tough struggle. a warning from china's premier as the country announces a race for growth this year between 6-7%. target raising its guidance, sees comp sales and the low to mid single digits. wheat, gold, oil, looking at all those commodities. david: welcome to "bloomberg daybreak." we have coals numbers out -- kohl's numbers out. it beat on comparable store sales. they did better than estimates on the earnings-per-share. 1.6%, not as much

was earlier. alix: you have to wonder if sales are coming in a touch light. maybe the market is forgiving it because of the dividend. david: they are making money on it. that's good. target, relation to they saw comp sales in the high single digits. david: exactly. now.for target, up 5% sales,beat on same-store up 5.3% versus the estimate of 5.1%. they took the items up. alix: if you are a retailer and you are not terrible, that is really good at the end of the day. we are breaking that down. you have s&p futures up by four points after the s&p fell the most yesterday in about three weeks.

we are looking at what happened in china to see what global growth we are looking at. euro-dollar flat, the eu services sector stronger than estimated, keeping the composite a bit higher. at 2.74.ar yield crude up a 5.4%. .4%. by we have supply coming on from libya. u.s. market:45, services and composite pmi's. the bank of england governor will be speaking before the house of lords economic affairs committee. alix: time for the bloomberg first take. we are joined by gina martin adams and marty schenker. kohl's also lifting its guidance for the full year.

similar to what we saw with target. what is your take? stands out as evidence of domestic strength continuing, which is good news for the s&p 500. you are seeing weakness emerge for the multinational companies. those exposed to europe and china are the weakest links. the domestic oriented companies are quite strong. when you look at the entire season of the fourth quarter, you have overwhelmingly companies negatively guided. the vast majority was neutral. c retailers guide and the positive direction, evidence of domestic stability. david: on the one hand, we have

a robust jobs market. on the other hand, there were reports yesterday, tariffs are having a negative effect in the in the short term, more than we thought. solid,wage growth is that means people are spending domestically. you have to give donald trump some credit for that. credits, thee tax domestic economy is strong, what i'm doing is working. david: as long as it ends up in productivity growth and investment. gina: that is just a step too far. david: let's go to china. china out now with the economic report. wedid basically what

expected. growth. of 6-6 .5% they have some fiscal stimulus in the off-balance-sheet local borrowings and special vehicles. marty: china has a huge undertaking to keep the economy growing while making sure it doesn't overheat. in the context of trying to negotiate a trade deal with donald trump. they have a large task ahead of them. they are trying to thread the needle. alix: the narrative today is more stimulus from china, isn't that great? 6% gdp is the lowest in three decades. gina: the nondomestic areas of the world are certainly slower than we would like to see, but not dipping into recession.

with the big shift we've seen in policymaking in china over the last year -- last year at this time, they were tightening policy, trying to clampdown on that growth -- debt growth. this year, you are seeing stimulus feeding through into better economic growth in the next 12 months. how sustainable is this long-term? they do have to thread the needle. they do have to find that balance between when growth is andgh but not inflationary not contributing to overall debt growth. they have found ways to keep that relatively -- debt relatively stagnant. they don't want to see it accelerate. trump we have president bringing india into the picture as well as turkey overnight.

pretty interesting in the context of india. is,narrative with in india wait a second, we are supposed to be the buffer between china and the u.s. and donald trump is not being our friend? they seem to do things that run counter to the geopolitical realities on the ground. indiathe government in just made it harder to do for walmart and amazon. our third story has to do with goldman's commodity call. positive returns will need to be further justified by further evidence of improving fundamentals. thereforeeward is b less compelling than a few months ago. what do you think about that?

gina: it is consistent with what we've been saying about the equity market. you've had your big bounce. now, you will have to pick your spots a bit more carefully. this is a reflection of the risk bottom we've v made across risk assets. going forward, we are expecting a bit of dispersion of returns, alpha generation will come, but it's reflective of the overall macro mission. david: we got european pmi's out. they pointed the other direction with commodities. european pmi's are picking up. maybe there's hope for europe after all. marty: that is the big question. u.s. growth is pretty solid. what's happening in the rest of the world is the issue. china is starting to stimulate.

if europe does better than forecast, it could be very helpful for commodities going forward. you, gina martin adams and marty schenker. you can find all the charts we just used on gtv . china's lowere on growth targets and the fiscal plan. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." papa john's founder john n fromter will resig the board after using a racial

slur. the move coming after star board activistnded an movement at papa john's. shares of salesforce.com lower in premarket trading. they gave a revenue forecast that fell short of estimates. that guidance suggesting it may not be able to keep growing at its previous rapid rate. ghosn's release from jail is in jeopardy. been behind bars since november over allegations of financial misconduct. prosecutors have appealed that decision. even if he is freed, they could arrest him again on new charges. that's your bloomberg business flash. david: china has lowered

expectations for its economy. said the country must brace for a tough battle ahead. a full analysis of developments in and outside china shows that in pursuing development this year, we will face a graver and more complicated environment as well as risks and challenges foreseeable and otherwise that are greater in number and size. we must be fully prepared for a tough struggle. reporting now from beijing is david ingles. thank you for staying up late and reporting for this. we knew they were going to say that things were slowing down. what was the biggest surprise we got out of this? david: right. in a lot of ways, it was really telling or confirming what a lot

of economists were telling us anyway. we were getting growth rates below the official target. they are basically saying we have a floor in growth. that's a good thing. to cut taxesning and that is meant to leave more money in the hands of private sector consumers. buried within the details is the government raising the amount of money that local governments can raise in the bond markets. dollars -- $320 billion u.s. that takes your budget deficit to gdp from 2.8% closer to 5%. lots of moving parts they have to grapple with in order to keep range. which is why we are looking at a range out of beijing.

