commerzbank and deutsche bank. not enough benefits outweigh the execution risks and capital requirements. deutsche bank moves to plan b. global bank earnings, the good, the bad, and the ugly. barclays says the market is challenging. nomura fights to survive. big profits. facebook delivers double-digit revenue growth. s&p numbers report today. david: welcome to "bloomberg daybreak." we have earnings out as fast as we can talk. bristol-myers is out now. they beat on both sales and earnings-per-share. they had first quarter sales revenue of $1.8 billion. adjusting earnings was $1.1 billion. they are up in the premarket about 2% now. alix: ups also out.

earnings and revenue come in a bit light. they do see they see -- they do say they see full-year adjusted earnings up. in terms of where they might have seen a little bit of weakness, they seem to miss on both the top and bottom lines. that stop getting hit at 1% -- by 1%. david: we also have comcast out now. they beat on earnings-per-share. they also did a bit better on the revenue -- i think your pardon, a little light. but they beat on earnings-per-share, up about 1% in the premarket. alix: one company that came out a little bit ago is 3m. they cut their full-year forecasts. they see slowing growth in some of their markets, and some execution issues they had forcing them to restructure. they are cutting 2000 jobs.

david: this is one worth watching because 3m really has its tentacles into a lot of industrial companies across the country, and around the world for that matter. down.e to watch that slow they are down almost 10% right now. really taking that down. one to watch, definitely. some of these earnings offsetting the rally we are seeing in facebook and microsoft . that give-and-take pushing and pulling on the equity indexes in the u.s.. it is a stronger dollar story, four-month high. what are companies going to say about a stronger dollar on their earnings call? we will see. you have more options coming online. seven your notes coming seven year notes -- seven year notes coming at 1:00 p.m. today. along with deutsche bank

and commerzbank, which we will get to a just a moment. we are joined by peggy collins and luke kawa. out wascompanies came parallel statements saying we are not going to merge. we just got to talk with the cfo for deutsche bank. it's is what he said. that do envisage overtime industry consolidation will take place in europe, and deutsche bank wants to be part of that. the timing and the specific form of that remains to be seen. we have talked about doing our homework to continue executing on our plans, executive on the restructuring of the company and improving our returns. david: the cfo saying maybe over time, but not now, not here. that's right.gy: he's leaving the door open. it points to the fact that deutsche bank doesn't seem like

it has a clear plan. we saw a number of suitors pop up already for deutsche bank, including unicredit and ing. the question is where does deutsche bank go from here? shareholders and investors will want to know quickly what are some details of that plan b. alix: they also want to know what i plan b is, and you can see it in the spreads. luke: the overarching question this reinforces is europe's problem-solving mechanism, or lack thereof. i'm trying to think of the last time europe had a big policy success we all talked about. draghi essentially said maybe this isn't the one, but we need consolidation in this sector. it is not us. it is not negative rates. it is you. whether it is the fiscal or banking side, europe cannot get out of its own way in keeping its economy down. alix: arguably, barclays is one of the strongest banks in europe. they are out with earnings today, kind of mixed.

you can see what is happening in the market, down by about 3%. here's what they had to say about the environment. the choppiness, particularly in investment bank around equity capital markets and m&a activity around the world. alix: but ironically, they actually did better than some of the u.s. banks. i have that was quite impressive. luke: it is interesting. the trading environment from quarter to quarter is such a black box it is tough to get a read. i was more encouraged on the ubs side. wealthy people are trying to get back into the market, trying to look for clues that what we are seeing in equities worldwide can continue. that is the activity you need to see more of. peggy: i thought it was really interesting in the ubs earnings that they were talking about strong growth particularly in march, almost as if there was a strong turn in client interest.

particularly in terms of the growth, the wealth they are getting from asian-pacific clients, ubs has been making a push on that for years, and it looks like some of that is coming to help them now. david: let's turn to u.s. tech. facebook and microsoft surprised to the upside. two very different companies, though. facebook is really facing consumers, and they really showed substantial growth. microsoft is all about the cloud. peggy: it is interesting on the facebook side, and particular, in terms of it seems like clients and advertisers didn't absorb some of the scandal and privacy as much as they thought. they really did rally more and hold their advertiser base more than people thought. amazonare watching for today in terms of where they're spending is going, in terms of warehouses and the cloud, like you said. david: they said we may have to pay the government $5 billion in

fines, and the markets has no problem. luke: i don't think the conversation has changed. i'm sorry, the conversation is the only thing that has changed. the facts are the same. you've got exactly what investors love about the company. you've got great top line on facebook, and for microsoft, great structural growth that is still growing ahead of nominal gdp worldwide on the cloud side. it is pretty much everything people love about these companies consolidated into one afternoon. alix: also kind of reflected in the market. $1 trillion market value now for microsoft. thank you very much. other breaking news concerning central banks. turkey's central bank removing its pledge to tighten further is needed. that is having an immediate impact in the currency market. the lira is down by about 1%. david: mr. erdogan will be

happy, right? a little like our president, maybe? alix: he got what he wanted. announcementme, an finally out of former vice president joe biden. it is now official he is going to run for president. if he were elected, he would be the oldest by a longshot. old. now 76 years ronald reagan was 72 when he started his second term. he is largely seen as a moderate in a field that is moving towards the left. alix: the question is can he woo the voters that like the elizabeth warrens in bernie sanders of the world? david: that moderation might work well in the general election, but maybe not so much in the primary. president obama came out with a statement right away, not endorsing him for president.

he did a really great job, saying you are a great vice president, but did not dorsum -- did not endorse him. alix: who doesn't want to see joe biden in a debate with 19 others in a democrat field? this is good stuff. [laughter] david: another step, if we were to go through it, imagine president trump debating with beau biden. that -- with joe biden. that would be gray television. coming up, -- great television. coming up, more on deutsche bank and commerzbank. are chief market strategist will join us next. alix: we are digesting a lot of earnings coming out this morning. 3m cutting their forecast for for year, cutting 2000 jobs organic growth and operational issues. watch that for global growth conversations ahead of the open. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." shares of facebook are surging in premarket trading. 26%, quarter sales jumping plus facebook signals it may be close to resolving a u.s. investigation over privacy. the company says it set aside $3 billion related to the u.s. federal trade commission probe. the cloud driving microsoft better-than-expected in quarterly earnings. a number of large brands signed agreements to use the company's azure cloud software, among and others.

