaction to that definitely. you are seeing this change in the team. a new team can really drive the turnaround for them.

taylor riggs is looking at the winners and losers of this retail season. what did we learn from the stock reaction? up 15%.you have shares i want to talk about the press release. saysestingly enough, she she has met with a lot of vendors and customers and suppliers. she's a bit constructive on the company. they have the capacity to deliver improved results. we are taking meaningful steps to drive improvement. some of that will be in women's apparel, active apparel, special size apparel and fine jewelry. they are trying to diversify to capture these different market segments. let's driving the stock higher.

they will be eliminating low categories,n reducing inventory and continuing to revitalize the women's apparel business. continuing to hear about the women's apparel and gross margins. reaction on aice one-day day basis following earnings announcements. lowe's best buy and t.j. maxx, rising 10-20%. gross margins for these companies have fallen. analyst investors are ok if you spend money to make money. short-term margins can be pressured if the long run business is still run pretty well. screen,lip up the next taking a look at the gross but theybest buy fell, are spending to become a leader in long-term technology. t.j. maxx as well, also saying

they are facing a lot of headwinds. they are looking at for traffic to drive sales. lowe's seeing their gross margins being pressured by supply chain, but if you can invest in the short term to make better decisions in the long run, investors seem to be rewarding these companies for all of this. color we have a bit more on jcpenney -- the new chief marketer comes from target. >> she most recently served at target, where she was the senior vice president of apparel and accessory merchandising. target considered to have done extremely well recently. they preannounced their holiday earnings, saying they've done well there. she also recently worked at cap navy. navy -- gap and old

definitelyis reacting to her appointment there. she will help turnaround their apparel segment at jcpenney. alix: the consumer -- do you like consumer staples? steve: we like discretionary. soay is my wife's birthday, i will go out and fix it. [laughter] steve: the underlying fundamentals are good. labor market is fantastic. we are getting some wage gains. a bit lowermay be or higher, but it's tax return season. you had a bit of a slow down at the end of last year because of the government shutdown. we are in a bottoming phase right now. we will have a strong may-april season going into that easter

holiday and passover season. the consumer is poised to do fine here. it takesr rates, pressure off the more vulnerable retailers that had some debt issues when rates were rising. alix: emma chandra and steve chiavarone of federated investors, thank you. macy's up over 10%. 10%.penney up over david: we turned out to viviana hurtado. mark: president trump says -- viviana: president trump says, "sometimes, you have to walk." the president speaking to reporters in hanoi. >> basically, they wanted these sanctions lifted in their entirety and we couldn't do that. ke a were willing to de-nu

large portion of the areas we wanted, but we couldn't give up all the sanctions for that. we had to walk away from that particular suggestion. viviana: president trump says the u.s. presented kim with evidence of additional nuclear sites. ministers prime calling it a gesture of peace. tomorrow, pakistan will release this indian pilot. the u.s. urging the two countries to refrain from further action. this standoff is the worst there in 50 years. warplanes bombed a terrorist site in pakistan. -- lower oil prices and write-downs hurting results.

a class action settlement with u.s. investors following the so-called carwash bribery scheme. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. the salt field is the place. exxon is making a huge bet on this. finally opening up the good stuff for foreign companies. that's a big place for growth for the next couple of years. david: they had some problems with offshore drilling operations. alix: they are not operationally good as an exxon. they don't have this flexibility. pemex has been hurt. later on, i will be speaking with todd becker. ethanol producers are in the

worst spot ever. 70% --as a tariff of margins are negative. what do you do? david: ask mr. trump to fix it. alix: they are betting on protein. things like feeding fish. watch i better "commodities edge." president trump against michael cohen -- we will take a look at the washington drama and wall t'seet plu plus reaction. trump people who follow blindly will suffer the same consequences. ♪

viviana: this is "bloomberg daybreak." hour, thein the next centerstone investors founder and cio. this is "bloomberg daybreak." viviana hurtado. say the nexter generation of autonomous driving technology should be market ready by the middle of the next decade. automakers are becoming more open to reaching out to competitors to share costs for electric and self driving cars. shares of hp plunging in premarket trading. would fall sales for the rest of the. hp reported revenue in the

holiday quarter that missed estimates. ab inbev reporting better-than-expected earnings growth. demand rising in markets like china, europe, mexico and colombia -- they see strong growth this year and they are extremely bullish on u.s. market share growing at the fastest pace in five years. alix: we turn now to wall street beat. branson'serica funds lending himke by $1.4 billion. of a lawsuitissal -- cohen captivates wall street. all eyes turned to donald trump's former lawyer yesterday. david: i didn't watch any of it. did you? alix: i had 4000 pre-tapes.

