strongrs seek safety in balance sheet companies. again,ts global outlook morning trade tensions and political uncertainty and weakness in china and europe -- tensions, trade political uncertainty and weakness in china and europe. investigations and spread to the u.s. and u.k. for danske bank. david: welcome to "bloomberg daybreak." carlos ghosn is actually out of jail, the first time in over 100 days now. go. have let him there he is in the car. alix: this happened 30 minutes ago. he will still have restrictions at home. he hasuse the internet,

cameras all over his home. david: very intrusive. alix: at least not interrogation in a japanese prison. 19, he wasmber arrested there. it's been quite a saga as he lost his position at nissan and renault. interrogation, often without his lawyers present. a $108 million bail check. a rangearkets, you have bound s&p and a resilient dollar. futures pretty much flat. euro-dollar flat on the day. dollar, puzzling when you have a dovish fed. nowhere,ield goes crude off by .7%, worries about more storage coming online in

the u.s. still a bit soggy in the market. we will get adp employment numbers for the week, followed by the u.s. trade balance for december. at 2:00 this afternoon, the federal reserve will release its beige book. cecelia will meet with robert lighthizer. alix: time for the bloomberg first take. oecd you get the downgrading global growth, looking at 2.3%. what does that mean to you? >> absolutely nothing. it's interesting because when the european commission downgraded european growth after the imf had already done so earlier and we had markets move on that, that told something to me. investors got a little too

enthusiastic. when markets don't move on this -- this is a story that is well understood, helps explain why we've had a bounce back and back inns -- a bounce valuations. not fresh news for anyone. xiid: wonder if president will change the oecd's mind. he has other thoughts in mind. lisa: does he? they just ratcheted back there growth expectations. they are aware of the slowdown. the oecd said trade tensions and political uncertainty has contributed to the unexpectedly significant slowdown in europe. in. is being priced if we do get a trade deal and some resolution to these issues, how much of a pop could we see?

what is the bigger risk here? to the upside or the downside? how much does that increase the likelihood we see upside? could answerudley that. we will be talking with him. one of the things he said in a bloomberg piece, part of the problem for the fed is they are worried about constraining growth. if trade gets done, maybe that turns around. lisa: i've never seen a scenario in the past 10 years where markets have dictated policy on every front to such degree, whether it was the federal reserve or china-u.s. trade negotiations. president trump asked his advisors, what is the market doing? what the market is doing with those european banks caught up in the money laundering allegations.

some russian money laundering through moscow -- it's a lot of european banks. what is going on here? ina: this is easy money terms of generating profitability. big can charge pretty revenues, pretty big margins to launder this money for russian criminals and other oligarchs that may be restricted in other places. >> this is interesting when you think of the postcrisis regulation framework, europe never fixed their banks on the capital side compared to the u.s. they don't have a regulator overseeing this. it is very patchwork. the u.s. got a lot of things right and europe

didn't -- lisa: the u.s. also has a fragmented regulatory system when it comes to overseeing banks. we have a unified legal system. what are the enforcement mechanisms? alix: we don't have negative deposit rates. david and i just interviewed the ceo of chevron. here's what he had to say about buybacks. it's a real signal of capitalism. when you have surplus cash to your dividend, your reinvestment needs in maintaining a strong balance sheet, some companies will put that right back into project investments. as a wayre repurchases to show discipline, only investing in the strongest projects.

rewardinginvestors companies overall for capital investors -- are rewarding companies overall for capital discipline? >> and credit markets. -- in credit markets. 's determining balance sheet strength -- investors have been piling into strong balance sheet companies. they are not being rewarded. what is being rewarded, this thisbeta balance, realization that q4 wasn't the end of the world. arely leveraged companies people questioning the fundamentals of the rally as we see earnings expectations go down.

here we are wondering what the staying power is. back to theit growth question we had in the first story. that means companies are not orrowing expanding -- and expanding. to this question of share buybacks, it's interesting that the chevron ceo said that. yesterday, j.p. morgan had a report showing share buybacks surpassed expenditures on capital projects for the first time in a decade. companiesewed as doing financial engineering. what does it say of these companies cannot find where projects to invest in with their money and the best project for

them is simply buying back their shares? is that concerning about the economic prospects of the ?trength of the economy alix: you can find all the traits we just used on gtv chartscan find all the we just used on gtv . we will speak with bill dudley, next. this is bloomberg. ♪

david: the federal reserve has given slowing global growth as one of the reasons for its newfound patience in raising rates. oh ecb projections confirm global growth is indeed slowing

-- oecd projections confirm global growth is indeed slowing. theelcome on telephone, bill dudley. thank you for joining us. anything surprise you in the oecd numbers? it's already anticipated. we saw a lot of evidence that china was encountering a slow patch and european growth had slowed quite significantly. i don't think it really changes the outlook in a meaningful way. david: you have a piece in bloomberg this morning. we say it could turn around, shouldn't get too complacent. the case for waiting has lessened somewhat. financial conditions have used in 2019 is the u.s. stock market has rebounded from its december -- as the u.s. stock market has rebounded from its

december slump. is there an upside on the growth? is it possible we could see some raising after all? weree factors that the stated in the article are fairly recent. the fact that the trade talks in china look like they will have a good outcome and china is stimulating their economy. pointing to the fact that the greatest risk on global growth has already passed. alix: they are not the only ones. eric rosengren was talking about equities pricing in more risk. they will have to wait for a few more months to see if the risks overall were going to be transmitted to the u.s. economy. a fed president said equity markets are pricing in too much risk. >> he is saying there is more