david: that's david ingles. alix: joining us in new york, walter todd, and on the phone, george magnus. you studied china for decades. the special-purpose bonds the state can issue, that is separate from the government's balance sheet. is there a concern that china will overheat? think there's a concern about overheating at the moment. the issue really is the slow son is so ubiquitous and deep-seated that what the government is promising to do -- i do think they can stabilize this downturn in time for the 70th anniversary. i don't think it's going to spark an economic revival.

no one doubts the chinese government can throw money at the economy in ways a lot of western governments can't. the issue is whether it's going to improve overall economic performance and get the economy growing on a sustainable path. david: one of the questions is how much debt are they taking on. they say they will keep it to 300% of gdp. that doesn't count if these made by localare municipalities for special purposes. george: i don't think we should be fooled into thinking the limited rise in the official to 2.8%eficit from 2.6% of gdp is anything like what's going on. if you include increases in

, particularly the ,inancing of local governments the special bond issuance allowance is double what it was in 2018. over $300 billion. this is infrastructure spending of budget that is not included in the official numbers. the fiscal stimulus is over a pretty decent proportion. alix: what does that mean for you in the market? walter: china is the key to the world. it's the largest trading partner with europe, europe is close to recession, so the world needs china growth to stabilize. they are throwing the kitchen at the problem. they will likely be successful at stabilizing growth. they are not at risk of overheating.

they just need to stabilize the growth rate over there and help the world turn out of this slow down we've seen since the start of 2018. we are encouraged by the steps they are taking. they are taking significant risks. think they are doing the things they need to do. david: what do we read into president xi's position right now? 18 months ago, it seemed like he was totally in command. --, there's some criticism he blamed a lot of problems on the u.s. trade dispute. as strong a position as he was a year ago? george: year ago, he was being -- it's anipotent year that's been difficult. he has encountered quite a lot

tone from state councilmembers and leading intellectuals about his approach to the united states and policies being pursued. the external environment has become more of a struggle. we will see what happens shortly before the summit meeting between the two presidents. it is a bit more on the defensive. he's in any way at risk at this point, but more on the defensive. -- thing that has happened this may be more optics than anything of substance -- at no point in the premier's report did you hear the phrase "made in china 2025." rhetorickeeping that very low for fear of antagonizing washington and

other western countries. there is a sensitivity there. alix: they also pledged to keep fx generally stable. is that throwing a bone to the u.s.? george: this is kind of interesting. they say they want to keep it stable, but there was another statement about flexibility. you cannot do stability and flexibility at the same time. enjoyingment, they are a bit of a purple patch because the dollar has pulled back a bit from where it was last year. that very much. i think the rmb is still very depreciation prone. least, itt while, at

looks to be not under pressure at the moment. alix: george magnus, great to catch up with you. walter todd of greenwood capital will be sticking with us. coming up, target and kohl's popping in premarket as the retailers offer positive outlooks for 2019. this is bloomberg. ♪

alix: target and kohl's out with earnings this morning, both trading higher in premarket after offering upbeat guidance for this year. joining us now, emma chandra. still with us, walter todd of greenwood capital. emma: it's interesting at target, in terms of numbers,, al eyes were on the bottom line all eyesms of numbers, were on the bottom line. sales versus margin,

margin still had a downward, something investors had been concerned about over the last two few years, they are investing so much -- they are drivingg store layout, people to pick up digital orders there. people are saying those costs have really eaten into margins at target. david: how do you see the retail environment right now? walter: the consumer is in good shape. this number proves that. in the effort to compete with amazon, these companies have had to spend more money to provide more services online, which is lower margin. we would rather own the suppliers rather than the bricks and mortars.

they are agnostic to where the bids are sold. there's upside if we get the rollback in the existing tariffs. david: target investing in digital. is it paying off? emma: they had 31% digital sales growth in the fourth quarter, the fifth year in which they seem digital sales be more than 25%. they've said the benefits of more cost effective strategies will payoff more this year. bondsre hoping they see improving over the course of 2019. retailers are interesting to investors when you look at the value basis? be ableand target may to compete with amazon, but

target is trading at a discount. emma: looking company by company, people do like walmart, they are doing a lot of the right things when it comes to taking those digital and in-store sales and leveraging both. that is something target is doing and something kohl's is doing. their strategy has been about redesigning stores and using benefit or support the digital offering. alix: walter todd of greenwood capital sticking with us. i met will be speaking to the ceo of target later today. this is bloomberg. ♪

alix: this is "bloomberg daybreak." happy tuesday, everybody. the risk off feel might permeate today. dayfutures now flat on the

after severing its worst loss yesterday in three weeks -- suffering its worst loss yesterday in three weeks. story, however paring some of those gains. euro-dollar now flat. the euro area helping the overall composite. dollar-yen is what we are focusing on in terms of china. how much downside? a bears points, steepener today. looking at the metal spot index sachsp 1% despite goldman coming more cautious on commodities. we need better fundamentals to get us to the next level. david: a bit of a pivot there.

viviana: good morning. china is looking at what could be the slowest pace of economic growth in almost three decades. policymakers setting the target this year and a range from 6% to 6.5%, giving the government more room to maneuver. china is hoping for a gradual slowdown while they grapple with a debt legacy and trade standoff with the u.s. president trump making another move aimed at unfair trade practices. the president notifying congress he will end key trade preferences for india and turkey. indiaying withdrawal -- saying withdrawal will have no impact. a man with hiv has been cured -- this is only the second time that has happened.