david: joining us now is lisa abramowicz. we know about mr. branson going after jes staley at barclays. jp morgan singh we will fund you. bank, bank a rival -- a direct competitor, reducing the competition for bank of america. risk point.stemic what happens if the financial system deteriorates at the same time? what sort of exposure does bank of america have if they have this $1.4 billion loan out to an investor?

of calls has all kinds and derivatives and things like that, which may increase the volatility. alix: i thought bank of america didn't like risk. brian moynihan said he wanted to take more risk. sachs pulled back from a tesla loan because it was too risky. agreemente is this among bankers not to go after each other. this is in direct violation of that. david: we don't do that to other banks. wins,if bank of america maybe others will do this. alix: bnp winning a dismissal suit. -- there were

individuals who try to sue. lisa: a trader wanted to buy certain derivatives. instead, he didn't check his receipt to notice that he was charged 54,000 euros for each derivative contract -- he is suing for $186 million in losses. the german court said wrong jurisdiction. sorry, take it to paris. wealthy traders are just like you. they are not checking their receipts. why did this take so long to come out? mistake seems like something you would catch quickly. he's already gone to france.

alix: congratulations to the lawyer. david: let's talk about michael cohen testifying on capitol hill, speaking of lawyers. >> i'm ashamed because i know what mr. trump is. it was my experience that mr. trump inflated his total assets when he served his purpose. mr. trump new up and directed the trump moscow negotiations throughout the campaign and lied about it. everyone's job at the trump organization is to protect mr. trump. say youepublicans should know a liar because you are a liar. lisa: it takes the focus directly off the mueller otherigation and to this investigation in new york.

given the connections between mr. trump and deutsche bank -- is this going to be financial fraud? an obliquecohen gave reference saying you have to talk to the southern district -- we have mr. scaramucci coming to trump's defense. >> the first part of it, i was therefore year -- there for a year. i think it's a stretch to call him a racist. my friends wouldn't say it's a stretch to call me a racist. alix: what reality show are we watching? if you were at deutsche bank and all these headlines crossed -- david: they have the documents.

how they evaluated his home at westminster. he wildly inflates it and they loan against it. this, allegations from someone who is an admitted liar. the issue here is the focus on the financials, which president trump said was a redline. that redline is been crossed. prosecutorsany bring cases based on people who are questionable on their ethics? your best witnesses are not normally boy scouts. he did have documents. many thanks to lisa abramowicz. way -- whileile huawei's first u.s.

court date. ♪

david: i'm watching huawei. they are rainay rraigny a huawei in seattle. n arraignment today, that's about lying to banks, fraud. she appears in canada on march 6. they have to have a whole legal proceeding to send her back to brooklyn. is there any influence that president trump and his staff would have to say you're

hurting this trade deal, you have to back off? david: they shouldn't. there's a scandal involving prime minister trudeau on just .hat issue it should never happen. saying this is a redline for us. david: i'm not sure china sees that distinction. call up your attorney general. alix: coming up, the centerstone investors founder and cio will be joining us. this is bloomberg. ♪

alix: the art of the deal. president trump walks out of

talks with kim jong-un in hanoi. d.c., robert lighthizer says it's about how to enforce the commitments. ,cpenney beat on earnings hoping for a turnaround. u.s. growth stumbles or face plants. first growth limping along. david: welcome to "bloomberg daybreak." it was remarkable when i got up this morning to hear president trump being pretty cheerful about it. i could have done a deal. it wasn't good enough. alix: which could leave him in a pretty good position. yesterday, when it was all handshakes and hugs, it seemed like it might be a bit different this time. david: it's much worse making a

bad deal. it's the deals that you don't make that often define your career. alix: a different story when it comes to china monday morning. david: that will affect the stock market a lot more. alix: friday, it was trump-lighthizer. a tiny bit of risk off, off the lows of the session, jcpenney up 21%. euro-dollar around the highs of the session. overall, european inflation coming in just a touch higher. the 10 year yields down to basis yield downhe 10 year two basis points. gotd: 30 minutes ago, we jcpenney numbers and their stock is now soaring because they had fourth-quarter earnings