british antitrust regulators formally blocked a merger, saying the competition would likely mean higher prices and less choice for consumers. walmart is considering options for asda, including an ipo. david: deutsche bank and commerzbank announced in parallel statements this morning they were ending talks of potential merger, sending deutsche bank stock up, although now it is down. bloomberg spoke with the cfo about where the bank goes from here. yes, we do envisage over time that industry consolidation will take place in europe, and deutsche bank wants to be part of that. the timing and the specific form of that obviously remains to be seen. we talked a lot about doing our homework to continue executing on our plans, executing on the restructuring of the company and

improving our shareholder returns. david: joining us now is our man in berlin, bloomberg's matt miller. great to have you here. was this a deal that ever made sense, looking back on it now? matt: i think it depends on who you ask. for the most part, berlin was not behind this deal. i spoke with a supervisor remember of deutsche bank from the bankers union a couple of days ago. they were against it as well. the problem was, for people outside of banking, 40,000 job cuts just doesn't work well, especially for people of this income level. in terms of internal people, it really was just too costly at the end of the day, too complicated, and didn't create the kind of economic synergy they would've hoped for. david: is there a plan b for deutsche bank specifically? that sounds like your plan b is just let's go back to plan a and

cut more costs. matt: exactly. they are just not willing to give us the details yet. i am not sure if that means they don't have any details or are really waiting for tomorrow's earnings release to share them. however, they gave her luminary numbers. shares rallied hard -- gave preliminary numbers. shares rallied hard, almost up 5%, but now have turned back down. maybe because that is sinking in that there really is no plan b. david: it is great to have you from berlin. that is bloomberg's matt miller. alix: no plan b. with us now is- our cogan of national holdings -- is art hogan of national holdings. does anything look appealing to you? side,he deutsche bank because there plan b is going back to the original plan a, and

they are going to have to do a raise and cut u.s. operations, and it will be difficult to find a natural suitor, but when you look at the banking industry in general, ubs spoke to wealthy individuals wanting to be back in this market, so i think that is a good sign. we think if you are looking at financials, you would do better to look at u.s. financials. think about the headwinds that both have come a low interest rates -- both have come a low interest rates. i would say dollar for dollar, you probably do better looking at u.s. financials. alix: i'm glad you brought that up. barclays has warned of a choppy environment, but the revenue beat all of the u.s. banks about up 40%. the equity mix was in line with the -- the equity miss was in line with the rest. what do you make of that? art: all of the trading revenues

have a great deal of volatility, so kudos to barclays doing a great job, but that is not something you can really model outgoing through the rest of the year. i don't think there is any secret sauce and that, necessarily. i would think that u.s. financials right now are much more attractive than multiples european banks are trading at, dollar for dollar. i just think the headwinds are much stronger in the euro zone's for financial institutions. david: how do they play against jes staley's hands right now? no one claims the investment bank is losing money, just that it is not making as much money as the rest of the bank. art: it is difficult to know right now what changes you want. at the end of the day, what they really want is a merger that makes sense so you can garner

economic synergy, but also have more on the balance sheet to spend all the money you have to spend on new technology to keep you in the current environment. national hogan of holdings, you will be sticking with us. the market is digesting a legal surprise, meaning they've ignored it. this is bloomberg. ♪

david: facebook announced strong results for the first quarter after markets closed yesterday, beating estimates on sales and earnings-per-share. we welcome now on the telephone michael nesson soon -- michael nathanson. he has just raised his price target to $210. hogan with- art national holdings is still with us, as well.

michael: the only thing we are dangling on with risk is regulatory in the future. what is going to happen around the world was regulatory, and what is the impact on revenue? results were really good. the question is what about the forward look. david: even only forward look they said they might have to pay as much as $5 billion in ftc finds, and the market says big deal. david: look at how much cash they have in their books -- michael: look at how much cash they have in their books. the question is does it change their ability to monitor the customer base, and also cost of compliance. the fine itself is not a big deal. we want to see what happens after. david: let me ask you about margins. we will put up charts that come up some in revenue growth rate, but the margin rate of growth is coming way down. does that give you any pause? funny, they blew

the stock up less june or july with margins of 35%, so this is expected. i think the rate of margin decline has actually been slower than they led us to believe would happen. the long-term margin degradation is a negative, but the rate for actually not falling as fast as it probably would have a year ago. alix: we used to call it -- david: we used to call it sandbagging. does facebook sandbag on some of these investments, overestimate and then come and lighter than we expect, and the stock goes up? or is it an honest answer on where they think they are going? : historically they are great sand baggers, but again, second quarter 2018, they really missed on revenues. that was a real shock that maybe they were not sandbagging right. we fell victim to believing them

and thinking maybe things are getting worse than we would've thought, and maybe they are telling the truth, but since then they've been sandbagging. alix: i sandbag my personal buzz -- my personal budget. michael, you cover google. acro soft had a killer quarter. do you expect the same kind of upside for google's cloud business? michael: they hired someone to effort. their sales are you as that growth will probably be in the same place, but we want business to accelerate from there. that you will see faster growth as the new management team brings on new people for monetization. alix: expectations are high, but so is the price.

you are looking at tech stock premiums to the s&p, remains elevated well above average. 2007. have pe since art: when you think about the market cap that just the faang group has put on since the turn of the calendar, some 600 billion dollars, it is insane to 100k we can extrapolate billion dollars of issuance in the bond market. while they are still doing technically well, they will sustainable.een as tech are there areas of that can be priced higher? art: like a microsoft or cisco where you don't have exposure to

new regulatory challenges of privacy or data. you get concerned about a google or facebook or twitter, and not necessarily some of the older technology names focused on getting you into the cloud and keeping you secure. david: it feels like regulatory overhang is overhanging them forever. we had hearings in congress. nothing came of it, as i can remember. michael: in the eu they just passed a new rule about copyright two force platforms to be more aggressive on taking down content they don't have copyright for. in australia, there is a new rule of hate speech. in california starting next year, a new rule on privacy. it is not happening yet on the u.s. federal government level, so where it has been slowest is --'s been slowest is in the

country where these companies are domiciled. right now, i think the question about can we see anything yet, this is not a risk because it hasn't happened. but i think it is happening around the world. eu,ou pay attention to the australia, new zealand, california, there are pushes in places to change the rules. alix: thank you very much. art hogan of national holdings will be staying with us. brett coming in at $55 a barrel. this is bloomberg. ♪