the scientists will publish the report today -- that virus affecting 37 million people worldwide. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. moment and take a say, oh, my goodness, if you find a cure to hiv -- changingne therapy is oncology, cancer, whatever. alix: for those affected by the disease, i'm sure it doesn't feel quick, but you are looking at 50 years that the disease was truly frightening -- a historic moment in our history here. goldman sachs is turning cautious. taylor riggs has highlights.

bullr: more of a cautious now. we are looking at the s&p enhanced commodity index. erasing the 23% loss we had in the fourth quarter. an improving global backdrop. monetarytinuing easing policies, supporting the commodity picture going forward. all of these improving fundamentals driving the more cautious outlook going forward. positive returns will need to be justified to get further evidence of improving fundamentals. they talked about the risk reward being less compelling relative to a few months ago. they are recommending a more neutral portfolio position. they talked a lot about the improving fundamentals. say that there outlook

here fail spectacularly as they went -- fell spectacularly as they when long commodities -- went long commodities. they expect that to rise 5%. you could see energy returns go up about 6% over the next three months. we are calling it a cautious bull. alix: walter todd of greenwood capital is still with us. what struck me about the call is got baked into different asset classes that quickly. walter: i don't disagree with goldman here. equity markets, commodities, the only one that hasn't followed suit is bonds and rates. they are correct in calling for a pause in a lot of different asset classes. copper up 12%.

we haven't seen the improving economic data get. we need to see some evidence that things are turning in china and europe for commodities to have the next leg up. surprise index rolling over now. they need to deliver something positive. industrials in tech leading the way. do you sell that now? walter: you don't need to add to it. having a more balanced approach to your portfolio -- you have some exposure there. out with some cash and exposure to more defensive areas like real estate or health care. we can blame it on the central bank anymore. there was a time when you can blame it all on the fed because they were talking about raising rates. does that make us worry a bit that central banks can save us

this time? that there is a put their on the one hand -- there on the one hand. if things go south, where can they go next? ifgrowth starts to improve, we get the trade deal, does that come back into view in terms of raising rates? the markets don't seem to think so. that is a risk later on in the year. alix: the analyst at morgan stanley saying growth is troughingight now -- right now/ yet they see the 10 year yield at 2.35. how do you swear what's happening with bonds and equities right now -- square what's happening with bonds and equities right now? walter: you can't. think about the fourth quarter

of last year, equities had given up and rates caught down to equities. there's a decent chance that rates start to move higher when you look at the move in the five-year breakevens. rates need to move higher to reflect that. it's hard to square above trend 5 10 year.h a 2.3 510 ye david: matt miller talked with hermann deese at the geneva auto show. >> we have been talking to the trump administration and european administration in berlin. it's really a threat for us. america is a very important market for our premium brands, for porsche and audi.

we are trying to avoid this conflict. it's possible to avoid it. between tariff negotiations, it's not only covering the automotive market -- we can only contribute and show goodwill. matt: donald trump seems focused on americaniff cars. >> i don't think we need to focus on a 10% tariff on importing american cars. scheme is not in our hands. we would be totally open to that kind of discussion. matt: just 24 days until the

official brexit is scheduled. can you quantify the cost of a hard brexit? >> it is very hard to quantify. we don't know exactly what's going to happen. this might be a transition period. , they aret exposure exporting 85% of production into europe and asia and the americas. for them, this would be a major reshuffle of their operations. that was the biggest concern. is a big market for audi. made, someision is way or the other, the market will recover. david: that was the volkswagen diess.rbert

germany so important to europe, exports so important to germany. how much of the problem is a trade problem and how much is a broader european problem? walter: it starts with the trade. that goes back to china and the situation there. that is the cornerstone of the issue. brexit has not helped with uncertainty around that. any resolution we get around that will be a positive for the euro some. -- the euro zone. the manufacturing side is really hurting in europe. david: the pmi's came out this morning. it doesn't show an uptick in sentiment. our thanks turning around -- are things turning around? walter: they are getting less bad. buts still modest 60, that's better than modest 88.

we need to see stabilization and growth -- in growth in europe. european equities dramatically underperformed the rest of the world, reflecting the slowdown we are seeing. alix: we have the boston fed president sounding a bit dovish. he said the markets are still pricing an elevated risk, equities pricing and risk to the in elevatedpricing equities pricing in risk to the downside. walter: the credit spreads, high-yield spreads have collapsed since the peak in the fourth quarter. a lot of those markets that were signaling stress late last year have come in. i don't understand the comment there. alix: especially talking about no immediate sign of inflationary pressures, but 10

year breakevens have had a pretty big run this year. if you are going to look at inflation expectations, they need to be anchored to the upside, that helps. walter: inflation expectation numbers are continuing to go down. not a lot of people paying attention to these breakevens, which had a significant move. those have to come back down or rates have to catch up on the upside. david: coming up, porsche and ferrari take the lead over aston martin. we take a look at the most expensive car of all time. that's next in wall street be. -- wall street beat. this is bloomberg. ♪

viviana: this is "bloomberg daybreak."

coming up in the next hour, an exclusive interview with the newmont mining ceo. the maker of oxycontin is considering bankruptcy because of legal problems caused by the opioid epidemic. advisors toa hired prepare for a bankruptcy filing. the company faces hundreds of lawsuits from cities and states. $4.5one plans to sell billion of convertible bonds to pay for the acquisition of some european units. they will sell the securities -- the may, they agreed to by german and eastern european units.