beat. >> comp sales were a miss, but cutting inventory by 13% something analysts are excited about. the ceo puts the tone of what i'm trying to capture here -- they are looking at taking meaningful steps to drive improvement in key businesses like women's apparel, active apparel and special sized apparel. eliminatingking at low margin products. the first seven pages are focused on growth margins. they reduced their inventory levels by 13%, eliminating reducings and clearance selling margins to

historically low levels. they are off 15% in 2018. you have to go back to 2013 to get growth margins that low at -18%. ther to 2012, they were in low single digits. the ceo sees a some opportunities there. , is this a case of the bar is so low that any non-bad news is good news? >> that is true. it is good news. whenever jcpenney has management team changes, there's optimism on the new initiative. what she is doing is pretty

impressive. women's apparel has been an area of struggle for a long time at jcpenney's. they need to get that right. the new on that -- chief merchant they've hired comes from target. if target does one thing right, it is definitely apparel, their signature category. outside of that in terms of bringing growth margins back to 2012 levels or higher, that will be a hard feat to accomplish. they can narrow the gap. alix: how much low hanging fruit is therefore jcpenney to capitalize? >> there's a lot left still. they are scratching the surface with appliances. there will be more noise from other clearance activities they pursue to get the business

stabilized. et,x: joining us now on s abhay deshpande, centerstone cio.tors cofounder and do you like retail? abhay: we are bottom up investors. i don't make broad thematic opinions. the color before mentioned how jcpenney is trying to take the target playbook. brian cornell started at target, he said focus on their core categories. that started a broad turnaround. target is something we own. companies. t.j. maxx aside from that, we are very careful not to get trapped into these dying retail channels.

regardless of what jcpenney tries to do, their core consumer is leaving the brand. they are not able to capture the millennials, who have completely different shopping habits. david: take us through your bottom up analysis. what causes you to like a jcpenney -- like a target and not a jcpenney? we saw best buy do well because they are driven by services increasingly. abhay: the key difference is that some of these concepts are destination concepts and some are part of a dying retail model. best buy is a destination store. walmart is a destination store. ,hey are surviving on their own they have a captive customer

base. they are providing more modern services, online delivery, same day delivery. that's a very significant competitive advantage versus a trapped or anyone else in these channels that are dying. atx: when you take a look beat,ompanies that have does that take pressure off the corporate credit market? >> it certainly helps. you can see the reaction instantaneously. retail was a big story over the last year or two. earnings matter. the sectors sorted itself out . we don't really get the same got aon retail that we year-and-a-half ago. david: how much dispersion do you see on the yields?

are there winners and losers? >> no question. of onelike the earnings they aren't going to terribly day aren't -- one going to terribly change that. target is considered to be safer. there is noise around a company like best buy. a bond market investor, there's lots of choices and ways to build the portfolio. we don't get the same volatility the equity guys to. alix: what do you see in corporate credit? >> we had been skewing toward the short end. we've been using two-year corporate papers as cash substitutes. 2.25% on paper. we've been favoring more this discoverment paper

-- we have been favoring a short paper. >> december was tough. the uncertainty in the market was huge in every way. political uncertainty. they were telling us three hikes, may be more. the balance sheet was on autopilot. rate volatility has fallen to an all-time low. that helps you and then will hurt you. , corporates collapse credit is at its ten-year average -- it helped us. it was in the price in december. we still like it. people think it is the calm t itre the storm, bu

could be the calm before the calm. david: abhay deshpande and brian weinstein will be staying with us. whether it's talks with north korea or china, the trump administration's art of the deal could be no deal. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." shares of hp plunging in premarket trading. for its printing supplier business will fall for the rest of the year. revenue missed estimates. the world's largest beer maker,

ab inbev, reporting better earnings growth. inbev sees a strong growth this year and is increasingly bullish on u.s. market share growing at the fastest pace in five years. the world's biggest mining company shaking up senior ranks to put more women in leadership roles. women will now make up half of the 10 member executive team. good job, bhp. finding women in the mining industry is tough. to 12.they are up banking, it would be a lot

easier to get women then mining -- than mining. president trump and robert lighthizer saying they would rather walk away from the table than make a bad deal. >> basically, they wanted these sanctions lifted in their entirety and we couldn't do that. ke a were willing to de-nu large portion of the areas we wanted, but we couldn't give up all the sanctions for that. we will continue to work and we will see but we had to walk away from that particular suggestion. >> if we can complete this effort -- again, i say if -- and can reach a satisfactory to the all outstanding issue of enforceability as well as some other concerns, we might be able to have an agreement -- much still needs to be done both before and agreement is reached