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7/10 of 1% tech stocks doing -- up by 7/10 of 1%. tech stocks doing well, 3m disappointing. you've got a lot of different earnings weighing on the markets. in asset classes, a pretty different story when it comes to the currency markets. . by lira weaker by the dollar about 1%. central bank says they are not going to hike rates. you think they will bend more towards cutting. the yen is up despite the fact the boj came in pretty dovish, some etf'sut lending further liquidity. david: tentatively stepping into oil turf. they have a profit in the first quarter, earnings-per-share of nine cents. the estimate was for a loss of

$0.27. the production seems to be excellent, significantly higher than what was expected, 278,000 barrels a day as opposed to 205,000. what are these guys going to do with the extra cash flow they are making? oil prices are higher. part of that is the iranian u.s. ending waivers. no immediate need. what is the premium in the market as you see it? art: we saw a quick jump of two dollars a barrel already -- tom we saw a quick jump of two

dollars a barrel already, but there is seasonal growth in demand we will get later in the spring and summer. alix: the rhetoric on monday was really split. the iea was like, we don't have a problem. there is spare capacity in the world. we've got this. supply losses and demand that we see. which part of the fence do you sit on? tom cole and i think i -- tom : i'm squarely in the middle. the other big issue is they are counting on further growth in sweet oil. light the infrastructure for the u.s. to deliver the growth they are looking for in the next year is not yet in place and not yet proven to be in place on a

timely basis. i think there will be some surprises that this has more impact then is being counted on right now. david: oil trading up today, as we know. can you explain what is going on in libya? it seems like a real puzzle. first of all, are we for or against the warlord, for or against the regime? i'm glad you brought that up. i think it is really important. i think the linkage of iran and what is happening in libya are part of the same place. is being financially supported by the saudis, so i think what we have in the case of iran is increased pressure of iran by the u.s. in no small part because the saudi' -- the want to see that pressure

develop that way, and they are willing to provide some assurances to the u.s. that they will be there. they have let their production drop down below 10 million barrels a day. they've got some capacity, therefore, vis-a-vis what they've had in recent times. but it is not all that great. when i mentioned between light sweet oil and the medium oils and heavy oils, there could be a challenge lay there still. when these oil companies report, what are they going to do with extra cash? i spoke to the ceo of occidental in relation to the potential merger between occidental and anadarko. here is what she had to say. >> we always look at the $40 to $50 range and make sure any decisions we make would be successful in that range of oil prices. if we do that, we will always be

successful and we can lower our risk. alix: that is h when he five dollar upside to where we are right now if you take a look at brent. what are companies going to do with that cash? tom: they are going to need it. capital intensity of the business is very much in place. a lot of infrastructure spending still needs to be done. i am not too worried about them having more progress than they need. but that differential is such that there is room for some pleasant surprise as people look forward from here. in the first quarter for the earnings being reported now, let's keep in mind we are 13% below the pricing of a year ago. the impact of that is what is reflected in the earnings reports we are seeing now ahead of the announcement. seeing forward, we will pretty good quarter to quarter improvements by virtue of what

is now unfolding, especially with the u.s. decision on iran. david: let's turn to you, art hogan. what are investors doing generally? art: that is a really important point. for the first quarter and general sector, that has improved significantly. one we think about this year, we -- we have seen this. a lot of infrastructure still needs to be done to extrapolate growth that the world is counting on, the u.s. putting into makeup some of the shortfalls. i think it takes more time than we are getting it credit for. alix: great to catch up with you.

you want to know more about oil? tune in today at 1:00 p.m. a 13 year lowor .or coffee prices that doesn't happen in that sector, and it is happening now. david: happening now. has reported unexpected profit in the first quarter, one of 65 companies reporting earnings today. here to give us a snapshot of what else is moving his taylor riggs. taylor: shares of 3m are sharply lower off of the lows of the session, about 8%, after they cut folio -- cut full-year sales and earnings guidance. now looking at growth from -1% to -2%.

a quote from the ceo seeing the firm missed on margins and fell short of expectations. responses are seeing restructuring and announcing a realignment to four from five business groups. ups shares lower as well, off about 3% after a miss across the board due to severe weather impacts in the u.s.. they are revising their full-year guidance lower for of 3.5sh flow to a total billion dollars. the company is in the middle of a three-year plan to adopt the increase in online retailing and shipping. finally, just want to touch on shares of bristol-myers, rising in premarket after first quarter topline beat. we were looking at drug shares of up to eva, which -- of up to

iva, whichopt missed. alix: thank you so much. art hogan of national holdings is still with us. on the s&p index, you can see the big rally we've had, versus the profit outlook for the index, which is much lower. where is there still going to be value? art: i think that is interesting. if we were to stand here with the s&p 500 trading at 2130, north of 17 times 2019's expected earnings. i think that is quite astonishing. i think it would be comfortable saying we are fairly valued here, and in terms of valued, the two sectors most undervalued

are energy and financials. overvalued, -- and consumer staples. earnings andverall the guidance they are giving, considering that for most pre-earnings we are concerned about things like inverted yield curve and low interest rates, then it is just margins being weak. the general health of the financials has been because of the fact that gdp growth is probably stronger than we anticipated. youd: everybody says shouldn't go into defensive's, yet the market seems to agree with everyone. what does the market see that we don't, or vice versa. t: utilities still throw off a

little less than 3%, so if you need that yield, hey, i can get him was 3% with a utility. why do i bother with the 10 year? pay 23 or 24 to times for that, and typically the yield on utilities is 4% or 5%. that thatcern is doesn't start. david: thank you so much for that. coming up, take-two of two banks. barclays deals with profitability concerns. more next in today's wall street beat. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." coming up in the next hour, tom miles, morgan stanley head of m&a.icas ♪ viviana: this is "bloomberg daybreak." i'm viviana hurtado with your bloomberg business flash. -- of of 3m arc falling 3m are falling. they warned of headwinds in china. they plan to cut about 2000 jobs, little more than 2% of the workforce. the ftse reportedly looking for -- the fbic reportedly looking head big banksto to get ready for the next

downturn, interviewing dozens of bankers for jobs as board members or executives. a former bond saleswoman may get her day in court. she accuses her former boss and colleague of harassment, discrimination, and retaliation. at one point she says she sound feces in her coffee mug. her request to send the matter r to arbitration was rejected. alix: that might be one of the worst things i've ever heard. feces in a cup? david: which is what has gotten everyone's attention, but if you read it, it has everything that is wrong with trading.