employeesy paid male less than women for similar work they are investigating whether google systematically underpaid women. the study did not address whether women were hired at a higher pay grade then the men -- than the men. used by ah banks turkey laundromat -- accounts of the three largest firms were used to move cash from russia. themestudy reinforces the heel.on martin's achilles they are also pretty. david: and very expensive.

we want to welcome jason kelly. , anda laundromat unfortunate name -- >> it is really amazing. once this story was pointed out -- this one especially because just yesterday, we were talking about this expanding money laundering probe. you said right before we came on air, it feels like every european bank -- david: it was wet bank before that and then danske bank. it seems like every european bank is involved. this isis expansive, russian money laundering according to this investigation. i recommend people read into this. you get a good sense of the scope of it.

it's not ultimately that complicated. they are laundering money through buying real estate, yachts. david: 43 million euros for a couple of boats. alix: what is next? can't do it through estonia. david: we already mentioned lithuania. that is close to estonia. it went from cyprus to estonia. now, they are talking lithuania. they have a lot of money they have to put someplace. >> you start pulling this thread. david: new york condos. london. who knew -- could be right? atlysts at s&p global looked

the returns of 2400 investors in the u.s. and said it was like. they happened to beat because of luck. >> it's better to be lucky than smart. that's not what wall street investors actually believe. alix: they want that bonus. out, this isted one people aren't going to like. only do you just need to be lucky, even when you perform well, the year after, you are not doing so good. someone who might like renaissance --at some people do get it right over time. >> i had the exact same thought reading this. managers,t these star

there is a reason they get paid so well. they continually outperform the market. david: there are fewer of them. let's go to cars. >> the few who are succeeding may be buying these cars. david: the profitability of aston martin compared to ferrari and porsche. aston martin makes $26,000 a car, 4%. $133,000, a 33% margin in a car. alix: is that suppliers or pricing power? david: it is pure brand. people will buy it for a ferrari no matter what it costs. >> i think you are right. monologue wel type want you to do on cars.

david: this is enzo ferrari. there is no comparison. bugatti?5 million alix: let's talk about what it looks like. you put up a picture of this car versus darth vader's helmet and tie-fighter, they look alike. >> he asked me, do you know what is?e-fighter that's offensive. david: they are only making one of them and it's already been sold. alix: to darth vader. david: they think it went to the former chairman of porsche. owner, they will only

describe him or her as an enthusiast. you think? they just opened up the checkbook and said go ahead and spend it. i think i will buy one. alix: that would buy 300 tesla model 3's. a pretty awesome is that. -- a pretty awesome stat. you would have some kind of garage or car lap -- david: a lap on a track? >> i don't know. where are we going? what's happening here? alix: your own car track at home. take us out. david: many thanks to jason kelly. he will go off in his starfighter now. ghosn getscarlos

bail. least, he says he can be released after 100 days in jail. this is bloomberg. ♪

david: i'm watching carlos ghosn and his bail application. it was approved by district court in tokyo. it's being appealed by the prosecutors. even if he gets a bail application approved, they can come up with new charges to keep him in jail. he's been in jail for 100 days now. there questioning this every day. -- they are questioning this every day. this is interesting to me about what happened to the stock of the two companies he ran -- nissan and renault. that's when he first got arrested.

renault has bounced back. nissan has really trailed off. alix: even nissan is off the lows of the session. them inis leaves general -- we take for granted rule of law here in the u.s. lawyer -- aine a ceo being held without a lawyer? , the fort pitt capital group senior portfolio manager will be joining us. retail is up next. this is bloomberg. ♪

alix: china must prepare for a tough struggle.

a warning from china's premier after the country announced a range for growth this year between 6% and 6.5%. target and kohl's deliver. the retailers raise their guidance for 2019. --will speak to the former ceo. takeover -- newmont offers an olive branch. we will speak to gary goldberg. david: welcome to "bloomberg daybreak." we still have some headlines from mr. rosengren. he is sort of tented had. -- tentative. the clear reading on the risks -- he says patience is appropriate. the markets are still pricing in elevated risks. marks he'sder what

looking at for that. i wonder if the foregone conclusion now is the third mandate -- what's happening with the economy off of that. conditions are loosening. david: we know he tends to be end of. maybe this is the way a dove thanks. -- we know he tends to be a dove. alix: i wonder if he's waiting for trade to play out and that's why he's waiting for a clean read on where rates should be. what clarity he is going to get in the next few months to make him change his take. david: we go back to jeff curry's call from goldman -- not sure about china yet. alix: taking a look at the s&p here.

afters pretty much flat yesterday's sing the worst selloff in three weeks -- yesterday seeing the worst selloff in three weeks. pmi from europe, the composite holding up thanks to services. with supplyp by .3% coming on from libya. 9:45, we will get u.s. market services and composite bmi. for0, new home sales december. 10:45, mark carney speaks before the house of lords. china spy minister gave the annual report on the economy china's prime minister gave the annual report on the economy earlier. >> what you get from the national people's congress is a

government that is very keen on stabilizing the economy. >> using all the tools to get more rapid growth in the future. they are injecting liquidity. this morning, they are talking about fiscal stimulus. >> there was little said about monetary policy. it's almost as if the government's fiscal policies are set on the assumption that we don't get a resolution to the trade war. >> china has decided that it needs to reverse its policies and come all out in support of growth. china gets away, new chance to trigger this reform. >> no one doubts that china can throw money at the economy in ways that many western governments can't or choose not to.