uncertainty in the economic the stock market is currently registering. the first quarter will be very weak. you had a government shutdown and uncertainty on trade and a delay on the tax refunds. the first quarter print a week gdp. ak gdp. second quarter will be firmer. this idea that the fed is done will be over. alix: it's not just when it comes to the equities and economic risk. morgan stanley lowered their call to 2.35% for the end of this year. what does that mean for the 10 year and long-term growth? >> the economy would have to be very weak to get to 2.35. that would imply that the fed

was done and the next move would be a cut. what the fomc meeting, fed shows in terms of their summary of economic projections, the path will show a bit of upward slope to it in the last part of 2019 and the first part of 2020. david: we are nearing a trough in the growth projections. what will bring it back up? is that the resolution of the china dispute? >> china has gone from trying to restrain the nonbanking financial sector to trying to stimulate the economy again through fiscal policy and credit easing. they try to tighten up, the economy slows and it scares them and then they push their foot on the accelerator.

the demand for foreign goods --wer is will increase foreign goods and will increase. a lot of uncertainties that existed on trade could easily be resolved over the next few months. alix: thank you for joining us, bill dudley, new york fed president. with the markets range bound, what will be the catalyst to the upside for you? >> we need to get trade behind us. it feels like that will happen soon. is next thing we need to see for the u.s. to not pivot immediately to europe. 2.0, let'se of nafta get a deal done with china and it's been over a year. putting tariffs on automobiles

and restarting the cycle all over again would be awful. ats is accomplished, look the great things we're doing, let's get diplomacy with north korea, stay away from trade for a while. david: doesn't matter what the it matter whats the deal is to the markets? >> the markets want tariffs to go away. up inre not as wrapped , theunfair playing field technology transfer, property theft -- you have guys like thishizer speaking about for decades. we know china is stimulating their economy. we just heard yesterday the amount of money they are putting into fiscal policy. ,nd will stabilize the economy

helping the global economy. alix: we were talking earlier about better balance sheet companies and how the flows are there, but the performance isn't there. those strategies paying out well. what do you want to do? >> the first headline we read trade, we cann tran't talk about the pace of the u.s. economy, industrials will do better. i think that would help quite a bit. health care has been kicked around as a political football for a year. anything that doesn't have to do with social media and technology in technology should have an explosive 2019. david: we avoid a problem with

europe, where is the market overall at the end of the year? we came way back up in january. where will we end up? -- we thinko months the s&p 500 will earn about $170. 2900,ets you right around exactly 2890. the math makes sense. the multiple is there. the estimate is conservative. the consensus is about 172.50. , the multiple at the end of the year will be fine. david: coming up, ge's cash crash.

industrial free cash flow will be negative this year. encz,iscuss with john coming up next -- we will discuss with john encz, coming up next. this is bloomberg. ♪

alix: ge's cash crash after the ceo set industrial free cash flow will be negative this year. joining us on the phone, john inch, gordon haskett senior analyst. why was this news so negative or ge after we knew things would be bad? john: we knew things would be bad. it comes down to expectations. the stock has run with the market on hype and hope. and we are seeing why larry the company did not want to give guidance on their fourth quarter earnings call. they knew there was bad news to be had. it's a combination of people not

momentum intion, the market and the company not setting up things as negatively as they should. this is just the beginning of bad news to come. larry didn't want to give the guidance or he didn't have his arms around it? yesterday on the call with j.p. morgan made comments that they still had nine days to tweak or fine-tune the guidance before they give it on the outlook call on march 14 of next week. that almost implies the company didn't have its ducts completely in a row -- ducks completely in a row. larry doesn't want to give a guide that the company can't hit. andhave very negative cash declining eps and adjusted eps

while ge is under investigation for accounting. alix: they also said headwinds to the cash flow would meaningfully lessen in 2021. john: you typically buy stocks at the bottom. there were power business -- their power business and ge capital are uses of cash flow for a long time. between now and the next three , the economy could go into recession and there's no room ge.error at ge will probably bounce around here. the cat is out of the bag. to everyonevetail thinking everything is great with respect to liquidity. questions, are we actually out of the liquidity

that yet -- liquidity debt yet? david: when is it time to buy? ge you really invest in without knowing what's in that power unit? situation of a company with terrible timing and businesses they didn't need to get into. you don't have too many alternatives in the industrial complex. dispersion and idiosyncratic investment you have to make now -- how long will that stay for? years ofs a couple of unknown in the ge complex before we can figure out how important

they were with debt. the other options are out there in the marketplace. i don't know why you want to stick your toe in this one. this could bounce back to $12. or, it could go to 5%. i would rather buy a lottery ticket then look at this right i would rather buy a lottery ticket than look at this right now. projectse worth production to reach 300,000 barrels a day by the end of 2023. then what? we will break it down. this is bloomberg. ♪

alix: this is "bloomberg daybreak." the equity market really getting no traction either way. s&p futures still flat, down .2%. european stocks lower as well, down .3% as the money laundering

scandal continues to permeate through many banks in europe. a resilient u.s. dollar. euro-dollar flat on the day. the big mover is over in the u.k. with yields down by four basis points. again movingening towards that vote next week. david: we will keep you posted. alix: crude is off by .8%, worries about oversupply in the u.s. viviana: after 108 days behind bars, today, carlos ghosn walked out of a jail in tokyo, posting , one of the in bail -- $8.9 million in bail,

one of the highest amounts in japan. president trump pressuring trade negotiators to cut a deal with china soon. the president is increasingly concerned that lack of an agreement could drag down stocks . art was created by artificial intelligence. will collectors want it? sotheby's will find out at a sale in london next month. christie's sold the first piece but a created by ai, human was involved. this art was fully created by a computer. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i don't want that hanging in my house.