and, more importantly, after it is reached, if one is reached. alix: still with us, abhay deshpande of centerstone investors and brian weinstein of morgan stanley. brian: it's always about uncertainty. something like north korea, it is not an immediate and obvious market impact. does this make people less likely to spend? the china uncertainty is a bigger deal than that. we had a good rally, so who knows? are we building up a resistance to this uncertainty about china trade? it's been two years now that we've been hearing about it. abhay: i don't know. this allstion that ends with a trade deal is a

false premise. this is part of a broader realignment of relations with china. it includes military, industrial trade, everything needs to be looked at. trade theft has been a major topic of concern for the u.s. government, in particular the .ilitary there is a broader realignment they are looking at. trade will be one thing. xi needs it economically and trump needs it politically. david: is there a second order effect to make capital investment? i'm not sure how trade is going to work out with china or europe or even mexico. trade many of these

routes have been rerouted to avoid being dependent on china. you are trying to re-scramble an omelette that we've been cooking for 40 years. u.s. shareholders have benefited greatly from being able to offshore the -- two other countries -- to other countries. they have a lot of variable costs they can reduce. the knock on effect has been that businesses here are more valuable from a multiple perspective. that's why stocks are trading at higher multiples because there is less cyclicality to them. shareholders in general don't really want a complete disentanglement of the gains they have benefited from

outsourcing and china being the production machine. alix: a forty-year omelette would be terrible. take a look at the 10 year yield. or ist a safe haven bid this an underlying issue with the u.s. economy that has yet to be addressed? brian: i wouldn't read into it that it's a bad sign for the stock market. the fed taking themselves out of the equation lowers volatility and risk premium. there's no signs of inflation. the idea that the fed would welcome inflation has steepened the yield curve. we aren't taking induration position on here. it is kind of stuck. we aren't going to learn that the fed is being more hawkish. i don't think they are going to ease, either.

what's going to move the 10-year note? data.employment i think you are stuck in a pretty tight range. a risk in there not much risk -- and being not much risk -- in there being not much risk? abhay: that is a really good point, especially when stocks don't have a margin of safety. market wast of the substantially undervalued last year, especially cyclical areas. people were assuming recession and all that stuff. many of these cyclical stocks just dove 60-80%. .here's definitely more risk

had there been a decline, there would be more risk in the market right now. we will occasionally spend time on the macro or technical things if it makes sense. i saw some figures the other day there had been 300 rallies going back 150 years -- 78% of them were 20%. -- 78 of them were 20%. 25 were in bull markets. the odds suggest we started another bull market. we will see. and briany deshpande weinstein staying with us.

premarketer in the for tech. more in today's bottom line. this is bloomberg. ♪

david: time for the bottom line. first of all, bristol-myers. they have met another dissident from the acquisition of celgene. expressed star board some doubt about it. now, the second largest shareholder coming in saying we don't think it's a good idea. alix: interesting. how many activists are in the market right now. i'm taking a look at in bed. -- ab invev. the huge write-down they had to fourth quarter beat estimates. they are more bullish on the u.s. even though shipments that fall. -- did fall.

it is global, not domestic. alix: beer is beer. david: the third story we are watching today is about technology. still with us, abhay deshpande of centerstone investors. this piece crossed late yesterday that there were a couple of tech stocks that didn't do so well. >> you had a couple different companies -- fitbit was down double digits following its earnings report. voxas another, booking.com, -- tech earnings had been relatively good leading up to this dismal series of reports yesterday. there are two trends that emerge. with fitbit, they are looking to make their devices more accessible. that means they will be cheaper.

that will weigh on their margins. a similar theme at booking.com, ramping up their spending on advertising, trying to expand into home rentals. competition -- seeing competition from airbnb. with voxsure in europe and hp seeing lower demand for inc. supplies. -- ink supplies. david: what are the ones you and which are the ones you look to stay away from? abhay: booking.com, there are barriers to entry. these good ones get taken out so quickly. a company that is a

specialty chemical provider to the semiconductor industry. it doesn't matter what fab demand is -- the specialty , it's the oilcers that keeps the machine running. there's a bidding war. integrity was the first -- entegris was the first. chemical maker has joined the fray, too. alix: coming up, count down to fourth quarter gdp. it is finally out. this is bloomberg. ♪

alix: i'm alix steel. 30 seconds away from fourth-quarter gdp. it has been delayed. fourth quarter and housing starts coming in weaker december.

