of equels. the ecb pushes back its rate forecast. coalition looking to push back production cuts in a win for russia. dovish powell and friends as investors target the fomc meeting this week. david: welcome to "bloomberg monday." on this i'm david westin, along with alix steel. alix: we are looking at about $2.1 billion. what are we going to see about dual shares? david: that is the question. it is no coincidence, i think, that the two founders will get

50%.n 19%, just below david: snap's ipo went really well. snap's ipo went really well. david: when a ceo gets too much share, the board can't really be a check on them. we finally futures, broke above 2800 friday. what is the followthrough buying we will see? euro-dollar up by 2/10 of 1%. just how dovish will the fed have to be? what does that mean for the dollar going forward? 10 year yields go nowhere. a58% to me does not jive with 2800. crude off by 2/10 of 1%.

opec might extend cuts, but they are going to push that back. really interesting dynamic between the saudis and russia. david: time now for the morning brief. focusing on the entire week coming up, to naro -- tomorrow brazilian president bolsonaro will visit president trump at the white house. wednesday the fed will announce their latest rate decision. friday we get u.s. existing home sales and manufacturing and services pmi's. time forme for --alix: bloomberg's first take. we are going to start with opec. the saudi oil minister talking earlier in baku. the concern we heard from

bilaterals was it would be premature to make any production decisions. alix: we are also getting headlines out of the joint presser right now. continuing to say they might meet in the first half of may, and inventory needs to be drained before cuts ended. and your world, are you paying closer attention to opec now that six months ago, or the opposite? >> i would say it is about the same. more than anything you pay attention to the price and the supply and demand dynamics. frankly, price has recovered with stocks until this point. it is just a question going forward if stocks in price can decouple. it is essential for a few trades within the equity market. then recovery in the broad commodity complex tends to be more for value than for growth. if opec can continue to manage production to the extent that they can keep a floor under the

oil price, it should keep the value trade moving. on the other hand, if you can't keep a floor under the oil price, if it continues to fall, you probably see growth stocks continue to outperform value, and that has been very frustrating for investors. david: how much of this operates on donald trump? this is really throwing opec off. >> >> it is true that donald trump has continually talked about iran sanctions. , and -- iran sanctions, and don't forget venezuela as well. it had weight on the market in terms of uncertainty. alix: what is interesting is the saudis versus trump over the last couple of weeks, where trump told opec to relax, and the saudis keep saying we have to keep cutting. does createue, it

tension between the trump administration the saudi leadership. aboutre very concerned the role and the beast. there's a -- rolled in the middle east. there's a piece about the jamal khashoggi death, and i think it has the potential of roiling those relations. david: it was a larger campaign that was really pretty harrowing, when you read about it. deutsche bank and commerzbank have confirmed they are in talks to merge. you can see the stock on both of them is up today on the news. at the same time, is this the beginning of a renaissance in european banks? [laughter] alix: sorry, i didn't mean to laugh. gina: i think it is relatively selective for a lot of reasons. obviously there is a need. revenues are devastating for

financials in europe alone, and thanks especially. there is no revenue growth. there is also no yield curve. there's a desperate need for an mende -- for m&a. whether it can move forward is whether or not they can to continue to push cross-border activity. that is difficult can see giving -- difficult considering the regulatory environment. there is some hope that could happen because there's some desperation. 3/4 of banks in the stoxx 600 are trading below book value. it is really a quite difficult situation for banks. david: in another world when these two large banks get together, you would be worried about concentration. but are we passed that because they are so weak? marty: you could even entertain the thought why does this

combined bank exist. don't forget there's also a 30,000 potential job cuts when they do finally combine. as gina says, the political question is about cross-border commendations -- cross-border combinations are possible. thank you, negative deposit rates. our third story is what we are going to hear from the fed. it's take -- let's take a look at the s&p 500 and the fed. . when the angle meets this week, what do you need to see to justify it? gina: i think the equity market is basically trading on the premise the fed is not going to do anything for most of 2019. could we handle one hike at the end of 2019?

the fair value model suggests we are trading at a level that could have one hike. the real trick is can they managed to reinflate the bond curve. the yield has been rallying. if you see that curve flattening, they probably do .eed to ease a little bit there has been enough inflation pressure to suggest they need to do anything yet, but later this year is a big question this year to the stent at the market starts to look forward, and then we look at the problem with it then. david: is this good or bad news trump?hed says he wanted low interest rates, but now he doesn't have anyone to blame if it goes sideways. marty: you talk about this election coming up in 2020, and

a whole fleet of republicans ready to run on a great economy. so i guess it is good news, but as long as the economy stays on course and continues to grow at is it has been. ?lix: does he blame unions all right. gina martin adams and marty schenker, thank you so much. tvto gdb to go -- go to in your terminal. this is bloomberg. ♪

lyft is hoping to raise more than $2 billion in its ipo. the ridesharing company coming out with its plans today. they plan to sell 30 million shares at a price between $62 to $68 an hour. in 2018.ny lost money a buyer is offering a mix of cash and stock to provide revenue of about $12 million. shares of italian fashion house product falling the most since january -- fashion house prada falling the most since january,

blaming its asia slump on chinese tourists cutting back spending in hong kong. that is your bloomberg business flash. david: deutsche bank over the weekend confirmed it will enter into merger talks with commerzbank after the governor gave tacit approval. the combined entity would have over $2 trillion in access and a market cap approaching $40 billion. -- $40 billion. give us your best argument for why this merger might make sense. for one thing, they have to cut costs. i've been talking to a number of analysts and investors today, and not a lot of them are sure it does make sense, but they all say if he does come back. one way to do that would be to shut down a lot of the branches they have here in germany and