david: it is a novelty. now, our focus will turn ambitious growth targets in the permian. we sat down with mike wirth. here's what he had to say about the growth plans. mike: we have the largest position in the permian with 2.2 million acres. have a tremendous starting point with land. we have held this land for decades. it doesn't have royalty override. we keep all the revenue we generate as opposed to paying a royalty honor. we've operated in factory drilling type operations for decades in san joaquin valley , running an operation times withrill many

a large fleet of rigs. alix: two things that wind up coming out with independent producers. liquid capacity is an issue across the board. crunches, theysh have to shut down operation. mike: as a company with a large and transparent profile, our shipping is something that many of the midstream providers compete for. they would like to see us underwrite new pipeline capacity. we have a clear commitment to growing our production. we don't invest in midstream infrastructure ourselves. those building pipelines are willing to offer us attractive shipping rates and terms. we've been impacted by the takeaway capacity. we are somewhat hedged against

the commodity price cycles and oil that could hit someone who's a one basin. alix: are you more vulnerable to shock price to the downside? you have to shut her production terwe get $30 -- shut production if we get $30? mike: we have the lowest breakeven. are ablee downturn, we to cover our capital spending at a lower price than our competitors. longer period a of low oil prices than many of our competitors. david: you will exploit that advantage. what about the short medium long-term?

mike: the nice thing about shale, and cycles so fast. within two years, that cash is flowing right back. they return cash within two years. last year was the strongest free cash flow in the history of our company. we have plenty of cash to invest in longer-term projects and return to our shareholders. we have a portfolio of longer-term projects under development. have tohose projects get more economically competitive. our deep water projects in the a higher orco took lower price to deliver the -- took a would want higher oil price to deliver the returns we would want.

the economics are much stronger on those projects today. david: do you have to keep putting money in? an ongoingntail commitment to further capital? mike: any individual shale well works quickly and then has a long tail. if you grow hundreds of thousands of those wells, those lsles accumulate -- tai; accumulate and become a large wedge. pays or layers in which you can drill and produce from in the permian are more than we've seen in other shale places. there's a lot of resource there. this will last for a long time. wind up having a time, cycle project, over

you have a nice free cash flow cow. with shale, that decline rate is really steep. the cash burn is something you have to wind up contending with. mike: for a small company where that's all they have, it becomes a real issue. point where we have 20 rigs working. we will go from 300,000 barrels a day last year to 600,000 torels a day next year 900,000 barrels a day in 2023. that allows the cash flow to begin to spin off as production grows. alix: why increase your share buyback instead of your dividend? mike: we did both. alix: yesterday, it was really about the share buyback. that in yourequal dividend instead?

mike: we increase our dividend when we are confident we can extend opportunity. this year, we've already increased our dividend 6%, the 32nd consecutive year in which we've delivered a dividend increase to shareholders. we have a steady approach to increasing the dividend. we canmmodity business, find cash flows that grow quickly and can disappear quickly because of the commodity price cycle. weaccumulate excess cash, .se that for a share repurchase david: do investors express a preference between dividends versus share buybacks? we used to like to do buybacks because they shareholder can control when they pay the tax.

mike: our shareholders tend to hold the stock for a long time. they look to dividend as a strong income component. they really do look to the dividend first. the buyback is a real signal of -- your reinvestment needs and maintaining a strong balance sheet, some companies will put that right back into project investments. share repurchase is as a way to show discipline -- repurchases as a way to show discipline. alix: does it say anything about your medium outlook for production and oil prices? mike: we outlined yesterday a compound annual growth in our production over the next five years. productiondy rate of

growth and low risk over the next decade. that doesn't end at the end of that period of time. alix: what happens after that? the numbers yesterday were really spectacular. spend -- what about after that? can you keep that up considering shale is so capital-intensive? mike: it is the highest return investment in our portfolio. other investments require more capital to deliver more return. the shale is economically attractive. there's a lot of focus on the permian. we have large shale positions in canada, argentina and the northeastern united states and the marsalis. -- in the marsalis.

we have a broad portfolio. anticipatedo you production plateauing in the permian? mike: we haven't outlined that yet. alix: why not? mike: it's growing to 900,000 barrels a day in 2023. it could grow much more than that. this is good news for the u.s. economy, good news for the american consumer. it has geopolitical ramifications as the u.s. has become the largest producer of oil and gas in the world once again. this is a lot of running room. david: that was mike wirth, the chevron ceo. alix: it looks great for the next five years, but then what? you will continue to burn this cash. what are you left with when

you're decline rates pick up? david: if you are sitting on all that land, you don't owe royalties, why don't you exploit it to take advantage against your competitors? it would be foolish not to take it. alix: retailers out with earnings -- a different story from the other companies we've heard from with coals and target -- kohl's and target. ross stores not getting it done, shares lower with weakness in ladies apparel. they are facing an uncertain macroeconomic environment. urban outfitters facing more weakness in 2019. they are getting a lot of downgrades from lou capital and rbc.