too.as one of the boys, it is a very complicated story. and it won't go to arbitration. alix: court is like a lot of dirty laundry you would be airing out there. we turn now to wall street beach, we recover three things wall street is buzzing about this morning. outt up, ubs not ruling large-scale m&a. barclays profit scalability continues. and deteriorating earnings spur $1 billion of expense cuts. alix: joining us is bloomberg's lisa abramowicz. we talked about how ubs net hat wes improved, but w want to focus on is what sergio ermotti said about m&a.

see ais not surprising to lot of different discussions with different players out there about consolidation because consolidation is part of growth, ands's cannot be ruled out, per se. alix: is that a yes, we like you? ubs has been talking for a long time about merging. willingtion is how deutsche bank will be after the commerzbank talks fell apart. so it is not just size. there has to be some sort of reason behind it, and some sort ,f synergy, i.e. cost-cutting all of the things that keep policymakers up at night. david: who is going to be better

at it? who are the executives who have really done a better job over time? who do you come up with? lisa: when you talk about asset management right now, this is a scale game. you need more of those assets to justify your business and get the products and services you need, and be able to afford them. that is why you are seeing blackrock consolidating assets to such a degree. david: barclays came out with earnings this morning. they did all right, but not as well as expected. there is some pressure on jes staley. he says if profit continues to be like, this is what he might do. >> if revenues continue to be light, we will make the proper adjustments to compensation costs overall so we can manage profitability levels we have committed to our shareholders. david: basically saying we will make it up on costs. lisa: the interesting thing is if you actually take a look at what barclays has done, it is the opposite.

for example, the bonus pool for the overall staff has increased 9% from 2017. you have to wonder, they are going to cost cuts. hot why haven't they already? already?y haven't they it is a tricky cause. you want to be able to extend bonuses to top performers, but also justify revenues going down. alix: isn't that just like a bone to the activist investor? david: maybe you don't need to do anything more than i bone. -- more than a bone. alix: maybe. david: as long as he's doing something. lisa: there is a question also, because the u.k. business did weigh on the results, but honestly love the european banks suffered. relative to the u.s. banks, they are just not doing as well.

so we go from good to not so good to really, really bad, and that is nomura. globaloss since the financial crisis for the full year, 96% drop in profit. 96%. what is that? david: if it is 100%, you make no money. lisa: global market revenue plunged 97%. international business declined for a fifth straight quarter. it wanted to expand to the u.s., to europe, to areas where yields aren't quite as low as they had been. that hasn't been panning out. it is hard to break into some of these competitive markets. here is the question for tomorrow -- four nomura. how much of this is something

they can deal with, and how much is a consequence of rates being negative in japan for a long time, and it is difficult to make money for any bank in that circumstance? david: and how long do they stay independent? the ceo suggests they could state independent, which says there could be alternative. lisa: they have flip-flopped with their international strategy for a long time, both expanding and then contracting in the u.s. and europe again and again. that also makes it difficult to create a footprint. alix: when we talk about the ecb tiering, that didn't work in japan. there's no end in sight, and nothing will help what they tried to fix. lisa: but the ecb is not committing to themselves to the fact that negative rates are

harmful for banks. alix: thank you for joining us. coming up, the avengers are assembling moviegoers. david is super skeptical, but he has not seen the movies. more on what i'm watching next. this is bloomberg. ♪

alix: david is killing me right now. he spent the whole break talking about why the avengers movies are bad. "ironman" the first was a catalyst movie -- was a fabulous movie. alix: this is going to affect movie theaters all over the world. the running time is 181 minutes, playing over 4600 screens. david: wait a minute, that is over three hours. alix: it is. that is part of the issue. david: is it like checkoff? alix: alix: no, more like

"waiting for godot." if it is a three hour movie, what do you do? they are putting them in extra theaters to do that. they hope it will have a lot for concession stands, moviegoers having a break in the middle of it because it is so long. it is having a reverberating effect on how movie theaters are running their actual business. david: what i am interested in is marble and what it has done for the walt disney -- is marblvel and what it has done for the walt disney company. alix: i don't know if they have jumped the shark, but they are flirting with the shark, which is why "endgame" is going to be the last one. they are also older. it has been going on for like a decade. david: joe biden is older.

they are not older. alix: if you look at star wars, pixar, marvel is right behind star wars at almost $1 billion. it will be interesting to see him much money they rake in. david: it is also what goes on in the theme park in the cruise lines, things like that. alix: and they will double the amount of popcorn they are going to sell. watch for that. [laughter] alix: he's mocking me, but it is true. up, wells fargo's senior global market strategist will be joining us. this is bloomberg. ♪

♪ 3m mourns on gross,

cutting forecasts for 2019 -- on th, cutting forecasts for 2019. talks fail between deutsche bank and commerzbank, ending merger talks. suitors line up for commerzbank. deutsche bank most a plan b. big tech delivers big profits. facebook delivering double-digit revenue growth, microsoft topping $1 trillion market value. david: welcome to "bloomberg daybreak." i'm david westin, alongside alix steel. --have freeport my karen now.ort mcnamara out alix: they see the same amount of sales for copper, 3.3 billion pounds. will beerence call super interesting for freeport. david: they will be investing more for capital investment,

increasing capital expenditure. it is up a little bit in the premarket right now. alix: that is interesting. there's conversation that a lot of the projects you could work on our low-quality copper. the lower quality it is, the more you have to spend. i wonder if there is anything in that? we will have to see what happens in the call. on the markets, a push and pull when it comes to earnings. s&p futures pretty much flat as these individual idiosyncratic issues visor control. a strong dollar story. why? i have no idea. the euro-dollar breaching some key levels here. we'll up by 3/10 of 1% around a four-month high. about risk with libya and iran. i don't know. david: turning back to deutsche