fire the people to have working , 30,000, 40,000, maybe more, because they have too much in terms of cost to make a decent profit without growing revenue. i heard gina martin adams talking to you about how difficult it is for european banks to grow revenue. the problem is a lot of the investors and stakeholders outside of berlin don't think that's his merger make a lot of sense. a lot of people don't really .hink it is going to happen david: let's assume that it does go forward. costs.ly you got to cut i know there's some talk about deutsche bank having to put aside their asset manager

business. this is probably the most important point for investors. analysts are telling us the bank here in frankfurt, for example, did a run-up of what the cost would be, and said it would cost about 8 billion euros to finance the job cuts and cost cuts that were needed to make this merger happen where would they get this money they could sell the asset management unit they have. but they would still need a lot to finance this. for that they would have to go back to shareholders and raise capital again. this is something deutsche bank shareholders have grown weary of , and that could be another roadblock in the way of this tie you --.miller, thank

roadblock in the way of this. matt miller, thank you. >> i think it is difficult for us to see much upside from this deal. i think georgia is a bank in transition. it has a weak position in retail . it really is a bank looking for a strategy. been --ank has always has always been very strong. putting these two make sense from a german political perspective, but i think people need to remember the banking industry is very different from many of the other european and .merican industries

they are not always run for profitability even making this words or merck will not --david: isensure there a restructuring that would make sense from your point of view? >> the problem from many of the euro zone banks in the lead up to this session is that there are many euros in banks and banking markets that remain unconsolidated with a lot of lending that still requires to be rental. how europe solved its banking crisis was very different from the u.k. in the u.s., so i think many of these strategies are

still underway because the environment for banking is still to be resolved. alix: is there a distinction between the equity and credit? either way, it feels like the government is going to let something happen to save deutsche bank. what does that mean for the debt market? ,uest: i think the debt markets as any part of this deal, they will need to be a lot more .quity rates people are questioning the solvency of the bank itself. if this has the blessing of berlin, and again, i have a slightly different spin in that i'm not sure the european union would welcome this deal, so we may have some difficulties from a regulatory perspective, but berlin may write some of the checks for it, in which case bondholders are any pat -- are

in a happier place than the equityholders. alix: the broad issue is the negative rate the ecb has come a creating a newfound urgency for these banks to merge. can you in anyway get positive about the european bank to sit -- banking sector as long as there is a negative deposit? guest: i don't think you can. i think it is one reason the european indices have performed so poorly over the last couple of years. european banks have generally not been fixed. i think the negative interest subsidye ineffective for european banks, and another t -- true -- another tlr+ it isr tltro indicates not really fixed.

it is part of the weakening global economy. david: neil dwane of alliance investors will be staying with us. coming up, fed officials head to washington for the fomc meeting. this is bloomberg. ♪

♪ alix: fed officials meet this week for the march fomc meeting. we spoke to charles schwab's chief investment strategist, who said it is going to be difficult to maintain this monetary sweet spot. >> the sweet spot in terms of monetary policy, the diameter of it is narrower. when the fed first started raising rates, financial conditions were loosening, inflation was picking up from a very low level. they were in to an extremely tight mode. narrower.k it is alix: still with us is neil

dwane. for the s&p 500, it is going to be difficult to continue that goldilocks narrative. marty: i agree. i would suggest they are particularly worried about corporate profits, and i think we are reaching all-time highs. which is right, the bond market or the stock market? when you have the 10 year down youh of 2.6%, a can -- can't reconcile that with it skyrocketing equity market. guy: i think the bond market

hasn't changed its view, but the world looks a fairly tough and the place. the equity market, i think fueled by share buybacks and mna, is maybe feeling the joists spring, and maybe they will realize we see corporate earnings speak. david: if there's a different -- a disagreement over what the fed is doing, is it over what will happen or to say how dovish or , or will itfed is really make a difference? guest: i think if the bond markets arrived to be pricing in , maybe we are going to start seeing disappointments and lower guidance, which would challenge the values of the equities. after a difficult q1, we are going to be really accelerating.

we have to price back the fed two or three rate rises. alix: fair point. on the flipside, what is the bar for another decline in rates? why wouldn't this be the bottom? marty: i think to see a decline in rates, we have to see the u.s. economy continue moves .omentum i think people are optimistic we have a bounce in q2. politics will also raise its head as we look into some socialist, left-leaning candidates from the democratic side that clearly would not be good for capitalism and u.s. markets. argue thed also senate will only really turn if they see the u.s. echo remarket .ave another stained fault

alix: what we see this across all asset classes? neil: whether with the leverage in the global system, quantitative easing, or more interest rates cuts, it is all still a very difficult one for us as investors. what i will say about asia and europe, most of those equity markets are priced for a recession. alix: thank you very much. coming, saudi arabia urging oil producers to stick with production cuts. this is bloomberg. ♪

alix: this is "bloomberg daybreak." the fed meeting and a couple of days. dow jones off by about 41.

will we see fall through eyeing out after friday? it is the european financials trending higher, up over 1% on a potential commerce bank/deutsche bank tie up. this time they are actually talking, so there is optimism in the markets. other asset classes, we haven't forgot about you, brexit. there was some confusion over whether or not italy was going to be ok with a bricks extent ancient -- for a brexit extension. maybe theresa may's strategy actually works. david: they say a bad deal is better than no deal. alix: we d.c. one curve steepening, the 530. 61 basis points. crude off by just 1/10 of 1%, rela sleeping near a four-month high on the fact you have saudi officials coming out and saying

you're going to wind up seeing a beating, and they might continue excel's in the u.s.. , but when they do it may or june. consensus we heard from the bilaterals i had yesterday and this morning is that they will be treated -- they will be premature to make any production decisions for the second half. alix: joining us from back to baku, azerbaijan, what did we take away? reporter: they are scrapping the jointmeeting i of this monitoring committee. he said this is on the table because somebody delegates are saying it is too early to tell whether to extend the cuts. concession from the saudi oil minister because

yesterday the russian oil ministers that the market is stable at the moment. he's having some concerns that could possibly be venezuela constraints. of course, we cannot forget about iran. waivers government give on some of their exports to not others. that deadline comes up in may, so there's a lot of concern .eading up to that june meeting that is when they would decide whether to make cuts for the rest of 2019. they are going to have another jmmc, which is this monitoring community, to see if everybody is complying and take staff of where we are right now in training for the oil market. orcould potentially increase decrease if there was a need in may. this is what we saw them do last year.