watch out for that stock. shares of abercrombie & fitch rising this morning. they are having a top and bottom line beat. expansion of 70 basis points for the first quarter, 50 basis points for the full year. dollar tree as well, a bit higher as well, looking at a fourth quarter coming right in they are accelerating the plans to make improvements. they will test out a new round of price points at certain stores. they will continue to see sion.ns expan street'sing up, wall plan to keep watchdogs off their backs when it comes to

derivatives. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." coming up in the next hour, dean maki. alix: we turn now to wall street eight. -- we turn now to wall street beat. solutions -- regulators revisit wall street pay limits. repurposing

postcrisis regulation. 's trading loss, losing $750 million. david: we welcome peggy collins. cvs says we will protect you if you can't repay something. terrific storya that several teams that bloomberg broke yesterday. -- at bloomberg broke yesterday. can'tare rules saying you entice a company to miss a bond payment. a default needs to be tied to the company's legitimate

financial stress, which seems obvious. alix: that goes back to how different companies are using credit default swaps. you wind up owning a debt or something else -- david: they don't. right? bought by cdse have no skin in the game at all. you want to have it payout. peggy: some of the issues that were popping up last year, people were losing faith in the cds market. this is a way to bolster that confidence. it would be a voluntary rule created by an industry group. it's unclear how much teeth that would have. blackstone wound up lending money, but said we

needed to trigger the credit default swaps. we need to get compensated at some point. that is hedging your bet. >> the person on their list doesn't like it when they have the person on the other is doesn't like it when they have to pay out. david: depending on someone else's risks -- it's like atlantic city. or las vegas. sorry. old-fashioned guy. alix: wall street could see restrictions on bonus payments. president trump could look at postcrisis rules that have been on the back burner. what will that do? had adjustedks their risk enough to not have these trades. ini looked back at our story

2016 when there was that proposal floating out there. it would be tied to top executives. this is not bonus pay across the entire industry. it would be to enforce rules around how long we have to hold your bonus for. would it be over four years instead of one? encouraging people to not take risks just for bonuses. david: a lot of bankers thought once the trump administration go.in, they would let it alix: sounds good for the campaign trail. david: third story, back to deutsche bank. millionraders lost $750 -- amazing. >> it looks like there was a huge overview of the unit, the investment bank last year.

$750 million. these projected revenue drops put more pressure on them to make dramatic changes. alix: good point. if you have commerzbank and deutsche bank together, do you off? this off -- spin this i don't know what that combined company will look like. >> we're are talking about an equity unit. it is a big unit for being competitive in the banking field. it's also expensive. david: it was part of their dna for many years until the crisis. it's hard to turn around and say now were going to be something not that -- we are not going to going to be something not that.

alix: it also highlights the fact that the ecb still has negative deposit rates. unicredit said the best thing for the banking system is to raise rates. maybe you don't take extra risk and get hurt on your equities. >> that's helpful if you are able to turn into a retail bank. david: many thanks to peggy collins. coming up, the list of banks roped into europe's dirty money scandal gets longer and longer. this is bloomberg. ♪

david: what i'm watching today, all those european banks caught up in this money laundering thank. there moscow branch has a

moscow branchir has a problem. this keeps going on and on. alix: we talk about the sourcing . it cycled through estonia. where is the compliance? the banks didn't have the oversight or they just turn a blind eye because they needed the cash? david: they want the money. the oversight question is for the government's. you have a lot of different governments there, not one central government. the french government penalized swiss banks over this. they didn't penalize french banks. it's not clear who has real authority ultimately. alix: how do you clean up the x going forward -- the acts going forward? david: they have some incentive.

ede markets really punish them. you have incentive to get some clarity. stop?when does it david: the u.s. government gets involved at some point and then the fines go way up. murphyoming up, cara will be joining us. that we see the lowering its growth forecast once again -- the oecd lowering its growth forecast once again. ♪

--x: the $100 billion

president trump pushes the u.s. towards a new trade deal with china to fuel a market rally. new jersey's budget chaos, budgeting a surplus for this year -- the highest in a decade as the state tries to appease rating agencies. global outlook yet again. how much more dovish can central banks get? the beige book on tap for later today. david: we will also be watching ge. larry said we will be negative on cash flow. markets don't like it. pricejp morgan says their target at six dollars looks generous. the issues may be stretching level,21, a whole new

where it seemed like the company was singing 2021 wouldn't be as ying 2021s say ye wouldn't be as bad. capitall have ge overhang. alix: breaking news when it comes to self driving cars. selling lidarrt automatedo non- companies. i'm thinking google. david: robots, all sorts of things, the internet of things. it suggests scale. you can sell those sensors to a lot more industries. supply,u will have more

lower the price, you can do that for more a breeze -- ab's. david: a fascinating story. alix: google started their self-driving project in 2009. david: they have far more miles than the others do. alix: in the markets here, not a lot of movement happening at all. s&p futures down .2%. euro-dollar flat as well. a resilient dollar story despite the dovish fed. the note from rosengren pushing back the rate hike conversation. crude down over 1%. it is a very mushy market this morning. morning, we15 this

will get adp employment numbers, followed by the u.s. trade balance at 8:30. at 2:00 this afternoon, the fed will release its beige book. in the meantime, the oecd has cut its global growth outlook again, saying trade tensions and global uncertainty are weighing on the global economy. taylor: this is what makes markets. you have economists from morgan stanley and goldman sachs saying global growth has started to bottom out. the oecd cutting the targeted to 2.3%.arget 1% ask. growing less than they face a host of uncertainties from brexit.