david: we welcome now kim caughey forrest, fort pitt capital group senior portfolio manager and the alpine macro strategist. is this a xi put on the chinese economy? xi put and a reactive policy. the economy slumped. 2018, we had a steep decline in economic growth. the chinese numbers reflect that steepness of the growth decline. we are working off a growth rate 5.5%.ut thre that's why they are doing an all-out out war to stabilize growth. ands a put from xi jinping reactive policy to the outgoing problem. david: why are they relying so

much on fiscal stimulus? >> fiscal policy is very quick. monetary policy always works through borrowers. you drop your interest rate, the borrower has to borrow to get the economic impact. fiscal policy is right into gdp. it's always immediate and very quick and very effective. don't forget, they are doing monetary stimulation, too. the interest rate is being slashed very aggressively. dropped by 3% has in 6-7 months. the reserve requirement has been slashed. monetarily and physically -- fiscally, they are aggressively stimulating. even though fiscal is the most

important part of the equation. alix: what does this mean for you wanting to take on more risk or not? kim: with the china put, that says they are bound and determined to grow their economy. since it's one of the larger economies in the world, even though we have tariffs going on between our countries, it still says they may be buying more equipment. i don't think they buy that much services, but they certainly could buy equipment and parts for equipment from america and europe. that could get more growth going on. i have to agree with your guest saying about the monetary stimulus. if you look at what happens in ratess. in 2009 and 2010, went to zero and borrowers were uninterested. fiscal is the way to get that economy moving. that is what they need to do.

alix: what is baked into markets now? do certain stocks look better today than yesterday? kim: yes. the tech stocks and semiconductors in particular look really strong. china wants to be one of the first countries to roll out 5g. there's a lot of components to that process that the u.s. can contribute to. semiconductors last year were among the most underperforming in that last quarter. it's because a lot of investors assumed that trade would dry up between the u.s. and china. david: in your remarks from the prime minister this morning, there was a lot of emphasis on the impact, the effect on the chinese economy from the u.s.-china trade dispute. if that goes away and there's this deal that has been rumored to be in the works, is it

possible they would over stimulate the economy? >> they are conveniently blaming the economic slump on the trade tension. in my view, the chinese economy is probably entirely policy induced. if you look at the total credit creation, they really crackdown credit creation. that's why the economy got into trouble. trade place in that role toward the latter part of last year, the overall picture is not a key factor for pulling down economic growth. if we have a trade deal, of course, that will undercut the risk premium for global equities, chinese stocks in particular. that's why chinese stocks are doing well. overstimulating, i don't think so, because the fundamental problem with the chinese economy

relative touch desired investment. that's why the investment demand is structurally weakened. the economytime, continues to save a lot of money. that's why the under heating of deflation will be the structure problem for the chinese economy. alix: it's not just the fiscal and monetary, it's also the special-purpose bonds, which could be 30% of gdp total debt. when does that hit the market? speak, the numbers are already beginning to improve. in terms of what we see from economic data, most likely the second quarter of this year, you will start to see so-called green shoots. -- bankdy see that loans shooting up, total social

financing beginning to shoot up. all of these leading indicators are beginning to rebound. what will follow afterwards are economic variables. second quarter of this year, we will start to see some numbers beginning to strengthen. alix: great to catch up with you. kim caughey forrest will be sticking with us. coming up, a level playing field. says he's open to eliminating the 10% tariff. this is bloomberg. ♪

viviana: this is "bloomberg daybreak."

up in stronglowing holiday sales with an upbeat projection for this year. they forecast earnings above estimates. target regaining its footing by remodeling stores, introducing new private brands and expanding online delivery service. kohl's forecasting full-year profit better than expected. projections were in line with estimates, raising their quarterly cash dividend 10%. the papa john's founder will resign from the board over his reported use of a racial slur. he still owns 30% of the shares and will help the company find a mutually acceptable dependent director -- independent director. they put the ceo in charge of the company. david: time for the bottom line.

three companies worth watching this morning -- kim caughey forrest of fort pitt capital group is still with us. -- we had the chairman of vw with matt miller. here's what he had to say about donald trump removing the 10% tariffs. >> i don't think we have to protect our european companies with a 10% import tax on american cars. i don't think it's necessary. we are competitive. in thee to understand whole scheme between different products, this is not in our hands, but we would be open to that kind of discussion. david: we don't need it, but the whole scheme, we need to impose

tariffs on trucks coming into europe. alix: it will work out. david: what do you think about automobiles at this point? kim: i agree with both sides dropping the tariffs and letting competitors fly. automotive stocks and automotive parts suppliers are unbelievably interesting as an area to invest. there's a couple of overall driving changes to the automotive industry. autos but want less still get ourselves driven uber. more with lyft and that being said, the autos being bought in the u.s. are larger and either trucks or suvs. this is a real point of inflection for the automotive companies to shine. we will have winners and losers.

as somebody who picks stocks, i love seeing conditions like this where there is change fundamentally in automotive's. alix: i want to look at salesforce. a pillar growth story. 22% -- increase of only if you are trading on the high-end of your evaluation and have monster growth but can't continue that, what happens? do you like salesforce here? kim: i don't. this is a stock that is undergoing a change. growth is slowing. we all knew it would happen at some point. apparently, this is the quarter. of being ang off

momentum stock to a lower evaluation is always ugly. you will have to wait a long time until the momentum players get out. david: the third story, at&t time warner. people inoing what the industry have been saying time warner should have done years ago -- merging all these together. at&t saying we will make it happen. alix: you have to streamline that all. david: what do you think of at&t time warner? kim: it will make it in some form. this is a longer-term story. you guys know, you work in this industry and no from the inside what changes need to be made. it does seem like there was a lot of excess in time warner.