. then only to find out the u.s. granted those savers and there is a glut market, which is find they are still doubling down. producing quite a day, so they are taking quite a lot of shares off the market. if they have the saudi oil minister in this final press conference, they can do either side of the equation. they can fill or they can take away, but right now it is clear they want to cut. alix: annmarie hordern, thank you very much. this will encapsulate that tension between saudi arabia and russia. here's what the quiz -- the corresponding oil ministers had to say over the weekend.

>> i cannot say the same for april or any other time period. aspect --ing us every is emory aspect's chief oil strategist. >> i think saudi arabia is not going to do anything you laterally, and russia does represent the biggest of the non-opec countries. the reality is they are the main ones that matter when it comes to the non-member affect. i don't think they see anything different. there are a lot of uncertainties right now, particularly with venezuela, which wasn't even consideration when they had the cuts back in december. i don't think russia is really

taking policy. this was very much from other countries as well. david: if you look at the variables, aren't most of them to the upside in terms of price? venezuela, we don't expect that to turn around right away. iran, and looks like the united states is not going to apply the same sanctions. >> i would say the risks to flat price should be given the upside given the fact we haven't met anyone. we don't expect iranian waivers to be going to zero at all, but we still expect a small cut. however, the market is probably not going to take this move of delaying until june very well. last summer we were starting to get questions about the end of the deal, which isn't, but the

market fears will probably resurface and we will be range found her a few weeks now. alix: how much of the market is actually tight right now, versus how much is anticipating an extension of cuts and a tighter market? guest: i think that is the difference. last year you had a pocket around q3 which was extremely tight, but this was like a month and a half of frustration. spreads are just generally, particularly with medium and heavy crude, the market is extremely tight. we just don't have any spare capacity of that quality of crude, especially with the canadianas as well. there are pockets that are probably as tight as they have ever been, but there were a lot of like crude coming out of the u.s..

alix: i cut up with energy secretary rick perry and asked about his relationship with opec. here's what he had to say. erry: i think we have a very workable relationship with the membership of opec. i try not to get confused about the political side versus the production side of the oil and gas industry. we may not always have the same interests in mind. alix: what is that relationship now? guest: at the end of the day, saudi arabia or at least opec have similar interests. they don't want prices to go to a point where it hurts them. there are of course political differences between the two sides, as rick perry mentioned as well. but when it comes to opec, and i think this was set over the , fairly pricel

in the 60's or 70's. it is also required for u.s. try looking. alix: always wonderful to catch up with you. thank you so much. david: time to find out what is going on outside the business world. here's viviana hurtado. viviana: in the netherlands, reports of at least one dead and multiple new did -- multiple wounded in the city on. a tram police are calling it a possible terrorist shooting. in new zealand, the prime pardor -- new zealand suggesting a ban on semiautomatic weapons after the shooting in christchurch. new zealand's gun ownership rate is one of the highest in the world. in france, president emmanuel

in an's president was round of crisis after yellow vests protests. you can see signs of chaos and arrested.200 people since november the yellow vests have been protesting ever saturday. recent protests has been low-key. i'm viviana hurtado. this is bloomberg. alix: those are really staggering pictures. guy: and the yellow vests --david: and the yellow vests are not going away. ,t came back over the weekend and it sounds really say -- real is a. by the way, it is not limited to mr. micron.

we've got to reform all of democracy. something fundamental. take aoming up, we will look at the potential coming up a bit. this is bloomberg. ♪

♪ viviana: this is "bloomberg daybreak." later on "bloomberg markets," chiefgreene, economist. ♪ -- this isis is "bloombergis daybreak."

president trump tweeted he sell gm's ceo to try to the plant and shifted blame to the union. the president demanded they keep the factory open. the founder of huawei saying revenue climbed 32% the first two months of the year despite pressure from the u.s. over the use of the chinese telecom gearpment maker's regarding 5g networks. an investigation by auditors confirmed the faa wasn't holding boeing accountable, bloomberg learning regulators were examining the 737 max's certification for the second of two deadly crashes. that is year bloomberg business flash. alix: thank you. that was pretty horrible. david: exactly.

it turns out they knew there were problems with the way they certified this aircraft beforehand. that is not good for boeing or the faa. alix: not at all. we are monitoring that story as well. we turn now to wall street beat. we could have the biggest merger ever in international payments. lyft sees $1.2 billion in ipo, which could be the year's biggest public offering aside from uber. [laughter] bloomberg'sng us is bureau chief. guest: a lot of accident -- a

lot of action happening here. we are changing the way we pay for things. paypal comes into this. there's a big story and "bloomberg businessweek" a month ago talks about how all of this processing business is going to change. alix: when i read it, i read wordplay. i was like, why do you want to buy that game? [laughter] david: in the meantime, and europe, you have the largest ipo in the euro zone. this is a hot area without a doubt. >> there are a number of firms that will process now when trillion dollars annually. alix: it is going to be competitive, it seems. formatthis is a great