softness all of the equity market. in other asset classes, euro-dollar moving higher. inflation in germany stable. up 1.4% year on year. finally get the numbers. fourth-quarter gdp. beat ofch is a big expectations which were 2.2%. personal consumption lighter based on estimates. core pce on a quarter to quarter basis of touch stronger. i have to say was expecting something bad. because of the retail sales and such. that lends more skepticism to what we saw in december. david: inflation is more than what we thought it would be. we do not accept the retail numbers that were so bad. we will not accept these because they are good? alix: business investment wound up picking up.

that does suggest growth could be more stable and stronger versus reliant on the consumer good -- reliant on the consumer. david: fascinating giving what is going on in the market. still with his our abhay dish anday -- abhay deshpande brian weinstein. initial reaction? brian: a surprise given our memories of december. i think the market will look at it -- it is good news. it is helpful. i think people need to see live data to prove things are ok now after what we lived through in december. i am surprised the strength is there on the business side. i agree. taking theirought hands off and --

alix: unless october and november were strong. you have software and equipment. those with a solid areas of spending. >> these can be revised. they will be revised. it is seasonally adjusted. we're not big believers in the recession is coming, but it has to take that off the table. it seems like businesses are spending -- maybe we will not grow 3% or 4%. 2% who have this 10 year tell, which is not been so terrible. things are getting as high as low as the markets think they are going to. profitable to read this against what the administration wanted with tax cuts. a lot of people were saying by now we start to see the effects of tax cuts dissipate. if it is not dissipating as much, maybe there's something to

the theory. look at how consumers are funding their spending, there is a lot of reliance on credit. they are barring more to sustain the level of spending. it is hard for me to see there is sustainable 3% gdp growth ahead of us. if you look at the consumer sectors, you can find stress, but the consumer has been strong. they do a good job with their balance sheet. they could use more leverage. david: it has gone up some but it is still fairly healthy. 2.5% is above trend. most economists would take that. inflation-adjusted disposable income up 4.2%, the most we've seen in about four quarters. if we run it out to the market,

you've basically what powell said. all of the indicators in the u.s. are good. still freaked out over things overseas. it seems like financial conditions, the stock market is their third mandate. numbers morer bond interesting than six weeks ago? abhay: we responded to the price weakness in december by buying a lot of stock. i started last year with almost 30% in cash and ended the year with 10% in cash. december 24, i was a big buyer of stocks. we tend to be early. we tend to react to prices. what we are looking at is has there been a significant change or airman to the intrinsic values of businesses out there. we saw zero effect. all that happened was that the safety group substantially, in december. i think stocks, generally speaking, are interesting.

we had a 20% rally. you will have a correction at some point. a lot of what we bought are still down 50% to 70% from the bottom. this rally is brought. it is not just the banks -- this rally is broad. is not just the banks. even ge is going up. david: for ge. -- poor ge. bondholders are happy at ge. is this good news for you in fixed income? what is the reaction? futures tend to be going down. yields tend to be going up. what does this do to mr. powell and his strategy of not raise rates. brian: it makes it more difficult but i think he has some time. the fed raised rates a lot. situationed with a

where he did not know it would keep getting tighter. accomplishing volatility and climbs was fine. having them all at once was not. he has backed off. this number makes it look like he is backed up too much. ofre'll be enough noise -- the economy gets up, we know what we need to do. inflation,t of wage a little bit of extra growth, the 10 year at 2.66, it will not stay there, it will move higher, that will pressure equities. alix: is there a self correcting mechanism. rich clarinet is speaking in washington. is there a feedback loop? find ishat they will that inflation pressures are on the wane, not just in the united states but globally. central bankers have a lot of room to let the economies run at this point. they have weapons.

look at unemployment claims. they are near lows. they have not turned. the economy seems to be fine. this idea of recession in the next few months, we have dismissed that. the market was convinced a year from now the roubini's, though it -- the year from now there would be an ease. david: an interesting question from a viewer. is it likely we see better than expected numbers like today being bullish for sentiment or bullish for the u.s. dollar? i think we would all like to see growth from somewhere else. we have below trend growth in em. the stronger dollar starts to put pressure on everybody else. given a choice between strong u.s. growth and going into recession, i think you need to be clear you want the growth.