that has to be wrung out. it will be better in the long run. david: kim caughey forrest of fort pitt capital group will be stay with us. coming up, desperate and bizarre. goldberg, newmont's chief executive, will be with us. this is bloomberg. ♪

alix: newmont gave barrick a resounding no in its attempt to buy the company. the deal would create the largest gold producer. ed hammond joins us now with gary goldberg, newmont mining ceo. ed: a resounding no. we have you guys sang this was a --ential hostile overture same time, we have the barrick

saying the proposal you put forward is a smokescreen. what's going on? gary: the joint venture is a bona fide offer to sit down with barrick and work through the details to deliver what we both areieve our synergies -- synergies that are available. we look at our own track record in terms of delivery, we were up 65% in total shareholder return. barrick is down 22%. we looked at what they proposed. it doesn't stack up against what we've got in terms of gold transaction to deliver that $4.4 billion in value from things we've applied from our operating model. we can do the gold transaction and work with barrick's ability

to add value from nevada. >> bristow asking for a meeting today. have you accepted? gary: we have. i'm looking forward to catching up with him later today here in new york. >> this will be to discuss the jv or the potential merger? gary: this will be the discussion on the joint venture with what we proposed yesterday. >> they are offering a discount premium -- you are quick to reject it. is there a level where it would be acceptable? gary: when you look at the sovereign risk of their assets and some of their esg performance they've had mark ranlly -- successfully for a long time five assets in africa. he is still in the middle of integrating the barrick randgold business together.

exposing shareholders to all that risk when we can work together and come up with the best for both of our business is in terms of how we deliver best seemsto our shareholders to make a lot of sense. >> you proposed a 50/50 split on the operations in nevada. is there room to move? gary: the 45-55 was based on consensus any be numbers -- nab numbers. we are more than happy to work through the negotiations on that. we would both appoint the key operating people. at the end of the day, the voting on the day today and how things operate would be the person who ends up owning the majority economic interests, which is barrick. >> one potential outcome would be to put all the nevada assets co and spin it off.

is that on the table at this point? gary: we are open to different suggestions. once you spin it off, it doesn't have the input from our expertise in operating a global mining business. placeeady, we are in this , a weekend of debate between these two companies -- you had a war of words. you called him desperate and bizarre. quote from the ceo at barrick where he says he doesn't have a single bad thing to say about you. he doesn't know you. in't it strange that we are this very fractious position already and yet, he says we

don't even know each other? gary: that's why it's important for us to sit down and work through the details. when i shook his hand a week ago at the bema conference, i said we need to talk. hopefully we will get together here in the near term. >> in terms of what the shareholders are saying, what conversations have you been happening with investors? -- haveg with investors you been having with investors? feedbackgot good yesterday from one key shareholder who owns both of us and goldcorp as well. he would like to see us at down sit down at the table and work together to create a joint venture. >> if you stay on and your final act is to hold off this takeover from barrick, does that leave shareholders in the difficult

managersof having new overseeing the company -- gary: our coo for the last two years has been running a global operation for three years, which is longer than mark has had the opportunity to run a global organization. came up with seven your guidance for the combined assets -- seven your guidance for the combined -- seven year guidance for the combined assets. why can't they tell us what's going to happen after 2019? how can you believe someone's going to deliver value like they proposed when they haven't given guidance past 2019? model hasg operating proven valuable.

>> is that consistent with what you've expected to see if this merger goes through? gary: we see synergy there. how can you come to the number without sitting together and working together? >> you will sit down with bristow and negotiate the jv and he will take the takeover the shareholders. -- to the shareholders. gary: we need to sit down first and talk about the nevada joint venture. >> we've had lots of news come out with you and bristow -- one person notably absent, john thornton. what's his role? gary: he is the executive chair. mark is accountable to john for running the business. i would suspect that john is over top of all of this going on here. >> we will follow the deal

closely. alix: that was gary goldberg, the newmont mining ceo. still with us, kim caughey forrest of fort pitt capital group. would you like this kind of merger? industry,ng at this it's clear that consolidation needs to take place. it has been. has long beent recognized as one of the best operators from a physical standpoint and esg standpoint as well, which feeds into the fiscal benefits. however, i'm really confused about the whole joint venture. i don't particularly like joint ventures. they are not terribly beneficial to shareholders. they are for companies that their management wants to continue to run a certain

property and that's interesting to them, but i'm not feeling the love behind that jv that these two companies were talking about. alix: kim caughey forrest of fort pitt capital group staying with us. had the biggest selloff yesterday in three weeks. s&p futures now flat on the day. the dax down .1%. the dollar was stronger. .1%.dollar down fromind of euphoria stimulus in china, we are not the yuan ends up slowly appreciating. 2-10 spread a bit tighter.

person --index up one up on 1%. price. david: breaking news. a bank inn bank -- austria is down 14%. the bank has been laundering money from russia that was gotten through criminal means. this was brought up about a month ago. yesterday it into prosecutors and now media is reporting there is an issue with the bank. this comes after the three largest dutch banks have been in a gated -- have been implicated in the troika laundromat situation. bank after bank involved in some sort of money laundering. european bank is

implicated. you can see what is happening to the stock. alix: that is the biggest drop since 2008. your point, itto all started with cyprus. was a originally there lot of money laundering through cyprus of russian funds. lithuania, -- deutsche bank has been implicated. some of the money came through deutsche bank. it seems to be spreading. i do not know of this is all the same or whether it is individual instances. there seems to be something in the water with russian money-laundering. a potential dirty money-laundering scandal. david: the first one i focused on was john skipper bank because because they bank