they are using on bloomberg news right now. they just break it down. there's a terrific story that goes through all of them. allianz is want to talk about, but even morgan stanley stanley in the mix. i know you spent a lot of time --h jace gorman, and this is david: we will see how much they end up paying for it. alix: you would think that deutsche is probably pretty desperate. they need to sell sooner rather than later. david: but there was a recurrent problem. the things that people want to buy are the things that are most valuable to you. to not get rid of what has the most gross potential. jason: some great reporting by bloomberg shows all the machinations going on, not the least of which is the assumed merger between these two big players. ft,id: let's turn to ly

now on the roadshow. as i recall, in their filings they said they lost 900 million last year -- $900 million last year. think aboutson: this idea. i feel at this is the modern-day coke and pepsi. think about them going public at the same time. you're going to have this great comparison between these two companies. they have different strategies going forward. ly doesft seem to have the does seem to have the edge in getting out sooner. alix: if you are a public company, you don't really get to do that. why not stay private? jason: clearly that's become an

issue with google and alphabet and the disproportionate power. david: many thanks to jason kelly. listen to him every day from 2:00 to 5:00 eastern. addng up, marriott looks to nearly 300,000 more rooms. planll look at its gross in this year's -- we will look at its gross plan in this year. this is bloomberg. ♪

david: marriott holds its investor and security conference today to go through its growth plans which include adding nearly 300,000 new rooms, and pleasing fee revenue, while increasing -- increasing fee revenue. i just outlined what i took away from your announcement. how robust are these plans? how aggressive is this on your part? >> it is not aggressive or nonaggressive. about 20 years ago we started

doing these annual conferences. we bring in analysts and say we want to look at the horizon, and basically say, how does the company perform over a longer period of time? today we will be talking about 2021. we are actually using a fairly benign projection about the economy. nothing particularly exciting. layering on top of that new hotels, we expect to open 1700 hotels, and say here's how we perform. david: you are increasing revenue modestly. is that market share or overall market? is there that much of an increase in demand for rooms? >> we are certainly taking market share. it is bigger for us in the u.s. that it is anywhere in the rest of the world. twice the share

and hotels under construction as we do. we know we will continue to take share in the years ahead, which is great. 275,000 will talk about new rooms opening. an activist in your brand thinks you've taken on too much. does he have a point? guest: i don't think so. we are happy to take in suggestions as they come in. this one runs contrary to what our strategy has been and what we particularly couple which is to say for us to compete with our loyalty program and.com sites, we need to offer choice to our customers. we want to encompass as much choice geographically, by brand segment, by sensibility, price point so that whenever you are

traveling, you can go to a marriott and no i have for place to say. having more brains and more -- and know you have a place to stay. david: will people understand bonvoy isthe -- that marriott? it will take a while for folks to adopt, but we have marriott rewards, ritz-carlton awards, and sbg, all very loved programs by their members taylor: we had to come up -- by their members. we had to come up with a name to unify this, so we are working that way. voy shouldn't be too hard to remember. david: i remember when you just bought starwood. one of the biggest

ierantages was the databases. you got in trouble with data a few years ago ended up in front of conference -- of congress. bad players were in the starwood reservation system for a few years, so we've learned some technical failures. what could we have done with a benefit of hindsight them moment we closed to maybe find these bad actors earlier. thatdata was taken from us turned to be a bit right, but still some big we got today or spots ability for infix. david: people are investing an awful lot in protecting data. using that to increase

costs for mariette? been: every year we've spending more than the year before. place whereously a this is a real risk in the world, and we've got to do more than we do to protect it. david: there are reports that the hack may have come from china. are you having any difficulties with china? how much of your expansion is in china? have: just to be clear, we no idea where the cyberattack originated from. we have cooperated with the fbi. there are experts to look at these things from a distance sometimes about what they think. we don't really know. we disclosed it when we knew about it. probably 30 countries around the world because of their local requirements.

response has been good. david: good to have you with us. that is the ceo of marriott international. levineoming up, alicia will be joining us and all eyes turned to the fed abigail: all eyes turn to the fed. european banks getting a bid. bit aslar paring back a we head into the fed meeting. this is bloomberg. ♪ want more from your entertainment experience?

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

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alix: conflict market. the s&p tries to break out. markets look towards the fed to see just how dovish they can be. merger of week equals. deutsche bank and commerz discuss a marriage is the ecb pushes back its forecast. until junes differs in a win for russia, which sends the market -- which says the market is currently in balance. . david: president trump has tweeted a moment ago about the gm dispute, saying they will start talks. why wait? i want jobs to stay in the usa and i want lordstown, ohio open or sold to a company who will open it up fast. this is president trump weighing in. i think probably part of the

issue is there's two issues. everyone starts union contracts in september. he may be confusing the two. alix: yes, but it is one of those campaign promises that we are going to bring jobs back, and then when they are gone, is there actual pushback? or like farmers, when they were tariffs, is it going to be fine in the end? david: uaw lordstown said you were going to bring manufacturing jobs to ohio. it is going the other way. i think that really got to the president. he reacted quickly. alix: with the democratic agenda .hich may include joe biden david: he has slips of the tongue. [laughter] aboves&p futures trading

2800. will we see fallout through buying? euro-dollar up by 3/10 of 1%. a weaker dollar story right now as we head into the fed come up with the exception of the cable rate. also questions as to what will happen with brexit, but nonetheless a weaker dollar today. it is the lows of the year for some. opec holding off any cuts until june. david: now it is time for the morning brief. we will take a look at everything happen this week. tomorrow, brazilian president bolsonaro will visit president trump at the white house. on wednesday, the federal reserve will announce its latest rate decision, followed by a news conference with chairman jay powell. -- the boe, the doe

announces their returns. taylor riggs is digging through some of the details with more. equities and bonds rallying on december fed meeting minutes. as we approach this wednesday's meeting, we are expecting the fed to reduce the number of rate hikes this year. prices are expected to fall less than.xpected -- fall less etf's are seeing outflows, which is very weird. spy andooking at the seeing the second largest outflows at $4.4 billion.