bank and commerzbank, they called off merger talks earlier today, saying the difficulties were too great but the upside they saw. deutsche bank stock was up on the news, although now it has gone down. commerzbank was down the whole time. bloomberg talked with deutsche bank's cfo, who said another merger could be possible down the road. >> yes, we do envisage over time that industry consolidation will take place in europe, and deutsche bank wants to be part of that. the timing and the specific form of that obviously remains to be seen. we talked a lot about doing our homework to continue executive on our plans, executing on the restructuring of the company and improving our shareholder returns. we are continuing that work. we will remain focused on that. over time, i'm sure you will see events in terms of consolidation in europe. it is a natural part of the strategic environment in which we live. reporter: do you feel like there

is pressure to do a cross-border merger? that was obviously a huge part of the discussion over the last few weeks. would deutsche bank be open to that? felt wef the reasons we had to look at the commerzbank merger as it became an opportunity for us earlier this , in market consolidation is an opportunity one has to look at when that arises. lastrzbank is the remaining significant publicly listed german banking institution, other than ourselves, so it was a natural partner to consider. to go ourdecide separate ways, it opens the door to potential cross-border consolidation in time, but i wouldn't speculate on the nature or the timing of that type of event. what would your reaction be to commerzbank now

doing a bigger kind of deal with a cross-border peer? would that be a problem for you competitively? naturally, it was one consideration my management board colleagues and i needed to take into account as we thought about the decision we announced today and our future path. we feel we can beat successfully -- we compete successfully in the german market today, but we are obviously aware we may face changes in that competitive environment in the future. we think we all rail prepared for that. alix: that was lou burks matt miller speaking with deutsche bank ash that was bloomberg's matt miller that was bloomberg -- that was bloomberg's matt miller speaking with deutsche bank's cfo. weare joined by -- david:

samana,ed now by sameer wells fargo senior global market analyst. in order to keep profit growthoing -- profit going, you have to cut costs. david: at the same time, europe is very different, particularly with labor restrictions. do you think we will see true consolidation which saves those costs? sameer: it will always be a political hot button issue. it seemed like we had buy-in from politicians and others, but that would have been one of those sticky points as you get along. it is more of an issue for politicians, and i don't know if they would be able to stomach it. david: do we have any sense of where a company like deutsche bank woodhead if they can't --

deutsche bank would head if they can't consolidate? sameer: i think it will continue to languish, unfortunately. alix: also joining us on the phone to break down deutsche bank and commerzbank is michael .ensler what is a good plan b for deutsche bank? you called the fact you didn't think that merger was going to happen. michael: i think deutsche bank is still in the position to go it alone. the capital ratio is absolutely sound, and i don't think that might become a major obstacle, as well as liquidity. so the focus would be on the revenues, and therefore the profitability. think there is a lot of room for improvement, and getting refocused on these parts, there is still a way for deutsche bank to go.

wouldn't they have done that if it was easy to do and there would be a big payoff? michael: i am not saying it is an easy thing to do, but there move,ll a lot of room to and in particular looking at cost income ratio. costs,se, you can cut and then you need to look at the impact on revenues come about there is still some ways to refocus on the more important parts, which might be fixed income rather than equity. looking at retail banking, the process is of the not finalized yet. i am not to bearish on deutsche bank prospects yet. some pointou say, at you've got to grow the top line. it doesn't sound they were going

to be growing the top line a lot in the investment bank. doesn't deutsche bank have a lot of competition locally in the retail branch system? michael: that is certainly true. germany is chronically haveanked, meaning markets been depressed for a considerable time, particularly given the low rate environment. that is difficult to fight, of course, but there is still a lot of potential in serving the clients. i think that deutsche bank has still some ways to gain market share and improve the revenues. alix: who should get commerzbank? there's a list of suitors. ofhael: for the merger commerzbank and deutsche bank, i think there has never been the potential many people speculated around. it would have paralyzed both institutions for a considerable

time. besides the cost synergies, i hadn't seen too much revenue potential. therefore, i think commerzbank is probably better off without deutsche bank, and i think there's always some demand for getting access to the german banking market, which might be interesting for a foreign bank to look at. ,ot that much for deutsche bank which is a combination of investment and retail banking. a bit difficult to take over, i think. david: sameer, you said earlier it might be time to look for some returns in places other than european banks. are there other assets in europe that you think would be interesting? sameer: at least right now, we would probably be neutral on europe. within europe, we are probably most concerned with what is going on with brexit and that uncertainty continuing to linger. right now we probably find

better opportunities in the u.s. side like technology, u.s. consumer discretionary, industrials, energy, and if global growth does rebound, that would do well. u.s. overavor the developed markets. another option is emerging-market equities. david: we've just been having earnings and some of those very areas we will come back and talk to you about. seler, thank you for joining us. sameer will be staying with us. alix: we will take a look at what is moving on the market, next. on the downside, you know you've got 3m. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." comcast reported better than expected profit in the first quarter. the largest u.s. cable company's internet business continued to counter the steady loss of paid tv subscribers, revenue falling short of estimates. in part, that reflects lower sales at nbc universal. ups first-quarter earnings taking a hit from bad weather in the u.s. earnings came up short of expectations. severe weather dragged down to mystic profit by $80 million -- down domestic profit by $80 million. the government shutdown also affecting earnings. of headwinds, planning to cut about 2000 jobs, a little more than 2% of the workforce. that is your bloomberg business

flash. david: thanks so much. results, scotts davis joins us over the phone. he has a neutral rating on the stock. great to have you here. as far as you can tell, what happened? cott: this result bears no resemblance to the rest of industrials. we had good numbers out of honeywell, dover, granger, so this is a really big surprise. we are scratching our head here. the only thing we can really come up with is that most of 3m's products are things you can easily inventory. perhaps there is some sort of going onentory destock in shorter cycle products. they are also exposed to more cyclical markets in china then many other industrial companies, but this really bears no resemblance to other companies

for the quarter. david: why did we get no since this was coming? scott: 3m numbers have not been good for a while now, really the ceo steps down and the new team came in, and they have struggled. there are disruptions that occur, change in focus, et cetera. we are not exactly sure, but the numbers have not been good for several quarters. this, for sure, but nothing to write home about. alix: what we heard yesterday from caterpillar is they are seeing a lot of competition in their business from china that wound up hurting them, particularly on the margins side. did you feel like that was part of the story for 3m? scott: i don't think so. cat was an interesting situation