acquired that business in estonia and all of their business was money-laundering. alix: wise this coming up now? you are about one band-aid and everything flows? david: it is all part of this large investigation. it seems like there is a fair amount going on. raiffeisen that stock .own by 14% the biggest drop since 2008. drawn into a money-laundering scandal probe hitting a lot of european banks. now is time to find out what is going on outside the business world. for that we turn to viviana hurtado. viviana: china is looking at what could be the slowest pace

of economic growth in almost three decades. -- a range from 6% to 6.5%. for a gradualg slowdown while it grapples with the debt legacy and a trade standoff with the u.s. donald trump is making another move aimed at what he calls unfair trade practices. the president saying he will end trade preferences for india and turkey. a 60 day countdown before he can take action on his own authority. india says withdrawal will not have an impact. a man known as london patient has aids/hiv reportedly been cured following a stem cell transplant. that would be only the second time that has happened. scientists will publish the report today in the journal nature. the virus affecting about 37 million people worldwide. 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? david: shares of target and inl's are trading higher premarket after they released earnings and offered upbeat guidance for 2019. here to recap is taylor riggs. taylor: you summed it up. shares of coals are up almost 6%. their 2019 sales guidance beat expectations. they are also getting in amazon effect. they've a program where you can return goods from amazon in store. on the balance sheet, reducing debt and increasing the dividend by 10%. target also getting a boost, up more than 6% on a strong holiday season. they do not look as good on the income statement. their margins are being pressured because they are offering free online shipping to compete with amazon.

no amazon and walmart are making big pushes to going to the grocery as well. analysts saying the grocery business is where target can improve. charts on amazon and walmart and where they can make gains in the grocery business. walmart gets 35% of the revenue from grocery, target only 20%. target only owns about 10% of the market share. online growth is where it is at. both growing about 45%. i want to come into my terminal. when we talk about target, the pressure on margins and profitability, and some of the gains we need to go to to overcome walmart and amazon. aboutt still trading at 1.5 times p/e ratio relative to target showing target might have room to run. alix: thank you so much taylor

riggs. joining us is the former chairman of to me and the former ceo of brooks brothers and still -- and is tim, he forest still with us is kim caughey forrest. let's start with you. when we take a look, what works and what has not? kohl's gotget and off to the season with a fast start. they took advantage of toys "r" us going out of business. their toy presentation was quite strong. about the factd that the toy business was great and the baby business was good. that brought traffic to the store and they got momentum quickly. as the season moved into december and got more difficult .or most retailers remember we had the government shutdown. interest rates were going up. the market was going down. all of the indicators were negative.

because of the momentum those retailers had, they managed to keep that momentum going. they were also value price. all of that work. david: toys "r" us is only going to go out of business once. does that mean next time will be harder or you have other retailers going out of business, maybe i'm -- may be there will be future toys "r" us? >> there will be for sure. now they are headquarters for toys at christmas time. that customer will return next year. it will be more difficult, but i believe they will own that business for a while. alix: the conversation a month ago was margins and how retailers do not have any good margins. that is true, but we do not care now for a target or a kohl's. why is that? joe: they continue to reinvest in the business. they are focused on digital and digital is expensive. they are doing the right things.

neither one wants to turn into another sears. they have to keep doing what they are doing to maintain credibility with the consumer. they are both driven by the consumer. david: one of the things i'm curious about. is this a further indication of the death of the mall? people go to a kohl's or a target. they do not just happened upon it at the mall. kim: i think shopping is more intentional, to use a millennial phrase. amazon is a shadow over the retail complex. they showed us there is a different way to shop and we like it. companies like polls -- like ohl's and target are showing is however you want to shop, they will facilitate that. that could mean direct to your door, it could mean by online, and it could mean going to a store. that is the strength of what target has. amazon has to build that out

because they do not have a brick-and-mortar presence. kohl's is not the best solution for them to have some sort of presence. it is nice you can return things through kohl's and that helps kohl's incrementally, but ideally you would want have more brand presence. alix: to that point, a great article in the journal talked about amazon taking stock in certain malls cap their presence -- to have their presence. is amazon going to save retail real estate? joe: i do not think so. if you look at the soft goods in the malls, -- target is adding swimwear, intimate apparel, activewear, kohl's has a few new launches coming. they are being competitive and

taking the business from the mall retailers like the specialty retailers. what is going in? food. amazon. books. in other locations they are doing other things. the great malls are doing well. malls that ofd d closed-end are being repurposed. david: come back to margins. as you see these brands coming into some of these large department stores, does that put more pressure on the brands? you pay more to get access to those brands. kim: i agree with that, but i also agree -- i want to highlight that target is making its own brand. as a vendor of anything you want to have your own brand and sell those rants of somebody else. on give a little bit

-- you will give a little bit of that, but once you get them in the store you will have comparable products that go along with that purchase and you will make it up on your brand. that is something that amazon wants to do and has not necessarily proven it can do is create its own brands. alix: they are trying to. want to buy a winter coat on amazon yet. joe: amazon has surpassed macy's in terms of its apparel sales. they opened up an area in brooklyn where they are doing amazon fashion and it has gotten great traction. alix: talking about target and what they have done, what does it mean for jcpenney? is that going to be the stock to watch? joe: i think pennies is at a disadvantage.