if we got into threes and fours and europe cannot caps on, then we have a prompt -- and europe cannot catch on, we have a problem. we're expecting better data from china, better data from em. it will keep the dollar from cheapening a lot, but as long as that flat lines we are ok. and --bhay dish fonda abhay dish fonda -- abhay desh ,ande and brian weinstein thanks for being with us. fourth-quarter gdp came in better than estimate. it was business investment that came in strong, whether it was software or equipment spending. we also want up looking at what is happening with pg&e. looking at a $10.5 billion firee related to 2018 camp

that destroyed the company and put them in bankruptcy. david: and another $1 billion for 2017 fire they had. at the same time, their earnings-per-share beat estimates. sayheadline for me is they it is probable -- the camp fire cause. alix: who will pay for climate change? they have to submit to the california utility commission that this is our plan and this is how we will upgrade our facilities. angstill cause a lot of for bondholders. david: you can see a much the stock is moving all this news, going up, probably. once they start taking a look at the reserves, and the causation, going back down. alix: for more on pg&e, taylor riggs has been digging through the release. taylor: you guys noticed the share price moving higher in

premarket mouse shifting lower. we try to determine what is going on. we are getting more numbers. they did reported $10.5 billion charge related to the 2018 camp fire and an additional $1 billion charge to the 2017 wildfire. that is on top of a $2.5 billion charge already recorded. the 2018 camp fire still under investigation. the company saying it is probable their equipment will be determined as the point for that camp fire. they have taken a total of $14 billion in pretax charges related to the 2018 and 2017 fires. that is on the lower end of their range of what they had expected in terms of their losses. they are reported previous estimates of $30 billion. sifting through the numbers. -- wee market is reacting

are taking a look at noncurrent liabilities. this is long-term debt. this is what got the company in trouble. this is the per market cap. it is heading lower. we start to differentiate between bondholders and equity holders. because they are in bankruptcy they will not get an earnings call. here is how the bonds are reacting. heading lower. these are some of the corporate bonds in 2021 that will be maturing. a lot going on. they are reporting at $20.5 billion charge related to the 2018 camp fire and a headline number lower than the losses they were anticipating. they do think they might be just german the ignition point for the 2018 wildfire. david: thank you so much for the update. coming up, slowing global growth in china's manufacturing sector. we take a look at the chinese

sector. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." coming up on "bloomberg markets," an exclusive interview with alan greenspan, former federal reserve chairman. lead.time for follow the a deep dive into stories making headlines and moving markets. today we are digging deep into china's economy. overnight data shows signs of contraction, particularly in china's manufacturing sector and the new export orders. ,hat yellow line rolling over

bringing questions asked of global growth worries. those concerns are affecting the investor views of copper even as supplies tighten. we sat down with the ceo of the biggest publicly traded copper producer and talk to him about the market place. >> we have this disconnect between the physical marketplace 'or copper and investors perceptions of the future. we're at a fork in the road. either there will be significant dislocation in china or copper prices will rise in the near-term. longer-term i feel good about copper because the fundamentals of supply being limited and demand being driven by brought economic factors related to andlopment in countries things like alternative uses for copper and electric vehicles and alternative energy generation.

we supply from our u.s. minds about one third of the copper to the u.s. economy. we are challenged in meeting customer's orders. commercial arrangements in indonesia for the selling of copper concentrate for mines outside the u.s. continues to be strong. demand is high. our chinese customers are anxious to secure supplies, as are our customers in japan, korea, the philippines, and india. alix: you can see more of that interview and commentary at 1:00 . do not miss that later on today. for more on the chinese economy, we are joined by chi lo. what is the reality? you have pmi's rolling over and then you have the ceo of a copper company saying supplies are tight. who is right? chi: both. alix: how? chi: if our forecast is right,

the second quarter we should see more concrete signs of economic stability and a gradual recovery. that would increase the chinese demands for imports, including copper. it is an unfolding story. alix: how much of that is going to be dependent on all the new loans we saw on january and the credit that has been popping? can that offset weakness with trade? chi: not completely offsetting the global contraction on trade but the credit growth is important. we do need to see continuation of recovery in credit growth, which we have seen in the past few months already. ,f you look at the pmi numbers new orders do not do badly. when you have the new export orders coming down, which means the domestic component in china is not bad. we may be seeing the start of