route in october vix december bought a make out in the equity markets, you're seeing a big rally. imagine what that would do if we had inflows into the etf says well. could push it higher than the 28 level where we are now. david: thank you so much. we are going to have this weird situation taylor describes at 2.6. to explain it to us is alicia levine. are they in detention they appear to be? guest: there's definitely conflicting signals. we have copper rallying, which is usually very bullish for the economy. there are conflicting signals everywhere. we think the 10 eventually moves upward during the rest of the year, but right now, what you've had in the last two or three months, you had the equity markets on the bond markets rallying together. we have basically seen the end of the negative correlation

between these two markets they had since the end of the financial crisis. we think it drift its way towards three to the end of the year, in part because we see growth in the u.s. ticking up towards the third quarter. alix: in the chart that taylor something we that could see. most observers did not expect it. essentially we didn't get it all. what we got is a 12% move since january 1. virtually straight up, and there were shorts coming in at the beginning of the year because as the market correctly predicted, global data was getting worse, and the rest of the world was growing much worse than expected

and predicted earlier. in fact, the data is worse. david: let's insert one more ingredient, volatility. if you show volatility across all asset classes, it is really down. guy: essentially we've got -- reporter: essentially we've got -- guest: essentially we got central banks handcuffed around the world. fed in the u.s., we have a talking about average inflation , a big move for the fed. alix: if you see higher inflation expectations, what is the reach through for margins? guest: margins are holding up for the s&p, but they are cyclically pretty high.

the expectations has to be that margins are coming down. you can see it because you had revenues growing this year, and earnings growing less than that. in part, we are not getting our china trade deal by the end of march, so the longer this goes on, the longer you extend the uncertainty, lack of investment, a bit of a cap on capex because we don't know what the deal looks like. david: are the markets sort of endured to that at this point? there's a south china morning post that won't be until june now before it might be postponed. guest: what i might say here is markets are priced to perfection . all markets have rallied to the point where they are trading at by the year averages.

if we think earnings are see it in then end of the year. alix: what areas have more upside here? guest: we've seen cyclicals rally and really drive this. i think it would prudent to start looking at some of the less cyclical areas just because .e rallied so much the lower cap looks very strong also. these can grow even if there is a bit of a slowdown. david: are you betting against the turnaround in the second half of the year? guest: health care is a great example. it has been walloped because of some of the political noise out of washington about ending managed care as we know it and medicare for all, and also some

of the rhetoric around drug pricing. health care has rallied much less than the other sectors. right now the health care sector feels like it is under kind of some sort of regulatory friend. it is a headline risk come of the multiple severity suffered. alix: alicia will be sticking with us. coming up, rival lenders deutsche bank and commerce bank confirmed talks -- and commerzbank confirmed talks make a deal happen. this is bloomberg. ♪

♪ viviana: this is "bloomberg

daybreak." lyft is hoping to raise more than $2 billion in its ipo. coming out with details today to sell more than 30 million shares at a price between $62 and $68 a share. $91company reported it lost million in 2018. is the biggest deal ever in the international payment sector. fif is offering a mix of cash and stocks to get a combined revenue of $12 billion. shares of italian fashion house -- house prada following the most since january, citing cut back on spending and hong kong.

that is your bloomberg business flash. david: deutsche bank over the weekend confirmed it will enter into merger talks with commerzbank after the german government gave tacit proposal to the tax cuts that would come from the banks coming together. we welcome now allison williams, bloomberg intelligence senior banks analyst. explain to us why this makes sense. reporter: they have to do something. that is the only thing that makes it makes sense. i guess for both banks, it has been several years of disappointment, but for deutsche bank especially. we've been through several different managements. the most recent iteration talked about making some changes, focusing a little more on europe . but the environment hasn't cooperated, and i think that has been a sticking point. maybe the final straw is the is the stronger

quarter, and now to announce another weaker quarter, investors are pushing to do something. a way of cutting cost fast? reporter: i don't know about the fast part, but that would be the rationale. , he did say credit credibility has been a major issue with the prior regime. cost. going to deliver on i think going forward, you do is a relevantsue new challenge -- a revenue challenge. thanking is a business where people want to feel confident, and that's is where you are getting that sort of cycle. alix: what does the bank

actually look like, and what of the problems they can't fix? reporter: the problems are the same ones now. this merger does nothing to fix .he poor problem at the bank you are going to stay in that business. ?ould there be some improvement that could be a positive. but a deal would basically be premised on looking at the german retail banks, putting those together, cutting costs. cost save would be the primary rationale. that involves jobs. there's a lot of politics around that. getting to government involved in having the blessing is helpful, but it is still going highly dilutive, so the economics don't look great.

it is not a win-win. if the main thing here is to estimat instill confidence, youd several years. david: is this a business driven transaction or politics driven? there are reports the german finance minister has made this almost a shotgun marriage. reporter: regulators are looking at these two companies, years of disappointment. the stocks are trading at fractions of tangible book value. and we are in a pretty healthy environment globally. they are going to want to make sure things are stable. obviously they are a key driver in the steel. deal. this alix: i want to bring in alicia levine of bny. guest: the thing we learned about negative rates is it is

just a disaster for banking systems. that is the exclamation point on all of this. you need a stable banking system to grow the economy, and they need the fiscal side to begin so stabilizing banks can help grow the economy. it is really interesting because despite the fact we have such a move down in rates in europe, the banks look like they are trading a little bit better since the december lows. it is true that everything is bounced up a little bit, but it is worth paying attention to come of this focus on will getng banks somewhere and instill some confidence. there is still the issue of whether they have to raise capital in this transaction. reporter: they most likely will have to raise several billions. one offset will be if they can sell the rest of dws group,