china downgraded to about 6.2% in 2019. siding trade tensions -- citing trade tensions and global uncertainty. the u.s. versus the rest of the world has been the trade over the last two years. has been up 6%. you're getting three times the outperformance on the u.s. market indices. we will see if that trade continues. world.rsus rest of the alix: joining us here in new -- and kara murphy.

we asked bill dudley about these projections. >> these are things that were already anticipated. we see a lot of evidence that china was encountering a slow patch. i don't think the revisions are particularly large. it doesn't change the outlook in a meaningful way. alix: do you agree? is everything already priced in? >> i do. this is the oecd catching up with the markets. the markets figured out that global growth was starting to slow. trade wars, tighter monetary i think it's more just catching up with what we already suspected. david: is it right? has it bottomed? if so, where is it going from here? managere a bottoms up using a multiyear time horizon and we try to capitalize on

stocks we think are attractive on a current and midcycle basis. predicted to trying to macro things, we take advantage of those in both directions to create buying and selling opportunities. the volatility -- the markets predicted what we've seen already in terms of the data. we took advantage of that in 2014 to add cyclical exposure. alix: what is your favorite pick, then? n, haveower ticker ma european exposure -- heavy european exposure. --s is a case of a stock industry-leading company that lost half of its market cap,

traded at a high single digit earning multiple. slowdown inassume a business, we thought the stock was still attractive. .air value is over $100 a share as manpower earned nine dollars , the market was valuing it as five dollars. david: what about the overall environment, specifically interest rates where the 10 year is? economists were projecting by december the 10 year yield to end the year at 2.5%. what does that do to the stock market? year is telling us is not anticipating

significant pickup and inflation -- pick up in inflation -- significant pickup and in inflation. i don't see it significantly higher, either. expectations of interest rates and economic optimism have built, that was an opportunity to take profits and companies that are more sensitive to higher economic growth and interest rates. as the year evolved last year and expectations -- higher credit spreads manifested themselves. higher money in more haded stocks -- where we

later weightings. up, global growth concerns and oil demand. the chevron ceo expects demand to remain strong. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." aon is no longer considering what would have been the insurance industry plus largest the insurance 's largest merger ever. today is the final day of production at the general motors

plant in lordstown, ohio. 14,000 workers could be affected. they can work for the company elsewhere. exxon mobil plans to boost capital spending 24% this year to about $32 billion. the company plans to use the money to search for oil, build natural gas plants and expand refiners. exxon raised its 2025 profit growth target. playoff -- chevron and exxon buying for the top spot in the permian. chevron plans to increase oil production in the basin over the next five years. we spoke to mike wirth earlier about where he sees oil prices.

>> we have seen world markets adjusting to try to accommodate this strong growth in the united states. we see demand very strong this year despite concerns about the state of the global economy. we've seen opec have to move into a different foster than when they previously have been opec and russia have had to come together. some of the non-opec countries have said we may hold production back to stabilize oil markets. the u.s. is a market-driven economy, we have hundreds of companies making economic independent decisions. it's really the marginal producer making the marginal investment who is challenged right now to make the decision as to whether to continue to invest in that production. alix: you and exxon together laid out significant growth targets for the permian. are you going to hurt yourself? you will have supply coming

online in the next few years, questions about whether demand will hold up to today. shale delivers returns at lower prices -- we get down into the 30's and 40's. it's not a matter of the shield being -- shale being non-economic. alix: that is sustainable? how long can you sustain the 30's? >> years. alix: is there any more low hanging fruit you can squeeze to bring that lower? >> we continue to get better. technology is improving our wellbore --lace the we are understanding where the shale works the best and why. we have data sets with millions of elements on them.

recovering 9-10% of the hydrocarbon in place today. that leaves 90% of the oil and gas behind. if that was the long-term outcome, it would be the first of our histor the history industry that we believe that much behind. test we would leave that much would be the first time in the history of our industry that we would leave that much behind. david: what are some acquisitions you might make? >> we have a strong portfolio. i would argue that our portfolio is stronger than it's ever been. you always want to become even stronger. the economics have to work, the strategic fit has to be right. we don't really comment on

specifically what we are looking at. david: you say i would like a little more of that, or i would like to get into that over there is a category, thanks to fill out your portfolio even more. things to fill out your portfolio even more. >> there's no holes in our portfolio. there's nothing we feel compelled to do. david: that was the chevron ceo. alix: why would he? the adp number just breaking out. 183,000 private jobs were added -- a little below estimates. you had january revised up to 300,000. david: that was dramatic. in advance of jobs day. alix: how good will number continue to be?

david: still with us. still with u -- still with us, colin mcquay and kara murphy. play anou see the shale energy play in the united states? kara: i always use to making predictions about energy. being in texas, i think i have to take a stand. it's hard to build a bullish picture for oil today. we talked earlier about opec cutting production. they tried to avoid cutting production because in past years when they've done that, u.s. producers have stepped on the gas and grown their market share. opec finally cried uncle and cut production. we have large integrated oil companies doubling their spending and the permian.