. they were losing market share, to.we can't tell really who some that it is just really -- so many different widgets that it is just really surprising that growth was the slow. honeywell put up an 8% growth number. it sells a lot of widgets, too, and has business in china. we will learn more on the call, of course, but it is really tough. david: do you have any global growth is idiosyncratic to 3m? scott: i hope so. we are bullish on industrials overall. this is the only print we've seen that has been tough.

we had nine companies report so overally world, and industrials may be 20. some say this could be a canary in the coal mine because these guys are shorter cycle and see things a bit earlier, but this seems too strange to me. alix: really great to get your perspective. scott davis of melius research joining us. fargo samana of wells still with us. sameer: we think industrials will probably be a beneficiary. you are starting to see rotation even within industrials. you are starting to see more strength in aerospace and defense, railroad, et cetera.

be that there is a rotation underway where people are trying to focus more on higher-quality growth. that may be what ended up hitting 3m as some of their competitors were doing a bit better. david: sameer is staying with us. coming up, facebook shares rising in premarket on first quarter sales growth. next is today's bottom line. this is bloomberg. ♪

david: time now to look at the companies worth watching this morning. strongf all, facebook's first quarter and tesla's rough one. dan ives of wedbush securities is with us. welcome back. good to have you here.

what did you see? dan: in my opinion, it was probably one of the biggest debacles i've seen in terms of a quarter. in terms of guidance and demand, it felt more out of a fictional novel that the company is not fessing up and admitting what demand looks like. ,he big thing is profitability and we need to throw in the white towel because we can't look investors in the eye. david: is this different from what we've seen before? they've often overpromise and under delivered. dan: before it was production issues. demand was coming through. we navigated the storm because you felt comfortable was going to be able to navigate production issues. now there's a serious demand crisis, but the company is not looking in the mirror, doing , instead need to do focused on robo taxis, insurance, and every other

initiative. that is taking focus away. that is why it feels like there's no pilot on the plane. david: let's focus on their cash burn and how much they have on hand. they are burning through cash pretty fast. they say they are ok, although for ais some suggestion capital raise as well. an: in our opinion, there is very high likelihood we think they will have to raise about $3 billion of capital, and it could be more. you have debt tranches coming up, capex needs in china. it all comes down to profitability. the company guide to profitability called for the second half of the year, and that continues to be an uphill battle. alix: this shows the cash burn, but if you take a look at how they get their cash, some of it is the deposits. we have a great breakdown that shows how much deposits makeup of their cash. if demand slows or is not there,

what happens? dan: it becomes a debt spiral. that is why right now if you look at customer deposits and underline demand, there is a pretty strong second quarter in terms of what deliveries could lookst now it is what it like the second half of the year. fundamentally, as someone who's been a big supporter of the name, you felt like coming off of that conference call this is not a house you want to bet on. alix: wish you could go back in time. david: a lot of ceos wish they weren't public [laughter] david: facebook is the second story. they beat on all expectations, even though they had taken them down before. what do you make a facebook? huge feather in the cap. you had a lot of headwinds and overhangs and social media names coming through with flying

colors. that is why right now for tech, that was the missing piece of this rally in terms of social media. fundamentally, it is really background noise. alix: when it comes to tech, wellr, the forward pe above the five-year average. how much more value can you get in tech? is there any left? sameer: if they keep delivering the growth they are delivering, we upgrade it to most favorable. some of these social media names that are also doing well in terms of getting users as well. alix: do you feel like that is already priced in, or as long as they keep delivering the numbers, that is enough? sameer: we don't think it is priced in. if you look at financials or consumer staples, there's not a lot of growth. they trade in multiples not two different from tech.

in a world where nothing looks all that cheap, we think tech is probably the best of the bunch. dan: i think he hit the nail on the head, especially when you look at growth. look at microsoft. you are talking about cloud stories in tech where growth is still in the early innings. we continue thinking these stocks get re-rated higher. alix: is that why the market totally ignored the $5 billion potential fine? dan: that is more potential background noise. investors are focused right now on where is the growth. if you are not chasing growth, you might be doing your resume later this year. david: is the big story here actually growth in the cloud? it is not as flashy as facebook. it is completely disruptive, taking all of those locally stored pieces of data and centralizing it. it is one of those things that

is driving a secular trend, along with things like payment processors and internet of things. tech is probably the most disruptive industry, and doesn't need to trade at an astronomical premium to the rest of the market, but right now it is not that much higher, so that is a great area to focus on. alix: dan ives of wedbush securities, great to see you. samana of wells fargo will be sticking with us. fuller, freight ceoightwave's will be with us. this is bloomberg. ♪ . ♪

alix: this is "bloomberg daybreak." i am alix steel. lots of earnings trickling in. the push and the pool. you have names like facebook and microsoft delivering, and on the

pull you have 3m lowering their forecast in cutting jobs during european banks down .7%. ubs had good news. barclays did not. the market do not take that well and commerzbank in deutsche bank breaking up weighing on the disease. a stronger dollar. puzzling markets all over the world. how intense can the dollar rally? why and what does it do to companies and growth? the latest read on growth coming in. for march, durable goods up 2.7%. david: it was forecast to be .8% up. it was speculated there would be a lot of inventory build. there was a time yet to start drawing down. also the initial jobless claims are 230,000, one above the survey of 200,000. alix: if you back out air

transportation it was down .2%. i wonder how much of that will be a blip? david: that is interesting. alix: in terms of the market, i'm not seeing any movement. you still have futures around the highs with cap doing well and the dollar on the four-month high. david: you make a great point. those planes make a big difference, it is true with exports and imports and durable goods orders. when you take that out it is down off of a forecast .1%, down .2%. alix: i am trying to scroll through the writeup. you do have equipment orders. that is a good read for manufacturers. they are seeing stable demand. as you mentioned, toward the inventories, there is larger inventory headed into the second quarter.