their asset management arm. there was a story that there were some interest. they could spin it off to the public. they could sell it. that's a few billion euros right there. probably beyond that they will .ave to issue stanley came out saying perhaps the worst was over, especially if there is a trade deal with europe. guest: it seems to me hard to think there could be any more negative surprises in the data coming out of europe because the expectations are so low at this point, and very quietly, some sectors are moving up nicely. european autos are moving up. european luxury has been moving ' rate ofhe banks

decline is not as bad as it was. that is where you can make a nice return if you are paying attention. if china can stabilize by the summer, the feedthrough will be to europe because when china sneezes, europe gets the flu. china heals itself. europe will feel it. i think we are nicely primed for a bit of a recovery here. but the key factor really is whether the china stimulus can be successful or not. david: all roads lead back to china soon or later. alison williams, thank you for being here. alicia levine of bny management is going to stay with us. more next in today's bottom line. this is bloomberg. ♪

♪ david: time now for the bottom line come over relook at three come please worth watching. ,ord cutting jobs in europe

cutting 5000 jobs in germany. leone, which supplies automobile companies with cables and wires, will cut 2000 jobs. continued softness in europe on automobiles. alix: but morgan stanley says the auto sector is going to stabilize. the worst is in. david: in the german government has said as well they think it is going to stabilize. alix: let's take a look at lyft, looking to raise about $2.1 billion, valued at $19.6 billion. shares between $62 and $68 a share. automakers, vwn was citing when they were going to spin off one of your units lyftthe ipo, and you have coming to the market.

it doesn't look too bad at the end of the day. the idea that it is not the markets, it is your product. david: the third company we are watching today is once again bowing -- once again boei ng. it is this report out of a seattle newspaper over the weekend that is really disturbing. goodter: it does not look faaeither boeing or the about just how closely entwined they really where. the faa has been outsourcing parts of the certification process for years, but increasingly that has become even more complicated, and boeing has taken on more offense ability. it seems they were primarily responsible for the safety analysis and the computer systems for the max 8.

in terms of the actual thrust of the plane's nose down, they are understating that. the other being that they are not spelling out the fact that the system can reset, which is likely what forced the plane's nose down. david: even if the pilots responded, it might reset. and this problem was known to people before the ethiopia crash. >> absolutely. it was being pinpointed as potentially because of the lion air crash. has said is this is continuous. the fact that it reset --tinually, case the continually complicates this. alix: i think it is a question to ask. reporter: this is been a program

supported by both sides of the aisle because faa does not have a significant budget. in terms of completing the certification on a timely basis, people were fans of outsourcing. obviously that has problems and creates conflict of interest. we are hearing from a lot of employees saying this would not pander -- this was not handled properly. it did not necessarily have the scrutiny it should have. david: it is early going, but i do wonder whether this will raise questions about the trump narrative about we need to deregulate taylor: that that is part of growth in this country. we need to make sure regulators are not of the backs of these companies. here's one where maybe they should have been. reporter: this story is interesting because it sounds , a littlet is true bit of regulatory capture by a local office in seattle where corporate headquarters were. this is less about the regulation and more about the

closeness of the regulator to the company. city.ere in the same that may have something to do with it. i don't see this as a deregulatory issue, but more about how to design your regulations for the best possible outcomes, and not to get regulatory capture. alix: but to your point, it is not like all of a sudden you fix the software and we are good to go. thank you very much. alicia levine of bny investment management will be sticking with us. coming up, russia's win. opec defers a decision on continuing production cuts. this is bloomberg. ♪

alix: this is "bloomberg daybreak." i am alix steel. happy monday. a big week lined up. what to watch is what the s&p does today. futures up over 2000.

the dow is a different story. boeing will be weighing heavily on that index. european stocks trying to eke out again. the euphoria of a deutsche bank .nd commerzbank a softer dollar story across the board. cominghave brexiteers out and saying theresa may's deal is better than a long-term extension. david: may be bad deal is ok after all. alix: what she has been saying for months. 61 basis points is the highest since december. one curve is getting steeper. eyes are on as all back to. david: let's not being too much of a hurry to extend our production cuts but then oil is up. i would think oil would go down. alix: david was just saying

about saudi arabia, members of opec coalition reaffirm their commitment opec cuts. they pushed back the timeline. the saudi oil minister asserted there is more to do. there is still inventory. russia sang a different tune and opec changed its mind today. joining us from azerbaijan is annmarie hordern. what changed the narrative for opec in the last 24 hours? thereie: it seemed like was a flip-flop for the saudi oil minister. it was not scheduled to happen but the russian oil minister had to go to crimea today to meet with president clinton for another event. -- to meet with president clinton for another of -- with president putin for another event. minister wasdi oil saying the job is not done, u.s. inventories are high, we are

surprised by u.s. shale growth, we need to continue the job. the minister took the other side. speaking with me he said the market is balanced. the price of oil is trending $60 to $70. it is a fair price for consumers and producers. i said what is the point of these extensions? why extend the? he said you do not know what is happening tomorrow. what he is talking about the supply constraints from venezuela with sanctions as well as iran as the waivers deadline approaches in may. alix: annmarie hordern, thank you much for your reporting. still with us is alicia levine. your call on oil and energy stocks? alicia: what is interesting as it seems opec and the other nations are waiting for the u.s. to do the work for them. they would rather not cut if the

sanctions kicked in to iran and and there is a slowing down of output from those countries. the u.s. is going to decide in may whether the waivers granted to several countries that buy oil from iran, windsor -- whether they will reinstate those waivers or stop them. that is what opec is waiting for. show whenh goes just it comes to most geopolitical issues, the u.s. is a heavyweight no matter where you look. david: there and exporter, the united states. things turn around. alix: maybe not around election time. one thing we should not ignore is that for the last few years, in order to keep oil over $50 or $60, you have to have production cuts from opec. don't forget the saudi's cannot balance their budget and less oil is at $80 a barrel.