-- in the permian. it's really hard to be bullish about oil going forward. david: where are you on energy? where are you on companies that are capital-intensive? they have a lot of capital. colin: people look at us being overweight energy and say you are making a call on oil prices, you must be bullish. oil is a neutral event to our entire portfolio. the pessimism give us an opportunity to load up on some i'm a believer that with 10% of the shale production 90%he u.s., is the other elsewhere in the world? they will want to replicate the shale revolution in the u.s. alix: you are playing the value

of offshore service companies. colin: offshore and international shale. it a value trap? , 2 have chevron and exxon million barrels a day growth is , putting themselves in a downward spiral for oil prices. colin: the decline curve still exists. capitole that u.s. discipline has been a big headwind. alleviate that can along with other things i've i talked about globally. david: are you worried about overall demand holding up for oil? kara: over the next year forward, i do worry about global growth.

over the longer term, as economies industrialize around the world, they are becoming larger consumers. the longer term picture is still ok. the near term is weak, that could pin incremental demand. alix: thank you for your perspective, colin. kara murphy will be sticking with us. europe's dirty laundromat. this is bloomberg. ♪

david: time for the bottom line. i'm watching ge. the ceo went out yesterday and said we will be a cash flow this year, which surprised everyone to the downside. it is down 5.6% in the premarket here. he said they have a lot of work

to do on the power unit. alix: it was down again today. not good news. i'm watching ab invev. you had snb global ratings placing pressure on the company to trim its debt load. the chairman is leaving the company. jeffries saying that is a good thing. in the so pumped earnings that it avoided the kraft heinz drama. and spinning out the asian unit. and build up through a lot of spinning off the asian unit. up through a lot of acquisitions. lisa abramowicz, tell us about these banks.

ata: let's take a look. these humdingers. shares down 14% so far this week as they get roped into this money laundering scheme. this is spreading across europe. what's interesting to me is how this is coming out. there's a consortium of journalists, independent investigators that specialize in organized crime. this is not coming from regulators and enforcement agencies. why? there isn't one for the entire euro zone. these banks cannot figure out how big they were in this money laundering scheme. some expect to trillion dollars -- to trillion

dollars a year globally -- $2 trillion a year globally. david: there's a lot of money in russia. people want to get it out and launder it. given that phenomenon, regulators have not figured a way to clampdown on. -- on it. that is surprising. droppedars ago, they the investigation into ing because they couldn't find any confirmation that there had been a crime committed. they didn't have branches in other countries. same thing and austria, also austria, also forced to drop the investigation.

alix: i wonder if that is a catalyst for them. lisa: that's what people are saying. within the next year or two, you will get an enforcement zone.ism for the euros o david: they are not going to more concentration. they are going the other way. alix: where does the russian mob go? where do they go? that is the big question. coming up, the december trade balance and what it says about the global economy, next. this is bloomberg. ♪

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"activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. alix: i'm alix steel. 30 seconds away from the latest read on trade in the u.s.. dow jones futures going nowhere. still down 5.2%. european banks underperforming.

a story of dollar outperformance. will that wind up continuing once we get the trade number? looking ahead to the beige book released today at 2:00. the yield curve gets steeper at 17 basis point. december,balance for -$59.8 billion. worse than estimated. you can bet november was revised down slightly. david: this is not good for the trump administration. this is what he has been concentrating on. if anything it has gotten worse. alix: 42018, it actually hit -- for 2018, it hit the highest in a decade. for 2018 the trade deficit was the highest in a decade at $621 billion. the overall deficit up 12%.

not good numbers. i wonder if it is preemptively going with the trade war and if that is resolved will it shipped? -- will it shift? david: with a stronger dollar, the trade deficit should go the other way. we will find out from some experts. --ning us is jean mackey dean maki and carol murphy. what is driving this trade deficit? the overall deficit is driven by what we say and what we spend. we are spending a lot more than we are saving. the primary reason is the federal budget deficit. that is gotten wider over the last year with the tax cuts put in place as well as the spending increases. this was inevitable that the trade deficit would keep widening as long as the federal budget deficit kept widening. this may suggest president trump might be riding the horse in different directions. dean: spending more through the

budget deficit increasing, that will dominate any turf increases in terms of the trade deficit. just want to go to this headline crossing now. the ecb is said to cut its outlook by enough to warn new loans. headed into the ecb meeting tomorrow with tltro's long-term loans and chief interest rates, will the ecb extend that could the headline says the ecb lowers growth rate enough to warrant those new loans. quite interesting. i want to check out what is happening. david: if it were washington i would say that sounds like a trial balloon, but maybe not. alix: the euro-dollar has been -1.14.bound, 1.12 we will get back to the trade deficit. a quick thought on this?

dean: the ecb is likely to put new tltro's in place. do they do it this week or in april? i do not think this is shockingly unexpected. alix: just look at that lower growth at the end of the day and the result of that. dean: they're likely to extend their forward guidance for how long rates will be on hold this week or in april. david: let's bring karen murphy back in. let's talk about -- carol murphy -- kara murphy back in. years and that was when we're importing more oil. it is getting worse despite the fact that we are not importing oil anymore. isa: it is true and it interesting because the trade deficit is not a great forward indicator of the economy. before trump came in office,

nobody focused on it that much. the reason it is important today is because it is important to trump. ,s we have seen that widening as you pointed out, there been structural changes in the less oilimporting should make it easier to have a smaller deficit. but we have increased fiscal spending. as that widens it goes counter to the goals trump has outlined. it makes it more important that we have a trade resolution. in some ways, it is counterintuitive. i would see this as a positive because it is more likely that trump and xi come to an agreement. david: we are seeing this increasingly, this morning saying part of the problem is trade. we talked earlier with the former new york fed head who said if there's a trade resolution it will turn around global growth. how important is that? dean: i think it is quite important.