that is a drain on them. will continue to downsize, close more stores and try to retrench in order to get back to profitability. alix: joe gromek, great to catch up with you. kim caughey forrest, great to see you as well. coming up, indebted illinois. the state has unfunded pension liability. we will have the latest in our installment of the deep in debt series. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." bloombergy on markets, brian cornell, target

ceo. i'm viviana hurtado with your bloomberg business flash. jetblue stoking speculation it is about to order long-range planes and start transatlantic flights. out thewatchers point background of the event invite resembles the seat cover on the london subway system. the mobile telecom company will may securities -- last vodafone agreed to buy liberties eastern european units for $22 billion. a finding at google that the company paid male employees less than women for doing similar work. this coming at a time when the

labor market is investigating whether google systematically under pays women. -- that isid not your bloomberg business flash. david: time for follow the lead. a deep time into stories making headlines and moving markets with key insight from industry veterans and insiders. all of this week will be taking a close look at state that. alix: today we will look at illinois. the state is projecting a budget deficit of $3.2 billion. it's big problem is pensions. $134 billion in unfunded liabilities. joining us is sean carney, iscklight -- -- joining us bloomberg management editor. walk us through the nuts and bolts of how bad illinois debt system is. >> one hundred $34 billion

unfunded pension liability. the state spends a quarter of its budget trying to pay off those debts. it is 40% unfunded. it has impact beyond the state capital. just last week in the first round of the chicago mayors race, bill daley, the son and brother of former mayors did not make the runoff because he had the audacity to suggest rolling back pension benefits, to push a constitutional amendments to do that and a lot of chicago firefighters and policemen said we will not go for that and consequently there will be no daly on the ballot. that sends a message to lawmakers in springfield that if you want to make a structural change to address this problem and rollback benefits from you will be in big trouble from labor unions and voters who opposed it.

they have a big problem. are they headed in the right direction or the wrong direction ? they have a new governor. can they did themselves out of this hole without reducing pension benefits? flynn: the short answer is no ,ut there are modest plans shipping state assets to the pension plans -- the pension funds, but his big plan is to push for graduated income tax. we have a flat tax in illinois, fairly rare. if that got past, and that is a heavy lift, he would have to get it not only passed the legislature but 60% of voters would have to agree to that amendment in 2020. that is not an easy lift. even if that did pass, it would only be about $200 million a

year they can dedicate to those pensions. alix: what is priced in? -- sean: this is not unique when we talk about illinois. the numbers are stark. what is priced in is a decent amount of risk premium. if we look at a state like california that trades at a 10 spread or new jersey at 60, connecticut at 80. illinois trades at 185. there is risk building in. i think it is because markets have become accustomed to the budget in illinois. with the democratic trifecta there was the hope the headwinds would turn into tailwinds. the reason spreads have not moved wider is there is a notion there is time given by the rating agencies when a new governor take seat to get his or her feet underneath them to

address the budget underhand. david: how much time does he have before the rating agencies hit him? sean: six months to a year. you could see a downgrade. fitch has talked about the budget. you have a little bit of time. project tothe bridge taxation,s a gradual we have heard this before. alix: is the room to short or do just a way? sean: the muni market continues to be a long only market. alix: there is no other way to express negative opinion? sean: not in the traditional market there is not. david: flynn, you pointed out the bill daley problem. makeggested he will changes, including putting the union on the line. does the governor have the political will to make changes

that need to be done within six months to a year. flynn: i think it will be modest steps. is to persuaden some state employees to take early retirement. that would be a structural fix, if you can convince a large number you are dealing with long-term obligation, but it will be tough. the lesson from the mayor's race, the first round last week's do not mess with the unions. david: illinois is standing. the municipal market is robust. sean: that is a good point. the amount of demand in the muni market has been sensational. supply is very well telegraphed. we have seen a renewed interest in retail. at salt deduction was kept $10,000. that will have a meaningful outcome for text conversations. that is already beginning. retail has been driving the demand in the salt states. alix: how much of the strength

in the muni market is demand driven because it is a short-term thing for tax and how much is a genuine i believe in your state, you will do well kind of thing? sean: it is difficult to break down how much of the $15.7 billion comes from a specific state. the amount of demand is probably about four times what we're seeing in supply. it is sustainable. it is not like we are seeing a pop that will turn into outflows. performance has been solid. very good demand. issuance that will not set the market on its heels anytime soon. david: for troubled state like illinois, is there a shift away from general obligation bonds to specific bonds? it is hard to raise money from general obligation bonds. sean: absolutely. you can purchase general revenue

bond where you can see the revenue stream, or appropriation debt such as in the state of new jersey. if you have enough exposure to the state of new jersey, appropriation debt is a good alternative. rj -- -- ok. you do it. david: sean carney and flynn with us. we will break down some of those headlines. more on what i'm watching next. this is bloomberg. ♪

alix: here is what i'm watching. chevron and at son. -- chevron and exxon. they will be spending more money this year but they will be having a lot of production coming out of the permian and in the permian has zero

royalty tax. they basically inherited this land over time from the railroad company. because they inherited over time they have zero royalty. they can spend money, produce a lot, and not have to pay royalty. david: a good investment. alix: will it be enough for shareholders? we'll be breaking that down because tomorrow you want to stay with bloomberg. we will be speaking to mike worth, the chevron chairman and ceo. looking forward to that interview. coming up on bloomberg the open with jonathan ferro, ubs financial services chief investing officer will be joining. this is bloomberg. ♪

jonathan: china lowering its growth goal. announcing a major tax cut to cushion the d sellers asian. a resilient -- a global bond market with a warm welcome. even greece is back again is yields fall to a 13 year low. in the markets this tuesday morning, good morning. futures positive a single point. we have been fading through the session. the s&p 500 not even .1% during in the fx market the president once a weaker dollar. he is getting a stronger one. euro-dollar a nudge lower, down .1% and treasury yields grinding a little bit higher, up two basis points to 2.74%. we begin with our top story. china struggling to adjust to a new normal. >> the wow factor is coming off. >>