this is telling you demand globally is weaker than the and opec, capacity for the perceivable future is going to have to keep up with cuts in order to keep this a balance market and to keep oil in a healthy place which is great for our country. david: global demand may help determine energy prices but when it comes to agriculture it has been president trump's trade policies, particularly his negotiations with china. we welcome tom albertson. we hear stories about how badly farmers are hurting because of curtailing things like soybean exports. how bad is it? of: there is a lot adjustment and suffering in the rural economy and the agricultural economy in the context is commodity prices for agricultural commodities have been down five years. before the recent trade negotiations and terror -- and

tariff rounds that are 18 months old, tariffs were already suffering. david: how big of an increase would it be if we get this stand shall increase in soybean. -- this substantial increase in soybean production? tom: it would make an enormous difference for the year -- for the agricultural economy. grown a substantial agricultural export market in china. china makes a substantial contribution to a surplus in our trade balance. there are some agricultural commodities in the united states where china is not just a marginal purchaser, but is the substantial market and soybean is one of those. 60% of all soybeans end up in china. that has gone up from what was before the stirrups down to about -- before these tariffs down to about 10%. david: your bank is a

cooperative that supports farmers. you make loans to farmers? tom: we make loans to associations that loan to farmers. david: what is the default rate? tom: it is up some, less than you have a right to expect. there are cooperatives we bank in all 50 states are suffering a little bit, in particular in industries where prices are lower for longer like gary. -- like dairy. alix: if you do want up getting a deal, the numbers we have seen for buying soybeans are marginal. 5 million or 60 million over years. this will not be transformative. do they get back all the business they lost? tom: it is uncertain what will happen. i am reasonably confident we will reach an agreement. i'm confident it will have attributes that deal with agricultural trade. some of the more, dated issues around intellectual property protection and ownership rights

are much more difficult and longer-term problems. i am quite confident the chinese will need to buy a lot more agricultural commodities than they have been buying of late. it is not clear we will go back to where we were. these markets, once lost were disrupted, it is not like flipping a light switch. that is the critical question. suppose we do get a trade deal. will we be in a better position before we started our were -- or will we be back to where we were? better we should be in a position on the intellectual property and joint venture side. the agricultural issue looks like it will be a reliable in to where we were. on the intellectual property and ip side, it feels like there could be progress and it seems that china is making signals it is leading to cut the joint venture requirements it previously had. david: if that is right, that sounds like we are using pain in

the agricultural sector to help other sectors. ip is not as important to the farmers. to the farmers remain patient with the president? tom: if you asked 10 farmers you will get 10 different opinions. i've been traveling around the country over recent weeks and talking to people. that thederstand argument and the logic that short-term pain for longer-term gain. it is certainly the case that agriculture has been taking more the pain for the potential benefits of other sectors of the economy. there is a fair amount of hope and a fair amount of trust that there will be results because the situation that farmers and ranchers and agribusinesses complex are in in the united states is quite -- halverson and alicia levine, thank you so much. david: time to find out what is

going on outside the business world with first word news. viviana: we begin in the netherlands. at least one person was killed and another wounded in a shooting on a tram. authorities say it might be terrorism. the attack taking place in the city of utrecht. no arrests. heavily armed police are gathered outside the site of the shooting. zealand, the prime minister agreed monday to overhaul the country's gun laws after the mosque massacre. ministers discussing a crackdown on semi automatic weapons. 50 people were killed in the shootings in christchurch. new zealand's gun ownership is one of the highest in the world. senator kiersten gillibrand of new york joining a crowded field running for the democratic presidential nomination. in a video, gillibrand saying america needs the leader who can make big bold choices. she has is asia as leader of the

me too movement. 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'm viviana hurtado. this is bloomberg. david: coming up, credit markets have gotten a boost from a dovish fed. how long can that last? barclays head of credit research and strategy joins us next in today's follow the lead. this is bloomberg. ♪

viviana: i'm viviana hurtado in hewlett-packard enterprise greenroom. coming up later, the u.s. chamber of commerce executive vice president.

i'm viviana hurtado with your bloomberg business flash. employees at the federal aviation administration warned seven years ago that boeing had too much influence in safety approval. that prompted an investigation by auditors who confirmed the agency was not holding boeing accountable. president trump pressuring general motors over a factory in ohio that is being closed. the president tweeting he asked gm ceo to sell the plant and tried to shift blame to the democratic leader of the local union. earlier, the president demanding gm keep the factory open. huawei appears to be defying its global trouble. revenue climbed 36% in the first two months of the year. -- u.s. is pressuring allies out of fears the company helps

china spy on the west. probably.e for a deep dive into the stories making headlines -- time for although the the -- time for follow the lead. a deep dive into the stories making headlines. today we look at credit and whether the rally is sustainable. taylor: let me see if i can answer that for you. i want to start with treasuries. take a look at the bloomberg barclays index on the five-year basis. it has been a rally. europe 13% over the last five years and our interest is on the right-hand side of that screen and the big rally you have seen in 2019 along with equities. the rally has been all across the maturity scale. you of anywhere from one year to 10 year. bonds posting gains. some of the muted inflation we are seeing means investors are comfortable going into long-term bonds. not getting the big rise in yields and inflation

expectations like you would normally see. investors comfortable extending duration. you are seeing 10 year plus bonds rallied more than 3% on a year-to-date basis. when it gets interesting for the credit market is this is not typically what you would see. you're having higher grade credits outperform lowest rated junk credits. stilllow you have aa trending 57 basis points. --75 -- at 2.25, and c typically would not expect to see the benefits trickle down to lower credits. not quite performing is some of the higher rated credits. alix: great stuff. on that point, does that signal more defaults and what does that mean for the overall economy?