there are a few channels where it is working. there is a lot of uncertainty. businesses do not go -- do not know what the rules will be. until there is some resolution, they will hold off on investing. the tariffs themselves are negative for growth. they are small in the scheme of things but that does not help. china slowing is another factor that is slowing trade growth as well. is more permanent and what is more temporary? year.s rose 6% last how much of that ucs stockpiling and how much is related to a stronger dollar -- how much do you see as stockpiling how much is related to a stronger dollar? kara: i think much is related to stockpiling still be interesting to see how the numbers progress. the more important impact is the psychological impact. as people get worried about what tariffs will be going forward

they will be less likely to invested dollar, build a factory, hire a worker. we have seen those confident swings in december, where they got very negative. we saw spending decline and we have seen the reverse as some of those fears start to abate. we have seen confidence rise. i think you will see spending rise again. as we start to see the stockpiling get away, we will get a better view. if we start to see resolution on the trade front people be more willing to spend. i think it will be important to watch that. kara raises an important point -- business investment. where are we in the united states in capital investment? dean: there is a perception that business investment has been weak. it has not been the case. if you look at business investment as a share of gdp we've only past where we are now a few times in the last 60 years. it is high relative to gdp.

what people are complaining about is that gdp itself has been slow. business investment tends to follow where gdp goes. alix: dean maki and carol murphy, -- and kara muprhy, thank you guys. will cut itse ecb outlook enough towards new loans and cut their inflation projections through 2021. euro-dollar did dip lower. flat on the day. you're seeing nice appetite in the bond market as well, especially in the long end. like dean said, we might have seen this coming. the question is when. remember the last meeting, mario draghi said they had a lot of discussion about tltro. the question is will they decide something. alix: how long they extended

for, an interesting development there. the ecb outlook will be cut enough to warrant new loans for the banks. david: come to find out what is going on outside the business world. we turned viviana hurtado. viviana: after 108 days behind bars, today carlos ghosn's walking out of it jail in tokyo. he boasted one of the highest amounts ever in bail in japan. thedom will give ghosn chance to work closely with his defense lawyers on allegations of financial misconduct or it prosecutors could extend his detention by arresting him on new charges. president trump is pressuring negotiators to cut a deal with china soon in hopes that will fuel market rally. themberg has learned president is concerned the lack of agreement could drag down stocks. the president is looking for a win after the summit with kim jong-un collapsed. shares of british american

tobacco rising after the head of the u.s. fda resigned. the impending departure of the fda commissioner leading to speculation the agency might back off proposal to restrict the sale of menthol cigarettes. global news -- global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. david: thanks very much. there were other tobacco stocks that went up as well. vaping --ave things like vaping that he was after. alix: you really foresee someone coming into the fda and saying just kidding? david: the question is right. maybe they will be just as hawkish on the subject. the question is how hard will they press. they knew scott copley was going to press hard for more. gottlieb would press

hard on the issue. the question is will the next man or woman be as hard as he was? alix: definitely watch those stocks for sure. david: coming up, new jersey budget chaos. that is coming up next in our deep in debt series. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." coming up later today, an exclusive interview with gq a ceo. daybreak."oomberg

wall street pay limits are getting a fresh look from regulators appointed by president donald trump. u.s.berg has learned agency may dust off rules that have been off the back burner. the rules were meant to curb bonuses that could encourage traders to take dangerous risks like those blamed for the 2008 global financial meltdown. bloomberg has learned deutsche bank estimates is equities trading unit lost $750 million. the u.s. equities unit has not showed a profit for years. at one point deutsche considered shutting down its entire equities operation. youngestthe world's self-made millionaire -- elf made billionaire, 21-year-old kylie jenner. her company decided exclusive partnership with all to beauty. according to the bloomberg billionaires index, that was enough to push her fortune over the billion dollar mark.

she is the half-sister of kim kardashian. david: this is impressive. she is part of the kardashian. it has nothing to do with reality show. alix: i feel the same way about the hilton sister. i went is go with nicky hilton. i was older. she did stuff. she started her own line. when you do stuff versus more a celebrity, i respect that. david: the kardashian's are in the billionaires club. alix: lipsticks sell. that is apparently what sells out in seconds. the famous kardashian lives. they want the lipstick to go with it. pretending like i know more than i did. david: it is time for all the lead. stories from it is he veterans and insiders.

we be taking a closer look at state debt. the states that are struggling with it and the ones that have managed it. today we are looking at new jersey. alix: governor phil murphy proposing a budget plan that includes a higher taxa millionaires that includes revenue to help fund its pension and health-care liabilities and downgrades from credit agencies. joining us is amanda albright, bloomberg news municipal bond fund porter. -- reporter. what is interesting is new jersey bonds actually outperformed. amanda: phil murphy is a credit rating conscious governor. he unveiled his budget yesterday and it includes a $1 billion .urplus increased funding for new jersey transit. the path to getting his budget off the ground is not going to