it was all about aircraft. that was it. that was the biggest gain for communications in 2015. david: let's get a second view on durable goods. we welcome craig fuller, freight waves ceo. leadingwaves is a provider of news and commentary for the freight market and still with us is sameer samana from wells fargo. craig, what do you see in the shipping industry when you are having trucks shipped in terms of durable goods. are you seeing a greater demand, lesser demand, or the same? to 2018, there has been a small drop off in volumes. data we track, we tracked 85% of the electronic contract market which is the market the larger carriers are involved in and was explodes to volume fluctuation. about two point 5% to 3% in terms of year-over-year comparison. keep in mind 2018 was an

inflated year. the numbers are skewed. if you compared to 2017, we're going back to where we were in 2017. not anything to panic over, but we are not seeing the level of volume we did last year. let's talk about your business and how it might allow us to look into the future. you deal with futures. we will put up a chart we brought for you about how big the trucking industry is in this country. it is quite stunning. this,ay take offense at but it is bigger than refined petroleum shipment. it is quite large. $726 billion. talk to us about that. craig: it is a massive industry and it is core to the industrial economy ise retail still moved primarily by trucking.

trucking is 72% of all miles of freight moved. if you buy something and consume it that is not electronic, it will go by shipment. trucks are involved in all elements of that. what our business does is track fundamental data across the market and we look at transactions. one of our proprietary indexes is the ability to track all electronic shipments. , when athem tenderers company or retail manufacturer requests a truck, we see that data and then contract how many of those requests take place across the country. alix: we spoke to drew mcelroy, transfixed ceo, a tech truck company, and here is what he had to say. >> the ability to drive incremental utilization through technology drives real increases in wages to the drivers as well as roi to the owners of the assets. alix: are using the same kind of thing and what is it means when

it comes to finding the workers and then pushing through these wage increases? craig: you have to look at the shortage when people talk about the shortage of trucks, they are talking about two different things. there is the shortage of capacity, which is a function of how many trucks are on the road, shortage"he "driver which is the availability to find qualified drivers. wages are sent by competition in ,ther sectors, construction in retail, warehousing. as those wages, as those parts of the economy continue to gain in employment, we will see wages go up for the truck drivers. drew waslieve group -- talking about is the efficiently gained through data which allows

trucks to be more optimal and hall more freight. what drew is talking about is with technology we can optimize the amount of capacity, so you do not have two trucks going to the same city, one being half-full and the other half-full. david: where are we in the process? how much of that efficiency have we realized and how much is yet to be realized? railroads are doing something similar where they are getting a substantial increase in efficiency showing up in earnings. craig: precision railroading is different than what we are seeing. the railroads have more opportunity because there are fewer railroads. for them to implement it, they mandate these actions. trucking is different. there are hundreds of thousands of independent trucking companies in the u.s. it takes a lot of time for technology to infiltrate the

industry. hasregulatory environment forced the electronic locking devices on the industry and mandated every truck has electronic locking devices. are starting to get exhausted data that let's us understand where our trucks are available, where they're being held up at docs and where they are inefficient. if you described it as an inning, we are probably in the first or second of digitization. the mobility revolution as a sector, as a concept probably looks like the internet and media in 1995. we are very early stage and this is going to be a long process. david: we have a fed meeting -- alix: we have a fed meeting next week, we get gdp tomorrow. i'm interested to see where your biggest cost inputs are right worriedt are you most about in terms of inflation for your business? craig: driver inflation wages

have impacted the broader part of the sector. it is harder to find drivers when there are competing industries that do not have the quality of life issue that trucking does. wage labor is an issue. most of the larger trucking companies have passed on their fuel costs. they are not impacted by diesel costs. what we are looking at is demand. is there a demand to drive the market? cost is secondary to this. a lot of it is demand. you have an industry that is capital sensitive. it takes a lot of money to keep those trucks running and to buy the trucks and turn them over in three years and keep them running. it is all about how much volume in the industry. one of the things we are watching is there has been an increase in capacity, therefore this year has driven down some of the spot rates. we are wondering how long does it take to start impact the

larger carriers that are more insulated. we have not seen any decrease in contract rates, but we are looking at that going forward. david: sameer samana, the trucking we just talked about is one of the data points the fomc will need to look at. as you take a look at it, what will they be facing? what decisions are they likely to make? oneer: what they will focus his loins are down a little bit, that will give the fed a pause as year-over-year is softer. if you go back to 2017, we are not that much off. the fed will probably view that as growth is good but not great. wages continue to take higher. that is something the fed is watching. a lot of times wage inflation drives other types of inflation. we will keep an eye on that. down,now pce is taking

but if it were to go back up that would put them on the back foot. those are the most important things. the dual mandate, and with volatility and credit spreads having come down, that financial stability is calm. they will focus mainly on inflation. alix: everybody on inflation. ceog fuller, freight wave and sameer samana of wells fargo investment, thank you. viviana hurtado is here with first word news. viviana: today the u.s. and japan are looking for a speedy deal when they resume trade talks in washington. the focus will be on cars and agriculture. the u.s. is pushing to reduce its trade deficit with japan. tokyo wants a promise it will not be hit with u.s. tariffs. carlos ghosn is hoping to get out of jail second time. his lawyers posting a $4.5 million bond to secure his release from a tokyo prison.

chairman isissan fighting charges he funneled millions of dollars through an intermediary for his own purpose. prosecutors argue he should not be released. official --king it he is running for the democratic nomination for president. joe biden making this announcement in a video on social media. he enters the race as a front-runner in a field that now includes 20 candidates. joe biden is 76. his pitch will focus on working-class voters who backed donald trump in 2016. 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: you have to wonder if the easy part is making the announcement for joe biden. president obama came out and said as a presidential candidate, he was a great vice president. did not endorse him. donald trump saying "welcome to the race sleepy joe.