mark takano of capital management told is the downgrade risk could weigh on gdp. >> at some point you have this potential massive amount of downgrade risk that hangs over high-yield bond market and when that happens, credit spreads have to widen everywhere. that pressure will be something that dampens the economy. barclaysning us is head of credit and strategy and alicia levine is still with us. brad, what do you think? bradley: in terms of the credit markets, i think we've had a great start to the year. beta notint of higher rallying is much as you would expect, it is not just been ccc. bbs have about the same return. in investmentint

a's haveket, bbb's to gone up, not expected when spreads are tightening. does all of this wind up telling you the rally we have seen is a fake out and we need to get more defensive or is there ketchup labor they go -- for the higher-yielding debt -- is there a catch up play for the higher-yielding debt. bradley: you guys alluded to the fed being on hold is a big part of what the rally is and hope the fed stays on hold for the next few months. you continue to see credit trade in the current strange. covenant structures of gotten better but remain loose on a historical context. i think with the market is telling you is there are cciosyncratic aspects to the c part of the market which has shrunk to the smallest it is

been the last several years. it does come into play with individual stories. i think it is hard -- david: what about the danger or risk involved in credit. we put up a chart that indicates it is a relationship between nate -- net debt. that is the what you pay off the debt. it shows that it is spiked up. this come up a little bit in the last year but is up substantially. should we be worried about that? bradley: there's different ways of showing those charts. when we try to look at that, if you weight it by the amount of debt outstanding for each of these company, it has come down a decent amount and there has been more lower levered tech companies issuing in the investment grade market over time. we see it as slightly above average. not a positive thing, but the pre-cash flow line, even the pre-cash flow you actually have

to repay that debt has gone up over time and the tax law has been a big part of the change. i do not worry so much about the credit metrics. there is the concern of downgrade risk over time. the investment grade market has bb.me 50% plus david: is that risk distributed evenly across companies? for the small caps, it has ramped up substantially. alicia: we do not think bbb is a larger risk, even though the bbb's are now more than 50% of the investment grade index. in part it is because the kind of businesses that are bbb and why they are bbb. much of the businesses are m&a. large corporations have large cash flow, they have dividends they can cut. they have buybacks. there are all sorts of ways they can deal with the downgrade issue should there be a downturn

in the cycle. bbb is not aelf, threat to the system. i would say that you have to do your bottom-up analysis. your fundamental analysis of credit quality and also cash flow. you have to make sure the credit you are buying to withstand the next downturn. the rate hiking cycle the conversation was about fallen angels, companies going into junk. is the fed on hold for the overseeing future, is there -- for the perceivable future, is there a rising star scenario? eight of the last nine years have seen more rising stars than fallen angels. the exception was 2016 with the energy and commodity related downturn. that has been the credit story. one of the main reasons people are so worried about fallen angels is the high-yield market

relative to the size of the investment grade market has gotten so big because of all of this m&a related issue and the high-yield market has been shrinking because those rising stars. this year we expect marginally more in the way of rising stars than fallen angels. i do not think it will be a big number. when her fallen angels going to happen? when the economy turns. i agree with the point lisa was making. those companies are overweight. it is based on the name. revenue should be going down for those companies as it desk should not be going down for those companies as for other companies. alix: bradley rogoff and alicia levine, thank you for being on set. coming up, lyft next stop on the public market. we did a look at the ridesharing giant potentially 2.8 million. -- the ridesharing giants ipo. this is bloomberg. ♪

alix: here is what i am watching. lyft filing for its ipo. a bloomberg tech columnist learns a -- joins us from london. what have we learned? >> a proportion of the voting shares the cofounders will take, just below 50%. i certainly think it was remarkable they had less than 50% of the voting shares. alix: are the markets going to like that? >> it probably does not make a huge amount of difference. it means a tiny amount of swing in their direction for any change or any vote to go in their favor. the other point that did jump out was bloomberg news had a talk of valuation between 20 and $25 billion. the high end looks to be $19.6

billion. below earlier expectations. uber: is bloomberg -- is encouraged by what they've seen so far or is this discouraging? >> i think there is a certain amount of concern from the uber side. it is not a massive difference. it is a slight one. inr are selling a stake their autonomous car unit. that looks to be an effort to highlight under the underlying value within over some of the parts valuation. i wonder that does point toward a greater worried about their ability to get that $120 billion listing. the saudi's had valued uber at something like $97 billion. anything below that would not look great for uber going forward good alix: what is the appetite for investors? they want uber and lyft? do they just want one?

>> there is so much appetite. you see people in venture capital, they seem optimistic that people are interested in these stocks. the slight correction last year where people went into more value investment. the rate at which these companies are growing. there are not many companies growing at such a rate. on that basis they do remain attractive. alix: thank you for a much. that does it for bloomberg daybreak. it was a happy monday. spent the whole time awake. that was a good thing. coming up, i will sub in for jonathan ferro. this is bloomberg. ♪

jonathan: from new york city -- alix: from new york city for viewers worldwide, i'm alix steel. the countdown to the open starts right now. ♪

alix: coming up, the s&p nearing record highs with volatility know where to be found as investors prepare for chairman powell later this week. raise as much as $2 billion in its ipo. deutsche bank in commerzbank confirming they are in merger talks with as many as 30,000 positions at risk. as we head to the open on this monday, s&p futures trading above the 2800 level. the dow way down by boeing. euro-dollar up .2%. a weaker dollar story. that dollar takes a break. selling on the margin on the 10 year. 2.61. still around the lows for the year. crude up .1%. opec continuing to cut later than we thought. kicking off the week, markets counting down to the fed's decision on wednesday.