be an easy one. democratic leaders are saying they are easy -- they're worried about there being too many tax increases and what impact that would have on the state. david: his track record at getting budgets through has not been strong. he tried this last year and it went on for weeks. millionaire's especially might be a sticking point. last year he was able to get a tax on people earning $5 million. this year he is pursuing a tax on incomes above $1 million, which would affect about 37 powell -- about 37,000 people. the question is whether or not he will have to compromise on that this year. alix: what is confusing to me is that a lot of investors like new jersey debt. mondayed about this on and he said new jersey as the top deck tech. -- top debt pick. new jersey turnpike just did a bond issue, about 4% tax-free. state and thatx

bond is attractive to a new jersey taxpayer. i like the new jersey taxpayer -- when the 30 year treasury is a 3% taxable. that is a great gift if you are a new jersey. what are your thoughts? >> is an interesting situation for investors. the turnpike is a separate issue in a separate credit. with new jersey, the states clearly need the money is. revenues -- they have to do something. for an investor looking like this, it is not like this will default. , butredit rating is a- investors are viewing it much lower. as an investor i'm looking at this seeing they are trying to

do things, i get more yield than on a typical a minus bond. it could be a decent investment. david: how big is their pension problem? is there a path to addressing it? daniel: it is a big one. governor, itt one is going back many governors. the payment has to increase and they have to find ways to cut expenses in their pension. it is not an issue that will cause a default in the next couple of years. david: it is one thing to raise revenue. there's a millionaires tax, which is question will they would get a through. what about cutting costs? amanda: murphy did highlight in his budget that he is seeking efficiencies. one area is with health care costs. that is a big liability for governments. he is still making these

investments, or trying to make investments in progressive issues he promised. pre-k, theion, problem is the amount of debt payments and pension payments is starting to crowd out the services and his ability to invest. alix: also you mentioned that is trading worse in terms of the credit rating, but what if they lose their credit rating? revenue shortfalls in the first half of the year will make catching up even if currently slow revenue trends reverse. if they cut, can you still find the debt interesting? daniel: it cap being cut consistently throughout administrations. it has been trending negatively. it has been stabilizing it. the market is viewing it as if it has already been downgraded. it will not go below investment grade but i think the anticipation is if they do not improve things they will be downgraded. david: something were referred to earlier as the salt tax and

the effect that might have on people's interest in bonds. are they being artificially supported by the salt exclusion? amanda: i spoke to an investor who said there were two markets for new jersey. the local towns and the commuter towns to new jersey, a lot of wealth and aaa rated credits. people really want tax shelters like munis, and then you have the state related credits. those do trade cheaper as daniel was talking about. alix: what is the risk that the high income earners will just leave? amanda: that is the risk -- daniel: that is the risk. people want to be in this area. there are jobs here. there are families here. there is a certain point where people leave. the question is where that is. i live in new jersey, you hear people say neighbors are complaining of leaving but the numbers are not showing it. it is a big thing to watch but so far it is holding off. david: is there anything unique

about the new jersey situation or is this similar to illinois? daniel: what is unique is the structure of the debt is different. they do not have a lot of general obligation bond, a lot of bonds subject to appropriation so the structure of the bonds is different. the economy is doing well here so it is not a bad economy. not growing as fast as rest of the country but it is a good location to be near new york. alix: thank you very much. coming up, we are looking at the ecb reportedly poised to cut their forecast by enough to justify a loan for banks. this is bloomberg. ♪

alix: bloomberg just had a scoop

that set the central bank is poised to cut economic forecasts by enough to justify another round of loans from banks. joining us is the reporter who got that scoop. walk us through what you learned. indeedcymakers are meeting as the decision is expected tomorrow. what they are discussing at the moment or about to discuss this afternoon is deteriorating economic outlook. they are looking at revisions to their growth and inflation forecast that are pretty steep, pretty severe, and also to a downgrade in the inflation outlook across the forecast horizon, which is through 2021. quite a long time. said that should there be a monetary policy case, should the economy be bad enough to warn new bank loans, they would go ahead. it seems like this moment has come. they are discussing to offer a new round of long-term loans to banks targeted to increase

credit to the real economy, to companies and households. whether they will have an announcement for us tomorrow remains unclear. they are clearly thinking about it. alix: the questions about that will be maturity and the rates. you have any insight as to that conversation? >> no. we know these are some of the most crucial sticking points. some of the most important pieces of information because obviously, officially an announcement on how to set the interest rate on those roads will hold important information and is an important gauge as to where the ecb sees interest rates developing over the course of the next couple of years. we do not know yet what the decision will be. i understand why the ecb would want to do something if the economic situation is deteriorating. at the same time, whether new loans would fix the problems

depending on what caused the problems in the first place. if it is trade problems, how would new loans help the trade situation? >> it is partially a trade situation. a lot of uncertainty has come from the external sector, that is true. we are also seeing internal problems, particularly in italy where investments are very weak. fix --hey will need to as well. alix: thank you very much. that does it for bloomberg america. with jonathan ferro, a man who took over for bill gross. this is bloomberg. ♪

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

jonathan: coming up, president trump said to be pushing for a trade deal soon in the hopes of fueling a market rally. this is the trade gap widens in 2018 to the widest level in a decade. a deficit of $621 billion. the ecb gearing up for stimulus said to cut the outlook enough to warrant a new round of loans. good morning. futures down .1% on the s&p 500 after a couple days of losses. in the fx market, even the prospect of water it easing from the ecb is not enough to shake the price market up. euro-dollar 1.1305. 2.71% is your yield on the 10 year. will the president's trade deal be enough to lift markets. allianz global management director.