stabilization in china. david: other problems down the road with china? president xi wanted to cut down on leverage. now he's going to have to re-leverage to get the economy going. chi: the short-term is to re-leverage. once the economy stabilizes he will go back to the deleveraging process. alix: when you take a look moving forward, what is your best case for a trade relationship between the u.s. and china? robert lighthizer saying there will be concrete enforcement, currency manipulation, no deal without a deal. what happens? chi: the negotiation will be a long-term process. it could last for years. in the meantime, as long as the sides agreed to talk, that is already progress in my mind. the u.s. is right the china has to do structural reforms. china realizes that. from the chinese perspective,

how much they can deliver may not be equal to how much the market or us in the developed world expects us to deliver. that gets and what is driving asset prices. bmp senior china economist. congress increasingly expediting its constitutional authority. we welcome one of those responsible for dealing with trade on capitol hill, congressman earl blumenauer, a democrat from oregon. he comes to us from capitol hill. thank you for your patience. appreciate you being with us. we heard from robert lighthizer yesterday. the initial reaction in the market was he was lowering expectations of what kind of a deal we could get. he said if we could get a deal. what did you take away as you listen to his testimony? >> there is significant

confidence with ambassador lighthizer. he has been very open with us. he is a long time skeptic about china but he is realistic. it is not inappropriate to lower the expectations. this is a long game and we are talking about structural changes necessary in the chinese economy but these are changes we've been waiting for since 1999. , it of what is going on here think the ambassador heard that while there is support for selective application of tariffs, there is deep concern that is not the only thing in the toolkit. my colleagues and i have expressed concern there is a go it alone approach by president valuing the strength in numbers with people who share

our interests and concerns. multilateral approaches have merit. damage to american consumer -- there israel damage to american consumers with the tariffs. rep. blumenauer: one of the most fundamental -- david: one of the most fundamental questions, bilateral versus multilateral. i'm sure you can sympathize with what you said about the wto. they did not comply with a lot of things they -- you can understand why the president says wto did not work, i have to put pressure on bilaterally? rep. blumenauer: i do not think we exercised our responsibilities under the wto, putting more pressure, using the mechanisms we have. we are not the only people who have these concerns. as a practical matter, the president undermines our ability for collective action, signaling that canada, one of our most

trusted allies for over a century, fighting with us side-by-side would be subject to tariffs based on national security concerns? this sends confusing signals that undermine our ability to work with other people. the ambassador is somebody we are interested in being able to cooperate with. rep. blumenauer: coming back for -- david: coming back for one last thought, one of the things you talk about was enforcement. not just market access, not just technology, but the structural change of getting the chinese to follow through on what they promised. are you confident we can get your world where we can enforce whatever we agreed to? rep. blumenauer: that was part of the line of inquiry i had yesterday with the currency questions. the way we demonstrate our commitment to enforcement is by enforcing areas where we can. we have had areas that are right

for enforcement. the united states has hung back. i think working hard to develop new mechanisms, but also to enforce agreements we have now. forave blatant disregard the free trade agreement that has been lingering for years where peru is in violation and there's massive illegal activity continues. we have to get serious about enforcement and send a signal to our trading partners we are very committed to making these things work and using our tools. david: a lot on the trade agenda. you're a busy man. thank you so much. congressman earl blumenauer of oregon. this is bloomberg ♪.

alix: fourth-quarter gdp number totally surprised. r&d spending up 13.5%. also consumer spending made up

inost 2% of the increase spending on things like structures had the biggest drop. equipment and software spending moving higher. companies were spending. we were not expecting it but they did it. they: on our noon program said we had words about the world but -- larida said thea u.s. economy is good. coming up on "the open" keith parker will be joining jonathan ferro. this is bloomberg. ♪

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

powelln: coming up, patiently waited for cross current. the u.s. economy remains resilient. chinese manufacturing continues to slump. no deal in hanoi. the president walks out after kim jong-un rejected u.s. demands. good morning. futures off the lows and down .1% off the s&p 500. the euro positive. treasury yields back at 2.70. up two basis points. the economic data in the u.s. is still looking decent. the data elsewhere, not so much. >> we do see growth slowing. >> the wider environment of slowing global growth. >> we have a slowdown, we were supposed to have a slowdown. >> we were never going to say at this -- stay at the strong pace for global growth. >>