i hope you have the intelligence -- long in gap -- to wages etc. -- long in doubt -- to wage a successful campaign." alix: he is making reference to the fact that joe biden is known for making remarks that are off kilter. david: i'm sure a real vulnerability competitor president trump, who never says anything. alix: we can make light of that, but will it be enough to satisfy the moderate democratic party and moderate republicans? david: it is such a difficult problem because in the general you might need to be the moderate, but right now the base of the democratic party seems to be asking for blood. they are steamed up. alix: interesting. we waited for it and it finally happened. coming up, we will look at the merger landscape with morgan stanley's head of american m&a. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." coming up in the next hour on "the open" mohamed el-erian, bloomberg opinion columnist. this is "bloomberg daybreak." southwest airlines sees added costs during the busy summer travel season. the grounding of the boeing 737 max fleet is one of them. southwest is the biggest u.s. operator of the plane and's has had to cancel 130 flights away. says a key revenue gauge may rise as much as 7.5% this quarter.

saudi arabia explaining her first quarter surge in oil revenue that baffled economists. it came from saudi aramco, the state-owned oil giant, bloomberg speaking with the saudi finance minister. what we have from saudi aramco are divided in three. we have the royalty, the tax, and the dividends and we have regular dividends and special dividends. tax,ceived royalty dividends, and special dividends like we did last season. says it is still committed to its ipo. the company ceo says it is -- he is not worried about electric vehicles impact. bloomberg learning walmart is considering an ipo for its

grocery unit in the u k. british regulators blocking a $9.4 billion deal. that is your bloomberg business flash. david: it is time for all of the lead. a deep dive into the stories making headlines and moving markets. today we are looking at m&a, starting with the failed merger talks between deutsche bank and commerzbank. joining us is tom miles, morgan stanley head of american m&a. you are here to talk about m&a generally. i'm not going to ask you exactly what is going on in deutsche bank, but this is the beginning we thought might go through and did not go through. you have had a lot of experience with deals that go through and do not go through. what makes a good deal and what makes it worth doing and when do people walk away? like a evaluating a deal big transformational merger like that in general, you want to have certainty with regard to

execution, integration, and it has to make strategic sense. when companies talk about deals and they do not do deals, it is often a result of the fact that you have differing views of the future and differing views of how the execution of the merger will play out. , you have aral situation where companies will go back to executing their strategic plan and staying on the path they had been on. you made an important point about putting the visions together. sometimes we call them cultures. how many big m&a deals fail because of that thing? they get done what it does not achieve the results they hope? tom: it is hard to know in a vacuum because you do not know what would've happened if they had not done it. many of the deals -- you do not

have a view on how that looks at in isolation. i would say that the strategic vision is the most important thing but you have to execute. the cultures have to come together. you have to become one company. world, i cover commodities. the news yesterday was occidental increasing the deal for anadarko. to occidental ceo about why this merger with making sense for her. here's what she had to say. cki: we do not have to buy anything. that is the scenario people need to understand about us. they need to understand what had the best portfolio we have ever had. alix: she is trying to sell the move is offense and not defense. how much m&a today is offense? craig: i would say most of it -- tom: i would say most of it is offense.

we have had five years of economic expansion. we have had a long run of a good environment. many companies have strong balance sheets and well-thought-out strategies. to the extent of company becomes available on your target list, you will go after it. i would say that most of the m&a's is more offense of then defense of. -- the defensive. does tradevid: regulation have a -- , all ofulatory trade those things lower certainty and you need certainty to have a good environment. i would say it is a discussion. it is not something stopping deals en masse. there is a discussion how long will it take to close, what is the risk, but we have not seen it stop deals at all. we have: -- alix:

energy, we have health care. bain about health care m&a. here's what he had to say. >> corporate m&a is at an all-time high. so was health care private equity deal making at about $65 billion. help your deals originated during the last cycle outperformed meaningfully the rest of the deals and health care private equity. it was a 2.7 times return for health care versus a 1.8 times for all non-health-care deals. that is why health care investors that have a long view are so bullish on this sector. alix: what is your outlook for health care m&a? tom: health care is an important part of the m&a market. it has been an important part every year. what has driven health care is innovation. companies seeking innovations, companies seeking growth whether it is a pharma company buying a biotech company, amid tech company investing in new product to drive growth, it is the

innovation driving it and that will continue and be a major part of the m&a market this year and in years to come. going beyond health care, what are the areas where seo would say that is a good business and i need to be looking at that, they should put those on my target list? tom: other sectors? i think the m&a market across every sector is on the offense of -- on the offensive. they are looking to enhance their business and grow products , they're looking to make their companies better through m&a. we had five years of economic expansion. five years of a strong m&a market and companies are looking to use m&a to achieve their strategic goals. an industrials company, a consumer company, or a health care company, they are all doing it. david: tom miles, morgan stanley

head of american m&a. coming up, the latest revamp of the volcker rule is turning out to be a win for wall street. the latest on what i am watching. that is next and this is bloomberg. ♪

david: here is what i'm watching . it is the revamp of the volcker rule, the great white whale. wall street has been complaining about the volcker rule forever in part because they say we cannot know what it means, it is so subjective. we cannot figure out what it is. inn president trump came he said we would clean it up. it appears they are now getting close to something that will be more definitive. there will be rules to note yes that works or know that does not work. bankers have been complaining about this for years. alix: the issue is how you define what a good trader bad trait would be? that has taken a lot of bank

time to say does this qualify as a bad trade, how would i justify it? been part of the confusion. the claim has been it has reduced liquidity in the marketplace because banks have been trying to avoid the ambiguous line and they go to conservative and do not buy any of it for their own account. we do not have liquidity in the marketplace. alix: a white whale or the waiting for gadot. waiting for the big changes and nothing. david: if we talk about the avengers we are ok. open"coming up on "the mohamed el-erian will be joining jonathan ferro. this is bloomberg. ♪

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

jonathan: coming up, with execution risk intensifying deutsche bank in commerzbank ending merger talks. earnings from facebook and microsoft sounding the all clear for the u.s. equity market bulls . is by america back in vote? dollar reclaiming of 2019 high. 30 minutes away from the start of trading. there is your dollar strength. euro-dollar at 1.1130. futures on the s&p 500 firm are. up a single point on the s&p 500. up a basis point on the 10 year to 2.53. we begin with our top story. a few more signs of optimism as tech earnings begin to roll in. >> whenever the markets have done well, tech has done well. >> tech. >> those high-growth tech faang stocks. >> these are the companies delivering the results w